SALTANA ENTEPRISES (PRIVATE) LIMITED v GWAFA (355 of 2024) [2024] ZWHHC 355 (20 August 2024)

1 HH 355 - 24 HC 8103/19 SALTANA ENTEPRISES (PRIVATE) LIMITED versus BRIGHT GWAFA HIGH COURT OF ZIMBABWE MUSITHU J HARARE, 19 January 2024 & 20 August 2024 Opposed matter based on a statement of agreed facts- Rei vindicatio. J Koto, for the plaintiff E Jera, for the defendant MUSITHU J: The history of this matter is long and circuitous. At the centre of the dispute is a property known as stand number 7874 Belvedere, Harare (the property). On 3 October 2019, the plaintiff instituted summons proceedings for the eviction of the defendant and all those claiming occupation through him from the property. The defendant also sought an order of costs against the defendant on the legal practitioner and client scale. The matter went to trial before CHIRAWU MUGOMBA J between 21 July and 16 August 2021. In a judgment under HH 417/22 handed down on 16 August 2021, the judge dismissed the plaintiff’s claim with costs. The plaintiff was dissatisfied with the dismissal of its claim and appealed to the Supreme Court under SC 309/21. On 19 July 2022, the Supreme Court granted an order by consent allowing the appeal with each party bearing its own costs of suit. The judgment of this court was set aside with the matter being remitted to this court for a new trial before a different judge. The order by consent from the Supreme Court did not give reasons for the setting aside of the judgment and the remittal of the matter. However, according to the parties’ counsels, the reason for the setting aside of the judgment and remittal of the matter was that the court had, in its determination of the matter relied upon an issue that had not been referred to trial without inviting the parties to make submissions on the point. The matter was placed before me based on a statement of agreed facts, with the parties agreeing to rely on the evidence already placed on record during the trial before CHIRAWU-MUGOMBA J, in the disposal of the matter. Since the matter was not proceeding to trial as no fresh evidence was required, the parties agreed to file heads of argument in support HH 355 - 24 HC 8103/19 of their respective cases. The parties however agreed on a new set of issues for determination which I shall relate to latter in the judgment. Considering the parties’ decision to rely on the evidence placed on record before CHIRAWU-MUGOMBA J, I shall relate to the evidence as summarized in setting out the brief background to the matter. Where necessary, I will also have recourse to the bundles of documents which the parties agreed to stand by. Background to the Applicant’s Case The plaintiff’s case is that in 2002, it was allocated a piece of land by the City of Harare to develop and sell stands to willing buyers. On 10 September 2002, the plaintiff sold the property to one Kavande, who later failed to pay the full purchase price within the stipulated period thereby breaching the agreement of sale. Borm Real Estate (Borm), which was acting as the plaintiff’s agent allegedly cancelled the agreement of sale and repossessed the property from Kavande. This was done firstly through a letter from Borm dated 4 October 2002, which gave Kavande up to 30 October 2002 to pay off the arrears. Kavande failed to comply with the request, and on 7 November 2002, Borm sent Kavande a certificate of repossession of the property. Despite the alleged repossession of the property, Kavande fraudulently sold the property to a third party without the plaintiff’s consent as the owner. According to the plaintiff, after the repossession of the property, the plaintiff sold it to one Penias Nyamwino. It is at that stage that the plaintiff became aware that the property had since been sold further to one Gwafa who had already taken occupation. Nyamwino sought the eviction of Gwafa from the property through HC 8101/14. That claim was dismissed by this court. The plaintiff insisted that the property belonged to it as it fell within the parameters of land that it was allocated by the City of Harare. The plaintiff never entered into any agreement of sale with the defendant. The defendant had no rights to occupy the property as he had not lawfully acquired it from the plaintiff. The plaintiff denied that it authorized Borm to sell the property on behalf of Kavande or to resale it to any other third party. The Defendant’s Case The defendant claimed to have purchased the property from Chenjerai Travolta Jana through an agreement of sale of 17 April 2003. Jana had purchased the property from one Patutshedzo Manala through an agreement of 3 December 2002. Manala had in turn purchased the property from Kavande through an agreement of sale of 21 October 2002. On his part, Kavande had purchased the property from the plaintiff through an agreement of sale HH 355 - 24 HC 8103/19 of 10 April 2002. The sale from the plaintiff to Kavande was done through Borm, as the plaintiff’s agent. The defendant averred that the plaintiff, having sold its rights to Kavande, who in turn sold his rights to Manala, could not seek to recover the stand from the defendant without joining the other parties involved in the sale. The defendant was the fourth purchaser in the chain of all the buyers that were involved, and he claimed to have properly acquired rights in the property as an innocent purchaser. The defendant denied that the plaintiff was the owner of the property as it held no real rights in the property. It did not have any right to vindicate the property from the defendant without first suing those people through whom the defendant was claiming possession and occupation. Kavande had not been brought to court to confirm or dispute the alleged cancellation of the agreement of sale between him and the plaintiff. The plaintiff could not establish that there was a breach or subsequent cancellation of the agreement between it and Kavande without citing Kavande in the proceedings. The defendant claimed that after purchasing the property, he dealt with the Tudor House Consultants who were the plaintiff’s judicial managers following the placing of the plaintiff under judicial management at some stage. The defendant was requested to pay some levies for the property, and he duly complied. The defendant also claimed that he purchased the property ahead of the agreement of sale between the plaintiff and Penias Nyamwino, which agreement of sale was entered into on 20 October 2006. The defendant also averred that Kavande did not relinquish his rights in the property to the plaintiff after the alleged cancellation of the agreement of sale. He continued to hold all the rights, title and interest in the property and proceeded to sell and alienate such rights, title and interest in the property to Manala. The plaintiff did not institute proceedings to confirm the cancellation and /or vindicate its rights, title and interest from Kavande. To date it had not done so and its claim would have prescribed by now. According to the defendant, the notice of cancellation issued to Kavande by Borm Real Estate was dated 4 October 2002. That notice required Kavande to pay up his instalments by 30 October 2002, failing which the property would be repossessed in terms of clause 13 of the agreement of sale. Instead of paying up the instalments as directed by the notice, Kavande, through the agency of Borm, sold the property to Manala on 21 October 2002. The sequence of events showed that the agreement of sale was not cancelled by the plaintiff before the property was sold to Manala by Kavande. The defendant argued that the HH 355 - 24 HC 8103/19 notice to cancel was issued through Borm, and as such, the plaintiff could not accept the validity of the notice to cancel and then not accept the validity of the actions by Borm, following the issuance of the notice and before the expiry of the period stated in the notice. The plaintiff could not purport to have rights in the property which it had disposed of, basing such rights on an alleged cancellation of the agreement with Kavande that was never followed up. The defendant averred that the alleged sale of the property by the plaintiff to Nyamwino was of no moment because at the time of the alleged sale, the agreement between the plaintiff and Kavande had not been cancelled and the property had already been sold to other purchasers. Nyamwino sued both the plaintiff and Gwafa in HC 8101/14, seeking the eviction of the defendant from the property or alternatively payment of damages in the sum of $40, 000.00, being the cost of a similar property. The court through judgment HH 179/18, dismissed the claim for eviction and instead ordered the plaintiff herein to compensate Nyamwino the sum of US$30, 000.00. In those proceedings, the plaintiff allegedly denied that it owned the property averring that the property belonged to a Mr Pahwaringira, a former director in the plaintiff. The plaintiff could not therefore be allowed to blow hot and cold. The defendant claims that on 4 January 2014, the plaintiff wrote to him asking him to visit its offices with proof of payment of levies in respect of the same property. The plaintiff would not have done so if the defendant had no valid agreement of sale. The agreed issues for determination The statement of agreed facts recorded the following to be the issues for determination in this matter.  Whether there was a valid notice of cancellation given by the plaintiff to Kavande as required by the Contractual Penalties Act [Chapter 8:04].  Whether the notice of cancellation was superseded by the sale between Kavande and Manala on 21 October 2002.  Whether the defendant can hold the plaintiff to its contract with Kavande.  Whether the plaintiff can legally evict the defendant from the property. I now turn to determine the issues hereunder seriatim. Whether there was a valid notice of cancellation given by the plaintiff to Kavande as required by the Contractual Penalties Act [ ] Chapter 8:04 The parties agree that the agreement of sale between the plaintiff and Kavande fell under the purview of the Contractual Penalties Act. The purchase price was required to be paid over a period of 60 months in terms of clause 3.2 of that agreement. HH 355 - 24 HC 8103/19 In its heads of argument, the plaintiff averred that the notice cancellation given to Kavande was valid. The notification letter gave Kavande from 4 October to 30 October 2002 to rectify the breach. The plaintiff argued that even though the notice did not specify that Kavande had 31 days to rectify the breach, it remained valid. The plaintiff further averred that the letter of cancellation was sent to Kavande on 7 November 2002. There was therefore substantial compliance with the law in that Kavande was given not less than 31 days’ notice as required by the law. The plaintiff further averred that the 33 days period that Kavande was given was reasonable. In any case, Kavande himself never objected to the nature and extent of the notice. He ought to be taken to have acquiesced to the notice in its form. In response, the defendant submitted in his heads of argument that the alleged notice of cancellation was invalid for want of compliance with s 8(1)(b) and s 8(2)(c) of the Contractual Penalties Act. This was because the period given in the notice was below what the law prescribed. The purported notice was therefore a nullity meaning that the agreement of sale between the plaintiff and Kavande remained valid. Nothing therefore stopped Kavande from passing on his rights in the property to subsequent purchasers. Sections 8 (1)(b) and 8(2)(c) of the Contractual Penalties Act limit the right of a seller under an instalment sell from terminating a contract of sale on account of a breach of the contract, unless the period fixed for the purpose in the instalment sale of the land concerned or thirty days, whichever is the longer period, has expired. The parties under an instalment sale of land cannot in their contract therefore agree to a shorter period of termination below the minimum period of thirty days stipulated by the law. As correctly submitted by the defendant, the period between 4 and 30 October 2002, was less than the 30 days stipulated by the law. The mere fact that the cancellation letter was only dispatched on 7 November 2002, some days after 30 October 2002, does not remedy the breach of the law. In the heads of argument, the plaintiff’s counsel unwittingly admitted that the letter of the law was not complied with. In para 5 of the plaintiff’s heads, it was alleged that there was “substantial compliance” with the requirement that the purchaser be given not less than 31 days. There is also the averment that the Kavande never objected to the “nature and extent” of the notice. He was therefore taken to have “acquiesced to the notice in its form”. Counsel’s interpretation of the law is way off the mark. The law is clear that the notice period shall not be less than the minimum set by s 8 of the Contractual Penalties Act. What it means is that the agreement of sale between the plaintiff and Kavande remained valid because the notice of cancellation was null and void. There is merit in the defendant’s submissions. HH 355 - 24 HC 8103/19 Whether the notice of cancellation was superseded by the sale between Kavande and Manala on 21 October 2002 It was submitted on behalf of the plaintiff that the notice of cancellation was not superseded by the purported sale between Kavande and Manala on 21 October 2002. This was because Kavande was acting fraudulently in not disclosing to the plaintiff that he was introducing a third party as debtor to pay for the property. Kavande is also accused of not disclosing to Manala that there was a debt outstanding, for which he was already on notice to remedy. As such Manala did not seek to step into Kavande’s shoes in order to clear the debt. It was further submitted that Kavande could not seek to enforce the contract against the plaintiff because of the non-payment of the purchase price. Manala could not seek to do the same, and the same consequences also befell the current defendant. It was also submitted that Kavande could not have ceded possession to Manala because he himself had no possession. In response, the defendant averred that before the purported notice of cancellation expired, Kavande sold the property to Manala on 21 October 2002. By the time the plaintiff purported to repossess the property through the certificate of repossession of 7 November 2002, Kavande no longer had any rights in the property. The purported cancellation was therefore inconsequential. It was also submitted that the sale between Kavande and Manala was facilitated by Borm as the plaintiff’s agent, and the plaintiff suffered no prejudice at all. The finding that the notice of cancellation and the purported cancellation of the contract between the plaintiff and Kavande was a nullity for want of compliance with the law had serious implications on the parties’ rights. The plaintiff’s submission that the sale between Kavande and Manala was fraudulent is premised on the misapprehension that the said sale took place when there was a notice of cancellation in place. That notice, as already stated was null and void. There was no notice to speak of. Kavande remained the purchaser of the property. The question about whether or not the property had been paid for in full does not arise because Kavande was never served with a valid notice to remedy the breach in terms of the parties agreement which had to comply with the law. Further, the plaintiff did not dispute that the sale between Kavande and Manala was facilitated by Borm. Borm was the same agent that issued the invalid notice of termination. It is the same agent that issued the certificate of repossession of the property. The certificate of repossession was invalid because it was founded on a nullity, that is the invalid notice. In HH 355 - 24 HC 8103/19 facilitating the sale of the property to another party before the expiry of the invalid notice, Borm as the agent of the plaintiff, sanitized the transaction between the Kavande and Manala. It all but confirmed that Kavande had fully discharged his mandate to the principal, the plaintiff herein. At any rate, in the absence of any breach of the contract, since non was established on account of the defective notice, Kavande acquired rights in the property which he could freely pass on to the next purchaser. The court finds in favour of the defendant in this regard. Whether the defendant can hold the plaintiff to its contract with Kavande It was submitted for the plaintiff that the defendant could not resist the cancellation of the contract between the plaintiff and Kavande because he was a stranger to that contract who could not sue on it or rely on any of its terms and conditions. Kavande did not contest the cancellation because he knew he had breached the contract, and he must therefore be taken to have waived his rights to challenge the cancellation. It was further submitted that Kavande never intended Manala to know of the fact that the property had not been fully paid for, and neither did he inform the plaintiff of the introduction of a third party. Manala was therefore a total stranger to the contract between the plaintiff and Kavande. In response, the plaintiff submitted that the invalidity of the notice of cancellation meant that the contract between the plaintiff and the Kavande remained valid. The defendant’s counsel also pointed to the role played by Borm as the plaintiff’s agent. Borm was the agent in the sale of the property to Kavande. It also received payments from Kavande and held them in trust on behalf of the plaintiff. Borm facilitated the sale between Kavande and Manala before the lapse of the purported notice period, that Borm had issued to Kavande. It was also submitted that during the time that the plaintiff was under judicial management, the judicial manager confirmed that one Gwafa was the registered holder of rights in the property. Gwafa had bought the property from Jana to whom Manala had sold it. The plaintiff clearly shot itself in the foot by failing to coopt the other parties that were involved in the sale of the property following the purported cancellation of the contract with Kavande. It also erred in not calling Borm as a witness to these proceedings. On 9 November 2016, C Mpame and Associates wrote to Borm on behalf of their client, Bright Gwafa, seeking confirmation that Manala had fully paid for the property before it was sold to their client. Borm responded to the letter through their letter of 14 November 2016 as follows: HH 355 - 24 HC 8103/19 “STAND 7874 BELVEDERE WEST: HARARE ………………. b) We also want to confirm that the attached duplicate receipt dated 30 th October 2002 in the name of P Manala was issued at out accounts section after paying the full purchase price. c) The Cashier at the time was Tsitsi Mildred Taisi (Nyamaropa). d) All the duplicate agreement of sale attached to your letter bear the signatures of both the Seller and our Registered Agent.” As the plaintiff’s registered agent, Borm confirmed that the property had been fully paid for by Manala. The letter also confirmed that Borm was receiving payments from purchasers on behalf of the plaintiff. The plaintiff therefore suffered no financial prejudice at all as confirmed by the communication from its agent. That Borm played a key role in all the transactions involving the property is confirmed by the fact that it prepared the agreement of sale between Kavande and Manala. That agreement of sale is on a Borm letter head. Manala and Kavande signed the agreement on 21 October 2002. Borm’s registered agent signed the same agreement on 23 October 2002. It follows that the plaintiff cannot claim that it was not aware of the sale of the property by Kavande to Manala, since its agent prepared the agreement of sale before the lapse of the purported notice of termination issued to Kavande. Further, as far back as 30 May 2003, Borm had also written to Muzondo Chinema legal practitioners in response to an enquiry about the cession of rights, title and interest in the property from Jana to Gwafa. Part of the letter reads as follows: “RE: STAND NO. 7874 BELVEDERE WEST HARARE CESSION OF RIGHTS, TITLE AND INTEREST THERETO BY CHENJERAI TRAVOLTA JANA TO BRIGHT GWAFA ………….. The above stand has no title deeds and for your client to cede the property we require the following. Your client is required to pay Capital Gains Tax which will be kept in trust until we proceed to apply for transfer and a cession fee of $75 000.00 is also required. …….” Borm would not have prepared all the agreements between the parties involved in the sale of the property, hold funds in trust on behalf of the plaintiff, without the plaintiff’s knowledge. In short, the plaintiff cannot claim that it suffered prejudice or that it retains title in the property in the face of evidence confirming that the full purchase price was received by its agent. On 14 November 2016, Tudor House Consultants wrote to C Mpame & Associates as follows following enquiries about the property: HH 355 - 24 HC 8103/19 “SALTANA ENTERPRISES (PRIVATE) LIMITED: STAND 7874 BELVEDERE WEST We would like to advise that when the company was placed under judicial management we carried out an audit verification exercise to ascertain the ownership of stands and the audit revealed that Bright Gwafa was the rightful owner of Stand 7874….” At the time of the confirmation by the former judicial manager, the property had long changed hands from Kavande and Manala to Jana and Gwafa. Under the circumstances, the plaintiff cannot still insist on having rights to the property based on the alleged cancellation of the agreement with Kavande when its agent and the judicial manager all confirmed that the rights in the property were already vested in third parties by the time that it was removed from judicial management. The plaintiff sought the eviction of the defendant from the property on the basis that the agreement of sale between the plaintiff and Kavande was cancelled. The defendant could not therefore acquire rights when Kavande did not have rights to pass to any third party following the alleged cancellation of the agreement between the plaintiff and Kavande. The plaintiff chose not to cite Kavande in these proceedings, yet it seeks to use the cancellation of the agreement with Kavande as the reason to evict the defendant. The evidence before the court tells a different story. As already noted, the alleged termination of the contract was nullity. Further, Borm as the plaintiff’s agent prepared the agreement of sale between Kavande and Manala before the expiry of the notice period. Under those circumstances, nothing stops the defendant from holding the plaintiff to its contract with Kavande to demonstrate that he legitimately acquired rights, title and interest in the property. The court accordingly finds in favour of the defendant. Whether the plaintiff can legally evict the defendant from the property It was submitted that the plaintiff was entitled at law to reclaim possession of the property as it had no contractual relationship with the defendant which entitled him to remain in occupation. In his response, the defendant submitted that the plaintiff did not own the property. The plaintiff was only a developer allocated land by the City of Harare to develop and sell stands as directed by the City of Harare, as the owner of the land. The plaintiff did not have title to the land. It only possessed personal rights, just like all the parties that acquired rights in the property through sale. HH 355 - 24 HC 8103/19 I find the defendant’s submissions persuasive. The plaintiff was not the holder of real rights in the property which are enforceable against any third party in possession of the property without the owner’s consent. The plaintiff was the holder of personal rights which were only enforceable against the immediate parties to the transaction involving the property. A vindicatory action was not available to the plaintiff under the circumstances. The plaintiff ought to have cited each of the parties that were involved in the transactions and have each sale revoked. In para 6 of the declaration, the plaintiff claimed that people who purchased stands from the plaintiff or its authorized agents were the only ones entitled to take occupation of the stands on terms agreed with the plaintiff. Evidence on record shows that Borm was involved in all the transactions pertaining to the property as an agent of the plaintiff. The plaintiff did not cite Borm or invite it as a witness to refute all the evidence that pointed to an agency relationship between Borm and the plaintiff. In fact, that Borm was an agent of the plaintiff was confirmed by one Dave Pfukwa Mutingwende who testified in the matter in HC 8101/14 (judgment HH 179/18) before DUBE J (as she was then). In that matter Nyamwino sought to evict Gwafa from the property on the basis that he, Nyamwino had purchased the property from Saltana Enterprises which was the second defendant in that matter. Mutingwende represented the second defendant in that matter (the plaintiff herein), in his capacity as its Executive Director. He told the court that the plaintiff herein had engaged Borm to market its stands on its behalf. He further told the court that sometime in 2005, it was agreed that directors of the plaintiff be allocated stands since they were not receiving salaries from the plaintiff. The property was allocated to a Mr Pahwaringira a director, who then sold it to Nyamwino. The agreement of sale only reflected the plaintiff herein as seller because there was no certificate of compliance in the name of the director who had been allocated the property. Going by its own version of events in the proceedings before DUBE J, the plaintiff all but admitted that it did not even own that property. The property had since been allocated to one of the directors in lieu of his salary with the plaintiff herein. The plaintiff does not state at what point it then reclaimed the same property from Pahwaringira to whom it had been allocated. For the foregoing reasons and going by the agreed issues placed before the court for determination, the court determines that there is no merit in the plaintiff’s claim, and it ought to be dismissed. The plaintiff failed to demonstrate, on a balance of probabilities that it still HH 355 - 24 HC 8103/19 retained rights, title and interest in the property, since Borm was involved in all the transactions that led to the disposal of the property between all the parties that acquired rights in the property at some point. The involvement of Borm, which collected and retained the purchase price in trust on behalf of the plaintiff as the agent, confirms that the plaintiff suffered no prejudice at all. The plaintiff’s claim, if any, must be directed to Borm to explain what happened to the proceeds of the sale which it was collecting on behalf of the plaintiff as the authorized agent. Costs Mr Jera urged the court to dismiss the claim with costs on the legal practitioner and client scale because it was frivolous and vexatious. I agree with that submission. The plaintiff ought to have heeded the sentiments of DUBE J in HC 8101/14, in which it was ordered to compensate Nyamwino in the sum of $30 000.00 for misleading Nyamwino into believing that the property was available for sale when it was aware that the property had been innocently purchased by Gwafa from Jana. Jana had purchased the property from Manala. In that matter, the court also highlighted that Borm should have been invited to come and explain the role it played in all the chaos surrounding the property. That the plaintiff sought institute litigation in connection with the same property but chose not to cite the other purchasers involved in the transaction or invite Borm to appear as a witness to explain its role under the circumstances was the highest form of impertinence. An order of costs on the legal practitioner and client scale is justified. Resultantly it is ordered as follows: 1. The plaintiff’s claim be and is hereby dismissed. 2. The plaintiff shall bear the defendant’s costs of suit on the legal practitioner and client scale. MUSITHU J: …………………………………… Koto & Company, plaintiff’s legal practitioners Moyo and Jera, defendant’s legal practitioners