HEIKO PETER HORSTMAN

versus

GARFIELDINVESTMENTS (PRIVATE LIMITED)

and

GODFREY MAKONI

HIGH COURT OF ZIMBABWE

GOWORA J

HARARE, 28 September 2010

Mrs R T L Matsika, for the applicant

Ms T J Magaya. for the respondents

GOWORA J:  The applicant herein is the registered owner of an immovable property located at 40 Josiah Tongogara Avenue, Harare. On 28 September 2004 in terms of a written agreement, the applicant let the premises to the first respondent for a period of one year with effect from 1 September 2004 to 31 August 2005. Certain differences have arisen between the parties and the applicant has approached this court on motion for an order for the eviction of the first respondent and all those claiming through it from the premises. The second respondent entered into a surety ship agreement with the applicant for the due payment of all dues by the first respondent and has been joined in this action in his capacity as such and costs are sought against the two respondents jointly and severally. The respondents have opposed the granting of the order sought and I intend to dispose of the matter in terms of the defences advanced by them.

The first issue raised by the respondents is that the papers are so fraught with material disputes of facts to such an extent that the application cannot be determined on the papers and the application should be dismissed with costs. In my view, whether or not there are disputes of fact is an issue that can only be resolved after a scrutiny of the issues put forward by the respondents in opposition.

The contention by the respondents is that the first respondent is a statutory tenant.  It is contended that the lease agreement expired on 31 August 2005 after which the parties did not reach agreement on the rentals to enable the extension of the lease agreement in terms of Clause 2 of the same. The lease agreement provided in Clause 2 as follows:

Period

1. Notwithstanding the date of signature hereof this lease shall commence on 1 September 2004 and shall continue for a period of one (1) year terminating on 31 August 2005 unless earlier terminated in terms of the lessor’s rights hereunder.

Notwithstanding the aforesaid date of termination, unless written notice has been given by the lesser or the lessee two calendar months before the said date of termination, the lease shall continue beyond such date on the same terms and  conditions, terminable by either party by two calendar months written notice.

1. For any period of renewal/review of this agreement or extension of tenancy the rental shall be such sum as may be agreed between the parties hereto as a fair and reasonable rental for the leased premises, but failing agreement thereon, such rental as shall be fixed as a fair and reasonable rental by an independent member of the Institute of Estate Agents, acting as an expert, not as an arbitrator, appointed by the lesser provided that in no instance shall such agreed or fixed rental be less than the amount paid at the expiry of this agreement by effluxion of time.

In my view, Clause 2 clearly provided for the automatic renewal of the lease for a period of 12 months each time on the same terms and conditions as initially agreed upon the only variant being the rental to be paid. The lease agreement was not terminable by the effluxion of time but by two calendar month’s written notice of the intention to terminate the same by either the lesser or the lessee. The applicant has not provided me with authority on this aspect of the dispute. The leading case on the duration of a lease is Tiopaizi v Bulawayo Municipality 1923 A.D 317. At 325 DE VILLIERS J.A. stated:

“Parties to a contract of letting and hiring may either agree to that the contract should run for a definite fixed timeand or they may leave its duration undefined. This is clearly expressed by Voet in 19.2.9, where he says in dealing with this contract: “vel ita quinquennii; vel ita, ut incerta sit duratio ejus.” Now if the parties agree upon a definite time for the expiration of the contract, it follows that no notice of termination is required. The contract expires by the effluxion of time, and with it the relationship of lessor and lessee ceases. But in the same passage Voet proceeds to point out that by our law what is called a tacit relocation may take place, e.g , by allowing the tenant to retain possession of the premises after the contract has expired.(D .19.2, lex 13, 11). Now, as is stated in D. 19. 2, lex 14, tacit relocation is one of the consensual contracts for which nudus consensus sufficed even in the Roman law, such consent being inferred from the fact that the relationship is allowed by both parties to continue after the contract has come to an end. It was to guard against this danger, therefore, and not to terminate, that notice became essential. This explains Sande, Dec. Fris.. III, tit. 6, del.1: Dat om de wederverhuring te beletten, huurder van het huis land voor den eersten Januari denuntiate of op-segging gedaan moet worden.” Unless notice is given before the date of the expiry of the lease, it will be too late to resist the presumption that there has been a relocation of the premises. And from this it follows that no definite time was required for such notice. As long as the notice was given before the contract actually came to an end it sufficed. There was no hardship on the tenant in getting such notice even at the last moment, for having agreed upon a definite time he must be taken to know when the lease expires and that the notice is merely for the purpose of preventing him, by remaining on, from setting up a tacit renewal of the contract. But even in this case some local statutes required what was called a timely notice (Menoch. Praes. 3.85.42)”.     

The authorities are agreed that a landlord who does not wish for a tacit relocation of the premises may protect himself by giving notice to the tenant at any time before the end of the fixed period. The situation postulated in the case of Tiapazi is illustrative of the principles governing a periodic lease, one that runs from week to week, month to month or year to year. Notice of termination is required for a period lease, which is usually related to the period of the lease but where a yearly periodic lease is concerned, notice of a year is not required and three months is usually sufficient.    .

The respondents who contend that the lease was terminated on 31 August 2005 have not established that the lease was terminated. It could only have been terminated in terms of Clause 2 by virtue of written notice of either party to the other. No such notice has been availed and I therefore find that the first respondent was not a statutory tenant as contended by the respondents. I therefore accept the contention by the applicant that the lease was extended yearly as neither party gave written notice to terminate

The respondents contend further that the lease did not continue beyond 31 August 2005 because there was no agreement between the parties on the rentals due thereafter. In terms of Clause 3 of the lease, the initial rent payable for September 2004 in February 2005 was Z$7 500-00 per month. For the remaining six months of the year the rent would be reviewed at the prevailing open market rate. In his opposing affidavit the second respondent suggests as a statutory tenant the first respondent is obliged to pay Z$7 500 000-00. This court takes judicial notice of the fact that due to the hyper inflation that gripped this country for the last six years, the Zimbabwe dollar was revalued on more than two occasions after this agreement was entered into by the parties. Each revaluation exercise would have drastically reduced the amount quoted on the lease to a ridiculous rental thus making a mockery of the agreement itself.

If the parties had failed to agree on the rental to be paid, the lease, in Clause 2, provided for the appointment of an expert to set the rentals. This course was never suggested by either party, leading to conclude that there was no disagreement at any stage on what amount constituted a fair and reasonable rental for the premises.

I accept the position of the applicant that prior to 2008, there was no issue of arrear rentals between the parties. Such arrears only built up in 2008. The rentals quoted thereon are far in excess of the Z$7 500- 00 being referred to by the second respondent.

In any event, the applicant has annexed to his answering affidavit copies of emails sent to him by the second respondent regarding payment of rent. On 14 July 2009 the applicant sent an email to the second respondent as follows:

“This is to inform you that I am not prepared to wait any longer for payment of the rent for 40 Josiah Tongogara which is now outstanding for over half a year. If payment has not been made by the last day of this month of July 2009 either into my account or given to Mr John Lester personally I will instruct my lawyers to take legal action.

Regarding the purchase of the property, I have decided NOT to sell at this stage”.

The second respondent sent a response on 29 July 2009 in the following terms.

“I hope I find you in good health. I have managed to raise US3000-00 which I have transferred to the account number which you gave me. The money should be reflecting any day from now. The balance I will settle in a week or two from now when I have received more payments from my debtors.

I sincerely apologise for the inconvenience that I have caused and I hope to establish a good working relationship with you now that we are in contact. My relationship with your agents has not been a good one due to lack of trust on my part. I hope we can put that behind us since I can now contact you”.

What emerges from that exchange of emails is that a specific amount was expected to be paid by the first respondent as rentals. If there was no specified sum due to be paid, the second respondent would not have stated that he was transmitting the sum of US$3000-00 and that the balance would be paid in a week’s time. Clearly, there was an amount that was in issue which the parties were in agreement on. If, however, there had been no agreement on the rental one would have expected the second respondent to raise the issue with the applicant, deny that there was an agreed rental and at that stage insist that after 31 August 2005 no rental had been agreed and as a result the first respondent would only pay what it considered as fair and reasonable rentals. Instead of this, the second respondent unequivocally accepted that rentals as demanded were due and made an undertaking in writing, to pay a specific sum, and an attempt to do was made, with a promise to pay the balance.

When the transfer had not shown in the applicant’s account as promised, the applicant again threatened legal action. The second respondent was at pains to convince him that he had transferred the funds and promised to send the applicant a copy of the transfer. The fact that the applicant gave details of his bank account to the second respondent is in my view evidence of the fact that the parties had not only agreed on the mode of payment but on the amount to be paid. It would be inconceivable that the landlord would give his lessee an account number to facilitate payment of rentals where no rental has been agreed. I therefore find that the lease agreement was not terminated and that the parties agreed for the rentals due each time the lease came up for extension, or tacit relocation.

If however, I have erred, and indeed the first respondent was a statutory tenant, is it, in casu, entitled to the protection afforded by the Commercial Premises (Rent) Regulations 1983? Section 22 (2) of the Regulations provides:

1. …
2. No order for the recovery of possession of commercial premises or for the ejectment of a lessee there from which is based on the fact of the lease having expired, either by the effluxion of time or in consequence of a notice duly given by the lesser shall be made by a  court, so long as the lessee -
   1. continues to pay the rent due, within seven days of due date; and
   2. performs the other conditions of the lease;

unless the court is satisfied that the lesser has good and sufficient grounds for requiring such order other than that –

1. the lessee has declined to agree to an increase in rent or
2. the lessor wishes to lease the premises to some other person.

The respondents contend that the basis for eviction is that the first respondent has refused to pay rent in units or United States dollars and has further refused to pay unilaterally increased rentals of US$1000-00 per month.

I will deal first with the refusal to pay rentals in units or US dollars. The emails from the second respondent belie this point. On 25 June 2009 the applicant sent an email to the second respondent detailing what was required to be done by the respondents –

-           sign the lease agreement and return it to Lester.

-           pay the rentals owed up and including July 2009 i.e. US6 400 into the applicant’s account with Carxa Catalunya in Paluna de Mallorca.

By email dated 9 July 2009 the second respondent, in response, agrees that he “will do as stated in your email and make payment into your account”.

There is no suggestion in that email that the first respondent would not be willing to pay rentals in United States dollars. The account number is obviously an offshore account and the second respondent agreed to transfer money to this account. Payment could only have been effected therefore in US dollars. Not only does the second respondent agree to pay in United States dollars on 29 July 2009 he actually instructed his bank in Harare, Metropolitan Bank, to transfer $3000-00 US to the applicant.

As regards the alleged unilateral increase by the applicant of the rental to US$1000-00, the second respondent undertook to pay US$3000-00 on 29 July 2009. This was following a demand by the applicant for the sum of $6 400-00 being rentals to up to July 2009. The second respondent, in my view, unequivocally agreed to pay the amount demanded. There are, therefore, in my view, no disputes as regards the rent due.

In the event, even if the respondents contend that the first respondent was a statutory tenant, there is no evidence that it continued to pay the rent due within seven days as is required by s 22 (2) (a) of the Regulations. By 29 July 2009 when the second respondent instructed its bank to transfer US $3000-00 to the applicant it owed rent for half a year as is stated in the email from the applicant. That transfer did not go through and at the time that the application was filed there were arrear rentals. An amount of US$2000-00 was only paid on 5 November 2009 after these proceedings were instituted meaning that at the time the applicant instituted proceedings of the arrear rental being demanded by the applicant no payment had in fact been made. Thus in my view, the protection afforded a lessee under s 22 (2)(a) cannot avail the first respondent.

It is my firm view therefore, that the first respondent has breached its obligations under the lease agreement entitling the applicant to an order for its eviction from the premises.

The issue of costs is provided for in the lease agreement. The clause relating to costs provides that in the event of legal costs being incurred due to breach of the terms of the lease by the lessee, such costs should be paid as between client and legal practitioner costs as well as party and party costs. The applicant has submitted that it provides for the payment of all costs incurred by the lessor. The respondents contend that the clause is ambiguous. They contend that court should award party and party as to do otherwise would be prejudicial to the respondents.

The clause is somewhat ambiguous and difficult to interpret The clause however also makes reference to the payment of collection charges and tracing fees incurred by the lessor. It seems clear that the intention behind the clause was to assist the lessor in recovering any costs which result from a breach on the part of the lessee. It seems to me that the inclusion of party and party costs rather than reducing the extent to which the applicant can claim costs from the respondents was intended to accommodate the applicant in collecting all costs attendant upon any legal dispute arising from alleged breaches on the part of the first respondent. The inclusion of party and party costs in my view was meant to be inclusive rather than exclusive. In the premises the applicant is entitled to costs on a higher scale.

The application succeeds and an order will issue in terms of the draft.   

Wintertons, applicant’s legal practitioners

O Matizanadzo & Associates, respondents’ legal practitioners