Court name
Supreme Court of Zimbabwe
Case number
SC 21 of 2009
Civil Appeal 285 of 2005

Zimbabwe Express Services (Pty) Ltd v Nuanetsi Ranch (Pty) Ltd (285/05) (SC 21 of 2009, Civil Appeal 285 of 2005) [2009] ZWSC 21 (18 May 2009);

Law report citations
Media neutral citation
[2009] ZWSC 21




REPORTABLE ZLR(15)











Judgment
No. SC-21-09


Civil
Appeal No. 285/05








ZIMBABWE
EXPRESS SERVICES (PRIVATE) LIMITED v NUANETSI
RANCH PRIVATE LIMITED








SUPREME
COURT OF ZIMBABWE


ZIYAMBI
JA, GWAUNZA JA & GARWE JA


HARARE,
NOVEMBER 27, 2006 & MAY 19, 2009









E Matinenga with him H Zhou, for the appellant



R M Fitches, for the respondent









GARWE JA: This is an appeal against the decision of the High
Court dismissing with costs the appellant’s claim for delivery
of
two hundred heifers and two hundred steers.







The background to this matter is as follows. At the relevant time,
Nuanetsi Ranch (Pvt) Ltd (“the respondent”) was one of
the
largest cattle breeders in the country. During 2003, the respondent
experienced acute cash flow problems as a result of which
a decision
was taken by management to dispose of some of the cattle in order to
raise money. On or about 7 May 2003 the respondent
entered into a
written agreement with the appellant in terms of which the respondent
sold to the appellant a total of four hundred
cattle consisting of
two hundred heifers and two hundred steers. The purchase price was
agreed at Z$450 per kilogram for the heifers
and Z$500 per kilogram
for the steers. The appellant paid the agreed deposit of Z$15
million on 8 May 2003. In terms of the agreement
the balance of the
purchase was payable “on Monday 12 May 2003 or after the animals
have been weighed and delivered whichever
occurs later”. The
cattle were not weighed by 12 May 2003 and consequently the balance
was not paid by that date. In June 2003
the respondent then advised
the appellant that it could collect one hundred and twenty steers
which the respondent said was equivalent
to the deposit of Z$15
million previously paid.







At the hearing of the matter before the court a quo, the court
found that the cattle had been weighed on 16 May 2003 and that
although the appellant had been advised of this fact
no payment had
been forthcoming despite numerous visits and telephone calls by the
respondent’s managing director. The court
also found that the
respondent had cancelled the contract and that it had done so by
implication. Consequent upon these findings
the court a quo
dismissed the appellant’s claim with costs. It is against this
order that the appellant has appealed to this Court.







In its grounds of appeal, the appellant has raised various issues.
These are that the court a quo erred:




  1. in finding that the cattle were weighed on 16 May 2003 and that the
    appellant was advised of this fact and the need to pay;



  2. in finding that the respondent cancelled the contract between the
    parties by implication;



  3. in not making a finding whether the respondent placed the appellant
    in mora;



  4. in declining to grant the appellant an order of specific
    performance.








I propose to deal with the first two grounds together as they are
inter-related and arise from the same set of circumstances.
There is
a dearth of evidence as to what happened exactly after the payment of
the deposit of Z$15 million was made. The respondent
says the cattle
were weighed on 16 May 2003 after which the appellant was then
advised of the fact. How the appellant was advised
was never
clarified during the trial. The witnesses who gave evidence for the
respondent told the court a quo that the invoice was faxed to
the appellant. A copy of the fax slip was, however, not produced to
confirm this. The witnesses
further told the court that the invoice
had been sent by fax and the original by post and that one Betty
Mudenge had done so.
Betty Mudenge was not called to testify to this
fact. At the end of the day therefore all that was before the court
a quo was an unsubstantiated claim that an invoice had been
forwarded to the appellant on or about 16 May 2003.







On the basis of such evidence the court a quo had no basis
for finding that the invoice was forwarded to the appellant on or
about 16 May 2003 and that the appellant, having
seen the invoice,
failed or refused to pay. Clearly there was no such evidence before
the court a quo.







There was evidence, however, that there were numerous visits and
telephone calls by the respondent’s managing director to the

appellant’s offices. I agree with the trial court that the cattle
were in fact weighed at some stage and that as a result the

respondent’s managing director then made numerous calls in order to
get payment. It is unlikely that the respondent’s managing

director would have behaved in such a fashion if in fact the cattle
had not been weighed. However, it is unclear when he made
the calls
or paid visits to the appellant’s offices.







The evidence on record shows that what next happened was that the
respondent wrote to the appellant on 12 June 2003. In that
letter
the respondent advised the appellant that the deposit it had paid was
equivalent to one hundred and twenty steers and that
an invoice to
that effect was attached to that letter. The letter was received and
responded to by Mr D G Lupepe, appellant’s
Managing Director. In
his response Mr Lupepe accepted the one hundred and twenty steers but
rejected the suggestion that there
should be a fresh quotation in
respect of the remainder of the cattle.







I am prepared to find, on the evidence, that the cattle must have
been weighed and the appellant notified on an unknown date
but before
12 June 2003. The appellant, it is common cause, did not pay.







The question that now arises is whether the contract was properly
cancelled. It was the evidence of the respondent’s managing

director that the cancellation was implied from the letter of 13 June
2003. In other words, it was accepted that the respondent
did not
explicitly cancel the contract. In its submissions, the appellant
says cancellation by implication is unknown at law.
The respondent
disagrees.







It is clear that in its letter of 13 June 2003 the respondent was
suggesting that it was prepared to let the appellant take delivery
of
one hundred and twenty steers against the deposit of $15 million
previously paid. The remark by the respondent that “If you
need
more cattle, you are free to contact us and we give you a fresh
quotation” suggests that the respondent considered at that
stage
that the contract was no longer in existence. The appellant’s
immediate reaction was that the contract was still in force
and that
the respondent should comply with that contract.







The position is now settled that:






“Notice of cancellation must be clear and unequivocal and takes
effect from the time it is communicated to the other party …”.







R H Christie, The Law of Contract in South Africa, 3 ed at p
597. See also Du Plessis v Government of the Republic of Namibia
1995(1) SA 603 at 605E.







A notice of intention to cancel must be such that the other party
is or ought to be aware of its nature, but it is not necessary
to use
the word “cancellation”. The intention to cancel may be made
sufficiently clear in other ways – Kerr, The Principles of the
Law of Contract
, 4ed p 462.







On the evidence, the respondent did not cancel the agreement in
clear and unequivocal terms. Indeed, this is common cause.
The
respondent’s evidence was that the cancellation was implicit from
its letter of 13 June 2003. In that letter the respondent
wrote:






“Find attached your receipt for the 120 steers which you purchased
from Nuanetsi Ranch.






If you need more cattle, you are free to contact us and we give you a
fresh quotation.”







This letter clearly implied that the contract was no longer in
existence and that if the appellant required to purchase more cattle

a fresh quotation would have to be provided. Indeed, the appellant
understood the letter to mean that the contract was no longer
in
existence and for that reason wrote back to say that as far as the
appellant was concerned the contract was still binding.







The question that now arises is whether in law a contract can be
cancelled by conduct. Although the appellant has submitted that

cancellation by implication is unknown to law, the question really is
whether cancellation can be by conduct.







In Du Plessis v Government of the Republic of Namibia 1995(1)
SA 603 at 605 C-D, the Namibian High Court accepted that a summons
claiming damages was an implied notice of cancellation.
The decision
to cancel a contract may also be by conduct – see Kerr, Principles
of the Law of Contract
, 4 ed at p 552.







Indeed, repudiation of a contract by the defaulting party may be by
words or conduct justifying cancellation by the aggrieved party
–
Kerr, The Principles of The Law of Contract, op. cit. at p
435. If the defaulting party can repudiate by words or conduct,
surely the aggrieved party should be able to terminate
the contract
by conduct too. Suppose that the defaulting party has evinced an
intention to repudiate the contract. Suppose too
that the aggrieved
party accepts such repudiation and by his conduct clearly evinces his
view that the contract has terminated.
Would one not talk of
termination in such a case? The answer in my view is in the
affirmative. As in all cases, the circumstances
must be such that
that is the only reasonable inference that may be reached. In such a
case I would have no difficulty in describing
the contract as having
been terminated by conduct.







Considering the circumstances of this case, I would have no
difficulty in concluding that the respondent’s managing director

was in fact saying the contract had come to an end and that if the
appellant wished to buy more cattle, then it would have to enter
into
a new agreement. I find therefore that the respondent did in fact
cancel the agreement although it did not do so expressly.







The question that now falls for determination is whether the
respondent lawfully terminated the agreement and in particular
whether
the appellant had been placed in mora.







It is clear from all the facts of the case that the respondent was in
financial dire straits and required payment as a matter of
urgency.
Clearly therefore this was a contract in which time was of the
essence. However, since the cattle were not weighed by
12 May 2003,
no time had been fixed within which payment had to be made.







In cases such as the present, the general rule is that:



“When the contract does not fix a time for performance there can be
no mora ex re, only mora ex persona, so a demand by the
creditor is necessary in order to place the debtor in mora …”.







Christie, The Law of Contract in South Africa, op cit.
p 555.







The view has been expressed in several decided cases that no demand
is necessary to place the debtor in mora when no time
for performance was stipulated but it is clear that immediate
performance was contemplated – Christie, op cit, at p 555.
This view does not appear to correctly reflect the law as it
currently stands.







The present position is that:







“When no time for performance is fixed but time is of the essence,
the debtor is not in mora and the creditor cannot cancel for
non-performance unless a proper demand for performance has been made.
… the concept of time
of the essence relates to the consequences
of a breach and not to the breach itself, so if no time is fixed
there can be no breach
by non-performance, whether or not time is of
the essence, until the creditor has informed the debtor when he
maintains performance
is due.” – Christie, op cit, p 562.







In the present case it is clear that the appellant was never placed
in mora. The respondent proceeded to cancel the
agreement but did not place the respondent in mora. In
the circumstances the contract was not lawfully terminated and
therefore continued to subsist.







Having come to the conclusion that the contract between the two
parties continues to subsist, the issue that falls for determination

is whether the appellant would in the circumstances be entitled to an
order of specific performance. It is not in dispute that
the
decision by the respondent to sell part of its herd had been
triggered by a precarious financial position that the company
found
itself in. The stipulation in the agreement that a deposit of Z$15
million was payable immediately and the balance within
five days
underscored the urgency with which the respondent treated the
situation. Whilst it is unclear when the cattle were weighed
and the
date on which the appellant was advised of this fact, there is
nothing on record to suggest that the appellant itself was
in a hurry
to perform its side of the agreement. The appellant does not appear
to have done much after the payment of the deposit.
In June 2003 the
respondent advised the appellant that if it wanted more cattle then a
fresh quotation would be prepared. The
appellant objected to this,
maintaining that a valid contract was still in existence. What this
meant was that the appellant wanted
to buy the cattle some three
months later, at the contract price of Z$450 per kilogramme for
heifers and Z$500 for steers. This
Court can take judicial notice of
the fact that inflation has been a problem in our economy for some
time including the year 2003.
Indeed, on two occasions the monetary
authorities have had to slash zeros from our currency to enable
financial transactions to
continue. A price of Z$450 or Z$500 per
kilogram weight of beef in 2003 would have been a trifling sum in
2005 when the High Court
was called upon to adjudicate over the
dispute.







Were specific performance to be granted, the effect would be that the
appellant would take delivery of 280 heifers and steers for
a very
small amount of money. In other words the appellant would be
entitled to take possession of a herd of cattle worth a considerable

sum of money for which it would have paid virtually nothing. In
these circumstances, specific performance cannot be granted.







The general rule is that:



“Prima facie every party to a binding agreement who is ready
to carry out his own obligation under it has a right to demand from
the other party,
so far as it is possible, a performance of his
undertaking in terms of the contract.” per INNES JA in Farmers’
Cooperative Society v Ben
1912 AD 343 at p 350.







An order of specific performance is, however, at the discretion of
the court and there are circumstances in which a court may refuse
to
grant an order of specific performance. The discretion is:







“[not] … completely unfettered. It remains, after all, a
judicial discretion and from its very nature arises from the
requirement
that it is not to be exercised capriciously, nor upon a
wrong principle (Ex parte Neethling (supra at 335). It
is aimed at preventing an injustice – for cases do arise where
justice demands that a plaintiff be denied his right
to performance –
and the basic principle thus is that the order which the court makes
should not produce an unjust result which
will be the case, e.g. if,
in the particular circumstances, the order will operate unduly
harshly on the defendant.”






Per HEFER JA in Benson v South Africa Mutual Life Assurance
Society
1986 (1) SA 776(A) at 783 C-D.







The contract that gave rise to the proceedings in the High Court
was entered into in May 2003. That was more than two years
before
the High Court gave its decision and almost six years to the time
this Court will determine the appeal. Naturally a lot
has happened
since the signing of the agreement. There is a somewhat
unsubstantiated suggestion by the respondent in its heads
that it no
longer had steers of the age and weight required by the appellant.
Most importantly, however, as this Court has found,
an order of
specific performance would no doubt operate unduly harshly on the
respondent and would undoubtedly result in the appellant
being
unjustly enriched at the expense of the respondent. The finding of
the court a quo to this effect cannot be impugned. Whilst
accepting that the agreement was not lawfully terminated an order of
specific performance
would not in these circumstances be appropriate.







In the circumstances, the appeal cannot succeed.







It is accordingly dismissed with costs.



















ZIYAMBI JA: I agree

















GWAUNZA JA: I agree



















Gill, Godlonton & Gerrans, appellant’s legal
practitioners



Coghlan, Welsh & Guest, respondent’s legal practitioners