KARWI J; Plaintiff's
claim as amended is for the delivery by the defendants of two Mercedes Benz
C200 Kompressor motor vehicles to plaintiff in terms of an agreement entered
into by and between the parties. In the event of failure to deliver the motor
vehicles, plaintiff claimed a refund of one hundred and seventy million
dollars, to be paid by defendants in performance of their part of the contract,
together with interest thereon at the prescribed rate from 16 September 2004
being date of demand to date of full payment. Plaintiff also claimed the sum of
US$94 654.00, being the difference in cost of the two Mercedes Benz at the time
of breach and the time of the contract, and interest thereon together with the
cost of suit. After the trial of this matter, parties continued to engage in
discussions with a view to settling the matter, and according to Plaintiff s
legal representative, parties agreed and defendants made full refund of the
purchase price plus interest. The only issue to be decided in this matter is
whether the defendants are liable to pay any damages which plaintiff have
suffered and if so, the quantum of such damages.
Plaintiff had on
19 March 2003 contracted defendants to supply it with two Mercedes Benz
vehicles in terms of a written agreement entered into by and between the
parties. In terms of an invoice supplied by defendants, the purchase price was
$170 000 for both vehicles. The vehicles, whose full description in terms of
colour, make, model and identification were to be second hand and were to be
acquired and delivered in three weeks time. In pursuance of the agreement,
plaintiff made full payment for the vehicles in terms of the contract. It is
common cause that upon visiting South
Africa to confirm the condition of the
vehicles, First respondent was not satisfied with the state of the vehicles. He
communicated with Plaintiff who indicated that he would opt for new vehicles
instead and both parties agreed that the prices of the new vehicles would be
finalized upon delivery. Defendants then proceeded to purchase the new vehicles
which were driven to Beitbridge Border Post for clearance. Problems arose after
the clearing agents acted outside their mandate by trying to clear the vehicles
through another clerk unknown to defendants resulting in the vehicles being
seized and eventually forfeited to the State. Meantime defendants had
surrendered their Ferrari Motor vehicle to plaintiff as security for the $170
000 advanced to defendants. A cession was agreed on and signed giving plaintiff
authority to sell the vehicle should defendants fail to deliver in terms of the
contract. It is also common cause that parties held several meetings trying to
resolve the issue of the seizure. On one hand defendants were always assuring
plaintiff that the problem would be sorted out while on the other hand
plaintiff was hopeful that a solution would be found. However, defendants
failed to sort out the problem until plaintiff issued out summons two years
later.
It was conceded by
the Defendant's legal representative that the defendants were no longer in a
position to fulfill their contractual obligation by supplying the motor
vehicles in question. It is clear that they had failed to do so for whatever
reason. The legal issue which arises is whether plaintiff had suffered any damages
as a result of the breach and if so whether defendants are liable for the
breach.
The law relating
to contractual damages is settled. A wronged party has a right to claim
contractual damages for breach of the contract or to claim specific performance.
A wronged party is entitled to damages where it is clear the breaching party is
liable for causing the non performance of the contract whether negligently or
willfully. To that extent the defaulting party is liable for actual damages
suffered by the plaintiff. See Pamire &Ors vs Dumbutshena & Anor 2001
[1] ZLR 123. Makarau J had this to say in this case, “Under the law of
contract, damages for breach are meant to put the injured party in the position
they have been had the contract been properly performed. It is trite that the
proper performance of the contract necessarily involves the satisfactory
discharge of all obligations by all parties and not by the one”
In this case
plaintiff said that it suffered damages as a result of the default by
defendants and has claimed specific performance and damages in the alternative.
It has already been noted that defendants can no longer fulfill their
obligations in terms of the contract. It has as a result persisted with a claim
for damages. In our law the essence of the payment of damages is to restore the
wronged party to the position it would have been had the contract been fully
performed. It is also settled law that damages are assessed as at the time of
the breach. See Parish vs King 1992 [1] ZLR 216 [S] and Victoria
Falls and Transvaal Power Co Ltd vs Consolidated Langlaage Mines
Ltd 1915 Ad 122.
Plaintiff is
therefore claiming the following in terms of its amended claim,
1] Damages in the sum of $94 654.00
or its equivalent in Zimbabwean dollars less the price of the Mercedes Benz C200 Kompressor
at the time of the breach of the contract.
2]. Interest at the prescribed rate
on the sum of US 94 654.00 or its equivalent in Zimbabwe dollars at the prescribed
rate from the date of summons to date of payment.
3]. Cost of suit.
Defendants's
position was that plaintiffs contracted defendants to purchase and supply two
C200K Kompressor Mercedes Benz vehicles in terms of an invoice dated 19 March
2003. Pursuant to the agreement, plaintiff paid the sum of $101 00.00 to the defendants
as part payment in respect of the two vehicles. The vehicles to be supplied
were used vehicles with a mileage of around 10 000 km combined. First defendant
supplied a vehicle detail form for the vehicles he had obtained from South Africa but
upon going to see the vehicles, he was not satisfied with the state of the
vehicles. He communicated with plaintiff 's company secretary who indicated that
he would opt for brand new vehicles which plaintiff accepted. However the
purchase price of the new vehicles would be finalized upon delivery. First
defendant proceeded to purchase two brand new vehicles which were taken to
Beitbridge boarder post for clearance through Speedlink Clearance Agents as the
vehicles had to be transferred into plaintiff s name. Complications arose after
the clearing agents acted outside their mandate by trying to clear through
another clerk unknown to the defendants resulting in the vehicles being seized.
Efforts to recover the vehicles proved fruitless thus rendering specific
performance impossible. Defendants instituted a claim against Zimra and
Speedlink in this court who did not enter appearance to defend and defendants
have since applied for default judgment. Defendants further submitted that they
were not in a financial position to use their own funds to fulfill their
obligations.
It was submitted
on behalf of defendants that this court should grant an order for damages
actually caused by defendants. Such damages ought to be reduced because
plaintiff did nothing to mitigate its loss. This is so in view of the fact that
plaintiff was in physical possession of defendants Ferrari motor vehicle as
security. It is defendants view that plaintiff should have sold the Ferrari in
order to reduce its losses which had been occasioned by the breach by
defendants. The duty to mitigate one's loss was emphasized in Ambali vs Bata
Shoe Company 1999[1] ZLR 417. If a party does not mitigate its loss, its
damages will be reduced.
It was further
submitted on behalf of defendants that plaintiff had claimed damages in the sum
of 494 654.00, after obtaining a quotation from Zimoco for brand new vehicles
If the court was inclined in granting damages for new vehicles, the figure had
to be reduced by US$15 000, 00 which defendants incurred for the purchase of
new vehicles. This would leave the sum of $79 654.00 being damages for second
hand vehicles the plaintiff had initially paid for. It was further argued that
the amount had to be further reduced in light of the fact that the breach of
the contract by defendants was not self inflicted but actuated by an agent acting
outside its mandate. Further the plaintiff was in possession of security, which
he failed to dispose of in terms of the cession of rights form which parties
agreed to.
It seems to me clear
that parties to this dispute entered into a contract for the supply and
purchase of two Mercedes Benz motor vehicles, which vehicles defendants have
failed to supply. They blame their failure on some clearing agent who did not
measure up to their expectations. It is clear that defendants have therefore
breached their agreement with plaintiff and should pay damages for their
failure to supply plaintiff with the vehicles. The only issue for determination
is one of the quantum of such damages. Plaintiff produced in evidence an
invoice from Zimoco for two new similar vehicles. The quotation was for an
amount of US$94 654.00. Plaintiff claims that amount as damages. It must
however be noted that the quotation is not for second hand vehicles for which
he had paid. The second hand vehicles which plaintiff paid for had 3500km and
6500km on their clocks respectively. It would be appreciated that although the
vehicles had been used, the said vehicles were substantially new, in my
opinion. Further, it would not be argued that the usage of 3500km and 6500km
respectively for both vehicles would be equated to US15000.00. The combined
usage is far less than US$15 000 which defendant want to equate. In my
considered view, the combined usage is negligible even for the class of vehicle
in question in our country. The figure given in the Zimoco quotation would
still not be reduced because there was no proof firstly, that the said amount
was ever paid to the suppliers in South Africa and secondly, that
plaintiff ever benefited from the said payment. In other words, plaintiff did
not benefit from the alleged payment as it did not get the new vehicles in
question in the final analysis. If
indeed the payment of US$15000.00 was ever made, it would have been easy to
produce the receipts in court, which was not done, therefore casting doubts as
to the truth of the assertion. Besides, the issue of the payment of US$15
000.00 was only raised in court during the trial. The issue was not raised in
the defendants's pleas. It is more probable that the payment was never made and
was only raised at the trial for the first time in an effort to reduce the
plaintiff s claim. I therefore do not accept that it was ever made. This also
means that the figure claimed by plaintiff will be reduced by US$15 OOO.00.
Defendants also
submitted that plaintiff should have mitigated its loss by selling the Ferrari
that was surrendered as security. The duty to mitigate does require plaintiff
not to sit back and allow damages to accumulate. Plaintiff is required to take
reasonable steps to mitigate its loss. See Reid vs Hepker Ltd and Sons [Pvt]
Ltd, [1] RLR 284 where it was held that the onus is on the defendant to prove
that plaintiff failed to take reasonable steps to mitigate his damages.
It seems to me that
plaintiff did not fail to take reasonable steps to mitigate its loss. It was
clear from the evidence that from the time of seizure of the vehicles several
meetings were held between the parties to try to have the vehicles released
from Zimra. In view of the efforts both parties were making, there appears to
have been no reason for plaintiff to sell the Ferrari for it genuinely believed
that something was to come out of the efforts. Besides, defendants kept
assuring plaintiff that things were under control. Plaintiff s witness gave evidence, which
evidence was not disproved, that plaintiff had been advised by a reputable car
dealer that there was no market in Zimbabwe at the time for a Ferrari.
The same witness also told the court that even if plaintiff had wanted to sell
the Ferrari, the retention of the keys to the car by the defendants would have
made it impossible to sell it. In the circumstances, I find that plaintiff did
not fail to mitigate its loss.
In the result, it
is ordered as follows:
- Defendants shall pay the Plaintiff damages in the sum
of US$94654.00 less the price of the two Mercedes Benz at the time of
breach of the contract.
- Interest at the rate of interest applicable in the United States of America.
Cost of suit.
