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The recent Supreme Court of Appeal judgment of Els v Venter and Another determined the issue on whether the Consumer Protection Act, 68 of 2008 applied to residential lease agreements. This article will outline the facts of the case and explain what the court’s ruling confirms on the legal standing.
FACTS OF THE CASE
Mr. and Mrs. Venter owned a property and rented it out to Mr. Els for a three year period from 1 December 2020 to 31 December 2023. Towards the end of the lease, as the subject property was put up for sale, the Venters informed Mr. Els that an extension of this lease would be subject to a clause which allowed them to terminate said lease within a notice of three months.
A subsequent lease agreement was entered into by the parties with the commencement and termination dates as 1 January 2024 and 31 December 2026 respectively, inclusive of the early termination clause.
The property was subsequently sold in 2023 and the Venters exercised their right to terminate the lease agreement with Mr. Els. Mr. Els, however, stated that the lease was a ‘fixed-term consumer agreement’ under section 14 of the CPA and could not be terminated except for material breach.
The High Court held that the CPA did not apply and the termination notice in terms of the lease agreement was valid. An appealed was brought before the Supreme Court of Appeal.
The questions before the Supreme Court of Appeal were whether the CPA applied and whether the High Court’s order amounted to an eviction.
CONSUMER PROTECTION ACT, 68 OF 2008
The arguments in dispute were whether the lease was a “consumer agreement” under section 14 of the CPA and whether the Venters qualified as “suppliers” who were acting within the “ordinary scope of business”
Definitions
According to section 1, the definitions are defined as follows:
consumer:“in respect of any particular goods or services, means— (a) a person to whom those particular goods or services are marketed in the ordinary course of the supplier’s business; (b) a person who has entered into a transaction with a supplier in the ordinary course of the supplier’s business, unless the transaction is exempt from the application of this Act by section 5(2) or in terms of section 5(3); (c) if the context so requires or permits, a user of those particular goods or a recipient or beneficiary of those particular services, irrespective of whether that user, recipient or beneficiary was a party to a transaction concerning the supply of those particular goods or services; and (d) a franchisee in terms of a franchise agreement, to the extent applicable in terms of section 5(6)(b) to (e)”
consumer agreement:‘an agreement between a supplier and a consumer other than a franchise agreement’
supplier:“means a person who markets any goods or services;”
It is noteworthy to mention that the parties entered into a lease agreement for the purpose of renting out a property for private residential use. The definition of ‘consumer’ would accordingly not be met by Mr. Els as no particular goods or services were afforded to him within the Venter’s ordinary course of a business.
Further, the Venters do not meet the definition of ‘supplier’ as they were not marketing any goods or services, they were however, renting out a property that was vacant. As such, no consumer agreement was concluded.
The SCA upheld this part of the High Court’s ruling in that the CPA did not apply to private residential lease agreements.
What was significant was the aspect of the High Court’s order which was set aside in that Mr Els was ordered to vacate the property by a specific date, confirming that this resulted in an eviction order as the provisions of the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act, 19 of 1998 was not adhered to.
CLARIFICATION ON THE CPA IN PRIVATE RESIDENTIAL LEASE AGREEMENTS
This judgment once again clarifies the position between the landlord and tenant relationship, in that the CPA does not apply unless the landlord is in the business of letting individuals.
For assistance in the interpretation, the drafting and the enforcement of lease agreements and subsequent evictions, contact our attorneys at Van Deventer and Van Deventer Incorporated to assist.