Polomo Enterprises Private Limited v Tillcorp Private Limited and David Smith

### Preamble
1
HH 581 - 25
HCHC 631/24
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CASE NO. 1

POLOMO ENTERPRISES PRIVATE LIMITED				HCH 631/24

versus

TILLCORP PRIVATE LIMITED

and

DAVID SMITH

CASE NO. 2

DAVID SMITH 								HCH 3651/24

versus

TILLCORP PRIVATE LIMITED

and

POLOMO ENTERPRISES PRIVATE LIMITED

HIGH COURT OF ZIMBABWE

COMMERCIAL DIVISION

MANZUNZU J & CHILIMBE J

HARARE; 27 February & 1 October 2025

Commercial Appeal

S Muzondiwa, for the appellant

A Kadye, for the 1st respondent

J Wood, for the 2nd respondent

MANZUNZU J:

GENERAL

This is a composite judgment in respect of two appeals which were, at the request of the parties, consolidated per order of this court of 22 November 2024 and heard at the same time. It was convenient to do so because the parties are the same and represented by the same legal practitioners. The appeals are against the same judgment.

FACTS COMMON TO BOTH APPEALS

INTRODUCTION

This is an appeal against the entire decision of the Magistrates’ court (the court a quo) sitting at Harare per her Worship Esquire L Ncube handed down on 15 August 2024 wherein the court granted an application for summary judgment against Polomo Enterprises (Private) Limited (Polomo) and David Smith (Smith), being the defendants in the court a quo, in favour of the plaintiff, Tillcorp (Pvt) Ltd (Tillcorp). Polomo and Smith filed separate appeals.

BACKGROUND

Polomo Enterprises (Private) Limited (Polomo) is a company registered in terms of the laws of Zimbabwe.

Tillcorp (Pvt) Ltd (Tillcorp) is a company registered in terms of the laws of Zimbabwe.

David Smith (Smith) is a director in Polomo.

Tillcorp issued summons in the court a quo against Polomo and Smith claiming payment in the sum of US$42 000.

In the particulars of claim, Tillcorp pleaded that sometime in February 2024 it concluded a verbal agreement with Polomo represented by Smith.

The agreement was that Polomo would remit the sum of US$ 42 000.00 to Tillcorp’s identified recipient.

It was further averred that Polomo breached the agreement by not remitting the money to Tillcorp’s intended recipient.

The result was that Polomo was enriched by receiving the money at the expense of the Tillcorp, it was alleged.

In response, Polomo filed its plea.  Polomo pleaded that the agreement between the parties was an illegal foreign currency exchange deal.

It was further pleaded by Polomo that no payment nor intended recipient was involved as nothing could stop Tillcorp from making the payment directly to the alleged intended recipient.

It was further argued by Polomo that the demand for the money lacked any legal basis because the agreement between the parties failed the legality test.

In response, Tillcorp filed an application for summary judgment (which is the subject of this appeal).

In the court a quo Tillcorp argued that Polomo did not have a bona fide defence to the action and only filed a plea for the purposes of delaying and wasting the court’s time.

It was further argued by Tillcorp that the summons and particulars of the claim were clear and based on a liquid document and that the plea filed was motivated by bad faith.

It was further argued by Tillcorp that the plea did not deny that Polomo had received US$ 42,000.00 and that it did not deny the existence of the agreement.

Tillcorp believed summary judgment was warranted in the circumstances.

The application for summary judgment was opposed by both Polomo and Smith.

Polomo raised a point in limine that the agreement was illegal as it was contrary to s4 of the Exchange Control Regulations S.I 109 of 1996. It alleged the agreement was a foreign exchange agreement in terms of which Nostro United States dollars were exchanged for United States Dollars (USD) cash at a rate.

The other point in limine was that there were material disputes of fact. It was argued that the money that was transferred to Polomo was by Agripeak Incorporated (Private) Limited and Tillcorp cannot therefore claim that it transferred the money.

It was further argued that Tillcorp had to show the court the nature of the transaction and explain why it used a third party to make the payment. It was therefore Polomo's argument that this could only be determined through a trial and not on the papers.

On the merits, it was argued that Polomo's defence of the illegality of the whole transaction is sufficient to upset the application for summary judgment.

It was argued that Smith was never an agent of Polomo and that Tillcorp did not want to disclose the fact that the whole transaction involved buying and selling foreign currency which was a breach of the Exchange Control Regulations of Zimbabwe.

It was further argued that Tillcorp's claim is not founded on a liquid document as the bank transfer was not done by Tillcorp.

It was therefore Polomo's argument that all those issues were triable issues of the legality or otherwise of the foreign currency exchange deal.

Smith in opposing the application for summary judgment argued that the document that Tillcorp relied on as proof of payment does not bear its name as the payer and that there is no explanation why Tillcorp is claiming money paid by a third party.

Smith raised an exception in the court a quo that Tillcorp had not properly pleaded a cause of action against him. He argued that there was nothing that linked him to the money and that he was not the recipient of the money therefore was not enriched in any manner.

The court a quo first dealt with the exception and concluded that the exception had not been properly taken. The court a quo determined that Smith was acting for Polomo when the transaction was entered.

In that regard the court a quo held that a cause of action had been established. The court a quo therefore dismissed Smith's exception and granted the summary judgment.

The court a quo held that Polomo and Smith have not managed to show that they have a prima facie defence to the claim. It was further held that there are several correspondences which show that the amount owed was duly acknowledged and that there was a payment plan that was made.

On the issue of illegality, the court a quo held that such an allegation is just a mere allegation and that the appellant had failed to prove that the agreement was an illegal foreign currency exchange deal.

The court went further and equated the present matter to the one in Wycliff Matsika v Jumvea Zimbabwe Ltd & Anor HH 9/23 and ruled that the in  pari delicto rule should be relaxed just as what had happened in the Matsika case (supra).

Aggrieved by the decision, Polomo and Smith filed separate appeals in this court.

GROUNDS OF APPEAL

Polomo relied on two grounds of appeal, that is;

The court a quo erred and misdirected itself in law, in granting summary judgment in circumstances where the appellant had successfully raised a triable issue as to whether or not the transaction as amongst the parties was illegal. Such triable issue sufficiently defeated the relief sought a quo.

The court a quo erred and misdirected itself at law in pronouncing itself on issues that were never put before it by the parties re:  whether or not the in pari delicto rule should be relaxed. None of the parties a quo placed this issue before the court for determination.

Smith raised 8 grounds of appeal which are;

The court a quo erred in law in failing to consider and relate to the appellant's submissions and evidence placed before it.

The court a quo erred in law in finding that a cause of action had been properly pleaded against and in dismissing the appellant's exception.

The court a quo erred in law in finding that a person who acts on behalf of a company is personally liable merely by virtue of his representation of the company.

The court a quo erred in ignoring evidence on the record that the appellant was not a director on the second respondent when that was the stated basis of his liability.

The court a quo erred in finding that there were no issues worth referring to trial.

The court a quo erred in finding that the appellant had acknowledged his indebtedness to the first respondent through the email written by the 2nd respondent Alma McCulloh.

The court a quo erred in finding that the appellant had been enriched and that the money had been paid to him.

The court a quo erred in finding under the circumstances that the requirements for summary judgment had been met.

These several grounds of appeal by Smith can only be condensed into two, that is, whether or not the court a quo erred in dismissing the exception and whether or not the court a quo erred in granting the application for summary judgment.

RELIEF SOUGHT

Polomo prays that the instant appeal be allowed with costs and that the judgment of the court a quo be set aside and substituted with the following;

“The application for summary judgment be and is hereby dismissed with costs.”

Smith prays that the appeal be allowed with costs and that the order of the court a quo be altered to one upholding the appellant's exception and dismissing the application for summary judgment with costs.

ISSUES FOR DETERMINATION

After reading the record the issues for determination are;

Whether or not the court a quo erred in granting summary judgment.

Whether or not the court a quo erred in pronouncing on issues that were never put before it.

Whether or not the court a quo erred in dismissing the exception by David Smith.

Whether or not the court a quo erred in law in finding that David Smith was personally liable for the debts of Polomo.

APPLICATION OF THE LAW TO THE FACTS

a) Whether Or Not The Court A Quo Erred In Granting Summary Judgment

The appellants argue that the acknowledgment of debt that the court a quo relied on was founded on an illegal foreign currency exchange transaction. The appellants further rely on section 4 of the Exchange Control Regulations SI 109/1996 which prohibits the exchange and dealing in foreign currency. The appellants therefore are of the view that such a defence was a triable issue and that summary judgment ought not to have been granted.

Per contra, Tillcorp is of the view that the debt's allegation of being founded on an illegal foreign currency exchange was never proven because the appellants, in their plea, do not deny their indebtedness. Tillcorp further argues that the allegation of illegality is not sustainable and that the appellants did not provide sufficient clarity to persuade the court a quo that there was a triable issue.

The Supreme Court has clearly set out the requirements that have to be satisfied for summary judgment to be granted. In Tavenhave & Machingauta Legal Practitioners v The Messenger of Court SC 53/14 the Court clarified the requirements as follows:

“Summary judgement is a drastic remedy which will only be granted where it is clear that the defendant has no bona fide defence and has entered appearance to defend solely for purposes of delay. Because of the drastic nature of the remedy a court will not grant it if there is any possibility that the defence raised on papers might succeed. Thus, it has been held that a mere possibility of success will suffice to avoid an order for summary judgment and that;

‘all that a defendant has to establish in order to succeed in having an application for summary judgment dismissed is that “there is a mere possibility of his success;” “he has a plausible case;” “there is a triable issue;” or, “there is a reasonable possibility that an injustice may be done if summary judgment is granted.”

In the Eastlea Hospital Private Limited v Ndoro & Ors SC 116/23 the court reaffirmed that in order to defeat an application for summary judgment, a respondent must set out a bona fide defence with sufficient clarity and completeness to enable the court to decide whether the opposing affidavit discloses facts which, if proved at the trial, would entitle the respondent to succeed.

Furthermore, the courts’ position on summary judgments was stated in an earlier judgment in Hales v Daverick Investments (Private) Limited 1998 (2) ZLR at 235 E-F that;

“Where a plaintiff applies for summary judgment against a defendant and the defendant raises a defence, the onus is on the defendant to satisfy the court that he has a good prima facie defence.”

Additionally, it was stated by Ziyambi JA (as she then was) in Kingstons Ltd v L D Ineson (Pvt) Ltd 2006 (1) ZLR 451 (S) at 458 that;

“Not every defence raised by a defendant will succeed in defeating a plaintiff’s claim for summary judgment. Thus, what the defendant must do is to raise a bona fide defence - a plausible case - with sufficient clarity and completeness to enable the court to determine whether the affidavit discloses a bona fide defence. He must allege facts which, if established, would entitle him to succeed”

The court a quo was persuaded by various correspondence that include letters and emails which confirm an acknowledgement of debt with proposed payment plans. The court a quo concluded that that the defence raised by the appellant was not bona fide.

However the burden upon the appellants is not an onerous one. All that a defendant has to establish in order to succeed in having an application for summary judgment dismissed is that;

there is a mere possibility of his success; or

he has a plausible case; or

there is a triable issue; or

there is a reasonable possibility that an injustice may be done if summary judgment is granted.

Polomo and Smith have maintained that the agreement between the parties was an illegal foreign exchange deal and had nothing to do with the payment of maize.

The particulars of claim by Tillcorp gave no details of how the purchase of maize came about, who was selling maize?, to who?, in what quantities? and for how much?. It remains unexplained, why Tillcorp would pay Polomo in turn for Polomo to pay a third party. Why should Tillcorp use an intermediary to pay a third party when it could pay directly to the third party?

When one looks at the appellants’ defence in the face of the lacuna in Tillcorp’s case, it becomes apparent that there is a triable issue. The appellants’ defence is beyond a mere possibility of success.

The court a quo misdirected itself to conclude that there was no bona fide defence.

The ground of appeal has merit.

b) Whether Or Not The Court A Quo Erred In Pronouncing On Issues That Were Never Put Before It

The appellants argue that the court a quo pronounced itself on issues that were never placed before it. It is further argued that the court a quo created its own issue and made its own decision based on that issue.  It is further argued that the court a quo did not invite the parties to make submissions on that point.

Per contra, Tillcorp is of the view that such submissions are not true and is of the opinion that the court a quo did not relax the in pari delicto rule and that the summary judgment was only granted on the basis of the fact that there was no triable issue. The last point raised by the Tillcorp is that the appellant is appealing against the court's sentiments expressed in orbiter and that such an appeal cannot succeed.

The courts must always determine matters that have been placed before it. It is a grave misdirection if a court pronounces itself on issues that were not placed before it. It has been said in the case of Nzara & Ors v Kashumba N.O and Ors SC 18/18 that:

“The function of a court is to determine disputes placed before it by the parties. It cannot go on a frolic of its own. Where a point of law or a factual issue exercises the court’s mind but has not been raised by the parties or addressed by them either in their pleadings in evidence or in submissions from the bar, the court is at liberty to put the question to the parties and ask them to make submissions on the matter.”

The appellant has raised an argument that the parties never called upon the court a quo to decide on the in pari delictum rule. From the reading of the record the court a quo merely raised the point of the rule and mero motu relaxed it just as was done in the case of Wycliff Matsika v Jumvea Zimbabwe & Anor HH 9/2003.

I agree with the appellants’ argument. The point that was discussed by the court a quo was never raised by any of the parties. If the point exercised the court’s mind, the court a quo ought to have called the parties to make submissions on that point and then decide after hearing the submissions from both parties as was explained in the Nzara case (supra). Ground of appeal has merit and thus ought to be upheld.

c) Whether Or Not The Court A Quo Erred In Dismissing The Exception By David Smith

David Smith raised an exception to the particulars of claim arguing that the summons or particulars of claim do not disclose a cause of action as against him. The exception was opposed by Tillcorp.

The court a quo held that the cause of action is clearly stated and dismissed the exception.

The term “cause of action” was defined in Peebles v Dairiboard (Pvt) Ltd 1999 (1) ZLR 41 (H) at 54E – F wherein the court stated:

“A cause of action is defined by Lord Esher MR in Read v Brown (1888) 22 QB 131 as every fact which it would be necessary for the plaintiff to prove if traversed in order to support his right to the judgment of the court.”

In the Silonda v Nkomo SC 6/22 the court stated that:

“The law on what constitutes a cause of action is settled. A cause of action is simply a factual conspectus, the existence of which entitles one person to obtain from the court a remedy against another person. In other words, it is an entire set of facts upon which the relief sought stands.”

The court a quo rightfully established that there was a cause of action placed before it. It is not disputed that Tillcorp and David Smith acting on behalf of Polomo entered into a verbal agreement and there was an alleged breach of the agreement which brought the matter before the courts.

d) Whether Or Not The Court A Quo Erred In Law In Finding That David Smith Was Personally Liable For The Debts Of Polomo

The general rule at common law is that an agent is not personally liable for his principal’s liabilities under a contract. The principle is amply articulated by F.M. Reynolds in his book Bowstead on Agency 1985 5th when he says at p 434:

“In the absence of other indications, when an agent makes a contract, purporting to act solely on behalf of a disclosed principal, whether named or unnamed, he is not liable to the third party on it. Nor can he sue the third party on it.”

A company is a separate legal persona from its directors. The court a quo erred in law in finding that a person who acts on behalf of a company is personally liable merely by virtue of his representation of the company.

CONCLUSION

The appeal should be allowed. The decision of the court a quo granting the summary judgment ought to be vacated.

DISPOSITION

CASE NO. 1

The appeal be and is hereby allowed with costs.

The judgment of the court a quo is hereby set aside and substituted with the following;

“The application for summary judgment be and is hereby dismissed with costs.”

CASE NO. 2

The appeal against the dismissal of the exception be and is hereby dismissed.

The appeal against the granting of the application for summary judgment be and is hereby allowed with costs.

The judgment of the court a quo is hereby set aside and substituted with the following;

“The application for summary judgment be and is hereby dismissed with costs.”

Manzunzu J: ………………………………………….

Chilimbe J: …………………………………………… Agrees

Samukange Hungwe Attorneys, applicant in case no. 1 and second respondent in case no. 2’s legal practitioners

Mlotshwa Solicitors Legal, first respondent in case no. 1 and case no. 2’s legal practitioners

Warhust Attorneys, second respondent in case no. 1 and applicant in case no. 2’s legal practitioners