CHIKUKU v THE STATE
HIGH COURT, HARARE
[Criminal Appeal HH 527-16]
September 12, 2016
HUNGWE AND MUSAKWA JJ
Criminal law - General principles - Liability - Director or employee of a company - Vicariously liable for criminal acts of other directors or employees.
The appellant was employed by a company as a clerk. A director of the company, together with the appellant's co-accused (who had since died), bought maize from the complainant, purporting to act on behalf of a company. The maize was delivered to the company's premises and an invoice was issued. The appellant undertook to have the complainant paid, but no payment was made. When the complainant called to see the appellant, he was told that the appellant was elsewhere in the country. The appellant was convicted of fraud. On appeal, the issue of his liability for the offence was raised.
Held, that in terms of s 277 of the Criminal Law (Codification and Reform) Act [Chapter 9:23], any conduct on the part of a director or employee of a corporate body who is acting in the exercise of his or her power or in the performance of his or her duties as such, or in furthering or endeavouring to further the interests of the corporate body, shall be deemed to have been the conduct of the corporate body. In terms of s 277 (3), any conduct, which constitutes a crime for which a corporate body is or was liable to prosecution, is deemed to have been the conduct of every person who at the time was a director or employee of the corporate body. However, where it is proved that a director or servant took no part in the conduct, such criminal liability shall not apply to him or her. The onus is on the director or servant to prove on a balance of probabilities that he did not take part in the commission of the offence and could not have prevented it. Here, although the appellant was not the one who initially made representations to the complainant, he subsequently made common cause with the director and his co-accused. This he did by making assurances that payment would be made.
Cases cited:
Attorney-General v Paweni Trade Corp (Pvt) Ltd & Ors 1990 (1) ZLR 24 (S), referred to
S v Coetzee and Others 1997 (3) SA 527 (CC), referred to
S v Todzvo 1997 (2) ZLR 162 (S), referred to
Legislation considered:
Zimbabwe:
Criminal Law (Codification and Reform) Act [Chapter 9:23], s 277 (3)
Criminal Procedure and Evidence Act [Chapter 9:07], s 232
South Africa:
Criminal Procedure Act 51 of 1977
BM Bhala, for the appellant
F Kachidza, for the respondent
MUSAKWA J:
The appellant was convicted together with a co-accused Julius Pasipanodya who is now deceased (hereinafter called the first accused) of three counts of fraud. On the first count, each accused was sentenced to seven months' imprisonment which was wholly suspended for five years on condition of good behaviour. In respect of the second count, each accused was sentenced to 18 months' imprisonment of which eight months were suspended on condition each accused restituted the complainant in the sum of US$4 188.80. In respect of the third count, the appellant was sentenced to 18 months' imprisonment of which eight months were suspended for three years on condition of good behaviour. The remaining ten months were suspended on condition that he restituted the complainant in the sum of US$8 250. Appeal was noted against conviction and sentence.
All the counts relate to the complainants supplying maize which was receipted in the name of a company called Octadav and not being paid save for the complainant in the first count. It appears an advertisement had been placed in the press by Octadav.
Count one
The transaction in the first count does not show the appellant's involvement at the initial stage, save when he was engaged by the complainant and he assured that payment would be processed. The complainant in the first count was eventually paid. The first complainant's gripe was that Andrew who was the first to approach him asked him to part with US$ 200 as administration costs. That cannot amount to fraudulent conduct on the part of the appellant.
Count two
The appellant approached the complainant in Karoi on 28 August 2014 and offered to purchase 26.18 tonnes of maize through Octadav. There was no consensus on the price. The appellant subsequently returned with an increased offer. The maize was loaded and they proceeded to Feed Mix in Harare. Thereafter they proceeded to Octadav premises where the maize was offloaded. The complainant was introduced to Liberty Maya, who was said to be the appellant's employer, together with the first accused. The appellant undertook to have the complainant paid. An invoice was issued. When the complainant called after seven days the appellant was not reachable. The first accused promised to call back but later switched off his phone. Liberty promised to call back but did not.
Count three
The complainant from Lions' Den took a consignment of 27 tonnes of maize to Irvine's. Whilst there he was approached by one Andrew who directed him to Feed Mix in Msasa. He was also given the first accused's phone number. The maize was weighed and offloaded. The first accused issued an invoice in the name of the complainant's nephew who resides in Msasa. When the complainant returned after seven days he found the premises locked. He called Liberty whose number he had previously been given and he was directed to a filling station along Samora Machel Avenue. The appellant claimed that Liberty was his young brother whilst pleading that payment would be made on the following day.
When the complainant called on the following day the appellant claimed to be in Beitbridge. Later the first accused was called using another person's phone and pretending to offer maize for sale. The first accused fell for the bait and was arrested. It was also the complainant's evidence that the appellant claimed he was a maize buyer and showed him records of people he claimed to have paid.
The defence and grounds of appeal
The appellant claimed to have been employed as a clerk. He claimed that his duties involved making purchases and receiving goods. He reported to Liberty Maya. There were no other employees for Octadav. He had worked for the company for one and a half months. He confirmed that he was arrested after someone called him and pretended that he had some money. He also confirmed that the premises had been locked.
The grounds of appeal were not meaningfully drawn. For example, the first ground of appeal contends that the trial court erred in dismissing the appellants' exception to the charge and in dismissing the application for discharge at the end of the State case. It is common cause the appellant never excepted to the charges. However, counsel for the appellant explained to court that there was a delay in the preparation of the record of proceedings and the notice of appeal had to be filed within the time prescribed by the rules. Whilst that might be the case, this does not excuse the first ground of appeal because, with or without the record of proceedings, it was immaterial that the trial court had dismissed the application for discharge.
Another ground of appeal is that the trial court erred in its interpretation of s 277 of the Criminal Law (Codification and Reform) Act [Chapter 9:23]. It is also contended that the trial court erred in drawing inferences from inadequate facts. Lastly, it is contended that the trial court erred in not calling for evidence from the Companies Registry as well as from Andrew and Samupfawa.
Disposition
The memorandum of association in respect of Octadav shows that the directors of the company are Liberty Maya and Caroline Tendai Runyowa. The company was incorporated on 18 June 2014. The company's address is that of Liberty Maya. Goods received notes were issued in the name of Octadav and one of them was signed by the appellant. Payment for the maize was to be within seven days contrary to the allegation in the charges.
Section 277 (3) of the Criminal Law (Codification and Reform) Act provides:
"277 Criminal liability of corporations and associations and their members, employees and agents
(1)-(2) ...
(3) Where there has been any conduct which constitutes a crime for which a corporate body is or was liable to prosecution, that conduct shall be deemed to have been the conduct of every person who at the time was a director or employee of the corporate body, and if the conduct was accompanied by any intention on the part of the person responsible for it, that intention shall be deemed to have been the intention of every other person who at the time was a director or employee of the corporate body:
Provided that, if it is proved that a director or employee of the corporate body took no part in the conduct, this subsection shall not apply to him or her.
(4)-(6) ..."
The above provision deems the directors and employees of a corporate entity vicariously liable for the acts of the corporate entity. A similar provision used to be found in the Criminal Procedure and Evidence Act [Chapter 9:07]. That provision was slightly different as it used the term "servant" in place of "employee". In my view, there is hardly a distinction between the two terms as they have a similar meaning.
In dealing with a provision in the Criminal Procedure and Evidence Act, in Attorney-General v Paweni Trade Corp (Pvt) Ltd & Ors 1990 (1) ZLR 24 (S) at 38C-G, KORSAH JA held that:
"This provision is not peculiar to the Criminal Procedure and Evidence Act of Zimbabwe. An identical section exists in the Criminal Procedure Act 1977, of the Republic of South Africa, viz. s 332 (5). The intention of the lawgiver was to make directors vicariously liable for criminal acts committed by their companies unless they can establish that they did not participate in such acts. In the words of Roper AJ in R v Theron 1960 (3) SA 331 (T) at 335F-G:
'The plain meaning of subs (5) is that, when an offence has been committed for which the corporate body is liable to prosecution, a director or responsible servant is to be liable as having committed that offence unless he shows that he was not responsible for it. I see no reason for limiting the language of the subsection to offences which are capable of being committed not only by a corporate body but also by an individual person.'
By the use of the phrase 'unless it is proved that they did not take part in the commission of that offence', the Legislature clearly intended that the director or responsible servant, in such circumstances, shall be deemed guilty of the offence for which the corporate body is liable to prosecution, and the onus is on the director or responsible servant of the corporate body to prove on a balance of probabilities that he did not take part in the commission of the offence and could not have prevented it. See S v Avon Bottle Store (Pty) Ltd & Ors 1963 (2) SA 389 (A) at 391H-392A."
As submitted by the appellant's counsel in heads of argument, the provision in the South African Criminal Procedure Act 51 of 1977 was struck down by that country's Constitutional Court in S v Coetzee and Others 1997 (3) SA 527 (CC). However, the constitutionality of s 277 of the Criminal Law (Codification and Reform) Act was raised for the first time by the appellant's counsel in heads of argument. It is in the heads of arguments that the court is being urged to refer the matter to the Constitutional Court. Counsel for the appellant did not persist with the issue as he did not address the court on the point.
Apart from Liberty Maya, the only other persons who had something to do with Octadav were the appellant and the first accused. The appellant played an active role in the second count as he is the one who made representations to the complainant. Thereafter he introduced the complainant to the first accused and Liberty. When the complainant later called him, he was no longer reachable.
In respect of the third count, although the appellant is not the one who initially made representations to the complainant, he subsequently made common cause with Liberty and the first accused. This he did by making assurances that payment would be made. Thereafter, he claimed to be in Beitbridge.
It was contended on behalf of the appellant that the trial court ought on its own accord to have called for evidence from the Registrar of Companies as well as Andrew and Samupfawa. According to s 232 of the Criminal Procedure and Evidence Act:
"232 Subpoenaing of witnesses or examination of persons in attendance by court
The court –
(a) may at any stage subpoena any person as a witness or examine any person in attendance though not subpoenaed as a witness, or may recall and re-examine any person already examined;
(b) shall subpoena and examine or recall and re-examine any person if his evidence appears to it essential to the just decision of the case."
It is not clear why the trial court should have called a witness from the Registrar of Companies. This is unlike a situation where the evidence cries out for clarification of some fact - see S v Todzvo 1997 (2) ZLR 162 (S). The documents that were produced are self-explanatory, such that there was no need for someone from the Companies Registry to speak to them. On the other hand, Samupfawa was said to be a nephew of the complainant in the second count. It was in his name that the goods received invoice was issued. This was purely for the convenience of the complainant as Samupfawa resides in Msasa. There were no issues to canvass with Samupfawa. As for Andrew, he was obviously a suspect. There is nothing to indicate that he was readily available and that the State had dispensed with him as a witness, if at all they ever entertained to call him as a witness.
In the result, it is ordered that:
(a) The conviction and sentence on the first count is hereby set aside.
(b) The appeal against conviction and sentence on the second and third counts is hereby dismissed.
HUNGWE J concurred.
Mundia & Mudhara, appellant's legal practitioners
National Prosecuting Authority, legal practitioners for the State
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