Semegal Investments (Private) Limited v Polomo Enterprises (Private) Limited

The Plaintiff, an agricultural commodity brokerage company, claimed that the Defendant, a transport services company, owed it USD 124,251.00 allegedly advanced as a loan. The Plaintiff asserted that in February and March 2024, the Defendant's director, Mr Saaim Sidaar, requested a loan through the Plaintiff's agent, David Christopher Smith, with repayment to be made to Taten Trading (Private) Ltd, the Plaintiff's creditor, by 30 April 2024. The Plaintiff claimed it transferred USD 84,551.52 to the Defendant and made further cash payments of USD 39,699 through Mr Smith. The Defendant denied any loan agreement, maintaining that the USD 84,551.52 was payment for soya beans sold to the Plaintiff on behalf of Taten Trading, and denied receiving any cash payments. The transaction involved Taten Trading selling soya beans to the Plaintiff, with the Defendant acting as transporter, all facilitated by David Smith as Taten Trading's agent.

• Whether the payment of USD 84,551.52 made to the Defendant by the Plaintiff was a loan or payment for soya beans
• Whether the Plaintiff advanced a further sum of USD 39,699 or any other amount to the Defendant in cash, and for what purpose
• Whether the Defendant was unjustly enriched to the tune of USD 124,551.52 or any other sum
• Whether the Plaintiff discharged its burden of proof in establishing the alleged loan agreement
• Whether the requirements for an action based on unjust enrichment were satisfied

The Plaintiff's claim was dismissed with costs.

The binding legal principles established are: (1) A party alleging the existence of a loan agreement bears the burden of proving, on a balance of probabilities, that the payment in question was indeed a loan, and must substantiate this with credible evidence beyond bald averments; (2) Where a bank transfer is made but is silent as to its purpose, and no written loan agreement or documentary evidence is produced, a claim that the payment constituted a loan will fail if the opposing party provides a plausible alternative explanation consistent with the commercial context; (3) Substantial cash payments alleged to have been made must be supported by documentary corroboration such as records, receipts, or other verifiable evidence - oral testimony alone is insufficient to discharge the evidentiary burden; (4) To succeed in a claim for unjust enrichment, the plaintiff must establish that: (a) the defendant was enriched by receipt of a benefit, (b) at the plaintiff's expense, (c) the enrichment is unjustified, (d) it does not fall within classical enrichment actions, and (e) no rule of law refuses an action; (5) The doctrine of unjust enrichment is not a remedy to cure evidentiary deficiencies and cannot succeed where the plaintiff fails to prove that the defendant's enrichment was unjustified or obtained without lawful cause.

The court made notable observations regarding the Plaintiff's refusal to join Taten Trading (Pvt) Ltd as a party to the proceedings. The court commented that this refusal "deprived the proceedings of potentially clarifying evidence regarding the nature of the transaction," suggesting that the court viewed this as a strategic misstep that weakened the Plaintiff's case. The court also observed that Mr Ormerod indicated during his evidence that he had records or documents relating to the alleged cash payments, yet chose not to produce them before the court. While not necessary for the decision, this observation underscores the court's view of the weakness in the Plaintiff's case preparation and presentation. The court's statement that "to hold otherwise would be to invite the court to speculate, or to impose liability in the absence of evidence, and that is impermissible" reflects a broader judicial philosophy rejecting speculative findings in commercial disputes. These observations, while not binding, provide guidance on evidence presentation and party joinder in commercial litigation.

This case reinforces fundamental principles of evidence and burden of proof in Zimbabwean commercial litigation. It emphasizes that parties alleging the existence of loan agreements or other financial transactions must provide credible documentary evidence beyond mere oral testimony, particularly where substantial sums are involved. The judgment clarifies that the doctrine of unjust enrichment cannot be used as a substitute for proper proof of the essential elements of a claim, and that it requires clear demonstration that the defendant's enrichment was unjustified. The case also demonstrates the importance of proper party joinder where third parties may hold relevant evidence, and illustrates the consequences of failing to produce documentary evidence that a party claims to possess. It serves as a cautionary tale for commercial entities to maintain proper documentation of financial transactions and loan agreements.