Front Comm Investments (Private) Limited and Megalink Investments (Private) Limited v Showman Tours and Leisure Services (Private) Limited

### Preamble
1
HH 790-18
HC 11095/14
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FRONT COMM INVESTMENTS (PRIVATE)

and

MEGALINK INVESTMENTS (PRIVATE) LIMITED

versus

SHOWMAN TOURS AND LEISURE SERVICES (PRIVATE) LIMITED

HIGH COURT ZIMBABWE

MANGOTA J

HARARE, 16 July, 2018 & 26 November 2018

Opposed application

J. Chikura, for the applicants

M. Zvirahwa, for the respondent

MANGOTA J: Contracts are wealth-creating vehicles for corporations, partnerships and business-minded persons. Where their terms are clear and unambiguous, such must be given effect to. The parties must adhere to the same. That is so as contracts are different from social agreements. They are enforceable at law.

A person who breaches a fundamental term of a contract cannot successfully sue the person who breaches some term of the same after his breach. He can only sue and get a remedy after he has made good his breach. He cannot, in other words, take advantage of his breach and proceed to allege that, because of the other person’s breach, he is entitled to cancel the contract. Cancellation presupposes that he adhered to the terms of the contract and the other person did not. Where he is as much to blame as his adversary is, the court will not assist him to assert a right which emanates from his own breach.

The above-stated set of circumstances resonate well with this application. All the three parties to the same are legal entities. They concluded a contract in which each of them hoped to derive a benefit.

The first applicant sold a 63 seater ZK 6116D Yutong bus to the respondent. The parties described their agreement as a credit sale. They concluded it on 13 August, 2014.

In terms of the contract, the respondent was to pay the sum of $140 000 for the bus. The agreement was that it would make a down-payment of $20 000 upon the parties’ signing of the same and the balance would be paid in nine (9) equal instalments which would commence on 30 October, 2014 and end on 30 September, 2015. It would pay its instalments at $15 333 per month.

Clause 14 of the contract introduces the second applicant into the equation. It reads:

“14. During the subsistence of this agreement, the motor vehicle shall be regularly serviced 	by the purchaser at the premises of the seller in conformity with the servicing schedule 	attached hereto and according to MEGALINK ‘OPERATIONS INSTRUCTIONS’ and 	‘WARRANTY 	BOOKLET’….The cost of servicing shall be borne by the Purchaser. The 	seller will not be responsible for any problem if the purchaser shall not use and maintain the 	vehicle according to the instructions of the seller. Any garage that meets Yutong maintenance 	standards may 	also be used.”

It was in terms of the above-cited clause that the parties signed an addendum to their agreement of 13 August, 2014. They signed it on 9 October, 2014. They agreed, in the addendum, that the second applicant had an interest in the bus and that it was entitled to recover the bus if the respondent defaulted on payments.

Clause 7 of the contract provided that, if the respondent defaulted in respect of two consecutive instalments, the first applicant was entitled to repossess the bus which, in terms of clause 8, would be sold to a third party and the money realised from the sale would be used first to off-set the balance owed by the respondent and, if there was any excess, it would be given to the latter.

The respondent paid $20 000 as agreed and took delivery of the bus which it registered in its name. On 31 October, 2014 it failed to pay the instalment of $15 333. On 30 November, 2014 it, once again, failed to pay the other instalment of $15 333. The respondent’s failure to pay the two consecutive instalments prompted the applicants to invoke clause 7 of the contract. They demanded return of the bus to them. Their demand constitutes the basis of this application. They move the court to:

(i)	cancel the agreement of sale of 13 August, 2014;

(ii)	order the respondent to return the bus to the second applicant - and

(iii)	where the respondent refuses to return the bus, order the deputy Sheriff, in the

presence of a locksmith and by the use of a tow truck if necessary, to repossess the bus from wherever it is situated and deliver the same to the second applicant’s premises.

The respondent opposes the application. It states that it took possession of the bus one month after 13 August, 2014. It alleges that the first applicant breached the agreement by failing to comply with clause 16 of the same. It avers that the first applicant failed to comply with Statutory Instrument 154/2014. It admits its breach and qualifies the same by stating that it could not pay the instalments because of the first applicant’s breach. It states that its breach was subsequent to that of the first applicant. It submits that the first applicant did not furnish it with the following items which would have enabled it to operate the bus and realise proceeds from which it would pay its instalments; a jack, a wheel spanner, a spare wheel, a tool-box, a radio and spare-keys. The absence of those items, it insists, disenabled it from operating the bus effectively particularly for the Harare-Tanzania route for which it had been purchased. It moves the court to dismiss the application with costs.

The applicants speak with a forked tongue. They convey the impression that they are law-abiding legal entities which do not want to take the law into their hands. They give the distinct impression that the respondent is still in possession of the bus and that it may likely refuse to hand it over to them. Paragraphs (1) and (2) of their draft order are relevant in the mentioned regard.

Evidence filed of record, however, shows a position which is contrary to what they are moving the court to grant them in para (1) and (2) of their draft order. It shows that they took possession of the bus on 19 May, 2015. It shows, further that, not only did they do so, they also sold the same to a legal entity which operates under the name and style of Trip-Transport.

It is with some sense of disquiet that the applicants refrained from advising the court of the stated development. They filed this application on 15 December, 2014. The same was heard and determined on 16 July, 2018. They, for reasons known to themselves, kept the above-stated matter a guarded secret which was only known to no one else but them. One was, therefore, left to wonder as to why they did not amend their draft order so as to allow it to be in sync with what they were/are moving the court to grant to them.

In stating as I am doing, I am not in any way suggesting that the applicants were wrong when they retained possession of the bus. The contract which they signed with the respondent offered them a leeway to act as they did, if such was justified. Clause 7 of the same is relevant. My bone of contention with them lies in their silence and the impression which they sought to create. All they want of this application is confirmation of cancellation of the contract of sale and nothing more than that. Nothing prevented them from stating the changed position for the benefit of the court, the respondent and them.

Whether or not cancellation of the contract should be confirmed depends, in a large measure, on the circumstances of this case as a whole. It is on the strength of a proper construction of the parties’ contract that a determination as to cancellation can properly be made.

Clause 16 of the contract is relevant. It places an obligation on the first applicant to ensure that the bus was fully cleared as to customs duties. It had to ensure that all statutory requirements were met before the bus was released to the respondent. The clause constitutes the respondent’s defence. It alleges that the first applicant violated the same.

The first applicant did not refute the allegation. It remained mute on the same. Its reasons for the attitude which it took remains unknown.

It is trite that what is not denied in affidavits is taken as having been admitted [see Fawcett Security Operations v Director of Customs and Excise, 1999 (2) ZLR 12 (SC) and DD Transport (Pvt) Ltd v Abbot, 1988 (2) ZLR 92]

The respondent went out of its way to show that the first applicant breached the terms of the contract. It attached to its notice of opposition two annexures. There are annexures B and D. They respectively appear at pages 41 and 43 of the record.

The first annexure, B, is a letter which the first applicant addressed to the respondent on 25 September, 2014. It is, in substance, the first applicant’s acknowledgement of its short comings in so far as its performance of the contract was concerned. It reads:

“This letter serves to confirm that Frontcom Investments is going to provide you [Showman

Tours] with the following items as soon as they are available:

1.  Jack;                           2.  Wheel spanner

3.  Spare wheel;               4.  Tool Box;

5.  Radio                          6.  Spare keys” [emphasis added].

Annexure D is a follow-up letter which the respondent addressed to the first applicant on 15 October 2014. It reads, in the relevant part, as follows:

“I note with concern that it is now 30 days later but your company has not availed the jack, wheel spanner, spare wheel , spare keys, tool kit and radio…….

The absence of the noted items means we cannot execute our game plan.

Please note that any further delays will impact negatively on my company’s ability to generate the desired returns and such an eventuality would not auger well for the interests of both parties” (emphasis added]

The respondent, it is evident, did not mince its words at all. It showed that, without the first applicant performing its own side of the contract, it would not be able to perform. Availability to it of the mentioned items was and remained a sine qua non aspect of its performance of the contract.

The fact that the applicants do not refer to the two annexures says it all. They admit that they breached the terms of the contract. They, it cannot be disputed, made it impossible for the respondent to perform. They breached the parties’ agreement of 13 August, 2014.

The first applicant’s letter of 19 September, 2014 shows, in clear and unambiguous terms, that the items were not available when it sold and delivered the bus to the respondent. Its statement which is to the effect that such would be availed to the respondent as soon as they were at hand constitutes ample evidence of the stated fact.

The irony of the first applicant’s statement is that it did not specify the date on which the items would be delivered to the respondent. All it said on that matter was that the same would be made available to it as soon as they were at hand.

The first applicant cannot be allowed to turn its breach of the contract into an advantage to it. Its case would have held if it alleged that it sold the bus and delivered the same to the respondent with its accessories. The fact of the matter, however, is that it did not perform its part of the contract and it, in the process, caused the respondent to fail to perform.

It remains a matter of serious cause of concern as to how the first applicant expected the respondent to perform. It is unknown how it thought the respondent would operate the bus without the mentioned items which were necessary for its operations. A fortiori when the same had to travel such a long distance as the Harare-Tanzania route and back.

The respondent’s defence to the claim of the applicant is clear and straight forward. It is grounded in the maxim exceptio non adimpleti contractus. The maxim was well explained in Botha and Anor v Henry Robing and Anor CCT 89/13 in which it was noted that bilateral contracts are almost invariably co-operative ventures where two parties reach a deal involving performance by each in order to benefit both. The contract, the court states, must be honoured by both parties. It cannot, in other words, be a matter for each side pursuing his or her own self-interest without regard to the other party’s interests. Good faith, the court insists, is the lens through which we come to understand contracts in that way. Good faith, says the court, is given expression to through the principle of reciprocity and the exceptio non adimpleti contractus principle.

The respondent develops its argument in a clear and succinct manner. It submits that the contract was a bilateral one in terms of which several reciprocal obligations were agreed upon. It states, and l agree, that in terms of clause 16, which is couched in peremptory terms, the first applicant was obliged to ensure that, before releasing the bus to it, all statutory requirements had been complied with. Such requirements, it says, are contained in s 53 (1) of Statutory Instrument number 14 of 2010.

Section 53 (1) upon which the respondent anchors its defence reads:

“spare wheel, tools and fire extinguisher, all vehicles.

53 (1) No person shall drive a motor vehicle other than a motor cycle on any road unless 	           the vehicle is equipped with -

a serviceable spare wheel, and

an efficient jack; and

a wheel brace or wheel spanner capable of undoing the vehicle’s wheel nuts;

and

in the case of  -

a heavy vehicle, a serviceable fire extinguisher of a size commercially known  as one comma five kilograms.”

It follows, from the cited section, that the first applicant was supposed to deliver the bus fully equipped with all the emergency and safety equipment which are mentioned in the same section. The bus could not be driven in the half-baked form that the first applicant delivered it to the respondent. Nor could the same generate any income which would enable the respondent to meet its obligations to the applicants.

De Villers CJ aptly describes the circumstances of the first applicant and the respondent. He states in Hauman v Nortje, 1914 AD 293 at 296 that;

“The general principle applicable to all bilateral contracts …. is that one party cannot, in 	the 	absence of any special agreement, call upon the other to perform his contract without 	himself 	having performed or being ready to perform his part of the contract …. One who 	unjustly prevents the performance or the happening of a condition of his own promisory duty 	thereby 	eliminates it as such a condition. He will not be permitted to take advantage of his 	own wrong, and to escape from liability for not rendering his promised performance by 	preventing the 	happening of the condition on which it 	was promised.”

The respondent states, and l agree, that it did not want to break the law by placing a bus which did not have its necessary equipment on the road. It states further, and l agree as well, that it did not want to endanger the lives of its passengers. It insists that the requested items remained a sine qua non aspect of its intended operations. Their unavailability was / is the first applicant’s making.

It follows, from the above analyzed matters, that whilst, from a prima facie perspective, the respondent breached the contract, the first applicant was the sole cause of the same. It cannot, therefore, be allowed to reap from its wrongful conduct. The entire blame which it attributes to the respondent rests upon it.

The applicants, in their wisdom or lack of it, repossessed and sold the bus to a third party before their contract with the respondent was confirmed as having been cancelled. They acted in terms of clause 7 of the contract. The clause does not state that they could sell the bus before their contract with the respondent was lawfully cancelled. They jumped the gun when they acted as they did. They have no one but themselves to blame for the unpalatable situation in which they find themselves.

The applicants failed to prove their application on a balance of probabilities. Their case stands on nothing. It is devoid of merit. It is, accordingly, dismissed with costs.

Hove and Associates, applicants legal practitioners

Coghlan, Welsh and Guest, respondent’s legal practitioners