TOTAL ZIMBABWE (PVT) LTD v APPRECIATIVE INVESTMENTS (PVT) LTD 2010 (2) ZLR 598 (H)

Flynote

Landlord and tenant - tenant - statutory tenant - when statutory tenancy is created - terms of statutory tenancy - relocation of lease on expiry - no real distinction from statutory tenancy

Headnote

The plaintiff issued summons seeking an order confirming the cancellation of a lease agreement it had with the defendant. The summons was duly served and the defendant entered appearance and filed its plea. It was common cause that the defendant entered into a lease agreement with Mobil Oil Zimbabwe (Pvt) Ltd ("Mobil") on 1 February 2002 for the lease of a workshop, office space and other spaces and appurtenances. The lease expired by the effluxion of time after six months and the parties did not execute a new written agreement. Instead, from time to time they discussed and agreed on the new amount for the monthly rent. Mobil was acquired by the plaintiff in 2006 and thus the plaintiff assumed its rights and obligations, including those pertaining to the lease agreement. The relationship between the parties was tumultuous. The introduction of the multi-currency system in Zimbabwe in February 2009 adversely affected the currency of account between the parties. The plaintiff desired payment of rent in a functioning currency, while the defendant attempted to use the new currency regime as a springboard for renegotiating the terms of lease. The defendant did not pay any rent from February 2009 until 28 July 2009 when the plaintiff cancelled the lease agreement. The defendant remained firmly in situ and had not paid any rent up to the date of the trial. At the pre-trial conference that was held on 5 July 2010 two issues were referred to trial. Firstly, whether or not the defendant breached the lease agreement by not paying rent from February 2009 to date. Secondly, if the breach was established, whether the plaintiff was entitled to an order for ejectment and the payment of arrear rents and holding over damages.

Held, that the meaning of statutory tenancy is provided in s 22 of the Commercial Premises (Rent) Regulations 1983 (SI 676 of 1983). Statutory tenancy is the legal relationship born out of a lease that has expired, either by the effluxion of time or in consequence of notice duly given by the lessor, in which the lessee, however, continues to pay the rent due, within seven days of due date, and performs the other conditions of the lease. Section 23 of the Regulations provides that lessee who, by virtue of s 22, retains possession of any commercial premises is, so long as he retains possession, entitled to the benefit of all the terms and conditions of the original contract of lease, so far as those terms and conditions are consistent with the provisions of the Regulations. The effect of ss 22 and 23 is that the original lease is renewed to the extent that it is consistent with the regulations. A relocation after a lease has expired is a new contract, which may be express or tacit. If the re-letting is express, the question of which of the terms of the expired lease forms part of the new contract is a question of interpretation. Where the relocation is tacit, there is a presumption that the property is re-let at the same rent and that those provisions that are incidental to the relationship of landlord and tenant are renewed. Provisions that are collateral, independent of and not incidental to that relationship are not presumed to be incorporated in the new letting. There is not much difference between a statutory tenancy and a tacit relocation. As in a tacit relocation, the terms and conditions of the original lease that are incidental to the relationship of landlord and tenant and consistent with the provisions of the Regulations, as opposed to those that are collateral and independent, are renewed.

Held, further, that one of the essential elements of a lease is the payment of rent. The defendant did not pay any rent. It was aware of the amount of rent that the plaintiff had unilaterally set. It did not dispute the amount but was only willing to pay it once the plaintiff agreed to the three new conditions that it had raised. The defendant breached the lease agreement by failing to pay the rent that was unilaterally imposed by the plaintiff. The plaintiff was entitled to cancel the lease for such breach.