Juthalal Velji Ltd v The THB Estate Company Ltd 1983 TLR 391 (HC)

JUTHALAL VELJI LTD v THE THB ESTATE COMPANY LTD 1983 TLR 391 (HC)

Court High Court of Tanzania - Dar Es Salaam

Judge Maina J

December 14, 1984

CIVIL CASE 230 OF 1983 G

Flynote

Landlord and Tenant - Tenancy agreement for fixed term with option to review by notice three months before date of expiry - Option taken by notice one month and three days before expiry - Whether landlord bound by the agreement.

Landlord and Tenant - Tenancy agreement - Negotiations on terms prior to signing - Signed agreement not contain terms agreed before signing - Whether agreement can be interpreted to include the terms orally agreed.

Evidence - Tenancy agreement - Disposition - Agreement in writing - Oral agreement prior I to signing written agreement but not incorporated in the written agreement - Whether extrinsic oral evidence admissible to vary A terms of written agreement - S.101 Evidence Act No. 6 of 1967.

Estoppel - Tenancy agreement - Lease for three years with option to renew for further term of two years on three months notice before date of expiry - Tenant desirous of longer term B during negotiations - Landlord assures tenant that no problem if covenants are observed - Tenant improves property - Whether landlord estopped from refusing to renew lease.

Rent Restriction Act - Maximum annual rent - Exemption order of Minister for Lands - C Whether Minister for Lands has powers to exempt - Rent Restriction Act Cap. 479 s 2(1).

Rent Restriction Act - Exemption Order in respect of particular premises only - Whether order discriminatory.

Rent Restriction Act - Exemption Order - Whether Minister should consult tenant before D making order - Rent Restriction Act Cap. 479 s.2(1).

-Headnote

The plaintiff leased a godown belonging to the defendant for a term of 3 years renewable for a further term of 2 years at a monthly rent of Shs. 13,860/=. It was expressly agreed E that in case the plaintiff opted to renew he should give notice to the defendant three months before the expiry of the first term. Relying on the agreement, the plaintiff carried out developments on the property involving substantial sums of money. The plaintiff failed to give the notice within the stipulated time and on opting to renew the lease, the F defendant refused. Instead the defendant offered the plaintiff a new lease on a rental of Shs. 65,000/= per month.

The defendant had secured orders exempting him from the provisions of the Rent Restriction Act relative to restriction of right of possession and from the Minister for Justice relating to restriction on the amount of rent that may be charged. The latter order was duly approved by the National Assembly as required by law. The plaintiff challenged the Orders as bad in law and the rent as excessive.

Held: 

(i) The discussion on the option to renew having been made prior to the signing of H the agreement and their not having been incorporated in the agreement which was presented for signing, the defendant was not estopped from denying his assurances;

(ii) the defendant had a right to refuse to renew the lease since the notice was not present within the time stipulated in the agreement;

(iii) the order by the Minister for lands relating to exemption from restriction of right of possession was bad in law because he did not have powers to issue A such orders;

(iv) the order by the Minister for Justice exempting the defendant from the provisions relating to restriction on the amount of rent that may be charged was neither discriminatory nor in breach of natural justice as there is ro requirement that the order should be general nor the tenant should be consulted.

Case Information

Suit dismissed.

Cases referred to:

1. Century Automobiles Ltd. v Hutchings Biemer Ltd. [1965] E.A.304.

2. R. v Electricity Commissioners [1924] 1 K.B. 171.

3. Board of Education v Rice [1911] A.C. 179.

4. Bates v Lord Hailsham [1972] 1 WLR 1373.

R.C. Kesaria for the plaintiff.

T.L. Mkude and S. Mjasiri (Tanzania Legal Corporation), for the defendant.

[zJDz]Judgment

Maina, J.: The plaintiff Juthalal Velji Limited, has filed this suit against the defendant, the THB Estate Company Limited, asking for the following reliefs: (a) a declaration that Government Notices No.113 of 17/11/82 and No.23 of 28/2/83 are bad in law, (b) a declaration that the defendant's demand for monthly rental of shs. 65,500/= for the suit F premises is contrary to the principles of natural justice and equity, and is arbitrary, (c) an order that the defendant be restrained from demanding higher rent than that fixed by the rent tribunal or from taking further proceedings for recovery of rent more than Shs. 13,937/= per month.

Briefly, the evidence is as follows: The plaintiff is a holding company incorporated in Tanzania and it deals with the manufacture of travel bags, school bags and suitcases and other travel products. The defendant is a subsidiary Company of the Tanzania Housing Bank and it is engaged in estate development, construction, letting of warehouses and also sells residential houses. Among its properties are four identical godowns situated at Mikocheni area in Dar es Salaam. These godowns are numbered 1, 2, 3 and 4. The suit premises are godown No. 1. Negotiations to let the suit premises to the plaintiff were held in 1976 and attended by PW. 1 Kumblakode Kutty and PW. 2 Girish Chande on  behalf of the plaintiff Company, and the defendant was represented by the then General A Manager of the Tanzania Housing Bank one Mr. Yona.

It was agreed that the rent for the godown would be Shs. 15,500/= per month for a period of three years. That rent was, however, later fixed by the Rent Tribunal in application Nos. 78-83 of 1979, Exhibit P7, at Shs. 13,860/= per month effective from 1/1/80.

As already stated, negotiations to let the suit premises to the plaintiff started in 1976. It was agreed that the lease would be for a period of three years renewable for a further period of two years provided three months' notice was given. On 28/9/79, before the C lease was signed, the plaintiff wrote a letter, Exhibit D4, to the defendant requesting that the terms of the lease should be altered to provide for a lease of six years instead of three years. The letter also requested approval to use the premises for storage or for light industry and confirmed that electrical installations would be such that they could be removed at any time without any damage to the property and that "the whole installation can be removed at any time". The plaintiff also undertook that the office to be constructed at the suit premises "would be of timber modules and hence removable". That offer was studied by the defendant and DW3 Peter Tarimo was instructed to reply rejecting the offer for a six years' lease but approved the construction of temporary E offices and of electrical installations of temporary offices and of electrical installation of temporary nature. The letter dated 15/10/76, exhibit P2, which was also annexure A to the plaint is very specific that the lease would be for three years but could be renewed for further periods of three years provided three months' notice was given and if there has been no breach of the covenants, thereafter, the lease was sent to the plaintiff for F signature and it was duly signed by PW3 Girish Chande and another director of the plaintiff Company on 9/5/77. Clause 4(c) of the lease, Exhibit P1, shows that the lease was for a period of three years from 1/9/76, but could be renewed for a further period of two years provided there was no breach of the covenants and provided further that the tenant gave three months' notice in writing before the expiry of the three years of the intention to renew the lease for two years.

By letter dated 27.7.1979, Exh. P6, the plaintiff gave notice of intention to renew the lease. That letter, as can be seen, was written one month and three days before the lease expired. The lease commenced on 1.9.1976 and was to expire on 31.8.1979. The General Manager of the defendant Company, DW.1 Mohamed Khalfan, in his letter dated 31.7.1979, exhibit D.1, refused to renew the lease as the notice was not given within the period prescribed in the lease. The defendant company offered the plaintiff a fresh lease of two years instead. This was rejected by the plaintiff. The defendant then asked for vacant possession of the suit premises and A filed a Civil Case No. 82 of 1980 in this court. By an order dated 16 June 1983 this court ordered that the suit for vacant possession should be filed in the court of resident magistrate and transferred the case to the resident magistrate's court. The suit is still pending in that court. The plaintiff alleges that sum of Shs. 1.6 million was spent to B improve the godown as it was believed that the lease would be for a longer period, and exhibit P.3 was produced showing the details of the expenses incurred by the plaintiff to improve the suit premises. PW1 Kumblakode Kutty said that his company would not have spent so much money for improvement of the godown if the lease was for a period of five years only.

DW.1 Mohamed Khalfan, the General Manager of the defendant company, then approached the Ministry of Lands and Urban Development on what to do about the situation as the plaintiff was refusing to vacate the premises. Government Notice No. 113 dated 17.9.1982 was then published in the official Gazette by which the Minister for D Lands exempted the defendant company from all provisions of the Rent Restriction Act relating to restriction of right of possession of the suit premises.

Another Government Notice No. 23 dated 28.2.1983 was later published in the Gazette and signed by the Minister for Justice giving exemption to the defendant company from all the E provisions of the Rent Restriction Act relating to restriction on the amount of rent that may be charged or collected by the defendant from any tenant occupying the suit premises. The exemption order was duly approved by the National Assembly as required under section 1 (2) of the Rent Restriction Act, Cap. 479. The plaintiff had not F been consulted before the exemption order was published. After the publication of the exemption order, GN. 23 of 28/2/1983, the defendant appointed Martin Heymann and Company Limited, a firm of surveyors, and the Managing Director of the firm, DW.2 Ian Grant, who is a chartered valuation surveyor who carried out the valuation of G the suit premises. He visited the site in June, 1983 and saw the identical godowns. The plaintiff was occupying godown No. 1 and the witness made valuation of godown No. 3. He estimated the costs of constructing a godown similar to the one in existence and, in his opinion, the cost would be Shs. 5,570,000/= as at the time of the valuation, H that is June, 1983. He calculated the annual rent at 14% of that cost and came up with a figure of Shs. 65,000/= per month. His report was tendered as exhibit D.3. The plaintiff company was notified to pay the new rent of Shs. 65,500/= by the defendant's letter of 29 June, 1983 (Exhibit P.4) but resisted as it was considered too high.

The plaintiff wrote a letter to the Ministry of Justice on 23 July, 1983 protesting about the rent and requested that the rent could be increased to a reasonable A level which the plaintiff was willing to pay, but pointed out that the increase which was five times the existing rent was unjust and oppressive. The letter was tendered as exhibit P5 but there was no reply from the Ministry of Justice. 

The first issue in this case is whether the defendant is estopped from increasing the rent. Mr. Kesaria learned counsel for the plaintiff submitted that in view of the defendant's letter exhibit P.2 dated 15/10/1976, the defendant had given assurance that the lease could be renewed every three years by merely giving notice.

He submitted further that C the plaintiff relied on the assurance given and spent substantial sums of money to improve the premises because it was believed that the tenancy would be for a long period. The plaintiff's proposal that the lease should be for six years was rejected by the defendant. Exhibit P2 reads as follows:

1. Lease term 

As for the term of the lease you suggest a term of six years rather than 3. Please note that by clause 4(b) the lease can be extended for a further period of 3 years if there has not been a breach of covenant and if the lessee so desires by merely giving three months' notice in E writing. Since this process is possible, the Bank does not foresee any difficulty on your part in having to give a written notice every 3 years.

That passage was taken by the plaintiff to mean an assurance that the lease would be for a longer period than three years. Mr. Kesaria submitted that the defendant is estopped from F increasing the rent and from denying that the lease was for a long period. He cited Century Automobiles Ltd. v Huntchings Biemer Ltd. [1965] E.A. 304. In that case the tenancy was for month to month but could be determined by either party by giving three months' notice. Subsequent to the making of that agreement, the landlord gave an assurance that the tenant was secured for three years. The Court of Appeal held that the doctrine of equitable estoppel applied and headnote (ii) at page 304 reads "the remarks made by the managing director of the respondent company amounted to sufficiently clear and unequivocal that the appellant company could regard itself as secure for three years, except in the event of a supermarket project materializing at an earlier date and the assurance was intended to be acted upon".

In that case, the assurance that the tenant was secure for three years was made subsequent to the making of the tenancy agreement. So the tenant incurred the expenses to improve the premises after the assurance was given A subsequent to the making of the tenancy agreement. In the present case, the alleged assurance that there would be no difficulty in renewing the tenancy agreement every three years was given before the signing of the lease. Exhibit P2 was written nine months before the lease was signed. With respect, I agree with Mr. Mkude, learned counsel for B the defendant, that the correspondence and discussions between the parties before the lease was signed, were offers and counter offers and whatever the parties agreed upon was reduced in writing in the form of the lease, exhibit P1 which the parties signed in May, 1977. The doctrine of estoppel does not apply on the facts of this case. The C parties are bound by what they signed in the lease.

Let me also point out that clause 4(c) of the lease is clear and unequivocal on the duration of the lease. No evidence can be introduced to vary, add to or contradict the terms of the lease. Section 101 of the Evidence Act 1967 is relevant. I do not see how the evidence of Mr. Yona the then General Manager of the Tanzania Housing Bank who negotiated the lease would be relevant. Mr. Kesaria said that the defendant would have called Mr. Yona as a witness, but in my view, that was unnecessary.

Whatever was discussed before the lease was signed, was later put in writing and the lease has been produced in court. If there had been a subsequent agreement after the signing of the lease, as was the case in the Century case, that evidence would be relevant to consider whether estoppel applied. But in this case, there is no suggestion that such an agreement took place.

The terms of the lease are contained in clause 4 (c) of Exhibit P1 and it is provided that the lease would be for a period of three years. The lease could be renewed once only for a further period of two years provided there was no breach of covenant and provided that notice was given in writing three months before expiry of the lease.

It is beyond dispute that the lease expired on 30/9/1979. Under the terms of the lease agreement, the written notice would have been given at least three months before the lease expired. But the plaintiff gave notice to renew the lease by its letter dated 27/7/1979. That was clearly a breach of the terms of the agreement. The defendant was, in my opinion, right in refusing to renew the lease.

The defendant did not throw out the plaintiff but offered a fresh lease with new terms and conditions, but the plaintiff company did not accept the offer. The original lease, exhibit P1, was for a specific period of three years and since the plaintiff did not comply with the condition agreed, by giving three months' notice of intention to renew, that lease expired without being renewed. I repeat that the plaintiff was at fault in not giving notice within the period stipulated in the lease. The defendant was entitled to do what it did by A terminating the lease. Since I have found that the defendants' letter, exhibitP2, was written before the lease was signed the doctrine of estoppel does not apply, the defendant company was at liberty to offer a fresh lease with fresh terms and onditions.

The maximum annual rent provided in the Rent Restriction Act cannot apply where the premises have been exempted under section 1(2)(b) of the Act. In this case the premises were exempted by the Minister from the provisions of the Act relating to restriction of the rent which may be charged. Whether the exemption order was bad in law is a matter which I shall discuss when I consider the fourth issue. So, Mr. Kesaria's argument that the annual rent could not be increased to more than fourteen per centum of the cost of construction has no basis in view of the Minister's order. As regards the valuation report, exhibit D.3, it was prepared by an expert, DW.2 Ian Grant, who inspected the premises. The improvements made by the plaintiff were excluded from the assessment of the market value of the premises. No evidence was produced to challenge the finding in the report. It was not necessary for the plaintiff to be informed or to be present during the inspection of the premises made by DW.2. I accept exhibit D.3 as evidence on the market value of the premises.

For the reasons given, the answer to the first issue must be in the negative. The defendant is not estopped from increasing the monthly rental.

As regards the second issue I have only to say that for the purpose of increase of rent the plaintiff is not a protected tenant. The plaintiff breached the covenant in the lease agreement on notice to be given. For the purpose of vacant possession, it is for the district court to decide whether the plaintiff is a protected tenant, as the suit for vacant possession is pending at the district court.

I do not consider it necessary to discuss the third issue which was framed as follows:

Is Government Notice No. 113 of 17/11/1982 valid? It is not necessary to consider that issue because as Mr. Mkude conceded in his submission to the court, that order was invalid. The Minister for Lands has no power under the law to give the exemption to the landlord. Under section 2(1) of the Rent Restriction Act, Cap. 479 the term "Minister" is defined to mean the Minister responsible for legal affairs.

The Minister for Lands had no powers to make the exemption under section 1(2) of the Rent Restriction Act. I therefore answer the third issue in the negative. I now turn to consider the fourth issue which is this: Is Government Notice No. 23 of 28.2.1983 bad in law as pleaded in paragraph 12 of the plaint? The order which was made under section 1(2)(b) of the Rent Restriction Act, reads as follows:

The premises known as TECCO Godowns situated at plots Nos. 1, 2, 3 in Mikocheni Industrial area Dar es Salaam in respect of which the THB Estates Company Limited, a public corporation established under the Companies Ordinance, is the landlord, are hereby exempted from all such provisions of the Rent Restriction Act, 1962 relating to restriction on the amount of rent that may be charged or collected by the THB Estates Company Limited as the landlord from any tenant occupying any part of the premises.

Section 1(2)(b) of the Rent Restriction Act 1962 as amended by act No. 57 of 1966 provides that the Act shall apply to all dwelling houses and commercial premises other than "any premises or class of premises in Tanganyika which the Minister may, with the approval of the National Assembly signified by resolution, by order published in the Gazette, exempt from all or any of the provisions of this Act".

The order, Government Notice No. 23 of 1983, which exempted the suit premises owned by the defendant company from the provisions relating to restriction on the amount of rent to be paid was  approved by the resolution passed in the National Assembly on the 27th January, 1983.

It was submitted on behalf of the plaintiff company that GN 23 of 1983 was unfair, unjust and discriminatory. Mr. Kesaria said that the plaintiff company was not given an opportunity of a hearing before the order was made and that the plaintiff was condemned unheard. Learned counsel also submitted that the defendant company has other properties and the order was only made in relation to the premises occupied by the plaintiff and so the Order was discriminatory. Mr. Mkude, on the other hand, submitted that there are no provisions of the Rent Restriction Act requiring the Minister to consult the tenants before the exemption order was made.

There can be no doubt, in my opinion, that the Minister for Justice had power under section 1(2)(b) of the Rent Restriction Act to exempt any landlord from the provisions in the Act relating to the rents that may be charged in any premises. Mr. Kesaria submitted that the order was discriminatory because the defendant company has other properties which were not subject to the exemption order. I do not think that the Minister had to include all the properties owned by the defendant company in the exemption order. There are, as DW. 3 Peter Tarimo, the Technical Manager of the defendant Company said, other properties owned by the defendant in other areas of the I country which were also exempted. One of them is Hifadhi House in Dar es Salaam. I have also noted that apart from the suit premises, there were other premises owned by other landlords which were also exempted and the exemption orders were published as Govt. Notices Nos. 24, 25, 26 and 27 all dated 28/2/1983. So it is, in my view not correct to say that the order in respect of the suit premises was discriminatory.

It was also said that the exemption order was unfair and unjust in that the plaintiff was not given a hearing before the order was made. The order was in a form of delegated legislation. Parliament invested the powers in the Minister to make such an order. Mr. Kesaria said that the plaintiff as tenants of suit premises should have been consulted before the order was made. He said that a notice should have been given so that persons who would be affected could make representations. Learned Counsel cited, as an example, the publication by the Dar es Salaam City Council of the Council's intention to make by-laws on rates known as development levy. That argument can, in my view, be disposed of by pointing out that under section 81 of the Local Government (Urban Authorities) Act No. 8 of 1982, there is specific mention that a local authority must publish in the Gazette the by-laws it intends to make and invite representations and objections from the people who would be affected. Similarly, section 16 of the local E Government Finances Act, No. 9 of 1982 provides that the local authority must publish notice on rates it intends to make within fifteen days after passing resolution for making the rate, and the rate shall not be valid unless notice of it is duly given in the manner prescribed. There is, however no express provision in the Rent Restriction Act which F requires the Minister to consult the people to be affected or to publish a notice before an exemption order is made under section 1(2)(b) of the Act. It is wrong to base the argument on the publication of rates made by the City Council on the facts of this case.

In support of his argument that the plaintiff as tenant of the suit premises had to be consulted before the Minister made the exemption order, Mr. Kesaria cited several cases. One of them is the case of R. v Electricity Commissioners [1924] 1KB 171. In that case, the Electricity Act provided that the Commissioners had to do certain things and specifically provided for holding of inquiries and to consult people to be affected by H the Commissioners' decisions. It was held by the Court of Appeal that the scheme formulated by the Commissioners was ultra vires because the Act did not permit the Commissioners to set up two electricity authorities. In the present case, the Rent Restriction Act does not require the Minister to consult the tenant or other people to be affected by an order made under section 1(2)(b). Similarly in the case of Board of I Education v Rice [1911] 1 A.C. 179 cited by Mr. Kesaria there were provisions in the Education Act requiring the education board to hold public inquiry in A order to find out if a local education authority has fulfilled its duty. Failure to hold such inquiry amounts to non-compliance with the provisions of the Education Act. But as I have already pointed out there is nothing in the Rent Restriction Act requiring the Minister to consult the people who would be affected by his order. Mr. Mkude, learned counsel for the defendant submitted that it was not necessary for the plaintiff to be consulted before the order was made. He said that as there is no requirement for consultation in the Act, delegated legislation could be made without consulting the people to be affected. He cited Bates v Lord Hailsham [1972] 1 WLR 1373. In that case the Lord Chancellor and his committee had consulted the Law Society as required by the Solicitors Act before making an order on solicitors' remuneration. However, some solicitors wanted more time for consultation before the order was made. The Court of Appeal refused to grant more time for consultation. Meggary, J. said at p. 1378:

Let me accept that in the sphere of the so called quasi-judicial, the rules of natural justice run, and that in the administrative or executive duty, there is a general duty of fairness. Nevertheless, these considerations do not seem to me to affect the process of legislation, E whether primary or delegated. Many of those affected by delegated legislation, and affected very substantially, are never consulted in the process of enacting that legislation; and yet they have no remedy. Of course, the informal consultation of representative bodies by the F legislative authority is common place, but although a few statutes have specifically provided for a general process of publishing draft delegated legislation and considering objections, I do not know of any implied right to be consulted or make objections, or any principle upon which the courts may enjoin the legislative process at the suit of those who contend that insufficient time for consultation and consideration has been given.

The learned judge went on to say:

If the procedure laid down by Parliament is fairly and substantially followed, I cannot see that H the Committee need do more; and I see nothing in the evidence to suggest that the Committee has not fully and fairly complied with the statutory requirements.

The above is the correct principle to be applied in this case. Parliament  has given powers to the Minister for Justice to exempt certain premises from the provisions the procedure to be followed. The order must be approved by the National Assembly. The Minister, in making the delegated legislation, did exactly what was required of him. The order was debated and approved by the National Assembly.

There can never be an implied right to be consulted in the making of delegated legislation. If Parliament intended that persons to be affected by the Minister's order should be consulted first, it would have provided so in the Rent Restriction Act. The order was debated and approved by the National Assembly as required by the Act and that was in full compliance with the statutory requirements. I am satisfied that Government Notice No. 23 of 28.2.1983 was properly made and it was not bad in law as pleaded. I therefore answer the fourth issue in the negative.

For these reasons this suit is dismissed with costs.

Suit dismissed.

1983 TLR p402

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