THE REGISTRAR OF DEEDS
HIGH COURT OF ZIMBABWE
HARARE, 13 and 15 October 2009, 21 September 2010 and 13 July, 2011
T. Tandi, for applicant
J.S. Mandizha, for 4threspondent.
No appearance for 1st, 2ndand 3rdrespondents.
CHITAKUNYE J. The applicant is a registered owner of stand No.671 Borrowdale Township of subdivision 4 of lot D of Borrowdale estate. The applicant entered into an agreement of sale of the property with first and second respondents who are husband and wife on 30 May 2001. Applicant later purported to cancel that agreement alleging that the purchasers had not paid the purchase price in time.
After the purported cancellation, applicant entered into another agreement of sale with fourth respondent for the same property on 25 July 2001. The fourth respondent made payments in cash and by cheques.
On or about 24 August 2001, the first and second respondents filed an urgent chamber application under case no. HC 8068/01 for an order restraining applicant from transferring the property to anyone. A provisional order was granted on 28 August 2001. That provisional order was subsequently confirmed on 20 February 2002 in default of the applicant. Upon learning of the confirmation applicant successfully applied for the rescission of the default judgment under case no. HC 1924/02. The applicant subsequently filed his opposing papers on 6 November 2002. In the interim the fourth respondent who had not been part to the initial proceedings in HC8068/01, succesfuly applied for joinder under case No. HC 10464/02. He subsequently filed his opposing papers on 26 November 2002.
The first and second respondents did not take their case in HC 8068/01 any further. They did not file answering affidavits and also did not file heads of arguments.
The fourth respondent filed his heads of arguments and proceeded to set down the matter for hearing in July 2006. The applicant did not file his heads of argument. He argued that he was not served with the fourth respondent’s heads of argument. He had been waiting for first and second respondents, as the applicants in the main case, to file their answering affidavits and heads of arguments. Upon realizing that the two were not complying with the rules he unsuccessfully applied for the dismissal of their application for want of prosecution under case no. HC 2619/06.
By virtue of the delay in filing his heads of argument after fourth respondent had filed his heads applicant was barred. It is in this respect that at the start of the hearing counsel present addressed court on the issue. The applicant’s explanation for not filing heads of argument in time was plausible and as there had been no proof that the fourth respondent’s heads of argument had been served on the applicant as the first respondent in the main case. On the 15 October 2009 I ruled in favor of the applicant.
As regards first and second respondents’ position both counsel for applicant and fourth respondent were agreed that first and second respondents remained barred as they had not even seen it fit to make a formal application for upliftment of the bar. The result was that the provisional order they had obtained in HC 8068/01 was discharged with costs.
The issue for determination remained as between applicant and fourth respondent. This judgment is essentially on the counter- application filed by fourth respondent against applicant (first respondent in the main case HC 8068/01)
In the counter-claim the fourth respondent sought an order compelling applicant to transfer the property in question to him.
The applicant opposed the counter- application principally on the basis that the fourth respondent did not discharge his contractual obligations in full. He contended that a payment in the form of a cheque made to Intermarket Building Society (formerly Founders Building Society) in the sum of $ 2 697 236.53 was dishonored. The issues for determination were thus identified as:-
Did 4threspondent fulfill his legal obligations in terms of the agreement of sale?
If so is 4thdefendant entitled to obtain transfer?
The applicant’s case was to the effect that the fourth respondent issued him cheques payable to his creditors. The cheque payments were meant to exhaust Applicant’s debt. He received the balance in cash from the fourth respondent. The cheques issued by fourth respondent were dishonored when presented for payment by applicant’s creditors resulting in one of the creditors, Founders Building Society foreclosing on the property. When the property was advertised for sale by the deputy sheriff he managed to pay off the debt thus serving the property from being sold by auction. The fourth respondent did not replace the dishonored cheques. To confirm the above he tendered a bank statement in the name of his company, Fairview Construction Pvt. Ltd., as annexure B. Though the applicant in his papers referred to ‘cheques’ as having been dishonored by his creditors, he seemed to in fact be referring to only one cheque in the sum of $ 2 697 236.53 which was made in favor of Founders Building Society. His papers did not reveal any other cheque that was dishonored.
The fourth respondent contended that he paid the purchase price in full. He denied that the cheque in question was dishonored. He contended that the cheque he issued in the sum of $2 697 236.53 was in fact met. To buttress his contention the fourth respondent indicated that a careful examination of applicant’s bank statement submitted as annexure ‘B’ to applicant’s opposing affidavit shows that the sum in question appears 5 times in applicant’s bank statement. The sum appears as payment (Credit) into Fairview Construction pvt. Ltd. account three times. It also appears as a deduction (debit) into the said account two times. The net effect, he contended, is that the sum of $2 697 236.53 from him was credited into Fairview Construction pvt Ltd Bank account.
The fourth respondent attached his own bank statement showing that cheque No. 59 in the sum of $ 2 697 236.53 was presented to his bankers on 15 December 2001 and was duly met as there were sufficient funds in the account.
A careful analysis of the entries in the two parties’ bank statements tends to favor the fourth respondent’s version. Applicant’s bank statement in the name Fairview Construction Pvt Ltd shows the following entries as from 14 November 2001 to 31 December 2001:-
Type Date Stat-ref txn Value Actual balance
14 November 2001 -5,086,922.06
Cheque deposit 29/11/2001 N/A 2,697,236.53 -2,389,685.53
Int. debit 30/11/2001 -150,411.10 -2,540,096.63
Cheque deposit 06/12/2001 N/A 2, 697,236. 53 157,139.90
Function chg 10/12/201 returned cheque -1,000.00 156,139.90
Chq Dishnr 10/12/2001 Deposited cheque dis -2,697,236.53 -2,541,096.63
Cheque deposit 13/12/2001 N/A 2,697,236.53 156,139.90
Function chg 14/12/2001 returned cheque -1000.00 155,139.90
Chq Dishnr 14/12/2001 Deposited cheque Dis -2,697,236.53 -2,542,096.63
Flat Charg 31/12/2001 Annual mortgage serv -500.00 -2,542,596.63
It is clear from the above that there were 3 credits and 2 debits involving a cheque for the sum of $2,697,236.53.
The fourth respondent’s bank account on the other hand shows only one entry wherein the sum of $2,697,236.53 was debited in the form of cheque No. 59. This was on the 15thDecember with the value date of 14 December 2001. There are no entries showing that that cheque was dishonored. That statement was attached as annexure ‘A’ to fourth respondent’s answering affidavit.
Apart from this cheque there is no other cheque that applicant pointed out as having been dishonored. Since from the documents tendered, including applicant’s own bank statement, a credit payment remained in favor of applicant it cannot be said the fourth respondent did not make that payment. Applicant could not tender the ‘referred to drawer’ cheque or anything to contradict the entry in fourth respondent’s bank account showing that the cheque in question was in fact met on presentation albeit after some query by applicant’s bankers.
The applicant contended that he cancelled the agreement of sale in 2003 due to the perceived breach and the fourth respondent did nothing about it. Unfortunately his papers did not confirm this. The letter by his legal practitioners dated 22 October 2003 purporting to cancel the agreement of sale was swiftly responded to by the fourth respondent’s legal practitioners in their letter of the 28thOctober 2003 in which respondent denied being in breach and denied that any of his cheques was referred to drawer. That letter was followed by another letter dated 5 November 2003 in which respondent’s legal practitioners pointed out that respondent had furnished them with clear proof that his cheque was met upon presentation to the bank. These letters by respondent’s legal practitioners were apparently not rebutted by applicant and neither did he address this aspect in his affidavit and submissions in court. I am therefore of the view that the cheque for $2,697,236.53 was in fact honored.
It may also be noted that the applicant did not state that he ever put the fourth respondent in mora before purporting to cancel the agreement of sale. The fourth respondent was not put in mora and so the purported cancelling could on that ground not stand.
On his part the fourth respondent argued that the amount he was to pay to Founders Building Society was not going to extinguish applicant’s indebtness which he understood to have been around $5 701 236. 53. The cheque that applicant said was dishonored was not going to liquidate that debt. Instead the parties had agreed that respondent would obtain a mortgage bond from Beverly Building Society to pay off the balance. Beverly Building Society duly granted respondent a legal under taking to pay the balance upon transfer. When applicant was not forthcoming with the transfer the fourth respondent said he went ahead and paid part of the balance of the purchase price to Mr. Mwayera himself in addition to other creditors. Applicant received the payments and up to date has not denied receiving these payments. To confirm this he tabulated the payments he made vis-à-vis the purchase price as follows:-
Purchase price…………………………………….. …………………… $6 300 000.00
Payment to Founders…………………… $2 697 236.53
Payment to ZIMBANK……………………$1 034 632.18
Payment to Chibanguza Group of
Hotels (for caveat removal) ……………. $1 500 000.00
Payment to Mwayera…………………(1) $ 850 000.00
(2) $ 500 000.00
(3) $ 450 000.00
Differential………………………………………………………………… $ 731 958.71
$ 7 031 958.71 $7 031 958.71
The three payments of $850 000.00, $ 500 000.00 and $450 000.00 were made directly to applicant as part of the purchase price and the substantial part was to go towards the unfinished works on the house of which applicant had said he would handle the completion of the house himself.
The applicant’s contention that respondent did not fulfill his obligation is also defeated by his own affidavit which he deposed to in opposition to the first and second respondents application in HC 8068/01. That affidavit was deposed to on 6 November 2002, almost a year after the fourth respondent had made the cheque payment in question and had not been advised that the cheque had been dishonored. To quote in extensor from paragraph 6.3 of his opposing affidavit -
“6.3 I proceeded to sell the property to a second purchaser namely Gilbert Jonga with the knowledge and clear understanding that the sale to the Applicants had been cancelled and was invalid. The sale of the property to Gilbert Jonga still stands and my conveyancers are attending to the transfer. Furthermore, the second purchaser has since paid a total sum of $6 735 868.69 in and under his sale agreement with me. I enclose as Annexure ‘B’ being a copy of my conveyancers’ letter to the second purchaser. The latter’s sale agreement is attached as Annexures ‘C1’ to ‘C6’. In addition, Gilbert Jonga paid a sum of $1 800 000.00 directly to me so that I could finish off building the property.”
And in paragraph 10 thereof that-
“The second purchaser as per Annexure ‘B’ has paid a total sum of$6 735 868.69 to Founders Building Society and Zimbabwe Banking Corporation Limited being arrears outstanding on the two mortgages registered over the property. A transfer to the Applicants will mean that the two financial institutions mentioned will move in to sell the property as Gilbert Jonga guarantees to them will fall away. I point out that the payments made to them were conditional upon transfer being registered in favour of Gilbert Jonga the second purchaser who retains a right to claim a refund if transfer is not made to him.”
Further on that:-
“The second purchaser is an innocent party who would be unduly prejudiced if specific performance were to be ordered. Most importantly, if the second purchaser’s guarantees and conditional offers of payment to my creditors were to fall away, the property would most certainly be sold in execution by my creditors who retain the right to do so until they are fully paid.”
In paragraph 14 thereof he went on to confirm the fact that the $2 697 236.53 cheque was not to extinguish the debt but the fourth respondent was to obtain a bond to pay the balance of the debt when he said that:-
“I attach as Annexure “G” a letter from Byron Venturas and Partners to Honey and Blanckenberg which confirms that the second purchaser paid a total sum of $ 2 697 236.53 and provided a guarantee for the sum of $ 3 004 000.00 to meet Founders Building Society’s cancellation requirements. I refer to the last paragraph of that letter from which it will appear clearly that my conveyancers specifically requested Founders Building Society to hold the money in trust pending cancellation of the bond and to enable the second purchaser to apply for a refund should the property not be registered in his name. I also attach as Annexures “H” and “I” letters dated 6 December 2001 and 17 October 2002 from Byron Venturas and Partners to Gill, Godlonton and Gerrans the first of which enclosed a cheque of $ 1 034 632.16 paid by the second purchaser conditionally to Zimbabwe Banking Corporation Limited to meet their cancellation requirements. The second letter confirms that the cancellation costs were paid by Gilbert Jonga on my behalf. This letter points out that the cancellation of the bond can only be effected upon transfer to Gilbert Jonga…….”
The import of the above is that as of the date of the affidavit applicant confirmed that the fourth respondent’s guarantees and conditional offer to pay were dependent on the transfer taking place only then will his creditors be paid in full. When transfer did not take place despite giving instructions to his conveyances applicant seemed to have opted to use that as an excuse to resile from the agreement. Unfortunately for him the fourth respondent made payments which he acknowledged and whose total sum exceeded the purchase price. Applicant also acknowledged that part of the money paid directly to him was for him to continue with the construction of the property.
The applicant having acknowledged receipt of the sums in question can surely not be allowed to resile from the agreement of sale at his own whim.
I am inclined to conclude that the fourth respondent fulfilled his obligation and is thus entitled to obtain transfer of the property in question.
Accordingly it is hereby ordered that
The counter application be and is hereby granted.
The applicant Mr. Fanuel Mwayera be and is hereby directed to sign all documents necessary to effect transfer of a certain piece of immovable property, being subdivision 4 of Lot D of Stand 671 Borrowdale Township, Borrowdale, measuring 5427 square metres held under deed of transfer Number 1814/96 to the fourth respondent Gilbert Jonga within 5 days of the date of the service of this order on him.
Should Fanuel Mwayera fail to comply with the terms of paragraph 2 above, the Deputy Sheriff be and is hereby authorized, directed and empowered to sign all the necessary transfer documents in his stead.
Applicant Fanuel Mwayera shall bear the costs of the counter application.
Kantor & Immerman, applicant’s legal practitioners.
Mandizha and Company, fourth respondent’s legal practitioners.