High Court Judgement Causes Fresh Headaches on Commercial Tenants in Zimbabwe.

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Introduction

Earlier this year, the tussles between the competing rights and interests of lessors and tenants were settled by the High Court in favour of lessors.  Commercial and residential tenants both enjoyed the benefit of what is called statutory tenancy before the judgment by Justice Chinamora in Elnour United Engineering Group (Pvt) Ltd v Minister of Industry & Ors HH 81-23.  Statutory tenancy occurs when a tenant whose lease agreement has expired continues to perform all obligations (eg paying rent) regarding the expired lease. Under such circumstances, they are allowed to remain on the property despite the fact that their lease has expired.

Before the judgment, the lessor could only evict the tenant with a court order after serving 3 months’ notice of eviction on the tenant. In addition, the lessor was required to justify repossessing the property on acceptable grounds for instance breach of the lease agreement, the need to do renovations, wanting to use the property for personal use etc. All these made it difficult for lessors in repossessing their property. Not only that, but the Lessor could only increase rentals with the consent of the tenant or through a ruling of the Rent Board. It is this ‘overprotection’ of tenants at the expense of the lessor that aggrieved the Applicant (a lessor) in the Elnour matter.

The High Court Case

The Applicant, an owner of immovable property that he was letting out approached the High Court challenging sections 22 and 23 of the Commercial Premises (Rent) Regulations 1983 as inconsistent with the Constitution and the Commercial Premises (Lease Control) Act [Chapter 14:04] (Hereinafter referred to as the Act). For context, sections 22 and 23 provide for the protection of statutory tenants that is to say tenants whose lease agreements have expired but still remain on the property whilst performing all obligations in terms of the expired agreement. The section also qualifies circumstances in which the Lessor could increase rentals, these being by consent of the tenant or by determination by the Rent Board. The Applicant’s (Elnour United Engineering Group [Pvt] Ltd) contention was that sections 22 and 23 of the Regulations overprotect tenants to the lessor’s detriment. The honorable judge, Justice Chinamora who presided over the matter granted the application and declared the sections inconsistent with the Act.

Implications of the Case

·        The judgment lessens lessors’ headaches in seeking eviction against tenants whose lease agreements have expired but is still in occupation of the property. Once the lease has expired, the tenant must vacate the premises and if they don’t, the lessor is no longer required to give reasonable notice to evict them. Equally, the tenants can no longer cling to statutory tenancy to resist lawful eviction.

 

·         The lessor can now repossess the property for any reason if the agreement has expired. Before the judgment, the lessor could not repossess their property on certain grounds for example the need to give vacant possession of the premises to a different tenant.

 

·         Moreover, the judgment removes the legal obligation on the employer to seek the consent of the tenant in increasing rentals on a commercial premise. Although this is the case, it is highly likely that the Minister will intervene for policy reasons and prescribe a maximum threshold that can be charged by lessors.

 

·         Lastly, it must also be stressed that the lessor is still required by law to obtain an eviction order from the courts regardless of the expiry of the lease agreement. This is so because the Constitution does not allow any one person to take the law into their own hands.

 

Conclusion

The court’s decision is an attempt to strike a balance between the competing rights and interests between commercial tenants and lessors. The judgment removes the extra burdens on lessors in repossessing their property in the event that a lease agreement expires.  Worthy mentioning is that the decision only affects commercial tenants and does not take away from the privileges of residential tenants to statutory tenancy in the event that a lease expires.

 

 

Disclaimer

The contents and suggestions contained in this article are for information purposes only and are not for the purpose of providing legal advice. If need be, you should contact the author to obtain advice regarding any particular issue or problem mentioned herein. Contact details: Cell +263 718832210

 

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