Zimbabwe adopted a policy that was dubbed “look east” as a way of combating economic sanctions that were imposed on it by the international community. The “look east” policy encourages a forging of closer business and trade ties with countries in the east as opposed to the west, the traditional ...
Zimbabwe adopted a policy that was dubbed “look east” as a way of combating economic sanctions that were imposed on it by the international community. The “look east” policy encourages a forging of closer business and trade ties with countries in the east as opposed to the west, the traditional former business and trade partners.
When this policy was adopted, a lot of Chinese nationals came to our country in pursuit of business opportunities, especially in the mines and minerals sector. Unfortunately, the language barrier has caused a lot of difficulty in the conclusion of contracts and the implementation of business deals.
The plaintiff is a Chinese national who does not speak English. He relied on the interpretation of a business associate who told him of the terms of the contract that he entered into with a Zimbabwean company called Big Valley Masters (Private) Limited (the first defendant). The company owns gold mining claims in Shurugwi (Sky Rocket Mine 1645). Mr. Phillimon Mubata (second defendant) is a director and shareholder in the first defendant.
The plaintiff issued summons against the defendants on 11 December 2012, claiming payment of USD$89,000 being a sum outstanding in respect of a loan advanced to the defendants, as well as interest thereon at the prescribed rate, and costs of suit.
In his declaration, the plaintiff averred, that, on 13 January 2011 he and the first defendant entered into a written agreement. The first defendant was represented by the second defendant when the agreement was concluded. The terms of the agreement included, among other things, an obligation on the plaintiff's part that he would pay for exploration work at the mine, invest capital and mining equipment, and use the block of claims which constituted Sky Rocket Mine 1645 as surety.
The parties agreed that the block of claims would subsequently be transferred into the name of a new investment company in which they would have equal shares, and which would be exclusively managed by the plaintiff.
The plaintiff averred, further, that, the parties agreed that he would advance a loan in the sum of USD$150,000 to the defendants, subject to repayment on certain conditions, for purposes of discharging pressing debts owed by the first defendant.
On 3 October 2011, the parties entered into a second agreement, in terms of which the defendants allegedly admitted to being indebted to the plaintiff in the sum of USD$89,000 and agreed to repay the loan, while allowing the plaintiff to run the mine.
The plaintiff is aggrieved because none of these undertakings given by the defendants have been honored.
The defendants filed their plea on 15 January 2013.
They did not dispute that the parties had entered into what they called a joint venture agreement relating to gold mining. They averred that the plaintiff breached the terms of the joint venture agreement by failing to provide capital to fund their joint venture, in the agreed sum of USD$150,000.
The second defendant denied that he entered into a loan agreement with the plaintiff, or that he entered into any agreement at all with the plaintiff in his personal capacity. He stated, that, at all times; he dealt with the plaintiff in a representative capacity as a director and shareholder of the first defendant.
In the plea, it was averred that the parties had agreed that any loan sums advanced by the plaintiff would be repaid using the proceeds of production at the mine.
After clearing the loan sums, by offsetting against the proceeds of production, the parties would subsequently enter into a profit sharing agreement.
The defendants averred that the plaintiff breached the agreement by failing to finance production through the agreed USD$150,000, and that this breach caused the collapse of the joint venture.
The defendants averred that the joint venture resulted in loss, which should be borne equally with the plaintiff, as an equal partner in the joint venture.
On 20 May 2013, the defendants filed an amended plea, in which they averred that the terms of the second agreement entered into by the parties were such that the plaintiff was obliged to advance the full USD$150,000, as agreed, before any repayment of that loan could be made.
The averment was that the plaintiff was not entitled to repayment until he paid USD$150,000 to the first defendant in full.
The defendants denied that they prevented the plaintiff from assuming control of the mining operations.
The defendants filed a counterclaim for the payment of USD$61,000 which they alleged was still due and owing to the first defendant in terms of the parties' first agreement.
In his replication to the amended plea and counter claim, dated 22 May 2013, the plaintiff denied being in material breach of the terms of the parties' agreements. In his plea to the counter-claim, he reiterated that the defendants themselves breached the agreement, by refusing to relinquish control of the first defendant's mining operations to him, as agreed.
This matter was referred to trial for the determination of these issues:
1. Whether the plaintiff was obliged to provide USD$150,000 towards the financing of a joint venture agreement.
2. Whether the defendants frustrated the contract and caused the non-fulfillment of its terms and conditions.
3. Whether the defendants breached the contract and caused the plaintiff to cancel it and demand re-payment of the USD$89,000 which he had advanced.
In terms of the joint pre-trial conference minute filed of record, on 29 May 2013, the defendants admitted that they received the sum of USD$89,000 from the plaintiff.
At the trial of the matter, Mr. Shi Jinwu gave evidence and told the court that he met the second defendant in February 2010 at a petrol station. He said that the second defendant told him that he was looking for investors for his mineral claims because he was experiencing financial difficulties, and invited him to form a partnership with him.
The plaintiff said that the second defendant invited him to tour his mining operations. He said that he asked him for a loan of USD$150,000. The loan was to be disbursed in phases. The second defendant offered to give up the certificates to his mining claims as collateral. He offered to let the plaintiff take over the day to day running of the mining activities.
The plaintiff told the court that the parties agreed that if he paid an initial USD$50,000 he would be allowed to take over the mining operations of the first defendant.
He said that he was surprised when the second defendant refused to let him assume control of the mining operations of the first defendant after he had paid the fifty thousand as agreed.
The plaintiff referred to Annexure 'A' to the summons, the agreement which the parties signed on 13 January 2011.
The plaintiff signed on behalf of “Chinese”. The second defendant signed that agreement on behalf of the first defendant. In fact, the plaintiff and second defendant are referred to as representatives.
The plaintiff told the court, that, despite the express terms of the agreement, the defendants refused to let him assume control of the mining operations, and, consequently, he was now seeking re-payment of the USD$89,000 which he had advanced to them.
He referred to a second agreement entered into on 3 October 2011 in which the defendants agreed to let him run the mine for purposes of recovering the USD$89,000 which he had advanced to them.
The plaintiff told the court, that, despite the signature of that second agreement, he was never given a chance to enter the mine.
He said that the defendants never prepared the relevant paperwork towards establishing a tribute agreement. There were no environmental and other requisite mining licenses. The plaintiff said that the second defendant kept on giving him excuses as to why he could not allow him to enter the mine and begin mining operations.
The plaintiff told the court that the spirit of the agreement never materialized.
He decided to cancel the partnership and to get a refund of his USD$89,000.
Finally, the plaintiff told the court, that, in his opinion, the second defendant ought to be bound in his personal capacity because he first knew him in his personal capacity.
During cross examination, the plaintiff told the court that he entered into the agreement with the first defendant in a representative capacity, as a representative of a company which is registered here in Zimbabwe, which he is a director of. He conceded that the name of this company was not part of any of the agreements entered into by the parties.
The plaintiff told the court that the first agreement was drafted by his friend who understands English, and that his friend explained the exigencies of the agreement to him. The plaintiff conceded that due to lack of understanding of the English language, he needed to have the agreements explained to him in Chinese.
He said that he was told of the contents of the agreements before he signed them, so he knew what he was signing for.
He called exhibit 1 a mining partnership agreement.
The plaintiff insisted that the partnership fell apart because he was not allowed to gain entry and to start mining operations.
He denied that the agreement known as exhibit 1 had anything to do with the loan agreement.
The plaintiff told the court that exhibit 1 was never followed that's why the parties entered into a second agreement - which was also never fulfilled.
The plaintiff told the court that the second defendant demanded that he pay USD$100,000 to him before he could allow him to enter and begin mining operations.
The plaintiff could not recall the exact dates when he cancelled the agreements entered into by the parties.
He could not comment on the letter shown to him, of 13 May 2011, from Messrs Danziger & Partners, which letter suggested that the parties had been at cross-purposes from the outset regarding the terms and conditions of their respective agreements.
He was unable to provide a cogent reason why the letter of cancellation did not mention that he had been denied entry to the mine, and suggested that the lawyers possibly misunderstood his instructions because of the language barrier.
The court had no problem following the logic of the plaintiff's evidence.
He was sincere in his belief of the terms of the agreements between the parties as they were explained to him in his language. The court believed that he told the truth as he knew it.
The plaintiff called Ms Hua Ding as his second witness.
She is also a Chinese national currently resident in Zimbabwe and South Africa. She told the court that she and the plaintiff met the second defendant at Gweru service station in December 2010. She was employed by the plaintiff as his assistant at the time. Ms Ding told the court that the second defendant invited them to tour his mining operations in Shurugwi and proposed that he enter into a joint venture agreement with the plaintiff to mine gold. She said that when the parties signed their first agreement, on 13 January 2011, she was not present but she witnessed some of the payments made to the defendants.
Ms Ding told the court that the agreement collapsed because the second defendant frustrated the plaintiff by denying him entry onto the mine site. She said that the second defendant had voluntarily surrendered the registration certificates to the first defendant's mining claims, as collateral against payment in full of the money advanced to the defendants as a loan.
Ms Ding told the court that the second agreement entered into by the parties was prepared by the second defendant.
She denied that the plaintiff breached the terms of this agreement, and insisted that it was the defendants who breached the agreement by failing to allow the plaintiff access to the mining site for purposes of conduction explorations, and to commence mining activities.
During cross-examination, Ms Ding remained steadfast that the plaintiff was denied access to the mine. She was unclear as to the reasons advanced for cancellation of the agreements, but she insisted, that, as far as she knew, the plaintiff was aggrieved when he was denied access to the mine despite clear provisions to the contrary in the two agreements signed by the parties.
Again, the court found this witness to be believable, although she could not shed light on some material aspects of the dispute between the parties. Ms Ding was articulate in English. It's a pity that when some of the material aspects of this matter were taking place she was in South Africa and is unable to assist the court to determine the truth.
The plaintiff's last witness was another Chinese national who is currently resident in Zimbabwe, Mr. Wei Ren.
He told the court that he was the plaintiff's mining manager from 2006 to 2010-2011. He confirmed that he was involved in the signing of the agreement between the plaintiff and the defendants.
Mr. Ren was responsible for structuring the mining partnership agreement.
He confirmed that he personally explained the exigencies of that agreement to the plaintiff, and satisfied himself that the plaintiff had understood the contents, before allowing him to append his signature to the agreement.
Mr. Ren also confirmed that exhibit 10, the second agreement between the parties, had been prepared by the second defendant.
He said that he signed that agreement on the plaintiff's behalf.
Before signing, he had consulted widely with the plaintiff who was in China at the time.
This witness told the court that the second defendant was given a loan by the plaintiff and that, he, in turn, had surrendered the certificates of registration to his mining claims to the plaintiff, as collateral for the repayment of the loan.
Mr. Ren told the court that the partnership collapsed because the second defendant denied the plaintiff access to the mine.
He said that the second defendant kept making excuses, but, at the same time, making requests for money to pay the first defendant's debts, until the plaintiff had disbursed a total sum of USD$89,000 to the defendants.
The witness told the court that the plaintiff lost his confidence in the second defendant because of the numerous lies he was told, and that, consequently, he elected to cancel the agreement of partnership.
He said that the second defendant never gave his permission to the plaintiff to commence mining operations, but, instead, kept on making incessant demands for more money.
Mr. Ren disputed the assertion that it was the plaintiff who breached the agreement between the parties. He insisted that it was the second defendant who failed to hold up his end of the bargain.
During cross examination, Mr. Ren confirmed that the plaintiff understood the entire contents of both agreements.
He told the court that a technical team was denied entry onto the mine after the initial USD$50,000 deposit had been paid. This happened fifteen (15) days after 13 January 2011, when the first agreement was signed.
The witness was unable to give a satisfactory explanation as to why the letter of cancellation of the agreement, dated 13 May 2011, had not mentioned that the plaintiff had been denied entry onto the mine as part of the reasons for cancellation.
When he was pressed, he blamed the legal practitioner for not following the plaintiff's instructions.
When it was suggested to him that the plaintiff's breach of clause 8 of the second agreement was the cause of the failure of the partnership, Mr. Ren denied this strenuously.
The plaintiff then closed its case.
Mr. Phillimon Mubata, the second defendant, testified on behalf of both defendants.
He told the court that it was the plaintiff who approached him and proposed that they enter into a joint venture. He said that this was after the plaintiff had proposed to buy the first defendant's mining claims and he had refused.
The second defendant told the court that the plaintiff was involved in a chrome mining project near to where the first defendant's mining claims were. He said that, contrary to what had been asserted by the plaintiff, the first defendant's legal documents were up to date, and all the requisite mining licenses were in place, and had always been in place.
The second defendant told the court that the parties agreed that a total of USD$150,000 would be paid to the first defendant, with an initial USD$50,000 to be paid, where after the second defendant would go to China with the plaintiff where water purification equipment would be bought, and paid for by the plaintiff, using the balance of USD$100,000.
After that, the parties would mine together using a new company which would be jointly owned.
He said that the parties agreed that the USD$150,000 would be repaid to the plaintiff using the proceeds of their joint mining efforts.
The second defendant told the court that the plaintiff breached the parties' agreement by failing to mount an exploration exercise at the mine. He said that he formed the view that the plaintiff ran out of money and was unable to bring the requisite equipment onto the mine. He also said that the plaintiff failed to bring technical experts onto the mine to conduct viability surveys as agreed.
The second defendant denied that the plaintiff was ever denied access to the mine. He said that at all material times, the plaintiff had personnel from his company present at the mine, taking soil samples, and finishing construction of certain buildings on the mine which they intended to use to accommodate their employees.
The second defendant told the court that the reason why the plaintiff purported to cancel the parties' first agreement was because he had refused to sell the mine to the plaintiff or to transfer the claim registration certificates to him.
On exhibit eleven, the parties' second agreement, the witness told the court that the plaintiff was extensively consulted over the telephone by Mr. Wei, and that he authorized Mr. Wei to sign the agreement on his behalf.
According to the second defendant, part of the problem with this matter is that the plaintiff relied entirely on Mr. Ren's interpretation and understanding of things, and there is a possibility that Mr. Ren could have distorted some things in his interpretation from English to Chinese, because Mr. Ren had ambitions to go into business for himself.
During cross-examination, the second defendant denied that it had ever been the parties' intention that he be personally liable or a party to the agreements in his personal capacity. He denied ever receiving any money in his personal capacity, and insisted that all transactions were done in the name of the first defendant, and that he never bound himself as surety.
Mr. Isaac Mhere testified as the defendant's second witness.
He said that he is employed as a Finance and Administration manager by the first defendant, and that the plaintiff, together with a group of other Chinese investors, came to the mine in January 2011 and asked if they could tour the mine and look at the mining operations.
He knew the plaintiff from the mine next door, so he agreed.
Mr. Mhere asked the second defendant for permission to allow the Chinese investors to tour their mining operations, and permission was granted.
Later, he was involved in the discussions for a joint venture, and present at the signing of the first agreement.
The witness told the court that the plaintiff paid the initial deposit of USD$50,000 in bits and pieces, and not as a lump sum as agreed. He personally receipted the payments. He said that the fifty thousand was not paid by the agreed date; it was paid much later than that.
Mr. Mhere said that the plaintiff was never denied access to the mine. He is in charge of the day to day running of the mine, and, if access was to be denied to the plaintiff, it would have been denied by him because he was in charge at the mine site and the second defendant normally operated from offices in Gweru city.
Mr. Mhere told the court, that, the purpose of the second agreement entered into by the parties was to rescue the first agreement and make it workable.
He said that the plaintiff breached the second agreement by failing to pay USD$61,000 as it stipulated; he failed to form a joint venture company; he failed to bring in equipment; he failed to conduct an exploratory survey; and he failed to provide working capital.
During cross examination, Mr. Mhere was adamant that the plaintiff was allowed access to the mine immediately after the first agreement was signed. He said that daily meetings were held on the site at the mine with the plaintiff's employees. He said the plaintiff was never blocked from coming onto the mine.
The defendant closed its case at this juncture.
The question for determination is a simple one: the Court must decide who is telling the truth between the plaintiff and the second defendant, regarding the question of breach of the parties' respective agreements.
Once the court determines this question, the next matter for consideration will be whether the plaintiff is entitled to be refunded USD$89,000, or whether the defendant is entitled to specific performance, and to payment of USD$61,000.
The law that governs contractual relationships is clear.
In interpreting a contract, a court must determine what the intention of the parties was when they entered into a contract.
In this case, did the parties intend to enter into a joint venture agreement in terms of which the plaintiff loaned one or both the defendants the sum of USD$150,000, or did the parties enter into a mining partnership agreement, in terms of which the plaintiff agreed to loan the partnership USD$150,000 which was to be re-paid from the proceeds of the mining venture?
The evidence shows that the parties had different ideas about their rights and obligations which emanated from both agreements which they entered into.
Were they ever of one mind, or there was never any consensus ad idem?
In researching what the law says on how to interpret the intention of parties to a contract, I came across the following:
In the case of Chikoma v Mukweza 1998 (1) ZLR 541 (SC) the Supreme Court stated that:
“…, the approach that the courts will adopt to the issue of whether a contract is void for vagueness will be to help the parties towards what they both intended rather than obstruct them by legal subtleties and allow one of the parties to escape the consequences of all he has done and all he has intended. The courts will interpret contracts fairly and broadly, without being quick to find defects, following the principle ut res magis valeat quam pereat.”
The court said that:
“Against this scenario, the approach to be adopted to the issue of vagueness must be that expressed by PRICE J in Hoffmann & Carvalho v Minister of Agriculture 1947 (2) SA 855 (T) at 860, namely:
'Where parties intend to conclude a contract, think they have concluded a contract, and proceed to act as if the contract were binding and complete, I think the court ought rather to try to help the parties towards what they both intended rather than obstruct them by legal subtleties and assist one of the parties to escape the consequences of all that he has done and all that he has intended....'”
Not to be overlooked, as well, are the wise words of LORD WRIGHT in Hillas & Co Ltd v Arcos Ltd [1932] All ER Rep 494 (HL) at 503I; (1932) 147 LT 503 (HL) at 514:
“Businessmen often record the most important agreements in crude and summary fashion; modes of expression sufficient and clear to them in the course of their business may appear to those unfamiliar with the business far from complete or precise. It is, accordingly, the duty of the court to construe such documents fairly and broadly, without being too astute or subtle in finding defects; but, on the contrary, the court should seek to apply the old maxim of English Law, verba ita sunt intelligenda ut res magis valeat quam pereat.”
The mutual intention of the parties, at the time of the contract, will govern the court's resolution of a contractual dispute if that intention can be determined and if that intention is lawful.
If possible, the mutual intent of the parties will be determined only from the written terms of the contract. If the language of the contract is clear and definite, that language will determine the mutual intent of the parties.
It is my view that the language of the parties' first agreement is clear.
It was an agreement to co-operate and operate the mine under the auspices of a new company which was to be incorporated and to be jointly-owned and controlled by the parties. The parties intended to conclude a contract. They thought that they had concluded a contract, and proceeded to act as if the contract were binding and complete.
The plaintiff proceeded to pay USD$50,000 in drips and drabs.
The parties went to China to look for water purification equipment. The plaintiff continued to give the first defendant money when requested to do so until he had paid USD$89,000.
There were no defects in the January agreement.
None were found in the second agreement.
The court discharged its duty and construed both documents fairly and broadly, without being too astute or subtle in finding defects. The court concluded, that, in respect of both documents, there was consensus as to the intention of the parties and a meeting of the minds in regards to the parties rights and obligations.
The evidence on record showed that the plaintiff had all the terms of both agreements explained to him, in Chinese, before appending his signature. Both agreements were valid and binding on the parties.
The court believed the evidence of the defendants that the plaintiff did not pay the initial USD$50,000 by 26 January 2011 as agreed. The evidence was that the plaintiff paid the USD$50,000 in drips and drabs and that, by 1 March 2011, the plaintiff had not fulfilled its obligation to form a joint venture company.
The court accepts, that, the plaintiff failed to pay the balance of USD$100,000 to the first defendant by 11 March 2011.
The court finds that the plaintiff breached the terms of the agreement entered into by the parties on 13 January 2011.
The plaintiff's excuse for non-performance of the contract appears to be an allegation of frustration of purpose.
However, the plaintiff's claims that he was not allowed to enter the mine are not supported by the evidence.
The court believed the first defendant's manager, that, the plaintiff had employees on the ground, immediately after the agreement was signed, who could come and go at their leisure on the site, and that the plaintiff even posted a guard at the gate to the mine to safeguard his interests.
That explanation is the most probable; given that the plaintiff was already operating on a neighboring mine; it would be absurd to find that his employees were barred entry onto the defendant's mine when they had previously come and gone without any hiccups.
The plaintiff was never prevented from entering the mine.
It is more probable that the plaintiff failed to raise the initial USD$50,000 tranche of the loan; he failed to register the joint venture company on time; and he failed to pay the USD$100,000 within the stipulated period.
The parties then decided to complicate matters by entering into a second agreement, which was described by the defendants' witness as “an attempt to rescue the first agreement.”
On 3 October 2011, nine months after the first agreement was entered into, the parties agreed to let the plaintiff operate the mine to recover the USD$89,000 that the first defendant had borrowed in terms of the first agreement.
Clause 3 of the second agreement stipulates that the USD$89,000 would be repaid using the proceeds of production from operating the mine.
It was agreed that the plaintiff would be offered a tribute to operate and extract ore from the first defendant's claims, and that if the USD$89,000 was paid in full before the expiry of the tributary period, then, a “percentage share structure” would be drafted by the parties.
It was agreed that the loan balance of USD$61,000 would be paid before the plaintiff could be given access to the mining area.
The author R. H. CHRISTIE, Business Law in Zimbabwe, 2nd ed, 1998…, has the following to say about reciprocal obligations:
“There is a presumption that in every bilateral or synallagmatic contract, i.e. one in which every party undertakes obligations towards the other, 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. Whether this presumption applies and whether the reciprocal obligations are to be performed simultaneously or consecutively are questions of interpretation of the contract.
See ESE Financial Services (Pty) Ltd v Cramer 1975 (2) SA 805 @ 808-9.
In contracts to which this principle of reciprocity applies, a plaintiff who demands performance without himself having performed, or tendered to perform, may be met with the exceptio non adimpleti contractus in the form of a dilatory plea: see BK Tooling (Edms) Bpk v Scope Precision Engineering (Edms) Bpk 1979 (1) SA 391 (A).
What if, in a contract to which the principle of reciprocity applies, the plaintiff has partly, but not completely, performed?
If the wording of the contract makes it very clear that he has no claim until he has performed in full, the defendant will be entitled to rely on the exceptio: Van Rensburg v Straughan 1914 AD 317.
But, in any other case, an equitable principle comes into play, based on unjust enrichment: see Ambrose and Aitken v Johnson and Fletcher 1917 AD 327 and applied in Grizzel v P & W Erection Co (Pvt) Ltd 1972 (2) RLR 68 (A), 1972 SA 449 378, 1972 RLR 21.”
Clearly USD$61,000 was never paid to the first defendant, so, the plaintiff's excuse for non-performance, that of frustration of purpose, does not apply.
In my view, the plaintiff has brought these proceedings in an effort to anticipate the first defendant's repudiation of the contract.
The terms of the second agreement between the parties were clear.
The plaintiff was to pay USD$61,000 before he could be allowed onto the mining site, or be allowed to commence operations, or be granted a mining tribute.
The plaintiff cannot claim that the first defendant breached the second agreement, which superseded the first agreement, when it was clearly a condition precedent to entry on the mine, that the additional sum of USSD$61,000 be paid first.
Novation means the replacing of an existing obligation by a new one, the existing obligation being thereby extinguished.
It could be argued that the October agreement was a novation of the January agreement.
The January agreement is what is governing the parties reciprocal obligations. The wording of the agreement has no provision for breach.
This means that the equitable principle, which is based on unjust enrichment, comes into play.
It is my view that the plaintiff's breach of both agreements went to the root of the agreements.
He failed to pay the USD$50,000 on time; he failed to register a joint venture company within the agreed period; he failed to bring equipment and capital to the venture; he failed to conduct geological surveys as agreed; he failed to pay USSD$150,000 as agreed.
A reasonable person may conclude that the plaintiff repudiated the parties' agreements.
He clearly does not intend to pay the first defendant the remaining USD$61,000.
He told the court that he has lost confidence in the defendants and no longer wants to work with them.
One of the remedies for breach of contract is cancellation.
I find that the plaintiff repudiated the parties' agreements. The first defendant is entitled to cancel the agreements and claim damages.
It has elected, instead, to counterclaim for payment of USD$61,000.
In my view, such a claim, being one for specific performance, is not sustainable where the other party to the contract has repudiated it.
The parties agreements did not provide any breach clauses. They never applied their minds to what would happen in the event of breach.
I am persuaded that it would be appropriate to utilise the equitable principle in coming to a resolution of this matter.
I hold this view primarily because the court was uneasy with the plaintiff's level of understanding of the terms of both agreements.
The plaintiff is a Chinese national who came to invest in the mining business in this country. He does not understand English. He relied on the services of his employees to explain the terms of the agreements to him.
The evidence before the court is that some of the interpretation of the agreements was not entirely bona fide because Mr. Ren wanted to go into business for himself and could have misled the plaintiff on some material aspects of the contracts between the parties.
The court believed that evidence.
The plaintiff seemed adamant that he ought to have been allowed to commence mining operations. The terms of the October agreement are diametrically opposed to this belief.
Contracts are made by agreement. They can be unmade by agreement, but, they cannot be unilaterally varied or discharged: see Strachan v Lloyd Levy 1923 AD 670, 671.
It has been said that:
“…, waiver is a bilateral transaction and does not result from a unilateral declaration or a decision…,.:” see Alberts v Bryson 1976 (2) RLR 193 (A) 198, 1977 (1) SA 857 860.
A modern interpretation of the equitable principle, one that takes into account the situation that is currently prevailing in our economy, might not favor an insistence that the plaintiff cannot succeed in his claim until he has performed, in full, the terms of the October agreement.
The court can exercise its discretion in the plaintiff's favour, despite his partial performance of the January agreement (by advancing a loan up to USD$89,000), and his non-performance of the October agreement.
In weighing the equities, the court was guided by Ambrose and Aitken v Johnson and Fletcher 1917 AD 327 where it was stated that it is not for the court to remake a contract of the parties.
The first defendant would be unjustly enriched if it were allowed to keep the USD$89,000 advanced to it by the plaintiff.
The doctrine of privity in the common law of contract provides that a contract cannot confer rights or impose obligations arising under it on any person or agent except the parties to it.
Privity is the legal term for a close, mutual, or successive relationship to the same right of property or the power to enforce a promise or warranty: see Coalridge (Private) Limited v Peter Makawu & Mobil Zimbabwe (Private) Limited SC69-04.
It is my considered view that just because the second defendant signed the January agreement as a representative of the first defendant did not mean that he became a party to the agreement.
The evidence before the court was that the mining claim certificates are in the name of the first defendant. It was the first defendant which entered into the January and October agreements with the plaintiff.
Being a juristic person, the first defendant is unable to sign documents; it would have to rely on its director and shareholder, the second defendant, to sign the documents as its officer and on its behalf.
No evidence was led before the court to show that the parties intended that the second defendant be bound as surety with the first defendant for the due performance of its liabilities.
Accordingly, I find that there was no privity between the plaintiff and second defendant, and that there is no evidence of liability against the second defendant.
Having found that the plaintiff was obliged to provide USD$150,000 towards the financing of a joint venture agreement, and that the defendants did not frustrate the contract and cause the non-fulfillment of its terms and conditions, or breach the contract and cause the plaintiff to cancel it, the court finds, nonetheless, that, it would be just and equitable to allow the plaintiff to recover the USD$89,000 which he had advanced to the first defendant.
In the result, it is ordered that:
1. The plaintiff's claim against the second defendant be and is hereby dismissed with costs.
2. The defendant's counterclaim against the plaintiff, for payment of USD$61,000, be and is hereby dismissed with costs.
3. Plaintiff's claim, as against the first defendant, Big Valley Masters (Private) Limited, in the sum of USD$89,000, is allowed, together with interest thereon at the prescribed rate calculated from 11 December 2012 to the date of payment in full.
4. First defendant shall bear the costs of suit.
