Delta One Security Company (Pvt) Ltd v Zimbabwe National Water Authority

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HH447/23
HCHC540/22
DELTA ONE SECURITY COMPANY (PVT) LTD
Versus
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HH447/23
HCHC540/22
DELTA ONE SECURITY COMPANY (PVT) LTD
Versus
ZIMBABWE NATIONAL WATER AUTHORITY

HIGH COURT OF ZIMBABWE
COMMERCIAL DIVISION
CHIRAWU-MUGOMBA J
Harare, 12, 20, 21 July 2023

L.C Ndoro, for the Plaintiff
C. Mahara, for the Defendant

SPECIAL CASE

CHIRAWU-MUGOMBA J

The plaintiff issued summons against the defendant for specific performance. It sought payment of ZWL$ 28 140.03, interest at the prescribed rate plus costs of suit. In its declaration, the plaintiff averred that it entered into a contract for the provision of security guard services with the defendant for the period 1st of January to the 30th of September 2022. These services were to be provided at three of the defendant’s catchment areas. Payment for such services was to be made on a monthly basis upon furnishing of an invoice. The plaintiff’s invoices totalled ZWL$47 344. 619.61. Of this amount, the defendant paid ZWL$ 18 771.510.25 leaving the amount being claimed outstanding.

In its plea, the defendant raised the following. That there is no cause of action because no valid contract was entered into. The basis of this assertion is that the plaintiff was not engaged in terms of the requirements set out in the Public Procurement and Disposal of Public Assets Act [ Chapter 22:23]. This was raised as a special plea. Further that no valid contract was entered into because the plaintiff would raise invoices to defendant in respect of specific periods in which services were rendered. The defendant would then effect payments. Further, that the plaintiff’s charges were above the average as expected by the Ministry of
 HH447/23
HCHC540/22

Finance. The plaintiff had failed to substantiate its claim by showing how much it charged per month and to state which particular invoices had not been settled. The defendant had settled all invoices in full and hence the plaintiffs claim had no merit and ought to be dismissed.

In its replication, the plaintiff rebutted the assertions in the defendant’s plea as follows. The plaintiff was engaged under a recognised procurement in terms of the relevant Act. If internal procedures were not followed, this had nothing to do with it and does not render the contract invalid. Assuming that the contract was illegal as alleged, the defendant would be unjustly enriched at the plaintiff’s expense since services had already been rendered. The plaintiff did not overcharge because security companies are permitted in terms of the Private Investigations and Security Guards Act [Chapter 27:10]. By accepting the high charges, the defendant is estopped from denying liability.

At a case management meeting convened on the 31st of May 2023, the following order was generated, capturing the essence of the discussions. The defendant abandoned its special plea. The amount owing was reduced to ZWL$ 11 340.644. The matter was to proceed as a special case in terms of the provisions of R52 of the High Court Rules, 2021. Time lines were set for the filing of an agreed statement of facts, heads of argument and oral submissions. However, the hearing scheduled for the 28th of June 2023 did not proceed due to circumstances beyond the control of the court. A letter was addressed to the legal practitioners to indicate whether or not the Judge could proceed on the papers. The plaintiff’s legal practitioners addressed a letter through the Registrar indicating that the matter could proceed on the papers without a formal hearing. The defendants also addressed a letter to the court expressing the same view.

The statement of agreed facts can be summarised as follows. The plaintiff and the defendant entered into a contract for the provision of security guard services from the 1st of January to the 30th of September 2022. The salient terms were that invoices were to be provided and paid for on a monthly basis. Out of the amount claimed in the summons and declaration, ZWL$16 799.465 was paid leaving a balance as indicated above. This balance in the view of the defendant constituted an overcharge. The issues identified were as follows. Whether or not the directive by the Minister of Finance of the 6th of October 2022 had an effect on the contract between the parties and whether or not the defendant was liable for the outstanding amount.


The court convened a hearing to specifically seek submissions from the parties on what they were referring to as the directive since it was not appearing in the record. The other issue related to a defence raised in defendant’s heads of argument to the effect that if the court held the contract to be valid, then it was contrary to public policy. This had not been raised in the pleadings and the agreed statement of facts. It was agreed that the directive should be filed separately after the hearing since it is an integral part of the case.

In the heads of argument filed, the plaintiff made the following submissions. It is not clear from a reading of the directive in terms of which statute it is derived from. The Public Finance Management Act [Chapter 22:19] section 4 does not apply to the plaintiff. Even if it is assumed that the defendant was to rely on s78(1) of the act, this does not affect the contractual relationship between the parties. The contract was entered into in terms of one of the recognised methods of procurement in terms of the relevant act. The defendant accepted quotations and invoices and made payments. It is therefore estopped from denying liability-Andrew Phillips (Pvt) Ltd vs GDR Pneumatics (Pvt) Ltd, 1986 (2) ZLR 65 (SC) and Tian Ze Tobacco co (Pvt) Ltd vs. Chihwai, HH-133-23. In relation to the defence of the contract being contrary to public policy, Mr Ndoro submitted that it is an alternative defence. It is not part of the agreed facts. Whether or not it can be relied on is a matter of fact and the court can only make a determination based on facts. In casu, there are no facts to support the assertion.

The defendant submitted as follows in its heads of argument. The defendant is a state entity governed by the ZINWA Act [Chapter 20:25] and the Water Act [Chapter 20:24]. Being state owned, it is subject to directives from the relevant Ministry. Reliance was placed on s10 of the ZINWA Act and ss 20 and 78 of the Public Finance Management Act. A contract can be declared to be one in contravention of public policy if it is inimical to the interests of the community, contrary to law or morality, runs contrary to social or economical expediency, is plainly improper or unconscionable or unduly harsh or oppressive- Karimazondo vs Standard Chartered Bank Zimbabwe, 1995 (2) ZLR 404 (SC). The contract between the parties has to be compliant given that it relies on payment from public funds- s 304 of the Constitution.

With regard to the defence on public policy, Mr Mahara submitted that if the court was to make a finding that the contract was valid, it has to consider the defence raised. The plaintiff did not place a fair charge on the defendant. Payment was made on the basis of what
 HH447/23
HCHC540/22 the defendant considered was due for payment. In answer to the contention by the plaintiff that there was no law in support of the directive, he referred to s4 of S.I 144/2019 – Public Finance Management (Treasury Instructions), 2019.

From the agreed facts, it is common cause that the parties entered into a contract of services. Further that some payments were made and stopped on the basis of the directive from the Minister. For good measure the directive dated the 16th of August 2022 is reproduced. It is addressed to Secretaries of various Ministries by the Ministry of Finance and Economic Development.

INTERNAL AUDIT DUE DILLIGENCE EXERCISE ON SUSPENDED FUNDING OF PAYMENT RUNS SUBMITTED AS AT 31 JULY 2022 AND REVIEW OF EXISTING PROCUREMENT CONTRACTS

Reference is made to the above subject matter in line with Treasury letter C/99/1/18 dated 4 August 2022, here attached.

Ministries internal Audit Departments shall carry out a due diligence review exercise on all running and future contracts with special focus on pricing to all payment runs submitted to Treasury as at 31 July 2022 and were suspended for funding.

The due diligence reports for all submitted and suspended payment runs, shall be submitted to the Secretary for Finance and Economic Development by 2 September 2022.

In future the internal Audit Department shall carry out due diligence review exercises on prices for future contracts and procurement and submit their reports attached to the payment runs to Treasury.

Internal Audit heads shall appoint internal auditors responsible for carrying out due diligence review exercises, who will not audit procurements and contracts, as this will be self-review.

Ministry Heads shall, in terms of section 10(4) of the Public Finance Management Act [Chapter 22:19], ensure that public entities under their Ministries carry out the same exercise. Public Entities Internal audit shall undertake due diligence exercise and report to their respective Ministries for review. In future, Ministry Heads should ensure that Public Entities use the willing buyer willing seller pricing models.

Please be guided accordingly.

It is common cause that after this directive whilst the contract between the parties was running, the defendant conducted a due diligence exercise and concluded that it had been overpriced by the plaintiff.


In terms of the Public Finance Management Act, s78(1) Treasury may prescribe or issue instructions or directions to Ministries whether individually or collectively concerning inter alia (b) the recovery or losses and damages of public resources and (g) the cancellation or variation of contracts to the detriment of the state. In casu, the legal question is that of the implications of the directive on the contract given that it was perfecta and the defendant had made payments based on the invoices send.

It is trite that a point of law can be raised at any stage even on appeal if it will cause no prejudice to the other party. See the cases of Austerlands (Pvt) Ltd v Trade & Investment Bank & Others 2006 (1) ZLR 372 (S) @ 378 B-F, Gazi v NRZ SC 60/15, Muchakata v Netherburn Mine 1996 (1) ZLR 153 (SC), Nissan Zimbabwe (Pvt) Ltd v Hopitt (Pvt) Ltd 1997 (1) ZLR 569 (SC) @ 571 D- 572 E and Zesa v Bopoto 1997 (1) ZLR 126 (SC) @ 131 E – 132 C. The plaintiff’s counsel was afforded an opportunity to address the court on the aspect of the contract being contrary to public policy. In my view, this is not a determining factor in the disposal of this matter.

It is common cause that the directive came after the contract had already been entered into. It is trite that there is a presumption against retrospectivity- see S vs Mzanywa and ors, 2006(1) ZLR 179(H). Although Treasury send the directive, at that time, the contract was already running. Even if s78(1) (g) allows cancellation and variation of contracts, this can only come from Treasury and not unilaterally. Nowhere does the directive state that after submission of due diligence reports, contracts should be varied or cancelled altogether. The directive just gave a cut-off date for submission of the reports and gave further directives for future conduct. No facts have been placed before the court on what transpired after the due diligence report was send. The explanation or submission by the defendant that it paid what it perceived to be what is owing can therefore not be legally sound. It ought to pay as per the contract.

Accordingly, the plaintiff has made its case for specific performance. Due to the fact that the claim by the plaintiff was substantially reduced in the agreed statement of facts, I will order that each party bears their own costs.


1. The defendant shall pay plaintiff the sum of ZWL$ 11 340.644 with interest at the prescribed rate from date of summons to date of payment in full.

2. Each party shall bear their own costs.

Muvingi and Mugadza, Plaintiff’s Legal Practitioners
Thondhlanga and Associates, Defendant’s Legal Practitioners
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