Grace Mutasa v Beryl Nkwazi

### Preamble
Judgment No. SC 163/19
1
Civil Appeal No. SC 528/18
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DISTRIBUTABLE 		(153)

GRACE     MUTASA

v

BERYL     NKWAZI

SUPREME COURT OF ZIMBABWE

GARWE JA, MAKARAU JA & MAKONI JA.

HARARE: JANUARY 31, 2019 & NOVEMBER 27, 2020

N. M. Phiri and R Nyamayemombe, for appellant

G.T. Mharapara, for respondent

MAKARAU JA:

1.	On 23 November 2016, in an action based on two alleged oral contracts, the High Court found in favour of the respondent and ordered the appellant to pay to the respondent with costs, the sums of CAD$89 810, US$17 477.00 and CAD$ 1 400 .00. This is an appeal against that order.

Background facts

2.	The appellant and the respondent are sisters. The respondent is the eldest while the appellant is the youngest in a family of four.

3.	Appellant’s son, one Tawanda, completed his high school education in Zimbabwe. He thereafter applied to study at a university in Canada where the respondent was resident. Appellant appealed to the respondent for assistance. Respondent not only paid the required application fee but took Tawanda in and became responsible for his board, tuition and other incidental expenses when Tawanda was offered a place to study at a Canadian University. This she did for 3 years and 8 months, with no assistance from the appellant, and at great hardship to herself.

4.	Four months before Tawanda completed his studies, the respondent asked him to leave her house. She also stopped funding his education. This was after she discovered that the appellant and her other son, Tawanda’s brother, were sending money to Tawanda without her knowledge.

The proceedings a quo

5.	Contending that she met all of Tawanda’s expenses in Canada in terms of an oral agreement concluded between herself and the appellant, the respondent sued the appellant in the court a quo for the sum of CAD89 810.00. Included in the claim was the sum of CAD1 400.00, being half the value of an air ticket from Canada to Zimbabwe. The respondent alleged a quo, and the court found in her favour that she had incurred this expense when she visited the appellant in Zimbabwe, in an attempt to resolve the matter.

6.	Also as a separate claim, the respondent sued the appellant for US $17 477.00.  She averred, and again the court found in her favour in this respect, that over the years, she had loaned several amounts to the appellant, totalling the amount of the claim.

7.	In her plea, the appellant denied liability for all the amounts claimed.  Without disputing the quantum of the amounts, she denied that the parties contracted as alleged. She specifically pleaded that the respondent had incurred the expenses towards Tawanda’s education benevolently and out of the goodness of her heart. Her argument a quo and in this appeal was that although the parties agreed that the respondent could incur the expenses on Tawanda’s education as alleged, their agreement in that respect was not legally binding.

8.	After trial, at which the parties were the only witnesses, the court a quo found that the parties had entered into two binding contracts. Consequently, it made the following order:

“1. The defendant pays to the plaintiff:

CAD89 810 being money expended by the plaintiff towards defendant’s son’s university education and other incidentals;

US$17 477.00 for money advanced to the defendant;

CAD$1 400.00 being half the cost of the airline ticket;

Interest on the above amounts at the rate of 5% per annum from the date of demand to the date of payment in full.

Costs of suit.

…..

……”

(The remaining two orders, being orders in favour of the appellant, are not part of this appeal.)

9.	Aggrieved by part of the decision a quo, the appellant noted this appeal.

The appeal

10.	The appellant raised six grounds of appeal as follows:

“The Learned Judge misdirected herself (sic) in fact and subsequently erred in law in concluding that there was a legally binding agreement between the parties, failing to recognise that there was a social arrangement between the parties creating no legal obligations.

The Learned Judge misdirected himself in fact and erred at law in ordering payment of CAD$89 810.00 being money expended towards defendant’s sons’ university education where no evidence was led to substantiate same.

The learned Judge misdirected herself (sic)in fact and subsequently erred at law in dismissing appellant’s evidence and finding that the respondent lent appellant US$17 477.00

The Learned judge misdirected himself in fact and erred at law in ordering appellant to pay for half the cost of the airline ticket where no evidence was led to substantiate same.

The learned judge erred at law in ordering payment of 5% interest on the amounts awarded from date of demand.

The learned judge erred at law by awarding costs when such had not been justified.”

11.	Three issues arise from the grounds of appeal. These relate to and are formed around the three main orders that the court a quo made against the appellant. The first issue is whether the court a quo was correct in finding that there was a contract between the parties regarding the funding of Tawanda’s university education and in consequence of which the appellant owed the respondent the amount claimed.  The second is whether the appellant owed the respondent the sum of US$17 477.00 as various loans in terms of an oral agreement and the last issue is whether the court a quo was correct in ordering the appellant to pay the sum of CAD$1 400.00, representing one half the cost of an airline ticket from Canada to Zimbabwe.

12.	I turn to deal with each of the three issues.

Whether the parties contracted over the funding of Tawanda’s university education in Canada.

13.	It is not in dispute that the parties agreed that the respondent would fully fund Tawanda’s university education in Canada and that she would be reimbursed her expenditure upon Tawanda completing his education and getting employed. The reimbursement would be made by Tawanda through the appellant.

14.	Thus, the finding by the court a quo that the agreement between the parties was oral and was made over the phone and via e-mails, whilst correct, was largely unnecessary. The fact of the agreement was common cause between the parties. The actual issue requiring the court to pronounce itself on was whether this agreement amounted to a contract and had legal consequences.

15.	From time immemorial, jurists have acknowledged that it is not every agreement that creates a contract. Put differently, it is not every agreement that is legally binding or has legal consequences.

16.	The seminal remarks of VAN DEN HEEVER JA in Estate Breet v Peri -Urban Areas Health Board 1955 (3) SA 523 (AD) in my view sums up the position concisely and precisely, where, at page 532, he had this to say:

“… but it does not follow that whenever two or more persons are in agreement they contract with each other,”

17.	The learned authors Van der Merwe, Van Huysseen, Reinecke & Lubbe in their text Contract, General Principles, 4th Edition, weigh in on the position when, on pages 19 to 21, they write that, for a contract to come into being, the parties must agree on the nature of the obligation or obligations that they wish to create and, more importantly, the consequences which will obtain ex lege as a result of the agreement.

18.	The authors make the point that:

“A simple social arrangement or gentlemen’s agreement does not lead to legal consensus, no matter how much the parties may regard themselves as bound in honour. They do not create a legal bond”

19.	The same position at law is also discussed by the learned author RH Christie in his book The Law of Contract in South Africa, 3rd Ed page 38, as a manifestation of an agreement where the parties lack animus contrahendi  and therefore do not contract. Thus, according to the author, where parties agree but lack animus contrahendi, their agreement does not amount to a contract.

20.	Whilst the general position is that persons who conclude a social arrangement or conclude an agreement without the requisite animus contrahendi do not thereby contract, it cannot for a moment be stated that it is not possible for sisters to conclude a contract due to their close relationship.  They can. Put differently, there is no law that prevents siblings or other persons in a close family or social relationship from concluding an agreement that is enforceable at law. (See Balfour v Balfour [1919] 2 KB 571).

21.	Where it is disputed that an agreement between persons in a close family or social setting is a contract, as in casu, the issue is always, as in any other suit where a contract is disputed, whether the parties contracted as alleged.

22.	The court a quo was alive to the fact that it was dealing with an alleged contract between parties that have a close relationship and wherein some agreements do not amount to more than social arrangements within the confines of that relationship. Thus, in finding that the arrangement between the parties was more than a social arrangement and was a contact, the court a quo had this to say:

“….(the respondent) intended to create a legally binding contractual relationship when she agreed to fund Tawanda’s education. I say this because personally she had her own two children who were attending university whom she was not funding because of financial constraints. It does not make sense to me to say that the plaintiff just volunteered to fund Tawanda’s education without expecting to be paid back when tuition fees alone was CAD$557 080-75 and when she had to get two jobs and get bank loans in order to cater for Tawanda. Over and above the tuition fees there were incidental expenses which included providing boarding facilities for Tawanda for four years. As I see it this was more than just a family arrangement. It is unreasonable to suggest that the plaintiff was happy to fund Tawanda’s education without any contribution from the defendant and for no reimbursement at all….”

23.	In making the finding that it did on the above basis, the court a quo, with respect, fell into grave error. It applied the incorrect law to test whether the parties were ad idem that their agreement be legally binding or, put differently, that the parties had the necessary animus contrahendi. It sought to establish that the respondent’s expectation to be reimbursed her outlay towards Tawanda’s education was “reasonable” or equitable in the circumstances of the matter. It did not seek to establish, as it was enjoined to do, animus contrahendi on the part of the parties in the form of a common intention that their agreement would have legal consequences or be enforceable at law.

24.	Quite apart from applying the incorrect law to the issue that was before it, the court a quo also erred in its approach to the issue. It sought for and established, albeit using an incorrect test, an intention on the part of the respondent to create a legally binding contract with the appellant. It did not proceed to find the necessary reciprocal intention on the part of the appellant, essential for the formation of the contract.

25.	The finding by the court a quo that the respondent intended that the agreement between the parties be legally binding, incorrectly established as it was, was with respect, not sufficient on its own, to find that the parties had a contract.  For there to be a meeting of the contracting minds, the court a quo had to find a similar and reciprocal intent on the part of the appellant. It did not. In fact, it found that the appellant had no intention to have the terms of the agreement enforced against her at all. In its words:

“The defendant was just bent on using the plaintiff to her own advantage and as such when she promised to reimburse her for funding Tawanda’s education, she was not negotiating in good faith. She made the plaintiff to believe that she would be reimbursed and that they were consensus ad idem when she knew in her heart she did not intend to reimburse the plaintiff.”

26.	In essence, it was thus the finding of the court a quo that the appellant did not intend to create any binding obligations between herself and the respondent when the parties concluded the arrangement for Tawanda’s education. Having made this finding, it was not open to the court a quo to then find that at law, the parties had a contract.

27.	I have anxiously scrutinised the evidence led a quo to assess whether this Court, on the basis of that evidence, can find that there was a contract between the parties as alleged by the respondent by invoking the application of the quasi mutual assent doctrine.

28.	Before I can even assess whether the appellant might have given out by word or deed that she was agreeing to be legally bound by the agreement she had with the respondent, I find no evidence that the respondent herself evinced such an intention at the inception of the contract. Although the point was specifically raised in the appellant’s plea, the respondent was not led directly on whether the parties agreed, at the inception of the agreement, that each of their respective obligations under the agreement would be legally enforceable. In the result, there is no direct evidence from the respondent, as plaintiff a quo, that it was the common intention of the parties to create a legally binding agreement, whose terms had legal consequences.

29.	I cannot infer such a common intention from the conduct and conversations of the parties at the time the arrangement for respondent to fund Tawanda’s university education was put in place. There was no discussion as to the full amount of the loan or how the amount was to be computed. In fact, the appellant did not know, prior to the suit a quo, how much the respondent had expended on Tawanda’s education.  More to the point, it is not clear which material term of the agreement the appellant allegedly breached when the respondent terminated the agreement unilaterally. There is insufficient evidence on record upon which one can infer that this was an arm’s length loan agreement between the sisters.

30.	In the circumstances, it is not necessary that I consider whether the appellant gave out that she was agreeing to be legally bound to the respondent. In other words, it is not appropriate that I invoke the doctrine of quasi mutual assent in attempting to resolve this matter.

31.	It is therefore my finding that the court a quo erred in finding that there was a contract between the parties for the funding of Tawanda’s university education. I set aside its decision in that regard.

32.	I turn to consider the second issue.

Whether the appellant owed the respondent the sum of US$17 477.00 as monies lent and advanced in terms of an oral agreement.

33.	The second claim for the payment of US$17 477.00 was also based on an alleged oral contract between the siblings.  The appellant raised the same defence against this claim that had she raised against the first claim. She denied that the parties had the intention to contract when they concluded the agreement over the alleged loans.

34.	In finding for the respondent on this claim, the court a quo, quite erroneously, found that since the appellant had not disputed the evidence that the respondent sent monies to her over the years, the onus was on her, the appellant, to prove that these monies were not loans. As a result, and specifically on the premise that the appellant had failed to prove that the various remittances to her were not loans, the court a quo found her liable for the total amount claimed.

35.	It is of course not debatable at law that there was no onus on the appellant to prove that the monies the respondent sent to her over the years were not loans. The respondent approached the court on the basis of an alleged contract that had been breached by the appellant. The contract was denied. The onus was therefore on the respondent throughout the trial not only to prove the alleged contract, but the breach thereof by the appellant giving rise to the claim.

36.	The court a quo fell into the grave error of imposing an un-procedural onus, one that has no foundation in law, upon the appellant. In doing so, the court a quo lost sight of the issue that was before it and consequently failed to determine it. The issue that was before it was contractual in nature. It was whether the parties had contracted over the alleged loans. In its erroneous finding, the court a quo did not establish whether or not the parties had contracted as alleged. It thus had no basis for making the order that it did without first pronouncing itself on the disputed contract.

37.	The order by the court a quo on the claim for the sum of US17 4 77.00 cannot stand. I set it aside.

38.	I now turn to consider the third and last issue.

Whether appellant owed the respondent the sum of CAD$1 400.00 being one half the value of an air ticket from Canada to Zimbabwe.

39.	During the hearing of the appeal, counsel for the respondent conceded that the respondent was not entitled to succeed on this claim. This concession was proper.  The claim for one half of the value of the air ticket was erroneously included under the expenses that the respondent allegedly incurred in funding Tawanda’s education.  It clearly was neither such an expense nor one that was incidental or ancillary to the educational expenses. In fact, the claim was delictual in nature and not contractual as was alleged in the summons. The court a quo ought to have disallowed it on this basis.

40.	Accordingly, I set aside the third order in favour of the appellant by consent.

Disposition and costs

41.	Having set aside all the orders that were made against the appellant, the appeal must succeed in its entirety.

42.	Regarding costs, notwithstanding that the appellant has been wholly successful, each party should bear its own costs. It is impossible to disregard the relationship between the parties and the fact that the suit a quo was based on an agreement concluded in the context of that relationship and from which the appellant’ s son benefited immensely. I find no justification to mulct the respondent with an order of costs in the circumstances, especially in the face of evident ingratitude by the appellant.

43.	In the result, I make the following order:

The appeal is allowed with each party bearing its own costs.

The judgment of the court a quo is set aside and is substituted with the following:

“The plaintiff’s claim is dismissed with no order as to costs.”

GARWE JA	:		I agree

MAKONI JA	:		I agree

Muvingi & Mugadza, appellant’s legal practitioners

Mtombeni, Mukwesha & Muzawazi, respondent’s legal practitioners.