CHIWESHE
JP: In this urgent chamber application
the applicant, established in January 2006 to represent and coordinate
companies in the cotton industry in Zimbabwe,
seeks a provisional order against the first respondent in the following
terms:
“TERMS
OF THE FINAL ORDER SOUGHT
1. The first respondent is hereby interdicted from
purchasing any contracted seed cotton from growers contracted to the
applicant's members.
2. The first respondent is interdicted from purchasing or
taking delivery of any seed cotton packed in cotton packs bearing the logo or
name or acronym of the applicant's members.
3. The first respondent is ordered to render an account of
the seed cotton that it purchased in Zimbabwe in year 2010 cotton marketing
season showing the names of the growers from whom the cotton was purchased,
their identity numbers and quantities of cotton seed purchased from each
grower, within 10 days of being served with this Order.
4. The first respondent is ordered to surrender to the
applicant all the contracted seed cotton purchased from growers contracted to
applicant's members during the 2010 season within 15 days of the date of this
Order.
5. The first respondent shall pay costs of suit.
INTERIM
RELIEF GRANTED
1. The first respondent is hereby interdicted from
purchasing or taking delivery of any contracted seed cotton from growers
contracted to the applicant's members.
2. The first respondent is hereby interdicted from
purchasing or taking delivery of any seed cotton packed in the cotton packs of
applicant's members.
3. First respondent is ordered to purchase seed cotton
solely from the common buying points used by other cotton buyers in Zimbabwe.
4. Pending the confirmation of this Order, first
respondent is interdicted from selling, exporting or howsoever disposing of any
seed cotton purchased in Zimbabwe during the year 2010”.
In
support of this application the applicant's Director–General Mr Godfrey Murombo Buka
filed a founding affidavit whose contents are to the following effect. The applicant's members (twelve in number)
are all registered as contractors and buyers with the Cotton Marketing Technical
Committee in terms of s 9 and 10 of SI 142 of 2009. These members have entered into contracts
with individuals and groups of cotton growers throughout the country in terms
of which they have technically and financially supported the growers with
inputs. They have also provided the
growers with cotton packs to be used when packing the seed cotton for sale. Applicant's members have consequently spent
considerable financial and technical resources supporting the current crop from
planting up to harvesting. In return,
contracted growers are obliged to sell their seed cotton to the company to
which they are contracted and the company is equally obliged to purchase the
seed cotton from its contracted growers.
This contractual relationship, avers the applicant, is consistent with
the provisions of s 14 of SI 142 of 2009.
The first respondent entered the cotton market on 24 June 2010 when it
was awarded a licence to buy seed cotton during the 2010 season.
According to the applicant, the
first respondent is violating the law and the terms of its licence by inducing
the contracted farmers to breach their contracts with applicant's members and
buying cotton seed from such contracted growers. The applicant states that the first
respondent's operations cover areas in Mashonaland Central, Mashonaland West
and the Midlands, particularly in the areas of Gokwe, Kadoma, Mhangura, Mount
Darwin, Bindura, Guruve, Mutoko and Rafingora.
It also alleges that the first respondent is buying seed cotton
contained in other companies' cotton packs which packs it would then empty into
its own packs. Pictures depicting this
state of affairs have been filed as annexures “E8” – “E17”. The applicant further states that on 14 July
2010 the first respondent sponsored an advertisement in “The Herald” newspaper
inviting all cotton farmers to sell their seed cotton to it as it was offering
higher prices, labeling other buyers as “thieves” who were cheating the farmers
by offering lower prices. The same
advertisement has been posted and published in all the areas where first
respondent is operating. The applicant has
reported this matter to the police but to date no action has been taken. A report was also made to the Cotton
Marketing Technical Committee which in a letter dated 9 July 2010 warned the
first respondent to stop its illegal activities.
The
applicant says the first respondent is offering the price of 50 cents per
kilogram which is higher than the average price of 40 cents per kilogram being
offered by its members. The first
respondent, according to the applicant, can afford to offer that higher price
because it has not incurred any production costs. It is reaping where it has not sown. The first respondent's conduct, says the
applicant, is illegal and highly prejudicial to the applicant's members as they
will not be able to recover their loans from the growers which were secured by the crop nor will they be
able to secure seed cotton for their ginning and processing factories. Further, according to the applicant, the
first respondent's actions will undermine the availability of cotton seed next
season, thus prejudicing growers and the cotton industry at large. The applicant's members may also, as a result,
fail to support the growers in future as they would have been driven out of
business.
In
support of this application various annexures comprising inter alia photographs, contract agreements, letters, resolutions,
constitution and members' reports have been filed by the applicant.
The first respondent filed a notice of opposition and
an opposing affidavit sworn to by its director, Mr Jimmy Zerenie. It also filed a supporting affidavit by Mr Tanga
Matema, a director of Plotland Investments (Pvt) Ltd, the purchasing agent of
the first respondent.
The
opposing affidavit is to the following effect.
Firstly the first respondent raises a point in limine namely, that the application lacks urgency. With regards the merits the first respondent
denies “inducing” any contracted grower to do business with it and states that
it has not purchased any contracted cotton.
It is suggested that the applicant is motivated by fear of competition
in the cotton industry and that the order sought, if granted, would stifle
first respondent's operations. The first
respondent denies breaking any law or inducing any grower to break the law. It
says that its operations are transparent and every grower who sells to it is
required to fill in declaration forms H and I, copies of which are filed of
record, declaring under form H that he is not contracted to anyone and, under
form I, that he is contracted but has discharged his obligations under such
contract or has cotton in excess of what he is required to sell in terms of his
contract. The first respondent further
states that there is no law which bars it from buying 'free” cotton or any arrangement
that prohibits competition amongst the players in the industry. The first respondent reiterates that it is its
policy not to buy contracted cotton.
Where “free” cotton has been brought to it in other companies' wool
packs, the first respondent has insisted that these be replaced, as long as the
cotton is free. The first respondent
also states that in some instances the growers are not aware that they should
not use other companies wool packs and, in some instances, some growers have
indicated that they owned the packs.
The
first respondent says the advertisement in “The Herald” warns growers against
dealing with unscrupulous middlemen. It
sees nothing wrong with that. The first respondent maintains that it has not
committed any criminal offence hence there is no basis upon which the police
may be expected to intervene. It says
that the farmers are benefiting from its prices. If any grower has breached the terms of his
contract the first respondent avers that the applicant should take it up with
the grower concerned.
The
supporting affidavit of Mr Tanga Matema corroborates the opposing affidavit made
on behalf of the first respondent. In
particular attention is drawn to clause 4.2 of the agreement between the first
respondent and Mr Tanga Matema's company, Plotland Investments (Pvt) Ltd,
wherein the agent company is prohibited from purchasing cotton contracted by
other companies. Mr Matema says they
have only been buying cotton from uncontracted and “free” cotton from contracted
growers.
The
applicant filed a detailed answering affidavit and annexures K 1 to K 3, all
being sample contracts and receipts relating to the operations of some of its
members.
The
applicant has filed heads of argument.
At the hearing of this application the first respondent raised a point in limine, namely that the application
lacked urgency. I ruled in favour of the
applicant because it was shown prima
facie that the applicant's members could face financial collapse and,
because of the short marketing season, it was important that the applicant
seeks urgent relief.
However,
the applicant is prematurely before this court.
It has not exhausted the internal remedies available to it. In fact the Cotton Marketing Technical
Committee is seized with this matter which was referred to it by the
applicants. The Committee has written to
the first respondent warning it against engaging in trade practices which
violate the terms and conditions of its trading licence. My understanding is that the Cotton Marketing
Technical Committee is a committee of the second respondent. In terms of the Agricultural Marketing
Authority Act [Cap 18:24] the second
respondent is endowed with wide ranging powers and functions over the marketing
of agricultural products. s 5 provides:
"FUNCTIONS AND POWERS OF AUTHORITY
(I) Subject to this Act, any regulatory Act and any other
enactment, the functions of the Authority shall be –
(a) to regulate the participation in the production, buying
or processing of any agricultural product by producers, buyers or processors or
classes of producers, buyers or processors of any agricultural product upon such terms and conditions including, as
appropriate, the fixing of quotas, as may be prescribed,
(b) to promote the proper marketing and fair pricing of any
agricultural product by any producers, including producers in the communal and
resettlement areas, who the Authority considers
require assistance:
(c) to properly co-ordinate its operations with those of
any statutory body charged with the regulation and marketing of any
agricultural product to ensure that the operations of any such statutory body
accord with the purposes of the Authority and at all times to act in the
economic interests of all the parties concerned and in the national interests.
(d) To promote contract farming of strategic crops.
(e)………………………….
(f) ………………………….
(g) ………………………….
(h)………………………….
(i) …………………………..
(j) …………………………..
(k)…………………………..
(l) …………………………..
(m)………………………..."
Section
3 (1) of SI 142/2009 provides:
“3 (1) All functions which under the Act
the Board (of the Agricultural Marketing Authority) may exercise in
relation to any agricultural commodity shall, in terms of these regulations, be exercised on
its behalf by a Committee of the Board established in
terms of s 13 of the Act to be known as the Cotton Marketing Technical Committee.” (My own brackets).
The
general functions of this Committee are outlined under s 3 (3) as follows -
“(a) To promote the growing, ginning, processing,
manufacture, preparation or marketing of seed cotton, seed cotton, cotton
planting seed, cotton lint and seed cotton
products; and
(b) to set and maintain standards relating to the quality,
classification, grading, moisture content and packaging of seed cotton, lint or
cotton seed which may be –
(i) accepted by the Committee, a ginner or any other
person; or
(ii) sold by a person, other than the Committee, whether for
use within or outside Zimbabwe; and
(c) to assist in the
training, examination and accreditation of graders of seed cotton; and
(d) to ensure that fair trade practices prevail in the
cotton industry” (My own underlining).
The
Committee is also charged with the responsibility of registering buyers, contractors,
growers and their associations.
Registration is a prerequisite to doing business in the cotton
industry. The Board is required to issue
certificates of registration to all players who meet its criteria. The certificates are renewable annually. By the same token the Committee has the power
to cancel the registration of any player.
Aggrieved persons in that regard may appeal to the Board whose decision
shall be final.
SI
142 of 2009 also provides for various offences under s 22.
Section 49 of the Agricultural
Marketing Authority Act provides for appeals against decisions of the
Board. An aggrieved party may appeal to
the Minister and ultimately to the Administrative Court.
The cotton industry is a highly
organized and regularized sector. I
would expect that the applicant would, in the first instance as it has done,
forward its urgent complaint to the Technical Committee. In the event it was aggrieved by the decision
of the Committee it would then approach the Board, then if still aggrieved, the
Minister, and if needs be, the Administrative Court. As it is, the applicant has brought its case
to the “wrong” forum. It has jumped the
gun, so to speak.
In my view the Cotton Marketing
Technical Committee is still seized with the matter. The fact that in the instant case the
committee has issued written warnings to the first respondent and taken, so far,
no further action does not in itself mean the Committee has abandoned its statutory
role. A warning might well be what the
Committee believes to be adequate or appropriate. With further reports or information they
might act substantively either by dismissing applicant's concerns or acting
upon them. After all, by applicant's own
admission, the bulk of the cotton is still on the market.
It is clear from the provisions of
the Agricultural Marketing Authority Act and SI 142 of 2009 that the day to day
affairs of the cotton industry are regulated, controlled and administered by
the Board and its Technical Committee.
To launch an application of this magnitude without citing them (save for
purposes of information only) is ill advised.
Sight must not be lost of the fact that the court, unlike the Board and
the Committee, is far removed from the theatre of the cotton industry. Hearing interested parties in the absence of
an impartial and informed regulatory authority, which is hands on with the goings
on in the cotton industry would hardly give the court the basis upon which
sound and wholesome decisions could be made.
Some of the facts in this matter are
by no means common cause. The
contradictions can only be resolved by hearing viva oce evidence and possibly going on the ground to examine the factual position.
In any event, the order that the
applicant seeks is so drastic and far reaching that a reasonable court would be
reluctant to grant it on the basis of the scanty information presented in this
urgent chamber application.
For
these reasons it is ordered that the application be and is hereby dismissed
with costs.
Scanlen & Holderness,
applicant's legal practitioners
Chinamasa, Mudimu
& Dondo, first respondent's legal practitioners
