Judgment record
XIE Chonghui V Elephanta Investments (Pvt) LTD AND Rekhakumari Patel AND Ajanta Properties Pvt LTD AND THE Registrar OF Deeds NO
HH 215-21HH 215-212021
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HH 215-21
HC 1194/21
Ref Case No. HC 1108/21
XIE CHONGHUI
versus
ELEPHANTA INVESTMENTS (PVT) LTD
and
REKHAKUMARI PATEL
and
AJANTA PROPERTIES PVT LTD
and
THE REGISTRAR OF DEEDS NO
HIGH COURT OF ZIMBABWE
TSANGA J
HARARE, 8 & 28 April 2021
Urgent chamber application
RM Dhaka, for applicant
ET Mandaza, for 1st and 2nd respondents
S Mukwekweke, for 3rd respondent
TSANGA J: This is an urgent application in which the provisional order sought the
placement of a caveat on property described as a certain 4357 square meters of land called
stand 17005 Harare Township of Stand 16969 Harare Township situate in the District of
Salisbury held under Deed f Transfer No 02319/95.
THE BACKGROUND
The context for the quest for a caveat on the property is that the applicant, Xie Chonghui,
loaned a sum of US$662 000.00 to the second respondent, Rekhakumari Patel. On 22
September 2020, the parties entered into an agreement on repayment terms and conditions.
Among those terms was that if Rekhakumari Patel failed to repay the money by the end of
November 2020, then the described property (also referred to as the Graniteside property in
the agreement) was to be transferred to the applicant as security for perfecting their
agreement. The first respondent, Elephanta Investments Private Limited signed as surety and
co-principal debtor and agreed to be bound by the terms of the agreement. This position was
fully expressed in a company resolution. The property in question is registered in the name of
the third respondent, Ajanta Properties Private Limited. Paragraph 4 of the signed agreement
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Ref Case No. HC 1108/21
rendered an explanation by the debtors as to the relevance of Ajanta Properties in their agreed
debt settlement plan and securitisation. It reads as follows:
“4. Our current situation is as follows:
a. All our Title Deeds are currently under Ajanta Properties Private Ltd
b. The shareholders of Ajanta are Elephanta Investments (Pvt) Ltd and Ellora Investments
(Pvt Ltd)
c. We are in the process of restructuring our company Ajanta Properties Private Ltd
d. The Graniteside and Leopold Takawira property title deeds will be transferred to
Elephanta Investments Private Limited.”
Paragraph 5 c. on payment plans reads as follows:
“c. If we do not pay back to Mr. Xie by end of November 2020, then I transfer title
deeds of the Graniteside property to Mr. Xie Chonghui Name (sic). After title deeds
of Graniteside are in Elephanta Private Limited. The transfer cost is charged belong
(sic) to Rekhakumari Patel.”
Despite the grammatical or editorial errors, he intention itself remained clear. If the
money was not repaid by a given date, the Graniteside property would be transferred to Mr
Xie at the second respondent’s cost. The loan was not repaid by the agreed date. On the 25 th
of March 2021 the applicant wrote a letter to the first and second respondents seeking transfer
as agreed. It read in part
“I kindly request that you transfer stand 17005 Sande Crescent Graniteside to me since you
failed to pay the money at the end of November 2020.”….
The first and second respondent dithered on performance and as emerges from
applicant’s further correspondence dated 30th March 2021 to them, a meeting took place prior
to the 30th where they advised the applicant that the transfer could not be affected because
the first respondent had already signed transfer papers from transfer of the property to a third
party. This follow up letter also captured that alternative property promised at that meeting
but had equally not materialized. Thus in the letter, the applicant advised the two respondents
that he was headed to court to protect his interests. He then filed a matter under No. HC
1108/2021 in which he seeks transfer of the property to him. He then followed this up with
this urgent application.
THE ARGUMENTS
When the urgent application was filed, the provisional order attached was couched as
one for an interim interdict preventing the transfer of the property to the first respondent
unless such transfer was being done simultaneously with the transfer of the said immovable
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property to the applicant. At the hearing of the urgent application, the applicant applied to
amend the draft order so as to request a caveat instead being placed on the described
property.
The first and second respondents were opposed to the application as a whole. Ms
Mandaza who appeared on their behalf, argued that the matter was in fact not urgent as first
and second respondents did not have authority to pass title to anyone else when the
arrangement was entered into. More particularly, the title deeds, she highlighted, were not
even registered in the names of the first and second respondent. As such, she argued that
there was no basis for a caveat.
Mr Mukwekwezeke argued on behalf of the third respondent. He was equally opposed
to the amendment sought and the application as a whole. His argument was as follows. The
amendment would change the nature of the application sought. The applicant was in reality
seeking to smuggle an entirely different order and application which ought to be refused.
Moreover, a caveator must have dealings with the owner of the property and in this case the
applicant had failed to show such dealings. Regarding the standards to be satisfied before a
caveat can be granted he referred illustratively to the two cases case of Stenhop Investments
(Pvt) Ltd v Blessing Mukoko HH 132/18 and The Cold Chain Zambia Ltd v Kurai Jesina
Kingsley (Nee Nehonde) & 4 Ors HH 379/20 whose principles are canvassed more fully later
in this judgement.
Furthermore, there was no board resolution from the third respondent and the latter
had also not bound itself as surety for any loan. Adding on to that, he highlighted that the
second respondent Rekhakumari Patel, was a secretary of the third respondent and that is
where her authority ended. She had no mandate to alienate the property of the third
respondent and could not securitise a building without authority to do so. He underscored that
the effect of a caveat would be that Ajanta Properties would not be able to securitise its own
building. In any event, he maintained, a shareholder cannot dispose of property that belongs
to some other company. Attention was also drawn to the fact that the property in question
currently belongs not only to the third respondent alone but also to a company called Ellora
which was not before the courts. No evidence had been placed before the court as to how the
first and second respondents could have disposed of property on their behalf and as such he
stressed that there was no reason why the applicant should benefit from a manifestly illegal
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transaction. Shareholders could also not divest of property in company they own directly.
Cumulatively therefore, he too believed the matter was not urgent.
In response, Mr Dhaka emphasised that this was a case where the urgency lay in that
if the applicant failed to take action now by placing the caveat and the property is transferred
to a third party as feared, there would be no point in seeking to act later. In other words, he
maintained that the facts more than meet the test of urgency. He referred to two letters written
on the 25th and the 30th of March 2021 which had not been respondend to. He accentuated the
point that the first and second respondents do not deny taking the money and that the
arguments now being raised are in reality for the return date.
As for the two court cases relied on, these he argued, as High Court cases were not
necessarily cast in stone as unshakable authorities. His view was that the Cold Chain case in
particular is too restrictive in its interpretation of the features of a caveat. He denied that the
amendment seeks to smuggle in a new order and pointed to body of the founding affidavit to
illustrate the underlying caveat theme throughout. He also argued that in any event a caveat is
less intrusive than an interdict. He therefore maintained that the applicant had made out a
proper case for the amendment as well as the prayer for the granting of the caveat as there
would be plenty opportunity to vent the matter on the return date. The final order sought
would among other things be to interdict the third respondent from disposing of, encumbering
or mortgaging the said property, other than transferring it simultaneously from the first
respondent to the applicant.
ANALYSIS
Urgency
Contractual rights constitute a caveatable interest given that the purpose of a caveat is
to warn someone or others or the public of a priority interest in property for a particular
reason so that any one dealing with the property has that knowledge. Whilst the respondents
argue that the matter is not urgent, the facts above clearly point to two fold urgency, firstly in
terms of the fact that the applicant took action when the need arose which was when the first
and second respondents refused to transfer the property. Secondly, there is also urgency from
the point of view of the apparent risk of the property being sold. It therefore makes sense to
fully assess whether a caveat should be granted herein at this stage since the caveat procedure
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Ref Case No. HC 1108/21
is an effective method for protecting interests such as those arising out of an agreement. To
the extent that purpose of registering a caveat is to ensure that nothing in conflict with the
status quo is registered, and to the extent that a registered interest has priority over an
unregistered interest, I do not see how the matter can be said to be not urgent. I will therefore
proceed to deal with the merits of the matter.
Amending the order
I turn to the issue of amending the draft order sought. Paragraph 8.13 of the founding
affidavit succinctly avers thus:
“The only way to secure my interests and protect me from suffering irreparable prejudice
which may ensue as a result of encumbrance or transfer of the property by the first respondent
to the third party after transfer of the same to it is for a caveat to be registered against the
parent of deed in the name of the third respondent and for the third respondent to be
barred from transferring the property to the first respondent unless such transfer is being done
simultaneously with the transfer of the immovable property from the first respondent to me”.
Equally, paragraph 9.1.1 also speaks to the need for a caveat as follows
“I have good legal basis for having a caveat registered against the property or have a
“caveatable interest” for the following reasons:
i) I have proprietary and financial interests in the said property as it was given to me as
security and I am entitled to take transfer of the property in terms of the sworn agreement
……..
The founding affidavit undoubtedly speaks to the need for a caveat clearly and
unambiguously and it cannot be said that the amendment of the order would affect the whole
application or introduce something new. I am therefore satisfied that the amendment sought
in fact flows from the essence of the founding affidavit and there is no reason not allow the
amendment of the draft order as prayed for. The application to amend is accordingly granted.
Having found that the application from the onset spoke to the need for a caveat in the body of
the founding affidavit, the key issue for determination is whether the applicant has made out a
satisfactory case for the granting of that caveat.
Caveatable interest
A caveat is a type of injunction or interdict which is noted by the registrar against the
title deeds of a property when the Registrar is served with an order of the court. The caveat in
this instance is sought on provisional basis.T he applicant maintains that he has made out a
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prima facie if not a clear right for the award of the provisional order sought. Applicant also
says a well-grounded apprehension of harm if the order sought is not granted has also been
made out. Equally, he says the case for balance of convenience being in its favour in having
the property preserved pending the determination of its case in HC 1108/2021 in which
transfer to applicant is sought has also been made out. Applicant also says that he has no
other remedy.
The purpose and ambit of a caveat has been set out in a number of cases before our
courts. In Stenhop Investments (Pvt) Ltd v Blessing Mukoko HH 132/18 alluded to earlier, it
was described more fully as follows:
“The term ‘caveat’ is a Latin term which means ‘let a person beware’ It is a notice or warning
that is registered over a property by a person who claims to have some interest in the property
concerned. The purpose of a caveat is to preserve and protect the rights of a person who seeks
to have a caveat placed on a property, known as a caveator. The effect of a caveat on a
property is that the property cannot be sold or disposed of without giving effect to the
caveator’s interest. Once a caveat is placed over a property, the said property cannot be
transferred, mortgaged or disposed of without the caveator’s consent. No further dealings
over the property are allowed unless the caveator consents to the upliftment of the caveat, it
lapses, is cancelled, withdrawn or removed. Any person who deals with the property does so
at his own risk. The law does not permit a person to lodge a caveat over another’s property
without good cause. An applicant who applies to place a caveat over a property must show
that he has an interest in the property concerned. The interest claimed must exist at the time
the caveat is lodged and should not be an interest that arises in the future. The caveator must
show that his claim arises from some dealing with the registered property. It is only those
interests that are connected to the land that can be subject of a caveat. The interest must attach
to the property, thus, a person seeking to place a caveat over a property is required to show
that he has a caveatable interest to lodge the caveat. A caveator does not have to show that the
other party is about to dispose of the property. The applicant has to show that he has a matter
pending that concerns the property. The moment that the pending matter is determined, the
caveat lapses by operation of law .The caveat cannot continue in perpetuity. The interest
claimed by the caveator may be challenged by the owner of the property. It is the duty of the
court to determine the validity and correctness of the application for a caveat.
The case of The Cold Chain Zambia Ltd v Kurai Jesina Kingsley (Nee Nehonde) & 4
Ors HH 379/20 further distilled from the above case ten principles on caveats which it set out
as follows:
(a) the caveat preserves and protects the rights of the caveator;
(b) it bars the owner of the caveated property from disposing of the same without the
caveator’s consent;
(c) only the caveator can, in general terms, consent to the upliftment of the caveat;
(d) a caveat can, in some instances, be cancelled or removed from the caveated
property;
(e) the caveator’s interest must be in existence at the time the caveat is lodged;
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(f) the caveator must show that his claim arises from some dealing which he had with
the owner of the caveated property;
(g) the caveator’s interest must attach to the property
(h) the caveator must show that he has a matter pending which relates to the property;
(i) when the pending matter is decided, the caveat lapses– and
(j) a caveat can only be placed on another’s property where the caveator has shown
good cause for the same, like an interest in the property.
See also Majabvu v Majabvu and Anor HH 486/16
It is these two cases that the third respondent in particular draws upon to argue that the
applicant has not satisfied the requirements of placing a caveat on its property as it has not
established any dealings in particular with the owner of the property or an interest which
attaches to that property. As stated, applicant’s lawyer argues that the interpretation or
distillation in The Cold Chain case is unduly restrictive and that this court is equally free to
engage with the interpretation of those basic principles.
It is true that a fundamental principle for the granting of a caveat is that a caveator
will not succeed unless there is a case for a caveatable interest. The onus rests on the
applicant to show such an interest. In this instance, the Applicant’s claim to entitlement to an
interest in the property arises from an agreement between the parties, which agreement not in
dispute as far as it existence is concerned. From that agreement, the property offered to the
applicant as security is indeed that which is said to be registered in the Ajanta Properties.
This is a company which is not a stranger to the first two respondents. Since a caveat prevents
dealings with the property’ title until the caveat is withdrawn or removed by court order, it is
evidently the extent to which an applicant must show such interest which would seem to be
decisive as to whether or not a caveat should be granted.
The standard of interest should not be an insurmountable one particularly given the
fact that a caveat is but a temporary measure to secure another’s interest in a property
pending determination of a matter. If an applicant makes out a strong arguable case for a
caveatable interest, then the caveat ought to be granted, more so where there is a return date
for the argument of the main matter. The placement of a caveat herein would not be long term
or indefinite. It is sought as a provisional order. Having been brought as an urgent application
for urgent interim for the placing of a caveat, it appears clear to me that the factors to be
considered in deciding whether or not to grant the caveat also mirror, even if not entirely, the
same as those considered when granting an interdict. By this I mean considerations such as a
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prima facie right even if open to some doubt, the absence of any other remedy as well as the
balance of convenience. In this instance the claim is stated with reasonable certainty as
supported by the agreement on record and the property to be caveated is also clearly
identified. In other words, the grounds upon which the claim is founded emerge not just from
the founding affidavit but from its supporting document in the form of the agreement entered
into with the first and second respondents. There is also a lis pendens transfer under matter
No HC1108/2021 which would also determine the issues substantively.
It is clearly not for this hearing, brought as a matter of urgency to require the
applicant to go beyond showing on a reasonable balance, a case for the granting of the caveat.
The return date presents an opportunity for the respondent to establish why the caveat should
not be preserved or whether there were no grounds for the caveat in the first place. Moreover,
damages can always be claimed if indeed the action in seeking a caveat has been reckless
although it is most unlikely that a court would grant a caveat without serious thought as to it
is appropriateness under given circumstances.
Thus even if the third respondent, from its submissions, casts doubt surrounding the
rights of the applicant to the caveat, arising from the standing of the first and second
respondent to enter into an agreement using its property as security, it appears to me that the
agreement itself gives the applicant a caveatable interest. It is for the respondents to render
their explanation in full when the final order is determined. In other words, in the face of an
arguable case having been made out by the applicant, any inconvenience to the third
respondent can be minimised by speedily pursuing the final order.
The first, second and third respondents have a remedy whereas if applicant misses this
opportunity to protect his interests he might as well indeed not bother to pursue the matter
thereafter.
I am satisfied that the placement of a caveat would be the only means of protecting
the applicant presently. Accordingly the interim relief is granted as follows:
1 The application to amend the provisional order sought is granted
2. Pending the return day, the 4th respondent be and is hereby ordered to place a
caveat on certain 4357 square metres of land called stand 17005 Harare
Township of stand 16969 Harare Township situate in the District of Salisbury
held under Deed of Transfer No. 02319/95. The Fourth Respondent be and is
hereby interdicted from registering transfer to the First Respondent.
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3. Costs shall be in the cause.
Matizanhadzo and Warhurst, applicant’s legal practitioners
Chinogwenya and Zhangazha, 1st & 2nd respondent’s legal practitioners
Chimwamurombe Legal Practice, 3rd respondent’s legal practitioners