GARWE
JA: On 25 July 2011, the High Court at
Harare granted an order in the following terms:
“FINAL RELIEF SOUGHT
That you show
cause to this Honourable Court why a final
order should not be made in the following terms:-
1.
Pending
the determination of the dispute between the parties by the process of
Arbitration in terms of the provisions of the Arbitration Act, the first
respondent shall not take any steps neither shall it act in any such manner as
is inconsistent with the rights of the applicants arising from the agreement
between the parties (as amended), and shall not act in such a way unless
entitled to so act in terms of any Arbitral Award that may be handed down.
2.
The
costs of this application shall be costs in the envisaged arbitration
proceedings.
INTERIM
RELIEF GRANTED
That pending
determination of this matter on the return date, applicants are granted the
following relief:-
1.
The
first respondent is directed to restore to the first applicant the internet
based reporting links and all access to Trustco mobile hardware and software,
thus enabling it to monitor and process airtime purchase transactions and
otherwise perform its obligations in terms of the agreement; and
2.
The
first respondent be directed to refrain from undertaking and implementing a
competing, infringing service to that provided by the first applicant in terms
of the agreement”.
Dissatisfied
with the order, the appellant filed a notice of appeal with this Court. In essence the appellant seeks an order
setting aside the decision of the court a
quo and substituting it with one dismissing the application with costs.
BACKGROUND
Econet Wireless (Pvt) Ltd
(“the appellant”) is a mobile network operator carrying out its operations in
Zimbabwe. On 17 August 2010 the
appellant concluded an agreement with Trustco Mobile (Proprietary) Ltd, ( “the
first respondent”), a Namibian based company and subsidiary of Trustco
Holdings, whose core business is micro-insurance, financial services and the provision of
various wireless application services through mobile telephony. In terms of the agreement, the first
respondent was to provide certain software and support services to facilitate
the provision of free life cover to Zimbabwean cellular phone users and
customers of the appellant against the purchase of cellular airtime from the
appellant. In terms of the agreement life
cover was to be underwritten by First Mutual Life Assurance Company of Zimbabwe
(“First Mutual”) at no cost to the appellant's customers but against
payment of a fee by the appellant to the first respondent calculated in terms
of the agreement. First Mutual was to
underwrite life cover against payment of a premium which was to be subtracted
from the amounts due to the first respondent by the appellant. The project came to be known in Zimbabwe as
“Ecolife”
The project was to be
facilitated by a transaction facilitation system, which allowed communication
between users seeking insurance, their mobile service provider and insurance
underwriter. The system would record all
the transactions that took place. A subscriber
would only be entitled to life cover if he purchased airtime in excess of three
dollars over a period of a month. For
life cover to be retained, further airtime of more than three dollars had to be
purchased. All subscribers who spent
more than three dollars would then be accepted for insurance by First Mutual.
The project was presented
on the basis that it would result in a substantial increase in the appellants'
airtime sales. It was a term of the
agreement that the same was to endure for an initial period of eighteen months and
that the appellant was to refrain from performing an act contesting, impairing
any part of the rights and infringing, copying, duplicating or passing off any
of the first respondent's rights. It was
also a term of the agreement that in the event of a breach not remedied within
fourteen days of notice of such breach, the innocent party was entitled to
cancel the agreement without prejudice to any other rights it may have had.
In February 2011, a
dispute arose in regard to the first respondent's entitlement to certain
royalties. Whilst the appellant agreed
to pay a portion of the royalty fee, it however maintained that no fees would
be paid in respect of customers whose details were not completely
captured. On 26 May 2011, the appellant
wrote to the first respondent also expressing its concerns over what it
regarded as violations of the agreement by the first respondent. What happened thereafter is what gave rise to
the proceedings the subject of this appeal.
On 31 May 2011, the first
respondent sent a letter to the appellant the contents of which triggered the
dispute that is the subject of this matter.
That letter reads, in relevant part:
“The current
situation is unbearable. Econet as a registered insurance broker, is holding
out to 1.85 Million subscribers that they in fact have life insurance while the
true state of affairs is that the insurer is not obliged to pay any claim while
its premiums are outstanding. Trustco cannot be associated with such a state of
affairs.
Therefore be
advised that all obligations of Trustco will be suspended 3 June 2011 at 12h00
Namibian time if all overdue payments are not received by then.
.........................................................
Kindly be further
advised that if all overdue amounts, of which you have been advised, are not
received within 14 days from date hereof Trustco will deem the contract
cancelled in terms of Clause 17.1 of the agreement”.
(the underlining is for emphasis).
The
appellant responded the following day, 1 June 2011, in the following terms:-
“We acknowledge
receipt of your letter dated 31st May 2011 regarding the above. Your
intention to terminate the agreement has been noted and accepted.
Econet maintains
that it has discharged all its obligations under our agreements with you. We
repeat our averment that royalties are only payable in respect of subscribers
who buy airtime of a value exceeding $3 per month. Those subscribers who buy
airtime amounting to $3, but do not buy any additional airtime are not entitled
to cover. Consequently, no royalties are payable in respect of such subscribers
.....”. (the underlining is for
emphasis)
In a letter dated 3 June 2011, the day it had
threatened to suspend all obligations if all overdue payments were not
received, the first respondent wrote in the last paragraph thereof:-
“Legal advice
received indicated that we are not entitled to switch off the system until 14
working days have lapsed since 31 May 2011. Hence the system will remain
operative until then”.
The appellant, in a letter dated 5 June 2011, stated:-
“We refer to your
letter of 3 June 2011 and advise that we stand by our letter of 1 June 2011 in
terms of which we accepted your notice of termination of our agreement.
Therefore, we consider the agreement terminated. We shall proceed to make
arrangements to ensure that our subscribers are not prejudiced by the
termination of the agreement that was initiated by you.
.......................................................”
The
appellant further advised that in view of the decision it had taken on the
matter, it had commenced the steps necessary to discontinue the use of the
Trustco Mobile Concept and would not use the system with effect from 14 June
2011.
On 5 June 2011 the appellant severed links with the first
respondent's system. By letter dated 8 June 2011, the first respondent's
lawyers, Messrs Rudolph Bernstein &
Associates wrote to the appellant advising that the letter of 31 May 2011
indicating an intention to cancel the agreement was never intended to
constitute an invitation to the appellant for the consensual termination of the
agreement and that by purporting to accept such termination, the appellant's
conduct constituted an attempt to repudiate the agreement. The letter further made it clear that the
first respondent would not accept such repudiation and that it had no intention
of cancelling the agreement pending the resolution of the dispute between the
parties. The letter further gave the
appellant until 9 June 2011 to restore all links failing which urgent
injunctive relief would be sought.
As a result of this impasse, the first respondent filed
on 24 June 2011 an urgent chamber application in the High Court in which it
sought the relief in the terms already indicated.
After hearing argument, the court a quo made the following findings:
(a)
That a reasonable explanation had been
tendered for the delay in the filing of the application and that the matter was
urgent.
(b)
That the relief sought in the interim was
restoration of the status quo ante
and on the return day a show cause why the first respondents' rights should not
be preserved pending determination of the dispute by arbitration. In other
words the relief sought on the return day was dissimilar to the interim relief
sought.
(c)
That the requirements for an interdict had
been met and in particular the balance of convenience favoured the respondents.
(d)
That the notice to terminate issued by the
first respondent was in the future and not ex
nunc and therefore invalid. In the
circumstances there was no cancellation which the appellant could note and
accept and consequently the agreement remained valid.
Consequent to the above findings, the court a quo granted an order in terms of the
draft filed. That order is the subject
of the present appeal.
It is perhaps pertinent
to mention at this juncture that the first respondent thereafter successfully
applied for an order allowing execution notwithstanding the noting of the
appeal. From the submissions made by
counsel, it is apparent that the parties have been engaged in arbitration
proceedings pursuant to the order granted by the court a quo.
The appellant has
attacked the decision of the court a quo
on several bases. Since a point in limine has been taken in respect of
the propriety of the notice of appeal itself, it becomes necessary to quote the
grounds of appeal in toto.
The appellant's grounds of appeal are:
“1.
The learned Judge in the court a quo erred in fact, and at law by finding that
the matter was urgent and in so finding, failed to pay due regard to the
background to the matter, the activities of respondents prior to the filing of
the application, to the submissions made and numerous authorities cited by
appellant and to the matters raised by appellant in its opposing papers.
3.
The
learned Judge in the court a quo erred in fact and at law in finding that the
relief sought in the amended provisional order did not suffer from the same
defect as the provisional order originally filed and erred in finding that the
interim and final reliefs prayed were not the same or not substantially
similar.
3. The learned judge in the court a quo erred in
failing to appreciate that by granting the interim relief as amended, the order
granted has the effect of a final order.
4.
The learned judge in the court a quo erred in fact, and at law by failing to
appreciate, and disregarding case authorities drawn to his attention that the process
of arbitration to which the final relief prayed for refers relies (sic)on an
arbitration clause in the agreement which does not oblige the parties to have
any dispute determined by the process of arbitration and in so finding took
away the appellant's discretion to adopt other dispute resolution methods that
are permissible at law, and under the agreement.
5.
Having regard to the hostility between the parties that was evident on the
papers, the protests by appellant's subscribers over abuse of appellant's
system through unsolicited messages sent by the respondents, the fixed term
nature of the contract between the parties, and the declaration by respondents
herein that they did not wish to honour their side of the contract, the learned
judge in the court a quo erred in finding that respondents had established all
requirements for the grant of a temporary interdict and in particular erred in
finding:
5.1
that respondents fear that appellant had infringed its concept was well
grounded, such finding having been erroneously arrived at in view of
appellant's averment that such infringement was not in fact possible because
appellant does not have access to the source code of respondents system
5.2 that the balance of convenience favoured the granting of the interdict, and
5.3 that no other adequate remedy was available to
the respondents.
6.
Having regard to the same factors referred to in paragraph 5 above, the learned
Judge in the court a quo erred in exercising his discretion to grant specific
performance of the agreement in all the circumstances.
7.
Generally, the learned judge in the court a quo did not apply himself to the facts of the matter
before him as a result of which he made the following findings of fact that are
not supported by the facts of the matter before him namely:
7.1
That the agreement between the parties required first respondent to procure
free life cover for the appellant's subscribers from First Mutual Insurance
Company when the agreement contained no such requirement at all, and the facts
before the judge showed that the first respondents would not have been able to
do so as it was appellant that sought and obtained approval from the
Commissioner of Insurance to obtain insurance cover for its subscribers and pay
for such cover on behalf of its qualifying subscribers.
7.2
That the “business model for the provision of free life cover as against the
purchase of airtime amounts to an intellectual property” when the agreement
between the parties did not so provide.
7.3
That “copyright and international patent had been applied for” when the agreement
stipulated falsely that first respondent already was a holder of International
patent over the “Trustco Mobile Concept”, and the undisputed facts on record
showed that such patent had been sought and declined on the basis the Trustco
Mobile Concept was not novel and was thus not patentable, facts that first
respondent kept hidden from appellant.
7.4
That “substantial revenue running into millions of US dollars was reaped from
it (the system) to the benefit of the three parties to the agreement” thereby
adopting first respondent's bald and disputed assertions without question and
in the absence of evidence to that effect.
8.
More specifically, the learned judge in the court a quo based his judgment on
the letter dated 31 May 2011 written by the first respondent and found that the
contents thereof was a mere expression of an intention to terminate the
agreement after 14 days, which intention first respondent was entitled to
withdraw on the following selective quotation of the first respondent's letter
of 31 May 2011:
“Therefore
be advised that all obligation of Trustco will be suspended on 3 June 2011 at
1200 hours Namibian time if all overdue amounts, of which you have been
advised, are not received by then ……Kindly be further advised that if all
overdue amounts, of which you have been advised, are not received within 14
days from the date hereof Trustco will deem the contract cancelled in terms of
clause 17.1 of the main agreement.”
Had the learned
judge a quo considered the full text of the relevant part of the letter, which
reads as follows:
“Therefore
be advised that all obligations of Trustco will be suspended on 3 June 2011 at
12oo hours Namibian time if all overdue amounts, of which you have been
advised, are not received by then.
We expect
yourselves to appraise the Postal & Telecommunications Regulatory of
Zimbabwe (Potraz), the Insurance and Pension Commission as well as the Reserve
Bank
of
the status quo of Eco Life with immediate effect. On Monday 6 June 2011 Trustco
will advise the Zimbabwean Press and its shareholders via SENS of the status
quo of Ecolife as required by the regulatory environment Trustco operates in.
Kindly be further
advised that if all overdue amounts, of which you have been advised, are not
received within 14 days from the date hereof Trustco will deem the contract
cancelled in terms of clause 17.1 of the main agreement.”
he would have come to the
inevitable conclusion:
a.
that
the letter was an unequivocal expression by first respondent of an intention
not to discharge its obligations under the agreement with effect from 3 June
2011 prior to the expiry of the 14 days, and
b.
that
such conduct at law constitutes anticipatory breach of contract, or repudiation
of contract from which first respondent was not entitled to approbate
particularly as such repudiation was accepted
and acted upon by appellant in notifying the regulatory authorities and
its subscribers of the situation before the 3 June 2011, and proceeding to
disconnect first respondent's system from its network.
c.
that
such repudiation had been accepted by appellant in writing, or by the
appellant's conduct in disconnecting first respondent's system from its
network.
The
learned judge in the court a quo thus erred both in fact and in the application
of the law.
9.
The learned judge in the court a quo
erred in fact, and at law by rejecting the submission that the facts of the
matter before him related to repudiation of contract, or anticipatory breach
and was thus distinguishable from the case of Waste Management Services (Pvt)
Limited that he relied upon in his judgment.
10. The learned judge in the court a quo erred in
fact and law in failing to attach
weight to various threats by first respondent to suspend its obligation under
the contract and by creating the impression that the Trustco Mobile Concept
worked flawlessly for nine months when the facts on the record showed repeated
failures that were well documented and were not disputed.
11. In any event,
the learned judge in the court a quo erred in granting relief to the second respondent
in the absence of a finding that second respondent has a substantial interest
in the matter particularly as the second respondent was not a party to the
agreements between the parties in this matter.”
In
their heads of arguments the respondents also took a number of points in limine. Most were not persisted in save for two. These are:
(1)
Whether the grounds of appeal are concise
and if not whether the appeal is
fatally defective for that reason.
(2)
That the appeal is not directed at the
order but the reasoning of the court a
quo.
I turn to deal with the above issues as well as the
others that arise from the papers.
WHETHER THE NOTICE OF
APPEAL IS LACKING IN PRECISION AND THEREFORE NULL AND VOID.
Rule 32 of the Rules of
the Supreme Court, 1964 requires that the notice of appeal shall state the
grounds of appeal concisely.
The position is now well established that a notice of
appeal must comply with the mandatory provisions of the Rules and that if it
does not, it is a nullity and cannot be condoned or amended. See Jensen
v Acavalos 1993 (1) ZLR 216 (S).
I have, earlier in this judgment, cited verbatim the
grounds of appeal filed by the appellant.
Whilst one must accept, as I do, that some of the grounds are
sufficiently clear to enable the respondent to appreciate the basis upon which
the order of the court a quo is
sought to be impugned, there can be no doubt that grounds 7 and 8 in particular
offend against the requirement that these must be clear and concise. I am inclined to agree with remarks by the
respondent that:
“There is nothing
concise about these grounds of appeal...... The grounds stretch over five pages and
contain in certain instances quotations from letters exchanged between the
parties.
...............
There is indeed a difference between the grounds of appeal and the heads filed
for this appellant, the difference being that the heads are a lot more concise
than the grounds of appeal.”
Indeed Mr De
Bourbon for the appellant, conceded that it was unnecessary to quote in the
grounds of appeal passages from the correspondence exchanged between the
parties.
I am satisfied that grounds seven and eight are not
clear and concise. In this regard I can
do no better than to quote the remarks of KORSAH JA in The Master of the High Court v Lilian
Grace Turner SC 77/93 in which the learned Judge of Appeal stated at p 1 of
the cyclostyled judgment:
“…
the prolixity of each ground of appeal offended Rule 32 of the Rules of the
Supreme Court, which requires that “the grounds of appeal shall be set forth concisely”
in separate numbered paragraphs. For
example, the first ground in the notice of appeal scans two foolscap pages and,
as well as being unnumbered, is argumentative.
……….It goes
without saying that by concise is meant brief, but comprehensive in
expression………”
Attention is also drawn to the decision of this Court
in River Ranch v Delta SC 38/10.
Whilst
ground 1 is somewhat vague one can discern that what is attacked is the
decision by the court a quo to decide
to hear the matter on the basis of urgency.
I would give the appellant the benefit of the doubt in so far as this
ground of appeal is concerned.
In
so far as ground 7 is concerned, as there has been no compliance with the Rules,
it becomes inevitable that it be struck off from the notice of appeal. The first two paragraphs of ground 8 sound
like heads of argument. That portion of
ground 8 must also be struck off with the result that that ground will read:
“more specifically, the learned
judge should have found:-
(a)
that
the letter was an unequivocal expression by the first respondent…………….”
WHETHER
THE APPEAL IS DIRECTED AT THE REASONS RATHER THAN THE ORDER.
That
an appeal must be directed at the order made and not the reasons thereof is now
well established. The authority for this
proposition, if any is required, is The Civil
Practice of the Supreme Court of South Africa by Herstein & Van Winsen, 4th
ed at p 868-9; Chidyausiku v Nyakabambo
1987 (2) ZLR 119 (S) 124C.
In the Chidyausiku & Nyakabambo case (supra) what was sought to be challenged was
not the order but the reasoning that led to the order. There was no request that the order made
consequent to that reasoning should be set aside. I am satisfied that the principle enunciated in
the above case is in general correct although recently I had occasion to
suggest in Alterm Enterprises (Pvt) Ltd
t/a Ruwa Furnishers v John Sisk and Son (Pvt) Ltd SC 4/13 that there may
well be instances, such as where a cross appeal is noted, where it might be
necessary to attack the reasoning itself rather than the order.
The circumstances of the present case are in my view
different. As Mr De Bourbon correctly pointed out, it is the order that is
challenged but in order to do so the reasoning of the learned judge is
challenged as the basis of the challenge to the order. At the end of the day the appellant would
want to have the order set aside.
It seems to me that the
principle that comes out in the case of Chidyausiku
v Nyakabambo is not always fully appreciated, even amongst lawyers. That case is not authority for the
proposition that in an appeal one should not attack the reasons for the order. What that case says is that an appeal should
be directed at the order and not simply the reasons. Quite clearly if the intention is not to have
the order interfered with in any way, then no purpose would be achieved by
attacking the reasons thereof. It goes
without saying that in order to attack the order made one must attack the
reasoning process leading to the order.
In other words in order to attack the order made, one must attack the
findings made that justify the order made.
I am satisfied in the
present case that the appeal has sought to attack the order given but in order
to do so has attacked the reasons thereof.
There is nothing wrong with such an approach.
This point in limine must therefore fail
THE QUESTION OF
URGENCY
It is common cause on the papers that the
urgent application filed by the respondents was only filed on 22 June 2011,
almost three weeks after the events giving rise to the dispute had occurred.
It is the appellant's contention that the delay in
filing the application was inordinate and that the court a quo therefore erred in deciding to hear the matter on the basis
of urgency.
In deciding to hear the matter on the basis of
urgency, the court a quo considered a
number of factors. It considered the
fact that the respondents, who are Namibian-based Companies, had had to brief
their lawyers on the highly technical aspects of the Trustco mobile system,
that the services of a South African advocate experienced in intellectual
property-related issues had to be sought, that there was need to obtain advice
across three jurisdictions and in particular on the procedural and substantive
issues applicable to the law in Zimbabwe, that thereafter trips had to be undertaken
by the first respondents' managing director and a South African lawyer to
Zimbabwe to consult with Zimbabwean-based lawyers. The court a
quo was of the view that the explanation given for the delay was not only
reasonable but was also understandable.
The court further found that the matter was urgent.
It is clear that in terms of Rules 244 and 246 of the
High Court Rules the decision whether to hear an application on the basis of
urgency is that of a judge. The decision
is one therefore that involves the exercise of a discretion. It follows from this that this Court has very
limited grounds upon which it can interfere with the exercise of such a
discretion. Various decisions of this
Court have stressed the point that unless the inferior court makes a mistake on
the law or the facts, acts upon a wrong principle, allows extraneous
considerations to influence its decision, fails to take into account relevant
facts or more generally makes a decision that is irrational, an appellate court
would have no basis for interfering with the exercise of discretion in such a
situation.
The position is now settled that what constitutes
urgency is not only the imminent arrival of the day of reckoning but also, if
at the time the need to act arises, the matter cannot wait. Urgency which stems from a deliberate or
careless abstention from action until the deadline draws near is not the type
of urgency contemplated by the Rules.
It is the submission by the appellant that it being
common cause that the respondents had taken three weeks to file the urgent
application, the court a quo erred in
deciding to hear the matter on the basis of urgency. It is not suggested that the court
misdirected itself in any other way or that its decision is irrational.
It seems to me that on the facts the matter was
urgent. The delay in filing the explanation was explained satisfactorily. I
find no basis upon which the decision by the court a quo to relate to this matter on the basis of urgency can be
impugned.
This ground of appeal must also fail.
WHETHER
THE INTERIM AND FINAL RELIEF SOUGHT ARE THE SAME
It
is important at this stage to highlight the fact that the appeal to this Court
is against the provisional order sought and granted by the court a quo.
The agreement between the parties has since run its course and therefore
the order sought on the return day no longer arises.
It
is the appellants' submission that the court a quo erred in finding that the relief sought in the amended
provisional order did not suffer from the same defect as the provisional order
originally filed and further erred in finding that the interim and final
reliefs sought were not the same or substantially the same. In particular the appellant has submitted
that the court a quo erred in
granting a provisional order which is final in effect and that consequently the
respondents lost the incentive to have the provisional order so granted
confirmed as it gave them final relief.
It
is correct that in general terms a court should not grant interim which is
similar to or has the same effect as the final relief prayed for. The reason
for this is obvious. Interim relief
should be confined to interim measures necessary to protect any rights that
stand to be confirmed or discharged, as the case may be, on the return date. Indeed in Kuvarega
v Registrar General & Anor
1998 (1) ZLR 188 (H), the High Court slammed the tendency by some litigants to
seek the same relief both as a provisional and final order. The court stated at p 193A-C:
“The practice of
seeking interim relief, which is exactly the same as the substantive relief
sued for and which has the same effect, defeats the whole object of interim
protection. In effect, a litigant who seeks relief in this manner obtains final
relief without proving his case. That is so because interim relief is normally
granted on the mere showing of a prima
facie case. If the interim relief sought is identical to the main relief
and has the same substantive effect, it means that the applicant is granted the
main relief on proof merely of a prima
facie case. This, to my mind, is undesirable especially where, as here, the
applicant will have no interest in the outcome of the case on the return day. The
point I am making will become clearer if I put it another way. If, by way of
interim relief, the applicant had asked for a postponement of the election
pending the discharge or confirmation of the provisional order she would not in
that event gain an advantage over the respondents, because the point she wanted
decided would have been resolved before the election was held. But, if the
interim relief were granted in the form in which it is presently couched, she
would get effective protection before she proves her case and the election will
be conducted on the basis that is unlawful to wear T-shirts emblazoned with
party symbols and slogans. Thereafter it would be fruitless for the respondents
to establish their entitlements to wear such T-shirts. Care must be taken in
framing the interim relief sought as well as the final relief so as to obviate
such incongruities”.
I would certainly agree with the
above remarks. Although the learned judge
in that case did not suggest that such a defect renders an application a
nullity, it seems to me that, whilst no hard and fast rule can be laid down, there
may well be cases where a court would be justified in holding, in such a
situation, that the application is not therefore urgent and that it should be
dealt with as an ordinary court application.
There may also be cases where the court itself, as it is empowered to
do, may amend the relief sought in order to make it clear that what is granted
is interim protection whilst the final order sought would be the subject of
argument on the return date. Rule 240 of
the High Court Rules permits a court, after hearing argument, to vary an order
sought. It is this power to grant an
order that is consistent with the facts which a court can use in order to
obviate a situation where final relief is granted by way of a provisional
order.
The
order granted in the interim was to restore the internet links and to ensure
the protection of the respondents' rights in the concept. The order obliges the parties during that
limited time to perform in terms of the contract. In other words the provisional order merely
restored the status quo ante.
On
the other hand the order to be confirmed or discharged on the return date was
to operate in contemplation of and pending the process of arbitration. It also sought to cast a broad obligation on
the appellant not to conduct itself in a manner inconsistent with the
agreement. In other words, on the return
date, the respondent would have been required to show not only why the status quo ante should be confirmed but also that it was entitled to
interdict the appellant from acting in a manner which might interfere with the
broader demands of the agreement.
In
my view the situation can be described in a more succinct manner. In the interim the status quo ante was to be
restored. On the return day, and only if
the respondent proved that there was a binding agreement still in force and
consequently that the parties were obliged to go for arbitration, would the
order be confirmed. In other words if on
the return day the appellant proved that the agreement had terminated or that
the dispute was not subject to arbitration, the provisional order would be
discharged. The mere restoration of the
links was not to be panacea for the respondents' problems. At the end of the day the agreement was about
the payment of money and this was not going to happen if the appellant sat back
in the hope that it had achieved through the provisional order what it required
by way of final order, the very situation which Kuvarega v Registrar General
& Anor (supra) cautions against.
In
all the circumstances therefore, I am of the view that the interim relief
prayed for did not have the same effect as the final order sought.
Accordingly
this ground of appeal must fail.
WHO
BETWEEN THE PARTIES REPUDIATED THE AGREEMENT AND WHETHER THE APPELLANT LAWFULLY
TERMINATED IT
As
correctly found by the court a quo,
this is the axis of the matter between the two parties.
In
his submission Mr De Bourbon
contended that on a proper reading of the letters of 31 May 2011 and 3 June
2011 from the first respondent's group managing director, it is clear that the first
respondent intended to resile from its obligations in terms of the
agreement. That anticipatory or actual
breach required the appellant to make an election either to accept the
termination or to enforce the agreement.
The appellant could have said “we do not accept your suspension of the contract
and we hold you to it”. Instead the
appellant, firm in its conviction that it would not pay the disputed amounts,
accepted the termination. Whether or not
the termination by the respondent was valid or not was not relevant. Once the appellant accepted the repudiation this
brought the agreement to an end. There would
have been no further continuing obligations and the order made by the court a quo would therefore have been wrong. Whether or not the notice was to terminate
the contract in future was irrelevant.
Mr
Mpofu, in his submissions, argued
that it was the appellant that sought to repudiate the agreement. He accepted that repudiation is a species of
anticipatory breach and that the innocent party has an election either to
resist and sue for specific performance or alternatively accept the repudiation
which then brings the contract to an end.
It was the appellant in this case which sought to repudiate. The respondent did not accept the
repudiation. Further he submitted that
as the threat to terminate the agreement by the respondent was not ex nunc but was to take place at a later
date, and as the issue before the court was whether a prima facie case had been established, the court correctly granted
the provisional order.
It
is correct that in determining whether a party has repudiated a contract, the
test to be applied is whether the party has acted in such a way as to lead a
reasonable person to the conclusion that he did not intend to fulfil his part
of the contract. It is also correct that
repudiation is a species of anticipatory breach. See Chinyerere
v Fraser No 1994 (2) ZLR 234 (H).
Repudiation may manifest itself in a
variety of ways. As stated by R.H Christie,
the Law of Contract in South Africa, 3rd ed, at p 572-3,
“If it takes place before performance
is due it is sometimes described as anticipatory breach and may take the form
of a statement that the party concerned is not going to carry out the contract,
or an unequivocal tender to perform less than is due, or an unwarranted but
unequivocal refusal by a buyer to pay the full purchase price, irrespective of
his true intention and the amount of any reduction that may be claimed, or the
taking of some action inconsistent with the intention to perform, or by his own
conduct putting it out of his power to perform …”.
In his letter of 31 May
2011, the respondents' group managing director wrote, inter alia:
“Therefore be advised that all
obligations of Trustco will be suspended on 3 June 2011 at 12h00 Namibian time
if all overdue payments are not received by then”.
In my view this was a clear
intimation that the respondent, for the reasons given in the letter, was going
to suspend all its obligations towards the appellant. The letter further made it clear that if all
outstanding amounts were not paid within fourteen days of the date of the
letter, the respondent was to deem the contract cancelled.
That
this was an anticipatory breach there can be no doubt. The procedure to be followed by either party
in the event that it was believed that a breach had occurred at the instance of
the other was clearly provided for in the agreement entered into and signed by
both parties. Nowhere in the agreement
was the respondent entitled to suspend all its obligations within three days of
giving notice to that effect. Such
conduct suggested that the respondent no longer believed it was bound by the
agreement previously entered into by the parties.
The
position is now settled that a party in the appellant's position has an
election to make. The appellant could
have refused or resisted such repudiation and insisted on specific
performance. The appellant, in holding
the respondent to the agreement, could have inter
alia argued that the notice of termination was not ex nunc and therefore invalid. Alternatively the appellant could
have accepted the repudiation, such acceptance having the effect of terminating
the agreement between the parties.
In
its response the appellant “noted the intention to terminate the agreement and
accepted” it. It is apparent from the
appellant's response that it accepted the repudiation. In my view that brought the contract to an
end. There were no further obligations
as the contract had come an end.
Therefore when the first respondent wrote on 3 June 2011 advising that
on legal advice received it was not entitled to switch off the system until
fourteen working days had lapsed and that the system would remain operational
until then, it was too late as there no longer was any contract in existence
between the two parties, a position the appellant stressed in its letter of 5
June 2011.
The court a quo found that the notice to terminate the agreement was in the
future and not ex nunc. The court also found that in the
circumstances there was no valid cancellation of the agreement and that the
agreement therefore remained in existence.
The court erred in coming to the above conclusion. It failed to consider the implications in our
law of contract of the respondents' letter of 31 May 2011 and the response by
the appellant of 1 June 2011 in which it accepted what it termed the
termination of the agreement but which in fact was a repudiation of the
agreement. Clearly therefore whilst Jackson
v Limly Insurance Company Ltd 1999 (1) ZLR 381 (S) correctly stated the law
when it held that a valid notice of cancellation must be exercised ex nunc, the issue that arises in this
case is different.
I
am satisfied therefore that the contract ceased to exist once the appellant
accepted the first respondent's repudiation.
In the circumstances the order of specific performance granted by the
court was improper and ought therefore to be set aside.
Two
other issues were the subject of much debate.
These were whether the requirements on an interdict were met and whether
the appellant could appeal against the interim order granted in favour of the
respondents regard being had to the provisions of article 9 of the Model Law. In the course of the preparation of this
judgment these issues exercised my mind for quite some time.
In
the light of the conclusion that I have reached that the contract came to an
end once the appellant accepted the repudiation, it becomes unnecessary to
consider these issues.
The
appeal must therefore succeed.
In
the result, it is ordered as follows:-
1. The
appeal is allowed with costs.
2. The
judgment of the court a quo is set aside and in its place the following substituted:-
“The
application be and is hereby dismissed with costs”.
MALABA DCJ: I agree
ZIYAMBI JA: I agree
Mtetwa
& Nyambirai, appellant's legal practitioners
Messrs Gill, Godlonton & Gerrans, respondents'legal
practitioners.
