Legal Personality re: Approach, Rule of Separate Legal Existence, Business Trade Names & Fiction of Separate Legal Entity

SC144-21 : FARAI MATSIKA and FAIRGOLD INVESTMENTS (PRIVATE) LIMITED vs MOSES CHINGWENA and 38 OTHERS
Ruled By: BHUNU JA

This is an opposed application for condonation of late noting of an appeal and extension of time within which to file a notice of appeal. The applicant brings the application in terms of Rule 43 of the Rules of Court 2018.THE PARTIESThe first applicant is a former employee of the ...

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SC59-16 : ZIMRE PROPERTY INVESTMENTS LIMITED vs SAINTCOR (PVT) LTD t/a V. TRACK and JOHN SHUMBA
Ruled By: ZIYAMBI JA, GARWE JA and GOWORA JA

In a judgment handed down in January 2014, the court a quo upheld the plea of prescription raised by the respondents, and, consequently, dismissed the claim against the respondents with costs.Against that order, the appellant now appeals to this court.BACKGROUNDIn October 2012, the appellant, as plaintiff, issued summons against both ...

In a judgment handed down in January 2014, the court a quo upheld the plea of prescription raised by the respondents, and, consequently, dismissed the claim against the respondents with costs.

Against that order, the appellant now appeals to this court.

BACKGROUND

In October 2012, the appellant, as plaintiff, issued summons against both respondents before the High Court, Harare, claiming payment of the sum of $30,094=98 being arrear rentals in respect of the respondents tenancy of premises known as Shop 5, Zimre Centre, Corner Kwame Nkrumah Avenue and Leopold Takawira Street, Harare.

The second respondent had bound himself as surety and co-principal debtor in respect of the first respondent's indebtedness.

In their plea, the respondents, as defendants, raised the defence of prescription. More specifically, they averred, that, in instituting proceedings on 19 October 2012, more than three years after the debt became due, the claim had become time-barred.

The plea was not set down for hearing. Instead, the defendants pleaded over to the merits in the same plea.

In its replication, the appellant denied that the claim had prescribed. It averred, that, the first defendant had, on 22 October 2009, acknowledged the debt and had undertaken to pay the outstanding amount in full by 10 November 2009.

There was no rejoinder by the respondents.

In a joint pre-trial conference minute, the parties agreed, that, the issues requiring determination at trial were:

(a) Whether the plaintiff's claim had prescribed;

(b) Whether the first respondent had breached the lease agreement by failing to pay rental and other costs;

(c) Whether the respondents were liable to pay the sum of US$30,094=98 together with interest and costs of suit;

(d) Whether there had been mutual termination of the agreement between the parties and whether the appellant had unlawfully and unilaterally ejected the respondents from its premises; and

(e) Whether such conduct had resulted in the respondents suffering damages “in respect of the first respondent's assets and business” and, if so, the quantum thereof.

PROCEEDINGS BEFORE THE COURT A QUO

At the hearing of the matter, the respondents, through their lawyer, sought the leave of the court to deal with the issue of prescription first and lead evidence on it.

Despite opposition from the appellant, the court a quo decided that the issue of prescription be determined first, and, thereafter, depending on the outcome, the court would again hear evidence on the remaining issues.

In its judgment, the court a quo was of the view, that, the issue that fell for determination was the authenticity of the letter purportedly written by one Annet Mbedzi on behalf of Saintcor Holdings in October 2009.

In this regard, it made a number of observations.

The letter was not written on any letterhead, unlike in previous correspondence; it reflected the appellant's postal address; the letter was also written on behalf of Saintcor Holdings, a company both parties were agreed does not exist and was not a party to the lease agreement; the letter was addressed to a Mr Muringani, but, the name had been cancelled in black ink and in its place the name Muringi inserted; nowhere in the letter is it suggested that Saintcor Holdings was acknowledging indebtedness on behalf of Saintcor (Pvt) Ltd.

On a consideration of all these features, the court a quo concluded, that, the letter had not been written on behalf of the first respondent.

Consequently, the court upheld the plea of prescription and dismissed the plaintiff's claim with costs, hence this appeal.

GROUNDS OF APPEAL

In its grounds of appeal, the appellant has attacked the decision of the court a quo on the basis that it:

(a) Erred in fact and at law in holding that the appellant's claim had prescribed;

(b) Misdirected itself by holding that the letter that was received by the appellant on 22 October 2012 was not authentic;

(c) Misdirected itself by making a finding that the author of the letter that was received by the appellant on 22 October 2009 did not have authority to author the same.

It is apparent from the above grounds, that. it is the conclusion reached by the court a quo, that the letter in question had not been written on behalf of the respondent that the appellant is challenging.

PRELIMINARY ISSUES RAISED BY THE RESPONDENTS

In their heads of argument, the respondents raised two points in limine:

(i) The first was that the judgment of the court a quo reflects three different dates as the dates when the judgment was handed down.

The date of the judgment reflected in the Notice of Appeal is at variance with the date appearing ex facie the judgment itself, and, consequently, there has been no compliance with Rule 29 of the Rules of this Court.

(ii) Secondly, the relief sought is defective as it seeks to substitute the decision of the court a quo with one referring the matter back to the court a quo itself.

In his response, counsel for the appellant drew the attention of the court to a letter from the Registrar of the High Court which states, that. the ex-tempore judgment was handed down on 10 February 2015, which is the date appearing in the Notice of Appeal.

On the prayer, he conceded, that, the wording was inelegant but argued that the relief sought was clear. He submitted that the inelegance does not invalidate the appeal as ultimately the court will make an order it deems appropriate in the circumstances.

After hearing argument on the two preliminary issues, this court was of the view, that, the issues be rolled over for determination together with the issues that arise on the merits.

APPELLANT'S SUBMISSIONS ON APPEAL

In both his heads of argument and oral submissions, counsel for the appellant raised the following issues:

(i) First, that the judgment of the court a quo does not derive from the pleadings.

(ii) Second, the appellant's cause of action was predicated upon a valid cancellation of the lease agreement. Such cancellation was effected on 18 November 2009 and the cause of action would have accrued on that day. Therefore, when the appellant issued summons on 22 October 2012, the debt had not prescribed.

(iii) Third, that the appellant would have had no reason to cause the letter of 22 October 2012 to be generated. Once it had accepted that the letter had not been generated by the appellant, the court should have concluded that the letter had indeed been authored by the respondents.

(iv) Fourth, that the second respondent knew how to contact Annet Mbedzi, the author of the letter in question. Annet Mbedzi had been involved in the goings-on at the premises of the first respondent, and yet both respondents had not found it proper to call him.

(v) Lastly, counsel for the appellant submitted, that, it was improper for the court to have heard evidence piecemeal. Once the plea of prescription had not been set down and the respondent had then proceeded to plead over to the merits, the court should have heard evidence on all the issues and an assessment of the credibility and integrity of the witnesses undertaken only after all the evidence had been led.

RESPONDENTS SUBMISSIONS ON APPEAL

In response, counsel for the respondents made the following submissions:

(i) First, that, what is being attacked by the appellant are findings of fact which cannot be interfered with on appeal in the absence of a finding of irrationality on the part of the trial court.

(ii) Second, that, the court a quo was correct in its findings that the letter received by the appellant on 22 October 2009 had not been written by or for the respondents. This is because the appellant had admitted that, by that date, the first respondent had been evicted from the premises, and, consequently, the first respondent would not have used that address in correspondence with the appellant.

(iii) Third, that, the appellant has not established a lawful basis for the suggestion that the judgment does not derive from the pleadings as no leave of the court had been sought to advance argument on this ground, contrary to the Rules of this court. In any event, the respondents, in their plea, had placed prescription in issue.

(iv) Lastly, that, the debt did not become due on cancellation since rent was due monthly in advance, and, therefore, the cause of action arose whenever such rental was not paid on due date. The appellant had, in any event, evicted the first respondent in August 2009 for non-payment of rent and the “debt” included outstanding rentals up to the date of such eviction.

ISSUES FOR DETERMINATION

It is clear from the above, that, a number of issues arise before this court. These will be dealt with in turn....,.

WHETHER THE COURT A QUO ERRED IN MAKING FINDINGS OF FACT

The appellant has attacked various findings made by the court a quo on the facts, and, in particular, the finding that the letter received by the appellant on 22 October 2009 was not authentic and that the author of the letter did not have authority to write the same.

The court a quo made the following findings of fact:

(i) First, that the letter was written for and on behalf of an entity called Saintcor Holdings and not Saintcor (Pvt) Ltd.

(ii) Second, the name of the addressee had been incorrectly spelt.

(iii) Third, the letter was not written on the first respondent's letter head.

(iv) Fourth, the appellant's address, reflected in the letter, was incorrect.

(v) Fifth, the letter of acknowledgment had been written in October 2009 and yet purported to use the same address from which the first respondent had been evicted.

(vi) Sixth, the company that the author, Annet Mbedzi, purported to represent in the capacity of Financial Director does not in fact exist, and the company does not, in any event, purport to act on behalf of the first respondent.

On the basis of the above observations, the court reached the conclusion, that, the letter had not been written on behalf of the first respondent and that the letter did not specify which debt was being acknowledged.

The above conclusion cannot be said to be irrational: nor can it be said that it is not supported by the evidence.

The position is now settled, that, an Appellate Court will not interfere with the findings of fact made by a trial court unless the court comes to the conclusion, that, the findings are so irrational that no reasonable tribunal, faced with the same facts, would have arrived at such a conclusion.

Where there has been no such misdirection, the Appeal Court will not interfere.

This position was aptly captured by this court in Hama v National Railways of Zimbabwe 1996 (1) ZLR 664 (S). At 670, KORSAH JA remarked:

“The general rule of law, as regards irrationality, is that an Appellate Court will not interfere with a decision of a trial court based purely on a finding of fact unless it is satisfied, that, having regard to the evidence placed before the trial court, the finding complained of is so outrageous in its defiance of logic that no sensible person who had applied his mind to the question to be decided could have arrived at such a conclusion….,.”

DISPOSITION

In my view, this appeal lacks merit and must therefore fail.

The appeal is accordingly dismissed with costs.

HH28-16 : FARPIN INVESTMENTS [PVT] LTD vs NETONE CELLULAR [PVT] LTD and JUSTICE L.G. SMITH [RETD] - ARBITRATOR
Ruled By: MAFUSIRE J

This was an application for the setting aside of an arbitration award.

The arbitrator, the second responded herein, was a retired Judge of this court.

The basis of the application was that the arbitrator had misconstrued the factual basis of the applicant's claim before him. It was also said, that, the arbitrator's second and final award had contradicted the findings in his first award. This misdirection was said to have led the arbitrator to make an award that was so palpably iniquitous as to be in conflict with the public policy of Zimbabwe, as envisaged by Article 34(2)(b)(ii) of the Model Law, which is incorporated in the Arbitration Act [Chapter 7:15].

The applicant also challenged the arbitrator's order of costs against it on the punitive scale of attorney and client and said, or implied, that, it was irrational, especially in circumstances where not only the arbitrator had given no justification or explanation for it, but also where the first respondent had not asked for such a scale.

Finally, the applicant also challenged the arbitrator's order that his costs be met by the applicant alone. The award of costs in such a manner was cited as another example of the lack of logic in, and the iniquitous nature of the award.

The first respondent opposed the application.

It supported the arbitrator's award and submitted that the applicant had misconstrued the arbitrator's findings in his initial award, which, it was argued, were no more than a re-statement or formulation of the issues for arbitration.

The papers were moderately voluminous. From the onset, I endorse the applicant's self-criticism in its heads of argument, that:

“…,. (T)he arguments in the submissions by the parties are somewhat convoluted, and, in some instances, intended to confuse the real issues.”

Not only that, but, the applicant's affidavits were prolix, repetitive, and argumentative. But, shorn of that, I believe the facts and the issues were simple and straightforward.

They were these:

(a) The Facts

The first respondent was a public cellular telephone operator. It was a private company. The applicant was also a private company. The genesis to the dispute between the two was the relationship that they entered into on 23 February 2009. As at that date, the first respondent was a 60% shareholder in another company called Zellco Cellular [Private] Limited [“Zellco”]. This shareholding had come about following a debt-equity swap.

The arrangement had been induced by Zellco Cellular's failure to remit what had been due by it to the first respondent.

Zellco Cellular's indebtedness to the first respondent had arisen out of a relationship that had existed between it and the first respondent since the year 2001. That relationship had been created in terms of a certain written agreement titled 'Service Provider Agreement' [hereafter referred to as “the SPA”].

In terms of the Service Provider Agreement, Zellco Cellular had been appointed to supply and distribute, inter alia, the first respondent's radio-linked telephone services to Zellco Cellular's own customers whom it would bill, and collect payments from, in connection with those services. In return, Zellco Cellular would be paid a commission by the first respondent. This would be deducted up-front and the net remitted to the first respondent.

The life-span of the Service Provider Agreement had been five years, but had been subject to renewal.

As at 23 February 2009, when the first respondent entered into the aforesaid relationship with the applicant, the Service Provider Agreement (SPA) had been renewed for another five years, from 21 November 2006 to some date in 2011.

Thus, when the applicant and the first respondent started their relationship, on 23 February 2009, the Service Provider Agreement (SPA) had still about two more years to run.

The relationship that the applicant and the first respondent created, on 23 February 2009, as aforesaid, was a straightforward sale of shares agreement. They executed a written document titled “Agreement of Sale of Shares”] [hereafter referred to as “the ASS”].

In substance, the first respondent sold to the applicant its entire shareholding in Zellco, i.e. the aforesaid 60% equity, for a certain sum of money.

It seemed common cause, that, the applicant had paid the purchase price in accordance with the agreement.

The fall-out between the parties was in respect of clause 13 of the Agreement of Sale of Shares.

The dispute was multi-faceted.

As I understood it, and in my own words, the applicant's position was that the first respondent had breached clause 13, and that, as a result, the first respondent had become liable to it in damages.

The first respondent disputed that it had breached the Agreement of Sale of Shares or that the applicant had been entitled to damages. It accused the applicant of purporting to step into the shoes of Zellco, and suing as if it were Zellco, allegedly in violation of basic tenets of Company Law.

The applicant's rejoinder was that it had not purported to step into Zellco's shoes; that, but for it to claim from the respondent, it had necessarily had to compute what Zellco had been owed by the first respondent by way of commissions in terms of the Service Provider Agreement, both as accrued in the past, and as projected in the future; that, the net amount, after deductions for expenses and contingencies, had constituted the value of its investment in Zellco, and that that was what it had lost as a result of the first respondent's breach.

Initially, the quantum of the applicant's claim was $13, 912,700=61. Subsequently, this was revised upwards to $14,962,121=82.

Zellco was not part of the dispute....,.

Clause 13 of the Agreement of Sale of Shares was undoubtedly the only link between the Service Provider Agreement (SPA) and the Agreement of Sale of Shares. As such, it was what connected the applicant to the SPA - an agreement to which it was otherwise not a party....,.

Clause 13 of the Agreement of Sale of Shares, particularly sub-clause 2 thereof, read as follows:

“13 Duration of Agreement and Life of Service Provider Agreement

13.1….,.

13.2 NetOne undertakes to renew the Service Provider Agreement between Zellco Cellular and themselves in order for Farpin to have the opportunity to realise full value on the shares procured by a further five [5] years from the date of expiry of the current agreement between NetOne and Zellco.”

[b] Arbitration

The dispute between the parties, or rather facets of it, was arbitrated upon, twice, by the second respondent.

In the first arbitration, the applicant challenged the jurisdiction of the arbitrator saying that the dispute was not one to be resolved by arbitration.

The arbitrator ruled against it.

In the course of his award, he made reference to the cancellation of the Service Provider Agreement (SPA) by the first respondent as not constituting a breach of the Agreement of Sale of Shares, but, that the effect of the cancellation had given rise to such breach since the respondent could then not comply with the Agreement of Sale of Shares.

From there, the arbitrator directed the parties to file their statements of claim for the second arbitration on the two issues that he had identified.

The first respondent was ordered to meet the costs of that initial award.

The arbitrator conducted a second hearing at which, among other things, the applicant's witness, an accountant, gave viva voce evidence on how the applicant's damages had been computed.

The proceedings did not go to the “defence” case.

The first respondent applied for the discharge of the applicant's claim.

The application was granted with costs on an attorney and client scale.

The arbitrator's findings and conclusions were as follows:

“Having given careful consideration to the submissions made by the legal representatives of the parties, I consider that there is no privity of contract between the parties.

Clause 13.2 of the SPA does not provide a nexus which would entitle the Claimant to claim damages for the loss of commission and profits suffered by Zellco because of the cancellation of the SPA.

The Claimant cannot step into the shoes of Zellco and claim the alleged damages suffered by Zellco.

In clause 7 of its Statement of Claim, as amended, the Claimant submitted, that, as a consequence of the cancellation of the SPA it suffered damages in the sum of $14,962,121=82 which is made up of three elements:

(i) The first being commission amount due to it (not to Zellco) up to April 2011;
(ii) The second being loss of income [from] April to May 2014; and
(iii) The third being projected loss of income [from] June 2014 to November 2016 and then claim that that was the amount of the damages it suffered.

If income in the sum of $6,688,988=96 was lost by Zellco, that does not mean that Zellco did not make a profit of $6,688,988=96 which it would have passed on to its shareholders. It would have incurred expenses which would have had to be paid from the income received.”

After that, the applicant applied to this court for the setting aside of the arbitrator's decision.

[c] Issues

In order for me to arrive at the conclusion whether or not the arbitration award was impeachable by reason of a violation of the public policy of Zimbabwe, as envisaged by Article 34[2][b][ii] of the Model Law, which is incorporated in the Arbitration Act [Chapter 7:15], the issues, as I see them, were these:

[i] What is the approach of the court where an arbitration award is sought to be impeached?

[ii] Did the arbitrator contradict himself in his two awards?

[iii] Did the first respondent breach the Agreement of Sale of Shares; was the applicant entitled to damages?

[iv] Did the arbitrator misdirect himself by awarding the first respondent costs on a higher scale and ordering the applicant to meet the costs of the arbitrator on its own?

I now proceed to consider the law on the point and to determine the issues as I have identified them above.

[i] Approach of the court vis-a-vis impeachment of Arbitral Award

In terms of Article 34 of the Model Law in the Arbitration Act, this court may set aside an arbitral award only on the grounds specified therein. One of those grounds, which the applicant has expressly relied on in these proceedings, was that the arbitration award was in conflict with the public policy of Zimbabwe as envisaged by sub-article [2][b][ii] of Article 34.

Sub-article [5] of Article 34 states:

“(5) For the avoidance of doubt, and without limiting the generality of paragraph (2)(b)(ii) of this article, it is declared, that, an award is in conflict with the public policy of Zimbabwe if —

(a) The making of the award was induced or effected by fraud or corruption; or

(b) A breach of the rules of natural justice occurred in connection with the making of the award.”

Other than paragraph [b] above, none of the other grounds listed by Article 34, on which this court may set aside an arbitral award, applied to the applicant's situation herein.

The definition of “public policy” in sub-article [5] does not limit the generality of that term as used in sub-article [2][b][ii].

The applicant alleged, that, the arbitrator misconstrued the premise upon which his claim had been presented before him, and that, as a result, he had seriously misdirected himself. It was argued, that, such misdirection had led him to come to a wrong conclusion. This was said to constitute a palpable and intolerable inequity that would hurt the conception of justice in fair-minded persons.

The onus lies on the party that seeks to set aside an arbitral award under Article 34 of the Arbitration Act.

In my view, it is an extremely heavy onus.

I believe, that, in the same way as in they exercise their review powers, superior courts restrain themselves from unnecessarily interfering with the exercise of judicial discretion by the inferior courts or tribunals. Unless the exercise of discretion by the inferior court or tribunal was injudicious or so grossly wrong as to amount to a miscarriage of justice, the superior court will let the decision pass even though it might itself have come to a different decision.

Dealing with the old Arbitration Act, before it was repealed and replaced by the current one, where the ground for setting aside an arbitral award was misconduct of the proceedings by the arbitrator, or the improper procurement of the arbitrator, or of the award, GUBBAY CJ, in Zimbabwe Electricity Supply Authority v Maposa 1999 [2] ZLR 452 [SC] said, at p462E–H:

“…,. [A] party seeking to set aside an arbitral award could succeed only if able to establish either misconduct on the part of the arbitrator or the fact that the award was improperly procured. The word 'misconduct' was to be understood in the sense of some wrongful, dishonest, or improper conduct; a bona fide mistake, whether of law or of fact, on the part of the arbitrator could not be relied upon as a ground for setting aside the award.”…,.

At p466E, the learned Chief Justice, dealing with the current Arbitration Act, said:

“An arbitral award will not be contrary to public policy merely because the reasoning or conclusions of the arbitrator are wrong in fact or in law. In such a situation, the court would not be justified in setting the award aside. Under Article 34 or 36, the court does not exercise an appeal power and either uphold or set aside or decline to recognise and enforce an award by having regard to what it considers should have been the correct decision.”…,.

In casu, both parties relied on Zimbabwe Electricity Supply Authority v Maposa 1999 [2] ZLR 452 [SC] above.

In particular, the applicant quoted the passage at 466 above, and evidently found support in what the learned Chief Justice went on further to say at p466F–G:

“Where, however, the reasoning or conclusion in an award goes beyond mere faultiness or correctness and constitutes a palpable inequity that is so far reaching and outrageous in its defiance of logic or acceptable moral standards that a sensible and fair minded person would consider that the conception of justice in Zimbabwe would be intolerably hurt by the award, then, it would be contrary to public policy to uphold it.

The same applies where the arbitrator has not applied his mind to the question or has totally misunderstood the issue, and the resultant injustice reaches the point mentioned above.”

I now turn to examine the alleged palpable, far reaching, illogical and outrageous inequity by the arbitrator which fair-minded persons would consider would hurt the conception of justice in Zimbabwe if allowed to stand.

This leads me to consider the rest of the issues as I have identified them above.

[ii] Did the arbitrator contradict himself?

One of applicant's refrain was, that, in his first award, the arbitrator had made a positive finding that the first respondent had breached clause 13.2 of the Agreement of Sale of Shares by having cancelled the Service Provider Agreement and that the effect of that cancellation had given rise to a breach of the Agreement of Sale of Shares.

Having made that finding, it was argued, all that had remained, as indeed the arbitrator himself had gone on to direct, was the filing of the parties statements of claim.

I understood the applicant's argument on this to be that the liability of the first respondent for breach of clause 13.2 of the Agreement of Sale of Shares had already been settled by the first award and that the purpose of the second arbitration had merely been to settle quantum.

On the other hand, the first respondent accused the applicant of having misconstrued the arbitrator's statement in the first award. It disputed that the arbitrator had made a finding that there had been a breach and said that he had merely identified that aspect as being one of the issues for arbitration, otherwise he would not have called on the parties to file their statements of claim.

I find against the applicant on this point.

Regarding the generic statement in question, the applicant was guilty of, firstly, selective quoting; secondly, quoting the statement out of context; and, thirdly, misconstruing it altogether.

The applicant repeatedly quoted [i.e. in the founding affidavit, answering affidavit, and heads of arguments] the arbitrator's statement in the first award as follows:

“In my opinion…, the effect of the cancellation did give rise to a breach of the Agreement because Claimant [sic] did not comply with the provisions of Clause 13.2.”

But, that was not all that the arbitrator had said on the point.

The arbitrator's full statement, relevant to that point, was this [with the words removed by the applicant restored and highlighted, and those directly contradicting it highlighted and underlined]:

“It is clear that the cancellation by Respondent, on May 2011, of the Service Provider Agreement it had entered into with Zellco did not constitute a breach of the Sale Agreement Respondent had entered into with Claimant….,.

In my opinion, although the actual cancellation by Respondent of the Service Provider Agreement did not constitute a breach of the Sale Agreement, and, therefore, could not be subject to arbitration in terms of clause 14, the effect of the cancellation did give rise to a breach of the Agreement because Claimant [sic - obviously Respondent] did not comply with the provisions of Clause 13.2.

Had Respondent renewed the Service Provider Agreement in November 2011 and cancelled it a few months later there would have been no breach of the agreement.

I consider that there are two issues giving rise to a dispute between the Parties.

[a] Under 14.1.3 the respective rights and obligations of the parties under the agreement once clause 13.2 became incapable of performance; and

[b] Under 14.1.4, because Respondent breached the agreement by failing to comply with its undertaking in terms of clause 13.2 to renew the Service Provider Agreement for a further 5 years from November 2011.

The first respondent was right.

In his first award, the arbitrator did not, as it were, settle the question of the first respondent's liability for the alleged breach of clause 13.2 of the Agreement of Sale of Shares. He had merely identified that aspect as being one of two issues to be settled in the second arbitration. As paragraph [a] of his formulation of the issues put it, the second arbitration would determine “…, the respective rights and obligations of the parties under the agreement….,.”

The applicant forgets, that, at that stage, the issue before the arbitrator was whether or not the dispute was one to be settled by arbitration.

The arbitrator said it was. He then went on to identify what the issues were.

The applicant's selective quoting of the arbitrator's statement in this regard, and quoting it out of context for that matter, was a self-serving stratagem which was intended to mislead. Therefore, it is my finding, that, the arbitrator did not contradict himself in his two awards in question.

[iii] Did the first respondent breach the Agreement of Sale of Shares; was the applicant entitled to damages?

Without doubt, there was no privity of contract between the applicant and the first respondent in terms of the Service Provider Agreement.

The Service Provider Agreement was between the first respondent and Zellco. That agreement started and ended with these two parties only.

It seems there had been some stray or loose argument to the effect that both Zellco and the applicant had a common shareholding in some respects.

Certainly, at the relevant time, Zellco's chief executive officer also happened to be the chairman of the applicant. But, this set up could not have had any consequence by itself.

Zellco and the applicant were separate legal personae. A wrong done to one was not necessarily a wrong done to the other.

Before me, the applicant accused the arbitrator of misconstruing the premise of his claim before him when he made a finding, that, by suing the first respondent directly for damages, the applicant was attempting to step into the shoes of Zellco.

The applicant said it never stepped, or ever wanted to step, into Zellco's shoes. It said it was not suing the first respondent on the basis of the Service Provider Agreement, to which it was not a party. It was suing the first respondent only on the basis of its breach of the Agreement of Sale of Shares, to which it was a party.

It is important that I capture, accurately, the gravamen of the applicant's argument on this point. It was the jugular vein.

The applicant put its argument this way…,.:

“Contrary to Respondent's allegations and the basis of the ruling by the Arbitrator on the issue, Applicant did not claim everything Zellco would have earned as its profits….,. Zellco's commission was calculated in terms of the SPA, as a percentage of the total income generated from its clients based on the usage of the Respondent's network.

It therefore is no rocket science that in order to determine the commission Zellco would have earned, Applicant needed to calculate or estimate the said total income. Having determined the commission, Applicant went on…, to deduct from the commission all the operating and administrative expenses Zellco would have incurred in earning such commission.

The result is what Zellco would have earned from the operations as its profit and it is this profit that accrues to the shareholders of Zellco and distributed to them as dividends or retained earnings or some other form.

It is this profit, calculated as such, that Applicant is clearly claiming in its statement of claim and particulars of damages.

To the extent that the arbitrator's ruling failed to appreciate this simple fact, it cannot be based on sound legal principles at all and allowing any finding or ruling based on grossly unsound appreciation of fact and such fundamental legal principles to stand would be such an aberration of justice that would no doubt be contrary to the public policy of Zimbabwe which requires that sound legal principles and justice be upheld in such matters.”

Earlier…, the applicant had put forward the same argument as follows:

“The only way the Claimant could have stepped into the shoes of Zellco and sued Respondent for damages suffered by Zellco as a result of the cancellation of the SPA is by suing Respondent in terms of breach of a specific clause of the SPA. Zellco had no shoes in the SSA (no privity of contract) and by suing Respondent for breach of Clause 13.2 of the SSA, the Claimant could not have been doing so in the shoes of Zellco but its own as it clearly has privity of contract.”

I saw no difference. To me, it was all a question of semantics. The applicant was approbating and reprobating.

Plainly, it purported to step into Zellco's shoes and to sue, under the guise of damages, the respondent for money that allegedly would have been due to Zellco.

I find no fault in the arbitrator's findings. But, I explain the situation in my own way.

In terms of the Service Provider Agreement (SPA), Zellco supplied the first respondent's products to members of the public. The profit belonged to the respondent. All Zellco was due was a commission. The applicant had no stake in that.

As a shareholder in Zellco, it would have had to wait for the declaration of a dividend.

If Zellco was pilfering the first respondent's money, then, that was a breach of the Service Provider Agreement (SPA). Indeed, the first respondent complained that Zellco was pilfering its money.

As a result, it instituted proceeding in HC3507/11 saying it had commissioned a firm of auditors who had discovered that Zellco had diverted an amount in excess of $14 million to its other project which had nothing to do with the first respondent. It said it had obtained summary judgment from this court in respect of that money.

All that the applicant said on this point was that the judgment had not been summary judgement, but merely a default judgment against which an application for rescission had been filed.

But, to me, that was neither here nor there. At the time of arbitration, Zellco had an unfulfilled judgment of over $14 million in respect of the first respondent's money. What was worse, Zellco had filed for bankruptcy.

On these facts, clearly, the first respondent had been entitled to cancel the Service Provider Agreement. It had done so. But, apparently, it had botched the cancellation procedure. For that, it had been ordered, by this court, to reverse the cancellation.

It had also been found guilty of contempt of court and fined for having failed, neglected, or refused to reverse the cancellation as had been ordered.

But, that was not the dispute that the arbitrator had been seized with. This was merely an aspect of, or the background to it.

At any rate, the first respondent contended, that, there had been yet another cancellation subsequent to the one in respect of which the applicant had obtained a provisional order and which the applicant had never challenged.

Of course, the applicant disputed that.

But, in my view, the goings-on between Zellco and the first respondent, which were playing out in this court, could not preclude the arbitrator from holding that there had been no privity of contract between the applicant and the first respondent in terms of the Agreement of Sale of Shares.

I find no fault with that decision, let alone one that could be classified as a palpable iniquity that was so outrageous in its defiance of logic or acceptable moral standards and would therefore be in conflict with the public policy of Zimbabwe.

The applicant fixed its sails to the mast of clause 13.2 of the Agreement of Sale of Shares. That clause obligated the first respondent to renew the Service Provider Agreement for a further five years.

The purpose for the renewal was so that the applicant could have the opportunity to realize full value on the shares that it had acquired from the respondent in terms of the Agreement of Sale of Shares.

Clause 13.2 was the only place in the whole Agreement of Sale of Shares that made reference to the Service Provider Agreement.

The clause did not say what would happen if the respondent did not renew as envisaged.

Notwithstanding that, the applicant claimed it knew what would happen.

In paragraph 8.7 of its founding affidavit, it said logic and equity demanded, that, any claim for damages in such circumstances would be a claim based on the applicant recovering that same value from the Service Provider Agreement that it would have derived had that agreement not been cancelled by the first respondent, which cancellation had resulted in the failure by the first respondent to renew the Service Provider Agreement.

But, there was a problem in the applicant's formulation of its alleged cause of action for damages against the first respondent.

In my view, clause 13.2 of the Agreement of Sale of Shares did not override the entirety of the Service Provider Agreement. It only revised the rights and obligations of the parties under the Service Provider Agreement regarding renewal, and not cancellation.

Those parties were Zellco and the first respondent.

The Service Provider Agreement had provisions relating to the rights and duties of the parties under it regarding cancellation. If Zellco frittered away the first respondent's money and the first respondent moved to cancel the Service Provider Agreement, the applicant could not invoke clause 13.2 of the Agreement of Sale of Shares and seek to block the first respondent from cancelling.

Clause 13.2 of the Agreement of Sale of Shares did not have that effect.

That, in my view, was why the arbitrator, in his first award, had surmised, that, had the first respondent renewed the Service Provider Agreement in November 2011, and cancelled it a few months later, there would have been no breach of the Service Provider Agreement.

There was yet another problem with the applicant's formulation of its damages claim.

Any rights arising out of any breach of the Service Provider Agreement, by the first respondent, would accrue to Zellco - not the applicant.

The applicant may have been the majority shareholder in Zellco, and clause 13.2 of the Agreement of Sale of Shares may have been inserted for its benefit; but, to argue that the value accruing to Zellco was the measure of the applicant's damages under the Agreement of Sale of Shares - never mind Zellco's own breach of the Service Provider Agreement, would, in my view, run counter to basic tenets of Company Law.

The applicant was no more than a shareholder in Zellco.

Zellco's money or assets were not the applicant's money or assets. Zellco's debtors were not the applicant's debtors.

The applicant could only rely on such rights as were conferred by its shares in Zellco.

What is a share? What rights does it confer to the holder?

In Borland's Trustees v Steel Brothers & Co Ltd [1901] 1 Ch 279 the plaintiff suggested, that, a share was a sum of money which would be dealt with in a particular manner by what were called, for the purpose of argument, executory limitations. The suggestion was emphatically rejected by the judge, FARWELL J…,.:

“To my mind, it is nothing of the sort. A share is the interest of a shareholder in the company, measured by a sum of money, for the purpose of liability in the first place, and interest in the second, but, also consisting of a series of mutual covenants entered into by all the shareholders inter se…,. A share is not a sum of money settled in the way suggested, but is an interest measured by a sum of money and made up of various rights contained in the contract [i.e. the articles of association], including the right to a sum of money of a more or less amount…,.”

CILLIERS and BENADE on Company Law, Durban Butterworths…, say:

“The term 'share' as such denotes that the holder thereof has a claim on part of the share capital of the company – and does not refer to a right of ownership in any part of the net assets of the company. A share in a company is not a corporeal object but represents a complex of rights and duties.”…,.

Some of the rights accruing to a shareholder via his shareholding in the company, and depending on the type of shares, are the right to dividends when they are declared, and the right to participate in a distribution on liquidation. There is also the right to vote at meetings, and so on.

For the applicant to have sued the first respondent directly to recover what would have accrued to Zellco, simply by virtue of an alleged breach of clause 13.2 of the Agreement of Sale of Shares, which, in any case, did not provide for such a right, amounted to the applicant assuming some derivative right of action but which it has not explained, let alone link to any tenet of Company Law.

The applicant's claim before the arbitrator was evidently based on numerous assumptions, not least, that Zellco had not been in breach of the Service Provider Agreement – despite the judgment of this court; that Zellco was trading profitably and would have made money, not only for the first respondent, but also for itself via the commissions – despite Zellco filing for voluntary liquidation; that Zellco would have declared dividends in all the succeeding years up to November 2016 when the Service Provider Agreement would expire, if it had been renewed, and so on.

I am satisfied, that, when the arbitrator refused to recognise such a formulation for a damages claim, there was nothing palpably iniquitous in his decision that could be said to be far reaching and outrageous in its defiance of logic that sensible and fair minded persons would consider that the conception of justice would be intolerably hurt.

Therefore, on this ground, again, I find against the applicant.

[iv] Did the arbitrator misdirect himself by awarding the first respondent costs on the higher scale and ordering the applicant to meet the costs of the arbitrator alone?

The applicant's claim before the arbitrator was dismissed with costs on the higher scale of attorney and client. Further, the applicant was ordered to meet the costs of the arbitrator on its own.

It has not been clear to me the basis upon which such scale of costs was ordered, or why the applicant was made to meet the costs of the arbitrator all by itself.

The first respondent did not ask for such a scale.

The arbitration clause in the Agreement of Sale of Shares made no provision for the costs of the arbitration. The only provision relating to costs was clause 15. But, this confined itself to the costs of, or incidental to, the negotiation, preparation and execution of the Agreement of Sale of Shares.

In his award, the arbitrator did not explain why he granted such a scale of costs, or why he ordered that his costs be paid by the applicant alone.

In casu, the applicant has made a frontal challenge on the arbitral award on this point. The first respondent's response has been rather muted or equivocal.

The award of costs is wholly a matter in the discretion of the judicial officer: see Graham v Odendaal 1971 [2] SA 611 [AD]; Kruger Brothers & Wassermen v Ruskin 1918 AD 63 and Rautenbach v Symington 1995 SA 583 [O].

Unless a party is guilty of some misconduct, costs are normally awarded on the ordinary scale. That is my understanding of the general principle in the civil courts. But, I see no reason why, in the absence of an agreement to the contrary, or of some other factors affecting it, the principle should not be extended to other fora or bodies exercising judicial or quasi-judicial functions.

In my view, the arbitrator misdirected himself when he awarded costs on the higher scale.

The applicant's claim may have been misconceived, but, the misconception was not so out of the ordinary as to warrant the applicant being mulcted in costs.

Although, even in these proceedings, the applicant may still be kicking against the legal pricks [see Corderoy v Union Government [Minister of Finance] 1918 AD 512…,.], in my view, it has not so gone out of bounds as to attract an adverse order of costs beyond the ordinary scale.

Regarding the order that the costs of the arbitrator should be borne by the applicant alone; again, I have found no explanation anywhere for this.

In my experience, the costs of the arbitrator are generally met by the parties in equal shares.

In the absence of an explanation for a departure from this practice, the arbitrator's costs have to be shared by the parties equally.

In the circumstances, the order of costs by the arbitrator, against the applicant, is set aside and substituted with one of costs on the ordinary scale, with the costs of the arbitrator being shared equally between the parties.

In casu, the applicant has only been partially successful, i.e. on the question of costs. But, to me, such success has been so infinitesimal as to warrant interference with the general principle that the costs should follow the result. Therefore, I make no special order as to costs.

DISPOSITION

1. The application is hereby dismissed with costs.

2. Paragraph 2 of the arbitration award by the Honourable Justice L. G. Smith [Retired], on 2 December 2014, relating to costs, is hereby set aside and substituted by the following:

2.1 The Claimant shall pay the Respondent's costs.

2.2 The costs of the arbitrator shall be borne by the parties in equal shares.

View Appeal
SC01-22 : FRANCIS BERE vs JUDICIAL SERVICE COMMISSION and SIMBI MUBAKO and REKAYI MAPHOSA and TAKAWIRA NZOMBE and VIRGINIA MABHIZA and PRESIDENT OF ZIMBABWE and MINISTER OF JUSTICE, LEGAL AND PARLIAMENTARY AFFAIRS
Ruled By: GUVAVA JA, UCHENA JA and KUDYA AJA

This is an appeal against the whole judgment of the High Court (court a quo). The suspension from office of the appellant led to a flurry of court applications in the court a quo. This is just one of them in which the court a quo dismissed the appellant's application.

The application was made in terms of section 4 of the Administrative Justice Act [Chapter 10:28] ('the Act') on the basis that the respondents had failed to comply with the provisions of section 3(1)(a) of the Administration Justice Act.

BACKGROUND FACTS

The appellant is a former judge of the Supreme Court of Zimbabwe having been dismissed from office by the sixth respondent (the President of Zimbabwe).

The first respondent (Judicial Service Commission) is a body corporate established in terms of section 189 of the Constitution of Zimbabwe Amendment (No.20) Act 2013 ('the Constitution').

The second respondent (Simbi Mubako) (being the Chairperson), third and fourth respondents (Rekayi Maphosa and Takawira Nzombe) (being members), constituted a Tribunal appointed by the President of the Republic of Zimbabwe in terms of section 187(3) of the Constitution. The Tribunal was set up to inquire into the removal of the appellant from the office of a judge.

The fifth respondent (Virginia Mabhiza) was the Secretary of the Tribunal and is the Permanent Secretary of the Ministry of Justice, Legal and Parliamentary Affairs. She is also the coordinator of the Special Anti-Corruption Unit in the Office of the President.

The sixth respondent is the President of Zimbabwe (the President) and the seventh respondent is the Minister of Justice, Legal and Parliamentary Affairs.

The Tribunal has since completed its mandate and is no longer in existence.

On 17 March 2020, the President, acting in terms of section 187(4) of the Constitution of Zimbabwe 2013 issued, in a Zimbabwean Government Gazette Extraordinary Proclamation 1 of 2020 Statutory Instrument 70 of 2020, in which, amongst other things, he established a Tribunal to investigate the question of removing the appellant from the office of a judge. The Tribunal's terms of reference were set out as follows:

“(i) To investigate into the matter of the removal from office of Honourable Justice Francis Bere JA;

(ii) To investigate into the matter of Honourable Justice Bere's conduct, whether it can be deemed to have been tantamount to gross misconduct;

(iii) To investigate whether the Honourable Judge conducted himself or presided over matters where there was conflict of interest;

(iv) To investigate any other matter which the Tribunal may deem appropriate and relevant to the enquiry;

(v) To consider all information submitted by the Judicial Service Commission and any other relevant information in order to arrive at an appropriate recommendation to the President;

(vi) To recommend to the President whether or not the Honourable Judge should be removed from office in terms of section 187 of the Constitution; and

(vii) To report to the President, in writing, the result of the inquiry within a period of five (5) months from the date of swearing in of the members.”

On 13 May 2020, following the publication of Proclamation 1 of 2020, SI70 of 2020 the appellant made an application in terms of section 4 of the Administrative Justice Act (the Act) before the court a quo.

The application was made on the allegation, that, the first respondent failed to comply with section 3(1)(a) of the Administrative Justice Act in that it failed to “act lawfully, reasonably, and in a fair manner” in advising the President to set up a Tribunal to investigate the appellant.

In making the application, it was the appellant's complaint, that, by letter dated 3 March 2020, he was suspended from the office of a judge pending the determination of the question of his removal from office by a three member Tribunal appointed by the President.

The appellant further averred, that, the suspension was preceded by a letter addressed to him by the Acting Secretary of the first respondent dated 28 February 2020. In the letter, the appellant was informed, that, at a meeting held on 13 December 2019, the first respondent had resolved to advise the President to consider the appointment of a tribunal to conduct and further investigate him for alleged misconduct.

The appellant raised five grounds, asserting that the first respondent failed to comply with section 3(1)(a) of the Administrative Justice Act:

(i) Firstly, it was his averment that the first respondent had no jurisdictional grounds for referring the matter to the President.

(ii) Secondly, the appellant averred that there was gross irregularity in the referral by the first respondent as it failed to accord him the right to be heard.

(iii) Thirdly, he asserted, that, at the time the first respondent made its decision to refer the matter to the President it had become functus officio as it had previously made a determination on the matter exonerating him of any wrongdoing.

(iv) Fourthly, that the first respondent, in making its decision, was not properly constituted as it lacked a proper quorum.

(v) Finally, that the fifth respondent was biased as she was the person who referred the complaint which was made by Mr Moxon (Moxon) to the first respondent. It was thus argued, that, as a secretary to the Tribunal, she was a judge in her own cause.

The second, third, fourth and seventh respondents (Simbi Mubako, Rekayi Maphosa, Takawira Nzombe and Minister of Justice, Legal and Parliamentary Affairs) submitted that they had no interest in the outcome of the application and would abide by the court's decision.

The President maintained that he was simply fulfilling his constitutional obligation when he appointed the Tribunal upon the recommendation of the first respondent.

The fifth respondent (Virginia Mabhiza) submitted that she was acting in her official capacity as a Permanent Secretary, Co-ordinator of the Special Anti-Corruption Unit in the office of the President and as Secretary of the Tribunal set up by the President. She stated that she received correspondence from Moxon wherein he complained about the manner in which the appellant had handled his case which was before him. She thereafter referred the complaint against the appellant to the first respondent.

She further stated, that, before receiving the complaint from Moxon, she had been made aware of allegations of improper conduct against the appellant by Mr Ndudzo, a legal practitioner from Mutamangira and Associates, and she duly included the two incidents in her referral letter to the first respondent and the Chief Justice of Zimbabwe.

In denying that she was conflicted, the fifth respondent maintained that she had no personal interest in the matter and was only carrying out her duties.

At the commencement of the proceedings, the first respondent (Judicial Service Commission) raised two preliminary points:

(i) It was submitted on behalf of the first respondent that the court a quo had no jurisdiction to review the constitutional powers vested in the President if he decides to appoint a Tribunal in terms of section 187 of the Constitution.

(ii) Secondly, that the matter was lis alibi pendens as a similar application under HC2162/20 had already been made by the appellant.

On the merits of the matter, the first respondent averred that it acted lawfully, reasonably, and in a fair manner in respect of the advice it gave to the sixth respondent (the President) in terms of section 187(3) of the Constitution.

The first respondent maintained, that, the appellant was availed an opportunity to respond to the allegations made against him and he duly did so in writing.

Further, that the decision to refer the appellant's matter to the President was made by a properly constituted Board of its Commissioners. The first respondent also averred that the onus to prove the purported allegation of an improperly constituted quorum lay with the appellant.

The appellant, in turn, raised a preliminary point to the effect, that, the deponent of the first respondent's opposing affidavit, Mr Chikwana (the first respondent's Acting Secretary), lacked authority to act on behalf of the first respondent.

The appellant averred, that, on the authority of the case of Francis Bere v Judicial Service Commission and Ors HH269-20 the court had already found, that, since it is the first respondent which has the constitutional duty to advise the President on the question of removal of a judge from office it could not delegate the function of defending that decision in a court of law to its Acting Secretary.

DETERMINATION BY THE COURT A QUO

The court a quo, in a well-reasoned judgment, dismissed the appellant's preliminary point. The court found, that, in light of the first respondent's Board resolution authorizing Mr Chikwana to do so, he could properly act on its behalf.

The court also dismissed the preliminary point taken by the first respondent that the matter before it was lis alibi pendens. The court reasoned, that, lis alibi pendens was not an absolute bar to a determination of the matter. The court thus dismissed the point as it did not dispose of the matter.

The court also declined to deal with the part that the court had no powers to review the Constitutional powers vested in the President as it reasoned that the issue was on the merits and was not a preliminary part.

On the merits of the matter, the court a quo held, that, on the point that there was no quorum at the first respondent's meeting of 13 December 2019, the appellant had made bare allegations without supporting affidavits of those present at the meeting and without attaching minutes of the meeting to show that there was no quorum. The court a quo further held, that, the first respondent had no obligation to assist the appellant in proving his allegation.

With regards to the issue of whether the first respondent was functus officio and could not reverse its decision of 21 November 2019, wherein it had purportedly found the appellant not guilty of misconduct, the court a quo found, that, the appellant failed to substantiate his allegations. It found that he did not support his averment that he had received a phone call from the first respondent's Deputy Acting Secretary informing him that a decision had been taken to exonerate him. The court noted that the appellant ought to have either produced minutes of the alleged meeting of 21 November 2019 or filed a supporting affidavit from the Deputy Acting Secretary.

The court a quo also found, on the issue of the alleged violation of the appellant's audi alteram partem rule that the appellant was given an opportunity to respond to the allegations made against him. The court noted that the exchange of correspondences between the first respondent and the appellant was sufficient. Thus, the court found that the appellant's right to be heard had not been violated.

Concerning the absence of jurisdictional facts to ground the first respondent's decision to advise the President, the court noted, that, it was not sitting as an Appeal Court to determine the correctness of the first respondent's decision to refer the appellant's matter to the President.

Rather, it was being called upon to decide whether any of the jurisdictional grounds for removal of a judge were disclosed in the first respondent's papers.

The court noted, that, section 187(1)(c) of the Constitution provides for gross misconduct as one of the jurisdictional grounds for the removal of a judge from office and that is what was averred in the papers to the President.

The court, however, concluded that whether or not there was gross misconduct on the part of the appellant was not an issue to be determined by it as the terms of the Tribunal, set up by the President, covered that aspect. It was therefore left for that Tribunal to determine the guilt or otherwise of the appellant.

In accordance with the above findings, the court a quo dismissed the application with an order that the appellant pays the first respondent's costs.

Aggrieved by the decision of the court a quo, the appellant noted an appeal on the following grounds:

“1. The court a quo erred in law in not upholding the appellant's point in limine, namely, that, that (sic) the 1st Respondent was not properly before the court as the deponent to its opposing affidavit was prohibited by the Constitution of Zimbabwe from representing the 1st Respondent in an application brought by a judge pursuant to section 187(3) of the aforesaid Constitution.

2. The court a quo erred in law in not finding that the 1st Respondent had no quorum at its meeting of 13th December 2019, and, consequently, erred in not finding that the 1st Respondent's advice to the 6th Respondent, pursuant to section 187(3) of the Constitution, was a nullity.

3. The court a quo erred in law in not finding, that, at the meeting of 13th December 2019, the 1st Respondent was already functus officio in respect of the complaints raised against the appellant and consequently erred in not finding that the 1st Respondent's advice to the 6th Respondent, pursuant to section 187(3) of the Constitution, was a nullity.

4. The court a quo erred in law in not finding that there had been a breach of the audi alteram partem rule in respect of the 1st Respondent's handling of complaints against the appellant at its meeting on 13th December 2019 and consequently erred in not finding that the 1st Respondent's advice to the 6th Respondent, pursuant to section 187(3) of the Constitution, was a nullity.

5. The court a quo erred in law in finding that the court had no jurisdiction to determine the existence or otherwise of the jurisdictional facts under section 187(1) of the Constitution and grounding the 1st Respondent's advice to the 6th Respondent in respect of complaints against the appellant pursuant to section 187(3) of the Constitution.”

SUBMISSIONS BEFORE THIS COURT

At the hearing, the first respondent raised a point in limine to the effect that the matter before the court had become moot.

The point was taken on the basis that the appellant had already been removed from the office of a judge following the findings of gross misconduct by the Tribunal appointed by the President.

Counsel for the first respondent…, submitted that the appeal had become moot arising from the fact that the appellant's appeal was predicated on his suspension from office. He argued that this position had since been overtaken by events.

He further submitted, that, the relief sought by the appellant, intending to set aside the decision by the first respondent to refer the complaint against the appellant to the President, under section 187(3) of the Constitution, would result in a brutum fulmen.

Counsel further argued, that, in light of the Proclamation removing the appellant from the office of a judge, the work of the Tribunal had been completed, the dismissal of the appellant was final, and, as such, the appeal was devoid of merit.

In opposition, counsel for the appellant…, argued that the matter was not moot as there was a live controversy which required the Court's determination.

Counsel submitted that the live issue related to whether or not the decision of the first respondent to advise the President, in terms of section 187(3) of the Constitution, was valid.

It was counsel's submission that this was a live issue which had to be determined by the court as it affected whether or not the appellant was lawfully removed from office.

Counsel further argued, that, in any event, even if the matter is moot, this Court has a discretion to hear the matter.

Counsel thus prayed for the dismissal of the preliminary point.

On the merits of the matter, counsel for the appellant submitted, that, the Acting Secretary for the first respondent had no authority to depose to the opposing affidavit. Counsel argued, that, the court in HH269-20 had already determined that the Acting Secretary could not so act. The court a quo could not make a contrary finding that Mr Chikwana had authority to act on behalf of the first respondent.

Counsel also submitted, that, the quorum recommending that the complaint against the appellant be referred to the President was not properly constituted.

Counsel further submitted, that, the appellant was not afforded the right to be heard in terms of the audi alteram partem rule as he was not given an opportunity to respond to the letter written by Mr Ndudzo.

Counsel argued, that, the first respondent lacked the jurisdiction to refer the matter to the President without first conducting an internal hearing of its own.

Lastly, it was counsel's argument that each party should bear its own costs owing to the reason that the issues raised in the appeal were fundamentally important.

Per contra, counsel for the first respondent argued, that, the court a quo did not err in finding that the first respondent's Acting Secretary could depose to the opposing affidavit as he acted merely as an agent of the first respondent and he could swear positively to the facts as he sat in its meetings.

Counsel further argued, that, the appellant had been afforded his right to be heard as he had been given an opportunity to reply, in writing, to the complaints levelled against him as well as an opportunity to be heard by the tribunal which right he opted not to exercise by walking out of the hearing.

Counsel submitted, that, in terms of section 187(3) of the Constitution, the first respondent was within its rights and had an obligation to refer the matter to the President.

He further argued, that, the onus rested squarely on the appellant to prove his assertion that the first respondent's quorum was not properly constituted.

Counsel was not opposed to the prayer that each party bears its own costs.

Counsel for the second to seventh respondents…, submitted that none of the appellant's grounds of appeal impugned the actions of the second to seventh respondents.

Counsel submitted, that, the President was within his constitutional mandate in appointing a Tribunal to investigate the appellant's alleged acts of misconduct. Counsel thus submitted, that, the Tribunal correctly investigated the matter and made recommendations to the President. It was his argument that the President correctly acted upon those recommendations in terms of his constitutional powers....,.

DETERMINATION OF THE MERITS OF THE MATTER

The appellant's grounds of appeal raise four broad issues for determination which are as follows:

(i) Whether or not the court a quo erred in finding that the first respondent's Acting Secretary could depose to its opposing affidavit and act on its behalf.

(ii) Whether or not the appellant failed to prove that there was no quorum at the first respondent's meeting of 13 December 2019.

(iii) Whether the first respondent was functus officio as it is alleged to have reversed its decision of 21 November 2019.

(iv) Whether or not the appellant's right to be heard was violated.

I will deal with each of these issues in turn.

WHETHER OR NOT THE COURT A QUO ERRED IN FINDING THAT THE ACTING SECRETARY COULD DEPOSE TO THE FIRST RESPONDENT'S OPPOSING AFFIDAVIT AND ACT ON ITS BEHALF IN LITIGATION BEFORE THE COURT A QUO

It was counsel for the appellant's argument, that, the first respondent was improperly before the court a quo as the deponent of its opposing affidavit, Mr Chikwana, had no authority to act on behalf of the first respondent.

In supporting this argument, great emphasis was placed on the decision made in Francis Bere v Judicial Service Commission and Ors HH269-20 wherein the court ruled, that, the Acting Secretary had no authority to depose to an affidavit on behalf of the first respondent as it is the constitutional duty of the first respondent to advise the President on the question of the removal of a judge from office and that such constitutional duty cannot be delegated.

In casu, the court a quo found, that, as Mr Chikwana was armed with a resolution to act on behalf of the first respondent and sits in its meetings, takes minutes as its secretary, and has full knowledge of the matter at hand, he thus had the capacity to depose to an affidavit on its behalf.

It is settled law that deponents to affidavits must be able to positively swear to the facts and averments therein. This position is set out in the High Court Rules 1971 (the Old Rules). Order 32 Rule 227(4)(a) provides as follows:

“B. GENERAL PROVISIONS FOR ALL APPLICATIONS

227. Written applications, notices and affidavits

(4) An affidavit filed with a written application —

(a) Shall be made by the applicant or respondent, as the case may be, or by a person who can swear to the facts or averments set out in therein….,.”…,.

It is not in dispute that Mr Chikwana, at the time when the application was heard a quo, was the Acting Secretary of the first respondent. It is also common cause, that, as the secretary of the first respondent, he sits in its meetings, keeps its minutes, and is knowledgeable of all of the Commission's daily business.

It is also common cause, that, the first respondent issued a resolution in which the Acting Secretary was clothed with authority “to sign documents on behalf of the JSC in litigation matters.”

A resolution, by its nature, shows the true intentions of an entity.

The first respondent, like a company with a Board of Directors, acts through its Commissioners. It is the Commissioners who regulate its daily business and make binding decisions on behalf of the Commission.

In First Mutual Investment (Pvt) Ltd v Roussaland Enterprises (Pvt) Ltd and Ors HH301-17 the court noted the following:

“A company, as a legal person, has no mouth through which it articulates its intentions. It has no ears with which to hear. It has no sense of sight or smell. It has no mind of its own.

It speaks to no one except through its directors, not individually but collectively, through resolutions which they pass when they are assembled in one room for the purpose of transacting the business of the company.

Directors and no one else are, together, the eyes, ears, nose and mind of the company.

Hahlo brings out the above stated principle in a clear and lucid manner in his South African Company Law through cases, 6th ed. The learned author makes reference to the Board of Directors and their powers. He states at p343 as follows:

'The powers of the company vest in the directors as a Board, and not as individuals. Directors exercise their powers by passing resolutions at Board meetings; of which proper notice must be given to all directors, and at which a quorum must be present'…,.

The deponent to the founding affidavit had every opportunity to attach to his answering affidavit a resolution of the applicant's directors as the law required him to have done.

The resolution would have constituted clear evidence of his authority to depose to the founding affidavit. His decision not to attach the resolution left the applicant's case standing on nothing. He failed to convince the court that he was clothed with the requisite authority to speak for, and on behalf of his employer. The application cannot, on the mentioned basis, be allowed to stand.”…,.

In casu, the first respondent passed a resolution authorizing its Acting Secretary to act on its behalf in all litigation matters.

This was clearly enough evidence to show that Mr Chikwana was not on a frolic of his own and had the requisite authority to depose to the opposing affidavit on behalf of the first respondent.

HH128-06 : DOBROCK HOLDINGS (PVT) LTD and TURNER AND SONS (PVT) LTD vs TURNER AND SONS (PVT) LTD and ANTHONY TURNER and MARTIN KING and ZAMBEZI PADDLE STEAMER (PVT) LTD and DOBROCK (PVT) LTD
Ruled By: KUDYA J

An order for the consolidation of these two matters was granted by UCHENA J, by consent, with no order as to costs, on 2 June 2006, for hearing before me on 7 June 2006 in Case Number 3157/06.

The first application, Case No. HC5186/05, concerns an order for specific performance while the second one, Case No.5264/05 seeks an order for the provisional liquidation of Zambezi Paddle Steamer (Pvt) Ltd (hereinafter called ZPS).

On 7 June 2006, at the request of the parties, I postponed the hearing to 13 July 2006.

When the hearing resumed, Mrs Wood, for Turner and Sons (Pvt) Ltd, applied for the forced recusal of Mr de Bourbon, for Dobrock (Pvt) Ltd, on the basis that he had been an arbitrator between these parties in 1994.

She referred to Pertisilis v Calaterra & Anor 1999 (1) ZLR 70 (H) as authority for the proposition that the legal practitioner who acted for a former client is precluded from representing a different client in circumstances where a conflict of interest is likely to arise between the former and present client. SMITH J set out the basis of the rule…, as being that:

“A legal practitioner who represents the adversary of his own client in litigation would clearly be violating his or her duty of loyalty and the common law rules against conflict of interest.”

He proceeded to survey American, English, South Africa, and Zimbabwean decided cases on the point at pages 74C–77F.

While he held that neither a partner nor his employee could represent an opponent of a former client in order to fulfill the adage that justice must not only be done but that it must manifestly and undoubtedly be seen to be done, he nevertheless permitted a partner to represent the opponent on the basis that there was no allegation that the other partner had acquired information from the papers in the possession of his firm which could be used to the former client's disadvantage.

Mrs Wood contended, that, justice will not be seen to be done if Mr de Bourbon was allowed to represent Dobrock (Pvt) Ltd, especially on the liquidation case, where Turner and Sons allege a deadlock has manifested itself between the joint shareholders, a fact found by Mr de Bourbon, as arbitrator, to exist in his 25 June 1994 ruling.

She further foresaw a need to call Mr de Bourbon on the deadlock issue in the liquidation case.

Mr de Bourbon countered by contending that he did not represent either Dobrock (Pvt) Ltd or Turner and Sons (Pvt) Ltd but acted in a quasi-judicial capacity.

He knew of no law which debarred him from representing either party as long as he had not possessed confidential information which could be used to the detriment of his client's adversary. He referred to Benmac Manufacturing (Pvt) Ltd v Angelique Enterprises (Pvt) Ltd 1988 (2) ZLR 52 (H).

In that case, Mr de Bourbon accepted a general retainer from Angelique Enterprises in a matter in which that company was involved in a dispute with Albco. He was, at that time, already seized with a retainer for Benmac Manufacturing in its contest with Angelique Enterprises, supra. He had accepted the retainer in the matter against Albco after assurance from his instructing attorney that there would be no conflict of interest.

It was accepted, in that case, by that attorney, that, he had not come into contact with any confidential information which would prejudice Angelique Enterprises in its contest with Benmac. The Law Society, and two other counsel, had absolved him of any impropriety, but, the Managing Director of Angelique Enterprise, Mr Holland, was not satisfied with their findings and advice.

REYNOLDS J held, that, Angelique Enterprises had not shown that Mr de Bourbon had in fact become acquainted with information that could be used to its detriment which would result in real mischief and real prejudice if he continued to act for Benmac Manufacturing. He did express his reservation on a legal practitioner acting for and against his client in the same or different matters.

Mr de Bourbon submitted that he had not acquired any information that he could possibly utilize to the prejudice of Turner and Sons (Pvt) Ltd and that his impartiality in 1994 had not been impugned by any of the parties.

I went through the arbitral award.

It concerned and dealt with the share of each joint shareholder in the extra costs, which were above the original cost of construction of the large commercial houseboat which Zambezi Paddle Steamer (Pvt) Ltd (ZPS) was to own.

Turner and Sons (Pvt) Ltd was not able to show what information Mr de Bourbon accessed which could prejudice its present defence and claim. If anything, I was satisfied that the arbitral award stands on its own and there would be no need to call the arbitrator to testify on it.

I accordingly dismissed the application for the forced withdrawal of Dobrock (Pvt) Ltd's counsel.

I also postponed the hearing sine die and granted, by consent, authority to Turner and Sons (Pvt) Ltd to file a further affidavit in response to Dobrock (Pvt) Ltd's supplementary affidavit.

I further reserved the question of costs in the provisional liquidation claim to which these additional affidavits pertained.

I eventually set down the matter for hearing on 1 November 2006. I directed that the parties argue the specific performance case first and thereafter proceed to argue the liquidation case.

On 12 October 2005, Dobrock (Pvt) Ltd filed the court application for specific performance against Turner and Sons (Pvt) Ltd and two others. It sought the following order:

“1. That, the respondents, jointly as well as severally, the one paying the other to be absolved shall forthwith undertake all that is necessary and required, including making all payments and completion and signing all documents required in order to procure transfer, without delay, by first respondent to applicant of first respondent's entire shareholding in Zambezi Paddle Steamer (Pvt) Ltd.

2. That, immediately upon registration of transfer in the share register of Zambezi Paddle Steamer (Pvt) Ltd (ZPS) applicant shall pay to first respondent the balance of the purchase price for the said shares; such balance being the sum of $138 million.

3. That, the respondents, jointly as well as severally, the one paying the other to be absolved, shall pay the costs of this application on the scale of legal practitioner and own client.”

The application was served on the three respondents on 13 October 2005 (see Peter Dobson's opposing affidavit of 9 November 2005 for which this averment was accepted by Antony Turner on 2 December 2005).

The three respondents filed their opposition papers on 27 October 2005 and prayed for the dismissal of the applicant's case with costs on the higher scale and made reference to the liquidation claim, case number HC5264/2005.

Case number 5264/05 is a court application brought on 17 October 2005 by Turner and Sons (Pvt) Ltd against Zambezi Paddle Steamer (Pvt) Ltd and Dobrock (Pvt) Ltd. It prayed for the winding up of Zambezi Paddle Steamer (Pvt) Ltd and that a liquidator be appointed in the following terms:

“1. That, first respondent, Zimbabwe Paddle Steamers (Pvt) Ltd be provisionally wound up pending the granting of an order in terms of paragraph 3 hereof or the discharge of this order.

2. That, Mrs Theresa Grimmel, of KPMG Chartered Accountants, Mutual Gardens, 100 The Chase, Emerald Hill, Harare be appointed as provisional liquidator of first respondent company with the powers set out in section 221 of the Act.

3. Any interested party appear before this court sitting at Harare on (a date sixty days from the date of the order) to show cause why an order should not be made placing first respondent's company in liquidation and order that the costs of these proceedings all be costs of the liquidation.

4. That, this order shall be published once in the Government Gazette and once in the Herald Newspaper. Publication shall be in the short form annexed to this order.

5. Any person intending to oppose or support the application on the return day of this order shall:

5.1. Give due notice to the applicant at Messrs Byron Venturas & Partners, 2nd Floor Tanganyika House, Corner 3rd Street/Kwame Nkrumah Avenue, Harare.

5.2. Serve on the applicant, at the address given above, a copy of any affidavit which he files with the Registrar of the High Court.”

The application for provisional liquidation was served on the respondents on 17 October 2005, who entered opposition on 31 October 2005 and filed, on that day, their opposing affidavit by fascimile. The actual opposing affidavit was filed on 9 November 2005.

These two applications were consolidated on the bases that the principal parties were the same and that the fundamental issue in each matter related to the ownership and management control of Zambezi Paddle Steamer (Pvt) Ltd (ZPS).

The pleadings in these consolidated matters are voluminous.

The founding, opposing, answering and supplementary affidavits are reinforced by an assortment of attachments which consists of the Memorandum of Association of Zambezi Paddle Steamer (Pvt) Ltd, electronic mail between the parties, and other documents raised by various people who worked for the parties in various capacities.

I have read all these documents.

It is apparent from these documents that there are areas in which the parties agree and others where they are at variance.

It is appropriate that I first deal with the facts as I have determined them to be from the wealth of information that is set out in the pleadings in both these cases.

The preliminary details on the formation of Zambezi Paddle Steamer (Pvt) Ltd (ZPS), on 3 April 1989, are set out in detail by Anthony Turner (Antony) in his founding affidavit in the liquidation matter, case HC5264/05 (Case No.2). Those details were admitted to by Peter Jameson Dobson (Peter) in his opposing affidavit in that case.

Turner and Sons (Pvt) Ltd agreed with Dobrock (Pvt) Ltd, in 1988, on a joint venture to construct and thereafter operate a 'Mississippi River Boat' for commercial use on Lake Kariba.

The concept of the “Southern Belle” was created by Turner and Sons (Pvt) Ltd who approached Dobrock (Pvt) Ltd.

Dobrock (Pvt) Ltd agreed to become its joint partner in the venture and to provide working capital and investment in the project.

Zambezi Paddle Steamer (Pvt) Ltd was incorporated as the special purpose vehicle through which the large commercial houseboat, MV Southern Belle, would be owned and operated.

Zambezi Paddle Steamer (Pvt) Ltd was incorporated in terms of the Companies Act [Chapter 24:03] with an issued share capital of $30,000 divided into 30,000 shares of $1 each fully paid up. Each of the two joint partners subscribed to 15,000 shares of $1 each in Zambezi Paddle Steamer (Pvt) Ltd.

The joint shareholders agreed that Turner and Sons (Pvt) Ltd would first build a model of the craft, and, thereafter, carryout the necessary construction work and interior design of the vessel at a contracted price. Dobrock (Pvt) Ltd would source both local and foreign raw materials for this construction. The total costs of both these operations would be the total cost of the vessel and would be met equally by the joint shareholders.

The agreement was reduced to writing and signed on 31 May 1991.

The arbitral award, of 15 June 1994, indicated that the vessel was completed in 1994. The original construction price was set at $5,950,000.

The issue before the arbitrator centred on the amount by which the original contract price increased, which issue he resolved.

Zambezi Paddle Steamer (Pvt) Ltd was run for 18 months, from the completion of the vessel in 1994, by Turner and Sons (Pvt) Ltd. Dobrock (Pvt) Ltd thereafter took over the management control of Zambezi Paddle Steamer (Pvt) Ltd and appointed a Managing Director, Adamson, to run it.

It was common cause, that, from 2000, the tourism industry went into decline and this affected the bottom line of the MV Southern Belle operations of Zambezi Paddle Steamer (Pvt) Ltd.

There is evidence, in the form of electronic mail exchanged between Peter Jameson Dobson and Anthony Turner, the principal shareholders in Dobrock (Pvt) Ltd and Turner and Sons (Pvt) Ltd, respectively, between 19 January 2003 and 7 April 2004, that, the joint shareholders were prepared to sell their respective shareholdings in Zambezi Paddle Steamer (Pvt) Ltd to the right suitor - if one came along.

On 4 May 2004, Zambezi Paddle Steamer (Pvt) Ltd Managing Director presented a report which highlighted the difficult circumstances the commercial houseboat operations were in. It required urgent maintenance and refurbishment to attain its former glittering glory.

On 6 June 2004, Anthony Turner indicated his decision to sell his shares in the commercial houseboat to Peter Jameson Dobson. This was a clear pointer to his unwillingness to inject funds for maintenance and refurbishment of the houseboat.

On 18 June 2004, Peter Jameson Dobson indicated his willingness to inject $250 million, for this purpose, provided his shareholding in Zambezi Paddle Steamer (Pvt) Ltd increased by 10% while that of Anthony Turner was reduced by the same percentage. He suggested that the houseboat was valued at approximately $3.5 billion. He followed up this by another e-mail of 25 June 2004.

He received a response on that same day (contained in an email wrongly dated as 6 June 2004) from Anthony Turner in which he offered him his shareholding in Zambezi Paddle Steamer (Pvt) Ltd for the sum of $250 million.

Peter Jameson Dobson duly accepted the offer.

He came to Harare, and, during the period 28 June to 14 July 2004, discussed with Anthony Turner on the terms of payment of Antony's entire shareholding.

He agreed to procure payment where and when Anthony Turner wanted.

The purchase price was agreed at $250 million. It was to be paid by Peter Jameson Dobson into the account of Antony's daughter, Jenny, in the United Kingdom, the bank account details of which he received.

The following day, after the terms of payment had been agreed, Anthony Turner requested part payment of the purchase price in local currency.

Peter Jameson Dobson alleged that he made out cheque payments to Chitekeshe of $115 million and to Vretto of $25 million, as part payment, a total of $140 million which Anthony Turner used to buy a pick-up truck.

This averment was not disputed by Anthony Turner, yet, he maintained, in his other affidavits, that, he was paid $138 million and $112 million remained outstanding.

Peter Jameson Dobson, in his prayer, and in Mr de Bourbon's submissions on behalf of Peter's company, accepted that the outstanding purchase price was $112 million.

No cheques or proof of payment in the sum of $140 million was produced.

I am therefore prepared to hold, that, Peter Jameson Dobson paid $138 million and had an outstanding balance of $112 million.

Anthony Turner averred, in his opposing affidavit, that, he required £12,000 to import a new engine for the craft that he was building, known as the “Zambezi Trader”. This craft would not be in competition with the houseboat at all and he was building it for his own account with the moral support and blessing of Peter Jameson Dobson.

Peter Jameson Dobson agreed to pay this amount into his daughter's bank account in the United Kingdom.

He repeated this allegation in paragraphs 31 and 32 of his founding affidavit in Case No. HC5264/05.

This was to be in lieu of the balance of the purchase price of $112 million.

In Case No. 5264/05, in paragraphs 26 and 27 of his opposing affidavit, Peter Jameson Dobson did not respond to these averments in so far as they refer to the alleged mode of payment in foreign currency.

That payment was to be in foreign currency is clear from Peter Jameson Dobson's own founding affidavit.

In paragraph 18, he averred, that, even when he met Anthony Turner, per chance, at the Borrowdale Race Course, in November 2004, he reassured him, that, notwithstanding the fall in the value of the Zimbabwean dollar against the Pound Sterling, the amount outstanding as the purchase price remained £12,000 being the amount in pounds in July 2004.

The two gentlemen agreed, that, the accountant and company secretary of Zambezi Paddle Steamer (Pvt) Ltd, Paul Turner (Paul), a partner in Ernst and Young Chartered Accountants, would effect the share transfer and receive Anthony Turner's letter of resignation as a director therein.

There was a delay in the transfer of the shares which was occasioned by Paul Turner's attempts to structure a tax avoidance scheme for the benefit and at the insistence of Antony Turner.

I make this finding based on Antony Turner's deliberate failure to respond to Paul Turner's affidavit, which was filed in support of Peter Jameson Dobson's founding affidavit.

It was agreed, that, on 3 August 2004 and 21 August 2004, Peter Jameson Dobson wrote to Anthony Turner enquiring whether or not he had signed the necessary transfer documents and resigned as a director of Zambezi Paddle Steamer (Pvt) Ltd - the two factors which would trigger the payment of the balance of the purchase price by Peter.

It also appears, that, even on 5 November 2004, a date disputed by Athony Turner, who put it as being sometime in September 2004, when the two met at Borrowdale Race Course, Antony intimated that he had been too busy to visit Paul Turner. The parties re-affirmed, that, despite an adverse movement of the Zimbabwe dollar since July 2004, the balance of the purchase price would be paid into Antony's daughter's account in the United Kingdom at the exchange rate agreed in July 2004.

On 17 January 2005, Antony Turner proceeded to appoint Peter Drummond and Martin King as directors of Turner & Sons (Pvt) Ltd, in his stead, who were charged with the responsibility of overseeing Turner & Sons (Pvt) Ltd's interests in the Southern Belle.

A flurry of e-mails followed which attempted to resolve the issue of the sale of Antony Turner's shares in Zambezi Paddle Steamer (Pvt) Ltd, who was claiming, that, the failure by Peter Jameson Dobson to pay the balance of the purchase price timeously amounted to repudiation of the contract.

He therefore regarded himself released from the contract.

The negotiations by the parties culminated in a letter of 23 August 2004 by Turner & Sons (Pvt) Ltd's erstwhile legal practitioners to Dobrock (Pvt) Ltd's legal practitioners which set out the history of their association.

In that letter, Turner & Sons (Pvt) Ltd indicated that it would seek an order to wind up the company in terms of section 206(g) of the Companies Act [Chapter 24:03].

Dobrock (Pvt) Ltd held the firm belief that it had purchased Turner & Sons shareholding and was therefore the sole shareholder in Zambezi Paddle Steamer (Pvt) Ltd.

These disagreements resulted in the two applications, for specific performance and liquidation, that are now before me.

The first issue for determination is whether or not a binding contract of sale was reached between Dobrock (Pvt) Ltd and Turner & Sons (Pvt) Ltd.

It is, I believe, common cause that an agreement of sale was entered into.

In its opposing affidavit, in paragraph 17, Turner & Sons (Pvt) Ltd acknowledges that the parties had a loose gentleman's agreement. Antony Turner concludes that paragraph by stating that "I believe, with respect, that the only explanation that is reasonable in the circumstances is that applicant repudiated the contract."

Paragraph 49(iii), in Case No. HC5264/05, by Turner & Sons (Pvt) Ltd, is to the same effect.

Turner & Sons (Pvt) Ltd's defence was, in the main, predicated on repudiation by conduct of the contract that was executed between the parties. Indeed, Mrs Wood, for Turner & Sons (Pvt) Ltd, in paragraph 2 of her written heads of argument, wrote:

"It is apparent from the applicant's own case that the agreement in question was very loose even if it was binding between the parties."

Counsel concentrated their submissions on the question whether time was of the essence in the performance by Dobrock (Pvt) Ltd of the term relating to payment of the outstanding purchase price.

It was on the assumption that it was of the essence that Turner & Sons (Pvt) Ltd alleged repudiation.

The onus, in my view, lies on Turner & Sons (Pvt) Ltd to show that time was of the essence and that the failure by Dobrock (Pvt) Ltd to act timeously entitled it to rescind the contract.

Turner & Sons (Pvt) Ltd blamed Dobrock (Pvt) Ltd for the delay in paying the balance of the purchase price.

The facts, as I find them, do not bear out the correctness of Turner & Sons (Pvt) Ltd's view.

Paul Turner indicated, in his unchallenged affidavit, that, the tax avoidance scheme was initiated at the instance of Antony Turner, and was for Turner & Sons (Pvt) Ltd's benefit.

My view is that, at that stage, Paul Turner was working as an agent of Turner & Sons. It became, in my finding, the duty of Turner & Sons to impress on him to act with speed if time was of the essence to it.

It is clear to me, that, Antony Turner understood and appreciated that the balance of the purchase price would not be paid out until the share transfer had been effected by Paul Turner; until Antony Turner had resigned as a director of Zambezi Paddle Steamer (Pvt) Ltd; and, until Antony Turner had obtained a capital gains clearance certificate from the Zimbabwe Revenue Authority (ZIMRA).

The delay cannot, therefore, be attributed to Dobrock (Pvt) Ltd.

Peter Jameson Dobson, after all, was desirous that transfer be effected with speed as shown by his enquiries of 4 August and 21 August 2004 which Antony Turner did not acknowledge.

Antony Turner never did challenge the averment, that, when they met at Borrowdale Race Course, he indicated that he was responsible for the delay for he was too busy to make a follow up with Paul Turner.

Paul Turner, after all, was acting, as regards the tax avoidance scheme only, as an agent of Antony Turner.

It is therefore my finding, on the papers, that, it was in fact Antony Turner who was responsible for the delay. He could not, therefore, lawfully repudiate the contract by projecting his own inaction onto Dobrock (Pvt) Ltd.

Mrs Wood contended, with reference to Concrete Products Co. (Pty) Ltd v Natal Leather Industries 1946 NPD 377…, and Broderick Properties v Rood 1962 (4) SA 447 that the mere fact that the agreement did not provide a particular date of performance did not mean that time was not of the essence.

She submitted, that, to Peter Jameson Dobson's knowledge, Antony Turner had to purchase an engine for another boat that he was building for £12,000 immediately, that is, at the time that they concluded the agreement.

In her view, though not spelt out in the oral agreement, the nature of that agreement, and the purpose to which Antony Turner wanted to utilize the funds were inherently indicative that both parties contemplated that payment had to be speedily made.

Speed payment was inherent in the agreement itself.

The proposition, in my view, conforms with the examples that were highlighted in Broderick Properties v Rood 1962 (4) SA 447 concerning the purchase of theatre tickets and repairs of a motor vehicle at a garage which are required for use within a set time frame.

The appreciation that I attribute to Antony Turner, of the conditions that had to be fulfilled before payment was made, in my view, removes his case from one relating to mora ex re (time set out in the contract) to one of mora ex persona, which requires demand before the time limits for performance are reached.

I associate myself with the statement of law that was propounded by GUBBAY CJ in Asharia v Patel 1991 (2) ZLR 276…,. He stated thus:

"The general applicable rule is that where time for performance has not been agreed upon by the parties, performance is due immediately on conclusion of their contract or as soon as is reasonably possible in the circumstances. But, the debtor does not fall into mora ipso facto if he fails to perform forthwith or within a reasonable time. He must know that he has to perform.

This form of mora, known as mora ex persona, only arises if, after a demand has been made calling upon the debtor to perform by a specified date, he is still in default.

The demand, or interpellatio, may be made either judicially, by means of a summons, or extra-judicially by means of a letter of demand, or even orally; and to be valid, it must allow the debtor a reasonable opportunity to perform by stipulating a period of performance which is not unreasonable - if unreasonable, the demand is ineffective.

Where a debtor has fallen into the mora ex persona after demand, the creditor can acquire a right to cancel the contract by serving notice of rescission, in which a second reasonable time limit is stipulated, making time of the essence. Both demand and notice of rescission are necessary in order to allow for cancellation for non-performance. The two may be, and commonly are, contained in the same notice. Such notice will then fulfil a double function. It will fix a time for performance after which the debtor will be in mora, and create a right in the creditor to rescind the contract on account of the mora."

In the present case, payment of the purchase price was not due immediately on conclusion of the contract. It was due as soon thereafter as was reasonably possible in the circumstances.

The circumstances related to the transfer of Turner & Sons (Pvt) Ltd's shareholding by Paul Turner; receipt by him of Antony Turner's resignation letter; and of a clearance certificate from the Zimbabwe Revenue Authority (ZIMRA).

It was within Antony Turner's power to expedite these matters.

Indeed, that it was not immediate was clearly demonstrated by the use put by Antony Turner of the part payment which was made of $138 million. He bought a pick up vehicle.

He also was duty bound to place Peter Jameson Dobson in mora if he believed that a delay had been occasioned in paying up the outstanding balance of the purchase price.

CHRISTIE, in The Law of Contract in South Africa, 3rd edition, Butterworths, 1996 deals with the line of cases culminating in Broderick Properties v Rood 1962 (4) SA 447 at pages 556 to 557. At page 555 he stated:

"The general rule will be seen in the next section, is that, when the contract does not fix a time for performance there can be no mora ex re, only mora ex persona; so, a demand by the creditor is necessary in order to place the debtor in mora. Whether there are exceptions to this general rule is a question that has led to differences of judicial opinion, but the present law can be stated with a fair degree of confidence."

It seems to me, that, in Zimbabwe, Asharia v Patel 1991 (2) ZLR 276 has provided the answer.

It confirms the correctness of the general rule as set out by CHRISTIE.

It appears to me too, that, the differences of judicial opinion that CHRISTIE noted may be resolved by applying the general rule to the particular facts of each matter in order to ascertain its validity to the time frames as contemplated by the parties. It is only after this has been done that a decision on whether mora ex re or mora ex persona applies can be made.

I, therefore, hold, in the present matter, that, Turner & Sons (Pvt) Ltd could not lawfully repudiate the contract without first placing Dobrock (Pvt) Ltd in mora.

Mrs Wood further submitted, with reference to section 11(1) of the Exchange Control Regulations 1996, SI109 of 1996, that, on the applicant's own case, the agreement was illegal because payment of the balance of the purchase price was to be made outside the country.

Mr de Bourbon, on the other hand, submitted that the contract was not illegal.

He contended, that, there was nothing on the papers to show that the obligations of Dobrock (Pvt) Ltd would be met by it. Rather, so he opined, it was only in the nature of assistance between friends, between Peter Jameson Dobson and Antony Turner which was permissible in terms of the Exchange Control Regulations.

There is a plethora of cases which have been determined by both the High and Supreme Court which are in point.

My starting point is section 11 of the Exchange Control Regulations 1996, S.I.109 of 1996. It reads:

"11(1) Subject to subsection (2) unless otherwise authorized by an exchange control authority, no Zimbabwean resident shall -

(a) Make payment outside Zimbabwe; or

(b) Incur any obligation to make payment outside Zimbabwe.

(2) Subsection (1) shall not apply to:

(a) Any act done by an individual with free funds which were available to him at the time of the act concerned;

(b) Any lawful transaction with money in a foreign currency account."

Mrs Wood contended that Dobrock (Pvt) Ltd was registered in Zimbabwe and was therefore resident in this country.

This contention is, in my view, correct, as it reflects the position set out in section 3(1) of the Exchange Control Regulations 1996, SI109/1996 for artificial persons.

She further contended that Dobrock (Pvt) Ltd had not shown that it had been authorized by the Exchange Control Authority before it incurred the obligation to make payment outside Zimbabwe. It had not demonstrated that this was a lawful transaction with money in a foreign currency account. She contended further, that, the free funds exception was applicable to individuals and not to companies, and that Dobrock (Pvt) Ltd could not save the agreement on that basis as it was inapplicable to it.

In International Who's Who Ltd v Bernstein Clothing (Pvt) Ltd SC28-99, MUCHECHETERE JA, considered the effect of section 8(1) of the Exchange Control Regulations RGN 399/77 where the respondent, a limited liability company, registered locally, incurred an obligation to pay 20,450 Swiss francs to the appellant, a limited liability company registered in England, in Johannesburg, for transmission to Vaduz, Switzerland.

The respondent raised a point in limine averring illegality.

At page 4-5 of the cyclostyled judgment, the learned judge of appeal stated as follows:

"At the outset, I should state that I agree with Mr Moyo's submission, that, the contract between the parties was illegal, invalid, and unenforceable because it was in breach of section 8(1) of the said Regulations. The provisions of the section are peremptory: see Abreu v Campos 1975 (1) RLR 198 and Swart v Smuts 1971 (1) SA 819 at 829-30.

As already indicated above, the appellant conceded that no authority had been obtained by the parties from the relevant authority for any payment outside Zimbabwe when the contract was entered into.

On the law, see Macape (Pty) Ltd v Executrix, Estate Forrester 1991 (1) ZLR 315 at 320D-E where McNALLY JA said:

'In other words, when one is concerned with payments INSIDE Zimbabwe (section 7 of the said Regulations) it is perfectly lawful to enter into the agreement to pay. But, without authority from the Reserve Bank, the actual payment may not be made. By contrast, when dealing with payments OUTSIDE Zimbabwe (section 8 of the said Regulations) it is unlawful even to enter into the agreement to pay without first obtaining the authority of the Minister which has been delegated to the Reserve Bank.' (my emphasis)

See also Abreu v Campos, supra; Young v Van Resnburg 1991 (2) ZLR 149 (S) at 155; Adleu v Elliot 1988 (2) ZLR 283 (S) at 287.”

The facts in Young v Van Resnburg 1991 (2) ZLR 149 (S) are distinguishable from the present matter.

It involved individuals who were foreign residents.

Its importance, in my view, lies in the sentiments of KORSAH JA, at page 153G-154A, where he agreed with Mr de Bourbon, in that case, that, subparagraph 8(1)(a), which barred a Zimbabwean resident from doing any act, outlawed the doing of even a single act.

It is noteworthy that section 8 of the 1977 Regulations is the precursor to section 11 in the 1996 Regulations, even though there are some variations in the wording of the two sections in these respective Regulations.

In International Who's Who Ltd v Bernstein Clothing (Pvt) Ltd SC28-99, MUCHECHETERE JA agreed with the observation of McNALLY JA in Macape (Pty) Ltd v Executrix, Estate Forrester 1991 (1) ZLR 315 that an agreement to pay outside Zimbabwe by a resident, without Exchange Control authority, where the resident was not an individual without free funds or where the resident was not utilising money in a foreign currency account, was void ab initio.

In Hattingh and Others v Van Kleek 1997 (2) ZLR 240 where a foreign visitor to Zimbabwe, Van Kleek, who was not aware that the Exchange Control Regulations prohibited local residents from incurring obligations to pay money abroad, agreed to give a loan to a Zimbabwean to be used to develop a Safari business and the money loaned was to be paid into that Zimbabwean's bank account outside Zimbabwe, and that Zimbabwean, and two other locals, signed a promissory note to repay the loan, the High Court then ordered the locals to repay the loan.

They appealed on the basis that they acted illegally by incurring an obligation to make payment outside Zimbabwe without the requisite Exchange Control authority.

The appeal was dismissed.

KORSAH JA held at page 244D that:

“Section 8 of the Regulations only prohibits, but does not declare void or illegal, the transactions enumerated therein” and found that the transactions did not contravene section 8 of the Regulations.

At page 246B he stated:

“The cases clearly show, that, where a contract is, on the face of it, legal but, by reason of a circumstance known to one party only, is forbidden by statute, it may not be declared illegal so as to debar the innocent, party relief, for to deprive the innocent person of his rights would be to injure the innocent, benefit the guilty, and put a premium on deceit.”

The facts of Hattingh and Others v Van Kleek 1997 (2) ZLR 240 are distinguishable from the present matter.

In addition, in casu, both parties were aware that their agreement fell foul of the Exchange Control Regulations.

In Greebe & Another v Famaps Investments (Private) Limited & Anor HH124-04, MAVANGIRA J dealt with the question whether a local resident could withhold and keep the assets that accrued to him from a sale by another local resident of those assets situated in Zimbabwe in circumstances where no payment was made abroad as agreed, on the basis that to do so would violate section 11(1)(b) of the Exchange Control Regulations 1996, S.I.109/1996.

She held that while the agreement contravened section 11 of the Exchange Control Regulations, the facts called for a relaxation of the par delictum rule, for, if she were to decline to do so, she would reward the purchaser by giving him a premium for deceit.

In Adleu v Elliot 1988 (2) ZLR 283 (S) GUBBAY JA…, recognised, that, in oral contracts, the court had the power to determine whether the terms of that contract required exact performance or the performance of some equivalent act. He stated thus:

“The application of this broad principle [that it is not for the court to remake a contract of the parties in line with INNES CJ in Ambrose and Aitken v Johnson and Fletcher 1917 AD 327 at 343 and the remarks of BEADLE CJ in Holmes v Palley 1975 (2) RLR 98 (AD) at 105C that one party to a contract was not entitled to expect that it will be carried out in a different manner than agreed because of the absence of prejudice] does not, of course, preclude a court from determining whether the parties to an agreement intended that a particular term thereof was to be fulfilled in forma specifica, that is, in the exact manner agreed upon by the parties or per acquipollens, that is, by some equivalent act.

Where the agreement is in writing, and the language employed is sufficiently clear, the common intention of the parties must be extracted from the agreement itself. But, if the language is ambiguous or where the agreement of the parties was oral, then, the court is obliged to have regard to the surrounding circumstances, and to any other admissible evidence in order to ascertain whether the common intention of the parties was to be fulfilled in forma specifica or whether performance thereof by some equivalent act would suffice.”

In Adleu v Elliot 1988 (2) ZLR 283 (S) the parties entered into an agreement of sale in which part of the purchase price was payable abroad in foreign currency and the remainder at home in local currency. GUBBAY JA approved the four factors outlined by CLAASEN J in Diggelen v de Bruin and Another 1954 (1) SA 188 SWA…, that:

“1. If the surrounding circumstances, and other admissible evidence, afford no clue as to what was in the contemplation of the parties, then, there is a rebuttable presumption in favour of performance in forma specifica. But, the presumption cannot be rebutted where it is clear from the terms of the contract that performance in forma specifica had been stipulated.

2. In case of doubt, the court will be more likely to find in favour of performance per acquipollens if the manner of performing the term is not material and also where performance in forma specifica is impossible through no serious fault on the promissor's part.

3. The act or performance tendered per acquipollens, where such is permissible, must be an equivalent act to that stipulated for or be of such a nature that it can make no material difference to the promise.

4. Where the promissor succeeds in rebutting the presumption mentioned above, there may be circumstances falling short of impossibility and even where there may be some fault on the part of the promissor; a court may be justified in concluding that the promissor's perfomance, or tendered performance, amounted to substantial performance.”

It seems to me, as appears from Dobrock (Pvt) Ltd 's averment, that, the parties contemplated that payment would be in sterling pounds in England into the account of Antony Turner's daughter, Jenny.

Dobrock (Pvt) Ltd was willing to pay “where and when” Turner & Sons (Pvt) Ltd desired it be made.

The agreement was sealed when Dobrock (Pvt) Ltd agreed to make payment in foreign currency in England.

The parties thus contemplated exact performance and not some substantial performance.

That exact performance was, however, illegal.

There is no room for the application of CLAASEN J's formulation in Diggelen v de Bruin and Another 1954 (1) SA 188 SWA in these circumstances.

It is my view, that, Hattingh and Others v Van Kleek 1997 (2) ZLR 240 does not apply to the present matter.

Dobrock (Pvt) Ltd was aware that it was contravening the Exchange Control Regulations when it promised to pay “where and when” and agreed to pay in England.

This is clear from the lack of particularity on the decision on the mode of payment that is apparent in its affidavits.

I cannot allow this court to be an accomplice to an illegality by enforcing this illegal contract, as prayed for by Dobrock (Pvt) Ltd.

I agree with Mrs Wood, that, Dobrock (Pvt) Ltd's claim on specific performance, and other subsequent relief related thereto, should be dismissed.

After all Dobrock (Pvt) Ltd is not an individual so the free funds exception would not avail it.

The oral agreement was transacted between the parties by individuals who were representing them respectively.

Peter Jameson Dobson did not aver, nor even suggest, that he had free funds from which he would pay Turner & Sons (Pvt) Ltd.

Even though he was an individual, he was acting for Dobrock (Pvt) Ltd. He had no Exchange Control approval to incur the liability to pay on behalf Dobrock in foreign currency in England.

The agreement reached is illegal, invalid, and unenforceable: see also Barker v African Homesteads Touring and Safaris (Pvt) Ltd & Anor SC18-03.

HH207-13 : MODCRAFT ENGINEERING (PVT) LTD vs TENDA BUSES (PRIVATE) LIMITED and DAMASCUS MUTARE
Ruled By: MATHONSI J

In this jurisdiction, the separate legal persona concept is the cornerstone of our Company Law.It provides, that, a company, once registered at the company registry, acquires a legal personality of its own divorced from that of its members. It enjoys perpetual succession, can sue and be sued in its own ...

HH435-15 : LADRAX INVESTMENTS (PVT) LTD vs IGNATIOUS CHIRENJE and RUTENDO CHIRENJE
Ruled By: TSANGA J

On 8 October 2014, I granted the applicant's claim for an eviction order against the respondents stemming from a sale in execution that had been confirmed by the Sheriff and where transfer of the property had already taken place.

I also dismissed the respondent's application for upliftment of bar for reasons I here upon elucidate.

The background facts are these:

The applicant bought the property through a Sherriff's sale for $116,000. The property is described as Subdivision A, Lot 16, Block B of Avondale, held under Deed of Transfer Registration No.4835/05.

The sale was in execution of a debt owed to Genesis Bank by the first respondent and his business partners and for which the property belonging to both respondents had been used as security.

Mr Maxwell Kufakunesu Chisvo was declared the highest bidder for the property on 18 March 2013.

On 19 March 2013, the second respondent applied to have the sale set aside on the basis that the price realised was unreasonable, given that their own evaluation was for $215,000.

The second respondent's application, which was in terms of Order 40 Rule 359, also contained various averments regarding the impropriety of the security that the Bank had obtained in the initial instance.

The application was dismissed in July 2013 and the sale was confirmed since the judgment debtor had failed to produce the buyer for this higher price.

Issues relating to any impropriety regarding the obtainment of the initial security were said to be matters for the court.

The property was duly transferred into the applicant's name in January 2014, which was some six months later.

On 22 January 2014, the applicant gave the respondents notice to vacate the premises.

On 24 January, the respondents practitioners wrote to the applicant's representative advising them of pending proceedings to challenge the terms on which the property had been acquired.

It was the applicant's position, that, the sale was no longer conditional but a confirmed sale, and, accordingly sought eviction on 10 February 2014 and holding over damages.

The respondents filed a notice of opposition, on 25 February, in which they argued, that, the highest bidder was one Mr Kufakunesu Chisvo and that they were surprised that the property was then transferred to Ladrax Investments (Pvt) Ltd.

Their primary objection was that the applicant is an imposter.

The applicant filed its answering affidavit, on 25 February, explaining that the applicant is a company whose directors are Mr Kufakunesu Chisvo and his wife, Joyce Chisvo.

He further explained, that, Mr Chisvo had made a request for the property be transferred into the applicant's name - which wish was acceded to by the Sherriff.

HH709-15 : ODAR HOUSING DEVELOPMENT CONSORTIUM vs SENSENE INVESTMENTS (PVT) LTD and MINISTER OF LOCAL GOVERNMENT, PUBLIC WORKS AND NATIONAL HOUSING and ATTORNEY–GENERAL
Ruled By: MAFUSIRE J

This was an urgent chamber application. At the end of the hearing, I dismissed it with costs on a legal practitioner-and-client scale. I deprecated the conduct of the applicant's legal practitioners.

The purported urgent chamber application was not only bad in many respects, it was incurably bad.

What I was particularly concerned with were the patent falsehoods in the applicant's papers.

Furthermore, there was an apparent disconnection between the order sought, the facts laid out in support thereof, and the allegations in the certificate of urgency.

Here are the details....,.

(c) The Relief Sought

The applicant's draft order was couched thus:

“TERMS OF FINAL ORDER SOUGHT

That you show cause to this Honourable Court why a final order should not be made in the following terms:

1. That, the 1st and 2nd Respondents be and are hereby interdicted from interfering with Applicant's operations on the Remainder of the Farm Ordar situate in the district of Salisbury pending determination of an application seeking the setting aside of title transfer under Deed No.2807/2015;

2. That, the 1st Respondent and 2nd Respondents (sic) shall bear the costs of this application on a legal practitioner and client scale.

INTERIM RELIEF GRANTED

Pending determination of this matter, the Applicant is granted the following relief:

1. That, the 1st Respondent be and is hereby interdicted from harassing Applicant's members and/or beneficiaries in any way whatsoever in respect of the Remainder of the Farm Odar immediately upon service of this order.”

The background to this case, in summary, and in my own words, as I understood it, and avoiding much of the contentious stuff, was that the applicant was a consortium or joint venture of some 56 members, comprising, among many others, companies, and State enterprises.

The first respondent was a private company fronted by one Phillip Chiyangwa (“Chiyangwa”).

The second respondent represented the Government.

It was said, in 2006, the Government, in terms of two written agreements, allocated to the applicant some 605,8092 hectares of a property known as Ordar Farm (“the property”).

The allocation was so that the consortium could develop, at its own cost, housing units for its members.

One important feature of the joint venture agreement was that the consortium would, through the Government, pay compensation to the former owner of the land at levels pegged by Government.

This former owner was identified in the agreements as the Zimbabwe Tobacco Association (“ZTA”).

Another feature of the agreements was that the parties to the joint venture would establish a partnership whose members contributions to the capital costs and whose entitlement to the individual land units would be in the proportions as set out.

The day to day management of the partnership would be entrusted to a committee of twelve persons appointed by the partners.

In due course, the Government would pass title to the owners of the individual units of land.

The applicant's case before me, again in my own words, and largely staying clear of the hotly contested facts, was that it had kept its side of the agreement.

Among other things, the relevant developmental permits had been put in place. The property had substantially been developed.

Yet, the Government had blatantly reneged on virtually every other undertaking that it had made to the applicant.

Among other things, the Government had surreptitiously surrendered the property to Phillip Chiyangwa, through his company, the first respondent herein.

A week before the application, the Government had, nicodemously, executed a Deed of Grant over the property in favour of Phillip Chiyangwa's company.

The applicant's members were now at Phillip Chiyangwa's mercy.

They were facing constant harassment from him as he relentlessly pursued compensation from them in return for individual title to the individual units occupied by them in terms of the agreements with the Government.

He was busy flighting malicious adverts in the media and making malicious reports to the police against the applicant's Management Committee.

The applicant did not recognise Phillip Chiyangwa or his alleged rights or title to the property.

In separate proceedings before this court, the applicant said it was challenging Government's actions. In particular, the applicant wanted the title to Phillip Chiyangwa's company reversed.

So. the applicant's case before me was that pending determination of the main case, it wanted a temporary interdict.

It was the nature of that temporary interdict that was the bone of contention.

Prima facie, the applicant had made out a case of double-dealing by the Government.

The Government's conduct was put into serious question.

It had acquired the property; it had allocated it to the applicant; the applicant had expended vast sums of money in line with the agreements; the applicant's members anticipated getting title to the individual units of land over which they had taken occupation, or were in the process of doing so; the level of compensation was, or had to be assessed by the Government.

Then, Phillip Chiyangwa zooms from nowhere, brandishing a title deed issued by the same Government - over the same property.

And the same Government was now tossing the applicant's members to Phillip Chiyangwa to whom payment of the compensation had to be made.

Thus, the Government was in the dock. It owed an explanation.

It was its secret execution of the title deed in favour of Phillip Chiyangwa's company that had prompted the applicant to approach the court on an urgent basis.

That, basically, was the applicant's case.

Unfortunately, it was not the one before me.

It was the case pending before this court for determination at another time and by another judge.

The case before me, as summarised in the interim relief sought, was that I should interdict Phillip Chiyangwa's company from “…, harassing Applicant's members and/or beneficiaries in any way whatsoever….,.”

But, there was a problem with that.

From the papers, it was not Phillip Chiyangwa's company that was doing the harm complained of - it was him personally.

But, he was not a party to the application.

HHH229-19 : INTRATREK ZIMBABWE (PVT) LTD and WICKNELL CHIVAYO vs PROSECUTOR GENERAL OF ZIMBABWE and L. NCUBE N.O.
Ruled By: TAGU J

This is an application for the review of the second respondent's ruling dismissing the applicants exception to criminal charges preferred against them in the court of the Provincial Magistrate at Harare under case number CRB P9114-5/2018. The ruling was handed down on the 19th of November 2018.The first applicant is ...

THE FACTS

The applicants were arraigned before the Magistrates Court sitting at Harare for contravening section 136 of the Criminal Law (Codification and Reform) Act [Chapter 9:23] - Fraud (2 counts); contravening section 5(1)(a)(ii) of the Exchange Control Act [Chapter 22:05] as read with section 4.1.18 of the Foreign Exchange Guidelines to authorised dealers, ECDI of 2009; and contravening section 5(1)(a)(ii) of the Exchange Control Act [Chapter 22:05] as read with Exchange Control Authority GR1776 of 26 April 2016.

The allegations, as appearing on the outline of the State case, were that -

“…,.

4. On the 23rd of October 2015, Zimbabwe Power Company (ZPC) signed an Engineering, Procurement and Construction Contract (EPC) with accused (1) being represented by accused (2) for the construction of 100-Megawatt Solar Power Generation Plant in Gwanda. The performance/scope of the work was guided by schedule 11 of the contract.

5. Clause 2(a) and (b) of the terms and conditions of the contract under schedule 11 stated, that, the employer's advance for feasibility study and pre-commencement activities was to be considered part of the contract advance payment. A Bank guarantee was to be provided against all payments made by ZPC towards the project implementation.

6. Subsequently, between 4 December 2015 and 22 January 2016, the accused submitted two separate invoices amounting to US$803,765=82 and US$1,631,888=81 dated 9 November 2015 and 11 January 2016, respectively, on the pretext of feasibility study implementation.

ZPC'S Finance Director, Hubert Chiwara, acted upon the misrepresentation and released the full payment of US$2,435,654 in 9 different instalments, without the requisite bank guarantee, between 4 December 2015 and 22 January 2016 on the understanding that Shanghai Electric Power Design Institute Co. Ltd was going to carry out the feasibility study.

The payments were made from ZPC'S Stanbic Bank account numbers…, and Stanbic Bank…, into accused (1)'s CBZ bank account number…,.

7. However, ZPC Technical Director, Robson Chikuri, ZPC Projects Manager, Cleopas Fambi, and the suspended ZPC Managing Director, Noah Gwariro, indicated, that, they never met sub-contractor, Shanghai Electric Power Design Institute Co. Ltd during the alleged study period. There also no record of sub-contractor's representative entering Zimbabwe during the period in question.

8. Again, between 15 February 2016 and 25 April 2016, the accused submitted 3 invoices of US$1,219,476=80 each supported by payment release certificates; being advance payment claims, purportedly for the implementation of the following works -

(i) Site establishment (basic ablutions, communication network, temporary housing, preliminary foundation for 20-megawatt power plant and water citing and borehole drilling and storage).

(ii) Access roads.

(iii) Ground clearing.

9. Similarly, Hubert Chiwara acted upon the misrepresentation and released a total advance payment of US$3,188,476=80 on 12 different instalments, without bank guarantee, into the same bank account highlighted above.

10. On 26 April 2016, Hubert Chiwara requested the accused to provide a schedule of commitment in respect of funds released by ZPC towards the implementation of the project. The accused, again, through his Company Secretary, K. Makoni, misrepresented to the Finance Director, that, a total of US$1,960,125=40 had been paid to subcontractors. The sub-contractors distanced themselves from the invoices submitted by accused.

11. The paper trail indicated, that, accused used the funds meant for feasibility study and pre-commencement works for his own person benefit by diverting them into various individual and companies who were not involved in the intended activities for which the pre-funding was intended for. Investigations established, that, the funds were used to purchase vehicles; air tickets for the girls stranded in Kuwait; school fees; settlement of civil suits.

12. Further, the accused loaded a total of US$684,150 into five different VISA cards, purportedly for the importation of earthmoving equipment from Pietznack Plant and Earth Moving Service, a company resident in Dallas in the United States of America.

13. The accused person entered into a recurring fees agreement with Pietznacle Plant & Earth moving services company based in Dallas, United States of America for the importation of earth moving equipment without seeking prior approval from Exchange Control Authority, contrary to the provisions of the said Act.

14. In violation of the Exchange Control Act, the Accused persons did not clear, with Exchange Authority, through CDI forms, within 90 days as required by the said Act.

15. The offence came to light after the ZPC Board, through its Chairperson, Engineer Stanley Kazhanje, who discovered that the payments were made without bank guarantee and he reported the matter to the police, through his letter dated 18 December 2017, for investigations.

16. ZPC suffered a total prejudice of US$5,624,130=80 and nothing was recovered.”

Upon arraignment, the applicants pleaded and excepted to the charges in terms of section 171(2) of the Criminal Procedure and Evidence Act [Chapter 9:07] on the basis, that, the facts do not disclose an offence.

The exception was contested by the State.

On the 19th of November 2018, the court a quo dismissed the application for exception.

Dissatisfied with the court a quo's ruling dismissing the application for exception, the applicants approached this Honourable Court with the present application.

The applicants also filed an urgent chamber application for stay of criminal proceedings pending the determination of the present review application.

The urgent chamber application was filed under case number HC11205/18.

The urgent chamber application was partially dismissed on the merits, on 31 December 2018, under case number HH849-18, by MUSAKWA J, who ordered that the criminal trial had been suspended only in respect of the third Count.

Consequently, the applicants are currently undergoing trial in the Magistrates Court in respect of the other counts.

The application for review is opposed by the State.

THE LAW

The applicants have approached this Honourable Court in terms of section 26 as read with section 27 of the High Court Act [Chapter 7:06]. Part V of the High Court Act [Chapter 7:06] provides for powers of the High Court on review. Section 26 provides for the High Court's power to review proceedings and decisions of inferior courts. There are three grounds on which an application for review of criminal proceedings can be brought to the High Court in terms of section 27(1) of the High Court Act [Chapter 7:06]. These are -

(a) Absence of jurisdiction on the part of the court or authority concerned;

(b) Interest in the cause, bias, or malice on the part of the person presiding over the court or tribunal concerned or on the part of the authority concerned, as the case may be; and

(c) Gross irregularity in the proceedings or decision.

In casu, the applicants raise one major ground of review. It is captured on record p1 as -

“The second respondent's decision is grossly unreasonable and patently contrary to law such that no reasonable judicial officer who had applied his mind to the facts would have reached the same decision.”

The parties agree on the law applicable in an application of this nature.

RELIEF SOUGHT

The remedy that the applicants seek is that -

“1. The second respondent's ruling, of 19 November 2018, in case number CRB P9114-5/18 be and is hereby set aside.

2. The following is substituted in its place:

'In the result, the exception succeeds. The charges be and are hereby quashed. Consequent to the accused's plea, both accused be and are hereby acquitted.'”...,.

MY ANALYSIS OF THE FACTS IN THE OUTLINE OF STATE CASE

In reviewing the decision of the court a quo, and having found that the court a quo did not deal with the actual basis of the exception, the court is now at large to decide whether the facts disclose or support the criminal offences/charges the applicants are facing or not.

The starting points are paragraphs 4 and 5 of the Outline of the State Case which contain the full facts pertaining to the charges the applicants are facing. They read as follows -

“4. On 23 October 2015, ZPC signed an Engineering, Procurement and Construction Contract (EPC) with accused (1) being represented by accused (2) for the construction of 100-Megawatt Solar Power Generation Plant in Gwanda. The performance/scope of the work was guided by schedule 11 of the contract.

5. Clause 2(a) and (b) of the terms and conditions of the contract, under schedule 11, stated that the employer's advance for feasibility study and pre-commencement activities was to be considered part of the contract advance payment. A bank guarantee was to be provided against all payments made by ZPC towards the project implementation.”

I shall now turn to the nature of the exception to the charges and facts preferred against the applicants in the court a quo.

The exceptions were taken on the basis, that, even if the facts which are alleged in the charges and the outline of the State's case are proven, no criminal offence would have been established.

I say so because, the reading of the whole Outline of the State Case shows, that, this is purely a civil rather than a criminal matter. It therefore amounts to a futile enterprise if the trial were to proceed as I will demonstrate below....,.

I now turn to address the prospects of success of the exception filed on behalf of the accused persons on the merits. I shall not repeat the terms of each of the charges and facts for brevity....,.

I now proceed to consider the exchange control charges.

These are two:

It is alleged, that, the accused persons committed offences by entering into an agreement “involving recurring fees amounting to US$849,479” with Pietznack Plant and Earth Moving Services of Dallas, USA without seeking exchange control approval.

The judgment in McCosh v Pioneer Corporation Africa Ltd 2010 (2) ZLR 211 (H) held, that, the entering into an agreement does not violate the Regulations. It is the payment which violates the Regulations. In other words, after entering into the contract, the parties could still seek exchange control approval.

Assuming, therefore, that, the alleged facts are accepted as they are by the accused persons, no criminal offence was committed.

In addition, the Foreign Exchange Guidelines to Authorised Dealers, ECD1/2009, were not promulgated by the President in terms of section 5(1)(a)(ii) of the Exchange Control Act [Chapter 22:05].

Section 2 of the Exchange Control Act provides that:

“2. Regulatory Powers of the President

(1) Notwithstanding anything to the contrary contained in any enactment, the President may make such regulations relating directly or indirectly to –

(a)…,.

(b) Exchange transactions.”

In terms of subsection (2), it is elaborated what such Regulations may relate to. In terms of sub-section (5), the Regulations may provide for penalties for contravention of the Regulations and criminal offences.

In the present matter, the Foreign Exchange Guidelines to Authorised Dealers, ECD1/2009 relate to authorised dealers, as defined, and not other persons.

In addition to not having been made by the President in terms of the Exchange Control Act, they do not create themselves a criminal offence.

This is admitted in the response by the Prosecution to the exception.

In any event, it is the first accused who entered into a public procurement contract with the Zimbabwe Power Company (“ZPC”). The second accused is not a party to the contract. He, however, represented the first accused.

There is therefore no valid charge for the contravention of the Foreign Exchange Guidelines to Authorised Dealers, ECD1/2009 in his capacity as Managing Director.

The contractual obligations related to, and flowed as between the complainant and the first accused only.

At all material times, the second accused represented the first accused in his capacity as Managing Director.

There is no allegation that the second accused did anything pursuant to the contract alleged in his own capacity.

There is no allegation that the corporate veil of the first accused was abused for a criminal enterprise and that the second accused, fully aware of this abuse, could have prevented the same, and, nonetheless, proceeded, recklessly, without regard to the consequences.

The following legal principles are trite:

A company is an entity distinct and separate from its shareholders and directors: see Salomon v Salomon & Co Ltd (1897) AC22 (HL) and Modern Company Law, 4th Ed (Stevenson and Sons 1979), by Prof GOWER LCB…,.

A director who acts for a company, on the basis of its resolution in that regard, does so as an agent of the company and does not attract personal liability for the conduct of the company.

The law is that, a company is capable of enjoying rights and of being subject to duties which are not the same as those enjoyed or borne by its members. A company has its own legal personality. That is, in fact, without statutory intervention, company directors would not be liable for damages in Civil Law in respect of commission or omissions by companies: see Burley Appliances Ltd v Grobbelar N.O. 2004 (1) SA…, per NEIL J.

The State alleges, that, the second accused made certain misrepresentations (which is denied) in the course of the implementation of the procurement contract.

Apart from the fact, that, the facts alleged do not disclose a criminal offence, the conduct alleged remains the conduct of the first accused regardless of who represented it.

The second accused is wrongfully charged in his personal capacity.

The basis of the charge, as appears from the Outline of the State Case (OSC), is his alleged conduct in a representative capacity in respect of the procurement contract.

To that end, the charges are merely frivolous and vexatious.

In giving last consideration to the foregoing, the basis for charging the second accused, in his personal capacity, is without merit and has not been clearly set out in the Charge and the Outline of the State Case (OSC).

It should be noted, that, the only basis for charging an accused person in their personal or representative capacity of a corporate entity is found in section 277(5) of the Criminal Law (Codification and Reform) Act [Chapter 9:23]; it being alleged, that, in his personal capacity, he is liable for the alleged criminal conduct of a separate legal persona.

The provisions of section 277(5) of the Criminal Law (Codification and Reform) Act notwithstanding, to the extent that it imputes vicarious criminal liability on the second accused in respect of an offence allegedly committed by another (in this case a company) in respect of an offence which requires actual intention to be proven, such a charge amounts to a breach of the protective provisions in sections 56(1) and 49(1) of the Constitution of Zimbabwe, and, as such, invalid.

HH231-10 : AGRICULTURAL BANK OF ZIMBABWE LTD t/a AGRIBANK vs NICKSTATE INVESTMENTS (PVT) LTD and RICHARD MAKWARA and PLAXEDES MAKWARA
Ruled By: GOWORA J

It is a fundamental and trite principle of law that a registered company is a legal persona in its own right and endowed with its own separate legal persona which is distinct from its shareholders: see Salomon v Salomon & Co. Ltd [1887] AC 22.

It is also settled law, that, in certain exceptional circumstances, where the company is controlled, in terms of activities and decisions, by another person, the courts have allowed the corporate veil to be lifted to reveal the real person behind the company.

I will respectfully refer to a passage by MARGO J in Gering v Gering & Anor 1974 (3) SA 358…, where the learned judge stated:

“There are three companies, apart from Lauren Lyn (Pty) Ltd, in which the first defendant has a 100 per cent interest in the shareholding. It is true, that, in the case of these companies, their records are not stricto sensu in the possession, custody or control of the first defendant in his personal capacity. However, on the facts, these companies are his creatures and his instruments. He is conducting business through them, or holding assets through them, and, they are separate juristic personalities; they are, in substance, merely part of the machinery by which he alone conducts his business affairs.”

In certain cases, courts have gone as far as stating that a company is the agent of the controlling shareholder.

In the English case of Wallersteiner v Moir (No.1) (1974) 3 All ER 217 (CA) LORD DENNING had this to say…,:

“I am prepared to accept that the English concerns, those governed by English company law or its counterparts in Nassau or Nigeria, were distinct legal entities. I am not so sure about the Liechtenstein concerns such as Rothschild Trust, the Cellpa Trust or Stawa AG. There was no evidence before us of Liechtenstein law. I will assume too, that they were distinct legal entities, similar to an English limited company. Even so, I am quite clear that they were just the puppets of Doctor Wallersteiner. He controlled their every movement. Each danced to his bidding. He pulled the strings. No one else got within reach of them. Transformed into legal language they were his agents to do as he commanded. He was the principal behind them. I am of the opinion that the court should pull aside the corporate veil and treat these concerns as his creatures - for whose doings he should be and is responsible. At any rate, it was up to him to show that any one else had a say in their affairs and he never did so…,.”

View Appeal
HH40-19 : UPENYU MASHANGWA and ANOR HC4197/18 and EMMANUEL MAKANDIWA and OTHERS HC1774/18 vs EMMANUEL MAKANDIWA and RUTH MAKANDIWA and ANOR and UPENYU MASHANGWA and ANOR
Ruled By: TAGU J

The two matters were consolidated to avoid conflicting judgments as the two matters involving the same parties, and same issues, were ready for arguments at almost the same time before different judges.

At the hearing of the two matters, counsels for the parties did not make oral submissions but agreed that the two matters be decided on the papers filed of record.

The following is the background to the two matters.

Upenyu and Blessing Mashangwa (the Mashangwas) are husband and wife respectively. They are members of the United Family International Church (UFIC).

Emmanuel and Ruth Makandiwa (the Makandiwas) are also husband and wife respectively. The Makandiwas are leaders (prophet and prophetess respectively) of United Family International Church (UFIC).

In case HC7214/18 the Mashangwas filed summons in this Honourable Court containing six claims against the Makandiwas and the United Family International Church for a total sum of US$6,535,000 to be paid jointly and severally, the one paying the other to be absolved.

In their declaration, the Mashangwas claimed that:

(1) In the year 2012, at Harare, and in church, the Makandiwas fraudulently and misrepresented to the Mashangwas that anyone with a bank debt or loan was to be cancelled as it was the season of miraculous cancellation of debts after the Makandiwas were informed, privately, that the Mashangwas had an existing ZB Bank loan to the tune of US$500,000.

As a result of the misrepresentation, the Mashangwas were induced not to pay the ZB Bank loan, and, in the result, the Bank executed on the Mashangwas property being 14 Edinburgh Road, Harare for $500,000 thereby losing their house valued at $700,000.

(2) In the same year, the Makandiwas misrepresented, in church, that one Tichaona Mawere was a great lawyer who would not lose a case, when, in fact, Mr Tichaona Mawere was an unregistered legal practitioner.

Acting on the misrepresentation, the Mashangwas handed over their McDowell file to the said Tichaona Mawere for a claim of US$1,698,000 and expended in fees an amount of US$37,000. Tichaona Mawere then produced fake court orders and the Mashangwas lost a total sum of US$1,735,000.

(3) In the years ranging from 2014 to 2016, the Mashangwas were called on stage, in church, by the Makandiwas and were announced as a successful example in their Ministry (UFIC).

Acting on this misrepresentation, the Mashangwas made various direct contributions to the Makandiwas and the church money amounting to US$1,100,000.

(4) The Mashangwas were also paraded in church, on the stage, by the Makandiwas, as the chosen people by God to have succeeded in business.

As a result of the misrepresentation, the Mashangwas marketed the Makandiwas prophecies to the tune of US$2,000,000.

(5) and (6) In claims (5) and (6), they alleged that the Makandiwas defamed them thereby destroying their reputation and causing monetary loss to the tune of USD500,000.

Having been served with the summons, the Makandiwas entered appearance to defend the claims.

They proceeded to address a letter, in terms of Rule 140 of the High Court Rules 1971, to the Mashangwas pointing out that the claims were vague and embarrassing and that they did not disclose a cause of action, and asked whether they were suing in contract or delict; and, as regards claim (5) and (6) asked whether the claims were in defamation or injuria.

The Mashangwas did not respond to the letter, causing the Makandiwas to file an exception on 30 August 2017 to the Mashangwas pleadings in terms of Order 21 Rule 137(1)(b) in case HC7214/18.

The exception was heard on 6 November 2017 by MANGOTA J in respect of all the six claims but was dismissed on 12 January 2018 and the Mashangwas were ordered to amend their declaration in respect of claims (5) and (6), and, the Makandiwas to plead, and thereafter, the matter was to proceed in terms of the High Court Rules 1971.

However, after the dismissal of their exception, the Makandiwas filed another court application on 23 February 2018 for the dismissal of the Mashangwas claims in terms of Order 11 Rule 75(1) of the High Court Rules 1971 in HC1774/18.

The Mashangwas, having felt that the Makandiwas had neglected or failed to timeously prosecute the court application which they instituted under case HC1774/18, filed a chamber application for dismissal on 8 May 2018 under HC4197/18.

Both applications were ready for hearing at almost the same time, before different judges, hence the consolidation of the two applications.

ISSUES FOR DETERMINATION

This court is therefore being asked to decide two issues simultaneously:

(i) The first issue is whether the Makandiwas application should be dismissed for want of prosecution as prayed for by the Mashangwas in HC4197/18.

In the event of this court granting the relief asked by the Mashangwas, this would be the end of the matters and this court will not deal with the Makandiwas application.

(ii) However, in the event that this court dismisses the Mashangwas application for dismissal, the court will proceed to deal with the second issue pertaining to the Makandiwas application for dismissal of the Mashangwas claims in the main case under HC7214/17....,.

SHOULD MAIN MATTER BE DISMISSED IN TERMS OF ORDER 11 RULE 75(1) OF THE HIGH COURT RULES

After the dismissal of their exception in HC7214/17 the Makandiwas pleaded to the main case and filed this application for summary dismissal of the principal case as being frivolous and vexatious in terms of Order 11 Rule 75(1) of the High Court Rules 1971 (the Rules).

The principal case contained the six claims brought against them by the Mashangwas as outlined above. I shall endeavor to deal with each of the claims where possible.

Suffice to state, at this stage, that Rule 75 of the High Court Rules provides that:

“75 Application for Dismissal of Action

(1) Where a defendant has filed his plea, he may make a court application for the dismissal of the action on the ground that it is frivolous or vexatious.

(2) A court application in terms of subrule (1) shall be supported by affidavit made by the defendant or a person who can swear positively to the facts or averments set out therein, stating that in his belief the action is frivolous or vexatious and setting out the grounds for his belief.

(3) A deponent may attach to his affidavit, filed in terms of subrule (2), documents which verify his belief that the action is frivolous or vexatious.”

In their supporting affidavits, the Makandiwas prayed that the principal case must accordingly be summarily dismissed pursuant to Rule 75(1) of the High Court Rules, and contended, among other things, that the action in the principal case is not only both frivolous and vexatious, but also a self–evident gross and contemptuous abuse of the process of this court on the bases that -

“1. The plaintiffs have deliberately pleaded and founded their purported causes of action on deliberate and easily demonstrable falsehoods;

2. Each of the six (6) claims suffers from predictable failure and so groundless that no reasonable person could ever hope to obtain relief therefrom;

3. The principle case has not been brought with the bona fide intention of obtaining relief;

4. The proceedings have been brought with the sole and mala fide intention of annoying and harassing us. It as such amounts to the unmitigated abuse and contempt of this court and the process thereof; and

5. The principal case is inconsistent with reason and common sense, and, as such, unworthy of serious consideration.”

The respondents (the Mashangwas) opposed the application. They took seven points in limine. The points were:

(1) Matter passed in rem judicatam;

(2) Estopel;

(3) Disputes of fact;

(4) Unlawful reversal of order of proceedings;

(5) Attempt to avoid the consequences of a valid acknowledgement;

(6) Mala fides and abuse of court process; and

(7) Provisions of the Rules not available to applicants.

On the merits, they contended, among other things, that, Mr Makandiwa is a common fraudster, a false prophet who has no relationship with God, is a liar who lied about a lawyer called Tichaona Mawere, and many other ills....,.

AD MERITS

The Makandiwas filed this application in terms of Rule 75(1) of the High Court Rules 1971 for the summary dismissal of frivolous and vexatious action proceedings instituted by the Mashangwas in an action pending before this court under case number HC7214/17.

The respondents made six claims.

Their cause of action in claims 1-4 is said to fall into the delict of fraud. The fifth claim is said to relate to the delict of injurious falsehoods. The sixth claim has been held to fall under the delict of injuria.

A common thread runs through these claims.

They plead that they were members of the third applicant (United Family International Church), a Christian Church founded by the first and second applicants (Emmanuel Makandiwa and Ruth Makandiwa). They further allege that they either received prophesies or representations in church or that certain injurious publications were made of and concerning them or their business. Hence, they claimed various sums all aggregating to a staggering six and a half million United States Dollars.

The applicants pleaded to each of the six claims. They denied the allegations.

Their pleas were filed in contemplation of the present application for dismissal.

The applicants placed before the court a detailed verifying affidavit that traversed and attached incontrovertible evidence which they said exposed the falsity of the facts pleaded by the plaintiffs in their declaration.

The applicants, thereafter, filed the present application for the dismissal of the suit as frivolous and vexatious.

The application is strongly opposed by the respondents.

THE LAW

Rule 75 of the High Court Rules allows a defendant, who has pleaded, to apply for the summary dismissal of the action on the grounds that it is vexatious.

The defendants must, on notice of motion, positively swear to the facts and verify their belief that the action is vexatious and deserving of summary dismissal.

The purpose of this procedure is the same as that of the procedure for summary judgment or provisional sentence.

The court, if satisfied, has the inherent jurisdiction to disallow and dismiss proceedings that are frivolous or vexatious: see Ushewokunze Housing Co-oporative Society Limited v Crest Breeders International (Private) Limited HH529-16; Rogers v Rogers & Another 2008 (1) ZLR 330…,.; and S v Coopers & Others 1977 (3) SA 475…,.

The test to be applied can be explained in no better words than those of MAKARAU JP…, in Stationery Box (Pvt) Ltd v Natcon (Pvt) Ltd & Anor HH64-10 as follows:

“The test to be applied in summary judgment applications is clear and settled. The onus resting on a defendant resisting summary judgment has been described as amongst the lightest that the rules of procedure cast on the litigants. He does not have to prove his defence. He must merely allege facts, which, if he can succeed in establishing them at the trial, would entitle him to succeed in his defence.

The defence so set up must, however, be plausible and bona fide.

Obviously implied in this test, but oft overlooked by legal practitioners, is that the defendant must raise a defence. The facts alleged must lead to and establish a defence that meets the claim squarely. If the facts that he alleges, fascinating as they may be and which he may very well be able to prove at the trial of the matter, do not amount to a defence at law, the defendant would not have discharged the onus on him and summary judgement must be granted.

To defend a claim arising out of a contract of sale, the purchaser must attack either the existence of the agreement itself or the fact that the goods sold were not delivered to him. If other defences are raised, they must be raised explicitly. It is not the function of the court to put words into the defendant's mouth and thereby establish a possible defence on his behalf when the defendant fails to do so in his opposing affidavit.”

In the present case, the respondents ultimately denied any liability to the plaintiffs.

This application, therefore, turns on the law of summary dismissal of cases on the basis that they are frivolous and vexatious.

Order 11 Rule 75(1) of the High Court Rules, which provides for this procedure, states that the defendant may make an application for the summary dismissal of the case, after filing of his plea, on the grounds that it is frivolous and vexatious.

My sole duty is to determine whether or not the claims are frivolous and vexatious....,.

CLAIM FIVE AS AMENDED

The crux of this claim is that the applicants allegedly published defamatory material against the respondents company that sells perfumes to the extent that the company was forced to close.

The defamation, if at all it was made, it was made against the company and not the respondents.

However, the claim was denied by the applicants.

The law is trite and settled, that, a company is, at law, a separate persona that can sue for the wrongs committed against it or be sued for the wrongs it commits. This is principle and cannot be deviated from.

The principle is that the award made thereto is the company's assets and benefits and not the shareholders or directors.

The respondents are directors and/or shareholders of the company in question.

In Zimbabwe Electricity Supply Authority v Modus Publications (Pvt) Ltd 1996 (2) ZLR 256 (HC) the court said:

“Dealing with the first ground, it is settled law that a trading corporation, being in law a person distinct from its members, and having therefore a reputation of its own to maintain, can sue for a defamatory statement which affects it in its trade, business, or property whether or not actual damage is proved: see McKERRON The Law of Delict 7ed at p181; Boka Enterprises (Pvt) Ltd v Manatse & Anor 1989 (2) ZLR 117 (H)."

In this claim, the fact that the respondents are the alter ego cannot take their matter any further.

It is therefore frivolous and vexatious, as well as abusive, for the people that run the company to sue for wrongs allegedly committed against the company in their names, without even joining the company to the proceedings, other than to harass and annoy the applicants.

The claim is equally and summarily dismissed in terms of Rule 75(1) of the Rules of this Honourable Court.

Appealed
SC92-22 : VALENTINE ZISWA and MARGARET ZISWA vs GRAEME CHADWICK and LANDOS FARM (PRIVATE) LIMITED
Ruled By: UCHENA JA, MAKONI JA and KUDYA AJA

On 11 March 2015, the High Court granted part of the claim sought by Valentine Ziswa and his wife Margaret Ziswa (the cross appellants) against Graeme Shaun Chadwick and Landos (Pvt) Ltd (the cross respondents).

The court a quo dismissed the claims of the cross-appellants as against the second cross-respondent in their entirety and granted part of the claims as against the first cross respondent.

The cross appellants seek a reversal of the dismissal orders issued a quo.

The order issued by the court a quo reads as follows:

“In the result, it is ordered that:

1. The plaintiffs claims against the second defendant are hereby dismissed with costs.

2. The plaintiffs claim (a) against the first defendant succeeds only in the sum of $8,808 which the first defendant is directed to pay the plaintiffs.

3(a) The plaintiffs claim (e) partially succeeds to the extent of the 4km LTC Electric cable while the rest is hereby dismissed.

(b) The first defendant shall pay to the plaintiffs the sum of $84,000 being the replacement value of the LTC electric cable removed from the plaintiffs farm.

4. The first defendant shall pay the plaintiffs the sum of $780 being value of labour hired to clear tobacco stalks and related expenses.

5. The plaintiffs claims (b), (c), (d), (f), (g), (j) and (l) are hereby dismissed.

6. Absolution from the instance is granted in respect of plaintiffs claims (h) and (k).

7. The plaintiffs shall pay 20% of the first defendant's costs of suit.”

The first cross appellant is Valentine Ziswa (Ziswa) while the second cross-appellant is his wife, Margaret Ziswa. I will cumulatively refer to them in this judgment as the lessor.

The first cross-respondent is Graham Shaun Chadwick (Chadwick) and the second cross-respondent is Landos (Pvt) Ltd (the Company).

Graham Shaun Chadwick was a director in Landos (Pvt) Ltd, which he also used as his special purpose vehicle or agent to conduct his farming operations on Ziswa Farm (the farm) and on three other surrounding farms, namely, Gijima, Kelvin, and Landos.

THE BACKGROUND

On 20 March 2015, Graham Shaun Chadwick filed a defective Notice of Appeal against the cross appellants, which did not indicate the part of the judgment he sought to impugn.

He, thereafter, filed a contested chamber application for condonation and extension of time within which to appeal on 11 January 2018, which was dismissed with costs on 21 March 2018.

The effective disposal of the main appeal in this manner left the cross appeal pending.

FACTS

On or before 1 September 2008, Valentine Ziswa and Graham Shaun Chadwick entered into a verbal agreement for the lease of the farm and the inventoried equipment. The description, quantities, and state of the leased equipment was recorded in the comprehensive inventory the parties drew in October 2008.

The tobacco season in Zimbabwe generally runs from September to August and sales generally take place between March and June.

Graham Shaun Chadwick was on the farm during the 2008-2009, 2009-2010, 2010-2011, and 2011-2012 seasons (hereinafter called the first, second, third, and fourth seasons, respectively).

On 9 January 2009, Valentine Ziswa and Graham Shaun Chadwick signed a 10-year lease agreement.

On the same date, Valentine Ziswa and his wife (the First Partner) executed a second “Joint Venture Agreement” (JVA) with Graham Shaun Chadwick (Second Partner) for the “long term development” of the farm.

The two agreements were backdated to 1 September 2008.

Graham Shaun Chadwick not only leased the farm and the inventoried property, but, in addition, undertook to erect permanent structures (in each season) of an equivalent value to the seasonal rental payable.

In terms of clause 1 and clause 2, Graham Shaun Chadwick leased “the land, together with all buildings and other permanent improvements and certain immovables” for the ten year period from 1 September 2008 to 31 August 2018 for the purpose of growing “30ha of tobacco, 40ha of maize, 20ha of wheat and any other crop agreed between the parties.”

In terms of clause 3, the rental payable would be “6 per cent on the US$ of the gross turnover of the crops produced on the said land inclusive of bonuses and hailstorm insurances.”

In respect of tobacco, the rent was to be paid into the lessor's FCA by stop order raised at the auction floor, and cash payments were to be made in respect of other crops.

In addition to the rental, Graham Shaun Chadwick would, in terms of clause 4(d), be responsible for the repairs and maintenance of tractors and the inventoried equipment leased to him with effect from 1 September 2008.

Lastly, clause 9 stipulated that:

“This agreement constitutes the entire agreement between the parties, and no representation or undertakings given by one of them to the other of them prior to the execution hereof, and no variation of the conditions hereof, shall have any force or effect unless recorded in writing and executed by the parties hereof.” (The underlining covers the handwritten portions of the otherwise typeset agreement).

The Joint Venture Agreement (JVA) substantially duplicates the lease agreement. Clause 3 thereof reads as follows:

“3. The rent payable by the lessee to the lessor shall be 6 per cent per centum of the gross turnover in respect of the crops produced on the said land, and payment of such rent/lease shall be secured by means of STOP ORDER given by the lessee in favour of the Company against proceeds of tobacco sold through TOBACCO SALES FLOOR. Such PAYMENT shall be executed and registered as soon (sic) may be after the signing of this lease. 31 MARCH, 3 APRIL, 6 END OF JULY. MAIZE 1.5 TON MONTHLY.” (The underlined words and figures are handwritten)

It was common cause that the two agreements are complementary and separate and distinct. The requirements of the Joint Venture Agreement (JVA) were additional to the rental payable.

It was also common cause, that, Graham Shaun Chadwick was an active councillor for the Zimbabwe Tobacco Association (ZTA) for six (6) years and had been its Vice-President for another two (2) years.

He introduced the Zimbabwe Tobacco Association (ZTA) proforma lease and Joint Venture (JV) agreements, and, together with Valentine Ziswa, supplemented and annotated the terms and conditions therein by hand.

Graham Shaun Chadwick grew maize during the first season only and abandoned it in subsequent seasons in preference to the more lucrative tobacco crop. He never grew wheat on the farm.

Graham Shaun Chadwick did not abide by the direct deduction method prescribed in the agreements. He did not disclose to the lessor his prior preferential stop order obligations to the Zimbabwe Leaf Tobacco Company (Pvt) Ltd.

By 10 May 2010, Graham Shaun Chadwick had repaired a weir, put in a pump and generator, laid underground irrigation pipes, erected a centre pivot, paid for the labour for the reconstruction of a burnt down tobacco barn “maintained” all 14 barns by putting in place the necessary appurtenances for curing tobacco, repaired furnaces and sheds, and, at a cost of US$2,700 constructed 11 two roomed staff houses.

By letter dated 22 February 2011, Graham Shaun Chadwick offered to increase lease rental to 8%.

The offer was not accepted.

Instead, the lessor made the counter offer proposed in the detailed draft agreement, which the lessor signed on 13 March 2011.

The counter-offer was, in turn, rejected by Graham Shaun Chadwick.

Between 10 January 2012 and 18 May 2012, the parties failed to amicably resolve the lessor's demands for arrear rentals, maintenance of the leased equipment, and the repatriation of leased property that Graham Shaun Chadwick allegedly took to other farms.

In frustration at the impasse, the lessor sought to exercise a lien over the tobacco produce that was on the farm.

They were, by consent, interdicted by Graham Shaun Chadwick and Landos (Pvt) Ltd, on 24 May 2012 in case No. HC5477/12.

On 10 June 2012, the Ziswas instigated the arrest of Graham Shaun Chadwick for theft of some of the 2008 inventoried property. The complete police docket, compiled by Sergeant N'andu (IO), was produced by consent as exhibit 5.

Sergeant N'andu (the IO) first attended at the farm on 12 June 2012. On 19 June 2012, he conducted a verification or “exit” inventory with Valentine Ziswa and a proxy of Graham Shaun Chadwick, at the direction of the Area Public Prosecutor for Rusape (APP).

By letter dated 2 July 2012, Graham Shaun Chadwick cancelled the lease agreement and immediately vacated the farm.

On 5 September 2012, the Area Public Prosecutor for Rusape declined to prosecute, adjudging the criminal complaint to be a civil dispute.

On 26 September 2012, the lessor issued summons against the defendants claiming an aggregate sum of US$456,699 under 13 heads. These comprised of the following claims:

(a) Arrear rentals of US$64,160 for the fourth farming season;

(b) A refund of rates and levies of US$1,980 paid to the Makoni Rural District Council for the fourth farming season;

(c) The lessor's share of the hailstorm insurance proceeds of US$5,500 in respect of the second farming season;

(d) The outstanding developments for the first three farming seasons, represented by the value of the centre pivot that was removed from the farm, in the sum of US$67,507;

(e) Other enumerated property valued at US$187,707 that was also removed from the farm;

(f) The estimated damages to recovered property of US$15,905;

(g) US$7,600 for the damage to the fence and gates on the farm;

(h) US$15,008 for the repairs to the damaged tobacco barns and flue pipes;

(i) US$780 for removing the fourth season tobacco stalks;

(j) US$26,313 for vandalized overhead water storage tanks, pipes, workers houses, electrical underground cables, dams, pump unit, boreholes, and transformer;

(k) US$15,000 for maize deliveries contractually due to the lessor during the second to fourth farming seasons;

(l) US$4,240 for the tobacco seedlings grown on the farm and sold to other farmers;

(m) US$45,000 damages for loss of income in respect of the 2012/2013 tobacco cropping season caused by the premature and abrupt termination of the agreements.

THE PROCEEDINGS A QUO

The lessor made the following contentions:

The two agreements had separate and distinct obligations. Landos (Pvt) Ltd had a direct and substantial interest in the two agreements, and was, together with Graham Shaun Chadwick, therefore liable for the various contractual breaches that gave rise to the 13 claims.

The lessor's documentary and oral evidence established both liability and quantum in respect of claim (a), (d), (e), (f), (g), (h), (j), (k) and (l) at the higher rate of 8 per cent and not at the 6 per cent in the two agreements.

The lessor abandoned claim (m) and conceded that Graham Shaun Chadwick and Landos (Pvt) Ltd be absolved from the instance in respect of claims (b), (c) and (i) on the ground that the lessor had failed to established the due amounts.

Graham Shaun Chadwick conceded that the annotations formed part of the terms agreed by the parties on 9 January 2009.

Counsel for Graham Shaun Chadwick argued, that, the lessor failed to establish both liability and quantum.

He submitted, on the authority of Agricultural Finance Corporation v Pocock 1986 (2) ZLR 229 (S), that, the oral variation of the rental rate from 6 per cent to 8 per cent in violation of the non-variation clause (Clause 9 of both agreements) of the agreements was inefficacious and invalid.

He also relied on the twin principles of privity and sanctity of contracts enunciated in CHRISTIE: The Law of Contract in South Africa, 6th ed, 2010 Lexis Nexis…, to call for the dismissal of all the claims sought against Landos (Pvt) Ltd.

Counsel, however, conceded that Graham Shaun Chadwick was liable for unpaid rental of US$8,808 for the fourth season and US$36,000 for the LTC line [falling under claim (e)] and not the respective US$64,160 and US$84,000 sought by the lessor.

He further contended, that, as the lessor had failed to establish liability or where liability had been established, the quantum thereof in respect of claims (b), (c), (d), the remainder of (e), (f), (g), (h) and (j), the claims fell to be dismissed.

Counsel requested the court a quo to discard the evidence of the valuator for the reason that it was unconventional and unprofessional.

He argued, that, the valuation was in breach of the 'objective' and 'appreciable help' standards expected of expert evidence that are propounded in Stock v Stock 1981 (3) SA 1280 (A)…,; Gentiruco AG v Firestone SA (Pty) Ltd 1972 (1) SA 589 (A)…,; and Menday v Protea Assurance Co. Ltd 1976 (1) SA 565 (E)…, and articulated in SCHWIKKARD & Van der MERWE's Principles of Evidence, Juta 2009…,.

He, therefore, prayed for the dismissal of claims (d) (e), (f), (g), (h) and (j), which rested on the valuator's computations.

Counsel further contended, that, the claims ought to be dismissed for the further reason that the lessor had not amended the quantum to reflect the new amounts touted by the valuator some of which were higher than the individual breakdowns set out in annexures 2 and 3 to the summons.

THE FINDINGS A QUO

The court a quo made the following findings:

The only effectual agreements were the lease and the Joint Venture agreements dated 9 January 2009 and not the draft agreement of 13 March 2011.

The operational rental rate was 6 per cent and not 8 per cent. This was because the offer of 22 February 2011 had not been accepted nor had the non-variation clause been invoked.

Valentine Ziswa was an inconsistent, unreliable, untruthful, and greedy witness.

He prevaricated on whether the tenure of the agreements was 5 years, 8 years, or 10 years and whether the rental rate was 6 per cent, 8 per cent, or 10 per cent.

He was greedy because he unjustifiably claimed for municipal imposts, maize deliveries, seedlings, and hailstorm insurance proceeds, which were all not covered by the two agreements. He also demanded for the value of the centre pivot, which he had categorically rejected as constituting a permanent structure.

The court a quo also excoriated the valuator for flaunting his professional qualifications and experience at the expense of conventional valuation principles. It, therefore, discarded his depreciated replacement cost computations.

Graham Shaun Chadwick, whose demeanour was highly extolled, was found to be a truthful, good, and reliable witness.

His status as an accomplished tobacco farmer with 20 years experience, and who exuded confidence and conceded where he was liable, endeared himself to the court a quo at the expense of Valentine Ziswa whose penchant for renting out instead of farming on his own account was deplored by the court.

Notwithstanding the contrary general findings on credibility of Valentine Ziswa and the valuator, the court a quo believed Valentine Ziswa's oral testimony on the US$780 claim on tobacco de-stalking and the chartered accountant's valuation of the LTC line. It, however, dismissed the rest of their evidence on the valuation of all the other claims. It further held that seedlings were not a crop as they could not be sold at the auction floors.

The court a quo dismissed the claims against Landos (Pvt) Ltd on the twin basis of lack of privity of contract and sanctity of contracts.

It held, that, these cardinal legal principles could not be negated by Graham Shaun Chadwick's directorship of the company, his use of the company's letterhead in correspondence with the lessor and bank account to effect payment of his lease obligations.

It issued the order that I adverted to at the commencement of this judgment.

Aggrieved by the order granted a quo, the lessor appealed to this Court on the following grounds:

“1. The court a quo erred in not finding that the reduction of part of the agreement between the parties to writing and the existence of the non-variation clause notwithstanding, on the entirety of the evidence before the court, the agreement between the parties consisted in part of the written portion and in part of the oral agreement sworn to by the cross appellants.

2. The court a quo erred, for the stronger reason, in not finding that the second cross respondent was privy to the whole of the agreement between the parties and in dismissing the claim against it.

3. The court a quo erred in its treatment of the evidence and assessment of the cross appellants claim with the result, that, the court misdirected itself in its gratuitous conclusions on the first cross-appellant's demeanour and motives culminating in the rejection of the cross-appellants claims on this flawed basis.

4. The court a quo erred in not finding that the rent for the use of the cross-appellants farm varied from 6 per cent to 8 per cent of the gross annual turnover realised on the farm.

5. The court a quo erred, in any event, in accepting the appellant's bare testimony that the sum of US$21,000 paid to the cross appellants was towards the rental for the 2011-12 season and in deducting the same from the rental due and owing to the cross appellants.

6. The court a quo erred in its treatment of the evidence in concluding, that, the claim for the tonnage of maize was not within the parameters of the agreement of the parties and in rejecting the cross-appellants testimony regarding the quantum thereof.

7. The court a quo erred in holding, that, the claims for the centre pivot and generator did not fall within the parameters of the developmental agreement.

8. The court a quo erred in holding that the seedlings produced on the cross appellants farm, but sold elsewhere, were not produce for the purposes of the parties agreement, and in rejecting the cross-appellants quantification thereof.

9. The court a quo erred in finding, as it did, that there was no evidence to substantiate the cross appellants claim (e) (property removed and not returned) and claim (g) (removed and/or damaged fences and gates) and in finding the property could have been unusable.

ALTERNATIVELY

The court a quo erred, in any event, in dismissing the said claims as opposed to granting absolution from the instance.

10. The court a quo erred in rejecting the evidence of Pange purely on the basis that he had used one as opposed to three quotations which had been sourced by the cross-appellants, and had applied the general accounting depreciation formulae without a physical examination of the property in question.

11. The court a quo erred in not awarding the claim for the irrigation pump, which the appellant conceded in his evidence and offered to compensate for the same.

12. The court a quo erred in accepting as true the appellant's testimony based solely on the fact that he managed to impress the judge in terms of his demeanour.”

The cross-appellants sought the success of the cross appeal with costs, the amendment of the judgment a quo by granting, jointly and severally, the one paying the other to be absolved:

(i) Arrear rentals of $67,502=40 for the 2011-12 season (being 8 per cent of gross realization of US$843,780 from sale of 205,800kgs at US$4=10 per kg);

(ii) Alternatively, judgment in the sum of US$50,626=80 being 6 per cent of the above gross realisation;

(iii) Judgment in respect of claims (d), (f), (j) and (i);

(iv) Judgment for the reduced sum of US$364,729 as particularised in exhibit 3; and

(v) Costs of suit against the cross respondents.

THE ISSUES

The issues that arise from the grounds of appeal are the following:

1. Whether the variation clause was waived by the parties to the lease agreement.

2. Whether the second cross-respondent was liable to the lessor's claims.

(a) Rentals for the fourth season (a portion of claim (a)).

(b) The value of the developments in lieu of the Centre Pivot (claim (d)).

(c) Damages for missing equipment (including the irrigation diesel pump whose liability was conceded) (claim (e)) and for damaged property and equipment on the farm (claim (f)).

(d) Repairs to tobacco barns (claim (h)).

(e) Vandalized overhead water tanks, reservoirs, boreholes, and staff houses and their connecting pump unit, cables, electrics, and pipes claim (j).

(f) Maize deliveries due for the second to fourth seasons (claim (k)).

(g) Value of tobacco seedlings (claim (l)).

3. Whether or not the court a quo properly exercised its discretion in respect of costs.

THE ARGUMENTS BEFORE THIS COURT

At the onset of his submissions before this Court, counsel for the lessor abandoned claims (b), (c) and (g).

He persisted with the appeal against the dismissal of the entire claim against the company, the part dismissed in respect of claims (a) and (e), and the dismissals against claims (d), (f) (h), (j), (k) and (l).

Counsel for the lessor contended, that, the dismissal of the lessor's claims against Landos (Pvt) Ltd was erroneous.

He argued, that, the resolution passed by Landos (Pvt) Ltd, on 18 May 2012, authorising Graham Shaun Chadwick to “represent the company in any legal matter against Mr and Mrs Ziswa” before the institution of action proceedings on 26 September 2012, showed that it had a direct and substantial interest in the two agreements.

He further argued, that, the main credibility findings in favour of Graham Shaun Chadwick and against Valentine Ziswa, upon which the court a quo premised its dismissal of the lessor's claims were, on the totality of the adduced evidence, irrational.

He argued, that, notwithstanding the embodiment of the non-variation clause in the lease agreement, the lessor had, contrary to the finding a quo, established that Graham Shaun Chadwick had, by conduct, waived the lease rental rate from 6 per cent to 8 per cent on the second and subsequent seasons.

He further argued, that, the valuation testimony of the chartered accountant had proved the damages suffered by the lessor as at the date Graham Shaun Chadwick cancelled the agreements and vacated the farm.

Lastly, he contended that the costs order granted a quo constituted a patent failure in the exercise of discretion warranting interference by this Court.

Per contra, counsel for Graham Shaun Chadwick and Landos (Pvt) Ltd vehemently supported the impugned findings and conclusions of the court a quo.

He argued, that, the claims against Landos (Pvt) Ltd were rightly dismissed because it was not privy to the lease agreements.

He strongly contended, that, having acted as an agent, it could not be sued either separately or together with its principal.

He further contended, that, the non-variation clause precluded the lessor from relying on any variation derived from an oral agreement or on the offer to increase the rate to 8 per cent which they did not accept.

He submitted, that, an oral agreement could not waive a non-variation clause.

He further contended, that, the court a quo had not relied on the demeanour of the witnesses only but also on the inconsistencies that characterized the evidence of the lessor's star witness, Valentine Ziswa.

Lastly, he contended that the valuator's testimony was rightly discarded for being both unconventional and unprofessional.

Counsel impugned his competence on two bases:

(i) The first was that he had relied on the quotations availed to him by Valentine Ziswa without conducting a physical inspection of the equipment.

(ii) The second was that he had further relied on internet sites, that he failed to disclose, in ascertaining the life span of some of the equipment listed in exhibit 3.

ANALYSIS OF THE LAW AND THE FACTS

WHETHER LANDOS (PVT) LTD (THE COMPANY) WAS LIABLE FOR ALL OR ANY OF THE CLAIMS SOUGHT BY THE LESSOR

Counsel for the lessor argued, that, Landos (Pvt) Ltd was privy to the whole agreement in the following respects:

(i) Firstly, the lessor regarded Graham Shaun Chadwick as a representative of Landos (Pvt) Ltd.

(ii) Secondly, Landos (Pvt) Ltd, through its various employees, carried out Graham Shaun Chadwick's obligations. It, in fact, exhibited its direct and substantial interest in the two agreements by being the first applicant in the urgent chamber application between the same parties in case No. HC5477/12, so argued counsel.

(iii) Thirdly, the correspondence that emanated from Graham Shaun Chadwick was invariably on the company's letterheads.

(iv) Fourthly, the company not only acknowledged indebtedness to the lessor but had the tobacco auction floor sales sheets issued in its name.

Counsel for Graham Shaun Chadwick and Landos (Pvt) Ltd made the contrary contention, that, the company was a separate and distinct person from Graham Shaun Chadwick. It could therefore not be vicariously liable for its director's personal debts.

He further argued, that, the lessor had not demonstrated the pre-conditions for lifting the corporate veil such as fraud, dishonesty, or improper motive.

He further relied on the twin principles of privity and sanctity of contract to countervail counsel for the lessor's contentions.

He further argued, that, in our law, an agent cannot be sued in its own name for the contractual or delictual breaches of its principal notwithstanding its intimate involvement in the principal's farming operations or the use of its letterheads and personnel.

The basis provided in the lessor's further particulars for suing the company was delictual.

They averred, that, the company breached “a general duty imposed on it by law to ensure that no damage would be caused on plaintiffs' property.”

This delictual basis was not pursued in evidence nor motivated in argument a quo. It was neither raised as a ground of appeal nor motivated in this Court.

In fact, the second ground of appeal impugns the failure a quo to find the company to have been privy to the two agreements.

I agree with counsel for Graham Shaun Chadwick and Landos (Pvt) Ltd, that, the company was not privy to the two agreements. Rather, it was an agent of Graham Shaun Chadwick: see Printing Registering Co. v Sampson 19 EQ 462…,.

In any event, it is clear from our law, that, where the principal is known, an agent cannot be sued for the contractual or delictual breaches committed by its principal.

In this respect, MALABA J…, pertinently remarked in Taunton Enterprises (Pvt) Ltd & Anor v Marais 1996 (2) ZLR 303 (H)…, that:

“The general rule is that a person who acts as an agent and contracts with a third party in the name of the disclosed principal is not a party to the contract and is not personally liable on the contract: Wood v Visser 1929 CPD 55; Marais v Perks 1963 (4) SA 802(E); de Villiers & Macintosh, The Law of Agency in South Africa, 3ed at 560.”

The converse position, that an agent cannot sue on behalf of a principal, was also set out in AMI Zimbabwe (Pvt) Ltd v Casalee Holdings (Successors) (Pvt) Ltd 1997 (2) ZLR 77 (SC)…, thus:

“Without such a cession of action, Casalee Zim cannot sue AMI on behalf of Casalee Belgium because an agent cannot sue on behalf of its principal: see SWA Amalgameerde Afslaers (Edms) Bpk v Louw 1956 (1) SA 346 (A) at 355C:

'…, the auctioneer can sue for the purchase price without cession of action from the seller only if, in the transaction, he sold as principal.'

…,. So, if Casalee Zim is suing as agent, it is out of court.”

In the circumstances, the finding a quo that the lessor had no legal basis for suing the company cannot be faulted.

The second ground of appeal ought to fail.

Appealed
SC94-22 : ROBERT TINDWA vs THE SHERIFF FOR ZIMBABWE and INSTITUTE OF MINING RESEARCH
Ruled By: HLATSHWAYO JA, BHUNU JA and MAKONI JA

This is an appeal against the dismissal by the High Court of the appellant's claim to property placed under attachment in execution, being a piece of land situate in the district of Salisbury called Stand 262 Mount Pleasant Township 9 of Lot 50 Mount Pleasant, measuring 4144 square meters also ...

FACTUAL BACKGROUND

The facts giving rise to the dispute are as follows:

On 23 March 2015, the second respondent obtained judgment against a company called Westcott Speciality Chemicals (Pvt) Ltd, the judgment debtor, in the sum of twenty four thousand four hundred and twenty one united states dollars (US$24,421).

Pursuant to the judgment, the second respondent instructed the Sheriff of Zimbabwe (the first respondent herein) to attach the judgment debtor's property at its principal registered office, being Number 187 Munhondo Street, Ruwa.

Upon arrival, the first respondent discovered that the property had already been attached in another matter. The judgment debtor apparently had ceased to operate from that address when the property was attached and had left no forwarding address.

In the circumstances, the first respondent issued a nulla bona return as an indication that there was nothing to attach.

The second respondent investigated the matter and discovered that the judgment debtor had moved its offices to No.5 Westcott Road, Mt Pleasant, being the appellant's residence.

The findings by the second respondent also revealed that the appellant was the director of the judgment debtor as well as its company secretary.

The second respondent formulated the view, that, the appellant was the alter ego of the judgment debtor.

It is at that point that the second respondent instructed the first respondent to attach the appellant's immovable property, namely, Stand No.5 Westcott Road, Mt Pleasant.

Upon such attachment, the appellant advised the first respondent that the property attached was owned by him in his personal capacity and not by the judgment debtor.

In the result, the first respondent instituted interpleader proceedings in terms of Rule 205A of the High Court Rules 1971.

During the proceedings in the court a quo, the second respondent argued, that, the court should pierce the corporate veil.

The second respondent further contended, that, where the director is the alter ego of the company he/she is always aware of the happenings of the company at any time. It was further submitted, that, the appellant has been running the company from his own premises and that the company is just a 'sham.'

Per contra, the appellant submitted that he is one of the four directors of the company and that it is the cardinal principle of Company Law that a company is a separate legal entity from its members.

He further submitted, that, because he is a separate entity from the company, the courts should be reluctant to pierce the corporate veil as to do so would negate or undermine the policy and the principles that underpin the concept of separate corporate personality and its legal consequences.

In determining the matter, the court a quo held that the appellant, although he was one of the four directors of the judgment debtor, was the only director who had been dealing with creditors.

He was also the Company Secretary and appeared in all meetings between the parties to discuss their business dealings.

It was also found that efforts to contact other directors who were indicated on the CR14 Form had yielded no response and that the only contact person in the company was the appellant.

The court a quo made findings to the effect, that, the appellant was the alter ego of the judgment debtor. He was the company and the company was him, and, the interests of justice required the lifting of the corporate veil to enable the second respondent to recover its dues.

In the result, the court a quo dismissed the appellant's claim to the immovable property.

Aggrieved, the appellant has noted an appeal to this Court on the following grounds:

(i) The court a quo erred in law in not finding that the lifting of the judgment debtor's corporate veil as a pre-condition to declaring the appellant's immovable property executable, required separate and specific proceedings against the appellant, and, as a consequence, further erred in not finding that such lifting of the corporate veil could not be done in inter pleader proceedings.

(ii) Alternatively, the court a quo improperly exercised its discretion and made an irrational decision in lifting the judgment debtor's corporate veil and in thereafter finding that the appellant and the judgment debtor were so inseparable as to permit the attachment of the appellant's immovable property in execution of the judgment in HC1566/15.

SUBMISSIONS BEFORE THIS COURT

Counsel for the appellant submitted, that, there were two issues that ought to be determined:

(i) Firstly, he argued that the writ of execution issued against the property of the appellant was void ab initio since the property was not registered in the name of the judgment debtor.

(ii) Secondly, he claimed that it was irrational for the court a quo to lift the corporate veil so as to attach liability to the appellant; liability that would otherwise not exist.

On the other hand, counsel for the second respondent submitted that the lifting of the corporate veil in inter-pleader proceedings was permissible in order to prevent manifest injustice from being committed.

ISSUE FOR DETERMINATION

From the submissions made, it appears to me that the sole issue arising for determination is as follows:

Whether or not the court a quo erred in exercising its discretion by ordering the lifting of the judgment debtor's corporate veil during interpleader proceedings

THE LAW AND THE FACTS

The concept of separate legal personality of a company is the cornerstone of Company Law.

The cardinal principle of Company Law, as enunciated in Salomon v Salomon & Co. Ltd [1897] AC 22 (HL) and Dadoo Ltd & Others v Krugersdorp Municipal Council 1920 AD 530…, is that a company is a separate entity that is distinct from its members.

The concept of corporate personality is that a company, once it is registered, acquires a personality of its own, quite distinct from its members or shareholders: see Welli-Well (Pvt) Ltd v Malvern Imbayago & Anor SC08-21…,.

Because a company is separate from its members, the courts will not readily disregard such corporate legal personality and lift the corporate veil so as to attach liability to individuals who are related to the company.

This principle was buttressed in the case of Cape Pacific Ltd v Lubner Controlling Investments (Pty) Ltd & Ors 1995 (4) 790 (A) SA..., wherein the court held as follows:

“It is undoubtedly a salutary principle that our Courts should not lightly disregard a company's separate personality, but should strive to give effect to and uphold it. To do otherwise would negate or undermine the policy and principles that underpin the concept of separate corporate personality and the legal consequences that attach to it.

But, where fraud, dishonesty, or other improper conduct is found to be present, other considerations will come into play.

The need to preserve the separate corporate identity would, in such circumstances, have to be balanced against policy considerations which arise in favour of piercing the corporate veil…, and a court would then be entitled to look to substance rather than form in order to arrive at the true facts, and, if there has been a misuse of corporate personality, to disregard it and attribute liability where it should rightly lie. Each case would obviously have to be considered on its own merits.”

Legislation also prescribes certain exceptions to the prevention of piercing of the corporate veil.

Section 318(1) of the Companies Act [Chapter 24:03] provides:

“(1) If at any time it appears that any business of a company was being carried on -

(a) Recklessly; or

(b) With gross negligence; or

(c) With intent to defraud any person or for any fraudulent purposes;
the court may, on the application of the Master, or liquidator, or judicial manager, or any creditor of or contributory to the company, if it thinks proper to do so, declare that any of the past or present directors of the company or any other persons who were knowingly parties to the carrying on of the business in the manner or circumstances aforesaid shall be personally responsible, without limitation of liability, for all or any of the debts or other liabilities of the company as the court may direct.”

Now that it has been established that the corporate veil can be lifted in the case of fraud or dishonest conduct, the question that follows is whether it is procedurally necessary for a judgment creditor to have obtained a prior court order lifting the corporate veil before attempting to attach the property.

The case of Cape Pacific Ltd v Lubner Controlling Investments (Pty) Ltd & Ors 1995 (4) 790 (A) SA has indicated, that, even if there are other routes that can be taken, the mere failure to do so does not block the lifting of the corporate veil. The Court held as follows at p805G–806B:

“In principle, I see no reason why piercing of the corporate veil should necessarily be precluded if another remedy exists….,. If the facts of a particular case otherwise justify the piercing of the corporate veil, the existence of another remedy, or the failure to pursue what would have been an available remedy, should not, in principle, serve as an absolute bar to a court granting consequential relief….,.

Whatever laxity or 'fault' there may have been on the part of the appellant in failing to pursue its rights under the doctrine of notice pales into insignificance compared to the impropriety of Lubner's conduct. Yet, respondents seek to rely upon such failure to deny the appellant relief.

Policy considerations dictate that they should not be permitted to do so.

In the circumstances, the appellant's failure to pursue its remedy under the doctrine of notice does not, in my view, operate as a bar to the relief it seeks.”…,.

PATEL J…, commenting on the above excerpt in the case Deputy Sheriff v Trinpac Investments (Pvt) Ltd & Anor 2011 (1) ZLR 548 (H)…, held as follows:

“While these observations may not be directly pertinent to the question at hand, they certainly fortify the principle that mere procedural technicalities should not be allowed to frustrate or impede the effective satisfaction of a just claim. In any event, I see no logic or practical reason in requiring the judgment creditor to institute fresh proceedings in this Court to pierce the corporate veil in circumstances where those proceedings would entail the same conclusion that I have reached earlier.”…,.

There are no compelling reasons why the second respondent was obliged to institute fresh proceedings.

If the end result would be that the corporate veil would be pierced, certainly that order could still be granted in interpleader proceedings.

This is so because the court a quo found, that, the appellant was the only director dealing with the second respondent, he appeared at all meetings between the parties, and that only his email address appeared on the judgment debtor's letter heads. In the result, it was found that “the impression that one gets from the above facts is that the appellant is the company and the company is the appellant and that the two were in fact, and in truth, inseparable.”

Accordingly, in such circumstances, it is not necessary to institute fresh proceedings for the lifting of the corporate veil as all facts point to the conclusion that the appellant is the alter ego of the judgment debtor. The interests of justice do not require the institution of fresh proceedings as insisting on the same would be tantamount to denying the second respondent what is due to it: see Sibanda v Sibanda SC07-14…,.

While it is accepted that there are no hard and fast rules on the circumstances that justify the lifting or piercing of the corporate veil, with each case generally having to depend on its own facts and merits, I find this dictum from the case of Mkombachoto v Commercial Bank of Zimbabwe & Anor 2002 (1) ZLR 31 (H)…, to be apposite.

The court held as follows:

“In my view, the court has no general discretion to disregard the company's separate legal personality whenever it considers it just to do so. The court may 'lift the veil' only where otherwise as a result of its existence fraud would exist or manifest justice would be denied.”…,.

From the evidence placed on record, and the observations of the court a quo thereof, it can be seen that the appellant has been running the company from his residential address. He has been the one dealing with the second respondent throughout, and, from that alone, the impression that one gets is that the appellant and the judgment debtor are inseparable.

As a result, I am satisfied that there exists some element of dishonesty in the operations of the appellant in trying to evade liability. The court a quo cannot be faulted in exercising its discretion to lift the judgment debtor's corporate veil as a failure to do so would have resulted in manifest injustice being done.

DISPOSITION

In the result, the court a quo exercised its discretion properly by lifting the judgment debtor's corporate veil during interpleader proceedings. Failure to do so would have caused great injustice to the second respondent.

The appeal ought to fail with costs following the cause.

Accordingly, the appeal is dismissed with costs.

View Appeal
HBHB160-21 : BLANKET MINE (1983) (PVT) LTD vs FISANI MOYO and VALENTINE MINE (Represented by THOMSON MOYO) and ZIMBABWE REPUBLIC POLICE, GWANDA and PROVINCIAL MINING DIRECTOR N.O.
Ruled By: KABASA J

A company is a juristic person capable of suing and being sued....,. Any company, being a juristic person, can only act through the agency of its directors or representatives.

View Appeal
HH54-18 : THE SHERIFF FOR ZIMBABWE vs ROBERT TINDWA and INSTITUTE OF MINING RESEARCH
Ruled By: CHITAKUNYE J

This is an application pursuant to the provisions of Rule 205A as read with Rule 207 of the High Court Rules 1971.

On 23 March 2015, the judgement creditor obtained judgment against Westcott Speciality Chemicals (Pvt) Ltd (hereinafter referred to as the judgement debtor) in the sum of $24,421 in HC1566/15.

Pursuant to the judgment, the judgment creditor instructed the applicant to attach the judgment debtor's property at its principal registered office at number 187 Munhondo Street, Ruwa.

When the applicant attended at the stated address, he failed to attach any property as the property he found had already been attached in another matter. The applicant later made a nulla bona return, the import of which was that there was nothing to attach.

The judgment debtor had apparently ceased operating from that address when its property was attached and had left no forwarding address.

Upon its investigations, the judgment creditor discovered that the judgment debtor was now operating from No.5 Westcott Road, Mt Pleasant - this is the claimant's address as well.

It also discovered, that, the claimant was the director of the judgment debtor as well as its company secretary.

The judgement creditor was of the view, that, the claimant was the alter ego of the judgment debtor and so instructed the applicant to attach the claimant's immovable property, namely, Stand 262 Mount Pleasant Township 9 of Lot 50 of Mount Pleasant, Harare also known as No.5 Westcott Road, Mt Pleasant.

Consequent upon the attachment, the claimant advised the applicant, in terms of Rule 205A of the High Court Rules, that the property was owned by him and not the judgment debtor, hence these interpleader proceedings.

From the papers filed of record and submissions made, it is common cause that the attached property is registered in the claimant's name. It is thus the claimant's property.

The judgment creditor's position was that the claimant is merely the alter ego of the judgement debtor and that it should be allowed to realize its dues from that property as the claimant and judgment debtor are one.

The judgment creditor thus sought the lifting of the corporate veil so that the real person behind the company is made to account for the debt.

The claimant, on the other hand, contended that he is not an alter ego of the debtor and that he is a separate entity from the judgment debtor which is a registered company. He is only one of the four directors of the company. He thus contended, that, there is no justification for lifting the corporate veil.

The claimant also contended, that, in terms of section 318(1) of the Companies Act [Chapter 24:03] the judgement creditor was required to first make an application to the High Court for the lifting of the corporate veil wherein it must prove that the business of the company was being carried on recklessly, with gross negligence, or with the intent to defraud any person, or for any fraudulent purpose.

The first issue is whether or not the judgment creditor ought to have first sought the lifting of the corporate veil, in terms of section 318(1) of the Companies Act, before attaching the property, as contended by the claimant.

It is pertinent to note, that, section 318(1) of the Companies Act is under Part V of the Companies Act. That part deals with winding up and judicial management of companies, and it provides that:

“(1) If at any time it appears that any business of a company was being carried on —

(a) Recklessly; or

(b) With gross negligence; or

(c) With intent to defraud any person or for any fraudulent purpose;
the court may, on the application of the Master, or liquidator or judicial manager or any creditor of or contributory to the company, if it thinks it proper to do so, declare that any of the past or present directors of the company or any other persons who were knowingly parties to the carrying on of the business in the manner or circumstances aforesaid shall be personally responsible, without limitation of liability, for all or any of the debts or other liabilities of the company as the court may direct.”

Given the above provision, the claimant contended that the judgement creditor ought to have applied separately for the lifting of the corporate veil before attaching the property. The failure to do so entails that this application should not be heard till section 318(1) of the Companies Act has been complied with.

The judgment creditor, on the other hand, argued, that, it is not in every case that a judgement creditor must first proceed in terms of section 318 of the Companies Act; each case must be treated on its own basis.

In any case, the procedural failure to seek the piercing of the veil of incorporation before attaching the property should not be fatal to the present matter. The circumstances of this case warranted that the matter be heard and be decided without the need for fresh proceedings in terms of section 318 of the Companies Act.

It must be decided on the substance and not on the form.

The question is thus: is it procedurally necessary for a judgement creditor to have obtained a prior court order lifting the corporate veil before attempting to attach the claimant's property?

It is pertinent to refer to the words of SMALLBERGER JA in Cape Pacific Ltd v Lubner Controlling Investments (Pty) Ltd 1995 (4) SA 790…, where, in dealing with the issue of piercing the corporate veil where another remedy was available, the learned judge stated, inter alia, that:

“In principle, I see no reason why piercing the corporate veil should necessarily be precluded if another remedy exists…,.; if the facts of a particular case otherwise justify the piercing of the corporate veil, the existence of another remedy, or the failure to pursue what would have been an available remedy, should not, in principle, serve as an absolute bar to a court granting consequential relief…,.

Whatever laxity or 'fault' there may have been on the part of the appellant in failing to pursue its rights under the doctrine of notice pales into insignificance compared to the impropriety of Lubner's conduct. Yet, respondents seek to rely upon such failure to deny the appellant relief. Policy considerations dictate that they should not be permitted to do so. In the circumstances, the appellant's failure to pursue its remedy under the doctrine of notice does not, in my view, operate as a bar to the relief it seeks.”

In Deputy Sheriff v Trinpac Investments (Pvt) Ltd and Anor 2011 (1) ZLR 458…, PATEL J…, alluded to the above observations and stated that:

“…, while these observations may not be directly pertinent to the question at hand, they certainly fortify the principle, that, mere procedural technicalities should not be allowed to frustrate or impede the effective satisfaction of a just claim. In any event, I see no logic or practical reason in requiring the judgement creditor to institute fresh proceedings in this court to pierce the corporate veil in circumstances where those proceedings would entail the same conclusion that I have reached earlier.”

In casu, I am of the view that the contention that the judgement creditor should have first obtained a court order lifting the corporate veil, in terms of section 318(1) of the Companies Act, is not sustainable.

If, as aptly noted in Deputy Sheriff v Trinpac Investments (Pvt) Ltd and Anor 2011 (1) ZLR 458, the facts are such as enable the court to make a decision, then, surely, why should the judgement creditor be required to start fresh proceedings for lifting of the corporate veil?

I do not think, that, in enacting that section, the legislature intended such a scenario.

The claimant's counsel could not cite any authority to the effect that failure to seek the lifting of the corporate veil, in terms of section 318(1) of the Companies Act, is a bar to a party seeking the lifting of the corporate veil through another procedure.

Clearly, the issue of lifting or piercing the corporate veil can be determined in the present proceedings.

The next issue for determination is whether or not the corporate veil should be lifted.

It is a cardinal principle of Company Law that a company is a separate legal entity from its members: see Saloman v Saloman and Co. Ltd (1897) AC 22 (HL).

It is also trite, that, the courts are reluctant to pierce the corporate veil, as to do so would negate or undermine the policy and principles that underpin the concept of separate corporate personality and its legal consequences.

There are, however, exceptions that have of late been alluded to as justifying the piercing of the corporate veil.

The veil of incorporation may be pierced where there is proof of fraud, dishonesty, or other improper conduct in the establishment or use of the company or in the conduct of its affairs.

In T Sibanda v H M Sibanda SC07-14…, GWAUNZA JA aptly noted that:

“While it is accepted, that, there are no hard and fast rules on the circumstances that justify the lifting or piercing of the corporate veil, with each case generally having to depend on its own facts and merits, I find this dictum from the case of Mkombachoto v Commercial Bank of Zimbabwe & Anor 2002 (1) ZLR 21 at p26D-C to be apposite;

'In my view, the court has no general discretion to disregard the company's separate legal personality whenever it considers it just to do so. The court may 'lift the veil' only where otherwise as a result of its existence, fraud would exist or manifest justice would be denied.'”…,.

A further illustration of the exceptions may be noted in Deputy Sheriff v Trinpac Investments (Pvt) Ltd and Anor 2011 (1) ZLR 458 wherein court held, inter alia, that:

“While the cardinal principle of Company Law is that a company is a separate entity distinct from its members, there are well established exceptions to the principle, grounded in policy considerations.

When the notion of a legal entity is used to defeat public convenience, justify wrong, protect fraud, or defend crime, the law will regard the corporation as an association.

When the corporation is the mere alter ego or business conduit of a person, it may be disregarded.

Where a corporation is organised or maintained as a devise in order to evade an outstanding legal or equitable obligation, the courts, even without reference to actual fraud, refuse to regard it as a corporate entity.

Where fraud, dishonesty, or other improper conduct is found, the need to preserve the separate corporate identity would have to be balanced against policy considerations which arise in favour of piercing the corporate veil.

The court would then be entitled to look to substance rather than form in order to arrive at the true facts, and, if there has been a mis-use of corporate personality, to disregard it and attribute liability where it should rightly lie. Each case would have to be considered on its merits.”

Further, in Cape Pacific Ltd v Lubner Controlling Investments (Pty) Ltd 1995 (4) SA 790…, SMALLBERGER JA aptly noted that:

“The law is far from settled with regard to the circumstances in which it would be permissible to pierce the corporate veil.

Each case involves a process of enquiring into the facts, which, once determined, may be of decisive importance: and, in determining whether or not it is legally appropriate, in given circumstances, to disregard corporate personality, one must bear in mind 'the fundamental doctrine that the law regards the substance rather than the form of things — a doctrine common, one would think, to every system of jurisprudence and conveniently expressed in the maxim plus valet quod agitur quam quod simulate concipitur:' Dadoo Ltd and Others v Krugersdorp Municipal Council 1920 AD 530 at 547.”

What should exercise the court's mind is whether, on the facts or evidence placed before it, the corporate veil should be lifted in the interests of justice, failure of which manifest justice will be denied.

Courts must not be seen to be shielding proven fraudsters or deceitful actors who seek to avoid personal liability by hiding behind the mask of corporate veil.

The facts which the creditor alluded to, as justifying the lifting of the corporate veil, include the following:

(i) The judgement debtor had its property attached in another matter, hence, when the applicant went to attach property in the matter in question he found nothing to attach and that the debtor had ceased operating from its registered office. There was no notification of change of address. There was no change of address at the companies registry; the judgment creditor had to carry out its own investigations to locate where the debtor was now operating from.

(ii) The claimant, whilst being one of the four directors of the judgement debtor, was the only director who had been dealing with the creditor; he was the contact person and no other; besides being the director, he was also the company secretary; it is the claimant who would appear in all meetings between the parties to discuss their business dealings.

In short, the judgment creditor only knew the claimant as the representative of the judgment debtor. Efforts to contact other directors who are indicated on the CR14 form yielded no response. Thus, the only contact with the judgment debtor was the claimant.

(iii) Another pointer to the claimant being the alter ego is that even the debtor's letter heads have the claimant's email address only.

(iv) Further, in his letter of 21 September 2012, attached to the creditors papers, the claimant undertook to pay the debt in these words:

“As I stated to you, we want to have the matter settled, I am proposing to have the full amount ($24,421) paid on or by October 31, 2012.”

Clearly, he was the one proposing and undertaking to pay as the one in control.

It is pertinent to note that most of these facts were not denied.

I did not hear the claimant to deny, that, in all the dealings with the judgment creditor he was the contact person and that the debtor's letter-heads in fact only bore his e-mail address and no other.

The claimant did not deny that when the debtor relocated from 187 Munhondo, Ruwa it did not notify anyone or change its registered office address at the companies registry.

There was no denial that the judgment creditor had to do its own investigations to discover that the judgment debtor was now operating from the claimant's residential address.

The judgment debtor was safely tucked away at the claimant's address and the claimant was busy operating the company business from his residence.

There is no doubt that the claimant has been running the company, even from his residential address, as his company. He is the face of the company and is fully conversant with the goings on in the company.

The impression one gets from the above facts is that the claimant was the company and the company was the claimant, the two were, in fact and in truth, inseparable. The claimant was in full control of the company. The separateness between the claimant and the company has not been maintained in operating the business.

Indeed, as noted from the claimant's papers and submissions, no averments were made on the whereabouts of other directors or properties for the judgment debtor - if at all it existed separate from the claimant.

The claimant hoped to evade liability by hiding behind the guise of the debtor being a company.

It is my view, that, there is some element of dishonesty in the manner the claimant operated the company and attempted to evade liability. He just could not own up and pay what was due to the judgment creditor. Manifest injustice will occur if the claimant is allowed to get away with such a scheme. He clearly must be personally made to account for the debt in question.

This is a case where the interests of justice require that the veil of incorporation be lifted to enable the judgement creditor to recover its dues.

I am of the view, that, the manner in which the claimant attempted to avoid liability, despite the indisputable facts on his role in the company, calls for costs on the higher scale.

The applicant and judgement creditor have been put to great expense when the noble thing would have been for the claimant to simply arrange a payment plan for the debt and save his property from being sold.

Accordingly, it is hereby ordered that:

1. The claimant's claim to a certain piece of land situate in the district of Salisbury, called Stand 262 Mount Pleasant Township 9 of Lot 50 of Mount Pleasant, measuring 4,144 square meters dated 11 March 1988, also known as 5 Westcott Road, Mount Pleasant, Harare placed under attachment in execution of judgement HC1566/15 is hereby dismissed.

2. The Notice of Intention to Sell Immovable Property in Execution, dated 7 January 2016, both of which were issued by the applicant, are confirmed and the property stated therein is declared executable.

3. The claimant is to pay the judgement creditor and applicant's costs on a legal practitioner and client scale.

View Appeal
HH240-15 : VALENTINE ZISWA and MARGARET ZISWA vs GREAEME CHADWICK and LANDOS FARM (PVT) LTD
Ruled By: MATHONSI J

The first plaintiff is a farmer who owns Ziswa Farm (“the farm”) otherwise known as Farm 23 of Lawrencedale Estate in the District of Makoni, Rusape which farm he prefers to rent out while staying on it, as he currently rents it out to his neighbour, he having rented it out to the first defendant prior to that and yet to another person before the first defendant came in.

The second plaintiff is his wife, who, apart from the fact that she was cited as a party along with the first defendant in a joint venture agreement concluded between the couple and the first defendant, on 9 January 2009, has been cited in these proceedings in extremely unclear circumstances.

The first defendant is a commercial farmer, a tobacco grower of note, conducting such business generally at Landos Farm, Halfway House in Headlands and is a director of the second defendant, a duly incorporated company.

The plaintiffs instituted proceedings against the defendant, and, in their summons and declaration, they set out an array of claims, thirteen (13) in all, arising out of a lease agreement signed between the first plaintiff and the first defendant on 9 January 2009 on which date a second agreement titled “Memorandum of Joint Venture Agreement” was also signed between the first and second plaintiffs on the one hand and the first defendant on the other hand.

The plaintiffs averred, that, sometime in 2008 they had entered into a long term development lease agreement with the defendants for the use of the farm and that although the first defendant had signed as the tenant, the actual farming was done through the second defendant.

In terms of the lease agreement, the defendants were expected to put up and maintain infrastructure at the farm, like the construction of 44 houses for workers, dam, and barn construction.

The relationship between the parties deteriorated over time resulting in the defendants cancelling the lease agreement on 2 July 2012 before vacating the farm without notice.

The plaintiffs averred further, that, when the defendants vacated the farm they unlawfully removed certain items of property belonging to the plaintiffs valued at US$186,701 which amount they claimed.

The defendants badly damaged the plaintiffs property valued at $15,905.

They removed fences and gates as they vacated, whose value is $7,600.

During the tenancy, the defendants damaged four (4) barns which were falling at the time they left, while two (2) barns were badly cracked and supported by poles. This was in breach of the agreement of the parties requiring the defendants to keep the barns in good and perfect condition and to repair them to usable state when vacating.

The plaintiffs claimed $5,008 being the costs of repairing the barns.

In further breach of the agreement, the defendants left the farm without removing and destroying tobacco stalks from the land and seed beds which exercise the plaintiffs had to undertake at a cost of $780 including a fine paid to the Environmental Management Agency.

The plaintiffs claimed a sum of $26,313 being the value of their property and machinery including overhead water storage tank and pipes, workers houses, underground cables, water reservoir, cast iron pipes, pump unit, electricals at boreholes and at transformers.

The plaintiff averred further, that, in terms of the lease agreement, the defendants were obliged to deliver to them certain quantities of maize but failed to deliver 50 metric tonnes of maize worth $15,000 which amount the plaintiffs claimed.

They claimed a sum of $45,000 damages for loss of income for the 2012-2013 farming season they would have realised if the defendants had not prematurely terminated the lease agreement and without notice.

A sum of $64,160 was claimed for arrear rentals for the 2011-2012 tobacco crop, being 8% of the gross turnover in respect of crops produced at the farm in terms of the agreement given that 220,000kgs of tobacco were produced during that cropping season.

A sum of $1,980 refund of what the plaintiffs paid for rates and levies to Makoni Rural District Council was claimed, which should have been paid by the defendants in terms of the lease agreement.

The plaintiffs claimed $5,500 being their share of the hailstorm insurance claim made by the defendants to their insurers for the 2009-2010 and 2010-2012 seasons.

A sum of $67,506 was claimed as the value of a centre pivot and generator, which, although purchased by the defendants, they should have left at the farm for the plaintiffs benefit as part of the long term development of the plaintiffs farm.

They claimed $4,240 being 8% of the tobacco seedlings grown on their farm by the defendants.

The defendants have contested the claims, and, in their plea, they took issue with the citation of the second defendant as a party to the proceedings given that there was no agreement, of whatever nature, between the plaintiffs and the second defendant.

In respect of the first defendant, they averred that he complied with all the terms of his agreement with the plaintiffs and denied owing the plaintiffs any money.

The relationship between the parties suffered as a result of the plaintiff's endless interference with farming operations and peaceful enjoyment of the property resulting in a court order being sought and granted interdicting such interference.

The first defendant had to cancel the lease agreement after the plaintiffs had preferred false and malicious criminal charges against him.

The defendants averred that at the termination of the lease, a verification exercise was conducted by the parties which established that all the plaintiffs property had been accounted for, and, as such, none was removed or damaged.

In addition, the fact that the plaintiffs had forcibly taken possession of the farm and equipment, meant that the defendants could not be expected to account for the damage to any property during that period.

They denied vacating the farm secretly or removing fences and gates in the process, especially as the parties were aware of the termination and the defendants vacation of the farm. They denied vandalising any property and that the plaintiffs were entitled to any damages for loss of income.

The parties agreed on the issues for trial at the pretrial conference, which are captured in their joint pre-trial conference minute as:

(a) Whether there was an agreement between the parties as pleaded by the plaintiffs;

(b) Whether the defendants fully complied with the terms and conditions of the agreement;

(c) Whether some of the plaintiffs claims have prescribed, if so, which ones specifically; and

(d) Whether the plaintiffs are entitled to the claims set out in the summons.

Only the first plaintiff gave evidence while the second plaintiff chose not to. They also called witnesses, namely, Assistant Inspector Nixon N'andu, Canaan Nyamombe, and Fanuel Phange.

It was the evidence of the first plaintiff (Ziswa) that prior to the first defendant (Chadwick) approaching him in 2008 he had been leasing his farm to someone else, and that, after Chadwick left unceremoniously in July 2012, he again let out the farm to a neighbour of his, Mr Coleman of Mersy Farm, who, upon taking over, repaired the eight (8) barns which Chadwick had left in a falling condition.

Himself and Chadwick negotiated the lease agreement, which was reduced to writing; the latter having printed a standard form agreement obtained from the National Tobacco Association out of his computer.

He stated that they negotiated every clause, and, as they did so, they added annotations in long hand, which unfortunately were not initialled or counter-signed by the parties, although every page was initialled at the bottom.

After signing the lease agreement, they also prepared and signed a Joint Venture Agreement (JVA) at the instance of Chadwick who wanted it to be signed to protect the parties, given that politically leasing farms was unacceptable while joint venture agreements were tolerated.

As far as he was concerned, the real agreement between the parties was a lease and not a joint venture, which is why the Joint Venture Agreement (JVA) also spoke of a lease and rentals. He referred to both agreements which are part of exhibit 1.

Although both agreements were signed with Chadwick, the witness insisted that they were concluded with both Chadwick and the second defendant, Landos Farm (Pvt) Ltd (Landos) - a claim which is difficult to sustain given that Landos, as an incorporation, was not cited at all in both agreements.

He sought to hold Landos Farm (Pvt) Ltd liable because Chadwick introduced himself as its director and used its letterhead in correspondence.

Some payments were made by Landos.

His claim is based on both agreements.

He explained, that, while the written agreements were signed on 9 January 2009 he had already allowed the defendants to commence farming in August 2008 and that the written agreements only recorded what the parties had agreed.

It is significant that the lease agreement does not necessarily contain some of the necessary details, with the first clause omitting the name of the farm and its hectarage. It also omits the lease period and the date of commencement.

It only has the date of termination entered in pen.

On the various additions to the document, appended in barely legible ink, Ziswa said some were entered by himself while some were made by Chadwick as the two negotiated the terms of the agreement.

The lease provides, in clause 2, that the land was leased for purposes of growing tobacco on 30 hectares, maize on 40 hectares, 20 hectares of wheat or another crop agreed between the parties.

Ziswa said, practically, Chadwick only grew maize during the first year and did not do so for the remainder of the time he was on the farm, electing to concentrate on tobacco farming. He never grew wheat or any other crop for that matter.

The payment of rent is provided for in clause 3 which reads:

“The rent payable by the Lessee to the Lessor shall be 6% on the US$ of the gross turnover in respect of the crops produced on the said land, and, payment of such rent/lease shall be secured by means of direct payment into a FCA given by the lessee in favour of the Company against proceeds of tobacco sold through the Lessee's contract, and, in the case of other such as maize/wheat in equivalue (sic) it shall be executed and registered as soon as may be after the signing of this lease. An advance payment shall be discussed if necessary.”

Despite this provision, Ziswa testified that his claim was for 8% of the gross turnover which he justified by reference to a letter written by Chadwick, on a Landos letterhead, on 22 February 2011, which reads:

“Dear Mr Ziswa

RE: JOINT VENTURE OFFER FOR 2010-2011 SEASON FOLLOWING

I am writing to present my offer on the subject stated above. I am hoping my proposal will be acceptable to you and will be effective for the next three seasons.

I am proposing that I pay you 8% of the gross realisation from the tobacco sales as my joint venture offer. This will be for the sole use of your whole farm.

Please consider that this is the best that I can do. May I refer you to the cost of production document that I sent you earlier on. If I go beyond this offer, the whole enterprise ceases to be viable. I believe this offer presents a win win situation for both parties.

This really is the best that I can do. May you please inform me of your decision by or before 15 March so as to enable me to make preparations for the coming season.

Yours faithfully

Greame Chadwick”…,.

Although Ziswa said he accepted the offer, he did not say when and how this was done.

He did not produce any document of acceptance, neither did he expand on where the acceptance was communicated to Chadwick.

This gives credence to Chadwick's argument, that, his offer was never accepted and that the 6% contained in the lease agreement remained in force.

It is noteworthy that Chadwick appeared to have been writing in his personal capacity even though he used Landos's letterhead.

Ziswa said that the lease was to subsist for an initial period of 5 years but they then “moved to 8 years” and that it was “a developmental lease agreement” enjoining Chadwick to embark on improvements of a permanent nature on the farm, like the construction of dams, staff housing, improving barns and other infrastructural development.

He never did, except for the construction of 11 staff houses out of an agreed total of 44 houses. Even the 11 constructed were not completed. He only repaired one barn which had been burnt down prior to the commencement of the lease. Even in respect of that one, the parties did it together, with Ziswa providing the bricks. Chadwick, however, left the barns falling and supported by poles.

He said the failure to insert the lease period on the agreement was an oversight. So was the failure to insert the name of the leased farm and the date of commencement of the lease, but, it was 1 September 2008 while termination was at the end of August 2018 at the completion of 10 years.

It turns out it was not 5 years, neither was it 8 years, but, Ziswa did not explain when the lease period changed to 10 years.

He stated, that, at the commencement of the lease, they were to hand over to Chadwick their assets located at that farm which the latter was to use for his farming activities.

In that regard, and in the process of identifying and handing over those assets, they produced an inventory at entry point listing these assets. He made reference to p20 to 26 of exhibit 1, the inventory in question, saying all the listed assets were handed over in good working order.

The inventory has a column with the title “Quantity” which he says is where they endorsed not only the quantity of the items involved but also the condition of the items so that if the item was not in good order that would be stated in that column. The fact that there would be no comment on an item meant that it was in good order.

A look at that inventory shows only a couple of comments.

The first relates to diesel tanks with the comment “on stand”. The second relates to an MF tractor with the comments “1 No Wheels.” Other than the description of the disc harrow as “1 red in colour” nothing supports Ziswa's claims on the condition of the items whose state was not given throughout.

Both parties kept their copy of the inventory.

Ziswa went on to say, that, although most of his claims are not based on the written agreements, they had a lot of discussions which resulted in agreements not reduced to writing.

As far as he is concerned, a verbal agreement is also binding. He referred, in that regard, to the agreement on the construction of dams.

After going through the list of items which he said were handed over to Chadwick, including what he said were new “flue pipes not fitted to the barns but kept at the sheds” as well as his own stock of fertilisers not for use by Chadwick, Ziswa went on to say that the tenant had taken over the items and grew tobacco for four (4) years with him being paid due rentals for 2009, 2010, and 2011. He was however not paid anything for the last year the tenant was at the farm, which is 2012.

The claim for arrear rent therefore relates to the 2011 to 2012 tobacco growing season.

In arriving at the 8% of the tobacco produced for that season (as opposed to 6% stated in the agreement), he had to estimate using the sale sheets of Landos which he obtained.

He went through those sale sheets stating that he had to resort to estimation because the tenant did not give him the information.

Based on the sale sheets, and the other information on the tobacco that was produced, they computed that 220,000kgs of tobacco was sold during that year and his 8% of it is the sum of $64,160 being claimed as arrear rental for the 2011-2012 growing season.

When the plaintiffs wrote a letter of demand to Chadwick, on 23 July 2012, they stated that 205,800kgs of tobacco had been realized at the farm during that period, which had been sold at $4=10 per kg giving a gross of $843,780. They were entitled to 10% of it which is $84,378.

It is not clear where 10% cropped up from, but, they claimed it all the same.

In their summons, the claim was reduced to 8% of the gross turnover estimated at 220,000kgs giving the $64,160 being claimed.

Ziswa stated, that, in terms of the parties agreement, the tenant was obliged to pay rates and levies due to Makoni Rural District Council which, for the year 2011-2012, was $1,980. As the tenant did not pay in January 2012, he was forced to pay on their behalf. He would like to be reimbursed that amount.

He stated, that, although he received a receipt upon payment, he was unable to produce it.

In support of his claim, that the tenant was obliged to pay rates, Ziswa made reference to a letter written by Chadwick, again on the Landos letterhead, on 9 November 2010, which reads, in relevant part, as follows:

“Dear Mr Ziswa

RE: RESPONSE TO YOUR LETTER DATED 5/11/10

1. Landos Farm agrees to make a payment of: $1,440 (that had been paid for rates); $750 (for 50 cords of wood @ $15); $350 (barn fire); Total 2,540.

The money will be paid in on Wednesday the 10th of November 2010. The proof of payment will be on the farm on Thursday the 14th of November 2010 as well as for you to collect.”

Unfortunately, Ziswa did not see the need to produce the letter of 5 November 2010 which was being responded to.

He however maintained that the payment of rates was the responsibility of the tenant - even though the lease agreement had no such provision.

In respect of the claim for $5,500, Ziswa stated that the tenant was obliged to insure the tobacco crop against hailstorm destruction. In the event that the tobacco crop is destroyed by hailstorm, the insurer would pay for it.

Hailstorm destroyed the tobacco crop and the tenant claimed from his insurance and was paid, but he did not transmit to him 8% share due in terms of the lease agreement. He is entitled to a percentage of the gross turnover and would also be entitled to the same percentage of insurance payment made for destroyed crops. He is not aware of the exact amount involved because Chadwick refused to give him the figures.

He has had to estimate the figure based on the investigations which he carried out involving his discussions with the employees of the insurer who came to the farm for an inspection.

He did not disclose what those investigations revealed, only stating that he estimated the figure based on his experience and the damage he observed on the crop - an explanation not helpful at all.

Asked as to why the claim for hailstorm insurance, involving a 2009-2010 crop, would be made by summons served on 26 November 2012, outside the prescriptive period of three (3) years, Ziswa dithered.

He then said that “in the heat of things” there was a typing error in the summons because his hailstorm claim is for the 2011-2012 cropping season and not 2009-2010 claimed in the summons.

Significantly, no attempt was made to amend the pleadings.

Pressed by counsel on how he could possibly justify a claim in which he had no figure, Ziswa offered to withdraw the hailstorm claim accepting that it could not be proved.

In respect of the claim for the replacement value of the centre pivot and generator, Ziswa had a difficult time indeed.

He said that the tenant had purchased these movable assets and brought them to the farm for use during the tenure of the lease. He had, however, taken them away at the end. As far as he is concerned, these items fall under the long term development provision of the parties agreement, meaning that they should accrue to the farm. As such, they should be returned or their value paid.

As to how such items should qualify for permanent improvements, he could not explain.

His problems were compounded by the fact, that, he had, through a letter written on his behalf by his legal practitioners, on 12 April 2012, written to Chadwick, stated in part that:

“Of essence, the agreement was that of long term development partnership in terms of which you are obliged to undertake permanent structural development on the farm, such as construction and other infrastructure development. We have noted with concern that you have failed to meet your side of the bargain. You undertook to built (sic) 44 houses for the workers, however, only 11 have been constructed to date. You have bought a centre pivot for irrigation. However, it does not qualify as long term development because it depreciates in value. Also, there is a huge list of farm equipment that has broken down which you have not bothered to repair.”

There you have it.

The plaintiffs themselves did not regard the centre pivot as a long term developmental addition, and, by any stretch of the imagination, the generator cannot be said to be either.

The plaintiffs themselves understood long term to apply to construction of workers houses, dam, and barn construction, and other infrastructural development.

Nothing more needs to be said about that.

On the value of the property either allegedly removed from the farm and not returned, or those damaged by the tenant and not repaired, Ziswa reiterated that all the property given to the tenant, at commencement, was not only usable but also in good working order.

He pointed out, that, at no time did they make life difficult for the tenant because he had free access to the farm at all times and had guards looking after the farm.

It was only after he discovered that they were removing his property from the farm and refusing to return it, and failing to pay to him what was due in terms of the agreement, that he moved in with three (3) of his own guards and closed the barns to prevent the tenant from removing any tobacco produce.

The tenant removed an electricity line running from the first to the second dam, wires and poles were all removed. The implements listed in the pleadings were also removed, including underground pipes.

He produced exhibit 2, an album of photographs showing the state of some of the items which had been given to the tenant at the commencement of the lease agreement. The photographs were taken by his wife, the second plaintiff, and their legal practitioner, in the presence of police inspector N'andu at the time that the defendants vacated the farm.

Unfortunately, none of the photographs depicts the appearance of any of the items at the commencement of the lease agreement, and would, naturally, be unhelpful standing on their own, for comparison.

Ziswa stated, that, Chadwick had used most of his equipment during the lease but broke down most of them with some of the damage being inflicted deliberately.

For more than two (2) years, Chadwick had not repaired the damaged equipment.

He made reference to a list of items, p15 of exhibit 1, which he said was property stolen and removed from the farm, and another list, p18, which he said was property removed and returned in a damaged state.

Although in the summons he was claiming sums of $187,707 as the value of the property removed and not returned, $15,905 as the value of property removed and returned in a damaged state, $7,600 as the value of fences and gates removed or badly damaged by the tenant, and $15,008 being the cost of repairing the damaged tobacco barns, Ziswa said he has since seen the light.

He now realizes that he cannot sustain those claims given that the items involved were not new at the time the tenant took them.

He is therefore not claiming the values contained in the summons but would now defer to the testimony of an expert witness, Fanuel Phange, an accountant who penned exhibits 3 and 3a representing the depreciated values of all the items involved.

He said that he is the one who gave Phange the list of all the items involved and their description. He used the original inventory to do so. He gave Phange the quantities and the quotations for the cost of each unit, which he had sourced himself.

With all that information, he instructed Phange to depreciate the values of the items using international accounting standards. He did, and came up with a grand total of $385,943 which he now craves.

On the claim for $708 for labour hired to clear tobacco stalks from the fields and seed beds, as well as the penalty paid to the Environmental Management Agency (EMA), Ziswa said he hired 10 or 15 casual workers at $4 a day for one week. He hired a tractor for $200, bought diesel for $150 and paid a fine of $150 to EMA.

He could not properly break it down.

If he hired 10 workers for 7 days (assuming that is the number of days as opposed to 5 working days), he would have paid each one of them $28 per week and all of them $280. If he hired 15, the figure would be much higher by $140 meaning he paid $420. Working on the lesser figure, he would have paid $780 under this head. The higher figure would yield a total of $920.

Ziswa said, in terms of the parties agreement, which again is not captured in the written lease and Joint Venture Agreement (JVA), the tenant owes him 50 metric tonnes of maize.

They had agreed that Chadwick would deliver to him 18 tonnes of maize in the first year, 12 tonnes the second year and then moving to 18 tonnes annually from the maize he was required to grow at the farm. He therefore owes 50 metric tonnes valued at $15,000.

In arriving at the value, he inquired from GMB what the value of the maize was, and was told that it was $300 per tonne adding to $15,000 he is claiming.

Again, he does not have a quotation to support the claim.

Ziswa testified, that, during the final year that the tenant occupied his farm, he had grown tobacco seedlings at the farm. He used these seedlings to grow the main crop of tobacco from which he is claiming a share. Chadwick also took some of the seedlings to his other farms and sold some to unnamed individuals in unknown quantities.

According to him, seedlings constitute a crop, and, as the agreement stated that he was entitled to a percentage of the crop grown at his farm, he was therefore entitled to 8% of all the seedlings not used to grow the main crop at the farm.

He stated, that, he had established that seedlings were sold for $200 during the 2011-2012 cropping season. He counted the number of seed beds at the farm over and above what was required at the farm to come up with a claim that would turn William Shakespeare's Shylock “The Merchant of Venice” very green with envy.

Regrettably, he did not tell us what amount of seedlings were required at the farm, how many seed beds were there, how the figure claimed is arrived at, and, more importantly, how “the young one” of a tobacco crop could qualify for a crop and found a basis for a monetary claim.

He however conceded, that, prior to the 2011-2012 season he had not been paid for seedlings and had not submitted a claim, stating that in previous seasons he had not asked for payment for seedlings because relations had not soured.

It is therefore a claim not based on the agreement, but clearly actuated by malice and a strong desire to claim virtually everything, especially considering that the initial claim under this head was $10,200 made in the letter of demand, which was pruned down to the $4,240 now being claimed.

The final claim of $45,000 for loss of income and damages allegedly sustained as a result of the premature termination of the lease, was withdrawn by Ziswa in his evidence in chief.

He said after consultation with his lawyers, he has decided to abandon that claim because he “wants this claim to be clean on things damaged and money not paid.”

It is a concession properly made in light of the abundance of evidence, including a court order granted by this court, by consent, pointing to interference with farming activities by the plaintiffs which led to the termination of the lease.

Under crosss examination, Ziswa conceded that the lease agreement that he relies upon contains a non-variation clause. Clause 9 reads:

“This agreement constitutes the entire agreement between the parties and no representation or undertakings given by one of them to the other of them prior to the execution hereof, and no variation of the conditions hereof, shall have any force or effect unless recorded in writing and executed by the parties hereof.”

The provision itself admits of no other interpretation but what it states, and Ziswa conceded as much.

He also admitted that he tried hard to get Chadwick to sign an improved lease agreement during the tenure of the lease, without success, and that the one signed on 9 January 2009 remained effectual throughout, governing the relationship between the parties.

He also conceded, that, he was paid a sum of about $21,000 in 2012 being rent due to him, although he was of the view that such payment was for arrears that had accrued during the 2010/11 cropping season, forgetting of course that in his evidence in chief he had said that he had been paid all his dues for all the years except the 2011-12 season.

Ziswa also admitted, under cross-examination, that Chadwick had brought his own equipment which he used at the farm and that he repaired a barn that had been burnt down, among other improvements at the farm.

When confronted about other improvements effected by Chadwick, he became evasive, only saying he could not remember some of them.

Valentine Ziswa did not make a good witness at all. His demeanour was extremely bad and he was given to wild exaggerations of his claims. He struck me as someone actuated by an improper motive and determined to maximise on what he can recover from the tenant at all costs, thereby reducing the claim to ridiculous levels. He just tried too hard.

A few examples should suffice.

He prevaricated a lot on the duration of the lease agreement and the level of his percentage share of the gross turnover. He is the same witness who testified that the lease agreement was for 5 years, he changed to say it was for 8 years, and then for 10 years. At the end, one is left without a determinable duration period.

He produced an agreement providing for rentals of 6% of the gross turnover. Although admitting that the initial agreement remained as the governing covenant of the parties, he claimed 8% of the gross turnover but failed to justify the basis of it. He also produced a letter of demand wherein he fixed his share at 10%, all the time suggesting that he had this fixation about extracting more and more from the defendants which he could not justify.

There is also the question of the tonnage of maize that he claims. It was not enough that the claim for delivery of the maize could not be found in the agreement, he premising it on the remote reference to production of maize at the farm (maize which was not even produced except during the first year); he claimed 12 tonnes per year, then 18 tonnes, succeeding in creating confusion and giving substance to the allegation that his claims were always changing every year.

The same acquisitive tendency is exhibited in his claim for the center pivot and generator. As to how these items could be classified as constituting permanent long term development projects, even when he himself stated earlier that one of them did not, remains a mystery of gigantic proportions.

His problems were also compounded by the poorly drafted lease agreement with endless un-initialled annotations as well as blank portions of important clauses.

He was then reduced to base his claims on alleged verbal agreements not contained in the lease which he said constituted the basing of his claim; a lease with a provision excluding anything agreed but not reduced to writing and executed by the parties.

It is therefore difficult to impute the existence or incorporation of such alleged provisions negotiated outside the written agreement.

While relying on a document signed with Chadwick, Ziswa insisted that the second defendant, a separate legal person from Chadwick, was also liable to him.

This is because Chadwick had introduced himself as its director, had used its letterhead in correspondence, he knew him before as being a director, several payments were made by Landos, and he personally made visits to Landos.

None of these would make a company liable for the debts of its director contracting in his personal capacity....,.

I have already stated, that, there is no basis for holding a company liable for the obligations of its director in terms of a written agreement in which the company is not a party. It is certainly not enough to say that the company is liable because it paid some of its director's debts, or that it is the one which carried out farming activities, or that its letter head was used in correspondence.

Public policy demands, that, men of full age and competent understanding should have the liberty to contract, and, when they have so contracted, freely and voluntarily, their contracts should be sacred and enforced by courts of law; see Printing Registering Co. v Sampson 19 EQ 462…,.

That is the whole essence of the concept of sanctity of contract.

When a party has so contracted with one party, he cannot be allowed to drag others with whom he has no contract into the contract merely because they associate themselves with a party to it.

There was simply no privity of contract between the plaintiffs and the second defendant. It is a registered company with limited liability.

It is a celebrated principle of our Company Law, that, upon registration, a company acquires a fictitious legal personality of its own and exists separate from its members. Except in very limited circumstances, the liability of its members and directors cannot be visited upon it and vice versa.

Such limited circumstances have not been shown to exist in the present matter.

Accordingly, I will not hesitate to dismiss all claims made against the second defendant....,.

1. The plaintiffs claims against the second defendant are hereby dismissed with costs.

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Legal Personality re: Approach, Rule of Separate Legal Existence, Business Trade Names & Fiction of Separate Legal Entity

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Ruled By: GOWORA J

View Appeal
HH40-19 : UPENYU MASHANGWA and ANOR HC4197/18 and EMMANUEL MAKANDIWA and OTHERS HC1774/18 vs EMMANUEL MAKANDIWA and RUTH MAKANDIWA and ANOR and UPENYU MASHANGWA and ANOR
Ruled By: TAGU J

Appealed
SC92-22 : VALENTINE ZISWA and MARGARET ZISWA vs GRAEME CHADWICK and LANDOS FARM (PRIVATE) LIMITED
Ruled By: UCHENA JA, MAKONI JA and KUDYA AJA

Appealed
SC94-22 : ROBERT TINDWA vs THE SHERIFF FOR ZIMBABWE and INSTITUTE OF MINING RESEARCH
Ruled By: HLATSHWAYO JA, BHUNU JA and MAKONI JA

View Appeal
HBHB160-21 : BLANKET MINE (1983) (PVT) LTD vs FISANI MOYO and VALENTINE MINE (Represented by THOMSON MOYO) and ZIMBABWE REPUBLIC POLICE, GWANDA and PROVINCIAL MINING DIRECTOR N.O.
Ruled By: KABASA J

View Appeal
HH54-18 : THE SHERIFF FOR ZIMBABWE vs ROBERT TINDWA and INSTITUTE OF MINING RESEARCH
Ruled By: CHITAKUNYE J

View Appeal
HH240-15 : VALENTINE ZISWA and MARGARET ZISWA vs GREAEME CHADWICK and LANDOS FARM (PVT) LTD
Ruled By: MATHONSI J

Categories

Law Portal Zimbabwe

Legal Personality re: Approach, Rule of Separate Legal Existence, Business Trade Names & Fiction of Separate Legal Entity

SC144-21 : FARAI MATSIKA and FAIRGOLD INVESTMENTS (PRIVATE) LIMITED vs MOSES CHINGWENA and 38 OTHERS Ruled By: BHUNU JA

View Appeal SC59-16 : ZIMRE PROPERTY INVESTMENTS LIMITED vs SAINTCOR (PVT) LTD t/a V. TRACK and JOHN SHUMBA Ruled By: ZIYAMBI JA, GARWE JA and GOWORA JA

HH28-16 : FARPIN INVESTMENTS [PVT] LTD vs NETONE CELLULAR [PVT] LTD and JUSTICE L.G. SMITH [RETD] - ARBITRATOR Ruled By: MAFUSIRE J

View Appeal SC01-22 : FRANCIS BERE vs JUDICIAL SERVICE COMMISSION and SIMBI MUBAKO and REKAYI MAPHOSA and TAKAWIRA NZOMBE and VIRGINIA MABHIZA and PRESIDENT OF ZIMBABWE and MINISTER OF JUSTICE, LEGAL AND PARLIAMENTARY AFFAIRS Ruled By: GUVAVA JA, UCHENA JA and KUDYA AJA

HH128-06 : DOBROCK HOLDINGS (PVT) LTD and TURNER AND SONS (PVT) LTD vs TURNER AND SONS (PVT) LTD and ANTHONY TURNER and MARTIN KING and ZAMBEZI PADDLE STEAMER (PVT) LTD and DOBROCK (PVT) LTD Ruled By: KUDYA J

HH207-13 : MODCRAFT ENGINEERING (PVT) LTD vs TENDA BUSES (PRIVATE) LIMITED and DAMASCUS MUTARE Ruled By: MATHONSI J

HH435-15 : LADRAX INVESTMENTS (PVT) LTD vs IGNATIOUS CHIRENJE and RUTENDO CHIRENJE Ruled By: TSANGA J

HH709-15 : ODAR HOUSING DEVELOPMENT CONSORTIUM vs SENSENE INVESTMENTS (PVT) LTD and MINISTER OF LOCAL GOVERNMENT, PUBLIC WORKS AND NATIONAL HOUSING and ATTORNEY–GENERAL Ruled By: MAFUSIRE J

HHH229-19 : INTRATREK ZIMBABWE (PVT) LTD and WICKNELL CHIVAYO vs PROSECUTOR GENERAL OF ZIMBABWE and L. NCUBE N.O. Ruled By: TAGU J

HH231-10 : AGRICULTURAL BANK OF ZIMBABWE LTD t/a AGRIBANK vs NICKSTATE INVESTMENTS (PVT) LTD and RICHARD MAKWARA and PLAXEDES MAKWARA Ruled By: GOWORA J

View Appeal HH40-19 : UPENYU MASHANGWA and ANOR HC4197/18 and EMMANUEL MAKANDIWA and OTHERS HC1774/18 vs EMMANUEL MAKANDIWA and RUTH MAKANDIWA and ANOR and UPENYU MASHANGWA and ANOR Ruled By: TAGU J

Appealed SC92-22 : VALENTINE ZISWA and MARGARET ZISWA vs GRAEME CHADWICK and LANDOS FARM (PRIVATE) LIMITED Ruled By: UCHENA JA, MAKONI JA and KUDYA AJA

Appealed SC94-22 : ROBERT TINDWA vs THE SHERIFF FOR ZIMBABWE and INSTITUTE OF MINING RESEARCH Ruled By: HLATSHWAYO JA, BHUNU JA and MAKONI JA

View Appeal HBHB160-21 : BLANKET MINE (1983) (PVT) LTD vs FISANI MOYO and VALENTINE MINE (Represented by THOMSON MOYO) and ZIMBABWE REPUBLIC POLICE, GWANDA and PROVINCIAL MINING DIRECTOR N.O. Ruled By: KABASA J

View Appeal HH54-18 : THE SHERIFF FOR ZIMBABWE vs ROBERT TINDWA and INSTITUTE OF MINING RESEARCH Ruled By: CHITAKUNYE J

View Appeal HH240-15 : VALENTINE ZISWA and MARGARET ZISWA vs GREAEME CHADWICK and LANDOS FARM (PVT) LTD Ruled By: MATHONSI J

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Law Portal
Zimbabwe

SC144-21 : FARAI MATSIKA and FAIRGOLD INVESTMENTS (PRIVATE) LIMITED vs MOSES CHINGWENA and 38 OTHERS
Ruled By: BHUNU JA

View Appeal
SC59-16 : ZIMRE PROPERTY INVESTMENTS LIMITED vs SAINTCOR (PVT) LTD t/a V. TRACK and JOHN SHUMBA
Ruled By: ZIYAMBI JA, GARWE JA and GOWORA JA

HH28-16 : FARPIN INVESTMENTS [PVT] LTD vs NETONE CELLULAR [PVT] LTD and JUSTICE L.G. SMITH [RETD] - ARBITRATOR
Ruled By: MAFUSIRE J

View Appeal
SC01-22 : FRANCIS BERE vs JUDICIAL SERVICE COMMISSION and SIMBI MUBAKO and REKAYI MAPHOSA and TAKAWIRA NZOMBE and VIRGINIA MABHIZA and PRESIDENT OF ZIMBABWE and MINISTER OF JUSTICE, LEGAL AND PARLIAMENTARY AFFAIRS
Ruled By: GUVAVA JA, UCHENA JA and KUDYA AJA

HH128-06 : DOBROCK HOLDINGS (PVT) LTD and TURNER AND SONS (PVT) LTD vs TURNER AND SONS (PVT) LTD and ANTHONY TURNER and MARTIN KING and ZAMBEZI PADDLE STEAMER (PVT) LTD and DOBROCK (PVT) LTD
Ruled By: KUDYA J

HH207-13 : MODCRAFT ENGINEERING (PVT) LTD vs TENDA BUSES (PRIVATE) LIMITED and DAMASCUS MUTARE
Ruled By: MATHONSI J

HH435-15 : LADRAX INVESTMENTS (PVT) LTD vs IGNATIOUS CHIRENJE and RUTENDO CHIRENJE
Ruled By: TSANGA J

HH709-15 : ODAR HOUSING DEVELOPMENT CONSORTIUM vs SENSENE INVESTMENTS (PVT) LTD and MINISTER OF LOCAL GOVERNMENT, PUBLIC WORKS AND NATIONAL HOUSING and ATTORNEY–GENERAL
Ruled By: MAFUSIRE J

HHH229-19 : INTRATREK ZIMBABWE (PVT) LTD and WICKNELL CHIVAYO vs PROSECUTOR GENERAL OF ZIMBABWE and L. NCUBE N.O.
Ruled By: TAGU J

HH231-10 : AGRICULTURAL BANK OF ZIMBABWE LTD t/a AGRIBANK vs NICKSTATE INVESTMENTS (PVT) LTD and RICHARD MAKWARA and PLAXEDES MAKWARA
Ruled By: GOWORA J

View Appeal
HH40-19 : UPENYU MASHANGWA and ANOR HC4197/18 and EMMANUEL MAKANDIWA and OTHERS HC1774/18 vs EMMANUEL MAKANDIWA and RUTH MAKANDIWA and ANOR and UPENYU MASHANGWA and ANOR
Ruled By: TAGU J

Appealed
SC92-22 : VALENTINE ZISWA and MARGARET ZISWA vs GRAEME CHADWICK and LANDOS FARM (PRIVATE) LIMITED
Ruled By: UCHENA JA, MAKONI JA and KUDYA AJA

Appealed
SC94-22 : ROBERT TINDWA vs THE SHERIFF FOR ZIMBABWE and INSTITUTE OF MINING RESEARCH
Ruled By: HLATSHWAYO JA, BHUNU JA and MAKONI JA

View Appeal
HBHB160-21 : BLANKET MINE (1983) (PVT) LTD vs FISANI MOYO and VALENTINE MINE (Represented by THOMSON MOYO) and ZIMBABWE REPUBLIC POLICE, GWANDA and PROVINCIAL MINING DIRECTOR N.O.
Ruled By: KABASA J

View Appeal
HH54-18 : THE SHERIFF FOR ZIMBABWE vs ROBERT TINDWA and INSTITUTE OF MINING RESEARCH
Ruled By: CHITAKUNYE J

View Appeal
HH240-15 : VALENTINE ZISWA and MARGARET ZISWA vs GREAEME CHADWICK and LANDOS FARM (PVT) LTD
Ruled By: MATHONSI J