MATHONSI
J:
On
16 April 2014 the 2 applicants instituted summons action against the
respondent for an order of cancellation of a lease agreement entered
into between the parties on 5 December 2013 in terms of which the
applicants leased out to the respondent certain premises being Stand
531 Nikolova Crescent Borrowdale Brook, Harare on certain terms and
conditions, and the eviction of the respondent.
They
also sought an order for arrear rentals, a late payment fee,
electricity bill and other levies.
The
basis of the claim was that the respondent defaulted in paying
rentals resulting in arrears accumulating to a sum of $13,600.00, she
failed to pay levies of $500.00, electricity bill of $601.00 and was
therefore liable in terms of the lease agreement to pay a 10% late
payment penalty.
The
respondent entered appearance to defend and in due course, a plea in
which she effectively only contested the penalty stipulation relating
to late payment of rentals was filed. She averred in para(s) 2 to 4
of that plea that:
“2.
Ad
para 4
The
terms of the lease agreement are noted and defendant pleads that the
terms mentioned under subpara 4.4 which provided for late payment
penalty fee of 10% over and above the claim of interest in subpara
4.5 contravenes the Contractual Penalties Act in that such penalty
stipulation is out of proportion to any prejudice that would have
been suffered by the plaintiffs. Enforcement of that penalty
stipulation will result in plaintiffs being unjustly enriched.
3.
Ad
para 5
The
defendant pleads that her failure to pay the rentals for the period
in question is due of (sic)
the fact that there was a robbery at the leased premises and her
merchandise valued at $17,000.00 was stolen. The said robbery/theft
was reported to the police and pending investigations. It is from the
stolen merchandise that defendant realised the money for rentals and
derive her livelihood. The defendant is making frantic efforts to
settle the debt from other sources.
4.
Ad
para 6-7
This
is disputed. The defendant has since paid the electricity bills and
levies which are now up to date.”
The
applicants were obviously not impressed by that plea, and believing
that appearance has been entered for purposes of delay, they launched
the present application for summary judgment on the basis that the
defendant does not have a bona
fide
defence especially as the respondent had previously acknowledged
indebtedness.
Not
to be outdone the respondent filed opposition, maintaining her
challenge to the penalty stipulation as stated in her plea. She went
on to say that after the summons was issued against her, she paid
certain sums of money to reduce the rent arrears and also paid the
electricity bills and outstanding levies.
The
applicant may have been correct in approaching the court seeking
summary judgment for essentially 2 reasons, namely that on 29 August
2014, well after the proceedings were instituted, the respondent
vacated the premises in capitulation and that the respondent paid
$5,000-00 towards arrear rentals leaving a balance of $8,600.00 which
she admits she owes. She also paid the outstanding electricity bill,
again a clear indication that the claim for that was well grounded.
In fact, Mr Mkwachari
who appeared for the respondent conceded that the only issue being
contested is the 10% penalty for late payment of rent. Clearly
therefore in respect of the other defences, the respondent was trying
her luck. They will not detain us here.
The
procedure for summary judgment was meant to eliminate bogus defences
and those defences which are bad at law as to have no substance or
merit: Roscoe
v
Stewart 1933
CPD 138.
It
is provided for in rule 64(1) of the High Court of Zimbabwe Rules,
1971 and in terms of subrule (2) of that rule, it is made when the
applicant harbours the belief that there is no bona
fide
defence to the action.
A
respondent who is faced with such application must then disclose a
defence and material facts upon which such defence is based with
sufficient clarity and completeness so as to persuade the court that
if proved at the trial those facts will constitute a defence to the
claim: Hales
v
Doverick
Investments (Pvt) Ltd
1998 (2) ZLR 235 (H) 239 A-B.
Not
every defence raised will succeed in defeating a plaintiff's claim
for summary judgment. The defendant must allege facts which, if
established, would entitle him to succeed at the trial; Kingstons
Ltd v
D.
Ineson (Pvt) Ltd 2006
(1) ZLR 451 (S) 458 F-H; Jena
v
Nechipore
1986
(1) ZLR 29 (S).
The
applicant claims a sum of $1,300-00 as a penalty for late payment of
rent because the respondent, by her own admission, did not pay rent
during the period extending from January 2014 up to the time the
summons was issued in April 2014, a period of 4 months.
It
would be noted that the rent was payable monthly in advance.
The
respondent, who went into the agreement of lease with her eyes very
wide open, argues that the penalty is oppressive and in breach of the
Contractual Penalties Act [Chapter
8:04]
and results in unjust enrichment given that the applicant is also
entitled to levy interest on outstanding rentals.
Section
4 of the Contractual Penalties Act [Chapter
8:04]
allows the court to act on a penalty stipulation if it appears to it
that it is out of proportion. It reads:
“(1)
Subject to this Act, a penalty stipulation shall be enforceable in
any competent court.
(2)
If it appears to a court that the penalty is out of proportion to any
prejudice suffered by the creditor as a result of the act, omission
or withdrawal giving rise to liability under a penalty stipulation,
the court may -
(a)
reduce the penalty to such extent as the court considers equitable
under the circumstances; and
(b)
grant such other relief as the court considers will be fair and just
to the parties.
(3)……….
(4)
In determining the extent of any prejudice for the purposes of
subsection (2), a court shall take into consideration not only the
creditor's proprietary interest but every other right-ful interest
which may be affected by the act, omission or withdrawal in
question”.
Section
5 of that Act dis-entitles a creditor to both the penalty and
damages. It says nothing about a creditor's entitlement to both
interest and penalty.
In
fact nothing prevents a creditor from levying both the penalty and
the interest on an outstanding debt. The respondent can therefore not
rely on the existence of both the penalty and interest in the lease
agreement of the parties.
Can
she rely on the quantum of the penalty in raising a defence?
Unfortunately
the defence which the respondent tries to rely upon is unnecessarily
bald, vague and sketchy. She has not submitted sufficient information
to enable the court to assess the defence properly. These
generalities and unsubstantiated facts will not help the respondent
at all; District
Bank Ltd v
Hoosain
& Ors
1984 (4) SA 544 (C) 547 G-H.
The
applicant's claim for the penalty is premised on clause 4 of the
lease agreement the relevant part of which states:
“If
the rent or any other payment due is not received in full by the
owner by the seventh day of the month, the Lessee agrees to pay (and
accept that this fee is fair and reasonable) a
late payment fee of 10% of the amount due as compensation for the
cost of additional administrative work for that month arising out of
the Lessee's delay. Reminder: the late payment of rent after the
SEVENTH day of any month can result in the cancellation of your lease
– See clause 17. In addition to the late payment fee the
Lessor may at its sole discretion charge interest
for every month on which the rent is outstanding at the rate at which
the lessor's bankers charge on unsecured overdrafts.” (The
underlining
is mine)
It
is significant to note that the respondent agreed in that agreement
that the penalty was fair and reasonable and that the applicant has a
discretion to levy interest over and above the penalty. What this
means is that the respondent may well be estopped from contesting the
penalty on the basis of unfairness and unreasonableness. She seems to
have opted to challenge it on the basis that the applicants cannot
have both the penalty and interest. This is despite the fact that
clause 4 entitled the applicants, at their sole discretion, to both.
I
fully subscribe to the views of JESSEL M.R. in Printing
Registering Co v
Sampson
19
Eq 462 at 465 that:
“If
there is one thing which more than any other public policy requires,
it is that men of full age and competent understanding shall have the
utmost liberty of contracting, and that their contracts when entered
into freely and voluntarily shall be held sacred and shall be
enforced by courts of justice. Therefore you have this paramount
public policy to consider – that you are not lightly to interfere
with this freedom of contract.”
A
reculcitrant tenant who accepted to be bound by the terms of the
lease agreement including the prompt payment of rentals in advance
failed to abide by its terms. She accepted that in the event of
failure to timeously pay rent, she would be subjected to both a
penalty and interest on the outstanding rent. Having failed to pay
rent on time and with the landlord now seeking enforcement of the
agreement, she rushes to shelter under a provision in the Contractual
Penalties Act which she has not adequately ventilated. In my view,
this cannot succeed in defeating a summary judgment application as,
first and foremost, courts of law should give effect to the sanctity
of contract.
I
conclude therefore that the applicant is entitled to summary
judgment. Accordingly it is ordered; that;
1.
The respondent shall pay to the applicant rent arrears in the sum of
US$8,600.00 including interest at the rate charged by the lessor's
bankers on unsecured overdrafts from due date to date of payment in
full.
2.
The respondent shall pay the late payment fee of US$1 360.00.
3.
The respondent shall pay US$500.00 being money for the outstanding
Borrowdale Brook levies.
4.
The respondent shall pay the costs of suit on a legal practitioner
and client scale.
Mtetwa
and Nyambirai,
1st
& 2nd
applicants' legal practitioners
T
H Chitapi & Associates,
respondent's legal practitioners
