Lasagne Investments (Pvt) Ltd and Samms Omar and Feroza Omar v Highdon Investments (Pvt) Ltd and Meadowridge Investments (Pvt) Ltd and Registrar of Deeds

On 31 July 2001, Aluminium Industries Ltd sold Stand 23 Reitfontein Township to the first applicant for ZWD $4.2 million, which the applicant paid in South African rand. However, the sale was not given effect to and the property was subsequently sold to the first respondent (Highdon Investments), with real rights transferred. The applicants entered into negotiations with the first respondent to secure title. An agreement was reached whereby the applicants would pay ZWD $2 billion by 28 February 2006, then monthly installments of ZWD $1.5 billion on 31 March and 28 April, and a final payment of ZWD $2 billion on 31 May 2006 (total ZWD $7 billion). The applicants paid the initial ZWD $2 billion on 1 March 2006, but failed to make the March and April installment payments. The first respondent cancelled the agreement and returned a cheque for ZWD $1 billion. Despite this cancellation, the applicants tendered ZWD $5 billion on 31 May 2006. Meanwhile, the first respondent had sold the property to the second respondent (Meadowridge Investments), who took transfer under Deed of Transfer No. 3600/06. The applicants then sought to set aside this transfer and compel transfer to themselves.

• Whether the cancellation of the agreement of sale by the first respondent complied with section 8 of the relevant Act governing installment sales
• Whether the applicants were entitled to specific performance of the contract despite their breach of payment terms
• Whether the applicants had discharged their onus to prove they had fulfilled or were ready to fulfill their own obligations under the contract
• In a case of double sale, whether the second purchaser (second respondent) had notice of the first sale and whether the court should order specific performance in favor of the first purchaser
• Who bears the onus of proving notice or lack of notice in a double sale scenario
• Whether the court should exercise its discretion to grant specific performance in favor of the applicants

The application was dismissed with costs.

In bilateral contracts, a party seeking specific performance must first fulfill or be ready and able to fulfill their own obligations under the contract - this is a prerequisite to obtaining an order for specific performance. In cases of double sale, where a second purchaser takes transfer in good faith without notice of a prior sale, their real right cannot be disturbed by the first purchaser. The onus lies on the party alleging notice (typically the first purchaser) to prove that the second purchaser had knowledge of the prior sale. A party seeking to challenge the cancellation of an installment sale agreement on grounds of non-compliance with statutory notice requirements must lay a proper factual foundation in their papers showing how the cancellation failed to comply with the Act, and must seek appropriate declaratory relief regarding the validity of the cancellation before seeking consequential orders. Legal arguments cannot succeed when based merely on suspicions and suppositions without supporting factual evidence properly pleaded in the affidavits.

The court noted that whatever recommendations a judge may make at a pre-trial conference regarding consolidation of matters are not binding unless the litigants themselves take steps to have the matters formally consolidated. The court also observed that the discretion to grant specific performance, while to be exercised judicially, is not confined to specific types of cases nor prescribed by rigid rules, but must be exercised based on the facts of each particular case. The court indicated (without needing to decide the point given its findings on notice) that it was not necessary to consider whether there were special circumstances affecting the balance of equities between the parties, as that question only arises after notice has been established.

This case reinforces several important principles in Zimbabwean contract and property law: (1) The strict application of the principle that a party seeking specific performance must prove they have fulfilled or are ready to fulfill their own contractual obligations (the exceptio non adimpleti contractus principle). (2) The procedural requirement that parties must lay proper factual foundations in their affidavits for legal arguments they wish to advance - legal arguments cannot be raised for the first time in heads of argument without factual support in the pleadings. (3) The application of the double sale principles from Crundall Brothers, protecting bona fide purchasers who take transfer without notice of prior sales. (4) The clarification of onus in double sale cases - the party alleging notice (the first purchaser) bears the onus of proving it, following general principles of onus in Mobile Oil. (5) The requirement that parties seeking to challenge cancellations under installment sale legislation must specifically plead and prove non-compliance with statutory notice requirements. The judgment demonstrates the court's unwillingness to rely on suspicions and suppositions, requiring concrete proof of fraud or collusion.