National Shunt Services (Private) Limited v The City of Harare

The applicant entered into a lease agreement with the City of Harare (respondent) in 2007 to develop a golf range on stand 822 of stand 129, Greystone Township. In July/August 2017, the parties entered into an agreement of sale for the property at US$327,750.00, with US$110,000.00 payable upon signing (which was paid) and the balance payable within 30 days of execution, failing which interest would be levied. The agreement also required construction of golf driving range buildings to commence within two years and be completed within four years. The applicant only paid the balance in December 2019, more than two years after the August 2017 agreement execution date. No buildings had been erected. The applicant claimed delays were due to the respondent's failure to provide a subdivision permit necessary for surveying. In June 2020, the respondent terminated the agreement citing clause 14 (which allowed termination on 30 days' notice) and breaches of clauses 6 (failure to pay purchase price timeously) and 8.2 (failure to erect principal buildings timeously). The applicant sought a declaratur that the cancellation was null and void.

• Whether the respondent's notice of termination constituted a valid notice of cancellation or merely a notice of intention to cancel from a future date
• Whether the respondent was required to place the applicant in mora before cancelling the agreement
• Whether clause 14 of the agreement, allowing termination on 30 days' notice, was valid and enforceable
• Whether the delay in payment of over two years constituted a breach justifying cancellation
• Whether the applicant was entitled to a declaratur that the cancellation was null and void

The application was dismissed with costs on the ordinary scale (the court declined to award costs on a higher scale as sought by the respondent).

A notice of termination that states an agreement is terminated while giving the contractually required notice period (in this case 30 days) constitutes a valid notice of cancellation simpliciter and not a futuristic notice of intention to cancel. Where parties have contractually agreed to a clause permitting termination on notice (such as clause 14 allowing termination on 30 days' notice), such a clause is valid and enforceable. Where a breach clause provides that the aggrieved party "may" give notice to remedy a breach, such notice is discretionary and not mandatory, and the aggrieved party may cancel without first placing the defaulting party in mora. Courts will not rewrite contracts or excuse parties from consequences of clauses they have freely agreed to. A delay of over two years in payment when the contractual term required payment within 30 days constitutes a material breach justifying cancellation, even where the agreement provides for interest on late payment.

The court noted that while clause 6 allowed for interest to be levied on belated payment, the agreement was silent as to the length of time that would be countenanced for this situation to prevail. The court observed that a period well in excess of two years before balance was paid could not by any stretch of imagination be what the parties intended. The court also noted there was no evidence that the applicant attempted to discuss its inordinate delay with the respondent before effecting the purported payment two years later. While not necessary to the decision, the court commented that the applicant's claim regarding improvements effected without Council approval was said to have been in breach of the agreement.

This case clarifies Zimbabwean law on the distinction between notices of cancellation simpliciter and notices of intention to cancel, particularly in the context of contractual provisions allowing termination on notice. It reinforces the principle that courts will enforce termination clauses as agreed by the parties and will not rewrite contracts. The case emphasizes that where parties have contractually agreed to permit termination on notice, such provisions will be upheld even where general contract law might otherwise require placing a party in mora before cancellation. It also demonstrates judicial interpretation of discretionary language ("may") versus mandatory language ("must") in breach clauses, and confirms that material breaches (such as payment delays exceeding two years when payment was due within 30 days) justify termination even where interest provisions exist for late payment.