Youngleson Investments (Pty) Ltd v South Coast Regional Rent Board and Another; Graham Properties Ltd v South Coast Regional Rent Board and Another

• Jurisdiction: South Africa
• Citation: 1971 (1) SA 405 (A)

Youngleson Investments (Pty) Ltd v South Coast Regional Rent Board and Another; Graham Properties Ltd v South Coast Regional Rent Board and Another
1971 (1) SA 405 (A)

1971 (1) SA p405

Citation	1971 (1) SA 405 (A)
Court	Appellate Division
Judge	Van Blerk ACJ, Rumpff JA, Wessels JA, Potgieter JA and Corbett AJA
Heard	September 22, 1970
Judgment	November 17, 1970

Flynote : Sleutelwoorde

Landlord and tenant — Rents Act, 43 of 1950, as amended. G — Rent control — Determination of "reasonable rent" in respect of flats in composite premises, partly controlled and partly not — Objective of Rent Board — "Reasonable rent" and "value" — Meaning of in sec. 1 (ix) and (xiii) — Board adopting wrong approach in certain respects but owners not prejudiced — Application to have determinations H set aside rightly dismissed.

Headnote : Kopnota

The appellants were each, respectively, the owners of composite buildings consisting of business premises and flats. The approach followed by the Rent Board and confirmed by the Control Board, in determining a reasonable rent for the controlled premises, i.e. the flats, was as follows: 1. The Rent Board determined the reasonable rent value of the whole premises as if the provisions of the Rents Acts applied to such premises as a whole. 2. Having made this basic determination of the rent value of the whole premises, the Rent Board proceeded to determine a reasonable rent for such premises,

1971 (1) SA p406

again as if the provisions of the Rents Act applied to the whole premises. 3. Having so determined a reasonable rent for the whole premises, the Rent Board proceeded to an allocation thereof as between the controlled premises (the flats) and that portion of the premises to which the provisions of the Rents Act did not apply (the business premises). It determined that the rent in fact being charged for the business premises was a A reasonable quid pro quo therefor, and accordingly allocated that amount to the business premises. 4. The amount of the rental thus allocated to the business premises was then deducted from the amount of the reasonable rent determined for the whole premises, the balance constituting the reasonable rent for the totality of the controlled premises (i.e., the flats as a whole). 5. Thereafter the Rent Board completed its task by determining a reasonable rent for each flat in the premises by allocating to each flat a portion of the reasonable B rent determined in respect of the totality of controlled premises. Appellants thereafter each separately instituted review proceedings in a Local Division claiming an order setting aside the determinations in respect of their own premises. The respondents opposed the relief claimed, and both applications were dismissed, the Court holding that neither applicant had been prejudiced notwithstanding the fact that the respondents had erred, after first making the determinations detailed in paragraphs 1 and 2 above, by acting arbitrarily in respect of the further determinations as summarised in C paragraphs 3 and 4 above. In an appeal, it was conceded on behalf of the respondents that they had erred in this respect.

Held, as the rent actually being charged for the "uncontrolled" portion of composite premises could hardly ever be a relevant consideration in the determination of a reasonable rent for the "controlled" portion thereof, that the concession had rightly been made.

Held, further, however, on the facts, as the appellants had not D been prejudiced, that their applications had rightly been dismissed.

The history of the Rents Act, 43 of 1950, as amended, set out and the definitions of "reasonable rent" and "value" in section 1 (ix) and (xiii) of the Act analysed.

In determining the value of land and buildings in composite premises the objective of the Rent Board must in every case be E the ascertainment of a reasonable rent value upon which the determination of a "reasonable rent" for the "controlled premises" in question can be made. The provisions of the Rents Act offer very little real guidance to it, except in so far as relatively uncomplicated cases are concerned.

Semble : It would appear that present day circumstances urgently require that the Legislature should in the field of legislation grapple with the problems which arise in regard to the determination of reasonable rents in the case of composite premises.

F The decision in the Durban and Coast Local Division in Youngleson Investments (Pty.) Ltd. v. South Coast Regional Rent Board and Another; Graham Properties Ltd. v. South Coast Regional Rent Board and Another, confirmed. G

Case Information

Appeal for a decision in the Durban and Coast Local Division (HENNING, J.). The facts appear from the judgment of WESSELS, J.A.

D. J. Shaw, Q.C. (with him K. R. McCall), for the appellants: In order to fix a "reasonable" rent as defined the Rent Board had to determine the value of the buildings and the value of the land, which, in terms of the definition as amended by sec. 1 (e) of Act 47 of 1964, provide the basis of certain H components of the reasonable rent and not, as before the 1964 Act, merely the basis for the maxima of those components. Lukral Investments v. Rent Control Board, Pretoria, 1966 (1) SA 496. "Value" is defined in sec. 1 (xiii) only in relation to controlled premises. Where there is no Rent Board constituted having jurisdiction over business premises, the Act does not apply at all in relation to business premises; see sec. 33 (1) (a) read with sec. 4 (2). The steps to arrive at a "reasonable rent" were not justified or warranted by the Act. The fact that difficulties are caused in the case of composite premises, see e.g.

1971 (1) SA p407

Ark Co. v. Johannesburg Rent Board, 1941 W.L.D. 114; Lukral Investments (Pty.) Ltd. v. Rent Control Board, Pretoria, 1969 (1) SA 496, does not warrant the approach taken, nor does Vandayar v. Port Elizabeth Rent Board, 1951 (1) SA 909, assist where part of the building was not controlled. The A difficulties arising in the case of rating, see Durban Corporation v. Lincoln, 1940 AD 36, do not justify the approach resorted to. The view that the appellants were not prejudiced and therefore that the applications for review should not succeed is erroneous on three grounds: (1) (i) The appellants are entitled to have the rental properly determined in terms of the law. If it is not so determined the B determination should be set aside. (ii) At the highest, in favour of the respondent, if the respondent were to show, (a) what a proper determination is; and (b) that this is equal to or is less than the amount actually determined, then there might be a basis for refusing to set aside the determination at the instance of the appellants. See Jockey Club of South Africa v. Feldman, 1942 AD 340; Le Roux v. Grigg-Spall, 1946 AD C 244; Estate Geekie v. Union Government, 1948 (2) SA 494; Margate Hotel v. Town Council, Borough of Margate, 1961 (1) SA 384.

The Rent Board's only right to determine the rent is to determine a reasonable rent. If, therefore, the agreed rent at the date when the premises became subject to the Act is deemed D to be the rent determined by the Board (as is provided by sec. 35 of Act 70 of 1968) then it follows that that is the reasonable rent. Subsequent adjustments must proceed on that basis. It is clear that the intention of the amendment with regard to interest rates by sec. 1 (c) of Act 54 of 1966 was intended to safeguard the lessor. If the appellants' E submissions are not adopted then this safeguard is rendered nugatory. The Rent Board was bound to determine the value of the "controlled premises". It did not attempt to do so, except perhaps inferentially by working back from the portion of the rental allocated to the controlled premises, which is clearly improper: Durban Rent Board v. Edgemount Investments, 1946 AD 962.

R. C. C. Feetham, S.C. (with him M. L. Mitchell), for the F respondents: The first and second respondents' approach in determining a "reasonable rent," was correct in so far as the first and second steps are concerned. It is not possible to determine the value of part of a multi-storeyed building and a portion of the land attributable to such part separately from G the rest of the building and the rest of the land, cf. Durban Corporation and Another v. Lincoln, 1940 AD 36. The difficulties that arise in dealing with composite premises are apparent from: Ark Co. v. Johannesburg Rent Board, 1941 W.L.D. 114; Lukral Investments (Pty.) Ltd. v. Rent Control Board, Pretoria and Others, 1969 (1) SA 496. The approach of the first and second respondents in taking the first and second H steps is supported by Vandayar v. Port Elizabeth Rent Board and Another, 1951 (1) SA 909, notwithstanding the differences in the provisions of the statute which applied then from those that apply to the present two cases. The approach of the first and second respondents with regard to the third and fourth steps was not correct. The proper way in which the reasonable rent for the whole premises should have been allocated between the controlled and uncontrolled premises in both the cases before the Court was on a square footage basis.

1971 (1) SA p408

Neither appellants has suffered any prejudice and each application for review in the Court a quo was bound to fail. Rajah & Rajah Ltd. v. Ventersdorp Municipality, 1961 (4) SA 402. Although sec. 33 (1A) (d) of the Rents Act, 43 of 1950, as A inserted by sec. 35 of the General Law Amendment Act, 70 of 1968, provides that the rent charged at the date when the premises became subject to the Act, is deemed to be the rent determined by the rent therefor, it does not follow that the rent charged is the "reasonable rent", as contended by the appellants. As to the "value", what has to be considered is the "value" of the premises at the time...