CHIGUMBA
J:
If
a man is motivated by moral, religious, cultural, or other beliefs to
agree to pay a sum of money which is owed to another, can the law
enforce such an assumption of liability against this man personally?
Should the law allow such a man, many years after the date on which
he agreed to pay, to evade liability on the basis that he only agreed
to pay because of these beliefs, and that therefore the legal
liability to pay remained at all times rooted in the second man? We
must determine whether the man's moral obligation was translated
into a legal obligation, an assumption of liability, when he agreed
to settle the debt on behalf of the second man by a certain date. The
court is entitled to look at extrinsic evidence of the behavior of
the parties, to determine whether it reveals evidence of an intention
to be bound by the agreement. It all boils down to whether there was
a meeting of the parties' minds.
We
must also determine whether the meeting held by the parties, at which
the man agreed to settle the debt, was held on a without prejudice
basis and therefore privileged. It is a matter of law whether a
plaintiff can found a cause of action on an agreement that was made
during the course of a privileged discussion. It is a matter of fact
whether both parties clearly understood that the meeting was
privileged. This is where we enter the slippery slope of human
foibles and ability to remember accurately and without bias in one's
favor, events which took place a long time ago. To compound matters,
the legal practitioners for the plaintiff and defendant in their
wisdom, saw fit to testify on behalf of their respective clients.
On
12 September 2014, the plaintiff issued summons against the defendant
for USD$3 872 123-00, (three million eight hundred and seventy two
thousand one hundred and twenty three United States dollars), payable
in terms of an agreement between the parties dated 12 August 2012,
plus interest thereon at the prescribed rate calculated from 28
February 2013 to the date of payment in full, as well as costs of
suit on a legal practitioner and client scale. Both parties are
businessmen of note, with multimillion dollar empires that span the
region and the globe. They used to hold each other in high regard
until the money came between them, as it is wont to do.
According
to the plaintiff's declaration, on 28 August 2008, the plaintiff
and a South African company Sahawi International Pty Limited (Sahawi)
issued summons against defendant and a Zimbabwean company, Breco
International Private Limited (Breco) under case number HC 4221-08
for the repayment of a loan advanced to them between 1st
February 2001 and 9th
November 2002 in the sum of USD$3 872-123 (three million eight
hundred and seventy two thousand one hundred and twenty three United
States dollars), plus interest thereon at six percent per annum
capitalized monthly and calculated from 1 February 2001 to the date
of payment in full. On 17 August 2012 the parties entered into a
verbal agreement in terms of which they settled the dispute by the
defendant agreeing to personally pay the plaintiff the amount in
question by the 28th
of February 2013. On 3 November 2013, the defendant raised a special
plea of lis
alibi pendens
that the proceedings in HC 4221-08 were still pending, so litigation
was pending between the same parties, on the same cause of action and
in respect of the same subject matter. The defendant prayed that the
present action be stayed pending determination of HC 4221-08. The
defendant's plea on the merits was to deny having entered into an
agreement to settle the amount outstanding by 28 February 2013 or at
all. The defendant averred that entering into such an agreement would
have contravened the Exchange Control regulations and been illegal.
The
defendant filed a counterclaim in which he alleged that on 20 January
2011 the plaintiff maliciously and wrongfully set the law in motion
by laying false charges against him of fraud and contravening
Exchange Control Regulations with the police. In particular the
defendant accused the plaintiff of complaining to the police that he
had secured a loan of USD4million by means of making a false
representation to him, and that defendant had not obtained Exchange
Control authority for the borrowing. The defendant averred that when
plaintiff made these complaints he had no reasonable/probable cause
for doing so, and he did not have any reasonable belief in the truth
of the information that he gave to the police. As a result of
plaintiff's conduct, defendant was arrested and arraigned before
the magistrate's court, and indicted for trial before the High
Court on 1 July 2013. The defendant was detained in custody until his
admission to bail on 4 July 2013. He was tried and acquitted by the
High Court on 12 September 2013. The defendant's claim for damages
for contumelia, deprivation of freedom and discomfort was in the sum
of USD$300 00-00. He also claimed a sum of USD$50 000-00 for his
legal costs.
On
20 November 2014, the plaintiff filed his replication to the
defendant's special plea, in which he denied that the proceedings
in HC 4221-08 were currently still pending, and denied that the
parties were the same in both matters, or that the cause of action
was the same. In the replication to the plea on the merits, the
plaintiff denied that the agreement between the parties violated
exchange control regulations and joined issue with the defendant. The
plaintiff's plea to defendant's counterclaim was an admission
that he laid charges against the defendant, and a denial that he
maliciously set the law in motion, or that the charges were false, or
that the information given was false. The plaintiff prayed that the
defendant's counterclaim be dismissed with costs. The parties filed
a joint pre-trial conference minute on 5 August 2015 in terms of
which four issues were referred to trial in the main matter and three
issues in the counterclaim. The following issues were referred to
trial in the main matter:
1.
Whether the current proceedings can be proceeded with despite the
pending nature and the non-conclusion of proceedings in HC4221-08?
2.
Did defendant agree on the 17th
of August 2012 to personally assume the indebtedness of KMC to the
plaintiff?
3.
Are there admissions of liability by defendant in legal
correspondence between plaintiff and defendant? If so are they
admissible?
4.
To what extent is defendant liable to the plaintiff?
The
following issues were referred to trial in the defendant's
counter-claim:
1.
Did plaintiff lay fake criminal charges with the police against the
defendant?
2.
Did the laying of the fake charges by the plaintiff cause the arrest,
detention and prosecution of the defendant?
3.
What amount of damages, if any, did defendant suffer as a result of
his arrest, detention and prosecution?
The
issue that arises for determination in the main matter is whether the
defendant assumed liability to settle the sum of USD$3 872-123, to
the plaintiff, in his personal capacity, and if he did so during the
course of privileged negotiations, such an assumption can be used
against him to recover that sum in court. With regards to the
defendant's counterclaim, the issue that falls for determination is
whether the complaint raised by the plaintiff to the police against
the defendant was deliberately and intentionally based on falsehoods,
the aim being to cause the arrest, detention and prosecution of the
defendant, knowing full well that such arrest, detention and
prosecution was unjustified. At the hearing of the matter, a notice
of withdrawal was tendered, dated 25 January 2016, in terms of which
the plaintiff withdrew its action in case HC 4221-08 and tendered
wasted costs. The parties agreed that the notice of withdrawal was
properly drawn and filed in terms of the rules of this court, and
that this effectively disposed of the special plea and of the first
issue that had been referred to trail.
The
plaintiff opened its case by leading the evidence of Mr Yakub
Mahomed, who told the court that: - he is an accountant by
profession, and a businessman who has had business interests in
Zimbabwe for the last twenty five years. His claim was based on the
agreement entered into by the parties on 17 August 2012, at a meeting
convened by the former Attorney General (AG) Mr Tomana. The meeting
had been convened in order to see if the parties could not resolve
their differences out of court after the AG had refused to prosecute
the defendant in the criminal court. The AG had told the plaintiff
that he was under political pressure not to prosecute the defendant,
who was allegedly involved in assisting the military with the war in
the Democratic Republic of Congo (DRC), and had been placed on the
sanctions list for assisting our government.
The
plaintiff referred to a letter dated 8 March 2011, on p105 of the
record as proof of the AG's refusal to prosecute the defendant and
the reasons why. The letter is apparently from the defendant to the
Ministry of Defence. In paragraph three of the letter, the defendant
writes that he; - “.borrowed USD$3.5 million from Mahomed. At no
time was my company Breco International involved in any way
whatsoever, or the other applicant Sahawi International who alleges
that meetings were held between them and Breco International, which
is simply not true. The dealings in this matter were entirely between
me and Mahomed”. The defendant acknowledged owing the money to the
plaintiff in his personal capacity in this letter. The letter was
given to the plaintiff by Mr. Chris Mutangadura a Chief law Officer
in the AG's office. The defendant made an undertaking to settle the
amount outstanding at the meeting with the AG. He promised to pay by
28 February 2012. He needed time to dispose of some assets as he was
experiencing cash flow problems due to being placed on the sanctions
list.
The
defendant did not pay by 28 February 2012. In the letter dated 1
November 2012 at record p 113, it was confirmed that a meeting had
taken place before the AG. Letter from the defendant's legal
practitioners Atherstone & Cook at record p 117 dated 14 December
2012 advised that the defendant was causing the sale of property in
Mozambique in efforts to settle his indebtedness to the plaintiff. In
a letter dated 18 February 2013, from Venturas & Samkange, which
appears at record p 118 payment details were given so that the
plaintiff could deposit the money into a trust account. The defendant
did not write back to dispute liability but by 15 March 2013 no
payment had been made (see letter from Venturas & Samkange
rp120). In para 3 of the letter to the AG dated 27 March 2013
(rp125), the defendant's legal practitioner made an undertaking to
make good the prejudice 'without admission of liability'. He said
that the defendant was in the process of selling his house in the
United Kingdom.
The
defendant had admitted liability and acknowledged indebtedness in his
personal capacity to Shortie Mahomed, Haji Kalil, Ayoub Doud, and
Shingai Mutasa up to the day before trial. The defendant never
intended to pay back the money which he borrowed so he misrepresented
himself giving rise to the criminal charges. He did not mention where
the funds were going or what he would use them for. He paid a total
of USD$ 400 000-00. At one stage he tried to pay USD$3 500 000-00 by
depositing it into an offshore account in Jersey but the payment was
returned by the bank because the source of the funds was not clear at
a time when the defendant was under investigation by the Serious
Frauds Squad. Thereafter defendant said that all his funds were
blocked because he had been placed on the sanctions list. The
defendant's trustees then wrote a letter in which they said that he
had instructed them that the payment had been made in error (rp104,
par 5). When the trustees confirmed that the defendant had no
intention to pay, that played apart in the consideration of pressing
criminal complaint. The criminal complaint was placed after legal
advice from Mr Samkange
(rp128, par 4). The defendant was only detained or one or two days at
the most.
During
cross examination, the plaintiff said that he knew nothing about the
defendant being denied bail and confirmed that he never asked for
proof of the legal costs. He reiterated that nothing was said about
the meeting at the AG's office being without prejudice. On the
criminal prosecution of the defendant, the witness confirmed that the
plaintiff took money from him with no intention of paying, based on
the misrepresentation that he needed a loan and that he was willing
to re-pay. He disputed the assertion that the e-mail from the
Maitland Trustees, which he relies on as proof that the defendant did
not intend to pay, was written well after he had already laid the
criminal complaint. He denied that the police advised him that this
was a civil matter or that they had refused to prosecute the
defendant for this reason. He denied that he had pursued a civil
matter using the criminal process.
Mr
Jonathan
Samkange
testified on behalf of the plaintiff. He told the court that;- he is
a senior partner with Venturas & Samkange, a legal practitioner,
a member of Parliament for Mudzi South constituency, chairman of the
parliamentary legal committee, and has been admitted to practice law
in Namibia from 2003 to date. He was present at a meeting held on 17
August 2012 which was convened by Mr Tomana the AG, for the express
purpose of settling the dispute between the plaintiff and the
defendant. The AG had declined to prosecute the defendant because it
was not in the national interest to do so. He believed that the
defendant was helping our army with the war in the DRC. He had
refused to issue a certificate of no intention to prosecute to enable
the plaintiff to mount a private prosecution. He decided to bring the
parties together at a round table conference to facilitate an out of
court settlement. The defendant was willing to pay but not what
plaintiff was asking for. The plaintiff agreed to forgo interest. A
figure of USD$3.8 million was agreed on. The defendant shook the
witnesses hand to seal the deal. The defendant was happy that
interest had not been charged to his personal liability he advised
the plaintiff to pursue interest payments from his company. There was
no discussion or mention of the privileged nature of the meeting at
the outset or at any other stage or during any of the preliminary
meetings held by the parties.
The
contents of his letters were correct, (rp113, 114-5) and a summary of
what was agreed that is why the letters were marked without
prejudice. The defendant made many promises to pay after the deadline
expired in February 2013. Mr Chagonda
wrote several letters in which assets were said to be in the process
of liquidation to settle the debt. When it became clear that the
defendant was not a man of his words, and the AG now had evidence
that defendant had not told the truth about his involvement with our
army in the DRC, he recommended that plaintiff lodge a criminal
complaint for fraud against the defendant (see rp128, par 4). The AG
was now prepared to prosecute. The basis of the criminal complaint
was that the defendant had misrepresented to the plaintiff that he
wanted a loan when he never had any intention of paying back the
money. The parties' transaction also violated exchange control
regulations which were in force at the time. The defendant was making
offers to settle the matter out of court the day before this trial
commenced.
During
cross examination Mr Samkange
refused to accept that the substance of out of court settlement
negotiations which took place a few days before trial commenced were
privileged, or that they had been conducted on a without prejudice
basis. He said the discussion was immaterial it was the substance of
the discussion which was material to a determination of the
privileged nature. On the criminal prosecution, Mr Samukange
said his recommendation that plaintiff place criminal charges was
based on the contents of the letter from the trustees, not on
plaintiff's instructions. He said that defendant could have made
alternative arrangements to pay the USD$3.5million that was returned
by plaintiff's bank if he was sincere in his intention to re-pay
the money.
Mr
Samkange
denied that he was instrumental in using the criminal route to
recover money from the defendant He said he disagreed with the
judgment of the criminal court which expressed misgivings at the use
of the criminal sanction in what it described as a purely civil
matter. The plaintiff closed its case. The court did not formulate
the impression that the two plaintiff's witnesses were being
economical with the truth or attempting to mislead it. There were
some unsavory aspects of the testimonies given but these aspects go
to certain legalities and need not necessarily have any bearing on
the question of whether the defendant is liable to the plaintiff for
the sum claimed. The court accepts that a lot of time has passed
since the meeting of 17 August 2012 which was convened by the AG.
The
plaintiff's testimony was clear. He had some difficulty with
questions put to him regarding the maliciousness of bringing criminal
charges against the defendant. He could not explain why the criminal
complaint was made when he was still being represented by Mr.
Mhiribidi, yet in his testimony he told the court that he had brought
the criminal complaint on Mr Samkange's
advice. Perhaps more care should have been taken to elicit
information about the criminal sanctions by separating them into two,
2009 and 2011. Mr Samkange's
evidence was clearly calculated to buttress his client's case to
the greatest extent possible. His evidence of his recollection of
whether the AG classified the meeting of 17 August 2012 as without
prejudice was a bare denial of that fact. He buttressed his client's
bare denial. His evidence as to the basis on which criminal charges
were brought against the defendant was not time sensitive in that
there appears to be an anomaly between the date the charges were
brought and the date when he assumed agency in the matter.
The
defendant opened his case by taking the witness stand in his own
defence. The defendant told the court that; - the money which was
borrowed from the plaintiff between 2000-2001 was borrowed not by him
personally, but by him on behalf of a company called KMC which was
operating in the DRC at that time. The plaintiff was aware of this as
evidenced by his admission to that effect in the e-mail at rp103, par
2, to Mr. Cassell, a trustee of the Maitland Trust. Tromult Private
Limited was the company which was handling operations in the DRC. The
plaintiff was not a director of Tromult. He had been placed on the
sanctions list and consequently was removed as a beneficiary of the
Maitlands Trust. On 3 May 2009 criminal charges were put to him and a
warned and cautioned statement recorded, see rp107. In that statement
plaintiff denied that he borrowed the money in his personal capacity
and told the police that the money was lent to KMC which was based in
the DRC. See also rp108-11 where the same defence appears. At the
meeting convened by the AG in 2012, no personal liability to re-pay
the money was assumed. He agreed to pay USD$3.8 million by 28
February 2013 because he felt morally obligated to do so. He denied
that he penned the letter of 8 March 2011 which appears at rp105-106
in which he admitted to owing the money.
He
was prosecuted and acquitted in 2013 after being arrested and taken
to prison. He was put in a cell with one toilet and 79 people who
were smoking all night and some of whom behaved aggressively towards
him. He was in custody for 3-4 days. He had had double bypass heart
surgery and was denied his medication which he should take every
morning and evening. During cross examination the witness denied
having accepted personal liability to settle the debt. He said that
he is 76 years old and has a short spasm memory so he forgets things.
He accepted that he has a moral obligation to pay the plaintiff. He
admitted to having agreed to pay by 28 February 2013. He has no
recollection of shaking hands with Mr Samkange
to seal the deal in 2012. He said his inability to pay by the agreed
date was because of sanctions, not unwillingness to pay. He said that
he tried to sell assets to pay and failed but he cannot recall the
details due to his faulty memory. He denied that when he instructed
the trustees of the Maitland trust to deposit money into the
plaintiff's account in Jersey he already knew that he was on the
sanctions list and under investigations and that the money would be
returned to the trust.
On
the malicious prosecution allegations, defendant said that because he
was put in jail and plaintiff has approached his friends and family
and bad mouthed him and continues to do so he should be paid damages.
He admitted that the police arrested and incarcerated him not the
plaintiff, but insisted that the plaintiff instructed his lawyers to
set the criminal sanction in motion. The witness was hazy on the
details of what actually happened or how many days he was
incarcerated for due to his faulty memory. He referred question on
the legal fees incurred to his legal practitioners of record. The
defendant said that he has not paid the plaintiff because he has no
access to cash. He is cash poor because he has remained on the
sanctions list and lost significant assets in the United States. He
admitted that he sold his mine in the DRC for USD$35 million and
denied that in light of this fact his failure to pay the plaintiff
was criminal. The letter on rp105 may have been written by him he
cannot recall whether he wrote it or he didn't
Mr
Innocent
Chagonda
testified on the defendant's behalf. He told the court that; - he
is the defendant's legal practitioner of record and a partner at
Messrs Atherstone & Cook. He confirmed that he was present when
warned and cautioned statements which appear at r pp107, 108-111 were
recorded from the defendant in 2009 in connection with fraud and
contravening exchange control regulations charges were put to him. In
2009 the docket was closed because the police view was that the
matter was civil, not criminal. In 2011 the AG again declined to
prosecute as set out in the letter at rp131. Several meetings were
held from 26 July 2012. On 27 July 2012 Mr Tomana said that the
meeting was without prejudice. From the letter on rp131 the agenda
was set and the impression created was that the meeting would be
without prejudice. On 17 August 2012 the meeting was said to be
without prejudice. Defendant felt morally obligated to pay the money
owed to the plaintiff by the company in the DRC.
The
defendant was placed in a difficult position by the sanctions imposed
on him and his companies. He felt responsible for the prejudice
suffered by the plaintiff. The defendant made it clear that his offer
to pay was made without an admission of liability on his part. The
witness could not recall details of who suggested which figure or
whether defendant shook Mr Samkange's
hand but could testify that eventually an agreement was reached. The
defendant refused to pay interest and the plaintiff agreed to that.
The defendant would cause payment to be made on the basis of
morality. He needed six months to raise the money because he was on
the sanctions list. The draft agreement at rp113-115 was not an
accurate reflection of what the parties agreed and for that reason it
was never shown to the defendant, or signed by him. The witness was
taken aback at the suggestion that he dictated the letter at rp118 to
himself and he denied doing so.
During
cross examination the witness said that at the time when the meeting
was held before the AG, he was not aware of the fresh pending
criminal charges against the defendant. He said that the dispute
between the parties emanated from the circumstances in which the
meeting was held before the AG, that the discussions were held
without prejudice and are therefore privileged, and should not be
relied on to found a cause of action. He insisted that the
defendant's intention was 'to cause money to be availed to the
plaintiff'. The witness denied ever having made an undertaking to
chase up payment or to ensure that defendant paid. He said that only
two letters were marked without prejudice because the agenda for the
meeting set by the AG made it clear that all discussions were to be
without prejudice. The letter which appears at rp105 came as a
surprise to the witness who only saw it last week. The defendant
closed its case.
The
defendant was not a good witness because when he was asked a
difficult question he simply said that he was old, that he was on
medication for his heart condition, and that he had no recollection
of the event that he was being asked about. At some stage during
cross examination be became belligerent and the court had to task
counsel for the plaintiff to elicit proper responses to the questions
asked which he was responding to with the answer 'if you say so'.
The court felt that a clear yes, or no, or an “I don't recall”,
gave a clear indication as to the evidentiary value to be placed on
the answer. Mr Chagonda
was a good witness who gave evidence in a clear and unequivocal
manner. He too however appeared to suffer from the disease of being
unable to remember the littlest things such as who suggested which
figure to use for settlement or who shook whose hand. His memory was
remarkably clear on two aspects, that the meeting before the AG was
understood by all parties to be on a without prejudice basis, and
that, the defendant made himself clear at the meeting that he was not
assuming liability, rather he was giving an undertaking to cause
funds to be availed to the plaintiff.
The
court must determine whether there was a compromise agreement whereby
the defendant agreed to pay the amount in question to the plaintiff
in his personal capacity, whether the compromise agreement is
privileged information which cannot be used to found a cause of
action against the defendant, and whether the plaintiff caused the
malicious prosecution of the defendant giving rise to a claim for
damages in the sum claimed by the defendant. It was submitted on
behalf of the plaintiff that the defendant accepted the existence of
the agreement sued upon both expressly and through conduct. The court
was referred to the case of Sullivan
v
Constable,
where it was held that:
“It
seems to me that the defendant, by his conduct and that of his agent,
has so acted that the plaintiff was reasonably entitled to believe
that the defendant was assenting to the position which he so plainly
asserted in the correspondence; and consequently that the rule in
Freeman v Cooke, 2Ex.254, governs this case. This rule is stated in
Smith
v Hughes, L.R. 6 Q.B. 597, @p607,
as follows;-
If, whatever a man's real
intention may be, he so conducts himself that a reasonable man would
believe that he was assenting to the terms proposed by the other
party, and that other party upon that belief enters into the contract
with him, the man thus conducting himself would be equally bound as
if he had intended to agree to the other party's terms”.
It
is arguable that the defendant's conduct of:
(a)
attempting
to sell assets
(b)
Causing payment of USD3.5 million be forwarded to the plaintiff's
Jersey account makes him bound as if he intended to be legally bound
by his undertaking to cause funds to be availed to the plaintiff
The
court was also referred to S.A.
Railways & Harbours v
National Bank of SA Ltd
where it was held that:
“The
law does not concern itself with the workings of the minds of parties
to a contract, but with the external manifestation of their minds.
Even therefore if from a philosophical standpoint the minds of the
parties do not meet, the law will, when fraud is not alleged, look at
their acts and assume that their minds did meet and that they
contracted in accordance with what the parties purport to accept as a
record of their agreement. This is the only practical way in which
courts of law can determine the terms of a contract”.
It
was submitted on behalf of the plaintiff that the meeting before the
AG resulted in a resolution that the defendant was to pay the
plaintiff an agreed sum by the 28th
of February 2013. The defendant has not disputed this, he accepted
that he was to pay and set out to liquidate his assets and conducted
himself in a manner consistent with diligent efforts to pay. He was
disappointed when the plaintiff seemed to distrust him. He felt
morally obliged to pay. Was his moral obligation irrelevant to his
obligation to pay after agreeing to do so? The defendant, on the
question of whether an agreement was reached on 17 August 2012 before
the AG, submitted that a compromise is described as a settlement
agreement of disputed obligations whether contractual and otherwise,
and referred to; The
Law of Contract in South Africa,
and Georgias & Anor v
Standard
Chartered Finance Zimbabwe Ltd.
It
was submitted further, that for a compromise to be valid, there must
be offer and acceptance, the hallmarks of a contract. The court was
referred to PG
Industries (Zim) Ltd v
Machawira,
which quoted with approval from R.H.Christie,
Business law in Zimbabwe,
as follows:
“To
be effective in creating a contract, acceptance must be so clear and
unequivocal as to leave no reasonable doubt in the offeror's mind
that his offer has been affected: Selected
Mines & Marketing (Rhodesia) Ltd v
Trees Asbestos Mining Co. Ltd 1952 SR5.
The reason for requiring a higher degree of certainty than the
standard proof on the preponderance of probability that is
universally accepted in civil as opposed to criminal cases is that
the offeror is entitled to expect an answer on which he can
immediately act, without interrupting his business while he weighs up
conflicting probabilities in order to decide whether he has a
contract or not.
A purported acceptance in the form of 'Yes, but… will not do,
because by seeking to add or subtract from the terms of the offer it
does not create the necessary agreement but leaves negotiations
open”.
(Underlining
for emphasis)
The
defendant submitted that the plaintiff failed to discharge the onus
of proving that a contract existed between the parties, for the
reason that even though the defendant agreed to pay before the AG,
his acquiescence was qualified by his reference to a moral obligation
to pay and to his reference to the fact that he was not assuming
legal liability to pay, he was assuming a moral obligation to pay
because the DRC Company was on the sanctions list and incapable of
fulfilling its obligation to the plaintiff. We must decide if in
effect that qualification left negotiations open, whether it added or
subtracted from the terms of the offer resulting in there not being
any legally binding agreement. In other words was the defendant's
acceptance of the plaintiff's offer clear and unequivocal leaving
no doubt in the plaintiff's mind that the offer had been accepted?
It was submitted on behalf of the plaintiff, on the law of
compromise, that:
“Our
law of contract has for long recognized that a new agreement that
settles a dispute operated as res
judicata
in respect of the old agreement and in itself becomes a valid and
binding contract between the parties. Not only can the original cause
of action no longer be relied upon, but a defendant is not entitled
to go beyond a compromise and raise defences to the original cause of
action when sued on compromise(see Road
accident Fund v
Ngulube 2008 (1) Sa 432 (SCA), Lieberman v
Santam
Ltd @000 (4) SA 321 (SCA) pa 11-12, Hamilton v
Van Zyl; 1983 (4) SA 379 (E), Majora v
Kuwirirana Bus Service (Pvt) Ltd 1990 (1) ZLR 87 (SC).
This
in our law is referred to as a compromise. The
Courts in South Africa have moved on to hold that a compromise need
not necessarily however, follow a disputed contractual claim. Any
kind of a doubtful right can be the subject of a compromise. A valid
compromise may even be entered to avoid a spurious claim. In
establishing whether a claim has been compromised one is concerned
simply with the principles of offer and acceptance.
See E
Bob A Lula Manufacturing & printing CC Kingtex Marketing (Pvt)
Ltd 2008 (2) SA 327 (SCA)
(underlining
for emphasis).
The
court was also referred to the case of Georgias
v
Standard Chartered Bank supra
on the principles that govern a valid compromise agreement. It was
held that:
“Compromise,
or transactio,
is the settlement by agreement of disputed obligations, or of a
lawsuit the issue of which is uncertain. The parties agree to
regulate their intention in a particular way, each receding from his
previous position and conceding something-either diminishing his
claim or increasing his liability. See Cachalia
v
Harberer & Co 1905 TS @457@462, Tauber v
Von
Abo 1984 (4) Sa 482 (E) @ 485 G-I, Karson v
Minister of Public Works 1996 (1) SA 887 (E) @ 893F-G)
The purpose of compromise is to end doubt and to avoid the
inconvenience and risk inherent in resorting to the methods of
resolving disputes. Its effect is the same as res
judicata
on a judgment given by consent. It extinguishes ipso
jure any
cause of action that previously may have existed between the parties,
unless the right to rely thereon was reserved, see Nagar
v Nagar 1982 (2) SA 263 (ZH) @ 268 E-H.As
it brings legal proceedings already instituted to an end, a party
sued on a compromise is not entitled to raise defences to the
original cause of action”.
I
accept the submissions made on behalf of the plaintiff that these
authorities set out the following principles;-
1.
Parties to a dispute can agree to resolve that dispute for whatever
reason.
2.The
resolution of the dispute under such circumstances results in the
setting out of the parties' intention and it extinguishes the old
cause of action.
3.
The parties are involved in a give and take where each part abandons
its old position and makes a concession which may diminish his claim
or increase his liability.
4.
A compromise creates a new liability. Once a compromise is reached a
party sued may not raise defences to the original cause of action.
5.
Once a compromise is reached issues become res
judicata.
6.
The court must ask itself whether there was an offer and an
acceptance in determining whether a compromise was reached.
The
defendant addressed two scenarios on offer and acceptance, the first
in which the plaintiff is the offeror and averred that the
plaintiff's negative offer was that the defendant accepts personal
liability to pay or in the alternative be prosecuted privately in a
criminal suit if the state declined to prosecute. Both the defendant
and Mr Chagonda
denied
that he agreed to be bound personally, which is why he claims to have
refused to sign the draft agreement which was prepared by Mr
Samkange.
It was submitted on behalf of the defendant that the sum of USD$3.8
million was not a compromise figure because the same sum was claimed
in the original summons under HC4221-08. The second scenario, in
which the defendant was the offeror, was to offer to cause payment to
be made. The differences in the letters of 1 November 2012, and 14
December 2012, was submitted to exhibit evidence that there was no
meeting of the minds regarding the issue of personal liability. It
was submitted that defendant denied personal liability in para(s) 2.4
and 2.5 of his plea in HC 4021-08 filed on 20 January 2009 and in his
warned and cautioned statements of 3rd
May 2009, and 17 June 2011.
The
failure by the plaintiff to withdraw criminal charges against the
defendant was submitted to be further evidence that there was no
meeting of the minds between the parties, because that term of the
compromise was not complied with. The defendant cited the case of
Pioneer
Transport (Pvt) (Ltd) v
Delta Corporation & Anor,
where it was held that;-
“The
nature of a contract is that two or more parties thereto reciprocally
promise, or one of them promises to the other or others, to give some
particular thing to do or to refrain from doing some particular act.
There is consequently a presumption that in every bilateral or
synallagmatic contract the common intention is that neither should be
entitled to enforce the contract unless he has performed or is ready
to perform his own obligations”.
I
am persuaded by the submissions made on behalf of the plaintiff that
what is material to the resolution of the issue of offer and
acceptance is that the defendant said he would pay the agreed sum by
an agreed date at the meeting with the AG. His reasons for agreeing
to pay are irrelevant, that fact that he does do is material. A
compromise can result in an increase in liability or in a diminution
of a claim. There is no reason why a compromise cannot result in an
assumption of liability to pay. The evidence supports the finding
that the defendant assumed liability to settle the debt. With all due
respect to counsel for the defendant, it is trite that when a
compromise is reached, defences to the original claim can no longer
be relied upon. There was not much evidence adduced before the court
as to existence of the company based in the DRC, KMC. No documents
were placed before the court to show whether this is a duly
registered company and whether the defendant had a resolution
authorizing him to borrow money from the plaintiff on its behalf at
the material time. The defendant admitted to using 'some' of the
money in the DRC and did not take the court into his confidence as to
whether he was authorized by KMC to utilize the loan elsewhere or for
other business not related to KMC.
In
my considered view, the defendant is hiding behind a finger when he
stipulates that the money was borrowed on behalf of KMC. When the
trustees of the Maitland Trust sent payment to plaintiff's account
in Jersey, which payment was subsequently rejected by plaintiff's
bank, there was no mention of KMC. When the trustees advised
plaintiff that defendant had instructed them not to make another
attempt to send the money, there was no mention of KMC. In each
letter when defendant has admitted that he agreed to pay the money
there is no mention of KMC. The company in my view was used by the
defendant as a shield to evade liability for exchange control
violations, which formed part of his defence in the original claim
and may not be used by him as a defence in these proceedings, after
extinguishing the old cause of action and creating a new one when he
agreed to pay. There was an offer. There was an acceptance by the
defendant. The fact that plaintiff subsequently failed to withdraw
the criminal charges against the defendant as promised may give rise
to a cause of action of failure to fulfill the compromise terms. It
does not, on its own, support the assertion that there was no meeting
of the minds, or an offer and acceptance, because one of the terms
was subsequently not complied with. Similarly the defendant failed to
pay by the agreed date. That does not mean there was no compromise
agreement. It is the finding of this court that the parties entered
into a compromise agreement on 17 August 2012, in terms of which the
defendant assumed liability to pay to the plaintiff the sum of USD$3
872-123 by 28 February 2013. The fact that he agreed to pay because
of a perceived moral liability, because he and his companies had been
placed on the sanctions list, because his attempt to deposit
plaintiff's money into an account in Jersey had failed, because he
was a gentleman and a man of honor, a man of his word, became
irrelevant as soon as he agreed to extinguish the old cause of action
and to create a new one.
I
am further persuaded by the submissions made on behalf of the
plaintiff that the defendant has no defence in terms of the pleadings
filed of record. It is trite that the 'object of pleadings is to
define the issues'. It is also trite that ', the parties will be
kept strictly to their pleas where any departure would cause
prejudice. See Robinson
v
Randfontein Estate GM Co. Ltd AD @198, and Shill v
Millner.
It was submitted on behalf of the defendant that '…a court will
not enslave itself to the pleadings in complete disregard to its duty
to decide the real dispute between the parties. As long as there no
likelihood of prejudice being occasioned to one or other of the
parties, the court should not lightly disregard a point which has
been thoroughly been investigated”. See Musadikwa
v
Minister of Home Affairs & Anor.
I do not find this submission persuasive. The defendant did not plead
a defence. His bare denial that an agreement was not entered into was
not supported by the evidence in terms of the pleadings or viva
voce
evidence. No witness contradicted the core averments made on behalf
of the plaintiff that a compromise was reached and the parties agreed
that defendant would pay the agreed sum by 28 February 2013. The
exchange control defence is not available to the defendant as it was
a defence based on the original cause of action which had been
extinguished when the compromise was reached. Plaintiff would clearly
be prejudiced by the admission of a defence that was not specifically
pleaded, at this stage. In any event, there was no application made
to the court for the plea to be amended.
The
next issue to be determined by the court is the 'without prejudice'
principle. It was submitted on behalf of the defendant that the
undated letter from the then Chief Law Officer in the AG's office,
Chris Mutangadura, set the agenda for the meeting. The evidence of Mr
Chagonda
for the defendant was that the AG was not aware of the civil
proceedings pending in HC 4221-08. The court was told that all the
parties to the meeting understood it to be on a without prejudice
basis. The negotiations were said to be 'negotiations between the
parties with a view to settlement of their differences'. The court
was referred to two cases; Millward
v Glasser,
Naidoo v
Mariner
Tade Insurance Co. Ltd.
The plaintiff's first submission, in relation to this issue, is
that this issue does not arise from the pleadings. It is not a
defence which was averred in the defendant's plea, nor was there an
application made to the court to amend the plea. The second point
advanced is that there are some letters which were exchanged by the
parties in which the agreement between the parties was set out and
the undertaking to pay recorded which were not marked 'without
prejudice'. The third point is that once an agreement is reached
the court cannot inquire into the negotiations preceding it.
Finally,
it was submitted on behalf of the plaintiff that the defendant has
misunderstood the application of the without prejudice principle. The
principle was discussed in the case of Kazingizi
& Anor v
Equity Properties (Pvt) Ltd,
which was cited as authority for the proposition that parties can
only rely on the inscription 'without prejudice' if the matter is
not resolved. Here is what the court in that matter said;-
“The
expression 'without prejudice' is often written on the face of a
document or communicated expressly to convey the message that the
party communicating the document will not be prejudiced by the
subsequent communications which are conducted with a view to the
settlement of the dispute.
Of course even parties who do not
know what they are doing or why they are doing it often timidly
inscribe the maxim on correspondence out of fear of being held to
account for what they would have communicated. I say this because
there is no logic whatsoever for a party who accepts liability to
refund money paid in anticipation of the conclusion of a sale
agreement and is making a payment plan, to then send the payment plan
on a 'without prejudice' basis. What prejudice is there to talk
about?
In
our law, documents do not necessarily have to be marked 'without
prejudice', for them to be protected. Gbashe
v
Nene 1975 (3) SA 941 E. Inversely,
merely labeling a document 'without prejudice' does not
necessarily confer privilege on the contents. What is important is
whether the communication is considered privileged from an objective
point of view. Crawford
v
Roset & Cornale (1992) 69 B.C.L.R. 2nd
Ed 349; Podovinikoff v
Montgomery (1984), 59 B.C.L.R. 204.
As
a general rule, statements that are made expressly or impliedly on a
'without prejudice' basis in the course of bona fide negotiations
for the settlement of a dispute will not be allowed into evidence.
Naidoo
v
Marine & Trade Insurance Co Ltd 1978 (3) SA 666.
The resolution of a dispute with a genuine view to settlement appears
to be the main consideration. If
the settlement is thereafter reached, the negotiations leading up to
it should be available to the court since the whole basis of the
non-disclosure would have fallen away. Gcabashe
v
Nene (supra). (Underlined
for emphasis)
Applying
the above to the facts of this matter, I am persuaded that the
details of the meeting before the AG on 17 August 2012 are not
privileged because the matter was resolved. The details would be
privileged if the meeting did not result in a resolution of the
dispute. Coupled with the fact that the objection to disclosing what
took place at this meeting was not raised as a part of the pleadings,
the inevitable conclusion is that the details of the meeting held on
17 August 2012 are not privileged and disclosing them to the court is
not prejudicial to the defendant because the meeting resulted in the
dispute being settled. I also find persuasive the submission made on
behalf of the plaintiff that an agreement cannot be without prejudice
or privileged, only the negotiations can. Having found that there was
a valid compromise entered into by the parties, and that, such an
agreement cannot be held to be privileged in the sense of being
precluded from being relied on, it follows that the plaintiff has
established that defendant is liable to him in the sum claimed.
The
last issue for determination is that of the claim in reconvention. In
determining this claim it has been submitted that the court should
consider whether the evidence before it establishes a cause of
action. A cause of action has been defined as;-
“…the
entire set of facts which gives rise to an enforceable claim and
includes every fact which is material to be proved to entitle a
plaintiff to succeed in his claim. It includes all the plaintiff must
set out in his declaration in order to disclose a cause of action”.
See Abrahamse
& Sons v
SA Railways & Harbours 1933 CPD626, Peebles v
Dairiboard
Zimbabwe (Pvt) Ltd, Patel v
Controller
of Customs & Excise 1982 (2) ZLR 82(H), Denton v
Director
of Customs & Excise HH216-89, Hodgson v
Granger & Anor HH133-91, Dube V Banana 1998 (2) ZLR 92 (H). See
Mukahlera
v
Clerk of Parliament & Ors,
where
the court relied on the case of
Dube v
Banana supra, in
which it was held that; “….the cause of action means the
combination of facts that are material for the plaintiff to prove in
order to succeed…”
So,
in order for there to be a 'cause of action', every fact which
gives rise to a successful claim must be present. Every act which is
relevant to the plaintiff's claim, if the plaintiff is to succeed
in its claim, must be present before it can be said that there is a
'cause of action'. See also Peebles
v
Dairiboard Zimbabwe supra.
The
cause of action in an action for a claim of damages caused by
malicious criminal or civil proceedings is the actio
iniuriarum. The
plaintiff bears the onus in respect of all the elements of the
delict, including that of animus
iniuriandi. See
Amler's
Precedents of Pleadings 7th
ed, Harms, pp 273-274,
Van der Merwe v
Strydom [1967]
3 All SA 281 (A),
Beckenstrator v
Rottcher Theunissen [1955]
1 All SA 146 (A),
Rudolph v
Minister
of Safety & Security [2007]
3 All SA 271 (T).
To
succeed with a claim for malicious prosecution, a claimant must
allege and prove that:
(a)The
defendant set the law in motion-instigated or instituted the
proceedings;
(b)
The defendant acted without reasonable or probable cause;
(c)
The defendant acted with malice, or (animo
iniuriandi); and
(d)
The prosecution has failed.
See
Minister
for Justice and Constitutional Development v
Moleko
[2008]
3 All SA 47 (SCA) , Bande
v
Muchinguri 1999
(1) ZLR 476 (H) See also Econet
Wireless & Ors v
Sanangura
,and
Luke davies v
Premier Finance Limited
The
plaintiff must allege and prove that the defendant instituted the
proceedings, that the defendant actually instigated or instituted
them. The mere placing of information or facts before the police, as
a result of which proceedings are instituted, is insufficient. See
Lederman
v
Moharal Investments (Pty) Ltd [1969]
1 All SA 297 (A).
The
test is whether the defendant did more than tell the detective the
facts and leave him to act on his own judgment. At pp197, the court
stated that:
“Inherent
in the concept 'set the law in motion', 'instigate or institute the
proceedings', is the causing of a certain result, i.e. a prosecution,
which involves the vexed question of causality. This is especially a
problem where, as in most instances, the necessary formal steps to
set the law in motion have been taken by the police and it is sought
to hold someone else responsible for the prosecution. Amerasinghe,
Aspects of the Actio
Injuriarum
in Roman-Dutch law, recognises that 'the problem is essentially one
of causation' and suggests (at p. 20):
'The principle is that where a
person acts in such a way that a reasonable person would conclude
that he' (i.e. the defendant) 'is acting clearly with a specific view
to a prosecution of the plaintiff and such prosecution is the direct
consequence of that action, that person is responsible for the
prosecution.'”
The
plaintiff must allege and prove that the defendant instituted the
proceedings without reasonable or probable cause, a phrase which
means 'an honest belief founded on reasonable grounds that the
institution of proceedings is justified. The concept involves an
objective and a subjective element. See Beckenstrater
v
Theunisen [1955]
1 All SA 146 (A). In the context of animus
iniuriandi malice
means animus
inuiriandi
and is not a separate element of the delict. See
Moaki
v
Reckitt & Coleman (Africa) Ltd [1968]
3 All SA 242 (A). Malice in this context does not mean ill will or a
spirit of vengeance; it has a wider connotation. It includes any
motive different from that which is proper for the institution of
criminal proceedings, which is to bring an offender to justice and
thereby aid in the enforcement of the law. See a Guide to the
Zimbabwean Law of Delict (2006), Feltoe; Bande
v
Muchinguri
supra.
The
plaintiff testified that he had received advise from his legal
practitioners that defendant had perpetrated a fraud on him and that
he made a report to the police based on this advice. Mr Samukange
confirmed that the plaintiff had acted on his advice. In this case,
it is common cause that the proceedings in S
v
Bredenkamp 2013 (2) ZLR 288(H) were
terminated when the now defendant was discharged at the close of the
state case. Did the plaintiff do more than give the police
information and leave them to decide whether to prosecute the
defendant? The defendant argues that there is no doubt that plaintiff
instigated the criminal proceedings against him and was malicious.
The defendant relies on the letter from the plaintiff's legal;
practitioners dated 25 March 2013 in which it is observed that
defendant's conduct of borrowing the money with no intention of
returning it fits the definition of fraud in the Criminal Code and
establishes all the elements of fraud. The defendant relies further
on the finding made in S
v
Bredenkamp supra, p
239F-H,
that
defendant had made two payments of USD$200 000-00 in 2001 and a
further payment of USD$3, 5 million in 2006 after he had sold his
mine in the DRC. There was also a finding made at p 229E that 'the
driving force behind the prosecution was the complainant (Plaintiff).
The Prosecutor General succumbed to the pressure from the complainant
to prosecute an apparently civil matter and therefore act in
complicity with the complainant to use a criminal court to put
pressure on the accused in order to collect a civil debt'. See also
Ngonidzashe
Sanangura
v Econet
Wireless HH
398-12.
It
was submitted that these findings pointed to a motive different from
that which is proper for the institution of criminal proceedings,
which is to bring an offender to justice and thereby aid in the
enforcement of the law.
It
was submitted on behalf of the plaintiff that a person who has not
been paid for ten years cannot be said to abuse court process in
seeking the prosecution of the fraudster, that this was plaintiff's
motivation and that this does not exhibit any malice at all, in the
sense of pushing the police. The plaintiff maintains that he acted on
Mr Samukange's
advice at the time and it was only when defendant breached the
undertaking that he had made to pay that a police report of fraud was
made. The plaintiff had knowledge that the defendant had the money
after the attempt to pay USD$3.5 to his account in Jersey was made.
The e-mail from the Maitland Trustees confirmed that defendant no
longer intended to pay the plaintiff after the money was returned
because of his instructions to the trustees that he had authorized
them to pay in error. I accept that this evidence was not placed
before my sister Judge Chatukuta in S
v
Bredenkamp supra.
The criminal court did not hear the evidence of defendant or verify
it through cross examination since the matter was dismissed at the
close of the state case. I am unable to accept that the plaintiff
caused the prosecution of the defendant in the sense of doing more
than merely report that a crime had been committed.
There
was no evidence placed before this court to prove that the USD$50
000-00 claimed by the defendant for legal costs, not a fee note, or a
bill of costs. The defendant referred the question to his legal
counsel and Mr Chagonda
gave no evidence on that aspect during his examination in chief.
There was also no serious attempt made to adduce sufficient evidence
to enable the court to assess the damages suffered by the defendant
as a result of his detention and prosecution, if any. The court was
left with an unclear picture as to the extent of the trauma suffered
by the defendant, whose evidence to the effect that this was his
first arrest was discredited during cross examination. The
defendant's version of his arrest and incarceration was sketchy and
garbled, and in some instances clearly fabricated, by a witness who
told the court that he cannot remember events which took place last
week because of his high blood pressure medications, let alone events
which took place years ago. His account of being detained in a cell
together with over 70 men who smoked like chimneys all night and some
of whom behaved 'aggressively' towards him was quite frankly,
incredible. The defendant had no memory of the number of days he was
incarcerated, the number of days spent in police cells, or of the
process of applying for bail, whether that was done at the
magistrates court or before this court.
We
find that the report made to the police by the plaintiff was not
fake, as in based on false information. We find that the plaintiff
did not do anything more than what is required to cause a perceived
perpetrator of a crime to be brought to book. We find that the
plaintiff could not have been motivated by malice, as in motivated by
the desire to induce the defendant to pay, alone The defendant had
already caused USD$3.5 million to be deposited into plaintiff's
bank account in Jersey. It was defendant's counter instructions to
the Maitland Trustees not to make any further attempts to pay that
triggered the report of fraud, not an intention to induce the
defendant to pay. The claim in reconvention must fail because it is
this court's view that the evidence does not support the assertion
that the plaintiff caused the prosecution of the defendant without
reasonable or probable cause. We find that the plaintiff had 'an
honest belief founded on reasonable grounds that the institution of
proceedings was justified, when he saw the e-mail from the trustees
which his lawyer advised him was evidence that defendant no longer
wished to re-pay the money borrowed after undertaking to do so.
In
the result it be and is hereby ordered that:
1.
Judgment
in favor of the plaintiff, as against the defendant be entered in the
sum of USD$3 872 123-00, (three million and seventy two thousand one
hundred and twenty three United States dollars).
2.
Plus
interest thereon at the prescribed rate calculated from 28 February
2013 to the date of payment in full,
3.
As
well as costs of suit on a legal practitioner and client scale.
4.
The claim in reconvention is dismissed with costs on legal
practitioner and client scale.
5.
The claim for legal costs attendant on defendant's criminal
prosecution, in the sum of USD$50 000-00 be and is hereby dismissed
with costs on a legal practitioner and client scale.
Venturas
& Samkange, plaintiff's
legal
practitioners
Atherstone
& Cook, defendant's
legal practitioners
1.
48 T.L.R. 267
2.
1924 AD 704 @ 715
3.
6th
ed p423
4.
1998 (2) ZLR 488 (S) @ 496 D-G
5.
2012 (1) ZLR 552 (H)
6.
2nd
ed-p39
7.
2012 (1) ZLR 58 (H) @ 72E
8.
1937 AD 101 @ 105
9.
2000 (1) ZLR 405 (H) @ 406A
10.
1950 (3) SA 547 (W)
11.
1978
(3) SA 666
12.
HH 797-15
13.
2005 (2) ZLR 365 (SC)
14.
SC 53-2013
15.
HH235-10
