DISTRIBUTABLE (20)

Judgment No. SC 22/07

Civil Appeal No. 219/06

AGRICONCORD (PRIVATE) LIMITED v

NATIONAL RAILWAYS OF ZIMBABWE CONTRIBUTORY PENSION FUND

SUPREME COURT OF ZIMBABWE

SANDURA JA, CHEDA JA & ZIYAMBI JA

HARARE, FEBRUARY 19 & SEPTEMBER 7, 2007

H Zhou, for the appellant

P Machaya, for the respondent

SANDURA JA: This is an appeal against a judgment of the High Court which dismissed with costs the appellant’s application for the rescission of a default judgment.

The background facts in this matter may be tabulated conveniently as follows –

1. On 23 June 2003 the appellant (“Agricon”) and the respondent (“the Pension Fund”) concluded a lease agreement in terms of which the Pension Fund let to Agricon the premises at 2 Bristol Road, Workington, Harare (“the premises”).

2. Clause 15 of the lease agreement, in relevant part, reads as follows:

“15 Breach of Lease

15.1 In the event of

1. non-payment of rent or any portion thereof on due date; or …

then the Lessor shall have the right to cancel the lease and re-enter upon and take possession of the premises and the contents thereof, provided that such action on the part of the Lessor shall not prejudice any claim that the Lessor shall have against the Lessee for rent already due …”.

3. On 7 July 2005 the Pension Fund cancelled the lease agreement for non-payment of rent on the due date, and demanded payment of the rental arrears amounting to $208 298 093.89 within five days, and a surrender of the premises within that period.

4. On 28 July 2005, when Agricon had neither paid the rental arrears nor vacated the premises, the Pension Fund filed a court application in the High Court against Agricon, which was served on Agricon, seeking an order directing Agricon to vacate the premises and pay the rental arrears and certain operating costs.

5. Thereafter, Agricon did not file a notice of opposition and an opposing affidavit in respect of the Pension Fund’s court application. Instead, Agricon contacted the lawyers acting for the Pension Fund in an attempt to settle the matter, but that was not successful.

6. On 4 August 2005 Agricon wrote to the lawyers acting for the Pension Fund. The letter, in relevant part, reads as follows:

“Following our recent meeting please find enclosed a cheque for the August rent for No. 2 Bristol Road, Workington.

I propose to pay the rent arrears in two payments on 31 August 2005 and 30 September 2005. However, I wish to discuss the rates issue with Richard Ellis in order to reach an agreement and settle the issue.”

7. On 10 August 2005 the lawyers acting for the Pension Fund replied as follows:

“We acknowledge receipt of your cheque in the sum of $11 242 500.00 and your letter of 4^th August, 2005. We have forwarded the same to our client for further instructions. We will revert to you once our client furnishes us with instructions in relation to your proposals.

Meanwhile, we have not yet received instructions from our client to suspend legal action against yourselves.”

8. On 2 September 2005 the lawyers acting for the Pension Fund set down the court application for hearing on the unopposed roll, and the Pension Fund was granted an order directing Agricon to vacate the premises and pay the arrear rentals and holding over damages.

9. On 12 September 2005 Agricon made part payment of the rental arrears, and refused to pay in full the sum claimed by the Pension Fund. It also refused to vacate the premises. Consequently, the Pension Fund issued a writ of execution and ejectment.

10. On 22 November 2005, after Agricon had been served with a notice of eviction, and the Pension Fund had refused to be involved in any further negotiations on the matter, Agricon filed a court application in the High Court seeking a rescission of the default judgment granted against it in September 2005. The application was opposed by the Pension Fund.

The learned Judge in the court a quo dismissed the application on the ground that the explanation given by Agricon for its failure to file its opposing papers was completely unacceptable. I have no doubt in my mind that the learned Judge was correct.

The explanation given by Agricon for not opposing the court application was that “it had been assured (by the Pension Fund’s lawyers) that litigation was being stopped to give negotiations a chance”.

In my view, that explanation cannot be true. I say so because on 10 August 2005 the Pension Fund’s lawyers wrote a letter to Agricon in which they stated, inter alia, as follows:

“Meanwhile, we have not yet received instructions from our client to suspend legal action against yourselves.”

In the circumstances, the Pension Fund’s lawyers could not possibly have assured Agricon “that litigation was being stopped to give negotiations a chance”. No explanation, let alone a reasonable one, was, therefore, given by Agricon for its default.

However, even on the merits Agricon had no chance of succeeding. That is so because it was common cause that Agricon had not paid its rent on the due date for some time, and had accumulated rental arrears amounting to millions of dollars. In terms of clause 15.1 of the lease agreement the Pension Fund had the right to cancel the lease in view of that default.

In my view, there is no substance in the argument advanced by Agricon’s counsel, that before the Pension Fund cancelled the lease agreement it should have given Agricon fourteen days within which to remedy the breach. Clause 15.1 of the lease agreement, which I have already set out in this judgment, does not say that in relation to the non-payment of rent by the due date.

In the circumstances, the appeal is devoid of merit and is dismissed with costs.

CHEDA  JA: I agree

ZIYAMBI  JA: I agree

Bvekwa Legal Practice, appellant's legal practitioners

Gill, Godlonton & Gerrans, respondent's legal practitioners