Negowac Services (Private) Limited v 3D Holdings (Private) Limited and Giftcare Electrical (Pvt) Ltd t/a Reg Electrical Wholesalers

The plaintiff leased commercial premises to two defendants under separate lease agreements from February 2004. Following Zimbabwe's adoption of a multi-currency system in 2009, the parties commenced negotiations for rental payments in US dollars from January 2009. The plaintiff proposed US$5 per square metre, while the defendants counter-offered US$2 per square metre. No agreement was reached. The plaintiff suspended the defendants' accounts in March 2009. The first defendant failed to pay any rent from January to May 2009, and the second defendant failed to pay for March and April 2009. In April 2009, the plaintiff cancelled both lease agreements citing non-payment of rent and demanded vacant possession. The defendants claimed there was a rent dispute that should have been referred to the Commercial Rent Board under the Commercial Premises (Rent) Regulations (S.I. 626 of 1983). The two cases were consolidated as they dealt with similar issues and involved the same parties and legal practitioners.

• Whether there was a rent dispute between the parties
• Whether the defendants breached the lease agreements by failing to pay rent during the disputed period
• Whether the plaintiff was entitled to cancel the lease agreements and demand vacant possession based on non-payment of rent during a rent dispute
• Whether the matter should have been referred to the Commercial Rent Board for determination of fair rent
• Whether a tenant can occupy premises without paying any rent when a rent dispute exists
• What obligations tenants have to pay rent when negotiations for new rental amounts are ongoing

The court confirmed the cancellation of both lease agreements and authorized the plaintiff to evict both defendants, together with their subtenants, assignees, invitees and all other persons claiming occupation through them, from the respective premises. Each party was ordered to bear its own costs.

Where a rent dispute arises in a commercial lease, the existence of that dispute does not absolve a tenant from the obligation to pay rent. A tenant who wishes to continue occupation must either: (a) continue paying the last agreed rent; or (b) pay what the tenant reasonably believes to be fair rent; or (c) approach the Commercial Rent Board for determination of fair rent under the Commercial Premises (Rent) Regulations (S.I. 626 of 1983). A tenant cannot simply occupy premises without paying any rent on the basis that a rent dispute exists. Such failure to pay constitutes a breach of the lease agreement entitling the landlord to cancel the lease and seek ejectment. The obligation to pay rent is core to the nature of a lease agreement and continues notwithstanding disputes about the quantum of rent payable.

The court observed that the plaintiff's agents totally mishandled the matter, as they knew what the law required in the event of a rental dispute (referral to the Commercial Rent Board) but sat back and did nothing. The court noted that the regulations aim to prevent unscrupulous landlords from taking advantage of shortages of commercial premises by increasing rent unjustifiably (citing Moffat Outfitters (Private) Limited v Yunus Hoosein and Others 1986(2) ZLR 148 (SC)). The court also commented that it could not find any law allowing a landlord to avoid the regulations and impose rent on a sitting tenant during a dispute, nor any law saying a tenant's obligation to pay rent ceases during a dispute allowing indefinite free occupation. The court expressed the view that regulatory protections for tenants do not give tenants license to exploit landlords by enjoying occupation without payment.

This case is significant in Zimbabwean commercial landlord and tenant law as it clarifies the obligations of tenants during rent disputes. It establishes that while the Commercial Premises (Rent) Regulations protect tenants from unfair rent increases, this protection does not permit tenants to occupy premises without paying any rent during disputes. The case balances the rights of landlords and tenants by holding that: (1) tenants must continue paying what they reasonably believe to be fair rent during disputes, or approach the Commercial Rent Board for determination; (2) landlords cannot unilaterally impose new rentals without proper procedures; (3) both parties have standing to approach the Commercial Rent Board; and (4) failure by both parties to utilize the statutory dispute resolution mechanism may result in shared responsibility for costs despite one party prevailing on the merits. The judgment reinforces that regulatory protections for tenants do not eliminate the fundamental obligation to pay rent in a lease agreement.