Commercial Evictions are done either through the High Court or the Magistrates Court. In the Magistrates Courts the process will follow the route of a summons being issued, while in the High Court one has the election of either proceeding with a Summons or an Application. The benefit of selecting the Application procedure is that it is usually finalised much faster, granted that there are no disputes of fact in the case.
It may sometimes be useful to split the claim for arrear rental and damages from the claim for eviction as the eviction claim could be finalised much quicker. The number one priority in most evictions is to eject the tenant from the premises so that new suitable tenants can be placed, returning the property to profitability.
General Notes on Commercial Evictions
Commercial Evictions are regulated by the common law and is not influenced by PIE or ESTA. A typical commercial eviction is the ejectement of persons from office space, retail space or industrial space. In determining whether an eviction falls under Residential or Commercial, one must have regard to the use of the property. The zoning of the property and the entity of the tenant does not assist in making this determination as only the actual use is relevant.
A further issue that must be determined is whether the Consumer Protection Act (CPA) has any bearing on the Lease Agreement. Certain tenants under the CPA may have extended time to remedy any breach of the agreement, and may even have the right to terminate a fixed term lease with 20 business day’s notice. Other tenants may be excluded from the CPA.
Under the new Companies Act a company may apply for business rescue if it finds itself in a position where it cannot satisfy the demands of creditors, but has a reasonable belief that the business could be rescued. In such a case a moratorium is placed on all legal action, which means that the Landlord may not thereafter terminate the lease, start eviction proceedings or take any action to recover arrear rental while the company is under business rescue. While it is accepted that business rescue proceedings allow some businesses to return to profitability, it is often employed as a delay tactic to prevent creditors (such as landlords) from taking legal action against them and evicting them. It may be suitable in some circumstances to either co-operate with the Business Rescue Practitioner in restoring the business, or it may be feasable to approach the High Court to set the Business Rescue aside, depending on the specific circumstances. The effect of Business Rescue on the Landlord could be fatal, especially if the property in question is bonded and the Landlord does not have alternative means of making the bond payments. The Business Rescue proceedings will delay all enforcement action by at least 3 months, but in practice this often takes much longer.
When dealing with Commercial Evictions, knowledge of Insolvency law may also be necessary. In the event that a tenant liquidates, the Landlord must determine whether it will be in its best interest to lodge a claim with the liquidators. The claim may either be limited to the amount of the security held by the landlord (Legal Hypothec and Guarantees) or it may be feasable to extend the claim to the full amount. The Lanlord must however exercise caution in extending its claim into the concurrent domain as it may result in a contribution being payable to the administration costs of the Liquidation.
Protections Afforded to Tenants by the Consumer Protection ActAt the forefront of consumer protection law in South Africa is the Consumer Protection Act (the “CPA”). Section 14 of the CPA is of particular importance to the landlord-tenant relationship, but it may not...