Meyers-Mbidzo N.O. v Chipunza & Anor (HC 1520 of 2008) [2009] ZWHHC 3 (20 January 2009)

HH 3-2009 HC 1520/08 RACHEL MEYERS-MBIDZO N. O versus JOHN MARK CHIPUNZA and REGISTRAR OF DEEDS HIGH COURT OF ZIMBABWE MTSHIYA J HARARE, 21 January 2009 Mr Mbidzo, for the plaintiff Mr Daitai, for the defendant MTSHIYA J: The plaintiff’s claim in this matter arises from the purchase of a property from the first defendant. The facts of the case, which are common cause, are these: The first defendant is the owner of Remainder of Lot II of Glen Tor of Glen Lorne and was granted authority by the Town Planning Authority under Subdivisional Permit No. 4353/85 to subdivide the property. On 7 November 2007 the parties signed an agreement of sale whereby the plaintiff in her capacity as Trustee of Mukudzei Trust purchased from the first defendant “a certain piece of land situate in the district of Salisbury called Stand 2944 Glen Lorne Township, subdivision of Lot II Hunters Moon Lane, Glen Tor Lorne, Harare, measuring 4648 square meters (“the property”). The property was sold for $9 000 000 000-00 (nine billion) dollars payable after the signing of the agreement. The sale of the property was handled by the first defendant’s agent called Denrose Real Estate (“the agent”) who would be paid $675 000 000-00 (six hundred and seventy five million dollars) as commission from the purchase price. The agent would also pay all the costs related to the subdivision of the property. The only special condition attaching to the agreement of sale was that the sale was subject to the seller completing the subdivision of Stand 2944 Glen Lorne Township held under deed of transfer No. SD/2008. As at 3 December 2007 the plaintiff had, through Real Time Gross Settlement (RTGS), paid, towards the purchase price, a total sum of $9 195 451 404-00 . Payments were made through the defendant’s agent. On 4 December 2007 the first defendant purported to cancel the agreement arguing that the plaintiff had failed to pay the purchase price in terms of the agreement. HH 3-2009 HC 1520/08 On 13 March 2008, following the purported cancellation of the agreement, the plaintiff issued summons against the first defendant claiming for: “1. An order declaring the purported cancellation of the agreement of sale whereby the plaintiff purchased a subdivision of the Remainder of Lot II of Glen Tor of Glen Lorne being Stand No. 2944 Glen Lorne Township from the first defendant for the sum of nine billion dollars ($9 000 000 000-00) which sum has been paid, null and void. 2. An order compelling the first defendant to complete subdivision of the Remainder of Lot II of Glen Tor of Glen Lorne in terms of Subdivisional Permit No. SD/2008 or any subsequent subdivisional permit that may be issued by the competent authority and sign all documents necessary and take all steps necessary to effect transfer of Stand 2944 Glen Lorne Township to the plaintiff within ten days thereof failing which the Deputy Sheriff or his authorised deputy take all steps necessary to effect transfer to the plaintiff. 3. An order compelling the second defendant to transfer Stand 2944 Glen Lorne Township only to the plaintiff or its order once the Remainder of Lot II of Glen Tor of Glen Lorne held under Deed of Transfer No. 4353/85 is subdivided in terms of SD/2008 or any subsequent subdivisional permit that may be issued by a competent authority. 4. An order that the first defendant pays costs of suit on a legal practitioner and client scale”. At the pre-trial conference held on 24 September 2008 the following were identified and agreed to as issues for trial:- “(a) whether the plaintiff paid in terms of the agreement; (b) whether the first defendant was entitled to cancel the agreement; and (a) whether the plaintiff has locus standi to institute these proceedings”. At the commencement of the hearing the first defendant abandoned the last issue on locus standi and thus leaving issues (a) and (b) for trial. The plaintiff in her capacity as Trustee of Mukudzei Trust gave evidence which in the main confirmed the agreement between the parties. In brief she restated the facts as already given above. In support of her evidence the plaintiff produced seven (7) exhibits. She, however, said it was not the understanding of the parties that payment would be in the form of bank notes or coins. She said that would not have been possible since it would have been against banking laws for the plaintiff to hold cash amounting to $9 billion. The withdrawal limits then in place HH 3-2009 HC 1520/08 did not allow for that. She said the arrangement with the estate agent was that money from the plaintiff’s investments would be paid into the agent’s account and to that end the Estate Agent had provided the plaintiff with an account number. She said although there had been no specific time frame for payments, as the agreement merely recorded that payment would be effected after the signing of the agreement, payment of the total sum of $9 195 451 404-00 had been effected by 3 December 2007 as per exhibit 4. Also, as shown on exhibits 2 and 3, staggered RTGS payments from the plaintiff’s investments were made in favour of the defendant through his agent. It was, however, her evidence that by the time of the purported cancellation of the agreement, (i.e. 4 December 2007 – exhibit 6) full payment had been made. She believed that the defendant’s wish to cancel the agreement was because he wanted to resell the property at a higher price. She produced the purported letter of cancellation as exhibit 5, which exhibit reads as follows: “RE: CANCELLATION OF AGREEMENT OF SALE I have attached here a letter from Mr Chipunza. I have just received it this morning and I believe it is self-explanatory. Mr Chipunza has cancelled the agreement of sale between yourself and him. Yours faithfully D F Zimbudzana MANAGING DIRECTOR” Through exhibit 7, the plaintiff’s legal practitioners had responded to the above letter which as can be seen was directed to the defendant’s agent. Exhibit 7 reads as follows: “AGREEMENT OF SALE: STAND NO. 2944 HUNTERS MOON LANE, GLEN ___________________________________________ TOR, GLEN LORNE, HARARE We act for Kuziwashe Trust. Your letter dated 4 December 2007 received by our client on 5 December 2007 has been handed over to us for attention and reply. Firstly the agreement in our client’s possession is properly and fully completed and signed. A copy is attached for your attention. HH 3-2009 HC 1520/08 Secondly, there is no time frame within which payment must be made only that it can be made after signing of the agreement. Consequently, our client is not in breach of the agreement. Full payment has been made, attached hereto are copies of the payments made to your agent. Furthermore, the agreement in our client’s possession is properly dated. In any event, that will have no legal effect on the agreement. We advise that our client is holding you to the agreement. If you do not accept in writing within forty-eight hours of the date of this letter, summons for specific performance will be issued against you without further ado. Yours faithfully MBIDZO, MUCHADEHAMA & MAKONI cc. Denrose Real Estate”. The witness, under cross examination, maintained that payments were to come from the plaintiff’s investments and the defendant’s agent was fully aware of that arrangement and hence the willingness to accept payments up to 5 December 2007. Furthermore the defendant’s agent had not raised issue with the mode and speed of payment. At most, she said, the defendant would have rejected RTGS payments and would have sent a letter of demand to the plaintiff. She denied the allegation that the contract had been tempered with. It was her view that, given the fact that the plaintiff had fulfilled its obligation under the contract, specific performance was called for. The plaintiff closed its case after the one witness. The defendant testified that he indeed entered into an agreement of sale with the plaintiff on 7 November 2007. He confirmed that the sale was handled by his agent, Denrose Real Estate. He said at his agent’s offices he had dealt with one Tendai and the understanding was that the purchase price would be paid at one time as opposed to a deed of sale which gives a purchaser time for payment. He said this was to be a cash payment. He, however, went on to explain that by cash payment he did not mean payment by bank notes or coins only. He said any other form of payment, including RTGS, would suffice as long as payment was made at once. Testifying that the agreement attached to the plaintiff’s summons was not the one the parties had signed, the defendant said that in the original and unaltered agreement, he had HH 3-2009 HC 1520/08 initialled all pages including the first page. He said that in clause 1 (a) on the first page the word “immediately” had been deleted and thus leaving the clause to read: “The purchaser pays cash in the sum of $9 000 000 000-00 (NINE BILLION DOLLARS) after signing the agreement”. Instead of: “The purchaser pays cash in the sum of $9 000 000 000-00 (NINE BILLION DOLLARS) immediately after signing the agreement”. (my own underlining) He also said clause 1 (c) in the agreement he signed provided for Scanlen & Holderness instead of Mbidzo Muchadehama & Makoni as conveyancers for him. He said he was the first to sign the agreement and had left it with the Estate Agent for the plaintiff to sign all the three copies. Indeed the agreement he then produced as exhibit 8 did not have any initials on the first page. Mr Chipunza said he had pointed out the alleged changes in the contract/agreement to a Mr Zimbudzana of Denrose Real Estate. He said Mr Zimbudzana could not give an explanation since the matter had been handled by Tendai whom he (the witness) understood had been dismissed for the manner he had handled the agreement of sale. He said although he had wanted an amicable settlement, he had failed to engage Mr Mbidzo of Mbidzo Muchadehand & Makoni legal practitioners on the issue. Failure to engage Mr Mbidzo had led to the cancellation of the agreement. Mr Chipunza said, on checking on 9 November 2007, he had noticed that a substantial first payment had been made from the sale of the plaintiff’s property. He did not, however, resort to cancellation of the agreement because he wanted to know why there were changes in the agreement. It was his view that the price of $9 billion was fair at the time. However, the city valuers had told him that the price was an underpayment. He said although he was not worried about the mode of payment, he was worried about the timing because of the effects of inflation on money. He said surveyors would charge him a lot of money and thus, leaving him with nothing. Under cross-examination Mr Chipunza said as at the time of sale he was fully aware of costs relating to endowment fee to council, installation of a culvert leading to the property, capital gains and surveyors’ fees. It was the city council valuers who had then, after 7 November 2007, advised him that the correct valuation for the property was $16 billion instead of $9 billion. He also said that initially he did not think it was important for him to mention the issue of changes in the agreement to his legal practitioners. He confirmed that he had not HH 3-2009 HC 1520/08 discussed same with his lawyers up to the time he came to court. He said he did not know the exact amount of money that had been paid at the time he decided to cancel the agreement. He, however, maintained that the mode of payment did not bother him but he had noticed that the agreement had been changed. He, however, agreed that he wanted to pull out because he wanted more money for the property as advised by city council valuers. Mr Mbidzo for the plaintiff, submitted that as at 3 December 2007 the plaintiff had made full payment. The plaintiff had, at that date, made a total payment of $9 195 651 404-00 through the defendant’s agent. That being the case, the defendant could not therefore justifiably cancel the agreement through his letter of 4 December 2007. Furthermore, there had been no prior warning. In any case, through a personal check on 9 November 2007, the defendant was fully aware that payments were being made from the plaintiff’s investments. There was therefore no question of an “immediate” payment. Relying on Asharia v Patel 1991 (2) ZLR 276, Mr Mbidzo submitted that prior to the attempt to cancel the agreement, the defendant should have put the plaintiff in mora. That was not done. This was precisely because the defendant was aware that payments were being made through his agent. He said the defendant, as per his evidence, was prepared to wait for full payment. This was so because there had never been an agreed time frame for payment. Mr Mbidzo said the real reason for the attempted cancellation of the agreement was that the City Council had placed a higher value of $16 billion on the property. The defendant therefore thought he could improve on the agreed purchase price of $9 billion. Mr Mbidzo submitted that the issue that the agreement had been tempered with, had only been raised in court. If such an important issue had existed, he argued, it would certainly have been raised in the pleadings. He urged, the court to dismiss the allegation. The sum effect of Mr Mbidzo’s submissions was that the plaintiff had fully complied with the agreement of sale and the defendant was therefore obliged to render specific performance. The purported cancellation was invalid. Mr Daitai, for the defendant, concentrated his submissions on the issue of the alleged changes to the agreement. He said the alleged alteration of the original agreement meant that there was no contract between the parties. Given the effects of inflation, Mr Daitai submitted, there was no way the defendant could have entered into an agreement that had no time frame for payment. He agreed, however, that the issue was so important that it should have been highlighted in the HH 3-2009 HC 1520/08 pleadings right from the beginning. He therefore urged the court to regard the agreement as having been lawfully cancelled. An analysis of the evidence from both parties coupled with the submissions from their legal practitioners points to one conclusion namely that there was, in casu, a valid agreement which was fully complied with and could therefore not be cancelled by either party. What remained was for the defendant to discharge his obligations under the agreement signed on 7 November 2007. A perusal of the pleadings in this matter and the issues for determination agreed to at the pre-trial conference clearly indicates the existence of a valid agreement between the parties. In terms of the issues agreed to at the pre-trial conference, the parties only want the trial to establish whether or not payment had been made in terms of that agreement and whether or not the defendant was entitled to cancel the agreement. There was never any issue raised relating to whether or not a valid agreement of sale existed between the parties or whether or not the original agreement had been tempered with. That being the case, the issue of the agreement having been tempered with is certainly not before me. The defendant only brought that issue at the trial where he even testified that he did not think the issue was important enough for him to discuss it with his legal practitioners. The new issue, in my view, cannot therefore be entertained. There was no application to amend the pleadings so as to incorporate that issue. I shall therefore proceed on the basis that a valid agreement of sale existed between the parties. The original agreement was not tempered with and is the one properly relied upon by the plaintiff. Admittedly, the agreement of sale relied upon did not stipulate the time frame for payment. However, given the fact that the defendant admitted in his evidence that he was prepared to wait for payment up to 4 December 2007 when he issued an instruction to his agent to cancel the agreement, I see no need to deal with disagreements that were raised regarding the mode of payment. This is so because as at 3 December 2007 the plaintiff had effected full payment through the defendant’s agent. The defendant’s agent had provided the plaintiff with an account number into which payments were to be made. The defendant could not therefore purport to cancel the agreement on 4 December 2007 and worse still without prior notice (See Asharia, supra). Payments were remitted through the defendant’s authorised agent and through checking on 9 November 2007 the defendant was fully aware that payments were being made. He did not at that time indicate dissatisfaction and thus leaving the HH 3-2009 HC 1520/08 agreement binding on both parties. In any event and given the circumstances of the case, it cannot be argued that full payment was not made within a reasonable time. This finding/conclusion means that the plaintiff is within its/his rights in demanding specific performance from the defendant. The defendant must therefore fulfil that obligation. The evidence of the defendant clearly demonstrated that the decision to attempt to pull out of a valid contract was dictated by the desire for more money after the City Council had placed a value of $16 billion on the property. As per his evidence, in entering the agreement, the defendant was fully aware of various other costs including the need for payment of surveying and endowment fee. He was also fully aware of the adverse effects of inflation. That being the case, it can safely be assumed that in arriving at the purchase price of $9 billion he took into account all cost factors. The defendant testified he was not a novice to the business of selling property. Accordingly the defendant cannot be allowed to pull out of an agreement where the plaintiff has fully complied with its/her obligations. Poor business decisions and greed cannot be allowed to interfere with the sanctity of contracts. The courts cannot and should not allow the sanctity of contracts to be destroyed by any factor that does not establish a breach of the terms of the contract. It has become common in our present economic environment for greedy parties in commercial/business transactions to manufacture imaginary breaches of contracts when trying to address sudden effects of inflation. That, in my view, cannot be allowed. Parties are in general always aware of the conditions under which they are contracting and should therefore spell out necessary protections within their agreements. There was in casu total fulfilment of obligations by the plaintiff under the contract. (See Unilever South East Africa v Viewleen Investments (Pvt) Ltd HH 37-07). In the circumstances the plaintiff’s case succeeds. I therefore order as follows: 1. The purported cancellation of the agreement of sale whereby the plaintiff purchased Stand 2944 Glen Lorne Township from the first defendant be and is hereby declared null and void; 2. The first defendant be and is hereby ordered to complete the subdivision of the Remainder of Lot II of Glen Tor in terms of subdivisional Permit No. SD/2008 or any subsequent thereafter subdivisional permit that may be issued by a competent authority, and thereafter sign all documents necessary to effect the transfer of Stand 2944 Glen Lorne Township to the plaintiff within ten (10) days from the date of HH 3-2009 HC 1520/08 this order; and failing which, the Deputy Sheriff or his authorised deputy be and is hereby ordered to take all steps necessary to effect transfer of Stand 2944 Glen Lorne Township to the plaintiff; 3. The third defendant be and is hereby ordered to transfer Stand 2944 Glen Lorne Township to the plaintiff once the Remainder of Glen Tor of Glen Lorne Township held under Deed of Transfer No. 4353/85 is subdivided in terms of Permit No. SD/2008 or any subsequent subdivisional permit that may be issued by a competent authority, and 4. The defendant be and is hereby ordered to pay costs of this suit. Mbidzo Muchadehama & Makoni, plaintiff’s legal practitioners C Mpame & Associates, defendant’s legal practitioners