MATHONSI
JA:
This
is an appeal against the whole judgment of the High Court handed down
on 18 July 2018 in which it ordered the appellant to deliver to the
respondent 167,275 Old Mutual Public Limited Company shares within 10
days of the date of the order. Alternatively, it ordered the
appellant to pay damages equivalent to the value of 167,275 Old
Mutual Public Limited Company shares calculated using the rate
determined by the Zimbabwe Stock Exchange as at the close of trading
on the last day that Old Mutual PLC traded in Zimbabwe.
The
appellant was also ordered to pay costs of suit.
THE
FACTS
The
respondent instituted an action against the appellant for the return
of the 167,275 Old Mutual PLC shares (the shares) which shares he had
transferred to the appellant or its nominee in pursuance of an asset
swap agreement. In the alternative, the respondent sought payment of
damages equivalent to the market value of the shares.
His
case was that sometime in 2008 he had entered into a verbal asset
swap agreement with the appellant the terms of which were that the
respondent would transfer the shares and a further 110,000 PPC shares
to the appellant. Upon the transfer of the shares the appellant would
transfer to the respondent an immovable property known as No. 4
Wroxham Road, The Grange, Harare (the property). Thereafter the
respondent would also transfer the 110,000 PPC shares to the
appellant.
It
was the respondent's case that about 22 October 2008, he duly
transferred the shares to the appellant's nominee Zimcor Limited
under Share Certificate No. 606776.
In
breach of the agreement the appellant failed to transfer the property
to the respondent as a result of which the respondent cancelled the
agreement in January 2011.
Accordingly,
the respondent became entitled to the return of the shares he had
transferred to the appellant. As the appellant failed to return the
shares, the respondent sued for their return. In the alternative, he
claimed their value as damages.
Before
the court a quo, the appellant denied ever entering into an agreement
with the respondent maintaining that he had only received the shares
from the respondent in his capacity as an agent of Zimcor Limited, a
company in which he was neither a director nor a shareholder.
The
appellant asserted that the shares in issue were not transferred to
him and as such he was not liable to the respondent in respect of the
shares.
The
respondent insisted that he dealt with the appellant in his personal
capacity and not as an agent and that the shares were transferred to
Zimcor Limited on the instructions of the appellant, the respondent
himself not having had any relationship with Zimcor Limited.
The
court a quo found in favour of the respondent and granted an order
aforesaid. The appellant was aggrieved. He noted an appeal to this
Court on the following grounds:
1.
The court a quo erred in fact and in law by finding that there was an
agreement for the sale of an immovable property in exchange for
shares in the absence of any evidence, disregarding the physical
evidence which negatived the existence of the alleged agreement.
2.
The court a quo erred in fact and at law in finding that the
appellant was not a credible witness as a result of discrepancies in
his evidence without taking into account the fact that the trial was
taking place about a decade since the occurrence of the events under
scrutiny which time would naturally have an effect on the memory of
the appellant.
3.
The court a quo erred in fact and in law by finding that the
plaintiff (sic) had proved his case on a balance of probabilities and
yet the appellant (sic) had in fact not proved the issues for trial.
4.
The court a quo erred in fact and in law in ordering appellant to
return shares which, from the evidence before the court, were never
in appellant's possession.
5.
The court a quo erred in fact and at law in finding that the shares
should be compensated by a party who had not been proved to have
benefited from same, in the absence of any proof that Zimcor Limited
itself had not solely benefited from the shares transferred in its
name.
I
must state that at the hearing of the appeal Mr Hashiti who appeared
for the appellant, quickly abandoned grounds of appeal numbers 1 and
3 which were afflicted by invalidity. This left only grounds of
appeal numbers 2, 4 and 5 to be motivated.
THE
COURT A QUO'S FINDINGS
The
court a quo accepted the evidence of the respondent which it found to
have been simple and in support of his averments in the pleadings. It
found that although the shares in question had been transferred to
Zimcor Limited and not to the appellant, Zimcor Limited was in fact
the appellant's nominee to whom the respondent owed no obligation
for which he could transfer the shares.
The
court a quo found the existence of a link between an immovable
property which the appellant had purchased at a Sheriff's auction
and the transfer of the shares.
The
court a quo concluded that the respondent was not only a credible
witness, but that his evidence also accorded with probabilities. The
evidence of the appellant in opposition to the claim did not impress
the court a quo at all. In fact, the court a quo was quite critical
of the appellant's presentation describing him “as an evasive and
in some instances deliberately mendacious witness” who made
inconsistent statements.
The
court a quo concluded that nothing turned on the transfer of the
shares to Zimcor Limited because the appellant had inadvertently
admitted being in the habit of not registering his assets in his own
name. This explained why he directed the respondent to transfer the
shares into the name of Zimcor Limited.
ISSUES
FOR DETERMINATION
This
appeal in essence turns on two issues, namely;
1.
Whether the court a quo erred in finding that there was a valid
agreement between the parties; and
2.
Whether the court a quo erred in ordering the delivery to the
respondent of the shares or their equivalent value.
1.WHETHER
THE COURT A QUO ERRED IN FINDING THAT THERE WAS A VALID AGREEMENT
BETWEEN THE PARTIES
It
was submitted on behalf of the appellant that he acted as an agent of
a disclosed principal namely Zimcor Limited. For that reason he could
not assume personal liability being merely a conduit that fell away
the moment the agreement was concluded between his principal and the
respondent.
In
advancing that argument, Mr Hashiti for the appellant, relied on the
proof of transfer of the shares dated 22 October 2008 showing that
the respondent indeed transferred the shares to Zimcor Limited. The
document in question was signed by the appellant on the same date and
he endorsed that he had received it “on behalf of Zimcor.”
Once
it was accepted that the appellant acted on behalf of a principal, so
the argument goes, the court a quo was precluded from ordering the
appellant to return the shares which he did not receive in his
personal capacity.
Mr
Mugandiwa who appeared for the respondent submitted that the
existence of an agency relationship between the appellant and Zimcor
Limited was not established.
Riding
on the court a quo's finding that there existed no relationship
between the respondent and Zimcor Limited as would motivate the
transfer of the shares to the later, Mr Mugandiwa submitted that the
court a quo's findings on that aspect cannot possibly be said to
have been irrational as to invite the Appellate Court to intervene.
I
agree.
This
is a matter which was decided entirely on the credibility of
witnesses. The appellant was pitted against the respondent and the
court a quo made factual findings based upon their presentation of
evidence.
I
have already said that the court a quo was critical of the evidence
of the appellant. The court a quo assessed the quality of the
appellant's evidence and concluded at p5 of the cyclostyled
judgment:
“The
defendant's (appellant) demeanor punctuated by evasiveness and the
use of impertinent language whenever he was confronted with facts
presented him as a witness who was seeking to mislead the court.”
Indeed,
there is a reason why the court a quo came to that conclusion. The
appellant's evidence was not only incoherent, it was punctuated by
the use of intemperate language. Expressions like: “this is
nonsense;” “no it is rubbish, absolute rubbish it is ridiculous…”
are all over the record of his testimony which is also replete with
situations where the appellant refused to answer questions.
The
trial court was required to resolve the factual disputes of whether
there was a swap agreement and whether the appellant was acting in
his personal capacity, among others.
The
quality of the appellant's evidence was so poor that the trial
court cannot be faulted for rejecting it and embracing that of the
respondents. The appellant has himself to thank for that outcome
having done nothing to endear himself in the eyes of the court.
In
rejecting the appellant's evidence the trial court made factual
findings, including the finding that the appellant had acted for
himself and not as an agent of Zimcor Limited which was merely his
nominee for receiving the shares.
It
has long been regarded as settled in this jurisdiction that this
Court will not interfere with factual findings, including findings on
the credibility of witnesses, made by a trial court unless the
decision is irrational.
This
Court has, in a number of cases, followed the general rule on whether
to interfere or not which was expressed in Hama v National Railway of
Zimbabwe 1996 (1) ZLR 664 (S) at 670 C-D, where the court pronounced:
“The
general rule of the law, as regards irrationality, is that an
Appellate Court will not interfere with a decision of a trial court
based purely on a finding of fact unless it is satisfied that, having
regard to the evidence placed before the trial court, the finding
complained of is so outrageous in its defiance of logic or of
accepted moral standards that no sensible person who had applied his
mind to the question to be decided could have arrived at such a
conclusion: Bitcoin v Rosenburg 1936 AD 380 at 395-7; Secretary of
State for Education & Science v Metropolitan Borough of Tameside
[1976] 3 All ER 665 (CA) at 671 E-H; CCSU v Min for the Civil Service
supra at 951 A-B; PF-ZAPU v Minister of Justice (2) 1985 (1) ZLR 305
(S) at 326 E-G.”
When
following this principle almost two decades later ZIYAMBI JA restated
it more emphatically in ZNWA v Mwoyounotsva 2015 (1) ZLR 935 (S) at
940 R-F:
“It
is settled that the Appellate Court will not interfere with factual
findings made by a lower court unless these findings were grossly
unreasonable in the sense that no reasonable tribunal applying its
mind to the same facts would have arrived at the same conclusions; or
that the court had taken leave of its senses; or, put otherwise, the
decision is so outrageous in its defiance of logic that no sensible
person who had applied his mind to the question to be decided could
have arrived at it; or that the decision was clearly wrong.”
The
appellant's case was never that there was no agreement involving
the transfer of the shares but that such agreement was between the
respondent and Zimcor Limited.
He
maintained that he was only an agent of Zimcor Limited.
The
respondent asserted that the verbal swap agreement was with the
appellant and that he knew nothing about Zimcor Limited. He only
transferred the shares to the latter as directed by the appellant.
The respondent produced proof of the transfer of shares which was in
fact signed by the appellant in acknowledgment of receipt. He also
produced further documents signifying his pursuit of the transfer of
the immovable property at the centre of the dispute or alternatively
the return of the shares.
It
is the view of this Court that the requirements of a valid contract
were satisfied by the evidence. The probabilities favoured the
respondent as correctly found by the trial court. This is
particularly so given that the appellant was not a credible witness.
The
court a quo's finding on credibility, as I have said, is one which
this Court cannot lightly interfere with. The assessment of the
credibility of a witness is for the trial court to make and not this
Court. That is the view expressed in S v Mlambo 1994 (2) ZLR 410 (S)
at 413 C:
“The
assessment of the credibility of a witness is par excellence the
province of the trial court and ought not to be disregarded by an
Appellate Court unless satisfied that it defies reason and common
sense.
A
careful reading of Ndlovu's evidence, to which no accompanying
adverse demeanor finding was made, does not persuade me that the
magistrate's assessment was erroneous.”
See
also Nzira v The State SC23/06.
There
was no adverse finding on demeanor in respect of the respondent.
It
was not suggested on behalf of the appellant that the findings of the
trial court on credibility could be faulted in any way except the
suggestion that the appellant's frailties as a witness should have
been excused because of the lengthy passage of time.
I
disagree because the respondent, who was credible and gave clear
testimony, also related to the same events and was also afflicted by
the same lengthy delay.
There
was no misdirection on the trial court's finding that a valid
agreement was concluded by the parties.
2.
WHETHER THE COURT A QUO ERRED IN ORDERING THE DELIVERY TO THE
RESPONDENT OF THE SHARES OR THEIR EQUIVALENT VALUE
Mr
Hashiti for the appellant strongly submitted that it was incompetent
for the trial court to order the appellant to return the shares which
were never transferred to him, they having been transferred to Zimcor
Limited and not the appellant.
In
a way, the conclusion already made that the parties entered into a
valid agreement involving the transfer of the shares, resolves this
issue as well.
In
fact that argument is not well taken to the extent that it ignores
the primary transaction between the parties. The appellant did not
meaningfully refute that there was an underlying agreement in terms
of which he was selling to the respondent a house he was in the
process of purchasing from a Sheriff's sale.
I
have already adverted to the trial court's factual findings which
were adverse to the existence of an agency relationship between the
appellant and Zimcor Limited. I have said that there is no legal
foundation for interfering with that finding. If there was no agency,
as the trial court correctly established, the consequences of an
aborted Swap Agreement, namely, the return of the shares or their
value, cannot be shared with any other party. They are for the
appellant alone.
When
giving evidence, the appellant was unable to show that he was an
agent of Zimcor. Quite to the contrary, he stated clearly under cross
examination at p148 of the record, that he did not get any authority
from Zimcor Limited. Pressed further, he dithered stating:
“I
cannot remember.”
There
can be no doubt that the obligation to make good the shares fell on
the appellant. In fact, that he was an agent of Zimcor was a claim
made by the appellant himself. He was therefore under an obligation
to lead evidence to establish that claim. His failure to lead
evidence from Zimcor which, presumably was available, further
warranted the drawing of an adverse inference that no such evidence
existed or that the evidence would not support his case.
The
respondent sought an order compelling the appellant to transfer the
shares to him given the cancellation of the swap agreement. In the
alternative, he sought payment of damages equivalent to the market
value of the shares. The trial court issued the following order:
“In
the result, it is ordered that:
1.
Judgment be and is hereby given in favour of the plaintiff and
against the defendant for:
(a)
Delivery to the plaintiff of 167,275 Old Mutual Public Limited
Company shares within ten days of the date of this order; or,
alternatively
(b)
Payment of damages equivalent to the value of 167,275 Old Mutual
Public Limited Company shares calculated using the rate determined by
the Zimbabwe Stock Exchange as at the close of trading on the last
date that that company traded in Zimbabwe.
2.
Defendant shall pay the costs of suit.”
It
is not clear why the trial court made such a disposition given that
the fourth issue for trial, which it was required to resolve, was the
value of the shares.
Apart
from that, it was common cause at the trial that Old Mutual PLC had
ceased to operate in Zimbabwe and had delisted from the Zimbabwe
Stock Exchange before commencement of trial. Not only that, it was
also common cause that the shares forming the dispute between the
parties no longer existed.
According
to a letter of 9 March 2015 by Corpserve Registrars (Pvt) Ltd to the
respondent's legal practitioners, the shares were transferred to
Stanbic nominees NNR on 4 June 2009.
Mr
Hashiti for the appellant submitted that a court of law sits to
resolve disputes and should not sub-contract its duties to a third
party. The trial court should have determined the value of the shares
and issued a holistic order instead of delegating the task to the
Zimbabwe Stock Exchange. He further submitted that the Court ordered
the determination of the value to be as at the close of trading on
the last day Old Mutual PLC traded in Zimbabwe. That date was not
determined and the parties had not made any submissions in that
regard. In his view the matter should be remitted to the trial court
to complete the case.
Mr
Mugandiwa in a way conceded that the order of the trial court
presents some difficulties. He however took the view that the value
of the shares is ascertainable because all stock brokers have an
index which can be used to determine the date of the delisting of Old
Mutual PLC. As to why all that was not canvassed during the trial and
resolved by the trial court, Mr Mugandiwa would not say.
Clearly
the trial court did not resolve all the issues for trial and in the
end gave an order which did not bring the dispute to finality.
It
should have determined the value of the shares from evidence
presented to it. If such evidence was not presented, there are
remedies available for such eventuality. It could not assign the
resolution of a trial issue to a third party who was not even cited
in the proceedings. Moreso in a case such as the present where it was
common cause that restitution of the shares was, to the knowledge of
the parties and the court, no longer possible, they having been
disposed of 17 years earlier.
The
matter has to be remitted for resolution of the outstanding issues.
In
the result, it is ordered that;
1.
The appeal partially succeeds to the extent described below:
(a)
The appeal on the merits is dismissed;
(b)
Paragraphs 1(a) and (b) of the order of the court a quo relating to
the delivery of the 167,275 Old Mutual Public Limited Company shares
and payment of damages are set aside and in their place is
substituted the following:
“The
defendant shall pay to the plaintiff damages equivalent to the value
of 167,275 Old Mutual Public Company Shares.”
2.
The matter is remitted to the court a quo for a determination of the
value of the 167,275 Old Mutual Public Limited Company Shares to be
paid.
3.
Each party shall bear its own costs.
GARWE
JA: I agree
MAVANGIRA
JA: I agree
Mushoriwa
Pasi Corporate Attorneys, appellants' legal practitioners
Messrs
Kantor & Immerman, respondents' legal practitioners
