MDC-T case thrown back to High Court

in which the party is being sued for close to R5 million for non-payment of the 2008 general election campaign materials.

Cabat Trade and Finance and Security Mills, who were the plaintiffs in the High Court case, had issued summons against MDC-T demanding the payment of R4 965 723 including VAT.

Bulawayo High Court judge Justice Lawrence Kamocha on 5 January this year, dismissed their claim after MDC-T had raised a special plea that the contract was illegal and unenforceable.

Cabat Trade and Finance and Security Mills then appealed against Justice Kamocha’s decision and Deputy Chief Justice Luke Malaba sitting with Justices Anne-Mary Gowora and Yunus Omerjee yesterday allowed the appeal to succeed with costs on the grounds that the court aquo misdirected itself in arriving at the decision that it did.

 

DCJ Malaba, who handed down the judgment, dismissed with costs the special plea in bar and remitted the matter back to the court aquo where the question of whether the parties had entered into a contract or not would be argued.

It was the court’s ruling that the special plea was based on speculation and DCJ Malaba noted that Advocate Lewis Uriri for the MDC-T acknowledged that the court aquo misdirected itself by listening to him and not hearing evidence.

After receiving the plaintiffs’ claims, the MDC-T filed its special plea in bar of the claim. It denied that it was obliged to the plaintiffs either in contract or in delict.

MDC-T stated that it was a political association with its headquarters in Zimbabwe and was accordingly a Zimbabwean based association.

It stated that the contract alleged by the plaintiffs would have been tainted with illegality for want of compliance with Exchange Control Act [Chapter 22:05] as read with the Exchange Control Regulations, 1966 contained in Statutory Instrument 109 of 1996, as the alleged contract would have required payment to be made by the MDC-T to Cabat Trade and Finance outside Zimbabwe.

They said the MDC-T did not have any free funds nor did it then hold any money in a foreign currency account and it was contended that the alleged contract was void for illegality and the plaintiffs’ claims ex contracti should be dismissed.

Justice Kamocha had ruled that the             MDC-T could not be prevented from relying on the illegality or unenforceability as a defence, no matter how unfair that may be to the plaintiffs.

“In the light of the foregoing, I would allow the plea in bar, which disposes of the case.  The need to deal with defendant’s exception, the plaintiffs’ exception to the defendant’s exception and plaintiffs’ application to strike out does not arise.

“In the result it is ordered that the plaintiffs’ main and alternative claims be and are hereby dismissed with costs on the ordinary scale,” ruled Justice Kamocha.

The salient facts of the case are that the MDC-T represented by Mr Eddie Cross and Mr Simon Spooner who, authorised by Mr Cross, entered into an oral agreement with  Security Mills, represented by Mr Laurence Zlattner, in terms whereof, the textile company undertook, at the MDC-T’s behest, to manufacture 200 000 garments, commonly known as “T-shirts” and as many head scarves, commonly known as “doeks or bandanas” as could be manufactured from the material on hand, but at least 30 000, which Cabat Trade and Finance sold to the MDC-T to use in its then forthcoming 2008 election campaign, for the agreed sum of R4 965 723 including VAT.

Given the size of the order, Security Mills agreed to manufacture the total order in batches, to accommodate MDC-T’s express stipulation that the total order be ready for them to use in its then forthcoming election campaign.

By its agreement, the MDC-T became contractually liable to pay Cabat Trade and Finance the contract price in South Africa, and simultaneously incurred contractual liability to Security Mills for the manufacture of the goods.

In accordance, Security Mills duly manufactured the said goods and delivered to the MDC-T goods in batches to the value of R4 672 215,37, including VAT comprising 149 887 articles or approximately 74 percent of the contract goods, payable on tender of delivery and demand, but MDC-T, in breach of its contractual obligation, notwithstanding having accepted delivery, had allegedly refused to pay, despite demand.

The plaintiffs said the MDC-T’s failure to pay for the goods thus far delivered to it constituted a material breach of an express, alternatively, implied term of agreement, entitling them to claim the full contract price ex vendito.

At the MDC-T’s request the Security Mills had withheld delivery of the balance of the manufactured goods, namely 30 000 single jersey T-shirts being finished goods ready for dispatch, to the value of R772 800 and 5 393 single jersey T-shirts, being finished goods ready for dispatch, to the value of R143 885,24 and 7 368 single jersey T-shirts, being goods comprising “work in progress” to the value of R196 578,24 pending the MDC-T’s advice of readiness to receive such goods, which goods subject to such stipulation, Security Mills thereby again tendered against payment by MDC-T of the total balance due of R340 463,48.

“The plaintiffs’ performance of the agreement as aforesaid, Security Mills rendered to the MDC-T the invoice for the manufacture of the goods, dated 18 March 2008 for R4 627 863,93, including VAT, being the amount due for the goods manufactured and delivered and goods manufactured, but in respect of which delivery had been withheld, but tendered, for the reasons given,” they wrote.

The said invoice constituted the plaintiffs’ demand and expressly stipulated that interest accrued at eight percent per annum within 30 days of the date of the invoice and the MDC-T was allegedly liable for interest on the total sum due, mora ex re, from 17 April 2008 to the date of final payment.

In its plea, the MDC-T denied that it had authorised Messrs Cross or Spooner to enter into the alleged contract.

It averred that neither Mr Cross nor Mr Spooner had authority to enter into contracts on its behalf.  It denied that it had purchased anything from the Cabat Trade and Finance and denied liability to pay VAT in South Africa.

The MDC-T further averred that any valid order would have been written not oral and would have been authorised by its director general.

It denied being party to the agreement between the plaintiffs and Messrs Cross and Spooner and further denied that it had expressly agreed to effect payment to the Cabat Trade and Finance the contractual price in South Africa as such agreement would have been illegal.

MDC-T pleaded that it had not received the goods and averred that a goods received voucher would have been issued to Security Mills had the goods been received.

The MDC-T finally averred that plaintiffs should have made the demand to Mr Cross and Mr Spooner since they were the parties to the contract and prayed for the dismissal of the plaintiffs’ claims with costs.