Civil
Trial
TSANGA
J:
The plaintiff, Zimbabwe United Passenger Company, better known as
ZUPCO issued summons in 2006 for the eviction of the defendants or
any persons occupying the premises through them, to vacate premises
known as No.9 Hood Rd, Southerton, Harare.
ZUPCO
also sued for costs jointly and severally on a higher scale.
The
background to the claim was that ZUPCO initially entered into a one
year lease agreement with the defendants in November 2001 which lease
commenced in January 2002 to the end of that year.
Subsequently,
on 25 November of 2003, a letter had been written by the then Chief
Operating Officer as well as the then Acting Finance Controller,
communicating the renewal of the lease agreement for a five year
period with effect from 1 January 2004 to December 2009.
This
being during the Zimbabwean dollar era, rentals payable were pegged
at Z$1,000,000.00 and were to be reviewed quarterly.
The
lease was to be renewable for a further five years on agreed terms
and conditions.
Endorsed
in handwriting on the letter was also that the actual lease agreement
would be submitted for signing.
No
written agreement however was ultimately ever signed.
The
first and second defendants are Mr Jayesh Shah and Gift Investments
(Pvt) Ltd respectively. Mr Jayesh Shah was the Managing Director of
Gift Investments at the relevant time.
In
seeking the defendants vacation from the premises, ZUPCO in its
declaration stated that the defendants had become statutory tenants
with effect from 31 December 2003, and that it now required the
premises for its own use.
In
the alternative, ZUPCO pleaded that the termination of the first
lease, and, upon failure to reduce the new agreement into a written
lease, an implied lease agreement was entered into for a period of
five years with rentals reviewable quarterly.
Further,
they pleaded that the agreement could be terminated on three months
notice.
Upon
breach for failure to pay rentals, ZUPCO pleaded that it was entitled
to terminate the lease agreement.
ZUPCO
later amended its claim to insert a further alternative claim being
that on 15 October 2003, the first defendant Jayesh Shah, had
corruptly paid a bribe to the then Chairman of ZUPCO Professor
Nherera, and to its then Chief Executive Officer, Mr Bright Matonga,
in order to induce the renewal of the lease from 1 January 2004 to 31
December 2009.
It
was also averred in the amendment that ZUPCO's board was not aware
of this and only became privy of this through an affidavit deposed to
by Jayesh Shah indicating that he had paid US$20,000.00 at
US$10,000.00 apiece to each of them for the purposes of inducing the
extension of the lease.
ZUPCO
therefore averred that the extension of the lease was not
enforceable.
The
defendants refused to vacate.
The
essence of their plea was that there was a lease agreement
communicated to them by way of a letter indicating that the terms
were to be reduced to writing. The defendants further emphasised that
the fact that no standard lease agreement was ultimately signed, did
not mean there was no lease agreement.
They
denied breaching the lease and put ZUPCO to the strictest proof
thereof.
As
regards the purported bribe, the defendants stance was that they paid
in circumstances that amounted to extortion and that ZUPCO was bound
by the terms of the agreement as its then Chief Executive Officer and
the then Chairperson of ZUPCO to whom the money had been paid, had
been acting in their official capacity.
Whilst
summons were issued in 2006, due to delays by the parties themselves
the matter was finally only heard in 2015.
Even
then there was a break in the trial as the parties had unsuccessfully
tried to find each other.
Of
significance is that by the time trial was heard in 2015 the lease
period in the disputed lease had long since expired and had not been
renewed.
The
Evidence
Professor
Chipo Dyanda gave evidence on behalf of ZUPCO in her capacity as the
Chairperson of the ZUPCO Board at the time of the trial and having
been a board member in 2002.
Her
evidence in chief was that the Board had made a resolution in 2005
that it needed the premises for its own use due to its growing fleet.
Whereas in 2002 when the premises had originally been leased they had
a negligible fleet, her evidence was that by 2005 their fleet had
grown such that they now needed the premises. The fleet had grown to
about 100 buses at the time.
This
need had been communicated in writing to the defendants and notice
had been given asking them to vacate by the 31 May 2005.
It
had also been communicated in that letter that the rentals payable
were below market value and would be increased from Z$1 million a
month to Z$34 million.
She
further explained that its Northern Division has had to rent premises
in Chitungwiza which she said would not have been necessary if they
had access to their own property. Accidents were said to sometimes
occur as shunters fail to manoeuvre the limited space at these other
depots.
About
350 buses were said to have been bought between 2011 and 2014 and
some were being refurbished. The size of the fleet was described as
approximately 500 buses.
ZUPCO's
efforts to diversify its operations include a cargo division was also
highlighted to as well as its intended acquisition of new buses which
will take its fleet to approximately 600.
She
stated that at the very least given the resistance to leave, ZUPCO's
expectation had been that the defendants would vacate once the lease
expired since the lease that the defendants placed reliance on had
not been renewed.
She
also emphasised ZUPCO's status as a State enterprise which needs to
effectively discharge duties and was being hampered from doing so by
the continued occupation of the premises by the defendants.
In
terms of the non-payment of rentals at the material time the summons
were issued, what she put to the court was that the defendants had
persistently at the material time refused to pay the rentals asked
for and were at one time paying as little as $1.00 due to the high
rate of inflation at the time.
Her
evidence was whilst the finer details were operational issues, in any
event ZUPCO was not seeking any backdated rentals.
The
reason why the defendants had refused to vacate was said to be
because they had a lease agreement which was valid until 2009.
She
stressed that with 2009 having come and gone, whatever had been the
basis for his refusal to vacate had ended.
She
also emphasised that ZUPCO's position in any event had been that
there was no lease agreement since the purported lease had not been
reduced to writing.
Mr
Shah who was the Managing Director of Gift investments at the time
the lease agreement was entered into gave evidence.
He
had negotiated the lease on behalf of Gift Investments.
The
gist of his evidence was that apart from leasing the premises from
ZUPCO, Gift Investments had also been a supplier of buses and spares
to ZUPCO. He said as at February 2005 it was owed a sum of
Z$2,735,561,369.86 by ZUPCO from which he stated that ZUPCO could
have offset its rentals since it was at that time that ZUPCO had
given notice of its rental increase.
The
reason for the defendants objection to the payment of increased
rentals at the time was said to be because the amount represented a
3400% increase.
The
defendants preference had been that the matter be referred to the
Rent Board which it said ZUPCO had not done.
There
were other subsequent letters are regards rental increases which he
said all included increases that were exorbitant.
Mr
Shah stressed that having been forced to pay the then Chairperson of
ZUPCO Professor Nherera and the then CEO Mr Matonga US$20,000.00 the
quest for his eviction was spurred by his subsequent refusal to pay
them a further bribe of US$5,000.00 for every bus supplied by Gift
Investments to ZUPCO.
He
said he had refused and had instead reported the matter to various
arms of government.
Whilst
he conceded refusing to pay the rentals that were being asked for on
account of the sums being exorbitant, he stated he was never
technically in arrears as claimed since defendants paid what they
deemed due in the absence of the Rent Board's approval.
He
also stressed that ZUPCO in fact owed it money and that spares had
been ordered on its account which they were still holding in stock.
These stocks held on behalf of ZUPCO were said to be well over a
million dollars.
He
also complained of defendant's refusal to take into consideration
the fact that improvements had been done to its premises and that
permanent structures had been put up.
A
commitment was said to have been made to give him the option to
purchase and it was said that investments on the premises had been
made on that ground.
He
maintained that the purported eviction was because of the refusal to
pay the two ZUPCO officials US$5,000.00 per bus.
This
was despite the fact that the two officials had long since left
ZUPCO.
The
need by ZUPCO of its own premises was denied.
Only
Mr Shah gave evidence but it was very apparent from his evidence that
his interests and those of Gift Investments were in fact inseparable.
The
second defendant who was legally represented opted to not to give
evidence despite having cross examined the first defendant as if
their interests were separate and having asked leading questions of
the first defendant.
The
purpose of this cross examination appears to have been to merely
enter information into the record.
Not
surprisingly, the plaintiff's counsel raised valid objections to
the stance that had been adopted by the second defendant's counsel
when it became clear that the second defendant would not be giving
evidence as there would be no opportunity to cross examine the second
defendant.
The
High Court Rules, 1971 are clear on co-defendants who are represented
by different legal practitioners and where their interests are the
same.
“443.
Legal practitioner for co-defendants: cross-examination: order of
addresses Co-defendants may be represented by different legal
practitioners
Where
the interests of the defendants are the same, the case shall proceed
as though the defence were joint and not separate. Where the
interests of the defendants are different, the legal practitioner for
each defendant shall be allowed to cross-examine plaintiff's
witnesses and to address the court in such order as the court shall
decide.”
Of
significance is that where the interests of the co-defendants are the
same the rules are clear that the case shall proceed as though the
defence were joint and not separate.
It
was very clear from Mr Shah himself that at the material time he was
the Managing Director of Gift Investments and that he continues to
have interests in this company as a major investor. At the start of
the trial the defendants had indicated that they were proceeding by
way of separate representation on account of Mr Shah having been a
former director and having separate interests.
Where
interests are said to be separate the rules of the High Court, 1971
provide as follows:
“444.
Procedure where co-defendants are opposed in interest to each other
Where
co-defendants are opposed in interest to each other, permission may
be given to each defendant or set of defendants to open and prove
their cases separately as well as to cross examine each other's
witnesses.”
No
such permission was sought to cross examine.
The
separation of Mr Shah from Gift Investments at the start of the trial
had been in attempt to argue that the lease agreement had not been
entered into with Gift Investments, but with Mr Shah.
I
had dismissed this argument in the application for absolution from
the instance. See ZUPCO v Jayesh Shah & Anor HH644/16.
The
cross examination of Mr Shah by the second defendant as co-defendant
was therefore not proper and is disregarded in this case.
Analysis
At
the close of the defendant's case the plaintiff sought an amendment
of its claim to introduce the following paragraph:
“The
purported lease agreement from the period 1 January 2004 to 31
December 2009 has since expired while those legal proceedings were
pending. The defendant has no cause for continued occupation of the
disputed premises. Accordingly, the plaintiff seeks an order for
their ejectment.”
Mr
Shah who gave evidence opposed this application on the ground that
the application had not followed the rules of the court in particular
Rule 134(2) which states that the court or judge granting such leave
shall fix the times for the defendant's entry of appearance to the
new cause of action and for the filing of all subsequent pleadings.
In
particular, reliance was placed on the case of ZFC Ltd v Taylor 1999
(1) ZLR 308 (H) which articulates that where the other party does not
consent to an amendment, then the proper procedure is to make an
application either to court or to judge in chambers depending on the
criteria set in Rule 226 which deals with court applications.
The
gist of his objection was that there was no affidavit in support of
the amendment and that there was no draft order.
It
was therefore argued that the purported amendment was a nullity and
the cases of Macfoy v United Africa Co. Ltd 1961 ALL ER 1169 (PC) at
11721; Muchakata v Netherburn Mine 1996 (1) ZLR 153 (S) at 157(B)
were relied on heavily for the point that a void act has no legal
standing.
Mr
Shah also argued that the amendment would be prejudicial to the
defendants and that this could not be remedied by an order of costs.
He
also argued that the amendment pleaded a new cause of action which
had not been pleaded in the alternative.
He
maintained that the amendment would further necessitate the reopening
of the pleadings and the referral of the matter to another pre-trial
conference.
Materially
this was an amendment sought at the close of the trial.
Rule
132 is the starting point as it states that pleadings can be amended
at any time prior to judgment.
It
would of course be highly unusual if not undesirable to have to send
a matter back for pre-trial where in effect all the evidence has been
given.
Suffice
it to state that where an amendment is sought under such
circumstances when evidence has been led, it would simply be for the
court to make a decision at that point whether or not to allow the
amendment to conform to the evidence and to raise the unpleaded
issue.
I
do not agree that under such circumstances so late in the day a
formal application would have to be made.
The
overall purpose of allowing pleadings at any time prior to judgment
is to facilitate a judgment on the merits. This is the fundamental
basis upon which a court will exercise its discretion especially in a
case such as this where evidence has been led.
What
is important is that the quest for amendment should not be made in
bad faith. See Lamb v Beazely NO 1988 (1) ZLR 77 (H).
In
this instance it is not necessary to decide on the issue of whether
or not to allow the amendment at this point given Mr Shah's own
very clear articulation of the circumstances that surrounded the
renewal of the lease in the first instance and the gravamen of his
dispute.
The
lease agreement as he stated, and, as supported by his affidavit
which was before the court, was grounded in extortion and his
agreement to pay the bribe of US$20,000.00 to have the lease renewed
and to have ZUPCO purchase its buses from him.
There
is no doubt in my mind that if these were the circumstances upon
which the lease was renewed then there was no lease at all as the law
does not recognise contracts that are founded on illegalities.
I
agree with the plaintiff's counsel that it makes absolutely no
sense for the defendant to insist on holding on to a lease that was
clearly obtained in violation of the law.
Mr
Magwaliba relied on the case of Dumbura v Mahwehwesa 2010 (2) ZLR 62
(H) in which an agreement grounded in extortion was deemed void and
unenforceable by the court.
I
am also in agreement with Mr Magwaliba that this was a case where the
defendants clearly made a decision to associate in an illegal
enterprise for their own private gain.
The
lease agreement from 1 January 2004 to 31 December 2009 was an
illegality.
Therefore
the fact that it has since expired is neither here nor there and as
there was never a legal contract as a result of the payment of the
bribe which was extorted or otherwise.
There
is no official who is employed to breach the law and to receive
bribes and therefore it cannot be said that the then ZUPCO officials
whom he paid were acting in the course of their duty.
The
act of giving something of value to an official or agent in exchange
for the official or agent exercising his or her authority in a manner
favourable to the party giving the payment is the essence of bribery.
The
rule of law must be upheld in the fight against corruption in any
shape or form regardless of its manifestation such as succumbing to
extortion, or paying for favours or kickbacks.
Both
the person asking for the bribe and the person paying for the bribe
are just as guilty of illicit conduct.
No
public officer is ever put in place so he can ask for bribe and no
business person should expect to benefit from any agreement that may
have come his way after the payment of a bribe. Instead of paying, he
should have raised the alarm at the time and not just be aggrieved
when the next bribe was now being sought.
The
defendant's argument that he is a statutory tenant cannot hold.
There
was simply no legal contract entered into with effect from January
2004.
The
fact that the contract may thereafter have been enforced is neither
here nor there.
In
any event Mr Shah was equally clear in his evidence that he refused
to pay increased rentals because they were exorbitant.
Yet
Zimbabwe's inflation is well documented.
By
mid-November 2008 it is documented to have reached a staggering rate
79,600,000,000% and the time needed for prices to double was a mere
24.7 hours.1
The
first defendant did not dispute that at one time what he was paying
as rentals was the equivalent of $1.00.
Whilst
he would ultimately pay what ZUPCO asked for, it was well after the
sum had been overtaken by inflation.
However,
as I have already stated, what is decisive in this case is clearly
the fact that there was no legal lease to talk about by virtue of the
illegal manner in which the lease had come about.
It
is not the business of this court to wilfully endorse an illegality.
As
the first defendant has himself so ably pointed out in his reliance
on the case of Macfoy:
“If
an act is void, then it in law a nullity. It is not only bad but
incurably bad. There is no need for an order of court to set it
aside. It is automatically null and void without more ado, though it
is sometimes convenient to have the court declare it to be so. And
every proceeding which is founded on it is also bad and incurably
bad. You cannot put something on nothing and expect it to stay there.
It will collapse.”
The
observation in the Muchakata case also cited by the first defendant
himself is apt.
It
is to the effect that it does not matter when and by who the issue of
invalidity is raised; nothing can depend on it.
The
defendants have remained on the premises by virtue of an illegal
contract.
ZUPCO
is a public entity that has suffered from the intransigence of the
defendants in seeking to benefit from an illegal contract. It is
therefore necessary and convenient for this court in the public
interest to declare the agreement of lease to have been a legal
nullity.
Costs
have
been sought on a higher scale on the grounds that the defendants have
been unreasonably holding on to the premises.
They
have been in occupation on the strength of an illegal contract since
January 2004 which is a period of more than 12 years. Costs on a
higher scale are in my view justified as the plaintiff has had to
drag them to the court for its intervention to enforce the public
interest.
Accordingly
in view of the fact that the agreement of lease entered into from 1
January 2004 was an illegality:
1.
The defendant or any person occupying the premises through them are
ordered to vacate the premises known as No.9 Hood Road, Southerton
Harare.
2.
The defendant shall pay the costs of this suit jointly and severally
the one paying and the other being absolved on a legal practitioner
and client scale.
Magwaliba
and Kwirira, plaintiff's legal practitioners
Atherstone
and Cook, 2nd defendant's legal practitioners
1.
See Steve H. Hancke and Alex K. F. Kwok On the Measurement of
Zimbabwe's Hyperinflation, Cato Journal Vol. 29 No.2 Spring/Summer
2009 pp353-364
