DOES THE ABSENCE OF APPROVED BUILDING PLANS AND AN OCCUPATIONAL CERTIFICATE RENDER A LEASE INVALID?

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In the case Wierda Road West Properties Pty Ltd (Wierda) vs SizweNtsalubaGobodoinc  (SNG)

Wierda owned a property that was leased by SNG.  Wierda undertook as part of the rental agreement to refurbish the rental premises.  During the course of the refurbishment it was discovered that there were not building plans in respect of a new wing added to the property by the previous owner, nor was there any occupational certificate for such portion.

The approval of the building plans and the issuing of the required occupational certificate took a substantial period of time due to technical difficulties and NHBRC building requirements.  During the aforementioned period the offices became too small for SNG and the vacated the premises without notice to Wierda.

Although they indicated to Wierda that the reason for the vacation was that they were seeking new premises their defence in Court was that had they known of the absence of building plans and the occupancy certificate they would never have signed the agreement and the absence of the aforementioned rendered the lease agreement void.

The High Court found the lease agreement to be valid but unenforceable due to the contravention of Section 4(1) and 14(1) of the National Building Regulations and Building Standards Act which stated that “the owner of any building or any person having an interest therein erected or being erected with the approval of a  local authority who occupies or uses such building or permits the occupation or use of such building unless a certificate of occupancy has been issued in respect of such building … is guilty of an offence.”

Wierda took the matter on appeal and the Supreme Court of Appeal found that the aforementioned legislation introduced Penal Sanctions which were adequate if contravened and there was no justifiable basis that it intends to render private contracts such as leases contravening these sections to be invalid.

In the light of the aforementioned it is clear that the absence of building plans and/or certificates of occupancy will not render a private deed of sale or lease invalid or unenforceable but will subject the parties to the penalties imposed by the Act and be classified as an offence.

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