NRZ Contributory Pension Fund v Sunray Stores (Private) Limited

### Preamble
HH 85-2007
HC 4741/06
NRZ CONTRIBUTORY PENSION FUND
versus
SUNRAY STORES (PRIVATE) LIMITED
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NRZ CONTRIBUTORY PENSION FUND
versus
SUNRAY STORES (PRIVATE) LIMITED

HIGH COURT OF ZIMBABWE
MAKARAU JP
Harare 29, 30 31 October and 28 November 2007

Civil cause

Mr H. Mutasa for plaintiff
Adv. E Morris for defendant.

MAKARAU JP: The plaintiff is the owner of certain business premises at Chisipite Shopping Centre called Lot 11 Chisipite Township Hindhead Avenue, Chisipite. In terms of a written agreement, the plaintiff leased the premises to Décor and Design in or about 1996. In March 1998, Décor and Design ceded its rights and obligations under the lease to the defendant.

The property was managed on behalf of the plaintiff by CB Richard Ellis, a firm of estate agents.

On 14 June 2006, CB Richard Ellis addressed a letter to the defendant alleging that its account reflected arrears in the sum of $81 737 600-00. Settlement of the outstanding amount was demanded with the threat that unless payment received within 7 days, the eviction of the defendant would be sought from the property. The following day, on 15 August 2006, another letter was addressed to the defendant, this time from the plaintiff’s legal practitioners. In the second letter, it was alleged that the defendant’ had failed to pay rentals and operating costs for the premises, accumulating arrears in the sum of $1 045 213 787-12. The defendant was then informed that the lease had been cancelled and that it should vacate the premises and pay up the outstanding amount within 5 days of the letter.

It is pertinent in my view to note at this stage that in both letters, it was not specifically averred that rent or operating costs for a particular month or for particular months was outstanding. Arrears in general were averred on both accounts. It was also not spelt out how much of the arrears represented unpaid rentals and how much related to unpaid operating costs.

On 2 August, 2006, summons was issued against he defendant out of this court. In the suit, the plaintiff prayed for payment of the sum of $1 045 213 787-12 together with interest thereon at the prescribed rate from the date of summons to date of payment in full; an order confirming the cancellation of the lease, an order ejecting the defendant from the leased premises and holding over damages at the rate of $60 515 000-00 per month from June 2006 to date of eviction. It was again averred in the plaintiff’s declaration in general terms that the defendant had failed to pay rental and operating costs in terms of the lease agreement, thereby accumulating arrears in the claimed sum.

It would appear that after the issuance of summons, the defendant’s rights in one of the shops forming the leased property were by consent ceded to a third party who then cleared all the arrear rentals and other charges due in respect of that particular unit.

The suit was resisted and in its plea, the defendant denied that there was an agreement between the parties for the levying of operating costs by the plaintiff. The defendant admitted that on two occasions it fell behind with its rentals but averred that this failure to pay rent on time was condoned by the plaintiff who subsequently accepted the defendant’s cheques tendered in payment of the rentals and banked such cheques. The right of the defendant to cancel the lease was denied and challenged.

At the trial of the matter, the plaintiff called two witnesses. The first to testify was McDonald Chinyoka. He is a property manager with CB Richard Ellis and since July 2007 has been managing the leased property, the subject of the dispute before me. He testified that the defendant never paid its rent on time. Rent was due on the first day of each month. In February and March 2006, the defendant failed to pay rent. A payment that was made in March was allocated to the operation costs account and not to the rent account. Again for the month of May 2006, the defendant did not pay its rent on time. The payment that was made at the end of April was appropriated to the operation cost account as this was the account that received priority as it included the payment of utilities that fell due at the end of each month. No payment was received for the rent that was raised for the month of July 2006. The rent payment for August 2006 was only received on 28 August, days after it fell due.

On 14 June 2006 a letter of demand was sent to the defendant and part of the amount demanded was paid on 20 June 2006 in the sum of $123 034 000-00, which was appropriated to the operation costs account. It was in view of this breach that the plaintiff cancelled the lease agreement.
 Regarding operating costs, the defendant did accept that it had an obligation to pay for these as they made a payment in June 2006 and accepted the obligation in principle in their letter of 17 November 2006.

The witness was very slow in answering questions and the trial took much longer than it should have had the witness come to court ready to testify and knowledgeable about the case and where to find information in his file. As it were, the court twiddled its thumbs on a number of occasions while the witness thumbed through his file for documents to assist him in answering questions. Some of the documents were not readily available, having to be retrieved from the witness’s office, necessitating the court having to rise. The court was far from impressed by this conduct and would urge all practitioners to warn and prepare their witnesses to be ready to testify in the High Court with the requisite degree of preparedness. Litigation in the High court is serious business and the integrity of the process demands that witnesses respect the business of the court.

Under cross examination, the witness testified that since the issuance of summons, the plaintiff has without fail sent monthly invoices to the defendant for rentals and these have been met without fail. Further, in October 2997, the plaintiff reversed all interest charged to the defendant’s account.

Next to testify on behalf of the plaintiff was Kumbirai Amen Chidemo. He is a Senior Property Manager with CB Richard Ellis. He used to manage the premises leased to the defendant by the plaintiff.

It was his testimony that the defendant was not paying rentals and operating costs on time. In January, February and March 2006, the defendant did not make any payments for either rent or operating costs and they handed over the matter to the plaintiff’s legal practitioners for the cancellation of the lease and for the securing of an order evicting the defendant from the leased premises.

Regarding operating costs, he held a meeting with the defendant’s representative where such representative agreed to the obligation to pay these. Further, in January 2006, the defendant addressed a letter to him where it was not challenging the obligation to pay operating costs but was querying the increase in the amount levied for these. Yet further, when demand was made for operating costs that were in arrears, the defendant made payment of these in June 2006.


Again the witness gave the impression that he came to court unprepared to testify. He did not appear to know the details of his case and constantly needed to make reference to his file when being cross-examined, even when it was unnecessary to do so.

Witnesses who cannot testify without making reference to files rob their evidence of much credibility. It is the usual practice to make over to the party’s legal practitioners all documents that may be necessary in the trial so that these are produced systematically and in a manner that enhances the party’s cause. Haphazard production of documents only goes to show lack of preparedness on the part of the witness. I was far from being impressed by the conduct of the plaintiff’s witness in this regard.

After the testimony of this witness, the plaintiff closed its case and when I invited Mr Morris to open the case for the defendant, he opted to keep his case shut for some time while he applied for absolution from the instance.

The facts of this matter, despite the time it took for such to be laid out before the court are to a large extent common cause. The defendant had in terms of its written lease agreement, an obligation to pay rentals in advance. The rent for February was not paid in advance. It was paid in March 2006. The rent for May 2006 was not paid on due date but during the following month. Similarly, the rent for June was not paid on due date. It was paid on 20 June 2006, 6 days after the letter of demand sent by the plaintiff. Before summons were issued on 2 August 2006, the rent for July 2006 had been unconditionally accepted.

From the evidence of the plaintiff’s witness, it is clear that the parties did not have an agreement for the payment of operating costs. The witnesses testified as to oral agreements between the parties and conduct on the part of the defendant from which I am urged to infer that the defendant agreed to the charges. All this is in my view in vain as the parties expressly agreed that any variation of the original agreement of lease would only be binding after being reduced to writing and signed for by both parties. It is common cause that this did not happen.

Following from the above, it means that any payments that were made by the plaintiff and were unilaterally appropriated to operating costs by the plaintiff are to be reversed in calculating whether or not the defendant was in arrears as at the time summon for its eviction was issued.

The test to be applied in determining an application for absolution from the instance is settled. It is whether the plaintiff has made a prima facie case. Different words and phrases have over the years been employed to determine what constitutes a prima facie case. To me, a prima facie case is a proven case unless the defendant can bring up something that will defeat it in whole or in part. Thus, the plaintiff must set up a case upon which judgment can be granted unless it is rebutted by the defendant. In my view therefore, the plaintiff’s case must be complete in all respects at the close of his case and cannot be supplemented by deficiencies in the defendant’s case.

It is my further view that in setting up a prima facie case, the plaintiff must destroy the defenses set up by the defendant in his plea unless the onus is on the defendant to prove certain facts upon which the defence rests.

In casu, it is my view that for the plaintiff to set up a prima facie case, it must prove not only that the defendant defaulted in its obligations to pay rent on time for a particular month but must go further to show that such default is not excusable in the circumstances. This it has to do to negate the specific defence that the defendant is raising since the defendant has specifically set out in its plea that it is relying on the principle of condonation to defeat the quest for its eviction.

I am of the view that the plaintiff has failed to set up a prima facie case.

It appears to me the settled position at law that where the tenant make a late payment of rent, the landlord must make his election within a reasonable time and at the latest, before the rent becomes due next month to cancel on account of the late payment of rent. Acceptance of a subsequent payment of rent is at law to be taken as an election not to proceed with cancellation on account of the past breach. (See Parkview Properties (Pvt) Ltd v Chimbwnda 1998 (1) ZLR 409 (H)).

Again I repeat that in its declaration, the plaintiff alleges that the defendant failed to pay rentals and operating costs and accumulated arrears in the sum claimed. The declaration has not been pleaded in my view with the requisite particularity and it has been left to the court to establish for which month rent may not have been paid. From the evidence led, it appears that rent was not paid in time for February, May and June 2006. I shall deal with each failure to pay rent on time month by month.

Thus applying the approach in the Parkview case to the facts that have been established by the evidence before me, the plaintiff cannot set up the breaches for February and May 2006 as testified by its two witnesses as subsequent payments were made in respect of these months and were accepted unconditionally. Mr Mutasa, correctly in my view, limited his argument to the late payment of rent for the month of June 2006 as summons was issued on account of this breach in August 2006 after letters of demand had been delivered to the tenant as detailed above.

Two issues present themselves to me at this stage. Firstly, it is whether it is the first letter of demand that has effect in this matter or not. In terms of the first letter, the defendant was given 7 days within which to remedy the breach. This it did on the 6th day and within the stipulated period. The second letter simply cancelled the lease agreement forthwith.

It is specifically provided for in the lease agreement that for failing to pay rent, the landlord can forthwith cancel the lease and seek the eviction of the tenant. Thus, the second letter was written in accordance with the agreement between the parties but, it was written after another giving notice to remedy the breach had already been dispatched to the tenant. In my view, the plaintiff, having given out to the plaintiff that it would only terminate if the defendant remained in default after 7 days, could not turn around the following day and cancel the lease agreement. It made an election to give notice and in my view is bound by that notice.

If regard is then had to the first letter of demand, the defendant purged its default and as at the date of issuance of summons, the defendant was no longer in breach as alleged. It is common cause that a payment of $139 million was made on 20 June 2006. This was 6 days after the letter of demand giving the defendant 7 days within which to remedy a breach which at that date was the failure to pay arrears amounting to $81 737 6000-00. Thus in my view, the plaintiff has not established a prima facie case for the cancellation of the lease agreement as at the date of the issuance of summons.

Secondly, assuming that I have erred in finding that the defendant had remedied the breach alleged at the time summons was issued, the conduct of the plaintiff after the issuance of summons in my view had the effect of condoning all past breaches by the defendant as it reinstated the landlord and tenant relationship without qualification or condition.

It is common cause that the plaintiff has since the issuance of summons continued to send invoices for rent each month without fail to the defendant. In turn the defendant has been paying the rentals. There has been no communication that the invoices that are sent each month to the defendant are for holding over damages, to which the plaintiff is perfectly entitled, following cancellation of the lease agreement. In the circumstances of the matter, the plaintiff has continued to uphold the tenant –landlord relationship between itself and the defendant and has not set up any facts that will dispel such a relationship. In my view, by issuing out invoices routinely and unconditionally accepting payment of rentals, the plaintiff has given out that the lease agreement between the parties subsists. To compound matters, the plaintiff has proceeded to reverse all interest charges that it had levied on the defendant’s account for late payments of rentals again giving out to the defendant that this extra charge was in error.

In my view, the conduct by the plaintiff amounts to reinstating the defendant as its tenant in respect of the property notwithstanding the issuance of summons. It therefore cannot rely on the alleged past breaches of the lease as its conduct after the issuance of summons has the effect of condoning these past breaches.

In coming to this conclusion, I am aware of the argument by Mr Mutasa that the lease agreement between the parties had anon-waiver clause in clause 17.4. This clause provided that:

“Any relaxation, indulgence or waiver which the landlord may grant to the Tenant of any condonation by the Landlord of any breach of the terms of this lease shall not become binding on the Landlord who shall at all times be entitled to claim due and proper performance by the tenant of his obligations”.

In my view, the clause cannot assist the plaintiff in the circumstances of this matter. It would have been of assistance to the plaintiff had the alleged waiver preceeded the breach relied upon to found an action for the eviction of the defendant. In casu, the relaxation or indulgence is after the alleged breach.

In the result, I make the following order:

1. The defendant is absolved from the instance.
2. The plaintiff shall pay the defendant’s costs.

*Gill Godlonton & Gerrans*, plaintifff’s legal practitioners.

*Atherstone & Cook*, defendant’s legal practitioners.
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