This is an appeal against the judgment of the High Court granting an application for specific performance lodged by the first respondent against the appellants. Apart from granting the relief sought, including the payment of damages in the alternative, the court a quo also ordered the appellants to pay costs of suit on an attorney and client scale.
Background
The first respondent is an association of residents of the Knowe Housing Development based in the town of Norton. These residents purchased Stands on the development site from the first appellant whose business is to develop and sell housing Stands.
The second appellant is apparently the only active director of the first appellant.
The second respondent is the Norton Town Council. It did not appear at the hearing of this appeal, having filed heads of argument indicating that it would abide by the decision of this Court.
The first appellant, as the owner and seller of Lot 2 of Knowe Suburb, entered into sale agreements with the first respondent's members in 1998 (Phase 2) and later in 2003 (Phase 3). The Phase 2 residents complied with their respective agreements by paying the first appellant in full over a period of 30 months. The Phase 3 residents also duly complied by paying the first appellant in full within the agreed period of 60 months that ended on 1 February 2008.
The first respondent averred that the first appellant had breached its contract of sale with the Knowe residents. It filed an application for specific performance or the payment of damages in the alternative.
The appellants opposed the application on the merits and also raised three points in limine at the hearing a quo.
High Court Judgment
The court a quo dismissed all three points in limine.
As regards the first point, relating to prescription, the court found that the permits granted to the first appellant did not give any time limit within which the infrastructural development was to be completed and that the contracts with the residents did not specify any time limits for suing the first appellant. Whatever was to be done by the first appellant was to be done within a reasonable time.
With respect to the second point, the court found that there were no material disputes of fact and that, therefore, it was proper for the first respondent to proceed by way of application rather than by way of action.
Lastly, the court dismissed the third point objecting to the citation of the second appellant in his personal capacity on the basis that he was responsible for the first appellant's administrative affairs.
On the merits, the court a quo found that the members of the first respondent had duly performed their part of the agreements. Conversely, the first appellant had performed some part of the agreements but had not fully complied with the agreements and development permits. The court was not satisfied that this failure to perform was mainly because of inflation. The court further found that the first appellant had failed to establish that performance was now impossible in the era of dollarisation.
If the first appellant had serviced the Stands at the time the purchase prices were paid, between 1998 and 2008, there would have been no difficulty in the performance of the contracts. The court rejected the defence of impossibility of performance on the basis that any hardships now encountered by the appellants were self-created.
Finally, the court held, that, if the appellants were unable to comply with an order for specific performance, they must, in the alternative, pay damages.
In the event, the court ordered the appellants to fully service the Stands in Phases 2 and 3 within 90 days to the second respondent's satisfaction and specifications. The latter was ordered to ensure that the relevant statutory requirements were met. Alternatively, the appellants were ordered to pay the sum of US$192,901,995 to the first respondent's members within 30 days. If they failed to pay, the Sheriff was authorised to attach and sell the appellants' property in execution in satisfaction of the damages awarded. Lastly, the appellants were ordered to pay the costs of suit on an attorney and client scale.
Grounds of Appeal and Relief Sought
The 10 grounds of appeal hereunder are unduly prolix and repetitive. They attack the judgment a quo on the following broad bases:
(i) The appellants were not in breach of their obligations in the absence of a finding as to the time when performance was due, and, therefore, the application a quo was premature and not enforceable.
(ii) The claims in casu were prescribed following the execution of their obligations by the residents, and, in that respect, the court misconstrued the first appellant's contractual obligations and its duties in terms of the permits issued by the second respondent.
(iii) The claim for damages required the quantification of damages by way of action, and, consequently, the claim for damages was not proven according to law.
(iv) The court erred in ordering the second appellant to pay damages personally, and, in so doing, it mis-applied the doctrine of piercing the corporate veil.
(v) The court failed to deal with and pronounce upon the defence of currency nominalism and ordered the payment of damages in the currency of circulation and not the currency of performance.
(vi) The court improperly failed to consider the feasibility of performance against the defence of supervening impossibility.
The appellants pray that the appeal be allowed with costs and that the judgment a quo be set aside and substituted with an order dismissing the application with costs.
At the hearing of the appeal, counsel for the appellants moved an amendment to the relief sought, substituting the prayer for dismissal with one for remittal to the court a quo. Counsel for the first respondent had no difficulty with the prayer being substituted as amended. The prayer was accordingly amended, by consent, to provide for the remittal of the matter rather than the dismissal of the application a quo....,.
Prescription of Claims
Counsel for the appellants submits that the question of prescription is also one that raises issues requiring evidence.
The cause of action of each member of the first respondent would vary according to individual circumstances pertaining to questions of demand of performance and the placing of the first appellant in mora. There was, so he contends, no evidence on these issues in the proceedings a quo.
He further submits that the first respondent's members could have become aware of the alleged breaches upon exercising reasonable care within the contemplation of section 16(3) of the Prescription Act [Chapter 8:11].
This was also a factual issue requiring further evidence.
I note that, in motivating the prescription argument, counsel for the appellants appears to have side-stepped the stated grounds of appeal premised on the position that the claims in casu were prescribed, in terms of section 15(d) of the Prescription Act, three years after the first respondent's members had executed their own obligations to pay the purchase price in full.
In any event, counsel for the first respondent submits that there is no merit in the prescription argument.
All the pleadings, including the opposing affidavit of the second appellant, are clear that the contracts of sale do not stipulate any time frames for the completion of works by the first appellant. She further notes that the second appellant appears to equivocate as to the running of prescription.
It is trite that for prescription to commence running regard must be had to the date when the cause of action first arose. This ordinarily occurs when the claimant becomes aware of all the relevant facts grounding his or her claim. Additionally, the claimant must make a demand for performance placing the other party in mora: see Brooker v Mudonda SC05-18.
In casu, the first respondent wrote a letter, dated 12 March 2015, addressed to the appellants, bemoaning the lack of activity on their part and enquiring when they would attend to the servicing of the Stands in Phases 2 and 3.
The contents of this letter obviously served to place the appellants in mora.
The response from the appellants' lawyers, dated 20 April 2015, purported to raise various evidently disingenuous queries as to the current status of development at Knowe Suburb.
On 15 May 2015, the first respondent's lawyers replied to those queries, and, additionally, sought a commitment date from the appellants, failing which the first respondent would deem such conduct as an unwillingness to comply on the part of the appellants and proceed to enforce its rights in terms of the law.
In my view, it was at this stage that the first respondent's cause of action arose against the appellants.
The court a quo relied on this correspondence to find, quite correctly, that the first respondent's claim, having been instituted on 15 December 2017, had not prescribed.
In the premises, I am satisfied that the third and fourth grounds of appeal also lack merit and must therefore be dismissed.
