In his article entitled 'Consumer act excludes immovable property lease' in the June 2011 Business Day Business Law & Tax Review Mr Patrick Bracher writes that '[t]he Consumer Protection Act does not apply to immovable property leases.' Why? The question is answered with an unequivocal 'the act says so'.

Bracher is presumably referring to sub-section (f) of the definition of 'services' which provides that services include 'a right of occupancy of, or power or privilege over or in connection with, any land or other immovable property, other than in terms of a rental'.

This is unfortunately not the only section of the CPA which must be considered when determining whether the CPA applies to leases of immovable property. Sub-section (f) is immediately preceded by sub-section (e)(v) which states that services include the provision of 'access to or use of any premises or other property in terms of a rental'. In Bracher's article lease is defined as 'an agreement in terms of which temporary possession of any premises or other immovable property is delivered to the consumer for consideration'. This definition is presumably gleaned from the definition of rental which is found in section 1 of the CPA. The definition goes further to exclude 'lease' in terms of the National Credit Act, which is a reference to movable property bought through so-called hire-purchase agreements, i.e. agreements where ownership of the property passes to the consumer at the end of the term of the agreement. The conclusion is therefore inescapable that on the plain wording of the CPA leases for immovable property are included within its ambit. Why? Because sub-section (e)(v) of the definition of services says so.

Bracher then points out that the application of the CPA to leases leads to certain 'absurdities'. He specifically refers to the fact that the Act fixes a maximum term for leases of 24 months unless the supplier can show a demonstrable financial benefit to the consumer. Here I have to agree.

The application of the CPA to leases is ill-advised to say the least. However, Bracher is mistaken in elevating this 'absurdity' to a reason for why the Act does not apply to leases. At best it is a reason for why the Act should not apply to leases, but elevating this to a reason for arguing that it does not flies in the face of what is referred to as the 'golden rule' of statutory interpretation. The classical formulation of this rule is that 'the grammatical and ordinary sense of the words is to be adhered to, unless that would lead to some absurdity, or some repugnance or inconsistency with the rest of the instrument, in which case the grammatical and ordinary sense of the words may be modified, so as to avoid the absurdity and inconsistency, but no farther.' (Venter v Rex 1907 TS 910 914) The Supreme Court of Appeal has pointed out that it is 'not the function of a court [or an attorney] to do violence to the language of a statute and impose its view of what the policy or object of a measure should be.' (Standard Bank Investment Corporation Ltd v Competition Commission; Liberty Life Association of Africa Ltd v Competition Commission 2000 (2) SA 797 (SCA) 810D) Given that the language of the CPA clearly and unambiguously extends its application to leases of immovable property, the absurdity of this policy decision has no bearing on the interpretation of the Act. Bracher also points out that leases are already regulated by the Rental Housing Act 50 of 1999.

This is correct. Section 2(9) of the CPA governs situations where there are inconsistencies between two Acts. Where the acts can apply concurrently they will. If they cannot apply concurrently, the act giving the greater protection to the consumer will be applied. Of course the Rental Housing Act only applies to leases for 'housing purposes' thus making its application more limited than that of the CPA. The Rental Housing Act also does not make provision for the cancellation rights contemplated in section 14 of the CPA. There is therefore no inconsistency between the acts. Rather, the Rental Housing Act falls short of the level of protection contemplated by the CPA. Therefore the acts will apply concurrently and there is no room to argue that the existence of the Rental Housing Act excludes leases from the ambit of the CPA. This unfortunate, but inescapable reality has caused considerable consternation in the property sector. The South African Property Owners Association (SAPOA) have approached the Department of Trade and Industry in order to obtain clarity regarding the application of the CPA to the property industry in general, given that the CPA will apply to sales of immovable property, and leases in particular. (SAPOA press release dated 11 May 2011)

The effect which section 14 (the right to terminate a fixed term agreement on 20 business days' notice) will have on the property sector is unfortunate indeed, but to boldly state that this leads to the conclusion that the Act does not apply to leases of immovable property is irresponsible. It may be that the Minister of Trade and Industry will grant an exemption from section 14 in respect of leases, but given that the absurdity of the application of the Act to leases was pointed out repeatedly during the drafting process coupled with the fact that the Rental Housing Act does not give similar rights to consumers makes this seem unlikely. In the interim landlords should be advised to ensure that their lease agreements comply with the CPA. It does apply. Because it says so.

- Elizabeth de Stadler (June 2011)

**Please note that these comments are summarised, may not be applicable to your particular situation and do not constitute legal advice. Please consult your legal professional should you wish to obtain a formal legal opinion.**