Habuce Farms Limited c Tabisbhai Gulam Isap Hola and Anor (APPEAL NO 218/2020) [2021] ZMCA 276 (29 April 2021)

IN THE COURT OF APPEAL OF ZAMBIA HOLDEN AT LUSAKA (Civil Jurisdiction) BETWEEN : APPEAL NO 218/2020 HABUCE FARMS LIMITED APPELLANT AND \ r ..... 'TABlSBHAI GULAM ISAP HOLA ANEELA MUHAMED ASLAM 1 ST RESPONDENT 2ND RESPONDENT CORAM: MULONGOTI, NGULUBE AND SIAVWAPA JJA On 19TH JA UARY A D 29 th APRIL, 202 1 FOR THE APPELLANT: MR. M. C. HAMACHILA OF MESSRS HAMACHILA L GAL PRACTITIO ERS . C. FOR THE RESP I DENTS: ISS M. MWAP AND ESSRS LU GU ISS M. MULENGA lMWANZA BOTH O A D ASSOC[ATES JUDGMENT SIAVWAPA, JA, delivered the Judgment of the Court. Cases referred to: 1. Homenet Zambia v David Van Der Merwe 2011 / HPC/ 0098 2. Engen Petroleum Zambia Limited v SCZ Appeal No. 117 of 2016 Esquire Roses Farm v Zega Limited Appeal o. 37 of 2 009 illis Muhanga and Another 3 . Other Authorities .referred to 1. Law Association of Zambia General Conditions of Sale 1997 1.0. INTRODUCTION l. 1. This appeal is against the Judgment of the High Court presided over by the Hon. Mrs. Justice Irene Z. bewe dated 17th August 2020 ordering specific performance of the sale of land against the Appellant. 1.2. The order of specific performance as made folio ing a finding by the learned Judge that the initi l contract of sale had been varied by the parties with the Appellant being in breach of th e varied con tract. 2.0. FACTS 2. L B contract of sale, the Respondents contracted to purch ase and the Appellant to sell sub-division No.6 of sub-division B of Farm 396a Lusaka at the purchas pric of K 1, 800,000.00. 2 .2. The contract of sale was executed on 18th April 2018 with vacant possession s t to be gi en in fourteen days. 2.3. The Respondents paid the sum of K900,000.00 with the balance payable upon the Appellant providing an approved surve diagram for sub-division F earlier sold to a third party and du for marking off. ]2 2.4. The Appellant however, failed to provide the survey diagrams marking off sub-division F but instead provided evidence of the commencing of the process to sub-divide and mark off sub-division F. 2.5. On that account the parties agreed that the Respondent pays a further K600, 000.00 after which the Respondents would be given vacant possession of the property on 29 th June, 2018 and the balance payable upon production of the survey diagram for sub-division F. 2.6. On 28 th June 2018, the Appellant wrote to the R:espondents purporting to rescind the contract but the Respondents rejected the move to rescind and instead demanded that the transaction be completed as agreed in the letter dated 4 th June 2018. 3.0 . IN THE HIGH COURT 3.1. The Respondents commenced the action on 22 nd August 2018 principally seeking an order of specific performance for the sale of the hereinbefore stated property and the yielding of vacant possession thereof by the Appellant. 3.2. The learned Judge, upon considering the evidence before her made some findings of fact namely; J3 That the Respondents had on 3()th May 2018 demanded vacant possession failing which they would rescind. That the balance would be paid upon production of approved survey diagrams of sub-division F. 3.3. The learned Judge was then left with the questions whether the contract of sale had been varied or that in fact, the Appellant had rescinded the contract by letter dated 28 t h June 2018. 3.4. After considering the correspondence passing between the parties between 30 th May and 9 th July 2018, the learned Judge came to the conclusion that there was a variation of the contract of sale. 3.5. It was her firm view that the contract was varied as regards the yielding of vacant possession and the terms of paying the purchase price by mutual consent of the parties. 4.0. THE APPEAL 4.1. The Appellant was unhappy with the outcome in the Court below and lodged an appeal containing three grounds of appeal attacking largely the learned Judge's findings of fact. 4 .2 The following are the grounds of appeal as set out 1n the Memorandum of Appeal. J4 1. The learned trial Court erred in law and in fact when she found that the Appellant was not entitled to rescind the contract of sale with the Respondents in this matter. 2. The learned trial Court erred in law and in fact when she held that the Law Association of Zambia General Conditions of Sale in respect of rescission of contract of sale did not apply in the p resent matter. 3. The learned trial Court erred in law and in fact when she held that there was a variation to the contract of sale by the parties in this matter. 5.0. ARGUMENTS IN SUPPORT 5.1. The Appellant argued grounds 1 and 2 together on the basis that LAZ General Condition of Sale No. 7, provides for resc1ss1on of contract if a party refuses to be bound by its prov1s1ons. 5.2. The Appellant also seeks to rely on the Respondents' letter of 30th May 2018 in which they threatened to rescind if the Appellant did not give vacant possession. 5.3. In grounds 3, th e Appellant's argument is that by its letter dated 28 th June 2018, it had indicated its failure to provide ]5 consideration, which amounted to failure to meet the r · quirernents for formation of a contra.ct. 5.4. That argument was anchored on the holding in the cas of Ho.menet Zambia v David Van Der Menve 1. In that case the High Court held that for a variation of a contr ct to be enforc. able, it must meet the requirements go erning the formation of a contract; namely; that there must be an offer, acceptance and consideration. 6.0. ARGUMENTS IN OPPOSITION 6.1. The Respondent's short response to th arguments in grounds 1 and 2 is that the effect of th correspondence passing between the parties amounted to a variation and not r scission of the contract. They also maintain that LAZ General Condition 7 did not apply. 6.2. ln response to th argum nts for ground 3, th R spondents stat that their letter of 30th May 2018 was an offer to take vacant possession in s v n da s whil th App llants' 1 tt r of 4 th June 2018 constituted acceptance to yield vacant possession on 29 th June 2018. 7.0. OUR CONSIDERATION AND DECISION 7.1 . We have carefully considered the record the arguments and the Judgment from the Court below as well as the grounds upon which it is sought to impugn the decision of the Court below. 7.2. It is clear to us that the dispute revolves around the two principles of rescission and variation of contract. 7.3. The argument for rescission as advanced by the Appellant is based on the Law Association of Zambia General Condition of Sale No. 7 which states as follows; {a) If a purchaser continues to make any requisition or objection as to title which the vendor shall be unable or on the grounds of unreasonable expense unwilling to remove or comply with and does not withdraw the same within ten days of being required in writing so to do) either party .may rescind the contract. (b} Upon such rescission the vendor shall return the deposit but without interest and the purchaser shall return the abstract and all papers belonging to the vendor and shall have no claim against the vendor for costs, compensation or otherwise. 7.4. The Law Association of Zambia General Conditions of Sale apply to the contract of sale pursuant to special condition 1 of the contract of sale at page 136 of the Record of Appeal. J7 7.5. We note that for ither party to rel on th t g ner 1 ondition to rescind, it mu t be shown by the party s king to r ly on it hat the purchaser has made and continu -d to mak requisition or obj ction to title which the v ndor is unable or unwilling to remo e or comply with for b ing unr -sonable. Further the party seeking to r -ly on the same must also demonstrate that they did d emand in writing to the oh r party to do as requested and the have failed to compl within ten da s. 7.6. In its defence in th Court below occurring page 167 paragraph 8 line 18 of the Record of Appeal, the Appellant pleaded as follows; ''Paragraphs 10 and 11 of the statement of claim are partially admitted only to the extent that the Defendants indeed terminated the contract of sale. The Defendants shall, at trial, aver that the te rmination to the contract of sale has been prompted by the various correspondences with the Plaintiff in particular the email dated 22nd June 2018 which indicated the Plaintiffs' impatience with the de lays in hand over vacant possession. Therefore, the Defendant saw to it that rather than inconveniencing the Plaint iff furthermore , opted to rescind the contract of sale and refund the .!8 Plaintiffs' money pursua nt to the Plaintiffs' letter dated 30th May, 2018". 7. 7. A dose look at this pleading shows that it is the basis upon which the Appellant seeks to rely upon Clause 7 of the Law Association of Zambia General Conditions of Sale to the extent that the Respondents insisted on requisitions that the Appellant could not meet. 7.8. The issue here was that the Respondents had initially attached the final payment of the purchase price to the availability of approved survey diagrams for sub-division F for the purposes of marking it off. 7.9. There is however, no dispute that in the letter dated 30th May 2018, the Respondent only demanded for vacant possession within 7 days and that the balance would be paid u pon production of the survey diagram. 7.10.. By letter dated 4 th June 2018, the Appellant conceded to the demand by the Respondents to yield vacant possession and to receive the balance upon production of the survey diagram. (See paragraph 2 of the letter at page 218 of the Record of Appeal). J9 7.11. On 20 th June 2018, the Appellant s n t an email to the Respondents requesting that the handing over of the property be postponed to 29 th June 2018 for reasons stated and on 22 nd June 2018, the Respond nts responded via email accepting to postpone the handov r to th e 29 th June, 2 018 (see p. 226 Record of Appeal). 7.12. Howev r; on 28 th June 2018, a day before the agreed date for the handover, the Appellan t sought to rely upon its failure to complete the process of obtaining the survey diagram to invite the Respondents to rescind the contract in line with their intimation in the letter of 30th May 2018. 7.13 . From the above stated correspondence passing between the parties) there is no qu stion that the parties re-negotiated the terms of their contract of sale and r ached an agr m nt to alter it accordingly. 7.14. As at 4 th June 2018, the Appellant had firmly agr d o surrender vacant possession by 22 nd J une 2018. However, at the Appellant's request, the Respondents agreed to shift the handover from 22 nd to 29 th June and that was the agreed position from 22nd June until 28 th June when the Appellant sought to avoid the contract. JIO 8.0. VARIATION 8 .. 1. The key requirement for a Contract to be varied or modified in terms is that the parties thereto ought to mutually agree to the variations. The variations should however, be consummated by the fulfilment of the three basic foundations of a Contract namely; offer, acceptance and consideration. 8.2. ln the case of Engen Petroleum Za.mbia Li.mited v Willis Muhanga and Another2 the Supreme Court of Zambia emphatically stated that parties to a contract were at liberty to vary it by modifying or altering its terms. 8.3 . in Homenet Zambia v David Van Der Menue, the Suprem e Court set out a number of principles governing variation of Contract namely; - That it alters legally enforceable obligations which previously bound the parties. - It can be either oral or in writing. - Can be effected by modifying or altering by mutual agreement. - Must contain offer, acceptance and consideration. - Once varied it applies as varied to the exclusion of the original terms which cannot be relied upon by either party. 8.4. We h a\e earlier noted that the Appellant offered to yield vacant possession on 291n June, 20 18 which offer was accepted by the J 11 Respondents on 22 nd June 2018. The onl el ment left is that of consid ration. 8.5. [n the case of Esquire Roses Farms v Zega Limited3 the Supreme Court of Zambia had occasion to define wh t a mounts to consideration in a varied contract . s stated as follows ; "The variation must be supported by consideration such consideration can also be found in the mutual abandonment of existing rights, or in the Conferment of new benefits by each party to the other". 8.6. In this case th parties abandoned or d f. rr d c rt in b nefits under the original agr m nt and gain d som b nefits under the aried terms. Notably, th App llant gained more time to obtain the survey diagram for the sub-di ision but deferred full payment until the survey diagram was provided. On th other hand the R spondents would gain vacant possession without p ayin g the full purchase price. Th · y would lso ha e to wait long r b fo r th con, ancing process could be concluded. 8.7. In our considered view, the abo e effects of the variation on the parties constitute consideration thereby fulfilling all the three elements of a valid contract. Th v ri tion was therefore J l2 f£ ctive and neither party could r ly on the terms of the original contract. 8.8 . We accordingly uphold the learned trial Judge>s finding that the parties had varied the contract of sale by mutual agreement. 9.0 RESCISSION 9. 1. In the law of contracts, resc1ss1on is the cancellation of a contract so that the parties assume positions as existed b fore the contract was entered into. Once rescinded the contract is treated as though it never existed and neither party can claim on it. A party will be entitled to rescind a contract entered into by misrepresentation, mistake, duress or undue influence. 9.2. In our vi w, based on the facts of the case, the App llant could not rescind as none of the vitiating factors had occurred. The Appellant has not alleged any of the factors in the variation of the contract. It cannot therefore rescind on any of the stated grounds. 9.3. There is an attempt by the Appellant to r ly on the intimation by th R spondents in their letter of 30 th May 2018 that they would rescind the contract if the Appellant did not yield vacant possession within 7 days of the letter. J l3 9.4. In essence the Appellant did not rescind the contract but requested the Respondents to effect their earlier intimation to rescind the contract on account that the Appellant had failed to obtain the surv y diagram before the date fixed for yielding of vacant possession. 9.5. Having already established that once aried a part cannot rely on the original terms of the contract; the Appellant cannot rely on a term contained in a letter whose terms had been altered by the subsequent correspondence which contained no such intimation. As at the 28t h June 2018, the agreed term of the contract was that the Appellant was to give acant possession on 29 th June 2018 without any option to rescind upon default as was the case in the agreement as at 4 th June 2018. 9.6. Secondly, the Appellant ought to have rescinded the contract if it had valid grounds upon which to do so. W, kno of no principl in th law of con tract that empo,:vers a party to invit the innocent party to rescind the contract. 9.7. On the other hand, it is trite law that an aggrieved party has the right and mandate to exercise the rights conferred upon that party by law or the provisions of the contract. Th Appellant in this case missed the n1ark. H4 10.0. CONCLUSION 10.1. The Appellant has endeavoured to find an avenue through which it could reverse the Contract of Sale for reasons best known to it. We say so because we find no substance in the reasons advanced to the effect that the Respondents had sought requisitions impossible to meet when in fact it was a reasonable and attainable demand by the Respondents that the sub-division sold earlier to a third party be marked off. 10.2. We also find, as did the learned Judge below, that Law Association of Zambia General Condition of Sale No. 7 was not applicable. 10.3. We therefore find no merit in this appeal on all the grounds and we dismiss it with costs to the Respondents here and in the Court below. P. C. M. NGULUBE COURT OF APPEAL JUDGE M. J. SIAVWAPA COURT OF APPEAL JUDGE J I5