In
or about January 2006, the applicant and the first respondent entered
into an Agreement of Sale in respect of certain immovable property
called Stand Number 584 Greystone Park Township of Greystone.
In
terms of the written agreement, the purchase price for the property
was the sum of $400,000,000= and this was to be paid in full within 5
days of the signing of the agreement. The payments clause in the
Agreement of Sale provided that the purchase price was payable in
full upon the signing of the agreement but a special condition of the
agreement provided that the payment be made within five working days
of the signing of the agreement failing which the agreement would be
considered null and void.
It
is common cause that the applicant did not pay the full purchase
price within the stipulated period or at any time thereafter. The
parties appear to have agreed, immediately after executing the
agreement, that the purchase price of the property be converted to
the sum of US$120,000= and that payment be made into a Channel
Islands bank account whose details were furnished to the applicant by
the first respondent.
This
variation to the written agreement was not itself reduced to writing.
In
pursuance of the new agreement, the applicant paid the sum of
US$30,000= to the applicant by making a deposit into the nominated
account. He also paid the estates agents' commission in local
currency in the sum of $30,000,000= directly to the estate agents who
had arranged the sale.
In
due course, the first respondent pressed for payment of the balance
of the purchase price in foreign currency as the applicant was taking
too long to remit same. The applicant tendered local currency which
was spurned by the first respondent. On 22 February 2007, the estate
agency, acting on behalf of the first respondent, wrote to the
applicant canceling the Agreement of Sale.
In
the letter, the agency alleged that the applicant was in breach of
the written agreement of sale in that he had failed to pay the full
purchase price within five working days of the execution of the
agreement of sale.
The
applicant denied that he was in breach of the agreement but did not
thereafter take any steps to enforce the agreement of sale against
the first respondent.
In
due course, the property was sold, jointly, to the Late Samuel
Mushaninga and the Late Salome Kudzai Chisvo. Before transfer could
be effected in favour of the second purchasers, the applicant
obtained an order restraining the first respondent from doing so. In
the meantime, the second purchasers took occupation of the property.
On
10 July 2009, the applicant filed this application, seeking an order
compelling the first respondent to pass transfer of the property to
him against payment of the sum of Z$370,000,000= and also evicting
the first respondent and all those occupying through him from the
property.
It
may be pertinent, at this stage, to note that the applicant brought a
similar application in 2007 which he withdrew in June 2009 with a
tender of costs.
The
first respondent was served with the application through service upon
one Violet Tanda at the disputed property. It is not indicated on the
certificate of service who Violet Tanda is and in what capacity she
accepted service of the court application on behalf of the first
respondent as it is common cause that the first respondent left the
country immediately after selling the property to the applicant and
that the families of the late Samuel Mushaninga and the late Salome
Kudzai Chisvo are the ones in occupation of the property.
Not
surprisingly, the first respondent did not oppose the application.
I
have considered, but have not decided, on the issue whether the
purported service on the first respondent in this matter is proper.
In view of the conclusion that I reach in this matter, it is not
necessary that I determine the issue. I simply raise it to highlight
that in another forum the issue will have to be determined before an
order can be made against the first respondent.
The
second and third respondents did oppose the application.
Of
material importance in the opposing affidavits filed by the second
and third respondents is a narration of how the Late Mushaninga and
the Late Chisvo purchased the property from the first respondent and
paid the full purchase price. The respondents also sought to argue
that the applicant was in breach of the contract between himself and
the first respondent, prompting the applicant to challenge their
locus
standi
to make such allegations.
The
situation presented by the facts of this mater depicts to me the
classical double sale situation.
The
first respondent first sold the property in dispute to the applicant,
and, thereafter, to the late Mushaninga and the late Chisvo who
purchased the property jointly. The first purchaser now approaches
court for an order of specific performance ahead of the second
purchasers.
As
stated above, at the hearing of the matter, the applicant took the
point in limine
that the second and third respondents had no locus
standi
in the matter to challenge the validity of the contract between the
applicant and the first respondent.
In
this regard, the use of the term “locus
standi”
was, in my view, misplaced.
Locus
relates to the standing of the party before the court. It does not
relate to the weight that should attach to the evidence of a party
that was not close to the transaction and who has no personal
knowledge of such. The issue of locus
standi
does
not arise in this matter as the second and third respondents have
each an interest to protect in the property in dispute. In any event,
the applicant cited the second and third respondents in this
application and it cannot lie in his mouth to deny them locus
standi
after he has dragged them to court.
It
appears to me that what the applicant intended to do was to urge the
court not to attach any weight to the averments of the respondents
regarding the alleged breach of the sale agreement by the applicant
as they were not close to the transaction. As will emerge from this
judgment, the breach of the agreement by the applicant is, in my
view, self confessed.
The
law relating to double sales is well settled.
The
principles which apply where a person sells a property to two or more
persons, separately, were set out by this court in Crundall
Brothers (Pvt) Ltd v Lazarus NO & Anor
1991 (2) ZLR 125 (S)…,.
Relying
on the Article by Professor E.M. Burchell titled “Successive Sales”
and published in the South African Law Journal in 1974, this court
adopted the approach set out by the late Professor McKerron in his
article, “Purchaser with Notice”, published in 1935 in the South
African Law Times. The conclusions reached at by Professor Mackeron
appeared in his article as follows:
“It
is submitted that where A sells a piece of land to B and then to C…,
the rights of the parties are as follows:
(1)
Where transfer has been passed to B; B acquires an indefeasible
right, and C's only remedy is an action for damages against A.
(2)
Where transfer has been passed to C; C acquires an indefeasible right
if he had no knowledge, either at the time of the sale or at the time
he took transfer, of the prior sale to B, and B's only remedy is an
action for damages against A. If, however, C had knowledge at either
of those dates, B, in the absence of special circumstances affecting
the balance of equities, can recover the land from him, and, in that
event, C's only remedy is an action for damages against A.
(3)
Where transfer has been passed to neither; B, in the absence of
special circumstances affecting the balance of equities, can
interdict A from passing transfer to C and obtain specific
performance on the contract, and, in that event, C's only remedy is
an action for damages against A.”
The
facts of the matter before me fall into the third conclusion reached
by the Late Professor R G McKerron. Transfer has passed to neither.
The
issue that immediately falls to be determined is whether the
applicant is entitled to specific performance on the written contract
of sale as he prays for. If he is so entitled, his right to the
property should prevail unless there are special circumstances in the
matter that favour the second purchasers.
Specific
performance is a discretionary remedy.
Generally
speaking, any party to a binding contract, who is ready to carry out
his own obligations, has a right to demand, from the other party, so
far as this is possible, reciprocity. See Farmer's
Coop Society (Reg) v Berry
1912
AD 343 and Haynes
v Kingswilliamtown Municipality
1951 (2) SA 371 (A)…,.
It
is trite that before a party can approach the court for specific
performance he or she must set up a contract whose terms are clear
and unequivocal and in terms of which the order is to be granted.
Trite
as it may be, the issue arises before me as to what contract the
applicant is setting up before me and upon whose terms I must grant
specific performance as the applicant has deposed to two possible
agreements between the parties. I find, however, that each is fraught
with fatal difficulties.
It
is convenient that I dispose of the second agreement first.
As
stated above, after the parties had concluded the written Agreement
of Sale, they verbally agreed that the purchase price be converted to
the sum of US$120,000= and that payments be made into an offshore
account whose details the first respondent furnished to the
applicant. The applicant part performed under this verbal agreement
and when he failed to pay the balance of the US$120,000=, the first
respondent purportedly cancelled the Agreement
of Sale.
I
cannot grant specific performance of the second agreement of sale for
two good reasons.
Firstly,
and this should effectively close the matter, the applicant has not
sought specific performance of this arrangement. He urges me to
ignore it and for me to revert to the written agreement between the
parties.
Secondly,
even if I could find that this was the effective agreement between
the parties, as I am inclined to, I would not have been able to grant
specific performance on it as it was tainted with illegality. The
parties, whilst resident in this country and without the prior
approval of the foreign exchange authorities, had sought to trade in
foreign currency for a property in Zimbabwe.
It
appears to me that being aware of the illegality tainting the second
arrangement, and, most probably, also wishing to avoid the onerous
obligations imposed upon him by the arrangement, the applicant has
urged me to enforce the written agreement between the parties wherein
the purchase price was payable in local currency.
The
applicant has not given me a reason why I should revert to the
written agreement in view of the subsequent developments between the
parties.
It
is common cause that almost immediately after concluding the written
Agreement
of Sale,
the parties entered into the verbal arrangement, the details of which
I have already given. It is further common cause that the applicant
did not pay the local purchase price of the property in local
currency within the stipulated five days - or at all.
In
my view, the fact that the second arrangement was entered into almost
at the same time as the written agreement and was acted upon whilst
the terms of the written agreement were not, strongly suggests that
the parties did not intend to be bound by the written agreement at
all. It was a sham. It was not contracted with the necessary animus.
It was never meant to be binding between the parties but to clothe
the transaction between the parties with some legality in the event
that the transaction attracted the scrutiny of the authorities.
I
am fortified in reaching this conclusion from the actions of the
parties.
The
first respondent never demanded payment of the purchase price in
local currency. The applicant himself did not approach the court to
enforce the contract by tendering the purchase price in local
currency. It was as if the written contract was never written until
the applicant failed to raise the balance of the foreign currency.
Then, for convenience, the first respondent alleged breach of the
written agreement.
Assuming
that I have erred in holding that the written agreement was concluded
without the necessary animus and is thus not binding between the
parties, I still would have refused the applicant an order of
specific performance on the same.
By
his own confession, the applicant is in breach of the agreement. It
was a specific term of the agreement that the purchase price in full
be paid within five working days of the agreement. Failure to pay
within the stipulated period would render the agreement of no force
and effect. Thus, the failure by the applicant to make the stipulated
payment on due date made the agreement lapse ipso facto. At the time
he brought his application to court, the contract had long lapsed and
could not be revived for enforcement.
Finally,
and in any event, assuming that the contract had not automatically
lapsed when the applicant failed to make the stipulated payment on
due date, I would have withheld my discretion to grant specific
performance in the circumstances of this matter.
In
Zimbabwe
Express Services (Private) Limited v Nuanetsi Ranch (Private) Limited
SC21-09,
the Supreme Court declined to order specific performance of a
contract whose contract price had been determined in 2003 and had
been eroded into nothing by inflation at the time specific
performance was sought. In declining to order specific performance,
the court was of the view that were it to grant specific performance,
the appellant it that matter would take delivery of 280 heifers for a
very small amount of money. In other words, the court reasoned, the
appellant would take possession of a herd of cattle worth a
considerable sum of money for which it would have paid virtually
nothing.
In
the matter before me, it is common cause that the applicant is
seeking an order compelling the first respondent to transfer the
immovable property to him against payment of the sum of Z$370
million. It is not in dispute that the local currency has now gone
into disuse and is accordingly valueless currently. The order that
the applicant seeks is for him to obtain transfer of a patently
valuable asset against the payment of a valueless currency.
While
this court upholds the principle of the sanctity of contracts, it
will also not grant specific performance of a contract where to do so
will result in an apparent injustice.
I
do not see any features in the application before me that would
distinguish the case from the case that was before the Supreme Court.
It
is therefore my finding that even without the advent of the second
purchasers, the applicant would not have succeeded in enforcing any
of the two agreements of sale that he concluded with the first
respondent in respect of the property in dispute.
In
view of the conclusions I reach in this matter, it appears
unnecessary to me that I embark on an exercise of determining whether
there are any special circumstances in this matter that dis-entitle
the applicant from obtaining an order transferring the property to
him ahead of the second and third respondents. It is my finding that
the applicant has not been able to establish that he is entitled to
specific performance of the contract that he seeks to rely on.
In
the result, I make the following order:
1.
The application is dismissed.
2.
The applicant is to bear the respondents' costs.
