On October 25, 2022, the Supreme Court of Zimbabwe handed down a seminal judgment in the case of Rolen Trading (Private) Limited v Parkside Holdings (Private) Limited SC 106/2022. In the judgment, the court held, amongst other things, that where there is a written lease agreement with set dates on which rent should be paid, there is no need for a landlord to give the tenant notice to rectify its breach before cancelling the lease agreement. This judgment is critical for landlords, in a time such as the present, where breach of lease agreements by tenants is on the rise. The most important requirement, for both landlords and tenants is to ensure that the lease agreement is written and signed by both parties to avoid disputes as regards the terms.
Lease agreements in Zimbabwe
A lease agreement comes into being once the landlord and the tenant have agreed on the formalities that form the basis of their contract. Importantly, there must be a property available for lease and the rent in respect thereof must be agreed upon. The landlord’s obligation is to make the property's occupation, use, and enjoyment available to the tenant. In fulfilling this obligation, the landlord has to refrain from disturbing the tenant in the enjoyment of the leased property and he must maintain the property in the condition agreed upon. In addition, the property must be fit for the purpose for which it is being let. Moreover, the landlord must protect the tenant against eviction by a third party with better title.
The primary obligations of the tenant are to pay the rent and related costs, like electricity and water usage and the charges incidental thereto at the proper time and place agreed in the agreement. On termination of the lease, the tenant has an obligation to restore the property in the same condition he would have found it.
Cancellation of lease agreements may be done by either the tenant or the landlord, where there has been a material breach of any obligation in the agreement, for example, if the tenant fails to pay rents on time. Cancellation of a contract is a legal act that ends the relationship between the parties to the contract at a specific moment. Ordinarily cancellation of the lease should be done in the manner stipulated in the written agreement. Further, not every breach entitles the injured party thereto to cancel the contract. The position at law is that, unless otherwise agreed, it is only that breach that goes to the root of the contract that can give rise to a right to cancel. In other words, it is a breach that goes to the root of the contract that entitles the aggrieved party to cancel.
The brief highlights of the judgment
Sometime in March 2010, Parkside Holdings (Private) Limited and Rolen Trading (Private) Limited entered into a written agreement of lease in terms of which the former leased to the latter commercial property known as Shops 1 and 2 Benhay Art House, situated at 120 Chinhoyi Street, Harare. The lease agreement like many standard lease agreements mandated the tenant to pay the agreed rentals on or before, the 7th of each consecutive month.
The agreement also contained a standard breach clause to the effect that where the tenant failed to pay rentals as required, the landlord would be obliged to give the tenant 15 days’ notice to remedy its breach, failing which the landlord could cancel the agreement and take possession of the property.
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The tenant breached the agreement by failing to pay the rentals on the dates agreed between the parties, leading to arrears being due and payable to the landlord. Instead of the 15 days’ notice required by the agreement, the landlord gave the tenant three days to rectify its breach, failing which it would institute proceedings to recover the outstanding rentals and eviction of the tenant. One of the critical issues before the court, was whether the three days’ notice was valid in light of the written agreement signed by the parties requiring 15 days’ notice.
Essentially the Supreme Court found that where an agreement is clear as to when rentals should be paid, and the tenant fails to pay same, then the landlord needs not give the tenant notice to rectify the failure to pay rent.
The reason being that the tenant would already have been in default (mora ex re) due to the failure to pay its rentals on time. Such breach, being one which both parties are aware of, as the agreement is clear on date of payment, entitles a landlord to cancel the lease immediately without giving notice to the tenant.
Although the judgment is applauded, the ruling of the court is of concern in that the court effectively ignored a clause of the contract signed by the parties, where they agreed to give each other 15 days’ notice to remedy any breach of contract.
It is especially concerning because it is an established principle of Zimbabwean law that courts are not at liberty to create contracts on behalf of parties, neither can they purport to create or remove obligations, whether mandatory or prohibitory, from contracts.
The role of the court is to interpret the contracts and uphold the intentions of the parties when they entered into agreements, provided always that the agreement meets all the elements of a valid contract.