Tonderai Abel Masango v Farmers Commodity Stock Exchange (Pvt) Ltd & 10 Others

### Preamble
1
HH 248-13
HC 4764/10 & 10 Other
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TONDERAI ABEL MASANGO

versus

FARMERS COMMODITY STOCK EXCHANGE (PVT) LTD (HC 4764/10)	(Case 1)

WEBSTER NYAMAYEDENGA BEPURA

versus

PETER KENNETH & ANOR 				(HC 6281/10)		(Case 2)

GODFREY MEDA

versus

PETER KENNETH & ANOR 				(HC 6282/10)		(Case 3)

TRUST CHINYAMA

versus

PETER KENNETH & ANOR 				[HC 6072/10]		(Case 4)

JEAN CHIKUVANYANGA (nee NYIRONGO)

versus

PETER KENNETH & ANOR 				(HC 6280/10)		(Case 5)

DAVIDZO ETHEL SHIRIHURU

versus

PETER KENNETH & ANOR 				(HC 6070/10)		(Case 6)

FELIX MAZIVARIMWE

versus

PETER KENNETH & ANOR 				(HC 6284/10)		(Case 7)

GOCHA RODWELL

versus

PETER KENNETH & ANOR 				(HC 6283/10)		(Case 8)

EDMORE MUGOBA

versus

PETER KENNETH & ANOR 				(HC 6279/10)		(Case 9)

MAGONYO OWEN

versus

PETER KENNETH & ANOR 				[HC 6278/10)		(Case 10)

MHANDARE PHIBION CHINGWARU

versus

PETER KENNETH & ANOR 				(HC 6071/10)		(Case 9)

HIGH COURT OF ZIMBABWE

MAFUSIRE J

HARARE, 6, 7, 19, 20, 21 June 2013 & 12 August 2013

Civil trial

C. W. Gumiro, for plaintiff in Case 1

G. C. Manyurureni, for plaintiffs in Cases 2 to 11

R. J. Gumbo, for defendant in Case 1; and for 2nd defendant in Cases 2 to 11

MAFUSIRE J: In September 2010 some 11 farmers from the Glendale farming area of Zimbabwe sued, on separate summonses, a company called Farmers Commodity Stock Exchange (Private) Limited in the one case, and one Peter Kenneth (Peter Kenneth) jointly with that company in the other cases. The claims were for payment of various sums of money. The farmers claimed they had sold maize grain to Farmers Commodity Stock Exchange (Private) Limited (hereafter referred to as FCSE) through Peter Kenneth. They alleged that Peter Kenneth was an employee or agent of FCSE. The plaintiff in case no 1, Tonderai Abel Masango (hereafter referred to as the first plaintiff), alleged that he had sold and delivered soya beans as well.

Upon application by FCSE all the 11 cases were consolidated to be heard by a single judge.

The background to the claims was common cause. FCSE was in the business of buying maize from various parts of the country. In the Glendale area they were buying the maize through Peter Kenneth. Peter Kenneth was renting premises from the local authority. He used those premises as a collection depot. The bagged grain would be collected from the different farms by trucks contracted by FCSE or Peter Kenneth. At Peter Kenneth’s depot were large containers for FCSE. The grain would be stored in those containers before dispatch to the various customers in and around Harare. Peter Kenneth dealt directly with the farmers. He sourced the grain and paid the farmers. His terms of payment were said to be cash within 7 days of delivery. FCSE was supplying the cash. Peter Kenneth moved around with a Mazda van emblazoned with FCSE’s name and logo.

Problems soon arose. Peter Kenneth did not pay for all the grain delivered. The farmers complained. Peter Kenneth became evasive. The farmers reported the matter to the police. Initially more than 50 farmers were involved. Both Peter Kenneth and certain representatives of FCSE were arrested. Peter Kenneth took rat poison in a suicide attempt. He was rushed to hospital just on time. He survived. FCSE’s representatives Mark Oliver Hutchings (Mark Hutchings) and Jonathan Paul Kennedy (J P Kennedy) were detained in custody for several weeks before being released on bail.

The charge against Peter Kenneth, FCSE, Mark Hutchings and P J Kennedy was fraud as defined in s 136 (a) and (b) as read with s 277 of the Criminal Law (Codification and Reform Act), [Cap 9: 13]. Evidently s 277 was invoked to attach personal liability on Mark Hutchings and J P Kennedy. They were said to be the directors of FCSE.

The particulars of the charge were that from July to August 2009 the accused persons deceived the farmers by purporting to be buying their maize at $300-00 dollars per tonne but that they did not pay them. Initially Peter Kenneth was a state witness. Subsequently he was jointly charged and tried together with FCSE and its representatives aforesaid Mark Hutchings and P J Kennedy. FCSE and its representatives were acquitted. Peter Kenneth was convicted and sentenced to 13 years imprisonment. Although he was in default at the time of the trial in this matter he was said to be out on bail pending appeal. It was also common cause that even after that conviction Peter Kenneth had again been subsequently convicted of a similar offence in which the victims were two of the farmers, Davidzo Ethel Shirihuru and Felix Mazivarimwe. For the latter fraud he was sentenced to 5 years imprisonment. But again he was said to be out on bail pending appeal.

The farmers were disgruntled by the outcome of the criminal proceedings. 11 of them decided to bring civil proceedings before this court. But of the initial 11only 6 actually turned up at the trial. The 6 are those listed in cases 1 to 6 above. The other 5, listed in cases 7 to 11 above, were in default. Their claims were dismissed with costs.

Peter Kenneth was a co-defendant in cases 2 to 11. However he neither filed any papers nor appeared at the trial.

The farmers’ cases before this court were all based on the allegation that Peter Kenneth was an “employee” of FCSE whose duty had been to procure grain on behalf of that company. They all claimed that they had contracted with FCSE through Peter Kenneth; that they had delivered their grains to FCSE through Peter Kenneth; that they had been paid for part of the deliveries by FCSE through Peter Kenneth and that they looked to FCSE for the remainder of their money.

On the other hand FCSE denied that Peter Kenneth had been their employee at the time or any other, but that he was someone the company had contracted as an independent agent to procure maize for it in the Glendale – Mvurwi area. He had been on a commission. He was being paid cash in advance for the procurement of the maize. He was to buy the maize at $150-00 per tonne and had no authority to buy at any price higher. FCSE had stationed its containers at his depot to facilitate collection. It had also released to him one of its motor vehicles at his special instance and request to ease up travel difficulties as the area he covered was vast. However, the arrangement was a credit sale. He would pay for the car from his commissions. FCSE also claimed that Peter Kenneth was an agent of several other grain merchants, among them his own company by the name of Glen Grain (Private) Limited and an individual by the name of Wayne Moss. FCSE stated that it had no control over Peter Kenneth’s dealings. The company was only interested in collecting grain from him for the cash disbursed to him in advance.

Except for the plaintiff in case no 4, Trust Chinyama (hereafter referred to as the fourth plaintiff), all the other plaintiffs gave their evidence in Shona. It soon became apparent, especially as the plaintiff in case no 2, Webster Nyamayedenga Bepura (the second plaintiff) was testifying, that the Shona language comes short on terms like “employee”, “employer”, “agent” and “independent contractor”. In the Shona language the terms “employee”, “agent” and “independent contractor” seem to mean the same thing, namely one doing a job or a piece of work for another for money. With regards to the term “employer” almost all the plaintiffs used the colloquial expression “varungu vake” meaning “his employers”. Therefore when the plaintiffs referred to Mark Hutchings and P J Kennedy as “varungu vake” in relation to Peter Kenneth it was clearly not in reference to their skin colour, for “varungu” is Shona for “white persons”, but to them as his employers. On the other hand the plaintiffs were clearly not ascribing any technical meaning to the word “employer” but simply the sense that it was those employers that would pay Peter Kenneth who in turn would pay them.

The crisp issue before me was whether Peter Kenneth was an employee and/or agent of, and/or for FCSE, or an independent contractor.

It is settled law that a principal is liable for the delicts of his agent where the agent is a servant but not where the agent is a contractor, subcontractor or the servant of a contractor or subcontractor: see M’kize v Maartens 1914 AD 382; Denniss Edwards & Co. v Lloyd 1919 TPD 291; Estate van der Byl v Swanepoel 1927 AD 141; Colonial Mutual Life Assurance Society Ltd v Macdonald 1931 SA 412 (AD); Smit v Workmen’s Compensation Commissioner 1979 (1) SA 51 (A); Southampton Assurance Co of Zimbabwe Ltd v Mutuma & Anor 1990 (1) ZLR 12 (HC).

DE VILLIERS CJ, in the Colonial Mutual Life Assurance Society case above, explained that there can be no satisfactory reason that can be advanced for holding a third party liable for the delictual acts of another when he neither committed such delicts nor authorised them. Earlier cases had sought to explain the rationale of the rule by saying “the reason why a principal shall answer for his deputy is, because as he, the principal has power to put him in, so he has power to put him out without showing any cause”. Other reasons advanced were that where a person commits a delict it is only just that he be held liable for his own wrong, but however where he gets another to do the deed, it is equitable that he should be held equally liable. Yet other reasons were that the principal is liable because of his own negligence in selecting such an agent for the work or for his failure to exercise proper control of the servant.

However, to the learned Chief Justice it was plainly a question of expediency. At p 430 he put it as follows:

“Experience teaches that the person who does the damage is in almost all cases not in a position to pay. The question then resolves itself into one between the principal and the innocent third party, and the law has decided (at least where the relation of master and servant exists between the principal and his agent) that of these two the person who takes the benefit of the activities of the agent should bear the loss, ……”

Therefore, in a case like the present the task is to determine whether the contractual relationship was one of master and servant or that of an independent contractor and a principal. Every case depends on its own set of circumstances.

Section 2 of the Labour Act, [Cap 28: 01] defines an “employee” and an “employer” as follows:

“‘employee’ means any person who performs work or services for another person for remuneration or reward on such terms and conditions as agreed upon by the parties or as provided for in this Act, and includes a person performing work or services for another person-

in circumstances where, even the person performing the work or services supplies his own tools or works under flexible conditions of service, the hirer provides the substantial investment in or assumes the substantial risk of the undertaking; or

in any other circumstances that more closely resemble the relationship between an employee and employer than that between an independent contractor and hirer of services. ”

“‘employer’ means any person whatsoever who employs or provides work for another person and remunerates or expressly or tacitly undertakes to remunerate him, and includes-

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The definitions in the Labour Act are unhelpful in determining whether Peter Kenneth was, at the relevant time, an employee or agent of FCSE or an independent contractor. However the reference in that Act to “… that more closely resemble the relationship between an independent contractor and hirer of services …” plainly shows that the Legislature was alive to the fact that there is a distinction between an employee or agent and an independent contractor. One must therefore look to the common law as expressed through the cases to determine whether at the relevant time Peter Kenneth was an employee or agent of FCSE or an independent contractor.

An employee, an agent and an independent contractor all render service to another for remuneration. Yet there are differences. In the Colonial Mutual Life Assurance Society case above, WESSELS JA stated:

“There are many cases in which one person renders service to another under a contract between them. In some cases the agent’s occupation is not an independent one, he is not free to render the service or withhold it, he is bound to time and place. In other cases the agent has an independent occupation, and in carrying out this occupation he renders service to others. This does not mean he does other work besides the service of his principal. The service he does to his principal may be …. his only occupation, but it is essential to determine whether in carrying out this occupation he was a free agent to do what he pleased and how he pleased, or whether his method of doing his own work was prescribed for him.”

The learned judge of appeal quoted FRASER on Master and Servant to determine the difference between an agent and an independent contractor. It has to be ascertained whether one renders his service in the course of an independent occupation representing the will of the employer only as to the result of the work and not as to the means by which it is accomplished.

ROOS JA, in the same case, admits that in many cases the question as to whether a person is a servant is a very difficult one because a contract may have some of the features of an agency agreement and yet be a service contract or vice versa.

DE VILLIERS CJ, also in the same case, quotes the example by SALMOND Law of Tortsof a coachman and a cabman to illustrate the difference between an agent and an independent contractor:

“Thus, my coachman is my servant; and if by negligent driving he runs over someone in the street, I am responsible. But the cabman whom I engage for a particular journey is not my servant; he is not under my orders; he has made a contract with me, not that he will obey my directions, but that he will drive me to a certain place; if an accident happens by his negligence he is responsible, and not I. So I am responsible for the domestic servants in my house, but I am not responsible for a skilled artisan whom I engage to do a certain job in my house – for example, to paint it, or to mend a window.”

There have been several parameters or tests that have been developed to determine whether a particular contractual relationship is one of master and servant or one of principal and independent contractor. JONATHAN M SILKE The Law of Agency in South Africa, 3rd ed. at p 26 states:

“An accurate test for distinguishing the agent from the independent contractor is that the agent has authority to bind his principal in contract whereas the independent contractor has no such power.”

In the cases of Denniss Edwards above and the judgment of the lower court in Smit v Workmen’s Compensation 1978 (1) SA 339 (C) it was noted that the provision in a contract of remuneration by commission, although not by itself decisive or conclusive, is a strong indication against a relationship of master and servant.

The degree of control, supervision and freedom helps in determining whether a particular contractual relationship is one of master and servant or one of an independent contractor and principal. On “control” JOUBERT JA, in the appeal judgment in the Smit’s case above, said:

“Control is a wide concept. It includes inter alia the right of an employer to decide what work is to be done by the employee, the manner in which it is to be done by him, the means to be employed by him in doing it, the time when and the place where it is to be done by him. Supervision implies the right of the employer to inspect and direct the work being done by the employee.”

The degree of control and supervision test was succinctly enunciated in the Colonial Mutual Life Assurance Society case above, especially in the judgment of DE VILLIERS CJ. Quoting BOWSTEAD on Agency the learned Chief Justice said at p 433:

“Bowstead on Agency … is equally clear: ‘The difference,’ he says, ‘between an agent and an independent contractor is, that an agent is bound to act in the matter of the agency subject to the directions and control of the principal, whereas an independent contractor merely undertakes to perform certain specified work, or produce a certain specified result, the manner and means of performance or production being left to his discretion, except as far as they are specified by the contract.’ This is a distinction which in our law cannot be ignored for the contract between master and servant is one of letting and hiring of services (locatio conductio operarum) whereas the contract between the principal and a contractor is the letting and hiring of some definite  piece of work (locatio conductio operis). In the former case the relation between the two contracting parties is much more intimate than in the latter, the servant becoming subordinate to the master, whereas in the latter case the contractor remains on a footing of equality with the employer. The crucial difference between these two cases lies in the fact that where a master engages a servant to work for him the master is entitled under the contract to supervise and control the work of the servant. He is entitled at any time to order the servant to desist, and if the matter is sufficiently serious may even dismiss him for disobedience.”

In summary, the employer has the right to supervise and control the work of the employee. The employer has the right to prescribe to the employee not only what work has to be done, but also the manner of doing it. In the absence of these features the contractual relationship cannot be one of employer and employee.

In the present case none of the plaintiffs ever dealt directly with FCSE. They claimed Peter Kenneth told them that he worked for the company. They took his word for it. But even on this score “employee” could have meant anything. The plaintiffs placed great reliance on the fact that Peter Kenneth was driving the company’s vehicle and that the company’s containers were stationed at his depot.

In the Colonial Mutual Life Assurance Society case aforesaid a life insurance agent who devoted himself exclusively to the business of the life assurance company and was being remunerated on a commission basis had, among other things, the use of a car sold to him by that company on hire purchase. After examining the details of the contract, the court held that the agent was an independent contractor and not an employee of the company. On the issue of the car ROOS JA stated:

“The agreement about the motor car does not order Britain to use the car. He may use any means he likes and in addition he may use the motor car in any way which he chooses but only for the business of the society. This cannot affect the nature of his position or the relationship between him and the society.”

It was a similar situation in Smit’s case. The appellant was an insurance agent. He was prohibited from acting directly or indirectly for any other insurance company although he was not required to work full time and he could do other work. He was given the use of the company vehicle, albeit up to a certain mileage per month. He had the use of a company office and access to telephone facilities of the company. He was held to be an independent contractor. In its judgment that was upheld on appeal the lower court, on the issue of the motor vehicle, had this to say:

“In regard to the use of a company car, etc. as a neutral factor under the circumstances of the present case, the appellant was not obliged to use the company’s car and office facilities and the availability of these did not in any way fetter his freedom of movement.”

In the present case the situation of Peter Kenneth and FCSE was far removed from the master and servant relationship. There was absolutely nothing advanced by the plaintiffs to establish that kind of contractual situation. Most plaintiffs produced purported delivery notes or some invoices as proof of delivery of the grain. However, those had all been issued by either Peter Kenneth himself or his clerk, one Muyambo. That is hardly evidence of an employer and employee relationship.

The first plaintiff’s evidence of Peter Kenneth as being an employee of FCSE was that through an advert in the press that his son had come across and in which FCSE was said to be buying grain, he had obtained PJ Kennedy’s telephone number. He had subsequently telephoned PJ Kennedy and had told him that he had grain to sell. Upon enquiry from PJ Kennedy he had disclosed the whereabouts of his farm as being in the Glendale area, whereupon PJ Kennedy had referred him to Peter Kenneth as their “employee” in that area. Thus unlike all the other plaintiffs, the first plaintiff claimed to have become aware of Peter Kenneth only through PJ Kennedy.

The second plaintiff’s evidence on the point was that upon becoming aware that Peter Kenneth was buying maize, he had gone to his depot and had asked him in what capacity he was buying. Peter Kenneth had allegedly told him that he was buying in his capacity as FCSE. As proof Peter Kenneth had allegedly pointed to the Mazda vehicle parked nearby which had been inscribed with the name and logo of FCSE. The second plaintiff said he had become satisfied and had required no further proof.

The third plaintiff’s evidence was that he had learnt through a third party that some white persons who were Peter Kenneth’s employers were buying maize. He had sought directions and had eventually arrived at Peter Kenneth’s place where he had seen lots of people, delivery trucks, scotch carts and large quantities of maize grain. Upon enquiry Peter Kenneth had told him he was buying the grain at $300-00 per tonne and that payment would be made within 7 days of delivery. He had established that Peter Kenneth’s employers would bring the cash.

The fourth plaintiff’s evidence was that Peter Kenneth, whilst driving a truck inscribed with defendant’s name, had led some delivery trucks to his farm for the collection of the grain. He had been informed that the maize  would be delivered to a company called Blue Ribbon Foods. They had agreed on a price of $300-00 per tonne which would be paid within 7 days of delivery. However, after the lapse of more than 7 days without any payment being made he had driven to Peter Kenneth’s place. There he had seen PJ Kennedy bringing cash to Peter Kenneth after which he had been paid in part.

In cross-examination the fourth plaintiff said that when they as farmers had collectively started making enquiries directly with FCSE after Peter Kenneth had failed to pay them PJ Kennedy had admitted that Peter Kenneth had indeed been “their man”. The fourth plaintiff admitted that at no stage had PJ Kennedy claimed that Peter Kenneth was their employee. However, he said by PJ Kennedy referring to Peter Kenneth as “their man” he had deduced that to mean he was their employee.

The fifth plaintiff’s evidence was that she had come to know of Peter Kenneth’s connection with FCSE when she had started making follow-ups on her money after her maize had already been collected. She had seen PJ Kennedy and Mark Hutchings bringing some money to Peter Kenneth who had referred to them as “my bosses”.

The sixth plaintiff’s evidence was that she had sold and delivered her grain to Peter Kenneth who had claimed he had some “mabhunhu” from FCSE that he worked with. “Mabhunhu” is Shona lingo for whites.

The sixth plaintiff was the only party to call a witness. His name was Mr Vincent Schults. He was quite advanced in age and he admitted to some memory lapses. However, the gist of his evidence was that he was a trucker who had been contracted and had been paid by FCSE to collect maize grain from sixth plaintiff’s farm. Beyond this his testimony became incoherent.

FCSE gave evidence through Mark Hutchings. He was quite emphatic. Peter Kenneth was no more than an agent that they had contracted to source maize for them at $150-00 per tonne. They had no control over him. Where and how he got the maize was up to him. He was left entirely to his own designs. He used his own stationery. He employed his own labour. He worked at his own time and from his own premises. He and not them dealt with the farmers at all times. He was not on a salary but a commission. To facilitate storage they had stationed their containers at his depot. They had sold him one of their trucks to ease up his travel woes. They would transfer ownership of the vehicle to him upon full payment of the purchase price. They were not the only company Peter Kenneth sourced maize for. He not only procured for others but also for himself through his own company. Mark Hutchings produced several documents, among them, the grain procurement arrangement with Peter Kenneth and on the sale of the car to him.

Mark Hutchings said they would never know what was sourced from which farmer and on what terms. Only after Peter Kenneth had taken poison did FCSE get to know that the plaintiffs had allegedly been promised $300-00 per tonne. However that price would make no sense to FCSE. For its own forward contracts with its customers the sale price was $268-00 per tonne. Therefore they would not buy for more and sell for less.

Mark Hutchings further said that FCSE had got to know Peter Kenneth in about May of 2009. He had been procuring soya beans for them. They had got to trust him. Their relationship had grown to such an extent that not only had they extended the grain procurement deal to cover maize but also that they would pay him large sums of money in advance for the procurement of the maize. Only afterwards, after some detailed reconciliation, did it transpire that there was a huge discrepancy between the money that they had disbursed to Peter Kenneth and the actual grain that he had delivered. FCSE had also reported him to the police.

I find that there is no evidence that Peter Kenneth was an employee of FCSE. Even the best evidence of some of the plaintiffs such as first Plaintiff’s claim that PJ Kennedy had told him that Peter Kenneth was their employee; or that of the fourth plaintiff that PJ Kennedy had told him that Peter Kenneth was “their man”; or that of several other plaintiffs that Peter Kenneth drove a motor vehicle emblazoned with FCSE’s name and logo; all falls woefully short of what is required to establish a master and servant relationship. What the parties call each other in such a contractual relationship, or what they perceive their relationship to be is not decisive and may actually be irrelevant. The court looks at the totality of the evidence and all the circumstances to determine the true nature of the relationship.

In the Colonial Mutual Life Assurance Society case, for example, it was the company itself that had made available a car to the agent. It was the company itself that had facilitated the insurance cover for that vehicle. And it was the company itself that had completed the proposal form for that cover. One of the questions on the proposal form was “Do you use your car in connection with your employer’s business?”. The answer was “Yes.” In the course of his judgment ROOS JA commented:

“It is a curious answer for the employer himself to give, but presumably the meaning is that the person using the car will use it about the business of the society.”

That did not stop the court from holding that the agent was an independent contractor.

The point is, even accepting the first plaintiff’s claim in casu that PJ Kennedy had told him that Peter Kenneth was “their employee”, this takes the plaintiffs’ cases no further. Apart from the fact that it is highly unlikely that PJ Kennedy would have been using “employee” in its more technical sense, the nature of the relationship between Peter Kenneth and FCSE, as disclosed by the totality of the evidence, was completely nowhere near that of master and servant. Peter Kenneth was plainly an independent contractor.

In the result the plaintiffs’ claims are hereby dismissed with costs. Judgment is hereby entered for the defendant in case no 1 above and is also entered for the second defendant in the rest of the cases.

Ngarava Moyo & Chikono, legal practitioners for plaintiff in case 1

Manyurureni & Company, legal practitioners for plaintiffs in cases 2 to 11

Gumbo & Associates, legal practitioners for defendant in case 1 and for 2nd defendant in cases 2 to 11