Sports and Recreation Commission v Laina Nhera and R W Manyati and The Registrar of Deeds

The plaintiff, Sports and Recreation Commission, was a tenant of the first defendant (Laina Nhera) on Stand 120 Bindura Township under a lease agreement facilitated by Manyati Enterprises (Pvt) Ltd, an estate agency managed by the second defendant. In November 2007, the estate agent notified the plaintiff that the lease would not be renewed. In December 2007, the estate agent invited the plaintiff to make an offer to purchase the property. The plaintiff's representatives negotiated with the second defendant, initially offering $50 billion (negotiable), later increasing to $95 billion. On 15 January 2008, at a meeting in Harare, the second defendant and the owner's son (Jorum Mteliso) signed an agreement of sale. The plaintiff's representative (Mrs Kabanda) took the documents away and later signed them. On 17 January 2008, the second defendant advised the plaintiff via SMS that the deal was cancelled as the owner (who was in the UK) had not authorized the sale and wanted $180 billion. Despite this, the plaintiff deposited $95 billion into the estate agent's account on 8 February 2008. The second defendant returned the money via cheques in February and March 2008, which the plaintiff refused to accept. The plaintiff sued for transfer of the property or damages.

• Whether the second defendant had actual or ostensible authority from the first defendant to sell the property
• Whether an estate agent mandated to lease property has ostensible authority to sell that property
• Whether the agreement of sale was validly concluded
• Whether the second defendant is personally liable for damages in his individual capacity or whether such liability rests with the company (Manyati Enterprises)
• Whether the corporate veil should be lifted to hold the second defendant personally liable

The plaintiff's claims against both defendants were dismissed with costs.

An estate agent who is mandated only to lease property does not have ostensible authority to sell that property. Ostensible authority arises only in respect of acts that are incidental to or arise from the specific mandate given (in this case, leasing), such as setting rentals and determining tenure. Leasing and selling are distinct functions. The corporate veil will only be lifted in rare circumstances involving fraud or manifest injustice, and a party seeking to hold a company director personally liable must plead a proper cause of action and the grounds for piercing the corporate veil. Where an agent acts throughout in the capacity of employee/agent of a company, that company, not the individual, is the proper party to any claim arising from those actions.

Kudya J made observations about the nature of the estate agency profession, quoting De Villiers and Macintosh's The Law of Agency in South Africa, noting that estate agents occupy a somewhat unique position in that they act sometimes for buyers and sometimes for sellers, and unlike most professionals, have no professional rules inhibiting them from vigorously soliciting business from both parties. The court also observed that the second defendant, in soliciting an offer from the plaintiff while seeking acceptance from the owner, was conforming to the nature of the estate agency profession. The judge commented that the plaintiff's actions after being notified of the cancellation amounted to "snatching at an agreement" and noted critically that payment was made two days after the deadline stipulated in the purported agreement, and after the plaintiff was aware the owner had not mandated the sale.

This case is significant in Zimbabwean law for clarifying the scope of ostensible authority in the context of estate agents. It establishes that an estate agent mandated to lease property does not automatically have ostensible authority to sell that property, as these are distinct functions. The case reinforces the principle from Reed v Sagers Motors that ostensible authority flows from acts normally within the scope of the particular capacity in which an agent is employed. The judgment also emphasizes the importance of proper pleadings when seeking to hold a company director personally liable, requiring specific grounds for piercing the corporate veil such as fraud or manifest injustice. It serves as a reminder that courts will not lift the corporate veil merely because it would be convenient or just to do so, and that a cause of action must be properly pleaded against individuals sought to be held personally liable.