ZIYAMBI JA: This is an appeal against a judgment of the
High Court (MUTEMA J) granting the respondent's claim against the appellants
for payment of $72 340.00 as well as interest at the prescribed rate from the
date of summons to the date of payment in full.
The history of the
matter is as follows.The plaintiff runs a tour operator company under the name
and style of LED Travel and Tours (Private) Limited. The first appellant owns Douglas Car Sales (Private)Limitedand
is also the owner of the second appellant (“the club”). At the time of occurrence of the events
giving rise to this case, the respondent was treasurer of the second appellant.
In
or about December 2008 the first appellant was experiencing considerable
difficulty in running the second appellant due to financial constraints. He intimated to the respondent his intention
to sell the second appellant's franchise or seek a partnership in order to
lessen the financial burden then bedeviling him. The two subsequently concluded a partnership
agreement in terms of which the respondent was to purchase 40 000 shares valued
at $49000.00 representing a 49% stake in the second appellant while the first
appellant would retain the balance. 40% of the shares would be paid for by the
respondent in 2009 while the balance of 9% would be paid for in January
2010. During 2009, the respondent and
the first appellant would contribute to the running costs of the second
appellant in the ratio of 40% and 60% respectively based on their respective
'shareholding'.
By 10 October 2009, the respondent had paid,
to the firstappellant, the sum of$36 807.00 towards the purchase of his 40% of
the shares and $35 533.00 being his pro
rata contribution to the running costs of the secondappellant. Then, approximately one month later, in
November 2009 the deal collapsed. The
cause of the collapse is the basis of the dispute between the parties.
The respondent alleged that the collapse
occurred when the first appellant, contrary to the terms of their agreement
began to claim that the 'partnership' was for the 2009 season only. His contention is that there was no life
limit placed on the partnership; that shares could not be bought for one season
only; and that purchased shares must be transferred to the buyer. He therefore instituted summons claiming the
amounts paid by him under the agreement.
The appellants, on the other hand, were
adamant that the alleged partnership was to endure for the 2009 season only and
that the respondent was in breach of the agreement by failing to pay the
balance of the 40% shareholding. They
filed a counterclaim for a total of $32 953.80 comprising of $3 193 being
the balance outstanding on the purchase of the shares for the 2009 season and
$29 760.80 being a contribution to administrative costs for the 2009 football
season. At the trial which followed, the
learned Judge disbelieved the evidence of the appellants and their witnesses
and granted the order as prayed by the respondent.
THE
APPEAL
The
grounds of appeal set out by the appellants in their notice of appeal are far
from clear and concise as required by the Rules of this Court. The Court was at pains to determine what the
grounds of appeal were and MrKamdefwere
appeared to be equally confused. This
type of notice of appeal, usually three or more pages long with argument and
reasoning which is better tendered at the hearing is becoming the rule rather
than the exception and legal practitioners are warned that such notices will be
struck off, with an appropriate order of costs, for non compliance with the
Rules of this Court. The purpose of the
grounds of appeal is to clarify the issues raised on appeal so that the
respondent and the court are not inconvenienced by having to read irrelevant
matter.
MrKamdefwere also sought, at the outset of the hearing of the appeal,
to amend the grounds appeal by adding an additional ground which he claimed
would read:
“That the court a quo misdirected itself in making an
order against the second appellant in favour of the respondent since the second
appellant was the respondent's partnership.”
He
submitted that this was equivalent to a point of law being taken on appeal the
point of law being that the respondent could not sue its own partnership. He submitted that no prejudice would be
suffered by the respondent even though the point was not taken or canvassed at
the hearing as the respondent could advance its arguments before the Court at
the appeal hearing. The application was
opposed by MrMazondeon the grounds
that the respondent would suffer prejudice if the application were to be
allowed.
The
Court was of the view that the criteria for a successful application of this
nature were not met. Since the point of law was not canvassed at the hearing, a
consideration of the merits of it at this stage would, in our view, involve
unfairness to the respondent.
In any event, the basis of the appellants'
case isthat the agreement was for a partnership for 2009 only and it was common
cause that the first appellant did not sign the agreement which was to bring the
partnership into existence. It would
follow, therefore, that atthe time the summons was issued and a fortiori at the date of the judgment
of the court a quo, the respondent
had no partnership in the club.
As to the merits of the appeal, the main
point taken by MrKamdefwerewas that
the Court erred in disbelieving the appellants' witnesses and accepting the
evidence of the respondent.
THE
EVIDENCE
The respondent's
evidence was to the effect that he had known the first appellant since 2002
through his football club the second appellant.
Initially, he was a supporter of the secondappellant but later became
the treasurer of the second appellant for almost five years until 2008 when the
first appellant broached the idea of himbuying shares in the second
respondent. The idea was attractive to
him and the first appellant invited him to lodge a written applicationwhich he
did on 27 December 2008. The application
was written on his company's letterhead and expressed in the following terms:
“Re: APPLICATION TO BUY 49% STAKE IN DOUGLAS WARRIORS
FOOTBALL CLUB_______________________________________
I submit my
application to buy 49% stake in Douglas FC through my company LED Travel &
Tours – coming in as the sponsor.
The
value of the shares is USD49 000-00 and as agreed in our meeting of 27
December, 2008 – the payment plan is as follows:
Year
2009 – 40%
§ USD
10 000-00 to be paid by 5 January 2009 subject to availability of foreign bank
account.
§ USD5
000-00 by mid to end of January 2009.
§ Payment
of balance to be spread over a period of 10 months and mode of payment will be
finalized in due course.
Year
2010 – 9%
§ As
agreed, the remaining 9% will be reserved for me in 2010 at same value. By then
the team will be in Premier League.
My
stake will be registered under my wife Gracious Mawungwa and in future will be
managed by my two sons Bernard Gwarada Jnr and Lawrence Gwarada.”
In response, the first appellant wrote to him on 5
January 2009, in the following terms:
“Re: APPLICATION FOR A 49% STAKE IN DOUGLAS
WARRIORS FOOTBALL CLUB.
The
above matter refers and I acknowledge receipt of your application requesting
for a 49% stake in Douglas Warriors Football Club.
I
am pleased to notify you that your request has been accepted of which the conditions
would be spelt out in the agreement document which will be availed to you upon
receipt of the first installmentof USD10 00-00.
I
would want to express my appreciation for showing interest of running Douglas
Warriors Football Club jointly with the current administration.
I
look forward to a cordial working relationship.”
The
cash payment of $10 000, 00 was made and receipt thereof acknowledged by the first
appellant. In the letter acknowledging
payment of the deposit the first appellant stipulated how the balance was to be
paid. A balance of $5 000.00 was to
be paid on or before 31 January, thereafter the remainder of $25 000 was
to be paid thus:
“USD5000.00 cash
on or before 31 March, 2009
USD5 000.00 cash
on or before 31 May 2009,
USD5
000.00 cash on or before 31 July 2009,
USD5 000.00 cash
on or before 30 September 2009,
USD5 000.00 cash
on or before 30 November 2009.”
The final 9% stake was
to be paid on or before 31 January 2010.The respondent faithfully made payment
until November 2009 when the deal collapsed.
Regarding
the conclusion and signature of the agreement of sale, he told the court that
the document given to him by the firstappellant and which contained the terms
of the agreement was drafted by MrGigima
the legal practitioner for the appellants.
Once he had perused the document he was called to MrGigima's office to sign the agreement. He went with his legal practitionerMrMujeyi, signed the agreement and left it
with MrGigima who was going to
procure the first respondent's signature thereon. That was the last time he saw the document as
it was never returned to him or to MrMujeyi.He
produced a letter from the secondappellants' administrator acknowledging
receipt of the payments made by him as claimed in the summons.
MrMujeyi gave evidence confirming the
respondent's evidencethat he had perused the agreement. Though he was of the view that it was
inelegantly drafted, he was satisfied that it expressed the intention of the
parties as communicated to him by the respondent. He confirmed that he accompanied the
respondent to MrGigima's offices
where the respondent signed the agreement.
The first appellant was not present butMrGigima promised to procure his signature and thereafter send a
signed copy of the agreement to his offices for transmission to the
respondent. The agreement was never sent
to him. Subsequently, in or about November 2009, the respondent reported to him
that the agreement had fallen through and he needed assistance to recover his
money. He advised the respondent to seek
independent legal advice. The agreement
signed by the respondent was an exact replica of the one produced by the
respondent in evidence.
The
backgroundfacts as recounted by the respondent were largely common cause. Where the parties differed was on the tenure
of the agreement. The respondent said
that in terms of the agreement the tenure of the partnership was indefinite
whereas the appellants' stance was that the partnership was to endure for the
2009 season only and that if the second appellant made it to the Premier League
the respondent would have the option to purchase a further 9% of the
shareholding in the second appellant.
The appellants took the view that it was the respondent who had reneged
on the agreement hence the counterclaim for the unpaid balance outstanding on
the shares as well as the administration expenses for the 2009 season.
MrGigima was called to give evidence on the appellants' behalf. He sought to corroborate the first
appellant's testimony but made a bad impression on the Court which found him to
be contradictory and disbelieved his evidence.
He told the court that the agreement was drafted at his office and it
was indeed to endure for one season only.
As to the document which was signed by the respondent, he averred that
he sent it to the first appellant for signature and it was returned to him and
sent to the respondent so that the latter would alter the date of signature from
January to November 2009. Thereafter he
did not see the agreement again.
The
court found the evidence of the respondent to be not only credible but in
accordance with the probabilities of the matter. I agree.
It also found that the first appellant had, by fraudulent
misrepresentation, induced the respondent to enter into the agreement of
partnership and part with his money when it was clear from his evidence and
that of his legal practitioner MrGigima
that there were never any shares for sale.
That finding is supported by the evidence.
The draft agreement which the respondent
was given to sign clearly tendered a 49% shareholding in the second appellant
valued at $49 000.00. Thefirst appellant
received some$36 000.00 of that money and pocketed it. In addition,the first appellant received some
$37000.00 by way of contribution to the administrative expenses of the second
respondent. Where a court at first
instance makes findings of fact with regard to the credibility ofthe parties
and their witnesses an appellate court will be loatheto interfere with such
finding in the absence of a misdirection by the lower court.
Not only has no misdirection been proved
to exist but the finding of the court accords with the probabilities. For example it is highly improbable that the
respondent would expend such a large sum of money in the first appellant's club
for one season only and with no return on his investment. The very fact that the respondent's infant
child and his wife were mentioned as the persons who would own the shares in
future as well as the provision for disposition of the shares first to family
members suggests this was meant to be a long term enterprise.
We are therefore of the view that the
appellants established no valid basis for interference by this court with the
judgment of the court a quo.
It was for the above reasons that after
hearing counsel we dismissed the appeal with costs.
GOWORA JA: I agree
GUVAVA JA: I agree
MuringiKamdefwere
Legal Practitioners, appellants' legal practitioners
Scanlen&
Holderness, respondent's legal
practitioners
