Purchase Price re: Approach, Terms of Payment, Ad Stipulator and the Actio Venditi

Appealed
SC36-12 : RESERVE BANK OF ZIMBABWE vs CAFCA LTD
Ruled By: MALABA DCJ, ZIYAMBI JA and OMERJEE AJA

This is an appeal against the judgment of the High Court granting with costs a claim by the respondent for:

(i) Payment of the sum of US$750,000.

(ii) Interest tempore morae at the London Interbank rate for United States dollars, at 3.5% per annum, from 1 September 2005 to the date of payment.

(iii) Costs of suit.

The factual background to this dispute, which is largely common cause, may be summarised as follows:

The appellant is a financial institution. The respondent is a manufacturer and supplier of an exclusive range of cables for the transmission of communication and distribution of energy used by such entities like the Zimbabwe Electricity Supply Authority, the Rural Electrification Agency, and Tel One.

The respondent's business caters for both domestic and export markets. As at end of 2003, 50% of its sales volumes were largely in exports.

In 2004, the respondent's business experienced slow growth due to inflation and the scarcity of foreign currency. During that year, the respondent's representatives met with the appellant's Governor, Dr. Gideon Gono, with a view of securing foreign currency to purchase imported inputs in order to sustain its business.

Dr Gono gave an oral undertaking to avail US$150.000 per week, to the respondent, from the foreign currency auction system.

In January 2005, the respondent began to receive the said sums of foreign currency against payment of a Zimbabwean dollar equivalent to the appellant via a commercial bank.

The special arrangement was extended to thirty-five (35) other companies selected as the recipients of foreign currency.

This allocation of US$150,000 was, with effect from 16 June 2005, increased to US$250,000.

Weekly allocations, at that new level, were made to the respondent until the end of July 2005.

In August 2005, the respondent made three transfers of money, in Zimbabwe dollars, to the appellant, for the equivalent of the amount of US$750,000. The payments were accompanied by details of external creditors to be paid by the defendant.

The appellant did not pay the foreign currency.

Its position, at the trial, was that foreign currency could not be paid because it was not available.

The respondent's witness, Mr. Turina, confirmed, in evidence, that, the appellant indicated that it did not have foreign currency for disbursement.

On 2, 11 and 19 August, respectively, the respondent made payments, in Zimbabwe dollars, equivalent to US$750,000.

In respect of these three payments, the respondent would receive a phone call from the appellant before making payment.

On 1 August, it received a call from the appellant before depositing a sum of Z$4,438,294,052=45 with the appellant the following day.

With regard to the second transaction, the respondent received a phone call on 5 August. In response thereto, it deposited the sum of Z$4,511,254,261=47 with the appellant on 11 August.

On the third occasion, the telephone call was made on 17 August. The respondent deposited an amount of Z$4,587,562,920=90 with the appellant on 19 August.

Bigboy Masoso, who was the Division Chief Treasury Officer testified on behalf of the appellant to the effect, that, the disbursement of foreign currency could only be made if the front office of the appellant made the funds available. He also stated that the telephone calls made to the respondent, and other companies, were meant to provide quotations to secure constance of the exchange rate.

In the affidavit filed of record, Dr Gono stated as follows at paragraph four thereof as follows:

“I advised them that the Bank would endeavour to source foreign currency for the plaintiff to the tune of USD$150,000 per week in recognition of the plaintiff company's strategic role in the national economy. No formal binding agreement was concluded in this regard and it was never the common understanding of the parties that we were concluding a formal agreement.”

At paragraph six of the affidavit, he stated as follows:

“As a result of further representations made by the plaintiff, the defendant increased the weekly allocation of foreign currency to the plaintiff to USD250,000 from or about the 8th June 2005. Again, it was never the common understanding and contemplation of the parties that they were entering into a formal binding transaction, hence no formal contractual documentation was executed.”

Again, at paragraph seven of his affidavit, he stated as follows:

“I am advised, that, during the month of August 2005, plaintiff made payments totalling Z$13,535,110 being the quoted equivalent at the auction rate of USD750,000 which the defendant had hoped to pay to the plaintiff. Due to many other competing and pressing national requirements, the defendant was unable to avail the foreign currency, not only to plaintiff but to many other companies in a similar situation who then accepted an offer for immediate refund. Plaintiff declined the refund.”

Following a trial, the learned Judge found as follows at p8 of the judgment:

“However, the main issue, in my view, is whether, by allocating to the plaintiff US$150,000 and later US$250,000 from the auction system, the defendant then became obligated to release the money to the plaintiff upon payment by the plaintiff, within twenty-four hours, of the Zimbabwe dollar equivalent at the defendant's instruction.”

At p9 of the judgement, the court a quo stated as follows:

“It becomes crucial for the defendant to explain the reasons for Patience Aisam to set in motion the process, if foreign currency was unavailable. My view is simply that the allocation was only made against funds that were already available from the auction.

It is important to note that Patience Aisam spoke of 'an approved allocation and not successful bid.'

This was so because the plaintiff was on a special list that was not required to bid.

There could, in my view, be no approval or allocation of what was not already available.

Given the condition that the completion of each transaction was totally dependant upon the availability of foreign currency, the possibility of Aisam confirming allocation and asking for payment of the Zimbabwe dollar equivalent, within 24 hours, when there was no foreign currency already earmarked for the plaintiff is, in my view, very remote.”

The learned Judge, at p9, made the following finding:

“I am therefore unable to accept that the above scenario did not create binding obligations on the part of the defendant.

To that end, I am of the view, that, upon compliance by the plaintiff, a binding contract was concluded and what remained was the release of the foreign currency purchased by the plaintiff.

The case of F.C. Hume (Pvt) Ltd v Minister of Natural Resources & Tourism 1989 (3) ZLR 55 indeed supports this view.

With the plaintiff having complied with all the requirements, the contract was already in place and the defendant was obliged to meet its obligation.”

The gist of the court a quo's reasoning was that, at the time the phone calls were made to the respondent, the foreign currency to which the call related was available and the call was an offer which the respondent accepted by depositing the money, in Zimbabwean dollars, with the appellant thereby giving rise to a binding contract.

The court a quo gave judgment in favour of the respondent as sought in the summons. It is against this judgment that the appellant now appealed to this Court.

In the grounds of appeal, the appellant contends that:

1. The court a quo erred in law and fact in not making a finding that the payment by the respondent of the Zimbabwe dollars, as directed by the appellant, did not create a binding contract which was an end itself but that performance was always subject to foreign currency being available.

2. The court a quo erred in law and fact in making a finding that the communications made by Patience Aisam, on behalf of the appellant, calling upon the defendant to pay the Zimbabwe dollars, meant or was evidence that the foreign currency being allocated was available for disbursement to the respondent.

3. The court a quo erred in fact and law in not making a finding that non-availability of foreign currency made performance impossible and that the appellant was entitled to refund the respondent the money it had paid as the suspensive condition, viz, the availability of foreign currency had failed to be met.

4. The court erred in law in allowing the claim for interest and in ordering the interest to run from 1 September 2005.

The primary question to be decided by this Court is: whether or not there existed a binding contract for the disbursement of a sum of foreign currency to the respondent's creditors upon payment by the respondent of an equivalent sum in Zimbabwean currency.

The following are undisputed facts:

As a result of an approach to the appellant's Governor, Dr Gono, on 27 October 2004, for assistance in obtaining foreign currency, the respondent was granted the status of a successful bidder at the weekly foreign currency auction.

Several other companies were on this special list.

The respondent was not required to place bids at the auction but was merely telephonically advised of the agreed weekly allocations.

The practice had been successfully operational from January 2005 to July 2005.

Payment requirements were availed to the respondent who complied by effecting payment of the equivalent amount of the foreign currency in Zimbabwe dollars.

There was no formal contract between the appellant and the respondent.

The respondent was amongst a list of thirty five (35) companies on this special list who had been identified as preferential recipients of foreign currency under the arrangement.

The court a quo correctly found, that, the arrangement between the parties was premised on the availability of foreign currency. As such, no allocation could be made without the availability of foreign currency.

Indeed, both parties were aware that the arrangement for the disbursement of foreign currency was subject always to a condition that foreign currency had to be available in the first instance.

Mr Turina stated, that, due to the scarcity of foreign currency, the respondent had reached an agreement with the appellant whereby bids from the respondent would be given preferential treatment.

He confirmed that the information on the allocations was done telephonically and that once an allocation (i.e. the initial US$150,000 rising to US$250,000) was made, the respondent was required to pay the equivalent in Zimbabwean dollars.

The arrangement had worked well from January 2005 until July 2005.

In August 2005, the appellant failed to disburse US$750,000 to the respondent's customers and suppliers after the respondent had deposited with the appellant an equivalent sum, in Zimbabwe dollars, in three separate tranches.

In this regard, the import of the affidavit of Patience Aisam was that a telephone call would be made to advise of an approved application and not allocation. In effect, the approval and the actual allocation of foreign currency were distinct processes - premised on the availability of foreign currency.

It was the evidence of Patience Aisam's superior, Bigboy Masoso that payments in foreign currency would only occur if the front office availed such funds.

This testimony accords with logic and probability.

Patience Aisam was not employed in the Front Office which was responsible for the allocation of foreign currency.

The court a quo found that there existed a binding contract between the parties.

When regard is had to Dr Gono's affidavit, it is clear that he advised the respondent that the appellant would “endeavour” to source foreign currency for the respondent.

Such assertion does not suggest that the appellant was binding itself to provide the respondent with foreign currency on an ongoing or permanent basis.

It is not in dispute that no allocation of foreign currency was made in August 2005. According to Bigboy Masoso, the system was discontinued because there was no foreign currency.

The 24 hours notice of payment of Zimbabwe dollars was not in fact adhered to by the respondent in August 2005.

The finding by the court a quo, that, upon payment by the respondent, a binding contract was concluded, is not borne out by the evidence with regard to the payments made following telephone calls of 5 and 17 August 2005.

SC22-09 : MAXMUS SAVANHU vs MAGNET MARERE N.O. and MASTER OF THE HIGH COURT and THE REGISTRAR OF DEEDS
Ruled By: MALABA DCJ, CHEDA JA and GARWE JA

This is an appeal from a judgment of the High Court given on 9 March 2006 dismissing with costs an application for an order compelling the first respondent to transfer Stand 151 of Plot 216 of Good Hope Township of Good Hope into the appellant's name in terms of an agreement of sale entered into ...

The appellant and the late Robert Mubayiwa Marere (“the deceased”) entered into a written contract on 30 October 1998 in terms of which the latter agreed to sell and the former agreed to purchase Stand 151 of Plot 216 of Good Hope Township of Good Hope (“the property”) for $230,000=.

The parties provided for two alternative methods of payment of the purchase price under Clauses 12 and 7. Under Clause 12, they agreed that the purchase price would be paid as follows:

“1. The sum of $50,000= (fifty thousand dollars) to be paid to ERS REALTY'S TRUST ACCOUNT on signing of this Agreement of Sale.

2. The balance of $180,000= (one hundred and eighty thousand dollars) to be paid at the rate of $30,000= (thirty thousand dollars) per month commencing on the 1st of July 1998 with interest at the rate of 25% effected if the purchaser does not meet the deadline of 30 December 1998.”

Under Clause 7, headed “TRANSFER”, the parties agreed that:

“Transfer shall be effected by the seller's conveyancers and the purchaser shall, within a period of fourteen days, pay or furnish a Bank or Building Society guarantee for payment of the purchase price against transfer. If such payment or guarantee shall not be furnished to the seller's conveyancers the purchase price shall bear interest at 19% per annum from the expiry of such period of fourteen (14) days until transfer shall be effected.”

The details of payment provided for under Clause 7 are so different from those under Clause 12 that an inference must be drawn, as a matter of construction from the terms used, that the parties intended that the appellant would have to decide which of the two methods of payment to follow and be bound by the terms....,.

No payment of the sum of $50,000 was made by the appellant on signing of the agreement on 30 October 1998 in terms of Clause 12(1) of the contract. An amount of $50,000 had been paid to ERS Realty on 21 May 1998. The receipt states that the money was paid as a deposit of the purchase price in respect of Stand 21G of Lot 216 of Good Hope Township.

Counsel for the appellant argued, on appeal, that Stand 21G of Lot 216 was in fact the same as Stand 151 of Lot 216 of Good Hope Township.

Whilst that may be the case there was nothing said by the appellant in the founding affidavit to support the contention. Similarly, the founding affidavit was silent as to whether Stand 21G of Lot 216 of Good Hope Township in respect of the purchase price of which an instalment of $3,000 was paid to ERS Realty on 31 July 1998 was the same as Stand 151 of Lot 216 of Good Hope Township.

Five receipts of payments of $30,000 made by the appellant to Messrs Manase & Manase, a firm of legal practitioners appointed as the seller's conveyancers, were annexed to the founding affidavit. The payments were all made between 31 March and 12 October 1999. Each receipt states that the payment was a deposit for a purchase price for an unidentified piece of land. The payment is said to be to the credit of an entity called NYIKA Engineering.

Counsel for the appellant suggested, in argument on appeal, that NYIKA Engineering was a company owned by the deceased.

There was no reference to NYIKA Engineering in the founding affidavit.

Even if it is a company there was no explanation given as to why it received payment of the money in terms of a contract to which it was not a party....,.

The court a quo held that payment of the instalments of $30,000= per month to Messrs Manase & Manase constituted a breach of Clause 12(2) of the Agreement of Sale as the appellant was bound to pay the money to ERS Realty. As a result, the application was dismissed with costs.

The contention, on appeal, was that the learned Judge misdirected herself in making the finding that the payment of the instalments to Messrs Manase & Manase was in breach of Clause 12(2) of the agreement of sale....,.

To determine the correctness of the contention that the court a quo misdirected itself in holding that payment to Messrs Manase & Manase was in breach of Clause 12(2) it is necessary to decide the question as to which of the two methods of payment of the purchase price the appellant was found to have decided to follow.

It is clear that the learned Judge took the view that he followed the method of payment provided for under Clause 12 of the contract. Counsel for the appellant argued that the payments of the instalments were made in terms of Clause 7 of the agreement of sale.

The fact that there was in fact no payment of the deposit of $50,000 on signing of the agreement of sale on 30 October 1998 in terms of Clause 12(1) of the contract would suggest that the appellant decided to pay the purchase price in terms of Clause 7. It is, however, clear from the facts of the case that although the payment of $50,000 to ERS Realty by the appellant on 21 May 1998 was, at law, not payment in terms of the agreement of sale, he believed that it was payment towards the purchase price of the property.

Although he produced no evidence to support the allegation, the appellant had his case argued on the basis that Stand 21G of Lot 216 of Good Hope Township for the purchase price of which $50,000 was paid was in fact Stand 151 of Lot 216 of Good Hope Township.

The learned Judge was correct in finding, on the facts, that the appellant believed he had made the payments in terms of Clause 12 of the agreement of sale. I, however, do not agree with the finding by the learned Judge that if the payment to Messrs Manase & Manase was indeed in respect of Stand 151 of Lot 216 of Good Hope Township it was in breach of Clause 12(2) because it ought to have been made to ERS Realty.

The appellant was specifically required, under Clause 12(1) of the agreement of sale, to pay $50,000 of the purchase price to ERS Realty on signing of the contract. That exclusive mandate did not extend to the payment of the balance of $180,000. Clause 12(2), relating to the payment of the balance, is silent as to whom the payment was to be made. It therefore had to be made to the deceased.

Payment of the instalments of the purchase price to Messrs Manase & Manase, in terms of clause 12(2) of the agreement, would not be in breach of the contract provided the appellant made sure that the deceased received the money.

HH15-09 : GRISON MUWIDZI vs OPTIMACK INVESTMENTS (PVT) LTD and REGISTRAR OF DEEDS
Ruled By: UCHENA J

The applicant and the first respondent entered into an agreement of sale. In terms of that agreement, the applicant was to purchase Stand 58 Greystone Township 2 of Lot A of Borrowdale Estate measuring 4,730 square meters. The agreement was entered into on 18 February 2008. In terms of clause 2, which deals with the terms ...

In terms of clause 2, which deals with the terms of payment, $1,950,000,000,000 (One trillion nine hundred and fifty billion Zimbabwe dollars) was to be paid “within three (3) days of signing this agreement of sale to Kingdom Asset Management.”

The applicant completed an RTGS form on 21 February 2008 and presented it to his Bank, instructing it to pay the first respondent's agent the purchase price. The RTGS form which was attached as annexure B to the applicant's application has the following material details;

It was addressed to CFX Bank requesting it to transfer $1,950,000,000,000 to Kingdom Securities Ltd Call Account. It is dated 21 February 2008. The value date is indicated as 22 February 2008. The account to be debited is indicated as c/o CFX. It is endorsed at the bottom in long hand “Debit new account No. 172 1197287-011” and “pd. 22/2”.

The following facts are common cause;-

1. The first respondent sold the property to a third party on 21 February 2008.

2. The applicant was offered another unspecified Stand on a without prejudice basis.

3. The applicant applied for a provisional order interdicting the first respondent from selling, disposing, transferring or alienating the immovable property to any person other than the applicant.

4. The provisional order was granted by HLATSHWAYO J on 5 March 2008.

The applicant now seeks confirmation of the provisional order. The first respondent seeks its discharge. The issue to be decided is whether or not the applicant paid the purchase price within the agreed period.

Counsel for the applicant submitted that the provisional order should be confirmed as the applicant has a clear right emanating from his having complied with the terms of the agreement of sale by paying the purchase price within the stipulated period. Counsel for the first respondent submitted that the provisional order should be discharged as the applicant has not established a clear right as the agreement lapsed when the applicant failed to pay the purchase price by the 21^st of February 2008.

The issue on which this case hinges is whether or not the applicant paid the purchase price within the stipulated period. Put differently, the issue is whether the instruction given by the applicant to CFX Bank on 21 February 2008 constitutes payment within three (3) days as provided in clause 2, or payment by the 21^st of February 2008 as provided in clause 17 of the agreement of sale.

Clause 17 provides as follows;-

“It is a condition precedent of this agreement that the Purchaser signs and pays the full purchase price stipulated in paragraph 2.1 (sic) on or before 21 February 2008 failing which the agreement shall immediately lapse and be of no further force or effect.”

Clause 2 of the agreement provides as follows;-

“Z$1,950,000,000,000 (one trillion nine hundred and fifty billion Zimbabwe dollars) to be paid within three (3) working days of signing this agreement of sale to Kingdom Asset Management.”

It is clear from clauses 2 and 17 that payment was to be made before the closing of business on 21 February 2008. Failure to comply would lead to the lapsing of the agreement of sale.

Counsel for the applicant submitted that the ZETTSS Payment Form, annexure B, proves that the applicant paid within 3 days as required by clause 2, and on or before 21 February 2008 as stipulated by clause 17. He relied on Rule 1.1 of the Zimbabwe Electronic Transfer and Settlement System Operating Rules, (R.B.Z.ZETSS - 1 (Issue 5) which provides as follows;-

“1.1 The Zimbabwe Electronic Transfer and Settlement System (ZETSS) allows for the real time, irrevocable, interbank transfer of funds on a same-day value basis using settlement accounts held at the Reserve Bank of Zimbabwe.”

Counsel for the respondent, on the other hand, submitted that payment is made when the sending Bank's account is debited and the receiving Bank's account is credited with the amount specified in the payment instruction. He relied on Rule 9 of the Zimbabwe Electronic Transfer and Settlement System Operating Rules which provides as follows;-

“9. A payment instruction under ZETSS is deemed to be final and irrevocable once the sending Bank's account is debited and the receiving Bank's account is credited with the amount specified in the payment instruction.”

It seems to me that the submissions made by counsel for the applicant are correct.

Rule 1.1 deals with the general intention behind the introduction of this type of transfer of funds. It was intended to be a quick way of transferring funds so that the funds so transferred could reflect in the recipient's Bank account on the same day. It makes it clear that once the instruction is given it becomes irrevocable, meaning that payment must be deemed to have been made at the time the instruction was given. Rule 9, on the other hand, provides for the stage when such a payment becomes final and irrevocable. In my view, this merely provides for the finality of an already irrevocable payment. I would therefore not agree with counsel for the respondent that payment is made at the time the receiving account is credited.

Rules 1.1 and 9 must be interpreted within the context of other provisions of the operating rules. Rules 7.1 and 7.4(a) of the Zimbabwe Electronic Transfer and Settlement System Operating Rules shed light to their true meaning. They provide as follows;-

“7.1 Only unconditional, irrevocable payment instructions between participants and between participants and the Reserve Bank may be made through the System;” and

“7.4 Participants may capture payments that are to be effected at a future date or time, on condition that:-

(a) Such payments shall be scheduled for a business day and time the System is in operation:”

This, to me, means, as a general rule only, unconditional, irrevocable payment instructions between participants and the Reserve Bank can be made. This would mean payment would be deemed to have been made on the day the paying party gave instructions to his Bank.

In this case, it would mean payment was made on 21 March 2008.

If there was no exceptions to Rules 1.1 and 7.1 I would have had no difficulties in finding that the applicant paid within the agreed period. However, the paying participant can, in terms of Rule 7.4(a) of the Zimbabwe Electronic Transfer and Settlement System Operating Rules, instruct his Bank to capture a payment that is to be made in the future. If he does, payment cannot be deemed to have been made on the date of the instruction but on the stipulated future date.

In this case, it is common cause that the applicant, in giving instructions to his Bank in annexure B, indicated the value date as 22 February 2008. That is the date on which he intended to effect payment. That is the date on which his Bank effected payment as he had instructed it to. The date of payment is, in this case, not the day the instruction was given but the future date stipulated by the applicant in his instructions. In the result, the applicant paid on 22 February 2008 when the agreement required him to pay by the 21^st of February 2008. This means the agreement lapsed at the close of business on 21 February 2008.

There is therefore no legal basis on which the provisional order granted on 5 March 2008 can be confirmed. The right on which it depended was extinguished by the lapsing of the agreement of sale. It is therefore discharged with costs.

HH25-10 : MAXWELL MATSVIMBO SIBANDA vs GWYNNE ANNE STEVENSON
Ruled By: CHITAKUNYE J

On 28 February 2007 the plaintiff entered into a Deed of Sale with the defendant for the purchase of an immovable property, being Subdivision B of Subdivision D of Subdivision A of Lot 4 of Lot A of Colne Valley of Rietfontein, otherwise known as 47 Addington Lane, Ballentyne Park, Harare.The clause on the purchase ...

The clause on the purchase price and manner of payment stated that -

“3. The Purchaser shall pay to the Seller the amount of GBP180,000= (one hundred and eighty thousand British Pounds) for the property.

4. The Purchaser shall pay the purchase price to the Seller, free of bank commission and any bank special clearance charges or other such charges, by means of the following instalments:

(a) GBP30,000= (thirty thousand British Pounds) on or before 31 March 2007;

(b) GBP30,000= (thirty thousand British Pounds) on or before 30 July 2007;

(d) GBP30,000= (thirty thousand British Pounds) on or before 31 March 2008;

(e) GBP30,000= (thirty thousand British Pounds) on or before 30 July 2008;

(f) GBP30,000= (thirty thousand British Pounds) on or before 30 November 2008.”

On 30 March 2007 the plaintiff tendered to Lorraine O'Neil a sum of $14,400,000= (Zimbabwean currency), purportedly as payment for the first instalment of GBP30,000=.

That tender was rejected by the defendant through her legal practitioners as not being in accordance with the Deed of Sale. The defendant demanded payment of the said instalment in British Pounds Sterling, as is stated in the Agreement, within fourteen days by their letter dated 4 April 2007.

Other clauses pertinent to the resolution of the dispute were as follows..., –

“7. The Purchaser is currently renting the properties and will continue paying monthly rental equivalent to the official midbank rate of GBP250= (two hundred and fifty British Pounds) until such time as the full purchase price has been paid.

8. ...,.

9. With effect from the effective date, the Purchaser shall ensure that at all times a good and sufficient insurance policy is maintained in respect of the properties and that the improvements thereon are insured against all the risks specified in such policy for the current replacements or reinstatement value thereof.”

The cardinal point revolved on the purchase price and manner of payment of that purchase price.

The plaintiff's evidence was to the effect that though the purchase price and manner of payment were expressed in British Pounds Sterling, the actual payment was, in fact, to be effected in the Zimbabwean dollar equivalent.

He argued that this is what the parties agreed to. The exchange rate was the mid bank rate/official bank rate.

From the pleadings filed of record, and the plaintiff's evidence, it is common cause that the Sellers were resident outside Zimbabwe. Both the plaintiff and his wife confirmed that to their knowledge the Sellers had no intentions of ever coming back to Zimbabwe. It is this common cause that from the onset the plaintiff knew that the purchase price he was to pay, irrespective of the currency, was for the credit of a non-resident.

It is further common cause that, apart from the purchase price, the plaintiff was required to pay other sums composing 7,5% commission to Lauraine O'Neal,15% value-added tax, and rent for the property in question.

In terms of clause 7 of the Deed of Sale, the rentals which the plaintiff was to continue paying until the purchase price was paid in full was pegged at GBP250= paid in Zimbabwe dollars equivalent to the official mid-bank rate.

Clause 19/20, on dealing with the commission, clearly states that the 7,5% commission to be paid by the plaintiff to Lauraine O'Neal was to be calculated using the parallel market exchange rate. This was clearly illegal. It is, nevertheless, what the parties agreed to.

It is very clear from the above two clauses that apart from quoting the currency in British Pounds Sterling the parties went further to provide the exchange rate to be applied in respect of each payment.

It is the same parties who were alive to the different rates of exchange, who in their clauses 3 and 4 of the Deed of Sale did not provide for an exchange rate. Clauses 3 and 4 do not in any way show that the British Pounds Sterling were to be paid out in any other currency.

The plaintiff and his wife could not point out any amendment that was made to the above clauses. They also could not say why there was no provision for an exchange rate if it was agreed that the purchase price be paid in Zimbabwe dollars.

It was a case of arguing that because the rentals and commission were paid in Zimbabwe dollars so the purchase price was to be paid in the same currency.

HH88-12 : BLUMO TRADING (PRIVATE) LIMITED t/a COLCOM COMMODITIES vs MORGAN MUDUVURI
Ruled By: MATHONSI J

The respondent was served with the applicant's heads of argument on 23 May 2011. In terms of Rule 238(2a) of the High Court Rules, as the respondent is represented by a legal practitioner, the said legal practitioner was required to file heads of argument not more than ten days after ...

HH92-09 : SUPA PLANT INVESTMENTS (PVT) LTD vs EDGAR CHIDAVAENZI
Ruled By: MAKARAU JP

The facts giving rise to this application are largely common cause. They are as follows:

The applicant is in the farming business, operating a farm in Chakari. In October 2006, it set out to acquire a centre pivot irrigation system for its farm. Its Managing Director, duly authorized to act on behalf of the applicant, approached one Douglas Chihuri (“Chihuri”) who was selling a center pivot system on behalf of the respondent.

An agreement of sale was concluded between the plaintiff and Douglas Chihuri, acting for his principal, regarding a 140HA center pivot system belonging to the respondent.

A purchase price in the sum of $12,000,000 and installation charges of $3,000,000 were agreed upon.

Pursuant to the agreement, an invoice was made out to the applicant giving the total amount payable as $15 million.

It was made clear to Douglas Chihuri that payment would be made through the African Banking Corporation and would take a few weeks to be processed.

A month later, payment was effected in the agreed sum. This was made in favour of Chartered Enterprises, Douglas Chihuri's trading mantle.

A week after payment had been made, the applicant met with the respondent to discuss the details of the delivery of the centre pivot. Douglas Chihuri was in attendance. At the meeting, the respondent unilaterally increased the purchase price of the centre pivot. Instead of holding the respondent to the agreed price, the applicant agreed to pay an additional $5million and executed an acknowledgement of debt to this effect.

The seller also appended his signature to the acknowledgement. So did Douglas Chihuri.

Payment of the $15 million was then made to the respondent according to his instructions. Still acting as the seller's agent, Douglas Chihuri agreed to have the centre pivot delivered to the applicant.

The respondent did not deliver the centre pivot, prompting the applicant to bring this application seeking an order compelling the respondent to deliver a 140HA center pivot to it.

In opposing the application, the respondent denies knowledge of what transpired between the applicant and Douglas Chihuri, but admits that he was, at that time, selling two centre pivots, the details of which he gave to Douglas Chihuri. He further confirmed, that, in time, Douglas Chihuri advised him that he had secured a buyer for one of the centre pivots. He also confirmed that he received the sum of $14 million dollars for the centre pivot that Douglas Chihuri had sold to the applicant on his behalf and that a balance in the sum of $5 million would be paid in due course.

It was also suggested to him that a further $15 million would be paid for the same pivot after the applicant had sold his beasts or that he could collect the beasts himself as further payment for the sold pivot. He however opted for a cash payment. He did not agree to the delivery of the pivot in the absence of full payment and did not deliver the center pivot because he did not receive the full purchase price of $35 million.

At the hearing of the application, it emerged that the respondent had sold the centre pivot, the subject of this dispute, after being served with this application but before the matter was determined.

This emerged from supplementary affidavits filed by both parties days before the hearing and which were filed with my leave. I granted leave to the parties to file the supplementary affidavits as, in my view, they air the full dispute between the parties and bring out the real issue for determination in this matter.

In his supplementary affidavit, the respondent deposed, that, after the filing of the above application, a director of the applicant caused his arrest on allegations of fraud. It was alleged, in the criminal proceedings, that the respondent had fraudulently misrepresented to the said director that the centre pivot was available for sale when he knew that it was not as it was to be sold to a third party. The respondent was duly prosecuted but was acquitted at the close of the trial.

In it own supplementary affidavit, the applicant admitted the facts given in the respondent's additional affidavit but urged me to find the contents of the affidavit inadmissible on the basis of irrelevancy.

Before proceeding further, I will dispose of the admissibility of the contents of the affidavit.

In my view, once a court grants leave to a party to file an additional affidavit, that grant of leave necessarily implies that the contents of the affidavit are admissible. Supplementary affidavits should only be filed if their contents are relevant to the dispute before the court.

It is a general rule of evidence that irrelevant evidence is inadmissible.

Section 26 of the Civil Evidence Act [Chapter 8.01] provides that evidence that is irrelevant or immaterial and cannot lead to the proving or disproving of any point in issue shall not be admissible.

This section is simply a codification of the position at common law which holds that all facts relevant to the issue in legal proceedings may be proved and where a legally recognized exception to this rule is not invoked, relevancy remains the fundamental rule governing the admissibility of evidence.

As indicated above, this is the rule that a court summarily employs before granting leave to file additional affidavits in motion proceedings.

In my view, the rule against admissibility of irrelevant evidence is rooted more in common sense than in a legal principle. It is a common sense approach by the court to govern that which it will accept or reject lest it be inundated by evidence of all facts surrounding a dispute and trials will take longer than is necessary to resolve if the parties were left at liberty to drag in all they wish or think is necessary.

It however remains clear that the rule against irrelevant evidence is against evidence of facts that have little to do with the issue in dispute.

In casu, I was of the view that the disposal of the centre pivot pending litigation is the issue in dispute and thus facts tending to prove the disposal cannot be irrelevant. Further, and in any event, the facts sought to be rendered inadmissible by the applicant are common cause and thus no party will be prejudiced by its admission into evidence.

It is on the basis of the above that I ruled admissible the contents of the two supplementary affidavits.

I now turn to consider the merits of the application.

The issues that fall for determination in this application are mainly two in my view:

(i) Firstly, I have to determine whether or not there was an agreement between the applicant and the respondent for the sale of the centre pivot for $20 million.

The respondent has sought to argue that the agreed purchase price was $35 million. He deposed in his opposing affidavit that after the applicant had paid the first $15 million and had promised a further $5 million, by way of the acknowledgement of debt; the parties agreed to a further payment of $15 million after the applicant had sold its beasts.

Relying on these averments by the respondent, counsel for the respondent argued that the correct purchase price of the center pivot cannot, in the circumstances, be ascertained without the leading of oral evidence and thus the application should fail on this basis.

It is common cause that Douglas Chihuri, acting as the agent of the respondent, agreed to sell the centre pivot to the applicant for $15 million. The parties agreed, later, to vary the purchase price to $20 million, when, after making payment of the initial purchase price, the applicant promised, by way of an acknowledgement of debt, to pay an additional $5 million.

The agency of Douglas Chihuri to represent the respondent, whilst challenged in the opposing affidavit, was not advanced in argument.

In my view, counsel for the respondent was well advised not to advance the argument in view of the affidavit by Douglas Chihuri and the fact that the respondent accepted the sum of $15 million paid by the applicant through Chihuri.

By his own conduct, of accepting the payment, the respondent put paid to whatever argument he may have had against the agency of Douglas Chihuri. By this conduct, he gave out and confirmed that Douglas Chihuri was indeed selling the centre pivot on his behalf and is thus bound not only by what Douglas Chihuri did but by what he also personally did.

If there was any doubt about the agency of Douglas Chihuri, the respondent personally removed that doubt by accepting the part payment of the purchase price and agreeing with the applicant that the balance now stood at $5 million, thereby putting beyond doubt that the purchase price was $20 million.

In my view, he is thus condemned by his own actions as revealed by the papers filed of record.

I am aware that the respondent has repeatedly and vehemently denied, in his affidavit, that the purchase price of the centre pivot was $20 million.

It is my view that it is not the number of times a denial is made or the vehemence with which a denial is made that will create a conflict of fact such as was referred to by McNALLY J…, in Masukusa v National Foods Ltd and Another 1983 (1) ZLR 232 (H) and in all the other cases that have followed.

A material dispute of fact arises when material facts alleged by the applicant are disputed and traversed by the respondent in such a manner as to leave the court with no ready answer to the dispute between the parties in the absence of further evidence.

In casu, I believe the papers filed of record present ready answers to the questions posed by the respondent. He argues that he wanted more than the $20 million that the applicant contends was the agreed purchase price.

(a) Firstly, the papers filed of record clearly show that the respondent's agent negotiated and agreed to the sum of $20 million.

At law, the actions of the agent bind the principal - even if the agent is breaching his own contract of agency with the principal.

There is thus no need to lead evidence to show what the terms of the agency contract were regarding the purchase price he had to seek. The respondent, through the agency of Douglas Chihuri, agreed to $20 million that the applicant has paid in full.

(b) Secondly, it is common cause that the respondent received the sum of $15 million dollars through his agent, and, thereafter, acknowledged, in writing, that the balance due was $5 million.

He did not, at that stage, query the fact that the balance was only $5 million instead of $20 million according to his assertions.

By appending his signature to the acknowledgement of debt, which clearly indicates the balance as $5million, he gave out to the applicant that he agreed with the applicant in this regard.

Thus, in my view, on the basis of the papers, it is clear that the total purchase price agreed to between parties was in the sum of $20 million which was paid in full.

I find nothing on the papers to indicate that the parties may have agreed to a price other than $20 million.

The only suggestion that this may be so is the averment by the respondent, in his opposing affidavit, to this effect. It is not backed up by any other evidence. It is contradicted by the facts that are common cause and is thus clearly simply meant to introduce an illusory conflict where none exists.

Aligned to the alleged conflict of fact on the agreed purchase price is whether the respondent agreed to deliver the centre pivot before payment of the purchase price in full.

Again, counsel for the respondent urged me to find that I could not resolve this dispute in the absence of oral evidence.

I am afraid I cannot agree.

Having found that the agreed purchase price was $20 million which was paid in full, it matters not, in my view, if the respondent agreed to deliver the centre pivot as delivery is a legal consequence following the conclusion of a sale agreement. It cannot be the subject of a separate agreement between the parties.

It is therefore my finding, that, there is no material conflict of fact in this application.

The parties concluded an agreement of sale of the centre pivot for the sum of $20 million which has since been paid in full. The respondent is bound by the law of sale to deliver the centre pivot to the applicant.

HH154-09 : PETHIAS CHITSUNGO vs D. MASUKU and RUWA LOCAL BOARD
Ruled By: MTSHIYA J

This is an opposed application where the applicant seeks the following relief:- “1. Applicant shall deposit $10,000,000,000= into the Registrar of High Court's temporary deposit account the outstanding balance towards the purchase price of Stand No.3519, Dzivaguru Crescent, Ruwa, for first respondent. 2. Thereafter, first respondent shall proceed to cede his rights, interests and title in Stand No.3519, Dzivaguru Crescent, ...

This is an opposed application where the applicant seeks the following relief:-

“1. Applicant shall deposit $10,000,000,000= into the Registrar of High Court's temporary deposit account the outstanding balance towards the purchase price of Stand No.3519, Dzivaguru Crescent, Ruwa, for first respondent.

2. Thereafter, first respondent shall proceed to cede his rights, interests and title in Stand No.3519, Dzivaguru Crescent, Ruwa, into applicant's name within ten (10) days of service of this order on him failure of which the Deputy Sheriff, Harare, be and is hereby authorised to sign all relevant cession papers for purpose of ceding first respondent's rights interests and title in Stand No.3519, Dzivaguru Crescent, Ruwa, into the applicant's name.

3. First respondent shall be evicted forthwith from Stand No.3519 Dzavaguru Crescent, Ruwa.

4. First respondent shall pay the costs of this application on client legal practitioners.”

In seeking the above relief, the applicant alleges that the respondent breached a contract relating to his purchase of Stand No.3519 Dzivaguru Crescent, Ruwa, (the property).

It is common cause that on 15 February 2008 the applicant and the first respondent entered into a written agreement whereby the first respondent would sell his rights in the property to the applicant for a sum of ZW$20,000,000,000= (twenty billion Zimbabwe dollars). The applicant paid ZW$10,000,000,000= (ten billion Zimbabwe dollars) upon the signing of the agreement. It was then agreed that the balance of ZW$10,000,000,000= would be paid over a period of three months.

On 21 April 2008 (i.e. 66 days after paying the deposit) the applicant tendered payment of the balance of ZW$10,000,000,000= but the first respondent refused to accept the payment arguing that he had since cancelled the agreement after the applicant refused to pay $3,300,000,000= on 15 March 2009, which payment, according to the first respondent, would have constituted the first instalment.

On 9 May 2008, the applicant filed this application praying for specific performance in terms of the draft order (relief) quoted in full herein…,.

On 9 July 2008, the applicant obtained a default judgment against the first respondent from this court, and, on the basis of that judgment, he caused the registration of the property into his name. However, the default judgment was later rescinded on 7 May 2009.

In opposing the application, the first respondent argued that the purchase agreement was not enforceable because it did not carry the consent of the lessor, namely, the Minister of Local Government and National Housing (the Minister) who was not even cited in the proceedings.

The first respondent based his argument on clause 12 of the lease agreement between himself as the lessee and the Minister as the lessor. The said clause provides as follows:

“That the lessee shall not cede or assign this lease or sublet or part with the possession of the stand/stands, or any part thereof, or alienate, mortgage, donate or otherwise dispose of the same, or cede or assign any right acquired by him/it hereunder without the previous consent in writing of the Lessor, or until title to the stand/stands shall have been granted to him/it as hereafter mentioned.”

The first respondent conceded that, although he, as the seller, had not complied with the above condition, the agreement between him and the applicant was not null and void. It was only unenforceable and would remain so until the Minister (lessor) placed him in a position to pass title. He, however, correctly argued that the Minister, who was not a party to the proceedings, could not be compelled to pass title to either of the two parties.

The first respondent argued that Ruwa Local Board, cited in the case as second respondent, was merely an administrative entity and could not take the place of the lessor who could pass title. It was further submitted that the second respondent had indeed confirmed that it would require authority from the Minister for it to pass title. The second respondent was not therefore compellable to pass title to the applicant.

The first respondent further submitted that when the parties concluded the contract their main intention was that the balance of $10,000,000,000= would be payable in three equal instalments over a period of three months. However, in breach of that arrangement, the applicant had, on 15 March 2008, upon demand, refused to pay the first instalment of $3,300,000,000=. The applicant had indicated that he would pay the whole balance at the end of the three months' period. That refusal to pay led to the cancellation of the agreement by the first respondent. The first respondent regarded refusal to pay the first instalment as a breach of contract justifying cancellation of the same.

On his part, the applicant submitted that upon payment of the balance of $10,000,000,000=, through the High Court, following the rescinded court order granted on 9 July 2008, he had fully discharged his obligations under the contract. He had initially tendered the payment on 21 April 2008 but the first respondent had rejected the same.

It should, however, be noted that notwithstanding the rescission of the court's order of 9 July 2008, on 7 May 2009, the applicant went ahead to register the property into his name.

The applicant averred that the refusal by the first respondent to accept the balance was due to the fact that he (the first respondent) wanted to fetch a higher price from an unnamed third party. He said the agreement did not spell out any specific instalments for the three months period. The first respondent could not therefore resile from a contract that was entered into freely and voluntarily. Payment had been made within the confines of the agreement and that payment was subsequently paid through the court.

The applicant agreed that although the agreement in question was legal it did not bind the lessor (Minister). See Jangara v Nyajuyamba 1998 (2) ZLR 475 (H) and Chanda v Mutandadzi and Anor SC74-94.

He said clause 12 of the lease agreement merely enunciated general policy. In the main, however, the City Councils/Local Boards are, on behalf of the Minister, the ones who approve of persons who are eligible to purchase or occupy any piece of land. The City Council(s) or local board(s), with authority from the Minister, can ratify what the parties will have concluded outside the non-cession clause. To that end, it was argued, it is the city councils/local boards that obtain the necessary authority for cession(s) from the lessor (in casu: the Minister). He said authority to cede would only be withheld where public policy would be injured.

In the premises, and because the applicant had fully discharged his obligations under the contract, it was argued, it would be unjust and inequitable for the court not to order specific performance. He urged the court to find the agreement legal and enforceable – hence his cry for specific performance.

In dealing with this matter, I want to take judicial notice of the fact that, generally, State land in municipalities is administered by local councils through delegated authority from the Minister. The lessee, for all practical purposes, dealt with the Ruwa Local Board which was mandated by the lessor (Minister) to approve developments on the Stand or property that was the subject of purchase. Ruwa Local Board was therefore the authorized agent of the Minister.

To that end, I do not see any prejudice in the non-citation of the Minister who appears in the lease agreement as the lessor.

Pursuing that argument, in any case, is now academic in the sense that, at the time of the hearing of this of matter, the second respondent had already exercised its delegated authority by effecting cession to the applicant.

It is important to note that the court order that was later rescinded was never challenged by the lessor. That, alone, is testimony to the fact that Ruwa Local Board is the authorized agent of the lessor.

The problem faced by both parties regarding their contractual relationship is the interpretation of the phrase “balance over three months from date of sale.”

There is no mention of what would be paid per each month. However, in his opposing affidavit, the respondent states the following:-

“5.4 Reference to payments “over three moths” was clear reference to the monthly instalments which were agreed by the parties.

5.5 I recall that on or about the 15^th of March 2008, I demanded payment of the first instalment Zimbabwean dollars. The applicant refused to pay the amount and indicated that he was to going to pay the amount at the end of three months period together with the subsequent instalments. I advised him that because of loss of value for money, I was not prepared to accept the full payment of 10,000,000,000= (ten billion) Zimbabwean dollars at the end of the three months period. I accordingly insisted on the payment of instalment. The applicant refused. As a result, I advised him that I was cancelling the agreement of sale.….,.

5.6 On or about the 15^th of April 2008, some two months after the cancellation of the agreement of sale, the applicant came to my residence and tendered the payment of the sum of $10,000,000,000= (ten billion) Zimbabwean dollars. I rejected the payment indicating that I had already cancelled the agreement of sale to his knowledge. That resulted in him writing the letter, which is attached to the applicant's founding affidavit papers, to the Ruwa Local Board. The said letter was however not copied to me.

5.7 I wish to point out that, originally, I had indicated to the applicant that the purchase of the property should have been made on cash basis. He negotiated with me and pleaded with me to accept a deposit in the sum of $15,000,000,000= (fifteen billion) Zimbabwean dollars. However, on the appointed day when the agreement was drafted, he came up with the sum of $10,000,000,000= (ten billion) Zimbabwean dollars. Initially, I had insisted that the balance which would have remained, in the sum of $5,000,000,000= (five billion) Zimbabwean dollars should have been paid within a month of the agreement of sale, that is by the 15^th of March 2008. On the date when the agreement was drawn up, it was after pleading of the applicant that I asked him to pay the balance spread over three months.”

As can be seen, the above statements attempt to introduce new terms to the agreement that the parties signed on 15 February 2008.

The statements, being outside the contract, are denied by the applicant. The applicant's position is that he would only be in breach if he failed to pay the balance within the three months period.

I agree.

The failure by the parties to incorporate the issue of instalments in the agreement, in my view, suggests that what was most important is that the balance should have been cleared within the three months period. The applicant could have paid any amount, even the total balance, before the expiry of the three months period. What the applicant could not do, however, was to effect payment outside the three months period.

That view is consistent with the need to restrict the interpretation of the intentions of the parties to the contents of the agreed document ie within the four corners of the contract.

Accordingly, my view is that the respondent lacked competence to cancel the contract on 15 March 2008 before the expiry of the three months period.

I also believe that the short period within which the balance was to be paid was meant to accommodate the issue of inflation raised by the respondent. In fact, the reason for refusing to accept the money was given as:-

“I advised him that because of loss of value for money, I was not prepared to accept the full payment of $10,000,000,000= (ten billion) Zimbabwean dollars at the end of the three months period.”

The first respondent accepts the contract signed on 15 February 2008 but now wants to add the issue of defined instalments. That may sound a reasonable expectation but it was not part of the contract. I therefore strongly hold the view that the first respondent could only talk of breach and cancellation of the contract after the expiry of the three months period.

This court cannot, therefore, be used as a platform to assist parties who enter into 'bad' deals by way of allowing unilateral variation of contracts. The respondent therefore refused to accept the full payment on 21 April 2008 at his own peril.

On the basis of the principle that the law respects the sanctity of contracts, the respondent cannot therefore be allowed to resile from the contract. There was no breach on the party of the applicant and the purported cancellation of the contract was therefore null and void.

Having complied with the terms of the contract, the applicant is entitled to an order of specific performance.

In Unilever South East Africa v Viewleen Investments (Private) Limited HH37-07, CHITAKUNYE J, dealing with the issue of specific performance and relying on what the late ROBINSON J said in Intercontinental Trading (Pvt) Ltd v Nestle Zimbabwe Ltd 1993 (1) ZLR (H), had this to say:-

“The money loss or inconvenience to be suffered by the defendant as a result of its own delay or failure to perform was discussed in the Intercontinental case, supra, and was held not to be good enough a ground to deny a party a prayer for specific performance.

Indeed, it would be a disservice to the business community if parties were to be allowed to will-nilly use likely monetary loss as a ground to defeat a prayer for specific performance.

I can do no better than quote the late ROBINSON J, in Intercontinental case, supra, at p37 where he said:

“I would wind up by saying that if the right of specific performance is to be shown to have real meaning to businessmen, then the loud and clear message to go out from the courts is: businessmen beware. If you fail to honour your contracts, then don't start crying if, because of your failure, the other party comes to court and obtains an order compelling you to perform what you undertook to do under your contract. In other words, businessmen who wrongfully break their contracts must not think they can count on the courts, when the matter eventually comes before them, simply to make an award of damages in money, the value of which has probably fallen drastically compared to its value at the time of the breach. Businessmen at fault will therefore, in the absence of good grounds showing why specific performance should not be decreed, find themselves ordered to perform their side of the bargain, no matter how costly that may turn out to be for them…,.”

This was a commercial transaction and I am therefore in complete agreement with the views expressed in the two judgments quoted above.

In casu, the first respondent, for financial considerations, refused to accept a legitimate payment that was being effected within the agreed period. The law is unable to protect him from his own deliberate but costly and legally unbackable action.

Accordingly I order as follows:-

1. That the purported cancellation of the agreement of sale signed on 15 February 2008 between the first respondent and the applicant be and is hereby declared null and void.

2. That the cession of the first respondent's rights, interests and title in Stand Number 3519 Dzivaguru Crescent, Ruwa into the applicant's name be and is hereby confirmed.

3. That the applicant be and is hereby authorized to evict the first respondent from Stand Number 3519 Dzivaguru Crescent, Ruwa within seven (7) days from service of this order; and

4. That the first respondent shall pay the costs of this application.

HH163-09 : MTOMBENI REGINALD vs TAPFUMANEYI MUPFURAREHWE
Ruled By: GOWORA J

I turn next to the payment of the purchase price. According to the applicant, the price had been agreed at $112,000= which had to be paid through a Real Time Gross Settlement System (RTGS). The applicant averred that he had paid the money on 29 August 2008 and has attached what he states is proof ...

HH158-10 : SIZE MAVUTO vs PAUL GOSTINO and PROMENADE REAL ESTATE and THE REGISTRAR OF DEEDS
Ruled By: GOWORA J

I turn now to consider the issue of payment. The applicant contends that payment was effected through the RTGS system and that this was in terms of the Agreement. Both the applicant and the second respondent aver, in their respective affidavits, that it was one of the conditions of the oral Agreement of Sale that ...

HH227-10 : MIKE MAKOPE vs GEOFFREY DZUMBUNU and REGISTRAR OF DEEDS N.O. and MINISTER OF LOCAL GOVERNMENT
Ruled By: MAVANGIRA J

The only written agreement between the parties is exhibit 2 which has already been referred to above. It states in clause 1: “1. THE PURCHASE PRICE AND TERMS OF PAYMENT The property is sold by the Seller to the Purchaser for the sum of $6,500,000= (six million five hundred thousand dollars) to be paid as follows: (a) The purchaser pays cash ...

HB201-11 : CABAT TRADE & FINANCE (PTY) LTD and SECURITY MILLS (PTY) LTD vs THE MOVEMENT FOR DEMOCRATIC CHANGE (MDC-T)
Ruled By: KAMOCHA J

The plaintiffs' claim in this matter was for payment of the sum of ZAR4,627,863=93 being the purchase price of goods sold by the first plaintiff to the defendant at the defendant's special instance and request in or about February/March 2008 which was manufactured and delivered by the second plaintiff to the defendant on or about ...

In their amended declaration, the plaintiffs had this to say.

Main Claim: Actio Venditi

In or around April 2008, at Bulawayo, the defendant, represented by Mr Eddie Cross, duly authorized, and Mr Simon Spooner, duly authorized by Mr Cross, entered into an oral agreement with the second plaintiff, represented by Mr Laurence Zlattner, in terms whereof, the second plaintiff undertook, at the defendant's behest, to manufacture 200,000 garments, commonly known as “T-shirts”, and as many head scarves, commonly known as “doeks or bandanas”, as could be manufactured from the material on hand, but at least 30,000 (hereinafter referred to as “the goods”) which the first plaintiff sold to the defendant for the defendant to use in its then forthcoming election campaign, for the agreed sum of ZAR4,965,723= including VAT. Given the size of the order, the second plaintiff agreed to manufacture the total order in batches, to accommodate the defendant's express stipulation that the total order be ready for the defendant to use in its then forthcoming election campaign as aforesaid. It was an express, alternatively, implied term of the parties' agreement that, given the size of the order, the defendant would pay on tender of delivery of each batch of goods supplied. To comply with its contractual obligation, the defendant expressly agreed to effect payment to the first plaintiff.

By its agreement aforesaid, the defendant became contractually liable to pay the first plaintiff the contract price in South Africa, and simultaneously incurred contractual liability to the second plaintiff for the manufacture of the goods.

In accordance therewith, the second plaintiff duly manufactured the said goods and delivered to the defendant goods in batches to the value of ZAR4,672,215=37, including VAT, comprising 149,887 articles or approximately 74% of the contract goods, payable on tender of delivery and demand, but the defendant, in breach of its contractual obligation, notwithstanding having accepted delivery, had allegedly refused to pay, despite demand. The defendant's failure to pay for the goods thus far delivered to it constituted a material breach of an express, alternatively, implied term of agreement, entitling the plaintiffs to claim the full contract price ex vendito.

At the defendant's request, the second plaintiff had withheld delivery of the balance of the manufactured goods, namely 30,000 single jersey T-shirts being finished goods ready for dispatch, to the value of ZAR772,800= and 5,393 single jersey T-shirts, being finished goods ready for dispatch, to the value of ZAR143,885=24 and 7,368 single jersey T-shirts, being goods comprising “work in progress” to the value of ZAR196,578=24 pending the defendant's advice of readiness to receive such goods, which goods, subject to such stipulation, the second plaintiff thereby again tendered against payment by the defendant of the total balance due of ZAR340,463=48.

Pursuant to the plaintiffs' performance of the agreement as aforesaid, the second plaintiff rendered to the defendant the invoice for the manufacture of the goods, dated 18^th March 2008 for ZAR4,627,863=93, including VAT, being the amount due for the goods;

(a) Manufactured and delivered; and

(b) Manufactured but in respect of which delivery had been withheld, but tendered, for the reasons given.

The said invoice constituted the plaintiffs' demand and expressly stipulated that interest accrues at 8% per annum within 30 days of the date of the invoice. Accordingly, the defendant was allegedly liable for interest on the total sum due, mora ex re, from 17 April 2008 to the date of final payment.

In the result, the plaintiffs prayed for judgment and costs against the defendant in the sum of ZAR4,627,863=93, together with interest at 8% per annum from 17 April 2008 to the date of payment….,.

DEFENDANT'S PLEA

The defendant denied that it had authorized Mr Eddie Cross or Mr Spooner to enter into the alleged contract. It averred that neither Mr Cross nor Mr Spooner had authority to enter into contracts on its behalf. It denied that it had purchased anything from the first plaintiff and denied liability to pay VAT in South Africa.

It averred that any valid order would have been written not oral and would have been authorized by the defendant's Director General.

It denied being party to the agreement between the plaintiffs and Mr Cross and Mr Spooner and further denied that it had expressly agreed to effect payment to the first plaintiff, the contractual price, in South Africa as such agreement would have been illegal.

It pleaded that it had not received the goods and averred that a goods received voucher would have been issued to the second plaintiff had the goods been received.

It went on to state that annexures “A” to the further particulars supplied by the plaintiffs alleged that some deliveries were made on 25 June 2008 and on 13 August 2008, when, in fact, it had very publicily resiled from the Presidential run-off election on 20 June 2008. Therefore, if the plaintiff continued to manufacture after 20 June 2008 then it voluntarily assumed the risk that it would receive no payment.

In the event of there being a valid contract for the plaintiffs to supply the defendant with election campaign materials, a material term of the contract would have been that the plaintiffs had to deliver well before the election and any delivery after the election would have been a material breach.

The defendant denied that it had contracted to pay for goods and further denied that it had requested the second plaintiff to withhold delivery of further items nor that it had received any delivery from the plaintiff and insisted that there had been no contract between the parties. It denied having agreed to any interest rates and averred that the interest claimed was usurious and illegal.

It was finally averred that the plaintiffs should have made the demand to Mr Cross and Mr Spooner since they were the parties to the contract and prayed for the dismissal of the plaintiffs' claims with costs….,.

HH535-15 : BLESSMORE CHANAKIRA vs SHEPHERD MALCOM N.O. and REGISTRAR OF DEEDS and PHIL RUSCH
Ruled By: NDEWERE J

The background facts are that the plaintiff expressed interest in Stand 5233 Salisbury Township Lands measuring 3,309 square metres which is the property in dispute.

The property belongs to the estate of the late Robert Eric Rae.

An agreement of sale was concluded, on 22 October 2009, between the plaintiff and the Property Shop, the Estate Agent firm which handled the transactions, for the sum of US$220,000.

On mode of payment, the agreement provided as follows:

“The Purchaser shall pay cash deposit of US$100,000 [one hundred thousand United States Dollars] of which US$30,000 [thirty thousand United States Dollars] shall be non-refundable] upon signing of the agreement of sale.

The purchaser shall pay the sum of US$60,000 [sixty thousand United States Dollars] on or before 30 November 2009 and the balance of US$60,000 [sixty thousand United States Dollars] on or before the 31st December 2009.”

The above mode of payment has been the source of the dispute.

The plaintiff claims to have paid theUS$100,000 cash deposit upon signing of the agreement of sale as stipulated by the clause. The first defendant, representing the estate, denies, that any deposit was paid.

The agreed issues for the trial were:

(i) Whether the plaintiff breached the agreement of sale with the first defendant, and, if he did, whether the first defendant cancelled the sale.

(ii) The second agreed issue was whether this was a double sale, with the third defendant as the second purchaser, and, if so, in whose favour did the balance of equities lie.

In my view, the first issue for determination by the court is whether the plaintiff paid the requisite deposit upon signature of the agreement.

The plaintiff's evidence was that he paid US$100,000, in cash, to Felicity Lock, The Property Shop negotiator, after counting the money, at her house, in the presence of Shirley Margaret Rae who represented the seller, who was still alive, by virtue of a Power of Attorney.

He said he did not ask for a receipt, neither did he obtain any other proof of payment from Felicity Lock.

The plaintiff's evidence was that he paid the US$100,000 before he signed the agreement because payment of that amount was a condition precedent to the signing of the agreement.

Felicity Lock denied that any payment was made.

She said she expected the plaintiff to pay soon after signing but then the plaintiff showed her some Kingdom Bank documents and said for him to get the money to pay, he needed to sell his shares first, and, for him to sell the shares, he needed a signed agreement.

She said she then gave him Shirley's Rae's Stanbic Account number and told him to deposit the money into that account. She also gave him a Property Shop Account number for him to deposit the agency commission.

Her evidence was that Shirley Rae signed the agreement first, in the absence of the plaintiff, and, later, she took the agreement to the plaintiff at some agreed meeting place near Hellenic School.

Shirley Rae also denied that any payment was made to her or Felicity Lock in her presence.

Her testimony was that she had not even met the plaintiff when the agreement was executed; she saw him, for the first time, at the pre-trial conference.

The plaintiff told the court that he is an astute businessman aged 35 years. He said he has been in business since he was 22 years old and has about 13 years business experience. He also said he is a qualified accountant and he has experience in the acquisition of properties as he has eleven properties to his name.

The court found it highly improbable that a qualified accountant, and an experienced property investor, would part with US$100,000 cash in the year 2009, when foreign currency was still scarce, without bothering to obtain a receipt or other proof of payment; yet that was the plaintiff's evidence on pages 51 and 52 of the transcribed record;

“Q. Now, before a dispute before the parties erupted, did you ever ask for a receipt?

A. No, from Felicity, no, I never asked for a receipt….,.

Q. It's a simple question, did you ever ask for a receipt?

A. From Felicity Lock.

Q. Did you ever ask for a receipt?

A. No, I have proof of payment.”

When the questioning about not asking for a receipt persisted, the plaintiff, in response, said, Property Shop was operating from home and the office was not running professionally.

All the more reason why he should have asked for a receipt, or some other form of proof of payment, if he knew that Property Shop was not being run professionally.

The plaintiff also told the court, in his evidence, that, paying US$100,000 cash was a condition precedent to the signing of the agreement.

The agreement is part of the court record, and, nowhere does the agreement say payment was a condition precedent.

It is also highly improbable that a qualified accountant would pay US$100,000 deposit before the agreement has been concluded and leave without any proof of payment.

Even if Felicity Lock had no receipts, on account of being “unprofessional” as the plaintiff alleged, the plaintiff himself could have prepared an acknowledgement note.

He knew this was possible:

“Q…., you could have done an acknowledgement of receipt and say I, Felicity acknowledge that I have received US$100 000, you could have done that….,.

A. I could have done that.”…,. (p57 to 58 of the transcribed record)

The plaintiff confirmed, that, he could have done an acknowledgement of receipt himself - but he did not.

He admitted, that, as a businessman, he knew that disputes could arise and that he could have had an independent witness with him to confirm the payment; but, he said he went alone to make this huge cash payment.

On the other hand, Felicity Lock's evidence was that they did not accept cash as a matter of policy; they gave clients account details for them to deposit the money into the appropriate accounts.

She said, in this instance, she gave the plaintiff Shirley Rae's Stanbic account.

She said once the money was deposited into an account, the deposit slip would be sufficient proof of payment.

Her evidence sounded truthful and the court accepted it.

Shirley Rae is an 83 year old lady who was around 78 years at the time of the incident with the plaintiff.

Her evidence was that the plaintiff never paid cash in her presence and never deposited any money into her account.

Her evidence was believable.

Why would an 83 year old lie against the plaintiff and say he did not pay if he had paid? All she wanted was a purchaser who would pay for her husband's property. If the plaintiff had paid, why would she have turned down his money in favour of the third defendant's money when the money tastes the same?

The court therefore accepts her evidence as truthful.

In addition to that, on 27 October 2009, when the plaintiff wrote to the second defendant, through his lawyers, requesting him to put a caveat on the property, he never said he had paid anything.

The third paragraph of that letter stated the following;

“The agreement of sale is to be satisfied within a period of three instalments as it fully appears from the attached copy of the agreement of sale.”

The use of the phrase “is to be satisfied” shows that payment had not yet been done.

If the plaintiff had already paid US$100,000 the letter would have said so.

In view of the above improbabilities in the plaintiff's claims, the court rejects the plaintiff's testimony and accepts that of Felicity Lock and Shirley Rae, that, no US$100,000 cash was ever paid by the plaintiff as a deposit for the property.

The above finding means the plaintiff was in breach of contract from the very day the sale agreement was concluded. He ought to have paid US$100,000 on signing of the agreement - he did not.

That was the first breach.

Appealed
SC12-20 : ZIMASCO (PVT) LTD vs CASPER TSVANGIRAI and BAOBAB REAL ESTATE and THE REGISTRAR OF DEEDS BULAWAYO
Ruled By: GARWE JA, HLATSHWAYO JA and GUVAVA JA

This is an appeal against the whole decision of the High Court sitting in Bulawayo under judgment number HB16-14, dated 30 January 2014, in which the appellants' application for absolution from the instance at the close of the first defendants case was dismissed.BACKGROUND FACTSThe facts which gave rise to this ...

BACKGROUND FACTS

The facts which gave rise to this matter are mainly common cause and may be summarized as follows:

On 10 June 2008, the appellant and the first respondent entered into an agreement of sale of a certain piece of land known as Stand 1004 Redcliff Township, situate in the District of Que Que (hereinafter referred to as the property). The property was owned by the first respondent.

In terms of the first respondent's summons and declaration before the court a quo, the purchase price for the property was said to be set at a local currency equivalent to US$180,000. The appellant purchased the property with the aid of the second respondent, a registered real estate agent.

The dispute centered on the amount of the purchase price which was payable.

The first respondent alleges that it was a term of the agreement that if the payment was to be made by cheque the amount would be based upon the prevailing informal market rate on the date of such payment.

It is not in dispute that the appellant paid Z$720,000,000,000,000 (Z$720 trillion) on 11 June 2008 through an interbank transfer.

The first respondent was thereafter requested to sign a power of attorney to effect transfer of the property by the second respondent. The first respondent alleged that it was his understanding that the transfer would only pass upon receipt of the full purchase price. The first respondent averred that the appellant, or the second respondent, removed some pages from the written agreement of sale and altered, inter alia, the purchase price so that it read the sum of Z$720 trillion without his knowledge or consent. The first respondent further indicated that the appellant and the second respondent then attached the forged pages to the authentic document bearing the first respondent's signature to make a complete “agreement of sale”.

Following the signing of the power of attorney to transfer the property, the property was transferred into the appellant's name.

According to the first respondent, the amount paid by the appellant, when he received the money, was equivalent to US$96,000. This left a balance of US$84,000, or its equivalent, in Zimbabwe dollars, in respect of the purchase price.

The first respondent alleged that the appellant should pay the difference but the appellant argued that it had paid the purchase price in full in terms of the agreement.

Following this dispute, the first respondent instituted summons seeking the nullification of the purported Agreement of Sale and cancellation of the Deed of Transfer in favour of the appellant. In the alternative, the first respondent prayed for the appellant to pay the outstanding balance of US$84,000, or its equivalent, together with interest.

PROCEEDINGS IN THE HIGH COURT

After the first respondent instituted summons, the appellant and the second respondent entered an appearance to defend. In its plea, the appellant denied allegations of falsifying the Agreement of Sale.

The appellant contended that the purchase price was always in Zimbabwean dollars and not quoted in United States Dollars. The second respondent confirmed the appellant's story.

The appellant, thereafter, filed a counter claim for the eviction of the first respondent from the property. It also claimed payment of arrear rentals and holding over damages in the sum of $400 per month plus interest from the first respondent.

At the close of the first respondent's case, the appellant made an application for absolution from the instance. The appellant further asked the court to grant its counter-claim. The basis upon which this application was made was three pronged;

(i) Firstly, it argued that the respondent could not claim that there was under payment when he had failed to prove the exchange rate on 11 and 12 June 2008, when the payment was made, to sustain the assertion that the payment made was not enough if converted to United States dollars.

(ii) Secondly, that the power of attorney contained a purchase price of $720 trillion. The first respondent was not disputing his signature thereon. It thus submitted that the caveat subscripto maxim applied regarding the signed power of attorney.

(iii) Thirdly, that the basis of its claim for eviction was the rei vindicatio. It further alleged that because they possessed the title deeds of the property it was prima facie the owner of the property and the onus now lay on the first respondent to justify why the eviction sought was not warranted.

On that basis, it was submitted that it was entitled to the order in terms of its counterclaim for the first respondent's eviction, arear rental, and holding over damages.

It was common cause that the appellant made a payment in the sum of $720 trillion dollars through an inter-bank transfer commonly known as an RTGS.

The appellant contended that even if it was accepted that the purchase price was pegged in United States dollars, which was denied, where payment is made through a Bank transfer, the date of the payment was the date when the application to pay is made to the Bank and not the date the money is reflected in the account of the transferee. The appellant thus submitted that payment of the full purchase price was made on the date that the application for transfer of the funds was made with the Bank.

The first respondent contended that the purchase price for the property was the equivalent of US$180,000 and that the time of payment would be the time that he received the money in his Bank account and was able to use the money - and not when the application for an interbank transfer was made.

He argued that, because of hyperinflation at the time, when he received the money in his account on 13 June 2008, it was less than the agreed amount when converted into United States dollars.

He submitted that the appellant, therefore, had not paid the purchase price in full.

It was also his submission that the original Agreement of Sale that he signed indicated that the purchase price was the Zimbabwe dollar equivalent of US$180,000 but the agreement was tampered with such that the amount that was eventually reflected in the agreement was Zimbabwe $720 trillion.

The court a quo refused to grant the application for absolution from the instance made by the appellant.

The court reasoned that in view of the letter written by the appellant's legal practitioner in respect to the purchase price being quoted as equivalent to US$180,000 it was necessary for the appellant to explain what the exchange rate was on 11 and 12 June when payment was made.

With regards to the allegation that the signed power of attorney was proof of the purchase price, the court held that the issue could not be determined because of the allegation of fraud.

The court also found that it was necessary for the appellant to prove its counter claim for damages in respect to the arrear rentals and holding over damages.

As a result, the court also declined to grant the appellant's counter claim.

Dissatisfied with the determination of the court a quo, the appellant, having been granted leave, noted an appeal to this court on the following grounds:

“1. The court a quo erred in placing upon the appellant the onus to prove what the exchange rate was on the 11th and 12th June 2008 under circumstances where the onus was upon the 1st respondent and had to be discharged by him.

It so erred in failing to grant absolution from the instance on the basis of 1st respondent's failure to prove that he had not been paid the contract sum.

2. The court a quo further erred in not giving effect to the fact that 1st respondent had signed transfer documents knowing what those were and which bore the purchase price which he had already paid and which he now sought to discount. It particularly erred on coming to the conclusion that the issue could not be dealt with at that stage.

3. The court a quo further erred in failing to come to the conclusion that as appellant sought a rei vindicatio in its claim in reconvention, the failure by the 1st respondent to rescind the agreement would ipso jure entail the success of the action for vindication.

4. The court a quo further erred in failing to come to the conclusion that the damages for unlawful occupation could competently be awarded, at least on the basis of the 1st respondent's confession.”

THE APPELLANT'S SUBMISSIONS ON APPEAL

In its submissions before this court, the appellant argued that the first respondent bore the onus to prove, prima facie, that the sum of $720 trillion dollars that he received was not the full purchase price for the property. The appellant further argued that the first respondent also had the onus to prove the exchange rate that was applicable as at the date of payment so as to successfully argue that $720 trillion dollars did not amount to the US$180,000 that he alleged had been agreed to as the purchase price.

It was the appellant's contention that the approach of the court a quo, in holding that the onus lay on the appellant to prove the exchange rate on 11 and 12 of June 2008, was erroneous.

The appellant also submitted that, by signing the power of attorney to effect transfer, the first respondent had accepted that he had been paid the full purchase price and that he was estopped from denying same.

The appellant also stated that, in any event, the power of attorney was quoted in Zimbabwean dollars in the amount of $720 trillion and that was therefore the purchase price.

The appellant further submitted that the court a quo should have granted its application for absolution from the instance, and, thereafter, granted its claim for eviction of the first respondent together with holding over damages as claimed.

FIRST RESPONDENT'S SUBMISSIONS ON APPEAL

The first respondent argued that the decision of the court a quo was appropriate in the circumstances. The first respondent asserted that he had proved a prima facie case of fraud and forgery which the appellant was called upon to answer.

The first respondent further submitted that he had proved that the original Agreement of Sale was fraudulently altered without his knowledge. The purchase price clause which stated that the purchase price was the equivalent of US$180,0000 was altered to reflect the purchase price of Z$720 trillion.

The first respondent stated that this was proved by correspondence between the parties when they discussed the issue of the purchase price.

He further submitted that he was not obliged to prove the exchange rate on 11 and 12 June as he was of the view that payment was made on 13 June. He also alleged that he had successfully proved the exchange rate on the date he received the money.

The first respondent also denied that the appellant was entitled to its counter claim for eviction as the basis of the eviction was based on the contract which stipulated that the first respondent was to grant the appellant vacant possession upon payment of the full purchase price.

ISSUES FOR DETERMINATION BEFORE THIS COURT

Two issues arise from both the grounds of appeal and the submissions made by counsel before this Court. The issues to be determined by this court are as follows:

1. Whether or not the requisite evidentiary burden required to grant absolution from the instance at the end of the first respondent's case was discharged.

2. Whether or not the appellant was entitled to an order for the first respondent's eviction and damages.

1. WHETHER OR NOT THE REQUISITE EVIDENTIARY BURDEN REQUIRED TO GRANT ABSOLUTION FROM THE INSTANCE AT THE CLOSE OF THE FIRST RESPONDENT'S CASE WAS DISCHARGED

As stated above, the first respondent instituted proceedings against the appellant seeking the nullification of the Agreement of Sale in terms of which he had sold a piece of property to the appellant. His claim was also that the Deed of Transfer that had been made in favor of the appellant should be cancelled.

The first respondent prayed, in the alternative, that the outstanding balance for the property be paid.

After leading evidence to the effect that he had not been paid the full purchase price in accordance with the Agreement of Sale, the respondent closed his case.

The appellant then applied for absolution from the instance on the basis that the respondent's claim had not been established as insufficient evidence had been led to show that the Agreement of Sale had been altered.
It was also alleged by the appellant that the agreed purchase price of the property was always in Zimbabwean dollars and not the United States dollars equivalent as claimed by the first respondent. It was submitted, on behalf of the appellant, that, in the event that the court accepted that the purchase price was pegged in United States dollars, then, insufficient evidence had been placed before the court by the first respondent to establish a valid claim as he was unaware of the prevailing market exchange rates on 11 and 12 of June 2008.

It is trite that after a plaintiff has closed its case, a defendant, before commencing his own case, may apply for absolution of the plaintiff's claim. Should the court accede to this application, the judgment will be one of 'absolution from the instance'; see CILLIERS AC, LOOTS C and NEL HC, HERBSTEIN and Van WINSEN, The Civil Practice of the Supreme Court of South Africa (4th edn, Juta and Co Ltd)…,.

A decree of absolution from the instance is derived from Roman Dutch Law. It is the appropriate order to make after all the evidence led by the plaintiff has not laid out a prima facie case upon which a court may find for the plaintiff.

If, at the end of the plaintiff's case, there is insufficient evidence upon which a reasonable man could find for him, the defendant is entitled to absolution. See LH HOFFMAN, DT ZEFFERT, The South African Law of Evidence (4th ed)…, who notes the following:

“It has also been said that the term 'absolution from the instance' is used to describe the finding that may be made at either of two distinct stages of trial. In both cases, it means that the evidence is insufficient for a finding to be made against the defendant.”

It is trite that the court cannot mero motu consider whether absolution must be granted. It is an option which is available to the defendant, upon application.

When an application for absolution from the instance is made at the end of the plaintiff's case the test is: what might a reasonable court do, that is, is there sufficient evidence on which a court might make a reasonable mistake and give judgment for the plaintiff? If the application is made after the defendant has closed his case the test is: what ought a reasonable court do?

In deciding what a court may or may not do, it is implied that the court may make an incorrect decision, because, at the close of the plaintiff's case, it will not have heard all the evidence.

In the case of Nobert Katerere v Standard Chartered Bank Zimbabwe Limited HB51-08, it was stated thus:

“The court should be extremely chary of granting absolution at the close of the plaintiff's case. The court must assume that, in the absence of very special considerations, such as the inherent unacceptability of the evidence adduced, the evidence is true.

The court should not, at this stage, evaluate and reject the plaintiff's evidence.

The test to be applied is not whether the evidence led by the plaintiff establishes what will finally have to be established. Absolution from the instance, at the close of the plaintiff's case, may be granted if the plaintiff has failed to establish an essential element of his claim; Claude Neon Lights (SA) Ltd v Daniel 1976 (4) SA 403 (A); Marine & Trade Insurance Co Ltd v Van Der Schyff 1972 (1) SA 26 (A); Sithole v PG Industries (Pvt) Ltd HB47-05.”

What flows from the above cases is that absolution from the instance will not be granted if there is sufficient evidence, which a court, directing its mind reasonably to such evidence, could or might (not should or ought to) find for the plaintiff.

In casu, the first respondent averred that after the appellant paid him the equivalent of US$96,000, there was a balance of US$84,000.

It is common cause that payment was done through an inter-bank transfer on 11 June 2008. The first respondent received payment on 13 June 2008.

The first respondent, in his evidence, did not prove what the exchange rate was on 11 and 12 June 2008.

The first respondent alleged that he was not obliged to do so as his case was that he was only obliged to prove the exchange rate on the date that the money reflected in his account.

The evidence before the court a quo showed that as soon as the $720 trillion reflected in his account, the first respondent quickly contacted the appellant to inform it that the money deposited into his account had a shortfall of US$84,000.

The appellant did not respond, only to do so sometime in December 2008 indicating that the deposited amount was equivalent to the US$180,000.

The first respondent testified that the amount of US$96,000 was arrived at using the rate he was given by Trust Bank on 13 June 2008.

At the time the first respondent received the amount transferred, it was less than the United States dollar stipulated amount. There was, however, no evidence on which rate was being used at the time the money was transferred.

The appellant seems to suggest that the money it paid was equivalent to the United States dollar amount agreed to by the parties. The rate, however, was not stated in the agreement.

Once the appellant stated that the amount deposited was equivalent to US$180,000, the onus shifted from the first respondent to the appellant, as it now carried the evidentiary burden to prove that the transfer that it had made into the first respondent's account was equivalent to the US$180,000.

It was the view of the court a quo that it was incumbent upon the appellant to lead evidence to buttress its allegation that the amount it paid on 11 June 2008 was equivalent to the United States dollar amount. This was on the basis that the appellant had submitted that the amount paid on that date was equivalent to US$180,000.

It was thus incumbent upon the appellant to state the rate that it used in coming up with that assertion.

The court a quo made a finding that the appellant had to answer the question regarding the rate of exchange on 11 and 12 June 2008. This finding was made in light of the letter written by the appellant's legal practitioners affirming that the Zimbabwean dollar purchase price paid by the appellant to the first respondent was equivalent to US$180,000.

This position, taken by the appellant's legal practitioners, had to be established by evidence of the exchange rate on 11 and 12 June 2008.

It is trite that “he who alleges must prove”.

The maxim was applied in the cases of Circle Tracking v Mahachi SC04-07 and Goliath v Member of the Executive Council for Health, Eastern Cape 2015 (2) SA 97 (SCA).

In the absence of such evidence, the court, as the adjudicating authority, cannot make its determination.

I share the sentiments expressed in Delta Beverages (Pvt) Ltd v Murandu SC38-15, where it was stated that:

“I take the time to point out that parties are expected to argue their cases so as to persuade the court to see the merit, if any, in the arguments advanced for them. They are not expected to make bald, unsubstantiated averments and leave it to the court to make of them what it can.”

It is common cause that when the first respondent was asked what the exchange rate was on 11 and 12 June 2008 he indicated that he did not know. This was after the first respondent had indicated that he had received a sum less than the agreed US$180,000 on 13 June 2008.

In my view, this was a pertinent question which had to be answered by the first respondent. This is so regard being had to the argument by the appellant that the rate had to be calculated on the date that the money was paid into the Bank.

This position is premised on the principle stated by CHRISTIE R.H in Business Law in Zimbabwe (1st edn, Juta & Co Ltd, Cape Town, 1998) which stated that;

“If payment by cheques is permissible under the contract, its acceptance by the creditor, as held in Marshall v Ivory 1951 SR 76, 82, 1951 (2) SA 555 at 558, is conditional on it being subsequently honoured; so, if it is honoured, however, the time of payment is taken to be the time at which it was delivered to the creditor, even if it would not be possible to present it to the debtor's bank for payment until some later date.”…,.

Payment by interbank transfer is similar in all respects to payment by cheque. Proof of payment is calculated on the date that the transfer is accepted by the Bank and not on the date that it is received by the recipient.

Based on the above, the relevant date in the circumstances is therefore 11 June when the transfer was processed.

The onus thus lay with the first respondent to show that the amount paid on that date was not equivalent to the purchase price as agreed.

The court a quo's decision was clearly premised on the assertion by the appellant's legal practitioners that the amount paid by the appellant was equivalent to US$180,000. The relevant part of the letter which was written by the appellant's legal practitioners read as follows:

“17 December 2008
Mkushi Foroma and Maupa Legal Practitioners KWEKWE

RE: ZIMASCO (PRIVATE) LIMITED V C. TSVANGIRAI STAND 1006 REDCLIFF TOWNSHIP

Your letter of 17 November 2008 refers.

We now have our client's instructions and respond thereto as follows;

1. That Zimasco is aware of only one Agreement of Sale which is the one they signed for $720 trillion.

2. That the purchase price of $720 trillion paid was then equivalent to an amount of US$180,000 (which was discussed and agreed to by the parties). Using an agreed rate of $4 billion to a US$3. That the Agreement of Sale was signed in the afternoon of the 10th of June 2008 by Zimasco. Payment was effected on the 11th June 2008 within 24 hours of signature of the Agreement of Sale….,.”

Having alleged the above, it was the first respondents duty to prove to the court a quo that the amount paid was not equivalent to US$180,000 that had been agreed.

It was him, as plaintiff, who claimed that the amount paid to him was equivalent to US$96,000 only.

The exchange rate which was proved by the first respondent related to the date when the money reflected in his account. The rate proved was of no consequence in view of the fact that the rate had to be determined on the date that it was paid into the Bank by the appellant.

The date when it reflected in his account was of no moment to the resolution of the dispute between the parties.

It was the first respondent, as plaintiff, who alleged that he had not been paid in full and that what was paid was equivalent to US$96,000 only. The burden was on him to show how the sum of Z$720 trillion equalled to US$96,000 only. The duty was on the first respondent to prove that insufficient money had been paid warranting the cancellation of the Agreement of Sale or ordering the appellant to pay the alleged balance.

It seems to me that the court a quo erred and misdirected itself in finding that the appellant had to prove the exchange rate on 11 and 12 June 2008. It was for the respondent to prove his case.

Accordingly, absolution from the instance should have been granted by the court a quo.

View Appeal
HB16-14 : CASPER TSVANGIRAI vs ZIMASCO (PVT) LTD and BAOBAB REAL ESTATE and THE REGISTRAR OF DEEDS, BULAWAYO
Ruled By: MUTEMA J

The genesis of the dispute between the parties resides in an Agreement of Sale entered into in respect of Stand 1004 Redcliff Township owned by the plaintiff which the first defendant purchased on 10 June 2008 via the facilitation of the second defendant.

Both the first and second defendants aver that the purchase price, which was paid in full on 11 June 2008, was Z$720 trillion. The plaintiff, however, avers that the price was set at the local currency equivalent of US$180,000 based on the prevailing informal market rate obtaining on the date of payment.

He further avers that he signed his portion of the Agreement of Sale first while the first defendant was to sign later.

On the same date, he signed a power of attorney to make transfer by the second defendant on the understanding that transfer would only pass upon receipt of the full purchase price.

It, however, so happened that the first defendant and the second defendant, or one or other of them, removed some pages from the written Agreement of Sale and altered, inter alia, the purchase price and inserted the plaintiff's initials without his knowledge or consent and attached the forged pages to the last page the plaintiff had signed.

Thereafter, the first defendant paid Z$720,000 (revalued) on 13 June 2008 which amount was at variance with the agreed calculation formula.

This amount, according to the plaintiff, was an equivalent of only US$96,000, leaving a balance of US$84,000.

In the event, the plaintiff prays for nullification of the purported sale agreement, cancellation of the Deed of Transfer No.1906/08 in favour of the first defendant in respect of the property and reversal of ownership into the plaintiff's name; that he refunds the Z$720,000 (revalued) to the first defendant with interest plus costs of suit on a punitive scale.

Alternatively, the plaintiff prays for payment of the outstanding balance of US$84,000 with interest and costs on a punitive scale by both the first and second defendants jointly and severally, the one paying absolving the other.

Both the first and second defendants deny the alleged malfeasance and aver that the agreement is as per exhibit 2 with the purchase price being Z$720 trillion with no US dollar component.

The first defendant counter-claimed for the plaintiff's eviction from the house, arrear rentals, and holding over damages from plaintiff at US$400 per month, plus interest and costs on attorney and client scale.

The plaintiff led evidence from only himself which was to the following effect:

Sometime in 2008, Albert Tsikira of the second defendant phoned him asking whether his house was still on sale. He confirmed it still was. Albert Tsikira then went and viewed the house with the first defendant's representatives. He communicated that his asking price was US$220,000. The price was negotiated down to US$180,000. He told Albert Tsikira that the purchase price was US$180,000 payable in local currency at open market rates.

Albert Tsikira captured that in the Agreement of Sale that he brought to him.

He told Albert Tsikira that the exchange rate was changing daily due to hyper-inflation; that he be consulted when payment was being made so that they agree on the rate.

He signed the last page of the Agreement of Sale and initialled all other pages. Albert Tsikira then left with the agreement documents and the next time he heard from him was on 15 June 2008 when he received payment in his account.

He told Albert Tsikira that the rate had since changed and the amount paid was equivalent to only US$96,000. Exhibit 1 is the letter he wrote.

He explained that when he signed the sale agreement he had also signed a power of attorney and given the title deeds of the property because Albert Tsikira had said the first defendant required those before it could sign the agreement.

When Albert Tsikira gave him exhibit 2, he discovered that the purchase price of US$180,000 had been substituted with Z$720 trillion and the pages preceding the last had been initialled differently on his behalf.

Albert Tsikira told him that he had effected the alterations to the agreement because the first defendant would not accept an agreement denominated in US dollars.

He then wrote exhibit 3 pointing out that the document he was given was not the one he had signed. He did not think that the first and second defendants would go ahead with transfer of the property until he received exhibit 4 – a letter from Wilmot and Bennett legal practitioners demanding vacant possession of the house.

He then instructed his current legal practitioners who wrote to Mrs Matshiya of Wilmot and Bennett who responded via exhibit 5 admitting that US$180,000 was the agreed purchase price.

He produced exhibit 6 – Deed of Transfer of the property from him to the first defendant which he said was fraudulently done.

He said the amount of US$96,000 was arrived at using a rate he was given by Trust Bank.

He concluded by saying that the first defendant's counter-claim has no leg to stand on on account of the fact that the house still belongs to him.

He then closed his case whereupon the first and second defendants applied for absolution from the instance.

The basis upon which the application was made is three-pronged, viz:

1. The date of payment of the purchase price and its effect.

It was argued that no reasonable man might find for the plaintiff because the legal position is that if payment is made by cheque or bank transfer, the date of payment when the instrument is subsequently honoured is the date when the application for transfer is made and not when the funds are credited.

The plaintiff conceded that on 11 and 12 June 2008 he did not know what the informal market exchange rate was and he produced no evidence as to what it was.

Without knowing the exchange rate, no reasonable man might find that the amount he was paid was less by an equivalent of US$84,000 as he claims.

I find that the issue regarding the Zimbabwe dollar equivalent needs the first defendant's answer in view of Mrs Matshiya's letter to the plaintiff's legal practitioner dated 17 December 2008 (exhibit 5) wherein she conceded that the Zimbabwe dollar purchase price was equivalent to US$180,000. There is need for the first defendant to also explain what the obtaining exchange rate was on 10 and 11 June 2008.

It is pertinent to note here that Mrs Matshiya is the first defendant's instructing legal practitioner.

Also, the mode of payment employed by the first defendant was not in sync with the relevant clause in the Agreement of Sale.

2. The caveat subscriptor maxim regarding the signed blank power of attorney does not require comment in extenso at this juncture save to state that fraud is being alleged.

3. re: the first defendant's counter-claim.

It is settled law that an order of absolution from the instance does not attract a subsequent plea of res judicata.

In the application, Mr Mpofu, while praying for absolution regarding the plaintiff's claim, also prayed that the first defendant's counterclaim the for plaintiff's eviction, arrear rentals, hold over damages, etc be granted.

He submitted that such a novel claim is competent in terms of Rule 185 and S W M Electrical P/L v Electrical Pulley Component Suppliers P/L 1996 (1) ZLR 696 (S).

The case was thrown in to buttress the plaintiff's seeming concession that reasonable rentals for the house in question are US$250 per month. The first defendant then indicated its willingness to abandon the counter-claimed US$400 per month, settling for the US$250 per month.

While it is difficult to say with any degree of certainty that what the plaintiff said amounts to a confession of indebtedness, no authority falling on all fours with what Mr Mpofu's application seeks particularly regarding the counter-claim has been cited.

It would be a novel precedent if the court were to grant the application in its current form.

Granting it would effectively put the entire dispute to rest, with the plaintiff losing his right to re-institute the suit in the future.

On the totality of the foregoing, the application for absolution from the instance at the close of the plaintiff's case and for the first defendant's counter-claim to be granted be and is hereby dismissed with costs.

Appealed
SC58-20 : YUSUF GAIBIE and MILLY GAIBIE N.O. vs ALEXANDER CASTANHEIRA and RACHEL CASTANHEIRA
Ruled By: GARWE JA, BHUNU JA and MAKONI JA

This is an appeal against the whole judgment of the High Court sitting at Bulawayo in which it granted absolution from the instance against the appellants' claim.FACTUAL BACKGROUNDThis is a contractual dispute. The appellants and the respondents entered into an Agreement of Sale in respect of a certain piece of ...

This is an appeal against the whole judgment of the High Court sitting at Bulawayo in which it granted absolution from the instance against the appellants' claim.

FACTUAL BACKGROUND

This is a contractual dispute. The appellants and the respondents entered into an Agreement of Sale in respect of a certain piece of land being Stand 710 Bulawayo Township in the District of Bulawayo known as Sunkist Flats situate at No.68 Samuel Parirenyatwa Street/Corner 6th Avenue, Bulawayo (“the property”).

In terms of the agreement, the purchase price of the property was in the sum of Z$11,500,000,000 (eleven billion five hundred million dollars) payable in instalments. The first instalment of Z$5,000,000,000 (five billion dollars) was to be paid upon signing of the agreement and was duly paid. The second instalment of Z$5,000,000,000 (five billion dollars) was payable by 27 January 2006 and the third instalment of Z$1,500,000,000 (one billion five hundred million dollars) upon the respondents taking occupation of the property.

On 27 January 2006, the respondents paid Z$1,800,000,000 (one billion eight hundred million dollars) instead of the agreed Z$5,000,000,000 (five billion dollars). After the respondents failed to pay the remaining amount within the stipulated time, the parties signed an addendum to the Agreement of Sale allowing the respondents an extension of time within which to pay the remaining amount.

It was signed by the parties on 16 February 2006 and it gave the respondents up to 28 February 2006 to pay the remaining balance. Pursuant thereto, the respondents made further payments.

It is common cause that by 28 February 2006 they had not cleared the amount outstanding. A further payment was made on 3 March 2006. By that date, a total of Z$9,200,000,000 (nine billion two hundred million dollars) had been paid by the respondents leaving a balance of $2,300,000,000 (two billion three hundred million dollars).

The respondents allegedly held on to this amount in the belief that the amount was to be paid to the sellers' conveyancers in terms of Clause 4.5 of the Agreement of Sale.

On 15 March 2006, the appellants wrote a letter to the respondents giving them 30 days' written notice to remedy their breach failing which the appellants would cancel the agreement. The letter further required the respondents to pay the sum of Z$2,300,000,000 (two billion three hundred million dollars) to their conveyancers, Messrs Baron & Partners, as provided for in the agreement as well as the outstanding interest charges as provided for in the addendum.

The respondents paid an additional amount of $1,200,000,000 (one billion two hundred million dollars). After getting no further response from the respondents pursuant to the letter of 15 March 2006, in respect of the outstanding amount, the appellants instituted proceedings in the court a quo against the respondents. They claimed cancellation of the Agreement of Sale. They tendered a refund of all the amounts paid as the purchase price as at the date of the summons. They further claimed costs of suit on the attorney and client scale in the event that the respondents opposed the matter.

The respondents denied breaching the Agreement of Sale and stated that they had complied with the agreement by paying the purchase price in full.

The matter was referred to trial on mainly two issues;

(i) The first issue was whether the defendants (the respondents) had breached the contract.

(ii) The other issue was whether the plaintiffs (the appellants) were entitled to cancel the agreement based on the defendants' breach.

The appellants gave evidence on their own behalf and closed their case.

Thereafter, the respondents applied for absolution from the instance arguing that the appellants had not proved a prima facie case as they had failed to prove any breach of the Agreement of Sale and a right to cancel the agreement.

On 5 July 2018, the court a quo granted the respondents' application for absolution from the instance reasoning that the plaintiff's case was full of glaring inconsistencies and unacceptable variances with the pleadings filed of record. It found that the appellants had failed, at the close of their case, to establish a prima facie case.

The appellants, aggrieved by that decision, filed the present appeal on the following grounds;

“GROUNDS OF APPEAL

1. The court a quo erred in law by granting absolution from the instance when the appellants had established a prima facie case of breach of contract by the respondents which breach entitled the appellants to cancel the contract.

2. The court a quo grossly misdirected itself on the facts by concluding that the appellants received the full purchase price set out in the contract when there was sufficient evidence to the contrary and no reasonable court, applying its mind to the evidence on record and the test for absolution from the instance, could have arrived at the same conclusion.

3. The court a quo grossly misdirected itself on the facts by concluding that the appellants had admitted that they had received the full market value of the property agreed upon at the time of contracting when there is no basis for such a conclusion and no reasonable court could have arrived at the same conclusion.

4. The court a quo erred in law by concluding that the appellants are not entitled to cancel the contract on account of breach by the respondents because the appellants allegedly breached the contract first, which alleged breach by the appellants was never pleaded by the respondents as a defence to the appellants` claim.

5. The court a quo erred in law by applying the contra preferentum rule against the appellants when there was no ambiguity at all as to the breach committed by the respondents and the appellants right to cancel the contract.”

Notwithstanding the number of grounds of appeal raised by the appellants, the court takes the view that the present appeal turns on the sole issue of whether or not the court a quo was correct in granting the application for absolution from the instance made by the respondents.

THE APPLICABLE LAW

The law to be applied in the present circumstances was eloquently articulated by MAKARAU JA in Competition and Tariff Commission v Iwayafrica Zimbabwe (Pvt) Ltd SC58-19…, where she said the following:

“[13] The law on when a court may grant absolution from the instance at the close of the plaintiff's case is settled. See Supreme Service Station (1969) (Private) Limited v Fox & Goodridge Limited 1971 (1) ZLR 1 (A) and United Air Charters (Private) Limited v Jarman 1994 (2) ZLR 341 (S). The court granting absolution must be satisfied that there is no evidence before it upon which a reasonable court might find for the plaintiff.

[14] Expressed differently, the court considering an application for absolution from the instance must ask itself if there is no evidence at all on each and every essential averment that the plaintiff must make to sustain the cause of action. If there is some evidence on all the essential averments, absolution should not be granted. If there is evidence on some, but not on all, the essential averments, absolution may be granted, for, in that instance, the plaintiff will not be able to sustain and perfect its cause of action. This is so because an application for absolution from the instance stands on pretty much the same footing as an application for the discharge of an accused person at the close of the State case albeit on a lower threshold of the burden of proof.

[15] It follows then that a court granting absolution must be clear on the essential averments that a plaintiff has to make to sustain the cause of action.”

See also United Air Charters (Pvt) Ltd v Jarman 1994 (2) ZLR 341 (S)…,.

APPLICATION OF THE LAW TO THE FACTS

In casu, it is common cause that the appellants' cause of action was breach of contract.

Clause 1.1 of the agreement, which regulated the purchase price and its payment, provided as follows:

“The purchase price of the property shall be the sum of $11,500,000,000 (eleven billion five hundred million dollars) which shall be payable in accordance with the provisions specified under Special Conditions elsewhere in this agreement.”

The relevant part of the Special Conditions clause provided as follows:

“4.2 THE FIRST PAYMENT in the sum of $5,000,000,000 (Five Billion Dollars) shall be payable upon signing of this agreement by RTGS transfer to an account to be advised.

4.3 THE SECOND PAYMENT in the sum of $5,000,000,000 (Five Billion Dollars) shall be payable on or before the 27th January 2006 by RTGS transfer to an account to be advised, else the Midrate applies thereafter.

4.4 THE THIRD PAYMENT in the sum of $1,500,000,000 (One Billion Five Hundred Million) shall be payable on the Purchaser obtaining occupation of the property.

4.5 The two parties agree that any amounts paid shall be immediately released to the sellers save for any amounts required by law to be of the Conveyancers on account of Capital Gains Tax.

…,.

4.8 In the event that the sum of $10,000,000,000 (Ten Billion Dollars) deposit shall not have been paid in full by the 10th February 2006 the Sellers shall have the right to cancel the Agreement forthwith notwithstanding to the contrary containing this Agreement.”

The addendum to the agreement granted the respondent extension of time to pay the outstanding amount by 28 February 2006.

The appellants argue that the second instalment of Z$5,000,000,000 (five billion dollars) was not paid in full as was required by the agreement and that the respondents only paid Z$1,800,000,000 (one billion eight hundred million dollars) thus leaving a balance of Z$3,200,000,000 (three billion two hundred million dollars). The second instalment ought to have been paid by 27 January 2006.

The respondents do not deny this but seek to aver that the addendum to the agreement granted them an extension to pay the outstanding amounts by 28 February 2006.

While that may be true, it is also correct that by the time the extension provided by the addendum had expired, the respondents had not yet paid the full Z$11,500,000,000 (eleven billion five hundred million dollars) as required by the agreement of sale as read with the addendum. Instead, they had only managed to pay Z$9,200,000,000 (nine billion two hundred million dollars) leaving a balance of Z$2,300,000,000 (two billion three hundred million dollars).

The last payment towards the purchase price was paid on 14 July 2006.

In addition, it is common cause that on 15 March 2006 the appellants wrote to the respondents giving them 30 days' notice in which to pay the outstanding amounts - which they failed to do.

The respondents argued that they paid the purchase price in full to the second respondent's account. The balance of Z$2,300,000,000 (two billion three hundred million dollars) was to be paid to the appellants' conveyancers. By the time the appellants issued summons they (the appellants) had not opened a file with their conveyancers.

It is this Court's view that the respondents have to explain why they failed to pay the amount they claimed was due to the conveyancers upon being advised of the identity of the conveyancers.

It is common cause that the respondents attempted to pay by cheque and it was returned by the Bank in April 2006. It was not clear why the cheque was returned.

Regarding the issue of whether the appellants were entitled to cancel the agreement, it is this Court's view that it is a question of interpretation of the agreement as read with the addendum. This can only be done after the court would have heard evidence from both sides.

As it is, the Court has heard the appellants' side only.

In this vein, therefore, the appellants established a prima facie case of breach of the agreement by the respondents. The full amount, as stated in the agreement, had not been paid at the time of issuance of the summons.

Once evidence has been adduced which constitutes prima facie proof of breach, then, such evidence may become proof, on a preponderance of probabilities, and a plaintiff will succeed in proving his or her case. The courts must be slow to grant absolution from the instance and this point was made in Katerere v Standard Chartered Bank Zimbabwe Ltd HB51-08 which was quoted with approval in Bakari v Total Zimbabwe (Pvt) Ltd SC21-19. It was stated that:

“The court should be extremely chary of granting absolution at the close of the plaintiff's case. The court must assume that, in the absence of very special considerations, such as the inherent unacceptability of the evidence adduced, the evidence is true. The court should not, at this stage, evaluate and reject the plaintiff's evidence. The test to be applied is not whether the evidence led by the plaintiff establishes what will finally have to be established. Absolution from the instance at the close of the plaintiff's case may be granted if the plaintiff has failed to establish an essential element of his claim - Claude Neon Lights (SA) Ltd v Daniel 1976 (4) SA 403 (A); Marine & Trade Insurance Co Ltd v Van Der Schyff 1972 (1) SA 26 (A); Sithole v PG Industries (Pvt) Ltd HB47-05.”

The same point had been made earlier on in Manyange v Mpofu & Ors 2011 (2) ZLR 87 (H)…, where it was stated that;

“The test to be applied as to whether to grant absolution is not whether the evidence for the plaintiff establishes what would finally be required to be established to obtain judgment. It is whether the plaintiff has made out a prima facie case against the defendant on the basis of which the court could or might find for the plaintiff. A reticent defendant should not be allowed to shelter behind the procedure of absolution from the instance. In practice, the courts are loathe to decide upon questions of fact without hearing all the evidence from both sides, and have usually inclined towards allowing the case to proceed. At this stage of the trial, it is not pertinent to evaluate the weight of the evidence adduced or the preponderance of probabilities, save where such findings are manifest from the evidence already heard.”

See also Chombo v Minister of Safety and Security (I3883/2013) [2018] NAHCMD 37.

It bears mention that the appellants only had to prove a prima facie case and their evidence a quo cannot be characterized as having been manifestly unsatisfactory, unreliable, or that it failed to establish an essential element of the claim. An arguable case was made out and the respondents ought to have been put to their defence.

At the hearing of the matter, counsel for the appellants sought to argue that the court a quo did not apply its mind to the matter that was before it for the reason that the judgment of the court a quo is a regurgitation of the respondents (then defendants a quo) submissions. He submitted that the court a quo simply adopted the evidence and submissions of the respondents without independently assessing it and without having regard to the appellants' submissions.

Per contra, counsel for the respondents argued that this was not an issue that had been raised in the grounds of appeal and thus could not be properly raised for the first time at this hearing.

On the merits, she argued that the court a quo did not produce a biased decision and for authority she relied on the case of Stuttafords Stores (Pty) Ltd and Others v Salt of the Earth Creations (Pty) Ltd 2011 (1) SA 267 (CC).

In that case, the Constitutional Court of South Africa, in no uncertain terms, refrained from determining the question whether the extensive use of counsel's heads of argument could lead to a perception of bias because it was not a question before it. It merely expressed its views on such conduct. The views are obiter and not binding.

However, in casu, it is apparent that the court a quo did not regurgitate the submissions made by the respondents in the court a quo. There are differences between the submissions and the final judgment. As a result, the court takes the view that while it may be undesirable for a court to plagiarize counsel's heads of argument in a judgment, this does not necessarily, without more, amount to a misdirection.

DISPOSITION

The appellants have managed to establish that the court a quo misdirected itself in granting absolution from the instance when the appellants had established a prima facie case. The appeal has merit and must succeed.

Accordingly, it is ordered as follows:

1. The appeal be and is hereby allowed with costs.

2. The judgment of the court a quo is set aside and substituted with the following:

“The application for absolution from the instance be and is hereby dismissed.”

View Appeal
HB179-18 : YUSUF GAIBIE and MAHMOUD GAIBIE vs ALEXANDER CASTANHEIRA and RACHEL CASTANHEIRA
Ruled By: 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 plaintiffs 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 of 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 of February 2006 in terms of an addendum to the Agreement of Sale signed on the 16th of 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 the plaintiffs' legal practitioners, who, incidentally, were also the 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 the defendants are in breach of contract.

2. Whether the plaintiffs' cancellation of the Agreement of Sale was in terms of the Contractual Penalties Act [Chapter 8:04].

3. Whether the plaintiffs' attempted to restitute the amount paid by the defendants towards the sale due to breach.

4. Whether the plaintiffs are entitled to cancel the agreement based on the 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 the 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 25 and 3 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 the first plaintiff. This is evident from an examination of both documents.

The second plaintiff testified that he co-owns the building with the first plaintiff.

The witness testified that the defendants failed to pay the purchase price by the 27th of 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 of February 2006 to settle the balance.

By 28 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 16 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 27 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 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 the 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 the 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 the 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 the defendants were said had failed to pay was calculated or arrived at. The defendants are alleged to have failed to pay such amount in the plaintiffs' pleadings. That the plaintiffs relied on the defendants' failure to pay that amount is clear from the 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 plaintiffs accountant, and enquired about the plaintiffs representation at Ben Baron & Partners. What was admitted, however, was that when the defendants intended to pay the Capital Gains Tax, the 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 do 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 SC04-15 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 of January 2006, the second one by failure to pay by the 28th of 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, the 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 of 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 sellers 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…,;

“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 in 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 plaintiffs 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. The plaintiffs are ordered to pay costs of suit.

Appealed
SC66-20 : BREASTPLATE SERVICE (PRIVATE) LIMITED vs CAMBRIA AFRICA PLC
Ruled By: GWAUNZA DCJ, PATEL JA and MAKONI JA

This is an appeal against the judgment of the High Court ordering the appellant to pay the outstanding amount due to the respondent in United States dollars (USD) as opposed to its Real Time Gross Settlement (RTGS) equivalent.

The relevant background to this matter is as follows;

On 25 February 2016, the parties entered into an agreement for the sale by the respondent to the appellant of its entire issued share capital in a company named Milchem Zambia Limited (Milchem) for the sum of USD46,347, payable on or before 31 March 2016.

The appellant then paid USD6,347 on an unspecified date and a further USD8,600 on 19 January 2018, leaving an outstanding balance of USD31,400. The appellant contended that the balance remaining as at 19 January 2018 was USD15,400 and not USD31,400 as claimed by the respondent.

On 15 July 2019, the parties concluded a Statement of Agreed Facts in which the appellant admitted that the sum of USD31,400.00 was still to be paid. However, it now argued that the sum was payable in RTGS and not in United States dollars.

The sole issue for determination by the High Court was whether the balance due was payable in United States dollars following the promulgation of the Presidential Powers (Temporary Measures) (Amendment of Reserve Bank of Zimbabwe Act and Issue of Real Time Gross Settlement Electronic Dollars (RTGS Dollars)) Regulations 2019 (S.I.33 of 2019) and the Reserve Bank of Zimbabwe (Legal Tender) Regulations 2019 (S.I.142 of 2019).

Judgment of the High Court

The court a quo found that the sum of USD31,400, payable by the appellant to the respondent, did not fall under the auspices of section 4(1)(d) but section 2(b) of the Presidential Powers (Temporary Measures) (Amendment of Reserve Bank of Zimbabwe Act and Issue of Real Time Gross Settlement Electronic Dollars (RTGS Dollars)) Regulations 2019 S.I.33 of 2019. This was the appellant's obligation as denominated and payable in foreign currency to the respondent. The court noted that in 2016 and 2017 the respondent had written to the appellant providing the details of its Bank account and the relevant IBAN and SWIFT codes. These codes applied to the payments in foreign currency into Nostro FCA accounts.

Given that the two payments already made by the appellant were by way of cash in United States dollars, the conduct of the parties, and that of the appellant in particular, showed that it was obliged to pay in United States dollars, and, in fact, proceeded to do just that. Additionally, the appellant's plea a quo, which was filed after it became aware of the Presidential Powers (Temporary Measures) (Amendment of Reserve Bank of Zimbabwe Act and Issue of Real Time Gross Settlement Electronic Dollars (RTGS Dollars)) Regulations 2019, S.I.33/2019, stated that it would pay the sum of USD15,400 to the respondent. Thus, the obligation to settle the debt in United States dollars was both explicit and implied by conduct.

The currency governing the terms sheet (the written agreement) was United States dollars and this was confirmed by paragraph 5 of the Statement of Agreed Facts drawn up by the parties on 15 July 2019.

The court also found that payment in foreign currency would not contravene S.I.142/2019 and would therefore not constitute a brutum fulmen.

In the event, the appellant was ordered to pay the respondent the sum of USD31,400 together with interest at the prescribed rate from 19 January 2018 and costs of suit on the ordinary scale.

Grounds of Appeal

At the commencement of the hearing, the Court pointed out the mis-citation of a statutory provision referred to in the first ground of appeal. The provision in question was incorrectly cited as section 3(2)(b) of S.I.33 of 2019, instead of section 44C(2)(b) of the Reserve Bank of Zimbabwe Act [Chapter 22:15].

This error is understandable given the convoluted fashion in which S.I.33 of 2019 is structured and formulated.

In any event, the error was corrected by the Court by allowing the first ground to be appropriately amended, with the consent of counsel for the respondent.

The first and second grounds of appeal take issue with the finding of the court a quo that the outstanding debt of USD31,400 fell under the auspices of section 44C(2)(b) of the Reserve Bank Act, and was therefore a foreign obligation payable in foreign currency, rather than being a local obligation governed by section 4(1)(d) of the Presidential Powers (Temporary Measures) (Amendment of Reserve Bank of Zimbabwe Act and Issue of Real Time Gross Settlement Electronic Dollars (RTGS Dollars)) Regulations 2019, S.I.33 of 2019, that was payable in RTGS dollars.

The third ground of appeal impugns the court a quo for having failed to appreciate that the Reserve Bank of Zimbabwe (Legal Tender) Regulations 2019, S.I. 142 of 2019 made it impossible for the appellant to pay the sum of USD31,400 to the respondent in foreign currency.

Foreign or Local Obligation

The critical provision to be interpreted in casu is section 44C of the Reserve Bank Act [Chapter 22:15] (as inserted by section 3(1) of S.I.33 of 2019).

Section 44C(1) of the Reserve Bank Act empowers the Reserve Bank to issue, or cause to be issued, electronic currency in Zimbabwe. Section 44C(2) provides as follows:

“The issuance of any electronic currency shall not affect or apply in respect of –

(a) Funds held in foreign currency designated accounts, otherwise known as 'Nostro FCA Accounts', which shall continue to be designated in such foreign currencies; and

(b) Foreign loans and obligations denominated in any foreign currency, which shall continue to be payable in such foreign currency.”…,.

Section 4(1)(a) of the Presidential Powers (Temporary Measures) (Amendment of Reserve Bank of Zimbabwe Act and Issue of Real Time Gross Settlement Electronic Dollars (RTGS Dollars)) Regulations 2019, S.I.33 of 2019 provides for the issuance and operation of an electronic currency, dubbed “the RTGS Dollar”, with effect from the effective date, being the date of promulgation of S.I. 33 of 2019, i.e. 22 February 2019.

Paragraphs (c), (d) and (e) of section 4(1) of the Presidential Powers (Temporary Measures) (Amendment of Reserve Bank of Zimbabwe Act and Issue of Real Time Gross Settlement Electronic Dollars (RTGS Dollars)) Regulations 2019, S.I. 33/2019 stipulate as follows:

“(c) That such currency shall be legal tender within Zimbabwe from the effective date; and

(d) That, for accounting and other purposes, all assets and liabilities that were, immediately before the effective date, valued and expressed in United States dollars (other than assets and liabilities referred to in section 44C(2) of the principal Act) shall on and after the effective date be deemed to be values in RTGS dollars at a rate of one-to-one to the United States dollar; and

(e) That after the effective date any variance from the opening parity rate shall be determined from time to time by the rate at which authorised dealers under the Exchange Control Act exchange the RTGS Dollar for the United States dollar on a willing-seller willing-buyer basis; and…,.”…,.

What emerges, clearly and unequivocally, from section 44C(2)(b) of the Reserve Bank Act, as read with section 4(1)(d) of S.I. 33 of 2019, is that foreign loans and obligations denominated in any foreign currency are excluded from the broad remit of S.I.33 of 2019. Thus, foreign loans and obligations continue to be valued and payable in the foreign currency in which they are denominated.

Counsel for the appellant submits that the debt in casu was a local obligation and not a foreign obligation within the meaning of section 44C(2)(b) of the Reserve Bank Act [Chapter 22:15].

For a debt to be a foreign obligation, the creditor must be resident outside Zimbabwe. The nationality of the creditor is irrelevant and it is his residence that matters.

The respondent's declaration, in the court below, admits that it is a resident of this country. It also has a registered office in Zimbabwe as its place of business, as accepted in its further particulars. Again, in terms of the written agreement between the parties, payment by the appellant was to be made “in Zimbabwean US Dollar bank account to be nominated” by the respondent. At the relevant time, all bank accounts in Zimbabwe were designated in United States dollars. The United Kingdom bank account details that were furnished by the respondent were provided on 6 December 2016 - well after the effective date of the agreement, i.e. 25 February 2016.

Counsel for the respondent observes that in the appellant's plea, which was filed on 28 February 2019, after the promulgation of S.I.33 of 2019, the appellant prayed for an order requiring it to pay the lesser “sum of US$15,400”. The court a quo found that the appellant was fully aware of the existence of S.I. 33 of 2019. The plea was not amended, and, so submits counsel for the respondent, it constitutes a firm irrevocable admission of the appellant's liability to pay the outstanding debt in United States dollars. Additionally, the two initial payments that were made by the appellant, totalling USD14,947, were made in cash in United States dollars.

The respondent initially supplied the details of a United Kingdom bank account, together with IBAN and SWIFT codes, which were recognised by the court a quo as pertaining to FCA accounts. At a later stage, in its further particulars, the respondent furnished the details of its local Nostro FCA account. Such accounts are specifically referred to and excluded from the scope of electronic RTGS transactions by section 44C(2)(a) of the Reserve Bank Act.

As regards the respondent's declaration a quo, counsel for the respondent argues that the respondent's statement that it is “a company duly [incorporated] according to the laws of the United Kingdom with an office in Zimbabwe where it is resident” is somewhat ambiguous. The Statement of Agreed Facts before the court a quo makes it clear that the respondent is “a foreign company registered in terms of the British laws with a registered office in Zimbabwe”. All that the respondent has is a business presence in Zimbabwe.

Having regard to the factual circumstances preceding the institution of proceedings a quo, coupled with the conduct of the parties, it is abundantly clear that it was the intention of both parties, from the onset of their transaction, that the appellant's contractual obligation to pay the respondent would be discharged in United States dollars.

Indeed, counsel for the appellant, in his replying submissions, quite properly conceded that until the promulgation of S.I.33 of 2019 the parties were fully agreed that payment would be made in foreign currency.

What is more contentious in casu is the status of the respondent in this country and the nature of the transaction between the parties. These two issues are obviously inter-related and need to be considered together in the context of this appeal.

The term “foreign loans and obligations denominated in any foreign currency”, as it appears in section 44C(2) of the Reserve Bank Act, is not defined in S.I.33 of 2019 or in any other relevant legislation that I am aware of. Its meaning, in any given case, must be ascertained from the factual circumstances of the parties involved and the material substance of the transaction that they have entered into.

It is common cause that the appellant is a local entity. On the other hand, the status of the respondent is not self-evident from the papers filed of record.

I agree with counsel for the respondent that the respondent's pleadings, i.e. its declaration and further particulars, are ambivalent in this regard. Its nationality, in as much as it is incorporated in the United Kingdom, is obviously foreign. What is less clear is the question of its residence and the nature of its physical presence in Zimbabwe. This is obviously a question of fact. Nevertheless, some guidance on this aspect can be gleaned from relevant statute law.

The commercial operations and transactions of all companies, whether foreign or local, are governed by our Company Law, both under statute and at common law. At the time when the transaction between the parties in casu was concluded, the relevant statutory provisions were contained in the Companies Act [Chapter 24:03]. (They are now to be found in the Companies and Other Business Entities Act [Chapter 24:31] which came into operation on 13 February 2020, ninety days after its publication on 15 November 2019).

Section 2 of the Companies Act [Chapter 24:03] (the repealed Act) defined a “foreign company” as “a company or other association of persons incorporated outside Zimbabwe which has established a place of business in Zimbabwe.” The term “place of business” was defined in section 329 to mean “any place where the company transacts or holds itself out as transacting business…,.” The formalities and requirements for the registration of a foreign company were stipulated in section 330. In essence, these included the submission of certified copies of the company's constituent instruments and the particulars of its directors resident in Zimbabwe. Thereafter, the responsible Minister would issue a certificate, subject to such conditions as he saw fit, authorising the foreign company to establish a place of business in Zimbabwe.

In the instant case, it is common cause that the respondent is a company incorporated in the United Kingdom with a registered office or place of business in Zimbabwe. The prescribed formalities for its registration do not form part of the record and were obviously not in issue in the proceedings a quo. In any event, it is undoubtedly a foreign company that was registered and entitled to operate in Zimbabwe.

The related question of residence in the country is indirectly addressed in the Exchange Control Regulations 1996, S.I.109 of 1996, as amended. Although these Regulations pertain principally to dealings in foreign currency, they are also relevant to the determination of questions of residence in Zimbabwe. In terms of section 3(1)(c) of the Exchange Control Regulations, a company or other body corporate is to be regarded as a Zimbabwean resident if “it is incorporated in Zimbabwe” or “it has its head office or principal place of business in Zimbabwe.”

In casu, it is abundantly clear that the respondent is neither incorporated in Zimbabwe nor does it have its head office or principal place of business in Zimbabwe.

By virtue of the Companies Act, as read with the Exchange Control Regulations, it is quite evidently a non-resident foreign entity operating in Zimbabwe.

As regards the transaction between the parties, it is not in dispute that what was sold by the respondent to the appellant was its entire share capital in a foreign company located in a foreign country, namely, Zambia. In short, a foreigner sold a foreign asset to a local company.

The asset consisted of shares in a foreign company that could presumably be sold abroad for foreign currency or, at any rate, in any currency other than the currency of Zimbabwe.

What the parties intended, and what they transacted, unquestionably gave rise to a foreign obligation.

In my view, it was not the intention behind S.I. 33 of 2019 to strike at an obligation of the kind involved in this case.

Section 44C(2)(b) of the Reserve Bank Act, as inserted by section 3(1) of the 2019 Regulations, makes it clear that the issuance of any electronic currency, i.e. RTGS dollars, shall not affect or apply to any foreign obligation. This is reinforced by section 4(1)(d) of the Regulations which explicitly excludes foreign obligations valued and expressed in United States dollars from the deemed parity valuation in RTGS dollars.

To conclude on this aspect, the currency of payment intended by the parties was United States dollars. Moreover, the obligation incurred by the appellant was a foreign obligation denominated in foreign currency within the contemplation of S.I.33 of 2019. That obligation therefore continued to be payable in foreign currency, even after the effective date, i.e. 22 February 2019.

It follows that the first and second grounds of appeal are without merit and must accordingly be dismissed.

Legality of Payment in Foreign Currency

Counsel for the appellant initially took the stance that S.I.33 of 2019 constituted a supervening obstacle to the continued payment of the appellant's obligation in United States dollars. He later conceded that, as at 22 February 2019, there was nothing to prevent the appellant from discharging its obligation in foreign currency. However, he persisted with the argument that following the promulgation of the Reserve Bank of Zimbabwe (Legal Tender) Regulations 2019, S.I.142 of 2019, on 24 June 2019, the Zimbabwean dollar was the sole legal tender for all local transactions in Zimbabwe.

Counsel for the respondent submits that there was no supervening impossibility preventing payments in foreign currency at any material time.

It was legal for the parties to enter into an agreement for the payment of United States dollars or any other foreign currency. Neither S.I.33 of 2019 nor S.I.142 of 2019 prohibited or precluded any such payment.

Subject to the broad impact of later restrictive measures introduced by S.I.212 of 2019, I fully agree with the position taken by counsel for the respondent for the following reasons;

As regards S.I. 33 of 2019, I have already concluded that this instrument did not operate to prohibit the payment of any foreign obligation denominated in foreign currency in such foreign currency. The status quo ante was explicitly saved and preserved by those provisions of S.I.33 of 2019 that I have alluded to earlier.

Turning to S.I.142 of 2019, the relevant provisions, for present purposes, are contained in subsections (1) and (2) of section 2, which stipulate as follows:

“(1) Subject to section 3, with effect from the 24th June 2019, the British pound, United States dollar, South African rand, Botswana pula, and any other foreign currency whatsoever shall no longer be legal tender alongside the Zimbabwe dollar in any transactions in Zimbabwe.

(2) Accordingly, the Zimbabwe dollar shall, with effect from the 24th June 2019, but subject to section 3, be the sole legal tender in Zimbabwe in all transactions.”…,.

Section 3(1) of S.I.142 of 2019 provides for savings from the ambit of section 2. In particular, it stipulates that nothing in section 2 shall affect the opening or operation of foreign currency designated accounts (Nostro FCA accounts) or the requirement to pay customs duties and import or value added tax in foreign currency in respect of such goods as are specified under the relevant tax legislation. Section 3(2) extends the exemption from the provisions of section 2 to the tender of foreign currency in payment for international airline services.

My reading of section 2 of S.I.142 of 2019 is that its operation and impact are confined to local transactions. It obviously cannot, and does not, apply to foreign transactions which ordinarily lie beyond the reach of purely domestic legislation. At any rate, this is clearly evident from the particular wording of the provision which expressly refers and relates to transactions in Zimbabwe.

By the same token, I take the view that section 2 of S.I.142 of 2019 does not extend to the discharge of foreign loans and obligations denominated in any foreign currency. This is so for two fairly obvious reasons;

(i) Firstly, it would be commercially incongruous and internationally unacceptable to attempt to settle any foreign loan or obligation in local currency - unless this is mutually agreed between the parties involved.

(ii) Secondly, and more importantly, the exemption from the scope of local currency in respect of foreign loans and obligations is explicitly preserved and embodied in section 44C(2)(b) of the Reserve Bank Act [Chapter 22:15] itself. The restrictions imposed by S.I.142 of 2019 are contained in Regulations made under the very same Act.

It is trite that subsidiary or subordinate legislation cannot override or purport to alter, whether expressly or impliedly, anything contained in its parent or enabling statute, or indeed in any other Act of Parliament. This proposition is so axiomatic that it requires no case law or other learned authority to support it.

There is yet a further reason for taking a restrictive view of the scope and operation of section 2 of S.I.142 of 2019. This arises from the juridical import of what is meant by “legal tender”.

In this context, it is the State, which is generally responsible for regulating its monetary system, that issues its own currency to serve as the universal means of exchange within its own boundaries. See PROCTOR: Mann on the Legal Aspect of Money, 7th ed, 2012…,..

To similar effect, GOLDBERG: Legal Tender SSRN (2008)…, observes that it is the Government which typically accords the status of legal tender to any currency which it has itself issued. Thus, when the law confers legal tender status only on the Government's currency, it implicitly allows the Government to reject any other currency as a medium of payment.

Insofar as concerns transactions between private persons and entities, GOLDBERG: Legal Tender SSRN (2008)…, points out that the “legal tender” concept originates in Contract Law and entitles the payer to settle a contractual obligation in whatever currency or medium of payment that has been declared, by law, as acceptable legal tender. Conversely, a buyer does not enjoy the same leeway in attempting to settle a contractual obligation through any medium of payment that is not recognised as legal tender within the State concerned.

The same point is underscored by PROCTOR: Mann on the Legal Aspect of Money, 7th ed, 2012 …,:

“If a country's system of trade and commerce is to be based on money as a means of exchange, then the law must buttress that position and allow for the assured discharge of monetary debts by payment in that medium. Thus, the law must require that creditors accept payment through that medium – in other words, the creditor must accept payment in legal tender.”…,.

To conclude on this aspect, the concept of “legal tender”, in its ordinary signification, denotes money or currency in official circulation that must be accepted if offered in payment of a debt.

In the realm of contractual relations, what this means is that the debtor is entitled to settle his debt through the medium of legal tender, and, conversely, the creditor is obliged to accept that tender.

The latter has no choice or latitude in the matter.

On the other hand, unless explicitly proscribed by statute…, there is nothing under the common law to preclude the debtor from discharging his debt in any currency or medium of exchange other than the officially designated legal tender, including any foreign currency, so long as the creditor is prepared to accept such payment in settlement of the debt.

This arises by virtue of the time-honoured doctrine of freedom of contract, which, in my view, remains intact and un-impaired by the provisions of S.I.142 of 2019.

In any event, as I have already emphasised, these provisions do not operate to override or detract from the explicit import of section 44C(2)(b) of the Reserve Bank Act in relation to the repayment or settlement of foreign loans and obligations in foreign currency.

I have earlier alluded to the wide impact of S.I.212 of 2019, to wit, the Exchange Control (Exclusive Use of Zimbabwe Dollar for Domestic Transactions) Regulations 2019, promulgated on 27 September 2019.

The term “domestic transaction” is very broadly defined in section 2(1) of the Exchange Control (Exclusive Use of Zimbabwe Dollar for Domestic Transactions) Regulations 2019, S.I.212 of 2019, subject to section 4, to encompass virtually every conceivable commercial transaction within Zimbabwe. Section 3(1), which is also subject to section 4, expressly prohibits the payment or receipt of any currency other than the Zimbabwe dollar, as the price or consideration payable or receivable in respect of any domestic transaction. Section 4 enumerates those transactions which are excluded from the scope of the definition of “domestic transaction”. Of particular relevance, for present purposes, is section 4(e), which excludes “transactions in respect of which any other law expressly mandates or allows for payment to be made in any or a specific foreign currency.”

As I have already concluded, the transaction in casu gave rise to a foreign obligation denominated in foreign currency. By virtue of section 44C(2)(b) of the Reserve Bank Act, as read with section 4(1)(d) of S.I.33 of 2019, that obligation continues to be, and is therefore allowed, by another law, to be payable in a specific foreign currency, i.e. the United States dollar.

It follows that the underlying transaction is excluded, by dint of section 4(e) of S.I. 212 of 2019, from the scope of the prohibition, imposed by section 3(1) of S.I. 212 of 2019, against the payment or receipt of any currency other than the Zimbabwe dollar in respect of any domestic transaction.

It follows from all of the foregoing that the third ground of appeal cannot be sustained.

Statutory Instrument 142 of 2019, or any other relevant or applicable law, did not make it impossible for the appellant to discharge its outstanding contractual obligation to pay the sum of USD31,400 to the respondent in foreign currency.

Present Status of S.I.33 of 2019 and S.I.142 of 2019

For the sake of completeness, it is necessary to address and clarify the present status of the two statutory instruments under scrutiny in casu.

S.I.33 of 2019 was enacted in terms of section 2 of the Presidential Powers (Temporary Measures) Act [Chapter 10:20]. In terms of section 6(1) of the Presidential Powers (Temporary Measures) Act, S.I. 33 of 2019 lapsed after the expiry of a period of 180 days. However, its provisions have been re-enacted, with some crucial modifications, through section 22 of the Finance (No.2) Act 2019 (Act No.7 of 2019).

As for S.I.142 of 2019, its provisions have also been substantially reproduced, in virtually identical terms, in section 23 of Act No.7 of 2019. This Act was promulgated on 21 August 2019 and came into operation and effect on the same date.

Section 21 of the Finance (No.2) Act 2019 (Act No.7 of 2019) inserts, and re-enacts, with effect from the “first effective date”, i.e. 22 February 2019, the entirety of section 44C of the Reserve Bank Act as was contained in section 3 of the Presidential Powers (Temporary Measures) (Amendment of Reserve Bank of Zimbabwe Act and Issue of Real Time Gross Settlement Electronic Dollars (RTGS Dollars)) Regulations 2019, S.I.33 of 2019. Section 44C(2) of the Reserve Bank Act preserves the position of funds held in foreign currency designated accounts as well as the continued acquittal of foreign loans and foreign obligations denominated in any foreign currency in such foreign currency.

As regards the issuance and legal tender of RTGS dollars, section 22 of the Finance (No.2) Act 2019 (Act No.7 of 2019) re-enacts the provisions of S.I.33 of 2019, but, with certain critical changes, which are not relevant for present purposes, with retrospective effect from the first effective date, i.e. 22 February 2019.

Section 23 of the Finance (No.2) Act 2019 (Act No.7 of 2019) reproduces and re-enacts the provisions of the Reserve Bank of Zimbabwe (Legal Tender) Regulations 2019, S.I.142 of 2019, to declare, in essence, that any foreign currency whatsoever is no longer legal tender in any local transactions and that the Zimbabwe dollar shall, with effect from the “second effective date”, i.e. 24 June 2019, be the sole legal tender in all such transactions, subject to the original savings in respect of the opening and operation of foreign currency designated accounts, the payment of customs duties and import or value added tax, and payments for international airline services.

Disposition

As I have concluded earlier, all the grounds of appeal in this matter are devoid of merit. They cannot be sustained and must therefore be dismissed. As for costs, there is no reason to depart from the norm that costs should follow the cause.

It is accordingly ordered that the appeal be and is hereby dismissed with costs.

View Appeal
HMT55-19 : CAMBRIA AFRICA PLC vs BREASTPLATE SERVICES (PRIVATE) LIMITED T/A NEMCHEM INTERNATIONAL
Ruled By: MUZENDA J

On 24 December 2018 the plaintiff issued summons against the defendant claiming the following:

1. Payment of US$31,400.

2. Interest thereon at the prescribed rate of interest per annum from 19 January 2018 to the date of payment in full and final settlement.

3. Interest at the prescribed rate from 1 March 2016 to 18 January 2018 on the sum of US$40,000.

4. Costs of suit on attorney-client scale.

From the plaintiff's declaration, on or about 25 February 2016, at Harare, the parties entered into an agreement in terms of which the plaintiff sold to the defendant its entire issued share capital of an entity known as Milchem Zambia Limited for US$46,347 which amount was payable to the plaintiff on or before 31 March 2016. The defendant paid US$6,347 on an unspecified date and a further US$8,600 on 19 January 2018 leaving a balance of US$31,400 which amount the defendant rejects or refuses to pay.

The defendant, on the other hand, admits the contents of the 2016 sale agreement but goes on to add that a new agreement was later concluded, more particularly, in that it paid both amounts of $6,347 and $8,600, but, on 2 September 2017, the defendant was using Leopard Rock Hotel for an amount of $23,285=48 being claimed under Case No. HC5580/17. Incidentally, the plaintiff owners or directors or shareholders had interests in Leopard Rock Hotel, the $23,285=48 that was owed to the defendant by Leopard Rock Hotel as US$16,000 for the purpose of off-setting and settling. Hence, the balance outstanding would be US$24,000. After the payment of $8,600, the defendant contends that the balance outstanding, as at 19 January 2018, was $15,400 not $31,400 as pleaded by the plaintiff.

After payment of the $8 600, a misunderstanding pertaining to interest arose as well as the 10% discount which the defendant thought applied to the $40,000 agreed as owing on 2 September 2017. The plaintiff argued that the discount applied to the time prior to 2 September 2017 when the debt was about $45,000 that was owed originally and was dependent on immediate payment which was not affected. The defendant tendered to refund the amount paid to it by Leopard Rock Hotel so as to revert to the 2 September 2017 agreement.

The defendant refutes being in breach of the 2016 sale agreement.

On 22 March 2019, the plaintiff filed its replication where it disputed any novation to the original sale agreement. It insisted that the balance, being the capital on the summons denominated in US dollars, should be paid by the defendant. There was never a set-off agreed by the parties relating to the Leopard Rock Hotel debt. In fact, the defendant was fully paid by Leopard Rock Hotel and accepted payment, and, lastly, it rejects the tendered amount for not being made in accordance with any agreement.

At the joint pre-trial conference held on 13 and 29 May 2019 the following issues were spelt out for trial:

(a) Whether or not the defendant is liable to pay to the plaintiff the sum of $31,400 and interest?

(b) Whether or not the defendant is liable to pay interest on the sum of $40,000 from 1 March 2016 to 18 January 2019?

(c) Whether or not the defendant is liable for the payment of costs at attorney-client scale?

(d) Whether or not there is a new contract between the parties supplanting the terms and conditions of the contract signed on 25 February 2016?

On 15 July 2019, the date of trial, the parties filed a Statement of Agreed Facts to the following effect:

1. The plaintiff is a foreign company registered in terms of the British Laws with a registered office in Zimbabwe and the defendant is a company registered in Zimbabwe.

2. On 25 February 2016, the plaintiff sold to the defendant the entire of its issued shares in Milchem Zambia with effective date of sale being 1 September 2015.

3. The purchase price was US$46,347 (forty six thousand three hundred and forty seven United States dollars); the term sheet agreement is already filed of record as part of the plaintiff's bundle of documents.

4. The defendant initially paid an amount of US$6,347 leaving a balance of US$40,000 of which US$8,600 was paid in cash to the plaintiff at Harare on 19 January 2018 leaving the balance of US$31,400 which is the subject of this claim.

5. The defendant admits the amount of US$31,400 has not been paid to the plaintiff but argues that the amount is now payable in RTGS dollars and not in US dollars as denominated in the term sheet agreement.

6. The issues the court is being called upon to determine are:

6.1. Whether or not the outstanding balance owing to the plaintiff, in terms of the term sheet agreement, is payable in United States dollars or not?

6.2. Whether or not the plaintiff is entitled to interest as acclaimed in the summons?

6.3. Whether or not the plaintiff is entitled to costs of suit on attorney-client basis?

Before the parties addressed the court it was further agreed that issues 6(2) and 6(3) on the Statement of Agreed Facts were no longer meant for determination by the court.

If the plaintiff succeeds, the issue of interest was going to follow the order and would be as acclaimed in the plaintiff's summons. Given the fact that the defendant had admitted owing the plaintiff the amount of US$31,400 and dispensed with the trial proceedings, counsel for the plaintiff, properly in the court's view, abandoned his insistence on claiming costs on attorney-client scale.

It was agreed that if the plaintiff succeeds, the defendant will pay wasted costs at an ordinary scale.

The remaining outstanding issue for determination is whether or not the outstanding balance owing to the plaintiff, in terms of the term sheet agreement, is payable in United States dollars or not?

THE ARGUMENTS

Counsel for the plaintiff submitted that contrary to what the defendant argues, Statutory Instrument 33 of 2019, Presidential Powers (Temporary Measures) (Amendment of Reserve Bank of Zimbabwe Act and Issue of Real Time Gross Settlement Electronic Dollars (RTGS Dollars) Regulations 2019, S.I.33 of 2019 does not affect the parties' agreement.

The Statutory Instrument only introduces Real Time Gross Settlements Electronic Dollars (RTGS) as a currency to operate side by side with the bond note and coin as a form of settlement currency within Zimbabwe. At the time it was introduced, that is the RTGS dollar, it operated side by side with the multi-currency permitted in Zimbabwe.

The recently introduced Statutory Instrument, S.I.142 of 2019, Reserve Bank of Zimbabwe (Legal Tender) Regulations 2019 does not bar the defendants from depositing the balance into the plaintiff's foreign account. The Statutory Instrument, 142 of 2019 still provides and allows payment into foreign accounts but payment made in Zimbabwe during transactions should be in local or domestic currency. He submitted that it will be in the interests of justice if the balance of US$31,400 should be paid in United States Dollars and cited the matter of Zimbabwe Development Bank v Zambezi Safari Lodges (Pvt) Ltd and 2 Others HH95-06 per PATEL J…,.

On the other hand, counsel for the defendant argued that there is a supervening impossibility. He cited CHRISTIE, The Law of Contract in South Africa, 6th edition, 2011…, and insisted on the defence of a vis major. The effect of the Presidential Powers (Temporary Measures) (Amendment of Reserve Bank of Zimbabwe Act and Issue of Real Time Gross Settlement Electronic Dollars (RTGS Dollars) Regulations 2019, S.I.33 of 2019, more particularly section 4(1)(d) which reads as follows:

“(d) That, for accounting and other purposes, all assets and liabilities that were immediately before the effective date valued and expressed in United States dollars (other than assets and liabilities referred to in section 44C(2) of the principal Act) shall, on and after the effective date, be deemed to be valued in RTGS dollars, at a rate of one-to-one to the United States dollar; and...,.”

To the defendant, in terms of paragraph 4(1)(d) of S.I.33 of 2019, cited above, the amount due to the plaintiff in the sum of US$31,400 should now be deemed to be RTGS$31,400 because, to the plaintiff, in accounting terms, it will appear on the balance sheet as an asset and to the defendant it will appear as a liability.

Statutory Instrument 142 of 2019, the defendant argued, makes it specific that the Zimbabwe dollar shall be the sole legal tender for Zimbabwean transactions. It will be illegal for the defendant to settle its obligations in United States dollar denomination. If this court proceeds to grant the judgment in United States dollars, the judgment will be a brutum fulmen.

Counsel for the defendant submitted and if the court grants the order, as per the summons, the judgment will open a floodgate to many entities who would approach the court with similar claims denominated in United States dollars. He concluded by urging the court to return the judgment sounding in RTGS dollar and order payment of RTGS$31,400.

THE STATUTORY INSTRUMENTS 33 AND 142 OF 2019

Statutory Instrument 142 of 2019, Reserve Bank of Zimbabwe (Legal Tender) Regulations 2019, was issued in terms of section 64 as read with section 44A of the Reserve Bank of Zimbabwe Act [Chapter 22:15]. In principle, the statutory instrument effectively ended the multi currency system and promoted, established, and determined, the Zimbabwe dollar as the sole legal trading currency in the country…,.

It was introduced to declare that the sole currency for use within Zimbabwean borders is the Zimbabwean dollar and eliminated the multi currency.

Statutory Instrument 33 of 2019, Presidential Powers (Temporary Measures) (Amendment of Reserve Bank of Zimbabwe Act and Issue of Real Time Gross Settlement Electronic Dollars (RTGS Dollars) Regulations 2019 was introduced in terms of section 2 of the Presidential Powers (Temporary Measures) Act [Chapter 10:20] and the statutory instrument introduced a new baby currency code-named Real Time Gross Settlement Electronic Dollar (RTGS Dollars) to enjoin Ecocash and other versions of mobile banking services. The bond note, the bond coin, and RTGS dollar became three major forms of domestic currency permitted to trade under the banner of the Zimbabwe dollar.

Of great interest to this matter is paragraph 2(b) of S.I.33 of 2019 which provides as follows:

“Shall not affect or apply in respect of -

(b) Foreign loans and obligations denominated in any foreign currency which shall continue to be payable in such foreign currency.”…,.

I conclude that, contrary to counsel for the defendant's submission that US$31,400 falls under the auspices of paragraph 4(1)(d) of S.I. 33/ 2019, it falls under paragraph 2(b) of S.I.33 of 2019 and it is the defendant's obligation denominated in foreign currency and payable to the plaintiff.

WHETHER OR NOT DEFENDANT IS LIABLE TO PAY PLAINTIFF THE SUM OF US$31,400 IN FOREIGN CURRENCY

The caption extracted from the terms sheet dated 25 February 2016 titled “Purchase Consideration” provides as follows:

“US$46,347 (forty six thousand three hundred and forty seven US dollars) being the net asset value (excluding shareholders and inter-company loan accounts) evidenced by the attached signed balance sheet.”

Further, under the following subtitle “Payment” it provides:

“In Zimbabwean US dollar bank account to be nominated by Cambria (the Plaintiff). Payable by 31 March 2016.”

The last extract pertinent for consideration is subtitled “agreement” and provides thus:

“The parties agree that this term sheet is a legally binding document and accurately records the intention of the parties.”

On 6 December 2016 and 23 March 2017, the plaintiff wrote to the defendant providing the name of the account holder, the Bank, account number, and, more importantly, the IBAN and SWIFT code numbers. The IBAN and SWIFT codes apply to payment into Nostro accounts and payment in foreign currency and the communication relating to that account was for the depositing of the balance of US$40,000. The two payments of $6,347 and $8,600 were made in United States dollars - and this court does not write an agreement for the parties.

From the clauses extensively cited above herein, the parties' conduct, more particularly that of the defendant, clearly shows that it was obliged to meet its obligations in United States dollars and proceeded to do so.

The defendant's plea contains, in its prayer..., that it shall pay to the plaintiff the sum of US$15,400, it being fully aware of the existence of S.I.33 of 2019.

The debtor's obligation to settle its indebtedness in foreign currency need not be more explicit than in this case and may also be implied, moreso, when such conduct is in fulfilment of that party's performance of the agreement.

It is also abundantly clear from the foregoing logic that the currency governing the terms sheet is the United States dollar and I am more satisfied in that conclusion by paragraph 5 of the Statement of Agreed Facts dated 15 July 2019 filed of record. The defendant, I conclude, is desirous of meeting its obligation in United States dollars but its only concern is whether such payment would not contravene the law obtaining in Zimbabwe.

That's how I interpret the conduct of the defendant.

The only question which is pertinent is whether the judgment should be in foreign currency.

As per the judgment of the learned Judge PATEL in Zimbabwe Development Bank v Zambezi Safari Lodges (Pvt) Ltd and 2 Others HH95-06, citing the Supreme Court case of Makwindi Oil Procurement (Pvt) Ltd v National Oil Company of Zimbabwe (Pvt) Ltd 1988 (2) ZLR 482 (SC), stated that:

“Our courts are at liberty to give judgments in foreign currency. This follows the radical approach adopted in England by the House of Lords in 1975. As was observed by gubbay cj (as he then was), at 488 A-B;

'In Miliangos v Geroge Frank (Textiles) Ltd (1975) 3 All ER 801 (HL), the majority of the members of the House of Lords (Lord Sermon of Celaisdale dissenting) took the unusual steps, termed by some as “revolutionary”, of reversing their earlier decision. Their Lordships laid down a new rule that where the justice of the case so required the court should give judgment in favour of the plaintiff for the amount of the foreign currency due to him or its sterling equivalent at the time of payment. With regard to the proper conversion date, Lord Wilberforce noted that changes in the value of currency between the breach date and the date of judgment or payment were the rule rather than the exception.'

The Learned Judge continued:

'The rationale for this novel approach is explained, at 492B-C, as follows:

'That the majority of the Law Lords succeeded in surmounting such an obstacle and opted for a more realistic approach to modern economic conditions is strongly illustrative of the concept, never to be overlooked, that the law is a living system that adapts to the necessities of [present time and is to be given new direction] where, on principle and in reason, it appears right to do so.'

At 492C-F the Chief Justice concluded:

'I am firmly of the opinion that in the absence of any legislative enactments which require our courts to order payment in local currency only the innovative lead taken both in Miliangos and the subsequent extensions to the rule there enunciated and in the Murata Machinery case in South Africa is to be adopted. This will bring Zimbabwe into line with many foreign legal systems. See Mann, The Aspect of Money, 4th ed at pp 339-40.

Fluctuations in world currencies justify the acceptance of the rule not only that a court order may be expressed in units of foreign currency, but also that the amount of the foreign currency is to be converted into local currency at the date when leave is given to enforce the judgment. Justice requires that a plaintiff should not suffer by reason of a devaluation in the value currency between the due date on which the defendant should have met his obligation and the date of actual payment or the date of enforcement of the judgment. Since execution cannot be levied in foreign currency, there must be a conversion into the local currency for this limited purpose and the rate to be applied is that obtaining at the date of enforcement.'”…,.

I entirely subscribe to both the Learned Judge and the then Chief Justice.

The matter of AMI Zimbabwe (Pvt) Ltd v Casalee Holdings (Successors) (Pvt) Ltd 1997 (2) ZLR 77 (S)…, is apposite where it was held that it was proper not only to give judgment in a foreign currency but also to couple such award with standard order that interest on the amount be payable tempore morae at the rate applicable to the currency in question.

I do not agree with counsel for the defendant that a judgment in foreign currency will be a brutum fulmen in light of the cases extensively cited herein above and dismiss that argument.

This is an appropriate case which warrants a judgment in foreign currency as clearly reasoned by the Chief Justice in Makwindi Oil Procurement (Pvt) Ltd v National Oil Company of Zimbabwe (Pvt) Ltd 1988 (2) ZLR 482 (SC)…,.

The plaintiff succeeds in its claim and the following is my order;

DISPOSAL

(a) Defendant is ordered to pay the plaintiff the sum of US$31,400.

(b) Interest thereon at the prescribed rate of interest per annum from 19 January 2018 to the date of payment in full and final settlement.

(c) Costs of suit ordinary scale.

HH39-11 : BLUMO TRADING (PVT) LTD vs NELMAH MILLING COMPANY (PVT) LTD and NELSON MAHUPETE
Ruled By: PATEL J

The plaintiff in this matter claims the sum of US$24,100 as special damages, being loss of profits arising from an alleged breach of contract by the defendants.It also claims restitution of US$10,000 paid as a deposit to the first defendant under the same contract.The defendants deny any breach on their ...

The plaintiff in this matter claims the sum of US$24,100 as special damages, being loss of profits arising from an alleged breach of contract by the defendants.

It also claims restitution of US$10,000 paid as a deposit to the first defendant under the same contract.

The defendants deny any breach on their part and allege that it was in fact the plaintiff that acted in breach of contract.

Evidence for the Plaintiff

Wayne Victor Moss is the Chief Executive Officer of the plaintiff company which, together with CCC Pigs (Pvt) Ltd, is a subsidiary of Colcom Foods Limited. He testified as follows:

On the 18th of January 2010, he signed the Agreement in casu with the defendants. In essence, the Agreement was for the sale of 500 tons of maize (at US$235 per ton) for a total purchase price of US$117,500. The maize was to be sourced by the first defendant from the Grain Marketing Board (the GMB).

On the same date, the second defendant signed a contract of suretyship guaranteeing the delivery of maize in terms of the Agreement. He said that the first defendant had a credit facility with the Grain Marketing Board (GMB) for 2,000 tons.

On the 21st of January, he withdrew a total of US$100,000 from the bank. He paid the agreed deposit of US$10,000 to the second defendant and then proceeded with him to the Grain Marketing Board (GMB) with US$90,000 in cash.

The Grain Marketing Board (GMB) was not aware of the transaction and had no release orders in the name of the first defendant. He was told by the GMB's Credit Controller (Mawanza) that he could obtain only 300 tons of maize at a higher price of US$300 per ton if he paid the US$90,000 into the first defendant's account with the GMB. This was because the first defendant's facility was for a maximum of 300 tons and because its account with the GMB was in debit at that time.

The second defendant then undertook to resolve the matter the following day.

The witness subsequently visited the Grain Marketing Board (GMB) on four consecutive days and was given the same explanations by Mawanza. He then met the GMB Marketing Manager (Mandizvidza) who cautioned him against dealing with the first defendant. Mandizvidza later furnished a letter confirming the first defendant's credit standing with the GMB at the relevant time.

The plaintiff did not proceed with the transaction as it became evident that the first defendant did not have the capacity to deliver as agreed.

The Agreement was cancelled on the 2nd of February and this was confirmed by the plaintiff's lawyers in their letter of the 4th of March to the first defendant. The defendants offered to restitute the US$10,000 deposit in January and October 2010, but have not made any payment to date.

The plaintiff had a contract with CCC Pigs (Pvt) Ltd, signed immediately after the Agreement with the defendants, for the onward supply of 500 tons of maize at a price of US$290 per ton. This represented a profit margin of US$55 per ton equating to a total profit of US$22,500. The plaintiff had arranged for the transportation of the maize at a cost of US$200 per truck. In order to meet its contract with CCC Pigs the plaintiff had to order 508 tons of maize from South Africa at a price of US$317 per ton.

Under cross-examination, the witness conceded that the deposit of US$10,000 was not paid on signature of the Agreement but on the 21st of January and that the sum of US$90,000 was not deposited into the GMB's bank account as agreed. The payments were a few days late and not strictly in accordance with the terms of the Agreement. However, this was not unreasonable in the circumstances of the transaction and the second defendant had accepted the delays. Moreover, the witness did not have the Grain Marketing Board's (GMB) bank account details.

Odson Dzanga is the plaintiff's Financial Manager. He accompanied Wayne Victor Moss to the Grain Marketing Board (GMB) on the 22nd of January 2010. He confirmed that the GMB would only have released 300 tons of maize upon payment of the US$90,000 in cash. He added that the first defendant's account with the GMB was in arrears standing at about US$54,000 as at the 8th of January 2010.

Emson Mandizvidza has been employed by the Grain Marketing Board (GMB) as its Marketing Manager since 2003. His duties include checking the credit facilities of customers, and, in conjunction with the Credit Controller, authorising release orders on credit sales. He corroborated the testimony of Wayne Victor Moss and Odson Dzanga regarding their visit to the GMB on the 22nd of January and his discussion with Moss in the presence of the second defendant. He also confirmed the contents of his letter of the 13th of May 2010 concerning GMB prices and the first defendant's credit status.

Between the 18th and 22nd of January 2010, the first defendant's credit facility was on hold because of its outstanding arrears of US$54,000, and, in any event, that facility did not enable it to buy 500 tons of maize from the Grain Marketing Board (GMB). At that time, the first defendant's credit facility was limited to 300 tons per month.

In practice, a credit customer wishing to increase its credit limit would have to apply, in writing, and the application would then be assessed by the Risk Management Committee (the RMC) which meets once a week.

In December 2009, the first defendant applied to increase its credit limit to 2,000 tons per month. This application was turned down by the Risk Management Committee (RMC) before the 18th of January. As at that date, there was no application from the first defendant to increase its credit limit. Even if it had lodged an application, this would only have been processed the following week and it would not have been possible to approve any increase on the 22nd of January. The Grain Marketing Board (GMB) sued the first defendant for the outstanding US$54,000 in April 2010 in Case No. HC2191/10. At the present time, the first defendant is no longer a credit client of the Grain Marketing Board (GMB).

Wanda van den Bergh is a grain broker. Her evidence was that she introduced Wayne Victor Moss to the second defendant in January 2010. The agreement between them was for the first defendant to supply maize to the plaintiff for onward sale to CCC Pigs (Pvt) Ltd. She was not aware of the first defendant's credit facility with the Grain Marketing Board (GMB).

Evidence for the Defendants

Nelson Mahupete, the second defendant, is the Chairman and Managing Director of the first defendant.

His evidence was that in December 2009 he applied to the Grain Marketing Board's (GMB) credit controllers (Mawanza and Pfumbidza) to increase the first defendant's credit facility from 300 tons to 2,000 tons per month. They agreed to increase the facility to 1,500 tons - provided the outstanding debt of US$54,000 due to the GMB was cleared.

After the Agreement was concluded with the plaintiff, Wayne Victor Moss only paid the deposit of US$10,000 after three (3) days. Moreover, he did not effect transfer of the US$90,000 into the Grain Marketing Board's (GMB) account but arrived at the GMB offices with the cash equivalent. He then declined to pay that amount towards the first defendant's account with the GMB. If he had done so, the first defendant would have fulfilled the contract to deliver 500 tons of maize.

As regards the debt of US$54,000 owed to the Grain Marketing Board (GMB), the first defendant has already paid US$33,250 towards this and the balance is to be cleared as per an agreed payment plan.

Under cross-examination, the second defendant conceded that the 500 tons of maize in question was for pig feed but denied that it was intended for CCC Pigs (Pvt) Ltd.

He disputed the averment to that effect made by Mandizvidza in his statement to the CID Serious Fraud Squad on the 12th of February 2010.

As regards the release orders for 500 tons of maize, he admitted that he did not have them in his possession on signature of the Agreement on the 18th of January or at the Grain Marketing Board (GMB) offices on the 21st of January.

He has been charged with fraud in respect of the present contract. The criminal trial has commenced and is yet to be completed.

Vavavirayi Mawanza has been the Grain Marketing Board's (GMB) Credit Controller since January 1999.

His evidence was that Grain Marketing Board (GMB) release orders are first signed by him and then by the Marketing Manager before they are issued. In August 2009, the first defendant applied for a credit facility, and, in September, it was granted a facility for 150 tons per fortnight or 300 tons per month. In December 2009, the GMB released a total of 268 tons of maize to the first defendant. The latter then applied for a facility of 2,000 tons per month. On the 18th or 19th of December, he verbally advised the second defendant that he could only approve a facility of 1,500 tons on condition that the first defendant paid an additional US$200,000 towards its account with the GMB.

As at the 8th of January 2010, the first defendant's account was in debit of about US$54,000. On the 22nd of January 2010, Wayne Victor Moss came to the Grain Marketing Board (GMB) wanting to pay US$90,000 into the first defendant's account. The witness refused his request and said that the first defendant should make the payment itself. Moreover, it would not have been possible for Moss to have paid the GMB through its own bank account.

In his statement to the CID Serious Fraud Squad, dated the 15th of February 2010, he declared that “the accused (second defendant) has a buying limit of 150 tonnes at a time.”

There was no mention of an increased limit of 1,500 tons having been conditionally approved.

Tatenda Pfumbidza is an Assistant Credit Controller with the Grain Marketing Board (GMB).

He confirmed that an existing credit client must apply, in writing, for any increase in its credit facility and that, if its application is approved, the Marketing Department and the client must be advised of the increased limit in writing.

When the first defendant applied for an increased limit of 2,000 tons, in December 2000, it was told to make an additional payment of “more than US$100,000” towards its account with the Grain Marketing Board (GMB). This application was not approved because the additional payment was not made.

In February 2010, the second defendant approached him for a credit reference. He then wrote two reference letters dated the 5th and 8th of February. He conceded that the letters were silent as to the conditions of release and the tonnage that could be released to the first defendant. Moreover, he accepted that the letters were not addressed to the plaintiff or to Wayne Victor Moss and that they were written after the events giving rise to the plaintiff's action in casu.

Breach of Agreement by Plaintiff

It is a fundamental premise of every contract that both parties will duly carry out their respective obligations. See Green v Lutz 1966 RLR 633; ESE Financial Services (Pty) Ltd v Cramer 1975 (2) SA 805 (C)…,.

As is explained by CHRISTIE: Business Law in Zimbabwe…,.:

“There is a presumption that in every bilateral or synallagmatic contract, i.e. one in which each party undertakes obligations towards the other, the common intention is that neither should be entitled to enforce the contract unless he has performed or is ready to perform his own obligations….,.

…,. Conversely, a party who has caused the other to commit a breach cannot found a claim on the breach…,.”

In terms of clause 3 of the Agreement in this case, the plaintiff undertook to pay a deposit of US$100,000 “upon the signing of this agreement”, US$90,000 into the bank account of the Grain Marketing Board (GMB) and US$10,000 in cash to the defendants.

It is common cause that Wayne Victor Moss did not pay the deposit of US$10,000 and did not transfer the sum of US$90,000 into the Grain Marketing Board's (GMB) bank account upon signature of the Agreement. Instead, he paid the US$10,000 deposit only on the 21st of January, and, on the same date, tendered US$90,000 in cash to the GMB.

It is therefore clear that the plaintiff did not perform its obligations strictly in accordance with clause 3 of the Agreement.

However, it is equally clear that the defendants accepted the late payment of the US$10,000, and, furthermore, they actively attempted to pressurise Wayne Victor Moss to pay the US$90,000 in cash to the Grain Marketing Board (GMB), particularly as it was not practically possible for him to make that payment into the GMB's bank account.

At that stage, he was obviously willing and able to make both payments in performance of the plaintiff's obligations.

Given the attitude and conduct of the parties, the delay of three (3) days in tendering the payments and the departure in the mode of payment to the Grain Marketing Board (GMB) were not material to the plaintiff's undertakings under the Agreement; and, although the plaintiff did not strictly comply with its payment obligations, such non-compliance was accepted by the defendants.

In short, they positively acquiesced in that non-compliance and are therefore estopped from raising it as a defence to the plaintiff's claim.

Appealed
HB59-09 : DINESH MANILAL NARAN vs RONNAH MAFURIRANO and THE REGISTRAR OF DEEDS
Ruled By: KAMOCHA J

The plaintiff in this matter seeks:-“1. An order to declare that the sale agreement executed between him and first defendant on the 30th of September 2001 on Stand 378, Gorebridge Road, Killarney, Bulawayo is still binding and effectual as between the parties;2. An order to compel the first defendant to ...

The plaintiff in this matter seeks:-

“1. An order to declare that the sale agreement executed between him and first defendant on the 30th of September 2001 on Stand 378, Gorebridge Road, Killarney, Bulawayo is still binding and effectual as between the parties;

2. An order to compel the first defendant to transfer all her rights, title and interests in Stand Number 378 Gorebridge Road, Killarney, Bulawayo to plaintiff.

3. An order authorizing the Deputy Sheriff of Bulawayo to sign all the transfer documents for and on behalf of the first defendant in order to effect transfer of Stand 378 Gorebridge Road, Killarney, Bulawayo to plaintiff.

Alternative to 1, 2 and 3 above -

Plaintiff seeks an order:

4(a) To be refunded by first defendant $1,500,000 plus interest a tempore morae at the prescribed rate, effective from the 31st of October 2001; and

(b) To be compensated by first defendant in the sum of $2,500,000.

5. That the first defendant pays all costs of this action on an attorney and client scale.”

When the parties appeared before a judge for a pre-trial conference it was agreed that the issues to be determined by the trial court be as follows:-

“(1) Did plaintiff advise first defendant that plaintiff was no longer prepared to be held to the contract of sale, and, as a result thereof, did plaintiff cancel the contract of sale?

(2) Was the contract of sale perfected?

(3) Is the plaintiff entitled to tender $3,800,000 plus interest, and, in that event, at what rate is the interest to be calculated?

(3) In the alternative, is plaintiff entitled to:-

(a) A refund of $1,500,000 plus interest calculated from the 31st October 2001; and

(b) Compensation for improvements effects (sic) by plaintiff.”

Each party had the onus to prove two of the above issues. The plaintiff had to prove issues 3 and 4 while the defendant had to prove issues 1 and 2.

The plaintiff gave evidence himself and called two witnesses to support him.

The plaintiff's story was that he was a businessman in Bulawayo. Mr Thokozani Khumalo was his business partner who needed a house. Thokozani Khumalo (“Khumalo”) had been initially leasing House Number 378 Gorebridge Road, Killarney, Bulawayo. The house belonged to Ronnah Mafurirano, the first defendant.

The husband of the first defendant, Mr Davis Sunganayi Mafurirano, was the plaintiff's business associate. They knew each other from the time Davis Sunganayi Mafurirano used to work for CBZ Bank.

After Thokozani Khumalo had expressed his wish to purchase the house he was renting, the plaintiff conveyed the message to Davis Sunganayi Mafurirano who asked the plaintiff to make an offer to him.

When the plaintiff made an offer of $2.5 million, Davis Sunganayi Mafurirano said he needed time to go and discuss with his wife, the owner, and would come back to them.

Davis Sunganayi Mafurirano came back with a figure of $5.3 million which the parties agreed on.

Although the house was being purchased for Thokozani Khumalo, the negotiations were being done by the plaintiff, Naran, while Davis Sunganayi Mafurirano represented his wife, the first defendant.

The parties then had a memorandum of agreement of sale reduced to writing which reads in part:

“Purchase Price and Payment

The purchase price payable to the seller by the purchaser for the said Stand shall be the sum of $5,300,000 (five million three hundred thousand dollars). A deposit of $2,500,000 (two million five hundred thousand dollars) shall be paid upon signing of this agreement and the balance of $2,800,000, (two million eight hundred thousand dollars) shall be paid in monthly instalments of $1,500,000 with effect from on/or before the 31st of October 2001 finishing with the balance of $1,300,000. 30% per month interest shall be paid on $2,300,000.”

The plaintiff engaged Sibusiso Ndlovu to represent him.

The seller signed the agreement on 12 September 2001 while the buyer signed it on 30 September 2001.

The plaintiff conceded that he had failed to pay the deposit as stipulated in the agreement. He should have paid $2,500,000 when he signed the agreement on 30 September 2001, but he, instead, paid the sum of $1,500,000 on 26 October 2001.

The plaintiff was clearly in breach of what the parties had agreed on not so long back.

He however seems to take solace in his belief that the $1,500,000 was not rejected by the buyer despite the fact that it was less than what the parties had agreed and was even paid late. He said the money was never sent back to him or his lawyers.

It was his evidence, that, as a business associate in relation to the buying of paper he had given Davis Sunganayi Mafurirano the sum of one million dollars to import paper. That, however, did not materialize but Davis Sunganayi Mafurirano never returned the $1 million.

The plaintiff seemed to suggest that that amount replaced the shortfall of one million he was supposed to pay as a deposit.

The plaintiff denied ever taking any steps to cancel the agreement. Instead, he said it was Davis Sunganayi Mafurirano who appeared to be bent on cancelling the agreement in his letters to be found on pages 12 and 15 of the plaintiff's bundle of documents.

The first one is undated and addressed to Sibusiso Ndlovu & Associates and marked for the attention of Mr S Ndlovu and reads thus:-

“Dear Sir

Re: Sale of House Number 378 Gorebridge Road, Killarney

Further to our telephone conversation on Wednesday 19 September 2001, I wish to confirm that we would like to give your clients up to 24 September 2001, 1400 hours, to pay their deposit. Failing, which, will give us the freedom to allow those who have shown interest to view the house as from 1000 hours on Tuesday 25 September 2001.

Please be advised accordingly, and your client's co-operation will be assumed.

Yours faithfully
D S Mafurirano”

I pause to observe that the above letter did not spur the plaintiff into trying to pay the deposit timeously at all. Instead, an amount of $1,500,000 was paid more than a month later - on 26 October 2001.

The plaintiff still had problems in paying as agreed prompting Mr Mafurirano to address a letter direct to Thokozani Khumalo on 8 November 2001 in the following terms:

“Re: Sale of House Number 378 Gorebridge Road, Killarney

It is with regret that I write to inform you of our decision to cancel the sale of the above property. The sale of the property was linked to a project we wanted to undertake, but we have had to seek alternative financing sources at higher costs than initially anticipated.

This affair concerning the sale of the above property has been one great problem and waste of time to us, simple because we didn't know that we were dealing with not so-serious people or rather people with other interests but to buy a house.

The negotiations for the price and other conditions were concluded on the 12th September 2001, with Mr Ndlovu, Mr D Naran's appointed representative. The payment of $2.5 million deposit was supposed to be immediate, but we had to wait until 26/10/2001 when a down payment of only Z$1.5 million was made. Promises of similar payments every week were made.

The above payment was based on the price and conditions negotiated, and signed for on the 12th September 2001. Mr D Naran called me to discuss the issue of payment, only to tell me that Mr Ndlovu, his representative, had no authority to conclude the negotiations on price and conditions as he did, as such, he, Mr Naran, was not bound by that agreement, which effectively meant there was no agreement in the first place. In fact, there is no agreement as I write, because Mr Naran nullified the one which we thought was binding.

Further, Mr D Naran, indicated that the house was overpriced, and that the whole deal should be abandoned, and that we were to return $1.1 million, with $400,000,00 being payment for inconvenience suffered by us, and that we were to compensate Mr Khumalo for the improvement done.

Despite good intentions we had, we have finally decided not to dispose of this property because we no longer need to, and, most importantly, the problems we have gone through and which we may go through in future, if we carry on as we have done this far.

In this regard, please forward invoices/receipts for the improvements you have undertaken so far for re-imbursement. Further, as discussed with you before, please, no improvements without consulting us first. You can stay if you like, but please we do not want to chase anybody for rent money.

If, in the future, we decide to sell, you will obviously have the first refusal option.

Regards
D S Mafurirano”…,.

The tone of the above letter reveals that the seller was disappointed by the behavior of the buyer who did not appear to be serious to pay on signature of the agreement. When payment was made, more than a month later, the money was one million dollars less than the agreed deposit. According to the letter, Naran did not feel bound by the agreement as he allegedly accused his lawyer of concluding negotiations on the price and conditions without his client's mandate.

The plaintiff denied ever doing or saying what is contained in the letter. He instead alleged that the negotiations were done by him. He did not remember the meeting of 7 November 2001 where he was alleged to have made those remarks.

It was his evidence that although he may have asked for more time to pay, never did he, at any stage, indicate that he wanted to cancel the agreement. It was the defendant who was bent on wanting to cancel the agreement as illustrated by her letter of 17 October 2001 addressed to the plaintiff's legal practitioners marked for the attention of Mr S Ndlovu which reads:

“Re: Sell of House Number 378 Gorebridge Road, Killarney

Further to our various discussions and letters concerning the sale of the above property. It is now almost the anniversary of the signing of an agreement of sale of the above property whose deposit should have been paid immediately after signing. This has not happened for the past 29 days.

I feel you have had ample time to raise and pay the deposit amount, therefore, I wish to officially inform you of my withdrawal from the agreement. And also to inform you that with immediate effect, Mr Khumalo should give access to people wishing to view the house.

Yours faithfully
R. Mafurirano (Mrs)”

The plaintiff went on to say that he had never instructed his legal practitioner to cancel the contract and accordingly wanted it to be enforced.

He said he did not know anything about the letters of 7 February 2002 and 2 May 2002 addressed to him at 6 Hussor Road, Khumalo, Bulawayo as he did not live there. He had never lived, owned, or used that address.

Under cross examination, Naran told the court that he in fact only became aware of the two letters two weeks before the trial when they were sent to him by his legal practitioner. He was not even aware of the letters when he issued summons and emphasized that he could not have been influenced to issue summons by something that he was not even aware of.

Similarly, he claimed the letter of 8 November 2001, addressed to Thokozani Khumalo, was only brought to his attention two weeks before the trial commenced. It also could not have influenced him to institute these proceedings.

In a nutshell, his erstwhile legal practitioner, Sibusiso Ndlovu, never brought to his attention all these letters.

Naran was being untruthful when he said he was not aware of the said letters before he issued summons. That is contrary to what he said in paragraphs 6 and 7 of his declaration where he says the defendant purported to cancel the agreement by addressing two letters to him, copies of which were attached to the declaration marked “B” and “C”. He said he had never received those letters and had accordingly not been put in mora by the defendant.

As can be seem from his declaration, his concern was that he had not been put in mora since he had not received the said letters.

He was clearly aware of the letters before he issued summons.

Consequently, his suggestion that they were only brought to his attention two weeks before the trial commenced is rejected as it is false and so is his suggestion that he was not aware of the letter of 8 November 2001 and that it did not influence him to institute these proceedings.

Further, Naran could not give a satisfactory explanation, under cross-examination, why he was tendering the balance of $3.8 million for the house if he had treated the $1 million meant for the paper project as part of the purchase price for the house. If what he told the court was true he should have tendered $2.8 million. There would have been no reason for him to tender more than what was due and owing.

In any event, the paper project involved Naran and the defendant's husband and had nothing to do with the defendant herself. Hence the $1 million could not have been treated as part of the price for the house.

Naran was an unreliable witness who was not worth to be believed. His evidence was in conflict with that of Thokozani Khumalo who categorically stated, that, on receipt of the letter of 8 November 2001 he discussed the import of its contents telephonically with Naran who distanced himself from the contents and suggested that the letter should be handed over to their lawyer Sibusiso Ndlovu. Indeed, the letter was handed over to the lawyer as suggested by Naran.

Thokozani Khumalo told the court that Naran never told him that the $1 million was part payment for the purchase price. Instead, he said Naran told him that Davis Sunganayi Mafurirano had borrowed the money.

Thokozani Khumalo said he had effected some improvements at the property. He, however, admitted under cross examination that the improvements were made without the authority from the Mafuriranos.

Mr Sibusiso Ndlovu was a friend and business partner of Naran. He was also a friend of Thokozani Khumalo. He was the legal practitioner who drew up the agreement of sale and signed it on behalf of Naran – the plaintiff.

He knew Mrs Mafurirano who had been introduced to him by one Mathew Nhindiri and also had dealings with her from her bank – CBZ Bank. He said he only got to know Mr Mafurirano at the time he drafted the agreement of sale.

He confirmed that three letters were addressed to his law firm but the fourth one was directly addressed to Thokozani Khumalo, who, without delay, handed it to him.

Thokozani Khumalo was reported as having been still agitated as he handed the letter to Sibusiso Ndlovu who got concerned after going through the contents of the letter. The letter in question is the one dated 8 November 2001 quoted from page 4 and 5 supra.

Sibusiso Ndlovu, like Thokozani Khumalo, telephoned Naran about the contents of the letter. Naran denied having agreed to cancel the agreement and told Sibusiso Ndlovu to contact Davis Sunganayi Mafurirano which he did. He went further to advise Davis Sunganayi Mafurirano that Naran and Thokozani Khumalo were still committed to pay but did not have money at that stage because the money they had expected from the payment of a cement consignment from a Zambian buyer was not forthcoming. But, Davis Sunganayi Mafurirano still allegedly told Sibusiso Ndlovu to pressurize Naran to make payment for the house as he knew Naran's plight. He knew about the Zambian consignment and anticipated that Naran would be paid for the consignment at some stage.

Under cross examination, Sibusiso Ndlovu said he had never regarded the letter of 8 November 2001 as a cancellation of the agreement. He also conceded that the defendant still considered herself bound by the agreement in the letter of 7 February 2002. In it, the defendant wanted to know when the plaintiff was going to pay if he was still interested in the agreement. The letter was written by her legal practitioners addressed directly to Naran and sent to 6 Hussar Road, Khumalo which was a wrong address.

The main body of the letter reads:

“Re: Agreement of Sale with Ronnah Marurirano

We refer to the above matter in which we act for Ronnah Mafurirano with whom you entered into a sale agreement in respect of Stand 378 Gorebridge Road, Killarney.

The purchase price was in the sum of $5,300,000 payable as to a deposit of $2,500,000 and the balance of $2.8 million in monthly installments of $1.5 million starting end of October 2001.

You paid $1.5 million as a deposit on the 26th October 2001. This was $1 million less than the agreed deposit.

You have not paid anything further after the $1 million (sic) referred to.

Our clients instruct us to enquire from you, as we hereby do, whether it is still your intention to proceed with the purchase, and, if so, when they can expect to receive the balance which is overdue. If you are no longer interested in the purchase please advise to enable our clients to move forward. Please let us have your election either way within 7 days of this letter failing which we will approach court for an order to declare forfeit as a pre-estimate of damages the deposit paid.

Yours faithfully
Majoko and Majoko”…,.

The contents of this letter clearly establish that the defendant still considered herself bound to the agreement as at 7 February 2002.

This court, therefore, makes a specific finding to that effect.

Another letter addressed directly to Naran, but also sent to the wrong address, was dated 2 May 2002 and it reads this:-

“Dear Sir

Re: Agreement of Sale with Ronnah Mafurirano

We refer to the above matter.

In terms of your agreement, you were supposed to pay a deposit for the purchase price in the sum of $2,500,000 on the date of your signing the agreement. You failed to do so. In fact, you only paid the sum of $1,100,000 (sic).

Through several letters to you our client informed you that time of payment was of the essence. You have failed to make any other payment from the date you made the first installment. You have breached your contract.

Due to your breach of the contract by failing to pay on time and as stipulated in the contract our client now considers your contract cancelled.

Our client also wishes to notify you that he reserves the right to forfeit the installment paid to her.

Yours faithfully
Majoko and Majoko”

The above two letters were sent to a wrong address although they were directed at Naran personally.

Naran said he had never used that address and had never lived there. He went on to state that he did not even know anyone living at that address.

He was being untruthful on that point, because, when Sibusiso Ndlovu asked him if he had once lived there, or had once used the address, or if he knew anyone at that address, he denied ever living there or ever using the address but revealed that his distant cousin lived there but was quick to say he was not close to him.

Sibusiso Ndlovu's evidence also confirmed that Naran was well aware of the above two letters well before the summons was issued. He was in fact aware of all the four letters quoted in this judgment id est;

(a) The undated letter addressed to Sibusiso Ndlovu & Associates;

(b) The one addressed to Thokozani Khumalo dated 8 November 2001;

(c) The one dated 7 February 2002 addressed to himself but sent to the wrong address; and

(d) The last one dated 2 May 2002 also addressed to himself but sent to a wrong address.

Accordingly, Sibusiso Ndlovu's evidence belies Naran's story that he only became aware of the letters two weeks before the trial commenced.

Sibusiso Ndlovu admitted, under cross examination, that, Naran did not disclose to him that he himself had made a tender of the purchase price to the defendant. He further admitted that Naran, the plaintiff, was in material breach of the agreement. He, however, went on to state that despite the fact that Naran was in material breach of the agreement the defendant kept on accepting and granting extensions.

The defence case was closed after the evidence of Sibusiso Ndlovu.

Mrs Mafurirano, the first defendant, gave evidence and called her husband as a defence witness.

She herself did not have much to say as most of what took place in relation to the agreement of sale was done by her husband. He did all the negotiations relating to the sale.

She told the court that she and her husband had more than one property in Bulawayo. The property at the centre of this dispute was registered in her name. Sometime in September 2001 the couple was offered a farm to buy. They needed money to buy it. They then decided to dispose of one of their properties in order to raise the money. They decided to sell the property in question. The first offer was made to Thokozani Khumalo the sitting tenant.

After sometime, her husband brought an Agreement of Sale drawn up by Sibusiso Ndlovu & Associates legal practitioners for her signature.

She confirmed that the plaintiff was in breach of the contract as he failed to pay the deposit in terms of the agreement. The purchase price was also not paid.

Although she had not been involved in the writing of several letters to the plaintiff by her husband she was made aware of what was going on.

Under cross-examination, she maintained that she had not cancelled the contract despite indications in the letters that it would be cancelled. She said she still considered herself bound by the agreement although her attitude was that the whole deal had taken too long. Her major concern was to have the house sold so that they could raise money for the farm project.

Mrs Mafurirano gave her evidence in a simple and clear manner. She was worth to be believed.

She called her husband who was her key witness as he was the one involved in the negotiations for the sale of the house.

The husband, one Davis Sunganayi Mafurirano, had this to say:

He told the court that Thokozani Khumalo was their tenant who rented the house in question. At one stage, an opportunity arose whereby someone was selling a business and a farm. He and his wife got interested in that property. They decided, as a family, to raise some money by selling their Killarney house in an endeavour to acquire the farm and a business. They agreed, as a family, that the husband was going to handle all negotiations and transactions relating to the selling of their Killarney house.

They then approached the sitting tenant, Thokozani Khumalo, and informed him about their wish to dispose of the house. Thokozani Khumalo was interested in the house but said he would seek financial assistance from Naran who was his employer. Later, Thokozani Khumalo advised him to go and see his lawyer, Sibusiso Ndlovu.

He went and had a discussion with Sibusiso Ndlovu. They agreed on a price of $5.3 million for the house. The lawyer, Sibusiso Ndlovu, undertook to draft an Agreement of Sale and said Davis Sunganayi Mafurirano should return the next day to sign it. He returned to the lawyer's office whereat the lawyer and himself made some amendments to the draft Agreement of Sale. Thereafter, he was given the amended draft Agreement of Sale to take to his wife for signature.

His wife signed the Agreement of Sale on 12 September 2001 and Davis Sunganayi Mafurirano immediately returned it to the law firm for the buyer to sign it. Davis Sunganayi Mafurirano expected the buyer to also sign the agreement on 12 September 2001, but, to his surprise and disappointment, the buyer only signed it 18 days later - on 30 September 2001.

Davis Sunganayi Mafurirano's expectations were that Naran was going to pay a deposit of $2.5 million on signature as stipulated in the Agreement of Sale but that never happened. Payment of the deposit was not made even on the belated date of signature by the buyer.

That caused a lot of anxiety to the Mafuriranos as their plans to purchase a farm and business were thrown into disarray. Davis Sunganayi Mafurirano had to go to a Mr Turner to negotiate with him about the time they could pay him for the farm and business.

The deposit was paid in by Thokozani Khumalo on 26 October 2001. To the Mafurirano's further disappointment, Thokozani Khumalo paid in $1.5 million leaving a shortfall of $1 million. That payment was made on a Friday and Thokozani Khumalo had promised to pay the balance the next Monday but failed to do so.

The witness reminded Thokozani Khumalo of his promise but the reminder produced no result. He then decided to go and see Sibusiso Ndlovu who referred him to Naran whom the witness had not dealt with in relation to the sale of the house.

The witness said he embarked on fruitless efforts to have the outstanding part of the balance paid. He went to Thokozani Khumalo who referred him to Sibusiso Ndlovu who in turn referred him to Naran.

As if that was not enough trouble, Naran surprised him by allegedly saying:-

(a) Sibusiso Ndlovu had no right to enter into the agreement;

(b) He also pointed out that the house was over-priced and went on to say he could get a better house for that price in Ilanda or Famona; and

(c) He finally said of the $1.5 million that had been paid that far $1.1 million had to be returned (without specifying to whom) while the witness kept $400,000 for the inconvenience caused to him.

Naran allegedly made the above revelations at a meeting which he had with the witness on 7 November 2001.

The following day, Davis Sunganayi Mafurirano addressed the letter to Thokozani Khumalo quoted supra…,.

The witness denied that he meant to cancel the agreement by writing the letter. He contended that he was merely conveying to Thokozani Khumalo what his benefactor said at the meeting of the previous day. It was the witness' further contention that it was Naran, instead, who was canceling the agreement by revealing that he was not bound by it since Sibusiso Ndlovu had no mandate from him to conclude the agreement.

It was Davis Sunganayi Mafurirano's evidence that the series of letters written by him and his wife were merely intended to cajole Naran and Thokozani Khumalo into honouring their obligation. But, to their disappointment, no written response came from the buyers and their legal practitioners.

They were further disappointed by the fact that the buyers and their legal practitioners drew up the Agreement of Sale wherein they stipulated conditions which they never met. Hence their ultimate conclusion that Naran had cancelled the Agreement of Sale.

That was what prompted them to instruct their legal practitioners to write the final letter on 2 May 2002…,.

According to Davis Sunganayi Mafurirano, the letter was a mere acceptance of the fact that Naran had cancelled the Agreement of Sale.

Davis Sunganayi Mafurirano vehemently denied the suggestion that he was given $1 million dollars which was applied to the purchase of the house.

Davis Sunganayi Mafurirano was subjected to a lengthy and thorough cross-examination. He came out of the cross examination badly bruised as he could not give direct answers to questions and was evasive.

He, however, made it clear, under cross-examination, that, it was not correct that he had been given the $1 million for the purchase of bond paper which money was later applied to the purchase of the house. He said the issue of bond paper only involved $80,000 and not $1 million as had been suggested by the plaintiff. He then referred the court to a document attached to exhibit 3 reflecting that he indeed paid $80,000 for A4 paper on 18 October 2001.

He further emphasized, under cross examination, that, the various letters written to the buyers were not meant to cancel the agreement but were being used as a means to spur them into making payment. They were just a tactic to pressurize Naran and Thokozani Khumalo to honour their contractual obligations.

Davis Sunganayi Mafurirano maintained that the letter of 2 May 2002 was just an acceptance of the fact that Naran had cancelled the agreement.

There is merit in Davis Sunganayi Mafurirano's conclusion in the light of the following findings made by the court:

This court makes a finding that the plaintiff was in material breach of the agreement right from the onset.

He failed to pay the deposit on signing the agreement as stipulated. When he did so, a month later, what he paid was $1 million less than what the parties had agreed.

Although the plaintiff was in material breach of the agreement, the defendant, through desperation, kept on accepting and granting extensions resulting in the plaintiff taking advantage of her and grossly abused that advantage.

Demands for him to pay, coupled with repeated threats to cancel the Agreement of Sale, did not spur him into honouring his side of the bargain.

This court has already found that Naran was an unreliable witness who was not worth to be believed. He contradicted the evidence of Thokozani Khumalo and Sibusiso Ndlovu. He did not end there. He sought to distance himself from his pleadings.

This court further finds, that, the probabilities favour the story that the plaintiff said he was not bound by the agreement, and, in any event, the house was overpriced and he could get a better house for that price in Illanda or Famona.

Here is why:

He did not want to pay the deposit in terms of the agreement. When he did so, after a month, he only paid $1.5 million instead of $2.4 million. He claimed to have lent Davis Sunganayi Mafurirano a sum of $1 million which sum he alleged had been applied to the purchase of the house. As far as he was concerned a total of $2.5 million had been paid.

It is important to note that Naran said he had offered to buy the house for $2.5 million.

Interestingly, after he had paid an amount equal to $2.5 million he made no further payment towards the purchase of the house despite a series of letters urging him to pay. He was simply unwilling to pay more than $2.5 million.

He denied being aware of any of the letters claiming that he had only become aware of them two weeks before the trial.

He was clearly untruthful.

This court also finds that Davis Sunganayi Mafurirano did not answer questions directly and was evasive. He tended to give unsolicited explanations, but, the court cannot go so far as classifying him as a witness who was not worth to be believed.

He was just a seller who had been disappointed by the buyer who had no respect for the agreement the parties had entered into.

The buyer drafted the Sale Agreement and stipulated conditions therein which he thereafter disregarded with impunity.

The Mafuriranos urgently needed the money to purchase a farm and business which explains why they continued to grant extensions of time within which to pay.

In conclusion, this court finds, in the light of the foregoing, that, the plaintiff stated that he was no longer prepared to be held to the contract of sale hence his unwillingness to make any further payments beyond the sum of $2.5 million thereby cancelling the agreement.

He is therefore not entitled to tender the sum of $3,800,000 plus interest.

He is, however, entitled to a refund of $1,500,000 plus interest calculated from 31 October 2001.

He is further entitled to compensation for proved improvements, if any, effected to the said property.

The plaintiff is to blame for the failure of the Agreement of Sale and should accordingly bear the costs of suit.

HH27-07 : EDWARD MARUME and ELLEN CHAMUNORWA vs TODD MURANGANWA
Ruled By: MAKARAU JP

This matter came before me in Motion Court as an application for default judgment in terms of Rule 58 of the High Court Rules, 1971.

The facts of the matter, as set out in the plaintiffs' affidavit of evidence, are as follows:

The plaintiffs are husband and wife. On 12 April 2005, they sold their rights, title, and interests in a certain piece of land in Budiriro Township in Harare. The agreement of sale was in writing.

It was a specific term of the agreement that the full purchase price would be financed from the proceeds of a staff loan to be advanced to the defendant from his employer.

It was also specifically agreed between the parties that the purchase price would be paid in full against the registration of a mortgage bond within 21 days of the signing of the Agreement of Sale.

On 13 July 2005, the 21-day period having long expired, the plaintiffs caused a letter to be sent to the defendant calling upon him to rectify the breach failing which the contract of sale would be considered cancelled.

In the letter, the plaintiffs also reserved to themselves the right to claim damages for the breach.

Unbeknown to the plaintiffs, the property had been transferred to the purchaser on 21 June 2005 - weeks before the letter of demand was sent.

Payment of the purchase price was only made on 2 August 2005 less certain deductions that were detailed in the letter from the conveyancers enclosing the cheque.

The cheque was sent back with a letter alleging that the Agreement of Sale had been cancelled and a reversal of the transfer would be sought.

On 3 March 2006, the plaintiffs issued summons against the defendant, claiming the sum of $366,503,000, being damages for breach of contract.

The summons was duly served personally on the defendant at his place of residence.

The dies induciae limited in the summons expired without the defendant taking any steps to defend the claim. The plaintiffs then applied for judgment, arguing that due to inflation, the amount of the cheque sent to them had been eroded by about 75%.

They further argued that the purchase price of the property was meant for an investment in a farming venture where the plaintiffs anticipated growing wheat for the 2005 season. Due to the delay in the payment of the funds, they missed their target and the tractor they intended to purchase had since increased in price.

In support of their claim, the plaintiffs attached a valuation report showing the value of the property as at 28 January 2006, months after the purchase price was tendered to the plaintiffs and months after the purchase price was due in terms of the Agreement of Sale.

When the matter was called up before me as an unopposed application for default judgment, I raised a number of issues with the plaintiffs' legal practitioners and requested him to file heads of argument to address those issues.

Heads were only brought to my attention on 29 March 2007, hence the delay in the handing down of the judgment.

Two issues have exercised my mind in this matter:

(i) Firstly, it is whether by allowing transfer of ownership in the property to pass to the defendant well aware of the breach, the plaintiffs can still claim damages based on the same breach....,.

It is common cause that the plaintiffs sent a letter placing the defendant in mora on 13 July 2005.

At the time, it is further common cause that the plaintiffs had passed transfer of the property sold to the defendant well knowing of the breach. Transfer of the property by the plaintiffs was performance of their side of the bargain under the Agreement of Sale.

It matters not, in my view, that transfer was effected by the conveyancers as such conveyancers were acting on a power of attorney drawn in their favour by the plaintiffs. Such power of attorney was not revoked - even after it became clear to the plaintiffs that the defendant had committed a breach of the terms of the contract of sale entitling them to cancel.

The plaintiffs' legal practitioners did not refer me to any authority where the performance of the contract by the aggrieved party, well aware of the breach by the other, still entitled the aggrieved party to claim for damages based on the same breach.

In my view, the conduct of the plaintiffs amounts to approbating and reprobating at the same time.

By allowing transfer to go through in the circumstances of this matter, the plaintiffs arguably gave out to the defendant that they had condoned the delay in the payment of the purchase price.

While I am of the firm view that the plaintiffs cannot rely on the breach by the defendant to claim damages in the circumstances of this matter, it is not necessary that I resolve the matter on this basis.

SC81-21 : FRANK HUMBE vs DESMOND MUCHINA and SPARKLES SERVICES (PVT) LTD and GODFREY MUNYAMANA and SHERIFF OF ZIMBABWE and FADZAYI MUNYAMANA
Ruled By: BHUNU JA, MATHONSI JA and KUDYA AJA

The appellant brought an urgent chamber application in the High Court for a stay of the execution of a judgment obtained by the first respondent against the second and third respondents on 12 February 2018 in the sum of US$352,851=30 together with interest and costs of suit.

By judgment delivered on 21 August 2020, the High Court dismissed the application with costs.

This appeal is against that judgment dismissing the appellant's urgent application.

THE FACTS

The third and fifth respondents, who are husband and wife, hold title to Stand 67 Guildford Estate Township of Subdivision H of Guildford of Borrowdale Estate, also known as No.67 Guildford Crescent, Borrowdale, Harare (the house) by Deed of Transfer Number 1447/2009.

On 15 November 2013, they entered into a Deed of Sale in terms of which they sold the house to the appellant for US$380,000 payable in certain instalments from 30 November 2013 to 30 June 2014.

There is no convergence between them as to whether the full purchase price was paid.

The appellant alleges having paid part of the purchase price through the sale of his own neighbouring house, through the agency of the second respondent, and part of it through the sale to the third respondent of his Mercedes Benz S Class motor vehicle.

The appellant alleges, further, that, although he failed to pay the cash balance of the purchase price in accordance with the agreement, he has however paid it in full.

On the other hand, the third and fifth respondents position is that the appellant defaulted in his payments, and, after giving him the requisite 30 days notice, in terms of the Deed of Sale, they duly cancelled the agreement.

Notwithstanding such cancellation, the appellant still sued the second, third, and fifth respondents in case number HC11367/15, which was filed on 20 November 2015, for an order compelling transfer of the house to himself and for their eviction from it.

The summons action in question was defended and does not appear to have been prosecuted with any zeal thereafter.

Appealed
SC110-21 : UPSET INVESTMENTS (PRIVATE) LIMITED vs CHITUNGWIZA MUNICIPALITY
Ruled By: GARWE JA, HLATSHWAYO JA and BHUNU JA

This is an appeal against the judgment of the High Court dismissing the appellant's claim for US$119,300 being the balance of the purchase price for a 20-tonne Hyundai Excavator sold and delivered by the appellant to the respondent.

In dismissing the appellant's claim, the court a quo upheld the respondent's counterclaim and ordered the appellant to refund US$140,000 to the respondent, being the deposit paid towards the purchase of the excavator and front-end loader.

The brief summary of the case

The facts giving rise to the claim and counterclaim are hotly contested. The brief facts of the case are that the respondent is a Municipal Council duly constituted as such in terms of the Urban Councils Act [Chapter 29:15], whereas the appellant is a company in the business of selling excavators and front-end loaders.

Sometime in 2014, the parties concluded a contract of sale of a twenty-tonne excavator. The terms of the contract are in dispute.

The appellant's claim is, that, sometime in 2014, it sold and delivered, in good working order, a refurbished 20-tonne excavator for US$209,300 at the respondent's instance and request. The purchase price was payable in instalments with an initial deposit of US$90,000 and the balance of US$119,300 payable on delivery.

The appellant's complaint is, that, despite effecting delivery at the respondent's premises, on 19 June 2014, the latter refused or neglected to pay the balance of the purchase price.

The respondent denies breaching the contract of sale as alleged or at all and has counterclaimed for a refund of the deposit it paid on account of defective performance.

Its defence is that, on 16 May 2014, it floated a tender for the purchase of a brand new twenty-tonne Tracked Excavator to the tune of US$182,000. The advertisement read:

“MUNICIPALITY OF CHITUNGWIZA TENDER NOTICE NO. 05/11

Tenders are hereby invited, in terms of section 211 of the Urban Councils Act (Chapter 29:15) from reputable and legally registered companies and institutions to provide specified brand new plant and machinery to the Municipality of Chitungwiza….,.

Supply and Provision of Specified Plant and Machinery

1. Jet Machine (high velocity clearing machine).

2. Tracked Excavator (30 tonne).

3. Front End loader (3 tonne).

Tender specifications are available at Chitungwiza Municipality Head Office.”

The appellant won the tender to supply the respondent with a brand new 20-Tonne Tracked Excavator at the cost price of US$182,000 and a brand new 3-Tonne Front End Loader at the cost price of US$105,000.

It was therefore a material term of the contract that the appellant was to deliver a brand new excavator and front end loader.

The appellant, however, in breach of contract, delivered a refurbished dysfunctional excavator.

It was also a material term of the contract that the respondent would pay US$140,000 deposit for both machinery and the balance upon delivery. The respondent paid the deposit in terms of the contract but the appellant, in breach of contract, delivered a pre-owned, dysfunctional excavator without the necessary accessories.

To date, the appellant has not delivered the brand new machinery in terms of the contract.

That being the case, the respondent counterclaimed for specific performance in terms of the contract, or, alternatively, a refund of the deposit of US$140,000 paid in anticipation of the fulfilment of the terms and conditions of the contract.

The respondent also claimed payment of damages in the sum of US$30,000 for breach of contract as well as storage charges at the rate of US$20 per day from the date of summons to the date of collection of the defective refurbished excavator.

The claims for damages and storage charges were not persisted with and are not the subject of this appeal.

Thus, the court a quo was left with only two issues for determination. The issues were defined at the pre-trial conference as follows:

“1(a) Whether or not plaintiff (appellant) should be compelled to deliver a brand new excavator.

OR ALTERNATIVELY

(b) Whether or not the defendant (respondent) is entitled to a refund of the deposit paid.

2. Whether or not the plaintiff (appellant) is entitled to payment of the outstanding amount.”

Determination of the two issues by the court a quo

Upon consideration of the evidence before it, the court a quo found, that, the appellant was guilty of breach of contract. It dismissed the appellant's claim and sustained the respondent's counter-claim. Consequently, it ordered as follows:

“In the result, I order as follows:

1. The plaintiff's claim is dismissed.

2. The plaintiff pays the defendant US$140,000, being the refund of the deposit paid by the defendant towards the purchase of the Excavator and Front End Loader.

3. The plaintiff pays to the defendant costs of suit.”

The Appeal

Aggrieved by the above order, the appellant appealed to this Court for relief on five grounds. The five grounds of appeal attack the judgment a quo basically on failure to appreciate the sufficiency of evidence and failure to apply the turquand rule in its favour.

Analysis of the Facts and the Law

It is clear right from the outset, that, the cardinal question to be answered is the validity and fulfilment of the contracts allegedly concluded by the parties. In simple terms, the court a quo had to determine whether the contract was for brand new or refurbished machinery.

The parties relied on different contracts for their competing claims.

The terms of the two contracts are incompatible and at variance with each other. The respondent relied on the tender as advertised in the Herald newspaper with a wide circulation in the area. The appellant, however, denied having responded to the notice floated in the newspaper. Its Managing Director, Darlington Chirara, testified that he responded to a different notice pinned on the notice board at the respondent's registry office. It was his testimony that the notice was a tender for the procurement of a refurbished twenty-tonne crawling excavator and a refurbished three-tonne front end loader.

The appellant's sole witness, Darlington Chirara, was however unable to verify or prove the existence of the notice he claimed to have responded to on behalf of the appellant. Under cross-examination by counsel for the respondent, this is what he had to say:

“Q. Do you have proof to show that there was such a notice?

A. I do not have any documentary evidence. I could not have removed the notice that was on the notice board because others were supposed to come and see that notice.”…,.

What the appellant said under cross examination is ample proof, that, apart from his mere say so, he has no evidence of the existence of the offer he says he accepted for the provision of refurbished second hand machinery.

It is trite, that, a valid contract is constituted by an offer and acceptance.

The appellant, by his own admission, failed to establish the existence of the tender for the provision of refurbished second hand machinery. The onus was on the appellant to establish the existence of all the essential elements of a valid contract. Failure to establish the existence of such tender, on the alleged terms and conditions, was fatal to its case as there can be no acceptance without an offer.

The respondent's version was, that, it tendered for the procurement of a brand new twenty-tonne excavator and three-tonne front end loader by floating a tender in the Herald Newspaper. After observing all the legal requirements and procedures, it awarded the appellant the tender, as amended for the acquisition of a twenty-tonne tracked excavator instead of a thirty-tonne as originally tendered. The appellant duly accepted the tender and undertook to perform the contract in accordance with the given terms and conditions.

The respondent proffered evidence of the described tender notice by producing a copy of the relevant Herald newspaper cutting. It further produced copies of the related minutes of the procurement Board duly constituted in terms of section 210 of the Urban Councils Act [Chapter 29:15]. The meeting was held at the respondent's offices on 17 September 2013. It was attended by the appellant's two directors, namely, S. Mlambo and D. Chirara, who were accompanied by its legal practitioner Mr Mucheriwesi of Mushangwe and Company Legal practitioners. The respondent was represented by its Chamber Secretary, Human Resources Manager, Deputy Finance Director of Works and a medical doctor.

The minutes of that meeting speak for themselves.

The record of proceedings captures the recommendations of the Procurement Board as follows:

“…, that the tenders for the tenders of the supply of new machinery/equipment be awarded as follows:

“1. Scotia Steel (Pvt) Limited – jet machine for US$119,113=50.

2. Upset Investments (Pvt) Ltd – Tracked Excavator, 20 tonne for US$162,000.

3. Upset Investments (Pvt) Ltd Front End Loader, 3–ton for US$105,000.”

The meeting, having been apprised of the recommendations of the Procurement Board, agreed that:

“Upset investments (is) to supply and deliver brand new equipment within 10 days after receipt of 50% deposit of the total value. Further, the Chitungwiza Municipality undertook to pay legal fees as the lawyer's invoice sic). All payments were to be made through Upset Investments lawyers, Mushangwe and Company Legal Practitioners.”…,.

The documentary evidence proffered by the respondent was corroborated in every material respect by oral evidence from four witnesses.

In its plea, in reconvention, before the court a quo, the appellant however gave the impression that it responded to an amended extended tender of the original advertised tender. It was its plea in reconvention, that, the amended tender did not require the provision of new machinery. Paragraphs 4 and 5 of its plea in reconvention read:

“Ad paragraph 4

It is denied, when plaintiff in reconvention advertised its tender, it was not won by its deadline. It was then extended and revised.

Ad paragraph 5

The defendant, in reconvention, will aver that it submitted its bid during the extension. According to the specifications, it was not a requirement that the excavator ought to be brand new. The tonnage of same was also reduced.

It affirms that the tender won by the defendant in reconvention is not the same with the one initially advertised as evidenced by the discrepancy in tonnage of the excavator.”

While the Procurement Board minutes record the amendment downsizing the weight of the excavator from 30 tonnes to 20 tonnes, there is no record of the amendment of the requirement for the provision of brand new machinery. On the other hand, the appellant contended, without proof, that it responded to a notice pinned on the respondent's notice board for the supply of refurbished second hand machinery.

It is noteworthy, that, the appellant vacillated between saying that it responded to a notice pinned on the notice board and saying that it responded to an amended tender revised notice. Such vacillation and inconsistency undermines the appellant's case.

The appellant's assertion, that the respondent offered to buy refurbished second hand machinery is not backed up by any proof of recommendations from the Procurement Board as is required by law.

Section 210(4) of the Urban Councils Act [Chapter 29:15] requires that any procurement of goods, materials, or services be subject to recommendations of the Procurement Board. The section provides as follows:

“A municipal council shall not procure any goods, materials, or services unless its municipal procurement board has made recommendations to the council thereon and the council has considered such recommendations.”

The section is couched in peremptory terms because it constitutes a prohibition coupled with the use of the mandatory term 'shall not'.

The appellant was unable to proffer any evidence of the Procurement Board having tendered for the procurement of second hand refurbished machinery. The evidence on record shows, that, before the full Council met to adjudicate over that tender, the then Town Clerk G. Tanyanyiwa, had, fifteen days earlier, written to the appellant advising him that he had won the tender to supply second hand refurbished machinery. The letter reads:

“Date 6/07/2011
Dear Sir/ Madam

REF: SUPPLY OF REFURBISHED TWENTY TONNE CRAWLING EXCAVATOR AND 3 TONNE FRONT END LOADER

Reference is made to the above.

You have been awarded the tender to supply the municipality with the above equipment. You are required to supply the equipment within 30 days from receipt of deposit which is going to be paid within the next 2 weeks. May you treat this order with urgency since there are disease outbreaks and we would like to use the equipment to arrest the spread of disease.”

It is needless to say, that, the above letter was false and in fact misleading, because, no such tender had been awarded by the respondent at that stage.

On the basis of the summation of the evidence in this case, no fault can be laid at the learned judge a quo's door for holding that the ruling contractual terms were as advertised in the Herald newspaper. The letter by G. Tanyanyiwa was pre-emptive and patently unlawful as he had no mandate to award such tender to the appellant without authority from Council.

In dealing with the unlawful and unbecoming conduct of G. Tanyanyiwa, the learned judge a quo had this to say:

“I do not believe that a Town Clerk's actions have the power to override the provisions that is (sic) peremptory. Therefore, the letter of Mr G. Tanyanyiwa, which was written on 6 July 2011, before the full Council meeting had been held on 21 July 2011, notifying the plaintiff that it had won the tender to supply refurbished machinery is therefore of no force or consequence. It does not bind the defendant. So the contract that was purportedly entered into and between the plaintiff and the defendant, pursuant to the letter which was written by G. Tanyanyiwa, is a nullity.”

In apparent concession that the Town Clerk acted unlawfully and unprocedurally, the appellant sought to rely on the Turquand rule in an attempt to sanitise and regularise G. Tanyanyiwa's unlawful and irregular conduct.

The Turquand rule is derived from the famous British case of Royal British Bank v Turquand 1856 199 ER 886.

In that case, the directors of the respondent company could borrow on behalf of the company under a company resolution. Two directors of the company signed a bond on behalf of the company, under the company seal, without the requisite company resolution. When pressed for payment, the company objected on the basis that the directors had signed without company resolution. The court held, that, when dealing with a corporate body, parties are not bound to do more than peruse the statutes of the company: and if the power to transact is given in the statute, then, the party so contracting has the right to infer that the authority to so contract on the part of the corporation has been perfected by the necessary resolutions.

In other words, a party contracting with a company is entitled to assume that all the internal procedures have been complied with, provided the company has the power to transact.

This case can easily be distinguished from Royal British Bank v Turquand 1856 199 ER 886 on two grounds:

(a) First, the respondent, being a Municipality, was expressly prohibited by section 210(4) of the Urban Councils Act from contracting without the necessary recommendations from the Procurement Board and approval from Council.

A statutory prohibition is mandatory and binding on the parties as everyone is presumed to know the law regardless of whether one has read and understood the law.

No such statutory prohibition bound the respondent in Royal British Bank v Turquand 1856 199 ER 886.

The finding by the learned judge in the court a quo, that the unsanctioned contract to provide refurbished machinery was a legal nullity, as it was prohibited by law, is beyond reproach.

The argument, that section 210 of the Urban Councils Act constitutes internal issues unbeknown to the appellant is therefore baseless and without any foundation at law. The respondent had therefore no capacity to transact in contravention of the law.

(b) Second, the letter written to the appellant by the Town Clerk, G. Tanyanyiwa, conveying the message that the appellant had won the tender to supply the machinery was false in fact and misleading. It was written without Council authority fifteen days before the adjudication of the tender. The letter was fraudulently calculated to prejudice other bidders, and the respondent, because it was meant to abort the whole purpose of the tender to identify the most suitable bidder for the supply of the advertised new machinery.

As correctly observed by the learned judge a quo, the Turquand rule cannot override a statutory prohibition. This is for the simple reason that the rule was not designed to promote and perpetuate illegality. It is meant to protect gullible members of the public who innocently contract with company agents oblivious of their failure to observe internal procedures.

Reliance on case law where the rule was applied in our jurisdiction was therefore misplaced, because, in this case, the purported contract was void ab initio and a nullity at law on account of fraud and statutory prohibition.

In this case, no contract came into existence because there was no meeting of the minds regarding the object of the sale.

The respondent intended to purchase brand new machinery whereas the appellant was bent on providing refurbished second hand machinery. It is clear that both parties did not intend to contract on the basis of each other's terms.

Consensus being the essence of contract there can be no contract in the absence of agreement on all material terms of the contract. In the absence of agreement on the nature and quality of the object of the intended sale no binding obligations came into being.

In the absence of a valid enforceable contract, the learned judge a quo cannot be faulted for dismissing the appellant's claim for payment of the balance of the purchase price of a non-existent contract.

Turning to the respondent's counter-claim, it is clear that it paid the deposit of US$140,000 in anticipation of a valid contract that never came into being. The obligation to refund the deposit paid is a natural consequence of the respondent's failure to supply the brand new machinery in terms of the respondent's offer.

No dispute arose regarding the appellant's right to collect his unwanted refurbished excavator.

In the result, the appeal can only fail. It is accordingly ordered as follows:

1. The appeal be and is hereby dismissed.

2. The appellant shall bear costs of the appeal.

View Appeal
HH100-17 : UPSET INVESTMENTS (PRIVATE) LIMITED vs CHITUNGWIZA MUNICIPALITY
Ruled By: MUREMBA J

The plaintiff issued summons claiming the following:

“(i) Payment of the sum of US$119,300 being the remaining balance of the agreed purchase price for one x 20 Tonne Hyundai Excavator, sold and delivered by the plaintiff to the defendant, at its specific instance and request.

(ii) Interest at the prescribed rate calculated from the date of delivery, being 19th of June 2014, to the date of full payment.

(iii) Costs of suit on a legal practitioner and client scale.”

In its declaration, the plaintiff averred the following:

In 2011, the parties entered into a procurement contract in which the defendant ordered one by 20 tonne hydraulic excavator from the plaintiff. The agreed purchase price was US$209,300 inclusive of VAT. The defendant was obliged to pay 50% deposit towards the purchase price. The remaining balance was payable upon delivery of the excavator.

In partial fulfilment of the agreement, the defendant paid, in instalments, the sum of US$90,000 as part deposit to the agreed purchase price.

The plaintiff accordingly delivered the excavator on 19 June 2014 which delivery was accepted. The excavator was accepted in good working order by the defendant at its premises.

The defendant has, despite demand, refused or neglected to pay the outstanding balance of US$119,300....,.

To the merits, the defendant averred, that, the plaintiff delivered a defunct Hyundai Excavator contrary to the undertaking that it made that it would deliver a new excavator. It had to incur unnecessary costs in having the excavator checked by an independent company. The defendant averred, that, it will only effect payment of the balance after delivery of a brand new and properly functioning machinery.

The defendant also made a counter claim. It averred the following:

On 16 May 2014, it advertised a Tender Notice in the Herald newspaper in terms of section 211 of the Urban Councils Act [Chapter 29:15]. The notice was inviting tenders for the supply of brand new machinery, viz:

(i) One Jet machine Chigu Velocity clearing machine.

(ii) One Tracked Excavator 30 tonne.

(iii) One Front End Loader.

On 18 July 2011, the defendant in reconvention won the tender to supply it with a 20 tonne Tracked Excavator and a 3 tonne Front End loader. It was a term of the agreement that:

(a) The defendant in reconvention would deliver a brand new excavator and a brand new front-end loader.

(b) The plaintiff in reconvention would pay the deposit of the agreed purchase price before delivery of the machinery.

(c) The plaintiff in reconvention would pay the outstanding purchase price upon delivery of the machine.

The plaintiff in reconvention paid the initial deposit to the defendant in reconvention on 29 January 2014 in the sum of US$140,000. On 19 June 2014, the defendant in reconvention delivered a dysfunctional excavator in breach of the agreement terms.

It has refused and failed to deliver a brand new machinery.

The plaintiff in reconvention has been prejudiced by the breach. The plaintiff in reconvention is entitled to specific performance of the agreed terms of the contract. Alternatively, it is entitled to restitution of US$140,000 being the deposit paid as part of the purchase price and damages for breach of contract. Consequently, it claims for:

“(a) An order compelling the defendant in reconvention to deliver brand new excavator and Frond End loader to the plaintiff in reconvention in terms of the agreement.

(b) Alternatively, an order compelling defendant in reconvention to pay the sum of US$140,000 being the deposit paid as part of the purchase price.

(c) An order compelling defendant in reconvention to pay US$30,000 as damages for breach of contract.

(d) An order compelling defendant in reconvention to pay US$20 per day from date of summons to date of collection being storage fees for the excavator.

(e) An order compelling defendant in reconvention to pay interest at the rate of 5% per annum from the date of demand to date of payment in full.

(f) Costs of suit on a legal practitioner client scale.”

The defendant in reconvention pleaded as follows to the counter-claim:

When the plaintiff in reconvention advertised its tender notice, the tender was not won by the deadline. The tender notice was then revised and extended.

It (the defendant in reconvention) submitted its bid during the extension.

According to the specifications of the re-advertised tender notice, it was not a requirement that the excavator be brand new. Even its tonnage had also been reduced. The tender that was won by the defendant in reconvention was not as per the initially advertised tender notice as evidenced by the discrepancy in tonnage of the excavator.

The defendant in reconvention averred, that, at all material times, the plaintiff in reconvention was fully aware that the excavator to be supplied would be pre-owned.

When the excavator was delivered, it was inspected by all responsible authorities and then certified to be in good working condition. The parties did not agree that the machinery to be supplied would be brand new.

The defendant in reconvention prayed for the dismissal of the counter claim with costs on a higher scale.

In its replication, the plaintiff in reconvention averred the following:

The excavator was supposed to be new. It disputes that the tender that was won by the defendant in reconvention was not the one that was initially advertised. The defendant in reconvention was paid the deposit for both the excavator and front end loader after a meeting was subsequently held. It disputes that the excavator that was delivered was in good working condition.

At the pre-trial conference, the parties agreed that the issues for trial were:

1(a) Whether or not the plaintiff should be compelled to deliver a brand new excavator; or, alternatively

1(b) Whether or not the defendant is entitled to a refund of the deposit paid.

2. Whether or not the plaintiff is entitled to payment of the outstanding amount.

To prove its case, the plaintiff led evidence from one witness, Darlington Chirara, who is its Managing Director since 2007.

His evidence was as follows:

In June 2011, he went to Chitungwiza Municipality head office chasing after his payment. At the Registry section notice board there was a tender notice asking for a refurbished 20 tonne Crawling Excavator and a 3 tonne Front End loader. Tender documents were going for US$5,000.

He went back the next day and bought the tender documents which included a tender form which was supposed to be filled in duplicate and attached to the quotation. He filled in the tender form for the excavator and attached it to his quotation and had them stamped by the defendant's registry section on 9 June 2011 on receipt.

The tender document, together with the tender form and the quotation, were produced as exhibit(s) 4 and 5…,.

The tender reference number for the supply of the excavator is CH.05/11.

Darlington Chirara said, that, on the tender form, he filled in the condition of the machinery as a 200g Model, a Hyundai Model which had already done 2,972 hours as it was a second hand. Its under-carriage life percentage was 76% meaning that 24% was already worn out or gone because of use.

He said that in exhibit 5, which is the quotation, he quoted a 20 tonne excavator valued at $182,000.

He said that, on 7 July 2011, he received a letter from the defendant saying that the plaintiff had won the tender to supply a refurbished 20 tonne excavator and a 3 tonne front-end loader.

The letter was produced by consent as exhibit 6 in the supplementary bundle.

The letter was written on 6 July 2011 to the directors of the plaintiff, by G. Tanyanyiwa, who was the then Town Clerk. It is on the defendant's letter head. It reads:

“REF: Supply of refurbished 20 tonne Crawling Excavator and 3 tonne Front Loader

Reference is made to the above.

You have been awarded the Tender to supply the Municipality with the above equipment.

You are required to supply the equipment within 30 days from receipt of deposit which is going to be paid within the next 2 weeks.

May you please treat this order with urgency since there are disease outbreaks and we would like to use the equipment to arrest the spread of diseases.”

Darlington Chirara said, that, in August 2011 the plaintiff received a purchase order and a transfer copy of the RTGS from Metropolitan Bank dated 24 August 2011 showing that the defendant had paid the 50% deposit as per the plaintiff's request in the quotation.

The purchase order was produced as exhibit 7…,.

It is dated 18 July 2011, but it was signed on 1 August 2011. It is for the purchase of a tracked excavator 20 tonne for US$182,000.

The RTGS, exhibit 8…, shows that it is dated 24 August 2011 for US$91,000, for the benefit of the plaintiff by the defendant. However, on top of the date stamp it is crossed and written “not processed.”

Darlington Chirara said, that, to the plaintiff's surprise, the money never came through. It was only paid after the plaintiff had issued summons.

The defendant finished paying the deposit for both the excavator and the front loader in February 2014. $90,000 was paid for the excavator and $50,000 was paid for the front-end loader.

He then delivered a 20 tonne excavator on 19 June 2014.

On delivering the machinery, he saw the Director of Works, Mr Gwanzura, who called the now current Town Clerk, Mr George Mukunde, who in turn called seven (7) councillors who were there. They came and inspected it and then instructed the Chief Internal Auditor, Mr Chipunza, to accompany him to the workshop with the machine. At the workshop they saw Mr Musiwa and the Workshop Foreman who inspected the machine and tested it for almost two (2) hours. After that, they signed the delivery note, which was produced by consent as exhibit…,.

The delivery note shows, that, it was signed by one Innocent on behalf of the defendant and it states, that, the machinery was received in good working order.

Darlington Chirara said that the machinery had tips and a cigarette lighter. The fuel gauge and the wipers were working.

On the tender form, he had stated, that, the machinery which was going to be supplied was a 7 series model i.e. 210 LC-7.50. He said that the defendant knew from the onset about the type of machinery that was going to be supplied.

He said the defendant even had the Ministry of Local Government, Public Works and National Housing write a letter to ZIMRA indicating that it (the defendant) had been granted a duty free certificate to facilitate the delivery of a Robex 210 LC-7H Hyundai Excavator valued at US$182,000.

It was signed on 14 April 2014. The letter was produced by consent as exhibit 12…,.

Darlington Chirara said that after delivering the excavator, on 19 June 2014, he was then furnished with a report, dated 11 July 2014, from the defendant, listing the defects it said it found on the excavator.

He said that he was disputing all of them.

He said that he was not even aware of the qualifications of the person who did this report, but he suspected that this person was an interested party in the same business as the plaintiff, because, after issuing the report, he went on to issue a quotation to supply the same machinery to the defendant.

He said that when he delivered the excavator it was in good working order.

When the inspection was done and the report was compiled, three (3) weeks later, no one from the plaintiff's company was present. The plaintiff was not made aware of the inspection.

He said that there was need for him to train the defendant's employees on how to operate the machinery. He said that in his quotation he had indicated that he would provide Basic Operator Orientation under the heading “Handover”. He said that he has not yet trained them because he has not been paid the outstanding amount.

During cross examination, the witness said that he did not respond to the Tender Notice which was flighted in the Herald Newspaper, but the one on the notice board of the Registry section at the defendant's headquarters.

He said he did not have proof of such since it was on the notice board.

He admitted, that, the delivery note that was signed by Innocent, on behalf of the defendant, was prepared by the plaintiff.

He disputed that the excavator was not inspected on delivery as it was inspected by the defendant's employees and signed for by Innocent as to have been received in good working order.

He said that he would have done the commissioning of the excavator once the purchase price had been paid in full within seven (7) days from the date of delivery.

He was shown minutes of a meeting which was held on 17 September 2013 between the plaintiff's directors and the defendant's management. These minutes were later produced by the defendant as exhibit 20…,.

He admitted that he attended that meeting.

Although in those minutes it is stated, that, it was agreed that the plaintiff would supply and deliver brand new equipment, Darlington Chirara disputed this saying that these minutes were not a true record of what was agreed on.

He said that these minutes were prepared by the defendant.

He maintained, that, when he delivered the machinery, it had no defects and US$182,000.00 was its value.

He said that the minutes were not sent to him before they were confirmed.

Referring to exhibit 10…, which is a letter which he wrote to the defendant's Town Clerk, on 22 August 2011, he said that it was the defendant which was supposed to prepare the tender contract between the parties but it was never prepared.

He said that, instead, the defendant furnished the plaintiff with a purchase order.

During the defendant's case, Mary Mukonyora, who is its Acting Chamber Secretary testified as follows:

The Tender Notice by the defendant, inviting tenders to supply an excavator and a front end loader, was placed in the Herald Newspaper. The closing date which was set for the submission of tenders was 31 May 2011.

The Tender Notice was produced as exhibit 13…,.

It shows, that, the defendant advertised for the supply of a 30 tonne excavator and a 3 tonne front-end loader.

The witness said, that, on 23 June 2011, there was a procurement meeting that was held by the Procurement Committee, and, in that meeting, the Procurement Committee recommended the awarding of the tender for the supply of the excavator and front end loader to the plaintiff.

The minutes were produced as exhibit 14…,.

These minutes show, that, the plaintiff was accorded the tender to supply a 20-tonne Tracked Excavator for US$182,000 and a 3-tonne Front End Loader for US$105,000. However, it was specified that the machinery was supposed to be new.

The minutes also show, that, the Town Clerk, Mr. G Tanyanyiwa, was in attendance of the meeting.

The witness said, that, these recommendations were being made to the full Council which later held its meeting on 21 July 2011.

The minutes of the full Council meeting were also produced by consent as exhibit 15…,.

They show that G Tanyanyiwa, the Town Clerk, was in attendance again.

The full Council adopted the recommendations of the Procurement Board on the award of tenders for the supply of the machinery.

Mary Mukonyora said, that, when the plaintiff then delivered a second hand excavator, the new Town Clerk, Mr. G. Makunde, wrote to the plaintiff, on 11 July 2014, raising the issue.

The letter was produced as exhibit 16…,.

In that letter, Mr Makunde stated, that, the defendant noted with great disappointment that the excavator was second-hand.

The witness said, that, according to an expert the defendant engaged, the machinery was not in good working condition.

The report that was compiled by the expert was produced as exhibit 19…,.

It enumerates about 19 defects and states that key accessories were missing. It states that the machine is an old machine that was repaired and resprayed.

The witness disputed that the Tender Notice was ever flighted on the Registry notice board for the supply of a refurbished excavator.

She said, that, from the time the excavator was delivered, it has never been used by the defendant. It is at the defendant's workshop.

The witness also made reference to the minutes of a meeting which was held on 17 September 2013 involving the directors of the plaintiff and the defendant's management.

These minutes were produced as exhibit 20…,.

They show, that, the meeting was held following the issuance of summons by the plaintiff for breach of contract; in that the defendant had not paid the deposit for the supply of the machinery by the plaintiff despite the plaintiff having won the tender in 2011. The plaintiff was suing for damages for breach of contract or for the payment for the equipment since the machinery was already there.

The minutes show, that, the parties agreed that the defendant would pay for the machinery and the plaintiff was to supply brand new equipment after payment of 50% deposit of the total value.

During cross-examination, the witness said that she got employed by the defendant on 1 October 2012 as Head of Human Resources, and, in 2015, she assumed the position of Acting Chamber Secretary.

She admitted, that, the letter notifying the plaintiff of having won the tender to supply a 20 tonne refurbished excavator and a 3 tonne front end loader, which was written by G. Tanyanyiwa, the then Town Clerk, on 6 July 2011 (exhibit 6) and the minutes of the Procurement Board recommending that the plaintiff supplies a 20 tonne excavator and 3 tonne front end loader were consistent.

She said that she, however, doubted the authenticity of the letter of G. Tanyanyiwa. She said that she doubted if it was genuine.

She, however, admitted, that, other than this document which was written by G. Tanyanyiwa, there is no any other document from the defendant which notified the plaintiff of having won the tender.

She also said, that, she sent the minutes of 17 September 2013 to the plaintiff for authentication, but, admitted that she had no evidence to prove that she had indeed sent the minutes for confirmation.

She said that Innocent, who received the excavator on behalf of the defendant and signed the delivery note, is not an expert in such machinery, but is just a clerk who works at the Stores department.

She said that the machine had not even been commissioned, yet, its standard practice to have equipment demonstrated to be in good working order.

She said that all the defendant's Tender Notices are done through the newspapers.

She, however, explained, that, if all tenderers say they can supply a 20 tonne excavator instead of a 30 tonne excavator which would have been advertised for, the defendant can make adjustments and accept the supply of a 20-tonne.

She said that the excavator was received by the defendant on 19 June 2014. It was inspected by the expert on 30 June 2014. The letter of complaint to the plaintiff, about the defects on the excavator, was written on 11 July 2014.

She said that the tender number on the Tender Notice which was flighted by the defendant is 5/11, yet, on the tender documents that the plaintiff submitted quoted the tender number as CH/05/11. She said that showed that the plaintiff was responding to a different Tender Notice than the one advertised in the Herald Newspaper with a deadline for submissions of 31 May 2011.

George Makunde, the current Town Clerk of the defendant, testified as follows:

He said that he joined the defendant in August 2012 and got to know about this case through a perusal of the defendant's documents.

He outlined the procedure that is followed by the defendant in procuring equipment.

He said that a Tender Notice is flighted in a national newspaper guided by section 30 and 31 of the Procurement Act [Chapter 22:14] inviting the submission of tenders. The Procurement Committee/Board then deliberates on the submitted tenders and makes recommendations in terms of the award of the tender to the winner of that particular tender. The recommendation is made to a formally constituted full Council of the defendant in the form of a report. Full council then makes a resolution on the issue which resolution then allows or authorises the Town Clerk, as the Chief Executive Officer or Accounting Officer, to then notify the winning tenderer for the provision of the goods or service so required.

The witness alluded to the Tender Notice that was flighted by the defendant; the minutes of the Procurement Committee of 23 June 2011; and the minutes of the full Council meeting of 21 July 2011 that Mary Mukonyora referred to in her evidence.

His evidence on all these documents was similar to that of Mary Mukonyora in all material respects.

He also reiterated that the tender required that the plaintiff supplied a brand new 20 tonne excavator and a 3 tonne front-end loader.

He disputed that the excavator that was delivered was in good working order saying that although he saw the excavator on the day it was delivered, he did not inspect it to satisfy himself that it was in good working order as he lacked the expertise in testing the machinery.

He said that inspection of machinery is contained in the regulations that guide procurement and it is a process and not an event.

He also said that Innocent, the clerk who received the machinery, has no qualifications to test its condition.

He said that the excavator was not able to perform its obligations and was never used by the defendant.

The witness said that he suspected that the letter that was written by the then Town Clerk, G. Tanyanyiwa, on 6 July 2011, notifying the plaintiff that it had won the tender to supply a refurbished excavator and front-end loader was as a result of a collusion between Mr. Tanyanyiwa and the plaintiff because it was written before the full Council of the defendant had made a resolution on 21 July 2011 to award the tender as per recommendations by the Procurement Committee which had set on 23 June 2011.

The witness evidence with regards to the minutes of 17 September 2013 (exhibit 20) was similar to the evidence that was given by Mary Mukonyora. He also testified, that, in that meeting, it was agreed that the plaintiff would supply a brand new excavator and a brand new front end loader, but, the plaintiff did not deliver brand new machinery.

During cross examination, the witness explained, that, receiving machinery on its delivery and commissioning of the machinery are two different things.

He also explained that the delivery note that was signed by Innocent, the defendant's employee, is a document which was prepared by the plaintiff and it already had the words “received in good working order” printed on it and all that Innocent did was to affix his signature after those words.

It is not Innocent who wrote those words.

He said that, initially, it was the transport personnel who observed that the excavator was second hand and this prompted the defendant to invite an expert, Nicnel, to come and inspect it.

Before that, Automobile Association of Zimbabwe (AAZ) had been called to come and check if the equipment was new.

He explained that the defendant never invited the plaintiff to be in attendance because, in business ethics, you would not want to give the impression that you are dealing with a dubious institution. He said that the defendant wanted to satisfy itself about the excavator hence it called in the Automobile Association of Zimbabwe (AAZ) to inspect it.

The witness said that the plaintiff gave them the price of US$182,000 for an old excavator yet Nicnel gave the defendant a quotation for a new excavator from Hyundai going for US$159,275 on 30 June 2014. He said that although the models are different the disparity in prices showed that the plaintiff was not dealing with the defendant in good faith.

Ryan Edward Berry testified as follows:

He is and has been employed by Nicnel Plant and Equipment (Private) Limited as the Technical Sales Manager for four (4) years now.

He was called by the defendant to inspect the excavator which is in issue.

He noticed that it was a second-hand, having done over 6,000 hours yet the meter read that it had only done 6 hours. The bucket had no tips similar to a car delivered with no tyres. The engine pipes were damaged from the breather which would allow dust to enter if the engine was to run for an extended period. The machine could start and run, but it could not perform its functions properly because it did not have tips and the engine was in a poor state of repair.

He said that the excavator is an LC-7 model, which is an old model which was manufactured until 2012, but a 9 model was manufactured from 2012 onwards.

About his qualifications, he said that he has “O” Level with technical experience from being on the job for about eight (8) years in the industry.

He said that because of this, he took a technician with him to inspect the machine.

He said that as the Sales and Technical Manager, he oversees his technicians using their expertise.

He said that Wency is the technician who inspected the machine as he (witness) filled out the report. However, he admitted that his name does not appear on the report. He said that Wency refused to come to court as he had been phoned, harassed, and intimidated.

He admitted to supplying his own quotation for an excavator to the defendant - on the same day of 30 June 2014 the excavator supplied by the plaintiff was inspected.

Analysis of Evidence

It is necessary to first determine whether or not the parties entered into a contract for the supply and delivery of brand new or refurbished machinery.

Having listened to the evidence given by the witnesses of both parties, it is clear that there is a dispute as to which Tender Notice the plaintiff responded to when it submitted its tender documents and quotation to the defendant's registry section on 9 June 2011.

This is because although the defendant's witnesses said that the response was to the Tender Notice it flighted in the Herald Newspaper with a deadline for submissions of the tenders of 31 May 2011, the defendant's date stamp on the plaintiff's tender documents show that they were received by the defendant's registry section on 9 June 2011 and the Tender Notice reference number that is quoted which is CH/05/11 is different from the Tender Notice reference number which is on the Tender Notice that was flighted in the Herald Newspaper by the defendant.

Whilst the plaintiff's witness said that the plaintiff was responding to a revised Tender Notice that was flighted on the defendant's registry notice board, he did not furnish the proof thereof saying, that, since the tender notice was on the notice board he could not get a copy thereof as other people also needed to see the notice.

However, despite this explanation by the plaintiff, I am convinced by the evidence which was given by the defendant's witnesses, that, the defendant flights tender notices in the national newspapers and not on notice boards.

They made reference to the provisions of the Procurement Act [Chapter 22:14] which Act makes provision for the procurement of goods, construction work, and services by the State and statutory bodies.

Section 30(1)(a) of the Procurement Act states, that, the procurement of goods, construction work, and services by a procuring entity shall be done by means of tendering proceedings in accordance with section 31.

Section 31(1)(a)(ii) of the Procurement Act [Chapter 22:14] then reads:

“Subject to this Act, in any tendering proceedings conducted by a procuring entity, the invitation to suppliers to tender shall be published in a newspaper circulating in the area in which the procuring entity has jurisdiction or carries on business, where the procuring entity is not the State.”…,.

The use of the word 'shall' in section 31 of the Procurement Act means that it is peremptory for the Tender Notice to be flighted in a national newspaper.

I also looked at section 211(1) and (2) of the Urban Councils Act [Chapter 29:15] which deals with tender proceedings by municipals. It reads;

“211 Tenders

(1) In this section —

'municipal procurement board' means a municipal procurement board appointed by a municipal council in terms of section two hundred and ten.

(2) Subject to subsections (8) and (9), before entering into a contract for the execution of any work for the council or the supply of any goods or materials to the council which involves payment by the council of an amount exceeding such sum or sums as may be prescribed, the council, or, in the case of a municipal council, the municipal procurement board shall call for tenders, by notice posted at the office of the council and advertised in two issues of a newspaper…,.”…,.

Whilst in terms of the Urban Councils Act a tender notice shall be posted at the office of the municipal council, it should also be advertised in a newspaper.

The defendant must therefore flight tender notices in accordance with the provisions of the Procurement Act and the Urban Councils Act.

If the defendant only flighted a tender notice on its notice board and did not do so in the newspaper it did not comply with the law.

However, if this is what happened, the plaintiff ought to have produced proof of the advertisement of such tender notice.

In the absence of such proof, I am led to conclude, that, the plaintiff's director was not being honest with the court about having seen such a tender notice on the notice-board of the defendant on 8 June 2011. Such advertisement would not have been in compliance with section 31 of the Procurement Act and section 211(2) of the Urban Councils Act.

Besides, the defendant has no such tender notice in its files or records.

He who alleges must prove and the plaintiff failed to prove the existence of Tender Notice CH.05/11.

The only tender documents that were produced are those that came from the plaintiff which were said to be its copies.

The defendant's witnesses had no knowledge that the Tender Notice 05/11, which had a deadline of 31 May 2011, was ever revised and extended. There is nothing that shows that in the defendant's records.

With this, I am not satisfied that Tender Notice 05/11, which was flighted by the defendant in the Herald Newspaper, was ever revised and extended.

In any case, it defies logic that the defendant, a municipality, would invite tenders for the supply of second hand machinery. I cannot think of a reason why it would do that.

What is disturbing about this case is that, on 23 June 2011, when the defendant's Procurement Committee/Board set and recommended, in its report to full Council, that the tender for the supply of a brand new excavator and front end-loader be awarded to the plaintiff, Mr G. Tanyanyiwa, the then Town Clerk, was in attendance.

In terms of procedure, the recommendation was subject to adoption as a resolution by a full Council meeting. Such a meeting was only held on 21 July 2011.

The Town Clerk, Mr. G. Tanyanyiwa, even attended that meeting as well.

At that meeting, full Council passed a resolution that the plaintiff be awarded the tender to supply a brand new excavator and front end loader.

What is buffling is that, on 6 July 2011, well before full Council had sat, Mr. G. Tanyanyiwa wrote to the plaintiff notifying it that it had won the tender to supply a refurbished excavator and frond-end loader.

Two questions arise:

(i) Firstly, why did he notify the plaintiff that it had won the tender before full Council had held a meeting to pass the recommendation as a resolution?

(ii) Secondly, why did he tell the plaintiff that it had won the tender to supply refurbished machinery?

These queries or questions show that the then Town Clerk was not conducting himself properly in the discharge of his duties.

This is worsened by the fact, that, he was in attendance at the full Council meeting which was later held on 21 July 2011 which adopted the recommendations of the Procurement Committee/Board which stated that the plaintiff was to supply brand new equipment.

When the adoption of the recommendation was made, he knew that he had already notified the plaintiff that it had won the tender to supply refurbished equipment - but he did not inform the Council.

Obviously, that is a sign that he knew that what he had done was improper.

This is further evidenced by the fact, that, after full Council had passed the resolution to award the tender to the plaintiff, he did not write a letter notifying the plaintiff about it as he was supposed to do as per procedure.

The critical question now is: is the defendant bound by the irregular conduct of its employee, the Town Clerk, who told the plaintiff that it had won the tender to supply refurbished machinery when in fact it wanted to be supplied with brand new machinery?

The plaintiff's counsel submitted, that, by virtue of the turquand rule, the defendant is bound.

I must point out from the onset, that, the turquand rule is a principle of company law.

In terms of the turquand rule, if a party transacts with a company only to later discover that the director lacked the authority to bind the company, the company may be forced to honour the transaction if the transaction was completed in good faith by the other party.

The rule is based on the English case of Royal British Bank v Turquand 1856 119 ER 886, wherein it was held, that, people transacting with a company are entitled to assume that internal company rules have been complied with even if they are not. The exceptions to this rule are:

(i) Firstly, if the outsider was aware of the fact that the internal requirements and procedures have not been complied with (in other words, he acted in bad faith).

(ii) Secondly, if the circumstances under which the contract was concluded on behalf of the company were suspicious.

Counsel for the plaintiff went on to cite the case of Potchefstroom se Stadsraad v Kotze 1960 (3) SA 616 AA…,. The case involved a municipality. The turquand rule was held to be applicable to municipalities.

In that case, the Town Clerk, just like in this case, had written a letter to the respondent cancelling the lease agreement between the municipality and the respondent when the municipality had not authorised the cancellation of the lease agreement. The municipality was now demanding money for rent from the respondent and a dispute arose as the respondent refused to pay saying that the lease agreement had been cancelled. The court held that:

“A municipality, in the normal exercise of its functions, necessarily concludes contracts with members of the public. It would be unbusiness-like if the respondent had been duly bound, when he received the Town Clerk's letter, to make enquiries to ensure that the Town Clerk was in fact authorised by the Town Council to convey the cancellation.”

Applying the law to the present case, counsel for the plaintiff submitted, that, the internal workings of Council are not known to the plaintiff, and, as such, there is a presumption of regularity in the adherence to Council procedures which makes it impossible for the defendant to escape liability on the basis that Mr. Tanyanyiwa had not been authorised by the defendant to write the letter that he wrote on 6 July 2011.

To begin with, with all due respect, I am not in agreement with the reasoning in Potchefstroom se Stadsraad v Kotze 1960 (3) SA 616 AA that the turquand rule is applicable to municipalities.

I see no basis for saying that.

Municipalities and companies are different entities.

In terms of section 131 of the Urban Councils Act [Chapter 29:15], a Town Clerk is an employee of the defendant (municipality) and his duties are outlined in section 136. These involve the administration of council, managing operations and property of council, supervise the activities of council employees, and any other duties that may be assigned to him by the Council.

The Urban Councils Act does not give the Town Clerk powers to take over the functions of Council when it comes to procurement issues and make binding decisions on its behalf.

The Urban Councils Act has provisions which deal with how goods and services are procured and those provisions are worded in peremptory terms as they use the words 'shall' and 'shall not'.

In terms of section 210(1) of the Urban Councils Act, every municipal council shall appoint a Procurement Board which is responsible for arranging tenders and for making recommendations to Council in regard to the acceptance of tenders and the procurement of goods, materials, and services.

In terms of section 210(4) of the Urban Councils Act:

“A municipal council shall not procure any goods, materials, or services unless its municipal procurement board has made recommendations to the council thereon and the council has considered such recommendations.”…,.

I do not believe that a Town Clerk's actions have the power to override the wording of the provisions that is peremptory.

Therefore, the letter of Mr. G. Tanyanyiwa, which was written on 6 July 2011, before the full Council meeting had been held on 21 July 2011, notifying the plaintiff that it had won the tender to supply refurbished machinery is therefore of no force and consequence. It does not bind the defendant.

So the contract that was purportedly entered into by and between the plaintiff and the defendant pursuant to the letter which was written by G. Tanyanyiwa is a nullity.

Assuming that the turquand rule is applicable to municipalities, as was held in Potchefstroom se Stadsraad v Kotze 1960 (3) SA 616 AA, it would not be proper to hold the municipality bound by the actions of a Town Clerk because a Town Clerk is not a functionary of the municipality but an employee.

A councillor, instead, would bind the municipality because a council is run by councillors, not by its employees.

I would equate a councillor to a director of a company.

In terms of the turquand rule, an employee of a company does not bind the company if he purports to act on behalf of the company.

So, in the present case, even assuming that the Tender Notice was properly advertised, the letter that was written by the then Town Clerk, Mr. G. Tanyanyiwa, would not bind the defendant because he had no authority to enter into contracts on behalf of the defendant as he was not a councillor, but just an employee.

In any case, even if the turquand rule was applicable, and even if the defendant, as a municipality, was bound by the actions of its Town Clerk, looking at the circumstances of this case, I would make a finding that the parties did not enter into a valid contract.

I say this because this is a contract which is supposed to be based on a tender notice which should have been properly advertised in terms of the Procurement Act and the Urban Councils Act.

Section 211(2) of the Urban Councils Act states, that, before entering into a contract for the execution of any work for the Council or the supply of any goods or materials to the Council, the Council shall call for tenders, by notice posted at the office of the Council and advertised in two issues of a newspaper.

The plaintiff was not able to produce the revised tender notice CH.05/11 which it said it responded to.

Since the defendant was disputing its existence, the plaintiff ought to have produced it to show that the contract which was entered into was entered into in compliance with the law.

The only tender notice that was produced is the one referenced 05/11, with a closing date for the submission of tenders of 31 May 2011, which the defendant is saying it is the only one it flighted in the Herald Newspaper.

The plaintiff's tender documents were submitted to the defendant's registry section on 9 June 2011 according to the date stamp on them. They were submitted way out of time - after the deadline of 31 May 2011.

To make matters worse, they only bear the date-stamp, but bear no name of the registry person who received them.

Mary Mukonyora even queried their authenticity on this basis alone.

I also query their authenticity.

It is my conclusion, that, these tender documents were submitted on the basis of a non-existent tender notice.

On this basis, alone, any contract that flowed from it is a nullity as it has no leg to stand on.

Clearly, the circumstances under which the contract was concluded are suspicious. This is even worsened by the fact, that, G. Tanyanyiwa, as the Town Clerk, mero motu wrote a letter to the plaintiff well before full Council had passed the resolution that the tender be awarded to the plaintiff.

To make matters worse, contrary to the recommendations of the Procurement Board, he said that the plaintiff had won a tender to supply refurbished machinery.

What this shows is that both Darlington Chirara, the director of the plaintiff, and G. Tanyanyiwa, the Town Clerk, were probably acting in connivance and were probably involved in underhand dealings because their actions are highly suspicious.

In light of the foregoing, I thus make a finding, that, there was never a contract between the plaintiff and the defendant.

Having concluded that there was never a contract between the parties, I will therefore not go on to deal with the issues of novation of the contract.

The defendant's second witness, Mr George Makunde, had said in his evidence, that, if it is held that the defendant is bound by the letter which was written by the then Town Clerk, Mr. G. Tanyanyiwa, then, that contract was novated by what the parties agreed upon in the meeting of 17 September 2013 (exhibit 20) that the plaintiff was to supply a brand new excavator and front end loader.

Novation is the substitution of a new contract for an old one. The new agreement extinguishes the rights and obligations that were in effect under the old agreement.

Since no contract was entered into in the first place, there is no novation to talk about.

Disposition

Since there was never a contract between the parties, the plaintiff is not entitled to payment of the remaining balance of US$119,300 that it is claiming. The plaintiff is entitled to collect its machinery from the defendant.

In respect of the counter-claim, the plaintiff in reconvention (the municipality) is entitled to a refund of US$140,000 being the money it paid as deposit of the purchase price.

Since there was no contract between the parties, I cannot order the defendant in reconvention (Upset Investments (Private) Limited) to deliver a brand new excavator and a brand new front end-loader. Consequently, the plaintiff in reconvention cannot be entitled to any damages for breach of contract or any storage charges.

In any case, the plaintiff in reconvention did not lead any evidence to prove its claim for US$20 per day for storage charges.

On costs of suit, the defendant prayed that the plaintiff's claim be dismissed with costs on a higher scale, but I see no justification for the award of such costs.

In the result, I order as follows:

1. The plaintiff's claim is dismissed.

2. The plaintiff pays to the defendant US$140,000 being the refund of the deposit paid by the defendant towards the purchase of the Excavator and Front End Loader.

3. The plaintiff pays to the defendant costs of suit.

HH109-08 : LLOYD GAMBIZA vs PIKIRAI TAZIVA
Ruled By: GOWORA J

On 1 March 2007, the plaintiff issued summons out of this court for an order as follows:

“(a) An order declaring the agreement, Annexure A to the particulars of the claim, dated 18 December 2006, to have been validly cancelled and incapable of performance.

(b) An order for the return to the plaintiff of motor vehicle Mitsubishi Chariot Reg number AAN 8616, or, alternatively;

(c) Payment of the sum of R17,000 being the balance of the purchase price due to the plaintiff.

(d) Costs of suit.”

The facts which give rise to the dispute are these:

The plaintiff and the defendant were not only friends, they were also business partners. On 18 December 2006, the parties entered into a written agreement of sale in respect of a Mistubishi Chariot owned by the plaintiff. It was agreed between the parties that the vehicle would be sold to the defendant for a price of ZAR25,000 or Z$6 million. A deposit of R8,000 was recorded as having been paid with the balance of R17,000 being paid in two or more installments on or before 20 January 2007.

In his declaration, the plaintiff avers, that, the defendant has not paid any other amount aside from the initial R8,000. He therefore sues for the return of the vehicle or payment of the outstanding amount.

The defendant admits the existence of the agreement and the terms of the written agreement. He agrees that the balance had to be paid by 20 January 2007, but denies that he had breached the agreement as claimed by the plaintiff.

He avers that he tendered payment within the stipulated period but that the plaintiff refused to accept payment because it was not in Rand.

The defendant states, that, the offered payment, in Zimbabwe dollars, as an alternative amount, had been stipulated in the agreement. He tendered, in his plea, payment of the balance owing to the plaintiff against delivery to him of the registration book in respect of the vehicle.

He has also filed a counter-claim where he seeks delivery of the registration book to him against payment by him of the outstanding balance payable in local currency.

I will now deal with the evidence which was common cause between the parties.

The agreement concluded was for the defendant to purchase the vehicle for the sum of the R25,000. The defendant paid an amount of R8,000 on the date that the agreement was signed. The defendant was obliged to have paid the balance by 20 January 2007. However, payment was not effected by the stipulated date. The balance was stated as R17,000 on the agreement.

The Zimbabwe dollar equivalent was not stated in the agreement.

As to the dispute between them, the plaintiff indicated that the defendant had not tendered payment.

During cross-examination, it was clear, however, that the defendant had tendered payment of the Zimbabwe dollar component based on official rates of exchange but the plaintiff had refused to accept any payment in local currency.

There is no indication as to how much the defendant had tendered.

Although in the summons and declaration, the plaintiff had an alternative claim for him to be paid the sum of R17,000 when he gave evidence he indicated that he had abandoned that claim as he said that he had been advised that an individual could receive any payment in foreign currency and that he understood that the agreement was illegal to that extent. He said it was not capable of execution and said that it was, as a result, null and void.

Initially, it was contended, on behalf of the plaintiff, that, the agreement was per se illegal and incapable of enforcement due to the same.

It was further submitted on his behalf, that, not only was the purchase price quoted in foreign currency but that the equivalent in the local currency was calculated by the use of the parallel market rate of exchange which in itself is illegal.

The plaintiff further contended, that, the parties were illegally dealing in foreign currency and that the court was, as a result, precluded from giving effect to the agreement.

The defendant, through his counsel, also conceded that the agreement was illegal and that both parties participated in the illegality. Counsel prayed that I find that the in pari delicto principle applied and that I should let the loss lie where it falls.

Effectively, this would mean that the defendant would retain a vehicle for which he contracted to pay ZAR25,000 and for which he only paid ZAR8,000.

The defendant would thus be enriched at the expense of the plaintiff.

I was not convinced that both counsel had properly addressed the legal issues before me and I requested that they address me further by way of supplementary submissions.

These have now been filed and I am grateful to counsel for acceding to my direction.

The plaintiff now contends, that, the agreement executed by the parties is legal and valid and that the court can give effect to the same. He relies on the provisions of section 4(1) of the Exchange Control Regulations SI109 of 1996, which he says, prescribes the buying, selling, borrowing, lending or exchange of any foreign currency without permission from the Exchange Control authority.

It is contended on his behalf, that, although the agreement provided for payment of the purchase price in foreign currency, this was not illegal as it was not an offence to receive foreign currency.

The defendant has submitted, contrary to the plaintiff, that, the agreement, as it provides for payment of the purchase price in foreign currency, is illegal, and that this court should not give effect to it as that would encourage parties to such agreements to commit illegal acts.

Section 4(1) of the Exchange Control Regulations, S.I.109 of 1996 (“the Regulations”) is in the following terms:

“Subject to subs (3), unless permitted to do so by an exchange control authority;

(a) No person shall, in Zimbabwe -

(i) Buy any foreign currency from or sell any foreign currency to any person other than an authorized dealer or foreign exchange bureau de change; and

(ii) Borrow any foreign currency, lend any foreign currency to, or exchange any foreign currency with any person other than an authorized dealer.”

It is not in dispute, that, when the agreement between the plaintiff and the defendant was concluded the defendant had paid an amount of ZAR8,000 as deposit on part of the purchase price.

In terms of the agreement between the parties, the equivalent of the ZAR8,000 in local currency was $6 million. The rate of exchange was not given, but, it is accepted by both parties that the conversion rate was not the authorized one.

The balance outstanding was stated to be ZAR17,000. The equivalent in local currency was not stated.

Counsel for the plaintiff is correct when he says that the law does not proscribe the conclusion by parties of agreements where prices are quoted in foreign currency.

A careful scrutiny of section 4(a)(ii) of the Exchange Control Regulations, SI109/1996 leads me to the conclusion that his submission is correct. The Regulations do not forbid parties from transacting in foreign currency in general terms, but, they detail specific conduct that involves foreign currency which is then prohibited.

What is pertinent is to determine whether the manner in which the parties herein conducted their agreement falls under the species of proscribed conduct within the ambit of the Exchange Control Regulations, S.I.109/1996. The only word that would apply to the present is 'exchange' and what meaning can be ascribed to it.

The Shorter Oxford Dictionary defines exchange, as a noun, variously, as follows:

“The action, or an act, of reciprocal giving and receiving; a mutual grant of equal interest, the one in consideration of the other.”

In respect of the verb, the dictionary ascribes the following meanings to 'exchange' -

“To change away; to dispose of by exchange; to give or part with (something) for something in return; to give and receive reciprocally; to interchange.”

In Matsika v Jumvea & Anor HH09-03, CHINHENGO J had to consider whether or not an agreement for the purchase of a motor vehicle, within Zimbabwe, in currency other than the local currency was legal.

It is not my intention to traverse the path taken by the learned judge in his examination of the matter, for, to do so, would be repetitive and disrespectful.

He concluded, that, in accordance with the Decimal Currency Act [Chapter 22:04], the legal tender in this country is the Zimbabwe dollar. He also concluded, that, according to the provisions of the Reserve Bank Act [Chapter 22:10], a tender of notes and coins issued by the Reserve Bank, which has not been demonetized shall be legal tender in Zimbabwe. He also found, that, the Reserve Bank Act does not prohibit the transaction by Zimbabweans of business in foreign currency.

With regard to the application before him, on the facts, as presented, the learned judge had no hesitation in finding, that, when the applicant paid US$1,700 and US$1,730, to the respondent, for the purchase price of a vehicle, without first having obtained the permission of an exchange authority, the parties had contravened the Exchange Control Regulations, SI109 of 1996.

In the context in which 'exchange' is used by the legislature in the Exchange Control Regulations, the meaning that can therefore be ascribed to it is “to pay” and “to receive”.

The defendant paid ZAR8,000 without the permission of an exchange control authority, and, in the circumstances, there can be no doubt that this is prohibited by the Exchange Control Regulations.

Thus, the agreement is tainted with illegality and cannot be enforced.

It is trite that there must be no illegality in a contract. An agreement is illegal if the making of the agreement, the performance agreed upon, or the ultimate purpose of both parties in contracting is prohibited by common or statute law, that is, if it is contrary to public policy or is contra bonos mores: see Sasfin (Pty) Ltd v Beukes 1989 (1) SA 1 (A).

A contract will be contrary to public policy if its performance, even though not illegal or immoral, is one which the courts will not enforce because performance would be detrimental to the interests of the community.

From the evidence given by the parties, it emerged that one of the parties, if not both, was aware that their transaction might not have been exactly above board.

The defendant gives as his reason for refusing to pay the balance in Rand the knowledge that the payment in foreign currency was illegal. This, he averred, was the reason why he did not pay, as he was afraid of committing an offence. He does not say when he became aware of the illegality attached to the payment in foreign currency in view of his initial payment of the deposit in foreign currency.

In his declaration, the plaintiff makes the averment, that, the contract was illegal as it contravened the Exchange Control Regulations and thus it was incapable of being enforced.

Whilst the agreement itself is not per se illegal, it has nevertheless been tainted by illegality in that the parties breached the Exchange Control Regulations when they were giving effect to its terms and conditions.

Instead of exchanging Rand, the parties could have calculated the official rate of the local currency and payment made accordingly and thus there would have been legal performance of the agreement.

Whilst the plaintiff has prayed that the agreement be cancelled, and for the return of the motor vehicle, the defendant has counter-claimed for the delivery to him of the registration book of the motor against a tender of payment by the defendant of an amount of $3,840,000 which he states is the outstanding balance on the purchase price.

The question that now confronts me is whether or not the contract can be cancelled or whether it is capable of being enforced thus entitling the defendant to an order in terms of the counterclaim.

I would, on this point, respectfully refer to the comments of GUBBAY CJ in Dube v Khumalo 1986 (2) ZLR 103 (SC)…, where he stated:

“There are two rules which are of general application. The first is that an illegal agreement which has not yet been performed, either in whole or in part, will never be enforced. This rule is absolute and admits no exception: see Mathews v Rabinowitz 1948 (2) SA 876 (W) at 878; York Estates Ltd v Wareham 1950 (1) SA 125 (SR) at 128. It is expressed in another maxim ex turpi causa non oritur actio.

The second is expressed in another maxim in pari delicto est potior conditio possidentis, which may be translated as meaning 'where parties are equally in the wrong, he who is in possession will prevail'.

The effect of this rule is that where something has been delivered pursuant to an illegal agreement, the loss lies where it falls.

The objective of the rule is to discourage illegality by denying judicial assistance to persons who part with money, goods, or incorporeal rights, in furtherance of an illegal transaction.

But, in suitable cases, the courts will relax the par delictum rule and order restitution to be made. They will do so in order to prevent injustice, on the basis that public policy 'should properly take into account the doing of simple justice between man and man.'”

The agreement before me has only been partially performed by either of the parties.

Whilst the defendant had paid less than half of the purchase price, the plaintiff had not really effected delivery in that the registration book had not been given to the defendant and thus he cannot assume ownership of the vehicle.

Although the agreement itself is not illegal, the manner in which the parties performed part of the agreement has rendered it illegal, and, any order on my part that would lead to the performance of the remaining part of the same would have the effect of giving sanction to the actions of the parties in violating the Exchange Control Regulations.

As a court, I am precluded from encouraging, through orders of court, the commission of acts that are proscribed by the law or the further perpetuation of such acts in clear violation of statutory provisions.

I am therefore of the view, that, this is not an agreement that can be given effect to and this, in my view, disposes of the counter claim of the defendant.

The question remaining on this issue is whether I should then declare the agreement duly cancelled.

When something is illegal, it is in fact null and void.

Thus, a declaration that it has been duly cancelled would clothe the agreement with legality. The only logical manner to treat the agreement is therefore to declare that it is of no force and effect.

What remains now is what is to be done with the vehicle.

The defendant, having acknowledged the unlawful nature of the agreement, has submitted that the court has several options on how to dispose of the matter:

(i) The first is to dismiss the plaintiff's claim in its entirety.

(ii) The second option is strike out the quotation of the price in Rand is not appropriate in view of the illegality of the agreement.

(iii) The defendant has also suggested that the defendant be made to pay the equivalent of ZAR17,000 calculated in accordance with the prevailing rates of exchange, and that, consequentially, the plaintiff be ordered to surrender the registration book to the defendant.

The last three options suggested by the defendant would result in the court giving effect to an illegal agreement. This would run counter to the two maxims that were pronounced by GUBBAY CJ in Dube v Khumalo 1986 (2) ZLR 103 (SC).

The usual manner of treating illegal agreements, where the parties to the same are equally to blame, is to let the loss lie where it fell. However, the courts have a discretion, in suitable cases, to relax the par delicto rule in order to do justice between man and man.

The rationale for this discretion is to prevent injustice where one party is enriched at the expense of another.

In Jajbhay v Cassim 1939 AD 537…, STRATFORD CJ stated the following:

“Courts of law are free to reject or grant a prayer for restoration of something given under an illegal contract, being guided in each case by the principle which underlies and inspired the maxim.

And, in this last connection, I think a court should not disregard the various degrees of turpitude in delictual contracts. And, when the delict falls within the category of crimes, a civil court can reasonably suppose that the criminal law provided an adequate deterring punishment, and, therefore, ordinarily speaking, should not, by its order, increase the punishment of the one delinquent and lessen it of the other by enriching one to the detriment of the other.

And, it follows from what I have said above, in cases where public policy is not foreseeably affected by a grant or refusal of the relief claimed, that a court of law might well decide in favour of doing justice between the individuals concerned and so prevent unjust enrichment.”

It is trite, therefore, that, where an agreement is illegal, a court has the discretion to relax the par delicto rule in order to do justice between man and man where the relief granted would be contrary to public policy.

I was not addressed by either counsel on the question whether granting the relief sought would be contrary to public policy, and, as a consequence, I find that I am not constrained from relaxing the par delicto rule.

Considering the circumstances of the case, it is only proper that I do so in order to do justice between man and man.

The plaintiff parted with a valuable item against payment of an amount which was less than half the purchase price. The defendant thereafter did not pay the outstanding amount within the stipulated period. The agreement provided, that, the full purchase price should have been paid before 20 January 2007.

The defendant readily admitted having failed to pay as stipulated therein.

In his evidence, he alluded to an agreement between himself and the plaintiff, concluded in South Africa, where the plaintiff agreed to extend the period by which payment could be made.

The defendant, however, was unable to state the date by when he was supposed to have made payment under the alleged verbal contract.

It is highly improbable, in my view, that the plaintiff, having in the agreement of sale stipulated a time period for payment of the purchase price, would be so accommodating as to allow the defendant an unlimited extension of time by which to pay the balance.

The defendant was already in mora and it would only be sensible and reasonable if the plaintiff was to allow more time to put the defendant on terms about payment.

In his evidence, which was not seriously challenged by the defendant, the plaintiff said he wanted to use the money for a business venture hence his stipulation for a time period on when balance was to have been paid in full.

The plaintiff denied that he had extended the time to the defendant for payment of the balance or that he had given an impression to that effect.

Under cross-examination, the plaintiff had admitted that the defendant had tendered payment of the balance of the purchase price in local currency, at the official rate, and, at that stage, the plaintiff had refused to accept the tender. The plaintiff said the offer to pay in local currency came after he had issued summons against the defendant.

My assessment of the evidence, as a whole, leads me to conclude, that, the plaintiff's version is to be preferred to that of the defendant. Neither he nor his brother impressed me as a witness. I find the plaintiff's version more probable given the prevailing circumstances.

In the premises, I find for the plaintiff.

I therefore make an order in the following terms:

1. The plaintiff's claim is granted to the extent that the defendant be and is ordered to restore possession to the plaintiff of a Mistubishi Chariot motor vehicle registration number AAN 8616 within ten (10) days of the date of service of this order failing which the Deputy Sheriff is hereby authorized to seize and recover the same from wherever it is situate and from whomsoever is in possession of the same.

2. The defendant be and is hereby ordered to pay the costs of suit.

HH128-06 : DOBROCK HOLDINGS (PVT) LTD and TURNER AND SONS (PVT) LTD vs TURNER AND SONS (PVT) LTD and ANTHONY TURNER and MARTIN KING and ZAMBEZI PADDLE STEAMER (PVT) LTD and DOBROCK (PVT) LTD
Ruled By: KUDYA J

An order for the consolidation of these two matters was granted by UCHENA J, by consent, with no order as to costs, on 2 June 2006, for hearing before me on 7 June 2006 in Case Number 3157/06.

The first application, Case No. HC5186/05, concerns an order for specific performance while the second one, Case No.5264/05 seeks an order for the provisional liquidation of Zambezi Paddle Steamer (Pvt) Ltd (hereinafter called ZPS).

On 7 June 2006, at the request of the parties, I postponed the hearing to 13 July 2006.

When the hearing resumed, Mrs Wood, for Turner and Sons (Pvt) Ltd, applied for the forced recusal of Mr de Bourbon, for Dobrock (Pvt) Ltd, on the basis that he had been an arbitrator between these parties in 1994.

She referred to Pertisilis v Calaterra & Anor 1999 (1) ZLR 70 (H) as authority for the proposition that the legal practitioner who acted for a former client is precluded from representing a different client in circumstances where a conflict of interest is likely to arise between the former and present client. SMITH J set out the basis of the rule…, as being that:

“A legal practitioner who represents the adversary of his own client in litigation would clearly be violating his or her duty of loyalty and the common law rules against conflict of interest.”

He proceeded to survey American, English, South Africa, and Zimbabwean decided cases on the point at pages 74C–77F.

While he held that neither a partner nor his employee could represent an opponent of a former client in order to fulfill the adage that justice must not only be done but that it must manifestly and undoubtedly be seen to be done, he nevertheless permitted a partner to represent the opponent on the basis that there was no allegation that the other partner had acquired information from the papers in the possession of his firm which could be used to the former client's disadvantage.

Mrs Wood contended, that, justice will not be seen to be done if Mr de Bourbon was allowed to represent Dobrock (Pvt) Ltd, especially on the liquidation case, where Turner and Sons allege a deadlock has manifested itself between the joint shareholders, a fact found by Mr de Bourbon, as arbitrator, to exist in his 25 June 1994 ruling.

She further foresaw a need to call Mr de Bourbon on the deadlock issue in the liquidation case.

Mr de Bourbon countered by contending that he did not represent either Dobrock (Pvt) Ltd or Turner and Sons (Pvt) Ltd but acted in a quasi-judicial capacity.

He knew of no law which debarred him from representing either party as long as he had not possessed confidential information which could be used to the detriment of his client's adversary. He referred to Benmac Manufacturing (Pvt) Ltd v Angelique Enterprises (Pvt) Ltd 1988 (2) ZLR 52 (H).

In that case, Mr de Bourbon accepted a general retainer from Angelique Enterprises in a matter in which that company was involved in a dispute with Albco. He was, at that time, already seized with a retainer for Benmac Manufacturing in its contest with Angelique Enterprises, supra. He had accepted the retainer in the matter against Albco after assurance from his instructing attorney that there would be no conflict of interest.

It was accepted, in that case, by that attorney, that, he had not come into contact with any confidential information which would prejudice Angelique Enterprises in its contest with Benmac. The Law Society, and two other counsel, had absolved him of any impropriety, but, the Managing Director of Angelique Enterprise, Mr Holland, was not satisfied with their findings and advice.

REYNOLDS J held, that, Angelique Enterprises had not shown that Mr de Bourbon had in fact become acquainted with information that could be used to its detriment which would result in real mischief and real prejudice if he continued to act for Benmac Manufacturing. He did express his reservation on a legal practitioner acting for and against his client in the same or different matters.

Mr de Bourbon submitted that he had not acquired any information that he could possibly utilize to the prejudice of Turner and Sons (Pvt) Ltd and that his impartiality in 1994 had not been impugned by any of the parties.

I went through the arbitral award.

It concerned and dealt with the share of each joint shareholder in the extra costs, which were above the original cost of construction of the large commercial houseboat which Zambezi Paddle Steamer (Pvt) Ltd (ZPS) was to own.

Turner and Sons (Pvt) Ltd was not able to show what information Mr de Bourbon accessed which could prejudice its present defence and claim. If anything, I was satisfied that the arbitral award stands on its own and there would be no need to call the arbitrator to testify on it.

I accordingly dismissed the application for the forced withdrawal of Dobrock (Pvt) Ltd's counsel.

I also postponed the hearing sine die and granted, by consent, authority to Turner and Sons (Pvt) Ltd to file a further affidavit in response to Dobrock (Pvt) Ltd's supplementary affidavit.

I further reserved the question of costs in the provisional liquidation claim to which these additional affidavits pertained.

I eventually set down the matter for hearing on 1 November 2006. I directed that the parties argue the specific performance case first and thereafter proceed to argue the liquidation case.

On 12 October 2005, Dobrock (Pvt) Ltd filed the court application for specific performance against Turner and Sons (Pvt) Ltd and two others. It sought the following order:

“1. That, the respondents, jointly as well as severally, the one paying the other to be absolved shall forthwith undertake all that is necessary and required, including making all payments and completion and signing all documents required in order to procure transfer, without delay, by first respondent to applicant of first respondent's entire shareholding in Zambezi Paddle Steamer (Pvt) Ltd.

2. That, immediately upon registration of transfer in the share register of Zambezi Paddle Steamer (Pvt) Ltd (ZPS) applicant shall pay to first respondent the balance of the purchase price for the said shares; such balance being the sum of $138 million.

3. That, the respondents, jointly as well as severally, the one paying the other to be absolved, shall pay the costs of this application on the scale of legal practitioner and own client.”

The application was served on the three respondents on 13 October 2005 (see Peter Dobson's opposing affidavit of 9 November 2005 for which this averment was accepted by Antony Turner on 2 December 2005).

The three respondents filed their opposition papers on 27 October 2005 and prayed for the dismissal of the applicant's case with costs on the higher scale and made reference to the liquidation claim, case number HC5264/2005.

Case number 5264/05 is a court application brought on 17 October 2005 by Turner and Sons (Pvt) Ltd against Zambezi Paddle Steamer (Pvt) Ltd and Dobrock (Pvt) Ltd. It prayed for the winding up of Zambezi Paddle Steamer (Pvt) Ltd and that a liquidator be appointed in the following terms:

“1. That, first respondent, Zimbabwe Paddle Steamers (Pvt) Ltd be provisionally wound up pending the granting of an order in terms of paragraph 3 hereof or the discharge of this order.

2. That, Mrs Theresa Grimmel, of KPMG Chartered Accountants, Mutual Gardens, 100 The Chase, Emerald Hill, Harare be appointed as provisional liquidator of first respondent company with the powers set out in section 221 of the Act.

3. Any interested party appear before this court sitting at Harare on (a date sixty days from the date of the order) to show cause why an order should not be made placing first respondent's company in liquidation and order that the costs of these proceedings all be costs of the liquidation.

4. That, this order shall be published once in the Government Gazette and once in the Herald Newspaper. Publication shall be in the short form annexed to this order.

5. Any person intending to oppose or support the application on the return day of this order shall:

5.1. Give due notice to the applicant at Messrs Byron Venturas & Partners, 2nd Floor Tanganyika House, Corner 3rd Street/Kwame Nkrumah Avenue, Harare.

5.2. Serve on the applicant, at the address given above, a copy of any affidavit which he files with the Registrar of the High Court.”

The application for provisional liquidation was served on the respondents on 17 October 2005, who entered opposition on 31 October 2005 and filed, on that day, their opposing affidavit by fascimile. The actual opposing affidavit was filed on 9 November 2005.

These two applications were consolidated on the bases that the principal parties were the same and that the fundamental issue in each matter related to the ownership and management control of Zambezi Paddle Steamer (Pvt) Ltd (ZPS).

The pleadings in these consolidated matters are voluminous.

The founding, opposing, answering and supplementary affidavits are reinforced by an assortment of attachments which consists of the Memorandum of Association of Zambezi Paddle Steamer (Pvt) Ltd, electronic mail between the parties, and other documents raised by various people who worked for the parties in various capacities.

I have read all these documents.

It is apparent from these documents that there are areas in which the parties agree and others where they are at variance.

It is appropriate that I first deal with the facts as I have determined them to be from the wealth of information that is set out in the pleadings in both these cases.

The preliminary details on the formation of Zambezi Paddle Steamer (Pvt) Ltd (ZPS), on 3 April 1989, are set out in detail by Anthony Turner (Antony) in his founding affidavit in the liquidation matter, case HC5264/05 (Case No.2). Those details were admitted to by Peter Jameson Dobson (Peter) in his opposing affidavit in that case.

Turner and Sons (Pvt) Ltd agreed with Dobrock (Pvt) Ltd, in 1988, on a joint venture to construct and thereafter operate a 'Mississippi River Boat' for commercial use on Lake Kariba.

The concept of the “Southern Belle” was created by Turner and Sons (Pvt) Ltd who approached Dobrock (Pvt) Ltd.

Dobrock (Pvt) Ltd agreed to become its joint partner in the venture and to provide working capital and investment in the project.

Zambezi Paddle Steamer (Pvt) Ltd was incorporated as the special purpose vehicle through which the large commercial houseboat, MV Southern Belle, would be owned and operated.

Zambezi Paddle Steamer (Pvt) Ltd was incorporated in terms of the Companies Act [Chapter 24:03] with an issued share capital of $30,000 divided into 30,000 shares of $1 each fully paid up. Each of the two joint partners subscribed to 15,000 shares of $1 each in Zambezi Paddle Steamer (Pvt) Ltd.

The joint shareholders agreed that Turner and Sons (Pvt) Ltd would first build a model of the craft, and, thereafter, carryout the necessary construction work and interior design of the vessel at a contracted price. Dobrock (Pvt) Ltd would source both local and foreign raw materials for this construction. The total costs of both these operations would be the total cost of the vessel and would be met equally by the joint shareholders.

The agreement was reduced to writing and signed on 31 May 1991.

The arbitral award, of 15 June 1994, indicated that the vessel was completed in 1994. The original construction price was set at $5,950,000.

The issue before the arbitrator centred on the amount by which the original contract price increased, which issue he resolved.

Zambezi Paddle Steamer (Pvt) Ltd was run for 18 months, from the completion of the vessel in 1994, by Turner and Sons (Pvt) Ltd. Dobrock (Pvt) Ltd thereafter took over the management control of Zambezi Paddle Steamer (Pvt) Ltd and appointed a Managing Director, Adamson, to run it.

It was common cause, that, from 2000, the tourism industry went into decline and this affected the bottom line of the MV Southern Belle operations of Zambezi Paddle Steamer (Pvt) Ltd.

There is evidence, in the form of electronic mail exchanged between Peter Jameson Dobson and Anthony Turner, the principal shareholders in Dobrock (Pvt) Ltd and Turner and Sons (Pvt) Ltd, respectively, between 19 January 2003 and 7 April 2004, that, the joint shareholders were prepared to sell their respective shareholdings in Zambezi Paddle Steamer (Pvt) Ltd to the right suitor - if one came along.

On 4 May 2004, Zambezi Paddle Steamer (Pvt) Ltd Managing Director presented a report which highlighted the difficult circumstances the commercial houseboat operations were in. It required urgent maintenance and refurbishment to attain its former glittering glory.

On 6 June 2004, Anthony Turner indicated his decision to sell his shares in the commercial houseboat to Peter Jameson Dobson. This was a clear pointer to his unwillingness to inject funds for maintenance and refurbishment of the houseboat.

On 18 June 2004, Peter Jameson Dobson indicated his willingness to inject $250 million, for this purpose, provided his shareholding in Zambezi Paddle Steamer (Pvt) Ltd increased by 10% while that of Anthony Turner was reduced by the same percentage. He suggested that the houseboat was valued at approximately $3.5 billion. He followed up this by another e-mail of 25 June 2004.

He received a response on that same day (contained in an email wrongly dated as 6 June 2004) from Anthony Turner in which he offered him his shareholding in Zambezi Paddle Steamer (Pvt) Ltd for the sum of $250 million.

Peter Jameson Dobson duly accepted the offer.

He came to Harare, and, during the period 28 June to 14 July 2004, discussed with Anthony Turner on the terms of payment of Antony's entire shareholding.

He agreed to procure payment where and when Anthony Turner wanted.

The purchase price was agreed at $250 million. It was to be paid by Peter Jameson Dobson into the account of Antony's daughter, Jenny, in the United Kingdom, the bank account details of which he received.

The following day, after the terms of payment had been agreed, Anthony Turner requested part payment of the purchase price in local currency.

Peter Jameson Dobson alleged that he made out cheque payments to Chitekeshe of $115 million and to Vretto of $25 million, as part payment, a total of $140 million which Anthony Turner used to buy a pick-up truck.

This averment was not disputed by Anthony Turner, yet, he maintained, in his other affidavits, that, he was paid $138 million and $112 million remained outstanding.

Peter Jameson Dobson, in his prayer, and in Mr de Bourbon's submissions on behalf of Peter's company, accepted that the outstanding purchase price was $112 million.

No cheques or proof of payment in the sum of $140 million was produced.

I am therefore prepared to hold, that, Peter Jameson Dobson paid $138 million and had an outstanding balance of $112 million.

Anthony Turner averred, in his opposing affidavit, that, he required £12,000 to import a new engine for the craft that he was building, known as the “Zambezi Trader”. This craft would not be in competition with the houseboat at all and he was building it for his own account with the moral support and blessing of Peter Jameson Dobson.

Peter Jameson Dobson agreed to pay this amount into his daughter's bank account in the United Kingdom.

He repeated this allegation in paragraphs 31 and 32 of his founding affidavit in Case No. HC5264/05.

This was to be in lieu of the balance of the purchase price of $112 million.

In Case No. 5264/05, in paragraphs 26 and 27 of his opposing affidavit, Peter Jameson Dobson did not respond to these averments in so far as they refer to the alleged mode of payment in foreign currency.

That payment was to be in foreign currency is clear from Peter Jameson Dobson's own founding affidavit.

In paragraph 18, he averred, that, even when he met Anthony Turner, per chance, at the Borrowdale Race Course, in November 2004, he reassured him, that, notwithstanding the fall in the value of the Zimbabwean dollar against the Pound Sterling, the amount outstanding as the purchase price remained £12,000 being the amount in pounds in July 2004.

The two gentlemen agreed, that, the accountant and company secretary of Zambezi Paddle Steamer (Pvt) Ltd, Paul Turner (Paul), a partner in Ernst and Young Chartered Accountants, would effect the share transfer and receive Anthony Turner's letter of resignation as a director therein.

There was a delay in the transfer of the shares which was occasioned by Paul Turner's attempts to structure a tax avoidance scheme for the benefit and at the insistence of Antony Turner.

I make this finding based on Antony Turner's deliberate failure to respond to Paul Turner's affidavit, which was filed in support of Peter Jameson Dobson's founding affidavit.

It was agreed, that, on 3 August 2004 and 21 August 2004, Peter Jameson Dobson wrote to Anthony Turner enquiring whether or not he had signed the necessary transfer documents and resigned as a director of Zambezi Paddle Steamer (Pvt) Ltd - the two factors which would trigger the payment of the balance of the purchase price by Peter.

It also appears, that, even on 5 November 2004, a date disputed by Athony Turner, who put it as being sometime in September 2004, when the two met at Borrowdale Race Course, Antony intimated that he had been too busy to visit Paul Turner. The parties re-affirmed, that, despite an adverse movement of the Zimbabwe dollar since July 2004, the balance of the purchase price would be paid into Antony's daughter's account in the United Kingdom at the exchange rate agreed in July 2004.

On 17 January 2005, Antony Turner proceeded to appoint Peter Drummond and Martin King as directors of Turner & Sons (Pvt) Ltd, in his stead, who were charged with the responsibility of overseeing Turner & Sons (Pvt) Ltd's interests in the Southern Belle.

A flurry of e-mails followed which attempted to resolve the issue of the sale of Antony Turner's shares in Zambezi Paddle Steamer (Pvt) Ltd, who was claiming, that, the failure by Peter Jameson Dobson to pay the balance of the purchase price timeously amounted to repudiation of the contract.

He therefore regarded himself released from the contract.

The negotiations by the parties culminated in a letter of 23 August 2004 by Turner & Sons (Pvt) Ltd's erstwhile legal practitioners to Dobrock (Pvt) Ltd's legal practitioners which set out the history of their association.

In that letter, Turner & Sons (Pvt) Ltd indicated that it would seek an order to wind up the company in terms of section 206(g) of the Companies Act [Chapter 24:03].

Dobrock (Pvt) Ltd held the firm belief that it had purchased Turner & Sons shareholding and was therefore the sole shareholder in Zambezi Paddle Steamer (Pvt) Ltd.

These disagreements resulted in the two applications, for specific performance and liquidation, that are now before me.

The first issue for determination is whether or not a binding contract of sale was reached between Dobrock (Pvt) Ltd and Turner & Sons (Pvt) Ltd.

It is, I believe, common cause that an agreement of sale was entered into.

In its opposing affidavit, in paragraph 17, Turner & Sons (Pvt) Ltd acknowledges that the parties had a loose gentleman's agreement. Antony Turner concludes that paragraph by stating that "I believe, with respect, that the only explanation that is reasonable in the circumstances is that applicant repudiated the contract."

Paragraph 49(iii), in Case No. HC5264/05, by Turner & Sons (Pvt) Ltd, is to the same effect.

Turner & Sons (Pvt) Ltd's defence was, in the main, predicated on repudiation by conduct of the contract that was executed between the parties. Indeed, Mrs Wood, for Turner & Sons (Pvt) Ltd, in paragraph 2 of her written heads of argument, wrote:

"It is apparent from the applicant's own case that the agreement in question was very loose even if it was binding between the parties."

Counsel concentrated their submissions on the question whether time was of the essence in the performance by Dobrock (Pvt) Ltd of the term relating to payment of the outstanding purchase price.

It was on the assumption that it was of the essence that Turner & Sons (Pvt) Ltd alleged repudiation.

The onus, in my view, lies on Turner & Sons (Pvt) Ltd to show that time was of the essence and that the failure by Dobrock (Pvt) Ltd to act timeously entitled it to rescind the contract.

Turner & Sons (Pvt) Ltd blamed Dobrock (Pvt) Ltd for the delay in paying the balance of the purchase price.

The facts, as I find them, do not bear out the correctness of Turner & Sons (Pvt) Ltd's view.

Paul Turner indicated, in his unchallenged affidavit, that, the tax avoidance scheme was initiated at the instance of Antony Turner, and was for Turner & Sons (Pvt) Ltd's benefit.

My view is that, at that stage, Paul Turner was working as an agent of Turner & Sons. It became, in my finding, the duty of Turner & Sons to impress on him to act with speed if time was of the essence to it.

It is clear to me, that, Antony Turner understood and appreciated that the balance of the purchase price would not be paid out until the share transfer had been effected by Paul Turner; until Antony Turner had resigned as a director of Zambezi Paddle Steamer (Pvt) Ltd; and, until Antony Turner had obtained a capital gains clearance certificate from the Zimbabwe Revenue Authority (ZIMRA).

The delay cannot, therefore, be attributed to Dobrock (Pvt) Ltd.

Peter Jameson Dobson, after all, was desirous that transfer be effected with speed as shown by his enquiries of 4 August and 21 August 2004 which Antony Turner did not acknowledge.

Antony Turner never did challenge the averment, that, when they met at Borrowdale Race Course, he indicated that he was responsible for the delay for he was too busy to make a follow up with Paul Turner.

Paul Turner, after all, was acting, as regards the tax avoidance scheme only, as an agent of Antony Turner.

It is therefore my finding, on the papers, that, it was in fact Antony Turner who was responsible for the delay. He could not, therefore, lawfully repudiate the contract by projecting his own inaction onto Dobrock (Pvt) Ltd.

Mrs Wood contended, with reference to Concrete Products Co. (Pty) Ltd v Natal Leather Industries 1946 NPD 377…, and Broderick Properties v Rood 1962 (4) SA 447 that the mere fact that the agreement did not provide a particular date of performance did not mean that time was not of the essence.

She submitted, that, to Peter Jameson Dobson's knowledge, Antony Turner had to purchase an engine for another boat that he was building for £12,000 immediately, that is, at the time that they concluded the agreement.

In her view, though not spelt out in the oral agreement, the nature of that agreement, and the purpose to which Antony Turner wanted to utilize the funds were inherently indicative that both parties contemplated that payment had to be speedily made.

Speed payment was inherent in the agreement itself.

The proposition, in my view, conforms with the examples that were highlighted in Broderick Properties v Rood 1962 (4) SA 447 concerning the purchase of theatre tickets and repairs of a motor vehicle at a garage which are required for use within a set time frame.

The appreciation that I attribute to Antony Turner, of the conditions that had to be fulfilled before payment was made, in my view, removes his case from one relating to mora ex re (time set out in the contract) to one of mora ex persona, which requires demand before the time limits for performance are reached.

I associate myself with the statement of law that was propounded by GUBBAY CJ in Asharia v Patel 1991 (2) ZLR 276…,. He stated thus:

"The general applicable rule is that where time for performance has not been agreed upon by the parties, performance is due immediately on conclusion of their contract or as soon as is reasonably possible in the circumstances. But, the debtor does not fall into mora ipso facto if he fails to perform forthwith or within a reasonable time. He must know that he has to perform.

This form of mora, known as mora ex persona, only arises if, after a demand has been made calling upon the debtor to perform by a specified date, he is still in default.

The demand, or interpellatio, may be made either judicially, by means of a summons, or extra-judicially by means of a letter of demand, or even orally; and to be valid, it must allow the debtor a reasonable opportunity to perform by stipulating a period of performance which is not unreasonable - if unreasonable, the demand is ineffective.

Where a debtor has fallen into the mora ex persona after demand, the creditor can acquire a right to cancel the contract by serving notice of rescission, in which a second reasonable time limit is stipulated, making time of the essence. Both demand and notice of rescission are necessary in order to allow for cancellation for non-performance. The two may be, and commonly are, contained in the same notice. Such notice will then fulfil a double function. It will fix a time for performance after which the debtor will be in mora, and create a right in the creditor to rescind the contract on account of the mora."

In the present case, payment of the purchase price was not due immediately on conclusion of the contract. It was due as soon thereafter as was reasonably possible in the circumstances.

The circumstances related to the transfer of Turner & Sons (Pvt) Ltd's shareholding by Paul Turner; receipt by him of Antony Turner's resignation letter; and of a clearance certificate from the Zimbabwe Revenue Authority (ZIMRA).

It was within Antony Turner's power to expedite these matters.

Indeed, that it was not immediate was clearly demonstrated by the use put by Antony Turner of the part payment which was made of $138 million. He bought a pick up vehicle.

He also was duty bound to place Peter Jameson Dobson in mora if he believed that a delay had been occasioned in paying up the outstanding balance of the purchase price.

CHRISTIE, in The Law of Contract in South Africa, 3rd edition, Butterworths, 1996 deals with the line of cases culminating in Broderick Properties v Rood 1962 (4) SA 447 at pages 556 to 557. At page 555 he stated:

"The general rule will be seen in the next section, is that, when the contract does not fix a time for performance there can be no mora ex re, only mora ex persona; so, a demand by the creditor is necessary in order to place the debtor in mora. Whether there are exceptions to this general rule is a question that has led to differences of judicial opinion, but the present law can be stated with a fair degree of confidence."

It seems to me, that, in Zimbabwe, Asharia v Patel 1991 (2) ZLR 276 has provided the answer.

It confirms the correctness of the general rule as set out by CHRISTIE.

It appears to me too, that, the differences of judicial opinion that CHRISTIE noted may be resolved by applying the general rule to the particular facts of each matter in order to ascertain its validity to the time frames as contemplated by the parties. It is only after this has been done that a decision on whether mora ex re or mora ex persona applies can be made.

I, therefore, hold, in the present matter, that, Turner & Sons (Pvt) Ltd could not lawfully repudiate the contract without first placing Dobrock (Pvt) Ltd in mora.

Mrs Wood further submitted, with reference to section 11(1) of the Exchange Control Regulations 1996, SI109 of 1996, that, on the applicant's own case, the agreement was illegal because payment of the balance of the purchase price was to be made outside the country.

Mr de Bourbon, on the other hand, submitted that the contract was not illegal.

He contended, that, there was nothing on the papers to show that the obligations of Dobrock (Pvt) Ltd would be met by it. Rather, so he opined, it was only in the nature of assistance between friends, between Peter Jameson Dobson and Antony Turner which was permissible in terms of the Exchange Control Regulations.

There is a plethora of cases which have been determined by both the High and Supreme Court which are in point.

My starting point is section 11 of the Exchange Control Regulations 1996, S.I.109 of 1996. It reads:

"11(1) Subject to subsection (2) unless otherwise authorized by an exchange control authority, no Zimbabwean resident shall -

(a) Make payment outside Zimbabwe; or

(b) Incur any obligation to make payment outside Zimbabwe.

(2) Subsection (1) shall not apply to:

(a) Any act done by an individual with free funds which were available to him at the time of the act concerned;

(b) Any lawful transaction with money in a foreign currency account."

Mrs Wood contended that Dobrock (Pvt) Ltd was registered in Zimbabwe and was therefore resident in this country.

This contention is, in my view, correct, as it reflects the position set out in section 3(1) of the Exchange Control Regulations 1996, SI109/1996 for artificial persons.

She further contended that Dobrock (Pvt) Ltd had not shown that it had been authorized by the Exchange Control Authority before it incurred the obligation to make payment outside Zimbabwe. It had not demonstrated that this was a lawful transaction with money in a foreign currency account. She contended further, that, the free funds exception was applicable to individuals and not to companies, and that Dobrock (Pvt) Ltd could not save the agreement on that basis as it was inapplicable to it.

In International Who's Who Ltd v Bernstein Clothing (Pvt) Ltd SC28-99, MUCHECHETERE JA, considered the effect of section 8(1) of the Exchange Control Regulations RGN 399/77 where the respondent, a limited liability company, registered locally, incurred an obligation to pay 20,450 Swiss francs to the appellant, a limited liability company registered in England, in Johannesburg, for transmission to Vaduz, Switzerland.

The respondent raised a point in limine averring illegality.

At page 4-5 of the cyclostyled judgment, the learned judge of appeal stated as follows:

"At the outset, I should state that I agree with Mr Moyo's submission, that, the contract between the parties was illegal, invalid, and unenforceable because it was in breach of section 8(1) of the said Regulations. The provisions of the section are peremptory: see Abreu v Campos 1975 (1) RLR 198 and Swart v Smuts 1971 (1) SA 819 at 829-30.

As already indicated above, the appellant conceded that no authority had been obtained by the parties from the relevant authority for any payment outside Zimbabwe when the contract was entered into.

On the law, see Macape (Pty) Ltd v Executrix, Estate Forrester 1991 (1) ZLR 315 at 320D-E where McNALLY JA said:

'In other words, when one is concerned with payments INSIDE Zimbabwe (section 7 of the said Regulations) it is perfectly lawful to enter into the agreement to pay. But, without authority from the Reserve Bank, the actual payment may not be made. By contrast, when dealing with payments OUTSIDE Zimbabwe (section 8 of the said Regulations) it is unlawful even to enter into the agreement to pay without first obtaining the authority of the Minister which has been delegated to the Reserve Bank.' (my emphasis)

See also Abreu v Campos, supra; Young v Van Resnburg 1991 (2) ZLR 149 (S) at 155; Adleu v Elliot 1988 (2) ZLR 283 (S) at 287.”

The facts in Young v Van Resnburg 1991 (2) ZLR 149 (S) are distinguishable from the present matter.

It involved individuals who were foreign residents.

Its importance, in my view, lies in the sentiments of KORSAH JA, at page 153G-154A, where he agreed with Mr de Bourbon, in that case, that, subparagraph 8(1)(a), which barred a Zimbabwean resident from doing any act, outlawed the doing of even a single act.

It is noteworthy that section 8 of the 1977 Regulations is the precursor to section 11 in the 1996 Regulations, even though there are some variations in the wording of the two sections in these respective Regulations.

In International Who's Who Ltd v Bernstein Clothing (Pvt) Ltd SC28-99, MUCHECHETERE JA agreed with the observation of McNALLY JA in Macape (Pty) Ltd v Executrix, Estate Forrester 1991 (1) ZLR 315 that an agreement to pay outside Zimbabwe by a resident, without Exchange Control authority, where the resident was not an individual without free funds or where the resident was not utilising money in a foreign currency account, was void ab initio.

In Hattingh and Others v Van Kleek 1997 (2) ZLR 240 where a foreign visitor to Zimbabwe, Van Kleek, who was not aware that the Exchange Control Regulations prohibited local residents from incurring obligations to pay money abroad, agreed to give a loan to a Zimbabwean to be used to develop a Safari business and the money loaned was to be paid into that Zimbabwean's bank account outside Zimbabwe, and that Zimbabwean, and two other locals, signed a promissory note to repay the loan, the High Court then ordered the locals to repay the loan.

They appealed on the basis that they acted illegally by incurring an obligation to make payment outside Zimbabwe without the requisite Exchange Control authority.

The appeal was dismissed.

KORSAH JA held at page 244D that:

“Section 8 of the Regulations only prohibits, but does not declare void or illegal, the transactions enumerated therein” and found that the transactions did not contravene section 8 of the Regulations.

At page 246B he stated:

“The cases clearly show, that, where a contract is, on the face of it, legal but, by reason of a circumstance known to one party only, is forbidden by statute, it may not be declared illegal so as to debar the innocent, party relief, for to deprive the innocent person of his rights would be to injure the innocent, benefit the guilty, and put a premium on deceit.”

The facts of Hattingh and Others v Van Kleek 1997 (2) ZLR 240 are distinguishable from the present matter.

In addition, in casu, both parties were aware that their agreement fell foul of the Exchange Control Regulations.

In Greebe & Another v Famaps Investments (Private) Limited & Anor HH124-04, MAVANGIRA J dealt with the question whether a local resident could withhold and keep the assets that accrued to him from a sale by another local resident of those assets situated in Zimbabwe in circumstances where no payment was made abroad as agreed, on the basis that to do so would violate section 11(1)(b) of the Exchange Control Regulations 1996, S.I.109/1996.

She held that while the agreement contravened section 11 of the Exchange Control Regulations, the facts called for a relaxation of the par delictum rule, for, if she were to decline to do so, she would reward the purchaser by giving him a premium for deceit.

In Adleu v Elliot 1988 (2) ZLR 283 (S) GUBBAY JA…, recognised, that, in oral contracts, the court had the power to determine whether the terms of that contract required exact performance or the performance of some equivalent act. He stated thus:

“The application of this broad principle [that it is not for the court to remake a contract of the parties in line with INNES CJ in Ambrose and Aitken v Johnson and Fletcher 1917 AD 327 at 343 and the remarks of BEADLE CJ in Holmes v Palley 1975 (2) RLR 98 (AD) at 105C that one party to a contract was not entitled to expect that it will be carried out in a different manner than agreed because of the absence of prejudice] does not, of course, preclude a court from determining whether the parties to an agreement intended that a particular term thereof was to be fulfilled in forma specifica, that is, in the exact manner agreed upon by the parties or per acquipollens, that is, by some equivalent act.

Where the agreement is in writing, and the language employed is sufficiently clear, the common intention of the parties must be extracted from the agreement itself. But, if the language is ambiguous or where the agreement of the parties was oral, then, the court is obliged to have regard to the surrounding circumstances, and to any other admissible evidence in order to ascertain whether the common intention of the parties was to be fulfilled in forma specifica or whether performance thereof by some equivalent act would suffice.”

In Adleu v Elliot 1988 (2) ZLR 283 (S) the parties entered into an agreement of sale in which part of the purchase price was payable abroad in foreign currency and the remainder at home in local currency. GUBBAY JA approved the four factors outlined by CLAASEN J in Diggelen v de Bruin and Another 1954 (1) SA 188 SWA…, that:

“1. If the surrounding circumstances, and other admissible evidence, afford no clue as to what was in the contemplation of the parties, then, there is a rebuttable presumption in favour of performance in forma specifica. But, the presumption cannot be rebutted where it is clear from the terms of the contract that performance in forma specifica had been stipulated.

2. In case of doubt, the court will be more likely to find in favour of performance per acquipollens if the manner of performing the term is not material and also where performance in forma specifica is impossible through no serious fault on the promissor's part.

3. The act or performance tendered per acquipollens, where such is permissible, must be an equivalent act to that stipulated for or be of such a nature that it can make no material difference to the promise.

4. Where the promissor succeeds in rebutting the presumption mentioned above, there may be circumstances falling short of impossibility and even where there may be some fault on the part of the promissor; a court may be justified in concluding that the promissor's perfomance, or tendered performance, amounted to substantial performance.”

It seems to me, as appears from Dobrock (Pvt) Ltd 's averment, that, the parties contemplated that payment would be in sterling pounds in England into the account of Antony Turner's daughter, Jenny.

Dobrock (Pvt) Ltd was willing to pay “where and when” Turner & Sons (Pvt) Ltd desired it be made.

The agreement was sealed when Dobrock (Pvt) Ltd agreed to make payment in foreign currency in England.

The parties thus contemplated exact performance and not some substantial performance.

That exact performance was, however, illegal.

There is no room for the application of CLAASEN J's formulation in Diggelen v de Bruin and Another 1954 (1) SA 188 SWA in these circumstances.

It is my view, that, Hattingh and Others v Van Kleek 1997 (2) ZLR 240 does not apply to the present matter.

Dobrock (Pvt) Ltd was aware that it was contravening the Exchange Control Regulations when it promised to pay “where and when” and agreed to pay in England.

This is clear from the lack of particularity on the decision on the mode of payment that is apparent in its affidavits.

I cannot allow this court to be an accomplice to an illegality by enforcing this illegal contract, as prayed for by Dobrock (Pvt) Ltd.

I agree with Mrs Wood, that, Dobrock (Pvt) Ltd's claim on specific performance, and other subsequent relief related thereto, should be dismissed.

After all Dobrock (Pvt) Ltd is not an individual so the free funds exception would not avail it.

The oral agreement was transacted between the parties by individuals who were representing them respectively.

Peter Jameson Dobson did not aver, nor even suggest, that he had free funds from which he would pay Turner & Sons (Pvt) Ltd.

Even though he was an individual, he was acting for Dobrock (Pvt) Ltd. He had no Exchange Control approval to incur the liability to pay on behalf Dobrock in foreign currency in England.

The agreement reached is illegal, invalid, and unenforceable: see also Barker v African Homesteads Touring and Safaris (Pvt) Ltd & Anor SC18-03.

HH250-17 : CLEOGOZ INVESTMENTS (PRIVATE) LIMITED vs PATRICIA COX (HOUGAARD) and REGISTRAR OF DEEDS N.O.
Ruled By: 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 FactsIt is not in dispute, that, the parties entered ...

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 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 sub-divisions 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 the first respondent's benefit. By her own admission, she was liable for the commission. Ergo, Trevor Dollar Real Estate Company was her agent: 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).

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, the 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 the 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.

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Law Portal
Zimbabwe

Purchase Price re: Approach, Terms of Payment, Ad Stipulator and the Actio Venditi

Appealed
SC36-12 : RESERVE BANK OF ZIMBABWE vs CAFCA LTD
Ruled By: MALABA DCJ, ZIYAMBI JA and OMERJEE AJA

SC22-09 : MAXMUS SAVANHU vs MAGNET MARERE N.O. and MASTER OF THE HIGH COURT and THE REGISTRAR OF DEEDS
Ruled By: MALABA DCJ, CHEDA JA and GARWE JA

HH15-09 : GRISON MUWIDZI vs OPTIMACK INVESTMENTS (PVT) LTD and REGISTRAR OF DEEDS
Ruled By: UCHENA J

HH25-10 : MAXWELL MATSVIMBO SIBANDA vs GWYNNE ANNE STEVENSON
Ruled By: CHITAKUNYE J

HH88-12 : BLUMO TRADING (PRIVATE) LIMITED t/a COLCOM COMMODITIES vs MORGAN MUDUVURI
Ruled By: MATHONSI J

HH92-09 : SUPA PLANT INVESTMENTS (PVT) LTD vs EDGAR CHIDAVAENZI
Ruled By: MAKARAU JP

HH154-09 : PETHIAS CHITSUNGO vs D. MASUKU and RUWA LOCAL BOARD
Ruled By: MTSHIYA J

HH163-09 : MTOMBENI REGINALD vs TAPFUMANEYI MUPFURAREHWE
Ruled By: GOWORA J

HH158-10 : SIZE MAVUTO vs PAUL GOSTINO and PROMENADE REAL ESTATE and THE REGISTRAR OF DEEDS
Ruled By: GOWORA J

HH227-10 : MIKE MAKOPE vs GEOFFREY DZUMBUNU and REGISTRAR OF DEEDS N.O. and MINISTER OF LOCAL GOVERNMENT
Ruled By: MAVANGIRA J

HB201-11 : CABAT TRADE & FINANCE (PTY) LTD and SECURITY MILLS (PTY) LTD vs THE MOVEMENT FOR DEMOCRATIC CHANGE (MDC-T)
Ruled By: KAMOCHA J

HH535-15 : BLESSMORE CHANAKIRA vs SHEPHERD MALCOM N.O. and REGISTRAR OF DEEDS and PHIL RUSCH
Ruled By: NDEWERE J

Appealed
SC12-20 : ZIMASCO (PVT) LTD vs CASPER TSVANGIRAI and BAOBAB REAL ESTATE and THE REGISTRAR OF DEEDS BULAWAYO
Ruled By: GARWE JA, HLATSHWAYO JA and GUVAVA JA

View Appeal
HB16-14 : CASPER TSVANGIRAI vs ZIMASCO (PVT) LTD and BAOBAB REAL ESTATE and THE REGISTRAR OF DEEDS, BULAWAYO
Ruled By: MUTEMA J

Appealed
SC58-20 : YUSUF GAIBIE and MILLY GAIBIE N.O. vs ALEXANDER CASTANHEIRA and RACHEL CASTANHEIRA
Ruled By: GARWE JA, BHUNU JA and MAKONI JA

View Appeal
HB179-18 : YUSUF GAIBIE and MAHMOUD GAIBIE vs ALEXANDER CASTANHEIRA and RACHEL CASTANHEIRA
Ruled By: MAKONESE J

Appealed
SC66-20 : BREASTPLATE SERVICE (PRIVATE) LIMITED vs CAMBRIA AFRICA PLC
Ruled By: GWAUNZA DCJ, PATEL JA and MAKONI JA

View Appeal
HMT55-19 : CAMBRIA AFRICA PLC vs BREASTPLATE SERVICES (PRIVATE) LIMITED T/A NEMCHEM INTERNATIONAL
Ruled By: MUZENDA J

HH39-11 : BLUMO TRADING (PVT) LTD vs NELMAH MILLING COMPANY (PVT) LTD and NELSON MAHUPETE
Ruled By: PATEL J

Appealed
HB59-09 : DINESH MANILAL NARAN vs RONNAH MAFURIRANO and THE REGISTRAR OF DEEDS
Ruled By: KAMOCHA J

HH27-07 : EDWARD MARUME and ELLEN CHAMUNORWA vs TODD MURANGANWA
Ruled By: MAKARAU JP

SC81-21 : FRANK HUMBE vs DESMOND MUCHINA and SPARKLES SERVICES (PVT) LTD and GODFREY MUNYAMANA and SHERIFF OF ZIMBABWE and FADZAYI MUNYAMANA
Ruled By: BHUNU JA, MATHONSI JA and KUDYA AJA

Appealed
SC110-21 : UPSET INVESTMENTS (PRIVATE) LIMITED vs CHITUNGWIZA MUNICIPALITY
Ruled By: GARWE JA, HLATSHWAYO JA and BHUNU JA

View Appeal
HH100-17 : UPSET INVESTMENTS (PRIVATE) LIMITED vs CHITUNGWIZA MUNICIPALITY
Ruled By: MUREMBA J

HH109-08 : LLOYD GAMBIZA vs PIKIRAI TAZIVA
Ruled By: GOWORA J

HH128-06 : DOBROCK HOLDINGS (PVT) LTD and TURNER AND SONS (PVT) LTD vs TURNER AND SONS (PVT) LTD and ANTHONY TURNER and MARTIN KING and ZAMBEZI PADDLE STEAMER (PVT) LTD and DOBROCK (PVT) LTD
Ruled By: KUDYA J

HH250-17 : CLEOGOZ INVESTMENTS (PRIVATE) LIMITED vs PATRICIA COX (HOUGAARD) and REGISTRAR OF DEEDS N.O.
Ruled By: CHAREWA J

Categories

Law Portal Zimbabwe

Purchase Price re: Approach, Terms of Payment, Ad Stipulator and the Actio Venditi

Appealed SC36-12 : RESERVE BANK OF ZIMBABWE vs CAFCA LTD Ruled By: MALABA DCJ, ZIYAMBI JA and OMERJEE AJA

SC22-09 : MAXMUS SAVANHU vs MAGNET MARERE N.O. and MASTER OF THE HIGH COURT and THE REGISTRAR OF DEEDS Ruled By: MALABA DCJ, CHEDA JA and GARWE JA

HH15-09 : GRISON MUWIDZI vs OPTIMACK INVESTMENTS (PVT) LTD and REGISTRAR OF DEEDS Ruled By: UCHENA J

HH25-10 : MAXWELL MATSVIMBO SIBANDA vs GWYNNE ANNE STEVENSON Ruled By: CHITAKUNYE J

HH88-12 : BLUMO TRADING (PRIVATE) LIMITED t/a COLCOM COMMODITIES vs MORGAN MUDUVURI Ruled By: MATHONSI J

HH92-09 : SUPA PLANT INVESTMENTS (PVT) LTD vs EDGAR CHIDAVAENZI Ruled By: MAKARAU JP

HH154-09 : PETHIAS CHITSUNGO vs D. MASUKU and RUWA LOCAL BOARD Ruled By: MTSHIYA J

HH163-09 : MTOMBENI REGINALD vs TAPFUMANEYI MUPFURAREHWE Ruled By: GOWORA J

HH158-10 : SIZE MAVUTO vs PAUL GOSTINO and PROMENADE REAL ESTATE and THE REGISTRAR OF DEEDS Ruled By: GOWORA J

HH227-10 : MIKE MAKOPE vs GEOFFREY DZUMBUNU and REGISTRAR OF DEEDS N.O. and MINISTER OF LOCAL GOVERNMENT Ruled By: MAVANGIRA J

HB201-11 : CABAT TRADE & FINANCE (PTY) LTD and SECURITY MILLS (PTY) LTD vs THE MOVEMENT FOR DEMOCRATIC CHANGE (MDC-T) Ruled By: KAMOCHA J

HH535-15 : BLESSMORE CHANAKIRA vs SHEPHERD MALCOM N.O. and REGISTRAR OF DEEDS and PHIL RUSCH Ruled By: NDEWERE J

Appealed SC12-20 : ZIMASCO (PVT) LTD vs CASPER TSVANGIRAI and BAOBAB REAL ESTATE and THE REGISTRAR OF DEEDS BULAWAYO Ruled By: GARWE JA, HLATSHWAYO JA and GUVAVA JA

View Appeal HB16-14 : CASPER TSVANGIRAI vs ZIMASCO (PVT) LTD and BAOBAB REAL ESTATE and THE REGISTRAR OF DEEDS, BULAWAYO Ruled By: MUTEMA J

Appealed SC58-20 : YUSUF GAIBIE and MILLY GAIBIE N.O. vs ALEXANDER CASTANHEIRA and RACHEL CASTANHEIRA Ruled By: GARWE JA, BHUNU JA and MAKONI JA

View Appeal HB179-18 : YUSUF GAIBIE and MAHMOUD GAIBIE vs ALEXANDER CASTANHEIRA and RACHEL CASTANHEIRA Ruled By: MAKONESE J

Appealed SC66-20 : BREASTPLATE SERVICE (PRIVATE) LIMITED vs CAMBRIA AFRICA PLC Ruled By: GWAUNZA DCJ, PATEL JA and MAKONI JA

View Appeal HMT55-19 : CAMBRIA AFRICA PLC vs BREASTPLATE SERVICES (PRIVATE) LIMITED T/A NEMCHEM INTERNATIONAL Ruled By: MUZENDA J

HH39-11 : BLUMO TRADING (PVT) LTD vs NELMAH MILLING COMPANY (PVT) LTD and NELSON MAHUPETE Ruled By: PATEL J

Appealed HB59-09 : DINESH MANILAL NARAN vs RONNAH MAFURIRANO and THE REGISTRAR OF DEEDS Ruled By: KAMOCHA J

HH27-07 : EDWARD MARUME and ELLEN CHAMUNORWA vs TODD MURANGANWA Ruled By: MAKARAU JP

SC81-21 : FRANK HUMBE vs DESMOND MUCHINA and SPARKLES SERVICES (PVT) LTD and GODFREY MUNYAMANA and SHERIFF OF ZIMBABWE and FADZAYI MUNYAMANA Ruled By: BHUNU JA, MATHONSI JA and KUDYA AJA

Appealed SC110-21 : UPSET INVESTMENTS (PRIVATE) LIMITED vs CHITUNGWIZA MUNICIPALITY Ruled By: GARWE JA, HLATSHWAYO JA and BHUNU JA

View Appeal HH100-17 : UPSET INVESTMENTS (PRIVATE) LIMITED vs CHITUNGWIZA MUNICIPALITY Ruled By: MUREMBA J

HH109-08 : LLOYD GAMBIZA vs PIKIRAI TAZIVA Ruled By: GOWORA J

HH128-06 : DOBROCK HOLDINGS (PVT) LTD and TURNER AND SONS (PVT) LTD vs TURNER AND SONS (PVT) LTD and ANTHONY TURNER and MARTIN KING and ZAMBEZI PADDLE STEAMER (PVT) LTD and DOBROCK (PVT) LTD Ruled By: KUDYA J

HH250-17 : CLEOGOZ INVESTMENTS (PRIVATE) LIMITED vs PATRICIA COX (HOUGAARD) and REGISTRAR OF DEEDS N.O. Ruled By: CHAREWA J

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Law Portal
Zimbabwe

Appealed
SC36-12 : RESERVE BANK OF ZIMBABWE vs CAFCA LTD
Ruled By: MALABA DCJ, ZIYAMBI JA and OMERJEE AJA

SC22-09 : MAXMUS SAVANHU vs MAGNET MARERE N.O. and MASTER OF THE HIGH COURT and THE REGISTRAR OF DEEDS
Ruled By: MALABA DCJ, CHEDA JA and GARWE JA

HH15-09 : GRISON MUWIDZI vs OPTIMACK INVESTMENTS (PVT) LTD and REGISTRAR OF DEEDS
Ruled By: UCHENA J

HH25-10 : MAXWELL MATSVIMBO SIBANDA vs GWYNNE ANNE STEVENSON
Ruled By: CHITAKUNYE J

HH88-12 : BLUMO TRADING (PRIVATE) LIMITED t/a COLCOM COMMODITIES vs MORGAN MUDUVURI
Ruled By: MATHONSI J

HH92-09 : SUPA PLANT INVESTMENTS (PVT) LTD vs EDGAR CHIDAVAENZI
Ruled By: MAKARAU JP

HH154-09 : PETHIAS CHITSUNGO vs D. MASUKU and RUWA LOCAL BOARD
Ruled By: MTSHIYA J

HH163-09 : MTOMBENI REGINALD vs TAPFUMANEYI MUPFURAREHWE
Ruled By: GOWORA J

HH158-10 : SIZE MAVUTO vs PAUL GOSTINO and PROMENADE REAL ESTATE and THE REGISTRAR OF DEEDS
Ruled By: GOWORA J

HH227-10 : MIKE MAKOPE vs GEOFFREY DZUMBUNU and REGISTRAR OF DEEDS N.O. and MINISTER OF LOCAL GOVERNMENT
Ruled By: MAVANGIRA J

HB201-11 : CABAT TRADE & FINANCE (PTY) LTD and SECURITY MILLS (PTY) LTD vs THE MOVEMENT FOR DEMOCRATIC CHANGE (MDC-T)
Ruled By: KAMOCHA J

HH535-15 : BLESSMORE CHANAKIRA vs SHEPHERD MALCOM N.O. and REGISTRAR OF DEEDS and PHIL RUSCH
Ruled By: NDEWERE J

Appealed
SC12-20 : ZIMASCO (PVT) LTD vs CASPER TSVANGIRAI and BAOBAB REAL ESTATE and THE REGISTRAR OF DEEDS BULAWAYO
Ruled By: GARWE JA, HLATSHWAYO JA and GUVAVA JA

View Appeal
HB16-14 : CASPER TSVANGIRAI vs ZIMASCO (PVT) LTD and BAOBAB REAL ESTATE and THE REGISTRAR OF DEEDS, BULAWAYO
Ruled By: MUTEMA J

Appealed
SC58-20 : YUSUF GAIBIE and MILLY GAIBIE N.O. vs ALEXANDER CASTANHEIRA and RACHEL CASTANHEIRA
Ruled By: GARWE JA, BHUNU JA and MAKONI JA

View Appeal
HB179-18 : YUSUF GAIBIE and MAHMOUD GAIBIE vs ALEXANDER CASTANHEIRA and RACHEL CASTANHEIRA
Ruled By: MAKONESE J

Appealed
SC66-20 : BREASTPLATE SERVICE (PRIVATE) LIMITED vs CAMBRIA AFRICA PLC
Ruled By: GWAUNZA DCJ, PATEL JA and MAKONI JA

View Appeal
HMT55-19 : CAMBRIA AFRICA PLC vs BREASTPLATE SERVICES (PRIVATE) LIMITED T/A NEMCHEM INTERNATIONAL
Ruled By: MUZENDA J

HH39-11 : BLUMO TRADING (PVT) LTD vs NELMAH MILLING COMPANY (PVT) LTD and NELSON MAHUPETE
Ruled By: PATEL J

Appealed
HB59-09 : DINESH MANILAL NARAN vs RONNAH MAFURIRANO and THE REGISTRAR OF DEEDS
Ruled By: KAMOCHA J

HH27-07 : EDWARD MARUME and ELLEN CHAMUNORWA vs TODD MURANGANWA
Ruled By: MAKARAU JP

SC81-21 : FRANK HUMBE vs DESMOND MUCHINA and SPARKLES SERVICES (PVT) LTD and GODFREY MUNYAMANA and SHERIFF OF ZIMBABWE and FADZAYI MUNYAMANA
Ruled By: BHUNU JA, MATHONSI JA and KUDYA AJA

Appealed
SC110-21 : UPSET INVESTMENTS (PRIVATE) LIMITED vs CHITUNGWIZA MUNICIPALITY
Ruled By: GARWE JA, HLATSHWAYO JA and BHUNU JA

View Appeal
HH100-17 : UPSET INVESTMENTS (PRIVATE) LIMITED vs CHITUNGWIZA MUNICIPALITY
Ruled By: MUREMBA J

HH109-08 : LLOYD GAMBIZA vs PIKIRAI TAZIVA
Ruled By: GOWORA J

HH128-06 : DOBROCK HOLDINGS (PVT) LTD and TURNER AND SONS (PVT) LTD vs TURNER AND SONS (PVT) LTD and ANTHONY TURNER and MARTIN KING and ZAMBEZI PADDLE STEAMER (PVT) LTD and DOBROCK (PVT) LTD
Ruled By: KUDYA J

HH250-17 : CLEOGOZ INVESTMENTS (PRIVATE) LIMITED vs PATRICIA COX (HOUGAARD) and REGISTRAR OF DEEDS N.O.
Ruled By: CHAREWA J