During
the month of September 2008, the second applicant, representing the first
applicant, entered into a memorandum of an Agreement of Sale with the first respondent
for the sale of a dwelling house known as number 29 Landau Drive or 13 Copley
Crescent, Khumalo, Bulawayo.
The
purchase price was US$150,000= payable by the Purchaser directly to the Seller
at Bulawayo free of bank exchange as follows:
1.
US$10,000= in cash before the 24th of September 2008;
2.
US$40,000= by way of transfer into the Seller's husband account before the 24th
of September 2008;
3.
The balance to be paid in a space of three months in installments of:-
(i)
US$34,000= to be paid by 31st of October 2008;
(ii)
US$33,000= to be paid by the 28th of November 2008;
(iii)
US$33,000= to be paid by the 31st of December 2008.
Clause
13 of the Agreement stipulated that should the purchaser fail to make payment
on due date of any amount as provided in clause 1 of the Agreement of Sale or
commit any breach of the terms and conditions thereof, then, upon giving seven
days written notice, the Seller shall, at her option, have the right to sue for
the full balance of the purchase price outstanding, including interest at
prevailing Barclays Bank UK overdraft – lending rates and collection charges of
10%, or, alternatively, to cancel the Agreement of Sale and resume possession
of the said property and sue the purchaser for any damages she may have suffered
as a result thereof and 15% of any payments made by the Purchaser to the Seller
shall be retained by the Seller as errah or rouwkoop.
The
Purchaser failed to meet his obligations as agreed by the parties.
The
parties ended up agreeing that it would not be possible for the Agreement of Sale
to be consummated. That was entirely due to the fault of the Purchaser. The
buyer had paid US$80,649=28 towards the purchase price at that time. When the Seller
sought to invoke the provisions of clause 13 of the Agreement of Sale above the
applicants launched this application seeking the following order:-
“It
is ordered that:-
1.
It and is hereby declared that no penalty shall be chargeable upon the
applicants by the 1st respondent consequent to clause 13 of the agreement of
the parties signed on the 19th September 2008; and
2.
Judgment be and is hereby granted against 1st respondent and in favour of the
applicants in the sum of US$80,649=28 together with interest at the prescribed
rate from the date of judgment as well as cost of suit.”
The
first respondent vehemently opposed the application and counter claimed thus:
“It
is hereby ordered that:-
1.
It be and is hereby declared that the applicants and 1st respondent entered
into an Agreement of Sale for Stand 6813 Bulawayo Township for the sum of
US$150,000=;
2.
It be and is hereby declared that pursuant to that Agreement of Sale the
applicants have paid US$80, 649=28;
3.
That the agreement of sale is cancelled; and
4.
That the applicants be and are hereby ordered to pay the 1st respondent a
penalty on account of breach of the agreement.”
As
alluded to earlier in this judgment, it was entirely the fault of the
applicants that the Agreement of Sale collapsed. They were unable to proffer
acceptable reasons why the penalty stipulation should not be enforced. In an
attempt to do so they had alleged that the first respondent had cancelled the
agreement without tendering refund of payments made towards the purchase price.
That of course, was not true. Further,
the applicants had argued that they had not committed any breach and that any
shortfall in the installments payments they had made were due to exchange rate
fluctuations between the British pound and the United States dollar. That
assertion was also untrue. The applicants were expected to have paid, for
instance, a total sum of US$66,000= but they only paid a paltry sum of US$3,723=65.
No exchange rate could result in such a gross disparity in installments.
The
Contractual Penalties Act [Chapter 8:04] permits the enforcement of a penalty
stipulation. Section 4(1) of the Contractual Penalties Act [Chapter 8:04] provides
that a penalty stipulation shall be enforceable in any competent court. The first
respondent is entitled to enforce the penalty stipulation in this court since
the court could not find any acceptable explanation why that should not be
done.
In
the result I would issue the following order:-
(a)
The provisional order be and is hereby discharged with costs;
(b)
The applicants' application be and is hereby dismissed with costs; and
(c) The 1st respondents' counter application be
and is hereby granted in terms of the draft order…., with costs.
