ANALEM Investments (Pvt) Ltd v Divine Aid Trust Company (Pvt) LTD and Another (207 to 2024) [2024] ZWHHC 207 (28 May 2024)

ANALEM INVESTMENTS (PVT) LTD

Versus

DIVINE AID TRUST COMPANY (PVT) LTD

And

ZVIMBA RURAL DISTRICT COUNCIL

HIGH COURT OF ZIMBABWE

COMMERCIAL DIVISION

CHILIMBE J

25 October 2023 and 28 May 2024

Interlocutory application

G. Madzima for applicant

T.B Jonasi for first respondent

No appearance by second respondent

CHILIMBE J

BACKGROUND

[ 1] This opposed application for declatory relief was assailed by a phalanx of points in limine. The parties herein are as follows; -applicant describes itself as an entity specialising in civil engineering consultancy, construction supervision, engineering survey and project management. The first respondent (“Divine Aid”) is described as a commercial land developer specializing in contractual land development agreements with prospective land owners.

[2] The second respondent (“Zvimba RDC”) was not participatory to these proceedings, having been cited “for purposes of compliance”. I will continue to specifically refer herein to applicant by that title for reasons that shall shortly become apparent. I will also italicise for distinction, the different totems in similar names.

[3] The applicant moved the court to grant the following relief (in paraphrase); -

1. to assert the validity of the Agreement for Land Development dated 16 October which was, according to applicant “entered into by the parties”,

2. to reverse the purported termination, on 10 November 2022, of this agreement by Divine Aid,

3. to direct Divine Aid to deliver in terms of the contract by way of (a) payment of an amount of US$ 413,219.47 and (b) the surrender of stands 2132 to 2307 in an estate known as Lilfordia Farm, Nyabira,

4. In the alternative, applicant prayed for payment of damages for breach of contract in the sum of US$ 1,594,638.24.

THE PRELIMINARY POINTS RAISED

[4] Divine Aid raised a number of preliminary points in the opposing affidavit deposed on its behalf by Mr. Brighton Manengureni-its “director”. I have distilled the points in limine concerned as follows for greater lucidity; -

[5] Firstly, that the relief claimed was entirely based on the Agreement for Land Development. The applicant herein, Analem Investments (Private) Limited, was not a party to that contract. The parties to that contract were first respondent Divine Aid and an entity named Analem Engineering (Private) Limited. Applicant was precluded from enforcing rights under that contract by the doctrine of privity of contract. As such applicant enjoyed no locus standi in judicio to institute the present proceedings.

[ 6] Secondly, that the applicant was not properly before the court. The deponent to applicant`s founding affidavit, Mr. Tarashana Mufunda was armed with a defective authority. This being a board resolution issued not by the directors of present applicant Analem Investments (Private) Limited, but of another entity named Analem Enterprises (Private) Limited.

[7] Thirdly, Divine Aid reiterated that applicant wrongly based its rights on a contract to which it was not party. It enjoyed no rights from that contract. In that regard, it automatically failed to meet the requirement prescribed by section 14 of the High Court Act [ Chapter 7:06] namely; - the existence of a present, future or continent right. Associated with this objection, Divine Aid argued that by claiming consequential relief, applicant fell afoul of section 14 of the High Court Act which prohibits such an approach.

[8] Fourthly, Divine Aid alleged that Mr. Tarashana Mufunda, was further disqualified from deposing to the founding affidavit by (a) 26 of the Regional, Town and Country Planning Act [ Chapter 29:12]. This section, according to Mr. Jonasi for Divine Aid, prohibited a civil engineering consultant (such as Mr. Mufunda) from assuming the role of overall project consultant whilst acting as project engineer for one party. Mr. Mufunda had conflated these two functions. As (b), Mr. Jonasi argued that even worse, Mr. Mufunda had, under that project, rendered consultant services to each, both and all.

[9] Fifthly, Divine Aid contended that the application was blighted by material disputes of fact incapable of resolution on the papers. As such, applicant had ill-advisedly elected for motion proceedings where an action would have better suited the process.

THE UNDERLYING DISPUTE

[10] Before addressing the 5 points raised by Divine Aid, I will outline the facts constituting the dispute. In doing so, I observe that consistent with its point in limine, Divine Aid studiously ignored applicant`s purported involvement in the contract and insisted that it dealt, at all times with Analem Engineering (Private) Limited. On the contrary, applicant insisted that it is the party that contracted, performed and engaged Divine Aid under the Agreement for Land Development.

[ 11] I have endeavoured to avoid serrating this dispute summary with a surfeit of bracketed explanations distinguishing the involvement or non-involvement of various “Analems” by their respective totems. Nonetheless, the story in essence is that; - Divine Aid as a land developer sought to service a tract of farmland in order to deliver a township thereon. The land in question was known as a portion of Remainder of Subdivision C of Lilfordia Farm stand number 2129-3456”.

[ 12] The piece of land was located in an area commonly known as Nyabira, falling under the jurisdiction of Zvimba RDC. This land development process entailed undertaking all necessary steps including obtaining regulatory approvals and effecting engineering works to deliver a residential estate. On 16 October 2021, a contract (the Agreement for Land Development) to deliver such outcomes was concluded between Divine Aid and Analem Engineering (Private) Limited. [Of course, applicant insists that it, Analem Investments (Private) Limited, was party to the contract.]

[ 13] It is not in dispute this contract ran aground. Divine Aid moved to terminate by letter addressed to “Analem Engineering” date 22 November 2022.It is this letter that triggered the present suit. Against this brief background, I revert to the points in limine; -

THE POINTS IN LIMINE ADDRESSED

[14] I will deal with these points in reverse order starting with the fifth. The first respondent Divine Aid seeks, under that objection, to non-suit applicant on the basis of alleged material disputes of facts. This is a conclusion framed entirely by Divine Aid. It is not a conclusion backed by incontrovertible nor common cause facts.

[ 15] The conclusion is also purely anticipatory on the part of the objector. It leaves no room for the alternative view that possibly through further reflection, argument, observation, or concession, the present position on dispute of facts could shift or dissipate.

[16] I do not believe that this point needs detain us. It is clearly not dispositive of the dispute. The authorities are clear as to what ought to transpire when the ship of litigation hits the reefs of irreconcilable disputes of fact. The application may fail, the court may give remedial directions depending on the nature of the disparity, or the matter may be referred to trial (see Masukusa v National Foods Ltd and Anor 1983 (1) ZLR 232 and Supa Plant Investments (Pvt) Ltd v Chidavaenzi 2009 (2) ZLR 132 (H). As such, the fifth point in limine cannot stand.

[ 17] Similarly, the fourth point (the alleged conflict of Mr. Mufunda) appears inconsequential. Section 26 of the Regional Town and Planning Act did not, with respect, support Mr. Jonasi` s argument. This section does not carry any such reference. Further, the nature and effect of the alleged conflation of roles become a matter immersed in the merits. The legality of the point was not, again with respect, argued sufficiently. Accordingly, this point will also fail.

[ 18] As for the double-barrelled third point regarding compliance with section 14 of the High Court Act, I comment as follows; - the reminder in Telecel Zimbabwe (Private) Limited v Postal & Telecommunications Regulatory Authority (Potraz) & Others HH 466-15 becomes apt at this stage. Therein, this court advised at page 7 that; -

“A preliminary point should only be taken where firstly it is meritable and secondly if it is likely to dispose of the matter.”

[19] The simplicity behind this statement buttresses the clarity behind the court`s guidance. Herein, applicant seeks a declaratory order in the main. It is well-established that declaratory relief is entirely discretionary on the party of the court. It entails an examination by the court, based on the requirements set out in 14 of the High Court Act which goes thus; -

“The High Court may in its discretion, at the instance of any interested person, inquire into and determine any existing, future or contingent right or obligation, notwithstanding that such person cannot claim any relief consequential upon such determination.” [ underlined for emphasis.]

[ 20] The considerations that must guide a court in dealing with a declaratory prayer are well-settled. (See Johnsen v Agricultural Finance Corporation 1995 (1) ZLR 65 (H) where the court held at 77B that; -

“Firstly the applicant must satisfy the court that he is a person interested in an existing future or contingent right or obligation. If satisfied on that point, the court then decides a further question of whether the case is a proper one for the exercise of the discretion conferred”

[21] It is clear that the instance of a declatory prayer places upon the court the responsibility to inquire into the circumstances surrounding the relief sought. The relief in question concerns a party`s quest to exercise or access its perceived rights. The relief available to a party under a declarateur is as wide as the inquiry into whether such relief is warranted Such inquiry by its nature, is best undertaken via a journey into the merits. Unless that trip is rightfully interrupted by a meritable objection.

[22] With these considerations in mind, it would be remiss to debar applicant from pursuing its claim on the basis of challenges that effectively constitute arguments on the merits. I now turn to deal with the second and first points in limine, maintaining their reverse order.

THE AUTHORITY TO INSTITUTE PROCEEDINGS & PRIVITY OF CONTRACT

[23] The second objection from Divine Aid was premised on the board resolution which empowered Mr. Mufunda to institute the current proceedings. As noted, the resolution filed of record was issued by the directors of Analem Enterprises (Private) Limited. The present applicant is Analem Investments (Private) Limited. This latter entity`s name appears on the certificate of incorporation placed before the court. Which means that as matters stand, there is indeed, no board resolution from Analem Investments (Private) Limited, the herein applicant.

[ 24] The position of the law on this issue is beyond argument. Where the authority to institute proceedings on behalf of an entity is challenged, proof thereof must be furnished. This position was set out by the Supreme Court in Cuthbert Dube v PSMAS & Anor SC 73-19 where GARWE JA (as he then was) held thus; -

“[38] The above remarks are clear and unequivocal. A person who represents a legal entity, when challenged, must show that he is duly authorised to represent the entity. His mere claim that by virtue of the position he holds in such an entity he is duly authorised to represent the entity is not sufficient. He must produce a resolution of the board of that entity which confirms that the board is indeed aware of the proceedings and that it has given such a person the authority to act in the stead of the entity. I stress that the need to produce such proof is necessary only in those cases where the authority of the deponent is put in issue. This represents the current state of the law in this country.” [ underlined for emphasis]

[25] The Learned Judge of Appeal was citing with approval, the court`s remarks Madzivire v Zvariwadzwa & Ors 2005 (2) ZLR 148 (H), where MAKARAU J (as she then was) had described, at page 150 C, the requirement to furnish proof of authority in the following famous line; - “In my view, so trite is this proposition or so settled is this position at law that no authority need be cited.”

[26] Applicant, who is Analem Investments (Private) Limited, produced a resolution from Analem Enterprises (Private) Limited. This resolution is clearly insufficient as proof of valid authority to institute proceedings. The defect was drawn to applicant`s attention in the notice of opposition. But the matter remained unremediated -right up to the set down date. What exactly is applicant`s position on this seemingly simple requirement? For answers, I will turn to applicant`s responses as set out in its answering affidavit and heads of argument, as amplified by Mr. Madzima in argument.

[27] The opposing affidavit deposed to by Mr. Mufunda, cited legal authorities. Mr. Mufunda also took time to accuse Divine Aid of demonstrating “a penchant of [for] misconstruing facts”. He then proceeded to refer to Order 2A r 8C of the High Court Rules 1971.All this in apparent endeavour to explain the anomaly in the board resolution. Neither the legal authority cited, nor the provision in repealed rules¹ of court dealt with authority to institute proceedings. Mr. Mufunda additionally urged the court to ignore what he termed “a miscapture” of applicant`s name.

[28] I also note that paragraph 2.2 of applicant`s heads of argument carried the following submission regarding the impugned authority to institute proceedings; -

“It is now clear that the applicant is at law an incorporated entity in the name of Analem Investments [Private] Limited as apparent in annexure A which is the certificate of its incorporation. This is the name by which the applicant is named in proceedings in casu. Once it is accepted that this is the legal name of the applicant, the question of its true identity becomes mere academic. This is more so when the first respondent does not dispute the existence of the contract and any of its terms.”

[29] This averment makes a number of incorrect, and in any event misplaced assertions. They did not address the issue of authority. To begin with Annexure A (board resolution) was issued by Analem Enterprises (Private) Limited not by applicant Analem Investments (Private) Limited. Secondly, the issue raised in contention in the opposing affidavit was not at all on the validity of applicant`s name nor identity. It was on the defective authority or board resolution.

[30] Thirdly, the last statement in the above excerpt is similarly incorrect. The existence of the Land Development Agreement is not in dispute. What triggered first respondent Divine Aid`s objection was applicant`s claims that it was a party thereto.

[ 31] With respect, Mr. Madzima`s oral submissions in argument took the matter no further. He focussed on the validity of the agreement, applicant’s interest in the matter and the competency of the relief sought. In the shortest response, applicant had no answer to the challenge raised against the lack of authority to institute the present proceedings. On this basis, the point in limine regarding failure to furnish valid authority to institute proceedings becomes unassailable. The result being that Mr. Mufunda is not properly before the court, and with that, the application collapses.

[32] I now address the final point in limine. Divine Aid contended that applicant had no locus standi in judicio to sue on a contract to which it was not a party. As noted in the aforegoing paragraphs, is not in dispute that the Agreement for Land Development was executed between Divine Aid and Analem Engineering (Private) Limited not Analem Investments (Private) Limited (nor for that matter, Analem Enterprises (Private) Limited).

[ 33] It is again not contested that applicant anchors its claim on that contract. The relief sought is entirely premised on contractual remedies available to a party to a contract at law. Throughout the application, the applicant insists that it is the self-same party which contracted with Divine Aid. Locus standi was described in the following terms by PATEL JCC in Museredza & Ors v Minister of Agriculture &Ors CCZ 1-22 where PATEL JCC held [ at 45] that; -

“It is settled that the principle of locus standi is concerned with the relationship between the cause of action and the relief sought. Thus, a party needs to show that they have a direct, personal and substantial interest in the matter in contention. In Zimbabwe Stock Exchange v Zimbabwe Revenue Authority SC 56-07, MALABA JA (as he then was) said: “The common law position on locus standi in judicio of a party instituting proceedings in a court of law is that to justify participation in the action; the party must show that he or she has a direct and substantial interest in the right which is the subject matter of the proceedings and the relief sought.”

[34] The above guidance generates a number of consideration on the principle of locus standi. Ahead of all else, locus standi is concerned with the identity of a party. Next, it is a concept that retraces that same party`s cause of action in a dispute. It is from that causa that the right to institute, persist or participate in legal proceedings is sustained.

[ 35] And where discussion focus on “causa” then automatically the question of fruits thereof- or relief- comes up. And causa, rights and relief are all considered against the intrinsic concept of the defence proffered against them in each instance. Herein, Divine Aid has resisted applicant`s claim on the basis of privity of contract. Is this defence valid?

[36] Locus standi and privity of contract both converge on the issue of identity. Herein, the court is dealing with the identity of corporate entities. The applicant is a body corporate. Its name is Analem Enterprises (Private) Limited. Its pool has been considerably muddied in these proceedings by the presence of Analem Investments (Private) Limited, and Analem Engineering (Private) Limited. How has applicant addressed these relationships and identities herein?

[ 37] The issue of corporate identity triggers a number of rights, obligations and principles at law. The Companies and Other Businesses Entities Act [ Chapter 24:32] (“COBE”), comprehensively sets out such rights, duties and related aspects. I do not intend to delve into those matters. But key among them is the doctrine of corporate and separate identity extended to a fictional legal persona.

[38] Additionally the COBE provides meticulous rules on how entities falling under its purview are formed, organised, operated, regulated or retired. Significant among such being ownership or entitlement to the fruits of commercial activity. Moreso in a scenario or likelihood of competing, conflicting or even converging rights, identity resolves the issue of entitlement.

[39] This therefore points to the importance of clear identity where corporate locus standi is claimed. Locus standi relates to a parties` direct, personal and substantial interest in a matter. Herein we are concerned with the fruits from the Agreement for Land Development. These are represented by the cornucopia of rights or relief claimed (including a million dollars in cash). Has applicant placed evidence before the court of its entitlement to such?

THE APPLICANT`S FOUNDING AND ANSWERING PAPERS

[40] That question brings me to the manner in which this application was pleaded. It is an established position that an application stands or falls on its founding papers. Secondly, it has also been held that the purpose of an answering affidavit is to respond to issues raised on the opposing affidavit.

[ 41] A founding affidavit which tepidly sets out a case without anticipating the likely defences will (improperly) burden an answering affidavit with the duty to remediate. In Andrew Chigovera v Minister of Energy and Power Development & Anor SC 115-21 per MAVANGIRA JA explained this principle at page 9 stating that; -

“It has been stated in a number of judgments of this Court that an application stands or falls on its founding affidavit. In Muchini v Adams & Ors SC 47/13 at p 4, ZIYAMBI JA pertinently observed that: “It is trite that an application stands or falls on the averments made in the founding affidavit. See Herbstein & van Winsen the Civil Practice of the Superior Courts in South Africa 3rd ed p 80 where the authors state: “The general rule, however, which has been laid down repeatedly is that an applicant must stand or fall by his founding affidavit and the facts alleged therein, and that although sometimes it is permissible to supplement the allegations contained in that affidavit, still the main foundation of the application is the allegation of facts stated therein, because these are the facts which the respondent is called upon either to affirm or deny. If the applicant merely sets out a skeleton case in his supporting affidavits any fortifying paragraphs in his replying affidavits will be struck out”

[42] Herein, applicant tried to make out its case in the answering affidavit. That was improper. Even then, it left a number of key matters unaddressed. In the first instance, applicant did not explain away the various anomalies being (a) why the Agreement for Land Development was concluded by Analem Engineering (Private) Limited and not itself Analem Investments (Private) Limited, (b) why the board resolution was issued by the directors of Analem Enterprises (Private) Limited and not those of Analem Investments (Private) Limited.

[ 43] The question is not so much that applicant does not have an explanation. Applicant may be well able to unpack, in a single paragraph, the interrelationships, shareholding, directorships or trade book between the three entities. The problem however, is that applicant did not proffer such explanation. The explanations tendered regarding trade names or misspellings were,given the nature of the challenges, rather feeble.

[44] Neither in its founding, nor in the answering affidavit. The result is a failure to account as to why an entity called Analem Investments (Private) Limited must sue on a contract concluded by Analem Engineering (Private) Limited.

[ 45] The doctrine of privity of contract is clear. It confines the exercise of rights flowing from a contract to the parties to such contract, unless there are recognisable exceptions to that general rule. I can do no more than refer to this court`s remarks per MATHONSI J (as he then was) in Siwawa v Cooper Construction (Pvt) Ltd HH 790-15 which went thus; -

“The applicant faces an insurmountable hurdle in that he relies for his claim on an agreement in which he is not a party. There is no privity of contract. The principle of privity of contract in our law is a simple one. As stated by the learned author R H Christie in his book Business Law in Zimbabwe, 2^nd ed, Juta & Co Ltd at p 7:

“A person who is not a party to a contract cannot be held liable or claim on it because, as it is usually expressed, he is not privy to the contract: PTC Pension Fund v Standard Chartered Merchant Bank Zimbabwe Ltd 1993 (1) ZLR 55. The doctrine of privity of contract is, however, sufficiently elastic to encompass the rules of agency, under which a principal becomes a party to a contract made on his behalf by his agent. But the appointment by the agent of a sub-agent does not, in the absence of agreement to the contrary, create privity of contract between the sub-agent and the principal: Karaolias v Sulam 1975 (1) RLR 320, 1975 (3) SA 873”.

DISPOSITION

[45] The first two points raised in limine by first respondent herein Divine Aid carry substance. Firstly, applicant stumbled on a fundamental yet simple hurdle. It failed furnish proof of authority to institute these proceedings.

[ 46] Secondly, it has not been able to demonstrate why it must enjoy the fruits of a contract entered into by and between two third parties. The declaratory procedure pursued does not insulate applicant against these two requirements. It must therefore be non-suited.

It is accordingly ordered; -

1. That the two points in limine raised by first respondent challenging applicant`s lack of locus standi in judicio as well as authority to institute these proceedings be and are hereby both upheld.

2. The application be and is hereby dismissed with costs.

Madzima & Company Law Chambers -applicant`s legal practitioners

Hamunakwadi and Nyandoro Law Chambers-first respondent`s legal practitioners

[CHILIMBE J__28/5/24]