This is an application for leave to appeal to the Supreme Court in terms of section 44(6) of the High Court Act [Chapter 7:06].In particular, the applicant seeks leave to appeal against the decision of the High Court handed down on 20 March 2019 in Case No.11141/18 (as Judgment No. ...
This is an application for leave to appeal to the Supreme Court in terms of section 44(6) of the High Court Act [Chapter 7:06].
In particular, the applicant seeks leave to appeal against the decision of the High Court handed down on 20 March 2019 in Case No.11141/18 (as Judgment No. HH229-19).
The effect of that judgment was to quash the criminal charges against the respondents in Case No. CRB P 9114-5/18, and, consequently, to order their acquittal on those charges.
The Background
The applicant herein is the Prosecutor-General. The first respondent is a company styled Intratrek Zimbabwe (Pvt) Ltd (Intratrek), while the second respondent, Wicknell Munodaani Chivayo (Chivayo), is that company's Managing Director.
The respondents were charged with two counts of fraud and two counts of contravening local exchange control requirements. All four charges emanate from an Engineering, Procurement, and Construction Contract (the Contract) entered into between Intratrek, represented therein by Wicknell Munodaani Chivayo (Chivayo), and the Zimbabwe Power Company (Pvt) Ltd (the ZPC).
The Contract, which was concluded on 23 October 2015, was for the construction of a 100 megawatt solar power generation plant in Gwanda (the Project).
The first charge alleges fraud pursuant to misrepresentation by the respondents through the submission of invoices designed to fund a feasibility study for the Project. It is alleged that the Zimbabwe Power Company (Pvt) Ltd (ZPC) released a total of US$2,435,654 on the strength of those invoices and that the respondents converted those funds to their own use thereby causing actual prejudice in that amount.
The second charge also alleges fraud by misrepresentation through the presentation of invoices for pre-commencement works on the Project. Again, it is alleged that the Zimbabwe Power Company (Pvt) Ltd (ZPC) acted upon the misrepresentation and released funds to the respondents who converted those funds to their own use thereby causing actual prejudice in the sum of US$3,188,476=80.
The third and fourth charges pertain to alleged exchange control violations.
The third charge alleges that the respondents entered into an unlawful agreement with a company resident in the United States of America involving the payment of recurring fees amounting to US$849,479 without seeking prior approval from the Exchange Control Authority. The fourth charge alleges that the respondents were granted exchange control approval to load Wicknell Munodaani Chivayo's VISA cards with funds amounting to US$849,479 to import earthmoving equipment for civil construction purposes at the Project. It is alleged that the respondents failed to provide bills of entry to the CBZ Bank as proof of receipt of the imported goods for acquittal purposes within 90 days of effecting payment.
Magistrates Court and High Court Proceedings
In Case No. CRB P 9114-5/18, before the Magistrates Court, the respondents pleaded not guilty and excepted to all four charges in terms of section 171(2) of the Criminal Procedure and Evidence Act [Chapter 9:07].
The exception was premised on the assertion that the facts as alleged in the Charge Sheet and State Outline did not disclose any offence, whether as alleged or at all.
The learned magistrate found that the charges in question did capture the essentials expected of a charge to enable the accused persons to properly plead thereto. He accordingly dismissed the exception.
Aggrieved by that ruling, the respondents filed an application to the High Court for the review of the magistrate's decision on the ground that it was grossly unreasonable and patently contrary to law. The respondents also filed a separate application to the High Court for the stay of proceedings before the Magistrates Court pending the determination of the application for review.
The latter application was heard and determined in Case No. HC11205/18 (as Judgment No. 849-18 per MUSAKWA J) on 31 December 2018. The learned judge found that there were no formal defects in three of the four counts and that the applicants (the respondents herein) had no prospects of success on review in respect of those three counts. The third count was found to be defective. The court accordingly ordered that the criminal trial be suspended only in respect of the third count and that the trial could proceed in respect of the other three viable counts.
High Court Judgment on Review
In the judgment which the applicant seeks leave to appeal against, the High Court found that the learned magistrate had misdirected himself because he dealt with an issue that was not before him. In particular, he had been asked to adjudicate whether or not the facts alleged disclosed an offence, but, instead, decided that the charges against the respondents were properly framed and therefore disclosed an offence. The High Court held that this was a reviewable irregularity that went to the root of the matter. The court then proceeded to determine the question itself by way of considering, in great detail, the merits of the entire case against the respondents. I summarise its principal findings as follows:
(i) The payments made by the Zimbabwe Power Company (Pvt) Ltd (ZPC) were advance payments authorised by contract and this negated any intention to deceive or cause prejudice.
(ii) The Zimbabwe Power Company (Pvt) Ltd (ZPC) incurred its own loss by negligently paying the respondents before any performance bond or guarantee was put in place.
(iii) Where a contractual agreement provides effective redress, the dispute should be resolved contractually and liability should not be extended under the different remedial regime of Criminal Law.
(iv) The respondents did not commit any offence under the Exchange Control Regulations as the Guidelines in question were not made under the Exchange Control Act, and, in any event, the respondents could have sought exchange control approval after entering into the relevant contract.
(v) No criminal offence was established in relation to the non-acquittal of payments as the Authority in question was not promulgated under the Exchange Control Act and did not prescribe any offence.
(vi) Wicknell Munodaani Chivayo merely represented Intratrek Zimbabwe (Pvt) Ltd (Intratrek) in his capacity as its Managing Director and was therefore wrongly charged in his personal capacity.
(vii) To the extent that section 277(5) of the Criminal Law (Codification and Reform) Act [Chapter 9:23] (the Criminal Law Code) imputes vicarious liability to Wicknell Munodaani Chivayo in respect of an offence allegedly committed by Intratrek Zimbabwe (Pvt) Ltd (Intratrek), the charges in question breached the protective provisions of sections 49(1) and 56(1) of the Constitution and were therefore invalid.
(viii) On the totality of the facts and the merits, it was highly improbable that a criminal suit would succeed, and, therefore, its continuation would violate section 49(2) of the Constitution.
The learned judge concluded by reiterating that a Criminal Court does not have any jurisdiction to hear or determine any case of a civil nature as in casu.
He then set aside the learned magistrate's ruling and substituted it with an order that the exception to the charges should succeed, resulting in all of the charges being quashed and both respondents being formally acquitted....,.
Grounds of Appeal
The intended grounds of appeal herein, as paraphrased, aver that the learned judge a quo misdirected himself and/or erred in the following respects:
1. In finding that the facts do not disclose an offence of fraud when it was apparent from the State Outline that the respondents had misrepresented to the Zimbabwe Power Company (Pvt) Ltd (ZPC) that a total of US$1,960,125 had been paid to subcontractors when such money had not been paid and was used by the respondents for their own benefit to the prejudice of the Zimbabwe Power Company (Pvt) Ltd.
2. In failing to consider the provisions of section 278(3) of the Criminal Law Code which impute that a person's conduct can constitute both criminal and civil liability and that the State could resort to criminal redress in a matter that was not purely contractual.
3. In finding that the facts do not disclose an offence of fraud as against the second respondent where he was chargeable in his personal capacity as a director of the first respondent and there was a paper trail to show that both respondents misrepresented facts to the Zimbabwe Power Company (Pvt) Ltd (ZPC) to its prejudice and that the funds were used by both respondents for their own benefit.
4. In making a finding that effectively interfered with un-terminated proceedings where there were no exceptional circumstances to warrant such interference and where trial had commenced and evidence was being led before the Magistrates Court.
5. In finding that the facts pertaining to the fourth count do not disclose an offence of entering into an agreement without seeking prior exchange control approval.
The relief sought by the applicant, on appeal, is that the appeal should succeed and that the judgment of the court a quo be set aside and substituted with an order dismissing the exception and continuing the trial under Case No. CRB P 9114-5/18....,.
Charges of Fraud against Second Respondent
As regards the charges against Chivayo, the court a quo found that he merely represented Intratrek Zimbabwe (Pvt) Ltd (Intratrek) in his capacity as its Managing Director. It was not alleged that he did anything pursuant to the Contract in his personal capacity and he was therefore wrongly charged in that capacity.
The court also found that, to the extent that section 277(5) of the Criminal Law (Codification and Reform) Act [Chapter 9:23] (the Code) imputes vicarious criminal liability to the director of a company in respect of an offence committed by the company, it breaches the protective provisions of sections 49(1) and 56(1) of the Constitution and is accordingly invalid.
As for the Constitutional dimension alluded to by the court a quo, the overall effect of section 277 of the Criminal Law (Codification and Reform) Act [Chapter 9:23] (Criminal Law Code) is that the conduct of a director is imputable to the company and, vice versa, the conduct of a company is imputable to each of its directors. Thus, a director can be held vicariously criminally liable to be prosecuted and punished personally for the crime of the company, unless he proves that he took no part in the alleged criminal conduct.
Counsel for the respondents submit that the whole of section 277 of the Criminal Law (Codification and Reform) Act is unconstitutional, as was held by the learned judge a quo. They rely for this proposition upon the decision in S v Coetzee 1997 (3) SA 527 (CC) wherein the Constitutional Court declared section 245 of the South African Criminal Procedure Act to be invalid for infringing the presumption of innocence.
In this regard, I would simply observe that the provision struck down is materially different from our section 277, and, therefore, the decision in S v Coetzee 1997 (3) SA 527 (CC) is not particularly germane to the situation in casu.
In any event, I do not think that the impugned provision and its constitutionality or otherwise are relevant at all to the circumstances of this case. More to the point, I am unable to accept the argument advanced by counsel for the respondents that the facts alleged relate only to the contractual obligations and conduct of Intratrek Zimbabwe (Pvt) Ltd (Intratrek) and not to the conduct of Wicknell Munodaani Chivayo in his personal capacity.
The two charges of fraud allege that both Intratrek Zimbabwe (Pvt) Ltd and Wicknell Munodaani Chivayo, or one of them, with intent to deceive and defraud the Zimbabwe Power Company (Pvt) Ltd (ZPC), made representations to the ZPC's Finance Director through the presentation of invoices designed to fund the feasibility study and pre-commencement works on the Project. The charges further allege that, instead of implementing the Project, both Intratrek and Chivayo, or one of them, converted the funds released to them to their own use, thereby causing actual prejudice to the Zimbabwe Power Company (Pvt) Ltd (ZPC).
The third and fourth charges, pertaining to exchange control violations, also clearly implicate both Intratrek Zimbabwe (Pvt) Ltd and Wicknell Munodaani Chivayo, or one of them, with having contravened the relevant exchange control requirements in question.
Turning to the State Outline, paragraph 2 states that “accused (1)” is Intratrek, while paragraph 3 makes it clear that “accused (2)” is “accused 1's Managing Director being charged in his personal capacity.”
Paragraphs 6, 8 and 9 allege that “the accused” submitted five separate invoices during the relevant period and that the ZPC's Finance Director acted upon the alleged misrepresentation and released the requisite advance payments in 21 different instalments into “accused 1's” CBZ bank account.
In paragraph 10, it is stated that ZPC's Finance Director requested “the accused” to provide a schedule of commitment in respect of the funds released by the ZPC. It is then alleged that “the accused, again, through his Company Secretary” misrepresented that a certain sum had been paid to subcontractors.
In paragraph 11, it is alleged that “accused” used the funds meant for feasibility study and pre-commencement works “for his own personal benefit” by diverting them to purchase vehicles and air tickets and for the settlement of school fees and civil suits.
Paragraphs 12 to 14 pertain to the alleged exchange control violations. They refer, variously, to the alleged conduct of “the accused”, “the accused person” and “the accused persons.”
Finally, paragraph 16 asserts that the ZPC suffered total prejudice of US$5,624,130=80 and that nothing was recovered.
In my view, the Charge Sheet, taken together with the State Outline, make it abundantly clear that there is no question of any vicarious liability being imputed to Wicknell Munodaani Chivayo in respect of the conduct of Intratrek Zimbabwe (Pvt) Ltd. On the contrary, he is specifically charged, in his personal capacity, for specific acts and misrepresentations attributed to him either individually or jointly with Intratrek, and not merely in his representative capacity as the Managing Director of Intratrek.
In the premises, I am satisfied that the learned judge a quo misdirected himself in finding that the facts, as alleged, did not disclose the offence of fraud as against Wicknell Munodaani Chivayo and that there was no basis for charging him in his personal capacity.
Accordingly, the third ground of appeal also holds high prospects of success.
