Nerveway Trading Limited v Alfred Pedro Karizi and Cletos Chakoma

On 1 July 2012, the plaintiff (Nerveway Trading Limited) entered into a lease agreement to lease a shop at 84 Rezende Street, Harare, owned by John Buckster Trust and managed through Guest & Turner Estate Agents. The first defendant was employed as a manager by the property owner Buckster Trust, while the second defendant was the Managing Director of the letting estate agent Guest & Turner (Pvt) Ltd. The defendants signed a written "Agreement of Occupation of Shop" in which the first defendant acknowledged receipt of $16,000.00 described as a "non-refundable payment for development fee or goodwill" from the plaintiff. The document stated that $10,000.00 was received initially and a balance of $6,000.00 was to be paid on 30 June 2012, after which keys would be handed over. The plaintiff sought a refund of this $16,000.00 payment, alleging it contravened section 19 of the Commercial Premises (Rent) Regulations SI 676/1983.

• Whether the payment of $16,000.00 as development fee or goodwill contravened section 19 of the Commercial Premises (Rent) Regulations SI 676/1983
• Whether the plaintiff's claim disclosed a cause of action
• Whether there was a lessor-tenant relationship between the parties sufficient to invoke section 19 of the Regulations
• Whether the claim could be sustained on the basis of unjust enrichment
• Whether the defendants were acting as agents of their employers or were acting unlawfully in their personal capacity

The exception was dismissed with costs. The matter was to proceed to trial on the merits.

Where defendants in positions of trust vis-à-vis a landlord and letting agent receive payments described as development fees or goodwill from a prospective tenant, such payments may be unlawful under section 19 of the Commercial Premises (Rent) Regulations SI 676/1983 regardless of whether the defendants were acting as agents of their employers or in their personal capacity. If acting as agents, the agreement contravenes section 19; if not acting as agents, they had no lawful basis to demand such payment. A claim for recovery of such payments may be sustained as unjust enrichment. An exception based on lack of cause of action will be dismissed where the plaintiff's allegations, if proved, would establish unlawful conduct by the defendants.

The court made observations about the suspicious conduct of the second defendant in witnessing the agreement despite being the managing director of the letting estate agent, stating that such conduct "tends to be inconsistent with an innocent frame of mind." The court also noted the discrepancy regarding witnesses to the document, observing that while the document showed only one witness named Charles, there were two signatures above his signature, one of which could be the second defendant's since he admitted signing the document. These observations, while not essential to the decision on the exception, suggest the court's preliminary view on the credibility issues that may arise at trial.

This case is significant in Zimbabwean commercial law as it interprets and applies section 19 of the Commercial Premises (Rent) Regulations SI 676/1983, which protects lessees from extra demands for payment of extraneous claims beyond rentals, such as bonuses, premiums, goodwill, or development fees. The case establishes that such protective provisions can be invoked even where the precise legal relationship between parties is unclear, and that claims for recovery of such payments may be sustained on the basis of unjust enrichment. The judgment also addresses the liability of employees or agents who act in positions of trust when collecting payments that may be prohibited by law, establishing that they may be personally liable whether acting as agents or in their personal capacity. The case reinforces the protection of commercial tenants from exploitation through demands for illegal payments in connection with the grant, continuation, or renewal of leases.