Court name
Supreme Court of Zimbabwe
Case number
SC 69 of 2004
Civil Appeal 110 of 2002

Coalridge (Pvt) Ltd. v Makawu and Another (10/02) (SC 69 of 2004, Civil Appeal 110 of 2002) [2004] ZWSC 69 (08 September 2004);

Law report citations
Media neutral citation
[2004] ZWSC 69


No. SC 69/04

Appeal No. 110/02






MARCH 25 & SEPTEMBER 9, 2004

, for the

, for the

This appeal is from a judgment of the High Court dated 20 March
2002, by which a claim by the appellant
against the respondents
jointly and severally for the payment of the sum of $1 600 000.00
was dismissed with costs.

The facts on which the case
proceeded in the court
a quo
are not in dispute. The second respondent (“Mobil”) carries on
the business of selling fuel and is the owner of Club Service
and Workshop (”the service station”). The first respondent
(“Peter”) is Mobil’s fuels manager.

In 1994 Mobil entered into a
franchise agreement with one John Papatheocharous (“John”),
in terms of which it leased to
him the service station with authority
to carry on the business of selling fuel supplied by it to members of
the public. The lease
agreement prohibited any sub-letting of the
premises to a third party without prior written approval from Mobil.

breach of the franchise agreement, John entered into a partnership
agreement with one Spyrous Apostolou (“Apostolou”)
operate the service station and workshop. They formed a company
called Friendship Investment (Private) Limited (“Friendship”),
which they held an equal number of shares. On 28 October 1999
Apostolou sold all his shares to the appellant (“Coalridge”),
represented by its managing director, George Riva (“Riva”),
for $2.25 million. After a year Coalridge sold all its
in Friendship to John on credit for the same amount for which it had
bought them from Apostolou. After paying two instalments

was owed $2.2 million by John for fuel it had delivered at the
service station, for which he had paid by means of dishonoured
cheques. As a result, fuel supplies were stopped, making it
impossible for John to pay his debt to Coalridge. Mr Riva was
aware that John was also indebted to Mobil.

On 2 August 2000 Riva
proposed to Peter that Coalridge and Mobil take over the service
station and run it as a joint venture
to recover the debts due to
them from John. The proposal was unacceptable to Mobil. On
4 September 2000 Riva wrote to Mobil,
offering to raise the sum
of $2 million from financial institutions to pay off the debt
due to it from John in return for authority
being given to Coalridge
to take over the dealership in the service station. There was no
reply to the letter from Mobil.

It appears that in the meantime
Riva approached John and offered to give him money with which to pay
his debt to Mobil so that he
could recover the dealership in the
service station, which Coalridge would then operate to recover the
loan and the balance outstanding
on the purchase price of the shares.
On 29 November 2000 John wrote to Peter saying:

am now in a position to pay off my debt to Mobil Oil Zimbabwe.
Therefore can arrangements be made for the forecourt to be hand
back to me as from the 1
st December

happened is that Coalridge and John had entered into a written
agreement, in terms of which the former would take over the
of the service station for the purposes of selling fuel as from
1 December 2000. Coalridge undertook to pay to Mobil
the debt
owed by John. It would then recover this money and the outstanding
balance on the purchase price of the shares sold to
John from the
proceeds of fuel sales.

agreement was in effect a sub-letting of the service station to
Coalridge by John in breach of the franchise agreement. On
4 December 2000 Riva gave John the sum of $1 600 000.00,
which the latter deposited into Mobil’s current bank account.

John signed the deposit slip in his own name.

receipt of the money Mobil appropriated it towards the debt due to it
from John. When Coalridge was unable to pay the balance
of the
debt owed by John to Mobil, it demanded the refund of the
$1 600 000.00, thereby disclosing the fact that it had
entered into a sub-lease agreement with John, in terms of which the
latter had sub-let the service station in breach of the franchise
agreement. As a result of the disclosure of the illegal contract
between Coalridge and John, Mobil cancelled the franchise agreement
but refused to refund the sum of $1 600 000.00 to

Summons was issued by Coalridge
on 6 June 2001, claiming the payment of $1 600 000.00
from John, Peter and Mobil
jointly and severally, the one paying the
others to be absolved. The defendants entered appearance to defend
and, after a full
trial, the court
a quo
held that John was liable for the payment of the money but dismissed
the claim with costs against the other defendants. Hence this

appears to me that the decision to dismiss the claim against the
respondents was, on the facts, correct. The claim was based
on the
doctrine of unjust enrichment because there was no privity of
contract between Coalridge and Mobil as the former had entered
an illegal contract with John, in terms of which the money was given
to him for the purpose of discharging his indebtedness
to Mobil.
The circumstances of the case show that the claim could not be
founded on unjust enrichment on the part of the respondents
Mobil could not be accused of having received the money from John
without cause.

The money was paid to Mobil by
John, who was its debtor. He paid it with the intention that the
debt due to Mobil from him be
discharged. In the letter of
29 November 2000 he indicated his readiness to discharge his
obligation to Mobil. John made
the payment of the money in his own
name, without any indication that the money did not belong to him or
that it was being paid for
any purpose other than the discharge of
his debt. Mobil was entitled to receive the money as payment of the
debt due to it from
John. It was unnecessary for the purposes of
enforcement of the obligation due to it from John for Mobil to know
where he had obtained
the money from, provided it had no notice of it
having been obtained by illegal means.

There was no basis upon which
the court
a quo
could have ordered Mobil to repay the money to Coalridge when it was
entitled to receive it from the person who in fact owed it a
duty to
pay the money.

The claim against Peter was
ill-conceived as well, because the money was not paid to him. He
had acted in the course and within
the scope of his employment with
Mobil. Peter had played no rôle at all in the decision by Riva to
have Coalridge enter into the
illegal contract with John, in terms of
which he was given the $1 600 000.00 to pay to Mobil.

appeal is accordingly dismissed with costs.

I agree.

JA: I agree.

Mudambanuki & Associates,
appellant's legal practitioners

& Immerman
respondents' legal practitioners