NIP Ltd v Zambia State Insurance Corporation Ltd (Appeal 1 of 1994) [1994] ZMSC 147 (5 January 1994)

IN THE SUPREME COURT OF ZAMBIA HOLDEN AT LUSAKA (1) JUDGMENT NO. 1 OF 1994 -------------------------------— 3 E TJI E E H: NIP LIMITED APPELLANT Vs ZAMBIA STATE INSURANCE CORPORATION LIMITED RESPONDENT CORAM: Garaner, Sakela and Chirwa JJJS., 14ch October, 1993 and Sth January, 1994 E. B. Mwansa of EBM Chambers appeared for the appellant. M. N. Mundashi of Zambia State Insurance Corporation Ltd appeared for the respondent. JUDGMENT Gardner J. S. delivered the judgment of the court. This is an appeal from a judgment of the High Court refusing a declaration that the appellant was entitled to the tenancy of a flat on lease from the respondent, and refusing the grant of damages for wrongful deprivation of the right to occupy the flat. The facts of the case are that the appellant was the tenant of the flat owned by the respondent. In or about June, 1992 the appellant allowed one Mainga Mwaanga to occupy the flat and on the 15th of September, 1992 rhe respondent gave notice of termination of the tenancy on the ground that the appellant had sublet the property to a third party. Thereupon the respondent entered into a tenancy agreement with the employers of Mwaaoga. In his affidavit" in support of the originating notice of motion, one Pancnal, the Managing Director of the appellant company, maintained that .he had not sublet the flat, but had allowed Mwaanga to occupy the'flat as a friend because his wife had just delivered a child and needed shelter for at least a month. Exhibited to the affidavit was a letter written by Mwaanga reading as fol lows:- 2/.......... □2 ( 2) > To Nip LTD,, Dear Mr. Panchai, This is to confirm that Flat No. 1 Premium Court has been given to me on a temporary basis for a month during the time I had no accomodation. I had not been subletting from him. I thank you for your assistance. MAINGA MUAANGA Signed And in an affidavit sworn in opposition to the application there was exhibited a further letter written by Mwoonga, which was in contradiction of the first letter, as follows:- Zambio State Insurance Corporation LTD., P. 0. Box 30B9L, LUSAKA 6th November, 1992 Curray Ltd;, P. 0. Box 30661, LUSAKA Dear Sir, I am writing to you to clarify why I wrote the contradictory letter to Mr. Panchai of NIP LTD saying that I did not pay him any money for staying in his flat. I wrote this letter because Mr. Panchai had asked me to as a favour, because he didn’t want NIP LTD to know that he had received money from me for the flat. The truth of the matter is that he was subletting the flat to me at sixty-five thousand kwacha a month (K65,000.00) and I paid him this amount for three months before this matter came to your attention. I hope this will clear the air on why I wrote the letter to Mr. Panchai. Yours faithfully Mainga Mwaanga 3/...... - r * At the hearing before the High Court Panchai gave-eVOehce that he had only helped Mwaanga temporarily, that he had'received no money from him and that he had left all his furniture in the flat« In rpply, for the respondent, Mwaangd gave evidence that he was allowed to rent the flat for sixty-five thousand kwacha per month and PanChai had told him to write the first letter saying that he was not a subtenant in order to prevent the respondent corporation from alleging that there has been a subletting^ He then decided to become a direct tenant of Zambia State Insurance Corporation Limited because the appellant was overcharging him, that is to say, he was charging him sixty five thousand kwacha per month instead of twenty seven thousand kwacha per month which was bping paid by the appellant to- the respondent. In his evidence Mwaanga confirmed that the flat was fully furnished* -x,;-:/ ' There was evidence from a representative of the respondent corporation confirming that the premises had been let to the appellant but the witness could not recall whether there was any written lease. There wos no evidence that there was any covenant against subletting with or without consent, but the witness said that the tenancy was terminated because there had been a breach of a clause of the tenancy agreement by subletting the flat to someone unknown to the respondent corporation. The witness said that the flat had now been let to the employers of Mwaanga because the corporation preferred to deal with limited companies as tenants. We were informed by counsel that the new letting was at the rate of sixty five thousand kwacha per month. The learned trial judge found that . Panchai had not told the court the truth when he said that he allowed Mwaanga to use the flat and his household goods free of charge. He therefore believed that Mwaanga was a tenant of the appellant for three months. The learned trial judge then held that this meant that under section “13 (1) (g) of the Rent Act the Plaintiff was subletting the flat. For this reason the learned trial judge refused to order that the appellant’s tenancy should continue. On appeal, Mr. Mwansa asked this court to find that Mwaanga should not had been believed when he said that he had paid sixty five thousand kwacha per month. He further argued that before the respondent repossessed the flat there should have been a court order for such repossession. J4 (4) Mi*. Eun.'a ski ■>- behalf of the respondent replied that the learned trial judge was entitled to believe i-iwaanga' 3 evidence that he had paid sixty five thousand kwacha per -.“oath. Mr. Eundashi furt'er very fairly conceded that the learned trial judge had implicitly accepted that the appellant had allowed Mwaamga to occupy the flat temporarily because his wife ha’ just had a baby, and that hm iitention was tual the occupation was to be uemporary, even though it w. o t 0 be paid for, Er. funlasli, in answer to a question by He court, maintained f:a. even if it was to be a temporary arr i: jo ment it was a subletting wi/jpot a licence, .7e sots fro:. ids record of evidence xbat apart fram a statement in eross-xXa.ji,motion that he allowed Mwaanga to use all the furniture m d utensils free of charge .ranch al was mot cross-examined i.: connection with his statement in bis evidence in chief that Lie lid mot receive any money, nor about the allegation Loy Kwaauga uhat he had paid sixty five thousand kwacha per aonth,.- In constract Lwaaara was cross-examined quite strongly about the arr» ig ex sc. bo ho had with wanchal and as a result of that he answered ih-.t no one persuaded him to write either of t.:e two letters. It follows from this, as was argued oy Er. Mwansa, that Mwaanga was umier no coercion to write the first letter in which he said that the flat was given to him on a temporary basis and that there had beon so subletting. un this evidence it is difficult to udersia.,u on what grounds the learned trial judge preferred rLwaanga1 .0 evidence concerning the payment by him of rent. Be that as it ••ay, i appears that all the jarties and the learned trial judge .assumed Hat any parent received oy r am ch al for occupation of v..;? fl;.t would render the transaction a sublet tin ’ and nake it i ^possibLle '"or the transactin' to be a licence. re accept that fro t ? Ic.e o ’ t learned .-rial judge's jud^osent he did not dicceli bameba 1 when he said that it vzas his intention to ,’.o ■ w ... a a favour fo-- s limited period only. Je are a.liv ..0 1 .e r.eed for the courts to guard against tie possibility tmat pr.rta.s .may endeavour to avni’. t..i? control of the ?.cl by gra.'it ia i.ioo.. C;. jcsuai of a tenancy, Jowaver, it is :;ot tie intention of ' . courts to construe apree'mants freely >iade baf/Veea two parties 1 aay vay fiat will defeat the .'.a oe .it intention of the nariiis. J5 (5) In this case no evidence of the tens of the appellant's tenancy agreement could be given by the witness for the respondent., Although he eaid that the tenancy was terminated because the appellant was im breach of a covenant against subletting, he conceded that the agreement may have been oral, in which event it is unlikely that such a covenant would have been mentioned, and, in any event, his evidence that the terms of the tenancy agreement were not within his own knowledge made it impossible for him to say that there was a covenant against subletting. That being the case, the only provisions relating to subletting without consent are statutory, and the appellant argues that they are inapplicable because the grant of permission to hwaanga to occupy the premises temporarily was a licence and not a subletting. ":!e would comment here that the appellant, being a company, cannot occupy the premises physically and has to allow some individual parson to occupy on its behalf. Megarry, in the Heat Acts (9th Edition) at page 52 has this to say:- "The fact that a licence is outside the acts may be sons ground for inferring that tbs grantor never intended to grant a tenancy, yet it is uncertain how far the grantor’s intention will ultimately prevail. On one view, if the intention of the grantor, accepted by the grantee, is to create a licence and no tenancy, it would be wrong for the court to extract from the grantor an estate or interest in land in the teeth of the intention of the parties, at all events if the words or document by which the transaction was effected are apt for a licence and not for a tenancy. On the other hand, if by being sufficiently careful in their drafting and explicit in their refusal to grant tenancies landowners could escape the Acts with ease, the social consequences would be grave. There have hitherto been enough flaws in the drafting or uncertainty in the surrounding circumstances to suable the courts to hold that tenancies have been created in all the reported cases where such a result seeded proper. The court will certainly scrutinise with great care any document or transaction, the sole object of which is to avoid the Acts.'1 In Facchini v. Srysou (1952) I. T. L.l. 1386 p. 1389, Denning L. J. said:- ”In all cases an occupier has been held to be a licensee there has been something in the circumstances, such as a family arrangement, t; an act of friendship or generosity, or such like, to negative any intention to create a tenancy.” (6) The above quotation appears on page 50 of Megarry, And on page 51 it is made quiet clear that the payment of a consideration for such occupation will not of itself prevent the transaction from being a licence. The authorities indicate that the surrounding circumstances must be looked at also. In this case, when Mwaanga was introduced by a mutual friend, he was in desperate straits because his wife had just given birth to a baby and he had no'accommodation whatsoever. The fact that Panchai left all his own furniture, bedding and utensils in the fl^t can be regarded as an indication that he did not intend to part with the possession of th? flat within the terms of the definition of a lease in ceoticn 2 of the Rent Act. If the appellant did not intend to part with the possession of the flat in those terms then the occupation by Mwaanga would not come within the terms of section 13 (1) (9) of the Rent Act, that is, subletting or parting with possession without the consent of the landlord. Part of the surrounding circumstances in the case was that Panchai had a mistress who had been occupying the flat but who had gone to Kenya, and it was suggested that it was only because she returned and reconciled with Panchai that he required to regain the flat from Mwaanga. However, the question of whether or not the return of the mistress was unexpected or whether or not there has been a reconciliation was not put to Panchai in cross-examination and there is nothing in those circumstances to suggest that when Mwaanga was allowed to go into occupation Panchai did not anticipate any further need for the flat. Taking into consideration the whole of the surrounding circumstances we are quiet satisfied that it was obviously the intention of the parties that Mwaanga was to be allowed only temporary occupation of the flat because of his desparate plight, end, whether or not payment was made by Mwaanga for such occupation, there was never an intention between the parties to grant anything other than a licence to occupy the premises for a short period. Ue have considered s. 26 of the Act which provides for auolettings of less than six months, and, although the appellant cl uld have sublet under this section by asking permission from the landlord or the court, there was nothing to prevent him from choosing to grant a licence instead. 7/........... I (7) bJe have also considered s. 13 (1) (d) of the Act and, as, we f?e satisfied that, the grant of a right of occupancy was no more t.ian a licence, that section doesf not apply. Ue find that the appellant did not sublet the premises within the terms of s. 13 (1) (g) of the Act. The appeal is ♦ allowed and the appellant is entitled to a declaration that the purported termination of his tenancy was null and void. ' The appellant's tenancy of tho 'lot in'question from the *jspondent shall continue ot th" ■ .t payable immediately before she purported repossession, unless the standard rent is increased io accordance with the provisions of the Act* In order to avoid further litigation and in order to ^ut this order into effect we order that the? respondent deliver up possession of the flat to the appellant within three months from the date of this order. The appellant claimed damages for the cost of renting -1 creative accommodation at the rate of K165,000.0D per month "x.u.n 15th September, 1992, No evidence was led by the respondent o suggest that this claim is unreasonable, and the appellant is 'worded damages of the difference between the rent he was paying nd that sum, namely; K130,COO. OO per month from the 15th September, 9'2 until possession of the f],at is returned to him. Costs of this appeal and in the court below to the appellant. bJe would mention that, had the Law of Property Ret 1925 applied in this country, the respondent would have had to give notice to the .. ? reliant drawing att-ntion to the alleged breach and requiring it to Io remedied. The occupant could then have been removed, or the temporary nature of the occupation explained to the respondent, and the resultant damages would nt t have been incurred, bJe would also mention that the present provisionr. "r o increasing the standard rent c m^lotely ignore th" presenlWrote ■" inflation and the learned law i- 'leers of the E' to may consider ’..■hat alterations in the law are r Top' tate. 0. T. GARDNER SUPREME COURT JUDGE a/................ JB (8) E. L. SAKALA SUPREME COURT JUDGE D. K. CHIRWA SUPREME COURT JUDGE