MATHONSI
JA:
Dismayed by the respondent's outright refusal to deliver to it
outstanding fuel in terms of an agreement of sale entered into
between the parties, the appellant filed a claim for specific
performance in the High Court (“the court a
quo”).
The
appellant sought judgment compelling the respondent to deliver
120,000 litres of diesel purchased from the respondent.
By
judgment delivered on 31 March 2021, the court a
quo
dismissed
the claim and issued the following order:
“Accordingly,
I order as follows:
1.
The plaintiff's claim is dismissed.
2.
The contract entered into between the parties whereby the plaintiff
purchased 150,000 lrs of fuel from the defendant be and is hereby
cancelled.
3.
The defendant be and is hereby is (sic) ordered to pay the plaintiff
the sum of $159,300.00 representing the plaintiff's partial
performance of the contract.
4.
The plaintiff be and is hereby ordered to pay the defendant's costs
of suit.”
This
is an appeal against that whole judgment of the court a
quo.
THE
FACTS
The
background facts are largely common cause.
The
appellant is a transporter of note while the respondent is a fuel
monger. They have a long standing business relationship whereby the
respondent has been supplying the appellant with bulk fuel over the
years.
On
1 November 2018, the parties entered into a sale agreement in terms
of which the respondent sold and the appellant purchased 150,000
litres of diesel.
On
2 November 2018 the appellant paid the purchase price of $201,000 in
terms of the invoice presented to it by the respondent but did not
take delivery of the diesel in question. In fact, it was not until
28 November 2018 that the respondent delivered only 30,000 litres of
the diesel on the instructions of the appellant.
This
left a balance of 120,000 litres of diesel which is the subject of
the present litigation involving the parties.
Problems
started in January 2019 when three events occurred in quick
succession:
(i)
First, the Minister of Finance and Economic Development gazetted the
Customs and Excise (Tariff) (Amendment) Notice, (No.7, 2019) as S.I 9
of 2019. The Statutory Instrument came into operation on 13 January
2019. It was enacted to amend Part II of the Second Schedule of the
Customs and Excise (Tariff) Notice, 2017 which was published in
Statutory Instrument 53 of 2017.
(ii)
Second, and subsequently to that, the Petroleum (Petroleum Products
Pricing) Regulations S.I 10 of 2019 were gazetted. Section 3 thereof
made it clear that they applied to “petroleum products prices in
relation to wholesaling and retailing activities.” Section 5
provided the formulas that were to be applied by the Zimbabwe Energy
Regulatory Authority (“ZERA”) in calculating the price of any
petroleum product.
It
is significant to note that the amount of duty imposed by S.I 10 of
2019 appears to have been equivalent to the amount fixed by S.I 9 of
2019, which, as I have stated, specifically stated that it came into
operation on 13 January 2019 without in any way suggesting that it
had retrospective effect.
(iii)
Third, and obviously in response to the imperatives of the Statutory
Instruments referred to above, the ZERA issued a directive requiring
all oil companies to declare their fuel stocks as of midnight on 12
January 2019. The directive was contained in a circular dated 17
January 2019 which reads in relevant part:
“RE:
DECLARATION OF OIL COMPANY FUEL STOCKS AS OF MIDNIGHT 12TH
JANUARY 2019
Pursuant
to the meeting held at the Ministry of Finance on the 16th
January 2019 between Ministry of Energy and Power Development,
Ministry of Finance, Zimbabwe Energy Regulatory Authority and Oil
Companies, the authority requires that Oil Companies declare the
details of the following:
1.0
Stockholding of diesel, petrol and paraffin held by the Oil Company
at depot or at NOIC (old duty paid) as of midnight 12th
January 2019 before the new pricing (Statutory Instrument 10 of 2019)
came into effect.
2.0
Outstanding coupons (yet to be redeemed) as of midnight 12th
January 2019, indicating products category of customers, volumes and
value as well as special conditions attaching to coupons.
Oil
Companies are further advised that they are required to pay the
difference in duty between the old duty and new duty to ZIMRA on the
stock referred to in 1.0 as the fuel will be sold in terms of S.I 10
of 2019.”
(The underlining is for emphasis)
Following
these developments the appellant moved quickly.
On
24 January 2019, it demanded the immediate delivery of the balance of
120,000 litres of diesel.
The
respondent was unmoved.
Citing
an increase in duty, the respondent refused to deliver until the
appellant paid additional duty on the outstanding diesel.
By
email of 24 January 2019 the respondent tabled three options
available to the appellant. The respondent wrote:
“… we
wish to provide you with below three options.
1.
Lonrho pay the difference of duty amounting to $1.65.
2.
Lonrho can draw down at the current price of fuel to exhaust your
prepayment with us.
3.
RAM Petroleum can refund Lonrho the total amount prepaid.”
The
appellant would have none of it.
Calling
the respondent's proposal “nonsense” it emotionally put its
case across that the ZERA directive did not apply to the diesel that
had already been sold.
With
the battle lines drawn, the appellant enlisted the services of its
legal practitioners whose letter of demand to the respondent yielded
nothing.
PROCEEDINGS
BEFORE THE COURT A QUO
On
7 February 2019 the appellant sued out a summons against the
respondent seeking an order directing the respondent to deliver the
outstanding diesel.
The
claim was contested by the respondent.
In
a long winding plea characterized by a number of alternative
averments, the respondent pleaded the existence of a tacit term of
the agreement that the appellant should have taken delivery within
seventy two hours after effecting payment.
In
addition, it asserted that section 230(1) of the Customs and Excise
Act [Chapter
23:02]
constituted an implied term that it was entitled to recover from the
appellant any amount by which duty was increased.
Some
of the pleas raised by the respondent related to fictional fulfilment
of the contract in the sense that it had tendered delivery of the
diesel which the appellant refused.
Also,
that by failing to accept delivery, the appellant had repudiated the
contract thereby entitling the respondent to cancel it and tender the
sum of $159,300.00 being the difference.
Following
a full trial, the court a
quo
found that the contract became perfecta
when
the parties agreed on the thing sold (the merx),
the price (pretium)
and showed they had the requisite animus
to
contract.
It
was the court a
quo's
finding
that the contract was perfected when the respondent accepted the
payment for the 150,000 litres of diesel.
Regarding
transfer of ownership of the diesel, the court a
quo
remarked:
“It
is evident to me that in the present matter, transfer of ownership of
the fuel in question happened by way of constitutum
possessorium
without
actual delivery of the thing and by means of a mere change in the
parties intention regarding animus
domini.
The change in animus
in
this matter repeatedly took place each time the plaintiff paid for
the fuel and the defendant accepted payment for the fuel. By that
exchange, the plaintiff acquired ownership in the fuel, when looking
at the facts in the present matter means that ownership of the
150,000 litres transferred to the plaintiff in early November 2018.”
Notwithstanding
those findings, the court a
quo
went
on to find that the burden for paying for the increase in duty passed
to the appellant.
Further,
it found that by failing to accept delivery, the appellant repudiated
the contract of sale. In disposing of the matter, other than
dismissing the appellant's claim, the court a
quo
also
granted positive relief to the respondent, namely the cancellation of
the contract and the return of the purchase price paid by the
appellant.
PROCEEDINGS
BEFORE THIS COURT
The
appellant remained aggrieved. It noted this appeal on the following
grounds of appeal.
1.
Having come to the conclusion that the contract between the parties
had become perfecta
and
ownership passed to the appellant, the court a
quo
erred
in not concluding that provisions of Statutory Instrument 10 of 2019
were, on the circumstances of the matter, not engaged in that:
(a)
The duty chargeable under and in terms of that Statutory Instrument
was not meant to and did not affect transactions that had already
been concluded.
(b)
Respondent did not place before the court any evidence tending to
show that it had been required to and had in fact paid additional
duties on fuel already purchased by appellant.
2.
The court a
quo
erred
at any rate in concluding that the increase of duty on future sales
was a risk which appellant was required to bear by operation of law.
3.
Consequently, the court a
quo
erred
in not finding that respondent had breached the agreement between the
parties by reason of its failure to deliver diesel that had been
purchased by appellant.
4.
The court a
quo
seriously
misdirected itself on the facts, such misdirection amounting to an
error in law in not finding at any rate, that there was no agreement
between the parties on the delivery timelines and that respondent had
at all times been prepared to effect delivery of the fuel to
appellant.
5.
The court a
quo
erred
in granting respondent positive relief on the basis of averments made
in its plea.
The
overarching issue commending itself for determination from the
foregoing grounds is whether the appellant's consignment of diesel
was subject to additional duty under S.I 10 of 2019. Also, whether
there were any timelines for the delivery of the diesel and whether
the court a
quo
erred
by granting relief to the respondent.
Mr
Mpofu
for
the appellant submitted that S.I 10 of 2019 was not applicable in the
circumstances of this case, it having come into effect on 13 January
2019 and not having retrospective effect.
In
counsel's view, and for that reason, the directive to Oil Companies
given by ZERA only applied to fuel that was still to be sold and not
the fuel, like the 120,000 litres of diesel, that had already been
sold.
The
fuel that had already been sold could not be subjected to further
taxation and did not carry such risk.
Counsel
submitted that the respondent had no business subjecting the
appellant's fuel to the directive issued by ZERA.
Regarding
the applicability of section 230(1) of the Customs and Excise Act, Mr
Mpofu
took
the view that the section was not engaged. There was no evidence, so
it was argued, that the respondent had been requested to, and did
pay, any additional duty as envisaged by section 230(1).
On
repudiation, Mr Mpofu
submitted
that the court a
quo's
findings
were not supported by any evidence at all. There was nothing in the
conduct of the parties suggesting that delivery was to be made within
72 hours. Neither was there evidence of any delivery timelines or any
tender of delivery.
Per
contra,
Mr Ochieng
for
the respondent contended that the appellant's reference to S.I 10
of 2019 was not only a false premise, it was also irrelevant. This is
because the additional duty was imposed by S.I 9 of 2019.
In
counsel's view, it was a fallacy that the directive by ZERA imposed
a duty on fuel.
Counsel
further contended that section 230(1) constituted a term imposed by
law which transferred liability to pay duty onto the appellant.
Finding
it difficult to defend most of the findings made by the court a
quo
which
appeared contradictory, counsel for the respondent submitted that the
court a
quo
arrived
at a correct conclusion on wrong reasons.
Given
that a party does not appeal against the reasons for judgment, so it
was argued, the respondent could not do anything about the situation.
WHETHER
THE DIESEL WAS SUBJECT TO ADDITIONAL DUTY
On
the evidence presented before the court a
quo,
including
the manner in which the parties conducted themselves, the basis upon
which the appellant should pay an additional duty was the directive
given by ZERA as read with S.I 10 of 2019.
I
mention here that the court
a quo
correctly
found that the sale became perfecta
at the beginning of November 2018.
In
other words, the sale was completed before the Statutory Instrument
came into effect.
The
question which then arises is whether its application extended to the
diesel, which for all intents and purposes, had been sold and
belonged to the appellant.
I
have already dealt with the two Statutory Instruments (S.I 9 and 10
of 2019), their introduction and purposes. I have also stated that
S.I 9 of 2019 expressly provided that it came into effect on 13
January 2019 and that it did not provide for retrospective
application.
In
statutory interpretation, there is a salutary presumption, as can be
gleaned from section 20(1) of the Interpretation Act [Chapter
1:01],
that statutes are not to be construed retrospectively.
In
fact, the general rule is that, in the absence of express provision
to the contrary, statutes should be regarded as affecting future
matters only. They should, if possible, be so interpreted as not to
take away rights actually vested at the time of their promulgation.
See Curtis
v Johannesburg Municipality
1906 TS 308 at 311.
The
above proposition has been hallowed by repetition over the years in
this jurisdiction. See Nkomo
& Anor v Attorney General & Ors
1993 (2) ZLR 422 (S) at 429; Greatermans
Stores (1979) (Pvt) Ltd & Anor v Minister of Public Service,
Labour and Social Welfare & Anor
2018
(1) ZLR 335 (CC) at 341.
I
have no hesitation in concluding that the pricing regime introduced
in January 2019, not having retrospective application, did not affect
the diesel forming the basis of this dispute.
This
is so because ownership of it had long passed to the appellant.
The
issue however does not end there because the respondent also placed
reliance on section 230(1) of the Customs and Excise Act [Chapter
23:02]
as bringing the diesel in question under the new pricing regime. The
section provides:
“230
Seller
under contract may recover any increase and purchaser may deduct any
decrease of duty
(1)
Whenever any duty is imposed or increased on any goods and such
goods, in pursuance of a contract made before the duty or increased
duty becomes payable, are thereafter delivered to and accepted by the
purchaser, the seller of the goods may, in the absence of agreement
to the contrary, recover from the purchaser as an addition to the
contract price a sum equal to any amount paid by him reason of the
said duty or increase.”
This
provision admits of no ambiguity. It must be given its simple
grammatical meaning.
In
the context of the present case, it raises a number of juridical
factors that must be established before its provisions are engaged.
(i)
First, there must be a contract entered into before duty was
increased.
(ii)
Second, duty must have been increased.
(iii)
Third, the goods must have been delivered to and accepted by the
purchaser after duty was increased.
(iv)
Fourth, the seller must have paid the duty thereby entitling him or
her to recover a sum equal to the amount so paid by reason of the
increase.
In
light of the definition of “duty” in section 2 of the Act as “any
duty leviable under this Act or any other law relating to customs and
excise and includes surtax” one wonders whether the Petroleum
(Petroleum Pricing) Regulations, 2018 are a law relating to customs
and excise.
They
incorporate the component of duty in the pricing formula to be
considered by ZERA.
The
regulations merely ensure just prices of petroleum products and do
not levy a duty.
It
is the Customs and Excise (Tariff) (Amendment) Notice (No.7), 2019
however, which is a law relating to customs and excise.
This
issue was not canvassed with counsel in argument. Accordingly it will
not be engaged any further in the resolution of this appeal.
Let
it suffice to say though that the requirements for the application of
section 230(1) have not been met in this case.
In
that regard, I agree with Mr Mpofu
that
the prerequisite juridical facts required for the section to be
engaged are patently absent.
The
respondent did not lead any evidence showing that it paid any
additional duty.
In
the absence of proof of payment of additional duty, among other
things, section 230(1) could not be triggered. This is so because it
is intended for a seller who has paid additional duty subsequent to
the fixing of the contract price to recover it from the purchaser.
That
the court a
quo
found
delivery as having occurred by constitutum
possessorium
at the beginning of November 2018, which finding was not contested,
was not helpful to the respondent's cause.
If
that is so, delivery occurred before the increase in duty which
increase could not affect the transaction within the contemplation of
section 230(1).
It
follows that the consignment of 120,000 litres of diesel was not
subject to additional duty. The respondent could not recover any
from the appellant.
WHETHER
THERE WERE ANY TIMELINES FOR DELIVERY
The
court a
quo
agreed
with the respondent that the contract provided for delivery of fuel
within 72 hours of payment.
It
is difficult to appreciate how such a finding could have been made
from the evidence placed before the court.
I
need do no more than point to the fact that, not only was there no
reference in the correspondence between the parties to that timeline,
there was also a stubborn fact staring the court a
quo
in
the face.
It
is that the only delivery made by the respondent was of 30,000 litres
of diesel. This delivery was effected on 28 November 2018 without
demur, some 26 days after payment.
Clearly
there was no evidence pointing to any timelines in delivery.
The
court a
quo
appears
to have read into the contract a non-existent term.
It
is not open to the courts to rewrite a contract for the parties.
Neither is it permissible to read into the parties contract some
implied or tacit term that is in direct conflict with the express
terms. See Magodora
& Ors v Care International Zimbabwe
2014 (1) ZLR 397 (S) at 403C.
From
the contents of the emails between the parties and the conduct of
delivering the first consignment of 30,000 litres 26 days after the
contract became “perfecta”
it is clear that the parties never set any timelines for delivery.
The
court a
quo
was
clearly wrong in its assessment. The importation of a non-existent
term into the parties contract was a gross misdirection.
WHETHER
THE COURT A
QUO
ERRED IN GRANTING POSITIVE RELIEF TO THE RESPONDENT ON THE BASIS OF
ITS PLEA
It
is curious that the court a
quo
granted
an order in favour of the respondent cancelling the sale and
directing the respondent to refund the balance of the purchase price.
That
relief was granted on the strength of a plea and nothing more. The
respondent had not filed a counter-claim.
The
point is made in Indium
Investments (Pvt) Ltd v Kingshaven (Pvt) Ltd & Anor
2015 (2) ZLR 40 (S) at 44F that:
“A
plea is a defence and as such can be likened to a shield. It is not a
weapon or a sword. No relief can attach to a party through a plea.”
Unfortunately
that is precisely what the court a
quo
granted
in this case.
However
just the court a
quo
may
have considered the respondent's tender of the sum of $159,300.00
to be, it was plainly incompetent for it to ratify it through an
unsolicited court order. Doing so was a gross misdirection.
DISPOSITION
The
court a
quo
made
quite a number of errors and grossly erroneous findings of fact which
cut against the grain of evidence. On appeal this Court is entitled
to interfere with those findings. See Barros
& Anor v Chimphonda
1999 (1) ZLR 58 (S).
The
Statutory Instrument and the ZERA directive did not apply to the fuel
that had already been purchased by the appellant from the respondent.
Section 230(1) of the Customs and Excise Act did not come into effect
in respect of the fuel in dispute. Finally, there were no timelines
for delivery agreed upon by the parties.
As
such the appellant was still entitled to delivery of the balance of
the fuel.
The
appeal has merit. It ought to be allowed.
Regarding
costs, they normally follow the result. It has not been suggested,
and I see no reason why the costs should not be awarded in favour of
the successful party.
In
the result, it is ordered as follows:
1.
The appeal is allowed with costs.
2.
The judgment of the court a
quo
is
set aside and substituted with the following:
“(i)
Judgment is entered for the plaintiff for the delivery by the
defendant of 120,000 litres of diesel within 7 days of this order.
(ii)
The defendant shall bear the costs of suit.”
UCHENA
JA:
I
agree
KUDYA
JA:
I
agree
Maweresibanda
Commercial Lawyers,
appellant's legal practitioners
Kevin
J Anott,
respondent's legal practitioners
