Takta Investments (Pvt) Ltd v Unitime Investments (Pvt) Ltd and Others

The applicant, Takta Investments (Pvt) Ltd, had business relationships with the first to fourth respondents and registered several affiliate companies. Commercial and criminal disputes developed between the parties. On 31 January 2011, the first, second and third respondents entered into a settlement agreement to resolve these disputes. The agreement contained Clauses 5(i) and 5(iii), with Clause 5(iii) providing that the second and third respondents would not have any claim against the applicant and its affiliates in respect of transactions, shares or properties sold before the date of the agreement. The applicant alleged the agreement was violated when the second respondent sued it under case numbers HC 2129/19 and HC 10318/19, and sued Tbic Investments (Pvt) Ltd under case number HC 8497/18. On 22 May 2020, the first respondent's legal practitioners advised the applicant of pending proceedings under case number HC 5990/19, where the first respondent sought declaratory orders upholding and enforcing the agreement. The applicant sought to be joined as a co-applicant in HC 5990/19, claiming it had substantial interest in the interpretation and enforcement of the agreement. The respondents opposed the application, arguing that the agreement had been amended to delete Clause 5(iii), and that the doctrine of privity of contract prevented the applicant from being joined as it was not a party to the agreement.

• Whether the applicant satisfied the requirements for joinder under Rule 85 of the High Court Rules, 1971
• Whether a common question of law or fact existed between the applicant and the parties to HC 5990/19
• Whether the applicant had a direct and substantial interest in the proceedings under HC 5990/19
• Whether the applicant's rights would be affected by the judgment in HC 5990/19
• Whether the doctrine of privity of contract prevented the applicant from seeking enforcement of the agreement
• Whether the doctrine of stipulatio alteri applied as an exception to privity of contract
• Whether the applicant should be joined as a co-applicant or in another capacity

The application for joinder was granted. The applicant was joined as the second applicant in HC 5990/19. The applicant was permitted to file a supporting affidavit in HC 5990/19 within ten (10) days of the granting of the order, if it so wished. The rest of the pleadings were to be dealt with in accordance with the rules of court. There was no order as to costs.

A party seeking joinder under Rule 85 of the High Court Rules, 1971 must satisfy two requirements: (1) that a common question of law or fact would arise if separate actions were brought; and (2) that all rights to relief arise out of the same transaction or series of transactions. Where a settlement agreement confers rights and benefits upon a third party (non-signatory), that third party has a direct and substantial interest in proceedings seeking to interpret and enforce that agreement, sufficient to warrant joinder. The doctrine of stipulatio alteri operates as an exception to the privity of contract rule where a contract confers benefits upon a third party. A party with a reasonably arguable case of substantial interest should be permitted to join proceedings where their rights may be affected by the judgment and where refusal would lead to multiplicity of actions and inconvenience to the court. The capacity in which a party is joined (as co-applicant or respondent) should be determined by the nature and alignment of their interests with the relief sought in the main proceedings.

The court noted that whether the amendment to the January agreement to remove Clauses 5(i) and 5(iii) was procedurally done was not before the court's attention at this stage. The merits of such amendments would form part of the issues under case number HC 5990/19, and it would be premature to discuss these merits as doing so would pre-empt those proceedings. The court observed that if the applicant was joined as the second applicant in HC 5990/19, the applicant would not be prejudiced if the first respondent chose to withdraw or abandon that matter, as the applicant could continue with the matter in the event of such withdrawal or abandonment. The court referenced Patrick Bracher's articulation of the principles of the stipulatio alteri doctrine, including considerations of whether the third party accepts the benefit or becomes a party to the contract, when and how the third party is entitled to accept the benefit, and whether a person stipulating for a benefit in favor of a third party can withdraw that stipulation before acceptance.

This case is significant in Zimbabwean civil procedure law as it clarifies the application of Rule 85 of the High Court Rules, 1971 regarding joinder of parties. It demonstrates the court's willingness to allow joinder where a party has a reasonably arguable case of substantial interest in proceedings, even where that party was not an original signatory to the agreement in dispute. The case illustrates the application of the stipulatio alteri doctrine as an exception to the privity of contract rule, allowing third-party beneficiaries of a contract to seek enforcement of rights conferred upon them. It emphasizes the court's consideration of preventing multiplicity of actions and ensuring procedural efficiency in the administration of justice. The case also clarifies that a party seeking joinder can be joined as a co-applicant rather than as a respondent where their interests align with the original applicant's claims.