Opposed
Application
1.
TAGU
J:
This
is an application for the review of the second respondent's ruling
dismissing the applicants exception to criminal charges preferred
against them in the court of the Provincial Magistrate at Harare
under case number CRB P9114-5/2018. The ruling was handed down on the
19th
of November 2018. The first applicant is Intratrek Zimbabwe (Pvt) Ltd
represented by second applicant Wicknel Munodaani Chivayo as its
Managing Director.
THE
FACTS
2.
The applicants were arraigned before the magistrates court sitting at
Harare for contravening section 136 of the Criminal Law (Codification
and Reform) Act [Chapter 9:23] - Fraud (2 counts); Contravening
section 5(1)(a)(ii) of the Exchange Control Act [Chapter 22:05] as
read with section
4.1.18
of the Foreign Exchange Guidelines to authorised dealers,ECDI of
2009; and Contravening section 5(1)(a)(ii) of the Exchange Control
Act [Chapter 22:05] as read with Exchange Control Authority GR1776 of
26 April 2016.
3.
The allegations as appearing on the outline of the State case were
that -
“………..
4.
On the 23rd
of October 2015, Zimbabwe Power Company (ZPC) signed an Engineering,
Procurement and Construction Contract, (EPC) with accused (1) being
represented by accused (2) for the construction of 100-Megawatt Solar
Power Generation Plant in Gwanda. The performance/scope of the work
was guided by schedule 11 of the contract.
5.
Clause 2(a) and (b) of the terms and conditions of the contract under
schedule 11 stated that the employer's advance for feasibility
study and pre-commencement activities was to be considered part of
the contract advance payment. A Bank guarantee was to be provided
against all payments made by ZPC towards the project implementation.
6.
Subsequently, between 4 December 2015 and 22 January 2016, the
accused submitted two separate invoices amounting to US$803,765.82
and US$1,631,888.81 dated 9 November 2015 and 11 January 2016
respectively on the pretext of feasibility study implementation.
ZPC'S Finance Director, Hubert Chiwara acted upon the
misrepresentation and released the full payment of US$2,435,654.00 in
9 different instalments without the requisite bank guarantee between
4 December 2015 and 22 January 2016 on the understanding that
Shanghai Electric Power Design Institute. Co. Ltd was going to carry
out the feasibility study. The payments were made from ZPC'S
Stanbic Bank account numbers 0222033958501 and Stanbic Bank
0222033958502 into accused (1)'s CBZ bank account number
23554830010.
7.
However, ZPC Technical Director, Robson Chikuri, ZPC Projects
Manager, Cleopas Fambi and the suspended ZPC Managing Director, Noah
Gwariro indicated that they never met sub-contractor, Shanghai
Electric Power Design Institute. Co. Ltd during the alleged study
period. There also no record of sub-contractor's representative
entering Zimbabwe during the period in question.
8.
Again, between 15 February 2016 and 25 April 2016, the accused
submitted 3 invoices of US$1,219,476.80 each supported by payment
release certificates, being advance payment claims, purportedly for
the implementation of the following works -
(i)
Site establishment (basic ablutions, communication network, temporary
housing, preliminary foundation for 20-megawatt power plant and water
citing and borehole drilling and storage).
(ii)
Access roads.
(iii)
Ground clearing.
9.
Similarly, Hubert Chiwara acted upon the misrepresentation and
released a total advance payment of US$3,188,476.80 on 12 different
instalments without bank guarantee into the same bank account
highlighted above.
10.
On 26 April 2016, Hubert Chiwara requested the accused to provide a
schedule of commitment in respect of funds released by ZPC towards
the implementation of the project. The accused again through his
Company Secretary, K. Makoni, misrepresented to the Finance Director
that a total of US$1,960,125.40 had been paid to subcontractors. The
subcontractors distanced themselves from the invoices submitted by
accused.
11.
The paper trail indicated that accused used the funds meant for
feasibility study and pre-commencement works for his own person
benefit by diverting them into various individual and companies who
were not involved in the intended activities for which the
pre-funding was intended for. Investigations established that the
funds were used to purchase vehicles, air tickets for the girls
stranded in Kuwait, school fees, settlement of civil suits.
12.
Further, the accused loaded a total of US$684,150.00 into five
different VISA cards, purportedly for the importation of earthmoving
equipment from Pietznack Plant and Earth Moving Service, a company
resident in Dallas in the United States of America.
13.
The accused person entered into a recurring fees agreement with
Pietznacle Plant & Earth moving services company based in Dallas
United States of America for the importation of earth moving
equipment without seeking prior approval from Exchange Control
Authority, contrary to the provisions of the said Act.
14.
In violation of the Exchange Control Act, the Accused persons did not
clear with Exchange Authority through CDI forms within 90 days as
required by the said Act.
15.
The offence came to light after the ZPC Board through its
Chairperson, Engineer Stanley Kazhanje who discovered that the
payments were made without bank guarantee and he reported the matter
to the police through his letter dated 18 December 2017 for
investigations.
16.
ZPC suffered a total prejudice of US$5,624,130.80 and nothing was
recovered.”
4.
Upon arraignment, the applicants pleaded and excepted to the charges
in terms of section 171(2) of the Criminal Procedure and Evidence Act
[Chapter 9:07] on the basis that the facts do not disclose an
offence. The exception was contested by the State. On the 19th of
November 2018 the court a quo
dismissed the application for exception.
5.
Dissatisfied with the court a
quo's
ruling dismissing the application for exception, the applicants
approached this Honourable Court with the present application. The
applicants also filed an urgent chamber application for stay of
criminal proceedings pending the determination of the present review
application. The urgent chamber application was filed under case
number HC11205/18. The urgent chamber application was partially
dismissed on the merits on the 31st
December
2018 under case number HH-849/18
by MUSAKWA J who ordered that the criminal trial had been suspended
only in respect of the 3rd
count. Consequently, the applicants are currently undergoing trial in
the Magistrates Court in respect of the other counts.
6.
The application for review is opposed by the State.
THE
LAW
7.
The applicants have approached this Honourable Court in terms of
section
26
as read with section 27 of the High Court Act [Chapter 7:06]. Part V
of the High Court Act [Chapter 7:06] provides for powers of the High
Court on review. Section
26
provides for the High Court's power to review proceedings and
decisions of inferior courts. There are three grounds on which an
application for review of criminal proceedings can be brought to the
High Court in terms of section 27(1) of the High Court Act [Chapter
7:06]. These are -
(a)
Absence of jurisdiction on the part of the court or authority
concerned;
(b)
Interest in the cause, bias or malice on the part of the person
presiding over the court or tribunal concerned or on the part of the
authority concerned, as the case may be; and
(c)
Gross irregularity in the proceedings or decision.
8.
In casu,
the applicants raise one major ground of review. It is captured on
record p1 as -
“The
second respondent's decision is grossly unreasonable and patently
contrary to law such that no reasonable judicial officer who had
applied his mind to the facts would have reached the same decision.”
The
parties agree on the law applicable in an application of this nature.
RELIEF
SOUGHT
9.
The remedy that the applicants seek is that -
“1.
The second respondent's ruling of 19 November 2018 in case number
CRB P9114-5/18 be and is hereby set aside.
2.
The following is substituted in its place:
“In
the result the exception succeeds. The charges be and are hereby
quashed. Consequent to the accused's plea, both accused be and are
hereby acquitted.”
THE
SUBMISSIONS
10.
The applicants submitted in their heads of argument that the court
below was duty bound to apply its mind to the question brought before
it, id
est,
whether the facts alleged disclosed an offence.
11.
The court a
quo
failed to determine the issue which was brought before it. See
Makandi
Tea & Coffee Estate (Pvt) Ltd v A.G & Anor
HH595/15. It went on a tangent. It considered whether the charge was
properly crafted. That was never the issue before it. A failure to
apply its mind to the question before it was a grossly unreasonable
failure of the judicial function. It was not only unreasonable. It
was also patently contrary to the law. On that basis the applicants
submitted that the decision of the court a quo be vacated on review
because if the court had addressed the question that had been brought
before it, it would have arrived at a decision that the facts do not
disclose a criminal offence. See also Bridges
& Hulmes (Pvt)Ltd v The Magistrate, Kwekwe & Ors
1996
ZLR 189
(HC) at 203 where it was stated:
“Because
of the wrong question of law he directed his inquiry at matters he
should not have considered and failed to apply his mind to the
matters in issue.”
12.
The applicants further submitted in their supplementary heads of
argument that the second applicant should not have been charged in
his personal capacity since he was acting only as a representative of
the first applicant which is a
legal persona.
13.
The first respondent on the other hand submitted that it appeared the
applicants purported to except to the charges in terms of both
section
170
and section 180 of the Criminal Procedure and Evidence Act [Chapter
9:07] and thereat lied the problem that then led the second
respondent to proceed in the manner he did. The first respondent
submitted that the applicants should have excepted in terms of
section
180
and not 171. However, the first respondent further conceded that
indeed the second respondent misdirected himself by determining an
issue that was not meant for him to decide but however, argued that
the misdirection was not one so fatal as to go to the root of the
matter.
14.
It further submitted that the trial has since commenced in respect of
counts 1, 2 and 4 hence this application has been overtaken by
events. As regards the third count the first respondent conceded that
there was no offence shown and agreed with the findings of MUSAKWA J
to which the council for the first respondent urged the court to take
note of in reviewing this matter. On the other hand the applicants
referred this court to the judgment by CHITAPI J and urged the court
to take into account the sentiments of CHITAPI J in deciding whether
the facts disclose an offence or not when reviewing this matter.
15.
It is therefore clear that the second respondent misdirected himself
when he dismissed the exception because he dealt with an issue that
was not before him. He decided whether the charges disclosed an
offence or not yet what he had been asked to adjudicate upon was
whether the facts as stated in the Outline of the State Case
disclosed any offence or not. This misdirection in my view goes to
the root of the matter.
16.
Having found that there was a misdirection what is left is for the
court to decide is whether if the court had decided the correct issue
the court would have arrived at the same findings in view of the
relief being sought by the applicants.
MY
ANALYSIS OF THE FACTS IN THE OUTLINE OF STATE CASE
17.
In reviewing the decision of the court a
quo,
and having found that the court a
quo
did not deal with the actual basis of the exception the court is now
at large to decide whether the facts disclose or support the criminal
offences/charges the applicants are facing or not.
18.
The starting points are paragraphs 4 and 5 of the Outline of the
State Case which contain the full facts pertaining to the charges the
applicants are facing. They read as follows -
“4.
On 23 October 2015, ZPC signed an Engineering, Procurement and
Construction Contract, (EPC) with accused (1) being represented by
accused (2) for the construction of 100-Megawatt Solar Power
Generation Plant in Gwanda. The performance/scope of the work was
guided by schedule 11 of the contract.
5.
Clause 2(a) and (b) of the terms and conditions of the contract under
schedule 11 stated that the employer's advance for feasibility
study and pre-commencement activities was to be considered part of
the contract advance payment. A bank guarantee was to be provided
against all payments made by ZPC towards the project implementation.”
19.
I shall now turn to the nature of the exception to the charges and
facts preferred against the applicants in the court a
quo.
20.
The exceptions were taken on the basis that even if the facts which
are alleged in the charges and the outline of the State's case are
proven, no criminal offence would have been established. I say so
because the reading of the whole Outline of the State Case shows that
this is purely a civil rather than a criminal matter. It therefore
amounts to a futile enterprise if the trial were to proceed as I will
demonstrate below.
21.
Before dealing with the justification for the above conclusion, I
need to comment on two procedural issues arising from the opposition
to the exception by the prosecution.
22.
The first issue is whether or not it was proper for the exception to
be filed in terms of section 171 of the Criminal Procedure and
Evidence Act [Chapter 9:07] instead of section 180(4) of the same
Act. The second issue is whether it is constitutional for the court
to, in terms of section 171(2) have a discretion to dispose first of
the exception or to hold the disposal in abeyance pending the
completion of the trial and then render the judgment on the exception
at the end of the trial.
23.
My conclusion on the first issue is that the prosecution is wrong to
contend that an exception ought to be filed in terms of section
180(4) of the Act. My justification for the conclusion is the
following:
24.
Section
171
reads as follows:
“171
Exceptions
When
the accused excepts only and does not plead any plea, the court shall
proceed to hear and determine the matter forthwith and if the
exception is overruled, he shall be called upon to plead to the
indictment, summons or charge.
When
the accused pleads and excepts together, it shall be in the
discretion of the court whether the plea or exception shall be first
disposed of.”
25.
Exceptions are therefore taken in terms of section
171.
That is the first and only provision in the Act dedicated to dealing
with exceptions. They are not dealt with under section
180.
To prove this point, one has to consider section
180.
26.
Section
180
provides in part as follows:
“180
Pleas
(1)
If the accused does not object that he has not been duly served with
a copy of the indictment, summons or charge or apply to have it
quashed under section
one hundred and seventy-eight,
he shall either plead to it or except to it on the ground that it
does not disclose any offence cognisable by the court.
(4)
The accused may plead and except together.”
27.
The clear conclusion which can be drawn is that pleas are made in
terms of section
180
while exceptions are taken in terms of section 171. The mention of
the discretion to the accused person for him to plead and except at
the same time is not the substantive power to make exceptions. It is
a reference to an exception which, would have been taken in terms of
section
171,
if it were to be taken without being combined with the plea.
28.
The submission by the prosecution that the exception must be
dismissed because it is made in terms of the wrong section is
accordingly without substance. The position is that an exception is
taken in terms of section
171
and a plea in terms of section
180.
The possibility of combining the two is provided for in section
180(4)
but that does not supplant the specific provision in section
171(2)
which shows that an accused can plead and except “together”.
29
The second point relates to section
171(2)
which provides that the court can exercise a discretion when an
accused has pleaded and excepted at the same time as to whether to
dispose of the plea or exception first. I conclude that the statute's
grant of discretion to the Magistrate appears unconstitutional. The
following is my justification for this conclusion:
30.
Invariably an accused, as in the present matter excepts on the basis
that the facts alleged, even if proven do not constitute an offence.
When an accused has pleaded not guilty and has not yet provided an
outline of his defence on the facts, he is entitled to a
determination as to whether the facts alleged would disclose an
offence as an antecedent to the commencement of a trial.
31.
To hold otherwise would allow the prosecution of an accused person on
a charge which potentially does not disclose an offence. That amounts
to a violation of the constitutional rights of the accused person to
a fair trial.
32
Section
69(1) of the Constitution
provides that:
“69
Right to a fair hearing
(1)
Every person accused of an offence has a right to a fair and public
trial within a reasonable time before an independent and impartial
court.”
33.
Section
70(1)
provides in part as follows:
“70
Rights of accused persons
(1)
Any person accused of an offence has the following rights –
(a)
to be presumed innocent until proven guilty;
(b)
to be informed promptly of the charge, in sufficient detail to enable
them to answer to it;
……………;
(i)
to remain silent and not to testify or be compelled to give
self-incriminating evidence.”
34.
The permission granted to a Magistrate to hear the defence on the
merits, in his discretion where an accused has pleaded and excepted
at the same time does not sit well with the above constitutional
provisions. It allows for a Magistrate to hear a defence on the
merits to a charge which may not disclose an offence and therefore
permit the self-incrimination of the accused person. It violates the
right of the accused person to be promptly informed of the charge in
sufficient detail in order for him to answer to it. How can an
accused answer to a charge when he alleges that it does not disclose
an offence? Equally the presumption of innocence which is cardinal in
human rights jurisprudence is violated.
35.
The remarks of KUDYA J in Tobacco
Sales Producers (Pvt) Ltd
v
Eternity
Star Investments
06-HH-121
and
2006
(2) ZLR 293 (H)
at paras 8-9 and 296C–D are therefore called to mind:
“In
my view that an exception can only be properly filed before the
excipient pleads to the merits of the matter. In terms of the heading
of Rule 137, it is an alternative to pleading to the merits. Once the
excipient pleads before the exception, he is in fact telling the
other party that its declaration discloses a cause of action and that
it is neither vague nor embarrassing. Otherwise, if it did not
disclose a cause of action or was vague and embarrassing, then the
defendant would of necessity raise an objection, either through an
exception or the other recognised ways laid out in the Rules.”
36.
I recognise that the above remarks apply to civil matters which are
regulated by Rule 137 of the High Court Rules
1971.
There is no reason why the same rule and principle of justice should
not apply in criminal matters. Moreso when the prospect of an
improper conviction in criminal matters has potential consequences of
incarceration for the accused person. More safeguards must therefore
be given in criminal procedure to ensure that the trial is as fair as
possible.
37.
I now turn to address the prospects of success of the exception filed
on behalf of the accused persons on the merits. I shall not repeat
the terms of each of the charges and facts for brevity.
38.
The first two charges constitute of allegations that the accused
persons committed fraud as defined in section 136 of the Criminal Law
(Codification and Reform) Act [Chapter 9:23]. The said section
provides:
“Any
person who makes a misrepresentation –
(a)
Intending to deceive another person or realising that there is a real
risk or possibility of deceiving another person; and
(b)
Intending to cause another person to act upon the misrepresentation
to his or her prejudice, or realising that there is a real risk or
possibility that another person may act upon the misrepresentation to
his or her prejudice; shall
be guilty of fraud if the misrepresentation causes actual prejudice
to another person or is potentially prejudicial to another person---"
39.
The essential elements for the charge of fraud are therefore -
(a)
The existence of a misrepresentation;
(b)
The existence of an intention to deceive or realisation of the risk
or possibility of deception;
(c)
The intention to cause another person to rely upon the
misrepresentation to their prejudice or the realisation that the
possibility of reliance on the misrepresentation exists; and
(d)
Causation of prejudice or potential prejudice.
40.
These requirements are confirmed in the judgment relied upon by the
State, to a large extent, the judgment in S
v Chikukwa
16-HH-813.
41.
The intention to deceive must exist at the time that the
misrepresentation is made. In this case such intention must be
alleged to have existed on each of the dates on which invoices were
presented to ZPC for payment. The non-existence of such intention
immediately becomes apparent if one considers that the relationship
between the parties was regulated by an Engineering Procurement and
Construction Contract (EPC) which authorised payment before works had
been done.
42.
All payments made by ZPC were advance payments. They were authorised
by the contractual document. The intention by both parties as
expressed in the contract was that work would be done after the
payments. That negates the intention on the part of the accused
persons to cause any prejudice to ZPC.
43.
Any prejudice, which may be alleged to have fallen upon ZPC or may
potentially fall upon it was contemplated by the parties at the time
of entering the contract and mitigatory measures were taken to guard
against such prejudice. In each case therefore a performance bond was
required to have been supplied before payments were made.
44.
The fact that it is alleged that no performance bonds had been
supplied at the time of the making of some of the payments does not
mean that there was any fraud. The parties contemplated the
possibility of breach of the contract by non-performance of the 1st
accused person and took appropriate mitigatory measures. The
non-implementation of the mitigatory measures can only be a breach of
the contract if established.
45.
In fact, the loss in that event would have been caused not by the
malperformance of the contract but by the negligence of ZPC in paying
where the contract provided that payments should have been made only
when the performance bond or an advance payment guarantee was in
place. Such loss is not the loss or prejudice contemplated in terms
of section 136 of the Criminal Law (Codification and Reform) Act.
46.
The State also contends that the Public Procurement and Disposal of
Public Assets Act [Chapter 22:23] does not apply to the facts because
it was not in existence when the contract between the parties was
concluded. The Act came into effect on 1 January 2018. The facts in
the present matter took place from about the year 2015 when the
contract was entered into.
47.
Section 103 of the Act provides that a procurement entity may apply
to the Procurement Regulatory Authority of Zimbabwe established in
terms of the Act to proceed with procurement under the new Act or
alternatively the Authority may direct a procurement entity to
proceed under the new Act. All procurement proceedings which were
pending at the time the new Act came into force must therefore be
concluded under the old Act. The reliance by the accused persons on
the new Act and its specific clauses for dispute resolution will
therefore not likely succeed.
48.
However, even in terms of the old Procurement Act, there was no
criminalisation of non-performance on procurement contracts. In
addition and even more telling is the fact that the present matter is
contractual. It is one based on an EPC Contract. It is therefore
supposed to be resolved contractually. The law is that whenever a
matter is contractual, and where the contract thereto is capable of
providing effective redress, the parties wishes concerning dispute
resolution as captured in the contract must be resorted to. No room
for extension of liability under a different remedial regime like
criminal law must be allowed.
49.
Put differently, the rule is that where the matter is entirely
contractual and where the contractual remedies provide sufficient
redress, public policy dictates that contractants pursue their
remedies contractually.
50.
The complainant is a private company owned by the State. Like the
accused persons it must have the same rights and liabilities. The law
is that whenever the State or its affiliate enters into a contract,
it must be treated equally as the other party to the contract. It
must find its remedies and/or incur its liabilities in terms of the
contract. The contract must be the beginning and the end in resolving
whatever dispute that might arise between the parties - Minister
of Natural Resources & Tourism v F C Hume (Pvt) Ltd
1989
(3) ZLR 55 (SC).
51.
Intrinsically related to the above, the State stands in the same
position as any other private commercial player, subject to the
statutory regulation of its commercial activity (GCO
Quinot State Commercial Activity, Juta & Co
2009 at p135). The ordinary principles of contract should therefore
ordinarily apply. In addition, the common law and statutory
principles of administrative justice bind the State which is required
to adhere to fairness, transparency, integrity and amongst other
things in the administration of public power (Phoebe Bolton, The
Law of Government Procurement in South Africa, Lexis
Nexis, 2017 reprint at p13). This is because of the source of the
power exercised despite the description of the complainant is a
private limited company (Quinot,
supra
at
68, quoting the leading case of Mustapha
v Receiver, Litchenburg
on
the classification approach; Bolton supra
at
30).
52.
The case of State
v Lovemore Kurotwi & Anor
16-HH-270
is instructive. It establishes that as a matter of law, where
government as a contracting party freely enters into a written
contract, any subsequent negation of the terms thereof by the State
depicts lack of candour on its part. In
verbatim,
BHUNU J (as he then was) had this to say in the cyclostyled
judgement:
“Both
government and ZMDC cannot be heard to complain that they were duped
into signing the contractual document under the mistaken belief that
BSGR was standing as guarantor for Core Mining when the contractual
document makes no mention of BSGR at all.
It
is also inconceivable that both government and ZMDC could have
believed that BSGR was the guarantor for Core Mining when Subithry
Naidoo and Licht Yehuda signed the contractual document in their
personal capacities as guarantors without any reference to BSGR.
Considering that the contractual document was subjected to scrutiny
by government lawyers before execution it is highly unlikely and not
in the least probable that they too could have been mistaken that
BSGR were the guarantors for Core Mining when the written contract
stipulated in clear and unambiguous terms that Subithry Naidoo and
Licht Yehuda were the guarantors.
It
is wholly unbelievable that government, ZMDC and Marange Resources
could have genuinely believed that BSGR was standing as guarantor for
Core Mining with the full knowledge that they had not accepted its
counter offer. It therefore boggles the mind how all these three
eminent entities backed up by proficient lawyers could have
entertained the idea of contracting with BSGR without the contractual
basics of offer and acceptance.”
53.
From the foregoing, it is clear that Government entities are taken to
have carried out all due diligence on the competencies of the
Contractor before entering into a Contract with them. By equal
measure, the Complainant is considered to have been satisfied by the
technical and financial capacity of the Accused persons together with
their partners. It is improbable that the State would consider itself
a victim of fraud when it was a willing participant in entering into
the EPC Contract with the Accused persons.
54.
Even in cases involving private entities alone, Criminal Law has
never been recognised as a competent remedy to compel a party to a
contract to perform in terms thereof. In the case of Brian Tarisai
Kambasha & Anor v The State 17-HH-036, the Court took occasion to
remind the parties that their relationship was contractual and in
instances where money was exchanged in the anticipation of
performance of certain agreed contractual obligations, the
relationship becomes civil, in the form of a debtor and a creditor.
55.
In the above case, the accused persons were convicted of theft of
trust property in terms of section 113(2)(d) of the Criminal
(Codification and Reform) Act [Chapter 9:23] and sentenced to 5 years
in prison at the Harare Magistrates Court. The charges arose from a
contractual undertaking in terms of which the Accused persons
undertook to erect a 100KVA solar plant at the complainant's farm.
The complainant's discontent arose when he became frustrated with
the Accuseds' failure to complete the installation of the solar
plant within the time limits agreed by the parties in a written and
signed memorandum of agreement. In pursuance of the first phase of
the agreement, complainant advanced the sum of US$50,125.00 to the
Accused and they cleared the ground and erected metal poles, but
failed to put into place the solar panels to complete the project.
56.
According to the Accused, the work which they did constitutes 80% of
the project. Complainant estimated the value of the work done to have
been US$3,000-00 of work. After the poles had been erected the
Accused persons stopped work. They said it was because the
US$50,125-00 had been used up due to a failure to get a 60% discount
promised to complainant upon entering into the agreement. On the
other hand complainant's concerns when he reported the Accused to
the Police were that they had downed tools because they had converted
the funds to their own use.
57.
This case is almost at all fours with the matter in question. In
determining this case on appeal, Mushore J sitting with Hungwe J were
correct in the reasoning that:
“The
State failed to establish a prima facie case at the closure of the
State case and the [Accuseds'] application for absolution from the
instance should have been granted. It is our considered view that the
essential elements for the offence of theft of trust property as
cited and appearing in section
113(2)(d)
were not met. The
complainant should have proceeded with a civil claim for breach of
contract and sued for either specific performance or for cancellation
and damages.
The facts of this case fall within the exceptions which are expressly
provided for in section 112 of the Criminal (Codification and Reform)
Act [Chapter 9:23].” Underlining for emphasis
58.
This case clearly sets out similar procedure which the complainant in
the current case [ZPC], ought to have followed. By reason and
standard of this case, it is correct to propound that the criminal
proceedings against the accused persons are unfounded, misled and
misdirected.
59.
Criminal Law is not a procedure for the enforcement or the remedy of
alleged breach of contract. There are specific measures provided for
this under both the contract itself and the regulatory statutory
regime. It has been held that the State does not need the help of the
criminal law to relate to the enforcement and remedy of public
contracts - see
S v Kurotwi & Another.
The Complainant is a procuring entity regulated by the procurement
regime and wholly owned by the State in its commercial activity. To
that end, its commercial activities cannot be assisted by the
criminal arm of the State in enforcing obligations which arise from
private commercial transactions governed by a Contract. It is clear
that the allegations against the accused persons were an arbitrary
ploy by the State to get an unfair advantage in a contractual issue
for which the state is indirectly a party. The state being party to a
contract must enforce its rights civilly without flexing its muscles
needlessly in order to intimidate a private party.
60.
I now proceed to consider the exchange control charges.
61.
These are two. It is alleged that the accused persons committed
offences by entering into an agreement “involving
recurring fees amounting to US$849,479.00”
with Pietznack Plant and Earth Moving Services of Dallas USA without
seeking exchange control approval.
62.
The judgment in McCosh
v Pioneer Corporation Africa Ltd
2010
(2) ZLR 211 (H)
held that the entering into an agreement does not violate the
regulations. It is the payment which violates the regulations. In
other words after entering into the contract, the parties could still
seek exchange control approval.
63.
Assuming therefore that the alleged facts are accepted as they are by
the accused persons, no criminal offence was committed.
64.
In addition, the Foreign Exchange Guidelines to Authorised Dealers,
ECD1/2009 were not promulgated by the President in terms of section
5(1)(a)(ii) of the Exchange Control Act [Chapter 22:05].
65.
Section 2 of the Exchange Control Act provides that:
“2.
Regulatory Powers of the President
(1)
Notwithstanding anything to the contrary contained in any enactment,
the President may make such regulations relating directly or
indirectly to –
(a)----
(b)
exchange transactions.”
66.
In terms of sub section (2) it is elaborated what such regulations
may relate to. In terms of sub section (5), the regulations may
provide for penalties for contravention of the regulations and
criminal offences.
67.
In the present matter, the Guidelines relate to authorised dealers as
defined and not other
persons.
In addition to not having been made by the President in terms of the
Act, they do not create themselves a criminal offence. This is
admitted in the response by the Prosecution to the exception.
68.
In any event, it is the First Accused who entered into a public
procurement contract with the Zimbabwe Power Company (“ZPC”). The
Second accused is not a party to the contract. He, however,
represented First Accused. There is therefore no valid charge for the
contravention of the Guidelines. In capacity as Managing Director.
The contractual obligations related to, and flowed as between the
Complainant and the First Accused only.
69.
At all material times the second accused represented the first
Accused in his capacity as Managing Director. There is no allegation
that the second accused did anything pursuant to the contract alleged
in his own capacity. There is no allegation that the corporate veil
of the First Accused was abused for a criminal enterprise and that
the second accused fully aware of this abuse, could have prevented
the same and nonetheless proceed recklessly without regard to the
consequences.
70.
The following legal principles are trite:
71.
A company is an entity distinct and separate from its shareholders
and directors: see
Salomon
v Salomon & Co Ltd (1897) AC22 (HL) & Modern Company Law, 4th
Ed (Stevenson and Sons 1979), by Prof Gower LCB..
A director who acts for a company on the basis of its resolution in
that regard does so as an agent of the company and does not attract
personal liability for the conduct of the company. The law is that, a
company is capable of enjoying rights and of being subject to duties
which are not the same as those enjoyed or borne by its members. A
company has its own legal personality. That is in fact without
statutory intervention, company directors would not be liable for
damages in civil law in respect of commission or omissions by
companies. See,
Burley Appliances Ltd v Grobbelar
NO.
2004
(1) SA 602,611G–,
per Neil J.
72.
The State alleges that the Second Accused made certain
misrepresentations (which is denied) in the course of the
implementation of the procurement contract. Apart from the fact that
the facts alleged do not disclose a criminal offence, the conduct
alleged remains the conduct of the First Accused regardless of who
represented it.
73.
The second accused is wrongfully charged in his personal capacity.
The basis of the charge as appears from the Outline of the State Case
(OSC) is his alleged conduct in a representative capacity in respect
of the procurement contract. To that end, the charges are merely
frivolous and vexatious.
74.
In giving last consideration to the foregoing, the basis for charging
the second accused in his personal capacity is without merit and has
not been clearly set out in the Charge and the OSC. It should be
noted that the only basis for charging an accused person in their
personal or representative capacity of a corporate entity is found in
section 277(5) of the Criminal Law (Codification and Reform) Act
[Chapter 9:23]; it being alleged that in his personal capacity, he is
liable for the alleged criminal conduct of a separate legal persona.
75.
The provisions of section
277(5)
above notwithstanding, to the extent that it imputes vicarious
criminal liability on the second accused in respect of an offence
allegedly committed by another (in this case a company) in respect of
an offence which requires actual
intention
to
be proven, such a charge amounts to a breach of the protective
provisions in sections 56(1) and 49(1) of the Constitution of
Zimbabwe and as such invalid.
76.
I now turn to the final exchange control charge.
77.
This charge relates to an allegation that exchange control approval
have been granted for the “loading”
of the sum of US$849,479.00, the accused has not submitted acquittals
in violation of Exchange Control Authority GR1776/2016.
78.
Again, the Exchange Control Authority GR1776/16 is subject to my
views above on the absence of a criminal offence and not having been
promulgated by the President. I therefore consider that even if it
were established that the facts alleged did take place, there is no
criminal offence established.
79.
On the basis of the above, I consider that the exception taken was
properly taken. Prospects of success of the criminal suit:
“This
is a matter that does not enjoy any much prospects of success. Apart
from the compelling submissions contained herein, the High Court has
also had occasion to express its opinion on the merit or otherwise of
the criminal case. In the case of Wicknel Munodaani Chivayo v The
State B1118/18, the learned judge, CHIKOWERO J, in granting bail to
the accused noted that 'there was nothing on the record that
demonstrates that the State had a strong case against the applicant
[accused two herein]. There was therefore no justification for a
finding that the strength of the State case was likely to induce the
accused to flee to avoid possible conviction and long incarceration.'
80.
The High Court went on to find that the effect of the testimony of
the investigating officer was to show that 'the
State
case was extremely weak and the defence very strong.'
–
Emphasis added.
In
respect of the alleged fraud, the High Court observed that the
investigating officer was unable to point out where the
misrepresentation was. He could not dispute that there was no “dirty
money” in respect of the money laundering charge which the state
later decided to drop at commencement of the trial. The source of the
money was known, it was the State itself. The Investigating officer
was unable to prove that the neither the accused or co-accused took
any money outside Zimbabwe in contravention of the Exchange Control
Act [Chapter 22:05].
On the basis of all these flaws, the High Court was at the verge of
declaring the State's case to be totally without merit and as a
candidate suitable for discharge at the close of the State's case.
81.
It is such compelling dicta
of a superior court that leaves no doubt in respect of the merits (If
any) of the criminal suit by the State. The High Court, properly
exercising its mind found that the State's case is without merit.
It can only follow, as guided by the Honourable Court, that the
State's case is hollow and devoid of merit. It can only be
dismissed with costs.
82.
The complainant has also failed to support its civil suit
satisfactorily. In the case of Intratrek
Zimbabwe (Pvt) Limited v Zimbabwe Power Company (Pvt) Limited
HH-818-18,
the complainant [respondent therein] denied ever instituting criminal
suit against the accused persons herein. It invites confusion and
uncertainty on how the State formulated the charges preferred against
the accused persons if the known complainant has denied ever
instituting same. Apart from being suggestive of a skirmish, a mere
witch hunt and a phishing expedition it tells more of a hidden hand
or mala
fides
intention in the institution of the criminal proceedings brought
about by the State in the circumstances.
CHITAPI
J, presiding in the civil suit retorted that:
“What
concerns the Court is the Respondent's [ZPC] denial that it had
nothing to do with the arrest of the Applicant and its Managing
Director. The denial is telling and has ramification because it then
leads to the conclusion that a third force, the Police which is an
organ of the State, frustrated the contractual relationship between
the Parties. The Court found the Respondent's denial that it had
nothing to do with the arrest of the Applicant and its Managing
Director [Accused Persons herein] to be glaringly and palpably
false.”
The
findings of the court cannot be over emphasized, suffice to opine
that it establishes the complainant as being untruthful under oath
and incredible. This characteristic cannot be overlooked in respect
of the criminal suit instituted at the instance of ZPC.
83.
It is a pinnacle of criminal procedure that in order for a person to
be competently charged and tried of a criminal offence, there should
be a person (natural or juristic) who should complain of the criminal
conduct of the accused. Put differently, a competent and credible
complainant should place before the court the basis upon which any
allegation of the commission of a crime maybe founded. The
complainant in unison with any other witness should submit before the
court a prima facie case and evidence beyond reasonable doubt to
secure a conviction. Without a competent and credible complainant,
the charges and allegations of criminal conduct upon an accused
become speculative and unsubstantiated.
84.
CHITAPI J casted further reservations on the nature of the criminal
allegations levelled against the Accused persons herein.
In
verbatim,
he intimated on p20 of the same judgement as follows:
“What
is however mind boggling is that the criminal allegations against the
Applicant [Intratrek] and its Managing Director that they defrauded
the Respondent [ZPC] of USD5,624,607.60
in payments for work not done directly
contradict the Addendum to the Contract
produced before this Court on oath. The allegations also
contradict the Respondent's [ZPC's] Managing Director's
deposition that work was done but had not been completed. The
Addendum also clearly shows that a further amount was due to
sub-contractors employed by the Applicant [Intratrek]. The
fraud is, at least on the facts before this Court, difficult to
fathom.”
– Emphasis added.
85.
That two different judges in separate sittings and dealing with
different issues but relating to a similar cause of action concur on
the lack of merit in the criminal case is no coincidence. Rather, it
demonstrates the extent of common acceptance that the criminal case
is at best a causa
non grata,
a
high sounding nothing.
86.
The learned Judge continues purging the criminal suit, justifiably
so, in the manner which follows hereunder:
“The
form 242 on which the [Accused Persons] were brought before the
Criminal Court in CRB 9114-5/18 alleged that there was an accomplice
involved, being the Minister of Energy and Power Development, Samuel
Undenge who was [at the time of the judgement] still to be arrested.
It was alleged that the Minister had corruptly interfered with the
tender process and directed the Respondent's [ZPC] Managing
Director Noah Gwariro to award the contract (the subject of this
application) to the accused person.”
87.
It is imperative at this stage to note that it is now common cause
that the aforesaid Minister was later arraigned and tried of the
criminal offence at the Magistrates Court and thereafter acquitted.
88.
The learned judge extended his judicial observation and noted that
the “duplicity
of the conduct of the respondent [ZPC]
in
causing the arrest of its contracting partner and denying so in this
Court has been amply demonstrated and smacks of mala fides or bad
faith.
If one must accept the respondent's Managing Director's denial
that the respondent filed the criminal report, then the inescapable
probability is that there is discord within the respondent company in
that the Board says one thing and the Management says another.”
89.
On the basis of the foregoing, the totality of the facts and merits
surrounding same, it is highly improbable that the criminal suit may
find merit in any court of law reasonably exercising its mind. It
stands to reason that any further tolerance of this criminal suit or
at worst conviction of the accused persons will amount to a violation
of the supreme law of the land, the Constitution.
Section
49(2) of the Constitution of Zimbabwe (Amendment No.20) is express in
that:
“No
person maybe imprisoned merely on the ground of inability to fulfil a
contractual obligation”.
This
constitutional provision establish constitutional protection upon the
doctrine of sanctity of contracts, which the accused persons also
enjoy. No criminal sanction is capable of execution when it is in
violation of the Constitution.
The
perpetuation of this criminal case is inherently null and void to the
extent that it is ultra
vires
the
supreme law of the land, the Constitution.
CONCLUSION
90.
The charges preferred against the applicants as revealed by the facts
are undoubtedly contrived and were properly excepted to. They arise
from a cause of action that is contractual in nature and therefore
incapable of being resolved through the criminal justice system. The
relationship between the complainant and both applicants is
contractual and therefore any remedy for a dispute arising therefrom
should be civil and in terms of the contract. The state cannot be
enjoined through the apparatus of the criminal justice system to
determine contractual obligations of private persons and the
performance or otherwise of such obligations.
The
facts therefore, do not disclose any criminal offence.
91.
It is assumed, and rightfully so, that the EPC Contracts are clear on
how any non-performance by a party is resolved. The dispute
resolution mechanism which should be available in the EPC Contract is
not suggestive of, neither does it impugn criminal liability on
either party's failure or delay to perform contractual obligations.
92.
To that extent the proper remedy available to the complainant is
claiming specific performance in terms of the provisions of the EPC
Contract. The EPC Contract always speaks for itself. In terms of the
well-known parole evidence rule no one can speak on its behalf as it
is the exclusive memorial of the parties agreement. The parties are
strictly bound by the four corners of the contractual document. The
parties cannot add or subtract anything from the contractual
document. The criminal court therefore does not have jurisdiction to
hear or otherwise determine a case of a civil nature, such as this
one.
93.
To buttress the foregoing, it suffices to record that it is settled
practice that where a fraudulent misrepresentation is alleged in the
performance of contractual obligations, the remedies available to the
aggrieved party are not criminal but rather civil in the form of a
claim of damage, specific performance or termination of the contract.
Notwithstanding the lack of merit in the State's charges and facts,
it is palpably a wrong procedure for redress altogether.
94.
The matter in
casu
is
therefore purely a civil matter which should be resolved by simply
enforcing the dispute resolution provisions of the EPC Contract. The
complainant negotiated and participated in the drafting of this
contract, was and remains fully aware of the existence of a dispute
resolution clause it was there but has elected not to utilize same,
ostensibly for the purpose of frustrating the applicants ability to
fully perform its obligations.
95.
In consideration it is prudent at this stage to observe the dicta of
CHITAPI J in the case of Intratrek
Zimbabwe (Pvt) Limited v Zimbabwe Power Company (Pvt) Ltd
18-HH-818
which council for applicants urged me to take note of. In determining
an application for specific performance by the first applicant
herein, the learned judge had occasion to intimate that -
“…..
the Addendum was entered into and it took into account that the
advance payment guarantee was still outstanding. There was no
fraudulent misrepresentation made by the applicant (accused) in
relation to the Advance Payment guarantee as would have influenced
the respondent [ZPC] to make the payment. Both parties were aware
that the guarantee was yet to be given for its availing. A failure to
meet the deadline agreed would not amount to a fraud per se but would
constitute a breach of an agreed condition. The papers show that the
applicant [accused] subsequently offered to provide a guarantee of
USD52 million against a similar amount, less payments already made,
but the respondent [ZPC] refused the offer arguing that the contract
had lapsed.”
In
consideration of the foregoing, the criminal charges stand on a frail
footing and cannot be sustained at law or before any Court reasonably
exercising its legal mind.
96.
If the learned magistrate had endeavoured to answer the correct
question asked of him he would have realised that the contractual
remedies to give the complainants the proper redress are provided for
in terms of the EPC Contract. It seems compelling that having a civil
matter determined by the State through the criminal justice system is
not only wrong but sets a dangerous precedent if not tamed at its
inception.
97.
This approach bears the greater danger of opening every commercial
transaction to criminal liability, a situation that may degenerate
into chaos if left to prowl freely. No investor would open themselves
to the extreme exigencies of having the fate of their investment
determined by a criminal court where, inter
alia,
the standard of evidence should be beyond reasonable doubt.
98.
I am not blind to the dicta
by MUSAKWA J where he said that there were no prospects of success on
review in respect of counts 1, 2, and 4 which case the respondent
urged me to take into account wherein the learned judge was dealing
with an urgent chamber application in the case of Intrateck
Zimbabwe (Private) Limited and Wicknel Munodaani Chivayo v Prosecutor
General of Zimbabwe and L Ncube N.O.
18-HH-849.
However, these were his prima facie opinions which are not binding on
this court having heard the full submissions and read the papers
presented before me.
On
the basis of the foregoing, the totality of the facts and merits
surrounding same, it is highly improbable that the Criminal suit may
find merit in any Court of law reasonably exercising its mind.
At
best, the exception to the facts should have been upheld had the
court a
quo
properly
exercised its mind and in the least, the State's case should be
discharged for want of merit.
IT
IS ORDERED THAT:
1.
The second respondent's ruling of 19 November 2018 in case number
CRB P9114-5/18 be and is hereby set aside.
2.
The following is substituted in its place:
“In
the result the exception succeeds. The charges be and are hereby
quashed. Consequent to the accused's plea, both accused be and are
hereby acquitted.”
Manase
and Manase, applicants legal practitioners
The
National Prosecuting Authority, respondents attorneys
