River Ranch Limited v Delta Corporation Limited

In February 1998, Peter Bailey was appointed as the plaintiff's liquidator. In October 1999, a Deed of Compromise was concluded with creditors and Bubye Minerals (Pvt) Ltd and sanctioned by the court. Bailey was appointed as agent to effect transfers and administer payments under the Deed. In September 2002, Bailey was approached by Bubye Minerals to sell two houses in Beitbridge (Stands 322 and 324) to the defendant. Bailey authorized both sales. The agreements of sale were signed by Adele Farquhar, then Managing Director of Bubye Minerals and ostensibly a director of the plaintiff, as the plaintiff's representative. The defendant paid the full purchase price in cash, which was immediately transferred to Bubye Minerals to continue running the plaintiff's mines. The defendant took occupation of both houses. The plaintiff did not question the sales until September 2004, over two years later, when it challenged their validity and sought eviction of the defendant. The defendant counterclaimed for transfer of the stands.

• Whether Bailey, as liquidator, had authority under the Deed of Compromise to authorize the sale of the plaintiff's assets
• Whether Adele Farquhar had actual or ostensible authority to represent the plaintiff in the agreements of sale
• Whether the agreements of sale were validly concluded and binding on the plaintiff
• Whether the defendant's counterclaim for transfer had prescribed under the Prescription Act

The plaintiff's claim for eviction was dismissed with costs. The defendant succeeded in its counterclaim. The court ordered: (i) The plaintiff to transfer Stands 322 and 324 Beitbridge Township into the defendant's name; (ii) The plaintiff to pay the costs of suit.

1. A liquidator's authority under a deed of compromise to authorize disposal of assets can be implied from provisions that grant the liquidator sole and absolute discretion in implementing the deed, even where asset alienation is expressed as a prohibition without prior consent. 2. A person acting as a director possesses ostensible authority to bind a company where their acts would be validated under articles of association providing that acts of persons acting as directors are valid notwithstanding defects in their appointment. 3. A principal is estopped from recovering property disposed of by an agent who possessed ostensible authority to deal with the property, particularly where the principal acquiesced in the transaction and the third party would be prejudiced by reversal. 4. In contracts for sale of immovable property, the purchaser's right to claim transfer is a 'debt' under the Prescription Act, and prescription commences to run when the purchase price is paid (when the debt becomes due). 5. A seller's proprietary claim for eviction of immovable property is not a reciprocal debt arising from the same contract as the purchaser's claim for transfer, for purposes of section 17(2) of the Prescription Act. 6. Tacit acknowledgment of liability under section 18 of the Prescription Act interrupts prescription, causing it to commence running afresh from the date of interruption.

The court observed that it would be absurd and pointless to decline the defendant's counterclaim for transfer on prescription grounds, only to require the defendant to institute a further claim for transfer based on the court's judgment finding the agreements valid and binding. The court noted that the judgment itself would constitute a fresh cause of action enforceable within the 30-year prescriptive period for judgment debts. The court also made observations about the vagueness of the transfer clause in the agreements of sale (common clause 2), but noted it accorded in essence with the common law position that a seller must transfer upon payment of the purchase price and a purchaser may demand specific performance once the price is paid.

This case is significant in Zimbabwean law for its exposition of the principles of ostensible authority and agency in the context of corporate asset disposals during liquidation proceedings. It clarifies the interplay between a liquidator's powers under a deed of compromise and the authority of ostensible directors to bind a company, particularly under Article 101-type provisions that validate acts of de facto directors. The judgment also provides important guidance on the application of prescription principles to claims for specific performance (transfer of immovable property), the concept of reciprocal debts under section 17(2) of the Prescription Act, and the operation of tacit acknowledgment of liability as interrupting prescription under section 18. The case demonstrates the court's pragmatic approach in refusing to allow technical challenges to transactions where the challenging party acquiesced for a substantial period and where reversal would cause significant prejudice.