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ZESA Holdings sued US$36k for breaching contract 

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By Staff Reporter


ZESA Holdings has been dragged to court by a security company which claimed US$36 660 in damages after the former breached a services contract signed between the parties.

The plaintiff in the matter is Manifest Security (Private) Limited whose arguments did not find favour with the court before its application was struck off the roll by High Court judge Justice Siyabona Musithu.

According to court papers, on 3 November 2021, Manifest Security instituted proceedings against ZESA claiming damages in the sum of US$36 660, arising from a breach of contract signed by the parties.

The company also claimed interest plus costs of the suit.

The brief background to the case is that on 28 December 2020, the parties entered a written contract in terms of which the plaintiff was required to provide security guard services to the defendant.

The contract was signed following the floating of a tender by ZESA for the provision of security services under reference number ZH/RFP/13/2020.

In terms of clause 6 of the contract, Manifest Security was required to provide the services at eleven (11) sites assigned by ZESA.

The monthly charge for all the sites was ZWL $439 696.21, which was equivalent to US$5 405.00.

Manifest Security claims that ZESA breached the agreement between the parties by assigning only five sites at which the services would be rendered instead of eleven.

According to the plaintiff, the remaining six sites that were not availed had a contract price of US$36 660, which would have been paid for twelve months.

Because of ZESA’s breach, the plaintiff avers that it suffered damages in the sum of US$36 660.00, being the amount that it would have earned from the provision of security services at the said six sites.

ZESA opposed the application arguing that the relief sought by Manifest Security was incompetent.

This was because the plaintiff’s claim was in United States dollars, instead of the local currency.

“The transaction between the parties was a domestic one. The contract between the parties was denominated in local currency.

“The position of the law was that monetary obligations in respect of such transactions had to be settled in local currency. The claim was therefore bad at law and had to be dismissed,” ZESA argued.

ZESA also said the court had no jurisdiction to hear the matter.

This was because, in terms of the same contract, any dispute arising therefrom had to be referred to arbitration.

The power utility said the plaintiff had rushed to court before exhausting the available domestic remedies. The judge ruled in favour of ZESA.

On whether it was improper for the plaintiff to denominate its claim in the United States dollar currency, the court’s attention was drawn to the provisions of the Exchange Control (Exclusive Use of Zimbabwe Dollar for Domestic Transactions) Regulations, 2019, promulgated as Statutory 212 of 2019.

“As already noted, the instrument defines domestic transaction to include any transaction within Zimbabwe whereby goods or services are offered for sale or attempted to be offered for sale.

“The nature of the transaction between the plaintiff and the defendant is not one of those excluded from the scope of domestic transactions in terms of s 4 of the instrument,” said the judge.

“The plaintiff’s claim makes it clear that the sum of US$36 660.00 was the contract price for the remaining six sites for a period of twelve months.

“The amendments that the plaintiff sought to make had the effect of adding the words “payable at the prevailing interbank rate” to part (a) of the plaintiff’s claim on the summons and to part (a) of the prayer to the declaration,” the judge noted.

He said he could only assume that the proposed amendment was triggered by the realisation that the claim as presently pleaded in the summons and declaration was not competent given the provisions of the Instrument.

“It is for the foregoing reasons that I determine that there is merit in the defendant’s preliminary point.

“The plaintiff’s claim is not properly before the court and must be struck off. That being the case it becomes needless to traverse the merits of the matter,” he ruled.