Local Authorities Pension Fund v F & R Travel Tours and Car Sales (Private) Limited and Others

The applicant (landlord) and first respondent (tenant) entered into a written lease agreement for commercial premises at Throgmorton House, Samora Machel Avenue, Harare, for a period of one year commencing 1 July 2006 and terminating 30 June 2007. The second and third respondents, as directors of the first respondent, bound themselves as co-principal debtors under the lease. The written lease agreement terminated by effluxion of time in June 2007. In July 2009, the applicant filed an application seeking to evict the respondents from the premises, alleging breach of the written lease agreement for failing to pay rentals and operating costs since January 2009. The original lease agreement provided for payment of rent in local currency. When that currency lost favour, the applicant sought to impose rental in United States currency, but the parties failed to reach agreement on the amount. The applicant alleged an agreement was reached on 12 May 2009 regarding US$700 per month rental, following a meeting to discuss a letter of demand dated 8 May 2009.

• Whether the applicant could rely on a written lease agreement that had terminated by effluxion of time as the basis for its cause of action
• Whether the applicant had properly pleaded its cause of action, particularly in relation to statutory tenancy under the Commercial Rent Regulations S.I. 276/83
• Whether an agreement on rental amount reached on 12 May 2009 could apply retrospectively to create a breach from January 2009
• Whether statutory tenancy protection remains viable where rentals were fixed in local currency that had become redundant
• Whether a tenant must pay 'reasonable rentals' where parties fail to reach agreement on rental amounts

The application was dismissed with costs awarded to the respondents.

A landlord cannot found a cause of action on a written lease agreement that has terminated by effluxion of time without pleading a proper legal basis for the continuation of rights and obligations under that agreement. Statutory tenancy under the Commercial Rent Regulations S.I. 276/83 is a separate and distinct cause of action from contractual tenancy that must be specifically pleaded; it is not a matter for judicial notice mero motu. Where a landlord proceeds ex contractu alleging breach of a specific written agreement that has expired, the action cannot succeed on that basis alone. An agreement allegedly reached after an alleged breach cannot retrospectively create the obligation that was allegedly breached - a party cannot prove breach before proving the agreement breached.

The court made several non-binding observations: (1) Where a tenant's obligation under a lease is to pay in local currency and that currency has lost all value and become redundant, the protection afforded by statutory tenancy becomes doubtful or of limited value, as payments in local currency would be ludicrous and may be impossible to effect. (2) The court found the reasoning in Negowac Services (Private) Limited v 3D Holdings (Private) Limited and Others HH144/09 attractive in principle - that where parties fail to reach agreement on rental amounts, statutory tenants may have an obligation to pay "reasonable rentals" since the sine qua non for enjoying use of another's property is payment of rent and one cannot hope to have that enjoyment for nothing. (3) In the absence of proof of payment of anything, a tenant would have no defense to resist enforcement of an owner's right to recover their property, citing Parkside Holdings (Private) Limited v Londoner Sports Bar HH66/05. (4) Had the applicant approached the court on an action in rem seeking to recover its property on the basis that parties had failed to reach agreement on a material term of the lease, the outcome might have been different.

This case is significant in Zimbabwean landlord and tenant law for clarifying the distinction between contractual tenancy based on a written lease agreement and statutory tenancy arising under the Commercial Rent Regulations. It establishes that statutory tenancy is a separate cause of action that must be specifically pleaded and cannot be assumed by the court. The case also addresses the practical difficulties arising from the transition from local currency to foreign currency in commercial leases, particularly regarding the viability of statutory tenancy protection where rentals were fixed in a currency that became redundant. It emphasizes the importance of properly pleading causes of action and demonstrates that a landlord cannot rely on an expired lease agreement without establishing the legal basis for its continued operation.