MAKONESE J: The defendants
have made an application for absolution from the instance at the
close of the plaintiffs case.
The defendants contend that the
plaintiffs had failed to lead evidence upon which a court might find
in favour of their claims. The application is made on the basis that
an essential of the claim, an alleged breach of contract was not
proved in sufficient evidence. Further, the plaintiffs alleged right
to cancel the agreement was not proved. The defendants aver that, the
evidence led by the plaintiff was fraught with glaring
inconsistencies and unacceptable variance with the plaintiffs'
pleaded case.
The plaintiffs are opposing the
application for absolution from the instance.
The plaintiffs' aver that
taking into account the applicable law, and evaluating all the
evidence adduced on behalf of the plaintiffs, the pleadings filed of
record, the exhibits and all the discovered documents as well as the
viva voce
evidence, the application for absolution from the instance is
unsustainable and ought to fail with costs. The plaintiffs aver that
they have established a prima
facie case of breach
of contract and the plaintiffs' right to cancel the contract as a
result of such breach. The plaintiffs alleged that the application
for absolution from the instance is premised on a mis-interpretation
of the terms of the agreement of sale as amended and a misconception
of the consequences at law of the defendants' failure to pay the
full purchase price after they were called upon to remedy their
breach.
The Factual Background
On the 25th
January 2006 the parties entered into an agreement of sale in terms
of which the plaintiffs sold to the defendants an immovable property
for the agreed price of Z$11,5 billion, subject to certain terms and
conditions as set out in the agreement. The plaintiffs alleged that
the defendants breached the agreement by failing to pay the purchase
price in full despite the extension of time to pay by the 28th
February 2006 in terms of an addendum to the agreement of sale signed
on the 16th
February 2006.
The defendants deny having
breached the agreement of sale and state that they have paid the
purchase price in full. They aver that the Capital Gains Tax was paid
to plaintiffs' legal practitioners, who incidentally were also
defendants' legal practitioners at the relevant time in accordance
with the agreement of sale.
The joint pre-trial conference
memorandum filed by the parties' legal practitioners set out the
following issues for trial;
1. Whether defendants are in
breach of contract.
2. Whether plaintiffs'
cancellation of the agreement of sale was in terms of the Contractual
Penalties Act (Chapter 8:04).
3. Whether plaintiffs'
attempted to restitute the amount paid by defendants towards sale due
to breach.
4. Whether plaintiffs are
entitled to cancel the agreement based on defendants' breach of
contract.
5. The onus on the plaintiffs on
all the issues.
The pleadings and burden of
proof
This being a cause based on
breach of contract the onus of proof rests on the plaintiff to prove
breach and the nature thereof. The plaintiffs not only have to allege
breach in sufficiently clear terms in their pleadings, but also to
prove such breach in evidence. In their pleadings the plaintiffs
allege breach in the following respects:
(a) failure by defendants to pay
a balance of Z$1,2 billion.
(b) failure by the defendants to
pay the sum of Z$2,3 billion to the conveyancers. The breach as
alleged is mentioned in paragraphs 4, 5, 6, 7 and 9 of the
declaration.
(c) failure to pay interest in
the sum of Z$54,208,814.
In their plea the defendants
denied breaching the terms of the agreement and contend that they
have complied fully with the agreement of sale.
Assessment of evidence
The plaintiffs filed both the
agreement of sale and the addendum as part of their case. During the
course of the proceedings, the plaintiffs also produced as exhibit
2a, a schedule showing the defendants' payments totaling Z$9,2
billion made to the first plaintiff, and exhibit 3, a letter from
Joel Pincus, Konson and Wolhuter, legal practitioners who were then
legal practitioners for the plaintiffs.
The plaintiffs led oral evidence
from two witnesses. The first plaintiff confirmed wholesale, together
with all and any defects therein, the evidence, beliefs and
recollections of the second plaintiff.
The evidence of the first
plaintiff that he confirmed and adopted the evidence of the second
plaintiff was of little probative value to the court.
The first plaintiff had no
independent recollection of the matter and did not corroborate the
second plaintiff's evidence in any material respects.
It has to be noted that
corroboration can only be supplied by independent evidence of a
witness giving independent recollections of an incident at issue.
Only one question was put to the
first plaintiff, under cross-examination, which question elicited new
evidence from the witness. The following exchange occurred between
the first plaintiff and the defendants' legal practitioners;
“Q. Who is the registered owner
of the property?
A. I am. I gave it to my brother,
but I am not the registered owner.”
The only independent aspect of
the witness' evidence was that he and not the second plaintiff and
not him and the second plaintiff is the registered owner of the
property. The witness under cross-examination, suddenly wept
copiously in court. He then informed the court that he and his
father had worked hard to acquire the building at issue. He indicated
that it was not proper for the property, to “just
go like that”. The
witness asked the court for a “good
judgment”. The
first plaintiff certainly displayed his emotions in a rather
exaggerated manner.
The second plaintiff gave
evidence central to the plaintiffs' claims. He was the single and
key witness in this matter.
Clause 1.2 of the agreement of
sale provides as follows:
“It is recorded herein that the
purchase price has been determined and agreed in the context of the
prevailing Midrate of Exchange between the Zimbabwean and United
States Dollar …”
The second plaintiff confirmed
that the price was set by him at an equivalent of US$120,000 which
was a reasonable price and acceptable to him at the time. The second
plaintiff accepted that the midrate only changed between 25th
and 3rd
March 2006.
The suggestion that the purchase
price was eroded by the slide of the Zimbabwean dollar in a period of
two months, is baseless.
The second plaintiff confirmed
that he signed both the agreement of sale and the addendum and he
signed both in his own name, and on behalf of first plaintiff. This
is evident from an examination of both documents.
Second plaintiff testified that
he co-owns the building with the first plaintiff.
The witness testified that
defendants failed to pay the purchase price by the 27th
January 2006 as stipulated in the agreement of sale. Initially the
witness stated that he tried to pursue the defendants to no avail. He
stated further that upon chasing the defendants he reached no
agreement with them. He later conceded that he had signed the
addendum with the defendants. After the addendum was signed the
witness averred that the defendants were given up to the 28th
February 2006 to settle the balance.
By 28th
February, the defendants had not paid the entire purchase price.
He then approached his lawyers
who issued a notice to remedy the breach. By the time the notice and
demand was issued, the defendants had paid a total of Z$9,2 billion.
Such payments were recorded and agreed by the parties prior to
issuance of summons.
The witness affirmed that his
claim was for cancellation of the contract and that he was tendering
a refund of all monies paid by the defendants against such
cancellation.
Under cross-examination an
entirely different picture began to emerge.
The plaintiff was moving away and
in some instances contradicting his initial evidence. The witness
sought to allege that when the addendum was signed on 16th
February 2006, the defendants had already breached the agreement of
sale by failing to pay the sum of Z$10 billion into his account by
27th
January 2006. The witness admitted that on the face of it, the
addendum did not give the sellers the right to cancel the agreement
on account of non-payment, with the extended time limits. The witness
conceded that the addendum gave the sellers the right to levy
interest at the rate of 80% or at the NMB Bank investment rate, for
any further delays in paying off the purchase price. The witness
emphatically denied under cross-examination that he had advised the
defendants how much they needed to pay on account of Capital Gains
Tax, to the nominated conveyancers, Ben Baron & Partners. The
witness repeatedly disputed that the figure of Z$2.3 billion as the
amount of Capital Gains Tax in spite of a demand having been made to
settle that amount. When it was put to the witness that his lawyers
had pleaded on his behalf that Capital Gains Tax was in the sum of
Z$2,3 billion the witness stood firm that there was no way he could
calculate and demand capital gains tax from the defendants.
Under cross-examination the
witness contradicted his pleadings on the amount, excluding capital
gains tax, which remained due to him under the agreement. He pleaded
mistakes in the calculations.
The witness further contradicted
the terms of the agreement of sale and the addendum in material
respects. One glaring contradiction is that the witness sought to
argue that that capital gains tax was not, contrary to clause 4.5 of
the agreement of sale, and contrary to the wording of the notice and
demand written by his legal practitioners, and the pleadings on
record, payable directly to the conveyancers. The witness kept
insisting that the money was his money and that it should have been
paid to him. Later in his cross-examination the witness had departed
from his earlier evidence and sought to assert that he had indeed
“estimated” capital gains tax in the sum of Z$2,3 billion.
The witness conceded that up to
the time demand was made by his legal practitioners, he had not
opened a file at Ben Baron & Partners or supplied the firm with
an irrevocable power of attorney as required by the agreement of
sale.
The witness conceded that the
following payments were made to the plaintiffs by the defendant:
(a) Z$9.2 billion into first
plaintiff's account which was nominated in the agreement of sale.
(b) Z$2,3 billion in various
instalments to Joel Pincus, Konson and Wolhuter.
(c) Z$54,208,844 on account of
interest to Joel Pincus, Konson and Wolhuter.
It was accepted by the second
plaintiff that at the time the last two payments were made, the
plaintiffs still did not have an account with the nominated
conveyancers for payment of capital gains tax.
Sufficiency of evidence at the
close of plaintiffs case
The defendants argue that at the
close of the plaintiffs case the plaintiffs failed to lead evidence
upon which a court might return a judgment in their favour.
The plaintiffs, however do not
agree.
The plaintiffs urge the court to
dismiss the application for absolution from the instance as it is
wholly without merit. The plaintiffs argue that they have made a
prima facie
case for breach of contract, entitling them to cancel the agreement
of sale. Further, it is alleged by plaintiffs that there is abundant
evidence upon which a court, directing its mind reasonably to such
evidence could or might find for the plaintiffs.
I shall examine the sufficiency
or otherwise of the evidence presented by plaintiffs at the close of
their case.
(a) Firstly, the breach of
contract pleaded by the plaintiffs was not proved. In his evidence,
the second plaintiff could not explain how the sum of Z$1,2 billion
which was stated in his pleadings, and which defendants were said had
failed to pay was calculated or arrived at. The defendants are
alleged to have failed to pay such amount in plaintiffs' pleadings.
That plaintiffs relied on the defendants' failure to pay that
amount is clear from plaintiffs' declaration, which states in
paragraph 4 as follows:
“In
breach of the aforesaid terms of the agreement, defendants only paid
the plaintiffs' the amounts detailed in annexure 'B' hereto,
leaving a balance of $1,200,000,000 plus accumulated interest on all
outstanding amount.”
The obligation to pay the sum of
Z$1,2 billion, which was termed a material breach was not proved nor
explained by the plaintiffs at all.
(b) Secondly, in their pleadings,
the plaintiffs based their allegations of breach of contract upon the
alleged failure by the defendants to pay the sum of Z$2,3 billion in
respect of Capital Gains Tax on time and as provided under the
agreement of sale. In his evidence, the second plaintiff conceded
that after payment of Z$9,2 billion into the second plaintiff's
account, the defendants met with a Mr Lunat, the plaintiff's
accountant and enquired about the plaintiff's representation at Ben
Baron & Partners. What was admitted however, was that when the
defendants intended to pay the Capital Gains Tax, plaintiffs had no
file or account at the nominated conveyancers. It was therefore not
possible for the defendants to pay the amount at the offices of the
seller's nominated conveyancers. In the event, the plaintiffs
cannot be allowed to rely on the delay in payment of Capital Gains
Tax. To the so would be tantamount to allowing the plaintiffs to
benefit from their own tardiness or wrongdoing which is not
permissible at law.
(c) Thirdly, the plaintiffs
according to their own admission were in breach of the contract.
Under cross-examination, the second plaintiff conceded that the
plaintiffs were in breach of clause 4.7 of the agreement of sale
which provides as follows:
“Upon
signing of this agreement the sellers shall furnish the conveyancers
herein with an irrevocable power of attorney authorising them to do
all such things and sign all such papers as might be necessary to
give effect to the transfer.”
The plaintiffs, having breached
the terms of the agreement of sale, which breach occurred prior to
the alleged breach by the defendants ought not to be permitted to
profit from such breach. See Chioza
v Siziba
SC4-15 where the Supreme Court held that:
“It
will seem quite clear that the appellant seeks to benefit unjustly
from the transaction. Having sold the property and received the
proceeds through his agent, he now seeks the return of the property
and thus, so to speak 'have his cake and eat it'. The respondent,
on the other hand, has parted with the full value of the property and
stands to incur great financial prejudice if an order for eviction is
granted in terms of the counter claim. It would appear then, that the
court a quo was correct in its finding that the appellant sought to
benefit from its own wrongdoing ….”
In this instance, the plaintiffs
admittedly received the full market value of the property, as set out
and accepted by them as at the time of the sale. I make the
observation that the plaintiffs ensured that the fluctuating
Zimbabwean dollar was pegged at the mid-rate of the United States
dollar at the relevant time.
The plaintiffs received the full
purchase price for the property.
It is crucial to note that the
addendum to the agreement of sale provided for a punitive rate of
interest of 800% for any late payment.
The second plaintiff, under
re-examination, sought to clarify his case on the alleged breach. He
stated that there were various instances of breach, the first
occurring on the failure to pay by the 27th
January 2006, the second one by failure to pay by the 28th
February 2006 following the delivery of the demand.
The plaintiffs' evidence was
clearly at variance with the pleaded cause of action.
The evidence was also contrary to
any correct reading of the addendum. Under re-examination second
plaintiff stated that by the end of the notice period only Z$9,2
billion had been paid to him out of Z$11,5 billion. The defendants
had indeed paid the total amount, exclusive of Capital Gains Tax. The
witness made reference to a failure to pay Z$10 billion by the 27th
January 2006. This argument presents an inconsistency in the
contract of sale. Under clause 4.2 and 4.3 a total of Z$10 billion
was to be paid into an account nominated by the sellers. This account
turned out to be the seller's personal account. In terms of clause
4.4 of the agreement the last payment of Z$1,5 billion was only to be
made upon the buyers obtaining occupation. The second plaintiff could
not state when occupation was taken by the defendants, but conceded
that this could not have been in November 2006. No interest,
therefore, would have become due and payable before the last payment
of Z$1.5 billion became due. Clause 4.5 inconsistently required that
the amount required for Capital Gains Tax was to be held by the
conveyancers. The pleadings allege that this amount was Z$2,3
billion. Given the amount, it becomes difficult to determine how the
defendants could be said to have failed to pay Z$10 billion to the
second plaintiff. The amount, less the Z$2,3 billon came to Z$9,2
billion which was admittedly paid to the plaintiffs.
The second plaintiff conceded
that the agreement of sale was drafted by himself.
It follows that the second
plaintiff is the proferens
in this matter, therefore by operation of the contra
proferentem sale, any
obscurity, vagueness and lack of clarity around the issue of what
clause was breached must be resolved against the plaintiffs; see
Blumo Trading (Pvt) Ltd
v Nelmah Milling Co and
Anor HH39-11.
In concluding the analysis of the
evidence led by the plaintiffs, I find that the plaintiffs'
evidence fell far short of establishing a prima
facie case for breach
of contract.
The plaintiffs' evidence was so
discredited under cross-examination that no reasonable court
examining the evidence could or might find in its favour. The
plaintiffs' pleaded case contradicted the viva
voce evidence in
material respects. The alleged breach was not established. The
second plaintiff departed from the pleaded case in several respects.
His evidence is not reliable. By choosing to extend the true limits,
and signing an addendum to provide expressly for penalties for late
payment and not reserving the right to cancel the agreement of sale,
the plaintiff exercised an election to remain in the agreement and to
receive the full market value for the property. There is sufficient
evidence that the plaintiffs received in full the value of the
property at the relevant time, pegged against the United States
midrate at the time. The plaintiff is attempting to have his cake and
eat it at the same time.
The law applicable
One of the leading case law
authority in this jurisdiction on the test to be applied when
deciding whether to grant an application for absolution from the
instance at the close of the plaintiffs' case is United
Air Charters (Pvt) Ltd
v Jarman 1994
(2) ZLR 341 where GUBBAY
CJ, stated as follows at page 343;
“The
test in deciding an application for absolution from the instance is
well settled in the jurisdiction. A plaintiff will successfully
withstand such an application, if at the close of his case, there is
evidence upon which a court, directing its mind reasonably to such
evidence, could or might (not should or ought to) find for
him….Moreover, in considering an application for absolution, the
court should lean favour of continuing the case rather the dismissing
it …”
See; Claude
Neon Lights (SA) Ltd v
Daniel
1976 (4) SA 403 (AD) and Manyange
v Mpofu
& Ors 2011 (2) ZLR
87 (H).
The test to be applied in this
instance is whether at the close of the plaintiffs' case there is
any evidence, upon which the court directing its mind reasonably to
such evidence could or might find favour of the plaintiffs. The court
must also examine whether the plaintiff has failed to adduce any
evidence or adduced insufficient evidence to establish an essential
element of the claim. The court is enjoined to make an overall
assessment of all the evidence adduced on behalf of the plaintiffs
and the pleadings filed of record together with exhibits and
annexures, as well as viva
voce evidence to
establish whether the evidence is sufficient to proceed to hear the
case for the defendants.
I am satisfied, that in applying
the applicable law to the facts of this dispute, it becomes evident
that the plaintiff's case is full of glaring inconsistencies and
unacceptable variance with the pleadings filed of record. The second
plaintiffs' evidence by all accounts was at direct variance with
the pleadings. The plaintiffs sought to correct his evidence under
re-examination. The net result was that this court concluded that the
plaintiffs failed at the close of the plaintiffs' case to establish
a prima facie case.
In the result, and accordingly,
absolution from the instance is granted. Plaintiffs are ordered to
pay costs of suit.
Messrs Moyo & Nyoni, plaintiffs' legal practitioners
Lazarus & Sarif, defendants' legal practitioners
