Stratus Capital Partners (Private) Limited v ADC Capital (Private) Limited

The applicant, an investment manager registered with the Securities and Exchange Commission of Zimbabwe, sold a 3-year Treasury Bill (maturity value US$5,000,000) to the respondent on 16 January 2025 at a discounted price of US$2,800,000. The sale was agreed on a delivery-against-payment basis. On 17 January 2025, the applicant delivered the Treasury Bill to the respondent's CSD account at Ecobank Zimbabwe through FBC Securities. The respondent confirmed receipt but failed to pay the purchase price. The applicant demanded return of the Treasury Bill on 17 January 2025 and made numerous efforts to recover it through various communications and a meeting on 24 January 2025. The Securities and Exchange Commission directed on 7 April 2025 that the sale be unwound and the Treasury Bill recovered. The respondent argued it was misled by a broker (Ben Mavedzenge/Benson), claimed it understood payment would be made in 2026 before maturity, and asserted the Treasury Bill had been incorporated into another transaction making return impossible.

• Whether there were material disputes of fact incapable of resolution on the papers
• Whether the parties reached consensus ad idem on the terms of the contract of sale
• Whether the sale was on a delivery-against-payment basis
• Whether the respondent breached the contract by failing to pay
• Whether the applicant was entitled to a declaratur confirming lawful termination and right to return of the Treasury Bill
• Whether costs on an attorney-client scale were justified

The application for a declaratur was granted. The court declared: (1) the sale was lawfully terminated on 17 January 2025; (2) the applicant's right to return of the Treasury Bill was confirmed; (3) the respondent and any persons holding or claiming through it must transfer the Treasury Bill to the applicant's CSD account within 7 days, failing which the Sheriff is empowered to sign all necessary papers to effect the transfer; (4) the respondent must pay costs on an attorney-client scale.

The binding legal principles established are: (1) A party alleging material disputes of fact must set out its defense in clear and cogent detail - bare denials are insufficient, particularly where the disputing party necessarily possesses knowledge of the facts and can provide an answer but fails to do so. (2) A party cannot withhold material evidence from the court and use that withholding as a basis to argue material disputes of fact exist. Litigants seeking the court's protection must be candid and lay bare all relevant facts. (3) A party cannot adopt contradictory positions, both accepting and denying the existence of a contract simultaneously - parties cannot blow hot and cold when it suits them. (4) In a cash sale under Roman-Dutch law, payment is due at the time of delivery. Where parties agree to delivery-against-payment terms, failure to pay constitutes a breach going to the root of the contract entitling the seller to reclaim the property. (5) An unpaid seller in a cash sale is entitled to reclaim the property if cash is not paid within a reasonable time after delivery. (6) For a declaratory order under s14 of the High Court Act, the court must find: (a) the applicant is an interested person with direct and substantial interest in the subject matter, and (b) the case is appropriate for exercise of the court's discretion. (7) Costs on an attorney-client scale are warranted where a party's conduct is dishonest, unreasonable, and reprehensible, marked by inconsistent averments designed to delay justice.

MUSHURE J made several non-binding observations: (1) The court commented on the undesirable practice of counsel advancing inconsistent arguments at the hearing that depart from sworn averments in the papers, placing the opposing party in an invidious position where they cannot properly prepare for the case they must meet. (2) The court observed that lawyers, as officers of the court, should not behave like 'hired guns' and that litigation is not a game of wits but a serious process where the search for truth is paramount. (3) The court noted that time is of the essence in securities transactions to establish and preserve investor confidence and market integrity. (4) The court commented that the respondent's argument appeared designed to use the court to renegotiate the contract, but courts cannot rewrite contracts on behalf of parties. (5) The court observed that the respondent's conduct in retaining a valuable asset without payment was 'inimical to the interests of commerce in Zimbabwe.' (6) The court noted the relevance of Securities and Exchange Commission Directive SS03/24 in establishing market practice and the regulatory framework for Treasury Bill transactions, though clarifying it was not itself the cause of action. (7) The court commented on the principle that mere violation of statutory directives may constitute regulatory breaches but do not necessarily found independent civil causes of action.

This case clarifies important principles in Zimbabwean commercial and securities law regarding: (1) the requirements for establishing material disputes of fact in motion proceedings, emphasizing that parties must seriously and unambiguously address disputed facts and cannot rely on bare denials, selective withholding of evidence, or contradictory positions; (2) the duty of candor owed by litigants to courts, particularly the prohibition against withholding material evidence while claiming disputes of fact exist; (3) the application of delivery-against-payment principles in securities transactions and the regulatory framework governing such transactions; (4) the essential elements of contracts of sale and the consequences of breach going to the root of the contract; (5) the circumstances justifying exercise of the court's discretion to grant declaratory orders under s14 of the High Court Act; and (6) when costs on a punitive scale are warranted due to dishonest and unreasonable conduct in litigation. The case reinforces market integrity in Zimbabwe's securities industry by upholding industry practices and regulatory directives.