Voteti Trading (Private) Limited Versus Kathleen Hancock AND THE Registrar OF Deeds

### Preamble
1
HH 330-2012
HC 4003/10
VOTETI TRADING (PRIVATE) LIMITED
versus
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VOTETI TRADING (PRIVATE) LIMITED
versus
KATHLEEN HANCOCK
and
THE REGISTRAR OF DEEDS

HIGH COURT OF ZIMBABWE
PATEL J

Civil Trial

HARARE, 9 February, 3 July and 6 September 2012

H. Zhou, for the plaintiff
D. Ochieng, for the 1st defendant

PATEL J: The plaintiff herein claims the transfer of a property in Groombridge, Harare, pursuant to an agreement of sale concluded in August 2009. Alternatively, it claims cancellation of the agreement and repayment of the sum of US$145,000 from the 1st defendant. The latter denies having received payment of the purchase price in the manner agreed. She counterclaims for an order declaring the agreement to have been validly cancelled together with an order for the eviction of the plaintiff.

The principal issue for determination is whether Midstar Properties (Pvt) Ltd [Midstar] was the plaintiff’s agent or the 1st defendant’s agent. If it was the 1st defendant’s agent, did it have authority to receive payment on its behalf? Conversely, if it was the plaintiff’s agent, has the latter discharged its obligations under the agreement of sale? As regards the claim in reconvention, the question for determination is whether the agreement was validly cancelled and, if so, what amount is to be tendered to the plaintiff?

The Evidence

Alex Makamure is a Director and part-owner of the plaintiff, which is a property holding company. His evidence was as follows. The property in question was advertised for sale by Midstar. The plaintiff made an offer to purchase the property in August 2009.
 The offer was made to Midstar acting for an unnamed seller. Midstar was representing the seller as her agent throughout the dealings between the parties. The agreement of sale was entered into on 25 August 2009 and was signed by his wife on behalf of the plaintiff, and by Vivian de Villiers on behalf of the 1st defendant, who was based in the United Kingdom. The agreed purchase price was US$145,000. Payment was to be made into the seller’s account as advised by Midstar. The first US$50,000 was payable on signature, of which US$10,000 was to be paid to Midstar and US$40,000 into the 1st defendant’s named account in the United Kingdom. The balance of US$95,000 was to be paid within two weeks. Upon signature of the agreement, the plaintiff’s bank advised that the transfer of funds required exchange control clearance. On 26 August the witness went back to Midstar and spoke to its Managing Director, Andrew Magirazi. The latter telephoned de Villiers and said that de Villiers wanted payment to be made into Midstar’s account and that de Villiers and Midstar would deal with the externalisation of funds. On 27 August the witness effected payment of US$50,000 into Midstar’s account. Midstar then transferred US$40,000 to the 1st defendant’s foreign account and retained US$10,000 as commission. Subsequently, he was told by Magirazi that payment of the balance of US$95,000 was to be effected in the same way. On 2 September 2009, within the stipulated two weeks, the balance was transferred into Midstar’s account. Soon thereafter, the 1st defendant came to Zimbabwe for a short period to clear the house. She accepted that the plaintiff had paid the full purchase price and did not question the method of payment. In September and October 2009, the plaintiff sought transfer of the property and was informed that the custodian of the title deeds, Lofty and Fraser, refused to release them. The witness then contacted de Villiers who assured him that there was no problem. On 28 October Midstar transferred US$30,000 into the custodian’s trust account and promised to pay the balance in weekly batches of US$20,000. On 30 and 31 October de Villiers sent two e-mails to the plaintiff and Midstar proposing the way forward. On 1 November de Villiers handed over occupation of the property to the plaintiff in terms of the sale agreement. Thereafter, on 3 November, de Villiers and Midstar concluded a memorandum of understanding (MOU) providing for payment of the outstanding balance of US$65,000 by Midstar. The MOU, which was proposed and drafted by de Villiers and to which the plaintiff was not a party, refers to Midstar as the seller’s agent. Magirazi is presently being prosecuted in a theft case relating to the disposition of that balance. De Villiers is the complainant in that case.

Vivian John de Villiers represents the 1st defendant by virtue of a general power of attorney executed on 10 January 2009. He has known the 1st defendant for 30 years. His evidence was that he advertised the property in question on the internet. In August 2009 he received a telephone call from Magirazi who said that he a signed offer from his client to purchase the property. He had never met or heard of Magirazi or Midstar before that. He met with Magirazi at the property and was shown the written offer stating the purchase price of US$145,000 including the agent’s commission of US$10,000. He then e-mailed the 1st defendant and accepted the offer after obtaining her approval. On 25 August 2009 he signed the agreement of sale which had been prepared by Midstar. He did not fix the payment terms in the agreement. The account for payment nominated by the 1st defendant was in the name of her niece in Ireland. The details were furnished to Mrs. Makamure at the time of signature. A few days later he was called by Midstar and told that there was a transfer charge of US$2,000 and that Mrs. Makamure wanted the purchase price reduced by that amount. He declined and asked that the bank charges be queried. Subsequently, he telephoned Magirazi who said that that the money had been paid into Midstar’s account because his bank would only charge a fee of US$200. The transfer of US$40,000 to the 1st defendant’s nominated account was then effected on 2 September 2009. The witness was not consulted about this arrangement but went along with it because it was already a fait accompli. In October 2009 Midstar paid US$30,000 into Lofty and Fraser’s trust account and promised to pay US$20,000 per week as from the beginning of November 2009. The MOU of 3 November 2009 was brought to him by Magirazi. The witness e-mailed Makamure who agreed to proceed with the MOU. Midstar paid the first month’s rent of US$600 in terms of the MOU but did not pay any further rentals. In November 2009 the plaintiff’s lawyers lodged a complaint about Midstar to the Estate Agents Council. Midstar responded in December 2009 stating that the plaintiff had breached the agreement by making payments into its account instead of the 1st defendant’s account. However, the witness accepted that Magirazi himself had probably asked for the payments to be made into Midstar’s account. In January 2010 the witness instructed his lawyers to write to the plaintiff’s lawyers giving notice of the seller’s intention to cancel the agreement if the purchase price was not received in full. Later, in mid-2010, he lodged a complaint to the police against Magirazi. He and Makamure testified as State witnesses at the criminal trial. He is the informant referred to in Magirazi’s warned and cautioned statement dated 23 August 2010. Apart from this fact, the contents of that statement are absolutely incorrect.

Under cross-examination, the witness reiterated that Midstar prepared the MOU of November 2009 and that Midstar was not the seller’s agent as stated in the MOU. He was tricked into signing the MOU. As regards the warned and cautioned statement of August 2010, he could not explain why the police drafted the preamble to state that Magirazi was mandated by him to sell the property on behalf of the 1st defendant. He conceded that he accepted the plaintiff’s first payment of US$40,000 through Midstar even though this was not in accordance with the agreement of sale. The total amount received by the 1st defendant was US$80,000. He was agreeable to refunding this amount to the plaintiff from the proceeds of resale of the property.

At the end of March 2012, after the conclusion of the trial, the Court was furnished with the Magistrates Court’s rulings in CRB No. R813/10, bearing upon the present matter. Counsel for both parties were subsequently directed to file the full record of proceedings in that case as well as further submissions on the evidence given and findings made at those proceedings.

Whether Midstar Plaintiff’s or 1st Defendant’s Agent

In the absence of specific instructions, an estate agent stands in the unique position of being a broker between the parties rather than as the agent of either. See Christie: *Business Law in Zimbabwe* (2nd ed. 1998) at pp. 332-336. Thus, any specific agency vested in an estate agent must be clearly established from the conduct of the parties, the relevant documentary evidence and the circumstances of the case.

Makamure’s undisputed evidence was that the property in question was advertised for sale by Midstar, following which the plaintiff made an offer to purchase it. De villiers stated that he advertised the property on the internet and that Magirazi contacted him with a signed offer to purchase it. On balance, it seems less likely that Midstar would have of its own initiative advertised the property for sale without some prior instruction to do so. Although there is no clear evidence in this regard, the probability is that it was de Villiers who gave Midstar the initial mandate to sell the property.

The documentary evidence in this matter is contained in the following: the offer to purchase made in August 2009, the agreement of sale concluded in August 2009, the MOU executed in
 November 2009, Magirazi’s warned and cautioned statement of August 2010, and the record of proceedings in CRB No. R813/10.

The offer to purchase is undated and does not identify the seller by name. Arguably, the seller’s name was not inserted because Midstar did not know who the seller was. However, it is equally plausible that the seller was not identified so as to pre-empt the possibility of the purchaser approaching the seller directly to avoid having to pay any agent’s commission.

It is common cause that Midstar prepared the agreement of sale, on its own letterhead, for signature by the parties. According to clause 1, transfer is to be effected by the purchaser’s conveyancers, on behalf of the seller, and the costs of transfer are to be borne by the purchaser. This is a little unusual and seems to suggest that Midstar might have been acting for the plaintiff. On the other hand, clause 2 provides that the agent’s commission is to be paid by the seller as a first charge on the purchase price. This is strongly indicative of Midstar having been the 1st defendant’s agent.

The MOU between de Villiers and Midstar expressly describes the latter as the seller’s agent. The MOU is somewhat inelegant and contains several typographical errors. These include the misspelling of the names of de Villiers and Hancock in the citation of parties and the name of Fraser in clauses 2 and 6. In this regard, counsel for the 1st defendant cites Chikoma v Mukweza 1998 (1) ZLR 541 (S) at 543, where it was observed that the courts should be astute to give effect to the manifest intention of the parties rather than impede their ends by miring them in subtleties and technicalities. He accordingly submits that the flaws in the MOU render it questionable that Midstar was the seller’s agent. De Villiers asserted in his evidence that the MOU was instigated and drafted by Midstar, and that he was tricked into signing it. However, this is clearly contradicted by his own e-mails of 30 and 31 October 2009, addressed to Magirazi and Makamure respectively, in which he presented the draft MOU for acceptance by Midstar and the plaintiff. As regards the errors in the final MOU, I note that de Villiers’ draft MOU does not contain any citation of parties and also misspells the name of Fraser. What all of this indicates is that de Villiers himself initiated the original draft MOU and that Magirazi simply prepared the final draft in accordance with the original draft. In the premises, it is fairly clear that de Villiers was the initiator and author of the original MOU and that he fully understood and accepted the implications of Midstar being described as the seller’s agent in the final MOU.

This position is positively confirmed by the contents of Magirazi’s warned and cautioned statement. The preamble to the warned and cautioned statement explicitly states that Magirazi was mandated by de Villiers to sell the property in casu for US$145,000 on behalf of the property owner, Kathleen Hancock. In his reply, Magirazi does not deny this mandate but raises an entirely unrelated defence. (It should be noted that De Villiers’ statement to the police is dated 26 June 2010 and does not acknowledge Midstar as his agent. Counsel for the 1st defendant falls into the error of arguing that Magirazi’s statement predates de Villiers’ statement and would therefore have been prepared without the benefit of the latter. This is patently incorrect. Although the initial criminal report was lodged on 13 June 2010, Magirazi’s statement was only recorded much later on 23 August 2010, well after de Villiers’ statement).

In CRB No. R813/10, Magirazi was charged with two counts of theft of trust property. He pleaded guilty on one count but not guilty to the charge involving the property in casu. Both de Villiers and Makamure testified at the trial which commenced in December 2011 and appears to have been completed in February 2012. Both disowned any agency relationship with Magirazi or Midstar and attributed that relationship to the other. The reason for their taking this stance seems fairly obvious. At that stage, the present matter was ready for trial and they must have been fully aware of the contractual and financial implications of admitting any agency relationship with Midstar. Magirazi’s defence, in keeping with his warned and cautioned statement, was that whilst he was in the process of remitting the balance of US$55,000 to the seller, de Villiers interfered by asking for that amount to be paid to him at the Botswana border post. The court, having heard evidence from de Villiers, referred to him as “the Diaspora Seller’s local Agent, who in turn engaged accused’s Midstar Properties – an Estate Agent, to transact the sale for a commission”. In the event, Magirazi was acquitted on this count following his application for discharge at the close of the State case. The reason cited for his acquittal was that the MOU of November 2009 between him and de Villiers made the matter a civil one and not subject to criminal jurisdiction.

Having regard to all of the foregoing and on a preponderance of probabilities, I am satisfied that Midstar was the 1st defendant’s agent specifically mandated by de Villiers to sell the property in question.

Whether Midstar had Authority to Receive Payment

As a general rule, in the absence of agreement, an estate agent with authority to sell has no residual or concomitant authority to accept payment of the purchase price on behalf of the seller. See Balzun v O’Hara & Others 1964 (3) SA 1 (T) at 5; Glasson v Peace Real Estate (Pty) Ltd 1969 (3) SA 113 (D) at 119; Earlie Homes Estates v Miller 1977 (4) SA 288 (C) at 290. Nevertheless, there will be instances when the estate agent is in fact authorised to receive payment and to receive it in a particular form. As is explained by Christie (op. cit.) at pp. 336-339, it is necessary to consider the general principles of contract to determine whether an agent has authority to perform a particular act. Thus, actual authority may be conferred on an agent expressly, impliedly or tacitly. As was observed in *Roberts v Bryer Bros* 1931 OPD 197 at 199, implied authority may be evidenced by a single act or by a course of dealing. On a similar but somewhat different footing, apparent or ostensible authority to receive payment can be inferred if the seller, by words or conduct, holds out his agent as having such authority. See *Seniors Service (Pvt) Ltd v Nyoni* 1987 (2) SA 762 (ZSC) at 767. Again, the principal may be estopped from denying that he has conferred a particular authority on the agent where a third party dealing with the agent is prejudiced by having acted on the principal’s representations. See generally *Bowmaker (Central Africa) (Pvt) Ltd v Benn* 1960 R&N 364 at 369.

In a contract of sale, the time and mode of payment stipulated therein are usually of the essence and must be exactly complied with, failing which the seller is entitled to cancel the contract. See *Mbayiwa v Chitakunye & Another* 2009 (1) ZLR 314 (S) at 319. Furthermore, an estate agent does not have the power or authority to amend an agreement concluded by the prospective seller and purchaser unless instructed to do so by the parties. See *Runatsa v Rumani Estates (Pvt) Ltd & Others* 2009 (2) ZLR 286 (S) at 290.

The payment terms stipulated in the agreement of sale herein are as follows:

“The purchaser promises to pay USD50000 upon acceptance of the offer and signing of this agreement. Payment will be made to the seller’s account less commissions which will be made to Midstar Properties (Pvt) Ltd Trust Account the balance of $95000 to be paid within fourteen days (14) after signing of the agreement.”

As I read this clause, its provisions are unclear and ambiguous in two respects. Firstly, the seller’s account is not expressly identified and, secondly, the reference to Midstar’s trust account suggests that Midstar is to be the intermediate vehicle for the remittance of payments to the seller. However, taken in its entirety, it seems reasonably clear that payment of the purchase price is to be made directly into the seller’s account. In this regard, cause 9 of the agreement becomes relevant. It provides that:

“This agreement of sale constitutes the entire contract between the seller and the purchaser and no warranties, representations or conditions, made expressly or by implication not recorded herein shall be binding on either of the parties unless incorporated herein signed by the parties.”

It is common cause that that there was no written alteration of the payment terms. Arguably, therefore, any oral variation of the mode of payment would be legally incompetent and not binding on the seller. Consequently, any payment made by the purchaser otherwise than into the seller’s nominated account would be in breach of the agreement. Nevertheless, for the reasons given below, I do not think that the 1st defendant is entitled to rely on this apparent breach in order to avoid the plaintiff’s claim and secure her counterclaim.

In my assessment of the evidence adduced at the trial, I am inclined to accept Makamure’s testimony of what transpired between the parties. His version was more consistent and certainly more credible than the contradictory version presented by de Villiers. According to Makamure, he was unable to immediately remit the initial payment of US$40,000 to the account nominated by the 1st defendant. He then immediately approached Magirazi, who telephoned de Villiers and was instructed by the latter to receive the payment into Midstar’s account. Subsequently, Makamure was advised by Magirazi that he should effect payment of the balance of US$95,000 in the same way. It is common cause that the plaintiff made both payments into Midstar’s account within the stipulated period of two weeks. On 2 September 2009 Midstar remitted US$40,000 to the nominated account, and then paid US$30,000 into Lofty and Fraser’s trust account in October 2009, leaving an unpaid balance of US$65,000. At some point in September or October 2009, the 1st defendant came to Zimbabwe for a short period, after the plaintiff had made both payments into
 Midstar’s account. Her dealings with the plaintiff appear to have been entirely cordial and, on 1 November 2009, de Villiers gave vacant possession of the property to the plaintiff. Two days later, de Villiers concluded the MOU with Midstar. This MOU was initiated by de Villiers and does not involve the plaintiff as a party, except to record that Midstar had received US$145,000 from the plaintiff and that the seller would allow the plaintiff to take occupancy as from 1 November 2009. There is no denial of the plaintiff having fulfilled its obligations and no mention of the plaintiff having to make any payments or comply with any other conditions. Rather, the agreed weekly instalments of US$20,000 were to be “disbursed” by Midstar into Lofty and Fraser’s trust account. What the MOU in its entirety conveys is that Midstar, as the seller’s agent, had duly received the full purchase price from the plaintiff and was then required to disburse the outstanding balance in weekly instalments to the seller until the full amount had been settled. At this stage, neither the 1st defendant nor de Villiers questioned the mode of payment followed by the plaintiff. It was only in January 2010, after the payments promised by Midstar did not materialise, that the plaintiff was given notice of the seller’s intention to cancel the sale. Taking the totality of this evidence together, it is reasonably clear that Midstar was not only the 1st defendant’s agent in transacting the sale but was also invested with the requisite implied and/or apparent authority to receive the purchase price on her behalf.

In my view, the conduct of the parties that I have alluded to does not constitute any deviation from the agreement of sale as envisaged in clause 9 thereof. Strictly construed, this clause is only concerned with “warranties, representations or conditions” which were made by the parties before or at the time when the agreement was concluded and which were not recorded in it. They are not binding unless they were subsequently incorporated and signed by the parties. The clause applies to oral as well as written warranties, representations or conditions not originally embodied in the agreement itself. However, it does not specifically refer or extend to any amendment, alteration or variation of the agreement, whether verbal or written, made after the agreement was executed. Any such modification may or may not be binding on the parties, having regard to their actions and intentions.

Even if I am wrong in my interpretation of clause 9, it seems to me that the particular circumstances of this case preclude the 1st defendant from relying on its provisions. My findings are that de Villiers engaged and mandated Midstar as the 1st defendant’s agent to sell the property and later authorised it to receive the purchase price on her behalf. This latter authorisation was a variation of the payment terms contained in the agreement. The plaintiff then effected full payment of the purchase price of US$145,000 to Midstar, which in turn remitted part of that payment to the 1st defendant and subsequently failed to account for the remaining balance of US$65,000. The plaintiff was obviously prejudiced by having parted with the full purchase price with the intention of acquiring ownership of the property. On these facts, it would constitute a palpable inequity for the plaintiff to be ordered to forfeit the balance and relinquish the property because of the misconduct of the 1st defendant’s own agent. I accordingly take the view that by dint of their own actions, i.e. by having accepted the first two payments through Midstar and thereafter by allowing the plaintiff to take occupation of the property without any conditions, de Villiers and the 1st defendant are estopped from insisting upon payment in exact compliance with the agreement of sale. They must therefore accept the consequences of the varied mode of payment that they have authorised. They cannot rely on their own conduct to deprive the plaintiff of the property that it has fully paid for.

Disposition


The plaintiff has duly performed his payment obligations under the agreement of sale and is consequently entitled to the decree of specific performance for transfer of title that he claims from the defendants. He is also entitled to his alternative claim for cancellation of the agreement and repayment of the full purchase price. As was clearly recognised in *Baker v Probert* 1985 (3) SA 429 (A) at 438, the purchaser’s right to claim repayment from the seller obviously exists where payment of the purchase price was made, not to the seller in person, but to his duly authorised agent, since payment to an agent is equivalent in law to payment to the principal. Moreover, this right is unaffected by the failure or inability of the agent to pay over the purchase price to the seller.

The 1st defendant, on the other hand, having received full payment through her agents, was not entitled to cancel the agreement for alleged non-payment. Her counterclaim for a *declaratur* to that effect and for the eviction of the plaintiff cannot succeed. Her recourse lies exclusively against her agents, de Villiers and Midstar and/or Magirazi, for their failure to perform their respective obligations. Her counterclaim is accordingly dismissed with costs.

As regards costs, although the plaintiff’s claim as against the 1st defendant was for an award of costs on a higher scale, nothing was put forward by counsel for the plaintiff to justify any such award.

In the result, judgement is granted in favour of the plaintiff as against the defendants as follows:

1. The 1st defendant is ordered to take all necessary steps to pass transfer of Lot 4 of Stand 31A, Groombridge Township 2, Harare, to the plaintiff within 14 days of the date of service of this order upon her, failing which the Deputy Sheriff be and is hereby authorised and directed to take the necessary steps to pass transfer of the said property to the plaintiff.


2. Alternatively, the agreement of sale between the parties is hereby cancelled and the 1st defendant is ordered to pay the plaintiff the sum of US$145,000-00.

3. The 2nd defendant is interdicted from transferring the aforesaid property in the appropriate Deeds Register to any third party pending compliance with the terms of this order.

4. The 1st defendant shall pay the costs of suit.

*Dube, Manikai & Hwacha*, plaintiff’s legal practitioners
*Atherstone & Cook*, 1st defendant’s legal practitioners
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