KUDYA
J: The plaintiff issued summons out
of this court on 8 September 2009. It sought an order confirming the
cancellation of the lease agreement it had with the defendant, the eviction of
the defendant and all those claiming occupation through it, arrear rentals,
holding over damages, interest and costs of suit. The summons was served on the
defendant on 9 September 2009. The defendant entered appearance on 11 September
and filed its plea on 30 October 2009.
The plaintiff called the evidence of
its Territory Manager Lovemore Tichaona Kuwana (“Kuwana”) and produced two
documentary exhibits. The first exhibit was the site lay out plan of stand 892A
Nelson Mandela Avenue,
Harare, the leased premises,
while the second exhibit was a 65 paged bundle of documents consisting of the
lease agreement and correspondence entered into between the parties through
their legal practitioners. The defendant called the evidence of its managing
director Ronald Mhlanga (“Mhlanga”) and produced exh 3, a 14 paged bundle of
correspondence exchanged between the parties.
It was common cause that the
defendant entered into a lease agreement with Mobil Oil Zimbabwe (Pvt) Ltd (Mobil)
on 1 February 2002 for the lease of the workshop, office space, empty space and
other appurtenances that were indicated by Kuwana in exh 1, the site lay out
plan of the leased premises. The lease expired by the effluxion of time after
six months and the parties did not execute a new written agreement. Instead,
they would from time to time discuss and agree on the new amounts of monthly
rentals payable. Mobil was acquired by the plaintiff in 2006. The plaintiff
thus assumed the rights and obligations of Mobil including those pertaining to
the lease agreement with the defendant.
The relationship between the parties
was tumultuous as demonstrated by the action brought by the plaintiff against
the defendant in this court in case number HC 3214/07. The plaintiff withdrew
that action on 9 January 2009. On 15 January 2009 the defendant's former legal
practitioners Chikumbirike and Associates wrote to the plaintiff's erstwhile
legal practitioners acknowledging receipt of the notice of withdrawal and sought
the plaintiff's input and comment on four proposals it wished included in a
written lease agreement. The defendant proposed a five year lease with an
option to renew, the inclusion in the lease of the parking space allocated to
the defendant, the inclusion in the lease of the informal pro rata sharing of utility charges and the exploration of the policy
of the plaintiff of leasing the whole premises to a single lessee as opposed to
two lessees as prevailed at the premises. The currency which underpinned the
lease relationship between the parties was the local currency. The introduction
of the multi-currency system of payments in Zimbabwe in February 2009 adversely
affected the currency of account between the parties. The plaintiff desired
payment of rentals in a functionary currency while the defendant attempted to
use the new currency regime as a springboard for renegotiating the terms of
lease. The meetings arranged between the parties failed to take place. The
defendant did not pay any rentals from February 2009 until 28 July 2009 when
the plaintiff cancelled the lease agreement. The cancellation stampeded the
defendant into making frantic efforts to save the lease by offering to pay the
outstanding rentals. It was common cause that the defendant has remained firmly
in situ and has not paid any rentals
to date.
The parties differed on whether or not the defendant was aware of
the rentals that were due in foreign currency before the service of summons. The pith of Kuwana's evidence was
that he personally handed the statements of rentals due to the defendant's
managing director, Mhlanga on the due dates until the lease was cancelled on 28
July 2009. Mhlanga denied ever receiving the statements and indicated that he
only became aware of the amount that the plaintiff unilaterally imposed when he
was served with the summons. Each party relied on the correspondence exchanged
between them to support its averment.
The onus on a balance of
probabilities to show prior knowledge of the amount of rental due per month lay
on the plaintiff. Kuwana testified that when the defendant failed to pay up he
arranged a meeting with Mhlanga for payment of the outstanding rentals and for
the execution of a new lease agreement. He relied on the tone of the letter
written by Mushangwe and Company legal practitioners engaged by the defendant
on 15 May 2009 as indicative of the defendant's prior knowledge of the amount
of rentals due. It reads in the relevant part: “He further advises us that it
was agreed by the parties that should the above request be met, our client will
start paying his rentals. To date no response had been given to our client and
he is too anxious to meet his obligation of paying you rentals.” The plaintiff
responded to that letter on 28 July 2009 and disputed the existence of an
agreement to forego rentals due until the issues of the formalization of
parking space, its request for a longer lease and exclusive use of the premises
were agreed. Mr Zhou, for the
plaintiff, contended that the term “rentals” in that letter was used in its
technical sense of being synonymous with the actual amount of money demanded by
the plaintiff. He further argued that the defendant had prior knowledge of the
amount claimed by the plaintiff; otherwise it would have asked in that letter
what the monthly rental payable was. Mr Mpofu,
for the defendant, contended that “rentals” was used in its wide and generic
sense of an unquantified and unknown amount of money that the defendant would
pay after agreement was reached between the parties. He further contended that
the letters written by Chikumbirike and Associates for the defendant on 30 July
and 29 September 2009 and the plea demonstrated that the defendant was ignorant
of the actual amount of monthly rental demanded by the plaintiff.
The difficult task of assessing the
credibility of Kuwana and Mhlanga and the probabilities in order to determine
this issue was minimized by the admission made by Mhlanga under the heat of
searching cross examination that he was aware of the amount of monthly rental
that was unilaterally set by the plaintiff in foreign currency before 5 May
2009. Before he made this admission Mhlanga had maintained that he did not know
the amount the plaintiff regarded as monthly rentals until the defendant was
served with summons. He had stuck to the suggestion made in the letter his
legal practitioners wrote to the plaintiff on 30 July and 29 September that the
plaintiff had not advised the defendant of what it regarded as a fair and
reasonable amount of monthly rental payable. He had suggested that the
statements drawn and produced by the plaintiff for the rentals payable from
February to July 2009 were fabricated documents because they all had a print
date of 21 October 2010. He had criticised the plaintiff for failing to produce
both the signed and unsigned copies of the statement of accounts that it
allegedly left with him. The admission portrayed him as an untruthful witness.
In the result I was satisfied that Kuwana was a credible witness. I discerned
from his testimony that he verbally conducted most of the business
communication between the plaintiff and the defendant with Mhlanga. He
represented the plaintiff in 28 different leases involving workshops and service
stations. The probabilities show that the plaintiff, being in the business of
making an income from the lease of workshops and service stations would naturally
have demanded a specific sum of monthly rentals from the defendant in foreign
currency. In my view the defendant scuttled the meetings of 5 and 15 May 2009
because it had prior knowledge of the amount of monthly rentals demanded by the
plaintif. The letter from Mushangwe and Company demanded that the plaintiff
stop all direct communications with the defendant and requested that all future
meetings be arranged with Mushangwe and Company. It revealed that the plaintif
had in the past arranged for similar meetings which had failed to take place. I
was satisfied from the tone and timing of that letter that the defendant was
unwilling to agree to the amount of rentals payable because it was already
aware of the figure demanded by the plaintiff. I hold that the term rentals as
used in the letter of 15 May 2009 demonstrated that the defendant was aware of
the sum of money demanded by the plaintiff as monthly rental payable. It was
unwilling to pay that amount until the issues it had raised of parking space, pro rata sharing of utility charges and
sole tenancy were incorporated in a new written lease agreement.
At the pre-trial conference that was
held on 5 July 2010 the following two issues were referred to trial:
1. Whether or not the defendant breached the lease
agreement by not paying rent from February 2009 to date.
2. If the breach is established, whether the plaintiff is
entitled to an order for ejectment and the payment of arrear rentals and
holding over damages.
Mr Zhou based his submissions that the defendant had breached the
lease agreement on the case of Parkside
Holdings (Pvt) Ltd v Londoner Sports Bar 2005 (2) ZLR 68 (H) and Negowac Services (Pvt) Ltd v 3D Holdings (Pvt) Ltd & Anor HH 144-09 while Mr Mpofu relied on the
sentiments expressed by MAKARAU JP, as she then was, in Local Authorities Pension Fund v
F & R Travel Tours & Car Sales (Pvt) Ltd HH 90-2010 and the views expressed
in Cooper's Landlord and Tenant 2nd
ed.
Mr Mpofu submitted that the claim should be dismissed. He argued that
the plaintiff grounded its claim on the wrong cause of action. He forcefully
contended that the lease agreement relied upon as the cause of action expired
by the effluxion of time on 31 July 2002. He relied on the Local Authorities Pension Fund case, supra, where at pp 2-3 of the cyclostyled judgment the learned JUDGE
PRESIDENT stated:
“In moving for
the granting of the order sought in the draft, the applicant urged me to find
that the parties had a written lease agreement, that in terms of that lease
agreement, the first respondent was obliged to pay rentals and operating costs
monthly and in advance and that in breach of that agreement, the first
respondent failed to pay any rent or operating costs from January 2009 to the
date of filing of the application.
As indicated
above, the applicant's argument is flawed in one or two respects and does not
flow from the facts that are common cause. Firstly, the written lease agreement
terminated in July 2007. As from that date, the first respondent became a
statutory tenant and the expired lease agreement can no longer found a cause of
action between the parties. The first respondent in my view can only be
competently evicted in terms of the provisions of the rent regulations. It is
common cause that the applicant is not proceeding in terms of the rent
regulations but is proceeding ex
contractu, alleging breach of the written agreement. Secondly, and assuming
that the written lease agreement between the parties is still subsisting, then,
in that event, the first respondent's obligation is to pay rentals monthly in
advance in local currency. The obligation to pay rentals monthly in advance
must have been imposed by some other agreement, which has not been pleaded.”
While the case before the JUDGE
PRESIDENT was an application and the present matter is an action, I find that
the causes of action in both cases are similar. The views of MAKARAU JP would
have applied with equal force in the present matter but for one issue that was
not argued before her. It does not appear in Her Ladyship's judgment that the
meaning and effect of statutory tenancy was fully explored. Had that been done,
she may have come to a different conclusion. The meaning of statutory tenancy
is provided in s 22 of the Commercial Premises (Rent) Regulations. Statutory
tenancy is the legal relationship borne out of a lease that has “expired either
by the effluxion of time or in consequence of notice duly given by the lessor
(in which the lessee) however continues to pay the rent due, within seven days
of due date; and performs the other conditions of the lease.” This definition
of statutory tenancy was adopted in such cases as Chibanda v Musumhiri & Anor 1999 (2) ZLR 50 (HC); Irvine v
HM The Queen In Right of Canada 1998 (1) ZLR 328 (SC) at 328 B; Mungadze v Murambiwa 1997 (2) ZLR 44 (SC) at 45E.
The effect is further provided in s 23
of the same regulations which read:
“23. Rights and duties of statutory tenant
A lessee who, by virtue of s 22, retains possession
of any commercial premises shall, so long as he retains possession, observe and
be entitled to the benefit of all the terms and conditions of the original
contract of lease, so far as the same are consistent with the provisions of
these regulations, and shall be entitled to give up possession of the premises
only on giving such notice as would have been required under the contract of
lease or, if no notice would have been so required, on giving reasonable
notice:
Provided that, notwithstanding anything contained in
the contract of lease a lessor who obtains an order for recovery of possession
of the premises or for the ejectment of a lessee retaining possession as
aforesaid shall not be required to give any notice to vacate to the lessee.”
The effect of s 23 as read with s 22 (2) (b) of the Commercial Premises
Rent Regulations is that the original lease is renewed to the extent that it is
consistent with the regulations. This view was confirmed by GUBBAY CJ in Jackson v
Unity Insurance Co Ltd 1999 (1) ZLR 381 (SC) at 381G-382A where he stated
that:
“On 29 November
1996, the appellant entered into a contract with the respondent in terms of
which the latter leased Flat No. 24 (hereafter referred to as "the
premises") for the period 1 December 1996 to 30 November 1997. Upon the
expiration of the lease, the appellant retained possession of the premises.
Under s 31 of the Rent Regulations 1982 (SI 626 of 1982) ("the
Regulations") he became a statutory tenant with occupation of the premises
governed by the terms and conditions of the original contract of lease in so
far as such were consistent with the Regulations.”
In Chibanda v Hewlett 1991
(2) ZLR 211 (H) at 216B-218D SANDURA JP, as he then was, dealt with the concept
of tacit relocation of a lease. At 217B the learned JUDGE PRESIDENT affirmed
the views of RAMSBOTTOM J in Doll House
Refreshments (Pty) Ltd v O'Shea & Ors 1957 (1) SA 345 (T) at 348F-H that:
“A relocation after a lease has expired is a
new contract which may be express or tacit. If the reletting is express the
question which of the terms of the expired lease form part of the new contract
is a question of interpretation as explained in Webb v Hipkin 1944 AD 95.
Where the relocation is tacit, there is a presumption that the property is
relet at the same rent and that those provisions that are incident to the
relationship of landlord and tenant are renewed. But provisions that are
collateral, independent of and not incident to that relationship are not
presumed to be incorporated in the new letting.”
The learned author Cooper at p.350, op cit, defines a tacit relocation in
these terms:
“A tacit
relocation is an implied agreement to relet and is concluded by the lessor
permitting the lessee to remain in occupation after the termination of the
lease and accepting rent from the lessee for the use and enjoyment of the
property.”
In my view, there does not appear to
be much of a difference between a statutory tenancy and a tacit relocation.
Like in a tacit relocation, the terms and conditions of the original lease that
are incident to the relationship of landlord and tenant and consistent with the
provisions of the Commercial Premises Rent Regulations as opposed to those that
are collateral and independent are renewed. See Chibanda
v Hewlett, supra at 220E. I find
that the plaintiff pleaded the renewed agreement by making reference to the
original agreement in the declaration.
It seems to me that the submission
by Mr Mpofu that the plaintiff
pleaded the wrong cause of action must fail. Even if I am wrong in finding that
the plaintiff correctly pleaded the original lease agreement, I would have
dismissed Mr Mpofu's submission on
this aspect on the basis that I have a wide discretion to determine the real
issues between the parties especially in circumstances such as this where the
parties have fully ventilated the issue in dispute during trial. See Mtuda v Ndudzo 2000 (1) ZLR 710 at 719B-G and the cases cited therein.
Mr Zhou submitted that the defendant breached the agreement by failing
to pay the rental communicated to it by the plaintiff. In the alternative he
submitted that he breached the agreement by failing to pay an amount which the
defendant itself would have considered reasonable. He relied on the sentiments of
MTSHIYA J in Negowac Services case, supra, at p 11 of the cyclostyled
judgment that:
“My view is that
as long as the defendants wanted the tenancy to continue, they had an
obligation to continue paying rent. They should have continued to pay what they
believed was a reasonable rent. … The defendants were therefore in clear breach
of the lease agreement for non-payment of rent.”
In the Local Pension Authority Fund case, supra, at p.5 MAKARAU JP found the reasoning in Negowac very attractive. I agree. After
all one of the essential elements of a lease is the payment of rent. The
defendant did not pay any rent. It was aware of the amount of rental that the
plaintif had unilaterally set. It did not dispute the amount but was willing to
pay it once the plaintiff agreed to the three conditions that it had raised.
I find that the defendant
breached the lease agreement by failing to pay the rental that was unilaterally
imposed by the plaintiff. The plaintiff was entitled to cancel the lease for
such breach.
I answer the second issue referred
to trial in the plaintiff's favour. In argument Mr Zhou prayed for judgment in the sum of US$350-00 per month for both
arrear rentals and holding over damages. He abandoned the purported increase of
US$402-50 that had been claimed by the plaintiff from 1 May 2009. The evidence
of Mhlanga demonstrated that the rental of US$350.00 per month demanded by the
plaintiff was fair and reasonable for the premises that are situated in the
Central Business District of Harare. In any event, in his testimony Mhlanga
expressed a willingness to pay the rentals demanded by the plaintiff, provided
the cancelled lease was restored. He did not challenge the reasonableness of
the rentals claimed. The plaintiff rejected the offer and persisted with its
claim.
The plaintiff is entitled to the
order it seeks together with costs of suit. I would order that interest at the
prescribed rate starts to run from the date of the service of summons for both
the arrear rentals and holding over damages.
Accordingly it is ordered that:
1. The cancellation of the agreement of lease entered into
between the parties for Stand 892A Nelson Mandela Avenue, Harare be and is
hereby confirmed.
2. The defendant
and all its subtenants, assignees, invitees and all those claiming occupation
through it be and is hereby evicted from Stand 892A Nelson Mandela Avenue, Harare.
3. The defendant shall pay arrear rentals to the defendant
in the sum of US$2 100-00 together with interest at the rate of 5% per annum
from 9 September 2009 to the date of payment in full.
4. The defendant shall pay holding over damages at the
rate of US$350-00 per month from 1 August 2009 to the date of ejectment
together with interest at the rate of 5% per annum from 9 September 2009 to the
date of payment in full.
5. The defendant shall pay the plaintiff's costs of suit.
Gill, Godlonton & Gerrans, plaintiff's legal practitioners
Manase & Manase, defendant's legal practitioners
