CHATUKUTA J: The following facts are common cause. The plaintiff is the owner of business
premises situated at defendant No 18
Shepperton Road, Graniteside, Harare.
On 16 December, 2002, the company entered into a lease agreement with
the defendant whereby the defendant leased from the plaintiff a portion of the
business premises. The lease agreement
was renewable annually. In 2005, the
parties agreed to renew the agreement every four months and would agree on the
monthly rental for the four months. In
December 2005 the rental was $40 million.
It was a term of the agreement that rent was payable on or before the
first day of each month.
Sometime in December, before the
expiry of the lease, the plaintiff prepared a draft lease agreement which was
given to the defendant. The plaintiff
was proposing that the monthly rental be increased to $120 million. The defendant was of the view that the rental
was to high. This was communicated to
the plaintiff on 15 January 2006. The
defendant offered to pay $60 million.
This was not acceptable to the plaintiff. On 24 January 2006 the plaintiff, through its
lawyers, demanded from the defendant payment of the January rental of $120
million. The defendant was given seven
days within which to remedy its alleged breach failing which the contract would
be cancelled "forthwith". On 1 February
2006, the defendant, through its lawyers, tendered a payment of $80
million being rent in the sum of $60
million and good tenancy fee in sum of $20 million. On 6 February 2006, the defendant tendered
payment of the $60 million as rent for February 2006. On 9 February 2006, the plaintiff, through
its lawyers, wrote to the defendant purportedly cancelling the lease agreement which
the defendant did not sign. It cited the
defendant's failure to pay rent timeously as the basis for the cancellation for
breach of agreement. On 6 March 2006,
the plaintiff instituted the present proceedings claiming:
(a)
the
ejectment of the defendant from the premises;
(b)
cancellation
of the lease agreement entered into by the parties between 16 December 2002 and
periodically renewed up to 31 December 2005;
(c)
payment
of rentals due for January to February 2006 in the sum of $240 million;
(d)
holding
over damages in the sum of $4 million per day for the period 1 March 2006 to
date of ejectment;
(e)
interest
at the prescribed rate from the date of issue of summons to date of payment;
(f)
collection
commission calculated in accordance with By-Law 70 of the Law society of
Zimbabwe By-Laws, 1982; and
(g)
costs
on the legal practitioner scale.
The plaintiff abandoned the claim
for rentals for the months of January to February 2006.
The plaintiff submitted that the
contract prepared in December 2005, which was refused by the defendant is the
basis of the claim against defendant. It
is its contention therefore that the defendant was not a statutory tenant
because there was an agreement between the parties. I failed to see the logic of these
submissions. It is not disputed that the
last lease agreement agreed upon by the parties ended on 31 December 2006. The agreement purportedly cancelled was a
mere draft agreement. The parties did
not agree to the terms of that agreement.
A statutory tenancy of
commercial premises is one which comes into being upon expiration of the lease
either by effluxion of time or in consequence of notice duly given by the
lessor and the lessee remains in personal occupation by virtue of the
provisions of section 22(2) of Commercial
Premises (Rent) Regulations, 1983, SI676 of 1983 (the Regulations). It is therefore my view that the defendant was
as statutory tenant. This meant that by
operation of law, the original agreement together with all its terms and
conditions continued in force after 31 December 2005.
Having
said so, I perceive the real
issue for determination as whether or not the defendant was entitled to
protection offered for statutory tenants in terms of section 22(2) of the
Regulations. Section 22(2) provides
that:
"No order for the recovery of possession of commercial
premises or for the ejectment of a lessee therefrom which is based D on
the fact of the lease having expired, either by effluxion of time or in
consequence of notice duly given by the lessor, shall be made by a court, so
long as the lessee:
(a) continues to pay the rent due, within
seven days of due date; and
(b) performs the other conditions of the
lease;
unless the court is satisfied that the lessor has good
and sufficient grounds for requiring such order other than that:
(i) the lessee
has declined to agree to an increase in rent; or
(ii) the lessor wishes to lease the premises to
some other person."
Therefore
statutory protection is only granted to a person who complies with paragraphs
(a) and (b).
The plaintiff submitted that the
defendant failed to comply with the requirements of section 22(2). In terms of the expired agreement, the
defendant was required to pay rent for the month of January 2006 on or before
the first of the month and within seven days of the due date. Mr Mario de Sousa Moura, the plaintiff's
director, testified that the defendant did not pay the rent for January 2006 on
time. The defendant purported to make a
payment in February 2006. The defendant
tendered $60 million which was not the rent that he had been paying in terms of
the expired agreement. The
counter-offer offer of $60 million did not transform itself into the statutory
rent of $40 million. He declined to receive the $60 million as this
would have been misconstrued as an acceptance of the defendant's counter offer
of $120 million.
The defendant submitted that the
payment of $60 million entitled it to the protection of the law. Mr Reggies Nazare, the defendant's managing
director, testified that he knew from Mr Moura's attitude that the latter would
not accept $40 million particularly when he was refusing a counter-offer of $60
million. It was his testimony that Mr
Moura precluded him from making a payment of $40 million when he indicated that
he was taking up the matter with plaintiff's lawyers.
It
is my view that the defendant did not place before the court evidence that Mr
Moura precluded the defendant from paying the statutory rent. The discussion between the parties on the
proposed lease agreement only took place on or about 15 January, fourteen days
after the due date. As of that date it
is not disputed that the defendant had not paid or tendered to pay any statutory
rental for the month of January 2006 by the due date. It was also not disputed that the agreement
between the parties enjoined the defendant to pay rent on or before the first
of the month. This was in fact confirmed
by Mr Mpame, the defendant's legal
practitioner, in his evidence in favour of the defendant. In fact, no payment was made within the
additional seven days grace period granted to a statutory tenant under the
Regulations. In such a situation, it is
my view that the defendant was not only breaching a term of the contract. It was failing to comply with a statutory
provision. In Bay
Homes (Pty) Ltd v Smith (supra) FRIEDMAN J considered section 32 of the
Rent Control Act 80 of 1976 (a similar provision to our section 22(2)). At he stated that-
"The argument on appeal on behalf of appellant was
that respondent was a statutory tenant and that he had failed to pay his rental
within seven days after the due date or even within the further extended period
of seven days provided for in s 28 of the Rent Control Act 80 of 1976
(hereinafter referred to as "the Act") and that he was accordingly no
longer entitled to the protection of the Act. It is common cause that the
rental was not paid within the time provided by s 28 of the Act. The sole issue
therefore is whether the magistrate was correct in applying s 32 of the Act and
on that ground refusing to issue an order for respondent's ejectment.
Section 32 of the Act reads as follows:
"If a lessee of any dwelling, garage or parking
space does not comply with any condition of any lease which in the opinion of a
court -
(a)
is of a trivial nature;
(b)
does not fundamentally violate the interests of the lessor concerned; and
(c)
does not constitute any situation referred to in s 28 (b), (c) or (d),
such
court shall not issue an order for the ejectment of such lessee from such
dwelling, garage or parking space."
........................................................................
I turn now to the question whether s 32 of the Act
affords a ground for refusing an order of ejectment based on respondent's
admitted breach of the lease. In my judgment the section does not assist
respondent for two reasons. Firstly, that section has no application to the
case of a statutory tenant who fails to pay his rental within the time
specified in s 28 of the Act. Section 32 is concerned with a failure to a
"comply with any condition of any lease". The obligation which rests
upon a statutory tenant to pay his rental is not solely a condition of the
lease; it is a statutory obligation placed upon a tenant in terms of s 28 of
the Act. The date fixed by the lease for the payment of rental does not
determine when the rental must be paid. Section 28 provides that the rental
must be paid within seven days of the due date "or such extended period
not exceeding a further seven days as the court may allow on good cause shown
and in exceptional circumstances". Thus even if it were a condition of the
lease that the rental should be paid on the first day of the month and no
period of grace be allowed under the lease, the obligation resting upon the
tenant could be to pay his rental within seven days of the first day of the
month, or within the extended period assuming he could satisfy the requirements
of the section. Having specifically provided in s 28 for the time within which
the rental was to be paid and having given the court a discretion, in the same
section, to extend that period by a further seven days, the Legislature could
not have intended to confer yet a further discretion upon the court in terms of
s 32 to condone a late payment of rental. (Cf Steyn Die Uitleg van Wette 5th ed
at 49.) Thus if a statutory tenant fails to pay his rental within the periods specified
in s 28, there is no way in which the court is empowered to come to his
assistance in terms of s 32.
......................................................................
Turning to the facts of the present case, the
condition which has been breached by the respondent is clause 3 of the lease in
terms of which the monthly rental shall be payable in advance on the first day
of each and every month. A condition such as
E clause 2, which requires the rental to be paid on a specified date,
cannot be described as being "of a trivial nature" and accordingly s
32 does not apply.
The Court is naturally not without sympathy for the
respondent. However, the fact of the matter is that he failed to pay his rental
on due date or even within the extended period allowed by s 28 of the Act.
Although respondent's failure to comply
F with such an important obligation timeously was occasioned by a
"momentary lapse", as he himself described it, I am unable to find that
s 32, properly interpreted, empowers the Court to condone or rectify the
position. Respondent's position is not dissimilar to that in which the
respondent found himself in Thelma Court Flats (Pty) Ltd v McSwigin 1954 (3) SA
457 (C) in G which an order of ejectment
was granted where proceedings were instituted the day after the last day for
payment stipulated in the lease."
It
appears to me that the obligation to pay rent timeously and within the extended
period of seven days is a statutory obligation imposed by section 22(2) of the
Regulations. As in Bay Homes (Pty) Ltd v
Smith (supra), I am of the view that the defendant does not deserve the
sympathy of the court. After the defendant
had become a statutory tenant, it had failed to pay the rent timeously and had
ceased to be a statutory tenant. It had,
by virtue of that breach, disentitled itself to the protection normally
afforded to a statutory tenant by s 22(2) of the Regulations. On this basis, the defendant was no longer
entitled to remain on the premises.
The defendant attempted to go around this problem by alleging that the
plaintiff waived its right to rent when it gave the defendant seven days within
which to pay the rental of $120 million.
As rightly, submitted by the plaintiff, the evidence of the plaintiff
seem to indicate the contrary. A landlord
must elect within reasonable time whether or not to cancel contract. The plaintiff instituted these proceedings
soon after the stalemate, that is on 6 March 2006. I am of the view that this was a reasonable
time within which the plaintiff asserted its rights and is not consistent with
a party waiving its rights.
Turning to the question of holding over damages, the plaintiff led
evidence from one Anorld Hove, a Commercial Letting Manager with Gabriel Real
Estate. He testified that the a fair of
$66 500 per day or $1.5 million per month was fair rental for the premises in
issue. The witness was not cross
examined hence his evidence remained unchallenged. In the result, I do not see a basis to deny
the plaintiff the damages claimed.
Regarding the claim for cost on a higher scale, the plaintiff did not
claim such costs in its evidence, neither did Advocate Matinega persist with the claim in the closing
submissions. I therefore do not have a
legal basis for ordering costs on higher scale.
Accordingly it is ordered as follows:
1.
The defendant be and is hereby ordered to vacate the
leased premises at No 18 Shepperton Road, Graniteside, Harare, within fourteen days
of the date of service of this order on the defendant.
2.
The defendant be and is hereby ordered to pay holding
over damages in the sum of $66 500 per day from the 1st March 2006
to the date of ejectment.
3.
The defendant be and is hereby ordered to pay interest
at the prescribed rate on the holding over damages calculated from the date of
issue of summons up to the date of payment.
4.
The defendant be and is hereby ordered to pay collection commission calculated in
accordance with By-Law 70 of the Law society of Zimbabwe By-Laws, 1982.
5.
The defendant be and is hereby ordered to pay costs of
suit.
Chihambakwe, Mutizwa & Partners,
plaintiff's legal practitioners.
Baera & Company, defendant's legal practitioner
