The
applicant is the owner of premises known as Fidelity Life Towers. It
bought the property from Fidelity Life Assurance of Zimbabwe Ltd, the
previous owner. The respondent leased part of the 4th
Floor of these premises from the previous owner. Clause 37 of the
lease agreement provides for the termination of the lease agreement
by the new owner. It provides as follows;
“37(2)
In the event of the Landlord disposing of the building, or the leased
premises by sale, or if the building or the leased premises are owned
by a company and the identity of the largest or majority shareholder
changes, then, in such event, the Landlord or new Landlord as the
case maybe, shall have the right to terminate the lease without
compensation, on giving six months' written notice to the Tenant.”
The
applicant bought the premises sometime in 2007. It therefore became
the respondent's new landlord. It, in terms of clause 37.2, by
letter dated 20 December 2007, gave the respondent notice to vacate
the premises by 31 March 2008. The notice period was to run from 1
January 2008 to 31 March 2008. It specifically advised the respondent
that it was giving it notice of three calendar months.
The
respondent, by letter dated 27 March 2008, from its legal
practitioners to the applicant, acknowledged the fact that the
applicant had taken over the ownership and management of Fidelity
Life Tower House. It pleaded with the applicant as follows;
“We
have been instructed to plead with you for and on behalf of our
client as we hereby do that you allow our client to remain in
occupation of the building for a further period of six (6) months so
that our client can secure alternative office space. Should our
client be able to secure alternative space earlier our client would
(sic)
advise accordingly and vacate your premises.”
Note
that the respondent's response came four days before the date on
which the applicant had required it to vacate the premises. It
required the premises for a further period and had to plead for the
three months notice to be extended.
The
applicant, by letter dated 25 April 2008, declined to extend the
notice period by six months but extended it by a further period of
two months, commencing 1 April 2008 to 31 May 2008.
The
respondent did not respond to this letter till 20 May 2008, when,
through its lawyers, it advised the applicant that it had failed to
secure alternative accommodation and sought the extension of its
tenancy to 30 September 2008. The applicant, by letter dated 5 June
2008, advised the respondent that it could not grant its request.
It
is common cause that the applicant did not give the respondent six
months notice as provided by clause 37.2 of the lease agreement. In
the absence of any written agreement between the parties altering the
provisions of clause 37.2 the notice given by the applicant is
invalid and of no force or effect. This is because clause 40.2
provides as follows;
“40.2
This agreement constitutes the whole of the agreement between the
parties and no variations or collateral agreements shall be of any
force or effect unless and until recorded in writing in a document or
series of letters signed by the parties.”
This
means any variation or alteration of the terms of the agreement must
be by agreement between the parties. The parties' agreement can be
proved by each party signing the variation or collateral agreement or
series of letters in which such an agreement can be found. In the
absence of the above, the parties are bound by the terms of the
original agreement.
Counsel
for
the applicant submitted that the parties agreed to depart from the
terms of clause 37.2. He submitted that proof of such an agreement
having been reached can be found in the correspondence exchanged by
the parties. Counsel for the respondent
disputed
the existence of such an agreement.
An
examination of the correspondence which has already been referred to
clearly proves that the parties did not reach a final agreement on
anything but continued to negotiate until they disagreed. In its
letter of 27 March 2008 the respondent did not agree with the
applicant's three months notice, as it sought its extension by a
further six months. This proves that the parties were still
negotiating as to the appropriate notice period. The applicant's
response, of 25 April, did not agree with the respondent's request
for a further six months but offered the respondent a further two
months. They did not agree as a counter offer to the six months
suggested by the respondent was countered by an offer to extend the
period to 31 May 2008. By letter dated 20 May 2008 the respondent
made a further counter offer by asking that its tenancy be extended
to 30 September 2008.
There
is therefore no series of correspondence through which the terms of
clause 37.2 can be said to have been varied. It is common cause that
there is no variation agreement.
Counsel
for the applicant also submitted that the original right to six
months notice was compromised by the respondent's agreeing to
vacate, but pleading to be allowed to stay for longer than the three
months given by the applicant because it needed time to secure
alternative accommodation.
It
is true that the respondent did not challenge the applicant's right
to give it notice and to require it to vacate on the basis of a three
months notice. It merely pleaded for the extension of the stated
period to enable it to find alternative office space. The issue is
not on whether or not the respondent conceded the applicant's right
to give it three months' notice, but whether that acceptance was
with the full knowledge of its right to insist on being given the six
months notice provided for in clause 37.2.
The
respondent, in its opposing affidavit, said it did not have the lease
agreement when it responded to the notice through its legal
practitioners. It states that it was, at that time, not aware of its
entitlement to six months notice.
The
issue is therefore whether or not the alleged compromise or waiver
was an informed one.
A
compromise is an agreement by the parties to abandon litigation or a
disputed position of their rights in favour of the agreement to
compromise. Each party alters its claim, rights or defence to reach a
compromise. It must do so fully appreciating the rights it will be
compromising on. It cannot be arrived at in error.
Counsel
for the applicant referred me to the case of Georgious
and Another v Standard Chartered Finance Zimbabwe Limited
1998 (2) ZLR 488 (S)…, where GUBBAY CJ said;
“Compromise
or transactio is the settlement, by agreement, of the disputed
obligations, or of a lawsuit the issue of which is uncertain. The
parties agree to regulate their intention in a particular way, each
receding from his previous position and conceding something - either
diminishing his claim or increasing his liability. See Achalia
v Har berev & Company
1905 TS 457 at 462 in fine; Tauber
v Von Abo
1984 (4) SA 482 @ 485 G-J; Karson
v Minister of Public Works
1996 (1) SA 887 E 893 F-G.
The
purpose of compromise is to end doubt and to avoid the inconvenience
and risk inherent in resorting to the methods of resolving disputes.
Its effect is the same as res judicata on a judgment given by
consent. It extinguishes ipso jure any cause of action that
previously may have existed between the parties, unless the right to
rely thereon was reserved. See Nagar
v Nagar
1982
(2) SA 263 (ZH) 268 E-H.
As
it brings legal proceedings already instituted to an end, a party
sued on a compromise is not entitled to raise defences to the
original cause of action.”
Counsel
for the applicant however stopped the quotation just before he got to
the crucial part for the determination of the dispute between the
parties. Immediately after the above, GUBBAY CJ said;
“See
Hamilton
v Van Zyl
1983
(4) SA 379 (E) at 383H. But, a compromise induced by fraud, duress,
justus
error,
misrepresentation, or some other ground for rescission, is voidable
at the instance of the aggrieved party - even if made an order of
court.”
It
is therefore clear from Georgious
and Another v Standard Chartered Finance Zimbabwe Limited
1998 (2) ZLR 488 (S) that a compromise cannot be based on “justus
error.”
Counsel
for the respondent submitted that the respondent was not, at the time
it negotiated for the extension of the three months notice, aware
that it was entitled to six months notice as it did not have its copy
of the lease agreement. He therefore argued that it neither
compromised nor waived its right to six months notice. He therefore
relied on the defence of justus
error and referred the court to the case of Hepner
v Roodepoort - Maraisburg Town Council
1962 (4) SA 772 (A)…, where STEYN CJ said;
“There
is authority for the view that in the case of waiver by conduct, the
conduct must leave no reasonable doubt as to the intention of
surrendering the right in issue. (Smith
v Mombery
(1895) 12 SC 295 at 304; Victoria
Falls and Transvaal Power (Pvt) Ltd v Consolidated Langflaagte Mines
Ltd
1915 AD 1 at 62); but, in Martin
v De Kock
1948 (2) SA 719 (AD) at p 733, this Court indicated that, that view
may possibly require reconsideration. It sets, I think a higher
standard than that adopted in Laws
v Rutherford
1924 AD 261 at 263 where INNES CJ said;
'The
onus is strictly on the appellant. He must show that the respondent,
with full knowledge of her right, decided to abandon it, whether
expressly or by conduct plainly inconsistent with an intention to
enforce it.'
This
accords with the test applied in Kenny's case and was followed in
Collen
v Rietfontein Engineering Works
1948 (1) SA 413 (AD) at 436, and Linton
v Corser
1952 (3) SA 685 (AD) at p 695, (CF
Ellis and Others v Laubscher
1956 (4) SA 692 (AD) at p 702).
In
my opinion. the test is more correctly stated in these cases.”
I
respectfully agree with STEYN CJ's observations, the applicant in
this case must, on the balance of probabilities, show that the
respondent knowingly abandoned its right to insist on six months
notice.
Counsel
for the respondent also referred the Court to the case of Ex parte
Sussens 1941 TPD 15…, where MURRAY J said;
“The
necessity for the full knowledge of the law in the case of waiver
follows from the principle that waiver is a form of contract in which
one party is taken, deliberately, to have surrendered his rights;
there must therefore be proof of an intention so to surrender, which
can only exist where there is knowledge both of the facts and the
legal consequences thereof.”
It
is therefore clear that for the applicant's claim, that the
respondent compromised or waived its right to six months notice to
succeed, it must prove that it did so expressly or by conduct well
knowing the facts and the legal effect of such compromise or waiver.
The
facts of this case clearly demonstrate that the respondent
persistently wanted more time in the premises, to the extent, of
having to plead with the applicant for extensions. If it was aware of
its right to six months notice would it have resorted to pleading
instead of demanding that it be given the notice provided for by
clause 37.2?
In
my view, the respondent was, as it alleges, not aware of the facts on
its rights to six months notice. It did not therefore knowingly
compromise or waive its right to six months notice. There was,
therefore, no compromise or waiver of its right to six months notice.
It simply responded erroneously believing the applicant's
misleading notice to be in accordance with the lease agreement. There
was therefore a common error between the parties. If the applicant
could itself be in error as to the correct notice period, why should
the respondent not be believed when it says it fell into the same
error because it did not have a copy of its lease agreement.
I
find the respondent's explanation consistent with a mistaken belief
that it had been given adequate notice hence the plea for the
extension of the notice period.
In
the result, the applicant's application is dismissed with costs.
