Court name
Supreme Court of Zimbabwe
Case number
SC 59 of 2004
Civil Appeal 33 of 2003
Case name
St. Tropez Residents' Association v Commissioner of Police and Another (33/03)
Law report citations
Media neutral citation
[2004] ZWSC 59













Judgment
No. SC 59/04


Civil
Appeal No. 33/03








ST.
TROPEZ RESIDENTS’ ASSOCIATION v





(1) THE
COMMISSIONER OF POLICE





(2)
NATIONAL SOCIAL SECURITY AUTHORITY








SUPREME
COURT OF ZIMBABWE


SANDURA  JA,
CHEDA JA & MALABA JA


HARARE,
MARCH 25 & SEPTEMBER 9, 2004








E
W W Morris
, for the
appellant





Ms
Y Dondo
, for the first
respondent





J
M Mafusire
, for the
second respondent





CHEDA
JA:





INTRODUCTION





The
appellant is an association of residents of a property known as
St. Tropez Flats (“the property”), which is owned by
the
second respondent. I shall refer to the appellant as “the
residents”. The first respondent is the Commissioner of the
Zimbabwe Republic Police (“the Commissioner”). The second
respondent is the National Social Security Authority (“NSSA”).

The appellant consists of a total of sixty residents who occupy the
property.





When
NSSA decided to sell the property, it offered the residents an option
to purchase as they were the tenants in occupation.
The option was
to be exercised on or before 31 March 2000. There is nothing
in the papers to show the detailed conditions
of this option and it
seems to have been made verbally at some meetings.





On
30 December 1999 the Commissioner entered into an agreement with
NSSA for the purchase of the property. The contract recorded
clearly that the tenants held a first option to purchase the flats
and that the option was to expire on 31 March 2000. The
Commissioner, as the purchaser in the agreement of sale, paid the sum
of $24 million to NSSA.





The
sale was made subject to the following conditions:






“CONDITIONS





The
sale is subject to the Seller’s tenants currently occupying the
property not exercising their option to purchase the property
by
31 March 2000. It is recorded that in the event that the
tenants exercise their option to purchase the property this agreement
shall be of no force or effect.”





The
Commissioner was to be given occupation of the property by 1 April
2000 if this option was not exercised.





Meanwhile
meetings were held between the residents or their representative and
NSSA. There is no record of the actual meetings;
but the letter
from Mr Chonzi (“Chonzi”), the chairman of NSSA, dated
16 February 2000 to the chairman of the residents
was written to
confirm the meeting of 14 February 2000, attended by some
members. One of the important issues agreed on at
that meeting was:





“That
the Association be given an extension of time to make funds available
and to allow the process of sectional title deeds to be
completed
since diagrams had already been done.”





On
14 April 2000 Chonzi wrote yet another letter to the chairman of
the residents, seeking confirmation that the other members
agreed to
the conditions discussed at the meeting of 14 February 2000, and
advised that:





“… it
might be very difficult to extend this deadline further as already
indicated to you at our meeting of 14 February 2000.”





According
to the record, once the date of 31 March 2000 expired, the
Commissioner called upon NSSA to transfer the property
to him and
give him occupation in accordance with their agreement. NSSA would
not agree.





The
Commissioner then made an application to the High Court to compel
NSSA to comply with their agreement of sale. The High Court
granted
the Commissioner’s application. The residents have now appealed
against that decision and NSSA has also cross-appealed.





Most
of the background facts in this case are common cause. The
existence of the option in favour of the residents is not disputed.

The terms of the agreements between NSSA and the Commissioner are
accepted by all the parties.





I
will deal with the issues that arise in this case under the following
heads –






1. What is an option to
purchase?;






2. How is the option exercised?;






3. Did NSSA extend the period to
exercise the option to purchase the property or the period for
payment?






1. WHAT
IS AN OPTION TO PURCHASE?






In Van Pletsen
v Henning
1913 AD 82
at 98, SOLOMON J said:





“An
option is an offer to sell, which remains open during the stipulated
period, and if the offer is accepted at any time before the
time has
elapsed, a binding contract of sale is concluded between the parties.






When an option is given by a
seller, he is bound and cannot withdraw his offer; the contract is a
unilateral one, and becomes bilateral
only when the offer is
accepted.”






The importance of the option
contract was highlighted by LORD DENNAN CJ in
Boyd
v Nel
1992 AD 4145,
where he said at :





“I
think the plaintiff here has a right to say to the defendant –





‘You
have, by your own act, placed yourself in a condition which prevents
you from performing the contract into which you have entered
with me,
a contract which gives me the option, during the space of seven
years, of calling on you to assign these premises to me.
I,
therefore, now demand damages for the breach of the contract. I am
neither ready, nor willing, nor able, at this moment, to
pay the
money for the assignment you engaged to make to me, but, however that
may be, I had a right to expect that you would keep
yourself in a
condition to fulfil your promise whenever I should want to exercise
the option I possessed.’”






See also Owsianick
v African Consolidated Theatres (Pty) Limited

1967 (3) SA 310 (AD); and
De Ujfalussy
v De Ujfalussy

1989 (3) SA 18 (AD), where JOUBERT JA at 23 E-G held that:






“The
ordinary meaning of an option to purchase a certain thing at a
certain price … is an agreement whereby the granter undertakes
to
keep open an offer to sell for a period of time within which the
grantee, by exercising the option, may elect to purchase it at
the
fixed price. See
Hersch
v Nel
1948 (3) SA 686
(A) at 695. In my judgment, the clearly stated intention of the
parties in the relevant provisions was to confer
until 31 August
1985 on the wife as grantee a right to purchase the half share of her
husband in Berg-en-Dal for the sum of
R60 000 subject to the
terms regarding payment of the R60 000.”






This case, as well as that of
Boyd v Nel supra,
shows that the option is an important contract on its own, completely
separate from payment which can be subject to the terms arranged
or
agreed to by the parties.






2. HOW
IS THE OPTION EXERCISED?





It
was suggested by the first respondent that the option to purchase the
property was not properly exercised, as no payment was
made.





There
is no authority that says payment is part of the exercise of the
option.





The
option to purchase has to be exercised by communication. The
exercise of the option must be communicated to the offeror of
the
option. There is no set method of doing it unless there is a
written agreement stating how it is to be done. It can be verbal
or
written.






3. DID
NSSA EXTEND THE PERIOD TO EXERCISE THE OPTION TO PURCHASE THE
PROPERTY OR THE PERIOD FOR PAYMENT?






I
now deal with the issue of the extension granted by NSSA.





In
his letter dated 16 February 2000 to the chairman of the residents,
Chonzi said:





“This
letter serves to confirm our meeting of 14 February 2000
attended by some members of your association and our chairman.
The
main points were –





(a) That
NSSA had taken the decision to dispose of the flats in order to
maximise its cash returns;






(b) That
NSSA would not finance or deal with the sixty individual families at
the complex but with the Association;





(c) That
the Association be given an extension of time to make funds available
and to allow the process of sectional title deeds to
be completed
since diagrams had already been done;





(d) It
was agreed that the process would require not more than six (6)
months from the date of the meeting; and





(e) That
NSSA agreed to extend the option date from 31 March 2000 to
31 July 2000, and that this extension shall be final.






Can
you please confirm that this was the agreed way forward by signing a
copy of this letter attached.”





On
4 April 2000 Chonzi wrote again to the residents’ chairman as
follows:





“We
refer to our various meetings and our letter dated 16 February
2000 to which we have not had the courtesy of a reply. (Copy
attached).






Please may you confirm what
we agreed at the meeting involving your members and our chairman





Mr Chonzi’s
letter of 4 April 2000 also stated:





“Specifically
we would like to know whether the terms and conditions for the
extension of time to exercise your option to purchase
the flats were
agreed to by other members of your Association and that you will
honour upon 31 July 2000.





It
was important for us to have this confirmation as it might be very
difficult to extend this deadline further as already indicated
to you
at our meeting of 14 February 2000.





We
wait to hear from yourselves soon.”





On
11 May 2000 a letter from the residents was addressed to Chonzi.
It is not clear if this was the reply to Chonzi’s two
letters,
but the letter advised Chonzi that the diagrams had been completed by
the surveyors and had been approved, the drawing of
the notarial
deeds was in progress and a financier had been found.





Nowhere
in this letter does the writer talk about exercising the option.
The letter gives the impression that the option had already
been
exercised, bearing in mind that exercising the option simply means
accepting the option and advising the person who has granted
the
option. The writer’s letter shows that the residents were then
dealing with issues which could only follow the exercise of
the
option, not before.





Mr Chonzi
could not have been asking the residents to confirm the meeting of
14 February 2000 if the residents had not
exercised the option.
It is clear that the residents had indicated their intention to
purchase the flats. That is why Chonzi
was referring to dealings
with the residents as opposed to the sixty individual families and
giving the residents:





“… an
extension of time to make funds available and to allow the process of
sectional title deeds to be completed since diagrams had
already been
done.”





The
above are issues which can only be discussed with someone who is
buying property and not with a person who is not, or has not
yet
decided to buy.





The
only confusion created by Chonzi’s letter is that, having correctly
made reference to extending the time to make funds available,
he then
refers to an extension of the option instead of the extension of time
for payment to 31 July 2000.





If
in fact the residents had not exercised their option to purchase the
property, Chonzi would not be talking about making funds
available.





It
is clear from the above that the option to purchase the property must
have been made at, or during, the various meetings referred
to in
Chonzi’s letters.





Even
if it were argued that the residents were expected to make payment on
exercising the option, that does not affect the arrangement
made,
since an extension of time for payment was granted once the option
had been exercised. The Commissioner cannot attack the
extension
for payment on that basis because the agreement between the residents
and NSSA related to exercising the option to purchase
and has no
condition about payment.





Payment
is a completely different issue. There is nothing to show that
exercising the option included making payment. Payment
could be
made in instalments, or later, or through a bond.






CONCLUSION


To
sum up, the residents held meetings with NSSA. The option to
purchase was clearly exercised at the meeting of 14 February
2000. That is why Chonzi wrote to the residents seeking assurance
that the residents would be able to pay by 31 July 2000.
He
could not have been seeking such assurance from the residents if they
had not exercised the option to purchase. One does not
claim
payment from a person who is not purchasing anything. NSSA clearly
kept the two issues separate. There was a time limit
to exercise
the option. There was an extension of time to pay the purchase
price. I am satisfied that once the residents exercised
their
option the agreement between NSSA and the Commissioner fell away.






Accordingly the appeal and
cross-appeal succeed with costs. The order of the court
a quo
is set aside and is substituted by the following –





“The
application in case no. 114/01 at the High Court, Harare, is
dismissed with costs”.








SANDURA  JA:
I agree.








MALABA
JA: I agree.








Gill,
Godlonton & Gerrans
,
appellant's legal practitioners


Civil
Division of the Attorney-General’s Office
,
first respondent's legal practitioners


Scanlen
& Holderness
,
second respondent's legal practitioners