Harren Zaranyika v Daniel Rangarirai Gusha and Francis Robson Mukanwa Zvoma and Registrar of Deeds

### Preamble
1
HH 481-18
HC 1982/05
---------


HARREN ZARANYIKA

versus

DANIEL RANGARIRAI GUSHA

and

FRANCIS ROBSON MUKANWA ZVOMA

and

REGISTRAR OF DEEDS

HIGH COURT OF ZIMBABWE

HUNGWE J

HARARE, 14 February 2008, 28 November 2012 & 8 August 2018

Civil trial

OTakaendesa, for the plaintiff

W P Zhangazha, for the 2nd defendant

No appearance for the 1st defendant

HUNGWE J: The plaintiff issued summons against the three defendants seeking the following relief;

“(a) An order declaring the Sale Agreement between the 1st defendant and the 2nd  defendant

in  respect of the property described in the plaintiff’s declaration to be null and void.

(b) An order declaring the sale agreement between the plaintiff and the 1st  defendant

in respect of the property described in the plaintiff’s declaration to be valid and

binding.

An order compelling the 1st  defendant to within seven (7) days of being served with this order and against payment by the plaintiff of the balance of the purchase price in the sum of $120 000 000.00, sign all documents necessary to pass transfer of stand 794 Bluff Hill Township 16 of Lot 8A Bluff Hill held under deed of transfer no. 3025/03 to the plaintiff.

An order to the effect that in the event of non-compliance with paragraph (c) above, the Deputy Sheriff be and is hereby empowered and authorised to sign for and on behalf of the 1st defendant all transfer documents necessary to transfer the aforesaid property to the plaintiff.

The 3rd defendant is directed to register the transfer referred to in paragraph (c) and (d) hereof.

The 1st defendant pay the costs of suit.”

In his declaration plaintiff sets out the basis of his claim as follows:

“5. On the 15th October, 2004 the plaintiff bought from the 1st defendant, stand 794 Bluff Hill Township 16 of Lot 8A, Bluff Hill (The Property) for $300 000 000.00.  See Annexure “A”.

6. The plaintiff duly paid the 1st defendant a deposit in the sum of $180 000 000.00. See Annexure “B”, “C” and “D”.

7. The balance in the sum of $120 000 000.00 was to be paid on or before 30th October, 2004.

8. The plaintiff failed to timeously pay the aforesaid balance.

9. Instead of calling upon the plaintiff to remedy his breach, the 1st defendant on the 30th November, 2004 proceeded to sell the property in question to the 2nd defendant for $350 000 000.00. See Annexure “E”.

10. The purported sale of the property by the 1st defendant to the 2nd defendant is null and void as the 1st defendant did not lawfully cancel his Sale Agreement with the plaintiff.

11. The plaintiff hereby tenders payment of the balance of the purchase price in the sum of $120 000 000.00 to the 1st defendant.”

At the pre-trial conference two issues were identified as issues upon which this matter will turn at the trial. They were set out as follows;

Whether 2nd defendant is a bona fide or mala fide purchaser of the property?

In the event that the 2nd defendant is found not to be a mala fide purchaser; whether or not there are any special circumstances justifying upholding 2nd defendant’s contract of sale over the plaintiff’s?

In his plea to the plaintiff’s claim, the 2nd defendant averred that he was not privy to an agreement of sale between the 1st  defendant and the plaintiff as much he was unable to confirm or deny the averments in respect of the terms and conditions as stated in the declaration. He however pointed out that by his own admission, the plaintiff breached the same agreement that he intends to enforce against an innocent third party. The 2nd defendant avers that as he was not privy to the agreement between the plaintiff and the first defendant, he does not know whether or not notice was given. He states that when he bought the property from the first defendant he was a bona fide purchase. Both his agent and himself were not aware of the alleged interest of the plaintiff in the property. He disputes that the agreement between him and the 1st defendant could be rendered null and void by virtue merely of the facts that it was subsequent in time to the 1st defendant and plaintiff’s.

The 2nd defendant avers that in light of the following special circumstances in his favour, his rights over the property ought to take precedence over those that the plaintiff may have:-

the 2nd defendant has taken advanced steps to assert his rights by having an arbitral award for transfer in his favour, by having the seller (1st defendant) sign transfer papers and by taking occupation of the property all through expensive litigation.

The 2nd defendant has paid an amount of $981 618.20 for rates clearance pending transfer.

The 2nd defendant has already paid two months instalments in foreign currency being a total of £1 232.46 to the Homelink branch of the Reserve Bank.

The 2nd defendant obtained funding for the purchase of the property through a loan from a public fund which loan he stands to lose should the sale be jeopardised.

The 2nd defendant considers the property to be his family’s home.

In contrast, the plaintiff has taken no steps to assert his rights nor to protect innocent purchasers from buying the same property.

Further, in contrast, the plaintiff has breached his own contract.

The 2nd defendant takes the point that no averment which is made by the plaintiff setting out a cause of action against an innocent purchase such as him.

The plaintiff’s case consisted in the evidence of the plaintiff himself, and one Ronald Machaka. The plaintiff’s evidence, supported by the documentary exhibits in his bundle amounted to this. He had entered into an agreement of sale with the first defendant of an immovable property namely, stand 794 Bluffhill Township 16 of Lot 8A Bluffhill on 15 October 2004. He defaulted in his payment resulting in the seller, the 1st respondent selling the same property to the 2nd respondent. This was despite the fact that the initial sale agreement to him had not been lawfully terminated. The sale agreement between the 1st defendant and the 2nd defendant was entered into on 30 November 2004. That agreement was supported by a mortgage agreement loan from the Homelink (Pvt) Ltd, a division of the Reserve Bank.

At some point after trial had commenced in 2008 the matter was postponed sine die. It was set down for continuation in 2012. In order for the record of proceedings that correctly reflected the stage of trial to be made available, the court directed that the record of proceedings be transcribed. It took quite a while for the transcribed record to be available. When it was available, the plaintiff in July 2015 made an application to reopen his case. In the meantime the parties sought to achieve an out court settlement. Various application and directives were obtained.

The agreed facts as can be gleaned from the parties’ summaries of evidence, are as follows:

1.	1st defendant executed an agreement of sale of the property on 15 October 2004.

2.	1st defendant executed another agreement of sale for a higher price on 6 December 2004.

3.	The Reserve Bank of Zimbabwe commissioned a valuation of the property and a valuation report was completed on 23 December 2004.

4.	The RBZ wrote a letter confirming a mortgage bond for registration purposes on 27 January 2005 in favour of the 2nd defendant.

5.	On 27 January 2005 1st defendant caused his estate agents to advertise the same property for sale in the print media

6.	On 18 February 2005 2nd defendant notified 1st defendant that he was referring the dispute over the property to arbitration.

7.	On 4 March 2005 2nd defendant filed his founding papers seeking an order that 1st defendant be ordered to sign all documents necessary for the transfer of the property to himself.

8.	On 7 March 2005 this court granted a provincial order to 2nd defendant in terms of which 1st defendant was directed to register a caveat over the property preventing the transfer of that property pending the final determination of the matter before the Commercial Arbitration Centre.

9.	On 22 March 2005 1st defendant’s legal practitioners wrote to 2nd defendant’s legal practitioners confirming that the defendant had signed all documents necessary to effect transfer of the property into 2nd defendant name.

10.	On 24 March 2005 the arbitrator made an award in which he noted that the dispute had been resolved and determined on the basis that 1st defendant is taking steps to effect transfer of the property in dispute to 2nd defendant, the claimant, before the arbitrator.

11.	On 27 April 2005 plaintiff filed an urgent application with the court interdicting the above process by which 2nd defendant would have obtained transfer before the finalisation of HC 1982/05.

12.	On 1st June 2005 by consent, matter HC 2007/05 was settled in terms of which 2nd defendant was to take occupation of the property from 1st defendant and all those claiming through him until the final determination of the present matter HC 1982/15.

The question for determination are simply captured in the joint pre-trial conference

minute. I proceed to determine these two issue as follows:

1. Whether 2nd defendant is a bona fide or mala fide purchaser of the property?

The plaintiff’s case during trial was that he had made part payment of the purchase price and failed to raise the balance when it was due in terms of the agreement between himself and the 1st defendant. His evidence was that he tried to pay the balance around Christmas time in 2004 but he learnt then that the latter was making arrangements to reimburse the part payment he had made as the 1st defendant had found another buyer.

He had by December 2004 found the outstanding balance but the first defendant preferred to sell the property to the 2nd  defendant.

Under cross-examination the plaintiff indicated that he was not aware whether the 2nd defendant, represented by Monica Zvoma was aware of the prior sale. The reason is that she was buying through an estate agent and he would not know what the officers at the agency told the new purchaser.

The 2nd defendant’s evidence was that at the time of the sale they did not know of this prior sale. Monica Zvoma said if she had known she would not have proceeded with the sale as she was aware of the complications associated with such double sale disputes. Her other brother had gone through nasty litigation. She would have had no reason to take such a risk as there were other unencumbered property on sale in the market.

On the other hand is the evidence by Ronald Machaka of Alexander Court Estate agent. He was called to testify on behalf of the plaintiff. It does not escape this court’s attention that he and Chrispen Kusikwenya had acted for both the 1st defendant and 2nd defendant. The 1st defendant had not filed any papers. He clearly is the greedy seller who sought to benefit through the multiple sales of the same property though these unregistered estate agents such as Machaka. Ronald Machaka’s evidence was tainted by his desire to protect whatever commission accrued to him and his agency by giving the impression that he had acted transparently in this saga. I am unable to find that the evidence he proferred in respect of what he told Monica Zvoma can be relied on. Firstly, he did not ascertain whether or not the agreement of sale between plaintiff and 1st respondent had been cancelled or how, if it had, that had been done. Secondly, he did not get all the parties to confirm in his presence the status of the 1st agreement. It is unlikely therefore that he could have made full disclosure to Monica Zvoma in respect of the issue of whether or not the initial agreement was still in existence or cancelled. If anything, he would not have wanted 2nd  defendant to know the risk attendant to the sale.

Consequently, I find that the second defendant was a bona fide   purchaser.

(b)	Whether there are any special circumstances justifying upholding second  agreement 	of sale over the first time?

In Guga v Moyo & Others 2000 (2) ZLR 458 (SC) MCNALLY JA stated as follows:

“The basic rule in double sales where transfer has not been passed to either party is that the first purchaser should succeed. The first in time is stronger in law. The second purchaser is left with a claim for damages against the seller, which is usually little comfort. But that rule applies only in the absence of special circumstances affecting the balance of equities.”

See: McKerron (1935) 4 SA Law Times 178; Burchell (1974) 91 SALJ 40. Burchell was of the view that “the balance of equities must weigh heavily in favour of the second purchaser” before the court could favour her over the first purchaser (p 41 in fine and ….31). And in BP Southern Africa (Pty) Ltd v Desden Properties (Pty) Ltd 1964 RLR 7 (G) MACDONALD J (as he then was) said;

“When one is dealing with the question of double sales of immovable property, as in the matter under consideration, the preference to real rights is tempered by an equitable doctrine called the Doctrine of Notice.”

See: Cussons en Andere v Krovn 2001 (4) SA 833

Thus, if it is shown that the 2nd defendant at the time of entering into the sale with 1st defendant, knew that the immovable property stand 794 had already been sold by 1st  defendant to plaintiff, he would, despite transfer be enjoined to relinquish it to plaintiff. It is actual knowledge which is required and this may take the form of dolus eventualis, i.e. circumstances which show that the second defendant ought reasonably to have known of the prior sale, but chose to ignore it and proceeded to purchase the same property from the first defendant.

See Meridian Bay Restaurant (Pty) Ltd & Others v Mitchell N.O 2011 (4) SA 1

The knowledge of the second defendant is essentially a question of fact. It is the party alleging knowledge who bears the onus to prove knowledge of  it, i.e. the plaintiff in this case.

2nd defendant, though his legal practitioner Mr Zhangazha argued that he was an innocent purchaser and that there were special circumstances which tilt the balance of equities in his favour. He listed these special circumstances as follows:

The 2nd defendant has taken advanced steps to asset his rights by having an arbitral award for transfer in his favour, by having the seller (1st defendant) sign transfer papers and by taking occupation of the property all through expensive litigation.

The 2nd defendant has paid an amount of $981 618.20 for rates clearance pending transfer.

The 2nd defendant has already paid two months instalments in foreign currency being a total of £1 232.46 to the Homelink branch of the Reserve Bank.

The 2nd defendant obtained funding for the purchase of the property through a loan from a public fund which loan he stands to lose should the sale be jeopardized.

The 2nd defendant considers the property to be his family’s home.

In contrast, the plaintiff has taken no steps to assert his rights nor to protect innocent purchasers from buying the same property.”

Mr Zhangazha also took the point that plaintiff sought to make out a case which he had not pleaded. He pointed out that nowhere in his declaration had the plaintiff averred that the second defendant had knowledge of the prior sale or had acted in bad faith when he entered into the agreement of sale, yet this was the case that the plaintiff sought to prove. On the contrary plaintiff averred that the purported sale of property by first defendant to second defendant is null and void as the first defendant did not lawfully cancel his sale agreement with plaintiff.

Despite the fact that the wrong proposition of law was pointed out as being a defective “cause of action.” Plaintiff did not seek to amend its declaration and persisted with the claim.

A declaration based on a non-existent cause of action is incurably defective. See Chivhiya v Chivhiya 1995 (1) ZLR 210.

I am satisfied that the plaintiff’s claim as presently framed cannot succeed.

Plaintiff has not discharged the onus upon him to show that 2nd defendant knew or ought to have known at the time he concluded the agreement of sale that there existed a prior sale agreement in respect of the same property. In any event there are special circumstance which tilt the balance of equities in favour of the 2nd defendant in that he asserted his rights over the property by expeditiously seeking protection of the law as demonstrated above.

In the premises the plaintiff’s claim is dismissed with costs.

C Nhemwa and Associates, plaintiff’s legal practitioners

Chinongweya and Zhangazha, 2nd defendant’s legal practitioners