Mining Industry Pension Fund v Cohen Chipunza

### Preamble
1
HH 126-21
HC 10929/17
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MINING INDUSTRY PENSION FUND

versus

COHEN CHIPUNZA

HIGH COURT OF ZIMBABWE

CHITAPI J

HARARE, 2 October 2018 & 23 March 2021

Stated Case

K Ncube, for the plaintiff

T Deme, for the defendant

CHITAPI J: The applicant is Mining Industry Pension Fund, a body corporate with juristic status and capable of suing and to be sued. The defendant is Cohen Chipunza, a male adult of Harare. The plaintiff is the owner of a certain immovable property called Stand 17594, Shop No. F09, Angwa City, Harare. The defendant stood as surety and co-principal debtor in solidium in respect of the rental and other obligations required to be satisfied by a company called Future Generations (Pvt) Ltd, in terms of a lease agreement between the plaintiff and the aforesaid company in relation to the plaintiff’s property referred to hereinabove. The lease agreement was entered into on 24 March 2015.

The lease agreement was subsequently cancelled consequent upon non-payment of rentals due in terms of the provisions of the lease agreement. In consequence of the cancellation, the plaintiff obtained judgment in Case No. HC 546/17 against the lessee company for payment of outstanding rental in the sum of $12 073.03 and holding over damages of $1500 per month reckoned from 1 December 2016 to the date of the company’s eviction. The company was evicted on 30 May 2017.

The plaintiff issued summons in this matter against the defendant as surety and co-principled debtor in solidium, for payment on the judgment of the court which granted the eviction order. The holding over damages to the date of eviction were calculated at $9000 meaning that the total amount claimed is $21 073 arrived at by addition of outstanding rental of $12 073.03 and holding over damages of $9000. In addition to the $21 073.03, the plaintiff also claimed interest on the above amount at the rate of 5% per month from the date of service of summons, which is 8 December 2017 to the date of payment in full. Additionally, the plaintiff claimed payment of collection commission in terms of the Law Society of Zimbabwe By-Laws and costs on the scale of legal practitioner and client.

The defendant entered appearance to defend and after requesting for further particulars which were supplied, he filed a plea. In the plea, the defendant admitted that he stood as a surety and as co-principal debtor in relation to the obligations of Future Generations (Pvt) Ltd in relation to the lease agreement pleaded by the plaintiff. The defendant however pleaded that he was only liable on the lease agreement for a period of one year, being the duration of the lease. He specifically pleaded that the lease agreement was entered on 1 January 2015 and expired on 31 December 2015 in terms of clause 1.5 of the lease agreement. He pleaded that the plaintiff’s claim was not valid at law because it was founded on an expired lease agreement. The defendant further pleaded that because the deed of suretyship which he signed on 24 March 2015 related to a lease agreement which expired on 31 December 2015, that was the date on which his liability on the lease terminated. He was therefore not liable for any obligations incurred by the lessee after 31 December 2015 after which date, the lessee became a statutory tenant.

The defendant further pleaded that he was not a party to the eviction case between the plaintiff and Future Generation (Pvt) Ltd. The defendant also pointed out that the lessee was Future Generations Pictures (Pvt) Ltd and not just Future Generations. No issue was raised in regard to the impact of the omission of the word “Pictures” in the citation of the defendant (lessee) in casu.  The judgment against Future Generations (Pvt) Ltd was granted in default. The defendant pleaded that in his opinion, Future Generation (Pvt) Ltd had a defence that no cause of action could arise out of an expired lease agreement. Since Future Generations did not defend the matter, the defendant’s opinion remained its opinion which would not impact on the case between the parties herein.

Lastly, the defendant pleaded that he could not be bound to a judgment between the plaintiff and Future Generations (Pvt) Ltd because he was not a party to that case. He reiterated in his plea that his liability was limited to the duration of the lease agreement and not beyond its tenure. He also pleaded that the plaintiff was already holding a judgment against Future Generations and could not lawfully seek the same relief against the defendant. The defendant further averred that the plaintiff was double dipping in instituting this claim as it had already done so against Future Generations (Pvt) Ltd. The defendant averred that it was incumbent upon the plaintiff to have sued the defendant as a party to the eviction proceedings and to have indicated that liability on the claim was joint and several between the plaintiff and Future Generations.

In the replication, the plaintiff pleaded that the contractual obligations of the defendant as surety and co-principal debtor remained binding on the defendant in terms of clauses 1-5 and 2-3 of the lease agreement. It also pleaded that since the liability of the principal debtor was settled by judgment of the court, the defendant’s obligations flowed as a matter of law. The plaintiff further pleaded that the defendant’s liability arose out of obligations imposed by the lease agreement and that the plaintiff claim was an incident of the enforcement of the obligations of Future Generations (Pvt) Ltd. Lastly the plaintiff pleaded that to the extent that the defendant renounced the benefit of excursion, the fact of the plaintiff having obtained judgment against Future Generations (Pvt) Ltd was of no consequence to the defendant’s liability to acquit his own obligations in terms of his suretyship.

The matter came before me for pre-trial conference. Upon a consideration of the pleadings and counsel for the parties engaging, it was agreed that there were no factual issues for trial and that the issues arising were matters of law. Counsel resolved between them that the case could be disposed of as a stated case. They further agreed that since there had been no need for me to go into the modalities and motions of a pre-trial conference, I could be pleased to determine the stated case. I agreed to the request by counsel.

The agreed facts of the stated case prepared jointly by both counsel reads as follows:

“1.	Plaintiff is a registered Pension Fund in terms of the laws of Zimbabwe.

2.	The defendant is a male business man who is a director of Future Generations (Pvt) Ltd

(“The Company”)

3.	On 24 March 2015 plaintiff and the company entered into a written lease agreement attached to the further particulars. The materials terms of the lease agreement were as follows:

3.1	The company was to lease from the plaintiff and the plaintiff would lease to the company certain immovable property on Stand 17594 being shop F09 Angwa City, 50 Angwa Street, Harare (“The Premises”).

3.2	That the lease was to commence on 1 January 2015 and terminate on 31 December 2015 renewable for another year on the same terms and condition except for rent and operating costs.

3.3	That if the company intends to vacate on the termination date, in which event the company undertook to vacate on such dated or;

34.	That if the Lessor fails to give notice as provided the lease would continue from termination date of the lease or option period on the same and conditions other than rent payable but subject to 2 months’ notice on either side being given.

4.	The defendant signed a deed of suretyship which is also attached to the further particulars in terms of which the defendant renounced the legal exception exception beneficium ordinis seu excussions and bound himself jointly and severally as surety and co-principal debtor for the due and faithful performance by the company of all obligations imposed in terms of the lease agreement.

5.	After the expiration of the lease agreement on 31 December 2015 the Company continued to occupy plaintiff’s premises as a statutory tenant.

6.	The company defaulted and did not pay rent and operating costs that it accumulated as a statutory tenant. The plaintiff instituted proceedings under Case No. 546/17 and plaintiff obtained judgment against it for payment of $12 073.03and holding over damages of $1500 per month calculated from 1 December 2016 to the date of eviction.

7.	Upon obtaining judgment against the Company on 17 March 2017 plaintiff executed and caused the ejectment of the company from the premises on 30 May 2017. At that stage the company was indebted to the plaintiff in the sum of $21 072.03.

8.	Defendant denies liability on account of the fact that the lease agreement upon which plaintiff’s claim is based expired on 31 December 2015 and thus defendant argues that such a document cannot found a cause of action at law and further that whatever legal obligations that the company accumulated cannot be covered by the Deed of suretyship that defendant executed in favour of the plaintiff.

ISSUES FOR DETERMINATION

9. (i)	whether or not the expiry of the lease agreement upon which plaintiff’s cause of action is based is on its own a ground for excusing the defendant from liability and,

(ii)	whether the defendant is liable to the plaintiff in terms of the Deed of Suretyship for the company’s obligations accumulated post 31 December 2015?

TIMELINES

10.	 Plaintiff to file heads of argument within 10 days and defendant to file heads of argument within 10 days.”

The issues for my determination were set out in para 9 above. I therefore address them in turn.

Whether or not the expiry of the lease agreement upon which plaintiff’s claim is

based is on its own a ground for excusing the Defendant from liability? The answer to the above question must be found in the provisions of the lease agreement itself read together with the provisions of the suretyship agreement. The defendant’s argument was that his surety ship obligations ended on the date that the lease agreement expired which the defendant submitted was 31 December, 2015. The defendant submitted that beyond 31 December, 2015, the plaintiff had become a statutory tenant. The defendant’s argument then became that, the defendant’s suretyship did not extend to cover a statutory tenancy relationship between the plaintiff and Future Generation Pictures (Pvt) Ltd, following the expiry of the written lease agreement. The defendant therefore argued that the expiration of the lease agreement absolved him as surety or guarantor of Future Generations Pictures (Pvt) Ltd obligations to the plaintiff post 31 December, 2015. It was the defendant’s further argument that the plaintiff’s cause of action was not well founded because it based it upon an expired lease agreement.

The defendant relied for his argument that the plaintiff’s claim was bad at law, it being founded on an expired lease, on the judgment of MAKARAU JP (as then she was) in the case Local Authorities Pension Fund v F & R Travel Tours and Car Sales (Pvt) Ltd and 2 others HH 90/10. The brief facts of that matter were that the plaintiff and first defendant therein concluded a written lease agreement in respect of a certain property in Harare. The plaintiff was the landlord and the first defendant, the tenant. The lease agreement which they signed was for one year commencing on 1 July, 2006 and terminating on 30 June, 2007. The second and third defendants were directors of the first defendant. They bound themselves as co-principal debtors under the lease agreement. The lease agreement expired. It was not renewed. The first defendant, despite the expiry of the written lease agreement remained in occupation of the premises. The plaintiff sued for the eviction of the first defendant and ancillary relief. The plaintiff based its claim on the lessor and lessee relationship under the lease which had expired. The plaintiff specifically averred that the respondents had breached the written lease agreement by a failure to pay rentals and operating costs since January, 2009, which was a date post the expiry date of the lease agreement upon which the second and third defendants guarantees were premised.

The learned Judge President reasoned that since the written lease agreement had expired by effluxion of time, it was no longer binding on the parties and as such, it could not ground a cause of action. Its terms and conditions could only have remained relevant to the extent referred to under the provisions of the Commercial Premises Rent Regulations S.I. 276/83. The regulations protect a tenant whose written lease agreement with the lessor has expired subject to the tenant continuing to honour the lessee’s obligations under the conditions of the expired lessee and in particular the payment of rentals within seven days of due date as provided for in the expired lease agreement.

The learned Judge President stated as follows on p 2 of the cyclostyled judgment-

“It is common cause that the written lease agreement between the parties terminated by the effluxion of time in June, 2007. As at the time of the filing of the application, it was no longer binding on the parties and could thus not form a cause of action for the applicant. Its terms and conditions may have continued to afford the respondents protection against eviction under the operation of the provisions of the Commercial Rent Regulations S.I. 276/83 under what is commonly referred to as statutory Tenancy. This is however not part of the averments made by the applicant in the founding affidavit.

In my view, a statutory tenancy is not an issue that the court should take judicial notice of mero motu. It must be specifically pleaded as it brings into play, different considerations regarding the respective rights of the parties. It is a separate cause of action, apart from the terminated agreement.”

The learned Judge President continued-

“At this stage, the point I am making is that the applicant could not validly seek to rely on an agreement that had terminated without first laying a legal basis for its revival so to speak.”

Before I consider the parties’ submissions, if find it convenient to set out common cause facts that arise from a consideration of the pleadings filed herein and the statement of agreed facts. The facts are-

That the lease agreement between the plaintiff and Future Generation Pictures (Pvt) Ltd in clause 1.5 provided as follows-

“1.5 the lease period is for 1 (one) year commencing on first January, 2015 terminating on 31st December 2015, renewable for another year on same conditions except for rent and operating costs which are renewable from time to time”

The process of renewal of the lease was provided for in clause 2 of the lease agreement. In the event that the lessee intended to renew the lease agreement, it was required to advise of such intention at least three months to the date of expiry of the lease agreement. The same applied if the lessee intended to vacate the premises on the expiry date. The lessee was required in the latter instance to also give three months’ notice of its intention to vacate. Upon the lessee not giving such notice, clause 2-3 came into play. The clause provided as follows-

“2-3 If the lessee fails to give notice as provided in clause 2-2 hereof, the lease will continue from termination date of the lease or option period on the same terms and conditions other than the rent payable but subject to two months’ written notice of termination on either side being given”

The lessee did not give any notice of intention to renew the lease nor to vacate the leased premises upon the expiry date of the lease agreement. Clause 2-3 therefore came with effect.

The defendant’s executed a deed of suretyship in favour of the plaintiff which was worded as follows:

“I/We under renunciation of the legal exception beneficium ordinis sell excussionis, with the and effect which I/We can/ are fully acquainted do hereby bind myself/ourselves jointly and severally as surety and co-principal debtor for the due and faithful performance by the hearse. FUTURE GENERATION PICTURES (PVT) LTD of all obligations imposed in terms of the agreement of lease entered into between the LESSEE and the LESSOR in respect of premises being SHOP NUMBER F09 ANGWA CITY 50 ANGWA STREET, HARARE. Some 53, 90 square metres in extent together with the improvements thereon”

The deed of suretyship and the defendant’s status as a co-principal debtor with FUTURE GENERATION PICTURES (PVT) LTD was intended to cover “all obligations imposed in terms of the lessee agreement….”

The plaintiff instituted a court action in case no. HC 546/17 claiming arrear rental and holding ever damages. The plaintiff obtained judgment in its favour against Future Generation Pictures (Pvt) Ltd, the principal debtor under the lease agreement at play, herein for payment of arrear rental of $12 073.03 and holding even damages of $1 500.00 per month for the period I December, 2016 to 30 May, 2017, being the date of eviction of future Generation Pictures.

The plaintiff contended that the lease agreement did not terminate by its expiry date because clause 2-3 of the agreement had the effect of renewal of the same agreement on the same terms as set out in the signed lease agreement which is the subject of this action. The notice period in the second year of the lease agreement was to be two months and the rental and operating costs only would be reviewed. The defendant argued that the deed of suretyship’s life span ended on the expiry date of the lease agreement on 31 December, 2015. In his heads of argument counsel for the defendant did not address clause 2.3 of the lease agreement. In failing to do so, it meant that counsel misconstrued the import of MAKARAU JP’s judgment in the Local Authorities Pension Fund v F & R Travel Tours and Car Sales (Pvt) Ltd & 2 Ors case. The learned Judge President did not deal with a situation wherein the lease agreement provided for its continuation post the date of its first anniversary. In other words, whilst the defendants in the case aforesaid upon expiry of the lease agreement which was subject of that case, became statutory tenants, that fact and finding of Makarau JP distinguishes that case from the one in casu in that a statutory tenancy situation did not arise. The lease agreement in casu was automatically renewed in perpetuity until terminated by either party on giving two months’ notice of termination.

The answer to the first issue therefore is that the lease agreement between the plaintiff and Future Generation Pictures (Pvt) Ltd did not expire by effluxion of time. The lease agreement could only be terminated by the giving of notice by the lessee, three months before the expiry date, of the lessee’s desire not to continue with the lease and to vacate the leased premise on or before the date of expiry of the lessee agreement. The failure to give such notice and the continued occupations of the premises by the lessee after due date rendered the “would have expired lease agreement” still valid for an indefinite period subject to two months to be given for termination and rental and operating costs renewals. Whether or not the suretyship of the defendant continued beyond 31 December, 2015 is answered by reference to the wording of the deed of suretyship considered together or in context with the provisions of clause 2.3 of the lease agreement.

The first point to note is that the defendant renounced the legal exception beneficium ordinis seu excussionis which entails waiving the defence that the creditor should first exhaust all legal remedies against the principal debtor claiming against the surety and/or co principal debtor. The second point is that the deed of suretyship executed by the defendant was not cover for the due performance of “all obligations imposed in terms of the lease agreement entered into between the lessee and lessor…” The question that arises was whether or not post 31 December, 2015 there was still in existence the lease agreement entered into between the lessee and lessor. In my view, the lease agreement was still in existence beyond 31 December, 2015 because the terms of the lease agreement provided for its automatic renewal and validity beyond 31 December, 2015. The defendant bound himself as surety under the lease agreement which did not expire on 31 December, 2015 contrary to the defendant’s contentions. The suretyship cover was for the duration of the lease agreement and the defendant was therefore not sued in regard to an expired lease agreement. The plaintiff claim was according well founded and is a valid claim.

The second issue which I am asked to determine is whether the defendant is liable to the plaintiff in terms of the Deed of Suretyship for the company’s obligations accumulated post 31 December, 2015 since its terms provided for its continued validity until properly terminated. The suretyship deed executed by the defendant continued holding for the duration of the lease agreement. The defendant stood surety and co-principal debtor in relation to “all obligations imposed in terms of the agreement of lease.” There is no suggestion that the amounts claimed by the plaintiff did not arise from the lessee’s obligations in terms of the agreement of lease.

The defendant also submitted that it was against public policy for the plaintiff to obtain a parallel judgment against the defendant. This argument was not developed by the defendant’s counsel with any conviction if at all. The argument has no merit. The argument would otherwise have made sense had the plaintiff made a second claim against Future Generation Pictures (Pvt) Ltd based on the same cause of action. If the plaintiff was to sue the same defendant twice in the same matter, the defendant could then plead res judicata in defending the second suit. A judgment is binding only on the parties to the proceedings in which it is rendered or the privies of the parties. The defendant was not party to case NO HC 546/17. He cannot seek to plead that the current claim is a duplication of case No. HC 546/17. The plaintiff was entitled therefore to separately sue the defendant.

The claim against the defendant may well arise out of the same subject matter as the claim against the principal debtor in case no. HC546/17. The defendant as surety and co-principal debtor can be sued separately. What would be against public policy would be for the plaintiff to levy execution of the judgment beyond what the plaintiff is entitled to. For example, the plaintiff may execute on judgment in HC 546/17 against the principal debtor. If the judgment is satisfied through that execution the plaintiff cannot proceed to again execute on the judgment obtained against the defendant as surety and co-principal debtor. In casu, it was open to the defendant to raise defences open to the principal debtor. He did not do so. There is therefore no challenge to the amounts claimed and ancillary relief. In the case on Spar Group v Webber [2011] ZAFS HC 11 at paragraph 24, the following is stated by Rampa J

“[24] It is trite that the surety; when sued by the debtors’ creditor can raise all the defences that were open to the principal debtor. This is so because the creditor’s claim against the surety has as its foundation precisely the same claim as against the principal debtor. Bank of OFS v Cloete 1985 (2) SA 859 (E) on 862 G to 863 J. The defences advanced by the defendant in this case are not defences in persona to the principal debtor. Therefore, the defendant as surety is entitled to advance them in much the same way as Marbid, the principal debtor could have.”

The defendant was not bound to accept judgment HC 546/17 as resolving the issue of liability on the agreement of lease and the amounts to be paid thereon by the principal debtor. The defendant was not estopped to raise defences on liability and quantum. He only challenged liability. In the agreed facts, the amount of the indebtedness was not put into issue for determination. One of the key principle of pleading is that, what is not disputed or denied by the defendant in the plea to the plaintiff’s declaration is deemed to be accepted or admitted. The ancillary claim which is not disputed relate to the levying of interest on the principal sum calculated at 5% per month, collection commission and costs on the legal practitioner and client scale. Costs are in the discretion of the court whilst the liability for payment of collection commission, where a dispute is resolved by court judgment must be provided for in the agreement between the parties.

In regard to interest, clause 7 of the lease agreement provides that interest on any monies due and paid by the date will be calculated using the landlord’s bankers minimum lending rate. The plaintiff did not plead how the 5% interest is arrived at. It is not for the court to investigate the plaintiff’s bankers minimum lending rate. Where the rate of interest claimed is not substantiated or its basis alleged, the court must find that the interest rate claimed has not been proved. In such case, interest on the judgment debt will be calculated at the prescribed rate of interest as provided for in s 5 of the Prescribed Rate of Interest Act [Chapter 8:10] from the date of judgment.

The claim for collection commission is also not proved. The onus is upon the plaintiff to prove that collection commission is lawfully due and payable by the defendant in terms of either the lease agreement or the suretyship agreement. The plaintiff did not plead the basis for the claim for collection commission. It is a specific claim for collection commission. It is a specific claim which must be pleaded ad proved. I did not find from the filed pleadings where the basis of the claim was pleaded either in the summons, declaration or agreed facts.

In relation to costs in civil litigation other than with labour matters costs follow generally the result.  This is the starting point when the court considers costs awards. The award of costs is in the discretion of the court unless the issue is governed by some enactment or an agreement between the parties. The lease agreement herein does not speak to litigation costs nor is there an enactment which to my knowledge provides for the issue of costs in a dispute such as the one before me herein. The plaintiff claims for punitive costs. No submission was made on why legal practitioner and client costs should be ordered against the defendant. In the case of Michale Mahembe v Clever Matambo HB 322/2002, Cheda J referred to the judgment in the case Nel v Waterberg Lanbouwers Kooperative Vereeniging 1946 AD 597 at 607 wherein tindall JA stated-

“the true explanation of awards of attorney client costs not authorized by statute seems to me to be that, by reason of special considerations arising either from the circumstance which give use to the action or from the conduct of the losing party the court in a particular case considers it just by means of such an order to ensure more effectively that it can do so by means of a judgment for party to party costs that the successful party will not be out of pocket in respect of the expenses caused to him by the litigation.”

I was not persuaded that the defendant was not genuine in his defence of the plaintiff claim. The plaintiff did not submit any special considerations to justify a punitive costs order. Costs will be ordered to be paid on the ordinary scale.

Consequently, I dispose of the stated case by order as follows:

It is declared that the defendant is liable to the plaintiff for payment of the sum of US$21 073.03 and interest thereon at the prescribed rate from the date of judgment to the date of full payment.

The claim for payment of collection commission is dismissed.

The defendant shall pay costs of suit on the ordinary scale.

Gill, Goldlonton & Gerrans, plaintiff’s legal practitioners

Thoughts Deme Attorneys at Law, defendant’s legal practitioners