Precedent-setting case: The CPA does NOT apply to month-to-month leases
A court case in the Western Cape, which deals with the most provocative section of the Consumer Protection Act (CPA) – Section 14 – could set a legal precedent countrywide.
The case involved an appealed eviction ruling handed down by the Goodwood Magistrates Court in which the court ordered tenants Eric Mongoso Makah and his family member to vacate two apartments owned by the landlord, Magic Vending (Pty) Ltd.
The Makahs were the occupants of two apartments which they rented on month-to-month lease agreements, which made provision for immediate cancellation if they breached contract.
The Makahs did in fact breach the terms of their lease agreements by failing to pay rental, either on time or at all, and their non-cooperation invariably led to the cancellation of their tenancy.
After cancellation (and due demand to vacate had been delivered to them), the Makahs failed and/or refused to vacate the apartments, which in turn led to the proceedings for their eviction being instituted in the Goodwood Magistrates Court.
Unhappy about not being given 20 business days’ notice, and the eviction order being granted by the court, the Makahs appealed to the Western Cape High Court. At the hearing of the appeal the Makahs contended that their eviction from the respective properties was unlawful, because they were not unlawful occupiers as envisaged by the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act, No. 19 of 1998. In this regard, the Makahs contended that their occupation of the respective apartments had not been lawfully terminated by Magic Vending, given that it failed to act in accordance with the provisions of Section 14(2)(b)(ii) of the CPA.
Why Section 14 of the CPA applies
The Makahs contended further that the terms of their respective lease agreements (insofar it entitled the Magic Vending to terminate the agreements with immediate effect upon breach) were in conflict with the statutorily prescribed notice period of 20 business days as provided for in Section 14(2)(b)(ii) of the CPA.
As a result of the above, the Makahs submitted that Magic Vending was obliged to afford them at least 20 business days’ notice of any alleged breach (and thereby afford them an opportunity to remedy it) before the right to cancel the agreements would accrue to it.
The court, however, rejected the Makahs arguments, and dismissed their appeals with costs. In this regard, it was held that Magic Vending was not required to comply with the 20-business day period prescribed by Section 14(2)(b)(ii) of the CPA, by virtue of the fact that the lease agreements in question were not fixed-term consumer agreements falling within the ambit of the section.
In answering the question before it, the court found that the provisions of Section 14(2)(b)(ii) of the CPA found no application in instances of month-to-month lease agreements, as these agreements were clearly concluded for an indeterminate period, as opposed to a fixed term.
As a result, the court held that Magic Vending was not required to comply with the mandatory 20-business day notice period prescribed by the section.
In reaching the above conclusion, the Honourable Ms. Justice Salie-Hlophe (the Honourable Mr. Justice Henney concurring) reasoned as follows:
- “Section 14(2) of the CPA is prefaced by the phrase ‘if a consumer agreement is for a fixed term’;
- “In this regard, the fact that the wording of the section is prefaced by the word ‘if’ induces a condition or supposition that it only applies to a certain type of contract in relation to its period;
“It is evident from the wording of Section 14 of the CPA that it clearly singles out fixed-term contracts as being the only category of contract to which its provisions find application;
- “Albeit that an agreement which imposes a month-to-month residential lease is a consumer agreement falling within the ambit of the CPA, the point of departure must be that Section 14(2)(b)(ii) of the CPA is only applicable to agreements which are for a fixed term;
- “Section 14(2) therefore prevails in all instances where a consumer agreement is for a fixed term;
- “The lease agreements before the court were concluded on a month-to-month basis, and were therefore concluded for an indefinite period as opposed to a fixed term;
- “To read into the CPA that the 20-business day notice requirement [imposed by Section 14(2)(b)(ii)] applied to a month-to-month (indefinite) lease, would be to offer protection in circumstances not envisaged by the Act;
- “Furthermore, it would be disproportionate to invoke a 20-business day notice period before the lessor would be entitled to cancel a monthly lease (given the fact that 20-business days equates to a calendar month);
- “Accordingly, and as Section 14(2)(b)(ii) of the CPA finds no application in the instance of month-to-month lease agreements, the Respondent [Magic Vending] was not required to provide the Appellants [the Makahs] with 20-business days’ notice to remedy their breach of their respective lease agreements.
- “In the circumstances, the Respondent’s [Magic Vending] right to cancel the respective lease agreements accrued as soon as the Appellants [the Makahs] had breached the terms thereof.”
Section 14 of the CPA allows a tenant to cancel a lease on 20 business days’ notice subject to a reasonable cancellation penalty and obliges a landlord to give 20 business days’ notice to a tenant to remedy a breach before possible cancellation of the lease. It also obliges a landlord to send a letter not less than 40 and not more than 80 days prior to expiration of a fixed lease period informing the tenant of what will be required upon expiration of the initial period (this letter does not need to be sent before the end of a 24-month lease as you cannot extend a lease beyond the maximum period of 24 months).
Case summary by Marlon Shevelew
Who is Marlon Shevelew?
Marlon Shevelew is the director of Marlon Shevelew and Associates Inc. a law firm specialising in rental property, contractual, consumer and company law.