MAKARAU JP: The
applicant and the respondent concluded an agreement of sale in respect of
certain property in Chegutu on 25 October 2006. The agreement was reduced to
writing. In terms of the agreement of sale, the purchase price was set at $29
million. The full purchase price was paid in full by the due date.
It
is common cause that on the same day, the respondent entered into a written
agreement with one Everisto Marenga, (“ Marenga”), for the sale and purchase of
a certain property in Glen View, Harare for the sum of $23 Million. The
agreement was also reduced to writing.
It
is pertinent in my view at this stage to record that the two agreements of sale
were all prepared by the same law firm that appeared to be acting as the agents
of both sellers in both contracts.
On
26 October 2006, before the applicant had paid the full purchase price for the
Chegutu property, she was advised by the law firm handling the sale that
Marenga, the seller of the property to the first respondent required to have
the purchase price under his agreement “topped” up by a further $3 million. She
agreed to pay the required amount as she had been told that this would enable
her to move into the Chegutu property. She executed an acknowledgment of debt
in favour of Marenga, promising to make the payment by 6 November 2006. She did
not make the payment until four days later.
When
she requested to take occupation of the property, she was advised that the
agreement of sale between the parties had been cancelled because the applicant
had failed to pay the money secured under the acknowledgement of debt on due
date, leading to the cancellation of the agreement between the respondent and
Marenga.
Unhappy
with the stance that the first respondent had adopted in the matter, the
applicant filed this application, seeking an order compelling the respondent to
transfer ownership of the property to her. In her application, the applicant
averred that she was not a party to the agreement between the respondent and Marenga
and that any cancellation of that contract did not have any consequences on her
contract with the first respondent. She also prayed for an order evicting the
first respondent from the property.
The
application was opposed by the first respondent. In her opposing affidavit, the
first respondent took the point in limine
that the application was fraught with conflict of facts that cannot be resolved
on paper and that it should be dismissed on that basis alone. Regarding the
merits of the matter, the first respondent averred that it was understood
between her and the applicant that the sale of the Chegutu property would only
be on condition that the first respondent was able to purchase a property in
Harare. She heard about the property being offered by Marenga and informed the
applicant about it. At the time, the applicant could not raise the required
amount. By the time that the applicant had raised the asking price, Marenga had
upped his price by $3million. She communicated this increase to the applicant. In
turn, the parties agreed to renegotiate the purchase price for the Chegutu
property. This was set at a price that would cover the increase by Marenga. She
agreed to sign the agreement of sale with the applicant. At the time of signing
the agreement, she did not know that the applicant had agreed to pay an additional
$3million to Marenga. Applicant failed to pay the $3million to Marenga on the
agreed date resulting in Marenga canceling the agreement of sale in respect of
the Harare property.
The
first respondent also filed a supporting affidavit by one Mangwiro, a legal
practitioner who was intimately involved in the negotiations and the drafting
of the agreements between the parties. In his affidavit, Mangwiro averred that
the applicant knew that the first respondent was only disposing of her Chegutu
property on condition she acquired a property in Harare. He further averred in
the affidavit that the sum secured in the acknowledgement of debt in favour of
Marenga by the applicant was applicant's own initiative to keep Marenga part of
the equation as the first respondent was prepared to pay only $23 million for
the property against an asking price of $26 million.
At
the hearing of the matter, Mr Mwonzora
for the applicant invited me to take a robust approach and find, on the basis
of the papers filed of record, that the agreement between Marenga and the first
respondent had no bearing on the agreement between the applicant and first
respondent. He further invited me to hold that the written agreement of sale
between the parties was the only agreement between them as provided for in
clause 7 of the agreement. Finally, he urged me to compel the first respondent
to pass transfer of the property to the applicant as the applicant had
performed all her obligations under the agreement. He cited to me clause 7 of
the agreement of sale, which provides:
“The terms of this Agreement shall
constitute the sole record of the agreement between the parties and supersedes
all prior and contemporaneous communications, representations, promises,
warranties or agreements (whether oral or written) with respect to the subject
matter hereof and no such communications, representations, promises, warranties
or agreements shall suspend the operation of, vary, add to the terms of, or
otherwise affect the validity or interpretation of this Agreement.”
In
addition to clause 7 of the agreement, Mr
Mwonzora also relied on clause 8 which provides that any alterations or
variations to the agreement of sale have to be in writing and signed for by
both parties.
While
he did not refer to the legal principle that he was relying on by name, it
appears to me that Mr Mwonzora was
trying to bar the introduction of any other evidence extrinsic to the written
document between the parties. In essence, Mr
Mwonzora was inviting me to make recourse only to the document between the
parties embodying the agreement of sale and to hold as inadmissible the
averments by the first respondent that there was a condition precedent to the
agreement which was not fulfilled and further, that there was an ancillary
agreement between the applicant and Marenga which the applicant breached. In my
view, and as correctly pointed out by Mr
Musekiwa, he could only have been relying on the parole evidence rule for
the exclusion of such evidence.
The
issue that has exercised my mind in this matter is whether the parole evidence
rule applies in the circumstances of this matter to resolve all conflicts of
facts that are arising.
The
parole evidence rule also known as the integration rule has been a part of our
law for decades and holds that when a contract has been reduced to writing, the
written document, in general, is regarded as the exclusive memorial of the
terms of the transaction between the parties and any evidence extrinsic to the
document is inadmissible. (See Union
Government v Vianini Ferro Concerete Pipes (Pty) Ltd 1941 AD 43).
It
is trite that the parole evidence rule is not of automatic application to all
written contracts, even where the parties have stipulated that the written
agreement constitutes the entire agreement between them as happened in casu. The authorities are quite clear
that it is a general rule. As a general rule it is subject to exceptions.
The
rule is based on the presumed intention of the parties that the written
documents embody their entire contract. In my view, it is in this regard that Mr Mwonzora heavily relied on clause 7
of the agreement. It follows in my further view that where evidence shows that
the parties did not so intend, the rule cannot apply.
In
casu, the written contract appears to
have been varied by the subsequent agreement between the applicant and Marenga,
increasing the purchase price of both properties by $3 million. By entering
into the separate agreement with Marenga, in my view, the applicant appears to
have evinced an intention to be bound by the condition precedent that the deal
between Marenga and the respondent had to go through to enable her to acquire
the Chegutu property. She makes the admission in her own papers that she went
into the agreement to ensure that Marenga did not pullout of his agreement of
sale with the respondent. It appears to me that by that admission, the
applicant may have destroyed the basis upon which she can successfully rely on
the parole evidence rule. It appears to me that by her own conduct, the
applicant takes herself outside the application of the rule as her conduct in
entering into the separate agreement with Marenga may have altered the
agreement between herself and the first respondent.
A
conflict of fact arises. The applicant alleges that by entering into the
separate agreement with Marenga, she did not intend to alter her agreement with
the first respondent. The first respondent argues that she did. Without hearing
viva voce evidence from the parties and
their witnesses as to how the separate agreement was negotiated and concluded,
I am of the view that I cannot conclusively decide on the matter without doing
an injustice to one of the parties, notwithstanding the prima facie position I
may have adopted above on the import of the separate on the original agreement
between the parties.
It
further appears to me that to allow the words that the parties used in the
document to override their common intention to include the sale by Marenga to
the respondent as part of the equation is in my view to enforce what was not
agreed upon. This is not the basis upon which our law of contract rests. At all
times, the common intention of the parties should override all other
considerations.
In
any event, the parole evidence rule does not prevent the leading of evidence to
show that the written contract was subject to a condition precedent not
expressed in the document. The first respondent cannot be stopped from leading
such evidence. (See R H Christie 3Ed: The Law of Contract in South Africa page
217-218).
In
my view, there is a material conflict of fact in this matter relating to
whether or not there was a condition precedent to the agreement of sale. That
conflict cannot be resolved on the basis of the affidavits filed of record
without doing an injustice to one or other of the parties. As discussed above,
the effect of the acknowledgement of debt signed by the applicant in favour of
Marenga takes centre stage in this dispute and has to be explained by viva voce evidence.
It
has been argued by the first respondent that the sale of the Chegutu property
was subject to her successfully purchasing a property in Harare. The applicant
seeks to avoid such a condition precedent. Evidence has to be led from the
parties as to whether this was their common intention or not.
Having
found that there are conflicts of facts that I cannot resolve on the basis of
the affidavits filed of record, it has exercised my mind whether I should
dismiss this application or refer the matter to trial. During the hearing of
the matter, I did raise some of the conflicts of facts that were arising in
this matter. I invited counsel to concede that such were that I could not
resolve them without the aid of oral evidence. Counsel was of the view that
there were not and invited me to be robust.
The
caveat has been sounded before that litigants must choose the form of
proceedings with care. Where a conflict of fact is apparent before the
proceedings are launched, application procedure should be avoided or the
applicant risks having the application dismissed. In casu, the conflict must
have been anticipated. It was apparent in the applicant's own papers. It became
clearer with the filing of the opposing affidavits. It was hinted at during the
hearing. Regardless, counsel opted to proceed not taking the hint to have the
matter referred to trial.
Taking
into account the facts of this matter and the alternative arguments raised orally
by Mr Mwonzora to the effect that the
first respondent has been unjustly enriched by keeping both the purchase price
and the property, an issue that does not require determination in these
proceedings, it is necessary in my view that the applicant clearly formulates
the cause of action that she intends to bring against the first respondent.
In
the result, I make the following order:
1.
The application is dismissed
2.
The applicant shall bear the first respondent's cots.
Mwonzora & Associates, applicant's
legal practitioners.
Musekiwa & Associates, 1st respondent's legal practitioners.
