At
the conclusion of this trial l granted the following order:
“It
is ordered as follows:
(a)
That the first Defendant be and is hereby ordered to transfer the
ownership of Stand No.4 of subdivision B of Subdivision B of Prospect
to Metachem Industries (Pvt) Ltd as requested by the Plaintiff by its
letter of 17 November 2006 within 14 days from the date reasons of
this judgment are delivered, failing which the Sheriff of Zimbabwe or
his lawful Deputy be and is hereby authorised to attend to such
transfer by signing all the relevant papers which would ordinarily be
signed by the 1st
Defendant.
(b)
That the 1st
Defendant's counterclaim be and is hereby dismissed.
(c)
That the 1st
Defendant pays costs of suit.”
I
did indicate, at the time, that my elaborate reasons for judgment
would follow. Here they are.
This
suit has been prompted by the following facts which are largely
common cause:
On
13 July 2006, the plaintiff
and the first defendant
entered into a written agreement of sale for property referred to as
Stand No. 4 of subdivision B of Subdivision B, Prospect with the
purchase price of the property being pegged at Z$15,000,000= (fifteen
million Zimbabwe dollars).
It
is not in dispute that the parties, at the request of the plaintiff
who felt uncomfortable with the interest related to the mortgage bond
which was supposed to be secured through Beverley Building Society
mutually agreed to vary the original agreement of sale on 4
September
2006 after they had agreed on new terms of payment.
It
is also common cause that at the time the parties mutually agreed on
variation of the contract agreement the agreed initial deposit and
other substantial sums of money towards the purchase price had been
paid by the purchaser.
It
is also not in dispute that after the meeting by the parties, on 4
September 2006, a new contract was drafted by the first defendant's
legal practitioners which the plaintiff declined to sign for a number
of reasons, and, further, that as at the time the parties dragged
each other to court no new agreement had been signed by the parties.
It
is the plaintiff's case that despite not having signed the
agreement it duly completed its part of the bargain to the extent
that transfer ought to have been made in its favour.
The
first defendant was of an entirely different view.
Its
position was that there was never a valid agreement between it and
the plaintiff, and, alternatively, that if there was one, the
plaintiff had breached the terms and conditions of such an agreement
justifying its cancellation and retaining any moneys paid by the
plaintiff as damages.
At
the pre-trial conference held by the two parties before my brother
Judge KUDYA the case was referred to trial basically on the following
issues:
“1.
Whether or not there is a valid and binding agreement of sale between
Plaintiff and Defendant.
2.
If there is a valid Agreement of Sale, did Plaintiff breach the
Agreement of Sale such as to enable Defendants to cancel?
3.
Is the Plaintiff entitled to take transfer of the property into their
name?
4.
What order as to costs is just and equitable?”
In
my assessment of the evidence led in this case I will endeavour as
much as is reasonably possible to be guided by the pre-trial
conference minute.
The
plaintiff's case was built around the evidence of its Managing
Director, Mr Killian Kufahakurambwi. The witness explained the
circumstances under which the plaintiff and the defendant entered
into the initial sale agreement on 13 July 2006 and why his company
eventually sought to re-negotiate the transaction. This part of his
evidence was confirmed by the defendant's sole witness and did not
pose
any challenge.
It
was the witness's testimony that the meeting that was held on 4
September
2006 was attended by a representative from the plaintiff, the first
defendant's Legal Practitioners, and a representative from the
first defendant. His evidence was that the purchase price of the
property would remain unchanged at the old price of Z$15,000,000=
(fifteen million Zimbabwe dollars) but that the terms of payment
would have to take into account the deposit initially made and the
subsequent various payments paid by the plaintiff towards the
purchase of the property.
It
was also the witness' testimony that the interest on the bond to be
registered on the property would be pegged at 125%. It was also
agreed that the new agreement should contain a clause to allow the
purchaser to discharge its liability much earlier if it secured the
money. In view of these mutually agreed changes, the first defendat's
legal practitioners, Messrs T.K Hove and Partners, were tasked to
draw up a new Agreement of Sale which would be presented to the
purchaser for signing on the following day, 5 September 2006.
The
witness went further to state that there was a terrible delay by the
first defendant's legal practitioners in drawing up the new
agreement and that it was only on 17 October 2006 that the new
agreement was availed to the plaintiff. The witness testified that
despite this delay he maintained communication with the first
defendant's legal practitioner, Mr Hove, and the first defendant's
representative, Mr John Thompson Mungwari, both of whom advised him
to keep on paying, which he gladly did.
It
was the plaintiff's further evidence that when the agreement was
eventually availed to it a substantial amount of money had been paid
towards the acquisition of the property as evidenced by exhibits 2,
4, 5, 6 and 7 tendered in these proceedings. It was his
uncontroverted evidence that the bulk of the payments were made
directly to the first defendant's company. The exhibits tendered
confirm these payments.
The
witness stated that when the varied agreement was presented to the
plaintiff for signing he noted a number of discrepancies and quickly
engaged Mr T.K. Hove, the first defendant's legal practitioner who
advised him to pay the remaining outstanding balance of three billion
Zimbabwe dollars directly to the first defendant's company which he
again did. Exhibit 9 confirms such payments.
It
was the witness's testimony that on 17 November 2006 he discussed
the question of interest with the first defendant's legal
practitioner who advised him to go back and do the computation of
interest and pay the amount to pave way for the transfer of the
property in question which he did. Exhibit 10 confirms the discussion
in question and also the payment of a sum of Z$650,000= as interest
and how it was computed.
According
to the witness, this last payment was followed by a pro forma invoice
of transfer fees from the first defendant's legal practitioners
which put the transfer fees for the purchased property at
Z$1,210,002= (revalued) which amount the plaintiff paid into the
trust account
of the lawyers as advised by the first defendant's legal
practitioners.
The
witness said that when his company demanded transfer of the property
the case took a dramatic turn when he was advised that the first
defendant was now claiming interest on the whole purchase price at a
rate of 600% per annum compounded interest, the argument being that
the first defendant had borrowed money from its own bankers, NMB
Bank, and sought to pass on the cost of borrowing that money to the
plaintiff.
The
plaintiff, naturally, objected to this approach as it signified a
complete departure from the mutual discussion of 4 September 2006.
Under
cross-examination, the plaintiff's representative stuck to his
story and maintained that as far as his company was concerned it had
fulfilled the terms of the agreement and reasonably awaited transfer
of the purchased property.
The
witness explained that there was no need to sign the second agreement
because it had come into the picture late and had been superceed by
various payments made by the plaintiff and accepted by both the first
defendant and his legal practitioners.
To
counter the evidence of the plaintiff was the evidence of Mr John
Thomson Mungwari, the Managing Director of the first defendant.
The
witness agreed that the original agreement of sale was cancelled
because of non-performance on the party of the plaintiff.
He
said he reluctantly acceeded to the second agreement which he said
was again cancelled due to non-performance by the plaintiff.
When
his attention was drawn to exhibits 6, 7 and 9 which confirm that
various payments were made to his company by the plaintiff he
retorted as follows:
“The
payments were made to the reception. I am sure they received them and
receipted them in line with our system. They would have been banked.
I do not work in the accounts department; sometimes it takes a long
time for me to know a payment has been made. I travel outside the
country quite often. My place is a busy place. There will be cheques
coming in for rentals, bus hire or truck hire. These cheques would
have gone to the accounts department without my knowledge.”
He
went on to suggest that he expected the plaintiff to have arranged
for a mortgage cheque as opposed to private cheques from the
plaintiff's company.
The
witness confirmed the meeting of the parties to the contract on 4
September 2006 and the fact that interest was to be pegged at 125%
per annum, and that this interest was to be paid immediately. The
witness further stated that after 4 September 2006, to try and
salvage the sale there was a suggestion that if the plaintiff was
prepared to pay interest at 600%, the second agreement would be
resuscitated and that NMB Bank Limited was tasked to draw up an
interest schedule on the purchase price of Z$15,000,000,000=. He said
the plaintiff did not agree to this and this signalled the end of the
agreement. The witness sought to have the new Agreement of 4
September 2006 cancelled as prayed for in the counter claim.
The
witness went on to say that the staggered payments by the plaintiff
meant that the first defendant never got the value for money from the
property and that the company lost the machine it intended to buy
because of hyper-inflation which gripped the country at the time.
Through
his testimony, and contrary to its counter-claim, the witness
proposed that the payments made be returned to the plaintiff and that
his company was prepared to negotiate a new agreement of sale.
Under
cross-examination, the witness acknowledged that on 4 September 2006,
and as part of the negotiations leading to the drafting of a new
agreement, he personally was paid a cheque of Z$2,000,000,000= by the
plaintiff's representative and that the purchase price was to
remain at Z$15,000,000,000=, and, further, that any payments were to
be made in terms of the new agreement. The witness further confirmed
that his counsel's letter of 2 February 2007…, suggests interest
was supposed to be paid as agreed on 4 September 2006. Compare this
with the first defendant's subsequent attempt to change interest
from 125% per annum with 600% per annum.
ASSESSMENT
OF THE EVIDENCE
The
story told by the plaintiff's sole witness struck me as a credible
one because of the following reasons:
Firstly,
every payment that the plaintiff claimed to have paid was supported
by documentary proof and confirmed by the first defendant's
representative.
Secondly,
the witness was candid enough to advise the court that he declined to
sign the second agreement basically because of two reasons, viz, the
delay in dispatching that agreement which meant that the agreement
per se had been superceeded by other developments since the bulk of
the purchase price had already been paid. This delay was entirely
caused by the first defendant's legal practitioners, who, instead
of sending the agreement on 5 September 2006, waited until 17 October
2006.
Thirdly,
the agreement contained minor changes which were a departure from
what the parties had agreed on at the meeting of 4
September
2006. These issues needed to be addressed, but, in essence, the
parties were already in agreement, otherwise the first defendant's
legal practitioners and the first defendant would not have continued
to receive payments from the plaintiff's representative.
The
plaintiff's representative maintained that when the second
agreement was negotiated, there was never reference to interest being
computed at 600% per annum but at 125% per annum. This position was
confirmed by Mr Mungwari, for the first defendant, as well as exhibit
8 which is a copy of the agreement in issue. When the plaintiff
calculated interest due to the first defendant, it simply used the
agreed rate as per the unsigned agreement which both parties accepted
was the basis of the new payment arrangements.
If
anyone doubted the credibility of the story told by the plaintiff,
the invitation by the first defendant's counsel, for the plaintiff
to pay transfer fees, should put an end to that doubt. It is my view
that, this invitation, was confirmation that the plaintiff had
complied with the terms of the contract to the extent that only the
payment of transfer fees would have triggered transfer of the
property. The plaintiff, having paid such fees, was entitled to have
the property transferred.
The
defendant's representative did not portray himself in good light in
this case.
Firstly,
he attempted to deny that there was no agreement between the parties
yet documentary evidence clearly shows
that both himself and his company continued to receive payments from
the plaintiff without objecting to such payments. The first
defendant's representative must not be believed when he purports
not to have been aware of payments made to his company. The alleged
bureaucracy or lack of transmission to him of information regarding
payments made to him by the plaintiff cannot disadvantage the
plaintiff.
It
is difficult to follow what exactly the first defendant's position
is in this case.
The
ambivalence nature of paragraph two of its plea casts doubt on the
bona
fides
of its plea. In one breadth it makes an averment that there was no
agreement and in another it then says if such an agreement existed,
it must have been breached by the plaintiff.
Mr
Mungwari, for the first defendant, alleged, in his evidence, that if
payments were made to his company he was not aware; yet, in the plea
he alleged that all the payments that were made by the plaintiff were
made and received “on a without prejudice basis”.
The
witness did not state this when he gave evidence. It is not
accidental that in the various correspondences exchanged between his
counsel and other law firms, this issue was never raised. The issue
of payments having been made on “a without prejudice basis” must
clearly be an after-thought on the part of the first defendant.
It
is clear to me that the only problem that has kept the parties apart
in this case is the issue of interest.
This
issue must be resolved by simply making reference to the draft
agreement which formed the basis of the parties' agreement which
followed the events of 4 September 2006. That agreement, and as
testified by both the plaintiff and the defendant's
representatives, put the rate at 125% and not the extortionous rate
of 600% as suggested by the first defendant's representative.
It
is clear from the evidence led that the plaintiff never agreed to the
interest as demanded by the first defendant. What the first defendant
has attempted to do is to recover interest that it was allegedly
charged by its bankers, NMB Bank Limited, on an entirely different
transaction to the plaintiff. This becomes very clear if reference is
made to the letter of 15 March 2007 written to Messrs Scanlen and
Holderness (plaintiff's erstwhile legal practitioners) by the first
defendant's legal practitioners which stated, inter
alia:
“Our
client's position is that they were charged interest by the bank,
which interest they were simply passing over to your clients, on the
basis that your clients had initially breached the signed Agreement
of Sale.”
I
accept the position of the plaintiff's counsel that the first
defendant, having quietly accepted the various payments made by the
plaintiff, must be taken to have waived any alleged breach of the
agreement. The first defendant must not be allowed to approbate and
reprobate at the same time.
Finally,
I have no doubt in my mind that computing interest at the rate of
600% per annum on the 11th
hour of the operation of the agreement, the first defendant was
acting mala
fide,
and, perhaps, actuated by greed and/or the desire to avoid
transferring the property to the plaintiff.
It
was for these reasons that judgment was entered in favour of the
plaintiff.
