Category Archives: Legal

Legal News on the Property Front

Recent legal developments on the property front have been attracting a great deal of attention. From Wendy Mechanic and Renette Block representing the Estate Agent end of the spectrum to Ndlambe Municipality demolishing unapproved residences. Last but not least is a breakdown of the process leading to the new steps recognising women’s property rights.

Wendy Machanik pleads guilty to theft charges

Wendy MachanikThe latest on the , former estate agent Wendy Machanik’s case is that she has pleaded guilty to 90 counts of theft, totalling R27 million, according to a recent report. Another two counts were for failing to keep accountable records of her trust account.

Due to Magistrate Phillip Venter’s concerns about terms of sentence, Machanik would only know her fate next month. Sapa has reported that Venter said she should be sentenced for two counts of contravening the Estate Agency Affairs Act separately from the 90 counts of theft, which are regarded as a common-law crime.

The plea and sentence agreement, however, stipulated that sentencing should take all 92 counts together. The case continues.

Meanwhile Jawitz Properties is taking legal action against its Jeffrey’s Bay franchise owner, Renette Block amid allegation of theft. It is also alleged that there have been misappropriations of funds held in trust and funds paid to the franchise on behalf of their clients.

Herschel Jawitz, CEO of Jawitz Properties says they were alerted to possible irregularities when their head office started receiving complaints at the end of 2011 from property owners who were not being paid their rent, which had been paid to the Jeffrey’s Bay franchise office by tenants.

The group has cancelled the franchise agreement and is seeking a court interdict against Block, preventing her from having any access to the business and the business bank accounts. Jawitz Franchise Systems has also laid criminal charges against the franchise owner Block with the Jeffrey’s Bay police.

In addition, the matter has been reported to the Estate Agency Affairs Board, the industry regulatory body, for further investigation. The EAAB has frozen the franchise’s trust account and if found guilty, Block could have her license revoked. “Our first priority is to our clients and we are doing whatever we can to manage the situation.” Jawitz told IOL.

In Ndlambe Municipality v Lester and Others’ the wall come tumbling down.

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Whether it is erecting a new building, making additions or deviating from the original plan of a house there may be the temptation to think you don’t have to abide by municipal rules.

The court is able to issue a demolition order even if the municipality has granted approval. All due processes are necessary including the neighbour’s approval as in the case mentioned above. This is according to Lanice Steward of Knight Frank Anne Porter who recently reviewed a case in the Smith Tabata Buchanan Boyes newsletter.

In the case of Ndlambe Municipality v Lester and Others, the property owner had his plans submitted and approved by the municipality.  The plan was to build a second, larger building on the property as the one that existed was too small.  The problem that arose is that a second dwelling was actually prohibited by the township conditions and a neighbour, Haslam, objected and applied, successfully, for an interdict against the building going ahead. Lester amended the plans and these (“the 2002 plans”) were also approved.

Lester then decided to proceed with a building that differed from the amended set of plans (things changed and he needed to make provision for his mother to live with him) and submitted another set, which were approved by the municipality but Haslam was never informed of the subsequent changes.

Once the building was almost complete Haslam realised the difference in plans and he brought an application to the review board because the building took away 75% of his sea view. After a series of amendments and re-submissions, which were rejected by Haslam, the last review ended in an order prohibiting the municipality from approving new plans, which meant that the only set approved were the original 2002 plans. As the building was substantially different from these, Haslam applied to the court to have the building demolished.

The court ruled in Haslam’s favour, ordering the building to be demolished, citing Section 21 of the Building Standards Act.

“The court has the discretion to issue a demolition order on a building even if the municipality has approved them, and this shows that all due processes are necessary, the neighbour’s approval in this case being the all-important step that was miss
ed,” says Steward. “There is a question to be asked here though – how did the municipality approve the plans in the first place?”
Recognition of Women’s Property Rights

Female_RoseIn recent court judgements, women’s matrimonial property rights in South Africa were recognised, according to Simphiwe Maphumulo, a director in the property and conveyancing department at Garlicke & Bousfield Inc. (Reported by Property24)

Maphumulo says that back in December 2008 the Constitutional Court delivered a milestone judgment in the case of Gumede v The President of the Republic of South Africa.

In the case the Court declared certain provisions of the Recognition of Customary Marriages Act, 1998 (the Act), inconsistent with the Constitution and invalid insofar as they did not recognise customary marriages entered into before the commencement of the Act.

Recently another matter of similar significance came before the Supreme Court of Appeal, but this time section 7(6) of the Act was under scrutiny.

That section provides that, a husband in a customary marriage who wishes to enter into a further customary marriage after the commencement of the Act must make an application to court to approve a written contract, which will regulate the future matrimonial property system of his marriages.

In this case, Ngwenyama v Mayelane & Another, a subsequent customary marriage had been concluded between the second wife and her deceased husband, but had not been preceded by the required application in terms of section 7(6).

The first wife brought an application in the Pretoria High Court to declare the subsequent marriage null and void on the basis that it lacked compliance with this section.

The High Court agreed with her and held that failure to comply with the mandatory provision of the Act cannot but lead to the invalidity of the subsequent customary marriage.

The second wife (the appellant) then appealed to the Supreme Court of Appeal against that decision and that Court was therefore faced with the task of interpreting the provisions of section 7(6) in light of the reasons provided by the Pretoria High Court in making its order.

Those reasons included a finding that failure to comply with the subsection leads to invalidity of the subsequent further customary marriage because of the peremptory language of section 7(6), i.e. the use of the word “must” and the provisions of section 7(b)(ii) which gives the Court powers to refuse to register a contract.

The High Court’s interpretation is also at odds with the Constitution and the Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW) to which South Africa is a signatory.

The Appeal Court held that the stated purpose of the Act is to regulate the proprietary consequences of customary marriages and the capacity of spouses of such marriages.

It was also noted that some authors on the topic have concluded that noncompliance with section 7(6) does not lead to the nullity of the customary marriage and that such marriages would be regarded as out of community of property.

The discriminatory interpretation of section 7(6) excluding women in polygamous marriages is deeply injurious to women in such marriages as it adversely affects them in such areas of, inter alia, succession, death or divorce.

The effect also extends to their children who would, by virtue of the disputed interpretation suddenly be rendered illegitimate.

The Appeal Court accordingly upheld the appellant’s appeal and set aside the order of the Pretoria High Court, which had declared her marriage to the deceased null and void.

It was also held by the Supreme Court of Appeal that, the second customary marriage must be out of community of property as it cannot be a marriage in community of property which would imply the existence of two joint estates.

Though a complicated weave, it’s another step forward for South African women’s property rights and for South African law as a whole.

Auctioneering in South Africa, still has one foot in the mud.

Auctioneering in South Africa is bobbing like a cork in a sea of suspicion. Let’s take  a quick look at Rael Levitt’s confession, a raid by the Hawks, a subsequent application with the Western Cape High Court; South African Institute of Auctioneers (SAIA) submits a code of conduct and is there a conflict of interest with qualifications and Tirhani Mabunda?

Rael Levitt – the confession

Rael Levitt, courtesy IOL

Rael Levitt resigned his position as CEO of Auction Alliance in February upon being accused of paying dummy bidders to hike up prices during auctions. He has confessed to using Auction Alliance employee Deon Leygonie to hike up the bidding price at the Quoin Rock estate auction in Stellenbosch in December last year.

Astonishingly Levitt says he was unaware that what he was doing was against the rules.  He clarified that it was only when bidder Wendy Appelbaum became suspicious as to whether Leygonie was a genuine bidder, questioning how above-board the process was, that Levitt chose to read the rules and discovered that it was a forbidden practice. Leygonie never actually made any real bids, he was used to push up the bid from Appelbaum’s R35 million to R55 million.

In his confession Levitt divulges that after the Auction he met with friend, Israeli businessman Ariel Gerbi who then agreed to be registered as a bidder, making it appear as if the Auction Alliance employee had been bidding on his behalf.

{Source: Eyewitness News}

The Hawks, a Raid and Court Order

The Hawks are investigating: Fraud, money laundering, and a failure to keep accurate records of business, or wilfully destroying them in their swoop on Auction Alliance House. The Hawks are also tabling the movements, travel arrangements and appointments of Rael Levitt as far back as 1993.

The Raids were conducted in early August at Auction Alliance offices in the Cape Town CBD, Levitt’s residence, the offices of accounting firm Accountants@Law, and at auditing firm KPMG. Documents included Levitt’s diaries, Credit Card receipts and other documents. Other items included any financial records “of whatsoever nature”, including records of foreign bank accounts and tax returns with a bearing on the investigation.

Auction Alliance has however launched an application with the Western Cape High Court against the Minister of Police and a Cape Town magistrate to challenge the constitutionality of search warrants authorising recent police raids. In an affidavit before court, Levitt argued most of the offences listed in the annexures did not clearly specify who was suspected.

In a two pronged approach the application firstly brought an interdict to prevent the police from viewing material seized, and a second to challenge the constitutionality of the search warrants issued. This brought pressure to bear as parties reached a settlement.

In terms of the settlement, made an order of court by Acting Judge Rob Stelzner, the police undertook to return the seized items.

The lawyers must retain the items in sealed exhibit bags until September 7, or until determination of any application for a subpoena or search warrant brought before that date. The minister has undertaken to write a “without prejudice” proposal to Auction Alliance and Levitt on how police propose to be given access to the material seized.

 Code of Conduct

In the wake of the Auction Alliance scandal, the South African Institute of Auctioneers (SAIA) has proposed a code of conduct for the auction industry. This is reported as having been widely welcomed by practising auctioneers saying new entry requirements will help regulate and stabilise the industry. The draft will first be submitted to the public consultation process to be accredited by the Department of Trade and Industry.

Moneyweb spoke to Mark Kleynhans, director of Aucor Property who has also welcomed the SAIA proposal: “Aucor Property is in support of processes and procedures that bring credibility and transparency to the auction industry and we believe that a fair and consultative course of action in order to draft an all-encompassing code of conduct is required.”

However realtor Lew Geffen believes the proposal is only an attempt at damage control due to the lack of faith the public has in the auction process. Geffen believes a statutory code is what’s really needed to deal with ghost bidding or any other dodgy practices exposed of late.

Another sentiment that has emerged is a sympathy with the what is believed to be the majority of auctioneers who are credited by many in the property business as ethical and who put clients’ interests first.

Conflict of Interest

Tirhani Mabunda, courtesy IOL

Just when you thought it was safe. Tirhani Mabunda, the chair of SAIA who is also owner of the African Training Academy and School of Auctioneering (ATASA) is accused of having a conflict of interest.

SAIA’s draft code of conduct for the industry involves entry-level qualifications for all new recruits into the sector. Those currently practising as auctioneers will need to be evaluated and if they are considered unqualified, they will have to enrol for the NQF4 and NQF5 courses as well. 60% of practicing auctioneers are considered to be in such a position according to SAIA.

The year long course for candidates to get up to speed is accredited by the South African Qualifications Authority (Saqa). Who has the accreditation: none other than, Tirhani Mabunda, and his African Training Academy and School of Auctioneering (ATASA).

When asked the obvious question by Moneyweb about a conflict of interest Mabunda said he started ATASA in May 2008 but it was only registered as a company in 2009. He became chair of SAIA in 2010. At that stage the academy mainly offered courses for estate agents. Mabunda said he started compiling the curriculum for the auctioneering course in 2009 and it was subsequently accredited by Saqa and the SETA in 2010.

With the Auction Alliance scandal came new and panicked calls for the industry to be regulated. Mabunda described to Moneyweb, allegations that his school stood to gain from the proposed code of conduct and the entry level exam as “disingenuous”.

Of course one point is that ATASA may be the only institution providing the required training currently but this does not preclude any other industry players offering the same accredited courses.

In the end the matter is perhaps more one of perception than anything else but some say that perception is everything.

It seems the auction industry is far from being out of the woods with regards to any ambitions it may have, to appear above-board and worthy of trust.

Life for Land Lords Becomes a Delicate Balancing Act.

Gone are the days when prospective landlords, commercial or residential, can buy premises, shove in some random tenants and put their feet up as they listen out for the ka-ching of the till in the back ground.

 

Some may argue that it hasn’t been that way for a while, some delight in an end to the days of the Laird and the serfs. So let’s look at a current court case, a proposed new bill and an eight year old Constitutional Court judgement.

 

Currently the case of Maphango and 17 Others v Aengus Lifestyle is before the Gauteng Rental Housing Tribunal after having been before the Constitutional Court. The case involves the Prevention of Illegal Eviction from an Unlawful Occupation of Land Act. It is an act of Parliament which came into effect on June 5, 1998, and which sets out to prevent, among other things, arbitrary evictions.

 

Briefly put: Aengus Lifestyle properties bought a rundown block of flats in Braamfontein with the view to renovating it. This isn’t a slumlord at work here but a legitimate developer. In the process, Aengus has chosen not to renew tenants’ leases as they expire.  This way the building would empty in time, renovating the units as they became empty. It also means that Aengus can charge higher rentals in line with other renovated buildings in the area. This has been a common practice in the renewal movement of inner city Johannesburg and around the world.

 

As it turns out the Constitutional Court handed down judgement on the 13 March 2012 but was a somewhat deflated one. In a majority judgment written by Justice Cameron, the Court found that that the High Court and SCA failed to give adequate weight to the Rental Housing Act and that the landlord’s conduct may have amounted to an “unfair practice”. The Rental Housing Tribunal is empowered to determine whether a landlord committed an unfair practice, and it might accordingly have ruled in the tenants’ favour. The applicants are therefore directed to lodge a complaint with the Gauteng Rental Housing Tribunal before 2 May 2012. On 2 May 2012, the complaint to the Tribunal was filed and we all wait with baited breath as to the outcome.

 

Then there’s the proposed Rental Housing Bill. The public was invited to respond to the re-drafted Rental Housing Bill that was introduced on October 28, 2011, in the National Assembly. Submissions were closed on the April 5, 2012.

 

The bill intends to regulate the relationship between landlords and penurious tenants as well as government.  Of note is the fourth chapter of the bill laying out what is referred to as Rental Housing Tribunals. These are essentially tasked with mediating on matters arising between landlords and tenants. The tribunals will have the jurisdiction in matters relating to: lack of maintenance; exploitive rentals; overcrowding and unacceptable living conditions.

 

The bill will no doubt have to be tested by cases as they surface but it is certain the relationship between landlord and tenant will change considerably.

 

Which brings us to some new attention to a 2004 Constitutional Court judgement. Many a landlord’s heart’s sank on the day that Mkontwana v Nelson Mandela Municipality made its movement through the Constitutional Court back in 2004. The knock-on effect for both residential and commercial landlords was and is far reaching.

 

Jason Lee of Rawson Property group has, among others, expressed a need to review “the situation” “especially in the current scenario where tenants are increasingly finding it difficult to pay both their rentals and their utilities accounts.” He announces on the Rawson Website.

 

For clarity: the outcome of the aforementioned case was that the landlord became responsible for all municipality service debts incurred by the tenant. The burden now rests with landlords for all water and electricity utilities run up by the occupant.

 

On the other hand landlords are not permitted to withhold water and electricity utilities from defaulting tenants. Sewage services and rubbish removal also remain in place regardless of what is owed.

 

The question raised is whether this burden on landlords and banks is too much to bear. The risk with “tenants from hell” enormous.  In the event of selling a property a rates clearance certificate is mandatory before a transfer is processed.

 

Given the current law the best landlords can do is to work very hard on background checks, demanding lengthy histories from tenants with impeccable references. In addition to this tenants will have to come up with several months in utilities and rental deposits.

 

How this will be “reviewed” as Lee puts it, is another matter. Watch this space.

 

There’s no doubt that being and landlord these days requires a very skilled tight-rope walk, delicately executed. Oh and don’t forget the net.

 

 

The City of Johannesburg in the News for all the Wrong Reasons

The City of Johannesburg seems to be in the news for all the wrong reasons, again. While the Property Owners’ and Managers’ Association (Poma) and The Johannesburg Development Agency (JDA) continue to do selfless and sterling work for the city, the council continues to dance about on thin ice.

 

Last year saw, among other things, the wrangling over The South African Property Owners Association (SAPOA) taking the City to court to set aside its budget following the city’s increase of the rate ratio applicable to commercial properties from 1:3 to 1:3.5. The additional 18% increase imposed by the City of Jo’burg burdened the commercial properties owners, and in many cases tenants, with an estimated annual over payment of R300 million according to Neil Gopal, CEO of SAPOA.

 

But the court case came to a sticky end for SAPOA in the South Gauteng High Court as the court ruled that there had been “plainly adequate publication and notification” relating to the raising of the rates in question.  Regardless, this has left a foul taste in the mouth of commercial property owners and tenants as they have to cough up the heavy increase.

 

Many developers and investors are also looking at the City of Johannesburg with a long face. Whilst pouring millions into the inner city, developers face countless red tape issues in getting plans and procedures rubber-stamped. Some developers are now holding back what they estimate that they owe in taxes, rates and services and have taken the council to court where they have cut off for non-payment. In the cases that have gone to court so far, they have not only forced the council to reconnect them but have also been awarded costs against the council. Alas, not all is well in the state of Jo’burg.

 

The Johannesburg Development Agency works like a Trojan in its visions to rejuvenate the CBD and inspire financiers to not give up on the city. “Yet their efforts are completely undermined by the [Jo’burg] council’s revenue department, which disconnects services to buildings even though accounts are paid and the courts have upheld this position.” Writes Property24’s Paddy Hartdegen.

 

The City of Johannesburg also found itself in The Constitutional Court which declared the City of Johannesburg’s housing policy unconstitutional and ordered the City to provide temporary, or ‘emergency’, accommodation to the 86 poverty stricken people living in Berea, Johannesburg.

 

The Court held that the City of Johannesburg was obligated to provide temporary accommodation to desperately poor people facing homelessness as a result of eviction. The Court also criticised the City’s failure to plan and budget for housing crises and labelled its argument that it was not legally entitled to do so “unconvincing”.

 

It seems the City feels that it is only obliged to provide temporary shelter for people it evicts from its own buildings or those deemed unsafe, not those who are left on the street as a result of legitimate private evictions. The Court declared this unreasonable and unconstitutional.

 

But on Jo’burg’s billing front a much more protracted tale of woes is playing out.  Right on the tail of Treasury and rating agencies raising concerns about The City’s financial stability, particularly regarding the low collection rates and The City’s operating margins, it was up before the National Consumer Tribunal.

 

However The City, in a bid to avoid a possible R45m in penalties, argued before the National Consumer Tribunal that complaints about inaccurate billing for water and electricity did not fall within the mandate of the National Consumer Commission.

 

The Auditor-general Terence Nombembe stirred the waters by raising concerns about the accuracy of the city’s finances in its 2010-11 audit report, based on billing discrepancies picked up during the audit.

 

Advocate Michelle le Roux, on behalf of the City of Johannesburg, said that the commission did not have valid and legal grounds to issue the city with compliance notices for 45 consumer complaints. She went on to declare that the provisions the commission relied on did not give results in prohibitive conduct as stipulated in the act. “However, if the commission had jurisdiction, then it failed to follow the required procedure before issuing the compliance notices.”

 

The point raised by the commission though was that residents were on the wrong end of rough deal and that The City has not responded in reasonable time to the resident’s queries. Delaying the issuing of transfer certificates, the point in case, has had a negative effect on the sale of property. The City admits that up to last month 109 000 enquiries remained unsettled and 56 000 of those were billing related.

 

The greatest concern in the minds of the City it seems is the criminalising of the municipality which would be referred to the National Prosecuting Authority.

 

A loud bureaucratic sounding voice came out of Advocate Ms Michelle le Roux, on behalf of the City of Johannesburg, that the service the city provided to residents ended before the invoice was issued, therefore the invoice was only a consequence of the service and could not be covered under the part of the act that deals with prohibitive conduct and the delivery of quality services. Urg, could it taste any worse: the taste of ‘pass-the-buck’ soup. The flavour of ‘not-my-responsibility’ pie. Could The City and its legal voice sound more bureaucratic, less helpful, less service orientated.

 

Ms Mohlala for the Commission summed up the attitude of The City stating that this interpretation of the act, by the city was, “superficial” and “not based on the actual reading and spirit of the act.”

 

There are 220 complaints outstanding against the City of Johannesburg, unprecedented in the history of the commission.

 

What’s next? It’s only March, it’s not a good start to the year.  Johannesburg has a long way to go before the City of Johannesburg matches the excellence and innovation of its private sector, which continues to lead the way with a disproportionately low level of help or incentive from the Metro, which has the symptoms of Apartheid era bureaucracy and Third World incompetence.

 

Jo’burg’s Housing Policy Under Scrutiny

By April this year, 86 otherwise evicted, people who live well below the breadline, should be accommodated at the behest of the Constitutional Court by the City of Johannesburg.  At the centre of this legal tussle is the matter of the constitutionality of the City of Johannesburg’s housing policy, which has been found wanting.

The Constitutional Court today declared the City of Johannesburg’s housing policy unconstitutional and ordered the City to provide temporary, or ‘emergency’, accommodation to the 86 poverty stricken people living in Berea, Johannesburg. The Constitutional Court’s unanimous judgment, written by Justice Van der Westhuizen was regarding the application of Blue Moonlight Properties to evict the occupiers from its property.

This comes at a time where Maphango and 17 others verse Aengus Lifestyle Properties comes up before the constitutional court. Those with property investments, landlords in poorer residential communities in particular, have their eyes cocked toward the outcome. The difference between the two cases though is that Maphango and the 17 are paid up lease holding flat dwellers having their leases terminated. The Berea 86 are poverty stricken families that have sought shelter in what are squalid conditions but who don’t want to move because they would be homeless and away from their sources of income.

The Court held that the City of Johannesburg was obligated to provide temporary accommodation to desperately poor people facing homelessness as a result of eviction. The Court also criticised the City’s failure to plan and budget for housing crises and labelled its argument that it was not legally entitled to do so “unconvincing”. It seems the City feels that it is only obliged to provide temporary shelter for people it evicts from its own buildings or those deemed unsafe, not those who are left on the street as a result of legitimate private evictions. The Court declared this unreasonable and unconstitutional.

Similarly prospective landlords who purchase property aware that it is occupied “may have to be somewhat patient and accept that the [owner’s] right to occupation may be temporarily restricted” in the event that the eviction lead to homelessness.

Therefore the Constitutional Court has ordered that alternative accommodation be made available in a location as near as possible to the Berea property. Having done so the occupants are expected to vacate and move to that accommodation.

Executive director of the Socio-Economic Rights Institute of South Africa (SERI) Jackie Dugard said “the City has been in a state of denial about the needs of poor and desperate people under threat of eviction by private landlords within its jurisdiction. That must now end. The Court has recognised that the state has obligations towards poor people regardless of whether a state or private entity evicts. The City must begin to engage actively with its obligations and budget to give effect to them.”

Morgan Courtenay, the occupiers’ attorney at the Centre for Applied Legal Studies (CALS) said “this is a huge victory for the poor generally and for the occupiers in particular. We call on the City of Johannesburg to immediately take steps to implement the Court’s order and to carefully consult with the occupiers and their representatives to this end”.

 

Although quite a different case, the similarities of which leaves one curious as to which way the Constitutional Court will swing with the Maphango and 17 Others v Aengus Lifestyle Properties. The consequences for landlords in particular and South African property in general would be sweeping in the event of a favourable decision for the tenants. Whatever the outcome South Africa’s Constitutional guarantee that everyone has the right to housing is being challenged on all levels.

 


PIE, Prevention of Illegal Eviction from an Unlawful Occupation of Land Act – Challenged

“If you wish to make an apple pie from scratch, you must first invent the universe.” Carl Sagan. Up until now, and some hope it continues, PIE was all you needed in dealing with an unscrupulous landlord. Similarly PIE protects landlords from unlawful occupation.

 

PIE, the Prevention of Illegal Eviction from an Unlawful Occupation of Land Act. Itis an act of Parliament which came into effect on June 5, 1998, and which sets out to prevent, among other things, arbitrary evictions.

 

This may all change if the complainants of the Maphango and 17 Others v Aengus Lifestyle Properties case before the constitutional court have their way. There are currently 11 constitutional court judges contemplating this case. Those with property investments, landlords in poorer residential communities in particular, have their eyes cocked toward the outcome.

 

PIE governed landlords rights could be permanently altered. Trudie Broekmann, commercial director for Gunstons Attorneys’, has been quoted as saying: “But community and human rights organisations representing indigent tenants are hoping that the judgement will provide extended security of tenure for the urban poor, who often “fall between the cracks” because housing law does not protect them.”

 

Aengus Lifestyle properties bought a rundown block of flats in Braamfontein with the view to renovatingit; this isn’t a slumlord at work here but a legitimate developer. In the process, Aengus has chosen not to renew tenants’ leases as they expire.  This way the building would empty in time, renovating the units as they became empty. It also means that Aengus can charge higher rentals in line with other renovated buildings in the area. This has been a common practice in the renewal movement of inner city Johannesburg and around the world.

 

However tenants are people and people have lives. As it turns out Loliebenhof, the building in question, has some very fine occupants. Firstly they are tenants of long-standing, some as long as 18 years. Secondly they are on record as being regular, prompt rent payers.  These aren’t squatters or criminals but law abiding citizens. Their argument is that they are not in a position to occupy similar accommodation elsewhere.

 

As it turns out the leases, which were fixed term, ceased to be current upon Aengus’ purchase of Lowliebenhof. The result was that the tenants were continuing to be tenants subject to either party’s right to terminate on reasonable notice. Notice was given with the offer of a new lease at rental increase of up to 150%. Under the South African law of contracts, landlords do not have to renew a lease upon expiration, although reasonable notice of termination must be given.

 

The case was then brought before Justice A.J. Van Der Riet of the South Gauteng High Court, and to quote the Southern African Legal Institute:  “First, that the respondent’s purported termination of the leases was invalid. Second, that, even if the leases were validly terminated, it would not be just and equitable to evict them from the flats. For the second ground they relied on the provisions of s 4(6) of the Prevention of Illegal Eviction from, and Unlawful Occupation of, Land, Act 19 of 1998, that generally became known as PIE.” A.J. Van Der Riet dismissed the case.

 

The Lowliebenhof tenants’ leases were validly terminated and eviction has been permitted.Currently the tenants are relying on section 26 of the Constitution, which guarantees each person’s right to have access to adequate housing.

 

The case went before the Supreme Court of appeal and was heard on the 11th of May 2011. By the 1st of June Justice JA Brand dismissed the appeal.  Justice Brand ended his judgement with:”The court held that, since the appellants raised important constitutional issues, they should not be burdened with costs. It therefore makes no order as to costs. “

 

Clearly Justice Brand sees the matter in a more serious light than just another case, but rather a case “that raised important constitutional issues” and needs to be tested before the constitution.

So the Constitutional Court will be aiming at balancing the interests of landlords and tenants. The exact nature of ones constitutional rights to adequate housing, or education and healthcare for that matter, are still being processed before South African courts. The United Nations has prescribed that ‘irrespective of the type of tenure, all persons should possess a degree of security which guarantees legal protection against forced eviction, harassment and other threats’.

 

Trudie Broekmann commercial director for Gunstons Attorneys’ has been quoted as saying: “If the Constitutional Court comes to the conclusion that it will advance access to adequate housing to grant tenants housing rights that extend even after their leases have elapsed, this case will certainly set a precedent and make landlords’ obligations more onerous.”

 

The consequences for landlords in particular and South African property in general would be sweepingin the event of a favourable decision for the tenants. Some would argue that human rights and championing the cause of the vulnerable would have won. On the other hand urban decay may be seen as having won the day with the renovation of buildings becoming more difficult and less financially viable due to deeply rooted occupants.

 

PIE may have become a redundant meal in the world of property law.