BATER & ANOR v MUCHENGETI 1995 (1) ZLR 80 (S)

1995 (1) ZLR p80

Citation 1995 (1) ZLR 80 (S)

Case No Judgment No. S-23-95

Court Supreme Court, Harare

Judge Gubbay CJ, Korsah JA & Ebrahim JA

Heard 6 February 1995

Judgment 16 February 1995

Counsel R Harvey for the appellants

T Biti for the respondent

Case Type Civil appeal

Annotations Link to case annotations

Flynote
Contract — breach — penalty — Contractual Penalties Act 13 of 1992 — application to transactions before
date of commencement of Act
Interpretation of statutes — presumptions — against retrospective operation D — strong presumption
against retrospectivity
Headnote
There is a strong presumption that an enactment does not operate retrospectively to
remove or in any way impair existing rights or obligations, unless such a construction
appears clearly from the language E used or by necessary implication.
Sections 8 and 9 of the Contractual Penalties Act 13 of 1992 relate only to actions taken by
a seller after the date of commencement of the Act, namely 23 October 1992. Any
cancellation in terms of the contract before then is valid although 30 days’ notice has not
been given. FHowever, the purchaser can seek relief under s 10 of the Act to reduce the
penalty suffered.
Cases cited
Gurure v Rusike 1992 (2) ZLR 334 (H)
Agere v Nyambuya 1985 (2) ZLR 336 (S) G
Nkomo & Anor v A-G & Ors 1993 (2) ZLR 422 (S)
R v Inhabitants of St Mary, Whitechaple (1848) 12 QB 120
A-G of SR v Thornton’s Transportation Rhodesia (Pvt) Ltd 1964 RLR 150 (G)
Sonia (Pty) Ltd v Wheeler 1958 (1) SA 555 (A)
Parker v W G B Kinsey & Co (Pvt) Ltd 1987 (1) ZLR 188 (S) H
1995 (1) ZLR p81
Gubbay CJ
Case information
R Harvey for the appellants A
T Biti for the respondent
Judgment
 Gubbay CJ: On 29 July 1982 the appellants, as joint sellers, entered into a written
instalment sale of land agreement with the respondent, as purchaser, in respect of the
property known as Lot 3 of Lot 74, Marlborough Township. B The purchase price of $26
000 was payable by an immediate deposit of $3 900, together with four amounts of
$775 payable on 31 January and 31 July over the years 1983 and 1984. The outstanding
balance of the purchase price was payable by monthly instalments of $236 due on the
first day of each month.
Clause 9 of the agreement provided, in relevant part, that: C
“Notwithstanding anything aforesaid or any extension of time or other indulgence or concession by
the seller(s) to the purchaser
(a) Should D the purchaser fail to pay any instalments or sum due by him within twenty-one (21) days
of due date,
(b) ... then the seller(s) shall be entitled to treat the full balance of the purchase price and interest as
immediately due and payable or summarily cancel this agreement in which event -
(i) the E purchaser shall forthwith vacate the property and the seller(s) shall be entitled to regain
possession;
(ii) the seller(s) shall be entitled to retain all amounts paid to date of cancellation aforesaid
as rouwkoop.”
On F 20 September 1989 the appellants served upon the respondent written notice of
cancellation on the ground that he was in arrear with the payment of the monthly
instalments to the extent of at least $552. The respondent was instructed to vacate the
property by the end of that month.
The G right of the appellants to cancel the agreement was disputed. The respondent
claimed that he was not in arrear with his payments. In the event, on 9 May 1991 the
appellants instituted proceedings in the High Court by way of notice of motion, in which
was sought an order that -
(i) cancellation of the agreement of sale between them and the respondent H be confirmed;
1995 (1) ZLR p82
Gubbay CJ
(ii) the respondent give vacant possession of the property; and A
(iii) all instalments paid in terms of the agreement of sale prior to cancellation be declared
forfeit.
The affidavits filed by the parties revealed an irresolvable dispute of fact. Accordingly, on
1 October 1991, the learned judge presiding ordered that the B matter be referred to trial
with the costs to be cost in the cause of the action.
At the inception of the trial, on 25 May 1994, counsel for the respondent proceeded to
raise, without objection, a point in limine. It was that, accepting that the cancellation
was procedurally regular in terms of the instalment sale of land agreement and
justifiable on the facts, as clause 9 constituted a C “penalty stipulation”, notice of
cancellation had not been given by the appellants in compliance with the requirements of
s 8(2) of the Contractual Penalties Act 1992.
After hearing argument, the learned judge reserved his decision until the next D morning,
when he upheld the point in limine and dismissed the action with costs. It is regrettable
that neither counsel referred the learned judge to the case
of Gurure v Rusike 1992 (2) ZLR 334 (H). If he had been, he may very well have
reached a contrary conclusion. Certainly he would have taken more time to consider the
issue.
The Contractual Penalties Act was brought into operation on 23 October E 1992 (GN 626
of 1992) and repealed the Conventional Penalties Act [Chapter 42]. It is divided into four
parts. Part I is headed “Preliminary”, Part II “Penalty Stipulations”, Part III “Instalment
Sales of Land”, and Part IV “General”. F
Section 3(1) of the Act, which falls under Part I, reads:
“This Act shall apply in respect of -
(a) all penalty stipulations; and G
(b) all instalment sales of land;
entered into on or after the 9th November 1973.”
The date is significant, being that upon which the Conventional Penalties Act passed into
law. The subsection simply locates or identifies the type of H
1995 (1) ZLR p83
 Gubbay CJ
agreements, A entered into on or after the date, to which the Act applies. Like its
precursor, the Act does not apply to any penalty stipulation or instalment sale of land
agreement if entered into before 9 November 1973. The purpose of s 3(1) is to ensure
continuity with what was provided under the Conventional Penalties Act. In short, it is
neither prospective nor retrospective.
Sections B 4 to 6, which come within Part II of the Act, repeat, if not always in identical
wording then to similar effect, the provisions of ss 3 to 6 of the repealed Conventional
Penalties Act.
Sections 7 to 10, in Part III, are new. They deal comprehensively with the C aspect of
instalment sales of land and afford the purchaser additional protection by the court. In
particular, ss 8(1) and (2), around the construction of which this appeal turns, read:
“(1) No seller under an instalment sale of land may, on account of any breach of contract by the
purchaser -
(a) enforce D a penalty stipulation or a provision for the accelerated payment of the purchase price; or
(b) terminate the contract; or
(c) institute any proceedings for damages;
unless E he has given notice in terms of subsection (2) and the period of the notice has expired
without the breach being remedied, rectified or discontinued, as the case may be.
(2) Notice for the purposes of subsection (1) shall -
(a) be F given in writing to the purchaser; and
(b) advise the purchaser of the breach concerned; and
(c) call upon the purchaser to remedy, rectify or desist from continuing, as the case may be, the
breach concerned within a reasonable period specified in the notice, which period shall not G be
less than -
(i) the period fixed for the purpose in the instalment sale of the land concerned; or
(ii) thirty days; H
whichever is the longer period.”
1995 (1) ZLR p84
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The prescribed form of notice is required to be given where the purchaser is A in breach
and the seller wishes to have recourse to any of the activities specified in subs (1). It is
with respect to each of them that s 8 operates or relates to, subject, of course, to their
inclusion as terms of the instalment sale of land agreement entered into on or after 7
November 1973.
The question is whether it was the intention of the lawmaker that a seller be B obliged to
comply with the laid down notice requirements, before being permitted to enforce a
penalty stipulation, terminate the contract or institute proceedings for damages, only on
or after the coming into force of the Act on 23 October 1992, that is, prospectively; or
whether the notice requirements applied to all instalment sale of land agreements
entered into on or after 7 November 1973. C
In Gurure v Rusike supra Smith J at 337E-G observed:
“I would point out that had Part III of the Contractual Penalties Act 1992 been in operation in July
1987 the cancellation of the agreement by the Ddefendant would not have been lawful because the
notice given to the plaintiff by the defendant’s lawyers would not have met the requirements of s 8
of that Act. Clause 9 of the agreement of sale provides that if the purchaser fails to pay any
instalment within 21 days of due date the seller is entitled to cancel the agreement summarily.
However, s 8 provides that no seller under an instalment sale of land may terminate a contract on
account of any breach of contract E by the purchaser unless he has given the purchaser a
reasonable period of not less than 30 days to remedy the breach.”
What the learned judge was saying was that because the seller’s act of cancelling the
instalment sale of land agreement preceded 23 October 1992, F the notice of cancellation
given to the purchaser did not have to comply with the thirty-day period of grace or the
other requirements laid down in s 8(2).
The correctness of that view of the matter is underscored when account is taken of the
fundamental rule of construction in our law, dating probably G from Codex 1:14:7, that
there is a strong presumption that retrospective operation is not to be given to an
enactment so as to remove or in any way impair existing rights or obligations, unless
such a construction appears clearly from the language used or arises by necessary
implication. The supposition is that the lawmaker intends to deal only with future events
and circumstances. See Agere vNyambuya 1985 (2) ZLR 336 (S) at 338H-339A; H
1995 (1) ZLR p85
Gubbay CJ
Nkomo A & Anor v A-G & Ors 1993 (2) ZLR 422 (S) at 428H-
429B; 1994 (3) SA 34 (ZS) at 38G-I.
Section 8 is not to be regarded as retrospective merely because it concerns instalment
sale of land agreements entered into in the past. That this is so is made plain by LORD
DENMAN in R v Inhabitants of St Mary, Whitechapel B (1848) 12 QB 120 where at 127 it
was said:
“The statute is in its direct operation prospective, as it relates to future removals only, and that it
is not properly called a retrospective statute because part of the requisites for its action is drawn
from time antecedent C to its passing ... (so) here ... one might incline to the view that the
sections in question are prospective in character, though part of the requisites for their action are
drawn from time antecedent to their passing.”
See also, D A-G of SR v Thornton’s Transportation Rhodesia (Pvt) Ltd 1964 RLR 150 (G)
at 153E; Devenish Interpretation of Statutes at p 194.
Moreover, to hold that s 8 has retrospective effect would be to create situations that the
lawmaker could never have intended. Suppose, for instance, that in 1985 a purchaser
breaches an instalment sale of land agreement entered into in 1975, which provided for
summary cancellation E and forfeiture of instalments paid. He acknowledges the breach,
vacates the property and accepts retention by the seller of the monies paid. Thereafter
the seller transfers the property to a third party. In November 1993 the original
purchaser comes across the Contractual Penalties Act. He brings action for an order that
the cancellation be adjudged invalid with the consequent right to re-occupy the property
and recover the monies forfeited. He would surely F be met with the answer that, as the
cancellation and forfeiture occurred before 23 October 1992, s 8 afforded him no relief.
On the accepted facts of this case, notice of cancellation for breach was given to the
respondent on 20 September 1989. Proceedings were instituted against G him on 9 May
1991 and the factual dispute between the parties was referred to trial on 1 October
1991. All well before the Act came into operation. Subsequent to 23 October 1992, the
appellants were not seeking, as the learned judge appears to have thought, the
authority of the court to cancel. They were merely claiming confirmation that the
cancellation of 20 September 1989 was lawful; that the status of the agreement be not
left in doubt. See H Sonia (Pty) Ltd v Wheeler 1958 (1) SA 555 (A) at 560 in fine-
561A; Parker
1995 (1) ZLR p86
Gubbay CJ
v W G B Kinsey & Co (Pvt) Ltd 1987 (1) ZLR 188 (S) at 194E-F; 1988 (1) SA 42 (ZS) at
47I-J; A Christie Law of Contract in South Africa 2 ed at p 635.
For these reasons it follows that the appellants did not contravene s 8 of the Contractual
Penalties Act. The point in limine should not have been decided in favour of the
respondent. B
It is open to the respondent, if upon the resumption of the trial he is held to be in
breach, to seek the relief available under Part II of the Act (see s 10). For the sake of
clarity I would add, however, that the relief given in s 9 is inapplicable to him, since that
provision, like s 8, is prospective in form. It only operates or relates to action taken by a
seller on or after the date of commencement of the Act. C
In the result, the appeal succeeds with costs. The order of the court a quo is altered to
read:
“The point in limine is dismissed with costs.” D
Ebrahim JA: I agree.
Muchechetere JA: I agree.
Granger & Harvey, appellants’ legal practitioners E
Honey & Blanckenberg, respondent’s legal practitioners