It is an offence under the Act for a person to erect a building without approved plans and for persons to occupy or use such building without a certificate of occupancy having been issued by the local authority.
A person guilty of an offence under the Act may be liable for a fine not exceeding R4 000 or to imprisonment not exceeding 12 months.
What are we then to make of lease agreements concluded in respect of buildings lacking a certificate of occupancy?
Will that lease agreement be valid and enforceable? This is a question that the Supreme Court of Appeal (SCA) in Weirda Road West Properties (Pty) Ltd v Sizwe Ntsaluba Gobodo Inc was called on to decide last year.
In that case, the landlord was attempting to recover significant arrear rental from a tenant that had by that stage vacated the leased premises.
The tenant defended the claim, contending that it was not liable for the payment of rental since no certificate of occupancy had been issued for the building.
The argument, so it went, was that the effect of the aforesaid prohibitions contained in the Act rendered any lease agreement concluded in respect of such a building invalid and of no force or effect.
The SCA held that the Act does not expressly prohibit the occupation of a building without a certificate of occupancy having been issued, but merely creates a statutory offence in those circumstances.
The SCA found no basis to justify reading such an implied meaning into the relevant section of the Act.
In reaching its decision, the SCA overruled a previous decision of the Western Cape High Court in which it was determined that the use and occupation of a building erected without approved plans was, by implication, prohibited by the Act.
The SCA considered what the legislature’s intention was in drafting the Act and determined that it was not intended for an act or contract to be invalid only for want of compliance with the provisions of the statute.
The SCA held that the Act made sufficient provision for penalising non-compliance and that it was not necessary to impose the additional sanction of invalidating an agreement relating to such non-compliance.
The SCA has, accordingly, provided clarity on the issue with the result that lease agreements concluded in respect of buildings which have no approved plans, and/or no certificate of occupancy, are valid and binding.
This decision notwithstanding, landlords would do well to ensure compliance with the Act to avoid incurring the statutory penalties contemplated therein.
* Philip Thompson is a partner at Cox Yeats Attorneys, where he specialises in construction litigation and alternative dispute resolution. Thompson practises in the Hay Construction Team. He can be contacted on 031 536 8500, email: [email protected]
Chantal Da Silva is an associate at Cox Yeats, practising in the Construction, Engineering and Infrastructure Team. She can be contacted on 031 536 8500, e-mail: [email protected]