Connect with us

Support The NewsHawks

Business

CMED-First Oil US$2.7 million dispute far from ending

Published

on

THE battle between CMED (Pvt) Limited and First Oil Company which has been going on for eight years seems to be far from ending as the latter has resisted settling a US$2,7 million debt.

This is despite a recent judgement by High Court judge Justice Owen Tagu directing First Oil to pay the amount, including interest.

The oil company has however filed a Supreme Court appeal challenging the High Court order.

Unhappy with the decision, CMED has again approached the High Court seeking an order authorising the execution of Tagu’s judgement, complaining that First Oil’s appeal is unmerited and aimed at stalling progress towards the recovery of the debt.

Court papers show that First Oil received money from CMED, but failed to deliver fuel.
Reads the application by CMED: “Upon the judgement the now respondent filed a notice of appeal with the Supreme Court under case S13/21. 

“It should be noted that pursuant to an agreement of sale of diesel, the respondent received US$2 700 000 deposited into its ZB (bank) account.

“Respondent acknowledged receipt of that payment. The respondent did not deliver the 3 million litres of diesel in terms of the agreement,” said CMED.

The company said the High Court granted the alternative relief, being a refund of US$2.7 million to it and dismissed the principal relief of principal performance.

“The respondent filed an appeal in terms of which they are seeking that judgement to be set aside while they seek to return the US$2.7 million which they received. The appeal is frivolous and not meant to achieve the substantial justice but aimed at frustrating the applicant,” complained CMED.

“The respondent clearly wants to unfairly derive pecuniary benefit from a failed transaction in circumstances which result to their unjust enrichment at applicant’s expense. The applicant has effectively lost anticipated profit which they could have earned had the respondent delivered the diesel upon payment,” reads the application.

CMED said there is already irreparable harm which cannot be cured.

The company further submitted that it is convenient to allow the judgement to be carried into execution pending appeal.

The two companies have been at loggerheads over the past eight years with the case having landed some top officials at First Oil company in the dock back in 2014.

According to court documents, the parties had entered into an agreement for the provision of diesel in terms of which First Oil Company was to supply three million litres of diesel to CMED upon payment.
The court heard that pursuant to the agreement, albeit before papers were signed, CMED paid a total of US$2.7 million towards the purchase of the three million litres of diesel.

In terms of the agreement, the plaintiff was to pay a further US$720 000 direct to the Zimbabwe Revenue Authority (Zimra) in lieu of import duties and levies.

It is alleged that First Oil Company received the payment of US$2.7m through its ZB account held at Avondale in Harare but CMED did not pay the sum of US$72 000 that would have been paid to Zimra in terms of duty and levies.

Parties went on to sign an agreement after payment of US$2.7 million.

First Oil Company then failed to deliver the fuel as promised, prompting CMED to file a case against the company, arguing that First Oil had an obligation to deliver the fuel to CMED or refund the value of three million litres of fuel.

In its plea, First Oil Company admitted receiving the money but defended itself, saying CMED breached the agreement by failing to pay US$720 000 for duty.

They also argued that a court could not enforce a refund because CMED had paid the amount before signing the agreement.

First Oil submitted that if CMED were to be given three million litres it would be unjust enrichment.
In his judgement, Justice Tagu said it is common cause that the parties had an agreement and that CMED paid US$2.7m. As such, it cannot run away from the obligation because an agreement was  signed after the money was paid.

The judge ruled that if First Oil’s position that the signed agreement is unenforceable because the plaintiff paid before the agreement was signed, then it has no right to hold onto the US$2.7m because, by so doing, it would be unjustly enriched.

The judge said it would be in the interest of justice that First Oil be compelled to refund the amount already received.

CMED wanted to be refunded in the alternative the value of diesel to have been delivered at the current rate of US$1.04 or ZW$86.36/litre as per letter from the Zimbabwe Energy Regulatory Authority dated October 1 2020.

But the judge said there is no justification for using this rate because no diesel was delivered to the plaintiff, the available diesel was at Msasa depot already procured at the rate applicable at that time.
The current application by CMED is yet to be entertained by the High Court. — STAFF WRITER

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Advertisement

Popular