MTSHIYA J: On 29 June 2009 the parties filed a
consent paper agreeing to the consolidation of the following two cases.
1.
Case
No. HC 2021/09 Negowac Services (Pvt) Ltd v 3D Holdings (Pvt) Ltd
2.
Case
No. HC 2022/09 Negowac Services (Pvt Ltd v Giftcare Electrical (Pvt) Ltd t/a
Reg Electrical Wholesalers.
The reason behind the consolidation
was to serve time and costs since the two cases
dealt with similar maters and both
parties were represented by the same legal practitioners.
Indeed,
as confirmed here below through the issues referred to trial in each case, the
matters for determination were similar.
(a)
Issues
for determination in HC 2021/09 were listed as follows:-
“1.1. Is there a rent dispute between the parties.
1.2. Whether or not the defendant breached the
terms and conditions of the lease agreement in failing to pay its rent for the
months of January, February, March, April and May 2009.
1.3. If the answer for 1.2. is in the
affirmative, whether or not plaintiff was entitled thereafter to cancel the
lease agreement and demand vacant possession of the premises and payment of
outstanding rentals”; and
(b) Issues for determination in HC 2022/09
were listed as follows:-
“1.1. Is there a rent dispute between the parties?
1.2. Whether or not the defendant breached the
terms and conditions of the lease agreement in failing to pay its March and
April 2009 rentals.
1.3. If the answer for 1.2. is in the
affirmative, whether or not plaintiff was entitled thereafter to cancel the
lease agreement and demand vacant possession of the premises and payment of
outstanding rentals”.
Following
the consolidation the defendants in cases HC 2021/09 and HC 2022/09 shall be
referred to as first and second defendants respectively.
The
record shows that with effect from 1 February 2004 the plaintiff and first
defendant entered into a lease agreement whereby the plaintiff leased to the
first defendant offices 5, 7, 8, 9 and A1 Strathaven Shopping Centre, 17 Browning Drive
Strathaven, Harare
(the premises). The lease was, subject to agreed terms, renewable and indeed
the lease agreement remained in force until 8 April 2009 when the plaintiff,
through its legal practitioners wrote to the first defendant in the following
terms:-
“We act for Negowac Services (Pvt)
Ltd.
Our instructions are that you lease
from our client, offices 5, 6, 7, 8 and 9 at the aforementioned premises.
We are also instructed that, in
breach of the agreement of lease with our client, you have failed to pay rent
and operating costs from January 2009 to date.
Further, we are instructed that you
have breached the agreement of lease by assigning your rights and obligations
to a third party without the prior written consent of the landlord.
As a consequence of your breach of
the agreement of lease with our client, we have been instructed to cancel the
said agreement and recover the leased premises. In the circumstances, take
notice that lease agreement is hereby cancelled. Further, we demand that you
vacate the premises and handover the keys at our offices, no later than end of
business on Tuesday 14 April 2009.
In the event that you do not vacate
he premises as stated above, we shall issue court process to recover the
premises without further notice. The resultant legal costs will be for your
account.
Yours faithfully
GILL, GODLONTON & GERRANS
Cc. Client-Attention Mr Sibenke”
As
can be deduced from the above letter the reason for terminating the lease
agreement was failure to pay rent from January 2009 to April 2009 and
cancellation was effective from 14 April 2009.
On
14 April 2009 the first defendant, through its legal practitioners, responded
to the plaintiff's letter of 8 April 2009 in the following terms:
“We refer to the above matter in
which we have been instructed by 3D Holdings to respond to your letter dated
the 8th April 2009.
Our client instructs that it has not
failed to pay rent as alleged by your client. The real issue and dispute
between the parties is the amount of rent payable. Our client proposed payment
of rent in the sum of one United
States of America dollar (USD1) per square
which was not accepted by your client. The rent payable was not agreed between
the parties.
On the issue of assigning rights and
obligations without the consent of the landlord, it should be noted that the
tenant, 3D Holdings did not change. It is the management of the tenant which
changed, and therefore there is no assignment of any rights. It is also
surprising that the issue is being raised now, when the change of management
took place in 2007 and rent was being paid to CB Richard Ellis by the new
management.
In the circumstances, we are of the
view that there is no basis at all for the cancellation of the lease agreement.
Yours faithfully
Mutezo & Company”
As
can be seen from the second paragraph of the above letter the first defendant
raised the issue of a dispute of the rental payable.
The
first defendant's letter prompted the following response from the plaintiff's
legal practitioners.
“We
refer to your letter dated 14 April 2009
It is an express term of the
agreement of lease that your client was obliged to pay rent monthly and in
advance. Failure by the parties to agree on an amount with regards to rent, did
not absolve your client from either paying the last agreed rent or reasonable
rent since January 2009. Your client's failure in this regard, is a clear
breach of the aforementioned term of the agreement of lease.
In the circumstances, please note
that the lease agreement remains cancelled on the basis stated above. We
therefore demand that your client relinquish vacant possession of the premises
forthwith and hands over the keys at our offices no later than end of business
on Wednesday 23 April 2009.
Yours faithfully
GILL, GODLONTON & GERRANS”
On
8 May 2009 when the first defendant had refused to vacate the premises, the
plaintiff issued summons by this court praying for the following relief:-
“(a) Confirmation of cancellation of the lease
agreement entered into between the parties for Offices 5, 7, 8, 9 and A1, 3D
Centre, Strathaven Shopping Centre, 17 Browning Drive, Strathaven, Harare.
(b)
An
order for the ejectment forthwith of the defendant, together with its
Subtenants, assignees, invitees and all other persons claiming through it from
Office 5, 7, 8, 9, 3D Centre, Strathaven Shopping Centre, 17 Browning Drive,
Strathaven, Harare.
(c)
Costs
of suit at Attorney and client scale”.
It is also common cause that with
effect from 1 February 2004 the plaintiff and the
second defendant entered into a
lease agreement with plaintiff leasing to second defendant Office 21 at 3D
Centre Strathaven Shopping Centre 17 Browning Drive Strathaven, Harare
(the premises). The lease agreement remained in force until 9 April 2009 when
the plaintiff's legal practitioners sent the following letter to the second
defendant
“We
act for Negowac Services (Pvt) Ltd.
Our
instructions are that you lease from our client the premises described above.
We are also instructed that in
breach of the terms and conditions of the agreement of lease with our client,
you have failed to pay rent and operating costs for March and April 2009
accumulating arrears thereby in the sum of US$510.
As a consequence of your breach of
the agreement of lease with our client, we have been instructed to cancel the
said agreement and recover the leased premises together with the outstanding
amount. In the circumstances, take notice that the lease agreement is hereby
cancelled. Further, we demand that you vacate the leased premises and handover
the keys at our offices, and settle the outstanding amount, no later than end
of business on Tuesday 14 April 2009.
In the event that you do not vacate
the premises and make payment as stated above, we shall issue court process to
recover the premises without further notice. The resultant legal costs will be
for your account.
Yours faithfully
GILL, GODLONTON & GERRANS”
The issue, as can be seen from the
above letter, was non-payment of rental for the months of March and April 2009
(i.e. indicated as a total sum of US$510).
On
14 April 2009 the second respondent's legal practitioners responded to the
plaintiff's letter in the following terms:-
“We
refer to the above matter and to your letter dated the 9th April
2009.
Our client instructs that it has not
failed to pay rent. Our client advises that the real dispute is about the
amount of rent to be paid per square metre. Your client wanted five United States of America
dollars (USD5) per square metre which our client rejected as unreasonably high.
It counter-offered rent payable as one United States of America dollar
(USD1) per square. No agreement was reached on the rent payable. Our client was
surprised to see your letter when the rent payable was not agreed on.
In the circumstances, we feel that
there is no basis to cancel the agreement of lease. It is the issue of rent
payable which should be resolved. Our client has instructed us to tender rent
calculated on the basis of one United States of
America dollar (USD1) per square which is twenty seven United States of America
dollars (UDS27) per month.
Yours faithfully
Mutezo & Company”
Again, as was the case in the other
lease agreement with the first defendant, the
second defendant, in similar fashion, also raised the issue
of there being a dispute over the rental
payable.
On
20 April 2009 the plaintiff's legal practitioners responded to the second
defendant's letter in the following terms:
“We
refer to your letter dated 14 April 2009.
It is an express term of the
agreement of lease that your client was obliged to pay rent monthly and in
advance. Failure by the parties to agree on an amount with regards to rent, did
not absolve your client from its obligations in terms of the agreement of
lease. Your client ought to have paid either the last agreed rent or a
reasonable amount towards rent. The failure by your client to pay rent for
March and April 2009, is a clear breach of the aforementioned term of the
agreement of lease.
In the circumstances, please note
that the lease agreement remains cancelled on the basis stated above. We
therefore demand that your client relinquish vacant possession of the premises
forthwith and hands over the keys at our offices no later than end of business
on Wednesday 23rd April 2009.
Yours faithfully
GILL. GODLONTON & GERRANS”
With
the second defendant having refused to vacate the premises by 23 April 2009, on
6 May 2009 the plaintiff issued summons through this court praying for:
“(a) Confirmation of cancellation of the
agreement of lease entered into between the parties for Office 21 at 3D Centre,
Strathaven Shopping Centre, 17 Browning Drive, Strahaven, Harare
(b) An order for the ejectment forthwith of
the defendant, together with its Subtenants, assignees, invitees and all other
persons claiming through it from Office 21 at 3D Centre, Strathaven Shopping
Centre, 17 Browning Drive, Strathaven, Harare.
(c) Costs
of suit at Attorney and client scale”.
The foregoing sets out the
background to the two cases that were consolidated and as can be seen the
issues for determination listed on pages 1 & 2 herein are indeed similar,
if not the same. The only slight difference is that default in rental payments
covers different periods in each case. (i.e. January – March in respect of HC
2021/09 and March - April in respect of HC 2022/09).
For its case the plaintiff called
one witness, a Mr Darlington Tapiwa Mandaza (Mandaza) of CB Richard Ellis (Pvt)
Ltd who are the plaintiff's agents managing the premises. Mandaza said he is the Property Portfolio
Manager at CB Richard Ellis (Pvt) Ltd. He said he had dealt with both
defendants in this matter since January 2009. He said there was indeed a
dispute over the amount of rent payable but insisted that the defendants,
instead of not paying any rent at all, should have continued paying what they
were offering, namely US$2 per square metre.
The dispute had arisen when they proposed a new rental of US$5 per
square metre in line with market trends. He was, however, convinced that the
defendants did not want to pay any rent at all and hence the reason for not
even approaching the Commercial Rent Board or an Arbitrator. The witness said
he was fully aware that the correct thing to do was to approach the Commercial
Rent Board or go to arbitration for the fixing of a fair rent.
Under cross-examination Mandaza
maintained that they (CB Richards Ellis (Pvt) Ltd were convinced that there was
no commitment on the part of the defendants to pay any rent at all. He said,
although not produced in court, statements had been sent to the defendants in
March 2009. He did not indicate though what rentals were reflected on those
statements. He also said apart from their proposal of 3 February 2009, which
suggested US$5 per square metre, another proposal had been sent to the
defendants on 1 January 2009 proposing that rentals be paid in the form of fuel
coupons. It was his evidence that by end of February 2009, it was clear that
there would be no agreement on the issue of rent and hence the decision to institute legal
proceedings.
The plaintiff closed its case after
Mandaza's evidence.
The defendants led evidence from
Regis Jamba, (Jamba) the Managing Director of both defendants. He said he has
been the Managing Director of both companies since 1997. In the main Jamba's
evidence was a confirmation of what the plaintiff's witness told the court.
Jamba said after their offer of US$2
per square metre which was made on 17 February 2009, he had remained in constant
communication with Messrs CB Richards Ellis (Pvt) Ltd. He had consistently been
phoning Mandaza and at one time he spoke to a Mr Matondo who had expressed
surprise as to why the rent issue had remained unresolved. The said Matondo had
promised action but had never gone back to them (defendants) with a solution.
Jamba said on 8 April 2009
defendants had requested for rental statements which the plaintiff was no
longer sending to them. He maintained that the real issue separating the
parties was the rent dispute. He, however, said the issue had, been resolved by
the owner of the premises, namely Minister Goche. He said Minister Goche had
indicated that he was not interested in the legal proceedings. This was,
however, quickly dismissed by the plaintiff's legal practitioner who said his
instructions were to proceed with the action.
Jamba went on to say that in March
2009 the defendants' accounts were suspended. The defendants had, however, made
the following payments in October 2009.
“(a) First
defendant : US$2560-00
(b) Second
defendant : US$ 350-00
The payments, he said, were based on
US$3 per square metre and were accepted by the plaintiff.
Under cross-examination, Jamba
agreed that the payments were accepted under a receipt with the endorsement
“without prejudice”. He also confirmed that since January 2009 the plaintiff
had never interfered with the defendants' occupancy of the premises. He said at
a meeting held on 8 October 2009 the defendants' new proposal of US$3 per
square metre had been accepted and the defendants were now waiting for details
regarding the outstanding amounts.
The defendants closed their case
after Jamba's testimony.
I must point out at this stage that
apart from confirming the rentals dispute, Mr Jamba's evidence also touched on
evidence that did not form part of the pleadings. Such evidence, for the
purposes of this judgment, will remain ignored.
At the close of the defendant's case
I postponed the proceedings and asked for written submissions from the legal
practitioners, which I received as arranged. I am grateful to the two legal
practitioners for both their oral and written submissions which I found useful.
Facts that are common cause in casu are well captured and summarised
by Mr Nleya, counsel for the
plaintiff, in his written submissions. I cannot do better than reproduce them
hereunder in full:
“1. The defendants currently occupy the
plaintiff's premises situated at Strathaven Shopping Centre, Strathaven Harare.
2. First
defendant has been in occupation of plaintiff's premises from March
2004 to date.
3.
Second
defendant has been in occupation of plaintiff's premises from April 2004 to
date.
4.
The
relationship between the plaintiff and both defendants is governed by separate
written lease agreements, which were for an initial period of one (1) year, but
were automatically renewed in terms of the provisions of clause 2 therein.
5.
In
February 2009, the parties commenced negotiations for payment of rentals in
United States Dollars, following the adoption of the Multi-currency system.
6.
These
negotiations were not concluded.
7.
Plaintiff
proposed rent at US5 per sq/m and the defendants made a counter proposal of
US$2 per sq/m.
8.
Whilst
these negotiations were still pending, the first defendant did not pay rent, at
all, from January 2009 up to May 2009.
9.
Likewise,
second defendant failed to pay rent, at all, for March and April 2009.
10.
Following
defendants' failure to pay rent, plaintiff cancelled the lease agreements and
caused Summons to be issued against both defendants on 8th May 2009”.
In
his submissions Mr Nleya correctly
submitted that the obligation, on the part of a tenant, to pay rent is the core of the nature of a lease
agreement and indeed failure to do so entitles the landlord to cancel the
agreement. He then proceeded to submit that the fact that negotiations for new
rentals were in process did not absolve the defendants from paying the last
agreed rentals or the amount proposed as a fair rent during the negotiations.
He also said at the every least the
defendants should have continued paying the amount they were proposing. This submission, as the facts show, is indeed
a confirmation of the fact that there was indeed a rent dispute.
Mr Nleya, however, did not agree that the rent dispute necessarily
required the intervention of the Commercial Rent Board in terms of the
Commercial Premises Rent Regulations (S.I. 626 of 1983). He reasoned that the
fact that the defendants continued in occupation of plaintiff's premises
without taking the initiative to refer the dispute to the Commercial Rent
Board, enjoined the defendants to pay some rent. They could therefore not use
the rent dispute as an excuse for not paying any rent at all.
In
his written submissions, Mr Mugomeza
for the defendants, pointed out that the admission by the plaintiff to the fact
that there was indeed a rent dispute meant that the matter ought to have been
referred either to an Arbitrator or the Commercial Rent Board as admitted by
Mandaza who testified on behalf of the plaintiff.
It was Mr Mugomeza's submission that since the parties agreed that there was
a rent dispute which remained unresolved in terms of the law, then the matter
should be dismissed on that basis. He said it was not the court's duty to fix
rent for the parties. This was the duty of the Commercial Rent Board as
provided for in s 7 of the Commercial Premises (Rent) Regulations (S.I. 626 of
1983).
An
analysis of the facts in this case leads me to the conclusion that from January
2009 the rent payable by the defendants became a totally unknown entity. It was
mentioned that on 1 January 2009 a proposal of rental in fuel coupons was made.
There were, however, no details of that proposal and no information as to how
the defendants responded to the proposal. It is clear, however, that as from
February 2009 the plaintiff was no longer accepting payment of rentals in Zimbabwe
dollars. In March 2009, having failed to get the defendants' acceptance of the
proposed rental of US$5 per square metre, the plaintiff suspended the
defendants' accounts. The defendants' had counter offered US$2 per square
metre. The pleadings refer to US$1 per square metre but evidence in court
confirmed the offer of US$2 per square metre. That offer was rejected as being
too low and from that time up to the issuance of summons, there was no
agreement on the rent payable. The rentals fixed in Zimbabwe dollars ceased to be
payable from 31 December 2008. There was therefore no question of the
defendants continuing to pay the rentals previously agreed. That point finds
confirmation in the suggestion that the defendants could have at least
continued to pay the rental they proposed. That rental, though, could not, in
the absence of an agreement, constitute a fair rental. Clearly therefore, it
was incumbent upon both parties to approach the Commercial Rent Board or an
Arbitrator for the fixation of rent from January/February 2009.
Section 7 of the regulations
referred to by Mr Muzomeza provides
as follows:-
“1. A lessor may apply to the appropriate
board for:-
(a) the determination of a fair rent: or
(b) the variation of such a determination;
in respect of commercial
premises let by him.
2.
A
lessee may apply to the appropriate board for:-
(a)
the
determination of a fair rent; or
(b)
the
variation of such a determination; in respect of commercial premises hired by
him.
3. ………..”
I
agree with Mr Mugomeza that apart
from ensuring a fair Commercial rent, the regulations are aimed at also
preventing “unscrupulous landlords from taking advantage of the shortage of
Commercial premises by increasing their rent unjustifiably”. See Moffat Outfitters (Private) Limited v Yunus
Hoosein and Others 1986(2) ZLR 148 (SC).
It
is, however, true that on the basis of authorities cited by Mr Nleya, the defendants had a duty to
continue paying the last agreed rentals (See Parkside Holdings (Private) Limited v Londoner Sports Bar HH 66-2005). However, this was not possible in casu because, as per evidence payment
of rental in Zimbabwe
dollars ceased on 31 December 2008 and from March 2009 the defendants' accounts
were suspended. Accordingly, it could be argued, that even if defendants
thought US$2 was reasonable, they could still claim that they were prevented
from effecting payment. That fact, however was disputed. It was submitted that statements
were sent for February and March on the basis of the US$2 proposed by the
defendants. The statements were, however, not produced in evidence. The
defendants only requested for statements in April 2009.
It
is clear to me that up to the date of the hearing of this matter there was no
agreed position on rent. The dispute over rent still persists. Instead of
approaching the Commercial Rent Board, the plaintiff has chosen to issue
summonses seeking confirmation of the cancellation of the lease agreements and
ejectment of defendants from its premises. Apart from stating that the
defendants are in breach of not paying rent, the plaintiffs' summonses do not
disclose what rent was payable. This is so because there was indeed never any
agreement on the reviewed rentals.
I
must point out that the plaintiff's agents totally mishandled this matter. They
knew what the law says in the event of a rental dispute. Mandaza confirmed
this. They sat back and did nothing.
I am unable to find any law which
allows a landlord faced with a rental dispute to avoid the regulations and
impose any rent on a sitting tenant. I am also equally unable to find a law
which says when there is a rent dispute a sitting tenant's obligation to pay
rent ceases and the tenant should continue in occupation indefinitely without
paying any rent at all.
Whilst
I agree that there was indeed a rent dispute, I am, however, not persuaded to
agree that the plaintiff's action should be dismissed on that ground.
My
view is that as long as the defendants wanted the tenancy to continue, they had
an obligation to continue paying rent.
They should have continued to pay what they believed was a reasonable
rent. I do not believe that the plaintiff would have refused to accept receipt
of rent paid in American dollars. I believe that statements were indeed sent to
the defendants and notwithstanding the dispute, the defendants ought to have paid
what they believed to be reasonable. The defendants agree that they only asked
for statements in April 2009.
Due to the fact that as from 31
December 200i8 the plaintiff was no longer accepting payments in Zimbabwe
dollars, the defendants should have continued paying their suggested US$2 per
month rather than enjoy a benefit from the plaintiff for nothing. Added
to the need to pay rent, the regulations allow the defendants to independently
approach the Commercial Rent Board for a fair rent. The need to approach the
Commercial Rent Board applied to both parties. Instead of using the law to
protect their tenancy, the defendants chose to believe that they would remain
in the premises without paying anything for as long as the rent dispute
persisted. That cannot be. The obligation to pay rent remained present and
failure to do so in the manner I have indicated above means that the
defendants were in breach of the lease agreement for non-payment of rent.
The
regulations, apart from offering the tenant protection from unfair and
prohibitive rentals, do not in any way give a tenant the licence to exploit the
landlord by enjoying occupation of the landlord's premises without paying rent for
it. That is why it is incumbent upon a sitting tenant to either pay the last
agreed rent or to approach the Commercial Rent Board for a fair rent. This, the
defendants failed to do. They did not pay any rent for the periods indicated on
the summonses. That fact they do not dispute. The defendants were therefore in
clear breach of the lease agreement for non-payment of rent. Subsequent
payments allegedly made in October 2009 did not in any way save the breaches.
The plaintiff remains entitled to its arrear payments and therefore acceptance
of those payments without revoking cancellation of the agreement(s) cannot be
held against the plaintiff.
As
to the issue of costs, I find that failure to approach the Commercial Rent
Board or an arbitrator is an omission attributable to both parties. That
failure is what led to this action. I therefore deem it fair for each party to
bear its own costs.
In
the premises, my finding is that the plaintiff is entitled to the relief it
seeks.
I
therefore order as follows:-
1. That
the cancellation of the lease agreement entered into between
the parties for Offices
5,7,8,9 and A1, 3D Centre, Strathaven Shopping Centre, 17 Browning Drive, Strathaven
Harare be and is hereby confirmed.
2.
That
the plaintiff be and is hereby authorised to evict forthwith the first
defendant, together with its Subtenants, assignees, invitees and all other
persons claiming occupation through it from Office 5,7,8,9, 3D Centre,
Strathaven Shopping Centre, 17 Browning Drive, Strathaven, Harare.
3.
That
the cancellation of the lease agreement entered into between the parties for Office
21 at 3D Centre Strathaven Shopping Centre 17 Browning Drive, Strathaven,
Harare be and is hereby confirmed.
4.
That
the plaintiff be and is hereby authorised to evict forthwith the second
defendant together with its subtenants assignees, invitees and all other
persons claiming occupation through it from Office 21 at 3D Centre. Strathaven,
Harare.
5.
That
each party shall bear its own costs.
Gill, Godlonton &
Gerrans,
plaintiff's legal practitioners
Mutezo
& Company, defendants' legal
practitioners
