Leonard Bwanali v Precious Katuruza

On 30 January 2013, the plaintiff and defendant (represented by her late mother Susan Katuruza) signed an agreement of sale for Stand Number 7410, Glenview Township, Harare for USD 42,000.00. The plaintiff paid the full purchase price by 29 January 2013. Material terms provided that occupation and cession would occur upon full payment. The plaintiff took occupation around March 2013 awaiting title registration. Susan Katuruza died about a month after signature of the agreement before registering title in the plaintiff's name. Meanwhile, the defendant (who was in the United Kingdom) sold the same stand to the Mhetus, who immediately registered title in their names. The Mhetus evicted the plaintiff from the property. The plaintiff lost the eviction case in HH 853/15. The plaintiff then cancelled the agreement of sale and sued for refund of the purchase price and consequential damages.

• Whether the defendant breached her contractual duties as seller by failing to deliver the property free from encumbrances
• Whether the plaintiff was entitled to cancel the agreement of sale
• Whether the plaintiff was entitled to consequential damages beyond mere refund of the purchase price
• Whether the defendant's fraudulent or negligent conduct caused the plaintiff's loss
• Whether the plaintiff was entitled to lost rental income

1. Declaration of cancellation of the agreement of sale signed on 30 January 2013 granted. 2. Defendant ordered to refund plaintiff's purchase price of USD 42,000.00. 3. Defendant ordered to pay consequential damages: (i) USD 18,000.00 being additional amounts required to purchase equivalent property at current rates; (ii) Monthly sum of USD 400.00 from February 2013 to date of full payment. 4. Interest at prescribed rate on above amounts from date of summons to date of full payment. 5. Costs of suit at legal practitioner-client scale.

A seller has an inherent implied duty to ensure that property sold is delivered without any encumbrance. Where a seller fraudulently or negligently exposes a buyer to rival claims resulting in the buyer losing the property through eviction, the buyer is entitled to cancel the agreement and claim consequential damages. Such damages must restore the innocent party to the position they would have been in had the breach not occurred, and include: (1) refund of purchase price; (2) the difference required to replace the lost property under current market conditions; and (3) lost rental income. Damages are recoverable where the loss arises naturally according to the usual course of things from the breach (applying Hadley v Baxendale). An inference of fraud or negligence is justified where the seller knew or ought to have known of competing claims before consummating the sale.

The court observed that there was no way the plaintiff could cling to the agreement and sue for specific performance given that he had already lost claim to the property and been evicted - his remedies lay in claiming consequential damages. The court also noted that the defendant's feeble excuse that the plaintiff lacked diligence in protecting his rights under the Deeds Registries Act was unconvincing, commenting that 'it boggles one's mind' why the defendant would sell the same property to another person knowing she had already sold it through her mother. The court remarked that the tepid contest by the lay defendant could not be preferred over the opinion of professional valuers.

This case affirms important principles in Zimbabwean contract and property law regarding the seller's duty to deliver property free from encumbrances. It demonstrates that when a seller fraudulently or negligently sells the same property to multiple buyers, the innocent purchaser who loses the property is entitled not only to refund of the purchase price but also to consequential damages including the increased cost of replacement property and lost rental income. The case reinforces the application of the Hadley v Baxendale remoteness test for consequential damages in property sale cases. It also confirms that professional valuation evidence will be preferred over lay testimony in assessing damages.