The
applicant and the first respondent entered into an agreement of sale.
In terms of that agreement, the applicant was to purchase Stand 58
Greystone Township 2 of Lot A of Borrowdale Estate measuring 4,730
square meters. The agreement was entered into on 18 February 2008.
In
terms of clause 2, which deals with the terms of payment,
$1,950,000,000,000 (One trillion nine hundred and fifty billion
Zimbabwe dollars) was to be paid “within three (3) days of signing
this agreement of sale to Kingdom Asset Management.”
The
applicant completed an RTGS form on 21 February 2008 and presented it
to his Bank, instructing it to pay the first respondent's agent the
purchase price. The RTGS form which was attached as annexure B to the
applicant's application has the following material details;
It
was addressed to CFX Bank requesting it to transfer
$1,950,000,000,000 to Kingdom Securities Ltd Call Account. It is
dated 21 February 2008. The value date is indicated as 22 February
2008. The account to be debited is indicated as c/o CFX. It is
endorsed at the bottom in long hand “Debit new account No. 172
1197287-011” and “pd. 22/2”.
The
following facts are common cause;-
1.
The first respondent sold the property to a third party on 21
February 2008.
2.
The applicant was offered another unspecified Stand on a without
prejudice basis.
3.
The applicant applied for a provisional order interdicting the first
respondent from selling, disposing, transferring or alienating the
immovable property to any person other than the applicant.
4.
The provisional order was granted by HLATSHWAYO J on 5 March 2008.
The
applicant now seeks confirmation of the provisional order. The first
respondent seeks its discharge. The issue to be decided is whether or
not the applicant paid the purchase price within the agreed period.
Counsel
for the applicant submitted that the provisional order should be
confirmed as the applicant has a clear right emanating from his
having complied with the terms of the agreement of sale by paying the
purchase price within the stipulated period. Counsel for the first
respondent submitted that the provisional order should be discharged
as the applicant has not established a clear right as the agreement
lapsed when the applicant failed to pay the purchase price by the
21st
of February 2008.
The
issue on which this case hinges is whether or not the applicant paid
the purchase price within the stipulated period. Put differently, the
issue is whether the instruction given by the applicant to CFX Bank
on 21 February 2008 constitutes payment within three (3) days as
provided in clause 2, or payment by the 21st
of February 2008 as provided in clause 17 of the agreement of sale.
Clause
17 provides as follows;-
“It
is a condition precedent of this agreement that the Purchaser signs
and pays the full purchase price stipulated in paragraph 2.1 (sic) on
or before 21 February 2008 failing which the agreement shall
immediately lapse and be of no further force or effect.”
Clause
2 of the agreement provides as follows;-
“Z$1,950,000,000,000
(one trillion nine hundred and fifty billion Zimbabwe dollars) to be
paid within three (3) working days of signing this agreement of sale
to Kingdom Asset Management.”
It
is clear from clauses 2 and 17 that payment was to be made before the
closing of business on 21 February 2008. Failure to comply would lead
to the lapsing of the agreement of sale.
Counsel
for the applicant submitted that the ZETTSS Payment Form, annexure B,
proves that the applicant paid within 3 days as required by clause 2,
and on or before 21 February 2008 as stipulated by clause 17. He
relied on Rule 1.1 of the Zimbabwe Electronic Transfer and Settlement
System Operating Rules, (R.B.Z.ZETSS - 1 (Issue 5) which provides as
follows;-
“1.1
The Zimbabwe Electronic Transfer and Settlement System (ZETSS) allows
for the real time, irrevocable, interbank transfer of funds on a
same-day value basis using settlement accounts held at the Reserve
Bank of Zimbabwe.”
Counsel
for the respondent, on the other hand, submitted that payment is made
when the sending Bank's account is debited and the receiving Bank's
account is credited with the amount specified in the payment
instruction. He relied on Rule 9 of the Zimbabwe Electronic Transfer
and Settlement System Operating Rules which provides as follows;-
“9.
A payment instruction under ZETSS is deemed to be final and
irrevocable once the sending Bank's account is debited and the
receiving Bank's account is credited with the amount specified in
the payment instruction.”
It
seems to me that the submissions made by counsel for the applicant
are correct.
Rule
1.1 deals with the general intention behind the introduction of this
type of transfer of funds. It was intended to be a quick way of
transferring funds so that the funds so transferred could reflect in
the recipient's Bank account on the same day. It makes it clear
that once the instruction is given it becomes irrevocable, meaning
that payment must be deemed to have been made at the time the
instruction was given. Rule 9, on the other hand, provides for the
stage when such a payment becomes final and irrevocable. In my view,
this merely provides for the finality of an already irrevocable
payment. I would therefore not agree with counsel for the respondent
that payment is made at the time the receiving account is credited.
Rules
1.1 and 9 must be interpreted within the context of other provisions
of the operating rules. Rules 7.1 and 7.4(a) of the Zimbabwe
Electronic Transfer and Settlement System Operating Rules shed
light to their true meaning. They provide as follows;-
“7.1
Only unconditional, irrevocable payment instructions between
participants and between participants and the Reserve Bank may be
made through the System;” and
“7.4
Participants may capture payments that are to be effected at a future
date or time, on condition that:-
(a)
Such payments shall be scheduled for a business day and time the
System is in operation:”
This,
to me, means, as a general rule only, unconditional, irrevocable
payment instructions between participants and the Reserve Bank can be
made. This would mean payment would be deemed to have been made on
the day the paying party gave instructions to his Bank.
In
this case, it would mean payment was made on 21 March 2008.
If
there was no exceptions to Rules 1.1 and 7.1 I would have had no
difficulties in finding that the applicant paid within the agreed
period. However, the paying participant can, in terms of Rule 7.4(a)
of the Zimbabwe
Electronic Transfer and Settlement System Operating Rules,
instruct his Bank to capture a payment that is to be made in the
future. If he does, payment cannot be deemed to have been made on the
date of the instruction but on the stipulated future date.
In
this case, it is common cause that the applicant, in giving
instructions to his Bank in annexure B, indicated the value date as
22 February 2008. That is the date on which he intended to effect
payment. That is the date on which his Bank effected payment as he
had instructed it to. The date of payment is, in this case, not the
day the instruction was given but the future date stipulated by the
applicant in his instructions. In the result, the applicant paid on
22 February 2008 when the agreement required him to pay by the 21st
of February 2008. This means the agreement lapsed at the close of
business on 21 February 2008.
There
is therefore no legal basis on which the provisional order granted on
5 March 2008 can be confirmed. The right on which it depended was
extinguished by the lapsing of the agreement of sale. It is therefore
discharged with costs.
