Maphango and Others v Aengus Lifestyle Properties (Pty) Ltd

• Jurisdiction: South Africa
• Judge: Mogoeng CJ, Moseneke DCJ, Cameron J, Froneman J, Jafta J, Nkabinde J, Skweyiya J, Yacoob J, Van der Westhuizen J and Zondo AJ
• Judgment Date: 23 November 2011
• Citation: 2012 (3) SA 531 (CC)
• Docket Number: CCT 57/11 [2012] ZACC 2
• Hearing Date: 03 November 2011
• Counsel: D Berger SC (with S Wilson and I de Vos) for the applicants. WB Pye (with N Mbelle) for the respondent. H Barnes (with N Jele) for the amicus curiae.
• Court: Constitutional Court

Cameron J (Moseneke DCJ, Froneman J, Nkabinde J, Skweyiya J, Yacoob J and Van der Westhuizen J concurring): A

[1] The narrow question in this case is when a landlord may cancel a lease and evict its tenants. Behind this lies the impact of the protection B the Constitution affords against eviction. [1]

[2] The applicants are tenants in Lowliebenhof, a ten-storey block of flats in Braamfontein, in the inner city of Johannesburg. The flats are their homes, and they live there in terms of various leases. The C respondent landlord, a property investment company, bought the building, upgraded it, and then wanted to increase the rent. To do so, it cancelled the tenants' leases, but offered them new tenancies, on identical terms, though at new and much higher rents. The tenants resisted. The landlord brought eviction proceedings. The tenants lost in the South Gauteng High Court [2] and the Supreme Court of Appeal [3] and D now seek leave to appeal to this court.

[3] Although different leases are at issue, each made provision for an annual rent increase at a stipulated rate. Each also had a clause entitling either party to terminate the lease on written notice. It is the landlord's E exercise of this power that gave rise to the dispute. The landlord's case was that, since the existing leases did not allow it to increase the rents unilaterally, it was entitled to use the termination clause to oblige the tenants either to leave or to enter new leases at higher rents. The tenants' case was that the law did not permit the landlord to use the bare power F of termination for this purpose. In the high court and the Supreme Court of Appeal the tenants' argument turned largely on the Constitution, contract law and public policy. But they also said the Rental Housing Act [4] (Act) precluded what the landlord had done. The two courts of previous instance rejected all these arguments, including that based on G the Act. The tenants now seek leave to appeal to this court.

[4] This judgment holds that the statutory argument should have prevailed. The Act creates a finely balanced mechanism to resolve disputes between landlords and tenants. It offers an appropriate and fair mechanism for the resolution of this dispute. There is therefore no need H to consider the tenants' common-law and contractual arguments.

Cameron J (Moseneke DCJ, Froneman J, Nkabinde J, Skweyiya J, Yacoob J and Van der Westhuizen J concurring)

Constitutional issue and leave to appeal A

[5] The statute was enacted to give effect to the constitutional right of access to adequate housing, which includes the right not to be evicted without an order made by a court after taking into account all the relevant circumstances. Hence we have jurisdiction to determine its ambit. [5] This, together with the tenants' strong prospects, points to the B grant of leave to appeal.

The parties and their leases

[6] There are 15 applicants. [6] They have lived at Lowliebenhof for differing periods — the longest since 1994. In that time, the building has C belonged to various entities, each of which concluded the leases with the individual tenants. Ten of them — including the first applicant, Ms Ntombizodwa Mgidlana (formerly Maphango) — concluded leases with the landlord's predecessor in title, the Ithemba Property Trust (Pty) Ltd (Ithemba lease). Two tenants concluded leases with the Technical Workers' Union, a registered trade union (Union lease). One person D concluded a lease with the Artisan Staff Association (Artisan lease). Two others concluded a lease with a company called Eagle Creek Investments 128 (Pty) Ltd (Eagle Creek lease).

[7] Each lease was to run for a specified initial period, [7] during which the E landlord could terminate the tenancy for breach (these included the usual grounds: [8] non-payment of rent, damage to the premises, contravention of laws or bylaws). After this, the lease would continue on the same terms and conditions, subject to termination by either the landlord or the tenant on a specified period of written notice. [9] The Ithemba lease provided in addition that if the landlord decided after the expiry of the F initial period, but while the lease was in force, to demolish or substantially renovate the premises, it would be entitled to suspend or cancel the lease on not less than two months' written notice.

[8] The Ithemba lease, which governs the tenure of most of the applicants, has four unusual stipulations. These reflect the fact that, G

Cameron J (Moseneke DCJ, Froneman J, Nkabinde J, Skweyiya J, Yacoob J and Van der Westhuizen J concurring)

A some years before the landlord acquired the property, the building had been refurbished with Gauteng provincial housing department funds. First, the lease provides that if it was 'supported by a Department of Housing subsidy, termination shall be at the discretion of the lessee'. Second, apart from the provision for an annual rent escalation, it B provides that if a 'statutory Rental Body or Act' becomes applicable to it, the landlord 'shall be entitled' to apply to the 'competent authority' to charge a higher rent than the stipulated annual increase, and to increase the rent to the extent permitted by 'the said Act or any amendment or replacement thereof', 'subject to the approval of the competent authority C whose approval is necessary'. [10]

[9] Third, the lease provides that the landlord has the right on written notice to the tenant four years after signing the agreement to 'change the nature of [the] tenure' under the lease. The provision stipulates that the changed tenure has to be 'one of the options as defined in the Housing D Code'. The tenant has first option to take up the changed tenure. Fourth, there is a succession clause. If the tenant dies or becomes permanently disabled, then his 'wife or dependants' are entitled to continue in occupation of the premises, subject to fulfilling the terms of the lease.

E [10] The subsidy had long run out by the time of the present dispute and not all the clauses reflecting it applied. But the tenants pointed to the unusual features of the Ithemba lease to underscore their contention that the landlord's invocation of the bare power of termination was contrary to the scheme of the lease.

[11] The landlord acquires run-down inner-city buildings, some of F which it strips and refurbishes. Others it upgrades. It says its ventures are

Cameron J (Moseneke DCJ, Froneman J, Nkabinde J, Skweyiya J, Yacoob J and Van der Westhuizen J concurring)

aligned with the city's 'initiative at refurbishing and upgrading the A Johannesburg inner city'. It became involved in the management of Lowliebenhof in 2007 through an associated company. It took formal transfer of the property in 2009 and later upgraded the building. After the sale, the landlord concluded that market-related rentals in similar buildings were many times higher than the tenants were paying, and that the rent income was in any event less than the building's overheads. B

[12] In September 2008 the then landlord began giving the tenants written notice to vacate. The termination letter in each case stated that if the tenant wished to remain, he or she would be billed the increased rent. The letter made no reference to any renegotiation of the lease, or to C any other change in its terms. The implication was that the landlord was willing to retain the tenant, on identical terms to those in the lease, save only for the increased rent.

[13] The tenants resisted. On 17 September 2008 they lodged a complaint with the Gauteng Rental Housing Tribunal (tribunal), [11] D established under the Act. [12] The tribunal wrote to the landlord immediately to inform it of the complaint. It later set out the details — 'intimidation and victimizing of tenants', 'threatening to evict tenants without a court order and issuing of notices while a case lodged against you has not been finalised', and 'unfair and exploitative rental and services charges'. The tribunal asked of the landlord: 'May you please E govern yourself accordingly and know that we are attending to this

Cameron J (Moseneke DCJ, Froneman J, Nkabinde J, Skweyiya J, Yacoob J and Van der Westhuizen J concurring)

A matter.' In the meantime it requested that the landlord 'refrain from issuing eviction notices'.

[14] A mediation hearing was convened at the tribunal on 22 October 2008. The landlord said that about eight tenants attended, apparently as B representatives for about twenty tenants. There are 58 flats in the building. The mediation proceeded, but at the end the mediator recorded that the parties could not settle. [13] The tribunal therefore referred the matter for arbitration. It would appear that a date was eventually set for a hearing, namely 19 June 2009. But before a hearing C could take place the landlord went to court to evict the tenants.

Litigation history

[15] In February 2009 the landlord's predecessor in title applied for the tenants' eviction in the magistrates' court. This was after the three-month D moratorium the Act places on evictions had expired. [14] The tenants defended. In resisting summary judgment in the Ithemba and Union lease cases, the tenants objected that the proceedings were incompetent because of their pending complaint before the tribunal. [15] Their plea that suit was pending in another forum [16] was never adjudicated, E because the magistrates' court proceedings were withdrawn in May 2009. For, in the meanwhile, formal transfer of title had taken place, and the present landlord became the legal owner of the building.

Cameron J (Moseneke DCJ, Froneman J, Nkabinde J, Skweyiya J, Yacoob J and Van der Westhuizen J concurring)

The day after the magistrates' court application was withdrawn, the A landlord instituted fresh proceedings for eviction in...