DISTRIBUTABLE (50)

Judgment No. SC 69/04

Civil Appeal No. 110/02

COALRIDGE (PRIVATE) LIMITED v

(1) PETER MAKAWU

(2) MOBIL ZIMBABWE (PRIVATE) LIMITED

SUPREME COURT OF ZIMBABWE

SANDURA  JA, CHEDA JA & MALABA JA

HARARE, MARCH 25 & SEPTEMBER 9, 2004

I Maja, for the appellant

G Mitha-Valla, for the respondents

MALABA  JA: This appeal is from a judgment of the High Court dated 20 March 2002, by which a claim by the appellant against the respondents jointly and severally for the payment of the sum of $1 600 000.00 was dismissed with costs.

The facts on which the case proceeded in the court a quo are not in dispute. The second respondent (“Mobil”) carries on the business of selling fuel and is the owner of Club Service Station and Workshop (”the service station”). The first respondent (“Peter”) is Mobil’s fuels manager.

In 1994 Mobil entered into a franchise agreement with one John Papatheocharous (“John”), in terms of which it leased to him the service station with authority to carry on the business of selling fuel supplied by it to members of the public. The lease agreement prohibited any sub-letting of the premises to a third party without prior written approval from Mobil.

In breach of the franchise agreement, John entered into a partnership agreement with one Spyrous Apostolou (“Apostolou”) to operate the service station and workshop. They formed a company called Friendship Investment (Private) Limited (“Friendship”), in which they held an equal number of shares. On 28 October 1999 Apostolou sold all his shares to the appellant (“Coalridge”), represented by its managing director, George Riva (“Riva”), for $2.25 million. After a year Coalridge sold all its shares in Friendship to John on credit for the same amount for which it had bought them from Apostolou. After paying two instalments John defaulted.

Mobil was owed $2.2 million by John for fuel it had delivered at the service station, for which he had paid by means of dishonoured cheques. As a result, fuel supplies were stopped, making it impossible for John to pay his debt to Coalridge. Mr Riva was aware that John was also indebted to Mobil.

On 2 August 2000 Riva proposed to Peter that Coalridge and Mobil take over the service station and run it as a joint venture to recover the debts due to them from John. The proposal was unacceptable to Mobil. On 4 September 2000 Riva wrote to Mobil, offering to raise the sum of $2 million from financial institutions to pay off the debt due to it from John in return for authority being given to Coalridge to take over the dealership in the service station. There was no reply to the letter from Mobil.

It appears that in the meantime Riva approached John and offered to give him money with which to pay his debt to Mobil so that he could recover the dealership in the service station, which Coalridge would then operate to recover the loan and the balance outstanding on the purchase price of the shares. On 29 November 2000 John wrote to Peter saying:

“I am now in a position to pay off my debt to Mobil Oil Zimbabwe. Therefore can arrangements be made for the forecourt to be handed back to me as from the 1^st December 2000.”

What happened is that Coalridge and John had entered into a written agreement, in terms of which the former would take over the running of the service station for the purposes of selling fuel as from 1 December 2000. Coalridge undertook to pay to Mobil the debt owed by John. It would then recover this money and the outstanding balance on the purchase price of the shares sold to John from the proceeds of fuel sales.

The agreement was in effect a sub-letting of the service station to Coalridge by John in breach of the franchise agreement. On 4 December 2000 Riva gave John the sum of $1 600 000.00, which the latter deposited into Mobil’s current bank account. John signed the deposit slip in his own name.

On receipt of the money Mobil appropriated it towards the debt due to it from John. When Coalridge was unable to pay the balance of the debt owed by John to Mobil, it demanded the refund of the $1 600 000.00, thereby disclosing the fact that it had entered into a sub-lease agreement with John, in terms of which the latter had sub-let the service station in breach of the franchise agreement. As a result of the disclosure of the illegal contract between Coalridge and John, Mobil cancelled the franchise agreement but refused to refund the sum of $1 600 000.00 to Coalridge.

Summons was issued by Coalridge on 6 June 2001, claiming the payment of $1 600 000.00 from John, Peter and Mobil jointly and severally, the one paying the others to be absolved. The defendants entered appearance to defend and, after a full trial, the court a quo held that John was liable for the payment of the money but dismissed the claim with costs against the other defendants. Hence this appeal.

It appears to me that the decision to dismiss the claim against the respondents was, on the facts, correct. The claim was based on the doctrine of unjust enrichment because there was no privity of contract between Coalridge and Mobil as the former had entered into an illegal contract with John, in terms of which the money was given to him for the purpose of discharging his indebtedness to Mobil. The circumstances of the case show that the claim could not be founded on unjust enrichment on the part of the respondents because Mobil could not be accused of having received the money from John without cause.

The money was paid to Mobil by John, who was its debtor. He paid it with the intention that the debt due to Mobil from him be discharged. In the letter of 29 November 2000 he indicated his readiness to discharge his obligation to Mobil. John made the payment of the money in his own name, without any indication that the money did not belong to him or that it was being paid for any purpose other than the discharge of his debt. Mobil was entitled to receive the money as payment of the debt due to it from John. It was unnecessary for the purposes of enforcement of the obligation due to it from John for Mobil to know where he had obtained the money from, provided it had no notice of it having been obtained by illegal means.

There was no basis upon which the court a quo could have ordered Mobil to repay the money to Coalridge when it was entitled to receive it from the person who in fact owed it a duty to pay the money.

The claim against Peter was ill-conceived as well, because the money was not paid to him. He had acted in the course and within the scope of his employment with Mobil. Peter had played no rôle at all in the decision by Riva to have Coalridge enter into the illegal contract with John, in terms of which he was given the $1 600 000.00 to pay to Mobil.

The appeal is accordingly dismissed with costs.

SANDURA  JA: I agree.

CHEDA JA: I agree.

Mudambanuki & Associates, appellant's legal practitioners

Kantor & Immerman, respondents' legal practitioners