Court name
Supreme Court of Zimbabwe
Case number
SC 60 of 2007
Civil Appeal 371 of 2005

Moyo and Another v Intermarket Discount House Ltd (SC 60 of 2007, Civil Appeal 371 of 2005) [2008] ZWSC 60 (08 April 2008);

Law report citations
Media neutral citation
[2008] ZWSC 60

DISTRIBUTABLE
(57
)








Judgment
No. 60/07


Civil
Appeal No 371/05











(1)
EDWIN MOYO (2) CHADWICK INVESTMENTS (PRIVATE)
LIMITED v INTERMARKET DISCOUNT HOUSE
LIMITED








SUPREME
COURT OF ZIMBABWE


CHEDA JA,
ZIYAMBI JA & GARWE JA


HARARE,
NOVEMBER 19, 2007 & APRIL 9, 2008








E T
Matinenga
, for the appellants





J C
Andersen SC
, for the respondent










ZIYAMBI JA: The respondent instituted proceedings in
the High Court for payment of the sum of $18 382 120 596,74 with
interest
at the rate of 210% per annum from 2 March 2004 to the date
of payment and costs of suit on an attorney and client scale. The
basis of the claim was an acknowledgement of debt which came about in
the following manner.







On 26 August 2003 the respondent lent and advanced to
the second appellant the sum of Z$4 billion to facilitate the
acquisition
of a controlling interest in a public company called
Trans Zimbabwe Industries Ltd (TZI). The shares were held by the
respondent
as security for the loan. In addition the first appellant
signed as surety for the due payment of the loan.







On the maturity date, the appellants were unable to pay
the amount due and the debt was rolled over to 29 February 2004 but
the
respondent indicated to the appellants that it would not roll the
debt over again. Payment was not made and the amount due increased

to in excess of Z$32 billion. Demand by the respondent produced no
result causing the respondent to request further security from
the
appellants. In addition, the shares were to be placed on the market
and, in the absence of satisfactory arrangements for payment,
the
respondent was to institute proceedings for the recovery of the debt
and liquidate the second appellant.







Negotiations then took place between the appellants and
the respondent through its curator, regarding the settlement of the
debt.
After a number of meetings and discussions the respondent
agreed to a reduction of the amount claimed. A figure of Z$24
billion
was suggested by the curator but this was rejected and the
parties finally agreed on the figure of Z$18 billion. So it was that

on 2 March 2004 the second appellant, represented by the first
appellant, signed an acknowledgement of debt for “the due and

proper payment, being
capital plus interest, in the sum of $18 382 120 596.74 (‘the
principal debt’) by reason of a loan made and advanced to
the
company and any interest thereon specified below …” and, on 16
March 2004 the first appellant signed a personal guarantee
for the
payment to the respondent of all amounts owed to the respondent by
the second appellant.







The appellants, at the pre-trial conference, admitted
liability for the capital debt of Z$4 billion as well as interest up
to the
double and an order was given by consent in favour of the
respondent for the sum of Z$8billion. As to the balance of the
claim
in the sum of $10 382 120 596.74, the appellants pleaded that
this was illegal interest in excess of the double which offended
against the
in duplum
rule
1
and which was accordingly not recoverable. The respondent in turn
replicated that the parties had entered into a new loan agreement
in
terms of which the principal debt was novated on terms and conditions
particularised in the acknowledgement of debt annexed
to the
declaration.







At the trial, counsel for the respondent advised the
court that he would be relying not on the principle of novation but
on that
of compromise, it being the respondent’s stance that the
principal debt had been compromised and was therefore recoverable.
The learned Judge found, upon an examination of the facts, that
indeed a compromise had been arrived at. He accordingly gave
judgment
in favour of the respondent.







The appellants appealed to this Court on the following
grounds:







“1. The court a quo
erred in finding that the respondent’s  claim against the
appellants’       was based on

a compromise when in fact in the summons and particulars of
      claim, the respondent
has not
based its claim on a compromise but on the       contrary,
had based its claim on  the
basis of an alleged novation.












  1. The court a quo
    erred in proceeding to determine that there existed a compromise
    when in fact the respondent had not amended its claim so as
    to plead
    a compromise and therefore enable the court to determine that there
    was a compromise.”








Mr Matinenga, for the
appellants, did not take issue with the fact that a compromise had in
fact been arrived at. His contention was that the
court
a
quo
ought not to have based its decision on
an issue which was not pleaded.







The learned Judge in the court a
quo
approached the matter as follows:



“As a general and tried proposition pleadings are
restricted to averments of factual matters and do not afford the
opportunity to
a party to expound on the law or legal principles.




Counsel for the defendant, with some justification
complained about the apparent shift in stance resorted to by the
plaintiff’s
legal practitioners [namely] between the stance taken
in their pleadings and the position at the trial. This court will
endeavour
to consider all the factual evidence with a view to
arriving at a just and proper decision on this matter by regard to
the relevant
legal principles applicable.”











In my view, the approach of the learned Judge was
correct. To begin with, the rules relating to pleadings require that
a party
pleads the facts on which his case is based and not the law
applicable or the evidence by which he intends to establish those
facts.
The learned author of
Beck’s Theory
and Principles of Pleading in Civil Actions
2
put it this way:



“Pleadings should state facts and facts only, that is
to say, they should not contain a statement of either law or the
evidence required
to establish the facts.”











It is true, as Mr
Matinenga submitted,
that the object of pleadings is to define the issues. In this
regard, the courts have held that parties will be bound
by their
pleadings where any departure would be prejudicial to the other party
or prevent a full enquiry. However, as INNES CJ
remarked in
Robinson
v Randfontein Estates GM Co Ltd
1925 AD 173
at p 198 :



“… within those limits the court has a wide
discretion, for pleadings are made for the court, not the court for
the pleadings, and
where a party has had every facility to place all
the facts before the trial court and the investigation into all the
circumstances
has been as thorough and as patient as in this
instance, there is no justification for interference by an appellate
tribunal, merely
because the pleading of the opponent has not been as
explicit as it might have been.”







See also Medisa (Pty) Limited v
Kroebel Tools & Products (Pty) Limited
1988
(4) SA 415(W) at 421-2; and
Collen v
Rietfontein Engineering Works
1948 (1) SA 411
(AD) where, at 433, CENTLIVRES JA remarked:



“This was not the contract relied on by the defendant
in his pleadings, and the position should have been regularised by an
appropriate
amendment. But in this case, where the contractual
relationship between the parties arose partly through the interchange
of letters
and partly through their conduct, all the material letters
(excepting one in respect of which secondary evidence, which was
rightly
accepted by the magistrate, was led) were produced in
evidence and the conduct of the parties was examined in
viva
voce evidence. This Court, therefore, has
before it all the materials on which it is able to form an opinion,
and this being the
position it would be idle for it not to determine
the real issue which emerged during the course of the trial….”








In a similar vein, it was said in Middleton
v Carr
1949 (2) SA 374 (AD) at pp 385-6 of
the judgment:



“… as has often been pointed out, where there has
been full investigation of a matter, that is, where there is no
reasonable ground
for thinking that further examination of the facts
might lead to a different conclusion, the Court is entitled to, and
generally
should, treat the issue as if it had been expressly and
timeously raised. But unless the Court is satisfied that the
investigation
has been full, in the above sense, injustice may easily
be done if the issue is treated as being before the Court.”







As Mr
Andersen submitted, it
was clear on the record that there were no further facts requiring
investigation and that the issue of the legality
or otherwise of the
acknowledgement of debt was fully canvassed in the court
a
quo
. Indeed, there was no suggestion by the
appellants that there were any further facts which required
investigation. Thus the court
a quo
had before it all the facts which were necessary to determine the
real issue which arose before it, which was, whether the agreement

amounted to a compromise or a novation. See also the following
passage in The Law of Contract in South Africa
3 ed by
R H Christie
at p 505 where the author says:



“Compromise, or transactio, is
the settlement by agreement of disputed obligations, whether
contractual or otherwise. If there is no such dispute there can
be
no compromise. It is a form of novation differing from ordinary
novation in that the obligations novated by the compromise
must
previously have been disputed or uncertain, the essence of compromise
being the final settlement of the dispute or uncertainty.
The fact
that a claim compromised subsequently turns out to have been invalid
does not affect the validity of the compromise,
but an illegal claim
or a claim unenforceable on grounds of public policy cannot be
validly compromised any more than it can be
validly novated. However
the contract may be described by the parties,

the court will look at the substance rather than the form in order to
decide whether a particular obligation or dispute has been

compromised.” (My underlining).











As I indicated above, Mr
Matinenga
did not dispute the finding of the
learned Judge that on the facts there was a compromise reached by the
parties. In view of that
finding, which is supported by the evidence,
the
in duplum rule was
of no assistance to the appellants as any cause of action which they
may have had before the new agreement of compromise
was extinguished
by that agreement. They are bound by the acknowledgement of debt. See
Georgias & Anor v Standard Chartered Bank
Zimbabwe Limited 1998
(2))
ZLR 488
(S) at 496
D-H where GUBBAY CJ said:



“Compromise, or transactio
is the settlement by agreement of disputed obligations, or of a
lawsuit the issue of which is uncertain. The parties agree to

regulate their intention in a particular way, each receding from his
previous position and conceding something either diminishing
his
claim or increasing his liability. See Cachalia
v Harberer & Co
1905 TS 457 at 462 in
fine
; Tauber v Von Abo
1984 (4) SA 482 (E) at 485G-I;
Karson v
Minister of Public Works
1996(1) SA 887 (E)
at 893F-G. The purpose of compromise is to end doubt and to avoid
the inconvenience and risk inherent in resorting
to the methods of
resolving disputes. Its effect is the same as
res
judicata
on a judgment given by consent. It
extinguishes
ipso jure
any cause of action that previously may have existed between the
parties, unless the right to rely thereon was reserved. See
Nagar
v Nagar
1982 (2) SA 263 (ZH) at 268E-H. As
it brings legal proceedings already instituted to an end, a party
sued on a compromise is not
entitled to raise defences to the
original cause of action. See
Hamilton v Van
Zyl
1983 (4) SA 379 (E) at 383H. But a
compromise induced by fraud, duress,
justus
error
, misrepresentation, or some other
ground for rescission, is voidable at the instance of the aggrieved
party, even if made an order
of court. See
Gollach
& Gomperts
(1967) (Pty)
Ltd v Universal Mills & Produce Co Ltd & Ors

1978 (1) SA 914 (A) at 922H. Unlike novation, a compromise is
binding on the parties even though the original contract was invalid

or even illegal. See Hamilton v Zyl
supra at 383D-E;
Syfrets Mortgage
Nominees Ltd v Cape St Francis Hotels (Pty)
Ltd
1991 (3) SA 276 (SEC) at 288E-F.”











Accordingly it is my view that the judgment of the court
a quo is unassailable
and the appeal is dismissed with costs.



















CHEDA JA: I agree



















GARWE JA: I agree



















Atherstone & Cook,
appellants’ legal practitioners



Dube, Manikai & Hwacha,
respondent’s legal practitioners




















1
Commercial Bank of Zimbabwe Ltd v MM Builders and Suppliers (Pvt)
Ltd & Ors
1996 (2) ZLR 420 (H);    1997 (2)
SA 285 (ZH)




2
5 ed by I.Isaacs at p 35