Ishmel Chinho v Crowhill Farm (Private) Limited

The applicant entered into an agreement of sale with the respondent on 28 April 2011 to purchase Stand 2097 of Lot J Borrowdale, measuring approximately 1000 square metres, for $30,618.75. The purchase price was payable in instalments, with a deposit of $1,500.00 and the balance over sixty months. The respondent undertook to complete servicing and development of the stand by May 2013 or within two years from date of transfer. The applicant paid a total of $17,000.00 (later stated as $18,490.00 in the order) but noticed no development was taking place on the site. The applicant wrote to the respondent on 15 June 2013 expressing concern about lack of development and a third-party claim to the land, giving 30 days' notice and withholding further payments. The respondent did not respond but later purportedly cancelled the agreement on 12 September 2013 and sold the stand to another person. The applicant was never properly notified of this cancellation and only learned of it when he made further enquiries with the respondent's agent.

• Whether the applicant was in breach of the agreement by withholding payments
• Whether the respondent was in breach of the agreement by failing to service and develop the stand as promised
• Whether the respondent validly cancelled the agreement
• Whether the applicant was entitled to a refund of monies paid under the Contractual Penalties Act
• Whether proper notice of cancellation was given to the applicant

1. The agreement of sale of stand number 2097 Lot J Borrowdale held under Deed of Transfer number 1214/86 dated 28 April 2011 between the Applicant and the Respondent was cancelled. 2. The Respondent was ordered to forthwith refund the Applicant the sum of $18,490.00 paid by the Applicant towards the purchase of the property. 3. The Respondent was ordered to pay costs of suit on a legal practitioner and client scale.

Where a seller in an agreement of sale fails to fulfill its material obligations under the contract (in this case, to service and develop property within the agreed timeframe), and the purchaser withholds further payments as a protective measure after giving proper notice, the purchaser is not in breach of the agreement. The seller cannot rely on the Contractual Penalties Act to retain monies paid when the seller is the party in breach. A party in breach cannot validly cancel an agreement and must refund monies received where it has failed to perform its own obligations.

The court observed that it was prudent and wise for the applicant to limit his exposure by withholding further payments once he became aware of the respondent's failure to develop the property and the existence of a third-party claim. The court also noted the absence of Annexures B1 and B2 referenced in the respondent's founding affidavit, which undermined the credibility of the respondent's case. The court implicitly criticized the respondent's failure to respond to multiple letters from the applicant and his legal practitioners, suggesting poor business practice and lack of good faith in contractual dealings.

This case is significant in Zimbabwean contract law as it demonstrates that a purchaser who withholds payment due to the seller's material breach of contract (failure to develop and service property as promised) is not in breach and is entitled to recover monies paid. The case reinforces the principle that the Contractual Penalties Act cannot be used to benefit a party who is itself in breach of the agreement. It also emphasizes the importance of proper notice and communication in contractual relationships, and protects consumers who enter into property development agreements from developers who fail to fulfill their obligations.