Union Housing Trust v Steady Munyanyi

On 7 February 2015, Union Housing Trust entered into an agreement of sale for subdivision B of Inkubusi of Hopley. Due to failure to pay, on 6 May 2015, the Trust entered into a joint venture agreement (JVA) with Steady Munyanyi to jointly purchase the same property for US$350,000. The parties then entered into a new agreement of sale with the seller. However, the JVA parties failed to meet their payment obligations, and on 14 October 2015, the seller's lawyers (Messrs Dube, Manikai and Hwacha) cancelled the sale agreement. The applicant acknowledged the cancellation and the parties allegedly agreed that the respondent would negotiate a fresh agreement with the seller, though this was not reduced to writing. The respondent subsequently purchased the property alone and cancelled the JVA on 6 June 2016. The applicant claimed it had paid US$98,590 towards its US$175,000 share and sought specific performance of the JVA.

• Whether the joint venture agreement between the parties was still in existence after the cancellation by the seller
• Whether the respondent purchased the property for and on behalf of the JVA when he entered into a sole agreement with the seller
• Whether the relief sought for specific performance was competent
• Whether Olivia Chikunichawa was properly authorized to represent Union Housing Trust (point in limine)
• Whether the court should exercise its discretion to grant specific performance

The application was dismissed with costs awarded to the respondent.

The binding legal principles established are: (1) When a sale agreement is cancelled by the seller, any joint venture agreement entered into for the purpose of fulfilling that sale agreement ceases to exist and becomes unenforceable; (2) Specific performance will not be granted where the party seeking it has not substantially fulfilled its contractual obligations; (3) Specific performance is an equitable remedy granted at the court's discretion and will be refused where it would produce an unjust result or where performance has become impossible; (4) Oral agreements to vary written contracts that contain clauses requiring variations to be in writing are invalid and unenforceable; (5) A party cannot seek relief that effectively seeks to review or overturn a previous court decision in the same matter - this amounts to an impermissible attempt to obtain a 'second bite of the cherry'; (6) Where authorization is challenged, substantial compliance with the requirements that the deponent have personal knowledge of facts and act in the interests of the represented party will suffice.

The court observed with concern that the applicant had previously sued the same respondent along with the seller and the Registrar of Deeds in case HC 5170/16 seeking substantially the same relief, which was dismissed by MUSHORE J on 4 November 2016. The court noted that the applicant was not being candid with the court and that the facts and balance of convenience suggested that the respondent had indeed negotiated and purchased the property on his own. The court also commented that had the dispute been properly framed under the original agreement (UH3), it should have been referred to arbitration in accordance with clause 29 of that agreement. Additionally, the court noted that any payments made by the applicant shown in the receipts were made to the seller, not the respondent, and would be recoverable from the seller if at all, not from the respondent who was not a party to those transactions.

This case reinforces important principles in South African and Zimbabwean contract law regarding: (1) the effect of cancellation of underlying agreements on dependent agreements; (2) the requirement that variations to written agreements must be in writing where such clauses exist in the contract; (3) the discretionary nature of specific performance and the circumstances under which courts will refuse to grant it; (4) the principle that specific performance requires substantial performance of contractual obligations by the party seeking the remedy; (5) the doctrine of res judicata preventing parties from seeking a 'second bite of the cherry' by relitigating matters already decided; and (6) the importance of proper authorization in litigation involving trusts and corporate entities.