Opposed
Application – To Compel Transfer
CHAREWA
J: This is an application to
compel transfer consequent upon an agreement of sale of “proposed
subdivision B of Lot 369 Highlands Estate of Welmoed measuring
approximately 2033 square metres” entered into between the
applicant and the first respondent in January 2015.
The
Facts
It
is not in dispute that the parties entered into the agreement of sale
aforesaid or that the purchase price was $75,000. Nor is it disputed
that at the time the agreement was entered into, a subdivision permit
had not yet been granted by the local authority, or that the
agreement was never cancelled.
It
is further not disputed that the plaintiff made payments towards the
purchase price in full.
The
Dispute Between the Parties
The
parties are not agreed as to who appointed the Estate Agents in the
matter.
The
applicant avers that Trevor Dollar Real Estate Company was the agent
for the first respondent, while the first respondent avers the
contrary.
Further
there is a dispute as to whether the purchase price was paid to the
first respondent. The applicant claims that it paid the purchase
price in full to the first respondent's agents, Trevor Dollar Real
Estate Company. It attached receipts and RTGS transfer forms showing
payment to Trevor Dollar trust account in the amount of $87,200.
It
argues that, the estate agents, being the first respondent's agent
for the sale of her property on commission, once the applicant paid
the purchase price and transfer fees to them, it discharged its
obligations and was entitled to transfer.
The
applicant based this averment on the fact that the first respondent
was a personal friend of Mr Trevor Dollar, and Trevor Dollar Estate
Agents advertised that the first respondent's intended to sell
subdivisions of her land.
In
any event, if Trevor Dollar Real Estate Company was its agent, that
would be tantamount to making payment to itself, which would be
illogical.
On
her part, the first respondent submits that she never received any
payment from the estate agents.
Besides,
she was not the principal of Trevor Dollar Estate Agents and since
she never received the purchase price from them, she is therefore not
obliged to transfer the property.
The
third area of dispute is whether there was a valid agreement of sale
between the parties. The applicant submits that the parties concluded
a conditional sale, subject to the first respondent obtaining a
subdivision permit, which was a condition precedent. There was thus
no contract between the parties until the permit was obtained. Once
the permit was issued, it brought the contract into existence.
Therefore at the time the contract came into existence it was not
contrary to the provisions of the law as it did not contravene
sections 39 and 40 of the Regional Town and Country Planning Act,
[Chapter
29:12].
On
her part, the first respondent submits that there was no condition
precedent to the sale and it was thus illegal as it was contrary to
the Regional Town and Country Planning Act aforesaid and is therefore
unenforceable.
Who
was the Principal of Trevor Dollar Real Estate Company?
It
seems to me that once I make a finding on Trevor Dollar Real Estate
Company's agency, the second area of dispute will be resolved as
well.
The
documentary proof on its own is not very helpful.
The
receipts from the estate agents show the applicant as the “client”.
On the other hand, the estate agent charged commission against the
first respondent, thus raising the presumption that she was indeed
the client.
However,
there exists communication between the first respondent and the
estate agents showing that she received, at the very least, some
advances which she did not dispute in those communications.
It
seems that this communication between the first respondent and Mr
Trevor Dollar points to a relationship of familiarity.
It
is clear from the communication that she was the one who informed Mr
Trevor Dollar of her financial problems and her decision to subdivide
her property and sell the subdivisions to overcome those challenges.
It
was as a result of her discussions with Mr Trevor Dollar that an
advertisement was flighted in the press.
In
addition, the existence of communication between her and the estate
agents showing that she requested and received some advances, which
she did not dispute in those communications, points to her being the
principal of the estate agent.
Going
further, it is apparent that money was paid to Trevor Dollar Real
Estate Company in payment of the subdivision to be held on her
behalf. That is why she was able to request for advances which were
given to her without the applicant being consulted at all.
This
coupled, with her admission to Mr Trevor Dollar to pay his commission
confirms that Trevor Dollar Real Estate Company was her agent.
It
seems to me that the first respondent seeks to trifle with the court
by alleging otherwise.
The
law is clear, the applicant was obliged, in terms of the agreement of
sale, to pay the money to Trevor Dollar Real Estate Company. The
money was indeed paid for first respondent's benefit. By her own
admission, she was liable for the commission. Ergo, Trevor Dollar
Real Estate Company was her agent.
By
the same token, since the law provides that he who does an act
through an agent does it himself, it made no sense for the applicant
to pay the purchase price to itself, by paying it to its own agent.
Further,
flowing from the same principle of law, it was totally unnecessary to
join the estate agent company to the suit.
How
the estate agent dealt with the money is not the applicant's
problem.
The
applicant discharged its legal obligation upon making payment to the
estate agent. At the very least therefore, since the first respondent
is the one seeking to withdraw from the contract, applicant is
entitled to restitution from her.
It
is obvious that the first respondent was quite aware of this, given
the tenor of her communication with the estate agent. In fact, I note
that she even at one point, instructed the agent to make restitution
to the applicant. Failure by the agent to do so reposes the
obligation to restitute squarely on her.
In
the premises, it seems clear to me that the first respondent
instructed her friend, Mr Trevor Dollar to sell her property on her
behalf on commission. He was therefore her agent. Mr Trevor Dollar,
through his company, sourced for prospective purchasers, drafted the
necessary agreements and received payment of the purchase price on
first respondent's behalf. He even made some advance payments to
the first respondent from the purchase price received.
Whether
or not the first respondent received all or any portion of the
purchase price, is entirely between her and her agent.
Once
the applicant made payment to Trevor Dollar Estate Agents Trust
account, it discharged all its obligations to the first respondent
and is entitled to transfer, subject, of course, to the contract
being legal.
But
even if it was not a legal contract, the first respondent has not
pleaded the in pari
delicto principle,
and cannot claim that the loss should fall where it lies. She must
therefore make restitution.
Contract
Proscribed by Law
The
first respondent is on firmer ground to avoid liability to transfer
the property sold to the applicant, if she can show that the contract
was contrary to section 39 of the Regional Town and Country Planning
Act, [Chapter
29:12] and
therefore void for illegality.
Section
39 of the Regional, Town and Country Planning Act reads:
“39
No Subdivision or Consolidation Without Permit
(1)
Subject to subsection (2), no person shall —
(a)
subdivide any property; or
(b)
enter into any agreement —
(i)
for the change of ownership of any portion of a property; or except
in accordance with a permit granted in terms of section forty.”
The
law with regard to contracts prohibited by statute may be summarised
as follows:
“As
a general rule a contract or agreement which is expressly prohibited
by statute is illegal and null and void even when, as here, no
declaration of nullity has been added by the statute."
Therefore,
once a court finds that an agreement or a contract it is being
enjoined to endorse as valid was entered into by the parties contrary
to statutory provisions that disposes of the matter.
The
requirement for courts to uphold statutes is such that even where the
parties have not brought the issue up, the court is entitled, mero
motu, to
raise the issue of illegality.
Hence,
the question that the court has to address is whether, section 39 of
the Regional, Town and Country Planning Act [Chapter
29:12]
prohibits persons from entering into an agreement for the change of
ownership of any portion of a property, even where the agreement is
made, expressly or impliedly, conditional upon the obtaining of a
permit.
This
question, has, in my view, already been answered by the Supreme Court
in the affirmative when it was held that:
“… section
39 forbids an agreement for the change of ownership of any portion of
a property except in accordance with a permit granted under s 40
allowing for a subdivision. The agreement under consideration was
clearly an agreement for the change of ownership of the subdivided
portion of a stand. It
was irrelevant whether the change of ownership was to take place on
signing, or on an agreed date, or when a suspensive condition was
fulfilled. The agreement itself was prohibited.”(my
emphasis)
Mr
Mpofu
is quite correct to raise the point that it is an established common
law principle governing the law of contracts that an agreement of
sale that is subject to the fulfilment of a condition is not a valid
sale until that condition has been fulfilled.
The
import of this is that, where a suspensive condition operates in an
agreement, the contract itself does not exist until the suspensive
condition is fulfilled. A non-existent contract cannot therefore be
deemed to be illegal: it is not there.
Therefore,
until the contract comes into existence, with the fulfilment of the
suspensive condition, there is nothing to declare illegal.
Building
on from this common law position, Mr Mpofu
makes the ingenious argument that,
in
casu,
because there was a condition to obtain a development permit before
transfer could be effected, there was thus no valid agreement in
existence between the parties until that condition was met. The
contract only came into existence on the date the condition was
fulfilled, and as at that date there was therefore no illegality.
I
am however not persuaded by this argument.
It
is my view that he goes astray when he implies that the agreement is
then only effectively entered into as at the date the suspensive
condition is fulfilled.
This
belies the fact that, in reality, the agreement between the parties
was reached as at the date of signature.
And
in terms of that agreement, from the date of its signature the
parties had certain obligations to fulfil within time limits
prescribed therein: the first respondent had to obtain subdivision
permit and thereafter effect transfer, while the applicant had to
make payment as agreed.
It
is therefore at the date of signature of that agreement that the
mischief sought to be avoided by the legislative provisions arises:
parties are prohibited from entering into any agreement at all until
the legislative requirements are met.
In
this case, the parties ought not to have reached any agreement at all
until a subdivision permit had been issued.
In
my view therefore, what did not exist was an agreement to effect
transfer before the
subdivision permit was issued.
Otherwise
there was an agreement between the parties to effect transfer once
the subdivision permit was issued, and it is that agreement which is
proscribed by law.
The
agreement between the parties was clearly intended that, once the
subdivision permit was granted, then change of ownership would be
effected.
According
to the X-Trend-A-Home
case (supra), it
was that agreement that was prohibited. The question of the condition
that a permit should be obtained is therefore irrelevant. In fact
special condition number 1 reads as follows:
“The
Purchaser acknowledges that the
process of subdivision and survey is on-going simultaneously with
transfers. The Seller shall take all necessary steps to enable the
Development Permit to be granted within a reasonable period from the
date on which this agreement is contracted.”
(my
emphasis).
There
is thence, a clear acknowledgment between the parties that;
(i)
firstly, the agreement has been entered into in the absence of a
subdivision permit; and
(ii)
secondly, such permit will only be obtained subsequent to the date of
the agreement.
This
brings the agreement squarely within the ambit of the comment of
MAVANGIRA J, as then was, when she stated:
“The
issuance of the permit after the agreement had already been entered
into cannot have any legal effect on the validity of the agreement
insofar as compliance with the Act in question is concerned. It is
the state of affairs prevailing at
the time that the parties entered into the agreement,
(my
emphasis) in
relation to the existence or otherwise of a subdivision permit, that
is relevant.”
The
agreement therefore runs afoul of the law and is therefore illegal.
It
is trite that the courts do not give effect to illegal agreements.
Consequently,
I do not agree that this case is distinguishable from the
X-Trend-A-Home
(supra) case.
In
fact, in that case, the Supreme Court clearly intended to clarify the
position of agreements entered into contrary to the law, whether or
not, they were subject to conditions precedent or suspensive
conditions, and hence McNALLY JA's finding that it is the agreement
itself which is prohibited.
Therefore,
by asking this court to find that a contract of sale to change
ownership after a suspensive condition had been fulfilled was not
contrary to section 39 it seems to me that Mr Mpofu
is inviting this court to overrule the Supreme Court decision, by the
back door.
I
refuse to accept such invitation.
In
the premises, I cannot find favour with the application to compel
transfer.
However
having found that the applicant succeeded in proving that the
purchase price was paid to the first respondent pursuant to the
invalid agreement, and that she should therefore restitute, otherwise
she would unjustly benefit, I make the following order:
1.
The application to compel transfer is dismissed.
2.
In the alternative, the 1st
respondent shall pay to the applicant the sum of Seventy Five
Thousand United States Dollars (USD75,000) with interest at the
prescribed rate from the date of payment of the last instalment to
the date of full and final payment, as a restitution for the purchase
price paid by the applicant.
3.
That the 1st
respondent shall pay costs of suit on a legal practitioner and client
scale.
Mhishi
Legal Practice, applicant's legal practitioners
Coghlan
Welsh & Guests, 1st respondent's legal
practitioners
1.
See Lens Agencies (Pvt) Ltd v Knight
Frank Beverly & Anor 1997 (2) ZLR 167 (SC);
See
also Ami Zimbabwe (Pvt) Ltd v Casalee Holdings (Pvt) Ltd 1997 (2) ZLR
77 (SC)
2.
York
Estates Ltd v Wareham 1949
SR 197, per Lewis ACJ
3.
Hativagone & Anor v CAG Farms (Pvt) Ltd & Ors [SC152/14]
(2015) ZWSC 42
4.
X-Trend-A-Home (Pvt) Ltd v Hoselaw (Pvt) Ltd 2000 (2) ZLR 348 (S)
5.
See
Leo v Loots
1909 TS 366 at 370-1
6.
Phillip Tsamwa v Ndoda Hondo and 2 Others HH53-2008
