REPORTABLE (4)
Judgment
No. SC 13/09
Civil
Appeal No. 336/05
CALISTO
CHIRENJE v
(1)
VENDFIN INVESTMENTS (PRIVATE) LIMITED
(2)
H S M USHEWOKUNZE (3) DIVINE HOMES
(PRIVATE) LIMITED
SUPREME COURT OF
ZIMBABWE
CHIDYAUSIKU CJ,
SANDURA JA & MALABA JA
HARARE, NOVEMBER 12,
2007 & MARCH 19, 2009
P Machaya, for
the appellant
C F Dube, for
the respondents
CHIDYAUSIKU CJ: This is an appeal against the judgment
of BHUNU J, in which he dismissed an application for
a
provisional order by the appellant and twenty-three other applicants.
I shall refer to the appellant and his co-applicants
as the
applicants hereinafter. The facts of this case are very ably
summarised by the learned Judge in the court a quo. The
applicants counsel, in his heads of argument, recapitulates and
accepts those facts. The following are the relevant
facts, as
summarised by the learned Judge.
The applicants bought serviced individual residential stands, being
subdivisions of Stand 399 Highlands Estate of Welmoed
Township,
Harare, (the property) from the third respondent, Divine Homes
(Pvt) Ltd (hereinafter referred to as Divine
Homes) some time
in or around 2001. Before title could pass to the applicants, the
same property was sold in execution by
the Deputy Sheriff and
title was transferred to the first respondent, Vendfin Investments
(Pvt) Ltd (hereinafter referred
to as Vendfin). Vendfin is a
nominee of H S M Ushewokunze (hereinafter referred as
Ushewokunze).
The transfer triggered fierce legal battles
between Divine Homes as the applicant and the Sheriff of Zimbabwe and
Ushewokunze
as the first and second respondents respectively under
case no. HC 1721/03.
The protracted legal battles culminated in the following consent
court order dated 4 May 2005:
IT IS ORDERED BY CONSENT THAT:
1. The applicant hereby withdraws its application against the
respondents.
2. The first respondent be and is hereby authorised/ ordered to
effect transfer (of) Lot 399 Highlands Estate of Welmoed,
Harare, to the second respondent, H S M Ushewokunze,
upon compliance with the terms of the agreement between (the)
first
and second respondent(s) in respect of 399 Highlands Estate of
Welmoed.
3. This order incorporates an agreement signed by the parties
regulating their interest, rights and obligations.
4. Each party bears its own costs.
The parties agreement, referred to under para 3 of the court
order, was filed of record. The applicants were not a party
either
to the court order or the agreement mentioned therein. The
agreement was between Divine Homes and Ushewokunze.
The applicants became aware that Vendfin was selling the property
and was inviting the applicants to purchase the property at
a price
to be advised. The applicants, who had somehow become aware of the
court order and the attached agreement, were invited
by Vendfin to
purchase the property at $200 000 per square metre and not the
$60 000 per square metre stipulated in the
original agreement.
This was not acceptable to the applicants and they launched an
application with the High Court for a provisional
order in which they
sought the following relief:
1. TERMS OF FINAL ORDER SOUGHT
That you show cause to this Honourable Court why a final draft order
should not be made in the following terms:-
a) That the first respondent shall address and cause to (be)
delivered to the applicants or their legal practitioners formal
offers
in terms of Clause 4 of the Agreement annexed to the
Order in case number 1721/03 Ref HC 523/03 within 10 days of
service
of this order upon them.
b) That the first respondent pay the costs of this application at a
higher scale.
2. INTERM RELIEF GRANTED
a) Pending the return date the first respondent be and is hereby
interdicted from disposing (of) or in any way alienating or
encumbering
its (interest) in the various stands that the applicants
had previously bought from the third respondent which are
subdivisions
of stand 399 Highlands of Welmoed, Salisbury.
The applicants sought an interim interdict prohibiting Vendfin from
disposing of or in any way alienating the disputed properties
pending
the outcome of the main action in which they sought an order
compelling Vendfin to make them an offer to purchase the property
at
$60 000 per square metre as provided for in the original
agreement. The applicants claimed that they had acquired the
right
to be offered the property at that price under the contract between
Divine Homes and Ushewokunze. In the main action they
sought an
order compelling Ushewokunze to offer the property to them at the
stipulated price of $60 000 per square metre.
As I have
already stated, the applicants were not a party to the agreement
between Divine Homes and Ushewokunze. The applicants
however argued
that clause 4 of the agreement conferred on them the right to be
offered to purchase the property at $60 000
per square metre.
Clause 4 of the agreement between Divine Homes and Ushewokunze
provides as follows:
4. H S M Ushewokunze has, on behalf of the parties,
agreed to offer the 62 purchasers [the applicants then,
now the
appellants] whose names appear on annexure A to this agreement
the stands which relate to their agreements of sale
with Divine Homes
(Pvt) Ltd in an amount of $60 000 per square metre, which offer
shall be subject to the following terms:
a) the offer shall be open for a period of seven (7) working days,
whereupon if the offeree has not accepted the offer it shall
lapse
and the stand shall be offered to the public on the terms and
conditions in clause 5 hereunder;
b) upon acceptance of the offer, an agreement of sale shall be
entered into which shall stipulate that the maximum period of payment
of the full purchase price shall be ninety (90) days from the date of
acceptance.
5. If the offers or such part of the offers as in clause 4
hereof have not been accepted by the stipulated date, i.e. after
seven (7) working days of the offer being made in terms of clause 4,
such stands shall be offered for sale to the public at
the same price
as the price in clause 4 or such other price as the parties to
this agreement shall from time to time fix.
However, at all times
the parties shall act and agree so as to sell the stands to best
advantage guided always by the market
prices prevailing at the time.
Clause 9 of the same agreement provided that the parties to the
agreement had an unfettered right to amend or vary the terms
of the
agreement. On a proper reading, clause 9 provides that the
agreement can be altered without any reference to third
parties.
The only requirement for the validity of any amendment was that it be
reduced to writing and signed by the parties to
the agreement.
Clause 9 provides as follows:
9. This agreement forms the whole agreement between the parties.
Any variation, change, alteration or anything that affects
the
implementation of its contents shall not be valid unless (the) same
is reduced into writing and signed by the parties whose
signatures
have been affixed to this agreement.
On 21 and 28 June 2005 Divine Homes and Ushewokunze
signed an addendum to the agreement in terms of clause 9,
amending the offer price. The amendment was reduced to writing and
duly signed by both parties in compliance with clause 9
of the
agreement. The addendum reads in part as follows:
ADDENDUM TO AGREEMENT AS PER PARAGRAPH 9
Made and entered into by and between
DIVINE HOMES (PVT) LTD (of the first part)
AND
H S M USHEWOKUNZE (of the other part)
WHEREAS
4. HERBERT SYLVESTER MASIYIWA USHEWOKUNZE has on behalf of the
parties agreed to offer the 62 purchasers whose names appear
on
annexure A to this agreement the stands which relate to their
agreements of sale with Divine Homes (Pvt) Ltd at $60 000
per
square metre or the prevailing market price, whichever is higher at
the time of acceptance of the offer, which offer shall
be subject to
the following terms:
a) The offer shall be open for a period of seven (7) working days,
whereupon if the offeree has not accepted the offer it shall
lapse
and the stand shall be offered to the public on the terms and
conditions in clause 5 hereunder;
b) Upon acceptance of the offer, an agreement of sale shall be
entered into which shall stipulate that the maximum period of payment
of the full purchase price be ninety (90) days from the date of
acceptance;
c) The parties have agreed to amend the principal agreement.
It is common cause that Ushewokunze, acting in terms of the amended
agreement, offered to sell the property to the applicants for
$200 000 per square metre. The applicants do not dispute that
$200 000 per square metre was the prevailing market value
of the
property at the time of the offer. The offer to the applicants was
through an advertisement in the press and an explanation
at the
offices of the respondents legal practitioners.
The applicants objected to the revised purchase price of $200 000
per square metre. The applicants contended that Ushewokunze
was
legally obliged to offer them the property at $60 000 per square
metre as per the original agreement. The applicants
argued that the
amendment to the agreement was illegal as it amounted to an illegal
variation of a court order. The learned Judge
in the court a quo
rejected this argument and concluded as follows:
I find that there is absolutely no merit in that argument because
the court order incorporates the agreement, which agreement
envisages
valid amendments or alterations to the original agreement. What
that means is that once a valid amendment is made in
terms of
clause 9 before acceptance by the applicants it becomes part of
the valid court order.
The applicants could not validly accept the original tentative offer
price because it was not a firm offer to them. Even if
we were to
assume for one moment that it constituted a firm offer, an offer can
be amended, varied or altered (at) any time before
acceptance.
Having come to that conclusion, I find that there is no merit in
this application. The applicants have failed to establish a
prima
facie right.
I respectfully agree with the conclusion of the learned Judge.
It is common cause that the agreement entered into between Divine
Homes and Ushewokunze is what is generally known as a
contract
for the benefit of a third party. In terms of clause 4 of the
agreement (before the amendment) Ushewokunze agreed
to offer to sell
to the applicants the property at the purchasing price of $60 000
per square metre. It is now settled law
that in a contract for the
benefit of the third party, the beneficiary third partys right to
sue and the obligation to be sued
under such contract accrue upon the
offer being communicated to and accepted by the third party in terms
of the contract. It
is the communicating of the offer and the
acceptance of the offer that creates the vinculum juris, which
in turn creates the entitlement to sue and the obligation to be sued.
See McCullogh v Fernwood Estate Ltd 1920 AD 204 at 206.
The applicants are no doubt the beneficiary third party in the
contract between Divine Homes and Ushewokunze. In terms of clause 4
of the agreement between the two contracting parties Ushewokunze was
to offer the applicants the property for sale at the purchasing
price
of $60 000 per square metre. He undertook to make the offer to
the applicants within seven days of the agreement.
On the
applicants version of the facts, no offer was ever communicated to
the applicants within the seven days stipulated
in the contract.
Indeed no offer was ever made to the applicants before the amendment
of the agreement in June 2005. As no
offer was ever made to the
applicants, on the authority of McCulloghs case supra
no vinculum juris was ever created entitling the
applicants to sue the promissor (Ushewokunze) on the undertaking to
sell the property for $60 000
per square metre in terms of the
agreement before it was amended. Divine Homes, as a party to the
agreement, could have sued
Ushewokunze to make good that offer before
it expired. Had Ushewokunze communicated the offer to the
applicants and sought to
withdraw the offer prior to the expiry date
of the offer, the applicants might have had a cause of action. On
the facts of this
case, as set out by the applicants themselves, no
offer was ever communicated to the applicants for the purchase of the
property
at $60 000 per square metre. Consequently no such
offer was ever accepted by them. Without the offer being
communicated
to the applicants and the applicants accepting such
offer, the applicants cannot sue or be sued upon the contract between
Divine
Homes and Ushewokunze. See Salisbury Bottling Co (Pvt)
Ltd v Lomagundi Distributors (Pvt) Ltd 1965 (3) SA 503 (SR) at
510. Ushewokunze, after the June 2005 amendment to the agreement,
offered to sell the property to the
applicants at $200 000 per
square metre. That offer was never accepted by the applicants.
Consequently no cause of action
can arise from that offer.
The applicants in this case sought an interim interdict pending the
finalisation of the main action between the parties. Before
a court
can grant an interim interdict, it is necessary for the applicant to
establish a prima facie case, that is to say, the
applicants must aver facts which if proved in the main action will
constitute a cause of action. The
facts that the applicants intend
to prove in the main action are incapable of constituting a cause of
action even if they were
proved. On this basis, I agree with the
learned Judge in the court a quo that the applicants
failed to establish a prima facie case entitling them to
an interim interdict pending the finalisation of the main action.
The other argument of the applicants, that the original agreement
between Divine Homes and Ushewokunze was part of an order
of the
court and therefore cannot be altered, does not merit any detailed
consideration. That argument is simply untenable.
The express
language of the agreement itself confers on the contracting parties
the unfettered power to amend the agreement in
the manner prescribed
or provided for in the agreement. This unfettered power to amend
the agreement is incorporated into the
court order itself. The
amendments to the agreement can only be impugned on the basis of lack
of compliance with the terms of
the agreement. The amendment was in
accordance with the agreement itself and is therefore valid.
In the result, the appeal is dismissed with costs.
SANDURA JA: I agree
MALABA JA: I agree
Makoni Legal Practice, appellant's legal practitioners
Dube, Manikai & Hwacha, respondents' legal practitioners