Consumer Protection Act – Leasing

There has been much discussion and debate about the applicability of the Consumer Protection Act 68 of 2008 (CPA) to leases of immovable property. The view has been expressed that one large landlord needs worry about the CPA, and those which lease only a single property (or a few) do not need to worry. The author believes that this is a terribly inaccurate position to adopt.

The CPA plainly states that it applies to leases (defined as a “service”) provided the leases are concluded “in the ordinary course of the supplier’s business”. This phrase is not defined, though the word “business” is defined as “the continual marketing of any goods or services …”

The CPA must be interpreted purposively to achieve its primary objective, namely: To afford consumers the maximum protection.

It would make little sense if the question of whether the CPA applies would turn solely on whether the supplier is in the “business” (in the conventional sense of the word) of entering into leases, especially because most leases are not concluded between landlords falling into that category. Indeed, a large number of consumers would be excluded from its ambit if this was the case.

This is where foreign law is instructive. Section 2(2) of the CPA requires a court to consider the following when interpreting the provisions of the CPA.
1. appropriate foreign and international law;
2. appropriate international conventions, declarations or protocols relating to consumer protection.

Foreign law indicates that a somewhat broad interpretation is given to the phrase “ordinary course of business” in the context of consumer protection legislation. The Solicitors Journal (UK) contains an article discussing the Unfair Terms in Consumer Contracts Regulations 1999 (the Regulations) and which explains succinctly that “The supplier must enter into the contract as part of their course of business. This should usually be easy to satisfy in tenancy cases, as rarely will property be let other than in the course of business.” Of course, as a matter of common knowledge, very few leases (at least in the residential context) are entered into with landlords holding large portfolios of property. Despite this fact, the article concludes that on the proper interpretation of the applicable consumer protection legislation, it should apply.

In summary, the author is of the view that out of caution (and also probably because it is the most likely interpretation) it should generally be assumed that the CPA applies to leases, regardless of the size of the landlord’s leasing.