GARWE JA: After hearing counsel, this Court was of the unanimous decision that the appeal
had no merit and consequently dismissed it with costs. It was indicated
at the time that the full reasons for the decision would be made available in
due course. These are they.
The background to the dispute giving rise to the appeal is as follows. In
March 2010, the respondent entered into an agreement with the appellants for
payment of what the parties termed “a commitment fee” in respect of premises
undergoing renovations at stand Number 151 Mbuya Nehanda Street, Harare.
It appears from the papers that a tendency has arisen in the housing market
where prospective tenants seeking rental space in buildings where there is a
high demand for such space are requested by the lessor to pay what is variably
termed “a commitment fee”, “goodwill of the rental space” or “lease preference
fees”. The purpose of such a fee is to enable the prospective tenant to
be given first priority in concluding a lease agreement in respect of the
premises once they are available for occupation. Without payment of such
a fee, a prospective tenant would stand little, if any, chance of even being
considered for possible occupation of the premises.
In terms of the agreement entered into between the parties, the respondent
agreed to pay the total sum of $35,000 as “goodwill” in respect of the premises
in question. It is common cause the premises in question were undergoing
renovations. The respondent paid the sum of US$10,000 as a deposit to the
second appellant on 11 March 2010, leaving a balance of $25,000 which was to be
paid once the renovations were complete. Once the balance of the $25,000
was paid, the parties were then to agree on the amount of rental payable per
month.
Having formed the opinion that he had been misled, the respondent decided to
demand a refund of the sum of $10,000. The appellant refused to refund
the money, claiming that the respondent had been in breach of the terms of the
agreement. The respondent then instituted proceedings for the recovery of
the amount in question. A joint pre-trial conference minute drafted by
the parties identified five issues for trial. At the conclusion of the
trial that followed, the court a quo found that no agreement had been
reached that the sum of $10,000 would be non-refundable. The court
further found that the appellants had been unjustly enriched at the expense of
the respondent and consequently ordered the appellants to refund the sum of
$10,000 together with interest and costs of suit. The appellants then noted
an appeal against that order.
At the hearing of the appeal before us, the attention of counsel for the
appellants was drawn to the provisions of s 19 of the Commercial Premises
(Rent) Regulations S.I. 676/83 (“the Regulations”). Neither counsel for
the appellants nor the respondent had, it would appear, been aware of the
provision. That section provides:
“19 – Payment of bonus, premium et cetera
No lessor shall, in respect of commercial premises let or
to be let by him, require or permit the lessee or prospective lessee of the
premises to pay, in consideration of the grant, continuation or renewal of the
lease concerned, any bonus, premium or other like sum in addition to the rent,
or any amount for negotiating the lease.”
Faced with the clear language in s 19 of the above
regulations, Mr Uriri for the appellant was forced to concede that
most of the issues raised before the court a quo and in heads of
argument before this Court were irrelevant and that the payment of the sum of
$10,000 to the appellants was illegal. That concession was, in the
circumstances, most proper.
The provisions of s 21 of the Regulations also re-inforce
the legislative intention that any one who receives payment in circumstances
similar to those of this case cannot retain that payment. Section 21
provides, in relevant part:-
“21 – Recovery of payments in excess of fair rent or
in contravention of section 19 (1) ...
(2)Where any payment has been
made in contravention of the provisions of section 19, the lessee who made the
payment may recover from the lessor who received the payment the amount
thereof.”
In addition, s 32 of the Regulations makes it a criminal
offence for any one to contravene s 19 of the Regulations and provides for a
fine or imprisonment or both. Section 34 allows a court to order a refund
following a conviction for a contravention of s
19.
The clear intention of the Legislature was to prohibit the
tendency on the part of some landlords to take advantage of desperate tenants
seeking to rent accommodation by demanding, over and above the amounts that a
landlord may lawfully demand from a lessee, such as rent and a security
deposit, other amounts that are not permissible in terms of the
Regulations. Put differently, it is impermissible and a breach of the
law, for a landlord to demand payment of “a commitment fee”, or “goodwill”, or
“a lease consideration fee” or any other fee, by whatever name, which amounts
to a bonus or premium or a consideration for negotiating the lease. That
this provision has been part of our law for a long time is clear – see the
decision of BEADLE CJ inS v Fraser Partners (Pvt) Ltd & Anor 1972(1)
S.A. 408, 409 (RAD)in which a similar provision came up for
consideration before the Court.
For the avoidance of doubt, it must be noted that a
security or good tenancy deposit does not constitute a prohibited payment in
terms of s 19. This is clearly recognised in s 20 of the Regulations
which provides that only such deposit must be refunded to the lessor within
fourteen (14) days of the termination of the lease in question.
One further matter falls for determination and that is whether the second
appellant is liable to pay the amount jointly and severally with the 1st
appellant.
Whilst it is correct that in the pleadings the appellants put in issue the
liability of the second appellant, it having been the appellants' position that
the second appellant had been a mere representative of the first appellant, it
is clear that the issue was never really pursued nor was the court a quo
asked to make a determination on it. The respondent's declaration made it
clear that payment of the sum of US$10,000 was sought against both appellants,
jointly and severally, the one paying the other to be absolved. Despite
the position seemingly adopted by the appellants in the plea that the first appellant
merely acted as an agent for the second appellant, the joint pre-trial
conference minute signed by both parties identified a total of five issues for
determination at the trial. Whether both appellants were jointly and
severally liable was not one of the issues identified for trial. As it so
happened, during the trial proceedings, the court a quo confined its
attention to the five issues that had been identified. At no stage was
the court asked to make a determination on whether or not the second appellant
was also liable.
To now suggest, as has been done in the grounds of appeal, that the court a
quo misdirected itself in holding that the liability of the two appellants
was joint and several is not only unfair to the court a quo but also
impermissible. A court cannot and should not be criticised for not making
a decision on an issue that was never placed before it for determination.
There is therefore no basis upon which the finding by the court a quo
that both appellants were liable can be impugned.
In any event, the acknowledgment of receipt issued to the respondent on payment
of the sum of $10,000 clearly indicates the receiver as “Jerry Okeke” and that
it was him who was to allocate the shop in question to the respondent.
There is no suggestion on the receipt that the money was being paid to the
first appellant and that the second was a mere agent of the first. For
this additional reason this court was of the view that no proper basis had been
established for setting aside the finding by the court a quo that the
liability of the appellants was joint and several.
In all the circumstances, therefore, the court was satisfied that there was no
merit to the appeal and accordingly dismissed the appeal with costs.
ZIYAMBI JA: I agree
PATEL JA: I agree
Mwonzora & Associates, appellants' legal
practitioners
Messrs Musariri Law Chambers,respondent's legal practitioners
