GBS Mkandawire v New Building Society (Civil Cause 2132 of 1999) [2006] MWHC 18 (26 April 2006);
Hon. Justice Katsala
Mwangomba, of counsel for the Plaintiff
P. Chirwa, of counsel for the Defendant
M. Katunga (Mrs), official interpreter
of property known as Plot Number BL 26/37/10 Kanjedza, or in lieu thereof damages for breach of contract, damages for loss of rentals
and interest thereon at commercial rates, and costs of the action.
is the plaintiff who breached the same. The defendant also counter claims from the plaintiff rentals collected by the plaintiff in
respect of the said property.
defendant, where various properties were put up for sale. The plaintiff won the bid for property known as Plot Number BL 26/37/10
Kanjedza (hereinafter referred to as the property). His bid was for the sum of K520, 000.00. He said the sale was subject to the
condition that the successful bidder should pay a deposit of 25% of the bid price within 2 days from the date of sale if a bidder
intended to be considered for a loan by the defendant and make an acceptable arrangement in respect of the balance of the price within
30 days. The plaintiff paid the sum of K130, 000.00 being the required deposit and submitted to the defendant an application for
a loan of K150, 000.00. He said that he was required to make a further payment of the sum of K240, 000.00, the shortfall. He said
that the terms of the auction did not state when this sum would be payable as such it was his intention to pay it upon being so advised
by the defendant. He told the court that the defendant advised that the shortfall must be paid but did not say when, thereby giving
him the impression that the time of payment was not of the essence. By cover of his letter dated 8th March 1999, he paid the shortfall through two cheques. He said that but despite so paying, on 9th March 1999 the defendant cancelled the sale on the ground that he had failed to pay the shortfall.
at the material time. He told the court that the plaintiff won a bid for the purchase of the property at a public auction held by
the defendant on 20th July 1998. Among the conditions of the sale were that the plaintiff would pay a deposit of 25% of the purchase price of K520, 000.00
within 2 days of the auction and that the balance of the price would be paid within 30 days of the auction. He said it was a further
condition of the sale that if the plaintiff fails to pay the balance as stipulated then the defendant would be entitled to cancel
the sale and the plaintiff would forfeit to the defendant an amount equal to 5% of the purchase price plus the defendants expenses
incurred in conducting the auction. He said it was a further condition of the sale that the plaintiff would not enjoy possession
or rents profits from the property before the full purchase price is paid. He said the plaintiff, fully aware of these conditions
and having paid only K130, 000.00 and requiring a loan of K150, 000.00 from the defendant, he (the plaintiff) failed to pay the balance
of K240, 000.00 within the agreed time. He said further, the plaintiff collected rentals on the property which he refused to surrender
to the defendant.
properties on 20th July 1999. Trust Auctioneers & Estate Agents were the auctioneers. The plaintiff won a bid for property known as Plot Number
BL 26/37/10 Kanjedza at a price of K520, 000.00. The sale was subject to inter alia the following conditions which the plaintiff
signed in agreement with. That a plaintiff would pay a deposit of 25% of the bid price within two days of the sale. The evidence
shows that the plaintiff paid the sum of K130, 000.00 on 30th July 1999 which was outside the stipulated time period. It would appear that the defendant did not make an issue out of this delay
in payment of the deposit. It is also a fact that it was a condition of the sale that the balance of the purchase price would be
paid within 30 days of the sale or over any extended period agreed to in writing by the parties. It was a further condition of the
sale that a purchaser intending to finance the purchase from sources other than the defendant would pay a deposit of 50% of the purchase
price within 2 days of the sale. The plaintiff indicated that he wanted to finance the purchase with a loan from the defendant. On
17th August 1999 (27 days from the sale date), he submitted to the defendant an application for a loan of K150, 000.00. On the loan application
form the plaintiff indicated that he would manage to pay a sum of K240, 000.00 which was the balance of the purchase price after
deducting the deposit he paid and the loan he was applying for.
for the sum of K120, 000.00 was dated 30th March 1999, that is, it was post dated. By its letter dated 9th March 1999 the defendant cancelled the sale on the ground that the plaintiff had failed to pay the balance of the purchase price.
They enclosed a cheque for the sum of K80, 076.17 which was net balance from the deposit paid by the plaintiff after deducting advertising
and administration costs. The plaintiff did not accept the cancellation and returned the refund cheque to the defendant. The defendant
maintained their position and returned the cheque together with the plaintiff’s post dated cheque and another cheque for K86,
446.02 (after they deducted the sum of K36, 000.00 being six months rentals collected by the plaintiff in respect of the property
– net of with holding tax).
the defendant breached the contract of sale when it cancelled the sale.
It was duly signed by the plaintiff on 20th July 1999 acknowledging the existence and applicability of the conditions to him. I therefore do not think that it lies with the
plaintiff to turn round and say that he is was not made aware of the conditions before he signed the contract. Or that he dealt with
the defendant unaware of the applicable conditions. There is no evidence before me which suggests that the plaintiff was fraudulently
made to sign this contract. The evidence shows that he is a reasonably enlightened person and that he voluntarily signed the contract
and that he knew what and why he was signing.
loan from New Building Society or 50% if he intended to finance the purchase from sources other than a loan from the defendant. The
deposit was to be paid within 2 days of the sale and that the balance was to be paid within 30 days from the sale or over an extended
period agreed to in writing by the parties. The evidence shows that the deposit was paid on 30th July 1998 which was ten days after the sale. The evidence also shows that the defendant did not make an issue out of this delay.
In other words they did not consider this failure to comply with the condition so fundamental as to warrant a repudiation of the
sale. And in my judgment the defendant is estopped from raising in its defence this non-co-mpliance as one of the reasons for repudiation
of the contract.
In fact he indicated on the mortgage loan application form that he would manage to pay this balance. In his testimony before the
court he said he had the money readily available and that he did not pay it earlier because he was waiting for the approval of his
application for the mortgage loan. As already stated in this judgment the defendant by its letter dated 18th January 1999 asked the plaintiff to pay the balance of K240, 000.00. The relevant parts of the letter read as follows:
property for us to continue processing your application.”
follows:
being the balance to be paid to you.
cancelled.
K130, 000.00
K23, 923.00
K26, 000.00
K80, 076.17”
He says the conditions governing the sale did not specify the time for the payment of the balance as such the plaintiff could only
pay it upon being so advised by the defendant. It has further been argued that the defendant’s letter of 18th January 1999 did not specify when the balance should be paid, consequently, the plaintiff was not in breach of the sale agreement
when he sent his two cheques for the balance on 8th March 1999.
outside this period upon the written agreement of the parties. In my judgment the plaintiff was clearly in breach of the sale agreement
when he failed to pay the balance within 30 days from the 20th July 1998, and without written approval of the defendant. At that point in my view the defendant was at liberty to terminate the
sale. However, the defendant chose not to exercise its rights and proceeded with the sale and this in my considered view was a waiver
of their right to repudiate the contract on the basis of this breach. On the other hand, I wish to agree with the defendant’s
submission that the balance became payable immediately upon the defendant’s demand as contained in their letter of 18th January 1999. And I would add that in the circumstances of this matter the balance should have been paid within 30 days from the
date of the demand. I do not see why the plaintiff should have had more than 30 days bearing in mind that he was required to pay
the balance within 30 days from the date of the sale. I do not agree that the defendant ought to have specified in the letter when
the balance should be paid. In fact in my opinion the very fact that no date of payment or period within which payment should be
made was given, clearly meant that the balance was payable immediately.
any time he felt like paying. The transaction between the parties was of a commercial nature and I do not think such an approach
would be commensurate with acceptable commercial practice.
he so delayed because he wanted to make a few Kwachas in form of interest on the balance. He said he had put the money in a fixed
deposit so that it could earn interest. In my view this only signifies how greedy the plaintiff was. He invested the balance of the
purchase price and earned returns on it and at the same time collected rentals on the property he had not paid for in full.
was post-dated. The defendant could only have accessed the money on or after 30th March 1999. In other words the plaintiff wanted to pay the balance of the purchase price by instalments. He made this decision unilaterally.
This was contrary to the express provisions of the sale. It was a further breach of the sale agreement. In my view it would be erroneous
for this court to hold that the plaintiff was acting within the terms of the sale in so doing.
was not of the essence of the sale agreement. Briefly, the facts of Kajombo case are that on 1st October 1991 the applicant was offered to purchase the respondent’s house at a price of K11, 611.50. He was required to accept
the offer and pay the full purchase price within 90 days from the date of the offer. However if he intended to finance the purchase
with a mortgage loan then he was required to pay an acceptance deposit of K1, 636.50 within 30 days from the date of the offer. He
accepted the offer and paid the deposit since he opted to seek a mortgage loan from the New Building Society. The loan was not processed
in good time and on 2nd February 1996 the respondent re-offered the same house for sale to him at a price of K41, 142.72. The respondent argued that the
time for payment of the balance of the purchase price was of the essence and as such the earlier agreement had lapsed due to non-payment
of the balance within the stipulated 90 day period. On this point the court said:
the same might have been furnished well far out of the 90 day period stipulated in the offer letter of 1st October 1991…. I do not agree that the stipulation of 90 day period applied to a situation where a prospective purchaser wanted
to avail himself to loan facilities from lending institutions. What applied was the 30 day period for the initial deposit. This is
logical because the respondent acknowledges that an applicant for a loan would have no control over the process of the loan by the
financier.”
paid the deposit of K130, 000.00, the plaintiff had applied for a mortgage loan for the whole balance of the purchase price, that
is K390, 000.00. But as things were, having applied for a loan for only K150, 000.00, the plaintiff herein was required to pay the
balance of the purchase price, that is, K240, 000.00 within 30 days from the date of the sale.
the plaintiff who in turn wanted to abuse the defendant’s generosity and or liberalism. I do not think that the plaintiff has
any reason for complaining. If anything he should blame himself for having decided to practice his greed. The plaintiff has failed
to prove his case, which I dismiss in its entirety.
collected from the tenants on the property and interest at bank rates. The defendant also claims 5% of the purchase price as agreed
and liquidated damages.
and profits from the property before the full purchase price was paid. The plaintiff was fully aware of this condition but he went
ahead to collect the rent from the tenant on the property. This was clearly wrongful and the defendant would be entitled to judgment
on this claim. However, the evidence before the court clearly shows that the defendant deducted the sum of K36, 000.00 (which was
the rentals collected by the plaintiff net of withholding tax) from the sums due to the plaintiff on the cancellation of the sale.
Having so been already paid by the plaintiff, as it were, it is frivolous for the defendant to make the claim for the same rentals.
This claim fails. Automatically the claim for interest on the rentals fails as well.
of the sale. No specific amount was pleaded under this head and no evidence was adduced to support it. The claim was not even mentioned
during the entire hearing of the case. To all intents and purposes the defendant abandoned this claim. And even if you look at the
heads of deductions the defendant made from the money due to the plaintiff on the cancellation of the sale, this head of claim is
not included. In these circumstances one would be entitled to hold that the defendant waived its right to these damages and or abandoned
the claim for such damages. And so I hold.