Termination of Contracts and Notice of Cancellation re: Approach, Repudiation, Debtors Mora and Effect of Breach of Contract

HH755-15 : CHIKUDZA MANGWENDE vs LIBERTY MACHODO
Ruled By: UCHENA J and MWAYERA J

At the conclusion of the trial of this matter, the court a quo dismissed the claim for payment of the outstanding lobola.

The court found that there was material breach of the very tenants of lobola.

The court concluded that the appellant was not entitled to payment of the balance of lobola because his daughter, who was married to the respondent, committed adultery with multiple partners ranging from the respondent's brothers, nephews, and the herd boy. The court also found that customarily a husband is allowed to divorce an adulterous wife, and then, if he has paid lobola in full, he is entitled to a refund of the lobola from the inlaws.

The appellant approached this court seeking to have the dismissal of his claim for payment of lobola set aside. The grounds of appeal, as outlined by the appellant, are as follows:

1(a) That the appellant's daughter was acting on the respondent's, that is, her husband's instructions and was safeguarding her husband's cultural values.

(b) That it was not the duty of the appellant's daughter to research on the truth of her husband's cultural values but only to do so as per husband's instructions and demands as a respectful wife.

(c) That the appellant's daughter was forced to confess under duress from the respondent and his relatives.

(d) That the child of the appellant's daughter did not breast feed after confession but only after they had both visited a prophet.

(e) That the appellant's daughter was not in wilful wrong-doing; this is evidenced by her not being in any other affair with outsiders.

2. That the learned magistrate erred in dismissing the appellant's claim when it was clear that the parties had engaged into a lobola agreement which was not completely paid off.

3. That the trial court misdirected itself in dismissing this claim when the averments by the appellant that his daughter and the respondent's brothers had never been to any court for adultery claims.

The facts of the matter, as discerned from the record of proceedings and submissions by the parties, can be summarised as follows:

The appellant's daughter was customarily married to the respondent. The respondent and his wife, the appellant's daughter, had a misunderstanding after the birth of their child. Central to the dispute is the fact that the newly born was not breast feeding. Evidence adduced from the respondent, and the respondent's wife, is to the effect that the child started to breast feed after a confession by the respondent's wife. The confession, which was uncontroverted evidence in the court a quo, was to the effect that the respondent's wife had, during the subsistence of the marriage to the respondent, been intimate with the respondent's elder, younger brothers, nephew, and herd boy.

It was after evidence of intimate relations between the respondent's wife and multiple partners that the respondent took his wife back to her parents.

Irked by this move, the appellant then approached the court a quo claiming for the balance of outstanding lobola.

The Magistrate's Court, basing on the evidence before it, concluded that the confession by the appellant's daughter was voluntarily given. Further, the appellant and his daughter did not dispute that the daughter had intimate relations with multiple partners. The appellant sought to argue, unsuccessfully, that his daughter was wayward in line with the respondent's family custom. The herd boy and nephew were not the respondent's brothers. In any event, other than the appellant's mere say so there was no evidence to confirm the promiscuous conduct by the respondent was in accordance with custom. No one else in the respondent's family had been subjected to such custom according to the appellant's daughter.

It was with this background that the trial magistrate concluded that the appellant's daughter engaged in adulterous relationship with multiple partners and that she, by so doing, breached the marriage relationship. This conduct was ruled as not entitling the appellant to payment of the outstanding lobola.

The court a quo properly spelt out that under customary law a man who would have paid lobola is entitled to a refund if the wife engages in adultery. Further, the court a quo stated that parents whose child would have committed adultery are not entitled to payment of the balances of lobola.

The very purpose of lobola is what was flouted by the appellant's daughter thereby severing the marriage relationship. The respondent did not choose to condone the adultery but to divorce his wife for the gross misconduct.

In coming up with the disposition of the matter whereby the court a quo dismissed the claim for the balance of lobola, the trial magistrate properly exercised his discretion and we find no fault in his findings.

Accordingly, the appeal lacks merit and must fail.

It is ordered that the appeal be and is hereby dismissed with costs.

HH39-09 : WARREN PARK TRUST vs ANTHONY PAHWARINGIRA and NTOMBIZODWA PAHWARINGIRA and DAVY MUTINGWENDE and CHIPO MUTINGWENDE and SALTANA ENTERPRISES PL
Ruled By: BHUNU J

The applicant is a Trust duly registered in terms of the laws of this country whereas the fifth respondent is a limited liability company registered in terms of the laws of this country. The first to fourth respondents are sole shareholders and directors in the fifth respondent, Saltana Enterprises (Pvt) Ltd.

The fifth respondent is currently under judicial management. Its judicial manager, Mr C Madondo, has, however, since filed a letter saying that he has no interest in this case and will abide by the decision of this Court and has sent a representative for an observation brief.

That being the case, the question of the fifth respondent's locus standi, that is to say, the right to stand and be heard in court, becomes a non-issue.

The first and second respondents are husband and wife. The same applies to the third and fourth respondents.

At the commencement of this hearing, the first and third respondents requested that their wives be excused from the hearing and that they be allowed to represent and speak on behalf of their respective wives to save costs.

There being no objection from counsel for the applicant, I granted the two respondents permission to represent and speak on behalf of their wives.

In any case, the two wives were already in default and would have had default judgments entered against them anyway. It is highly unlikely that they can successfully apply for rescission of judgment seeing that the defaults appear to be willful and deliberate. For that reason, I cannot perceive any prejudice which cannot be redressed by an appropriate order of costs if their husbands are allowed to speak on their behalf with the applicant's consent.

In this regard, I find the applicant's attitude commendable in that it is not trying to snatch at default judgement but to obtain judgment on the merits.

In granting this unusual request, I was alive to the peculiar relationship between husband and wife in that they normally have a common interest and household.

Generally speaking, at common law, the husband is the head of the family and has the marital power although the position has been somewhat altered by statute. In Christian parlance, they are said to become one flesh and blood at marriage.

That being the case, I could perceive no impediment or impropriety in a husband representing his wife in a case in which they are jointly being sued and there is no objection from the other party.

The respondents objected to the matter being placed before this Court arguing that the dispute ought to have been referred for arbitration in terms of clause 13 of the contract which provides as follows:

“In the event of a dispute or a claim arising as a result of a breach of this agreement or other cause arising from this agreement, then, the purchaser shall be entitled, after notifying the seller beforehand, to have the dispute or claim or other cause referred to arbitration.”

My reading of the above clause is that it does not compel the applicant to refer the matter for arbitration in the event of a dispute arising. It merely entitles, without directing, the applicant to refer the dispute for arbitration.

In other words, the clause merely confers a discretion on the applicant whether or not to refer the matter to arbitration without impeding its right to approach the Courts for redress.

For that reason, I hold that the applicant was within its rights in referring the dispute to court for resolution.

Having said that, I now turn to determine the matter on the merits.

The facts giving rise to this application are to a large extent common cause. The undisputed facts are that some time in March 2005 the first to fourth respondents (hereinafter referred to as the respondents) concluded a written contract in terms of which they sold to the applicant their entire shareholding in the fifth respondent to the applicant.

The written contract of sale was subject to various suspensive conditions in favour of the applicant. The contract however conferred upon the applicant the right to waive the suspensive conditions thereby bringing the terms of the contract into force.

The applicant subsequently waived its rights under the suspensive conditions sometime in June 2005 and demanded that the respondents perform their part of the bargain in terms of the written contract.

The respondents took exception and objected on the basis that they had already cancelled the contract on account of breach of contract. In particular, they objected on the basis that the applicant had not discharged its obligations under clause 1. 2.18 of the contract. That clause falls under the definition section of the agreement and it provides as follows:

“'Signature date' means the date of signature of this agreement by the party last signing.

As soon as possible thereafter the amount of $100 million shall be paid to the Sellers in equal portion of $25 million each in such consideration as the Purchaser shall determine at its sole discretion. A further amount of $100 million shall thereafter be paid to the Sellers on similar terms, on the Effective Date.”

The respondents acknowledged having been paid the initial $100 million dollars in terms of the above clause but denied having been paid the remaining $100 million dollars.

The alleged non-payment of that amount forms the basis of the respondents' refusal to perform their part of the bargain and purported cancellation of the contract.

The applicant denies that it breached any material terms of the contract as alleged or at all thereby entitling the respondents to cancel the contract.

Firstly, it denies that it failed to pay the remaining $100 million dollars as alleged by the respondents.

This is a factual dispute incapable of determination on the papers. Fortunately, it is not necessary to resolve that factual dispute for the purpose of determining this matter.

Apart from denying that it failed to pay the amounts stipulated in clause 1. 2. 18 of the contract, the applicant also argued that the clause was not a material term of the contract but merely constituted a sweetener.

A sweetener, in my view, is payment calculated to raise the other party's appetite so as to induce him to contact.

Clause 1.2.18 of the contact appears to have all the hallmarks of a sweetener in that it is tied up with the definition of the word “signature”. It refers to payment of “such consideration as the purchaser shall determine at its sole discretion.”

It is inconceivable that had the payment under this clause been intended to be a material term of the contract the parties could have left its payment to the sole discretion of the parties.

This provision is different from clause 4 which places an obligation on the applicant to pay on pain of cancellation and heavy penalties in the event of failure to pay.

For that reason, I come to the conclusion that clause 1.2.18 is not a material term of the contact the breach of which would entitle the aggrieved party to cancel the contract.

It was the applicant's further argument that it is entitled to compel the respondents to perform their part of the bargain under clause before it becomes liable to pay the purchase price which is not yet due until the price is determined in terms of clause 4 of the agreement.

It might be necessary, at this juncture, to determine whether the parties concluded a binding contract in view of the fact that the agreement did not fix the price but merely provided a formula for fixing the price.

It is trite and a matter of elementary law that the essential elements of a valid contract of sale comprise:

1. Agreement (consensus ad idem) as to:-

(a) The thing sold, the (merx); and

(b) The price of the thing sold, the (pretium).

In other words, a contract of sale comprises three essential elements, that is to say:-

(i) An agreement between the parties to buy and sale.

(ii) An agreement on the thing or commodity sold known as the merx.

(iii) An agreement on the price known as a pretium.

R.H. CHRISTIE's Business Law in Zimbabwe…,; E KAHN's Contract and Mercantile Law Through the Cases…,; and P S ATIYAH's The Sale of Goods…, are instructive on this well established legal principle on the essential elements of a valid contract of sale.

The material terms of the written contract, which form the basis of the contract at hand, are to be found under clauses 3 and 4 which provide as follows:-

“3. Sale

3.1 Subject to the fulfillment or waiver of the suspensive conditions, the seller sell(s) to the Purchaser which purchases the shares from the Effective Date.

3.2 Should the suspensive conditions be fulfilled or waived, then ownership in and the risk and benefit attaching to the Shares will be deemed to have passed to the Purchaser on the Effective Date notwithstanding the fact that this agreement may have been signed after the Effective Date or that the suspensive conditions are fulfilled or waived.

3.3 Each of the Sellers confirms that it has, prior to the Signature Date, waived any and all pre-emptive rights it may have in respect of the Shares.

4. Purchase consideration and payment

4.1. The consideration for the shares shall be an amount equal in the aggregate to 20% (TWENTY PER CENTIUM) of the CVEM (City Valuer & Estates Manager) Price as at effective date less the development costs of the Stands and the standard commission payable to any estate agent after the said date.

4.2 The consideration is payable within ninety days from the date of receipt of the Certificate of Compliance issued by the City of Harare in terms of clause 10 of the agreement.”

Undoubtedly, the respondents agreed to sell to the applicant the shares stipulated in the written contract in terms of clause 3 for a price to be determined in terms of clause 4 of the written contract.

In the ordinary run of things, our law requires that the price be fixed before a valid contract comes into being: see VOET (18.1.1). This is, however, not a rule of thumb. Where the price, though not fixed, can easily be ascertained, a valid contract comes into being notwithstanding the fact that the actual price has not yet been fixed.

It is an everyday occurrence that people often transact perfectly valid contracts of sale leaving the price to be determined at a future date. This prompted LANSDOWN JP, in R v Pearson 1942 EDL 117…, to remark that:

“There are many transactions in which goods pass on sale without a price being stated and the transaction is nonetheless a sale, if the court can determine, from the conduct of the parties and the surrounding circumstances, how the price was to be determined.”

Likewise, the court, in the case of Dublin v Diner 1964 (1) SA 799 recognised a contract of sale where the purchaser had agreed to purchase the applicant's shares at a price to be determined by the company's auditors.

See also Gilling v Sonnenberg 1953 (4) SA 675 T.

The above two cases are on all fours with the case at hand where the parties agreed to sell each other shares at a price to be determined by a third party, the City Valuer & Estates Manager.

Undoubtedly, the price, though not stated in this case, it can easily be determined once the City Valuer Manager has carried out the necessary evaluations.

I accordingly hold that the parties' respective contracts of sale were perfectly valid and enforceable.

The respondents, however, resist performing their respective parts of the bargain arguing that they have already terminated the agreement in terms of the written contract on account of breach of contract.

The applicant, on the other hand, denies that the respondents ever terminated the agreement in the manner alleged or at all.

Clause 12 of the agreement lays down the procedure that has to be followed by a party wishing to effect cancellation on account of breach. The clause reads:

“12. Breach

Should either party commit a material breach of this agreement and fail to remedy such breach within 14 days (fourteen) days of written notice requiring the breach to be remedied, then. the party giving notice will be entitled, at its option, either to cancel this agreement and claim damages or to claim specific performance of all the defaulting party's obligations, together with damages if any whether or not such obligations have fallen due for performance.

The defaulting party shall become liable for all legal fees incurred by the aggrieved party (on a Legal Practitioner and Client scale) including collection fees incurred by the aggrieved party seeking such redress whether through the courts or arbitration. As provided for herein.”

The applicant denies having been given the requisite fourteen (14) days notice.

That being the case, the onus was squarely on the respondents to establish, on a balance of probabilities, that they complied with the mandatory requirements of clause 12 of the Agreement.

Apart from their mere say so, the respondents have not been able to produce any shred of evidence that they gave the applicant the necessary fourteen (14) days written notice. The respondents were obliged to produce a copy of the written notice, or, at least, tender an explanation as to why it was not available.

This they did not do.

When writing to counsel for the fifth respondent, Saltana Enterprises, on the issue of written notice, in a letter dated 10th January 2006, the respondents resorted to generalizations and subterfuge. This is what they had to say in paragraph 2 of their letter:

“Could you please give the lawyers the letter attached to this one where we cancelled the agreement because they failed to honour it. They were given their 14 days notice, and, even if they were not, surely by now, more than six months after the cancellation, they have been in a position to appreciate that we were carrying on without them.”

What emerges quite clearly from the above paragraph is that the respondents have proffered written evidence of the letter dated 11th July 2005 canceling the Agreement of Sale. They have, however, not proffered any evidence tending to show that they gave the vital fourteen (14) days written notice. They do not have any evidence as to when it was written and as to when, where, and how it was served or delivered to the applicant.

Our law requires not only that the notice to cancel be properly delivered but also proof that it was in fact received by the other party: see Cohen and Another v Lench 2007 (6) SA 132.

Thus, in the absence of any averments that the alleged notice was properly served and received, one cannot assume that it was so served and received.

In the circumstances of this case, I have therefore no hesitation, whatsoever, in concluding, on the papers before me, that the respondents have dismally failed to proffer any evidence tending to suggest that they gave the requisite fourteen (14) days notice to cancel the agreement.

It is now settled law that where the parties have agreed on a particular mode of termination of their contract it must be followed to the letter.

In the words of KORSAH JA, in Minister of Public Construction & National Housing v Zesco (Pvt) Ltd 1989 (2) ZLR 311…,:

“Where parties to a contract have agreed upon a procedure for terminating an agreement, they are bound by the provisions spelling out those procedures as if they have been imposed upon them by law, and a departure from the agreed procedure will not result in an effective termination of the contract.”

Those wise words signify the time honoured principle of the inviolability and sanctity of contract.

It is therefore in the public interest that agreements freely entered into must be honoured; and it is the unwavering duty of the courts to give effect to all lawful binding agreements; see Book v Davidson 1988 (1) ZLR 365…,.

For that reason, our courts lean in favour of upholding binding contracts rather than their abrogation. This prompted the Court, in Madoo (Pty) Ltd v Wallace 1979 (2) SA 957, to remark that:

“Our system of law pays great respect to the sanctity of contact. The Courts would rather uphold than reject them.”

On the papers before me, I am satisfied beyond question that the respondents' purported cancellation of the written contract was a nullity and of no force or effect in so far as they failed to observe the cancellation procedure laid down in the contract. More particularly, in that, they failed to give the requisite fourteen (14) days notice to cancel the contract on account of the alleged breach.

For the foregoing reasons, I therefore come to the conclusion that the respondents are firmly bound and are liable to perform their part of the bargain in terms of their written contract of sale.

As the first and third respondents' spouses did not appear to oppose the application they shall not be required to meet the costs of opposing the application.

It is accordingly ordered:

1. That upon receipt of the purchase price calculated in terms of clause 4 of the contract of sale and fulfillment of all the applicant's contractual obligations under the contract -

1.2 The first, second, third, and fourth respondents be and are hereby ordered to sign all documents necessary to transfer all their respective shares in the fifth respondent to the applicant.

1.2 The first, second, third, and fourth respondents be and are hereby ordered to deliver to the applicant:-

(a) All documents and books of accounts, registers, contracts, minute books, salary records, and other documents and records relating to the fifth respondent; and

(b) Such documents, powers of attorneys, and authorities as may be reasonably required by the applicant to enable it to acquire ownership of the fifth respondent's shares and/or beneficial interest therein, the business assets or the registration in the name of any of the business assets, should the need arise.

1.3 The first, second, third, and fourth respondents be and are hereby ordered to sign documents resigning as directors of the fifth respondent, failing which the Sheriff of Zimbabwe or his lawful deputy be and is hereby authorised to sign all necessary documents (in particular Form CR14) removing the current directors of the fifth respondent and substituting the same with the applicant's appointees.

1.4 The first, second, third, and fourth respondents and all those claiming through them, be and are hereby interdicted and/or restricted from carrying on any developments and/or works in furtherance of the fifth respondent's business operations without the applicant's written approval.

1.5 The first and third respondents be and are hereby ordered to pay the costs of this application.

2. For the avoidance of doubt, it is ordered that the applicant be and is hereby authorised to enforce its contractual rights against the respondents only upon due fulfillment and discharge of all its contractual obligations under the written contract annexture “A”.

HH09-09 : SKF ZIMBABWE P/L vs PARIS OLYMPIOUS
Ruled By: MAKARAU JP

It is trite that having come to court to assert and enforce a contract, the plaintiff bore the onus of proving not only the terms of such a contract, but breach of a material term thereof.

Appealed
HB59-09 : DINESH MANILAL NARAN vs RONNAH MAFURIRANO and THE REGISTRAR OF DEEDS
Ruled By: KAMOCHA J

The plaintiff in this matter seeks:-“1. An order to declare that the sale agreement executed between him and first defendant on the 30th of September 2001 on Stand 378, Gorebridge Road, Killarney, Bulawayo is still binding and effectual as between the parties;2. An order to compel the first defendant to ...

The plaintiff in this matter seeks:-

“1. An order to declare that the sale agreement executed between him and first defendant on the 30th of September 2001 on Stand 378, Gorebridge Road, Killarney, Bulawayo is still binding and effectual as between the parties;

2. An order to compel the first defendant to transfer all her rights, title and interests in Stand Number 378 Gorebridge Road, Killarney, Bulawayo to plaintiff.

3. An order authorizing the Deputy Sheriff of Bulawayo to sign all the transfer documents for and on behalf of the first defendant in order to effect transfer of Stand 378 Gorebridge Road, Killarney, Bulawayo to plaintiff.

Alternative to 1, 2 and 3 above -

Plaintiff seeks an order:

4(a) To be refunded by first defendant $1,500,000 plus interest a tempore morae at the prescribed rate, effective from the 31st of October 2001; and

(b) To be compensated by first defendant in the sum of $2,500,000.

5. That the first defendant pays all costs of this action on an attorney and client scale.”

When the parties appeared before a judge for a pre-trial conference it was agreed that the issues to be determined by the trial court be as follows:-

“(1) Did plaintiff advise first defendant that plaintiff was no longer prepared to be held to the contract of sale, and, as a result thereof, did plaintiff cancel the contract of sale?

(2) Was the contract of sale perfected?

(3) Is the plaintiff entitled to tender $3,800,000 plus interest, and, in that event, at what rate is the interest to be calculated?

(3) In the alternative, is plaintiff entitled to:-

(a) A refund of $1,500,000 plus interest calculated from the 31st October 2001; and

(b) Compensation for improvements effects (sic) by plaintiff.”

Each party had the onus to prove two of the above issues. The plaintiff had to prove issues 3 and 4 while the defendant had to prove issues 1 and 2.

The plaintiff gave evidence himself and called two witnesses to support him.

The plaintiff's story was that he was a businessman in Bulawayo. Mr Thokozani Khumalo was his business partner who needed a house. Thokozani Khumalo (“Khumalo”) had been initially leasing House Number 378 Gorebridge Road, Killarney, Bulawayo. The house belonged to Ronnah Mafurirano, the first defendant.

The husband of the first defendant, Mr Davis Sunganayi Mafurirano, was the plaintiff's business associate. They knew each other from the time Davis Sunganayi Mafurirano used to work for CBZ Bank.

After Thokozani Khumalo had expressed his wish to purchase the house he was renting, the plaintiff conveyed the message to Davis Sunganayi Mafurirano who asked the plaintiff to make an offer to him.

When the plaintiff made an offer of $2.5 million, Davis Sunganayi Mafurirano said he needed time to go and discuss with his wife, the owner, and would come back to them.

Davis Sunganayi Mafurirano came back with a figure of $5.3 million which the parties agreed on.

Although the house was being purchased for Thokozani Khumalo, the negotiations were being done by the plaintiff, Naran, while Davis Sunganayi Mafurirano represented his wife, the first defendant.

The parties then had a memorandum of agreement of sale reduced to writing which reads in part:

“Purchase Price and Payment

The purchase price payable to the seller by the purchaser for the said Stand shall be the sum of $5,300,000 (five million three hundred thousand dollars). A deposit of $2,500,000 (two million five hundred thousand dollars) shall be paid upon signing of this agreement and the balance of $2,800,000, (two million eight hundred thousand dollars) shall be paid in monthly instalments of $1,500,000 with effect from on/or before the 31st of October 2001 finishing with the balance of $1,300,000. 30% per month interest shall be paid on $2,300,000.”

The plaintiff engaged Sibusiso Ndlovu to represent him.

The seller signed the agreement on 12 September 2001 while the buyer signed it on 30 September 2001.

The plaintiff conceded that he had failed to pay the deposit as stipulated in the agreement. He should have paid $2,500,000 when he signed the agreement on 30 September 2001, but he, instead, paid the sum of $1,500,000 on 26 October 2001.

The plaintiff was clearly in breach of what the parties had agreed on not so long back.

He however seems to take solace in his belief that the $1,500,000 was not rejected by the buyer despite the fact that it was less than what the parties had agreed and was even paid late. He said the money was never sent back to him or his lawyers.

It was his evidence, that, as a business associate in relation to the buying of paper he had given Davis Sunganayi Mafurirano the sum of one million dollars to import paper. That, however, did not materialize but Davis Sunganayi Mafurirano never returned the $1 million.

The plaintiff seemed to suggest that that amount replaced the shortfall of one million he was supposed to pay as a deposit.

The plaintiff denied ever taking any steps to cancel the agreement. Instead, he said it was Davis Sunganayi Mafurirano who appeared to be bent on cancelling the agreement in his letters to be found on pages 12 and 15 of the plaintiff's bundle of documents.

The first one is undated and addressed to Sibusiso Ndlovu & Associates and marked for the attention of Mr S Ndlovu and reads thus:-

“Dear Sir

Re: Sale of House Number 378 Gorebridge Road, Killarney

Further to our telephone conversation on Wednesday 19 September 2001, I wish to confirm that we would like to give your clients up to 24 September 2001, 1400 hours, to pay their deposit. Failing, which, will give us the freedom to allow those who have shown interest to view the house as from 1000 hours on Tuesday 25 September 2001.

Please be advised accordingly, and your client's co-operation will be assumed.

Yours faithfully
D S Mafurirano”

I pause to observe that the above letter did not spur the plaintiff into trying to pay the deposit timeously at all. Instead, an amount of $1,500,000 was paid more than a month later - on 26 October 2001.

The plaintiff still had problems in paying as agreed prompting Mr Mafurirano to address a letter direct to Thokozani Khumalo on 8 November 2001 in the following terms:

“Re: Sale of House Number 378 Gorebridge Road, Killarney

It is with regret that I write to inform you of our decision to cancel the sale of the above property. The sale of the property was linked to a project we wanted to undertake, but we have had to seek alternative financing sources at higher costs than initially anticipated.

This affair concerning the sale of the above property has been one great problem and waste of time to us, simple because we didn't know that we were dealing with not so-serious people or rather people with other interests but to buy a house.

The negotiations for the price and other conditions were concluded on the 12th September 2001, with Mr Ndlovu, Mr D Naran's appointed representative. The payment of $2.5 million deposit was supposed to be immediate, but we had to wait until 26/10/2001 when a down payment of only Z$1.5 million was made. Promises of similar payments every week were made.

The above payment was based on the price and conditions negotiated, and signed for on the 12th September 2001. Mr D Naran called me to discuss the issue of payment, only to tell me that Mr Ndlovu, his representative, had no authority to conclude the negotiations on price and conditions as he did, as such, he, Mr Naran, was not bound by that agreement, which effectively meant there was no agreement in the first place. In fact, there is no agreement as I write, because Mr Naran nullified the one which we thought was binding.

Further, Mr D Naran, indicated that the house was overpriced, and that the whole deal should be abandoned, and that we were to return $1.1 million, with $400,000,00 being payment for inconvenience suffered by us, and that we were to compensate Mr Khumalo for the improvement done.

Despite good intentions we had, we have finally decided not to dispose of this property because we no longer need to, and, most importantly, the problems we have gone through and which we may go through in future, if we carry on as we have done this far.

In this regard, please forward invoices/receipts for the improvements you have undertaken so far for re-imbursement. Further, as discussed with you before, please, no improvements without consulting us first. You can stay if you like, but please we do not want to chase anybody for rent money.

If, in the future, we decide to sell, you will obviously have the first refusal option.

Regards
D S Mafurirano”…,.

The tone of the above letter reveals that the seller was disappointed by the behavior of the buyer who did not appear to be serious to pay on signature of the agreement. When payment was made, more than a month later, the money was one million dollars less than the agreed deposit. According to the letter, Naran did not feel bound by the agreement as he allegedly accused his lawyer of concluding negotiations on the price and conditions without his client's mandate.

The plaintiff denied ever doing or saying what is contained in the letter. He instead alleged that the negotiations were done by him. He did not remember the meeting of 7 November 2001 where he was alleged to have made those remarks.

It was his evidence that although he may have asked for more time to pay, never did he, at any stage, indicate that he wanted to cancel the agreement. It was the defendant who was bent on wanting to cancel the agreement as illustrated by her letter of 17 October 2001 addressed to the plaintiff's legal practitioners marked for the attention of Mr S Ndlovu which reads:

“Re: Sell of House Number 378 Gorebridge Road, Killarney

Further to our various discussions and letters concerning the sale of the above property. It is now almost the anniversary of the signing of an agreement of sale of the above property whose deposit should have been paid immediately after signing. This has not happened for the past 29 days.

I feel you have had ample time to raise and pay the deposit amount, therefore, I wish to officially inform you of my withdrawal from the agreement. And also to inform you that with immediate effect, Mr Khumalo should give access to people wishing to view the house.

Yours faithfully
R. Mafurirano (Mrs)”

The plaintiff went on to say that he had never instructed his legal practitioner to cancel the contract and accordingly wanted it to be enforced.

He said he did not know anything about the letters of 7 February 2002 and 2 May 2002 addressed to him at 6 Hussor Road, Khumalo, Bulawayo as he did not live there. He had never lived, owned, or used that address.

Under cross examination, Naran told the court that he in fact only became aware of the two letters two weeks before the trial when they were sent to him by his legal practitioner. He was not even aware of the letters when he issued summons and emphasized that he could not have been influenced to issue summons by something that he was not even aware of.

Similarly, he claimed the letter of 8 November 2001, addressed to Thokozani Khumalo, was only brought to his attention two weeks before the trial commenced. It also could not have influenced him to institute these proceedings.

In a nutshell, his erstwhile legal practitioner, Sibusiso Ndlovu, never brought to his attention all these letters.

Naran was being untruthful when he said he was not aware of the said letters before he issued summons. That is contrary to what he said in paragraphs 6 and 7 of his declaration where he says the defendant purported to cancel the agreement by addressing two letters to him, copies of which were attached to the declaration marked “B” and “C”. He said he had never received those letters and had accordingly not been put in mora by the defendant.

As can be seem from his declaration, his concern was that he had not been put in mora since he had not received the said letters.

He was clearly aware of the letters before he issued summons.

Consequently, his suggestion that they were only brought to his attention two weeks before the trial commenced is rejected as it is false and so is his suggestion that he was not aware of the letter of 8 November 2001 and that it did not influence him to institute these proceedings.

Further, Naran could not give a satisfactory explanation, under cross-examination, why he was tendering the balance of $3.8 million for the house if he had treated the $1 million meant for the paper project as part of the purchase price for the house. If what he told the court was true he should have tendered $2.8 million. There would have been no reason for him to tender more than what was due and owing.

In any event, the paper project involved Naran and the defendant's husband and had nothing to do with the defendant herself. Hence the $1 million could not have been treated as part of the price for the house.

Naran was an unreliable witness who was not worth to be believed. His evidence was in conflict with that of Thokozani Khumalo who categorically stated, that, on receipt of the letter of 8 November 2001 he discussed the import of its contents telephonically with Naran who distanced himself from the contents and suggested that the letter should be handed over to their lawyer Sibusiso Ndlovu. Indeed, the letter was handed over to the lawyer as suggested by Naran.

Thokozani Khumalo told the court that Naran never told him that the $1 million was part payment for the purchase price. Instead, he said Naran told him that Davis Sunganayi Mafurirano had borrowed the money.

Thokozani Khumalo said he had effected some improvements at the property. He, however, admitted under cross examination that the improvements were made without the authority from the Mafuriranos.

Mr Sibusiso Ndlovu was a friend and business partner of Naran. He was also a friend of Thokozani Khumalo. He was the legal practitioner who drew up the agreement of sale and signed it on behalf of Naran – the plaintiff.

He knew Mrs Mafurirano who had been introduced to him by one Mathew Nhindiri and also had dealings with her from her bank – CBZ Bank. He said he only got to know Mr Mafurirano at the time he drafted the agreement of sale.

He confirmed that three letters were addressed to his law firm but the fourth one was directly addressed to Thokozani Khumalo, who, without delay, handed it to him.

Thokozani Khumalo was reported as having been still agitated as he handed the letter to Sibusiso Ndlovu who got concerned after going through the contents of the letter. The letter in question is the one dated 8 November 2001 quoted from page 4 and 5 supra.

Sibusiso Ndlovu, like Thokozani Khumalo, telephoned Naran about the contents of the letter. Naran denied having agreed to cancel the agreement and told Sibusiso Ndlovu to contact Davis Sunganayi Mafurirano which he did. He went further to advise Davis Sunganayi Mafurirano that Naran and Thokozani Khumalo were still committed to pay but did not have money at that stage because the money they had expected from the payment of a cement consignment from a Zambian buyer was not forthcoming. But, Davis Sunganayi Mafurirano still allegedly told Sibusiso Ndlovu to pressurize Naran to make payment for the house as he knew Naran's plight. He knew about the Zambian consignment and anticipated that Naran would be paid for the consignment at some stage.

Under cross examination, Sibusiso Ndlovu said he had never regarded the letter of 8 November 2001 as a cancellation of the agreement. He also conceded that the defendant still considered herself bound by the agreement in the letter of 7 February 2002. In it, the defendant wanted to know when the plaintiff was going to pay if he was still interested in the agreement. The letter was written by her legal practitioners addressed directly to Naran and sent to 6 Hussar Road, Khumalo which was a wrong address.

The main body of the letter reads:

“Re: Agreement of Sale with Ronnah Marurirano

We refer to the above matter in which we act for Ronnah Mafurirano with whom you entered into a sale agreement in respect of Stand 378 Gorebridge Road, Killarney.

The purchase price was in the sum of $5,300,000 payable as to a deposit of $2,500,000 and the balance of $2.8 million in monthly installments of $1.5 million starting end of October 2001.

You paid $1.5 million as a deposit on the 26th October 2001. This was $1 million less than the agreed deposit.

You have not paid anything further after the $1 million (sic) referred to.

Our clients instruct us to enquire from you, as we hereby do, whether it is still your intention to proceed with the purchase, and, if so, when they can expect to receive the balance which is overdue. If you are no longer interested in the purchase please advise to enable our clients to move forward. Please let us have your election either way within 7 days of this letter failing which we will approach court for an order to declare forfeit as a pre-estimate of damages the deposit paid.

Yours faithfully
Majoko and Majoko”…,.

The contents of this letter clearly establish that the defendant still considered herself bound to the agreement as at 7 February 2002.

This court, therefore, makes a specific finding to that effect.

Another letter addressed directly to Naran, but also sent to the wrong address, was dated 2 May 2002 and it reads this:-

“Dear Sir

Re: Agreement of Sale with Ronnah Mafurirano

We refer to the above matter.

In terms of your agreement, you were supposed to pay a deposit for the purchase price in the sum of $2,500,000 on the date of your signing the agreement. You failed to do so. In fact, you only paid the sum of $1,100,000 (sic).

Through several letters to you our client informed you that time of payment was of the essence. You have failed to make any other payment from the date you made the first installment. You have breached your contract.

Due to your breach of the contract by failing to pay on time and as stipulated in the contract our client now considers your contract cancelled.

Our client also wishes to notify you that he reserves the right to forfeit the installment paid to her.

Yours faithfully
Majoko and Majoko”

The above two letters were sent to a wrong address although they were directed at Naran personally.

Naran said he had never used that address and had never lived there. He went on to state that he did not even know anyone living at that address.

He was being untruthful on that point, because, when Sibusiso Ndlovu asked him if he had once lived there, or had once used the address, or if he knew anyone at that address, he denied ever living there or ever using the address but revealed that his distant cousin lived there but was quick to say he was not close to him.

Sibusiso Ndlovu's evidence also confirmed that Naran was well aware of the above two letters well before the summons was issued. He was in fact aware of all the four letters quoted in this judgment id est;

(a) The undated letter addressed to Sibusiso Ndlovu & Associates;

(b) The one addressed to Thokozani Khumalo dated 8 November 2001;

(c) The one dated 7 February 2002 addressed to himself but sent to the wrong address; and

(d) The last one dated 2 May 2002 also addressed to himself but sent to a wrong address.

Accordingly, Sibusiso Ndlovu's evidence belies Naran's story that he only became aware of the letters two weeks before the trial commenced.

Sibusiso Ndlovu admitted, under cross examination, that, Naran did not disclose to him that he himself had made a tender of the purchase price to the defendant. He further admitted that Naran, the plaintiff, was in material breach of the agreement. He, however, went on to state that despite the fact that Naran was in material breach of the agreement the defendant kept on accepting and granting extensions.

The defence case was closed after the evidence of Sibusiso Ndlovu.

Mrs Mafurirano, the first defendant, gave evidence and called her husband as a defence witness.

She herself did not have much to say as most of what took place in relation to the agreement of sale was done by her husband. He did all the negotiations relating to the sale.

She told the court that she and her husband had more than one property in Bulawayo. The property at the centre of this dispute was registered in her name. Sometime in September 2001 the couple was offered a farm to buy. They needed money to buy it. They then decided to dispose of one of their properties in order to raise the money. They decided to sell the property in question. The first offer was made to Thokozani Khumalo the sitting tenant.

After sometime, her husband brought an Agreement of Sale drawn up by Sibusiso Ndlovu & Associates legal practitioners for her signature.

She confirmed that the plaintiff was in breach of the contract as he failed to pay the deposit in terms of the agreement. The purchase price was also not paid.

Although she had not been involved in the writing of several letters to the plaintiff by her husband she was made aware of what was going on.

Under cross-examination, she maintained that she had not cancelled the contract despite indications in the letters that it would be cancelled. She said she still considered herself bound by the agreement although her attitude was that the whole deal had taken too long. Her major concern was to have the house sold so that they could raise money for the farm project.

Mrs Mafurirano gave her evidence in a simple and clear manner. She was worth to be believed.

She called her husband who was her key witness as he was the one involved in the negotiations for the sale of the house.

The husband, one Davis Sunganayi Mafurirano, had this to say:

He told the court that Thokozani Khumalo was their tenant who rented the house in question. At one stage, an opportunity arose whereby someone was selling a business and a farm. He and his wife got interested in that property. They decided, as a family, to raise some money by selling their Killarney house in an endeavour to acquire the farm and a business. They agreed, as a family, that the husband was going to handle all negotiations and transactions relating to the selling of their Killarney house.

They then approached the sitting tenant, Thokozani Khumalo, and informed him about their wish to dispose of the house. Thokozani Khumalo was interested in the house but said he would seek financial assistance from Naran who was his employer. Later, Thokozani Khumalo advised him to go and see his lawyer, Sibusiso Ndlovu.

He went and had a discussion with Sibusiso Ndlovu. They agreed on a price of $5.3 million for the house. The lawyer, Sibusiso Ndlovu, undertook to draft an Agreement of Sale and said Davis Sunganayi Mafurirano should return the next day to sign it. He returned to the lawyer's office whereat the lawyer and himself made some amendments to the draft Agreement of Sale. Thereafter, he was given the amended draft Agreement of Sale to take to his wife for signature.

His wife signed the Agreement of Sale on 12 September 2001 and Davis Sunganayi Mafurirano immediately returned it to the law firm for the buyer to sign it. Davis Sunganayi Mafurirano expected the buyer to also sign the agreement on 12 September 2001, but, to his surprise and disappointment, the buyer only signed it 18 days later - on 30 September 2001.

Davis Sunganayi Mafurirano's expectations were that Naran was going to pay a deposit of $2.5 million on signature as stipulated in the Agreement of Sale but that never happened. Payment of the deposit was not made even on the belated date of signature by the buyer.

That caused a lot of anxiety to the Mafuriranos as their plans to purchase a farm and business were thrown into disarray. Davis Sunganayi Mafurirano had to go to a Mr Turner to negotiate with him about the time they could pay him for the farm and business.

The deposit was paid in by Thokozani Khumalo on 26 October 2001. To the Mafurirano's further disappointment, Thokozani Khumalo paid in $1.5 million leaving a shortfall of $1 million. That payment was made on a Friday and Thokozani Khumalo had promised to pay the balance the next Monday but failed to do so.

The witness reminded Thokozani Khumalo of his promise but the reminder produced no result. He then decided to go and see Sibusiso Ndlovu who referred him to Naran whom the witness had not dealt with in relation to the sale of the house.

The witness said he embarked on fruitless efforts to have the outstanding part of the balance paid. He went to Thokozani Khumalo who referred him to Sibusiso Ndlovu who in turn referred him to Naran.

As if that was not enough trouble, Naran surprised him by allegedly saying:-

(a) Sibusiso Ndlovu had no right to enter into the agreement;

(b) He also pointed out that the house was over-priced and went on to say he could get a better house for that price in Ilanda or Famona; and

(c) He finally said of the $1.5 million that had been paid that far $1.1 million had to be returned (without specifying to whom) while the witness kept $400,000 for the inconvenience caused to him.

Naran allegedly made the above revelations at a meeting which he had with the witness on 7 November 2001.

The following day, Davis Sunganayi Mafurirano addressed the letter to Thokozani Khumalo quoted supra…,.

The witness denied that he meant to cancel the agreement by writing the letter. He contended that he was merely conveying to Thokozani Khumalo what his benefactor said at the meeting of the previous day. It was the witness' further contention that it was Naran, instead, who was canceling the agreement by revealing that he was not bound by it since Sibusiso Ndlovu had no mandate from him to conclude the agreement.

It was Davis Sunganayi Mafurirano's evidence that the series of letters written by him and his wife were merely intended to cajole Naran and Thokozani Khumalo into honouring their obligation. But, to their disappointment, no written response came from the buyers and their legal practitioners.

They were further disappointed by the fact that the buyers and their legal practitioners drew up the Agreement of Sale wherein they stipulated conditions which they never met. Hence their ultimate conclusion that Naran had cancelled the Agreement of Sale.

That was what prompted them to instruct their legal practitioners to write the final letter on 2 May 2002…,.

According to Davis Sunganayi Mafurirano, the letter was a mere acceptance of the fact that Naran had cancelled the Agreement of Sale.

Davis Sunganayi Mafurirano vehemently denied the suggestion that he was given $1 million dollars which was applied to the purchase of the house.

Davis Sunganayi Mafurirano was subjected to a lengthy and thorough cross-examination. He came out of the cross examination badly bruised as he could not give direct answers to questions and was evasive.

He, however, made it clear, under cross-examination, that, it was not correct that he had been given the $1 million for the purchase of bond paper which money was later applied to the purchase of the house. He said the issue of bond paper only involved $80,000 and not $1 million as had been suggested by the plaintiff. He then referred the court to a document attached to exhibit 3 reflecting that he indeed paid $80,000 for A4 paper on 18 October 2001.

He further emphasized, under cross examination, that, the various letters written to the buyers were not meant to cancel the agreement but were being used as a means to spur them into making payment. They were just a tactic to pressurize Naran and Thokozani Khumalo to honour their contractual obligations.

Davis Sunganayi Mafurirano maintained that the letter of 2 May 2002 was just an acceptance of the fact that Naran had cancelled the agreement.

There is merit in Davis Sunganayi Mafurirano's conclusion in the light of the following findings made by the court:

This court makes a finding that the plaintiff was in material breach of the agreement right from the onset.

He failed to pay the deposit on signing the agreement as stipulated. When he did so, a month later, what he paid was $1 million less than what the parties had agreed.

Although the plaintiff was in material breach of the agreement, the defendant, through desperation, kept on accepting and granting extensions resulting in the plaintiff taking advantage of her and grossly abused that advantage.

Demands for him to pay, coupled with repeated threats to cancel the Agreement of Sale, did not spur him into honouring his side of the bargain.

This court has already found that Naran was an unreliable witness who was not worth to be believed. He contradicted the evidence of Thokozani Khumalo and Sibusiso Ndlovu. He did not end there. He sought to distance himself from his pleadings.

This court further finds, that, the probabilities favour the story that the plaintiff said he was not bound by the agreement, and, in any event, the house was overpriced and he could get a better house for that price in Illanda or Famona.

Here is why:

He did not want to pay the deposit in terms of the agreement. When he did so, after a month, he only paid $1.5 million instead of $2.4 million. He claimed to have lent Davis Sunganayi Mafurirano a sum of $1 million which sum he alleged had been applied to the purchase of the house. As far as he was concerned a total of $2.5 million had been paid.

It is important to note that Naran said he had offered to buy the house for $2.5 million.

Interestingly, after he had paid an amount equal to $2.5 million he made no further payment towards the purchase of the house despite a series of letters urging him to pay. He was simply unwilling to pay more than $2.5 million.

He denied being aware of any of the letters claiming that he had only become aware of them two weeks before the trial.

He was clearly untruthful.

This court also finds that Davis Sunganayi Mafurirano did not answer questions directly and was evasive. He tended to give unsolicited explanations, but, the court cannot go so far as classifying him as a witness who was not worth to be believed.

He was just a seller who had been disappointed by the buyer who had no respect for the agreement the parties had entered into.

The buyer drafted the Sale Agreement and stipulated conditions therein which he thereafter disregarded with impunity.

The Mafuriranos urgently needed the money to purchase a farm and business which explains why they continued to grant extensions of time within which to pay.

In conclusion, this court finds, in the light of the foregoing, that, the plaintiff stated that he was no longer prepared to be held to the contract of sale hence his unwillingness to make any further payments beyond the sum of $2.5 million thereby cancelling the agreement.

He is therefore not entitled to tender the sum of $3,800,000 plus interest.

He is, however, entitled to a refund of $1,500,000 plus interest calculated from 31 October 2001.

He is further entitled to compensation for proved improvements, if any, effected to the said property.

The plaintiff is to blame for the failure of the Agreement of Sale and should accordingly bear the costs of suit.

HH111-08 : RAILWAY ARTISANS UNION and RAILWAY ASSOCIATION OF YARD OPERATING STAFF and ANOR vs RAILMED and NATIONAL RAILWAYS OF ZIMBABWE and RAILWAYS EMPLOYMENT COUNCIL
Ruled By: GOWORA J

A party cannot be in breach of an obligation which has not been made an express or implied term of the contract.

HH27-07 : EDWARD MARUME and ELLEN CHAMUNORWA vs TODD MURANGANWA
Ruled By: MAKARAU JP

This matter came before me in Motion Court as an application for default judgment in terms of Rule 58 of the High Court Rules, 1971.

The facts of the matter, as set out in the plaintiffs' affidavit of evidence, are as follows:

The plaintiffs are husband and wife. On 12 April 2005, they sold their rights, title, and interests in a certain piece of land in Budiriro Township in Harare. The agreement of sale was in writing.

It was a specific term of the agreement that the full purchase price would be financed from the proceeds of a staff loan to be advanced to the defendant from his employer.

It was also specifically agreed between the parties that the purchase price would be paid in full against the registration of a mortgage bond within 21 days of the signing of the Agreement of Sale.

On 13 July 2005, the 21-day period having long expired, the plaintiffs caused a letter to be sent to the defendant calling upon him to rectify the breach failing which the contract of sale would be considered cancelled.

In the letter, the plaintiffs also reserved to themselves the right to claim damages for the breach.

Unbeknown to the plaintiffs, the property had been transferred to the purchaser on 21 June 2005 - weeks before the letter of demand was sent.

Payment of the purchase price was only made on 2 August 2005 less certain deductions that were detailed in the letter from the conveyancers enclosing the cheque.

The cheque was sent back with a letter alleging that the Agreement of Sale had been cancelled and a reversal of the transfer would be sought.

On 3 March 2006, the plaintiffs issued summons against the defendant, claiming the sum of $366,503,000, being damages for breach of contract.

The summons was duly served personally on the defendant at his place of residence.

The dies induciae limited in the summons expired without the defendant taking any steps to defend the claim. The plaintiffs then applied for judgment, arguing that due to inflation, the amount of the cheque sent to them had been eroded by about 75%.

They further argued that the purchase price of the property was meant for an investment in a farming venture where the plaintiffs anticipated growing wheat for the 2005 season. Due to the delay in the payment of the funds, they missed their target and the tractor they intended to purchase had since increased in price.

In support of their claim, the plaintiffs attached a valuation report showing the value of the property as at 28 January 2006, months after the purchase price was tendered to the plaintiffs and months after the purchase price was due in terms of the Agreement of Sale.

When the matter was called up before me as an unopposed application for default judgment, I raised a number of issues with the plaintiffs' legal practitioners and requested him to file heads of argument to address those issues.

Heads were only brought to my attention on 29 March 2007, hence the delay in the handing down of the judgment.

Two issues have exercised my mind in this matter:

(i) Firstly, it is whether by allowing transfer of ownership in the property to pass to the defendant well aware of the breach, the plaintiffs can still claim damages based on the same breach....,.

It is common cause that the plaintiffs sent a letter placing the defendant in mora on 13 July 2005.

At the time, it is further common cause that the plaintiffs had passed transfer of the property sold to the defendant well knowing of the breach. Transfer of the property by the plaintiffs was performance of their side of the bargain under the Agreement of Sale.

It matters not, in my view, that transfer was effected by the conveyancers as such conveyancers were acting on a power of attorney drawn in their favour by the plaintiffs. Such power of attorney was not revoked - even after it became clear to the plaintiffs that the defendant had committed a breach of the terms of the contract of sale entitling them to cancel.

The plaintiffs' legal practitioners did not refer me to any authority where the performance of the contract by the aggrieved party, well aware of the breach by the other, still entitled the aggrieved party to claim for damages based on the same breach.

In my view, the conduct of the plaintiffs amounts to approbating and reprobating at the same time.

By allowing transfer to go through in the circumstances of this matter, the plaintiffs arguably gave out to the defendant that they had condoned the delay in the payment of the purchase price.

While I am of the firm view that the plaintiffs cannot rely on the breach by the defendant to claim damages in the circumstances of this matter, it is not necessary that I resolve the matter on this basis.

Appealed
SC24-21 : BIG VALLEY MASTERS (PRIVATE) LIMITED vs SHI JINWU
Ruled By: GWAUNZA DCJ, GUVAVA JA and MAVANGIRA JA

INTRODUCTIONThis appeal arises from the judgment of the High Court in which the court a quo ordered the appellant to pay the respondent the sum of US$89,000 with interest at the prescribed rate calculated from 11 December 2012 to the date of full payment.The appellant is a gold mining company. ...

INTRODUCTION

This appeal arises from the judgment of the High Court in which the court a quo ordered the appellant to pay the respondent the sum of US$89,000 with interest at the prescribed rate calculated from 11 December 2012 to the date of full payment.

The appellant is a gold mining company. It is registered in terms of the laws of Zimbabwe. It owns a gold mine located in Shurugwi (Sky Rocket 16485).

The respondent is a private individual of Chinese origin. He is a foreigner investor based in Zimbabwe.

BACKGROUND FACTS

On 13 January 2011, the appellant and the respondent entered into a joint venture agreement. In terms of the agreement, the parties would constitute a new company. The appellant would provide mining claims and the respondent would be responsible for exploration and providing investment of capital and equipment in respect to the mining venture.

In terms of the agreement, the respondent would get 75 per cent and the appellant 25 per cent of the proceeds from the mine.

The respondent was obliged to grant a loan to the new company in the sum of US$150,000. The loan was to be paid back to the respondent through deductions from profits that would accrue to the appellant when such profit was realized by the company.

The respondent had to pay a down payment in the sum of US$50,000 within ten days of coming into effect of the agreement. In return, the appellant would give the respondent 'blocks of claims' certificate and the company certificate “after agreement of signature of ten days.” (sic)

The new company was to be established before 1 March 2011, and, thereafter, the respondent would pay the remaining US$100,000 to the appellant within ten days after 1 March 2011.

Failure by the respondent to bring reasonable mining equipment and to have the project take off by July 2011 would entitle him to be paid back the loaned amount within six (6) months.

Following signing of this agreement, the respondent, through his erstwhile legal practitioners, wrote a letter to the appellant dated 13 May 2011. In this letter, the respondent informed the appellant that there was a misconception on the terms and conditions of the agreement which had been agreed to by the parties on 13 January 2011. As such, the respondent informed the appellant that he was cancelling the agreement and demanded a refund of the sum of US$88,099 which he had paid to the appellant as a loan amount in terms of the agreement.

Following the letter cancelling the agreement, the parties thereafter entered into a new agreement on 3 October 2011.

In terms of the new agreement, the appellant admitted that it owed the respondent the sum of US$89,000. It was also agreed that the full loan amount, as agreed by the parties, was US$150,000.

It was further agreed that the respondent would recover the loan amount through a tribute to operate and extract ores from the mine. The respondent was to take over the appellant's workers and general control of the mine and recover the amount due to him.

Payment of the loan balance of US$61,000 was to be made before the respondent could take up occupation of the mine.

On 11 December 2012, the respondent issued summons against the appellant claiming the sum of US$89,000 being the amount advanced to the appellant as well as interest at the prescribed rate and cost of suit.

In his declaration, the respondent averred that the new agreement between the parties did not come into fruition due to the appellant's (represented by Philemon Mubata who was cited as the second defendant a quo) failure to perform in terms of the agreement by excluding him from the operations at the mine and using the loan contrary to the provisions of the agreement.

The respondent further averred that he had no choice but to cancel the agreement as the appellant had breached it.

In its plea, the appellant did not dispute entering into a joint venture agreement with the respondent but argued, instead, that, the respondent had not sought to recover his money by mining ore equivalent to the loan sum of US$89 000. It was the appellant's argument that according to the agreement, the appellant was entitled to six months in which to repay the loan. The appellant thus stated that the issuance of summons proceedings was premature.

On 20 November 2013, the appellant amended its plea and averred that the respondent had breached the agreement and failed to provide equipment necessary to carry out exploration work at the mine.

Following breach of the first agreement by the respondent, the parties entered into a second agreement.

The appellant further averred that the second agreement had a suspensive provision to the effect that the respondent had to pay the full amount of US$150,000 before he could recover his monies from production on the mine.

The appellant also filed a counter claim against the respondent with the amended plea for the sum of US$61,000 being payment of the balance of the loan in fulfilment of obligations which the respondent had undertaken in order to fulfill the terms of the agreement.

In response to that claim, the respondent alleged that a condition had to be satisfied, prior to the payment of the US$61,000, which condition was his involvement in management and operations at the mine at the inception of the loan agreement. The respondent averred that he was frustrated by the actions of the appellant. This was the reason why he failed to fulfill his obligation and led to the cancellation of the whole agreement.

PROCEEDINGS BEFORE THE COURT A QUO

At a Pre-Trial Conference, the agreed issues for determination were stated as follows:

“(a) Whether or not the plaintiff was, in accordance with the joint venture agreement, obliged to pay the sum of US$150,000 towards financing the gold mining venture.

(b Whether or not the first and second defendants frustrated the contract resulting in non-fulfillment of the terms and conditions of the agreement between the parties.

(c) Whether or not the first and second defendants were in breach of the fundamental terms of the agreement causing the plaintiff to cancel the whole agreement and demand repayment of the loaned sum of US$89,000.”

During the trial the respondent, Ms. Ding (his assistant at the time when the agreement was made) and one Mr. Wei Ren (the respondent's mining manager from 2005 to 2010-2011) gave evidence.

The three witnesses all testified to the effect that the appellant and respondent entered into two agreements which never materialized and that the appellant denied the respondent access to the mine so that he would recover his monies. Ms Ding further clarified that the second agreement was prepared by Mr Mubata. She denied that the respondent had breached any of the terms of the agreement and insisted that it was the appellant which had breached the terms of the agreement by denying the respondent access to the mine.

Two witnesses led evidence on behalf of the appellant.

Mr. Mubata (the second defendant a quo) testified that the agreement failed to materialize because the respondent failed to bring the requisite equipment to the mine and that the respondent cancelled the agreement because the appellant had refused to sell the mine and transfer the registration certificates to him. The second witness was Mr. Mhere, the appellant's Finance and Administration manager. He testified that the respondent failed to pay the full loan amount which had been agreed between the parties leading to the breach of the agreement.

In its judgment, the court a quo found that the respondent had had the agreement explained to him in Chinese and therefore they were valid agreements.

The court believed the evidence of the appellant that the respondent paid the loan in 'dribs and drabs' contrary to the terms of the agreement. The court a quo also found that the respondent was in breach of both agreements.

The court, however, decided to apply the principle of equity on the basis that the respondent's grasp of English was so bad that he may not have understood the terms of the agreement and decided to reimburse the respondent the amount that he had loaned the appellant. The court stated as follows:

“I (sic) persuaded that it would be appropriate to utilize the equitable principle in coming to a resolution of this matter. I hold the view primarily because the court was uneasy with the plaintiff's level of understanding of the terms of both agreements.”

The court made the following order:

“In the result, it is ordered that:

1. The plaintiff's claim against the 2nd defendant be and is hereby dismissed with costs.

2. The defendant's counter-claim against the plaintiff, for payment of USD$61,000, be and is hereby dismissed with costs.

3. Plaintiff's claim, as against the 1st defendant, Big Valley Masters Private Limited, in the sum of US$89,000, is allowed, together with interest thereon at the prescribed rate calculated from 11 December 2012 to the date of payment in full.

4. 1st defendant shall bear the costs of suit.”

The appellant was dissatisfied and appealed on the following grounds:

1. The court a quo erred in law in deeming the partnership dissolved by a letter at a future date contrary to the principle that dissolution of a contract is exercised ex nunc.

2. The court grossly misdirected itself in adjudging that the respondent was entitled to recover US$89,000 when he was in clear breach of the parties' agreement.

3. The court a quo grossly misdirected itself by allowing the respondent to derive a benefit from his own wrong.

4. The court a quo erred in failing to uphold the appellant's defence of the exceptio non adimpleti contractus.

5. The court a quo further erred in allowing interest on the sum of US$89,000 to run up to the date of payment thus contravening the in duplum rule.

6. The court a quo grossly misdirected itself in awarding costs in favour of the respondent where it had failed to fully succeed in the matter.

In my view, from the appellant's grounds of appeal, and from submissions made, the issue that resolves the appeal is the following:

Whether or not the court a quo erred in applying the principle of equity in resolving the matter

SUBMISSIONS ON APPEAL

Counsel for the appellant…, submitted, in the main, that, the court a quo erred in determining the matter before it on the basis of the principle of equity as such principle is not part of the Zimbabwean law.

Counsel argued that the principle could only be resorted to where a statute provides for its application.

It was counsel's submission that the terms of the agreement were clear and should have been complied with. With these submissions, whilst not abandoning the other grounds, counsel prayed that the appeal be allowed.

Per contra, counsel for the respondent…, argued that the court a quo did not misdirect itself when it applied the principle of equity. It was his submission that the principle is part of our law in terms of the common law. Counsel further argued that the breach of the agreement by the respondent could be attributed to the fact that there had been difficulty in communication as the respondent could not communicate fluently in English. Counsel thus submitted that the case was one which justified the application of the principle of equity so as to ensure that the appellant would not be unjustly enriched.

The court a quo found in favour of the respondent on the basis of the principle of equity. The court stated as follows;

“A modern interpretation of the equitable principle, one that takes into account the situation prevailing in our economy, may not favor an insistence that the plaintiff cannot succeed in his claim until he has performed in full, the terms of the October agreement. The court can exercise its discretion in the plaintiff's favor despite his partial performance of the January agreement (by advancing a loan up to US$89,000) and his non-performance of the October agreement.”

The appellant has argued that the court a quo erred in applying the principle of equity in this matter as the principle is foreign to this jurisdiction. With that, the appellant seeks to show that the court misdirected itself in finding for the respondent resulting in him deriving a benefit from his own wrong.

The second agreement had a provision, under paragraph 8, which stated as follows:

“(8) PAYMENT OF LOAN BALANCE ($61,000) SHOULD BE PAID TO SUM IN FULL BEFORE OCCUPATION OF PLANT WILL BE TAKING AFTER MR SHI IS BACK”(sic)

It was not in dispute that the provision under paragraph 8 was not fulfilled by the respondent.

It was also an agreed fact that at no point did the respondent mine or recover any profits from the mine.

The appellant submits that the court a quo erred by ordering it to pay the respondent his money in circumstances where he had breached the contract.

The respondent argued, before the court a quo, that, he was denied entry on to the mine by the appellant. This prevented him from being productive to recover his monies as agreed between the parties in the second agreement. The appellant counter-argued that the respondent was never refused access to the mine from the date when the first agreement was signed to the signing of the second agreement.

The court a quo believed the appellant's arguments and found that the respondent failed to honor some of the provisions of the agreement and was never denied access to the mine.

It is a settled principle that this Court will not easily interfere with factual findings made by a lower court unless the findings are grossly unreasonable: see ZINWA v Mwoyounotsva 2015 (1) ZLR 935 (S); Hama v NRZ 1996 (1) ZLR 664 (S); Reserve Bank of Zimbabwe v Corrine Granger and Another SC34-01.

The lower court enjoys the opportunity to see the witnesses on the stand, assess their demeanour and credibility. Such findings of fact cannot easily be interfered with by an Appellate Court as it is limited to the record of proceedings: see Mtimukulu v Nkiwane and Another SC136-01.

The respondent, in making his claim for the amount which had been advanced to the appellant, had to prove that he was owed such money.

It is pertinent to note that the standard of proof in all civil matters is on a balance of probabilities.

The concept of proof on a balance of probabilities was enunciated in British American Tobacco Zimbabwe v Chibaya SC30-19 wherein the court quoted with approval the case of Miller v Minister of Pensions [1947] 2 All ER 372, 374 and explained the concept of balancing probabilities as follows:

“It must carry a reasonable degree of probability but not so high as is required in a criminal case. If the evidence is such that the tribunal can say 'we think it more probable than not', the burden is discharged, but if the probabilities are equal it is not.”

This was further emphasized in the book, Principles of Evidence, 4th ed (2016) Juta: Cape Town, wherein the authors SCHWIKARD PJ and Van der MERWE SE stated that:

“In civil proceedings, the inference sought to be drawn must also be consistent with all the proved facts, but it need not be the only reasonable inference: it is sufficient if it is the most probable inference.”

The rule on onus of proof was pronounced in ZUPCO Ltd v Pakhorse Services (Pvt) Ltd SC13-17 where the Court stated that:

“The cardinal rule on onus is that a person who claims something from another in a Court of law has to satisfy the Court that he is entitled to it.”

The respondent managed to discharge the onus of proof which was required of him in making his claim.

Indeed, it was conceded, by the appellant, that, the sum of US$89,000 was paid to it by the respondent. It was also conceded that during the subsistence of the agreement the respondent did not mine any gold or recover any profit from the use of that money.

The resultant effect was that the appellant ended up unjustly enriched by the respondent's US$89,000 which the respondent did not benefit from.

The appellant, in motivating the point that the court a quo erred in finding that the respondent could recover money he had paid to the appellant, relied on the ground that the court erred in failing to uphold its defense of exceptio non adimpleti contractus.

This point was not pursued in the appellant's heads of argument and was never pleaded a quo.

Clearly the appellant was wrong in submitting that the court a quo erred by not dealing with the point.

It is a trite principle that it is not open to the courts to rewrite a contract entered into between the parties or to excuse any of them from the consequences of the contract that they have freely and voluntarily accepted, even if they are shown to be onerous or oppressive as this is a matter of public policy: see Magodora and Others v Care International Zimbabwe SC24-14.

This Court must interpret the second agreement literally.

It can be deduced from the agreement that the respondent had to pay the full loan amount first before taking occupation of the mining claims. The respondent failed to do so and this resulted in a breach of the contract. Once the respondent failed to fulfil his end of the agreement, and a breach occurred, the agreement was terminated and the respondent would ordinarily not be entitled to recover his money.

However, for a wholesome resolution of this matter, it is in the interests of justice that the principle of equity be looked at as that was the basis of the court a quo's decision.

The scholar R.H. CHRISTIE, Business Law in Zimbabwe, 2nd Ed, Juta & Co Ltd…, provides that the principle of equity may be resorted to where there is incomplete performance of a contract. The principle is based on unjust enrichment.

The court, in Carlis v McCusker 1904 TS 917, observed that:

“In view of the well-known maxim of law, that no man should be allowed to enrich himself at the expense of another, this court would not permit a man who had verbally agreed to sell landed property, and had, on the faith of that agreement, received the whole or portion of the purchase price, to retain both the money and the land. It would, under such circumstances, come to the relief of the purchaser,”

See also Matipano v Gold Driven Inv (Pvt) Ltd SC225/12.

This principle is clearly discretionary and is applied by a court on the basis of the particular circumstances of a case which warrant the use of such a principle.

I would, however, venture to suggest that the principle of equity should be sparingly used as it has the effect of undermining the contract entered into between the parties.

In this case, the respondent paid a known sum of money to the appellant on the basis of the first agreement. The respondent never acquired any minerals from the appellant's mine. Although the first agreement was dissolved, the court a quo, in the exercise of its discretion, took into account that the second agreement did not have an operational clause to deal with what would happen if any of the parties breached the agreement.

In the first agreement, it was an agreed provision, that, in the event that the respondent failed to bring equipment to the mine he would be entitled to a refund of his money within six (6) months. The appellant, in its own plea, stated that it was an agreed provision that if there was failure to pay the debt it would settle the debt over a period of six months.

It seems to me that even though the second agreement did not have a provision for settlement between the parties, in the event that the respondent failed to fulfill his obligations, the court a quo was correct to exercise its discretion and be guided by the spirit of the provision in the first agreement. It was quite apparent that the second agreement flowed from the first agreement between the parties.

This is a matter where equity may properly be applied.

It would be unjust for the appellant to remain in possession of the US$89,000 which was paid to it by the respondent when the respondent himself did not get anything from the deal. The agreement between the parties was an investment on the part of the respondent that was going to jointly benefit both parties. The loan paid by the respondent was to be paid back through production on the mine.

Production did not happen.

Despite the respondent's breach of the agreement, justice will be met if the parties are returned to their status quo ante.

The appellant did not, either in its grounds or in argument, seek to challenge the application of discretion by the court a quo in applying the principle of equity in these circumstances.

Indeed, in my view, the appellant would have been hard pressed to make such a submission in view of the concession it had made that it had received the money.

It would appear, however, that an order for interest on the sum is not justified.

The respondent accepted, in his evidence, that he was in breach of the agreement between the parties. He did not fulfil his obligations which would have resulted in him occupying the mine and getting his money back.

He thus cannot benefit by being awarded interest in view of the fact that he did not comply with the terms of the agreement.

However, the special circumstance of the respondent justifies the approach by the court a quo.

The respondent's understanding of the English language was so bad that the court felt the need to intervene. It would be a travesty of justice to hold the respondent to the terms of the agreement in circumstances that clearly show that he did not grasp that he was obliged to pay the full amount before he could recover his money. This was in circumstances where the appellant not only retained the profits from the mining operations but also retained the respondent's money.

DISPOSITION

The court a quo did not err in finding that it was just and equitable for the appellant to return the respondent's loan of US$89,000. Indeed, it was clearly accepted by the appellant that it had received the money from the respondent. The court, however, erred in awarding interest on the sum at the prescribed rate when such interest was not justified where the court was applying principles of equity.

The appeal thus succeeds on this point.

With regards to costs, the respondent has successfully defended the appeal in the main and I thus find no reason why costs should not follow the cause.

In the result, it is accordingly ordered as follows:

1. The appeal be and is hereby partially allowed with costs.

2. Paragraph 3 of the judgment of the court a quo be and is hereby set aside and substituted with the following:

“3. Plaintiff's claim, as against the 1st defendant, Big Valley Masters (Private) Limited, in the sum of US$89,000 is allowed.”

View Appeal
HH601-14 : SHI JINWU vs BIG VALLEY MASTERS (PRIVATE) LIMITED and PHILLIMON MUBATA
Ruled By: CHIGUMBA J

Zimbabwe adopted a policy that was dubbed “look east” as a way of combating economic sanctions that were imposed on it by the international community. The “look east” policy encourages a forging of closer business and trade ties with countries in the east as opposed to the west, the traditional former business and trade partners.

When this policy was adopted, a lot of Chinese nationals came to our country in pursuit of business opportunities, especially in the mines and minerals sector. Unfortunately, the language barrier has caused a lot of difficulty in the conclusion of contracts and the implementation of business deals.

The plaintiff is a Chinese national who does not speak English. He relied on the interpretation of a business associate who told him of the terms of the contract that he entered into with a Zimbabwean company called Big Valley Masters (Private) Limited (the first defendant). The company owns gold mining claims in Shurugwi (Sky Rocket Mine 1645). Mr. Phillimon Mubata (second defendant) is a director and shareholder in the first defendant.

The plaintiff issued summons against the defendants on 11 December 2012, claiming payment of USD$89,000 being a sum outstanding in respect of a loan advanced to the defendants, as well as interest thereon at the prescribed rate, and costs of suit.

In his declaration, the plaintiff averred, that, on 13 January 2011 he and the first defendant entered into a written agreement. The first defendant was represented by the second defendant when the agreement was concluded. The terms of the agreement included, among other things, an obligation on the plaintiff's part that he would pay for exploration work at the mine, invest capital and mining equipment, and use the block of claims which constituted Sky Rocket Mine 1645 as surety.

The parties agreed that the block of claims would subsequently be transferred into the name of a new investment company in which they would have equal shares, and which would be exclusively managed by the plaintiff.

The plaintiff averred, further, that, the parties agreed that he would advance a loan in the sum of USD$150,000 to the defendants, subject to repayment on certain conditions, for purposes of discharging pressing debts owed by the first defendant.

On 3 October 2011, the parties entered into a second agreement, in terms of which the defendants allegedly admitted to being indebted to the plaintiff in the sum of USD$89,000 and agreed to repay the loan, while allowing the plaintiff to run the mine.

The plaintiff is aggrieved because none of these undertakings given by the defendants have been honored.

The defendants filed their plea on 15 January 2013.

They did not dispute that the parties had entered into what they called a joint venture agreement relating to gold mining. They averred that the plaintiff breached the terms of the joint venture agreement by failing to provide capital to fund their joint venture, in the agreed sum of USD$150,000.

The second defendant denied that he entered into a loan agreement with the plaintiff, or that he entered into any agreement at all with the plaintiff in his personal capacity. He stated, that, at all times; he dealt with the plaintiff in a representative capacity as a director and shareholder of the first defendant.

In the plea, it was averred that the parties had agreed that any loan sums advanced by the plaintiff would be repaid using the proceeds of production at the mine.

After clearing the loan sums, by offsetting against the proceeds of production, the parties would subsequently enter into a profit sharing agreement.

The defendants averred that the plaintiff breached the agreement by failing to finance production through the agreed USD$150,000, and that this breach caused the collapse of the joint venture.

The defendants averred that the joint venture resulted in loss, which should be borne equally with the plaintiff, as an equal partner in the joint venture.

On 20 May 2013, the defendants filed an amended plea, in which they averred that the terms of the second agreement entered into by the parties were such that the plaintiff was obliged to advance the full USD$150,000, as agreed, before any repayment of that loan could be made.

The averment was that the plaintiff was not entitled to repayment until he paid USD$150,000 to the first defendant in full.

The defendants denied that they prevented the plaintiff from assuming control of the mining operations.

The defendants filed a counterclaim for the payment of USD$61,000 which they alleged was still due and owing to the first defendant in terms of the parties' first agreement.

In his replication to the amended plea and counter claim, dated 22 May 2013, the plaintiff denied being in material breach of the terms of the parties' agreements. In his plea to the counter-claim, he reiterated that the defendants themselves breached the agreement, by refusing to relinquish control of the first defendant's mining operations to him, as agreed.

This matter was referred to trial for the determination of these issues:

1. Whether the plaintiff was obliged to provide USD$150,000 towards the financing of a joint venture agreement.

2. Whether the defendants frustrated the contract and caused the non-fulfillment of its terms and conditions.

3. Whether the defendants breached the contract and caused the plaintiff to cancel it and demand re-payment of the USD$89,000 which he had advanced.

In terms of the joint pre-trial conference minute filed of record, on 29 May 2013, the defendants admitted that they received the sum of USD$89,000 from the plaintiff.

At the trial of the matter, Mr. Shi Jinwu gave evidence and told the court that he met the second defendant in February 2010 at a petrol station. He said that the second defendant told him that he was looking for investors for his mineral claims because he was experiencing financial difficulties, and invited him to form a partnership with him.

The plaintiff said that the second defendant invited him to tour his mining operations. He said that he asked him for a loan of USD$150,000. The loan was to be disbursed in phases. The second defendant offered to give up the certificates to his mining claims as collateral. He offered to let the plaintiff take over the day to day running of the mining activities.

The plaintiff told the court that the parties agreed that if he paid an initial USD$50,000 he would be allowed to take over the mining operations of the first defendant.

He said that he was surprised when the second defendant refused to let him assume control of the mining operations of the first defendant after he had paid the fifty thousand as agreed.

The plaintiff referred to Annexure 'A' to the summons, the agreement which the parties signed on 13 January 2011.

The plaintiff signed on behalf of “Chinese”. The second defendant signed that agreement on behalf of the first defendant. In fact, the plaintiff and second defendant are referred to as representatives.

The plaintiff told the court, that, despite the express terms of the agreement, the defendants refused to let him assume control of the mining operations, and, consequently, he was now seeking re-payment of the USD$89,000 which he had advanced to them.

He referred to a second agreement entered into on 3 October 2011 in which the defendants agreed to let him run the mine for purposes of recovering the USD$89,000 which he had advanced to them.

The plaintiff told the court, that, despite the signature of that second agreement, he was never given a chance to enter the mine.

He said that the defendants never prepared the relevant paperwork towards establishing a tribute agreement. There were no environmental and other requisite mining licenses. The plaintiff said that the second defendant kept on giving him excuses as to why he could not allow him to enter the mine and begin mining operations.

The plaintiff told the court that the spirit of the agreement never materialized.

He decided to cancel the partnership and to get a refund of his USD$89,000.

Finally, the plaintiff told the court, that, in his opinion, the second defendant ought to be bound in his personal capacity because he first knew him in his personal capacity.

During cross examination, the plaintiff told the court that he entered into the agreement with the first defendant in a representative capacity, as a representative of a company which is registered here in Zimbabwe, which he is a director of. He conceded that the name of this company was not part of any of the agreements entered into by the parties.

The plaintiff told the court that the first agreement was drafted by his friend who understands English, and that his friend explained the exigencies of the agreement to him. The plaintiff conceded that due to lack of understanding of the English language, he needed to have the agreements explained to him in Chinese.

He said that he was told of the contents of the agreements before he signed them, so he knew what he was signing for.

He called exhibit 1 a mining partnership agreement.

The plaintiff insisted that the partnership fell apart because he was not allowed to gain entry and to start mining operations.

He denied that the agreement known as exhibit 1 had anything to do with the loan agreement.

The plaintiff told the court that exhibit 1 was never followed that's why the parties entered into a second agreement - which was also never fulfilled.

The plaintiff told the court that the second defendant demanded that he pay USD$100,000 to him before he could allow him to enter and begin mining operations.

The plaintiff could not recall the exact dates when he cancelled the agreements entered into by the parties.

He could not comment on the letter shown to him, of 13 May 2011, from Messrs Danziger & Partners, which letter suggested that the parties had been at cross-purposes from the outset regarding the terms and conditions of their respective agreements.

He was unable to provide a cogent reason why the letter of cancellation did not mention that he had been denied entry to the mine, and suggested that the lawyers possibly misunderstood his instructions because of the language barrier.

The court had no problem following the logic of the plaintiff's evidence.

He was sincere in his belief of the terms of the agreements between the parties as they were explained to him in his language. The court believed that he told the truth as he knew it.

The plaintiff called Ms Hua Ding as his second witness.

She is also a Chinese national currently resident in Zimbabwe and South Africa. She told the court that she and the plaintiff met the second defendant at Gweru service station in December 2010. She was employed by the plaintiff as his assistant at the time. Ms Ding told the court that the second defendant invited them to tour his mining operations in Shurugwi and proposed that he enter into a joint venture agreement with the plaintiff to mine gold. She said that when the parties signed their first agreement, on 13 January 2011, she was not present but she witnessed some of the payments made to the defendants.

Ms Ding told the court that the agreement collapsed because the second defendant frustrated the plaintiff by denying him entry onto the mine site. She said that the second defendant had voluntarily surrendered the registration certificates to the first defendant's mining claims, as collateral against payment in full of the money advanced to the defendants as a loan.

Ms Ding told the court that the second agreement entered into by the parties was prepared by the second defendant.

She denied that the plaintiff breached the terms of this agreement, and insisted that it was the defendants who breached the agreement by failing to allow the plaintiff access to the mining site for purposes of conduction explorations, and to commence mining activities.

During cross-examination, Ms Ding remained steadfast that the plaintiff was denied access to the mine. She was unclear as to the reasons advanced for cancellation of the agreements, but she insisted, that, as far as she knew, the plaintiff was aggrieved when he was denied access to the mine despite clear provisions to the contrary in the two agreements signed by the parties.

Again, the court found this witness to be believable, although she could not shed light on some material aspects of the dispute between the parties. Ms Ding was articulate in English. It's a pity that when some of the material aspects of this matter were taking place she was in South Africa and is unable to assist the court to determine the truth.

The plaintiff's last witness was another Chinese national who is currently resident in Zimbabwe, Mr. Wei Ren.

He told the court that he was the plaintiff's mining manager from 2006 to 2010-2011. He confirmed that he was involved in the signing of the agreement between the plaintiff and the defendants.

Mr. Ren was responsible for structuring the mining partnership agreement.

He confirmed that he personally explained the exigencies of that agreement to the plaintiff, and satisfied himself that the plaintiff had understood the contents, before allowing him to append his signature to the agreement.

Mr. Ren also confirmed that exhibit 10, the second agreement between the parties, had been prepared by the second defendant.

He said that he signed that agreement on the plaintiff's behalf.

Before signing, he had consulted widely with the plaintiff who was in China at the time.

This witness told the court that the second defendant was given a loan by the plaintiff and that, he, in turn, had surrendered the certificates of registration to his mining claims to the plaintiff, as collateral for the repayment of the loan.

Mr. Ren told the court that the partnership collapsed because the second defendant denied the plaintiff access to the mine.

He said that the second defendant kept making excuses, but, at the same time, making requests for money to pay the first defendant's debts, until the plaintiff had disbursed a total sum of USD$89,000 to the defendants.

The witness told the court that the plaintiff lost his confidence in the second defendant because of the numerous lies he was told, and that, consequently, he elected to cancel the agreement of partnership.

He said that the second defendant never gave his permission to the plaintiff to commence mining operations, but, instead, kept on making incessant demands for more money.

Mr. Ren disputed the assertion that it was the plaintiff who breached the agreement between the parties. He insisted that it was the second defendant who failed to hold up his end of the bargain.

During cross examination, Mr. Ren confirmed that the plaintiff understood the entire contents of both agreements.

He told the court that a technical team was denied entry onto the mine after the initial USD$50,000 deposit had been paid. This happened fifteen (15) days after 13 January 2011, when the first agreement was signed.

The witness was unable to give a satisfactory explanation as to why the letter of cancellation of the agreement, dated 13 May 2011, had not mentioned that the plaintiff had been denied entry onto the mine as part of the reasons for cancellation.

When he was pressed, he blamed the legal practitioner for not following the plaintiff's instructions.

When it was suggested to him that the plaintiff's breach of clause 8 of the second agreement was the cause of the failure of the partnership, Mr. Ren denied this strenuously.

The plaintiff then closed its case.

Mr. Phillimon Mubata, the second defendant, testified on behalf of both defendants.

He told the court that it was the plaintiff who approached him and proposed that they enter into a joint venture. He said that this was after the plaintiff had proposed to buy the first defendant's mining claims and he had refused.

The second defendant told the court that the plaintiff was involved in a chrome mining project near to where the first defendant's mining claims were. He said that, contrary to what had been asserted by the plaintiff, the first defendant's legal documents were up to date, and all the requisite mining licenses were in place, and had always been in place.

The second defendant told the court that the parties agreed that a total of USD$150,000 would be paid to the first defendant, with an initial USD$50,000 to be paid, where after the second defendant would go to China with the plaintiff where water purification equipment would be bought, and paid for by the plaintiff, using the balance of USD$100,000.

After that, the parties would mine together using a new company which would be jointly owned.

He said that the parties agreed that the USD$150,000 would be repaid to the plaintiff using the proceeds of their joint mining efforts.

The second defendant told the court that the plaintiff breached the parties' agreement by failing to mount an exploration exercise at the mine. He said that he formed the view that the plaintiff ran out of money and was unable to bring the requisite equipment onto the mine. He also said that the plaintiff failed to bring technical experts onto the mine to conduct viability surveys as agreed.

The second defendant denied that the plaintiff was ever denied access to the mine. He said that at all material times, the plaintiff had personnel from his company present at the mine, taking soil samples, and finishing construction of certain buildings on the mine which they intended to use to accommodate their employees.

The second defendant told the court that the reason why the plaintiff purported to cancel the parties' first agreement was because he had refused to sell the mine to the plaintiff or to transfer the claim registration certificates to him.

On exhibit eleven, the parties' second agreement, the witness told the court that the plaintiff was extensively consulted over the telephone by Mr. Wei, and that he authorized Mr. Wei to sign the agreement on his behalf.

According to the second defendant, part of the problem with this matter is that the plaintiff relied entirely on Mr. Ren's interpretation and understanding of things, and there is a possibility that Mr. Ren could have distorted some things in his interpretation from English to Chinese, because Mr. Ren had ambitions to go into business for himself.

During cross-examination, the second defendant denied that it had ever been the parties' intention that he be personally liable or a party to the agreements in his personal capacity. He denied ever receiving any money in his personal capacity, and insisted that all transactions were done in the name of the first defendant, and that he never bound himself as surety.

Mr. Isaac Mhere testified as the defendant's second witness.

He said that he is employed as a Finance and Administration manager by the first defendant, and that the plaintiff, together with a group of other Chinese investors, came to the mine in January 2011 and asked if they could tour the mine and look at the mining operations.

He knew the plaintiff from the mine next door, so he agreed.

Mr. Mhere asked the second defendant for permission to allow the Chinese investors to tour their mining operations, and permission was granted.

Later, he was involved in the discussions for a joint venture, and present at the signing of the first agreement.

The witness told the court that the plaintiff paid the initial deposit of USD$50,000 in bits and pieces, and not as a lump sum as agreed. He personally receipted the payments. He said that the fifty thousand was not paid by the agreed date; it was paid much later than that.

Mr. Mhere said that the plaintiff was never denied access to the mine. He is in charge of the day to day running of the mine, and, if access was to be denied to the plaintiff, it would have been denied by him because he was in charge at the mine site and the second defendant normally operated from offices in Gweru city.

Mr. Mhere told the court, that, the purpose of the second agreement entered into by the parties was to rescue the first agreement and make it workable.

He said that the plaintiff breached the second agreement by failing to pay USD$61,000 as it stipulated; he failed to form a joint venture company; he failed to bring in equipment; he failed to conduct an exploratory survey; and he failed to provide working capital.

During cross examination, Mr. Mhere was adamant that the plaintiff was allowed access to the mine immediately after the first agreement was signed. He said that daily meetings were held on the site at the mine with the plaintiff's employees. He said the plaintiff was never blocked from coming onto the mine.

The defendant closed its case at this juncture.

The question for determination is a simple one: the Court must decide who is telling the truth between the plaintiff and the second defendant, regarding the question of breach of the parties' respective agreements.

Once the court determines this question, the next matter for consideration will be whether the plaintiff is entitled to be refunded USD$89,000, or whether the defendant is entitled to specific performance, and to payment of USD$61,000.

The law that governs contractual relationships is clear.

In interpreting a contract, a court must determine what the intention of the parties was when they entered into a contract.

In this case, did the parties intend to enter into a joint venture agreement in terms of which the plaintiff loaned one or both the defendants the sum of USD$150,000, or did the parties enter into a mining partnership agreement, in terms of which the plaintiff agreed to loan the partnership USD$150,000 which was to be re-paid from the proceeds of the mining venture?

The evidence shows that the parties had different ideas about their rights and obligations which emanated from both agreements which they entered into.

Were they ever of one mind, or there was never any consensus ad idem?

In researching what the law says on how to interpret the intention of parties to a contract, I came across the following:

In the case of Chikoma v Mukweza 1998 (1) ZLR 541 (SC) the Supreme Court stated that:

“…, the approach that the courts will adopt to the issue of whether a contract is void for vagueness will be to help the parties towards what they both intended rather than obstruct them by legal subtleties and allow one of the parties to escape the consequences of all he has done and all he has intended. The courts will interpret contracts fairly and broadly, without being quick to find defects, following the principle ut res magis valeat quam pereat.”

The court said that:

“Against this scenario, the approach to be adopted to the issue of vagueness must be that expressed by PRICE J in Hoffmann & Carvalho v Minister of Agriculture 1947 (2) SA 855 (T) at 860, namely:

'Where parties intend to conclude a contract, think they have concluded a contract, and proceed to act as if the contract were binding and complete, I think the court ought rather to try to help the parties towards what they both intended rather than obstruct them by legal subtleties and assist one of the parties to escape the consequences of all that he has done and all that he has intended....'”

Not to be overlooked, as well, are the wise words of LORD WRIGHT in Hillas & Co Ltd v Arcos Ltd [1932] All ER Rep 494 (HL) at 503I; (1932) 147 LT 503 (HL) at 514:

“Businessmen often record the most important agreements in crude and summary fashion; modes of expression sufficient and clear to them in the course of their business may appear to those unfamiliar with the business far from complete or precise. It is, accordingly, the duty of the court to construe such documents fairly and broadly, without being too astute or subtle in finding defects; but, on the contrary, the court should seek to apply the old maxim of English Law, verba ita sunt intelligenda ut res magis valeat quam pereat.”

The mutual intention of the parties, at the time of the contract, will govern the court's resolution of a contractual dispute if that intention can be determined and if that intention is lawful.

If possible, the mutual intent of the parties will be determined only from the written terms of the contract. If the language of the contract is clear and definite, that language will determine the mutual intent of the parties.

It is my view that the language of the parties' first agreement is clear.

It was an agreement to co-operate and operate the mine under the auspices of a new company which was to be incorporated and to be jointly-owned and controlled by the parties. The parties intended to conclude a contract. They thought that they had concluded a contract, and proceeded to act as if the contract were binding and complete.

The plaintiff proceeded to pay USD$50,000 in drips and drabs.

The parties went to China to look for water purification equipment. The plaintiff continued to give the first defendant money when requested to do so until he had paid USD$89,000.

There were no defects in the January agreement.

None were found in the second agreement.

The court discharged its duty and construed both documents fairly and broadly, without being too astute or subtle in finding defects. The court concluded, that, in respect of both documents, there was consensus as to the intention of the parties and a meeting of the minds in regards to the parties rights and obligations.

The evidence on record showed that the plaintiff had all the terms of both agreements explained to him, in Chinese, before appending his signature. Both agreements were valid and binding on the parties.

The court believed the evidence of the defendants that the plaintiff did not pay the initial USD$50,000 by 26 January 2011 as agreed. The evidence was that the plaintiff paid the USD$50,000 in drips and drabs and that, by 1 March 2011, the plaintiff had not fulfilled its obligation to form a joint venture company.

The court accepts, that, the plaintiff failed to pay the balance of USD$100,000 to the first defendant by 11 March 2011.

The court finds that the plaintiff breached the terms of the agreement entered into by the parties on 13 January 2011.

The plaintiff's excuse for non-performance of the contract appears to be an allegation of frustration of purpose.

However, the plaintiff's claims that he was not allowed to enter the mine are not supported by the evidence.

The court believed the first defendant's manager, that, the plaintiff had employees on the ground, immediately after the agreement was signed, who could come and go at their leisure on the site, and that the plaintiff even posted a guard at the gate to the mine to safeguard his interests.

That explanation is the most probable; given that the plaintiff was already operating on a neighboring mine; it would be absurd to find that his employees were barred entry onto the defendant's mine when they had previously come and gone without any hiccups.

The plaintiff was never prevented from entering the mine.

It is more probable that the plaintiff failed to raise the initial USD$50,000 tranche of the loan; he failed to register the joint venture company on time; and he failed to pay the USD$100,000 within the stipulated period.

The parties then decided to complicate matters by entering into a second agreement, which was described by the defendants' witness as “an attempt to rescue the first agreement.”

On 3 October 2011, nine months after the first agreement was entered into, the parties agreed to let the plaintiff operate the mine to recover the USD$89,000 that the first defendant had borrowed in terms of the first agreement.

Clause 3 of the second agreement stipulates that the USD$89,000 would be repaid using the proceeds of production from operating the mine.

It was agreed that the plaintiff would be offered a tribute to operate and extract ore from the first defendant's claims, and that if the USD$89,000 was paid in full before the expiry of the tributary period, then, a “percentage share structure” would be drafted by the parties.

It was agreed that the loan balance of USD$61,000 would be paid before the plaintiff could be given access to the mining area.

The author R. H. CHRISTIE, Business Law in Zimbabwe, 2nd ed, 1998…, has the following to say about reciprocal obligations:

“There is a presumption that in every bilateral or synallagmatic contract, i.e. one in which every party undertakes obligations towards the other, the common intention is that neither should be entitled to enforce the contract unless he has performed or is ready to perform his own obligations. Whether this presumption applies and whether the reciprocal obligations are to be performed simultaneously or consecutively are questions of interpretation of the contract.

See ESE Financial Services (Pty) Ltd v Cramer 1975 (2) SA 805 @ 808-9.

In contracts to which this principle of reciprocity applies, a plaintiff who demands performance without himself having performed, or tendered to perform, may be met with the exceptio non adimpleti contractus in the form of a dilatory plea: see BK Tooling (Edms) Bpk v Scope Precision Engineering (Edms) Bpk 1979 (1) SA 391 (A).

What if, in a contract to which the principle of reciprocity applies, the plaintiff has partly, but not completely, performed?

If the wording of the contract makes it very clear that he has no claim until he has performed in full, the defendant will be entitled to rely on the exceptio: Van Rensburg v Straughan 1914 AD 317.

But, in any other case, an equitable principle comes into play, based on unjust enrichment: see Ambrose and Aitken v Johnson and Fletcher 1917 AD 327 and applied in Grizzel v P & W Erection Co (Pvt) Ltd 1972 (2) RLR 68 (A), 1972 SA 449 378, 1972 RLR 21.”

Clearly USD$61,000 was never paid to the first defendant, so, the plaintiff's excuse for non-performance, that of frustration of purpose, does not apply.

In my view, the plaintiff has brought these proceedings in an effort to anticipate the first defendant's repudiation of the contract.

The terms of the second agreement between the parties were clear.

The plaintiff was to pay USD$61,000 before he could be allowed onto the mining site, or be allowed to commence operations, or be granted a mining tribute.

The plaintiff cannot claim that the first defendant breached the second agreement, which superseded the first agreement, when it was clearly a condition precedent to entry on the mine, that the additional sum of USSD$61,000 be paid first.

Novation means the replacing of an existing obligation by a new one, the existing obligation being thereby extinguished.

It could be argued that the October agreement was a novation of the January agreement.

The January agreement is what is governing the parties reciprocal obligations. The wording of the agreement has no provision for breach.

This means that the equitable principle, which is based on unjust enrichment, comes into play.

It is my view that the plaintiff's breach of both agreements went to the root of the agreements.

He failed to pay the USD$50,000 on time; he failed to register a joint venture company within the agreed period; he failed to bring equipment and capital to the venture; he failed to conduct geological surveys as agreed; he failed to pay USSD$150,000 as agreed.

A reasonable person may conclude that the plaintiff repudiated the parties' agreements.

He clearly does not intend to pay the first defendant the remaining USD$61,000.

He told the court that he has lost confidence in the defendants and no longer wants to work with them.

One of the remedies for breach of contract is cancellation.

I find that the plaintiff repudiated the parties' agreements. The first defendant is entitled to cancel the agreements and claim damages.

It has elected, instead, to counterclaim for payment of USD$61,000.

In my view, such a claim, being one for specific performance, is not sustainable where the other party to the contract has repudiated it.

The parties agreements did not provide any breach clauses. They never applied their minds to what would happen in the event of breach.

I am persuaded that it would be appropriate to utilise the equitable principle in coming to a resolution of this matter.

I hold this view primarily because the court was uneasy with the plaintiff's level of understanding of the terms of both agreements.

The plaintiff is a Chinese national who came to invest in the mining business in this country. He does not understand English. He relied on the services of his employees to explain the terms of the agreements to him.

The evidence before the court is that some of the interpretation of the agreements was not entirely bona fide because Mr. Ren wanted to go into business for himself and could have misled the plaintiff on some material aspects of the contracts between the parties.

The court believed that evidence.

The plaintiff seemed adamant that he ought to have been allowed to commence mining operations. The terms of the October agreement are diametrically opposed to this belief.

Contracts are made by agreement. They can be unmade by agreement, but, they cannot be unilaterally varied or discharged: see Strachan v Lloyd Levy 1923 AD 670, 671.

It has been said that:

“…, waiver is a bilateral transaction and does not result from a unilateral declaration or a decision…,.:” see Alberts v Bryson 1976 (2) RLR 193 (A) 198, 1977 (1) SA 857 860.

A modern interpretation of the equitable principle, one that takes into account the situation that is currently prevailing in our economy, might not favor an insistence that the plaintiff cannot succeed in his claim until he has performed, in full, the terms of the October agreement.

The court can exercise its discretion in the plaintiff's favour, despite his partial performance of the January agreement (by advancing a loan up to USD$89,000), and his non-performance of the October agreement.

In weighing the equities, the court was guided by Ambrose and Aitken v Johnson and Fletcher 1917 AD 327 where it was stated that it is not for the court to remake a contract of the parties.

The first defendant would be unjustly enriched if it were allowed to keep the USD$89,000 advanced to it by the plaintiff.

The doctrine of privity in the common law of contract provides that a contract cannot confer rights or impose obligations arising under it on any person or agent except the parties to it.

Privity is the legal term for a close, mutual, or successive relationship to the same right of property or the power to enforce a promise or warranty: see Coalridge (Private) Limited v Peter Makawu & Mobil Zimbabwe (Private) Limited SC69-04.

It is my considered view that just because the second defendant signed the January agreement as a representative of the first defendant did not mean that he became a party to the agreement.

The evidence before the court was that the mining claim certificates are in the name of the first defendant. It was the first defendant which entered into the January and October agreements with the plaintiff.

Being a juristic person, the first defendant is unable to sign documents; it would have to rely on its director and shareholder, the second defendant, to sign the documents as its officer and on its behalf.

No evidence was led before the court to show that the parties intended that the second defendant be bound as surety with the first defendant for the due performance of its liabilities.

Accordingly, I find that there was no privity between the plaintiff and second defendant, and that there is no evidence of liability against the second defendant.

Having found that the plaintiff was obliged to provide USD$150,000 towards the financing of a joint venture agreement, and that the defendants did not frustrate the contract and cause the non-fulfillment of its terms and conditions, or breach the contract and cause the plaintiff to cancel it, the court finds, nonetheless, that, it would be just and equitable to allow the plaintiff to recover the USD$89,000 which he had advanced to the first defendant.

In the result, it is ordered that:

1. The plaintiff's claim against the second defendant be and is hereby dismissed with costs.

2. The defendant's counterclaim against the plaintiff, for payment of USD$61,000, be and is hereby dismissed with costs.

3. Plaintiff's claim, as against the first defendant, Big Valley Masters (Private) Limited, in the sum of USD$89,000, is allowed, together with interest thereon at the prescribed rate calculated from 11 December 2012 to the date of payment in full.

4. First defendant shall bear the costs of suit.

View Appeal
HH329-17 : MARINDA FENESEY vs GATEWAY PRIMARY SCHOOL and K M RICQUEBOURG N.O. and GATEWAY PRIMARY SCHOOL PARENTS ASSOCIATION and THE SHERIFF OF ZIMBABWE
Ruled By: MUSAKWA J

This is an application for a spoliation order. The draft order reads as follows -“TERMS OF FINAL ORDER SOUGHTThat you show cause to this Honourable Court why a final order should not be made in the following terms;1. The 1st, 2nd and 3rd Respondents be and are hereby interdicted from ...

This is an application for a spoliation order. The draft order reads as follows -

“TERMS OF FINAL ORDER SOUGHT

That you show cause to this Honourable Court why a final order should not be made in the following terms;

1. The 1st, 2nd and 3rd Respondents be and are hereby interdicted from interfering in any manner with the Applicant's business operations at the tuck shop situated at Gateway Primary School, including, but not limited to barring her potential customers from buying from the tuckshop.

2. The1st, 2nd and 3rd Respondents be and are hereby ordered not to unlawfully evict the Applicant from the tuck-shop at Gateway Primary School.

3. The 1st, 2nd and 3rd Respondents to pay costs of suit on an attorney and client scale, the one paying the others to be absolved.

INTERIM RELIEF GRANTED

Pending confirmation or discharge of the provisional order, the Applicant is granted the following relief:

1. The 1st, 2nd and 3rd Respondents be and are hereby ordered to remove their additional locks at the tuckshop at Gateway Primary School upon service of this order and take all necessary steps to ensure that the Applicant's peaceful and undisturbed occupation of the tuck shop is restored failing which the 4th Respondent be and is hereby authorized to remove the locks above said (sic).

2. The 2nd Applicant (sic) be and is hereby ordered to publicly, and at an assembly, reverse the order he imposed on school pupils and teachers not to buy at the Applicant's tuck shop at Gateway Primary School.

3. The Applicant's legal practitioners are hereby given leave to serve the order on the Respondents.”

The background to this application is that the applicant leased a tuckshop that is situated at Gateway Primary School. The agreement was concluded with the Parents Association Committee of Gateway Primary School.

The applicant has been a statutory tenant since 2011.

On 6 February 2017, the applicant was given notice of termination of the lease with effect from 6 April 2017.

On 5 April 2017, the applicant's legal practitioners wrote to the chairman of the Parents Association Committee challenging the termination of the lease without good cause.

The applicant claims that she stocked the tuckshop in anticipation of the opening of the second term of schooling.

On 9 May 2017, which was the opening day of school, it is alleged that the second respondent barred everyone from buying from the tuck shop. The ban was announced at the school assembly. People were deployed to guard against anyone buying from the tuckshop. The applicant tried to engage the second respondent to no avail.

On 10 May 2017, the applicant found that additional locks had been installed on the tuck shop. As a result, she has not been able to access the tuck-shop.

It is the applicant's contention, that, she had hitherto been in peaceful and undisturbed possession of the tuck shop. Consequently, she was despoiled of her peaceful and undisturbed possession of the tuckshop.

The respondents contend, that, the applicant accepted the termination of the lease. She only flipped on 5 April 2017.

When she voluntarily gave up possession, the Gateway Schools Trust took over the premises.

It is also contended, that, the applicant was never in possession of the premises during the month of April. It is also disputed that she stocked the tuck shop.

There is further averment that the second and third respondents did what was in the best interests of the pupils whom the applicant was swearing at.

Although in the opposing papers the respondents had raised some points in limine, counsel for the respondents abandoned them in favour of the matter being heard on the merits.

That is quite commendable, as it has become predictable, in urgent applications, for the opposing side to raise preliminary issues.

Counsel for the applicant submitted, that, there was no response to the letter of 5 April, which suggests an admission of the unlawful conduct complained of. He further submitted, that, in terms of the oral lease, the applicant would not pay rentals during school holidays as there was no business to be conducted. However, the applicant had access to the tuck shop during the holidays.

The denial of access, by placing additional locks, is in violation of section 24 of the Commercial Premises (Rent) Regulations, S.I.676 of1983, SI676/83.

He further submitted that a tuck shop fits within the definition of commercial premises.

Regarding the contention that a spoliation order may not be granted where it is not practicable to do so, counsel for the applicant submitted that there is no averment that someone else has taken over the premises.

In submitting that the requirements for spoliation had been proven, he outlined them as -

(a) Peaceful and undisturbed possession; and

(b) Unlawful deprivation.

Whilst conceding the legal requirements for spoliation, counsel for the respondents submitted that this is not a case of spoliation.

According to him, spoliation is proprietary and does not apply to personal rights. He further submitted, that, the applicant's possession of the premises ended when the lease was terminated. Thus, possession of immovable property must be factual. Quasi-possession does not apply.

Counsel for the respondents also submitted that the applicant was misconceived to claim that the Commercial Premises (Rent) Regulations, SI676/1983 apply to the facts of the matter. This is because Gateway Primary School does not constitute commercial premises.

Counsel for the respondents further submitted, on the authority of De Jager and Others v Farah and Nestadt 1947 (4) SA 28 that a court has discretion not to grant a spoliation order where it is not practicable to do so.

Thus, it was his submission that the applicant's return to the premises would poison the learning environment. This is because the relationship between the parties is said to have deteriorated.

Reference was made to an incident wherein the applicant is said to have scolded one pupil calling her an idiot.

I do not think that it can be argued, seriously, that the applicant was not in possession of the tuck shop.

Once it is admitted that there was a lease agreement, then the issue of possession is established.

The applicant had access to the tuckshop from where she conducted her business.

Even though the applicant was not in exclusive possession of the tuck-shop, as it would be closed during holidays, it cannot be said she forfeited her overall physical control.

I am not persuaded that the tuck shop does not constitute commercial premises.

This is because, in terms of the Commercial Premises (Rent) Regulations, S.I.676/83 commercial premises are defined as -

“'commercial premises' means any premises, or part thereof, occupied under a lease for the purpose of carrying on therein any industry, business, trade or occupation, and includes any ground, parking-space, garage, outbuilding, workers quarters, and other improvement let therewith;”

There is no doubt that the applicant was conducting business under a lease with the respondents. This is irrespective of the fact that Gateway Primary School, on which the tuckshop is situated, may not be commercial premises for other purposes.

For purposes of a spoliation order, possession is not dependent on who has better title between an applicant and the spoliator.

What is necessary to prove is that the applicant was unlawfully dispossessed, or was unlawfully prevented from resuming possession after temporarily relinquishing physical control over the thing where there is reasonable belief that the applicant would be able to resume such control whenever he required the thing: see H. SILBERBERG, The Law of Property -1975.

With the requirements for spoliation having been set out, the only valid defences available are that -

(a) The applicant was not in peaceful and undisturbed possession of the thing in question at the time of the dispossession;

(b) The dispossession was not unlawful and therefore did not constitute spoliation;

(c) Restoration of possession is impossible;

(d) The respondent acted within the limits of counter-spoliation in regaining possession of the article.

In this respect, see the case of Kama Construction (Pvt) Ltd v Cold Comfort Farm Co-Operative and Others 1999 (2) ZLR 19 (SC).

There is dispute between the parties regarding whether the applicant had relinquished possession of the tuck shop by virtue of the notice that was given by the third respondent.

The applicant denies that she acquiesced to the notice, hence the letter of 5 April.

The other contention is that if she had voluntarily vacated the tuck shop, there would have been no need to install the additional locks. In addition, there would have been no need to make an announcement at assembly.

I would therefore hold, that, the applicant was unlawfully deprived of possession of the tuckshop. This destroys the respondents defence that the applicant voluntarily vacated the tuck shop.

It can be noted that the notice of termination did not advance any reasons.

This does not accord with section 22 of the Commercial Premises (Rent) Regulations, S.I.676/1983 which provides that -

“No order for the recovery of possession of commercial premises or for the ejectment of a lessee therefrom which is based on the fact of the lease having expired, either by the effluxion of time, or in consequence of notice duly given by the lessor, shall be made by a court, so long as the lessee —

(a) Continues to pay the rent due, within seven days of due date; and

(b) Performs the other conditions of the lease;
unless the court is satisfied that the lessor has good and sufficient grounds for requiring such order other than that —

(i) The lessee has declined to agree to an increase in rent; or

(ii) The lessor wishes to lease the premises to some other person.”

The fact that the applicant refused to vacate the premises did not empower the respondents to resort to unorthodox means to gain control of the premises. This runs contrary to the well-established principle that no one must take the law into their own hands.

The law on spoliation is aimed at protecting a possessor in retaining physical control or regaining it where he or she has been unlawfully deprived of such possession: see WILLE's Principles of South African Law, 7th ed.

The placing of additional locks on the tuckshop violates section 24 of the Commercial Premises (Rent) Regulations, SI 676/83 which provides that -

“No lessor of commercial premises shall —

(a) Without a lessee's consent, and without reasonable excuse, cause the removal from the premises of any property belonging to the lessee; or

(b) Prevent a lessee from using or occupying the premises; unless he has obtained an order of court for the removal of such property, if appropriate, or for the recovery of possession of the premises or the ejectment of the lessee therefrom.”

As regards whether restoration is possible, the contention by the respondents is untenable.

The argument, that the relationship between the parties has deteriorated was never advanced in the notice of termination. The claim that the applicant verbally abused a pupil cannot be an adequate reason to deny restoration as the aggrieved party has sufficient remedies to pursue. In addition, there was no averment by the respondents that a new tenant has since taken over the premises.

Accordingly, a provisional order is granted in terms of the draft.

SC81-21 : FRANK HUMBE vs DESMOND MUCHINA and SPARKLES SERVICES (PVT) LTD and GODFREY MUNYAMANA and SHERIFF OF ZIMBABWE and FADZAYI MUNYAMANA
Ruled By: BHUNU JA, MATHONSI JA and KUDYA AJA

The appellant brought an urgent chamber application in the High Court for a stay of the execution of a judgment obtained by the first respondent against the second and third respondents on 12 February 2018 in the sum of US$352,851=30 together with interest and costs of suit.

By judgment delivered on 21 August 2020, the High Court dismissed the application with costs.

This appeal is against that judgment dismissing the appellant's urgent application.

THE FACTS

The third and fifth respondents, who are husband and wife, hold title to Stand 67 Guildford Estate Township of Subdivision H of Guildford of Borrowdale Estate, also known as No.67 Guildford Crescent, Borrowdale, Harare (the house) by Deed of Transfer Number 1447/2009.

On 15 November 2013, they entered into a Deed of Sale in terms of which they sold the house to the appellant for US$380,000 payable in certain instalments from 30 November 2013 to 30 June 2014.

There is no convergence between them as to whether the full purchase price was paid.

The appellant alleges having paid part of the purchase price through the sale of his own neighbouring house, through the agency of the second respondent, and part of it through the sale to the third respondent of his Mercedes Benz S Class motor vehicle.

The appellant alleges, further, that, although he failed to pay the cash balance of the purchase price in accordance with the agreement, he has however paid it in full.

On the other hand, the third and fifth respondents position is that the appellant defaulted in his payments, and, after giving him the requisite 30 days notice, in terms of the Deed of Sale, they duly cancelled the agreement.

Notwithstanding such cancellation, the appellant still sued the second, third, and fifth respondents in case number HC11367/15, which was filed on 20 November 2015, for an order compelling transfer of the house to himself and for their eviction from it.

The summons action in question was defended and does not appear to have been prosecuted with any zeal thereafter.

HH169-13 : TROJAN NICKEL MINE LIMITED vs RESERVE BANK OF ZIMBABWE
Ruled By: MATHONSI J

It is WALLIS JA, with HARMS AJ, VAN HEERDEN JA, MALAN JA and PETSE AJA all concurring who waxed lyrical in Executive Officer of the Financial Services Board v Dynamic Wealth Ltd Ors 2012 (1) SA 543 when he said:“Ever since the bursting of the South Sea Bubble ...

It is WALLIS JA, with HARMS AJ, VAN HEERDEN JA, MALAN JA and PETSE AJA all concurring who waxed lyrical in Executive Officer of the Financial Services Board v Dynamic Wealth Ltd & Ors 2012 (1) SA 543 when he said:

“Ever since the bursting of the South Sea Bubble in 1720, governments have recognised the need, in the interests of the investing public, for regulation of the financial services industry.”

The plaintiff, a public company registered in Zimbabwe sued the defendant for payment of US$1,007,541=30 together with interest at the prescribed rate and costs of suit, being the plaintiff's money allegedly appropriated by the defendant from the plaintiff's bank in pursuance of a Monetary Policy Statement issued in terms of section 46 of the Reserve Bank Act [Chapter 22:15] (“the Act”) and a directive issued to banks in terms of section 35(1) of the Exchange Control Regulations, Statutory Instrument 109/96, SI109/1996.

The defendant is established in terms of section 4 of the Reserve Bank Act [Chapter 22:15] and is charged with, inter alia, the regulation of Zimbabwe's monetary system, the supervision of banking institutions, and the smooth operation of the payment system as well as acting as banker and financial advisor to, and fiscal agent of, the State.

It is salutary that the defendant performs these functions in order to regulate banking and protect the banking public.

In the discharge of its duties aforesaid, the defendant issued a Monetary Policy statement, on 1 October 2007, centralising all foreign currency accounts and directing the lodgement, at its doorsteps, of all corporate foreign currency balances held by authorised dealers.

One such authorised dealer is Banc ABC where the plaintiff maintained a foreign currency account.

In compliance with the monetary policy, and a subsequent directive issued by the defendant, Banc ABC lodged the plaintiff's foreign currency balance with the defendant.

That is the last time the plaintiff saw the money, as the defendant did not return it to Banc ABC as a result of which the plaintiff was unable to access that money.

The plaintiff then sued the defendant aforesaid seeking to recover the money but the defendant contested the action averring, in its plea, that, there was no causal nexus between the parties given that the plaintiff and the defendant did not enjoy any banking relationship and that the plaintiff should have proceeded against its Bank, that is Banc ABC, and not against the defendant.

At the pre-trial conference, the parties agreed on the issues for trial as:

“1.1. Whether or not the plaintiff has a cause of action against the defendant.

1.2. Whether or not the defendant is obliged to pay the amount claimed or any amount at all.”

When the matter initially came before me for trial, the parties were of the view that the facts were generally common cause. They then requested the deferment of the hearing to enable them, firstly, to agree on the facts, prepare and file a Statement of Agreed Facts as well as heads of argument.

In due course this was done, and the Statement of Agreed Facts signed and filed by the parties reads:

“1. The plaintiff is Trojan Nickel Mine Limited, a public company registered in accordance with the laws of Zimbabwe.

2. The defendant is the Reserve Bank of Zimbabwe. It is established in terms of the Reserve Bank of Zimbabwe Act [Cap 22:45] (“the Act”) with the power, amongst other things, to regulate the banking sector.

3. The plaintiff, at all material times, maintained a foreign currency account number ZWTROJ001CALUS0019 domiciled at Banc ABC, formerly the African Banking Corporation.

4. On 1 October 2007, the Governor of the defendant, Dr G. Gono, issued a Monetary Policy Statement in terms of section 46 of the Act. The Monetary Policy Statement provided, in pertinent part, as follows..,.:

'6.2. In order to achieve the twin objectives of boosting exporter viability and improving the economy's accountability for total export and other foreign currency receipts, as well as ensuring judicious allocation of the scarce foreign currency resources, it has become necessary that the Reserve Bank introduces a new frame-work where we pool our resources together without disadvantaging the generators of that foreign currency.

6.3. Within this spirit, of preserving and promoting the welfare of our generators of foreign currency, who are the geese that lay the golden eggs, it has become necessary that the Central Bank centralises the management of FCAs, along with the creation of an interest earning investment window that boosts exporter viability.

6.4. What this means is that, with immediate effect, all corporate FCA balances at Authorised Dealers are to be lodged at the Reserve Bank, such that each bank maintains mirror accounts for transactions tracing purposes.'

5. On 2 October 2007, the defendant's Division Chief, Exchange Control, one M.B. Mpofu, directed a minute to the Head, Exchange Control Department of all Authorised Dealers, which read(s) in pertinent part as follows:

'Dear Sir/Madam

DIRECTIVE ISSUED IN TERMS OF SECTION 35(1) OF THE EXCHANGE CONTROL REGULATIONS, STATUTORY INSTRUMENT 109 OF 1996

1. INTRODUCTION

1.1. Reference is made to the Mid-Year Monetary Policy Statement announced by the Governor on 1 October 2007. In order to operationalize the measures highlighted therein, Authorised Dealers are accordingly directed as follows…,.:

2….,.

3. CENTRALISED FCA MANAGEMENT

3.1. Authorised Dealers are advised, that, with immediate effect, all Corporate and Non-Governmental Organisations (NGOs) FCA balances, as at 1 October 2007, shall be lodged with the Reserve Bank.

3.2. Authorised Dealers shall transfer all their Corporate FCA (including EPZ Companies) and NGOs balances to the Reserve Bank by close of business on 2 October 2007, as directed by International Banking and Portfolio Management Division, and submit to Exchange Control, individual exporter balances on those transfers made.

3.3. Authorised Dealers are required to maintain mirror accounts for their exporting clients indicating individual entitlements for transaction tracking purposes.

3.4. Authorised Dealers shall submit to the Exchange Control Inspectorate monthly foreign currency account statements for their clients for which global balances should be consistent with holdings at the Reserve Bank's Internal Banking and Portfolio Management Division.

3.5. All special FCAs (transitory accounts) and FCAs for International Organisations, Embassies, and Individuals shall remain with Authorised Dealers.

3.6. In order to ensure that exporters preserve the real value of the foreign exchange deposits under the pooled framework, all such deposits shall earn an all inclusive (interest) rate of 12% per annum in foreign currency for USD, Pound, Euro, Pula and Rand.'

6. The Ban ABC was, and remains, an Authorised Dealer.

7. The plaintiff alleges, that, it had a foreign currency balance of USD1,007,541=30 as at 1 October 2007 in its FCA aforesaid.

8. Banc ABC, pursuant to the directive in para 4 above, remitted the sum of USD1,492,516=06 to the defendant.

9. The plaintiff alleges, that, it has been unable to access its funds from Banc ABC despite demand.

10. The plaintiff has sued the defendant for:

'Payment of an amount of USD1,007,541=30 which amount is due and payable to the plaintiff by the defendant: which amount represents the entire balance of the money which was held by the plaintiff in a foreign currency account in African Banking Corporation Limited: which amount was appropriated by the defendant some time in 2008: and which amount, despite demand, the defendant fails or refuses to pay.'

11. The defendant has pleaded to the summons as follows:

'The defendant pleads that there is no causal nexus between the plaintiff and the defendant, more particularly that:

(a) The plaintiff and defendant have no banking relationship and the defendant did not manage or keep a banking account of the plaintiff and owed the plaintiff no duties normally associated with a banker and its depositor.

(b) The plaintiff's claim should be against its banker and not the defendant. It is improper and there is no legal basis alleged which would entitle the plaintiff to bring a claim against the defendant.

WHEREFORE, the defendant prays for the dismissal of the plaintiff's claim with costs.'

12. The parties have joined issue and agreed on the following issues for disposition:

12.1 Whether or not the plaintiff has a cause of action against the defendant.

12.2. Whether or not the defendant is obliged to pay the amount claimed or any amount at all.

13. The parties respectfully pray that this honourable court may dispose of the agreed issues on the basis of the facts agreed herein and Heads of Argument to be filed by both parties.

DATED AT HARARE this 22nd day of May 2013.”

The Statement of Agreed Facts is duly signed by counsel for the parties.

Counsel for the plaintiff submitted, that, the plaintiff does have a cause of action against the defendant because it is the defendant which wrongfully procured a breach of the contract that exists between the plaintiff and Banc ABC. He maintained, that, an action exists in our law for the intentional and wrongful interference with contractual rights.

In addition, the plaintiff is entitled to recover from the defendant the procured money on the basis of unjust enrichment, it having been enriched at the expense of the plaintiff.

Counsel for the plaintiff strongly argued, that, the directives issued to Authorised Dealers, by the defendant, had the effect:

(i) Firstly, of inducing Banc ABC to commit a breach of its contract with the plaintiff; and

(ii) Secondly, the directives intentionally and wrongfully interfered with contractual rights.

Counsel for the defendant did not address himself to that argument. As far as he was concerned, there was no banker and client relationship between the parties, and, for that reason, the defendant does not owe the plaintiff any duty.

Counsel for the defendant insisted, that, it is the plaintiff's Bank which received the money from the plaintiff, and, for that reason, it is the one with the obligation to pay the money to the plaintiff.

Counsel for the defendant further argued, that, the plaintiff's pleadings do not allege a legal basis entitling it to bring a claim against the defendant especially as the summons does not specify that the suit is based on either contract or delict.

Relying on the judgment of BERE J in China Shougang International v Standard Chartered Bank Zimbabwe Limited HH310-11 where the learned judge stated, obiter dictum…, that there was no privity of contract between the Central Bank and a depositor at a Bank.

I do not think the decision in China Shougang International v Standard Chartered Bank Zimbabwe Limited HH310-11 needs to detain us at all because it is clearly distinguishable from the present case.

In that case, the depositor had sued its own Bank and the defendant (in casu) was not cited as a party to the proceedings. More importantly, apart from the fact that the claim was based on a banker and depositor relationship, and not on the procurement of the deposit by the present defendant, there was also no admission by the Reserve Bank of Zimbabwe (RBZ) that it had indeed appropriated the depositor's money.

I agree with counsel for the plaintiff, that, the question of wrongful procurement was not placed before the court in that matter. Therefore, the case is distinguishable.

In our law, it is generally accepted, and I did not hear counsel for the defendant argue to the contrary, that, an action exists for intentional inducement of a breach of contract.

In PQR BOBERG, The Law of Delict, Vol 1, Juta & Co. Ltd…, the point made that:

“It is well established that the intentional inducement of a breach of contract is an actionable wrong: see Atlas Organic Fertilisers (Pty) Ltd v Pikkewyn Ghwano (Pty) Ltd 1981 (2) SA 173 (T) at 202G, and the cases there-cited.”

In Dantex Investments Holdings (Pty) Ltd v Brenner & Ors NNO 1989 (1) SA 390 (AD)…, GROSSKOPF JA also made that point in stating:

“It is clear that an interference with contractual rights can, in certain circumstances, constitute a delict. What is less clear is what precisely the requirements for liability are.”

See also Roux v Hattingh 2012 (6) SA 428 and R.H. CHRISTIE, The Law of Contract, 3rd ed, Butterworths…,.

In casu, the defendant acted in terms of section 46 of the Reserve Bank Act [Chapter 22:15]. That section provides:

“In June and December of each year, the Governor shall submit to the Minister a policy statement containing –

(a) A description of the monetary policy to be followed by the Bank during the next succeeding six months, and a statement of reasons for those policies; and

(b) A statement of the principles that the Bank proposes to follow in the implementation of the monetary policy; and

(c) An evaluation of the monetary policy and its implementation for the last preceding six months.”

In order to implement the policy statement given in terms of section 46 of the Reserve Bank Act, to the effect that foreign currency balances were to be lodged with the defendant, a directive was also issued to Banks, in terms of section 35(1) of the Exchange Control Regulations, SI109 of 1996 instructing them to immediately lodge the foreign currency balances with the defendant.

Section 35(1) of the Exchange Control Regulations, SI109/96 is of peremptory application. It reads:

“Authorised dealers shall comply with such directions as may be given to them by an exchange control authority relating to -

(a) The exercise of any functions conferred on them by or under these regulations;

(b) The terms on which they are to exchange foreign currency for Zimbabwean currency;

(c) The offer of foreign currency in their possession for sale to the Reserve Bank.”

It was stated in China Shougang International v Standard Chartered Bank Zimbabwe Limited HH310-11, that, the directive given by the Governor of the defendant was invalid for want of a Ministerial approval.

I do not think it is necessary to discuss that issue in this case because it is accepted that the directive was given.

To that extent, the plaintiff's Bank was obliged to comply with the directive in terms of the law. Doing otherwise would have resulted in dire consequence to it, if not the loss of its Banking licence.

It is common cause, that, after appropriating the plaintiff's money, the defendant did not return that money and has not even begun to give any indication as when, if at all, it will repay the money.

It has contented itself with hedging behind the non-existence of a contractual relationship between it and the plaintiff. The proverbial hiding behind a finger.

Quite how and why the defendant could come to the conclusion that it can just acquire the money and refuse to repay it to the owner is one of the greatest unfathomable mysteries of this world.

There can be no doubt, that, the right to private property is one of the sacrosanct rights protected by law.

There is little doubt, that, the plaintiff should be protected against the arbitrary deprivation of its equity deposited at Banc ABC, which institution was powerless against the defendant's directive and is now unable to perform its contractual obligations, namely, paying the money to the plaintiff on demand.

To my mind, the defendant intentionally induced Banc ABC to breach its contract with the plaintiff.

I have already stated, that, an intentional inducement of a breach of contract is actionable in our law.

As a corollary to that is the submission made on behalf of the plaintiff, that, the directive which led to the appropriation of the plaintiff's foreign currency balance at Banc ABC constitutes a wrongful interference with contractual rights.

I agree.

While it is true, that, the defendant is the monetary authority charged with the management of the Banking sector and the formulation of Banking rules, I have not been directed to any authorities entitling the defendant to proscribe the release of deposits to depositors or indeed to interfere with Bankers obligations to pay balances to their clients on demand.

As a matter of policy, the security of Bank deposits should forever be protected by our courts.

Indeed, it would be an affront to the rights of depositors if ownership of their property, stored with Banks, and the culture of banking money instead of keeping it under a pillow, were to be rendered a serious economic hazard and a ruinous activity.

Our law, which protects ownership of property, is founded on a rock of wisdom. For that reason, the courts should be clear, consistent, and firm in enforcing principles protecting deposits.

Needless to say, that, the expropriation of export proceeds prior to dollarization, which have not been compensated, is one of the major factors inducing weak balance sheets of businesses resulting in poor economic performance.

I am persuaded, that, the plaintiff does have a cause of action against the defendant based on the twin concepts of the intentional inducement of a breach of contract and the wrongful interference with contractual rights: for wrongful it is if the monetary regulatory authority gives a directive for the appropriation of an individual's equity in a Bank and then failing to make good that equity.

Even if I am wrong in that conclusion, the defendant cannot escape liability on the basis of unjust enrichment.

It is now accepted, that, the general enrichment action is recognised in our law: see Industrial Equity v Walker 1996 (1) ZLR 269 (H) where BARTLETT J stated…,.:

“I am of the respectful view, that, the principal requisites for a general action on enrichment can be regarded as aptly summarised by Wouter de Vos in Verry King saanspreeklikheid in die Suid Africkaanse Reg (1958) as stated by Scholtens in the 1996 Annual Survey of South African Law, 150 at 152 as:

'(a) The defendant must be enriched;

(b) The enrichment must be at the expense of another (i.e. the plaintiff must be impoverished and there must be a causal connection between enrichment and impoverishment);

(c) The enrichment must be unjustified;

(d) The case should not come under the scope of one of the classical enrichment actions;

(e) There should be no positive rule of law which refuses the action to the impoverished person.

Obviously, these requirements can only be fulfilled if, in any given case, the action is based on a defined set of circumstances.'”

I am satisfied that all the requirements of unjust enrichment are met in the present case.

It is also not a case that would open floodgates, because, rarely do we have a situation where a depositor's foreign currency balance is appropriated the way it was in this case.

Counsel for the defendant submitted, that, the plaintiff did not plead any case based on delict, and that, for that reason, the claim should fail.

I am of the view, that, the manner in which the plaintiff pleaded its case, predicating it mainly on the fact that the amount claimed “was appropriated by the defendant” was wide enough to encompass the claim as it has been argued by counsel.

I however agree, that, it would be inappropriate, bearing in mind the banking relationship between the parties, the defendant being “a banker of banks” to direct that the money be paid directly to the plaintiff. The correct approach would be for the defendant to return the money to Banc ABC, the plaintiff's banker.

Accordingly it is ordered, that:

1. Judgment is hereby entered in favour of the plaintiff as against the defendant in the sum of USD1,007,541=30 together with interest a tempoe morae at the prescribed rate from the date of summons to date of payment.

2. The defendant is directed to deposit the said sum of USD1,007,541=30 into the plaintiff's Banc ABC account number ZWTROJ001CALUSD0019 or any other account held by the plaintiff at that Bank.

3. The defendant shall bear the costs of suit.

SC138-21 : DIVVYLAND INVESTMENTS (PRIVATE) LIMITED vs DAVID CHIWEZA
Ruled By: PATEL JA, GUVAVA JA and BHUNU JA

This is an appeal against the whole judgment of the High Court which was handed down on 10 April 2019. The gripe of the appellant is that the court a quo dismissed its claim and granted an order in favour of the respondent's counter-claim.BACKGROUND FACTSThe facts of the matter which ...

BACKGROUND FACTS

The facts of the matter which have a bearing on the dispute may be summarised in the following manner:

The appellant is a private limited company duly registered in accordance with the laws of Zimbabwe. The respondent is a private individual and resides at 12 Le Roux Drive, Hillside, Harare.

On 19 July 2017, the appellant issued summons against the respondent and sought an order in the following terms:

“(a) Ejectment forthwith of the defendant and all those claiming occupation through him from the property at Number 12 Le Roux Drive, Hillside, Harare.

(b) Payment of damages in the sum of US$58,000 to plaintiff;

(c) Payment of holding over damages in the amount of US$700 per month calculated from the 01st June 2017 to date of eviction;

(d) Costs of suit on the higher scale of legal practitioner and client.”

The basis of the claim followed a purported breach of contract by the respondent.

In its declaration to the summons, the appellant averred, that, sometime in September 2009, the parties entered into a verbal agreement for the sale and purchase of a portion of immovable property known as Number 12 Le Roux Drive, Harare ('the property'). The sale was facilitated by an estate agents company known as Property Plus Realtors (Private) Limited which was acting on behalf of the appellant.

The agreement of sale stipulated, that, the respondent would pay the purchase price of US$75,000 by paying a deposit of US$15,000 upon agreement. The balance of US$60,000 was to be paid at the rate of US$5,000 per month for 12 consecutive months with interest on the purchase price being calculated at the rate of 1 per cent per month. The full purchase price was to be paid on or before 30 August 2010.

The parties further agreed, that, the respondent would take immediate occupation of the property upon payment of the deposit.

The appellant alleged, that, the respondent failed to pay the full instalments by the due date, and, as such, breached the verbal agreement of sale. It was the appellant's evidence, that, the respondent failed to pay the sum of US$39,100 which comprised the principal debt and interest.

The appellant further stated, that, the respondent acknowledged, in writing, on 30 March 2017, that he had not paid the full purchase price.

On 17 May 2017, the appellant served the respondent with a notice to rectify its breach within 30 days. Despite the notice, the respondent failed or neglected to comply. As a result of the respondent's breach, the appellant cancelled the agreement of sale on 23 June 2017 and demanded vacant possession of the property.

Following the issuance of summons, the respondent entered an appearance to defend.

In his plea, he averred, that, the agreed purchase price for the property was US$68,000 and that he was to pay a deposit of US$15,000, and, thereafter, instalments of US$5,000 until the balance was paid in full.

The respondent further averred, that, he paid the deposit and a further US$37,000 and that the remaining balance, as at 1 May 2010, was US$16,000.

The respondent averred, that, he failed to continue with the payments as the appellant refused to come up with a written Agreement of Sale which would enable him to obtain a mortgage loan to pay for the outstanding balance for the property.

The respondent further averred, that, both parties, as a compromise to their verbal agreement, agreed, that, upon payment of US$300 by the respondent, the appellant would draft the Agreement of Sale.

The respondent paid the US$300 but no agreement was drafted.

The respondent further stated, that, the appellant, without his knowledge and consent, sought to subdivide the property.

In reaction to the subdivision, the respondent, through his legal practitioners, wrote a letter, on 30 March 2017, to the appellant, informing it to refrain from the illegal sub-division and for it to provide a written agreement of sale.

The respondent stated, that, the appellant did not comply with his notice.

The appellant decided to give him notice to rectify a non-existent breach of the verbal agreement. It was the respondent's averment that the notice by the appellant was a legal nullity and of no force and effect.

The respondent thus denied the appellant's entire claim, and, consequently, filed a counter-claim against the appellant seeking the following order:

“(a) An interdict restraining the Plaintiff from subdividing the property known as Stand 10830 Salisbury Township of Salisbury Township Lands Held Under Deed of Transfer Number 11900/2005.

(b) An order that the Plaintiff take all necessary steps to prepare an agreement of sale within 10 days of the granting of judgment reflecting the terms of the verbal agreement as set out in paragraphs 16 and 17 of this Declaration including the amount paid as of date and the balance outstanding in the sum of US$16,000.

(c) Costs of suit on a Legal Practitioner and client scale.”

In its plea to the counterclaim, the appellant maintained, that, the agreement between the parties was for the sale and purchase of a portion of the property.

The appellant further denied the payments and outstanding balance which the respondent purportedly made to it.

The appellant also denied that it had an obligation to draw up an Agreement of Sale.

It was the appellant's argument, that, the agreement of sale did not have a term which provided that the balance of the purchase price would be paid through a Bank loan.

Following a pre-trial conference before a Judge, in chambers, the parties entered into a joint pretrial conference minute which read as follows:

“ISSUES

1. What were the initial and later compromise terms of the agreement?

2. Whether or not the defendant breached any of the terms of the agreement.

3. Whether or not the plaintiff should not be interdicted from subdividing the property?

ONUS

4. On both parties in respect of issue number 1.

5. On the plaintiff in respect of issue 2.

6. On defendant in respect of issue 3.

ADMISSIONS

7. Plaintiff admits to receiving US$300 for the purposes of drafting an agreement of sale.

8. Defendant is presently in possession of the property.”

EVIDENCE BEFORE THE COURT A QUO

At the trial, the appellant led evidence through a single witness, one Brian Machengo (Machengo), a Sales Manager at Property Plus Realtors (Private) Limited.

Brian Machengo testified, that, the advertisement of the property was published through The Herald newspaper. It did not indicate that only a portion of the property was being sold. It simply made reference to 'one acre of panoramic views'.

He further stated, that, he was given a mandate by the appellant to sell the property for US$90,000 but published the advertisement with an offer price of $70,000.

His mandate was to sell land with a residential property measuring plus or minus 1,500 square meters. It was part of the whole property that comprised 12 Le Roux Drive.

The respondent was one of the persons who responded to the advertisement and made an offer to purchase the property for US$68,000. This offer was rejected by the appellant.

He could, however, not explain how the purchase price changed from US$90,000 to US$70,000, and, subsequently, to US$75,0000. It was his evidence, that, as the agreement was verbal there was no paper trail explaining what had taken place.

Brian Machengo further accepted, that, at the time when the sale was concluded, there was no subdivision permit as the permit was only granted on 10 February 2015.

He further accepted, that, the respondent paid about US$52,000 towards the purchase of the property and that he paid US$300 for the drafting of an Agreement of Sale.

He confirmed that the respondent filled in an offer to purchase form.

He also highlighted, that, the form did not make any reference to the respondent accessing mortgage finance to pay off the purchase price.

He denied that he was obliged to give the respondent a written agreement.

He further stated, that, the appellant was within his rights to sub-divide the property as he had only sold a portion of it to the respondent.

The respondent testified on his own behalf and led evidence from two other witnesses.

The respondent testified, that, he saw an advert for the property which had a purchase price of US$70,000. He made an offer for US$68,000 on an Offer Form provided to him by Brian Machengo.

He indicated that it was never mentioned to him that only a portion of the property was being sold and that from the description of the property on the advertisement he believed he was purchasing the whole property.

He denied that the purchase price of the property was agreed as US$75,000 as alleged by the appellant.

The respondent admitted that he had not paid the full purchase price for the property.

He attributed his failure to meet the terms of the agreement to the fact that his company was facing economic hardships and that he failed to acquire a Bank loan as the appellant had refused to give him a written Agreement of Sale.

He explained, that, since he failed to get a written agreement he was unable to obtain a loan to offset the outstanding balance.

The respondent testified, that, in 2010, he met Mr Van Hoogstraten, whom he believed to be the seller, for the first time, who informed him that he never signs written contracts in his business dealings.

He then formed the opinion that he was dealing with “crookey, dodgy, people” and decided not to pay the balance of the purchase price.

He testified, that, he later received a report that there were people subdividing the property.

He wrote to the appellant protesting the subdivision as he believed he had purchased the whole property. When he did not get a response, he made a report to the police. Following the report to the police, he then received a letter informing him that he was in breach of the agreement.

The respondent denied that he owed the sum of US$58,000 as damages for rentals calculated at the rate of US$700 per month.

In 2014, he again met Mr Van Hoogstraten, and, this time, he agreed to have a written Agreement of Sale, provided the money for drafting such agreement was paid. It was on this basis that he paid the $300 for drafting the Agreement of Sale.

However, in spite of paying the $300, no agreement was drafted by the appellant.

The evidence of Patrick Mapfumo, the respondent's second witness, was admitted with the consent of both parties.

Patrick Mapfumo's evidence, as stated in the respondent's summary of evidence, confirmed, that, in 2014, the witness and his wife had gone with the respondent to see one Mr. Nicholas Van Hoogstraten along Mazowe Road. Their party also included Brian Machengo. It was Patrick Mapfumo's evidence, that, at the meeting, the parties agreed that an Agreement of Sale be drawn up upon payment of US$300 (being made) by the respondent for drafting the agreement.

The respondent's third witness was Patrick Nyamugama, a registered estate agent, who appeared to give expert evidence in support of the respondent's case.

Patrick Nyamugama testified, that, around the year 2009 the property in dispute would have been valued at about US$70,000 – US$80,000. He also stated, that, if the property was to be subdivided, the value of the property would be about US$50,000.

At the conclusion of the trial, the court a quo found, that, the respondent purchased the entire property and not a subdivision as alleged by the appellant.

The court disbelieved the evidence of Brian Machengo and found him to be an evasive witness. The court also found that Brian Machengo made a number of concessions in favor of the respondent.

The court a quo thus found that the appellant had failed to prove its claim.

It noted, that, there were gaps in the evidence given by Brian Machengo and that the appellant ought to have called its directors.

The court further noted, that, as the subdivision of the property had already been granted it could not make any order interdicting the operation of the subdivision permit.

However, the court found, that, the subdivision permit number SD/CR/15/14, dated February 2015, was null and void as it had been granted six years after the whole property had been sold to the respondent.

In the result, the court made the following order:

“1. The plaintiff's claim is dismissed.

2. The defendant's counter-claim is granted.

3. The plaintiff shall take all the necessary steps to prepare an Agreement of Sale within ten (10) days of the handing down of this judgment reflecting the terms of the verbal agreement entered into on 30 August 2009 including the following:

3.1 That plaintiff sold to the defendant certain piece of land situate in the district of Salisbury called Stand 10830 Salisbury Township of Salisbury Township Lands measuring 3,033 square metres held under Deed of Transfer number 11900/2005 in favour of Divvyland Investments (Private) Limited.

3.2 That the agreed purchase price for the immovable property was the sum of US$68,000 (sixty eight thousand United States dollars).

3.3 That the defendant paid a deposit in the sum of US$15,000 (fifteen thousand United States dollars) on 04 September 2009.

3.4 That the defendant has paid a total of US$56,900 (fifty six thousand nine hundred United States dollars) to date towards liquidating the purchase price inclusive of interest.

3.5 That the defendant shall pay the outstanding balance of $14,384-01 (fourteen thousand three hundred and eighty four United States dollars and one cent) through a Bank loan.

4. The plaintiff shall pay the defendant's costs of suit, in respect of both the main claim and the counter-claim, on the legal practitioner and client scale.”

Aggrieved by the judgment of the court a quo, the appellant noted the present appeal on the following grounds:

1. The court a quo erred and misdirected itself in granting relief not sought by the parties, and, in consequence, by creating a non-existing contract for the parties.

2. The court a quo erred and misdirected itself in setting aside a valid subdivision permit when no such relief had been sought before it.

3. The court a quo erred and misdirected itself in failing to find, that, once the respondent was in willful default/breach for a period in excess of five years, and contrary to the agreement, the appellant was entitled to cancellation of the agreement and to the consequential relief of eviction and holding over damages.

4. Furthermore, the court a quo erred in its failure to find, that, the absence of a written agreement is no bar to payment of the purchase price and that the respondent was not absolved from performing his side of the agreement as he could still tender into court or have made payment as he had previously done.

5. The court a quo further erred and misdirected itself in failing to find, that, an advertisement is an invitation to treat and does not create a binding contract. Furthermore, it misdirected itself in failing to find, per the evidence led, that, the respondent's offer had not been accepted by the appellant.

6. The court a quo further erred in imposing a contractual obligation of loan/mortgage financing which did not form part of the agreement between the parties and which did not exist at the time of contracting as per the evidence led.

7. The court a quo further erred and misdirected itself in failing to find, that, the admissions made by the respondent entitled the appellant to succeed on its case and have the counterclaim dismissed. These were:

(a) The property is registered in the name of the appellant who still possesses all rights of ownership in terms of the title deed.

(b) The respondent had not paid the full purchase price, whether for the half portion or for the full portion. It doesn't matter which portion he has not paid and persists in breach beyond the contracted time period (sic).

(c) The appellant, like any other party, had a right to cancel the agreement and claim eviction and holding over damages consequent to cancellation.

8. The court a quo further erred and misdirected itself in disregarding the uncontroverted evidence that the land in issue was a half-acre portion as opposed to a full acre, regard being had to the mandate to sell letter and to the advertisement placed by the appellant.

9. The court a quo further erred and misdirected itself in failing to find, that, the agreement to sell a portion of land, absent a subdivision permit, was, in any event, unlawful and could consequently not be enforced.

The appellant's grounds of appeal, in my view, raise the following issues for determination:

1. Whether or not the court a quo granted relief not sought by either of the parties.

2. Whether or not the court a quo erred in dismissing the appellant's claim.

3. Whether or not the court a quo erred in granting the respondent's counterclaim.

I will proceed to deal with these issues seriatim.

APPELLANTS SUBMISSIONS BEFORE THIS COURT

Counsel for the appellant argued, that, the court a quo fell into error when it granted relief which was not sought by either of the parties.

It was counsel's submission, that, the court a quo's finding, that the subdivision permit was null and void, was made in error as the issue of its legal effect was never an issue for determination before the court.

Counsel argued, that, the court found that it could not interdict the operation of the sub-division permit as the permit had already been granted and yet the court a quo went on to grant the respondent's counterclaim - including the part which sought to interdict the appellant from subdividing the property.

It was also counsel's submission, that, paragraph 3 of the order granted by the court a quo was made in error as the court enforced a non-existent agreement made on 30 August 2009 when the verbal agreement was in September 2009.

The appellant submitted, that, the court a quo erred in granting a computation of figures which were to be included in the Agreement of Sale. In support of the point, counsel argued, that, the court misdirected itself when it ordered that the respondent was to pay US$14,384=01 through a Bank loan when the respondent, by his own admission during trial, maintained that he owed US$16,000.

In relation to the issue of whether or not the respondent proved his counterclaim, counsel for the appellant argued, that, the respondent, by his own admission, stated, that, in a period of over nine years he failed to pay the full purchase price of the property. He thus had no valid claim to the property which remained under the ownership and title of the appellant.

It was the appellant's further argument, that, the respondent's claim, that he was to obtain a Bank loan to pay off the outstanding amount, was never agreed to as between the parties and therefore the court a quo should not have granted an order allowing the respondent to pay the outstanding balance through a Bank loan.

Counsel concluded by submitting, that, it was a basic principle of law, that, where a person occupies another person's property he or she must pay rent.

Counsel thus argued, that, the respondent, having been in occupation of the property for over nine years without being able to satisfy the purchase price, was liable to pay the appellant damages of US$58,000 and holding over damages of US$700 per month calculated from 1 June 2017 to the date of eviction.

RESPONDENT'S SUBMISSIONS BEFORE THIS COURT

Per contra, counsel for the respondent submitted, that, the court a quo did not misdirect itself in its findings as it dealt with all the issues which were raised in the pre-trial conference minutes.

Counsel submitted, that, the court had to resolve whether there was a breach by the respondent.

Counsel further submitted, that, the events that led to the appellant issuing summons only arose after the respondent wrote to it informing it to stop the subdivision of the property as this was a breach of the agreement of sale.

It was counsel's argument, that, the court correctly believed the respondent's version of how the purchase price was paid. He also submitted, that, the respondent made efforts to pay off the outstanding balance by paying the US$300 for a written contract which would help him secure a loan.

The appellant's witness, Brian Machengo, made concessions during the trial which destroyed the appellant's claim. Counsel thus argued, that, the appellant's case was full of improbabilities and inconsistencies.

He therefore submitted, that, the judgment of the court a quo was unassailable and prayed for the dismissal of the appeal.

APPLICATION OF THE LAW

Whether or not the court a quo erred in dismissing the appellant's claim

The court a quo dismissed the appellant's claim on the basis that its case:

“…, was riddled with inadequacies of evidence; manifestly illogical; pregnant with concessions favourable to the defendant; diametrically opposed to the documentary evidence; against the probabilities; wanting in credibility in respect of the sole witness called by the plaintiff; and, quite simply, hopeless. In a nutshell, this trial was a sheer waste of the court's time.”

The court found, that, the appellant failed to prove the claim for eviction of the respondent from the property as well as the claim for damages and holding over damages.

It is imperative to note, that, the appellant as well as the respondent, in making their respective claims, had to prove their cases on a balance of probabilities: see Zimbabwe Electricity Supply Authority v Dera 1998 (1) ZLR 500 (SC).

In its claim, the appellant was obliged to prove, firstly, that it had title over the property and had a right to seek the eviction of the respondent from the property.

The court a quo, in assessing the appellant's evidence, was of the view, that, its witness was not truthful. It believed the respondent and came to the conclusion, that, the cancellation of the agreement by the appellant was null and void and of no effect.

The court further concluded, that, by subdividing the property, the appellant wanted to resell the property behind the respondent's back and to prevent the respondent from enjoying his rights to the property.

The court a quo, however, failed to appreciate one important fact.

It was not in dispute that the respondent was in breach of the verbal agreement of sale. As at the time when the matter was heard a quo and to date, the respondent is in continued breach of the Agreement of Sale as he has not paid the full purchase price for the property.

In my view, questions around whether or not the property was sold in its entirety, whether or not the property was sold for US$68,000 or US$75,000, and whether or not the subdivision permit is legal and affects the rights of the respondent on the property could only be answered after the respondent had remedied his breach.

It was an agreed term between the parties that the full purchase price would be paid by the respondent on or before 30 August 2010. It is not in dispute that the respondent failed to pay the outstanding balance to the appellant for a period of over nine years.

The appellant gave notice of the breach and cancelled the Agreement of Sale.

At the trial, the respondent testified that he failed to pay the outstanding balance due to the failure by the appellant to draft a written agreement which he could use to obtain a mortgage from the Bank.

Under cross-examination, the respondent changed positions and admitted that he did not pay the outstanding balance because he saw that he was dealing with: “crookey, dodgy people who just wanted me to finish pay off then they say they did not sell….,.”

The respondent further admitted, during cross-examination, that, the appellant had a right to terminate the agreement in the event of a breach.

For the sake of completeness, I will quote the relevant evidence before the court a quo:

“Q. Now, I want you to look at the undertaking you made under the method of payment, you wrote 'I undertake to pay the full amount not later than 30 August 2020;' do you see that?

A. Correct.

Q. 'Failing which the seller may proceed to terminate the agreement of sale;' do you see that?

A. Correct.

Q. Did you make full payment of any amount by 30 August 2010?

A. I did not.”

Having been admitted and established that the respondent failed to pay the full purchase price by the agreed date, the court a quo ought to have been alive to the fact that the appellant remained with a valid title over the property and had the right to cancel the agreement when there was a breach.

The court a quo fell into error by clouding issues and failed to determine the issue that was squarely before it.

The issue of the appellant failing to provide a written agreement after the respondent paid the drafting fee, so as to enable him to obtain a mortgage loan, was never a term of the original agreement.

It is a fundamental principle of every contract that both parties will duly carry out their respective obligations: see Blumo Trading (Private) Limited v Nelmah Mining Company (Private) and Another HH39-11. In the event that a party fails to carry out its obligation this will amount to a breach of the contract or agreement.

In R.H. CHRISTIE, Business Law in Zimbabwe, Juta & Co. Ltd…, the learned author states that:

“Breach may take a number of forms other than mora, and, whether a breach has been committed will be decided by comparing what the debtor has done or not done with what he ought to have done on a proper interpretation of the contract….,.Once it is decided that a breach has been committed, it is necessary to decide whether the creditor is entitled to the most drastic remedy, of cancellation, or whether he must be content with one or more of the other available remedies.”

The admission by the respondent, that he failed to pay the full purchase price, amounted to a breach of the agreement of sale which gave the respondent the right to cancel the agreement between the parties.

As such, the respondent cannot continue to have occupation of the property while he is in breach of the agreement of sale. The ownership rights of the appellant must be protected.

In the case of Alspite Investment (Pvt) Ltd v Westerhoff 2009 (2) ZLR 236 it was stated, that, there are no equities in an application for a rei vindicatio as it is a principle of our law that an owner, as a general rule, cannot be deprived of his property against his will.

With respect to the appellant's claim for damages in the sum of US$58,800 calculated at the rate of US$700 per month as reasonable rental income from the date of occupation to date of summons, and the claim for holding over damages in the sum of US$700 calculated from 1 August 2017 to the date of eviction, it is our view that these claims were not substantiated or proved at trial.

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SC59-16 : ZIMRE PROPERTY INVESTMENTS LIMITED vs SAINTCOR (PVT) LTD t/a V. TRACK and JOHN SHUMBA
Ruled By: ZIYAMBI JA, GARWE JA and GOWORA JA

In a judgment handed down in January 2014, the court a quo upheld the plea of prescription raised by the respondents, and, consequently, dismissed the claim against the respondents with costs.Against that order, the appellant now appeals to this court.BACKGROUNDIn October 2012, the appellant, as plaintiff, issued summons against both ...

In a judgment handed down in January 2014, the court a quo upheld the plea of prescription raised by the respondents, and, consequently, dismissed the claim against the respondents with costs.

Against that order, the appellant now appeals to this court.

BACKGROUND

In October 2012, the appellant, as plaintiff, issued summons against both respondents before the High Court, Harare, claiming payment of the sum of $30,094=98 being arrear rentals in respect of the respondents tenancy of premises known as Shop 5, Zimre Centre, Corner Kwame Nkrumah Avenue and Leopold Takawira Street, Harare.

The second respondent had bound himself as surety and co-principal debtor in respect of the first respondent's indebtedness.

In their plea, the respondents, as defendants, raised the defence of prescription. More specifically, they averred, that, in instituting proceedings on 19 October 2012, more than three years after the debt became due, the claim had become time-barred.

The plea was not set down for hearing. Instead, the defendants pleaded over to the merits in the same plea.

In its replication, the appellant denied that the claim had prescribed. It averred, that, the first defendant had, on 22 October 2009, acknowledged the debt and had undertaken to pay the outstanding amount in full by 10 November 2009.

There was no rejoinder by the respondents.

In a joint pre-trial conference minute, the parties agreed, that, the issues requiring determination at trial were:

(a) Whether the plaintiff's claim had prescribed;

(b) Whether the first respondent had breached the lease agreement by failing to pay rental and other costs;

(c) Whether the respondents were liable to pay the sum of US$30,094=98 together with interest and costs of suit;

(d) Whether there had been mutual termination of the agreement between the parties and whether the appellant had unlawfully and unilaterally ejected the respondents from its premises; and

(e) Whether such conduct had resulted in the respondents suffering damages “in respect of the first respondent's assets and business” and, if so, the quantum thereof.

PROCEEDINGS BEFORE THE COURT A QUO

At the hearing of the matter, the respondents, through their lawyer, sought the leave of the court to deal with the issue of prescription first and lead evidence on it.

Despite opposition from the appellant, the court a quo decided that the issue of prescription be determined first, and, thereafter, depending on the outcome, the court would again hear evidence on the remaining issues.

In its judgment, the court a quo was of the view, that, the issue that fell for determination was the authenticity of the letter purportedly written by one Annet Mbedzi on behalf of Saintcor Holdings in October 2009.

In this regard, it made a number of observations.

The letter was not written on any letterhead, unlike in previous correspondence; it reflected the appellant's postal address; the letter was also written on behalf of Saintcor Holdings, a company both parties were agreed does not exist and was not a party to the lease agreement; the letter was addressed to a Mr Muringani, but, the name had been cancelled in black ink and in its place the name Muringi inserted; nowhere in the letter is it suggested that Saintcor Holdings was acknowledging indebtedness on behalf of Saintcor (Pvt) Ltd.

On a consideration of all these features, the court a quo concluded, that, the letter had not been written on behalf of the first respondent.

Consequently, the court upheld the plea of prescription and dismissed the plaintiff's claim with costs, hence this appeal.

GROUNDS OF APPEAL

In its grounds of appeal, the appellant has attacked the decision of the court a quo on the basis that it:

(a) Erred in fact and at law in holding that the appellant's claim had prescribed;

(b) Misdirected itself by holding that the letter that was received by the appellant on 22 October 2012 was not authentic;

(c) Misdirected itself by making a finding that the author of the letter that was received by the appellant on 22 October 2009 did not have authority to author the same.

It is apparent from the above grounds, that. it is the conclusion reached by the court a quo, that the letter in question had not been written on behalf of the respondent that the appellant is challenging.

PRELIMINARY ISSUES RAISED BY THE RESPONDENTS

In their heads of argument, the respondents raised two points in limine:

(i) The first was that the judgment of the court a quo reflects three different dates as the dates when the judgment was handed down.

The date of the judgment reflected in the Notice of Appeal is at variance with the date appearing ex facie the judgment itself, and, consequently, there has been no compliance with Rule 29 of the Rules of this Court.

(ii) Secondly, the relief sought is defective as it seeks to substitute the decision of the court a quo with one referring the matter back to the court a quo itself.

In his response, counsel for the appellant drew the attention of the court to a letter from the Registrar of the High Court which states, that. the ex-tempore judgment was handed down on 10 February 2015, which is the date appearing in the Notice of Appeal.

On the prayer, he conceded, that, the wording was inelegant but argued that the relief sought was clear. He submitted that the inelegance does not invalidate the appeal as ultimately the court will make an order it deems appropriate in the circumstances.

After hearing argument on the two preliminary issues, this court was of the view, that, the issues be rolled over for determination together with the issues that arise on the merits.

APPELLANT'S SUBMISSIONS ON APPEAL

In both his heads of argument and oral submissions, counsel for the appellant raised the following issues:

(i) First, that the judgment of the court a quo does not derive from the pleadings.

(ii) Second, the appellant's cause of action was predicated upon a valid cancellation of the lease agreement. Such cancellation was effected on 18 November 2009 and the cause of action would have accrued on that day. Therefore, when the appellant issued summons on 22 October 2012, the debt had not prescribed.

(iii) Third, that the appellant would have had no reason to cause the letter of 22 October 2012 to be generated. Once it had accepted that the letter had not been generated by the appellant, the court should have concluded that the letter had indeed been authored by the respondents.

(iv) Fourth, that the second respondent knew how to contact Annet Mbedzi, the author of the letter in question. Annet Mbedzi had been involved in the goings-on at the premises of the first respondent, and yet both respondents had not found it proper to call him.

(v) Lastly, counsel for the appellant submitted, that, it was improper for the court to have heard evidence piecemeal. Once the plea of prescription had not been set down and the respondent had then proceeded to plead over to the merits, the court should have heard evidence on all the issues and an assessment of the credibility and integrity of the witnesses undertaken only after all the evidence had been led.

RESPONDENTS SUBMISSIONS ON APPEAL

In response, counsel for the respondents made the following submissions:

(i) First, that, what is being attacked by the appellant are findings of fact which cannot be interfered with on appeal in the absence of a finding of irrationality on the part of the trial court.

(ii) Second, that, the court a quo was correct in its findings that the letter received by the appellant on 22 October 2009 had not been written by or for the respondents. This is because the appellant had admitted that, by that date, the first respondent had been evicted from the premises, and, consequently, the first respondent would not have used that address in correspondence with the appellant.

(iii) Third, that, the appellant has not established a lawful basis for the suggestion that the judgment does not derive from the pleadings as no leave of the court had been sought to advance argument on this ground, contrary to the Rules of this court. In any event, the respondents, in their plea, had placed prescription in issue.

(iv) Lastly, that, the debt did not become due on cancellation since rent was due monthly in advance, and, therefore, the cause of action arose whenever such rental was not paid on due date. The appellant had, in any event, evicted the first respondent in August 2009 for non-payment of rent and the “debt” included outstanding rentals up to the date of such eviction.

ISSUES FOR DETERMINATION

It is clear from the above, that, a number of issues arise before this court. These will be dealt with in turn....,.

WHETHER DEBT BECAME DUE ON CANCELLATION OF THE AGREEMENT

It was counsel for the appellant's submission, that, the appellant's cause of action in the court a quo was predicated upon a valid cancellation of the lease agreement. Put differently, he sought to argue, that, the debt which was sought to be recovered would have become due upon cancellation of the lease agreement.

In my view, this contention also lacks merit.

It was common cause, that, rental payments were due and payable monthly in advance. Indeed, following the failure by the first respondent to pay rentals on due date, the appellant caused the eviction of the first respondent in August 2009.

In the circumstances, I agree with the respondents, that, the debt became due each time the first respondent failed to pay rent on due date and that the debt would include all rentals owing up until eviction in August 2009.

WHETHER THE COURT A QUO ERRED IN MAKING FINDINGS OF FACT

The appellant has attacked various findings made by the court a quo on the facts, and, in particular, the finding that the letter received by the appellant on 22 October 2009 was not authentic and that the author of the letter did not have authority to write the same.

The court a quo made the following findings of fact:

(i) First, that the letter was written for and on behalf of an entity called Saintcor Holdings and not Saintcor (Pvt) Ltd.

(ii) Second, the name of the addressee had been incorrectly spelt.

(iii) Third, the letter was not written on the first respondent's letter head.

(iv) Fourth, the appellant's address, reflected in the letter, was incorrect.

(v) Fifth, the letter of acknowledgment had been written in October 2009 and yet purported to use the same address from which the first respondent had been evicted.

(vi) Sixth, the company that the author, Annet Mbedzi, purported to represent in the capacity of Financial Director does not in fact exist, and the company does not, in any event, purport to act on behalf of the first respondent.

On the basis of the above observations, the court reached the conclusion, that, the letter had not been written on behalf of the first respondent and that the letter did not specify which debt was being acknowledged.

The above conclusion cannot be said to be irrational: nor can it be said that it is not supported by the evidence.

The position is now settled, that, an Appellate Court will not interfere with the findings of fact made by a trial court unless the court comes to the conclusion, that, the findings are so irrational that no reasonable tribunal, faced with the same facts, would have arrived at such a conclusion.

Where there has been no such misdirection, the Appeal Court will not interfere.

This position was aptly captured by this court in Hama v National Railways of Zimbabwe 1996 (1) ZLR 664 (S). At 670, KORSAH JA remarked:

“The general rule of law, as regards irrationality, is that an Appellate Court will not interfere with a decision of a trial court based purely on a finding of fact unless it is satisfied, that, having regard to the evidence placed before the trial court, the finding complained of is so outrageous in its defiance of logic that no sensible person who had applied his mind to the question to be decided could have arrived at such a conclusion….,.”

DISPOSITION

In my view, this appeal lacks merit and must therefore fail.

The appeal is accordingly dismissed with costs.

SC163-21 : TENDAYI WASHAYA and CHIPO WASHAYA vs MAKEBREAK TRADING (PVT) LTD and THE SHERIFF OF THE HIGH COURT (N.O.) and THE REGISTRAR OF DEEDS
Ruled By: MALABA CJ, UCHENA JA and CHIWESHE AJA

This is an appeal against the whole judgment of the High Court (“the court a quo”) holding that the first respondent had complied with the provisions of the Contractual Penalties Act [Chapter 8:04] (“the Contractual Penalties Act”) in sending a notice of cancellation of an agreement to the appellants by registered post.

The Court holds, that, the delivery of a registered mail slip at the appellants chosen domicilium citandi constituted due delivery as contemplated by section 8(3)(b) of the Contractual Penalties Act, and as provided for in the parties agreement.

It was not necessary for the document containing the written notice to be delivered to the appellants. Once there was delivery of the registered mail slip then there was delivery of the notice in the same manner as when one is given keys to a house or motor vehicle.

FACTUAL BACKGROUND

On 24 February 2015, the appellants and the first respondent entered into an Agreement of Sale (“the agreement”), in terms of which the first respondent sold to the appellants a vacant piece of land described as Stand Number 321 being a subdivision of Marconi Farm of Kinvara, held under Deed of Transfer number 1136/2002 (“the property”).

The purchase price of the property was pegged at US$30,000.

A deposit of US$15,000 was to be paid in instalments. The first US$10,000 towards the deposit was to be paid upon the signing of the agreement. The balance of the deposit of US$5,000 was to be paid in instalments of US$1,666=67 for a period of three months starting from 30 April 2015. The remaining balance of the purchase price of US$15,000 was to be paid over a period of eighteen months. That balance of the purchase price was to attract interest at the rate of 20% per annum.

Possession of the property was to be given to the purchaser upon payment of 50% of the purchase price.

It was further agreed between the parties, that, if the purchaser failed to perform any of the obligations under the agreement and failed to rectify such breach within thirty days of dispatch by the seller of written notice of such breach by registered post or hand delivery, the seller would have the right to cancel the agreement.

It was further agreed, that, in such circumstances, the seller would regain possession of the property and claim damages by way of a cancellation fee in the sum of US$2,000 subject to compliance with the provisions of the Contractual Penalties Act, or claim specific performance in terms of the agreement with interest at the rate of 20% per annum.

Pursuant to the agreement, the appellants took possession of the property.

In breach of the terms of the agreement, the appellants failed to pay some of the instalments of the purchase price when they became due for payment. Consequently, the first respondent cancelled the agreement.

The cancellation resulted in the appellants instituting summons in the court a quo. They contended, that, contrary to the terms of the Agreement of Sale, there was no thirty day notice given by the first respondent to enable them to rectify the breach.

The allegation was that the first respondent's conduct was in violation of the terms of the agreement.

The appellants sought an order, from the court a quo, declaring the cancellation of the agreement to be invalid. They also asked the court a quo to order the first respondent to accept payment of the arrear instalments together with interest thereon. Lastly, they sought an order compelling the first respondent to sign all documents necessary for the transfer to themselves of the property.

The first respondent filed a plea and a counter-claim in response to the appellants claim.

In the counterclaim, the first respondent averred, that, the appellants breached the agreement when they defaulted on the payment of instalments towards the purchase price for the property when the payment became due. As at 31 October 2017, they had accrued arrears in the sum of US$24,194=04.

The first respondent further contended, that, acting in terms of clause 11 of the agreement, it notified the appellants of the breach through a letter which was served on them via registered mail on 20 November 2017.

The allegation was that the appellants did not rectify the breach, leading to the first respondent cancelling the agreement on 30 October 2018 through a letter which was again served on the appellants via registered mail.

The first respondent prayed for the confirmation of the cancellation of the agreement, eviction of the appellants from the property, the payment of US$2,000 as cancellation fee, payment of holding over damages of US$600 per month, and costs of suit.

In response to the counter claim, the appellants denied all the averments made by the first respondent. They alleged, that, the notice of breach of the agreement given by the first respondent did not comply with the requirements of the contract between the parties.

The appellants accepted that they had breached the agreement by failing to pay the instalments when they became due and payable.

The matter proceeded by way of a Stated Case.

The agreed facts were, that, the appellants had defaulted in the payment of the instalments and had fallen into arrears in the amount of US$24,194=04. It was agreed, that, consequent upon the breach of the agreement between the parties, the first respondent dispatched a letter, by registered post, to the appellants domicilium citandi on 20 November 2017 giving them thirty days notice of intention to cancel the agreement.

The parties also agreed, that, on 15 December 2017, and prior to the expiration of the thirty days notice period, the first respondent dispatched another letter, by registered post, purportedly cancelling the agreement.

The appellants had moved from the domicilium citandi without notifying the first respondent. As a result, the registered mail remained unclaimed at the Post Office until it was returned to the first respondent on 11 April 2018.

The parties were in agreement, that, on 26 October 2018, the first respondent sent another letter to the appellants, advising them to disregard the letter of 15 December 2017 and to consider the letter of 26 October 2018 as the final cancellation letter.

Notwithstanding the letter of 26 October 2018, and in an attempt to remedy the breach of the agreement, the appellants paid into the first respondent's Bank account the sum of US$12,960 on 20 November 2018. They subsequently made payments of US$14,138=20 and US$3,780 on 7 and 9 January 2019 respectively.

The payments were not received because the first respondent had closed the Bank account.

The parties agreed that there was one issue for determination. They couched it as being:

“Whether or not the provisions of the Contractual Penalties Act [Chapter 8:04], in particular section 8(2) as read with section 8(3)(b) that entitles a debtor to a written notice before a credit provider institutes action, requires the debtor to actually receive the notice.”

The court a quo found, that, in sending, by registered post, the notice to the appellants to rectify breach of the agreement within the prescribed period, the first respondent had complied with the legal obligation under the Agreement of Sale. It held that there was compliance with section 8(3)(b) of the Contractual Penalties Act. The appellants claim was dismissed with costs.

Aggrieved by the decision of the court a quo, the appellants noted the present appeal.

The issue for determination is whether the holding by the court a quo, that the delivery of the registered mail slip at the domicilium citandi was service on the appellants of the notice of breach of the agreement of sale in terms of section 8(3)(b) of the Contractual Penalties Act was correct.

The appellants argued, that, what was delivered at the domicilium citandi was not the package containing the written notice itself.

As regards the legal consequences of the delivery, counsel referred the Court to section 40(1) of the Interpretation Act [Chapter 1:01] (“the Interpretation Act”).

Counsel for the appellants argued, that, section 40(1) of the Interpretation Act regulates the interpretation of section 8(3)(b) of the Contractual Penalties Act, which deals with the delivery of registered mail.

It was further submitted, that, section 40(1) of the Interpretation Act envisages a situation where the document with the written notice is delivered rather than the registered mail slip.

He further asserted, that, the provisions of section 8(3)(b) of the Contractual Penalties Act do not depart, in principle, from those of section 40(1) of the Interpretation Act.

He also submitted, that, section 8(3)(b) of the Contractual Penalties Act must be read together with section 40(1) of the Interpretation Act.

The argument was that there was no compliance with section 8(3)(b) of the Contractual Penalties Act.

Counsel for the first respondent argued, that, it was common cause that the registered mail slip was delivered at the appellants domicilium citandi.

He argued, that, the obligations under section 8(3)(b) of the Contractual Penalties Act were discharged by the first respondent.

Counsel further asserted, that. the first respondent did not have the additional obligation to ensure that the appellants collected the registered mail from the Post Office.

Counsel for the first respondent further stated, that, contrary to the terms of the agreement, the appellants had vacated their chosen domicilium citandi without informing the first respondent. He argued, that, while the appellants claimed not to have seen the registered mail slip, they had admitted receipt of a process sent in the same way subsequent to the delivery of the registered mail slip.

THE LAW AND THE FACTS

The question is whether the court a quo was correct in holding that the delivery of the registered mail slip at the appellants domicilium citandi constituted service of the written notice of breach of the agreement between the parties in terms of section 8(3)(b) of the Contractual Penalties Act [Chapter 8:04].

The court a quo said at pp9 and 10 of the judgment:

“The first defendant served the notice in terms of the parties agreement. Paragraph 15 of that agreement gave either party's chosen domicilium citandi and 268/64 Chiltern Road, Waterfalls was the plaintiffs chosen domicilium.

The parties had also indicated in the agreement that any variations or changes to the contract should be in writing and signed by both parties. It is in that same contract that the parties agreed on their respective domicilium for the purpose of receiving any correspondence. There was no variation or change to this.

…,.

A chosen domicilium citandi denotes where a party to a contract desires to receive whatever communication that is in relation to issues to do with such contract.

It follows, therefore, that one's residential address need not be one's chosen domicilium.

A party may choose such domicilium based on where they regard as the most convenient place to receive legal notices, and, should that change, it is to be expected that such party will duly notify those likely to be sending such notice, otherwise the whole concept of choosing a domicilium citandi loses meaning.

It is in this context that one must interpret the provisions of section 8(3)(b) of the Act.

I am therefore persuaded by Mr Nyahuma's argument, that, when the notice dated 17 November 2017 was sent by registered post to the purchaser's chosen domicilium citandi, the first defendant was complying with the exigencies of the provisions of section 8(3)(b).”

Choosing a domicilium citandi has specific legal consequences, such as -

(i) The party who elected the domicilium citandi should be ready to receive any legal notice that is delivered to that address;

(ii) If a change in address occurs, a party should notify the other contracting party, preferably in writing, of such a change in address; and

(iii) Delivery of a legal notice or document to the domicilium citandi chosen by a party to a contract will be considered sufficient for the purposes of legal action and such party would be deemed to have received the legal notice or document.

Section 8 of the Contractual Penalties Act [Chapter 8:04] provides as follows:

“8 Restriction of sellers rights

(1) No seller under an instalment sale of land may, on account of any breach of contract by the purchaser —

(a) Enforce a penalty stipulation or a provision for the accelerated payment of the purchase price; or

(b) Terminate the contract; or

(c) Institute any proceedings for damages;
unless he has given notice in terms of subsection (2) and the period of the notice has expired without the breach being remedied, rectified, or discontinued, as the case may be.

(2) Notice for the purposes of subsection (1) shall —

(a) Be given in writing to the purchaser; and

(b) Advise the purchaser of the breach concerned; and

(c) Call upon the purchaser to remedy, rectify, or desist from continuing, as the case may be, the breach concerned within a reasonable period specified in the notice, which period shall not be less than —

(i) The period fixed for the purpose in the instalment sale of the land concerned; or

(ii) Thirty days;
whichever is the longer period.

(3) Without derogation from section 40 of the Interpretation Act [Chapter 1:01], a notice shall be regarded as having been duly given to the purchaser for the purposes of subsection (1) —

(a) If it has been delivered to the purchaser personally or to an agent chosen by the purchaser for the purpose of receiving such notices; or

(b) If it has been posted, by registered post, to the address chosen by the purchaser for the delivery of correspondence or legal documents relating to the instalment sale of land concerned, or, in the absence thereof, to the purchaser's usual or last known place of residence or business.”

Section 40(1) of the Interpretation Act [Chapter 1:01] provides as follows:

“40 Service of Documents

Parties to a contract are allowed the discretion to choose different forms of delivery of documents or legal notices that relate to the contractual relationship.

The parties elected to use the registered mail system as a mode of delivery.

Because they chose this mode of delivery of documents relating to the contractual relationship, it meant that they agreed to be bound by it.

The law of service of documents by registered post prescribes a procedure for ensuring effective service.

The procedure entails that the registered article, such as an envelope containing the document concerned and bearing the name of the addressee and place where the mail is to be delivered, be deposited by the originator or sender at a Post Office. The registered article must be accepted and its receipt, as a registered item, acknowledged.

Using the internal system of ensuring the security of registered mail, the Post Office concerned conveys the registered article to the branch nearest to the address on the registered item. The branch of the Post Office in possession of the registered item issues out a registered mail slip directed at the address on the registered article, notifying the person whose name appears as the addressee of the availability of the registered item at the Post Office for collection.

The registered item becomes capable of retrieval by the addressee from the Post Office.

Delivery of the registered mail slip at the address appearing on the registered article constitutes effective service of the registered mail. The collection of the registered item from the Post Office is the responsibility of the addressee.

The South African case of Kubaya v Standard Bank of South Africa Ltd [2014] ZACC 1 sets out, at paragraph 48, a standard practice of the Post Office on the conveyance and delivery of registered mail similar to that prevailing in Zimbabwe. The court said:

“It is so, that, section 96(1) requires that notices be delivered 'at the address' provided by the recipient. However, this requirement must be understood with due regard to the practical aspects of dispatching a notice by way of registered mail.

When a credit provider dispatches a notice in that manner, the notice is sent to a particular branch of the Post Office. That branch then sends a notification to the consumer, indicating that a registered item is available for collection. It is never the case that an item dispatched by registered mail will physically be delivered to an individual – such delivery only occurs if the item is sent by ordinary mail, which does not suffice for purposes of sections 129 and 130 of the Act.

If a consumer elects not to respond to the notification from the Post Office, despite the fact that she is able to do so, it does not lie in her mouth to claim that the credit provider has failed to discharge its statutory obligation to effect delivery.”

Where a party to a contract has chosen an address as a domicilium citandi where service of documents or correspondence on matters relating to the contract should be effected and has selected the registered mail as the preferred mode of service of documents or correspondence, compliance by the other party with the procedure prescribed under the law of service by registered post would constitute effective service of any such document or correspondence upon delivery of the registered mail slip at the chosen domicilium citandi.

The procedure prescribed by the law of service of documents or correspondence by registered post does not require delivery of the registered item itself at the chosen domicilium citandi.

In Munien v BMW Financial Services (SA) (Pty) Ltd and Another 2010 (1) SA 549 WALLIS J stated the following...,:

“It follows, that, in my judgment, provided the credit provider delivered the notice in the manner chosen by the consumer in the agreement, and such manner was one specified in section 65(2)(a), it is irrelevant whether the notice in fact came to the attention of the consumer.

As the consumer has the right to choose the manner in which notice is to be given, it is for the consumer to ensure that the method chosen will be one that is reasonably certain to bring any notice to his or her attention.

In the present case, the applicant was presumably aware of the deficiency in the postal services at the address chosen in the agreement. He was certainly aware that he had moved. In terms of clause 15.1 of the contract, he was perfectly entitled to give notice of that fact to the first respondent and to alter his domicilium. He did not do so.

His right to alter his address was reinforced by section 96 of the NCA.

In addition, he was obliged, under section 97 of the NCA, to inform the first respondent that the location of the motor vehicle had changed, but, it does not appear that he did so.

The fact that he did not receive either the notices or the summons appears to follow very largely from his own actions rather than those of the first respondent.”

It is common cause, that, the parties had agreed, under clause 15 of the agreement, that the domicilium citandi would be as stated in the agreement. It is also common cause, that, under clause 14 of the agreement, the parties had agreed that any variation or change to the contract would be in writing and agreed on by both parties.

The written notice, drawing the attention of the appellants, as purchasers, to breach of the contract and calling upon them to rectify the breach within thirty days of service of the notice on them failing which cancellation of the contract would follow, was sent by registered post to the branch of the Post Office nearest to the address the appellants had chosen as the domicilium citandi.

The Post Office issued out a registered mail slip to the domicilium citandi, notifying the appellants of the availability of the registered item for collection. The registered mail slip was delivered at the domicilium citandi.

The act of delivery of the registered mail slip at the domicilium citandi completed the process of effective service of the notice by registered post contemplated under section 8(3)(b) of the Contractual Penalties Act.

Section 8(3)(b) of the Contractual Penalties Act does not require actual receipt of the registered mail itself by the addressee. It does not require the seller, under an instalment sale of land, to bring the contents of the notice of breach to the subjective attention of the purchaser.

Section 8(3)(b) of the Contractual Penalties Act is to the effect, that, the notice shall be regarded as having been duly given to the purchaser if it has been posted, by registered post, to the address chosen by the purchaser for the delivery of correspondence or legal documents relating to the instalment sale of land concerned.

The seller discharged its obligation to the appellants, as purchasers, in terms of the contract, as read with section 8(3)(b) of the Contractual Penalties Act, regarding the mode of service of the notice of breach of the contract.

The fact that the appellants no longer resided at the chosen domicilium citandi was of no consequence to the determination of the question whether delivery of the registered mail slip at the domicilium citandi constituted effective service of the notice of breach of the contract for purposes of section 8(3)(b) of the Contractual Penalties Act.

The risk of non-receipt of the registered item lay with the appellants once the registered mail slip was delivered at the domicilium citandi. The obligation to notify the seller, in writing, that they were no longer residing at the chosen domicilium citandi was theirs.

In Van Niekerk and Another v Favel and Another 2006 (4) SA 548 (W)…, it was held, that, the requirement of notifying the purchaser of breach of contract and making demand of the purchaser to rectify the breach was satisfied provided that the letter had in fact been sent to him by registered post, whether or not it was received by the purchaser.

The contention advanced on behalf of the appellants was that the service of the written notice of breach by the seller, on the purchaser, by registered mail, required under section 8(3)(b) of the Contractual Penalties Act was the delivery of the written notice itself in a registered envelope at the chosen domicilium citandi.

That meaning, of section 8(3)(b) of the Contractual Penalties Act, was said to be derived from the application of section 40(1) of the Interpretation Act on the interpretation of enactments providing for service of documents by registered post.

The contention advanced on behalf of the appellants overlooked the principle contained in section 2(1)(a) of the Interpretation Act, to the effect, that, the application of the provisions of the Interpretation Act to the construction of any enactment must be consistent with the intention, purpose, or context of the enactment.

The purpose of section 8(3)(b) of the Contractual Penalties Act is to make provision for effective service of a written notice of breach of the instalment sale of land by the seller, to the purchaser, where it has been posted by registered post to the address chosen by the purchaser for the delivery of correspondence or legal documents relating to the instalment sale of land.

Section 8(3)(b) of the Contractual Penalties Act expressly provides that the notice shall be regarded as having been duly given to the purchaser for the purposes of subsection (1)(b) (termination of the contract) if it has been posted by registered post to the address chosen by the purchaser as the domicilium citandi.

Given the provisions of section 2 of the Interpretation Act, section 40(1) of the of the Interpretation Act may not be relied upon to contradict the purpose of section 8(3)(b) of the Contractual Penalties Act.

Section 8(3)(b) of the Contractual Penalties Act does not need the application of section 40(1) of the Interpretation Act because its provisions are clear and unambiguous.

DISPOSITION

Accordingly, it is ordered as follows -

“The appeal is dismissed with costs.”

HB57-15 : SIPIWO NKOMO vs MLWELIWENKULULEKO NCUBE
Ruled By: MUTEMA J

This is an application for rescission of a default judgment that was granted against the applicant in case number HC548/14.

The facts relevant to the resolution of the dispute between the parties are briefly these:

The applicant sold a BMW X5 motor vehicle registration number ACX 0734 to the respondent. The respondent paid a deposit of $12,000 and took possession of the vehicle. He, however, failed to pay the balance of $12,175.

The applicant then sued for the balance under case number HC2869/13 and obtained default judgment.

As a follow up to the default judgment, a writ of execution was issued which resulted in the vehicle in question being attached by the Deputy Sheriff.

The respondent filed an application for rescission of the default judgement under case number HC548/14.

The applicant's legal practitioners drew up papers to oppose the application, but, before they filed them, the parties reached a settlement which culminated in the signing of an agreement annexure “D” to applicant's founding affidavit. It was drafted in these words:

“MEMORANDUM OF AGREEMENT

It be and is hereby recorded that following a meeting between:

Plaintiff and her legal practitioner Mr G. Nyoni

Defendant and his legal practitioner Mr S.S. Mazibisa

It was agreed without force; duress and undue influence and the parties conscious of what they were doing, that:

1.The execution of Defendant's property be stayed only and strictly on the following conditions:

(a) That, he pays US$5,000 on 15 April 2014 and US$5,175 on the 6th of May 2014.

(b) That, he pays US$578 paid by Plaintiff to Sheriff of Zimbabwe; Sheriff's further costs and commission; interest of US$250 and costs as will be taxed, all by the 27th of May 2014.

2. The BMW X5 registration number ACX 0734 shall be removed by plaintiff from the Sheriff of Zimbabwe, at Defendant's expense (i.e. storage charges) and kept at Plaintiff's place or other safe place until the defendant has fully paid all monies detailed in paragraph (1) above.

3. Should the Defendant fail to make any one of the payments mentioned in (1) above, the plaintiff shall, without notice to the Defendant, take the vehicle to a car dealer (sellers of second hand vehicles) for the car to be sold by private treat at such reasonable price as will be determined thereat.

4. This memorandum shall stand as Defendant's mandate to the Plaintiff and the said car dealer to sell and transfer the car to the would-be purchaser.

DATED at BULAWAYO on this the 26 day of MARCH 2014.”

It was signed by both parties and their respective legal practitioners.

As a result of the agreement, the application and opposition for rescission under case number HC548/14 could not be pursued.

The respondent failed to meet the payments stipulated in the agreement of 26 March 2014 and the vehicle was taken to a dealer, but, the highest offer received was US9,000. There followed a series of correspondence between the parties legal practitioners concerning the value of the vehicle and whether the respondent should pay the applicant's costs.

On 3 September 2014, the current legal practitioners of the respondent wrote to the applicant's legal practitioners as follows:

“RE: M. NCUBE vs SIPIWO NKOMO

The above matter refers and to our previous conversation.

Kindly note, that, I am preparing a payment plan which is to commence at the end of September 2014 inclusive of clearing the balance if that option is still possible then.

In the meantime, may I please have photocopies of all the filed pleadings since Messrs Cheda and Partners seem to have lost the whole file in their moving offices. I have tried to photocopy directly from the High Court, but, at a dollar per page, it was too stiff, hence the favour that I now seek.”

The respondent was obliged with the documents he requested, which papers he then used to pursue his application for rescission of judgment in case number HC548/14 which had been laid in abeyance by the memorandum of agreement alluded to above - without alerting the applicant.

On 23 October 2014, the respondent obtained a default judgment, with costs, rescinding the judgment the applicant had obtained in HC2869/13.

The applicant says she was shocked to receive a letter, on 19 November 2014, written to her legal practitioners by the respondent's current legal practitioners to this effect:

“RE: MLWELIWENKULULEKO NCUBE vs SIPIWO NKOMO HC548/14 X REF HC2869/13

The above matter refers and to the attached court order.

Be advised that we have since obtained a rescission of judgment of the order which was in favour of your client. Mr Ncube had clearly wanted this matter to rest and had resigned himself to losing both the BMW X5 and the money, a sum of US$12,000, plus other monies that he had paid to the sheriff.

What he then found unfair was the fact that your client wanted to further make him pay a sum in excess of US$2,000 as legal costs when she had both the car and the money. Clearly, that was for all to see, a gross injustice.

In light of the rescission of judgment may the status quo before the judgment be restored, and the matter proceed through normal trial route and Mr Ncube pays the balance which was owing. Failing which, may your client make arrangements to refund the money paid to her by Mr Ncube, by the 1st of December, 2014.

As yours took back possession of the vehicle, which she is using, as we are told by Mr Ncube that he has seen her use the motor vehicle, there is therefore no legal basis for her not to return the money since she had taken back the motor vehicle and enjoys its use.”

That letter elicited a response from the applicant's legal practitioners in this vein:

“We refer to the above matter and to your 19 November 2014 letter. We are, we should confess, shocked by your stance which borders on lack of candour and dishonesty. There is a memorandum of agreement that you signed. Did you disclose it to the court? We are interested in this because we saw the papers in court and the agreement was not part thereof. Can we hear from you urgently as we are determined to take this back to court and to show the court that it was, in our view, at least, misled.”

This letter provoked no response from the respondent hence the current application.

At the hearing of the application, counsel for the respondent attempted, in vain, to introduce cases not cited in the respondent's heads of argument on the basis that he was only briefed by Ndove, Museta and Partners the day before.

I disallowed it in terms of Rule 238(2c) because Ndove, Museta and Partners had been served with the notice of set down on 12 February 2015 but briefed counsel on the eleventh hour. No explanation for that was forthcoming.

As if that was not enough, counsel for the respondent went on to smuggle into the hearing new issues that appear not anywhere in the papers in an endeavour to persuade the court to dismiss the application.

I will proceed to deal with those technical issues that he raised first before adverting to those raised in the opposing affidavit and the heads of argument....,.

In his heads of argument, the respondent raised three issues in opposing the grant of this application. I herewith deal with them hereunder:

(a) That the agreement was a compromise

The argument here is that the agreement was meant to put an end to the parties intended action, viz the applicant stay execution and respondent, implicitly not to pursue rescission. The respondent further argues, that, if any of the parties failed to honour the compromise the proceedings would resume.

Both parties breached the agreement – the respondent failed to keep up with payments while the applicant took the car from the dealer and started using it.

The situation was: who approached the court first to continue the suspended proceedings? and unfortunately, for the applicant, the respondent did so first and prosecuted his application for rescission.

In Georgias and Another v Standard Chartered Finance Zimbabwe Limited 1998 (2) ZLR 488 (SC)…, GUBBAY CJ…, defined compromise in these words:

“Compromise or transactio is the settlement, by agreement, of disputed obligations, or of a lawsuit the issue of which is uncertain. The parties agree to regulate their intention in a particular way, each receding from his previous position and conceding something – either diminishing his claim or increasing his liability.”

It is trite law, that, once a compromise agreement is concluded, it precludes an action on the original debt, except where the compromise specifically or by clear implication provides that the original claim shall revive in the event of the non-performance of the terms of the compromise: FARLAM and HATHAWAY: A Case Book on the South African Law of Contract…,.

In casu, assuming that the agreement the parties concluded meets the requirements of a compromise, the respondent argues, that, it contained a clear implication “implicitly and explicitly” that the original claim shall revive in the event of non-performance of the terms of the compromise.

A reading of the terms of the agreement does not distil an implication, let alone a clear one, that the respondent would revive his application for rescission in the event of non-performance by the applicant or by himself of the terms of the compromise.

In casu, it is the respondent who failed to perform his terms of the compromise by failing to pay.

I am yet to come across a compromise agreement with a clause, either express or implicit, giving a party who deliberately fails to perform his/her terms of the compromise, the leeway to revive the original claim. If anything, it is the applicant who was granted the explicit right to revive execution of the respondent's property vide the words in paragraph 1 which state:

“The execution of defendant's property be stayed only and strictly on the following conditions” which are mentioned in (a) and (b), viz the payment by him of the amounts stated therein which amounts the respondent failed to pay.

Further, in the absence of fraud, duress, or justus error, it is also trite, that, the purpose of a compromise is to end doubt and to avoid the inconvenience and risk inherent in resorting to the methods of resolving disputes. Its effect is the same as res judicata on a judgment by consent. It extinguishes ipso jure any cause of action that previously may have existed between the parties unless the right to rely thereon was reserved: Nagar v Nagar 1982 (2) SA 263 (ZH).

In the instant case, as already found supra, the agreement reserved no such right to the respondent.

Even if he had such right, he still would be precluded from rushing back to court without giving due notice of such action to the applicant, who..., was justified in wallowing in the belief that the agreement was still binding....,.

(c) The third and last point raised by the respondent, viz that the applicant's actions of retaining the deposit paid and the motor vehicle is not worthy considering at this stage.

Those merits should be ventilated in a different forum if it is found, that, the agreement concluded by the parties does not put the dispute between them to rest.

HB60-15 : JABULANI NCUBE vs INNOCENT NYATHI
Ruled By: MOYO J

This is an application for condonation of the late filing of an application for rescission of judgment.

The parties have been engaged in protracted litigation dating far back as 2006.

The parties, in 2006, entered into a loan agreement. Part of the terms of the loan agreement were that:

“That the loanee offers his house, being Stand 32699 Bulawayo Township of Bulawayo Township Lands as security.”

Clause 10 of the loan agreement also provides as follows:

“In the event the loanee breaches any content of this agreement, the house that he has given as security to the loaner shall hold him to this agreement (sic) and claim transfer of the pledged stand number 32699 Entumbane area (above-named).”

In this matter, the applicant was the loanee and the respondent was the loaner.

The applicant did make some payments towards the loan, although it looks like they were not made timeously. It is also not clear as to whether the loan was paid up or not.

In such applications, what is central are the following principles:

“It is well established, that, in considering application for condonation, the court has a discretion to be exercised judicially upon a consideration of all the facts, and that, in essence, it is a question of fairness to both sides.

In this enquiry, relevant considerations may include the degree of success…, (agreements); the importance of the case; the respondent's interest in the finality of his judgment; and the avoidance of an unnecessary delay in the administration of justice.

The list is not exhaustive.

These factors are not individually decisive but are inter-related and must be weighed one against the other; thus, a slight delay and a good explanation, may help compensate for prospects of success which are not strong.”

Per the case of United Plant Hire (Pvt) Ltd v Hills & Ors 1976 (1) SA 717 (A)…,.

Our Supreme Court also listed the considerations relevant to the determination of such an application in the case of KM Auctions (Pvt) Ltd v Adanesh Samuel & Anor SC15-12.

In this case, they were listed as:

(i) The degree of non-compliance.

(ii) The explanation for it.

(iii) The importance of the case.

(iv) The prospects of success.

(v) The respondent's interest in the finality of the case.

(vi) The convenience of the court.

(vii) The avoidance of unnecessary delay in the administration of justice.

Apparently, the delay in this matter has been quite lengthy; initially, a default judgment against the applicant was rescinded in 2008, the applicant did nothing, prompting the respondent to seek directions on how to proceed.

Eventually, default judgment awarding the respondent Stand 32699 Entumbane Township was granted on 10 November 2011.

The applicant states, in his founding affidavit, that, he learnt of the default judgement in February 2012, when the respondent intended to evict him from the said property. He states, that, his legal practitioner relocated and went to Botswana and that he never was aware that the legal practitioner had relocated and that there were court proceedings against him. He then approached another firm of lawyers who filed an urgent application for stay of execution that was eventually dismissed.

He says he then had financial problems and could not approach lawyers for assistance.

He then approached his current legal practitioners who advised him, that, condonation had to be sought in order to file an application for rescission of judgment.

The applicant has not gone into much detail as to the specific times he approached these different firms of lawyers. His explanation lacks information and is very slippery. He does not volunteer much information on the delay of more than two (2) years counting from February 2012 to October 2014 when this application was filed.

He tries to blame the departure of his legal practitioner from Zimbabwe to Botswana.

However, he had a duty to check on his matter and not wait until when he hears from the Deputy Sheriff upon execution of the order. A diligent litigant does not wait for his lawyer to communicate with him - especially when the lawyer becomes silent. The litigant is duty bound to enquire from his legal practitioner the status of his case.

In any event, the legal practitioner in question was no longer in the picture from February 2012 when the applicant became aware of the judgment against him.

In this regard, STEYN CJ, in the case of Salajee & Anor NNO v Minister of Community Development 1965 (2) SA 135…, said:

“A litigant…, is not entitled to hand over a matter to his attorneys and then wash his hands of it. If, as here, the stage is reached where it must become obvious also to a layman that there is a protracted delay, he cannot sit passively by, without so much as directing any reminder or enquiry to his attorney…,.”

I accordingly make a finding that:

The applicant was negligent in the prosecution of his own case. He has difficulty explaining the delay. What he has attempted to throw in as an explanation for the delay does not hold any water.

Having found, that, the delay has not been explained to the satisfaction of the court, I therefore move on to find if there are any other factors that could find favour in the applicant's situation, for, the enquiry does not end with the reasonableness or otherwise of the explanation for the delay.

It goes beyond that.

In the case of Mahachi v Barclays Bank of Zimbabwe SC06-06, it was held, that, in a case where no acceptable explanation for non-compliance with the Rules has been given, the applicant must show very good prospects of success.

In the case of Melane v Santana Insurance Co. Ltd 1962 (4) SA 531 (A)…, it was stated thus:

“In deciding whether sufficient cause has been shown, the basic principle is, that, the court has a discretion, to be exercised judicially upon a consideration of all the facts, and, in essence, it is a matter of fairness to both sides.

Among the facts usually relevant are the degree of lateness, the explanation therefore, the prospects of success, and the importance of the case. Ordinarily, these facts are interrelated, they are compatible with a true discretion, save of course that if there are no prospects of success there would be no point in granting condonation.

An attempt to formulate a rule of thumb would only save to harden the arteries of what should be a flexible discretion. What is needed is an objective conspectus of all the facts.

Thus, a slight delay and a good explanation may help to compensate for prospects of success which are not strong or the importance of the issue may tend to compensate for a long delay. And the respondent's interest in finality must not be overlooked.”…,.

I now turn to assess the merits.

In this case, the parties entered into a loan agreement, on the face of it which strikes as an agreement that has certain terms, like clause 10, that may be found to be unlawful.

Clause 10 of the agreement, in my view, is a pactum commissorium.

A pactum commissorium is defined, in the case of Chimutanda Motor Spares (Pvt) Ltd v Musare & Anor 1994 ZLR 310 (H), as:

“A pact by which the parties agree, that, if the debtor does not, within a certain time, release the thing given in pledge by paying the entire debt, after the lapse of the time fixed, the full property in the thing will irrevocably pass to the creditor in payment of the debt.”

WILLES, Principles of South African Law, 8th Edition…, established, that, a valid pledge merely confers the right to retain possession of the thing pledged as security by the pledgor as long as the debt remains unpaid - it does not confer the right of ownership. The pledger retains ownership of the pledged property.

It would appear, that, from the afore-stated authorities, there is a well grounded contention, prima facie, that the agreement between the parties, and the subsequent transfer of the property to the respondent, was in fact premised on an illegality.

HMA02-19 : JETINOS ZIVANOMOYO vs HELLEN DINGANI
Ruled By: MAWADZE J and MAFUSIRE J

This was an appeal from a decision of the Magistrate's Court. We dismissed it soon after argument and gave reasons ex tempore. The appellant has now sought written reasons.

In the court a quo, the respondent, hereafter referred to as “the purchaser” where appropriate, sued for specific performance in respect of a property that she had bought from the appellant in terms of a written agreement of sale.

She proceeded by way of a court application.

The draft order, apart from costs, sought an order directing the appellant, hereafter referred to as “the seller” where appropriate, to sign forthwith all the documents necessary to enable transfer of the property to herself, failing which the Messenger of Court should be empowered to stand in his stead and sign.

She said, in terms of the agreement, the parties had consented to the jurisdiction of the Magistrate's Court.

In his notice of opposition, the appellant took a point in limine, that, the remedy sought was not one contemplated by the Agreement of Sale. He said in terms of it, in the event of a breach by himself, the only remedy available to the respondent was cancellation of the agreement upon a prior demand to make good the breach within 14 days, and that this had not been done.

He said specific performance was a remedy alien to the written agreement.

An adjunct to the above objection was that, in terms of the Magistrates Court Act [Chapter 7:10], a Magistrates Court has no jurisdiction to grant specific performance in the absence of an alternative claim for damages. He cited section 14(1)(d) of the Magistrates Court Act.

On the merits, the appellant's basic defence was that the respondent had only paid part of the purchase price; that, as such, she was in breach of the Agreement of Sale; and that therefore she was not entitled to specific performance. He prayed for the dismissal of the application with costs.

The court a quo felt there was a dispute of fact that was incapable of resolution on the papers. It referred the matter to trial.

After a full scale trial, the court a quo found in favour of the respondent and granted specific performance.

The appellant appealed.

We felt the appeal had no merit. We dismissed it as aforesaid.

The seller's argument, that the remedy sought by the purchaser was not one contemplated by the agreement of sale was premised on clause 11. It read:

“Should the Seller breach any of the conditions of the Agreement, the Purchasers, shall, in writing, within fourteen (14) days, call upon the Seller to remedy, failure to which the Purchasers shall be entitled to cancel the Agreement and claim the return of the Purchase Price or damages.”

The point in limine was all smoke.

The approach by the seller was to skin and disembowel the agreement, yank individual clauses out, and hang them up to dry. The result was to turn an otherwise reasonably worded commercial agreement into a vain document that was an end in itself, instead of it being a means to an end.

The agreement of sale was an instrument for the seller to transfer real rights in the property sold and the purchaser to acquire them.

That was the object. That was the purpose. The court had to give effect to it. Otherwise the law would be damned.

As ROBINSON J would put it, in Intercontinental Trading (Pvt) Ltd v Nestle Zimbabwe (Pvt) Ltd 1993 (1) ZLR 21 (H):

“Let me add that to have found in this matter that there was no contract between the parties would have been artificial in the extreme and, I am sure, would have prompted any reasonable businessman to remark that if, before, he had thought the law was an ass, he now knew for certain that it was, since it had shown itself to be the domain of niggling academics out of touch with reality and to have nothing to do with the cut and thrust of the business world where one is concerned, not with the legal niceties pertaining to, but with the perceived existence of a contract.”…,.

The point is, a purchaser who buys a property and performs his side of the bargain, or is ready to perform, is entitled to take title. The seller is obliged to deliver. If he fails or neglects or refuses to do so, the purchaser is entitled to sue for specific performance.

This is quite elementary.

As long ago as 1912 INNES JA said, in Farmers Co-operative Society (Reg) v Berry 1912 AD 343…,:

“Prima facie, every party to a binding agreement who is ready to carry out his own obligation under it has a right to demand from the other party, so far as it is possible, a performance of his undertaking in terms of the contract.”

A plaintiff has the right to choose whether to hold a defendant to his contract and claim performance by him of what he bound himself to do, or to claim damages for the breach: see Haynes v Kingwilliamstown Municipality 1951 (2) SA 371 (A)…,.

The defendant has no such right of election.

He cannot claim to be allowed to pay damages instead of having an order for specific performance entered against him. In the exercise of its discretion, the court may grant or refuse specific performance. Specific performance will be refused if it will lead to an injustice, or, if it will be unduly harsh and burdensome on the defendant.

There was nothing like that in this case.

The court exercises its discretion to grant or refuse specific performance judiciously, not whimsically. The discretion is not confined to specific types of cases. It is not circumscribed by rigid rules. Each case depends on its own set of facts: see Intercontinental Trading (Pvt) Ltd v Nestle Zimbabwe (Pvt) Ltd 1993 (1) ZLR 21 (H).

In the present case, clause 11 of the agreement did not oust the purchaser's right to sue for specific performance. It merely pronounced one of the remedies available to her in the event of a breach by the seller.

A proper and holistic study of the agreement shows, that, it was the intention of the parties, that, upon her performing her side of the contract she would get transfer of the property. Otherwise why would clause 1(ii)(4) refer to the payment of capital gains tax, if not in contemplation of transfer? Or clause 1(iii) that said the balance of the sale proceeds would be released to the seller upon the registration of transfer? Or clause 5 that said risk and profit in the property would pass to the purchaser on the date of registration of transfer?

The court a quo was right to dismiss the point in limine.

Its adjunct that the claim for specific performance was incompetent because it was not accompanied by a claim for damages was equally properly dismissed.

HH28-16 : FARPIN INVESTMENTS [PVT] LTD vs NETONE CELLULAR [PVT] LTD and JUSTICE L.G. SMITH [RETD] - ARBITRATOR
Ruled By: MAFUSIRE J

This was an application for the setting aside of an arbitration award.

The arbitrator, the second responded herein, was a retired Judge of this court.

The basis of the application was that the arbitrator had misconstrued the factual basis of the applicant's claim before him. It was also said, that, the arbitrator's second and final award had contradicted the findings in his first award. This misdirection was said to have led the arbitrator to make an award that was so palpably iniquitous as to be in conflict with the public policy of Zimbabwe, as envisaged by Article 34(2)(b)(ii) of the Model Law, which is incorporated in the Arbitration Act [Chapter 7:15].

The applicant also challenged the arbitrator's order of costs against it on the punitive scale of attorney and client and said, or implied, that, it was irrational, especially in circumstances where not only the arbitrator had given no justification or explanation for it, but also where the first respondent had not asked for such a scale.

Finally, the applicant also challenged the arbitrator's order that his costs be met by the applicant alone. The award of costs in such a manner was cited as another example of the lack of logic in, and the iniquitous nature of the award.

The first respondent opposed the application.

It supported the arbitrator's award and submitted that the applicant had misconstrued the arbitrator's findings in his initial award, which, it was argued, were no more than a re-statement or formulation of the issues for arbitration.

The papers were moderately voluminous. From the onset, I endorse the applicant's self-criticism in its heads of argument, that:

“…,. (T)he arguments in the submissions by the parties are somewhat convoluted, and, in some instances, intended to confuse the real issues.”

Not only that, but, the applicant's affidavits were prolix, repetitive, and argumentative. But, shorn of that, I believe the facts and the issues were simple and straightforward.

They were these:

(a) The Facts

The first respondent was a public cellular telephone operator. It was a private company. The applicant was also a private company. The genesis to the dispute between the two was the relationship that they entered into on 23 February 2009. As at that date, the first respondent was a 60% shareholder in another company called Zellco Cellular [Private] Limited [“Zellco”]. This shareholding had come about following a debt-equity swap.

The arrangement had been induced by Zellco Cellular's failure to remit what had been due by it to the first respondent.

Zellco Cellular's indebtedness to the first respondent had arisen out of a relationship that had existed between it and the first respondent since the year 2001. That relationship had been created in terms of a certain written agreement titled 'Service Provider Agreement' [hereafter referred to as “the SPA”].

In terms of the Service Provider Agreement, Zellco Cellular had been appointed to supply and distribute, inter alia, the first respondent's radio-linked telephone services to Zellco Cellular's own customers whom it would bill, and collect payments from, in connection with those services. In return, Zellco Cellular would be paid a commission by the first respondent. This would be deducted up-front and the net remitted to the first respondent.

The life-span of the Service Provider Agreement had been five years, but had been subject to renewal.

As at 23 February 2009, when the first respondent entered into the aforesaid relationship with the applicant, the Service Provider Agreement (SPA) had been renewed for another five years, from 21 November 2006 to some date in 2011.

Thus, when the applicant and the first respondent started their relationship, on 23 February 2009, the Service Provider Agreement (SPA) had still about two more years to run.

The relationship that the applicant and the first respondent created, on 23 February 2009, as aforesaid, was a straightforward sale of shares agreement. They executed a written document titled “Agreement of Sale of Shares”] [hereafter referred to as “the ASS”].

In substance, the first respondent sold to the applicant its entire shareholding in Zellco, i.e. the aforesaid 60% equity, for a certain sum of money.

It seemed common cause, that, the applicant had paid the purchase price in accordance with the agreement.

The fall-out between the parties was in respect of clause 13 of the Agreement of Sale of Shares.

The dispute was multi-faceted.

As I understood it, and in my own words, the applicant's position was that the first respondent had breached clause 13, and that, as a result, the first respondent had become liable to it in damages.

The first respondent disputed that it had breached the Agreement of Sale of Shares or that the applicant had been entitled to damages. It accused the applicant of purporting to step into the shoes of Zellco, and suing as if it were Zellco, allegedly in violation of basic tenets of Company Law.

The applicant's rejoinder was that it had not purported to step into Zellco's shoes; that, but for it to claim from the respondent, it had necessarily had to compute what Zellco had been owed by the first respondent by way of commissions in terms of the Service Provider Agreement, both as accrued in the past, and as projected in the future; that, the net amount, after deductions for expenses and contingencies, had constituted the value of its investment in Zellco, and that that was what it had lost as a result of the first respondent's breach.

Initially, the quantum of the applicant's claim was $13, 912,700=61. Subsequently, this was revised upwards to $14,962,121=82.

Zellco was not part of the dispute....,.

Clause 13 of the Agreement of Sale of Shares was undoubtedly the only link between the Service Provider Agreement (SPA) and the Agreement of Sale of Shares. As such, it was what connected the applicant to the SPA - an agreement to which it was otherwise not a party....,.

Clause 13 of the Agreement of Sale of Shares, particularly sub-clause 2 thereof, read as follows:

“13 Duration of Agreement and Life of Service Provider Agreement

13.1….,.

13.2 NetOne undertakes to renew the Service Provider Agreement between Zellco Cellular and themselves in order for Farpin to have the opportunity to realise full value on the shares procured by a further five [5] years from the date of expiry of the current agreement between NetOne and Zellco.”

[b] Arbitration

The dispute between the parties, or rather facets of it, was arbitrated upon, twice, by the second respondent.

In the first arbitration, the applicant challenged the jurisdiction of the arbitrator saying that the dispute was not one to be resolved by arbitration.

The arbitrator ruled against it.

In the course of his award, he made reference to the cancellation of the Service Provider Agreement (SPA) by the first respondent as not constituting a breach of the Agreement of Sale of Shares, but, that the effect of the cancellation had given rise to such breach since the respondent could then not comply with the Agreement of Sale of Shares.

From there, the arbitrator directed the parties to file their statements of claim for the second arbitration on the two issues that he had identified.

The first respondent was ordered to meet the costs of that initial award.

The arbitrator conducted a second hearing at which, among other things, the applicant's witness, an accountant, gave viva voce evidence on how the applicant's damages had been computed.

The proceedings did not go to the “defence” case.

The first respondent applied for the discharge of the applicant's claim.

The application was granted with costs on an attorney and client scale.

The arbitrator's findings and conclusions were as follows:

“Having given careful consideration to the submissions made by the legal representatives of the parties, I consider that there is no privity of contract between the parties.

Clause 13.2 of the SPA does not provide a nexus which would entitle the Claimant to claim damages for the loss of commission and profits suffered by Zellco because of the cancellation of the SPA.

The Claimant cannot step into the shoes of Zellco and claim the alleged damages suffered by Zellco.

In clause 7 of its Statement of Claim, as amended, the Claimant submitted, that, as a consequence of the cancellation of the SPA it suffered damages in the sum of $14,962,121=82 which is made up of three elements:

(i) The first being commission amount due to it (not to Zellco) up to April 2011;
(ii) The second being loss of income [from] April to May 2014; and
(iii) The third being projected loss of income [from] June 2014 to November 2016 and then claim that that was the amount of the damages it suffered.

If income in the sum of $6,688,988=96 was lost by Zellco, that does not mean that Zellco did not make a profit of $6,688,988=96 which it would have passed on to its shareholders. It would have incurred expenses which would have had to be paid from the income received.”

After that, the applicant applied to this court for the setting aside of the arbitrator's decision.

[c] Issues

In order for me to arrive at the conclusion whether or not the arbitration award was impeachable by reason of a violation of the public policy of Zimbabwe, as envisaged by Article 34[2][b][ii] of the Model Law, which is incorporated in the Arbitration Act [Chapter 7:15], the issues, as I see them, were these:

[i] What is the approach of the court where an arbitration award is sought to be impeached?

[ii] Did the arbitrator contradict himself in his two awards?

[iii] Did the first respondent breach the Agreement of Sale of Shares; was the applicant entitled to damages?

[iv] Did the arbitrator misdirect himself by awarding the first respondent costs on a higher scale and ordering the applicant to meet the costs of the arbitrator on its own?

I now proceed to consider the law on the point and to determine the issues as I have identified them above.

[i] Approach of the court vis-a-vis impeachment of Arbitral Award

In terms of Article 34 of the Model Law in the Arbitration Act, this court may set aside an arbitral award only on the grounds specified therein. One of those grounds, which the applicant has expressly relied on in these proceedings, was that the arbitration award was in conflict with the public policy of Zimbabwe as envisaged by sub-article [2][b][ii] of Article 34.

Sub-article [5] of Article 34 states:

“(5) For the avoidance of doubt, and without limiting the generality of paragraph (2)(b)(ii) of this article, it is declared, that, an award is in conflict with the public policy of Zimbabwe if —

(a) The making of the award was induced or effected by fraud or corruption; or

(b) A breach of the rules of natural justice occurred in connection with the making of the award.”

Other than paragraph [b] above, none of the other grounds listed by Article 34, on which this court may set aside an arbitral award, applied to the applicant's situation herein.

The definition of “public policy” in sub-article [5] does not limit the generality of that term as used in sub-article [2][b][ii].

The applicant alleged, that, the arbitrator misconstrued the premise upon which his claim had been presented before him, and that, as a result, he had seriously misdirected himself. It was argued, that, such misdirection had led him to come to a wrong conclusion. This was said to constitute a palpable and intolerable inequity that would hurt the conception of justice in fair-minded persons.

The onus lies on the party that seeks to set aside an arbitral award under Article 34 of the Arbitration Act.

In my view, it is an extremely heavy onus.

I believe, that, in the same way as in they exercise their review powers, superior courts restrain themselves from unnecessarily interfering with the exercise of judicial discretion by the inferior courts or tribunals. Unless the exercise of discretion by the inferior court or tribunal was injudicious or so grossly wrong as to amount to a miscarriage of justice, the superior court will let the decision pass even though it might itself have come to a different decision.

Dealing with the old Arbitration Act, before it was repealed and replaced by the current one, where the ground for setting aside an arbitral award was misconduct of the proceedings by the arbitrator, or the improper procurement of the arbitrator, or of the award, GUBBAY CJ, in Zimbabwe Electricity Supply Authority v Maposa 1999 [2] ZLR 452 [SC] said, at p462E–H:

“…,. [A] party seeking to set aside an arbitral award could succeed only if able to establish either misconduct on the part of the arbitrator or the fact that the award was improperly procured. The word 'misconduct' was to be understood in the sense of some wrongful, dishonest, or improper conduct; a bona fide mistake, whether of law or of fact, on the part of the arbitrator could not be relied upon as a ground for setting aside the award.”…,.

At p466E, the learned Chief Justice, dealing with the current Arbitration Act, said:

“An arbitral award will not be contrary to public policy merely because the reasoning or conclusions of the arbitrator are wrong in fact or in law. In such a situation, the court would not be justified in setting the award aside. Under Article 34 or 36, the court does not exercise an appeal power and either uphold or set aside or decline to recognise and enforce an award by having regard to what it considers should have been the correct decision.”…,.

In casu, both parties relied on Zimbabwe Electricity Supply Authority v Maposa 1999 [2] ZLR 452 [SC] above.

In particular, the applicant quoted the passage at 466 above, and evidently found support in what the learned Chief Justice went on further to say at p466F–G:

“Where, however, the reasoning or conclusion in an award goes beyond mere faultiness or correctness and constitutes a palpable inequity that is so far reaching and outrageous in its defiance of logic or acceptable moral standards that a sensible and fair minded person would consider that the conception of justice in Zimbabwe would be intolerably hurt by the award, then, it would be contrary to public policy to uphold it.

The same applies where the arbitrator has not applied his mind to the question or has totally misunderstood the issue, and the resultant injustice reaches the point mentioned above.”

I now turn to examine the alleged palpable, far reaching, illogical and outrageous inequity by the arbitrator which fair-minded persons would consider would hurt the conception of justice in Zimbabwe if allowed to stand.

This leads me to consider the rest of the issues as I have identified them above.

[ii] Did the arbitrator contradict himself?

One of applicant's refrain was, that, in his first award, the arbitrator had made a positive finding that the first respondent had breached clause 13.2 of the Agreement of Sale of Shares by having cancelled the Service Provider Agreement and that the effect of that cancellation had given rise to a breach of the Agreement of Sale of Shares.

Having made that finding, it was argued, all that had remained, as indeed the arbitrator himself had gone on to direct, was the filing of the parties statements of claim.

I understood the applicant's argument on this to be that the liability of the first respondent for breach of clause 13.2 of the Agreement of Sale of Shares had already been settled by the first award and that the purpose of the second arbitration had merely been to settle quantum.

On the other hand, the first respondent accused the applicant of having misconstrued the arbitrator's statement in the first award. It disputed that the arbitrator had made a finding that there had been a breach and said that he had merely identified that aspect as being one of the issues for arbitration, otherwise he would not have called on the parties to file their statements of claim.

I find against the applicant on this point.

Regarding the generic statement in question, the applicant was guilty of, firstly, selective quoting; secondly, quoting the statement out of context; and, thirdly, misconstruing it altogether.

The applicant repeatedly quoted [i.e. in the founding affidavit, answering affidavit, and heads of arguments] the arbitrator's statement in the first award as follows:

“In my opinion…, the effect of the cancellation did give rise to a breach of the Agreement because Claimant [sic] did not comply with the provisions of Clause 13.2.”

But, that was not all that the arbitrator had said on the point.

The arbitrator's full statement, relevant to that point, was this [with the words removed by the applicant restored and highlighted, and those directly contradicting it highlighted and underlined]:

“It is clear that the cancellation by Respondent, on May 2011, of the Service Provider Agreement it had entered into with Zellco did not constitute a breach of the Sale Agreement Respondent had entered into with Claimant….,.

In my opinion, although the actual cancellation by Respondent of the Service Provider Agreement did not constitute a breach of the Sale Agreement, and, therefore, could not be subject to arbitration in terms of clause 14, the effect of the cancellation did give rise to a breach of the Agreement because Claimant [sic - obviously Respondent] did not comply with the provisions of Clause 13.2.

Had Respondent renewed the Service Provider Agreement in November 2011 and cancelled it a few months later there would have been no breach of the agreement.

I consider that there are two issues giving rise to a dispute between the Parties.

[a] Under 14.1.3 the respective rights and obligations of the parties under the agreement once clause 13.2 became incapable of performance; and

[b] Under 14.1.4, because Respondent breached the agreement by failing to comply with its undertaking in terms of clause 13.2 to renew the Service Provider Agreement for a further 5 years from November 2011.

The first respondent was right.

In his first award, the arbitrator did not, as it were, settle the question of the first respondent's liability for the alleged breach of clause 13.2 of the Agreement of Sale of Shares. He had merely identified that aspect as being one of two issues to be settled in the second arbitration. As paragraph [a] of his formulation of the issues put it, the second arbitration would determine “…, the respective rights and obligations of the parties under the agreement….,.”

The applicant forgets, that, at that stage, the issue before the arbitrator was whether or not the dispute was one to be settled by arbitration.

The arbitrator said it was. He then went on to identify what the issues were.

The applicant's selective quoting of the arbitrator's statement in this regard, and quoting it out of context for that matter, was a self-serving stratagem which was intended to mislead. Therefore, it is my finding, that, the arbitrator did not contradict himself in his two awards in question.

[iii] Did the first respondent breach the Agreement of Sale of Shares; was the applicant entitled to damages?

Without doubt, there was no privity of contract between the applicant and the first respondent in terms of the Service Provider Agreement.

The Service Provider Agreement was between the first respondent and Zellco. That agreement started and ended with these two parties only.

It seems there had been some stray or loose argument to the effect that both Zellco and the applicant had a common shareholding in some respects.

Certainly, at the relevant time, Zellco's chief executive officer also happened to be the chairman of the applicant. But, this set up could not have had any consequence by itself.

Zellco and the applicant were separate legal personae. A wrong done to one was not necessarily a wrong done to the other.

Before me, the applicant accused the arbitrator of misconstruing the premise of his claim before him when he made a finding, that, by suing the first respondent directly for damages, the applicant was attempting to step into the shoes of Zellco.

The applicant said it never stepped, or ever wanted to step, into Zellco's shoes. It said it was not suing the first respondent on the basis of the Service Provider Agreement, to which it was not a party. It was suing the first respondent only on the basis of its breach of the Agreement of Sale of Shares, to which it was a party.

It is important that I capture, accurately, the gravamen of the applicant's argument on this point. It was the jugular vein.

The applicant put its argument this way…,.:

“Contrary to Respondent's allegations and the basis of the ruling by the Arbitrator on the issue, Applicant did not claim everything Zellco would have earned as its profits….,. Zellco's commission was calculated in terms of the SPA, as a percentage of the total income generated from its clients based on the usage of the Respondent's network.

It therefore is no rocket science that in order to determine the commission Zellco would have earned, Applicant needed to calculate or estimate the said total income. Having determined the commission, Applicant went on…, to deduct from the commission all the operating and administrative expenses Zellco would have incurred in earning such commission.

The result is what Zellco would have earned from the operations as its profit and it is this profit that accrues to the shareholders of Zellco and distributed to them as dividends or retained earnings or some other form.

It is this profit, calculated as such, that Applicant is clearly claiming in its statement of claim and particulars of damages.

To the extent that the arbitrator's ruling failed to appreciate this simple fact, it cannot be based on sound legal principles at all and allowing any finding or ruling based on grossly unsound appreciation of fact and such fundamental legal principles to stand would be such an aberration of justice that would no doubt be contrary to the public policy of Zimbabwe which requires that sound legal principles and justice be upheld in such matters.”

Earlier…, the applicant had put forward the same argument as follows:

“The only way the Claimant could have stepped into the shoes of Zellco and sued Respondent for damages suffered by Zellco as a result of the cancellation of the SPA is by suing Respondent in terms of breach of a specific clause of the SPA. Zellco had no shoes in the SSA (no privity of contract) and by suing Respondent for breach of Clause 13.2 of the SSA, the Claimant could not have been doing so in the shoes of Zellco but its own as it clearly has privity of contract.”

I saw no difference. To me, it was all a question of semantics. The applicant was approbating and reprobating.

Plainly, it purported to step into Zellco's shoes and to sue, under the guise of damages, the respondent for money that allegedly would have been due to Zellco.

I find no fault in the arbitrator's findings. But, I explain the situation in my own way.

In terms of the Service Provider Agreement (SPA), Zellco supplied the first respondent's products to members of the public. The profit belonged to the respondent. All Zellco was due was a commission. The applicant had no stake in that.

As a shareholder in Zellco, it would have had to wait for the declaration of a dividend.

If Zellco was pilfering the first respondent's money, then, that was a breach of the Service Provider Agreement (SPA). Indeed, the first respondent complained that Zellco was pilfering its money.

As a result, it instituted proceeding in HC3507/11 saying it had commissioned a firm of auditors who had discovered that Zellco had diverted an amount in excess of $14 million to its other project which had nothing to do with the first respondent. It said it had obtained summary judgment from this court in respect of that money.

All that the applicant said on this point was that the judgment had not been summary judgement, but merely a default judgment against which an application for rescission had been filed.

But, to me, that was neither here nor there. At the time of arbitration, Zellco had an unfulfilled judgment of over $14 million in respect of the first respondent's money. What was worse, Zellco had filed for bankruptcy.

On these facts, clearly, the first respondent had been entitled to cancel the Service Provider Agreement. It had done so. But, apparently, it had botched the cancellation procedure. For that, it had been ordered, by this court, to reverse the cancellation.

It had also been found guilty of contempt of court and fined for having failed, neglected, or refused to reverse the cancellation as had been ordered.

But, that was not the dispute that the arbitrator had been seized with. This was merely an aspect of, or the background to it.

At any rate, the first respondent contended, that, there had been yet another cancellation subsequent to the one in respect of which the applicant had obtained a provisional order and which the applicant had never challenged.

Of course, the applicant disputed that.

But, in my view, the goings-on between Zellco and the first respondent, which were playing out in this court, could not preclude the arbitrator from holding that there had been no privity of contract between the applicant and the first respondent in terms of the Agreement of Sale of Shares.

I find no fault with that decision, let alone one that could be classified as a palpable iniquity that was so outrageous in its defiance of logic or acceptable moral standards and would therefore be in conflict with the public policy of Zimbabwe.

The applicant fixed its sails to the mast of clause 13.2 of the Agreement of Sale of Shares. That clause obligated the first respondent to renew the Service Provider Agreement for a further five years.

The purpose for the renewal was so that the applicant could have the opportunity to realize full value on the shares that it had acquired from the respondent in terms of the Agreement of Sale of Shares.

Clause 13.2 was the only place in the whole Agreement of Sale of Shares that made reference to the Service Provider Agreement.

The clause did not say what would happen if the respondent did not renew as envisaged.

Notwithstanding that, the applicant claimed it knew what would happen.

In paragraph 8.7 of its founding affidavit, it said logic and equity demanded, that, any claim for damages in such circumstances would be a claim based on the applicant recovering that same value from the Service Provider Agreement that it would have derived had that agreement not been cancelled by the first respondent, which cancellation had resulted in the failure by the first respondent to renew the Service Provider Agreement.

But, there was a problem in the applicant's formulation of its alleged cause of action for damages against the first respondent.

In my view, clause 13.2 of the Agreement of Sale of Shares did not override the entirety of the Service Provider Agreement. It only revised the rights and obligations of the parties under the Service Provider Agreement regarding renewal, and not cancellation.

Those parties were Zellco and the first respondent.

The Service Provider Agreement had provisions relating to the rights and duties of the parties under it regarding cancellation. If Zellco frittered away the first respondent's money and the first respondent moved to cancel the Service Provider Agreement, the applicant could not invoke clause 13.2 of the Agreement of Sale of Shares and seek to block the first respondent from cancelling.

Clause 13.2 of the Agreement of Sale of Shares did not have that effect.

That, in my view, was why the arbitrator, in his first award, had surmised, that, had the first respondent renewed the Service Provider Agreement in November 2011, and cancelled it a few months later, there would have been no breach of the Service Provider Agreement.

There was yet another problem with the applicant's formulation of its damages claim.

Any rights arising out of any breach of the Service Provider Agreement, by the first respondent, would accrue to Zellco - not the applicant.

The applicant may have been the majority shareholder in Zellco, and clause 13.2 of the Agreement of Sale of Shares may have been inserted for its benefit; but, to argue that the value accruing to Zellco was the measure of the applicant's damages under the Agreement of Sale of Shares - never mind Zellco's own breach of the Service Provider Agreement, would, in my view, run counter to basic tenets of Company Law.

The applicant was no more than a shareholder in Zellco.

Zellco's money or assets were not the applicant's money or assets. Zellco's debtors were not the applicant's debtors.

The applicant could only rely on such rights as were conferred by its shares in Zellco.

What is a share? What rights does it confer to the holder?

In Borland's Trustees v Steel Brothers & Co Ltd [1901] 1 Ch 279 the plaintiff suggested, that, a share was a sum of money which would be dealt with in a particular manner by what were called, for the purpose of argument, executory limitations. The suggestion was emphatically rejected by the judge, FARWELL J…,.:

“To my mind, it is nothing of the sort. A share is the interest of a shareholder in the company, measured by a sum of money, for the purpose of liability in the first place, and interest in the second, but, also consisting of a series of mutual covenants entered into by all the shareholders inter se…,. A share is not a sum of money settled in the way suggested, but is an interest measured by a sum of money and made up of various rights contained in the contract [i.e. the articles of association], including the right to a sum of money of a more or less amount…,.”

CILLIERS and BENADE on Company Law, Durban Butterworths…, say:

“The term 'share' as such denotes that the holder thereof has a claim on part of the share capital of the company – and does not refer to a right of ownership in any part of the net assets of the company. A share in a company is not a corporeal object but represents a complex of rights and duties.”…,.

Some of the rights accruing to a shareholder via his shareholding in the company, and depending on the type of shares, are the right to dividends when they are declared, and the right to participate in a distribution on liquidation. There is also the right to vote at meetings, and so on.

For the applicant to have sued the first respondent directly to recover what would have accrued to Zellco, simply by virtue of an alleged breach of clause 13.2 of the Agreement of Sale of Shares, which, in any case, did not provide for such a right, amounted to the applicant assuming some derivative right of action but which it has not explained, let alone link to any tenet of Company Law.

The applicant's claim before the arbitrator was evidently based on numerous assumptions, not least, that Zellco had not been in breach of the Service Provider Agreement – despite the judgment of this court; that Zellco was trading profitably and would have made money, not only for the first respondent, but also for itself via the commissions – despite Zellco filing for voluntary liquidation; that Zellco would have declared dividends in all the succeeding years up to November 2016 when the Service Provider Agreement would expire, if it had been renewed, and so on.

I am satisfied, that, when the arbitrator refused to recognise such a formulation for a damages claim, there was nothing palpably iniquitous in his decision that could be said to be far reaching and outrageous in its defiance of logic that sensible and fair minded persons would consider that the conception of justice would be intolerably hurt.

Therefore, on this ground, again, I find against the applicant.

[iv] Did the arbitrator misdirect himself by awarding the first respondent costs on the higher scale and ordering the applicant to meet the costs of the arbitrator alone?

The applicant's claim before the arbitrator was dismissed with costs on the higher scale of attorney and client. Further, the applicant was ordered to meet the costs of the arbitrator on its own.

It has not been clear to me the basis upon which such scale of costs was ordered, or why the applicant was made to meet the costs of the arbitrator all by itself.

The first respondent did not ask for such a scale.

The arbitration clause in the Agreement of Sale of Shares made no provision for the costs of the arbitration. The only provision relating to costs was clause 15. But, this confined itself to the costs of, or incidental to, the negotiation, preparation and execution of the Agreement of Sale of Shares.

In his award, the arbitrator did not explain why he granted such a scale of costs, or why he ordered that his costs be paid by the applicant alone.

In casu, the applicant has made a frontal challenge on the arbitral award on this point. The first respondent's response has been rather muted or equivocal.

The award of costs is wholly a matter in the discretion of the judicial officer: see Graham v Odendaal 1971 [2] SA 611 [AD]; Kruger Brothers & Wassermen v Ruskin 1918 AD 63 and Rautenbach v Symington 1995 SA 583 [O].

Unless a party is guilty of some misconduct, costs are normally awarded on the ordinary scale. That is my understanding of the general principle in the civil courts. But, I see no reason why, in the absence of an agreement to the contrary, or of some other factors affecting it, the principle should not be extended to other fora or bodies exercising judicial or quasi-judicial functions.

In my view, the arbitrator misdirected himself when he awarded costs on the higher scale.

The applicant's claim may have been misconceived, but, the misconception was not so out of the ordinary as to warrant the applicant being mulcted in costs.

Although, even in these proceedings, the applicant may still be kicking against the legal pricks [see Corderoy v Union Government [Minister of Finance] 1918 AD 512…,.], in my view, it has not so gone out of bounds as to attract an adverse order of costs beyond the ordinary scale.

Regarding the order that the costs of the arbitrator should be borne by the applicant alone; again, I have found no explanation anywhere for this.

In my experience, the costs of the arbitrator are generally met by the parties in equal shares.

In the absence of an explanation for a departure from this practice, the arbitrator's costs have to be shared by the parties equally.

In the circumstances, the order of costs by the arbitrator, against the applicant, is set aside and substituted with one of costs on the ordinary scale, with the costs of the arbitrator being shared equally between the parties.

In casu, the applicant has only been partially successful, i.e. on the question of costs. But, to me, such success has been so infinitesimal as to warrant interference with the general principle that the costs should follow the result. Therefore, I make no special order as to costs.

DISPOSITION

1. The application is hereby dismissed with costs.

2. Paragraph 2 of the arbitration award by the Honourable Justice L. G. Smith [Retired], on 2 December 2014, relating to costs, is hereby set aside and substituted by the following:

2.1 The Claimant shall pay the Respondent's costs.

2.2 The costs of the arbitrator shall be borne by the parties in equal shares.

HH62-14 : JOHANNES MAKONYE vs KENAE RAMODIMOOSI and ENTREDEV PROPERTY GROUP and C.H. LUKAS
Ruled By: CHIGUMBA J

This is an application in terms of section 34 of the Model Law as set out in the Second Schedule to the Arbitration Act [Chapter 7:15] for the setting aside of an arbitral award dated 23 February 2012, granted by the third respondent.

The second respondent was the applicant's estate agent.

At the hearing of the matter, I dismissed the application with costs on a legal practitioner client scale, being of the view that the application was entirely devoid of merit. I have now been asked to provide detailed reasons for judgment for purposes of appeal.

These are they.

The arbitral award that is sought to be impugned reads as follows:

“IT IS AND IS ORDERED THAT:

1. The termination of the agreement of lease in respect of Number 7 Westcott Road, Mount Pleasant, Harare signed by the parties on the 6th of September 2011 is confirmed.

2. The respondent (applicant in the matter now under consideration) refunds and pays to the claimant the sum of US$16,800 plus interest thereon from the 1st of November 2011 to the date of receipt of payment.

3. The costs of the Arbitrator, amounting to US$2,000, and covered by a deposit paid by the claimant, be refunded to the claimant by the respondent.”

The background giving rise to the dispute between the applicant and the first respondent involved the termination of a lease agreement entered into by the parties on 6 September 2011.

The parties had agreed that the first respondent would occupy the leased premises on 1 November 2011. The premises were under renovation, and the applicant gave an assurance that the renovations would be complete by the date of occupation.

The first respondent paid a sum of US$16,800, being a deposit and six months rent in advance, to the applicant.

Both parties submitted voluminous written statements to the arbitrator, the applicant, as the respondent, on 31 December 2011. The second respondent, the letting agent, also submitted a written statement to the arbitrator, on 9 February 2012.

The arbitrator found, that, the rental amount had been assessed based on the size of the kitchen, which the applicant had promised to extend and make bigger according to the first respondent's specifications.

This is the reason why the first respondent had agreed to pay six months rent in advance.

The applicant was unable to complete the renovations by the agreed date of occupation.

The parties entered into further negotiations which broke down after the applicant demanded more money which the first respondent refused to advance.

On 1 November 2011, the date of occupation, the premises were still under renovation.

The first respondent terminated the lease agreement and claimed a refund of the US$16,800 that had been advanced.

The arbitrator found, that, the applicant's inability to renovate the kitchen by the agreed date went to the root of the lease agreement, and confirmed that the lease agreement had been correctly terminated, and ordered that the applicant refund the monies advanced to him by the first respondent.

The basis of the application to set aside the arbitral award is that the applicant was not given an opportunity to be heard by the arbitrator.

He averred, that, he never agreed that the arbitrator could determine the mater on the papers filed by the parties. He averred, further, that, the third respondent only remitted US$12,800 to him, and that the first respondent had already been reimbursed US$3,840 by the second respondent.

The applicant averred, that, the arbitral award should be set aside on the basis that it had been awarded contrary to public policy in Zimbabwe, and in breach of the rules of natural justice.

The first respondent opposed the application on the basis, that, the applicant had given a mandate to the respondents to file a written report before the arbitrator in an electronic mail dated 7 January 2012.

The first respondent averred further, that, the arbitrator, had, in an electronic mail communication to all the parties, dated 5 January 2012, asked the parties how they wished to proceed and the parties agreed to make written submissions to the arbitrator.

The first respondent pointed out, that, the applicant, in the email dated 7 January 2012, to the arbitrator, stated that:

“…, written submissions only are fine, more focused and cheaper financially and time wise by me.”

The first respondent admitted, that, the amount outstanding was US$12,800 and averred, that, when the arbitral award is registered, it will be registered in that sum.

The first respondent reiterated, that, it was not fatal to an arbitral award if parties agreed to forgo an oral hearing and mandated the arbitrator to make a determination on the basis of written submissions.

The second respondent opposed the application and averred that it had no interest in the outcome of the matter, but merely wished to protect itself against an adverse order as to costs.

The second respondent averred, that, it was given a mandate to manage the applicant's property, Number 7 Westcott Road, Mt Pleasant, Harare, in August 2011.

Pursuant to that mandate, it secured the first respondent as a tenant for those premises. It averred that a dispute arose between the parties which resulted in the first respondent terminating the lease agreement and to demand a refund of rentals and deposit paid in advance.

The second respondent confirmed that both the applicant and the first respondent requested that it submit a written report to the arbitrator....,.

In regards to the merits of the matter, the second respondent averred that it failed to find any justification in the applicant's complaints against its report - which the applicant had specifically requested that it be submitted to the arbitrator.

Copies of e-mails between the parties were attached to confirm the second respondent's version of events.

The second respondent reiterated that the applicant's contention, that it was not given an opportunity to be heard, were entirely devoid of merit....,.

The question that the court must determine is whether the arbitral award handed down by the third respondent is contrary to public policy in Zimbabwe as envisaged by Article 34 of the Model Law, Arbitration Act [Chapter 7:15].

In other words, did the third respondent grant the arbitral award without proper consideration of the terms of the lease agreement between the parties; without affording the applicant an opportunity to be heard; or with fraud and corruption?

Article 34 of the Model Law provides that:

“Article 34 Application for setting aside as exclusive recourse against arbitral award

(1) Recourse to a court against an arbitral award may be made only by an application for setting aside in accordance with paragraphs (2) and (3) of this article.

(2) An arbitral award may be set aside by the High Court only if —

(a) The party making the application furnishes proof that —

(i)…,.

(ii) The party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

(iii)…,.

(iv)…,.

(b) The High Court finds, that —

(i)…,.

(ii) The award is in conflict with the public policy of Zimbabwe.”

“Article 19 Determination of Rules of Procedure

(1) Subject to the provisions of this Model Law, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting the proceedings.

(2) Failing such agreement, the arbitral tribunal may, subject to the provisions of this Model Law, conduct the arbitration in such manner as it considers appropriate. The power conferred upon the arbitral tribunal includes the power to determine the admissibility, relevance, materiality and weight of any evidence.”

Article 24 of the Model Law provides that:

“Article 24 Hearings and Written Proceedings

(1) Subject to any contrary agreement by the parties, the arbitral tribunal shall decide whether to hold oral hearings for the presentation of evidence or for oral argument, or whether the proceedings shall be conducted on the basis of documents and other materials.”

The test applies to an arbitral award, in order to set it aside on the basis that it is contrary to public policy is that:

“An arbitral decision can only be held to be contrary to public policy if some fundamental principle of law or morality or justice is violated or if it is so defiant of logic or accepted moral standards that the concept of justice in Zimbabwe would be intolerably hurt.”

See Chanakira v Mapfumo & Anor HH155-10; and Husaihwevanhu & Ors v USF Collaborative Research Programme HH237-10, where the court stated that:

“The courts in this country have construed the defense of public policy very restrictively so that the objective of finality to arbitration is achieved.

It follows, that, the grounds upon which an award may be set aside…, are very narrow. The import of Article 34 and Article 36 of the First Schedule to the Act is not to endow the court before which the award is set aside with powers of appeal to determine the correctness of the decision of the arbitrator;…, an award by the Arbitrator is not contrary to public policy merely because it wrong in law or in fact in reaching the conclusion arrived at…, award…, goes beyond mere faultiness or incorrectness and constitutes a palpable iniquity that is so far reaching…,.”

See Pioneer Transport (Private) Limited v Delta Corporation Ltd & Anor HH18-12.

Based on the provisions of Article 19 of the Model Law, I find that it was entirely proper and permissible for the arbitrator and the applicant and the first respondent to agree on the procedure to be followed.

The arbitrator was even at liberty to conduct the arbitration in such manner as it considered appropriate if the parties failed to agree on which procedure could be used (Article 19(2) of the Model Law).

The power conferred on the tribunal included the power to: “determine the admissibility, relevance, materiality and weight of any evidence.”

There is nothing in the papers filed of record which suggests that the arbitrator did not have these powers.

The evidence placed before this court, via copies of electronic mail communication between the parties, clearly shows that the applicant consented to the matter being determined on the basis of written submissions placed before the arbitrator. The applicant is on record as celebrating the advantages of this course of action as being cheaper and less time consuming.

To turn around now and ask this court to find that the arbitral award was made without affording the applicant an opportunity to be heard is downright dishonest and dishonorable.

Article 24 of the Model Law gives the arbitrator the power to override any agreement between the parties themselves in regards to how the matter should proceed, and stipulates that the arbitral tribunal SHALL decide whether to hold an oral hearing or whether the proceedings shall be conducted on the basis of documents or other materials.

In essence, the conduct of the hearing is entirely at the tribunal's discretion.

There is no onus on the tribunal to hear oral submissions. The onus on the tribunal relates to notification of the hearing; and, an arbitrator has exclusive jurisdiction, contrary to the parties wishes, to decide how to collate evidence. There is no provision to compel the arbitrator to hear oral evidence.

What is required is for all the parties to be notified of the hearing, to be given an opportunity to present their case as stipulated by the arbitrator, and to have sight of the submissions made by the other parties, if in writing.

The second respondent was clearly implored by all the parties to submit a written report to the arbitrator.

A careful reading of the party's emails will confirm this.

There is therefore no basis on which the applicant can aver, that, despite advising the arbitrator that he preferred being heard verbally, his request was denied or ignored. In fact, the evidence before the court is that the applicant submitted the most voluminous written submissions before the arbitrator.

The court has also been unable to find any evidence of fraud on the part of the arbitrator in determining the arbitral award.

There is no evidence that the offence of fraud was committed or reported to the police by the applicant.

Fraud is a criminal offence which involves an element of misrepresentation to deceive another to his prejudice.

There is no evidence that the applicant was operating under any misrepresentation by the arbitrator, or of any prejudice which he may have suffered as a result of such misrepresentation.

According to Zimbabwe Electricity Supply Authority v Maposa 1999 (2) ZLR 452 (SC)…, Article 34 of the Model Law “…, means that, if, for example, if the arbitrator was fraudulently misled or bribed by a party, the award, however innocuous, would be contaminated in the process of making and contrary to public policy. There is simply no evidence before the court that the third respondent misrepresented himself in order to deceive or cause prejudice to any of the parties, or that he received a gift or benefitted in any way in reaching the decision that he did.”

The allegations of fraud and corruption against the third respondent, by the applicant, are clearly baseless and without foundation.

The Court has been unable to find any evidence that the arbitrator mis-interpreted the terms of the lease agreement between the parties.

Clearly, the applicant has been unjustly enriched by the deposit and rental in advance paid by the first respondent.

On the termination of the lease agreement, it was just and equitable that the first respondent be re-imbursed US$16,800, in the absence of evidence of fraud, corruption, breach of public policy, breach of the rules of natural justice, as provided in Article 34 of the Model Law.

The test for contravening public policy, that: “…, some fundamental principle of law or morality or justice is violated or if it is so defiant of logic or accepted moral standards that the concept of justice in Zimbabwe would be intolerably hurt” was not established.

There was nothing immoral about the arbitral award that the applicant return monies given to him pursuant to a lease agreement which was terminated before it commenced, due to failure on his part to complete renovations to the property by an agreed date.

That award did not defy logic, or intolerably hurt the concept of justice in Zimbabwe.

In fact, the opposite is true; the concept of justice in Zimbabwe would have been hurt by allowing the applicant to keep the US$16,800. The applicant would have been unjustly enriched at the expense of the first respondent, who was innocent of any wrongdoing which resulted in the termination of the lease agreement.

The applicant is not entitled to have the arbitral award set aside.

Further, the basis of the application before the court is so flimsy; it would appear the application was conceived as a gimmick to frustrate the first respondent by delaying payment. It is for that reason that the court acceded to the application that costs be awarded on a higher scale, to discourage such conduct in future, and to mark its displeasure at the blatant abuse of court process.

This application is entirely devoid of merit and is dismissed with costs on the higher scale of legal practitioner and client.

It is ordered that the second respondent cease to be a party to these proceedings, and that the applicant pay the second respondent's costs on a legal practitioner client scale.

HH128-06 : DOBROCK HOLDINGS (PVT) LTD and TURNER AND SONS (PVT) LTD vs TURNER AND SONS (PVT) LTD and ANTHONY TURNER and MARTIN KING and ZAMBEZI PADDLE STEAMER (PVT) LTD and DOBROCK (PVT) LTD
Ruled By: KUDYA J

I associate myself with the statement of law that was propounded by GUBBAY CJ in Asharia v Patel 1991 (2) ZLR 276…,. He stated thus:

"The general applicable rule is that where time for performance has not been agreed upon by the parties, performance is due immediately on conclusion of their contract or as soon as is reasonably possible in the circumstances. But, the debtor does not fall into mora ipso facto if he fails to perform forthwith or within a reasonable time. He must know that he has to perform.

This form of mora, known as mora ex persona, only arises if, after a demand has been made calling upon the debtor to perform by a specified date, he is still in default.

The demand, or interpellatio, may be made either judicially, by means of a summons, or extra-judicially by means of a letter of demand, or even orally; and to be valid, it must allow the debtor a reasonable opportunity to perform by stipulating a period of performance which is not unreasonable - if unreasonable, the demand is ineffective.

Where a debtor has fallen into the mora ex persona after demand, the creditor can acquire a right to cancel the contract by serving notice of rescission, in which a second reasonable time limit is stipulated, making time of the essence. Both demand and notice of rescission are necessary in order to allow for cancellation for non-performance. The two may be, and commonly are, contained in the same notice. Such notice will then fulfil a double function. It will fix a time for performance after which the debtor will be in mora, and create a right in the creditor to rescind the contract on account of the mora."...,.

CHRISTIE, in The Law of Contract in South Africa, 3rd edition, Butterworths, 1996 deals with the line of cases culminating in Broderick Properties v Rood 1962 (4) SA 447 at pages 556 to 557. At page 555 he stated:

"The general rule will be seen in the next section, is that, when the contract does not fix a time for performance there can be no mora ex re, only mora ex persona; so, a demand by the creditor is necessary in order to place the debtor in mora. Whether there are exceptions to this general rule is a question that has led to differences of judicial opinion, but the present law can be stated with a fair degree of confidence."

It seems to me, that, in Zimbabwe, Asharia v Patel 1991 (2) ZLR 276 has provided the answer.

It confirms the correctness of the general rule as set out by CHRISTIE.

It appears to me too, that, the differences of judicial opinion that CHRISTIE noted may be resolved by applying the general rule to the particular facts of each matter in order to ascertain its validity to the time frames as contemplated by the parties. It is only after this has been done that a decision on whether mora ex re or mora ex persona applies can be made.

HH250-17 : CLEOGOZ INVESTMENTS (PRIVATE) LIMITED vs PATRICIA COX (HOUGAARD) and REGISTRAR OF DEEDS N.O.
Ruled By: CHAREWA J

This is an application to compel transfer consequent upon an agreement of sale of “proposed subdivision B of Lot 369 Highlands Estate of Welmoed measuring approximately 2033 square metres” entered into between the applicant and the first respondent in January 2015.The FactsIt is not in dispute, that, the parties entered ...

The Facts

It is not in dispute, that, the parties entered into the agreement of sale aforesaid or that the purchase price was $75,000. Nor is it disputed, that, at the time the agreement was entered into, a subdivision permit had not yet been granted by the local authority, or that the agreement was never cancelled.

It is further not disputed, that, the plaintiff made payments towards the purchase price in full.

The Dispute Between the Parties

The parties are not agreed as to who appointed the Estate Agents in the matter.

The applicant avers, that, Trevor Dollar Real Estate Company was the agent for the first respondent, while the first respondent avers the contrary.

Further, there is a dispute as to whether the purchase price was paid to the first respondent.

The applicant claims that it paid the purchase price in full to the first respondent's agents, Trevor Dollar Real Estate Company. It attached receipts and RTGS transfer forms showing payment to Trevor Dollar trust account in the amount of $87,200.

It argues, that, the estate agents, being the first respondent's agent for the sale of her property, on commission, once the applicant paid the purchase price and transfer fees to them, it discharged its obligations and was entitled to transfer.

The applicant based this averment on the fact, that, the first respondent was a personal friend of Mr Trevor Dollar, and, Trevor Dollar Estate Agents advertised that the first respondent intended to sell subdivisions of her land.

In any event, if Trevor Dollar Real Estate Company was its agent, that would be tantamount to making payment to itself, which would be illogical.

On her part, the first respondent submits, that, she never received any payment from the estate agents.

Besides, she was not the principal of Trevor Dollar Estate Agents, and, since she never received the purchase price from them, she is therefore not obliged to transfer the property.

The third area of dispute is whether there was a valid agreement of sale between the parties.

The applicant submits, that, the parties concluded a conditional sale, subject to the first respondent obtaining a subdivision permit, which was a condition precedent. There was thus no contract between the parties until the permit was obtained. Once the permit was issued, it brought the contract into existence. Therefore, at the time the contract came into existence it was not contrary to the provisions of the law as it did not contravene sections 39 and 40 of the Regional Town and Country Planning Act [Chapter 29:12].

On her part, the first respondent submits, that, there was no condition precedent to the sale and it was thus illegal as it was contrary to the Regional, Town and Country Planning Act aforesaid and is therefore unenforceable.

Who was the Principal of Trevor Dollar Real Estate Company?

It seems to me, that, once I make a finding on Trevor Dollar Real Estate Company's agency, the second area of dispute will be resolved as well.

The documentary proof, on its own, is not very helpful.

The receipts from the estate agents show the applicant as the “client”. On the other hand, the estate agent charged commission against the first respondent, thus raising the presumption that she was indeed the client.

However, there exists communication between the first respondent and the estate agents showing that she received, at the very least, some advances which she did not dispute in those communications.

It seems that this communication, between the first respondent and Mr Trevor Dollar, points to a relationship of familiarity.

It is clear from the communication, that, she was the one who informed Mr Trevor Dollar of her financial problems and her decision to subdivide her property and sell the sub-divisions to overcome those challenges.

It was as a result of her discussions with Mr Trevor Dollar that an advertisement was flighted in the press.

In addition, the existence of communication between her and the estate agents, showing that she requested and received some advances, which she did not dispute in those communications, points to her being the principal of the estate agent.

Going further, it is apparent that money was paid to Trevor Dollar Real Estate Company in payment of the subdivision to be held on her behalf. That is why she was able to request for advances which were given to her without the applicant being consulted at all.

This, coupled with her admission to Mr Trevor Dollar to pay his commission, confirms that Trevor Dollar Real Estate Company was her agent.

It seems to me, that, the first respondent seeks to trifle with the court by alleging otherwise.

The law is clear; the applicant was obliged, in terms of the agreement of sale, to pay the money to Trevor Dollar Real Estate Company. The money was indeed paid for the first respondent's benefit. By her own admission, she was liable for the commission. Ergo, Trevor Dollar Real Estate Company was her agent: see Lens Agencies (Pvt) Ltd v Knight Frank Beverly & Anor 1997 (2) ZLR 167 (SC); see also Ami Zimbabwe (Pvt) Ltd v Casalee Holdings (Pvt) Ltd 1997 (2) ZLR 77 (SC).

By the same token, since the law provides that he who does an act through an agent does it himself, it made no sense for the applicant to pay the purchase price to itself, by paying it to its own agent.

Further, flowing from the same principle of law, it was totally unnecessary to join the estate agent company to the suit.

How the estate agent dealt with the money is not the applicant's problem.

The applicant discharged its legal obligation upon making payment to the estate agent. At the very least, therefore, since the first respondent is the one seeking to withdraw from the contract, the applicant is entitled to restitution from her.

It is obvious that the first respondent was quite aware of this, given the tenor of her communication with the estate agent. In fact, I note that she even, at one point, instructed the agent to make restitution to the applicant. Failure by the agent to do so reposes the obligation to restitute squarely on her.

HH535-15 : BLESSMORE CHANAKIRA vs SHEPHERD MALCOM N.O. and REGISTRAR OF DEEDS and PHIL RUSCH
Ruled By: NDEWERE J

The background facts are that the plaintiff expressed interest in Stand 5233 Salisbury Township Lands measuring 3,309 square metres which is the property in dispute.

The property belongs to the estate of the late Robert Eric Rae.

An agreement of sale was concluded, on 22 October 2009, between the plaintiff and the Property Shop, the Estate Agent firm which handled the transactions, for the sum of US$220,000.

On mode of payment, the agreement provided as follows:

“The Purchaser shall pay cash deposit of US$100,000 [one hundred thousand United States Dollars] of which US$30,000 [thirty thousand United States Dollars] shall be non-refundable] upon signing of the agreement of sale.

The purchaser shall pay the sum of US$60,000 [sixty thousand United States Dollars] on or before 30 November 2009 and the balance of US$60,000 [sixty thousand United States Dollars] on or before the 31st December 2009.”

The above mode of payment has been the source of the dispute.

The plaintiff claims to have paid theUS$100,000 cash deposit upon signing of the agreement of sale as stipulated by the clause. The first defendant, representing the estate, denies, that any deposit was paid.

The agreed issues for the trial were:

(i) Whether the plaintiff breached the agreement of sale with the first defendant, and, if he did, whether the first defendant cancelled the sale.

(ii) The second agreed issue was whether this was a double sale, with the third defendant as the second purchaser, and, if so, in whose favour did the balance of equities lie.

In my view, the first issue for determination by the court is whether the plaintiff paid the requisite deposit upon signature of the agreement.

The plaintiff's evidence was that he paid US$100,000, in cash, to Felicity Lock, The Property Shop negotiator, after counting the money, at her house, in the presence of Shirley Margaret Rae who represented the seller, who was still alive, by virtue of a Power of Attorney.

He said he did not ask for a receipt, neither did he obtain any other proof of payment from Felicity Lock.

The plaintiff's evidence was that he paid the US$100,000 before he signed the agreement because payment of that amount was a condition precedent to the signing of the agreement.

Felicity Lock denied that any payment was made.

She said she expected the plaintiff to pay soon after signing but then the plaintiff showed her some Kingdom Bank documents and said for him to get the money to pay, he needed to sell his shares first, and, for him to sell the shares, he needed a signed agreement.

She said she then gave him Shirley's Rae's Stanbic Account number and told him to deposit the money into that account. She also gave him a Property Shop Account number for him to deposit the agency commission.

Her evidence was that Shirley Rae signed the agreement first, in the absence of the plaintiff, and, later, she took the agreement to the plaintiff at some agreed meeting place near Hellenic School.

Shirley Rae also denied that any payment was made to her or Felicity Lock in her presence.

Her testimony was that she had not even met the plaintiff when the agreement was executed; she saw him, for the first time, at the pre-trial conference.

The plaintiff told the court that he is an astute businessman aged 35 years. He said he has been in business since he was 22 years old and has about 13 years business experience. He also said he is a qualified accountant and he has experience in the acquisition of properties as he has eleven properties to his name.

The court found it highly improbable that a qualified accountant, and an experienced property investor, would part with US$100,000 cash in the year 2009, when foreign currency was still scarce, without bothering to obtain a receipt or other proof of payment; yet that was the plaintiff's evidence on pages 51 and 52 of the transcribed record;

“Q. Now, before a dispute before the parties erupted, did you ever ask for a receipt?

A. No, from Felicity, no, I never asked for a receipt….,.

Q. It's a simple question, did you ever ask for a receipt?

A. From Felicity Lock.

Q. Did you ever ask for a receipt?

A. No, I have proof of payment.”

When the questioning about not asking for a receipt persisted, the plaintiff, in response, said, Property Shop was operating from home and the office was not running professionally.

All the more reason why he should have asked for a receipt, or some other form of proof of payment, if he knew that Property Shop was not being run professionally.

The plaintiff also told the court, in his evidence, that, paying US$100,000 cash was a condition precedent to the signing of the agreement.

The agreement is part of the court record, and, nowhere does the agreement say payment was a condition precedent.

It is also highly improbable that a qualified accountant would pay US$100,000 deposit before the agreement has been concluded and leave without any proof of payment.

Even if Felicity Lock had no receipts, on account of being “unprofessional” as the plaintiff alleged, the plaintiff himself could have prepared an acknowledgement note.

He knew this was possible:

“Q…., you could have done an acknowledgement of receipt and say I, Felicity acknowledge that I have received US$100 000, you could have done that….,.

A. I could have done that.”…,. (p57 to 58 of the transcribed record)

The plaintiff confirmed, that, he could have done an acknowledgement of receipt himself - but he did not.

He admitted, that, as a businessman, he knew that disputes could arise and that he could have had an independent witness with him to confirm the payment; but, he said he went alone to make this huge cash payment.

On the other hand, Felicity Lock's evidence was that they did not accept cash as a matter of policy; they gave clients account details for them to deposit the money into the appropriate accounts.

She said, in this instance, she gave the plaintiff Shirley Rae's Stanbic account.

She said once the money was deposited into an account, the deposit slip would be sufficient proof of payment.

Her evidence sounded truthful and the court accepted it.

Shirley Rae is an 83 year old lady who was around 78 years at the time of the incident with the plaintiff.

Her evidence was that the plaintiff never paid cash in her presence and never deposited any money into her account.

Her evidence was believable.

Why would an 83 year old lie against the plaintiff and say he did not pay if he had paid? All she wanted was a purchaser who would pay for her husband's property. If the plaintiff had paid, why would she have turned down his money in favour of the third defendant's money when the money tastes the same?

The court therefore accepts her evidence as truthful.

In addition to that, on 27 October 2009, when the plaintiff wrote to the second defendant, through his lawyers, requesting him to put a caveat on the property, he never said he had paid anything.

The third paragraph of that letter stated the following;

“The agreement of sale is to be satisfied within a period of three instalments as it fully appears from the attached copy of the agreement of sale.”

The use of the phrase “is to be satisfied” shows that payment had not yet been done.

If the plaintiff had already paid US$100,000 the letter would have said so.

In view of the above improbabilities in the plaintiff's claims, the court rejects the plaintiff's testimony and accepts that of Felicity Lock and Shirley Rae, that, no US$100,000 cash was ever paid by the plaintiff as a deposit for the property.

The above finding means the plaintiff was in breach of contract from the very day the sale agreement was concluded. He ought to have paid US$100,000 on signing of the agreement - he did not.

That was the first breach.

The plaintiff admitted breaching the further requirements to pay $60,000 by end of November and $60,000 by end of December.

These were the second and third breaches respectively.

In view of the three breaches, the plaintiff has no basis to claim specific performance by the first defendant.

As held in the case of Lasagne Investments (Pvt) Ltd & Others v Highdon Investments (Pvt) Ltd & Others 2010 (2) ZLR 296…, referred to by the third defendant's counsel, a litigant who seeks an order for specific performance must perforce establish that he has complied with his obligations under the agreement.

The first defendant, through its representatives, comprising of the Property Shop and Sinyoro and Partners, gave the plaintiff some grace period.

Felicity Lock's evidence was that she continued to follow up for payment.

Mataba of Sinyoro and Partners evidence was that when the plaintiff stopped responding to the Property Shop's follow-up, he got into the fray and also followed up the plaintiff.

All the plaintiff paid was the Agents Commission and the Conveyancing fees.

These follow ups and indulgences were in order because of the provisions of clause 8 of the agreement of sale between the parties.

After getting no joy from the follow ups for payment, on 27 November 2009, Sinyoro and Partners gave the plaintiff 30 days notice to remedy the breach.

The letter was sent to the plaintiff's domicilium citandi executandi given in the agreement of sale, on the schedule of details, as 40 Dover Road, Chisipite, Harare as provided in clause 9 of the agreement of sale.

The plaintiff claimed not to have seen the notice.

However, since the notice was sent to his domicilium, in terms of the agreement, the notice was validly given.

Clause 9.2 of the agreement of sale provides as follows:

“All notices required to be given in terms of this agreement, and all process, shall be deemed to have been validly given or served if addressed to the party concerned and delivered to the given domicilium, postal, or e-mail address.”

This means that a party had to choose to deliver to the given domicilium, post to the domicilium or use an email address.

In this instance, the notice was “addressed to the party concerned and delivered to the given domicilium.”

The plaintiff did nothing about the notice, and, on 30 December 2009, a letter confirming the cancellation of the agreement was addressed to the plaintiff and sent to the given domicilium.

During the trial, the plaintiff tried to take issue with the fact, that, by 30 December 2009, 30 days notice was not complete.

While the plaintiff's basis for saying that is not clear, the court notes, that, no prejudice was caused to the plaintiff thereby because the third defendant's evidence clearly shows, that, his own agreement of sale was concluded when thirty days had expired - in January 2010.

In any event, the default clause provided, that, the breach should be rectified “within thirty (30) days of notice calling upon him to do so.”

It did not say after 30 days notice.

It is clear from the facts of this case, that, the first defendant and its representatives, always sought to abide by the terms of the contract while the plaintiff was busy doing his own thing which was at complete variance with the signed agreement.

He therefore repudiated the contract from the onset.

The cases referred to by the first defendant's counsel, on repudiation of contracts, are relevant to this case.

In Chinyerere v Fraser NO 1994 (2) ZLR 234 it was held that:

“Before a contract could be said to have been fulfilled per acquipollens, it was necessary that the act or performance tendered must be equivalent to that mentioned in the contract….,.”

In this instance, the performance which was required was that of paying $100,000 “upon signing the contract.”

The plaintiff did not pay upon signing as required by the contract.

In Ross T Smyth & Co. Ltd v TD Bailey, Sons Co. [1940] ALL ER 60 (HL)…, the court said:

“I do not say that it is necessary to show that the party alleged to have repudiated should have an actual intention not to fulfil the contract. He may intend in fact to fulfil it, but, may be determined to do so only in a manner substantially inconsistent with his obligation, and in no other way.”

The plaintiff's case is a good example of a party wanting to pay on his own terms, and not in terms of the stipulation in the contract.

As held in Ross T Smyth & Co. Ltd v TD Bailey & Sons Co. [1940] ALL ER 60 (HL), such conduct amounts to repudiation.

Consequently, the plaintiff's contract was validly terminated after he breached it from the outset and failed to remedy the breach during the grace period accorded to him.

The third defendant is therefore not a second purchaser because there was no other agreement in force when his own contract of sale was concluded.

The plaintiff's claims, that his contract be declared valid and enforceable while that of the third defendant is declared null and void are therefore dismissed.

All the parties prayed for costs on a higher scale, and, during the proceedings, they all made some justification for the higher scale.

The plaintiff shall therefore pay the defendants costs on the legal practitioner and client scale.

HMT12-20 : CHENESO MUVANDI vs CITY OF MUTARE and MATIVENGA MHISHI N.O. (as Executor of the Estate Late Washington Jekanyika)
Ruled By: MUZENDA J

The applicant made an application seeking the following order:“IT IS HEREBY ORDERED THAT:1. The cancellation of the Memorandum of Agreement of Sale of Stand No.11234 Darlington Extension, Mutare Township, measuring approximately 1,1759 hectares, entered into by the City of Mutare and Washington Jekanyika, jointly together with Cheneso Muvandi, is a ...

The applicant made an application seeking the following order:

“IT IS HEREBY ORDERED THAT:

1. The cancellation of the Memorandum of Agreement of Sale of Stand No.11234 Darlington Extension, Mutare Township, measuring approximately 1,1759 hectares, entered into by the City of Mutare and Washington Jekanyika, jointly together with Cheneso Muvandi, is a nullity, of no force and effect.

2. The Memorandum of Agreement of Sale of Stand No.11234 Darlington Extension, Mutare Township, measuring approximately 1,1759 hectares, entered into by the City of Mutare and Washington Jekanyika, jointly together with Cheneso Muvandi, is declared valid.

3. The 1st respondent shall pay costs of suit on a higher scale of attorney and client.”

The application is opposed by the first respondent, the City of Mutare.

BACKGROUND

On 20 July 2016, Clayhill Trading (Private) Limited entered into an agreement of sale of a piece of land, namely, Stand No.11234 Darlington Extension, Mutare Township, measuring 1,1759 hectares, with the applicant and her late husband, Washington Jekanyika.

The purchase price was US$62,000.

Clause 3 of the agreement of sale stipulated the payment plan: US$20,000 was payable against the signing of the agreement; US$20,000 was payable three (3) weeks after the signing of cession papers; the balance of US$22,000 was going to be liquidated through monthly instalments of US$4,000 commencing 30 September 2016.

The preamble to the memorandum of agreement of sale between the seller and buyer provided, that, the buyers had to demand transfer from the Municipality of Mutare of such immovable property so purchased by the buyer; however, the seller was responsible for the payment of all cession costs, including the City Council's cession fees and capital gain tax, if any (clause 8 of the agreement of sale).

During the same year, 2016, the first respondent, City of Mutare, entered into an agreement of sale with the applicant and her husband.

Under clause 2 of this agreement, the purchase price “was the intrinsic value paid by Clayhill (Pvt) Ltd.”

Clause 14 thereto stipulates, that, the purchasers shall demand transfer of the Stand from the seller upon completion on the main building.

The agreement of sale does not state any conditions for breach or grounds for cancellation of the agreement of sale.

On 24 September 2019, the City of Mutare wrote a letter to the applicant's legal practitioners indicating that the agreement of sale between itself, the applicant, and her husband had been cancelled.

The first respondent alleged in the letter the applicant's late husband, Mr W. Jekanyika had misrepresented to the City Council that he had fully paid the purchase price of the property to the developer, Clayhill and that Clayhill had since cancelled the first agreement of sale.

As a result of the “fraud” committed by the purchasers, the first respondent was cancelling the agreement of sale.

A lot of correspondences were exchanged between the City Council's legal practitioners and the purchasers lawyers but nothing came out of the correspondences until the applicant approached this court.

Clayhill (Pvt) Ltd had since issued summons against the purchasers claiming an amount of US$28,000 for arrear payments.

It is important to note, that, there is no allegation nor prayer by Clayhill for the cancellation of the agreement of sale or a misrepresentation on the part of the applicant and her late husband.

The first respondent, in its opposing papers, contends, that, the applicant's application should fail for failing to join Clayhill Trading (Private) Limited as a party to the proceedings.

As already addressed in the foregoing above, the first respondent went on to state, that, the applicant and her husband breached the terms of their agreement with Clayhill by failing to pay the full purchase price and that led to the cancellation of the agreement of sale by letter of 21 November 2016 written by Clayhill Property Development: hence, the agreement of sale between City of Mutare and the applicant and her husband was a nullity, because, at the time it was drafted, the City Council did not hold any rights, interest or title in the Stand; instead, such rights were vested with Clayhill; and, as such, the cancellation of the agreement was above board; and, before the cancellation of that agreement, the applicant's legal practitioners were fully appraised of the whole scenario of the events.

To the respondent, the relief being sought by the applicant has no basis.

The second respondent is an estate of the late Washington Jekanyika. The executor had notified the Registrar of the court that he will abide by the decision of this court.

Both the applicant and first respondent had raised preliminary points in their respective papers; and, I directed the legal practitioners to holistically address the court by commencing with points in limine and then the main issues....,.

On the merits of the application, the following issues are uncontroverted, in my respectful view:

(1) The applicant and her husband, the late Washington Jekanyika, purchased Stand No.11234 Darlington Extension, Mutare for $62,000; paid cash of $20,000 upon signing of the agreement of sale; and, from the calculation between the cost price and balance being claimed on the summons alluded to above, it is clear that the applicant paid another instalment of $14,000, to make a total of US$34,000.

(2) At the agreement of sale between Clayhill Trading (Private) Limited and the applicant, another agreement of sale was concluded between City of Mutare, the applicant, and the late W. Jekanyika.

(3) The applicant took occupation of the purchased Stand and started to develop it.

(4) The selling company is suing the applicant for an amount of $28,000 as balance outstanding. The company (Clayhill Trading (Private) Limited) is not praying for the cancellation of the agreement of sale on grounds of fraudulent misrepresentation nor for the cancellation of sale between the City of Mutare and the purchaser.

(5) In terms of the agreement of sale concluded between the applicant and City of Mutare (first respondent) there is virtually no clause pertaining to which conditions would justify cancellation of the contract concluded between the parties. Though not addressed by the parties, it appears the first respondent was paid by the developer before the developer (Clayhill Trading (Private) Limited) was allowed to offer such Stands for sale to the public.

(6) City of Mutare remained the title holder, both for purposes of cession or transfer; that is why the second agreement of sale, between the applicant and the first respondent, had to be drafted.

Transfer of ownership between City of Mutare and the applicant would only be processed after the property had been fully developed.

All these aspects are common cause and this court asked the first respondent its basis for opposing the application.

If Clayhill Trading (Private) Limited is fully paid the balance, it means the matter between it and the applicant would have been resolved; and, by necessary implication, the subject Stand has to remain with the applicant and the estate of her husband.

After going through the opposing papers filed on behalf of the first respondent, it is apparent, that, the first respondent, mero motu, proceeded to cancel the agreement of sale it had entered into with the purchaser without having heard from them.

That was not proper: see See U-Tow Trailers (Pvt) Ltd v City of Harare and Another 2009 (2) ZLR 259 (H) per MAKARAU JP…,.

As long as the administrative authority is involved in making such decisions, it is required to comply with the dictates of administrative justice; that requirement applies even when the first respondent was acting in terms of a contract: see U-Tow Trailers (Pvt) Ltd v City of Harare and Another 2009 (2) ZLR 259 (H)…,.

The first respondent was duty bound to hear the applicant and her husband first and even ask them to reduce their response in writing.

No such evidence was produced by the first respondent.

Hence, cancellation of the agreement was arbitrary and cannot be allowed to stand.

The first respondent also contended, that, what prompted her to cancel the agreement was that the late Washington Jekanyika fraudulently did not disclose that he had not fully paid the purchase price to Clayhill Trading (Private) Limited.

This court will not dwell much on this issue simply because the first respondent stated, that, it learnt this from Clayhill Trading (Private) Limited; and, as already covered hereinabove, the summons issued by Clayhill Trading (Private) Limited do not allude to any fraud on the part of W. Jekanyika - what Clayhill Trading (Private) Limited needs is its payment of the balance of $28,000.

In any case, fraud should not only be pleaded but must be established by way of tangible evidence.

I am hence satisfied, that, the first respondent failed to justify its cancellation of the agreement of sale with the applicant and her husband on a balance of probabilities; there is no condition which could have been relied upon in the agreement of sale, which, if breached by the purchasers, could have justified the cancellation of such a contract: see Muzondo and Others v Usayiwevanhu and Others HH107-12; SPF & Anor v LBCCT/ALB & Anor 26492/13 [2016] ZAG PPHC 378; Chikwanira v Mutonhora & Anor HH224-16; Mkandla & Anor v Ncube & Anor HB93-14.

Costs

The applicant prayed for costs on a punitive scale of attorney-client.

A lot of correspondence between the first respondent's office and the applicant's legal practitioners exchanged hands, including documents pertaining to the matter; more particularly, the summons issued by the developer Clayhill Trading (Private) Limited where it was claiming $28,000 from the purchasers.

Surely, at that stage of proceedings, and letter written by the applicant's lawyers to the first respondent about that, should have caused the first respondent to reconsider its stance about the application.

It did not.

Even after heads of argument were filed and served on the first respondent, it persisted with the opposition of the application.

The court is aware, that, any order of costs adversely affect the rate payer; but, the aptitude of the first respondent's action Clerk exhibits a nonchalant attitude bordering on recklessness and abuse of court process - all done in the name of public entity whose resources should better be ploughed towards service delivery than defending indefensible, unilateral, and unjust conduct by its officials.

This judgment must be brought to the attention of the Mayor and councillors, to censure, in the strongest terms, the behaviour of the Town Clerk: see Binza v Acting Director of Works & Anor 1998 (2) ZLR 364 (H).

In future, legal costs of this type should be met by the city official personally; however, in this case, the first respondent stated, that, he was authorised to oppose the matter by the Council, so, the Council/public entity will be ordered to pay the applicant's wasted legal costs.

As a result, the following order is granted:

1. The cancellation of the Memorandum of Agreement of Sale of Stand 11234 Darlington Extension, Mutare Township, measuring 1,1759 hectares, entered into by the City of Mutare and Washington Jekanyika, jointly together with Cheneso Muvandi, is a nullity, of no force.

2. The Memorandum of Agreement of Sale of Stand No.11234 Darlington Extension, Mutare Township, measuring approximately 1,1759 hectares, entered into by the City of Mutare and Washington Jekanyika, jointly together with Cheneso Muvandi, is declared valid.

3. The first respondent to pay the applicant's costs on attorney-client scale.

SC05-22 : CUTHBERT DUBE vs PREMIER SERVICE MEDICAL AID SOCIETY and PREMIER SERVICE MEDICAL INVESTMENTS
Ruled By: MAKONI JA, MATHONSI JA and CHITAKUNYE JA

This is an appeal against the whole judgment of the Labour Court (the court a quo) which allowed two appeals filed in that court by the first and second respondents in terms of section 98(10) of the Labour Act [Chapter 28:01].

It set aside the two awards made in favour of the appellant, and, in their place, substituted them with an order dismissing the appellant's claims before the arbitrator.

FACTUAL BACKGROUND

The first respondent is a medical aid society registered in terms of the Medical Services Act [Chapter 15:13]. The second respondent is the investment vehicle of the first respondent. Both respondents are managed by two separate boards of directors.

It is common cause, that, the appellant was the Chief Executive Officer of the first respondent in terms of a contract of employment. He also drew a salary from the second respondent in unclear circumstances.

He attained the retirement age, of 60 years, in December 2013 in terms of the Retirement Policy of the Society 4/2003 of the first respondent.

On 14 March 2013, both boards of directors of the respondents unanimously extended the appellant's tenure of office by a further ten years.

The new contract commenced from 1 January 2014 and would end on 31 December 2024.

At the beginning of 2014, the appellant commenced the extended employment contract. The parties also reached an agreement that the appellant's monthly salary would be US$60,000 per month effective January 2014 along with other benefits. It was later reduced to US$43,000.

Following allegations that the appellant was taking an exorbitant salary of US$92,000 every month, before allowances, without the knowledge of the full Board, other than two of its members, the boards withdrew their earlier decision of extending the appellant's contract of employment.

They relied on the provisions of the Retirement Policy to rescind the extension of the employment contract.

The appellant was thus requested to take a pre-retirement paid leave.

In response, the appellant, through a letter dated 20 February 2014, addressed to the first respondent, claimed that he had a subsisting contract of employment for a period of ten years which commenced on 1 January 2014.

He insisted that the contract had not been terminated in any way, and, consequently, he would abide by it and continue to execute his duties in terms of the same until its expiry.

No such letter was written to the second respondent.

Consequently, a dispute arose between the appellant and the first respondent.

On 17 February 2015, the dispute between the appellant and the first respondent was referred to compulsory arbitration. The terms of reference were as follows:

“(a) To determine whether or not the claimant's (the appellant in this matter) contract of employment was lawfully terminated;

(b) The appropriate remedy.”

On 14 March 2015, a dispute in the matter between the appellant and the second respondent was referred to compulsory arbitration. It is not clear from the record how the dispute had arisen. The terms of reference were as follows:

“(a) Whether or not the appellant's contract of employment was enforceable against the second respondent;

(b) If so, whether or not the claimant's contract of employment was lawfully terminated and the remedy thereof.”

On 14 April 2015, the arbitrator issued awards in respect of both matters.

In the matter between the appellant and the first respondent, the arbitral award was to the effect that the contract of employment between the appellant and the first respondent still subsisted and thus remained in force. He further ordered that the first respondent pay the appellant all salaries and benefits from the date these were last paid at the salary scale of US$92,000 per month.

In the matter between the appellant and the second respondent, the arbitral award was to the effect, that, the appellant's contract of employment was enforceable against the second respondent and that the contract was never terminated thereby rendering the appellant entitled to payment of salaries and benefits as claimed.

Aggrieved, the first and second respondents independently appealed against the two arbitral awards to the Labour Court, under LC/H/348/15 and LC/H/349/15 respectively. The two appeals were consolidated for the sake of convenience.

PROCEEDINGS IN THE COURT A QUO

The first respondent, in its heads of argument before the court a quo, in which it was the first appellant, argued that the arbitrator made a determination that ran foul of the issue presented before him.

It submitted, that, the issue before the arbitrator was whether or not the employment contract between the first respondent and the appellant was lawfully terminated. Thus, it insisted that the arbitrator fell into error when he determined that there was a valid and enforceable contract between the parties whereas it was common cause between the parties that no contract still existed.

The first respondent contended, that, the arbitrator was bound by the terms of reference and had no authority to re-format the issues as presented to him by the parties.

It was also the first respondent's case that no evidence was tendered to justify the amount of US$92,000 per month which was awarded to the appellant by the arbitrator.

The second respondent largely associated itself with the arguments made by the first respondent regarding the arbitrator straying from the terms of reference.

In addition to that, the second respondent submitted that the arbitrator missed the import of the issues referred to him and came to the conclusion that there existed a contract of employment between the appellant and the second respondent.

The second respondent further submitted, that, it was simply the investment vehicle of the first respondent and used to contribute to the appellant's salary at the request or on the instructions of the appellant. Thus, it was the second respondent's submission that these remittances did not make it the appellant's employer.

Per Contra, the appellant submitted that the arbitrator correctly determined the issues before him.

He submitted, that, the issues referred to the arbitrator were whether or not the appellant's contract of employment was lawfully terminated and to determine the appropriate remedy. He further submitted, that, determining whether or not the contract was valid was the first stage of inquiry which would then lead to the conclusion of whether or not the same was lawfully terminated.

Regarding the second respondent, he submitted that the evidence placed before the arbitrator, of termination of the contract in the form of a letter, was not sufficient enough to prove that the same was terminated in terms of the law.

The appellant insisted that a contract of employment could only be terminated by mutual consent, death, dismissal through a formal disciplinary hearing, or resignation.

Thus, he proffered that a valid contract still existed as the second respondent failed to prove termination.

The appellant further submitted, that, the second respondent was his employer, by extension, as management of the same reported directly to him. It followed that his contract of employment with the second respondent was valid and enforceable.

DETERMINATION OF THE COURT A QUO

The court a quo examined the terms of reference as placed before the arbitrator by the parties.

With respect to the first respondent, the court reasoned that it was clear in the parties minds that the contract of employment had been terminated and what required determination was whether or not such termination was lawful.

The court further reasoned, that, the arbitrator fell outside the terms of reference by making a determination that the contract of employment still subsisted and remained in force.

The court relied on the case of C Kambuzuma and Ors v The Athol Evans Hospital Home Complex SC118-04 in its reasoning that the arbitrator ought to have confined himself to the terms of reference and not go further than that.

In addition, the court a quo held that the arbitrator, by making a finding that there was still a valid contract in existence between the parties, effectively made a new employment contract for the parties, contrary to the Supreme Court decision in the matter between Kundai Magodora & Ors v Care International Zimbabwe 2014 (1) ZLR 397.

With respect to the second respondent, the court a quo made a finding, that, as was apparent from the record, the second respondent did not extend the appellants tenure.

It effectively concluded, that, there was nothing to enforce between the appellant and the second respondent as there was never an employment contract between them. Consequently, the court found that there was nothing to terminate and therefore the appellant was not entitled to anything from the second respondent.

In the result, it allowed the appeals and set aside the arbitral awards.

This prompted the appellant to note the present appeal on the following grounds:

GROUNDS OF APPEAL

“1. The court a quo misdirected itself and erred at law in finding that the decision of the arbitrator, that there was still a subsisting contract of employment between the appellant and the first respondent, was outside the arbitrator's terms of reference.

2. The court a quo erred by making a determination that there was no binding contract of employment between the appellant and the second respondent.”

SUBMISSIONS ON APPEAL

In addressing the first ground of appeal, counsel for the appellant made the following submissions:

The issue before the court was a question of interpretation of the terms of reference. The terms of reference were quite straightforward and had inherent in them two questions, namely:

1. Has the contract of employment been terminated?

2. If so, was the termination lawful?

A term of reference, in terms of the Labour Act [Chapter 28:01] (the Act) is statutorily regulated and must be interpreted in terms of the scheme under Part XII of the Labour Act.

What has to be resolved is the dispute that was referred to conciliation.

The court a quo fell into error by treating this as voluntary arbitration, in which the terms of reference were as a result of the meeting of the minds of the parties. To the contrary, this was a compulsory arbitration in terms of the Labour Act where the labour officer formulates the terms of reference after taking into account the nature of the dispute between the parties.

A labour officer referring a dispute to compulsory arbitration cannot create a new dispute for the parties as was held in Tafadzwa Sakarombe & Anor v Montana Carswell Meats SC44-20.

As regards the appellant's second ground of appeal, counsel for the appellant made the following submissions:

A resolution by one party to terminate its contractual obligations cannot bind the innocent party to the contract.

It was a serious misdirection by the court a quo, that, the appellant was bound by the decisions of the respondents in respect of the contract between the parties.

Further, a contract need not be in writing. There is no doubt that an oral contract of employment existed between the appellant and the second respondent.

The court a quo relied on the absence of a written contract to determine that there was no contract between the appellant and the second respondent. From the circumstances, including the payment of salary and the duties of the appellant vis a vis the second respondent, there is no doubt that a contract existed between the parties.

Counsel for the respondents submitted:

In respect of ground one, that, the issue before the arbitrator was to determine whether or not the contract of employment was lawfully terminated. The arbitrator went on to determine that there was a valid contract of employment between the parties, which was not an issue placed before him.

The conduct of the arbitrator was tantamount to making a contract for the parties, which he or any court or tribunal cannot do as a matter of law.

As regards the purported contract of employment between the appellant and the second respondent, that the appellant could not point to a single document that suggested that there was a contract between him and the second respondent.

The only contract produced was the one between the appellant and the first respondent.

The argument by the appellant, that there is an oral contract, is startling. He failed to present evidence before the court a quo, and this court, to prove that there was an oral contract. Thus, there was nothing to enforce between the appellant and the second respondent.

ISSUES FOR DETERMINATION

1. Whether or not the court a quo erred in finding, that, the arbitrator acted outside his terms of reference in concluding that a contract of employment between the appellant and the first respondent still subsisted.

2. Whether or not the court a quo erred in finding, that, the appellant did not have a binding contract with the second respondent.

THE LAW

The matter before this Court pertains to compulsory arbitration which derives from statute. It only arises after the failure of conciliation and the issuing of a Certificate of No Settlement (L MADHUKU, Labour Law in Zimbabwe...,.). This was provided for in terms of section 93(5) of the Labour Act [Chapter 28.01] before the amendment to the section.

The author, L MADHUKU, Labour Law in Zimbabwe…, puts it this way:

“This new scheme focuses on the nature of the dispute in determining whether or not to refer it to compulsory arbitration. Disputes of interest depend on whether or not an essential service is involved;...,. A dispute of interest, outside the essential service, cannot be referred to compulsory arbitration in the absence of agreement by parties.”

Crucial to mention are provisions of section 98 of the Labour Act. The relevant parts read as follows:

“93 Effect of reference to compulsory arbitration under Parts XI and XII

(1) In this section 'reference to compulsory arbitration' in relation to a dispute, means a reference made in terms of paragraph (d) of subsection (1) of section eighty-nine or section ninety-three.

(2) Subject to this section, the Arbitration Act [Chapter 7:15] shall apply to a dispute referred to compulsory arbitration.

(3) Before referring a dispute to compulsory arbitration, the Labour Court or the labour officer, as the case may be, shall afford the parties a reasonable opportunity of making representations on the matter.

(4) In ordering a dispute to be referred to compulsory arbitration, the Labour Court or labour officer, as the case may be, shall determine the arbitrator's terms of reference after consultation with the parties to the dispute.”

In Ballantyne Butchery (Pvt) Ltd t/a Danmeats v Edmore Chisvinga & Ors SC 2015 (1) 335, SC06-15..., this Court held that:

“Where a dispute is referred to compulsory arbitration by a labour officer, section 98(4) of the Labour Act [Chapter 28:01] enjoins the officer to determine the arbitrator's terms of reference, after consultation with the parties to the dispute.”

The same point was made in Metallon Gold Zimbabwe (Pvt) Ltd & Anor v Collen Gura 2015 (1) 509, HH263-16..., where it was held that:

“However, the procedure for submission is that the matter commences with conciliation before a labour officer in terms of section 93 of the Labour Act. When conciliation fails, the labour officer then refers the dispute to compulsory arbitration in terms of section 98. In doing so, the labour officer consults the parties for the arbitrator's terms of reference to be drawn. The arbitrator is confined to the agreed terms of reference during the arbitral process;..., if the arbitrator goes beyond the terms of reference that may be a ground for objection to the registration of the arbitral award.”

It thus follows, that, in settling the terms of reference for compulsory arbitration, the parties have a role to play. They are consulted by the Labour Court or the labour officer, as the case may be.

It is an established principle that an arbitrator is not allowed to venture outside the terms of reference when making a determination.

The law on arbitration, and terms of references, was succinctly captured at pp10 to 11 in the case of Munchville Investments (Pvt) Ltd t/a Bernstein Clothing v Chiedza Mugavha SC62-19 as follows:

“As regards the jurisdiction and powers of arbitral tribunals, it must be emphasised that the arbitration process, generally, is a voluntary and consensual process, both at common law and under the Arbitration Act [Chapter 7:15].

This is made clear by section 4(1) of the Act which stipulates that 'any dispute which the parties have agreed to submit to arbitration may be determined by arbitration'. Moreover, by virtue of section 4(3) of the Act 'the fact that an enactment confers jurisdiction on a court or other tribunal to determine any matter shall not, on that ground alone, be construed as preventing the matter from being determined by arbitration'.

According to BRAND: Labour Dispute Resolution (2nd ed. 2008) at p.163:

'In private arbitration, the arbitration agreement plays a pivotal role. It embodies a description of the dispute to be referred to arbitration, it names the arbitrator, it specifies the terms of reference and arbitrator's powers, it sets out the process before the actual hearing, and, finally, it describes the process to be followed during the hearing.'

In similar vein, as was stated in Total Support Management (Pty) Ltd & Anor v Diversified Health Systems (SA) (Pty) Ltd & Anor 2002 (4) SA 661 (SCA) at 673H-I:

'The hallmark of arbitration is that it is an adjudication, flowing from the consent of the parties to the arbitration agreement, who define the powers of adjudication, and are equally free to modify or withdraw that power at any time by way of further agreement.

It is thus axiomatic that the jurisdiction and powers of an arbitrator are determined by agreement between the disputant parties. The terms of reference define the dispute to be resolved and the manner in which it is to be resolved. The arbitrator's mandate flows from and is limited by the terms of reference.

To put it differently, the arbitrator derives his jurisdiction and powers from the arbitration agreement between the parties.

The position is no different under section 93(1) of the Labour Act.

The jurisdiction and powers of an arbitrator are established and assumed by dint of the agreement of all the parties involved and their voluntary submission to the arbitral process and its jurisdiction. The arbitrator is not endowed with jurisdiction by the labour officer or conciliator. It is the disputant parties themselves who vest the arbitrator with jurisdiction, notwithstanding any preceding or parallel lis or contestatio between them. In other words, it is the voluntary and consensual nature of arbitration that determines the scope of the arbitrator's jurisdiction and powers where any matter is referred to arbitration in terms of section 93(1) of the Labour Act.'”...,.

The above-cited case establishes that the principles applicable to private or voluntary arbitration are the same as those applicable to compulsory arbitration in terms of the Labour Act.

However it must noted, that, there is a slight difference in that in respect of private arbitration there is complete party autonomy with no room for intervention by the arbitrator.

Section 93(2) of the Labour Act, however, gives the Labour Court, or the Labour Officer, the right to intervene and determine the terms of reference - in consultation with the parties.

The arbitrator ought not to mis-characterise the disputes between the parties.

In Alliance Insurance v Imperial Plastics (Pvt) Ltd SC30-17..., the learned MALABA DCJ..., cited with approval the case of Inter Agric (Private) Limited v Mudavanhu & Ors SC09-15 wherein the respondent, alleging unfair dismissal, filed a grievance with a labour officer, and, failing conciliation between the parties, the labour officer referred the matter to compulsory arbitration. MALABA DCJ opined:

“Article 34(2)(a)(iii) of the Arbitration Act states that an arbitral award can be set aside if it contains submissions on matters beyond submissions for arbitration. In Inter-Agric (Pvt) Ltd v Mudavanhu & Ors SC09-15, at p3 of the cyclostyled judgment, GOWORA JA said:

'In addition, at law, the arbitrator was only competent to determine the dispute between such parties as had been referred to him by the labour officer. Thus, he was confined to his terms of reference. He had no mandate beyond that which had been referred to him.'”...,.

See also Augur Investments OU v Fairclot Investments (Private) Limited t/a T & C Construction & Anor SC08-19.

What emerges from the above authorities is that the arbitrator, in determining the dispute referred to him, is confined to the terms of reference settled for him or her by the Labour Court or the labour officer in consultation with the parties.

He is not allowed to stray outside those terms of reference. For emphasis, he has no mandate beyond that which has been referred to him or her.

APPLICATION OF THE LAW TO THE FACTS

In essence, the principal issue to be addressed is whether or not the arbitrator exceeded his terms of reference and thereby arrived at the wrong conclusions. Flowing from this is the correctness or otherwise of the decision of the Labour Court in not upholding the arbitrator's award.

The appellant submits, that, the court a quo took a simplistic and fundamentally wrong approach in interpreting the terms of reference. He avers that it is implicit in the terms of reference that what was before the arbitrator were two issues and these are:

1. Has the contract of employment been terminated?

2. If so, is the termination lawful?

Before considering the attack on the arbitrator, that he misconceived the nature of the inquiry and his duties, or exceeded his jurisdiction by venturing outside the terms of reference, it is necessary to determine the nature of the inquiry which was before him.

As mentioned at the outset, the arbitrator had to determine whether or not the contract between the appellant and the first respondent had been lawfully terminated and the remedy thereof.

In my view, what was implicit in the terms of reference is that:

(a) There had been a contract of employment between the appellant and the first respondent.

(b) That the contract was terminated by the employer; and

(c) That the appellant's issue was whether or not the same was lawfully terminated.

This is what the arbitrator had to relate to.

The court a quo was therefore correct in finding, that, the arbitrator had mis-interpreted the terms of reference.

Indeed, the arbitrator erred given the specific terms of reference in proceeding to make the finding, that:

“1. That, the contract of employment between the respondent and the claimant still subsists and remains in force.”

The court a quo correctly opined, that:

“What seems to be coming out of the arbitral award is that, firstly, the arbitrator was not sure of the position of the respondent's employment status. Secondly, the arbitrator was not sure of the propriety of the respondent's salary apart from commenting that the employee was entitled to continue working while the Board made its deliberations. His position was that the contract was never terminated….,.

When parties presented the above as a term of reference, it was clear on their minds that the respondent's contract of employment with the first appellant had been terminated. What required determination was whether or not such termination was lawful.”

Counsel for the appellant had this to say about the above finding, in para 9 of the appellant's Heads of Argument:

“The above misdirection was the source of the court a quo's error. Parties never presented any terms of reference. This was compulsory arbitration. It was the labour officer who formulated the terms of reference, after taking into account the nature of the dispute between the parties.”

He further contended, that, instead of taking into account the nature of the dispute after conciliation, the court a quo applied the wrong principle, namely, taking into account a non-existent 'intention of the parties'.

The dispute was referred to the labour officer for conciliation as follows:

“(i) Whether or not our client's contract of employment was terminated, and, if so, when?”

He concluded by submitting, that, taking into account the nature of the dispute, the arbitrator was correct to include a determination of whether or not the employment had been terminated.

What counsel for the appellant over-looked is the role of the parties to the dispute, in the settlement of terms of reference to be referred to an arbitrator.

Section 98(4) of the Labour Act makes provision for the labour officer 'to determine the arbitrator's terms of reference after consultation with the parties to the dispute.'

Whilst it is the function of the labour officer to determine the terms of reference, he or she does not do it by himself or herself. He has to do so in consultation with the parties. The parties input in the final product: see Ballantyne Butchery (Pvt) Ltd t/a Danmeats v Edmore Chisvinga & Ors SC 2015 (1) 335, SC06-15.

There is no indication on the record that the appellant objected to the terms of reference as presented to the arbitrator at the beginning of the arbitration process.

The arbitrator, in his award, captures the terms of reference as referred to him by the labour officer. It is during the analysis stage that he changes course and starts to deal with whether the appellant's contract had been terminated.

The arbitrator clearly fell outside the terms of reference, contrary to the settled position of the law which states that arbitrators should confine themselves to the presented terms of reference: see Munchville Investments (Pvt) Ltd t/a Bernstein Clothing v Chiedza Mugavha SC62-19.

He could not go behind what was before him to ascertain what it is that was referred to the labour officer, as was suggested by counsel for the appellant.

The arbitrator was not asked to determine whether or not the contract between the parties still subsisted, but, was required to determine whether or not the contract between the parties was lawfully terminated.

In light of the foregoing, the court a quo's finding cannot be faulted.

The court a quo further found that equally disturbing is that the arbitrator's conduct was tantamount to making a contract for the parties which neither he nor any court or tribunal can do as a matter of law. It remarked as follows:

“Making contracts for parties is not the duty of an adjudicating authority. An adjudicating authority deals with disputes arising from contracts, or, indeed, interprets terms of contract where parties need interpretation of the terms thereof in the context of disputes between them. They do not make contracts for parties. In the Kundai Magodora case (above) at 403C-D the Supreme Court stated as follows:

'In principle, it is not open to courts to rewrite a contract entered into between the parties or to excuse any of them from the consequences of the contract that they have freely and voluntarily accepted even if they are shown to be onerous or oppressive.'

As is appositely cautioned by CHRISTIE: The Law of Contract in South Africa (5ed.) at p366:

'The fundamental rule that the court may not make a contract for the parties is a salutary one, the principle of which has probably never been seriously questioned. It is unthinkable that the courts should not only tell the parties what they ought to have done but then make them do it by enforcing the court's idea of what the contract ought to have been.'”

Indeed, the arbitrator misdirected himself by concluding, that, the contract was never terminated. It was not within his remit to exceed his mandate. The arbitrator misconceived the whole nature of the inquiry or his duty in connection therewith.

Thus, the first ground of appeal has no merit and must fail.

Appealed
SC12-24 : FELIX DZUMBUNU vs BATANDI MPOFU N.O. and CHIKOTI DORO and MASTER OF THE HIGH COURT OF ZIMBABWE
Ruled By: GUVAVA JA, MAVANGIRA JA and CHITAKUNYE JA

This is an appeal against the whole judgment of the High Court of Zimbabwe handed down on 14 July 2022 under judgment number HB188-22.After hearing the parties, the court dismissed the appeal with costs. The reasons therefor appear hereunder.FACTUAL BACKGROUNDStatement of Agreed FactsThe parties filed a statement of agreed facts ...

This is an appeal against the whole judgment of the High Court of Zimbabwe handed down on 14 July 2022 under judgment number HB188-22.

After hearing the parties, the court dismissed the appeal with costs. The reasons therefor appear hereunder.

FACTUAL BACKGROUND

Statement of Agreed Facts

The parties filed a statement of agreed facts before the court a quo. The statement was reproduced by the court a quo in its judgment and may be summarised, materially, to the following effect:

(a) Sometime in November 2014, the first respondent and the appellant entered into a written agreement of sale over Stand Number 6505 Bulawayo Township of Stand 6541 Bulawayo Township, situate in the district of Bulawayo.

In their papers, the parties refer to it as “the initial agreement”.

The appellant took occupation of the property immediately upon the signing of the agreement in accordance with the terms thereof. The terms of the agreement also provided that the appellant was to pay the purchase price of the property in the sum of USD105,000 as follows:

(i) A deposit in the sum of USD25,000 upon the signing of the agreement.

(ii) The balance of USD80,000 by way of three equal instalments commencing on the 28th of February 2015, and, subsequently on or before 28 April 2015 and finally on or before 31 July 2015.

(b) The said purchase price was as per the then prevailing fair market value of the property.

The appellant paid a deposit of USD37,000 “by 12 March 2015.”

The appellant however breached the agreement of sale by failing to pay the balance of the purchase price of USD68,000 in the manner stipulated in the agreement.

The notice of termination of the initial agreement of sale, authored by the first respondent, was, according to the Sheriff's return of service, served upon the appellant at No.43 Aberdeen Road, Fortunes Gate, Bulawayo on 12 August 2015, by handing a copy thereof to the appellant's worker.

In terms of the notice of termination, the initial agreement was cancelled on 4 September 2015.

(c) An action was instituted by the first respondent on 16 February 2017, under case number HC446/17, seeking the following relief:

(i) An order confirming the cancellation of the initial agreement.

(ii) An order evicting the appellant and all those claiming occupation from the property in question.

(iii) An order that the appellant pays “occupational damages” to the first respondent in the sum of USD800 per month or USD26.67 per day from the 4th of September 2015, being the date of the cancellation of the initial agreement to the date of eviction.

(d) A default judgment was granted on 19 May 2017, confirming the cancellation of the initial agreement and granting the relief as prayed for in the summons in HC446/17. In terms of the writ of execution and ejectment issued on 8 February 2018 pursuant to the default judgment, the appellant was evicted from the property in question.

(e) On 22 November 2018, the default judgment under HC446/17 was rescinded and set aside under HC1576/18. On 26 November 2018, the appellant entered an appearance to defend the action under HC446/17. On 18 February 2019, he filed a special plea but had not (as at the time of the filing of the statement of agreed facts) pleaded over to the merits.

(f) During the period when the order (in default) in HC446/17 was extant, the first respondent entered into a written agreement of sale over the same property (second agreement) with the second respondent. In terms of the second agreement, the second respondent was to pay the full purchase price in respect of the property being the sum of USD130,000 as follows:

(i) A deposit in the sum of USD70,000 upon the signing of the agreement.

(ii) The balance of USD60,000 to be paid between 31 April 2018 and 31 July 2018.

(g) The purchase price prescribed in respect of the property in terms of the second agreement was also per the then prevailing fair market value. In accordance with the terms of the second agreement, and by the 18th of July 2018, the second respondent had paid the full purchase price in the sum of USD130,000 to the first respondent.

(h) The third respondent was made aware of the second agreement of sale in terms of a report by the first respondent and he duly recorded such sale in his minutes in respect of a creditors meeting held on 21 June 2018. The minutes of the said meeting are contained in the third respondent's final liquidation file under CRB2/10.

I interpose at this juncture, for the sake of clarity, to explain that the first respondent acts in his official capacity as the liquidator of a company, Tabs Avon Lighting (Pvt) Ltd (in liquidation), the seller of the property in issue, hence the involvement of the third respondent.

(i) On 21 March 2018, the only secured creditor of Tabs Avon Lighting (Pvt) Ltd (in liquidation), being NMB Bank Limited, approved of the second agreement of sale and the third respondent was duly made aware of such approval. The letter by this sole creditor is also filed in the third respondent's final liquidation file under CRB2/10.

(j) In the aftermath of the granting of the order under HC1576/18, and after the conclusion of the second agreement of sale and the payment by the second respondent of the full purchase price in respect of the property, the appellant took steps aimed at remedying his breach of the initial agreement of sale. He did so by depositing USD68,000 into the first respondent's legal practitioners trust account, being the balance of the purchase price.

(k) The steps taken by the appellant, aimed at remedying his breach of the initial agreement, were not accepted by the first respondent. The first respondent's legal practitioners tendered back to the appellant the said amount of USD68,000 that had been paid into its trust account.

(l) By way of an order granted under HC3144/18, the second respondent (being the purchaser in the second agreement) was joined to the main proceedings. He duly entered an appearance to defend the action and filed his plea thereto.

(m) As at the date of the Statement of Agreed Facts, and following the appellant's eviction therefrom in terms of the writ of execution and ejectment issued against him under HC1576/18, neither of the parties were in physical or lawful occupation of the property nor had any party taken transfer thereof.

In the Statement of Agreed Facts, the parties listed the following as the issues for determination by the court a quo:

(i) Whether the initial agreement of sale over Stand 6505 Bulawayo Township of Stand 6541A Bulawayo Township, situate in the District of Bulawayo, between the plaintiff (appellant) and first defendant (first respondent), was lawfully terminated.

(ii) Whether there existed any legal impediment to the conclusion of the second agreement of sale entered into between the plaintiff (first respondent) and the second defendant (second respondent) at the material time.

(iii) To whom should the property, being Stand 6505 Bulawayo Township of Stand 6541A Bulawayo Township, situate in the District of Bulawayo be transferred.

SUBMISSIONS BEFORE THE COURT A QUO

On the first issue, the appellant argued, that, the notice was not delivered in compliance with section 8(3) of the Contractual Penalties Act [Chapter 8:04] ('the Act') in that it was not delivered to him personally or by registered post to his chosen address.

On the other hand, the first respondent submitted, that, the appellant was notified of the breach in a manner that complied with the provisions of section 8 of the Contractual Penalties Act, and that the agreement was lawfully cancelled.

The second respondent, on his part, contended that the agreement between the appellant and the first respondent was lawfully terminated. According to him, the question that arose was whether the service of the notice on the appellant, by way of handing it to his worker, was valid service in terms of section 8 of the Contractual Penalties Act.

THE COURT A QUO'S DETERMINATION

In determining the matter, the court a quo found that it was “required to tease out the intention, purpose or context of section 8(3)(b)” of the Contractual Penalties Act.

It found, that, its purpose is to make provision for effective service of a written notice of breach of an instalment sale agreement. It stated that service of the notice of the termination of the agreement was served at the appellant's given address of service and concluded that service on the appellant's worker amounted to effective service of the notice.

The said court noted, that, the notice of cancellation clearly specified that the appellant had breached the agreement of sale by failing to pay the instalments. The appellant was given thirty days notice to remedy the breach by settling the amount due. The notice specified that failure to settle the amount within thirty days would lead to an automatic cancellation.

The appellant unilaterally deposited into the first respondent's legal practitioners trust account the balance of the purchase price almost three years after the deadline of 1 September 2015.

Therefore, the issue whether the agreement between the appellant and the first respondent was lawfully terminated, was settled accordingly.

On the second issue, the first respondent contended, that, the second agreement was concluded after the cancellation of the first agreement and also at the time the default judgment confirming cancellation was extant. It was also submitted, on his behalf, that, the fact that the default judgement confirming the cancellation was later rescinded was of no moment.

Per contra, the appellant argued that the preamble to the agreement between the first respondent and the second respondent described the property as Stand 6512 Bulawayo Township. It was submitted, that, it therefore followed that the parties in the second agreement had in mind Stand 6512 and not Stand 6505, the subject matter of the initial agreement. Furthermore, that there was thus no privity of contract between the first respondent and second respondent concerning the property the subject of this appeal.

The second respondent contended, that, the appellant breached the agreement by failing to pay the balance of the purchase price. Subsequently, the appellant was notified of the breach and failed to rectify the breach. He stated, that, the sale to him (second respondent) was conducted during the period when the order confirming the cancellation of the initial sale was extant and that there were therefore no legal impediments to the conclusion of the said (second) agreement of sale.

The court found, that, the property referred to in the agreed facts was Stand Number 6505 Bulawayo Township, situate in the District of Bulawayo. It found that there was no factual dispute as to the identity of the property in issue, the subject matter of the agreement between the first and second respondents.

Further, that, in any event, the validity of the agreement of sale between the first and second respondents was not an issue that the appellant should have concerned himself with. His matter did not turn on whether the second agreement was valid or not. His matter turned on whether he had breached the agreement of sale with the first respondent and whether his agreement was lawfully cancelled.

The court ultimately found that the agreement of sale between the appellant and the first respondent was lawfully cancelled.

With regard to the third issue for determination, the first respondent submitted, that, since the agreement of sale was lawfully terminated, and that the only valid agreement was the one between the first and second respondents, it followed that the property ought to be transferred to the second respondent.

It was further argued, that, ordering a transfer of the property to the appellant would be tantamount to creating a contract between the appellant and the first respondent where none existed.

It was also contended, that, such an order to transfer to the appellant would be tantamount to ordering specific performance, which remedy was not available to the appellant because he had failed to fulfil his contractual obligations, a factor which eventually led to the cancellation of the agreement.

The appellant argued that the court ought to order transfer of the property to him, coupled with an order for specific performance as the appellant had paid the purchase price by depositing the balance into the account of the first respondent's legal practitioners trust account.

The court found, that, by his own admission, the appellant breached the sale agreement and was not entitled to specific performance. It noted, that, the appellant's attempt at remedying the breach was not accepted by the first respondent and that a party cannot, after a breach, make a unilateral payment way outside the stipulated time frame, hoping to remedy the breach. It found, that, the second respondent was entitled to specific performance for the reason, that, in terms of the agreed facts he (the second respondent) agreed and undertook to pay the full prescribed purchase price and proceeded to do so in compliance with the terms of the agreement. Therefore, transfer of the property was to be done in favour of the second respondent.

In the result, the court a quo issued an order in the following terms:

1. The cancellation of the agreement of sale entered into between the plaintiff (first respondent in this appeal) and the first defendant (appellant in this appeal) in respect of a property known as Stand Number 6505 Bulawayo Township of Stand 6541A Bulawayo Township situate in the District of Bulawayo measuring 3109 square metres, D.T 2749/84 is confirmed.

2. The plaintiff shall transfer the property, being Stand Number 6505 Bulawayo Township of Stand 6541A Bulawayo Township situate in the District of Bulawayo measuring 3109 square metres, D.T. 2749/84 to the second defendant (second respondent in this appeal) within thirty (30) days of this order.

3. First defendant pays the costs of suit for plaintiff and second defendant on a party and party scale.

Aggrieved by the decision of the court a quo, the appellant has noted this appeal on the following grounds of appeal:

“GROUNDS OF APPEAL

1. The court a quo erred in law in finding that the agreement of sale in instalments over Stand 6505 Bulawayo township of Stand 6541A Bulawayo Township (the property) between appellant and first respondent was lawfully terminated.

2. The court a quo misdirected itself in law in finding that service of notice to remedy a breach in the instalment sale of land over the property on one Mr.Ncube, a gardener, was competent service as contemplated in section 8(2)(3) of the Contractual Penalties Act [Chapter 8:04].

3. A fortiori, the court a quo erred in law in finding that the appellant was properly placed in mora by the respondent.

4. The court a quo erred in law in finding, that, the first respondent, as seller in the instalment sale, clearly and unambiguously communicated its election to cancel the sale to the appellant as purchaser.

5. The court a quo erred in law in finding that the rescission of judgment granted in appellant's favour, in HC1576/18 on the 22nd of November 2018, was of 'no moment'.

6. The court a quo erred in law in finding that the appellant was not entitled to the relief of specific performance.

7. The court a quo erred in law in ordering transfer of the property into the second respondent's name in circumstances where a clear material dispute of fact existed as to the identity of the property sold to him by the first respondent.

RELIEF SOUGHT

WHEREFORE the appellant prays for the following relief:

1. The instant appeal succeeds.

2. The judgment of the court a quo is set aside in its entirety and in its place substituted the following -

(a) The plaintiff's claims be and are hereby dismissed.

(b) The plaintiff is ordered to transfer into first defendant's names Stand Number 6505 Bulawayo Township of Stand 6541A Bulawayo Township situate in the district of Bulawayo measuring 3,109 square meters held under Deed of Transfer 2749/84 within 30 days of this order.

(c) The plaintiff and second defendant are to pay the cost of suit, jointly and severally the one paying the other to be absolved on an attorney and client scale.

3. The first and second respondents are to pay the costs of this appeal, jointly and severally the one paying the other to be absolved.”

SUBMISSIONS BEFORE THIS COURT

Appellant's Submissions:

Counsel for the appellant submitted before this Court, inter alia, that, it is now accepted that courts interpret the provisions of section 8 of the Contractual Penalties Act strictly, and, in that regard, cited Washaya & Anor v Makebreak Trading (Pvt) Ltd SC163-21 where a shortfall of one day in the notice period was ruled to amount to non-compliance with the requirements of the section.

He further submitted, that, the Contractual Penalties Act requires personal service on the purchaser, and that, in casu, there was no personal service on the appellant as the purchaser. The appellant's gardener was not a nominated person and service on him was therefore not in compliance with section 8 of the Contractual Penalties Act.

He further submitted, that, section 40 of the Interpretation Act only becomes relevant and applicable where the provisions of an Act are not clear or the Act does not stipulate how service of documents is to be effected.

Section 8 of the Contractual Penalties Act, being clear in its provision, it follows that section 40 of the Interpretation Act has no role to play.

It was also contended by counsel for the appellant, that, there was “a serious dispute of fact” in that the initial and the second agreements related to two different properties. Thus, the appellant purchased a different property from that purchased by the second respondent.

Counsel conceded that the appellant did not make payments in accordance with the agreement of sale. To be specific, counsel's response to the court's question as to whether the appellant had paid in accordance with the agreement, was:

“He defaulted. That is why he was given the notice, but, subsequently, he tendered the payment.”

Note may be taken, at this juncture, that, the notice given to the appellant to remedy the breach was in August 2015 and that it afforded him 30 days to do so.

Counsel also conceded, that, the appellant did not rectify the breach within the given period.

He further confirmed, that, the appellant had subsequently received the summons issued by the first respondent for the confirmation of the cancellation of the agreement of sale and for his eviction.

When asked whether the appellant had “reacted” to the summons, counsel made reference to the payment of the outstanding balance that the appellant purported to make in 2018 and stated that the said payment was rejected.

Notably, the summons was issued on 16 February 2017 while the purported payment was made in December of 2018.

It was also counsel's submission, that, the reflected or implicit position in the Statement of Agreed Facts, that the property the subject matter of the initial agreement was the same property sold in the second agreement, was agreed to by mistake on the appellant's part because the two agreements related to two different properties.

He submitted, that, the issue of the two agreements relating to two different properties was brought to the attention of the court a quo which ought to have asked for an explanation why it was being asked to award to the second respondent property that had been bought by the appellant. He submitted that the court a quo ought to have advised that the matter should go to trial.

First Respondent's Submissions:

Counsel for the first respondent submitted, that, section 8 of the Contractual Penalties Act should not be read to be doing away with the provisions of section 40 of the Interpretation Act. He submitted, that, this was so because section 8(3) of the Contractual Penalties Act states clearly that it is “without derogation from section 40…,” and specifically provides as follows:

“Without derogation from section 40 of the Interpretation Act [Chapter 1:1], a notice shall be regarded as having been duly given to the purchaser for the purposes of subsection (1) -

(a) If it has been delivered to the purchaser personally or to an agent chosen by the purchaser for the purpose of receiving such notices; or

(b) If it has been posted by registered post to the address chosen by the purchaser for the delivery of correspondence or legal documents relating to the instalment sale of land concerned, or, in the absence thereof, to the purchaser's usual or last known place of residence or business.”

Counsel for the first respondent submitted, that, Washaya & Anor v Makebreak Trading (Pvt) Ltd SC163-21, cited by the appellant, was distinguishable because in that case service was by registered mail and such service is provided for in section 8 of the Contractual Penalties Act; there was thus no need to consider section 40 of the Interpretation Act.

He also submitted, that, it was incorrect to say, as submitted for the appellant, that section 8 of the Contractual Penalties Act should be read alone to the exclusion of section 40 of the Interpretation Act.

It was counsel's contention, that, in casu, there was effective service and that section 8 of the Contractual Penalties Act was complied with.

With regard to the alleged dispute of fact, counsel argued, that, the appellant's argument would only carry the day where, as in Leathought Investments (Pvt) Ltd v Chirangano and Others SC60-21, such dispute of fact appears on the face of the Statement of Agreed Facts itself and in the pleadings.

He submitted that in casu, the parties decided to forgo preliminary issues and that the real issue that they placed before the court was the question: “who is entitled to take transfer of the property?”

Furthermore, the appellant should have followed the proper channels to resile from the Statement of Agreed Facts.

Without having done so, the appellant must be held to the facts as reflected in the Statement of Agreed Facts.

The issue of the Stand Number is thus overridden by the Statement of Agreed Facts which the parties signed.

Further to that, after so signing, the appellant had, as agreed, filed a plea in which the issue of the Stand Number did not arise.

The issue only arose during the hearing.

He argued, that, the parties were bound to the facts in the Statement of Agreed Facts and that the court only assists the parties by determining issues of law that arise therefrom. The appellant cannot therefore start alleging disputes of fact at the stage where the parties are addressing the court on issues of law.

Second Respondent's Submissions:

Counsel for the second respondent contended, that, the question for determination is whether or not the service of the notice of termination on the appellant's employee was proper service in terms of the law. She referred to Nenyasha Housing Co-op v Violine Sibanda 2019 (3) ZLR 9 (H)…, where the court stated as follows, inter alia:

“The notice (to) (sic) must be in writing as stipulated in section 8(2)(a) of the Act. The procedure to be followed by the seller entails him giving notice to rectify, discontinue, or remedy the breach, followed by the institution of proceedings. The mischief behind this provision is to offer protection to purchasers in instalment sales.”

Counsel highlighted that the appellant conceded that he saw the notice of termination. Counsel also observed that the appellant was subsequently served with summons for cancellation but did not do anything about it.

Counsel for the second respondent argued, that, section 8 of the Contractual Penalties Act does not require personal service on the purchaser. She contended that section 8(3) of the Contractual Penalties Act gives the seller the option to either deliver personally or on a nominated agent of the purchaser or to post by registered post. She contended that, in casu, the appellant was served effectively in that the notice was served on a responsible person at his usual address in accordance with the terms of section 40(2)(c) of the Interpretation Act.

On the alleged dispute of fact, counsel submitted, that, there was no merit in the allegation as the parties are all in agreement that the Stand in issue is Stand No. 6505. She further highlighted, that, the court a quo held that the validity of the agreement of sale between the first respondent and the second respondent is not an issue that the appellant should concern himself about; his matter does not turn on whether the second agreement was valid or not.

Counsel contended, that, the appellant was not genuine in pursuing the appeal but was merely frustrating the other parties and causing unnecessary delay in the finalisation of the matter. She further highlighted that the appellant had re-occupied the property and was benefitting from it and urged the court to dismiss the appeal with costs.

ISSUES FOR DETERMINATION BY THIS COURT

Considering the grounds of appeal, as well as the submissions made before this Court, the following issues emerge for determination:

1. Whether or not service on the appellant's gardener, of the notice to remedy the breach, was proper service.

2. Whether or not the appellant was entitled to specific performance.

APPLICATION OF THE LAW TO THE FACTS

Whether or not service on the appellant's gardener, of notice to remedy the breach, was proper service

What emerges from the appellant's first ground of appeal is that he holds the view, that, the court a quo erred in law in finding that the instalment sale agreement of the property, between him and the first respondent was lawfully terminated.

What is also clear from a perusal of its judgment is that the court a quo came to the now impugned conclusion on the basis, that, the appellant was served with the notice to remedy the breach through his gardener, at his given address of service.

The court a quo relied on section 8 of the Contractual Penalties Act as read with section 40(2)(c) of the Interpretation Act. It stated, in paragraph 26, as follows:

“26. The written notice, drawing the attention of the first defendant, as the purchaser, to breach of the agreement and calling upon him to rectify the breach within thirty days of service of the notice on him failing which the cancellation of the agreement would follow, was served on him in terms of section 8 of the Contractual Penalties Act as read with section 40(2)(c) of the Interpretation Act, in that it was served by leaving it with his worker at his usual or last-known place of abode which he provided in the agreement.”

Section 8 of the Contractual Penalties Act provides as follows:

“8. Restriction of sellers' rights

(1) No seller under an instalment sale of land may, on account of any breach of contract by the purchaser —

(a) Enforce a penalty stipulation or a provision for the accelerated payment of the purchase price; or

(b) Terminate the contract; or

(c) Institute any proceedings for damages;
unless he has given notice in terms of subs (2) and the period of the notice has expired without the breach being remedied, rectified, or discontinued, as the case may be.

(2) Notice for the purposes of subs (1) shall —

(a) Be given in writing to the purchaser; and

(b) Advise the purchaser of the breach concerned; and

(c) Call upon the purchaser to remedy, rectify or desist from continuing, as the case may be, the breach concerned within a reasonable period specified in the notice, which period shall not be less than —

(i) The period fixed for the purpose in the instalment sale of the land concerned; or

(ii) Thirty days; whichever is the longer period.

(3) Without derogation from section 40 of the Interpretation Act [Chapter 1:01], a notice shall be regarded as having being duly given to the purchaser for the purposes of subsection (1) —

(a) If it has been delivered to the purchaser personally or to an agent chosen by the purchaser for the purpose of receiving such notices; or

(b) If it has been posted by registered post to the address chosen by the purchaser for the delivery of correspondence or legal documents relating to the instalment sale of land concerned, or, in the absence thereof, to the purchaser's usual or last known place of residence or business.”

Section 40 of the Interpretation Act provides as follows:

“40 Service of documents

(1) Where an enactment authorises or requires a document to be served by post, and where the word 'serve' or any of the words 'give' 'deliver' or 'send' or any other word is used, the service of the document may be effected by pre-paying, registering and posting an envelope addressed to the person on whom the document is to be served at his usual or last known place of abode or business, and containing such document, and, unless the contrary is proved, the document shall be deemed to have been served at the time at which such envelope would have been delivered in the ordinary course of post.”

On this issue, the court a quo noted the following at paragraph 6 of its judgment:

“…,. Counsel submitted that 1st defendant does not dispute that the notice of cancellation of the agreement was served on his gardener on the 12 August 2015. What was disputed was that the return of service did not relate to the service of the notice of cancellation.”

The court a quo pertinently repeated this observation in paragraph 11 where it stated as follows:

“First defendant agreed that the notice of termination of the initial agreement of sale was served upon the first defendant at No.43 Aberdeen Road, Fortunes Gate, Bulawayo on the 12th August 2015, on the first defendant's worker. First defendant is bound by the statement of facts. In his submissions, Mr Ndubiwa contended that the first defendant does not dispute that the notice of cancellation of the agreement was served on his gardener on the 12 August 2015. What was disputed was that the return of service did not relate to the service of the notice of cancellation.”

In its analysis, and in disposing of the issue, the court further stated at paragraphs 25, 26 and 27 of its judgment:

“25. In determining whether service of the notice was valid service, the court is required to tease out the intention, purpose or context of section 8(3)(b) of the Contractual Penalties Act. Its purpose is to make provision for effective service of a written notice of breach of the agreement of sale.

In the agreement of sale, first defendant provided his address as number 43 Aberdeen Road, Fortunes Gate, Bulawayo. That is the address where the notice of termination of the agreement was served.

The agreement does not specify the manner of service of a written notice in the case of breach.

The first defendant accepts that the notice was indeed delivered, but contends that it was not delivered in terms of the provisions of the law. The position taken by the first defendant is tantamount to saying “yes” the notice was delivered and I saw it, but it did not come to me via the correct route.

Such a position is unattainable (sic) (untenable?). What the law requires is the effective service of the notice, and leaving it with his worker amounts to effective service….,.

26. The written notice, drawing the attention of the first defendant, as the purchaser, to breach of the agreement and calling upon him to rectify the breach within thirty days of service of the notice on him failing which cancellation of the agreement would follow, was served on him in terms of section 8 of the Contractual Penalties Act as read with section 40(2)(c) of the Interpretation Act, in that it was served by leaving it with his worker at his usual or last-known place of abode which he provided in the agreement.

27. The notice of cancellation clearly specified that first defendant had breached the agreement of sale by failing to pay the instalments. He was given thirty days notice calculated from the 1st August 2015 to remedy the breach by settling the amount due.

The notice specified that failure to settle the amount within thirty days shall lead to an automatic cancellation of the agreement of sale.

First defendant did not comply with the notice of cancellation, and he unilaterally deposits to the plaintiff's legal practitioners trust account the balance of the purchase price - almost three years after the deadline of the 1st September 2015.

On 19 May 2017, this Court confirmed the cancellation of the agreement of sale between plaintiff and first defendant, and, while the order was extant, the property was sold to the second defendant.

That, on the 22nd November 2018, the order confirming cancellation of the agreement was rescinded is of no moment.

Therefore, the issue whether the agreement between the plaintiff and first defendant was lawfully terminated is answered in favour of the plaintiff and second defendant.”

The court a quo's summation, analysis, and conclusion, cannot, in my view, be said to be devoid of soundness. They exude a clear and lucid examination of the evidence that was placed before it in the form of the Statement of Agreed Facts as well as an application of the law to those facts that accords with sense and logic.

In Nenyasha Housing Co-operative v Violine Sibanda HH456-19, at p3 of the judgment, the court stated the following in respect of section 8 of the Contractual Penalties Act:

“An instalment sale is defined as a sale agreement which requires that payment of the purchase price be made in three or more instalments by way of deposit and two or more instalments with transfer of the property, which is subject of the sale, being transferred after full payment of the purchase price….,.”

It further stated, at pp4-5:

“The procedure to be followed by the seller entails him giving notice to rectify, discontinue, or remedy the breach, followed by the institution of proceedings.

The mischief behind this provision is to offer protection to purchasers in instalment sales. Where a purchaser in an instalment sale is in breach of the terms of the agreement, he is afforded an opportunity to rectify, discontinue, or remedy the breach before proceedings for cancellation of the instalment sale are commenced. Where he is in breach and is able to remedy the breach within the time specified in the notice, the need to cancel the sale falls away. Failure to give a purchaser notice to rectify, discontinue, or remedy the breach renders the proceedings for cancellation of the contract a nullity….,.”…,.

In casu, the appellant provided his address of service as Number 43 Aberdeen Road, Fortunes Gate, Bulawayo.

It was noted, that, the initial agreement did not stipulate the manner in which service of a written notice was to be effected.

However, the court found, as supported by the Sheriff's return of service, that service of the notice of breach and of termination was made at the appellant's given address. In doing so, it relied on the cited provisions of the Contractual penalties Act and the Interpretation Act.

The court a quo's finding, that service of the notice on the gardener was proper service on the appellant, is in accord with the appellant's own admission that he saw the notice.

This goes to show the effectiveness of the service. The purpose of the pertinent legislation was therefore served.

The appellant's attempt, three years later, to purport to rectify the breach, also confirms the same considering that no other or second notice was served on him and he did not, at any stage, complain that the notice had come to his attention belatedly.

His expectation, for the first respondent to accept his attempted or purported rectification of the breach, three years later, amounts to an exhibition of lack of seriousness; the same lack of seriousness that is also exhibited by the concession, that, when he was served with summons he did not take the appropriate action.

The claim that the service of the summons is what led him to make the payment that he did three years later does not accord with common sense or with the recorded sequence of events.

He made the alleged attempt to supposedly rectify his breach way after the deadline stipulated in the notice and also after the confirmation of the cancellation of the sale.

That was a vain transaction on his part and could not salvage the self-inflicted consequence of the cancellation that was now a reality.

I opine, that, where, as happened in this case, a party to a contract has chosen an address as his or her or its domicilium citandi where service of documents or correspondence on matters relating to the contract should be effected, compliance by the other party with the procedure prescribed for service of notices under law would constitute effective service of such document regardless of who receives the notice.

The contention by the appellant in this matter, that the service on his gardener, who resides at his chosen domicilium citandi, did not constitute proper service, cannot, on the particular facts of this matter, succeed.

This is particularly so considering the very important fact that the appellant accepted that he saw the notice.

Apparently, he took no action merely because the notice had not been handed to him personally - even though he saw the notice.

It is my considered opinion, that, to allow the appellant to successfully hide behind strict compliance with the Contractual Penalties Act would, on the particular facts of this matter, make a mockery of the purpose of the provision in issue, as captured in paragraph 40 above.

It would create a situation where a party who has had the requisite notice brought to his attention, can opt to hide behind a finger and not take the necessary remedial action, to the detriment of the giver of the notice.

It is quite conspicuous that, in casu, the appellant purported to remedy his breach three years after the notice to remedy admittedly came to his attention. This was in circumstances where no subsequent notice was served on him and the agreed time frame for the payment of the purchase price had long expired.

The protection that the Contractual Penalties Act gives to purchasers does not afford the appellant the liberty to ignore a notice that has come to his attention and only act on it when it suits him - in this case three years later.

The court a quo did not misdirect itself in the approach that it took and in arriving at the finding that the appellant was properly served with the notice that was served on his gardener at his chosen domicilium. A contrary finding would have resulted in an untenable situation where the appellant, having admittedly seen the notice, would evade the consequences of his failure to heed such notice and comply or rectify the defect by hiding behind a finger.

The court a quo did not avail him such relief.

This Court sees no justification for interfering with the court a quo's factual findings and resultant determination of the issue.

Having found that the notice was properly served on the appellant, it therefore follows that the agreement between the appellant and the first respondent was properly terminated.

The appellant was served with the notice which placed him in mora. The appellant, however, failed to remedy the breach within the timeframe stipulated by the notice.

The agreement of sale having been properly terminated, the appellant's first, second, third and fourth grounds of appeal therefore lack merit.

SC43-22 : LEGACY HOSPITALITY MANAGEMENT SERVICES LIMITED vs AFRICAN SUN LIMITED and HON. JUSTICE MTSHIYA (RTD) N.O.
Ruled By: MAKONI JA, MATHONSI JA and MWAYERA JA

This is an appeal against the entire judgment of the High Court dismissing an application to set aside an arbitral award in terms of Article 34 of the Arbitration Act [Chapter 7:15] and registering the award instead.FACTUAL BACKGROUNDThe appellant is a non-resident company in the business of hospitality management providing ...

FACTUAL BACKGROUND

The appellant is a non-resident company in the business of hospitality management providing hotel management services. The first respondent is a resident Zimbabwean company that leases hotels and lodges in Zimbabwe and is listed on the Zimbabwe Stock Exchange.

Sometime in 2015, the first respondent decided to outsource the management of some of its premium hotels and selected the appellant to manage its hotels.

On or about 18 September 2015, the parties entered into a management agreement (“the agreement”) to regulate their business relationship in terms of which the appellant was to render management services to the first respondent's hotels. The agreement was amended and re-signed on 10 October 2015.

Thereafter, the agreed services were delivered by the appellant.

Subsequently, about three years later, on or about 13 September 2018, the first respondent purported to terminate the agreement between the parties on the basis that the Reserve Bank of Zimbabwe (RBZ), as the Exchange Control Authority, had refused to accommodate the first respondent's continued position of incurring the obligation to pay fees in foreign currency to the appellant in terms of the agreement.

In addition to the Reserve Bank of Zimbabwe's refusal to countenance the obligation for payment of fees by the first respondent, the first respondent also sought to terminate the agreement on the basis that the appellant had refused to re-negotiate the terms and rates of payment in order to bring the parties agreement in conformity with the Reserve Bank of Zimbabwe's Exchange Control Regulations.

The first respondent indicated that it was unable to pay outside the Reserve Bank of Zimbabwe's directives, as it deemed that this would be illegal.

Further, the first respondent averred that the fact that the Reserve Bank of Zimbabwe refused to countenance the continued accrual of the foreign currency obligation made the fulfilment of its contractual obligation permanently impossible to perform.

The respondent averred that the impossibility to perform was through no fault of either party, but that a supervening impossibility barred the parties from performing the terms of the agreement.

The appellant was not amenable to the termination of the agreement and disputed the lawfulness of the termination by the respondent.

Dissatisfied with the purported termination by the first respondent, a dispute arose and the parties referred the dispute to the second respondent for arbitration.

PROCEEDINGS BEFORE THE ARBITRATOR

In its claim before the second respondent (the arbitrator) the appellant contended, that, the first respondent had unlawfully terminated the agreement as it should have given the appellant notice of the force majeure in terms of clause 25.12.3 of the agreement.

It averred, that, after being given notice of termination, only the appellant was entitled to terminate the agreement and not the first respondent, since it was the one alleging failure to perform due to the Reserve Bank of Zimbabwe directives.

The appellant claimed, before the arbitrator, that the termination was unlawful and invalid.

The appellant further claimed, that, there was no supervening impossibility warranting the purported termination of the agreement.

The appellant, in summary, sought an order in the following terms;

1. The purported termination was invalid and improper and should be set aside for non-compliance with the parties agreement.

2. There was no supervening impossibility, as refusal of authority to pay by the Reserve Bank of Zimbabwe (RBZ) only amounted to delay in payment, which did not excuse non-performance.

The second respondent found in favour of the first respondent.

His finding was based on the fact, that, the lack of approval of the agreement from the Reserve Bank of Zimbabwe (RBZ) signified the existence of force majeure. He stated that it was unlawful for two parties to enter into an agreement without the authority of the RBZ in terms of the Exchange Control Act [Chapter 22:05]. The resultant force majeure was detrimental to both parties, and, as such, the first respondent was equally entitled to withdraw from the agreement by operation of the law.

He issued an award in favour of the first respondent, effectively dismissing the appellant's claim.

PROCEEDINGS IN THE COURT A QUO

The appellant, dissatisfied with the arbitral award, approached the High Court in terms of Article 34(2)(b)(ii) of the Arbitration Act seeking to have it set aside.

The appellant averred, that, the award issued by the second respondent was contrary to public policy.

It was illogical as it was in conflict with substantive Contract Law and it abrogated the tenets of the pacta sunt servanda principle, which recognises the sanctity of contract and provides that once a contract is entered into freely and voluntarily it becomes sacrosanct and the courts should enforce it.

The appellant insisted that the agreement was lawful, and, therefore, the purported termination by the first respondent was invalid.

The first respondent, in turn, opposed the application and also made a counter application for the registration of the award.

The court a quo found that the award was not so illogical as to offend public policy, as the parties had not obtained the authority of the Reserve Bank of Zimbabwe, a pre-requisite in terms of the Exchange Control Act.

The court a quo reasoned, that, the award could not be said to be contrary to public policy as there was indeed a supervening impossibility since the agreement could not be implemented without the exchange control approval.

It then dismissed the application for the setting aside of the award and registered it instead.

Aggrieved by the finding of the court a quo, the appellant lodged the present appeal on five grounds of appeal.

GROUNDS OF APPEAL

1. The court a quo erred in failing to determine, that, the second respondent's arbitral award abrogated the pacta sunt servanda principle. The second respondent's award is inimical to public policy in that it irregularly excuses the first respondent from complying with express provisions of the contract relating to force majeure.

2. The court a quo erred in failing to hold, that, the second respondent's arbitral award went far beyond mere faultiness or incorrectness. The Reserve Bank of Zimbabwe had no ability to cause nor call for cancellation of the contract inter partes. Consequently, the court a quo ought to have found offence in the second respondent concluding that the Reserve Bank's suggestion that parties renegotiate their contract actuated force majeure.

3. The court a quo grossly misdirected itself in failing to find, that, the second respondent's adjudication was palpably anomalous in that it was predicated on non-existent datum such as the finding that the appellant had refused to negotiate with the first respondent. Any decision born of non-existent facts is inimical to logic and thereby impairs the conception of justice.

4. The court a quo also erred in failing to hold, that, the arbitral award offended acceptable moral standards and what fair minded persons would consider just. In conflating the Exchange Control approval of the agreement by the Reserve Bank, and the approval of payment, the court a quo erred in law and rewrote the contract between the parties.

5. The court a quo also ignores, that, in the circumstances, the second respondent's arbitral award is not only anomalous at law but goes on to actuate a sense of shock for a society in the midst of trying to court foreign investment in the ilk of the appellant. The registration of an award that negates what the parties agree in a contract eviscerates current law on exchange control and occasion dis-investment in the country is contrary to public policy and must be set aside.

ISSUES FOR DETERMINATION

Although there are five grounds of appeal, there are only two issues for determination, namely;

1. Whether the court a quo erred in not setting aside the award; and

2. Whether or not the court a quo erred in registering the award.

SUBMISSIONS ON APPEAL

Counsel for the appellant submitted, that, the court a quo erred in registering the arbitral award which was not only illogical but contrary to public policy. He argued that the termination of the agreement by the first respondent was unlawful and invalid. He further asserted, that, even if it was to be assumed that the first respondent was entitled to terminate the agreement, the termination was unlawful for want of giving notice.

He contended, that, in terms of clause 25.12.3 of the agreement, the respondent ought to have first given the appellant notice of the force majeure before terminating.

After such notice, it was the appellant who was entitled to terminate the agreement, and not the first respondent, as it was the one alleging failure to perform due to the Reserve Bank of Zimbabwe's directive.

He further submitted, that, there was no force majeure, contending that the termination was unlawful, and, as such, the arbitral award ought to be vacated.

Per contra, counsel for the first respondent submitted, that, the termination of the agreement was above board and was lawfully done.

He submitted, that, the agreement was registered with the Reserve Bank of Zimbabwe (RBZ) for one year, from 8 January 2016 to 7 January 2017. The yearly contract was not thereafter extended as the RBZ stated that the management fees had to be reviewed before the agreement could be renewed. He contended, that, the fact that the RBZ did not grant the relevant authority amounted to a supervening impossibility which had the effect of terminating the agreement.

It was further submitted, that, the respondent could not incur obligations to make a payment outside Zimbabwe without the Reserve Bank of Zimbabwe's authority in terms of clause 11(1)(b) of the Exchange Control Regulations, and, that without authority from the RBZ, the contract became not only unenforceable, but illegal.

He submitted, that, the respondent conducted itself in accordance with the suspensive condition clause and the force majeure clause.

Counsel argued that the court a quo properly registered the arbitral award which was not contrary to public policy. He urged the court to dismiss the appeal with costs.

THE LAW

Article 34 of the Model Law (Schedule to the Arbitration Act [Chapter 7:15]) prescribes the procedure for setting aside an arbitral award and the substantive grounds upon which it may be set aside by the High Court.

In terms of Article 34(2)(b) of the Model Law:

“An arbitral award may be set aside by the High Court only, if it finds that the subject matter or dispute is not capable of settlement by arbitration under the law of this country or the award is in conflict with public policy of Zimbabwe.”

Article 34(5) of the Model Law goes further to set out what would ordinarily be regarded as being contrary to public policy. It states:

“For the avoidance of doubt, and without limiting the generality of paragraph (2)(b)(ii) of this article, it is declared that an award is in conflict with public policy of Zimbabwe if:

(a) The making of the award was induced or affected by fraud or corruption; or

(b) A breach of the rules of natural justice occurred in connection with the making of the award.”

These provisions were considered in Zimbabwe Electricity Supply Authority v Maposa 1999 (2) ZLR 452 (S) where the Court set out the approach to be adopted when considering whether an award is contrary to public policy.

GUBBAY CJ, at 465D, made the following remarks:

“In my opinion, the approach to be adopted is to construe the public policy defence, as being applicable to either a foreign or domestic award, restrictively, in order to preserve and recognise the basic objective of finality in all arbitrations, and to hold such defence applicable only if some fundamental principle of the law or morality or justice is violated.”

He further stated, at 466E-H:

“An award will not be contrary to public policy merely because the reasoning or conclusions of the arbitrator are wrong in fact or law. In such a situation, the court would not be justified in setting the award aside.

Under Article 34 or 36, the court does not exercise an appeal power and either uphold or set aside or decline to recognise and enforce an award by having regard to what it considers should have been the correct decision.

Where, however, the reasoning or conclusion in an award goes beyond mere faultiness or incorrectness and constitutes a palpable inequity that is so far reaching and outrageous in its defiance of logic or accepted moral standards that a sensible and fair-minded person would consider that the conception of justice in Zimbabwe would be intolerably hurt by the award, then, it would be contrary to public policy to uphold it.

The same consequence applies where the arbitrator has not applied his mind to the question or has totally misunderstood the issue, and the resultant injustice reaches the point mentioned above.”

Force majeure, which is also known as vis major in contract, means that a superior force has occurred, disabling a party from performing contractual obligations due to a circumstance(s) beyond their control.

A force majeure clause in a contract excuses a party from performing some, or all, of its obligations.

The case of Standard Chartered Bank Zimbabwe Limited v China Shougang International 2013 (2) ZLR 385 (S) is apposite in illustrating what constitutes force majeure.

The Court made reference to the case of Peter Flamman and Company v Kokstad Municipality 1919 AD 427, in which SOLOMON ACJ said;

“Nor is it necessary to consider generally what are the circumstances in which it can be said a contract has become impossible of performance. The authorities are clear, that, if a person is prevented from performing his contract by vis major or casus fortuitus, under which would be included such Act of State as we are concerned with in this appeal, he is discharged from liability.”

See also the case of Firstel Cellular (Pvt) Ltd v Net One Cellular 2015 (1) ZLR 94 (S) in which the Court, when dealing with suspension of contractual obligations on the basis of a vis major or causa fortuitus, held that…,.:

“It is trite that the courts will be astute not to exonerate a party from performing its obligations under a contract that it has voluntarily entered into at arm's length. Thus, the suspension of a contractual obligation by dint of vis major or casus fortuitus can only be allowed in very compelling circumstances.

The courts are enjoined to consider the nature of the contract, the relationship between the parties, the circumstances of the case, and the nature of the alleged impossibility.

See also Watergate (Pvt) Ltd v Commercial Bank of Zimbabwe 2006 (1) ZLR 9 (S) at 14B-F.”…,.

The Latin maxim pacta sunt servanda aptly refers to the sanctity of a contract to the effect, that, a contract freely and voluntarily entered into is sacrosanct and should be given effect by the courts.

In Barkhuizen v Napier 2007 (5) SA 323 (CC) the maxim pacta sunt servanda was succinctly defined as meaning that parties to a contract have freedom to contract and assent to whichever terms they wish to and the court should only intervene and oversee when such contract contravenes another set of legal rights.

In Makani and Ors v Arundel School and Ors CC07-16 the Constitutional Court fluidly, and in clear terms, visited the import of the doctrine of sanctity of contract. It stated the following…,:

“It is trite that a contract concluded in contravention of the written or unwritten law, or one that is contrary to public policy, is susceptible to being struck down and rendered of no force or effect. The doctrine of sanctity of contracts is obviously subject to constitutional limits. As was observed in Bredenkamp and Ors v Standard Bank of South Africa Ltd 2010 (4) SA 468 (SCA) at para 39, every contract or institutional rule must pass Constitutional muster.”

Again, in Barkhuizen v Napier 2007 (5) SA 323 (CC)…, it was emphasised that:

“All law, including common law of contract, is now subject to Constitutional control. The validity of all laws depends on their consistency with provisions of the Constitution and the values that underlie our Constitution. The application of the principle pacta sunt servanda is, therefore, subject to constitutional control.”

APPLICATION OF THE LAW TO THE FACTS

The appellant's main contention is that the arbitral award ought not to have been registered as it was illogical and offends the public policy of Zimbabwe.

To buttress this contention, the appellant relied heavily on the contention that the award goes against the pacta sunt servanda principle which is at the heart of contractual agreements.

In order to determine whether the arbitral award offends public policy, as contended by the appellant and vehemently disputed by the first respondent, due consideration to the agreement entered by the parties ought to be made.

A close look at the contract reveals, that, the parties entered into a management agreement which needed exchange control approval as Legacy Hospitality Management Services Limited is a foreign company. The parties, in due recognition of this legal position, included a suspensive condition in their contract, in clause 5, which provides:

“5.3 This agreement is subject to the following suspensive conditions -

5.31…,.

5.32…,.

5.33 That both parties receive all statutory and regulatory approvals necessary for the legal fulfilment of all requirements attendant to this management agreement.”

The exchange control approval relates to approval to enter into a liability to pay a foreign company which has to be paid in foreign currency.

When the Reserve Bank of Zimbabwe (RBZ) declined to authorize the agreement, in terms of the Exchange Control Regulations, this constituted a supervening impossibility to the performance of the contractual obligations as it would have been unlawful to proceed without the authority of the regulatory Board.

It is apparent from the record that the parties received a year's approval from the Reserve Bank of Zimbabwe. After the lapse of one year, the Reserve Bank of Zimbabwe refused to authorize the agreement and advised the parties to re-negotiate.

The re-negotiation did not work out.

The court a quo's finding was that when the parties entered into the contract, they subjected themselves to fulfilment of statutory and regulatory requirements.

In this case, there was no regulatory authority approval thus termination of the contract was inevitable.

The force majeure affected both parties such that termination, at the instance of either of the parties, without giving notice, was appropriate.

The court a quo, having made a finding that the refusal of the Exchange Control authority to register the agreement fell squarely within a force majeure event, as defined in clause 25.12.1 of the agreement, found no fault in the arbitral award setting aside the contract.

The court a quo's findings in that regard cannot be faulted....,.

The court a quo's conclusion, that the arbitrator's finding that the parties subjected themselves to a suspensive condition in conformity with the exchange control regulations, cannot be faulted.

The continuity of the management agreement was centred on Reserve Bank of Zimbabwe approval.

When the Reserve Bank of Zimbabwe (RBZ) declined to authorise the obligation to incur a foreign liability, the contract was rendered illegal and incapable of performance, regard being had to the fact that the appellant is a foreign entity.

This constituted a vis major.

It is apparent that the suspensive condition could not be fulfilled and this rendered continuity of the agreement unlawful and impossible.

The sanctity of contract was not in any manner interfered with by the registration of the award by the court a quo.

The fact that the contract was impossible of performance meant that either of the parties was entitled to terminate it on that basis.

SC50-22 : LONRHO LOGISTICS (PRIVATE) LIMITED vs RAM PETROLEUM (PRIVATE) LIMITED
Ruled By: UCHENA JA, MATHONSI JA and KUDYA JA

Dismayed by the respondent's outright refusal to deliver to it outstanding fuel in terms of an agreement of sale entered into between the parties, the appellant filed a claim for specific performance in the High Court (“the court a quo”).

The appellant sought judgment compelling the respondent to deliver 120,000 litres of diesel purchased from the respondent.

By judgment delivered on 31 March 2021, the court a quo dismissed the claim and issued the following order:

“Accordingly, I order as follows:

1. The plaintiff's claim is dismissed.

2. The contract entered into between the parties, whereby the plaintiff purchased 150,000 lrs of fuel from the defendant, be and is hereby cancelled.

3. The defendant be and is hereby is (sic) ordered to pay the plaintiff the sum of $159,300 representing the plaintiff's partial performance of the contract.

4. The plaintiff be and is hereby ordered to pay the defendant's costs of suit.”

This is an appeal against that whole judgment of the court a quo.

THE FACTS

The background facts are largely common cause.

The appellant is a transporter of note while the respondent is a fuel monger. They have a long standing business relationship whereby the respondent has been supplying the appellant with bulk fuel over the years.

On 1 November 2018, the parties entered into a sale agreement in terms of which the respondent sold and the appellant purchased 150,000 litres of diesel.

On 2 November 2018, the appellant paid the purchase price of $201,000 in terms of the invoice presented to it by the respondent but did not take delivery of the diesel in question. In fact, it was not until 28 November 2018 that the respondent delivered only 30,000 litres of the diesel on the instructions of the appellant.

This left a balance of 120,000 litres of diesel which is the subject of the present litigation involving the parties.

Problems started in January 2019 when three events occurred in quick succession:

(i) First, the Minister of Finance and Economic Development gazetted the Customs and Excise (Tariff) (Amendment) Notice (No.7, 2019) as S.I. 9 of 2019. The Statutory Instrument came into operation on 13 January 2019. It was enacted to amend Part II of the Second Schedule of the Customs and Excise (Tariff) Notice, 2017 which was published in Statutory Instrument 53 of 2017.

(ii) Second, and subsequently to that, the Petroleum (Petroleum Products Pricing) Regulations S.I.10 of 2019 were gazetted. Section 3 thereof made it clear that they applied to “petroleum products prices in relation to wholesaling and retailing activities.” Section 5 provided the formulas that were to be applied by the Zimbabwe Energy Regulatory Authority (“ZERA”) in calculating the price of any petroleum product.

It is significant to note, that, the amount of duty imposed by S.I 10 of 2019 appears to have been equivalent to the amount fixed by S.I 9 of 2019, which, as I have stated, specifically stated that it came into operation on 13 January 2019 without in any way suggesting that it had retrospective effect.

(iii) Third, and obviously in response to the imperatives of the Statutory Instruments referred to above, the Zimbabwe Energy Regulatory Authority (ZERA) issued a directive requiring all oil companies to declare their fuel stocks as of midnight on 12 January 2019. The directive was contained in a circular dated 17 January 2019 which reads in relevant part:

“RE: DECLARATION OF OIL COMPANY FUEL STOCKS AS OF MIDNIGHT 12TH JANUARY 2019

Pursuant to the meeting held at the Ministry of Finance on the 16th January 2019 between Ministry of Energy and Power Development, Ministry of Finance, Zimbabwe Energy Regulatory Authority and Oil Companies, the authority requires that Oil Companies declare the details of the following:

1.0 Stockholding of diesel, petrol and paraffin held by the Oil Company at depot or at NOIC (old duty paid) as of midnight 12th January 2019 before the new pricing (Statutory Instrument 10 of 2019) came into effect.

2.0 Outstanding coupons (yet to be redeemed) as of midnight 12th January 2019, indicating products, category of customers, volumes and value, as well as special conditions attaching to coupons.

Oil Companies are further advised that they are required to pay the difference in duty between the old duty and new duty to ZIMRA on the stock referred to in 1.0 as the fuel will be sold in terms of S.I 10 of 2019.”…,.

Following these developments the appellant moved quickly.

On 24 January 2019, it demanded the immediate delivery of the balance of 120,000 litres of diesel.

The respondent was unmoved.

Citing an increase in duty, the respondent refused to deliver until the appellant paid additional duty on the outstanding diesel.

By email of 24 January 2019, the respondent tabled three options available to the appellant. The respondent wrote:

“…, we wish to provide you with below three options.

1. Lonrho pay the difference of duty amounting to $1=65.

2. Lonrho can draw down at the current price of fuel to exhaust your prepayment with us.

3. RAM Petroleum can refund Lonrho the total amount prepaid.”

The appellant would have none of it.

Calling the respondent's proposal “nonsense” it emotionally put its case across that the Zimbabwe Energy Regulatory Authority (ZERA) directive did not apply to the diesel that had already been sold.

With the battle lines drawn, the appellant enlisted the services of its legal practitioners whose letter of demand to the respondent yielded nothing.

PROCEEDINGS BEFORE THE COURT A QUO

On 7 February 2019, the appellant sued out a summons against the respondent seeking an order directing the respondent to deliver the outstanding diesel.

The claim was contested by the respondent.

In a long winding plea characterized by a number of alternative averments, the respondent pleaded the existence of a tacit term of the agreement that the appellant should have taken delivery within seventy two hours after effecting payment.

In addition, it asserted that section 230(1) of the Customs and Excise Act [Chapter 23:02] constituted an implied term that it was entitled to recover from the appellant any amount by which duty was increased.

Some of the pleas raised by the respondent related to fictional fulfilment of the contract in the sense that it had tendered delivery of the diesel which the appellant refused.

Also, that by failing to accept delivery, the appellant had repudiated the contract thereby entitling the respondent to cancel it and tender the sum of $159,300 being the difference.

Following a full trial, the court a quo found that the contract became perfecta when the parties agreed on the thing sold (the merx), the price (pretium) and showed they had the requisite animus to contract.

It was the court a quo's finding, that, the contract was perfected when the respondent accepted the payment for the 150,000 litres of diesel.

Regarding transfer of ownership of the diesel, the court a quo remarked:

“It is evident to me that in the present matter, transfer of ownership of the fuel in question happened by way of constitutum possessorium without actual delivery of the thing and by means of a mere change in the parties intention regarding animus domini. The change in animus in this matter repeatedly took place each time the plaintiff paid for the fuel and the defendant accepted payment for the fuel. By that exchange, the plaintiff acquired ownership in the fuel, when looking at the facts in the present matter means that ownership of the 150,000 litres transferred to the plaintiff in early November 2018.”

Notwithstanding those findings, the court a quo went on to find that the burden for paying for the increase in duty passed to the appellant.

Further, it found that by failing to accept delivery, the appellant repudiated the contract of sale.

In disposing of the matter, other than dismissing the appellant's claim, the court a quo also granted positive relief to the respondent, namely, the cancellation of the contract and the return of the purchase price paid by the appellant.

PROCEEDINGS BEFORE THIS COURT

The appellant remained aggrieved. It noted this appeal on the following grounds of appeal:

1. Having come to the conclusion, that, the contract between the parties had become perfecta and ownership passed to the appellant, the court a quo erred in not concluding that provisions of Statutory Instrument 10 of 2019 were, on the circumstances of the matter, not engaged in that:

(a) The duty chargeable under and in terms of that Statutory Instrument was not meant to, and did not, affect transactions that had already been concluded.

(b) Respondent did not place before the court any evidence tending to show that it had been required to and had in fact paid additional duties on fuel already purchased by the appellant.

2. The court a quo erred, at any rate, in concluding that the increase of duty on future sales was a risk which the appellant was required to bear by operation of law.

3. Consequently, the court a quo erred in not finding that the respondent had breached the agreement between the parties by reason of its failure to deliver diesel that had been purchased by the appellant.

4. The court a quo seriously misdirected itself on the facts, such misdirection amounting to an error in law in not finding, at any rate, that there was no agreement between the parties on the delivery timelines and that the respondent had, at all times, been prepared to effect delivery of the fuel to the appellant.

5. The court a quo erred in granting the respondent positive relief on the basis of averments made in its plea.

The over-arching issue commending itself for determination from the foregoing grounds is whether the appellant's consignment of diesel was subject to additional duty under SI10 of 2019. Also, whether there were any timelines for the delivery of the diesel, and whether the court a quo erred by granting relief to the respondent.

Counsel for the appellant submitted that S.I.10 of 2019 was not applicable in the circumstances of this case, it having come into effect on 13 January 2019 and not having retrospective effect.

In counsel's view, and for that reason, the directive to oil companies given by the Zimbabwe Energy Regulatory Authority (ZERA) only applied to fuel that was still to be sold and not the fuel, like the 120,000 litres of diesel, that had already been sold.

The fuel that had already been sold could not be subjected to further taxation and did not carry such risk.

Counsel submitted, that, the respondent had no business subjecting the appellant's fuel to the directive issued by the Zimbabwe Energy Regulatory Authority (ZERA).

Regarding the applicability of section 230(1) of the Customs and Excise Act, counsel for the appellant took the view, that, the section was not engaged. There was no evidence, so it was argued, that the respondent had been requested to, and did pay, any additional duty as envisaged by section 230(1) of the Customs and Excise Act.

On repudiation, counsel for the appellant submitted, that, the court a quo's findings were not supported by any evidence at all. There was nothing in the conduct of the parties suggesting that delivery was to be made within 72 hours. Neither was there evidence of any delivery timelines or any tender of delivery.

Per contra, counsel for the respondent contended, that, the appellant's reference to S.I.10 of 2019 was not only a false premise, it was also irrelevant. This is because the additional duty was imposed by SI9 of 2019.

In counsel's view, it was a fallacy that the directive by the Zimbabwe Energy Regulatory Authority (ZERA) imposed a duty on fuel.

Counsel further contended, that, section 230(1) of the Customs and Excise Act constituted a term imposed by law which transferred liability to pay duty onto the appellant.

Finding it difficult to defend most of the findings made by the court a quo, which appeared contradictory, counsel for the respondent submitted that the court a quo arrived at a correct conclusion on wrong reasons.

Given that a party does not appeal against the reasons for judgment, so it was argued, the respondent could not do anything about the situation....,.

WHETHER THE COURT A QUO ERRED IN GRANTING POSITIVE RELIEF TO THE RESPONDENT ON THE BASIS OF ITS PLEA

It is curious that the court a quo granted an order in favour of the respondent cancelling the sale and directing the respondent to refund the balance of the purchase price.

That relief was granted on the strength of a plea and nothing more. The respondent had not filed a counter-claim.

The point is made in Indium Investments (Pvt) Ltd v Kingshaven (Pvt) Ltd & Anor 2015 (2) ZLR 40 (S)…, that:

“A plea is a defence, and, as such, can be likened to a shield. It is not a weapon or a sword. No relief can attach to a party through a plea.”

Unfortunately, that is precisely what the court a quo granted in this case.

However just the court a quo may have considered the respondent's tender of the sum of $159,300 to be, it was plainly incompetent for it to ratify it through an unsolicited court order.

Doing so was a gross misdirection.

SC56-22 : CENTRAL AFRICAN BUILDING SOCIETY vs FINORMACG CONSULTANCY (PRIVATE) LIMITED and RETIRED JUSTICE L.G. SMITH
Ruled By: GUVAVA JA, CHATUKUTA JA and MUSAKWA JA

This is an appeal against the whole judgment of the High Court of Zimbabwe handed down on 9 September 2020 in which it ruled that the arbitral award granted against the first respondent be set aside and the matter be referred to a different arbitrator.BACKGROUNDThe appellant and the first respondent ...

BACKGROUND

The appellant and the first respondent entered into a consultancy contract which commenced on 1 January 2013 and was expected to terminate on 31 July 2013.

Although the contract was not signed by the first respondent, the parties were agreed that the contract regulated their relationship.

The purpose of the contract was to transform the appellant from being a building society into a commercial bank.

On 28 February 2013, the Managing Director of the appellant wrote a letter to the first respondent advising that it was not renewing the contract. It thus terminated the contract and tendered to pay the first respondent cash in lieu of notice.

Aggrieved by the contents of the letter, the first respondent referred the matter to arbitration.

ARBITRAL PROCEEDINGS

The first respondent's contention before the second respondent (the arbitrator) was that the appellant had no right, in terms of clause 7.1 of the contract, to unilaterally, and without reason, terminate the contract. It argued, that, the appellant should have given it notice to cure the breach and/or an opportunity to defend itself.

It claimed that the contract should be reinstated failing which it be paid damages in the sum of US$1,744,451=50.

The appellant argued that it exercised its rights to terminate the contract on notice in terms of clause 7.1 of the contract. It argued that termination of the contract, in terms of clause 7.1, did not require the existence of a breach or fault as a pre-condition to invoke the clause. It further argued that it was therefore not obliged to justify or give the first respondent reasons for the termination.

The appellant further argued, that, the first respondent had breached the contract as it had failed to implement the project successfully within the agreed time frame and budget.

It contended, that, in order to mitigate its losses, it engaged another consultant to complete the project. It argued that it suffered contractual damages in the sum of US$1,648,169=91 as a result of the breach and filed a counterclaim for damages in the stated sum.

The appellant conceded, that, a monthly payment of US$23,517 for the month of March 2013 was due to the first respondent in terms of clause 4 of the contract.

The first respondent denied that it had breached any terms of the contract. It argued that the damages claimed by the appellant were wrongly calculated and incompetent.

The arbitrator made a finding, that, the termination of the contract was in compliance with clause 7.1 of the contract which clause permitted termination of the contract without giving reasons for the termination.

The arbitrator dismissed the first respondent's claim that the cancellation of the contract be declared a nullity and that the contract be reinstated.

He also dismissed the first respondent's claim for damages.

The arbitrator awarded the first respondent the sum of US$23,517 being the monthly payment for the month of March 2013 due to the first respondent from the appellant.

The arbitrator further held, that, the appellant had not established its entitlement to the damages in the sum of US1,648,169=91. He therefore dismissed the appellant's counterclaim.

Aggrieved, the first respondent applied to the High Court to have the arbitral award set aside in terms of Article 34(2)(b)(ii) of the Uncitral Model Law, Schedule to the Arbitration Act [Chapter 7:15] (the Model Law).

PROCEEDINGS BEFORE THE COURT A QUO

The first respondent argued that the arbitrator misdirected himself in his interpretation of the contract.

It was argued, that, the arbitral award offends the principles embodied in our public policy as the arbitrator was biased in his decision. It was submitted that the possibility of bias arose from the fact that the arbitrator and Kevin Terry, the Managing Director of the appellant, were known to each other. It was contended that the two engaged in a conversation at the hearing during which the arbitrator expressed more than a casual interest in the life of Kevin Terry. It further contended, that, the two had a prior relationship, and, as a result, the conversation was likely to give rise to a reasonable apprehension of bias on the part of the arbitrator and he ought to have recused himself.

The first respondent further argued that the arbitrator, in an opposing affidavit which he filed in response to the application before the court a quo, used intemperate and unacceptable language towards the first respondent. It was submitted, that, the language used was evidence that the arbitrator was supporting the appellant in proceedings in which he ought to have been neutral.

In response, the appellant submitted that the conversation between Kevin Terry and the arbitrator was done in the presence of all the parties. It was further submitted, that, the conversation did not relate to the subject matter of the arbitral proceedings. It was argued that the conversation was innocuous, and, therefore, there was no basis for the apprehension of bias.

The appellant further argued, that, the allegations relating to the intemperate language in the arbitrator's opposing affidavit were not the basis for the first respondent's apprehension for bias as they were contained in the answering affidavit and not the founding affidavit.

The court a quo was urged to disregard the arbitrator's opposing affidavit.

DETERMINATION OF THE COURT A QUO

The court a quo found, that, the arbitrator's interpretation of the contract, though it was faulty, did not render the award contrary to public policy.

The court a quo held, that, the conversation between the arbitrator and Mr Kelly was innocuous and did not raise a reasonable apprehension of bias. It found that the first respondent did not raise the allegations of bias with the arbitrator during the arbitration process. The allegations were only raised after the decision of the arbitrator. It therefore concluded, that, the first respondent had not established reasonable apprehension of bias in the making of the award.

The court a quo, however, found that the arbitrator's post award averments, in the opposing affidavit, created an impression that he was “pitching camp” with the appellant.

It found that the averments were intemperate, disparaging, and unacceptable in judicial proceedings. The court a quo held, that, disparaging averments taken in conjunction with the conversation between the arbitrator and Mr Terry, and the faulty interpretation of the contract, gave a reasonable apprehension of bias.

Consequently, it ruled that the arbitral award be set aside and the matter be remitted to a different arbitrator.

Aggrieved by the court a quo's decision, the appellant noted the present appeal.

PROCEEDINGS BEFORE THIS COURT

The appellant noted the appeal on the following grounds:

“(1) The court a quo erred and grossly misdirected itself on the facts and evidence in holding that the degree of fault in the arbitrator's reasoning in the award, and his alleged acquaintance with Kelvin Terry, gave rise to a reasonable impression and apprehension of bias on part of the arbitrator, and that, consequently, the award was contrary to the public policy of Zimbabwe.

(2) The court a quo erred and misdirected itself, and, in any event, in considering the factual basis of the alleged bias which allegedly took place three months after the granting of the award and therefore could not invalidate the prior award on the basis of the alleged bias.

(3) The court a quo erred in placing reliance on the opposing papers in finding that there was an impression of bias as opposed to the founding papers upon which the application ought to have succeeded or failed.

(4) The court a quo erred and acted without jurisdiction in referring the dispute between the parties to be determined by a different arbitrator.”

ISSUE FOR DETERMINATION

The grounds of appeal raise two issues for determination:

1. The first three grounds of appeal raise one issue: whether the court a quo misdirected itself in holding that there was a reasonable apprehension of bias warranting the setting aside of the arbitral award.

2. The second issue is raised in the fourth ground of appeal. In that ground, the appellant seeks to challenge the order of the court a quo to remit the dispute between the parties for determination by a different arbitrator on the basis that the High Court is not reposed, by the Arbitration Act, with the power to make an order for remittal.

APPELLANT'S SUBMISSIONS

Counsel for the appellant submitted, that, the judgment of the court a quo was irregular in that it set aside the award on a basis other than the one alleged by the first respondent in its founding affidavit.

He submitted that the first respondent, in the proceedings a quo, alleged, in its founding affidavit, bias of the arbitrator during the arbitral proceedings. He argued that an application stands or falls on its founding affidavit.

He further argued that the court a quo was therefore called to answer whether there was bias on the part of the arbitrator during the making of the award.

He submitted, that, the court a quo correctly concluded that the first respondent did not establish bias and hence the application ought to have failed on that basis.

Counsel for the appellant argued, that, the court a quo however placed a lot of emphasis on the arbitrator's opposing affidavit to the application instead of the first respondent's founding affidavit.

Counsel for the appellant further submitted, that, the court a quo made a finding that both the substance of the award and the manner of the making of the award were not contrary to public policy. Counsel for the appellant argued that the court a quo therefore misdirected itself in relying on the arbitrator's affidavit which was filed three months after the issuance of the award.

He also argued that the court a quo erred in making contradictory findings and thus reviewed itself.

He submitted, that, the court a quo found that the conversation between Kevin Terry and the arbitrator did not constitute a reasonable apprehension of bias. He argued that the court a quo, later in the same judgment, found that the same conversation constituted bias if it is read together with the arbitrator's opposing affidavit.

He submitted that the court a quo misdirected itself by taking into account factors it had rejected earlier in its judgment.

FIRST RESPONDENT'S SUBMISSIONS

Counsel for the first respondent submitted, that, the court a quo could not be faulted for accepting the evidence adduced by the first respondent in support of its claim that the arbitrator was biased.

He argued that the issue of bias was raised in the first respondent's founding affidavit.

He submitted that the adverse averments in the arbitrator's opposing affidavit were alluded to in the answering affidavit to illuminate the allegations of bias in the founding affidavit.

He submitted, that, the court a quo did not misdirect itself in considering the arbitrator's conduct post the award. He submitted that the court a quo did not review itself but considered the arbitrator's pre-award conduct together with the post-award conduct.

APPLICATION OF THE LAW

It is trite that an application stands or falls on its founding affidavit.

The founding affidavit sets out the case that a respondent is called upon to answer.

The principle was aptly set out in Austerlands (Pvt) Ltd v Trade & Investment Bank Limited & Ors SC92-05. CHIDYAUSIKU CJ remarked…, as follows:

“The general rule that has been laid down in this regard is that an application stands or falls on the founding affidavit and the facts alleged in it. This is how it should be, because the founding affidavit informs the respondent of the case against the respondent that the respondent must meet. The founding affidavit sets out the facts which the respondent is called upon to affirm or deny.”

The first respondent alleged, in its founding affidavit in the court a quo, that the conversation between the arbitrator and Mr Terry was the basis for its apprehension of the bias of the arbitrator and the reason why the arbitrator arrived at a wrong decision.

It stated, in paragraph 9.10 of the founding affidavit, that:

“Finally, the inexplicable findings of the Honourable Arbitrator as illustrated above could only be understood in the contest (sic) of some other influence. I am constrained to give that influence as the unusual familiarity between the Honourable Arbitrator and Kelvin Terry the managing director of the 1st respondent.”

The appellant disputed that the conversation was a cause for an apprehension of bias.

The court a quo held that there was no basis for any reasonable person to have an apprehension of bias.

It remarked, at p10, that:

“I agree with the observations made by the respondent in its heads of argument. These are that the discussion forming the basis of the applicant's case was held in the presence of both parties and within hearing distance. There was nothing to hide. A biased arbitrator would have been more circumspect. The discussion centred not on the arbitral proceedings themselves but on Mr. Terry's pending relocation to Kenya on transfer. The timing of his relocation was relevant from a case management point of view in the event that oral evidence was required.”

Further down, at p11, the court stated that:

“I am satisfied that the discussion between him and the arbitrator arose as a result of that communication by the respondent's legal practitioners and that the Arbitrator's sole interest in Mr Terry's imminent departure was legitimate. No reasonable person could perceive bias under these circumstances. Further, no allegation has been made that the prior dealings referred to by the applicant were in any way connected to the matter under arbitration.”…,.

The court a quo agreed with the appellant's submissions, and, in essence, concluded that the first respondent had not established bias.

The court a quo therefore ought to have dismissed the application following its finding.

The court a quo however proceeded to consider the first respondent's contention that the remarks by the arbitrator, in his opposing affidavit, gave credence to the first respondent's assertions of the arbitrator's bias.

It remarked that:

“In my view, the applicant's case hinges on the following factors: the degree of faultiness in the arbitrator's reasoning, the fact that the arbitrator and Kevin Terry are acquaintances, and the fact that in response to the present application, the arbitrator has attacked the applicant's intelligence and its legal practitioners professional standing.

Do these three factors, taken together, give rise, in the mind of a reasonable litigant in the applicant's position, to a reasonable apprehension of bias on the part of the arbitrator?

In my view, that question should be answered in the affirmative.

The arbitrator's post award comments in particular give the impression that he is 'pitching camp with, or rendering assistance to one of the contestants to the dispute before him'.”…,.

The court a quo misdirected itself in three respects when it took into account the arbitrator's averments in the opposing affidavit.

(i) Firstly, the first respondent's allegations of the arbitrator's bias, as contained in the founding affidavit, were based on the conversation between the arbitrator and Mr Terry during the arbitral proceedings.

The arbitrator's averments in the opposing affidavit were not pleaded in the founding affidavit. They found their way into the answering affidavit.

The first respondent therefore raised fresh allegations of bias in the answering affidavit instead of confining itself to its allegations in the founding affidavit.

The first respondent could not make out a case against the appellant on the basis of the answering affidavit.

The court a quo therefore misdirected itself when it made a decision relying on the fresh allegations in the answering affidavit.

The order of the court a quo was therefore not on the basis upon which the application had been brought in the founding affidavit.

(ii) Secondly, the court a quo had earlier on in its judgment concluded that the allegations of bias, based on the conversation between the arbitrator and Mr Terry, were without merit.

It thus misdirected itself when it relied on the same conversation to arrive, in the same judgment, at a contrary conclusion that the arbitrator was biased.

In so doing, it contradicted its earlier findings and essentially reviewed its own earlier determination.

It could only have relied on the averments in the answering affidavit to bolster its findings on the first respondent's case as pleaded in the founding affidavit. It could not use the averments in the answering affidavit to take away findings made on the basis of the founding affidavit.

Regard is given to the fact, that, when the court a quo made its pronouncement on the issues raised in the founding affidavit, the first respondent's answering affidavit and heads of argument addressing the arbitrator's opposing affidavit were both before it.

(iii) Thirdly, the court took into account factors which occurred after the award in order to find bias during proceedings leading to the award.

The arbitrator's opposing affidavit was filed long after the arbitration proceedings had been terminated. It could not therefore be a basis for a finding of bias during the making of the award.

The judgment of the court a quo is irregular on the basis that it set aside the arbitral award on a basis other than that sought by the first respondent.

It is also untenable on the basis that the court a quo relied on an opposing affidavit that had no bearing to the making of the award.

(iv) Lastly, before it contradicted itself, the court a quo had found in favour of the appellant on the two issues that had been placed before it in the founding affidavit.

The resultant order ought to therefore have been the dismissal of the application by the first respondent.

In view of the above findings, it is therefore not necessary to consider the second issue raised in the fourth ground of appeal.

The appeal has merit. The judgment of the court a quo cannot therefore stand. It must be set aside.

COSTS

The appellant prayed, in the notice of appeal, for costs on the legal practitioner and client scale.

It however did not motivate for such costs in its heads of argument or oral submissions.

There is no basis advanced for granting the punitive costs. An order for ordinary costs is therefore appropriate.

Accordingly, it is ordered as follows:

1. The appeal be and is hereby allowed with costs.

2. The judgment of the court a quo be and is hereby set aside and substituted with the following:

“The application be and is hereby dismissed with costs.”

SC59-22 : DELTA BEVERAGES (PRIVATE) LIMITED vs BLAKEY INVESTMENTS (PRIVATE) LIMITED
Ruled By: BHUNU JA, MAKONI JA and CHITAKUNYE AJA

This is an appeal against the whole judgment of the High Court (“the court a quo”) handed down on 1 December 2020 dismissing the appellant's application for a declaratur....,.FACTUAL BACKGROUNDThe appellant is a company duly incorporated in Zimbabwe whilst the respondent is a foreign company duly incorporated in South Africa.It ...

This is an appeal against the whole judgment of the High Court (“the court a quo”) handed down on 1 December 2020 dismissing the appellant's application for a declaratur....,.

FACTUAL BACKGROUND

The appellant is a company duly incorporated in Zimbabwe whilst the respondent is a foreign company duly incorporated in South Africa.

It is common cause that the appellant and the respondent have been doing business with each other for some time - albeit they are not agreed as to when they started doing business together.

The appellant alleged that it is since 2012 whilst the respondent contended that it is since 2007.

Nothing much turns on the date of commencement of their relationship. What is important to note is the fact that they have been in this relationship for many years.

On 11 June 2020, the appellant filed a court application for a declaratur before the court a quo in terms of section 14 of the High Court Act [Chapter 7:06]. It sought that the written Supply Agreement between the parties, dated 16 March 2018, be declared void, invalid, and of no legal effect on the basis that it was not its act and it was entered into in contravention of the laws of Zimbabwe.

The appellant alleged that the respondent had been its supplier in respect of plastic products since 2012 on an ad hoc basis. The appellant's Supply Chain Director, Cynthia Malaba (Cynthia), had signed an agreement with the respondent on 16 March 2018 when she had no authority to sign on its behalf.

It was the appellant's case that its senior officers did not know of the existence of the agreement up till an internal audit was conducted in July 2019.

As such, until the discovery of the agreement, the appellant operated under the belief that the respondent was being contracted on an ad hoc basis like other suppliers.

The appellant averred, that, the agreement had not undergone the standard review and approval processes in terms of the appellant's procurement processes. It further alleged that the respondent had previously made attempts to procure the conclusion of a supply agreement with the appellant by bribing the appellant's employees but it had failed.

The appellant averred, that, after discovering the agreement, it engaged the respondent and indicated that it did not recognise the validity of the contract for the following reasons:

(i) The contract committed the appellant to order a stipulated minimum quantity of goods from the respondent while the respondent was empowered to unilaterally increase the prices merely by giving the appellant 30 days notice.

(ii) The contract was in direct contravention of the Competition Act [Chapter 14:28] (Competition Act) in that it gave the respondent exclusive rights to supply the appellant with the products thus shutting out other competitors. It thus contained an unfair business practice.

(iii) The contract had not been approved in terms of the Exchange Control Regulations 1996 yet it required the appellant to pay the respondent in South Africa.

(iv) The contract gave the respondent the sole prerogative to terminate the agreement which right the appellant was denied and it compelled the appellant to accept defective goods from the respondent.

(v) The contract provided that the applicable law was South African law and yet the appellant is domiciled in Zimbabwe and bound by Zimbabwean laws.

The respondent opposed the application and contended that the contract was valid.

It averred that the relationship between the parties had commenced in 2007. Since that year, the appellant would place orders for flexible packaging materials with the respondent on an ad hoc basis. The respondent contended, that, the demand for the materials had increased, and, in 2018, its representatives met with the appellant's representatives to negotiate terms of a written agreement.

This resulted in the contract in question being entered into between the respondent and the appellant, represented by Cynthia Malaba, who held herself out as a lawfully appointed representative clothed with the authority to sign the agreement on the appellant's behalf.

The respondent also contended, that, there had been a similar prior written agreement between the parties wherein the said Cynthia Malaba had signed for the appellant and no issues of lack of authority or exchange control approval or breach of Zimbabwean laws had been raised, and, as such, the appellant could not be allowed to avoid its contractual obligations by claiming that the contract was unlawful and therefore invalid.

The respondent further averred, that, the agreement was to be construed under South African law as chosen by the parties, and, as such, it was valid.

It also asserted, that, the agreement provided for amendments in the case of difficulties and it had invited the appellant to discuss any issues of concern but the appellant had been unwilling to do so, and, as such, it could not then seek to invalidate the contract.

The respondent denied that the contract was unfair and oppressive and averred that both parties had performed their obligations under the agreement pursuant to its conclusion, and, as such, the appellant was estopped from contending that the agreement was invalid.

It thus sought the dismissal of the application with costs.

THE COURT A QUO'S FINDINGS

In its decision, the court a quo held, inter alia, that unless it was demonstrated that there was something in the foreign law which makes it inapplicable, it can be applied in our courts. The court proceeded to find, that, there was nothing submitted by the appellant which non-suited the application of South African law. It therefore held that the parties elected law in the agreement had to be applied.

The court a quo further found that there existed an agreement between the parties based on the fact that -

(i) Senior officials of the appellant knew about the existence of the agreement;

(ii) Cynthia Malaba, who had signed the agreement on behalf of the appellant, was a Supply Chain Director; and

(iii) The agreement she had signed was a supply agreement which served to prove that her job description gave her the authority to act on behalf of the appellant.

The court a quo held that Cynthia Malaba had ostensible authority and the appellant is estopped from denying this. The assertion by the appellant, that its internal process had not been followed, should not prejudice the respondent hence the application of the Turquand Rule.

In relation to the averments by the appellant that some clauses in the agreement infringed various statutes, the court a quo held, inter alia, that -

(i) There was no breach of section 43 of the Competition Act. It stated that the 'exclusivity' clause makes provision for minimum quantities that the appellant should order, beyond which it was at liberty to order from any other supplier. It further noted, that, from the evidence before it, there was precedent for operating outside the realm of exclusivity.

It also noted that clause 22.7 of the agreement permitted any offending clause, or part thereof, to be severed from the contract or to be construed in a manner that was in conformity with the law.

In casu, there was nothing stopping the parties from removing anything which suggested exclusivity.

(ii) On contravening section 11 of the Exchange Control Regulations 1996, the court a quo held that the contract did not breach that section. The section proscribes payment or incurring any obligation to make payment outside Zimbabwe without first obtaining authority from an Exchange Control Authority.

In this case, the clause on payment did not state that the payment was to be made into an account outside the country but stated that payment was to be made into an account to be nominated by the respondent.

(iii) On the question of The Control of Goods (Open General Import Licence) (Notice) RGN 766 of 1974 as amended by The Control of Goods (Open General Import Licence) (Amendment) Notice, Statutory Instrument No.122 of 2017, SI122 of 2017, the court a quo did not find in favour of the appellant. It, in effect, found that there was no breach as no evidence of such breach was proffered.

In essence, the court a quo held that there were no breaches of local statutes. Any complaints on perceived infringements of local statutes and regulations were capable of being addressed in terms of the provisions in the agreement which provided for the parties to seek amendments, including severance of any offending clause.

The court a quo noted, that, the respondent had invited the appellant to discuss the clauses alleged to be offensive but the appellant had been unresponsive.

The court a quo further found that no substantiated evidence had been submitted to prove the allegation of commercial bribery.

In the result, the court a quo concluded that the agreement was valid and there was no basis upon which it could nullify it. It therefore held, that, the appellant had failed to establish a basis upon which the court could grant the declaratory order sought and proceeded to dismiss the application with costs on the legal practitioner and client scale.

Aggrieved by the decision of the court a quo, the appellant noted the present appeal.

The appellant raised nine (9) grounds of appeal. The key issues arising from the grounds of appeal are:

(i) Whether or not the court a quo erred in finding that Cynthia Malaba had ostensible authority to enter into a valid agreement on behalf of the appellant thus making the contract binding on the appellant.

(ii) Whether the court a quo did not pronounce itself on the alleged breach of Zimbabwean laws and whether the contract is void for being contrary to such laws.

(iii) Whether there was justification for costs on a punitive scale.

BEFORE THIS COURT

In motivating the appeal, counsel for the appellant submitted, that, the pith of the appellant's case is that, firstly, the agreement is not of its act and it is therefore void ab initio. He submitted that the agreement was a product of the respondent's fraud and commercial bribery which was concluded with the appellant's junior employee who did not have the requisite authority to do so.

He thus submitted that the court a quo erred and misdirected itself by failing to make a determination that the contract was void on the basis that it was not of the appellant's making and there was lack of compliance with the appellant's internal processes, including Board resolutions, which gave Cynthia Malaba authority to enter into same.

In the second rung, counsel submitted that if this Court was to find that it is its act, the contract is void for breach of Zimbabwean laws. In this regard, he submitted that the contract was a nullity since it contained provisions which contravened -

(a) Section 43 of the Competition Act [Chapter 14:28] which prohibits unfair business practice, including exclusivity;

(b) Section 11 of the Exchange Control Regulations1996 which prohibits the making of any payment outside Zimbabwe or incurring of any obligation to make payment outside Zimbabwe without first obtaining authority or licence from an exchange control authority; and

(c) The Control of Goods (Open General Import Licence) (Notice) RGN 766 of 1974 as amended by S.I.122 of 2017 which requires an importer in the position of the appellant to obtain an import permit or licence to import goods from outside the country before it can do so.

He thus insisted that the court a quo erred and misdirected itself in holding that the contract was valid.

Counsel also submitted that the court a quo had failed to determine all the issues which the appellant had raised.

He argued that the court a quo had failed to pronounce its findings on whether the agreement was in direct contravention of the Competition Act, the Exchange Control Regulations 1996 and the Control of Goods (Open General Import Licence) RGN 766/74 as amended by S.I.122/2017.

Counsel argued, that, the court had an obligation to apply its own law and the onus was on the respondent to prove that South African law was applicable in this case.

He thus sought to have the appeal allowed and that an order be granted declaring the contract void and invalid.

Per contra, counsel for the respondent submitted, that, there was no misdirection on the part of the court a quo in holding that the contract was binding on the appellant on the basis of ostensible authority.

The finding that Cynthia Malaba had ostensible authority cannot be said to be in defiance of logic or contrary to the evidence placed before the court. Such a finding was in fact in tandem with the evidence placed before the court a quo.

Counsel also submitted, that, the court a quo correctly found that the applicable law, in terms of the parties agreement, was South African law. He submitted that the parties had, out of their free choice, agreed that the contract be governed by the law of South Africa.

As such, the appellant had the onus to prove that Zimbabwean law was applicable rather than the law chosen by the parties and yet it had omitted to do so.

He further submitted, that, the appellant's stance on the choice of law made by the parties would render the entire concept of choice of law and the freedom of contract nugatory and will severely hinder international trade between private corporations.

Counsel further argued, that, the appellant could not seek to benefit from its own wrong doing since it had benefited from the agreement by taking delivery of the goods it was now seeking to be absolved from paying for.

He further submitted, that, the severability clause allowed the parties to sever any offensive terms which therefore meant that there was no need to nullify the whole agreement.

He thus sought to have the appeal dismissed with costs.

APPLICATION OF THE LAW TO THE FACTS

The first issue pertains to whether or not the court a quo misdirected itself in finding that Cynthia Malaba had ostensible authority and that the agreement between the parties was valid and binding on the appellant.

It is trite law that a contract is an agreement by two or more parties entered into with the serious intention of creating a legal obligation. In order for a contract to be binding, it must meet the following criteria:

(i) It should be freely entered into;
(ii) Lawful;
(iii) Possible to perform;
(iv) Parties must have contractual capacity;
(v) Made with the serious intention to contract;
(vi) The parties must be ad idem; and
(vii) The agreement must not be vague.

Where any person purports to be entering into a contract on behalf of another, such person must have authority to do so. Such authority may be express or apparent (ostensible).

It is trite that when interpreting a contract the courts must give effect to the intention of the parties.

In Joubert v Enslin 1910 AD 6, INNES J stated as follows:

"The golden rule applicable to the interpretation of all contracts is to ascertain and to follow the intention of the parties."

When a contract is reduced to writing, it becomes easier for the court to ascertain the intention of the parties.

In casu, it was clear that there was a written agreement between the parties emanating from the relationship between them wherein the respondent supplied the appellant with plastic products at prices ascertained in terms of that agreement.

The critical question was whether Cynthia Malaba had authority to enter into that written contract on behalf of the appellant.

The court a quo answered this question in the affirmative.

It held, that, the evidence showed that Cynthia Malaba had ostensible authority to contract on behalf of the appellant.

In Infrastructure Development Bank of Zimbabwe v Engen Petroleum Zimbabwe (Private) Limited SC16-20..., GUVAVA JA aptly espoused the law on ostensible authority as follows:

“Ostensible authority, or apparent authority, exists where an agent's words or conduct lead a reasonable person in a third party's position to believe that the agent is authorized to act, even if the principal and the purported agent have never discussed such a relationship. The effect and meaning of ostensible authority was discussed in Makate v Vodacom Ltd 2016 (4) SA 121 (CC) at paragraph 45, in which the case of Hely-Hutchinson CA v Brayhead Ltd and Anor [1968] 1 QB 549 (CA) at 583A-G was referred to with approval. The court stated the following:

'Actual authority and ostensible or apparent authority are the opposite sides of the same coin. If an agent wishes to perform a juristic act on behalf of the principal, the agent requires authority to do so for the act to bind its principal. If the principal had conferred the necessary authority, either expressly or impliedly, the agent is taken to have actual authority. But, if the principal were to deny that she had conferred authority, the third party who concluded the juristic act with the agent may plead estoppel in replication. In this context, estoppel is not a form of authority but a rule to the effect, that, if the principal had conducted herself in a manner that misled the third party into believing that the agent has authority, the principal is precluded from denying that the agent had authority.'

The court went on to state the importance of ostensible authority and made the following remarks at paragraph 65:

'The concept of apparent authority, as it appears from the statement by Lord Denning, was introduced into law for purposes of achieving justice in circumstances where a principal had created an impression that its agent has authority to act on its behalf. If this appears to be the position to others, and an agreement that accords with that appearance is concluded with the agent, then, justice demands that the principal must be held liable in terms of the agreement. It cannot be gainsaid, that, on present facts, there is a yearning for justice and equity.'”

Ostensible authority thus binds a principal over actions done by its agent in relation to third parties. Such principal is estopped from denying liability for the actions of the agent.

In casu, Cynthia Malaba was an agent of the appellant, as she was employed by the appellant as the Supply Chain Director, and, there was nothing to show that she did not have the authority to sign the agreement on behalf of the appellant.

In any event, the respondent submitted previous agreements between the parties which the appellant did not dispute.

These agreements include a Finance Credit Agreement signed by H. Huruva on 25 October 2013 as Procurement Manager for the appellant. The second one is a Procurement Agreement signed by Cynthia Malaba, on behalf of the appellant, on 28 October 2017, effective 1 October 2017, for the procurement of similar goods as in the disputed contract.

Thus, not only was Cynthia Malaba presented as the Procurement Supply Chain Director, she had also entered into a similar written supply agreement with the respondent the previous year before the contract in issue.

That prior contract was apparently honoured by the appellant without any disputation.

It was at its expiry that the contract in issue was then entered into, in March 2018 - by Cynthia Malaba.

The appellant's contention, that it was not aware of the contract in question till its internal audit of July 2019, was without merit.

The audit report itself shows that other senior employees of the appellant were aware of this contract: for instance, a Mrs Mbelengwa, whose designation was General Manager-Procurement, acknowledged that she knew of the contract, and, when asked what steps had been taken to ensure that the contract had terms, conditions, and clauses that were in the best interests of the appellant before signing off she stated:

“1. Senior management was involved in the approval of the contract, and all necessary steps were taken to ensure that Delta's interests were taken into cognisance i.e. pricing competitiveness, quality, and lead times in terms of delivery.

2. Clause 6, which is talking of exclusivity on agreement, but it doesn't preclude Delta from buying from another supplier if there is no written agreement. Also read it in conjunction with clause 8.2 which provides for the review of business operations.”

In response to further probing she stated, inter alia, that:

“In 2017, when the forex shortages started, all foreign orders were now being approved by the Supply Chain Director. The SBU GMs were also included in the approval process….,.”

H. Huruva, now designated as the Group Procurement Manager (Imports), also confirmed knowledge of the contract in question.

When asked by the audit team to provide details of the process leading to the contract in question, he conceded to his role in preparing the appellant's requirements and that after he had worked out the requirements a contracting meeting was held at Delta Head Office (DHO) and Delta was represented by the General Manager and the Supply Chain Director.

Thereafter, the contract was shared with the imports team.

He also confirmed, that, they were being guided by the March 2018 contract in their ordering requirements.

Besides the above officials, there are also e-mails between the parties showing that other officers of the appellant were aware of this contract.

Faced with all this overwhelming evidence, the court a quo cannot be faulted for finding that Cynthia Malaba had authority to enter into the contract on behalf of the appellant.

The appellant had presented Cynthia Malaba as its Supply Chain Director with capacity to enter into binding agreements with the respondent, and had, in fact, entered into another agreement of a similar nature with the respondent.

The contention that some internal processes were not followed was decided upon relying on the turquand rule.

That Rule provides, that, when there are persons conducting the affairs of a company in a manner which appears to be perfectly consonant with the Articles of Association, those so dealing with them externally are not to be affected by irregularities which may take place in the internal management of the company.

In Infrastructure Development Bank of Zimbabwe v Engen Petroleum Zimbabwe (Private) Limited SC16-20 this Court aptly noted that:

“Section 12 of the Companies Act codifies the common law principle of the Turquand Rule: see Govero v Ordeco (Private) Limited and Another SC25-14; Andrew Mills v Tanganda Tea Company Limited HH12-13.

The section provides for the presumption of regularity to an extent that any person who deals with a representative of a company is taken to presume that all procedures are regular.

Section 12 is further reinforced by section 13 of the same Act which provides that such liability is not affected even where the company alleges that the representative acted in a fraudulent way.”

In casu, the respondent, having previously conducted business with Cynthia Malaba, on behalf of the appellant, could not be expected to know or suspect that, on this occasion, Cynthia had not complied with all the internal processes.

The court a quo's finding, that the written agreement was an act of the appellant and is binding on the appellant, is thus unassailable.

I accordingly find no merit in the appellant's appeal in this respect.

The next issue is whether the court a quo did not pronounce itself on the alleged breach of Zimbabwean laws and whether the contract is void for being contrary to such laws.

Counsel for the appellant's submission that the court a quo did not make a determination on breaches of Zimbabwean laws was without merit.

As is evident from the findings of the court a quo alluded to above, the court pronounced itself on each of the alleged breaches:

(i) It found that the agreement was not in breach of section 43 of the Competition Act as the appellant could still buy from other suppliers as confirmed by its officials.

(ii) If there was any clause, or part thereof, which the appellant felt was now offensive, such could be severed in terms of the contract.

(iii) It also held, that, there was no breach of section 11 of the Exchange Control Regulations as the contract did not state that payment had to be made outside the country.

(iv) Equally, there was no breach of the Control of Goods RGN 766/74 as amended by SI122 of 2017.

In the light of the above findings, the issue should thus be whether the court a quo erred and misdirected itself in reaching its determination on these aspects.

This issue must be examined from the fact, that, this contract has international aspects. These include that each party is incorporated in its own country of domicile.

The respondent, as the seller/ supplier, signed the agreement in South Africa whereas the appellant, as the buyer/importer, signed the agreement in Zimbabwe.

Where there are international aspects to a transaction, it is imperative that parties include clauses in the contract on both the governing law and jurisdiction, i.e. which country's law shall govern the contract and in which country's courts will any dispute be finally decided.

In casu, it was within the parties rights to be precise as to which country's law shall govern their contract.

There are varying factors that parties would have taken into account in deciding on the law to govern their contract.

The law chosen by the parties will generally be respected by the courts of the other country in the spirit of sanctity and freedom of contract.

A caveat to this general approach is that matters of public policy and mandatory laws of that other country may take precedence over governing law clauses, such as in the area of employment and exchange control regulations, which are in the category of directly applicable statutes that override the choice of law.

In C F FORSYTH: Private International Law, 5th Edition, Juta..., the author states:

“For the avoidance of doubt, it should be made quite clear that the directly applicable statutes of the forum, as discussed above, stand outside the choice of law process. They apply according to their terms irrespective of the law the parties have chosen to govern the contract.”

In casu, the parties were alive to their freedom on choice of law and chose that the agreement was to be governed by and must be interpreted and construed in accordance with the laws of the Republic of South Africa.

However, cognisant of the circumstances of their agreement, including the mandatory laws or directly applicable statutes that may affect that choice of law, each party made certain warranties, representations, and undertakings in clause 16.1 of the agreement.

That clause provides, inter alia, that each party warrants, represents, and undertakes to the other party that:

“(c) The execution of and performance by it of its obligations under this Agreement does not contravene any law or regulation to which it is subject; and

(d) It will have all necessary consents, licences, and approvals required in connection with the entry into and performance of its obligations under this Agreement.”

Having made the above warranties, representations, and undertakings each party was obliged to ensure compliance with the peremptory laws of their respective countries.

Any challenges in compliance were ably catered for by clause 22.7 which provided for amendment of any provision of the agreement that becomes invalid, illegal, and unenforceable for reasons stated therein.

That clause states as follows:

“If any part of this Agreement is, for any reason whatsoever, including a decision by any court, any legislation, or any other requirement having the force of law, declared or becomes unenforceable, invalid, or illegal, the Parties must negotiate and effect an amendment of this Agreement such that it is lawful and enforceable, retaining its essential terms, or, failing such agreement between the parties, as far as possible this Agreement must be interpreted so as to exclude the offending provision but retain the essential terms of the Agreement.”

It is common cause that the parties have been doing business together for many years, albeit, on ad hoc basis.

In October 2017, the parties entered into a written supply contract, the precursor to the agreement in question.

The Zimbabwean statutes that the appellant wishes to hide behind in avoiding paying for goods supplied and consumed were in place. The appellant, nevertheless, met its obligations on the prior transactions. It was never argued that in the preceding agreement the appellant failed to meet its obligations due to a breach of the statutes in question.

As already alluded to above, the agreement in question came into effect on 16 March 2018 and was to run till 31 December 2019.

It was only when a demand for payment for goods supplied and consumed was raised, that, in July 2019, the appellant objected to the sum being claimed.

The audit it carried out was premised on its belief that it was being overcharged.

At that stage, its query was not lack of compliance with the domestic statutes.

Clearly, this is a case of a party who previously met its obligations, now seeking to avoid the accrued debt - yet it had consumed the goods for which payment was being demanded.

I am of the view that the appellant cannot succeed in that quest....,.

It is not open to a party to seek to rely on its own default or illegality to avoid its obligations. These courts are loathe to lend support to such a party: see Standard Chartered Bank Limited v Matsika 1997 (2) ZLR 389 (SC).

In Book v Davidson 1988 (1) ZLR 365 (SC)..., DUMBUTSHENA CJ in discussing the sanctity of contract and public policy aptly noted that:

“There is another tenet of public policy, more venerable than any thus engrafted onto it under recent pressures, which is likewise in conflict with the ideal of freedom of trade. It is the sanctity of contracts….,.

If there is one thing which more than another public policy requires, it is that men of full age and competent understanding shall have the utmost liberty of contracting, and that their contracts when entered into freely and voluntarily shall be held sacred and shall be enforced by courts of justice.

Therefore, you have this paramount public policy to consider - that you are not lightly to interfere with this freedom of contract.

The 'inviolability' of contracts was described by LINDLEY MR in E Underwood and Son Ltd v Barker (1899) 1 CH 300 (CA) at p305 as essential to trade and commerce. He continued thus, referring to the covenantor as the defendant:

'To allow a person of mature age, and not imposed upon, to enter into contract, to obtain benefit of it, and then to repudiate it and the obligations which he has undertaken is, prima facie at all events, contrary to the interests of any and every country.'”

This speaks well to the circumstances of this case, whereby, after receiving and consuming goods on credit as per its orders, the appellant seeks to have that contract declared void, and, by that, avoid meeting its obligations to pay for the goods....,.

It would be contrary to public policy to allow the appellant to escape its international obligations on the pretext of its own alleged default when previously it had met its obligations.

View Appeal
HB60-19 : JOEL SILONDA vs VUSUMUZI NKOMO
Ruled By: BERE J

On 22 April 2015, the plaintiff issued summons out of this court seeking the following order against the defendant:

“(1) An order confirming null and void the purported agreement of sale signed by the plaintiff and defendant on the 12th January 2010 in respect of Umguza 100 Acre Lot 5A for want of a subdivisions permit at the material time, and, in any event, and in the alternative, for defendant's breach of the terms and conditions of the agreement of sale.

(2) An order for the eviction of the defendant and all those claiming rights after him from Umguza 100 Acre Lot 5A currently occupied by the defendant on the basis of a null and void agreement of sale.

(3) Payment of the sum of US$18,000 being reasonable rental and unjust enrichment arising from defendant's occupation of Umguza 100 Acre Lot 5A from March 2010 to April 2015.

(4) An order for holdover damages at the rate of US$10 per day being reasonable rental for the portion of Umguza 100 Acre Lot 5A currently occupied by the defendant calculated from the 1st May 2015 to date of vacation, both days included.

(5) Costs of suit on a higher scale.”

Upon being served with the summons, and after indicating his intention to defend the action, the defendant, in his plea, flatly denied any form of liability and sought the dismissal of the plaintiff's claim with costs at a punitive scale.

In addition, the defendant counter claimed on the basis of unjust enrichment and sought an order against the defendant in the following terms:

“1. Payment in the sum of US$19,000 together with such payment as will be sufficient to enable the defendant to purchase a property of comparable value including all the improvements he had effected.

2. A refund of all the money used by the defendant in drawing electricity to the plaintiff's homestead and applying for a subdivision permit.

3. Interest on all sums at the prescribed rate of 5% per annum with effect from the date of issue of summons to date of payment in full.

4. Costs of suit at an attorney and client's scale.”

THE FACTS OF THE CASE

The following facts are not in dispute in this case:

By a Deed of Sale signed by both parties on 26 January 2010, the plaintiff sold to the defendant 10 acres of land being part of 100 Acre of Lot 5A, Umguza District on certain terms and conditions outlined in the deed.

At the time the parties signed the agreement of sale, there was no subdivision of the land in question as required by section 40 of the Regional, Town and Country Planning Act [Chapter 29:12], thus rendering the agreement null and void from its inception....,.

The plaintiff's case was largely built around the alleged breach of the agreement of sale.

However, as the evidence led in this court has shown, there was no agreement to talk about for lack of compliance with the statutory requirements of the Regional, Town and Country Planning Act which prohibits any agreement of sale in respect of land which is not yet subdivided in accordance with a permit granted under section 40 of the Regional, Town and Country Planning Act.

In the case of X-Trend–A Home (Pvt) Ltd v Hoselaw (Pvt) Ltd 2000 (2) ZLR 348 (SC), the Supreme Court had occasion to deal with the law as regards the kind of sale which the plaintiff and defendant purported to enter into in this case. The court had this to say:

“Section 39 forbids an agreement for the change of ownership of any portion of a property except in accordance with a permit granted under section 40 allowing for a subdivision. The agreement under consideration was clearly an agreement for the change of ownership of the unsubdivided portion of a Stand. It was irrelevant whether the change of ownership was to take place on signing or on an agreed date fulfilled. The agreement itself was prohibited.”

This Supreme Court decision was subsequently followed by the High Court in the case of Tsamwa v Hondo and Others 2008 (1) ZLR 401 (H)…, where the court remarked as follows:

“The plaintiff's claim must be dismissed, as, at the time the parties entered into the agreement, there was no subdivision permit in existence. An agreement made in such circumstances is forbidden by section 39(1)(b)(i) of the Act. Any purported agreement for the change of ownership of a portion of a property is a nullity and no effect can be given thereto.”...,.

Let me deal first with the legal position in as far as it impacts on the agreement entered into by the parties in casu.

It has already been spelt out that the contract entered into by the parties was null and void, and, therefore, unenforceable. As observed by R.H. Christie, in Business Law in Zimbabwe, published by Juta and Company Ltd 1998…,:

“The law cannot be expected to lend its aid to the enforcement of a contract which the law itself prohibits: City of Gweru v Kombayi 1991 (1) ZLR 333 (S). Unenforceability means that, as in York Estates Ltd v Wareham 1949 SR 197; 1950 (1) SA 125, specific performance will not be granted.”

Taken to its logical conclusion, the plaintiff cannot sue for breach of contract in this case.

But, our law recognizes that quite often, in the process of engaging in an illegal or unenforceable contract there may be other “collateral or connected transactions that do not amount to indirect attempts to enforce the illegal contract:” see R.H. Christie, Business Law in Zimbabwe, published by Juta and Company Ltd 1998.

In general terms, our law will not enforce an illegal or an invalid contract unless public policy demands that such approach be relaxed: see Jajbay v Cassim 1939 AD 537 which created the guiding rules.

Where someone has been unjustly enriched, in circumstances where the victim's innocence is beyond question, the court will come to the aid of such a party.

The defendant's case is a clear example of the need to relax the rule.

In what is probably the leading case in this country on unjust enrichment, in Industrial Equity Ltd v Walker 1996 (1) ZLR 269 (H)…, the court affirmed the position that a general enrichment action is recognized in our law and that the pre-requisites of such an action are:

“(a) The defendant must be enriched;

(b) The enrichment must be at the expense of another, in that the plaintiff must be impoverished and there must be a causal connection between the defendant's enrichment and the plaintiff's impoverishment;

(c) The enrichment must be unjustified;

(d) The enrichment must not come within the scope of one of the classical enrichment actions;

(e) There should be no positive rule of law which refuses an action for the impoverished person.”

See also the recent case of Charles Nyathi v Estate Late Philemon Ncube Mabuza and Tandie Mabuza N.O. and the Master of High Court N.O. HB54-19.

It is noted that, the defendant, in his counter claim has established all the requirements for unjust enrichment which call for his compensation....,.

As further noted by his counsel, in Rubin v Botha 1911 AD 568…, INNES J…, had this to say:

“The equitable relief given by Roman Dutch Law to a person who had made improvements upon the land of another was the outcome of the modification of the maxim that whatever is affixed to the soil belongs to it, by maxim that no man should be allowed to enrich himself at the expense of another….,.”

I might add and say the courts must endeavour to do justice between man and a man, and, further, that the decisions made must not encourage parasitic tendencies.

View Appeal
HB188-22 : BATANDI MPOFU N.O. vs FELIX DZUMBUNU and CHIKOTI DORO and ASSISTANT MASTER OF THE HIGH COURT OF ZIMBABWE
Ruled By: DUBE-BANDA J

IntroductionOn 16 February 2017, the plaintiff sued out a summons against the first defendant seeking an order couched in the following terms:“(i) An order confirming the cancellation of an agreement of sale entered into by and between plaintiff and defendant in respect of a property known as a certain piece ...

Introduction

On 16 February 2017, the plaintiff sued out a summons against the first defendant seeking an order couched in the following terms:

“(i) An order confirming the cancellation of an agreement of sale entered into by and between plaintiff and defendant in respect of a property known as a certain piece of land being Stand number 6505 Bulawayo Township of Stand 6541A Bulawayo Township, situate in the District of Bulawayo and which cancellation was occasioned by defendant's breach of the terms and conditions of the said sale agreement.

(ii) An order evicting the defendant and all those claiming through him from the aforesaid premises on the basis that the defendant and his claimants no longer have a lawful right to remain in occupation of the premises following the cancellation of the sale agreement.

(iii) An order that the defendant pays occupational damages to the plaintiff in the sum of US$800 per month or US$26=67 per day, from the 4th September 2015, this being the date of the sale agreement was cancelled to the date of eviction.

(iv) Cost of suit at an attorney and client scale.”

The defendant referred to in the order sought by the plaintiff is the first defendant in this matter. The second and third defendants were joined to this matter by an order of this Court in Case No. HC3144/18 granted on 8 January 2019.

At a case management meeting held on 19 February 2020, before a judge of this court, the parties agreed to file a written statement of agreed facts and to refer the matter to the Court for determination by way of a special case in terms of Order 29 of the High Court Rules 1971. A statement of agreed facts was drawn, signed and filed on the 1 October 2020.

The matter then proceeded as a special case in terms of the rules of court.

On 11 February 2022, the plaintiff filed a notice to amend the summons, declaration, and pleading filed of record in terms of Rule 41(1) of the High Court Rules 2021. The notice sought to delete the names of Thabani Siziba N.O. to be substituted with the name of Batandi Michael Mpofu N.O.

There was no written objection to the proposed amendment within the ten days of the delivery of the notice, the amendment sought was therefore effected.

The Facts

For the purposes of clarity and completeness, I reproduce in ex extensio the statement of agreed facts signed and filed by the parties in this matter. These are the agreed facts:

(i) That the plaintiff and first defendant, sometime in November 2014, entered into a written agreement of sale over Stand 6505 Bulawayo Township of Stand 6541A Bulawayo Township, situate in the District of Bulawayo (hereinafter 'the in initial agreement'). A copy of the initial agreement is annexed hereto and marked, “A”.

(ii) That the first defendant took occupation of the property immediately upon the signing of the initial agreement pursuant to the terms thereof.

(iii) That in terms of the initial agreement, the first defendant agreed and undertook to pay the full prescribed purchase price in respect of the property, being the sum of USD105,000 as follows:

(a) A deposit in the sum of USD25,000 upon the signing of the agreement.

(b) The balance of USD80,000 to be paid by way of three (3) equal instalments commencing on 28 February 2015, and subsequently on or before 28 April 2015, and finally on or before 31 July 2015.

(iv) That the purchase price prescribed in respect of the property in terms of the initial agreement was as per the then prevailing fair market value.

(v) That the first defendant initially paid a deposit of USD37,000 by 12 March 2015. A copy of the defendant's proof of payment of the deposit is annexed hereto and marked “B”.

(vi) That the first defendant breached the agreement of sale by failing to pay the balance of the purchase price of USD68,000 in the manner prescribed in the initial agreement.

(vii) That the notice of termination of the initial agreement of sale over the property was, according to the Sheriff's Return of Service, served upon the first defendant at No.43 Aberdeen Road, Fortunes Gate, Bulawayo on 12 August 2015, by handing a copy thereof to the first defendant's worker. A copy of the notice of the termination and the Sheriff's Return of Service hereto marked 'C' and 'D' respectively.

(viii) That in terms of the notice of termination, the initial agreement of sale was cancelled on 4 September 2015.

(ix) That an action was instituted by the plaintiff on 16 February 2017, under cover of case No. HC446/17, seeking:

(a) An order confirming the cancellation of the initial agreement;

(b) An order evicting the first defendant and all those claiming occupation from the property in question (sic);

(c) An order that the first defendant pay occupational damages to the plaintiff in the sum of USD800 per month or USD26=67 per day from 4 September 2015, being the date on the cancellation of the initial agreement to the date of eviction.

(x) The default judgment was granted on 19 May 2017, confirming the cancellation of the initial agreement and granting the rest of the relief as prayed for in the summons in the matter under cover of Case No. 446/17. A copy of the default judgment is annexed hereto marked 'E'.

(xi) That in terms of the writ of execution and ejectment issued out on 8 February 2018, pursuant to the default judgment in the matter under cover of Case No. HC446/17, the first defendant was evicted from the property in question. A copy of the writ of execution and ejectment is attached hereto and marked “F”.

(xii) That the default judgment in the matter under cover of Case No. HC446/17 was rescinded and set aside on 22 November 2018 in terms of the Order issued in the matter under cover of Case No. HC1576/18, a copy of which is annexed hereto marked “G”.

(xiii) That the first defendant entered an appearance to defend the action under cover of Case No. HC446/17 on 26 November 2018, and filed a special plea on 18 February 2019, but has not pleaded over to the merits of the matter.

(xiv) That during the period when the order in Case No. HC446/17 was extant, and on 14 March 2018, the plaintiff entered into a written agreement of sale over the property with the second defendant (hereinafter “the second agreement”). A copy of the second agreement is annexed hereto and marked “H”.

(xv) That in terms of the second agreement, the second defendant agreed and undertook to pay the full prescribed purchase price in respect of the property being the sum of USD130,000 as follows:

(a) A deposit in the sum of USD70,000 upon the signing of the agreement.

(b) The balance of USD60,000 to be paid between 31 April 2018 and 31 July 2018.

(xvi) That the purchase price prescribed in respect of the property in terms of the second agreement was per the then prevailing fair market value.

(xvii) That in accordance with the terms of the second agreement, and by 18 July 2018, the second defendant had paid the sum of USD130,000 to the plaintiff, being the full prescribed price in respect of the property in question. The prescribed purchase price was paid into the bank account of Waterbuck Trust (Pvt) Ltd as evidenced by the attached proof of payment marked “I”.

(xviii) That the third defendant was made aware of the second agreement of the sale in terms of a report by the plaintiff and duly recorded such sale in its minutes in respect of a creditors meeting held on the 21 June 2018. The minutes of such meeting are duly contained in the third defendant's final liquidation file under CRB2/10 and attached hereto marked “J”.

(xix) That on 21 March 2018, the only secured creditor of Tabs Avon Lighting (Pvt) Ltd (the company under liquidation) being, NMB Bank Limited, approved of the second agreement of sale and the third defendant was duly made aware of such approval. The letter by the said sole secured creditor of the company under liquidation is contained in the third defendant's final liquidation file under CRB2/10 and is attached marked “K”.

(xx) That in the aftermath of the granting of the order in the matter under cover of Case No. HC1576/18, and after the conclusion of the second agreement of sale and the payment of the full purchase price in respect of the property by the second defendant, the first defendant took steps aimed at remedying his breach of the initial agreement of sale by depositing into the plaintiff's legal practitioners trust account the balance of the purchase price being USD68,000 in terms of the correspondence attached hereto marked “L”.

(xxi) The steps taken by the first defendant, aimed at remedying his breach of the initial agreement, were not accepted by the plaintiff in terms of correspondence attached marked “M”.

(xxii) The plaintiff's legal practitioners tendered back to the first defendant the amount paid into its trust account in the sum of USD68,000. This amount is currently held in trust by the plaintiff's legal practitioners as per the correspondence attached hereto marked “M”.

(xxiii) That by way of an Order granted in the matter under cover of Case No. HC3144/18, the second defendant was joined to the main proceedings, duly entered an appearance to defend the action and filed his plea thereto.

(xxiv) That as at the date of this statement, and following the first defendant's eviction therefrom in terms of the writ of execution and ejectment issued against him in the matter under cover of Case No. HC1576/18, neither of the parties are in physical or lawful occupation of the property nor has any party taken transfer thereof.

The Issues

The issues for determination by the Court are as follows:

(i) Whether the initial agreement of sale over Stand 6505 Bulawayo Township of Stand 6541A Bulawayo Township, situate in the District of Bulawayo between the plaintiff and the first defendant was lawfully terminated.

(ii) Whether there existed any legal impediment to the conclusion of the second agreement of sale entered into between the plaintiff and the second defendant at the material time.

(iii) To whom should the property, being Stand 6505 Bulawayo Township of Stand 6541A Bulawayo Township, situate in the District of Bulawayo be transferred?...,.

I now turn to the issues for determination as identified in the statement of agreed facts.

Whether the initial agreement between the plaintiff and the first defendant was lawfully terminated

In terms of the agreement of sale between the plaintiff and the first defendant, the latter had to pay a deposit of USD25,000 upon signing of the agreement and the balance of USD80,000 had to be paid in three equal instalments.

It was an instalment sale of land in terms of section 2 of the Contractual Penalties Act [Chapter 8:04] which says an “instalment sale of land” means a contract for the sale of land whereby payment is required to be made in three or more instalments; or by way of a deposit and two or more instalments; and ownership of the land is not transferred until payment is completed.

The agreed facts are that the first defendant paid a deposit of USD37,000 by 12 March 2015 and breached the agreement of sale by failing to pay the balance of the purchase price of USD68,000 in the manner prescribed in the agreement.

The notice of termination of the agreement of sale over the property was served upon the first defendant at No.43 Aberdeen Road, Fortunes Gate, Bulawayo, on 12 August 2015, by handing a copy thereof to his worker.

Cut to the bone, the first defendant argues that the notice was not delivered in compliance with section 8(3) of the Contractual Penalties Act [Chapter 8:04] in that it was not delivered to the first defendant personally or by registered post to his chosen address.

The plaintiff submitted, that, the first defendant was notified of the breach in a manner that complies with the provisions of section 8 of the Contractual Penalties Act, and that the agreement was lawfully cancelled.

The second defendant contended, that, the agreement between the plaintiff and the first defendant was lawfully terminated.

The question that arises is whether the service of the notice to the first defendant, upon handing it to his worker, was valid service in terms section 8 of the Contractual Penalties Act [Chapter 8:04].

Counsel for the first defendant submitted, that, the first defendant does not dispute that a notice was served on his worker on 12 August 2015; the contention is that it was not proper service.

Section 8 of the Contractual Penalties Act [Chapter 8:04] provides thus:

“Restriction of sellers rights

(1) No seller under an instalment sale of land may, on account of any breach of contract by the purchaser —

(a) Enforce a penalty stipulation or a provision for the accelerated payment of the purchase price; or

(b) Terminate the contract; or

(c) Institute any proceedings for damages;
unless he has given notice in terms of subsection (2) and the period of the notice has expired without the breach being remedied, rectified, or discontinued, as the case may be.

(2) Notice, for the purposes of subsection (1), shall —

(a) Be given in writing to the purchaser; and

(b) Advise the purchaser of the breach concerned; and

(c) Call upon the purchaser to remedy, rectify, or desist from continuing, as the case may be, the breach concerned within a reasonable period specified in the notice, which period shall not be less than —

(i) The period fixed for the purpose in the instalment sale of the land concerned; or

(ii) Thirty days; whichever is the longer period.

(3) Without derogation from section 40 of the Interpretation Act [Chapter 1:01], a notice shall be regarded as having being duly given to the purchaser for the purposes of subsection (1) —

(a) If it has been delivered to the purchaser personally or to an agent chosen by the purchaser for the purpose of receiving such notices; or

(b) If it has been posted by registered post to the address chosen by the purchaser for the delivery of correspondence or legal documents relating to the instalment sale of land concerned or, in the absence thereof, to the purchaser's usual or last known place of residence or business.”…,.

Section 40(2) of the Interpretation Act [Chapter 1:01] provides thus:

“(2) Where an enactment authorizes or requires a document to be served on any person without directing it to be served in a particular manner, the service of that document may be effected —

(a) By personal service; or

(b) By post in accordance with subsection (1); or

(c) By leaving it for him with some person apparently over the age of sixteen years at his usual or last known place of abode or business; or

(d) In the case of a corporate body, or an association of persons, whether incorporated or not, by delivering it to a director, the secretary, or clerk of the body or association at the registered or principal office of the body or association, or serving it by post on such director, secretary, or clerk at such office; or

(e)…,.”

In Washaya and Another v Makebreak Trading (Private) Limited and 2 Others SC163-21, the court held thus:

“The contention advanced on behalf of the appellants overlooked the principle contained in section 2(1)(a) of the Interpretation Act, to the effect that the application of the provisions of the Interpretation Act to the construction of any enactment must be consistent with the intention, purpose, or context of the enactment.

The purpose of section 8(3)(b) of the Contractual Penalties Act is to make provision for effective service of a written notice of breach of the instalment sale of land by the seller to the purchaser where it has been posted by registered post to the address chosen by the purchaser for the delivery of correspondence or legal documents relating to the instalment sale of land.”

In determining whether service of the notice was valid service, the court is required to tease out the intention, purpose, or context of section 8(3)(b) of the Contractual Penalties Act.

Its purpose is to make provision for effective service of a written notice of breach of the agreement of sale.

In the agreement of sale, the first defendant provided his address as number 43 Aberdeen Road, Fortunes Gate, Bulawayo. That is the address where the notice of termination of the agreement was served.

The agreement does not specify the manner of service of a written notice in the case of breach.

The first defendant accepts that the notice was indeed delivered, but contends that it was not delivered in terms of the provisions of the law. The position taken by the first defendant is tantamount to saying “yes” the notice was delivered and I saw it, but it did not come to me via the correct route.

Such a position is unattainable.

What the law requires is the effective service of the notice, and leaving it with his worker amounts to effective service.

The written notice, drawing the attention of the first defendant, as the purchaser, to breach of the agreement and calling upon him to rectify the breach within thirty days of service of the notice on him failing which cancellation of the agreement would follow, was served on him in terms of section 8 of the Contractual Penalties Act as read with section 40(2)(c) of the Interpretation Act, in that it was served by leaving it with his worker at his usual or last-known place of abode which he provided in the agreement.

The notice of cancellation clearly specified that the first defendant had breached the agreement of sale by failing to pay the instalments. He was given thirty days notice, calculated from 1 August 2015, to remedy the breach by settling the amount due. The notice specified that failure to settle the amount within thirty days shall lead to an automatic cancellation of the agreement of sale.

The first defendant did not comply with the notice of cancellation, and he unilaterally deposits to the plaintiff's legal practitioners trust account the balance of the purchase price almost three years after the deadline of 1 September 2015.

On 19 May 2017, this court confirmed the cancellation of the agreement of sale between the plaintiff and the first defendant, and, while the order was extant, the property was sold to the second defendant.

That, on 22 November 2018, the order confirming cancellation of the agreement was rescinded is of no moment.

Therefore, the issue whether the agreement between the plaintiff and the first defendant was lawfully terminated is answered in favour of the plaintiff and the second defendant.

View Appeal
HB188-22 : BATANDI MPOFU N.O. vs FELIX DZUMBUNU and CHIKOTI DORO and ASSISTANT MASTER OF THE HIGH COURT OF ZIMBABWE
Ruled By: DUBE-BANDA J

A party cannot, after a breach, make a unilateral payment hoping to remedy the breach.

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Termination of Contracts and Notice of Cancellation re: Approach, Repudiation, Debtors Mora and Effect of Breach of Contract

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SC59-16 : ZIMRE PROPERTY INVESTMENTS LIMITED vs SAINTCOR (PVT) LTD t/a V. TRACK and JOHN SHUMBA
Ruled By: ZIYAMBI JA, GARWE JA and GOWORA JA

SC163-21 : TENDAYI WASHAYA and CHIPO WASHAYA vs MAKEBREAK TRADING (PVT) LTD and THE SHERIFF OF THE HIGH COURT (N.O.) and THE REGISTRAR OF DEEDS
Ruled By: MALABA CJ, UCHENA JA and CHIWESHE AJA

HB57-15 : SIPIWO NKOMO vs MLWELIWENKULULEKO NCUBE
Ruled By: MUTEMA J

HB60-15 : JABULANI NCUBE vs INNOCENT NYATHI
Ruled By: MOYO J

HMA02-19 : JETINOS ZIVANOMOYO vs HELLEN DINGANI
Ruled By: MAWADZE J and MAFUSIRE J

HH28-16 : FARPIN INVESTMENTS [PVT] LTD vs NETONE CELLULAR [PVT] LTD and JUSTICE L.G. SMITH [RETD] - ARBITRATOR
Ruled By: MAFUSIRE J

HH62-14 : JOHANNES MAKONYE vs KENAE RAMODIMOOSI and ENTREDEV PROPERTY GROUP and C.H. LUKAS
Ruled By: CHIGUMBA J

HH128-06 : DOBROCK HOLDINGS (PVT) LTD and TURNER AND SONS (PVT) LTD vs TURNER AND SONS (PVT) LTD and ANTHONY TURNER and MARTIN KING and ZAMBEZI PADDLE STEAMER (PVT) LTD and DOBROCK (PVT) LTD
Ruled By: KUDYA J

HH250-17 : CLEOGOZ INVESTMENTS (PRIVATE) LIMITED vs PATRICIA COX (HOUGAARD) and REGISTRAR OF DEEDS N.O.
Ruled By: CHAREWA J

HH535-15 : BLESSMORE CHANAKIRA vs SHEPHERD MALCOM N.O. and REGISTRAR OF DEEDS and PHIL RUSCH
Ruled By: NDEWERE J

HMT12-20 : CHENESO MUVANDI vs CITY OF MUTARE and MATIVENGA MHISHI N.O. (as Executor of the Estate Late Washington Jekanyika)
Ruled By: MUZENDA J

SC05-22 : CUTHBERT DUBE vs PREMIER SERVICE MEDICAL AID SOCIETY and PREMIER SERVICE MEDICAL INVESTMENTS
Ruled By: MAKONI JA, MATHONSI JA and CHITAKUNYE JA

Appealed
SC12-24 : FELIX DZUMBUNU vs BATANDI MPOFU N.O. and CHIKOTI DORO and MASTER OF THE HIGH COURT OF ZIMBABWE
Ruled By: GUVAVA JA, MAVANGIRA JA and CHITAKUNYE JA

SC43-22 : LEGACY HOSPITALITY MANAGEMENT SERVICES LIMITED vs AFRICAN SUN LIMITED and HON. JUSTICE MTSHIYA (RTD) N.O.
Ruled By: MAKONI JA, MATHONSI JA and MWAYERA JA

SC50-22 : LONRHO LOGISTICS (PRIVATE) LIMITED vs RAM PETROLEUM (PRIVATE) LIMITED
Ruled By: UCHENA JA, MATHONSI JA and KUDYA JA

SC56-22 : CENTRAL AFRICAN BUILDING SOCIETY vs FINORMACG CONSULTANCY (PRIVATE) LIMITED and RETIRED JUSTICE L.G. SMITH
Ruled By: GUVAVA JA, CHATUKUTA JA and MUSAKWA JA

SC59-22 : DELTA BEVERAGES (PRIVATE) LIMITED vs BLAKEY INVESTMENTS (PRIVATE) LIMITED
Ruled By: BHUNU JA, MAKONI JA and CHITAKUNYE AJA

View Appeal
HB60-19 : JOEL SILONDA vs VUSUMUZI NKOMO
Ruled By: BERE J

View Appeal
HB188-22 : BATANDI MPOFU N.O. vs FELIX DZUMBUNU and CHIKOTI DORO and ASSISTANT MASTER OF THE HIGH COURT OF ZIMBABWE
Ruled By: DUBE-BANDA J

View Appeal
HB188-22 : BATANDI MPOFU N.O. vs FELIX DZUMBUNU and CHIKOTI DORO and ASSISTANT MASTER OF THE HIGH COURT OF ZIMBABWE
Ruled By: DUBE-BANDA J

Categories

Law Portal Zimbabwe

Termination of Contracts and Notice of Cancellation re: Approach, Repudiation, Debtors Mora and Effect of Breach of Contract

HH755-15 : CHIKUDZA MANGWENDE vs LIBERTY MACHODO Ruled By: UCHENA J and MWAYERA J

HH39-09 : WARREN PARK TRUST vs ANTHONY PAHWARINGIRA and NTOMBIZODWA PAHWARINGIRA and DAVY MUTINGWENDE and CHIPO MUTINGWENDE and SALTANA ENTERPRISES PL Ruled By: BHUNU J

HH09-09 : SKF ZIMBABWE P/L vs PARIS OLYMPIOUS Ruled By: MAKARAU JP

Appealed HB59-09 : DINESH MANILAL NARAN vs RONNAH MAFURIRANO and THE REGISTRAR OF DEEDS Ruled By: KAMOCHA J

HH111-08 : RAILWAY ARTISANS UNION and RAILWAY ASSOCIATION OF YARD OPERATING STAFF and ANOR vs RAILMED and NATIONAL RAILWAYS OF ZIMBABWE and RAILWAYS EMPLOYMENT COUNCIL Ruled By: GOWORA J

HH27-07 : EDWARD MARUME and ELLEN CHAMUNORWA vs TODD MURANGANWA Ruled By: MAKARAU JP

Appealed SC24-21 : BIG VALLEY MASTERS (PRIVATE) LIMITED vs SHI JINWU Ruled By: GWAUNZA DCJ, GUVAVA JA and MAVANGIRA JA

View Appeal HH601-14 : SHI JINWU vs BIG VALLEY MASTERS (PRIVATE) LIMITED and PHILLIMON MUBATA Ruled By: CHIGUMBA J

View Appeal HH329-17 : MARINDA FENESEY vs GATEWAY PRIMARY SCHOOL and K M RICQUEBOURG N.O. and GATEWAY PRIMARY SCHOOL PARENTS ASSOCIATION and THE SHERIFF OF ZIMBABWE Ruled By: MUSAKWA J

SC81-21 : FRANK HUMBE vs DESMOND MUCHINA and SPARKLES SERVICES (PVT) LTD and GODFREY MUNYAMANA and SHERIFF OF ZIMBABWE and FADZAYI MUNYAMANA Ruled By: BHUNU JA, MATHONSI JA and KUDYA AJA

HH169-13 : TROJAN NICKEL MINE LIMITED vs RESERVE BANK OF ZIMBABWE Ruled By: MATHONSI J

SC138-21 : DIVVYLAND INVESTMENTS (PRIVATE) LIMITED vs DAVID CHIWEZA Ruled By: PATEL JA, GUVAVA JA and BHUNU JA

View Appeal SC59-16 : ZIMRE PROPERTY INVESTMENTS LIMITED vs SAINTCOR (PVT) LTD t/a V. TRACK and JOHN SHUMBA Ruled By: ZIYAMBI JA, GARWE JA and GOWORA JA

SC163-21 : TENDAYI WASHAYA and CHIPO WASHAYA vs MAKEBREAK TRADING (PVT) LTD and THE SHERIFF OF THE HIGH COURT (N.O.) and THE REGISTRAR OF DEEDS Ruled By: MALABA CJ, UCHENA JA and CHIWESHE AJA

HB57-15 : SIPIWO NKOMO vs MLWELIWENKULULEKO NCUBE Ruled By: MUTEMA J

HB60-15 : JABULANI NCUBE vs INNOCENT NYATHI Ruled By: MOYO J

HMA02-19 : JETINOS ZIVANOMOYO vs HELLEN DINGANI Ruled By: MAWADZE J and MAFUSIRE J

HH28-16 : FARPIN INVESTMENTS [PVT] LTD vs NETONE CELLULAR [PVT] LTD and JUSTICE L.G. SMITH [RETD] - ARBITRATOR Ruled By: MAFUSIRE J

HH62-14 : JOHANNES MAKONYE vs KENAE RAMODIMOOSI and ENTREDEV PROPERTY GROUP and C.H. LUKAS Ruled By: CHIGUMBA J

HH128-06 : DOBROCK HOLDINGS (PVT) LTD and TURNER AND SONS (PVT) LTD vs TURNER AND SONS (PVT) LTD and ANTHONY TURNER and MARTIN KING and ZAMBEZI PADDLE STEAMER (PVT) LTD and DOBROCK (PVT) LTD Ruled By: KUDYA J

HH250-17 : CLEOGOZ INVESTMENTS (PRIVATE) LIMITED vs PATRICIA COX (HOUGAARD) and REGISTRAR OF DEEDS N.O. Ruled By: CHAREWA J

HH535-15 : BLESSMORE CHANAKIRA vs SHEPHERD MALCOM N.O. and REGISTRAR OF DEEDS and PHIL RUSCH Ruled By: NDEWERE J

HMT12-20 : CHENESO MUVANDI vs CITY OF MUTARE and MATIVENGA MHISHI N.O. (as Executor of the Estate Late Washington Jekanyika) Ruled By: MUZENDA J

SC05-22 : CUTHBERT DUBE vs PREMIER SERVICE MEDICAL AID SOCIETY and PREMIER SERVICE MEDICAL INVESTMENTS Ruled By: MAKONI JA, MATHONSI JA and CHITAKUNYE JA

Appealed SC12-24 : FELIX DZUMBUNU vs BATANDI MPOFU N.O. and CHIKOTI DORO and MASTER OF THE HIGH COURT OF ZIMBABWE Ruled By: GUVAVA JA, MAVANGIRA JA and CHITAKUNYE JA

SC43-22 : LEGACY HOSPITALITY MANAGEMENT SERVICES LIMITED vs AFRICAN SUN LIMITED and HON. JUSTICE MTSHIYA (RTD) N.O. Ruled By: MAKONI JA, MATHONSI JA and MWAYERA JA

SC50-22 : LONRHO LOGISTICS (PRIVATE) LIMITED vs RAM PETROLEUM (PRIVATE) LIMITED Ruled By: UCHENA JA, MATHONSI JA and KUDYA JA

SC56-22 : CENTRAL AFRICAN BUILDING SOCIETY vs FINORMACG CONSULTANCY (PRIVATE) LIMITED and RETIRED JUSTICE L.G. SMITH Ruled By: GUVAVA JA, CHATUKUTA JA and MUSAKWA JA

SC59-22 : DELTA BEVERAGES (PRIVATE) LIMITED vs BLAKEY INVESTMENTS (PRIVATE) LIMITED Ruled By: BHUNU JA, MAKONI JA and CHITAKUNYE AJA

View Appeal HB60-19 : JOEL SILONDA vs VUSUMUZI NKOMO Ruled By: BERE J

View Appeal HB188-22 : BATANDI MPOFU N.O. vs FELIX DZUMBUNU and CHIKOTI DORO and ASSISTANT MASTER OF THE HIGH COURT OF ZIMBABWE Ruled By: DUBE-BANDA J

View Appeal HB188-22 : BATANDI MPOFU N.O. vs FELIX DZUMBUNU and CHIKOTI DORO and ASSISTANT MASTER OF THE HIGH COURT OF ZIMBABWE Ruled By: DUBE-BANDA J

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Law Portal
Zimbabwe

HH755-15 : CHIKUDZA MANGWENDE vs LIBERTY MACHODO
Ruled By: UCHENA J and MWAYERA J

HH39-09 : WARREN PARK TRUST vs ANTHONY PAHWARINGIRA and NTOMBIZODWA PAHWARINGIRA and DAVY MUTINGWENDE and CHIPO MUTINGWENDE and SALTANA ENTERPRISES PL
Ruled By: BHUNU J

HH09-09 : SKF ZIMBABWE P/L vs PARIS OLYMPIOUS
Ruled By: MAKARAU JP

Appealed
HB59-09 : DINESH MANILAL NARAN vs RONNAH MAFURIRANO and THE REGISTRAR OF DEEDS
Ruled By: KAMOCHA J

HH111-08 : RAILWAY ARTISANS UNION and RAILWAY ASSOCIATION OF YARD OPERATING STAFF and ANOR vs RAILMED and NATIONAL RAILWAYS OF ZIMBABWE and RAILWAYS EMPLOYMENT COUNCIL
Ruled By: GOWORA J

HH27-07 : EDWARD MARUME and ELLEN CHAMUNORWA vs TODD MURANGANWA
Ruled By: MAKARAU JP

Appealed
SC24-21 : BIG VALLEY MASTERS (PRIVATE) LIMITED vs SHI JINWU
Ruled By: GWAUNZA DCJ, GUVAVA JA and MAVANGIRA JA

View Appeal
HH601-14 : SHI JINWU vs BIG VALLEY MASTERS (PRIVATE) LIMITED and PHILLIMON MUBATA
Ruled By: CHIGUMBA J

View Appeal
HH329-17 : MARINDA FENESEY vs GATEWAY PRIMARY SCHOOL and K M RICQUEBOURG N.O. and GATEWAY PRIMARY SCHOOL PARENTS ASSOCIATION and THE SHERIFF OF ZIMBABWE
Ruled By: MUSAKWA J

SC81-21 : FRANK HUMBE vs DESMOND MUCHINA and SPARKLES SERVICES (PVT) LTD and GODFREY MUNYAMANA and SHERIFF OF ZIMBABWE and FADZAYI MUNYAMANA
Ruled By: BHUNU JA, MATHONSI JA and KUDYA AJA

HH169-13 : TROJAN NICKEL MINE LIMITED vs RESERVE BANK OF ZIMBABWE
Ruled By: MATHONSI J

SC138-21 : DIVVYLAND INVESTMENTS (PRIVATE) LIMITED vs DAVID CHIWEZA
Ruled By: PATEL JA, GUVAVA JA and BHUNU JA

View Appeal
SC59-16 : ZIMRE PROPERTY INVESTMENTS LIMITED vs SAINTCOR (PVT) LTD t/a V. TRACK and JOHN SHUMBA
Ruled By: ZIYAMBI JA, GARWE JA and GOWORA JA

SC163-21 : TENDAYI WASHAYA and CHIPO WASHAYA vs MAKEBREAK TRADING (PVT) LTD and THE SHERIFF OF THE HIGH COURT (N.O.) and THE REGISTRAR OF DEEDS
Ruled By: MALABA CJ, UCHENA JA and CHIWESHE AJA

HB57-15 : SIPIWO NKOMO vs MLWELIWENKULULEKO NCUBE
Ruled By: MUTEMA J

HB60-15 : JABULANI NCUBE vs INNOCENT NYATHI
Ruled By: MOYO J

HMA02-19 : JETINOS ZIVANOMOYO vs HELLEN DINGANI
Ruled By: MAWADZE J and MAFUSIRE J

HH28-16 : FARPIN INVESTMENTS [PVT] LTD vs NETONE CELLULAR [PVT] LTD and JUSTICE L.G. SMITH [RETD] - ARBITRATOR
Ruled By: MAFUSIRE J

HH62-14 : JOHANNES MAKONYE vs KENAE RAMODIMOOSI and ENTREDEV PROPERTY GROUP and C.H. LUKAS
Ruled By: CHIGUMBA J

HH128-06 : DOBROCK HOLDINGS (PVT) LTD and TURNER AND SONS (PVT) LTD vs TURNER AND SONS (PVT) LTD and ANTHONY TURNER and MARTIN KING and ZAMBEZI PADDLE STEAMER (PVT) LTD and DOBROCK (PVT) LTD
Ruled By: KUDYA J

HH250-17 : CLEOGOZ INVESTMENTS (PRIVATE) LIMITED vs PATRICIA COX (HOUGAARD) and REGISTRAR OF DEEDS N.O.
Ruled By: CHAREWA J

HH535-15 : BLESSMORE CHANAKIRA vs SHEPHERD MALCOM N.O. and REGISTRAR OF DEEDS and PHIL RUSCH
Ruled By: NDEWERE J

HMT12-20 : CHENESO MUVANDI vs CITY OF MUTARE and MATIVENGA MHISHI N.O. (as Executor of the Estate Late Washington Jekanyika)
Ruled By: MUZENDA J

SC05-22 : CUTHBERT DUBE vs PREMIER SERVICE MEDICAL AID SOCIETY and PREMIER SERVICE MEDICAL INVESTMENTS
Ruled By: MAKONI JA, MATHONSI JA and CHITAKUNYE JA

Appealed
SC12-24 : FELIX DZUMBUNU vs BATANDI MPOFU N.O. and CHIKOTI DORO and MASTER OF THE HIGH COURT OF ZIMBABWE
Ruled By: GUVAVA JA, MAVANGIRA JA and CHITAKUNYE JA

SC43-22 : LEGACY HOSPITALITY MANAGEMENT SERVICES LIMITED vs AFRICAN SUN LIMITED and HON. JUSTICE MTSHIYA (RTD) N.O.
Ruled By: MAKONI JA, MATHONSI JA and MWAYERA JA

SC50-22 : LONRHO LOGISTICS (PRIVATE) LIMITED vs RAM PETROLEUM (PRIVATE) LIMITED
Ruled By: UCHENA JA, MATHONSI JA and KUDYA JA

SC56-22 : CENTRAL AFRICAN BUILDING SOCIETY vs FINORMACG CONSULTANCY (PRIVATE) LIMITED and RETIRED JUSTICE L.G. SMITH
Ruled By: GUVAVA JA, CHATUKUTA JA and MUSAKWA JA

SC59-22 : DELTA BEVERAGES (PRIVATE) LIMITED vs BLAKEY INVESTMENTS (PRIVATE) LIMITED
Ruled By: BHUNU JA, MAKONI JA and CHITAKUNYE AJA

View Appeal
HB60-19 : JOEL SILONDA vs VUSUMUZI NKOMO
Ruled By: BERE J

View Appeal
HB188-22 : BATANDI MPOFU N.O. vs FELIX DZUMBUNU and CHIKOTI DORO and ASSISTANT MASTER OF THE HIGH COURT OF ZIMBABWE
Ruled By: DUBE-BANDA J

View Appeal
HB188-22 : BATANDI MPOFU N.O. vs FELIX DZUMBUNU and CHIKOTI DORO and ASSISTANT MASTER OF THE HIGH COURT OF ZIMBABWE
Ruled By: DUBE-BANDA J