Kaizen Family Trust v The Trustees of the Rodney Dangarembizi Family Trust

### Preamble
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HH527/23
HCHC319/22
KAIZEN FAMILY TRUST
versus
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HCHC319/22
KAIZEN FAMILY TRUST

versus

THE TRUSTEES OF THE RODNEY DANGAREMBIZI FAMILY TRUST

HIGH COURT OF ZIMBABWE

COMMERCIAL DIVISION

CHIRAWU-MUGOMBA J

Harare 13, 14 & 18 September 2023

G. Madzoka, for the plaintiff

T. Zhuwarara, for the defendant

CHIRAWU-MUGOMBA J

1. At the centre of the dispute between the parties lies a piece of land called, the remainder of Lot 3 of Rolf Valley Township of Lot 8 of Colne Valley Reitfontein (hereinafter called the property).

2. After going through the pleadings, I formulated an opinion that the dispute between the parties was more legal than factual. Accordingly at a case management meeting held on the 27th of July 2023, the parties agreed to proceed with the matter as a special case as generally set out in R52 of the High Court Rules, 2020. Time frames were set for the filing of a statement of agreed facts and heads of argument. Thereafter the matter proceeded as an opposed hearing at which the respective counsel made submissions in motivating the main claim and the claim-in-reconvention.

3. The statement of agreed facts captures the essence of the matter as follows.

4. The plaintiff and the defendant entered into a written agreement of sale with respect to the property on the 6th of June 2021. The purchase price was set at US$2 500 000 (Two
HCHC319/22 million Five Hundred Thousand United States Dollars). The terms and obligations of the parties were set out in the agreement.

5. In breach, the failed to pay the purchase price as required in terms of clause 2. On the 21st of August 2021, the parties entered into a further agreement varying clause 2. The new date for the payment of the purchase price was extended by a period of forty-five days from the 10th of August 2021 being the date of signing of the addendum. The plaintiff failed to pay the purchase price in accordance with the extension of the period. The defendant as a result, cancelled the agreement.

6. At the time of termination, the defendant had paid US$432 000 (Four Hundred and thirty-two thousand United States Dollars). The defendant subsequently sold the property to a third party, for US$1 200 000 (One Million-two Hundred thousand United States dollars only).

7. The plaintiff’s claim is to the effect that it ought to be refunded the sum of US$432 000 that it paid. The defendant’s stance which is captured in its counter claim is that it ought to be paid the sum of $868 000 being damages arising from the plaintiff’s breach.

8. The issues to be answered by the court are as follows:-

   a. Whether the plaintiff is entitled to payment of US$432 000 being reimbursement of the money that it paid to the defendant towards the purchase price for the property?

   b. Whether the defendant complied with the provisions of section 8 of the Contractual Penalties Act In cancelling the contract, and if not, what is the effect of the defendant’s failure to comply with that act on the defendant’s claim for damages?

   c. Whether the defendant is entitled to payment of US$ 868, 000 being damages arising from the plaintiff’s failure to comply with the terms of the contract?

   d. What orders should be made by the court in the circumstances of this matter?

9. Essentially the two issues that have been brought to court are (a) a claim for a refund of part -payment of the purchase price in the sum of $432 000 and damages in the sum of $868 000 as a claim in reconvention. These damages are calculated as follows. The agreement of sale stated that the purchase price was $2 500 000. The plaintiff paid $432
HCHC319/22

000. After the sale fell through due to the plaintiff’s non-payment, the defendant sold the property for a ‘loss’ of US$1 200 000. The difference between this price and the price contracted for is $1 300 000. This figure less the $432 000 equals the $868 000 that the defendant is claiming. The defendant is therefore holding on to the $432 000 as it awaits payment of $868 000 to make it $1 300 000. This, added to $1 200 000 will take the figure to $2 500 000.

10. It is noted that the plaintiff in its initial summons and declaration, pleaded that the conduct of the defendant was in breach of the provisions of the Contractual Penalties Act [Chapter 8:04], “the Act”, in particular section 8(1) (2) as read with clause 7:1 of the agreement of sale. In the amended summons and declaration, no reference was made to the Act. It is therefore not surprising that in their heads of argument, the parties adopted different positions. The plaintiff submitted that the defendant had failed to abide by the Act in that it was not given the requisite 30 days, notice. On the other hand, the defendant was adamant that the Act does not apply and in any event, the plaintiff did not take issue with the cancellation, that is, it is not seeking to have it set aside.

11. Paragraph 7 of the agreement of sale deals generally with default. In 7:1, it states that in the event of default by the purchaser and upon failing to rectify the breach, and within a period of 30 days written notice, the seller shall be entitled to cancel the agreement without further notice or institute legal proceedings for payment of the purchase price without prejudice to any other remedy.

12. Clause 7:2 reads as follows, Should refund become(s) (sic) an option in the event of breach by the purchaser it can only be done after the seller has secured another buyer of the property. The refund shall be done after the seller would have quantified any losses incurred as a result of the breach.

13. Clause 7:2 deals with breach by the seller that would entitle the purchaser to a refund by the purchaser after giving the seller 30 days notice to rectify the breach.

14. In my view, the case by the plaintiff before the court is not about breach of the agreement by the seller. The plaintiff has clearly admitted that it breached the contract by failing to pay the purchase price. And what it is now seeking is a refund of the money paid towards the purchase price. The amended summons and declaration do not make reference to the Act at all. There are no dates averred in terms of which the plaintiff is saying it was entitled to be given notice and the consequences of failure to do so. While I am cognisant that a question of law can be raised at any time, in *casu*, it seems to me that the issue of whether or not the Act applies is an after thought by the plaintiff. It was never pleaded and will cause prejudice to the defendant.

15. The important clause in my view is 7:2 on the refund. I agree with the defendant that it is not the duty of the court to re-write contracts for the parties- See *Magodora and ors* vs. *Care International Zimbabwe*, 2014(1) ZLR 397. I also did not read the plaintiff’s claim to be about whether or not clause 7:2 amounts to a penalty clause as defined in s2 as read with s3(1) and (4) and 8(1)(a)of the Act. If that was the plaintiff’s claim, it would have then prayed for remedies in tandem with the Act and further still, place enough facts to enable the court to consider the appropriate remedy. As afore stated and worthy reiterating, the plaintiff’s claim is pure and simple. It wants a refund of the US$432 00 that it paid to the defendant as part of the purchase price.

16. My reading of clause 7:2 is that (a) the purchaser has to be in breach (2) the seller has secured another purchaser for the property and (3) the seller has quantified **ANY** losses incurred as a result of the breach. The cardinal rule of contractual interpretation that words must be given their ordinary grammatical meaning unless absurdity or inconsistency arises, applies. See *Zimbabwe Revenue Authority and anor. Vs. Murowa Diamonds (pvt) Ltd* , 2009 (2) ZLR 213 (S). In *casu*, the plaintiff was in breach and the defendant secured another buyer and has since transferred the property. I did not read the plaintiff’s claim to state that it had engaged the defendant in writing to request that it intended to claim a refund and that the latter should quantify its losses if any. This is the contract that the plaintiff signed and is bound by. The clarion reminder by the defendant of *caveat subscriptor* is therefore apt. See *Muchabaiwa vs. Grab Enterprises (pvt) Ltd*, 1996(2) ZLR 691. The plaintiff’s legal practitioners simply rushed to court without paying attention to clause 7:2 whose provisions are as clear as daylight. In my view, the plaintiff could then take issue with the quantification had the defendant been given an opportunity to do so.

17. To address issues number one and two as per the statement of agreed facts, the plaintiff in my view is not entitled to a refund of $432 000. This issue can only be scrutinised after the defendant has quantified its loss if any. On whether or not the Act applies, it was never pleaded as the basis of the plaintiff’s claim especially given that the plaintiff simply seeks a refund and has accepted that it was in breach.
 HCHC319/22

18. The defendant’s claim in reconvention has been explained in relation to the amount of $868,000 that it is claiming. It is trite that in terms of clause 7:2, both parties contemplated the issue of a refund. The courts have dealt with an almost similar situation where an agreement of sale was repudiated after a deposit was paid and the property was subsequently sold to another for a lower price. See *Collective Self-Finance Scheme vs. Asharia*, 2000 (2) ZLR 472 (S). What is critical to note is that the claim was subsumed under that of special damages. It is trite that damages must be assessed in light of loss actually suffered. See *Brimpton vs. Commercial Bank of Zimbabwe Limited*, 2001(2) ZLR 194 (H). In my view, the claim by the defendant falls into the realm of special damages. Again there is no quantification. The defendant simply took mathematical figures and turned them into a claim for damages. What the parties ought to have done was to exchange notes on the losses if any incurred, as the starting point. The defendant’s claim is nothing more than payback against the plaintiff.

19. In answering the third issue raised by the parties for adjudication, the simple answer is that on the pleadings, the defendant is not entitled to damages in the sum claimed as there is no basis upon which the amount claimed can be granted especially in the absence of a proper quantification of loss allegedly suffered.

20. The fourth issue identified for adjudication is meaningless. It is the duty of the court to grant orders.

21. In view of the above it follows that both claims by the plaintiff and the defendant have no merit. They ought to be dismissed. As for costs, none of the parties has been successful. Accordingly, the most appropriate order is one that each party bears its own costs.

DISPOSITION

1. The plaintiff’s claim be and is hereby dismissed.

2. The defendant’s claim-in-reconvention be and is hereby dismissed with costs.

3. Each party shall bear their own costs.

Saunyama Dondo, plaintiff’s legal practitioners.

Chinawa Law Chambers, defendant’s legal practitioners
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