A group of more than 70 households, who are leasing properties from the ECDC, failed in their legal bid to certify a class action against the corporation after the latter is selling the properties
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More than 70 households who have been tenants of the Eastern Cape Development Corporation (ECDC), who now stand to lose their homes, which they have occupied for many years, lost their legal bid for their case against the ECDC to be certified as a class action.
The corporation is the registered owner of a substantial number of immovable properties situated in Butterworth and Mthatha, which were “inherited” by it on the incorporation of the former homeland of Transkei into the Republic of South Africa.
These properties were originally rented out by the erstwhile Government of Transkei and are still occupied, whether by the original lessees or their successors in title. Some of the tenants have been living in these houses for more than 30 years.
They turned to the Eastern Cape High Court, sitting in East London, to have a class action certified, as they either want to remain in the homes or be compensated for the refurbishments they had made to their properties over the years.
For many years there has been an ongoing dispute between ECDC and the tenants about their continued occupation in the houses. Various groups, including the one now before court, tried to halt the selling of the properties.
Due to the lapse of time, many applicants are no longer in possession of a copy of the contract they concluded with the respondent (the ECDC) or its predecessor, as some have been living there for decades.
In September 2022, the respondent issued letters to the tenants in which the latter were invited to buy the properties. According to the tenants, they had responded to the invitation but were met with unreasonable selling prices. As a result, the respondent commenced with a public auction process. Some of the houses had meanwhile been sold at auction.
The tenants are unhappy as they claimed that the respondent has refused to grant them the right of first refusal or to pay them for the upkeep of the properties. According to them, the respondent stands to be unjustly enriched if it sold the houses and pocketed the proceeds for homes which they (the tenants) had improved and kept in good condition over the years.
The respondent said in 2022 it took a decision to sell many of the residential properties, but to first offer them to the existing tenants. It said given the arrears in rent paid to it, it tried, as a last resort, to come up with various cost-saving proposals. One was to offer the homes for sale to the tenants on favourable terms.
According to the respondent, many of the tenants owe substantial sums of money in arrear rental and they (the tenants) expect this debt simply to be written off. The respondent, as a state-owned enterprise, cannot do so. Thus, the respondent said, it is obliged to sell the properties at market-related prices, whether to an existing tenant or to an outside buyer.
Acting Judge Nicholas Mullins, in dismissing the application for a class action, said the right of the respondent to sell the properties is not being challenged. A class action will not result in a fair resolution of the disputes, he said, as each of the applicant’s cases is based on their own individual circumstances.
Thus, if they wanted to pursue with their claims against the respondent, they have to do so on an individual basis.
