Court name
Supreme Court of Zimbabwe
Case number
SC 70 of 2002
Civil Appeal 391 of 2000

Chitewe v Chiroodza (SC 70 of 2002, Civil Appeal 391 of 2000) [2002] ZWSC 70 (29 October 2002);

Law report citations
Media neutral citation
[2002] ZWSC 70
Coram
Ziyambi JA
Malaba JA
Gwaunza AJA



















Judgment
No. SC 70\2002


Civil Appeal No. 391\00















AARON
CHITEWE

v

JOSIAH

CHIROODZA











SUPREME COURT OF
ZIMBABWE


ZIYAMBI JA, MALABA JA
& GWAUNZA AJA


HARARE
JULY 4 &
OCTOBER 30, 2002








P.
Nherere,
for the appellant





J.
Muganhu
, for the respondent









ZIYAMBI
JA: On the 13
th
December 1993, and in terms of a written agreement of sale, the
appellant in this matter purchased from the respondent the property
known as Lot 5 of Lot 5 of Waterfalls, Induna of Waterfalls (the
property) for the sum of $350 000. The purchase price was to be
paid
by an initial deposit of $150 000 on or before the 31
st
December 1993 and the balance of $200 000 was payable by monthly
instalments of $2 000 (together with interest at the rate of $333,33
per month) commencing the 1
st
of February, 1994.






The
deposit was duly paid and the appellant took occupation of the
property with effect from the 1
st
January 1994. It is common cause that as at the 21
st
February 1995, no further payment had been made by the appellant and
on that date, a letter was addressed by the respondent’s legal
practitioners to the appellant advising him that the respondent was
exercising his rights as provided by clause 14.1 of the Special
Conditions of the agreement of sale and demanding that the full
balance outstanding in the sum of $205 999.94 be paid by the 31
st
August 1995 failing which he would be required to vacate the
property.






The
appellant’s response to this letter was to enclose, in a letter
dated 7
th
August 1995, a cheque for the sum of $38 000 “to bring all the
arrears up to date” and to request that the respondent complete
certain stop order forms enclosed in the said letter in order to
facilitate the payment of future instalments of $2 000. A further
letter dated 22
nd
August 1995, and tendering a cheque in the sum of $38 000 “for
the total instalment amounts outstanding plus interest thereon
as at
31
st
August 1995”, was addressed to the respondent’s legal
practitioners by the appellant’s legal practitioners. It is
common
cause that the respondent’s legal practitioners refused to
accept the cheque and an application for cancellation of the
agreement
and the eviction of the appellant was brought in the High
Court. The matter was referred to trial by GARWE J on the 17
th
September, 1996.



MUNGWIRA J who
presided over the trial found for the respondent and ordered the
eviction of the appellant. The appellant’s counterclaim
for the
cost of improvements effected on the property was dismissed. It is
against this order that the appellant now appeals.



The
first ground of appeal advanced by Mr
Nherere,
who appeared for the appellant, was that on a proper construction of
clause 14.1 of the agreement the phrase “full amount then
outstanding” meant the unpaid arrear instalments. He submitted,
that had the parties intended the phrase in question to mean the
balance of the purchase price, they would have said so. Accordingly,
the whole of the balance of the purchase price had not become
due as
at the 31
st
August 1995 and the respondent was not entitled to cancel the
contract. This argument was advanced before the learned Judge who
dealt with it thus:-



“I
do not believe there to be merit in the argument submitted by the
defendant. It is to me patently clear from the language used
that
the words the “full amount then outstanding” relates to the
balance of the purchase price. I cannot in the circumstances
of this
case perceive of a situation where the parties agreed that the
defendant could at his election at any time default in his
payments
and be afforded the opportunity to, after the expiry of a combined
eighteen month period, at his election then determine
to pay the
outstanding instalments. It cannot, in my view, have been the
parties’ intention that the defendant could perpetuate
an
arrangement whereby he could effect his payments on an indefinite
basis. The result would be absurd.






Another cogent factor is that the defendant had to arrange finance
within that period. What was clearly envisaged there was not
finance with which to pay arrear instalments but finance to pay the
full amount then outstanding plus interest up to the date of
payment.
The plaintiff makes the salient point that even if there is the
averment that the plaintiff’s initial correspondence
referred only
to the commencement and expiry date of the ‘first phase and second
phase’ and the dishonoured cheque, the letter
emanating from his
legal practitioners in February 1995 made specific demand for payment
of the sum of $205 999.94 by 31 August 1995
failing which the
agreement would be terminated and eviction would ensue. Despite
acknowledgement of receipt of the letter the
defendant did not take
issue with or protest the contents of the letter. He made no
efforts to resolve the matter. Save to advise
in February 1995 the
plaintiff’s legal practitioner that the matter was receiving his
attention, the defendant maintained silence
before unilaterally
seeking to pay $38 000 which represented 19 months of instalments
which he had neglected to pay.






Had the
defendant truly and honestly harboured the belief that the correct
interpretation to be placed on the agreement was that which
he sought
to persuade this court to accept, one would have expected him at the
very least to have queried the demand for payment
of the balance
outstanding on the purchase price.





I would in
the circumstances agree with the submission by the plaintiff that to
hold that the phrase ‘the full amount then outstanding’
means
arrear instalments unpaid over the 15 month period is to do
unnecessary violence to the otherwise unambiguous language employed
in drafting the agreement.






In the result the defendant had on a proper construction of clause
14.1 fifteen months within which to apply for and obtain a loan
with
which to pay the plaintiff the outstanding $200 000 plus interest at
the fixed rate. It is common cause that he failed to
do so. This
breach entitled the applicant to cancel the agreement.”








I
respectfully agree with the view expressed by the learned judge.
The appellant’s defence is clearly without merit. He is merely
clutching at straws. One cannot look beyond the ordinary meaning of
the words which is that the full balance outstanding on the
purchase
price is what was envisaged by the parties in clause 14 of the
agreement.



I
turn to consider the second ground of appeal advanced by Mr
Nherere,
namely, that even if the respondent was correct in his interpretation
of clause 14.1 of the agreement, the purported cancellation
was
invalid for want of compliance with s.8 of the Contractual Penalties
Act, [Chapter 8:04] (The Act). S 8 of the Act provides:-





“8.
(1) No seller under an instalment sale of land may, on account of
any breach of contract by the purchaser –







(a) enforce a penalty stipulation
or a provision for the accelerated payment of the purchase price; or







(b) terminate the contract; or







(c) institute any proceedings for
damages;







unless he has given notice in
terms of subsection (2) and the period of the notice has expired
without the breach being remedied,
rectified or discontinued as the
case may be.







(2) Notice for the purposes of
subsection (1) shall –







(a) be given in writing to the
purchaser; and







(b) advise the purchaser of the
breach concerned; and







(c) call upon the purchaser to
remedy, rectify or desist from continuing, as the case may be, the
breach concerned within a reasonable
period specified in the notice,
which period shall not be less than –







(i) the period fixed for the
purpose of the instalment sale of the land concerned; or







(ii) thirty days;







whichever
is the longer period…”











The
point taken on behalf of the appellant was that the respondent
purported to cancel the agreement without first giving notice calling
upon the appellant to remedy his breach. The letter of the 21
February 1995 did not, it was submitted, constitute such a notice
since the breach complained of therein was failure to pay instalments
and that was the very breach which the appellant sought to
remedy on
the 22 August 1995 by the tender of payment of $38 000. This
argument is, in my view, untenable. The relevant portion
of the
letter under mention reads as follows:-






“As
you are well aware you have not met any instalments since the 1
st
of February, 1994, which means that your instalments are in fact 12
months in arrears. Our client finds this position unacceptable
and
we are instructed to advise you that he will be exercising his rights
provided by the special conditions under annexure ‘B’
of the
aforementioned Deed of Sale. We set out the special condition
below:-







14.1 In the event of the purchaser
failing to effect any payment due hereunder within three months of
the due date thereof, he shall automatically be allowed a further
15
(fifteen) months in which he should arrange finance for the
settlement of the full amount then outstanding plus interest to date.
Failure to do so would render the agreement of sale null and void
in which case any amounts paid to the seller in the form of the
deposit or instalments shall be forfeited to the seller and the
property shall revert back to the seller with immediate effect
without
any recourse to any court of law, and in this event the
purchase
r shall
vacate property with immediate effect.







In light of the above-mentioned special condition
you have until the 31
st
August, 1995, in which to arrange finance for the settlement of the
full amount outstanding. Please note that on the 31
st
August, 1995 the amount outstanding will be $205 999,94. This
amount being the capital outstanding plus the fixed interest as
agreed.







Please note our
client will not accept payment of the balance of the purchase price
by instalments and we therefore advise you that unless you are
able
to raise the aforementioned sum by the 31
st
August 1995 you shall be asked to vacate the property which shall
revert back to our client with immediate effect and further to
this
you shall lose your deposit of $150 000.00”









In terms of the above quoted clause of the
agreement, in the event of a failure to make any payment within 3
months of the date
on which it fell due, the appellant automatically
had 15 months within which to obtain finance for the balance
outstanding failing
which the agreement would become null and void.
Thus it was a breach of the conditions of payment which would trigger
the operation
of the second stage namely the sourcing of finance to
settle the balance of the purchase price.









The letter under mention clearly advised the
appellant that he had breached the terms of the agreement and that
the respondent would
be exercising his right to receive settlement of
the full amount outstanding as provided in terms of clause 14.1. of
the special
conditions of the contract. It also set out the manner
in which the appellant was to remedy the breach, namely, by arranging
finance
for the settlement of the full amount outstanding which
amount with interest to the 31
st
August, 1995, was calculated to be $205 999.94. By neglecting to
obtain finance for the settlement of the purchase price as advised
in
the said letter, the appellant failed to remedy the breach at his own
peril. Accordingly, the sale was validly cancelled.









The final submission advanced on
behalf of the appellant was that, in the event that it is found that
the sale was validly cancelled,
the appellant is entitled to
compensation for improvements in the sum of $64 531.03 being the
proven costs of improvements effected
by the appellant on the
property.









The appellant counter-claimed for
$307 000 being the value by which he said that the property had
appreciated by reason of the improvements
which he had effected on
it. The learned judge found that:-








” …
the observation by Mr Muganhu that the defendant’s claim for
payment of $307 000, being the amount by which the plaintiff’s
property has appreciated in value due to improvements effected by him
is not based on the actual cost of labour and materials and
is not
supported by expert evidence as to the effect if any that the
improvements had on the value of the property in question is
in
accord with my own views. No basis has been established upon which
this court can make a finding that the plaintiff’s property
has
appreciated in value solely due to any improvements that the
defendant may have effected.”












With regard to the cost of the
improvements effected, the learned judge found:-






“There
can however be no doubt that the defendant did effect repairs and
improvements. He cannot, on the evidence before this court
however,
be heard to state that he when he entered into the agreement was
unaware of the condition of the house, swimming pool and
the workers’
quarters. He had the opportunity to inspect the property and did in
fact inspect the premises on several occasions
prior to his decision
to purchase. According to the plaintiff’s evidence he visited the
premises on several occasions between
1991 and 1993 when the
agreement of sale was concluded. The defects he referred to were
not latent defects except for perhaps the
leak in the roof but in
respect of this particular defect he did not lead evidence of
substance as to his expenditure in attending
(to)
the particular problem. None of the
documents in exhibit 1 were in his evidence linked to the work he
carried out in respect of
the alleged roof leak.







There is no evidence of any misrepresentation on
the part of the plaintiff. There is in fact no evidence upon which
the protection
of the
voetstoots
clause can be nullified. In clause 6.4 of the agreement the
defendant acknowledged that he had inspected the property and was
satisfied
as to the
nature
and condition thereof.”









The
learned judge also considered the appellant’s claim in the light of
section 9 of the Act. At page 183 of the record she observed:-







“This being an instalment sale
of land this court must therefore consider the defendant’s claim
for compensation for improvements
in light of the provisions of
section 9 of the Act which section provides:-







‘9(1) Whereupon the
cancellation of the termination of an instalment sale of land the
purchaser is required, in terms of the contract
to forfeit –







(a) The whole or any part of any
instalment or deposit which he has paid to the seller; or







(b) any claim for any expenditure
he has incurred –







(i) whether with or without the
seller’s consent, in protecting or preserving the land or in paying
rates or taxes relating to the
land; or







(ii) with the seller’s consent,
where the expenditure has enhanced the value of the land,







and it appears to a competent
court that such forfeiture is out of proportion to the prejudice
suffered by the seller, the court may
grant such relief as it
considers will be fair and just to the parties.’”













The
court is empowered by this section to grant such relief as it
considers will be fair and just to the parties if it appears that
the
forfeiture is out of proportion to the prejudice suffered by the
seller. In the present matter the issue of the forfeiture of
the
deposit did not fall to be determined by the court

a quo
as the parties
were agreed that the deposit would be refunded less $2 000 per month
for every month that the respondent was in occupation
of the
property.







With regard to the forfeiture of
the improvements made, the issue which fell to be decided by the
trial court was whether the penalty
was unconscionable. The
following factors were taken into account by the learned judge in
arriving at the conclusion that the penalty
was not out of proportion
to the prejudice to the seller:






a. the defendant made no payment
of the instalments in terms of the agreement for almost eighteen
months after the date of signature
of the contract;






b. in May 1994 he attempted to
make payment of one instalment. The cheque was dishonoured;






c. in
February 1995 demand was made of him for the full amount outstanding
by the 31
st
August 1995 but he took no steps to raise the finance for the
purchase of the property;






d. there was no averment by the
appellant that the expenditure incurred on the property was for
“protecting or preserving the land
or in paying rates or taxes
relating to the land” and it did not appear from the invoices
produced in evidence by the appellant,
that the expenditure was
incurred in respect of necessary expenses;







e. the improvements allegedly
carried out were not proved to have been effected with the seller’s
consent;



f. the appellant had
benefited from residing on the property on the premises for 6 years
without any escalations.






Taking all these
factors into account, the learned judge was satisfied that the
appellant was not entitled to compensation in respect
of the
improvements.






I
find no fault with the reasoning of the learned judge. Indeed it
seems to me almost immoral that the appellant, having lived on
the
property for 6 years without making any attempt to pay the purchase
price thereof, should be allowed to claim for minor improvements
made
to the property for his own benefit. Bearing in mind the escalation
of property prices over the said period, the appellant
undoubtedly
benefited greatly from a rental of $2 000 per month without
escalations. This ground of appeal is, therefore, also devoid
of
merit.



The appeal is
accordingly dismissed with costs.









MALABA
JA: I agree










GWAUNZA AJA: I
agree









Mugabe & Partners,
appellant's legal practitioners


Musunga
& Associates
, respondent's legal
practitioners