MAKONESE J: This matter was first heard on the 31st
January 2012. The matter was then postponed on divers occasions for
reasons beyond the control of the court. The parties led evidence from
the Plaintiff and Defendant's witnesses and judgment was reserved. The
respective legal practitioners, both senior legal practitioners, undertook
verbally to file submissions by 30th September 2013.
I made
various efforts through my clerk to secure these written submissions but none
were forthcoming. On the 20th December 2013 Defendant's legal
practitioner filed his closing submissions, indicating his frustration that he
had waited in vain for Plaintiff's legal practitioner to file his submissions
first to enable him to respond. After a further waiting period the Plaintiff's
legal practitioner finally and eventually filed his closing submissions on the
3rd of February 2014. I must indicate however, that
Plaintiff's legal practitioner has apologised for his late filing of the
closing arguments. I must also observe that it is important for legal
practitioners to file documents timeously moreso where they make undertakings
to file such documents within a stipulated period.
Background
The Plaintiff is a duly incorporated
company in terms of the laws of South Africa whose address and principal place
of business is in the Republic of South Africa. The 1st and 2nd
Defendants are duly incorporated companies in terms of the laws of
Zimbabwe. The Plaintiff is in the business of supplying mining equipment,
spares and machinery to various companies inside and outside Zimbabwe. In
the year 2008 the Plaintiff supplied certain spares and equipment to the
Defendants. At the commencement of the trial, the court was advised by
the parties that they were in agreement and that save for an amount of R119
439.90 payments made were equivalent to the value of goods supplied by the
Plaintiff. In other words, but for any interest and legal charges raised
by the Plaintiff the only amount in dispute is R119 439.90. The Plaintiff
further avers that the Defendant is liable to pay the said sum of R11943.90
together with interest at the rate of 10% per month as well as collection
commission and costs on a legal practitioner and client scale. The
Defendant denies that it owes any amount and contends that in any event there
is no obligation to pay interest at the rate of 10% per month as well as
collection commission and costs on a punitive scale. I shall deal with
these issues in turn:
WHETHER PLAINTIFF IS ENTITLED TO
PAYMENT OF R119439.90
The Plaintiff asserts that the claim for
payment of R119439-90 is valid and must stand. The Plaintiff led evidence
from Mathew Chikwanda, who is the Chief Executive Officer of the Plaintiff's
company. He testified that in or around March 2008 Plaintiff opened an
account for the Defendant for the supply of mining spares and equipment.
On various dates goods were brought in from South Africa into Zimbabwe and the
Defendant took delivery of the said goods on credit. Chikwanda told the
court that it was understood by the parties that payment would be effected
within 90 days from the date of delivery. He stated, further, that it was
in the contemplation of the parties that the terms of credit would be
formalised by reducing them into writing. The written credit agreement
would cover issues including the rate of interest, collection commission and
legal costs. It was also envisaged that the issue of securitization would
be covered in such agreement. The parties never got to sign the agreement
as there was no agreement on certain terms. The Plaintiff acknowledged
that the defendant raised a query regarding goods worth R119439.90, which it
says it never received. The method of delivery as explained by the
Defendant's witness Patrick Zenizeni was accepted by Chikwanda. It was to
the effect that the Plaintiff's driver would bring the goods to the Defendant
at Zvishavane. A physical check would be conducted by the driver and the
Plaintiff's employee against delivery notes. If satisfied, the Defendants
would sign the delivery note confirming receipt of the goods. In the
event that certain goods were missing appropriate endorsements would be made
and signed for by both parties on the delivery notes. The defendant
produced copies of the delivery notes that showed that certain goods were not
received. Mr Chikwanda did acknowledge that there was a query regarding
certain goods that were allegedly not received by the Defendant. It seems
to me that the evidence of Defendant's storeman P Zenizeni was very clear in
this regard. Chikwanda was forced to concede that these goods were not
received. He sought to argue that there were two separate supply
contracts being the ordinary and initial contract or arrangement and what was
referred to as the CCJ Petrow arrangement, the latter being an arrangement
where Defendant's purchases from the Plaintiff were to financed by CCJ Petrow
(Pty) Limited. Chikwanda's submission was that these missing goods were
not goods that were being delivered on the ordinary account that is the subject
of these proceedings but on the CCJ Petrow account. I did not follow the
logic advanced by Chikwanda on this aspect. In any event, and at any rate
once it was accepted that there were goods that were not received and it is
conceded that such goods have not been accounted for, it stands to reason that
the Defendant cannot be compelled to pay for goods not received. On this
basis alone the Plaintiff's claim cannot succeed.
PAYMENT OF COLLECTION COMMISSION
It is necessary for me for the purpose of
the completeness of this judgment to comment on Plaintiff's claims for
collection commission. The Plaintiff has sought to rely on the provisions
of an unsigned credit agreement. The Defendant cannot be contractually
bound by an unsigned agreement in the particular circumstances of this
case. The Plaintiff's evidence that it was in the contemplation of the
parties that the terms in the unsigned agreement would bind the parties is not
tenable and the court rejects it. In this jurisdiction collection commission
is governed by Statutory Investment 314 of 1982 (The Law Society
By-Laws). The Law Society fixes the rate at which legal practitioners may
raise or claim collection commission against their clients. Since
dollarization the Law Society does not appear to have fixed a tariff governing
collection commission. The rate which has always been applied is 10% of
the capital debt. However, collection commission may be determined by the
parties who may fix a rate for particular commercial transactions. In such
instances the rate applicable must be reduced to writing and agreed to by the
contracting parties. Where the Defendant has not agreed to pay collection
commission at all the court can neither fix a rate for collection commission
nor compel the Defendant to pay such commission.
The Defendant has properly indicated that there is an even stronger argument
against liability for the collection commission by the Defendant. The
position which has not been controverted by the Plaintiff is that Plaintiff
obtained judgment against Defendants under case No. HC 1288/10 by way of a
Summary Judgment application on the 5th of August 2010. The
Plaintiff then issued a Writ of Execution on the strength of which the Deputy
Sheriff attached the Defendant's property. Thereafter Defendants made
payment to the Deputy Sheriff who passed on the money to the Plaintiff's legal
practitioners in September and November 2010 after the issuance of the Writ and
attachment of Defendant's property. It is now a settled legal principle
which has become part of our law that once legal proceedings have been
instituted and where the matter has gone to execution stage, a legal
practitioner can no longer claim collection commission. It is now
considered that recovery of any amounts due is now being done through the
process of the court and therefore collection commission is no longer
chargeable. See UDC Rhodesia Limited –v- Ushewokunze 1972(2) ZLR
page 97; and Scotfin Ltd v Ngomahuru 1998 (3) SA 466 (ZH).
For this and other reasons alluded to there is therefore, in my view no basis
for Plaintiff's claim for collection commission.
Interest
The Plaintiff avers that the Plaintiff
operates a business involved in the supply of goods for the mining industry and
that there was an understanding that interest should be levied on overdue
accounts. The Plaintiff argues that the goods were supplied on a 90 day
account and that it follows naturally, that after the expiration of the 90 day
period interest would begin to accrue on the outstanding amounts. The
Plaintiff's witness sought to relie on a bundle of e-mail communications
between the parties wherein the Defendants undertook to settle the various
outstanding amounts. The undeniable fact, however is that there was never
an agreement whether oral or written on the rate of interest to be paid by the
Defendant.
In terms of the provisions of the Prescribed Rate of Interest Act [Chapter
8:10] interest can only be pegged at the prescribed rate, in the absence of an
agreement by the parties on any other rate. Section 4 of the relevant Act
provides as follows:
“If a debt bears interest and the rate at which the interest is to be
calculated is not governed by any other law or by an agreement or trade or
custom or in any other manner, such interest shall be calculated at the
prescribed rate as at the date on which such interest begins to run, unless a
court of law, on the ground of special circumstances relating to that debt,
order otherwise.”
See also the case of; Funding Initiatives International (Pvt) Ltd v
Constantine Mabaudi HH 20/07.
The above case lays out the principle that interest on a debt must be within
the permissible limit before it can be treated as enforceable and recoverable.
In casu, the Plaintiff was charging interest at the rate of 10% per
month which eventually translates to 120% per annum. This rate of
interest was clearly excessive and by any stretch of imagination it cannot be
concluded that it was in the contemplation of the parties that in the event of
a default, the Plaintiff would be permitted to recover interest at such a
punitive rate.
From all the evidence presentenced by the parties I am of the view that the
Plaintiff failed to prove its claim on a preponderance of probabilities.
In the result, I accordingly dismiss the Plaintiff's claims with costs.
Messrs Cheda and partners, plaintiff's legal practitioners
Messrs
Dube, Manikai & Hwacha, defendants' legal practitioners
