Consensus Ad Idem re: Approach iro Privity of Contract ito Quasi Mutual Assent Doctrine

SC13-21 : MOSES MAWIRE vs RIO ZIM LIMITED (PRIVATE) LIMITED
Ruled By: GOWORA JA, PATEL JA and MAVANGIRA JA

In the case of Smith v Hughes LR 6 QB 597…, it was stated that:“If, whatever a man's real intention may be, he so conducts himself that a reasonable man would believe that he was assenting to the terms proposed by the other party, and that other party, upon that ...

SC13-21 : MOSES MAWIRE vs RIO ZIM LIMITED (PRIVATE) LIMITED
Ruled By: GOWORA JA, PATEL JA and MAVANGIRA JA

After hearing the parties on 9 March 2018, the court was of the unanimous view that the appeal was devoid of any merit and accordingly ordered as follows:“The appeal be and is hereby dismissed with costs. Full reasons will be available in due course.”The following are the reasons:BACKGROUND FACTSThe appellant ...

After hearing the parties on 9 March 2018, the court was of the unanimous view that the appeal was devoid of any merit and accordingly ordered as follows:

“The appeal be and is hereby dismissed with costs. Full reasons will be available in due course.”

The following are the reasons:

BACKGROUND FACTS

The appellant was employed by the respondent as a Human Resources Superintendent on 1 November 2006. He was based at the Head Office in Harare. In February 2009 he was transferred to Renco Mine. His contract of employment provided for, amongst other things, locality allowance, leave bonus, and a company vehicle which was to be fuelled and maintained by the company.

In February 2009, as happened nationwide, the respondent shifted from the use of the Zimbabwean dollar to the United States dollar when the Zimbabwean dollar became moribund.

On 19 February 2009, the respondent wrote a letter to the appellant notifying him, that, following the adoption of the United States dollar, his salary would be US$4,147=43 per month.

The letter was silent on allowances.

On 21 March 2009, through an office memorandum, all the respondent's employees were notified of the changes in their salaries and allowances. The memorandum provided, that, the respondent had implemented salary scales based on regional 'SADC' rates for employees in all grades. Consequently, transport and meals allowances, together with leave bonus payable when employees proceeded on annual leave, were to fall away with effect from 1 March 2009 for all employees in Grade 10 and above. Transport and meals allowances were also removed for employees in Grade 10 and above.

The respondent further indicated that the employees would be kept abreast of further changes.

Following the adoption of the United States dollar, the appellant was being paid a globular salary without any allowances. The respondent did not provide the appellant with the motor vehicle, but, rather, supplied him with fuel and paid for the maintenance of his personal car.

This was regardless of the fact that the respondent's contract of employment stated that he was entitled to allowances and a motor vehicle maintained by the company.

In June 2014, the appellant raised a complaint of unfair labour practice with the Labour Officer. He demanded payment of the following:

1. Outstanding locality allowance for the period from February 2009, when he was transferred to Renco Mine, up to the time when he made the complaint in June 2014;

2. Leave bonus from 2009 to 2013; and

3. Mileage for use of his personal motor vehicle from 1 March 2007 up to the time of the making of the claim.

At conciliation, the parties failed to reach a settlement and the matter was referred to arbitration.

Before the arbitrator, the appellant argued, that, he was entitled to payment of outstanding locality allowances and leave bonus and to a motor vehicle coupled with its maintenance and repairs. The appellant had been using his personal vehicle for the respondent's business as the respondent had failed to provide the motor vehicle. For this reason, he claimed compensation on the mileage of his vehicle on the same basis as if it was on hire to the respondent.

The appellant also contended, that, the respondent had unilaterally varied the contents of the contract of employment.

The respondent raised a preliminary point.

It was to the effect, that, in the event that the appellant's contract was found to have been violated, the appellant's claims had prescribed in terms of section 94(1)(b) of the Labour Act [Chapter 28:01] (herein after referred to as 'the Act').

The respondent also argued, that, none of the respondent's contractual benefits were being violated.

The arbitrator dismissed the preliminary point.

In his award, he made the finding, that, all the claims made by the appellant had been sustained. He thus ordered the respondent to pay the sum of US$197,563 for compensation as had been claimed by the appellant. This was to be paid in two equal monthly instalments of US$98,781=50 with the final payment being paid not later than 1 October 2014.

APPEAL TO THE LABOUR COURT

Dissatisfied with the arbitrator's ruling and award, the respondent appealed to the Labour Court.

A number of grounds of appeal were raised. The court a quo summarized them to amount to:

1. That prescription applied to the claims and those claims that were older than two years had prescribed in terms of section 94(2) of the Labour Act [Chapter 28:01].

2. That the contract of employment was varied by the office memorandum, and by conduct, and that the arbitrator therefore erred at law in his interpretation of the facts.

3. That, there was no prejudice to the employee's remuneration as occasioned by the new method of payment.

4. That, the arbitrator had grossly misdirected himself in the relevant findings of fact so much as to amount to a misdirection at law.

After hearing the parties, the Labour Court allowed the appeal and set aside the arbitral award.

The Labour Court accepted the argument presented by the respondent. It came to the conclusion, that, once an infraction has occurred, and becomes known by the affected party, it prescribes if it is not actioned within two years from the date when the dispute first arose.

The court ruled, that, all the outstanding claims that were more than two years when the claim was instituted by the appellant had prescribed.

On whether or not there was unilateral variation of the contract, the Labour Court found, that, the contract had been unilaterally varied by the respondent.

In its judgment, the Labour Court stated, that, although there was unilateral variation of the contract by the respondent - for five years the appellant received his salary without any complaint. By so doing, the appellant, who was a human resources practitioner, had demonstrated, by conduct, that he accepted the new salary structures.

As a result, the allowances claimed by the respondent were no longer claimable as there was now a new contract in existence.

The Labour Court further found no merit in the appellant's claim which was based on the contention that he had been hiring out his personal motor vehicle to the respondent.

The court a quo found, that, there was no standing agreement between the parties to that effect, and, therefore, to say that the appellant had hired out his vehicle to the respondent would amount to overstretching the contract.

THIS APPEAL

The appellant was aggrieved by the judgment of the court a quo and appealed against its decision on the following grounds:

1. The Labour Court fundamentally misdirected itself on a question of law in failing to find that the claims of the Appellant had not prescribed, they being claims arising from unfair labour practices of a continuing nature covered by section 94(2) of the Labour Act.

2. The Labour Court further erred on a question of law in finding that the contract of employment between the Appellant and the Respondent had been varied such that the appellant would not be paid the claimed allowances.

3. The Labour Court further erred in law in failing to award the Appellant compensation in respect of the usage of his motor vehicle for the business purposes of the respondent.

At the beginning of the hearing, counsel for the appellant indicated that he was abandoning the third ground of appeal which related to the issue of the motor vehicle.

Notably, this ground formed the bulk of the appellant's claim. He therefore restricted his argument to the first two grounds which relate to the claims for outstanding locality allowance and leave bonus.

SUBMISSIONS ON APPEAL

Counsel for the appellant's contention was that the Labour Court erred in ruling that the appellant's claims had prescribed and he placed reliance on section 94(2) of the Labour Act.

He argued, that, the unfair labour practice commenced in March 2009 and continued until the matter was brought to the attention of the Labour Officer and to the Labour Court.

The gravamen of his argument is that the dispute was of a continuous nature, and, therefore, on the basis of section 94(2) of the Labour Act, no prescription could run.

He further contended, that, the appellant's rights, conferred by the Labour Act, were “frozen” during the period of his employment. Therefore, any infractions of these rights could only be actioned after termination of the employment relationship.

On variation of the contract of employment, the contention was that the introduction and operation of multi-currencies, in February 2009, did not operate to vary the contracts of employment in any way.

The respondent remained indebted in respect of the appellant's allowances.

Secondly, the memorandum issued in March 2009 was a unilateral act by one party to a contract of employment and did not have the effect of validly taking away vested rights.

Counsel for the respondent submitted, that, the rights accorded by the Labour Act are not “frozen” as there are remedies provided by the Labour Act for any infraction of the rights. He described the appellant's contention as “judicial heresy.”

Counsel for the respondent further submitted that section 94 of the Labour Act must be read together with section 8 of the same Act.

Section 94 of the Labour Act limits itself to unfair labour practices and these the appellant had not been able to identify. For this reason, he submitted, the protection of section 94 of the Labour Act was not available to the appellant.

The kind of infractions that the appellant complained about are infractions that gave him a full and competent cause of action within a period of two years. He submitted that the appellant's suggestion, that the two year period must be counted starting from after the end of the employment relationship, is not worthy of any notice due to its frivolity.

ISSUES FOR DETERMINATION

The issues for determination by this court are:

1....,.

2. Whether or not the contract of employment had been varied....,.

Whether or not the contract of employment was varied

The question must of necessity, therefore, be answered whether or not the contract was in fact varied unilaterally.

The appellant submitted, that, the change in currency, following the adoption of the use of the United States dollars, did not alter the contract of employment. He further contended that he was still entitled to the car loan, as per the contract of employment, which was operative during the time when the Zimbabwean dollar was in use.

Counsel for the respondent, on the other hand, submitted that the local dollar contract could not have had its terms transposed into the US Dollar period. It was his contention, that, in order to successfully advance the contention that there had been variation of the contract, the appellant had to first identify the contract expressed in United States Dollars, set out its terms and then show how it was unlawfully varied by the respondent.

As already mentioned earlier, the respondent issued out an internal memorandum, on 21 March 2009, following the adoption of the United States dollar currency.

This memorandum had the effect of altering the appellant's contract of employment.

Following the memorandum, the appellant, who was the Human Resources Officer, accepted his new salary in terms of the memorandum. He was receiving a salary in terms of the memorandum, and, for the five years, he never raised any complaint nor did he challenge the new salary scale.

It is trite, that, consent can either be express or implied.

In the case of Smith v Hughes LR 6 QB 597…, it was stated that:

“If, whatever a man's real intention may be, he so conducts himself that a reasonable man would believe that he was assenting to the terms proposed by the other party, and that other party, upon that belief, enters into the contract with him, the man thus conducting himself would be equally bound as if he had intended to agree to the other party's terms.”

For five years, the respondent accepted a salary, in terms of a memorandum which had no provision for any allowances. By such conduct, he accepted the variation of the terms of his contract of employment.

If he genuinely felt that the memorandum breached his contractual rights, he ought not to have accepted the salaries and ought to have mounted his challenge at the pertinent time or within the permitted period.

In the absence of any challenge to the variation of the contract, it is clear, that, after variation of the contract of employment, there was acquiescence by the appellant.

If there was acceptance of the variation, as there was, there was no claim to be prescribed.

It follows, that, by his conduct, the appellant impliedly consented to the variation of his contract.

In such circumstances, he could not claim any benefits flowing out of the contract that had been varied.

The court a quo thus correctly found, that, the contract of employment was varied with the consent of the appellant, and, therefore, the allowances claimed by the appellant were no longer claimable under the contract ushered in by the memorandum.

It is for these reasons that we found that the appeal had no merit and proceeded to grant the order that we did as recorded at the beginning of this judgment.

SC12-21 : TOBACCO PROCESSORS ZIMBABWE (PRIVATE) LIMITED vs TONGOONA MUTASA and OTHERS
Ruled By: MAVANGIRA JA, MAKONI JA and CHATUKUTA AJA

This is an appeal against the whole judgment of the Labour Court upholding the National Employment Council - Tobacco Grievance and Disciplinary Committee's (NEC GDC Committee) finding that the appellant tacitly renewed the respondents' contracts of employment.FACTUAL BACKGROUNDThe following facts are common cause. The respondents were employed by the appellant ...

FACTUAL BACKGROUND

The following facts are common cause. The respondents were employed by the appellant on two-year fixed contracts beginning 1 May 2011 to 30 April 2013.

After the expiry of their contracts of employment, they continued to work for the appellant for eleven months following which the appellant offered them new contracts with the same terms as the expired ones.

The respondents signed the new contract which effectively regularised their employment in retrospect for the period of 1 May 2013 to 30 April 2015.

Upon expiry of the contracts, on 30 April 2015, the appellant retained the respondents until 22 June 2015 on the same terms as the expired contracts. It then offered them one-year fixed term contracts. The proposed contracts had a two-months probation clause and other less favourable conditions.

The respondents rejected the appellant's offer.

The appellant terminated their contracts of employment by letter dated 7 July 2015 on the basis that the negotiations between the parties had collapsed.

Aggrieved by the termination of their employment, the respondents noted a grievance of unfair dismissal with the appellant's Works Council.

The Works Council upheld the decision by the appellant's Human Resources department to offer the appellants one year contracts after the expiry of the two year contracts. It reasoned that there was no legal impediment to the appellant replacing the expired two-year contracts with other contracts which had different terms and conditions from the expired contracts.

The Work's Council further found that the respondents suffered no prejudice as they were paid for the period they worked whilst the parties were negotiating.

Thereafter, the respondents appealed to the National Employment Council - Tobacco Grievance and Disciplinary Committee (NEC GDC).

They submitted, that, in instances where an employer allows an employee to work after a fixed-term contract had expired, the contract is deemed to have been tacitly relocated on the same terms and conditions. Therefore, they submitted, there was no basis for the new contracts as there had been tacit renewal. They also averred, that, the alleged negotiations were inconsequential as they ensued after the tacit renewal.

In response, the appellant submitted, that, the National Employment Council - Tobacco Grievance and Disciplinary Committee (NEC GDC) had no power to interfere with the findings of facts made by the lower tribunal unless the findings were outrageous in their defiance of logic. The appellant contended that the two-month delay in notifying the respondents of the new offer could not be inferred to mean there was tacit renewal.

It did not intend to renew the two year contracts.

The National Employment Council - Tobacco Grievance and Disciplinary Committee ruled in favour of the respondents.

It held, that, tacit relocation could be safely presumed since the appellant did not communicate its intention to change the terms of the respondents' contracts before their termination and that the respondents were engaged on the same terms and conditions as before. It accordingly ordered the reinstatement of the respondents for the unexpired period of their contracts without loss of pay and benefits or payment of their salaries and benefits up to 30 April 2017.

Aggrieved by this decision, the appellant appealed to the Labour Court (the court a quo) on the ground, that, the National Employment Council - Tobacco Grievance and Disciplinary Committee (NEC GDC) grossly misdirected itself when it made a finding that there was a tacit renewal of the respondents' two year employment contracts simply because the appellant allowed the respondents to continue reporting for duty after the expiry of their contracts.

It argued, that, where there are clear indications that the other party did not intend to be bound by the old contract, there could not be tacit relocation of a contract that extended beyond the contractual period.

The appellant submitted, that, tacit relocation could not occur where the parties are engaged in negotiations over a new agreement. It contended that the respondents were allowed to work and were paid for the period when their new contracts were being attended to.

To the contrary, the respondents argued that there was tacit relocation in that the appellant allowed them to continue working on the same conditions from 1 May 2015 to 22 June 2015 notwithstanding that their contracts expired on 30 April 2015.

They also emphasized that the parties did not agree on a new arrangement.

The respondents further indicated that the appellant had the option of terminating their contracts of employment but allowed them to render their services and subsequently introduced unfavourable conditions. It was submitted that a finding against tacit relocation in the circumstances of the case would be contrary to social justice and fair labour standards of equity and fairness in the workplace.

DETERMINATION OF THE COURT A QUO

The court dealt with the issue of whether or not the National Employment Council - Tobacco Grievance and Disciplinary Committee (NEC GDC) erred in finding that the contracts of employment had been tacitly relocated.

In doing so, it considered the employment status of the respondents at the time their contracts were terminated. The court a quo found that there was no evidence to the effect that the new contracts were as a result of any negotiation process as no negotiations were done from 1 May to 22 June 2015.

It reasoned, that, the old contracts were tacitly relocated in that the appellant had allowed the respondents to continue working on the same terms and conditions as before, and did not communicate any intention to change the terms and conditions of the employment.

The court a quo also had regard to the precedent that the appellant did not immediately terminate or renew the respondent's contracts but allowed them to continue working, for some period, on the same terms and conditions of the expired contracts.

It reasoned, that, had the appellant not wished to be bound by the old expired contracts, it would have expressed that intention.

The court accordingly concluded, that, the National Employment Council - Tobacco Grievance and Disciplinary Committee's decision did not constitute an outrageous defiance of logic since the facts indicated that there was tacit relocation of the two year contracts.

Aggrieved by that decision, the appellant noted the present appeal on the following grounds:

GROUNDS OF APPEAL

“1. Having accepted that the fixed term contracts between appellant and each of the various respondents had come to an end and that new fixed term contracts have been offered, within two months of the expiry of respondent's contracts, the court a quo erred in finding notwithstanding those agreed facts, that the old contracts had been relocated.

2. The court a quo erred in not coming to the conclusion that the negotiation that took place after the expiry of the contracts were such as negated any finding that there was an extension of the contractual relationship between the parties by the quasi-mutual assent.

3. The court a quo erred in imposing upon appellant a contract it had not concluded to prejudice the clear terms it had actually offered. (sic)

4. Respondents, having rejected the terms of the contract offered by appellant, the court a quo erred in concluding that respondents had a contract to enforce.”

SUBMISSIONS BEFORE THIS COURT

At the hearing, counsel for the appellant submitted that the court a quo asked itself the wrong question, and, ultimately, gave itself the wrong answer.

The wrong question was whether it had been shown that there had been negotiations between the parties from 1 May 2015 to 22 June 2015, and, if not, what the effect of the absence of negotiations, during that period, would be.

The court a quo's ratio was that, upon the expiry of the contract, they only engaged in negotiations after a period of six weeks: because of that silence, there was tacit relocation of the contract.

He contended, that, the real dispute between the parties was not that the respondents' contracts had been relocated but that the respondents were aggrieved by the terms of the new contracts.

Counsel for the appellant submitted, that, the respondents admitted that there were negotiations and that they did not refuse to sign the one-year contracts but were looking forward to working under the old two-year contracts.

Counsel for the appellant further contended, that, a holistic analysis of the facts would show that relocation of contracts in 2015 could not have been the appellant's intention.

The parties knew of the need for a written contract at all material times as evidenced by the fact that in 2013 the respondents worked for eleven months without contracts and later signed contracts backdated to the period when they were without contracts.

The parties haggled over the terms of the one year contracts as the employees did not like the new terms of the contract. They did not argue that the old contracts had relocated.

To confirm the appellant's position some of the employees signed the one-year contracts.

He concluded by saying that tacit relocation cannot be inferred from the facts of this matter.

On being asked the date when the negotiations started, he was unable to pinpoint a date.

He however submitted that even if there were no negotiations between 1 May and 20 June 2015 a tacit relocation could not be inferred when the parties subsequently negotiated.

He further submitted, that, the fact that the parties were negotiating shows that there was no intention on the part of the appellant to revert to the old contract. He relied for that proposition on the case of Justin Kwangwari v Commercial Bank of Zimbabwe HH79-03.

He submitted, that, there is no period set in our law between the expiry of a fixed term contract and the conclusion of a new one for it to be held that there was tacit relocation. He urged the court to consider all the facts holistically in order to draw inferences consistent with the proven facts.

On being asked what would be the status of the employees in the seven (7) weeks, before the offer, he submitted that the status was determined by the new contract.

Counsel for the respondents submitted, that, the facts of the matter point to tacit relocation.

He indicated that the root of the dispute lies in the determination of the respondents' employment status in the seven (7) week period.

Accordingly, he referred to section 12(1) of the Labour Act [Chapter 28:01] (the Act) for the proposition that the legislature envisaged the existence of 'deemed contracts' in respect of an employee who works for an employer and is receiving or entitled to receive any remuneration notwithstanding that such contract has not been reduced to writing.

He also referred to section 12(2) of the Labour Act, which, so he argues, demands mandatory compliance by the employer to inform the employee, in writing, the period in terms of which they are engaged and section 12(3)(a) of the Labour Act which provides that where a contract does not specify its duration or date of termination, it is deemed to be one without a limit of time.

As such, he argued, the legislature sought to protect employees from unscrupulous employers who have more bargaining power than the employees.

He emphasized, that, there was tacit relocation in that the respondents reported for work and were remunerated under the old contracts.

He further indicated that the respondents' concerns did not only relate to their disgruntlement with the new offer but also spoke to the issue of tacit relocation.

He further submitted, that, the appellant's offer of new contracts of employment was immaterial to the concept of tacit relocation.

Additionally, he stated that the one-year contracts offered by the appellant were unjust, unfair, and violated the respondents' right to fair and safe labour practices and standards provided for in section 65 of the Constitution of Zimbabwe, 2013.

In rebuttal, counsel for the appellant submitted that there can be a delay after the expiry of the contract and the delay does not amount to relocation.

It would be wrong to say once there is a delay then section 12 of the Labour Act is the answer.

He submitted that section 12 uses “shall” in a directory sense and not in a peremptory manner. Failure to comply with it does not render conduct void.

He concluded by saying that section 12 of the Labour Act is what the employer was complying with in the seven (7) weeks.

ISSUE FOR DETERMINATION

From a consideration of the grounds of appeal raised and the submissions made, one issue falls for determination which is:

Whether or not the court a quo erred in finding that the contracts of employment in question had been tacitly relocated.

A reading of the record reflects that the ratio of the court a quo's ruling was that the respondents' continued rendering of services from 1 May 2015 to 22 June 2015 in terms of the expired contracts constituted tacit relocation of the contracts by the appellant.

That tacit relocation was at the centre of the parties' dispute is also evidenced in the way the matter progressed before the various fora. This will be shown by a perusal of the minutes of the appeal hearing of 26 October 2015 before the Work's Council to the respondents' appeal before the National Employment Council - Tobacco Grievance and Disciplinary Committee (NEC GDC Committee) and the subsequent proceedings in the court a quo.

THE LAW

It is settled law that a fixed-term contract of employment automatically expires at the end of the specified period unless the parties thereto mutually agree to its termination: see ZIMRA v Mudzimuwaona SC04-18.

However, in certain instances, despite the expiry of the period of employment, the employer-employee relationship may be found to exist owing to the parties' conduct under the concept of tacit relocation.

Tacit relocation, as it applies to contracts of employment, entails that where an employee's fixed term contract expires without renewal and the employee continues to render his services to the employer with the employer paying the previously agreed remuneration, the expired contract is deemed to be relocated. Therefore, the employee is deemed to be employed on the same terms and conditions as the previous contract.

In Gumbo v Air Zimbabwe (Pvt) Ltd 2000 (2) ZLR 126…, the court made the following pertinent remarks regarding the principle of tacit relocation;

“Finally, the best that can be said for the applicant is that in certain cases, akin to the present, there is a presumption that when the parties continue the employer-employee relationship beyond the contractual period, without agreeing new terms, there is a tacit relocation of the expired contract on the same terms and for the same duration.

In other words, all things being equal, it could be said that on 1 October 1999, the applicant commenced a new probationary period.

However, this presumption does not operate when it is clear that one of the parties has no intention of continuing on the terms of the expired contract: see Lilford v Black 1943 SR 46 at 47, where BLAKEWAY J said:

'The renewal of a lease or of a contract for services to be performed can take place either by express agreement or tacitly. If, after the expiration of the period provided for the duration of the contract, the parties continue their relationship without any fresh agreement the law presumes, in the absence of indications to the contrary, that they have agreed to enter upon a new lease on the same terms as the expired lease. But, this presumption does not operate when it is clear that the parties, or one of them, does not intend to carry on with the contract on the old terms.'” …,.

JOHN GROGAN in his book “Workplace Law” 8th ed…, states the following:

“If, after the agreed date for the termination of the contract, the employee remains in service and the employer continues to pay the agreed remuneration, the contract is deemed to have been tacitly renewed, provided that an intention to renew is consistent with the parties' conduct. The relocated contract will continue on exactly the same terms and conditions as the previous fixed-term contract, except that the duration of the contract need not be the same as that of the original contract; the life of the relocated contract must be determined in light of the particular circumstances of each case.”…,.

In Golden Fried Chicken (Pty) Ltd v Sirad Fast Foods CC & Ors 2002 (1) SA 822 (SCA)…, the court held:

“After the termination of the initial agreement, and prior to this letter, the parties (in the light of the facts recited) conducted themselves in a manner that gave rise to the inescapable inference that both desired the revival of their former contractual relationship on the same terms as existed before.

Taken together, those facts establish a tacit relocation of a franchise agreement (comparable to a tacit relocation of a lease) between the appellant and Sirad (Shell South Africa (Pty) Ltd v Bezuidenhout and Others 1978 (3) SA 981 (N) 984B-E).

A tacit relocation of an agreement is a new agreement and not a continuation of the old agreement (Fiat SA v Kolbe Motors 1975 (2) SA 129 (O) 139D-E; Shell 985B-C).

The fact that the appellant had forgotten that the agreement had lapsed is beside the point because in determining whether a tacit contract was concluded a court has regard to the external manifestations and not the subjective workings of minds (Fiat SA 138H-139D).”…,.

The principle that can be drawn from the cited authorities is that an inference of tacit relocation is dependent upon the continued existence of an employer-employee relationship after the expiration of the contract. The employee will continue rendering his services to the employer who, in turn, pays remuneration in terms of the expired contract.

Tacit relocation is based on the intention of the parties which must be consistent with their conduct. The court, in determining such an issue, considers all the facts holistically as it draws inferences which are consistent with the proved facts.

The principle of tacit relocation of contracts of employment appears to be embodied in statute, in particular section 12 of the Labour Court Act [Chapter 28:01] which provides:

“12 Duration, particulars and termination of employment contract

(1) Every person who is employed by or working for any other person and receiving or entitled to receive any remuneration in respect of such employment or work shall be deemed to be under a contract of employment with that other person, whether such contract is reduced to writing or not.

(2) An employer shall, upon engagement of an employee, inform the employee, in writing, of the following particulars —

(a) The name and address of the employer;

(b) The period of time, if limited, for which the employee is engaged;

(c) The terms of probation, if any;

(d) The terms of any employment code;

(e) Particulars of the employee's remuneration, its manner of calculation, and the intervals at which it will be paid;

(f) Particulars of the benefits receivable in the event of sickness or pregnancy;

(g) Hours of work;

(h) Particulars of any bonus or incentive production scheme;

(i) Particulars of vacation leave and vacation pay;

(j) Particulars of any other benefits provided under the contract of employment.

(3) A contract of employment that does not specify its duration or date of termination, other than a contract for casual work or seasonal work or for the performance of some specific service, shall be deemed to be a contract without limit of time:

Provided that a casual worker shall be deemed to have become an employee on a contract of employment without limit of time on the day that his period of engagement with a particular employer exceeds a total of six weeks in any four consecutive months.

(3a) A contract of employment that specifies its duration or date of termination, including a contract for casual work or seasonal work or for the performance of some specific service, shall, despite such specification, be deemed to be a contract of employment without limitation of time upon the expiry of such period of continuous service as is —

(a) Fixed by the appropriate employment council; or

(b) Prescribed by the Minister, if there is no employment council for the undertaking concerned, or where the employment council fixes no such period; and thereupon the employee concerned shall be afforded the same benefits as are in this Act or any collective bargaining agreement provided for those employees who are engaged without limit of time.”

Section 12(2) of the Labour Act has been interpreted to merely impose an obligation on the employer to supply the information and does not require the parties to sign a written contract: see Rumbles v Kwa Bat Marketing (Pty) Ltd (2003) 8 BLLR 811 LC.

The statement of particulars is not the contract itself nor is it even conclusive evidence of the contract: see L. MADHUKU, Labour Law in Zimbabwe, 2015…,.

However, a proper construction of section 12(1) of the Labour Act yields the result, that, where an employee renders services in return for remuneration, a contract of employment exists notwithstanding that such a contract has not been reduced to writing.

Tacit relocation is therefore presumed.

This is made clearer by the provisions of section 12(3a) of the Labour Act which states, that, a fixed term contract shall be deemed to be a contract without limit of time upon the expiry of such period of continuous service.

APPLICATION OF THE LAW TO THE FACTS

A determination of whether a written contract was automatically renewed in accordance with the principle of tacit relocation is a question of fact which has to be answered after an analysis of the particular facts and circumstances of each case: see Sun International (South Africa) Ltd v Crocodile Enterprises [2014] ZANWHC 52.

In casu, it is not in dispute that the parties' relationship was governed by a written contract of employment which terminated by effluxion of time on 30 April 2015. As at that date, the respondents would have ceased to be the appellant's employees.

However, the appellant allowed the respondents to continue working on the old terms and conditions of their contracts until 22 June 2015 when it then offered the respondents one-year contracts with less favourable conditions.

It can be reasonably inferred from this conduct of the parties that a new contract had come into existence by the principle of tacit relocation.

Applying the dicta in Golden Fried Chicken (Pty) Ltd v Sirad Fast Foods CC & Ors 2002 (1) SA 822 (SCA)…, that, tacit relocation of an agreement is a new agreement and not a continuation of the old agreement, it follows, that, a new agreement between the parties came into effect on 1 May 2015 owing to the appellant's conduct of retaining the respondents in its employ on the same terms and conditions of the expired contracts.

Such a finding would have resolved the matter; however, a secondary issue arises from the parties' submissions.

The issue for consideration is the effect of the alleged negotiations, if any, on the relocated contract.

This is necessitated by the appellant's position that the existence of negotiations regarding a new contract negates any finding to the effect that the old contracts were relocated. It is the appellant's position that the engagements between the parties, after the expiration of the contract, are a clear indication that it had no intention of continuing on the old terms.

It relied on communication by the appellant's Human Resources Manager, dated 7 July 2015, informing the respondents that the negotiations had collapsed, thus, a new contract would not materialize and the Works Council determination to that effect.

Per contra, the respondents aver, that, negotiations regarding the new offer made by the appellant did not have any legal effect on tacit relocation as a new contract had already materialised.

In their written submissions, they aver that the purported negotiations were induced by duress as the appellant's Human Resources' Manager threatened to dismiss them if they did not abandon the claim for tacit relocation and dispense with the services of their legal practitioners.

As such, they submitted that the 'alleged collapse of negotiations' in the circumstances, could not be a basis for the termination of employment.

Since tacit relocation is inferred from the presumed intention of the parties to the contract and their conduct, where it is established that both parties accepted that the old contract had terminated and engaged in negotiations regarding a new contract, tacit relocation will be negated.

This is for the reason that neither of the parties would have conducted themselves in a manner that gave rise to the inescapable inference that both desired the revival of their former contractual relationship on the same terms as existed before.

In this regard, the court a quo made a factual finding that there was no evidence to the effect that there were any negotiations between the parties from 1 May 2015.

It further found, that, although the appellant may have intended to terminate the contracts, it failed to communicate that intention.

It also took into account the manner in which the parties dealt with the same issue in the past.

When the initial two year contracts expired the employer did not immediately renew the contracts. It merely allowed the employees to continue rendering services on the same terms and conditions of the expired contracts.

It only regularised the contracts after eleven (11) months.

It is settled law that an Appellate Court may only interfere with the decision reached by a lower court based on factual findings where gross misdirection has been established: see Hama v National Railways of Zimbabwe 1996 (1) ZLR 664 (S).

The appellant has not alleged such a gross misdirection which necessitates this court's interference.

More importantly, there is nothing on record to show that the parties engaged in negotiations during the period 1 May 2015 to 22 June 2015 when they were without contracts.

There is no evidence, that, during this period, the appellant communicated to the respondents its intention as to whether or not the two-year contracts would be renewed or terminated.

The first meeting on record occurred in the appellant's board room on 29 June 2015, notably after the period upon which the respondents base their claim for tacit relocation. This is followed by the appellant's letter of 7 July 2015 indicating the collapse of the alleged negotiations.

Given this, the court a quo's finding cannot be assailed.

Its decision was based on a correct application of the principle of tacit relocation as enunciated in Gumbo v Air Zimbabwe (Pvt) Ltd 2000 (2) ZLR 126.

The fact of the matter is, that, for the two month period, that is 1 May 2015 to 22 June 2015, the conduct of the parties reflects that they intended to be bound by the expired contracts.

Those contracts were therefore tacitly relocated and were to expire after two years - just like the expired contracts.

In the circumstances of this case, a mere attempt to negotiate a new contract does not operate to vary an existing binding contract. The appellant's new offer thus amounted to an attempt to unilaterally vary the respondents' relocated contracts.

This is a classical case of the application of subsections 12(1) and (3a) of the Labour Act [Chapter 28:01] which seek to protect employees by estopping an employer from alleging the non-existence of a contract of employment where there has been continued service in terms of an expired contract.

Counsel for the appellant argued that it would be wrong to invoke section 12 of the Labour Act everytime there is a delay in re-negotiating an expired contract. He contended that section 12 of the Labour Act uses “shall” in a directory sense and not in peremptory terms.

It is the generally accepted rule of interpretation that the use of the word “shall” as opposed to “may” is indicative of a peremptory intent on the part of the legislature.

Failure to comply with the mandatory dictates of law renders the act done a nullity.

However, where the legislature has not explicitly provided that non-compliance is fatal, there is a presumption that the legislature left it to the courts to determine the consequences of non-compliance.

In Shumba & Anor v The Zimbabwe Electoral Commission & Anor SC11-08…, the court had occasion to deal with the issue of interpreting a statute that does not prescribe the consequences of non-compliance with a statutory provision.

In interpreting the provisions of the Zimbabwe Electoral Commission Act, CHIDYAUSIKU CJ remarked as follows…,:

"It is the generally accepted rule of interpretation that the use of peremptory words such as 'shall' as opposed to 'may' is indicative of the legislature's intention to make the provision peremptory.

The use of the word 'may' as opposed to 'shall' is construed as indicative of the legislature's intention to make a provision directory.

In some instances, the legislature explicitly provides that failure to comply with a statutory provision is fatal. In other instances, the legislature specifically provides that failure to comply is not fatal.

In both of the above instances, no difficulty arises.

The difficulty usually arises where the legislature has made no specific indication as to whether failure to comply is fatal or not.

In the present case, the consequences of failure to comply with the provisions of section 18 of the Zimbabwe Electoral Commission Act are not explicitly spelt out.

In those statutory provisions where the legislature has not specifically provided for the consequences of failure to comply, it has to be assumed that the legislature has left it to the Courts to determine what the consequences of failure to comply should be.

The learned author FRANCIS BENNION in his work Statutory Interpretation suggests that the courts have to determine the intention of the legislature using certain principles of interpretation as guidelines. He had this to say at pp21-22:

'Where a duty arises under a statute, the court, charged with the task of enforcing the statute, needs to decide what consequence Parliament intended should follow from breach of the duty.'

In Sutter v Scheepers 1932 AD 165 at pp.173, 174 the court gave guidelines on how the real intention of legislature can be arrived at. These were summarised in Pio v Franklin NO and Another 1949 (3) SA 442 (C) as follows:

'(1) The word 'shall' when used in a statute is rather to be considered as peremptory, unless there are other circumstances which negative this construction.

(2) If a provision is couched in a negative form, it is to be regarded as a peremptory rather than a directory mandate.

(3) If a provision is couched in positive language and there is no sanction added in case the requisites are not carried out, then the presumption is in favour of an intention to make the provision only directory.

(4) If when we consider the scope and objects of a provision, we find that its terms would, if strictly carried out, lead to injustice and even fraud, and if there is no explicit statement that the act is to be void if the conditions are not complied with, or if no sanction is added, then the presumption is rather in favour of the provision being directory.

(5) The history of the legislation also will afford a clue in some cases.'”

The principle which comes out of the guidelines is that where strict adherence to the wording of a statute leads to an injustice, or even fraud, in instances where no penalty is prescribed, it may be desirable to lean in favour of making the provision directory.

From the cited authorities, it is the general position that the use of the word 'shall' in a statutory provision requires mandatory compliance.

Where the penalty for infraction of the provision is not explicitly stated, it is for the courts to determine what the consequences of failure to comply should be. In doing so, the court must interrogate the purpose of the relevant statute and pronounce a penalty which is proportionate to the mischief the legislature sought to remedy.

It is my considered view that both provisions are peremptory owing to the specific use of the word “shall” which has mandatory connotations.

Section 12(1) of the Labour Act [Chapter 28:01] provides:

“12 Duration, particulars and termination of employment contract

(1) Every person who is employed by or working for any other person and receiving or entitled to receive any remuneration in respect of such employment or work shall be deemed to be under a contract of employment with that other person, whether such contract is reduced to writing or not.”

It is accepted that there is no explicit obligation on an employer, under this provision, to reduce a contract into writing. However, that fact alone does not render the provision directory.

The use of the word “shall” after a description of a factual set of facts in an employment set up, followed by the pronouncement of a specific outcome, is indicative of the fact that the legislature intended the provision to be peremptory.

In enacting section 12(1) of the Labour Act, it appears that the legislature envisaged a situation where services are rendered in return for remuneration but the recipient of the services later disputes the existence of a contract of employment.

The peremptory nature of section 12(1) of the Labour Act is not dependent on whether or not a particular act is done, which, in this case, would be a mandate on the employer to reduce a contract into writing. The peremptory nature of the provision lies in the deemed existence of a contract of employment which follows the rendering of services and remuneration for such services.

Once it is established that services have been rendered, and there is a correlative entitlement to remuneration or actual remuneration, a contract is deemed to be in existence.

It is prima facie proof of employment.

A similar interpretation can be ascribed to section 12(3) of the Labour Act. The peremptory nature of the provision stems from the fact that a contract is deemed to be without limit of time where no specific details of its duration are provided.

The same applies to a casual worker who continues rendering services notwithstanding the expiry of the specific period for which he was engaged.

Therefore, the onus to disprove the continued existence of the contract rests on the party disputing its existence.

It is my considered view, that, the legislature must have been cognisant of the fact that employees are vulnerable under some unscrupulous employers, hence the use of such peremptory provisions in section 12 of the Labour Act.

Having said the above, the circumstances of this case fall into the ambit of the sentiments of the court in Melamed and Hurwitz v Vorner Investments (Pty) Ltd 1984 (3) SA 155 (A) at 165B-C, that:

“…, a court may hold that a tacit contract has been established where, by a process of inference, it concludes that the most plausible probable conclusion from all the relevant proved facts and circumstances is that a contract came into existence…,.”

Applying this approach to the matter at hand, an inference of tacit relocation was justified on the facts of this case.

The court a quo's finding, that, the respondents' contracts were tacitly renewed from 1 May 2015, is unassailable. Therefore, the appellant's termination of the respondent's contracts of employment in the circumstances was grossly irregular.

An employer clearly cannot terminate a contract that has expired - even though it has been tacitly renewed.

The appeal therefore lacks merit and ought to be dismissed. Costs will follow the cause.

It is accordingly ordered as follows:

“The appeal is dismissed with costs.”

HH63-13 : BLESSMORE Z. MABVURAMITI vs ALTFIN INSURANCE COMPANY
Ruled By: MAFUSIRE J

The plaintiff's argument, in the letter from his legal practitioners, seems to be confusing the issues of interpellatio and mora ex persona. Even though he accepts that he did not pay the last premium, the plaintiff insists on the contract being treated as having remained alive because, according to paragraph 7 of the declaration, ...

The plaintiff's argument, in the letter from his legal practitioners, seems to be confusing the issues of interpellatio and mora ex persona. Even though he accepts that he did not pay the last premium, the plaintiff insists on the contract being treated as having remained alive because, according to paragraph 7 of the declaration, he “did not receive any correspondence from the defendant to inform him of the cancellation of the contract.”

In Asharia v Patel & Ors 1991 [2] ZLR 276 [SC] the Supreme Court held that where the performance of a contract has not been agreed upon between the parties, performance is due on conclusion or so soon thereafter as is reasonably possible. But, in that situation, the debtor does not fall into mora ipso facto. He must know he has to perform. This is known as mora ex persona. It only arises after interpellatio or demand.

In this case, interpellatio or demand on the plaintiff to pay his instalments was not necessary to place him in mora ex persona. By his own admission, the payment of the premium by him was the key to unlock the indemnity due by the defendant. The time for payment or performance had expressly been agreed upon. That the defendant may not have sent him correspondence about the cancellation of the contract does not change the legal position. If a party to a contract has committed a major breach of the contract the aggrieved party does not always have to go to the law; see KERR “The Principles of the Law of Contract”, 3^rd edition…,.. The aggrieved party is entitled to disregard the contract, wait for the defaulting party to sue and set up the default as a defence.

The above position is aptly summarised in a passage on pages 377 to 378 of KERR's book “The Principles of the Law of Contract”, 3^rd edition…,. It reads:

“If a party to a contract finds that the other party has committed a major breach of the contract he does not necessarily have to go to the law. If he is clearly in the right and does not desire to take any action at all he is entitled to disregard the contract. In such a case if he is sued on the contract by the other party that party's default is a complete defence. Thus, in Goldestein and Wolff v Maison Blanc [Pty] 1948 [4] 446 [C], defendant company in Cape Town placed an order for certain ladies' frocks to be dispatched to them from Johannesburg during the months of January or February 1945. They were in fact railed on 16 April 1945 and when the parcel was tendered to defendant in Cape Town it refused to accept it. The plaintiff then instituted action for the purchase price and tendered delivery. HERBSTEIN J found that time was of the essence of the contract [the goods being fashion goods which both parties knew were purchased for resale during a season limited in time] and that dispatch six or seven weeks late was not in compliance with the contract. He found too that;

'There was no obligation on the defendant, as alleged in the replication, to intimate at the end of February that it no longer required the goods. It was entitled to wait until delivery and then to repudiate (Federal Tobacco Works v Barron & Co, 1904 TS 483; Strachan & Co Ltd v Natal Milling Co [Pty] Ltd, 1936 NPD 376].'

This is in accordance with the rule enunciated many years ago by LORD BLACKBURN in The Mersey Steel and Iron Co. Ltd v Naylor Benzon & Co [1894] 9 AC 434 [HL] and adopted in our law:

'The rule of law…, is that where there is a contract in which there are two parties, each side having to do something…, if you see that the failure to perform one part of it goes to the root of the contract, goes to the foundation of the whole, it is a good defence to say, “I am not going to perform my part of it when that which is the root of the whole and the substantial consideration for my performance is defeated by your misconduct.'”

In an insurance contract, the failure to pay a premium goes to the root and is the very foundation of the contract. Contrary to the assertion by the plaintiff's legal practitioners, the breach was quite material.

There was no question of quasi mutual assent. The defendant had repudiated liability.

HH38-10 : LUCIA MUNYANYI vs LIMINARY INVESTMENTS AND ISRAEL GUMUNYU N.O.
Ruled By: MAKARAU JP

The applicant has sought to argue that she did not intend to part with possession before transfer but acted out of good faith, and in the belief that Dr. Mushonga would come through with the balance of the purchase price. In my view, it matters not that the applicant viewed her conduct in parting with possession ...

In my view, it matters not that the applicant viewed her conduct in parting with possession prior to the agreed date as an indulgence on her part. However, the mental reservation was not communicated to the first respondent. What was communicated to the first respondent, and accepted by it, was that occupation would no longer await transfer as per the written Agreement.

Occupation was coming sooner as per the new arrangement between the parties.

It is a trite principle of law of contract that where, by word or deed, one party to a contract gives out to the other a certain position, and that position is accepted, both parties are bound. This is referred to as the quasi-mutual assent doctrine, which is an intrinsic part of objectively establishing consensus ad idem between the parties to a contract. In this regard, I can do no better than refer to the words of GOLDIN J in Musgrove & Watson (Rhod) (Pvt) Ltd v Rotta 1978 (2) SA 918 (R)..., where he had the following to say -

“There are cases in which a contract is treated as having come into existence notwithstanding that one party's conduct conflicts with his real intention. (I.Pieters & Co. v Salomon 1911 AD 121 at 137; Levy v Banket Holdings (Pvt) Ltd 1956 (3) SA 558 (FC) at 561-3; Collen v Rietfontein Engineering Works 1948 (1) SA 413 (A). This type of contract is sometimes called “quasi-mutual assent” (WILLE and MILLIN, Mercantile Law of South Africa 16^th ed at 17; LEE, Introduction to Roman-Dutch Law at 220; Van Ryn Wine & Spirit Co. v Chandos Bar 1928 TPD 417 at 422). It has also been described as “the objective theory of contract” (Williston on Contracts revised ed vol 1 para 98; and Peri-Urban Areas Health Board v Breet N.O. and Another 1958 (3) SA 783 (T) at 789-90.”

The doctrine of quasi mutual assent has been part of our contract law from time immemorial, and it is on its application that the applicant is bound by the variation in the terms of the Agreement.

HH125-09 : TAKAWIRA MAPAYA vs STEELFORCE HOLDINGS (PRIVATE) LIMITED
Ruled By: MAKARAU JP

The plaintiff in this matter is an English teacher at a local girls school. In August 2007, he was in the process of building a residence for his family in one of Harare's suburbs. He approached the defendant for steel as per the diagram drawn up by his engineers. He was given a quotation of the cost of the material that he required. Some days later, he returned to the defendant and made payment of the amount reflected on the quotation by way of a bank transfer.

He furnished the defendant with proof of payment and was promised delivery of the steel.

He checked on progress of the delivery and was advised to give the defendant a few more days. He checked again and was referred to the defendant's Branch Manager at the Harare outlet. He was informed that the defendant was having difficulties in obtaining some of the steel that he had ordered and that the defendant was in fact considering refunding to him the amount he had paid for the steel that was unavailable. He insisted on getting all the steel that he had ordered from the defendant.

He then sought legal advice on the matter and after he had delivered a letter of demand from his legal practitioners, to the defendant, he received delivery of the bulk of the steel he had ordered, save the two items that form the subject of this suit.

On 16 October 2009, he discovered that the defendant had reversed part of his electronic money transfer and had returned into his account the cost price of the steel that had not been delivered. He, in turn, reversed the re-deposit. On the advice of his engineers, he bought part of the steel that the defendant had failed to deliver from some other source to protect his building project from the rains. Still aggrieved by the defendant's failure to deliver the outstanding items, he caused summons to be issued out of this court claiming delivery of the 2.147 tonnes of Y12 steel and the 0.085 tonnes of ANN wire.

The suit was defended.

In its plea, the defendant, whilst admitting that it gave the plaintiff the quotation that was adduced into evidence by consent, averred that at the time of giving him the quotation, the plaintiff was advised that the Y12 and ANN wire were not in stock and were currently not available in the country and may have to be imported. It was further averred that the plaintiff agreed to wait on his entire order until the two items of steel were available. The defendant thus conceded, in its plea that, the Y12 and ANN wire remained undelivered as it failed to source the two products locally and also failed to access foreign currency to import the steel. It denied that, in the circumstances, it was liable to deliver the outstanding steel to the plaintiff as claimed.

At the trial of the matter, the plaintiff gave evidence.

His narration of the facts, which are largely common cause, is as captured in the opening paragraph of this judgment. It was his specific testimony that he was not advised, at the time he made payment to the defendant for the entire order, that the defendant was experiencing any difficulties in procuring the Y12 and ANN wire. He was only told this after he had checked with the defendant's Branch Manger as to why his order was delaying after he had made the requisite payment. He did not know where the defendant was sourcing its steel. When he was advised that the defendant had secured some of the steel that he had ordered, he informed the defendant that he would wait until all the steel he had ordered was available.

The witness gave his evidence very clearly. He came across as a firm and unyielding man. Under cross –examination he remained firm that all he wanted was the steel that he had paid for. He was clear that he was not seeking damages from the defendant but was simply holding the defendant to the contract that it has concluded with him.

While the witness was quite firm about the propriety of his claim in the circumstances, I did not believe him when he testified that he was not made aware of the unavailability of the Y12 and ANN wire when he made payment. Given the unyielding stance that he has revealed in the witness box, it is most unlikely, in my view, that he would have accepted the delay in the delivery of the entire order had he been unaware that part of the order was unavailable at the time. It appears to me that he was prepared to wait for the defendant to receive the items from its supplier because he was aware that the products were not in stock at the time. According to his testimony, it was only when the defendant sought to refund the cost price of the outstanding steel that he sought legal advice on the matter and decided to hold the defendant to the written quotation.

After testifying as detailed above, the plaintiff closed his case without calling any other evidence, prompting counsel for the defendant to apply for absolution from the instance on the basis that before me was insufficient evidence upon which I could find for the plaintiff.

I dismissed the application on the turn and indicated that my reasons would follow. It is convenient that I now set them out. These they are.

In making his application, counsel for the defendant was quite alive to the fact that the plaintiff was approaching the court for an order for specific performance without an alternative claim for damages.

In his view, there was an undisputed supervening impossibility that prevented the defendant from fully discharging its obligations under the sale agreement. He further submitted that the plaintiff could not dispute that the defendant failed to secure the outstanding steel from its local supplier and also that it failed to obtain foreign currency from the Central Bank for the importation of the steel. In conclusion, he argued that by virtue of the supervening impossibility, the plaintiff was not entitled to specific performance as to order such would work an undue hardship on the defendant and would produce an injustice.

While agreeing, in the main, with the submissions made by counsel, it appears to me that in a claim for specific performance, the court may not prudently exercise its discretion after hearing only one party to the dispute. This is so because specific performance is a remedy in the discretion of the court and is founded in equity. That discretion has to be judicially exercised upon a consideration of all relevant facts. The discretion that the court enjoys in this regard is not confined to specific cases or is it circumscribed by rigid rules. It appears to me that a plaintiff claiming specific performance bears no onus to show that the grant of the order will not work an undue hardship on the defendant. A plaintiff, in our law, has the right to elect to hold a defaulting defendant to the contract and once having made that election, bears no further burden to prove that their election is equitable in the circumstances of the matter. Thus, if I am correct that the plaintiff bears no burden to prove that specific performance is equitable in the circumstances of their matter, there is no basis upon which a court, acting reasonably, can, at the close of the plaintiff's case, hold that the plaintiff has not adduced sufficient evidence to show that an order of specific performance should be granted in his or her favour.

It further yet appears to me that since specific performance can only be granted after a finding of breach of a material term of the contract, where such breach is still in issue, it is not prudent or even proper for the court to jump to resolve the dispute between the parties on the basis of the unavailability of specific performance without first determining the issue of the alleged breach.

At the close of the plaintiff's case, and in view of the contents of the plea, I felt that the issue of the alleged breach of contract was still alive and that there was need for me to hear the defendant's version of events to enable me to determine whether or not the defendant had breached the sale agreement as alleged.

It is on the basis of the above that I dismissed the application for absolution from the instance when it was made. I was also guided by the sound advice given by BEADLE CJ in Supreme Service Station (1969) (Pvt) Ltd 1971 (1) RLR 1 (A), that, when in doubt, a court must always lean towards the matter proceeding.

The defendant opened its case by calling one Martin Mahlamvana (“Mahlamvana”). He is a Sales Clerk with the defendant and has been in the employment of the defendant for a commendable thirty years. He was the first contact that the plaintiff made with the defendant.

His evidence was also to large extent a narration of the events that are common cause in this suit as to how the plaintiff was given a quotation for the steel he required and how payment was made some days later. Regarding whether or not the Y12 and ANN wire were in stock at the time the plaintiff sought the quotation and subsequently made his payment, the witness was adamant that the plaintiff was advised by Mr Mano, the Harare Branch Manager that these two were not in stock. He denied that he had personally assured the plaintiff that such were in stock. He further testified that, in his presence, the plaintiff was told at the time he made payment that these two types of steel were not in stock but that an order for them had been placed by the defendant's head office in Bulawayo. It was his evidence that the plaintiff was advised that the defendant was waiting for the local supplier to supply the steel. The plaintiff agreed to wait.

Finally, the witness testified that, currently, the defendant is not selling any steel products as these remain unavailable from the local supplier.

The witness gave his evidence in a measured manner. So measured was he in his manner of speech that at times he appeared slow. He would not exaggerate and would defer questions to his superior where these fell out of the ambit of his duties. He was not shaken under cross–examination. I gained a favourable impression of him as a truthful and reliable witness.

Mr Boyina Mano, the defendant's Harare Branch office manager, also gave evidence. He has been in the employment of the defendant for the past twenty-eight years.

His testimony was similar to that of Martin Mahlamvana. He testified that he personally advised the plaintiff that Y12 and ANN wire were not in stock and the plaintiff assured him and Martin Mahlamvana that he would wait until the two items were in stock.

The witness was shown an order that the defendant had placed with ZISCO Steel for steel lengths, including the Y12 and ANN wire in dispute in this suit. He identified the order, dated 18 June 2007 which was then adduced into evidence by consent. He also identified a schedule that was prepared by the defendant showing that no Y12 and ANN wire were delivered from ZISCO Steel on the order in June 2007. The witness further confirmed that application was made to the defendant's Bank for the allocation of foreign currency to import the steel from South Africa. Had this happened, the cost price of the steel, as given on the quote, would have been affected and this is why the defendant had indicated on the quote that prices were subject to change.

Finally, the witness testified that the supply of steel had not improved since 2007 due to viability problems at ZISCO Steel, the main supplier. Currently, the defendant does not have the Y12 and ANN wire in stock and will only get these once the supplier starts rolling out the products.

The witness gave his evidence well. He was refreshingly clear and was easy to follow in his answers to questions put to him in cross-examination. I gained the impression that he was telling the truth when he testified that he informed the plaintiff that Y12 and ANN wire were not in stock when the plaintiff made his payment. He was, at that time, confident that since the defendant had placed an order for the steel, such would be delivered, and, in my view, he would have spread this confidence to the plaintiff. At that stage, there was no reason to doubt that delivery would be effected, and, in my view, it is highly improbable that the witness would have hidden that fact from the plaintiff.

After the testimony of this witness, the defendant closed its case.

On the basis of the above evidence, it appears to me that three issues arise;

(i) Firstly, I have to determine what the terms of the agreement between the parties were.

(ii) Secondly, and only after I have ascertained the terms of the agreement, I have to determine whether the defendant breached a material term of such agreement entitling the plaintiff to seek specific performance.

(iii) Finally, if I find that the agreement has been breached materially, I will have to determine whether specific performance is appropriate in the circumstances of this matter.

I return to the first issue.

It is common cause that the parties intended to conclude a sale agreement. The plaintiff inquired as to the prices at which the defendant would sell and deliver to him certain specified steel. The defendant gave the plaintiff the price list at which it could conclude the sale. This is not in dispute.

At the time that the plaintiff made the inquiry, and eventually made payment, it is my finding that he was aware that the Y12 and ANN wire were not in stock. In the circumstances, the issue that has exercised my mind is whether or not the parties concluded an unconditional sale agreement of all the steel products ordered - including the products that were not available. The plaintiff contends that they did and relies on the quotation and the payment of the amount quoted as proof of the unconditional sale.

While the point was not forcefully advanced on behalf of the defendant, I am of the view that the totality of the transactions between the parties did not amount to more than a conditional sale. It appears to me that by giving the quotation and accepting payment of the total amount on the quotation, after advising the plaintiff that it did not have the Y12 and ANN wire in stock, the defendant was not going beyond saying:

“I will sell you the Y12 and ANN wire at these prices when I get delivery from my supplier. In the meantime, I am accepting your money so that I will make delivery to you as soon as I receive the steel.”

When the defendant failed to receive the Y12 and ANN wire from its suppliers, it, in turn, could not supply same to the plaintiff. Its failure, however, to deliver these steel products to the plaintiff would, in the circumstances, not constitute a breach of the agreement between the parties. The condition precedent to the agreement had not been fulfilled and so the obligation to deliver did not arise.

I would have come to a different conclusion had the plaintiff been unaware that the two products were not in stock at the time he made payment. Then, I would have found that by accepting payment for the product, the defendant gave out to the plaintiff that it would deliver the product to him and is therefore bound to do so on the basis of the quasi mutual assent doctrine.

This is the view that the plaintiff urged me to take in the matter.

I cannot, as I found against him that he was aware that the two products were not in stock and had to be procured from the supplier before they could be delivered to him. He was prepared to wait, and did wait, for the products to become available. He only sought legal advice not because the products had delayed in coming but because the defendant wished to refund the purchase price for the products that had been sold subject to the condition as the condition could now no longer be met.

In my view, the plaintiff has taken too simplistic a view of the matter. He argued that the quotation given him by the defendant was the offer and his payment of the amount on the quotation was the acceptance of the offer, birthing a contract between the parties.

While, to some extent, this is correct, in my view, the entire contract is underlined by the fact that both parties knew that part of the products in the “offer and acceptance” were not in stock. They thus could not have agreed upon the sale of such items without qualification. The sale of such items could only have been conditional upon the availability of such since the defendant was merely a retailer and not the manufacturer of the products.

I am inferring the condition precedent to the agreement of sale by applying the well known “officious bystander” test. In my view, from the knowledge that both parties had as to the unavailability of the two items, had the officious bystander enquired of the parties why they were including the two items in the order, he would have received a prompt response that the sale was subject to the two items being delivered to the defendant by its supplier. None of the parties would have responded, at that stage, that the sale was unconditional and that the defendant had to procure the two items at its own cost, from wherever, for the benefit of the plaintiff.

In conclusion, it is therefore my finding that the parties entered into a conditional sale agreement. The condition precedent was not fulfilled and the defendant is not in breach. The plaintiff is not entitled to any remedy in the circumstances.

As indicated above, counsel for the defendant did not advance the fact that the sale agreement between the parties was conditional with much conviction. He, on the other hand, submitted that the remedy sought by the plaintiff in this suit was untenable and that I should use my discretion to refuse specific performance. Assuming, therefore, that I have erred in finding above that the sale between the parties in respect of the Y12 and ANN wire was conditional, I turn to examine whether the plaintiff would have been entitled to the order that he seeks.

It is the settled position at law that generally while a plaintiff who elects to hold the defaulting defendant to the contract is entitled to an order for specific performance, where the defendant is in a position to perform, the court has a discretion to refuse to grant the order on several grounds. In particular, the court will decline to grant the order where, at the time of the order, performance would be impossible or will work an undue hardship on the defendant. See Haynes v Kingswilliamtown Municipality 1951 (2) SA 371 (A)…,.

In casu, it is not in dispute that the defendant does not have in its stock the two steel products. It has not been proved before me that the steel products are readily available on the market. The plaintiff was uncharacteristically cagey when it came to testifying about the Y12 that he purchased elsewhere on the instructions of his engineers. He was not forthcoming with the name of the supplier and the cost of the item. He was of the view that this evidence was not material for the resolution of this dispute. He may have erred in this regard, for, in the circumstances, the evidence of the defendant that the two products are unavailable from the only and regular supplier remains uncontroverted.

I would distinguish the facts of this matter form those that my brother PATEL had to deal with in Interfresh Limited v Megapak Zimbabwe (Private) Limited HH90-09. In that matter, the defendant agreed to deliver a number of containers and their caps to the plaintiff at a concessionary price as it had been availed funds for the purpose under the Basic Commodity Supply Side Intervention Facility (BACOSSI) set up by the Reserve Bank. The defendant allowed the facility to end without supplying all the containers that it had undertaken to deliver under the facility. In holding the defendant to the contract, PATEL J reasoned that the only inference he could draw from the facts of the matter was that the defendant failed to deliver because it failed to exercise due commercial diligence by allowing the facility to run out before it had made good on all the promises it had made on the basis of the facility.

In casu, I have accepted that the defendant did not have the items in stock and were awaiting delivery on an order that had been made prior to its agreement with the plaintiff. In the circumstances, there was little that it could do to secure the product and was thus not guilty of commercial incompetence as was found in Interfresh Limited v Megapak Zimbabwe (Private) Limited HH90-09.

I have been referred to Zimbabwe Express Services (Private) Limited v Nuanetsi Ranch (Private) Limited SC21-09. In that case, the Supreme Court declined to order specific performance of a contract whose contract price had been determined in 2003 and had been eroded into nothing by inflation at the time specific performance was sought. In declining to order specific performance, the court was of the view that were it to grant specific performance, the appellant in that matter would take delivery of 280 heifers for a very small amount of money. In other words, the court reasoned, the appellant would take possession of a herd of cattle worth a considerable sum of money for which it would have paid virtually nothing.

It was pressed on me that were I to order specific performance in this matter, the plaintiff would take delivery of steel products worth a lot of money in foreign currency and for which he paid very little in local currency.

I do not agree that this is solely the basis upon which specific performance may be declined or that this was the simplistic manner in which the Supreme Court arrived at its decision in Zimbabwe Express Services (Private) Limited v Nuanetsi Ranch (Private) Limited SC21-09.

In my view, the law on specific performance has always been clear that where to order specific performance will result in an injustice, or where it is impossible, the court should not make such an order as this will act as an antithesis of what the law stands for.

In casu, it has been argued, and not challenged before me, that the defendant does not have the outstanding steel products in its stock. It has also been argued and not challenged that its supplier has not been able to supply it with the products. I have been told, in evidence, that the defendant has not been able to source the product from South Africa as it did not receive the necessary foreign currency allocation it required for the purpose. In the circumstances, to order the defendant to deliver the steel to the plaintiff will clearly, in my view, work an undue hardship on the defendant. On the evidence before me, it will be nigh impossible for the defendant to supply the steel from local suppliers.

On the basis of the foregoing, even if I have erred in finding that the defendant is not in breach of the sale agreement between the parties, I still would have declined to grant an order of specific performance in favour of the plaintiff as prayed.

In the result, I make the following order:

1. The plaintiff's claim is dismissed.

2. The plaintiff shall bear the defendant's costs of suit.

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Law Portal
Zimbabwe

Consensus Ad Idem re: Approach iro Privity of Contract ito Quasi Mutual Assent Doctrine

SC13-21 : MOSES MAWIRE vs RIO ZIM LIMITED (PRIVATE) LIMITED
Ruled By: GOWORA JA, PATEL JA and MAVANGIRA JA

SC13-21 : MOSES MAWIRE vs RIO ZIM LIMITED (PRIVATE) LIMITED
Ruled By: GOWORA JA, PATEL JA and MAVANGIRA JA

SC12-21 : TOBACCO PROCESSORS ZIMBABWE (PRIVATE) LIMITED vs TONGOONA MUTASA and OTHERS
Ruled By: MAVANGIRA JA, MAKONI JA and CHATUKUTA AJA

HH63-13 : BLESSMORE Z. MABVURAMITI vs ALTFIN INSURANCE COMPANY
Ruled By: MAFUSIRE J

HH38-10 : LUCIA MUNYANYI vs LIMINARY INVESTMENTS AND ISRAEL GUMUNYU N.O.
Ruled By: MAKARAU JP

HH125-09 : TAKAWIRA MAPAYA vs STEELFORCE HOLDINGS (PRIVATE) LIMITED
Ruled By: MAKARAU JP

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Law Portal Zimbabwe

Consensus Ad Idem re: Approach iro Privity of Contract ito Quasi Mutual Assent Doctrine

SC13-21 : MOSES MAWIRE vs RIO ZIM LIMITED (PRIVATE) LIMITED Ruled By: GOWORA JA, PATEL JA and MAVANGIRA JA

SC13-21 : MOSES MAWIRE vs RIO ZIM LIMITED (PRIVATE) LIMITED Ruled By: GOWORA JA, PATEL JA and MAVANGIRA JA

SC12-21 : TOBACCO PROCESSORS ZIMBABWE (PRIVATE) LIMITED vs TONGOONA MUTASA and OTHERS Ruled By: MAVANGIRA JA, MAKONI JA and CHATUKUTA AJA

HH63-13 : BLESSMORE Z. MABVURAMITI vs ALTFIN INSURANCE COMPANY Ruled By: MAFUSIRE J

HH38-10 : LUCIA MUNYANYI vs LIMINARY INVESTMENTS AND ISRAEL GUMUNYU N.O. Ruled By: MAKARAU JP

HH125-09 : TAKAWIRA MAPAYA vs STEELFORCE HOLDINGS (PRIVATE) LIMITED Ruled By: MAKARAU JP

Categories

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Law Portal
Zimbabwe

SC13-21 : MOSES MAWIRE vs RIO ZIM LIMITED (PRIVATE) LIMITED
Ruled By: GOWORA JA, PATEL JA and MAVANGIRA JA

SC13-21 : MOSES MAWIRE vs RIO ZIM LIMITED (PRIVATE) LIMITED
Ruled By: GOWORA JA, PATEL JA and MAVANGIRA JA

SC12-21 : TOBACCO PROCESSORS ZIMBABWE (PRIVATE) LIMITED vs TONGOONA MUTASA and OTHERS
Ruled By: MAVANGIRA JA, MAKONI JA and CHATUKUTA AJA

HH63-13 : BLESSMORE Z. MABVURAMITI vs ALTFIN INSURANCE COMPANY
Ruled By: MAFUSIRE J

HH38-10 : LUCIA MUNYANYI vs LIMINARY INVESTMENTS AND ISRAEL GUMUNYU N.O.
Ruled By: MAKARAU JP

HH125-09 : TAKAWIRA MAPAYA vs STEELFORCE HOLDINGS (PRIVATE) LIMITED
Ruled By: MAKARAU JP