The effect of force majeure on the rights and obligations relating to monthly rental. Private and commercial landowners have a right to receive prompt and regular rental payments under a lease agreement.
Failure to pay rental promptly and in full will usually constitute a breach of the lease, which in turn could entitle the landowner to cancel the lease, evict the tenant and claim arrear rental and damages from the tenant.
Does COVID-19, the lockdown or the state of disaster entitle tenants to withhold rent?
South Africa’s laws around impossibility of performance derives from English law. The interchangeable terms force majeure (French) and vis major (Latin), which means ‘major force’, and casus fortuitus (Latin for ‘accidental occurrence’), refer to a supervening event which prevents performance under a contract.
South African law does not automatically apply force majeure principles to contracts. Parties must specifically include it in their contracts and must spell out what exactly constitutes force majeure in the contract itself. The same applies to lease agreements.
If the contract is silent on force majeure, then the tenant may not withhold rent.
If the contract does include a force majeure clause, and if all the requirements of force majeure are met, then the tenant may withhold rent in part or entirely.
Requirements of Force Majeure
- Performance must be objectively impossible and not merely cause an inconvenience or disturbance in the performance of obligations;
- Impossibility must be absolute as opposed to probable;
- It must be absolute as opposed to relative, in other words, if it relates to something which can be done in general, but the one seeking to escape liability cannot do it personally, then such party remains liable in contract;
- The impossibility must be unavoidable by a reasonable person;
- It must not be the fault of either party If the impossibility could or should have been foreseen, then the party remains liable;
- The mere fact that a disaster or event was foreseeable, does not necessarily mean that it ought to have been foreseeable or that it is avoidable by a reasonable person.
In the 2019 case Joint Venture between Aveng (Africa) (Pty) Ltd and Strabag International GmbH v South African National Roads Agency SOC Ltd and Another, the court went further and noted, in obiter remarks, that a party seeking to escape liability should make an effort to overcome the impossibility. It cannot simply sit back and allege impossibility of performance. It must take positive steps to overcome the impossibility.
Ultimately, the court held that the applicant’s refusal to return to the site on which it was contracted to perform work and its subsequent cancellation of the agreement on the basis of force majeure had no legal basis.
It, therefore, appears that the party alleging a force majeure can be called upon to answer for the steps it took to mitigate the adverse effects of the force majeure event.
Application to leases
From the above, it appears that South African law requires that a strict test must be applied to determine whether a tenant will be excused from performance during the lockdown period.
A commercial tenant which is still able to trade, albeit constrained in trading, will not be excused from paying rent during lockdown.
At most, the tenant will qualify for a reduced rent in accordance with the severity of the constraint it suffered due to the lockdown.
The onus will be on the tenant to prove how badly its business suffered. A commercial tenant which is able to trade at 50% of normal capacity, will not be excused from more than 50% of its ordinary rental obligation.
The same principles apply to a private tenant. A private tenant who will continue to receive her full salary during lockdown, will not be excused from paying rent as performance is still objectively possible.
A private tenant who is self-employed, but operating as an essential service provider, will only be excused from a portion of his rent, to the extent that he is able to prove:
- that he has suffered a loss of income
- that he took steps to mitigate the loss
- that he is unable to pay the rent in full
- that he has already suffered the losses (not that it will occur in future)
- that he could not have been expected to avoid the impossibility; and
- that he is not at fault.
Tenants which may very well qualify to be excused, are those businesses which may not trade during lockdown, for example bars, restaurants, hotels, churches, retail stores and musicians.
Tenants which have been adversely affected, but have a lot of retained earnings or savings, would however not satisfy the requirement of being unable to pay the rent in full as they are able to draw from their reserves. In this way, wealthy individuals and profitable businesses would not be excused from performance.
Tenants who guaranteed performance, cannot rely on a defence of supervening impossibility.
There are no hard and fast rules regarding supervening impossibility of performance – each matter must be judged on its own merit. Tenants and landlords are encouraged to seek legal advice if they are uncertain as to their rights.
If you need advice on your eviction case or would like us to represent your case, get in touch with Le Roux Attorneys
- (8331/19)  ZAGPPHC 97;  3 All SA 186 (GP) (22 March 2019)