Brian Runganga v Secline Nyamyudeza and Shepherd Makonyere

### Preamble
1
HMT 56-20
HC 260-19
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BRIAN RUNGANGA

versus

SECLINE NYAMYUDEZA

and

SHEPHERD MAKONYERE

HIGH COURT OF ZIMBABWE

MUZENDA J

MUTARE, 27 July 2020 and 20 August 2020

Civil Trial

A Mutungura, for the plaintiff

C Ndlovu, for the defendants

MUZENDA J: On 28 August 2019 the plaintiff issued summons against the two defendants jointly and severally, the one paying the other to be absolved seeking the following relief:

Confirmation of the cancellation of the agreements of sale.

Payment of the sum of US$90 000-00 or its equivalent being the total amount which will place the plaintiff in the position he should have had been had he never purchased and paid as purchase price in respect of stand Number 7061 Mutare Township of Stand 2485 Umtali Township in terms of the Agreement of Sale dated the 19 July 2017.

Payment of damages which are rentals paid by the plaintiff at the rate of US$200-00 or its equivalent per month from 1 November 2018 to the date of full payment.

Payment of interest from the date of issuing of its summons to date of payment in full.

Payment of collection commission.

Costs of suit.

The two defendants are denying liability. They state that the agreement of sale was subject to the first defendant successfully prosecuting claim against her husband and Mr Alfred Mukarakate. The defendants dispute that plaintiff paid the agreed purchase price of US$90 000-00 to the defendants. Instead plaintiff paid RTGS $55 000-00 on 21 July 2017 and R60 000-00 on 20 November 2018. They claim that plaintiff breached the agreement of sale. They add that contrary to what plaintiff allege he was aware of litigation between first defendant and her husband, plaintiff was fully conscious of the risk attendant to the litigation and defendants fully disclosed all relevant and material facts. In any case, defendants pleaded, plaintiff never demanded vacant possession of the house as he was always aware of the status of the house. Plaintiff assured both defendants that he was willing to wait for finalisation of all litigation before he could take vacant possession and or title.

It was well known to the plaintiff that second defendant was first defendant’s legal counsel. The two defendants denied acting fraudulently. To the defendants all matters related to the house were fully disclosed to the plaintiff. First defendant goes on further to deny any breach, she however accepts that the agreement of sale be cancelled, but the breach is attributable to the plaintiff.

The defendants contend that they transferred RTGS 55 000-00 into the plaintiff’s lawyers Trust Account and have tendered R 60 000-00 to the plaintiff’s lawyers and the plaintiff rebuffed it. The defendants are still willing to pay the amount of R60 000-00 to the plaintiff. The defendants aver that any refund to the plaintiff should now be done at the rate of 1 US$ to one RTGS dollar. They argue that the plaintiff is not entitled to any damages related to the rentals because he waived his right to occupation and never placed first defendant in mora and plaintiff cannot benefit from his own breach. The defendant pray for the dismissal of plaintiff’s claim.

BACKGROUND

The declaration of the plaintiff attached to the summons states that the plaintiff is a local businessman in Mutare. First defendant resides in Mutare and second defendant resides in Harare and is a registered legal practitioner.

On 19 July 2017 and at Harare at second defendant’s offices the parties entered into an agreemet of sale where first defendant sold to plaintiff Stand 7061 Mutare Township for a purchase price of US$90 000-00. The terms of the agreement were that US$60 000-00 was to be paid upon the signing of the agreement, US$ 15 000-00 on or before 30 November 2017, US$ 15 000-00 on or before the end of February 2018 and the plaintiff states that he completed the full payment on 1 November 2018. When he sought for vacant possession and transfer of the immovable property, it was disclosed for the first time that the property did not belong to the first defendant, as same belong to one Alfred Zivanai Muvirimi Mukarakate and Zesa Pension Fund registered a mortgage bond over the property. The plaintiff became aware that the second defendant attended and dealt with the agreement of sale and proceeded to receive money on behalf of the first defendant knowingly that there was no deed of transfer held in the name of the first defendant and her husband whom he claimed was handling divorce and would share proceeds with first defendant. Second defendant used an old deed of transfer which showed the first defendant and her husband as the co-owners of the property, yet the property had already been transferred to Mukarakate. Had it not been for the second defendant’s fraudulent acts, plaintiff would not have entered into the agreement of sale, paying US$90 000-00 as a result of second defendant’s misrepresentation.

Plaintiff pleads that first defendant is in breach of the contract and plaintiff is entitled to cancel the agreements of sale and claim the refund of the purchase price paid. All this time defendants were aware the plaintiff wanted to occupy the property with his family as he was leasing a house at the rate of US 200-00 per month, yet he had fully paid the purchase price but for the first defendant’s failure to deliver vacant possession.

Plaintiff testified and told the court the contents of his declaration. When plaintiff entered into an agreement with first defendant on 19 July 2017 he was not aware that title of the house was not in first defendant’s name nor in her husband’s. He told the court that he paid the purchase price in full totalling US$ 90 000-00. After payment he demanded vacant possession that was the time that he realised that the property sold was not reflecting the seller’s names. He was advised by his legal practitioner that an advert had appeared in the Sunday Mail newspaper about the house and Zesa was selling the house. Zesa had bought the house for its employee Alfred Mukarakate through a mortgage bond and when the employee was dismissed Zesa wanted to recover its moneys. Nothing has been repaid to the plaintiff after the cancellation of the agreement of sale. About the RTGS$43 500-00 the plaintiff told the court that he had heard about the money but cannot define its purpose. He was told of R 60 000-00 received by his lawyers’ employees but told the court that the money had been send back to first and second defendants. He is still renting a house for his family paying an equivalent of US$ 200-00 per month, which is translated into RTGS$20 000-00.

Under cross-examination by Mr Ndlovu for the defendants, plaintiff confirmed that the agreement of sale between him and the two defendants was terminated. He confirmed that he made a payment of RTGS 55 000-00 through second defendant trust account. He authorised second defendant to release RTGS 12 000-00 to the first defendant. The RTGS$43 500-00 was paid through plaintiff’s legal practitioners after a letter of demand was written to the defendants. It was deposited on 31 July 2019 and Plaintiff did not instruct his lawyers to send the payment back to second defendant. He does not recall as to how much he paid first defendant in Mutare. He was asked why he was demanding payment of US$90 000-00 yet he paid $55 000-00 RTGS and R60 000-00. His response was that US$90 000-00 was meant to enable him to pay a house for US$ 90 000-00. The RTGS$55 000-000 and R60 000-00 were both equivalent to United States Dollar, but he did not have a statement from RBZ for the equivalent conversions at the time the payments were made. About the payments made by the plaintiff he stated that he stuck to the agreement of sale, because no definitive dates for payment were given by the sellers. On vacant possession of the house, he confirmed that he never sued first defendant. On the rentals of US$200-00 per month, he did not have the lease agreement nor the receipts of payment. Plaintiff acknowledged that the currency regime in Zimbabwe was changed and has heard about the position of the courts on the issue of outstanding debts and payments. He is not suing for a house but for the money that can buy a house and he concluded that he should be paid in United States dollars or the refund’s equivalent value. Plaintiff then closed his case.

The first defendant opened her case. She told the court that about the agreement of sale and that plaintiff paid second defendant RTGS $55 000-00 as a deposit payment. She was again paid R60 000-00 which was paid through her lawyers, second defendant. She also acknowledged that she was paid RTGS$12 000-00 through eco-cash. Another RTGS$12 000-00 was send to her by second defendant. She told the court that the agreement of sale was cancelled and an amount of $43 500-00 was refunded to the plaintiff through the latter’s legal practitioners. All in all first defendant told the court that she received $24 000-00 and was willing to pay it back to the plaintiff.

Under cross examination by Mr Mutungura she stated that she owes plaintiff RTGS 24 000-00. She added that there is nothing misrepresenting on the information on the agreement of sale. She admitted that at the time the agreement of sale was entered into the property was then registered not in her name but that of Alfred Mukarakate who got registered in 2014. First defendant said she is still staying in that house, she is still waiting for 50% share of the house as ordered by the High Court. She confirmed that she is known to the plaintiff personally. She denied that she owes plaintiff US$24 000-00 and that $12 000-00 was paid in staggered instalment via her phone.   Second defendant testified. He is first defendant’s legal practitioner. According to the second defendant the agreement of sale was poorly drafted, it was not prepared by him and none of his employees identified one’s self with its preparation. He stated that there is a civil matter in Harare involving first defendant, her husband and Alfred Mukarakate and that bone of contention was that the house was fraudulently transferred to Mukarakate. The civil matter has gone past pre-trial conference and is awaiting a set down date for trial. The second defendant did not meet the plaintiff during the negotiations that led to the agreement of sale. He therefore cannot tell whether plaintiff was shown the copy of the title deed well before the agreement of sale was concluded. He told the court that RTGS $55 000-00 was deposited into his account by the plaintiff, another R60 000-00 was paid at his offices by the plaintiff. When second defendant received $55 000-00 he sought the permission of plaintiff to pay first defendant $12 000-00 which he got and paid her. Then out of the balance he deposited $43 500-00 into plaintiff’s legal practitioners trust account where the money is held up to this date. Second defendant was shocked when he was served with summons for US$90 000-00, to second defendant plaintiff is entitled to a refund of $24 000-000 to be paid by first defendant. It would be absurd, second defendant stated if the plaintiff is paid in United States dollars, because the plaintiff never paid in United States dollars and that it will not be legal under the Zimbabwean law. He also queried the basis upon which the plaintiff would claims US$200-00 damages in lieu of arrear rentals from the second defendant who was but only acting on behalf of first defendant. Second defendant told the court that he had absolutely nothing to do with that weird claim. He was not part of the agreement of sale and did not refuse to move out of the subject house, he added that if all lawyers are sued for representing a client and because they keep client’s money in their trust account that would not be sustainable. He stated that he did not see where his fault was that caused plaintiff to join him in these proceedings.

Under cross-examination by Mr Mutungura for the plaintiff and second defendant, he agreed that on the papers, his legal firm’s name appears but that alone cannot tell that he is the one who prepared the agreement. He also conceded that the purchase price is shown as US$90 000-00. He also confirmed that his law firm received payments arising out of the agreement of sale. When his law firm received the $55 000-00 he was under strict instructions from first defendant to refund the money so the second defendant telephoned plaintiff’s legal practitioners requesting the trust account number so that the refund be deposited into that account. He agreed that when the office received R60 000-00 there is an inscription on the receipt written US$15 000-00. He concluded that the agreement of sale was entered into in terms of United States dollars currency. He also confirmed under cross-examination that in conveyancing trust funds pertaining to sales of houses are released upon instructions from the purchaser. Second defendants told the court that before he paid first defendant US$12 000-00 he sought plaintiff’s permission and then released the money.

After the testimony of the second defendant, the defence case was closed.

From the joint pre-trial conference minute the issues that were referred to trial were as follows:

Whether the plaintiff in entitled to a refund of the purchase price paid and if so in what currency and denominations should the repayments be effected?

Whether the plaintiff is entitled to any damages and if so for how much?

Whether the plaintiff is entitled to any collection commission and interest on any amount due?

The onus was placed on the plaintiff.

WHETHER THE PLAINTIFF IS ENTITILED TO A REFUND OF THE PURCHASE PRICE PAID AND IF SO IN WHAT CURRENCY?

Most issues are common cause in this matter and should not take much of the court’s time as proposed by the plaintiff in his opening address.

It is unanimously agreed by both parties that the agreement of sale should be cancelled although each party blame the other on what caused the cancellation of the agreement of sale.

Both parties agree that the plaintiff should be refunded the purchase price as a result of the termination of the agreement of sale.

Both parties agree that although the transaction was concluded during the multi-currency regime, the laws have since changed regulating the mode of payments in Zimbabwe.

The parties agree that plaintiff paid $55 000-00, $12 000-00 and $R60 000-00 to the first defendant in lieu of the purchase price and first defendant accepts that as true.

Both parties agree that after the plaintiff learnt about the advert of the selling of the house in the Sunday Mail tabloid, he instructed his lawyers to terminate the agreement of sale and demand refund.

When first defendant’s legal practitioners received a letter of demand from plaintiff’s legal practitioners, he deposited $43 500-00 into the trust account of plaintiff’s legal practitioners and also paid back ZAR60 000-00 to the plaintiff’s attorney at law but the ZAR60 000-00 was rejected by the plaintiff legal practitioners and is kept by second defendant in his trust account ready for release to plaintiff.

Both parties agree that first defendant received a total of $24 000-00 and that amount should be refunded to the plaintiff.

It also common caused that the plaintiff has failed to prove the liability of the second defendant in the latter’s capacity as a legal practitioner and that it is only the first defendant who should refund the $24 000-00 paid to her.

The issue of determination is how much should be repaid by the first defendant and in what form of currency?

The first defendant is prepared to repay plaintiff $24 000-00. There is also $43 500-00 held in trust by the plaintiff’s legal practitioner and second defendant is holding RSAR60 000-00 ready for the release to the plaintiff once the plaintiff’s legal practitioners gives second defendant green light.  The three amounts are the exact figures paid towards the agreement of sale and in my view there is no prejudice to the plaintiff to be repaid exactly what he paid. Plaintiff in his summons claimed the sum of US$90 000-00 or its equivalent being the total amount which will place the plaintiff in the position he should have been had he never purchased and paid as purchase price in respect of the property. The perusal of the record as well as the declaration of the plaintiff clearly shows that the plaintiff is not claiming damages arising out of the breach of contract which would have justified this sort of prayer by the plaintiff. There is in my view no legal basis for the plaintiff to be placed in the position he would have been had he not purchased and paid for the property. The agreement of sale indicates that in the clause relating to the terms, the last instalment of $15 000-00 was to be made on or before February 2018. (Paragraph 6 of plaintiff’s declaration) nine months behind schedule of payments prescribed by the parties’ agreement. Hence the plaintiff was equally in breach of the agreement of sale.  In my view the most equitable position is to place both parties where they were before the cancellation of the agreement of sale. I am satisfied that plaintiff did not sue the first defendant for breach of contract nor specific performance but sued the defence for refund from the first defendant what is outstanding to the plaintiff which is the amount of $24 000-00. The second defendant did nothing wrong in the circumstances and application for absolution could have been proper after plaintiff closed his case. Accordingly plaintiff’s claim against the second defendant has not been proved and it is dismissed. First defendant is liable to refund plaintiff $24 000-00, the next question then becomes: in what currency should first defendant pay the $24 000-00?

The first defendant submitted that this question is well settled by the introduction of statutory instrument No. 33 of 2019 more particularly s 4 (1). The transaction of or agreement between plaintiff and first defendant constitutes a domestic transaction that brought the first defendant’s liability to the plaintiff before the introduction of SI 33 of 2019 and invariably the $24 000-00 due to the plaintiff has to be set off in RTGS dollars. S 2 (1) of SI. 142 of 2019 further consolidated s 4 (1) of SI 33 of 2019 when it provided that “any other foreign currency whatsoever shall no longer be legal tender alongside the Zimbabwe Dollar in any transaction in Zimbabwe” and from 24 June 2019 the sole legal tender in Zimbabwe in all transactions become the Zimbabwe dollar. Section 3 (b) of SI 142 of 2019 further clarified the exchange rate where it provides that bond notes and RTGS dollars are at par with the Zimbabwean dollar. Statutory Instrument 212 of 2019 was further brought into operation explicitly providing that “no person who is a party to a domestic transaction shall pay or receive as the price of the value of any consideration payable or receivable in respect of such transaction any currency other that the Zimbabwean Dollar” ( my own emphasis).

I have not been convinced by the plaintiff that these provisions in all the three statutory instruments exclude him. I agree with the first defendant’s counsel that plaintiff and first defendant entered into a domestic transaction in July 2017 well before promulgation of SI 33 of 2019. Hence whatever amounts that the plaintiff is to be paid by the first defendant become a debt in terms of the applicable law. I have no hesitation to conclude that the form of currency to be paid by first defendant must be that permitted by legislation and that is in terms of the Zimbabwe Dollar. However that amount must be paid with an interest at the prescribed rate calculated from date of summons 24 August 2019.

WHETHER DEFENDANT IS ENTITLED TO ANY DAMAGES AND IF SO HOW MUCH?

Plaintiff is claiming $200-00 damages being the rentals he has been paying for the house he is renting. Before looking at the law, it is important to note that the plaintiff did not produce the lease agreement nor any proof of payment for the payment of rentals. Those issues remain a product of his evidence and nothing else. He was challenged by first defendant to at least produce documentary evidence and unfortunately failed to do so and went on to close his case. The bundle of documents alluded to by the plaintiff was not produced as an exhibit and no document was referred to the bundle. The plaintiff also failed to prove wrongful action against first defendant leading to his economic loss based on the doctrine of Lex Aquila that requires a mental element in the form of negligence or dolus before liability can be founded.

The plaintiff’s claim relating to damages fails on this aspect.

WHETHER THE PLAINTIFF IS ENTITLED TO ANY COLLECTION COMMISSION AND INTEREST ON ANY AMOUNT DUE?

The plaintiff did not pray for collection when he gave evidence. Nevertheless he abided by the summons and declaration to form part of his evidence in chief.

In the matter of United Africa Technologies (Pvt) Ltd v Twenty Century System (Pvt) Ltd the learned Judge held that:

“It is not permissible to claim both collection commission and costs even where there is an acknowledgement of debt or other document from the debtor agreeing to do so, collection commission is essentially a charge made by a legal practitioner or a commission agent when payment has been obtained through his services prior to judgment.”

From the foregoing it is apparent that the position is well settled and the plaintiff has failed to convince the court why he is entitled to collection commission. The claim fails.

The claim brought by the plaintiff cannot be regarded as hopeless and meant to harass the first defendant. He genuinely believed that because of the fact that the title deeds were in a third party’s name, first defendant acted fraudulently. Indeed if there was no civil case in this court pertaining to the property first defendant would have been tasked to explain why she would sell property already registered in someone’s name, and would go on to show proof of title still showing her as the owner. I am convinced that first defendant managed to explain her conduct but should pay costs of the plaintiff for this matter. She has to meet 50% of those costs at party to party basis.

Accordingly the following order is granted:

The agreement of sale between plaintiff and first defendant in respect of stand 7061 Mutare Township of Stand 2485 Umtali Township is cancelled.

First defendant is ordered to refund RTGS 24 000-00.

First defendant is to pay interest on the RTGS $24 000-00 at the prescribed rate calculated from 24 August 2019.

Plaintiff’s claim against 2nd defendant is dismissed with no order as to costs.

Plaintiff’s claim of US$200-00 per month for rentals is dismissed.

Plaintiff’s claim for collection commission is dismissed with costs.

Second defendant is ordered to release R60 000-00 to the plaintiff’s legal practitioners forthwith.

First defendant is ordered to pay 50% of plaintiff’s costs on party to party basis.

Mutungura & Partners, plaintiff’s legal practitioners

Gonese & Ndlovu, defendant’s legal practitioners