Evidence on Behalf of a Corporate Entity and Institutional Memory

View Appeal
HH466-18 : NMB BANK LTD vs THE TRUSTEES FOR THE TIME BEING OF CORNERSTONE TRUST and JULIUS MAKONI and THE TRUSTEES FOR THE TIME BEING OF RYVONNE TRUST
Ruled By: ZHOU J

The plaintiff, a commercial Bank, claims against the three defendants payment of a sum of money amounting to US$1,105,748=90 together with interest thereon at the rate of 15% per annum calculated from the 9th September 2015 to the date of payment in full; such interest to be calculated monthly and in advance and capitalized.

The plaintiff also claims collection commission and costs of suit on the legal practitioner and client scale, as well as an order declaring a certain immovable property, described in the summons as a certain piece of land situate in the District of Salisbury called the Remainder of Lot 6 of Reitfontein, measuring 1,2129 hectares, to be specially executable.

The claim is for money advanced to the first defendant pursuant to loan and overdraft facilities and in respect of which the second and third defendants are said to have executed deeds of suretyship and guarantorship.

The claim is contested by all the defendants....,.

On the main claim, the plea which was filed on behalf of the defendants is very brief. In that plea, the defendants deny that the person who entered into the agreements pursuant to which the plaintiff advanced money to the first defendant had the authority to represent the first defendant.

The other aspect, which is denied, is that the second defendant executed the power of attorney which was used to register a mortgage bond over his immovable property in favour of the plaintiff.

Going by the pleadings, the other material allegations made in the plaintiff's declaration are not disputed and must therefore be taken as admitted. These include:

(i) The existence of the facilities (save for the alleged lack of authority of the person who represented the first defendant).

(ii) The terms of the loan facility as set out in paragraph 6 of the plaintiff's declaration.

(iii) The facts alleged in paragraph 7 of the plaintiff's declaration that the second and third defendants executed deeds of suretyship and guarantees by which they bound themselves as sureties and co-principal debtors for performance of the first defendant's contractual obligations to the plaintiff under the facilities.

(iv) There is also no denial of the failure by the first defendant to pay the amount due to the plaintiff in terms of the agreements.

(v) The amount claimed in the summons and declaration is also not disputed in the plea.

Although three issues were outlined in the joint pre-trial conference minute, a resolution of those issues depends on the determination of whether the loan facilities were validly concluded on behalf of the plaintiff and whether the mortgage bond over the immovable property known as a Certain Piece of Land Situate in the District of Salisbury Called the Remainder of Lot 6 of Rietfontein measuring 1,2129 hectares, held by the second defendant under Deed of Transfer Number 4388/1994, was validly executed.

The plaintiff led evidence, oral and documentary, from Alwyn Tafadzwa Chinyoka, Leonard Tendai Nhari, Lazarus Marume, Benson Ndachena, and Lionel Chinyamutangira, all of whom are its employees save for Leonard Tendai Nhari who is a handwriting expert.

The essence of the evidence of these witnesses is that the second defendant, Julius Tawona Makoni, was a founder and director of the plaintiff. He was still a director of the plaintiff when the facility upon which the claim arose was granted to the first defendant.

A composite facility of call loans and overdraft of US$760,000 was extended to the first defendant. The first defendant is the second defendant's Trust through which he operated to access money from the plaintiff.

Alwyn Tafadzwa Chinyoka testified, that, Dr Makoni signed the power of attorney to pass a mortgage bond over his property. The guarantee executed by the third defendant was signed by Dr Higginson, who, together with the second defendant, was the authorized signatory. The two were also the signatories for the first defendant.

The second defendant would give instructions to the plaintiff's employees for draw-downs on the facility.

He stated that the plaintiff engaged the second defendant about recovery of the amounts owed following a directive from the Reserve Bank of Zimbabwe that all insider loans be settled by 31 December 2014.

When the second defendant was approached about the debt, he acknowledged it and advised that he was making arrangements to settle it.

The matter was discussed at some Board meetings of the plaintiff in the presence of the second defendant. The minutes of Board meetings were produced in evidence.

The witness also gave evidence of the emails which were exchanged between the second defendant and the plaintiff's officials in connection with the debt in which the second defendant acknowledged the debt.

The witness disputed the signatures on the alleged loan agreement upon which the first defendant's counter-claim was based.

He also gave evidence of payments made on behalf of, and, at times, on the instructions of the second defendant from the account of the first defendant.

He testified that the facility availed to the first defendant was to cater for the personal needs of the second defendant.

The first defendant held shares in the plaintiff on behalf of the second defendant, according to the witness.

Lazarus Marume, who was employed by the plaintiff as Branch Manager at Mutare, stated that he knew the second defendant as the founder of the plaintiff and as a Bishop of the Church of the Province of Central Africa.

He confirmed, that, the second defendant signed the power of attorney to pass a mortgage bond at Mutare.

The witness had always known the second defendant's signature as he had dealt with him many times before that. He signed as a witness after the second defendant had signed in his presence. The document was signed at the second defendant's office to which the witness had taken the document.

Significantly, at no time during cross-examination was it suggested to this witness that the signature on the document was not that of the second defendant; neither was it suggested that the second defendant had not signed the document.

The evidence of Leonard Tendai Nhari and Benson Ndachema pertains to the first respondent's claim in reconvention, which, as already noted, has been abandoned.

In relation to the main claim, Benson Ndachema's evidence confirmed the instruction from the Reserve Bank of Zimbabwe for the recovery of insider loans. He also stated, that, the second defendant, as representative of the first defendant, owed money to the plaintiff, and that he resigned from his directorship owing to his failure to repay the loan.

The second defendant, according to the witness, had indicated that he would settle his indebtedness to the plaintiff from the proceeds of his shares in MBCA Bank which he would dispose of.

Lionel Chinyamutangira was Chief Banking Officer at the plaintiff at the time that he gave his evidence.

When he was Relationships Manager he reported directly to the second defendant, and got to deal with the first and third defendants as well. He explained that the purpose of the facility extended to the first defendant was in fact to take care of the second defendant's affairs when he was away, such as paying for his family's expenses and motor vehicle expenses. The second defendant would instruct him, and the other employees of the plaintiff, on the transactions to be performed, and Higginson would do the paperwork.

He identified some e-mails exchanged between him and the second defendant in terms of which the second defendant would sometimes instruct him to debit the first defendant's account for the purposes of paying his (second defendant's) expenses.

This witness identified various documents pertaining to payments to or on behalf of the second defendant made from the account of the first defendant. He confirmed that the second defendant stepped down from the Board of the plaintiff because of his failure to discharge his financial obligations to the plaintiff....,.

The second defendant's evidence was that he is the one who founded the plaintiff. He was its Chief Executive Officer, Executive Director, and Non-Executive Director at different times. He is also a shareholder of the plaintiff.

His evidence was that he was not clear as to what the basis of his liability for the first defendant's debts to the plaintiff was.

He recognized and identified the signature on the Deed of Suretyship, executed on 10 July 2002, to be his. He then sought to state that he did not understand why he was to act as surety for the first defendant's obligations to the plaintiff.

He stated that he never enjoyed any benefit from the facility granted to Cornerstone.

He stated that he resigned voluntarily from the Board of the first defendant and that his resignation was unconnected to the debt owed by the first respondent....,.

View Appeal
HH100-17 : UPSET INVESTMENTS (PRIVATE) LIMITED vs CHITUNGWIZA MUNICIPALITY
Ruled By: MUREMBA J

The plaintiff issued summons claiming the following:

“(i) Payment of the sum of US$119,300 being the remaining balance of the agreed purchase price for one x 20 Tonne Hyundai Excavator, sold and delivered by the plaintiff to the defendant, at its specific instance and request.

(ii) Interest at the prescribed rate calculated from the date of delivery, being 19th of June 2014, to the date of full payment.

(iii) Costs of suit on a legal practitioner and client scale.”

In its declaration, the plaintiff averred the following:

In 2011, the parties entered into a procurement contract in which the defendant ordered one by 20 tonne hydraulic excavator from the plaintiff. The agreed purchase price was US$209,300 inclusive of VAT. The defendant was obliged to pay 50% deposit towards the purchase price. The remaining balance was payable upon delivery of the excavator.

In partial fulfilment of the agreement, the defendant paid, in instalments, the sum of US$90,000 as part deposit to the agreed purchase price.

The plaintiff accordingly delivered the excavator on 19 June 2014 which delivery was accepted. The excavator was accepted in good working order by the defendant at its premises.

The defendant has, despite demand, refused or neglected to pay the outstanding balance of US$119,300....,.

To the merits, the defendant averred, that, the plaintiff delivered a defunct Hyundai Excavator contrary to the undertaking that it made that it would deliver a new excavator. It had to incur unnecessary costs in having the excavator checked by an independent company. The defendant averred, that, it will only effect payment of the balance after delivery of a brand new and properly functioning machinery.

The defendant also made a counter claim. It averred the following:

On 16 May 2014, it advertised a Tender Notice in the Herald newspaper in terms of section 211 of the Urban Councils Act [Chapter 29:15]. The notice was inviting tenders for the supply of brand new machinery, viz:

(i) One Jet machine Chigu Velocity clearing machine.

(ii) One Tracked Excavator 30 tonne.

(iii) One Front End Loader.

On 18 July 2011, the defendant in reconvention won the tender to supply it with a 20 tonne Tracked Excavator and a 3 tonne Front End loader. It was a term of the agreement that:

(a) The defendant in reconvention would deliver a brand new excavator and a brand new front-end loader.

(b) The plaintiff in reconvention would pay the deposit of the agreed purchase price before delivery of the machinery.

(c) The plaintiff in reconvention would pay the outstanding purchase price upon delivery of the machine.

The plaintiff in reconvention paid the initial deposit to the defendant in reconvention on 29 January 2014 in the sum of US$140,000. On 19 June 2014, the defendant in reconvention delivered a dysfunctional excavator in breach of the agreement terms.

It has refused and failed to deliver a brand new machinery.

The plaintiff in reconvention has been prejudiced by the breach. The plaintiff in reconvention is entitled to specific performance of the agreed terms of the contract. Alternatively, it is entitled to restitution of US$140,000 being the deposit paid as part of the purchase price and damages for breach of contract. Consequently, it claims for:

“(a) An order compelling the defendant in reconvention to deliver brand new excavator and Frond End loader to the plaintiff in reconvention in terms of the agreement.

(b) Alternatively, an order compelling defendant in reconvention to pay the sum of US$140,000 being the deposit paid as part of the purchase price.

(c) An order compelling defendant in reconvention to pay US$30,000 as damages for breach of contract.

(d) An order compelling defendant in reconvention to pay US$20 per day from date of summons to date of collection being storage fees for the excavator.

(e) An order compelling defendant in reconvention to pay interest at the rate of 5% per annum from the date of demand to date of payment in full.

(f) Costs of suit on a legal practitioner client scale.”

The defendant in reconvention pleaded as follows to the counter-claim:

When the plaintiff in reconvention advertised its tender notice, the tender was not won by the deadline. The tender notice was then revised and extended.

It (the defendant in reconvention) submitted its bid during the extension.

According to the specifications of the re-advertised tender notice, it was not a requirement that the excavator be brand new. Even its tonnage had also been reduced. The tender that was won by the defendant in reconvention was not as per the initially advertised tender notice as evidenced by the discrepancy in tonnage of the excavator.

The defendant in reconvention averred, that, at all material times, the plaintiff in reconvention was fully aware that the excavator to be supplied would be pre-owned.

When the excavator was delivered, it was inspected by all responsible authorities and then certified to be in good working condition. The parties did not agree that the machinery to be supplied would be brand new.

The defendant in reconvention prayed for the dismissal of the counter claim with costs on a higher scale.

In its replication, the plaintiff in reconvention averred the following:

The excavator was supposed to be new. It disputes that the tender that was won by the defendant in reconvention was not the one that was initially advertised. The defendant in reconvention was paid the deposit for both the excavator and front end loader after a meeting was subsequently held. It disputes that the excavator that was delivered was in good working condition.

At the pre-trial conference, the parties agreed that the issues for trial were:

1(a) Whether or not the plaintiff should be compelled to deliver a brand new excavator; or, alternatively

1(b) Whether or not the defendant is entitled to a refund of the deposit paid.

2. Whether or not the plaintiff is entitled to payment of the outstanding amount.

To prove its case, the plaintiff led evidence from one witness, Darlington Chirara, who is its Managing Director since 2007.

His evidence was as follows:

In June 2011, he went to Chitungwiza Municipality head office chasing after his payment. At the Registry section notice board there was a tender notice asking for a refurbished 20 tonne Crawling Excavator and a 3 tonne Front End loader. Tender documents were going for US$5,000.

He went back the next day and bought the tender documents which included a tender form which was supposed to be filled in duplicate and attached to the quotation. He filled in the tender form for the excavator and attached it to his quotation and had them stamped by the defendant's registry section on 9 June 2011 on receipt.

The tender document, together with the tender form and the quotation, were produced as exhibit(s) 4 and 5…,.

The tender reference number for the supply of the excavator is CH.05/11.

Darlington Chirara said, that, on the tender form, he filled in the condition of the machinery as a 200g Model, a Hyundai Model which had already done 2,972 hours as it was a second hand. Its under-carriage life percentage was 76% meaning that 24% was already worn out or gone because of use.

He said that in exhibit 5, which is the quotation, he quoted a 20 tonne excavator valued at $182,000.

He said that, on 7 July 2011, he received a letter from the defendant saying that the plaintiff had won the tender to supply a refurbished 20 tonne excavator and a 3 tonne front-end loader.

The letter was produced by consent as exhibit 6 in the supplementary bundle.

The letter was written on 6 July 2011 to the directors of the plaintiff, by G. Tanyanyiwa, who was the then Town Clerk. It is on the defendant's letter head. It reads:

“REF: Supply of refurbished 20 tonne Crawling Excavator and 3 tonne Front Loader

Reference is made to the above.

You have been awarded the Tender to supply the Municipality with the above equipment.

You are required to supply the equipment within 30 days from receipt of deposit which is going to be paid within the next 2 weeks.

May you please treat this order with urgency since there are disease outbreaks and we would like to use the equipment to arrest the spread of diseases.”

Darlington Chirara said, that, in August 2011 the plaintiff received a purchase order and a transfer copy of the RTGS from Metropolitan Bank dated 24 August 2011 showing that the defendant had paid the 50% deposit as per the plaintiff's request in the quotation.

The purchase order was produced as exhibit 7…,.

It is dated 18 July 2011, but it was signed on 1 August 2011. It is for the purchase of a tracked excavator 20 tonne for US$182,000.

The RTGS, exhibit 8…, shows that it is dated 24 August 2011 for US$91,000, for the benefit of the plaintiff by the defendant. However, on top of the date stamp it is crossed and written “not processed.”

Darlington Chirara said, that, to the plaintiff's surprise, the money never came through. It was only paid after the plaintiff had issued summons.

The defendant finished paying the deposit for both the excavator and the front loader in February 2014. $90,000 was paid for the excavator and $50,000 was paid for the front-end loader.

He then delivered a 20 tonne excavator on 19 June 2014.

On delivering the machinery, he saw the Director of Works, Mr Gwanzura, who called the now current Town Clerk, Mr George Mukunde, who in turn called seven (7) councillors who were there. They came and inspected it and then instructed the Chief Internal Auditor, Mr Chipunza, to accompany him to the workshop with the machine. At the workshop they saw Mr Musiwa and the Workshop Foreman who inspected the machine and tested it for almost two (2) hours. After that, they signed the delivery note, which was produced by consent as exhibit…,.

The delivery note shows, that, it was signed by one Innocent on behalf of the defendant and it states, that, the machinery was received in good working order.

Darlington Chirara said that the machinery had tips and a cigarette lighter. The fuel gauge and the wipers were working.

On the tender form, he had stated, that, the machinery which was going to be supplied was a 7 series model i.e. 210 LC-7.50. He said that the defendant knew from the onset about the type of machinery that was going to be supplied.

He said the defendant even had the Ministry of Local Government, Public Works and National Housing write a letter to ZIMRA indicating that it (the defendant) had been granted a duty free certificate to facilitate the delivery of a Robex 210 LC-7H Hyundai Excavator valued at US$182,000.

It was signed on 14 April 2014. The letter was produced by consent as exhibit 12…,.

Darlington Chirara said that after delivering the excavator, on 19 June 2014, he was then furnished with a report, dated 11 July 2014, from the defendant, listing the defects it said it found on the excavator.

He said that he was disputing all of them.

He said that he was not even aware of the qualifications of the person who did this report, but he suspected that this person was an interested party in the same business as the plaintiff, because, after issuing the report, he went on to issue a quotation to supply the same machinery to the defendant.

He said that when he delivered the excavator it was in good working order.

When the inspection was done and the report was compiled, three (3) weeks later, no one from the plaintiff's company was present. The plaintiff was not made aware of the inspection.

He said that there was need for him to train the defendant's employees on how to operate the machinery. He said that in his quotation he had indicated that he would provide Basic Operator Orientation under the heading “Handover”. He said that he has not yet trained them because he has not been paid the outstanding amount.

During cross examination, the witness said that he did not respond to the Tender Notice which was flighted in the Herald Newspaper, but the one on the notice board of the Registry section at the defendant's headquarters.

He said he did not have proof of such since it was on the notice board.

He admitted, that, the delivery note that was signed by Innocent, on behalf of the defendant, was prepared by the plaintiff.

He disputed that the excavator was not inspected on delivery as it was inspected by the defendant's employees and signed for by Innocent as to have been received in good working order.

He said that he would have done the commissioning of the excavator once the purchase price had been paid in full within seven (7) days from the date of delivery.

He was shown minutes of a meeting which was held on 17 September 2013 between the plaintiff's directors and the defendant's management. These minutes were later produced by the defendant as exhibit 20…,.

He admitted that he attended that meeting.

Although in those minutes it is stated, that, it was agreed that the plaintiff would supply and deliver brand new equipment, Darlington Chirara disputed this saying that these minutes were not a true record of what was agreed on.

He said that these minutes were prepared by the defendant.

He maintained, that, when he delivered the machinery, it had no defects and US$182,000.00 was its value.

He said that the minutes were not sent to him before they were confirmed.

Referring to exhibit 10…, which is a letter which he wrote to the defendant's Town Clerk, on 22 August 2011, he said that it was the defendant which was supposed to prepare the tender contract between the parties but it was never prepared.

He said that, instead, the defendant furnished the plaintiff with a purchase order.

During the defendant's case, Mary Mukonyora, who is its Acting Chamber Secretary testified as follows:

The Tender Notice by the defendant, inviting tenders to supply an excavator and a front end loader, was placed in the Herald Newspaper. The closing date which was set for the submission of tenders was 31 May 2011.

The Tender Notice was produced as exhibit 13…,.

It shows, that, the defendant advertised for the supply of a 30 tonne excavator and a 3 tonne front-end loader.

The witness said, that, on 23 June 2011, there was a procurement meeting that was held by the Procurement Committee, and, in that meeting, the Procurement Committee recommended the awarding of the tender for the supply of the excavator and front end loader to the plaintiff.

The minutes were produced as exhibit 14…,.

These minutes show, that, the plaintiff was accorded the tender to supply a 20-tonne Tracked Excavator for US$182,000 and a 3-tonne Front End Loader for US$105,000. However, it was specified that the machinery was supposed to be new.

The minutes also show, that, the Town Clerk, Mr. G Tanyanyiwa, was in attendance of the meeting.

The witness said, that, these recommendations were being made to the full Council which later held its meeting on 21 July 2011.

The minutes of the full Council meeting were also produced by consent as exhibit 15…,.

They show that G Tanyanyiwa, the Town Clerk, was in attendance again.

The full Council adopted the recommendations of the Procurement Board on the award of tenders for the supply of the machinery.

Mary Mukonyora said, that, when the plaintiff then delivered a second hand excavator, the new Town Clerk, Mr. G. Makunde, wrote to the plaintiff, on 11 July 2014, raising the issue.

The letter was produced as exhibit 16…,.

In that letter, Mr Makunde stated, that, the defendant noted with great disappointment that the excavator was second-hand.

The witness said, that, according to an expert the defendant engaged, the machinery was not in good working condition.

The report that was compiled by the expert was produced as exhibit 19…,.

It enumerates about 19 defects and states that key accessories were missing. It states that the machine is an old machine that was repaired and resprayed.

The witness disputed that the Tender Notice was ever flighted on the Registry notice board for the supply of a refurbished excavator.

She said, that, from the time the excavator was delivered, it has never been used by the defendant. It is at the defendant's workshop.

The witness also made reference to the minutes of a meeting which was held on 17 September 2013 involving the directors of the plaintiff and the defendant's management.

These minutes were produced as exhibit 20…,.

They show, that, the meeting was held following the issuance of summons by the plaintiff for breach of contract; in that the defendant had not paid the deposit for the supply of the machinery by the plaintiff despite the plaintiff having won the tender in 2011. The plaintiff was suing for damages for breach of contract or for the payment for the equipment since the machinery was already there.

The minutes show, that, the parties agreed that the defendant would pay for the machinery and the plaintiff was to supply brand new equipment after payment of 50% deposit of the total value.

During cross-examination, the witness said that she got employed by the defendant on 1 October 2012 as Head of Human Resources, and, in 2015, she assumed the position of Acting Chamber Secretary.

She admitted, that, the letter notifying the plaintiff of having won the tender to supply a 20 tonne refurbished excavator and a 3 tonne front end loader, which was written by G. Tanyanyiwa, the then Town Clerk, on 6 July 2011 (exhibit 6) and the minutes of the Procurement Board recommending that the plaintiff supplies a 20 tonne excavator and 3 tonne front end loader were consistent.

She said that she, however, doubted the authenticity of the letter of G. Tanyanyiwa. She said that she doubted if it was genuine.

She, however, admitted, that, other than this document which was written by G. Tanyanyiwa, there is no any other document from the defendant which notified the plaintiff of having won the tender.

She also said, that, she sent the minutes of 17 September 2013 to the plaintiff for authentication, but, admitted that she had no evidence to prove that she had indeed sent the minutes for confirmation.

She said that Innocent, who received the excavator on behalf of the defendant and signed the delivery note, is not an expert in such machinery, but is just a clerk who works at the Stores department.

She said that the machine had not even been commissioned, yet, its standard practice to have equipment demonstrated to be in good working order.

She said that all the defendant's Tender Notices are done through the newspapers.

She, however, explained, that, if all tenderers say they can supply a 20 tonne excavator instead of a 30 tonne excavator which would have been advertised for, the defendant can make adjustments and accept the supply of a 20-tonne.

She said that the excavator was received by the defendant on 19 June 2014. It was inspected by the expert on 30 June 2014. The letter of complaint to the plaintiff, about the defects on the excavator, was written on 11 July 2014.

She said that the tender number on the Tender Notice which was flighted by the defendant is 5/11, yet, on the tender documents that the plaintiff submitted quoted the tender number as CH/05/11. She said that showed that the plaintiff was responding to a different Tender Notice than the one advertised in the Herald Newspaper with a deadline for submissions of 31 May 2011.

George Makunde, the current Town Clerk of the defendant, testified as follows:

He said that he joined the defendant in August 2012 and got to know about this case through a perusal of the defendant's documents.

He outlined the procedure that is followed by the defendant in procuring equipment.

He said that a Tender Notice is flighted in a national newspaper guided by section 30 and 31 of the Procurement Act [Chapter 22:14] inviting the submission of tenders. The Procurement Committee/Board then deliberates on the submitted tenders and makes recommendations in terms of the award of the tender to the winner of that particular tender. The recommendation is made to a formally constituted full Council of the defendant in the form of a report. Full council then makes a resolution on the issue which resolution then allows or authorises the Town Clerk, as the Chief Executive Officer or Accounting Officer, to then notify the winning tenderer for the provision of the goods or service so required.

The witness alluded to the Tender Notice that was flighted by the defendant; the minutes of the Procurement Committee of 23 June 2011; and the minutes of the full Council meeting of 21 July 2011 that Mary Mukonyora referred to in her evidence.

His evidence on all these documents was similar to that of Mary Mukonyora in all material respects.

He also reiterated that the tender required that the plaintiff supplied a brand new 20 tonne excavator and a 3 tonne front-end loader.

He disputed that the excavator that was delivered was in good working order saying that although he saw the excavator on the day it was delivered, he did not inspect it to satisfy himself that it was in good working order as he lacked the expertise in testing the machinery.

He said that inspection of machinery is contained in the regulations that guide procurement and it is a process and not an event.

He also said that Innocent, the clerk who received the machinery, has no qualifications to test its condition.

He said that the excavator was not able to perform its obligations and was never used by the defendant.

The witness said that he suspected that the letter that was written by the then Town Clerk, G. Tanyanyiwa, on 6 July 2011, notifying the plaintiff that it had won the tender to supply a refurbished excavator and front-end loader was as a result of a collusion between Mr. Tanyanyiwa and the plaintiff because it was written before the full Council of the defendant had made a resolution on 21 July 2011 to award the tender as per recommendations by the Procurement Committee which had set on 23 June 2011.

The witness evidence with regards to the minutes of 17 September 2013 (exhibit 20) was similar to the evidence that was given by Mary Mukonyora. He also testified, that, in that meeting, it was agreed that the plaintiff would supply a brand new excavator and a brand new front end loader, but, the plaintiff did not deliver brand new machinery.

During cross examination, the witness explained, that, receiving machinery on its delivery and commissioning of the machinery are two different things.

He also explained that the delivery note that was signed by Innocent, the defendant's employee, is a document which was prepared by the plaintiff and it already had the words “received in good working order” printed on it and all that Innocent did was to affix his signature after those words.

It is not Innocent who wrote those words.

He said that, initially, it was the transport personnel who observed that the excavator was second hand and this prompted the defendant to invite an expert, Nicnel, to come and inspect it.

Before that, Automobile Association of Zimbabwe (AAZ) had been called to come and check if the equipment was new.

He explained that the defendant never invited the plaintiff to be in attendance because, in business ethics, you would not want to give the impression that you are dealing with a dubious institution. He said that the defendant wanted to satisfy itself about the excavator hence it called in the Automobile Association of Zimbabwe (AAZ) to inspect it.

The witness said that the plaintiff gave them the price of US$182,000 for an old excavator yet Nicnel gave the defendant a quotation for a new excavator from Hyundai going for US$159,275 on 30 June 2014. He said that although the models are different the disparity in prices showed that the plaintiff was not dealing with the defendant in good faith.

Ryan Edward Berry testified as follows:

He is and has been employed by Nicnel Plant and Equipment (Private) Limited as the Technical Sales Manager for four (4) years now.

He was called by the defendant to inspect the excavator which is in issue.

He noticed that it was a second-hand, having done over 6,000 hours yet the meter read that it had only done 6 hours. The bucket had no tips similar to a car delivered with no tyres. The engine pipes were damaged from the breather which would allow dust to enter if the engine was to run for an extended period. The machine could start and run, but it could not perform its functions properly because it did not have tips and the engine was in a poor state of repair.

He said that the excavator is an LC-7 model, which is an old model which was manufactured until 2012, but a 9 model was manufactured from 2012 onwards.

About his qualifications, he said that he has “O” Level with technical experience from being on the job for about eight (8) years in the industry.

He said that because of this, he took a technician with him to inspect the machine.

He said that as the Sales and Technical Manager, he oversees his technicians using their expertise.

He said that Wency is the technician who inspected the machine as he (witness) filled out the report. However, he admitted that his name does not appear on the report. He said that Wency refused to come to court as he had been phoned, harassed, and intimidated.

He admitted to supplying his own quotation for an excavator to the defendant - on the same day of 30 June 2014 the excavator supplied by the plaintiff was inspected.

Analysis of Evidence

It is necessary to first determine whether or not the parties entered into a contract for the supply and delivery of brand new or refurbished machinery.

Having listened to the evidence given by the witnesses of both parties, it is clear that there is a dispute as to which Tender Notice the plaintiff responded to when it submitted its tender documents and quotation to the defendant's registry section on 9 June 2011.

This is because although the defendant's witnesses said that the response was to the Tender Notice it flighted in the Herald Newspaper with a deadline for submissions of the tenders of 31 May 2011, the defendant's date stamp on the plaintiff's tender documents show that they were received by the defendant's registry section on 9 June 2011 and the Tender Notice reference number that is quoted which is CH/05/11 is different from the Tender Notice reference number which is on the Tender Notice that was flighted in the Herald Newspaper by the defendant.

Whilst the plaintiff's witness said that the plaintiff was responding to a revised Tender Notice that was flighted on the defendant's registry notice board, he did not furnish the proof thereof saying, that, since the tender notice was on the notice board he could not get a copy thereof as other people also needed to see the notice.

However, despite this explanation by the plaintiff, I am convinced by the evidence which was given by the defendant's witnesses, that, the defendant flights tender notices in the national newspapers and not on notice boards.

They made reference to the provisions of the Procurement Act [Chapter 22:14] which Act makes provision for the procurement of goods, construction work, and services by the State and statutory bodies.

Section 30(1)(a) of the Procurement Act states, that, the procurement of goods, construction work, and services by a procuring entity shall be done by means of tendering proceedings in accordance with section 31.

Section 31(1)(a)(ii) of the Procurement Act [Chapter 22:14] then reads:

“Subject to this Act, in any tendering proceedings conducted by a procuring entity, the invitation to suppliers to tender shall be published in a newspaper circulating in the area in which the procuring entity has jurisdiction or carries on business, where the procuring entity is not the State.”…,.

The use of the word 'shall' in section 31 of the Procurement Act means that it is peremptory for the Tender Notice to be flighted in a national newspaper.

I also looked at section 211(1) and (2) of the Urban Councils Act [Chapter 29:15] which deals with tender proceedings by municipals. It reads;

“211 Tenders

(1) In this section —

'municipal procurement board' means a municipal procurement board appointed by a municipal council in terms of section two hundred and ten.

(2) Subject to subsections (8) and (9), before entering into a contract for the execution of any work for the council or the supply of any goods or materials to the council which involves payment by the council of an amount exceeding such sum or sums as may be prescribed, the council, or, in the case of a municipal council, the municipal procurement board shall call for tenders, by notice posted at the office of the council and advertised in two issues of a newspaper…,.”…,.

Whilst in terms of the Urban Councils Act a tender notice shall be posted at the office of the municipal council, it should also be advertised in a newspaper.

The defendant must therefore flight tender notices in accordance with the provisions of the Procurement Act and the Urban Councils Act.

If the defendant only flighted a tender notice on its notice board and did not do so in the newspaper it did not comply with the law.

However, if this is what happened, the plaintiff ought to have produced proof of the advertisement of such tender notice.

In the absence of such proof, I am led to conclude, that, the plaintiff's director was not being honest with the court about having seen such a tender notice on the notice-board of the defendant on 8 June 2011. Such advertisement would not have been in compliance with section 31 of the Procurement Act and section 211(2) of the Urban Councils Act.

Besides, the defendant has no such tender notice in its files or records.

He who alleges must prove and the plaintiff failed to prove the existence of Tender Notice CH.05/11.

The only tender documents that were produced are those that came from the plaintiff which were said to be its copies.

The defendant's witnesses had no knowledge that the Tender Notice 05/11, which had a deadline of 31 May 2011, was ever revised and extended. There is nothing that shows that in the defendant's records.

With this, I am not satisfied that Tender Notice 05/11, which was flighted by the defendant in the Herald Newspaper, was ever revised and extended.

In any case, it defies logic that the defendant, a municipality, would invite tenders for the supply of second hand machinery. I cannot think of a reason why it would do that.

What is disturbing about this case is that, on 23 June 2011, when the defendant's Procurement Committee/Board set and recommended, in its report to full Council, that the tender for the supply of a brand new excavator and front end-loader be awarded to the plaintiff, Mr G. Tanyanyiwa, the then Town Clerk, was in attendance.

In terms of procedure, the recommendation was subject to adoption as a resolution by a full Council meeting. Such a meeting was only held on 21 July 2011.

The Town Clerk, Mr. G. Tanyanyiwa, even attended that meeting as well.

At that meeting, full Council passed a resolution that the plaintiff be awarded the tender to supply a brand new excavator and front end loader.

What is buffling is that, on 6 July 2011, well before full Council had sat, Mr. G. Tanyanyiwa wrote to the plaintiff notifying it that it had won the tender to supply a refurbished excavator and frond-end loader.

Two questions arise:

(i) Firstly, why did he notify the plaintiff that it had won the tender before full Council had held a meeting to pass the recommendation as a resolution?

(ii) Secondly, why did he tell the plaintiff that it had won the tender to supply refurbished machinery?

These queries or questions show that the then Town Clerk was not conducting himself properly in the discharge of his duties.

This is worsened by the fact, that, he was in attendance at the full Council meeting which was later held on 21 July 2011 which adopted the recommendations of the Procurement Committee/Board which stated that the plaintiff was to supply brand new equipment.

When the adoption of the recommendation was made, he knew that he had already notified the plaintiff that it had won the tender to supply refurbished equipment - but he did not inform the Council.

Obviously, that is a sign that he knew that what he had done was improper.

This is further evidenced by the fact, that, after full Council had passed the resolution to award the tender to the plaintiff, he did not write a letter notifying the plaintiff about it as he was supposed to do as per procedure.

The critical question now is: is the defendant bound by the irregular conduct of its employee, the Town Clerk, who told the plaintiff that it had won the tender to supply refurbished machinery when in fact it wanted to be supplied with brand new machinery?

The plaintiff's counsel submitted, that, by virtue of the turquand rule, the defendant is bound.

I must point out from the onset, that, the turquand rule is a principle of company law.

In terms of the turquand rule, if a party transacts with a company only to later discover that the director lacked the authority to bind the company, the company may be forced to honour the transaction if the transaction was completed in good faith by the other party.

The rule is based on the English case of Royal British Bank v Turquand 1856 119 ER 886, wherein it was held, that, people transacting with a company are entitled to assume that internal company rules have been complied with even if they are not. The exceptions to this rule are:

(i) Firstly, if the outsider was aware of the fact that the internal requirements and procedures have not been complied with (in other words, he acted in bad faith).

(ii) Secondly, if the circumstances under which the contract was concluded on behalf of the company were suspicious.

Counsel for the plaintiff went on to cite the case of Potchefstroom se Stadsraad v Kotze 1960 (3) SA 616 AA…,. The case involved a municipality. The turquand rule was held to be applicable to municipalities.

In that case, the Town Clerk, just like in this case, had written a letter to the respondent cancelling the lease agreement between the municipality and the respondent when the municipality had not authorised the cancellation of the lease agreement. The municipality was now demanding money for rent from the respondent and a dispute arose as the respondent refused to pay saying that the lease agreement had been cancelled. The court held that:

“A municipality, in the normal exercise of its functions, necessarily concludes contracts with members of the public. It would be unbusiness-like if the respondent had been duly bound, when he received the Town Clerk's letter, to make enquiries to ensure that the Town Clerk was in fact authorised by the Town Council to convey the cancellation.”

Applying the law to the present case, counsel for the plaintiff submitted, that, the internal workings of Council are not known to the plaintiff, and, as such, there is a presumption of regularity in the adherence to Council procedures which makes it impossible for the defendant to escape liability on the basis that Mr. Tanyanyiwa had not been authorised by the defendant to write the letter that he wrote on 6 July 2011.

To begin with, with all due respect, I am not in agreement with the reasoning in Potchefstroom se Stadsraad v Kotze 1960 (3) SA 616 AA that the turquand rule is applicable to municipalities.

I see no basis for saying that.

Municipalities and companies are different entities.

In terms of section 131 of the Urban Councils Act [Chapter 29:15], a Town Clerk is an employee of the defendant (municipality) and his duties are outlined in section 136. These involve the administration of council, managing operations and property of council, supervise the activities of council employees, and any other duties that may be assigned to him by the Council.

The Urban Councils Act does not give the Town Clerk powers to take over the functions of Council when it comes to procurement issues and make binding decisions on its behalf.

The Urban Councils Act has provisions which deal with how goods and services are procured and those provisions are worded in peremptory terms as they use the words 'shall' and 'shall not'.

In terms of section 210(1) of the Urban Councils Act, every municipal council shall appoint a Procurement Board which is responsible for arranging tenders and for making recommendations to Council in regard to the acceptance of tenders and the procurement of goods, materials, and services.

In terms of section 210(4) of the Urban Councils Act:

“A municipal council shall not procure any goods, materials, or services unless its municipal procurement board has made recommendations to the council thereon and the council has considered such recommendations.”…,.

I do not believe that a Town Clerk's actions have the power to override the wording of the provisions that is peremptory.

Therefore, the letter of Mr. G. Tanyanyiwa, which was written on 6 July 2011, before the full Council meeting had been held on 21 July 2011, notifying the plaintiff that it had won the tender to supply refurbished machinery is therefore of no force and consequence. It does not bind the defendant.

So the contract that was purportedly entered into by and between the plaintiff and the defendant pursuant to the letter which was written by G. Tanyanyiwa is a nullity.

Assuming that the turquand rule is applicable to municipalities, as was held in Potchefstroom se Stadsraad v Kotze 1960 (3) SA 616 AA, it would not be proper to hold the municipality bound by the actions of a Town Clerk because a Town Clerk is not a functionary of the municipality but an employee.

A councillor, instead, would bind the municipality because a council is run by councillors, not by its employees.

I would equate a councillor to a director of a company.

In terms of the turquand rule, an employee of a company does not bind the company if he purports to act on behalf of the company.

So, in the present case, even assuming that the Tender Notice was properly advertised, the letter that was written by the then Town Clerk, Mr. G. Tanyanyiwa, would not bind the defendant because he had no authority to enter into contracts on behalf of the defendant as he was not a councillor, but just an employee.

In any case, even if the turquand rule was applicable, and even if the defendant, as a municipality, was bound by the actions of its Town Clerk, looking at the circumstances of this case, I would make a finding that the parties did not enter into a valid contract.

I say this because this is a contract which is supposed to be based on a tender notice which should have been properly advertised in terms of the Procurement Act and the Urban Councils Act.

Section 211(2) of the Urban Councils Act states, that, before entering into a contract for the execution of any work for the Council or the supply of any goods or materials to the Council, the Council shall call for tenders, by notice posted at the office of the Council and advertised in two issues of a newspaper.

The plaintiff was not able to produce the revised tender notice CH.05/11 which it said it responded to.

Since the defendant was disputing its existence, the plaintiff ought to have produced it to show that the contract which was entered into was entered into in compliance with the law.

The only tender notice that was produced is the one referenced 05/11, with a closing date for the submission of tenders of 31 May 2011, which the defendant is saying it is the only one it flighted in the Herald Newspaper.

The plaintiff's tender documents were submitted to the defendant's registry section on 9 June 2011 according to the date stamp on them. They were submitted way out of time - after the deadline of 31 May 2011.

To make matters worse, they only bear the date-stamp, but bear no name of the registry person who received them.

Mary Mukonyora even queried their authenticity on this basis alone.

I also query their authenticity.

It is my conclusion, that, these tender documents were submitted on the basis of a non-existent tender notice.

On this basis, alone, any contract that flowed from it is a nullity as it has no leg to stand on.

Clearly, the circumstances under which the contract was concluded are suspicious. This is even worsened by the fact, that, G. Tanyanyiwa, as the Town Clerk, mero motu wrote a letter to the plaintiff well before full Council had passed the resolution that the tender be awarded to the plaintiff.

To make matters worse, contrary to the recommendations of the Procurement Board, he said that the plaintiff had won a tender to supply refurbished machinery.

What this shows is that both Darlington Chirara, the director of the plaintiff, and G. Tanyanyiwa, the Town Clerk, were probably acting in connivance and were probably involved in underhand dealings because their actions are highly suspicious.

In light of the foregoing, I thus make a finding, that, there was never a contract between the plaintiff and the defendant.

Having concluded that there was never a contract between the parties, I will therefore not go on to deal with the issues of novation of the contract.

The defendant's second witness, Mr George Makunde, had said in his evidence, that, if it is held that the defendant is bound by the letter which was written by the then Town Clerk, Mr. G. Tanyanyiwa, then, that contract was novated by what the parties agreed upon in the meeting of 17 September 2013 (exhibit 20) that the plaintiff was to supply a brand new excavator and front end loader.

Novation is the substitution of a new contract for an old one. The new agreement extinguishes the rights and obligations that were in effect under the old agreement.

Since no contract was entered into in the first place, there is no novation to talk about.

Disposition

Since there was never a contract between the parties, the plaintiff is not entitled to payment of the remaining balance of US$119,300 that it is claiming. The plaintiff is entitled to collect its machinery from the defendant.

In respect of the counter-claim, the plaintiff in reconvention (the municipality) is entitled to a refund of US$140,000 being the money it paid as deposit of the purchase price.

Since there was no contract between the parties, I cannot order the defendant in reconvention (Upset Investments (Private) Limited) to deliver a brand new excavator and a brand new front end-loader. Consequently, the plaintiff in reconvention cannot be entitled to any damages for breach of contract or any storage charges.

In any case, the plaintiff in reconvention did not lead any evidence to prove its claim for US$20 per day for storage charges.

On costs of suit, the defendant prayed that the plaintiff's claim be dismissed with costs on a higher scale, but I see no justification for the award of such costs.

In the result, I order as follows:

1. The plaintiff's claim is dismissed.

2. The plaintiff pays to the defendant US$140,000 being the refund of the deposit paid by the defendant towards the purchase of the Excavator and Front End Loader.

3. The plaintiff pays to the defendant costs of suit.

SC21-18 : EASTER MZITE (as Executrix Dative Estate Late Chemayi Joseph Mtize) vs DAMAFALLS INVESTMENTS (PVT) LTD and MASTER OF THE HIGH COURT
Ruled By: BHUNU JA

This is an application for condonation and extension of time within which to note an appeal in terms of Rule 31(3) of the Supreme Court Rules 1964.

The applicant is the widow of the late Chemayi Joseph Mtize. She is the duly appointed executrix dative of his deceased estate.

The first respondent, Damafalls (Pvt) Ltd, is a duly registered company in terms of the laws of Zimbabwe, whereas the second respondent, the Master of the High Court, is cited in his official capacity. He is responsible for the administration of deceased estates.

The first respondent sued the applicant in the High Court alleging that during his life time the deceased sold Stand Number 2699, Gwelo Township to it. In consequence whereof, it sought the following relief against his deceased estate:

1. An order for the setting aside by the second defendant of the distribution of Stand 2699 Gwelo Township to the beneficiaries of the estate late Chemayi Joseph Mtize.

2. An order for the transfer of Stand 2699 Gwelo Township from the estate of the Late Chemayi Joseph Mtize to the plaintiff, failing which the Deputy Sheriff Gweru be authorised to sign the transfer documents.

3. An order for the eviction of the first defendant from Stand 2699 Gwelo Township.

4. An order for payment of US$2,800 together with a sum of US$400 per month from 1 December 2014 to date of eviction of first defendant and all those claiming occupation in her name; or, alternatively, an order for payment to the plaintiff by the first defendant of the value of the said property currently US$60,000.

5. An order for payment of legal costs on an attorney client scale.

The applicant unsuccessfully defended the respondent's suit in the court a quo with judgment being given against her on 23 December 2015.

If she intended to appeal against that judgment she had 15 days from the date of judgment to note her appeal in terms of Rule 30 of the Supreme Court Rules 1964.

She however only approached this court on 26 February 2016 with this application for condonation of late noting of appeal and extension of time to file the appeal. By then, she was 26 days out of time excluding weekends and public holidays.

The requirements for the application of this nature to succeed are well known as outlined in the case of Kombayi v Berkout 1988 (1) ZLR 53 (S). These are:

1. The extent of the delay;

2. The reasonableness of the explanation for the delay; and

3. The prospects of success on appeal.

I now proceed to consider the three requirements in sequence....,.

Prospects of success on Appeal

The plaintiff relied on the evidence of four witnesses in the court a quo, comprising Martin Mataranyika, Edmore Samson, Priscilla Marume, and Ravheti Kaseke.

Martin Mataranyika was the main witness for the plaintiff.

It was his testimony, that, he was a business consultant with a company called Millennial Insurance Company. The first respondent was the principal shareholder whereas, the late Joseph Chemayi Mtize was one of the executive Directors.

Sometime in 2005 there was need to inject more capital in the company. He then advised the executive directors to top up their nominal shareholding in a Board meeting to avoid their shareholding being diluted to zero by the envisaged increase in capital.

The late Chemayi Mtize, who had no money, offered to sell the disputed property to the first respondent to raise funds to purchase more shares.

He is not privy to the contract of sale but he knows that the late Chemayi Mtize travelled to Gweru with a representative of the respondent company to view the property. Following the trip to Gweru, the late Mtize later bought more shares from Millenial Insurance Company.

Edmore Samson is the first respondent's Managing Director and a shareholder in Millenial Insurance Company.

He confirmed Martin Mataranyika's evidence, that, in 2015, there arose need to raise Millenial Insurance Company's share capital. It then became necessary for shareholders to increase their shareholding by purchasing more shares in the company. He corroborated Mataranyika's evidence to the effect that the late Mtize, who had no money, offered to sell his house to the first respondent.

It was his testimony, that, the first respondent then bought house Number 5 Cooper Road Southdowns, being the disputed property. The property was bought for $Z300,000,000 (three hundred million Zimbabwean Dollars) payable in instalments from May 2005 to August 2005.

The Agreement of Sale was reduced to writing and signed by both parties.

The written Agreement of Sale has since been misplaced and the first respondent's officials are still looking for it.

When the purchase price was paid in full, the late Mtize handed over the title deeds of the disputed property to the first respondent. He then took a copy of the title deeds saying he was taking it to ZIMRA for capital gains exemption since he was above the age of 60.

It is common cause, that, the first respondent had possession of the original title deeds of the disputed property which were produced in evidence at the trial in the court a quo.

It is also not in dispute that the first respondent took peaceful and undisturbed occupation of the property way back in 2005 soon after payment of the purchase price in full as alleged.

Mrs Mtize, the executrix dative of the late Mtize's deceased estate, alleged, without proof, that, the first respondent stole the title deeds from the late Mtize's office while he was ill.

This unfounded allegation was denied by both witnesses for the first respondent, saying that Mtize's office was kept under lock and key during the duration of his illness.

Despite those serious allegations of theft of property of immense value, Mrs Mtize did not bother to report the theft to the police.

Edmore Samson testified, that, Mrs Mtize only emerged about nine (9) years later when she invaded the property, forcibly took the keys and occupation of the property.

Priscilla Marume testified, that, at the material time, she was employed as the first respondent's Accountant. It was her testimony, that, she signed the Agreement of Sale as a witness in the presence of the late Mtize and Edmore Samson. She was responsible for paying the purchase price in full to the late Mtize.

It was her evidence that she paid him the full purchase price starting from 13 May 2005 to 22 August 2005.

Each time she paid him he would sign on a petty cash voucher to acknowledge receipt. She produced three (3) cash voucher receipts duly signed by the late Mtize. The amounts on the three (3) petty vouchers add up to a total of $Z300,000,000 (three hundred million Zimbabwean dollars).

She denied that the first respondent ever managed the property on behalf of the late Mtize as alleged by Mrs Mutize.

It is common cause, that, Mrs Mtize, in her first and final distribution account in the estate of her late husband, Chemayi Mtize, deliberately left out the disputed property from the inventory.

According to Edmore Samson's evidence, when he approached Mrs Mtize seeking transfer of the disputed property, she was surprised that the property had not yet been transferred to the first respondent's name.

Upon realising that the property was still registered in her husband's name, she refused to effect transfer and filed a supplementary distribution account in which she included the disputed property in the distribution inventory. The supplementary account was advertised in the newspapers.

The first respondent did not object because it did not see the advertisement.

In her evidence, Mrs Mtize confirmed having deliberately left out the disputed property from the first and final distribution account.

She also confirmed having included it in the supplementary account upon realising that it was still registered in her late husband's name.

She explained that she initially left out the property from the initial distribution account because she wanted to investigate whether indeed the first respondent had purchased the disputed property as alleged.

The evidence on record, however, establishes, that, she carried out no such investigations.

She only decided to claim the property after being approached for transfer and realizing that it was still registered in her late husband's name.

It is only then that she started to question the validity of the sale.

She alleged, without proof, that, the first respondent was merely administering the property on her late husband's behalf.

She did not know the terms of that arrangement or the commission her husband was paying to the first respondent. She first said Z$325, after contradicting herself under cross-examination, she ended up saying that she did not know.

Faced with the totality of the evidence placed before her, the learned judge in the court a quo weighed the credibility of witnesses and made material findings of fact: She had this to say:

“Looking at the evidence led before the court, I am inclined to find in favour of the plaintiff that there was indeed a sale agreement involving the late Mr Mtize's property in Gweru between the plaintiff and Mr Mtize. I am convinced because the plaintiff's witnesses gave their evidence very well and impressed the court as credible witnesses. They were truthful and did not exaggerate their testimonies.”

The learned judge in the court a quo's summation of evidence and analysis of the credibility of witnesses is beyond reproach.

The evidence clearly exposes Mrs Mtize as a desperate widow trying to pounce on the delay in effecting transfer to hang onto property which her husband sold during his lifetime.

The late Mtize, having validly sold his property during his life time, it cannot form part of his deceased estate.

For the foregoing reasons, I consider that the judgment the applicant seeks to appeal against is water tight and unassailable. As such, there are no reasonable prospects of success on appeal.

Although the first respondent has asked for costs at the punitive scale, these are not warranted. The first respondent was, in a way, to blame by delaying in seeking transfer.

It is accordingly ordered:

1. That, the application for condonation of late noting of appeal and extension of time within which to appeal to the Supreme Court be and is hereby dismissed.

2. That, the applicant shall pay costs of this application at the ordinary scale.

HH823-15 : AT INTERNATIONAL LTD vs ZIMBABWE REVENUE AUTHORITY
Ruled By: KUDYA J

The answer sought in this appeal is whether, the appellant, a foreign registered company is liable to pay value added tax in Zimbabwe.The appellant disputed liability for value added tax (VAT) arising from the purported importation of goods into and the carrying on of trade in Zimbabwe and appealed against ...

The answer sought in this appeal is whether, the appellant, a foreign registered company is liable to pay value added tax in Zimbabwe.

The appellant disputed liability for value added tax (VAT) arising from the purported importation of goods into and the carrying on of trade in Zimbabwe and appealed against a contrary determination of the respondent.

Introduction

The appellant is an International Business Company incorporated on 19 May 2005 in the British Virgin Islands in Guernsey in the Channel Islands but is not permitted to trade in that jurisdiction. The respondent is a body corporate responsible for the collection, amongst other imposts, of value added tax in Zimbabwe.

The Facts

The original intention of the appellant in Zimbabwe, prior to 1992, was to invest in property and participate in the construction of the Chitungwiza road…,.

Instead, the appellant became a supplier of basic commodities to local companies that included the WG (hereinafter referred to as the holding company).

It concluded an agency agreement with D & T, a subsidiary of the holding company, in 1992.

By 1999, it was supplying basic commodities under a US$10 million line of credit registered with the Reserve Bank of Zimbabwe to the holding company and other local customers…,.

On 1 October 2007, the Governor of the Reserve Bank of Zimbabwe unveiled the Basic Commodities Supply Side Intervention, BACOSSI, facility designed to end the chronic shortages of basic commodities in Zimbabwe…,.

The facility commenced in May 2008 and continued until the introduction of the multi-currency regime on 29 January 2009.

In May 2008, officials of the Reserve Bank of Zimbabwe (RBZ) amongst whom was the Governor and the Senior Division Chief Strategic Planning and Special Projects (SDC) visited the warehouse of D & T in Chitungwiza. The RBZ was referred to the appellant by D & T.

The appellant and the Reserve Bank of Zimbabwe (RBZ) commenced negotiations which culminated in the purchase of the non-Bacossi basic commodities that were in the D & T warehouse valued at US$7,987,207=54. The two parties also concluded an agreement in which the appellant supplied basic commodities to the RBZ, in Zimbabwe, the bacossi goods, valued at US$11,698,174 between July and September 2008.

The Baccossi Agreement was reduced to writing…, but was not signed by the parties apparently because the appellant was unhappy with the preamble to the agreement.

A verbal agreement, purportedly concluded between the Reserve Bank of Zimbabwe (RBZ), represented by the Governor, and the appellant, represented by a named Ukrainian lady, governed the supply relationship between them.

The respondent conducted a tax investigation of the purchases, in foreign currency, of the Reserve Bank of Zimbabwe from the appellant for the period between May 2006 and September 2008. The investigations revealed non-payment of value added tax (VAT) on the supplies made in that period…,.

They also revealed that D & T was paid commission, in terms of an agreement between them, on the invoiced supplies from 1 January 2006 to 31 January 2009.

On 9 February 2009…, the respondent made written demand on the Finance Director of the holding company, who was also the public officer of D & T, for the payment of value added tax (VAT) on the invoiced income paid to the appellant during that period.

On 13 February, a meeting was held at the Reserve Bank of Zimbabwe (RBZ) between the Senior Division Chief Strategic Planning and Special Projects, the investigators of the respondent, and the liaison officer of the appellant, who was also the Sales and Marketing Director of the holding company of D & T, the appellant's agent.

On 12 March, the respondent appointed the CEO of the holding company of D & T as the public officer for the appellant in terms of section 61 of the Taxes Act on the ground that his company was closely linked and connected to the appellant's local trading activities.

The CEO objected to the appointment on 17 and 20 March 2009 on the ground, that, he was not an agent, employee, director, or signatory to the bank account of the appellant; but, the respondent did not relent in its demand.

On 20 March 2009, at the respondent's offices, a meeting was held between three representatives of the respondent and two tax advisors from a local firm of accountants.

In reply to counsel for the respondent's oral submissions, counsel for the appellant disputed that the appellant was represented at the meeting and suggested that the tax accountants represented D & T.

The purpose of the meeting was to get the respondent's version on the value added tax (VAT) issues pertaining to both the appellant and D & T.

The VAT head from the tax advisors provided the respondent with two letters of his firm's mandate to represent the client.

It is inconceivable that he would not have received full instructions from his client, as he indicated, were that client D & T.

I am satisfied, from the heading of the minutes minuted by the tax advisors, that, they represented the appellant and not D & T.

In any event, the briefing given him by the respondent related to the alleged activities of the appellant, including the payment of 0.1% commission on the gross sales of the appellant in Zimbabwe to D & T.

On 30 March, the public officer of D & T disputed the legality of the appointment of his CEO as a public officer for the appellant. He, nonetheless, compiled and delivered the monthly breakdowns of the income received by D & T during the period from January 2006 to 31 January 2009 requested in the letter of 9 February.

On 25 March 2015…, the appellant wrote to the respondent objecting to the appointment of the public officer outside its registered place of business in Guernsey and to the tax liability claim.

The basis of the objection was that it did not maintain offices nor employ staff nor was it a value added tax (VAT) registered operator obligated to charge VAT on goods purchased from its foreign based operations and supplied to clients in Zimbabwe.

The relevant part of the letter reads:

“We object to your claim that we have a tax liability in Zimbabwe as we do not have a self-established presence in the country. Our involvement with Zimbabwe clients, and the West Group, is limited to the supply of our stock to agents who operate on a commission basis to store and handle our stock that we hold in Zimbabwe, for which we have always operated with Reserve Bank Approval.”

The objection by the appellant, of 25 March, and the further objection of its compulsorily appointed public officer, were dismissed by the respondent on 31 March 2009.

On 1 April, the respondent proceeded to appoint the holding company, and its subsidiaries, as an agent for the collection of value added tax (VAT) due from the appellant, purportedly in terms of section 48 of the Value Added Tax Act…,.

On 3 April 2009, the appellant, through its authorised signatories, wrote to the CEO of the holding company appointed as its public officer and copied the letter to the head of investigations of the respondent, and the Senior Division Chief Strategic Planning and Special Projects on the tax enquiry conducted by the respondent disputing tax liability on two grounds:

(i) The first was that it was not the importer; and

(ii) The second was that the sale to the importer, the Reserve Bank of Zimbabwe (RBZ), took place outside Zimbabwe.

I believe exhibit 2 may have been written by the compulsorily appointed public officer for the appellant between May 2009 and 17 June 2009, and not on 15 April 2008, as it is highly unlikely that the author possessed prescient powers to predict the events that were to take place between January and May 2009.

It was addressed to the prospective external legal practitioner of the Reserve Bank of Zimbabwe (RBZ).

The writer summarised the history of the relationship between the appellant and the holding company and one of its subsidiaries, D & T, before and during the bacossi period. He also dealt with the relationship between these parties and the Reserve Bank of Zimbabwe and exonerated the appellant from value added tax (VAT) liability.

In response, on 17 June 2009, the external legal practitioner of the Reserve Bank of Zimbabwe (RBZ) wrote a six page legal opinion to the Senior Division Chief on the US$4m tax dispute….,.

The legal practitioner in question had apparently held a meeting, on 21 April, with the Senior Division Chief of the central bank and two representatives of the holding company. He believed, that, his mandate to protect the interests of the Reserve Bank of Zimbabwe (RBZ) coincided with the interests of the appellant. He had engaged the lawyers of record of the appellant.

He identified the common problem to be the demand for value added tax (VAT) on the appellant in respect of the supply of Bacossi goods and its agent on commission received from the appellant.

Apparently, the appellant declined to supply him with information on its business profile, shareholders and directors, summary of significant business activities in the 12 months to the date of the letter and on the nature and extent of its business activities in Zimbabwe, its certificate of registration, any Board resolutions on Bacossi transactions, and its local call account.

In the absence of this information, he could not state, with certainty, that the appellant was not conducting local trading activities nor exclude it from value added tax (VAT) liability other than on the mere say so of its agent, D & T.

He advised that the Reserve Bank of Zimbabwe (RBZ) was liable for the payment of value added tax (VAT), in local currency, on the basis of the bills of entry that identified it as the importer.

He urged the Reserve Bank of Zimbabwe (RBZ), for strategic reasons that he set out in the opinion, to tender the duty in local currency hoping, that, if the respondent accepted the payment, the appellant would automatically be exempted from liability.

On 1 July 2009, the Senior Division Chief wrote to the appellant's legal practitioner of record. She confirmed the importation of Bacossi goods and the acceptance of liability for value added tax (VAT) by the Reserve Bank of Zimbabwe (RBZ)….,.

On 20 August 2009, three members of the respondent investigations team held a meeting with four RBZ employees at the RBZ amongst whom was the Senior Division Chief (SDC).

In that meeting, the Reserve Bank of Zimbabwe (RBZ) repudiated the concession made by the Senior Division Chief (SDC) and laid liability at the doorstep of the appellant.

However, in view of the national importance of the project and the profile of the major beneficiaries, the Reserve Bank of Zimbabwe (RBZ) resolved to seek exemption for payment of value added tax (VAT) on these goods from the Ministry of Finance by 25 August 2009.

A further meeting was held on 7 October 2009, in the Governor's boardroom at the Central Bank, between the Reserve Bank and the holding company, to discuss the appellant/RBZ value added tax (VAT) liability of US$3.2m….,.

In attendance were the Governor, his advisor, bank secretary, and a strategic planning executive for the Reserve Bank of Zimbabwe (RBZ) and the Sales and Marketing Director, indicated in exhibit 2 as the liaison officer of the appellant, and another officer of the holding company.

Notwithstanding that the respondent was not claiming value added tax (VAT) from the central bank, the Governor prevaricated on whether the Reserve Bank of Zimbabwe (RBZ) accepted liability or not. In one vein he accused the Senior Division Chief (SDC) of erroneously accepting liability for the central bank without his express authority, and, in the other, he was prepared to pay the VAT as long as it was charged in Zimbabwe dollars.

The Sales and Marketing Director for the holding company declined to answer for the appellant insisting that D & T acted as liaison for the appellant as the foreign supplier and local buyers.

The underlying suggestion from her contribution was that the appellant was not liable for value added tax (VAT).

In addition, the concluding remarks of the meeting suggested the existence of minutes of meetings between the Reserve Bank of Zimbabwe (RBZ) and the appellant.

The investigation prompted the respondent to raise against the appellant schedules for outstanding value added tax (VAT) on both the non-Bacossi and Bacossi transactions, initially on 17 March and later on 15 July 2009, in the sum of US$6,302,712=13 inclusive of interest and penalties, which it corrected by the exclusion of zero rated products on 13 October 2009 by reducing the amount to the sum of US$6,249,496=70.

The computations of the principal value added tax (VAT) due in each month for the non Bacossi commodities were in the sum of US$1,198,081=13. The respondent added an equal amount in penalties and a further amount of US$206,799=52 in interest and requested payment of US$2,602,961=79 for the non-Bacossi commodities.

In regards to the Bacossi commodities, it claimed a principal sum of US$1,754,726=10 and a penalty in an equal amount and interest from 21 July 2008 to 23 October 2009 in the sum of US$137,082=72 totalling US$3,646,534=92….,.

The appellant lodged an objection to the assessment in terms of section 32 of the Value Added Tax Act [Chapter 23:12] through its legal practitioners of record on 25 September 2009.

It also applied for condonation from the Commissioner for filing the objection outside the normal time limits. It set out four grounds for condonation and eight grounds of objection.

The respondent dismissed the condonation and disallowed the objection.

The appellant appealed both decisions to this Court on 12 October 2009. The respondent filed its reply on 12 November 2009.

In the objection, the appellant denied ever doing business in Zimbabwe and indicated, that, the local transactions were imports carried out by the holding company, the Reserve Bank of Zimbabwe (RBZ), and other local companies.

It averred, that, the appellant was authorised by the Reserve Bank of Zimbabwe (RBZ) to sell the goods in foreign currency using free funds from non-resident entities.

It supplied goods in bond to its local agent, D & T, for commission.

The local buyer took delivery of the goods after paying the appellant from free funds.

On receipt of payment, the appellant instructed D & T to pay duty and value added tax (VAT) before releasing the goods.

The appellant averred, that, the value added tax (VAT) claim on non-Bacossi goods constituted a double claim for VAT already paid by D & T.

The appellant called the evidence of the founder and chairman of the holding company and director of D & T.

He confirmed the foreign status of the appellant and its relationship with D & T before the Reserve Bank of Zimbabwe came onto the scene.

The holding company, D &T, and the appellant, were not related companies.

The contact between the appellant and D & T was facilitated by his Russian partners in 1992.

The relationship between the appellant and D & T was one of principal and agent.

The Central Bank appeared on the scene in May 2008. At that time, the agent, D & T, imported the goods into Zimbabwe that were supplied by its principal, the appellant.

The Central Bank concluded two agreements with the appellant:

(a) The first related to the purchase of the goods stored in the warehouse that had been imported by D & T, referred to in the appeal as the non Bacossi goods.

(b) The second agreement concerned the Bacossi goods under which the Central Bank directly imported in excess of 400 truckloads of goods from South Africa between July and September 2008.

At Beitbridge, the goods were checked against the bill of entry before they were taken to the bonded warehouse, and, unlike direct home consumption imports, the bill of entry was not surrendered at that stage.

D &T stored the Bacossi goods for the Reserve Bank for a fee.

The relationship between the appellant and D & T was suspended during the duration of the Bacossi imports.

The goods were received and secured by the Reserve Bank of Zimbabwe (RBZ).

The Reserve Bank of Zimbabwe (RBZ) would take the goods from the warehouse once D & T received a release order from the appellant confirming receipt of the purchase price, and, after D & T had paid duty and value added tax (VAT) for the goods.

The clearing agent invoiced D & T for clearance fees; D & T, in turn, added these to the storage fees for the account of the Reserve Bank of Zimbabwe.

He identified the South African export documents and the Zimbabwean import documents encompassing pp33-90 of exhibit 1. Amongst these documents were local bills of entry that identified the importer as the Reserve Bank of Zimbabwe.

The witness confirmed his managing director's assertion, in the letter of 30 March to the respondent, that, D & T was not paid commission by the appellant during the subsistence of the Bacossi imports.

It was on the basis of this evidence, that, counsel for the appellant submitted, that, the sole witness was credible and reliable in all material respects.

I do not agree with the contention by counsel for the appellant, that, the witness was a credible and reliable witness who gave his evidence well.

Under cross examination, he contradicted material parts of his evidence-in-chief.

He abandoned his earlier version that the relationship of principal and agent between the appellant and D & T was suspended during the Bacossi imports. He categorically stated, in cross-examination, that, the relationship did not change for both the Bacossi and non Bacossi imports as the appellant continued to pay D & T, in foreign currency, commission at the rate of 1% of the value of each transaction.

The appellant maintained its grip on the goods in the warehouse and directed its agent to pay duty and value added tax (VAT), and, thereafter, release the goods after confirming receipt of the transaction value of each consignment from the Reserve Bank of Zimbabwe.

He incorrectly stated that value added tax (VAT) was paid for the non-Bacossi goods.

That VAT was never paid was demonstrated by the abandonment of the double claim ground at the hearing of this appeal.

He did not participate in the discussions that culminated in the agreement between the appellant and the Central Bank. He was not privy to the terms and conditions of the agreement. He did not interact with any of the directors and authorised signatories of the appellant.

He had met an officer of the appellant whose name appears in the last paragraph on p112 of exhibit 1 once in Harare.

He was not a director, employee, or official of the appellant or the clearing agent.

His version on the motivation of the clearing agent to invoice D & T rather than the Reserve Bank of Zimbabwe (RBZ) was not confirmed by evidence from the clearing agent or the Central Bank.

He did not produce any evidence to show that D & T included the charges of the clearing agent in the storage fees levied on the Central Bank.

The evidence of the sole witness left gaps that could only be filled by the directors, employees, officials, or agents of the appellant.

His averments preceding the incorporation of the appellant, on 19 May 2005, underscored his unreliability and the need for the testimony of the active officers or agents of the appellant.

It is simply incomprehensible how he could have dealt with the appellant before it was incorporated.

HH728-17 : C R S (PVT) LTD vs ZIMBABWE REVENUE AUTHORITY
Ruled By: KUDYA J

This is an appeal against the four amended assessments issued by the respondent against the appellant on 23 June 2014 in respect of the four consecutive tax years ended 31 December 2009, 2010, 2011 and 2012.The real issue for determination posed by these assessments is whether the respondent can tax ...

This is an appeal against the four amended assessments issued by the respondent against the appellant on 23 June 2014 in respect of the four consecutive tax years ended 31 December 2009, 2010, 2011 and 2012.

The real issue for determination posed by these assessments is whether the respondent can tax non-existent income through the deeming provisions of section 98 of the Income Tax Act [Chapter 23:06]....,.

On 28 October 1996, the appellant concluded a lease agreement and a separate logistical agreement with a South African company, hereinafter referred to as the related party, for the lease of its mechanical trucks, trailers, and tankers for a fixed rental. The agreements took effect from the date of signature. The lease agreement was further renewed on 8 October 2003, 16 August 2006, and 6 July 2009.

In February 2013, the respondent commenced a tax compliance investigation on the appellant. It was triggered by the shared common ancestry, logo, name, and Managing Director between the two companies.

The Commissioner identified five (5) areas of dispute, which resulted in the exchange of a number of e-mails with the appellant between 8 August and 8 October 2013. Only two areas of dispute remained unresolved by 8 October 2013:

(i) The first concerned the payment by the appellant of the salaries and wages of the local drivers used by the related party;

(ii) While the second was in respect of under-invoicing.

The issue relating to the drivers was resolved on 23 April 2014.

The failure to reach agreement on the second issue prompted the respondent to raise the disputed amended assessments on 23 June 2014.

The appellant objected to these amended assessments on 22 July 2014. The respondent disallowed the objection on 14 November 2014. The appellant gave notice of its intention to appeal on 18 November 2014 and filed its notice of appeal on 28 November 2014 and case on 18 December 2014. The respondent duly filed the Commissioner's case on 30 March 2015.

The appellant contended, that, the rentals in the agreements were fair and reasonable while the respondent contended, that, they were outrageously low so as to constitute under invoicing and therefore tax avoidance.

The respondent compared the local charges imposed by the appellant on three (3) local tobacco companies on pp1.1 to 3.2 of exhibit 2 against the Currency Declaration Form, CD3 income received from the related party on pp4.1 to 9.2 of exhibit 2.

The income earned from local operations and from CD3 rentals was conveniently summarised by the appellant in tabular form…, which I reproduce below as Table 1.

Table 1

	2009	2010	2011	2012
CD3-revenue R	2 579 685.00	2 429 399.00	1 815 806.00	1 795 380.00
CD3 revenue USD	298 658.98	336 530.44	257 329.12	224 855.18
Other local income USD	144 730.00	245 493.00	321 525.47	298 391.98
Total US$ in FSs	443 388.98	582 023.44	578 854.59	523 247.16
Av exchange rate	8.64	7.22	7.06	7.98

Notwithstanding the absorption of running costs by the related party, the respondent maintained, that, the rentals were outrageously low and unrealistic in comparison with the charges imposed by local cross border hauliers.

It applied the related party's 2013 rate of R22.47 on the distance covered in each year to compute the taxable income set out on page 50.2 of exhibit 1, which formed part of the amended assessments.

It was common cause that the rate was in tandem with the market rates charged by third parties in 2013.

At the appeal hearing, the appellant relied on the evidence of one of its directors and public officer and nephew to its 80 year old founder and Managing Director, who has stood in the position of a General Manager since 1995 and has been a member of the executive committee of the Transport Operators Association of Zimbabwe, one HJR and the 374 paged lever arch file, exhibit 1, and one paged exhibit 4.

The respondent called the evidence of two of its Chief Investigations Officers, one of whom was a purported transfer pricing specialist and relied on the 32 paged exhibit 2 and 6 paged exhibit 3A, 3B and 3C in addition to the Rule 11 documents filed of record.

At the pre-trial hearing of 1 June 2015, the following six issues were referred on appeal for determination:

(i) Did the appellant in fact receive the additional income assessed by the respondent, and, if so, what was the source of the income.

(ii) Whether or not the transactions between the appellant and the related party resulted in the appellant being deemed to have received additional income for tax purposes.

(iii) Whether or not the transactions that were being carried out by the appellant with its related company fall within the ambit of section 98 of the Income Tax Act [Chapter 23:06], and, if not, whether the respondent was entitled, as a matter of law, to utilise section 98 of the Income Tax Act.

(iv) In the event of any such additional income, or deemed income, having been correctly assessed by the respondent, whether the respondent was obligated to deduct from that income the expenses which would have been incurred had the appellant undertaken such transactions; in particular, the cost of the diesel that would have been expended in conducting such transactions.

(v) Whether or not SI163 of 2014 is applicable in casu.

(vi) The appropriate penalty.

At the commencement of the appeal hearing, on 14 September 2015, counsel for the appellant abandoned the fourth issue and persisted with the remaining five issues.

The evidence was mostly common cause.

The appellant was incorporated on 12 June 1960 under a different name and adopted its present name on 10 June 1983. The major shareholders of the appellant were the 80 year old Managing Director and a registered trust.

The Managing Director also held the same position in the related party, a company he promoted in 1978.

It was common cause, that, even though the two entities did not have common shareholders, they were related parties….,.

The appellant operated in the local and regional transport industry with a complement of 24 mechanical horses, 83 trailers, and 11 tankers. A common recurring statement in the Director's report in each of the four tax years under consideration was that it was “engaged in transport and operated principally in Africa.”

The operations were manned by 7 Head Office staff, 10 workshop employees, and 110 local, highly skilled articulated truck and trailer, internationally certified drivers with mostly over 10 years driving experience.

The transport business is dependent on the availability of imported fuel, spare parts, and tyres.

In 1996, the appellant had difficulties in sourcing scarce foreign currency locally to service its cross border operations. In the aftermath of the demise of apartheid in South Africa, in 1994, the South African economy became more integrated with other regional economies.

The appellant alleged, that, it staved off the spectre of liquidation by concluding the 1996 rental agreement with the related party through which the related party used the appellant's equipment to carry goods, by road, between South Africa and the designated countries to the north.

The agreement was executed on 28 October 1996 and renewed for three years on 8 October 2003 and then extended for a further 3 years on 16 August 2006. On 6 July 2009, in deference to the introduction of the multi-currency regime in Zimbabwe, the agreement was infused with an indefinite lifespan.

The 2003 agreement was signed by the uncle and nephew on behalf of the related party and the appellant, respectively. The 2006 and 2009 agreements were signed by other representatives of the related party with the nephew.

The notable terms and conditions of the agreements were that the related party used the appellant's excess fleet based on an agreed fixed fee per leg per trip and not on the distance covered.

With effect from 1 July 2009, the rental was fixed at ZAR1,000 per journey for the use by the related party of any locally registered trailer drawn by a South African registered horse. The rental for a horse, and a horse and trailer, were indicated on pages 15 and 16 of exhibit 1.

These rentals were all increased annually by 10%.

In addition, the related party was responsible, at its own cost, for running maintenance and repairs of the equipment comprising of the cost of insurance, tyres, rims, spare parts and fuel and regulatory requirements such as road toll fees, environmental and port health fees attached to the equipment but not to any damage attributable to the negligence of the appellant's drivers or third parties.

The appellant employed and remunerated the local drivers seconded to the related party and did not receive any compensation from the related party.

However, the appellant invoiced the related party for any maintenance and repairs carried out in Zimbabwe on all equipment used by the related party.

It was the uncontroverted testimony of the nephew, that, a portion of the fee was surrendered to the Reserve Bank of Zimbabwe and another used to purchase the requirements of the appellant's local fleet, while the balance was sold on the inter-bank market to meet local expenses and staff salaries and wages.

This situation continued until hyperinflation adversely affected the viability and pricing of the domestic transport services in 2008.

The appellant, however, deliberately failed to disclose the 2003 agreed rentals in appendices C1, C2 and C3 to that agreement that were adopted by both the 2006 and 2009 agreements and the logistical and rental agreements of 1996 but elected to reveal the escalation clause set out on page 12.29 of exhibit 1.

However, the agreed rentals for the rented horses were indicated on page 15 and 16 of the exhibit 1 for each of the four (4) tax years and for each of the routes covered.

The southbound trip to Harare and Kwekwe in Zimbabwe from Lusaka, the Copperbelt, Blantyre and Lilongwe accrued different rentals, denominated in South African rands from the north bound trips as indicated in the following table 2:

Table 2

2009

2010

2011

2012

2013

LSK-HRE

HRE-LSK

1420

2 310

1 562

2 541

1 800

3 000

2 050

3 420

2 260

3 760

CPBLT-HRE

HRE-CPBLT

1 970

3 930

2 167

4 323

2 500

5 000

2 850

5 700

3 140

6 270

BLA-KWE

KWE-BLA

NIL

3 110

NIL

3 421

NIL

4 000

NIL

4 560

NIL

5 020

BLA-HRE

HRE-BLA

1620

2 910

1 782

3 201

2 050

3 680

2 330

4 200

2 570

4 620

LLE-HRE

HRE-LLE

2 080

3 370

2 288

3 707

2 630

4 300

3 000

4 900

3 300

5 400

Transit rates

LSK-HRE –JBG

JBH-HRE-LSK

1 320

2 950

1 452

3 245

1670

3 730

1 900

4 200

2 100

4 620

CBLT-HRE-JBG

JBG-HRE-CBLT

1 570

3 650

1 727

4 015

2 000

4 620

2280

5 200

2 500

5 720

2009

2010

2011

2012

2013

BLA-HRE-JBG

JBG-HRE-BLA

1 560

3 470

1 716

3 817

2 025

4 390

2 300

5 000

2 530

5 500

LLE-HRE-JHB

JHG-HRE-LLE

1 740

3 930

1 914

4 323

2 200

4 970

2 500

5 600

2 750

6 160

The northbound routes to Zimbabwe consisted of the Johannesburg to Harare, Johannesburg to Bulawayo, Johannesburg to Midlands, and Johannesburg to Livingstone routes. The rental was the same for each route in each of the four (4) years, respectively.

In 2009 it was R5,050; in 2010 it was R5,555; in 2011 it was R6,400; and, in 2012 it was R7,300.

The north-bound routes from Zimbabwe were the Harare-Lusaka, Harare-Copperbelt, Kwekwe-Blantyre, Harare-Blantyre and Harare-Lilongwe routes.

The rentals were different on each route and in each year. The cheapest was the Harare to Lusaka route ranging between R2,310 in 2009 and R3,420 in 2012. The most expensive was the Harare to Copperbelt route, which ranged between R3,930 in 2009 and R5,700 in 2012.

The transit routes were the Johannesburg to Livingstone and Johannesburg to Harare destined for Lusaka route, for which the related party paid between R2,950 in 2009 and R4,200 in 2012 and the Johannesburg to Harare destined for Copperbelt for which the related party paid R3,650 in 2009 and R5,200 in 2012 to the appellant.

The last transit route was from Johannesburg to Harare destined for Blantyre and from Johannesburg to Harare destined for Lilongwe. The related party paid the appellant between R3,470 in 2009 and R5,000 in 2012 for the route to Blantyre and between R3,930 in 2009 and R5,600 in 2012 for the route to Lilongwe.

The rental for the trailer only was R1,270 in 2011 and R1,450 in 2012.

The south bound journeys were the exact opposite of the north bound ones.

The rates from the Zimbabwe centres to Johannesburg were the same in each year. The rentals were R2,810 in 2009, and R3,091 in 2010 and R3,560 in 2011 and R4,060 in 2012.

The south bound transit rates were Lusaka to Johannesburg via Harare that ranged between R1,320 in 2009 and R1,900 in 2012 while the Copperbelt to Johannesburg via Harare route ranged between R1,570 in 2009 and R2,280 in 2012; and, lastly, the transit rate between Blantyre and Johannesburg via Harare ranged between R1,560 in 2009 and R2,300 in 2012 while the Lilongwe to Johannesburg via Harare route ranged between R1,740 in 2009 and R2,500 in 2012.

The related party paid R1,270 for the trailer per leg per trip on each of these routes. In 2012, the north bound trailer rental was R1,450.

The journey from Johannesburg to Harare and back consisted of two trips while the journey from Johannesburg to any of the destinations outside Zimbabwe and back consisted of four (4) trips.

The maintenance and running expenses incurred by the related party, in respect of 21 mechanical horses, between 1 January 2009 and 31 December 2012 amounted to R1,854,841 for spares and maintenance…,.; US$436,983 for labour on repairs and maintenance.

In the same period, tyres worth R1,151,777 were purchased by the related party and R536,021=51 was expensed on 69 trailers. The related party also spent the sum of R9,128,122 on fuel, US$1,809,460 on insurance, and US$40,992 on lubricants.

The mechanical horses traversed 1,771,964km…, during the four year period in question. The distance covered by each identified mechanical horse, and the cost of maintenance and running expenses, tyres and fuel in each year was listed on pages 23 to 24.6 of exhibit 1.

The yearly amounts expensed on each line item by the related party on the leased equipment was conveniently summarised by the appellant on pp24 and 42.5 of exhibit 1.

I reproduce the essential costs in Table 3 below.

Table 3: Expenses paid by related party on leased equipment

	2009	2010	2011	2012	Total
Km travelled	359 478	505 748	456 664	450 074	1 771 964
Spares in R	684 101	282 918	413 281	474 541	1 854 841
Labour in R	161 168	66 653	97 365	111 797	436 983
Tyres in R	233 661	328 736	296 832	292 548	1 151 777
Fuel in R	1 406 193	2 198 516	2 484 789	3 039 323	9 128 822
Insurance in R	489 000	489 000	440 100	391 360	1 809 460
Lubricants in R	15 119	6 252	9 134	10 487	40 992
Total cost in R	2 989 241	3 372 076	3 741 501	4 320 058	14 422 875
Average cost per km in R	8.32	6.67	8.19	9.60	8.14

The respondent derived the gross charges of cross-border transactions from the third party verification exercise that it conducted on three local cross-border hauliers, TCS, CT and CCC.

It wrote exhibits 3A, 3B and 3C between 2 July 2013 and 16 September 2013 seeking the gross rates in both United States dollars and South African rands charged in respect of each tax year under investigation on 19 regional routes traversed by the related party.

The responses…, were received between 5 August and 19 September 2013.

These parties did not offer a separate truck and trailer service. They factored into the freight rates the operational costs of fuel, vehicle inspection, toll and environmental management fees, insurances and driver's allowances, the distance covered, the nature of the cargo, and competition.

The freight rates ranged between US$1.60 per km and US$2.30 per km for both south and north bound routes during the period to the end of the 2012 tax year.

In respect of the 2013 tax year, the average rate was US$2.50 per km.

One of the local hauliers supplied very detailed information on the freight rates. It used the cost plus mark-up model where the mark-up ranged between 7% and 12%. It charged between US$750 and US$1,300 for the south bound routes and between US$1,300 and US$2,500 for the north bound routes. While it charged per trip like the related party, it translated these charges to between US$1.60 and US$2.30 per km.

The nephew listed 11 advantages that accrued to the appellant from the rental agreement.

The appellant was, inter alia, assured of prompt and steady flow of income and a regular foreign currency supply, accounted through the Reserve Bank of Zimbabwe CD3 forms, to meet local expenses from a single client; it's fleet was maintained at no cost to it and prevented from deteriorating from disuse; it was able to offer limited local transport services; it did not incur marketing and clearing and depot expenses in South Africa, Zimbabwe, Zambia and Malawi; it had a guaranteed free source of fuel at its depot in Zimbabwe for local use; and, lastly it was able to retain a pool of experienced internationally certified drivers starving it off liquidation and heavy retrenchment costs.

On the other hand, the related party benefited from the use of authorised equipment on Zambian, Malawian, Batswana and Mozambican public roads and highly skilled drivers who were unable and unwilling to secure work permits in South Africa.

It was common cause, that, the respondent treated the appellant as a cross-border haulier and applied the 2013 freight rate charged by the related party, of R22.47 per km, retrospectively to each of the tax years in dispute. It ignored the aggregate expenses of R21.20 per km incurred in raising this amount.

It computed the gross revenue earned from the leased equipment by multiplying this amount by the number of kilometres travelled in each year and converted the total to United States dollars using the uniform and inaccurate cross rate of 1US$ to R10.

The respondent further calculated the yearly running maintenance and repair costs expensed on the leased trucks and converted it to United States dollars using the inaccurate exchange rate of 1US$ to R10 and added the figure to the transport services income in the annual financial statements derived from the CD3 forms.

It then deducted the aggregate amount from the gross revenue earned from the leased equipment aggregate figure from the CD3 revenue and running maintenance and repair costs. The variance, whether positive or negative, was added to income in the computation of taxable income.

The appellant gave contrary evidence in two respects:

(i) The first was on whether it operated a transport service in Zimbabwe only or whether it also operated across our borders.

(ii) The second was on whether it charged per trip or per km in respect of the local transport services.

The sole witness called by the appellant testified that the appellant operated a transport service in Zimbabwe only.

In each of the tax years in issue the same witness signed the Director's report in which he proclaimed that the appellant operated principally in Africa.

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

At the commencement of the trial, the plaintiff sought an amendment to its claim by the deletion of the amounts of fourteen billion eight hundred million and six hundred and sixty six billion dollars and their substitution with the amounts of US$ twenty two thousand five hundred and sixty dollars and one million fifteen thousand four hundred and seventy dollars, respectively; the first amount being the replacement cost of one vehicle and the second amount being the global sum for forty-five brand new trucks.

I granted the application to amend in the face of opposition from counsel for the defendants and indicated that I would furnish my reasons together with the reasons for judgment....,.

I turn now to the determination of the matter on the merits.

The plaintiff in this matter is a commercial bank which is primarily involved in lending to persons, both corporate and individuals, engaged in agricultural pursuits. It is a statutory corporation.

In 2006, it flighted an invitation for the tender of supply of trucks of an engine capacity ranging from 1.8 to 2 litres.

The invitation to tender, the tender by the first defendant, and the contract itself were the main documents produced before me by the parties.

The invitation is dated 2 November 2006, and calls upon established companies to urgently tender for the supply and delivery of brand new trucks within the range of 1.8L to 2L. Certain other specifications not germane to this dispute are listed. The invitation then spells out information that is 'mandatory' to enable the plaintiff to make a concrete acceptance of the quotation and contract decision.

Firstly, it is stated, that, prices quoted shall be in Zimbabwe dollars, which price shall be fixed during the bidder's performance of the contract and not subject to any variation of any account.

The invitation also spelt out, that, a bid submitted with an adjustable price condition would be treated as non-responsive and would be rejected.

Prices were required to be inclusive of value added tax.

The invitation to tender also required the company profile of the bidder as well as a list of major clients and contactable references.

Added to this was the requirement of payment schedules, delivery, and fallback position should delivery not be effected as anticipated.

Other stipulated requirements are not germane to this dispute and will consequently not be referred to.

The first defendant was amongst the companies that responded to the tender. After an adjudication process, it was decided to award the tender to the first defendant and a contract for the supply of the vehicles was concluded between the parties.

Two days after the signing of the contract, the plaintiff paid an amount in excess of $1.8 billion Zimbabwe dollars into a current account operated by the first respondent with a commercial bank.

The contract provided for specific dates for delivery of the vehicles to the plaintiff.

Needless to say, the delivery schedule stated in the delivery clause was not adhered to, as the defendant defaulted; and, in fact, it has not made any delivery up to today necessitating the plaintiff issuing summons for relief from this court.

In its summons, the plaintiff prays for the delivery of the vehicles in question, or, in the alternative, for payment of the value of the vehicles as at the time of judgment.

The second and third defendants are husband and wife and the only directors of the first defendant.

The plaintiff has prayed, as against the two, for an order lifting the corporate veil and for judgment against them jointly and severally with the first defendant, on the basis that they cannot be divorced from the latter.

At the pretrial conference, three issues were extracted for trial. I will therefore dispose of the dispute on the basis of those issues.

The first issue for trial was whether the agreement made and entered into by and between the parties was conditional upon the first defendant obtaining foreign currency from the Reserve Bank of Zimbabwe.

It is pertinent, therefore, in resolving this issue, to examine the contract documents and other documents have a bearing on the relationship between the parties.

The tender bid document from the first defendant focused on the Ford Ranger 1800 STD.

A brief description of the vehicle is given, which description is on the physical features of the vehicle not its mechanical capacity. The quoted price is Z$37,500,000 per unit with a total price of Z$1,687,500,000 for the forty-five vehicles.

The quotation confirms that the price is inclusive of Value Added Tax.

A warranty is given for three years or 100,000kms whichever comes first.

The first respondent also confirmed an ability to supply and deliver at a stipulated time.

There were no indications of conditions that required to be met before delivery could be effected.

Next, the first defendant provides, in the tender document, a list of vehicles and motor cycles, that are presumably available.

There is no caption with the list to state whether these are readily available or whether the first defendant is able to easily source the same.

Pictures of the vehicles and motor cycles, together with specifications, are provided in detail.

Included in the tender documents is a letter written by the second defendant. The letter, written on 27 November 2006, opens with the sentence:

“We, the undersigned, hereby tender and should this letter be accepted in whole or part, undertake to supply Motor Vehicles as per the requirement of the tender, and in conformity with the Fund's General Conditions of Tender, and the specifications, the articles described or referred to in this document or such said articles as may be ordered by the Fund in consideration of the prices as Nickstate Investments (Pvt) Ltd are concerned.”

The contract was then concluded on the basis of these documents.

Clause 3 of the contract is in the following terms:

“It is agreed that the seller sells forty five (45) brand new Ford Ranger, pick up trucks….,. It is further agreed that the pick up trucks shall comply with the following specifications -

(i) They shall be long wheel base.

(ii) The engine capacity shall be 1.800 litres.”

Clause 4 provides that “the vehicles are bought with the following accessories on each one of them” and a list of the accessories is then provided….,.

Clause 5 of the contract reads:

“The purchase price of the vehicles is the sum of (Z$1,687,500,000) (One billion six hundred and eighty seven million, five hundred thousand Zimbabwe dollars) based on a unit price of ZW$37,500,000 (thirty seven million five hundred thousand).”

Clause 7 reads as follows:

“It is agreed that the price referred to in clause 5 above is fixed and not subject to any variation whatsoever.”

Delivery is covered in clause 9 which is in the following terms:

“The motor vehicles shall be delivered to the customer's premises, that is to say, Hurudza House No.14-16 Nelson Mandela Avenue, Harare duly registered in two batches as follows:

(i) 15 (fifteen) vehicles by 31 January 2007.

(ii) 30 (thirty) vehicles by 28 February 2007.”

In its declaration, the plaintiff alleged, that, the first defendant had breached the terms of the agreement and that despite being paid in full for the vehicles the first defendant had failed to deliver any of the vehicles, and further, that, despite numerous requests by the plaintiff, the first defendant had failed and/or neglected to deliver the said vehicles.

In response to this averment, the defendants had denied that they had failed, neglected, or refused to deliver and that the plaintiff was aware that the defendants had applied to the Reserve Bank for the allocation of foreign currency.

It was further averred by the defendants, that, the allocation was approved on 9 February 2007 but the Bank did not have the required foreign currency to avail to the defendants to fulfill the terms of the contract.

The contract concluded by the parties does not make mention of the need for the defendants to source for foreign currency to purchase the vehicles.

This is accepted by the defendants.

Their contention, however, is that the fact that the vehicles had to be imported should be presumed and it did not need to be written down.

It was contended, that, the vehicles could not be purchased in Zimbabwe dollars and payment had to be made in a currency acceptable to the manufacturer; and it is precisely because the defendants had to import the vehicles that they had approached the Reserve Bank for the allocation of foreign currency.

Although accepting that the written contract was never varied in writing, it is suggested, by the defendants, that, the parties communicated through correspondence which clearly established that there was an understanding between the parties that the defendants needed to source funds, through the Reserve Bank of Zimbabwe, in order to import the vehicles to be delivered to the plaintiff by the first defendant.

The defendants produced to court a number of letters written by the second defendant explaining or seeking to explain the delay in delivery of the vehicles.

The first letter is dated 29 January 2007 which was a mere two days before the date scheduled for the delivery of the first batch; and the explanation given for the anticipated delay in delivery is the late approval of the allocation of foreign currency.

An assurance is given, in the letter, that everything was under control.

The second letter, dated 15 February 2007, again speaks of the delays in obtaining foreign currency allocation (approval?).

The writer goes further to state, that, arrangements had been made for the first batch of fifteen vehicles to be in the country by 28 February 2007.

It was stated further, that, the supplier had refused to accept an advance payment that had been arranged due to the fact that it had come from a bank in South Africa.

The last sentence in the letter is to the effect, that, correspondence from the Reserve Bank was being attached and the defendants were vigorously pushing for payment and the vehicles would be released 'soon'.

Attached to the letter in question was a Reserve Bank approval for the defendants to pay for the vehicles through their Bank. There was no allocation of funds on the certificate produced.

The letters addressed to the plaintiff were not responded to.

The plaintiff's witness, Mrs Chinodya, explained that when the defendants started coming up with excuses on the delivery of the vehicles, they were requested to put their explanations in writing.

The witness told the court, that, the position of the plaintiff was that the contract was for the supply and delivery of vehicles and not for the importation of the same.

The plaintiff was hopeful that the endevours by the defendants would succeed, but, when the contract was concluded, it was never a term of the contract that the defendants would require an allocation of foreign currency from the Reserve Bank of Zimbabwe in order for them to perform their obligations on the contract.

The contract was never varied - a position accepted by the defendants.

I was unable to accept the contention by counsel for the defendants, that, the fact that the vehicles would be imported was presumed and it did not need to be written in the contract.

He did not cite any authority for this submission, and I am not persuaded that this is a correct principle of the law of contract.

Apart from the letters written by the second defendant, after the contract was concluded, I have not seen any evidence pointing to a condition that the defendants had to obtain foreign currency from the Reserve Bank of Zimbabwe in order to comply with their obligations under the agreement.

The plaintiff's witness, Mrs Chinodya, emphasized, that, what was concluded was in fact an agreement of sale of the stated number of vehicles and that tenders were invited for supply of the vehicles in the local currency.

She was adamant, that, any tenders that were quoted in foreign currency were turned down.

She also said, that, the issue of the need for foreign currency arose after the first defendant failed to meet the delivery dates, and, in her view, it was nothing but an excuse.

I find no reason to doubt the veracity of her evidence on this issue.

I find for the plaintiff.

Her evidence was given in a straight forward manner and she made a better impression on the court than did the second defendant who was very evasive and unwilling to answer difficult questions under cross examination.

Overall, looking at the evidence of the two witnesses against the backdrop of the documents which preceded the contract, and the contract itself, it is my view that the contract was not conditional upon the first defendant being allocated foreign currency by the Reserve Bank as pleaded by the defendants.

I find that, therefore, that performance by the defendants was not conditional upon obtaining foreign currency from the Reserve Bank.

HMT26-20 : AYAN TRADING (PRIVATE) LIMITED vs CLEARSKY (PRIVATE) LIMITED
Ruled By: MWAYERA J and MUZENDA J

On 12 November 2019, the court sitting at Mutasa Magistrates Court granted a judgment in favour of the respondent herein and ordered as follows:

1. That the defendant be ordered to pay US$314,112=68.

2. That the defendant be ordered to pay interest at a present rate.

3. That the defendant pays costs of suit.

On 18 November 2019, the appellant noted an appeal against the whole final judgment and outlined the grounds of appeal as follows:

“GROUNDS OF APPEAL

1. The court a quo's finding is grossly erroneous in that it orders the appellant to pay interest twice to the respondent, contrary to the basic tenets of the law.

2. The award of 0.1% on the gross revenue to the respondent, by the court a quo, is erroneous and ought to be impeached on the following basis:

(a) That it was not sought and pleaded in the summons; and

(b) There is no evidence that supports the award.

3. The court a quo committed a gross misdirection in calculating 10% commission based on an incorrect figure.

4. The court a quo erred and committed a gross irregularity in failing to make a finding that the respondent was in breach and thus was not entitled to the commission awarded to it.

5. The court a quo erred and grossly misdirected itself in making a finding that the respondent reduced the tax obligation of the appellant to Zimbabwe Revenue Authority for the year 2013.

6. The court a quo grossly erred in awarding the claim in the denomination of United States Dollars instead of Real Time Gross Settlement denomination.

7. The court a quo erred in misinterpreting the meaning of 10% of the reduced debt.

8. The court a quo erred in making a finding a fact that the appellant was liable to pay to the respondent, a position of the various amounts claimed contrary to evidence on record that the respondent did not have expertise to carry out such works and that there was non-compliance by the respondent to cause a certificate to be issued by the respondent's accountants certifying reasonable terms of the amended agreement of service.”

The appellant prayed that the appeal succeeds and the order of the court a quo be set aside and substituted by one dismissing the plaintiff's claim with costs.

On 28 November 2019, the respondent filed a cross-appeal and sets out the grounds of the cross appeal as follows:

“GROUNDS OF APPEAL

1. The court a quo grossly misdirected itself in terms of the law wherein it granted costs of suit on ordinary scale despite the parties having agreed, that, in the event of litigation, costs were to be granted on attorney-client scale.

2. The court a quo grossly misdirected itself at law by failing to grant interest of 5% per month from the date of default to date of full payment which interest had been agreed by the parties.

3. The court a quo grossly misdirected itself in terms of the law by failing to grant the respondent the sum of US$500 being the agreed amount for monthly service fees which the respondent had proved to be due to it and appellant had not contested.

4. The court a quo grossly misdirected itself at law by failing to grant collection commission in terms of the Law Society By-Laws which the parties had agreed upon and respondent had claimed in the summons.

5. The court a quo grossly misdirected itself by erroneously calculating the 10% tax reduced fees for the year 2013.”

The respondent prays, in its cross-appeal, that, the cross appeal be upheld and that the relevant part of the judgment of the court a quo be set aside and substituted with the following:

“(a) The appellant be and is hereby ordered to pay costs of suit on attorney-client scale.

(b) The appellant be and is hereby ordered to pay interest at rate of 5% per month from the date of default until the date of full and final payment of the debt as agreed between the parties.

(c) The appellant be and is hereby ordered to pay US500 to respondent being the outstanding service fees for monthly returns VAT, PAYE and QDP.

(d) The appellant be and is hereby ordered to pay collection commission in terms of the Law Society By-Laws as agreed between the parties.

(e) The appellant be and is hereby ordered to pay for the tax reduction fees in the sum of the amount of US$40,848=21 for the year 2013.”

FACTS

The plaintiff (now respondent) is Clearsky (Private) Limited trading as Fool-vest Financial Services, a company duly registered in terms of the law of Zimbabwe. The defendant (appellant) is Ayan Trading (Private) Limited, a company incorporated in terms of the laws of Zimbabwe whose registered business office is 113 Herbert Chitepo Street, Mutare.

Sometime in 2016, the appellant instructed the respondent, a tax accounting services contract and entered into a written agreement and key to the agreement:

(i) The respondent was to offer tax accounting service to the appellant.

(ii) The tax management fees for tax year 2009 to 2013 would be charged at 10% of the tax debt reduced for each year under audit.

(iii) The appellant would pay US$500 per month as services fees for monthly returns of VAT, PAYE and QPD.

(iv) Preparation of ITF12C Returns, including amended ITF12 for the previous years would be charged at 0.1% of Annual Gross Revenue.

(v) US$25 per hour would be charged for attending meeting and preparation of reports or any other correspondences.

(vi) That 5% interest per month shall accrue against any outstanding amount in the event of default of payment by the appellant.

(vii) That, in the event of termination of services, the respondent shall charge fees for service rendered until such termination and the appellant shall be liable to pay 10% of the tax debt reduced at the time of termination which shall be due and payable forthwith.

The respondent rendered its services to the appellant from the date of the agreement until 26 June 2017 when the appellant terminated the contract.

During the term of the contract, the respondent would raise its fees from time to time, but, the appellant defaulted payment such that interest, at the rate of 5% per month, had been accruing on the outstanding amount.

At the time of termination of the agreement, the appellant was cumulatively liable to the respondent in the sum of US$554,065=93 inclusive of default interest for services which had been rendered to the appellant.

In terms of the agreement between the respondent and the appellant, the parties agreed, that, the appellant shall be liable to pay costs of suit on a legal practitioner-client scale together with collection commission in terms of the tariff of the Law Society of Zimbabwe.

The respondent claimed for the following:

(a) Payment of US$554,065=93 by the appellant, being the outstanding fees for the services rendered to the appellant by the respondent.

(b) Collection commission in terms of the Law Society by-laws.

(c) Costs of suit on legal practitioner-client scale.

(d) 5% interest per month to be calculated on the outstanding amount on 27 June 2017 until full payment of the outstanding amount.

The appellant, in its plea to the respondent's claim, denied entering into any agreement with the respondent.

It further denied, that, the respondent was in the business of offering tax accounting services and lacked technical expertise to carry out such tax accounting services.

It denied that the respondent satisfied its mandate towards the appellant.

The appellant also denied that there was never any reduced tax debt after audit by Zimbabwe Revenue Authority (ZIMRA) during the period in question which entitled the respondent to a 10% charge on reduced debts.

The appellant contended, in its plea, that, the respondent did not specifically plead such reduced tax debts to justify the amount of $50,000; the appellant also blamed the respondent for miscalculating the amount.

The applicant further denied that the respondent rendered services to it.

The appellant pleaded, that, the respondent did a dis-service for it and contemplated a counter claim.

The agreement alluded was relating to provision of financial services as opposed to attending to Zimbabwe Revenue Authority (ZIMRA) tax matters.

It denied that any invoices were raised and denied owing the respondent any money.

It stated in its plea, that, the respondent was liable to it in the sum of US$6,000,000 (six million dollars).

It prayed that the respondent's claim be dismissed with costs on attorney-client scale.

It is necessary to briefly look at the respondent's evidence.

Daniel Mahonye, testifying for the respondent, told the court a quo, that, in 2016, the respondent was engaged by the appellant to do tax services; the operative agreement was signed on 1 April 2016 but was to become effective with effect from 1 July 2016.

He reiterated the terms of the agreement, that, the appellant was going to pay a premium of 10% of the reduced tax debt for the period stretching from 2009 to 2013. The appellant also agreed to pay the $500 per month for the services performed by the respondent in meeting the appellant's obligations towards the Zimbabwe Revenue Authority (ZIMRA).

The respondent prepared ITF12C as well as amended ITF12C returns and reiterated, that, the appellant undertook to pay 0.1% of the gross revenue for year accruing to the appellant, and, according to his evidence, the total for such gross revenue from 2010 to 2016 totalled $295,070=11.

Interest on that capital debt due to the respondent from the annexed schedule attached to the respondent's summons added up to $149,956=60.

In 2013, the Zimbabwe Revenue Authority (ZIMRA) raised a debt of $408,482=08 and the respondent's charges, according to the agreement, was 10% which computes to an amount of $40,848=20 due to the respondent.

Much of Mr Mahonye's evidence on these figures was not controverted by the appellant during trial and we take it as issues of common cause and should not detain us....,.

The appellant's plea is poorly drafted, in our respectful view, and it is but a bare denial....,.

So, we conclude, that, what is not challenged is indeed admitted: see Tetrad Investments Bank Limited v Bindura University 2009 WSC–5 and Fawcett Security Operations (Private) Limited v Director of Customs & Excise & Ors 1993 ZLR 121 (S).

Appealed
SC31-22 : NMB BANK LIMITED vs FORMSCAFF (PVT) LTD and PENNIWILL (PVT) LTD and RODNEY CALLAGHAN and MILLICENT CALLAGHAN and CHARLES CANNINGS and CLIFFORD JOHNSON and LESLEY BENNET
Ruled By: GARWE JA, PATEL JA and GUVAVA JA

This is an appeal against the whole judgment of the High Court (court a quo) dated 18 October 2018. The court a quo granted an application for absolution from the instance made jointly by the respondents, granted claims in reconvention, and ordered the appellant to pay costs of the counterclaims on a legal practitioner and client scale.

The court a quo erred in this regard and the appellant was correctly aggrieved by the judgment of the court a quo.

There is no evidence in the record that the first, third, fourth, fifth, sixth, and seventh respondents (Formscaff (Pvt) Ltd, Rodney Callaghan, Millicent Callaghan, Charles Cannings, Clifford Johnson and Lesley Bennet) had filed counterclaims and the court a quo erred in granting counter claims that were not before the court.

Although the second respondent was properly before the court a quo, the requirements for the grant of absolution from the instance were not met.

Accordingly, the judgment must be vacated. I set out hereunder the reasons for this finding.

BACKGROUND FACTS

The appellant is a registered commercial bank operating in Zimbabwe. The first respondent is a private company registered in accordance with the laws of Zimbabwe. The third to seventh respondents (Rodney Callaghan, Millicent Callaghan, Charles Cannings, Clifford Johnson and Lesley Bennet) are private individuals who bound themselves as sureties and co-principal debtors in respect of a loan granted to the first respondent. The second respondent is a private limited company duly incorporated in Zimbabwe.

The appellant issued summons against the respondents on 13 March 2017 for the payment of US$368,706=62 being capital and US$20,654=10 being interest on the sum of US$368,706=62 at the rate of 18% per annum, which rate was subject to change from time to time, with effect from 26 November 2016 to date of payment in full and costs of suit on a legal practitioner and client scale.

At the commencement of trial, by consent of the parties, the claim was amended to read as follows:

“(i) By deletion of the capital amount of US$368,706=62 and the substitution thereof with the amount of US$361,034=23.

(ii) By deletion of the interest amount of US$20,654=10 and the substitution thereof with the amount US$28,246=49.”

The total amount claimed by the appellant amounted to US$389,362=72.

In its particulars of claim, the appellant averred that in or around November 2015, the appellant and the first respondent entered into an agreement in terms of which the appellant extended to the first respondent a loan for the sum of US$373,000.

The loan was accessed through the first respondent's operating account and was for the purpose of assisting the first respondent in financing its working capital requirements.

Interest was to accrue on the facility at the rate of 12% per annum subject to change from time to time and 18% per annum in the event of default by the first respondent in making due and punctual payment of any instalment.

The loan advanced was repayable to the appellant as follows:

“(a) US$2,000 on the 30th November 2015;

(b) US$1,500 on the 30th December 2015;

(c) US$2,000 on the 30th January 2016; and thereafter

US$15,200 per month with effect from the 28th of February 2016 until full payment.”

It was a term of the agreement, that, in the event of the first respondent defaulting in making due and punctual payment of any instalment, the total outstanding amount would immediately become due and payable.

The second, third, fourth, fifth, sixth and seventh respondents (Penniwill (Pvt) Ltd, Rodney Callaghan, Millicent Callaghan, Charles Cannings, Clifford Johnson and Lesley Bennet) bound themselves jointly and severally as sureties and co-principal debtors with the first respondent for payment of any and all monies due to the appellant.

The respondents defaulted in making due payment of the loan under the agreement giving rise to the total outstanding amount claimed by the appellant of US$389,362=72.

All the respondents jointly entered an appearance to defend, and, in their plea, denied that the amount claimed by the appellant arose from the agreement dated 2 November 2015.

The first respondent denied owing the appellant any money as it argued that the loan advanced through the loan agreement was repaid in full on the 30th of December 2015. The first respondent further denied owing the appellant any interest under the loan facility and maintained that the appellant actually recovered more interest from it than was lawfully due.

The second to the seventh respondents (Penniwill (Pvt) Ltd, Rodney Callaghan, Millicent Callaghan, Charles Cannings, Clifford Johnson and Lesley Bennet) averred that all the suretyship deeds held by the appellant were void for vagueness as they covered an unlimited liability. They contended, that, a suretyship deed must contain a limit in monetary terms so as to be valid.

The second respondent (Penniwill (Pvt) Ltd) averred that the deed of suretyship between it and the appellant was void as it was not authorised by its Board of Directors.

The first respondent (Formscaff (Pvt) Ltd) further stated, that, the acknowledgment of debt executed by it in favour of the appellant was unenforceable as it was not signed by its representatives.

The second respondent (Penniwill (Pvt) Ltd) also averred, that, it never authorised the registration of a mortgage bond in favour of the appellant over its property known as Subdivision A of Subdivision H of N'Thaba of Glen Lorne situate in the District of Salisbury held under Deed of Transfer number 1998/95 ('the property').

Together with its plea, the second respondent (Penniwill (Pvt) Ltd) filed a claim in reconvention against the appellant and averred, that, the appellant fraudulently procured a suretyship and mortgage bond in its favour over the second respondent's property. The second respondent prayed that the suretyship deed and mortgage bond be cancelled.

The appellant entered a plea against the claim in reconvention and denied all the averments made by the respondents.

On 30 May 2017, the third to seventh respondents (Rodney Callaghan, Millicent Callaghan, Charles Cannings, Clifford Johnson and Lesley Bennet) indicated their intention to apply to amend their pleas and file a claim in reconvention at the pre-trial conference.

The amendments sought alleged that all the respondents purported suretyships had expired by effluxion of time, having been signed more than three years before the loan was granted. It was also averred, that, the suretyships were in contravention of section 12 of the Moneylending and Rates of Interest Act [Chapter 14:14] ('the Moneylending Act') and, as such, were invalid and unenforceable.

In the proposed claim in reconvention, the third to seventh respondents sought an order that their respective suretyships be declared null and void.

The second, third and fourth respondents (Penniwill (Pvt) Ltd, Rodney Callaghan and Millicent Callaghan) prayed that the mortgage bonds in their names be cancelled.

There is, however, no evidence in the record that the amendment was ever granted at the pre-trial conference or at the trial.

On 27 July 2017, the parties signed a Joint Pre-Trial Conference Minute and the issues for determination by the court a quo were stated as follows:

“1. Whether 2nd, 3rd, 4th, 5th, 6th, and 7th Defendants Deeds of Suretyship are valid and enforceable.

2. Whether 2nd Defendant's 1st and 2nd Mortgage Bonds (numbers 1557/13 and 1656/13) in favour of Plaintiff are valid and enforceable or whether they should be cancelled.

3.Whether 1st Defendant is indebted to Plaintiff under the Loan Agreement dated 2 November 2015 in the sums of US$368,706=62 as capital and US$20,654=10 as interest, and, was there novation or termination of the loan agreement.

4. Whether 1st, 2nd, 3rd, 4th, 5th, 6th and 7th Defendants, jointly and severally, one paying the others to be absolved, are indebted to Plaintiff as alleged or at all.”

At the trial, the appellant led evidence through two witnesses, namely, Mr. C. Gunundu (Gunundu) the appellant's Account Relationship Manager and Mr. V.S. Nyangulu (Nyangulu) a registered legal practitioner and conveyancer.

Mr. C. Gunundu testified, that, the appellant and the first respondent had a long business history spanning many years. They agreed that the Bank would advance a loan to the first respondent which loan would, in turn, re-finance the existing loan already held by the first respondent.

He further testified, that, the first respondent and its sureties had failed on numerous occasions to fulfil the loan obligations which it owed to the appellant. The new arrangement was meant to assist the respondents.

Gunundu maintained, that, the surety deeds and mortgage bonds made by the second to seventh respondents (Penniwill (Pvt) Ltd, Rodney Callaghan, Millicent Callaghan, Charles Cannings, Clifford Johnson and Lesley Bennet) in the appellant's favour were all valid and properly constituted. He further maintained, that, the sureties were open and unlimited, and, as such, covered all the money obtained through loans by the first respondent from the appellant.

The second witness, Mr. V.S. Nyangulu, testified that the mortgage bonds he registered on behalf of the second respondent (Penniwill (Pvt) Ltd) in favour of the appellant were valid and were registered after due process and Board resolutions had been passed.

At the close of the appellant's case, the first to seventh respondents (Formscaff (Pvt) Ltd, Penniwill (Pvt) Ltd, Rodney Callaghan, Millicent Callaghan, Charles Cannings, Clifford Johnson and Lesley Bennet) made an application for absolution from the instance.

In making the application, the first and third to seventh respondents (Formscaff (Pvt) Ltd, Rodney Callaghan, Millicent Callaghan, Charles Cannings, Clifford Johnson and Lesley Bennet) averred that the appellant sued the respondents on a cause of action which had already been discharged on 31 December 2015.

They also alleged that their sureties were not valid.

In making its application, the second respondent (Penniwill (Pvt) Ltd) averred that the appellant failed to prove a valid cause of action that the mortgage bonds against its property, registered in favour of the appellant, were valid.

In response to the applications for absolution from the instance, the appellant argued that the applications were frivolous.

It vehemently denied receiving any payment from the first respondent in repayment of the loan. It also maintained that all the documents in respect of the security for the loan were valid and that the obligation of the sureties had not been extinguished by prescription or on any other basis.

The court a quo, in dealing with the matter, found that the appellant's first witness Mr. C. Gunundu (Gunundu) was not a credible witness and that he contradicted himself on material issues.

The court further found, that, the appellant failed to prove a prima facie case against the respondents.

The court went on to find, that, the first respondent repaid the loan of US$350,000 on 31 December 2015 as evidenced by the appellant's own books of account and statements.

The court a quo also found, that, the suretyships made in favour of the appellant by the second to seventh respondents were invalid and unenforceable as they were not in compliance with section 12 of the Moneylending and Rates of Interest Act. Further, that, the sureties did not relate to the 2 November 2015 loan facility, and, as such, could not be relied upon by the appellant in making a cause of action for the repayment of a loan under that facility.

The court a quo further held, that, the mortgage bonds executed in the second respondent's name were invalid as they were not made in compliance with the law and that the sureties and mortgage bonds could not be held to have an unlimited clause to their operation as such a clause was contrary to public policy.

The court concluded, that, as the appellant had failed to prove a prima facie case against the respondents, the respondents claims in reconvention had merit and that there was no need to put the respondents to their defence.

In the result, the court made the following order:

“1. The application for absolution from the instance, made by the defendants, succeeds with costs.

2. The surety ships (sic) in favour of the plaintiff entered into by 2nd, 3rd, 4th, 5th, 6th and 7th defendant and plaintiff be and are hereby cancelled.

3. The mortgage bonds passed by 2nd, 3rd and 4th defendants in favour of plaintiff, namely, Numbers 2416/2011, 4889/2011, 1557/2013 and 1656/2013 be and are hereby cancelled.

4. The plaintiff to pay costs of counterclaim to the defendants on attorney-client scale.”

Dissatisfied with the decision of the court a quo, the appellant noted the present appeal on the following grounds of appeal:

“1. The court a quo erred in holding that any amounts which were due to Appellant under the agreement dated 2 November 2015 were repaid in full and that Plaintiff sued on a cause of action that was discharged in full on the 30th of December 2015, in so doing, the court a quo failed to appreciate that the agreement (dated 2 November 2015) was entered into to enable the 1st respondent to settle previously existing debts.

1.1 The court a quo erred in strictly evaluating and rejecting the appellant's evidence and effectively demanding of it more than a prima facie (sic) as if it had (sic) evidence from defendants.

1.2 The court a quo erred in granting respondents 1, 3 to 7 counter-claims which were not before it.

1.3 The court a quo erred in granting the counterclaims by respondents 1, 3 to 7 when those respondents had not moved it to grant same as at that stage.

1.4 The court a quo erred in itself cancelling the parties agreements when it was not a party thereto and in violation of the sanctity thereof.

2. The court a quo erred in holding that:

(a) The Suretyship agreements executed by 2nd, 3rd, 4th, 5th, 6th and 7th Respondents did not relate to the agreement dated 2 November 2015, and that neither did they cover any amounts due thereunder.

(b) The Suretyship agreements had prescribed. In so holding, the court a quo grossly failed to appreciate that, at law, a Surety's obligations only arise upon demand.

(c) The 2nd, 3rd, 4th, 5th, 6th and 7th Respondents were released from their Suretyship due to material variation of the principal obligation, when this was not pleaded and no evidence proving actual prejudice was placed.

(d) That 2nd, 3rd, 4th, 5th, 6th and 7th Respondents suretyship agreements were void for being contrary to public policy.

3. In agreeing with 2nd, 3rd, 4th, 5th, 6th and 7th Respondents entire submissions on the application for absolution from the instance, the court a quo grossly erred in holding 2nd to 7th Respondents averment that the suretyship agreements are invalid for violation of Section 12 of the Money Lending (sic) and Rates of Interest Act [Chapter 14:14].

4. The court a quo erred in holding that the Mortgage Bond passed by 2nd Respondent, and 3rd and 4th Respondents are invalid and grossly failed to appreciate, that, at law, the Mortgage Bonds are valid as an instrument of both debt and hypothecation.

5. Consequent to the gross misdirection referred to in Paragraph 1, 2, 3 and 4 above, the court a quo erred in granting 1st to 7th Respondents application for absolution from the instance and entering Judgment in favour of Respondents as per their claim in reconvention for cancellation of the suretyship agreements and Mortgage Bonds.

6. The court a quo erred in awarding costs against Appellant in respect of the Respondents claim in reconvention on a higher scale, when there was no legal basis for so doing.”

PROCEEDINGS BEFORE THIS COURT

On the merits, counsel for the appellant argued that it was improper for the court a quo to grant counterclaims that were not filed in terms of Rule 121 of the High Court Rules 1971 ('the High Court Rules').

Counsel further argued, that, the judgment of the court made factual findings without hearing the evidence of the first respondent. The factual findings could only have been made after hearing the defence case.

He also argued, that, the inference drawn by the court in respect of the statement of account was not the only inference in the circumstances of the case, and, in any event did not prove that the debt owed by the respondents had been repaid.

It was also counsel's argument, that, the appellant proved a prima facie case in establishing that the loan facility was disbursed to the first respondent and it was for the respondents to prove that the loan was repaid in full.

He prayed that the appeal be allowed with the matter being remitted to the court a quo for continuation of trial and an order for costs.

Per contra, counsel for the first, third to seventh respondents argued that the court a quo correctly found that the appellant failed to establish a prima facie case as there was no valid cause of action.

Counsel further argued, that, the documentary evidence produced before the court a quo showed that the loan was repaid in full on 31 December 2015, and, as such, the appellant had no basis to sue.

He also argued, that, the appellant's witness, Gunundu, contradicted himself in his evidence, and, as such, a prima facie case could not have had been established by the appellant.

Counsel further argued, that, the purported sureties made in the names of the third to seventh respondents were invalid and void.

Counsel prayed for the dismissal of the appeal.

Counsel for the second respondent also prayed for the dismissal of the appeal and argued, that, the appellant had no cause of action against the second respondent as no loan facility was ever advanced to it.

Counsel submitted, that, the loan was repaid on 31 December 2015 and that the appellant had admitted that this was the position in evidence.

He further submitted, that, there was no valid mortgage bond in the name of the second respondent upon which the appellant could execute. The mortgage bond made by the second respondent, in favour of the appellant, related to a 2011 loan facility and not the 2015 loan facility.

Counsel further maintained, that, the second respondent had only one director in Zimbabwe, and, as such, no valid resolution could have been made in the absence of the second director. As such, counsel argued that the power of attorney and mortgage bond were not properly executed.

It is my view, that, the appellant's grounds of appeal raise a single issue, i.e. whether or not the court a quo erred in granting the application for absolution from the instance.

ANALYSIS

Whether or not the court a quo erred in granting the application for absolution from the instance

The cause of action of the appellant, against the first respondent (Formscaff (Pvt) Ltd), was based on a credit facility dated 2 November 2015. It was alleged that the first respondent had failed to repay the loan advanced to it under that facility.

The cause of action as against the second to seventh respondents (Penniwill (Pvt) Ltd, Rodney Callaghan, Millicent Callaghan, Charles Cannings, Clifford Johnson and Lesley Bennet) was based on the various surety and mortgage bonds filed of record which were made in favour of the appellant by the respondents at different times.

The court a quo, in granting the respondents application for absolution from the instance, found that the loan advanced to the first respondent was repaid on 31 December 2015. The basis of this finding was an accounting entry made by the appellant in its statement of accounts, which showed a credit entry in the sum borrowed as having been paid.

On the basis of this entry, the court reasoned that there was no cause of action upon which the appellant could claim as there was no outstanding debt.

The law to be applied in an application for absolution from the instance is well settled. In United Air Charters (Pvt) Ltd v Jarman 1994 (2) ZLR 341 (S)…, the Court held that:

“The test in deciding an application for absolution from the instance is well settled in this jurisdiction. A plaintiff will successfully withstand such an application if, at the close of his case, there is evidence upon which a court, directing its mind reasonably to such evidence, could or might (not should or ought to) find for him:” see also Oesthuizen v Standard General Versekeringsmaa & Kappy BPK 1981 (A) 1035 (H)).”

In Gordon Lloyd Page & Associates and Rireira & Another 2001 (1) SA 88 (SCA)…, it was held that:

“The test for absolution to be applied by a trial court at the end of plaintiff's case was formulated in Claude Neon Lights (SA) Ltd v Daniel 1976 (4) SA 403 (A) at 409G-H in these terms:

'…, when absolution from the instance at the close of plaintiff's case, the test to be applied is not whether the evidence led by the plaintiff established what would finally be required to be established, but, whether there is evidence upon which a court applying its mind reasonably to such evidence could or might (not should or ought) find for the plaintiff…,.'

This implies that the plaintiff has to make out a prima facie case in the sense that there is evidence relating to all elements of the claim…,.”

Absolution from the instance is thus granted by the court when an application has been made by a defendant at the close of a plaintiff's case who fails to prove a prima facie case.

A prima facie case was noted in Fillieks and Others v S [2014] ZAWHC 34 as follows:

“Prima facie evidence, in its more usual sense, is used to mean prima facie proof of an issue, the burden of proving which is upon the party giving that evidence. In the absence of further evidence from the other side, the prima facie proof becomes conclusive and the party giving it discharges his onus…,.”

In granting the application for absolution from the instance, the court a quo thus had to be guided by the question of whether or not the appellant made out a prima facie case against the respondents on the basis of which the court could or might have found for the appellant.

The appellant's cause of action was based on the credit facility which it advanced to the first respondent on the 2nd of November 2015 for the sum of US$350,000. The purpose of the facility was to assist the first respondent in financing its working capital requirements.

The facility further provided, under clause 6, that, the security for the amount advanced as the loan was secured by sureties and mortgage bonds registered in the names of the respondents in favour of the appellant.

Under clause 12 of the facility, all previous facility letters advanced to the first respondent, by the appellant, were cancelled.

The accounting statements of the appellant, filed of record, show that on 17 November 2015, under transaction number LD1532460482, and described as “Loan Drawdown” the appellant credited the first respondent's account with the sum of US$350,000. On the 30th of December 2015, under transaction number LD1532460482 and described as “Payment of Principal” the sum of US$350,000 was reversed from the first respondent's account into the appellant's account.

The first respondent remained with a debit balance of US$375,671=35.

The appellant's witness, Gunundu, explained that the first entry meant that the appellant was crediting the first respondent with the proceeds of the loan. The second entry showed that those proceeds were meant to pay off an existing debt that the first respondent already had with the Bank.

It is important to quote the exchange between counsel for the appellant and the witness where he states that:

“Q. If you move further down, you will see that the same $350,000 appears on that page?

A. Yes, the second entry for $350,000 which in this instance now appears as a debit on the borrowers account, was passed on 30th December 2015. The second entry that was passed by the Bank on the 30th of December 2015 for 350,000 entailed that the Bank was now debiting the customer's account to confirm that this was now a new loan agreement with terms as contained in the facility letter offer of 2nd November 2015.”

The first respondent however maintained the argument a quo, and before this Court, that, the loan was repaid on the 30th of December 2015 under the transaction description of “Payment of Principal”.

On the basis of the above exchange, the court a quo found that the witness of the appellant did not establish its claim at all. The court concluded that Gunundu was not a credible witness and found that the appellant had failed to make out a prima facie case upon which the respondents could be placed on their defence.

It is our view, however, that the court a quo fell into error in arriving at this finding.

It should be noted from the onset, that, the appellant and the first respondent have had a long standing relationship of a banking nature.

The record shows, that, from 2011 to 2015, when the credit facility which is the subject of this appeal was entered into, the appellant was advancing the first respondent different loan facilities and overdrafts.

These loan facilities were advanced on the basis of the securities which were made by the second to seventh respondents.

For over five (5) years, the appellant was advancing money to the first respondent on the basis of those securities with no issues arising.

Emails filed of record further show correspondence between the third respondent (Rodney Callaghan), the first respondent's Finance Manager, one Jill Ngwerume Gunundu, on behalf of the appellant, and Nyangulu, which correspondence shows how some of the securities were registered.

Emails between Rodney Callaghan and Darryn Blumears (acting on behalf of the second respondent) are also part of the record which shows the parties acknowledging that certain sums of money were owed and that the respondents would raise money to pay the debts.

Although these emails were written in 2013 to 2014, this confirms the nature of the relationship between the appellant and the respondents, and that, as at 2014, there was a debt owed to the appellant.

Having found that there existed a banking relationship between the appellant and the respondents, the next question relates to the credit facility advanced to the first respondent on 2 November 2015 and whether or not that facility was repaid.

There is no documentary evidence in the record which shows that the first respondent wrote to the appellant seeking a refinancing loan to cover its existing debts.

However, given the history between the parties on how the appellant advanced several loans to the first respondent over the years, it can be taken that the first respondent must have approached the appellant seeking a loan to repay its outstanding debts.

A reading of the appellant's accounting statement shows, that, before the “loan drawdown” was made to the first respondent's account, the account showed a debit balance of US$367,981=74. When the loan sum was deposited, the balance was reduced to US$17,981=74. This means that the loan reduced an existing debt. When the loan was reversed back to the appellant's account on 30 December 2015, the balance returned to US$375,671=35.

This summary shows, that, the loan was advanced by the appellant to refinance an existing debt.

The credit facility, though not clearly labelled as a refinancing loan, appears to have been made in order to give the first respondent time to repay the loan. This explains the creation of a repayment plan on how the first respondent would repay its debt.

In my view, the credit facility, though not specified as a re-financing loan, must have been made for the purpose of extending the period in which the first respondent had to repay its debts.

It is important to borrow the words quoted with approval by GUBBAY CJ in Chikoma v Mukweza 1998 (1) ZLR 541 (SC)…, wherein the Court noted that:

“Not to be overlooked, as well, are the wise words of Lord Wright in Hillas & Co. Ltd v Arcos Ltd [1932] All ER Rep 494 (HL) at 503I; (1932) 147 LT 503 (HL) at 514:

'Businessmen often record the most important agreements in crude and summary fashion; modes of expression sufficient and clear to them in the course of their business may appear to those unfamiliar with the business far from complete or precise. It is, accordingly, the duty of the court to construe such documents fairly and broadly, without being too astute or subtle in finding defects; but, on the contrary, the court should seek to apply the old maxim of English Law, verba ita sunt intelligenda ut res magis valeat quam pereat.'

See also Burroughs Machines Ltd v Chenille Corp of SA (Pty) Ltd 1964 (1) SA 669 (W) at 670G-H.”

Thus, essentially, what was before the court a quo was a claim for the repayment of a loan.

The appellant had a duty, after all the evidence had been led by both the appellant and the respondents, to prove its case on a balance of probabilities.

The argument in the respondents plea, that the loan was repaid in less than a month, does not carry much weight and is an argument which the respondents had to prove in evidence....,.

Gunundu explained how the transactions under the credit facilities were made and how they operated. He further explained how the appellant had always worked with the first respondent in trust and on the basis of the securities which had been lodged with the Bank by the first respondent over the years.

It seems to me that his evidence was sufficient to establish a prima facie case for the appellant with regard to whether or not the respondent owed the appellant.

View Appeal
HH606-18 : NMB BANK LIMITED vs FORMSCAFF (PVT) LTD and PENNIWILL (PVT) LTD and RODNEY GALLAGHAN and MILLICENT GALLAGHAN and CHARLES CANNINGS and CLIFFORD JOHNSON and LESLEY BENNET
Ruled By: MUZENDA J

On 13 March 2017, the plaintiff issued summons claiming against the defendants, jointly and severally, one paying the other to be absolved, payment of:

(a) US$368,706=62 being capital;
(b) US$20,654=10 being interest;
(c) Interest on the sum of US$368,706=62 at the rate of 18% per annum subject to change from time to time with effect from 26 of November 2016 to date of payment;
(d) Costs of suit on a legal practitioner and client scale and collection commission as provided for under the law society of Zimbawe by-laws (1982).

At the commencement of trial, on 27 August 2018, by consent of all the parties, the claim was amended in paragraph 16 of the declaration as follows:

(i) By the deletion of the Capital amount of US$368,706=62 and the substitution thereof with the amount of US$361,034=23.

(ii) By the deletion of the interest amount of US$20,654=10 and the substitution thereof with the amount US$28,246=49.

The total amount being claimed by the plaintiff coming up to US$389,362=72.

The plaintiff's claim, as amplified in the declaration, is premised on the following synopsis:

“9. In or about November 2015, at Harare, Plaintiff and first defendant entered into an agreement in terms of which plaintiff extended to first defendant a loan of US$373,000. The loan was accessed through first defendant's operating account.

10. Interest was to accrue on the facility at the rate of 12 per cent per annum subject to change from time to time, but, in the event of first defendant defaulting on making due and punctual payment of any installment, the arrears were to attract interest at the rate of 18 per cent per annum subject to change from time to time, further, first defendant agreed to pay bank charges regarding the administration of the account.

11. The loan advanced of US$373,000 was repayable to plaintiff as follows:

(a) US$2,000 on the 30 of November 2015;
(b) US$1,500 on the 30 of December 2015;
(c) US$2,000 on the 30 January 2016; and, thereafter, US$15,200 per month with effect from the 28 of February 2016 until full payment.

12. It was a term of the agreement that in the event of first defendant defaulting on making due and punctual payment of any instalment, the total outstanding amount thereunder would immediately become due and payable.

13….,.

14. Second, third, fourth, fifth, sixth and seventh defendants bound themselves jointly and severally as sureties and co-principal debtors with first defendant for payment of any and all monies due to plaintiff by first defendant.

15. On diverse occasions, defendants defaulted on making due and punctual payments under the agreement resulting in the total outstanding amount under the agreement, as at the fifth of November 2016, in the sum of US$389,360=72 falling due and payable on the 25th of November 2016.”

DEFENDANTS PLEA

All the seven defendants deny that the amount of US$373,000 the plaintiff claims arises from the loan agreement.

The first defendant denies that it is liable to the plaintiff for the capital sum of US$361,034=23 (as amended), or at all, arising out of the loan agreement signed on 16 November 2015 because only US$350,000 in capital was actually lent and advanced to the first defendant and the entire capital debt was repaid in full on 30 December 2015 - less than two months after 16 November 2015.

The agreement terminated in sixty (60) days in terms of the loan or facility agreement.

And the agreement does not have a survival clause.

Paragraph 24 of the facility cancels all previous agreements and this meant that even the balance on the first defendant's account is not covered by the agreement in question.

The first defendant denies liability under the facility and contended that the plaintiff actually recovered more interest than was lawfully due to it.

The first defendant also denies liability for any legal costs as it does not owe the plaintiff any money under the facility in question, and, if the plaintiff is successful, it would only be entitled to normal costs.

The defendants contend that all the suretyship deeds are void for vagueness in that they cover unlimited liability. The liability under suretyship must contain a limit in monetary terms.

The defendants further challenge the validity of the suretyship for they were not all authorized by the second defendant's Board of Directors. The second defendant challenges the company resolution for having been signed by an incompetent company representative.

The acknowledgement of debt alluded to by the plaintiff is challenged by the first defendant because it was not typed by its representatives. Equally so, the resolution signed by Ms Blumears was a nullity, the second defendant avers.

The first defendant denies defaulting payment. It denies owing the plaintiff any amount and also deny being liable to payment of the plaintiff's claims.

On 30 May 2017, the defendants sought to amend their pleas.

They added, that, if at all, the first defendant was liable ex contractu the loan agreement of 16 November 2015, the first defendant will dispute the amount owing since provisionally, as at the end of 2016, the first defendant's credits against debits had brought the first defendant's debit balance to less than US$109,000.

The defendants further contend, that, either the purported acknowledgement of debt or the loan agreement, or both, contravene section 12 of the Money Lending and Rates of Interest Act and consequently invalid and unenforceable.

The second defendant further pleaded that its act of suretyship fails to comply with the requirements of section 12 of the Money Lending and Rates of Interest Act for an instrument of debt as defined in that Act and the purported act of suretyship is therefore of no force or effect as an instrument of debt.

The second defendant's act of suretyship had expired by reason of the effluxion of time, having been signed more than three years before the grant of the loan as claimed for; it was signed on 23 May 2012.

The second defendant further pleaded, that, neither of the mortgage bonds filed reflect that they were surety bonds for debts owing by the first defendant to the plaintiff and accordingly do not bind the second defendant to the plaintiff for this purpose. Further, the mortgage bonds filed amount to a disposal of the whole or a greater part of the second defendant's assets in the absence of formal approval of a general meeting of shareholders as required by the Companies Act, and, for that reason, they are of no force or effect.

It reiterated that the registration of the mortgage bond in favour of the plaintiff was not authorised by the second defendant and that the plaintiff, as lender, clearly over-reacted and unlawfully requested the mortgage bonds.

The third, fourth, fifth, sixth and seventh defendants challenged the suretyships and validity of the mortgage bonds and contravention of the Money Lending and Rates of Interest Act.

Some of the suretyships were also signed long back, in February 2011; they had expired, the defendants aver.

The defendants pray for the plaintiff's claim to be dismissed with costs.

DEFENDANTS CLAIM IN RECONVENTION

Due to the invalidity of the suretyships alleged in the pleas, the defendants pray that their respective purported suretyships be declared null and void and of no force and effect.

The second defendant, in its counter-claim, also prays that the plaintiff be ordered to issue formal consent according to deeds registry requirements for the cancellation of mortgage bonds registration nos 1557/2013 and 1656/2013 allegedly passed by the second defendant in favour of the plaintiff, and, with the said documents of consent, to release to the second defendant the deeds of the said mortgage bonds and deed of transfer no.1998/1975 made in favour of the second defendant on 7 May 1975.

The third and fourth defendants further pray that the plaintiff be ordered to issue formal consent, according to deeds registry requirements, for the cancellation of mortgage bonds reg nos. 2416/2011 and 4889/2011 allegedly passed by the third and fourth defendants in favour of the plaintiff, and, with the said documents of consent, to release to the third and fourth defendants the deeds of the said mortgage bond and deed of transfer no. 8573/95 made in favour of the third and fourth defendants on 15 December 1995.

The defendants jointly further pray for costs of suit in respect of this claim in reconvention.

PLAINTIFF'S PLEA TO DEFENDANTS CLAIM IN RECONVENTION

The plaintiff, in its plea to the defendants claim in reconvention, contends that the defendants executed open guarantees which are valid, lawful, and enforceable.

It further avers, that, the second defendant's suretyship was and is properly constituted and was extended premised upon a valid resolution by the defendant company.

The acknowledgement of debt was also properly executed by the first defendant and is valid.

The plaintiff added that due process was equally provided in the execution on the guarantee by the second defendant, and the plaintiff was unaware that the third and fourth defendant's daughter unlawfully signed the guarantee and does not admit same.

The plaintiff denies that its representatives interfered in the execution of the guarantee by the second defendant. It argues that the guarantee is hence valid and enforceable.

The plaintiff contends further, that, due process was followed in the registration of the two bonds.

According to the plaintiff, the second defendant's resolutions were made and powers of attorney issued. The bonds were properly registered and are valid. As a result, according to the plaintiff, there is no legal basis on which the second defendant's guarantee and mortgage bonds should be cancelled.

The plaintiff prays for the dismissal of the defendant's claim in reconvention with costs.

AGREED JOINT ISSUES FOR TRIAL

1. Whether or not the first defendant is indebted to the plaintiff in the sum of US$361,024 as capital and US$28,246=49 as interest under and in terms of the loan agreement signed by the parties and dated 2 November 2015.

2. Whether or not the second, third, fourth, fifth, sixth and seventh defendants are jointly and severally liable together with first the defendant for the capital and interest amount claimed under and in terms of their respective deeds of suretyship.

3. Whether or not the second defendant's first and second mortgage bonds numbers 1557/13 and 1655/13, in favour of the plaintiff, are valid and enforceable, and whether or not the said bonds be declared null and void and cancelled.

PLAINTIFF'S CASE

On 27 August 2018, the plaintiff opened its case by calling Cuthbert Gunundu. He is a university graduate holding a Bachelor of Business Studies, a Masters Degree in Business Administration, a holder of a diploma certificate in Institute of Bankers of Zimbabwe, and is employed by the plaintiff as an Account Relationship Manager.

He has been employed by the plaintiff since January 2008.

His job entails managing customers account, more particularly the customer's operating account, receiving credit applications for borrowing to assess credit worthiness of the borrower and make recommendations to the Credit Committee, to approve or reject a credit application.

Once a resolution to lend to the customer is made, he will monitor performance of that client's account to ensure that the borrower performs in line with the terms of the facility.

When there is a deviation by the borrower, the witness would make recommendations for call up or otherwise of the debt.

These are the major roles of his job.

He knows the first defendant as a long outstanding customer of the plaintiff. The second to seventh defendants are guarantors to the first defendant. He testified, that, since 2011, when he was assigned to manage the first defendant's account, the plaintiff demanded the requirement of guarantees to safeguard its moneys loaned out.

From 2011, the plaintiff received guarantees, in terms of security guarantees as well as mortgage bonds against the third and fourth defendants properties. The security guarantees proferred by the third and fourth defendants were for unlimited lifespans until the defendants have paid their debts in full.

In 2013, the witness told the court that the first defendant approached the plaintiff for further borrowing and the first defendant's directors were advised, by the plaintiff, that, the plaintiff would need further security. At that stage, the third defendant indicated that it had associates to cover and provide security for the debt.

Sometime in 2015, the first defendant submitted an application to get assistance from the plaintiff through a loan to pay off its existing debt.

At that stage, the witness stated that the first defendant had failed to meet its obligations.

The first defendant then approached the plaintiff to access a loan whose proceeds the first defendant would then use to pay off its existing debts. That fresh application, of 2015, culminated into a fresh loan agreement which is the agreement dated 2 November 2015.

As at the date of the loan agreement, the witness told the court that the first defendant owed the plaintiff a total of US$373,000.

The terms of that loan agreement was that the Bank had to be secured, and, in terms of clause 6 of the agreement, the security was already in the hands of the plaintiff.

As a result of the 2 November 2015 agreement, the plaintiff advanced a loan to the first defendant to pay off the debt, a loan draw down of $350,000; and, that amount was to pay off the first defendant's outstanding debt.

On 30 December 2015, the second entry on the bank statement shows that there was a loan repayment of $350,000 and the witness told the court that to the plaintiff it was a debit to show that it was a new loan account.

The witness denies that the first defendant repaid the amount on 30 December 2015; there was no settlement on the account.

The witness denied the assertion made by the defendants, that, the plaintiff had sued under the wrong agreement.

He further added, that, the first defendant was using its operating account.

The witness also explained, that, the customer signed an acknowledgment of debt cited on pp10-12 of the plaintiff's bundle of documents, p202 of the record of proceedings. The document, the witness said, was executed by the third defendant and did so on behalf of the first defendant. He added, that, although the loan agreement shows a figure of $373,000 and the acknowledgement of debt bears an amount of $377,299=70 the two (2) documents relate to the same transaction.

Asked by the plaintiff's lawyer to explain, the witness stated that by 6 November 2015 the first defendant owed the plaintiff $377,299=70, the facility letter dated 2 November 2015 showed $373,000, and the acknowledgement of debt, dated 16 November 2015, was the date the acknowledgment of debt was executed.

The acknowledgment of debt was sent to the first defendant on 31 October 2015, and, by that date, the amount due to the plaintiff from the first defendant was $377,299=20; from time to time, the first defendant was periodically depositing money into the operating account and this resulted in gradual reduction of the first defendant's obligation.

However, from 2 November 2015 the first defendant failed to meet its obligations.

The witness further explained to court, that, the defendants provided two forms of security, the guarantees and mortgage bonds, contained on pp67-69 of the plaintiff's bundles.

The second defendant executed it for registration.

In 2012, the borrower applied for an increase to its loan facility and that is when the security was made.

The witness insisted that all the documents were properly executed and the resolution on p69 of the bundle was authentic and valid.

Mr Gunundu was cross-examined by counsel for the first, third, fourth, fifth, sixth and seventh defendants and was put to task to explain the capital debt of $373,000 and the $361,024 and also $350,000 and he had difficulties to explicitly define such figures.

Tasked to explain why the plaintiff would write on its statement that the second entry on the statement of 30 December crediting the first defendant's account with an amount of $350,000, the witness stated that it was a “confirmation” of the loan advanced to the first defendant.

Further, under cross examination, the witness averred that the loan agreement of 2 November 2015 permitted the plaintiff to factor in the old debts.

Pressed to explain clause 12 of the facility letter, on p16 of the record; that clause 12 cancels and invalidates all previous agreements, the witness admitted that the plaintiff was bound by that clause.

He could not produce a letter or application to show that the first defendant applied to the plaintiff for a loan to facilitate funding an existing debt.

Commenting on clause 2 of the facility letter relating to “working capital requirements” he testified that a letter application for a loan to pay off existing debt includes or encapsulates working capital requirements.

He failed to explain precisely the purpose of the loan, he could not satisfactorily explain the purpose of $350,000 whether it was for settling previous debts or was for working capital requirements; if it was for payment of old debts, then, it ceased to be for working capital.

On the aspect of surety, he agreed that the surety agreements violated section 12 of the Money Lending and Rates of Interest Act [Chapter 14:14] but insisted that they are valid.

The defendants, after signing the 2 November 2015 loan agreement, did not provide securities to cover the new loan.

On the aspect of the in duplum rule schedule, the witness computed the figures starting from 1 October 2015 and did not commence on 2 November 2015. The calculation patently included past debts and recapitalised the interest and he could not answer the question put to him, whether it was not proper to calculate the figures with effect from the date of the new loan.

He denied that the amount due to the plaintiff is at least $108,000 however the entries on the bank statement were debited based on the new loan not on the old debts.

He also admitted that the acknowledgment of debt, on p9 of the plaintiff's bundles was prepared by the Bank using a blank form which is later completed by the customer and the customer provides handwritten information to an existing format and the figure on the acknowledgement of debt $377,499=70 was written by the plaintiff.

He had difficulties of explaining the signature on the acknowledgment of debt.

The witness was referred to p6 of the bundle by counsel for the second defendant and asked to comment on the aspect of the declaration by the plaintiff, that, the plaintiff's claim is based on the 2 November 2015 agreement and no other, and he agreed.

He agreed with the second defendant's defence lawyer that the whole cause of action is premised on the 2 November 2015 agreement.

He agrees further that the $350,000 was for working capital.

He could not, however, agree that on 30 December 2015 the first defendant paid off the borrowed $350,000 clearly acquitted by the narrative.

He confirmed that the 2 November 2015 agreement is a stand-alone agreement and cancels all previous facility letters.

On the security and mortgage bonds, he concurred with counsel for the second defendant, that, the amounts of $437,500 was not registered for the 2015 November loan agreement but were meant for loans for 2013.

The mortgage bonds were executed for the 2013 agreement not for the 2 November 2015 agreement.

There was no accompanying resolution by the second defendant authorising the third defendant to represent the second defendant in any capacity, yet the 2013 agreement was totally distinct from the 2015 loan agreement.

The resolution captured on p70, the resolution by the second defendant's directors, was prepared by the plaintiff Bank and it does not authorise a power of attorney to pass a mortgage bond. It also does not provide for registration of a continuing covering bond, nor does it identify any property which is going to be covered by the mortgage bond.

Relating to the causa of the mortgage bond, he admitted that the second defendant was not indebted to the plaintiff.

On p99 of the record, it is clear that the second defendant was not granted any loan by the plaintiff and the $375,000 was not loaned to the second defendant by the plaintiff.

On p105, the clauses on the surety bonds do not reflect the truth about the entire transactions, the witness confirmed under cross-examination, because it appears that the surety bond was passed by the debtor itself.

The witness does not know as to who signed the documents and was not there when such documents were signed.

He was at pains in marrying the documents prior to November 2015 with the 2015 loan agreement which is the cause of action for the plaintiff.

He sought to rely on the clauses of the mortgage bond which speak of continuing cover and failed to explain the practicality of clause 12 of the 2 November 2015 agreement.

The witness had difficulties to explain what transpired relating to figures and signature on documents and legality of the documents contained on the plaintiff's bundle.

He did not impress as a good witness, moreso when he was subjected to a protracted cross-examination by the defendants legal practitioners. He did not fare well in evidence in chief and under cross examination.

He did not know much, even on basic issues of practices and interpretation of a simple loan agreement.

If clause 12 of the loan agreement cancelled all past agreements, how can the witness resort to previous debts to calculate the capital debt?

How can the witness “confirm” a loan facility after a month from the date the loan was signed and then enter into its own books the inscription “loan repayment $350,000?”

The capital sum of $373,000 keeps changing and no comprehensive statement to explain that continuous change of figures was produced and no good explanation by the plaintiff's witnesses was proferred.

This court cannot prepare a contract for the parties, it will interpret what is on paper and draw conclusions from such.

The duty to clarify the terms of the agreement lies with the plaintiff through its witness; Mr Gunundu left a lot of issues hanging.

HH238-17 : ZIMBABWE UNITED PASSENGER COMPANY vs JAYESH SHAH and GIFT INVESTMENTS (PVT) LTD
Ruled By: TSANGA J

The plaintiff, Zimbabwe United Passenger Company, better known as ZUPCO, issued summons in 2006 for the eviction of the defendants or any persons occupying the premises through them, to vacate premises known as No.9 Hood Rd, Southerton, Harare.Zimbabwe United Passenger Company (ZUPCO) also sued for costs, jointly and severally, on ...

SC24-18 : MEDLOG ZIMBABWE (PVT) LTD vs COST BENEFIT HOLDINGS (PVT) LTD
Ruled By: GARWE JA, GOWORA JA and GUVAVA JA

The respondent issued summons out of the High Court seeking an order for the release of its plastic bags which were being retained by the appellant, payment of the sum of US$157,350=05 representing the business it lost as a result of such retention, and costs of suit on the scale of legal practitioner and client.

The respondent also sought payment of interest from the date of issue of summons to the date of payment in full.

After hearing evidence and submissions from the parties, the court a quo ordered the appellant to pay the sum of $157,350=05 to the respondent being damages for loss of business, interest on that sum at the prescribed rate, and costs of suit on the ordinary scale.

The present appeal is against that order.

FACTUAL BACKGROUND

The appellant is a company registered in accordance with the laws of Zimbabwe and carries on business from premises in Avondale, Harare. It is an agent of the Mediterranean Shipping Company (“Mediterranean Shipping”) a company that operates worldwide with its core business being the carriage of containers.

As agent, appellant's responsibility is to fulfil the obligations of Mediterranean Shipping by facilitating delivery of containerised cargo to the clients of Mediterranean Shipping in Zimbabwe.

In this particular instance, at the behest of Mediterranean Shipping, the appellant supervised the movement, by road, of the plastic bags, which were in a container, from the Port of Beira to Mutare Dry Port.

In Mutare, the appellant instructed the employees of the Port not to release the goods until certain monies were paid by the respondent.

It is common cause, that, initially, the appellant refused to release the container until a sum of money owed by the wife of one of the directors of the respondent had been paid. Upon realizing that the debt had nothing to do with the respondent, the appellant then demanded payment of the sum of $80=50 in respect of handling charges.

The respondent, believing the bags had been unlawfully retained by the appellant, instituted proceedings in October 2012 for the release of the bags, damages for loss of business, and interest thereon at the prescribed rate.

The sum of $80=50 was only paid in August 2013 after which the plastic bags were then retrieved.

PROCEEDINGS A QUO

In its declaration, the respondent alleged that it had imported a container of plastic bags from Hong Kong and that it had engaged the appellant as its agent to facilitate the importation and clearing of the goods with the Zimbabwe Revenue Authority(“ZIMRA”).

It alleged, that, notwithstanding the fact that it had paid the import duty and the appellant's clearing fees, the appellant had refused to release the container on the basis that it was owed money from a previous transaction by the wife of one of the respondent's directors.

It alleged, that, consequent upon the refusal by the appellant to release the container, a client who had placed an order with it for plastic bags had cancelled the order as a result of which the respondent had suffered damages in the amount claimed.

In its plea, the appellant, as defendant, denied that it had entered into a contract of agency with the respondent.

It alleged, that, it had been contracted by the shipper (a term used in the freight business to denote the person who prepares the necessary documentation for the carriage of goods), Hong Kong Richer Int'l Group Limited (”Richer International”) to transport the cartons of plastic bags cif Mutare. It alleged, that, it duly discharged its obligations to deliver the container to Mutare Dry Port after which the respondent became liable to pay its administration fee relating to the Bill of Lading and the container in the sum of $80=50.

The appellant accepted that it refused to release the container before payment of the administration fee in the sum of $80=50 had been made.

At a pre-trial conference before a judge in chambers, the parties agreed the issues to be determined at the trial.

The issues included, inter alia, whether a contract existed between the parties, and, if so, the terms thereof. Further, whether the appellant was entitled to refuse to release the container until payment of the handling fee of $80=50 had been made, and, if not, whether the respondent had suffered damages in the amount claimed in the summons.

During viva voce evidence, the respondent, represented by its managing director, Albert Kuwaza, stated as follows:

His company ordered the plastic bags from China, and, through the supplier, engaged the appellant at its offices in China to transport the merchandise from China to Mutare, Zimbabwe. Once the goods were in Mutare, the appellant then demanded payment of the sum of $1,750 which it alleged was owed by a Mrs Kuwaza, wife of one of the respondent's directors, in respect of a previous transaction.

The issue of the handling fee of $80=50 was raised by the appellant for the first time in October 2012, way after a client who had placed an order for the bags had cancelled the purchase.

Under cross-examination, he conceded, that, in fact, the company with which he contracted in China was Hong Kong Richer Int'l Group Limited (Richer International) and that Richer International, in turn, contracted with Mediterranean Shipping to transport the goods to Mutare. He further conceded, that, the clearing fees were paid directly to Green Motor Services, the company that was operating Mutare Dry Port and not to the appellant. He told the court, further, that, as far as he was concerned, the appellant, Mediterranean Shipping, and Green Motor Services were part of the same company.

Following the dismissal of an application for absolution at the close of the plaintiff's case, the appellant's managing director, Dr Giorgio Spambinato, gave evidence before the court a quo. His evidence was as follows:

The appellant, which operates from offices situate at 27 Natal Road, Belgravia, Harare is an agent of Mediterranean Shipping. It has no offices outside Zimbabwe. The appellant's role was to assist Mediterranean Shipping to execute its contractual obligation of moving cargo into and out of Zimbabwe. In this case, the appellant only supervised the movement, by road, of the container from the Port of Beira to Mutare. It was not involved in the clearance of the goods with the Zimbabwe Revenue Authority (ZIMRA).

He confirmed that, initially, the appellant had insisted on payment of the sum of $1,750 owed by a Mrs Kuwaza in respect of a previous transaction, but, on realizing the error, had personally instructed that the container be released on payment of the sum of $80=50.

That sum represented the handling fee for facilitating the necessary documentation and supervising the speedy execution of delivery by sub-contractors and service providers.

He explained, that, in Zimbabwe, it is customary for the agent handling the cargo on behalf of Mediterranean Shipping to recover the costs directly from the recipients of the cargo. In other countries, the handling fee is paid by Mediterranean Shipping.

Whatever role the appellant played in this case was in fulfilment of its agency agreement with Mediterranean Shipping.

In its closing address a quo, the respondent submitted, that, the question whether there was a contract was “of no real consequence” and that “there needn't have been a contract between them because the scenario can be resolved by the principles of depositum…,.” Further, that, as depositary, the appellant had an obligation to return the goods to the respondent upon demand.

The respondent further submitted, that, it was clear from the summons and declaration that the claim “was vindicatory in nature, not contractual.”

Accordingly, the respondent prayed for its claim for damages and interest thereon to be granted on the basis of depositum.

In its address a quo, the appellant submitted, that, on the evidence led before the court, no contract had been proven. The person with whom the respondent had communicated in China was not the appellant but an employee of Mediterranean Shipping. More critically, the terms of the alleged contract between the respondent and the appellant had not been established. Moreover, at no stage had the respondent deposited the goods with the appellant.

In its judgment, the court a quo found, that, Mr Kuwaza, the managing director of the respondent had been unclear as to the nature of the relationship between the appellant, Mediterranean Shipping, Hong Kong Richer Int'l Group Limited (Richer International) and the respondent.

The court remarked as follows at page 10 of its judgment:

“What is apparent from Mr Kuwaza's evidence is that he did not produce any documents to show the existence of a contract between the plaintiff and the defendant. From the evidence that is before me, it is clear that the plaintiff entered into a shipping agreement with Mediterranean Shipping Company in Hong Kong, China in April 2012 for the shipment of its plastic container from China to Zimbabwe. That contract did not involve the defendant.”

However, at pages 10-11 of the cyclostyled judgment, the court a quo stated:

“I am of the considered view, that, the circumstances of this case show, that, there was a contract between the plaintiff and the defendant. Although the defendant said that it was acting as an agent of Mediterranean Shipping Company, its conduct towards the plaintiff shows that it also contracted with the plaintiff separately. It is not disputed that the defendant facilitated the importation of the plaintiff's cargo from the Port of Beira to Mutare.

Thereafter, it demanded payment from the plaintiff for the service that it had rendered.

The parties did not enter into this contract verbally or in writing, but, they did so by their conduct.

By demanding payment from the plaintiff for the costs it incurred in facilitating the importation of the plaintiff's cargo, the defendant created a contract between itself and the plaintiff. It made it a condition of the contract, that, if the administration fee was not paid, the plaintiff's cargo was not going to be released.

If there was no contract between the plaintiff and the defendant, the defendant should have simply demanded payment of its fees from Mediterranean Shipping Company which it alleges to be its principal.

At law, an agent's duty is to perform his mandate on behalf of his principal and he accounts to his principal. The agent's remuneration is paid by the principal and not by a third party.

I therefore take it, that, the moment an agent starts demanding payment from the third party and not from his principal, then, it means that he is no longer acting in terms of the contract between himself and his principal, but he would have created his own contract with the third party.

That contract he would have created with the third party is separate from his contract with his principal.

In casu, this is what the defendant did. It created its own contract with the plaintiff, which contract was separate from the one it had with Mediterranean Shipping Company.”

At page 12 of its judgment, the court, without commenting on the submission by the respondent, that, it now relied on a contract of depositum, concluded by stating:

“If there was no contract between the 2 companies, then, the defendant should and would have demanded its fee from Mediterranean Shipping Company which is its principal. If there was on (sic) contract, the defendant had no business demanding that money from the plaintiff. It also had no business withholding or refusing to release the plaintiff's container on the basis that the handling fee had not been paid. All the defendant's payments would have been due from Mediterranean Shipping Company. The plaintiff managed to prove that there was contract between itself and the defendant.”

Based on the above findings, the court concluded, that, the appellant had wrongfully refused to release the container and that the respondent had proved its contractual damages. It consequently made the order which is the subject of this appeal.

GROUNDS OF APPEAL

In its notice of appeal, the appellant raised five grounds. These are:

(i) The court a quo erred in finding, that, there was a contract between the appellant and the respondent when the latter was unable to identify the nature of the contract it relied upon and its terms – i.e. whether the contract was one of carriage, depositum, or agency.

(ii) The court a quo erred in finding, that, there was a contract between the appellant and the respondent despite a contrary indication in the Bill of Lading and the respondent's lack of knowledge of the terms of the contract it alleged.

(iii) The court a quo erred in placing the onus of proving the terms of the contractual relationship between the appellant and the respondent on the former, albeit obliquely.

(iv) The court a quo erred in finding that -

(1) The contract for the sale of the plastic bags between the respondent and Nedol Investments (Private) Limited was not a sham; and

(2) The loss suffered by the respondent, if any, was reasonably foreseen by the appellant at the time of the conclusion of the alleged contract, and, despite the fact that the reasonable foreseeability was not specifically pleaded and proved.

(v) The court a quo erred in finding that the respondent had mitigated its loss.

APPELLANT'S SUBMISSIONS BEFORE THIS COURT

In its submissions before this Court, the appellant has argued, that, the respondent did not sufficiently identify the nature of the contract between the parties, in particular, whether it was one of agency or depositum. The terms of the agreement, be it agency or depositum, remained unknown.

It further submitted, that, the case for the respondent was muddled and that the judgment of the court a quo was equally confusing and confused. Lastly, it submitted that whilst the facts show some relationship between the parties, the respondent had not proved the nature of the relationship that existed between them.

RESPONDENT'S SUBMISSIONS BEFORE THIS COURT

In its heads of argument, the respondent has submitted as follows:

Its declaration in the court a quo made it clear, that, what it sought was the release of its goods arising from their unlawful detention. Further, that, even if there was no contract of agency between the parties, the respondent “was not without a remedy” and that there was a tacit contract of depositum between the parties.

In paragraph 3 of its heads of argument, it has further stated:

“The respondent had contended that the claim was of a vindicatory nature and that any contract between the parties was one of depositum…,. As the appellant states, the court did not deal with these issues. It is here noted, that, by the time the matter came before the court, the goods had been released, and, if the claim had originally been vindicatory in nature, it no longer was, which was probably the reason why the court a quo allowed itself to be misled by the appellant to believe that the claim fell to be decided in contract.”…,.

At paragraph 10 of its heads of argument, the respondent has also stated:

“The absence of a contract, however, would not have left the respondent without a remedy because he would have a claim in delict for any loss incurred as a result of the unlawful possession of his property…,.”

Finally, at paragraphs 13 and 14 of its heads, the respondent has further argued:

“13. Thus, as the respondent's counsel contended at p239, the issue whether there was a contract between the parties was really of no consequence and the appeal cannot succeed on the basis that no such contract was brought into being.

The court a quo found, in effect, that, there was a tacit contract between the parties based on the fact, that, the appellant raised charges mentioned above against the respondent.”...,.

REQUISITES FOR PLEADING A CONTRACT

In an action based on a contract, the material averments that must usually be made are the existence of the contract, the relevant terms of the contract, and the applicability of those terms to the particular right forming the basis ex contractu of the claim: see HERBSTEIN & Van WINSEN, The Civil Practice of the High Courts of South Africa (5th edn, Juta and Co. Ltd, Cape Town 2009)…,.

Whether the contract of agency was proved

This was the basis of the respondent's cause of action before the High Court.

The respondent's managing director did not know the exact relationship between the appellant, Mediterranean Shipping, and Hong Kong Richer Int'l Group Limited (Richer International) of Hong Kong.

From the evidence, it is clear that the appellant was not involved in the transactions that took place in China. It does not conduct operations outside Zimbabwe. It only got involved, as agent of Mediterranean Shipping, in tracking the container once it landed in Beira and in having it transported to Mutare Dry Port.

It was also clear from the evidence, that, as agent of Mediterranean Shipping, the appellant was supposed to receive payment from Mediterranean Shipping for its role in checking the Bill of Lading and ensuring that the cargo was delivered to Mutare Dry Port. The appellant's managing director explained, however, that, it is the practice in Zimbabwe for the recipient to be billed directly by the appellant.

Clearly, no contract of agency was proved.

The fact that the appellant invoiced the respondent for handling fees does not, on its own, show the existence of a contract. The exact relationship that existed between the two parties was not established.

In the circumstances, the court a quo should have granted the application for absolution from the instance which was made at the close of the case for the plaintiff.

The court a quo accepted, that, the respondent had not produced documents to show the existence of a contract. The court further accepted, that, the respondent had entered into a shipping agreement with Mediterranean Shipping in Hong Kong and that the appellant was not involved.

The court also accepted, that, the appellant only got involved in supervising the movement of the container from Beira to Mutare at the behest of Mediterranean Shipping. The court further found, that, although the parties had been involved in these transactions over the years, the respondent did not know that the appellant was merely an agent of Mediterranean Shipping.

Having made these findings, that really should have been the end of the matter.

The suggestion, that, judging by the conduct of the parties, there must have been some other undefined contract between them, is not borne by the evidence. In any event, the court did not state what type of contract this may have been and what its terms were.

Of significance is the fact, that, the respondent itself accepted, in its closing submissions, that, its claim was not based on agency but rather on depositum.

Having abandoned its claim based on a contract of agency, it was not for the court a quo to find, as it did, that there was some other undefined contract. Once the respondent abandoned its pleadings, the court should have granted absolution from the instance.

The attempt by the respondent, to rely on the rei vindicatio and depositum, as well as delict, clearly confirms that the respondent had not established any real cause of action against the appellant.

SC86-22 : CITY OF HARARE vs EVARISTO MUNGATE
Ruled By: GOWORA JA, MAKONI JA and BERE JA

After hearing counsel, in the matter, we dismissed the appeal with costs and indicated that reasons would follow in due course. Below are the reasons for judgment.This is an appeal against the whole judgment of the High Court upholding the respondent's claim for damages arising from the appellant's negligence.THE BACKGROUND ...

After hearing counsel, in the matter, we dismissed the appeal with costs and indicated that reasons would follow in due course. Below are the reasons for judgment.

This is an appeal against the whole judgment of the High Court upholding the respondent's claim for damages arising from the appellant's negligence.

THE BACKGROUND FACTS

On 28 March 2014, at around 19:00 hours, near Lyon's Maid offices, along Simon Mazorodze Road, the respondent fell into the appellant's uncovered drainage tunnel commonly referred to as a “catch pit.” He was rushing to board a commuter omnibus which he had waved down. He broke his leg, sustaining a permanent limp. The catch pit is situated on a traffic island which is between Simon Mazorodze Road and a pedestrian or foot path.

Subsequently, on 23 September 2014, the respondent issued summons against the appellant claiming damages amounting to US$305,796; interest thereon, and costs of suit.

The breakdown of the damages claimed by the respondent was as follows:

(a) Shock, pain, and suffering US$50,000;
(b) Loss of amenities of life US$100,000;
(c) Disability US$100,000;
(d) Medical expenses US$5,796;
(e) Contumelia US$50,000;

The respondent averred, that, the appellant was liable for the injuries he suffered and ensuing damages as it had failed to either cover or put up any cautionary signs to warn pedestrians of the existence of the uncovered catch pit.

In its plea, the appellant denied liability in toto stating that it was not negligent in any way, nor was it liable for the respondent's injury, loss incurred, and damages claimed. It put the respondent to the strict proof thereof.

It further averred, that, the misfortune that befell the respondent was a result of the respondent's negligence since he failed to keep a proper lookout and acted without due care and attention.

The appellant prayed for the dismissal of the respondent's claim.

PROCEEDINGS IN THE COURT A QUO

The following issues were referred to trial:

“(i) Whether or not the defendant(s) are liable for injuries allegedly suffered by the plaintiff.

(ii) Whether the plaintiff's injuries were not a result of Plaintiff's own negligence and failure to keep a proper outlook.

(iii) Whether or not the defendant(s) are liable to pay any damages whatsoever.

(iv) If the defendant(s) are liable, what is the quantum thereof.”

The respondent was the sole witness in his case....,.

In its defence, the appellant led evidence through one George Munyonga, who is a Deputy Chief Engineer employed by the appellant, responsible for maintaining road infrastructure.

SC16-23 : ZIMBABWE PLATINUM MINES (PRIVATE) LIMITED vs ZIMBABWE REVENUE AUTHORITY
Ruled By: BHUNU JA, UCHENA JA and CHATUKUTA JA

This is an appeal against part of the judgment of the Special Court for Income Tax Appeals, handed down on 14 August 2020, dismissing the appellant's appeal against the respondent's Commissioner's dismissal of its objection in respect of its failure to deduct Pay As You Earn (PAYE) in respect of meals and accommodation the appellant provided to its employees and penalties the respondent's Commissioner had imposed against the appellant.

At the hearing of the appeal, the appellant abandoned its grounds of appeal in respect of penalties.

The appeal was therefore argued on whether or not the accommodation and meals the appellant provides to its employees are taxable.

FACTUAL BACKGROUND

The appellant is a company duly registered in terms of the laws of Zimbabwe. It is involved in the mining industry at its still to be fully developed mines at Ngezi and Selous areas in Zimbabwe.

The respondent is an administrative authority established in terms of the Revenue Authority Act [Chapter 23:11] and is tasked with, inter alia, the collection of income tax from income earners in terms of the Income Tax Act [Chapter 23:06] (ITA).

On establishing its mines, the appellant built Ngezi, Mupani, and Eagle's Nest Villages where it accommodates and provides meals to employees on shifts and those waiting to go on shifts. It gives packed meals to employees who will be on shift in the mines. The employees on shift in the mines are given breaks of only 15 minutes to eat their packed meals before continuing with their duties.

The appellant's villages can only be accessed by employees who it will have authorised to be accommodated there for the periods they will be on shifts and waiting to go on shifts. The appellant completes forms authorising the admission of employees going on shifts into its villages. The villages do not have individual cooking facilities for the employees. The appellant provides them with meals. The villages can only accommodate employees. They do not accommodate the employees dependents. An employee can only stay in the villages while on shift or waiting to go on shift. When an employee is off duty, he has to go back to his own accommodation.

The respondent carried out a tax review audit of the appellant's payroll tax compliance. Upon concluding the investigations, the respondent's officers found the appellant liable for failure to withhold pay as you earn tax on advantages and benefits accruing to the appellant's employees in respect of the accommodation and meals it provides to them in the villages and mines. As a result, the respondent issued the appellant with revised assessments for the period 2010 to 2016 and required it to pay the outstanding taxes.

The appellant objected, in terms of section 62 of the Income Tax Act, to the assessments raised by the respondent in respect of the accommodation and meals it gives to its on shift and waiting to go on shift employees. It submitted, that, the employees were not deriving any benefit from the accommodation arrangements as they were purely designed for the employer's business transactions.

The respondent's Commissioner disallowed the appellant's objections.

The appellant appealed to the court a quo challenging his determination of its objections.

In the court a quo, the appellant argued, that, the meals and accommodation it provided to its employees did not constitute a taxable advantage or benefit in terms of section 8(1) of the Income Tax Act.

In response, it was submitted for the respondent, that, the assessments had been done in terms of the law. It was argued, that, the appellant's employees were getting a benefit from the free accommodation and meals they got from Eagle's Nest, Ngezi, and Mupani villages as they were relieved of the financial burden of paying for their own accommodation and buying their own meals. The respondent therefore argued, that, this made the provision of accommodation and meals taxable benefits in the hands of the appellant's employees.

In determining the issue of the meals and accommodation provided by the appellant to its employees at Eagle's Nest, Ngezi, and Mupani Villages, the court a quo held, that, they were taxable as they relieved the employees from having to pay for their own accommodation and meals.

The appellant was aggrieved by the decision of the court a quo. It appealed against it to this Court, on the following ground of appeal:

“The court a quo erred in law by holding, that, the meals and accommodation provided by the appellant to its employees temporarily residing at Eagle's Nest, Ngezi, and Mupani Villages, and working at the appellant's mines, constitutes a taxable advantage or benefit in terms of section 8(1)(f)(ii)(b) of the Income Tax Act (Chapter 23:06) accruing to the employees.”

SUBMISSIONS BY THE PARTIES

Counsel for the appellant submitted, that, he will be advancing argument in respect of ground 3, which dealt with section 8(1)(f) of the Income Tax Act focusing on taxation of accommodation and meals provided by the appellant to its employees. He submitted, that, section 8(1)(f) of the Income Tax Act contained an exception to the effect, that, advantages or benefits used, enjoyed, or consumed by employees for purposes of the employer's business transactions are not taxable.

He averred, that, the meals and accommodation provided by the appellant to its employees in the mines and villages were not taxable as they were provided for the employer's business transactions.

He further submitted, that, the circumstances surrounding the operations of the appellant demanded that the employees be provided with temporary accommodation and meals, on site, for the employer's benefit.

Per contra, counsel for the respondent submitted, that, the appellant's employees enjoyed a benefit that was unrelated to the services they rendered and so they ought to have been taxed on the meals and accommodation they received from the appellant. He further averred, that, the appellant's employees ought to have found their own accommodation in neighbouring towns because the accommodation and meals which were provided by the appellant were not in line with the business transactions of the appellant, but was mainly for the convenience of the employees.

He however conceded, that, employees who are off duty cannot stay in the villages and have to go back to their own accommodation and would not be entitled to meals.

The appellant, having abandoned the issue of the penalty imposed upon it, the only issue remaining to be determined relates to: whether or not the court a quo correctly held, that, there was no misdirection on the part of the respondent in holding, that, the meals and accommodation provided by the appellant constituted a taxable advantage or benefit in terms of the Income Tax Act.

THE LAW

It is settled law, that, the taxpayer bears the onus of proving its case on appeal. Section 63 of the Income Tax Act provides as follows:

“63 In any objection or appeal under this Act, the burden of proof that any amount is exempt from or not liable to the tax or is subject to any deduction in terms of this Act or credit, shall be upon the person claiming such exemption, non-liability, deduction or credit, and, upon the hearing of any appeal, the court shall not reverse or alter any decision of the Commissioner unless it is shown by the appellant that the decision is wrong.”

The tax payer can prove this by giving evidence which proves that the law exempts him/her/it from paying the tax the Commissioner is requiring it to pay.

In the case of Parkington v Attorney General 1869 LR 4 H.L. 100, 122 LORD CAIRNS, commenting on the interpretation of fiscal statutes, said:

“As I understand the principle of all fiscal legislation, it is this. If a person sought to be taxed comes within the letter of the law, he must be taxed, however great the hardship may appear to the judicial mind to be. On the other hand, if the Crown, seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of the law the case might otherwise appear to be.”

The facts of each case, and the relevant provisions of the Income Tax Act, must therefore be carefully examined to determine whether or not a taxpayer falls within or outside the ambit of the taxing provision.

Section 8(1)(f) of the Income Tax Act provides as follows:

“8(1) For the purposes of this part:

'gross income' means the total amount received by or accrued to or in favour of a person, or, deemed to have been received by or to have accrued to or in favour of a person in any year of assessment from a source within or deemed to be within Zimbabwe excluding any amount (not being an amount included in 'gross income' by virtue of any of the following paragraphs of this definition) so received or accrued which is proved by the taxpayer to be of a capital nature, and, without derogation from the generality of the foregoing, includes —

(a) to (g)…,.

(f) An amount equal to the value of an advantage or benefit in respect of employment, service, office or other gainful occupation or in connection with the taking up or termination of employment, service, office or other gainful occupation.”

The Income Tax Act proceeds to define the terms 'advantage' or 'benefit' as including:

“the use or enjoyment of any other property whatsoever…, granted to an employee, his spouse or child by or on behalf of his employer in so far as it is not consumed, occupied, used or enjoyed, as the case may be, for the purpose of the business transactions of the employer…,.”…,.

The words “in so far as it is not consumed, occupied, used, or enjoyed, as the case may be, for the purpose of the business transactions of the employer” provides an exception which determines whether or not an employee who receives an advantage or benefit should be taxed.

The words “in so far as it is not” which precedes the words “consumed, occupied, used, or enjoyed” means the taxability of the advantage or benefit depends on the purpose for which the consumption, occupation, use, or enjoyment is given by the employer.

The words “for the business transactions of the employer” exempts the employee from taxation if he/she/it consumes, occupies, uses, or enjoys the advantage or benefit for the business transaction of the employer.

It must be noted, that, the consumption, occupation, use, or enjoyment would be taxable but is exempt because of the need to further the employer's business transactions.

The Legislature deliberately provided for the exemption in appreciation that circumstances may arise when employees may get an advantage or benefit which should be exempt because it will have been necessitated by the business transaction of the employer.

The purpose of the employer's business transaction can be identified by considering who is the dominant beneficiary between the employer and the employee, or, who determines the need for the giving of the benefit and is enriched by it.

If the transaction is predominantly for the employer's benefit or interest, the employee should be exempt from taxation. If the transaction gives the employee an advantage or benefit, as would be the case when employees are given incentives, the employee must be taxed.

This, therefore, means, advantages and benefits which are given to an employee are taxable unless they are consumed or used by the employee for the purpose of the business transactions of the employer.

APPLICATION OF THE LAW TO THE FACTS

In determining the appeal on whether or not the accommodation and meals provided by the appellant to its employees were taxable the court a quo said:

“The issue herein is whether the meals and the accommodation provided by the appellant to its employees at these camps constitute a taxable advantage or benefit accruing to the employees in terms of section 8(1)(f) of the Act. The appellant's contention is basically, that, it provides meals and accommodation to its employees at these villages because it is a necessary part of its business. In other words, there is no taxable benefit which is given to the employees. During the hearing, the appellant chose not to pursue the issue as to whether or not there was a practice generally prevailing within the respondent in terms of which meals provided to low level employees were not subjected to tax. I will therefore focus on the remaining issue.

It is trite that section 8(1)(f) of the Act excludes from taxation any advantage or benefit in so far as it is used, consumed, or enjoyed for the purpose of the business transactions of the employer.

The appellant contents, that, this provision is not different from the so-called convenience of the employer doctrine applied in the United States of America. The later doctrine, as codified by the Internal Revenue Code of 1954, established two requirements for excluding meals:

(a) The employer must provide the meal for the convenience of the employee; and
(b) The meal must be provided 'on the business premises of the employer.'

See also Commissioner v Kawalisk 434 US 77 (1977).

I disagree with the appellant. Section 8(1)(f) creates a dispensation that is materially different from the US doctrine of the convenience of the employer.

The respondent correctly relies upon a case from this court in ITC number 1336 (1981) 43 SATC 114 (Z). In that case, SQUIRES J stated:

'The advantage of (sic) benefit of using a car belonging to the employer is to relieve the employee tax payer of the financial burden of owning a car himself. It can be a very substantial benefit compared to the person who receives no such advantage…, since the relief thus afforded is unquestionably a benefit to the employee. I can see no basis on which the spirit of the Act would save to exclude these from what falls into income particularly as they are equally clear a cost to the employer.'

Although the court was dealing with a motoring benefit, the principle is equally applicable to accommodation and meals benefits in casu.

These benefits are subject to taxation.

The accommodation and meals provided by the appellant to its employees relieves the employees of the financial burden of paying for their own accommodation and buying their own meals.

They are therefore benefits taxable in the hands of the employees.

The accommodation and meals were not consumed for the business transactions of the appellant. The job would have been done whether or not the appellant had provided the accommodation and food. The employees could have looked for their own accommodation and their own food to sustain themselves.

If all that the appellant wants was to prevent its employees from wondering away from the workplace, and, at the same time, not give them a taxable benefit was for the appellant to provide the accommodation and the meals for a market price consideration. The appellant even provided meals to employees who were no longer on shift.”…,.

In his evidence, Mr. Jokonya, the appellant's Human Resources and Community Services Manager, during his examination in-chief, told the court how they run three shifts.

During that part of his evidence, the following exchange took place between him and the appellant's counsel:

“Q. In relation to that, can I ask you, Mr Jokonya, to tell the court how long does an employee stay at this (sic) accommodation villages?

A. We run three shifts, what we call 7:3 when employees are on day shift they are at work for 7 days and then they go off for 3 days. That is when they are on day shift. When they go on night shift, they go on what we call 7:4 which means that they are at work for 7 days and they go off for 4 days. And at any one point in time there is a shift that is off so two shifts are at work, one shift is off. And then we have got the third one that we call 5:2. This basically refers to people who work Monday to Friday and they are off over the weekend.

Q. Mr Jokonya, you have explained to the court the various shifts that employees work for 7 days then after 4 days off, then 5 days off; when these employees are not on shift where did they stay?

A. My Lord, when these employees are not on shift they are expected to go on (sic) wherever they call home.”…,.

The fact that employees who are not on shift, or awaiting to go on shift, have to go to their own accommodation resolves the issue.

It means the court a quo erred when it, in its judgment, held that “the accommodation and meals provided by the appellant to its employees relieves the employees of the financial burden of paying for their own accommodation and buying their own meals.”

If employees have to go to their own accommodation when not on shift, or waiting to go on shift, it means they have to own or rent their own accommodation for use when they are not on shift.

Their stay in the appellant's camps or villages is temporary and does not relieve them of the financial burden of owning or renting their own accommodation.

Counsel for the respondent conceded, during the hearing of the appeal, that, employees go to their own accommodation when they are not on shift or waiting to go on shift.

Entry and exit from the villages are controlled by the employer.

An employee can only be accepted into the villages at the instance of the employer who completes a form instructing the village to book in the employee who will be about to go on shift. The employees can only stay in the villages for the period specified by the employer. At the end of his shift, an employee has to leave the village and go back to his own accommodation. He will be replaced in the village by another employee who will be coming to stay for the duration of the next shift.

The accommodation is therefore only availed to employees during the duration of their shifts.

This clearly demonstrates, that, the accommodation is for the benefit of the employer's business. The employer controls the employees stay in the villages at times it requires their presence in the villages to work in its mines which are located in the bush.

The employer also controls the provision of food in its villages and mines. The villages have no provision for employees to cook their own food. They have to eat what the employer provides. Employees working in the mines are given fifteen minutes, per shift, to eat the packed meals. This is obviously to avoid loss of production time.

This is clearly for the benefit of the employer's business transaction.

The employees can therefore only stay in the villages and consume the meals for purposes of rendering efficient services to their employer during the times they are confined to the villages and mines for the business transactions of the employer.

It is only the appellant's employees, on shift, who can stay in the villages.

The employees have to find their own, and their families, accommodation elsewhere. They have to provide meals for their families during the period they will be on shift. They have to go back to their own accommodation when they are not required to be in the villages or mines for the business transactions of the employer.

The appellant clearly uses its villages and meals for the furtherance of its business transactions.

SC81-23 : DISCENT BAJILA and FRANK MHLANGA and ADELAIDE MHLANGA and SANPOULOS MAPLANKA and OTHERS vs TATENDA MADZIRASHE and RAMSON CHINGWARA and LINDA MPOFU and OTHERS
Ruled By: UCHENA JA, CHITAKUNYE JA and MWAYERA JA

The four appeals are against parts of the High Court's Judgment HB157-23 (“the court a quo”) which was handed down on 27 July 2023.

The appeals are against the decision of the court a quo setting aside the thirteenth respondent's decision to accept the appellants nomination papers as candidates for the impending harmonised general elections.

The four appeals SCB59/23, SCB60/23, SCB61/23 and SCB62/23 were consolidated and heard by this Court on 2 August 2023.

On 3 August 2023, we issued the following order:

1. The appeals be and are hereby allowed with costs.

2. The judgment of the court a quo be and is hereby set aside and substituted as follows:

'The applications be and are hereby dismissed with costs.'

3. The reasons for the court's decision will follow in due course.”

We undertook to furnish reasons for our disposition. These are they.

FACTUAL BACKGROUND

On 21 June 2023, the fourteenth respondent constituted a Nomination Court to receive submissions for the nominations of candidates for the election of constituency members to the National Assembly for the Bulawayo Metropolitan Province. This was in accordance with Proclamation 4 of 2023, gazetted under S.I. 85 of 2023 by the President.

The determinant facts of this appeal emanate from the events that transpired on 21 June 2023 at the Nomination Court.

The appellants appeared before the Nomination Court for their nominations as candidates for elections scheduled for 23 August 2023. The nomination officer accepted their nominations and registered them as candidates.

The respondents, except for the thirteenth to fifteenth respondents, applied to the court a quo for the setting aside of the appellants (respondents a quo) nominations. They alleged, that, their nomination papers were in disarray. They further alleged that when the appellants lodged their papers, before 4pm, they were advised to correct them. The respondents further alleged, that, the appellants thereafter filed their corrected papers out of time, after 4pm, in violation of the Electoral Act [Chapter 2:13] (“the Act”). They further alleged that, by 4pm, the appellants were outside the courtroom frantically trying to rectify their nomination papers. They further asserted, that, such nominations were null and void.

In response, some of the appellants asserted that their papers were in order and that they lodged them with the nomination officer who accepted them before 4pm. The other appellants stated, that, their papers had errors which were pointed out by the Nomination Court and were corrected and filed with the nomination officer before 4pm. Some of the appellants maintained, that, they were in court with their corrected papers which were accepted before 4pm.

In his opposing affidavit, the 13th respondent, Innocent Ncube, in his official capacity as the Provincial Elections Officer, and, for and on behalf of the Zimbabwe Electoral Commission (“ZEC”) and the Chairperson of ZEC, indicated that the nomination papers were procedurally and timeously lodged between 10am and 4pm. He also pointed out that the designated courtroom could only accommodate 12 to 15 people at any time. During the proceedings, at 3:55pm, he announced that all prospective candidates who were queuing outside because of his administrative decision (to allow 12 to 15 people at any time) should hand over their nomination papers to the police officer as the court was due to close at 4pm. The police officer collected all the nomination papers and handed them over to the thirteenth respondent before 4pm. Thereafter, the nomination officer would call in those whose papers he would be processing.

In respect of the form, Annexure “B” relied upon by the applicants a quo, he pointed out that it was a register in which the secretary captured the times when the nomination forms were inputted into the Zimbabwe Electoral Commission's (ZEC) records. In other words, he stated that the form was for the purpose of data capture into ZEC's system and not a record reflective of the time when the nomination papers were lodged with the nomination officer.

On the basis of the above facts, the court a quo found for the applicants a quo (now respondents). It held that the appellants nominations had been lodged after the stipulated cut-off time of 4pm. It, therefore, declared the nominations of the appellants as null and void.

PROCEEDINGS BEFORE THE COURT A QUO

The parties made submissions on both the preliminary points and the merits before the court a quo, after which the court a quo rendered a composite judgment for all the applications, which had been consolidated by consent.

Counsel for the thirteenth, fourteenth, and fifteenth respondents raised a preliminary point, that, the court a quo had no jurisdiction. He submitted that all the applications ought to have been filed in the Electoral Court.

Counsel for the first to the sixth appellants associated himself with the submissions made by counsel for the thirteenth, fourteenth, and fifteenth respondents on jurisdiction.

He further submitted, that, there was no application before the court because the first to twelfth respondents had irregularly truncated the dies induciae. Counsel also argued that the respondents had no locus standi and that the applications were based on hearsay evidence. He submitted that the first to twelfth respondents had not attended the Nomination Court but sought to rely on social media reports and a document, Annexure “B” which was differently interpreted by the Electoral Commission.

He also argued in limine, that, there were material disputes of fact that could not be resolved on paper.

He further submitted, that, there was a material non-joinder of Citizens Coalition for Change party (CCC) which had sponsored some of the appellants. In support of this assertion, he contended that the party would be prejudiced in obtaining proportional representation seats.

Finally, on preliminary points, counsel submitted that the applications were an abuse of the court process.

Counsel for the seventh to twelfth appellants in SCB59/23 associated himself with the preliminary points raised by counsel for the thirteenth, fourteenth, and fifteenth respondents and counsel for the first to the sixth appellants. He emphasised that the applications were based on hearsay evidence and that only the Electoral Court had exclusive jurisdiction to hear the applications.

Counsel for the first to fourth appellants in SCB61/23 associated himself with submissions made by counsel who addressed the court before him.

Counsel for the appellants in SCB60/23 also associated himself with submissions that had been made by counsel before him.

Per contra, counsel for the first to twelfth respondents opposed all the preliminary points raised, characterising them as meritless.

He relied on the case of Kambarami v 1893 Mthwakazi Restoration Movement Trust and Others SC66-21 for the proposition, that, the court had jurisdiction. Regarding the validity of the applications, he submitted that the parties had attended a case management meeting and agreed on truncating the dies induciae.

On locus standi, he submitted that the respondents had a legitimate interest in the nomination proceedings because they had a direct and substantial interest in the outcome of the process. In relation to the applications being based on hearsay evidence, he contended, that, the respondents relied on public information and that there was Annexure “B” which supported their position. He further submitted that there were no material disputes of fact. A robust approach would resolve the matter.

Counsel for the first to twelfth respondents further submitted, that, the applications a quo were not an abuse of the court process given the substantial interests which the respondents had in the nomination of candidates for the constituencies where they were registered voters.

Finally, in relation to the non-joinder of Citizens Coalition for Change party (CCC) he argued that the party had no direct and substantial interest in the acceptance of the nomination papers.

The court a quo deferred the determination of the preliminary points to the end of the hearing and sought to be addressed on the merits.

Counsel for the first to twelfth respondents submitted, in support of the applications, that, the nominations ought to be nullified since they were accepted after 4pm in defiance of section 46 of the Electoral Act [Chapter 2:13]. He further submitted that the nomination officer unlawfully opened the court to specifically allow the affected candidates to present their papers out of time. He argued that the police officer who collected the papers was not a nomination officer. Annexure “B” confirmed that the nomination papers were filed out of time.

Counsel for the thirteenth to fifteenth respondents submitted that Annexure “B” was not a document reflective of the times when the nomination papers were lodged with the nominations officer. Further, he submitted, that, the nomination papers were submitted and received before the cut-off time of 4pm on the day in question. He emphasised that the officers of the Zimbabwe Electoral Commission (ZEC) who placed evidence before the court, through their supporting affidavits, spelt out that no nomination papers were submitted after 4pm. Finally, he submitted that there was no breach of section 46 of the Electoral Act.

Counsel for the first to the sixth appellants in SCB59/23 submitted, that, the respondents were relying on hearsay evidence that the social media was awash with; information that the appellants nomination papers were in disarray and filed out of time. He pointed out that the appellants filed their papers in compliance with section 46 of the Electoral Act before 1600 hours. Further, in opposing the allegations, he relied on the Zimbabwe Electoral Commission (ZEC) and the nomination officer's evidence that Annexure “B” was not a document indicative of the lodgement of nomination papers, but, that the time reflected on it related to the time of data capture.

Counsel for the seventh to twelfth appellants in SCB59/23 was also critical of Annexure “B” and he agreed with submissions by counsel for the first to the sixth appellants in SCB59/23 on it. He submitted that the respondents were relying on hearsay evidence and that they failed to discharge the onus and to prove the factual basis of their allegations. Their evidence was speculative as they relied on social media assertions.

Counsel for the appellants in SCB60/23 associated himself with submissions made by counsel who addressed the court before him. He emphasised, that, his clients submitted their nomination papers on time. He further added that the collection of nomination papers by the police officer, at the instruction of the nomination officer, did not amount to contravening section 46 of the Electoral Act.

Counsel for the first to fourth appellants in SCB61/23 associated themselves with counsel for the other appellants submissions.

DETERMINATION OF THE COURT A QUO

The court a quo gave a composite judgment. It dismissed all the preliminary points and made a finding that Annexure “B” was a document prepared by a Zimbabwe Electoral Commission (ZEC) official and that it spoke for itself, that, the nomination papers were submitted after 4pm. It found that the submission of papers from the appellants, through the police officer, was unlawful. It thus declared the nominations as null and void and issued the following order:

“IT IS DECLARED THAT:

1. That, the decision of the 1st Respondent, sitting as a nomination court at Bulawayo on 21 and/or 22 June 2023 to accept the following Respondents nomination papers and candidature in the elections scheduled to be conducted on 23 August 2023 was in contravention of section 46(7) & (8) of the Electoral Act [Chapter 2:13].

2. That, the decision of the 1st Respondent, sitting as a Nomination Court at Bulawayo on 21 and/or 22 June 2023, to accept the following Respondents nomination papers and candidature in the elections scheduled to be conducted on 23 August 2023 is declared null and void and is hereby set aside.

ACCORDINGLY, IT IS ORDERED THAT:

3. 1st Respondent is prohibited from including the names of the following Respondents in the preparation of ballot papers to be used in the general elections scheduled to be conducted on 23 August 2023.

4. Respondents shall jointly and severally pay the costs of suit.

OBERT MANDUNA; ERECK GONO; DOUGLAS NCUBE; GIFT SIZIVA; SANPOULUS MAPLANKA; PRINCE DUBE; NQOBIZITHA NDLOVU; DESMOND MAKAZA; BAJILA COLLINS DESCENT; SICHELESILE MAHLANGU; DESIRE MOYO; ALELAIDE MHLANGA; NOMPILO BHEBHE; SURRENDER KAPOIKILU; RAPHAEL PASHOR SIBANDA; NTANDOYENKOSI MINENHLE GUMEDE; FRANK MHLANGA.

5. The application against Zvikwete Innocent Mbano be and is hereby dismissed with costs.

6. The application against ADMORE GOMBA, NIGEL NDLOVU, SONENI MOYO, DINGILIZWE TSHUMA, STRIKE MKANDLA & ALBERT MHLANGA be and is hereby withdrawn.”

GROUNDS OF APPEAL

Aggrieved by the judgment of the court a quo in all the four applications, the appellants in SCB59, 60, 61 and 62 of 2023 launched appeals with this court on more or less similar grounds. All the appellants grounds of appeal can be summarised as captured in SCB59/23 except for ground 5 which is specific to candidates for Citizens Coalition for Change party (CCC).

Ground 5 speaks to non-joinder of Citizens Coalition for Change party (CCC). It reads as follows:

“(5) Having found that the Citizens Coalition for Change political party was adversely affected by the proceedings before it, the court a quo erred in relating to and affording an application which adversely affected its interests without affording the concerned political party the opportunity of being heard.”

The grounds of appeal which are similar for purposes of these appeals, as discerned from the record, are as follows:

(1) Having heard the argument on points in limine, including critical point (sic) on the jurisdiction, the court a quo grossly misdirected itself and erred in proceeding to hear the argument on the merits of the matter without making a determination on the points taken before it in limine litis.

(2) The court a quo erred in assuming jurisdiction over a matter which is by constitutional and statutory command subject to the exclusive jurisdiction of the Electoral Court and so erred in entertaining a review disguised as a declaratur.

(3) The court a quo erred and misdirected itself having invented their own dies induciae in violation of the rules and of superior court authority and so erred in condoning a fatal defect and where no application for condonation had been made.

(4) The court a quo erred in granting relief to parties who had no locus standi in judicio, who could not swear positively to the “facts” they relied upon and who sustained their cause on the basis of objectively established falsehoods.

(5)…,.

(6) The court a quo, having found that there was a dispute of fact material to the resolution of issues before it, erred in purporting to resolve such dispute in the absence of any work tools for such resolution and so erred in making credibility findings, on motion, that were unsupported by the evidence placed before it.

(7) The court a quo erred in not finding that matters factual stood to be resolved on the basis of the position given by the Electoral Commission as well as appellants who were physically in attendance at the Nomination Court and which positions could not be gainsaid by the first to twelfth respondents hearsay evidence.

(8) The court a quo erred in not concluding that appellants had timeously presented their papers, had an absolute right to have them processed, and, accordingly, had been properly declared duly nominated by the Nomination Court.

SUBMISSIONS BEFORE THIS COURT

(1) Submissions on the Merits

Counsel for the first to sixth appellants, in SCB59/23, submitted that the High Court had no jurisdiction to hear the matter. He submitted that section 161 of the Electoral Act as read with section 5 of the Judicial Laws Amendment (Ease of Settling Commercial and Other Disputes) Act 2017 constituted the Electoral Court as a specialised division of the High Court, and, therefore, now has jurisdiction to hear an application for a declaratur.

He further argued, that, the relief sought was worded in the form of a review relief.

Further, he submitted, that, the authority of Kambarami v 1893 Mthwakazi Restoration Movement Trust and Others SC66–21, relied upon by the court a quo, was rendered per incuriam and, thus, it was inapplicable.

It was also counsel for the first to sixth appellants in SCB59/23 submission, that, there were no valid applications before the High Court. He argued, that, the court a quo disregarded two binding authorities of this Court to the effect that an applicant cannot specify a dies induciae other than the one that is set out in the rules. He proceeded to argue, that, the court a quo compounded its error of adjudicating over an invalid application by proceeding to grant condonation where such had not been applied for.

On the merits of the applications that were before the court a quo, he further submitted that section 46(7) of the Electoral Act, which the court a quo relied on, was not properly engaged. He also submitted, that, the decision of the court a quo was wrong and contrary to the evidence adduced. To illustrate his point, counsel for the first to sixth appellants in SCB59/23 mentioned the case of Zvikwete Innocent Mbano who was also a respondent in the same matter but treated differently by the court a quo despite his circumstances being identical to those of the appellants.

He submitted, that, his clients had filed their papers before 4pm.

In any event, the thirteenth respondent (nominations officer), had, before 4pm, requested for all prospective candidates queuing outside awaiting their turn to file nomination papers, to hand in their papers through the police officer attached to the Nominations Court.

By so doing, the thirteenth respondent enabled everyone in the queue outside the small courtroom to submit their papers within the prescribed time.

He further submitted, that, the thirteenth respondent acted in terms of section 24(1) of the Interpretation Act [Chapter 1:01].

He also submitted, that, the appellants evidence established that they had lodged their papers before 4pm. He further submitted that there was no evidence that his clients papers were collected through the police officer. He thus argued that these facts were at variance with the conclusion of the court a quo.

In respect of Annexure “B” counsel contended, that, the times set out in that document were the times of inputting data as opposed to the time for filing nomination papers with the thirteenth respondent.

Finally, counsel argued that the applications were based on hearsay evidence from social media as deposed to by the respondents. This disregarded the fact, that, the appellants papers were presented in open court as required by section 46 of the Electoral Act.

He, therefore, prayed that the appeal be allowed with costs.

Counsel for the seventh to twelfth respondents submitted, that, there were no valid applications filed by the respondents before the court a quo. He associated himself with submissions made by counsel for the first to sixth appellants in SCB59/23. He further submitted, that, the respondents cases were based on hearsay evidence, which issue was not resolved by the court a quo. Counsel submitted that the conclusion reached by the court a quo was indefensible.

He prayed that the appeal be allowed with costs.

Counsel for the first to fourth appellants in SCB61/23 associated himself with submissions made by counsel for the first to sixth appellants in SCB59/23 and counsel for the seventh to twelfth respondents. He, however, further pointed out that the court a quo erroneously took all the respondents who were before it to be Citizens Coalition for Change party (CCC) sponsored candidates when this was not correct as some of the respondents were affiliated to different political parties and others were independent candidates. To demonstrate his point, he quoted the portion of the judgment a quo which mentioned that if one read one affidavit, he would have read all.

In respect of one of his clients, Adelaide Mhlanga, counsel for the first to fourth appellants in SCB61/23 submitted that she averred that she was in the court at all material times. To counsel, there was no evidence that the papers were collected after 4pm from persons who were outside.

In his submissions, counsel for the first to fourth appellants in SCB61/23 intimated that the court a quo took a casual approach to the evidence of the appellants and that of the nominations officer and the Zimbabwe Electoral Commission (ZEC). He stated that the court a quo regarded the appellants averments as merely bald denials. The court a quo was also accused of making sweeping statements against the electoral authority. For instance, it is said to have referred to the majority of the respondents, but, without specifying who they are.

He prayed for the appeal in SCB61/23 to be allowed with costs.

Counsel for the sixteenth appellant in SCB59/23 and the appellants in SCB62/23 submitted, that, the court a quo had no jurisdiction to deal with the matter because the Electoral Court exercises the general jurisdiction of the High Court in any matter before it. In addition, counsel moved the Court to depart from Kambarami v 1893 Mthwakazi Restoration Movement Trust and Others SC66–21…, as, in his view, it conflicted with section 171(1) of the Constitution and section 161 of the Electoral Act. He associated himself with submissions made by counsel for the appellants who addressed the Court before him.

He further submitted, that, the matter was disposable on the one question of whether or not the nomination papers were received by 4pm.

He finally submitted, that, section 46 of the Electoral Act simply requires papers to be received by a nomination officer, and, it does not prohibit any person from delivering the forms. Thus, to the extent that section 46(7) of the Electoral Act did not prohibit a police officer assigned by the nominations officer from receiving nomination papers from any person before 4pm, the conduct cannot be said to be illegal as it is not forbidden by statute.

Counsel for the sixteenth appellant in SCB59/23 and the appellants in SCB62/23, therefore, prayed that the appeal be allowed with costs.

Counsel for the first to the twelfth respondents submitted, that, the seventh ground of appeal resolved the appeal. He submitted that the court a quo accepted the evidence of the thirteenth to the fifteenth respondents. He however said that what the court a quo rejected were the opinions of the Electoral Commission.

Counsel further submitted, that, in terms of section 46(5) and 46(6) of the Electoral Act, the Nomination Court is a public and open court that closes at 4pm, after which time it cannot accept nomination papers from new prospective candidates.

He further submitted, that, the evidence from the Commission was that the appellants were not in court. He also referred to the evidence of Tabeth Mwonzora, a secretary at the Nomination Court, to the effect, that, a police detail collected the papers. Relying on the definition of a nomination officer, counsel also submitted that the definition does not include a police officer. Thus, by directing the police detail to collect the nomination papers, the nomination officer acted unlawfully and his conduct was null and void. He referred the court to Muchakata v Netherburn Mine 1996 (1) ZLR 153 (S) in support of this proposition.

He submitted, that, the circumstances of this case warranted a declaration on the correct position of the law.

In respect of Annexure “B” counsel for the first to the twelfth respondents contended, that, it was a public document which is acceptable in terms of section 12 of the Civil Evidence Act [Chapter 8:01]. He further submitted that the document is a submission form from Bulawayo Province which sets out the times when the nomination papers were accepted. He stressed the point, that, all the appellants nominations were captured as having been accepted after 4pm.

On the question of jurisdiction, counsel for the first to the twelfth respondents submitted that Kambarami v 1893 Mthwakazi Restoration Movement Trust and Others SC66–21 was good law, having been decided after the adoption of the 2013 Constitution and the enactment of the Judicial Laws Amendment (Ease of Doing Business) Act 2017. He therefore submitted, that, the High Court has jurisdiction to grant a declaratur.

Regarding the issue of the validity of the applications a quo, counsel submitted that the High Court issued an order truncating the dies induciae. He further contended, that, Rule 59(6) of the High Court Rules 2021 does not specify that urgent applications must be filed with a modified dies induciae only after the High Court has granted such leave.

In respect of the first ground of appeal, he submitted that it was a bad ground at law as it challenged a decision on how the court should have conducted its proceedings. He argued that such a decision was not appealable.

In respect of the fifth ground of appeal, counsel for the first to the twelfth respondents submitted that the first to the twelfth respondents had locus standi. He relied on the decision in Stevenson v Minister of Local Government & Others 2002 (1) ZLR 498 (S).

On the issue of non-joinder of Citizens Coalition for Change party (CCC), counsel averred that it was not an interested party.

He prayed for the dismissal of the appeals with costs.

Counsel for the thirteenth, fourteenth, and fifteenth respondents submitted that his clients would abide by the decision of this Court. Accordingly, he did not make any submissions.

ISSUES FOR DETERMINATION

The issues which commend themselves for determination by this Court are as follows:

(i) Whether or not the court a quo erred and misdirected itself in dismissing the appellants preliminary points.

(ii) Whether or not the court a quo was correct in its findings, that, the appellants nomination papers were submitted to the nomination officer after 4pm.

THE APPLICABLE LAW

The appeals are all hinged on the law relating to the procedure for the nomination of candidates for election as Members of Parliament. Sections 46(6), (7) and (8) of the Electoral Act are central to the resolution of these appeals. They read:

“(6) The nomination officer, shall, in open court —

(a) Announce whether any candidate has lodged his or her nomination paper before the sitting of the court, and, if so, the name of every such candidate; and

(b) Receive any further nominations for election as constituency member of the National Assembly for the constituency for which he or she is the nomination officer.

(7) No nomination paper shall be received by the nomination officer in terms of subsection (6) after four o'clock in the afternoon of nomination day, or, where there is more than one nomination day for the election concerned, the last such nomination day: Provided, that, if at that time a candidate or his or her chief election agent is present in the court and ready to submit a nomination paper in respect of the candidate, the nomination officer shall give him or her an opportunity to do so.

(8) The nomination officer shall examine every nomination paper lodged with him or her which has not been previously examined by him or her in order to ascertain whether it is in order, and shall give any candidate, or his or her election agent, an opportunity to rectify any defect not previously rectified and may adjourn the sitting of the court for that purpose from time to time: Provided that the sitting shall not be adjourned to any other day that is not a nomination day.”

The Interpretation Act [Chapter 1:01], section 24(1) and (2), are also relevant and provide as follows:

“POWERS AND APPOINTMENTS

24. Statutory powers and duties generally

(1) Where an enactment confers a power, jurisdiction, or right, or imposes a duty; the power, jurisdiction or right may be exercised and the duty shall be performed from time to time as occasion requires.

(2) Where an enactment empowers any person or authority to do any act or thing, all such powers shall be deemed to be also given as are reasonably necessary to enable that person or authority to do that act or thing or are incidental to the doing thereof.”

In our view, the appeals can be resolved by a correct interpretation of section 46(6), (7) and (8) of the Electoral Act. The interpretation of section 24(1) and (2) of the Interpretation Act will also be considered in resolving the appeals.

Section 46(6)(a) of the Electoral Act permits a prospective candidate to lodge his or her nomination papers before the nomination day. On nomination day, the nomination officer must announce, in open court, the names of all candidates who lodged their nomination papers prior to the nomination day.

Section 46(6)(b) of the Electoral Act provides for the nomination officer's receipt of nomination papers on the nomination day.

Section 46(7) of the Electoral Act forbids a nomination officer from receiving nomination papers after 4pm on nomination day except for those candidates, or their election agents, who will be present in the courtroom and ready to submit their nomination papers by 4pm. Therefore, candidates, or their election agents, who will be in the courtroom will not be affected by the cut-off time of 4pm.

Section 46(8) of the Electoral Act mandates the nomination officer to attend to and examine all nomination papers lodged with him or her between 10am and 4pm, and give opportunities to candidates, or their agents, to rectify anomalies by adjourning the court to enable them to do so by not later than the end of the nomination day.

Section 24(1) of the Interpretation Act provides, that, where a statute gives a public officer power to perform a duty, such power includes the power to organise and perform as occasion requires.

Section 24(2) of the Interpretation Act gives a public officer powers to take reasonable steps that enable him or her to accomplish what the law mandates.

The principles of interpretation of statutes have been discussed by this Court in a number of cases. In the case of Endeavour Foundation and Anor v Commissioner of Taxes 1995 ZLR 339 (S)…, this Court held that:

“The general principle of interpretation is that the ordinary, plain, literal meaning of the word or expression, that is, as popularly understood, is to be adopted, unless that meaning is at variance with the intention of the Legislature as shown by the context, or such other indicia, as the court is justified in taking into account, or creates an anomaly, or otherwise produces an irrational result.”

See also Zambezi Gas Zimbabwe (Pvt) Ltd v N.R. Barber (Pvt) Ltd & Anor SC03–20…,.

According to case law on rules of interpretation, the use of the word “shall” in a statute denotes a mandatory intention by the legislature for the provision to be complied with. In the case of Shumba and Anor v ZEC and Anor 2008 (2) ZLR 65 (S)…, this Court held:

“It is the generally accepted rule of interpretation, that, the use of peremptory words such as 'shall' as opposed to 'may' is indicative of the legislature's intention to make the provision peremptory. The use of the word 'may' as opposed to 'shall' is construed as indicative of the legislature's intention to make a provision directory. In some instances, the legislature explicitly provides, that, failure to comply with a statutory provision is fatal. In other instances, the legislature specifically provides that failure to comply is not fatal. In both of the above instances, no difficulty arises. The difficulty usually arises where the legislature has made no specific indication as to whether failure to comply is fatal or not.”

Given that it is generally accepted that the use of the word “shall” in any enactment is understood as being indicative of the legislature's intention of making the provision peremptory, it becomes necessary to consider some hallowed principles of interpretation for determining the intended effect of non-compliance with a peremptory statute. There are principles that the courts resort to in order to determine whether or not the legislature intended non-compliance with a provision to be fatal.

Thus, in Shumba and Anor v ZEC and Anor 2008 (2) ZLR 65 (S)…, it was stated that:

“Francis Bennion, Statutory Interpretation submits that the courts have to determine the intention of the legislalture using certain principles of interpretation as guidelines. He had this to say at pp21-22:

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

This is an area where legislative drafting has been markedly deficient. Draftsmen find it easy to use the language of command. They say that a thing 'shall' be done. Too often they fail to consider the consequence when it is not done. What is not thought of by the draftsman is not expressed in the statute. Yet, the courts are forced to reach a decision.

It would be draconian to hold, that, in every case, failure to comply with the relevant duty invalidates the thing done. So, the courts answer has been to devise a distinction between mandatory and directory duties. Terms used instead of 'mandatory' include 'absolute' 'obligatory' 'imperative' and 'strict'. In place of 'directory' the term 'permissive' is sometimes used.

Use of the term 'directory' in the sense of permissive has been justly criticised: see Craies, Statute Law, 7ed 1971, p61 n74.) However, it is now firmly rooted.

Where the relevant duty is mandatory, failure to comply with it invalidates the thing done. Where it is merely directory, the thing done will be unaffected (though there may be some sanction for disobedience imposed on the person bound). (As to sanctions for breach of statutory duty see section 13 of this Code (criminal sanctions) and section 14 (civil sanctions)).'

Thereafter, the learned author sets out some guiding principles for the determination of whether failure to comply with a statutory provision is fatal or a mere irregularity. One of those guiding principles is the possible consequences of a particular interpretation. If interpreting non-compliance with a statutory provision leads to consequences totally disproportionate to the mischief intended to be remedied, the presumption is that Parliament did not intend such a consequence, and, therefore, the provision is directory.'”

Similarly, in the case of Sibanda & Anor v Ncube & Ors; Khumalo & Anor v Mudimba & Ors SC158–20…, PATEL JA…, held that:

“The broad test for ascertaining the true nature of a statutory duty was enunciated more than a century ago in the case of Howard v Bodington (1877) 2 PD 203, at 211:

'…, in each case, you must look to the subject-matter, consider the importance of the provision and the relation of that provision to the general object intended to be secured by the Act, and, upon a review of the case on that aspect, decide whether the enactment is what is called imperative or only directory….,.'

A further aspect that may be relevant is the need to distinguish between those persons who are bound to perform the statutory duty and those who might be affected by its performance or non-performance: see Bennion, op cit, at p21.

In this context, the extent to which the former are in a position to exercise control over the latter may become a crucial consideration. This point was aptly elucidated in Montreal Street Railway Company v Normandin [1917] AC 170, at 174:

'When the provisions of a statute relate to the performance of a public duty and the case is such that to hold null and void acts done in respect of this duty would work serious inconvenience or injustice to persons who have no control over those entrusted with the duty, and, at the same time would not promote the main object of the legislature, it has been the practice to hold such provisions to be directory only, the neglect of them, though punishable, not affecting the validity of the acts done.'”

These principles must be understood within the context of the law relating to electoral matters in general.

In Hove v Gumbo (Mberengwa West Election Petition Appeal) 2005 ZLR 85 (S) MALABA JA…, summarised some of the principles. At pp92B–E, it was held that:

“The law governing the manner and grounds on which an election may be set aside must be found in statute and nowhere else. In Nath v Singh & Ors [1954] SCR 892 at 895, MAHAJAN CJ said:

'The general rule is well settled, that, the statutory requirements of election law must be strictly observed and that an election contest is not an action at law or a suit in equity but is a purely statutory proceeding unknown to the common law and that the court possesses no common law power.

It is also well settled, that, it is a sound principle of natural justice that the success of a candidate who has won at an election should not be lightly interfered with and any petition seeking such interference must strictly conform to the requirements of the law.'

About twenty years later, the same principle was reiterated by CHANDRACHUD CJ in Sahu's case supra, where at p39 he said:

'The rights arising out of elections, including the right to contest or challenge an election, are not common law rights. They are creatures of the statutes which create, confer, or limit those rights. Therefore, for deciding the assertion whether an election can be set aside, on any alleged ground, the courts have to consult the provisions of law governing the particular election. They have to function within the framework of that law and cannot travel beyond it.'”…,.

Although this relates to the setting aside of an election, it applies with equal force to setting aside nominations of candidates for the National Assembly constituencies as in the present case.

APPLICATION OF THE LAW TO THE FACTS

On the merits, the Court makes the following observations:

It is common cause, that, on the nomination day, the court commenced at 10am. It is also not in dispute that the designated Nomination Court was a small courtroom and the nomination officer could only allow 12 to 15 people at a time. The rest of the candidates and/or agents queued outside the courtroom. At 3:55pm, the nomination officer announced that all prospective candidates were to hand over their nomination papers to the police officer attached to the Nomination Court.

The police officer complied and directed, from the end of the queue, that, nomination papers be handed to the police officer at the door who then handed over the nomination papers to the nomination officer before 4pm.

A reading of section 24(1) and (2) of the Interpretation Act shows, that, the nomination officer, as a public officer, has the power to employ such appropriate administrative tools to accomplish his duty: see Shumba and Anor v ZEC and Anor 2008 (2) ZLR 65 (S).

He accepted lodgement of nomination papers within the prescribed time limits in compliance with section 46(6) as read with section 46(7) and 46(8) of the Electoral Act.

Evidence from the thirteenth to fifteenth respondents confirms, that, the nominations lodged on the nomination day were lodged before 4pm and that Annexure “B” was not an official document indicating the times of lodgement of nomination papers in the Nomination Court.

It appears, that, the court a quo turned a blind eye to the responsible authority's evidence and relied on the first to twelfth respondents evidence, which was heavily borrowed from social media, and, that is hearsay.

A close examination of Annexure “B” reveals that it is a submission form, without specification as regards what was submitted and to whom. Further, the form only starts recording at 1300 hours and the recordings are randomly captured at different times, some of which were prior to 1300 hours. It was therefore speculative for the court a quo to ascribe the unsystematically recorded form as proof of the times of lodgement of nomination papers.

The court a quo thus erred in dismissing the Electoral Commission's evidence as regards the use of Annexure “B” when it relied on its own interpretation of the document as opposed to the evidence presented by the nomination officer and all the other officials who deposed to supporting affidavits.

It is important to note, that, the nomination officer deposed the opposing affidavit on behalf of the Zimbabwe Electoral Commission (ZEC) and its Chairperson who had authorised him to do so. His deposition must therefore be understood to be the evidence of ZEC and its Chairperson…,.

In our view, the court a quo should have exercised caution in dismissing the Zimbabwe Electoral Commission's explanation of the form because one cannot lightly dismiss the responsible authority's explanation of the purpose for which the form is used in the absence of cogent evidence to the contrary. It is up to an Administrative Authority to devise administrative tools to function efficiently.

SC110-23 : CHINHOYI MUNICIPALITY vs TENDAI MUSONZA
Ruled By: MAVANGIRA JA, CHIWESHE JA and MUSAKWA JA

This is an appeal against the whole judgment of the High Court (the court a quo) sitting at Harare, handed down on 16 June 2021, dismissing the appellant's claim for an order ejecting the respondent and all those claiming occupation through him from Plot 16340, Chinhoyi (the Plot), payment of holding over damages in the sum of $300 per month for illegal occupation of the appellant's Plot from 13 December 2013 to date of ejectment or vacation and interest at the prescribed rate and costs of suit.

Aggrieved by the decision of the court a quo, the appellant has noted this appeal to this court.

THE PARTIES

The appellant is a local authority established in terms of the Urban Councils Act [Chapter 29:15].

The respondent resides within the area under the jurisdiction of the appellant. He is a former councillor of the appellant.

THE FACTS

Between 2008 and 2013, the respondent was a councillor of the appellant. The appellant alleges that, at some point during his tenure as councillor, the respondent created a false rates account in his name, with the help of an unknown council employee, and took occupation of the Plot.

It further alleges, that, the respondent never acquired the Plot in question as it was reserved for a motor cross course which could not be reduced to a residential Stand.

The appellant states, that, the respondent had occupied the Plot in the name of Leengate Investments (Pvt) Ltd and that the respondent never purchased the Plot.

On the other hand, the respondent argues that he was entitled to the plot as he had purchased it from the appellant.

After a full trial, the court a quo dismissed the appellant's claim with costs. The appellant appeals against that decision on the following grounds:

“GROUNDS OF APPEAL

1. The court a quo erred in concluding that there existed an agreement of sale between the defendant and Mr Maregere, verbally, and that such agreement was binding on the plaintiff contrary to the clear provisions of section 152 of the Urban Councils Act [Chapter 29:15].

2. The court a quo erred by ignoring a claim of rei vindication, and, instead, placed onus on the plaintiff where onus was to be on the defendant to prove acquisition.

3. The court a quo erred, grossly, in requiring the plaintiff to prove the narrative that the defendant had no valid agreement of sale and that he did not pay for the land.

4. The court a quo erred by ruling that the plaintiff ought to have pleaded the law on sale of public land owned by plaintiff, which sales are all governed by section 152 of the Urban Councils Act [Chapter 29:15].

5. The court a quo exhibited bias by believing the defendant and holding him to be a credible witness, contrary to the evidence placed on record.

6. The court a quo erred grossly by relying on plan approval process to authenticate an alleged sale where there existed no single evidence of the sale itself or the proper allocation and agreement of sale of public land.

7. The learned Judge grossly erred in arriving at a conclusion which was not in any manner supported by the facts or evidence and law that were placed before her.”

RELIEF SOUGHT

The appellant seeks the following relief:

“1. That the appeal succeeds with costs.

2. That the judgment of the court a quo be and is hereby set aside and in its place the following is substituted:

'(a) Judgment be and is hereby entered for the plaintiff.

(b) The defendant be and is hereby ordered to vacate Plot 16340, Chinhoyi within 7 days of this order, failing which the Sheriff be and is hereby ordered to evict him and all those claiming occupation through him from the said property.

(c) The defendant is ordered to pay holding over damages to the plaintiff in the sum of US$300 per month for illegal occupation with effect from the 13th December to the date of ejectment or vacation of the property by the respondent.

(d) The defendant shall pay interest thereon at the prescribed rate.

(e) The defendant shall pay the appellant's costs of suit.'”

THE ISSUES

The grounds of appeal raise three issues:

(a) Whether the respondent purchased the Plot in question.

(b) Whether the appellant is entitled to evict the respondent.

(c) Whether the respondent should pay holding over damages.

PROCEEDINGS IN THE COURT A QUO

The matter was referred to trial on two issues, vis:

“(i) Whether the defendant lawfully acquired the property called Plot 16340, Chinhoyi.

(ii) Whether the defendant is liable to pay holding over damages for the unlawful occupation of plaintiff's land.”

During the trial, each party called only one witness.

The appellant called one Marshal Johanne who was employed by it as a Revenue Accountant. He told the court, that, he had been in the appellant's employ for 4 years; 2 years of which he was employed as a Credit Controller.

His evidence was that the Plot was owned by the appellant and that it was used for motorbike sports until 2009. The Plot was then offered to a Mr Chayne. He did not take the Plot citing lack of title.

In June 2010, an entity called Leengate Investments applied to lease or acquire the Plot.

An offer to lease was extended to that company, but, nothing materialised as the company failed to meet the conditions stipulated by the appellant.

The witness accused the respondent of having been in cahoots with Leengate Investments.

He averred that the respondent sat in the Committee that had recommended leasing the Plot to Leengate Investments, without declaring his interest.

The witness stated, that, no Agreement of Sale was ever entered into between the respondent and the appellant concerning this Plot. In fact, according to this witness, there are no Council records confirming the alleged sale of the Plot to the respondent or any other purchaser.

He explained, that, whenever the appellant intended to sell land to anyone, a resolution to that effect must first be made.

When the offer is not being made to an individual, an advertisement is placed in the newspaper inviting prospective buyers to apply. Thereafter, an offer is made to the successful applicant. This is then followed by an Agreement of Sale or lease agreement.

He denied that the respondent paid the sum of $36,080 as there are no records to that effect.

He explained that estate accounts have a unique serial number and same is created from an Agreement of Sale. Thus, when payment is made, it goes into that estate account.

The witness conceded that the respondent's plans had been approved, but, he was unable to identify the persons who did so.

He insisted that the respondent had neither the Agreement of Sale nor lease, despite the approval of his building plans.

The witness maintained, that, all other payments or subsequent approvals by various departments cannot stand in the absence of the source documents, that is, the Agreement of Sale or lease.

The witness stated, that, his department was the custodian of all Council records and his search did not yield any source documents in favour of the respondent.

The court a quo found this witness evasive in that he denied, for example, a document clearly marked “arrear rentals” as being what it is - a paper outlining arrear rentals. The same was observed with a document showing payment of rates. He kept referring to the relationship between Leengate Investments and the respondent until it was pointed out to him, that, in its papers, the appellant had indicated that it later found out that there was no link between the respondent and Leengate Investments.

The court a quo assessed the credibility of this witness as follows:

“Rather than give his evidence in a truthful manner, acknowledging where necessary, that he had no knowledge of the facts, the witness struck the court as a hired gun who was bent on ensuring that the plaintiff wins at all costs.”

ANALYSIS

1. Whether the respondent purchased the Plot in question

It appears that the court a quo based its assessment of the credibility of this witness on peripheral matters. It however lost sight of the crux of the witness evidence, namely, that, his department is the custodian of the appellant's records and that he had established that there was no record of any Agreement of Sale or lease of the Plot to the respondent. For that reason, the Plot remained the property of the appellant.

In this regard, the witness was not shaken nor did the respondent adduce evidence to contradict that position.

The respondent has not produced any documents purporting to be the Agreement of Sale entered into by the parties.

What he relies on are various inputs to do with the respondent's departments, for example, the assessment of rates and the approval of building plans pertaining to the Plot.

However, it is common cause that all these processes and activities could only be embarked upon once there was a Council resolution and an Agreement of Sale.

In devoting its assessment of the witness's credibility on peripheral issues, some of which occurred before the witness was employed by the respondent, the court a quo lost the essence of the inquiry that it should have embarked upon.

The respondent has alleged a verbal agreement of sale entered into between him and the appellant's employee, namely, the Director of Housing.

That is confirmation of the witness's evidence that there are no records of the sale.

The appellant's position is unassailable. It did not sell the property to the respondent - there are no records to that effect.

SC127-23 : ZIMBABWE POWER COMPANY vs INTRATREK ZIMBABWE
Ruled By: MAKONI JA, CHIWESHE JA and MUSAKWA JA

This is an appeal against the whole judgement of the High Court (the court a quo) sitting at Harare, dated 11 January 2023, wherein it declared that the procurement contract entered into between the appellant and the respondent was valid and binding between them. The court a quo proceeded, consequently, to grant an order of specific performance of the contract.

It also dismissed the appellant's counter claim and ordered that the appellant pays the respondent's costs in the claim in reconvention.

Aggrieved by the decision of the court a quo, the appellant has noted the present appeal.

THE FACTS

On 23 October 2015, the parties entered into a Public Procurement Engineering, Procurement and Construction Contract (the contract). In terms of that contract, the respondent was required to construct one solar Photovoltaic Power Station to the capacity of 100MV in Gwanda (the project).

A dispute arose during the implementation of the project.

The respondent issued summons in the court a quo seeking the following relief:

“1. An order declaring that the procurement contract for the Engineering, Procurement and Construction (EPC) of the 100 MV Gwanda Solar Project (ZPC 304/2015) between the parties, as amended, is valid and binding between the parties.

2. Consequent to the declaration of the validity of the EPC contract, an order for specific performance.

Alternatively:

Damages in the sum of US$25,000,000 (twenty five million United States dollars) for repudiatory breach of the EPC contract by the defendant.

3. Costs of suit at the attorney and client scale.”

In its declaration, the respondent amplified its claim as follows:

The agreed contract price for the project was US$172,848,597=60 exclusive of taxes. The respondent was to secure and facilitate the funding of the project as well as bear most of the risks associated with the construction of the plant up to the point of commissioning.

The contractual terms were derived from the FIDIC Silver Book (General Conditions of Contract for EPC/Turnkey Project) 1999, First Edition. The General Conditions were applicable to the extent that they were amended by the Particular Conditions of contract agreed to by the parties.

The appellant was to borrow the funds sourced by the respondent in its name, superintend over both the construction works, and facilitate payments due to the respondent.

The appellant would only take over the risk and liability in the power infrastructure upon successful completion of the solar plant, that is, at the “turn of the key”.

The commencement of the contract was subject to certain suspensive conditions which were to be satisfied or achieved by both parties within a period of 24 months reckoned from 23 October 2015, the date of signature of the contract. The period within which the suspensive conditions were to be satisfied (the Conditions Precedent Satisfaction Period”) could be extended by a period of 6 months through an amendment to the contract. Such extension was to be done before the expiry of the tenure of the conditions precedent satisfaction period.

Beyond the conditions precedent satisfaction period, either party became entitled to terminate the contract, provided that the party seeking to terminate the contract was not responsible for the delays in the fulfilment of the conditions precedent.

Before the expiry of the conditions precedent satisfaction period, on 23 October 2017, the parties agreed to enter into an addendum to the contract, the terms of which would allow the appellant to pay some of the respondent's subcontractors directly in order to carry out the pre-commencement works at the project site.

The arrangement was in anticipation of the commencement of the contract.

The addendum was executed on 21 September 2017, prior to the expiry of the conditions precedent satisfaction period set for 23 October 2017.

The addendum set different timelines for the conclusion of the pre-commencement works. The appellant undertook to pay for that work.

The appellant, however, failed to pay for such works, and, as a result, these were not executed at all or were not executed timeously.

The appellant sought to extend the conditions satisfaction period by a period of six months, on 29 November 2017. The extension was to be reckoned from 23 October 2017.

The respondent objected to the extension, which it regarded as a breach of the contract, given the new terms of the addendum to the contract and the appellant's failure to perform its obligations under the addendum.

According to the respondent, the appellant unilaterally demanded that the suspensive conditions be completed on or before 23 April 2018, a demand that the respondent viewed as a material breach of the express provisions of the contract.

By way of notices dated 10 April 2018, 6 July 2018, and 31 July 2018, the appellant informed the respondent that the contract had expired by operation of law.

All contractual obligations between the parties were, in terms of these notices, terminated.

The appellant insisted on such termination despite its admission that it had failed to perform its obligations to pay the respondent's sub-contractors.

The respondent further contended, that, the termination was also unlawful in view of the appellant's direct liability in causing delays in the fulfilment of the conditions precedent within the agreed time frames.

It was thereafter that the respondent approached the court a quo, by way of application, seeking a declaration of validity of the contract and an order for specific performance.

The application was granted on 13 December 2018 under HC8159/18.

The appellant appealed that determination to this Court under SC39/21.

In the meantime, the respondent applied for leave to execute judgment pending appeal.

The court a quo granted that application on 19 June 2019 under HC2425/19.

The respondent claims, that, during the two year period in which the parties awaited the outcome of the appeal at the Supreme Court, the parties implemented the contract, as amended, and engaged in a series of meetings that culminated in the drafting of an amended and restated contract.

On 13 May 2021, this court upheld the appellant's appeal and set aside the judgment of the court a quo. This Court determined, that, the matter was replete with material disputes of fact which could not have been resolved on the papers before the court a quo.

It was for that reason that the respondent returned to the court a quo and instituted action procedure, seeking the same relief.

In its plea in the court a quo, the appellant raised two points:

(i) Firstly, it contended that the contract never took off because the conditions precedent were not fulfilled. There was thus no basis at law for the respondent to seek the declaration of validity.

(ii) Secondly, it averred that this court had dismissed the respondent's claim. It therefore pleaded res judicata.

The appellant also filed a counter-claim seeking an order in the following terms:

“(a) An order that the EPC contract, and the Addendum entered into by the parties, did not commence due to the plaintiff's failure to meet the prescribed conditions precedent.

(b) Damages for breach of contract and misrepresentation in the sum of US$96,673,236=30 (ninety-six million six hundred and seventy-three thousand two hundred and thirty-six United States dollars thirty cents.”

The matter was referred to trial on the following agreed issues:

In respect of the main claim:

“(a) Is the procurement contract entered into by and between the plaintiff and the defendant, dated 23 October 2015, valid and binding on the parties?

(b) Depending on the conclusion reached on the above question, did the plaintiff suffer damages, and what is the quantum thereof?

In respect of the claim in reconvention:

(a) Was the agreement entered into by and between the parties induced by misrepresentation on the part of the plaintiff?

(b) If the plaintiff breached the agreement, then, did the defendant suffer damages as pleaded by it or at all and what is the quantum?”

At the commencement of the trial in the court a quo, the appellant abandoned the claim in paragraph (b) of its prayer, that is, the claim for damages for breach of contract and misrepresentation action in the sum of US$96,673,236.

The appellant, however, persisted with the claim for US$3,330,736=30, being the advance payment made to the respondent in respect of the pre-commencement works.

PROCEEDINGS BEFORE THE COURT A QUO

The Respondent's Evidence

The respondent's sole witness was its Managing Director, Wicknell Munodaani Chivhayo. His evidence was summarized by the court a quo as follows:

He told the court, that, when the tender for the project was flighted, the appellant had no funds for the project. For that reason, the appellant was looking for a contractor that would also assist it in raising funds for the project.

The respondent's partner, CHINT, was roped into the project to bring in the required funds. He told the court, that, CHINT had the required financial and technical capacity to execute the project.

The contract price was US$172,848,597=60.

Mr Chivhayo said, that, the commencement of the contract was subject to the satisfaction of the conditions precedent set out in clause 5 of the contract. These included the sourcing of the funds for the project and the completion of the feasibility studies. The appellant was responsible for funding the pre-commencement works and the respondent was required to assist with the fundraising.

To that end, the respondent had engaged financial consultants and financial partners such as the China Exim Bank and the Ministry of Finance and Economic Development. These engagements were done before the commencement of the project.

The witness blamed the appellant for the collapse of the engagements that were intended to birth the necessary financial agreements.

China Exim Bank required that the Government of Zimbabwe guarantees the loan facility.

The witness approached the Ministry of Finance on behalf of the appellant. The Ministry indicated its interest to support the project and had agreed, at the witness's suggestion, that the project be given national status.

The Ministry of Finance undertook to provide the Government guarantees required by China Exim Bank and had written a letter, dated 10 March 2016, addressed to the Export-Import Bank of China, undertaking to issue a sovereign guarantee for the project in the sum of US$147,000,000.

However, the Government of Zimbabwe had been blacklisted for defaulting on a loan of US$400 million. For that reason, the China Export and Credit Insurance Corporation (China Sinosure), a state funded insurance company established to support China's foreign and trade development co-operation, refused to secure the loan.

Thereafter, the parties mooted other sources from which to raise capital.

One of these was the proposed raising of energy bond through the CBZ Bank. This proposal had the full support of the SPB (State Procurement Board). However, the appellant was not interested, even after its own Ministry directed it to pursue that route.

The witness further told the court, that, the appellant frustrated the signing of the financial arrangements, contrary to the spirit of clause 5(a) of the contract.

The witness had this to say about the advance payment demand guarantee:

During meetings with the appellant's officials, feasibility studies had been carried out and the appellant owed the respondent funds for the work done. There was no need for such guarantee once work had been completed and payment now due to the plaintiff. The advance payment received was therefore in respect of the feasibility studies that had been performed.

With regards the performance security, the witness said it was not provided for, partly because the appellant still had some outstanding amounts still to be paid, and that, at any rate, it had not been asked for.

He also confirmed, that, the appellant had carried out its due diligence in terms of clause 5(f) of the contract.

Both parties representatives travelled to China for the purpose of evaluating the respondent's partner, CHINT. Both parties were aware that CHINT had successfully carried out some projects in Zimbabwe.

The witness stated, that, the production of the Environmental Impact Assessment was the responsibility of the appellant. It was only produced through his intervention, when he directly engaged the responsible Ministry.

The land for the project was also acquired through his efforts when he approached the Ministry of Lands.

He confirmed that both parties had secured the necessary authorizations as required by clause 5(f) of the contract.

Only one condition remained outstanding, that is, the financing agreements.

He said that the amendments of the contract, through the addendum, were occasioned by the loss of time.

In terms of the agreement, as re-affirmed by the addendum, the total cost of the pre-commencement works was US$5,111,224=50. The respondent was supposed to contribute to that amount in the sum of US$1,000,000 with the appellant contributing the remainder.

The respondent did not pay its contribution as it was only required to perform work of an equivalent value.

He said that after the payment of the feasibility studies, and part of the fee for the pre-commencement works, the appellant still had an outstanding liability in the sum of US$1,232,322=87 for part of the pre-commencement works carried out.

The respondent's sub-contractors were to be paid from that outstanding amount.

He stated that the appellant caused his arrest by ZACC officials for non-performance of the contract. He wrote to the appellant's Managing Director complaining about the unfounded allegations of corruption. His arrest negatively affected the execution of some of the works by the respondent's subcontractors.

He insisted that the conditions precedent satisfaction period was extended by the parties, and yet, the appellant went on to raise a criminal complaint for non-performance.

He made reference to clause 5(i) of the contract which provided, that, if the conditions precedent were not satisfied on or before 24 months after the date of signature of the contract, the parties should meet, and, if need be, the appellant could, in its sole discretion on or at any time before the lapse of the 24 month period, elect to extend the conditions precedent satisfaction period by a further six months.

He referred to a letter from the appellant to the respondent, dated 29 November 2017, in terms of which the period was extended by a further 6 months from 23 October 2017 to 23 April 2018.

The witness made reference to various correspondences between the parties, and other stakeholders, tending to show that the appellant was responsible for the failure to sign financial agreements during the extended period.

He averred, that, in terms of clause 5(i) of the contract, the appellant was estopped from relying on its own breach to cancel the contract.

He said that the respondent declared a dispute between the parties in terms of the contract. The dispute was declared through a letter dated 15 January 2018. In terms of the contract, the dispute was to be adjudicated by the Dispute Adjudication Board, which was duly constituted.

The appellant's attitude was that there was no need for the constitution of the Board as the parties could meet and resolve the dispute.

The respondent then sought to refer the matter to arbitration, but, the appellant objected saying that it was not an arbitration matter. It was then that the respondent approached the court a quo for an order of specific performance, alternatively, damages.

It succeeded in its quest for specific performance. The appellant appealed that decision to this Court.

Pending the hearing of the appeal, the respondent applied in the court a quo for an order to execute the judgment of that court pending appeal. That application was granted, but, the appellant did not comply with it.

In the meantime, according to the witness, the Ministry of Energy directed that the parties further engage in order to give effect to the contract. The directive was contained in a letter dated 15 June 2020.

As a result, the parties prepared an amended contract which they are yet to sign.

That development was seen by the witness as dispelling the notion that specific performance was no longer possible.

Thereafter, various engagements were initiated by the Ministry of Energy to iron out the problems bedeviling the implementation of the contract. On 6 July 2020, the Minister of Energy wrote to the Executive Chair of ZESA Holdings intimating to the Chair that his office was required “to urgently conclude the drafting of all the pertinent agreements and financial instructions necessary for the available financier to avail the funds required to implement the project.”

This letter was copied to the witness.

The witness asserts, that, the Government of Zimbabwe, through the Ministry of Energy, as the shareholder in the appellant, wanted the project to be implemented without delay. It was for that reason, that, the Ministry had intervened calling on both parties to implement the project.

However, the appellant remained defiant.

The witness indicated, that, in July 2020, the parties arranged a joint visit to the site. The purpose of the visit was to assess the work done and that which remained to be done, since both parties were negotiating a revised contract.

Thereafter, the parties prepared a report, comprising pictures and video evidence, demonstrating their findings on the ground. The report was jointly signed by the parties representatives. The appellant was represented by its project manager, Mr Mugwagwa, and its officials Mr Fambi and Mr Chinho. On the other hand, the respondent was represented by the witness, its project manager, Mr Magweza, and an official called Mr Mubviri. The witness participated in both the joint visit and in the compilation of the joint report.

The witness opined, that, the exercise was an indication that the contract was temporarily on hold.

The witness stated, that, the appellant's counter claim for the sum of US$3,310,736=30 was devoid of merit if considered in the context of the joint report. It was made on the premise that the pre-commencement works were not carried out, yet, the report showed otherwise. The report confirmed that the appellant owed the respondent some money for work done at the conclusion of the pre-commencement works. It also confirmed that the advance payment guarantee was no longer necessary.

He was adamant that the objective of the pre-commencement activities, as set out in the contract, were satisfied. In that regard, he was of the view that the appellant was being malicious in suggesting that the contract was not implemented at all.

The witness justified the respondent's alternative claim for damages as follows:

The respondent had incurred expenses to do with the tendering process as well as the due diligence exercise when the parties had to travel to countries such as China and India. That included the cost of air fares of the appellant's personnel that had to be covered by the respondent. The respondent also claimed risk, occupational damages, and damages for reputational loss occasioned by the negative publicity caused by the appellant. The witness also stated, that, the respondent's security guards were kicked off the project site by the appellant at a time the respondent was prepared to carry on with the project.

Under cross examination, he insisted that discussions for a new contract started in earnest in 2020 after the new Minister of Energy had assumed office.

He said the Minister was unhappy over the delays in implementing the project. The Minister was displeased with the appellant's failure to comply with CHITAPI J's order granting the respondent leave to execute the High Court judgment pending appeal.

The parties met again to discuss the way forward - with no positive results.

He insisted that there were financiers ready to fund the project, but, for the obstinacy of the appellant; a fact he communicated to the Minister. He said that the execution of the Amended and Restated Contract Agreement was not an admission that the respondent had failed to perform. The idea was simply to kick start the project, with the respondent required to source funds for the initial phase of 10MW with the rest of the MW coming later as provided in the contract.

He said it was the EPC contract that is sought to be enforced and not the Amended Restated Contract.

The respondent had even offered to reduce the price to demonstrate its commitment to the implementation of the contract.

Asked whether a guarantee was provided by the respondent, as required by the contract, the witness stated that CHINT wrote to the appellant advising that they had the guarantee in place, but the appellant dithered. The offer was not accepted by the appellant because it had no money.

However, the appellant did make payments for the feasibility and pre-commencement works without an advancement payment guarantee.

This was justifiably so because the respondent had delivered those activities.

He insisted that the appellant's letters of 7 and 10 April 2018 and 6 July 2018, which confirmed the non-extension of the condition satisfactions period beyond 23 April 2018, prevented the respondent from fulfilling the conditions precedent as set out in clause 5a. This was because the appellant failed to pay the respondent's sub-contractors, and, as a result, the pre-commencement works could not be completed.

He further stated, that, although the actual project had not yet commenced, save for the pre-commencement works, the respondent needed only 6 months to complete the first 10MW once it secured the necessary funding.

He accepted that the respondent had revised the project costs downwards in the Amended and Restated Contract because the costs of solar products had generally gone down on the international market.

He dismissed the ADB integrity report on the debarment of CHINT on the basis, that, the respondent was not seeking funding from ADB. In any case, the debarment was lifted as CHINT was never found guilty of any fraudulent conduct.

Asked how the project could be implemented since the appellant did not have financial resources, he responded as follows:

The respondent had presented to the appellant China Exim Bank as a willing financier in 2015. The respondent could not access the funding set aside by China Exim Bank because the appellant's shareholder owed the bank's export credit insurance adviser, Sinosure, and its account was in arrears; China Exim Bank said it could still lend the money using other insurers. There were alternative funders that did not even require underwriters. The respondent introduced other local financiers, such as CBZ and the African Transmission Cooperation (ATC), as prospective funders. The Ministry of Energy even approved the funding proposal by ATC in June 2020.

The appellant was mandated to amend and restate the terms of the contract to give effect to the new funding model but it failed to do so.

The witness said he had also approached NSSA, on behalf of the appellant, requesting assistance in raising US$25,927,289.

The offer was also not taken up by the appellant.

The witness stated, that, the annexure to the joint report prepared during the joint visit to the site, dated 13 July 2020, was part of the main report prepared by the parties representatives. He said that the report, together with the annexure, was actually sent to the respondent by the appellant after the joint visit.

The Appellant's Evidence

The appellant called one witness, Cleopas Fambi, its Assistant Project Manager.

During the period 2015-2017, his duties included the management of the project between the appellant and the respondent. He was involved in the tendering stage, contract negotiations, and the pre-commencement works. His evidence was to the following effect:

Sometime in 2013, the appellant, through the State Procurement Board (SPB), floated a tender for the construction of 3 x 100MW photovoltaic solar plants at Gwanda, Insukamini and Munyati.

The respondent was awarded the tender to construct the solar plant at Gwanda.

The parties concluded the contract on 23 October 2015. The contract was to commence in full force and effect after the satisfaction of the conditions precedent stipulated in the contract.

The respondent failed to fulfil the conditions precedent under clause 5 of the contract and the conditions remain unfulfilled to this date. As a result, the contract did not commence because of the respondent's failure to fulfil those conditions.

He stated that the addendum to the contract dealt with the pre-commencement works listed in schedule 11 of the contract. The appellant paid for the pre-commencement works in advance. The respondent, however, failed to provide the bank guarantee for the advance payments. It also failed to provide its portion that it was meant to contribute to the pre-commencement works. The respondent also misrepresented its capacity to perform the contract.

The witness said, that, he was part of the joint team that visited the project site on 13 July 2020. The visit took place in the context of a proposal to implement the project in phases. The works had been partially completed on the ground. No maintenance or repairs had been carried out since July 2020.

With regards the documentation attached to the joint report showing the various activities of the pre-commencement works undertaken on site and the bill of quantity amounts, the witness said that he was seeing these papers for the first time in court.

He said that the amount of US$2,031,230 representing the value of the ground site clearing was overstated since there was still need to carry out ripping of the top soil, clearing, and site levelling.

He dismissed the allegation that the appellant did not wish to implement the project, saying that the appellant's conduct was consistent with a desire to see the project completed. It was for that reason that the appellant had paid for the pre-commencement works.

Under cross examination, the witness admitted that the appellant was a State commercial entity and therefore subject to the law governing procurement by State entities.

He agreed that according to the law, the appellant's accounting officer was its Managing Director who was wholly responsible for the administration of the project.

He conceded that he could not account for the project within the contemplation of the law as he was not the appellant's accounting officer. The accounting officer was the person with the complete records of all the transactions.

Asked whether he could provide insight on the issue of financing agreements, he stated that his insight was limited. He could not comment as to why there was no financial closure because he did not have the required information. He could also not comment on whether the appellant deliberately frustrated the financial closure as alleged by the respondent. He could not deny that CHINT had procured funding from China since he was not the accounting officer. Neither could he deny that the respondent had, as an alternative, engaged domestic funders to finance the project and that its efforts had been frustrated by the appellant's ambivalence. He could also not deny that CHINT had offered a US$52 million guarantee but the appellant had not embraced it because it did not have the required funds.

He said the best person to comment would be the accounting officer since all correspondence was directed to him.

The witness admitted, that, the parties did not refer their dispute to a consultant or engineer because there was no disagreement on the value of the pre-commencement works carried out.

The witness was also part of the team that carried out a site visit in July 2020. The parties agreed that the fence was erected and completed. He agreed that the appellant therefore received value at the conclusion of that part of the project. He also agreed that the feasibility study had been done and completed. Repairs and maintenance works had also been carried out.

Although he denied the value delivered, ascribed to the pre-commencement works, in the sum of US$3,382,697 as recorded in the bill of quantities report, he conceded that he could not tell the value that had been delivered to date.

Further, he could not comment on how the sum of US$3,310,736=30 representing the appellant's counterclaim was arrived at. It would require the accounting officer, his team, and the contractor to confirm how the figure was arrived at.

He also admitted that, at some point, the appellant had ordered the respondent's workmen off the site.

The witness could not comment on the Ministry's directive that the project be completed.

His attention was drawn to the fact, that, on 6 July 2020, the minister had, by letter of that date, communicated Government's position to the chairperson of ZESA Holdings. Another letter, dated 15 June 2020, had been written to the ZESA chairperson by the minister. In it, the minister had reiterated Government's desire for the parties to move with speed to implement the project without delay.

The witness could not deny that the contract was still capable of performance and that the respondent could still secure funding to achieve financial closure. He also admitted, that, the appellant was desirous of addressing power shortages. That desire is what had given impetus for the project....,.

SUBMISSIONS IN THE COURT A QUO

The respondent dismissed the evidence given by the appellant's sole witness as ineffectual because the witness admitted that he was not competent to testify on matters which only the appellant`s CEO could shed light on. This witness was, according to the respondent, unable to give evidence proving the value of the pre-commencement work done, nor could he dispute the contention that it was the appellant that actually owed the respondent....,.

The appellant's closing remarks were to the following effect:

It submitted that Mr Chivhayo's evidence was unreliable and thus the respondent had failed to discharge the onus on it to prove its claim. It accused this witness of changing his evidence when it suited him. It said that his evidence was inconsistent with contemporaneous documents, and that he referred to non-existent documents....,.

SUBMISSIONS BEFORE THIS COURT

RESPONDENT'S SUBMISSIONS

With regards the evidence adduced in the court a quo, counsel for the respondent noted that the court a quo made a finding of credibility in favour of the respondent's sole witness, Mr Chivhayo. He submitted that the evidence adduced by Mr Fambi, on behalf of the appellant, left a lot to be desired.

He chronicled Mr Chivhayo's evidence and noted, that, it was upon the respondent to raise the necessary funding for the project. He submitted that the evidence given by Mr Chivhayo shows how the appellant had frustrated the respondent's efforts aimed at financial closure for the project. Mr Chivhayo also told the court a quo that the respondent wished to conclude the project. Counsel for the respondent submitted, that, it was not shown that it was not possible to do so. For that reason it was appropriate for the court a quo to grant the remedy of specific performance.

He further submitted that any evidence elicited from Mr Chivhayo, under cross-examination, as to the meaning of the contractual documents, does not bind the court....,.

Counsel for the respondent submitted, that, the appellant's sole witness admitted that he was not involved in the process of financial closure as this was the preserve of the appellant's Managing Director. He was thus not in a position to challenge the evidence proffered by the respondent and its witness.

Further, while disputing the value of the pre-commencement works, neither the witness nor the appellant placed evidence of the value of the works that were carried out. On the contrary, the witness conceded that there was value in the works done and that same had been completed. He also confirmed that the respondent had been barred from the site and thus could not do repair work. He could not dispute that the appellant in fact owed the respondent....,.

ANALYSIS

APPLYING THE LAW TO THE FACTS

(3) Whether Fictional Fulfilment Occurred

Fictional fulfilment is a doctrine that may be invoked under circumstances where a party to a contract deliberately frustrates the fulfilment of a condition stipulated in the contract.

In casu, the respondent submits that the appellant was guilty of such conduct with regards the financing arrangements. It invited the court a quo to deem the conditions to have been fulfilled in line with the doctrine of fictional fulfilment.

The invitation was accepted - and correctly so.

The respondent's sole witness gave evidence to the effect, that, various proposals for the financing of the project were brought to the table but the respondent showed disinterest and declined to engage the various would-be financiers, both local and foreign. The appellant's witness, one Fambi, confessed that he had no knowledge of the financing arrangements and how they had been handled. He told the court a quo that such arrangements were the preserve of the appellant's Chief Executive Officer.

The Chief Executive Officer was not called to give evidence.

For that reason, the evidence of the respondent's witness, one Chivhayo, was virtually uncontroverted.

It was on the basis of that witness's uncontested testimony, that, the court a quo found that the appellant had frustrated the implementation of the contract and invoked the doctrine of fictional fulfilment....,.

The case of Scott & Anor v Poupard & Anor 1971 (2) SA 373 sets out the factors to be established in order to invoke the doctrine of fictional fulfilment. The factors are:

(i) Non-fulfilment of the condition;
(ii) The defendant's breach of his duty, with an intention to frustrate the fulfilment; and
(iii) A causal link between the non-fulfilment and the defendant's intentional frustration of the fulfilment of the conditions.

The court a quo, in line with case law and the uncontroverted evidence of Chivhayo, found this an appropriate case in which the doctrine of fictional fulfilment should be invoked.

Its decision in this regard cannot be impugned....,.

(4) Whether specific performance should have been granted

The fourth issue is to do with the propriety of the decision of the court a quo in ordering specific performance.

The law on specific performance is well traversed.

In the case of Grandwell Holdings (Pvt) Ltd v Zimbabwe Mining Development Corporation & 3 Ors SC05-20, this Court remarked as follows:

“However, the right to claim specific performance is predicated on the concept that the party claiming it must first show that he or she has performed all his or her obligations under the contract or is ready, willing, and able to perform his side of the bargain. Even then, the court has a discretion, which should be exercised judicially, to grant or refuse a decree of specific performance. It follows, therefore, that the court's discretion should not be exercised arbitrarily or capriciously: see Minister of Public Construction and National Housing v Zescon (Pvt) Ltd 1989 (2) ZLR 311 (S), where, at 318G, this Court stated:

'The law is clear. This is a remedy to which a party is entitled to as of right. It cannot be withheld arbitrarily or capriciously.'”

In dealing with the question of specific performance, the court a quo was alive to the principles governing the grant or refusal of that relief. It correctly noted that each case must be determined according to its own circumstances, and that the court must exercise its discretion judiciously, without appearing to be making a contract for the parties.

In casu, it noted that the appellant had not placed any evidence before it showing the measures it took in its attempt to achieve financial closure. Its sole witness, Mr Fambi, was unable to shed any light on this crucial issue.

Resultantly, the court a quo correctly concluded that there was nothing to show that specific performance was unachievable.

On the contrary, Mr Chivhayo, the respondent's sole witness, had shown that the respondent could secure funding for the project, the procurement of funding being central to the implementation of the project.

The court a quo dismissed the appellant's assertions that the project is no longer viable. It held, that, any issues pertaining to the viability of the project, and the effect of the changes in the currency regime (as alleged by the appellant), must be left to the parties to take care of in terms of clause 5(i) of the contract.

In any event, clause 6 of the contract allows the parties to amend the contract should they so wish.

The court a quo made reference to an “Amended and Restated Contract” which would have seen the project being implemented in phases. The respondent had funding for the initial phase of 10MW. This contract was never signed, but, its existence shows that funding could be obtained.

At p47 of its cyclostyled judgment, the court a quo makes the following finding of fact:

“The point is that, the question of the unavailability of funding is clearly not an excuse going by the evidence that was placed before the court.”

That finding of fact cannot be impugned: see Hama v National Railways 1996 (1) ZLR 66.

Counsel for the appellant submitted, that, an order for specific performance would bring intolerable hardships on the appellant, as the appellant has no funds to implement the project.

We note, however, that Mr Fambi, the appellant's sole witness, did not say so in his evidence before the court a quo.

Secondly, it is the duty of the respondent to source funding.

If there is any hardship to be borne at this stage, it has to be borne by the respondent and not the appellant.

The respondent has indicated that it is able to source funding for the project.

That being the case, there was no reason for the court a quo to deny the respondent the remedy of specific performance....,.

6. Whether the counterclaim was properly dismissed

The residue of the counter claim (after the abandonment of that part of it imputing misrepresentation to the respondent) relates to a refund due to the appellant in the sum of USD3,000,000. The amount had been advanced to the respondent to carry out pre-commencement works.

Through the testimony of Mr Chivhayo, the respondent resisted this claim on the basis that the pre-commencement works to that value, if not much more, was in fact carried out. For that reason, the respondent did not owe the appellant any money.

Mr Chivhayo relied primarily on the report of the joint visit to the project site, which showed that substantial progress had been achieved on the pre-commencement work.

On the other hand, Mr Fambi, the appellant's sole witness, was unable to substantiate the counterclaim because he did not have the material to do so, as such matters were the preserve of the appellant's CEO.

The CEO was not called to testify.

In the circumstances, the appellant failed to prove its counter-claim. The court a quo's decision to dismiss the counter claim cannot be faulted....,.

DISPOSITION

Despite counsel for the appellant's spirited efforts, the appellant's case is weak in three cardinal respects:

(i) Firstly, Mr Chivhayo gave detailed, factual evidence in support of the respondent's case. On the other hand, Mr Fambi, who gave evidence on behalf of the appellant, was literally at sea as he admitted that he had no useful information regarding the issues before the court. He referred all material issues to the respondent's CEO who was, surprisingly, not called to give evidence.

In essence, therefore, Mr Chivhayo's evidence was not controverted.

(ii) Secondly, the court a quo made a finding of credibility in favour of Mr Chivhayo. To all intents and purposes, therefore, the court a quo accepted the veracity of the evidence as given by Mr Chivhayo and rejected any evidence to the contrary.

It is trite, that, an Appeal Court will not lightly interfere with the findings of credibility of a trial court.

(iii) Thirdly, following from the above, the court a quo made findings of fact in favour of the respondent. There is no basis to interfere with those findings.

We are satisfied, that, the court a quo properly held that the contract between the parties was valid and extant and that same was properly amended by the Addendum to it which extended the period within which the conditions precedent should be fulfilled. It correctly found that its purported termination by the appellant was of no legal force or effect as such termination did not meet the requirements of the termination clause of the contract.

The court a quo exercised its discretion judiciously, in ordering specific performance of the contract, having found that the respondent was willing, and able, to source funding for the project.

In any event, no meaningful evidence was presented by the witness led by the appellant.

The witness was unable to lead satisfactory evidence with regards the appellant's counter-claim in the sum of US$3 million. The court a quo correctly found that the counterclaim had not been proved and proceeded to dismiss it.

In the circumstances, the appeal stands to fail. Costs shall follow the cause.

Accordingly, it is ordered that:

(1) The appeal be and is hereby dismissed.

(2) The appellant shall pay the costs of suit.

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Evidence on Behalf of a Corporate Entity and Institutional Memory

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HH466-18 : NMB BANK LTD vs THE TRUSTEES FOR THE TIME BEING OF CORNERSTONE TRUST and JULIUS MAKONI and THE TRUSTEES FOR THE TIME BEING OF RYVONNE TRUST
Ruled By: ZHOU J

View Appeal
HH100-17 : UPSET INVESTMENTS (PRIVATE) LIMITED vs CHITUNGWIZA MUNICIPALITY
Ruled By: MUREMBA J

SC21-18 : EASTER MZITE (as Executrix Dative Estate Late Chemayi Joseph Mtize) vs DAMAFALLS INVESTMENTS (PVT) LTD and MASTER OF THE HIGH COURT
Ruled By: BHUNU JA

HH823-15 : AT INTERNATIONAL LTD vs ZIMBABWE REVENUE AUTHORITY
Ruled By: KUDYA J

HH728-17 : C R S (PVT) LTD vs ZIMBABWE REVENUE AUTHORITY
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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

HMT26-20 : AYAN TRADING (PRIVATE) LIMITED vs CLEARSKY (PRIVATE) LIMITED
Ruled By: MWAYERA J and MUZENDA J

Appealed
SC31-22 : NMB BANK LIMITED vs FORMSCAFF (PVT) LTD and PENNIWILL (PVT) LTD and RODNEY CALLAGHAN and MILLICENT CALLAGHAN and CHARLES CANNINGS and CLIFFORD JOHNSON and LESLEY BENNET
Ruled By: GARWE JA, PATEL JA and GUVAVA JA

View Appeal
HH606-18 : NMB BANK LIMITED vs FORMSCAFF (PVT) LTD and PENNIWILL (PVT) LTD and RODNEY GALLAGHAN and MILLICENT GALLAGHAN and CHARLES CANNINGS and CLIFFORD JOHNSON and LESLEY BENNET
Ruled By: MUZENDA J

HH238-17 : ZIMBABWE UNITED PASSENGER COMPANY vs JAYESH SHAH and GIFT INVESTMENTS (PVT) LTD
Ruled By: TSANGA J

SC24-18 : MEDLOG ZIMBABWE (PVT) LTD vs COST BENEFIT HOLDINGS (PVT) LTD
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SC86-22 : CITY OF HARARE vs EVARISTO MUNGATE
Ruled By: GOWORA JA, MAKONI JA and BERE JA

SC16-23 : ZIMBABWE PLATINUM MINES (PRIVATE) LIMITED vs ZIMBABWE REVENUE AUTHORITY
Ruled By: BHUNU JA, UCHENA JA and CHATUKUTA JA

SC81-23 : DISCENT BAJILA and FRANK MHLANGA and ADELAIDE MHLANGA and SANPOULOS MAPLANKA and OTHERS vs TATENDA MADZIRASHE and RAMSON CHINGWARA and LINDA MPOFU and OTHERS
Ruled By: UCHENA JA, CHITAKUNYE JA and MWAYERA JA

SC110-23 : CHINHOYI MUNICIPALITY vs TENDAI MUSONZA
Ruled By: MAVANGIRA JA, CHIWESHE JA and MUSAKWA JA

SC127-23 : ZIMBABWE POWER COMPANY vs INTRATREK ZIMBABWE
Ruled By: MAKONI JA, CHIWESHE JA and MUSAKWA JA

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Evidence on Behalf of a Corporate Entity and Institutional Memory

View Appeal HH466-18 : NMB BANK LTD vs THE TRUSTEES FOR THE TIME BEING OF CORNERSTONE TRUST and JULIUS MAKONI and THE TRUSTEES FOR THE TIME BEING OF RYVONNE TRUST Ruled By: ZHOU J

View Appeal HH100-17 : UPSET INVESTMENTS (PRIVATE) LIMITED vs CHITUNGWIZA MUNICIPALITY Ruled By: MUREMBA J

SC21-18 : EASTER MZITE (as Executrix Dative Estate Late Chemayi Joseph Mtize) vs DAMAFALLS INVESTMENTS (PVT) LTD and MASTER OF THE HIGH COURT Ruled By: BHUNU JA

HH823-15 : AT INTERNATIONAL LTD vs ZIMBABWE REVENUE AUTHORITY Ruled By: KUDYA J

HH728-17 : C R S (PVT) LTD vs ZIMBABWE REVENUE AUTHORITY Ruled By: KUDYA 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

HMT26-20 : AYAN TRADING (PRIVATE) LIMITED vs CLEARSKY (PRIVATE) LIMITED Ruled By: MWAYERA J and MUZENDA J

Appealed SC31-22 : NMB BANK LIMITED vs FORMSCAFF (PVT) LTD and PENNIWILL (PVT) LTD and RODNEY CALLAGHAN and MILLICENT CALLAGHAN and CHARLES CANNINGS and CLIFFORD JOHNSON and LESLEY BENNET Ruled By: GARWE JA, PATEL JA and GUVAVA JA

View Appeal HH606-18 : NMB BANK LIMITED vs FORMSCAFF (PVT) LTD and PENNIWILL (PVT) LTD and RODNEY GALLAGHAN and MILLICENT GALLAGHAN and CHARLES CANNINGS and CLIFFORD JOHNSON and LESLEY BENNET Ruled By: MUZENDA J

HH238-17 : ZIMBABWE UNITED PASSENGER COMPANY vs JAYESH SHAH and GIFT INVESTMENTS (PVT) LTD Ruled By: TSANGA J

SC24-18 : MEDLOG ZIMBABWE (PVT) LTD vs COST BENEFIT HOLDINGS (PVT) LTD Ruled By: GARWE JA, GOWORA JA and GUVAVA JA

SC86-22 : CITY OF HARARE vs EVARISTO MUNGATE Ruled By: GOWORA JA, MAKONI JA and BERE JA

SC16-23 : ZIMBABWE PLATINUM MINES (PRIVATE) LIMITED vs ZIMBABWE REVENUE AUTHORITY Ruled By: BHUNU JA, UCHENA JA and CHATUKUTA JA

SC81-23 : DISCENT BAJILA and FRANK MHLANGA and ADELAIDE MHLANGA and SANPOULOS MAPLANKA and OTHERS vs TATENDA MADZIRASHE and RAMSON CHINGWARA and LINDA MPOFU and OTHERS Ruled By: UCHENA JA, CHITAKUNYE JA and MWAYERA JA

SC110-23 : CHINHOYI MUNICIPALITY vs TENDAI MUSONZA Ruled By: MAVANGIRA JA, CHIWESHE JA and MUSAKWA JA

SC127-23 : ZIMBABWE POWER COMPANY vs INTRATREK ZIMBABWE Ruled By: MAKONI JA, CHIWESHE JA and MUSAKWA JA

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View Appeal
HH466-18 : NMB BANK LTD vs THE TRUSTEES FOR THE TIME BEING OF CORNERSTONE TRUST and JULIUS MAKONI and THE TRUSTEES FOR THE TIME BEING OF RYVONNE TRUST
Ruled By: ZHOU J

View Appeal
HH100-17 : UPSET INVESTMENTS (PRIVATE) LIMITED vs CHITUNGWIZA MUNICIPALITY
Ruled By: MUREMBA J

SC21-18 : EASTER MZITE (as Executrix Dative Estate Late Chemayi Joseph Mtize) vs DAMAFALLS INVESTMENTS (PVT) LTD and MASTER OF THE HIGH COURT
Ruled By: BHUNU JA

HH823-15 : AT INTERNATIONAL LTD vs ZIMBABWE REVENUE AUTHORITY
Ruled By: KUDYA J

HH728-17 : C R S (PVT) LTD vs ZIMBABWE REVENUE AUTHORITY
Ruled By: KUDYA 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

HMT26-20 : AYAN TRADING (PRIVATE) LIMITED vs CLEARSKY (PRIVATE) LIMITED
Ruled By: MWAYERA J and MUZENDA J

Appealed
SC31-22 : NMB BANK LIMITED vs FORMSCAFF (PVT) LTD and PENNIWILL (PVT) LTD and RODNEY CALLAGHAN and MILLICENT CALLAGHAN and CHARLES CANNINGS and CLIFFORD JOHNSON and LESLEY BENNET
Ruled By: GARWE JA, PATEL JA and GUVAVA JA

View Appeal
HH606-18 : NMB BANK LIMITED vs FORMSCAFF (PVT) LTD and PENNIWILL (PVT) LTD and RODNEY GALLAGHAN and MILLICENT GALLAGHAN and CHARLES CANNINGS and CLIFFORD JOHNSON and LESLEY BENNET
Ruled By: MUZENDA J

HH238-17 : ZIMBABWE UNITED PASSENGER COMPANY vs JAYESH SHAH and GIFT INVESTMENTS (PVT) LTD
Ruled By: TSANGA J

SC24-18 : MEDLOG ZIMBABWE (PVT) LTD vs COST BENEFIT HOLDINGS (PVT) LTD
Ruled By: GARWE JA, GOWORA JA and GUVAVA JA

SC86-22 : CITY OF HARARE vs EVARISTO MUNGATE
Ruled By: GOWORA JA, MAKONI JA and BERE JA

SC16-23 : ZIMBABWE PLATINUM MINES (PRIVATE) LIMITED vs ZIMBABWE REVENUE AUTHORITY
Ruled By: BHUNU JA, UCHENA JA and CHATUKUTA JA

SC81-23 : DISCENT BAJILA and FRANK MHLANGA and ADELAIDE MHLANGA and SANPOULOS MAPLANKA and OTHERS vs TATENDA MADZIRASHE and RAMSON CHINGWARA and LINDA MPOFU and OTHERS
Ruled By: UCHENA JA, CHITAKUNYE JA and MWAYERA JA

SC110-23 : CHINHOYI MUNICIPALITY vs TENDAI MUSONZA
Ruled By: MAVANGIRA JA, CHIWESHE JA and MUSAKWA JA

SC127-23 : ZIMBABWE POWER COMPANY vs INTRATREK ZIMBABWE
Ruled By: MAKONI JA, CHIWESHE JA and MUSAKWA JA