United Engineering Group Ltd v Mungalu and Ors (Appeal 173 of 2005) [2007] ZMSC 136 (19 January 2007)

IN THE SUPREME COURT OF ZAMBIA HOLDEN AT LUSAKA (CIVIL JURISDICTION) BETWEEN: APPEAL NO 173 OF 2005 SCZ NO 4 OF 2007 UNITED ENGINEERING GROUP LTD Appellant and MACKSON MUNGALU AND 15 OTHERS Respondent Coram: Chirwa, Chitengi, JJs and Kabalata Ag. JS on 20,h June 2006 and 19th January 2007. For the Appellant: Mr P N Yangailo of Messrs Yangailo & Co. For the Appellant: Messrs K Nsemukila and F C Nsokolo of Messrs Nsemukila & Co. Chirwa JS delivered the judgment of the Court: JUDGMENT Case referred to: 1. Meah V Sector Properties Ltd [1974] 1 All. E. R. 1074 This matter was commenced in the High Court by the Respondents by way of Originating Notice of Motion under Order 6 Rule 2 of the High Court Rules. The main prayers in the Summons were for the Court to: a) Determine Rent for the various shops at what is called Lusaka City Market pursuant to Sections 7(3) and 28(1) of the Landlord and Tenant (Business Premises) Act, Cap. 193 J2 b) Order of on injunction restraining the appellants by himself, his servants or agent or otherwise be restrained from evicting the respondents from the shops. The common facts in the case are that the respondents had been trading at what was generally called CHA CHA CHA ROAD Market. The market was managed by the Lusaka City Council. The Lusaka City Council was desirous to construct a modern market but did not have the funds. The appellant came in and agreed with the Council to re-build the Market from its own resources. As part of the Market was re-built, the appellant entered into lease agreement with each of the respondents and these agreements were made between November and December 2004. The rent payable varied from shop to shop. The first dispute is whether the three months rent requested by the appellant from each of the respondent was evidence payment of the rent or it was the respondents contribution towards the construction of the market. This is an aspect that was not considered at the stage of the proceedings in the Court below. Before the matter could be considered on merit, Counsel for the appellant raised a preliminary objection to the proceedings. An objection was raised that as the matter was brought to court pursuant to J3 Section 7(3) and 28(1) of the Landlord and Tenant (Business premises) Act, Cap 193, the matter was wrongly brought to court on two points: a) Section 7 of the Act could not be evoked as the appellant had not given notice to quit as provided under Section 5 of the Act, nor had the respondents requested for renewal of the lease. b) Under Section 28(1) the respondent were required to move the Court within 3 months of commencement of the tenancy agreement and that on the facts of the case the respondents were way out and that there was no discretion given to the Court to extend the period. It was argued that on both points, the Court could not entertain the action. In response to these objections, it was argued that the tenancy was a continuing one in terms of Section 4 of the Act and that the respondents had been complaining about the high rentals for a long time but the appellant had been unwilling to review the rent, instead he had threatened to evict them. In his ruling, the learned trial judge held that in view of the relationship that existed between the parties even before the construction of the market, the respondents ought to be heard. On the question of J4 time limit, the learned trial judge held that on public policy or demands of justice, the courts have always had powers to allow determination of matters on merit as opposed to short circuiting proceedings on technicalities such as refusing a party to be heard, unless the action were caught up by the Statute of limitation and not a mere rule stipulating time. He therefore overruled the objections. It is against this ruling that the appellant has appealed. There are two grounds of appeal. The first is that the learned trial judge misdirected himself in law and fact when he ruled that the respondents could be granted leave to apply to Court outside the three (3) months period provided for in Section 28(1) of Cap. 193. The second ground is that the learned trial judge misdirected himself in law and fact when he ruled that the respondents' application should be entertained by the Court since the respondents contributed to the construction of the market in issue when in fact the respondents did not contribute to the construction of the market. That at the time the respondents paid advance rentals to secure the shops for themselves, the market had already been constructed at the appellant's sole costs. These grounds of appeal were supported by detailed heads of arguments and authorities on which Counsel for the appellant relied. The gist in ground one is that the lease agreement between the appellant and respondents commenced between October 2005 and January 2005 and the respondents commenced their action on 23rd June 2005 more J5 than three months from the commencement of the leases. Even after this time, the respondents never attempted to apply for leave to apply out of time. It was submitted that even if the respondents may have applied for leave, there is no provision for leave to apply out of time. It was argued that since the 16 respondents are the only tenants out of 63 tenants who are complaining now, they cannot be heard to say that they are the only ones whose rentals are high. On the second ground of appeal, the gist was that, there was no long tenant/landlord relationship between the appellant and respondent in that before the re-construction of the market, the market belonged to the Lusaka City Council, and construction started in 2003 and part of the market was only ready for occupation between July and October 2004 when the respondents were asked to pay three months commitment fee in order to reserve the space for them. There was no relationship before the construction of the market between the parties, the learned trial judge therefore misdirected himself by referring to the relationship as existing before the re-construction. It was therefore prayed that this appeal be allowed. On behalf of the respondents, there were also filed detailed heads of arguments. In the first ground of appeal, it was argued that there was evidence on record that some tenants refused to pay the proposed rents as it was said to be very exorbitant and they lodged their complaints in January 2005 which was within the three (3) months period. On the facts, it was submitted, the trial court properly ruled to proceed with the matter. J6 On the second ground, it was argued that the learned trial judge was right in holding that the respondents contributed to the construction of the market as they contributed K23,000,000 and this cannot be said to be towards rent. We have considered the judgment and the arguments in this appeal. The respondents applied to the Court for determination of rent payable under Section 7(3) and 28(1) of the Landlord and Tenant (Busi­ ness Premises) Act, Cap. 193. For clarity, it is worth quoting Section 7(1) and (3) in full:- “7(1) The Landlord of a tenancy to which this Act applies may a) if he has given notice under Section five to terminate the tenancy; or b) if the tenant has made a request for a new tenancy in accordance with Section six apply to the Court to determine the rent which it would be reasonable for the tenant to pay while the tenancy continues by virtue of Section four and the Court may determine rent accordingly. c) The rent determined in proceedings under Subsection (1) shall be deemed to be the rent payable under the tenancy from the date on which the proceedings were commenced or the date specified in the Landlord's notice or the tenant's request whichever is later”. J7 Section 28(1) of the Act reads: “28 Notwithstanding anything to the contrary contained in this Act or any other written law or in any lease, a tenant whose tenancy commences on or after Is* January 1972 and to which tenancy this act applies, may, within three months from the commencement thereof (if he is aggrieved by the rent payable there-under) apply to the Court for determination of rent; and, subject to the provisions of Subsection (2), the Court shall determine the rent which shall be substituted for the rent agreed to be paid under the tenancy". From the affidavit evidence on record and the exhibits, there is no doubt that there is Landlord/tenant relationship between the parties and there are lease agreements with each individual respondent at various rentals. These lease agreements were made between October and January 2005. The respondents lodged their application to Court on 23rd June 2005; well after three months from the commencement of the leases. This fact was accepted by the learned trial judge. But the learned trial judge states: “From the outset, have strong doubts whether a tenant Cannot be allowed to apply for leave to apply out of time as refusal to do so would definitely inflict hardship even in cases of bonafide aggrieved tenants whose delay may not be entirely theirs”. On whether time can be extended, the learned trial judge observed thus: J8 “My short response Is, call it public Policy or the demands of justice; Courts have always been compelled for good cause, to determine cases on merit as opposed to short circuiting proceedings on technicalities such as refusing a party to be heard unless the action is caught up by the Statute of limitation not a mere rule stipulating time”. There is grave misdirection in the understanding of the objection taken by the appellant to the proceedings. The appellant were pleading that the action by the respondents was statute barred. Section 28(1) is not a mere rule stipulating time. The Act is a statute. Limitation of actions are not only those that directly fall or are specifically mentioned in the Limitation Act, 1939. Any Act of Parliament can provide limitations and a plea of statute bar can be taken as a defence or preliminary point. In the case of MEAH V SECTOR PROPERTIES LTD (1) the Court of Appeal in England in considering the effect of time under a similar Act held that where a tenant does not apply within the time limit "it was an inherent jurisdiction in the Court to strike out a stale claim when there has been no kind of evincing by the claimant of any ground whereby he could seek to get round the obvious time barrier”. The conduct of the appellant in the case can in no way be said to have provided a waiver. Further, the learned trial judge misdirected himself in insinuating relationship between the parties before the market was rebuilt. We entirely agree with Mr Yangailo that before the market was re-built the respondents had some form of relationship with Lusaka City Council and not with the appellant. J9 For reasons given, we agree with the objection taken by the appellant to the proceedings that they were statute barred. The objection was rightly taken at the right time not to waster the Court's time to proceed with the trial. The appeal is allowed. The respondents may make appropriate application at the appropriate time. It follows that the injunction ex-parte by the Court in favour of the respondents on 24fh June 2005 is discharged. Costs to follow the event to be agreed, in default to be taxed. (Shirwa JUDGE OF THE SUPREME COURT JUDGE OF THE SUPREME COURT T A. Kabalata AG. JUDGE OF THE SUPREME COURT