Civil
Appeal
MUZENDA
J:
On
12 November 2019 the court sitting at Mutasa Magistrates Court
granted a judgment in favour of the Respondent herein and ordered as
follows:
1.
That the defendant be ordered to pay US$314,112-68.
2.
That the defendant be ordered to pay interest at a present rate.
3.
That the defendant pays costs of suit.
On
18 November 2019 appellant noted an appeal against the whole final
judgment and outlined the grounds of appeal as follows:
GROUNDS
OF APPEAL
1.
The court a
quo's
finding is grossly erroneous in that it orders the appellant to pay
interest twice to the respondent, contrary to the basic tenets of the
law.
2.
The award of 0.1% on the gross revenue to the respondent by the court
a
quo
is erroneous and ought to be impeached on the following basis:
(a)
that it was not sought and pleaded in the summons; and
(b)
there is no evidence that supports the award.
3.
The court a
quo
committed a gross misdirection in calculating 10% commission based on
an incorrect figure.
4.
The court a
quo
erred and committed a gross irregularity in failing to make a finding
that the respondent was in breach and thus was not entitled to the
commission awarded to it.
5.
The court a
quo
erred and grossly misdirected itself in making a finding that the
respondent reduced the tax obligation of the appellant to Zimbabwe
Revenue Authority for the year 2013.
6.
The court a
quo
grossly erred in awarding the claim in the denomination of United
States Dollars instead of real time gross settlement denomination.
7.
The court a
quo
erred in misinterpreting the meaning of 10% of the reduced debt.
8.
The court a
quo
erred in making a finding a fact that the appellant was liable to pay
to the respondent a position of the various amounts claimed contrary
to evidence on record that the respondent did not have expertise to
carry out such works and that there was non-compliance by the
respondent to cause a certificate to be issued by the respondent's
accountants certifying reasonable terms of the amended agreement of
service.
The
appellant prayed that the appeal succeeds and the order of the court
a
quo
be set aside and substituted by one dismissing plaintiff's claim
with costs.
On
28 November 2019 the respondent filed a cross-appeal and sets out the
grounds of the cross-appeal as follows:
“GROUNDS
OF APPEAL
1.
The court a
quo
grossly misdirected itself in terms of the law wherein it granted
costs of suit on ordinary scale despite the parties having agreed
that in the event of litigation costs were to be granted on
attorney-client scale.
2.
The court a
quo
grossly misdirected itself at law by failing to grant interest of 5%
per month from the date of default to date of full payment which
interest had been agreed by the parties.
3.
The court a
quo
grossly misdirected itself in terms of the law by failing to grant
the respondent the sum of US$500-00 being the agreed amount for
monthly service fees which the respondent had proved to be due to it
and appellant had not contested.
4.
The court a
quo
grossly
misdirected itself at law by failing to grant collection commission
in terms of the Law Society By-Laws which the parties had agreed upon
and respondent had claimed in the summons.
5.
The court a
quo
grossly
misdirected itself by erroneously calculating the 10% tax reduced
fees for the year 2013.”
The
respondent prays in its cross-appeal that the cross-appeal be upheld
and that the relevant part of the judgment of the court a
quo
be set aside and substituted with the following:
“(a)
the appellant be and is hereby ordered to pay costs of suit on
attorney-client scale.
(b)
The appellant be and is hereby ordered to pay interest at rate of 5%
per month from the date of default until the date of full and final
payment of the debt as agreed between the parties.
(c)
The appellant be and is hereby ordered to pay US500-00 to respondent
being the outstanding service fees for monthly returns VAT, PAYE and
QDP.
(d)
The appellant be and is hereby ordered to pay collection commission
in terms of the Law Society By-Laws as agreed between the parties.
(e)
The appellant be and is hereby ordered to pay for the tax reduction
fees in the sum of the amount of US$40,848-21 for the year 2013.”
FACTS
The
plaintiff (now respondent) is Clearsky (Private) Limited trading as
Fool-vest Financial Services, a company duly registered in terms of
the law of Zimbabwe. The defendant (appellant) is Ayan Trading
(Private) Limited, a company incorporated in terms of the laws of
Zimbabwe whose registered business office is 113 Herbert Chitepo
Street, Mutare.
Sometime
in 2016 appellant instructed respondent a tax accounting services
contract and entered into a written agreement and key to the
agreement:
(i)
respondent was to offer tax accounting service to the appellant.
(ii)
the tax management fees for tax year 2009 to 2013 would be charged at
10% of the tax debt reduced for each year under audit.
(iii)
appellant would pay US$500-00 per month as services fees for monthly
retuns of VAT, PAYE and QPD.
(iv)
preparation of ITF12C, Returns including amended ITF12 for the
previous years would be charged at 0.1% of Annual Gross Revenue.
(v)
US$25 per hour would be charged for attending meeting and preparation
of reports or any other correspondences.
(vi)
that 5% interest per month shall accrue against any outstanding
amount in the event of default of payment by the appellant.
(vii)
that in the event of termination of services respondent shall charge
fees for service rendered until such termination and appellant shall
be liable to pay 10% of the tax debt reduced at the time of
termination which shall be due and payable forthwith.
The
respondent rendered its services to the appellant from the date of
the agreement until 26 June 2017 when appellant terminated the
contract.
During
the term of the contract respondent would raise its fees from time to
time but appellant defaulted payment such that interest at the rate
of 5% per month had been accruing on the outstanding amount.
At
the time of termination of the agreement appellant was cumulatively
liable to respondent in the sum of US$554,065-93 inclusive of default
interest for services which had been rendered to the appellant.
In
terms of the agreement between the respondent and appellant the
parties agreed that the appellant shall be liable to pay costs of
suit on a legal practitioner-client scale together with collection
commission in terms of the tariff of the Law Society of Zimbabwe.
The
respondent claimed for the following:
(a)
payment of US$554,065-93 by appellant being the outstanding fees for
the services rendered to appellant by the respondent.
(b)
collection commission in terms of the Law Society by-laws.
(c)
costs of suit on legal practitioner-client scale.
(d)
5% interest per month to be calculated on the outstanding amount on
27 June 2017 until full payment of the outstanding amount.
The
appellant in its plea to the respondent's claim denied entering
into any agreement with the respondent. It further denied that
respondent was in the business of offering tax accounting services
and lacked technical expertise to carry out such tax accounting
services. It denied that respondent satisfied its mandate towards the
appellant. Appellant also denied that there was never any reduced tax
debt after audit by ZIMRA during the period in question which
entitled the respondent to a 10% charge on reduced debts.
Appellant
contended in its plea that respondent did not specifically plead such
reduced tax debts to justify the amount of $50,000-00; the appellant
also blamed the respondent for miscalculating the amount.
Applicant
further denied that respondent rendered services to it.
The
appellant pleaded that respondent did a disservice for it and
contemplated a counter claim.
The
agreement alluded was relating to provision of financial services as
opposed to attending to ZIMRA tax matters.
It
denied that any invoices were raised and denied owing respondent any
money.
It
stated in its plea that respondent was liable to it in the sum of
US$6,000,000-00 (six million dollars).
It
prayed that respondent's claim be dismissed with costs on
attorney-client scale.
It
is necessary to briefly look at the respondent's evidence.
Daniel
Mahonye testifying for the respondent told the court a
quo
that in 2016 respondent was engaged by the appellant to do tax
services, the operative agreement was signed on 1 April 2016 but was
to become effective with effect from 1 July 2016.
He
reiterated the terms of the agreement that the appellant was going to
pay a premium of 10% of the reduced tax debt for the period
stretching from 2009 to 2013. The appellant also agreed to pay the
$500-00 per month for the services performed by the respondent in
meeting appellant's obligations towards ZIMRA.
Respondent
prepared ITF12C as well as amended ITF12C returns and reiterated that
appellant undertook to pay 0.1% of the gross revenue for year
accruing to the appellant and according to his evidence the total for
such gross revenue from 2010 to 2016 totalled $295,070.11.
Interest
on that capital debt due to the respondent from the annexed schedule
attached to respondent's summons added up to $149,956-60.
In
2013 ZIMRA raised a debt of $408,482-08 and the respondent's
charges according to the agreement was 10% which computes to an
amount of $40,848-20 due to the respondent. Much of Mr Mahonye's
evidence on these figures was not uncontroverted by the appellant
during trial and we take it as issues of common cause and should not
detain us.
AD
GROUND 1 OF APPELLANT'S NOTICE OF APPEAL: WHETHER THE COURT A
QUO
GROSSLY ERRED IN ORDERING APPELLANT TO PAY INTEREST TWICE TO THE
RESPONDENT CONTRARY TO BASIC TENETS OF THE LAW
The
appellant submitted that the amount of $14,957-75 constitutes 5%
interest and that interest was added to the capital debt when the
court in its final order further granted an order directing appellant
to pay interest at a present rate it erred.
On
the other hand the respondent submitted in opposing that ground of
appeal that the parties in their own agreement agreed that 5%
interest per month on the amount outstanding was chargeable, the duty
of the court a
quo
was simply to extend that clause of the agreement into the final
judgment.
Respondent
goes further in its cross appeal (ground no.2) on this aspect to
contend that the court a
quo
only granted interest from the date of default to the date of the
judgment. The court ought to have provided for interest until the
date of full payment as agreed by the parties in clauses of their
contract.
The
issue for determination by this court is whether the court a
quo
misdirected itself by ordering 5% interest on the capital amount due
to the respondent on an amount which had been taken into account by
the parties in their agreement.
In
the matter of Administrator
Transvaal v J D Van Nierkerk en Genote BK
it was held that:
“Interest
on a judgment debt is levied from the day on which the debt is
payable, not from the date of the judgment itself. This is the case
unless the court orders otherwise…”
We
therefore come to a conclusion that the court a
quo
in dealing with the issue of interest applicable from the date of
judgment it had a discretion whether to consider that the capital
debt still remains unpaid and in such a scenario to order the rate of
interest agreed upon by the parties, or to deem the debt due to be
fully capitalised and order interest to be paid at the prescribed
rate from the date of judgment.
We
looked at the parties heads as well as oral submissions and did not
discern any misdirection by the court a
quo.
Both the main appeal as well as the cross appeal on this aspect of
the order relating to interest from the date of judgment have no
merit.
WHETHER
THE COURT A
QUO
ERRED IN AWARDING 0.1% OF GROSS REVENUE TO THE RESPONDENT ON THE
GROUNDS THAT IT HAD NOT BEEN PLEADED NOR PROVED BY THE RESPONDENT
The
appellant submitted that the respondent did not plead to the issue of
0.1% of the annual gross revenue in its summons. Its claim was for
$554,065-93 being the outstanding fees for the services rendered to
the appellant. Hence the court erred in granting the amount of
US$295,070-11.
Appellant
further added that the court a
quo
could not have granted that relief mero
motu,
hence in doing so it committed a gross misdirection.
It
was further submitted on behalf of the appellant that the court erred
in granting an order where the respondent had not disclosed any cause
of action. There was no evidence in the plaintiff's bundle of
documents to show the gross revenue upon which 0.1% was calculated
from.
The
respondent opposes that ground of appeal.
It
contends that the amount of $554,065-93 owed to it included the 0.1%
gross revenue, the 0.1% annual gross revenue was cumulatively
included. The respondent added that on p31 of its bundle of documents
it shows how the amount of $295,070-11 was arrived at.
The
respondent went on to lead evidence in court to prove that amount, it
submitted the matter of 0.1% gross revenue was debated from the start
stretching to the closing submissions of both parties and hence the
trial court had to make a decision in that aspect as argued by the
respondent.
Respondent
also alluded to the judgment of the court a
quo
on p20 of the record of proceedings where it dealt with the 0.1%
gross revenue.
The
question for determination is whether the court a
quo
granted a relief which had not been pleaded by the respondent or
alternatively whether there was no evidence adduced by respondent to
be relied upon by the trial court?
On
p31 of the record of proceedings is an annexure attached to the
respondent's summons commencing action, the first column of that
document shows a computation of how the amount of $295,070-11 was
arrived at.
Paragraph
3 of the agreement between the appellant and the respondent provides
for the ITF12C and amended ITF12C returns from 2010 to 2013 where the
respondent was entitled to 0.1% of the annual gross revenue.
Page
20 of the record, the judgment of the court a
quo,
extensively dealt with that aspect.
The
bundle of documents discovered by the respondent shows the type of
work done by the respondent and the annual gross revenue for each
year from 2010.
On
page 386 of the record, during the re-examination of Mr Nyabvure, by
appellant's counsel the following exchange occurred:
“Q:
How was plaintiff supposed to be paid by the defendant.
A:
$6 million of 10% for tax reduced, 0.1%
of annual gross revenue,
$25-00 per hour for attending meetings at ZIMRA and $500-00 per
month.” (my emphasis)
The
$295,070-11 is the total of the annual gross revenue claimed by the
respondent in its papers and admitted by the appellant.
The
summons, the declaration as well as the annexures of the respondent
refer to the amount. The appellant's plea is poorly drafted in our
respectful view and it is but a bare denial.
The
appellant did not ask questions to Mr Mahonye about the 0.1% of gross
revenue, if it did it did not seriously do so. So we conclude that
what is not challenged is indeed admitted.
The
appellant pleaded to respondent's declaration without asking for
further particulars more particularly asking the respondent how that
amount of $554,065-00 was arrived at.
We
infer that it had understood the respondent's nature of claim.
The
appellant proceeded to make submissions relating to that claim and
the court a
quo
believed the respondent and awarded the order relating to that
aspect.
We
failed to understand the basis upon which the appellant attacked the
trial court. The second ground of appeal, we conclude, lacks merit.
WHETHER
THE COURT A QUO COMMITTED A GROSS MISDIRECTION IN CALCULATING 10%
COMMISSION BASED ON AN INCORRECT FIGURE
The
tax audit for 2013 was $408,482-08, the respondent contends that its
commission was 10% of this amount which would come up to $40,848-20.
The
appellant contends that what was due to the respondent is 10% of the
40,848-20 which would be the figure of $4,084-82 on p20 of the
record.
It
now becomes a matter of rendition in our view.
Clause
3(1) of the agreement provides that:
“Tax
management fees for tax year 2009 to 2013 is 10% of tax debt reduced
for each year under audit…”
On
p31 of the record of proceedings the respondent clearly indicates
under the 5th
column 'Tax Debt Reduced' the amount of $408,482-08 and Amount
Due to the respondent under column 6 is $40,848-21.
The
court a
quo
correctly granted the 10% collection commission, but committed a
miscalculation of 10% of the tax debt reduced coming out with the
figure of $4,084-82.
We
agree with the respondent in its cross appeal that there was a
mathematical calculation error and conclude that the correct amount
of collection commission due to the respondent is $40,848-21 not
$4,084-82.
Appellant's
third ground of appeal fails and the respondent's cross appeal on
that aspect ought to succeed.
WHETHER
THE COURT A
QUO
FAILED TO MAKE A FINDING THAT RESPONDENT WAS IN BREACH OF THE
AGREEMENT AND HENCE NOT ENTITLED TO COMMISSION AWARDED
The
appellant argued that respondent did not deserve a commission at all
for it had failed to perform its obligations.
The
appellant added that the respondent was infact in breach of the
contract.
Respondent
did not reduce appellant's tax debts and since it failed to meet
what was expected of it by the appellant it should not have been
awarded any commission.
It
is ideal to join this 4th
ground of appeal with ground of appeal number 5 which states that the
court a
quo
erred in making a finding that the respondent reduced the tax
obligation of the appellant to ZIMRA for the year 2013.
These
are issues of fact which were dealt with by the court a
quo.
The
court a
quo
believed the respondent and dealt with the issue of reduced tax in
its judgment on p20 of the record. The trial court concluded that the
respondent was entitled to the 10% commission and calculated the
figure due albeit erroneously so. However the issue is that of the
liability of the appellant to pay 10% commission on reduced tax debt.
The
pleadings, the bundle of documents as well as the reasoning of the
learned magistrate a
quo
shows that the respondent managed to prove on a balance of
probabilities why she was entitled to the 10% commission and we fail
to see where the court a
quo
misdirected itself.
On
the question of breach, the appellant did not file a counter claim
where it ought to have sought the court to have an order declaring
the respondent to be in breach of contract in any case in our view
that was not necessary anyway because it was the appellant who had
terminated the agreement and indicated in its pleadings that it had
sued the respondent in the High Court claiming millions of dollars
for breach.
The
issue for breach though alluded to by the appellant in cross
examination of the respondent's witness was not specifically
isolated for decision by the trial court as per the issues for trial
reflected on the Pre-trial Conference Minute on p48 of the record.
The
trial court resolved the issue of whether the appellant was liable or
not to the respondent and accepted some of the claims of the
respondent and dismissed others. We see no misdirection in the manner
the trial court dealt with the matter.
Both
grounds of appeal 4 and 5 have no merit.
Grounds
6 and 8 of the Notice of Appeal were abandoned by the appellant's
counsel on the date of hearing.
We
now deal with the grounds of the cross appeal filed by the
respondent.
Grounds
2(b) on the issue of the 5% per month interest has since been
dispensed with when dealing with the main appeal. This equally
applies to the $40,848-21 for the year 2013 on grounds 2(e) of the
cross appeal.
WHETHER
APPELLANT SHOULD PAY COSTS OF SUIT ON ATTORNEY-CLIENT SCALE
Clause
6 of the agreement between the appellant and respondent provides that
in the event of liquidation instituted by the respondent the debtor
shall be liable to pay all legal costs on attorney client scale based
on the current Law Society of Zimbabwe tariff.
The
court a
quo
having ruled that the contract between the parties was binding
between them the misdirected itself in awarding respondents costs on
party and party contrary to what the parties had agreed.
In
tandem of the decision the court incorrectly alluded to in its
judgment pertaining to the sacrosanct nature of contracts the
appellant should pay attorney-client scale and it is so ordered.
WHETHER
APPELLANT SHOULD PAY COLLECTION COMMISSION IN TERMS OF LAW SOCIETY
BY-LAWS AS AGREED BETWEEN THE PARTIES
This
ground of cross-appeal is related to the foregoing ground on the
issue of costs, clause 6 of the agreement provides for that and the
court a
quo
did not show why it did not grant that relief to the respondent in
its judgment.
We
conclude that in failing to grant that relief as per the summons the
court a
quo
misdirected itself that ground of cross appeal has merit and it ought
to succeed.
WHETHER
APPELLANT OWED RESPONDENT $500-00 OUTSTANDING FEES
This
amount was claimed by the respondent and not disputed by the
appellant. The trial court ought to have granted.
As
already indicated by this court hereinabove, Mr Nyabvure at p368
acknowledged that the respondent was to be paid $500 for attending
ZIMRA meetings and the court a
quo
on p19 of the recorded listed that amount as one of the respondent's
claims.
It
is not clear on record why no decision was made by the court relating
to the claim for $500-00.
The
respondent had managed to prove on a balance of probabilities the
amount of $500-00 fees outstanding and that unground of cross appeal
has merit in our view.
As
a result the following order is granted:
1.
Appellant's appeal be and is hereby dismissed with costs.
2.
Respondent's cross appeal partially succeeds and in addition the
order of the court a
quo
is amended in clause 3, by setting aside that clause and substituted
it by the following:
(i)
The defendant is ordered to pay the plaintiff's costs on
attorney-client scale; in addition
(ii)
Defendant is ordered to pay $500-00 to the plaintiff being the
outstanding service fees for monthly returns for VAT, PAYE and QPD.
(iii)
The defendant to pay collection commission in terms of the Law
Society of Zimbabwe By-laws as agreed by the parties.
(iv)
Defendant is to pay the amount of $40,848-21 for the reduction fees
for year 2013 to the plaintiff.
MWAYERA
J agrees ________________
Mutamangira
& Associates,
plaintiff's legal practitioners
Mugadza
Chinzamba & Partners,
respondent's legal practitioners
1.
1995 (2) SA 24 (A)
2.
Tetrad Investments Bank Limited v Bindura University 2009 WSC–5;
Fawcett Security Operations (Private) Limited v Director of Customs &
Excise & Ors 1993 ZLR 121 (S)
3.
See Sakunda Energy (Private) Limited & Anor v Mayor Logistics
(Pvt) Ltd HH226-18
