CHIDYAUSIKU CJ: This is an appeal against the judgment of
BHUNU J, in which he dismissed an application for a provisional order by
the appellant and twenty-three other applicants. I shall refer to the appellant and his co-applicants
as "the applicants" hereinafter. The
facts of this case are very ably summarised by the learned Judge in the court a quo. The applicants' counsel, in his heads of
argument, recapitulates and accepts those facts. The following are the relevant facts, as
summarised by the learned Judge.
The applicants bought
serviced individual residential stands, being subdivisions of Stand 399
Highlands Estate of Welmoed Township, Harare, ("the property") from the third
respondent, Divine Homes (Pvt) Ltd (hereinafter referred to as "Divine Homes")
some time in or around 2001. Before
title could pass to the applicants, the same property was sold in execution by
the Deputy Sheriff and title was transferred to the first respondent,
Vendfin Investments (Pvt) Ltd (hereinafter referred to as "Vendfin"). Vendfin is a nominee of
H S M Ushewokunze (hereinafter referred as "Ushewokunze"). The transfer triggered fierce legal battles
between Divine Homes as the applicant and the Sheriff of Zimbabwe and
Ushewokunze as the first and second respondents respectively under case
no. HC 1721/03.
The protracted legal battles culminated in the following consent court
order dated 4 May 2005:
"IT IS ORDERED
BY CONSENT THAT:
1. The applicant hereby
withdraws its application against the respondents.
2. The first respondent be
and is hereby authorised/ ordered to effect transfer (of) Lot 399
Highlands Estate of Welmoed, Harare, to the second respondent,
H S M Ushewokunze, upon compliance with the terms of the
agreement between (the) first and second respondent(s) in respect of
399 Highlands Estate of Welmoed.
3. This order incorporates
an agreement signed by the parties regulating their interest, rights and
obligations.
4. Each party bears its own
costs."
The parties'
agreement, referred to under para 3 of the court order, was filed of
record. The applicants were not a party
either to the court order or the agreement mentioned therein. The agreement was between Divine Homes and
Ushewokunze.
The applicants became
aware that Vendfin was selling the property and was inviting the applicants to
purchase the property at a price to be advised. The applicants, who had somehow become aware
of the court order and the attached agreement, were invited by Vendfin to
purchase the property at $200 000 per square metre and not the $60 000
per square metre stipulated in the original agreement. This was not acceptable to the applicants
and they launched an application with the High Court for a provisional order in
which they sought the following relief:
"1. TERMS
OF FINAL ORDER SOUGHT
That you show
cause to this Honourable Court why a final draft order should not be made in
the following terms:-
a) That the first
respondent shall address and cause to (be) delivered to the applicants or their
legal practitioners formal offers in terms of Clause 4 of the Agreement
annexed to the Order in case number 1721/03 Ref HC 523/03 within 10 days
of service of this order upon them.
b) That the first
respondent pay the costs of this application at a higher scale.
2. INTERM RELIEF GRANTED
a) Pending the return date
the first respondent be and is hereby interdicted from disposing (of) or in any
way alienating or encumbering its (interest) in the various stands that the
applicants had previously bought from the third respondent which are
subdivisions of stand 399 Highlands of Welmoed, Salisbury."
The applicants sought an
interim interdict prohibiting Vendfin from disposing of or in any way
alienating the disputed properties pending the outcome of the main action in
which they sought an order compelling Vendfin to make them an offer to purchase
the property at $60 000 per square metre as provided for in the original
agreement. The applicants claimed that
they had acquired the right to be offered the property at that price under the
contract between Divine Homes and Ushewokunze.
In the main action they sought an order compelling Ushewokunze to offer
the property to them at the stipulated price of $60 000 per square metre. As I have already stated, the applicants
were not a party to the agreement between Divine Homes and Ushewokunze. The applicants however argued that
clause 4 of the agreement conferred on them the right to be offered to purchase
the property at $60 000 per square metre.
Clause 4 of the agreement between Divine Homes and Ushewokunze
provides as follows:
"4. H S M Ushewokunze
has, on behalf of the parties, agreed to offer the 62 purchasers [the
applicants then, now the appellants] whose names appear on annexure 'A' to this
agreement the stands which relate to their agreements of sale with Divine Homes
(Pvt) Ltd in an amount of $60 000 per square metre, which offer shall be
subject to the following terms:
a) the offer shall be open
for a period of seven (7) working days, whereupon if the offeree has not
accepted the offer it shall lapse and the stand shall be offered to the public
on the terms and conditions in clause 5 hereunder;
b) upon acceptance of the
offer, an agreement of sale shall be entered into which shall stipulate that
the maximum period of payment of the full purchase price shall be ninety (90)
days from the date of acceptance.
5. If the offers or such
part of the offers as in clause 4 hereof have not been accepted by the
stipulated date, i.e. after seven (7) working days of the offer being made in
terms of clause 4, such stands shall be offered for sale to the public at
the same price as the price in clause 4 or such other price as the parties
to this agreement shall from time to time fix.
However, at all times the parties shall act and agree so as to sell the
stands to best advantage guided always by the market prices prevailing at the
time."
Clause 9 of
the same agreement provided that the parties to the agreement had an unfettered
right to amend or vary the terms of the agreement. On a proper reading, clause 9 provides
that the agreement can be altered without any reference to third parties. The only requirement for the validity of any
amendment was that it be reduced to writing and signed by the parties to the
agreement. Clause 9 provides as
follows:
"9. This agreement forms the
whole agreement between the parties.
Any variation, change, alteration or anything that affects the
implementation of its contents shall not be valid unless (the) same is reduced
into writing and signed by the parties whose signatures have been affixed to
this agreement."
On 21 and 28 June
2005 Divine Homes and Ushewokunze signed an addendum to the agreement in
terms of clause 9, amending the offer price. The amendment was reduced to writing and
duly signed by both parties in compliance with clause 9 of the
agreement. The addendum reads in part
as follows:
"ADDENDUM TO
AGREEMENT AS PER PARAGRAPH 9
Made and entered
into by and between
DIVINE HOMES
(PVT) LTD (of the first part)
AND
H S M USHEWOKUNZE
(of the other part)
WHEREAS
4. HERBERT SYLVESTER
MASIYIWA USHEWOKUNZE has on behalf of the parties agreed to offer the
62 purchasers whose names appear on annexure 'A' to this agreement the
stands which relate to their agreements of sale with Divine Homes (Pvt) Ltd at
$60 000 per square metre or the prevailing market price, whichever is
higher at the time of acceptance of the offer, which offer shall be subject to
the following terms:
a) The offer shall be open
for a period of seven (7) working days, whereupon if the offeree has not
accepted the offer it shall lapse and the stand shall be offered to the public
on the terms and conditions in clause 5 hereunder;
b) Upon acceptance of the
offer, an agreement of sale shall be entered into which shall stipulate that
the maximum period of payment of the full purchase price be ninety (90) days
from the date of acceptance;
c) The parties have agreed
to amend the principal agreement."
It is common cause that Ushewokunze, acting in terms of the amended
agreement, offered to sell the property to the applicants for $200 000 per
square metre. The applicants do not
dispute that $200 000 per square metre was the prevailing market value of
the property at the time of the offer.
The offer to the applicants was through an advertisement in the press
and an explanation at the offices of the respondents' legal practitioners.
The applicants objected to the revised purchase price of $200 000
per square metre. The applicants
contended that Ushewokunze was legally obliged to offer them the property at
$60 000 per square metre as per the original agreement. The applicants argued that the amendment to
the agreement was illegal as it amounted to an illegal variation of a court
order. The learned Judge in the court a quo rejected this argument and
concluded as follows:
"I find that there is absolutely no
merit in that argument because the court order incorporates the agreement,
which agreement envisages valid amendments or alterations to the original
agreement. What that means is that once
a valid amendment is made in terms of clause 9 before acceptance by the
applicants it becomes part of the valid court order.
The applicants could not validly
accept the original tentative offer price because it was not a firm offer to
them. Even if we were to assume for one
moment that it constituted a firm offer, an offer can be amended, varied or
altered (at) any time before acceptance.
Having come to that conclusion, I
find that there is no merit in this application. The applicants have failed to establish a prima facie right."
I respectfully
agree with the conclusion of the learned Judge.
It is common cause that the
agreement entered into between Divine Homes and Ushewokunze is what is
generally known as a contract for the benefit of a third party. In terms of clause 4 of the agreement (before
the amendment) Ushewokunze agreed to offer to sell to the applicants the
property at the purchasing price of $60 000 per square metre. It is now settled law that in a contract for
the benefit of the third party, the beneficiary third party's right to sue and the
obligation to be sued under such contract accrue upon the offer being
communicated to and accepted by the third party in terms of the contract. It is the communicating of the offer and the
acceptance of the offer that creates the vinculum
juris, which in turn creates the entitlement to sue and the obligation to
be sued. See McCullogh v Fernwood Estate Ltd 1920 AD 204 at 206.
The applicants are no
doubt the beneficiary third party in the contract between Divine Homes and
Ushewokunze. In terms of clause 4
of the agreement between the two contracting parties Ushewokunze was to offer
the applicants the property for sale at the purchasing price of $60 000
per square metre. He undertook to make
the offer to the applicants within seven days of the agreement. On the applicants' version of the facts, no
offer was ever communicated to the applicants within the seven days stipulated
in the contract. Indeed no offer was
ever made to the applicants before the amendment of the agreement in June 2005. As no offer was ever made to the applicants,
on the authority of McCullogh's case supra no vinculum juris was ever created entitling the applicants to
sue the promissor (Ushewokunze) on the undertaking to sell the property for
$60 000 per square metre in terms of the agreement before it was amended. Divine Homes, as a party to the agreement, could
have sued Ushewokunze to make good that offer before it expired. Had Ushewokunze communicated the offer to
the applicants and sought to withdraw the offer prior to the expiry date of the
offer, the applicants might have had a cause of action. On the facts of this case, as set out by the
applicants themselves, no offer was ever communicated to the applicants for the
purchase of the property at $60 000 per square metre. Consequently no such offer was ever accepted
by them. Without the offer being
communicated to the applicants and the applicants accepting such offer, the
applicants cannot sue or be sued upon the contract between Divine Homes and
Ushewokunze. See Salisbury Bottling Co (Pvt) Ltd v Lomagundi Distributors (Pvt) Ltd 1965
(3) SA 503 (SR) at 510. Ushewokunze,
after the June 2005 amendment to the agreement, offered to sell the property to
the applicants at $200 000 per square metre. That offer was never accepted by the
applicants. Consequently no cause of
action can arise from that offer.
The applicants in this case sought an interim interdict pending the
finalisation of the main action between the parties. Before a court can grant an interim
interdict, it is necessary for the applicant to establish a prima facie case, that is to say,
the applicants must aver facts which if proved in the main action will
constitute a cause of action. The facts
that the applicants intend to prove in the main action are incapable of
constituting a cause of action even if they were proved. On this basis, I agree with the learned
Judge in the court a quo that
the applicants failed to establish a prima facie
case entitling them to an interim interdict pending the finalisation of the
main action.
The other argument of the applicants, that the original agreement between
Divine Homes and Ushewokunze was part of an order of the court and
therefore cannot be altered, does not merit any detailed consideration. That argument is simply untenable. The express language of the agreement itself
confers on the contracting parties the unfettered power to amend the agreement
in the manner prescribed or provided for in the agreement. This unfettered power to amend the agreement
is incorporated into the court order itself.
The amendments to the agreement can only be impugned on the basis of
lack of compliance with the terms of the agreement. The amendment was in accordance with the
agreement itself and is therefore valid.
In the result, the
appeal is dismissed with costs.
SANDURA JA: I
agree
MALABA JA: I
agree
Makoni Legal Practice, appellant's legal
practitioners
Dube, Manikai &
Hwacha, respondents' legal practitioners