The plaintiff is a medical doctor, a gynaecologist, and a professor at the University of Zimbabwe. He boasts that he is a founder member and majority shareholder of the defendant, a maternity institution he is suing for $50,000, being money he says he paid to a creditor of the defendant ...
The plaintiff is a medical doctor, a gynaecologist, and a professor at the University of Zimbabwe. He boasts that he is a founder member and majority shareholder of the defendant, a maternity institution he is suing for $50,000, being money he says he paid to a creditor of the defendant on its behalf.
In his declaration, the plaintiff averred that sometime in September 2005, while he was the Managing Director of the defendant, he entered into an agreement with Vengesayi Architects (the architects), on behalf of the defendant, in terms of which the architects were to provide the defendant with services for a fee. The architects were contracted to make town planning applications for special consent on the Stand, co-ordinate all project consultations, design, work on drawings and supervise construction work of the proposed additions and alterations to the hospital.
Although the architects drew up the plans, the defendant did not proceed with the construction, but, the agreement he had concluded with the architects resulted in the defendant being indebted to the architects in the sum of US$1,300,000.
As Managing Director, founder, and majority shareholder of the defendant he paid a sum of $50,000 towards settlement of the debt in order to protect the integrity and good name of the defendant.
The $50,000 was paid by him in instalments between 30 May 2011 and 18 July 2011. The plaintiff averred, in paragraph 8 of the declaration, that:
“The money paid to the architects by the plaintiff thus made the latter the defendant's creditor. There is no dispute as to whether the plaintiff made the payment aforesaid.”
The plaintiff then prayed for judgement in the sum of $50,000 together with interest at the prescribed rate and costs of suit on a legal practitioner and client scale.
Having entered appearance to defend, the defendant filed a plea denying liability and stating that the plaintiff was not authorised by its Board of Directors and shareholders to enter into an agreement with the architects and that he had entered into that agreement unlawfully.
It further averred that when the plaintiff paid the sum of $50,000 to the architects, he did so without the authority of the defendant. As he had entered into the agreement without authority, the plaintiff was personally liable to the architects. The plaintiff's claim should therefore be dismissed with punitive costs.
At the pre-trial conference the parties agreed on the issues as:
1. Whether the plaintiff entered into an architectural agreement with the architects without the authority of the defendant's Board of Directors and shareholders.
2. Whether the defendant is liable to the plaintiff in the sum of $50,000 paid to the architects.
Only the plaintiff gave evidence at the trial of this matter, stating that he had been the Managing Director of the defendant since 1998 and he still holds that position.
On 29 January 2010, the defendant's Board had proposed, and agreed, that they should negotiate terms of payment of the architects' fees for work done. The architects had performed work for the defendant and submitted a claim for the payment of their fees.
Prior to that, the architects had drawn plans for the development of the hospital which was called the second phase.
A contract had been signed in 2005 between the hospital and the architects with the former being represented by himself. He made reference to pages 66 to 69 of exhibit 1, being the agreement in question, stating that it was signed by himself in his capacity then as Executive Chairman and countersigned by the defendant's Administrator.
The plaintiff maintained that he had the authority of the Board which he worked with then, to enter into the agreement, and, as such, the agreement was binding on the defendant which however did not pay the fees of the architects even though a demand for payment was initially made in 2006, re-submitted in 2009, and, finally, in 2010.
Prior to making payment on behalf of the defendant, he had been specifically mandated, by the Board, to negotiate with potential investors for the funding of the project. He had brought in Banc ABC which was willing to invest $7.5 million and Mbizvo Group which was willing to invest $15 million into the project. Content with the funding arrangement, the plaintiff said he had incorporated the architects' fees in the funding. He then paid $50,000 to the architects satisfied that he could recoup his money in due course.
The payment was made in order to create a good atmosphere for negotiation with the architects.
The plaintiff referred to letters written by the architects between 30 May 2011 and 18 July 2011…, in which the architects were acknowledging payment of the various sums allegedly made by the defendant to them.
The letters themselves are drafted the same way except for the figure acknowledged. The plaintiff did not explain why no receipt, in the usual manner, was issued. It was suggested to him, under cross-examination, that the letters were manufactured to justify his claim and he did not give a meaningful response.
The plaintiff stated that he had paid the money to the Administrator of the defendant, Mr Makamure, who, alone with the accountant, Mr Tembo, effected payment to the architects.
He pointed out that there was no formal Board meeting to authorize the payment and there was evidence that some Board members did not want payments to be made to the architects while others favoured payment.
There was no formal instruction given to him to effect that payment.
He however sought legal advice from Mr Mabulala, who was also a Board member. Before Mr Mabulala's advice came, in the form of a letter dated 13 June 2011..., the plaintiff went ahead and started paying instalments to the architects, the first one of $3,500 being made on 30 May 2011. When the letter from Mabulala & Motsi legal practitioners finally came it not only endorsed that payment was a fait accompli, it also counselled caution. It reads:
“RE: ARCHTECTS
I refer to your note to me dated 9th June 2011 and the letter from Kantor and Immerman dated 8th June 2011. It seems to me that you have already committed yourself, personally, to paying the architects' fees, and, any opinion from me would be of academic interest. The question which remains is whether or not you can, and did, lawfully commit the hospital as well. I hope the Board and the shareholders are fully informed of these latest developments.”
From the correspondence that had been refereed to Mr Mabulala, it is apparent that the plaintiff had already offered to pay $50,000 to the architects in “tranches” and had already agreed with them that he would sign a Deed of “surety, acknowledgement and undertaking” in respect of the full extent of their claim of $1,303,783 in respect of their fee note dated 3 August 2010…,.
The plaintiff says he then convened a meeting of the Board, in September 2011, intending to regularise what he had done without Board approval.
Unfortunately, on 21 September 2011, he says he was locked out of his office at the hospital and was prevented from going in by armed guards. He has never had access to the office since then and his efforts to reclaim his position and the office, subsequent to that, have hit a brick wall.
He approached this court, in HC9630/11, for spoliatory relief but was turned down. The judgement in that matter, delivered by MUTEMA J is HH221-11, and, at p3 of it, the court made the following findings:
“Applicant alleges (he) was despoiled of the office as well as his personal belongings lodged therein which he uses for his private life and business. Respondents have offered that applicant is at liberty, at his earliest convenience, to come and collect his personal items. I have no reason to doubt the sincerity of that offer.
However, as regards the office, that is a different kettle of fish.
While applicant alleges spoliation, respondents' papers clearly show that it is him who is the spoliator. He had been away for some 8 months and Saungweme was in lawful and undisturbed possession of that office. He was denied occupation of the office but he locked it to the exclusion of everyone except himself. This, despite the exitant dispute between the parties, amounts on the applicant's part, to self-held.
I did not hear applicant to dispute respondents' version either on paper or in oral submissions, of how he ended up re-occupying the office. He therefore cannot come to court with clean hands. He is the spoliator. To allow him audience would be tantamount to sanctioning unlawfulness.”
He says that if the meeting took place he does not know what transpired as he was unable to attend.
What is even more important is the fact that he was unable to “regularize” his payments made to the architects without approval - meaning that the plaintiff's payments remained unsanctioned.
The plaintiff testified that he paid the architects, on behalf of the defendant, because it was necessary to maintain the integrity and good name of the institution.
He did not have vouchers to show that payment was indeed made through the defendant.
Although he did not have direct and formal authority to effect the payment, he had indirect authority emanating from the fact that the Board had tasked him to raise funds for the project.
It did not specify the source of those funds which then left him at liberty, as the Managing Director at the time, to pay from his pocket. In any event, loans from shareholders (he is a major shareholder) have been given to the institution in the past.
Under cross examination, it became apparent that the plaintiff was not the Managing Director at the time that he made instalment payments of the $50,000 to the architects - Dr Saungweme was. According to the minutes of a Board meeting held on 10 May 2011…, the plaintiff was trying to force his way back in that position. The minutes state, at paragraph 4.2:
“Dr P. Zvandasara
Dr Zvandasara came into the boardroom and advised the Board that he had notified the Board chair person that he was now back at the hospital as the Managing Director. He went on to say that he had taken legal action against some Board members who had accused him of stealing hospital funds.”
That state of affairs was also captured in the minutes of a Shareholders meeting held on 25 May 2011 during which the plaintiff notified the gathering that he was coming back as Managing Director (MD) because some people had accused him of being a thief. At paragraphs 5 and 6, the minutes state:
“He (the plaintiff) went on to declare that whether the members approved or not, he was now the one running the activities of the institution as the MD. He said that he could no longer work with the shareholders and proposed that we proceed with a separation either through him buying the other shareholders out or vice versa.
The shareholders noted, with concern, the developments that had taken place.
They advised Dr Zvandasara that the current recognised MD for the institution is Dr Saungweme; the position remained that Dr Saungweme had been appointed by the Board as the MD with effect from August 2010. This motion was put to the vote and was unanimously endorsed.”
It also became apparent that the defendant had contested the validity of the agreement for architectural services throughout, and, when they raised a fee note for those services, in the sum of $1,071,999=05, on 3 August 2010, about the same time that the plaintiff ceased to become Managing Director (MD), the defendant disputed liability.
It is a matter of record that in HC2893/12 the architects sued the defendant for the amount set out in the fee note, without deducting the $50,000 allegedly paid by the plaintiff, suggesting they did not recognise any payment. That claim was dismissed by this court, per DUBE J, by judgement delivered on 18 February 2015 (HH161-15).
In that matter, the plaintiff was called as a witness by the architects and stated that:
“He paid $50,000 from his own pocket after the defendant had refused to settle the fee note.”
My attention was also drawn to a summons and declaration in HC9444/11…, in which the plaintiff had sued the defendant for payment of the same amount of $50,000 through Mambosasa legal practitioners of Harare. In paragraph 7 of the declaration he had averred;
“The defendant failed, refused and/or neglected to pay the amount due to the architects in its entirety alleging, inter alia, that the plaintiff had no authority to contract with the architects resulting in the plaintiff feeling compelled to repay part of the debt from his personal sources.”
The totality of the evidence shows, clearly, that, at the time that the plaintiff took it upon himself to pay $50,000 of the claim made by the architects he had no authority of the defendant to make that payment and the defendant was already contesting the claim.
The plaintiff was aware of the defendant's position in that regard but decided to take a calculated risk and pay the money all the same. He said that he did so because he could not renege on the promise he had given to the architects that payment would be made.
At the end of evidence for the plaintiff, counsel for the defendant made an application for absolution from the instance on the basis that no evidence had been led upon which the court may find in favour of the plaintiff. He submitted that the evidence has not shown any contract between the parties in terms of which the money was paid. In any case, the claim, as pleaded, is not based on contract.
In addition, the claim is not based on unjust enrichment either because it was not pleaded.
Counsel for the defendant submitted that the plaintiff's counsel could not possibly introduce the claim for unjust enrichment in his opening address when it has not been pleaded.
In any event, according to the plaintiff's evidence, he paid the $50,000 without authority in order to create a conducive atmosphere for dialogue between the parties. He did not achieve that objective and there is no evidence that the defendant was enriched in any way....,.
Even if it had been pleaded, I am not satisfied that the plaintiff has made a case based on unjust enrichment.
The requirements for such a claim were set out by BARTLETT J in Industrial Equity v Walker 1996 (1) ZLR 269 (H) 298..., where he said:
“I am of the respectful view that the principal requisites for a general action on enrichment can be regarded as aptly summarised by WOUTER De VOS in Verry King saanspreeklikheid in die Suid Africk aansc Reg (1958) as stated by SCHOLTENS in 1996 Annual Survey of South African Law, 150 at 152 as:
(a) The defendant must be enriched;
(b) The enrichment must be at the expense of another (i.e. the plaintiff must be impoverished and there must be a causal connection between enrichment and impoverishment);
(c) The enrichment must be unjustified;
(d) The case should not come under the scope of one of the classical enrichment actions;
(e) There should be no positive rule of law which refuses the action to the impoverished person.
Obviously these requirements can only be fulfilled if, in any given case, the action is based on a defined set of circumstances.”
What happened in this case is that a shareholder and founder member of the defendant who had been ousted from the position of Managing Director was fighting tooth and nail to force his way back into office; an office which was already occupied by Dr Saungweme.
Proceeding roughshod on all the rights and interests of others, and stating that he did not care whether anyone approved or not, he forcibly took office with no recognisable role to play except, perhaps, to cause alarm and despondency among everyone associated with the institution.
He threatened to sue Board members because they were accusing him of stealing money from the defendant.
In the midst of all this, he claimed to have taken his money, generated from his own medical rooms, and meant for the tuition fees of his children studying out of the country, and paid $50,000 of it to a perceived creditor of the defendant without anyone asking him to and certainly without any authority to do so.
When he did that, he was aware that the defendant was denying liability and was contesting the claim. In fact, as fate would have it, the defendant has successfully defended the architects' claim. It cannot be said, therefore, that it was liable and that the payment, if any, made by the plaintiff was for its benefit.
No benefit whatsoever has been shown.
