Lease notes 2021 table summary on lease whole module plus cases PDF

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table summary on lease whole module plus cases...

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LEASE (Duties of lessor) duties of the lessor in relation to the condition of the leased property, the lessee’s duty to pay the rent (protected by the lessor’s tacit hypothec), security of tenure (huur gaat voor koop), termination of the lease agreement, compensation for improvements and aspects of the Rental Housing Act. Practice Questions

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In terms of the common law residual rules, in what condition must leased premises be handed over and maintained by the lessor? (Hunter p 740) Is the lessor responsible for repairing defects in the premises caused by the lessee’s negligence? What does the Rental Housing Act provide regarding joint inspection of the premises at the beginning of the lease? What is the effect if this inspection did not take place? The Rental Housing Act also provides for a joint inspection before the tenant moves out. What is the purpose of this inspection? What is the effect if this inspection did not take place? What does the Rental Housing Amendment Act require regarding the condition of the leased premises? Note that the provinces have promulgated unfair practices regulations under the Rental Housing Act which have relevant rules regarding the condition of the property. E.g. Gauteng regulations require the lessor to maintain certain parts/aspects of the premises and the lessee to maintain others. The Rental Housing Amendment Act foresees that the Minister will make regulations (so that one national set of regulations on unfair practices will apply). Have a lookout for these when you are in practice, or if they have not yet been issued, check your province’s unfair practices regulations for details. Note that the CPA regards lease as a supply of services and not a supply of goods (s 1 definitions of “services” and “goods”). Therefore s 54 on the quality of the services supplied applies (and not s 55 and 56 on quality of goods supplied). Summarise what s 54 implies regarding the condition in which leased goods or premises must be made available? And regarding the lessee’s remedies? Note that there is an overlap here between the RHA, the regulations issued under it and the CPA. Which one applies, particularly if they say conflicting things? See s 2(9) CPA. List the remedies available to a lessee if the lessor breaches the common law duty to hand over and maintain the premises in a proper condition (Hunter p 740; as amplified by Mpange and Ntshiqa). Cite a case in support of each remedy where possible. May a lessee repair a defect itself and then claim the cost of repairs from the lessor? What is the prerequisite for doing so? (Hunter p 740; Mpange). Suppose a serious defect arises in leased premises during the currency of the lease. May the lessee cancel without more under the common law rules? Explain (Sharrock p 332) Is the position different if the serious defect was already latently there at the time the lessor handed over the premises to the lessee? Sharrock p 332 does not mention the exceptio non adimpleti contractus (“enac”, right to withhold performance – in this case, right to withhold rent) as a possible remedy to the lessee, but only a proportionate reduction of rent. What does Ntshiqa hold in this regard? Note that, despite Ntshiqa, it is advisable that lessees who receive some use and enjoyment from defective premises, pay a reduced rent in proportion to their reduced use and enjoyment, rather than withhold the

full rent until the lessor fixes the defect, as enac would imply (or until the lessor approaches the court asking for relaxation of enac under BK Tooling principles). Unreported judgments available on Saflii and not mentioned in textbooks on lease have held that a lessee who withholds the full rent, whereas the lessee did receive some use and enjoyment, would be in breach of contract, entitling the lessor to cancel under a cancellation clause. (Ethekwini Metropolitan Unicity Municipality v Pilco Investments [2007] ZASCA 62; Loch Logan Waterfront (Pty) Ltd v Carwash 4U (Pty) Ltd [2012] ZAFSHC 32). For those interested in further reading on this controversy, including what the law should be, please read Naude’s article in 2016 Stellenbosch Law Review 323 (not examinable). 15. When may a lessee claim damages for loss caused by defective premises according to Hunter v Cumnor? 16. Note that Nannucci v Wilson 1894 SC 240 has a somewhat simpler rule than Hunter in this regard – the lessee may claim damages if the lessor knew or should have known about the defect (basically fault based liability). Do you prefer the principle in Hunter or this Nannucci principle? 17. Does Hunter mean that a lessor who were told about a defect (such as a leak coming from the roof) and took reasonable steps to fix it, e.g. by instructing an independent contractor to find and repair the cause of the leak, is not liable for further losses resulting from a subsequent leak? (See the facts of Hunter and the ultimate decision on the facts, and carefully read what the court stated in this regard). 18. Is s 61 CPA applicable to a claim for damages by a lessee who is a consumer under this Act, even though lessors are regarded as supplying services rather than goods? See s 61(2). 19. What does s 61 CPA entail regarding when a lessor who must maintain the premises is liable for damages caused by a defect in the premises? Is it also fault based liability similar to the common law rules? (Remember the defence to the “retailer” in s 61(4)(c) – the lessor who leases to the consumer will be treated as a “retailer” for the purpose of s 61 liability). 20. Suppose the lessee undertook to maintain the premises or part thereof (in terms of a lease not governed by the RHA or CPA). 18.1 Must such a lessee repair structural defects as well? (see Sharrock 334) 18.2 Explain with an example what is meant by “fair wear and tear” and whether the lessee who undertook to maintain the premises is also obliged to repair such fair wear and tear. 21. Note that the courts strictly interpret clauses excluding or limiting the lessor’s common law duty to hand over the premises in a proper condition. See Pete’s Warehousing and Sales CC v Bowsink Investments CC 2000 3 SA 833 (E) as an example (not prescribed case, discussed by Sharrock on pp 333-335 in more than one place). 22. Indicate whether the following statements are true/false: a. The RHA provides that at the end of the lease period, the lessee and lessor must arrange a joint inspection of the dwelling to take place within a period of three days prior to expiry of the lease period with a view to ascertaining whether there was any damage caused to the dwelling during the lessee’s occupation thereof. The effect of the lessor not arranging this inspection is that the lessor will not be able to hold the lessee liable for any damage caused by the lessee. b. Section 61 CPA (liability for damage caused by defective goods) does not apply to leases as a lessor is regarded as supplying a service rather than goods in terms of the CPA. c. Section 54 CPA in effect provides for a mandatory right for the lessee of defective premises to pay a reduced rent or to claim specific performance

against the lessor, thereby forcing the lessor to repair the defect. d. Under the common law residual rules, a lessee may repair a defect themselves and deduct the repair cost from the rental payable, provided only that the lessee got quotes from at least two repairers and used the cheapest one. e. Under the common law residual rules laid down in Hunter v Cumnor, a lessee may claim damages caused by a defect in the premises if the lessor knew about the defect, or should have known about it by reason of the lessor’s occupation or profession, and failed to take reasonable steps to repair the defect. f. Under the common law residual rules, a lessee who discovers soon after taking occupation of leased premises that there is a serious latent defect in the premises which must have been there at the time the premises was initially handed over, may only cancel the lease after the lessee had given the lessor a reasonable chance to repair the defect. g. According to SCA authority, a lessee faced with a defect in the leased premises may raise the exceptio non adimpleti contractus and refuse to pay any rent until the lessor fixes the defect, or until the lessor approaches a court and claims a reduced contract price according to the principles laid down in the BK Tooling case. h. A lessee who is large juristic person and who undertook to maintain the interior of leased business premises during the currency of the lease will not be liable to repair fair wear and tear such as carpets which became somewhat worn through normal use, unless the lease agreement specifically obliges the lessee to pay for replacement of carpets at the end of the lease and/or to pay for a deep clean of the carpets at the end of the lease.

Lease Definition

Formalities

Sources of law

One party called the lessor undertakes to give temporary undisturbed use and possession to the other party called the lessee in return for payment called the rental « There are no formalities (an oral lease is a valid one). « The CPA says that if the lease is in writing, it must be in plain language. « Some formalities come in with regard the “huur gaat voor koop” maxim. « If the lease is a long-term lease (more than ten years) the lease is supposed to be registered against the title deed. It is still valid as between the lessee and the lessor if it is unregistered, but it is not valid against the lessor’s successors in title after the first ten years. « if the lessee wants to make sure that he has the right to remain in possession for more than ten years, he must make sure that it is registered against the title deed of the property. « If there is a gratuitous successor (he got the property for free), he is bound to respect the lessee’s right regardless of registration. Layers of regulation depending on the type of lease: 

All leases subject to the common law (can rely on CL rights) and Constitution.

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Business to large business contracts à no specific legislation unless it is about land. Regulated almost entirely by common law and Constitution.

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Any lease to do with rental housing:

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RHA (rental housing act) Natural persons usually. So CPA would apply in conjunction - Neither of these legislations are complete codifications

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Rental housing tenants should also look to their common law rights 

Public rental housing: state/ local authority rents out housing

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RHA and CPA

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Malan v City of Cape Town: CC said state can’t just terminate such a lease by notice (regardless of the contract). They may only terminate on good grounds 

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Leases of non-residential premises:

To natural persons/businesses who are sole proprietors/small juristic persons: CPA + common law + constitution 

Agricultural land v urban land: different rules (lessee’s right to claim compensation for improvements, sub-letting)

« common law and « the Rental Housing Act 59 of 1999 does not apply to business premises or business-to-business leases. Under the Act ach province has its own unfair practice regulations which define what is an unfair practice under the Act and each province has some procedural regulations which describes how you have to approach the rental housing tribunal in the specific province. « The CPA is another source of the law on lease. A lease of goods is not regarded as a supply of goods, but as a service. Section 61 does apply to lease (damage caused by goods) because it also deals with the suppliers of services, who supply defective goods used in conjunction with the service. In this case the lessor would be seen as the retailer, and would have the defence that it may be unreasonable for him to have known of the defect having regard to his role in marketing the goods. overlap

Formalities In Respect Of Long Term Leases Of

overlap between the Rental Housing Act and the CPA. Which Act gets preference? The CPA overlaps with several pieces of legislation and s 2(9) of the CPA specifically deals with this overlap: if there is an overlap you must first try and apply them concurrently (if possible), and if it is not possible, the one which provides the greater protection to the consumer applies. this deals with the requirement of registration if the lease is more than ten years in order to protect the lessee against successors in title

Land Act: Security By Means of Moveable Property Act

certain classes of goods are not subject to the landlord’s hypothec, particularly goods sold on a credit agreement (installments) where the seller retains ownership until the last installment is paid. Certain other third party goods may be subject to the hypothec. This is probably unconstitutional. Note that one of the duties of the lessor is to ensure undisturbed use and enjoyment (similar to the seller’s warranty against eviction), but we are not going to deal with this.

Ensure undisturbed use and enjoyment of the property

Delivery property in a good condition

1.1) LESSOR’s DUTIES Ensure undisturbed use and enjoyment of the property Must ensure that no one with a stronger title to the property will come and evict the lessee during the lease. if the Lessor only had a limited real right over the property – the lease will end automatically when the limited real right ends IF the lessee knew that the lessor only had a limited real right. if the lessee did not know, they could be evicted but they will have a claim for breach of contract against the lessor. Consider huur gaat voor koop principle  If a 3rd party with a stronger title evicts the lessee, then lessor is liable for breach (disturbance in use and enjoyment)

At initial delivery: Common law: 

At the very least, it must be in same condition as it was at conclusion of contract. The premises must be fit for the purposes for which it was let.

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Leases are typically drafted by the lessor and are typically harsh (they are drafted solely to further the interests of the lessor). They often include a lot of exemption clauses to protect the lessor against liability for defects. One such clause is “the lessee acknowledges that the premises are received in a good state of repair and will give it back at the end of the lease in the same state of repair, fair wear and tear expected”. The courts interpret all these exemption clauses strictly in favour of the lessee. They courts would say that this clause only protects the lessor against patent (or obvious) defects and is only relevant where the lessee has had the chance to inspect the premises. The clause has the effect that the lessee may not hold the lessor liable for patent defects which he could have discovered on inspection. If there is a latent defect that only becomes obvious once the tenant has taken occupation, the lessor cannot rely on the exemption clause.

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Sometimes the lessor also includes a voetstoets clause, which claims to exclude liability for latent defect. A voetstoets clause will not protect the lessor if he knew about the defect and with fraudulent intent did not disclose it. If the lessee knows about the defect he waives the right to rely on the defect, so the lessor

should probably point out any defects he knows about to the lessee. In summary, the common law does allow exemption clauses but treat them very narrowly. 

Business to large business leases are only governed by CL. Often find exemption clauses (mostly drafted by lessor) so lessee acknowledges the premises was received in a good state of repair, a fairer clause would be to give the lessee 7 days to make a list of the defects present and notify the lessor.

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However, under CL, courts interpret exemption clauses strictly in favour of the lessee against the drafter. This type of clause would only apply where the lessee had a chance to inspect the premises. This clause does not protect the lessor against latent defects (only patent)

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Pete’s Warehousing v Bowsink Investments 2000 (E): clause said the landlord does not warrant the premises are fit for the purpose it is leased for. The court held it does not exclude the CL duty to deliver in a manner fit for purpose. Rather, they looked at context of term. They said parties intended only to mean that lessor wouldn’t be responsible for the lessee to get local authority approval for that type of business. Lessor still obliged to make sure premises are free from defects

Statute: 

Under the Rental Housing Act says that if it is housing, it must be reasonably fit for human habitation. This basically confirms the common law requirement of the premises being ‘fit for purpose’.

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The Act includes important provisions relating to joint inspections which have to be held. Section 5(3)(e) says that the parties must jointly, before the lessee moves in, inspect the premises with the view of determining the landlord’s responsibility to rectify any defects, or with the view of registering such defects for the purpose of s 5(7). Section 5(7) states that a list of the defects must be attached to the lease. Within three days before the end of the lease the parties must jointly inspect the premises with a view to ascertaining whether there was any damage caused to the dwelling whilst the tenant was in occupation of the premises. There are some rules regarding keeping the deposit to rectify these defects. Section 5(3)(j) states that failure by the landlord to inspect the dwelling in the presence of the lessee within three days before the expiration of the lease is deemed to be an acknowledgement that the dwelling is in a decent state of repair, and no further claim on the basis that the tenant damaged the property.

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If the lessor does not identify the defects in the three-day period before the end of the lease he is precluded from claiming for such defects after the end of the lease. If there is fraud, the court will probably make an exception. Also, if the lessee is not cooperative and does not let the lessor inspect, then the lessor can do the

inspection within a certain amount of time after the expiration of the lease. 

AND maintain the property during the lease

The CPA applies on top of this, but doesn’t really give many more remedies. A lease is seen as a service and not a good. Section 54 discusses the consumer’s rights to quality services. The consumer has a right to services of a quality that he was reasonably entitled to expect. Section 54 only has two remedies: a proportional refund or a repair. If the premises are not delivered in a proper state (fit for the purpose, or in the condition that the party could reasonably be entitled to expect in the circumstances) the lessee may insist on a repair by the lessor or a refund in proportion to the decreased use and enjoyment of the property. These remedies are also available under the common law.

¶ The common law position (which is applicable if there is no agreement otherwise): the lessor is responsible for maintaining the premises. ¶ The parties can change this rule but even where the lessee is responsible for maintaining the property, this does not extend to fair wear and tear or structural defects. ¶ RHA and CPA do not expressly say you cannot change the default rule BUT provincial regulations may specify who is responsible for what maintenance.

Ntshipa v Andreas Supermarket 1997 – This case shows that the lessor is not entitled to cancel the lease due to the lessee not paying rent if the premises are damaged/not maintained in a good condition. This obviously does not apply if the damage is due to the lessee’s negligence. Exclusion of the duty by a...