Chematron Products Zimbabwe (Pvt) Ltd v Tenda Transport (Pvt) Ltd and Registrar of Deeds

On 13 July 2006, the Plaintiff and first Defendant entered into a written agreement of sale for Stand No. 4 of subdivision B of Subdivision B, Prospect for Z$15,000,000. At the Plaintiff's request, due to concerns about mortgage bond interest rates through Beverley Building Society, the parties mutually agreed on 4 September 2006 to vary the original agreement with new terms of payment. At this time, the Plaintiff had already paid the initial deposit and other substantial sums. A new contract was drafted by the 1st Defendant's legal practitioners but the Plaintiff declined to sign it due to various discrepancies and delays. Despite not signing the new agreement, the Plaintiff continued making payments which were accepted by both the 1st Defendant and its legal practitioners. The parties agreed on an interest rate of 125% per annum. When the Plaintiff sought transfer after completing all payments including transfer fees, the 1st Defendant attempted to impose a 600% per annum compounded interest rate, claiming it had borrowed money from NMB Bank and sought to pass the borrowing costs to the Plaintiff. The Plaintiff refused and demanded transfer, leading to litigation.

• Whether there was a valid and binding agreement of sale between the Plaintiff and Defendant
• Whether the Plaintiff breached the Agreement of Sale such as to enable the Defendant to cancel
• Whether the Plaintiff was entitled to take transfer of the property
• Whether the 1st Defendant could unilaterally vary the agreed interest rate from 125% to 600% per annum
• Whether acceptance of payments constituted waiver of any alleged breach

The court ordered: (1) That the first Defendant transfer ownership of Stand No. 4 of subdivision B of Subdivision B of Prospect to Metachem Industries (Pvt) Ltd as requested by the Plaintiff within 14 days from the date reasons for judgment were delivered, failing which the Sheriff of Zimbabwe or his lawful Deputy was authorized to attend to such transfer by signing all relevant papers which would ordinarily be signed by the 1st Defendant; (2) That the 1st Defendant's counterclaim be dismissed; (3) That the 1st Defendant pay costs of suit.

Where parties have varied a contract and one party accepts performance (payments) under the varied terms, that party cannot later deny the existence of a valid agreement or unilaterally impose new onerous terms. Acceptance of payments constitutes waiver of any alleged breach of the agreement. A party cannot approbate and reprobate at the same time - having accepted the benefits of performance under an agreement, it cannot then deny the agreement's validity. Where conduct demonstrates acceptance of varied terms, the absence of a signed written agreement recording those variations does not invalidate the agreement, particularly where substantial performance has occurred and been accepted. Attempts to impose drastically increased terms (such as increasing interest from 125% to 600%) at the final stage of performance, particularly when motivated by bad faith or greed, will not be enforced.

The court observed that the 1st Defendant's representative did not portray himself in good light and that his claim of not being aware of payments made to his company due to alleged bureaucracy or lack of information transmission could not disadvantage the Plaintiff. The court noted that the alleged bureaucratic issues within the 1st Defendant's organization were its own internal problem and could not affect the rights of the Plaintiff who had made payments to the company. The court also commented that computing interest at 600% per annum was "extortionous" and suggested that the 1st Defendant was acting out of greed. The court remarked on the ambivalent nature of the 1st Defendant's plea, noting it was contradictory to deny an agreement existed while simultaneously claiming breach of that agreement.

This case establishes important principles regarding variation of contracts, the effect of accepting performance under a varied agreement, and the doctrine of waiver in the context of property sales. It demonstrates that parties cannot approbate and reprobate simultaneously - having accepted payments under varied terms, a party cannot later deny the existence of an agreement or unilaterally impose new terms. The judgment also reinforces that attempts to impose onerous terms in bad faith (mala fide) at the final stages of a transaction will not be countenanced by the courts. It provides guidance on when conduct (acceptance of payments) can supersede the formal requirement of a signed written agreement, and confirms that a party seeking to pass on its own borrowing costs to a purchaser cannot do so without express agreement.