Mike Makope v Geoffrey Dzumbunu & 2 Ors

### Preamble
Judgment No. SC 79/20
1
Civil Appeal No. SC 415/14
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REPORTABLE		(72)

MIKE     MAKOPE

v

GOEFFREY     DZUMBUNU     (2)     REGISTRAR     OF     DEEDS     N.O     (3)     MINISTER     OF     LOCAL     GOVERNMENT

SUPREME COURT OF ZIMBABWE

GARWE JA, GUVAVA JA & MAKONI JA

HARARE: JUNE 21, 2018 & JUNE 18, 2020

T. Zhuwarara, for the appellant

L. Uriri, for the first respondent

GARWE JA

[1]	This is an appeal against the entire judgment of the High Court which dismissed with costs the appellant’s claim for damages for breach of contract in the agreed sum of US$22 000.00.

[2]	Having carefully considered all the facts of this matter and argument from counsel, I am persuaded that the court a quo was correct in dismissing the claim.  Crucial evidence, which was available, from both the appellant, who was the purchaser, and the estate agent Denrose Real Estate (allegedly a division of Mortconterence (Pvt) Ltd) was not adduced.  Whilst there was evidence which suggested that the appellant had paid some money towards the purchase price of the property in question, it remains unknown when that money was paid and whether the appellant complied with the terms and conditions of the agreement of sale.  In order to sustain a claim for damages, it was incumbent upon the appellant, as plaintiff, to prove, on balance, that he had performed in terms of the agreement and that he was therefore entitled to damages as an alternative to the relief of specific performance.

FACTUAL BACKGROUND

[3]	The appellant was the plaintiff in the court a quo.  At all material times, he was not resident in Zimbabwe and was working in the United Kingdom.  On 8 October 2007, at Hitch-in-Herts, United Kingdom, he signed a special power of attorney, nominating and appointing his brother, Memory Makope, to be his agent for purposes of entering into negotiations and concluding the sale agreement in respect of property known as Block 12 Room 93, Mufakose Flats, Harare (“the property”).  It was in terms of this special power of attorney that Memory Makope entered into an agreement of sale with the first respondent.  It remains unexplained however how, on the basis of the special power of attorney that was only executed in October 2007, Memory Makope was able to sign the agreement of sale, on behalf of the appellant, on 4 September 2006 i.e. almost a year before the power of attorney had been executed.  The propriety of the special power of attorney is however not an issue before this Court.

[4]	The property in question was, at all material times, the property of the Ministry of Local Government, Public Works and Urban Development (The Ministry).  On a date that is unclear, the Ministry had entered into an agreement of sale with the first respondent.  Clause 7 of the agreement specifically prohibited the first respondent, as purchaser, from disposing of, ceding or assigning any of his rights or interest in the property without the prior consent of the Ministry.  Upon receipt of information that the first respondent had unlawfully sold the property to the appellant, the Ministry subsequently wrote to the appellant advising him that it would not consent to the sale and that it was proceeding to take the necessary steps to cancel the sale agreement it had entered into with the first respondent and repossess the property in terms of the agreement of sale.

[5]	It was common cause, in the court a quo, that the first respondent had allowed his brother, one Felix Dzumbunu, to take occupation of the property and thereafter to dispose of it.  It was during a social binge in Mufakose that a distant cousin mentioned to one Patrick Disban (“Disban”) of Denrose Real Estate that the property was on sale. Further discussions with Disban culminated in a written agreement in which the purchase price was set at six million five hundred thousand dollars.  The appellant, represented by his brother, Memory Makope, signed the agreement on 4 September 2006 whilst the first respondent signed it on 25 September 2006.

[6]	It was further common cause during the trial proceedings that the appellant, at some stage, made a transfer of funds to the estate agents.  The exact date of such transfer is unknown.  Although the written agreement provided that there was to be no variation of any of the terms “save in writing signed by both parties”, the parties appear to have subsequently agreed to vary the amount payable as the purchase price.  The sum of ten million dollars was agreed upon.  The total amount paid pursuant to the latter agreement, inclusive of accrued interest on the capital sum, was the sum of $7,198,082,19, leaving a balance of $2,801,917,81.  Memory  Makope then paid the sum of $800,000 on 18 December 2006 and a further sum of $1,196,000 on 30 January 2007.  The balance of just over $800,000 does not appear to have been paid at all.

[7]	The first respondent signed a cession form ceding his rights and interest to the appellant on 25 September 2006, the same day he signed the agreement of sale.  It was also not in dispute that the appellant, through his brother Memory, was allowed to take occupation.  The exact date when that happened and whether such occupation suggested that the appellant had fully discharged his obligations under the agreement remained a contentious issue between the parties.  The cession was never effected.

PROCEEDINGS BEFORE THE HIGH COURT

[8]	In his declaration, the appellant, as plaintiff, averred that he paid the entire purchase sum of $6,500,000 and that, consequent thereto, he was allowed to take occupation of the property.  Despite having paid the purchase price, the first respondent had then unlawfully cancelled the agreement in February 2007.  Such cancellation was unlawful as he had not, in any event, been given fourteen (14) days notice of such cancellation, a requirement in terms of the contract. He therefore sought an order declaring such cancellation to be null and void and setting it aside.  He also sought an order directing the first respondent to effect cession of the property into his name, and to pay the costs of suit.  On it being made clear by the Ministry that there could be no cession, he, by consent, substituted a claim for damages.  At the beginning of the trial the parties agreed that the value of the property in question was twenty two thousand United States dollars (U.S $22, 000).

[9]	In his plea, the first respondent, as defendant, denied liability.  He averred that the plaintiff breached the agreement by failing to pay the purchase price as agreed.  He stated that he had signed the cession form at the request of Denrose Real Estate who had indicated that they would only release the purchase price upon signature of the cession form.  Because of the failure by the appellant to pay the purchase price on time, the parties agreed on a new purchase price of ten million dollars ($10,000,000). The amount was to be paid in two instalments.  The sum of nine million dollars was to be paid immediately and the balance of one million by 30 December 2006.  The appellant again failed to pay the amount of $9 million but paid a sum of $6,658,226,03 well after the agreed date.  Consequently, he (the first respondent) cancelled the agreement on 12 December 2006.

[10]	At the hearing of the matter, Memory Makope and his father Tawona Mike Munetsiwa Makope gave evidence.  Inexplicably, the appellant did not attend and consequently did not adduce any evidence.  It was clear from Memory Makope’s narration of the events that unfolded that he had no direct knowledge of the payment of the purchase price by his brother, the appellant.  He had no dealings with the first respondent and all he knew was that payments were being made by his brother, the appellant, directly to the estate agents.  The receipts for such payments were not made available to him.  He was not present when the purchase price was revised from 6,5 million to 10 million dollars and told the court that all the discussions that took place were between the agent and his brother, the appellant.  He was aware though that his brother had agreed to pay the revised figure “in order to secure the agreement of sale”. He had no personal knowledge of the reconciliation prepared by the estate agent which reflected the amount outstanding as at 20 November 2006 to be $2,801,917,81.  He had no idea as to when the initial sum of $6,5 million was paid by his brother to the estate agent. Asked whether the money was paid on the date of the signing of the written agreement, he said he did not know and “would need the agent to explain or prove this…”.

[11]    Further asked whether there was proof that the initial agreed price of $6,5 million had been paid timeously and that his brother had thereafter agreed to pay a new figure of 10 million dollars because he realised he had been in breach, he was unable to say, stating that he was not involved in all the transactions and that the money had been paid by the appellant directly to the estate agent.  Asked further whether the appellant had complied with the new agreement to pay 9 million immediately and 1 million by 31 December 2006, he again prevaricated and stated that “we can get the evidence from Denrose”.  Further asked whether, on the basis of the papers before the court, of the revised figure of 10 million dollars there remained a balance of $800,000 that was never paid, his response was that this would require the estate agents “to make print outs for all payments made”.  He was unaware that the estate agent had transferred the sum of $6,6 million to the first respondent’s bank account only on 24 November 2006.  He was unaware that the first respondent had, on 12 December 2006, cancelled the agreement and relayed such cancellation to the estate agents.  Asked if he was going to call the estate agent, he responded “we can call him if the court wants him”.

[12]     His father Tawona Mike Munetsiwa Makope, who was the second witness, did not take the plaintiff’s case any further.  He accepted however that when, as a family, they went to pay the sum of $1,196,000 on 30 January 2007, he appreciated that there was still an outstanding balance in respect of the purchase price.  Asked on the whereabouts of Denrose Real Estate, he told the court that the owner of the Estate Agent, Mr Zimbudzana, was “at their offices.”

[13]     I pause here to mention that it was clear from all the circumstances that only the appellant himself and the estate agent knew exactly what amounts had been paid and when.  Felix Dzumbunu had no direct knowledge of the transactions that took place between the two. Only the two knew of the circumstances surrounding the variation of the purchase price from 6,5 million to 10 million.  Although both appear to have been available, they were not called.  The appellants’ case a quo was then closed without the benefit of this crucial evidence.

[14]   The first respondent, Geoffrey Dzumbunu, and his brother, Felix Dzumbunu, gave evidence for the defence.  It was as follows.  The property in question was the subject of a rent- to-buy agreement with the Ministry. Both had no dealings with the appellant as purchaser and all communication with regards to the property was handled by the estate agent.  The agent made it clear that the property could be sold once all outstanding amounts were paid.  The period in question was characterised by high inflation.  Initially the parties had agreed on a purchase price of 5 million which was raised to 6,5 million because of delays in payment.  Even then the purchase price was not received and the agent would give various excuses for non-payment.  Emphasis had been made on the need for payment to be made expeditiously and for such payment to be made before cession since the process of obtaining cession would take some time.  The agent even avoided taking calls each time Felix phoned to enquire as to when the money would be paid.  Eventually, between the first and second week of October 2006, a meeting was held and was attended by Felix and the two officials from the estate agent.  Felix told the court that, at this stage, he felt very disappointed owing to the failure on the part of the appellant to pay the purchase price on time but through persuasion he agreed to give the purchaser a second chance.  A new purchase price of ten million was eventually agreed upon at this meeting, with the sum of nine million being payable within five working days and the balance of one million by the end of December 2006.  The parties agreed that the estate agent was to prepare a written agreement to capture the new agreement but this was never done.

[15]     Felix further told the court a quo that, as had happened previously, the money was not paid as agreed.  The estate agent became elusive and at times would not pick up his calls. On the few occasions he picked up the phone, he would promise to pay the following day but would not do so.  It was only during the first week of December 2006 that he discovered that a sum of six million six hundred thousand dollars (6 600,000) had been paid into his First Bank account on 24 November 2006.  He immediately phoned Denrose Real Estate and indicated that this was not acceptable and that he would be cancelling the agreement.  Between 13 - 15 December 2006, he wrote a letter enclosing cheques for the refund of the amount paid.  The cheques were presented for payment and his account debited.  He agreed that there was no specific cancellation of the written agreement.  He averred that there was no need for such cancellation because it was the buyer who came up with a new offer which he accepted, thereby superseding the previous written agreement.  It was pursuant to that new agreement that the purchaser made two further payments of $800,000 and $1,1 million well after the due date and after cancellation of the agreement.

JUDGMENT OF THE COURT A QUO

[16]     In its judgment, the court a quo dealt with a number of issues it considered had arisen from the evidence.  First, it found that Denrose Real Estate were mere stakeholders in the sale agreement and that they acted for both parties.  Denrose Real Estate had received some money from the appellant and had kept it in trust whilst awaiting completion of the contract.  Second, that payment of the purchase price was due immediately after the parties signed the agreement or, at least, within a reasonable time thereafter.  Third, that although no proof of variation of the purchase price in conformity with the agreement had been produced, by agreeing to pay the new purchase price of ten million dollars, the appellant must be taken to have accepted that he had not paid the sum of $6,5 million in terms of the written agreement.  Lastly, that the estate agent had neither been made a party to the suit nor called to give evidence.  The fate of the monies that the agent had received from the appellant remained unknown.  The court therefore found that the appellant had not adduced proof of payment of the purchase price to the first defendant.  Consequent to these findings, the court a quo dismissed the appellant’s claim with costs.  Unhappy with the determination of the court a quo, the appellant noted an appeal to this Court seeking an order reversing that decision.

PROCEEDINGS BEFORE THIS COURT

[17]    In his notice of appeal, the appellant has attacked the decision of the court a quo on several bases.  He alleges that:-

“1. 	The court a quo erred at law in concluding that the Estate

Agent represented both the Appellant and the 1st Respondent considering the nature of the authority that had been granted to the Estate agent by the 1st Respondent and his participation in the transaction.

2.	The court a quo erred at law in coming to the conclusion that the alleged oral contract

between the parties was valid notwithstanding the import of the non-variation and the “whole agreement” clauses of the written contract.

3.  	The court a quo grossly misdirected itself on facts to an extent that is so outrageous that

no reasonable tribunal seized with the same facts would have arrived at the same conclusion, such misdirection constituting a point of law.  The misdirection was particularly that:

The court concluded that no monies were ever paid in terms of the agreement despite the 1st Respondent’s own admittance in his evidence, that he had received the full amount.

The court a quo failed to place due significance on the evidence of the signed cession papers and that the Appellant was in occupation of the premises known as Block 12 Room 93, Mufakose Flats, Harare.

There was no basis for the court’s conclusion that payment in terms of the agreement was not done on time when the 1st Respondent did not notify the Appellant of any breach that needed to be remedied in terms of the written contract.

The court concluded that there was a need for the Appellant to provide proof of payment effected in terms of the agreement despite clear admittance by the 1st Respondent to the fact that he had received such payment.”

[18]     In his prayer he seeks an order setting aside the decision of the court a quo and, in its place, an order setting aside the cancellation of the written agreement signed between the parties and payment of damages in the sum of US $22,000 together with interest at the prescribed rate.

APPELLANT’S SUBMISSIONS ON APPEAL

[19]	In his heads of argument the appellant has identified three issues that fall for determination before this Court.  First, whether the estate agent was a mere stakeholder.  He submits that it was the seller who looked for the estate agent and that, on the facts, the purchase price was to be paid to the estate agent.  As the appellant and the seller had never met and did not know each other, once the appellant had paid the purchase price to the estate agent, he had fully discharged his obligations in terms of the contract.  Any delays in receiving the money were therefore not attributable to the appellant but to the chosen agent of the seller.  Secondly, that the evidence established that the purchase price had been paid to the estate agent.  The first respondent, as seller, never at any time queried why the money had been paid to the estate agent. Thirdly, that once the court had accepted that the agreement of sale signed by the parties was valid, it should have found that the first respondent had an obligation to cede the property to the appellant before he could access the purchase price. By cancelling the agreement, the first respondent was attempting to benefit from his own wrong doing.  Further, once the court had accepted that the contract was valid, it should also have found that the first respondent had an obligation to notify the appellant of any breach and give him an opportunity to rectify the same within a period of fourteen days as provided in the written agreement of sale.

RESPONDENT’S SUBMISSIONS ON APPEAL

[20]	In his heads of argument before this Court, the first respondent makes the following submissions.  Whilst payments were allegedly made towards the purchase price by the appellant to Denrose Real Estate, no-one knows the exact amount that was paid and whether the agreed purchase amount was paid within the time envisaged in the written agreement of sale.  There was no express provision in the agreement authorising Denrose Real Estate to not only receive the purchase price but to also conclude the sale on his behalf.  Payment was therefore supposed to be made directly to him upon signing of the agreement.  The court a quo had therefore correctly concluded that the estate agent had received the money and kept it in trust whilst awaiting completion of the contract.  Further, the onus was on the appellant to call the agent to testify on the exact nature and extent of the mandate he had been given.  The court a quo had therefore properly concluded that the failure to call the estate agent had been fatal to the appellant’s case.  The onus was on the appellant to prove that he had paid the sum of $6,5 million and that such payment was made within the timeframe envisaged in the agreement of sale.  The appellant should have led evidence to show that he had complied with all the terms and conditions of the agreement of sale.  The written agreement did not provide for payment to the estate agent.  Payment to the estate agent did not therefore constitute payment to the first respondent as seller. At no time did the appellant prove the exact date or dates on which payments were made to the estate agent.  Lastly, the court a quo had correctly found that, by negotiating a second agreement, the appellant must have been in breach of the terms of the written agreement of sale.

ISSUES ARISING FOR DETERMINATION

[21]	From the submissions made by the parties as well as the grounds of appeal, it seems to me that there are three issues to be determined by this Court.  In the order in which they fall to be determined, the first issue is whether the appellant, as purchaser, proved before the court a quo that he had performed in accordance with the terms and conditions of the written agreement.  Only if the answer to the above question is in the affirmative, would the second question arise, namely, who the estate agent represented in the agreement, and more specifically, whether once the purchase price had been paid to the estate agent, it had, to all intents and purposes, been paid to the seller.  The third issue raised, namely whether the first respondent properly cancelled the agreement of sale, would only become relevant if it is found that the estate agent represented the appellant as purchaser.  I say this because in the event that it is found that the agent represented the seller and that the full amount had been paid, then the appellant would be entitled to the relief he seeks.

WHETHER THE APPELLANT PERFORMED IN TERMS OF THE SALE AGREEMENT

[22]	I think the answer to the above question must be in the negative.  As indicated at the commencement of this judgment, vital evidence was not led during the trial proceedings.  It is common cause that there were no direct dealings between the appellant and the first respondent, the seller.  The appellant would deal directly with Denrose Real Estate.  Transfers would be made to the account of Denrose Real Estate.  Vital communication on the transaction would take place between the appellant and the estate agent.  The appellants’ relatives in Zimbabwe, including Memory Makope, would only be given details of the discussions and money transfers later by the estate agent.  The appellant closed his case without himself giving evidence on when he paid and without calling the estate agent to confirm whether he had performed in terms of the agreement.

[23]	Whilst there is evidence that the appellant at some stage did transfer some funds to the estate agent, to this date, no-one knows how much was transferred and, crucially, when.  Memory Makope was very clear in his evidence that this detail was not within his knowledge as the transfers were handled directly by the appellant, who was in the United Kingdom, and the estate agent.  There is some evidence that confirms that the appellant accepted a revised purchase price of $10 million and that he did, in fact, attempt to perform in terms of the new oral agreement.  As the first respondent correctly points out, it remains unclear why he would have agreed to pay the increased figure of ten million if indeed he had paid the purchase price of 6,5 million in terms of the agreement.

[24]	On balance, therefore, the appellant did not discharge the burden on him to show that he had performed in terms of the contract.  Mr Zimbudzana of Denrose was available at the time of the trial but was not called.  No explanation was given for this.  All that Memory Makope could say was that the estate agent could be called if the court so desired.  This was the appellant’s case.  The stance adopted was not good enough.  The appellant himself also did not give evidence but expected the court to make findings in his favour based on the hearsay evidence of his brother, Memory Makope.

[25]	In all the circumstances, therefore, I am satisfied that the court a quo was correct in finding that no plausible evidence had been adduced to prove performance of the contract on the part of the appellant.  That being the case, the appellant could neither seek specific performance on the part of the first respondent as seller, nor could he insist on an order for damages in the alternative.

[26]	In these circumstances, the question whether the estate agent represented the first respondent, as seller, or the appellant, as buyer, becomes irrelevant.  The appellant was, in simple terms, not entitled to the relief he sought without himself showing that he had performed in terms of this contract.  The appellant was, on the proved facts, therefore in breach.  The issue that consequently arises is whether the agreement was properly terminated.

WAS THE SALE AGREEMENT PROPERLY TERMINATED?

[27]	Both the appellant and the respondnt are agreed that no notice of termination of the written agreement was given.  Instead the notice of termination given was in respect of the oral agreement reached between the parties during which it was agreed, inter alia, that the purchase price be increased to 10 million Zimbabwe dollars.

[28]    It is common cause that the written agreement was not specifically set aside.  It was varied to the extent that the purchase price was increased to ten million Zimbabwe dollars with $9 million Zimbabwe dollars being payable immediately and the balance of 1 million by 31 December 2006.  The question is this.  What is the effect of such variation on the written agreement that specifically provided that any variation to the written agreement had to be in writing?

[29]    Here we have two parties to a written agreement, agreeing to vary, verbally, the purchase price and the manner and dates of its payment.  Notwithstanding the non-variation clause in the written agreement, that conduct cannot be ignored and must have legal consequences.

[30]    A non-variation clause in a contract entrenches the requirement that any variation has to be in writing.  However such a clause does not prevent a party for whose benefit it is inserted from waiving the requirement, unless in addition to the non-variation clause the parties also insert a non-waiver clause.  A non-waiver clause would exclude conduct which might otherwise be a waiver or give rise to an estoppel – Agricultural Finance Corporation v Pocock 1986 (2) ZLR 229 (SC).

[31]     R.H. Christie in the Law of Contract in South Africa 5th Ed, is also authority for the above proposition. At p 449, the learned author states:-

“A non-variation clause will effectively prevent waiver in the general sense of an informal agreement to vary or cancel the contract, but it will not prevent one party waiving a provision of the contract that is entirely for his benefit or waiving the right to pursue his remedy for a breach that has already occurred.  The reason is that waiver in this sense does not amount to a variation of the contract but is either a pactum de non petendo that can stand alongside it or a unilateral act that does not require the consent of the other party.  The parties may also waive a non-variation clause by simply not relying on it even when litigation ensues.  Unlike illegality, the existence of such a clause is not a point that could be raised by the court mero motu”.

[32]     The Court of Appeal of England and Wales has gone further to hold that a non-variation clause is not a bar to the subsequent variation of the contract by words or conduct. In the case of Globe Motors Inc v TRW Lucas Variety Electric Steering Ltd (2016) EWCA Civ 396, the court considered, as the courts in South Africa have done, the need for certainty in contractual agreements and the evidential difficulties which are attendant upon an attempt to prove the conclusion of an oral contract.  In coming to the conclusion that a non-variation clause is not strictly enforceable, the court remarked:-

“The parties have freedom to agree whatever terms they chose to undertake and can do so in a document, by word of mouth, or by conduct.  The consequence in this context is that in principle the fact that the parties contract contains a clause such as Article 6.3 does not prevent them from later making a new contract varying the contract by an oral agreement or by conduct”.

Attention may also be drawn to another Court of Appeal decision in Mwb Business Exchange Centres Ltd v Rock Advertising Ltd (2016) EWCA Civ 553; (2017) QB 604 (Mwb).

[33]   The position appears to have been accepted by some courts in the United States of America.  In Alfred C Beatty v Guggenheim Exploration Company and Others (1919) 225 NY 380, 387 – 8, the court stated:-

“Those who make a contract, may unmake it.  The clause which forbids a change, may be changed like any other.  The prohibition of oral waiver, may itself be waived … what is excluded by one act, is restored by another.  You may put it out by the door, it is back through the window.  Whenever two men contract, no limitation self-imposed can destroy their power to contract again.”

[34]     In the present matter the parties agreed to vary the amount payable as purchase price and the time frame within which such amount was payable.  Not only did they agree, the purchaser made two payments pursuant to that agreement.  He waived any benefits that may have accrued to him under the written agreement.  He is estopped from relying on the non-variation clause.

[35]    It is clear that even in terms of the new oral agreement, the appellant did not perform.  A sum of eight hundred thousand dollars remained unpaid.  The amount was never paid and was subsequently overtaken by the multicurrency system which came into operation in February 2009.

[36]     I am satisfied that, following the conclusion of the new oral agreement by the two parties, the appellant waived any rights he may have had in terms of the written agreement to the benefit of non-variation of any of its terms unless reduced to writing.  The notice of termination of the sale agreement was indeed given, not to the appellant whom the first respondent had never met and did not know, but to the estate agent.  It is common cause that after that notice had been given, the appellant made two belated payments through his brother Memory Makope in Harare but which payments did not liquidate the agreed purchase price of ten million Zimbabwe dollars.

DISPOSITION

[37]	In my view, the first respondent was entitled to terminate the agreement for the reasons given.  The appellant did not, before the court a quo, prove that he had performed in terms of the agreement, whether in its original form or as varied.

[38]	The appeal must therefore fail.  In the result, it is ordered as follows:-

“The appeal be and is hereby dismissed with costs.”

GUVAVA JA		:	     I agree

MAKONI JA		:		I agree

Messrs Lawman Chimuriwo, appellant’s legal practitioners

Mashayamombe & Company, Attorneys, 1st respondent’s legal practitioners