REPORTABLE (ZLR) (55)

Judgment No. SC. 65/05

Civil Appeal No. 37/03

EASTVIEW GARDENS RESIDENTS ASSOCIATION v

(1) ZIMBABWE REINSURANCE CORPORATION LIMITED

(2) NATIONAL REAL ESTATE (PRIVATE) LIMITED

(3) GAINSBOROUGH ESTATE AGENTS (PRIVATE) LIMITED

SUPREME COURT OF ZIMBABWE

SANDURA JA, CHEDA JA & GWAUNZA JA

HARARE, MAY 19 & NOVEMBER 17, 2005

R M Fitches, for the appellant

D S Mehta, for the first respondent

No appearance for the second and third respondents

SANDURA JA: This is an appeal against a judgment of the High Court which dismissed with costs the appellant’s application for an order granting the appellant’s members, totalling three hundred and nine, the right to purchase the flats which they were renting from the first respondent.

The background facts are as follows. The first respondent owned a complex of flats in Harare, collectively known as Eastview Gardens, and the appellant’s members occupied the flats as tenants.

At the beginning of 2001 the first respondent decided to sell the flats. Accordingly, it instructed the second and third respondents to do so on its behalf.

Thereafter, on 9 February 2001, the second respondent, acting on the instructions given by the first respondent, wrote to the tenants as follows:

“Dear Sir/Madam,

RE: PROPOSED SALE OF EASTIVEW GARDENS

Reference is made to the above matter.

The owners of Eastview Gardens, the Zimbabwe Reinsurance Company Limited, have advised that they shall be selling the premises you are leasing from them. The sale shall be on sectional title basis and each flat shall have title deeds on transfer.

As a sitting tenant, we are hereby giving you notice of the owner’s intention to sell the flat and advise that we are offering you to purchase (sic) if you are interested in doing so. The purchase price for the flat is $950 000.00. The terms of payment are as follows –

• 25% cash deposit and the balance payable by mortgage loan; or

• 30% cash deposit and the balance payable over six equal monthly instalments; or

• cash deposit and/or full mortgage bond/loan from employer.

May you please advise us in writing whether or not you shall be taking up the offer as soon as possible and in any event by 28 February 2001. In addition, if you are taking up the offer, may you please call at our offices in person to complete the necessary formalities by the same date.”

Subsequently, on 15 February 2001, the second respondent wrote to the tenants as follows:

“Dear Sir/Madam,

RE: PROPOSED SALE OF EASTIVEW GARDENS

Reference is made to our letter of 9 February 2001 in respect of the above matter.

Please be advised that the offer made to purchase the unit you occupy has been withdrawn. This follows the decision by the seller to sell the flats block by block. However, should you wish to purchase a unit into Eastview Gardens now, you may choose from the block that shall be selling at any one point in time.

In any event, you still need to confirm your interest in purchasing a unit by close of business on 28 February 2001.”

Before 28 February 2001 some of the tenants accepted the offer but others did not. Those who accepted the offer indicated how they proposed to pay the purchase price, and subsequently signed agreements of sale. These tenants now own their flats and are not involved in this appeal.

However, on 28 February 2001 the appellant wrote to the second respondent, expressing some concern about the manner in which the sale of the flats was being handled, and suggesting that the idea of selling the flats be shelved until various issues were clarified. The letter, in relevant part, reads as follows:

“Please note that we would like to register our objection in the manner in which you are handling the sale of the flats. It is of great concern that you are denying the sitting tenants the first option to buy the flats, instead you are offering the backdoor sale through a third party.

It has become obvious that your intention as mentioned in your letter dated 09/02/2001 was not in good faith, hence your immediate withdrawal of the offer on the 15/02/2001. It is also disturbing to note that your pricing of the flats is haphazard with no uniformity. Your pricing is ranging so far from $800 000.00 to $1 300 000.00.

You also intend to play the residents against each other by not allowing them to purchase their own flats, instead you offer them to buy another flat, thereby antagonising people who have been living harmoniously.

Therefore, it is our belief that you shelve the idea of selling these flats until the various issues with the tenants have been clarified.”

The papers placed before the learned judge in the court a quo did not indicate whether or not there had been any response to this letter.

Nevertheless, on 8 March 2001, the third respondent wrote to the tenants as follows:

“Our letter refers (sic) to introduce ourselves as the selling agents for the flat you occupy. As the sitting tenant we would like to offer you the first refusal to purchase the flat.

We are giving you seven days notice to make your offer to buy the same, failing which the flat will be offered to the public. Your offer should be made to the writer within the stipulated period and your failure to respond will be assumed as a rejection to our proposal. Therefore we would like you to allow our prospective buyers to view your flat at (a) reasonable time.”

It would appear that this letter was written to those tenants who had not accepted the offer by 28 February 2001. However, no agreements of sale appear to have been concluded as a result of the new offer.

Subsequently, when the flats in respect of which no sale agreements had been concluded were offered for sale to members of the public, the appellant, acting on behalf of three hundred and nine of its members, filed a court application in the High Court seeking an order granting those members the right to purchase the flats which they were occupying. That application was dismissed with costs. Aggrieved by that result, the appellant appealed to this Court.

Before the appeal was heard, the appellant filed a court application in this Court for leave to adduce further evidence on appeal. The application was filed in terms of rule 39(4) of the Rules of the Supreme Court, 1964, which reads as follows:

“An application to lead further evidence on appeal shall be accompanied by that evidence in the form of an affidavit and also by an affidavit, or a statement from a legal practitioner, showing why the evidence was not led at the trial, and also a copy of the judgment appealed from, and a statement indicating in what manner it is alleged the evidence sought to be adduced affects the matters at issue.”

The evidence which the appellant intended to adduce on appeal consisted of affidavits signed by some of the three hundred and nine tenants, alleging that they had informed the second respondent, before 28 February 2001, that they intended to purchase the flats which they were occupying, and copies of the letters received by some of the tenants from the second respondent.

The statement from the appellant’s legal practitioner, showing why the evidence was not led before the court a quo, in relevant part, reads as follows:

“1. The appellants (sic) issued a court application in the High Court in case number 3277/01. Messrs Ziweni & Company drafted this court application. No evidence of the individual members of the appellant were (sic) attached or alluded to.

2. The matter at the hearing was then handled by a Mr Mambosasa of Kentor (sic) & Immerman. The founding affidavit shows that the appellant members (sic) tried in vain to get their legal practitioner at the hearing to furnish the court with proof of the appellant’s responses to the first respondent’s two offers. The appellants (sic) when they complained to the Messrs Kentor & Immerman (sic) were told that the legal practitioner in question lacked legal experience to deal with the matter.”

No affidavit or statement from Messrs Ziweni & Company and Messrs Kantor & Immerman was filed in order to explain why the evidence sought to be adduced on appeal was not placed before the court a quo.

The leading case in this jurisdiction on whether a court should allow the admission of fresh evidence on appeal is Farmers’ Co-op Ltd v Borden 1961 (1) SA 441 (FC). At 442G-443B CLAYDEN FJ, who was considering an application for leave to adduce fresh evidence on appeal, said the following:

“An application of this nature is never lightly granted. In Brown v Dean, 1910 AC 373 at p 374, LORD LOREBURN LC, stressed

‘the extreme value of the old doctrine “interest reipublicae ut sit finis litium”, remembering as we should that people who have means at their command are easily able to exhaust the resources of a poor antagonist.’

And in Colman v Dunbar, 1933 AD 141 at p 161, WESSELS CJ said:

‘It is essential that there should be finality to a trial, and therefore if a suitor elects to stand by the evidence which he adduces he should not be allowed to adduce further evidence except in exceptional circumstances.’

There are certain guiding principles which the Courts apply in exercising discretion. The first is that the evidence tendered could not have been obtained with reasonable diligence for use at the trial – see Ladd v Marshall 1954 (3) A.E.R. 745 at p 748; Colman v Dunbar supra at p 161. The second is that the evidence must be such as is ‘presumably to be believed’ or ‘apparently credible’, see Ladd v Marshall supra at p 748; Colman v Dunbar supra at p 162. The third relates to the effect which it would have on the case. … The last is that conditions since the trial must not have so changed that the fresh evidence will prejudice the opposite party – see Colman v Dunbar supra at p 162.”

The principles set out by CLAYDEN FJ in the Farmers’ Co-op case supra have been applied in a number of cases. See, for example, Leopard Rock Hotel Co (Pvt) Ltd & Anor v Walenn Construction (Pvt) Ltd 1994 (1) ZLR 255 (S) at 260 C-H; S v Banga 1995 (2) ZLR 297 (S) at 301 G-H; and Warren-Codrington v Forsyth Trust (Pvt) Ltd 2000 (2) ZLR 377 (S) at 380 G-H.

Applying the principles set out by CLAYDEN FJ to the facts of this case, there can be no doubt that the application for leave to adduce fresh evidence on appeal cannot succeed. According to the appellant’s own evidence, the fresh evidence sought to be adduced on appeal was in the possession of the appellant’s legal practitioner when the application was heard in the court a quo. However, for reasons best known to him, the legal practitioner concerned decided not to place the evidence before the court which heard the application. If the appellant were now permitted to adduce such evidence on appeal, that would set a dangerous precedent, and there might be no end to litigation.

The appellant’s allegation that the legal practitioner who represented it in the court a quo was inexperienced does not assist the appellant. As GREENBERG JA said in R v Carr 1949 (2) SA 693 (AD) at 699:

“… it must be emphasised that the inadequate presentation of the defence case at the trial will only in the rarest instances be remediable by the adduction of further evidence at the appeal stage. However serious the consequences may be to the party concerned of a refusal to permit such evidence to be led the due administration of justice would be greatly prejudiced if such permission were lightly granted.”

In my view, the present case is not one of those “rarest instances” where the inadequate presentation of a party’s case at the trial stage, assuming that to be true, should be remedied by allowing the party to adduce fresh evidence on appeal. As already stated, no affidavit or statement from the legal practitioner concerned, confirming that the evidence in question was in his possession when the application was heard in the court a quo, and explaining why he did not place it before the court, has been filed.

In addition, the fresh evidence sought to be adduced on appeal is contradictory to the averments made by the appellant in its founding affidavit filed in the court a quo.

In its founding affidavit, the appellant alleged that its members had been wrongfully prevented from accepting the offer made in the letter dated 9 February 2001 by the withdrawal of the offer by the second respondent before 28 February 2001. That was a clear admission that the appellant’s members had not accepted the offer before 28 February 2001.

However, in the founding affidavit filed in this Court by the appellant in support of its application for leave to adduce fresh evidence on appeal, the appellant avers that at least sixty-two of its members accepted the offer before 28 February 2001. The obvious contradiction has not been explained by the appellant.

Since the evidence sought to be adduced on appeal was in the possession of the appellant’s legal practitioner when the application was heard in the court a quo, the effect which the evidence would have on the case if admitted on appeal is of no significance in determining whether or not the evidence should be adduced at this stage.

As TUCKER LJ said in E.H. Lewis & Son, Ltd v Morelli & Anor [1948] 2 All ER 1021 (CA) at 1024 A-B:

“For the purposes of my judgment, I am prepared to assume that the evidence, if admitted, would be conclusive in favour of counsel for the plaintiffs, but, nonetheless, it is evidence which could have been obtained with the greatest possible ease. True that it is evidence dealing with the status of premises, but it is evidence of a fact which it was necessary to prove to show the status of the premises. In view of the admission made in the court below, and in view of the fact that this evidence could have been obtained by ordinary elementary precautions and care, I think that, if we were to admit it, we should be creating a dangerous precedent and be acting far beyond what has been laid down in the authorities. In my view, therefore, this evidence should not be admitted.”

I shall not, therefore, consider what effect the evidence would have if admitted.

In the circumstances, the application for leave to adduce fresh evidence on appeal cannot succeed. The appeal should, therefore, be determined on the basis of the evidence which was placed before the learned judge in the court a quo.

Although in its notice of appeal the appellant set out eleven grounds of appeal, the two main ones are that:

“1. The Honourable judge erred in finding that no right of pre-emption was extended to the applicant’s (appellant's) members.

2. In the alternative, the learned judge a quo erred in not finding that as the acceptance of the offer embodied in the second respondent’s letter dated 9 February 2004 (sic) was conditioned to be made within a time prescribed by the first respondent, then the prescribed time limit should have been adhered to and not unilaterally withdrawn or altered before the expiry of the said time limit.”

The main argument advanced on behalf of the appellant in this Court and in the court a quo was that the letter of 9 February 2001 granted the appellant’s members the right of pre-emption which could not be withdrawn. I disagree with that contention.

The right of pre-emption is a right created by an agreement between the grantor and the grantee of the right, in terms of which the grantor of the right undertakes that before selling the subject-matter of the right to a third party he will give the grantee of the right the opportunity to purchase the subject-matter of the right at the price offered by the third party which is acceptable to the grantor. See, for example, Madan v Macedo Heirs & Anor 1991 (1) ZLR 295 (SC) at 302 A-B; and Owsianick v African Consolidated Theatres (Pty) Ltd 1967 (3) SA 310 (AD) at 316 C-D.

In my view, it is clear beyond doubt that the letter of 9 February 2001 did not set out an agreement between the appellant’s members and the respondents on the right of pre-emption allegedly granted to the appellant’s members. The letter did not even constitute an offer, to the appellant’s members, of the right of pre-emption.

In addition, as already stated, the appellant averred in its founding affidavit that its members had been prevented from accepting the offer of 9 February 2001 by the withdrawal of that offer before 28 February 2001. That was a clear admission that the appellant’s members did not accept the offer within the specified period.

Thus, even if the letter of 9 February 2001 were construed as containing the offer of the right of pre-emption to the appellant’s members, no agreement would have been concluded on the matter as the offer had not been accepted, and no right of pre-emption would, therefore, have been granted to the appellant’s members.

However, as the offer of 9 February 2001 was obviously not an offer of the right of pre-emption, it was a simple offer which specified the period within which it could be accepted and which could, therefore, be withdrawn by the offeror at any time before it was accepted by the offeree.

In addition, the evidence placed before the court a quo did not indicate that any of the appellant’s three hundred and nine members had accepted the offer set out in the letter dated 15 February 2001 or the one contained in the letter dated 8 March 2001. Indeed, the appellant did not rely upon these two letters for the submission that its members had been granted the right of pre-emption.

Furthermore, it is pertinent to note that nowhere in the letter dated 9 February 2001 or in the one dated 15 February 2001 was it stated that the second respondent undertook to keep the offer open until 28 February 2001, or declared that the offer was irrevocable during the specified period. That being the case, the second respondent was not estopped from revoking the offer before 28 February 2001.

As none of the appellant’s three hundred and nine members accepted the offer of 9 February 2001, or the one in the letter dated 15 February 2001, within the specified period, cadit quaestio. That is the end of the matter, and the appeal cannot succeed.

In the circumstances, the appeal is dismissed with costs.

CHEDA JA: I agree.

GWAUNZA JA: I agree.

Hussein Ranchhod & Co, appellant's legal practitioners

Costa & Madzonga, first respondent's legal practitioners