Court name
Supreme Court of Zimbabwe
Case number
SC 32 of 2006
Civil Appeal 229 of 2003

Posts & Telecommunications Corporation and Others v Brightpoint Zimbabwe (Pvt) Ltd. (29/03) (SC 32 of 2006, Civil Appeal 229 of 2003) [2006] ZWSC 32 (11 September 2006);

Law report citations
Media neutral citation
[2006] ZWSC 32


DISTRIBUTABLE (26)


Judgment
No. SC.32/06



Civil Appeal No. 229/03









(1) POSTS &
TELECOMMUNICATIONS CORPORATION (2) M L MASHUMA (3) NET
ONE CELLULAR (PRIVATE) LIMITED
(4) REWARD KANGAI





v







BRIGHTPOINT ZIMBABWE
(PRIVATE) LIMITED









SUPREME
COURT OF ZIMBABWE


SANDURA
JA, ZIYAMBI JA & GWAUNZA JA


HARARE,
MAY 11 & 12 SEPTEMBER 2006








E
T Matinenga,
for the
appellants





A
B Chinake
, for the
respondent











ZIYAMBI
JA: This appeal is against a judgment of the High Court declaring
null and void the cancellation by the appellants (to whom
I shall
refer collectively as the “PTC”) of an agreement between the
parties.






I
must comment at the outset that the judgment makes difficult reading
as it contains numerous typographical errors, is in many parts
illegible and appears not to have been edited by the learned Judge.






The
Registrar is directed to ensure that all judgments on appeal are
edited by the Judge concerned before their inclusion in the record.







The respondent brought an
application in the court
a
quo
seeking the
following order -







(1) The purported cancellation
of the principal Agreement between PTC and the Applicant be and is
hereby declared null and void.


(2)
Consequently, the First and Third Respondents be and are hereby
ordered to enter into a written agreement with the applicant on
reasonable terms and conditions as set out in the first consolidated
draft agreement being annexure “11” to the application within
14
days from the date of this order.



(3) That the Second and Fourth
Respondents be and are hereby ordered to take all reasonable steps to
ensure compliance with paragraph
“2” of this order by the First
and Third Respondents.


(4)
That the Respondents jointly and severally the one paying the other
to be absolved shall pay the costs of this application.






It
was alleged that the respondent entered into an agreement (“the
contract”) with the first appellant (to whom I shall refer
as “the
PTC”) in terms of which the respondent was to provide certain
services connected with a prepaid cellular communication
service
among which was the provision of a call platform enabling NETONE to
route calls to and from pre-paid customers through the
platform.







The call platform provided by the
respondent failed to function properly from the outset and as early
as 4 January 1999, the PTC began
a series of complaints the non
resolution of which resulted in the PTC sourcing and installing its
own call platform which proved
to be incompatible with the
respondent’s equipment. Thereafter, there were negotiations
between the parties to enter another agreement
(the respondent claims
it was an agreement to vary the contract while the PTC maintains it
was to be a new agreement which would
apply to the changed
circumstances). Since the PTC had sourced and installed its own
call platform, the new agreement was intended
to reduce the
obligations of the respondent to providing sim cards for the prepaid
cellular service. Negotiations for the new agreement
failed and on 4
January 2000 the PTC cancelled the contract.






The
respondent argued in the court
a
quo
that there was no
breach by it of any term of the contract that went to the root
thereof and that the purported cancellation of the
contract was null
and void since the parties had agreed to a variation thereof. In any
event, the PTC, by failing to cancel the
contract at the time of
occurrence of the breach, had waived its rights to cancel the
agreement and was now estopped from doing so.





Further,
as the contract envisaged severability and the PTC’s complaints
referred only to the call control platform, any entitlement
by the
PTC ought to have been restricted to that part of the contract and
not the rest of the contract.






In
response, the PTC contended that the contract had been validly
cancelled because of the respondent’s default and that in any
event, the respondent had based its case not on the contract but on
the ‘new’ agreement which was invalid by virtue of the fact
that
it was not signed by both parties.







The court a
quo
defined the issues
for determination as follows:







“Whether the agreement was
validly cancelled; and, if not, whether the parties can be ordered to
implement the whole or part of the
contract.”









It went on to find that the
agreement was not validly cancelled but found itself unable to order
the appellant to implement the whole
or part of the contract.






Mr
Matinenga,
in
contending on behalf of the PTC that the contract was validly
cancelled, submitted that the fact that the parties entered into
negotiations with a view to entering into another agreement
constituted neither a variation of the terms of the contract nor a
waiver
of the PTC’s right to cancel the contract since the alleged
variation, not having been signed by the PTC, was devoid of legal
effect
because of its non compliance with clause 45:8 of the
contract. See
The Law
of Contract in South Africa
,
Christie
, 3 ed at p 117-118;
AFC
v Pocock
1986 (2) ZLR
229 (SC). In any event, so it was argued, clause 45:8 clearly
prohibits any waiver not reduced to writing and signed
by the
parties.







Clause 45:8 provides as follows:







“VARIATION, CANCELLATION AND
WAIVER



No contract varying, adding to,
deleting from or cancelling this agreement, and no waiver of any
right under this agreement, shall
be effective unless reduced to
writing and signed by or on behalf of the parties.”






The submission that there was no
waiver of the PTC’s rights is, in my view, correct since the
respondent has produced no waiver
written and signed by the PTC and
indeed it has not been the respondent’s case that there was such a
written waiver. Accordingly,
the indulgence afforded to the
respondent by the PTC cannot, by virtue of the clear provisions of
this clause, be held to amount
to waiver of the PTC’s right of
cancellation in terms of the contract.







That notwithstanding, the High
Court found in favour of the respondent. The learned Judge at p 9
of the cyclostyled judgment
said:






“… in the present case with
the history of the complaints by the respondent of the problems
related to the Call Control Platform and
the specific reference by
the respondent to cancellation in its letters to the applicant, it
cannot seriously be argued that the
respondent was not aware of its
rights in terms of the agreement to cancel or the legal consequence
of failure to (blank space)
this right.





By
its own conduct as reflected in the correspondences, respondent is
estopped from now seeking to rely on breaches that it had apparently
been aware of.”







At p 10 of the judgment the
learned Judge continued, rather curiously in my view, as follows:







“Having come to the conclusion
that the respondent waived its right to cancel the contract, it is my
view that the subsequent negotiations
which resulted on (sic) the 2
drafts were in fact variations to that agreement. These variations
were necessitated by the fact of
the respondent having installed its
own platform, the agreement as it stood could not be proceeded with
…”







In arriving at the above
conclusions the learned Judge ignored the clear provisions of s45.8
of the contract which render invalid
any waiver or variation of the
contract which is not reduced to writing and signed by the parties as
well as the provisions of s45.9.2
which militate against estoppel.






Section 45.9 provides as
follows:







“45.9
INDULGENCES




If either party at any time
breaches any of that party’s obligations under this agreement, the
other party (‘the aggrieved party’):




45.9.1
…



45.9.2 shall not be estopped
(i.e. precluded) from exercising the aggrieved party’s rights
arising out of that breach, despite the
fact that the aggrieved party
may have elected or agreed on one or more previous occasions not to
exercise the rights arising out
of any similar breach or breaches.”







The final contention advanced on
behalf of the respondent, and accepted by the court
a
quo,
is that even
accepting that the respondent was in breach of its obligation in part
A of the contract to provide the PTC with a call
control platform,
the contract is severable by virtue of the provisions of s 45.10
thereof and was, therefore, wrongfully cancelled
by the PTC because
parts B & C thereof were still capable of implementation by the
respondent.







The learned Judge was of the
view that the contract provided for a situation where the PTC would
install its own call platform. However
the PTC argued that the
circumstances in which it set up its own call platform are not those
envisaged in the contract. Further,
it was now impossible for the
respondent to provide the services set out in parts B & C of the
contract because the platform
installed by the PTC is not compatible
with the respondent’s equipment.




The following clauses of the
contract are relevant to the determination of this issue:






“3.2. To the extent of that
part of this agreement that relates to the maintenance and support of
the Call Platform more fully outlined
in clause 7 hereof, those terms
of this agreement shall terminate on the date on which NETONE’s
migration to an integrated node
platform is completed. …








    1. … In the event of NETONE
      requiring the assistance of BRIGHTPOINT to migrate from the Call
      Platform to the integrated node, then
      in that event NETONE shall be
      liable to pay to BRIGHTPOINT an agreed fixed fee of US$2,00 (TWO
      THOUSAND U.D. DOLLARS) per day
      or part thereof, but not exceeding
      the total sum of US$50,00 (FIFTY THOUSAND U.S. DOLLARS)
      notwithstanding that BRIGHTPOINT shall
      be liable to render such
      assistance for a total period of 30 (THIRTY) days.









18.3 … The gross revenue
allocated to each party shall be apportioned as to 55% to NETONE and
45% as BRIGHTPOINT.”







It seems to me that the
provisions of clause 3.2 envisaged a situation where NETONE would
eventually migrate to “
an
integrated node platform
”
and not a situation like this where the respondent failed from the
start to perform its part of the contract by providing a call
platform which functioned properly. The remaining parts of the
contract were then to remain in force until the expiry of 5 years
from the date of commencement of the contract. However the
respondent, on its own admission, failed from the very beginning in
its obligation in terms of the agreement to provide a call platform
which functioned properly. Its malperformance drove the PTC
to
install its own call platform. That was a substantial breach of the
terms of the contract entitling the PTC to cancel it. Compare
Southern Rhodesia
Government Irrigation Department v. Hein

1956 R & N 573.







Further,
as submitted on behalf of the PTC, although the contract contained a
clause that it was severable, this clause was incapable
of
implementation as the consideration specified in clause 18.3,
supra,
was for 45% of the gross revenue for the respondent in respect of
all the services provided for with no breakdown as to the revenue
to
be paid in the event of the installation of a new call platform by
the PTC.







Accordingly, the appeal is
allowed with costs. The order of the Court
a
quo
is set aside and
substituted with the following:







“The application is dismissed
with costs”.






























SANDURA
JA: I agree.














GWAUNZA
JA: I agree.














Coghlan
Welsh & Guest
,
appellants' legal practitioners


Kantor
& Immerman
,
respondent's legal practitioners