GURURE v RUSIKE 1992 (2) ZLR 334 (H)

Flynote

Contract — Contractual Penalties Act 1992 has replaced Conventional Penalties Act [Chapter 42] — court must reduce agreed penalty if disproportionate to prejudice suffered — date from which interest accrues on money which has to be refunded — period of notice required for cancellation of deed of sale under Part III of Contractual Penalties Act 1992

Headnote

On 5 June 1987 the parties entered into a deed of sale contract, whereunder the defendant sold a plot of land to the plaintiff. After the plaintiff had paid a substantial portion of the total purchase price, he failed to pay a monthly instalment due under the sale agreement. The defendant cancelled the sale. He immediately resold the property for a higher price than that which the plaintiff had agreed to pay. The defendant purported to retain the entire amount already paid by the plaintiff as rouwkoop. The plaintiff averred that the amount retained by the defendant was completely out of proportion to the damage he had suffered and should be reduced to an equitable amount.

Held, that the Contractual Penalties Act 1992 which replaced the Conventional Penalties Act [Chapter 42] applied to this deed of sale agreement as the legislation applies to all penalty stipulations as defined in s 2 entered into on or after 9 November 1973.

Held, further, that under the Contractual Penalties Act 1992 the court must reduce the penalty imposed if it is disproportionate to the loss suffered.

Held, further, that the defendant had in fact made a profit rather than a loss as a result of the plaintiff's default, as he had re-sold the property at a higher price.

Held, therefore, that the defendant must refund to the plaintiff the total amount paid by him towards the purchase price, but he could retain the amount paid by the plaintiff for rates and for the agent's commission.

Held, further, that the plaintiff was only entitled to interest at the prescribed rate from the day after the defendant received the money for the re-sale and not from the date of cancellation of the deed of sale agreement.

Held, further, that had Part III of the Contractual Penalties Act 1992 been in operation at the time of the cancellation, under s 8 of that Act the plaintiff would have been entitled to receive not less than 30 days' notice of cancellation.