Court name
Harare High Court
Case number
82 of 2021
Case name
Nelchen Investments (Private) Limited v Toyorama Invetsments (Private) Limited And Another
Media neutral citation
[2021] ZWHHC 82
Judge
Musithu J

HH 82/21

Case No. HC 5466/19

 

NELCH INVESTMENTS (PVT) LTD                     

versus

TOYORAMA INVESTMENTS (PVT) LTD

and

THE REGISTRAR OF DEEDS

 

HIGH COURT OF ZIMBABWE

MUSITHU J

HARARE: 18 June 2020 & 9 March 2020

 

 

Opposed Application – Specific Performance

 

Mr N. Chikono, for the applicant  

Mr E.N. Dube, for the 1st respondent

 

 

MUSITHU J:

INTRODUCTION

The applicant seeks against the respondents, the following relief set out in the draft order accompanying the application:

            “IT IS ORDERED THAT:-

  1. The Applicant is not in breach of the agreement of sale in respect of Stand number 1227 Tynwald South Measuring 2052m2 in the name of the 1st respondent.
  2. The 1st Respondent be and is hereby ordered to attend to Zimbabwe Revenue Authority for the assessment of capital gains tax and sign all papers to facilitate the transfer of the property described in paragraph 1 above into the Applicant’s name.
  3. If the 1st Respondent fails or refuses to sign all such papers within seven days of being called to do so, the Sheriff of Zimbabwe be and is hereby authorised to sign all such papers on behalf of 1st Respondent.
  4. 2nd Respondent is directed to register the aforementioned property in favour of the Applicant.
  5. The 1st Respondent pays cost of suit on a higher scale of legal practitioner and client….”

 

1st respondent opposed the application. The matter was argued on 18 June 2020 and I reserved judgment. From engagements with counsel, it seemed an amicable settlement was possible.  Counsel sought some time to further engage. The request was granted. It was agreed that the parties would revert to me on or before 6 July 2020 with an update on the outcome of their deliberations. On 6 July 2020, I met counsel in chambers. They advised that they were on the right path. They needed about a week to clear sticking issues. They promised to revert to me on or before 17 July 2020 with a final position. Indeed on 17 July 2020, I received a joint communique from counsel. They had failed to reach agreement. The court could proceed to determine the matter.

FACTUAL BACKGROUND

            The genesis of the dispute is set out in the papers before the court. It is as follows. Applicant and 1st respondent entered into an agreement of sale of an immovable property known as Stand Number 1227 Tynwald South, Harare measuring 2052m2 (the property). 1st respondent was the seller and applicant the purchaser. The agreement was signed on 16 January 2018.  The purchase price was US$126 000.00. It was supposed to be paid by way of a cash transfer to the seller or its lawyers trust account. This was to be done upon signing of the agreement. Applicant failed to comply with the payment terms. The parties negotiated an addendum to redefine the payment terms. It was signed by the seller on 21 June 2018, and by the purchaser on 25 June 2018.[1]

            Applicant submits that following the signing of the addendum, it paid a total amount of $54 000.00 as follows:

  1. 15 June 2018, $8 000.00 was paid into Tarisai Simbi’s account;
  2. 10 July 2018, $10 000.00 was paid into Tarisai Simbi’s account;
  3. 27 July 2018, $10 000.00 was paid into Tarisai Simbi’s account;
  4. 4 September 2018, $10 000.00 was paid into Tarisai Simbi’s account;
  5. 17 October 2018, $4 500.00 was paid into Tarisai Simbi’s account;
  6. 9 November 2018, $5 500 was paid into Tarisai Simbi’s account;
  7. 9 November 2018, $6 000 was paid into the account of Muteworld Investments.

I pause to remark that the amount of $8 000.00 was in fact paid on 15 June 2018, almost a week before the addendum was signed. It is therefore erroneous for applicant to state that the amount was paid after the signing of the addendum.

Applicant’s Case

Applicant contends that the total amount of $54 000.00 was paid before the deadline stated in the addendum. 1st respondent was however refusing to pass transfer of the property citing a breach of the contract by the applicant. This position was communicated to the applicant through a letter of 22 November 2018[2]. The letter reads:

            “Dear Mr Nelson Bekitemba Chikwana

 

I refer to the letter which I wrote to you on the 17th of October 2018 requesting you to correct the breach of agreement by Nelch Investments with Toyorama Investments and you failed to do so within the stipulated time.

Therefore Toyorama Investments has chosen to put the property on the market as it is entitled to do by clause 7a of the agreement of sale with Nelch Investments.

 

Yours sincerely

 

Tarisai G. Simbi”

 

Applicant remained adamant that it had complied with the agreement as payment was made in full before the deadline. On 11 April 2019, applicant’s legal practitioners wrote to respondent as follows:

“Dear Madam T. G. Simbi

……………………………

……………………………

RE: TRANSFER: STAND NUMBER 2052 TYNWALD

We have been supplied with a copy of the agreement of sale between Toyorana Investments P/L and Nelch Investments P/L in respect of the above property.

 

We are advised that the purchase price has been paid in full. We therefore advise that you can now attend to ZIMRA for capital gains assessment so that a capital gains certificate can be issued to enable us to now effect transfer of the property in favour of the purchasers.

 

Kindly advise when both parties can avail themselves for that purpose. You can be assisted by the agent, Mr Mabhachi.

We trust that this shall be done expeditiously….”[3]

The letter solicited a response from 1st respondent’s legal practitioners. The letter of 25 April 2019 states:

                        “…RE: TRANSFER: STAND NUMBER 2052 TYNWALD

                        ……………..

We advise you that your client was in breach of the agreement of sale and as such the agreement of sale was terminated. Reference is made to letters of termination dated 16th October 2018 and 22nd November 2018 respectively. Your client failed to remedy the breach hence the agreement of sale was terminated. It therefore follows that the said processes cannot be done realising that they are being done after the termination of the agreement.”[4]

 

In reply through their letter of 16 May 2019, applicant’s legal practitioners insisted their client had not breached the agreement[5]. Following the signing of the addendum, parties agreed that applicant rectifies its earlier breach by paying interest of 3,5% per month to the extent of the breach. The parties agreed on a figure of $9 338.00. The balance of the purchase price amounting to $42 850.00 was to be paid in five months beginning 10 July 2018 and ending on 10 November 2018. As at 9 November 2018, applicant had paid $48 000.00 directly into the account of Tarisai Simbi. The $6 000.00 paid into the Muteworld Properties (Private) Limited (the agent) account was partly meant to cover the capital gains tax that the parties had agreed upon. 1st respondent was given five days within which to comply with applicant’s demands failing which applicant would approach the court to compel transfer.

            1st respondent was unfazed. Through its legal practitioner’s letter of 21 May 2019, it insisted applicant had breached the agreement.[6] The agreed position was that applicant would pay monthly instalments of $10 000.00. No such payment was made in October 2018. Applicant was given notice to remedy the breach within seven days, but failed to do so. Payments made after the cancellation of the agreement were therefore null and void. 1st respondent also denied there was an arrangement for any payment to be made through the agent. In any case, 1st respondent denied ever receiving any amount from the agent. 1st respondent offered to refund the amounts paid by the applicant, subject to a deduction in respect of damages suffered. The letter elicited a further response from applicant’s legal practitioners. In their letter of 22 May 2019,[7] they averred that 1st respondent had failed to establish any breach of the agreement by the applicant. The purported cancellation was done long after performance was rendered in full.

            Applicant submitted that 1st respondent was obliged to pass transfer in its favour, following its compliance with the terms of the agreement. Further, since it was already in occupation, applicant also claimed to have incurred expenses in excess of US$70 000.00. It continued to be prejudiced by 1st respondent’s intransigence.

1st Respondent’s Case

            As already noted in the exchanges between the parties’ legal practitioners, 1st respondent was adamant that applicant had breached the agreement. 1st respondent referred to a notice that had been given to applicant to remedy its breach within seven days, but had not been complied with. Applicant had conveniently omitted to disclose the letter so as to mislead the court. The letter of 16 October 2018 reads:

“Re: Agreement of sale between Toyorama Investments P/L and Nelch Investments P/L

 

I am writing this letter to bring to your attention as Nelch Investments P/L’S representative, Nelch Investments P/L’s breach to clause 1.1 of the agreement of sale which it made with Toyorama Investments P/L of which I am a representative of on the 19th of January 2018 with an addendum on the 21st June 2018………….

 

In terms of the default/breach clause 7a of the agreement of sale, Toyorama Investments P/L hereby gives Nelch Investments P/L seven (7) days to remedy the breach in full, after which it will exercise its right as specified in the said clause of the agreement of sale. If the breach is not remedied within the stipulated seven (7) days we should both consider the agreement of sale between Nelch Investments P/L and Toyorama Investments P/L as cancelled without any further notice……”[8]

 

The applicant’s representative acknowledged receipt of the letter on 25 October 2018. 1st respondent maintains that the payment of 17 October 2018 was only made pursuant to a notice to remedy the breach. That payment ought to have been made on or before 10 October 2018. The notice required applicant to remedy the breach within seven days, failing which the agreement would be cancelled without further notice. 1st respondent also denied that it was relying on the letter of 22 November 2018, which it insisted only served as a reminder of the notice of 16 October 2018. 1st respondent further averred that the full payment was not made to it. It never instructed applicant to make any payment through the agent. Neither did the agreement direct the applicant to do so. Consequently, 1st respondent never received any payment made through the agent. In any case, even if payment was made, it was well after the deadline.

1st respondent disputed applicant’s claim of having incurred expenses in excess of US$70 000.00. It was 1st respondent that continued to suffer prejudice since applicant remained in occupation from the date of breach and cancellation of the agreement, without paying any rentals.

Applicant’s Reply

            Applicant denied that 1st respondent’s letter of 16 October 2018 specified any breach allegedly committed by applicant. In terms of the addendum, the full payment ought to have been made by 10 November 2018, and this was complied with. At any rate, the alleged breach in respect of the month of October 2018 was remedied within the specified seven day period. The acknowledgment of receipt of the letter showed that the letter was served long after payment was made. Consistent with the terms of the addendum, all payments were made before the final payment date of 10 November 2018. There was no breach to talk about.

            Applicant maintains that it was the letter of 22 November 2018 which gave the impression that 1st respondent was terminating the agreement at that stage. Applicant averred that it made improvements to the property, which were in excess of US$70 000.00. That amount was stated in order to demonstrate the prejudice applicant would suffer in the event that 1st respondent refused to render transfer.

THE ISSUES

            Two issues stand out for determination herein. These are:

  • Whether applicant committed a breach which warranted the termination of the agreement; and
  • Whether 1st respondent lawfully terminated the agreement of sale pursuant to the alleged breach.

THE LAW

The general approach of the courts when dealing with contractual disputes of this nature was set out in Ashanti Goldfields Zimbabwe Limited v Jafati Mdala.[9] The court said:

It is an accepted principle of our law that courts are not at liberty to create contracts on behalf of parties, neither can they purport to extend or create obligations, whether mandatory or prohibitory, from contracts that come before them. The role of the court is to interpret the contracts and uphold the intentions of the parties when they entered into their agreements provided always that the agreement meets all the elements of a valid contract. This principle was set out clearly in the case of Kundai Magodora & Ors v Care International Zimbabwe SC 24/14 by PATEL JA when he stated the following:

“In principle, it is not open to the courts to rewrite a contract entered into between the parties or to excuse any of them from the consequences of the contract that they have freely and voluntarily accepted, even if they are shown to be onerous or oppressive. This is so as a matter of public policy. See Wells v South African Alumenite Company 1927 AD 69 at 73; Christie: The Law of Contract in South Africa (3rd ed.) at pp. 14-15. Nor is it generally permissible to read into the contract some implied or tacit term that is in direct conflict with its express terms. See South African Mutual Aid Society v Cape Town Chamber of Commerce 1962 (1) SA 598 (A) at 615D; First National Bank of SA Ltd v Transvaal Rugby Union & Another 1997 (3) SA 851 (W) at 864E-H.” (My emphasis).

 

The position of the law as explicated above is however not absolute. There exists exceptional cases where courts are expected to have regard to the context of the written agreement in order to resolve any ambiguities that may arise in interpretation.

 

 

THE SUBMISSIONS

            For the applicant, Mr Chikono submitted that the full amount was paid before the deadline of 10 November 2018. The amount of $6 000.00 paid to the agent on 9 November 2018 constituted part of the outstanding amount. If one were to consider the purchase price of the property, surely the amount that remained outstanding, even assuming the payment made through the agent was ignored, did not justify the cancellation of the agreement. In its heads of argument, applicant cited the cases of Aucamp v Morton[10] and Mud Man Enterprises (Pvt) Ltd T/A Blue Chip Agencies v Nechironga and Others[11] to advance its position. Mr Chikono further submitted that although the payment schedule prepared by the agent showed that an amount of $40 000.00 had been paid, the balance of $2 850.00 that remained outstanding as per the addendum was subsumed in the $6 000.00 paid directly into the agent’s account. That amount catered for the outstanding balance and capital gains tax. Counsel urged the court to adopt a robust approach and invite the agent to come and clarify the makeup of the $6 000.00.

            For the 1st respondent Mr Dube, argued that the purchase price was not paid in full. Applicant was given an opportunity to rectify its breach, but it turned a blind eye resulting in the cancellation of the agreement. Applicant only paid $34 500.00. The payment of $5 500 on 9 November 2018 was only made after the agreement was cancelled. Counsel further submitted that 1st respondent was concerned with compliance with the agreement, and not the making of haphazard payments before the deadline. The parties would not have clearly specified the instalments, had the intention been otherwise.

            In reply Mr Chikono submitted that as at 10 November 2018, no breach of the agreement had occurred. The addendum required the balance of $42 850 to be “paid in 5 equal months from the 10th of July 2018 up to the 10th of November 2019”. All payments were made before 10 November 2018. The agreement between the parties fixed time for performance, and performance was rendered within the agreed timeframes. The alleged notice of breach was not clear on the nature of the infringement. The notice did not satisfy the minimum specifications of the law. The court was referred to the case of Asharia v Patel and Others[12]

 

 

 

ANALYSIS

Whether applicant committed a breach which warranted the termination of the agreement.

            Whether or not applicant failed to render payment timeously thereby committing a breach turns on the interpretation of the addendum which revised the payment terms. The critical part of the addendum reads as follows:

“….It is agreed that the purchaser shall pay interest at 3,5% per month to the effect that he is in breach of the agreement. The interest for the breach is from February up to November 2018 calculated on a pro rata basis, at an agreed monthly payment of $10 000 the interest is $9 338. This interest shall be paid on signing of the Addendum. The balance of $42 850 shall be paid in 5 equal months from the 10th of July 2018 up to the 10th of November 2018” (Underlining for emphasis).

 

Mr Chikono argued that the addendum only required that the balance of $42 850.00 be paid in five equal months. It did not specify the instalments. Mr Dube on the other hand argued that the addendum clearly specified the instalments applicant was required to pay by 10 November 2018.

There is clearly an ambiguity in the construction of the addendum, which betrays a high level of poor craftsmanship on the part of the drafters of the document. Courts are generally loath to interfere with the parties’ freedom to contract. This is in line with the revered-time honoured doctrines of freedom of contract, sanctity of contract and privity of contract. However, there has been a general relaxation of these doctrines where circumstances so require that the courts should endeavour to give effect to the intention of the parties as expressed in the agreement. Thus in Sheisam Consulting (Pvt) Ltd & Ano v Energy and Information Logistics (Pvt) Ltd.[13] CHAREWA J said:

“It is settled in our law that courts do not make contracts for parties. And where a contract has been reduced to writing, the basic principle of the caveat subscripto rule is that parties are bound by the ordinary meaning of what they have appended their signatures to.[14] The court is therefore generally confined to relying on the provisions of the contract where a contractual dispute arises; otherwise the value of written contracts will be eroded.[15]

Consequently, a contract must be interpreted, either literally, through its ordinary grammatical meaning[16] or contextually in that words in a contract must be read within the entire context of the contract so as to take consideration of the apparent scope and purpose of the contractual provisions.[17]

Therefore, it is only where a contract is totally ambiguous, having looked at its literal and contextual meaning, that the court may import into it an unexpressed provision which derives from the common intention of the parties as inferred from the surrounding circumstances and which the parties expressly failed to agree on. The sole purpose of this is to give efficacy to the contract in the business sense.[18]

Courts are at large to have regard to extrinsic circumstances surrounding the written agreement in order to resolve any ambiguities that may have triggered a dispute.[19] The critical part of the addendum states that “the interest for the breach is from February up to November 2018 calculated on a pro rata basis, at an agreed monthly payment of $10 000 the interest is $9 338”. On the face of it, the statement appears convoluted and all jumbled up. That statement speaks of two things. It refers to interest for the breach, which is calculated on a pro rata basis. The interest was to be paid on the signing of the addendum. It further speaks of an agreed monthly payment of $10 000.00. The last part of the addendum requires the balance of $42 850 to be paid in 5 equal months, without specifying the instalment.

The court’s view is that a contextual reading of the addendum shows that the intention of the parties was that the outstanding balance be paid in monthly instalments of $10 000.00. I do not believe that the reference to “an agreed monthly payment of $10 000” was inserted in the agreement for no specific reason. It is also important to note that for the months of July (on 10 and 27 July), and September 2018, applicant paid $10 000.00 for each month. That to me would not have been a coincidence.  It was in keeping with the terms of the agreement.

If the agreement by the parties was for payment of monthly instalments of $10 000.00, then as at the monthend of October 2018, applicant had committed a breach by paying $4 500, instead of the agreed instalment. That breach justified the invoking of the breach clause in the agreement of sale. 1st respondent contends that it invoked the breach clause leading to the cancellation of the agreement. It accepts that the amount of $4 500 may have been paid before cancellation, while the $5 500 was paid well after cancellation.

Even if one were to accept applicant’s submission that the amount of $5 500.00 was paid before the deadline, the total amount paid would still fall short of the balance of $42 850. The amounts paid directly to 1st respondent as from 10 July 2018 to 9 November 2018 would add up to $40 000.00. The amount of $6 000.00 paid on 9 November 2018 was deposited into the agent’s account. Mr Chikono submitted that the amount was made up of the outstanding balance of $2 850.00 and the Capital Gains Tax. His submission found no support in the papers before the court. Both the main agreement and the addendum did not make provision for any part of the purchase price to be paid through the agent. On its part, 1st respondent denied ever instructing the applicant to make any payment through the agent. Clause 1.1 of the main agreement required that the purchase price be “payable upon signing of this Agreement of Sale by both parties, to the Seller or to his lawyers trust account”. That payment arrangement was not altered by the addendum. In fact, the addendum specifically incorporated clause 1.1 of the main agreement.

Realizing the imprudence of his argument, Mr Chikono urged the court to adopt a robust approach and invite the agent to come and confirm that the amount of $6 000.00 included the outstanding balance of $2 850.00. That proposal was obviously ill-conceived coming as it did, at this stage of the proceedings. The applicant was aware at the very outset that the dispute between the parties was centered on whether it had paid the full amount timeously. It could have attached the agent’s supporting affidavit at the time of instituting proceedings. Additionally, the supporting affidavit could still have been attached to the applicant’s answering affidavit. In the circumstances, the applicant can only blame itself for its reticence and lackadaisical approach. It is this court’s view that the applicant was in breach of the agreement.

Whether 1st respondent lawfully terminated the agreement of sale pursuant to the alleged breach.

            The first paragraph of the addendum provided that “as per clause 1.1 and clause 7 of the agreement, both parties are entitled to cancel the agreement if there is a breach”. Clause 1.1 of the main agreement dealt with payment terms, while clause 7(a) dealt with the breach of the agreement by the purchaser.[20] In the event of the purchaser failing to fulfil its obligations under the agreement, or in the event of any breach of any condition of the agreement, which was not remedied on seven (7) days written notice, then the seller was entitled to cancel the agreement and sue for any damages suffered as a result of the breach. 1st respondent contends that it gave applicant notice to remedy its breach by way of a letter of 16 October 2018. Applicant failed to remedy the breach resulting in the cancellation of the agreement. 1st respondent’s position is summarised in its opposing affidavit as follows:

“7.1. In as much as it is not denied that such payments could have been made, it must be noted that the payment on the 17th of October 2018 was made pursuant to a notice to remedy breach. The payment was supposed to be made on or before the 10th of October 2018. The Applicant defaulted in making payment leading to a notice to remedy breach being sent to it. Reference is made to Annexure “A” being the copy of the notice to remedy breach. The second paragraph in the said notice placed the Applicant in mora to remedy the breach in full within seven (7) days. Failure of which the Applicant was notified that the agreement would be cancelled without any further notice…….”

In paragraph 8.1, 1st respondent states that “….the Applicant failed to remedy breach and the agreement of sale was cancelled in terms of the agreement…” In paragraph 11.1, 1st respondent states “….when the Applicant breached the addendum, it seemed apparent that the Applicant could not honour its obligations resulting in a notice dated 16 October 2018. The applicant failed to remedy the breach in full leading to the cancellation of the agreement without need for further communication. The letter dated 22 November 2018, was not a termination letter but a reminder of the cancellation. The wording in the said letter is very clear on that”.

Curiously, the 1st respondent does not state when exactly it cancelled the agreement of sale. In his oral submissions, Mr Dube was not helpful either. He continued to refer to the notice of 16 October 2018, and that the payment of $5 500.00 was only made after cancellation of the agreement. From the 1st respondent’s averments referred to above, one can only conclude that the same notice of 16 October 2018, served as the letter of cancellation of the agreement. This is so if one considers the 1st respondent’s submission that the letter of 22 November 2018 was no termination letter, but a reminder of the cancellation. The letter of 22 November 2018 refers to the letter of 17 October 2018 (I believe the writer meant 16 October being the date of the notice letter).

There are several problems with the letter of 16 October 2018, which tend to give credence to Mr Chikono’s submission that the agreement was not properly cancelled. Clause 7(a) of the main agreement does not envisage that the notification letter shall serve as the cancellation letter as suggested by the 1st respondent. The clause provides that if the alleged breach is not remedied within seven (7) days of written notice having been dispatched to the purchaser, “the seller shall be entitled to cancel this Agreement and sue the Purchaser for any damages the Seller will have suffered as a result of the breach…”. A literal interpretation of these words suggests that in the event that the purchaser fails to remedy the breach, then the seller will cancel the agreement. That means the notification and the cancellation are two separate events. The seller cannot give notice to the purchaser to remedy the breach and in the same breath cancel the agreement. The two cannot be combined. The cancellation could only come after the failure to remedy the breach by the purchaser. Put differently, the expectation was that upon the purchaser failing to remedy the breach, the seller would formerly notify the purchaser of the cancellation of the agreement. I do not see how else the cancellation would have been effected in view of the wording of clause 7(a) of the main agreement.

The last paragraph of the letter of 16 October 2018 read in part In terms of the default/breach clause 7a of the agreement of sale, Toyorama Investments P/L hereby gives Nelch Investments P/L seven (7) days to remedy the breach in full, after which it will exercise its right as specified in the said clause of the agreement of sale. If the breach is not remedied within the stipulated seven (7) days we should both consider the agreement of sale between Nelch Investments P/L and Toyorama Investments P/L as cancelled without any further notice……”. Clause 7(a) of the main agreement does not provide for cancellation “without further notice”. Instead, it entitles the seller to “cancel this Agreement and sue the Purchaser for any damages the Seller will have suffered as a result of the breach”. The fact that Mr Dube failed to explain the point at which the agreement was cancelled, shows that the intention of the parties was that any cancellation was to be done upon the expiry of the notice to remedy the breach.

This conclusion gains traction if one also considers the contents of the 1st respondent’s letter of 22 November 2018. The letter referred to the earlier letter of 17th October 2018 “requesting you to correct the breach of agreement by Nelch Investments with Toyorama investments and you failed to do so within the stipulated time. Therefore Toyorama investments has chosen to put the property on the market as it is entitled to do by clause 7a of the agreement of sale with Nelch investments”. If indeed this letter was merely a reminder of the letter of 16 October 2018, as submitted by the 1st respondent, then one wonders the motive of writing such a letter well after the agreement had been cancelled. What was the point of informing the applicant that 1st respondent was putting the property on the market when the agreement had already been cancelled? As already stated, the 1st respondent poured cold water on that letter insisting the agreement was already cancelled at that stage.

The position of the law is also clear in this regard. In order to constitute a notice of rescission, the language used by a party seeking rescission must clearly and unequivocally convey an intention to cancel the contract.[21] That means the party in default must not be left in doubt as to the intention of the innocent party concerning the cancellation of the contract and the reasons thereof. Similarly, the court should not be required to speculate whether or not a party exercised its right to cancel the contract. It must all be clear from the communication. Broadly speaking, there must be no debate as to whether an agreement was cancelled or not.

Failure to comply with the Contractual Penalties Act [Chapter 8:04] (the Act).

The court would still have found the alleged cancellation of the agreement unlawful on a point of law, which neither counsel addressed the court on. Section 8 (1) and (2) of the Act provides:

8 Restriction of sellers’ rights

(1) No seller under an instalment sale of land may, on account of any breach of contract by the purchaser—

(a) enforce a penalty stipulation or a provision for the accelerated payment of the purchase price; or

(b) terminate the contract; or

(c) …………….;

unless he has given notice in terms of subsection (2) and the period of the notice has expired without the breach being remedied, rectified or discontinued, as the case may be.

(2) Notice for the purposes of subsection (1) shall—

(a) be given in writing to the purchaser; and

(b) advise the purchaser of the breach concerned; and

(c) call upon the purchaser to remedy, rectify or desist from continuing, as the case may be, the breach concerned within a reasonable period specified in the notice, which period shall not be less than—

(i) the period fixed for the purpose in the instalment sale of the land concerned; or

(ii) thirty days;

whichever is the longer period.

The following terms as defined under section 2 of the Act are significant.

“instalment sale of land” means a contract for the sale of land whereby payment is required to be made—

(a) in three or more instalments; or

(b) by way of a deposit and two or more instalments;

and ownership of the land is not transferred until payment is completed;

“land” includes—

(a) any improvements or anything permanently attached or growing on land ; and

(b) …….(underlining for emphasis)

 

It is common cause that the addendum commuted what was otherwise a single cash transfer agreement to an instalment sale agreement. The addendum required the balance to be paid in five equal instalments. The subject matter of the sale was described as “Certain 2052 sqm of land called stand 1227 Tynwald South Township Of stand 1043 Tynwald South Township situate in the district of Salisbery…..Comprising: Open shade….”. The significance of s8 (2) (c) of the Act is that the period within which a purchaser is required to remedy a breach must not be less than the period specified in the instalment sale agreement or 30 days whichever is the longer period.  In casu, the provisions of the Act kicked in the moment the agreement was modified into an instalment sale agreement. The notice to remedy the breach had to comply with section 8(2) (c) of the Act. Failure to comply with the section 8 (2) (c) was fatal.[22] Section 11 of the Act states that “No waiver of any right or benefit conferred by this Act shall be of any force or effect”. The seven days’ notice given by the applicant violated the law. The purported cancellation, coming as it did on the backdrop of an invalid notification, was consequently ineffectual and of no effect. In Manengureni v Kakomo & Two Others[23], DUBE J said:

“Notwithstanding the provision in the agreement for 7 days' notice to rectify the breach, the defendant was required to give the plaintiff 30 days in terms of s8 of the Act. The 7 day period within which to remedy the breach provided for is shorter than the 30 days stipulated in s8 of the Contractual Penalties Act. In that event, the plaintiff was entitled to be given 30 days’ notice to rectify the breach, which is the longer period.  The plaintiff was not lawfully placed in mora because he was given 7 days’ notice and not the statutory 30 days’ notice to rectify the breach as required by s8 of the Contractual Penalties Act” (Underlining for emphasis).

The failure by 1st respondent to comply with the law means that the applicant was never placed in mora.[24] Consequently, the purported cancellation of the agreement of sale between the applicant and 1st respondent, by the 1st respondent is null and void ab initio. The agreement between the parties remains extant, until such time 1st respondent terminates it in compliance with the law.

Whether applicant is entitled to the relief it seeks.

            Having come to the conclusion that the contract between the two parties remains extant, the question which arises is whether applicant is entitled to the relief it seeks. Primarily, applicant seeks an order of specific performance against the 1st respondent. It wants the court to declare that it did not breach the agreement of sale. In the event that the court makes that finding, it wants the 1st respondent directed to take all necessary steps to transfer the property into its name, failing which the Sheriff for Zimbabwe should do so on 1st respondent’s behalf. The remedy for specific performance is entirely in the discretion of the court, and subject to evaluation on a case by case basis. In Zimbabwe Express Services (Private) Limited v Nuanetsi Ranch Private Limited,[25] the court articulated the position of the law as follows:

“An order of specific performance is, however, at the discretion of the court and there are circumstances in which a court may refuse to grant an order of specific performance. The discretion is:

“not completely unfettered. It remains, after all, a judicial discretion and from its very nature arises from the requirement that it is not to be exercised capriciously, nor upon a wrong principle (Ex parte Neethling (supra at 335). It is aimed at preventing an injustice for cases do arise where justice demands that a plaintiff be denied his right to performance and the basic principle thus is that the order which the court makes should not produce an unjust result which will be the case, e.g. if, in the particular circumstances, the order will operate unduly harshly on the defendant.”

Per HEFER JA in Benson v South Africa Mutual Life Assurance Society 1986 (1) SA 776(A) at 783 C-D”

 

The court will not order specific performance where there is a substantial and material breach of the agreement by the party seeking enforcement of same.[26] This court has already established that applicant breached the agreement of sale. It did not pay the full purchase price. There was no evidence before the court to suggest that part of the amount paid through the agent was for the 1st respondent’s account. The agreement did not require that the purchase price or any portion thereof, be paid through the agent. In as much as applicant was not properly placed in mora, thanks to the invalid notice by 1st respondent, it still had an obligation to comply with the agreement. It did not fully comply. For that reason, it cannot competently seek the remedy of specific performance against 1st respondent. Consequently, the application must fail.

COSTS  

            1st respondent sought the dismissal of the application with costs on the legal practitioner and client scale. In Nel v Waterberg Landbouwers Ko-operative Vereeniging,[27] the court said of such costs:

“The true explanation of awards of attorney and client costs not expressly authorised by statute seems to be that, by reason of special considerations arising either from the circumstances which give rise to the action or from the conduct of the losing party, the court in a particular case considers it just, by means of such an order, to ensure more effectually than it can do by means of a judgment for party and party costs that the successful party will not be out of pocket in respect of the expense caused to him by the litigation….”[28]

            An award of costs must relate to the circumstances of the case. Neither party can claim to have scored a major success in this case. I gave the parties an opportunity to discuss the matter further hoping a settlement would materialise having observed the pitfalls that beset the parties’ respective cases from the outset. Unfortunately they chose this lengthy and costly route in a matter that required counsel to exercise their legal minds and properly advise their respective clients.  Litigation would have been averted. It is the court’s view that this is a proper case to direct that each party bears its own costs of suit.

DISPOSITION 

Accordingly, it is ordered as follows;

  1. The application is dismissed.
  2. Each party shall bear its own costs.

 

Ngarava Moyo & Chikono, legal practitioners for the applicant

Chinawa Law Chambers, legal practitioners for the 1st respondent

 

 

[1] Page 15 of the record. The addendum reads:

“As per clause 1.1 and clause 7 of the agreement, both parties are entitled to cancel the agreement if there is a breach. It is agreed that the Purchaser shall pay interest at 3,5% per month to the effect that he is in breach of the agreement. The interest for the breach is from February up to November 2018 calculated on a pro-rata basis, at an agreed monthly payment of $10 000 the interest is $9 338. This interest shall be paid on signing of the Addendum. The balance of $42 850 shall be paid in 5 equal months from the 10th of July 2018 up to the 10th of November 2018”

 

[2] Letter on page 30 of record.

[3] Letter on pages 31-32 of record.

[4] Letter on page 33 of record

[5] Pages 34-36 of record.

[6] Pages 37-38 of record.

[7] Page 39 of record.

[8] Page 54 of the record

[9] SC 60/17 on pages 4-5

[10] 1949 (3) SA 611 (A)

[11] 2003 (2) ZLR 131 (H)

[12] 1992 (2) ZLR 276 (S)

[13] HH-7/18 at pages 3-4

[14] Burger v Central African Railways 903 TS 571 @ 578.

[15] Johnson v Lean 1980(3) SA 927 @937. See also Duplesis v Nel 1952(1) SA 513

[16] Total SA Pty Ltd v Bekker 1992 (1) SA 617 @ 625

[17] Melmoth Town Board v Marius Mostert (Pty) Ltd 1984 (3) SA 718 @ 728.

[18] Regate v Union Manufacturing Co [1918] 1 KB 592

[19] Old Mutual Property Investments v Metro International (Private) Limited & Ano HH 53/06 at page 8

 

[20] Clause 7 provides:

“DEFAULT/BREACH

  1. Notwithstanding anything to the contrary herein contained, the Seller shall, in the event of the Purchaser failing to fulfill its obligations hereunder or in the event of any breach of any condition of this Agreement which is not remedied within (7) seven days of written notice having been dispatched to the Purchaser requiring the Purchaser to remedy and or rectify the breach, notwithstanding any previous indulgences or concessions given by the Seller, the Seller shall be entitled to cancel this Agreement and sue the Purchaser for any damages the Seller will have suffered as a result of the breach; provided that it is the Seller’s right to enforce the contract notwithstanding breach of the same by the Purchaser, in which event the Seller shall be entitled, in addition to an order informa specifica, to sue for any damages suffered as a result of the Purchaser’s default”

[21] Asharia v Patel & Ors 1991(2)ZLR 276(SC)

[22] Fichani & Anor v Makonye SC 3-2003 and Preston v Charuma, Blasting & Earth Moving Services P/L & Anor SC 135-99

[23] HH 489/20

[24] See Mvundla v Dube & Ano HB 47/07 at page 7

[25] SC 21/09 at pages 10-11

[26] See Manengureni v Kakomo & Two Others (supra) at page 7 of the judgment.

[27] 1946 AD 597 at 607, Per TINDALL JA.

[28] See also In re Alluvial Creek Ltd 1929 CPD 532, where GARDNER JP said at page 535:

“An order is asked for that he pays the costs as between attorney and client. Now sometimes such an order is given because of something in the conduct of a party which the Court considers should be punished, malice, misleading the court and things like that, but I think the order may also be granted without any reflection upon the party where the proceedings are vexatious, and by vexatious I mean where they have the effect of being vexatious although the intent may not have been that they should be vexatious”.