Walter Nyaungwa v Jeffm Auctions (Pvt) Ltd and Forestry Commission

In July 2021, Jeffm Auctions (Pvt) Ltd (first respondent) advertised a public auction on behalf of Forestry Commission (second respondent) for 24 July 2021, offering a Sanding Machine, Hot Press System, and Glue Spreader. The applicant obtained a bidder's card, made preliminary payments, and attended the auction where he emerged as the highest bidder for all three lots at a total bid price of US$14,885, which he calculated as RTGS$1,265,225 using an exchange rate of US$1 to RTGS$85. The applicant made three payments: RTGS$300,000 on 24 July 2021 (part payment of the deposit of RTGS$500,000), RTGS$300,000 on 6 August 2021, and RTGS$665,225 on 7 August 2021, totaling the full purchase price. When applicant sought to collect the items, first respondent claimed there was a shortfall of US$6,589.40 due to escalating exchange rates on the parallel market (RTGS$145 and RTGS$165 rather than the official bank rate of RTGS$85). First respondent then advertised the same items for a second auction. Applicant brought an urgent chamber application for an interdict to prevent the resale.

• Whether the matter was urgent and brought to court timeously
• Whether a valid auction sale contract was concluded between the parties
• Whether the applicant met the requirements for an interdict
• Whether the first respondent could unilaterally cancel the sale after accepting full payment
• Whether the exchange rate applicable should be the official bank rate or the parallel market rate

Interim relief granted: (a) The respondents and all those acting through them are interdicted from reselling off, disposing of or surrendering possession of or dealing with Lot 15 Sanding Machine, Lot 16 Hot Press machine, and Lot 18 Glue Spreader without an order of court, pending confirmation or discharge of the final order; (b) Costs of the application to be in the cause.

A valid auction sale contract is concluded when a bidder is declared the highest bidder and fulfills the payment obligations as agreed with the auctioneer. Once an auctioneer issues a buyer's card, accepts participation in the auction, and receives full payment of the purchase price (even if paid in installments with the auctioneer's consent), the auctioneer cannot unilaterally cancel the sale or impose additional payment demands based on subsequently changing exchange rates. An auctioneer is bound by the conduct and agreements of its authorized agents. Where movable property is at risk of being sold to third parties, an applicant who has a prima facie right based on a concluded contract has no alternative remedy and is entitled to interdict relief to prevent disposal of the property pending final determination of the dispute.

The court observed that first respondent exhibited a "do not care attitude" towards its agent Mr. Mubaiwa's work. The court noted that it was unclear from the record why the auction prices were pegged in hard currency (US dollars) rather than local currency. The court also commented that had first respondent acted diligently by indicating to applicant any alleged shortcomings or misrepresentations, the applicant would not have proceeded to participate in the auction sale and effect payments. The judgment suggests that where a party attempts amicable resolution before approaching the court, this should be considered favorably when assessing whether there has been undue delay in bringing an urgent application.

This case is significant in Zimbabwean contract and auction law as it clarifies the binding nature of auction sales once a bidder is declared the highest bidder and fulfills payment obligations. It demonstrates that an auctioneer cannot unilaterally cancel a concluded auction sale or impose additional payment demands based on exchange rate fluctuations after accepting full payment according to the agreed terms. The case also addresses the interplay between official exchange rates and parallel market rates in commercial transactions, emphasizing that parties cannot retrospectively change the basis of calculation after a contract is concluded. Furthermore, it illustrates the court's approach to urgency in interdict applications where movable property is at risk of being sold to third parties.