MTSHIYA
J:
The
cause of action in this case arises out of an alleged breach of
contract by the defendant for the supply of 20 IBM A50 desktop
computers (computers) to the plaintiff.
The
plaintiff is suing the defendant for specific performance or payment
of damages in lieu thereof.
At
the commencement of the trial the plaintiff applied to amend the
damages figure or the summons to read $9,792,245,000,000-00 instead
of $7,800,000,000-00. The amendment was meant to address the effect
of inflation on the original figure. Counsel for the defendant did
not oppose the application for amendment. I granted the application
for amendment and consequently the plaintiff's claim herein is for:
“(a)
An order that the defendant supply and deliver to the plaintiff a
total of twenty (20) IBM A50 desktop computers forthwith
alternatively an order that defendant pays to plaintiff a total of
$9,792,245,000,000-00 representing the current value of the said
computers.
(b)
Interest on the amount representing the value of the computers from
the date of summons to the date of payment; and
(c)
Costs of suit”.
It
is common cause that on 23 February 2005 the plaintiff ordered from
the defendant a total of thirty (30) computers. Each computer was
quoted at a price of $9,860,400-00, bringing the total cost,
including V.A.T. payment, to $340,183,800-00. This amount was then
paid in full on 28 February 2008. The defendant, however, only
managed to deliver ten (10) computers on 2 March 2005. This left a
balance of 20 computers.
It
is the non-delivery of these 20 computers that has led to this court
action.
The
defendant explains non-delivery by citing the failure to obtain the
requisite foreign currency allocation from the Reserve Bank of
Zimbabwe through the auction system which was then in operation. It
is the defendant's position that both parties were fully aware that
the amount paid by the plaintiff would be utilised for the purchase
of foreign currency in order to meet the requirements of the
defendant's foreign supplier, namely a company called
'TriContinental Limited' (Tri-Continental).
However,
plaintiff's position is that delivery was to be effected soon after
payment and the total amount paid represented the full payment for
the 30 computers ordered.
In
view of the different positions taken by the parties, it was agreed
that the issues for determination in this trial would be:-
“(1)
What were the terms of the Agreement between the parties?
(2)
Whether it was agreed as between the parties that defendant would
supply the computers upon receiving foreign currency allocation by
the Reserve Bank of Zimbabwe.
(3)
Whether the plaintiff is entitled to the order sought.
(4)
Whether the defendant is liable to the plaintiff in damages”.
The
plaintiff called two witnesses to support its case and through the
witnesses it submitted a total of nine (9) exhibits.
The
first witness called by the plaintiff was Mr Patrick Gwara (“Mr
Gwara”) who said he is currently employed by the plaintiff as a
Stores Supervisor with the main responsibility of taking care of the
plaintiff's stocks.
Mr
Gwara testified that upon an evaluation of quotations the defendant
was awarded the contract/tender to supply the plaintiff with thirty
(30) computers. He said upon being paid the sum of $340,180,800-00 to
cover the total cost of the computers, the defendant delivered ten
(10) computers. The ten (10) computers were received by the plaintiff
on 2 March 2005. That left a balance of 20 computers already paid
for.
It
was Mr Gwara's evidence that at the time of placing the order with
it, the defendant had indicated that it had twenty-five (25)
computers in stock and 'it would get the other five (5)'.
He
said, apart from paying the requisite purchase price for the
computers, the plaintiff was not aware of the financial arrangements
between the defendant and its suppliers.
He
went further to say if the plaintiff had known that the defendant
would face supply problems, it (plaintiff) would not have placed the
order with the defendant. This was so because the computers were
needed urgently for its Harare and Bulawayo offices.
Under
cross-examination Mr Gwara said he was not aware that his seniors had
moved the delivery date to 1 July 2005 as indicted in the
replication. He, however, maintained that as far as he was concerned
delivery was to be made soon after payment. He said that although the
plaintiff had in the past accepted long delivery periods with respect
to other contracts, this was not the case with respect to the thirty
(30) computers because they were needed urgently.
The
contract/tender, had been awarded to the defendant on the basis that
it had the computers in stock.
Mr
Gwara denied knowledge of the offer by the defendant to refund the
plaintiff. He said as far as he was concerned the plaintiff wanted
delivery of the 20 computers.
The
second witness called by the plaintiff was Mr Mischeck Chigatse (“Mr
Chigatse”). He said he is employed by the plaintiff as a
Procurement Officer.
Mr
Chigatse was, in that capacity, responsible for the procurement of
goods and services for the plaintiff. He was, however, not aware of
the issue of the thirty (30) computers since the contract had been
entered into before he was employed by the plaintiff.
The
witness, however, gave evidence on current prices of computers such
as those forming the subject of the dispute herein. He said the
prices ranged from $300 billion to $700 billion. His evidence was
based on three (3) quotations obtained by the plaintiff. He said
based on the quotations, the current price of a similar computer to
the one that had been ordered by the plaintiff would be $489 billion.
The
defendant called only one witness to support its case.
It
called Mrs Doreen Nyamusara (“Mrs Nyamusara”). She said she
joined the employ of the defendant in April 2005 as a Finance Manager
but was, as from January 2008 promoted to the position of General
Manager. She told the court that she was unaware of the details of
the contract in issue since she joined the employ of the defendant
when the contract had already been concluded. She was, however,
involved in negotiations with the defendant's suppliers for the
delivery of the remaining twenty (20) computers.
Mrs
Nyamusara testified that at one stage the defendant had asked the
plaintiff to participate in the auctions(s) for foreign currency. The
plaintiff had refused to do so. She said after all efforts to obtain
foreign currency had failed to produce results, the defendant had
offered to refund the plaintiff. The plaintiff had, however, declined
the offer, insisting that it wanted delivery of the computers.
Mrs
Nyamusara also stated that the parties failed to resolve the matter
amicably largely due to differences in the calculation(s) of
interest. As a result of the differences the matter was never
resolved amicably. This was notwithstanding the fact that the
defendant made a payment of $1,392,000-00 through the plaintiff's
legal practitioners – which payment was still being held by the
plaintiff's legal practitioners.
Under
cross-examination, she agreed that the sum of $1,392,000-00 was too
little to pay for the twenty (20) computers.
Also
admitting that the type of computers originally ordered by the
plaintiff had been phased out, Mrs Myamusara said a similar computer
(ie A55 Lenovo) would, as per exhibit 24, cost $143,750,000,000-00.
Mr
Dondo for the plaintiff, submitted that there was no doubt that
delivery was to be effected immediately upon payment of the full
purchase price. He said the issue of foreign exchange was only
brought up in an effort to justify a clear breach of contract by the
defendant. He said that in concluding the contract the issue of
foreign exchange was never raised. He said the quotations which
resulted in the award of the contract were in local currency – with
the foreign exchange element having been taken into account. It was
his view that if indeed the issue of foreign exchange had been a
factor, the parties would have said so upon executing the contract.
He
urged the court to dismiss the defendant's defence based on the
shortage of foreign currency because it came as an afterthought.
Relying
on RH Christie's The Law of Contract in South Africa 3ed, Mr Dondo
submitted that 'an impossibility to perform must be absolute'.
He
argued that in casu, that defence was not available and as such the
defendant was clearly in breach and was liable for the prejudice
suffered by the plaintiff. To that end Mr Dondo prayed either for the
delivery of the twenty (20) computers or payment of damages
representing the current market value of the computers.
Mr
Dondo submitted hat if payment of damages were to be ordered, the sum
of $9,792,245,000,000-00 would be reasonable because it would enable
the plaintiff to procure the computers on its own. That value, he
argued, had not been challenged.
The
primary aim in asking for damages was to put the plaintiff to where
it should have been were it not for the breach of contract by the
defendant.
Mr
Dondo further submitted that the issue of money paid to the
plaintiff's legal practitioners should not be allowed to cloud the
issues before the court. That money could still be recovered. Ms
Shongedza for the defendant submitted that the dispute was mainly on
the issue of the delivery dates.
She
said that the parties were not agreed on what was the delivery date.
She, however, agreed that the defendant's only witness could not
testify to the terms of the contract since it was concluded before
she joined the defendant's employ.
Ms
Shongedza submitted that as per the plaintiff's replication, the
delivery date in terms of the contract should have been 1 July 2005.
That, according to her, meant there was no question of immediate
delivery in line with the parties' conduct on previous supply
contracts. She went further to suggest that the failure by Mr Gwara
to explain the averment in the replication referring to 1 July 2005
supported the defendant's case in the sense that a delay of some
four months after payment meant that the computers would be delivered
only after the defendant had paid its supplier, namely
Tri-Continental. Payment involved foreign currency.
It
was therefore Ms Shongedza's submission that the plaintiff, despite
denial, was aware from inception that delivery of the computers would
only be effected after the procurement of foreign exchange by the
defendant. Accordingly, when that became impossible, it meant the
defendant could no longer deliver as had been agreed.
The
failure to obtain foreign currency was, in her view, a supervening
impossibility which served to extinguish the defendant's
obligations under the contract.
She
said according to Joubert's General Principles of the Law of
Contract, the defence of a supervening impossibility was available to
the defendant. To that end she quoted Joubert at page 293 where he
states:-
“Performance
may become either absolutely or relatively impossible after the
conclusion of the contract. In the case of absolute or objective
impossibility of performance the rule is undoubtedly that the duty of
the debtor to perform is extinguished …”
On
the basis of the above, Ms Shongedza submitted that it was improper
for the plaintiff to insist on specific performance. In so doing, she
argued, the plaintiff had contributed to its own loss.
She
said the loss would have been mitigated if the plaintiff had accepted
the refund offered in May 2005.
The
defendant had, all the same, gone ahead to refund the plaintiff with
a sum of $1,362,980-32. That money was still being held in trust by
the plaintiff's legal practitioners. The amount, it was argued, had
been calculated properly and therefore the defendant's view was
that the plaintiff had been refunded in full. There was therefore no
basis for this action.
On
the possibility of the court finding in favour of the plaintiff and
ordering payment of damages, Ms Shongedza submitted that the figures
quoted by the plaintiff were excessive and did not accurately reflect
the current prices for the originally ordered computers.
She
said although there was no case for damages, the defendant's own
quotation of $143,750,000-00, would represent a reasonable figure.
The
fact that the plaintiff's loss would have been mitigated if it had
participated in foreign currency auctions or had accepted the refund
as offered in May 2005 could not be ignored. Accordingly damages
payable, if any, should be reduced, she argued.
Ms
Shongedza also urged the court to be cautious when evaluating Mr
Gwara's evidence. She said this was so because Mr Gwara had denied
knowledge of the refund issue yet there was evidence that
correspondence on the issue was copied to him.
I
shall, taking into account evidence from both parties' witnesses
and submissions by their legal practitioners, now deal with the
agreed issues for determination.
The
issues are enumerated in the second paragraph at page 2 herein. In
dealing with this matter, I believe that a finding of whether or not
delivery of the computers was subject to the availability of foreign
currency to meet the defendant's suppliers' financial
requirements will greatly narrow issues for consideration.
In
order for that argument to succeed the court has to be convinced that
in paying the sum of $340,183,800-00 the plaintiff was fully aware
that this was merely part payment which would go towards the purchase
of foreign currency.
There
must be evidence that the defendant made it clear to the plaintiff
that delivery would be dictated by the availability of foreign
currency to meet the requirement of Tri-Continental, its supplier.
This is clearly so because apart from quotations and payment
confirmations, the contract terms were not reduced to writing.
In
casu the evidence from papers and that lead in court leads me to the
conclusion that the defendant cannot avail itself to the defence of a
supervening impossibility.
This
is so because it is clear to me that the plaintiff gave the
contract/tender to the defendant on the understanding that the
computers were in stock and readily available. All what the plaintiff
was required to do was to effect full payment and then delivery would
follow immediately.
The
defendant had indeed indicated to the plaintiff that it had the
computers in stock, at least 25 of them.
The
plaintiff effected full payment on 28 February 2008. Payment was in
accordance with the defendant's quotation for the delivery of 30
computers.
Contrary
to the defendant's legal practitioner's perception of Mr Gwara, I
found him to be a credible witness who knew exactly what took place
when the contract was entered into between the two parties. His
failure to know subsequent details of discussions between the
plaintiff's senior management and the defendant's representatives
on the issue of delivery times and the refund, should not be allowed
to carve a dent into his evidence.
The
witness, Mr Gwara, was adamant that the issue of foreign currency was
never raised when the contract was granted to the defendant. He
pointed out that if at all the plaintiff knew there would be problems
of foreign currency the contract would not have been granted to the
defendant. The plaintiff needed the computers urgently and the
defendant had indicated that it had twenty-five (25) in stock and
would look for the other five (5).
That
evidence was never satisfactorily challenged in court.
All
the defendant could say was that the computers were in stock at
Tri-Continental.
Clearly,
if that detail was necessary the defendant could have revealed it to
the plaintiff at the time of concluding the contract.
That
was not done and as submitted by the plaintiff's legal
practitioner, I hold the view that the price quoted in Zimbabwean
dollars included the foreign exchange component.
Indeed,
even upon the speedy delivery of ten (10) computers, there was no
mention of a possible top up to cater for the foreign currency
element required for the remaining twenty (20) computers.
It
is also significant to note that full payment was made on 28 February
2005 and within a few days (ie. 2 March 2005) ten (10) computers were
delivered.
That
reinforces the issue of immediate delivery upon full payment and the
availability of computers in stock in Zimbabwe.
As
already indicated the defendant has also argued that failure to
procure foreign currency rendered performance impossible and hence
the defence of a supervening impossibility.
As
correctly argued by the plaintiff's legal practitioner, that
defence is not available to the defendant. Right from the inception
of the contract the defendant made the plaintiff believe the
computers were in stock in Zimbabwe. That is why within 3 days the
defendant was able to deliver 10 computers.
The
issue of foreign currency only came up as an excuse for failure to
deliver.
I
am therefore, on a balance of probabilities, satisfied that upon
making full payment on 28 February 2005 the plaintiff had fully
discharged its obligation under the contract. That means the issue of
foreign currency was never raised when the contract was concluded and
did not therefore form part of the contract terms.
Upon
failure to reach an out of court settlement, the plaintiff remained
ready to accept delivery. This remained the plaintiff's position up
to the hearing of this matter.
To
that end I would reject the defence of a supervening impossibility
because my finding is that when the contract was made the defendant
assured the plaintiff of immediate delivery upon payment, as
evidenced by the delivery of the first ten (10) computers. There was
no basis for the plaintiff to ever think or imagine that the
remaining twenty (20) computers were not in stock.
The
contract was not subject to the defendant being availed foreign
currency by the Reserve Bank of Zimbabwe. If indeed that were the
case, the contract would have said so.
As
was submitted by the plaintiff's legal practitioner, the issue of
an agreement becoming impossible of performance is fully covered by
R.H. Christie in his book 'The Law of Contract In South Africa 3ed,
at pages 101-102 where he writes:-
“The
Roman law principle that a contract is a nullity if at the time it
was made it was impossible of performance forms part of our law.
'By
the Civil Law a contract is void if at the time of its inception its
performance is impossible: impossiblium nulla obligation
(D50.17.185).'
But
the principle thus stated may easily be misunderstood and requires
immediate qualification in four respects.
(i)
First, the impossibility must be absolute as opposed to probable. The
mere likelihood that performance will prove impossible is not
sufficient to destroy the contract.
(ii)
Second, the impossibility must be absolute as opposed to relative. If
I promise to do something which, in general, can be done, but which I
cannot do, I am liable on the contract.
(iii)
Third, the impossibility must not be the fault of either party. A
party who has caused the impossibility cannot take advantage of it
and so will be liable on the contract.
(iv)
Fourth, the principle must give way to the contrary common intention
of the parties. This intention may be expressed, as when a seller
expressly represents or promises that the merx exists. If it is found
not to have been in existence at the time the contract was made, he
will be liable for damages for breach of his promises or for his
false representation if fraudulent or negligent. Or the common
intention of the parties may be implied, as in the case of the sale
or lease of a res aliena. The seller or lessor impliedly undertakes
to deliver the property or to pay damages if he is unable to do so”.
In
casu, there is nothing to suggest impossibility at the time of
contracting or to suggest any conditionalities.
There
is also nothing to suggest that the issue of foreign currency led to
a complete paralysis of the defendant's business. To date it is
still in the business of selling computers.
As
already stated, it is my finding that the defendant clearly
represented to the plaintiff that he had the computers in stock and
since the plaintiff needed them urgently he gave the contract/tender
to the defendant.
In
breach of contract and without any fault on the part of the plaintiff
the defendant delivered ten (10) computers only, leaving a balance of
twenty (20) computers.
Clearly
therefore and in line with the principles of law enunciated by R.H.
Christie in the above quoted passage, the defendant is liable for
specific performance or damages. (See Lupu v Lupu 2000 (1) ZLR 120
(S)).
The
plaintiff still insists on specific performance or payments of
damages to cover the cost of similar computers at today's prices.
I
also did not hear the defendant to say it cannot perform.
The
defendant is still in the business of selling computers.
Quotations
were produced to indicate current prices for similar computers. The
defendant produced one quotation and argued that the plaintiff's
prices were for superior machines. The defendant said that a computer
similar to the one originally ordered would cost $143,750,000,000-00.
The plaintiff, however, believes that, in order for it to be put back
to where it would have been had the twenty computers been delivered,
a sum of $9,792,245,000,000-00 should be payable in the event of
failure by the defendant to deliver. That amount is based on
quotations for each similar computer on exhibits 8
($382,455,561,600-00), 9 ($489,622,500,000-00) and 10
($776,250,000-00). Given the effects of inflation the plaintiff
recommended the midway price of $489,622,500,00-00.
The
defendant, on its part and despite denying liability, insisted that
it was possible to procure similar computers at the price it quoted
(ie. $143,750,000,000-00).
Counsel
for the plaintiff submitted that the matter of a refund should not be
allowed to cloud the real issues before the court.
I
agree.
I
believe the payment of $1,392,000-00 through the plaintiff legal
practitioners only serves to confirm a failed attempt to settle the
matter out court. In any case Mrs Nyamusara who testified for the
defendant agreed that the money was too little to cover the cost of
twenty (20) computers. I hold the view that a party that is in clear
breach should not be allowed to dictate the amount of damages that
should be paid to the party that is not at fault and more so an
innocent party that will have fully met its obligations under a
contract. To allow that would be to encourage parties to pull out of
contracts on the strength of their capacity to pay damages.
In
International Trading (Pvt) Ltd v Nestle Zimbabwe (Pvt) Ltd 1993 (1)
ZLR 21 (H), addressing the issue of specific performance, the late
ROBINSON J, as he then was, had this to say:
“I
would wind up by saying that if the right of specific performance is
to be shown to have real meaning to businessmen, then the loud and
clear message to go out from the courts is: businessmen beware. If
you fail to honour your contracts, then don't start crying if
because of your failure, the other party comes to court and obtains
an order compelling you to perform what you undertook to do under
your contract.
In
other words, businessmen who wrongfully break their contracts must
not think they can count on the courts, when the matter eventually
comes before them, simply to make an award of damages in money, the
value of which has probably fallen drastically compared to its value
at the time of breach. Businessmen at fault will therefore, in the
absence of good grounds showing why specific performance should not
be decreed, find themselves ordered to perform their side of the
bargain, no matter how costly that may turn out to be for them…”
I
fully endorse the above sentiments.
In
view of the foregoing and having determined all the issues raised at
page 2 in favour of the plaintiff, I believe that, in casu the
circumstances demand that the relief prayed for by the wronged party,
the plaintiff should be given favour by this court.
Accordingly,
I order as follows:-
1.
That the defendant be and is hereby ordered to supply and deliver to
the Plaintiff twenty (20) IBM A55 (Lenovo) desktop computers
forthwith.
2.
That in the event of failure to deliver as indicated in 1 above, the
defendant be and is hereby ordered to pay the plaintiff damages in
the sum of $9,792,245,000,000-00 forthwith.
3.
That the amount referred to in 2 above shall be payable with interest
at the prescribed rate from the date of summons to the date of
payment; and
4.
That the defendant shall bear the costs of this suit.
Chinamasa,
Mudimu, Chinogwenya & Dondo, plaintiff's legal practitioner
Wintertons,
defendant's legal practitioners
