Intent or Animus Contrahendi re: Trade or Past Practices, Parol Evidence Rule, Integration Rule, Rectification & Retraction

HH99-18 : C F (PVT) LTD vs ZIMBABWE REVENUE AUTHORITY
Ruled By: KUDYA J

This is an appeal against four amended income tax assessments number 20211442 for the year ending 31 December 2009; 20211443 for the year ending 31 December 2010; 202211446 for the year ending 31 December 2011; and 20211448 for the year ending 31 December 2012 that were issued against the appellant by the respondent on 27 June 2014….,.

On 25 July 2014, the appellant objected to the amended assessments in terms of section 62 of the Income Tax Act [Chapter 23:06]. On 22 October 2014, all the objections were disallowed save for a few relating to penalties.

The appellant gave notice of its intention to appeal on 30 October 2014 and duly filed the present appeal on 18 December 2014.

The appellant called the evidence of two witnesses, an independent tax consultant, LM, who worked for the respondent for the 16 years to 2006 and its Managing Director. In addition, it produced four voluminous documentary exhibits in excess of 500 pages, exhibits 1 to 4.

The respondent called its Chief Investigations Officer, OM, who has held that office since 2011 but with a total of 14 years experience, produced a 9 paged documentary exhibit, exhibit 5, and relied on the mandatory R11 documents.

Background

The appellant was incorporated on 29 September 1995 and underwent two name changes, on 24 April 1996 and 9 October 2014….,.

The second name change was precipitated by the acquisition of the South African registered sister company by the appellant's holding company on 1 June 2005.

Sometime in 2010…, the respondent commenced the tax compliance investigation on the appellant that resulted in the amended tax assessments that gave rise to this appeal. The appellant's main business activities in the four years in question were in the importation, distribution, and marketing of motor vehicles and spare parts of a specified brand….,.

The 1996 Distributor-Assembler Agreement

Initially, on 24 June 1997, the appellant entered into a detailed 53 article distributor-assembler three year agreement, the original agreement, with NML, a Japanese conglomerate engaged in the development, manufacture, and assembly and worldwide distribution and sale of an international brand of various models of motor vehicles and spare parts, retroactively from 1 April 1996….,.

The appellant had access to the conglomerate's trademarks, trade names, and engineering technology and was authorised to purchase, manufacture, assemble, market, distribute, and sell certain models of the brand, knocked down components, and spare parts through a network of dealers appointed by the appellant and approved by the conglomerate in Zimbabwe.

The ordering, production, shipment prices, and payment of the vehicles and components, in an amount sufficient to cover the price, was regulated by Articles 5 to 7 of exhibit 3….,.

The appellant met the full cost and expenses of the shipment and demurrage, and storage costs of the vehicles and spare parts. The risk for loss or damage passed to the appellant once the goods crossed the ship's rail at the port of shipment - but ownership and title of the goods was retained by the conglomerate until the payment obligation had been discharged.

It was discharged by payment into an L/C bank account opened in the name of the conglomerate by a bank acceptable to the conglomerate by irrevocable letters of credit at sight in favour of the conglomerate at which point the appellant simultaneously received the shipping documents for the relevant goods through that opening bank.

Because the timelines for ordering and the confirmation of the orders and payment preceded the production of the vehicles, ownership passed to the appellant on delivery of the vehicle FOB past the ship's rail at the port of shipment.

The appellant was solely responsible for securing Government licences and permits required to complete payments for and importation of the ordered goods….,.

The terms and conditions contemplated a cash before delivery sale.

The conglomerate could export and deliver to, and sell in Zimbabwe, brand vehicles in its own name through the agency of the appellant and pay the appellant for the services rendered.

The conglomerate played an active advisory role in the establishment of the appellant's business and was entitled to receive prescribed mandatory reports at specified periods and to inspect the appellant's operations.

The appellant undertook to maintain sufficient working capital and investment capital to enhance its business activities.

Each party was, in terms of Article 39-2, responsible for any and all expenditure incurred and assumed in the performance of its duties, obligations, and responsibilities.

Article 44 provided that:

“This agreement does not constitute either party as the agent or legal representative of the other party for any purpose whatsoever. Neither party is granted any expressed or implied right or authority to assume or to create any obligation or responsibility on behalf or in the name of the other party or to bind the same in any manner whatsoever.”

The appellant was also required to purchase a specified minimum number of vehicles, gain market share, and, in the event of a decline due to circumstances beyond its control, implement agreed counter measures to arrest the decline or risk termination of the agreement.

It appears to me, that, these were standard terms and conditions found in international contracts for the facilitation of international trade as demonstrated by their striking similarity with the conditions found in Lendalease Finance (Pty) Ltd v Corporacion de Mercadeo Agricola & Ors 1976 (4) SA 464 (A) especially in regards to the payment arrangements and the passing of both risk and ownership.

The 1 August 2007 Memorandum of Understanding

The appellant and the related party…, whom I shall refer in this judgment as the intermediary, signed a memorial of the procedures for importation of vehicles into Zimbabwe in the Memorandum of Understanding dated 1 August 2007.

The intermediary was required to place monthly production orders with the brand suppliers. The importation value of the consignment was reflected in a manual invoice issued by the intermediary to the appellant. The vehicles were imported into Zimbabwe and held in the appellant's bonded warehouse as consignment stock with the intermediary retaining ownership of the vehicles until payment was made. Once payment was made, the invoice was stamped by customs officials and duty and other imposts paid for the consignment by a clearing agent before ownership was transferred to the appellant. The appellant, in turn, invoiced and transferred the vehicles to an authorised dealer for sale.

The Distribution Agreement of 25 April 2011

On 25 April 2011, the appellant and the conglomerate entered into a “Distribution Agreement”…, consisting of 39 Articles with retroactive effect…, from 1 February 2007.

It appeared to be a reproduction of an incomplete Distribution Agreement dated 31 January 2007 that was only signed and initialled by the appellant's Managing Director….,.

It substituted the original agreement.

The preamble, structure, and, in most respects, the contents, mirrored word for word the original agreement. The noticeable change was the wholesale removal of the right to purchase knocked-down kits for assembling from and the transfer of technological assistance and assembly by the conglomerate to the appellant.

Articles 21, 22 and 23 mirrored word for word Articles 5, 6 and 7 of the original agreement in respect of the ordering, production, and shipment of the vehicles and spare parts.

Article 24, like Article 10 in the original agreement, dealt with the supply of spare parts whose purchase prices were computed on a cost, insurance and freight (CIF) or free on board (FOB) basis derived from a price list provided by the conglomerate.

The grounds for termination were generally similar to those in the original agreement.

The Memorandum on Sales and Purchase of the Conglomerate Vehicles of 25 April 2011

The appellant and the conglomerate entered into a memorandum on Sales and Purchases of brand vehicles with the intermediary, retroactive from 1 February 2007, soon after signing the Distribution Agreement.

The appellant appointed and the conglomerate approved the appointment of the intermediary as the intermediary for the sale and purchase of the vehicles from the conglomerate under the Distribution Agreement.

The three parties agreed that the intermediary would purchase the vehicles from the conglomerate and sell them to the appellant.

The parties all incorporated the ordering, pricing, and payment and supply of spare parts provisions in Articles 21, 23 and 24 of the Distribution Agreement. They further agreed that any violation or default of those provisions, by the intermediary, would be ascribed to the appellant.

The Management Services Agreement between the Appellant and the Intermediary of 2 March 2009

On 2 March 2009, the appellant and the intermediary entered into a Management Services/Technical Services Agreement which was governed by the laws of Zimbabwe and took effect on 1 March 2009.

They were motivated by the introduction of the multi-currency financial regime in Zimbabwe. It was to run for an indefinite period. The intermediary undertook to:

“Provide administrative services, financial services and support and logistical services and support to help appellant achieve its goals in terms of gaining market share, growth and profitability…, ensure that new developments and systems will be properly communicated together with appropriate facilitation of technical support, system materials and training…, (and) be available to provide help and guidance on any aspect of the business mentioned, at the request of appellant.”

In regards to the computation of the fees, the parties agreed that:

“The intermediary will calculate the fees based on both the turnover reported by appellant and also the level of input that has been provided in terms of this agreement. The fees to be provided for shall be 2% of turnover; however, this will not necessarily be the amount finally invoiced. The amount finally invoiced shall not exceed 4% of turnover.”

And, in respect of payment, they agreed that:

“Payment of the management fees shall ordinarily be made in the year following that on which the fees have been based on receipt of an invoice from the intermediary. For cash flow purposes, it will be permissible to make part payments, but, at least two half-yearly payments will be required.”

The implementation and operation of the agreements

The evidence of the appellant's Managing Director was that the intermediary, a Mauritian registered short-term credit financier interposed between the conglomerate and the appellant in the purchase of the vehicles and spare parts destined to Zimbabwe.

Customers in Zimbabwe would place an order on the brand model of their choice, either to the appellant or an approved dealer appointed by the appellant. The appellant would group the orders and submit a bulky order of the required stock of vehicles, four (4) months in advance, to the intermediary, which, in turn, placed orders with the conglomerate.

The conglomerate would build the ordered vehicles for the intermediary.

The intermediary would purchase the vehicles, in its own name, from the conglomerate, and consign them directly to the appellant's bonded warehouse in Zimbabwe.

The intermediary retained ownership of the consignment in bond until it was paid.

Ownership vested in the appellant upon payment of the purchase price equivalent to the value for duty purposes.

Thereafter, the appellant would, where applicable, pay customs duty, surtaxes, and VAT based on the agreed value, through a clearing agent, before the consignment was released from the bonded warehouse and delivered to the approved dealer and end user.

The appellant used to import stock from a South African related party and the conglomerate under value rulings 18 and 29 of 2001 before the advent of the French holding company. These were replaced by value ruling 15 of 2007, on 5 November 2007, following upon protracted negotiations between the appellant and the respondent that commenced on 26 March 2006….,.

A sample of the documents used in the consignment of the vehicles from the intermediary to the appellant were captured on pp14 to 38 of exhibit 2 and pp1 to 9 of exhibit 5.

These were commercial invoices, telegraphic transfers, and Zimra certificates of origin, bills of entry, and customs clearance certificates.

These commercial invoices…, denoted the intermediary as the supplier and the appellant as the purchaser and consignee.

The vehicles were fully described by model, chassis and engine number, colour, and year of manufacture.

The order number, dates of issue and delivery, method of shipment, origin and destination together with the terms of payment, the free on board purchase price, the cost of freight, insurance and total CIF price, denominated in United States dollars, were also indicated.

The certificates of origin…, certified that each vehicle was manufactured by the supplier in South Africa and bore the same information contained in the commercial invoice in regards to the supplier, consignee, and description of the vehicle.

The bills of entry…, were completed by the clearing agent and identified the intermediary as the exporter or consignor.

They identified the country of supply and destination, the description, and total invoice value of each vehicle separately from the freight and insurance charges.

The customs clearance certificates…, for each vehicle were issued by Zimra.

They contained the full description of the vehicle shown in the commercial invoice. The cost, freight, and insurance price for each vehicle sold was captured in a combined invoice…, issued by the intermediary to the appellant, which the appellant submitted to its bankers with instructions to pay the intermediary by telegraphic transfer….,.

The sequence of dates on these documents showed that an advance payment by telegraphic transfer was made on 12 February 2007, the certificate of origin was presented on 15 April 2007 while the commercial invoice was issued on 24 April 2007 and the vehicle was cleared by a bill of entry at the port of entry on 9 May 2007. Thereafter, a customs clearance certificate was issued on 19 June 2007.

It was common ground, that, the intermediary's consignment was delivered to Zimbabwe and warehoused by the appellant in bond.

It was common cause, that, the appellant did not suffer any exposure to foreign currency risk or credit risk since the end users were required to make payment before the relevant vehicles were dispatched from South Africa…, in 2009 and 2010.

However, in 2011 and 2012, the appellant was exposed to foreign currency risk through the importation of inventory, the liability of which was settled in South Africa in a carrying amount of US$264,729 and US$294,956 respectively….,.

It was common ground that the appellant received vehicle prepayments in the sum of US$2,064,187…, in 2010 that was subsequently revised to US$4,693,512…, in the 2011 financial statements, US$3,086,165 in 2011…, and US$755,673…, in 2012.

Summary of the Tripartite Arrangement

The nature and scope of the tripartite arrangement between the parties was concisely set out by counsel for the respondent in paragraph 5 of his written heads of argument.

A customer placed an order to the appellant through an approved dealer appointed by the appellant. The appellant placed orders with the intermediary, which, in turn, procured the motor vehicles from the conglomerate.

The appellant received the motor vehicles in Zimbabwe and kept them in a bonded warehouse.

Ownership of the motor vehicles remained with the intermediary until duty had been paid by the appellant.

The purchase of a motor vehicle by a customer resulted in the payment of duty to the respondent by the appellant before the vehicle was released to the customer.

The intermediary was paid the transaction value of the motor vehicle, which, according to the letter of the appellant to the respondent, of 8 August 2007, included a 5% administration charge and interest of the selling price on the price list…, in which was incorporated its mark-up of between 7.5% and 10%.

The appellant was responsible for rentals, marketing expenses, and payment of duty.

It sold the vehicles to the dealers at a mark-up of 7.5% and the dealers sold the vehicle to the end customer.

Concessions made at the commencement of the appeal hearing

At the commencement of hearing, the appellant confirmed the concession first made in the letter of 19 June 2014, that, it was remiss in failing to charge the intermediary a mark-up of 7% for transit services rendered in the sum of US$2,240 for 2009, US$2,505=87 for 2010 US$2,198=13 for 2011 and US$3,273=40 for 2012 in respect of vehicles exported by the intermediary to Zambia, Malawi and Tanzania.

Again, the appellant conceded, that, it paid management fees to the intermediary when such fees were not due in the sum of US$130,000 in 2009, US$140,000 in 2010, US$256,629 in 2011 and US$140,000 in 2012.

In the same vein, the respondent conceded, that, it wrongly raised notional interest at the rate of 24% in the sum of US$97,279=92 in respect of the 2012 loan to GS and in the sum of US$106,953=12 for 2010, US$266,879=52 for 2011 and US$124,666=80 for 2012 in respect of the loans availed to ADI.

Assessment of witnesses

The appellant acted in a devious manner in regards to management fees. Its conduct amounted to a deliberate act of transfer pricing which was done with intent to avoid tax.

The production of backdated agreements gave the impression that these were created as a response to the tax investigation.

This was apparent from the purported agreement of 31 January 2007 which had the appellant's signatures only that was rejected by the respondent and resulted in the production of duly signed agreement of 25 April 2011 backdated to 1 February 2007.

The Managing Director misled the court that the appellant provided functional analysis input under duress, contrary to his letter of 12 July 2013 in which he requested two weeks within which to provide the requested information, thus affording the appellant in excess of a month from the date of the initial request.

He disputed making prepayments to the intermediary yet the financial statements, in note 17 on p71 of exhibit 1, show that US$4,693,512 was paid in 2010 and US$3,086,165 in 2011 before the vehicles were exported in bond.

He falsely averred, and thus copied the evidence adduced by the Tax Consultant in his presence, that, the audits for his company commenced in November of each year in contradistinction to the timelines indicated in the audit engagement letter.

The tax consultant prevaricated on what the respondent's generally prevailing practice in regards to provisions was.

The chief investigations officer failed to demonstrate how he arrived at the apportionment ratio he used in his functional analysis. He testified that the appellant misled the respondent by claiming ownership of the consignment stock at the time he applied for the value ruling, contrary to the contents in the letters written by the appellant at that time.

The issues referred for determination

At the pre-trial hearing of 2 June 2015, the following issues were referred for determination. In view of the concessions made by the respondent at the commencement of trial, it is no longer necessary to outline in respect of the loans advanced by the appellant to GS and ADI.

Sharing of profits/transfer pricing

1. Whether or not the respondent is precluded from adopting its current stance on this issue on account of either:

1.1 The value ruling issued by it; or

1.2 The fact that duties and taxes were assessed and paid to it on a different basis.

2. Whether the respondent is entitled to invoke section 24 of the Act to deem income to have accrued to the appellant which was not actually received by it.

Expenses relating to Leave Pay and Audit Fees

1. Whether it was proper of the appellant and open to the appellant to make provision for the costs in question.

2. Whether the respondent was precluded from issuing amended assessments by virtue of the provisions of section 47 of the Act.

Penalties

1. What, if any, penalties are payable to the respondent.

I proceed to deal with each issue in turn....,.

Expenses relating to leave pay and audit fees; whether it was proper of appellant and open to appellant to make provision for the costs in question

In its income tax returns, the appellant made provision for leave pay in its accounts in respect of its employees in the sum of US$10,193 for the year 2009; US$12,372 for 2010; US$22,947 for 2011; and US$24,207 for 2012.

It was common cause, that, the respondent disallowed the 2009 and 2010 provisions in these amounts but disallowed US$10,575 in the 2011 tax year and US$1,260 in the 2012 tax year.

The appellant contended, that, it was under a legal obligation to pay to its employees for the leave days accumulated at the end of each financial year and was therefore entitled to make provision for these leave days.

On the other hand, the respondent contended, that, the obligation to pay only arose when an employee went on leave or encashed his or her leave days as it was at that stage that the leave pay would be incurred for the purpose of trade or in the production of taxable income, otherwise the provisions were rendered non-deductible expenses by virtue of section 16(1)(e) of the Income Tax Act.

In the alternative, the appellant contended, that, the provision in the original income tax return having been deemed issued by the Commissioner, as his original assessment on the date of filing, was accepted and made in accordance with the practice then prevailing in the respondent's office for which the respondent was precluded by the proviso (i) to section 47(1) of the Income Tax Act from issuing amended assessments.

The respondent disputed, firstly, that, the mere acceptance of the self-assessed return amounted to a concession as to its correctness otherwise the provision permitting the respondent to investigate and verify the correctness of the self-assessments, as had been done on the appellant in the past, would be superfluous.

Secondly, it disputed the existence of such a practice as generally prevailing in its office at the time and characterised it as an arrangement which simply went unnoticed for years.

Audit Fees

It was common cause that the appellant was required, by law and proper corporate governance, to have its annual financial statements audited and would incur an audit fee in that regard.

In each of the four years in question, the appellant made provision in its respective financial statements for the audit fees in the sum of US$10,000 in 2009; US$15,000 in 2010; US$12,000 in 2011; and US$12,500 in 2012.

It was common cause that provisions are made and are deductible for accounting purposes in accordance with the requirements of International Financial Reporting Standards.

It paid the audit fees in the subsequent tax year but claimed them as a cost of undertaking business in the year of the assessment in which the audit pertained.

The respondent disallowed the whole amount claimed in 2009 and US$9,960 in 2010; US$2,049 in 2011; and US$491 in 2012.

In the alternative, the appellant contended, that, the respondent was precluded from re-assessing the audit fees by proviso (i) to section 47(1) of the Income Tax Act on the basis, that, the acceptance of the original self-assessments, which are deemed by law to have been the assessments made by the Commissioner, were made in accordance with the practice generally prevailing in the Commissioner's office at the time.

The two issues that arise in respect of these two provisions are:

(i) Whether or not these amounts are deductible under the general deduction formula, section 15(2)(a) of the Income Tax Act, notwithstanding that payment was only made in the following year.

(ii) The second is whether the respondent is precluded from issuing amended assessments in each of these four years by virtue of a practice generally prevailing in its office at the time.

In regards to the first sub-issue, the law is clear.

The general deduction formula caters for expenses incurred for the purposes of trade or in the production of income in the year of assessment.

The provisions of the section are met when the taxpayer has incurred, in the tax year to which the expenses relate, an unconditional legal obligation to pay the amount due notwithstanding that the actual payment is made in the following tax year: see G Bank Zim Ltd v Zimra 2015 (1) ZLR 348 (H)…, and the cases cited therein, where the Bank made commitment to pay certain amounts pertaining to voluntary retrenchments to employees in the 2009 tax year. Some employees had applied and the tax payer accepted the applications in that tax year while others only applied in the subsequent tax year in which the applications were accepted. The acceptance was conditional upon approval by the Minister of Labour and Social Services who granted such approvals for all employees in the subsequent year.

I held, that, the unconditional obligation to pay arose in the subsequent tax year notwithstanding the commitment made by the Bank, and the acceptance of some applications in the 2009 tax year to which the Bank sought to deduct these expenses.

The cases of Edgars Stores Ltd v Commissioner for Inland Revenue 1988 (3) SA 876 (A)…,; 50 SATC 81 (A)…, and ITC 1587 (1994) 57 SATC 97 (T)…, define the expression 'expenditure actually incurred' as “an unconditional legal obligation arising in the year of assessment whether or not that liability has been discharged during that year.”

In the latter case, Van DIJKHORST J stated thus:

“'Incurred' is not limited to defrayed, discharged or borne, but does not include a loss or expenditure which is no more than impending, threatened, or expected.

It is in the tax year in which the unconditional liability for the expenditure is incurred, and not in the tax year in which it is actually paid (if paid in the subsequent year) that expenditure is actually incurred for the purposes of section 11(a): Caltex Oil (SA) Ltd v Secretary for Inland Revenue 1975 (1) SA 665 (A) at 674; Nasionale Pers Bpk v KBI 1986 (3) SA 549 (A) at 564; Edgars Stores Ltd v CIR 1988 (3) SA 876 (A) at 888-9; CIR v Golden Dumps (Pty) Ltd (1993) 55 SATC 198 (A) at 205-6.

It is clear that expenditure may be deducted only in the year in which it is incurred: Sub-Nigel Ltd v Secretary for Inland Revenue 1984 (4) SA 580 (A) 589-591; Caltex Oil (SA) Ltd v SIR (supra) at 674.

It is not necessary for expenditure to be regarded as 'incurred' that it must be due and payable at the end of the year of assessment. As long as there is an unconditional legal liability to pay at the end of the year, the expenditure is deductible even though actual payments may fall due only in a later year: Nasionale Pers Bpk v KBI (supra) at 563-4; SILKE on South African Income Tax, 11ed, Vol 1 para 7.5 at page 7-13.”

To the same effect was ITC 1516 (1991) 54 SATC 101 (N) where GALGUT J said…,:

“It is now settled, for purposes of section 11(a), that 'expenditure actually incurred' is not limited to expenditure actually paid. It includes all expenditure for which liability has been incurred during the year, whether such liability has been discharged during the year or not: see Port Elizabeth Electric Tramway Co Ltd v CIR 8 SATC 13 at 15; 1936 CPD 241 at 244 and Caltex Oil (SA) Ltd v Secretary for Inland Revenue 1975 (1) SA 665 (A) at 674D-E.

A liability so incurred, must, however, be absolute and unconditional before it will qualify as a deduction for the purposes of section 11(a).

It will not be deductible in the year concerned if, for example, the liability is subject to a contingency; if, in other words, it is dependent upon an uncertain future event.

So much is clear from Nasionale Pers Bpk v Kommissaris Van Binnelandse Inkomste 1986 (3) SA 549 (A)…,.

The law, in regard to the problem before us, therefore, offers no difficulty.”

In the local case of Commissioner of Tax v 'A' Company 1979 (2) SA 411 (RAD)…, LEWIS JP cited with approval the definition of 'incurred' that was set out in the Australian case of Federal Commissioner of Taxation v James Flood (Pty) Ltd (1953) 88 CLR 493…, as equivalent to defrayed, discharged or borne of, encountered, and run into or fall upon and not to impending, threatened or expected or due and payable.

Case Law on Provisions for Leave Pay and Analogous Provisions

In ITC 674 (1949) 16 SATC 235, a provision for the payment of holiday allowances for a mandatory holiday that was due in the subsequent year was allowed on the basis that the appellants incurred mandatory and “absolute legal liability to pay” in the tax year in which the provision was made.

In contradistinction, holiday allowances in Federal Commissioner of Taxation v James Flood (Pty) Ltd (1953) 88 CLR 493 were disallowed as a deduction on the ground that they did not constitute losses or outgoings incurred under section 51(1), the section equivalent to our general deduction formula, section 15(2)(a) of the Income Tax Act.

The holiday was based on the accrual of 14 leave days for every 12 months of continuous service which leave days had to be taken within 6 months of due date provided the continuous service was not broken by death, a strike, or absenteeism. In addition, it was mandatory to take such leave outside the year of assessment and the employee was paid his normal salary while on leave and prohibited from encashing such leave.

It was held, that, the factors that could break continuous service constituted contingent liabilities that undermined a definite obligation on the part of the employer to make payment to those employees who had not completed 12 months service before the end of the taxpayer's financial year, and, as such, had not incurred an outgoing proportional to the accrued leave days.

I understood this case to mean, that, the obligation to take the holiday allowance was in terms of the award, which was the source of the liability, incurred when the employee qualified to take leave in the year subsequent to the year of assessment.

In Commissioner of Tax v A Company 1979 (2) SA 411 (RAD)…, LEWIS JP referred to another Australian case of Nevill & Co Ltd v Federal Commissioner of Taxation for the proposition that the employer taxpayer had “at best, an inchoate liability in process of accrual but subject to a variety of contingencies” which liability would be completely incurred in the following year in respect of those employees who had not yet qualified to take annual leave notwithstanding that the amount regarding the labour as a whole had become predictable with certainty.

In Edgars Stores Ltd v Commissioner for Inland Revenue 1988 (3) SA 876 (A)…,; 50 SATC 81 (A), CORBETT JA distinguished between a conditional liability which arises in the year of assessment but is fulfilled in the following year and an unconditional liability which arises in the year of assessment but the amount of the liability is ascertained in the following year.

The later was exemplified by the local case of Commissioner of Tax v “A” Company 1979 (2) SA 411 (RAD) where the unconditional loss on a loan advanced was incurred in the year the debtor was placed in liquidation and was held that the likelihood of a recoupment of a fraction of the amount in a subsequent year did not transform the unconditional liability into a contingent one.

In contrast, in Edgars Stores Ltd v Commissioner for Inland Revenue 1988 (3) SA 876 (A)…,; 50 SATC 81 (A), the obligation to pay rental was found to be contingent upon the determination of turnover at the end of the lease period in the subsequent year and was not an unconditional obligation, the quantification of which took place at the end of the lease period.

The condition to pay rental, based on the turnover that was only quantifiable at the end of the lease period, was contingent upon the computation exceeding the basic rental paid, a position that could only be ascertained in the subsequent tax year.

The unconditional liability would thus be incurred only after the determination had been made that the turnover rental exceeded the basic rental.

The concession by the Commissioner, to apportion the turnover rental monthly, was held to be contrary to principle.

In ITC 1495 (1991) 53 SATC 216 (T), where the employee was entitled to take mandatory leave after working for a fixed period failing which he would forfeit the accumulated leave and the employer did not have any obligation to pay cash in lieu of leave other than in respect of any accrued leave days on death or retirement, it was held that the provisions made for the accrued leave days on death or retirement could not be deducted in the tax year in which they were provided for because they were contingent on the happening of an uncertain event. In other words, it was held that the unconditional liability to pay for such days was only incurred on death or retirement.

The principles derived from case law

It seems to me, that, the principles that emerge from the above cases are that where, by virtue of a statutory or contractual provision, the employer is required to pay an employee cash in lieu of leave, which leave accrued in the year of assessment but is due in the subsequent year and the application for encashment is made and approved in the year of assessment, the liability to pay is incurred in that year of assessment.

However, where application is made in the year of assessment and approved in the following year or where both the application and the approval are made in the subsequent year, then, the liability to pay is incurred in that subsequent year.

The facts on leave pay

The Managing Director stated, that, in 2007 and 2008 the appellant used the same method to claim provisions as it did in each of the four years and they were not disallowed.

In the tax periods under review, the appellant had 20 employees in the administrative, reception, managerial, sales, parts, finance and logistics and drivers divisions.

A sample contract of a bookkeeper, dated 3 May 2011, was produced…,. In regards to annual leave, paragraph 9.1 states:

“Your annual leave will be calculated as follows:

Annual leave 22 working days; you may accumulate leave up to a maximum of twice your annual leave entitlement.

The company may require you to take your leave during the annual December shutdown period. If you do not, at that stage, have any leave accruing to you or have insufficient leave accruing to you, then, you will be required to choose between taking unpaid leave or accepting paid leave which will be off-set against leave that will accrue to you in the future (such leave will be termed advance paid leave).

If you should resign, or your employment with the company be otherwise terminated before your advanced paid leave has been set-off, then, you acknowledge and consent to the deduction or off-set against any moneys which may be owed to you by the company, of an amount equal to the salary paid on the days when the advance paid leave was taken for those days which have not been off-set against accrued leave.”

The Managing Director stated, both in his evidence in chief and under cross examination, that, cash in lieu of leave was payable based on request from the employee who had a right to such payment and 95% of the employees took up that right.

However, until the request was made and approved, the appellant would not know whether the employee would seek encashment or the number of days sought to be encashed and the amount.

Any leave days over the maximum would be forfeited.

He could not say whether it was paid in the year the leave accumulated or in the subsequent year, but, was content to aver that it was paid based on accumulation of the days up to the two year maximum.

The Chief Investigations Officer stated, that, while it was well and proper to make a provision for prospective leave under the International Financial Reporting Standards for accounting purposes, such a provision could not be claimed for income tax purposes before it was actually incurred for the purposes of trade or in the production of income.

The obligation to pay the employee arose when the employee's application for the full or partial encashment of his leave entitlement was approved.

Counsel for the appellant argued, that, the appellant's employees had an absolute legal right to convert the leave days which accrued in the course of the year of assessment.

He further argued, that, the appellant accordingly incurred an absolute liability to pay for these leave days each time the days accrued even though actual payment was made in the following tax year.

In other words, counsel for the appellant contended, that, the employee had an absolute legal right to encash such days on accrual.

The contention flounders on the proposition propounded in Nevill & Co. Ltd v Federal Commissioner of Taxation and approved in Commissioner of Tax v A Company 1979 (2) SA 411 (RAD), that, the employer taxpayer had, at best, an inchoate liability in the process of accrual but which was subject to a variety of contingencies and which liability would only be completely incurred in the following year in respect of those employees who had not yet qualified to take annual leave notwithstanding that the amount regarding the labour as a whole had become predictable with certainty.

The evidence disclosed, that, employees could take voluntary leave or be forced to take leave during the annual December shutdown.

In the forced leave category, were employees who had accumulated the required leave days and those who either had not accumulated any leave days or had accumulated insufficient leave days.

The appellant and its Managing Director did not disclose, either to the Commissioner or this Court, whether the annual December shutdown took place and the exact dates when it did so in each of the years in question.

They did not tender any evidence concerning the corporate diktat nor indicate when it was issued and what its contents were.

We do not know whether it affected all or some of the employees.

No evidence was led on the number who took full voluntary leave, unpaid leave, advance paid leave, or those who took partial voluntary leave or even those who took forced leave combined with encashment.

In respect of those who went on voluntary leave, he failed to disclose when they applied for such leave and whether they sought full or partial encashment of their accrued days and when and whether such leave was approved.

There was simply no evidence on whether any leave was ever taken or encashed in each of these years.

All these administrative factors were relevant to determine when the unconditional legal obligation to pay arose.

If the corporate diktat forced every employee to take leave during the annual December shutdown, then, no provision for leave pay could be made for the duration of the shutdown because the employees would be paid from the ordinary funds allocated for their wages and salaries during that period, which would be deductible in the subsequent tax year.

In regards to encashed days, the payment would be incurred on the date on which the approval was granted and not on the date of payment.

The submission made by counsel for the appellant, that, the absolute legal obligation to pay occurred when the leave accrued was therefore contrary to authority.

The unconditional legal obligation to pay arose when the administrative conditions dictated by the exigencies of the corporate diktat and contractual terms were fulfilled.

These administrative factors were sorely missing in the testimony of the appellant.

The appellant failed to establish, on a balance of probabilities, that, the provisions for leave pay were incurred in each of the tax years in which it claimed the deductions.

The facts on audit

The Managing Director indicated, that, the appointment of auditors and the contract of audit were made prior to the end of the financial year.

This was confirmed by the engagement letters dated 29 August 2011 and 27 September 2012 for the 2011 and 2012 audits.

The 2011 audit fees and expenses were, by agreement, based on the number of hours spent on the audit engagement while the 2012 fees were “billed as agreed from time to time and payable on presentation” at the standard rates in force when the service was delivered.

The auditors estimated fees of US$12,008 from 277 hours for the 2011 audit and US$15,825 for 250 hours in 2012.

The 2012 audit was projected to commence in December 2012 and end in February 2013 (wrongly stated as 2012 p29 but corrected on diagram on p40 of exhibit 4 dated 18 October 2012).

The audit timetable on p40 of exhibit 4 was at variance with the evidence of the two witnesses called by the appellant, that the substantive audit covering the first 11 months took place in 2012 and only mop up audits were done in 2013.

The auditors projected that meetings with management would be held in December 2012 and January 2013 while planning and risk assessment and the compilation of the financial statements and the tax review would be done in February and the presentation of management reports and the distribution of the final audit reports would take place in March 2013.

The Chief Investigations Officer testified, that, provisions denoted an impending service that was accounted in the year of assessment under the accounting prudence concept.

He however, indicated, that, such provisions were treated as reserve funds which were not deductible in the year of assessment but in the following year being the year on which they were incurred.

The testimony of the Chief Investigations Officer, that the real audit encompassed the compilation of the statement of financial position, statement of comprehensive income, statement of changes in equity and cash flows, and, thereafter, the invoicing for the work done, was confirmed by the auditors engagement letters and projections.

The essence of his testimony was that, by agreement of the parties, the liability to pay was incurred on the dates on which each stage of the contract was performed and not on the date on which the contract of engagement was entered into.

My reading of the contracts of engagement is that the appellant incurred inchoate liability to pay at each stage of performance and an absolute liability to do so on the date on which performance was completed and the amount actually expended quantified and brought into account.

The onus to show when the audit commenced and when it was completed lay on the taxpayer.

The principle of law that LEWIS JP appears to have approved in Commissioner of Tax v A Company 1979 (2) SA 411 (RAD)…, by reference to the two Australian cases of Federal Commissioner of Taxation v James Flood (Pty) Ltd (1953) 88 CLR 493 and Nevill & Co. Ltd v Federal Commissioner of Taxation and the English case of Edward Collins and Son Ltd v IRC 12 TC 773…, was that an expenditure or loss arising from the terms and conditions set out in a contract is incurred when the contracted work is performed.

This view is supported by the underlined words by WATERMEYER AJP in Port Elizabeth Electric Tramway Co. Ltd v CIR 8 SATC 13 (1936) CPD 241…, that:

“But, expenses 'actually incurred' cannot mean actually paid. So long as the liability to pay them actually has been incurred they may be deductible. For instance, a trader may, at the end of the income tax year, owe money for stock purchases in the course of the year or for services rendered to him. He has not paid such liabilities but they are deductible.”…,.

The clear principle arising from these cases is that the unconditional obligation to pay is incurred when the work is done or the services are rendered.

In my view, the provisions made in respect of the audit fees constituted a contingent liability, the performance of which was “impending, threatened, or expected” in the future.

The appellant wrongly sought to deduct them in the years in which the provisions were made.

The practice generally prevailing

I must point out, that, this alternative ground was not raised by the appellant in the objection letter and cannot be considered unless leave, based on agreement or good cause, has been granted in terms of section 65(4) of the Income Tax Act.

The appellant did not seek leave and none was granted.

I decided to deal with the point simply because it raised an important issue regarding the use of the Assessors Handbook in determining the existence of a practice generally prevailing in the Commissioner's office.

In ITC 1495 (1991) 53 SATC 216 (T)…, MELAMET J relied on the Shorter Oxford English Dictionary in defining the phrase 'practice generally prevailing' as a common habitual action authorised, approved, and applied by the Commissioner.

It was common cause that the onus lay on the taxpayer to prove the existence of such a practice.

The appellant relied on the testimony of the Tax Consultant and an extract from the Commissioner's Assessors Handbook, a private and confidential internal document issued by the respondent for the guidance of his employees in applying the provisions of the Income Tax Act.

The appellant's first witness introduced paragraph 145(e) of the Assessor's Handbook into evidence notwithstanding that the appellant had cited its contents in its letter of 19 June 2014.

She worked for the respondent as an Assessor between 1995 and 2005 and as an investigator for a few months before resigning in 2006.

She runs her own tax consultancy.

It was common cause that self-assessments were introduced by legislation on 1 January 2007.

Her testimony was based on her personal experience as a tax consultant and the contents of paragraph 145(e) of the Assessors Handbook.

An extract of the relevant paragraph, which was reluctantly produced by the respondent by order of Court at the hearing, reads:

“[145] This subsection details the expenses which a client is not entitled to deduct from his income. The deductions not allowed are:

(e) Income taken to a reserve fund or capitalised in any way. In practice, this paragraph is not applied to specific reserves created in respect of leave pay, directors fees, bonuses and the like. Such reserves and provisions will be allowable deductions if -

(i) The amounts are voted on or before the date of the relative accounts or the annual general meeting at which they were considered; and

(ii) The income is taxable in the year of assessment following that in which it is allowed as a deduction.”

Similarly, amounts due in terms of some industrial law or regulations are treated as allowable deductions having been properly incurred during the year of assessment.

In no circumstances, however, are provisions for anticipated or contingent losses or expenditure allowed as deductions.

Thus, a car dealer cannot be allowed to deduct anticipated expenses to be incurred after his year-end on free services still to be given on cars sold before the year end - but see section 15(2)hh) (paragraph [148D]).

At the commencement of her testimony, she stated that the respondent's current practice was to disallow provisions for audit fees.

She then changed her evidence, and, thereafter, maintained, in both her remaining evidence in chief and under cross-examination, that, the respondent consistently allowed provisions for audit fees and leave pay in the tax year to which they related and added them back to income in the following tax year after they were approved at the Annual General Meeting.

She did not know how the appellant carried out its business and tax obligations, but relied on her experience with other similarly placed corporates to postulate the general period auditors were engaged and the duration of such audits.

She indicated that audits generally commenced in November and ended in the subsequent financial year.

In regards to the generally prevailing practice followed by the respondent, the Chief Investigations Officer averred, that, both prior to and after 2007, provisions for leave pay and audit fees were not allowable deductions in the tax years in which they were made, or at all, despite the impression portrayed in the extract that they were allowable.

The respondent regarded them as reserve funds that could not be deducted by virtue of the provisions of section 16(1)(e) of the Income Tax Act.

He stated, that, prior to the 2007 amendment, the respondent's Assessors would examine each return, but, this practice disappeared with the advent of self-assessments.

He further averred, that, one of the un-intended consequences of self-assessments was that provisions such as the ones in issue could, until a corrective audit was undertaken within the statutory period of six years, escape notice, and, in the absence of an audit, would remain undetected and become final and conclusive.

The respondent regarded the Assessors Handbook as a private and confidential, and not a public or policy document, or even a tax ruling, which could establish a practice.

He maintained, that, the practice of the Commissioner was that all deductions for leave pay and audit fees provisions were not allowable.

The answer as to whether paragraph 145(e) of the Commissioner's Assessors Handbook constitutes a practice generally prevailing in the Commissioner's office is provided by section 37A(11) to (13) of the Income Tax Act and paragraph 4(6), and 5(3) to the Fourth Schedule of the Revenue Authority Act.

Section 37A(11) to (13) of the Income Tax Act stipulates that:

“(11) Where a specified taxpayer has furnished a return in terms of subsection (1), the taxpayer's return of income is treated as an assessment served on the taxpayer by the Commissioner-General on the due date for the furnishing of the return or on the actual date of furnishing the return, whichever is the later.

(12) Notwithstanding subsection (1), the Commissioner General may make an assessment under section 46 and 47 on a specified taxpayer in any case in which the Commissioner-General considers necessary.

(13) Where the Commissioner-General raises an assessment in terms of subsection (12), the Commissioner General shall include with the assessment a statement of reasons as to why the Commissioner General considered it necessary to make such an assessment.
[Section inserted by Act 12 of 2006].”

It seems to me that subsection (12) allows the Commissioner to reopen an assessment, such as the self-assessments in question, provided he is not precluded from doing so by either proviso (i), (ii) or (iii) of section 47(1) of the Income Tax Act.

The 6 year prescription prescribed in proviso (ii) and proviso (iii) do not apply to each of the provisions under consideration.

The first proviso, if proved on a balance of probabilities by the taxpayer, would preclude such a re-opening.

The appellant maintained, that, paragraph 145(e) of the Assessors Handbook established such a practice.

Paragraph 4(6) to the Revenue Authority Act deals with binding rulings while paragraph 5(3) of the same Act deals with non-binding rulings. They stipulate that:

“(6) A publication or other written statement issued by the Commissioner-General does not have any binding effect unless it is an advance tax ruling.”

And 5(3):

“(3) Any written statement issued by the Commissioner General interpreting or applying the Income Tax Act [Chapter 23:06] prior to the 1st January 2007, or any other relevant Act prior to the 1st January 2009, is to be treated as and have the effect of a non-binding private opinion, unless the Commissioner-General prescribes otherwise in writing.”

It was common cause, that, the extract from the Assessor's Handbook was neither an Advance Tax Ruling nor a non-binding private opinion issued by the Commissioner to a taxpayer. Nor did it meet the prescribed requirements for a general binding ruling or a private binding ruling in paragraphs 10(3) and 11(5), respectively, to the Fourth Schedule in question.

However, it could liberally be interpreted to fall into the category of “any written statement issued by the Commissioner interpreting or applying the Income Tax Act [Chapter 23:07] prior to 1 January 2007” contemplated by paragraph 5(3) above.

The evidence of the first witness of the appellant attested to its existence during the time of her employment with the respondent - prior to 1 January 2007.

It would therefore have the effect of a non-binding private opinion, which, in terms of paragraph 5(2) “may not be cited in any proceeding before the Commissioner-General or the courts other than a proceeding involving the person to whom the non-binding private opinion was issued.”

It was common cause, that, the extract in the Commissioner's handbook was never issued to any taxpayer - let alone the appellant.

It was therefore remiss of the appellant to seek to rely on it to establish a practice generally prevailing in the respondent's office.

By operation of law, the appellant is precluded from relying on it to establish a generally prevailing practice.

Although distinguishable on the facts and contentions of law, to the extent that Commissioner of Taxes v Astra Holdings (Pvt) Ltd t/a Puzey and Payne 2003 (1) ZLR 417 (SC) was decided on the principle of “the operation of law” the respondent was correct to rely on that case for the proposition that the Commissioner was bound to act in terms of the law of the land to collect all tax properly due to the fiscus and not untax the taxpayer on the basis of his own mis-interpretation of the law.

The other evidence, excluding the extract that was led by the appellant's witnesses, in the face of the denials of the Chief Investigations Officer as to its existence, failed to establish that such a practice had been operating since time immemorial.

The undisputed evidence of the Chief Investigation Officer, that a practice generally prevailing was communicated in much the same way as a Tax Ruling and that the Commissioner General was working with the Institute of Chartered Accountants to come up with such a practice, clearly demonstrated that such a practice, as alleged by the appellant, did not exist.

In any event, the appellant should have led cogent and not vague evidence, perhaps from other taxpayers, on the existence of such a practice: see D Bank Zim Ltd v Zimra 2015 (1) ZLR 348 (H)…,.

Such a failure satisfies me that the alleged practice does not exist.

HB44-15 : RAILWAYS ARTISAN UNIONS vs NATIONAL RAILWAYS OF ZIMBABWE and OTHERS
Ruled By: TAKUVA J

This is an application for confirmation of a provisional order issued by the Honourable Mr Justice Kamocha on the 31st day of October 2013.

The applicant is a registered trade union representing the artisans employed by the first respondent. It has capacity to sue and be sued in its own name.

The first to fourth respondents (National Railways of Zimbabwe, National Association of Enginemen, Railways Association of Yard Operation Staff and Zimbabwe Amalgamated Railway Workers Union) are signatories to the Parterson Job Evaluation System used at the first respondent's place of employment.

On or about 7 July 2004, the applicant and the respondents entered into an agreement setting out how the job evaluation system was to be conducted.

A procedural manual was drafted and signed by the applicant and all the respondents in July 2006.

In terms of clause 2 of the Parterson Job Evaluation System Procedural Manual, the purpose of the manual is to “set down the principles and procedures to be observed in respect of the classification of all Railway jobs in bands A to F using the Parterson Job Evaluation System.”

Clause 6 sets up a Job Classification/Review Committee whose composition is set out in clause 6.1 as:

“…,. 16 members, 8 of whom shall be appointed by the employer and 2 by each of the registered trade unions who are members of the Railways Employment Council.”

The quorum is established in terms of clause 6.1.5 as follows:

“The quorum of this committee shall be at least 4 members from the employer and at least one member from each of the trade unions. In the event of lack of a quorum, the meeting shall stand adjourned to a date and time to be agreed upon.”

The parties conducted their business in terms of the above manual until problems surfaced, and, in a meeting held on 18 September 2012, wherein the applicant and the fourth respondent's representatives indicated, that, unless the Parterson Job Evaluation System was reviewed they would be uncomfortable to remain as members of the Job Classification/Review Committee.

The third respondent withdrew its members on 27 November 2009.

The applicant also did so on 12 January 2010.

Consequently, no meetings of the Committee were conducted since then.

However, on 10 October 2013, the respondents met, without the applicant's knowledge and consent, and a motion was moved that the Committee should convene its meetings, and, if a party is absent, the meeting should remain adjourned for seven (7) days, and, at the agreed date, those members present shall constitute a quorum.

This proposal was the idea of one Gibson Mhlophe: see annexure H…,.

Indeed, notices were sent out by the secretary to the Railway Employment Council, one W. Chitima, and G. Ndlovu, the HR Manager for the first respondent: see annexures I and J…,.

Pursuant to those notices, a meeting was scheduled for the 23rd of October 2013. However, the meeting was postponed to the 30th of October 2013.

The applicant then sought and was granted a provisional order in the following terms:

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

1. The respondents be and are hereby ordered not to proceed with the meeting of 30 October 2013 to evaluate jobs as it violates the procedural manual.

2. In the event the meeting has already been done, the results of such meeting be declared null and void.”

The terms of the final order sought are:

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

1. The respondents be ordered to review the Parterson Job Evaluation Committee within 30 days of the order by subjecting it to an external evaluation.”

The applicant's argument is that there must be a review of the Committee's nature and functions in view of the corrupt manner in which it has been discharging its functions.

It was submitted, that, this Committee is a creature of the Manual and is strictly bound by the provisions of the manual in particular clause 6.1.5 thereof.

Further, it was submitted, that, where a quorum should be met in all such meetings, the failure to so comply renders those meetings conducted outside the requirements null and void: see L. Piros & Sons v Piros 1993 (2) ZLR 245 (H) and James North Ltd Can v Matrimson 1989 (1) ZLR 322 (HC).

The applicant also submitted, that, clause 6.1.5 of the Manual is clear and unambiguous in that the quorum of the committee shall be at least four (4) members from the employer and at least one member from each of the trade unions.

Also, it was argued, that, there is no provision in the Manual for the procedure proposed by Mhlophe and adopted by Chitima and Ndlovu.

Finally, it was submitted, that, the procedural manual is not subordinate to the Railway Employment Council constitution and any attempt to refer to it in order to resolve the impasse is a nullity.

The respondents opposed the confirmation of the provisional order on the following grounds:

(a) That, the applicant is barred from filing heads of argument because it did not, within one month of filing an answering affidavit, set the matter down for hearing in compliance with Order 32 Rule 236(4) of the High Court Rules 1971, and, as a result, the respondents have, under case number 272/14, applied for dismissal of this case for want of prosecution in terms of Order 32 Rule 236(4)(b) of this Court's rules.

(b) There is no urgency in that the decision the applicant seeks to be set aside was communicated to it on 10 October 2013 yet it waited until the 29th of October 2013 before approaching the court. Reliance was placed on Kuvarega v Registrar-General and Anor 1998 (1) ZLR 188.

(c) That the applicant has not exhausted domestic remedies provided for in terms of section 74(4) of the Labour Act [Chapter 28:01] before approaching this court.

(d) That the relief sought is incompetent in that the court has no authority to make an agreement for the parties.

(e) That constitutions of voluntary associations should be interpreted in a manner which gives effect to the objects of the association as was held in Mudzumwe & Ors vs MDC & Anor 2012 (1) ZLR 490; Mudzengi & Ors v Hungwe & Anor 2001 (1) ZLR 179; and Garment Workers Union v Vries & Ors 1948 (1) SA 1110…,.

(f) That, the decision the applicant complains of was taken when there was a full quorum and the applicant was simply out-voted.

In my view, the real issue is whether or not the respondents purported amendment of clause 6.1.5 is lawful.

The rest of the points raised by respondents are frivolities. However, I will consider them and provide reasons for their dismissal....,.

The fifth point is totally without merit because the basic rule of interpretation, namely, the literal rule, requires that words be given their ordinary grammatical meaning.

If this is applied to clause 6.1.5, the meaning becomes crystal clear.

The object of clause 6.1.5 is to ensure that all members of the Committee must be present when it conducts its business in line with sound industrial relations principles.

Any other meaning would defeat the spirit of collective bargaining.

HH412-21 : ZIMBABWE LEAF TOBACCO vs KEVIN COOKE
Ruled By: DUBE J

In Breastplate Service (Pvt) Ltd v Cabria Africa PLC SC66-20, the court zeroed in on issues regarding the intention of the parties in a contract and held, that, where the parties have agreed and expressed their intention that payment must be made in foreign currency, a court must give effect ...

HMA02-19 : JETINOS ZIVANOMOYO vs HELLEN DINGANI
Ruled By: MAWADZE J and MAFUSIRE J

This was an appeal from a decision of the Magistrate's Court. We dismissed it soon after argument and gave reasons ex tempore. The appellant has now sought written reasons.

In the court a quo, the respondent, hereafter referred to as “the purchaser” where appropriate, sued for specific performance in respect of a property that she had bought from the appellant in terms of a written agreement of sale.

She proceeded by way of a court application.

The draft order, apart from costs, sought an order directing the appellant, hereafter referred to as “the seller” where appropriate, to sign forthwith all the documents necessary to enable transfer of the property to herself, failing which the Messenger of Court should be empowered to stand in his stead and sign.

She said, in terms of the agreement, the parties had consented to the jurisdiction of the Magistrate's Court.

In his notice of opposition, the appellant took a point in limine, that, the remedy sought was not one contemplated by the Agreement of Sale. He said in terms of it, in the event of a breach by himself, the only remedy available to the respondent was cancellation of the agreement upon a prior demand to make good the breach within 14 days, and that this had not been done.

He said specific performance was a remedy alien to the written agreement.

An adjunct to the above objection was that, in terms of the Magistrates Court Act [Chapter 7:10], a Magistrates Court has no jurisdiction to grant specific performance in the absence of an alternative claim for damages. He cited section 14(1)(d) of the Magistrates Court Act.

On the merits, the appellant's basic defence was that the respondent had only paid part of the purchase price; that, as such, she was in breach of the Agreement of Sale; and that therefore she was not entitled to specific performance. He prayed for the dismissal of the application with costs.

The court a quo felt there was a dispute of fact that was incapable of resolution on the papers. It referred the matter to trial.

After a full scale trial, the court a quo found in favour of the respondent and granted specific performance.

The appellant appealed.

We felt the appeal had no merit. We dismissed it as aforesaid.

The seller's argument, that the remedy sought by the purchaser was not one contemplated by the agreement of sale was premised on clause 11. It read:

“Should the Seller breach any of the conditions of the Agreement, the Purchasers, shall, in writing, within fourteen (14) days, call upon the Seller to remedy, failure to which the Purchasers shall be entitled to cancel the Agreement and claim the return of the Purchase Price or damages.”

The point in limine was all smoke.

The approach by the seller was to skin and disembowel the agreement, yank individual clauses out, and hang them up to dry. The result was to turn an otherwise reasonably worded commercial agreement into a vain document that was an end in itself, instead of it being a means to an end.

The agreement of sale was an instrument for the seller to transfer real rights in the property sold and the purchaser to acquire them.

That was the object. That was the purpose. The court had to give effect to it. Otherwise the law would be damned.

As ROBINSON J would put it, in Intercontinental Trading (Pvt) Ltd v Nestle Zimbabwe (Pvt) Ltd 1993 (1) ZLR 21 (H):

“Let me add that to have found in this matter that there was no contract between the parties would have been artificial in the extreme and, I am sure, would have prompted any reasonable businessman to remark that if, before, he had thought the law was an ass, he now knew for certain that it was, since it had shown itself to be the domain of niggling academics out of touch with reality and to have nothing to do with the cut and thrust of the business world where one is concerned, not with the legal niceties pertaining to, but with the perceived existence of a contract.”…,.

The point is, a purchaser who buys a property and performs his side of the bargain, or is ready to perform, is entitled to take title. The seller is obliged to deliver. If he fails or neglects or refuses to do so, the purchaser is entitled to sue for specific performance.

This is quite elementary.

As long ago as 1912 INNES JA said, in Farmers Co-operative Society (Reg) v Berry 1912 AD 343…,:

“Prima facie, every party to a binding agreement who is ready to carry out his own obligation under it has a right to demand from the other party, so far as it is possible, a performance of his undertaking in terms of the contract.”

A plaintiff has the right to choose whether to hold a defendant to his contract and claim performance by him of what he bound himself to do, or to claim damages for the breach: see Haynes v Kingwilliamstown Municipality 1951 (2) SA 371 (A)…,.

The defendant has no such right of election.

He cannot claim to be allowed to pay damages instead of having an order for specific performance entered against him. In the exercise of its discretion, the court may grant or refuse specific performance. Specific performance will be refused if it will lead to an injustice, or, if it will be unduly harsh and burdensome on the defendant.

There was nothing like that in this case.

The court exercises its discretion to grant or refuse specific performance judiciously, not whimsically. The discretion is not confined to specific types of cases. It is not circumscribed by rigid rules. Each case depends on its own set of facts: see Intercontinental Trading (Pvt) Ltd v Nestle Zimbabwe (Pvt) Ltd 1993 (1) ZLR 21 (H).

In the present case, clause 11 of the agreement did not oust the purchaser's right to sue for specific performance. It merely pronounced one of the remedies available to her in the event of a breach by the seller.

A proper and holistic study of the agreement shows, that, it was the intention of the parties, that, upon her performing her side of the contract she would get transfer of the property. Otherwise why would clause 1(ii)(4) refer to the payment of capital gains tax, if not in contemplation of transfer? Or clause 1(iii) that said the balance of the sale proceeds would be released to the seller upon the registration of transfer? Or clause 5 that said risk and profit in the property would pass to the purchaser on the date of registration of transfer?

The court a quo was right to dismiss the point in limine.

Its adjunct that the claim for specific performance was incompetent because it was not accompanied by a claim for damages was equally properly dismissed.

HMA38-19 : BERRINGTON ZVANYANYA and OTHERS vs ZIMBABWE SUGAR MILLING INDUSTRY WORKERS UNION and OTHERS
Ruled By: MAFUSIRE J

Applicants 1 to 10 (Berrington Zvanyanya, Samuel Jinjika, Nyararai Dembo, Madhuvura Emmanuel, Madzuro Stiriki, Lovemore Muteurwa, Vengai Masungwini, Ngonidzashe Mabina Mudambanuki, Joe Gasva and Masacha Tapiwa) are one faction of a trade union.

Respondents 2 to 6 (Godfrey Katerere, Brawl Chikandiwa, Tavanga Vandirai, Lucia Chirilele and Nokhutula Dube) are the other.

The trade union is the first respondent (Zimbabwe Sugar Milling Industry Workers Union).

The seventh respondent (Tongaat Hulett Ltd t/a Triangle Ltd or Hippo Valley Estates Ltd) is the undertaking or industry in which the trade union is established. It is the employer. It is cited as a nominal party. It did not file any papers, electing to abide by the decision of the court.

Respondents 2 to 6 (Godfrey Katerere, Brawl Chikandiwa, Tavanga Vandirai, Lucia Chirilele and Nokhutula Dube) are members of the National Executive Committee of the trade union.

The applicants allege respondents 2, 3 and 4 (Godfrey Katerere, Brawl Chikandiwa and Tavanga Vandirai) are no longer employees of the seventh respondent (Tongaat Hulett Ltd t/a Triangle Ltd or Hippo Valley Estates Ltd).

For that reason, they allege, these respondents are automatically disqualified from continuous membership of the trade union.

So, the applicants seek two inter-related orders as follows:

(i) That, respondents 2, 3 and 4 are no longer members of the trade union by virtue of the termination of their contracts of employment with the employer; and

(ii) That respondents 2, 3 and 4 are disqualified from holding positions in the trade union's National Executive Committee.

The applicants also seek two inter-related orders in respect of the trade union.

They want it to hold elections to choose members of its National Executive Committee and to hold Annual General Meetings in terms of its Constitution.

Costs of suit are sought against respondents 2, 3 and 4 on an attorney-client scale.

The applicants allege they derive their power to sue from their membership of the trade union and in terms of its Constitution.

The respondents, except the employer, have all vehemently opposed the application.

Their grounds are multiple and disparate. They are both technical and substantive....,.

Argument ensued on the substantive ground of opposition.

This was that the loss of employment by members of a trade union did not automatically translate into losing their membership of the trade union, or becoming ineligible to hold positions in the National Executive Committee.

The respondents expanded their argument on the substantive ground of opposition above.

They said membership to a trade union was not confined to employees in the respective undertaking only. Continued membership, or loss of it, depends on the wording of the Constitution of the trade union. Ex-employees can remain members of a trade union. Even students can become members of a trade union.

By custom and precedence, members of this particular trade union who in the past have lost their employment in the undertaking have continued with their membership, especially where they have been challenging their loss of employment and the case would be pending in the courts.

With respondents 2, 3 and 4 in particular, they are still challenging their termination of their contracts of employment, and, therefore, there is no basis for the applicants to pursue the orders they are seeking.

With regards the non-holding of general elections, the respondents argue that the issue has been relegated to the periphery owing to the endless legal fights that have dogged the trade union. But plans are underway to hold the general meetings.

It is common cause that respondents 2, 3 and 4 lost their employment three years ago in 2016. However, they allege they are challenging their dismissal and that their cases are pending at the Supreme Court.

The substantive issue before me is whether respondents 2, 3 and 4 forfeited their trade union membership upon their loss of employment. Corollary to that, or concomitantly, did they become ineligible to hold positions in the executive committee of the trade union?

I have dealt with a similar situation before, in Makarudze & Anor v Bungu & Ors 2015 (1) ZLR 15 (H).

I held that employment in the relevant undertaking or industry is a pre-requisite for membership by any person to a trade union in that undertaking or industry.

Counsel for the respondents argues that Makarudze & Anor v Bungu & Ors 2015 (1) ZLR 15 (H) is distinguishable in that the Constitution of the trade union in question excluded non-employees from becoming members of the trade union. She says, in contrast, the Constitution of the first respondent in casu, is wide enough to accommodate as members anyone who may be prepared to abide by its conditions of membership, moreso, ex-employees who may still be fighting against their dismissal.

Counsel fort the respondents further argues, that, the applicants have sought to rely on clauses of the trade union's Constitution on eligibility of membership instead of relying on those dealing with the termination of membership. She says once someone becomes a member of the trade union, his or her termination of that membership depends on those clauses dealing with termination of membership and that termination of employment is not one of the criteria.

The answer to this case lies in the wording of the Constitution of the first respondent and the Labour Act [Chapter 28:01].

I find no material difference between the scenario in Makarudze & Anor v Bungu & Ors 2015 (1) ZLR 15 (H) and the present.

The substantive provisions of the Constitution in that case, dealing with the eligibility of membership to a trade, are similar to those of the Constitution of the trade union in casu. For example, in casu, clause 6.0 of the Constitution says membership of the union shall be open to non-managerial employees in the sugar milling industry. Thus, first and foremost, one has to be employed in the sugar milling industry to be eligible for membership of the first respondent.

Counsel for the respondents says clause 6.0 is irrelevant.

She says it merely opens the door for membership. It does not shut it up against anyone, especially those that have already entered. She says the clauses dealing with shutting the door against members are 10.6 and 10.7.

Clause 10.6 of the first respondent's Constitution says a member of the National Executive Committee vacates his seat upon resignation, suspension, or expulsion from membership of the trade union. He or she also vacates his seat for absenteeism from any three consecutive meetings without reasonable cause or on non-payment of subscriptions for a period of more than three months.

Clause 10.7 says any member of the National Executive Committee may be removed from office if a vote of no confidence is passed against them by a majority of members at a general meeting.

Undoubtedly, none of these provisions is relevant to the respondents situation.

But, counsel for the respondent's argument is a ruse.

In Makarudze & Anor v Bungu & Ors 2015 (1) ZLR 15 (H) I said, opening up membership of a trade union to anyone not employed in the particular industry or undertaking is alien to trade unionism in Zimbabwe.

By virtue of section 4 of the Labour Act, the entitlement to membership of a trade union, and to hold any office in it, is that of someone called an employee.

An employee is not just any person.

In terms of section 2 of the Labour Act, he or she is any person who performs work or services for another person for remuneration or reward. A non-employee or ex employee is not an employee. In terms of section 27 of the Labour Act, the right to form trade unions is that of employees.

Clauses 10.6 and 10.7 of the first respondent's Constitution, that form the bedrock of counsel for the respondents argument, are irrelevant.

They are dealing with the wilful cessation of office by a member of the National Executive or upon breach by him or her of some term or condition of the Constitution or upon loss of confidence in him or her by members. But, before one gets to that, one has to have been qualified first to be a member of the trade union. If he or she was not, but had got in anyway, that does not stop disgruntled members, like the applicants, from challenging his or her eligibility.

At all relevant times, respondents 2, 3 and 4 were not employees in the sugar milling industry, or anywhere else for that matter.

They were ineligible to become or remain members of the first respondent.

How they might have lost their employment or that three years on they were still fighting their dismissal, are issues of no moment. Incidentally, the facts of the alleged appeal by the respondents have not been ventilated before me. All that the respondents have said is that the appeals for respondents 2 and 3 are pending at the Supreme Court and that respondent 4 has lodged an application for leave to appeal.

But, it is trite, that, an appeal against the decision of a judicial body or quasi-judicial body that is not a superior court does not suspend the decision.

It is also trite, that, an application for leave to appeal is not an appeal: Makarudze & Anor v Bungu & Ors 2015 (1) ZLR 15 (H).

Evidently, as a last-ditch effort, counsel for the respondents stitched together the argument that the spirit of the first respondent's Constitution was such that a member's loss of employment does not lead to an automatic cessation of membership of the trade union.

She pointed to clause 7.0 of the first respondent's Constitution.

This clause says a member shall be exempt from payment of subscriptions in respect of any particular months during which he is unpaid (his salary) on account of suspension without pay or is unemployed for two months.

But, even if this argument had any semblance of probity, which it does not, the cut-off period in terms of the clause is a maximum of two months - and this is only in relation to the payment of subscriptions.

Plainly, the applicants have a right to be represented by genuine trade union members.

One who is not a member, or one whose membership has lapsed for one reason or other, cannot hold a position on the first respondent's national executive. Clearly, the applicants are entitled to relief as against respondents 2, 3 and 4....,.

(i) The second, third, and fourth respondents ceased being members of the first respondent upon the termination of their contracts of employment with the seventh respondent.

(ii) By reason of paragraph (i) above, the second, third, and fourth respondents are hereby disqualified from holding any positions in the first respondent's National Executive Committee.

HH48-12 : ENOCK GOVHA vs ASHANTI GOLDFIELDS ZIMBABWE LIMITED t/a FREDA REBECCA MINE and ANOR
Ruled By: MATHONSI J

This is an application for rescission of a judgment of this court entered in default in favour of the first respondent on 26 June 2008 in terms of which the eviction of the applicant and those claiming occupation through him from premises known as 1495 Chiwaridzo Township Bindura was ordered together with costs of suit.

On 4 February 2008, the first respondent issued summons out of this court in case number HC642/08 alleging that the house in question had been leased to the applicant by written lease agreement signed by the parties on 20 December 2003, which lease could be terminated by the first respondent in the event that the applicant left employment with the first respondent.

The first respondent further averred, that, the applicant's employment having been terminated on 31 March 2007, a point which is now hotly disputed by the applicant who claims having retired from the first respondent's employ in October 2005, the lease had been terminated.

The first respondent then sought an order for eviction as a consequence of the applicant's failure to vacate the house following such termination.

According to the Deputy Sheriff's (second respondent herein) return of service filed of record in that matter, the summons was “served on defendant Enock Govha” on 29 February 2008.

On 12 May 2008, the first respondent submitted an application for default judgement which was granted on 26 June 2008 aforesaid. In due course, a writ of ejectment was issued and the applicant's eviction was sought.

It is that default judgment which the applicant seeks to have rescinded arguing that he was not in wilful default as he was never served with the summons.

The applicant has cited the Deputy Sheriff in this application as second respondent and attacked his return of service as being “false and misleading” given that on the day the second respondent alleges he served the summons personally upon him, he (the applicant), was enjoying the fruits of his retirement in his communal home, he having relocated there in January 2006 following his retirement either in October or December 2005.

It is not clear when, as he mentions two (2) different months in 2005 as his retirement date.

It is not clear whether this application was served upon the second respondent as no proof of such service was filed.

What is clear though is that the second respondent has not challenged the serious allegations made against him regarding service of the summons. His failure to do so may be due to the fact that he did not have notice of the application.

The applicant states, in his founding affidavit, that, he only became aware of the existence of the default judgment when the second respondent sought to evict his daughter from the house on 1 November 2008.

He goes on to say, that, he should be allowed to contest the eviction because he bought the house from the first respondent and he paid the full purchase price.

In support of that claim, he has filed documents showing that the first respondent, as employer, offered houses to its employees, including the applicant. Those documents also show that the housing units were valued, their values determined and what each employee was expected to pay as the purchase price assessed and agreed.

The applicant also submitted his payslip showing that deductions were made by the first respondent from his salary under the caption “rent to buy”. The same payslip also reflects the balance after each deduction of the said 'rent to buy' showing that the amount charged was being progressively reduced. In addition, he filed receipts issued by the first respondent for further lump sum payments marked “payment of House 1495.”

For that reason, the applicant is of the firm view, that, having paid the full purchase price for the house, he cannot be evicted from it and has prospects of success on the merits.

The first respondent strongly opposes the application on the basis that the applicant has not shown good and sufficient reasons for the rescission of the judgment entered in default.

It has been argued on behalf of the first respondent, that, as the owner of the house, with title, it is entitled to vindicate against the applicant and that there was never an agreement of sale between the parties involving the house in question.

Counsel for the first respondent insisted that the relationship between the parties was governed by the written lease agreement signed in December 2003, which document the applicant says only recorded the financial arrangement between the parties for the conveyance, to the first respondent, of the purchase price. He vehemently argued, that, in terms of that lease agreement, the applicant would only be eligible for consideration to purchase the house at the expiration of 60 months from the date of the signing of that lease agreement.

Regrettably, counsel for the first respondent did not explain what governed the relationship between the parties before the lease agreement of 29 December 2003 was signed.

He took the view, that, as the applicant retired in March 2007, before the 60 month period had expired, he was not eligible to purchase the house and the first respondent was entitled to reclaim it.

There is a dispute as to when the applicant retired and two (2) different letters purporting to inform him of his resignation have been produced.

The first respondent produced a letter dated 14 November 2007 recording the applicant as having resigned on 31 March 2007.

Counsel for the applicant insists that letter is a recent fabrication by the first respondent, and has produced a letter written by the applicant's Human Resources Manager, M. Nyamadzawo, on 22 June 2005, giving the applicant notice of his retirement on 31 December 2005.

The first respondent has not explained the circumstances under which that letter was written if the applicant had not resigned.

Rule 63 of the High Court of Zimbabwe Rules 1971 provides:

“(1) A party against whom judgment has been given in default, whether under these rules or under any other law, may make a court application not later than one month after he has had knowledge of the judgment, for the judgment to be set aside.

(2) If the court is satisfied, on an application in terms of subrule (1), that there is good and sufficient cause to do so, the court may set aside the judgment concerned and give leave to the defendant to defend or to the plaintiff to prosecute his action, on such terms as to costs and otherwise as the court considers just.”

Subrule (2) of Rule 63 was interpreted succinctly in the seminal case of Stockill v Griffiths 1992 (1) ZLR 172 (S)…, as follows:

“The factors which a court will take into account in determining whether an applicant for rescission has discharged the onus of proving 'good and sufficient cause' as required to be shown by Rule 63 of the High Court of Zimbabwe Rules 1971 are well established. They have been discussed and applied in many decided cases in this country: see, for instance, Barclays Bank of Zimbabwe Ltd v CC International (Pvt) Ltd SC16-86 (not yet reported); Roland and Anor v Donnell 1986 (2) ZLR 216 (S) at 226E-H. Songore v Olivine Industries (Pvt) Ltd 1988 (2) ZLR 210 (S) at 211C-F. They are:

(i) The reasonableness of the applicant's explanation for the default.

(ii) The bona fides of the application to rescind the judgment; and

(iii) The bona fides of the defence on the merits of the case which carries some prospects of success.

These factors must be considered not only individually but in conjunction with one another and with the application as a whole.”…,.

The explanation given by the applicant, for failure to respond to the summons, is not
convincing, especially as it does not appear that the second respondent, who claims to have served the summons personally on the applicant, has been served for him to responded to the accusations levelled against him.

I agree with counsel for the first respondent, who relies on the authority of Gundani v Kanyemba 1988 (1) ZLR 226 (S), that, the second respondent's return of service is prima facie proof of service and can only be rebutted by concrete evidence being placed before the court.

However, that is not the only factor to be considered in deciding whether the applicant for rescission of judgement has discharge the onus of showing “good and sufficient cause” for the rescission.

I had occasion, in Mazuva v Simbi and Ors HB155-11, a matter in which an applicant for rescission had not given a good explanation for failure to act, to comment…, that, even in such a situation such applicant can still discharge the onus if all the factors are taken together. In that matter, I stated:

“While the explanation for the first respondent's failure to respond to the application in HC905/10 is what MAKARAU JP (as she then was) referred to in Mwanyisa v Jumbo & Ors HH03-10 as 'a dog's breakfast' if the factors to be taken into account in deciding a rescission of judgment application, as set out in Stockill v Griffiths (supra), are taken in conjunction with one another, the applicant has discharged the onus of proving 'good and sufficient cause' for the rescission of the judgment entered on 1 July 2010. It simply cannot stand.”

Here is a company which avails to its employees an opportunity to purchase houses they are leasing from it. It signs an understanding with the employees representatives which has, appended to it, a list of beneficiaries which list sets out the value of each housing unit and the monthly instalment to be paid by each beneficiary - the applicant included. It goes on to deduct the equivalent of such instalment from the applicant's salary clearly stating that it is rent to buy the house and to also show the balance outstanding after such deduction.

The same instalment is reflected on a written lease agreement.

It must be understood, that, in an application of this nature, the applicant is not required to prove his case but merely to show a bona fide defence carrying prospects of success.

Counsel for the first respondent referred me to the case of Ashanti Goldfields Zimbabwe Ltd v Clement Kovi SC07-09 (unreported) in which the Supreme Court ruled, that, the agreement signed between the first respondent and its employees, on 1 December 2003, which the applicant relies upon, was not a sale.

That issue was considered by MAKARAU JP…, in: 1. Antonio v Ashanti Goldfields Zimbabwe Ltd & Anor; 2. Mujati v Ashanti Goldfields Zimbabwe Ltd & Anor; 3. Ashanti Goldfields Zimbabwe Ltd v Bonde 2009 (2) ZLR 371 (H); which matters involved the same arguments as in casu.

She distinguished that case and concluded…, as follows:

“I am bound by all decisions of the Supreme Court on points of law. Where, however, the facts that were placed before the Supreme Court are different from the facts before me, I believe I am at liberty to interpret those facts in light of the law handed down by the Supreme Court. The doctrine of stare decisis applies to points of law and not to factual disputes.”

I find myself in agreement with that postulation.

I am not aware if that judgment has been challenged, but, until such time that it is overturned, I am entitled to use it as I am persuaded by it.

Following the guidance given in Stockill v Griffiths 1992 (1) ZLR 172 (S), to consider the factors not only individually but in conjunction with one another and with the application as a whole, I am of the view, that, the applicant has discharged the onus resting on him to show 'good and sufficient cause' for the rescission of the default judgment.

Justice demands that the issues raised ought to be interrogated fully in a trial and that the applicant should not be shut out, as it were, on the technicality of default judgment.

In the result, I make the following order; that

1. The default judgement entered on 26 June 2008 be and is hereby rescinded.

2. The applicant should file his notice of appearance to defend in HC642/08 within ten (10) days of the date of this order.

3. The costs of this application shall be costs in the main action.

HH54-16 : AIR DUCT FABRICATORS (PVT) LTD vs A.M. MACHADO & SONS (PVT) LTD
Ruled By: CHIGUMBA J

This is an opposed matter in which the applicant (defendant in the main matter) filed a special plea, that the respondent's (plaintiff in the main matters) action be stayed, pending the final determination of the dispute by the arbitrator in terms of the parties agreement.

Both parties are companies which are duly incorporated in accordance with the laws of Zimbabwe.

This case brings to the fore the vexing question of the effect, that, the raising of a special plea ought to have on the proceedings in the main matter.

Various other contentious issues come to mind, such as; whether a special plea should only be raised in circumstances where, if it is upheld, it is likely to dispose of the matter, and, what the purpose of a special plea is as a tool in litigation?

These interesting legal conundrums aside, the issue that arises for determination in this matter is simple.

Does the existence of an arbitration clause in an agreement between parties preclude one of the parties from instituting legal proceedings until the matter has been referred to and determined by an arbitrator?

The background to this special plea is that the respondent issued summons against the applicant on 16 February 2015 in which it claimed payment of the sum of USD$17,313=75 being the 5% retention fund held in terms of the agreement between the parties, as well as costs of suit.

On 5 February 2013, the parties entered into an agreement in terms of which the respondent undertook to supply and fix air-conditioning and mechanical ventilation systems as a nominated sub-contractor in the Nestle new laboratory and administration block project. The respondent averred in the summons, that, it completed its mandate by 4 February 2014 and that it was issued with a certificate of practical completion of works by the Architect.

It is common cause, that, on 13 May 2014, the final certificate of payment in the sum of USD$17,313=75, the 5% retention fund held in terms of the agreement, was issued to the applicant for onward transmission to the respondent. The respondent averred, that, the applicant had failed or refused to release this money to it, in breach of the parties agreement.

The applicant filed notice of entry of appearance to defend on 3 March 2015, and, on 24 June 2015, after further particulars and further and better particulars had been sought and supplied, the applicant filed its special plea.

The basis of the special plea was clause 27 of the CIFOZ Conditions of Building Subcontracts, which the applicant averred provided, that, any dispute or difference that arose between the parties would be referred to arbitration.

According to the applicant, the dispute between the parties arose from the fact that the retention money, to the value claimed by the respondent, was and is still being held in a retention fund trust at Tetrad Investment Bank Limited for Nestle Zimbabwe (Private) Limited (Nestle) and the respondent.

The retention fund was created on 16 November 2012 under the instruction of the respondent and a nominated architect, together with the applicant for the benefit of Nestle.

The applicant contended, that, the respondent ought to have sued Nestle in its summons.

The applicant contended further, that, in terms of clause 13(c) of the CIFOZ Conditions of Building Sub-contracts, the respondent accepted the cession of the retention money to it by the applicant, therefore its claim ought to be against Nestle.

It is common cause that Tetrad Investment Bank Limited (Tetrad) was placed under judicial management, that is why the applicant has not been paid from the retention fund.

The filing of a special plea is provided for as follows by Order 21 of the High Court Rules 1971;

“137. Alternatives to pleading to merits: forms

(1) A party may —

(a) Take a plea in bar or in abatement where the matter is one of substance which does not involve going into the merits of the case, and which, if allowed, will dispose of the case;

(b)…,.

(c)…,.

(d)…,.

(2)…”

In the case of Cabat Trade & Finance v Movement for Democratic Change SC50-12…, it was held that:

“A special plea is a plea in trial susceptible of a replication and must be heard separately on the adduction of evidence: Doelcam v Pitchanik and Ors 1999 1 ZLR 390 (H) 396G-E.”

The applicant contends, that, the dispute between the parties is premised on Clause 27(b) of the agreement between the parties which reads as follows;

“Arbitration

If either the contractor or the subcontractor is unwilling to accept mediation or is dissatisfied with or unwilling to accept the opinion expressed by the mediator, then, and in such case, either the Contractor or the Sub-Contractor may within twenty eight (28) days after receiving notice of such proposal or decision require that the matter shall be referred to arbitration and the final decision of some person to be agreed upon by the parties or failing agreement, to a person to be appointed by on a request of either party by the President for the time being of the Construction Industry Federation of Zimbabwe and the award of such arbitration shall be final and binding on the parties.

Such reference, except on the question of certificates and/or payments, shall not be opened until after the completion or alleged completion of the Contract works, unless with the written consent of the Architect or the Contractor; provided that in any such arbitration as is provided for in this clause any decision of the Architect is final and binding between and upon the contractor and the sub-contractor.

The provisions of this sub-clause shall not affect the sub-contractor's rights under sub-clause 12(c) hereof.”…,

I accept as correct, the submission made on behalf of the respondent, that, a close reading of Clause 27 will show that arbitration is not mandatory. The Clause is couched in permissive terms.

Before taking a look at what our own courts have had to say on the distinction between the word 'may' and 'shall' in the context of statutory interpretation, let us take a brief look at the approach which has been adopted in South Africa.

It has been held, that, language of a predominantly imperative nature is generally taken to be indicative of peremptoriness, and that the verb “shall” is one such word: see Messenger of Magistrates Court, Durban v Pillay 1952 (3) SA 678 (A); Maharaj & Ors v Rampestad 1964 (4) SA 638 (A)…,.

The cases have a common thread, that, a court called upon to determine whether a particular provision is peremptory or directory “must construe the language of the concerned provision in the context, scope, and object of the act which it forms part.”

Use of the word 'shall' has been held to be “…, a strong indication that the requirement was peremptory:” see Messenger of Magistrates Court, Durban v Pillay 1952 (3) SA 678 (A).

It has been held further, that, categorizing statutory requirements as 'peremptory' or 'directory' are concise and convenient labels to use for the purpose of differentiating between the two categories.

Peremptory requires exact compliance whilst directory requires substantial compliance, though the distinction between the two has now become blurred.

In Nkisimane & Ors v Santam Insurance Co Ltd 1978 (2) SA 430 (A), it was held that:

“Care must be exercised, therefore, not to infer from the use of such labels what degree of compliance is necessary and what the consequences are of none or defective compliance. These must ultimately depend upon the proper construction of the statutory provision, or, in other words, upon the intention of the lawgiver as ascertained from the language, scope, and purpose of the enactment as a whole.”

In Maharaj & Ors v Rampestad 1964 (4) SA 638 (A), the court said that:

“It is a recognized principle of statutory construction, that, a court, when determining which of these two alternative constructions is to be placed upon a statutory enactment, must seek to ascertain the real intention of the Legislature, and, in so doing, have regard to the scope and object of the enactment as a whole.”

In Charleston Town Board and Another v Vilakazi 1951 (3) SA 361 (AD)…, the court said the following:

“…, every enactment must be dealt with in light of its own language, scope, and object and the consequences in relation to justice and convenience of adopting one view rather than the other…,.”

Our own superior courts have given us sufficient guidance.

In the case of Diocesan Trustees for the Diocese of Harare v The Church of the Province of Central Africa SC09-10…, it was held that:

“…, the general rule is that, when the legislature uses the word 'may' in a statute by which it confers power on a public official to do a thing, the intention is to confer the power only without a duty to exercise it.

The statute must be construed as conferring on the repository of the power a discretion to decide whether or not to do the thing, unless, there is something in the subject-matter to which the statute relates which shows that the word 'may' is used in an imperative sense to impose a duty on the public official to exercise the power.

The something referred to in the general rule may be in the nature of the thing the public official is empowered to do; in the object for which the thing is to be done; in the condition under which it is to be done; in the title of the persons for whose benefit the power is to be exercised.

That something may couple the power to a duty and make it an obligation on the person in whom the power is reposed to exercise it when called upon to do so.

If, upon consideration of the subject-matter to which the statute relates, the only reasonable conclusion that can be reached is that the intention of the legislature is that the repository of the power would have no justification for failing to exercise the power, the word 'may' must, in such a case, be held to mean 'shall'”….,.

See CRAIES on Statute Law, 7ed…,.; Annison & Ors v District Auditor for St Pancras Borough Council & Anor (1962) 1 QB 489…,.; Salisbury Financial Holdings (Pvt) Ltd v Van Niekerk 1974 (1) RLR 333 (G)…,.”

It is accepted, that, the court in Diocesan Trustees for the Diocese of Harare v The Church of the Province of Central Africa SC09-10 made these remarks in connection with the wording of a statute, but, it is my view, that, the meaning attributed to the words 'may' and 'shall' applies to those words in any contex.

'May' implies permissiveness, as in a discretion or a choice, while 'shall' is an imperative, a duty or obligation to take the prescribed course of action: see also Jonathan Nathaniel Moyo & 2 Ors v Austin Zvoma N.O. & Anor SC28-10…, where the court made a similar distinction in the meaning of the words 'may' and 'shall' also in relation to statutory interpretation. It was held that;

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

'Where a duty arises under a statute, the court, charged with the task of enforcing the statute, needs to decide what consequence Parliament intended should follow from breach of the duty. 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 (7th ed, 1971) p61 n74].”

The guidance that emanates from these cases is that when 'may' is used, it is merely directory, and, choosing not to act in the manner prescribed is permissible. When the word 'shall' is used it denotes mandatory action and compliance with the prescribed course of action is obligatory, imperative, and strict.

Failure to comply with a mandatory course of action invalidates the thing done whereas failure to comply with a directive is not fatal, it may result in some being sanction imposed: see Associated Newspapers of Zimbabwe (Private) Limited v Minister of Information and Publicity & 2 Ors SC111-04…,.; Association of Independent Journalists & 2 Ors v The Minister of State for Information and Publicity in the President's Office & 2 Ors SC136-02…,.; Doctor Daniel Shumba & Anor v The Zimbabwe Electoral Commission & Anor SC11-08…,.; Zellco Cellular (Private) Limited v Post & Telecommunications t/a Net One 1998 (2) ZLR 106 (H).

Counsel for the respondent correctly states the position, that, it is clear from a reading of Clause 27 in the Schedule of conditions that what is mandatory or imperative is the giving of notice of the dispute as evidenced by the use of the word 'shall' in relation to notice.

It is common cause that the applicant was given such notice in a letter dated January 2015.

It is clear from a reading of Clause 27 that mediation, or arbitration, is not mandatory. The wording is not couched in peremptory terms in terms of the meaning of peremptory, as opposed to permissive, which meaning is settled at law, as shown by the cases cited above. Referring the matter to arbitration is a choice, not an imperative, as evidenced by the use of the word 'may' in relation to the issue of arbitration.

This court also agrees with the statement of law, made on behalf of the respondent, that, the arbitration clause, in Clause 27, does not oust the inherent jurisdiction of this court: see Shell Zimbabwe (Private) Limited v Zimsa (Private) Limited & Anor 2007 (2) ZLR 366 (H); Zimbabwe Broadcasting Corporation v Flame Lily Broadcasting (Private) Limited 1999 (2) ZLR 448 (H); Recoy Investments (Private) Limited v Tarcon (Private) Limited 2011 (2) ZLR 65 (H).

These cases provide authority for the proposition, that, Article 8 of the UNICTRAL Model Law set out in the Schedule to the Arbitration Act [Chapter 7:15] is an alternative to litigation and cannot take away the inherent jurisdiction of the court.

It is only when an arbitration clause is clear and unequivocal that arbitration must proceed, at first instance, in resolving the dispute that such a clause can have the effect of staying proceedings.

Clearly, Clause 27 does not state, in no uncertain terms, that, arbitration must proceed first before litigation. This court's inherent jurisdiction is not ousted by the wording of Clause 27. If it had been, such ouster would have been legally permissible in terms of Article 8 of the UNICTRAL Model Law.

What is also clear is that the arbitration process must be set in motion by the existence of a dispute. The terms of the dispute must be set by the party wishing to have the matter referred to arbitration.

In the case before me, it is common cause that the main contractor has failed to pay the sub-contractor. It is also common cause that the parties agreed to place certain funds in an escrow account with Tetrad Investment Bank Limited which is now in liquidation. It is common cause that the reason why the main contractor is unable to pay the sub-contractor is that the escrow funds are stuck at Tetrad Investment Bank Limited, the account has been frozen in the process of liquidation. The amount due and payable is not disputed.

There is no dispute between the parties which requires resolution by arbitration.

The special plea is not properly before the court because it does not constitute a matter of substance which is capable of disposing of the matter as required by Order 21 Rule 137(a) of the rules of this court.

A special plea should only be taken in circumstances where it is likely to dispose of the matter without delving into the merits.

This special plea falls short of that requirement.

Clause 27 of the of the CIFOZ Conditions of Building Sub-contracts does not provide in clear and unequivocal terms that if there is a dispute between the parties it must be referred to arbitration first, before litigation. It does not oust the inherent jurisdiction of this court in clear and unequivocal terms, thereby denying the applicant the use of the Arbitration Act as a shield or the use of Article 8 of the Model Law as a sword.

The applicant knew, or ought to have known, that, the special plea would not dispose of the matter, because the law is clear. The applicant can simply petition the court that Nestle be joined as a party to the proceedings. This will alleviate its obvious difficulty. Raising a special plea was not the appropriate legal remedy in the circumstances.

The court awards a punitive order as to costs as a mark of its displeasure at this waste of its time.

For these reasons, the special plea be and is hereby dismissed with costs on a legal practitioner and client scale.

HH103-12 : ASHANTI GOLDFIELDS ZIMBABWE LIMITED T/A FREDA REBECCA MINE vs TATENDA TAKAVADA
Ruled By: MUTEMA J

This is an application for summary judgment whose draft order reads:

“1. The respondent be and are (sic) hereby ordered to vacate the plaintiff's premises to wit House No. 1117 Haka Way, Chipadze Township, within seven (7) days of this order.

2. The respondent pays costs of suit.”

This is one of several similar matters in which the applicant is seeking the eviction of its former employees from company houses on the basis that the former employees were mere tenants whose employment has since terminated.

The former employees, just like the respondent herein, argue that the applicant sold the houses to them.

The respondent argues that he has a bona fide defence to the applicant's claim. That defence is explained as follows:

In 1998, the applicant, as part of its staff retention scheme, proposed to sell its housing units to its employees over a five year period. By then, the life-span of the mine had been projected to be around five years. The scheme would also help the applicant realize better value from the disposal of the houses in that manner as opposed to by selling them upon closure of the mine in an environment akin to a ghost town.

As a sequel to the proposal, a lot of deliberations were held on the issue and a Housing Committee was put in place composed of representatives of the employees and the applicant.

The relevant minutes were attached to the opposing papers.

Minutes of 8 May 2003 read:

“2.1 Sale of Residential Properties

The process was still ongoing and progressing well. The Finance Director, together with the workers representative went to consult a lawyer to resolve the outstanding issues. The lawyer came up with what he advised as the best option. Minor changes were made to what the lawyer proposed to suit the employee's needs. Whether that is acceptable will be determined when forms are taken back to the lawyers. IT WAS AGREED that the issue be pursued closely so that it comes to rest.”

Minutes of 24 August 2003 read:

“2.1 Sale of Residential Properties

There was a lot of progress on the sale of residential properties. A hurdle on the revaluation of the houses was cleared with Mr Kwaku-Akosah-Bempah when he visited the mine during the second quarter. The Finance Director, together with the worker's representative, had been to the lawyer with the final draft to which the lawyer had already responded….,.”

Thereafter, what was termed a Memorandum of Agreement BETWEEN Ashanti Goldfields Management and Employees was signed. It provided:

“Ashanti Goldfields Zimbabwe agrees to dispose of its housing units situated in Chiwaridzo, Grey Line Flats and Low Density to its employees who are sitting tenants effective 1 December 2003. Find the agreed prices attached.”

The attached schedule has names of the sitting tenants, house number, new valuation of the house, and monthly repayment amount.

On 12 December 2003, the respondent (and other employees) entered into what is headed Agreement of Lease with the applicant.

The material clauses of the “lease” state that the lease period would be for five years, monthly rent of not more than 25% of the lessee's basic salary which would escalate periodically at a rate and on the basis described in Annexure 'A' viz:

“The value of the property will be revalued each time the employee is awarded the annual salary increment. The outstanding balance as at the effective date of the increment is what is revalued. The revaluation will be calculated as follows:

50% of the salary increment (%) x the outstanding balance (as at that date). The revalued outstanding balance will then be divided by the remaining period to get the monthly payment.”

The purported lease agreement was simply a vehicle through which deductions would be made from the respondent's salary.

This explains why the applicant, on the respondent's payslip, put a deduction titled “Rent to Buy” and why the applicant accepted a lump sum payment in full and final settlement of the sums payable to it under the agreement of sale before the expiration of the purported lease period.

Also, the minutes of 16 December 2003 are apposite. The relevant part reads:

“3.0 Sale of Residential Properties

There was a lot of progress on the sale of residential properties. Management had approved and concluded the sale. The employees are busy filling in the contract forms.”

Pertinent to note here is that this was said after 12 December 2003 purported lease agreement.

While there exists a plethora of case law on the subject of summary judgment, the locus classicus is that of Maharaj v Barclays National Bank Limited 1976 (1) SA 418 (AD)…, where CORBETT JA said:

“Accordingly, one of the ways in which a defendant may successfully oppose a claim for summary judgment is by satisfying the court, by affidavit, that he has a bona fide defence to the claim. Where the defence is based upon facts, in the sense that material alleged by the plaintiff in his summons…, are disputed, or new facts are alleged constituting a defence, the court does not attempt to decide these issues or to determine whether or not there is a balance of probabilities in favour of one party or the other.

All that the court enquires into is:

(a) Whether the defendant has fully disclosed the nature and grounds of his defence and the material facts upon which it is founded; and

(b) Whether, on the facts so disclosed, the defendant appears to have, as to either the whole or part of the claim, a defence which is bona fide and good in law.”

On the facts so disclosed in casu, I am persuaded that the respondent's defence is bona fide and good in law.

I also derive solace in reaching this conclusion from the salutary words of GUBBAY JA…, in Jena v Nechipote 1986 (1) ZLR 29 (S)…, where the LEARNED JUDGE OF APPEAL held:

“All the defendant has to establish in order to succeed in having an application for summary judgment dismissed is that there is a mere possibility of his success; he has a plausible defence; there is a triable issue; or there is a reasonable possibility that an injustice may be done if summary judgment is granted.”

The respondent's explanation, expounded above, right through its chronology of events pertaining to the disposal of residential properties, does amount to a trial issue. There exists a reasonable possibility of an injustice being done if summary judgement were to be granted.

I am constrained to utter the following strictures concerning the applicant's obduracy.

As stated above, there are scores of similar cases involving the applicant and its former employees. One such is Ashanti Goldfields Zimbabwe Limited t/a Freda Rebecca Mine v Joachim C Nguwo HH58-12 wherein I dismissed a similar application on the same grounds.

The applicant seems to be engaged in a process of judge-hunting because several similar cases are either pending before other judges or have been dealt with meeting with the same fate of dismissal.

In 1. Simbarashe Antonio v Ashanti Goldfields Zimbabwe Limited & Registrar of Deeds; 2. Kingstone Mujati v Ashanti Goldfields Zimbabwe Limited t/a Freda Rebecca Mine & Registrar of Deeds; and 3. Ashanti Goldfields Zimbabwe Limited v Kwadzanayi Bonde HH135-09 MAKARAU JP…, following a full trial based on similar claims, distinguished Ashanti Goldfields Zimbabwe Limited v Clemence Kovi SC07-09 which the applicant seems to rely on in its claims and held that the facts in HH139-09 established a sale.

Those facts fall on all fours with the facts in casu as well as those in Ashanti Goldfields Zimbabwe Limited t/a Freda Rebecca Mine v Joachim C Nguwo HH58-12 in which I dismissed the application for summary judgment and gave the respondent unconditional leave to defend.

Although the judgment in 1. Simbarashe Antonio v Ashanti Goldfields Zimbabwe Limited & Registrar of Deeds; 2. Kingstone Mujati v Ashanti Goldfields Zimbabwe Limited t/a Freda Rebecca Mine & Registrar of Deeds; and 3. Ashanti Goldfields Zimbabwe Limited v Kwadzanayi Bonde HH135-09 was appealed against, and the appeal is still pending, it is only prudent and proper that the applicant should await its outcome and stop judge hunting in order to avoid creating a multiplicity of contradictory judgments involving the same issue thereby causing confusion and injustice.

Since the facts and argument in casu fall on all fours with the cases dealt with by MAKARAU JP…, cited supra, and Ashanti Goldfields Zimbabwe Limited t/a Freda Rebecca Mine v Joachim C Nguwo HH58-12 I dealt with supra, the present application for summary judgement be and is hereby dismissed and the defendant is given unconditional leave to defend the action.

The applicant is ordered to pay the costs of this application.

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

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

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

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

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

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

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

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

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

HH149-16 : ZIMASCO (PRIVATE) LIMITED vs COMMISSIONER GENERAL OF THE ZIMBABWE REVENUE AUTHORITY
Ruled By: HLATSHWAYO J

On 23 January 2015, after hearing counsel and having gone through papers filed of record, and the parties having failed to settle the matter on the basis of recent precedent, I gave an order dismissing the appeal with costs and indicated that reasons thereof will follow in due course.

I now proceed to set them down below.

The facts of this matter are common cause:

By correspondence dated 13 March 2007, the respondent made a ruling, that, the appellant was obliged to withhold and remit non–resident tax on fees paid to an entity known as Centachrome, an agent based in Switzerland.

Centachrome was appointed “sub-agent” in an agreement entered into by and between the appellant (“producer”), the Minerals Marketing Corporation of Zimbabwe (MMCZ) (“marketing agent”) and Centachrome.

Centachrome was supposed to facilitate the selling of ferrochrome produced by the appellant, but sold through the Minerals Marketing Corporation of Zimbabwe (MMCZ) in terms of the Minerals Marketing Corporation of Zimbabwe Act [Chapter 21:04] which requires that all minerals mined in Zimbabwe are marketed by and through the MMCZ.

On 11 May 2007, the appellant wrote to the respondent objecting to the ruling. By letter dated 15 November 2007, the respondent disallowed the objection but reduced the penalty to 60% from the initial 100% it had stipulated.

Aggrieved by the decision of the respondent, the appellant noted an appeal to this Court challenging the decision of the respondent on grounds that may be summarised as follows:

(a) The appointment of Centachrome had the effect of making it an agent of the Minerals Marketing Corporation of Zimbabwe (MMCZ) and not an agent of the appellant.

(b) The appellant was not obliged to pay withholding non–resident tax since the money paid to Centachrome was commission and commission is not fees as defined in terms of the 17th Schedule of the Income Tax Act [Chapter 23:06].

(c) The money paid to Centachrome was not derived from a source within Zimbabwe as stipulated by the 17th Schedule of the Income Tax Act [Chapter 23:06].

WHOSE AGENT WAS CENTACHROME?

While the preamble to the agreement creates the impression that Centachrome is the agent of the Minerals Marketing Corporation of Zimbabwe (MMCZ), the rest of the agreement, and the facts on the ground, clearly show that the appellant was the real principal for Centachrome.

The Minerals Marketing Corporation of Zimbabwe (MMCZ) only appears as principal to fulfil the requirements of the law on the sale of minerals - and nothing more.

The appellant is ultimately responsible for the payment of Centachrome's commission from the proceeds of its chrome; the Swiss firm places orders with both 'principals'; the investigations into chrome content are done by the appellant and Centachrome with the Minerals Marketing Corporation of Zimbabwe (MMCZ) approving any agreement reached, and, finally, in terms of the Process Flow Chart, the payment confirmation is sent directly to the appellant and only copied to MMCZ.

Both, in its heads of argument and in the presentation in court of its case, the appellant did not place much store on this argument, and, rightly so, in my view.

It is simply not sustainable.

HH271-13 : ASHANTI GOLDFIELDS ZIMBABWE LIMITED t/a FREDDA REBECCA MINE vs NYASHA MUTENGWA
Ruled By: MAWADZE J

This is an application for summary judgment wherein the applicant seeks the eviction of the respondent and all those claiming occupation through him from House Number 1131, Chipadze Township, Bindura and costs of suit.

The facts of this matter are largely common cause:

The respondent was employed by the applicant. With the passage of time, the apparently benevolent employer, being the applicant, decided to sell some of the houses to some employees who were sitting tenants.

Some sort of agreement was entered between the applicant, represented by its General Manager and Financial Director, and the employees, represented by the Workers Committee members being the Chairman and two Committee members.

The said agreement or memorandum is dated 1 December 2003 and is in the following terms;

“MEMORANDUM OF AGREEMENT BETWEEN ASHANTI GOLD FIEDS MANAGEMENT AND EMPLOYEES

Ashanti Goldfield Zimbabwe agrees to dispose of its housing units situated in Chiwaridzo, Grey Line Flats, and Low Density to its employees, who are sitting tenants, effective 01 December 2003. Find the agreed prices attached.”

The said agreement is attached to the applicant's founding affidavit as Annexure F1 to F4.

Attached to this agreement is a schedule which has a list of the employees involved, the house they occupy, the value of each house (in Zimbabwe dollars) and the monthly instalments or repayment each employee was to pay.

The respondent occupied House No.1131 which was then valued at Zimbabwean dollars $1,200,000 and was to pay a monthly instalment of Zimbabwe $20,000.

Pursuant to the signing of the Memorandum of Agreement explained above, and on 12 December 2003, the applicant and the respondent entered into what is called “Agreement of Lease” in which the applicant agreed to lease House No.1131 Chipadze, Bindura (the house) to the respondent for a period of 60 months (5 years) commencing 1 January 2004 at the monthly rentals of Zimbabwean $20,000 which was reviewable in accordance with Annexure 'A' to that lease agreement (which provided for revaluation of the property whenever employees are awarded a salary increment).

These monthly rentals were deducted from the respondent's salary.

Clause 3 of the lease agreement provided for the option to buy the house. It provides as follows;

“3. OPTION TO PURCHASE

3.1. The lessee shall have the option to purchase the property after sixty months.

3.2. The rentals paid by the Lessee to the Lessor in terms hereof shall be taken and be deducted from the amount due in respect of the purchase price determined in accordance with the provisions of Clause 3.1. (above).”

The lease agreement is signed by a representative of the applicant and the respondent.

From other decided cases I have been referred to, dealt with by this court, it is common cause that a number of employees entered into such a lease agreement.

It would appear to my mind, that, the dispute in this case, and other cases already dealt with by this court, relates to interpretation to be accorded to the “Memorandum of Agreement” dated 1 December 2003 and the lease agreement dated 12 December 2003 and the relationship between the two documents.

I shall revert to this point later.

After the issuing of the Memorandum of Agreement, on 1 December 2003, and before the signing of the lease agreement, on 12 December 2003, the Workers Committee, through what was now called the Housing Committee, issued out a Memorandum to all employees of the applicant copied to the applicant.

This Memorandum explained the Agreement reached on 1 December 2003. Most importantly, it invited the employees who were sitting tenants to take up the offer to buy the houses.

The relevant part of this Memorandum, dated 2 December 2003, reads as follows;

“Please note that you have until February 29, 2004 to decide whether to purchase the house you are living in or not, after which date the offer will be extended to an employee who is willing to purchase the property. The offer is now open, therefore, employees who are ready can see the Members to formalise the purchase.”…,.

It was after this invitation that the respondent entered into the lease agreement with the applicant on 12 December 2003.

In addition to that, the respondent has attached as Annexures A1 to A3 his payslips which reflect that money was deducted from his salary which money is reflected as “rent to buy”.

The payslips are as follows;

A1, dated 31 October 2004, has a deduction indicated as “Bal rent to buy $52,755”

A2, dated 25 March 2004, has a deduction indicated as “Bal rent to but $116,000”

A3, dated 25 June 2004, has a deduction reflected as “Bal rent to buy $56,895”

The respondent has also attached to his opposing affidavit a memorandum from the applicant, written by the applicant's Financial Controller to the respondent and copied to the Housing Committee dated, 14 March 2004. Its contents are as follows;

“This memo serves as an acknowledgement that we have received $1,100,000 (one million one hundred thousand dollars) as payment towards yours house. The outstanding balance is now $60,000 (sixty thousand dollars).”

It is common cause that the respondent, who was employed by the applicant, and was the sitting tenant in this house as at 1 December 2003, was summarily dismissed on 15 July 2009 following a disciplinary hearing held in terms of their Code of Conduct.

This means, that, as at the date of his dismissal, the respondent has been in occupation of the house for a period of sixty seven (67) months - which is in excess of the sixty months stipulated in the Lease Agreement dated 12 December 2003.

After the dismissal, on 15 July 2009, the respondent, on 4 September 2009, was advised to vacate the house on the basis that the lease agreement which entitled him to occupy the house had lapsed due to the termination of the respondent's contract of employment (see Annexure D to the applicant's founding affidavit).

The respondent refused to vacate the house.

This prompted the applicant to issue summons out of this court in HC4395/09 (main matter) seeking the eviction of the respondent and all those claiming occupation through him and costs of suit.

The respondent entered an appearance to defend and filed a plea, which plea had been dismissed by the applicant as not raising a good prima facie defence, culminating in this application for summary judgement.

It is useful, at this stage, to deal with the respondent's plea (Annexure E to E4 to the applicant's founding affidavit).

In his plea, the defendant stated, that, prior to 1 December 2003, he was occupying the house in issue on the basis of the contract of employment and that since 1 December 2003 he was now occupying the house on the basis of a sale agreement.

The respondent said he has since fully paid for the house and awaits the transfer of the house into his name.

It is the respondent's contention, that, the lease agreement dated 12 December 2003 was the vehicle through which the respondent, and other employees, purchased the houses as they paid for the houses through the process of rent to buy with the monthly repayments deducted from their salaries.

The respondent, in his plea contends, that, he has now acquired rights and interest in the same house hence the applicant cannot evict him from the house.

In fact, the respondent proceeded to file a counter-claim seeking an order to compel the applicant to transfer its rights, interest, and title in the said house to the respondent within 30 days of the grant of such an order and costs of suit.

The question to be addressed in this matter is whether, given the facts I have painstakingly outlined, the applicant is entitled to this extraordinary remedy in the form of a summary judgment?

An application for summary judgment is made in terms of order 10 Rule 64 of the High Court Rules 1971 in circumstances where the applicant is of the belief that the respondent has no bona fide defence to his action.

The respondent may oppose such an application in terms of Order 10 Rule 66(1)(b) of the High Court Rules by showing that he has got a prima face defense to this action.

The law, in relation to the requirements for granting a summary judgment, is clear.

The old case of Roscoe v Stewart 1937 CPD 138 which is cited by the celebrated authors HERBSTEIN and Van WINSEN – Civil Procedure of The Superior Courts In South Africa, 2nd Edition…, makes the point, that, summary judgement is a remedy designed to eliminate or dispose of bogus defences and defences which are bad at law.

The mischief which is curbed by this drastic remedy is to prevent unscrupulous litigants seeking to delay a clear and just claim by raising frivolous defences: see Nedlaw Investments & Trust Corporation Limited v Zimbabwe Development Bank SC05-00 in which it was clearly stated that;

“…, the quintessence of the drastic remedy is that a plaintiff, whose belief is that the defendant's defence is not bona fide and entered solely for dilatory purposes should be granted immediate relief without the expense and delay of a trial.”

In order to successfully fend off an application for summary judgment, a defendant has to show that he has a good prima facie defense to the action.

Our courts have had the opportunity to define what constitutes a good prima facie defence.

In the case of Hales v Doverick Investments (Pvt) Ltd 1998 (2) ZLR 235 (H)…, MALABA J…, has this to say;

“…, he must at least disclose his defense, and material facts upon which it is based, with sufficient clarity and completeness to enable the court to decide whether the affidavit discloses a bona fide defence: Haharaj v Barclays National Bank Ltd 1976 (1) SA 418 at 426D…, the statement of material facts (must) be sufficiently full to persuade the court that what the defendant has alleged, if proved at trial, will constitute a defense to the plaintiff's claim.”

Having laid out these principals of law applicable to this case, I now proceeded to apply these principles to the facts of this case.

The applicant believes, that, the appearance to defend entered by the respondent, and his subsequent plea, do not disclose a bone fide defence but was solely entered for purposes of delay.

In argument, the applicant submitted, that, there was never an agreement of sale between the applicant and the respondent.

It is the applicant's view, that, the memorandum of agreement, dated 7 December 2003, cannot be construed as an agreement of sale, and, reliance was placed on the case of Ashanti Goldfields Zimbabwe Ltd v Clement Kovi SC07-09 in which CHEDA JA had to interpret this same document and clearly stated, that, it cannot be said to be an agreement of sale.

Similarly, the applicant submitted, that, the lease agreement, dated 12 December 2003, cannot be construed also on an agreement of sale as it merely provides, in Clause 3, that, an option to purchase this property would be offered to the respondent after sixty months.

The applicant's case, therefore, is that the agreement of lease, having been terminated after the respondent left the employ of the applicant, the respondent has no right, whatsoever, to remain in the house as the applicant remains the registered owner of the house.

While it is correct, that, the pronouncements of the Supreme Court are binding to this court, I believe the case in which the applicant seems to have reposed all his faith in, of Ashanti Goldfields Zimbabwe Ltd v Clement Kovi SC07-09, can be distinguished from the facts of this case.

In fact, MAKARAU JP…, in a number of cases involving the applicant and its employees, in Antonio v Ashanti Goldfields Zimbabwe & Anor; Mujati v Ashanti Golfields Ltd & Anor; Ashanti Goldfieds Zimbabwe Ltd v Bonde 2009 (2) ZLR 371 (H)…, distinguished Ashanti Goldfields Zimbabwe Ltd v Clement Kovi SC07-09 as follows;

“I am bound by all the decisions of the Supreme Court on points of law. Where, however, the facts that were placed before the Supreme Court are different from the facts before me, I believe I am at liberty to interpret their facts in light of the law handed down by the Supreme Court. The doctrine of stare decisis applies to points of law and not to factual disputes.”

A number of my brother and sister judges who have been seized with matters involving the applicant and its employees, in relation to these houses, have adopted the approach enunciated by MAKARAU JP…, in arriving at a different conclusion, on the facts presented in each particular case, despite the sentiments expressed in Ashanti Goldfields Zimbabwe Ltd v Clement Kovi SC07-09 in relation to the Memorandum of Agreement, dated 7 December 2003, and the Lease Agreement dated 12 December 2003.

Few examples are sufficient to illustrate this point.

In the case of Ashanti Goldfields Zimbabwe Ltd v Jhafati Mdala HC5664/07 CHATUKUTA J, after a protracted trial, did find, that, on the facts presented before her, inclusive of the Memorandum of Agreement dated 7 December 2003 and the Lease Agreement dated 12 December 2003, indeed, Ashanti Goldfields Zimbabwe Ltd had sold the house to the defendant.

In the case of Ashanti Goldfields Zimbabwe Limited t/a Freda Rebecca Mine v Shingirai Matimura & Ors HH54-11, GOWORA J…, declined to grant a summary judgment wherein the applicant had sought the eviction of the respondents; whilst the respondents had advanced a similar argument like in the instant case. Indeed, the Memorandum of Agreement dated 7 December 2003 and the Lease Agreement, similar to one dated 12 December 2003, were some of the documents in issue in that case.

Lastly, in the case of Govha v Ashanti Goldfields Zimbabwe t/a Freda Rebecca Mine & Anor HH48-12, and, in Ashanti Goldfields Zimbabwe Limited t/a Freda Rebecca Mine v Ephraim Pfidze HH347-12 MATHONSI J, in both cases, faced with facts almost on all fours with the present case, declined to grant a summary judgement in both cases for the eviction of the respondents (employees).

It is clear from the facts of this case that the respondent has raised a good prima facie defence to the action for eviction.

The Memorandum of Agreement, dated 1 December 2003, which I have alluded to in my introductory remarks, shows, that, the respondent was one of the sitting tenants who were eligible to purchase the house in issue. The respondent contends, that, he acted in terms of the Memorandum, dated 2 December 2013, which invited all employees who were sitting tenants to exercise the offer to purchase the houses as at 29 February 2004.

In fact, the respondent argues, that, he proceeded, in exercising this option, to enter into a lease agreement, dated 12 December 2003, which he described as the vehicle with which the employees were to purchase the houses, as they all started to pay what was called “rent to buy”.

Indeed, the respondent attached some of his payslips, for 2004, which show that monthly deductions in various amounts were made as “rent to buy”.

In addition to that, the respondent has included a memorandum from the applicant, addressed to him, acknowledging receipt of $1,100,000 towards the purchase of house, and indicating that outstanding balance as $60,000 only.

As already stated, the respondent was in occupation of this house (as a sitting tenant) for a period in excess of 60 months (Clause 3 of the lease agreement) before he was dismissed from work and the lease agreement purportedly terminated.

Considering all these the factors placed before the court by the respondent, one cannot say, with certainty, at this stage, that the respondent did not exercise the option to purchase the house in issue.

The applicant has not been able to meaningfully explain why, after a period of 60 months, and in view of the proof of monthly deductions and confirmation by the applicant of such payment as part of the purchase price, in March 2004, the applicant is still of the view that the respondent did not purchase the house.

I am satisfied that the respondent has presented an arguable case.

It cannot be said that the defence raised by the respondent is simply raised for purposes of delaying the inevitable. It would therefore be unfair and improper, and this stage, to close the door to the defendant and deny him the opportunity to defend the claim.

On the facts before me, it cannot be said, that, the applicant's case is unanswerable and unassailable.

The parties should be allowed to have their day in court and present evidence on whether the respondent exercised the right to purchase the house in issue and paid the full purchase price.

The claim for eviction, at this stage, is premature.

The application for summary judgment is therefore without merit. In the result, the summary judgement application is dismissed with costs.

View Appeal
HH310-11 : CHINA SHOUGANG INTERNATIONAL vs STANDARD CHARTERED BANK ZIMBABWE LTD
Ruled By: BERE J

MW JONES and HC SCHOEMAN, An Introduction to South African Banking and Credit Law described the relationship between a banker and a customer in the following terms:“…, the banker customer relationship is not based solely on contract, but, imposes many additional duties on banks and customers alike. These duties are ...

HH535-15 : BLESSMORE CHANAKIRA vs SHEPHERD MALCOM N.O. and REGISTRAR OF DEEDS and PHIL RUSCH
Ruled By: NDEWERE J

The background facts are that the plaintiff expressed interest in Stand 5233 Salisbury Township Lands measuring 3,309 square metres which is the property in dispute.

The property belongs to the estate of the late Robert Eric Rae.

An agreement of sale was concluded, on 22 October 2009, between the plaintiff and the Property Shop, the Estate Agent firm which handled the transactions, for the sum of US$220,000.

On mode of payment, the agreement provided as follows:

“The Purchaser shall pay cash deposit of US$100,000 [one hundred thousand United States Dollars] of which US$30,000 [thirty thousand United States Dollars] shall be non-refundable] upon signing of the agreement of sale.

The purchaser shall pay the sum of US$60,000 [sixty thousand United States Dollars] on or before 30 November 2009 and the balance of US$60,000 [sixty thousand United States Dollars] on or before the 31st December 2009.”

The above mode of payment has been the source of the dispute.

The plaintiff claims to have paid theUS$100,000 cash deposit upon signing of the agreement of sale as stipulated by the clause. The first defendant, representing the estate, denies, that any deposit was paid.

The agreed issues for the trial were:

(i) Whether the plaintiff breached the agreement of sale with the first defendant, and, if he did, whether the first defendant cancelled the sale.

(ii) The second agreed issue was whether this was a double sale, with the third defendant as the second purchaser, and, if so, in whose favour did the balance of equities lie.

In my view, the first issue for determination by the court is whether the plaintiff paid the requisite deposit upon signature of the agreement.

The plaintiff's evidence was that he paid US$100,000, in cash, to Felicity Lock, The Property Shop negotiator, after counting the money, at her house, in the presence of Shirley Margaret Rae who represented the seller, who was still alive, by virtue of a Power of Attorney.

He said he did not ask for a receipt, neither did he obtain any other proof of payment from Felicity Lock.

The plaintiff's evidence was that he paid the US$100,000 before he signed the agreement because payment of that amount was a condition precedent to the signing of the agreement.

Felicity Lock denied that any payment was made.

She said she expected the plaintiff to pay soon after signing but then the plaintiff showed her some Kingdom Bank documents and said for him to get the money to pay, he needed to sell his shares first, and, for him to sell the shares, he needed a signed agreement.

She said she then gave him Shirley's Rae's Stanbic Account number and told him to deposit the money into that account. She also gave him a Property Shop Account number for him to deposit the agency commission.

Her evidence was that Shirley Rae signed the agreement first, in the absence of the plaintiff, and, later, she took the agreement to the plaintiff at some agreed meeting place near Hellenic School.

Shirley Rae also denied that any payment was made to her or Felicity Lock in her presence.

Her testimony was that she had not even met the plaintiff when the agreement was executed; she saw him, for the first time, at the pre-trial conference.

The plaintiff told the court that he is an astute businessman aged 35 years. He said he has been in business since he was 22 years old and has about 13 years business experience. He also said he is a qualified accountant and he has experience in the acquisition of properties as he has eleven properties to his name.

The court found it highly improbable that a qualified accountant, and an experienced property investor, would part with US$100,000 cash in the year 2009, when foreign currency was still scarce, without bothering to obtain a receipt or other proof of payment; yet that was the plaintiff's evidence on pages 51 and 52 of the transcribed record;

“Q. Now, before a dispute before the parties erupted, did you ever ask for a receipt?

A. No, from Felicity, no, I never asked for a receipt….,.

Q. It's a simple question, did you ever ask for a receipt?

A. From Felicity Lock.

Q. Did you ever ask for a receipt?

A. No, I have proof of payment.”

When the questioning about not asking for a receipt persisted, the plaintiff, in response, said, Property Shop was operating from home and the office was not running professionally.

All the more reason why he should have asked for a receipt, or some other form of proof of payment, if he knew that Property Shop was not being run professionally.

The plaintiff also told the court, in his evidence, that, paying US$100,000 cash was a condition precedent to the signing of the agreement.

The agreement is part of the court record, and, nowhere does the agreement say payment was a condition precedent.

It is also highly improbable that a qualified accountant would pay US$100,000 deposit before the agreement has been concluded and leave without any proof of payment.

Even if Felicity Lock had no receipts, on account of being “unprofessional” as the plaintiff alleged, the plaintiff himself could have prepared an acknowledgement note.

He knew this was possible:

“Q…., you could have done an acknowledgement of receipt and say I, Felicity acknowledge that I have received US$100 000, you could have done that….,.

A. I could have done that.”…,. (p57 to 58 of the transcribed record)

The plaintiff confirmed, that, he could have done an acknowledgement of receipt himself - but he did not.

He admitted, that, as a businessman, he knew that disputes could arise and that he could have had an independent witness with him to confirm the payment; but, he said he went alone to make this huge cash payment.

On the other hand, Felicity Lock's evidence was that they did not accept cash as a matter of policy; they gave clients account details for them to deposit the money into the appropriate accounts.

She said, in this instance, she gave the plaintiff Shirley Rae's Stanbic account.

She said once the money was deposited into an account, the deposit slip would be sufficient proof of payment.

Her evidence sounded truthful and the court accepted it.

Shirley Rae is an 83 year old lady who was around 78 years at the time of the incident with the plaintiff.

Her evidence was that the plaintiff never paid cash in her presence and never deposited any money into her account.

Her evidence was believable.

Why would an 83 year old lie against the plaintiff and say he did not pay if he had paid? All she wanted was a purchaser who would pay for her husband's property. If the plaintiff had paid, why would she have turned down his money in favour of the third defendant's money when the money tastes the same?

The court therefore accepts her evidence as truthful.

In addition to that, on 27 October 2009, when the plaintiff wrote to the second defendant, through his lawyers, requesting him to put a caveat on the property, he never said he had paid anything.

The third paragraph of that letter stated the following;

“The agreement of sale is to be satisfied within a period of three instalments as it fully appears from the attached copy of the agreement of sale.”

The use of the phrase “is to be satisfied” shows that payment had not yet been done.

If the plaintiff had already paid US$100,000 the letter would have said so.

In view of the above improbabilities in the plaintiff's claims, the court rejects the plaintiff's testimony and accepts that of Felicity Lock and Shirley Rae, that, no US$100,000 cash was ever paid by the plaintiff as a deposit for the property.

The above finding means the plaintiff was in breach of contract from the very day the sale agreement was concluded. He ought to have paid US$100,000 on signing of the agreement - he did not.

That was the first breach.

View Appeal
HH661-16 : M COMPANY (PVT) LTD vs ZIMBABWE REVENUE AUTHORITY
Ruled By: KUDYA J

This is an income tax appeal filed in the High Court in terms of section 65 of the Income Tax Act [Chapter 23:06].

The two questions for determination are:

(i) Whether the appeal is valid; and

(ii) Whether the commission paid to two foreign agents for facilitating the sale of tobacco constituted fees for services of a technical, managerial, administrative or consultative nature as contemplated by section 30 of the of the Income Tax Act and the Seventeenth Schedule to the Income Tax Act.

THE BACKGROUND

The appellant, an exporter and seller of processed tobacco from Zimbabwe, is a locally registered company. It entered into two successive sales and marketing agreements with two foreign companies on 1 April 2004 (annexure 1 of respondent's case and p1-2 of appellant's bundle) and 1 April 2011 (annexure 2 of respondent's case and p3-4 of appellant's bundle) respectively, for the sale of export tobacco in foreign markets.

The sales were on commission of 7.5% of the aggregate net export sales and FCA Zimbabwe sales value of each export, respectively.

In 2007, the respondent audited the affairs of the appellant. It decided that the commission paid for the period to 2005 constituted fees for services of a technical and administrative nature performed by the overseas agent on behalf of the appellant for which the appellant was liable for withholding non-resident tax in terms of the Seventeenth Schedule to the Income Tax Act.

On 5 April 2007, the respondent submitted schedules showing the appellant's withholding tax liability on the tobacco sales commissions payable to the overseas agent.

The tax adviser of the appellant objected to the schedules and imposition of withholding tax on the sales commissions.

On 10 August 2007, the respondent disallowed the objection.

A notice of appeal was filed on 24 August 2007.

The appellant's case was not filed within 60 days of the service of the notice of appeal or at all. In accordance with the provisions of section 65(3) of the Income Tax Act, the appeal lapsed.

The appellant continued to remit non-residents withholding tax to the respondent until the advent of the multi-currency era.

On 24 October 2013, officials of the respondent conducted a routine audit visit at the premises of the appellant during which the Finance Director of the appellant indicated that further remittals had stopped in consequence of the unresolved 2007 appeal.

In a further meeting of 5 December 2013, the appellant requested and was provided with a schedule of the non-residents tax on fees payable from January 2009 to October 2013.

The schedules consisted of 11 columns showing the period covered, the amount of commission paid, the withholding tax rate, the witholding tax due, the penalty charged at 100%, the period covered in respect of interest computation, the period of delay in paying, the interest rate, and the amount of tax due.

The principal amount of the non-residents tax on fees due was in the sum of US$4,252,647=57. An equivalent amount was imposed as penalty and a further US$795,988=62 was imposed as interest.

The penalties were later reduced by half leaving the revised total liability of US$5,974,959=97.

The appellant responded to the schedule by way of the objection letter dated 10 December 2013, which was served on the respondent on the same day.

It disputed that the commissions constituted the fees contemplated in section 30 and the Seventeenth Schedule of the Income Tax Act. It undertook to pay the outstanding principal amount in four instalments between 13 December and 20 January 2014. In consequence of the undertaking, the respondent further waived the reduced penalty and interest by e-mail of 19 December 2013.

The appellant, however, paid the principal amount by 20 December 2013.

A meeting was held between the appellant's tax advisers and the respondent on 13 December 2013. The parties appeared to have agreed, in that meeting, that, the objection had been improperly made.

However, the appellant filed a notice of appeal on 25 March 2014 and served it on the respondent on the following day. The appeal was based on the deemed decision arising from the failure to respond to the letter of objection within three months as contemplated by section 62(4) of the Income Tax Act. The parties filed their respective cases on 28 May 2014 and 13 August 2014....,.

THE MERITS

The Facts

The facts in this matter are derived from the pleadings, the Rule 11 documents, and the appellant's bundle. Both the appellant and the respondent did not call any oral evidence.

The facts were as follows:

The appellant company executed two successive "Sales and Marketing Commission Agreements" with two foreign companies domiciled in Bermuda and Switzerland, respectively. The appellant was identified, in both Agreements, as the "Principal" while the two were specifically termed agents.

In the first agreement, the appellant was represented by its Managing Director and Finance Director while the agent was represented by its Management Committee member and secretary. In the second, the parties were represented by their respective Managing Director and President.

Except for the first two declarations in the preamble and the initial rate of commission in the first agreement, all the other terms of the two agreements were similar.

In terms of clause 6 of the agreements:

"…, the validity, interpretation and enforcement of the agreement shall be governed by the laws of Zimbabwe."

The preamble proclaimed that the agent had "demonstrated expertise in the international marketing and trading of leaf tobacco enabling it to provide such services with greater efficiency and lower costs" and was willing to utilize its sales and marketing capacity and render services on behalf of the appellant.

Four duties of the agent were set out in clause 1:

(i) The agent undertook to use its "best efforts" to help the principal in the export sale of leaf tobacco without incurring financial responsibility or obligations even where it did not disclose that it was an agent of the appellant;

(ii) The agent also undertook to promote the export sales by the appellant in all major markets based on prices and conditions set by the appellant;

(iii) It undertook to maintain and safeguard the quality of the product and image of the appellant; and

(iv) To supply personnel and materials necessary for the promotion of the appellant's exports.

In addition, the agreements authorised the agents to inform the appropriate local authorities in those export countries, where necessary, that it was the sales and marketing agent representing the principal's business interests for the sale of leaf tobacco exported from Zimbabwe.

The commissions under the first agreement were initially equal to 8.5% of the aggregate net sales from the export tobacco of the principal for each statutory year ending 31 March during the term of the agreement but was reduced to 7.5% in November 2005 to comply with the Zimbabwe Exchange Control approval.

Under the second agreement, the agent was paid commission of 7.5% of the Foreign Currency Account Zimbabwe sales value of each export of the principal during the term of the agreement.

Both the aggregate net sales and the FCA Zimbabwe sales value for exports were computed by deducting freight costs to the destination port from the gross invoice value CIF port of destination. These amounts were captured in the CD1 Form as gross FCA value.

The commissions payable were approved by the Exchange Control Authority.

In terms of paragraph 2 and 3 of the Exchange Control Authority, dated 1 February 2012, the authority was granted on condition the 7.5% commission, as well as value addition, would be declared on all the relevant Form CD1 prior to the export and "payment of the commission shall be from the appellant's local FCA".

The provisions of the sales agreement constituted the entire agreement between the parties.

It was certainly not a term of the agreement that the agents would deduct commission before remitting the balance into the FCA account of the appellant.

The suggestion, in the pleadings, that it was in the agreement was contrived.

A meeting was held, on 18 July 2013, at the premises of the appellant, between the appellant and the respondent.

As a result, the appellant wrote the letter of 30 July 2013 in which it set out the duties of the agent in detail.

The agent accompanied a major tobacco buyer and took part in price negotiations in Zimbabwe with the appellant. Other customers did not purchase their tobacco requirements in Zimbabwe. They were first supplied with samples of the available export tobacco before placing their orders. The customers assessed the colour and appearance (the styles) and the sugar and nicotine levels, texture and quality (the smoking characteristics) of the export tobacco.

Generally, price negotiations and marketing logistics for these customers were held outside Zimbabwe by the agent.

The shipping mandate was the final responsibility of the Sales Administration Director. The invoice papers of all export sales from the appellant flowed through the agent.

The agent's main function was to establish and maintain customer relationships on a global scale.

In the letter of 30 July 2013, the appellant listed eight functions of the agent.

The agent interacted with international customers by phone, e-mail, and visits and conducted reviews of previous purchases and deliveries and projected order indications of the new season. In addition, it arranged customer samples and volumes and assessed the price expectations of each customer and followed up customers shipping arrangements. All shipping documents were sent to the agent for processing. The agent also invoiced the customers, collected payments, and retained the commissions.

The appellant's bundle contains the kind of documentation handled by the agent during the process of facilitating and making a sale. They show that the agent played a major role in selling the export tobacco.

The appellant contended, that, as the commissions were not fees, as defined in the Seventeenth Schedule of the Income Tax Act, it had no obligation to withhold non-residents tax.

In addition, the appellant further contended, that, as the commissions were deducted by the agents from the gross foreign currency account value outside Zimbabwe, before the balance was remitted to its account, it could not have withheld any non-residents tax nor would it have been obliged to remit any such tax to the respondent.

The respondent contended, that, the commissions were fees, as defined, and that the appellant, as the principal, was obliged to withhold and remit the non-residents tax on fees due to the respondent.

The Issues

The issues for determination are:

(i) Whether the commissions constituted fees as defined in the Seventeenth Schedule that were chargeable, leviable, and collectable under section 30 of the Income Tax Act?

(ii) Whether the appellant was liable for withholding and remittal of non-residents tax on fees arising from the deduction of these commissions outside Zimbabwe before any proceeds of the sales had been remitted to it?

The Legislative Provisions

The relevant tax is imposed by section 30 of the Income Tax Act which reads:

"30 Non-residents Tax on Fees

There shall be charged, levied, and collected throughout Zimbabwe for the benefit of the Consolidated Revenue Fund a non-residents tax on fees in accordance with the provisions of the Seventeenth Schedule at the rate of tax fixed from time to time in the charging Act."

The Seventeenth Schedule of the Income Tax Act defines fees, foreign company, non-resident person, payee, and payer in paragraph 1(1) in the following manner:

"1(1) In this Schedule, subject to subparagraph (2) —

'fees' means any amount from a source within Zimbabwe payable in respect of any services of a technical, managerial, administrative or consultative nature, but does not include any such amount payable in respect of — (none of the 8 apply herein)

'foreign company' means a body corporate that is incorporated in a state or territory other than Zimbabwe under the laws of that state or territory;

'Non-resident person' means -

(b) A partnership or foreign company which is not ordinarily resident in Zimbabwe;

'payee' means a non-resident person to whom fees are payable or paid;

'payer' means any person who or partnership which pays or is responsible for the payment of fees…,.”

The application of the two sections to the appellant and the agents

The non-residents tax is imposed on the agents.

The first agent was resident in Bermuda and the second in Switzerland. The two agents were foreign companies and non resident persons as defined in paragraph 1(1) and (1)(b) of the Seventeenth Schedule.

The two agents would also be payees, if the commissions constituted fees payable or paid.

Again, in the event that the commissions were fees, as defined, the appellant would be a payer, defined "as any person who…, pays or is responsible for the payment of fees."

A positive duty to withold such tax is thrust upon the payer by paragraph 2(1) of the Seventeenth Schedule of the Income Tax Act. It reads:

"2(1) Every payer of fees to a non-resident person shall withhold non-residents tax on fees from those fees and shall pay the amount withheld to the Commissioner within ten days of the date of payment or within such further time as the Commissioner may for good cause allow."

Such a payer is mandated, in subsection (2) of paragraph 2, to furnish the payee with a certificate showing the amount of fees paid and the amount of non-residents tax on fees deducted and kept back. A payee who fails to furnish such a certificate, or who furnishes an inaccurate certificate, is liable to suffer the criminal sanctions set out in paragraph 2(3) of the Schedule.

The duties and responsibilities of the payer, and the resultant sanctions stipulated in paragraph 2 above, apply in equal measure in terms of paragraph 3(1)(2) and (2a) of the same Schedule to an agent who receives the gross fees due to the payee from the payer.

In terms of sub-paragraph (3), the agent is deemed to be an agent of the payee if the payer records its address as the address of the payee and delivers the fees to that address. The agent is treated, under subparagraph (4), as an agent of a taxpayer who is absent from Zimbabwe.

It is apparent from the provisions of paragraph 6 of the Seventeenth Schedule that the agent contemplated by paragraph 3(3) and (4) of the same Schedule is one who is in Zimbabwe.

In terms of paragraph 5, the payer or agent attaches a prescribed form to the payment of the fees.

In terms of paragraph 6(1), a payer or agent who fails to withhold or pay the prescribed tax to the Commissioner, under paragraph 2 or 3, is personally liable for the payment not later than 10 days from the period that the actual amount was due and to an additional equivalent amount of such tax.

Counsel for the appellant listed six (6) other instances in the Income Tax Act where Parliament thrust a similar duty on a payer to withhold tax from a third party and remit it to the statutory tax collecting body.

He correctly submitted, that, the resident payer had no obligation to pay the non-resident tax unless it failed to deduct and keep back the tax from the fees paid or from the fees payable.

Counsel for the appellant submitted, that, paragraph 6 of the Schedule did not create a tax liability for a resident taxpayer, rather, it created a penalty for the resident taxpayer.

He suggested, that, the heading of the section be amended to reflect that it was a penalty for failure to withhold non-residents tax. He based his submission on the well-recognised and established common law principle that the Commissioner is not accorded any legal right to waive taxes.

I agree that the Commissioner is not accorded the legal right to waive taxes: see Foroma v Minister of Public Construction and National Housing and Anor 1997 (1) ZLR 447 (H)…,.; Ritch & Bhyat v Union Government (Minister of Justice) 1912 AD 719…,.; and SAR & H v Transvaal Consolidated Land & Exploration Co. Ltd 1961 (2) SA 467…,.

The Commissioner is only accorded the power to waive the equivalent penalty imposed under paragraph 6(1)(a). He cannot waive the amount of tax not withheld.

The logical conclusion of the argument by counsel, arising from such an inability to waive the tax not withheld, would be that this paragraph creates a tax liability and not a penalty for the appellant.

In my view, Parliament imposed a tax on the resident who failed to withhold the non-resident tax on fees. Paragraph 6(1)(a) therefore created a tax payable by the appellant if it is found that it failed to withhold the contemplated tax.

In this vein, counsel contended, in paragraph 13 of his written submissions, that:

"The resident becomes personally liable for the payment of the tax only if he, she, or it fails to withhold the tax from the fees payable, in the sense, that, he could do so and did not withhold the tax or thereafter failed to remit the tax so withheld to the Commissioner. But, in normal circumstances, the local resident is not the taxpayer in terms of section 30."

The word 'withhold' is defined in the Shorter Oxford English Dictionary as "to keep from doing something, to hold back, restrain, refrain from, to keep back, to keep in one's possession what belongs to or is due to."

I would accept the word "to keep back" as the best possible meaning of the word in the context of the provision.

Were the commissions fees as defined?

I turn to determine whether the commissions constituted fees as defined in the Seventeenth Schedule of the Income Tax Act.

I dealt with a similar question in G Bank Zimbabwe Ltd v Zimbabwe Revenue Authority HH207-15. The facts in that case are distinguishable with those in the present case in two material respects:

(i) In that case, the appellant used the term bank charges interchangeably with bank fees, while, in the present matter, the appellant used the term "commissions" for the contract payments that it was obliged to pay.

(ii) Again, G Bank admitted paying the charges directly to the foreign banks while in the instant case the appellant disputed making any direct payments.

At paragraph 109 [p29-30 of the cyclostyled judgment] I said:

"Mr de Bourbon submitted, that, the Nostro bank charges were not subject to withholding tax as they did not fall under any one of the four categories of technical, administrative, managerial or consultative.

It seems to me that the four categories in question are merely adjectives which describe a particular activity.

According to the Shorter Oxford English Dictionary 'administer' means inter alia 'to manage'; 'to handle'; while 'administrative' is defined as 'pertaining to management.'

One of the many permutations of 'to manage' is 'to deal with carefully'. Like McDONALD JP in Commissioner of Taxes v 1 supra at 115F, where he was of course referring to 'transaction, operation or scheme' I would agree that each of the words 'technical, managerial, administrative and consultative' that is used in the para under consideration is of wide and general import and there are a few activities of a taxpayer which will not be appropriately described by one or other of them.”

Counsel for the appellant vigorously attacked my finding, that, the four categories in the definition of fees are of wide and general application and suffice to cover almost every activity undertaken by a taxpayer.

My finding was based on the meaning I ascribed to the ordinary grammatical meaning of the adjectives "technical, managerial, administrative or consultative".

The Income Tax Act itself does not define any of these words.

The established position in Zimbabwe is to adopt the ordinary, literal, and grammatical meaning of words unless doing so leads to glaring absurdity or to results which Parliament would never have intended (per GARWE J…, in Mashamhanda v Mpofu 1999 (1) ZLR 1…, and CHATIKOBO J in Expedite Haulage (Pvt) Ltd v Scotfin Ltd 2000 (2) ZLR 113 (H)…,.

See also Madoda v Tanganda Tea Company 1999 (1) ZLR 374 (S)…,. and the cases cited thereat.

In doing so, the Court must be mindful of the words of WESSELS AJA…, in Stellenbosch Farmers Winery Ltd v Distillers Corp (SA) Ltd 1962 (1) SA 458 (A)…, on the importance of the textual context in which words sought to be interpreted are found, that:

“In my opinion, it is the duty of the court to read the section of the Act which requires interpretation sensibly, i.e. with due regard, on the one hand, to the meaning or meanings which permitted grammatical usage assigns to the words used in the section in question, and, on the other hand, to the contextual scene, which involves consideration of the language of the rest of the statute as well as the matter of the statute, its apparent scope and purpose, and, within limits, its background.”

See also the sentiments of CHEDA J in Sunfresh Enterprises (Pvt) Ltd v Zimra 2004 (1) ZLR 506 (H)…,.

Counsel for the appellant contended, that, our established position is better expressed by WALLIS JA in Natal Joint Municipal Pension v Endumeni Municipality 2012 (4) SA 593 (SCA)…, in these words:

"The present state of the law can be expressed as follows:

Interpretation is the process of attributing meaning to the words used in a document, be it legislation, some other statutory instrument, or contract, having regard to the context provided by reading the particular provision or provisions in the light of the document as a whole and the circumstances attendant upon its coming into existence.

Whatever the nature of the document, consideration must be given to the language used in the light of ordinary rules of grammar and syntax; the context in which the provision appears, the apparent purpose to which it is directed and the material known to those responsible for its production.

Where more than one meaning is possible, each possibility must be weighed in the light of all these factors.

The process is objective not subjective.

A sensible meaning is to be preferred to one that leads to insensible or un-businesslike results or undermine the apparent purpose of the document. Judges must be alert to and guard against the temptation to substitute what they regard as reasonable, sensible or businesslike for the actual words used. To do so, in regard to a statute or statutory instrument, is to cross the divide between interpretation and legislation; in a contractual context, it is to make a contract for the parties other than the one they in fact made.

The inevitable point of departure is the language of the provision itself, read in context and having regard to the purpose of the provision and the background to the preparation and production of the document."…,.

Again, the same learned judge of appeal emphasised, in Firstrand Bank Ltd v Land and Agricultural Development Bank of South Africa 2015 (1) SA 38 (SCA)…, that:

"The process of interpretation is no longer one in which we seek out a notional plain meaning of the words used, ignoring context and the circumstances in which the document being interpreted, whether a contract or a statute or a patent specification, came into being. Nonetheless, it must start with the actual words used."

It seems to me, that, barring the semantics used, the formulation advanced by WALLIS JA is not different from the approach followed in Zimbabwe. A court is not concerned with the notional meaning but with the practical application of the principles that emerge from the formulation.

I proceed to deal with the essential requirements of fees as defined.

Before I do so, I emphasize, that, what constitutes fees is defined; therefore, all reference by counsel for the appellant, in oral argument, to the perceived notional meanings of 'fees' with reference to advocates and 'commissions' by reference to commodity brokers is of no significance.

The meaning of fees, in the present case, is delineated by the definition in the Seventeenth Schedule of the Income Tax Act.

Any amount from a source within Zimbabwe

The first amount is defined in section 2 of the Income Tax Act, in relation to the determination of gross income, income, and taxable income in terms of section 8(1) as "money or any other property, corporeal or incorporeal property having an ascertainable money value".

The commissions would constitute part of the gross income of the agents.

It was common cause that the amount was received by or accrued to or was in favour of the agents from a source deemed to be within Zimbabwe by virtue of paragraph 1(2)(a) of the Seventeenth Schedule of the Income Tax Act. It reads:

"(2) For the purposes of this Schedule —

(a) Fees shall be deemed to be from a source within Zimbabwe if the payer is a person who…, is ordinarily resident in Zimbabwe;"

The appellant was, at all material times, ordinarily resident in Zimbabwe.

Counsel for the appellant made a conditional concession, that, if the commissions were found to constitute fees, then, they would be deemed to have been from a source within Zimbabwe. He contended that the agent, and not the appellant, was the payer.

Payable

The word payable connotes a payment that is due, which ordinarily arises from an unconditional obligation on the payer to pay: see Edgar Stores Ltd v Commissioner for Inland Revenue 1988 (3) SA 876 (A) at 889A-C; 50 SATC 81 (A) and ITC 1587 (1994) SATC 197 at 103-104.

The sales commission and marketing agreements, in clause 2, imposed such an unconditional obligation to pay on the appellant. The responsibility of paying the commissions was imposed on the appellant by the agreements and by the Exchange Control Authority.

Payer is defined as "any person who pays…, or is responsible for the payment of fees."

In my view, a payer could be one of two persons, between the one who actually pays and the one who has the unconditional obligation to pay.

Thus, while on the contention of the appellant, that the agent paid itself, I would find that the person who was responsible for the payment of the fees was the appellant. If the commissions constitute fees, I would therefore find the appellant to have been the payer.

Any services of a Technical, Managerial, Administrative or Consultative nature

The starting point is that the four categories of services are disjunctive rather than conjunctive.

A finding that the physical activities of the agents fell into any one of these categories would suffice to found liability for the payment of non-residents tax on each category.

It was common cause that the agents supplied a service to the appellant. The appellant and the agents termed the service a sales and marketing of export leaf tobacco service.

The physical activities carried out by the agents, on behalf of the appellant, were first outlined in the minutes of 18 July 2013 whose accuracy was confirmed by the signatures of both parties on 6 and 7 August 2013. These activities were further listed in the letter of the appellant to the respondent of 30 July 2013.

The sales and marketing of export leaf tobacco involved negotiating prices with foreign purchasers. There were two types of foreign purchasers:

(i) The first was the major purchaser from the Far East, which accounted for between 40 and 50% by volume and between 50 and 60% by value of the appellant's exports.

The purchaser in question negotiated with the appellant in Zimbabwe. The tone of the minutes indicated that these meetings were facilitated and co-ordinated by the agent. While the directors of the appellant had the final say on the prices and volumes allocated to the major purchaser, the agent played a prominent role in the negotiations. In terms of the sales and marketing agreement the agent assisted the appellant by exerting its best efforts and demonstrated expertise in international marketing and trading of the export leaf tobacco.

(ii) The second type of buyer was the one who did not come to Zimbabwe to negotiate and assess the packed tobacco.

This type of buyer requested a sample of the tobacco on sale. The "price negotiations and other marketing logistics" for this buyer were done by the agent.

The four adjectives that describe the nature of fees are not defined in the Income Tax Act.

WALLIS JA recognised, in both Natal Joint Municipal Pension v Endumeni Municipality 2012 (4) SA 593 (SCA) and Firstrand Bank Ltd v Land and Agricultural Development Bank of South Africa 2015 (1) SA 38 (SCA), the primacy of the actual words used in the statute.

The appellant did not refer to any dictionary for the meanings of each of these four words. The respondent referred to the Oxford Advanced Learner's Dictionary. I relied on the Shorter Oxford English Dictionary.

The Definition of Technical

Counsel for the appellant, without reference to any dictionary, suggested that the word "technical" was a term of art which referred to manufacturing, engineering or architectural activities.

The Selling Dictionary renders the word as 'connected with the skills needed for a particular job'; 'an adjective relating to a particular subject, art or craft or its techniques'.

The Shorter Oxford English Dictionary defines the word as follows: "of a person; skilled in or practically conversant with some particular art or subject, belonging to or relating to an art or arts; appropriate or peculiar to or characteristic of a particular art, science profession, occupation; also pertaining to the mechanical arts and applied sciences generally;"

I am unable to agree with counsel for the appellant, that, there exists, in the context of the Income Tax Act, any limitation for this meaning of the word to applied sciences only, when, by definition, it also applies to the mechanical arts.

Thus, whether one considers the skills needed in selling tobacco as mechanical arts or applied sciences, the "best efforts" and "demonstrated expertise" of the agent is covered in the definition of technical.

The practical application of the knowledge possessed by the agent of the climatic and soil conditions, the style and smoking characteristics of the export leaf necessary for determination of the appropriate blend required by the customers fell into the ambit of technical services provided by the agent to the customer on behalf of the appellant.

But, even if the narrow definition advocated by counsel for the appellant were adopted, the appellant did not establish, on a balance of probabilities, that, the agent did not require knowledge of the type of export blending leaf required in the manufacture of cigarettes in order to make a sale.

The averment made, that knowledge of these characteristics was not a requirement to effect a sale, were contrary to the averment in the letter of 30 July that the appellant used such technical knowledge to purchase the appropriate blend on the auction floors and from contract farmers for export.

This technical knowledge was the expertise that the appellant required in making local purchases from both auction floors and contract farmers, and, in negotiating suitable prices with the major purchaser.

The appellant also relied on this technical knowledge to purchase the tobacco that met these specifications from both auction floors and contract farmers in order to satisfy the ultimate manufacturing requirements of the end customers.

The Bill of Lading…, indicates the expertise of the agents in regards to the shipping of export tobacco.

The six documents required were Bills of Lading, EUR 1 certificates, fumigation certificates, detailed weight lists, container packing lists, and invoices. These were all distributed to the agent. The agent gave special instructions on the time frames for dispatching documents and the type of containers used for carrying export tobacco and the manner of storage and fumigation standards applicable to the tobacco.

I would find, that, the agent supplied technical services to the appellant.

Definition of Managerial

In paragraph 19 of his written submissions, counsel for the appellant contended, that, the word managerial was synonymous with directing the activities of the appellant.

In paragraph 1.3 of the minutes on p5 of the Rule 11 documents, the appellant indicated the agent was responsible for "price negations and other marketing logistics."

In my view, these activities were carried out on behalf of the appellant by the agent. The agent was directing the activities of the appellant in these foreign markets and was required to even advise the local authorities that it was acting for the appellant.

I find that the practical activities of the agents fell into the ambit of the definition of managerial advocated by counsel for the appellant.

Again, applying the definition of "manage" derived from the Shorter Oxford English Dictionary; the agents were running the affairs of the appellant in those markets. The agents exercised actual authority on behalf of the appellant.

Indeed, the letter of 30 July established that the eight functions of the appellant that were managed by Sales Administration Director in Zimbabwe were mirrored by the eight functions run by the agents outside Zimbabwe on behalf of the appellant.

I agree with counsel for the respondent, that, some of the functions constituted both managerial and administrative services.

The Definition of Administrative

The word is defined in the Oxford Advanced Learner's Dictionary as "relating to the running of a business, organisation, etc."

The synonyms accorded to the word include 'managerial'.

In both his oral and written submissions, counsel for the appellant was unable to make any practical distinction between administrative and managerial services. He conceded, that, filling forms, rendering reports, filing documentation, and making payments constituted administrative functions.

These administrative services were, in my view, inseparable from managerial services.

These were carried out by the agent on behalf of its principal - the appellant.

The documentation consisted of sales confirmation invoices, orders, shipping instructions, bills of lading, EUR 1 certificates, fumigation certificates, detailed weight lists, container packing lists, and customs clearance invoices which were dispatched to the agent for processing exports in the countries of destination.

I find that the practical activities of the agents administrative services.

Definition of Consultative

In the Shorter Oxford English Dictionary, consultative means “pertaining to consultation, deliberative, advisory, take counsel, deliberate, confer, to plan, advise, have recourse to professional advice."

The preamble to the agreements proclaim the purpose for selecting the agents was based on their professionalism and ability to promote, supply, safeguard, and maintain personnel and materials required to make a sale.

In paragraph 19 of his written submissions, counsel for the appellant contended, that, the word 'consultative' connoted the offering of expert professional services and not "simply speaking to the appellant."

The suggestion, that, the agents were engaged for their expertise in "simply speaking" to the appellant is devoid of merit.

The very fact that the agents accompanied an accomplished and major international buyer of export tobacco demonstrates the high pedigree of the professional services rendered to the appellant by these agents.

Again, I find, as a matter of hard fact, that, the agents provided consultative services to the appellant.

The four words appear in the context of section 30 of the Income Tax Act.

That section is designed to tax fees that are payable or paid to an agent who is based outside Zimbabwe but from a source in Zimbabwe.

In my view, the words 'payable' and 'paid' as used in the definition of 'payee' in paragraph 1(1) to the Seventeenth Schedule of the Income Tax Act are synonymous with 'received by' or 'accrued to' or 'in favour of' that are used in section 8(1) of the Income Tax Act.

The overall purpose of the Income Tax Act is to tax taxable income "received by or accrued to or in favour of” the targeted taxpayer - including the non-resident in question.

The objective and sensible application of the meaning of each of these words is one which discards the notional plain meaning of the words in favour of the contextual meaning.

It seems to me, that, the real test of the pudding prepared by WALLIS JA is in the actual application of the facts found in each matter to the principles that he outlined.

The narrow meaning contended by counsel for the appellant does violence to the context and purpose of enacting the provision.

The true essence of a sale involves technical, managerial, administrative, and consultative competencies of the agent. That is why I maintain, that, there are hardly any activities of a taxpayer that can escape the wide embrace of the definition of fees that is found in the Seventeenth Schedule.

Accordingly, I am satisfied, that, the commissions in question constitute the type of fees contemplated by section 30 and paragraph 1 of the Seventeenth Schedule of the Income Tax Act.

Counsel for the appellant submitted, that, paragraph 6(1) merely imposed a penalty and not a tax on the payer or agent who failed to deduct and keep back or pay the appropriate non-resident tax on fees to the Commissioner in the stipulated period.

He argued, that, the personal obligation did not extend to a payer who could not physically deduct the non-resident tax on fees in Zimbabwe retained outside Zimbabwe. He contended, that, as the appellant did deduct and keep back the fees from the gross FCA value of the legal obligation to remit any non-residents tax on fees to the Commission.

The Seventeenth Schedule of the Income Tax Act reads:

“Penalty for non-payment of tax

"6. Subject to subparagraph (2), a payer or an agent in Zimbabwe who fails to withhold or pay to the Commissioner any amount of non-residents tax on fees as provided in paragraph 2 or 3 shall be personally liable for the payment to the Commissioner, not later than the date on which payment should have been made in terms of paragraph 2 or 3, as the case may be, of —

(a) The amount of non-residents tax on fees which the payer or the agent, as the case may be, failed to pay to the Commissioner; and

(h) A further amount equal to one hundred per centum of such non-residents tax on fees.

(2) The Commissioner, if he is satisfied in any particular case, that, the failure to pay to him non-residents tax on fees was not due to any intent to evade the provisions of this Schedule, may waive the payment of the whole or such part as he thinks fit or repay the whole or such part as he thinks fit of the amount referred to in subparagraph (b) of subparagraph (1).

(3) If a defaulting payer or agent referred to in subparagraph (1) does not pay the penalty in full on the date on which the default has ceased, interest, calculated at a rate to be fixed by the Minister by statutory instrument, shall be payable on so much of the penalty as remains unpaid by the payer or agent during the period beginning on the date the default has ceased and ending on the date the penalty is paid in full, and, such interest shall be recoverable by the Commissioner by action in any court of competent jurisdiction; provided, that, in special circumstances, the Commissioner may extend the time for payment of the penalty without charging interest."

In my view, whether the above cited paragraph is regarded as a penalty or non-residents tax on fees charging provision, it creates a legal liability for the holder or agent who fails to withhold or pay this type of tax to the Commissioner.

I have already found, that, the commissions in question constituted fees as contemplated by both section 30 and the Seventeenth Schedule of the Income Tax Act.

The next sub-issue to determine is: whether the appellant was the payer of the fees.

It was agreed, that, the appellant was required, by Exchange Control Authority, to pay the fees from its local foreign currency account.

In terms of clause 5 of the Sales and Marketing Commission Agreements these agreements were negotiated and executed within the laws of Zimbabwe. The validity, interpretation and enforcement of the agreements were, also in terms of the same clause, governed by the laws of Zimbabwe.

That the Exchange Control Authority had the force of the laws of Zimbabwe is beyond dispute.

The powerful influence of this Exchange Control Authority was highlighted by the reduction of the commission payable for the first agent from 8.5% to the 7.5% in compliance with the requirements of the Foreign Exchange Control Authority.

The appellant did not disclose the basis on which the offshore payment arrangements of the commission were made. They were certainly made outside the order of the Exchange Control Authority, and were, to that extent, illegal.

If seems to me, that, the illegality conducted by the appellant would obviously impact the decision on whether or not to waive the penalty equivalent to the unpaid non-residents tax on fees under paragraph 6(2) to the Schedule. If adjudged illegal, then, it would not qualify for waiver as the intention on the part of the appellant would be to evade withholding such tax arising from any payments from its local foreign currency account.

The appellant averred, that, it made no payments to the agents. The agents simply deducted the fees due to them offshore before making telegraphic transfers into the evidence accounts at the appellant's local bankers.

Counsel for the appellant submitted, that, in those circumstances, there was no amount against which tax could be withheld.

Like in G Bank Zimbabwe Ltd v Zimbabwe Revenue Authority HH207-15, counsel for the appellant relied on the decision of this Court in Sunfresh Enterprises (Pvt) Ltd t/a Bulembi Safaris v Zimbabwe Revenue Authority 2004 (1) ZLR 506 (H) which appeared to suggest, that, the local safari operator was not a payer of the commission that was deducted offshore from the overall fees due to him in Zimbabwe.

The facts in that case are unclear.

They appear in the recitation of the taxman's arguments on pp508G and 509G of the report. It would appear, that, the safari operator provided the foreign independent operators with the gross value of its hunting services. Foreign prospective hunters paid this amount to the foreign independent operators who, in turn, deducted some agreed amounts as commission before remitting the balance to the account of the safari operator.

CHEDA J held, that, the source of the payment was from outside Zimbabwe, and, for that reason, the payment did not constitute fees. He also held, that, as the payment had been made to the agent by the prospective hunter and not by the safari operator, the safari operator was not the type of payer contemplated by the Seventeenth Schedule to the Income Tax Act.

In G Bank Zimbabwe Ltd v Zimbabwe Revenue Authority HH207-15 …, I said of Sunfresh Enterprises (Pvt) Ltd t/a Bulembi Safaris v Zimbabwe Revenue Authority 2004 (1) ZLR 506 (H)…,:

"If the commission in the Sunfresh case was deducted from the overall hunting fee remitted to the safari operator, as submitted by Mr de Bourbon, I would, with respect, differ from the finding of CHEDA J. The payment by the foreign client to the foreign based agent, in my view, would simply constitute a prepayment on behalf of the safari operator. It would have been subject to withholding tax."

I remain of the view, that, if the deduction of the commission was made from the total package charged by safari hunting services from Zimbabwe, then, it would constitute an the safari operator to the independent agent from moneys due to the I could have found that the source of the payment was from the originating cause of the payment was from the hunting services in Zimbabwe.

The words "from a source in Zimbabwe" denote the originating cause.

In K v Commissioner 1990 (1) ZLR (H)…, SMITH J stated that:

"I accept, that, it is settled law that the source of any payment means the originating cause thereof, and, prima facie, that would be where the work was performed - see Commissioner of Taxes v Shein 1958 R&N 384 (FSC) at 387E; 1958 (3) SA 14 (SC) at 16H (also (1958) 22 SATC 12) where TREDGOLD CJ said:

'It may be accepted, that, prima facie, the test of the source of a payment for services rendered is the place where those services are rendered.'

The learned CHIEF JUSTICE went on, however, to say, that, the ultimate test of source is the originating cause."

I would, for these reasons, disagree with the decision in Sunfresh Enterprises (Pvt) Ltd t/a Bulembi Safaris v Zimbabwe Revenue Authority 2004 (1) ZLR 506 (H) and would therefore decline to follow it.

There is also a more fundamental reason for rejecting Sunfresh Enterprises (Pvt) Ltd t/a Bulembi Safaris v Zimbabwe Revenue Authority 2004 (1) ZLR 506 (H) and the argument advocated by counsel for the appellant.

The provisions of paragraph 1(2)(c) to the Seventeenth Schedule of the Income Tax Act provide that "fees shall be deemed to be paid to the payee if they are credited to his account or so dealt with that the conditions under which he is entitled to them are fulfilled, whichever occurs first."

I understand this provision to mean, that, even though the actual payment is pending, if the payer, in this case the appellant, has credited the account of the payee, the agent, with the fees, the payer is deemed to have paid the fees.

This first rung does not apply to the facts of this case.

The second rung deems the fees paid where such fees are due and payable and the payer makes prior arrangements for their payment. The payer thus incurs an unconditional liability to pay and arranges for the payment of such fees.

In the present case, the fees became due and payable to the agent and the appellant incurred an unconditional liability to pay each time a sale was made.

The arrangements that were made, in respect of payment, before the payment took place were that the agent would retain the fees from the gross FCA value of the exports receipts.

It seems to me, that, the making of the sale, together with these prior arrangements, is deemed to constitute payment of the fees by the second rung of paragraph 1(2)(c) to the Seventeenth Schedule.

The argument advanced by counsel for the appellant, that liability for the appellant was based on actual payment, flounders on the provisions of the second rung of paragraph 1(2)(c) to the Seventeenth Schedule of the Income Tax Act.

In any event, the agreements in the present case, in terms of clause 5, are governed by the is inter alia applicable to this case. CHRISTIE, in Business Law in Zimbabwe (Juta 1998 reprinted 2014)…, provides the working definition of agency in these words:

"Agency may be defined as a contract whereby one person (the principal) employs another to enter into contractual relationships binding between him and third parties.”

LEE and HONORE in The South African Law of Obligations (Butterworths 1950) are to the same effect. In para 606 the learned authors write:

"A contract of agency is a contract whereby one person (termed the agent) agrees to represent another (termed the principal) in dealings with third parties."

The learned authors go on to explain, in para 658, that:

"An agent contracting as agent, whether for a named or unnamed principal, does not generally render himself personally liable or acquire rights under a contract made with third parties, but, he may contract in such terms as to do so."

Again, SILKE, in The Law of Agency in South Africa 3rd ed…, provides a more illuminating definition of agency in these words:

"The essence of the modern view of agency is that there must be a third party in contemplation and the agent acts purely as a channel bringing the principal into legal relations of a contractual nature with the third party. The acts of the agent are done in the name of the principal and are deemed to be the acts of the principal himself, ensuring to his benefit or rendering him liable, without any benefit accruing or liability attaching to the agent."

The academic writers make the self-evident point, that, an agent acts for the principal and its actions are ascribed to the principal.

The deduction of the commission from the gross FCA value of the exports by the agent, by operation of law, are attributed to the appellant, who, it is common cause, is resident within Zimbabwe.

It cannot lie in the mouth of the appellant to protest that it made no payment to the agents.

I find that it did.

It was obliged, by paragraph 2(1) of the Schedule, to withhold non-residents tax on fees. It failed to do so. It was therefore legally liable to pay such fees under the provisions of paragraph 6 of the same Schedule.

I therefore find, that, the Commissioner correctly fostered liability on the appellant.

The appeal, based on the decision of the Commissioner, is dismissed.

I do not find the grounds of appeal to have been frivolous. In accordance with the provisions of section 65(12) of the Income Tax Act, I therefore make no order as to costs.

Disposition

Accordingly, the appeal is dismissed.

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

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

THE FACTS

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

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

“…,.

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

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

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

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

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

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

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

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

(ii) Access roads.

(iii) Ground clearing.

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

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

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

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

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

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

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

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

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

The exception was contested by the State.

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

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

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

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

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

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

The application for review is opposed by the State.

THE LAW

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

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

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

(c) Gross irregularity in the proceedings or decision.

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

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

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

RELIEF SOUGHT

The remedy that the applicants seek is that -

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

2. The following is substituted in its place:

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

THE SUBMISSIONS

The applicants submitted, in their heads of argument, that, the court below was duty bound to apply its mind to the question brought before it, id est, whether the facts alleged disclosed an offence.

The court a quo failed to determine the issue which was brought before it: see Makandi Tea & Coffee Estate (Pvt) Ltd v A.G & Anor HH595-15.

It went on a tangent.

It considered whether the charge was properly crafted. That was never the issue before it.

A failure to apply its mind to the question before it was a grossly unreasonable failure of the judicial function. It was not only unreasonable. It was also patently contrary to the law.

On that basis, the applicants submitted, that, the decision of the court a quo be vacated, on review, because, if the court had addressed the question that had been brought before it, it would have arrived at a decision that the facts do not disclose a criminal offence.

See also Bridges & Hulmes (Pvt) Ltd v The Magistrate, Kwekwe & Ors 1996 ZLR 189 (HC)…, where it was stated:

“Because of the wrong question of law, he directed his inquiry at matters he should not have considered, and failed to apply his mind to the matters in issue.”

The applicants further submitted, in their supplementary heads of argument, that, the second applicant should not have been charged in his personal capacity since he was acting only as a representative of the first applicant which is a legal persona.

The first respondent, on the other hand, submitted, that, it appeared the applicants purported to except to the charges in terms of both section 170 and section 180 of the Criminal Procedure and Evidence Act [Chapter 9:07,] and, thereat, lied the problem that then led the second respondent to proceed in the manner he did.

The first respondent submitted, that, the applicants should have excepted in terms of section 180 and not 171 of the Criminal Procedure and Evidence Act.

However, the first respondent further conceded, that, indeed, the second respondent misdirected himself by determining an issue that was not meant for him to decide, but, however, argued, that, the misdirection was not one so fatal as to go to the root of the matter.

It further submitted, that, the trial has since commenced in respect of Counts 1, 2 and 4 hence this application has been overtaken by events.

As regards the third Count, the first respondent conceded, that, there was no offence shown and agreed with the findings of MUSAKWA J to which counsel for the first respondent urged the court to take note of in reviewing this matter.

On the other hand, the applicants referred this court to the judgment by CHITAPI J and urged the court to take into account the sentiments of CHITAPI J in deciding whether the facts disclose an offence or not when reviewing this matter.

It is therefore clear, that, the second respondent misdirected himself when he dismissed the exception because he dealt with an issue that was not before him. He decided whether the charges disclosed an offence or not yet what he had been asked to adjudicate upon was whether the facts, as stated in the Outline of the State Case, disclosed any offence or not.

This misdirection, in my view, goes to the root of the matter.

Having found that there was a misdirection, what is left is for the court to decide whether, if the court had decided the correct issue, the court would have arrived at the same findings in view of the relief being sought by the applicants.

MY ANALYSIS OF THE FACTS IN THE OUTLINE OF STATE CASE

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

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

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

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

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

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

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

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

The first two charges constitute of allegations that the accused persons committed fraud as defined in section 136 of the Criminal Law (Codification and Reform) Act [Chapter 9:23].

The said section provides:

“Any person who makes a misrepresentation –

(a) Intending to deceive another person or realising that there is a real risk or possibility of deceiving another person; and

(b) Intending to cause another person to act upon the misrepresentation to his or her prejudice, or realizing that there is a real risk or possibility that another person may act upon the misrepresentation to his or her prejudice;
shall be guilty of fraud if the misrepresentation causes actual prejudice to another person or is potentially prejudicial to another person…,."

The essential elements for the charge of fraud are therefore -

(a) The existence of a misrepresentation;

(b) The existence of an intention to deceive or realisation of the risk or possibility of deception;

(c) The intention to cause another person to rely upon the misrepresentation to their prejudice or the realisation that the possibility of reliance on the misrepresentation exists; and

(d) Causation of prejudice or potential prejudice.

These requirements are confirmed in the judgment relied upon by the State, to a large extent, the judgment in S v Chikukwa HH813-16.

The intention to deceive must exist at the time that the misrepresentation is made.

In this case, such intention must be alleged to have existed on each of the dates on which invoices were presented to the Zimbabwe Power Company (ZPC) for payment. The non-existence of such intention immediately becomes apparent if one considers, that, the relationship between the parties was regulated by an Engineering Procurement and Construction Contract (EPC) which authorised payment before works had been done.

All payments made by the Zimbabwe Power Company (ZPC) were advance payments. They were authorised by the contractual document. The intention by both parties, as expressed in the contract, was that work would be done after the payments.

That negates the intention on the part of the accused persons to cause any prejudice to the Zimbabwe Power Company (ZPC).

Any prejudice which may be alleged to have fallen upon the Zimbabwe Power Company (ZPC) or may potentially fall upon it was contemplated by the parties at the time of entering the contract and mitigatory measures were taken to guard against such prejudice.

In each case, therefore, a performance bond was required to have been supplied before payments were made.

The fact that it is alleged, that, no performance bonds had been supplied at the time of the making of some of the payments does not mean that there was any fraud.

The parties contemplated the possibility of breach of the contract by non-performance of the first accused person and took appropriate mitigatory measures. The non-implementation of the mitigatory measures can only be a breach of the contract if established.

In fact, the loss, in that event, would have been caused not by the malperformance of the contract but by the negligence of the Zimbabwe Power Company (ZPC) in paying where the contract provided that payments should have been made only when the performance bond or an advance payment guarantee was in place.

Such loss is not the loss or prejudice contemplated in terms of section 136 of the Criminal Law (Codification and Reform) Act....,.

In terms of the well-known parole evidence rule, no one can speak on its behalf as it is the exclusive memorial of the parties agreement. The parties are strictly bound by the four corners of the contractual document. The parties cannot add or subtract anything from the contractual document.

The Criminal Court, therefore, does not have jurisdiction to hear or otherwise determine a case of a civil nature, such as this one.

To buttress the foregoing, it suffices to record, that, it is settled practice, that, where a fraudulent misrepresentation is alleged in the performance of contractual obligations, the remedies available to the aggrieved party are not criminal but rather civil in the form of a claim of damages, specific performance, or termination of the contract.

HH411-15 : TENDAI MASAMBA vs ZIMBABWE ELECTRICITY TRANSMISSION AND DISTRIBUTION COMPANY (PVT) LTD
Ruled By: CHIWESHE JP and CHITAKUNYE J

On 26 March 2015, we dismissed the appellant's appeal with costs on the attorney-client scale. We indicated that full reasons will follow. These are the reasons for the dismissal.

The appellant owns an immovable property, namely, Flat No.4 Resdale, 56 Selous Avenue, Harare. The appellant is resident in New Zealand and she was represented in these proceedings by her brother, Ignatius Masamba, by virtue of a General Power of Attorney she granted to him in the year 2011.

In 2011, the appellant, through Ignatius Masamba, sued the defendant for the sum of $1,960 broken down as follows:

“Their statements are a Nuisance $150;
Professional negligence $1,500;
Mental distress/physical inconvenience/time $300;
Transport/stationery/photocopying $10.”

The summons commencing action was not clear on the cause of action or the legal basis for the various claims.

The particulars of claim are, to say the least, confusing and incoherent. The particulars of claim do not disclose the legal basis for the claims.

It is trite, that, particulars of claim must clearly disclose the cause of action being relied upon.

If it is based on contract, the nature and extent of the contractual obligations and their breach must be clear. If it is a suit for damages, the summons and particulars of claim must clearly spell out whether such damages are being claimed in contract or under an Aquilian action.

In casu, the summons and particulars of claim did not disclose whether the damages being claimed were for breach of contract or for a delict.

If the damages are in delict, the summons did not properly establish the cause of action. No wrongful or unlawful conduct on the part of the respondent is alleged, let alone established from the summons and particulars of claim: see Nyaguse v Skinners Autobody Specialists & Another 2007 (1) ZLR 296 (H) and Border Timbers Limited v ZIMRA 2009 (1) ZLR 131 (H).

Based on the above, there was virtually no case to try.

A trial was, nevertheless, held after which the trial magistrate, after considering each of the claims, dismissed the appellant's claim with each party to pay their own costs.

The appellant, being dissatisfied with the magistrate's decision, appealed to this court.

The respondent opposed the appeal and raised points in limine on points of law.

Though some of the points of law may not have been clearly raised in the court below, we were of the view, that, the points pertain to issues that are clear from the pleadings. The consideration of the points will not cause any unfairness as clearly part of the aspects were raised and the appellant was aware of them: see Ngani v Mbanje & Another; Mbanje & Another v Ngani 1987 (2) ZLR 111 (SC).

Upon perusal of the appeal record, it was apparent that the appellant's appeal was not in order.

On 27 January 2015, we inquired on the authority for Ignatius Masamba to act for the appellant when all he had was a general power of attorney which did not specify that he was empowered to institute litigation.

We also drew Ignatius Masamba's attention to the defective nature of the Notice of Appeal.

Upon noting that he was intent on prosecuting the appeal as it is, we advised him to seek legal assistance before we decided the fate of the appeal.

On that day, he agreed.

The appeal hearing was thus postponed to 26 March 2015.

When the matter was heard, on 26 March 2015, Ignatius Masamba indicated that he had approached a legal practitioner. He however did not know the name of that legal practitioner or the law firm. He further on said, that, he had not engaged the services of any legal practitioner as he had no financial means to engage one but was ready to argue on his own.

Upon further inquiry from him, he indicated, that, his sister (the appellant) had in fact instructed him to withdraw the appeal. He had however, on his own accord, decided to pursue the appeal despite his principal's instruction.

It is apparent, therefore, that, from Ignatius Masamba's own admission he no longer had the mandate to pursue the appeal once his principal instructed him to withdraw the appeal.

In any case, a general power of attorney is inadequate for litigation. There was need for a specific power of attorney to litigate.

In Ashley v SA Prudential Ltd 1929 (1) TPD 283…, TINDALL J had this to say on the issue of a general power of attorney:

“But, in my opinion, where the authority is stated to be 'to demand and receive the title deeds relating to such transfer' it cannot be said that bringing legal proceedings to obtain the title deeds is a necessary or usual means of executing the authority to 'demand and receive'. The institution and prosecution of legal proceedings is an important step which may involve the principal in great expense and I see no justification for holding, that, where a principal authorises an agent to 'demand and receive' a thing, the principal must be taken to have intended to include the authority to bring and prosecute proceedings. There is no reason for construing the word 'demand' in a sense other than its ordinary sense which is well understood and means 'claim' in other words an extrajudicial demand.”

Equally, in Mutemererwa & Another v Tavarwisa & Another HH160-04, KAMOCHA J opined that:

“In casu, the power of attorney nominated and appointed the agent for managing and transacting all the principal's affairs involving the purchase of the property. There would be no justification for construing it to have authorised him to bring and prosecute legal proceedings. He had no authority to do that.”

In casu, the general power of attorney, issued on 14 April 2011, related to the management of 4 Resdale, 56 Selous Avenue, Harare. The second paragraph of that power of attorney clearly states its purpose as:

“General management of the property. This is to include rental management, inclusive of any issues arising from that, maintenance, and general keeping of the property.”

I am of the view, that, the purpose did not authorize the agent to institute and prosecute litigation.

He therefore had no authority to institute ligation without the principal's specific or special mandate as at the date of instituting the action.

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....,.

WHETHER THE COURT A QUO COMMITTED A GROSS MISDIRECTION IN CALCULATING 10% COMMISSION BASED ON AN INCORRECT FIGURE

The tax audit for 2013 was $408,482=08; the respondent contends that its commission was 10% of this amount which would come up to $40,848=20.

The appellant contends, that, what was due to the respondent is 10% of the $40,848=20 which would be the figure of $4,084=82 on p20 of the record.

It now becomes a matter of rendition in our view.

Clause 3(1) of the agreement provides that:

“Tax management fees for tax year 2009 to 2013 is 10% of tax debt reduced for each year under audit…,.”

On p31 of the record of proceedings, the respondent clearly indicates, under the 5th column 'Tax Debt Reduced' the amount of $408,482=08 and Amount Due to the respondent under column 6 is $40,848=21.

The court a quo correctly granted the 10% collection commission, but, committed a miscalculation of 10% of the tax debt reduced coming out with the figure of $4,084=82.

We agree with the respondent in its cross appeal, that, there was a mathematical calculation error and conclude that the correct amount of collection commission due to the respondent is $40,848=21 not $4,084=82.

The appellant's third ground of appeal fails and the respondent's cross-appeal on that aspect ought to succeed.

WHETHER THE COURT A QUO FAILED TO MAKE A FINDING THAT RESPONDENT WAS IN BREACH OF THE AGREEMENT AND HENCE NOT ENTITLED TO COMMISSION AWARDED

The appellant argued, that, the respondent did not deserve a commission at all for it had failed to perform its obligations.

The appellant added, that, the respondent was in fact in breach of the contract.

The respondent did not reduce the appellant's tax debts, and, since it failed to meet what was expected of it by the appellant, it should not have been awarded any commission.

It is ideal to join this fourth ground of appeal with ground of appeal number 5 which states, that, the court a quo erred in making a finding that the respondent reduced the tax obligation of the appellant to the Zimbabwe Revenue Authority (ZIMRA) for the year 2013.

These are issues of fact which were dealt with by the court a quo.

The court a quo believed the respondent and dealt with the issue of reduced tax in its judgment on p20 of the record. The trial court concluded, that, the respondent was entitled to the 10% commission and calculated the figure due, albeit erroneously so.

However, the issue is that of the liability of the appellant to pay 10% commission on reduced tax debt.

The pleadings, the bundle of documents, as well as the reasoning of the learned magistrate a quo shows, that, the respondent managed to prove, on a balance of probabilities, why she was entitled to the 10% commission and we fail to see where the court a quo misdirected itself.

On the question of breach, the appellant did not file a counter-claim where it ought to have sought the court to have an order declaring the respondent to be in breach of contract.

In any case, in our view, that was not necessary anyway because it was the appellant who had terminated the agreement and indicated in its pleadings that it had sued the respondent in the High Court claiming millions of dollars for breach.

The issue for breach, though alluded to by the appellant in cross-examination of the respondent's witness was not specifically isolated for decision by the trial court as per the issues for trial reflected on the Pre-trial Conference Minute on p48 of the record.

The trial court resolved the issue of whether the appellant was liable or not to the respondent and accepted some of the claims of the respondent and dismissed others. We see no misdirection in the manner the trial court dealt with the matter.

Both grounds of appeal 4 and 5 have no merit.

CC07-16 : AMOS MAKANI and OTHERS vs ARUNDEL SCHOOL and OTHERS
Ruled By: CHIDYAUSIKU CJ, MALABA DCJ, ZIYAMBI JCC, GWAUNZA JCC, GARWE JCC, GOWORA JCC, HLATSHWAYO JCC, PATEL JCC and GUVAVA JCC

The four applicants are the fathers and guardians of their respective minor daughters, all four of whom are pupils at Arundel School, a private girls school situated in Harare.

The first and second respondents are the Trustees and Headmistress of the School.

The third respondent is the Minister of Primary and Secondary Education, cited in his official capacity, and the fourth respondent is the Attorney-General, also cited in his official capacity.

The applicants seek various declarators and consequential relief in respect of the alleged violation of their daughters constitutional rights. They also seek an order for costs against the first and second respondents on a legal practitioner and client scale.

The first and second respondents are opposed to the application and aver that it be dismissed with costs.

The third and fourth respondents have indicated that they will abide by the Court's decision.

The Background

Before 2015, the long-established practice at the School was to commence the day with prayers in the School chapel. Pupils were free to attend if they so wished and a separate room was set aside for those of other faiths who did not attend chapel on religious grounds. This inter-denominational position was confirmed by the School's website on the internet.

The applicants and their daughters are all practising Jehovah's Witnesses. Their beliefs are not similar to those of other Christian denominations.

Upon application to the School for the admission of their daughters, each of the applicants completed a standard application form in which they indicated that they were Jehovah's Witnesses. Their daughters were duly accepted for admission.

At the beginning of 2015, a new Headmistress was appointed to run the School.

She sought to introduce compulsory chapel attendance for all pupils at the School in order to reinforce its collegiality. The applicants wrote several letters to the Headmistress as well as the School's lawyers to register their complaints. On 17 March 2015, after taking legal advice, the Headmistress wrote to the applicants insisting that their daughters were required to attend chapel and that, if they failed to comply, they would be deemed to have been voluntarily withdrawn and removed from the School.

On 19 March 2015, after the girls refused to attend chapel and surrendered their books, they were told to go home.

The applicants then filed an urgent application to the High Court, in Case No.2717/15. Following a consent order granted on 27 March 2015, the girls were allowed to continue to attend the School, without being compelled to attend chapel, pending the determination of the present application.

The applicants aver, that, freedom of conscience includes the right to practice and propagate one's religion as well as the right not to be compelled to subscribe to any religion.

In this respect, the actions of the Headmistress violate their daughters freedom of conscience and their right to protection against discrimination on the ground of religion.

Moreover, although any person is entitled to establish and maintain an independent educational institution, he or she cannot discriminate in the manner in which the institution is administered. Thus, the conduct of the Headmistress also violates their daughters right to education.

The applicants, accordingly, seek declarators that the respondents actions are in violation of their daughters freedom of conscience and religion, right to protection against discrimination, and right to education.

They also seek an order precluding the respondents from refusing the admission of their daughters to Arundel School on the basis of their religious beliefs and failure to attend chapel.

On behalf of the School, the Headmistress relies upon the standard enrolment form signed by the applicants upon the admission of their daughters into the School.

She avers, that, this agreement, which constitutes a binding contract, expressly provides, that, any latitude from chapel attendance is at her sole discretion and that her decision in that regard is final and binding.

The agreement also provides, that, any changes to the School rules must be observed and followed by the signatory parents and their daughters.

One of her functions is to articulate the values of the School, and, morning chapel is the only time when pupils come together in an environment most conducive for the values and ethos of the School to be properly impacted upon them.

It is not compulsory for any pupil to participate in any activity, such as singing or praying, or to abandon her beliefs during chapel. What is compulsory is that all pupils attend and evince respectful behaviour in chapel.

The applicants were not forced to enrol their daughters at the School.

They should respect the rights of the School's founding members who established an educational institution that conforms with and pursues their own values and beliefs. The School authority is constitutionally entitled to establish and maintain the School and impose reasonable rules to be followed at the School. It should not be precluded from pursuing its religious beliefs and insisting on anyone who joins the School to respect its views.

Such policy is reasonable and those who agree to join the School, despite their religious views, must be taken to have necessarily waived their own constitutional rights.

For the sake of completeness, it is necessary to set out the relevant provisions of the standard application form of admission to the School.

Upon signature, each of the applicants acknowledged and understood that his daughter had been accepted for entry as a day student at the School on the following express terms and conditions:

“4. That, the School's rules and regulations, as amended from time to time, shall bind and be observed by my daughter, and, insofar as they concern me, also by me. I further accept, that, by signing this enrolment contract I will be bound by the Arundel Parents Association constitution, which is available to me on request.

5. That, the School is founded on Christian principles, and all pupils are expected to comply with the rules and routines thus implied. No exemption from any part of the curriculum will be considered on religious grounds. Any latitude concerning Chapel attendance, holy days, special meal requirements, dress codes etc. will be at the sole discretion of the Head, whose decision will be accepted as final and binding on my daughter.”

Relevant Constitutional and Statutory Provisions

Section 2 of the Constitution re-affirms the supremacy of the Constitution in terms that are significantly wider and more inclusive than those embodied in its precursor in the former Constitution, as follows:

“(1) This Constitution is the supreme law of Zimbabwe and any law, practice, custom or conduct inconsistent with it is invalid to the extent of the inconsistency.

(2) The obligations imposed by this Constitution are binding on every person, natural or juristic, including the State and all executive, legislative, and judicial institutions and agencies of government at every level, and must be fulfilled by them.”

Also relevant for present purposes is section 47 of the Constitution which recognises the existence of rights other than those contained in the Declaration of Rights:

“This Chapter does not preclude the existence of other rights and freedoms that may be recognised or conferred by law, to the extent that they are consistent with this Constitution.”

As I have already indicated, the specific relief sought by the applicants relates to the alleged violation of their daughters freedom of conscience and religion, right to protection against discrimination, and right to education, as enshrined in sections 60, 56 and 75 of the Constitution. These sections, in their relevant portions, provide as follows:

“56 Equality and Non-discrimination

(1) All persons are equal before the law and have the right to equal protection and benefit of the law.

(2)….,.

(3) Every person has the right not to be treated in an unfairly discriminatory manner on such grounds as their nationality, race, colour, tribe, place of birth, ethnic or social origin, language, class, religious belief, political affiliation, opinion, custom, culture, sex, gender, marital status, age, pregnancy, disability or economic or social status, or whether they were born in or out of wedlock.

(4) A person is treated in a discriminatory manner, for the purpose of subsection (3), if —

(a) They are subjected, directly or indirectly, to a condition, restriction or disability to which other people are not subjected; or

(b) Other people are accorded, directly or indirectly, a privilege or advantage which they are not accorded.

(5) Discrimination on any of the grounds listed in subsection (3) is unfair unless it is established that the discrimination is fair, reasonable and justifiable in a democratic society based on openness, justice, human dignity, equality and freedom.

(6)…,.”

“60 Freedom of Conscience

(1) Every person has the right to freedom of conscience, which includes —

(a) Freedom of thought, opinion, religion or belief; and

(b) Freedom to practice and propagate and give expression to their thought, opinion, religion or belief, whether in public or in private and whether alone or together with others.

(2) No person may be compelled to take an oath that is contrary to their religion or belief or to take an oath in a manner that is contrary to their religion or belief.

(3) Parents and guardians of minor children have the right to determine, in accordance with their beliefs, the moral and religious upbringing of their children, provided they do not prejudice the rights to which their children are entitled under this Constitution, including their rights to education, health, safety, and welfare.

(4) Any religious community may establish institutions where religious instruction may be given, even if the institution receives a subsidy or other financial assistance from the State.”

“75 Right to Education

(1) Every citizen and permanent resident of Zimbabwe has a right to —

(a) A basic State-funded education, including adult basic education; and

(b) Further education, which the State, through reasonable legislative and other measures, must make progressively available and accessible.

(2) Every person has the right to establish and maintain, at their own expense, independent educational institutions of reasonable standards, provided they do not discriminate on any ground prohibited by this Constitution.

(3) A law may provide for the registration of educational institutions referred to in subsection (2) and for the closing of any such institutions that do not meet reasonable standards prescribed for registration.

(4) The State must take reasonable legislative and other measures, within the limits of the resources available to it, to achieve the progressive realisation of the right set out in subsection (1).”

In support of their contention, that, their daughters right to education has been violated by the School, the applicants also rely upon section 4 of the Education Act [Chapter 25:04] which provides as follows:

“(1) Notwithstanding anything to the contrary contained in any other enactment, but subject to this Act, every child in Zimbabwe shall have the right to school education.

(2) Subject to subsection (5), no child in Zimbabwe shall —

(a) Be refused admission to any school; or

(b) Be discriminated against by the imposition of onerous terms and conditions in regard to his admission to any school;
on the grounds of his race, tribe, place of origin, national or ethnic origin, political opinions, colour, creed or gender.

(3)…,.

(4) Any person who contravenes subsection (2) shall be guilty of an offence and liable to a fine not exceeding level six or to imprisonment for a period not exceeding one year or to both such fine and such imprisonment.

(5) It shall be a defence in any criminal proceedings for an offence under subsection (2) for the accused person to show, that, though he committed the act alleged against him —

(a) He committed the act on the grounds of the creed of the child against whom the act was committed, but he did so because the school concerned is controlled by a bona fide religious organization and members of that religious organization or adherents of a particular religious belief are accorded preference in admission to that school; or

(b) He committed the act on the grounds of the gender of the child against whom the act was committed, but...,.”

Lastly, but very importantly, there is section 86 of the Constitution which permits the limitation of fundamental rights in the following circumstances:

“(1) The fundamental rights and freedoms set out in this Chapter must be exercised reasonably and with due regard for the rights and freedoms of other persons.

(2) The fundamental rights and freedoms set out in this Chapter may be limited only in terms of a law of general application and to the extent that the limitation is fair, reasonable, necessary and justifiable in a democratic society based on openness, justice, human dignity, equality and freedom, taking into account all relevant factors, including —

(a) The nature of the right or freedom concerned;

(b) The purpose of the limitation, in particular, whether it is necessary in the interests of defence, public safety, public order, public morality, public health, regional or town planning or the general public interest;

(c) The nature and extent of the limitation;

(d) The need to ensure that the enjoyment of rights and freedoms by any person does not prejudice the rights and freedoms of others;

(e) The relationship between the limitation and its purpose, in particular, whether it imposes greater restrictions on the right or freedom concerned than are necessary to achieve its purpose; and

(f) Whether there are any less restrictive means of achieving the purpose of the limitation.

(3) No law may limit the following rights enshrined in this Chapter, and no person may violate them —

(a) The right to life, except to the extent specified in section 48;

(b) The right to human dignity;

(c) The right not to be tortured or subjected to cruel, inhuman or degrading treatment or punishment;

(d) The right not to be placed in slavery or servitude;

(e) The right to a fair trial;

(f) The right to obtain an order of habeas corpus as provided in section 50(7)(a).”

As appears from sub-section (3) of section 86 of the Constitution, none of the rights allegedly violated in casu falls into the category of inviolable rights enumerated in that subsection.

Accordingly, in the event that the applicants are able to establish any violation of their rights, it will be necessary to measure such prima facie violation as against the rights and freedoms of others, in terms of subsection (1), and within the context of the permissible derogations contemplated in sub section (2)....,.

Freedom of Conscience and Religion

For the purpose of addressing the merits of this aspect of the matter, it is necessary to consider three separate but inter-related issues, to wit:

(i) The nature and scope of the applicants freedom of religion as guaranteed by section 60 of the Constitution.

(ii) Whether and the extent to which that freedom has been infringed by the School.

(iii) If so, whether any such infringement constitutes a permissible limitation by virtue of subsections (1), (2) or (3) of section 86 of the Constitution.

Subsection (1) of section 60 of the Constitution defines the right to freedom of conscience as including, inter alia, freedom of religion or belief and freedom to practise and propagate and give expression to one's religion or belief, whether in public or in private and whether alone or together with others.

Subsection (3) affirms the right of parents and guardians to determine, in accordance with their beliefs, the moral and religious upbringing of their minor children, provided they do not prejudice the constitutional rights of their children, including their rights to education, health, safety, and welfare.

The essence of the applicants religious credo, as appears from their founding papers, is that there is no hell of fire and torment; that places of worship should not contain any religious symbols; that religions and faiths should not be mixed; and that there can only be one truth from God - which truth they hold.

With specific reference to religious symbols at the School, they object to the three crucifixes atop, outside and inside the chapel, as well as the foundation stone at the entrance of the chapel. These symbols, so they believe, contravene the first Commandment against idolatry.

The fundamental doctrinal beliefs and practices of Jehovah's Witnesses may also be gleaned from the following article by JOHN GORDON MELTON in the online Encyclopaedia Britannica:

“Witnesses hold a number of traditional Christian views but also many that are unique to them. They affirm that God, Jehovah, is the most high. Jesus Christ is God's agent, through whom sinful humans can be reconciled to God. The Holy Spirit is the name of God's active force in the world. Witnesses believe that they are living in the last days, and they look forward to the imminent establishment of God's kingdom on earth, which will be headed by Christ and jointly administered by 144,000 human co-rulers (Revelation 7:4). Those who acknowledge Jehovah in this life will become members of the millennial kingdom; those who reject him will not go to hell but will face total extinction….,.

The Witnesses teachings stress strict separation from secular government.

Although they are generally law-abiding, believing that governments are established by God to maintain peace and order, they refuse, on biblical grounds, to observe certain laws. They do not salute the flag of any nation, believing it an act of false worship; they refuse to perform military service; and they do not participate in public elections….,.

The Witnesses distrust of contemporary institutions extends to other religious denominations, from which they remain separate. They disavow terms such as minister and church….,.

Witnesses also oppose certain medical practices that they believe violate Scripture. In particular, they oppose blood transfusions because of the scriptural admonition against the consumption of blood (Leviticus 3:17)….,.

In the early years of the movement, members met in rented halls, but, under Rutherford, the Witnesses began to purchase facilities that they designated Kingdom Halls….,. Each Kingdom Hall has an assigned territory and each Witness a particular neighbourhood to canvass….,.”

The following excerpt from Wikipedia, as at 19 December 2015, elaborates Jehovah's Witnesses aversion to the mixing of religions and their self-imposed injunction to remain separate from the world at large:

“Jehovah's Witnesses believe that the Bible condemns the mixing of religions, on the basis that there can only be one truth from God, and, therefore, reject interfaith and ecumenical movements. They believe, that. only their religion represents true Christianity, and that other religions fail to meet all the requirements set by God and will soon be destroyed. Jehovah's Witnesses are taught, that, it is vital to remain 'separate from the world'. The Witnesses literature defines the 'world' as 'the mass of mankind apart from Jehovah's approved servants and teach that it is morally contaminated and ruled by Satan. Witnesses are taught, that, association with 'worldly' people presents a 'danger' to their faith, and are instructed to minimize social contact with non-members to better maintain their own standards of morality.”

Counsel for the applicants places great reliance upon the case of Dzvova v Minister of Education, Sports & Culture and Others 2007 (2) ZLR 196 (S) for the broad submission, that, fundamental rights must invariably be respected.

In that case, the Supreme Court affirmed the general proposition, that, the rules of the school in question could not be applied to derogate from the constitutional rights of its pupils, including their freedom of religion.

However, the ratio decidendi of the Court was not predicated on any constitutional point, but, rather, on the principle that the power to make rules on school discipline and to regulate the admission, punishment, and expulsion of pupils was reposed in the Minister of Education and was therefore outside the remit of the school Head.

Consequently, Dzvova v Minister of Education, Sports & Culture and Others 2007 (2) ZLR 196 (S) does not, in my view, take the matter any further in resolving the issues at hand.

Moreover, it is also distinguishable from the factual situation in casu in that the applicant in that case had not subscribed to any contract of admission entitling the school to interfere with the enjoyment of his child's freedom of conscience and religion.

Another more recent case involving facts similar to those in Dzvova v Minister of Education, Sports & Culture and Others 2007 (2) ZLR 196 (S) is that of Kapasula & Others v The Headmistress Hermann Gmeiner High School N.O. & Others Case No. SC153-10.

The applicants daughters in that matter were allegedly excluded from enrolment to the first respondent's school because their heads had not been shaven or trimmed for religious reasons. This was in apparent contravention of the school's rules and regulations stipulating that all pupils must always be smart with short and neatly combed hair.

The first respondent's opposition, in the High Court, did not addresss the merits of the matter, but merely relied on the preliminary objections that the application was not urgent, and that, in any case, the laws prohibiting discrimination did not apply to the school since it was a private non-governmental institution.

On referral to the Supreme Court, under section 24(2) of the former Constitution, the Court was called upon to determine three issues:

(i) Whether the refusal to admit the children into the school on the basis of their failure to shave or trim their hair was discriminatory on the ground of creed in contravention of section 19(1) of the former Constitution;

(ii) Whether the decision of the school, to refuse admission into the school, was done under the authority of a law as envisaged in section 19(5) of the Constitution; and

(iii) If so, whether such law was reasonably justifiable in a democratic society.

The applicants argued, that, the first respondent's actions were clearly discriminatory and in contravention of section 19 of the Constitution. Furthermore, the school's rules and regulations did not constitute a law and were not made under the authority of any law, i.e. the Education Act or its subsidiary regulations.

The application before the Supreme Court was not opposed by any of the respondents.

In the event, the Court granted an order simply prohibiting the school from refusing the children's admission into the school on the basis of the length of their hair.

There appear to have been no written reasons for the judgment.

As with Dzvova v Minister of Education, Sports & Culture and Others 2007 (2) ZLR 196 (S), Kapasula & Others v The Headmistress Hermann Gmeiner High School N.O. & Others SC153-10 is clearly distinguishable from the situation in casu.

The school's rules and regulations were not authorised under any law within the contemplation of section 19 of the Constitution and were therefore patently ultra vires.

More significantly, the applicants in both cases had not subscribed to any binding contractual undertaking or commitment expressly and unequivocally relinquishing their rights and the rights of their children to abide by or enforce their religious beliefs and convictions without qualification.

Counsel for the respondents, submits, in reliance on a dictum drawn from Wittmann v Deutscher Schulverein Pretoria & Others 1998 (4) SA 423 (T)..., that “freedom of religion does not mean freedom from religion.”

In the instant case, so he argues, the applicants daughters are not being persuaded to change their religion or subscribe to other religious beliefs, but, are simply being required to attend an activity that forms part of the School's curriculum. Thus, the School cannot be said to have infringed any aspect of the right to freedom of religion as enunciated by the Canadian Supreme Court in R v Big M Drug Mart Ltd [1985] 1 SCR 295..., where it was stated that:

“The essence of the concept of freedom of religion is the right to entertain such religious beliefs as a person chooses; the right to declare religious beliefs openly and without fear of hindrance or reprisal; and the right to manifest religious belief by worship and practice or by teaching and dissemination.”

In Christian Education South Africa v Minister of Education 2000 (4) SA 757 (CC)..., freedom of conscience and religion was regarded as being integral to the dignity, growth, and self-worth of the individual:

“The right to believe or not to believe, and to act or not to act, according to his or her beliefs or non-beliefs, is one of the key ingredients of any person's dignity.

Yet, freedom of religion goes beyond protecting the inviolability of the individual conscience.

For many believers, their relationship with God or creation is central to all their activities. It concerns their capacity to relate in an intensely meaningful fashion to their sense of themselves, their community and their universe. For millions in all walks of life, religion provides support and nurture and a framework for individual and social stability and growth. Religious belief has the capacity to awaken concepts of self worth and human dignity which form the cornerstone of human rights. It affects the believer's view of society and founds the distinction between right and wrong. It expresses itself in the affirmation and continuity of powerful traditions that frequently have an ancient character transcending historical epochs and national boundaries.”

The importance of religious diversity in the educational sphere was highlighted by LANGA CJ in MEC for Education: Kwazulu-Natal & Others v Pillay 2008 (1) SA 474 (CC)..., as follows:

“As a general rule, the more learners feel free to express their religions and cultures in school, the closer we will come to the society envisaged in the Constitution. The display of religion and culture in public is not a 'parade of horribles' but a pageant of diversity which will enrich our schools, and, in turn, our country.”

Counsel for the applicants correctly notes, that, an essential component of the right to freedom of religion is the absence of coercion or restraint and that the freedom may be unjustly impaired by measures that compel anyone to act or refrain from acting in a manner contrary to one's religious beliefs.

This absence of compulsion is emphasised even in Wittmann v Deutscher Schulverein Pretoria & Others 1998 (4) SA 423 (T)...,.:

“Of course, the right of freedom of religion (in the case of religious minorities) and the right to freedom of thought, belief, and opinion (in the case of atheists and agnostics) entails that attendance may not be enforced. It must be voluntary. The right of non-attendance is expressly recognised in sections 14(2) of the interim Constitution and 15(2) of the Constitution. Attendance must be 'free and voluntary'. There may be no coercion, neither by rules nor by action, on the part of the authorities.”

Similarly, in MEC for Education: Kwazulu-Natal & Others v Pillay 2008 (1) SA 474 (CC)..., the underlying values of human dignity, equality, and freedom are underscored in the pursuit of religious practices:

“A necessary element of freedom and of dignity of any individual is an 'entitlement to respect for the unique set of ends that the individual pursues'. One of those ends is the voluntary religious and cultural practices in which we participate. That we choose, voluntarily, rather than through a feeling of obligation, only enhances the significance of a practice to our autonomy, our identity, and our dignity.”

These sentiments, against coercive conduct, are also sagaciously captured in R v Big M Drug Mart Ltd [1985] 1 SCR 295...,.:

“Freedom, in a broad sense, embraces both the absence of coercion and constraint, and the right to manifest beliefs and practices. Freedom means, that, subject to such limitations as are necessary to protect public safety, order, health, or morals or the fundamental rights and freedoms of others, no one is to be forced to act in a way contrary to his beliefs or his conscience.

What may appear good and true to a majoritarian religious group, or to the State, acting at their behest, may not, for religious reasons, be imposed upon citizens who take a contrary view. The Charter safeguards religious minorities from the threat of 'the tyranny of the majority.'”

To conclude on this aspect, there can be no doubt that the applicant's children are entitled to hold and practise their religious beliefs, whether within or without their homes, and within the precincts of the School.

It also cannot be doubted that the applicants are entitled, in accordance with their own beliefs, to shape the moral and religious upbringing of their children.

The applicants aver, that, to compel their daughters to attend chapel is contrary to their religious convictions because it entails the mixing of religious practices and attending church services in a building strewn with religious symbols. Therefore, their daughters do not wish to be present in the chapel.

Having regard to the authorities cited above, I take the view, that, the School's policy, of compelling the applicants daughters to attend chapel services, constitutes a prima facie infringement of their religious beliefs.

The practice and observance of their faith demands, that, they exclude themselves from any place of worship that contains any religious symbol, including the crucifix. It also demands that they abstain from any rite or ritual that involves the admixture of any religion other than their own.

By being compelled to enter the School chapel and attend the predominantly Anglican services conducted therein, they are being called upon to renounce, albeit temporarily, certain fundamental tenets of their faith that are designed to enhance their peculiar sense of religious and cultural identity as well as their dignity as self-professed Jehovah's Witnesses.

They can only be required to renounce those tenets if they choose to do so freely and voluntarily, or, in circumstances that are reasonable and justifiable having regard to the public interest or the rights and freedoms of others.

Permissible Limitation of Religious Freedom

The critical question for determination in casu is whether or not the compulsion to attend chapel imposed upon the applicants daughters is constitutionally permissible in the circumstances under consideration.

In terms of section 86(2) of the Constitution, fundamental rights and freedoms may be limited “only in terms of a law of general application and to the extent that the limitation is fair, reasonable, necessary, and justifiable in a democratic society.”

In this respect, counsel for the respondents argues, that, the contract of admission signed by the applicants is the law envisaged in section 86(2) of the Constitution and that the School is entitled to enforce that contract accordingly.

Counsel for the applicants appears to implicitly accept this proposition by his lengthy written submissions interrogating the contract and the School's conduct under the criteria set out in section 86(2) of the Constitution.

The proposition, and its implicit acceptance, are clearly misplaced.

The term “law” is defined in section 332 of the Constitution to mean any provision of the Constitution, an Act of Parliament, or a statutory instrument, or any unwritten law in force in Zimbabwe, including customary law.

A private contractual stipulation is patently not a law as defined, or as generally understood; let alone a law of general application within the meaning of section 86(2) of the Constitution.

Accordingly, I take the view, that, section 86(2) of the Constitution has no direct bearing on the constitutionality or enforceability of the contract of admission and does not take the matter any further in upholding or impeaching the School's policy of compulsory chapel attendance.

As regards the extent to which the freedom of religion may be limited, counsel for the applicants contends, that, although it may be permissible to limit the right to manifest religious or other non-religious beliefs, the right to hold such beliefs is to be considered as being inviolable.

I am unable to discern any justification for this perceived distinction either in section 60 or in section 86 of the Constitution.

In terms of section 60(1) of the Constitution, the freedom of thought, opinion, religion or belief is accorded the same prominence and protection as the freedom to practice, propagate and give expression to one's thought, opinion, religion or belief.

Both are guaranteed in the same breath and without any express or implied differentiation as to the extent of their entitlement to protection.

Equally significantly, section 86(3) of the Constitution specifically enumerates those fundamental rights which “no law may limit” and which “no person may violate”.

These include the rights to life, human dignity, not to be tortured, not to be placed in slavery or servitude, to a fair trial, and to obtain an order of habeas corpus.

The right to freedom of conscience and religion is conspicuously absent from this list of absolutely sacrosanct and inviolable rights. The necessary implication is that freedom of religion is not inviolate or non-derogable.

The provision that I deem most apposite to the resolution of this matter, and which I now turn to consider, is section 86(1) of the Constitution. It declares that “fundamental rights and freedoms..., must be exercised reasonably and with due regard for the rights and freedoms of other persons.”

The analysis of conflicting rights postulated by section 86(1) of the Constitution calls for an essentially unitary approach. The question whether a given right is being exercised reasonably is inextricably intertwined with the question whether it is being exercised with due regard for the rights and freedoms of others.

What is required is the balancing of actually or potentially antagonistic rights, having regard to the nature of those rights, the manner in and the extent to which they impinge upon one another, and the circumstances in which they have been or are to be exercised.

It is trite, that, a contract concluded in contravention of the written or unwritten law, or one that is contrary to public policy, is susceptible to being struck down and rendered of no force or effect.

The doctrine of sanctity of contracts is obviously subject to constitutional limits.

As was observed in Bredenkamp and Others v Standard Bank of South Africa Ltd 2010 (4) SA 468 (SCA)..., every contract or institutional rule must pass constitutional muster.

Again, in Barkhuizen v Napier 2007 (5) SA 323 (CC)..., it was emphasised that:

“All law, including the common law of contract, is now subject to constitutional control. The validity of all laws depends on their consistency with the provisions of the Constitution and the values that underlie our Constitution. The application of the principle pacta sunt servanda is, therefore, subject to constitutional control.”

Counsel for the applicants submits, that, the School's contract of admission contains unlawful and onerous terms and conditions targeted against members of different faiths. They are contrary to public policy, and, therefore, cannot qualify as rules capable of enforcement.

Counsel for the respondents retorts, that, although the School's assemblies in chapel carry religious overtones, no pupil is obliged to participate in any religious activity. All the pupils are simply required to attend and be respectful. No one is victimised for not singing or praying. To this extent, the School is entitled to expect conformity and the applicants are equally entitled to remove their daughters to a school that does not offend their religious principles. This accords with the rights of establishment and maintenance explicitly preserved and conferred upon independent educational institutions by section 75(2) of the Constitution.

It is common cause, that, the religious status of the applicants children was known from the outset and that the previous policy of the School was one of religious tolerance and accommodation.

In this respect, I am unable to accept the submission by counsel for the respondents, that, the applicants acted fraudulently in signing the contract of admission simply to gain the admission of their daughters into the School. This is because the previous policy was highlighted in the School's website which, although out-dated, appears to have been relied upon by the applicants.

In this context, therefore, it cannot be said that their daughters refusal to attend chapel is unreasonable.

In any event, there is nothing in the opposing papers to show, that, the objective of collegiality that the Headmistress wishes to inculcate in the pupils was not previously attained. There is no evidence that the exemption from chapel attendance, that was previously granted, has negatively impacted on the collegiality or discipline of the applicants daughters or the other pupils. Nor is there anything to indicate that compulsory collective chapel attendance is the most appropriate vehicle to entrench collegiality.

This objective might be better achieved through regular attendance at social or sporting events or when all the pupils are gathered together in the dining hall, as happens at the School during the daily lunch break.

As counsel for the applicants correctly submits, coercion, as opposed to persuasion, does not necessarily build collegiality.

On the contrary, to forcibly conjoin persons of different faiths might serve to undermine the dignity of all concerned, the minority as well as the majority. As I have already noted, freedom of conscience and human dignity are inseparably linked and the denial of the former entails the denial of the latter.

As against the foregoing, it is not in dispute, that, the applicants were fully aware, from the time that they signed the admission forms, that their daughters had been accepted as pupils on the following terms and conditions:

(i) That, the School's rules and regulations, as amended from time to time, would be binding and had to be observed;

(ii) That, the School's founding Christian principles would entail adherence to its rules on chapel attendance;

(iii) That, no exemption from the curriculum would be considered on religious grounds; and

(iv) That, any latitude concerning chapel attendance was at the sole discretion of the School Head, whose decision was final and binding.

Thus, the applicants were cognisant of the fact, that, any previous latitude or exemption granted in relation to chapel attendance was subject to being reversed and that they, and their daughters, would be obliged to comply with any such change in policy.

In short, there can be no doubt, that, they willingly consented to the implementation and enforcement of the School's rules and regulations - even if they were altered after the admission of their daughters into the School.

In Wittmann v Deutscher Schulverein Pretoria & Others 1998 (4) SA 423 (T), the facts of which involved the enforcement of an enrolment contract in circumstances which are are very similar to those herein, Van DIJKHORST J..., opined as follows in relation to parochial community schools:

“In respect of these educational institutions, the fundamental freedom of religion of 'outsiders' is limited to the freedom of non-joinder. Outsiders cannot join on their own terms, and, once they have joined, cannot impose their own terms.

This indicates, that, the waiver of the freedom of religion (for the limited duration of one's membership and within the limits of the institution's constitution) is not contrary to the provisions of the Constitution in the case of private educational institutions. Waiver per se of that freedom is therefore not unconstitutional.”

I note that this decision was premised on specific provisions of the South African Constitution which are not identical to the corresponding provisions in our Constitution, and that, as far as I am aware, it has not been followed or applied by the Constitutional Court of South Africa.

I also note, with the utmost respect, that, the sentiments expressed by the learned judge might be criticised as being somewhat exclusivist, having been pronounced in the peculiar post-apartheid milieu of that country.

Nevertheless, I take them to be fairly instructive in the broader context of delineating the outer contours of religious freedom.

Another case of persuasive value is the decision of the European Court of Human Rights, apropos the European Convention on Human Rights, in Valsamis v Greece [1996] 24 EHRR 294, arising from facts which are not dissimilar to those in casu.

The applicants, in that case, were Jehovah's Witnesses. Pacifism was a fundamental tenet of their religion which forbade any conduct or practice associated with war or violence - even indirectly.

Following a written request, their daughter was exempted from attendance at religious education lessons and Orthodox Mass. However, in common with other pupils at her school, she was asked to take part in the celebration of the National Day, a day when the outbreak of war between Greece and Fascist Italy was commemorated with school and military parades. She requested the headmaster that she be excused from the celebration on religious grounds, in particular, on the basis of her pacifist convictions.

Her request was refused, but, she nevertheless did not participate in the school parade.

She was punished for her failure to attend with one day's suspension from school; a decision taken by the headmaster in accordance with a circular issued by the Ministry of Education and Religious Affairs.

She, and her parents, argued, that, they were the victims of a breach of the right to education under Article 2 of Protocol No.1, which requires the State to respect the right of parents to ensure that the education and teaching received by their children is “in conformity with their own religious and philosophical convictions.” They also complained that their “right to freedom of thought, conscience and religion” guaranteed by Article 9 of the Convention had been breached.

Their complaints, in relation to these two provisions, were dismissed by a majority decision of seven votes to two.

The dissenting judges took a robust view of the rights allegedly infringed. In their opinion, Mr and Mrs Valsamis's perception of the symbolism of the school parade and its religious and philosophical connotations had to be accepted because it was not obviously unfounded and unreasonable. Similarly, Miss Valsamis's statement, that, the parade she did not participate in had a character and symbolism that were clearly contrary to her religious beliefs also had to be accepted, and, there was no basis for seeing her participation in this parade as necessary in a democratic society.

The minority accordingly found, that, both Article 2 of Protocol No.1 and Article 9 of the Convention had been violated.

As regards the right to education and its corollary of parental convictions, the majority judges were of the opinion…, that:

“Such commemorations of national events, serve, in their way, both pacifist objectives and the national interest. The presence of military representatives at some of the parades which take place in Greece, on the day in question, does not in itself alter the nature of the parades.

Furthermore, the obligation on the pupil does not deprive her parents of their right 'to enlighten and advise their children, to exercise with regard to their children natural parental functions as educators, or to guide their children on a path in line with the parents own religious or philosophical convictions'….,.

It is not for the Court to rule on the expediency of other educational methods which, in the applicants view, would be better suited to the aim of perpetuating historical memory among the younger generation.….

In conclusion, there has not been a breach of Article 2 of Protocol No.1 (P1-2).”

On the freedom of thought, conscience, and religion, the majority adopted the earlier decision of the Commission and opined…,:

“The Commission considered that Article 9 (art. 9) did not confer a right to exemption from disciplinary rules which applied generally and in a neutral manner, and that, in the instant case, there had been no interference with the applicant's right to freedom to manifest her religion or belief.

The Court notes, at the outset, that, Miss Valsamis was exempted from religious education and the Orthodox Mass, as she had requested, on the grounds of her own religious beliefs. It has already held, in paragraphs 31-33 above, that, the obligation to take part in the school parade was not such as to offend her parents religious convictions. The impugned measure therefore did not amount to an interference with her right to freedom of religion either….,.

There has consequently not been a breach of Article 9 of the Convention (art. 9).”

Disposition

Before balancing the respective rights and freedoms of the parties, it is necessary to consider the waiver of constitutionally entrenched rights.

Counsel for the applicants argues, that, it is possible to waive certain rights, depending upon the right in question; for example, the right to trade which can be subjected to restraint by agreement. However, the right to entertain and manifest religious beliefs cannot be waived because it is characterised by the absence of compulsion or coercion, including indirect control. Accordingly, clauses 4 and 5 of the School's admission form must be regarded as being contra bonos mores and therefore unlawful.

Counsel for the respondents accepts, that, public policy enables the scrutiny of private contracts in order to ensure their constitutionality. Nevertheless, it is possible to contractually waive one's religious precepts in order to achieve a specific social or material purpose - as the applicants have done by signing the contentious form of admission.

I am inclined to agree.

As I have indicated earlier, I do not perceive the right to freedom of religion as being absolute or non-derogable. On that basis, I can think of no objection to its being voluntarily waived in circumstances where such waiver does not entail the fundamental eradication of one's religious or conscientious beliefs.

The applicants cannot assert that their faith condemns the mixing of religious beliefs and practices, and, at the same time, enrol their daughters at a school with an Anglican ethos and practices.

The contract of admission that they signed categorically states, that, any latitude in chapel attendance granted to the pupils would not invariably exempt their attendance in future and that the decision of the Head in that regard would be final.

In effect, the applicants chose to bend the tenets of their faith to a limit determined by themselves so as to gain admission to the School for their daughters. Once that limit has been exceeded, they now invoke the right to religious freedom in order to demand that the School should conform to their religious dictates.

In other words, the applicants and their daughters, are prepared to remain “separate from a contaminated world” only to the extent that they deem it expedient to do so. To use a well-worn adage, they cannot approbate and simultaneously reprobate the School and its avowed ethos.

As I have already observed, freedom of religion is not an absolute right enforceable erga omnes, at all times and in every circumstance. It cannot override and must conform with the law of the land to the extent that such law is reasonably justifiable in a democratic society. Moreover, its exercise cannot justify interference with the rights of others or countenance any harm to public interests.

Thus, in the instant case, it is necessary to balance the religious freedom of the applicants, and their daughters, within their chosen educational environment, as against the rights and interests of the School and its institutional values as propounded by its founders.

The ethical foundation of freedom of conscience, as guaranteed by section 19 of the former Constitution, was lucidly expounded by GUBBAY CJ in In re Chikweche 1995 (1) ZLR 235 (SC)…,:

“…,. I am of the view, that, the reference in section 19(1), to freedom of conscience, is intended to encompass and protect systems of belief which are not centred on a deity or religiously motivated, but are founded on personal morality.”

Having regard to this ethical dimension, it seems to me, that, every religion, be it Judaeo, Christian, Muslim, Buddhist or Hindu, is essentially rooted in the precepts of morality. The forms of moral expression and observance adopted by each religion may vary according to time, place, culture, and tradition. But, the transcendent values that animate every religion are universal. They are embedded in the quintessential humanity of its protagonists.

Apart from each individual's personal relationship with his or her own deity, there is the collective bond of human commonality that informs and guides his or her relationship with others. In a libertarian society, what this bond demands is mutual respect and tolerance between individuals, social groups, and communities, with the ultimate objective of attaining a truly pluralistic polity.

Reverting to the question at hand, what is envisaged by section 86(1) of the Constitution is precisely, that, mutuality of rights and freedoms, to be enjoyed and exercised in a manner that is reasonably justifiable in a democratic society.

In the specific context of freedom of religion, what this entails is that the scope and extent of one's spiritual rights must be measured within the temporal environment in which they operate.

The position of the applicants and their daughters, in casu, is no different.

They have willingly chosen to join and participate in the communal ethos of the School, and, furthermore, to abide by whatever its broader curriculum implies. The principle of mutual respect and tolerance requires that they accommodate the institutional rights and interests of the School in pursuing its perceived objectives, so long as those objectives are not pursued unreasonably, and equally importantly, so long as they do not radically undermine the religious beliefs and convictions of any of its pupils.

In other words, the School's policy should not transmute into some tyranny of the majority, imposed without due regard for the rights and sensibilities of the minority.

From a purely neutral and secular standpoint, I do not think that attendance in chapel, for short stints, three times a week, would necessarily negate or deracinate the fundamental beliefs of the applicants daughters.

They are not being called upon to engage in prayer or participate in the Anglican rituals conducted in chapel. They are simply required to attend chapel and remain dispassionately respectful during its proceedings; not unlike the participants at an athletic event or diplomatic function, where everyone present is expected to stand in silence whenever the national anthem of any given country is played.

Indeed, it is perfectly possible, if they are prepared to open their hearts and minds in the true spirit of religious tolerance, that they might even derive some benefit from quietly observing the rites and rituals of another religion, without having to surrender their own convictions and succumb to the specific beliefs of that religion.

In the event, after considerable vacillation, and, not without some reservation, I have come to the conclusion, on the particular facts of this case, that, the applicants are not entitled to the declaratory and consequential relief that they crave.

What this means is that the School is entitled to enforce its policy of compulsory chapel attendance in respect of the applicants daughters.

However, in the event that they refuse to abide by this policy, they should not be removed from or required to leave the School:

(i) Firstly, unless the School takes the fully considered view that it is entirely necessary to do so; and

(ii) Secondly, until they are afforded a reasonable period of time to select and relocate to another school, having regard to their individual educational needs and circumstances....,.

In the result, it is ordered as follows:

1. The application be and is hereby dismissed with no order as to costs.

2. In the event that the first and second respondents take the decision to expel the applicants daughters from the School, they shall be afforded a reasonable period of time to select and relocate to another school.

Appealed
SC15-22 : UNKI MINE (PRIVATE) LIMITED vs ZIMBABWE REVENUE AUTHORITY
Ruled By: GUVAVA JA, UCHENA JA and MAKONI JA

This is an appeal against the whole judgment of the Fiscal Appeal Court HH20-20 dated 8 January 2020. The court a quo dismissed the appellant's appeal against the decision of the Commissioner in respect of assessed tax and confirmed its amended income assessment made by the Commissioner on 2 September 2015.

The appellant is a company, with limited liability, duly incorporated in terms of the laws of Zimbabwe. It carries on the business of mining platinum in an area known as Middleridge Claims in Zimbabwe.

The appellant and a related company, known as Southridge Limited, are subsidiaries of a registered company known as AmZim Holdings Limited Group ('Amzim'). Amzim is, in turn, a member of the Anglo American Group ('Amhold').

Anglo American Group (Amhold) is not a trading or operating entity and is also not a Zimbabwean company. It merely holds all the shares in the appellant.

The respondent is a statutory body established in terms of section 3 of the Zimbabwe Revenue Authority Act [Chapter 23:11]. Its mandate is, amongst others, to assess and collect revenue on behalf of Government.

The appellant is the holder of a Special Mining Lease issued to it in March 2008 by the Government of Zimbabwe ('GOZ') in respect of the mining of platinum in an area known as Middleridge Claims. The appellant and Southridge Limited, for the purpose of facilitating the participation of other players in the platinum industry, ceded platinum claims (Bougai and Kironde) to the Government of Zimbabwe (GOZ) in an agreement signed between the relevant parties on 25 March 2008 (the 'cession agreement').

On 1 November 2012, the Government of Zimbabwe (GOZ), the National Indigenisation and Economic Empowerment Fund, Anglo American Platinum Limited, AmZim Holdings Limited Group (Amzim), Southridge Limited and the appellant entered into an agreement to implement the indigenisation implementation plan and indigenisation transaction.

The agreement also provided for the 51 per cent equity ownership in Anglo American Group (Amhold) being issued to Indigenous Entities.

The founding document of the agreement was termed the Heads of Agreement ('Heads of Agreement'). The Heads of Agreement are part of an agreement in fulfilment of the indigenisation laws of Zimbabwe and was consequent upon the cessation agreement signed on 25 March 2008.

In 2007, the Government of Zimbabwe (GOZ) enacted the Indigenisation and Economic Empowerment Act No.14 of 2007 [Chapter 14:33] ('the Indigenisation and Economic Empowerment Act'). The Act came into operation on 17 April 2008.

On 23 November 2011, a Deed of Trust for the Tongogara Rural District Community Share Ownership Trust ('the Trust') was founded. The founders of the Trust were Saviour Kasukuwere, the then Minister of Youth Development, Indigenisation and Empowerment representing the Government of Zimbabwe (GOZ), July Ndlovu duly authorised to represent Anglo American Group (Amhold), Collin Chibata duly authorised to represent the appellant, Gilbert Dhaidhai, Christmas Ndanga, Toendepi Banga, Walter Nemasasi, and James Pasipano Maposa as founding trustees.

The Trust Deed was to be read together with the Indigenisation Implementation Plan signed on 12 August 2012.

On 15 April 2010, Anglo American Group (Amhold) submitted its initial indigenization implementation plan under the Indigenisation and Economic Empowerment (General) Regulations, 2010 Statutory Instrument 21 of 2010 ('the Regulations'), which also covered its local subsidiaries, to the Minister of Youth Development, Indigenisation and Empowerment for approval.

The indigenisation implementation plan was revised, initially on 7 June 2012, and finally approved on 10 August 2012.

In terms of the final approved indigenisation implementation plan, Anglo American Group (Amhold) committed to donate US$10 million as seed capital to the Tongogara Rural District Community Share Ownership Trust through the appellant, its subsidiary.

The actual payment of the US$10 million donation was thus made by the appellant.

On 30 May 2011, the appellant submitted its self-assessment for the tax year ending 31 December 2011 wherein it claimed, inter alia, the US$10 million as a deduction against its taxable income in terms of section 15 of the Income Tax Act [Chapter 23:06] (the 'Income Tax Act') as read with paragraph 4(1)(a) of the Twenty-Second Schedule to the Income Tax Act, thereby reducing its taxable income by that amount.

The assessment by the appellant showed an assessed loss of US$41,652,575.

The total expenses, excluding interest and tax, were in the sum of US$30,254,951 which included the sum of US$10 million donation categorised in its financial statements for the year ended 31 December 2011 as “Contribution to Community Share Trust”.

The respondent then carried out an investigation on the tax compliance of the appellant on 12 November 2012 for the period January 2009 to December 2012.

On 2 September 2015, the respondent issued to the appellant an amended Manual Notice of Assessment for income tax (Assessment Number 1/5114) for the year ending 31 December 2011, in which, inter alia, the respondent disallowed as a deduction the said sum of US$10 million donation.

A dispute arose between the appellant and the respondent as both parties disagreed over the nature of the appellant's payment of the US$10 million donation.

The appellant filed a notice of objection, on 11 November 2015, to the amended notice of assessment dated 2 September 2015.

In making the objection, the appellant argued that it had made the US$10 million payment in compliance with the Indigenisation and Economic Empowerment Act and the Indigenisation and Economic Empowerment Regulations.

The appellant alleged that it had an indigenisation implementation plan approved by the Minister of Youth Development, Indigenisation and Empowerment in terms of which it was obliged to make a payment of US$10 million to the Tongogara Rural District Community Share Ownership Trust. Consequently, the appellant contended that the payment was of a revenue nature, as it was incurred for the purpose of trade or in the production of income.

On 13 April 2016, the respondent disallowed the objection and reasoned that the US$10 million payment was not made wholly and exclusively for the purposes of the special mining lease operations but largely for obtaining approval of the indigenisation implementation plan. It also determined that the expenditure of the US$10 million was of a capital nature.

Aggrieved by the decision of the respondent, the appellant lodged an appeal with the court a quo on 11 July 2016.

The parties filed a Statement of Agreed Facts on 30 November 2017.

The parties were in agreement that the appellant paid the sum of US$10 million to the Tongogara Rural District Community Share Ownership Trust. The parties were also agreed that the appellant contended that the payment was made in part fulfilment of its legal obligation to indigenise in terms of the Indigenisation and Economic Empowerment Act, and, as such, the payment was a deduction against its taxable income in terms of section 15 of the Income Tax Act. It was agreed that the respondent, on the other hand, contended that the appellant did not have any legal obligation to pay the money to the Tongogara Rural District Community Share Ownership Trust, and, as such, the payment was of a capital and not revenue nature.

On 20 March 2017, a Pre-Appeal Meeting was held and a pre-appeal minute was agreed between the parties wherein the issue for determination was stated as follows:

“(a) Whether the expenditure (payment of US$10 million to the Tongogara Rural District Community Share Ownership Scheme made in 2011) claimed as a deduction is allowable as such.”

On 8 January 2020, the court a quo, in determining the appeal, found that the donation of US$10 million was not designed to establish, improve, or add to the income earning capacity nor did it generate any income for the appellant hence it was not of a revenue nature but capital. The court a quo agreed with the respondent, that, the disbursed US$10 million was designed to preserve the appellant's income-earning structure hence it was expenditure of a capital nature and not of a revenue nature.

The court a quo also dismissed the appellant's contention, that, the US$10 million was paid in compliance with the indigenisation implementation laws of Zimbabwe and on the provisions of the indigenisation implementation plan.

The court a quo found, that, the disbursement was a donation which had been made by the appellant on behalf of its holding company, Anglo American Group (Amhold), which was a separate legal entity, and, as such, the appellant could not claim a deduction of the same.

The court further found that the provisions of the Indigenisation Act, and its Regulations, did not require the appellant to make any donation in order to be indigenous compliant as it was a Zimbabwean company.

In the result, the court made the following order:

“1. The appeal be and is hereby is (sic) dismissed in its entirety.

2. The amended assessment issued by the Commissioner, on 2 September 2015, be and is hereby confirmed.

3. Each party shall bear its own costs.”

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

“1. The learned Judge erred at law in finding, in the main, that the payment of US$10 million to a Community Share Ownership Trust was a donation to such trust. He ought to have found that the payment was made to satisfy Appellant's legal obligation to comply with Zimbabwe's indigenous laws.

2. The learned Judge erred at law in making the following incidental/ancillary findings against Appellant:

(a) The Appellant was not obliged to comply with indigenisation despite it being a business as defined and obliged to be indigenous compliant in terms of the law.

(b) Having earlier found, that, the Appellant's parent company had submitted an indigenisation plan for itself and its subsidiaries (including Appellant), later contradicted himself in finding that:

'Appellant could not rely on an indigenisation implementation plan that did not relate to it to claim the deduction in question.'

3. The learned Judge erred at law in finding that the payment of US$10 million to the Trust was expenditure of a capital and not of a revenue nature.”

The appellant's grounds of appeal, in my view, raise the following issues for determination:

1. Whether or not the appellant was obliged, at law, to donate the sum of US$10 million to the Community Share Ownership Trust?

2. Whether or not the court a quo erred in finding that the payment of US$10 million to the Tongogara Rural District Community Share Ownership Trust was expenditure of a capital and not of a revenue nature?

SUBMISSIONS BEFORE THIS COURT

Counsel for the appellant submitted, that, the US$10 million donated by the appellant to the Tongogara Rural District Community Share Ownership Trust was not a donation in the strict sense considering the context in which the payment was made. He insisted that the appellant was obligated to make the donation in order to be compliant with the requirement for indigenisation in accordance with the indigenisation laws of Zimbabwe.

Counsel further submitted, that, the payment was a deductible expenditure of a revenue nature because it was for licensing purposes in order for the appellant to trade. He contended, that, had the appellant not made the donation, its mining license would have been revoked.

He thus urged the Court to allow the appeal.

Per contra, counsel for the respondent submitted, that, the donation was a donation proper which is not deductible in terms of part 4(a) of the Twenty Second Schedule of the Income Tax Act.

He contended, that, the donation did not benefit the appellant but was designed to benefit Anglo American Group (Amhold), its parent company, a third party.

In any event, it was his contention that there was no legal obligation on the appellant to make the donation or to be compliant with the indigenisation laws of Zimbabwe.

Counsel explained, that, no consequence would have befallen the appellant had it not made the donation, and, even if there would have been any such consequence, it would have befallen the parent company, Anglo American Group (Amhold), which had the obligation to indigenise and not the appellant.

He also submitted, that, the amendment to the Income Tax Act allowing deductions of payments made to Community Share Ownership Trusts was only made on 1 January 2013, hence, the appellant could not claim a deduction in its tax assessment report compiled in 2011 in relation to the donation as the amendment did not apply retrospectively.

ANALYSIS

Whether or not the appellant was obliged, at law, to donate the sum of US$10 million to the Community Share Ownership Trust

The appellant's contention is that the payment of US$10 million to Tongogara Rural District Community Share Ownership Trust was made in compliance with the indigenisation laws of Zimbabwe to enable it to continue operating its special lease mining operations.

Further, that the payment was for purposes of trade or in production of income and not of a capital nature.

On the other hand, the respondent maintained that the payment of US$10 million by the appellant was strictly a donation as there was no legal obligation on it to make the donation.

Further, that the legal obligation to be compliant with the indigenisation laws was on the parent company, Anglo American Group (Amhold), and not the appellant.

It was also submitted, for the respondent, that, the payment could only have been of a capital nature as it was not paid for the purpose of trade or production of income.

The resolution of this appeal, in my view, revolves upon the determination of whether or not the appellant had a legal obligation to make the payment of US$10 million. In the event that it did, then, the court must then determine whether the payment was of capital or revenue in nature.

It should be borne in mind, from the onset, that, the relationship between the Government of Zimbabwe (GOZ), AmZim Holdings Limited Group (Amzim) and its subsidiary companies has always been regulated by different laws and agreements.

The Heads of Agreement were signed between the Government of Zimbabwe (GOZ), Anglo American Platinum Limited, Amzim Holdings Limited, Southridge Limited, and the appellant.

Clause 1.4 of the agreement provides for Amzim Holdings Limited, which is a member of the Anglo American Group ('Amhold'). The appellant and Southridge Limited are in turn members of the Anglo American Group.

Clause 2.15 of the agreement further defines 'Amhold Group' means “Amhold and all its direct and indirect subsidiaries including Unki Mine…,.”

Clause 4.2 of the agreement provides for the nature of the indigenisation transaction as follows:

“…,. 51% equity ownership of Amhold shall be issued to the indigenous entities, utilising a notional vendor funded mechanism to be facilitated by Amhold. The implementation of the Indigenisation Transaction will result in the Amhold Group being in compliance with the indigenisation Requirements for the duration of the Indigenisation Compliance Period.”

Clause 9.2.1 of the agreement is also worth quoting as it provides as follows:

“…, following the implementation of the Indigenisation Implementation Plan, through the Indigenisation Transaction, each member of the Amhold Group shall qualify as, and shall for the duration of the Indigenious Compliance Period continue to qualify as, an Indigenous Entity in compliance with the Indigenous Act…,.”…,.

An Indigenous Entity is further defined in the agreement, under clause 2.1.49, as follows:

“means a company in which issued shares are owned, directly or indirectly, by Indigenous Zimbabweans in the percentage proportion no less than that prescribed from time to time under the Indigenisation Act as the 'minimum indigenisation and empowerment quota'…,.”

Lastly, clause 3.4 of the agreement provides for the indigenisation implementation plan which was submitted by Anglo American Group (Amhold) and approved by the Minister of Youth Development, Indigenisation and Empowerment in accordance with the Indigenisation and Economic Empowerment Act.

The collective effect of the provisions of the Heads of Agreement show that Anglo American Group (Amhold) is the parent company which has subsidiary companies, being the appellant and Southridge Limited.

Further, it can be deduced that it is the parent company which submitted an indigenisation implementation plan which was approved by the Minister.

It should also be noted, that, it was an agreed provision between the parties to the agreement that the parent company was obligated to issue 51 per cent of its shares to indigenous entities in compliance with the Indigenization and Economic Empowerment Act.

The Heads of Agreement further make it clear, that, during the implementation of the indigenisation plan, the subsidiary companies of Anglo American Group (Amhold) were to be treated as indigenous companies owned by indigenous Zimbabweans.

It is thus apparent that the indigenisation laws and agreements placed an obligation on Anglo American Group (Amhold) to issue 51 per cent of its shares in order to comply with the indigenisation laws of Zimbabwe.

It was the parent company that was given that legal mandate as it is a foreign entity and not its subsidiary companies.

It thus follows, that, the Heads of Agreement and indigenous implementation plan were made for and on behalf of Anglo American Group (Amhold) so that it is able to fulfil its legal obligations, as a foreign company.

Having arrived at this conclusion, the Court must determine whether or not the appellant, as a subsidiary of Anglo American Group (Amhold), had a legal obligation to make the payment of US$10 million.

Clause 5.3 of the Heads of Agreement provide as follows;

“5.3 It is hereby recorded, that, as part of the indigenisation implementation plan, Amhold has donated US$10,000,000 to the Community Trust for purposes, inter alia, funding community projects.”

The Heads of Agreement show that the US$10 million was donated by Anglo American Group (Amhold), the holding company of the appellant, to the Tongogara Rural District Community Share Ownership Trust for purposes of funding community projects.

It is quite apparent from the record that Anglo American Group (Amhold) is a separate company from its subsidiary companies. Consequently, the appellant could not claim a deduction, based on the donation, because it was not incurred by it but by the holding company.

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

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 ...

SC59-22 : DELTA BEVERAGES (PRIVATE) LIMITED vs BLAKEY INVESTMENTS (PRIVATE) LIMITED
Ruled By: BHUNU JA, MAKONI JA and CHITAKUNYE AJA

It is trite that when interpreting a contract the courts must give effect to the intention of the parties.In Joubert v Enslin 1910 AD 6, INNES J stated as follows:"The golden rule applicable to the interpretation of all contracts is to ascertain and to follow the intention of the parties."When ...

SC59-22 : DELTA BEVERAGES (PRIVATE) LIMITED vs BLAKEY INVESTMENTS (PRIVATE) LIMITED
Ruled By: BHUNU JA, MAKONI JA and CHITAKUNYE AJA

This is an appeal against the whole judgment of the High Court (“the court a quo”) handed down on 1 December 2020 dismissing the appellant's application for a declaratur....,.FACTUAL BACKGROUNDThe appellant is a company duly incorporated in Zimbabwe whilst the respondent is a foreign company duly incorporated in South Africa.It ...

This is an appeal against the whole judgment of the High Court (“the court a quo”) handed down on 1 December 2020 dismissing the appellant's application for a declaratur....,.

FACTUAL BACKGROUND

The appellant is a company duly incorporated in Zimbabwe whilst the respondent is a foreign company duly incorporated in South Africa.

It is common cause that the appellant and the respondent have been doing business with each other for some time - albeit they are not agreed as to when they started doing business together.

The appellant alleged that it is since 2012 whilst the respondent contended that it is since 2007.

Nothing much turns on the date of commencement of their relationship. What is important to note is the fact that they have been in this relationship for many years.

On 11 June 2020, the appellant filed a court application for a declaratur before the court a quo in terms of section 14 of the High Court Act [Chapter 7:06]. It sought that the written Supply Agreement between the parties, dated 16 March 2018, be declared void, invalid, and of no legal effect on the basis that it was not its act and it was entered into in contravention of the laws of Zimbabwe.

The appellant alleged that the respondent had been its supplier in respect of plastic products since 2012 on an ad hoc basis. The appellant's Supply Chain Director, Cynthia Malaba (Cynthia), had signed an agreement with the respondent on 16 March 2018 when she had no authority to sign on its behalf.

It was the appellant's case that its senior officers did not know of the existence of the agreement up till an internal audit was conducted in July 2019.

As such, until the discovery of the agreement, the appellant operated under the belief that the respondent was being contracted on an ad hoc basis like other suppliers.

The appellant averred, that, the agreement had not undergone the standard review and approval processes in terms of the appellant's procurement processes. It further alleged that the respondent had previously made attempts to procure the conclusion of a supply agreement with the appellant by bribing the appellant's employees but it had failed.

The appellant averred, that, after discovering the agreement, it engaged the respondent and indicated that it did not recognise the validity of the contract for the following reasons:

(i) The contract committed the appellant to order a stipulated minimum quantity of goods from the respondent while the respondent was empowered to unilaterally increase the prices merely by giving the appellant 30 days notice.

(ii) The contract was in direct contravention of the Competition Act [Chapter 14:28] (Competition Act) in that it gave the respondent exclusive rights to supply the appellant with the products thus shutting out other competitors. It thus contained an unfair business practice.

(iii) The contract had not been approved in terms of the Exchange Control Regulations 1996 yet it required the appellant to pay the respondent in South Africa.

(iv) The contract gave the respondent the sole prerogative to terminate the agreement which right the appellant was denied and it compelled the appellant to accept defective goods from the respondent.

(v) The contract provided that the applicable law was South African law and yet the appellant is domiciled in Zimbabwe and bound by Zimbabwean laws.

The respondent opposed the application and contended that the contract was valid.

It averred that the relationship between the parties had commenced in 2007. Since that year, the appellant would place orders for flexible packaging materials with the respondent on an ad hoc basis. The respondent contended, that, the demand for the materials had increased, and, in 2018, its representatives met with the appellant's representatives to negotiate terms of a written agreement.

This resulted in the contract in question being entered into between the respondent and the appellant, represented by Cynthia Malaba, who held herself out as a lawfully appointed representative clothed with the authority to sign the agreement on the appellant's behalf.

The respondent also contended, that, there had been a similar prior written agreement between the parties wherein the said Cynthia Malaba had signed for the appellant and no issues of lack of authority or exchange control approval or breach of Zimbabwean laws had been raised, and, as such, the appellant could not be allowed to avoid its contractual obligations by claiming that the contract was unlawful and therefore invalid.

The respondent further averred, that, the agreement was to be construed under South African law as chosen by the parties, and, as such, it was valid.

It also asserted, that, the agreement provided for amendments in the case of difficulties and it had invited the appellant to discuss any issues of concern but the appellant had been unwilling to do so, and, as such, it could not then seek to invalidate the contract.

The respondent denied that the contract was unfair and oppressive and averred that both parties had performed their obligations under the agreement pursuant to its conclusion, and, as such, the appellant was estopped from contending that the agreement was invalid.

It thus sought the dismissal of the application with costs.

THE COURT A QUO'S FINDINGS

In its decision, the court a quo held, inter alia, that unless it was demonstrated that there was something in the foreign law which makes it inapplicable, it can be applied in our courts. The court proceeded to find, that, there was nothing submitted by the appellant which non-suited the application of South African law. It therefore held that the parties elected law in the agreement had to be applied.

The court a quo further found that there existed an agreement between the parties based on the fact that -

(i) Senior officials of the appellant knew about the existence of the agreement;

(ii) Cynthia Malaba, who had signed the agreement on behalf of the appellant, was a Supply Chain Director; and

(iii) The agreement she had signed was a supply agreement which served to prove that her job description gave her the authority to act on behalf of the appellant.

The court a quo held that Cynthia Malaba had ostensible authority and the appellant is estopped from denying this. The assertion by the appellant, that its internal process had not been followed, should not prejudice the respondent hence the application of the Turquand Rule.

In relation to the averments by the appellant that some clauses in the agreement infringed various statutes, the court a quo held, inter alia, that -

(i) There was no breach of section 43 of the Competition Act. It stated that the 'exclusivity' clause makes provision for minimum quantities that the appellant should order, beyond which it was at liberty to order from any other supplier. It further noted, that, from the evidence before it, there was precedent for operating outside the realm of exclusivity.

It also noted that clause 22.7 of the agreement permitted any offending clause, or part thereof, to be severed from the contract or to be construed in a manner that was in conformity with the law.

In casu, there was nothing stopping the parties from removing anything which suggested exclusivity.

(ii) On contravening section 11 of the Exchange Control Regulations 1996, the court a quo held that the contract did not breach that section. The section proscribes payment or incurring any obligation to make payment outside Zimbabwe without first obtaining authority from an Exchange Control Authority.

In this case, the clause on payment did not state that the payment was to be made into an account outside the country but stated that payment was to be made into an account to be nominated by the respondent.

(iii) On the question of The Control of Goods (Open General Import Licence) (Notice) RGN 766 of 1974 as amended by The Control of Goods (Open General Import Licence) (Amendment) Notice, Statutory Instrument No.122 of 2017, SI122 of 2017, the court a quo did not find in favour of the appellant. It, in effect, found that there was no breach as no evidence of such breach was proffered.

In essence, the court a quo held that there were no breaches of local statutes. Any complaints on perceived infringements of local statutes and regulations were capable of being addressed in terms of the provisions in the agreement which provided for the parties to seek amendments, including severance of any offending clause.

The court a quo noted, that, the respondent had invited the appellant to discuss the clauses alleged to be offensive but the appellant had been unresponsive.

The court a quo further found that no substantiated evidence had been submitted to prove the allegation of commercial bribery.

In the result, the court a quo concluded that the agreement was valid and there was no basis upon which it could nullify it. It therefore held, that, the appellant had failed to establish a basis upon which the court could grant the declaratory order sought and proceeded to dismiss the application with costs on the legal practitioner and client scale.

Aggrieved by the decision of the court a quo, the appellant noted the present appeal.

The appellant raised nine (9) grounds of appeal. The key issues arising from the grounds of appeal are:

(i) Whether or not the court a quo erred in finding that Cynthia Malaba had ostensible authority to enter into a valid agreement on behalf of the appellant thus making the contract binding on the appellant.

(ii) Whether the court a quo did not pronounce itself on the alleged breach of Zimbabwean laws and whether the contract is void for being contrary to such laws.

(iii) Whether there was justification for costs on a punitive scale.

BEFORE THIS COURT

In motivating the appeal, counsel for the appellant submitted, that, the pith of the appellant's case is that, firstly, the agreement is not of its act and it is therefore void ab initio. He submitted that the agreement was a product of the respondent's fraud and commercial bribery which was concluded with the appellant's junior employee who did not have the requisite authority to do so.

He thus submitted that the court a quo erred and misdirected itself by failing to make a determination that the contract was void on the basis that it was not of the appellant's making and there was lack of compliance with the appellant's internal processes, including Board resolutions, which gave Cynthia Malaba authority to enter into same.

In the second rung, counsel submitted that if this Court was to find that it is its act, the contract is void for breach of Zimbabwean laws. In this regard, he submitted that the contract was a nullity since it contained provisions which contravened -

(a) Section 43 of the Competition Act [Chapter 14:28] which prohibits unfair business practice, including exclusivity;

(b) Section 11 of the Exchange Control Regulations1996 which prohibits the making of any payment outside Zimbabwe or incurring of any obligation to make payment outside Zimbabwe without first obtaining authority or licence from an exchange control authority; and

(c) The Control of Goods (Open General Import Licence) (Notice) RGN 766 of 1974 as amended by S.I.122 of 2017 which requires an importer in the position of the appellant to obtain an import permit or licence to import goods from outside the country before it can do so.

He thus insisted that the court a quo erred and misdirected itself in holding that the contract was valid.

Counsel also submitted that the court a quo had failed to determine all the issues which the appellant had raised.

He argued that the court a quo had failed to pronounce its findings on whether the agreement was in direct contravention of the Competition Act, the Exchange Control Regulations 1996 and the Control of Goods (Open General Import Licence) RGN 766/74 as amended by S.I.122/2017.

Counsel argued, that, the court had an obligation to apply its own law and the onus was on the respondent to prove that South African law was applicable in this case.

He thus sought to have the appeal allowed and that an order be granted declaring the contract void and invalid.

Per contra, counsel for the respondent submitted, that, there was no misdirection on the part of the court a quo in holding that the contract was binding on the appellant on the basis of ostensible authority.

The finding that Cynthia Malaba had ostensible authority cannot be said to be in defiance of logic or contrary to the evidence placed before the court. Such a finding was in fact in tandem with the evidence placed before the court a quo.

Counsel also submitted, that, the court a quo correctly found that the applicable law, in terms of the parties agreement, was South African law. He submitted that the parties had, out of their free choice, agreed that the contract be governed by the law of South Africa.

As such, the appellant had the onus to prove that Zimbabwean law was applicable rather than the law chosen by the parties and yet it had omitted to do so.

He further submitted, that, the appellant's stance on the choice of law made by the parties would render the entire concept of choice of law and the freedom of contract nugatory and will severely hinder international trade between private corporations.

Counsel further argued, that, the appellant could not seek to benefit from its own wrong doing since it had benefited from the agreement by taking delivery of the goods it was now seeking to be absolved from paying for.

He further submitted, that, the severability clause allowed the parties to sever any offensive terms which therefore meant that there was no need to nullify the whole agreement.

He thus sought to have the appeal dismissed with costs.

APPLICATION OF THE LAW TO THE FACTS

The next issue is whether the court a quo did not pronounce itself on the alleged breach of Zimbabwean laws and whether the contract is void for being contrary to such laws.

Counsel for the appellant's submission that the court a quo did not make a determination on breaches of Zimbabwean laws was without merit.

As is evident from the findings of the court a quo alluded to above, the court pronounced itself on each of the alleged breaches:

(i) It found that the agreement was not in breach of section 43 of the Competition Act as the appellant could still buy from other suppliers as confirmed by its officials.

(ii) If there was any clause, or part thereof, which the appellant felt was now offensive, such could be severed in terms of the contract.

(iii) It also held, that, there was no breach of section 11 of the Exchange Control Regulations as the contract did not state that payment had to be made outside the country.

(iv) Equally, there was no breach of the Control of Goods RGN 766/74 as amended by SI122 of 2017.

In the light of the above findings, the issue should thus be whether the court a quo erred and misdirected itself in reaching its determination on these aspects.

This issue must be examined from the fact, that, this contract has international aspects. These include that each party is incorporated in its own country of domicile.

The respondent, as the seller/ supplier, signed the agreement in South Africa whereas the appellant, as the buyer/importer, signed the agreement in Zimbabwe.

Where there are international aspects to a transaction, it is imperative that parties include clauses in the contract on both the governing law and jurisdiction, i.e. which country's law shall govern the contract and in which country's courts will any dispute be finally decided.

In casu, it was within the parties rights to be precise as to which country's law shall govern their contract.

There are varying factors that parties would have taken into account in deciding on the law to govern their contract.

The law chosen by the parties will generally be respected by the courts of the other country in the spirit of sanctity and freedom of contract.

A caveat to this general approach is that matters of public policy and mandatory laws of that other country may take precedence over governing law clauses, such as in the area of employment and exchange control regulations, which are in the category of directly applicable statutes that override the choice of law.

In C F FORSYTH: Private International Law, 5th Edition, Juta..., the author states:

“For the avoidance of doubt, it should be made quite clear that the directly applicable statutes of the forum, as discussed above, stand outside the choice of law process. They apply according to their terms irrespective of the law the parties have chosen to govern the contract.”

In casu, the parties were alive to their freedom on choice of law and chose that the agreement was to be governed by and must be interpreted and construed in accordance with the laws of the Republic of South Africa.

However, cognisant of the circumstances of their agreement, including the mandatory laws or directly applicable statutes that may affect that choice of law, each party made certain warranties, representations, and undertakings in clause 16.1 of the agreement.

That clause provides, inter alia, that each party warrants, represents, and undertakes to the other party that:

“(c) The execution of and performance by it of its obligations under this Agreement does not contravene any law or regulation to which it is subject; and

(d) It will have all necessary consents, licences, and approvals required in connection with the entry into and performance of its obligations under this Agreement.”

Having made the above warranties, representations, and undertakings each party was obliged to ensure compliance with the peremptory laws of their respective countries.

Any challenges in compliance were ably catered for by clause 22.7 which provided for amendment of any provision of the agreement that becomes invalid, illegal, and unenforceable for reasons stated therein.

That clause states as follows:

“If any part of this Agreement is, for any reason whatsoever, including a decision by any court, any legislation, or any other requirement having the force of law, declared or becomes unenforceable, invalid, or illegal, the Parties must negotiate and effect an amendment of this Agreement such that it is lawful and enforceable, retaining its essential terms, or, failing such agreement between the parties, as far as possible this Agreement must be interpreted so as to exclude the offending provision but retain the essential terms of the Agreement.”

It is common cause that the parties have been doing business together for many years, albeit, on ad hoc basis.

In October 2017, the parties entered into a written supply contract, the precursor to the agreement in question.

The Zimbabwean statutes that the appellant wishes to hide behind in avoiding paying for goods supplied and consumed were in place. The appellant, nevertheless, met its obligations on the prior transactions. It was never argued that in the preceding agreement the appellant failed to meet its obligations due to a breach of the statutes in question.

As already alluded to above, the agreement in question came into effect on 16 March 2018 and was to run till 31 December 2019.

It was only when a demand for payment for goods supplied and consumed was raised, that, in July 2019, the appellant objected to the sum being claimed.

The audit it carried out was premised on its belief that it was being overcharged.

At that stage, its query was not lack of compliance with the domestic statutes.

Clearly, this is a case of a party who previously met its obligations, now seeking to avoid the accrued debt - yet it had consumed the goods for which payment was being demanded.

I am of the view that the appellant cannot succeed in that quest.

For instance, regarding the submission that the contract contravened section 43 of the Competition Act by reason of containing an exclusivity clause; given the evidence before it, the court a quo aptly noted, that, the clause only provided for minimum quantities and the appellant had continued to order from other suppliers on an ad hoc basis.

Mrs Mbelengwa, in her testimony before the audit team, confirmed that the appellant would still buy from other suppliers on an ad hoc basis as and when the need arose.

In any event, as properly noted by the court a quo, the agreement contained a clause which provided for the parties to cause the agreement to be amended so as to exclude any offending provision. As such, any offending clause, as suggested by the appellant on exclusivity, could be cured through an amendment of same without nullifying the contract.

The finding by the court a quo, that the 'exclusivity' clause complained of by the appellant can be expunged, cannot be faulted.

If the appellant was serious in its view that the 'exclusivity' clause was offensive, despite evidence from its officers that they did not treat this clause that way, it could simply have asked for an amendment to exclude that clause.

The test for severability, as articulated in Bligh-Wall v Bonaventure Zimbabwe (Pvt) Ltd & Another 1998 (2) ZLR 264 (SC)..., is basically whether the offending clause is substantially at the core of the contract or is subsidiary.

If it is subsidiary, and the parties would still have entered into the contract without the offending aspect of the clause, then, that part is severable.

In casu, the parties contractual relationship did not depend on the clause in question.

They had been trading for many years. The clause merely provided guarantee or assurance to the appellant that whenever it placed an order for certain quantities of goods it required, such goods would be available on the credit terms of the agreement.

Previously, the parties had traded without that clause and could still do so.

The court a quo can thus not be faulted for finding that the agreement was, in effect, not exclusive.

The finding that there was no breach of section 11 of the Exchange Control Regulations may also not be faulted.

The section proscribes the making of payments outside the country or the incurring of any obligation to make such payment without first obtaining authority from an Exchange Control Authority.

In casu, the clause on payment did not state that payment was to be made outside the country.

The onus was on the appellant to show, that, despite the absence of such a statement, it had in fact been asked to make payment outside the country.

This, the appellant did not do.

Instead, it sought to rely on an inference that since the respondent was domiciled in South Africa and the contract was to be governed by South African law, the court a quo should have inferred that payment had to be made in South Africa.

As aptly noted by the court a quo, the clause on payment (clause 12.5) simply stated that payment would be made 30 days after receiving a tax invoice into an account to be nominated by the respondent.

By the time the appellant raised issues, the contract had run three quarters of its lifespan with the appellant placing orders, receiving the goods, and consuming same on the basis of the credit agreement.

It was only upon receiving demand to pay outstanding sums for what it had consumed that it objected.

The record does not reflect that the respondent had nominated an account in South Africa.

As parties who had been trading with each other for many years, the appellant must surely know how it had been making payments, even in respect of the agreement in question, prior to the raising of the sum it deemed overcharged.

As the onus was on the appellant to prove the unlawfulness of that clause, one would have expected it to simply furnish the tax invoices with the nominated account into which the funds were to be paid as proof, that, though the clause was silent on the place of payment, such place was in fact in South Africa.

Clearly, the appellant failed to discharge the onus on it.

View Appeal
HB60-19 : JOEL SILONDA vs VUSUMUZI NKOMO
Ruled By: BERE J

On 22 April 2015, the plaintiff issued summons out of this court seeking the following order against the defendant:

“(1) An order confirming null and void the purported agreement of sale signed by the plaintiff and defendant on the 12th January 2010 in respect of Umguza 100 Acre Lot 5A for want of a subdivisions permit at the material time, and, in any event, and in the alternative, for defendant's breach of the terms and conditions of the agreement of sale.

(2) An order for the eviction of the defendant and all those claiming rights after him from Umguza 100 Acre Lot 5A currently occupied by the defendant on the basis of a null and void agreement of sale.

(3) Payment of the sum of US$18,000 being reasonable rental and unjust enrichment arising from defendant's occupation of Umguza 100 Acre Lot 5A from March 2010 to April 2015.

(4) An order for holdover damages at the rate of US$10 per day being reasonable rental for the portion of Umguza 100 Acre Lot 5A currently occupied by the defendant calculated from the 1st May 2015 to date of vacation, both days included.

(5) Costs of suit on a higher scale.”

Upon being served with the summons, and after indicating his intention to defend the action, the defendant, in his plea, flatly denied any form of liability and sought the dismissal of the plaintiff's claim with costs at a punitive scale.

In addition, the defendant counter claimed on the basis of unjust enrichment and sought an order against the defendant in the following terms:

“1. Payment in the sum of US$19,000 together with such payment as will be sufficient to enable the defendant to purchase a property of comparable value including all the improvements he had effected.

2. A refund of all the money used by the defendant in drawing electricity to the plaintiff's homestead and applying for a subdivision permit.

3. Interest on all sums at the prescribed rate of 5% per annum with effect from the date of issue of summons to date of payment in full.

4. Costs of suit at an attorney and client's scale.”

THE FACTS OF THE CASE

The following facts are not in dispute in this case:

By a Deed of Sale signed by both parties on 26 January 2010, the plaintiff sold to the defendant 10 acres of land being part of 100 Acre of Lot 5A, Umguza District on certain terms and conditions outlined in the deed.

At the time the parties signed the agreement of sale, there was no subdivision of the land in question as required by section 40 of the Regional, Town and Country Planning Act [Chapter 29:12], thus rendering the agreement null and void from its inception.

As fate would have it, the parties ran into problems with their agreement, with allegations and counter allegations mounted against each other.

Under cases referenced HC491/11 and HC2828/12 both parties initiated civil action against each other over the invalid agreement.

Confusion reigned.

Both parties ended up withdrawing the civil suits against each other leaving the instant case to resolve their differences and provide some direction.

THE EVIDENCE

The evidence in this trial centred on the testimonies of the two protagonists aided by some documentary exhibits to strengthen each other's position. I proceed to deal with that.

THE PLAINTIFF'S EVIDENCE

The plaintiff, who was aged 94 years at the time he gave evidence in court, was in full control of his faculties and did not seem to show any sign of struggling due to his advanced age.

The witness gave a detailed narrative of his relationship with the defendant, whom he regarded as his “child”. He chronicled how he entered into an agreement of sale (exhibit 1 of Annexure 1) on 26 January 2010. The witness told the court, that, pursuant to the signing of the agreement and the payment of the initial US$10,000 (ten thousand) dollars, he allowed the defendant to commence construction on the purchased property.

He said it was part of the agreement that the defendant would pay expenses related to the processing of the subdivision permit.

The witness said he wanted the defendant to pay him $350 per month as rentals for staying and conducting his farming activities at the plot which was the subject of the sale agreement.

He said when they ran into problems with their agreement, owing to the defendant's failure to comply with their agreement, he wanted him to be evicted from the plot and the defendant's response was to report him to the police.

When the witness's attention was drawn to the fact that the defendant was alleging to have made improvements for which he had been enriched and therefore wanted to be compensated, he said that the improvements had not benefited him and that the defendant was free to destroy such improvements.

The witness confirmed the improvements consisted, inter alia, of two dwelling houses, the second one of which the defendant had constructed against his will. The witness further told the court, that, in installing electricity, the defendant had used substandard poles which got rotten, and, he concluded his evidence in chief by suggesting that the defendant had cheated him.

Under cross-examination from the defendant's counsel, the plaintiff confirmed that he and the defendant had signed the sale agreement in 2010 and that as a result of that, the defendant had carried out visible improvements on the purchased property.

The witness also confirmed, that, other than the sale agreement, he had not signed any lease agreement with the defendant.

When questioned about the borehole on the property, the witness was emphatic that it was him who had sunk it and that all the defendant did was merely to have it flushed.

On further cross-examination, the witness could not dispute that the houses built by the defendant had electricity installed by the defendant.

When the valuations of the improvements done by the defendant were brought to his attention, the plaintiff was unable to challenge same. The best the plaintiff could say on the valuations was;

“He did that on his own volition. I did not tell him to make such developments. There is a letter which says there should be no development until the case is over.”

The plaintiff's cross examination was concluded by an admission, that, when he concluded the agreement of sale with the defendant, he was fully aware that he did not have a sub-division permit.

When his attention was drawn to his arbortive attempt to obtain a subdivision permit in 2000, almost 10 year before signing the agreement with the defendant, the plaintiff denied having applied for such permit, and sought to argue that the only permit he had applied for was for the southern side of his plot.

THE DEFENDANT'S EVIDENCE

The defendant commenced his evidence by highlighting the cordial relationship which he had enjoyed with the plaintiff prior to entering into this agreement of sale with him.

He indicated, that, in order to raise the money to buy this particular plot, he had to dispose of his smaller 6 acre piece of land. The defendant told the court, that, after paying the initial agreed sum of US$10,000 (ten thousand United States Dollars), he embarked on the construction of his cottage which was subsequently followed by the main house and electrification of same.

The defendant testified on the difficulties that he had with the plaintiff which were centred on the latter's refusal to receive part of the payment owing to delay.

The defendant, said, owing to the frustrations which he faced as a result of the refusal by the plaintiff to accept payment, he ended up initiating legal proceedings against the plaintiff for breach of contract.

The plaintiff also confirmed the civil suit commenced against him by the defendant and its ultimate withdrawal.

The defendant testified, that, all in all he paid the plaintiff a total of US$19,550 (nineteen thousand five hundred and fifty United Stated Dollars) toward the agreement.

The defendant's further evidence was that he only became aware of the absence of the subdivision permit much later, and when he was well into the agreement, as a result of which he gave the plaintiff US$80 for the facilitation of the permit.

The defendant further stated, that, when he eventually got the subdivision permit, through the plaintiff's legal practitioners, it turned out to be a fake or not authentic document.

He insisted that other than paying for its processing, he had no input into its production and flatly denied ever being involved in the fraudulent acquisition of the sub-division permit.

In his further evidence in chief, he gave a detailed account of the various improvements he made at the “purchased” property and the numerous demands for his eviction made against him by the plaintiff.

The witness said he was prepared to move out of the property as long as he was fully compensated for the improvements made. In his own words, the defendant stated the following as regards his counter claim;

“May the court order that the plaintiff compensates, the reason being that I constructed my house after he had given me permission to do so. I constructed two houses and he was watching me do so. If he says I should vacate the piece of land I will do so by removing what I put there to enable me to construct again at a different place. If he does not end up a destitute or a person of no fixed abode.”

When questioned during his evidence in chief to indicate the improvements he made, the following is what he stated:

“First and foremost, I built a three-bedroomed house (cottage), and, secondly, a three bedroomed main house. I pulled electricity to the house. On that Stand was a dry borehole. I got a company which flushed the borehole. I then bought the pump and the jojo tank which I fixed for the storage of water. That is the water that we are using. The rest of the things have their valuation.”

The witness went further to give the three valuations of the improvements he carried onto the property which he averaged to come up with a figure of US$97,833=33.

The witness emphasized that he had invested all his resources on the property and maintained that if he did not get compensated for such improvements he would end up having no fixed abode.

The defendant was taken through cross examination, part of whose thrust was to challenge him why his (defendant's) lawyer had not suggested to the plaintiff that he was lying, if at all he was misleading the court during his testimony. Part of the exchanges which caught the court's attention and require emphasis went along the following:

“Q: You accept now that this land has always belonged to plaintiff until today?

A: Yes.

Q: You appreciate that the plaintiff's claim is based on you being unjustly enriched and him being unjustly impoverished?

A: I realize he was unjustly enriched. I paid some money towards the property to the plaintiff following our sale agreement.

Q: What do you want from the plaintiff?

A: I want him to reimburse me for the expenses I incurred on that piece of land so that I am able to get another place to stay with my children since he pretended as if he was selling me that piece of land, he knew I would never get any title deed in respect of that land…,.

Q: Your claim is based on unjust enrichment?

A: Yes.

Q: You heard him say he has no use of such improvements?

A: Yes, I heard him say so but he is going to use them. The structures are on his piece of land which he pretended to be selling. There is electricity which he will use. If he did not want the houses, he could not have allowed me to construct them….,.

Q: Your bundle, you have put in several receipts from pages 90-102 to support your expenditure. All these are from September 2010. These were incurred at a time plaintiff told you to stay away from his land and to keep your money?

A: We had entered into an agreement of sale.”

When it was suggested to the witness that he was supposed to be paying rentals to the plaintiff, the defendant denied ever entering into a lease agreement with the plaintiff, but rather a sale agreement.

In conclusion, the defendant said that the valuation reports that he submitted had collectively dealt with the improvements he made and for which he was claiming to be paid.

ASSESSMENT OF EVIDENCE

At a joint pre-trial conference (record pp56-58), held by the parties, the parties narrowed their contentious issues to the following:

(1) Whether or not the plaintiff is entitled to a reasonable rental arising from the defendant's unauthorized/authorized occupation of the property in dispute.

(2) Whether or not the defendant has been unjustly impoverished and the plaintiff unjustly enriched as a result of the alleged developments made by the defendant upon the disputed part of the land, and, if so, the quantum thereof.

It is with these issues in mind that I proceed to consider the evidence tabled in this court.

Is the plaintiff entitled to reasonable rentals

The evidence which is not in dispute is that the defendant took occupation of the property in issue pursuant to a sale agreement, which sale turned out to be null and void or invalid owing to its non-compliance with the mandatory provisions of sections 39(1)(b)(i) and 40 of the Regional, Town and Country Planning Act [Chapter 29:12].

The sale agreement entered into by the parties is self-explanatory and it is too ambitious, if not too generous, to read into the agreement that it could, at any stage, be turned into a lease agreement to provide for a basis for the plaintiff to claim rentals.

It cannot possibly be the correct position, as stated by the plaintiff in his declaration, that:

“In or about March 2010, Defendant forcibly occupied a portion of Umguza 100 Acre Lot 5A….,.”

This averment is clearly not borne out by the overwhelming evidence in this court which speaks to the defendant's occupation as informed by the agreement of sale.

The fact that under case HC2828/12 the plaintiff initiated a civil suit against the defendant to force compliance with the sale agreement cements the existence of the agreement of sale between the parties.

The argument is simply, that, if in 2010, the defendant had forced himself onto the plaintiff's property, there would have been no need for the plaintiff to try and enforce compliance with some agreement in 2012 - two years down the line.

The plaintiff, in his own testimony, confirmed that the defendant only took occupation of the plot pursuant to an agreement.

What cannot be disputed is that subsequent to the defendant's occupation, the agreement ran into challenges. Despite this, these challenges did not in any way change the defendant from being a purchaser to a tenant.

The parties were fully conscious of what they wanted when they entered into this agreement.

It is not for this court to re-write the contract for the parties.

As was observed by the Supreme Court in the case Magodora and Others v Care International Zimbabwe 2014 (1) ZLR 397 (S)…,:

“It is not open to the courts to write a contract entered into between the parties or to excuse any of them from consequences of the contract that they freely and voluntarily accepted, even if they are shown to be onerous or oppressive. This is so a matter of public policy. Nor is it generally permissible to read into the contract some implied or tacit term that is in direct conflict with its express terms.”

For these reasons, the court is not prepared, for whatever reasons, to convert or to read into a simple sale agreement, a lease agreement.

One gets the obvious impression that reference to the defendant's alleged forced occupation of the property was slotted in as a desperate attempt to justify a claim for rentals by the plaintiff.

The averment clearly lacks merit and it is not sustainable.

Has the defendant been unjustly enriched at the expense of the plaintiff

This enquiry is intricably linked to the existence or non-existence of a lease agreement.

I have already made my position clear, that, the plaintiff is not entitled to any rentals flowing from a lease agreement because no such agreement ever existed or can be inferred from the evidence led in this court. If anything, the evidence shows, beyond doubt, that, it is in fact the plaintiff who has been unjustly enriched and the defendant impoverished in the process.

It is not in dispute, that, pursuant to the sale agreement the defendant paid a total of $19,550 towards the fulfillment of that agreement. The $19,000 was for the purchase of the land and $550 was paid towards the facilitation of the subdivision of the sold piece of land when the defendant realized that he had been sold the land in violation of the mandatory provisions of the Regional, Town and Country Planning Act.

The defendant's evidence in support of this payment was not challenged by the plaintiff.

In fact, in his declaration filed in this court on 22 April 2015, the plaintiff made an unsolicited offer to refund the defendant US$19,000 on monthly instalments of US$395.

The defendant's claim is built in his counterclaim filed in this court on 24 June 2015.

In that counter-claim, the defendant states that he made a number of improvements which would prejudice him if they were to accrue to the plaintiff without him being compensated.

In his closing submissions, the plaintiff's counsel criticized the defendant's pleadings and commended as follows:

“Of significance is that in paragraph 5 above defendant did not specifically allege that the alleged improvements have resulted in plaintiff being enriched.”

I accept the position taken by the plaintiff's counsel, that, the defendant's pleadings, especially in the counter claim, were poorly drafted. They lacked elegance. They could have been drafted in a much better way.

However, I do not accept that when the defendant's case is looked at holistically, the alleged defects in the pleadings can be raised to the level of fracturing his case. This is because the defects were cured by the overwhelming evidence in support of the defendant's case.

The defendant's uncontroverted evidence was that pursuant to the agreement of sale (which turned out to be invalid), he had poured substantial resources on the plaintiff's property. In the process, the plaintiff ended up being enriched and the defendant impoverished and that the defendant wanted to be compensated for this.

This was the basis of the defendant's claim, and even the plaintiff's counsel fully understood this as demonstrated by the tone and nature of his cross-examination of the defendant.

It is therefore not sustainable for counsel to argue that the defects in the pleadings must lead to the collapse of the defendant's case.

I now proceed to consider the defendant's case.

The plaintiff's case was largely built around the alleged breach of the agreement of sale. However, as the evidence led in this court has shown, there was no agreement to talk about for lack of compliance with the statutory requirements of the Regional, Town and Country Planning Act which prohibits any agreement of sale in respect of land which is not yet subdivided in accordance with a permit granted under section 40 of the Regional, Town and Country Planning Act.

In the case of X-Trend–A Home (Pvt) Ltd v Hoselaw (Pvt) Ltd 2000 (2) ZLR 348 (SC), the Supreme Court had occasion to deal with the law as regards the kind of sale which the plaintiff and defendant purported to enter into in this case. The court had this to say:

“Section 39 forbids an agreement for the change of ownership of any portion of a property except in accordance with a permit granted under section 40 allowing for a subdivision. The agreement under consideration was clearly an agreement for the change of ownership of the unsubdivided portion of a Stand. It was irrelevant whether the change of ownership was to take place on signing or on an agreed date fulfilled. The agreement itself was prohibited.”

This Supreme Court decision was subsequently followed by the High Court in the case of Tsamwa v Hondo and Others 2008 (1) ZLR 401 (H)…, where the court remarked as follows:

“The plaintiff's claim must be dismissed, as, at the time the parties entered into the agreement, there was no subdivision permit in existence. An agreement made in such circumstances is forbidden by section 39(1)(b)(i) of the Act. Any purported agreement for the change of ownership of a portion of a property is a nullity and no effect can be given thereto.”

In the preceding portions of this judgment, I have already dealt with the fallacy of the plaintiff's claim for rentals and it is not my intention to revisit same save to emphasize that when the plaintiff gave evidence in this court, he repeatedly stated that he allowed the defendant to take occupation of the portion of the land pursuant to the signing of the deed of sale.

Indeed, clause 3.1 of the agreement fully supports this averment.

It therefore follows that the plaintiff has dismally failed to plead a valid cause of action for rentals.

The defendant was taken to task by the plaintiff's counsel on why his lawyer did not specifically tell the plaintiff that he was lying on certain aspects of his evidence which the defendant disputed in his evidence in chief or in his own cross-examination.

Over my years on the Bench, I have always been marveled by this way of reasoning.

In the first place, a litigant can be a lay person (as in this case), and, when he gives instructions to his counsel he/she does no more than tell a simple story in his own simple understanding. In court, such a litigant has no capacity to frame appropriate questions for his legal practitioner. The legal practitioner, who is properly trained in the field of law, is assumed to know better how to frame his questions for cross-examination.

A simple, untrained litigant has absolutely no control over that process.

More importantly, a court does not require the cross-examination of a party in pointed terms labeling him a liar to make a finding that such a party is indeed a liar. The ultimate decision of finding someone to be a liar is not for the cross-examiner but it is a prerogative of the trier of fact after taking into account all the evidence in that trial.

In fact, in my view, a cross examiner must be slow to label a witness a liar because the trier of fact might see things differently and arrive at a completely different conclusion, which, by implication, might then project the cross-examiner as a liar himself.

As I will demonstrate later in this judgment, contrary to the effort made in this trial to portray the defendant as not worth believing, I found his credibility to be beyond reproach.

The plaintiff was clearly far from convincing.

Let me deal first with the legal position in as far as it impacts on the agreement entered into by the parties in casu.

It has already been spelt out that the contract entered into by the parties was null and void, and, therefore, unenforceable. As observed by R.H. Christie, in Business Law in Zimbabwe, published by Juta and Company Ltd 1998…,:

“The law cannot be expected to lend its aid to the enforcement of a contract which the law itself prohibits: City of Gweru v Kombayi 1991 (1) ZLR 333 (S). Unenforceability means that, as in York Estates Ltd v Wareham 1949 SR 197; 1950 (1) SA 125, specific performance will not be granted.”

Taken to its logical conclusion, the plaintiff cannot sue for breach of contract in this case.

But, our law recognizes that quite often, in the process of engaging in an illegal or unenforceable contract there may be other “collateral or connected transactions that do not amount to indirect attempts to enforce the illegal contract:” see R.H. Christie, Business Law in Zimbabwe, published by Juta and Company Ltd 1998.

In general terms, our law will not enforce an illegal or an invalid contract unless public policy demands that such approach be relaxed: see Jajbay v Cassim 1939 AD 537 which created the guiding rules.

Where someone has been unjustly enriched, in circumstances where the victim's innocence is beyond question, the court will come to the aid of such a party.

The defendant's case is a clear example of the need to relax the rule.

In what is probably the leading case in this country on unjust enrichment, in Industrial Equity Ltd v Walker 1996 (1) ZLR 269 (H)…, the court affirmed the position that a general enrichment action is recognized in our law and that the pre-requisites of such an action are:

“(a) The defendant must be enriched;

(b) The enrichment must be at the expense of another, in that the plaintiff must be impoverished and there must be a causal connection between the defendant's enrichment and the plaintiff's impoverishment;

(c) The enrichment must be unjustified;

(d) The enrichment must not come within the scope of one of the classical enrichment actions;

(e) There should be no positive rule of law which refuses an action for the impoverished person.”

See also the recent case of Charles Nyathi v Estate Late Philemon Ncube Mabuza and Tandie Mabuza N.O. and the Master of High Court N.O. HB54-19.

It is noted that, the defendant, in his counter claim has established all the requirements for unjust enrichment which call for his compensation.

In an attempt to resist the defendant's claim, the plaintiff raised basically three arguments, viz:

(i) That the counterclaim was not properly framed;

(ii) That he did not authorize the improvements; and

(iii) That the improvements are not useful to him, and therefore does not need them.

I have earlier own dealt with the alleged defects in the pleadings and made a specific finding that any such defects were cured by the overwhelming evidence in support of the defendant's claim.

As correctly argued by counsel for the defendant, the contention that the plaintiff did not authorize the improvements effected on the plaintiff's land is untenable because of clause 3.1. of the Deed of Sale which authorized construction to commence upon payment of a deposit of $10,000.

The plaintiff's own evidence confirmed that this initial payment was made and the defendant confirmed same.

prev 1 2 3 next

Back Main menu

Law Portal
Zimbabwe

Intent or Animus Contrahendi re: Trade or Past Practices, Parol Evidence Rule, Integration Rule, Rectification & Retraction

HH99-18 : C F (PVT) LTD vs ZIMBABWE REVENUE AUTHORITY
Ruled By: KUDYA J

HB44-15 : RAILWAYS ARTISAN UNIONS vs NATIONAL RAILWAYS OF ZIMBABWE and OTHERS
Ruled By: TAKUVA J

HH412-21 : ZIMBABWE LEAF TOBACCO vs KEVIN COOKE
Ruled By: DUBE J

HMA02-19 : JETINOS ZIVANOMOYO vs HELLEN DINGANI
Ruled By: MAWADZE J and MAFUSIRE J

HMA38-19 : BERRINGTON ZVANYANYA and OTHERS vs ZIMBABWE SUGAR MILLING INDUSTRY WORKERS UNION and OTHERS
Ruled By: MAFUSIRE J

HH48-12 : ENOCK GOVHA vs ASHANTI GOLDFIELDS ZIMBABWE LIMITED t/a FREDA REBECCA MINE and ANOR
Ruled By: MATHONSI J

HH54-16 : AIR DUCT FABRICATORS (PVT) LTD vs A.M. MACHADO & SONS (PVT) LTD
Ruled By: CHIGUMBA J

HH103-12 : ASHANTI GOLDFIELDS ZIMBABWE LIMITED T/A FREDA REBECCA MINE vs TATENDA TAKAVADA
Ruled By: MUTEMA J

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

HH149-16 : ZIMASCO (PRIVATE) LIMITED vs COMMISSIONER GENERAL OF THE ZIMBABWE REVENUE AUTHORITY
Ruled By: HLATSHWAYO J

HH271-13 : ASHANTI GOLDFIELDS ZIMBABWE LIMITED t/a FREDDA REBECCA MINE vs NYASHA MUTENGWA
Ruled By: MAWADZE J

View Appeal
HH310-11 : CHINA SHOUGANG INTERNATIONAL vs STANDARD CHARTERED BANK ZIMBABWE LTD
Ruled By: BERE J

HH535-15 : BLESSMORE CHANAKIRA vs SHEPHERD MALCOM N.O. and REGISTRAR OF DEEDS and PHIL RUSCH
Ruled By: NDEWERE J

View Appeal
HH661-16 : M COMPANY (PVT) LTD vs ZIMBABWE REVENUE AUTHORITY
Ruled By: KUDYA J

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

HH411-15 : TENDAI MASAMBA vs ZIMBABWE ELECTRICITY TRANSMISSION AND DISTRIBUTION COMPANY (PVT) LTD
Ruled By: CHIWESHE JP and CHITAKUNYE J

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

CC07-16 : AMOS MAKANI and OTHERS vs ARUNDEL SCHOOL and OTHERS
Ruled By: CHIDYAUSIKU CJ, MALABA DCJ, ZIYAMBI JCC, GWAUNZA JCC, GARWE JCC, GOWORA JCC, HLATSHWAYO JCC, PATEL JCC and GUVAVA JCC

Appealed
SC15-22 : UNKI MINE (PRIVATE) LIMITED vs ZIMBABWE REVENUE AUTHORITY
Ruled By: GUVAVA JA, UCHENA JA and MAKONI JA

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

SC59-22 : DELTA BEVERAGES (PRIVATE) LIMITED vs BLAKEY INVESTMENTS (PRIVATE) LIMITED
Ruled By: BHUNU JA, MAKONI JA and CHITAKUNYE AJA

SC59-22 : DELTA BEVERAGES (PRIVATE) LIMITED vs BLAKEY INVESTMENTS (PRIVATE) LIMITED
Ruled By: BHUNU JA, MAKONI JA and CHITAKUNYE AJA

View Appeal
HB60-19 : JOEL SILONDA vs VUSUMUZI NKOMO
Ruled By: BERE J

Categories

Law Portal Zimbabwe

Intent or Animus Contrahendi re: Trade or Past Practices, Parol Evidence Rule, Integration Rule, Rectification & Retraction

HH99-18 : C F (PVT) LTD vs ZIMBABWE REVENUE AUTHORITY Ruled By: KUDYA J

HB44-15 : RAILWAYS ARTISAN UNIONS vs NATIONAL RAILWAYS OF ZIMBABWE and OTHERS Ruled By: TAKUVA J

HH412-21 : ZIMBABWE LEAF TOBACCO vs KEVIN COOKE Ruled By: DUBE J

HMA02-19 : JETINOS ZIVANOMOYO vs HELLEN DINGANI Ruled By: MAWADZE J and MAFUSIRE J

HMA38-19 : BERRINGTON ZVANYANYA and OTHERS vs ZIMBABWE SUGAR MILLING INDUSTRY WORKERS UNION and OTHERS Ruled By: MAFUSIRE J

HH48-12 : ENOCK GOVHA vs ASHANTI GOLDFIELDS ZIMBABWE LIMITED t/a FREDA REBECCA MINE and ANOR Ruled By: MATHONSI J

HH54-16 : AIR DUCT FABRICATORS (PVT) LTD vs A.M. MACHADO & SONS (PVT) LTD Ruled By: CHIGUMBA J

HH103-12 : ASHANTI GOLDFIELDS ZIMBABWE LIMITED T/A FREDA REBECCA MINE vs TATENDA TAKAVADA Ruled By: MUTEMA J

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

HH149-16 : ZIMASCO (PRIVATE) LIMITED vs COMMISSIONER GENERAL OF THE ZIMBABWE REVENUE AUTHORITY Ruled By: HLATSHWAYO J

HH271-13 : ASHANTI GOLDFIELDS ZIMBABWE LIMITED t/a FREDDA REBECCA MINE vs NYASHA MUTENGWA Ruled By: MAWADZE J

View Appeal HH310-11 : CHINA SHOUGANG INTERNATIONAL vs STANDARD CHARTERED BANK ZIMBABWE LTD Ruled By: BERE J

HH535-15 : BLESSMORE CHANAKIRA vs SHEPHERD MALCOM N.O. and REGISTRAR OF DEEDS and PHIL RUSCH Ruled By: NDEWERE J

View Appeal HH661-16 : M COMPANY (PVT) LTD vs ZIMBABWE REVENUE AUTHORITY Ruled By: KUDYA J

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

HH411-15 : TENDAI MASAMBA vs ZIMBABWE ELECTRICITY TRANSMISSION AND DISTRIBUTION COMPANY (PVT) LTD Ruled By: CHIWESHE JP and CHITAKUNYE J

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

CC07-16 : AMOS MAKANI and OTHERS vs ARUNDEL SCHOOL and OTHERS Ruled By: CHIDYAUSIKU CJ, MALABA DCJ, ZIYAMBI JCC, GWAUNZA JCC, GARWE JCC, GOWORA JCC, HLATSHWAYO JCC, PATEL JCC and GUVAVA JCC

Appealed SC15-22 : UNKI MINE (PRIVATE) LIMITED vs ZIMBABWE REVENUE AUTHORITY Ruled By: GUVAVA JA, UCHENA JA and MAKONI JA

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

SC59-22 : DELTA BEVERAGES (PRIVATE) LIMITED vs BLAKEY INVESTMENTS (PRIVATE) LIMITED Ruled By: BHUNU JA, MAKONI JA and CHITAKUNYE AJA

SC59-22 : DELTA BEVERAGES (PRIVATE) LIMITED vs BLAKEY INVESTMENTS (PRIVATE) LIMITED Ruled By: BHUNU JA, MAKONI JA and CHITAKUNYE AJA

View Appeal HB60-19 : JOEL SILONDA vs VUSUMUZI NKOMO Ruled By: BERE J

Categories

Your Donation.

Law Portal
Zimbabwe

HH99-18 : C F (PVT) LTD vs ZIMBABWE REVENUE AUTHORITY
Ruled By: KUDYA J

HB44-15 : RAILWAYS ARTISAN UNIONS vs NATIONAL RAILWAYS OF ZIMBABWE and OTHERS
Ruled By: TAKUVA J

HH412-21 : ZIMBABWE LEAF TOBACCO vs KEVIN COOKE
Ruled By: DUBE J

HMA02-19 : JETINOS ZIVANOMOYO vs HELLEN DINGANI
Ruled By: MAWADZE J and MAFUSIRE J

HMA38-19 : BERRINGTON ZVANYANYA and OTHERS vs ZIMBABWE SUGAR MILLING INDUSTRY WORKERS UNION and OTHERS
Ruled By: MAFUSIRE J

HH48-12 : ENOCK GOVHA vs ASHANTI GOLDFIELDS ZIMBABWE LIMITED t/a FREDA REBECCA MINE and ANOR
Ruled By: MATHONSI J

HH54-16 : AIR DUCT FABRICATORS (PVT) LTD vs A.M. MACHADO & SONS (PVT) LTD
Ruled By: CHIGUMBA J

HH103-12 : ASHANTI GOLDFIELDS ZIMBABWE LIMITED T/A FREDA REBECCA MINE vs TATENDA TAKAVADA
Ruled By: MUTEMA J

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

HH149-16 : ZIMASCO (PRIVATE) LIMITED vs COMMISSIONER GENERAL OF THE ZIMBABWE REVENUE AUTHORITY
Ruled By: HLATSHWAYO J

HH271-13 : ASHANTI GOLDFIELDS ZIMBABWE LIMITED t/a FREDDA REBECCA MINE vs NYASHA MUTENGWA
Ruled By: MAWADZE J

View Appeal
HH310-11 : CHINA SHOUGANG INTERNATIONAL vs STANDARD CHARTERED BANK ZIMBABWE LTD
Ruled By: BERE J

HH535-15 : BLESSMORE CHANAKIRA vs SHEPHERD MALCOM N.O. and REGISTRAR OF DEEDS and PHIL RUSCH
Ruled By: NDEWERE J

View Appeal
HH661-16 : M COMPANY (PVT) LTD vs ZIMBABWE REVENUE AUTHORITY
Ruled By: KUDYA J

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

HH411-15 : TENDAI MASAMBA vs ZIMBABWE ELECTRICITY TRANSMISSION AND DISTRIBUTION COMPANY (PVT) LTD
Ruled By: CHIWESHE JP and CHITAKUNYE J

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

CC07-16 : AMOS MAKANI and OTHERS vs ARUNDEL SCHOOL and OTHERS
Ruled By: CHIDYAUSIKU CJ, MALABA DCJ, ZIYAMBI JCC, GWAUNZA JCC, GARWE JCC, GOWORA JCC, HLATSHWAYO JCC, PATEL JCC and GUVAVA JCC

Appealed
SC15-22 : UNKI MINE (PRIVATE) LIMITED vs ZIMBABWE REVENUE AUTHORITY
Ruled By: GUVAVA JA, UCHENA JA and MAKONI JA

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

SC59-22 : DELTA BEVERAGES (PRIVATE) LIMITED vs BLAKEY INVESTMENTS (PRIVATE) LIMITED
Ruled By: BHUNU JA, MAKONI JA and CHITAKUNYE AJA

SC59-22 : DELTA BEVERAGES (PRIVATE) LIMITED vs BLAKEY INVESTMENTS (PRIVATE) LIMITED
Ruled By: BHUNU JA, MAKONI JA and CHITAKUNYE AJA

View Appeal
HB60-19 : JOEL SILONDA vs VUSUMUZI NKOMO
Ruled By: BERE J