The Trustees of Alexandra Club v Pathfinder International (Pvt) Ltd

The defendant had been renting two tennis courts from the plaintiff's premises since 1997, initially under a written lease agreement and subsequently under a verbal lease agreement from 2005. The essential terms of the current lease agreement were that the defendant rented the premises for motor vehicle sales, rent was $400 plus $60 for administrative charges per month (total $460), payable monthly in advance on or before the 7th day of each month. The defendant paid the July 2010 rent late on 21 July 2010 (instead of by 7 July 2010), and this payment was accepted "without prejudice" to the landlord's right to cancel. The defendant then failed to pay the August 2010 rent by the due date. The plaintiff issued summons on 27 August 2010 seeking cancellation of the lease, eviction, holding over damages of $460 per month from August 2010, and costs.

• What were the essential terms of the verbal lease agreement between the parties?
• Whether the defendant breached the lease agreement in any way?
• Whether the plaintiff is entitled to cancel the lease agreement, evict the defendant and claim holding over damages?
• Whether the plaintiff's acceptance of late July 2010 payment constituted a waiver of the right to cancel the lease for subsequent breaches?
• Whether non-waiver clauses prevent a landlord from canceling a lease after accepting late payments without reservation?

Judgment was entered for the plaintiff. The court ordered cancellation of the lease agreement, eviction of the defendant, and payment of holding over damages in terms of the summons, with costs.

Where a landlord accepts late payment of rent with an express reservation of rights (i.e., "without prejudice" to the right to cancel), this does not constitute waiver or estoppel preventing the landlord from canceling the lease for a subsequent breach occurring in the following month. The principles in Masukusa v Tafa regarding waiver do not apply where: (1) the previous late payment was accepted with reservation, and (2) the landlord cancels the lease while the tenant is still in mora for the current month's rent, before the breach is remedied. Non-waiver clauses operate to prevent a lessee from successfully invoking waiver or estoppel where the lessee makes late payment in a subsequent month and the lessor cancels before any remedy of that breach is effected.

The court remarked that had the agreement between the parties been handled professionally and the pleadings properly drafted, the court would not have been presented with such blurred evidence. The court observed it was improbable that a landlord would agree that rent would be payable "whenever possible" on or before the last day of the month, criticizing the defendant's shifting and inconsistent positions on when rent was due. The court also noted with disapproval that the defendant's second witness was seated in court from the onset of trial before being called to testify, stating his evidence should be treated with caution, though acknowledging this was the defendant's counsel's first trial.

This case is significant in clarifying the operation of non-waiver clauses in lease agreements and the landlord's right to cancel a lease for breach. It establishes that acceptance of late payment "without prejudice" does not constitute waiver of the right to cancel for subsequent breaches, and that a landlord who cancels while the tenant is still in mora (in default) for a current month's rent is not precluded from doing so merely because previous late payments were accepted. The case also demonstrates the importance of reducing verbal agreements to writing to avoid evidential difficulties and clarifies when the principles in Masukusa v Tafa and Parkview Properties apply.