Does the CPA (Consumer Protection Act) apply to Residential Rental Agreements?
The confusion around how the Consumer Protection Act (CPA) applies to property rentals continues to be challenged in courts, which sadly seems to be the only way to secure clarity. Recently, the case of Venter and Another v Els and Another revealed that the CPA does not, without exceptions, apply to a fixed-term lease.
According to STBB Attorneys, we’re essentially looking at Section 14 of the CPA, which provides that “a tenant may cancel a lease agreement by giving twenty business days’ notice, in writing, of such intended cancellation notwithstanding the existence of any provisions in the lease to the contrary”.
The Venter/Els case required a judgment relating to a dispute when a landlord gave notice of early termination of the lease, in terms of a clause in the agreement that made provision therefor. The tenant argued that despite this agreement, this conduct contravened the provisions of section 14 of the CPA.
Not so, held the court, and clarified that one must not lose sight of the context in which the CPA finds application and that it does not, without exception, apply to a fixed-term lease.
Facts of the court case – Venter / Els
Mr and Mrs Venter, both engineers, moved to Australia in 2018. Whilst there, they rented their property to Mr Els for the period 1 December 2020 to 31 December 2023. In February 2023, Els advised them that he was keen to renew the lease beyond December 2023. By this time, Mr and Mrs Venter had decided to establish themselves in Australia permanently and were keen to rather sell their home. They advised Els accordingly.
The parties entered negotiations and, in the end, agreed to renew the lease but with a provision recorded in the lease that the Venters were entitled to terminate the lease on three months’ written notice (‘the renewal lease agreement’).
The Venters’ property was sold in October 2023. The sale agreement provided for the Venters to give the purchasers vacant occupation on 1 April 2024. The Venters gave Els notice to vacate in accordance with the provisions of the renewal lease agreement. Various communications between the parties followed, with El indicating that he was keen to arrive at a more convenient solution.
In January 2024, the Venters received a letter from El’s attorney in which they were advised that the lease they concluded was a fixed-term agreement subject to the Consumer Protection Act 68 of 2008 (‘the CPA’) and that section 14 thereof prohibits the landlord from early terminating the lease agreement.
The Venters maintained that the termination was valid under the provisions of the renewal lease. Subsequently, the Venters made various attempts to reach an agreement with Els to move out of the premises, but to no avail. They then approached the Court for relief.
The court order was that three months’ written notice given to Els validly cancelled the lease with effect on 31 March 2024 and that Els should vacate the property on that date.
What is revealed:
As it stands the CPA’s Section 14((2) (b) states:
If a consumer agreement is for a fixed term –
(b) despite any provision of the consumer agreement to the contrary –
(i) the consumer may cancel that agreement –
(aa) upon the expiry of its fixed term, without penalty or charge, but subject to subsection (3)(a); or
(bb) at any other time, by giving the supplier 20 business days’ notice in writing or other recorded manner and form, subject to subsection (3)(a) and (b); or
(ii) the supplier may cancel the agreement 20 business days after giving written notice to the consumer of a material failure by the consumer to comply with the agreement, unless the consumer has rectified the failure within that time….
This is an important catalyst in the judgment because, as summarised by STBB, “if the CPA were to apply to the lease agreement, then “section 14(2)(b) should not be read as providing the only circumstances in which the lease may be terminated. Such an interpretation does not necessarily promote the objectives and spirit of the CPA, nor is it consistent with a literal interpretation of the provisions of the CPA.”
Definitive interpretation:
STBB says that the Venter/Els case ruling is an important judgment for anyone dealing with lease agreements. “In the circumstances, the CPA does not apply to the lease agreement!”