Landlords granted right of automatic cancellation in breach by the Supreme Court

On the 25^th of October 2022, the Supreme Court of Zimbabwe handed down a seminal judgment in the case of Rolen Trading (Private) Limited v Parkside Holdings (Private) Limited SC 106/2022. In the judgment the Court held, amongst other things, that where there is a written lease agreement with set dates on which rent should be paid, there is no need for a landlord to give the tenant notice to rectify its breach before cancelling the lease agreement. This judgment is critical for landlords, in a time such as the present, where breach of lease agreements by tenants is on the rise in the country. In this weeks’ article we unpack the implications of the judgment for landlords and tenants with written lease agreements. Before looking at the key implications of the highlights, we will consider what a lease agreement really is and critical terms that should be contained therein. Fundamentally, the most important requirement, for both landlords and tenants is to ensure that the lease agreement is written and signed by both parties to avoid disputes as regards the terms.

Lease agreements in Zimbabwe

A lease agreement comes into being once the landlord and the tenant have agreed on the formalities that form the basis of their contract. Importantly, there must be a property available for lease and the rent in respect thereof must be agreed upon. The landlord’s obligation is to make the property’s occupation, use, and enjoyment available to the tenant. In fulfilling this obligation, the landlord has to refrain from disturbing the tenant in the enjoyment of the leased property and he must maintain the property in the condition agreed upon. In addition, the property must be fit for the purpose for which it is being let. Moreover, the landlord must protect the tenant against eviction by a third party with better title.

The primary obligations of the tenant are to pay the rent and related costs, like electricity and water usage and the charges incidental thereto at the proper time and place agreed in the agreement. On termination of the lease, the tenant has an obligation, to restore the property in the same condition he would have found it.

Cancellation of lease agreements may be done by either, the tenant or the landlord, where there has been a material breach of any obligation in the agreement, for example, if the tenant fails to pay its rent on time. Cancellation of a contract, is a legal act that ends the relationship between the parties to the contract at a specific moment. Ordinarily cancellation of the lease, should be done in the manner stipulated in the written agreement. Further, not every breach entitles the injured party thereto to cancel the contract. The position in law is that, unless otherwise agreed, it is only that breach that goes to the root of the contract that can give rise to a right to cancel. In other words, it is a breach that goes to the root of the contract that entitles the aggrieved party to cancel.

The brief highlights of the judgment

Sometime in March 2010, Parkside Holdings (Private) Limited and Rolen Trading (Private) Limited entered into a written agreement of lease in terms of which the former leased to the latter commercial property known as Shops 1 and 2 Benhay Art House, situated at 120 Chinhoyi Street, Harare. The lease agreement like many standard lease agreements mandated the tenant to pay the agreed rentals on or before, the 7^th of each consecutive month. The agreement also contained a standard breach clause to the effect that where the tenant failed to pay rentals as required, the landlord would be obliged to give the tenant 15 days’ notice to remedy its breach, failing which the landlord could cancel the agreement and take possession of the property.

The tenant breached the agreement by failing to pay the rentals on the dates agreed between the parties, leading to arrears being due and payable to the landlord. Instead of the 15 days’ notice required by the agreement, the landlord gave the tenant 3 days to rectify its breach, failing which it would institute proceedings to recover the outstanding rentals and eviction of the tenant. One of the critical issues before the court, was whether the three days’ notice was valid in light of the written agreement signed by the parties requiring 15 days’ notice.

Essentially the Supreme Court found that where an agreement is clear as to when rentals should be paid, and the tenant fails to pay same, then the landlord need not give the tenant notice to rectify the failure to pay rent. The reason being that the tenant would already have been in default (mora ex re) due to the failure to pay its rentals on time. Such breach, being one which both parties are aware of, as the agreement is clear on dates of performance, entitles a landlord to cancel the lease immediately without giving notice to the tenant.

Although the judgment is applauded, the ruling of the court is of concern, in that the court effectively ignored a clause of the contract signed by the parties, where they agreed to give each other 15 days’ notice to remedy any breach of contract. It is especially concerning because, it is an established principle of Zimbabwean law, that courts are not at liberty to create contracts on behalf of parties, neither can they purport to create or remove obligations, whether mandatory or prohibitory, from contracts that is before it. The role of the court is to interpret the contracts and uphold the intentions of the parties when they entered into their agreements provided always that the agreement meets all the elements of a valid contract. 

This judgment is of grave importance for landlords especially, who previously would be given the run around by problematic and non-paying tenants when eviction proceedings imminent. All manner of arguments and delays would be raised by tenants to seek additional time to keep residing in the premises without paying rentals. Frustrating the landlord and racking up a phenomenal bill of not only unpaid rentals but also water and electricity charges. Now in light of the judgment, where a tenant breaches the written lease, the landlord merely has to advise the tenant that the agreement is cancelled and request vacant possession of the property immediately, failing which the landlord can approach the courts.

In conclusion, the case has made it easier for landlords to cancel contracts in instances where the tenant fails to pay rentals and there is a written lease agreement, with set dates for payments of rent. There is no longer need for long notice periods to the tenant to remedy its breach, and the landlord may cancel the lease and evict the tenant through the legal system.

Disclaimer:The information and opinions expressed above are for general information only. They are not intended to constitute legal or other professional advice. For clarification, assistance, or any questions please contact Lex Amicus, by email at: lexamicus@outlook.com