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First Oil ordered to refund CMED

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By Nyasha Dube

HIGH Court judge Justice Owen Tagu has ordered First Oil Company to refund US$2,7 million to the State-owned CMED (Pvt) Limited after the company failed to supply three million litres of diesel.

According to papers filed at the High Court in 2013, CMED entered into an agreement of supply and delivery of diesel with First Oil. First Oil received a payment of US$2,7 million to supply the diesel to CMED, but failed to honour the commitment.

CMED approached the High Court after First Oil Company failed to honour its part of the bargain and also declined to reimburse the US$2,7 million. First Oil, in its opposing papers, acknowledged the payment made by CMED, but declined to deliver the fuel claiming the Stateowned transport company breached the agreement after failing to pay US$720 000 in duty to the Zimbabwe Revenue Authority (Zimra).

In his ruling, Justice Tagu noted that First Oil’s claim that CMED had breached the contract was unfounded as they had signed a contract to deliver the fuel after the payment had been made.

“Both parties allege breach of the agreement. The plaintiff alleges that the defendant breached the agreement by not delivering the fuel.

“On the other hand, the defendant alleges an agreement on the part of the plaintiff to pay US$720 000 to Zimra. The defendant further alleges that by paying the US$2,7 million before the contract was signed; the agreement is of no force and effect and is unenforceable.

“Having analysed the submissions by the parties and reading bundles of documents filed by the parties, the court noted that terms of the agreement were very clear.

“The defendant cannot claim that the agreement is unenforceable because it signed the agreement with eyes wide open well after the amount of US$2,7 million was deposited into its account,” Tagu ruled.

He also noted that the agreement could not be declared unenforceable as it would mean that First Oil gained US$2,7 million unfairly.

“If the defendant’s position is correct that the signed agreement is unenforceable because the plaintiff paid before the agreement was signed, then in my view it follows that the defendants had no right to hold onto the US$2,7 million because by doing so it would be unjustly enriched.”

Tagu ordered First Oil to refund the money paid by CMED. “The plaintiff must be refunded US$2,7 million together with interests and costs. It cannot recover the full US$3,12 million as this includes duties and levies that it did not pay to Zimra.

“It is ordered that the defendant is to pay the plaintiff an amount of US$2,7 million at the current bank rate, being a refund of the value of diesel that the plaintiff had paid for, but was not delivered by the defendant.”

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