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 appellant's 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 respondent's
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.
2.
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 1200 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 p1 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 p868-9;
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
respondent's 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 appellant's 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 p193A-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 p572-3:
“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
