Quildriver Investments (Pvt) Ltd t/a Yorwe Regional Contracting v Fabwell Farming (Pvt) Ltd

### Preamble
1
HH 388-25
HCH2100/23
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QUILDRIVER INVESTMENTS (PVT) LTD

T/a YORWE REGIONAL CONTRACTING

versus

FABWELL FARMING (PVT) LTD

HIGH COURT OF ZIMBABWE

TAKUVA J

HARARE; 8 November 2024 and 2 July 2025

Civil Trial

P Kadani, for plaintiff

Adv T Zuwara, for defendant

TAKUVA J:	Plaintiff issued summons against Defendant claiming:

Payment of the sum of USD$ 80 925-00 (eighty thousand nine hundred and twenty-five united states dollars), or the equivalent in local currency at the prevailing official rate on the date of payment.

Interest there on at the agreed rate of 1% per month, compounded monthly, calculated from 1 January 2022 to date of payment in full.

Costs of suit on Attorney and Client Scale.

BACKGROUND FACTS

Plaintiff is a company duly incorporated in terms of the laws of Zimbabwe.  Defendant is also a duly incorporated company in terms of the laws of Zimbabwe.  On or about 30 August 2021, the plaintiff and defendant entered into an agreement in terms of which the Defendant agreed to use the Plaintiff’s farming equipment at its New Dennington Farm, Norton for ripping 400 hectares, discing 600 hectares and planting 200 hectares of maize.

The agreed terms of payment of services provided by the Plaintiff were USD$90-00 for ripping per hectare, USD$55.00for discing per hectare, USD$65-00 for planting maize per hectare and USD $6000-00 for transportation of the Plaintiff’s three tractors to and from the Defendants’ farm.  Also, the Defendant agreed to pay interest at a rate of 1% per month, and that should the contract fees not be settled by the 1 July 2022, the Defendant would immediately sell as many cattle as necessary from its farm to settle any outstanding amounts due to the plaintiff.

As agreed, plaintiff carried out the required services and in December 2021, the plaintiff’s equipment was used at Defendant’s farm to rip 453.50 hectares, disc 131.50 hectares, and plant 1303.50 hectares maize.  Thereafter, the Plaintiff raised an invoice in the sum of USD$203 025-00 for its services, which invoice was acknowledged as correct by the Defendant.  At the Defendant’s specific instance in or around May 2022, the Defendant extended the services under the contract to include harvesting (combining) of the Defendant’s soya beans and maize crops.  Plaintiff provided the services and an invoice in the sum of USD$87 900 was raised on 30 July 2022.  Between 30 march 2022 and 1 November 2022, the Defendant paid a total of USD$ 210 000-00 towards settlement of the Plaintiff’s invoices, leaving an outstanding balance of USD$80 925-00, which sum the Defendant has failed and or refused to pay despite demand.

In its plea to the Plaintiff’s claim Defendant accepted that on 30 August 2021 it mandated plaintiff to rip 400 hectares at a rate of USD90-00 per hectare amounting to US $36 000-00, discing 600 hectares at a rate of USD 55 per hectare amounting to USD 33 000-00, plant maize on 700hectares at USD 65-00 per hectare amounting to USD 45 500.  Defendant admitted that an amount of US 6000 was agreed upon as the cost of moving tractors to and from Defendant’s farm. Thus, bringing the ground total of the contract to USD 120 500-00.  It was however denied that plaintiff was contracted to rip 453 hectares, disc 131,50 hectares and plant 1303,50 hectares.  Defendant averred that the interest at the rate of 1% per month is unlawful.

Further Defendants denied that it was ever lawfully indebted to Plaintiff in the sum of USD 203 205 as parties contracted for USD 120 500.  Defendant prayed for the dismissal of the Plaintiff’s claim with costs on attorney client scale.

A joint Pre-Trial Conference minute shows the following as agreed issues for trial;

“1. 	Whether the Defendant is indebted to the Plaintiff in the sum of USD$ 80 925-00?

2.	If yes whether the Defendant is liable to pay the plaintiff interest there on at a rate of 1% per month from 1 January 2022 to date of payment in full?”

At the commencement of the trial on 18 June 2024, the Defendant invited the Court to employ its power under R 52(7).  The parties filed a statement of agreed facts together with two questions of law as follows:

Statement of agreed facts

That the cattle sure Contract dated 30 August 2021 was signed by the Deft, Luka Fabris and is addressed to Alister York.

That the Plaintiff’s farming equipment was used at the Defendant’s farm in pursuance of the Cattle surety contract.

That on 31 January 2022, the plaintiff’s director, Alister York sent a statement of account bearing the company name to the Defendant’s Director.

That Alister York is the Plaintiff’s Managing Director and Ashley York is the Plaintiff’s Director.

QUESTIONS OF LAW

The question of law are as follows;

Whether the Plaintiff, as cited in the summons can at law sue on the Cattle Surety Contract dated 30 August 2021?

Whether interest at the rate of 1% per month compounded monthly from 1 January 2022 to date of payment in full is lawful?”

As regards the parties submissions it was agreed inter-alia that the Court and the parties shall be at liberty to refer to each other’s pleadings and documents the court shall draw from such factsand documents stated in the special case, any inference, whether of fact or law which might have been drawn there from if proved at trial in accordance with R 52(6) of the High Court Rules.

DEFENDANT’S SUBMISSIONS.

THE FIRST QUESTION OF LAW- IS. is PLAINTIFF NON-SUITED

It is defendant’s contention that in terms of the law, parties who are not privy to a contract cannot sue or be sued on it.  Reliance was placed on R.H Christie THE LAW OF CONTRACT IN SOUTH AFRICA 5TH EDITION (at page 260) where this principle was put as

“The basic idea of contract being that people must be bound by the contracts they make with each other, it would obviously be ridiculous if total strangers could sue or be sued on contracts which they are in no way connected.  The doctrine which prevents this ridiculous situation arising is usually known as the doctrine of privity of contract.”

Further, defendant argued that in casu, the Plaintiff is a stranger to the Cattle Surety Contract on which it predicates its claim.  In other words, the Plaintiff does not have locus standi to sue on the basis of a contract of which it was not a named party.  Therefore, the operation of the doctrine of privity of contract leaves the Plaintiff non-suited.  The Plaintiff an incorporated entity is not mentioned at all in the Cattle Surety Contract on which it sues.

It was also argued that the fact that Alister York is one of the Plaintiff’s directors does not make the said Plaintiff privy to the Cattle Surety Contract, since a company is a separate legal person as from its directors.  As Plaintiff was not mentioned in the Cattle Surety Contract, it means that such entity was at best a subcontractor.  The contract speaks for itself and the Plaintiff is not part of such contractual arrangements and the obligations and attendant right to sue was expressly given to Alister York and not the Plaintiff.

Defendant submitted that parties in casu cannot depart from the Cattle Surety Contract because of the facta servanda sunt principle described in Commercial Grain Producers Association v Tobacco Sales Ltd 1982 (2) ZLR 154(SC) as the age-old contractual doctrine that agreements solemnly made should be honoured and enforced”.  See also UNION GOVT H v VIANINI FERRO-CONCRETE PIPES (PVT)LTD 1941(AD) 43.

Defendant also challenged the Plaintiff’s interest claim as incongruent with law and logic.  The submission is that the contract states that interest is chargeable on a statement produced each month.  Yet Plaintiff’s interest claim is being made on invoices not statements.  Therefore, the Plaintiff’s claim is divorced from the written document it seeks to effectuate.

Further, Plaintiff seeks to claim interest from 1 January 2022 when the first invoice was only sent on 31 January 2022.  Plaintiff is alleged to seek to claim interest from even before the alleged debt became due.  The Plaintiff is claiming compounded interest for months that the Defendant was paying the indebtedness It is finally submitted that the interest is being claimed at a usurious rate of 1% per month compounded which will see the Defendant pay 12% compounded interest per annum.

PLAINTIFF’S CASE

Plaintiff considers this matter underserving of determination by way of a stated case in that the dispute between the parties is factual.  As a result, the matter presents an evidentiary as opposed to a legal burden of proof.  The Plaintiff’s factual synopsis of the claim is admitted in the Defendant’s plea and summary of evidence. The defendant admits that it entered into an agreement with the Plaintiff but places in issue, the quantum and extent of the works.  Consequently, once the Plaintiff proves the quantum and extent, if is entitled to judgement as prayed for.

According to the Plaintiff, an admission made in the plea and again in the summary of evidence is now-sought to be surreptitiously withdrawn via a stated case that seeks to advance one “ Strawman’s argument after the other”. It is trite that parties are bound by formal admissions and cannot take positions in evidence or in their submissions that are the antithesis of what they have admitted.

THE DOCUMENT DATED 30 AUGUST 2021

Plaintiff submitted that the document dated 30 August 2021 is a “letter not a contract.”  Its contents prove this.  The defendant having written the letter cannot benefit from having that letter adversely interpreted against the Plaintiff.  In any event for the letter to constitute a contract, it must evidence ex facie, proof of an offer and acceptance of that offer.  Further it must be signed by both parties not just one.

INTEREST CHARGED

The plaintiff’s submission is that interest rates cannot be   unlawful merely because a party says so.  A thing can only be illegal if it violates a statute, a norm of our common law and or morality.

ANALYSIS

At the heart of this case is whether or not it can be determined by way of a stated case? Defendant averred that it can, while Plaintiff argued otherwise.  In advancing its argument, Defendant submitted that the Cattle Surety Contract is indeed a contract as its name suggests.  Therefore, so that argument went if it is a contract, then the Plaintiff is non-suited by the doctrine of privity of contract in that while Plaintiff Director one Alister York is mentioned in that document, the Plaintiff is not.

In my view, the crucial question is what is the legal status of the Cattle Surety Contract?  In order to answer this question, it is necessary to quote the document in extenso. The document is marked Annexure A and occurs on page 20 of the record and it states:

“30 August 2021

ALISTER YORK

CATTLE SURETY FOR CONTRACT RIPPING DESCING AND PLANTING AT NEW DONNINGTON ESTATE NORTON.

This serves to confirm that, Alister York will be using his equipment to carry out the following proposed work for FABWELL FARMING at NEWDONNINGTON FARM in NORTON commencing September 2021:

Ripping   400 Ha @ USD 90 per Ha = USD 36 000

DISCING 600Ha @ USD 55 per Ha= USD 33 000

PLANTING MAIZE ON 700 Ha @ USD 65 per Ha =USD 45 500

MOVING THREE TRACTORS TO AND FROM NEWDONNINGTON ESTIMATED @ USD 600

THE ABOVE RATES ARE DRY RATES AND FABWELL FARMING WILL PROVIDE DIESEL TO THE TRACTORS;

A statement is to be updated at the end of each month with contract fees captured for work completed and an interest of 1% per month will be added to the full statement balance at the end of each.

SHOULD THE FULL STATEMENT BALANCE NOT BE SETTLED BY THE 1 JULY 2022, FABWELL FARMING WILL IMMEDIATELY SELL AS MANY CATTLE AS NECESSARY FROM THEIR HERD AT NEW DONNINGTON TO SETTLE THE DEBT.

Yours faithfully.

LUKA FABRUS

DIRECTOR, 0774 000 000 .....................”

What is to be noted are the following features;

The letter is dated 30 August 2021, addressed to Alister York and signed by LUKA FABRUS Defendant’s Director

The document is not signed by Plaintiff’s representative.

The document is not signed by Alister York, Plaintiff Director.

The document bears Defendant’s letter Head together with its physical address, phone numbers and an e-mail address.

The formation of a valid contract consists of an offer and an acceptance.  It is also trite that a written contract must be signed by both parties not by one party only.  In case, the document dated 30 August is a simple letter written by Defendants’ Director and addressed to the Plaintiff’s Director.  Certainly, it lacks the essential requisites of a valid contract.  Therefore, I find that it is not a contract.  In this regard, the legal principles and case authorities cited and relied on by Defendant’s Counsel in respect of the doctrine of privity of contract become irrelevant.

In any event Defendant’s reliance on this letter for the proposition that the Plaintiff is nonsuited has no merit in that the Defendant having written the letter cannot benefit from having that letter adversely interpreted against the Plaintiff.  In OLD MUTUAL PROPERTY INVESTMENTS v METRO INTERNATIONAL (PVT) LTD& ANOR 2006(1) 442 (H) at p 447 at  par C, Patel J (as he then was) stated the following; “As a rule, where there is some ambiguity in the use of a word or choice of expression which leaves the court unable to decide which of the two meanings is correct, the word or expression ought to be construed against the party who was responsible for drafting the document in question.  See CAIRNS (Pvt) Ltd v PLYADON Co Ltd 1948(3) SA 99 (A) at 123; COMMERCIAL UNION FIRE MARINE & GENERAL INSURANCE Co. Ltd v FAWCETT SECURITY ORGANISATION Byo (Pvt) Ltd 1985 (2) ZLR (S) PRESBYTERIAN CHURCH OF SOUTHERN AFRICA v SHIELD OF ZIMBABWE INSURANCE Co Ltd 1991(2) ZLR 261(H)

In casu, the letter was authorised and signed by the Defendant’s Managing Director and confirms contracting the Plaintiff.  The letter is addressed to the director of the Plaintiff.  The court should adopt the literal rule in interpreting the words that appear on the face of the letter.  The duty of the court is to avoid an interpretation that is repugnant in its effect.  See CHEGUTU MUNICIPALITY v MANYORA 1996 (1) ZLR 262 (SC) at 264 D-E, where the S/C said;

“There is no magic about interpretation, words must be taken in their context.  The grammatical and ordinary sense of the words is to be adhered to as Lord WENS LE DALE said in GREY v PEARON/ 1857 91857) 10 ER 1216 at 1234,”

Unless that would lead to some absurdity, or some repugnance or inconsistency with the rest of the instrument, in which case the grammatical and ordinary sense of the words may be modified so as to avoid that absurdity and inconsistency, but no further”.

The Defendant’s argument that because the Plaintiff’s director is the one mentioned by name in the letter dated 30 August 2021, the Plaintiff is nonsuited to sue, is to tally at variance with its admission in the plea and in the summary of evidence.  In ZIMBABWE REVENUE AUTHORITY v STANBIC BANK ZIMBABWE Ltd SC 13/19 at page 14 Mavangira JA said;

“ With this as its pronounced stance, the respondent could not, without abandoning its argument, move for relief which was predicated on an exact antithesis of its given position.”

In the present matter, the Defendant has formally admitted in its plea and summary of evidence that it engaged the Plaintiff for the purposes stated in the declaration.  See para 1 of the Defendant’s summary which says, the Defendant’s witness admits that:

“He is the Managing Director of Defendant and confirms contracting the Plaintiff to rip....”.  note that the witness does not say he does not know the Plaintiff or that he is only aware of the director in his personal capacity.  Therefore, to state that the Defendant has no relationship with the Plaintiff is a recent fabrication. Also, the admission does not end with just confirmation of the agreement between Plaintiff and Defendant, but also admits that the Plaintiff’s equipment was used at its farm.

Plaintiff addressed an e-mail to the Defendant’s Director and attached a statement bearing the name of the Plaintiff and amounts owed to it.  The Defendant’s director’s response was that the contents of that statement were correct.  See pages 28 and 33 of the record.  An admission made in the plea and again in the summary of evidence is now-sought to be withdrawn via a stated case that seeks to advance one weak argument after the other.  The fate of an admission is that the parties are bound by formal admissions and cannot take positions in evidence or in their submission that are the antithesis of what they have admitted.

In Dengu and Another v EASTERN & SOUTHEN AFRICAN TRADE and DEVELOPMENT BANK t/a PTA BANK AND 2 ORS SC 02/24 24 P 16-17, the court held that:

“In the recent case of MANYENGA v PETROZIM (Pvt) Ltd SC 40/23, this court went to great lengths in articulating the effect of an admission by a party.  It held that;

“32.  The effect of an admission has been held to be the following in the case of POTATO SEED PRODUCTION (PROPRIETARY) Ltd v PRINCE WOOD ENTERPRISES (Pvt) Ltd & ORS HH 45-17 at p.4

“In deed the effect of an admission is settled law.  Once made it binds its maker with the attendant consequences see RETTEX HOLDINGS P/L v KENGOR MANANGEMENT SERVICES P/L HH 236/15.”

The consequences of making an admission which is not withdrawn is that it will not be necessary to prove the admitted acts.  ADIER v ELLIOT 1988(2) ZLR 283 (S) at 288 C.  In addition, this court in the case of MASHOKO v MASHOKO & ORS SC 114-22 held that:

“The Law on admissions in pleadings and indeed in evidence is also settled.  A party to civil proceedings may not, without the leave of the court withdraw an admission made nor may it lead evidence to contradict any admission the party would have made.  By equal measure, a party is not permitted to attempt to disprove admissions made.”

In the present matter, the Defendant is seeking to withdraw the admission it made through the back door of a stated case.  It is critical that standards of truthfulness and honesty be observed by litigants who seek relief.  The question that lingers in the court’s mind is at what stage after the summary of evidence was settled, did the defendant experience a charge of heart and why?

The court in DD Transport v ABBOTT 1998(2) ZLR 92(SC) at pages 97G-98B, said

“But this admission in the plea is of the greatest importance, for it is what WIGMORE”

(Para (s) 2588-2590) calls a judicial admission (of the confessio judicialis of Voet (42.2.6) which is conclusive, rendering it unnecessary for the party to adduce evidence to prove the admitted fact and in competent for the party making it to adduce evidence to contradict it (see also Pulps on 7 ed p 18) WIGMORE loc cit, speaking of judicial admissions in general, refers to the court’s discretion to relieve a party from the consequences of an admission made in error.  It does not seem to me that such a discretion could be exercised, in a case where the admission has been made in a pleading in any other way than by granting an amendment of that pleading.”

In my view, since the Defendant’s written submissions seek to argue against an admission formally made, they are incompetent in that they are barred by law.  I find that the reason why the defendant wants the court to proceed by way of a stated case is so as to avoid a trial where the court will be entitled to examine the whole case including all documentary evidence before concluding what the terms of the relationship between the parties are.

In ASHANTI GOLDFIELDS ZIMBABWE Ltd v MDALA SC 60/17.  The Supreme Court quoted with approval the case of HOFFMANN & CARVALHO v MINISTER OF AGRICULTURE 1947 (2) SA 855 (J) at 860 where Price J stated that;

“Where parties intend to conclude a contract, think they have concluded a contract and proceed to act as if the contract were binding and complete, I think the court ought rather to try to help the parties towards what they both intended rather than obstruct them by legal subtleties and assist one of the parties to escape the consequences of all that he has done and all that he intended.” (emphasis added).

As regards the 1st question submitted for determination.  I find as follows;

The document dated 30 August 2021 is a letter authored by the defendant’s director.  It is not by any stretch of imagination a contract, hence no question of standing arises from it.

The Defendant has admitted entering into an agreement with the Plaintiff twice, once in the plea and again in the summary of evidence.

The only issue for determination in evidence is the extent nature and cost of works done by the Plaintiff using its equipment.

The statement bearing what is due to the plaintiff was admitted as correct by the Defendant’s director

The arguments in respect of standing, and privity of contract now being submitted by the Defendant are a result of its characterization of the letter dated 30 august 2021.  While it is accepted that these principles are good law, they unfortunately do not apply in casu.

In our law, the principle of pacta sant servanda, or privity of contract has never been applied to a letter unilaterally written by a party.

RATE OF INTEREST CHARGED

As regards interest charged the Defendant claims that the interest is unlawful and illegal.  In AFRICAN DAWN PROPERTY FINANCE 2(PTY)Ltd v DREAMS TRAVEL & TOURS CC &ORS; 2011(3) SA 511 (SCA) at para 26 the following seminal passage state that;

“[26] At common law there is no fixed customary rate that can be described as a standard rate beyond which it can be said that a transaction becomes usurious.  Rates of interest vary with the nature of the financial transaction, the social and economic standing of the parties, the risk and so on.

In the absence of any proof or allegation to the contrary it must be assumed, I would imagine, the loan was worth the rate of interest fixed to the borrower.  One looks in vain for a declaration by the court that at common law any particular rate of interest is the only legal rate.  For the rate of interest levied depends upon various factors, not least the risk to the lender, which in turn is usually dependent upon whether the creditor is well or ill secured.  And, it can hardly be disputed that in as much as profit varies and fluctuates, so too must interest which by its very nature is representative of profit.  I thus hesitate to say that a court by a mere decision or a series of mere decisions can authoritatively declare what shall be the rate of interest which without more upon being exceeded shall amount to usuary.  To declare to be usurious a bargained interest beyond a certain rate may well amount to court legislating by judicial decree.” (Empasis added)

See also MERRY v NATAL SOCIETY OF ACCOUNTANTS 1937 AD 331 where the test for setting aside of an interest rate was stated thus;

“In South Africa the common law has always been that in order to render a transaction usurious, it must be shown that it is tainted with oppression or extortion or something akin to frand, (DYASON v RUTHVEN (3 Seale 282), REUTER v YATES (1904, T CO 55) SOUTH AFRICAN SECURITIES v GREYLING (1911,T.P.D 352) (my emphasis)

The question whether an interest rate is usurious, unlawful or morally objectionable is one that requires evidence.  Consequently, in casu this question can not be answered as the court is unable to authoritatively categorise the rate as usurious.

DISPOSITION

The decision by the parties to refer this matter to Court by way of a special case is incompetent and is set aside.

The matter is referred to trial for a determination of the issues proposed in the joint pretrial conference minute dated 13 September 2023.

The costs of the special case shall stand over for determination of the trial.

Takuva J: ....................................................

Atherstore and Cook, plaintiff’s legal practitioners

Mambosasa Legal Practitioners, defendants legal practitioners