Ashanti Gold Fields Zimbabwe Ltd v Jafati Mdala (SC 60/17)

 “The evidence as a whole in my view leads to one logical conclusion; that the appellant was well aware of what it was doing when it entered into the contracts and the legal consequences thereof. This appeal is, therefore, nothing more than an attempt to depart from a valid and legally binding agreement. Courts frown upon attempts to skirt one’s legal obligation and it is therefore proper that the appellant be made to pay the respondent’s costs.”

Introduction

This case is amongst a series of judgements passed by the Supreme Court of Zimbabwe supporting the argument that courts do not readily rewrite contracts between an employee and his or her employer. All things being equal, the court will readily accept all the terms and conditions in a document duly signed by the parties as binding. This is provided that the contract was not induced by malice like fraud and misrepresentation.

Facts

The major source of the dispute was the fact that the employee had signed two agreements governing his occupation of company-provided accommodation. The first agreement was a memorandum of agreement where the appellant company had agreed to sell its houses to its employees. In the second instance, there was a lease agreement also governing the occupancy of the same house. The lease stipulated the rentals that the employee was entitled to pay.

The employer started deducting money from the employee’s salary. These deductions were itemised as “rent to buy”. The same amounts were also stated in the initial memorandum of agreement as amounts payable on the sale of the said house. The employee’s contract ended on 4 June 2007 and the employer required the employee to vacate the house. Believing that he had made a full payment in purchasing the house, the employee refused to vacate. Eviction proceedings started in the High Court, but the court ruled in favour of the employee. It was based on this HC judgement that the appellant company approached the Supreme Court.

Court’s Reasoning

Role of court in contractual disputes

The SC ruled that its duty was never to write a contract but to interpret the same. In interpreting the contract, the court is duty-bound to uphold the intention of the parties, provided the contract is valid.

The court noted that the memorandum of agreement signed by the parties made up a valid contract of sale in that the parties agreed to buy and sell the house and agreed on a price. Once these requirements were met, the court will seek to uphold the agreement. It made an important remark:

“If the appellant is to persist with the argument, it can only be construed as contracting in bad faith and as stated in the above cases, courts are not there to absolve one party of its obligations to another, particularly where the other party contracted in good faith and carried out its side of the agreement.”

Caveat Subscriptor

This is the principle that a party to a contract is bound by his signature whether he has read and understood the contract. The SC argued that this principle buttressed the argument that the memorandum of agreement signed between the employer and the employee was a valid contract of sale because the document said so and that the parties had signed the agreement.

It further argued that the lease agreement signed by the parties only completed the sale because deductions were made from the employees’ salary showing that this was a “rent to buy” arrangement.

Based on the above, the Supreme Court dismissed the appeal with costs.

Own Comment

The biggest lesson one can learn from this case is that courts are bound by what parties would have agreed. The courts do not have a duty to rewrite contracts as their only role is to give meaning to their terms. This case confirms what the SC has held in a plethora of cases like Unilever Zimbabwe (Pvt) Ltd v Matsheza[1], Magodora & Others v CARE International Zimbabwe[2]  and Lawrence Shumbayaonda v Madhatter Mining (Private) Limited.[3] Contracts duly agreed upon by the parties will be upheld.


[1]           Unilever Zimbabwe (Pvt) Ltd. v Matsheza (SC 16/2017).

[2]           Magodora & Others v CARE International Zimbabwe (SC 191/13).

[3]           Lawrence Shumbayaonda v Madhatter Mining (Private) Limited (HH 147-2010).

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