Dzirutwe v Grabroc Enterprises (Pvt) Ltd & Ors (HH 70 of 2004) [2004] ZWHHC 70 (23 March 2004)

HC 4942/02 DAVID PHILLP DZIRUTWE and GRABROC ENTERPRISES (PRIVATE) LIMITED THE REGISTRAR OF DEEDS N. O THE SHERIFF FOR ZIMBABWE N. O. HIGH COURT OF ZIMBABWE GOWORA J HARARE, 11 June 2003 and 24 March 2004 Opposed Court Application H Simpson, for the applicant P Nherere, for the 1st respondent No appearance for the 2nd and 3rd respondents GOWORA J: On 8 April 1999, the applicant entered into an agreement of sale for the purchase of a vacant piece of land Stand 463 Shortson of Derbyshire Estate held under Deed of Transfer No 2685/94 by the first respondent. The agreement was signed by the applicant whilst the first respondent was represented by Tony West Real Estate the agency responsible for selling the property. In terms of the agreement of sale, a copy of which is attached to the papers the purchase price was $180 000.00, payable as follows; a) b) c) an initial deposit of $20 000.00 payable to Tony West Real Estate upon the signing of the agreement, a further deposit in the sum of $52 000.00 to be paid to Tony West Real Estate within a period of six months in monthly instalments of not less than $8 666.67 the balance outstanding in the sum of $108 000.00 was to be secured by means of a first mortgage from Founders Building Society. The applicant was entitled to immediate occupation of the stand. In his founding affidavit, the applicant avers that he has performed his obligations in terms of the agreement and has paid the purchase price in full. He has annexed to his application copies of the receipts issued to him by Tony West Real Estate confirming payment by him of various amounts on various occasions. The applicant further avers HC 4942/02 that in about May 2002 he enquired from the first respondent about having the stand transferred into his name and was handed Annexure ‘C’, and it is his view that the first respondent had backdated the letter. A perusal of the said letter reveals the following contents: “1st February 2001 Mr D P Dzirutwe Flat 6871 Glen Norah B HARARE Dear Sir Re: STAND 463 SHORTSON In terms of the agreement of sale you entered into with Graboc for the purchase of the above property, you are hereby advised that you are in arrears of your payments in respect of the agreement of sale. You are hereby notified in terms of the agreement to remedy your breach within 30 days of the date hereof, failure of which this agreement of sale will be cancelled and shall be considered of no force or effect. We shall not be entering into any further correspondence in this matter.” The applicant states that he suspects that the letter was backdated by the first respondent and the attempt to cancel the agreement is simply driven by the situation in the property market in that prices of immovable properties had been escalating at a very high rate, so that the value of the stand which he had purchased from the respondent had in all probability increased four fold. He goes on to state that if he was in arrears it was due to the fact that it had been agreed between the parties that the applicant pay a deposit representing 40% of the purchase price. It had further been agreed that the first respondent would then assist the applicant in obtaining a mortgage bond for the balance owing, but the first respondent had been unable to assist. In addition the entire piece of land which the respondent had subdivided and sold of in portions and which was the land on which the subdivision which is the subject matter of the sale was situate, had at some stage been attached and HC 4942/02 was to be sold at a forced sale by Founders Building Society to whom the first respondent was heavily indebted. In the circumstances the applicant had not found it necessary or wise to continue making payments when the property could be sold in execution. He had resumed the payments after receiving reassurance from the first respondent that the sale was still in effect and binding on both parties. In this instance the applicant has annexed to his papers a letter dated 29 August 2000 signed by the chairman of the respondent in which the problems encountered by it in obtaining approval of the plans, the transfer of the properties and the processing of mortgage bonds from the financiers are referred to. The applicant is called upon to pay off the amount outstanding balance within a period of sixty days with effect from 1 September 2000. The applicant states that the respondent then wrote to him advising that adequate arrangements had been made by it with Founders Building Society and the agreement stood. Although he makes reference to an annexure ‘D’ in this context I have not noticed a document with those contents on his papers. The only reference to Founders Building Society is on copies of minutes of a meeting held between the residents of Shortson and the chairman of the respondent on 22nd August 2000, which was prior to the letter in which demand had been made to the applicant to pay the balance on the outstanding purchase price. The applicant contends that he continued with his payments to the respondent’s agent who accepted payment on behalf of its principal until such time as the full purchase price had been paid. He has demanded transfer of the first respondent who refuses to transfer the stand to him. The position of the respondent in short is that the applicant has failed to perform his obligations in terms of the agreement of sale. In terms of the agreement of sale the applicant was supposed to pay a deposit of $40 000.00 upon the signing of the agreement. This amount was paid. The applicant was also supposed to make six monthly instalments of not less than $8 666.67 per month in order to pay an additional deposit of $52 000.00. This, the applicant paid . The last condition was that the applicant obtain a mortgage bond with Founders Building Society in the sum of $108 000.00. The applicant did not obtain the mortgage bond as provided in the agreement and also failed to discharge the HC 4942/02 obligation of paying the sum of $108 000.00 as one lump sum payment as provided for in the agreement in contrast to the piecemeal payments effected by the applicant. The applicant was then put on terms to pay the outstanding amount within sixty days but he failed to comply with the demand within the stipulated period. The respondent avers that whatever payments were made by the applicant after the expiry of the period in question were accepted on a without prejudice basis by the agent of the first respondent, which agent in view of the voluminous transactions which the agent conducted on behalf of the first respondent, was not aware of the breach or that the first respondent had cancelled the agreement. It is also denied on behalf of the first respondent that it taken unto itself the responsibility of assisting the applicant to obtain a mortgage bond as averred by the applicant. It is denied on behalf of the respondent that the letter of demand annexure ‘C’ was backdated or that the documents in terms of which the applicant was put on notice had been sent to him in May 2002. It is admitted that the prices of properties had gone up but it was disputed that the escalation in prices was the reason for the respondent’s refusal to transfer the stand to the applicant. The first respondent maintains that the applicant breached the agreement resulting in the respondent canceling the same. Despite the averments in the respondent’s opposing affidavit that the agreement had been cancelled the applicant did find it necessary to file an answering affidavit. I intend to deal with the matter on the basis of the issues as summarized by the respondent in heads of argument filed on its behalf as follows as those issues in essence capture the dispute between the parties: i) Whether the agreement of sale envisaged a specific and strict code of payment of the purchase price. ii) Whether applicant fully performed his obligations in terms of the agreement of sale. iii) Whether the first respondent lawfully cancelled the sale. iv) In the premises whether it is just and equitable that the first respondent be ordered to pass transfer to the applicant. Whether the agreement of sale envisaged a specific and strict code of HC 4942/02 payment of the purchase price? It was the contention on behalf of the applicant that the written agreement stipulates payment of the initial two payments constituting deposits, which amounts were paid in time by the applicant. It is admitted that the agreement provides for the payment of the balance of by mortgage bond, but it is silent on how payment should be effected in the absence of a mortgage bond. In the light of this, so the submission goes, the purchaser had a duty to make payments when he could in amounts of his choosing. It was contended further that as at the 1st February 2001, the applicant was not in arrears. When the applicant failed to secure a mortgage bond with Founders Building Society the respondent did not raise any objections and the agreement did not stipulate what the positions of the parties would be in the absence of a mortgage bond. Per contra the position of the first respondent was that the agreement provided for three major payments, thus making time of the essence in effecting payment. It was contended that the applicant failed to secure a mortgage bond from Founders Building Society or failed to discharge the sum of $108 000.00 as was required by the agreement. It was further contended that the fact that the agreement provided for a specific means of discharging the balance meant that it was material that the sum of $108 000.00 be paid off in one lump sum and that such payment was to be made within a reasonable period after payment of the second deposit of $52 000.00. The submission was made that it was the law that where credit is given but no date of payment is specified, then payment had to be made within a reasonable time. I was referred to A J Kerr ‘The Law of Sale and Lease’ 2ed p203 where the learned author has stated the following: ‘Where credit is given but no date of payment is agreed upon, payment must be made within a reasonable time.’ The agreement was concluded on 8th April 1999 at which time two payments had been made by the applicant. Thereafter there were payments on the following dates; 30th April 1999, 28th May 1999, 8th July 1999, 5th August 1999, 10th September 1999 29th September 1999, 28th October 1999, 8th December 1999. In 2000, the applicant made payments on the following dates­5th January, 3rd February, 10th March, 5th April, 11th May, HC 4942/02 1st June, 11th July, and 15th August. He then paid the amount of $54 000.00 on 26th November 2001 with a final sum of $28 225.28 being paid on 26 April 2002. It is not in dispute that the initial amounts constituting the deposit were paid within the period stipulated in the agreement. By the 29th September 1999, the applicant had paid the additional $52 000.00 in instalments which was part of the deposit. The dispute centres on whether or not the remaining amount was paid in time or whether or not due to the default of the applicant the respondent had cancelled the agreement. Although the respondent has in its opposing affidavit averred that the applicant was given up to October 2000 to effect full and final payment, it does not appear that this is the reason it relies on for having cancelled the agreement between the parties as there is another letter dated 1st February 2001, in which the applicant is advised that he was in arrears and that if he did not purge his default within thirty days of the date of the letter, the agreement would be cancelled. It is this letter which therefore the respondent is relying on in seeking to resile from the agreement. Payment of the purchase price in this agreement was in more than three instalments and therefore the agreement is protected in terms of the Contractual Penalties Act [Chapter 8:04] In terms of section 8 the seller is obliged to give not less than thirty days written notice to the purchaser to rectify an alleged breach. In the instant case there is indeed a letter in terms of which the applicant was given the required notice to pay up the amounts that were outstanding. The applicant stated that the letter was not given or sent to him in February 2001 as alleged in the papers, but was handed to him by the legal practitioners of the respondent when he attended upon them to enquire about the progress on the transfer of the property to him. The respondent denies this and it is obvious therefore that there is a dispute of fact between the parties on the issue. This in my view can be resolved on the papers, especially if regard is had to the provisions of the Act. The Act specifically and in peremptory terms makes provision for the giving of notice. Section 8(3) provides as follows: Without derogating from section 40 of the Interpretation Act [Chapter 1:10], a notice shall be regarded as having being duly given to the purchaser for the HC 4942/02 purposes of subsection (1)­ a) b) if it has been delivered to the purchaser personally or to an agent chosen by the purchaser for the purpose of receiving such notices; or; if it has been posted by registered post to the address chosen by the purchaser for the delivery of correspondence or legal documents relating to the instalment sale of land concerned or, in the absence thereof, to the purchaser’s usual or last known place of residence or business. The applicant contends that he was never given the notice referred to in the letter of 1st February 2001, and that the letter was instead handed over to him in May 2002, by the respondent’s legal practitioner. The respondent in denying this averment merely states that the letter was sent to the applicant in February 2001. The respondent does not state how the letter was sent to the applicant and in the absence of proof by the respondent that the delivery was as provided for in accordance with the provisions of the Act I am unable to conclude that the applicant was placed in mora and failed subsequent to that, to purge his default as a result of the letter in question. In my view the applicant was not in arrears as at the 1st February 2001. The agreement did not stipulate a period of payment in the event that the purchaser failed to obtain a mortgage with Founders Building Society. Payment should therefore be within a reasonable period. What however amounts to a reasonable period is relative and depends upon the circumstances of each case. In casu, provision was made for part of the deposit to be paid in instalments over a period of six months. It is also not in dispute that for some time the property as a whole was under attachment and that it was not until 22nd November 2001, that the legal practitioners for the judgment creditor confirmed that the sale of the immovable property had been suspended. However the applicant seems to suggest that after receiving Annexure D to the application, the respondent confirmed that the agreement between them stood and he therefore continued with his payments to the respondent through its appointed agent. I have no reason therefore to dispute the averment by the applicant that he had stopped paying as he was under the impression that the entire property was being sold in execution and therefore saw no reason to keep on HC 4942/02 paying in the circumstances. Whether the applicant fully performed his obligations in terms of the agreement of sale It was the contention of the applicant that he made his final payment on the 26th of November 2001 in an amount of $54 000.00 as appears from receipt number 101770. It further contended that the receipt does not have a clear stamp to the effect that payment was accepted without prejudice and that in those circumstances the payment was made in the ordinary course of business and by issuing this unclear receipt the respondent had waived his right to rely on previous alleged breaches of contract relating to payment and further that the sellers acceptance of this late payment negatived his earlier claim of breach of contract for non­ payment of arrears. Mr Simpson for this proposition sought reliance on Naidoo v Marine & Trade Insurance Co. Ltd S. A. L. R.1978(3) 666 p672. It was submitted further that the applicant had not breached the agreement of sale as claimed by the first respondent. The first respondent submitted that in casu it would be absurd to hold that the applicant had discharged the balance of the purchase price within a reasonable time because he had made several inconsistent payments, the first respondent had then cancelled the agreement and the applicant had made his last payment on 26th April 2002 which was almost three years from the date when the agreement was concluded. In addition it was contended that it was not correct to state that the respondent had not raised an objection to the applicant’s inability to secure a bond with Founders Building Society. In this regard reference is made to the letter from the first respondent of the 29th August 2000 wherein the applicant was called upon to clear the outstanding balance within sixty days of the date of the letter if he was unable to obtain a bond. However by the end of October 2000 the applicant had not paid the sum in question and was thus clearly in mora. It was further submitted that the indulgence thus accorded to the applicant did not amount to a waiver of the respondent’s rights. The agreement did not provide for a mode of payment in the absence of mortgage facilities being offered to a purchaser and in the letter of the 29th August 2000, the HC 4942/02 respondent was unilaterally seeking to vary the terms and conditions of the agreement between the parties. Can this court hold in the circumstances that the applicant was in mora when he did not pay the outstanding amount within sixty days as demanded in the said letter in the absence of agreement between the parties. In clause 13.3 of the agreement it is provided that the written agreement constituted the entire agreement between the parties and no variation would be of any force and effect unless reduced to writing and signed by the parties. The requirement in the letter of the 29th August 2000, calling upon the applicant to pay the outstanding balance within thirty days of the date of the letter was a unilateral condition imposed by the respondent which I cannot give effect to. I cannot therefore hold that the applicant was placed in mora as a result of the same. Cancellation of the agreement of sale It was the contention of the respondent that the agreement was cancelled by it in terms of the letter of the 1st February 2001. I have already found that the notice letter which the respondent seeks to rely on in effecting the cancellation was not delivered to the application accordance with the provisions of section 8 of the Contractual Liabilities Act, and that therefore there was no proof before me that the letter had in fact been delivered to the applicant. In heads of argument filed on behalf of the respondent it is submitted that in terms of section 40 of the Interpretation Act [Chapter 1:01] where a document has been served by post in accordance with the requirements of an enactment, the document shall be deemed to have been posted at the time at which such envelope would have been proved to have been delivered in the ordinary course of business. The respondent in answer to the averment by the applicant that the letter was handed to him in May 2002 states as follows; ‘I deny handing over to the applicant the alleged documents in or about May 2002 and put him to the proof of that averment. In fact Annexure C to the Applicant’s application was sent to him in February 2001’ Section 8 of the Contractual Penalties Act provides: 1) No seller under an instalment sale of land may on account of any breach of contract by the purchaser – HC 4942/02 a) b) c) enforce a penalty stipulation or a provision for the accelerated payment of the purchase price ; or terminate the contract; or institute any proceedings for damages 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. 3) Without derogation from section 40 of the Interpretation Act [Chapter 1:01], a notice shall be regarded as having being duly given to the purchaser for the purposes of subsection (1)­ (a) if it has been delivered to the purchaser personally or to an agent chosen by the purchaser for the purpose of receiving such notices; or if it has been posted to the address chosen by the purchaser for the delivery of correspondence or legal documents relating to the instalment sale of land concerned or, in the absence thereof, to the purchaser’s usual or last known place of residence or business. (b) On the other hand section 40 of the Interpretation Act is in the following terms: 1) Where an enactment authorizes or requires a document to be served by post, and where the word ‘serve’ or any of the words ‘give,’ ‘deliver,’ or ‘send’ or any other word is used, the service of the document may be effected by prepaying, registering and posting an envelope addressed to the person on whom the document is to be served at his usual or last­ known place of abode or business, and containing such document, and, unless the contrary is proved, the document shall be deemed to have been served at the time at which such envelope would have been delivered in the ordinary course of post. Although the respondent states that the letter of 1st February 2001 was sent to the applicant sometime in February 2001, there is no evidence from the respondent as to when precisely this was done. Nor has the court been advised as to how it was done. In the absence of a specific date as to when it was sent to the applicant it becomes difficult for the court to conclude that it was not handed to the applicant by the respondent’s legal practitioner sometime in May 2002 as claimed by the applicant. If indeed the respondent dispatched this letter to the applicant it should be in a position to provide details as to the time and manner of dispatch thereof. Indeed in terms of the agreement it is provided that HC 4942/02 notices should be sent by personal delivery, facsimile or registered post. The respondent did not prove delivery by any of the modes provided for in the agreement. In my view there was no notice dispatched to the applicant in respect of the alleged breach and as a result the respondent cannot claim to have validly cancelled the agreement of sale. It therefore follows that the payments to Tony West Real estate were made in terms of the agreement of sale. It was submitted by the counsel for respondent that once an agreement was formally cancelled it could not be resuscitated except by means of signing an entirely new contract. In this connection I was referred to the case of Bako v Bulawayo City Council 1996(1) ZLR 232. I accept that this as a correct and valid statement of the law but in my view this would only apply where the cancellation of the agreement is valid. In casu, the respondent cannot even state when the notice to rectify the breach was sent. There has not been compliance on the part of the respondent with the terms of the agreement with regard to cancellation. Equally the respondent did not comply with the Contractual Penalties Act in the manner in which the alleged notice was sent to the applicant. The conclusion I come to is that therefore the cancellation of the agreement by the respondent was invalid. The legal practitioners for both parties were inclined to dwell somewhat on whether or not the payment of $54 000.00 paid in November 2001 was paid without prejudice to the rights of the respondent to insist that the agreement had in fact been cancelled, I do not intend to pursue this in view of the finding that I have come to regarding the validity of the cancellation of the agreement. In the premises whether it is just and equitable that the first respondent be ordered to pass transfer to the applicant The respondent has submitted in its heads of argument, which were not drawn up by Mr Nherere, that the parties are not in dispute that the property in question has appreciated greatly in terms of its market value. It was contended further that should the respondent be compelled to pass transfer to the applicant who breached the agreement by failing to make timeous payments in line with market forces, then the respondent would HC 4942/02 suffer irreparable harm. I was therefore urged, on the basis that the equities favoured the respondent, to place the parties in the positions they would have been prior to their entering into and signing the agreement. There is before me however no counter­ application by the respondent for this relief nor was I referred to any authority for this proposition. Equity as a system of law distinct from and opposed to the common law is not part of our law. In their book Wille’s Principles of South African Law 8 ed the learned authors van Heerden Visser and van der Merwe state as follows at page 18: The incorporation of these equitable principles in our law has made it well fitted to deal fairly and justly with virtually all cases of hardship that are likely to arise, and there is no need for the courts to have recourse to arbitrary rules of ‘equity’ in order to mete out substantial justice. It is true that Paulus lays down that equity is to be sought in all things, and particularly in law, and also that Voet says that a judge is bound to esteem equity and fairness above strict law, but the actual position in South Africa is that our courts can administer equity only in so far as is consistent with the fixed principles of the Roman­Dutch law. Equitable principles are only of force in so far as they have become authoritatively incorporated and recognized as rules of positive law. It follows that equity cannot, and does not, override a clear provision of our law. ‘The court cannot therefore grant equitable relief’, said Sir James Rose Innes, ‘if by so doing it would be going contrary to a well­defined principle of the Roman­Dutch law, or to some statutory provision. It has been held, for example, that the court has no authority to grant what is known in English law as ‘equitable relief against the forfeiture of a lease. It is interesting to note that our judges have frequently expressed their satisfaction that their judgments would lead to an ‘equitable’ result and that there has been at least one instance of a judge criticizing a judgment as being ‘inequitable’ I am in the circumstances not able to accede to the plea by the respondent to place the parties in the positions they would have enjoyed prior to the agreement being signed. The applicant has in my view made out a sufficient case for an order to have the property transferred to him. There is no basis in my view for an order interdicting the transfer of HC 4942/02 the property to some other person as no evidence was placed before me that in fact the respondent intended disposing of the property to some other party. The applicant therefore succeeds in respect of para 2 of the order that he seeks I therefore issue an order in the following terms: IT IS ORDERED THAT: The first respondent be and is hereby ordered and directed to sign all necessary documents within ten (10) days of the date of this order in order to effect transfer from it to the applicant, of Stand 463 Shortson of Derbyshire Estate, held under Deed of Transfer 2685/94, failing which the Sheriff for Zimbabwe or his lawful Deputy is hereby ordered and directed to sign all necessary documents for and on behalf of the respondent in order to effect such transfer. The costs of the application shall be borne by the first respondent. Manase & Manase, applicant's legal practitioners Kantor & Immerman, 1st respondent's legal practitioners