REUTERS/Clodagh Kilcoyne
REUTERS/Clodagh Kilcoyne

Rental tribunals bound by legal principles, rules, procedures

By Opinion Time of article published Oct 21, 2020

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By Dr Sayed Iqbal Mohamed

The provincial rental housing tribunals, although empowered by legislation to do all things possible to terminate an unfair practice between landlord and tenant, are bound by legal principles, rules and procedure.

According to the Rental Housing Act 50 of 1999, an unfair practice arising from a residential lease agreement must be determined by the tribunal (13(9). It defines “unfair practice” as (a) any act or omission by a landlord or tenant in contravention of this act; or (b) a practice prescribed as a practice unreasonably prejudicing the rights or interests of a tenant or a landlord.

Section 13(4)(c) of the act states the tribunal can make any other ruling that is just and fair to terminate any unfair practice, including, without detracting from the generality of the aforegoing, a ruling to discontinue - (i) overcrowding; (ii) unacceptable living conditions; (iii) exploitative rentals; or (iv) lack of maintenance.

In resolving an unfair practice, the legal procedure is that the parties before the tribunal must be properly represented. Where the parties are individuals, they will appear before the tribunal in their individual capacities as tenant and landlord. These individuals would have legal capacity to conclude the lease agreement. At the tribunal, they may be legally represented, unlike in the small claims court where legal representation is not allowed.

The person representing a legal entity or a trust as landlord or tenant to a lease will have to demonstrate that she or he has proper written authorisation or mandate. This will indicate the legal capacity of the representative of the legal entity, such as a company or a body corporate.

There are individuals who do not have the legal capacity to enter into a contract. A minor, for example, who is a person younger than 18 years, does not have legal capacity and will therefore not be a party to a lease agreement. Also excluded from contracting is a person who is mentally challenged or ill (for example, an insane person). A drug addict or an intoxicated person cannot contract either. Such a person does not have the capacity to conclude a contract, because she or he is unable to understand or reason due to the serious state of intoxication or such a state of mind brought about by alcohol or drugs.

Once the legal capacity is established, the next important aspect of representation is the authorisation. If the contracting party is a company or close corporation, as a legal entity or a legal persona, its directors or members, respectively, must give permission to the person who is going to represent it. This is done through a company resolution or minutes of a meeting of the close corporation, authorising the representative. In the same way it authorised a person to enter into a lease contract, it will so authorise a person to take legal action or lodge a complaint with the tribunal or defend any legal action.

The situation is different when the contracting party is a trust. Unlike a company or a close corporation that is cited as a party, a trust is not a legal persona or a juristic person. It cannot own property, since it is an accumulation of assets. Property is held by the trustees.

“(A trust) is an accumulation of assets and liabilities. These constitute the trust estate, which is a separate entity. But, though separate, the accumulation of rights and obligations comprising the trust estate does not have legal personality. It vests in the trustees, and must be administered by them - and it is only through the trustees, specified as in the trust instrument, that the trust can act” - in Nedbank v Trustees for the time being of The Mthunzi Mdwaba Family Trust and Others (2019) ZAGPPHC 336.

Trustees are required to follow legal procedures (Thorpe and Others v Trittenwein and Another [2006] 4 All SA 129 (SCA)) and a trustee or trustees will conclude a lease agreement. The trust deed is central to powers of trustees and how decisions are to be made. Chief Justice Steyn in Commissioner for Inland Revenue v Macneillie’s Estate [1961] 4 All SA 27 (A) confirmed that a trust is not a legal entity: “[a] trust, if it is to be clothed with juristic personality, would be a persona or legal entity consisting of an aggregate of assets and liabilities. Neither our authorities nor our courts have recognised it as such a persona or entity It is trite law that the assets and liabilities in a trust vest in the trustee.”

Would authorisation be required for a municipality? A municipality as a landlord may be the complainant or a respondent at the tribunal in respect of an unfair practice complaint. It cannot become a party to legal proceedings unless a proper resolution is taken empowering a particular individual to act on its behalf.

Acting Judge Patel in Kritzinger v Newcastle Local Transitional Council and Others 2000 (1) SA 345 (N) at 349 held that it was a trite proposition of the law that artificial persons must duly authorise their employees either to institute or defend proceedings. An authority to act on behalf of an artificial person such as a company or a municipality is, according to the best evidence rule, established by a resolution of the entity concerned.

Parties to a lease agreement as legal entities or trusts must ensure that proper authorisation is provided to represent their interests at the tribunal.

*Tenants who need advice during the lockdown can WhatsApp Pretty Gumede at 0713465595, Loshni Naidoo at 0714445671, or email [email protected] and Dr Mohamed at [email protected]

Dr Sayed Iqbal Mohamed is the chairperson of the Organisation of Civic Rights and deputy chairperson of the KZN Rental Housing Tribunal. He writes in his personal capacity.

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