Amos Sukurudzayi v Thomas Vhushendibaba

### Preamble
1
HMT 45-20
CIV ‘A’ 36/19
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AMOS SUKURUDZAYI

versus

THOMAS VHUSHENDIBABA

HIGH COURT OF ZIMBABWE

MWAYERA and MUZENDA JJ

MUTARE, 11 March 2020 and 16 July 2020

Civil Appeal

P Makombe, for the Appellant

Advocate GR Sithole, for the Respondent

MWAYERA J: In this matter the appellant lodged an appeal against the decision of the court a quo wherein the court dismissed the plaintiff’s claim and ruled in favour of the defendant. The matter was centred on whether or not there was breach of contract warranting cancellation of the agreement between the parties and thus effectively barring the plaintiff from claiming specific performance to enforce the agreement. The appellant raised the following grounds of appeal:

“1.	The court a quo erred in concluding that the Appellant breached a term of the agreement of sale by failing to pay the purchase price in United States Dollars yet it had been caused by supervening impossibility as Reserve Bank of Zimbabwe had enacted a policy whereby One United States Dollar was said to be equal to One RTGS.

2.	The court a quo erred by failing to understand mortgage and banking practices that was prevailing at the given time.

3.	The court a quo erred in granting eviction of the Appellant in the given circumstances.

4.	The court a quo erred by granting judgment with figures for wasted, administrative and legal costs without evidence having been led or taxation having been done.

5.	The court a quo erred in ordering Appellant to pay arrear rentals in the sum of US$500-00 whereas it was not justified in the given circumstances.

6.	The court a quo erred in awarding costs at Attorney-client scale without justification.”

It is important to highlight that the proceedings in the court a quo were largely common cause and the parties proceeded by way of a stated case as follows:

“1.	The Plaintiff and Defendant entered into an agreement of sale on 1 June 2018 for the sale of Stand 3039 Dangamvura Township of Stand N. 955 Dangamvura Township.

2.	The agreement of sale:

i.	Specifically denominated the purchase price in United States Dollars.

ii.	Required the Plaintiff to secure a mortgage bond loan within twenty-one working days of the parties entering into the agreement.

iii.	Required the Plaintiff to pay the purchase price within ten working days of the granting of the mortgage bond loan.

3.	The Plaintiff secured the mortgage bond loan on the 9th of August 2018.

4.	Following the approval of the Mortgage Bond, the Plaintiff’s Bank set conditions for the mortgage bond loan that required specified renovations to be done on the Property, failing which it would withhold the amount of USD$5,000.00 from the mortgage bond loan.

5.	In terms of the Agreement of Sale, the Property was sold voetstoots and therefore the Defendant advised Plaintiff that he would have to meet any conditions required by his Bank, and Defendant expected payment of the purchase price in full, in terms of the Agreement of Sale.

6.	The Plaintiff complied with his Bank’s conditions, to the Bank’s satisfaction.

7.	Plaintiff’s Bank issued a letter of undertaking, which was delivered to Defendant’s legal practitioners on 17 October 2019.

8.	Upon receipt of the letter of undertaking, the Defendant inquired from the Plaintiff’s Bank what the currency the purchase price would be paid in, in a letter dated 18 October 2018. The Plaintiff’s Bank insisted that payment would be made in RTGS Nostro and not in United States Dollars.

9.	The Defendant’s legal practitioners, in a letter dated 13 November 2018 gave the Plaintiff fourteen days’ notice to pay the purchase price in full and in United States Dollars in terms of the agreement, failure which it would cancel the agreement.

10.	Plaintiff did not make payment following the receipt of the notice and the notice period expired.

11.	The Plaintiff did not pay the purchase price.

12.	The Plaintiff is now seeking an order to compel Defendant to transfer ownership to him, failure which the Messenger of Court shall be ordered to sign the necessary transfer papers.

13.	The parties agree to have the matter proceed as a stated case on the basis that factual issues are common.

14.	The only issue which arises for determination is whether or not the agreement of sale between the parties was terminated, releasing the Defendant from any obligation.”

What is apparent from the stated case is the fact that only one issue fell for determination being “Whether or not the agreement of sale between the parties was terminated thereby releasing the defendant from any obligation.”

The respondent opposed vacation of the decision of the court a quo on the basis of ground 1 to 2 and conceded that the appeal succeeds in so far as ground 3 to 6 were concerned. It is apparent from the record of proceedings that no evidence was adduced in so far as the counter claim was concerned. No evidence was placed before the court on holding over damages awarded by the court. In fact the stated case only sought the court to exercise its mind on whether or not there was breach of a sale agreement between the parties warranting termination of the agreement. The court a quo ignored the statement of agreed facts and went on a frolic of its own to grant eviction and wasted administration and legal costs on a punitive scale. In the absence of evidence on damages and parties seeking the court to determine issues, the court a quo’s order of holding over damages, eviction and administrative and legal costs on a punitive scale cannot remain in force. It has to be set aside.

Bearing in mind the only issue for determination that is whether or not the agreement of sale between the parties was terminated releasing the defendant from obligation, it is important in determining the outstanding two grounds of appeal to look closely at the sale agreement entered into by the parties.

The sale agreement on pages 106 to 109 of the record among other things reflects that the respondent entered into an agreement of sale with the appellant. The respondent agreed to sell Stand No. 303 of Dangamvura Township measuring 312 square metres to the appellant for an agreed specified amount and specified form of payment as discerned from the sale agreement:

“NOW THEREFORE IT IS AGREED AS FOLLOWS:

Sale and Purchase Price

The Seller hereby sells and the Purchaser hereby purchases the property for the price of US$22 000.00 (Twenty two Thousand United States Dollars).

Payment terms

(i) US$22 000.00 100% Mortgage Bond through CABS Bank.

Currency

United States Dollars………..”

The appellant on its part argued that there was no breach as the appellant performed its part of the agreement. The agreement was entered into in June 2018 when all transactions were denominated in United States Dollars. Further the sale agreement entered into was 100% Mortgage Bond and the Mortgage Bond was obtained from the CABS bank on 12 October 2018, p 69. The appellant contended that the letter of undertaking meant the appellant had performed its part since the sale agreement was 100% Mortgage Bond. The appellant argued that the letter of demand by the respondent was only written as a reaction to the monetary policy but this was after the undertaking had been made and thus condition precedent to transfer fulfilled. The monetary policy had the effect of directing banks to separate accounts into Nostro FCA and RTGS accounts but that would not erode the Mortgage Bond agreed to.

The Mortgage Bond 100% as per agreement constituted performance at the hands of the bank for and on behalf of the buyer, the appellant. The respondent on the other hand argued that an undertaking does not suffice as payment. The respondent further contended that since payment was not made, the agreement was not consummated and as such the respondent was relieved of any obligation. The respondent further argued that the second ground of the court failing to appreciate mortgage and banking practices prevailing at the given time could not be entertained as it was not part of the statement of agreed facts presented before the court a quo.

This assertion is not strictly accurate because the stated case speaks to the sale agreement and terms thereof. The second ground of appeal in our view is a matter of law and evidence. Disposal of the first ground of appeal is hinged on the second ground. If according to the banking practice a guarantee or mortgage bond undertaking is as good as payment then there would be no basis for concluding that there was breach on the part of the appellant releasing the respondent from this contractual obligation. The disposal of the first ground of appeal will of necessity dispose of ground two which is a matter of evidence to substantiate or refute the first ground of appeal. On the other hand, if the letter of undertaking is not sufficient as payment then the first ground of appeal cannot be sustained as it would mean there is breach on the part of the appellant which warranted the court a quo to dismiss the plaintiff’s claim as breach would release the defendant from any obligation. The respondent having properly conceded to grounds 3 to 6, the court was left to decide on the first ground of appeal:

“The court a quo erred in concluding that the Appellant breached a term of the agreement of sale by failing to pay the purchase price in United States Dollars yet it had been caused by supervening impossibility as the Reserve Bank of Zimbabwe had enacted a policy whereby One United States Dollar was said to be equal to One RTGS.”

The answer to the issue of whether or not there was breach lies in the interpretation of the contract entered into by the parties. The law is fairly settled that the intention of the parties should be of paramount consideration. To uphold the sanctity of a contract and not seek to make a new contract for the parties the courts should endeavour to give the ordinary meaning of words used unless this leads to absurdity. See S v Madoda v Tanganda Tea Company Ltd 1999 (1) ZLR 374 SC wherein Sandura ja as he then was had this to say:

“As Joubet JA said in Coopers and Lybrand and Ors v Byrant 1995 (3) SA 761 at 767 D-F. The matter is essentially one of the interpretation. I proceed to ascertain the common intention of the parties from the language used in the instrument. Various canons of construction are available to ascertain their common intention at the time of concluding the cession. According to the golden rule of interpretation, the language in the document is to be given its grammatical and ordinary meaning unless this would result in some absurdity or some repugnancy or inconsistency with the rest of the instrument.”

What this entails is that in interpreting a contract, the court must examine all the facts so as to ascertain the intention of the parties and not lightly interfere what the parties intended to achieve by entering into the contract.

In the present case the parties in their sale agreement stipulated payment terms. Clause 2:

“(i) US$22 000.00 100% Mortgage Bond through CABS Bank.”

This clause makes it clear the parties agreed that payment would be 100% mortgage in the sum of US$22 000.00 and further down in the agreement bank details confirm agreement of electronic transfer. The mode of payment was by way of electronic transfer into an account provided by the respondent as per clause 17 iv:

“ZB Bank Account 4532-796958-200, Maunga Maanda & Associates Trust.”

It is imperative to take note of the fact that at the time of signing agreement monetary regime was multi currency. The agreement was reached during the multi-currency system when the United States Dollars was at par with the local bond currency. The account details are not foreign currency details although denominated in United States Dollars. The same account would allow flow of both local currency and United States Dollars. The agreement was entered before the Reserve Bank introduced the distinction between Real Time Gross Settlement account (RTGS) and Nostro FCA. This separation came into effect in October 2018. This policy change should not detract the agreement of the parties. The parties agreed to 100% Mortgage Bond from CABS Bank and at the time of agreement was the multi-currency regime United States Dollar at par with local currency. The account to facilitate the payment of the Mortgage Bond as per agreement is not a foreign currency account.

The letter of undertaking was issued before the policy change requiring separate accounts. Once the undertaking was made then payment and subsequent transfer had to follow. Considering the letter of undertaking which is in conformity with the general tone and terms of the agreement of the parties there is no basis for holding the appellant in default. When one considers the import of further monetary policy SI 22/19 in relation to the circumstances of this case the United States Dollar is again at par with the local currency. See Zambezi Gas Zimbabwe (Private) Limited v N.R. Barber (Pvt) Limited and The Sheriff for Zimbabwe SC 3/2020.

By tendering the letter of undertaking, appellant was performing his end of the bargain and it was now for the respondent to enable facilitation of payment in the wake of the monetary policy changes. To hold the appellant in breach with the letter of undertaking speaking volumes to the Mortgage Bond as agreed by the parties would be erroneous. In the circumstances of this case, upon taking a close look at the sale agreement entered to by the parties, the court a quo ignored the undisputed undertaking or bond guarantee and erroneously ordered that there was breach. The appellant fulfilled the condition precedent to payment and the respondent has to play ball and avail account to facilitate electronic transfer effectively paving way for payment and subsequent transfer. The first ground of appeal and all the grounds of appeal are accordingly upheld.

It is ordered that:

The Appeal be and is hereby upheld with costs.

The decision of the court a quo is set aside and substituted as follows:

The plaintiff’s claim be and is hereby granted.

The respondent’s claim in reconvention be and is hereby dismissed with costs.

MUZENDA J agrees_____________________

Makombe & Associates, appellant’s legal practitioners

Maunga Maanda & Associates, respondent’s legal practitioners