#Covid19 – What are landlords and tenants to do now?

#Covid19 – What are landlords and tenants to do now?
09 Apr 2020

Lately both landlords and tenants are concerned about the future. Landlords are seriously at risk of losing tenants in mass or having to deal with mass evictions and tenants trying to survive Covid 19.

First things first though… The starting point first is to establish what is a force majeure or vis major. In Joint Venture between Aveng (Africa) (Pty) Ltd and Strabag International GmbH v South African National Roads Agency SOC Ltd and another, it is commonly accepted that a qualifying event (a force majeure or vis major) is one that is:

a. unforeseeable (at the time of entering into the Contract),
b. unavoidable in terms of occurrence or impact and
c. impossible to overcome.

With that said, in Transnet Ltd t/a National Ports Authority v Owner of mv Snow Crystal, the Supreme Court of Appeal stated that there is a need to:

a) look to the nature of the contract,
b) the relation of the parties,
c) the circumstances of the case, and
d) the nature of the impossibility invoked by the defendant, to see whether the general rule ought, in the particular circumstances of the case, to be applied.

As such, each matter should be individually assessed with due consideration to the below.

Beneficial Occupation

In Zweigenhaft v Rolfes, Nebel & Co., a Government Resolution of the late South African Republic closing all premises licensed for the sale of liquor constitutes such vis major in the case of premises let as a bar. A lessee who cannot use the property for the purpose it was intended would entitle him to remission of rent, is also not obliged to use the property for any other purpose.

The Court stated that: “Where the enjoyment of property for the purposes for which it was let is hindered or prevented by some vis major happening, without the default, actual or constructive, of either lessor or lessee, the latter may claim a remission of rent for the period during which the enjoyment is so hindered.”

A right to reduced rent or rental holidays?

In Hay v the Divisional Council of King William’s Town the court stated that:

“Where the law imposes a duty, and the party is disabled from performing it, without any default of his own, by the act of God or the Queen’s enemies, the law will excuse him; but where a party by his own contract creates a duty or charge upon himself, he is bound to make it good, notwithstanding any accident by inevitable necessity.”

What is more, in Mountstephens & Collins v Ohlssohn’s Cape Breweries our courts noted remission for rental in the circumstances where beneficial occupation is absent: “… that a lessee is entitled to remission of rent wholly or in part where he has been prevented wholly or to a considerable extent in making use of the property for the purposes for which it was let, by some vis major or casus fortuitus, provided always that the loss of enjoyment of the property is the direct and immediate result of the vis major or casus fortuitus, and is not merely indirectly or remotely connected therewith….”

Conclusion

Each situation should be assessed with due consideration to its own merits, and consider amongst other aspects, the following:

1. If there was a force majeure or vis major event;
2. Whether beneficial occupation has been deprived and it is not the doing of the tenant; and
3. Whether the performance is impossible, not just difficult and assessed on the reasonableness thereof.

Landlords and tenants are urged to negotiate and find mutually feasible ways in dealing with this devastating situation. For more information or to mediate your agreement contact SchoemanLaw Inc.

See also:

(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)
Nicolene Schoeman-Louw
Nicolene Schoeman-Louw

Mrs Nicolene Schoeman – Louw founded the firm in 2007, aged 24, and is now the Managing Director of the firm. Nicolene is an admitted Attorney of the High Court...

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