Court name
Supreme Court of Zimbabwe
Case number
SC 85 of 2002
Civil Appeal 176 of 1999

Mutomba t/a Mutomba Supermarket v R and C Investments (Pvt) Ltd. (176/99) (SC 85 of 2002, Civil Appeal 176 of 1999) [2002] ZWSC 85 (20 October 2002);

Law report citations
Media neutral citation
[2002] ZWSC 85


REPORTABLE (75)

















Judgment
No S.C.85\2002


Civil
Appeal No 176\99

















CLEVER
MABHAUDHI MUTOMBA t/a MUTOMBA SUPERMARKET v R
AND C INVESTMENTS (PRIVATE) LIMITED











SUPREME
COURT OF ZIMBABWE


SANDURA
JA, CHEDA JA & GWAUNZA AJA


HARARE
JULY 11 & OCTOBER 21, 2002








H.
Zhou
,
for the appellant





G.
Mandizha
,
for the respondent








GWAUNZA
AJA: This is an appeal against the judgment of the High Court,
in which the appellant was ordered to pay to the respondent
the sum
of $105 594,39, together with interest at the prescribed rate from 22
January 1998 to the date of payment.





The
background to the matter is common cause. The respondent leased
certain business premises in Chitungwiza from one Chigovanyika.
The
lease terminated at the end of November 1997, following the
appellant’s failure to generate enough business to make the
enterprise
viable. At the time of termination of the lease
agreement, the respondent, in fact, owed the landlord certain rent
arrears.






Upon the
termination of the lease the appellant concluded an agreement with
Chigovanyika, in terms of which it was agreed that he
would take over
the premises from the respondent as the new lessee. When the
respondent vacated the premises in question, certain
of its
merchandise was left behind. A stock-take of this merchandise was
conducted by representatives of the parties to determine
the quantity
and value of the stock. An agreed retail value of $105 594,39 was
put on the merchandise. The merchandise was not
removed from the
premises. The appellant started trading in similar business, i.e. a
supermarket, a day or so later. On the
22
nd
of January 1998, the director of the respondent, Mr Rushambwa,
(“Rushambwa”) addressed a letter to the appellant, demanding the
value of the stock that had been left on the premises, on the ground
that the appellant had “taken over” such stock. Having
received
no response to this letter, nor payment of the amount demanded, the
respondent issued summons against the appellant for
that amount.





In
the particulars of claim, it is asserted as follows in paragraph 6:-





“By
virtue of agreeing to conduct the taking of stock of plaintiff’s
merchandise defendant by implication agreed to take over the
goods
and reimburse plaintiff their value in the sum of $105 594,39.”









The
respondent maintained this argument throughout the proceedings in the
court
a
quo

and in this Court. Rushambwa asserted, in addition, that the
appellant had neither returned the merchandise to him, nor challenged
his letter of demand for the amount in question. This, Rushambwa
contended, was further evidence of the implied agreement of sale
between the parties.





The
appellant denied he ever intended to buy the merchandise in question.
His response to the question why he had participated,
through his
representative, in the stocktaking and evaluation of the merchandise
in question, is given as follows at page 26 of the
record:-





“… we
wanted to count the goods so that we know when they come in and they
say we want four pots, we know there were four pots, we want
so many
items, we know those were the items and it was the time when there
was looting and all. If those things had been looted
we would know
what quantities were there for the previous tenant. So our
stock-take was for inventory purposes only as far as we
were
concerned.”








He
denied that the representatives had in effect evaluated the goods,
saying all they had done was note down the retail prices as
marked on
the goods, and add them up.





The
appellant went on to say that after the exercise of stocktaking, the
merchandise that could be so packed, was packed in boxes
while those
items that could not be so packed were left as they were. He added,
however, that all the merchandise had been stored
in the mezzanine
floor of the building. He asserted the merchandise had stayed there
during the entire period of his tenancy (some
thirteen or so months)
and had thereafter been removed by the landlord, i.e. Chigovanyika,
and taken to his home. He did not feel
he had any obligation to
“return” the goods to the respondent since he had told the
landlord that he did not want them.






It is not in dispute that about
two months after the appellant commenced business a meeting at which
the fate of the goods was to
be discussed had been called between the
appellant, Rushambwa and the landlord, but had failed to take place
due to the appellant’s
late arrival at the venue. The appellant
denied personally seeing the letter of demand from the respondent’s
director, Rushambwa,
but asserted it had been received by his manager
and taken to the landlord. The reason for the manager having taken
that action
was because, the appellant asserted, he himself had
hitherto dealt only with the landlord over the respondent’s goods.





It
is significant that the landlord, Chigovanyika, was not called by
either party to give evidence. It is, however, not in dispute
that
the appellant and Rushambwa had never met nor spoken directly with
each other before the day of the pre-trial conference.
It was on
that day that they saw each other for the first time. Each had
dealt separately with the landlord over issues concerning
the other.
Therefore, neither could challenge the other’s evidence as to what
had been said or agreed between the other party
and the landlord
concerning the merchandise in question.






That being the case, and in the
absence of other evidence to contradict it, the court must accept
that the respondent, having fallen
into arrears in his rentals, did,
through Rushambwa, agree with the landlord that upon its vacation of
the premises, whoever took
over the premises would take the remaining
stock, i.e. buy it, sell it and then remit the proceeds to either the
respondent or the
landlord. By the same token, the court must
accept the evidence of the appellant that he told the landlord, whom
he believed (not
unreasonably given the arrears owed to him by the
respondent) had a landlord’s lien over the merchandise to take away
the stock
because he did not need it for himself. Once the court
has accepted this uncontroverted evidence, it must accept the
appellant’s
evidence that the goods in question were never
displayed by him on the shelves, had therefore been stored on the
mezzanine floor
of the building and had ultimately been removed by
the landlord.





What
this evidence establishes is that Rushambwa, having assumed his offer
that the new tenant should buy the left over goods had
been conveyed
to the appellant by the landlord, sent his representatives to
undertake stocktaking of the goods. He assumed the
participation of
the appellant’s representative in this exercise constituted an
acceptance of his offer. The appellant who, however,
was not, even
by Rushambwa’s admission, privy to the agreement between Rushambwa
and the landlord, nevertheless sent his representative
to do a
stocktaking of the merchandise together with the respondent’s
representatives.





According
to their evidence, each party believed there was a different purpose
to the stocktaking. As already indicated the two
had never before
this exercise, met to discuss this possible relationship between
them. In the absence of information to the contrary,
the
respondent’s assumption that the stocktaking, done together with
the appellant’s representatives, was an indication of the
appellant’s willingness to buy stock, is clearly understandable.
He was not to know that his agreement with the landlord had
not been
conveyed to, nor accepted, by the appellant. At the same time, I
find reasonable the appellant’s explanation for what
he thought was
the purpose of the stocktaking. There is nothing in the evidence
before the court to suggest that before the stocktaking,
he had been
informed, much less agreed, that he was to “take over” the
merchandise left over by the respondent for a fee. As
long as it
was his understanding that the goods were not to be removed the same
day the respondent vacated the premises and that
his rejection of the
offer to buy the stock had been conveyed to the respondent the
appellant’s explanation for why he sent his
representative to
participate in the stocktaking is, in my view, both credible and
reasonable. It should be noted that the learned
judge
a
quo
made no adverse
comment concerning the credibility of both Rushambwa and the
appellant as witnesses.





The
learned judge in the court
a
quo
found, in essence,
that the appellant had accepted the offer to buy the respondent’s
stock leading to the establishment of a tacit
contract between the
parties. In reaching this conclusion, the learned judge drew
guidance from the following passage from
Christie’s
“The Law of Contract in South Africa”:-





“In
order to establish a tacit contract, it is necessary to prove, by the
preponderance of probabilities, conduct and circumstances
which are
so unequivocal that the parties must have been satisfied beyond
reasonable doubt that they were in agreement. If the
court is
satisfied on the preponderance of probabilities that the parties
reached agreement in that manner it may find the tacit
contract
established."








See
also
Landmark Real
Estate (Pty) Ltd v Brand

1992 (3) SA 983.





Citing
the same authority the learned trial judge noted that the inquiry
involves three stages. The first is to decide on a balance
of
probabilities, what facts have been established. The second stage
is to decide how the proved facts, that is, the conduct of
each party
and surrounding circumstances must have been interpreted by the
other. The third, and final stage, is to decide also
on the
preponderance of probabilities, what conclusion consistent with those
facts is most likely to be correct.





Applying
this test, the learned trial judge considered the facts as presented
to the court, and was satisfied that the facts pointed
“unmistakably”
to the fact that there must have been an arrangement that the
appellant would purchase the stock. The main factor
considered by
the learned judge was the appellant’s participation in the
stocktaking in question.





I
have already explained why I do not find to be unreasonable the
appellant’s understanding of the purpose of the stock-take.
It
appears to me that the learned trial judge did not attach sufficient
weight to the role the landlord played in that whole matter.
An
appreciation of the consequences of that role is central to a proper
determination of whether or not an implied agreement of
sale was
concluded between the parties.





As
correctly contended for the appellant by his counsel, Mr
Zhou,
the fundamental principle is that the parties must have, in fact,
intended to enter into a binding contract with each other.
1
This principle is also implicit in the words of
Christie,
cited above. In this case the landlord is the one with whom
Rushambwa of the respondent discussed the possibility that the
latter’s
left over stock would be taken over by the appellant. It
was to and through the landlord that the appellant conveyed the
information
that he (appellant) did not require the respondent’s
merchandise. According to the appellant, this was communicated to
the landlord
during the same month, i.e. December 1998, that he
started trading. It is evident that the landlord must have
communicated something
of this rejection to the respondent’s
director, hence his (landlord’s) attempt to broker a meeting
between the appellant and
Rushambwa two months after the appellant
had started trading. Apart from the total lack of direct contact
between the appellant
and Rushambwa there is also uncertainty in the
evidence before the court, regarding who between the landlord and
those of the parties’
representatives who did the stocktaking,
would have been their agent on the matter of the alleged agreement of
sale. There is no
evidence that the representatives who
participated in the stocktaking had a mandate to do more than that.
Nor is there any conclusive
evidence that the landlord conveyed the
appellant’s rejection of the offer to buy the merchandise to the
respondent.





In
the circumstances of this case, for a valid agreement of sale to be
implied from the parties’ conduct, it would be necessary
to show,
on a balance of probabilities, that the appellant accepted the offer
in circumstances where the two were
ad
idem
on the matter.
In the absence of testimony from Chigovanyika as to what information
he conveyed to the parties from each other,
I find there is no
evidence to suggest, even on a balance of probabilities, that the
parties’ conduct in jointly participating
in the stocktaking in
question, evinced a mutual intention to enter into a binding
agreement of sale in relation to the goods in
question.





Because
the appellant’s conduct in participating in the stocktaking was
open to more than one credible interpretation, including
the one
given by the appellant, it was necessary to look to other conduct by
him, in order to determine whether or not he had accepted
the offer
to buy the respondent’s merchandise.





The
court
a quo,
therefore, quite correctly considered other factors, one of which was
the failure by the appellant to “return” to the respondent
the
merchandise in question.





The
court regarded the appellant’s failure to return the merchandise in
question to the respondent as further evidence of his
having accepted
the offer to buy the merchandise in question. However, a conclusion
based on such a fact is not supported by the
authorities. In
Charles Velkes Mail
Order 1973 (Pty) Ltd v Commissioner for Inland Revenue

1987 (3) SA 345 (A)
2
NESTADT JA had this to say in this respect at 357I – 358C:-





“Where
the acceptance of an offer by conduct is relied on, it must be shown
that the offeree acted with the intention (actual or apparent)
of
accepting the offer (
Chitty
on Contracts : General Principles 25 ed (1983) para 55 at 34) …
In the case of contracts of sale such conduct may be the retention
by
the ‘purchaser’ of [358] goods sent to him (
Christie
– The Law of Contract in South Africa at 62) … The factor
underlying these cases is a prior or existing business relationship
or course of dealings between the parties. Where, however, this is
absent the position will ordinarily be otherwise. In this
situation, ie, where
unsolicited
goods are sent to a person, the failure
per
se
to return them
would not normally found a sufficient inference that they had been
accepted. As
Corbin
on Contracts Vol 1 s 72 at 306 puts it:





‘It
may indicate that he preferred to give no thought to the offer and to
waste no time and effort in making a reply, whether orally
or by a
writing. In such cases, the offeror is not reasonable in giving to
the offeree’s mere silence an interpretation that
he accepted.
So, if a party sends a book or paper or other goods to another, with
a letter saying he is offering it for sale at
a specified price, the
party to whom it is sent is not bound by contract to pay for it if he
does nothing and says nothing.’”
(my emphasis)











The
above can aptly be applied to the circumstances
in
casu
. The
merchandise in question was certainly unsolicited. The appellant
told the landlord that he did not wish to buy it and left
it at that.
Based on the reasoning outlined above, it can therefore not be said
that by not returning the goods, he had impliedly
accepted them.
The position would, of course, be different had the appellant traded
in the goods. In this respect at 358F the
learned Judge of Appeal
went on to say:-





“On
the other hand, were the offeree to make beneficial use of the goods
or otherwise exercise ownership over them, an acceptance may
and
probably would be inferred (see
Williston
on Contracts 3 ed Vol 1 s 91 (D) at 333-4).”








The
appellant
in casu,
quite apart from not making any beneficial use of the merchandise in
question, had it packed and stored away from the shelves where
the
goods he traded in were displayed.





The
learned trial judge found there were other factors pointing to the
existence of a tacit agreement of sale between the parties.
He
noted as follows at page 7 of the judgment:-





“The
stock was valued at $105 000 odd. There must have been considerable
quantities, presumably stacked on shelves. No stock-take
was done
on 2 December and the defendant started trading the following day.
If the defendant did not purchase the plaintiff’s
stock then I
cannot but wonder when it is on 3 December that the defendant had the
time to remove the plaintiff’s stock, stow it
away and bring in its
stock and commence business. It is not far fetched to infer that
the defendant commenced to trade in plaintiff’s
stock on 3
December. If that be so, it reinforces the inference that the
defendant purchased the plaintiff’s stock.”








My
reading of the record of the proceedings in the court
a
quo
suggests that the
learned trial judge misrepresented the evidence of the appellant,
which was that after the stock-take was completed,
the merchandise in
question was taken “upstairs” to the mezzanine floor. The
specific evidence of the appellant is on page
35 of the record and it
was given under cross-examination:-






“Q. Where were the goods
stored?






  1. They
    were stored upstairs on the mezzanine floor.







  1. On
    the floor?







  1. They
    were stored in cardboard boxes, yes, on the floor.







  1. In
    cardboard boxes, you say.







  1. Uhu.







  1. All
    these goods were stored in cardboard boxes?







  1. Those
    that fitted (sic) but you had hardware, hardware was in the open.
    Like cloth material …”









Rushambwa,
in his evidence asserted he never established where the goods had
been stored after he vacated the premises. He, therefore,
could not
dispute that they were stored in the manner stated by the appellant.





That
being the case, one sees no basis for the learned trial judge’s
presumption that the goods in question were stacked on shelves.
If
they were never stacked on the shelves, it follows that the appellant
would not have required a lot of time to stow the goods
away and
bring in his own stock. To state, as the learned trial judge did,
that the appellant must have commenced to trade in the
respondent’s
stock is to suggest that the former did not have, at hand, his own
stock. That this was not the case is made clear
by the evidence of
the appellant, which was to the effect that he had brought in his own
stock and did not need the respondent’s.
This evidence was not
challenged by the respondent.





The
learned trial judge’s assessment of these material facts, as
outlined above was therefore premised on a misinterpretation of
the
evidence placed before the court. Such assessment is, therefore, in
my view, patently defective.





Given
all of the above, there can be no doubt that the respondent failed to
prove conduct on the part of the appellant that could
have been
construed as an acceptance of its offer to him to buy the stock in
question.





It
follows that the respondent failed to prove the existence of a tacit
agreement of sale between it and the appellant.





Two
other issues call for comment. The first is that much reliance was
placed by both the respondent and the learned trial judge,
on the
appellant’s failure to respond to the letter of demand written to
him by Rushambwa, dated 22
nd
January 1998. The learned trial judge dismissed as highly unlikely
the appellant’s evidence that the letter had been received
by his
subordinate who had, without showing it to him, passed the letter on
to the landlord. Whatever the fate of the letter may
have been, the
fact that the appellant did not respond to the letter does not, in my
view, carry the respondent’s case any further.
Rushambwa believed
the landlord had conveyed his offer to sell the merchandise to the
appellant and that the latter had accepted
such offer. The evidence
before the court is to the effect that while such offer may have been
conveyed to the appellant, it had
not been accepted by him. As long
as the appellant as a result did not believe himself bound to any
contract of sale, he could
not be said to have been under any
obligation to respond to the letter of demand. That he did not
respond to it cannot, under these
circumstances, be taken as an
admission that he was bound by the implied contract of sale alleged
by the respondent.





The
second issue is the exchange between the respondent’s director,
Rushambwa, and the landlord, Chigovanyika, of two letters.
The
first letter, written by Rushambwa and dated 19 May 1998,
acknowledged receipt of a letter received by him from Chigovanyika
two or so weeks earlier. The other letter apparently demanded the
arrears that were due to Chigovanyika by the respondent. Rushambwa,
in response to this demand, and without revealing the subject of such
sale, requested “the agreement of sale entered between you
and Mr C
Mutomba” so that he could reconcile some “figures”.
Chigovanyika, in his response dated 20 May 1998 informed Rushambwa:-





“I
write to advise that no sale has been entered into between C Mutomba
and myself save for a lease agreement.”








It
was contended for the appellant that this correspondence not only
confirmed Rushambwa’s evidence that he and the landlord had
agreed
the merchandise would be “sold” to the appellant but also
suggested that Rushambwa had been informed by Chigovanyika that
the
appellant was not willing to buy the stock in question. Rushambwa,
in his evidence in the court
a
quo,
was so evasive
when he was asked about the subject matter of the agreement of sale
referred to, that no sense could be made out of
his answer to the
question.





When
the probabilities are considered, however, I find there may be merit
in the appellant’s contention, firstly, that the lease
agreement
and the merchandise in question were the only factors linking the
three of them together, ie, the appellant, Rushambwa
and
Chigovanyika, and secondly, therefore, that since the lease agreement
is directly mentioned in the correspondence “the sale
agreement”
could only have related to the left over merchandise. The
implication of this would be that the respondent insisted
on an
implied agreement of sale when its director knew very well that the
appellant had not accepted its offer to buy the merchandise
in
question.





If
that is indeed the case, that evidence would certainly lend further
credence to the appellant’s assertion that nothing in his
conduct
and the facts surrounding this case could have justified a finding
that the parties intended to enter into a binding contract
of sale.
However, even without this evidence, as already shown, the appellant
would still have sufficiently disproved conduct consistent
with an
acceptance of the offer, and therefore, an implied agreement of sale
between him and the respondent.





In
all circumstances the appeal must, therefore, succeed.






It is accordingly ordered as
follows:






  1. The
    appeal is allowed with costs.


  2. The
    judgment of the court
    a
    quo
    is set aside and
    is substituted with the following:






“The
Plaintiff’s claim is dismissed with costs.”














SANDURA
JA: I agree








CHEDA
JA: I agree











Muvingi
and Mugadza
,
appellant's legal practitioners


Mapfumo,
Debwe and Partners
,
respondent's legal practitioners












1
See
Salisbury
Bottling Co (Pvt) Ltd v Lomagundi Distributors

1965 RLR 268 at 280.




2
See
Ellison
Kahn

“General Principles of Contract; Agency and Representation,” 2
ed Vol 1 at page 122