Procon GT Capital (Pty) Ltd v Woldeyesus and Another

The plaintiff, Procon GT Capital (Pty) Ltd, sought summary judgment against the defendants for arrear rental and other charges amounting to R1,108,382.28 in respect of a commercial property in Voortrekker Road, Bellville, which the defendants rented to operate a restaurant. At the time of negotiating the lease, another restaurant operated from the same building by a tenant named Yonas was in direct competition. The plaintiff undertook to evict Yonas as soon as the defendants paid their rental deposit. Based on this undertaking, the defendants signed the lease agreement, paid rent, assumed liability of R430,000 owed by Yonas to the plaintiff, and allowed their R75,000 cash deposit to be set off against Yonas's arrears. Despite the undertaking, it took approximately nine months to evict Yonas, during which period Yonas continued to trade in direct competition with the defendants, causing them to lose approximately 50% of their customer base. The defendants ceased paying full rental and claimed they were entitled to a rental reduction.

• Whether the defendants raised a triable defence based on section 54(1)(b) read with section 54(2)(b) of the Consumer Protection Act 68 of 2008, entitling them to a rental reduction because the plaintiff's performance fell short of the standard persons are generally entitled to expect.
• Whether summary judgment could be granted where the plaintiff bears the onus to prove the reduced amount payable under the CPA.
• Whether the defendants' defence could be sustained outside the terms of the lease agreement by relying on the CPA.

The application for summary judgment was refused. The defendants were granted leave to defend the action. The plaintiff was ordered to pay the defendants' costs of the summary judgment application, save for wasted costs, and the defendants were ordered to pay the plaintiff's wasted costs of the first summary judgment proceedings including the hearing on 31 January 2024.

Where a consumer raises a defence under section 54 of the Consumer Protection Act alleging defective performance of a service (including a lease), the consumer need not locate the defence within the terms of the contract, and the service provider bears the onus to prove the reduced amount payable. In summary judgment proceedings, if a defendant raises a plausible section 54 defence based on the service provider's conduct falling short of the standard persons are generally entitled to expect, the plaintiff's case cannot be considered unanswerable, and summary judgment must be refused.

The court expressed the view that regard can be had to conduct that does not amount to breach of contract when interpreting section 54 of the CPA. It noted that the National Consumer Tribunal had found in previous matters that 'poor treatment' of a consumer can amount to a contravention of section 54, though this does not mean poor treatment inevitably amounts to a contravention. The court also observed that where a CPA provision is capable of more than one meaning, the interpretation that best promotes the spirit and purposes of the Act — and which favours the consumer — must be followed.

This case is significant as it provides guidance on the intersection between the law of lease and the Consumer Protection Act. It confirms that section 54 of the CPA applies to commercial leases and can provide an independent statutory defence to a claim for arrear rental, even where contractual terms (such as 'non-variation' or 'no misrepresentation' clauses) would otherwise bar such a defence. It establishes that a landlord's failure to perform a promised obligation — such as evicting a competing tenant — can constitute substandard service under the CPA, entitling the tenant to a rental reduction.