PATEL
JA: This
is an appeal against the decision of the High Court granting summary
judgment against the appellant in the sum of US$8,330,470.52 together
with interest at 2.5% per annum above the prime overdraft bank rate
and costs of suit.
The
claim against the appellant arose from a service provider agreement
concluded between the parties on 10 March 2006 (the agreement). The
agreement required the appellant to pay the sums due thereunder
within thirty days of receiving the respondent's invoices. It is
common cause that the appellant owed the respondent the outstanding
amount claimed as at 30 September 2010.
The
respondent issued summons on 16 November 2010 and, following the
appellant's appearance to defend, applied for summary judgment on
14 February 2011.
The
court a
quo
held that the respondent's claim was unimpeachable and that the
appellant had no plausible defences to the claim. In particular, the
court found that there was no supervening impossibility due to the
currency regime changeover between January and March 2009, entailing
any objective impossibility of recovering debts from the appellant's
customers. Additionally, there was no condition precedent in the
agreement that those customers should first pay the appellant before
it became obliged to pay the respondent. Lastly, there was no
principal and agent relationship between the parties to preclude the
recovery of payments from the appellant upon presentation of the
respondent's invoices.
The
grounds of appeal herein arise from the defences raised in the High
Court, viz.
supervening impossibility of performance, recovery from customers as
a condition precedent for payment, and the existence of a principal
and agent relationship between the parties.
In
essence, the question to be determined is whether the learned judge
was correct in holding that the respondent's claim was unassailable
and that the appellant had no bona
fide
defences to that claim.
In
addition, the appellant's heads of argument raise a further ground
of appeal not pleaded in its notice of appeal. It is argued that the
order granted by the court a
quo
is vague as it does not specify the applicable rate of interest and
the dates when the amounts due accrued interest.
A
further procedural point taken at the hearing of the appeal relates
to the respondent's founding affidavit in support of its
application for summary judgment. Counsel for the appellant submits
that this affidavit is flawed in that the status of the Commissioner
of Oaths before whom it was deposed is not clearly identified.
VAGUENESS
OF COURT ORDER
The
court a
quo
granted summary judgment as prayed for in terms of the draft order.
The latter is regrettably terse and simply orders that summary
judgment be entered in terms of the summons.
In
the summons, the respondent's claim is for payment of the sum of
US$8,330,470.52 with:
”interest
thereon at a rate of 2.5% per annum above the prime overdraft rate of
the Standard Chartered Bank of Zimbabwe, from the date each payment
was due to the date of payment.”
Adv.
Magwaliba
for the appellant contends that this part of the court order is vague
and unclear as regards the rates of interest applicable and their
respective dates of application.
As
I have already indicated, this is not a ground of appeal that was
raised in the notice of appeal. Nevertheless, it is a point of law
that can be raised at any stage of the proceedings, provided that the
other party is not thereby prejudiced.
Adv.
Ochieng
for the respondent accepts that it would not be improper or
prejudicial to the respondent for the point to be addressed and
determined at this stage.
In
my view, there is nothing vague or unclear in the court order as read
with the summons.
The
applicable rates of interest are undoubtedly available from the Bank
cited and the dates from which those rates apply will be apparent
from the relevant tax invoices presented by the respondent to the
appellant.
In
any event, this is an issue that should most appropriately be agreed
between the parties themselves or, failing such agreement, be
referred to the court a
quo
for determination and quantification.
IDENTITY
AND STATUS OF COMMISSIONER OF OATHS
The
respondent's founding affidavit in the court below was sworn before
one Raymond Moyo, a registered legal practitioner, who appended his
signature above the designation “Commissioner of Oaths”. The
stamp used for the purpose is one that would ordinarily have been
used to certify copies of original documents as being true and
correct. However, it also denotes Raymond Moyo as a Commissioner of
Oaths and Notary Public.
Counsel
for the appellant cites the case of Deyi
v The
State
[2013] ZAGPPHC 75 for the proposition that the stamp adopted must
clearly indicate the status of the Commissioner of Oaths.
In
that case, the court was called upon to apply the directory
provisions of regulations, made under the South African Justices of
the Peace and Commissioners of Oaths Act 1963, which require a
Commissioner of Oaths to state his or her designation and the area
for which he or she holds his appointment of office. The commissioner
in question was evidently a police constable, but the stamp that was
used was that of a magistrate. The court found that this stamp
misrepresented the office of the commissioner and was likely to cause
confusion in that regard. Consequently, it declined to exercise its
discretion in favour of receiving the document relied upon in that
case as a sworn affidavit.
It
is common cause that there is no specific legislation regulating the
issue in this jurisdiction and that the matter is one that is
governed by practice.
In
that regard, what is required is that any stamp that is used to
designate a Commissioner of Oaths should clearly identify the person
before whom an affidavit is deposed and the office or capacity in
which he or she acts as a commissioner.
In
casu,
it is not disputed that Raymond Moyo is a legal practitioner and a
notary public and, as such, a recognised commissioner of oaths.
The
respondent has therefore verified its cause of action in an
affidavit, deposed by its functionary duly authorised thereto, before
a clearly identified Commissioner of Oaths. That, in my view,
suffices for the intended purpose of adducing evidence under oath and
renders the validity of the respondent's founding affidavit
manifestly impervious to challenge.
GROUNDS
OF APPEAL
The
grounds of appeal set out in the notice of appeal appear to have
conflated the three defences raised in the court a
quo.
The essence of these grounds is that the relationship between the
parties, based on their conduct after the inception of the agreement,
was one of principal and agent, whereby the appellant was an agent of
the respondent in sourcing customers for post-paid cellular airtime
usage, collecting payments for the airtime used or sold, and then
remitting payments to the respondent after deducting its commission.
Consequently,
since payments to the respondent would only be due upon the appellant
recovering the same from its customers, payment by the latter was a
condition precedent to any payment to the respondent. This applies to
the entire amount of US$8,330,470.52 claimed by the respondent.
Again,
on the same footing, the appellant's failure to recover the
payments from its customers constituted a supervening impossibility
suspending the appellant's obligation to remit payments to the
respondent, there being nothing to remit until such time as payments
had been made by or recovered from the customers.
PRINCIPAL
AND AGENT RELATIONSHIP
The
appellant's position, as I understand it, is as follows. Although
not expressly stated in the agreement, the common understanding of
the parties was that the appellant would be paid by its customers for
network service usage and would then deduct its commission and pass
on the balance to the respondent.
This
position appears to be buttressed by para 3 of the respondent's
declaration which states that the appellant would collect payments
for airtime used by its customers and remit the collected amounts
less its commission to the respondent.
In
this connection, Adv. Magwaliba
submits that the Court must look at the true nature and substance of
the agreement and not merely at its form. The description of the
parties contained in the agreement is not necessarily conclusive as
it disguises the true nature of their principal and agent
relationship.
I
note in this regard the remarks of Silke: The
Law of Agency in South Africa
(3rd
ed.) at pp. 32-33, where the learned author adverts to the
difficulties in ascertaining the true nature of an agency
relationship.
Turning
to the provisions of the agreement itself, clause 2 thereof sets out
the principal rights and obligations of the parties.
The
respondent undertakes to supply and distribute terminal equipment and
network services to the appellant's customers (clause 2.1). In
turn, the appellant may
from time to time
order and purchase quantities of smartcards from the respondent
(clause 2.2.1). The respondent is then obliged to make the network
service available to
the appellant for onward supply to the appellant's customers
(clause 2.2.2 as read with clause 6.1). The smartcards ordered and
purchased by the appellant are allocated
by it to its own customers
(clause 4.1). The appellant is liable to the respondent for all
charges generated in respect of each
smartcard activated by the appellant
with effect from the date of such activation (clauses 4.5.1 and
4.5.2). The respondent is then entitled to raise call charges,
monthly service charges and all other charges for
the account of the appellant
(clause 8.1). Thereafter, all charges invoiced by the respondent to
the appellant shall
be paid
by the appellant to the respondent within
30 days of the date of the relevant tax invoice
(clause 8.3).
My
reading of the afore-cited provisions of the agreement is that they
clearly spell out the true nature of the relationship between the
parties.
In
essence, it was agreed that the appellant would go to the airtime
market and source its own customers for the network services to be
provided by the respondent. The respondent did not decide who those
customers would be or which of them would receive network service on
credit. More significantly, it was the appellant itself that carried
the risk of default by its customers.
As
was quite correctly conceded by Adv. Magwaliba,
the respondent had no right, except where this was ceded to it by the
appellant in terms of clause 17.1, to sue the appellant's customers
in order to enforce and collect any payments due and outstanding from
them. There was simply no nexus or privity of contract between the
respondent and the appellant's customers. If the appellant was
merely an agent for the respondent as its principal, those customers
would have been directly liable to the respondent.
The
apparent admission of agency emanating from paragraph 3 of the
respondent's declaration is not, in my view, of any material
significance.
The
importance of pleadings should not be unduly magnified so long as
there is no likelihood of prejudice being occasioned to any of the
parties. While the parties should ordinarily be restricted to the
averments in their pleadings, the courts should not enslave
themselves to the pleadings in complete disregard of their duty to
decide the real dispute between the parties so that justice is
eventually attained.
See
in this context the very pertinent observations of Chatikobo J in
Musadzikwa
v Minister
of Home Affairs & Another
2000 (1) ZLR 405 (H) at 412H-413H, and the authorities there cited,
which were subsequently applied by this Court, per
Ziyambi JA, in Moyo
& Another
v Intermarket
Discount House Ltd
2008 (1) ZLR 268 (S) at 272A-G.
In
short, pleadings cannot be construed so as to compromise the delivery
of justice.
In
the instant case, although para 3 of the declaration is somewhat
ineptly worded, it cannot be elevated above the entire declaration
and the clear terms of the agreement itself.
In
any event, that paragraph makes explicit reference to the agreement
itself. More importantly, it is immediately followed by para 4 which
captures the essence of the appellant's obligation to pay in terms
of the agreement, i.e.
to make payment for all charges within thirty days of receiving the
respondent's tax invoice.
Having
regard to the agreement as a whole, I am unable to discern from its
express provisions anything approximating the principal and agent
relationship espoused by the appellant. It was clearly contemplated
by the parties that the appellant would be engaged as an independent
contractor to distribute to its own customers the network services
provided by the respondent.
CONDITION
PRECEDENT FOR PAYMENT
The
supposed common understanding between the parties is also relied upon
by the appellant as the basis for its contention that payment by its
customers was a condition precedent to any payment becoming due to
the respondent.
Although
this contention flies in the face of the express provisions of the
agreement, it is one that the appellant intends to substantiate by
extrinsic evidence to be adduced should the matter be allowed to
proceed to trial.
As
is correctly argued by Adv. Ochieng,
this is clearly impermissible by virtue of the so-called parol
evidence or integration rule.
Generally
speaking, although the integration rule may not invariably apply
where the true nature of an agreement is in issue, extrinsic evidence
cannot be allowed to negate the express and clear terms of the
agreement. See the remarks of Ziyambi JA in Nhundu
v Chiota
& Another
2007 (2) ZLR 163 (S) at 166C-H.
This
is particularly so where, as in this case, the agreement constitutes
the entire contract between the parties (clause 20.3) and any
variation, addition, deletion or waiver is ineffective unless reduced
to writing and specifically subscribed by the parties (clause 20.5).
SUPERVENING
IMPOSSIBILITY
The
final defence advanced by the appellant is that of supervening
impossibility – that its failure to recover payments from its
customers constituted a supervening event suspending its obligation
to remit payments to the respondent.
This
was occasioned, so it is argued, by the advent of dollarization
between January and March 2009 when, for some unexplained reason, a
significant number of the appellant's customers defaulted on their
payments.
It
is trite that the courts will be astute not to exonerate a party from
performing its obligations under a contract that it has voluntarily
entered into at arms length. Thus, the suspension of a contractual
obligation by dint of vis
major
or casus
fortuitus
can only be allowed in very compelling circumstances.
The
courts are enjoined to consider the nature of the contract, the
relationship between the parties, the circumstances of the case and
the nature of the alleged impossibility. See Watergate
(Pvt) Ltd
v Commercial
Bank of Zimbabwe
2006 (1) ZLR 9 (S) at 14B-F.
In
particular, it must be shown that the impossibility is objective and
absolute in contradistinction to one that is merely subjective or
relative. See Chiraga
v Msimuko
2002 (2) ZLR 368 (H) at 380C-E, where it was held that shortage of
foreign currency did not constitute an absolute supervening
impossibility.
Again,
the contract must have become finally and completely impossible of
performance as opposed to the situation where one party is only
temporarily disabled from fulfilling its obligations. See Beretta
v Rhodesia
Railways Ltd
1947 SR 48 at 49-50; NUST
v NUST
Academic Staff & Others
2006 (1) ZLR 107 (H) at 109A-D; Mutangadura
v TS
Timber Building Supplies
2009 (2) ZLR 424 (H) at 429C-F.
In
the instant case, the appellant has dismally failed to demonstrate
why its customers failed to meet their bills and how that alleged
failure necessarily and definitively precluded it from meeting its
payment obligations aliunde
or from recovering the outstanding amounts from its customers at some
later stage.
In
other words, the appellant's subjective inability to pay its debts
cannot be confused with the objective impossibility that must prevail
for its plea of supervening impossibility to succeed.
AVAILABILITY
OF BONA
FIDE
DEFENCE
It
is apparent from all of the foregoing that the appellant has not been
able to proffer any plausible defence to the respondent's claim.
The court a
quo
was therefore perfectly correct in concluding that the appellant had
no bona
fide
defence to the respondent's unassailable claim for summary
judgment.
In
the result, the appeal must fail and it is accordingly dismissed with
costs.
ZIYAMBI
JA:
I agree
GARWE
JA: I
agree
Dube,
Manikai & Hwacha,
appellant's legal practitioners
Coghlan,
Welsh & Guest,
respondent's legal practitioners
