Telone (Pvt) Ltd v Denfarm Properties

On 1 March 2008, the plaintiff (Telone) and defendant (Denfarm Properties) entered into a lease agreement whereby the plaintiff leased 584 square metres of the 1st floor of Runhare House, Harare to the defendant. Initially rent was paid in Zimbabwe dollars. Following the introduction of a multi-currency regime by Government in February 2009, the rent payable became US$1.75 per square metre, translating to US$1,022.00 per month, excluding operating costs. The defendant made erratic rental payments resulting in arrears of US$22,941.40 in respect of both rent and operating costs as at February 2010. The plaintiff also alleged that the defendant, without consent, sublet the leased premises. The plaintiff sought cancellation of the lease, eviction of the defendant, payment of rental arrears and operating costs, holding over damages, and costs.

• Whether the defendant breached the lease agreement by failing to pay agreed rentals and operating costs
• Whether the defendant sublet the premises without the plaintiff's authority contrary to the lease agreement
• Whether the parties had agreed on the rental amount of US$1.75 per square metre after the introduction of multi-currency
• Whether the plaintiff was entitled to cancel the lease agreement and evict the defendant
• The quantum of holding over damages and operating costs payable

The court ordered: (1) Cancellation of the lease agreement dated 1 March 2008; (2) Eviction of the defendant and all persons claiming through it from the premises within 14 days of service of the order; (3) Payment by defendant of US$22,941.40 in arrear rentals and operating costs as at February 2010; (4) Payment of holding over damages at US$58.40 per day from 1 March 2010 to date of eviction; (5) Payment of operating costs apportioned to the leased premises from 1 March 2010 to date of eviction; (6) Interest on amounts claimed at the prescribed rate from date of summons to date of payment; and (7) Costs of suit.

A tenant has an undisputed obligation to pay rentals for property hired from the landlord, which is the sine qua non for continued occupation of the leased property. Where a tenant disputes the amount of rentals chargeable, that challenge does not absolve the tenant from paying any rentals at all. The minimum the tenant must pay is the amount it contends represents fair rentals to avoid ejection on the basis of non-payment, even if its challenge to what constitutes fair rentals is subsequently validated. Failure to pay rent in accordance with the lease agreement and unauthorized subletting constitute material breaches of the lease agreement entitling the landlord to cancel the lease and evict the tenant. The conduct and correspondence of parties can establish agreement on rental amounts even in the absence of formal written amendments to the lease agreement.

The court noted that the defendant's purported counterclaim was not properly before the court as no formal counterclaim had been filed and there was no reference to it in the agreed issues for determination at the pre-trial conference. The issue was only raised through the defendant's witness evidence and closing submissions. The court also observed that if the space occupied by the defendant had truly been reduced as alleged, this would have been mentioned in the defendant's correspondence with the plaintiff, but the issue only emerged when the plaintiff took action for non-payment and subletting.

This case is significant in South African and Zimbabwean landlord-tenant law as it establishes clear principles regarding a tenant's fundamental obligation to pay rent and the consequences of breach. The judgment reinforces that payment of rent is the sine qua non for continued occupation of leased premises and that a tenant disputing the quantum of rent must still pay at least the amount it contends is fair to avoid eviction. The case also clarifies that breach of essential lease terms such as non-payment of rent and unauthorized subletting justifies cancellation of the lease and eviction. It demonstrates the court's approach to interpreting conduct and correspondence between parties to determine agreed rental amounts in the absence of formal written amendments to lease agreements, particularly in the context of currency changes.