This is an appeal from a decision of the High Court sitting
at Bulawayo dismissing the appellants' claim for the transfer of two immovable
properties situated in the City of Bulawayo. The background to this matter is
fairly complicated but may be simplified and summarized as follows.
The first appellant was the former shareholder and Director
of the respondent companies, which are the registered owners of the two
properties in question. He was persuaded to enter into a business transaction
involving one Mahomed Jassat and a company called Allen Wack & Shepherd
(Pvt) Ltd [AW&S]. Mahomed Jassat's dealings with Allen Wack & Shepherd
(Pvt) Ltd were conducted through his company known as Youngblood Investments
(Pvt) Ltd. In order to reduce his company's indebtedness to Allen Wack &
Shepherd (Pvt) Ltd, Mahomed Jassat agreed to dispose of ten properties,
including the two owned by the respondents, through the sale of shares to Allen
Wack & Shepherd (Pvt) Ltd. Consequently, in June 1999, the first appellant
concluded two agreements with Allen Wack & Shepherd (Pvt) Ltd for the sale
of shares in the respondent companies. At the same time, both appellants also
concluded two Buy Back Agreements with the respondents for the repurchase of
the two properties within ten years. The purchase price was agreed at ZW$9
million and ZW$6 million, respectively, to be increased by 43.5% per annum from
the date of signature to the date when the options to purchase were exercised. Subsequently,
the share sale agreements were duly implemented with the issuance of share
certificates and changes in the Directorship of both respondent companies.
In June 2004, the appellants exercised their options to
purchase under the Buyback Agreements and tendered the sum of ZW$30 million in
respect of the properties, representing ZW$15 million capital and ZW$15 million
interest. However, Allen Wack & Shepherd (Pvt) Ltd rejected this tender and
the appellants failed to pay the agreed purchase price within the prescribed
three months period. In October 2004, the respondents cancelled the Buyback Agreements
and the options to purchase as having lapsed.
The appellants then issued summons for the transfer of both
properties.
Following a full trial, the High Court held that the
calculation of the option price was not subject to the in duplum rule and that
the appellants had failed to tender the correct option price within three (3)
months of having exercised their options to purchase. Moreover, the options to
purchase had lapsed and the respondents were not obliged to give three (3)
months' notice of cancellation. They were entitled to cancel three (3) months
after the options to purchase had been exercised by the appellants. In the
event, the court dismissed the appellants' main and alternative claims with
costs.
The grounds of appeal herein are numerous and repetitive.
Nevertheless, the thrust of the appellants' case is that the court a quo erred
in rejecting the evidence adduced by the appellants and their witnesses. They further contend that the agreements in
question were disguised surety agreements rather than agreements of sale. The
transaction, as a whole, amounted to security for debts and the interest
accrued thereunder was therefore subject to the in duplum rule. Thus, the
amounts tendered by the appellants, in June 2004, in accordance with the in
duplum rule, constituted full payment of the purchase price due in discharge of
the Buy Back Agreements.
Alternatively, payment under the options to purchase was to
be effected within three months after notification of the purchase price by the
respondents and not three (3) months after the options had been exercised….,.
Turning to the merits of the appellants' case, the critical
clause that fell for interpretation by the court a quo is clause 3 of the two Buy
Back Agreements. Its relevant portion provides as follows:
“…, if the full purchase price is not paid or guaranteed to
the satisfaction of the conveyancers within a period of three months from the
date of the exercise of the option, the company shall have the right to cancel
the sale and all option rights will cease.”
The intention of the parties, as gleaned from this clause,
is abundantly clear, viz. In the
event that the appellants failed to pay the full purchase price within three
months of exercising their options to purchase, the respondents were entitled
to cancel the sales and the appellants' option rights would cease upon such
cancellation.
This is precisely what happened in this case.
The appellants failed to pay the agreed purchase price
within the prescribed period and the respondents duly cancelled the sales and
the attendant options to purchase. And this is also what the court a quo found
had in fact occurred. In my view, the learned judge correctly interpreted the Buyback
Agreements in accordance with the issues agreed for trial.
His findings and determinations in this regard
cannot be faulted.
