ZUPCO wins lengthy court battle

Source: ZUPCO wins lengthy court battle | The Financial Gazette May 11, 2017

THE Zimbabwe United Passenger Company (ZUPCO) has won a 10-year-long legal battle against the sole distributor of Scania buses in Zimbabwe, Packhorse Investments.
Packhorse had taken the State-owned bus company to court, demanding to be paid US$800 000 in outstanding debt for buses purchased in 2002.

The company had won the dispute in the lower court before the tables were turned recently at the Supreme Court.
The facts are that ZUPCO entered into an agreement with Scania South Africa in 2002 for the purchase and supply of 50 luxury Scania Torino buses at cost of US$3 663 000.
Packhorse was engaged by the two companies as the official and sole distributor of the Scania buses from South Africa into Zimbabwe.

ZUPCO then settled most of its debt, leaving an outstanding balance of US$763 068.
In 2007, Packhorse Investments then took ZUPCO to the High Court in a bid to recover the outstanding debt.

In its defence, ZUPCO said it was not liable to pay the remaining debt because government had taken over the balance demanded, and Packhorse should instead chase the State for the outstanding payment.
In July 2009, ZUPCO filed an amended plea and made a number of pertinent changes to its 2007 defence outline.

In the amendments, the public transporter denied ever entering into an agreement with Packhorse and claimed it was only aware of the agreement it entered into with Scania South Africa.
ZUPCO altered the fleet of buses it purchased by acknowledging procurement of 48 buses and not the 50 claimed by Packhorse.

It restated that if Scania South Africa had not received its outstanding debt, it should instead approach government for such payment since it was no longer liable for servicing the debt.
In 2013, the High Court passed a ruling against ZUPCO and ordered it to pay Packhorse the outstanding amount, but the State-owned company appealed against the judgment at the Supreme Court.
In its appeal, ZUPCO said it was common cause that it had purchased the buses, but the dispute related to who the buses were purchased from.

It argued through its lawyers, Magwalimba and Kwirira, that the High Court had erred in finding Packhorse as the seller of the buses when Scania South Africa were the sellers.
ZUPCO also argued that the High Court had erred in ruling that the agreement entered into between the State and Scania South Africa had no effect of releasing ZUPCO from the obligation to pay the balance of the purchase price. The appeal was heard last month before Supreme Court judges Paddington Garwe, Marie-Anne Gowora and Susan Mavangira, where Packhorse maintained that the agreement of sale of the buses was between it and ZUPCO.

Packhorse, represented by law firm, Kantor and Immerman, argued that although it was known that the supplier of the buses was Scania South Africa, the liability to pay Scania South Africa remained with it. The distributor also denied that government had taken over ZUPCO’s debt and it was, therefore, entitled to claim the balance of the purchase price from ZUPCO and not from government.
The Supreme Court then over turned the High Court judgment, ruling that Packhorse had failed to prove that the transaction was between it and ZUPCO.

“The respondent did not prove that the transaction of the sale of the buses was between it and the appellant,” the Supreme Court ruled.

The judges ruled that all exhibits produced in court referred to Scania South Africa as the seller and previous payments were made to Scania South Africa and not to the Packhorse.
“Consequently, the question of whether or not Scania compromised the balance owing does not arise. The appeal has merit and must succeed. The order of the court a quo (High Court) is hereby set aside. On a proper analysis of the evidence adduced before the court a quo, the respondent did not meet the requirements set out by the authorities,” the judges ruled.

“Its case is not compelling. The court a quo placed emphasis on the credibility of the respondent’s witnesses, but in reality their version does not tally with the evidence on record at all.”
The Supreme Court reprieve for ZUPCO comes in the wake of the bus company having secured a US$25 million loan from India Exim Bank for the purchase of 290 buses from an Indian bus manufacturer, ASHOK.
The deal was announced last week in Parliament by Local Government, Public Works and National Housing Deputy Minister, Christopher Chingosho, who told legislators that from the 290 buses, 145 would be used to ply intra-city routes.

Chingosho was responding to a question from Harare West Member of Parliament, Jessie Majome, on what his ministry was doing to restore the efficiency of public transport service in the capital similar to standards set by the now defunct Harare United Passengers Omnibus Company in the 1980s.