The first applicant (Alba Consolidated Fund) and first respondent (Axia Operations Limited) entered into an agreement of cession on 26 January 2019, whereby the first applicant purportedly ceded its rights in 252,750.5 kilograms of tobacco to the first respondent. Prior to this, the first respondent had paid USD 4,966,507.71 to the first applicant under a trade facilitation and payment agreement involving letters of credit. The first respondent subsequently alleged that the applicants fraudulently misappropriated these funds. On 24 May 2019, the third respondent (Detective Constable Blessing Hove) seized tobacco and other items from the first applicant's premises pursuant to a warrant of search and seizure issued by a magistrate's court in connection with fraud and money-laundering investigations. The applicants alleged that following the seizure, the first and third respondents connived to allow Rambanapasi (the first respondent's finance director) to take 340 bales of tobacco from the warehouse where the seized tobacco was kept under police custody. The applicants sought a declaratur that the cession agreement was null and void, and an order compelling the return of the 340 bales of tobacco.
The application was granted as prayed. The court declared the cession agreement dated 26 June 2019 to be null and void and set it aside. The first, second and third respondents were ordered, jointly and severally, the one paying the others to be absolved, to return 340 bales of tobacco taken from stand numbers 1252 and 1253, 24th Road, Tynwald South, Harare within 48 hours of service of the court order.
A cession agreement is null and void where the signatory purporting to act on behalf of the cedent company: (1) is merely an employee with no authority to cede rights; (2) acts under coercion or instruction from a single director rather than pursuant to a proper board resolution; and (3) the cedent company has not passed a board resolution authorizing the cession. Corporate powers vest in directors as a board, not as individuals, and directors exercise their powers by passing resolutions at board meetings. No one can give what they do not have (nemo dat quod non habet) - an employee with no right to property cannot transfer such right. A cession intended to transfer a right that is not an asset in the estate of the cedent is ineffective. In motion proceedings, a respondent who wishes to dispute material facts must produce positive evidence to the contrary, not merely make bare denials. A material dispute of fact exists only where the respondent produces positive evidence contradicting the applicant's material averments on oath.
The court made strong obiter remarks criticizing the practice of raising frivolous and vexatious preliminary objections. Mangota J stated that "it has become fashionable for litigants who know that they have nothing to say either in the prosecution of their cases or in defence of themselves to raise frivolous and vexatious in limine matters" in the vain hope of clouding the real issues. The court warned that this "unwholesome conduct by litigants must stop forthwith" and that in future, costs will be visited upon legal practitioners who fail to assess the propriety of objections they raise on behalf of their clients. The court noted that legal practitioners are forewarned and "should not cry foul when the court proceeds to censure them for their unwholesome conduct where they continue to remain unbridled." The court also observed that production of a company resolution is not a necessity in all cases, especially where parties have had prior dealings, citing African Banking Corporation t/a Banc ABC v PWC Motors (Pvt) Ltd, HH 123/13. The court emphasized that all it needs to satisfy itself of is that the evidence shows it is the company itself litigating and not some unauthorized person, particularly where the deponent states they have authority to represent the entity.
This case is significant in Zimbabwean company law and contract law for several reasons: (1) it reaffirms the principle that corporate powers vest in directors as a board, not as individuals, and that board resolutions are required for significant transactions such as cession agreements; (2) it confirms that employees of a company, regardless of position, cannot bind the company to major transactions without proper authorization; (3) it establishes that cession is ineffective where the cedent does not have the right being ceded or lacks authority to cede (nemo dat quod non habet principle); (4) it provides guidance on when prior dealings between parties may dispense with the need for strict proof of authority to represent a corporate entity; (5) it addresses the distinction between bare denials and material disputes of fact in motion proceedings, emphasizing that respondents must produce positive evidence to the contrary, not merely deny allegations; (6) it demonstrates judicial disapproval of frivolous preliminary objections and warns that costs may be awarded against legal practitioners who raise such objections; and (7) it illustrates how circumstantial evidence and probabilities can be used to resolve factual disputes on the papers in appropriate cases.