DISTRIBUTABLE (53)

Judgment No. SC. 59/05

Civil Appeal No. 361/04

LESLEY FAYE MARSH v INTERMARKET BUILDING SOCIETY

SUPREME COURT OF ZIMBABWE

CHIDYAUSIKU CJ, CHEDA JA & ZIYAMBI JA

HARARE, SEPTEMBER 27 & NOVEMBER 14, 2005

R M Fitches, for the appellant

T Biti, for the respondent

CHEDA JA: The parties entered into a lease agreement on 20 July 1997 in respect of a property known as Stand 506A, Salisbury Township, in the District of Salisbury (hereinafter referred to as “the property”). The appellant signed the lease on 25 July 1997 and the respondent signed it on 28 July 1997. The lease was for a period of five years, commencing on 1 October 1997 and terminating on 30 September 2002. The rental was fixed as follows –

(a) $8 000.00 per month for the period 1 October 1997 to 30 September 1998;

(b) $9 600.00 per month for the period 1 October 1998 to 30 September 1999;

(c) $11 520.00 per month for the period 1 October 1999 to 30 September 2000;

(d) $13 825.00 per month for the period 1 October 2000 to 30 September 2001; and

(e) $16 590.00 per month for the period 1 October 2001 to 30 September 2002.

On 11 November 2002 the respondent addressed a letter to the appellant in the following terms:

“RE: YOUR LEASE AGREEMENT – INTERMARKET CHAMBERS

I refer to our previous communication in respect of the above matter and advise that the Society has agreed to renew your lease for a further three years with effect from 1 October 2002.

The lease will be on a nett lease basis and the rental structure will be as follows –

01.10.02 - 30.09.03 $25 000 per month;

01.10.03 - 30.09.04 To be negotiated;

01.10.04 - 30.09.05 To be negotiated.

The operation costs will be shared amongst all the tenants at Intermarket Chambers based on the ratio which the floor area of the leased premises bears to the total lettable area of (the) building.

Your landlord is currently considering taking over your leased premises for its own use. However, no definite position has been reached and should such a decision be made you shall be given six months notice to vacate the leased premises.

This letter supersedes all other previous communication in respect of the lease renewal. A copy of the lease agreement will be sent to you for signature shortly.

Yours sincerely,

F NYAMBIRI

VALUATION MANAGER”

On 22 June 2003 another letter was addressed to the appellant in the following terms:

“RE: CANCELLATION OF LEASE – INTERMARKET CHAMBERS

I refer to our previous communication in respect of the above matter and advise that the Society (landlord) has decided to occupy your rented space for their banking business development. In this respect we hereby regrettably grant you six months notice (up to (the) end of business on Friday 02 January 2004) to vacate the premises.

We would like to take this opportunity to thank you for your good tenancy over the years and wish you the best.

Please acknowledge receipt of file by signing below and return a copy of the letter.

Yours sincerely,

W MAPFUMO

(EXECUTIVE RISK ASSESSMENT)

In acknowledgement of receipt

Signature: __________________

(For and on behalf of Marsh Jewellers)

Date: ……………………………………………… 2003.”

On 8 September 2003 the appellant’s legal practitioners wrote to the respondent and stated as follows in the second paragraph of their letter:

“We wish to draw your attention to the fact that in terms of the Lease Agreement the lease is for a period of three years with effect from 1 October 2002. The lease therefore expires on 1 October 2005. In the circumstances you cannot purport to give our client six months’ notice to vacate the leased premises before the expiry of the lease period. Our client will vacate the premises after the expiry of the lease period on 1 October 2005.”

This position taken by the appellant was not accepted by the respondent, who replied on 1 December 2003 as follows:

“We refer to your letter dated 8 September 2003 on the above matter.

We advise that the Lease Agreement between the Society and your client expired on 30 September 2002. As you will note from a reading of the agreement there was no provision for renewal of the lease agreement. On expiry, continued lease of the premises by your client was therefore dependent on the parties negotiating new terms and signing a new Lease Agreement.

Intention to enter into a new Lease Agreement was communicated to your client on 11 November 2002.

Among the conditions of the intended new lease, it was specifically stated that the Landlord was considering taking over the premises, in which case once a firm decision in the affirmative was made, your client would be given six months’ notice to vacate the premises. It was also specifically stated that a copy of the new Lease Agreement would be sent to your client for signing. Such Lease Agreement was going to incorporate the conditions communicated in the letter and any other terms that would apply to the new Lease.

The new Lease Agreement was subsequently never signed. This would leave your client in the position of only a statutory tenant. …”

Faced with this disagreement, the respondent applied to the High Court to have the termination of the lease agreement declared valid and for an order for the ejectment of the appellant. Despite opposition by the appellant, the High Court granted that order.

The appellant has now appealed against the High Court’s decision. Her grounds of appeal were that:

“1. The learned judge erred in law in holding that (the) appellant did not justify her belief that the respondent did not require the premises for its own use.

2. Further, the learned judge erred in law in finding that (the) respondent had proved its case in the Founding Affidavit when (the) respondent’s proof was only attached in its Answering Affidavit.

3. Further, the learned judge erred in law in finding that a lessor can give notice to terminate a lease for a fixed term on the grounds that the lessor requires the premises for its own use. The principle of law has been clearly established by the Supreme Court that a lessor cannot terminate a lease for a fixed term even if it requires the premises for its own use and therefore the Order of Ejectment should not have been granted in favour of (the) respondent.”

The main issues to be decided on appeal fall under the following headings –

1. The renewal of the lease;

2. The status of the tenant; and

3. The cancellation of the lease.

1. THE RENEWAL OF THE LEASE

The lease did not provide for renewal after the initial period of five years that was agreed to by the parties. Instead, it provided that if the tenant wished to remain in occupation after the end of the agreed period she was to advise the lessor in writing, and the lessor would inform her if it was prepared to let her do so and the rent that would be charged.

The respondent’s letter of 11 November 2002, while purporting to renew the lease for a period of three years, only fixed the rental for the period of one year only, that is, from 1 October 2002 to 30 September 2003. The rent for the remaining two years was not fixed but was to be negotiated.

We are not told if the appellant responded to this letter, but since in the letter from her legal practitioners dated 8 September 2003 she argued that the lease was for the three years given in the respondent’s letter, it can be safely assumed that she accepted the new conditions given by the respondent.

However, that acceptance would mean that the lease was validly renewed for the further period of one year only because for that period the rental was stated and accepted.

The remaining period of two years, that is from 1 October 2003 to 30 September 2005, cannot be considered as a valid lease.

While the parties did not deal with this issue sufficiently in their papers, there can be no lease where the rental was not fixed and agreed.

In Globe Electrical Transvaal (Pty) Ltd v Brunhuber and Ors 1990 (3) SA 99, it was held that the agreement was not valid as the price payable was not readily ascertainable.

In Hattingh v van Rensburg 1964 (1) SA 578, it was held that:

“A right and option to purchase in a lease ‘at such price as they may agree upon’ is of no force or effect until a price is agreed upon by the lessee and lessor.”

In Aris Enterprises (Finance) (Pty) Ltd v Waterberg Koelkamers (Pty) Ltd 1977 (2) SA 425 it was held that the agreement was of no force or effect as the price was uncertain and the parties might never have agreed on the amount.

See also W.E. Cooper on Landlord and Tenant 2 Ed pp 54-55.

Similarly, in this case the agreement was invalid, as it is not known whether the parties would have agreed on the rental when it was eventually negotiated.

2. THE STATUS OF THE TENANT

What this means is that at the end of the period for which rental was agreed, the appellant became a statutory tenant in terms of s 22(2) of the Commercial Premises (Rent) Regulations, SI 676/83.

Since the appellant was given notice to vacate the premises by 2 January 2004, her right to occupy the premises fell away on that date under the above Regulations.

3. THE CANCELLATION OF THE LEASE

The respondent gave the appellant six months’ notice to vacate the premises. The appellant argued that she should not have been given notice to vacate the premises since the agreement had been renewed for three years.

Mr Fitches, for the appellant, referred to the case of Mungadze v Marambiwa 1997 (2) ZLR 44 (S). This case is not relevant regarding the issue of notice to vacate before the end of the lease period because in this appeal the lease had expired, as I have already found.

The part of the case Mungadze v Marambiwa supra that is relevant is the part that deals with the issue of notice to vacate when the lessor requires the property for its own use.

In the present appeal, the lessor indicated to the appellant why it required the premises. The evidence submitted leaves no doubt that the respondent needed the property for its own use. The tenant had been forewarned of this possibility when the lease was renewed.

The lessor eventually made a decision to re-occupy the premises and use it for its own business purposes. The suggestion by the appellant that she heard from other people that the lessor did not require the premises for its own use cannot be relied on. It is not evidence that disproves what the lessor has stated.

The appellant has also argued that the respondent had not established, in the founding affidavit, the averment that the premises were required for its own occupation.

This was not an issue at the time the parties exchanged correspondence. The appellant had not raised this point and as such it cannot be said that the respondent failed to deal with it. The appellant had only raised the issue of the notice to vacate before the end of the lease period.

Having found that the appellant was then a statutory tenant, how else was she to be removed from the premises?

Section 22(2) of the Commercial Premises (Rent) Regulations 1993 reads as follows:

“(2) No order for the recovery of possession of commercial premises or 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 –

(a) …

(b) …

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

(i) the lessee has declined to agree to an increase in rent; or

(ii) the lessor wishes to lease the premises to some other person.”

I have already stated that the allegation by the appellant that she heard from some people that the respondent was not wanting the premises for itself is not sufficient evidence to be relied on.

The respondent had previously advised the appellant that the repossession of the premises was being considered and that the appellant would be advised once a firm decision was made.

Once a corporate decision to expand the respondent’s business was taken, the appellant was advised accordingly. The respondent filed architectural plans of the premises, drawn on 22 July 2003. The plans show areas marked as “cash dispensers”, which are part of the respondent’s business.

I am therefore satisfied that the respondent had good and sufficient grounds for requiring the order that it sought in the High Court.

Accordingly, the appeal is dismissed with costs.

CHIDYAUSIKU CJ: I agree.

ZIYAMBI JA: I agree.

Hussein Ranchod & Co, appellant's legal practitioners

Honey & Blanckenberg, respondent's legal practitioners