MTSHIYA J: The plaintiff's claim in this matter arises from the purchase of a
property from the first defendant. The facts of the case, which are common
cause, are these:
The first defendant is the owner of
Remainder of Lot II of Glen Tor of Glen Lorne and was granted authority by the
Town Planning Authority under Subdivisional Permit No. 4353/85 to subdivide the
property. On 7 November 2007 the parties signed an agreement of sale whereby
the plaintiff in her capacity as Trustee of Mukudzei Trust purchased from the
first defendant "a certain piece of land situate in the district of Salisbury
called Stand 2944 Glen Lorne Township, subdivision of Lot II Hunters Moon Lane,
Glen Tor Lorne, Harare, measuring 4648 square meters ("the property"). The
property was sold for $9 000 000 000-00 (nine billion) dollars payable after
the signing of the agreement.
The sale of the property was handled
by the first defendant's agent called Denrose Real Estate ("the agent") who
would be paid $675 000 000-00 (six hundred and seventy five million dollars) as
commission from the purchase price. The agent would also pay all the costs
related to the subdivision of the property.
The only special condition attaching
to the agreement of sale was that the sale was subject to the seller completing
the subdivision of Stand 2944 Glen
Lorne Township
held under deed of transfer No. SD/2008.
As at 3 December 2007 the plaintiff
had, through Real Time Gross Settlement (RTGS), paid, towards the purchase
price, a total sum of $9 195 451 404-00 . Payments were made through the
defendant's agent.
On 4 December 2007 the first
defendant purported to cancel the agreement arguing that the plaintiff had
failed to pay the purchase price in terms of the agreement.
On 13 March 2008, following the
purported cancellation of the agreement, the plaintiff issued summons against
the first defendant claiming for:
"1. An
order declaring the purported cancellation of the agreement of sale whereby the
plaintiff purchased a subdivision of the Remainder of Lot II of Glen Tor of
Glen Lorne being Stand No. 2944 Glen Lorne Township from the first defendant
for the sum of nine billion dollars ($9 000 000 000-00) which sum has been
paid, null and void.
- An
order compelling the first defendant to complete subdivision of the
Remainder of Lot II of Glen Tor of Glen Lorne in terms of Subdivisional Permit No. SD/2008 or any
subsequent subdivisional permit that may be issued by the competent
authority and sign all documents necessary and take all steps necessary to
effect transfer of Stand 2944 Glen Lorne Township to the plaintiff within ten days thereof failing which
the Deputy Sheriff or his authorised deputy take all steps necessary to
effect transfer to the plaintiff.
- An
order compelling the second defendant to transfer Stand 2944 Glen Lorne Township
only to the plaintiff or its order once the Remainder of Lot II of Glen
Tor of Glen Lorne held under Deed of Transfer No. 4353/85 is subdivided in
terms of SD/2008 or any subsequent subdivisional permit that may be issued
by a competent authority.
- An
order that the first defendant pays costs of suit on a legal practitioner
and client scale".
At the pre-trial
conference held on 24 September 2008 the following were identified and agreed
to as issues for trial:-
"(a) whether the plaintiff paid in terms of the
agreement;
(b) whether the first defendant was entitled to
cancel the agreement; and
(a) whether the plaintiff has locus standi to institute these
proceedings".
At the commencement of
the hearing the first defendant abandoned the last issue on locus standi and thus leaving issues (a)
and (b) for trial.
The plaintiff in her
capacity as Trustee of Mukudzei Trust gave evidence which in the main confirmed
the agreement between the parties. In brief she restated the facts as already
given above.
In support of her evidence the plaintiff
produced seven (7) exhibits. She, however, said it was not the understanding of
the parties that payment would be in the form of bank notes or coins. She said
that would not have been possible since it would have been against banking laws
for the plaintiff to hold cash amounting to $9 billion. The withdrawal limits
then in place did not allow for that. She said the arrangement with the estate
agent was that money from the plaintiff's investments would be paid into the
agent's account and to that end the Estate Agent had provided the plaintiff
with an account number. She said although there had been no specific time frame
for payments, as the agreement merely recorded that payment would be effected
after the signing of the agreement, payment of the total sum of $9 195 451
404-00 had been effected by 3 December 2007 as per exhibit 4. Also, as shown on
exhibits 2 and 3, staggered RTGS payments from the plaintiff's investments were
made in favour of the defendant through his agent. It was, however, her
evidence that by the time of the purported cancellation of the agreement, (i.e.
4 December 2007 - exhibit 6) full payment had been made. She believed that the
defendant's wish to cancel the agreement was because he wanted to resell the
property at a higher price. She produced the purported letter of cancellation
as exhibit 5, which exhibit reads as follows:
"RE: CANCELLATION OF
AGREEMENT OF SALE
I have attached here a letter from
Mr Chipunza. I have just received it this morning and I believe it is
self-explanatory.
Mr Chipunza has cancelled the
agreement of sale between yourself and him.
Yours faithfully
D F Zimbudzana
MANAGING DIRECTOR"
Through exhibit 7, the plaintiff's
legal practitioners had responded to the above letter which as can be seen was
directed to the defendant's agent. Exhibit 7 reads as follows:
"AGREEMENT OF SALE: STAND NO. 2944 HUNTERS MOON LANE, GLEN TOR, GLEN
LORNE, HARARE___________________________________________
We act for Kuziwashe Trust.
Your letter dated 4 December 2007
received by our client on 5 December 2007 has been handed over to us for
attention and reply.
Firstly the agreement in our
client's possession is properly and fully completed and signed. A copy is
attached for your attention.
Secondly, there is no time frame
within which payment must be made only that it can be made after signing of the
agreement. Consequently, our client is not in breach of the agreement. Full
payment has been made, attached hereto are copies of the payments made to your
agent.
Furthermore, the agreement in our
client's possession is properly dated. In any event, that will have no legal
effect on the agreement.
We advise that our client is holding
you to the agreement. If you do not accept in writing within forty-eight hours
of the date of this letter, summons for specific performance will be issued
against you without further ado.
Yours faithfully
MBIDZO, MUCHADEHAMA & MAKONI
cc. Denrose Real Estate".
The witness, under cross examination,
maintained that payments were to come from the plaintiff's investments and the
defendant's agent was fully aware of that arrangement and hence the willingness
to accept payments up to 5 December 2007. Furthermore the defendant's agent had
not raised issue with the mode and speed of payment. At most, she said, the defendant
would have rejected RTGS payments and would have sent a letter of demand to the
plaintiff. She denied the allegation that the contract had been tempered with.
It was her view that, given the fact that the plaintiff had fulfilled its
obligation under the contract, specific performance was called for. The
plaintiff closed its case after the one witness.
The defendant testified that he
indeed entered into an agreement of sale with the plaintiff on 7 November 2007.
He confirmed that the sale was handled by his agent, Denrose Real Estate. He
said at his agent's offices he had dealt with one Tendai and the understanding
was that the purchase price would be paid at one time as opposed to a deed of
sale which gives a purchaser time for payment. He said this was to be a cash
payment. He, however, went on to explain that by cash payment he did not mean
payment by bank notes or coins only. He said any other form of payment,
including RTGS, would suffice as long as payment was made at once.
Testifying that the agreement
attached to the plaintiff's summons was not the one the parties had signed, the
defendant said that in the original and unaltered agreement, he had initialled all
pages including the first page. He said that in clause 1 (a) on the first page
the word "immediately" had been deleted and thus leaving the clause to read:
"The purchaser pays cash in the sum of $9 000
000 000-00 (NINE BILLION DOLLARS) after signing the agreement". Instead of:
"The purchaser pays cash in the sum of $9 000
000 000-00 (NINE BILLION DOLLARS) immediately after signing the
agreement". (my own underlining)
He also said clause 1 (c) in the
agreement he signed provided for Scanlen & Holderness instead of Mbidzo
Muchadehama & Makoni as conveyancers for him. He said he was the first to sign the
agreement and had left it with the Estate Agent for the plaintiff to sign all
the three copies. Indeed the agreement he then produced as exhibit 8 did not
have any initials on the first page.
Mr Chipunza said he had pointed out
the alleged changes in the contract/agreement to a Mr Zimbudzana of Denrose
Real Estate. He said Mr Zimbudzana could not give an explanation since the
matter had been handled by Tendai whom he (the witness) understood had been dismissed
for the manner he had handled the agreement of sale. He said although he had
wanted an amicable settlement, he had failed to engage Mr Mbidzo of Mbidzo
Muchadehand & Makoni legal practitioners on the issue. Failure to engage Mr
Mbidzo had led to the cancellation of the agreement. Mr Chipunza said, on
checking on 9 November 2007, he had noticed that a substantial first payment
had been made from the sale of the plaintiff's property. He did not, however,
resort to cancellation of the agreement because he wanted to know why there
were changes in the agreement.
It was his view that the price of $9
billion was fair at the time. However, the city valuers had told him that the
price was an underpayment. He said although he was not worried about the mode
of payment, he was worried about the timing because of the effects of inflation
on money. He said surveyors would charge him a lot of money and thus, leaving
him with nothing.
Under cross-examination Mr Chipunza
said as at the time of sale he was fully aware of costs relating to endowment
fee to council, installation of a culvert leading to the property, capital
gains and surveyors' fees. It was the city council valuers who had then, after
7 November 2007, advised him that the correct valuation for the property was $16
billion instead of $9 billion. He also said that initially he did not think it
was important for him to mention the issue of changes in the agreement to his
legal practitioners. He confirmed that he had not discussed same with his
lawyers up to the time he came to court. He said he did not know the exact
amount of money that had been paid at the time he decided to cancel the
agreement. He, however, maintained that the mode of payment did not bother him
but he had noticed that the agreement had been changed. He, however, agreed
that he wanted to pull out because he wanted more money for the property as
advised by city council valuers.
Mr Mbidzo for the plaintiff, submitted that as at 3 December 2007 the
plaintiff had made full payment. The plaintiff had, at that date, made a total
payment of $9 195 651 404-00 through the
defendant's agent. That being the case, the defendant could not therefore
justifiably cancel the agreement through his letter of 4 December 2007.
Furthermore, there had been no prior warning. In any case, through a personal
check on 9 November 2007, the defendant was fully aware that payments were being
made from the plaintiff's investments. There was therefore no question of an
"immediate" payment.
Relying on Asharia v Patel 1991 (2)
ZLR 276, Mr Mbidzo submitted that prior
to the attempt to cancel the agreement, the defendant should have put the
plaintiff in mora. That was not done.
This was precisely because the defendant was aware that payments were being
made through his agent. He said the defendant, as per his evidence, was
prepared to wait for full payment. This was so because there had never been an
agreed time frame for payment. Mr Mbidzo
said the real reason for the attempted cancellation of the agreement was that
the City Council had placed a higher value of $16 billion on the property. The
defendant therefore thought he could improve on the agreed purchase price of $9
billion.
Mr Mbidzo submitted that the issue
that the agreement had been tempered with, had only been raised in court. If
such an important issue had existed, he argued, it would certainly have been
raised in the pleadings. He urged, the court to dismiss the allegation.
The sum effect of Mr Mbidzo's submissions was that the
plaintiff had fully complied with the agreement of sale and the defendant was
therefore obliged to render specific performance. The purported cancellation
was invalid.
Mr Daitai,
for the defendant, concentrated his submissions on the issue of the alleged
changes to the agreement.
He said the alleged alteration of
the original agreement meant that there was no contract between the parties. Given
the effects of inflation, Mr Daitai
submitted, there was no way the defendant could have entered into an agreement
that had no time frame for payment. He agreed, however, that the issue was so
important that it should have been highlighted in the pleadings right from the
beginning. He therefore urged the court to regard the agreement as having been
lawfully cancelled.
An analysis of the evidence from
both parties coupled with the submissions from their legal practitioners points
to one conclusion namely that there was, in casu,
a valid agreement which was fully complied with and could therefore not be
cancelled by either party. What remained was for the defendant to discharge his
obligations under the agreement signed on 7 November 2007.
A perusal of the pleadings in this
matter and the issues for determination agreed to at the pre-trial conference
clearly indicates the existence of a valid agreement between the parties. In
terms of the issues agreed to at the pre-trial conference, the parties only
want the trial to establish whether or not payment had been made in terms of
that agreement and whether or not the defendant was entitled to cancel the
agreement. There was never any issue raised relating to whether or not a valid
agreement of sale existed between the parties or whether or not the original
agreement had been tempered with. That being the case, the issue of the
agreement having been tempered with is certainly not before me. The defendant
only brought that issue at the trial where he even testified that he did not
think the issue was important enough for him to discuss it with his legal
practitioners. The new issue, in my view, cannot therefore be entertained.
There was no application to amend the pleadings so as to incorporate that issue.
I shall therefore proceed on the basis that a valid agreement of sale existed
between the parties. The original
agreement was not tempered with and is the one properly relied upon by the
plaintiff.
Admittedly, the agreement of sale
relied upon did not stipulate the time frame for payment. However, given the
fact that the defendant admitted in his evidence that he was prepared to wait
for payment up to 4 December 2007 when he issued an instruction to his agent to
cancel the agreement, I see no need to deal with disagreements that were raised
regarding the mode of payment. This is so because as at 3 December 2007 the
plaintiff had effected full payment through the defendant's agent. The defendant's agent had provided the
plaintiff with an account number into which payments were to be made. The defendant could not therefore purport to
cancel the agreement on 4 December 2007 and worse still without prior notice (See
Asharia, supra). Payments were remitted through the defendant's authorised
agent and through checking on 9 November 2007 the defendant was fully aware
that payments were being made. He did not at that time indicate dissatisfaction
and thus leaving the agreement binding on both parties. In any event and given
the circumstances of the case, it cannot be argued that full payment was not
made within a reasonable time. This finding/conclusion means that the plaintiff
is within its/his rights in demanding specific performance from the defendant. The defendant must therefore fulfil that
obligation.
The evidence of the defendant
clearly demonstrated that the decision to attempt to pull out of a valid
contract was dictated by the desire for more money after the City Council had placed
a value of $16 billion on the property. As per his evidence, in entering the
agreement, the defendant was fully aware of various other costs including the
need for payment of surveying and endowment fee. He was also fully aware of the
adverse effects of inflation. That being the case, it can safely be assumed
that in arriving at the purchase price of $9 billion he took into account all cost
factors. The defendant testified he was not a novice to the business of selling
property. Accordingly the defendant cannot be allowed to pull out of an
agreement where the plaintiff has fully complied with its/her obligations.
Poor business decisions and greed cannot be
allowed to interfere with the sanctity of contracts. The courts cannot and
should not allow the sanctity of contracts to be destroyed by any factor that
does not establish a breach of the terms of the contract. It has become common
in our present economic environment for greedy parties in commercial/business
transactions to manufacture imaginary breaches of contracts when trying to
address sudden effects of inflation. That, in my view, cannot be allowed.
Parties are in general always aware of the conditions under which they are
contracting and should therefore spell out necessary protections within their
agreements. There was in casu total
fulfilment of obligations by the plaintiff under the contract. (See Unilever South East Africa v Viewleen Investments (Pvt) Ltd
HH 37-07). In the circumstances the plaintiff's case succeeds.
I therefore order as follows:
1.
The
purported cancellation of the agreement of sale whereby the plaintiff purchased
Stand 2944 Glen Lorne Township
from the first defendant be and is hereby declared null and void;
2.
The
first defendant be and is hereby ordered to complete the subdivision of the
Remainder of Lot II of Glen Tor in terms of subdivisional Permit No. SD/2008 or
any subsequent thereafter subdivisional permit that may be issued by a
competent authority, and thereafter sign all documents necessary to effect the
transfer of Stand 2944 Glen Lorne Township to the plaintiff within ten (10)
days from the date of this order; and failing which, the Deputy Sheriff or his
authorised deputy be and is hereby ordered to take all steps necessary to
effect transfer of Stand 2944 Glen Lorne Township to the plaintiff;
3.
The
third defendant be and is hereby ordered to transfer Stand 2944 Glen Lorne
Township to the plaintiff once the Remainder of Glen Tor of Glen Lorne Township
held under Deed of Transfer No. 4353/85 is subdivided in terms of Permit No.
SD/2008 or any subsequent subdivisional permit that may be issued by a
competent authority, and
4.
The
defendant be and is hereby ordered to pay costs of this suit.
Mbidzo Muchadehama
& Makoni,
plaintiff's legal practitioners
C
Mpame & Associates,
defendant's legal practitioners
