Bravo (Pvt) Ltd v Wordhouse Multimedia Service (Pvt) Ltd and Terrence Mapiravana

### Preamble
1
HH 246/13
HC 3562/10
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BRAVO (PVT) LTD

versus

WORDHOUSE MULTIMEDIA SERVICE (PVT) LTD

and

TERRENCE MAPIRAVANA

HIGH COURT OF ZIMBABWE

DUBE J

HARARE, 5 November 2011, 4 February 2013

Civil Trial

C.Takaendesa, for the plaintiff

A. Mutsiwa,for the defendant

DUBE J: Bravo Ltd is a company in the business of letting out properties. It owns number 125 Dartford Road, Willowvale, Harare, (hereinafter referred to as the premises). It is the plaintiff and the landlord in this matter. The first defendant is Wordhouse Multimedia Services (Pvt) Ltd, the tenant and leases the premises from the plaintiff. The second defendant is a director of the first defendant. He bound himself as surety and co-principal debtor for the first defendant’s obligations under the lease agreement.

The parties entered into a lease agreement in terms of which the first defendant leased the premises for US3 000, 00 per month payable in advance. It was also a term of the lease agreement that the tenant would pay monthly maintenance and operating costs. The plaintiff avers that the defendant has breached the terms of the contract in that it failed to pay the rental for the month of May 2009 by the first of the month in terms of the lease agreement. On 28 May 2009 the plaintiff issued out summons against the defendants seeking the following relief,

An order for cancellation of the agreement of lease between plaintiff and first

defendant

An order for ejectment of the first defendant from 125 Dartford Road, Willowvale

Harare

Payment in the sum of $9000-00 being the sum owed by the defendants as

arrear rentals as from November 2009 to May 2010.

Payment of $1087-00 being money owed by the defendants as arrear operating

costs.

Payment of damages for continued occupation by the defendant at a rate of $3000-

00 a month for rent and $364.50 for maintenance and operating costs from the 1st of June 2010

An order for costs on an Attorney Client scale.

The summons and particulars of claim were amended in paragraph (c).The plaintiff now claims $4 087-00 as arrear rentals and operating costs from December 2009 to May 2010 plus interest.

The defendant opposes the relief sought on the basis that it did not breach the agreement of lease and that the plaintiff failed to give it notice to cancel the contract of lease.

The plaintiff called Caesar Masuku as its witness. The witness is a property manager with Knight Frank, Zimbabwe. He testified that there is a lease agreement between the parties commencing from 1 July 2009.The second defendant signed a deed of surety ship as a guarantor to the obligations of the first defendant under this lease agreement. The monthly rental of $3 000-00 per month and operating costs were required to be paid on the 1st of each month and in advance. The tenant was required in terms of clause 6 of the agreement to pay for the operating costs. The figure for operating costs is constituted of monthly charges for municipal rates, water, effluent and sewerage and these fluctuate depending on consumption.

The figure of $364-50 represents operating costs and includes water and rates per month and is based on estimates because the city authorities were not delivering bills. Electricity is not included in this figure. The total operating costs as estimated is $2 184-00. The tenant was supposed to pay water and property rates bills of the City of Harare as well as. The plaintiff monitors the consumption of both electricity, water and rates. Credit is passed where the tenant has made payment to the relevant authorities. The actual bills are now available from the city council but were not produced. Nothing has been paid in respect of operating costs for the period in issue. As at 1st May 2010 the tenant owed $3 000-00 plus operating costs totalling $2650-00, based on the actual bills.

The tenant owed a total of $23 184-30 for rentals and maintenance and operating costs for the period December 2009 to May 2010. The tenant paid a total $19 100-00, 00.  The total arrears for this period are $4 084-00 which are made up of the rental of $3 000-00 for May and operating costs totalling $1 084-30.  As at the end of May 2010 the first defendant had paid a total of $22 100-00. The breach arises from the fact that rentals for May 2010 were paid on 27 May 2009 when the first defendant was required to pay on 1 May. After a series of meetings, a letter of demand was written to the first defendant in February 2010, and the agreement was cancelled. The lease agreement was cancelled by the issuing of summons.

The defendants called Terence Mapiravana the second defendant as its witness. His evidence is as follows. He is a director of the first defendant. He confirmed the existence of the lease agreement between the first defendant and the plaintiff. The first defendant paid a total of $22 100-00 for the period December to May 2009.An amount of $1 8000-00 was for rental for 6 months, $3 000-00 was for good tenancy deposit and the balance of $1 100-00 was an estimate for operating costs. The first defendant has been paying electricity, rates and water bills. The water and rates bills were estimated as the bills were not coming. The witness paid $1 100-00 for operating costs. No certificate was issued to prove operating costs. The plaintiff claims $1 087-00 in operating costs therefore the first defendant is fully paid for the period in issue. There is no evidence that the lease agreement was cancelled. If the plaintiff intended to cancel the lease agreement it did not comply with clause 33.2 of the lease agreement which stipulates that all notices sent or served shall be delivered at the address in clause 38.1 or hand delivered and the plaintiff never delivered any such notice. The witness only learnt at court that operating costs were being charged at $364-50 per month.

The issues that will resolve the dispute may be summarised as follows.

Whether the 1st defendant was in breach of the lease agreement as of 1st May

2010.

b)  Whether the plaintiff cancelled the lease agreement.

Clause 8.1 of the agreement provides that the rent and maintenance and operating costs shall be payable monthly in advance on the first day of each month. The agreement in clause 33.1.1 compliments clause 8 and reads as follows.

“33.1     In the event of;

33.1.1 the rent being in arrears after the 7th  day of the month for which it is due

whether the same has been legally demanded or not; or

33.1.2   any other payment in terms of this agreement being in arrears or

33.1.3   The Tenant committing or permitting a breach of or disregarding any of the

terms and conditions of this Agreement and failing to remedy the breach within 7 days of the landlord giving him notice to remedy such breach; or….

The landlord shall be entitled to cancel the lease forthwith…..”

The essence of these clauses is that rentals were due and required to be paid by the 1st of each month with the right to cancel the contract accruing where the rent  or any other payment remains  in arrears after the 7th of the month whether the rental has been demanded or not.

Where a tenant makes a late payment of rent the landlord must make an election within a reasonable time and at the latest before the rental for the next month becomes due, to cancel the lease agreement, see Parkview Properties(Pvt) Ltd vChimbanda 1981 ZLR 409 for that proposition. The lease agreement  specifies that if the  tenant fails to pay outstanding arrear rentals and operating costs after the 7th day of the month for which it is due, the landlord is entitled to cancel the lease agreement forthwith, whether the same has been legally demanded or not. A statement prepared by the plaintiff shows that May 2010 rentals were paid on the 27thof that month. Summons were issued on 28 May 2010. The defendants did not dispute this fact. The plaintiff has proved that the defendant failed to pay rentals for the month of May 2010 within the required period. May rentals were tendered out of time and the fact that rentals were subsequently paid does not deprive the plaintiff of his right to cancel the agreement. The breach complained of is fairly serious. Failure to comply with the requirement to pay rentals timeously in terms of a lease agreement amounts to a material breach justifying cancellation of the lease agreement. The plaintiff has discharged the onus of proving that it was entitled to cancel the lease agreement based on breach of contract.

The next issue is whether the plaintiff validly cancelled the lease agreement. The cancellation clause provides that in the event of breach, the landlord shall be entitled to cancel the lease agreement, ‘forthwith’. The lease agreement is silent on the mode of cancellation and notification of cancellation of the lease agreement. Summons was issued without prior notice of cancellation having been given. The plaintiff claims that it cancelled the agreement when it issued summons commencing action in this matter. There is no actual notice of cancellation.

The onus is on a plaintiff in an action for ejectment to justify the termination of the lease agreement. Where a contract does not make provision for the procedure for cancellation of a contract, the common law applies. This position was well enunciated in the cases of Standard Bank of SA v Koekemoer (2012) ZAGPPHC 300 and DTCC Investment v Klopper (2012) ZAECPEHC 97.The common law position is that a notice of cancellation must be clear and unequivocal. In Miller and Miller v Dickinson, 1971(3) SA 581 (A) the court held that a landlord has a common law duty to bring to the attention of the lesser the fact that they are cancelling the contract.

“In the absence of an agreement to the contrary, a party to a contract who exercises his right to cancel must convey his decision to the mind of the other party and that cancellation does not take place until that happens’’

See Swart v Visloo 1971(1) SA 100. In Jackson v Unity Insurance Co Ltd 1999 (1) ZLR 381 (SC), our own Supreme Court held that where a party wishes to cancel a lease agreement it must do so in no uncertain terms and remarked as follows,

“ ... a valid notice of cancellation of lease must clearly and unambiguously inform the guilty party of the wrong party’s unqualified and final decision to treat the contract at an end”

Cancellation of a contract takes place upon delivery of the notice of cancellation. In instances where there has not been communication of cancellation, cancellation takes place from the date of the service of the summons or notice of motion. This approach was adopted in Du Plessis v Government of the Republic of Namibia 1995(1) SA 603. In Standard Chartered Bank of SA Ltd (supra) the court remarked that:

”…to the extent that a notice of cancellation was required, the service of the summons on the respondent and the fact that the election to cancel the agreement was expressly stated therein, served that purpose”.

Closer home, GARWE JA in Zimbabwe Express Services v Nuanetsi Ranch (Pvt) Ltd SC21/09 followed the reasoning in the Du Plessis case and accepted that a summons claiming damages was an implied notice of cancellation.

It is common cause that no formal notice to cancel the lease agreement was given.  There was no formal intimation or warning of the cancellation. The fact that the contract had been cancelled was not communicated to the defendants until at the stage when summons was issued. The cases cited confirm the position that service of summons where a notice to cancel has not previously been communicated suffices as notice of cancellation. The plaintiff’s intention to cancel is exhibited in the summons. Cancellation has been proved. I am satisfied that the summons served on the defendant constitute due notice of cancellation of the lease agreement.

As regards the issue of rental arrears, the evidence discloses that there are no arrears outstanding for rentals for the period in issue. The plaintiff’s witness conceded that there are no rental arrears for the period December 2009 to June 2010 and that although the tenant paid rentals for May 2010 on 27 May 2010 and late, all arrear rentals arising from that period have since been cleared. The plaintiff contended that what is outstanding is holding over damages for rentals up to the date of ejectment.

An analysis of the statement of account prepared by the plaintiff shows that the first defendant has been struggling to pay its rentals and operating costs. It is common cause that the first defendant paid a total of $22 100-00 for the period in issue. Simple arithmetic shows that the first defendant was required to pay a total of $18 000-00 in rentals for that period. If one subtracts an amount of $3 000-00 as good tenancy deposit, this leaves a balance of $ 11 00-00.The first defendant acknowledged that it was obliged to pay operating costs in terms of the agreement  and that it paid $1 100-00 as an estimate for operating costs on 14 January 2011.The defendants’ position is that although aware that the first defendant was required to pay operating costs,  they had not been made aware that the first defendant was required to pay an amount of $364-05 in operating costs per month. The first defendant claimed that it used to pay for electricity as well as rates and water charges at the City of Harare.

The plaintiff’s claim is that the defendant was required to pay a balance of $1 084-30 in operating costs, arrived at on the basis of an estimate of $364-05 per month. The plaintiffs have been erroneously or interchangeably using the figure for operating costs as $364-50 and $364-05. This explains why they came up with $1 087-00 instead of $1 084-30 in their summons and further particulars.  The amendment to introduce the figure of $4 087-00 in arrears was meant to cover one month rental of $3 000-00 and $1 087-00 in operating costs calculated at $365-50 per month.

Operating costs are covered under clause 6 of the agreement of lease. The tenant was required to pay estimates of operating costs every month until actual amounts based on the actual bills were available. If the actual bills turned out to be more than what the tenant had paid, the tenant would settle the difference and vice versa. Whilst the claim for maintenance and operating costs is based on estimates, no attempt was made to breakdown the different figures for the different components of maintenance and operating costs neither in the particulars of claim nor in evidence. The plaintiff’s evidence is to the effect that the figure of $364-05 was arrived at by obtaining a print out from the City of Harare for the monthly levies of rates and water. No such printout was produced. This figure seems to have been plucked from the air. The plaintiff does not seem to have complied with clause 6.4 of the lease agreement which requires that the landlord prepare an estimate of the likely maintenance and operating costs of the building. No certificate reflecting the amount due by the tenant was done. Proof of the actual bills incurred for maintenance and operating costs for the period in issue or even up to the date of trial would have made the plaintiff’s position easier.

The plaintiff did not produce proof of the actual bills. An attempt was made to produce a water bill for the period November 2011 to April 2012.This attempt was met with fierce opposition from the defendants who argued that they were being ambushed and prejudiced by the actions of the plaintiff who had failed to discover the document. The defendants urged the court to show its abhorrence of the practice of producing documents without discovery by denying the plaintiffs leave to produce the water bill. The court ruled against the plaintiffs. It is this court’s considered view that the plaintiff has failed to prove the claim for maintenance and operating costs.

The tenant undertook liability for costs on a legal practitioner scale in the event that the plaintiff consulted legal practitioners following any breach of any term or condition of the lease agreement.

In the result it is ordered as follows:

The cancellation of the lease agreement be and is hereby confirmed.

The respondent and all those claiming occupation through him are evicted from number 125 Dartford Road, Willowvale, Harare.

Payment of damages for continued occupation by the defendant at the plaintiff’s premises at the rate of $3 000-00 a month for rent from the 1st of June 2010 to date of defendants’ ejectment.

Payment of Interest at the prescribed rate from 1 June 2010 to date of payment in full.

The defendants jointly and severally with the one absolving the other are ordered to pay costs of suit on an Attorney Client Scale.

Hangazha&Charamba,plaintiff’s legal practitioners,

DonsaNkomo&Mutangi, defendant’s legal practitioners,