Zimbabwe Consolidated Diamond Company (Private) Limited v Adlecraft Investments (Private) Limited

### Preamble
Judgment No. SC 69/25
1
Civil Appeal No. R-SC 201/23
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REPORTABLE	(69)

ZIMBABWE     CONSOLIDATED     DIAMOND     COMPANY     (PRIVATE) LIMITED

v

ADLECRAFT     INVESTMENTS     (PRIVATE)     LIMITED

SUPREME COURT OF ZIMBABWE

UCHENA JA, CHIWESHE  JA & MUSAKWA JA

HARARE: 23 JANUARY 2025 & 8 AUGUST 2025

T. Magwaliba, for the appellant

L. Uriri & E. Mubaiwa, for the respondent

CHIWESHE JA:	This is an appeal against the whole judgment of the High Court (the court a quo) sitting at Harare dated 15 March 2023 wherein the court a quo granted the respondent`s claim against the appellant in the sum of US $10 718 373.51 plus interest thereon at the rate of 2% per month calculated from the date of judgment up to the date of full payment.  The court a quo also ordered that the appellant pays costs on the attorney and client scale.

Aggrieved by the decision of the court a quo, the appellant noted the present appeal.  It did so on 4 April 2023.  On 6 April 2023 the respondent filed an urgent application for leave to execute the judgment of the court a quo pending appeal.  The application was granted on 5 May 2023.  On 12 May 2023, the Sheriff attached appellant`s various assets.  At that point the parties agreed that execution of the judgment of the court a quo be stayed on condition that appellant pays to the respondent the sum of US $1.5 million.  On 15 May 2023 and on 24 May 2023, respectively, the appellant paid the sums of US $ 1.5 million and US$679 103.98.

At the hearing of the appeal, the respondent raised a preliminary point to the effect that the appellant had negated its right of appeal by partly paying the judgment debt arising from the judgment being appealed against.  The court upheld the preliminary point and disposed of the appeal on that basis.  Aggrieved by that outcome, the appellant approached the Constitutional Court seeking an order for direct access on the grounds that this Court violated its right to a fair hearing by not delving into the merits of the appeal.  The Constitutional Court allowed the application and remitted the matter to this Court for a hearing “de novo”.  As a result, the parties are once again before this Court.

THE FACTS

On 8 February 2016, the parties entered into a written agreement in terms of which the respondent was to render contract mining services to the appellant.  The appellant was required to pay for such services on the basis of monthly invoices.  The initial duration of the agreement was to be twelve months from the date of signature subject to renewal upon satisfactory performance.  After the expiry of twelve months, the respondent continued to render services pending negotiations as to the contract rate to be applied in the renewed agreement.  The parties were unable to agree on the new contract rates and, consequently, the appellant terminated the agreement in April 2020.

On 8 October 2019, the appellant wrote to the respondent acknowledging the debt of US $4 344 965.67 arising from services rendered in terms of the agreement.  In a letter dated 14 November 2019, the appellant further acknowledged the outstanding balance which was in excess of ZWL$ 5 million.  In another letter dated 13 April 2021, the appellant agreed to pay the sum of US$1 979 590.65 based on the contract rate.  In a letter of demand dated 14 December 2022, the respondent acknowledged that the sum of US $ 1 300 486.67 had been paid, leaving a balance of US$ 679 103.98.  The letter demanded that the appellant pays the outstanding balance within 72 hours.  On 16 December 2022, the respondent dispatched another letter advising that the outstanding balance as at 31 December 2018 was in the sum of US $4 344 965.67, excluding interest.  When interest was factored in, the balance due would be US$ 13 824 163.22 as at 31 December 2022.

PROCEEDINGS IN THE COURT A QUO

On 2 February 2023, the respondent filed an urgent court application in the court           a quo for an order directing the appellant to pay the sum of US $13 824 163.22 being unpaid fees arising from the contract services agreement.  The appellant raised a number of preliminary points.  It argued, firstly, that the matter was not urgent as the debt had been outstanding for a number of years.  The respondent argued that the matter was urgent as it was on the brink of insolvency.  The court a quo ruled that commercial urgency was a valid ground upon which to seek the urgent hearing of a matter.  Relying on the decision in Silver`s Trucks & Anor v Director of Customs and Excise 1999 (1) ZLR 490 (H), the court a quo ruled that the matter was urgent and dismissed the preliminary point.  In the second preliminary point, the appellant submitted that the claim had prescribed, as the agreement giving rise to it was entered into in 2016, a period of more than three years.  It further argued that even for services rendered after 2016, the claims prescribed if the debts arose more than three years prior to the service of the court application.  On the other hand, the respondent submitted that the appellant had expressly and or tacitly acknowledged its indebtedness and that such acknowledgment interrupted the running of the period of prescription.  The court a quo found that in terms of s 18 (1) of the Prescription Act [Chapter 8:11] the running of prescription shall be interrupted by an express or tacit acknowledgement of liability by the debtor and that “in casu”, the letter dated 13 April 2021 was a clear and unequivocal acknowledgment of liability.  It accordingly dismissed the preliminary point.  The third preliminary point raised by the appellant was to the effect that there were material disputes of fact which could not be resolved without hearing “viva voce” evidence.  The court a quo ruled that the only issue which the affidavits could not establish with certainty, was the exact amount that remained outstanding.  It held that it had a discretion as to the fate of an application riddled with material disputes of fact.  It directed that evidence be led, through witnesses, for it to be able to determine the exact amounts owed by the appellant.  The parties led evidence from one witness each.

On the merits, the appellant conceded that it owed the respondent the sum of          US $ 4 344 965.67 as at 31 December 2018 which was converted to RTGS due to the enactment of Statutory Instrument 33 of 2019.  It however argued that it never paid interest before, and for that reason, it was not obliged to do so now.  It submitted that the amount owing should be reduced by removing the amount representing interest.  It asserted that it paid in full the amount of US $4 369 965.33 in separate instalments on 7 and 20 August 2019 which exceeded the amount it owed.  It argued that the amount it now owed was US $ 679 103.98.

The court a quo found that the appellant claimed to have paid the sum of                                     US $4 344 965.67 by 21 August 2019 but in a letter dated 8 October 2019, the appellant acknowledged that it still owed the respondent that same amount.  It further found that in a letter dated 14 November 2019, the appellant had acknowledged owing the respondent over                  US $ 5 million, contrary to its assertions that it had paid off the debt by 21 August 2019.  The court a quo held that the evidence showed that as at 28 April 2020, the amount outstanding was US $6 259 127 .55, excluding interest.  If interest were factored in, the outstanding amount would rise to US $13 824 163.22 and that the amount of US $679 103.98 that the appellant admitted owing was only part of the US $13 824 163.22 claimed by the respondent.  The court a quo further held that since the interest exceeded the principal amount, interest ceased to accrue upon reaching US $ 6 009 430.00 in accordance with the “in duplum” rule.  This would reduce the total claim to US $12 018 860.18.  However, the respondent subsequently amended its claim to read US $ 10 712 860.80 to comply with the “in duplum” rule.

Regarding the currency of the debt, the court a quo determined that the agreement between the parties expressly denominated the rates in United State dollars.  Since clause 7.1 of the agreement specified that the contract represented the entire agreement between the parties, there was no legal barrier precluding performance in the agreed currency.  Accordingly, the court a quo concluded that the applicable currency was the United States dollar.

Regarding costs, the court a quo noted that clause 15.2 of the agreement provided that a party that has approached a court to enforce its rights is entitled to recover its costs on the attorney-client scale.  Further, it noted that the refusal by the appellant to meet its contractual obligations was in itself so reprehensible as to justify a special order of costs.

In the result, the court a quo granted the urgent court application, directing the appellant to pay the sum of US $10 718 373.51 plus costs on the attorney client-scale.  The appellant appeals that decision on the following grounds:

“GROUNDS OF APPEAL

The High Court grossly erred in assuming jurisdiction where the urgent court application filed on behalf of the respondent was invalid for want of compliance with r 59 (6) of the High Court Rules, 2021 in that it called upon the appellant to file opposing papers within a period of two (2) days with no court order having been obtained to permit the limited period to file opposing papers.

The High Court further grossly erred in finding that commercial urgency had been established by the respondent when it was apparent that the debt sued for arose from about 2018 and there was no basis for concluding that the alleged debt was the cause of the alleged insolvency of the respondent.

The High Court further grossly erred in dismissing the point in limine that there were material disputes of fact which could not be resolved on the papers and at the same time, without any application from any party, directing that oral evidence should be led to resolve material disputes of fact.

The High Court further grossly erred in finding that the respondent was owed any amount other than the acknowledged sum of US $679 103.98 given the payment of RGTS $4 469 965.33 to the respondent in August 2019.

The High Court further grossly erred in finding that the debt which was sued for, other than the admitted amount, had not been extinguished on account of extinctive prescription it having been due from as far back as the year 2018.

The High Court further grossly erred in awarding costs against the appellant on an attorney-client scale where there was no justification for such an order.”

RELIEF SOUGHT

“The present appeal be allowed with costs and the judgment of the High Court be set aside and substituted with the following:

‘The application be and is hereby dismissed with costs.’”

ISSUES FOR DETERMINATION

The grounds of appeal raise the following issues for determination:

Whether or not the debt had prescribed.

Whether or not commercial urgency had been established and whether or not the application was valid.

Whether or not there were material disputes of fact which could not be resolved without hearing evidence “viva voce.”

Whether or not the respondent was owed more than the acknowledged sum of US                            $ 679 103.98.

PROCEEDINGS BEFORE THIS COURT

At the hearing of the appeal, counsel for the respondent raised two preliminary objections.  Firstly, he contended that the notice of appeal was fatally defective for failing to comply with r 37 (1) (c) and 37 (1) (e) of the Supreme Court Rules, 2018 (the Rules).  Relying on Sambaza v Al Shams Global BVI Limited SC 03/18, counsel submitted that the relief sought was incompetent as it provided for remedies that the court could not grant.  He also submitted that the first, second and third grounds of appeal were unrelated to the indulgence sought.  Further, counsel submitted that the appellant could not claim to appeal against the whole judgment of the court a quo while conceding liability for the sum of USD 679 103-98.  Counsel raised another preliminary objection to the effect that the first, second and third grounds of appeal were inconsequential, as the law prohibits appeals against findings of urgency.  Accordingly, counsel prayed for the matter to be struck off the roll, or, alternatively, that the first, second and third grounds of appeal be struck out.

On the other hand, counsel for the appellant submitted that respondent’s preliminary objections were improperly raised without notice in terms of r 51 of the Rules.  He contended that counsel for the respondent could have raised these issues at the initial hearing before this Court.  Relying on Ndebele v Bhunu SC 34/10, counsel argued that the relief sought is not rendered ineffective merely because it cannot be granted in the precise terms sought.  He contended that even if the sum was conceded, it did not negate the fact that the entire judgment debt was being appealed against because the entire judgment irked the appellant.  He did concede, however, that urgency alone cannot sustain an appeal and that he was prepared to abandon the first, second and third grounds of appeal.

In reply, counsel for the respondent submitted that the preliminary objections raised were points of law and r 51 of the Rules did not preclude the respondent from raising them in the absence of a formal notice.

DECISION OF THIS COURT ON THE PRELIMINARY POINTS RAISED BY THE RESPONDENT

In light of the concessions made by the appellant on the appealability of the question of urgency, and, in light of its abandonment of the first, second and third grounds of appeal, the only preliminary issues left to be determined are:

Whether the notice of appeal was fatally defective for failure to comply with r 37 (1) (c), namely, whether the appeal should have been against the whole or only part of the judgment of the court a quo as appellant was conceding liability for the sum of             USD 679 103-98.

There is no merit in this preliminary issue.  Paragraph 1 (a) of the order of the court a quo requires the appellant to pay the global sum of USD 10 718 373-51.  There is no separate order dealing specifically with the acknowledged sum of USD 679 103-98.

On the contrary, the court a quo observes, at p 9 of its judgment as follows:

“The sum of USD 679 103-98 which was admitted to be due to the applicant by the respondent is part of the USD 13 824 163-22 which forms the claim in casu.”

Strategically, therefore, it was prudent for the appellant to appeal against the whole judgment while tactically admitting liability in the sum of USD 679 103-98.  The appellant’s stance in this regard does not render the notice of appeal fatally defective

For these reasons, the preliminary objection must be dismissed.

Whether the notice of appeal was fatally defective for failure to comply with r 37 (1) (e), namely, whether the relief sought is fatally defective.

The relief sought by the appellant in the notice of appeal reads as follows:

“1. The present appeal is allowed with costs and the judgment of the High Court be set aside and substituted with the following:

‘The application be and is hereby dismissed with costs.’”

On the face of it, there is nothing defective in a relief that calls for the success of the appeal with costs, the setting aside of the judgment of the court a quo and its substitution with an order dismissing the application with costs. Though the relief presently sought is inelegantly formatted, that alone cannot render it fatally defective.

As already observed, the court a quo gave a global order in terms of the amount to be paid by the appellant.  The order did not separate the amount acknowledged as owing by the appellant from the amount disputed by the appellant as owing.  This fact renders it difficult for the appellant to formulate a relief in which a distinction is made between the sums conceded and the sums outstanding.  Under the circumstances, the relief sought is prudently crafted.  The objection stands to be dismissed.

DISPOSITION

In our view, the objections raised by the respondent have no merit.  They ought to be dismissed.  Costs shall be in the cause.

Accordingly, it is ordered as follows:

The preliminary objections with regards non-compliance with r 37 (1) (c) and r 37 (1) (e) of the Supreme Court Rules, 2018, be and are hereby dismissed.

It is directed that the appeal be heard on the merits.

Costs shall be in the cause.

UCHENA JA		: 	I agree

MUSAKWA JA	:	I agree

Sawyer & Mkushi, appellant`s legal practitioners.

Tarugarira Sande Attorneys, respondent`s legal practitioners.