Polomo Enterprises Private Limited v Tillcorp Private Limited and David Smith; David Smith v Tillcorp Private Limited and Polomo Enterprises Private Limited

Tillcorp Private Limited (Tillcorp) issued summons in the Magistrates' Court claiming payment of US$42,000 from Polomo Enterprises Private Limited (Polomo) and David Smith (Smith), a director of Polomo. Tillcorp alleged that in February 2024 it concluded a verbal agreement with Polomo, represented by Smith, whereby Polomo would remit US$42,000 to Tillcorp's identified recipient. Tillcorp alleged Polomo breached the agreement by not remitting the money, resulting in Polomo being enriched at Tillcorp's expense. Polomo filed a plea alleging the agreement was an illegal foreign currency exchange deal contrary to s4 of the Exchange Control Regulations S.I 109 of 1996, and that there was no legal basis for the demand. Tillcorp then filed an application for summary judgment, which was opposed by both Polomo and Smith. The Magistrates' Court dismissed Smith's exception and granted summary judgment in favor of Tillcorp. Both Polomo and Smith filed separate appeals which were consolidated.

• Whether the court a quo erred in granting summary judgment where the appellant had raised a triable issue regarding the illegality of the transaction
• Whether the court a quo erred in pronouncing on the in pari delicto rule when this issue was not put before it by the parties
• Whether the court a quo erred in dismissing David Smith's exception that no cause of action was disclosed against him
• Whether the court a quo erred in finding that David Smith was personally liable for the debts of Polomo merely by virtue of representing the company
• Whether the appellants had established a bona fide defence sufficient to defeat the application for summary judgment

Case No. 1 (Polomo's appeal): Appeal allowed with costs. The judgment of the court a quo set aside and substituted with an order dismissing the application for summary judgment with costs. Case No. 2 (Smith's appeal): Appeal against the dismissal of the exception dismissed. Appeal against the granting of summary judgment allowed with costs. The judgment of the court a quo set aside and substituted with an order dismissing the application for summary judgment with costs.

The binding legal principles established are: (1) In summary judgment applications, a defendant need only establish a mere possibility of success, a plausible case, a triable issue, or a reasonable possibility of injustice if summary judgment is granted - the burden is not onerous. (2) An allegation that the underlying transaction is illegal under Exchange Control Regulations constitutes a triable issue sufficient to defeat summary judgment, particularly where there are unexplained aspects of the plaintiff's case. (3) Courts must not pronounce on issues not raised by the parties without first inviting submissions - courts cannot go on a frolic of their own. (4) A company is a separate legal persona from its directors, and a director is not personally liable for company debts merely by virtue of representing the company in entering into a contract - the general rule is that an agent is not personally liable for the principal's liabilities under a contract.

The court observed that when a point of law or factual issue exercises the court's mind but has not been raised by parties, the court is at liberty to put the question to the parties and ask them to make submissions on the matter before deciding - courts should not decide such matters mero motu (of their own accord). The court also noted the unexplained aspects of Tillcorp's case, including why Tillcorp would use an intermediary (Polomo) to pay a third party when it could pay directly, and the absence of details regarding the alleged maize purchase transaction (who was selling, to whom, in what quantities, for how much). These observations suggested weaknesses in the respondent's case that supported the existence of triable issues.

This case is significant in Zimbabwean commercial law for clarifying the test for summary judgment, particularly that a defendant need only establish a mere possibility of success, a plausible case, or a triable issue to defeat summary judgment. It reinforces that summary judgment is a drastic remedy not to be granted where there is any possibility that the defence might succeed. The judgment is important in emphasizing that allegations of illegality of the underlying transaction constitute a triable issue that should be determined at trial rather than on summary judgment. The case also reinforces the principle that courts cannot determine issues not placed before them by parties without inviting submissions. It affirms the separate legal personality doctrine and the principle that directors/agents are not personally liable for company/principal debts merely by virtue of representing the company, absent special circumstances.