Zimbabwe Spring Steel (Pvt) Ltd v Nesbert Bako and Others; Zimbabwe Spring Steel (Pvt) Ltd v Zivai Bako and Others

Zimbabwe Spring Steel (Pvt) Ltd initiated two related actions (HC 6800/19 and HC 6801/19) against multiple defendants arising from alleged fraud. In June 2018, the second defendant, purportedly representing the fifth defendant (Lamasat Zimbabwe (Pvt) Ltd) as its Managing Director, approached the plaintiff's director and misrepresented that he had foreign currency available and wanted bank funds to offset local debts. The second defendant promised to exchange the transferred amounts for United States Dollars at the then prevailing official rate of 1USD:1 Bond Dollar. The plaintiff transferred $100,000 in HC 6800/19 and $145,000 in HC 6801/19 into the first defendants' CBZ Bank accounts on 6 July 2018. When payment became due, the second defendant went into hiding. The plaintiff alleged the first defendant's account was used as a conduit and that the third and fourth defendants, as directors of the fifth defendant, should be held personally liable as the fifth defendant's corporate standing was used to veil fraudulent activities. The defendants filed exceptions and a special plea challenging the validity of the claim.

• Whether a claim for payment in foreign currency (USD) contravenes section 23 of the Finance (No. 2) Act of 2019 and therefore discloses no cause of action
• Whether the essential requirements for liability for fraud were pleaded with sufficient particularity against the first, third, fourth and fifth defendants
• Whether the failure to specify the date when payment was due and when defendants were placed in mora renders the claim defective
• Whether the plaintiff withheld material facts showing the transaction was illegal under Exchange Control laws (special plea)
• Whether an alleged compromise agreement between the plaintiff and second defendant bars the claim

1. The 1st, 3rd, 4th and 5th defendants' exception is dismissed, with costs. 2. The 2nd defendant's special plea is dismissed, with costs. 3. This judgment applies to both HC 6800/19 and HC 6801/19. The court declined to award costs on a higher scale.

The binding legal principles established are: (1) Section 23 of the Finance (No. 2) Act of 2019 does not prohibit courts from granting judgments sounding in foreign currency; it only designates legal tender for transactions but does not restrict the currency in which judgments may be expressed (execution being converted to local currency at the date of enforcement). (2) A declaration need not plead every detail with absolute precision to disclose a cause of action; where further clarity is needed, the proper remedy is a request for further particulars, not an exception. (3) The essential elements for a fraud claim must be pleaded, but where a party acts through a representative and company structure, the declaration adequately discloses a cause of action by alleging the representative's fraud and the use of corporate structure to veil fraudulent activity. (4) Where material facts are disputed between parties (such as whether a transaction was illegal or whether a valid compromise was reached), these are issues requiring evidence and cannot be determined by exception or special plea on the pleadings alone. (5) The purpose of exceptions is to dispose of cases efficiently or protect against genuine embarrassment, not to seek excessive detail or technical advantages.

The court made several non-binding observations: (1) It noted appreciation for the clarity of counsel's arguments and their agreement to consolidate the matters. (2) The court observed that punitive costs should only be awarded where conduct is deserving of censure, and that it could not find the defendants were abusing the court process despite dismissing their exception and special plea. (3) The court remarked on the distinction between a party's desire for detail to enable proper pleading versus a "fastidious defendant" motivated by a desire to unnecessarily drag matters out. (4) The court observed that even where exceptions are upheld, the usual consequence is to allow amendment rather than dismissal of the claim. (5) The court commented on the principle that courts will not aid parties seeking to enforce illegal contracts, though this was not applicable on the facts as illegality was disputed. (6) The court noted that only evidence would reveal "where the truth lies" regarding the disputed versions of events, acknowledging that a claim remains just a claim until proven by evidence.

This case is significant in Zimbabwean civil procedure for several reasons: (1) It clarifies that section 23 of the Finance (No. 2) Act of 2019, which designated the Zimbabwe dollar as sole legal tender, does not prohibit courts from granting judgments sounding in foreign currency, maintaining the principle established in Makwindi and subsequent cases. (2) It reinforces the proper scope and purpose of exceptions, emphasizing they should be used to dispose of cases efficiently rather than to embarrass opponents or seek unnecessary detail that could be obtained through requests for particulars. (3) It demonstrates the application of section 318 of the Companies Act regarding piercing the corporate veil in fraud cases. (4) It provides guidance on when factual disputes preclude determination by way of exception or special plea, requiring evidence to be led at trial. The case serves as a reminder against taking technical objections where genuine prejudice cannot be shown and where disputes turn on contested facts.