OLD MUTUAL LIFE ASSURANCE COMPANY
PETER RAFTOPOLOUS t/a SELECTIONS
HIGH COURT OF ZIMBABWE
HARARE, 22 February 2010, 19 March 2010 & 23 June 2010
T. Nleya, for the plaintiff
J. Samukange, for the defendant
MTSHIYA J: On 23 January 2009, the plaintiff issued summons against the defendant seeking relief in the following terms:-
“(a) An order for the ejectment forthwith of he defendant together with its subtenants assignees, invitees and all those claiming through defendant from the plaintiff’s premises known as Shop No. 2 Stand No. 12A Avondale Township located at Avondale Shopping Centre, Avondale Harare.
(b) Plaintiff’s claims arises from a lease agreement concluded between the parties. The lease agreement having expired on 31 March 2008, the defendant became a statutory tenant. Plaintiff now reasonably requires the premises for own use and despite being given three months notice to vacate the premises, the defendant has failed and/or has neglected to vacate the premises.
(c) Plaintiff further claims payment of holding over damages at a rate that is equivalent to the market value of the occupation of the premises in question from 1 October 2008 to the date of the defendant’s ejectment.
- Payment of costs of suit at legal practitioner and client scale”.
The defendant objected to the relief sought and the matter was then referred to trial for
the determination of the following two issues:-
“1.1. whether or not the plaintiff requires the premises for its own use?
- whether or not the plaintiff is entitled to holding our damages. If yes, the
It is common cause that under a lease agreement which commenced on 1 April 2005, the defendant occupied the plaintiff’s premises known as Shop No. 2 Stand No. 12A Avondale Township measuring approximately 60.2 square metres and located at Avondale Shopping Centre, Avondale, Harare. In terms of the lease agreement, the expiry date was 31 March 2008.
In terms of Clause 6 of the lease agreement, the lease was subject to renewal on agreed terms between the parties. There is dispute as to whether or not the lease agreement was renewed after 31 March 2008. The defendant asserts that the lease agreement was renewed but the plaintiff denies that and states that he defendant is now occupying the premises as a statutory tenant. On 30 May 2008 the plaintiff gave the defendant three months notice in writing. The notice was for the defendant to vacate the premises because the plaintiff wanted the premises for its own use. The said notice expired on 30 August 2008 but the defendant still remains in occupation. Indeed the said notice which was produced in court as exhibit number 2 reads as follows:-
“We write to advise that your lease agreement will be terminated in three months from the date of this letter, i.e. 30 August 2008. Please be advised that the Landlord will require the premises for owner-occupation effective 1stSeptember 2008.
This development is however strictly without prejudice to the other terms and provisions of the lease. Thus rentals proposed and agreed with your Mr M Raftopolous for the period May to July 2008 would remain payable.
Our maintenance department will come to carry out a pre-vacation inspection, and we would afterwards advise of the necessary premises reinstatements”
In refusing to vacate the premises the defendant argued that a ‘renewed lease agreement’ was never signed because the plaintiff was demanding rentals in foreign currency when that was not permissible in law at the time. The defendant goes on to say it was not true that the plaintiff required the premises for its own use. The defendant pointed out that the plaintiff wanted to lease the premises (for rental) to another tenant, namely Central Africa Building Society (CABS).
The plaintiff called three witnesses. The first witness, Washington Moyo (Mr Moyo) now an Investment Analyst with the plaintiff, said that at the material time he was in the employ of the plaintiff as a Property Manager assigned to manage the plaintiff’s Avondale properties. He was responsible for negotiating lease agreements and rentals attaching to such leases. He said the parties (plaintiff and defendant) had indeed entered into a lease agreement which he produced as exh 1. The said lease agreement, which was renewable commenced on 1 April 2005. Mr Moyo said he had dealt with the defendant from April 2008 to May 2009. (i.e. the period during which he was plaintiff’s Property Manager). He said rental negotiations with the defendant were conducted in a cordial manner. He also confirmed the issuance by him of the notice of 30 May 2008 which he produced as exhibit 2.
Mr Moyo said the plaintiff wanted to occupy the premises for its own use through CABS, one of its subsidiaries. This, he said, was so because CABS were being evicted from the premises of Avondale Holdings (Private) Limited which they (CABS) were leasing.
In order to prove the relationship between CABS and the plaintiff, Mr Moyo produced the following exhibits:-
“(a) Exhibit 3-Certificate of Registration showing that on 21 October 1961 Old Mutual Building Society of Central Africa changed its name to Central Africa Building Society.
- Exhibit 4 – Certificate of Registration showing that on 8 September 1954 Old Mutual Building Society of Central Africa was registered as a Building Society.
- Exhibit 5 – an organogram lining up the plaintiff’s subsidiaries in Zimbabwe.
I must, at this stage, record that the production of the exhibits indicated above (a-c) was
strongly opposed by the defendant through its legal practitioner, Mr Samukange. He argued that proof of the relationship between the plaintiff and CABS was not an issue for determination before the court. The issues for determination, he pointed out, were only those two referred to on the first page of this judgment.
I took the view that the production of exhibits 3-5 was anchored on the need to prove the point that ‘the premises were genuinely required for own use’, I therefore allowed the production of the exhibits. I believe that a party should not be hindered or restricted in the manner it may seek to prove the aspect of ‘own use’ in matters of this nature. To the extent that some evidence is requested, this view enjoys the support of the case authorities relied upon by the parties namely Mobil Oil Zimbabwe (Pvt) vs Chisipite Service Station (Pvt) Ltd 1991(2) ZLR 82(SC) and Film and Video Trust v Mahovo Enterprises (Pvt) Ltd 1993(2) ZLR 191(H).
Mr Moyo said the request from CABS was made on 19 May 2008 i.e. before the plaintiff’s notice of 30 May 2008. He said, through CABS, a Mr Michael Chikanda (Chikanda) had then inspected the premises on 22 May 2008 upon notice of that inspection having been given to all tenants on 20 May 2008.
The witness said on 23 May 2008 Mr Chikanda had then advised the plaintiff that they (CABS) had identified shops No. 1 and 2 for their banking needs (i.e. Shop No.2 being the one leased to the defendant). He confirmed that to-date the plaintiff was still pursuing the eviction of the defendant.
Under cross-examination Mr Moyo said there had never been any intention to renew the lease agreement. He said the negotiations were aimed at getting a return for the months of May 2008 to July 2008. He did not know the exchange rate when the lease was due to expire. He said the negotiation were in terms of the Zimbabwe dollar and not foreign currency. He agreed that as at 27 May 2008 when the parties had failed to agree on new rentals, the plaintiff had not yet advised the defendant about CABS.
Mr Moyo said he had never spoken to a Mr Terry, the Managing Director of CABS. He had only dealt with Mr Chikanda and was not aware of any discussions between the defendant and Mr Terry. He maintained that the plaintiff needed the premises for its own use through its subsidiary (CABS). He could not comment on the fact that the defendant had since been given a new lease as from February 2010 to December 2010.
The second witness called by the plaintiff was Michael Anthony Finnigan of CABS. He said he was the General Manager responsible for Retail Banking since the 1990’s and was in charge of CABS branch operations, including Avondale Branch which fell under the supervision of Mr Chikanda who reported directly to him. He said Avondale Holdings had given CABS notice to vacate the premises where the CABS Avondale Branch operated from. To that end he produced exhibits 6 & 7.
Exhibit 6 from Avondale Holdings (Private) Limited, directed to CABS and dated 6 May 2008, reads as follows:-
“We hereby give you three months notice to vacate the premises you occupy in Avondale Shopping Centre, effective from 1 June 2008 to 31 August 2008.
Your lease expires at the end of this month and we will not be renewing it as the premises are required for owner own use”.
The above exhibit was received by CABS on 8 May 2007 and on it are the following handwritten endorsements: “SM, OK, OM
- Target Stanley House
- Relocation of Avondale
- CABS requirements”
The above endorsements were made on 20 May 2008 and from the endorsements it
appears as at that date CABS were targeting Stanley House for their requirements.
Exhibit 7, also from Avondale Holdings (Private) Limited, dated 11 June 2008 and
directed to CABS reads as follows:
“We refer to our letter of 6 May 2008 in which we gave you notice to vacate the premises by 31 August 2008, and which was delivered to CABS Avondale and to Old Mutual via their Mutual Centre collection point.
We have had no response to this letter from CABS or from Old Mutual and we now confirm the notice to vacate the premises at Sammar Galleries in the Avondale Shopping Centre, reiterating that the reason for the cancellation of the lease is that the owner wishes to have it for her own use.”
Mr Finnigan said it was because of the above communications that CABS, as part of the plaintiff’s group of Companies, had approached the plaintiff for rental premises in Avondale. He said after visiting the offices occupied by the defendant in the company of Chitanda, he had then instructed Chitanda to proceed with negotiations with the plaintiff for the conclusion of a lease agreement over the premises occupied by the defendant. He said correspondence had then ensued between the parties as indicated in exhibit 8 which was a collection of e-mails exchanged between officials of CABS and the plaintiff. Mr Finnigan said CABS was 100% owned by the plaintiff – who had the final say in matters relating to CABS. He also said CABS still wanted to operate in Avondale and hence the need for the premises occupied by the defendant.
Under-cross examination Mr Finnigan said negotiation with the plaintiff had started early in May 2008. He agreed that CABS was an independent legal entity like the plaintiff and if offered the premises they would pay rent.
The third and last witness called by the plaintiff was Miss Olga Maulana (Miss Maulana), the plaintiff’s Senior Potfolio Manager. She said she was aware of the dispute between the parties. Her department was responsible for rent reviews and was therefore responsible for drawing up exhibit 11 which was signed by the defendant on 29 January 2010. She, however, said the letter had been dispatched to the defendant by mistake and she only realised the mistake when payment had been effected. Exhibit 11, addressed to the defendant (Peter Raftopolous and dated 20 May 2010) reads as follows:-
The year 2009 was challenging for the Property sector as the market lacked comparative evidence after the dollarization since all rentals had to be reviewed at the same time. I am glad however that as the year progressed and the rent levels began to take shape and this year we were in a position to set rentals based on market evidence. We are hereby proposing a rent increase with effect from 1 February 2010 to 31 December 2010 as you have probably noticed we have maintained the January 2010 rent at 2009 levels.
After our market research we have determined the fair rent for your premises to be US $674.71 per month, which translates to US7,421.81 for 11 months that is 1 February 2010 to 31 December 2010. Our rent proposal comes with the following options for you to select from in line with your business operations.
Option 1: 11 months rent in advance
This option allows you a 20% discount on the proposed rent, resulting in a rental of US $5,937,45 payable by the 15thof February 2010.
Option 2: half yearly advance payments
This option allows you a 15% discount on the proposed rent, resulting in a rent of US $2,867,52 for the remaining 5 months to June, payable by the 10thof February 2010. The second half payment will be due by the 30thof June 2010 and it will be US $3,441,02.
Option 3: Quarterly advance payments
This option allows you a 12% discount on the proposed rent, resulting in a rent of US $1,781,23 for each quarter, however for the balance of Q1 the total due will be US $1,187,49 for the remaining two months. The due dates for each quarter are as set below
Quarter 1 - 7 February 2010
Quarter 2 – 31 March 2010
Quarter 3 – 30 June 2010
Quarter 4 – 30 September 2010
Option 4: monthly rent
This option allows you to pay the proposed rent as set out above on or before the first of each month in question.
Please select your desired option and return a copy of this letter clearly stating your selected option in the space provided. We require your responses to be submitted by no later than the 31stof January 2010. Please take note to adhere to the stipulated deadlines for each option as failure to do so will nullify the choice and we will renege to option 4, monthly payments at proposed levels. Should you require clarification please do not hesitate to conduct your respective Property Manager, who is your usual contact person.
P/S: Complete your details below and return the copy to Old Mutual, 100 The Chase, Emerald Hill, Harare by 31 January 2010.
I …………………………. being the authorised lease negotiator hereby
Name & Signature
selects Option ……… for our February 2010 to 31 December 2010, on this the ……. day
of …………………. 2010.
Name of organisation ………………………… premises …………………………”
The exhibit reveals that on 29 January 2010, the defendant selected option 1 and
endorsed same on the exhibit as had been requested by the plaintiff. The exhibit was sent back to the plaintiff indicating the defendant’s option.
Miss Maulana maintained, under-cross examination, that the letter was sent to the defednant in error. She, however, admitted that the letter was specifically directed to the defendant.
Mr Michael N. Raftopolous was the only witness called to give evidence on behalf of the defendant. He said he was the Managing Director of the defendant and had directly negotiated rentals with Mr Moyo of the plaintiff. He said Mr Moyo had clearly stated that the plaintiff wanted rentals in United States dollars – a currency that Mr Moyo said was being used by everybody. The witness said he had told Mr Moyo that as a small business he could not afford to pay in US dollars – (based on the parallel market rates i.e. Zimbabwe dollar to US dollar). He had also told Mr Moyo that such a transaction would be illegal. Mr Moyo, according to the witness, had stated that he would find someone else who would be able to pay rent in US dollars. The witness said when he maintained his refusal to pay rent in foreign currency, Mr Moyo had then revealed that CABS would be able to pay rentals in US dollars.
Mr Raftopolous said he had told Mr Moyo that it would be unfair to evict him for the sake of bringing in someone else who had the capacity to pay rent in US dollars. Mr Moyo, the witness went on, had refused to indicate the rentals in foreign currency in the draft agreement that the parties were negotiating. He said during the negotiations Mr Moyo had turned abusive and vowed that he would ensure that the defendant was moved out of the premises. He said following their exchanges, he had then on 30 May 2008 been served with a notice to vacate the premises. He had immediately proceeded to see Mr Terry of CABS who said he knew nothing about the proposed arrangements for CABS to takeover the premises leased to the defendant. He said Mr Terry had eventually visited Avondale and had expressed interest in two vacant shops situated in Avondale and belonging to the plaintiff. The witness said all along he was not aware of the relationship between the plaintiff and CABS. He was of the view that if he had succumbed to Mr Moyo’s demands to pay rent in foreign currency there would have been no court case at all.
Mr Raftopolous said his family had operated at the premises for thirty years without any problems and therefore believed Mr Moyo was victimising him for refusing to pay rent in foreign currency. He did not believe that the plaintiff wanted the premises for its own use. The premises were not suitable for banking purposes, he testified.
Under-cross examination, Mr Raftopolous maintained that rental negotiations had commenced in April 2008. He said Mr Moyo had never sent him any documentation incorporating the rental that he was demanding in foreign currency. The only document Mr Moyo had sent to him was the notice to vacate the premises.
He said CABS, through Mr Terry, were told that those were the only shops available – there was no question of choice. He said all along he had hoped the matter would be settled out of court.
In dealing with this matter it is important start by capturing the relevant section of our statute law that regulates the relationship between parties such as the ones in casu involved in a dispute requiring the intervention of this court.
Section 22(2) of the Commercial Premises (Rent) Regulations (the Regulations) provides as follows:-
“No order for the recovery of possession of commercial premises or for the ejectment of a lessee therefrom which is based on the fact of the lease having expired, either by the effluxion of time or in consequence of notice duly given by the lessor, shall be made by a court, so long as the lessee-
(a) Continues to pay the rent due, within seven (7) days of due date; and
(b) Performs the other conditions of the lease;
Unless the court is satisfied that the lessor 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”
Relying on Mobil Oil Zimbabwe (Pvt) and Chisipite Service Station (Pvt) Ltd 1991(2) ZLR 82(SC) and Film and Video Trust v Mahovo Enterprises (Pvt) Ltd 1993(2) ZLR 191(H), Mr Nleya for the plaintiff submitted that where an owner or lessor wishes to use rented premises for its own use, the court should make an enquiry only as to its bona fides. He said those case authorities had decided that the lessor was required ‘to assert its good faith and bring some small measure of evidence to demonstrate the genuineness of its desire to use the premises’. He went on to state that the defendant had been aware since May 2008 that CABS, a company wholly owned by the plaintiff, as demonstrated by evidence given in court especially by Mr Moyo, would occupy the premises. The plaintiff, it was submitted, was not motivated by a wish to lease the premises to a third party with the objective of obtaining a higher rental. CABS, it was argued, had been thrown into a serious predicament after being moved out of he premises it was renting in Avondale Shopping Centre. The premises rented by the defendant had therefore been identified as suitable for CABS’ banking business. This therefore, was, a genuine need on the part of the plaintiff as it required the premises for use by its wholly owned subsidiary (CABS).
Mr Nleya further submitted that if the plaintiff had been motivated by malice then it could not have allowed the defendant to continue renting one of its premises in the same location (Avondale Shopping Centre).
On the issue of holding over damages, Mr Nleya submitted that although the defendant continued to make rental payments, the plaintiff was entitled to retain same as the tenant was still unlawfully holding over to the premises after having been given notice to vacate the premises as far back as 30 May 2008. He noted that the defendant had since made an advance payment up to December 2010. That advance payment, he submitted, was a fair return for the occupation of its premises by the defendant.
In the main, the plaintiff’s argument was that it had made a genuine case in proving to the court that it intended to occupy the premises for its own use. There was therefore a valid reason for requiring the defendant to vacate the premises. Adequate notice had been given.
In his submissions, Mr Samukange for the defendant, noted that in its declaration the plaintiff had given the main reason for requiring the defendant to vacate the premises in the following terms:-
“Plaintiff now reasonably requires the said premises for its own use and on the 30 May 2008, the plaintiff gave the defendant three months notice in writing to vacate the said premises on that ground”.
He said the respondent had responded to the above in the following terms:-
“This is denied. Plaintiff does not need the premises the defendant occupies for its own use. The area occupied by the defendant is so small that it’s not possible for the plaintiff to occupy it. Plaintiff’s claim that it requires the premises for its own use is simply a ploy to punish the defendant for refusing to pay rentals in foreign currency last year”
The plaintiff, it was submitted, had repeated its assertion in its summary of evidence and had denied that the move was a result of a rent dispute between the parties. That being the case, Mr Samukange submitted, both parties had agreed at the pre-trial conference that the issues for trial would be:-
“(a) whether or not the plaintiff required the premises for its own use?
- whether or not the plaintiff is entitled to holding over damages, if yes the quantum”.
Mr Samukange further argued that, given the above two issues, the evidence by
Messrs Moyo and Finnigan on the relationship between the plaintiff and CABS was of no consequence. That issue was not before the court. He said to that end, the defendant had objected to the production of evidence relating to the relationship and indeed to the introduction of that issue at the hearing. (i.e. the issue of whether or not CABS was a company wholly owned by the plaintiff).
It was the defendant’s view, that notwithstanding any relationship, CABS, as conceded to by Mr Finnigan in court, was a separate legal entity. That entity, as again admitted by Mr Finnigan, would take the premises as a lessee and would also negotiate rentals with the plaintiff. Such evidence or concession, it was argued, clearly corroborated the defendant’s defence that the plaintiff simply wanted to evict it because, contrary to the provisions of the law, it wanted to bring in a new tenant that would pay higher rentals. That new tenant, a third party, it was pointed out, was CABS.
It was further submitted that the evidence of Olga Maulana did not dismiss the fact that a one year lease, expiring on 31 December 2010 is currently in place and rentals were paid in advance. That was not a disputed fact.
Mr Samukange went on to submit that, as per the defendant’s evidence, Mr Moyo of the plaintiff had maintained during rental negotiations which commenced in April 2008, that rentals were to be paid in foreign currency. The defendant’s refusal or failure to do so had angered Mr Moyo who now sought to evict the defendant at any cost. The fact that the defendant had been allowed to continue occupying one of the plaintiff’s premises in the same location was meant to make it appear there was no personal vendetta between Mr Moyo and the defendant. The plaintiff had not, as per Film & Video Trust (supra), produced architectural building plans or application to the Municipality for change of use. The plaintiff had only introduced the issue of CABS as a potential tenant at the eleventh hour and in any case the plaintiff had not admitted to the issue of CABS when raised by the defendant at the pre-trial conference. In the premises, it was argued, the plaintiff had failed to satisfy the requirements of s 22(2) of the Regulations.
As to the issue of holding over damages, Mr Samukange submitted that the defendant had already paid up to December 2010 what the plaintiff accepted as fair rentals. This was not disputed by the plaintiff. The issue of holding over damages did not therefore arise.
Mr Samukange called for the dismissal of the plaintiff’s claim with costs.
Elsewhere in this judgment I recorded that I allowed the plaintiff to produce evidence relating to its relationship with CABS. To the extent that a lessor is required to prove its bona fides in requiring leased or rented premises for its own use, I did not see anything wrong in the plaintiff endeavouring to prove its genuineness by proceeding to prove that it and CABS were one entity. I note, however, that in law the two entities enjoy separate legal status. However, the plaintiff can only prove its case by the introduction of some relevant evidence (See Film & Video Trust, supra). I believe a lessor in the circumstances of the plaintiff in casu should not be curtailed in its efforts to prove its bona fides. It should, however remain the sole duty of the court to determine whether or not such evidence entitles the plaintiff to an order in terms of the Regulations.
In casu the lessor is the plaintiff. Irrespective of any relationship, CABS cannot, in these proceedings, be defined as the lessor. The Regulations, in my view, are meant to define the relationship between the lessor and the lessee. Accordingly when the lessor declares the need for own use of the leased premises, it is logical that the lessee shall understand that to mean own use by the lessor to whom rent is payable. As per the Regulations, the lessor cannot repossess the premises for the reason of “leasing the premises to some other person”. That would certainly be against the spirit of the law.
It was conceded that CABS was a separate legal entity that would also be required to pay rent for the premises as a lessee. That concession to me disposes of this matter because it clearly establishes that the plaintiff wanted to lease the premises to another person – a third party. At the time Mr Moyo engaged the defendant for revised rentals, it knew of CABS’s predicament. CABS had been given notice no 6 May 2008 and as already said it appears they were targetting Stanley House for there requirements. I am, therefore, on a balance of probabilities, satisfied that Mr Moyo was, just before giving notice, still negotiating the renewal of the lease agreement with the defendant. The negotiations were frustrated by the defendant’s refusal to pay rent in foreign currency, an act, which, as the defendant correctly observed, would have been against the law prior to February 2009.
It should also be noted that in terms of exhibit 3, on 21 October 1961, Old Mutual Building Society of Central Africa changed its name to Central Africa Building Society (CABS). The legal entity (the plaintiff) that seeks relief in casu is Old Mutual Life Assurance Company Zimbabwe Ltd and not, as per exhibit 5, the holding company Old Mutual Zimbabwe Ltd. There was never any explanation of the differences. The court cannot therefore substitute the plaintiff with Old Mutual Building Society of Central Africa or Old Mutual Zimbabwe Ltd without a valid explanation. The absence of any explanation therefore throws away any value to be gained from the evidence proferred to demonstrate a relationship between the plaintiff and CABS.
The plaintiff in casu remains as cited in the summons, namely; Old Mutual Life Assurance Company Zimbabwe Limited. It is that plaintiff who, as far back as 6 May 2008, must have been aware of the predicament of CABS. The most that could therefore have happened, was for the plaintiff’s notice requiring the defendant to vacate the premises to disclose its full intentions by making reference to CABS and explaining who CABS was (i.e. the alleged relationship). That was never the case until the eleventh hour.
Given the circumstances of this case, I am unable to dismiss the defendant’s defence which, in the main, is that the reason for the rift between the parties was the refusal by the defendant to pay rentals in foreign exchange, contrary to the laws of the country.
The extended relationship – now expiring in December 2010 - would tend to prove that, whilst the plaintiff’s Mr Moyo thought otherwise, the plaintiff per se did not share his views. The regularisation of the defendant’s occupation of the premises up to December 2010 cannot be ignored in considering the defendant’s evidence in court. That being the case, I am unable to place value on Miss Maulana’s evidence.
In view of the foregoing, I am therefore, on a balance of probabilities, not satisfied that the plaintiff wanted the premises for its own use. In the circumstances, I cannot, in terms of s 22(2) of the Regulations and indeed in terms of the authorities relied upon by both parties, grant the plaintiff the order it seeks.
With regards the issue of holding over damages, I am guided by the subsequent conduct of the parties after the issuance of the notice to vacate. The plaintiff has not claimed any unpaid rentals and has proceeded to allow the defendant to remain in occupation on the basis of fully paid fair rentals up to December 2010. The issue of holding over damages therefore falls away.
I therefore order as follows:-
1. That the plaintiff’s claim be and is hereby dismissed with costs.
Gill, Godlonton & Gerrans, plaintiff’s legal practitioners
Ventures & Samukange, defendant’s legal practitioners