On 11 March 2015, the High Court granted part of the claim sought by Valentine Ziswa and his wife Margaret Ziswa (the cross appellants) against Graeme Shaun Chadwick and Landos (Pvt) Ltd (the cross respondents).The court a quo dismissed the claims of the cross-appellants as against the second cross-respondent in ...
On 11 March 2015, the High Court granted part of the claim sought by Valentine Ziswa and his wife Margaret Ziswa (the cross appellants) against Graeme Shaun Chadwick and Landos (Pvt) Ltd (the cross respondents).
The court a quo dismissed the claims of the cross-appellants as against the second cross-respondent in their entirety and granted part of the claims as against the first cross respondent.
The cross appellants seek a reversal of the dismissal orders issued a quo.
The order issued by the court a quo reads as follows:
“In the result, it is ordered that:
1. The plaintiffs claims against the second defendant are hereby dismissed with costs.
2. The plaintiffs claim (a) against the first defendant succeeds only in the sum of $8,808 which the first defendant is directed to pay the plaintiffs.
3(a) The plaintiffs claim (e) partially succeeds to the extent of the 4km LTC Electric cable while the rest is hereby dismissed.
(b) The first defendant shall pay to the plaintiffs the sum of $84,000 being the replacement value of the LTC electric cable removed from the plaintiffs farm.
4. The first defendant shall pay the plaintiffs the sum of $780 being value of labour hired to clear tobacco stalks and related expenses.
5. The plaintiffs claims (b), (c), (d), (f), (g), (j) and (l) are hereby dismissed.
6. Absolution from the instance is granted in respect of plaintiffs claims (h) and (k).
7. The plaintiffs shall pay 20% of the first defendant's costs of suit.”
The first cross appellant is Valentine Ziswa (Ziswa) while the second cross-appellant is his wife, Margaret Ziswa. I will cumulatively refer to them in this judgment as the lessor.
The first cross-respondent is Graham Shaun Chadwick (Chadwick) and the second cross-respondent is Landos (Pvt) Ltd (the Company).
Graham Shaun Chadwick was a director in Landos (Pvt) Ltd, which he also used as his special purpose vehicle or agent to conduct his farming operations on Ziswa Farm (the farm) and on three other surrounding farms, namely, Gijima, Kelvin, and Landos.
THE BACKGROUND
On 20 March 2015, Graham Shaun Chadwick filed a defective Notice of Appeal against the cross appellants, which did not indicate the part of the judgment he sought to impugn.
He, thereafter, filed a contested chamber application for condonation and extension of time within which to appeal on 11 January 2018, which was dismissed with costs on 21 March 2018.
The effective disposal of the main appeal in this manner left the cross appeal pending.
FACTS
On or before 1 September 2008, Valentine Ziswa and Graham Shaun Chadwick entered into a verbal agreement for the lease of the farm and the inventoried equipment. The description, quantities, and state of the leased equipment was recorded in the comprehensive inventory the parties drew in October 2008.
The tobacco season in Zimbabwe generally runs from September to August and sales generally take place between March and June.
Graham Shaun Chadwick was on the farm during the 2008-2009, 2009-2010, 2010-2011, and 2011-2012 seasons (hereinafter called the first, second, third, and fourth seasons, respectively).
On 9 January 2009, Valentine Ziswa and Graham Shaun Chadwick signed a 10-year lease agreement.
On the same date, Valentine Ziswa and his wife (the First Partner) executed a second “Joint Venture Agreement” (JVA) with Graham Shaun Chadwick (Second Partner) for the “long term development” of the farm.
The two agreements were backdated to 1 September 2008.
Graham Shaun Chadwick not only leased the farm and the inventoried property, but, in addition, undertook to erect permanent structures (in each season) of an equivalent value to the seasonal rental payable.
In terms of clause 1 and clause 2, Graham Shaun Chadwick leased “the land, together with all buildings and other permanent improvements and certain immovables” for the ten year period from 1 September 2008 to 31 August 2018 for the purpose of growing “30ha of tobacco, 40ha of maize, 20ha of wheat and any other crop agreed between the parties.”
In terms of clause 3, the rental payable would be “6 per cent on the US$ of the gross turnover of the crops produced on the said land inclusive of bonuses and hailstorm insurances.”
In respect of tobacco, the rent was to be paid into the lessor's FCA by stop order raised at the auction floor, and cash payments were to be made in respect of other crops.
In addition to the rental, Graham Shaun Chadwick would, in terms of clause 4(d), be responsible for the repairs and maintenance of tractors and the inventoried equipment leased to him with effect from 1 September 2008.
Lastly, clause 9 stipulated that:
“This agreement constitutes the entire agreement between the parties, and no representation or undertakings given by one of them to the other of them prior to the execution hereof, and no variation of the conditions hereof, shall have any force or effect unless recorded in writing and executed by the parties hereof.” (The underlining covers the handwritten portions of the otherwise typeset agreement).
The Joint Venture Agreement (JVA) substantially duplicates the lease agreement. Clause 3 thereof reads as follows:
“3. The rent payable by the lessee to the lessor shall be 6 per cent per centum of the gross turnover in respect of the crops produced on the said land, and payment of such rent/lease shall be secured by means of STOP ORDER given by the lessee in favour of the Company against proceeds of tobacco sold through TOBACCO SALES FLOOR. Such PAYMENT shall be executed and registered as soon (sic) may be after the signing of this lease. 31 MARCH, 3 APRIL, 6 END OF JULY. MAIZE 1.5 TON MONTHLY.” (The underlined words and figures are handwritten)
It was common cause that the two agreements are complementary and separate and distinct. The requirements of the Joint Venture Agreement (JVA) were additional to the rental payable.
It was also common cause, that, Graham Shaun Chadwick was an active councillor for the Zimbabwe Tobacco Association (ZTA) for six (6) years and had been its Vice-President for another two (2) years.
He introduced the Zimbabwe Tobacco Association (ZTA) proforma lease and Joint Venture (JV) agreements, and, together with Valentine Ziswa, supplemented and annotated the terms and conditions therein by hand.
Graham Shaun Chadwick grew maize during the first season only and abandoned it in subsequent seasons in preference to the more lucrative tobacco crop. He never grew wheat on the farm.
Graham Shaun Chadwick did not abide by the direct deduction method prescribed in the agreements. He did not disclose to the lessor his prior preferential stop order obligations to the Zimbabwe Leaf Tobacco Company (Pvt) Ltd.
By 10 May 2010, Graham Shaun Chadwick had repaired a weir, put in a pump and generator, laid underground irrigation pipes, erected a centre pivot, paid for the labour for the reconstruction of a burnt down tobacco barn “maintained” all 14 barns by putting in place the necessary appurtenances for curing tobacco, repaired furnaces and sheds, and, at a cost of US$2,700 constructed 11 two roomed staff houses.
By letter dated 22 February 2011, Graham Shaun Chadwick offered to increase lease rental to 8%.
The offer was not accepted.
Instead, the lessor made the counter offer proposed in the detailed draft agreement, which the lessor signed on 13 March 2011.
The counter-offer was, in turn, rejected by Graham Shaun Chadwick.
Between 10 January 2012 and 18 May 2012, the parties failed to amicably resolve the lessor's demands for arrear rentals, maintenance of the leased equipment, and the repatriation of leased property that Graham Shaun Chadwick allegedly took to other farms.
In frustration at the impasse, the lessor sought to exercise a lien over the tobacco produce that was on the farm.
They were, by consent, interdicted by Graham Shaun Chadwick and Landos (Pvt) Ltd, on 24 May 2012 in case No. HC5477/12.
On 10 June 2012, the Ziswas instigated the arrest of Graham Shaun Chadwick for theft of some of the 2008 inventoried property. The complete police docket, compiled by Sergeant N'andu (IO), was produced by consent as exhibit 5.
Sergeant N'andu (the IO) first attended at the farm on 12 June 2012. On 19 June 2012, he conducted a verification or “exit” inventory with Valentine Ziswa and a proxy of Graham Shaun Chadwick, at the direction of the Area Public Prosecutor for Rusape (APP).
By letter dated 2 July 2012, Graham Shaun Chadwick cancelled the lease agreement and immediately vacated the farm.
On 5 September 2012, the Area Public Prosecutor for Rusape declined to prosecute, adjudging the criminal complaint to be a civil dispute.
On 26 September 2012, the lessor issued summons against the defendants claiming an aggregate sum of US$456,699 under 13 heads. These comprised of the following claims:
(a) Arrear rentals of US$64,160 for the fourth farming season;
(b) A refund of rates and levies of US$1,980 paid to the Makoni Rural District Council for the fourth farming season;
(c) The lessor's share of the hailstorm insurance proceeds of US$5,500 in respect of the second farming season;
(d) The outstanding developments for the first three farming seasons, represented by the value of the centre pivot that was removed from the farm, in the sum of US$67,507;
(e) Other enumerated property valued at US$187,707 that was also removed from the farm;
(f) The estimated damages to recovered property of US$15,905;
(g) US$7,600 for the damage to the fence and gates on the farm;
(h) US$15,008 for the repairs to the damaged tobacco barns and flue pipes;
(i) US$780 for removing the fourth season tobacco stalks;
(j) US$26,313 for vandalized overhead water storage tanks, pipes, workers houses, electrical underground cables, dams, pump unit, boreholes, and transformer;
(k) US$15,000 for maize deliveries contractually due to the lessor during the second to fourth farming seasons;
(l) US$4,240 for the tobacco seedlings grown on the farm and sold to other farmers;
(m) US$45,000 damages for loss of income in respect of the 2012/2013 tobacco cropping season caused by the premature and abrupt termination of the agreements.
THE PROCEEDINGS A QUO
The lessor made the following contentions:
The two agreements had separate and distinct obligations. Landos (Pvt) Ltd had a direct and substantial interest in the two agreements, and was, together with Graham Shaun Chadwick, therefore liable for the various contractual breaches that gave rise to the 13 claims.
The lessor's documentary and oral evidence established both liability and quantum in respect of claim (a), (d), (e), (f), (g), (h), (j), (k) and (l) at the higher rate of 8 per cent and not at the 6 per cent in the two agreements.
The lessor abandoned claim (m) and conceded that Graham Shaun Chadwick and Landos (Pvt) Ltd be absolved from the instance in respect of claims (b), (c) and (i) on the ground that the lessor had failed to established the due amounts.
Graham Shaun Chadwick conceded that the annotations formed part of the terms agreed by the parties on 9 January 2009.
Counsel for Graham Shaun Chadwick argued, that, the lessor failed to establish both liability and quantum.
He submitted, on the authority of Agricultural Finance Corporation v Pocock 1986 (2) ZLR 229 (S), that, the oral variation of the rental rate from 6 per cent to 8 per cent in violation of the non-variation clause (Clause 9 of both agreements) of the agreements was inefficacious and invalid.
He also relied on the twin principles of privity and sanctity of contracts enunciated in CHRISTIE: The Law of Contract in South Africa, 6th ed, 2010 Lexis Nexis…, to call for the dismissal of all the claims sought against Landos (Pvt) Ltd.
Counsel, however, conceded that Graham Shaun Chadwick was liable for unpaid rental of US$8,808 for the fourth season and US$36,000 for the LTC line [falling under claim (e)] and not the respective US$64,160 and US$84,000 sought by the lessor.
He further contended, that, as the lessor had failed to establish liability or where liability had been established, the quantum thereof in respect of claims (b), (c), (d), the remainder of (e), (f), (g), (h) and (j), the claims fell to be dismissed.
Counsel requested the court a quo to discard the evidence of the valuator for the reason that it was unconventional and unprofessional.
He argued, that, the valuation was in breach of the 'objective' and 'appreciable help' standards expected of expert evidence that are propounded in Stock v Stock 1981 (3) SA 1280 (A)…,; Gentiruco AG v Firestone SA (Pty) Ltd 1972 (1) SA 589 (A)…,; and Menday v Protea Assurance Co. Ltd 1976 (1) SA 565 (E)…, and articulated in SCHWIKKARD & Van der MERWE's Principles of Evidence, Juta 2009…,.
He, therefore, prayed for the dismissal of claims (d) (e), (f), (g), (h) and (j), which rested on the valuator's computations.
Counsel further contended, that, the claims ought to be dismissed for the further reason that the lessor had not amended the quantum to reflect the new amounts touted by the valuator some of which were higher than the individual breakdowns set out in annexures 2 and 3 to the summons.
THE FINDINGS A QUO
The court a quo made the following findings:
The only effectual agreements were the lease and the Joint Venture agreements dated 9 January 2009 and not the draft agreement of 13 March 2011.
The operational rental rate was 6 per cent and not 8 per cent. This was because the offer of 22 February 2011 had not been accepted nor had the non-variation clause been invoked.
Valentine Ziswa was an inconsistent, unreliable, untruthful, and greedy witness.
He prevaricated on whether the tenure of the agreements was 5 years, 8 years, or 10 years and whether the rental rate was 6 per cent, 8 per cent, or 10 per cent.
He was greedy because he unjustifiably claimed for municipal imposts, maize deliveries, seedlings, and hailstorm insurance proceeds, which were all not covered by the two agreements. He also demanded for the value of the centre pivot, which he had categorically rejected as constituting a permanent structure.
The court a quo also excoriated the valuator for flaunting his professional qualifications and experience at the expense of conventional valuation principles. It, therefore, discarded his depreciated replacement cost computations.
Graham Shaun Chadwick, whose demeanour was highly extolled, was found to be a truthful, good, and reliable witness.
His status as an accomplished tobacco farmer with 20 years experience, and who exuded confidence and conceded where he was liable, endeared himself to the court a quo at the expense of Valentine Ziswa whose penchant for renting out instead of farming on his own account was deplored by the court.
Notwithstanding the contrary general findings on credibility of Valentine Ziswa and the valuator, the court a quo believed Valentine Ziswa's oral testimony on the US$780 claim on tobacco de-stalking and the chartered accountant's valuation of the LTC line. It, however, dismissed the rest of their evidence on the valuation of all the other claims. It further held that seedlings were not a crop as they could not be sold at the auction floors.
The court a quo dismissed the claims against Landos (Pvt) Ltd on the twin basis of lack of privity of contract and sanctity of contracts.
It held, that, these cardinal legal principles could not be negated by Graham Shaun Chadwick's directorship of the company, his use of the company's letterhead in correspondence with the lessor and bank account to effect payment of his lease obligations.
It issued the order that I adverted to at the commencement of this judgment.
Aggrieved by the order granted a quo, the lessor appealed to this Court on the following grounds:
“1. The court a quo erred in not finding that the reduction of part of the agreement between the parties to writing and the existence of the non-variation clause notwithstanding, on the entirety of the evidence before the court, the agreement between the parties consisted in part of the written portion and in part of the oral agreement sworn to by the cross appellants.
2. The court a quo erred, for the stronger reason, in not finding that the second cross respondent was privy to the whole of the agreement between the parties and in dismissing the claim against it.
3. The court a quo erred in its treatment of the evidence and assessment of the cross appellants claim with the result, that, the court misdirected itself in its gratuitous conclusions on the first cross-appellant's demeanour and motives culminating in the rejection of the cross-appellants claims on this flawed basis.
4. The court a quo erred in not finding that the rent for the use of the cross-appellants farm varied from 6 per cent to 8 per cent of the gross annual turnover realised on the farm.
5. The court a quo erred, in any event, in accepting the appellant's bare testimony that the sum of US$21,000 paid to the cross appellants was towards the rental for the 2011-12 season and in deducting the same from the rental due and owing to the cross appellants.
6. The court a quo erred in its treatment of the evidence in concluding, that, the claim for the tonnage of maize was not within the parameters of the agreement of the parties and in rejecting the cross-appellants testimony regarding the quantum thereof.
7. The court a quo erred in holding, that, the claims for the centre pivot and generator did not fall within the parameters of the developmental agreement.
8. The court a quo erred in holding that the seedlings produced on the cross appellants farm, but sold elsewhere, were not produce for the purposes of the parties agreement, and in rejecting the cross-appellants quantification thereof.
9. The court a quo erred in finding, as it did, that there was no evidence to substantiate the cross appellants claim (e) (property removed and not returned) and claim (g) (removed and/or damaged fences and gates) and in finding the property could have been unusable.
ALTERNATIVELY
The court a quo erred, in any event, in dismissing the said claims as opposed to granting absolution from the instance.
10. The court a quo erred in rejecting the evidence of Pange purely on the basis that he had used one as opposed to three quotations which had been sourced by the cross-appellants, and had applied the general accounting depreciation formulae without a physical examination of the property in question.
11. The court a quo erred in not awarding the claim for the irrigation pump, which the appellant conceded in his evidence and offered to compensate for the same.
12. The court a quo erred in accepting as true the appellant's testimony based solely on the fact that he managed to impress the judge in terms of his demeanour.”
The cross-appellants sought the success of the cross appeal with costs, the amendment of the judgment a quo by granting, jointly and severally, the one paying the other to be absolved:
(i) Arrear rentals of $67,502=40 for the 2011-12 season (being 8 per cent of gross realization of US$843,780 from sale of 205,800kgs at US$4=10 per kg);
(ii) Alternatively, judgment in the sum of US$50,626=80 being 6 per cent of the above gross realisation;
(iii) Judgment in respect of claims (d), (f), (j) and (i);
(iv) Judgment for the reduced sum of US$364,729 as particularised in exhibit 3; and
(v) Costs of suit against the cross respondents.
THE ISSUES
The issues that arise from the grounds of appeal are the following:
1. Whether the variation clause was waived by the parties to the lease agreement.
2. Whether the second cross-respondent was liable to the lessor's claims.
(a) Rentals for the fourth season (a portion of claim (a)).
(b) The value of the developments in lieu of the Centre Pivot (claim (d)).
(c) Damages for missing equipment (including the irrigation diesel pump whose liability was conceded) (claim (e)) and for damaged property and equipment on the farm (claim (f)).
(d) Repairs to tobacco barns (claim (h)).
(e) Vandalized overhead water tanks, reservoirs, boreholes, and staff houses and their connecting pump unit, cables, electrics, and pipes claim (j).
(f) Maize deliveries due for the second to fourth seasons (claim (k)).
(g) Value of tobacco seedlings (claim (l)).
3. Whether or not the court a quo properly exercised its discretion in respect of costs.
THE ARGUMENTS BEFORE THIS COURT
At the onset of his submissions before this Court, counsel for the lessor abandoned claims (b), (c) and (g).
He persisted with the appeal against the dismissal of the entire claim against the company, the part dismissed in respect of claims (a) and (e), and the dismissals against claims (d), (f) (h), (j), (k) and (l).
Counsel for the lessor contended, that, the dismissal of the lessor's claims against Landos (Pvt) Ltd was erroneous.
He argued, that, the resolution passed by Landos (Pvt) Ltd, on 18 May 2012, authorising Graham Shaun Chadwick to “represent the company in any legal matter against Mr and Mrs Ziswa” before the institution of action proceedings on 26 September 2012, showed that it had a direct and substantial interest in the two agreements.
He further argued, that, the main credibility findings in favour of Graham Shaun Chadwick and against Valentine Ziswa, upon which the court a quo premised its dismissal of the lessor's claims were, on the totality of the adduced evidence, irrational.
He argued, that, notwithstanding the embodiment of the non-variation clause in the lease agreement, the lessor had, contrary to the finding a quo, established that Graham Shaun Chadwick had, by conduct, waived the lease rental rate from 6 per cent to 8 per cent on the second and subsequent seasons.
He further argued, that, the valuation testimony of the chartered accountant had proved the damages suffered by the lessor as at the date Graham Shaun Chadwick cancelled the agreements and vacated the farm.
Lastly, he contended that the costs order granted a quo constituted a patent failure in the exercise of discretion warranting interference by this Court.
Per contra, counsel for Graham Shaun Chadwick and Landos (Pvt) Ltd vehemently supported the impugned findings and conclusions of the court a quo.
He argued, that, the claims against Landos (Pvt) Ltd were rightly dismissed because it was not privy to the lease agreements.
He strongly contended, that, having acted as an agent, it could not be sued either separately or together with its principal.
He further contended, that, the non-variation clause precluded the lessor from relying on any variation derived from an oral agreement or on the offer to increase the rate to 8 per cent which they did not accept.
He submitted, that, an oral agreement could not waive a non-variation clause.
He further contended, that, the court a quo had not relied on the demeanour of the witnesses only but also on the inconsistencies that characterized the evidence of the lessor's star witness, Valentine Ziswa.
Lastly, he contended that the valuator's testimony was rightly discarded for being both unconventional and unprofessional.
Counsel impugned his competence on two bases:
(i) The first was that he had relied on the quotations availed to him by Valentine Ziswa without conducting a physical inspection of the equipment.
(ii) The second was that he had further relied on internet sites, that he failed to disclose, in ascertaining the life span of some of the equipment listed in exhibit 3.
ANALYSIS OF THE LAW AND THE FACTS
WHETHER LANDOS (PVT) LTD (THE COMPANY) WAS LIABLE FOR ALL OR ANY OF THE CLAIMS SOUGHT BY THE LESSOR
Counsel for the lessor argued, that, Landos (Pvt) Ltd was privy to the whole agreement in the following respects:
(i) Firstly, the lessor regarded Graham Shaun Chadwick as a representative of Landos (Pvt) Ltd.
(ii) Secondly, Landos (Pvt) Ltd, through its various employees, carried out Graham Shaun Chadwick's obligations. It, in fact, exhibited its direct and substantial interest in the two agreements by being the first applicant in the urgent chamber application between the same parties in case No. HC5477/12, so argued counsel.
(iii) Thirdly, the correspondence that emanated from Graham Shaun Chadwick was invariably on the company's letterheads.
(iv) Fourthly, the company not only acknowledged indebtedness to the lessor but had the tobacco auction floor sales sheets issued in its name.
Counsel for Graham Shaun Chadwick and Landos (Pvt) Ltd made the contrary contention, that, the company was a separate and distinct person from Graham Shaun Chadwick. It could therefore not be vicariously liable for its director's personal debts.
He further argued, that, the lessor had not demonstrated the pre-conditions for lifting the corporate veil such as fraud, dishonesty, or improper motive.
He further relied on the twin principles of privity and sanctity of contract to countervail counsel for the lessor's contentions.
He further argued, that, in our law, an agent cannot be sued in its own name for the contractual or delictual breaches of its principal notwithstanding its intimate involvement in the principal's farming operations or the use of its letterheads and personnel.
The basis provided in the lessor's further particulars for suing the company was delictual.
They averred, that, the company breached “a general duty imposed on it by law to ensure that no damage would be caused on plaintiffs' property.”
This delictual basis was not pursued in evidence nor motivated in argument a quo. It was neither raised as a ground of appeal nor motivated in this Court.
In fact, the second ground of appeal impugns the failure a quo to find the company to have been privy to the two agreements.
I agree with counsel for Graham Shaun Chadwick and Landos (Pvt) Ltd, that, the company was not privy to the two agreements. Rather, it was an agent of Graham Shaun Chadwick: see Printing Registering Co. v Sampson 19 EQ 462…,.
In any event, it is clear from our law, that, where the principal is known, an agent cannot be sued for the contractual or delictual breaches committed by its principal.
In this respect, MALABA J…, pertinently remarked in Taunton Enterprises (Pvt) Ltd & Anor v Marais 1996 (2) ZLR 303 (H)…, that:
“The general rule is that a person who acts as an agent and contracts with a third party in the name of the disclosed principal is not a party to the contract and is not personally liable on the contract: Wood v Visser 1929 CPD 55; Marais v Perks 1963 (4) SA 802(E); de Villiers & Macintosh, The Law of Agency in South Africa, 3ed at 560.”
The converse position, that an agent cannot sue on behalf of a principal, was also set out in AMI Zimbabwe (Pvt) Ltd v Casalee Holdings (Successors) (Pvt) Ltd 1997 (2) ZLR 77 (SC)…, thus:
“Without such a cession of action, Casalee Zim cannot sue AMI on behalf of Casalee Belgium because an agent cannot sue on behalf of its principal: see SWA Amalgameerde Afslaers (Edms) Bpk v Louw 1956 (1) SA 346 (A) at 355C:
'…, the auctioneer can sue for the purchase price without cession of action from the seller only if, in the transaction, he sold as principal.'
…,. So, if Casalee Zim is suing as agent, it is out of court.”
In the circumstances, the finding a quo that the lessor had no legal basis for suing the company cannot be faulted.
The second ground of appeal ought to fail.
