Richard Norman v Kingdom Calls t/a Marineland Harbour

### Preamble
1
HCC13-22
CIV APPEAL 2/22
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RICHARD NORMAN

versus

KINGDOM CALLS T/A MARINELAND HARBOUR

HIGH COURT OF ZIMBABWE

MUZOFA & KWENDA JJ

CHINHOYI, 24 June & 17 August 2022

Civil Appeal

S Kuchena, for the appellant

T Nyamayaro, for the respondent

MUZOFA J. This is an appeal against the decision of the Magistrate sitting at Kariba Magistrate Court dismissing the appellant’s claim.

Factual background

The appellant’s son one Scott Norman, now deceased and herein after referred to as the deceased owned a cabin cruise boat known as Wandering Star. Before his demise the deceased entered into a written storage contract with the respondent on 23 November 2009.

In terms of the agreement the respondent was required to provide a shed for the storage of the boat. Clause 3 of the agreement set out the payment of rent modalities. Overdue amounts would attract interest prevailing at the time based on the prime rate levied by Barclays Bank Zimbabwe Limited.

Clause 5 thereof, provided that in the event of any change in ownership such changes would only be effective and recognised on registration of transfer of ownership with the respondent. The original owner would remain responsible for the payment of rentals and expenses until such registration is effected.

The parties also included a special condition in the contract. The special condition is the basis of the dispute between the parties. It provides

‘Special Condition

In the event that mooring or harbour fees remain unpaid for a period in excess of 12 months without notification in writing to Marineland of any reasons for non-payment, Marineland will assume that the vessel/boat has been abandoned and the owner has ceded all rights and ownership to Marineland. This cession will then automatically authorise Marineland to take whatever measures are necessary to recover their debt, including the sale of equipment, machinery etc from the vessel /boat or sell or scrap the whole vessel/boat if necessary.’

The deceased passed on in 2010 leaving the cabin cruise boat still housed at the respondent’s premises. When the appellant approached the respondent for the release of the cabin cruise boat, the respondent declined to release it. The respondent’s basis for refusal was that it had repossessed it for outstanding bills.

Aggrieved by the respondent’s conduct the appellant approached the court a quo for a compelling order for the release of the cabin cruise boat.

Proceedings before the court a quo.

The appellant’s claim was for the release of the cabin cruise boat. By then, the appellant was not legally represented.

In his founding affidavit he stated that after the death of the deceased he paid rentals from the time of death until 2016. Thereafter his relocation from Mazowe to Kariba disturbed him, so he could not make further payments.

When he finally relocated to Kariba in June 2020 he approached the respondent for the outstanding bill. He was provided with a bill payable in US dollars. He challenged it for reasons not relevant to the case.

The parties did not settle the issue until 2021 when the respondent was requested to release the cabin cruise boat, it declined to do so. It had repossessed it.

He further averred that, the respondent must have sued him instead of repossessing the boat.

The application was opposed. In its notice of opposition, the respondent challenged the appellant’s locus standi to sue. It averred that it entered into the contract with Norman Scott, the deceased. The appellant was not privy to the agreement. Appellant having alleged that Scott Norman had died, there was no proof before the court that the appellant was the appointed executor of the estate. There was no proof that the cabin cruise boat was part of the deceased’s estate. Any claims by the appellant in his personal capacity would be incompetent.

Further to that, the rentals for the cabin cruise boat remained unpaid for more than 12 months. In terms of the Special Condition under Clause 7 the respondent repossessed it for breach.

The appellant filed an answering affidavit to which he confirmed that he was appointed the executor of the estate of the late Scott Norman on 21 September 2010.He also pointed out that the deceased’s estate was handled by a renowned company and all advertisements were made. The respondent did not file any claim against the estate.

The respondent was aware of the death of the deceased as a result, it even changed the cabin cruise boat account into his name. He attached a detailed ledger in his name.

After hearing parties, the court, a quo dismissed the application. The court’s finding was that even if the appellant was an executor he was still bound by the terms and conditions of the contract. The appellant had conceded in his founding affidavit that he did not pay the rentals from 2016 to 2020. He defaulted for 4 years. No explanation was given to the respondent. The respondent was therefore entitled to rely on the provisions of Clause 7 and repossess the cabin cruise boat.

Grounds of appeal

Dissatisfied by the findings in the court a quo the appellant noted this appeal. The grounds of appeal are set out as follows.

The learned Magistrate erred in dismissing the application and awarding the boat to the respondent who did not show any proof of ownership and performed due process.

The Court a quo erred in not considering that the appellant has a certificate of authority for his son’s estate.

The Court a quo erred in not considering that the contract was not signed by the appellant.

The court a quo erred in finding out (sic) that the appellant breached the contract.

As a self-actor we noted that the grounds of appeal were inelegantly set out but we understood the issues impugned.

We note at the outset that the second ground of appeal does not arise at all since the court considered and accepted that the appellant was the executor therefore it considered the Certificate of Authority.

Proceedings before this court

Both parties were initially not legally represented. They are not obliged to file heads of argument. However, an unrepresented litigant can opt to file such heads of argument in terms of r57 (25) of the high Court Rules, 2021. The appellant opted to exercise his option to file heads of arguments and filed them.

When the parties appeared before the court unrepresented, the court was of the view that both parties may not properly argue the legal issues arising in this case. After engaging the parties, they were inclined to engage legal practitioners. We are grateful to both counsel’s submissions in this case.

Mr Kuchena for the appellant, decided not to file additional heads of argument for the appellant. He was content to augment the appellant’s heads of argument by way of oral submissions.

Mr Nyamayaro for the respondent filed heads of argument.

The submissions from both the appellant’s heads of argument and the oral submissions aver that Clause 7 is illegal, it is a pactum commissorium. The court a quo misdirected itself when it gave effect to the clause. The respondent must have followed due process to take ownership of the boat.

Further, that the appellant had no contractual obligation towards the respondent flowing from the contract. The contract was between the deceased and the respondent. The contract lapsed when the deceased died. The appellant cannot be bound by contractual obligations of a contract he was not part of.

The respondent’s submissions focused on whether Clause 7 is a pactum commissorium.

It was submitted that Clause 7 is a penalty section. A penalty section is enforceable in our jurisdiction in terms of s 4 of the Contractual Penalties Act (Chapter 8:04). A court may decline to enforce a penalty section where it is disproportionate or prejudicial to the debtor. The court was referred to the case of Delta Operations (Pvt) Ltd v Origen Corporation (Pvt) Ltd SC 112/07 where the provision was interpreted. In that case it was also held that a court may decline to enforce a penalty section where it appears that the section is prejudicial to the respondent. The factual finding on prejudice can only be made after a factual inquiry.

In this case, the submissions went on, when the appellant approached the court a quo he did not make a case to set in motion any of the exceptions by placing facts upon which the court could have made a finding in his favour.

Further it was submitted that, a pactum commissorium is a pledge, premised on a valid principal debt which the pledge is securing. The court was referred to the cases of   Upper Class Enterprises (Pvt) Ltd v Oceaner t/a Enigma Promotions &Ors SC 88/02, Chimutanda Motor Spares (Pvt) v Musare &Anor 1994 (1) ZLR 310 on what constitutes a pactum commissorium.

In this case there was no pledge, there was no money to be paid for the release of the cabin cruise boat. The respondent did not obtain possession due to a pledge or failure by the appellant to pay any amount for its release. There was no debt to secure. The respondent acted in terms of the contract and took possession of the cabin cruise boat due to a breach of contract as provided in the penalty section.

Issues for determination.

Despite the inelegant grounds of appeal, this appeal is disposable on two issues

Whether the appellant is bound by the contract

Whether Clause 7 is a pactum commissorium and its effect on this case.

Factual and legal Analysis

A contract binds parties who are privy to the contract. This doctrine is known as privity of contract. See Christie’ Law of Contract in South Africa, 7th Ed. To that end, no rights or obligations accrue to a person or body that is not party to the contract. The rationale behind this doctrine is to ensure that parties are held accountable to what they have agreed on.

In this case, it is common cause that the contract forming the subject of the dispute was between the deceased and the respondent. The appellant was not a party to the agreement.  No rights or obligations arising out of the contract bind the appellant in his personal capacity.

The court a quo accepted that the appellant was the executor of the estate. All estates of persons dying either testate or intestate must be administered and distributed according to law under letters of administration to be granted by the Master to the testamentary executors or executors dative as provided in Section 23 of the Administration of Estates Act [Chapter 6:0]. A person who administers and distributes an estate must do so in terms of letters of administration in his name. See: Cosmas Chiangwa v David Katerere & Ors SC 61/21.

In Nyandoro & Anor v Nyandoro & Ors 2008 (2) ZLR 219(H), the court stated that in our law, in terms of section 25 of the Administration of Estates Act, a deceased estate is represented by an executor or executrix duly appointed and issued with letters of administration by the Master. The court cited with approval the remarks of NDOU J in Mhlanga v Ndlovu HB 54/04 where the learned judge stated that the executor of an estate has certain rights and powers in connection with the liquidation and administration of the estate and also certain duties to perform. A deceased estate is therefore vested in the executor; he is the only person who has locus standi to bring proceedings relative to property alleged to form part of an estate.

In this case, the appellant attached a Certificate of Authority as proof of his appointment as an executor. The appellant must have attached the actual letters of administration on Form B in the Second Schedule as set out in the Act issued by the Master. However, the Certificate of Authority is sufficient proof of such appointment. The appellant therefore stepped into the deceased’s shoes, despite the fact that he did not personally sign the contract he is bound by the contractual terms as the executor. The court a quo therefore did not misdirect itself in finding the appellant bound by the terms of the contract in his capacity as the executor. The third ground of appeal cannot succeed.

The next issue for determination is whether the respondent must have followed due process to acquire ownership of the cabin cruise boat in terms of clause 7 of the contract. Closely linked to the issue is whether the clause is a pactum commissorium.

What constitutes a pactum commissorium was properly set out by the respondent’s legal representative. Indeed, the cabin cruise boat was not pledged as security for a debt. There was debt to secure. It is our finding that clause 7 is not a pactum commissorium.

Clause 7 is clear in its terms that it is a penalty stipulation as submitted for the respondent. It sets out the envisaged breach and sanction for such breach. A penalty stipulation is a provision in a contract under which a defaulting party is required to pay some money or perform anything or forfeit any money, right benefit as a result of the default.

Such penalty stipulations are indeed enforceable in our jurisdiction in terms of s4 of the Contractual Penalties Act (Chapter 8:04). Subsection (1) thereof provides as follows.

‘Subject to this Act, a penalty stipulation shall be enforceable in any competent court’.

The significance of the provision is relatively clear. The primary thrust is that a penalty stipulation must be enforced in a competent court. The language used is peremptory. Where a breach arises the provision gives the innocent party a cause of action to approach a court setting out the nature of the breach, the relevant factors and a prayer to trigger the penalty stipulation. The court dealing with such a matter may, depending on the facts decline to enforce the penalty stipulation based on s4 (2) of the Contractual Penalties Act.  The law does not envisage that the innocent party takes it upon itself to enforce the penalty stipulation despite the fact of the breach. It must be enforced by way of a court order.

We agree with the respondent’s submissions that in declining to enforce a penalty stipulation on the basis that it is disproportionate or prejudicial to the debtor, the court must embark on a factual analysis and make a factual finding. This can only be done where the innocent party approaches the court, the obligation is not on the defaulting party to approach the court. The obligation is on the innocent party to seek the enforcement of the stipulation penalty in a competent court.

In this case, the respondent literally resorted to self-help and cannibalized the cabin cruise boat. It is unknown how much was due for payment, the value of the cabin cruise boat is unknown and the appellant was not even placed in mora. It is equally unknown how much the respondent realised from the whole process. A court must have pronounced itself on a proper application on the enforceability of the clause taking into account all the relevant factors. The respondent must have followed due process as envisaged in s4 (1) of the Contractual Penalties Act.

Disposition

The contracting parties having agreed on a penalty stipulation, the respondent was required at law to enforce the penalty stipulation by notifying the owner of its intention to do so and in the event of disagreement follow due court process for its enforcement. The law did not envisage that the respondent resort to self-help. The appeal must therefore succeed.

Costs usually follow the cause. No reasons were given to depart from this time honoured principle.

Accordingly, the following order is made.

The appeal be and is hereby upheld with costs.

The order of the court a quo is set aside and substituted by the following

‘The application be and is hereby granted’

KWENDA J         ……………………….  Agrees

L. T  Muringani  Law Practice, appellant’s legal practitioners

Wintertons, respondent’s legal practitioners.