Property World (Pvt) LTD Versus NMB BANK Limited

### Preamble
1
HH 175-18
HC 12161/15
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PROPERTY WORLD (PVT) LTD

versus

NMB BANK LIMITED

HIGH COURT OF ZIMBABWE

MUSAKWA J

HARARE, 24 January and 28 March 2018

Civil Trial

T. Zhuwarara, for the plaintiff

T. Mpofu, for the defendant

MUSAKWA J: The plaintiff is claiming US$201 250 as commission for facilitating the sale of stand 1824 Ardbennie Township, interest on the said sum plus costs of suit. At the close of the plaintiff’s case the defendant applied for absolution from the instance.

It is not in dispute that the defendant is the sole shareholder in a company called Tatalogun Investments (Private) Limited. Tatalogun Investments (Private) Limited owned stand 1824 Ardbennie Township which it sold to a company called Varun Beverages (Zimbabwe) (Private) Limited. It is from this transaction that the plaintiff has instituted the present proceedings, claiming that it is the one that introduced the buyer to the seller.

Evidence for the plaintiff was led from its director Sharid Sadik. He testified that after he established that stand 1824 Ardbennie Township was on the market he approached Lionel Chinyamutangira, a representative of the plaintiff. Lionel Chinyamutangira confirmed that the property was for sale and asked the witness to find a suitable buyer. Sharid Sadik did his homework and secured a buyer in the form of Varun Beverages (Zimbabwe) (Private) Limited. Varun Beverages (Zimbabwe) (Private) Limited was then introduced to the defendant. Following the introduction Varun Beverages (Zimbabwe) (Private) Limited and the defendant entered into a memorandum of understanding, and thereafter an agreement of sale. Sharid Sadik was adamant that without his participation the defendant and Varun Beverages (Zimbabwe) (Private) Limited would not have contracted.

Sharid Sadik justified the suit against the defendant on the basis that the defendant is the sole shareholder in Tatalogun Investments (Private) Limited. The chief executive officer of the defendant is the one who also represented Tatalogun Investments (Private) Limited. The financing of the sale was through a mortgage facility provided by the defendant. Thus the agreement entailed the active participation of the defendant.

Sharid Sadik also explained that he is the one who prepared the property report. When the plaintiff demanded to be paid commission which constitutes five percent of the selling price, the defendant refused to pay. The defendant’s attitude was that the purchaser was responsible for the commission. This was reflected in the memorandum of understanding between Tatalogun Investments (Private) Limited and Varun Beverages (Zimbabwe) (Private) Limited.

Sharid Sadik was taken to task by counsel for the defendant regarding the contents of the documents that were produced during the course of his evidence in-chief. He conceded that there was no board resolution authorising the defendant to engage the plaintiff. He also conceded that he did not request for such a resolution. Concerning the correspondence in which the defendant denied appointing the plaintiff as its agent, Sharid Sadik could only state that it was understood between the parties that the plaintiff was instructed by the defendant. Having agreed that it is best practice to have a signed mandate, he stated that an unsigned form remained with the defendant. This is because Lionel Chinyamutangira refused to sign it. Allied to that, he conceded that there is no acknowledgment by the plaintiff that it was instructed by the defendant. Having been excluded from further involvement by the contracting parties, Sharid Sadik admitted that he did not register his concerns with the two. Although he understood that the defendant’s position was that the commission was to be paid by Varun Beverages, (Z9mbabwe) (Private) Limited he was not happy about it. Pressed further on the issue of commission, Sharid Sadik conceded that there was no consensus on who was to pay the commission.

With the closing of the plaintiff’ case came the inevitable application for absolution from the instance. As authorities on the test applied in such applications, Mr Mpofu cited Supreme Service Station (1969) (Pvt) Ltd v Fox Goodridge (Pvt) Ltd 1971 (1) RLR 1 and United Air Charters (Pvt) Ltd v Jarman 1994 (2) ZLR 341 (S). On the other hand Mr Zhuwarara cited Mackey v Whyte 1923 TPD 347.

The essence of such an application then is to determine whether there is sufficient evidence on which a court might make a reasonable mistake and find for the plaintiff. As was held in Supreme Service Station (1969) (Pvt) Ltd v Fox Goodridge (Pvt) Ltd supra an important aspect to note is that the defendant would not have testified. It was further held that a greater onus is placed on a defendant who applies for absolution before closing his case than when an application for absolution is made after closure of the defendant’s case. In the case of Erasmus v Boss 1939 CPD 204 it was held that where there is doubt regarding what a reasonable court might do, a judicial officer should always lean in favour of allowing the case to proceed to the defence.

Having referred to the law, I now proceed to deal with the issues. Mr Mpofu submitted that the witness for the plaintiff conceded under cross-examination that there was no consensus on commission. As this was a contract of offer and acceptance there was no consensus on who was responsible for paying commission. I find merit in this submission. It is a well-established principle of contract that for a valid contract to exist there must be a meeting of the minds. Subsequent to the sale of the property, on 19 October 2015 the plaintiff addressed a letter to the Chief Executive Officer of NMB Bank Limited. Part of the letter reads as follows:

“We refer to our meeting at your NMB Bank Head Office with Mr Lionel Chinyamutangira, the Executive Director of Banking on or around 30th April 2015. On the agenda in that meeting was the introduction by us to NMB Bank of a prospective buyer for a certain 18 acre piece of land currently bonded to NMB bank, located at the corner of Simon Mazorodze Road and St Georges Street in Harare.

……………………………………………………………………………………………………………………………………………………………………………………………………We were given a draft copy of this MOU which indeed mentions that Varun Beverages would be responsible for the commission. Thinking that we were actually protected, we continued to assist in the transaction by assisting to get the survey drawings showing the stand and also assisted in opening a water account and held meetings with ZESA to secure the power for the project.”

Then on 27 October 2015 the Chief Executive Officer of NMB Bank Limited responded to the plaintiff. Part of the letter reads as follows:

“You approached NMB Bank Limited to introduce to us a prospective buyer of a property we owned. It is our view that for you to do this you had been approached by someone to act as their agent and look for suitable land on their behalf.

As clearly comes out from your letter, NMB Bank Limited did not give you any mandate to act as an agent on its behalf. This is demonstrated by your not having any signed mandate from NMB Bank Limited to act on behalf of the bank we acknowledge that meetings were held between yourself and our Mr Chinyamutangira but having these meetings was not tantamount to obtaining a mandate from NMB Bank Limited.”

Sharid Sadik, the plaintiff’s witness struggled to explain the contents of the above letter. In some instances he had no answers to questions posed. The best he could say was that it was his understanding that the defendant would pay the plaintiff’s commission. This understanding was defeated by the witness’s ultimate concession that there was no consensus regarding the payment of commission.

Mr Zhuwarara sought to rely on the authorities that state that where an agent introduces a purchaser and is the effective cause of a sale then it is entitled to a commission. Thus he cited the cases of Webranchek v LK Jacobs 1948 (4) SA 671 and John H. Pritchard & Associates v Thounypart Estates 1967 (2) SA 511.  Mr Mpofu countered this submission by pointing out this is essentially a contract of principal and agent. He further submitted that since Sharid Sadik conceded that there was no consensus on mandate what legal principle allows a court to award a claim where there is no consensus. He also submitted that the authorities cited are only applicable where there is proof of mandate given.

I am satisfied that there was no mandate given to the plaintiff by the defendant. Sharid Sadik conceded that under cross-examination. What case then is the defendant expected to answer in light of the concession? Sharid Sadik was generally not an impressive witness when he underwent cross-examination. The plaintiff’s case was shattered through cross-examination of its sole witness.

Mr Mpofu also attacked the plaintiff’s case on the basis that it sued the wrong defendant. Incidentally the defendant had initially excepted to the pleadings on this basis. However the exception was not set down within the time frames provided by the rules and the defendant then pleaded over.

Mr Mpofu submitted that the defendant and Tatalogun Investments (Private) Limited are distinct legal entities notwithstanding the fact that the defendant wholly owns Tatalogun Investments (Private) Limited. Consequently, there is no privity of contract between the plaintiff and the defendant as the agreement of sale giving rise to the present litigation was concluded between Varun Beverages (Zimbabwe) (Private) Limited and Tatalogun Investments (Private) Limited. In support of the submission that a holding company and its subsidiary are separate legal entities Mr Mpofu cited the case of Zimnat Life Assurance Limited v George Dikinya SC 30-10. In that case GARWE JA held that a holding company is a separate legal persona which possesses its own interests, rights, assets and liabilities. The learned judge referred to Company Law, 4th ed by Cilliers & Benade at p 543. The same views are expressed in Hahlo’s South African Company Law, sixth edition.

Mr Zhuwarara countered Mr Mpofu’s submission in a two pronged manner. The first submission was that non-joinder of Tatalogun Investments (Private) Limited is not fatal to the proceedings. He referred to r 87 of the Rules of The High Court. In my view, the issue is not about non-joinder but citation of the wrong defendant.

Mr Zhuwarara’s other submission was that the memorandum of agreement in respect of the sale was made by the defendant and is replete with references to the defendant. That may well be the case but the agreement cites the parties as Tatalogun Investments (Private) Limited and Varun Beverages (Zimbabwe) (Private) Limited. The seller and owner of the property was Tatalogun Investments (Private) Limited and not the defendant. That is what really matters. That the defendant facilitated the agreement is immaterial because it is not cited as a party to the agreement.

In light of the foregoing, the application for absolution from the instance is hereby granted with costs.

Muvingi & Mugadza, plaintiff’s legal practitioners

Gill Godlonton & Gerrans, defendant’s legal practitioners