Royale Properties (Private) Limited v Municipality of Kariba and The Sheriff of Zimbabwe

### Preamble
1
HH 81-2013
HC 11215/11
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ROYALE PROPERTIES (PRIVATE) LIMITED

versus

MUNICIPALITY OF KARIBA

and

THE SHERIFF OF ZIMBAWE

HIGH COURT OF ZIMBABWE

KUDYA J

HARARE, 15 MARCH 2013

Opposed Application

TE Mudambanuki, for the applicant

CW Gumiro, for the first respondent

KUDYA J:  The real issue for determination in this matter is whether the applicant and the first respondent concluded a contract for the sale of land.

The facts in this matter are basically common cause. The applicant sought to buy land belonging to the first respondent. The first respondent in turn wanted to increase its revenue base from undeveloped land under its control and ownership. Commencing in 2008, the two parties entered into discussions and negotiations over land in the applicant’s central business district.

Following previous discussions on the matter, on 3 March 2010 the chairman of the applicant wrote to the town clerk of the first respondent a letter entitled “Proposed Kariba CBD- Offer for Land” that states:

“We hereby revise our offer price to US$1, 05 per square metre. We now await your urgent response to enable us to move ahead and not lose available funding. We request a meeting to discuss the way forward with the various options available to enable us to conclude this transaction.”

The municipality management of the first respondent held the requested meeting with the applicant’s officials on 5 July 2010 in the council boardroom. The outcome of the meeting is set out in the acting Town Clerk’s letter of the same date addressed to the applicant’s chairman. The letter reads:

“MEETING BETWEEN KARIBA MUNICIPALITY MANAGEMENT AND ROYALE PROPERTIES OFFICIALS

At a meeting held between Kariba Municipality Management and Royale Properties officials on 5 July 2010 in the council boardroom it was tentatively agreed that Royale Properties purchase 1 000 000 square metres of land at a cost of US$1 050 000-00 that is US$1.05/square metre and that this amount be paid over a period of 24 months.

To this end the Council will convene a special full council meeting within seven days to seek approval from council for this transaction.”

The applicant’s chairman responded on the same day. He wrote:

“We concur that an agreement was reached for the municipality to sell 1 000 000 square metres of land at a cost of $1 050 000-00 payable over 24 months for the purpose of developing the CBD. We now wait to hear from you with respect to Council’s ratification. We are looking forward to partnering with you in this development.”

It was common cause that the full council meeting to ratify the tentative agreement was not held within the time frame suggested by the Acting Town Clerk.  Instead, a meeting was held in the first respondent’s boardroom between Kariba Municipality Councillors, officials and Royale Property officials on 3 February 2011, annexure B to the founding affidavit. The councillors present at the meeting were N Hwindiri - the mayor, T Ndoro - the deputy mayor, A Chinyama, J Dzapasi, S Misihairambwi, E Mukoyi E Musemburi and D Zulu. The seven officials were G Makunde - town clerk, S Chitenhe - director of financial services, N Nyaningwe - director of engineering services, ML Banda - deputy director of engineering services, M Chipepo - assistant director of housing and community services, C Muchenje - housing superitendent and G Mazvivofa - administrative assistant. The applicant was represented by its chairman N Nedziwe, director for business development D Mollat and financial adviser F Kumirayi.

In para 7 of the founding affidavit the applicant averred that in the meeting “it was agreed by council that the parties would enter into an agreement of sale of the Central Business District land in question and that both parties would forthwith draft a memorandum of agreement of sale which was to be signed at Harare on the following Thursday, 11 February 2011.” In its opposing affidavit the first respondent averred that the meeting did not constitute a full council meeting and stated that the applicant was informed of the need for a council resolution to authorise respondent to enter into an agreement of sale. It further averred that no agreement was entered into at that meeting as the parties were to discuss the matter further. In its answering affidavit on the point the applicant alleged that the council was fully and properly represented by the mayor, deputy mayor and six councillors who all formed a quorum and pleaded ignorance of the internal processes of council. The applicant however further averred that the meeting was called to draw up the resolution envisaged in the letter of 5 July 2010.

The sub-issue raised by the disputed averment in para 7 of the founding affidavit that is capable of resolution on the papers is whether the meeting of 3 February 2011 constituted a full council meeting to ratify the tentative agreement of 5 July 2010.

The manner and modalities of calling council meetings are set out in part VI of the Urban Councils Act [Cap 29:15]. The manner of calling ordinary and special meetings is prescribed. A quorum is made up of a third of the total membership of the council.  A special meeting is called by the mayor at the request of not less than a third of the councillors or six councillors which ever is the less within fourteen days of the request. A notice of the meeting is sent to each councillor at least 24 hours before the meeting specifying the object of the meeting. The conduct of such meetings is also set out. The procedure for recording, confirming, approving, signing and storing the minutes is dealt with in s 88.  They are kept by the secretary and once confirmed and approved are signed by the chairman of the meeting at which they are confirmed. Section 88 (4) provides that a document purporting to be minutes of a meeting of council and signed by the chairman or an extract certified by the town clerk shall be accepted in court as prima facie proof of facts set therein and the formalities are deemed to have been observed until the contrary is proved. They may be obtained by any one for a fee. Special committees are provided for but in terms of s 100 (1) (f). Council is precluded from delegating full council powers to such a committee. The minutes referred to by the applicant do not fit the statutory set requirements of minutes of a council meeting.  As the minutes are not council minutes as envisaged by the Act, the sub-issue is determined in favour of the first respondent and against the applicant.

The minutes record the expectation of the first respondent of a dedicated developer to construct its civic centre. The applicant made a presentation on the kind of partnership it envisaged with the first respondent. It highlighted project details that included construction of a conference centre and development concept of the CBD. It set out its development strategy to develop and sell stands, develop, build and sell buildings and develop, build and lease buildings. The applicant indicated its preference for developing and selling stands and building some buildings of their own and retaining some for lease. The presentation also covered development phases, financial estimates and mobilization and timelines. Thereafter a plenary question and answer session took place. The questions centred on the applicant’s competence to handle such a project, its historical profile and ability to pay. The last question asked was:

“Q. 	Would Royale Properties invite councillors and officials for a tour of Royale Properties Projects in Harare?

A. 	The invitation was extended to Council and the signing of a memorandum of agreement could be done in Harare on Thursday 10 February, 2011.

The mayor expressed his pleasure and satisfaction at the proposals and presentation of Royale.

Mr Nedziwe stated that after three years pursuing the project, it was now necessary to conclude and move forward, as Royale would not be able to continue to pursue this without imminent successful conclusion. He advised loss of interest by previously interested investors. Councillor Musemburi encouraged that we move ahead without delay as the project was long over-due.”

Thus far the minutes show that the applicant was conscientising the meeting of its competencies. The minutes do not show that council passed a resolution ratifying the tentative agreement of 5 July 2010. The words attributed to the mayor, councillor Musemburi and Mr Nedziwe did not signify that a resolution to that effect had been reached. The meaning of clause 7 of the minutes that deal with the way forward is unclear. In one vein the town clerk was explaining to the meeting the procedures of crafting a council resolution and in another a three way road map was set out. The explanation of the town clerk was not captured in the minutes. The road map was spelt out. In my view such a road map was synonymous with the expectations of the meeting after the conscientisation. These were the provision by council of a commitment letter by the 7th, sprucing up of a draft memorandum and a tour of the applicants sites in Harare by the applicant’s officials and the possible signing of a memorandum of agreement.  That the signing was not a done deal is apparent from the answer given by the applicant’s chairman that the signing of the memorandum of agreement could be done in Harare on Thursday 10 February 2011.

The minutes do not confirm the applicant’s contention that the meeting was called to draw up and pass a resolution ratifying the tentative agreement. A council resolution approving the tentative agreement does not form part of the minutes. Thus even if the minutes were accepted as council minutes, they do not support the applicant’s averments and contention that council ratified the tentative agreement. That the meeting was not a full council meeting is apparent from the letter from the town clerk of 17 March 2011. A special council meeting was held on 15 March 2011 and the draft minutes of 3 February 2011 and a draft agreement from the applicant were discussed. The letter simply showed that council officials who conducted discussions with the applicant did not fully set out the correct position envisaged by council and that the finer details in the draft memorandum did not meet the council’s requirements. Council in essence did not ratify the tentative agreement. It seems to me that draft agreements constituted other documents that council would use to ratify the tentative agreement of sale. These productions by municipal employees and the applicant were not proof of ratification. The condition of ratification was a suspensive condition or condition precedent. The tentative agreement could only come into effect as stated by the acting town clerk and confirmed by the applicant’s chairman in their respective correspondence of 5 July 2010 once full council ratified it. Council declined to ratify the agreement. It went further and made a new invitation to treat to the applicant which the applicant declined. See Okeke v Duro & Co (Pvt) Ltd 2006 (1) ZLR 506 (H) at 512 E-F. In the end, no binding contract was concluded between the parties.

In any event there is a greater legal impediment in the applicant’s way. A municipal authority can only alienate its land in terms of the mandatory provisions of s 152 (2) of the Urban Council Act. It must carry out certain preliminary advertisements and serve pertinent preliminary documents on the Minister responsible for the administration of the Urban Councils Act. There was no evidence that these mandatory preliminary legal requirements were done.

In the premises, the application must fail. It is accordingly dismissed with costs, as prayed by the respondent, on the scale of legal practitioner and client.

Mudambanuki & Associates, applicant’s legal practitioners

Ngarava, Moyo and Chikono, first respondent’s legal practitioners