MWENYA AND RANDEE v KAPINGA (1998) S.J. 12 (S.C.

SUPREME COURT
BWEUPE, D.C.J., SAKALA AND MUZYAMBA, JJ.S.
(S.C.Z. JUDGMENT NO. 4 OF 1998)

Flynote

Contract Law - Specific performance - Statute of Frauds

Contract Law - Time - When it is of the essence

Headnote
The 1st appellant agreed to sell her house to the respondent for the sum of K12,000,000.
Meanwhile she asked the respondent to pay up K800,000 to enable her redeem the mortgage
under which the house was. The respondent paid the said amount and the 1st appellant
redeemed the mortgage accordingly. But when the respondent wanted to pay the rest of the
purchase price, the 1st appellant refused to accept the money saying the 1st appellant had
taken too long to find it. She then signed a second contract of sale with the 2nd appellant and
the respondent sued. The High Court found in favour of respondent and ordered specific
performance of the contract. The appellants appealed to the Supreme Court.

Held:
(i) For a note or memorandum to satisfy Section 4 of the Statute of Frauds, the agreement
itself need not be in writing. A note of memorandum of it is sufficient provided that it
contains all the material terms of the contract such as names or adequate identification
of the parties, the description of the subject matter and the nature of the consideration

(ii) It may be said that time is essential firstly, if the parties expressly stipulate in the
contract that it shall be so; Secondly, if in a case where one party has been guilty of
undue delay, he is notified by the other that unless performance is completed within a
reasonable time the contract will be regarded as at end; and lastly, if the nature of the
surrounding circumstances or of the subject makes it imperative that the agreed date
should be precisely observed.

For the appellants: Miss Sharpe of Messrs Mopani Chambers

assisted by Mr Wood of Wood and Company.
For the Respondent: Mr Musaba of Mungomba and Associates.
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Judgment
BWEUPE, D.C.J.: delivered the judgment of the court.

This is an appeal by the appellant against the judgement of the High Court granting the
respondents specific performance of a contract for the sale of Plot No. 4109 Sunningdale,
Lusaka to the respondent by the 1st appellant.
The 1st appellant, Miss Jane Mwenya by a letter dated 25th August, 1992, offered to sell to the
respondent plot No. 4109 for the sale price of K12,000,000. As a precondition to the sale the
1st appellant requested the respondent to pay K800,000 to assist her in redeeming the
mortgage under which the house was at the time. The 1st appellant received K800,000 and
redeemed the mortgage. When the respondent sent the balance of the purchase price, the 1st
appellant refused to accept the money because the respondent allegedly had taken too long to
find the money.

The respondent has lived in that house for six (6) years as a tenant since 7th January,1987,
and had paid the K12,000,000 into court ready to be collected by the appellant.

On 22nd September, 1993, a third party was added to the proceedings, Mr Jason Randee, now
a second appellant, a person to whom the 1st appellant has allegedly sold the house. The 2nd
appellant is claiming that there is a valid contract of sale between him and the 1st appellant in
that in October, 1992, the 1st appellant sold the house to him for K13,000,000. He paid
K9,000,000 as deposit and remained with K4,000,000 unpaid.

The court was asked to resolve the following issues:

(a) Whether the contract of sale made by the 1st appellant and the respondent was ever
brought to an end by rescision or other method.
(b) Whether the contract of sale made by the 1st appellant and 2nd appellant
(intervenor) was valid;
(c) Whether Intervenor was an innocent bona fide purchaser for value without notice and
whether he acquired good title to the house;
(d) Which one of the two men, respondent and Intervenor, should be recognised as a legal
purchaser of the house.

In its judgment the court said:

"The court has not been shown a copy or the original of the contract signed by the
plaintiff and defendant. The court does not know what the terms and conditions of the
agreement were. As a result of this

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omission, the court shall infer that the agreement was unconditional and that time
of completion of the sale was not of the essence...."

The learned judge summarised the evidence. He said according to the evidence of the
respondent , the contract was made on 25th August,1992, when the respondent responded to
the advertisement for sale of the house made by the 1st appellant. On 26th August, 1992, the
respondent paid K800,000 to the 1st appellant. The respondent then started to source for
funds to buy the house. During September, 1992 the 1st appellant tried to get the purchase
price from the respondent but she failed. On 12th October, 1992, the 1st appellant decided to
sell the house to the 2nd appellant and signed a contract for sale with Mr Randee, the 2nd
appellant. The court went on:

"The following account clearly shows that Miss Mwenya was too much in a hurry and did
not give the plaintiff sufficient time to look for the purchase price. She only gave him
 the month of September, 1992. I do not think that delay of 30 days to find K12 million
can be said to be innordinate or unreasonable. A delay of four to six months would have
been undoubtedly too long for any vendor to continue waiting for the purchase price.
The one month or one and half months delay by the plaintiff to find K12 million could
not be said to be too long to justify a rescission of a contract. Since time of completion
of the sale was not a term of the contract, the plaintiff was not guilty of breach of any
term by the short delay in finding the purchase price.... I rule that the contract of sale
between plaintiff was still subsisting when the 1st appellant purported to rescind it, and
it still subsists now. The purported sale of the house to Mr Randee was a breach of
contract on the part of the defendant."

The appellants abandoned grounds 1 and 7. They argued grounds 2-6. The learned advocates
for the appellants, Miss Sharp contended in ground 2 that the learned trial judge erred in law
by holding that a valid contract was in existence when there was no evidence produced before
it to prove such contract. What was in existence was preliminary agreement which was not
enforceable in the absence of a formal contract of sale. She argued that the correspondence
between the 1st appellant and the respondent amounted to a preliminary negotiation which
was included to culminate into a concluded contract but from which either party could retire
before the formal contract concluded. she then referred the court at Halsbury's Law of
England 3rd Edition Vol. 34 page 192.

In ground 3 Miss Sharp submitted that the court below erred in law by granting the remedy of
specific performance to the respondent when there was a more appropriate remedy of
damages since there was a bona fide purchaser for value without notice: refer Pacific Mother
Auctions Private Limited v Motor Credit (Hire Finance) Limited (1965) 2 ALL E.R 105.

She argued ground 5 that in the alternative, if this court finds that the 1st appellant's letter of
25th August, 1992 amounted to a valid contract, then the

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Judge erred both in law and in fact by not finding that the contract was terminated by the
respondent's own breach: See Encyclopedia of Forms and Precendents 4th Edition Vol 17 page
749, Sutton and Shannon on Contracts Butterworths 7th Edition page 325.

In ground 6, Miss Sharp submitted that the court below erred in law by applying the Sales of
Goods Act 1893 to transaction involving sale of Land.

The respondent's advocate Mr Musaba of Mungomba and Associates responded to five grounds
of the appellants grounds of appeal. He said the appellants' ground of appeal is misconceived
in that there is sufficient evidence of a concluded contract between the 1st applicant and the
respondent which contract neither left anything to future treaty nor specifically stated that the
parties would treat the said contract merely as a preliminary agreement and/or subject to a
further or formal contract to be drawn. Mr Musaba argued that the sufficient note or
Memorandum as desired by the Statute of Frauds 1677 being the 1st appellant's letter of offer
to the respondent dated 25th August, 1992, did not indicate that the sale transaction would
subject to a formal contract to be drawn up nor is such an inference capable of being drawn
from the said letter. In any case the preliminary negotiations were held by the parties prior to
the letter of offer. He referred to page 25 of the record of appeal and Fry and Specific
performance 8th Edition page 25 paragraphs 506 - 508.

He argued ground 3 that notwithstanding the fact that completion was to be within thirty days
from the date of contract, the court did not fall into error in law when it held that the contract
between the 1st appellant and the respondent was unconditional in respect of time of
completion in that there was nothing in the said letter indicating that time was of the essence
of the contract. He said the holding of the judge in this respect ought not to be misconstrued
as having implied that the contract between the parties was unattended by conditions in its
entirety, but that even though the parties agreed that completion would be within thirty days,
nevertheless they did not agree nor intend that time be of the essence of the contract. See
Cheshire and Fifoot's Law of Contract 10th Edition 499 paragraphs 1 - 3 where the learned
authors say:

"By way of summary, it may be said that time is essential firstly if the parties expressly
stipulate in the contract that it shall be so; secondly, if in a case where one party has
been guilty of undue delay, he is notified by the other that unless performance is
completed within a reasonable time the contract will be regarded as at end; and lastly if
the nature of the surrounding circumstances or of the subject matter makes it
imperative that the agreed date should be precisely observed."

Mr Musaba argued that nothing at page 25 indicates that time was of the essence. He said
contract can only be repudiated if a notice is given, the stipulated period. He refers the court
to appeal No. 4 of 1992 Dennis Lyuwa v Cold Storage of Zambia (unreported) and concluded
that in the absence of completion Statement by the Vendor to the purchaser time was not of
the essence of the contract.

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In ground 4 Mr Musaba submitted that the learned judge was in order to have decreed the
remedy of specific performance in favour of the respondent instead of damages and that the
second appellant was not a bona fide purchaser for value without notice. He argued that an
order for damages would not have been sufficient to redress the respondents plight and
therefore the judge properly exercised his discretion in pronouncing an Order for specific
performance in the respondent's favour as being the more appropriate remedy. He referred
the court to the case Hutton v Walting (1947) 2 AII E R 641 at 641 where Jenkins, J., said:

"The normal common law remedy for breach of a contract, namely damages is not in all
cases an adequate remedy."

He also referred to the case of Tito v Waddel (No. 2) (1977) Ch. D.P. 106 at p. 322 where it
was stated:

"The question is not simply whether damages are an "adequate" remedy but whether
specific performance as it were will do more perfect and complete justice than award of
damages.
This is particularly so in all cases dealing with a unique subject matter such as land."

Mr Musaba argued that the decree upon being pronounced was practically enforceable and has
in fact since been complied with as in fact, the respondent prior to and during the proceedings,
was a tenant of the 1st appellant, and already in possession of the property the subject of the
present appeal. A certificate of title has since been issued in the respondent's name and his
family continues to live on the property.

Mr Musaba further argued that the 2nd appellant was not a bona fide purchaser for value
without notice as he had:

(a) Actual notice of a purportedly and/or allegedly failed agreement of sale of the same
property between the 1st appellant and the respondent. He referred to Halsbury's laws
Vol. 16 4th Edition para. 1322 on p. 887 where the learned author states:

"Notice may be actual or constructive and where the said notice is imputed on the
subsequent purchaser, then the plea of purchaser for value without notice is defeated."

He further argued in the alternative that:

(b) The 2nd appellant had constructive notice of the fact that the respondent was in
possession as tenant of the property he too desired to purchase. He argued that notice
that the land is in possession of tenant puts the purchaser on inquiry as to the terms of
the holding and he has constructive notice of the tenants' rights including a possible
agreement for sale to him.

He referred the court to Hunt v Luck (1902) 1 Ch. D.P p 428

where it was:

"held in that case that the occupation of land by a tenant affects a

purchaser of land with constructive

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notice of all that tenants rights including an agremment for sale to him
by the vendor."

"A tenant's occupation is notice of all the tenant's rights. It means that if a purchaser
has notice that the vendor is not in possession of the property, he must make
inquiries of the person in possession and find out from him what his rights are and, if
he does not choose to do that, then whatever title he acquires as purchaser will be
subject to the title or rights of the tenant in possession."

He said the 2nd appellant had constructive notice in that when he was taken to view the house
by the 1st appellant, they found people living in the house. Hence no title was acquired by
2nd appellant and if he acquired one it was subject to the rights of the respondent.

Mr Musaba responded in ground 5 that the judge did not fall into error in fact or in law by not
finding that the said contract was terminated by the respondent's own breach in that acts or
omissions were done or the part of the respondent as to amount to a breach of the contract of
sale. To the contrary the 1st appellant failed and/or neglected to perform part of the contract
as agreed on by the parties, in the contract being the 1st appellant's letter of 25th August,
1992, thus:

(a) the respondent paying to the first appellant as part of the purchase price an initial
amount of K800,000.00
(b) that the 1st appellant using the said sum to redeem mortgage she had on the property
under sale;
(c) after redemption, the 1st appellant than transferring title of the property to the
 respondent

However, the 1st appellant failed and/or neglected to transfer title of the property to the
respondent before she could receive the balance of the purchase price and as contracted
between the parties. He referred the court to the case of Killner v France (1946) 2 all E.R. p.
83 where Stable, J., said:

"completion" in the contract had its usual meaning i.e. the complete conveyance of the
estate and final settlement of the business."

He argued that in the instant case, the 1st appellant was firstly supposed to transfer title of
the property to the respondent: the complete conveyance of the estate, before the
respondent could pay her the balance of the purchase price: the final settlement of the
business.

As regard ground 6, Mr Musaba submitted that though it was conceded that the sale of Goods
Act 1893 does not apply to contracts involving disposition of an interest in land nevertheless
reference and/or reliance on the said legislation by the judge is not sufficient as to warrant this
court allowing this appeal for the following reasons:

(a) that the provisions of Sections 10 and 22 of the Sale of Goods Act 1893 on stipulations
as to time and a bonafide purchaser for value without notice are not at variance with
the general law of contract;

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(b) that an award of damages to the respondents would not have been adequate to redress
his plight as he had acquired a very special and/or very unique interest in the property
having lived in it for at least eight (8) years as at the date of judgment and thus the
decree of Specific Performance has the more appropriate remedy. He then urged the
court to dismiss the appeal with costs.

We have anxiously considered the oral evidence on record and the submissions by both
learned counsel. We have also examined the judgment of the learned trial judge, the
documents and authorities cited. The issue for determination, as we see it, however, is
whether the letter written by the 1st appellant to the respondent on 25th August,1992,
constitute an offer.

The letter reads as follows:

"Mr. P. Kapinga
LUSAKA
Dear Sir,
re: SALE OF PLOT NO. 4109 - SUNNINGDALE
As per our discussion, I now offer you this Plot at K12 Million. The first payment of
K800,000.00 has to be paid immediately. On completion of this transaction, I will
transfer the title deeds and you will pay me the balance, and this will be within 30 days
from the date hereof.

Kindly let me know if this offer is accepted.

 Yours faithfully,

Signed
JANE MWENYA"

The above letter was written on 25th August, 1992 and on 26th August, 1992, the respondent
accepted the offer and paid K800,000 deposit as demanded in the letter of offer and which
deposit the 1st appellant used to redeem the mortgage on the property.

Miss Sharp on behalf of the appellant argued that the learned trial judge was in error when he
held that a valid contract was in existence when there was no evidence produced before it to
prove such contract. She said what was in existence was a preliminary agreement which was
not enforceable in the absence of a formal contract of sale. She further argued that the
correspondence between the 1st appellant and the respondent amounted to a preliminary
negotiation which was intended to culminate into a concluded contract of sale.

In the case of Vincent Mijoni v Zambia Publishing Company Limited Appeal No. 10/1986
(unreported) this court had this to say:

"It seems to us that it is now settled that for a note or memorandum to satisfy Section
4 of the Statute of Frauds, the agreement itself need not be in writing.

p19

A note of memorandum of it is sufficient provided that it contains all the material terms
of the contract such as names or adequate identification of the parties, the description
of the subject matter and the nature of the consideration (See Cheshire and Fitfoot's
Law of Contract 9th Edition at p.186 under the heading:

The contents of the note or memorandum). It has also been said that latters may
themselves constitute the contract and the written evidence of it. It follows that
whether there is a binding contract or not it must depend on the construction of the
letters."

The letter dated 25th August, 1992, by the 1st appellant addressed to the respondent is not in
dispute. It has identified the parties, the subject matter of the agreement and the
consideration of K12 million. The offer was made by Miss Jane Mwenya to Mr P Kapinga as per
their discussions to purchase Plot 4109, Sunningdale, Lusaka at K12 million. The first
payment of K800,000.00 had to be paid immediately. The name of the vendor and the name of
the purchaser, the subject matter plot 4109 and the consideration of K12 million were all
featured in that letter of 25th August, 1992. The accepatance of the offer was clearly made by
payment of K800,000.00 deposit which the vendor used to clear the mortgage. There was
therefore nothing left to be included in the future.

In the case of Mundada v Mulwani and Others (1987) Z.R. we said:

"We will deal first with the question of the learned judge's discretion to make an order
for specific performance. In this respect we are quite satisfied that the majority of the
authorities cited to us related to specific performance of contracts other than the
contracts for the sale. The law concerning specific performance of contracts relating to
the sale of land is quite clearly set out in paragraph 1764 of contracts 25th Edition
 which reads in part:-

Land

The law takes the view that damages cannot adquately compensate a party for breach
of contract for the sale of an interest in a particular piece of land or of a particular
house (however ordinary).... This authority is supported in countless other cases and
this case it is quite clear that the learned trial judge did not have his attention drawn to
the fact that his discretion in relation to specific performance for the sale of land was
decidedly limited."

In this case the preliminary negotiations were had by the parties as indicated by the letter. We
agree with the learned author in Fry on Specific Performance 6th Edition at page 244
paragraph 506 - 508 that when the contract is not expressly stated to be subject to formal
contract it becomes a question of construction, whether the parties intended that the term
agreed on should merely be put into term or whether they should be subject to a new
agreement the terms of which are not expressed in details.

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In Lloyd v Nowell (1985) 2 Ch. D.P. 744, a writing purporting to be an agreement for a lease
but expressed to be "made subject to the preparations and approval of a formal contract" was
held not to be a concluded contract and the vendor could not waive such a stipulation. In the
matter before us the parties intended that the terms agreed on should merely be put into
form.

In relation to delay Cheshire and Fifoot's Law of Contract 10th Edition on page 499 pages 1, 2
and 3 thereof puts the matter thus:

"By way of summary, it may be said that time is essential firstly, if the parties expressly
stipulate in the contract that it shall be so; Secondly, if in a case where one party has
been guilty of undue delay, he is notified by the other that unless performance is
completed within a reasonable time the contract will be regarded as at end; and lastly,
if the nature of the surrounding circumstances or of the subject makes it imperative
that the agreed date should be precisely observed."

We are satisfied, therefore, that upon a proper construction of the 1st appellant's letter dated
25th August, 1992, as at page 25 of the record a sufficient note or memorandum existed of
which time was not of the essence. That there was no unreasonable delay and that no
completion statement was issued. We would also hold as did the trial judge that there was no
basis for rescission.

We now turn to ground four. It was submitted that the trial judge erred in law by granting the
remedy of specific performance to the respondent when there was a more appropriate remedy
of damages since there was a bonafide purchaser for value without notice. The respondent's
counsel argued that the learned trial judge was in order to have decreed the remedy of specific
performance in favour of the respondent instead of damages and that a 2nd Appellant was not
a bonafide purchaser for value without notice. He said damages would not have been sufficient
to redress the Respondent's plight. He referred to the case of Tito Waddel (No. 2 1997) Ch.
D.P. 106 at p. 322 where it reads:
 "The question is not simply whether damages are an 'adequate remedy but whether
specific performance as it were will do more perfect and complete justice than award of
damages. This is particularly so in all cases dealing with a unique subject matter such
as land."

The learned lawyer for the respondent further argued that the 2nd appellant was not a
bonafide purchaser for value without notice as he had:

(a) actual notice of a purportedly and/or allegedly failed agreement of sale of the same
property between the 1st appellant and the respondent. He then referred us to
Halsbury's Laws of England para 1322 on page 887 Vol. 16 4th Edition where the
learned author said:

"Notice may be actual or constructive and where he said notice is imputed on the
subsequent purchaser then the plea of purchaser without notice is defeated."

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(b) in the alternative the 2nd appellant had constructive notice of the fact that the
respondent was in possession as tenant of the property he too desired to purchase.

The learned counsel argued that Notice that the land is in possession of a tenant puts the
purchaser on inquiry as to the terms of the holding and he has constructive notice of the
tenant's rights including a possible agreement for sale to him. He referred us to the case of
Hunt v Luck (1902) 1 Ch. D P 428 where it was held:

"in that case that the occupation of land by a tenant affects a purchaser of land with
constructive notice of all that tenants' rights including an
agreement for sale to him by the vendor.

It means that if a purchaser has notice that the vendor is not in possession of the property he
must make inquiries of the person in possession of the tenant who is in possession - and find
out from him what his rights are and, if he does not choose to do that then whatever title he
acquires as purchaser will be subject to the title or rights of the tenant in possession."

We have considered this ground of appeal. It is clear from the record and the judgment of the
trial court that when the 2nd appellant visited the property he found the respondent in
possession of the property. He had therefore constructive notice and when he purchased the
property his purchase was subject to the respondent's title or rights of the respondent.

We would hold as did the learned trial judge, that the 2nd appellant was not a bonafide
purchaser for value without notice. We adopt the opinion of the learned author of Halsbury's
and the enunciation in Tito v Waddel (No. 2); Hunt v Luck; and other authorities herein
before adequately referred to. This ground would also fail.

We have held in ground 3 that a letter at page 25 of the record constituted a valid contract and
that there was no basis for rescission. We find it superflous to repeat ourselves except to say
by way of emphasis that the purported rescission was null and void.

All in all and for reasons we have given, we would dismiss this appeal. We confirm the trial
judge's decision ordering the specific performance of the contract for the sale of Plot 4109,
Sunningdale, Lusaka to the respondent by the first appellant. Costs to the respondent and to
be taxed if not mutually agreed.

Appeal dismissed
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