Matrix Realty Private Limited vs Trustees for the Time Being of Tongogara Community Share Ownership Trust

### Preamble
HH 740-18
HC 1863/17
---------


MATRIX REALTY PRIVATE LIMITED

versus

TRUSTEES FOR THE TIME BEING OF TONGOGARA COMMUNITY SHARE OWNERSHIP TRUST

HIGH COURT OF ZIMBABWE

CHIKOWERO J

HARARE, 31 October 2018 & 14 November 2018

Opposed Application

S Ushewekunze, for the applicant

E T Moyo, for the respondent

CHIKOWERO J: The full facts of this matter are set out in the judgment of this court, per Muremba J, under case number HH 247-18 commencing at page 7 thereof.

In that matter, an application for rescission of default judgment, the Deed of Trust was not placed before the court.

A copy of that document was part of the evidence put before me. With the consent of the parties, a supplementary opposing affidavit filed more than a year after  the filing of the notice of opposition and opposing affidavit, also forms part of the record. A composite answering affidavit traversing the averments made in both sets of opposing affidavits completes the pleadings.

Applicant, a company of estate agents duly incorporated in terms of the laws of Zimbabwe, is suing respondent for payment of commission in the sum of US$54 625.00.

The legal personality of respondent appears ex facie its citation.

As agent for a company called Kelor (Pvt) Ltd “Kelor”, the applicant had brokered an agreement of sale between respondent and Kelor.

In terms thereof, Kelor sold the rights, title and interest in a certain immovable property to the respondent. The purchase price was US$950 000.

The Board Chairperson of the respondent signed the agreement of sale on behalf of the respondent with two other trustees signing as witnesses.

The agreement of sale was also signed and duly witnessed, for Kelor. Denford Chatendeuka, a duly authorized director of the applicant, signed as witness number two for Kelor.

The respondent did not pay the purchase price. Instead it wrote a letter cancelling the agreement of sale.

Clause 6.1 of the sale agreement on which this application is based, reads as follows:

“The agent’s commission in respect of this sale shall be payable by the seller and the sellers [sic] hereby authorise their said Agent (Matrix Reality (Pvt) Ltd) to deduct the commission from the purchase money when the same becomes payable to him. Commission shall be deemed to be earned upon the parties to this agreement appending their signatures to this agreement. The parties to this agreement acknowledge that the commission shall be deducted from the purchase price. Should any party to this agreement breach the terms of such agreement causing the Agreement to be cancelled, the defaulting party shall be liable for the Agent’s commission.”

The respondent raised two preliminary points as well as one point on the merits. I

examine each in turn.

APPLICANT’S LACK OF LOCUS STANDI

Not being a party to the contract, so the argument goes, applicant lacks the requisite standing to sue respondent for payment of the agent’s commission.

The primary liability to pay the commission rests on applicant’s principal. That principal is Kelor.

In the event of breach by the respondent, liability, as agreed by the contracting parties between themselves, shifts to the respondent.

But that does not give the applicant, who is not privy to the contract, to, so to speak, descend into the arena and sue on a contract to which it is not a party.

I accept the respondent’s argument. The agreement of sale was neither a tripartite agreement nor was it a contract for the benefit of the applicant.

In this regard, Gubbay ja (as he then was), McNally and Manyarara JJA (concurring) stated in Whaley and Ors (Law Society of Zimbabwe Intervening) v Cone Textiles (Pvt) Ltd 1989 (1) 54 (SC) at 62 G:

“An application of the approach and principles laid down in these decisions makes it clear in our view that the agreement of sale entered into by the respondent and Karina was not, and was not intended to be, a contract for the benefit of the appellants. It created no contractual liability on the part of the respondents towards the appellants – only a liability to meet the costs incurred by Karina in the registration of the transactions concerned,”

The learned Judge went on to state at 63H:

“Although the ultimate beneficiaries of the payment made were the appellants, one must look to the pertaining circumstances and in particular to the contractual setting. Under the agreement of sale the respondent’s obligations were to Karina and to no one else. It had no obligation to pay the appellants and could have lawfully refused to do so.”

The clause under consideration read:

“Transfer of the premises and the registration of the bonds shall be registered by Messrs Coghlan, 	Welsh and Guest as Karina’s legal practitioners, at the cost of Cone Textiles and the bonds shall 	include all such other terms and conditions as are consistent with the provisions of this agreement 	and proforma mortgage bond attached hereto.”

In an appeal judgment handed down on 18 January 2018 by this Court  Munangati- Manongwa J with the concurrence of Mwayera J said in R M Africa Property Consultants v Johannes Muchimika HH 20-18 at page 2 of the cyclostyled judgment:

“It is common cause that the respondent failed to comply with the terms of the agreement leading 	to the cancellation of the agreement of sale. The legal question which neither the magistrate nor 	any of the parties failed to appreciate and address was that; “who in the circumstances is the 	aggrieved party, who has a cause of action.” In my view the answer lies in considering the parties 	to the contract. The agreement of sale is clearly between Estate Late Stephen Omar Hayisa as 	represented by Francis Haisaid, the Executor Dative, and Johannes Muchimika the respondent. 	The appellant is not party, as an estate agent he merely facilitated the agreement of sale. If he is 	not a party to the agreement he cannot have a cause of action as the terms in the agreement are 	binding to the contracting parties and not a third party who in essence is the appellant. Legally 	and factually it is the seller who is the aggrieved party, for the respondent let him down by failing 	to honour the terms of their agreement. Any relief therefore lies with the seller, that is, if he had 	paid the agent’s commission which he could recoup by way of claiming for damages arising from 	breach of contract.”

The penalty clause in that matter read as follows:-

“Should any party breach the terms of this agreement of sale, causing the agreement to be 	cancelled, the defaulting party shall be fully, liable for the agent’s commission due in terms of 	this agreement of sale.”

I am in full agreement with these sentiments. The ratio therein applies with equal force to the circumstances of the present matter.

I am of course bound by the law as espoused by the Supreme Court in Whaley and Ors v Cone Textiles (Pvt) Ltd (supra).

This court is no longer bound by the Zimbabwe Rhodesia Appellate Division decision in Flashco (Pvt) Ltd v Fox and Carney (Pvt) Ltd 1980 (1) ZR 235 as well as the superior court judgment in Gilchrist and Cooksey Ltd v Smith 1948 SR 69. Application of the principles set out therein would have resulted in dismissal of the preliminary submission on the basis that the clause in question created a tripartite contract and also meant that the agreement of sale was a contract for  the benefit of the applicant, giving him locus standi to sue for payment of the commission.

As I have already demonstrated the law is no longer as propounded therein.

It would therefore be remiss of me to follow the Flashco (supra) line of cases being Salisbury Bottling Co (Pvt) Ltd v Lomagundi Distributors (Pvt) Ltd 1964 RLR 143 and the High Court of South Africa Gauteng Division case of Mmabothini Victoria Xaba and 2 Others v Nobantu Pascaline Ruth Xaba N.O. and 5 Others A 279/13.

I therefore uphold the first preliminary point.

This conclusion renders it unnecessary that I go on to consider the second preliminary point as well as the merits of the matter.

PROCEDURE

It is sufficient that I record, very briefly, that there is no merit in the submission that summons ought to have been issued. As Muremba J found on p 9 of the cyclostyled  judgment in HH 247-18 the commission, being 5% of the purchase price of US$950 000 plus 15% Value Added Tax, is readily ascertainable. Had the Commission been paid by Kelor and Kelor gone on to sue the respondent for recovery thereof, a court application and not summons would still have been the correct procedure.

THE MERITS: VALIDITY OF THE CONTRACT

Finally, the two sets of minutes of board meetings held by the respondent is, in my view, adequate evidence that conclusion of the agreement of sale was authorised by the respondent. Respondent did not apply for leave to file a replying  affidavit to deal with applicant’s averments in the answering affidavit that a quorum was duly constituted when the Chairperson of the Board of Trustees, plus two other trustees, signed the agreement of sale. In the circumstances, the fact that all the trustees did not sign the agreement of sale, does not, in my view, mean that they were not acting jointly when the contract document was read to them with three of them signing thereon.

The absence of a standalone written resolution authorising the three trustees to sign the agreement of sale does not mean they were on a frolic of their own. In this regard, I refer to p 85 of the record. The relevant extract of the Minutes of the respondent’s board meeting of 29 July 2015 reads:

“TMB/15/12 Matters arising from the previous meeting

Purchase of a commercial building - it was reported that two of the three targeted Harare buildings were sold and indications are that buildings prices are increasing. The one opposite ZANU PF  headquarters is still there and the board agreed to buy the property as an investment. The last time the owner of the building was engaged, he had reduced selling price to $950 000. The board resolved to purchase the building as soon as possible.”(underlining is mine)

In the result, the following order will issue:

Respondent’s preliminary point that applicant does not have locus standi in judicio to institute the instant application is upheld.

The application is dismissed.

The applicant shall pay the respondent’s costs of suit.

Ushewokunze Law Chambers, applicant’s legal practitioners

Scanlen and Holderness, respondent’s legal practitioners