The
equipment purchased by and supplied to Mazowe Mine is listed on page 95 of exhibit
1. It consists of a KE5 motor protection relay control voltage 550V; KE5 (CTS)
current transformer, core balance CT insulator lockout converter, MMI program
unit; warman pump spares 4/3D impeller shaft sleeve DO75 and stop start push
button. The ...
The
equipment purchased by and supplied to Mazowe Mine is listed on page 95 of exhibit
1. It consists of a KE5 motor protection relay control voltage 550V; KE5 (CTS)
current transformer, core balance CT insulator lockout converter, MMI program
unit; warman pump spares 4/3D impeller shaft sleeve DO75 and stop start push
button. The detailed ledger of the Mazowe Mine account is fully captured
on pages 93-115 of exhibit 1. The accuracy of Ephraim Tatenda Gwatidzo's
testimony on the quantities and cost of the delivered items was not placed in
issue under cross examination. He established that as at 31 January 2012, the
defendant was indebted to the plaintiff in the sum of US$47,733=04 on the
Mazowe Mine account.
In
his testimony, Engineer Patrick Sana admitted that the equipment was delivered
to Mazowe Mine. He also admitted that due payment is still outstanding on the
equipment claimed in the summons. He countered the claim by seeking set off of
the debt against the invoiced cost of four mixers that were delivered to Mazowe
Mine and paid for which failed to perform to expectation. Patrick Sana
diagnosed the problem at Mazowe Mine. He found that gear boxes were
overheating and breaking their flanges and bending wet-end shafts. Engineer Patrick
Sana's reports confirmed that all four mixers for Mazowe Mine that were ordered
and paid for in full in the sum of US$107,175=17, on 25 August 2010, were
delivered on 28 October 2010. That the four mixers were received at Mazowe Mine
is confirmed in the Mazowe Mine goods received note on page 4 of exhibit 3 (page
260 of exhibit 1). They failed to perform satisfactorily. In August 2011, in a
meeting attended by Ephraim Tatenda Gwatidzo and Saweto for the plaintiff and Patrick
Sana, Mashingaidze and Mekani for the defendant, Ephraim Tatenda Gwatidzo
promised to replace the four at the plaintiff's own cost as recorded in the
e-mail of 30 August 2011. The replacements were delivered installed and
commissioned on tanks 2, 4, 5 and 7 by the defendant and witnessed by the
plaintiff's personnel. The commissioning history of the replacement Mazowe
Mine mixers was set out by Patrick Sana on page 278-284 of exhibit 1. Page 279
shows that the four gear boxes were received on 28 October 2010 at Mazowe Mine.
They had been successfully installed by 7 November. The motors on tank 2,
4 and 7 were overloading. The supply breaker was upgraded and blades changed.
On 15 November, all four mixers were successfully commissioned after the
problems of 7 November were rectified. On 22 November, all four tanks had high
levels of siltation. Operations were stopped to allow the plaintiff to supply
four variable speed drives that would drive all four mixers successfully. On 24
November, after these had been fitted, the mixers ran well. On 1 April 2011,
tank 4 snapped due to an unstable gearbox plate. On 15 April, a motor coupling
was affected by a loose drive key that was in off position and gearbox number 5
failed due to overheating and the use of wrong blades. It was attended to but
failed again on 1 May 2011 after the blade bent and snapped. On 3 November 2011,
tank 4 and 7 were drained of carbon. On 16 November 2011, new mixers, complete
with electric motor, gear box, shaft and 3 pairs of blades, were installed.
After rubberizing, tank 4 accumulated high mud levels. It did not improve on 24
November. Tank 4 and 7 were not working on 25 November as they were still
silting. The gear box and motor on tank 4 were fitted on tank 5 but agitation
did not improve. On 30 November, tank 4 did not have both motor and gear
box. On 2 December, tank number 5 was running well. A gear box was restored on
tank number 7 on 5 December and it achieved perfect agitation. Tank 5 and 7
were still running well on 7 December. On 8 December, all the plaintiffs'
gearboxes were removed for failing to perform and the contract was allegedly
terminated.
Ephraim
Tatenda Gwatidzo and Munodawafa Dzobo accepted that the only components of the
mixers purchased on 25 August 2010 that were returned were two CIL Flenders
gearboxes serial number MZ CIL number 4 and MZ CIL Number 5 gear boxes returned
for repair under warrant on 14 November 2011, page 5 of exhibit 3. In addition,
the defendant returned to the plaintiff two 15kW AC drives serial numbers
F0009MA11622330 and F009MA116022324 shown on its Goods Returned Advice Slip
dated 13 December 2011.The defendant also returned two 60mm shafts complete
with blades, one 60mm shaft, two gearboxes serial numbers 841687516-002 and
841687516-003 and two electrical motors serial numbers 0603004 and 0603005 to
the plaintiff on 12 December 2011 under note number 00495 referenced 50812 on page
6 of exhibit 3 and 262 of exhibit 1. The latter were goodwill mixers that the
defendant rejected and which the plaintiff then retrieved that were not part of
the four purchased on 25 August 2010. Ephraim Tatenda Gwatidzo conceded that
his e-mail of 28 November 2011 to Graham pointed out that the mixers, including
the new lot, were not working, but the four supplied were all working but not
to expectation, hence his call for a new design and for Graham to fly to
Zimbabwe. Ephraim Tatenda Gwatidzo was unable to cost the value of the two gear
boxes returned for repair on warrant. He disputed that all the goods worth
US$107,175=17 were returned by the defendant to the plaintiff.
It
seems to me that the two mixers returned on 12/13 December 2011 were not the
ones purchased on 25 August 2010. Munodawafa Dzobo and Ephraim Tatenda Gwatidzo's
version that these were goodwill replacement mixers is more probable than the
defendant's testimony that they were 7,5 kW purchased on 25 August 2010. These
were 15kW and not 7,5 kW mixers.
In addition, the onus was on the defendant to establish
that it rejected the two that were returned for repair on warrant. It failed to
do so. It further failed to establish the fate of the remaining two 7,5
kW mixers that were originally delivered on 25 October 2010. Again, it further
failed to establish the basis for set off of the returned parts of two mixers
that it returned for repair and not for refund. The onus lay on the defendant
to establish the value of the two gearboxes. It failed to do so.
All
the amounts paid by Mazowe Mine for all goods delivered, including the four
mixers, are reflected in the composite reconciliation account for the period 28
August 2009 to 30 January 2012 on pages 236-238 of exhibit 1.
I
am satisfied that the plaintiff proved that it is owed US$47,733=04 by the
defendant for the Mazowe Mine account.
The
equipment purchased by and supplied to the defendant by Shamva Mine was listed
in the schedule on page 221 of exhibit 1. It consists of the motor control
centre for mixers; 15kw gear box repaired; LA100 (10-100amp) motor protection
relay; 30.5 mm assembled die cast aluminium oil tight buttons stations pad
lockable; Warman pump spares 6/4E impeller closed STD NIHARD shaft sleeve EO75
D21; Warman spares 4/3D impeller closed STD, NIE 4/3D; 15kw and 22kw mixer
complete with wet ends, protection relay and commissioning service factor; 15kw
and 22kw VSD (550V); Machining of 22kw rotor and cut key way; Repairing of
threads on DTV shaft; 20mm wire rope 12 x 7 (6/1) 6 x 7 (6/1); Electrical power
analysers CA 8230; 3 phase electrical power energy analyser; 22kw drive end
motor flange; 15kw rotor; 15kw and 22 kW mixer motors complete with gear boxes,
15kw wet ends shafts; Shafts for 15kw mixers; Motor protection relays
GKE50 (KW), GKE 100 (37) KW, GKE 200 (75 KW), AND GKE50 (15KW) and accessories;
Part no. 301 Esteritz Z23 d28 shank pinion, part 305 Z98 Bak 3 Helical gear
wheel; Relays LA10, LA50 and LA 100; KA100 10-100AMP motor protection relay;
Interposing CTs class 1 100/5; 630 amp 3 phase neutral 600V 3 position handle
operated change over switch; Motor protection relay for 37 kW (50hp) complete
with accessories; DTV pump shaft after repairs.
The
detailed ledger for the Shamva Mine account runs from page 117 to 221 of exhibit
1. The schedule of purchase orders is found on page 117 while the actual
purchase order runs from pages 118 to 141. The schedule of delivery notes is at
page 175 while the actual delivery notes run from pages 176-201. The schedule
of tax invoices is at page 142. The tax invoices are found on pages 143-174. A
schedule of statements is at page 202 while the detailed ledger, with the full
description of the equipment supplied, is found at pages 203-220. The full
reconciliation of all orders, from invoices to and payments from Shamva Mine
are on pages 217-220 of exhibit 1.
Ephraim
Tatenda Gwatidzo stated that all the items listed, except for the motor control
centre that was paid for in full, were delivered to Shamva Mine. He stated that
the invoiced cost of these items in the sum of US$109,454=82 was due and owing
from Shamva Mine. The purchase order, number 30730, for the motor control
center, is found on page 138 of exhibit 1. It was sold for US$99,407=26 but the
defendant paid by electronic transfer the sum of US$100,000=, as shown on the
transfer form dated 9 September 2011. The motor control center was manufactured
to the specifications of Shamva Mine. It was completed after summons had been
issued. In either December 2011 or January 2012 the witness advised Shamva Mine
to collect the motor control center. They promised to send a vehicle to collect
it but have not done so to date. The outstanding issue is for the defendant to
decide whether the variable speed drives should be connected to the motor
control center at Shamva Mine where they were delivered or at the manufacturing
hub of the plaintiff. His preference was that it was easier, convenient and
preferable for the connection to be done at the manufacturing hub. Shamva Mine
has not collected the motor control center nor indicated its place of
preference for the connection. The reluctance to collect the motor control
center was admitted by both Patrick Sana and Godfrey Fore and confirmed in the
email, exhibit 4, where D Mhlanga of the defendant revealed that Shamva Mine
had been ordered to freeze all dealings with the plaintiff pending the
resolution of the present matter.
Godfrey
Fore admitted that all the goods in respect of the claim in the summons for
Shamva Mine were delivered. He agreed with Ephraim Tatenda Gwatidzo and Munodawafa
Dzobo that the motor control centre for Shamva Mine was not delivered. He
further stated that six variable speed drives purchased under order number
30742, placed on 23 February 2011, were not delivered. This order in respect of
two 22KW mixers complete with gearbox, wet ends, protection relays,
commissioning service factor; two 15KW complete with gearbox, wet ends,
protection relays, commissioning service factor, five 22KW VSDs and five 15KW
VSDs carried an invoiced cost of US$245,692=99.The plaintiff, however, delivered, on 24
October 2011, two 22KW mixers, two 15KW mixers and four 15KW VSDs but failed to
deliver one 15KW variable speed drive and all five 22KW variable speed drives. The note in question
is on page 194 of exhibit 1 and 17 of exhibit 2. The plaintiff wrote on the
delivery note: “kindly note VSDs are being fitted into the panel and will be
delivered as one unit later this week.” Both Ephraim Tatenda Gwatidzo and Munodawafa
Dzobo did not produce documentary proof that the six variable speed drives in
question were delivered. They carried an invoiced cost of US$49,006=10. The
defendant was invoiced for order 30742 on 23 August 2011 in the sum of US$245,692=99.
It paid, by electronic transfer, the sum of US$145,000= on 18 May 2011. The
electronic transfer form does not indicate the order number to which it
related. The plaintiff appropriated this amount to order 5144 and not 30742.
The defendant also paid a further US$100,000= for order 30742, as reflected on
the electronic bank transfer on page 35 of exhibit 3 on 12 August 2011. The
defendant set the invoiced cost of the six variable speed drives that were not
delivered at US$49,006=10.
The
undelivered motor control center and six variable speed drives had a carrying
value of US$149,006=01.
The
defendant sought set-off of this amount against the proved debt owing to the
plaintiff.
The
defendant also raised the defence of set off against three mixers with an
invoiced cost of US$196, 686=89 that were delivered, paid for but failed to
function within less than one year of commissioning. These were No.5 CIP 22KW
mixer, commissioned 4 November 2010, which failed on 17 November 2010, No.6 CIP,
commissioned 30 November 2011, which failed on 6 January 2012, and No.7 CIP
22KW mixer, commissioned 8 November 2011, which failed on 1 December 2011. Godfrey
Fore produced an internal memorandum of 12 April 2012, found on pages 7-9 of
exhibit 3, to justify the defence of set off against the equipment valued at US$196,686=89.
In the report, he indicated that two 22KW and two 12KW gearboxes were returned
to the plaintiff for repair; one 15KW and one 22KW gearboxes were in the Shamva
Mine workshops awaiting dispatch to the plaintiff for repair; the plaintiff had
changed horizontal shafts to vertical shafts to improve performance; the
failure by the plaintiff's South African supplier to correct the problem of
bending wet ends; and the failure to supply and commission order 30742 of 22
February 2011 notwithstanding that the plaintiff's fitter Mudimu and Gwatidzo
were virtually operating from Shamva Mine hence the decision by the mine to
return the problematic equipment to the plaintiff for repairs and redelivery to
the mine after the repairs had been done. The plaintiff had supplied but failed
to commission two years down the line. He did not believe the plaintiff was
ready to deliver the motor control center. It was a small item that the
plaintiff could easily deliver and fix to the drives that were long delivered
to the mine were it truly ready….,.
Godfrey
Fore further indicated in his testimony and in the internal memorandum of 12
April 2012 that Shamva Mine owed the plaintiff US$83,988=09. He did not show
how this amount was calculated. He then deducted it from the aggregate of the
invoiced cost of the motor control center, six variable speed drives, the three
non-performing mixers and the three electronic transfers of 18 May, 12 August
and 9 September 2011. He concluded that the plaintiff owed Shamva Mine US$261,704=99. The
defendant sought the deduction of this amount from the proved invoiced cost of
the sum owed to the plaintiff.
I
am satisfied that the plaintiff correctly computed the amount owed by Shamva Mine
of US$109,454=82 for the period 20 August 2009 to 30 January 2012. The
reconciliation account for Shamva Mine, on pages 218-220, together with the
composite reconciliation for all the mines on pages 236-238 of exhibit 1, show
that the plaintiff correctly appropriated the bulk payments made for the
payment of US$100,000= for the motor control center and the US$245,000=, that
included payment of the outstanding six variable speed drives, to arrive at the
amount owing. The evidence of Munodawafa Dzobo that he did the reconciliation
with two employees of Shamva Mine, Chiwaya and Mhlanga, stood uncontroverted by
these two men. Godfrey Fore disputed that the plaintiff and the defendant
conducted a joint reconciliation contrary to the report made to the pre-trial
conference judge on 17 April 2012 that the parties had conducted such
reconciliation on 13 April 2012….,
I
am satisfied that the defendant has failed to establish the defences of set off
or repudiation….,.
In
its plea, the defendant placed in issue the quantity of the equipment delivered
and the amount claimed. It did not plead set off but raised it as a
defence in evidence. Set-off must be pleaded and proved. INNES CJ stated in Schierhout v Union Government 1926 AD 286…, -
“The
doctrine of set off with us is not derived from statute and regulated by rule of
court, as in England. It is a recognised principle of our common law. When two
parties are mutually indebted to each other, both debts being liquidated and
fully due, then the doctrine of compensation comes into operation. The one debt
extinguishes the other pro tanto as
effectively as if payment had been made. Should one of the creditors seek
thereafter to enforce his claim, the defendant would have to set up the defence
of compensatio by bringing the facts to
the notice of the court – as,
indeed, the defence of payment would have to be pleaded and proved. But
compensation, once established, the claim would be regarded as extinguished
from the moment the mutual debts were in existence together.”…,.
The
defence of set-off was pleaded in the local cases that dealt with it such
as Geoff's Motors (Pvt) Ltd v Lilfordia Estates (Pvt) Ltd
1995 (2) ZLR 342 (S)…,; Mountain Lodge Hotel (1979) (Pvt)
Ltd v McLoughlin
1983 (2) ZLR 238 (SC)….,; and C C A Little & Sons v Liquidator R Cumming (Pvt) Ltd
(in liquidation)
1964 (2) SA 684 (SR)…,.
In
the present matter, it was not pleaded. I will, however, consider it on the
basis that it was fully ventilated by the parties before summons was issued and
during trial. In any event, it is only fair and just that as I decided to
determine the issue of the increased claims of the plaintiff that were not
pleaded I reciprocate by also considering it. After all what is good for the
goose must be good for the gander.
The
onus obviously lies on the defendant to establish, on a balance of
probabilities, that the plaintiff is mutually indebted to it and that the debt
is fully due. In Commissioner of Taxes v First Merchant Bank Ltd 1997 (1) ZLR 350 (S)…,
GUBBAY CJ stated that -
“At
common law, set-off or compensatio is a
method by which mutual debts, being liquidated and due, may be extinguished. It
takes place ipso jure. If the debts are equal, both
are extinguished; if unequal, the smaller is discharged and the larger is
proportionally reduced.”
It
was common cause that the defendant made pre-payments in the aggregate sum of
US$149,006=10 for the undelivered motor control center and the six variable
speed drives. It was common cause that the plaintiff did not appropriate this
amount to defray the proved debt of US$301,342=73. Rather, it used the
pre-payment in the manufacture of the motor control centre. At the closure of
pleadings, on 3 February 2012, the manufacture of the motor control center was
work-in-progress. It was not a debt that was fully due to the defendant. It was
common cause that the defendant did not, at any stage, place the plaintiff in mora for the delivery of, or cancel the contract of sale
of, the motor control centre and the undelivered six variable speed drives. The
requirement to place a defaulting party in mora was emphasized
by GARWE JA in Zimbabwe Express Services (Pvt) Ltd v Nuanetsi Ranch (Pvt) Ltd 2009 (1) ZLR 326 (S)…,
where he stated that -
“The
position is now settled that:
'Notice
of cancellation must be clear and unequivocal and takes effect from the time it
is communicated to the other party.'
R.H.CHRISTIE
Law of Contract in South Africa 3ed at p597. See also du Plessis v Government of the Republic of
Namibia 1995
(1) SA 603 (HH) at 605E.
A
notice of intention to cancel must be such that the other party is or ought to
be aware of its nature, but it is not necessary to use the word “cancellation.”
The intention to cancel may be made sufficiently clear in other ways. KERR Principles of the Law of Contract 4ed p 462.”
Again,
R.H.CHRISTIE Law of Contract in South Africa 3ed at 555 states:
“When
the contract does not fix a time for performance there can be no mora ex re only mora ex persona, so a demand by the
creditor is necessary in order to place the debtor in mora.”
And
again at page 562:
“When
no time for performance is fixed but time is of the essence, the debtor is not in mora and the creditor cannot cancel for non-performance
unless a proper demand for performance has been made…., the concept of time of
the essence relates to the consequences of a breach and not to the breach
itself, so if no time is fixed there can be no breach by non-performance,
whether or not time is of the essence, until the creditor has informed the
debtor when he maintains performance is due.”
Counsel
for the defendant conceded
that the contract of sale of the motor control center and the six variable
speed drives was not cancelled expressly or by conduct.
In
my view, despite the tone of the communication to Graham in paragraph 3 of the
e-mail of 28 November 2011 that expressed the fears of Ephraim Tatenda Gwatidzo
arising from the problematic mixers at both Mazowe Mine and Shamva Mine, the
defendant did not cancel the contract. The correspondence between the parties
at the time the problems arose was such that the defendant was content with
repairs on warrant and replacement of defective parts. The report of Patrick
Sana of 25 November 2010 and 29 March 2012, and of Godfrey Fore of 12 April
2012, were written after the closure of pleadings. They were internal reports
that were not copied to the plaintiff. They made false conclusions concerning
the termination of the contract of sale of the undelivered equipment and the
faulty equipment. The reports indicate that the defendant did not repudiate the
contracts of sale but sought remedial measures for the repair and replacement
of the equipment.
The
defence of set off in respect of the prepaid equipment that was not delivered
is not available to the defendant.
Patrick
Sana gave contradictory evidence on whether the plaintiff delivered the four
Mazowe Mine mixers. His reports indicate that all four mixers were delivered
for Mazowe Mine initially on 25 October 2010 and were used on tank number 2, 4,
5 and 7. Indeed, the reports show that the four were all replaced at the plaintiff's
cost as agreed by Ephraim Tatenda Gwatidzo in August 2011 captured in Ephraim
Tatenda Gwatidzo's e-mail of 30 August 2011. Patrick Sana stated in his report
of 29 March 2012 that four Mazowe Mine mixers were replaced in October 2011 and
fitted in November 2011. In his oral testimony he changed his testimony to suit
the information on the goods returned notes on page 5 and 6 of exhibit 3.
I
agree with counsel for the plaintiff that the two defence witnesses were, in
that regard, unreliable and unworthy of belief.
The
defendant failed to establish a case for set off against the Mazowe Mine
mixers. It did not establish the fate of the four mixers. The commissioning
history of tanks 2, 4, 5 and 7 on which the mixers were used is replete with
stop start operations. There is no evidence that the four 7,5 kW fully
motorised mixers, complete with wet-ends, were returned for repair on warrant
or for credit. Only two gearboxes were returned for repair on warrant. The
defendant remained with the motor and wet ends. This set of circumstances is
inconsistent with either cancellation or repudiation of the contract.
Certainly, the defendant has failed to establish that it is owed money on the
four mixers. It has failed to establish set-off against the four mixers.
The
plaintiff also raised the defence of set off in regards to the equipment
supplied to Shamva Mine valued at US$196,686=89 it alleged was defective.
The
correspondence between the parties indicated that the parties worked together
to resolve the problems. The external suppliers of the plaintiff held the firm
view, expressed by Saweto in exhibit 4, that the problems bedevilling the
non-performing equipment were operational rather than mechanical. The evidence
on record shows that the defendant only took the position that the problems
were mechanical after the issue of summons. The technical report of Patrick
Sana, dated 25 November 2010, setting out the problems of commissioning the
Mazowe Mine mixers highlight operational problems of overload that affected the
motor and gearbox and the problem of running the wet-ends in sludge that bent
them. Until the time of closure of pleadings, the defendant was content with
the repair and return of damaged equipment. The report of Patrick Sana defies
his conclusion that the mixers at both Mazowe Mine and Shamva Mine were a total
failure. They were running but faced the problems that appear to me to be
operational in the sense that the defendant's employees failed to follow laid
down operating procedures in running the equipment….,.
The defence of set off raised by the defendant
also fails on the ground that the contract of sale concluded with the plaintiff
for the purchase and delivery of mining equipment subsists.
