W & E Silks (Pvt) LTD V Fynatex Distributors (Pvt) LTD

### Preamble
1
HH 527-21
CIV ‘A’ 292/19
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W & E SILKS (PVT) LTD

versus

FYNATEX DISTRIBUTORS (PVT) LTD

HIGH COURT OF ZIMBABWE

CHITAPI AND CHIRAWU-MUGOMBAJJ

HARARE, 16 July 2020 and 29 September 2021

Civil Appeal

V Tivadar, for the applicant

T S Mujungwa, for the respondent

CHITAPI J:	The appellant and the respondent were landlord and tenant by virtue of a written lease agreement over a fixed property called stand 7449A (also called Shop No. 1, 32 Julius Nyerere Way, Harare.  The lease agreement was executed on 17 January 2018.  The agreement was due to terminate on 31 March 2018.  The appellant instituted proceedings against the respondent in the court a quo in which it prayed for an order to confirm the termination of the lease agreement, ejectment of the respondent from the leased premises and costs of suit.  The appellant based its case for the relief sought on the grounds that the agreed agreement had expired by the effluxion of time thus ending the rights of the respondent to its continued occupancy of the property.  Additionally the appellant pleaded that it required vacant possession of the property in order to carry out substantial renovations thereon.

The respondent in its plea resisted the appellant’s claim on the grounds that the respondent had upon the expiry of the period of the lease agreement, remained in occupation of the property.  It pleaded that, it had by virtue of its continued occupation of the property become a statutory tenant as contemplated by the Commercial Premises (Rent) Regulations, S.I. 676/1983.  In consequence of its assumed status of a statutory tenant, the respondent pleaded that is was protected from eviction by virtue of the regulations.  The respondent further denied that the applicant intended to carry out renovations and averred that the proposed renovations were a ploy to justify the otherwise undeserved eviction of the respondent.

When the matter was heard in the court a quo, the learned magistrate dismissed the appellant’s case.  He reasoned that the respondent enjoyed protection from eviction as a statutory tenant.  The learned magistrate also determined that the appellant’s claim that it required the property for renovations was not bona fide.  It is against the dismissal of its claim as outlined above that the appellant, being dissatisfied with the judgment of the learned magistrate, file this appeal.

The appellant’s grounds of appeal were couched as follows:

“1. 	The court a quo erred and misdirect itself at law in finding that the respondent is in occupation of the appellant’s premises legally as a statutory tenant, notwithstanding the clear evidence and admission by the respondent that it had failed to pay its rentals within seven days of due date.

2.	The court a quo erred and misdirected itself in finding that the appellant had not established good and sufficient grounds for evicting the respondent when the appellant had produced clear and extensive evidence of its genuine intention to effect renovations and to use the premises for its own business use,

3. 	The court a quo erred 	and misdirected itself in finding that the appellant had acted mala fide when the appellant had clearly shown evidence in support of its intention to renovate the premises and use it for its own use.

4.	The court a quo erred and misdirected itself at law in finding that the parties had novated the lease agreement when the same was not an issue before court.

At the end of arguments by counsel, it was clear that the appeal could be disposed of upon a determination of the first ground of appeal.  If that ground failed, then it would be necessary to consider the other grounds of appeal.  A determination of whether or not the respondent was a statutory tenant is what then informs any consequential relief in which case the other grounds of appeal would become material.  The onus of proving that the occupier under an expired lease is a statutory tenant falls on the one who avers to be so. Therefore the respondent had the onus to establish that it was a statutory tenant. It had the further onus to establish that it complied with the obligations which are required to be performed by a statutory tenant for such tenant to be protected from eviction in terms of the Commercial Premises (Rent) Regulations.

The relevant section of the Commercial Premises (Rent) Regulations, 1983 which the dispute between the parties turned upon was s 22(2).  Its provisions read as follows:

“(2)	No order for the recovery of possession of a commercial premises or for the ejectment of a lease therefrom which is based on the fact of the lease having expired, either by effluxion of time or in consequence of notice duly given by the lessor, shall be made by a court, so long as the lessee –

Continues to pay the rent due within seven days of due date; and

Performs the other conditions of the lease;

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

The lessee has declined to agree to an increase in rent; or

The lessor wishes to lease the premises to some other person.”

Statutory tenancy and consequent protection from eviction arises in circumstance set out as quoted and not from any other circumstances outside of s 22(2) above.  Firstly, the tenancy enjoyed by the occupier must arise from a lease agreement.  Such lease agreement must have expired by effluxion of time or the lessor must have given the lessee due notice to vacate the leased premises:  Where the lessors seeks to retake possession of the leased premises in either of the two circumstances, the court is precluded from granting an order for the eviction of the lessee if the lessee has continued to comply with the following obligations:

Payment of rental due within seven days of due date.  In terms of clause 4 of the lease agreement between the parties, rent was due monthly in advance on the first day of every month.  The respondent was required to pay monthly rental by no later than the eighth day of each successive month.

Performance by the lessee of the rest of the lessee’s obligations in terms of the expired lease or following notice given by the lessor as the case may be.

The requirement of the lessee to perform the above two obligations is conjuctive.  Where it is shown by the lessee that the lessee has continued to perform the two obligations as provided for, the lessee is then qualified to assume the status of a statutory tenant.  The lessee in such a case can only be ejected from the leased premises for “good and sufficient grounds” which the lessor must plead and prove.  Such grounds exclude the grounds set out in sub-para(s) (i) and (ii) of subs (2) of s 22 of the Commercial Premises (Rent) Regulations.  To put it aptly, the lessor cannot properly rely upon and the court is precluded from considering as good and sufficient ground for the ejectment of a statutory tenant, the fact that the statutory tenant has refused to accept a rent increase or the fact that the lessor desires to lease the premises to another person.

The agreed issues for determination in the court a quo were set out in the joint pre-trial conference minute filed on 31 July 2019. They were listed as follows-

“1.  Whether or not the defendant is a statutory tenant?

2.  Whether or not the plaintiff’s intentions to use its own property and effect renovations to  the property constitute good and sufficient grounds that the defendant vacate the premises?

3. Whether the above reasons comply with the Commercial (Premises) Rent Regulations 1983?

4. Whether the plaintiff is entitled to costs on a legal practitioner and client scale.”

The above issues and not any other constituted what the learned magistrate was required to make a determination upon.

The appellant as plaintiff in the court a quo pleaded as follows in para 5 of the Particulars of Claim:

“5.  Defendant’s right to occupy the premises therefore terminated by effluxion of time as at 31st of March 2018 but despite demand, the defendant had refused and/or failed to vacate the premises. A copy of the letter confirming termination of the lease agreement and the demand for free and vacant possession is attached hereto as Annexure “B”.

In response the respondent in this plea pleaded as follows in para 2 thereof-

“2.  Ad para 5.8

This is disputed. The defendant remained in occupation after expiry of the lease as a statutory tenant as the landlord-tenant relationship continued to exist. The renovation is a made up strategy to evict the defendant made by the plaintiff after it failed to illegally evict the defendant.”

The principal issue which had to be determined was therefore clear from the pleadings and agreed pre-trial conference minute. The issue was whether or not the respondent was a statutory tenant. Bearing in mind the provisions of para 5 (a) of subs 2 of s 22 of the Commercial Premises Rent Regulations, on the timing of payment of rental which should be made “within seven (7) days of due date”, the statutory tenant must prove the timeous payment of the full amount rental due. In casu, it was common cause that the respondent did not pay rentals due within seven (7) days of due date. There was therefore non-compliance with the requirement that rental be paid within seven (7) days of due date. I will deal later with counsel’s arguments in regard to the effect of the respondent’s default to pay rentals within the seven (7) days given in the regulations.

The learned magistrate for inexplicable reasons did not determine the issue of timely payment of rentals as pleaded by the parties. The learned magistrate created a new defence for the respondent. The learned magistrate reasoned that because the respondent continued to pay rent which the appellant accepted, such acceptance of the rental, amounted to a tacit renewal of the expired lease. The appellant submitted that the learned magistrate misdirected himself by determining the dispute between the parties on a basis created by the court instead of on the facts and issues placed before it by the parties. The applicant relied upon the Supreme Court judgments in Lifort Toro v Vodge Investments (Pvt) Limited & Ors SC 15/2017 and Nzara & Ors v Kashuma N.O. & 3 Others SC 18/18 to argue that the court must determine the dispute on facts and issues placed before it by the parties. It is very easy to appreciate the rationale for this approach. The court stands to hear and determines disputes brought before it as per the issues and facts before it by the parties. Once the court determines the dispute on some basis not pleaded by the parties, the court will be misdirected. If for good reason the court picks up a point not pleaded by the parties but which in its view is relevant to the determination of the dispute before it, it should raise the point with parties for their input. The learned magistrate did not do so before he determined the matter on his own created issue of the tacit renewal of the expired lease agreement.

The appellant’s counsel in para 5.9 of the appellant’s heads of argument correctly summed up the correct approach of the court in determining a dispute brought before it for determination. Counsel stated as follows-

“5.9. In Makgatho v Old Mutual Life Assurance (Zimbabwe) Ltd SC 57/2015 the Supreme Court significantly upheld the remarks by the authors Jacob and Goldrein: Pleadings : Principles and Practice at pp 8-9 cited with approval in Jowel v Bramwell – Jones & Ors 1998 (1) SA 836 at 898:

“As the parties are adversaries, it is left to each of them to formulate his case in his own way, subject to the basic rules of pleading….For the sake of certainty and finality, each party is bound by his own pleading and cannot be allowed to raise a raise a different or fresh case without due amendment properly made. Each party knows the case he has to meet and cannot be taken by surprise at the trial.

The court itself is as much bound by the pleadings of the parties as they are themselves. It is not part of the duty or function of the court to enter upon any enquiry into the case before it other than to adjudicate upon the specific matters in dispute which the parties themselves have raised by their pleadings. Indeed the court would be acting contrary to its own character and nature if it were to pronounce upon any claim or defence not made by the parties. To do so would be to enter the realms of speculation…  In the adversary system of litigation, therefore, it is the parties themselves who set the agenda of their trial by their pleadings and neither party can complain if the agenda is strictly adhered to.”

The respondent as noted admitted or did not dispute that it did not always pay the rentals within seven (7) days of due date. The respondent introduced an ingenious but legally unsound argument that the statutory tenancy albeit the respondent not having paid rental within seven (7) days of due date should be declared to have come into existence because the respondent continued to conduct itself as it had always done before the expiry of the lease agreement. It was argued in the heads of argument that the appellant could not seek to exercise greater rights as given in the Commercial Premises (Rent) Regulations than it previously enjoyed in terms of the lease agreement. As I understood the respondent’s argument, the respondent was raising estoppel as part of its defence. Its argument was that, because the applicant had not made issue with the manner in which the respondent had performed its obligations in terms of the expired lease agreement including payment of rentals, the appellant could not rely upon the respondent’s breaches which the appellant tacitly condoned as a basis for its claim for eviction of the respondent.

The respondent’s counsel in his heads of argument raised another ingenious argument. Relying on the Supreme Court judgment in the cases Kutama v Town Clerk, Municipality of Kwekwe 1993 (2) ZLR 137 and Mwenye v Lonrho Zimbabwe 1999(2) ZLR SC 429. Counsel argued that there was nothing in the wording of the provisions of s 22 (2) of the Commercial Premises (Rent) regulations to show that the requirement that the statutory tenant should comply with paras (a) and (b) of subs 2 of s 22 aforesaid was mandatory or directory. Counsel further cited the Supreme Court case of Sterling Products v Zulu 1988 (2) ZLR  293 (s) to argue that it was sufficient compliance with the provisions (a) and (b) aforesaid if the respondent has substantially complied with the requirements.

The term “substantial compliance” is not to be found anywhere in the Commercial Premises (Rent) Regulations. It is in my view an elusive term that is dependent upon the view of the decision maker. What is however not disputable is that there must be a factual basis laid down to support the conclusion that there has been substantial compliance of the performance of an obligation. It is therefore not easy to lay a criteria for measuring substantial compliance. The facts of each case will inform whether it could be said that there has been substantial compliance with the duties and obligations which the person who claims substantial compliance must perform. An attempt at defining “substantial compliance” therefore becomes an excuse in futility.

I have indicated that the arguments raised by the respondent’s counsel are ingenious but legally unsound. A statutory tenancy in my view does not amount to an extension or resuscitation of the expired lease agreement. The effect of the provisions of s 22 of the Commercial Premises (Rent) Regulations is to create a new relationship between the parties hitherto governed by the expired written lease. The relationship is sui generis because the creation of a statutory tenancy results in parties being governed by terms which they have not freely negotiated and agreed upon. The relationship is created by law and its provisions governed in terms thereof. It is therefore anomalous to argue that the regulations extend the expired contract. The fact that the statutory tenant is required to observe the terms of the expired lease does not amount to an extension of that lease. That lease upon its expiry ceases to legally exist.   The lease agreement cannot be extended as it is not legally existing anymore. It could perhaps be resuscitated which would be different from extending it.

It must be noted that upon expiry of the lease agreement, the parties’ relationship in terms thereof terminates. The law does not recreate it. It imposes terms which govern the parties’ relationship. The parties’ rights and obligations are defined in the regulations. A failure to comply with the legislated provisions of a statutory tenancy as set out in para(s)(a) and (b) of subs (2) of s 22 of the Commercial Premises (Rent) Regulations amounts to a breach that goes to the roof of the protection given to the statutory tenant by the regulations.

The argument that the respondent as a statutory tenant substantially complied with its obligations as set out in s 22 of the Commercial Premises (Rent) Regulations does not apply to a statutory tenancy. The Supreme Court authorities cited in the respondent’s heads of argument are distinguishable because they do not deal with or discuss the doctrine of substantial compliance within the context of the Commercial Premises (Rent) Regulations and the performance by the statutory tenant of obligations imposed thereof. In any event, if the law giver had intended to qualify the obligations of the parties in terms of s 22 aforesaid, the qualification(s) would have been clearly expressed. There is already an expressed qualification in that the statutory tenant is granted an indulgence to have paid rent within seven (7) days of its due date. The fact that the performance of the rest of the obligations are not qualified  means that they are to be strictly observed as with the seven (7) days extended period to pay rent post its due date.

In this ingenuity counsel for the respondent submitted as follows in para(s) 24 to 26 of the respondent’s heads of argument:

“24.  It is therefore clear that the binding position of the law is that the courts are mandated to take into consideration not whether the payment of the rentals within seven days from the date they become due was strictly complied with to the exact letter, but whether the failure to observe strict compliance within the seven (7) day time period defected the general plan or object of the enactment.

25. It is abundantly clear  that section 22 of the Commercial (sic)  Rent Regulations, 1983 seeks to protect tenant from capricious ejectments, where there has been an expiry of a lease agreement but where, however, these has been a continuation in the observance of the provisions of the lease agreement. It has continued to pay rentals in the same manner that it has always done for the ten year period whom the lease agreement was still extant.

26. It is clear that the degree of non-compliance with the provisions of section 22 was by no means great and the regulatory injunction was not frustrated or materially impaired by the respondent proceeding in the manner he did.”

Expressed simply, the respondent admitted being in breach of the previously expired lease agreement in regard to late payment of rentals and continued to do so after legislative intervention to protect his continued occupation. The legislative intervention imposes conditions which the respondent did not comply with. The argument that the respondent substantially complied with its obligations has no place under s 22 of the regulations. The respondent disqualified himself from protection afforded by the Rent Regulations by paying rentals outside the stipulated period of seven (7) days of the due date. The appellant was on this basis entitled to seek the ejectment of the respondent. The court a quo should have granted an order for the respondent’s ejectment on this basis.

It becomes unnecessary to consider the rest of the grounds of appeal including the point in limine raised on the validity of the third ground of appeal. The respondent was in breach of the statutory tenancy obligation to timeously pay rent and by so doing lost protection from ejectment. The court a quo should have granted the appellant’s prayer with amendments. The appellant had prayed for confirmation of termination of the fixed term lease agreement. Such order would be unnecessary because on the pleadings it was accepted that the lease had expired. The respondent and appellant’s relationship was one of statutory tenancy. The ejectment of the respondent would follow from a breach of the statutory tenancy conditions. There was equally no justification for the appellant to seek costs on the legal practitioner and client scale because there was nothing in the conduct of the respondent which warranted that it be punished with punitive costs.

Disposition

The following order is consequently made:-

The appeal succeeds with costs.

The judgment of the court a quo is set aside and the following order is substituted:

The defendant having failed to observe the provisions of para (a) of subs.(2) of s 22 of the Commercial Premises (Rent) Regulations S.I. 676/1983 in that it failed to timeously pay rental within seven (7) days of due date, the plaintiff is entitled to an order ejecting the defendant as follows:

The order for the ejectment of the defendant and all persons claiming occupation through the defendant of Shop No. 1, 32 Julius Nyerere Way, Harare is issued.

Costs of suit shall be paid by the defendant.

The defendant shall pay the costs of appeal.

CHIRAWU-MUGOMBA J: agrees:……………………

Matizanadzo & Warhurst, appellant’s legal practitioners

Tavenhawe & Machingauta, respondent’s legal practitioners