Riozim Limited v Famski Trading Group (Pvt) Ltd and Others

Riozim Limited (plaintiff) issued summons against Famski Trading Group (Pvt) Ltd (first defendant), Cuthbert Nhika (second defendant), Jerifanos Wilson Tondori (third defendant), Glen Nduramo Tendayi, and Brian Chitenderu (fourth defendant) for $67,509.89 arising from goods sold and delivered. The plaintiff alleged that the first defendant supplied goods at exorbitant prices after misrepresenting that their prices were the lowest on the market, charging $138,657.80 when the fair market value was $71,148.91. The trial proceeded only against the first and fourth defendants. The first defendant was one of plaintiff's suppliers, and the fourth defendant was its Managing Director who negotiated transactions. An internal audit investigation revealed that quotations from J.A. Industries and Exlone that accompanied the first defendant's quotations were fake, designed to make the first defendant's prices appear competitive. The fourth defendant was discovered to be a director in a South African company owned by Mr. Tondori, the plaintiff's then Group Purchasing Manager. Evidence showed 16 transactions where the first defendant supplied goods at overpriced values.

• Whether the plaintiff established a prima facie case to dismiss the application for absolution from the instance
• Whether the first and fourth defendants made fraudulent misrepresentations to the plaintiff regarding pricing
• Whether hearsay evidence in the form of email quotations was admissible under s 27(1) of the Civil Evidence Act
• Whether the plaintiff proved losses resulting from the fraudulent misrepresentation
• Whether the defendants engaged in anti-competitive conduct and unfair business practices

The court ordered that the first and fourth defendants, jointly and severally (the one paying the other to be absolved), pay to the plaintiff: (a) $67,509.59; (b) interest on the above sum at the prescribed rate from date of judgment to date of full payment; (c) costs of suit.

Where fraudulent misrepresentation in commercial transactions is alleged, circumstantial evidence may establish liability even in the absence of direct proof of the defendant's involvement in the misrepresentation. A party who enters into a contract due to fraudulent misrepresentation may claim delictual damages for fraud while electing to stand by the contract. First hearsay evidence is admissible under s 27(1) of the Civil Evidence Act where the witness is the recipient of the communication and the statement contains facts rather than opinions. Anti-competitive conduct through price manipulation and use of fake quotations to gain unfair business advantage constitutes fraudulent misrepresentation giving rise to liability for damages. For absolution from instance, the test requires that evidence which in a criminal case would be insufficient to justify refusing discharge might in a civil case be sufficient to justify refusing absolution.

The court made strong observations about corruption and anti-competitive practices, stating: "Corruption is a vice which should not be tolerated especially as it has impacted negatively on the national economy. Overpricing as done by the defendants has a ripple effect. It is the public who ultimately shoulder the brunt of such corruption. The end user price is distorted by such practices. It is high time the courts join forces with the industry to curb such practices." The court emphasized that "it is only fair competition which can foster sustainable development" and that the judiciary should actively curb anti-competitive conduct. These observations underscore the court's broader policy concerns about economic integrity beyond the immediate dispute.

This case is significant in Zimbabwean commercial law for its treatment of fraudulent misrepresentation in procurement contexts and anti-competitive business practices. It demonstrates the court's willingness to infer fraudulent conduct from circumstantial evidence and confirms that a party misled by fraudulent misrepresentation can claim delictual damages while standing by the contract. The judgment also emphasizes the judiciary's role in curbing corruption and anti-competitive conduct that distorts markets and harms the economy. The case affirms the admissibility of first hearsay evidence under s 27(1) of the Civil Evidence Act and sets standards for absolution from instance applications. It highlights the courts' intolerance for corrupt procurement practices involving collusion between suppliers and purchasing managers.