DISTRIBUTABLE (21)
Judgment
No. SC 31/08
Civil
Application No. 244/08
METRO
INTERNATIONAL (PRIVATE) LIMITED v OLD MUTUAL
PROPERTY INVESTMENT CORPORATION (PRIVATE)
LIMITED
SUPREME COURT OF
ZIMBABWE
HARARE, OCTOBER 29,
2008
I A Kurawley,
for the applicant
R M Fitches, for
the respondent
BEFORE MALABA DCJ: In Chambers in terms of r 31 of the Rules of
the Supreme Court (the Rules).
This is an application for an extension of time within which to note
an appeal against the judgment of the High Court given on
18 June
2008 granting to the respondent an order of ejectment of the
applicant from the commercial premises it is occupying at
the
Westgate Shopping Centre.
The respondent is the owner of the premises it had leased to the
applicant for a period of 10 years with effect from 1 April
1997 to
31 March 2007 under an agreement of lease. Under clause 32.3 of the
lease the parties agreed that the tenant would not
without having
first obtained prior written consent of the landlord transfer shares
from any of its shareholders to a third party.
The terms in which
the obligation was undertaken by the applicant are worth re-stating.
They were that:
If the tenant is a company whose shares are not listed on a
recognized stock exchange, no shares therein shall be transferred
from its shareholders nor may any shares be allocated to any person
other than such shareholders without the landlords prior
written
consent, which in the case of an allotment or transfer of shares
which will still leave control of the tenant with the
present
shareholders, or of a transfer of shares to a deceased shareholders
heirs shall not be unreasonably withheld.
It is common cause that in breach of clause 32.3 of the agreement of
lease 90% of the shares held by the majority shareholder
were
transferred to Alphavic (Pvt) Ltd.
On 3 July 2007 a letter was written on behalf of the respondent by
the Chief Property Manager drawing the attention of the applicant
to
the breach of clause 32.3. The applicant was advised by the
respondents Chief Property Manager as follows:
In light of the breach and developments at hand, and whilst we
reserve our rights in terms of clause 31 of the lease agreement
with
respect to breach, we wish to advise that we will not be in a
position to extend the Metro lease beyond the extension given
up to
30 September 2007. Therefore take this as notice to vacate our
premises on or before 30 September 2007.
Whilst the lease had been due to expire on 31 March 2007 the parties
agreed to extend the period of expiry to 30 September 2007
whilst
awaiting a judgment of the Supreme Court in case No SC 83/06 which
would have affected the contractual relationship between
the parties.
The Supreme Court judgment was handed down on 28 June 2007.
The applicant refused to vacate the premises after the expiry of the
agreement of lease. The respondent made an application to
the High
Court for an order of ejectment. At the end of hearing argument in
the application the learned Judge reserved judgment.
The judgment
was given on 18 June 2008.
There was no indication that the applicant intended to appeal
against the judgment until it made an application for an extension
of
time within which to note an appeal on 7 October 2008. The period of
non-compliance with Rule 30(a) of the Rules requiring
an appellant to
institute an appeal within fifteen days of the date of the judgment
appealed against is two months.
The explanation given in the founding affidavit deposed on behalf
of the applicant was that it had no knowledge that judgment
had been
given on 18 June 2008 until the Deputy Sheriff served a copy of it at
its head office on 4 October 2008 in execution of
the writ of
ejectment. The averment was that the applicant and its legal
practitioners did not receive notification from the Registrar
to the
effect that judgment had been given on 18 June 2008.
The applicants legal practitioner confirmed in the supporting
affidavit that he did not at any time during the period between
31
January 2008 when judgment was reserved and 4 October 2008 contact
the Judges clerk or the Registrars office to inquire
as to when
judgment would be handed down. The only inquiry made was by a legal
assistant on 26 August 2008 when she asked the
Judges clerk
whether the judgment was still pending handing down. She said she was
told that the judgment had not yet been given.
It was her view that
she did not find it necessary to confirm the inquiries by a letter
because the status quo ante was in favour of the applicant.
As events turned out the statement that judgment had not yet been
given was not true and the belief
that the status quo ante
continued to favour the applicant was misplaced.
In Maheya v Independent African Church S-58-07 it is stated
at p 5 of the cyclostyled judgment that:
In considering an application for condonation of non-compliance
with its Rules, the court has a discretion which it has to exercise
judicially in the sense that it has to consider all the facts and
apply established principles bearing in mind that it has to do
justice. Some of the relevant factors that may be considered and
weighed one against the other are: the degree of non-compliance;
the
explanation therefore; the prospects of success on appeal; the
importance of the case; the respondents interests in the
finality
of the judgment; the convenience to the court and the avoidance of
unnecessary delays in the administration of justice.
Bishi v
Secretary for Education 1989(2) ZLR 240(H) at 242D-243C.
The same principles are applicable to an application for an extension
of time within which to note an appeal. Capital Alliance (Pvt)
Ltd & Ors v Kafesu & Anor S-3-08 at p3.
It is clear that the applicants legal practitioners were under a
duty, having taken instructions to represent it in the application
at
the High Court, to make regular inquiries at the Registry, confirmed
by letters, as to whether the judgment had been given and
if not when
it was to be handed down. A vigilant litigant interested in the
speedy outcome of the application would have satisfied
himself that
the legal practitioners made regular inquiries for the judgment.
Lack of knowledge of a judgment due to failure to
make necessary
inquiries in circumstances where one is under a duty to do so cannot
be an acceptable explanation for non-compliance
with Rules of the
court. The applicant could not remain inactive until notification of
the judgment was given by the Registrar.
In addition to the unacceptable explanation of the failure to note
the appeal timeously there are no good prospects of the appeal
succeeding. The applicant admitted breach of clause 32.3 of the
agreement of lease. It pleaded three defences against the
consequences
of the breach being brought to bear upon it.
The first defence was that the respondent was estopped from denying
knowledge of the change in the shareholding structure of the
applicant because it dealt with the new shareholder for two years
prior to raising the issue of shareholding in the applicant in
the
letter of 3 July 2007.
The defence of estoppel failed in the court a quo and there
are no prospects of it succeeding on appeal because the parties
agreed under clause 37 of the agreement of lease that
no
representation, express or implied, which did not form part of the
terms of the agreement would be binding on any of them.
Any
suggested authorization of the change in the shareholding structure
of the applicant by the respondent which was not in the
form of a
written consent given prior to the change in the shareholding
structure being effected would be of no legal effect.
It would not
be what the parties agreed upon. The alleged representation the
respondent is alleged to have made to the effect
that it approved of
the change in the shareholding structure of the applicant was not
part of the terms of the contract of lease.
In any case the
respondent denied that it knew that the third party had acquired the
majority shares in the applicant when it
dealt with it. It averred
that it got to know about the third party when the applicant asked
for authority to sub-let the premises
to it. There was nothing to
suggest that the intended sub-lessee was in fact a majority
shareholder in the applicant. The facts
show that when the
respondent had knowledge of the fact that there had been a change of
shareholding in the applicant it wrote
the letter of 3 July. The
first paragraph of the letter reads:
We note with concern that there has been a transfer of
shareholding in Metro International (Private) Limited without our
consent.
This is in breach of clause 32.3 of the existing lease
agreement.
The knowledge of the change in the shareholding structure in the
applicant imputed to the respondent as the basis of the defence
of
estoppel was not borne out by the facts. What is clear from the
papers is that when the respondent got to know that there had
been a
change in the shareholding structure of the applicant without its
written consent having been obtained it got so concerned
that it
confronted the applicant with the information and accused it of
breach of contract in the letter of 3 July. It is highly
unlikely
that the respondent would conduct itself in that manner if it had
previously dealt with the third party with full knowledge
that it was
now the majority shareholder in the applicant.
The second defence was that the respondent could not rely on the
breach of contract by the applicant before giving it written
notice
to remedy the breach within 10 days of receipt of the notice as
required under clause 31 of the agreement of lease. Clause
31
provides that:
If the tenant fails to pay any rent on due date or it commits any
other breach of the lease and fails to pay such rent or remedy
such
other breach within 10 days after the receipt of written notice
requiring it to do so
the landlord shall have the right
but shall
not be obliged
forthwith to cancel the lease and to resume
possession of the premises
.
Although the defence was raised by the applicant there are no
prospects of it succeeding on appeal. The reason is that the
respondent
did not seek to rely on the breach in the application for
the order of ejectment against the applicant. The respondent relied
on the expiry of the lease by the effluxion of time. That is why in
response the applicant claimed that it had become a statutory
tenant
entitled to the protection from eviction under s 22(2) of the
Commercial Premises (Rent) Regulations 1983 (S.I 676 of 1983)
(the
Regulations).
That brings me to the third defence to the application. Accepting
that the lease had expired on 30 September 2007 the applicant
averred
that it could not be evicted from the premises because as a statutory
tenant it enjoyed the protection under s 22(2) of
the regulations.
Section 22(2) provides that:
No order for the recovery of possession of commercial premises for
the ejectment of a lessee therefrom which is based on the
fact of the
lease having expired, either by the effluxion of time or in
consequence of notice duly given by the lessor, shall be
made by a
court, so long as the lessee
continues
to pay the rent due, within seven days of due date and;
performs
the other conditions of the lease.
At the time of expiry of the lease by effluxion of time, the
applicant was still in breach of clause 32:3 of the lease. The
breach
meant that the applicant was in fact not performing the other
conditions of the lease even if it was paying rent. It did not
become
a statutory tenant to enjoy the protection under s 22(2) of
the Regulations. In Moffat Outfitters (Pvt) Ltd v Hoosein &
Ors 1986 (2) ZLR 148 (S) GUBBAY JA (as he then was) referred
to the circumstances which a court must take into account in deciding
whether the protection was available to a party claiming it. He said
at p 152 D-E:
It is apparent that as a preliminary to its decision as to whether
a statutory lessee is to be given the protection afforded
by this
provision the court must be satisfied not only that the rent is being
paid within seven days of the due date but that the
other conditions
of lease as it was at the date of its expiration are being performed.
A statutory lessee therefore who fails
to perform any conditions of
a lease will forfeit the protection to which he may otherwise have
been entitled. See for example
Elher (Pty) Ltd v Silver 1945
WLD 271; Marshall v Ivory 1951(2) SA 555 (SR) at 560 infine
561 A.
Mr Kurawley argued that under s 23 of the Regulations the
applicant was entitled to the benefit of all the terms and conditions
of the original
contract of lease. The contention was that the
applicant was entitled to be given the written notice to remedy the
breach within
10 days of receipt of the notice as required under
clause 31 before it could be said to have forfeited the protection
under s 22(2)
of the Regulations.
Section 23 of the Regulations provides that:
A lessee who by virtue of section 22, retains possession of any
commercial premises shall, so long as he retains possession,
observe
and be entitled to the benefit of all the terms and conditions of the
original contract of lease, so far as the same are
consistent with
the provisions of these regulations
.
It is clear that the condition precedent to the entitlement to the
benefits of all the terms and conditions of the original contract
of
lease is that the party should be a statutory tenant retaining
possession of the premises because he continues to pay the rent
due
within seven days of due date and performs the other conditions of
the lease. He must be shown to be enjoying the protection
from
ejectment under s 22(2) of the Regulations for s 23 to apply.
In this case the applicant did not become a statutory tenant because
it was not performing the other conditions of the contract
of lease
at the time of its expiry by reason of breach of clause 32.3.
Section 23 of the Regulations was not applicable to the
applicant.
There are no prospects of the third defence succeeding on appeal.
The application is accordingly dismissed with costs.
Gollop & Blank, applicants legal practitioners
Scanlen & Holderness, respondents legal practitioners
