Songore v Madekutsikwa & Anor (HC 7567 of 2012) [2015] ZWHHC 368 (14 April 2015)

1 HH 368/15 HC 7567/12 EVELYN TSITSI SONGORE versus ELVIS MADEKUTSIKWA and BOBBIAS MUGOROGODI HIGH COURT OF ZIMBABWE TSANGA J HARARE, 3 March and 15 April 2015 Opposed Application A Muzvaba, for applicant K Maeresera, for 2nd Respondent No appearance by 1st Respondent TSANGA J: This opposed application in which a declaratory order is sought, emanates from a double sale of a certain vacant stand by the first respondent, one Elvis Madekutsikwa (the seller) to the applicant Evelyn Songore (the 1st purchaser) in the initial instance, and then to the second respondent Bobbias Mugorogodi, the 2nd purchaser. On 17 January 2013 the seller sold to the applicant for the sum of $15000.00 a certain stand described as Stand 3630 Prospect Township of Stand No. 3202 Prospect Township measuring 466 square meters held under Deed of Transfer 3425/2010. Under the agreement of sale the payment of the purchase price was staggered with the relevant clause reading as follows: 2.1 The purchase price is US $15 000.00 (fifteen thousand United States dollars) payable as follows: a) Deposit: Cash payment of US 4500.00(four thousand five hundred United States dollars) upon signing of sale b) Cash payment of US$4 500.00 (four thousand five hundred dollars) payable on the 7th of February 2013. c) The balance of US$6000.00 (six thousand United States dollars) to be paid in 3 monthly instalments of US 2 000.00 (two thousand United States Dollars) on the 7th of March 2013, 7th of April 2013 and 7th May 2013. HH 368/15 HC 7567/12 The applicant paid as follows: US 4500.00 on signing the agreement. . US 4500.00 on the 7th of February. US $ 2000.00 on the 9th of March (instead of the 7th of March) US $2000.00 on the 11 of April (instead of 7th of April). US $ 700.00 on the 3rd of June (instead of 7th of May). Save for the last payment of $700.00, all payments amounting to US 13 000.00 were paid through the seller’s legal practitioners who were MT Chiwaridzo and Associates. With regards to the last payment, applicant avers that the parties had agreed that $1 300 would go towards stamp duty for the transfer of the property. The applicant also states that the seller phoned her claiming he was in South Africa and that the $700. 00 was to be paid to one Itai Dzapasi who would then pass on the money to him. Acknowledgement of receipt by Itai was attached as an annexure. The remaining US$1300.00 was not paid by the 1st purchaser on the basis that it would go towards rates and transfer costs since the seller was now in South Africa. The applicant retrieved the Deeds which had been left with the lawyers until payment had been complete and confirmed that indeed the property was registered in the seller’s name. It was then that applicant was advised that a caveat had been placed on the property by Maeresera and Partners acting on behalf of the 2nd Purchaser who had also purchased the same stand, unbeknown to him that the property had already been sold to the applicant as 1st purchaser at the time when he bought it. A letter was then written to Maeresera and Partners seeking details of the caveat. The finer details which emerged were that the 2nd purchaser had bought the same by virtue of an agreement of sale entered into on 19 January 2013 in which the property was sold for $14 000. Under this agreement, a sum of $11 000 was to be paid upon signing of the agreement and the balance US$3000.00 was to be paid by the 25th of February. The first sum was duly paid and it was when the 2nd purchaser was attempting to pay the remaining sum of US$3000.00 that the seller became evasive and could not be found. This led the 2nd purchaser, (unbeknown to the applicant who was not aware of this second sale), to obtain an HH 368/15 HC 7567/12 order of the court through a default judgment under case HC 2856/13 on 29 May before Justice Bere. In terms of this court order, the seller was compelled to sign all documents to effect transfer to the second respondent of the above mentioned stand. In the event of failing to do so, the order authorised the Sherriff to sign all necessary documents to effect transfer. The order further compelled the seller to pay all rates to facilitate the issuance of a rates clearance certificate and to pay capital gains tax. In the event of failing to pay these, the order stated that the amount was to be deducted from the sum of $3000.00 that was being held in trust by the seller’s lawyers. The remaining balance was to be paid to the seller by the Registrar of the High Court who was to hold it on behalf of the seller. The seller was to also pay costs on a legal practitioner and client scale. These were the circumstances under which a caveat had been placed on the property by the second respondent. The 2nd purchaser only became aware of the earlier sale in October 2013 following a round table conference with the 1st purchaser i.e. applicant’s lawyers. Thus in essence the seller collected US$13 700.00 from the applicant as 1st purchaser and also collected US$11 000.00 from the 2nd purchaser for the same property. The applicant as 1st purchaser seeks in the initial instance that the order granted under case No. 2856/13 in favour of the second respondent (2nd purchaser) be set aside. There after it seeks the following declaration: 1. That the agreement of Sale entered on the 19th of January 2013 between 1st Respondent and 2nd Respondent over stand 3630 Prospect Township of Stand 3202 prospect Township be and is hereby set aside. 2. The applicant is hereby declared the lawful owner of the property, Stand No. 3202 prospect Township, Harare. 3. The 1st Respondent be and is hereby ordered to sign all necessary documents to effect transfer of Stand 3630 Prospect Township of Stand 3202 Prospect Township measuring 466 square meters held under Deed of Transfer 3425/2010 from his name into name of the Applicant within 14 days from date of this order. 4. In the event that 1st Respondent fails to comply with paragraph 3 above, the Sheriff or his lawful deputy be and is hereby ordered to sign all necessary documents to effect transfer of Stand 3630 Prospect Township of Stand 3202 Prospect Township measuring 466 square meters held under Deed of Transfer 3425/2010 from the name of the 1st Respondent into the name of the Applicant. HH 368/15 HC 7567/12 5. 1st Respondent to pay costs of suit. The seller as first respondent did not file any papers in connection with this case. Mr Maeresera on behalf of the 2nd purchaser objected to applicant’s quest to have the order granted to his client under case No. 2856/13 set aside on the basis that such request could not be made in the context of a declaratory order. It was his standpoint that the application to set aside a court order in terms of r 449 had to be very specifically pleaded and could not merely be intermeshed within the context of a declaration. He drew strength for his objection on the case of Mutyasira v Gonyora NO and others HH 180/14 in which Mawadze J stated as follows: “In my view applicant cannot seek to have this court review its own orders under the guise of a declaratory relief. This court can only vary or rescind its judgments and orders in terms of r 449 (1) (a) to (c) of the High Court Rules, 1971. The applicant has not approached the court on that basis but seeks a declaratory relief. See Thomas Kapfudza v Tirivangani No & Chitungwiza Municipality HC 52 89/05 In my view applicant cannot seek to have this court review its own orders under the guise of declaratory relief. This court can only correct vary or rescind its judgements and orders in terms of r 449(1) (a) to (c) of the High Court Rules 1971. The applicant has not approached the court on that basis but seeks declaratory relief. I do not share the view that para 3 of KUDYA J’s order can be pronounced by this court as void ab initio. The simple fact is that the judgements of this court are not reversible by the same court but appealable.” He also challenged the view that the order was erroneously sought on the basis that there was no mistaken belief at all and that his client’s rights should supersede those of the applicant since the order was properly obtained. He argued that the way out for the applicant is to claim a refund against the seller. It was in the context of the above objection that at the hearing Mr Muzvaba on behalf of applicant the 1st purchaser sought to have the issue of setting aside the judgement dispensed with first by the court. He also argued that the court can set aside the judgment mero motu including even where no such application is made and consequently even where a wrong application is made. He cited the case of Banda v Pitluk 1993 (2) ZLR 60 as an example where an order was granted under r 449 even though the application had been made under r 63. Rule 449 of the High Court Rules 1971 is couched as follows: “449 Correction, variation and rescission of judgment and orders (1) The court or a judge may, in addition to any other power it or he may have, mero motu or upon the application of any party affected, correct, rescind, or vary any judgment or order- HH 368/15 HC 7567/12 (a) That was erroneously sought or granted in the absence of any party affected thereby; or (b) In which there is an ambiguity or patent error or omission, but only to the extent of such ambiguity, error or omission; (c) That was granted as a result of a mistake common to the parties. (2) The court or a judge shall not make any order correcting, rescinding or varying a judgment or order unless satisfied that all parties whose interests may be affected have had notice of the order proposed”. The issue and meaning of the court acting mero motu in setting aside a judgment in terms of r 449 is one that our Supreme Court has had occasion to address in the case of Munyimi v Tauro S-41-13. Adopting the reasoning in the South African case of Mutembwa v Mutembwa & Anor 2001(2) SA 193 our Supreme Court reached the following conclusion with regards to when the court can set aside a judgment mero motu: “In summary therefore the position would seem to be settled that where a court or judge acts mero motu and decides to correct, rescind or vary a judgment or order, such court or judge is confined to the record of the proceedings and such error should appear ex facie the record. The court or judge cannot take into account other facts or circumstances that do not arise from the record itself or facts which become known later but which would have been placed before the court whose order is sought to be varied or rescinded.” In other words, where a court acts mero motu then the error should be ex facie the record. In the present matter the error was clearly not ex facie the record of the case decided by Bere J. It emerges succinctly from the application placed before the court which is what reveals that the judgment would not have been granted had such facts been before the judge. Where a court acts on the basis of a written application to set aside a judgment, then it would have before it the full context of why such setting aside is sought, especially facts which may not have been placed before the judge who granted the earlier judgment. In such instances the judgment can still be set aside on account of the facts that are placed in the application that will have been put before the court. As Jafta J explained at p 199 H-J of the Mutebwa case in unpacking their r 42 (1) which is similarly worded as our r 449: “Although the language used in r 42 (1) indicates that the Court has a discretion to grant relief, such discretion is narrowly circumscribed. The use of the word “may “ in the opening paragraph of the rule turns to indicate circumstances under which the Court will consider a rescission of variation of the judgement, namely that it may act mero motu or upon application by an affected party. It seems to me that the Rule maker could not have intended to confer upon the Court a power to refuse rescission in spite of it being clearly established that the judgment was erroneously granted. The Rule should therefore, be construed to mean that once it is established that the judgment was erroneously granted in the absence of the party affected thereby, a rescission of judgment should be granted.” HH 368/15 HC 7567/12 He expanded this viewpoint on p 201 para B-E as follows: “I agree that the error should appear on the record but only in cases where the Court acts mero motu or on the basis of an oral application made from the Bar for rescission or variation of the order. For obvious reasons in such case the Court would have before it the record of proceedings only. The same interpretation cannot, in my respectful view, apply to cases where the court is called upon to act on the basis of a written application by a party whose rights are affected by an order granted in its absence. In the latter instance the Court would have before it not only the record of the proceedings but also facts set out in the affidavits filed of record. Such facts cannot simply be ignored and it is not irregular to adopt such a procedure in seeking rescission. In fact, it might be necessary to do so in cases such as the present where no error could be picked ex facie the record itself.” Applying the above reasoning, the 2nd purchaser’s position that there was no mistaken belief ex facie the record of proceedings, cannot be a basis for overlooking the facts which have been placed before this court in the present application which show why the judgment was granted in error. Clearly this court has power to examine and be guided by the facts placed before it in the affidavits of the 1st purchaser in deciding whether or not to rescind the judgment obtained by the second purchaser. The facts point to a judgment granted without full knowledge of the facts of the first sale. I do not think that it is fatal that the request for rescission of that judgment is intermeshed what an application for a declaratur. I say this because in the case of Mutyasira relied upon as authority that the order to set aside a judgement cannot be made in the context of a declaratur is distinguishable on the facts from this matter before me. A full reading of the context in which these remarks were made reveals that factually the circumstances were different from the case before me. In Mutyasira’s case the applicant had the option of appeal as the matters had been heard fully to their logical conclusion. The option of appeal is not one that is open to the applicant since they were not a party to the case neither were there any court cases that had been heard on merit as was the case therein. The case is distinguishable on the facts. In Mutyasira’s case several court cases had been heard on the matter and what the declaratur sought was in essence a disagreement with the positions taken in that matter. More significantly, the facts presented in the application meet the requirements of r 449 in that they show that: 1) The judgment was erroneously granted 2) The judgment was granted in the absence of the applicant 3) The applicant’s rights or interests are affected by the judgment. All the necessary factors are satisfied by the evidence put forward in the 1st purchaser’s affidavits in that there is evidence that the property had already been sold as HH 368/15 HC 7567/12 confirmed by an agreement of sale and evidence of purchase between the seller and the 1st purchaser. The judgement was clearly granted in the absence of the 1st purchaser albeit not through any wilful misrepresentation on the part of the 2nd purchaser. The applicant’s rights as 1st purchaser have evidently been compromised by the judgment. As such there can be no reason for not setting aside the judgment in terms of r 449. Whilst it is desirable that r 449 should be specifically pleaded where reliance is placed upon it, ultimately where the facts speak for themselves as to whether or not there is merit in setting aside an order, then they should guide the process. Even if a separate application were to be brought before the court in terms of r 449 the contextual and factual averments would be the very ones that have been used to inform this quest for a declaration. There is no running away from the legal reality that a prior agreement in a context of sale shifts the balance in ways that a judge would not simply ignore and grant an order. Therefore under the specific circumstances of the case before me, it would merely result in unwarranted delay and unnecessary expenses for both parties to insist that r 449 be pleaded in a specific application. Indeed rules are there for the efficient administration of justice but if it is apparent from the facts, as in this instance, that the attainment of justice is likely to be curtailed by an unbending approach in favour of administrative efficiency, then such quest must yield to the attainment of justice. As such I granted the order to set aside the judgment and allowed the matter to proceed to its merits. Addressing the merits and the legal position on double sales As regard double sales the case of BP Southern Africa (PTY) Ltd v Desden properties (Pvt) Ltd and Anor 1964 (2) SA 21 ( SR) at p 25 MacDonald J as he then was, laid out the “contract based” policy position as the preferred one in our law as far as double sales are concerned. He explained this position as follows: “It is the policy of the law to uphold within, reason, the sanctity of contracts. It follows that Courts of law should, as far as possible, in matters of this kind, adopt an approach which will discourage sellers from entering into contracts the performance of which will necessarily involve breach of an earlier contract, and by adopting such an approach reduce a potential cause of hardship. The concern of the Courts should primarily be with the removal of the cause of these cases of hardship rather than with the result in a particular case”. He further articulated this position as follows: “In my view, the policy of the law to uphold the sanctity of contracts will best be served in the ordinary run of cases by giving effect to the first contract and leaving the second purchaser to claim damages for breach of contract. I do not suggest that this should be the HH 368/15 HC 7567/12 invariable rule, but I agree with the view expressed by Prof McKerron, that save in “special circumstances, the first purchaser is to be preferred.” This qualified position permitting a deviation from the first contract through the examination of special circumstances if there are any, has been used as a beacon in cases such as Chimphonda v Rodriques & Ors 1997 (2) ZLR 63 (H) and in Guga v Moyo & Ors 2000 (2) ZLR 458(S). As stated by McNally JA as he then was in the latter case: “The basic rule in double sales where transfer has not passed to either party is that the first purchaser should succeed. The first in time is the stronger in law. The second purchaser is left with a claim for damages against the seller, which is usually small comfort. But that rule applies only “in the absence of special circumstances affecting the balance of equities.” The 2nd purchaser argues that there are special circumstances to be considered in this case that ought to tilt the balance in his favour. He disputes paying $11 000.00 only, arguing that the balance of $3000.00 was deposited with the lawyers because the seller was not forthcoming and his mobile phone became unreachable when the 2nd purchaser was attempting to discharge his obligations. He says he asserted his rights by paying the balance into the trust account. He also argues that he was not aware of the earlier sale when he entered into the agreement and when he obtained his court order. More significantly the 2nd purchaser argues that the 1st purchaser actually did not comply with the terms and conditions of the agreement of sale with the seller as some of the instalments were not paid on the stipulated dates as per agreement. He highlights that there is in fact still a balance of US$1300.00 owed to the seller by the 1st purchaser and as such she has not yet discharged her obligations. It is also argued that the 2nd purchaser unlike the applicant took active steps to enforce his rights by seeking the order in question. It is also pointed out that the 2nd purchaser paid more money than the 1st purchaser having paid $14000.00 compared to $13 700.00 paid by the applicant. In his own case the 2nd purchaser argues that he has in fact fulfilled the payment obligations in total since the balance of the purchase price is being held in trust as a result of the seller himself having failed to cooperate to enable the money to be paid directly to him. In other words it is the seller who has himself brought about the non-fulfilment a situation that can be said to amount to mora creditoris or positive malperfomance of the contract by virtue of the actions of the seller himself. In a case of breach of contract the other party to the contract has a right to resile from the contract. In this case however the seller in fact condoned the late payments by the first purchaser by receiving his money. Therefore it cannot be for the 2nd purchaser to attempt to HH 368/15 HC 7567/12 resile to the contract on his behalf when the seller himself by his conduct appears to have regarded the non-timeous payments as immaterial to the contract. The applicant as 1st purchaser denies that the 2nd purchaser’s rights should supersede his because the reason why the seller was evasive with the 2nd purchaser was because he knew that he had already sold the property. A copy of the title deeds was also deposited with the 1st purchaser’s lawyers. Furthermore applicant argues that he could not have paid the remaining balance as there were certain costs to be met before transfer could be effected and the seller was already in South Africa. Both parties seem to have taken it upon themselves to deduct certain amounts from the final payment for duty and such concerns. The fact that the balance of $1300.00 has not been paid on the basis that it will pay for rates and related transfer expenses cannot, in my view, be used as an argument by the 2nd purchaser since he too purports to do the exact same thing - that is to have deducted rates and transfer duty from his payment of US$3000.00. In reality since the 2nd purchaser can be refunded his US$3000.00 he will have paid US $10 000.00 while the 1st purchaser will have paid US 13 700.00. It cannot be said that there are “special circumstances” that justify that the 2nd purchaser should take precedence. It is the first purchaser who stands to lose more money than the 2nd purchaser if the agreement is not honoured when he in fact stands on a firmer legal footing. The law as it applies to the problem of double sales necessarily leaves the 2nd purchaser to pursue damages against the seller. In the result it is ordered that: 1. That the agreement of Sale entered into on the 19th of January 2013 between 1st Respondent and 2nd Respondent over stand 3630 Prospect Township of Stand 3202 prospect Township be and is hereby set aside. 2. The applicant is hereby declared the lawful owner of the property, Stand No. 3202 prospect Township, Harare. 3. The 1st Respondent be and is hereby ordered to sign all necessary documents to effect transfer of Stand 3630 Prospect Township of Stand 3202 Prospect Township measuring 466 square meters held under Deed of Transfer 3425/2010 from his name into name of the Applicant within 14 days from date of this order. 4. In the event that 1st Respondent fails to comply with paragraph 3 above, the Sheriff or his lawful deputy be and is hereby ordered to sign all necessary documents to effect transfer of Stand 3630 Prospect Township of Stand 3202 Prospect Township measuring 466 square meters held under Deed of Transfer 3425/2010 from the name of the 1st Respondent into the name of the Applicant. 5. 1st Respondent to pay costs of suit. HH 368/15 HC 7567/12 C Mutsahuni Chikore & Partners, applicant’s legal practitioners Maeresera & Partners, respondent’s legal practitioners