MAKAMURE v DEVEN ENGINEERING (PVT) LTD 2008 (2) ZLR 319 (H)

Flynote

Contract — option — right of first refusal (pre-emption) — meaning — what rights are given to grantee — when right exercisable — third party must make offer for the property — duty of grantor before accepting such offer — right cannot be exercised in the absence of an offer by a third party —grantor of right not compelled to offer property for sale to a third party

Practice and procedure — application — urgent — urgent applications should not be brought where relief is dependent on the conclusion of an action launched or to be launched

Headnote

Litigants must refrain from seeking relief in an urgent manner where such relief is dependant on the conclusion of an action launched.

The applicant was employed by the respondent company. When he left its service, having worked there for nearly four years, he retained the car that had been allocated to him. He sought an order compelling the respondent to sell the car to him at the current market value. The relevant clause in the contract of employment provided that assigned vehicles shall be disposed of after three years of continuous use by the employee concerned and, where applicable, subject to the lease hire company's laid down conditions. The user would be given a right of first refusal to purchase the vehicle at a price to be determined by reference to the lease hire company's laid down value or any other value as determined by the executive directors.

Held, that there was an agreement offering the applicant a right of pre-emption or first refusal, which entitles the holder to the first opportunity of buying if the seller decides to sell. For the right to be exercisable there must be an offer made for the property by a third party for the property which is subject to the right. At that stage the obligation of the grantor, before accepting the offer of the third party made with a specific price, is to offer the property for sale to the grantee to purchase the property at the price being offered by the third party. The grantee is then at liberty to accept or refuse the offer made to him. Thus are the conditions of first refusal satisfied.

Held, further, that where there is no offer on the table for the grantor to accept, there can be no right of first refusal for the grantee to exercise. The right cannot be exercised in a vacuum. Nor can the grantor be compelled to offer the property for sale so that the grantee may then exercise his right of first refusal. In casu there was no offer on the table, nor was there a third party vying to purchase the car from the respondent. There was no price specified on the vehicle. The applicant could thus not exercise a right of pre-emption.