Sitshengisiwe Brenda Nhlizio v Amos Sambo and CBZ Properties (Private) Limited and CBZ Bank Limited and The Registrar of Deeds-Harare

On 15 November 2019, the applicant purchased from the 1st respondent Stand 1467 Parktown Township 6 in Salisbury for ZW$575,000.00. The property was hypothecated to the 3rd respondent (CBZ Bank) under Mortgage Bond No. 1404/2014. The purchase price was to be paid via deposit and balance, with part financing through a mortgage loan from Homelink. The agreement was amended twice, with the final purchase price being ZW$609,556.25 (ZW$90,000.00 deposit, ZW$485,000.00 from Homelink via letter of undertaking, and balance of ZW$34,556.25). The applicant paid the full purchase price. The 2nd respondent (CBZ Properties) undertook in writing to release the title deeds once subdivision permit conditions were met. Despite compliance with all conditions, payment in full, and issue of compliance certificates, the 1st, 2nd and 3rd respondents failed to release the title deeds to the conveyancers. On 23 July 2020, the 1st and 2nd respondents purported to cancel the agreement of sale, claiming non-payment of the balance. The applicant sought specific performance and declaratory relief.

• Whether there were material disputes of fact that could not be resolved on the papers
• Whether the applicant had a cause of action against the 2nd and 3rd respondents who were not parties to the sale agreement
• Whether a letter of undertaking from a financial institution constitutes valid payment of the purchase price
• Whether the 1st respondent validly cancelled the agreement of sale
• Whether the applicant was placed in mora before purported cancellation
• Whether the applicant was entitled to specific performance of the sale agreement
• Whether the applicant complied with all her obligations under the agreement

The court granted the application with costs on a legal practitioner and client scale against the 1st and 2nd respondents jointly and severally. The court declared the purported cancellation invalid, null and void. The 1st respondent was directed to sign all documents necessary to transfer the property within 7 days, failing which the Sheriff was authorized to sign on his behalf. The 1st, 2nd and 3rd respondents were directed to deliver the original Deed of Transfer and Mortgage Bond with consent to release to the conveyancers, failing which the Sheriff was authorized to seize same. Messrs Mhishi & Nkomo Legal Practitioners were authorized to act as conveyancing attorneys. The Registrar of Deeds was authorized to register the transfer and release from the mortgage bond.

1. A letter of undertaking issued by a bank or financial institution in conveyancing transactions is, in commercial practice, as good as cash and constitutes valid payment where it is consistent with the parties' intention and agreement. 2. Before a seller can validly cancel an agreement of sale, the purchaser must first be in breach and must then fail to remedy the breach within 30 days of written notice requiring remedy of the breach. Failure to give such notice means any purported cancellation is invalid, null and void. 3. Section 8(1)(b) of the Contractual Penalties Act makes it illegal for a seller to cancel an instalment sale without giving 30 days written notice to remedy any breach. 4. Prima facie, every party to a binding agreement who is ready to carry out and has carried out their obligations has a right to demand specific performance from the other party. 5. A party seeking an order for specific performance after purported cancellation must first obtain an order setting aside the cancellation as a basis for the relief of specific performance.

The court observed that in the normal course of conveyancing processes, the registration of transfer and registration of a mortgage bond can be done simultaneously. The court noted that it was the applicant who had actually placed the 1st respondent in mora first, and that the 1st respondent backdated the letter purporting to place the applicant in mora after the applicant had already demanded specific performance. The court commented that to hold that a letter of undertaking is not valid payment in the circumstances would create an absurdity, given normal banking and conveyancing practice. The court also noted that the 3rd respondent's concerns regarding payment of the mortgage loan are issues to be governed by usual conveyancing practice and laws, and that the 3rd respondent could request guarantees from the conveyancer when called upon to release documents if not satisfied with the Homelink guarantee.

This case is significant in Zimbabwean law for establishing important principles regarding: (1) the validity of letters of undertaking from financial institutions as payment in commercial and conveyancing transactions; (2) the strict requirements for valid cancellation of sale agreements, particularly the necessity of placing a party in mora through proper written notice before cancellation; (3) the application of s 8(1)(b) of the Contractual Penalties Act requiring 30 days written notice before cancellation of instalment sales; (4) the enforcement of specific performance where a party has fulfilled all contractual obligations; and (5) the circumstances in which parties not privy to a contract may still have obligations enforceable against them based on separate undertakings and agreements related to the subject matter of the contract. The judgment reinforces the principle that courts take a robust approach to resolving disputes of fact in motion proceedings and that bare denials are insufficient to create genuine disputes of fact.