“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” (attributed to Mark Twain)
A married couple moved to Australia and rented out their South African family home while they tested the waters Down Under. Years later, once they had decided to remain abroad, they sold the property and gave their tenant notice under a clause that allowed them to cancel the lease on three months’ written notice.
The tenant argued that the lease was protected by the Consumer Protection Act (CPA) and could only be cancelled if he had materially breached it.
A recent Supreme Court of Appeal decision explains why the tenant’s CPA argument failed, but also why the landlords could not require him to vacate without following the proper eviction process.
Not every landlord is in the letting business
For a residential lease to fall within the CPA’s definition of a rental, the letting must take place in the ordinary course of business.
The court found that the couple were not in the business of letting property. They had let out their own home as a temporary measure while deciding whether their move abroad was permanent, not as part of an ongoing letting business.
They were not continually marketing rental services and were therefore not suppliers as contemplated by the Act. Their tenant, in turn, did not qualify as a consumer. On this basis alone, his reliance on the Act failed.
Where the line actually falls
Whether a lease falls within the CPA depends on its factual setting. What matters is whether letting property forms part of the landlord’s ordinary, continuing business activity.
A court must look at what business the landlord actually carries on and how that business operates. The fact that rent is being paid does not settle the question on its own.
A valid cancellation does not authorise an eviction
The High Court upheld the cancellation of the lease and ordered the tenant to leave by a fixed date.
The Supreme Court of Appeal set that order aside. Requiring the tenant to leave was, in effect, an eviction order, but the process required under the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act (PIE) had not been followed.
Under PIE, a court must decide whether eviction is just and equitable and determine an appropriate date for the tenant to leave.
A landlord therefore cannot treat cancellation of a lease as an automatic eviction. Cancelling the lease and evicting the tenant are two separate legal steps.
Two questions, not one
For landlords and tenants alike, the lesson is to keep these questions separate. First ask whether the lease falls within the CPA by looking at the nature of the landlord’s letting activity. Then, if the lease has ended and the tenant remains in occupation, the eviction process must still be dealt with under PIE.
A cancelled lease ends the contract, but it does not remove the tenant.
Not sure whether the CPA applies to your lease or whether the correct eviction process has been followed? Speak to us before taking the next step.
Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact us for specific and detailed advice.
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