Justin Chola v IHS Zambia Limited (2018/HP/1548) [2021] ZMHC 120 (28 June 2021)

IN THE HIGH COURT FOR ZAMBIA 2018/HP/ 1548 AT THE PRINCIPAL REGISTR HOLDEN AT LUSAKA (Civil Jurisdiction) BETWEEN: JUSTIN CHOLA AND RT U OF PRINCIPA E G IST R X 50067 IHS ZAMBIA LIMITED DEFENDANT BEFORE THE HONOURABLE LADY JUSTICE P. K. YANGAILO, IN OPEN COURT, ON 28TH JUNE, 2021 , AT 10:00 HOURS. For the Plaintiff Ms. C. C Mwansa - Messrs. C. C. Mwansa For the Defendant: Mr. E . Kaluba - Messrs. Isaac & Partners and Associates JUDGMENT CASES REFERRED TO: 1. National D111g Company Limited & Zambia Privatization Agency vs. Mary Katongo - Appeal No. 79/2001; 2 . Barclays Bank (Zambia) Limited v Frank Mutambo and Mutaz Limited - Appeal No. 8 of 201 9 (CA); and 3. Anderson Kambela Mazoka and two Others v Levy Patrick Mwanawasa and two Others (2 005) Z. R. 138. LEGISLATION AND OTHER WORKS REFERRED TO: 1. The Landlord and Tenant (Business Premises) Act, Chapter 193 of the Laws of Zambia; 2. Halsbwy's Laws of England, 4111 Edition Re-issue, Volume 32; and 3. The Rules of the Supreme Court, 1999 Edition, London Sweet & Maxwell. INTRODUCTION 1. 1 This m atter d eals with an unfortunately unintended dispute between the Plaintiff and Defendant occasioned by the Defendant having previously placed its tele J1 I Page communication tower ("Tower'') on the now Plaintiff's piece of land. The Plaintiff, apparently acquired the land involved in this dispute, through a sell of the said land by a mortgagee in possession, following the failure by the previous registered owner mortgagor's default to h onour his financial obligations to the said mortgagee 1n possess10n. 1.2 The previous registered owner mortgagor of the land now owned by the Plaintiff had apparently entered into a lease agreement with the Defendant for an awkwardly lengthy period of time of ten ( 10) years for unusually small amount of monthly rent in the sum of K2,500.00. One of the terms of this unconscionable agreement was to the effect that it would bind future purchasers of the land concerned. 1.3 The Plaintiff contends that having purchased the land in issue from a mortgagee in possession, rather than from the previous owner mortgagor, the lease agreement entered into between the Defendant and the said previous owner mortgagor does not bind the Plaintiff. The Defendant, on its part, canvasses a converse position to that of the Plaintiff, hence this Court's action to resolve this rather bizarre dispute created by the rigid positions adopted by the parties hereto. PLEADINGS 2.1 The Plaintiff originally issued out of the Principal Registry a Writ of Summons and Statement of Claim on JZ I P a g ~ 10th September, 2018, to which claim the Defendant settled its Defence on 8 th November, 2018. At the instance of the Plaintiff, an application to amend the issued and served Writ of Summons and Statement Claim was launched on 15th January, 2019 and the learne d Deputy-Registrar granted the Plaintiff the amendment order sought on 14th May, 2019. 2.2 By Amended Writ of Summons and Statement of Claim, dated 16th May, 2019, the Plaintiff seeks, inter alia, the following reliefs: - 1. An Order for the removal of the tower from Subdivision No.5 of Subdivision E of Farm No. 487a, Kalunguti Road, New Kasama, Lusaka; 2. Damages by way of mesne profits derived from the Defendant's use of the Plaintiffs land on which the tower is e rected, to be agreed or in default to be assessed by the Court; 3. Costs; and 4. Any other relief the Court may deem appropriate. 2.3 In the Amended Statement of Claim, it was stated that the Plaintiff is the registered owner of the property known as Subdivision No.5 of Subdivision E of Farm No. 487a, Kalunguti Road, New Kasama, Lusaka ("the Proper ty"). 2.4 Previously, the Property was owned by one Jawette Masinja ("Mortgagor"), who pledged it as collateral by way of a mortgage to a lender known as Bettern ow Finance Company Limited ("Mortgagee") for certain sums of money. J3 I Page 2.5 Meanwhile, the Mortgagor, as landlord of the Property, entered into a tenancy agreement ("the Agreement") with the Defendant, as tenant, for a term of ten ( 10) years on 1s t July, 2015, at the gross monthly rent of K2,500.00. 2.6 The Mortgagor apparently fell on hard times and failed to pay the Mortgagee the monies advanced him. The Mortgagee exercised its legal right of foreclosure and sale of the Property under the Mortgage. It is in these circumstances that the Plain tiff acquired the Property from the Mortgagee, as Mortgagee in possession. 2 .7 Upon acquiring the Property it was the Plaintiff's understanding and averment that the Agreement, entered into between the Defendant and the Mortgagor, had come to an end with the Mortgagee exercising its legal right under the Mortgage. As a consequence, the Plaintiff attempted to engage the Defendant, with a view to entering into a fresh agreement related to the continued use of the Property by the Defendant for its Tower. However, these attempts by the Plaintiff were frowned upon by the Defendant and d id not, as a result , succeed. Instead the Plaintiff, then , resorted to giving the Defendant two (2) months' notice, from 14 th May , 2018 to 3 rd July, 2018, to remove its Tower from the Property and also claimed for damages, by way of mesne profit for the Defendant's use of the Plaintiff's Property. 2.8 In response to the Plaintiff's Amended claims, the Defendant filed a very brief Amended Defence, on 28 th May, 2019 , wherein it asserted that the Agreement, J4 I P age entered into between the Mortgagor and the Defendant, did not only entitle it to erect and maintain the Tower on the Property as it did, but also amongst other things, the said Agreement, in clause 11.3 thereof, was binding on purchasers of the Property, such as the Plaintiff. 2.9 As consequence, the Defendant went further to aver, in its Amended Defence, that the Plaintiff was, therefore, not entitled to any of the reliefs sought, until the Agreement either comes to an end by affliction of time or was terminated in accordance with its terms. Neither option had occurred at the time of the Plaintiff presenting its claim in this matter, the Defendant contend in the Amended Defence. EVIDENCE AT TRIAL 3 .1 At trial, the Plaintiff called only one witness; himself. The gist of PWl 's testimony is that in early March, 20 18 , responding to an advertisement placed in a daily newspaper by the Mortgagee, he successfully bought the Property in issue in this matter from the said Mortgagee in possession. After taking possession of the Property, PWl noticed that there was a Tower on the Property, which he subsequently found out to belong to the Defendant. 3 .2 His further testimony is that he engaged the Defendant, in writing, with a view to entering into an agreement on the continued use of his Property by the Defendant's Tower, where he proposed rent of US$1 ,000.00 per JS I Page month. The Defendant's response, according to PWl 's testimony, was that there already existed an agreement between the Defendant and the Mortgagor previous owner of the Property, whereby in the terms of the said agreement in clause 11 .3 thereof, he was bound by its terms, which included rent of K2 ,500.00 per month, with a duration of ten (10) years of the agreement. PWl refused that he was bound by the te rms of the agreement entered into between the Defendant and the Mortgagor previous owner of the Property because he did not buy the Property from the Mortgagor, but rather from the Mortgagee in possession, who was not privy to the agreement relied upon by the Defendant in its res ponse. 3.3 PWl also testified that following the position adopted by the Defendant in response to his request for a new agreement for the use of his Property by the Defendant's Tower, h e instead opted to give the Defendant Two Months' notice to r emove the Tower from his Property. The Defendant did not positively respond to the notice given and PW 1 then instructed his lawyers to commen ce this Court action against the Defendant seeking the r eliefs , inter alia, of the removal of the Tower from his Property and payment of mesne profits . 3.4 Both in Cross-examina tion and re-examination, PWl 's t estimony, summarised above, remained evidentially the s ame and tha t also marked the close of the Plaintiff's case. JG I P age 3.5 The Defendant, equally, called only one witness. DWl , was one Bernard Kaputo Mulenga, an Acquisition Manager of the Defendant and he testified that sometime in 2015, the Defendant entered into a lease agreement, through its subsidiary company called Zambian Towers, with the Mortgagor previous owner of the Property for a period of Ten (10) years at the monthly rent of K2 ,500.00. He went further to testify that during the tenure of the agreement, the Mortgagor mortgaged the Property to the Mortgagee, which Mortgagee eventually repossessed the Property and sold it to the Plaintiff. Upon the Plaintiff purchasing the Property from the Mortgagee, DWl testified that on 16 th April 2018 , the Defendant received a letter written by the Plaintiffs Personal Assistant, requesting the Defendant to enter into an agreement with the Plaintiff for the continued use of having its Tower on the Plain tiff's Property for 12 months, at a proposed monthly rent of US$1,000.00. 3.6 In response to the Plaintiff's demand for a new agreement on the proposed terms, DWl testified that in the Defendant's written response, it was stated that the previous agreement with its terms, entered into between the Mortgagor and the Defendant's subsidiary company, was still in force , binding on the Plaintiff and he ought to honour its terms. DWl went further testified that no new agreement was reached with the Plaintiff, but instead the Plaintiff gave the Defendant notice to vacate the Property and the Defendant completed the J7 I Page decommissioning of the Tower on 15th May, 2019. DWl confirmed that all rentals, as stated in the agreement with the Mortgagor from the time the Plaintiff became the new owner of the Property to date of decommissioning of the Tower were paid into Court. 3.7 During cross-examination, DWl conceded that in the agreement that the Defendant relied upon on the terms to continue to deal with the Plaintiff was entered into between the Defendant's subsidiary and the Mortgagor. Further, he agreed that there was both no mention of either the Mortgagee or the Plaintiff in the agreement, even though the Defendant was aware that the Property had been repossessed by the Mortgagee and sold to the Plaintiff. 3.8 There was no re-examination of DWl and this marked the close of the Defendant's case. The Court then gave the parties 30 days to exchange written submissions and the matter was reserved for Judgment to 28t h June , 202 1 at 10:00 hours. POINTS FOR DETERMINATION 4. 1 I have considered the Pleadings, evidence adduced at trial and written submissions settled by the parties hereto. I have also considered the list of authorities cited by the parties, for which I am grateful. I may not mention all the cases cited, but I am alive to the principles espoused therein. Having analysed the J8 I Page evidence adduced at trial, the main issues identified for determination are as follows:- 1. Whether or not, as the case has been pleaded by the parties hereto, the lease agreement dated 11 th December, 20 14, entered into between the Defendant's subsidiary company and Dr. Jewette Masinja, is binding on the Plaintiff, considering the manner in which the Plaintiff purchased the Property concerned with the said lease agreement; and 2. Whether or not the Plaintiff is entitled to recover mesne profits from the Defendant, as pleaded. DECISION OF THE COURT 5 .1 I will proceed to consider the issues for determination in the order that I have identified them above, starting with wh ether or not, as the case has been pleaded by the parties h ereto, the lease agreement dated 11 th December, 2014, entered into between the Defendant's subsidiary company and Dr. Jewette Masinja, is binding on the Plaintiff, considering the manner in which the Plaintiff purchased the Property concerned with the said lease agreement. In determining whether or not the lease agreement in issue binds the Plaintiff, I am guided first and foremost by the intention of the parties to the said lease agreement) as expressed in the document itself. Secondly, I am guided by the law that recognises a lease agreement, at law, as a contract and the holding J9 I P age 1n the case of National Drug Company Limited & Zambia Privatization Agency vs. Mary Katongo 1 is instructive, where the law and role of Courts in appr oaching disputes concerning contracts was stated as follows: - "It is trite law that once the parties have voluntarily and freely entered into a legal contract, they become bound to abide by the terms of the contract and that the role of the Court is to give efficacy to the contract when one party has breached it by respecting, upholding and enforcing the contract." 5.2 The parties to the lease agreement, in issue, were clearly stated as the Defendant's subsidiary and the Mortgagor previous owner of the Property, as defined more specifically in clauses 2. 1.11 and 2.1.12, r espectively . There were no extended parties to this particular lease agreement apart from the two parties so stated in the said clauses 2. 1.11 and 2 .1.1 2. That, in the opinion of this Court, was the intended p osition bargained voluntarily and freely by the parties to the said lease agreement. The Court's role here is, therefore, m erely to give efficacy to th e said lease agreement as bargained by the stated parties and not read into it anything more than what is clearly expressed. Consequently , it is the finding of this Court that the parties to the lease agreement, in issu e, are the Defendant's subsidiary and the Mortgagor previous owner of th e Property as defined more specifically in clauses 2 .1.11 and 2 .1. 12. The Plaintiff is not a party to the said lease agreem ent JlO I P Mg e becau se he purchased the Property from a Mortgagee in possession , who was not t h e lessor or successor-in-title to the said lessor as defined under clause 2. 1. 11 of the Agreement. Further clause 11.3 is unambiguous in its provision; it states as follows: - "Notwithstanding any provision of this Agreement, it is hereby agreed that in the event of a sale of the Property by the Lessor, this Agreement will continue uninterrupted until expiration thereof, including option periods .. . " (Court's emphasis) 5.3 The lessor, as defined in clause 2. 1.11 of the Agreement was the Mortgagor. The successor-in-title to the Mortgagor in th is matter was never at any point in time the Mortgagee because th e Mortgagee only exercised its righ t of foreclosure and r igh t to sell the Property under the Mortgage. The Property was consequently not sold to the Plaintiff by lessor or h is successor-in-title, as defined under clause 2. 1. 11 of the Agre em en t. The Property was sold by a Mortgagee in possession and as such the Plaintiff cannot, therefore, be bound by its ter ms including clause 11.3. This is th e finding of this Court on this issue. 5.4 The Defendant in its Amen ded Defence, filed herein , did not at all p lead anything that suggested that the Agreement, in issue in this matter, ought to be construed and interpreted in terms of The Landlord and Tenant (Business Premises) Act1, as it attempts to do so, late in the day, in its written Submissions, filed Jll I P age into Court 7 th May, 2021. I say so because, at law pleadings and submissions serve precise and specific roles in civil litigation. Pleadings give notice to litigants as to the issues in dispute b etween th e parties concern ed so that such parties may have sufficient opportunity to address and r espond to such issu es as pleaded upon, which the Court is expected to determine the matter in con tention . On the other h and , s ubmissions are m ere argum ents as subjectively seen in the eyes of the party m aking the particular submissions. Matters in contention are determined by Courts based on the pleadin gs and evidence of the parties. In the case of Barclays Bank (Zambia) Limited v Frank Mutambo and Mutaz Limited2, the Court of Appeal em p h asised t his important distinction at law and the roles of pleadings in dealing with civil litigation, when it quoted from the Supreme Court of Zambia's binding decision, in th e case of Anderson Kambela Mazoka and two Others v Levy Patrick Mwanawasa and two Others3 , where it was h eld as follows: - "The function of pleadings is to give fair notice of the case which was to be met and to define the issues on which the Court will have to adjudicate in order to determine the matters in dispute between the parties. Once the pleadings have been closed, the parties are bound by their pleadings and the Court has to take them as such. In case where any matter not pleaded is let in evidence and not objected to by the other side the Court is not and should not be precluded from J12 I Page considering it. The resolution of the issue will depend on the weight the Court will attach to the evidence of un-pleaded issues. This however does not mean that we condone shoddy and incomplete pleadings. Each case must be considered on its own facts. In a proper case, the Court will always exclude matters not pleaded more so where an objection has been raised. " 5.5 And the Court of Appeal in its decision in the Barclays Bank (Zambia) Limited v Frank Mutambo and Mutaz Limited2 case cite d above, put this binding position of the law in t his way: - "It seems to us that the learned judge was carried away by the submissions on behalf of the Respondent which were misplaced for not dealing with the issues pleaded. Section 50 of the Banking and Financial Services Act was at no time invoked or alluded to in the pleadings and the evidence." 5.6 In the case at h and, the Defendant h a s argued 1n its s ubmissions that the Agreement in issue, especially clau se 11 .3 thereof, should be construed in terms of the provisions of The Landlord and Tenant (Business Premises) Act1 , particularly Section 2 of the said Act, as it interprets who a landlord under the Act is . However, t h e Defendant did n ot plead this aspect in its Amended De fence . Neith er was any eviden ce led in trial by DWl on this point. As such, the Defendant's attemp t to bring the issue of r e liance on the provisions of on The Landlord and Tenant (Business Premises) Act1 does n ot aid its case on the b a sis of the a u thorities cited above. In any case, a proper and complete J13 I P c.1 g e consideration of Section 2 of The Landlord and Tenant (Business Premises) Act1, actually states a s follows: - "Interpretation of "tenancy" means a tenancy of business premises (whether written or verbal) for a term of years certain not exceeding twenty-one years, created by a lease or under-lease, by an agreement for or assignment of a lease or under-lease, by a tenancy agreement or by operation of law, and includes a sub tenancy but does not include any relationship between a mortgagor and mortgagee as such, and references to the granting of a tenancy and to demised property shall be construed accordingly. "tenant", in relation to a tenancy, means the person for the time being entitled to the tenancy, whether or not he is in occupation of the holding, and includes a sub-tenant ... " (Court's emphasis) 5.7 Consequently, a proper and complete reading of the interpretation section of the Act quoted a bove, does not make the Agreement, in issue, binding on the Plaintiff because of the manner in which he purchased the Property from the Mortgagee rather than the lessor. It 1s, therefore, the finding of this Court that the Agreement, in issue, does not bind the Plaintiff in this matter. 5.8 This now brings me to the second issue of Whether or not the Plaintiff is entitled to recover mesne profits from the Defendant, as pleaded. In d eciding this issue, I am J14 I Page guided by th e learn ed a uthors of Halsbury's Laws of EnglancP, wh er e they state a t paragr a ph 255 t h at: - "Mesne Profits - The Landlord may recover in an action for mesne profits the damages which he has suffered through being out of possession of the Land or if he can prove no actual damage caused by him by the Defendant's trespass, the Landlord may recover as mesne profits the amount of the open market value of the premises for the period of the Defendant's wrongful occupation. In most cases the rent paid under any expired tenancy will be strong evidence as to the open market value. Mesne profits being a type of damages for trespass can only be recovered in respect of the Defendant's continued occupation after the expiry of his legal right to occupy the premises. The Landlord is not limited to a claim for the profits which the Defendant has received from the land or those which he himself has lost." (Court 's emphasis) 5.9 Having found that the Agreem ent, in this m a tter , does not bind the Plaintiff, it follows that the Plaintiff is en titled to r ecover from the D efendant m esne profits derived from the Defendant's use of the Plain tiff's Property by way of continued presence of the Tower from the date that the Plaintiff b ecame th e n ew owner of the Property in March , 2018 , to the actual d ate when the Tower was r emoved from the Prop erty, which is som etime in May, 20 19. It was not disputed that if this tower was n ot on the prop erty, the Plaintiff would have been able to genera te an incom e from r enting ou t the prop erty. It was further his unchallen ged testimony th at h e could not secure a ten a nt, as p rospective JlS I P age tenants expressed their discomfort at renting a property which had presence of a tower. 5 . 10 On average, the exchange rates, which are public knowledge according to the Bank of Zambia website, the US Dollar to Zambian Kwacha in 20 15, was US$1.00 to K5.60. In 2018, when the Plaintiff bought the Property, the exchange rate on average was US$ 1. 00 to K 11. 9 3. When I apply these two exchange rates to the only available rental figure of K2,500.00, it translates to approximately US$446.00 as at 2015. When one factors in the depreciation of the Kwacha to the US Dollar as at 2018, which was over 100% in depreciation, the US$446.00 is almost US$900.00 as at 2018 exchange rates. Consequently, I find and hold that the monthly rental of US$1 ,000.00 proposed by the Plaintiff, especially that no challenge was mounted by the Defendant to the rent proposed by the Plaintiff, is fair and reasonable in the circumstances of this case, with interest. 5.11 For avoidance of doubt, the money that was paid into Court will go towards reducing the total amount of rent awarded to the Plaintiff. Further, the said money paid into Court will only attract interest from the date that the rentals became due up to the date of payment into Court. This position is supported by the explanatory notes under Order 22, Rule 1 (8) of The Rules of the Supreme Court3 , which states as follows: - J16 I P "g e "Any interest that may be awarded on the debt or damages recovered should be calculated up to the date of payment into Court." CONCLUSION 6 .1 For the foregoing reasons, it is my finding that the lease agreement entered into between the Defendant's subsidiary company and the Mortgagor, dated 1st July, 2015, does not bind the Plaintiff in relation to the continued use of the Property by the Defendant's Tower. 6.2 The Plaintiff is entitled to recover from the Defendant mesne profits derived from the Defendant's use of the Plaintiff's Property by way of continued presence of the Tower from the date the Plaintiff became the new owner of the Property to the actual date when the Tower was removed from the Property at the rent of US$1 ,000.00 p er month. This being a dollar claim, the rate at which interest will be awarded is generally low as opposed to a Kwacha claim. Interest is accordingly awarded to the Plaintiff from the date of the debt to the date of final payment at an annual rate of 5% . 6 .3 Costs are for the Plaintiff to be taxed 1n defa ult of agreement. 6.4 Leave to Appeal is granted. Signed, Sealed and Delivered at Lusaka, this 28th day of June, 2021. HIGH COURT JUDGE J11 I P a g c