COMMERCIAL AND INDUSTRIAL HOLDINGS (PVT) LTD v U.K ELECTRICAL (PVT) LTD and OTHERS (190 of 2024) [2024] ZWHHC 190 (17 May 2024)

1 HH-190-24 REF: HCHC 358/23 COMMERCIAL AND INDUSTRIAL HOLDINGS (PVT) LTD Versus U. K ELECTRICAL (PVT) LTD And UJESH KANTILAL BHIKA And JEETESH BHIKA HIGH COURT OF ZIMBABWE COMMERCIAL DIVISION CHIRAWU-MUGOMBA J Harare, 5, 14,15, 16 and 17 May 2024. T. Mpofu, for the plaintiff T. Nyamasoka, for the defendants TRIAL CAUSE CHIRAWU-MUGOMBA J: This matter was placed before me as an action, in which the plaintiff seeks an order of ejectment of the first defendant and all those claiming title through it from premises called, Stand 4916 and Lot. No. 1 of Stand 6178 of Salisbury Township, the “premises”. The plaintiff also seeks an order against the defendants, jointly and severally, each paying the other to be absolved, for payment of arrear rentals in the sum of USD93,678,00 or the equivalent in Zimbabwe currency for the period February 2022 to January 2023. Additionally, plaintiff seeks an order for holding over damages in the sum of USD$9,000 per month plus VAT calculated from the 1st of February 2023 to date of ejectment and costs of suit on a legal practitioner-to-client scale. In amplifying the matter in its declaration, the plaintiff made the following averments. That on the 9th of June 2017, the plaintiff and the first defendant entered into a lease agreement for the premises. As a result, the first defendant took occupation. In terms of sub- clause 1.4 of the lease agreement, the first defendant was obliged to pay rentals in the sum of USD$9,000 per monthly in advance plus VAT. The lease agreement contains a clause on renewal, which option the first defendant exercised with effect from the first of July 2022 for a period of five years at the same rentals of USD$9,000 per month plus VAT. The first defendant is in breach of the renewed agreement in that it failed to pay rent on or before the first day of the month or indeed at all for the period February 2022 to December 2022. After demand was made, of the USD$97, 051,50 outstanding in rentals, the first defendant only made payment of the equivalent of USD$3372-52 , thus leaving a balance of USD$93, 678,48. After giving the first defendant requisite notice in terms of sub-clauses 15.1.1, 15.1.2 and 15.1.3, the plaintiff exercised the right of cancellation. The basis for suing the second and third defendants jointly and severally with the first defendant is that on the 9 th of June 2017, they signed a deed of suretyship and renounced the usual benefits. In its plea, the first defendant made the following averments. That at the material time of signing the lease, the rental was USD$9,000 but around the 22nd of February 2019, this was affected by the 1:1 parity. After that date and in keeping with the law, the plaintiff commenced rendering invoices in Zimbabwe dollars. The parties were in agreement that the USD$9,000 was no longer applicable. The lease agreement was renewed but not on the basis of USD$9,000 per month. At the time of the alleged breach, the rental was ZWL 688, 946,50 per month and it was duly paid. There was no review of rental as set out in the lease agreement. There was no basis for the alleged holding over damages as the second and third defendants were not liable. At the close of the plaintiff’s case, the defendants’ legal practitioner moved a motion of absolution from the instance. I duly gave him and the plaintiff’s legal practitioner time frames to file the application and the response and thereafter reserved judgment. Let me hasten to state that in his opening address, the plaintiff’s legal practitioner, T. Mpofu submitted that the first defendant and all those claiming title through it had agreed to vacate the premises on the 10th of May 2024. As a result, the plaintiff was abandoning the claim for ejectment and would concentrate only on the arrear rentals and holding over damages. I had no reason to disbelieve him, being an officer of the court and there being no protest by the defendants’ counsel. I note from the application submitted by the defendants on absolution that the version of the first defendant is that notice was given to the plaintiff and that the first defendant has since vacated the premises on its own volition. That is neither here nor there. What is important is that the first defendant has vacated the premises. Therefore, from the court’s perspective, the claim by the plaintiff was located in the claim for USD$93, 678,00 (the forty-eight cents seemingly abandoned in the summons) and holding over damages in the sum of USD$9,000 per month for the stated period but now up to the 10th of May 2024. The plaintiff called one Sanjakumar Patel as its sole witness. He is an executive director of plaintiff company. His testimony can be summarized as follows. He was involved in negotiations for the lease agreement that was signed in June 2017. The rentals then were set at USD$9,000 per month. The plaintiff is a sub-tenant of Mashonaland Holdings (“M. H”) and were subletting the premises to the first defendant with authority from M. H. At the commencement of the lease agreement, the plaintiff was paying approximately USD$12 600 to M. H and currently approximately USD$14 000 per month. The amount due to be paid by the first defendant represented approximately 71% of the total in relation to what the plaintiff was paying to M. H. per month. That percentage has not changed. His understanding of clause 1.4 of the lease is that if rentals between M. H and plaintiff changed, this should cascade to the agreement between the plaintiff and the first defendant. This equally applied to clause 4 on rent reviews. An example was on page record 69, exhibit number 2, being a letter from the plaintiff to the defendant outlining its negotiations with M. H and how this impacted on their lease agreement. Once negotiations were done with M. H, the plaintiff would in turn commence negotiations with the first defendant. Page record 71 also speaks to the negotiations between M. H and the plaintiff how this is passed over to the first defendant. Record page 24 is a letter from the plaintiff’s legal practitioners to the first defendant, dated the 8th of December 2022, outlining the rentals that were still outstanding. The gist of the letter is that the monthly rentals are in the sum of USD$9, 000 and should be paid. There was definite breach because the rentals were not being paid. On the letter on pages 24-26, exhibit number 5, the first portion sets out the exchange rate used by the RBZ and the quantum thereon. If the first defendants’ contention was that the rentals were converted to 1:1 parity, post February 2022, there would be no payments exceeding USD$9 000. The sum of ZWL 688 946.50 remained static because the first defendant was not paying. At the time that the first defendant exercised the right to renew the lease, it was not paying the sum of USD$9 000. During the period of renewal, the plaintiff had negotiated with Charter Properties (M. H) for rentals to be paid in the ratio 50/50 USD/ZWL. The set amount was USD$14 000. This then entailed in terms of clause 1.4 that the rentals for the first defendant should maintain the 71% ratio. The first defendant was notified of these increases but failed to pay and did not give any justification. There was never an agreement that the first defendant should pay ZWL 688 946.50. The law on absolution from the instance has been set out in a plethora of cases. There is a difference as stated in the cases, on an application at the close of the plaintiff’s and the defendant’s case. See Danha vs Mudzongachiso and anor, 2018(1) ZLR 74(H) and the cases cited therein. See also Moyo and anor vs. Methodist Church (Greendale) 2018(1) ZLR 375(H). The learned authors, Herbstein and Van Winsen in, The civil practice of the High Courts of South Africa, Vol , 5th Ed, Juta and Co, 2016, at pp920-921, have stated as follows, “After the plaintiff has closed the defendant, before commencing his own case, may apply for the dismissal of the plaintiff’s claim. Should the court accede this, the judgment will be one of absolution from the instance. The correct approach to an application for absolution at the end of a plaintiff’s case was stated by Harms JA in Gordon Lloyd Page and Associates v Rivera: The test for absolution to be applied by a trial court at the end of a plaintiff’s case was formulated in Claude Neon Lights (SA) Ltd v Daniel 1976 (4) SA 403 (A) ta 409G-H in these terms: ‘... (W)hen absolution from the instance is sought at the close of plaintiffs' case, the test to be applied is not whether the evidence led by plaintiff establishes what would finally be required to be established, but whether there is evidence upon which a Court, applying its mind reasonably to such evidence, could or might (not should, nor ought to) find for the plaintiff. (Gascoyne v Paul and Hunter 1917 TPD 170 at 173; Ruto Flour Mills (Pty) Ltd v Adelson (2) 1958 (4) SA 307 (T).’ This implies that a plaintiff has to make out a prima facie case — in the sense that there is evidence relating to all the elements of the claim —to survive absolution because without such evidence no Court could find for the plaintiff (Marine & Trade Insurance Co Ltd v Van der Schyff 1972 (1) SA 26 (A) at 37G-38A; Schmidt Bewysreg 4th ed at 91-2). The test has from time to time been formulated in different terms, especially it has been said that the Court must consider whether there is 'evidence upon which a reasonable man might find for the plaintiff" (Gascoyne (loc cit)) — a test which had its origin in jury trials when the 'reasonable man' was a reasonable member of the jury (Ruto Flour Mills). Such a formulation tends to cloud the issue. The Court ought not to be concerned with what someone else might think; it should rather be concerned with its own judgment and not that of another 'reasonable person or Court. Having said this, absolution at the end of a plaintiff’s case, in the ordinary course of events, will nevertheless be granted sparingly but when the occasion arises, a Court should order it in the interests of justice. The defendants crystallised the application for absolution as summarised as follows, whether the plaintiff has made a case that it had an agreement with the first defendant for payment of USD$9 000 with effect from February 2022. The following factors were considered to be common cause. That the parties entered into a lease agreement for the premises for an initial period of five years subject to renewal. The rent was USD$9 00 per month subject to renewal annually or upon changes effected on the main lease. Statutory instrument 33/19 changed the face of the lease because USD$9 000 became ZWL 9 000 by operation of the law. From then on, rent was invoiced in ZWL. The last agreed rentals were ZWL 688 946.50. There was no query regarding rentals before February 2022. Exhibit 8 shows that the plaintiff actually informed the first defendant that rentals were now ZWL 4 999.40 representing 50% and USD$4 999.40 being the other 50%. Therefore the dispute as to the rent payable remains. There was no agreement in terms of which the plaintiff and the first defendant was required to pay USD$9 000. On the other hand, the plaintiff’s contention is that the application has no merit. Essentially, the evidence before the court if not answered constitutes proof of the claims on a balance of probabilities. The submissions can be summarised as follows. That at the close of the plaintiff’s case, it was established that there was a lease agreement between the parties for USD$9,000 per month. Currently the first defendant is paying an equivalent of USD$ 20.53. The evidence shows that the first defendant is paying significant amounts post renewal showing that it accepted the sum of USD$ 9 000 as being the set rentals. Post February 2019, the first defendant continued to pay the equivalent of USD$9,000 as evidenced by the letter on pages 24-26. In terms of clause 1.4 of the lease agreement, the first defendant is obliged to pay a 71% share if rentals between the plaintiff and the head lessor increases. Further that SI 33/19 is not applicable and that the dispute is not about figures. The plaintiff located its claim squarely on the breach of the lease agreement, partly for the period during the ‘first lease’ agreement and the renewed lease agreement. In the summons, the plaintiff claimed that the first defendant was in breach between February 2022 and January 2023 and that the right to renewal was exercised in July 2022. I am indebted to the learned author, R. H Christie in, Business Law In Zimbabwe, 1998 (Juta and Company) (reprinted in 2016) at page 272 who set out the essential elements of a lease as follows, “ To qualify for treatment as a lease rather than as an innominate contract, governed only by the general rules of contract, the contract must conform to the pattern of giving the use and occupation of specified property for a specified time in exchange for a specified rent, which must be determined or determinable”. The task before the court is therefore to consider whether or not the plaintiff has set out a prima facie case, one which the court can say, needs to be explained or rebutted by the defendant. It is trite that courts are loath to grant applications for absolution from the instance at the close of a plaintiff’s case since this potentially infringes upon a litigant’s constitutionally protected right to equality and right to equal protection and benefit of the law and the right to a fair hearing – see sections 56(1) and 69 of the 2013 constitution. It also infringes potentially on the right to be heard under the rules of natural justice in that the plaintiff will not be afforded a chance to hear the defendant’s case and cross examine witnesses. This of course is in the context of an order of absolution from the instance not barring the plaintiff from filing the claim as long as it still has not prescribed. It is trite that the standard of proof is the less onerous one of a prima facie case. To that end, it is worth repeating the test that has stood the test of time as enunciated in Gascoyne v Paul and Hunter (supra) and quoted with approval in the Danha case (supra) as follows:- “At the close of the plaintiff’s case, therefore, the question which arises for the consideration of the court is, is there evidence upon which a reasonable man might find for the plaintiff? And if the defendant does not call any evidence, but closes his case immediately, the question for the court would be, ‘Is there such evidence upon which the court…. ought to give judgment in favour of the plaintiff’.” The first defendant has put in issue through its plea, breach, liability to pay USD$9 000 per month as contended, and terms of the renewal. In my view, for the plaintiff to successfully establish a prima facie case and having located its dispute in breach of a lease agreement, the issues for trial being arrear rentals and holding over damages, the plaintiff ought to establish proma facie the following, a. How much were the exact rentals per month as at February 2022 to January 2023? b. Breach of the lease agreement based on the agreed rentals. c. Terms for the renewal with respect to the rentals payable? d. In light of (a) (b) and (c) above, how much is the arrear rental? e. Holding over damages. The authors Herbstein & Van Winsen (Supra) at pp 923 entreat courts to tread carefully in applications of this nature as follows; “In view of the principles set out above, it is clear that a trial court should be extremely wary of granting absolution at the close of the plaintiff’s case. In deciding whether or not absolution should be granted, the court must assume that in the absence of very special considerations, such as the inherent unacceptability of the evidence adduced, the evidence is true. The court should not at this stage evaluate and reject the plaintiff’s evidence. The test to be applied is not whether the evidence led by the plaintiff establishes what will finally have to be established. When the plaintiff relies on an inference the court will refuse the application for absolution unless it is satisfied that no reasonable court can draw the inference for which the plaintiff contends. A court may grant absolution from the instance at the close of a plaintiff’s case if the plaintiff has failed to establish an essential element of the claim even though the defendant could have succeeded on exception or by way of special plea had the issue been raised by either procedure…” This observation is critical as it guides the court on the manner of correctly establishing whether or not a prima facie case has been established. No doubt it is a delicate exercise anchored on what is already accepted, that courts are loath to grant such applications. The plaintiff in a manner of speaking is asking the court to look at figures put forward as arrear rentals and asking that the defendants answer to those claims. What has finally to be established is post February 2022 what were the rentals due per month and how much was paid and how much remains outstanding, and once that is established, the issue of breach and holding over damages will follow. The plaintiff’s evidence-in-chief ought to put forward the agreed rentals from February 2022 and the arrear rentals clearly set out. In my view, the plaintiff has failed to set out a prima facie case against the defendants, seeing as it is that the issue is of first and foremost the agreed rentals. The plaintiff admitted in court and in previous litigation over the same premises filed in the High Court Bulawayo under case number HC-B-1867/20, that the parity rate of 1:1 applied as from February 2019. It was then accepted that as from February 2019, the rentals were to be in Zimbabwe dollars. What the court did not hear is whether the parties then negotiated and agreed that USD$9,000 per month calculated at the prevailing RBZ rate would be the benchmark, and this would then justify the claim of USD$ 9,000 per month. In other words, was the rent reviewed by the parties since the lease agreement also allowed this, quite apart from a review based on increase of rentals occasioned by the increase between the plaintiff and M. H. The plaintiff testified to this effect, that a review could be effected between itself and the first defendant in annually in terms of the lease agreement without reference to M. H. The evidence from the Bulawayo High Court proceedings tells a different story from what the plaintiff is claiming. In the affidavit, the plaintiff analysed the rentals prior to renewal of the lease as rising from USD$9,000,to USD$28, 431, to USD$ 38, 417 to USD$53, 450 to USD$250, 300 and yet did not explain why plaintiff is sticking to the figure of USD$9,000. The increments, as the plaintiff put, are ostensibly on the basis of the increase of rentals by M. H as per clause 1.4 as read with clause 4 of the lease agreement, and this increase being passed over to the defendants. And yet the claim by the plaintiff is that the arrear rentals were calculated at USD$9,000 per month. The unanswered question is therefore what exactly did the parties agree post February 2019 given the acceptance that rentals were now pegged in Zimbabwe dollars. When regard is had to the letter from the plaintiff’s legal practitioners to the defendants dated the 8th of December 2022 (page 24-26), it does not set out how much exactly were the rentals post February 2019 and the implications even on the renewal. Instead, there is reference to a mid-rate. On page 25, second half of the letter, there are some calculations and ‘conversion’ into United States Dollars. What it actually shows is that the currency of payment was now the Zimbabwe dollar but the question remains – did the parties post February 2019 agree to use USD$9,000 as the benchmark for calculating rentals given the acceptance of Zimbabwe dollars being the currency of rentals and the issuance of invoices in that currency. On exhibit number 2, page record 69, the plaintiff’s addressed a letter to the defendants again quoting various figures- an increase of 143.9% between M. H and the plaintiff and passing this on to the defendants, the rentals would be ZWL 28 431 with effect from 1 May 2019. If the contention by the plaintiff is that these increasements between itself and the main lessor were passed on to the defendants, the question is why did plaintiff claim USD9,000 or its equivalent as the arrear rentals? Once the plaintiff failed to set out how much exactly was due especially from February 2019 and all the way to February 2022-January 2023, it means that there is no certainty over the claim for USD$9, 000 per month as holding over damages. In my view, there is no evidence led prima facie on the amount due and payable that the court can say the defendants ought to answer to. Many figures were floated but they do not answer the main question of what exactly was the monthly rental post February 2019 and as at February 2022 especially given the fact of the acceptance by the plaintiff that rentals were now pegged in ZWL post February 2019. The evidence actually shows that the plaintiff was invoicing the first defendants in Zimbabwe dollars. The plaintiff’s prima facie case suffered another major blow. In the summons and declaration, arrear rentals and holding over damages were claimed against the defendants, jointly and severally, one paying the other to be absolved. No evidence at all was led by the plaintiff in its evidence-in-chief to establish the basis of the claim against the second and third defendants, despite them denying liability in their plea. In the end, the evidence of their liability remained on paper. What therefore should they answer to given the fact that no oral evidence of their liability was adduced. In answer to the test and standard enunciated above, there is no evidence placed before the court upon which a reasonable person would give judgment in favour of the plaintiff. Even if the defendants were to close their case and not call witnesses, the prima facie evidence that is expected in a case of alleged breach of a lease agreement and the consequences that flow therein, it would be an exercise in futility to hear the defendants’ side of the matter. I perceive of no reason why I should depart from the time- honoured acceptance of costs following the cause. DISPOSITION 1. Absolution from the instance is hereby granted to the defendants. 2. The plaintiff shall pay costs of suit. Warhurst Attorneys, plaintiff’s legal practitioners. Gollop and Blank, defendants’ legal practitioners.