Plaudit Chemicals CC v African Associated Mines and SMM Holdings (Private) Limited

The Plaintiff, a South African company in the business of supplying mining equipment, supplied spares and equipment to the Defendants (Zimbabwean companies) in 2008 on credit terms. The parties agreed that, save for an amount of R119,439.90, payments made were equivalent to the value of goods supplied. The Plaintiff claimed this outstanding amount plus interest at 10% per month, collection commission, and costs on a legal practitioner-client scale. The Defendant denied owing the amount and disputed liability for the interest and collection commission. The dispute centered on goods worth R119,439.90 that the Defendant contended were never received. The parties had contemplated formalizing credit terms in writing, including interest rates and security, but never signed such an agreement. Delivery notes showed that certain goods were marked as not received, with appropriate endorsements signed by both parties.

• Whether the Plaintiff was entitled to payment of R119,439.90 for goods allegedly not received by the Defendant
• Whether the Plaintiff was entitled to collection commission in the absence of a signed agreement and after obtaining judgment and proceeding to execution
• Whether the Plaintiff was entitled to interest at the rate of 10% per month in the absence of an agreement on the interest rate

The Plaintiff's claims were dismissed with costs.

The binding legal principles established are: (1) A party cannot be compelled to pay for goods not received, even where there is a supply relationship, where evidence (including signed delivery notes) confirms non-receipt; (2) Collection commission cannot be claimed based on an unsigned agreement, and once legal proceedings reach the execution stage, collection commission is no longer chargeable as recovery is effected through court process rather than debt collection; (3) In the absence of an agreement on interest rates, the Prescribed Rate of Interest Act [Chapter 8:10] applies, and interest can only be charged at the prescribed rate unless parties have agreed otherwise; (4) An excessive interest rate of 10% per month (120% per annum) is unenforceable where it was not expressly agreed to by the parties and could not have been in their contemplation.

The court made observations about the importance of legal practitioners filing documents timeously, particularly where undertakings have been made to file within stipulated periods. The court noted its frustration with the delays in receiving written submissions, with the Plaintiff's practitioner filing closing arguments more than four months after the undertaking was made (filing on 3 February 2014 versus the 30 September 2013 deadline). The court also noted that while the Law Society fixes collection commission rates under Statutory Instrument 314 of 1982, since dollarization the Law Society does not appear to have fixed a tariff governing collection commission, though 10% of capital debt has traditionally been applied.

This case reinforces important principles in Zimbabwean commercial law regarding: (1) the requirement that parties can only be held liable for goods actually received; (2) the limitation on claiming collection commission once matters proceed to execution stage; (3) the application of the Prescribed Rate of Interest Act to regulate interest claims in the absence of agreement; and (4) the unenforceability of excessive interest rates (120% per annum) that could not have been in the contemplation of the parties. The case demonstrates the courts' willingness to protect defendants from unreasonable contractual claims based on unsigned agreements and excessive charges.