Zellco Cellullar (Pvt) Ltd v Netone Cellullar (Pvt) Ltd and Others

The applicant (Zellco) had a Service Provider Agreement with the first respondent (NetOne). On 13 April 2011, Patel J granted a provisional order under Case No HC 3507/11 declaring NetOne's cancellation of the Service Provider Agreement unlawful and ordering NetOne to retract its text message to customers and send a corrected message indicating the agreement still subsisted and customers should continue paying Zellco. On 10 May 2011, Zellco launched contempt proceedings alleging that NetOne and its directors (second, third, and fourth respondents) willfully disobeyed Patel J's order. NetOne had issued a retraction but directed customers to pay bills to NetOne instead of Zellco, contrary to the court order. The second respondent was chairman of the board, the third respondent was managing director, and the fourth respondent was company secretary and legal adviser.

• Whether the applicant was in contempt of a prior costs order and should be denied a hearing
• Whether counsel's fees constitute a disbursement not subject to taxation
• Whether the second, third, and fourth respondents were properly joined to contempt proceedings
• Whether directors can be held personally liable for contempt of a court order issued against a company
• What requirements must be satisfied to establish contempt of court
• Whether the first respondent was in contempt of the provisional order granted by Patel J

The first respondent was found to be in wilful contempt of the Court Order under Case No HC 3507/11 dated 13 April 2011. The first respondent was ordered to pay a fine of US$20,000.00 within ten days of service of the order. The first respondent was ordered to pay the applicant's costs. The application against the second, third, and fourth respondents was dismissed with costs.

The binding legal principles established are: (1) An order ad factum praestandum is an order in personam and only binding on those against whom it has been issued and who have been personally served or informed of it. (2) Before directors can be found in contempt of an order issued against their company, they must have personal knowledge of the order, which requires personal service or proof that the order was brought to their personal attention. (3) A corporate entity is guilty of contempt when it purports to comply with a court order but materially alters its substance to defeat the purpose of the order. (4) Once failure to comply with a court order is established, wilfulness is normally inferred, and the onus rests on the person who failed to comply to rebut the inference on a balance of probabilities. (5) While counsel's fees are a disbursement not regulated by tariff, a party is entitled to have a bill of costs taxed to test the reasonableness of counsel's fees, and refusal by the successful party to submit to taxation does not constitute grounds for staying proceedings for non-payment.

Gowora J made several obiter observations: (1) The court noted with apparent disapproval that the applicant had filed no less than six sets of proceedings, suggesting the applicant had taken a decision to mire the respondents in litigation despite the commercial dispute needing resolution. (2) The court observed that in the absence of a tariff against which counsel's fees can be measured, the taxing officer has no means by which to test reasonableness, echoing concerns expressed in Logan v Taxing Officer about the absence of minimum and maximum thresholds for counsel's work. (3) The court commented that when a litigant files defective proceedings and refuses to pay costs awarded against it, it is clearly causing the other party unwarranted expense. (4) The court noted that by the time of judgment, the contract between the parties had been cancelled, rendering an order to purge contempt by issuing an amended statement of no force and effect, leaving only the fine as an appropriate remedy. (5) The court emphasized that proceedings for committal for contempt require proof of wilful or reckless disregard, and disobedience must be not only wilful but also mala fide.

This case is significant in Zimbabwean jurisprudence (which shares common legal principles with South African law) for clarifying the requirements for contempt of court proceedings against corporate entities and their directors. It establishes that: (1) directors can be held personally liable for contempt when they cause a company to disobey a court order, but only if the order has been personally served on them or brought to their personal attention; (2) mere copying of correspondence to directors is insufficient to establish personal knowledge required for contempt proceedings; (3) counsel's fees, while not subject to tariff-based taxation, can still be subjected to the taxation process to test their reasonableness; and (4) a corporate entity's purported compliance with a court order that materially alters its substance constitutes contempt. The case reinforces the principle that courts must jealously guard their orders and that parties cannot substitute their own interpretation for clear court directives.