On 28 February 2008, under Case No. HC1239/08, the appellant caused
summons to be issued against the respondents seeking an order for the
cancellation of a lease, and, consequent thereto, the eviction of the
respondents from the leased premises.On 10 December 2008, a
second summons was issued by the appellant, ...
On 28 February 2008, under Case No. HC1239/08, the appellant caused
summons to be issued against the respondents seeking an order for the
cancellation of a lease, and, consequent thereto, the eviction of the
respondents from the leased premises.
On 10 December 2008, a
second summons was issued by the appellant, under Case No. 6969/08,
wherein it sought the eviction of the respondents due to the expiry of
the lease.
The High Court dismissed the claims with costs.
The appellant was aggrieved by the dismissal and has noted this appeal.
THE FACTUAL BACKGROUND
The basic facts surrounding the dispute are the following:
The
appellant (hereinafter referred to as “Indium”) is the registered owner
of certain immovable property, being Stand 450 Avondale West Township
of Stand 390 Avondale West, also known as 108 West Road, Strathaven,
Harare (hereinafter referred to as “the premises”).
The first
respondent (hereinafter referred to as “Kingshaven”) is a private
company registered as such under the laws of Zimbabwe.
The second
respondent, Daniel Shumba (hereinafter referred to as Shumba), and the
third respondent (Linda Shumba), his wife, are the only shareholders of
and directors in Kingshaven.
Kingshaven carries on business in
the hospitality sector and is in occupation of the premises by virtue of
a lease concluded on 14 December 2007 with Indium. Notwithstanding the
date of signing, the agreement was to come into force on 10 December
2007 and was to endure for a period of 365 days, terminating
automatically on 9 December 2008.
Shumba and his wife are
shareholders in a Close Corporation, ERF Bryanstan CC, which is duly
registered as such under the laws of South Africa.
ERF Bryanstan
is the registered owner of an immovable property, being Portion 2 of ERF
825 Bryanstan Township also known as 17 Portman Road, Bryanstan,
Sandton, Johannesburg.
In 2007, ABSA Bank, in whose favour ERF
Bryanstan had registered a mortgage against the property, called up the
mortgage and executed against the same.
In an effort to save the
property, Shumba approached Jayesh Shah (hereinafter referred to as
“Shah”) for financial assistance, and, this culminated in a number of
agreements.
The first agreement consists of a loan between Shah,
on the one part, as lender, and Shumba and ERF Bryanstan Cc on the
other, as borrowers. The loan amount is UD$500,000.
The second
agreement is for the sale of the entire shareholding in Indium concluded
by Shumba and his wife, on the one part, as sellers, and Shah and
Shaleetha Mahabeer, on the other, as purchasers.
The last agreement is the lease agreement concluded between Indium, as lessor, and Kingshaven, as lessee, on 14 December 2007.
The two matters instituted by Indium were, by consent of the parties, consolidated for trial before the High Court.
In dismissing the claims, the court a quo stated:
“He
intended to secure a windfall by all means legally possible. His legal
practitioner advised a web of agreements to ensure he remained within
the realms of the law. A loan here, a purchase of shares there and a
lease with a buy-back option to crown it all, was all it took to secure
apparent control of the debtor's immovable property in Zimbabwe without
any reference to its true value. Clearly, whatever the parties decided
to call it, the agreement to take over control of the plaintiff company
from Shumba without paying for it amounted, in my view, to a pactum
commissorium.
It is the substance, not the form, to which the court looks when deciding the true nature of an agreement.
Consequently,
therefore, the second issue, whether annexure “C” amounts to a pactum
commissorium is determined in defendants favour.
I have already
found that the payment in South Africa, by Shah, was intended as a loan,
as pleaded by plaintiff; therefore, there is no evidence to suggest
that the same payment doubled as payment for shares in Indium
Investments (Private) Limited. That issue is resolved in favour of the
defendants as well.
The transactions were clearly in fraudum
legis. The law in this jurisdiction is clear. Where the contract which
is in fraudum legis is performed, the court cannot come to either
party's assistance.”
The appeal is premised on the following grounds:
1.
That, the court a quo erred in not finding that in the absence of a
plea for rectification of a contract, the parole evidence rule operates
to exclude extrinsic evidence to disprove the contents of a written
contract. (sic)
2. The court a quo erred in not finding that
returns lodged with the Registrar of Companies are prima facie proof of
the correctness thereof, and the same cannot be impugned without the
joinder of the Registrar of Companies.
3. Consequently, and for
the stronger reason in view of grounds of appeal 1 and 2 above, the
court a quo erred in holding, that, the respondents had discharged the
onus of justifying possession of the appellant's property within the
context of the actio rei vindicatio.
4. The court a quo erred in
fact and in law in holding, that, the agreements in question were
simulated agreements which “mimicked” the South African agreements.
5.
The court a quo erred in any event in holding, that, the agreements,
the subject of the litigation, were in fraudem legis in that they sought
to evade the exchange control legislation, in view of the fact that
free funds were paid to the credit of a South African resident, and in
not finding that the fact that such South African resident was a citizen
of Zimbabwe and did not give rise to the need for exchange control
approval.(sic)
6. The court a quo erred in fact and in law in
holding, that, the agreements, the subject of the litigation a quo, were
a pactum commissorium.
Counsel for the appellant urged us to
find, that, the learned judge in the court a quo had not dealt with the
case that was placed before him.
It was his contention, that, the
matter before the court was principally for the cancellation of the
lease agreement between Indium and Kingshaven and consequential
relief. He argued, that, it was essentially a rei vindicatio.
What
the court a quo did, however, it is argued, was to turn its focus on a
completely different issue which it could not competently determine, and
made findings which cannot be supported. It is contended that the court
thereby misdirected itself.
In my view, the dispute can be
resolved by this court having regard to the manner in which the court a
quo dealt with what it referred to as the simulated agreements, and,
secondly dealing with the actio rei vindicatio in accordance with the
claims in the summons.
THE ALLEGEDLY SIMULATED AGREEMENTS
In
answer to the claim for the eviction of Kingshaven from the premises,
the respondents raised various defences, namely, that, Shumba and his
wife had borrowed a specified sum of money from Shah, and that, as
security for their due performance thereon, the latter had demanded
security, in Zimbabwe, in the form of shares in Indium. They pleaded
further, that, the parties entered into a simulated agreement for the
sale of shares in Indium which ultimately resulted in the lease
agreement providing for a buy back option in favour of Shumba and his
wife.
There is no suggestion on the papers, that, Indium participated in any of the agreements, except the lease.
It then begs the question, which parties the court a quo referred to when it concluded that the agreements were fraudum legis.
It
is common cause, that, the loan agreement was between ERF 825 Bryanston
Cc, in which Shumba and his wife owned shares, and Shah.
ERF
Byanston Cc was not cited as a party to the proceedings before the court
a quo. Shah only appeared in the proceedings in the court a quo as a
witness on behalf of Indium.
In the circumstances, the court
could not have properly considered the loan agreement, or its legality,
in the absence of the parties thereto.
I turn next to the “Share Sale” agreement in relation to the shares in Indium.
The
parties to the sale of the shares were, on the one part, Shumba and his
wife, as sellers, and, on the other part, Jayesh Shah and Shaleetha
Mahabeer.
The last two were never before the court as parties,
and, the agreement for the sale of shares could therefore not be
scrutinised to any extent by a court in their absence.
Consequently,
the determination by the court of the issues related to the lease
agreement concluded by Indium and all the respondents, in reference to
the share sale agreement, was highly irregular. It follows, therefore,
that, any issues referred to the trial court for determination in
relation thereto would be irregular.
It is therefore logical to conclude, that, the court a quo dealt with matters and issues that were not before it.
This leaves Indium, Kingshaven, Shumba and his wife.
They were parties to a document, being the lease agreement, which is the only document properly before the court.
Those
were the parties that were before the court, and, therefore, the only
dispute for determination was that arising from the lease agreement in
respect of which the court had to determine the respective rights and
obligations of the parties before it.
In the absence of a
counter-claim for declarations of invalidity in respect of the
agreements discussed above, the court could not grant relief to the
effect, that, the agreements were invalid. At best, it was argued, the
court ought to have granted absolution from the instance.
I think the criticism is well taken....,.
THE VALIDITY OF THE LEASE AND THE REI VINDICATIO
I
turn then to discuss the real issue before the court a quo, that is,
the claim for the eviction of Kingshaven, and through it, Shumba and his
wife, from its premises.
The preamble to the lease agreement
acknowledges, that, Jayesh Shah and Shaleetha Mahabeer have become the
beneficial owners of shares in Indium Investments (Private) Limited. The
relevant provision states:
“Whereas by a sale of shares
agreement between JAYESH SHAH and SHALEETHA MAHABEER on the one part,
and DANIEL SHUMBA and LINDA SHUMBA on the other, JAYESH SHAH and
SHALLETHA MAHABEER have become the beneficial owners of shares in INDIUM
INVESTMENTS (PRIVATE) LIMITED.”
In turn, Indium is the registered owner of the premises.
In
terms of clause 3.1 of the lease agreement, the lessee undertook to
deposit an amount of Z$ One Billion as security for the due performance
by it of its obligations under the lease. Rental for the premises was
set at Z$ One Billion per month payable in advance and reviewable from
time to time.
In recognition of the prior ownership of the shares
in Indium by Shumba and his wife, in terms of clause 13.1 of the lease,
the latter were granted an option to repurchase the shares in Indium.
The option was to expire on 9 October 2008.
It is common cause that the option was not exercised.
In
February 2008, Indium advised Kingshaven that it was in breach of its
obligations under the lease to pay rentals and cancelled the lease. On
10 December 2008, the lease also expired through the effluxion of time.
Indium, again, issued summons, this time claiming return of the premises
by virtue of the expiry of the lease through the effluxion of time.
In
the plea to the claim for their eviction from the premises, the
respondents admitted that the appellant was the registered owner of the
premises.
The claim, as pleaded by the appellant, was a simple actio rei vindicatio.
The
nub of the actio rei vindicatio is that an owner is entitled to reclaim
possession of his property from whosoever is in possession thereof.
As was stated in Chetty v Naidoo 1974 (3) SA 3…,.:
“It
may be difficult to define dominium comprehensively (cf. Johannesburg
Municipal Council v Rand Townships Registrar & Ors 1910 TS 1314 at
1319), but, there can be little doubt…, that, one of its incidents is
the right to exclusive possession of the res, with the necessary
corollary that the owner may claim his property wherever found, from
whomsoever holding it. It is inherent in the nature of ownership that
possession of the res should normally be with the owner, and, it follows
that no other person may withhold it from the owner unless he is vested
with some enforceable right against the owner (eg. a right of retention
or a contractual right).”
As a consequence, once the ownership
by Indium, of the premises, was acknowledged and accepted by the
respondents, all that the court a quo had to determine was whether
Kingshaven had any legal right to remain in possession of the same.
Therefore,
the simple task before the court a quo was to decide whether or not a
lease agreement existed between the parties as alleged, and, thereafter,
to determine whether or not the claim for eviction on the lease was
well founded.
This, the court failed to do. It went on to make wider pronouncements on relationships that were not before it.
It thereby misdirected itself.
The
principle of rei vindicatio was applied in Stanbic Finance Zimbabwe Ltd
v Chivhungwa 1999 (1) ZLR 262 (H) by MALABA J…, where he remarked as
follows:
“The principle on which the actio rei vindicatio is
based is that an owner cannot be deprived of his property against his
will, and that, he is entitled to recover it from any person who retains
possession of it without his consent. The plaintiff in such a case must
allege, and prove, that he is the owner of a clearly identifiable
movable or immovable asset and that the defendant was in possession of
it at the commencement of the action. Once ownership has been proved,
its continuation is presumed. The onus is on the defendant to prove a
right of retention: Chetty v Naiddo 1974 (3) SA 13 (A) at 20A-C:
Makumborensa v Marini SC130-95 p2. It follows that the action is based
on the factual situation that prevailed at the time of the commencement
of the legal proceedings.
Once an owner proves that the property
is his, and that the defendant originally obtained possession of the res
pursuant to a contract, the owner is obliged to prove that such a
contract has expired or that he was entitled to cancel it, and has,
indeed, terminated it.
In Chetty v Naidoo (supra) it was emphasised that:
'…,
a plaintiff who claims possession by virtue of his ownership must ex
facie his statement of claim prove the termination of any right which he
concedes the defendant would have had but for the termination.'”…,.
The only defences available to a defendant in the position of the respondents are the following;
(i) That he had a right to possess;
(ii) That he was not in possession; or
(iii) That the plaintiff is not the owner.
It
is worth noting, that, the respondents did not plead any of these
defences. In truth, they could not have as they had a lease with Indium,
the termination of which they did not deny or place in issue.
The validity of the lease agreement is confirmed.
Counsel
for the appellant has, however, further submitted that the court, in
the face of this clear claim, then went on to grant judgment in favour
of the respondents in the absence of a counter claim.
In African Farms and Townships v C.T. Municipality 1963 (20) SA 555 (AD) STEYNE CJ made the following remarks:
“Counsel
for the appellant further argued that the order in the original
proceedings, which as such is an order dismissing the application, is to
be equated with absolution from the instance, leaving the issue
undecided. In my view, there is no substance in that argument. As Sande,
De Diversis Regulis ad l. 207, points out, the res judicata is not so
much the sentential, the sentence, or the order made, as the lis or
negotium, the matter in dispute or question at issue about which the
sententia is given, or the causa which is determined by the sententia
judicis.
As pointed out in Purchase v Purchase 1960 (3) SA 383
(N) at p385, dismissal and refusal of an application have the same
effect, namely, a decision in favour of the respondent.
The
equivalent of absolution from the instance would be that no order is
made, or that leave is granted to apply again on the same papers.
In
Commissioner of Customs v Airton Timber Co. Ltd 1926 CPD 351 at p359,
WATERMEYER J draws a distinction between the actual judgment and the
reasons for judgment, and expresses the view, in effect, that, where the
decision of a particular question, although dealt with in the reasons
for judgment, is not incorporated in the actual judgment, and the
question is not necessarily determined by the judgment, the matter is
not res judicata.
I do not understand this to mean, that, where a
Court decides the particular issue raised and dismisses the
application, the question decided is not res judicata. If that is what
it does mean or imply, I would be unable to agree with it. In the
present case, having regard to the judgment, the import of the order is
clearly, that, on the issues raised, the Court found against the
appellant and in favour of the respondents.”
A dismissal of the plaintiff's claim is a judgment in favour of a defendant.
It is my view, that, the dismissal had the effect of awarding the respondents judgment in their favour.
I turn next to the relief being sought.
In
the prayer, the appellant seeks an order for the setting aside of the
judgment of the court a quo and its substitution with an order entering
judgment in its favour in terms of the summons.
In addition to the cancellation of the lease, Indium sought the following relief:
“2.
An order directing the defendants, and all those claiming occupation
through them, to vacate the premises situate Stand 450 Avondale West
Township of Stand 390 Avondale West, otherwise known as 108 West Road,
Strathaven, Harare ('the premises').
3. An order, that, in the
event that within forty-eight (48) hours of the date of the above order
being issued and the defendants failing and/or neglecting and/or
refusing to comply, the Sheriff for Zimbabwe, or his lawful deputy for
Harare, duly assisted by the Zimbabwe Republic Police, if need be, be
authorised, empowered, and directed to eject the defendants from the
premises, and all those claiming occupation through them, and to hand
over vacant occupation of the premises to the plaintiff or its
authorised agent or representative.
4. An order precluding and restraining the defendants from removing any item of property from the premises.
5. An
order for payment of the sum of $Z2,567,000,000 (two billion five
hundred and sixty seven million dollars) together with interest thereon
calculated at the prescribed rate to the date of payment as follows:
5.1 On Z$567,000,000.00 (five hundred and sixty seven million dollars) with effect from 10 December 2007;
5.2 On Z$1,000,000,000 (one billion dollars) with effect from 1 January 2008; and
5.3 On Z$1,000,000,000 (one billion dollars) with effect from 1 February 2008.
6.
An order for holding-over damages at the rate of Z$4,000,000,000 (four
billion dollars) per month with effect from 1 March 2008 to the date
that the plaintiff recovers vacant occupation of the premises aforesaid,
such rate to be adjusted from time to time in accordance with market
rates.
7. An order for interest on the sum of holding over
damages aforesaid at the prescribed rate from the date each amount
becomes due and payable.
8. An order for payment of the sum of
Z$10,000,000,000 (ten billion dollars) together with interest thereon at
the prescribed rate from the date of judgment to the date of payment.
9. Costs of suit as between legal practitioner and client.”
The appellant sought for an order confirming the cancellation of the lease.
It
is common cause that the lease has expired through the effluxion of
time. Its expiry is not in dispute and it is not necessary to confirm
its cancellation. As a consequence, an order for the eviction of the
respondents from the premises will issue....,.
The
claim for holding over damages is premised on the lease agreement, and,
it would follow from a confirmation of the cancellation of the lease.
The same considerations would apply to the claim for arrear rentals, as
that would be a consequence of the finding that a valid lease existed
between Kingshaven and Indium.
The amounts
claimed were denominated in the local currency and were never converted
to the United States Dollar currency in the trial below.
They therefore remain an issue for determination by the court a quo....,.
The
trial court can take judicial notice of the fact, that, the country,
and, indeed, every person in the country uses foreign currency to
transact and that the country adopted a multi-currency regime with
effect from February 2009. It is also worthy to note that the Zimbabwe
Dollar has since been demonetized.
To that end, justice would
best be served if the parties were to adduce evidence from experts in
the field of real estate as to any sums that may be owing under the
headings on which the matter is remitted for the adduction of
evidence....,.
Accordingly, the appeal succeeds
to the extent that the lease agreement is held to be valid and an order
for the eviction of the respondents shall ensue. The matter is remitted
for the determination of the arrear rentals and holding over damages
before the court a quo....,.
The appeal is allowed with costs to the extent provided for hereunder:
1. The judgment of the court a quo is set aside and substituted with the following:
'(i)
It is declared that the lease agreement between the plaintiff and the
first respondent has terminated through the effluxion of time.
(ii)
The defendants and all those claiming occupation through them shall
vacate the premises, being Stand 450 Avondale West Township of Stand 390
Avondale West, otherwise known as 108 West Road, Strathaven, Harare
within seven (7) days of the date of this judgment, failing which the
Sheriff for Harare or his lawful deputy is hereby authorised to eject
them from the same and give vacant possession to the plaintiff or its
duly authorised agent or representative.
(iii) The defendants be
and are hereby precluded and prevented from removing, with the exception
of personal items belonging to them, any item of property from the
premises....,.
2. The issue relating to the
payment of sums of money claimed under paras (e) to (g) of the prayer in
the declaration are remitted to the court a quo for a determination on
the substance of what sums are due and owing.
