BAK Storage (Pvt) Ltd. v Saltlakes Holdings (Pvt) Ltd. (HC 1393 of 2010) [2016] ZWHHC 48 (19 January 2016)

1 HH 48-16 HC 1393/10 BAK STORAGE (PRIVATE) LIMITED versus SALTLAKES HOLDINGS (PRIVATE) LIMITED HARARE HIGH COURT TSANGA J HARARE, 3 & 4 December 2015 & 19 January 2016 Civil Trial: Application for absolution T Magwaliba, for the plaintiff T Mpofu, for the defendant TSANGA J: I dismissed an application for absolution from the instance made by the plaintiff, Bak Storage (Private) Limited, as the defendant in the counter claim brought by Saltlakes Holdings (Private) Limited, as plaintiff’s in reconvention. Since an application for absolution is directed at the sufficiency of a plaintiff’s evidence, having heard the nature of the evidence, I indicated at the close of submissions by both counsel in the oral application made, that based on the evidence placed before the court thus far, I was far from convinced that it could be said that the plaintiff in reconvention had failed to make out a prima facie case for its claim. This was more so in light of the fact that the evidence need only be such as is reasonable to justify a finding in a plaintiff’s favour. Since a motion for absolution can equally be made at the close of all evidence, I was of the view that at this point, the defendant in reconvention be put to its defence and that its evidence be heard. Mr Magwaliba, who appeared for Bak Storage indicated that his instructing lawyers were adamant regarding the application for absolution at the close of the plaintiff’s evidence, and that the application having been denied, rather than proceeding with defendant’s evidence, the full written reasons for denying absolution should be provided for purposes of appeal. These are they. HH 48-16 HC 1393/10 THE BACKGROUND For ease of reference, I shall simply refer to the defendants in reconvention as Bak Storage and to the plaintiff in reconvention as Saltlakes. The parties had an agreement for storage of Saltlakes’ tobacco at Bak Storage’s various warehouses. Summons were issued by Bak Storage as the plaintiffs in the initial instance, for the recovery of storage charges. The parties having agreed at the trial that Saltlakes is indeed indebted to the Bak Storage for specified charges, less an amount already in its account from the sale of bales in its possession, the focus of this trial action is on Saltlakes’ counterclaim for damages that occurred to its tobacco from rain and water whilst stored at various of Bak Storage’s warehouses. Damages are also claimed for loss of tobacco which went missing from the auction floors to the Bak storage’s warehouses, which Saltlakes had contracted Bak Storage to uplift from the auction floors. Additionally, damages are claimed for tobacco belonging to Saltlakes which it says Bak Storage released to a wrong party, despite clear instructions as to whom it was to be released. The dates of the cause of action for these various claims, span the period November 2008 to June 2009. Saltlakes’ counterclaim is thus for payment of the sum of US 1 467 701.86 for the damaged, stolen and smuggled tobacco. FACTS UPON WHICH EVIDENCE LED For ease of articulation, I have elected to number the various claims under the counter claim starting with those relating to water damage as claims 1 to 5, and then dealing with those that relate to loss in transition or loss due to wrongful release of the tobacco as claims 6 to 7. Claim 1 In the first instance relating to water damage, Saltlakes says that in November 2008 damage occurred to its tobacco whilst stored at Bak 2 Storage House, when 14 bales, worth US$3 987.00 were damaged due to roof leakages. The plaintiff led evidence from Mr Wilfred Nhemwa its then support and services manager during the period in question from 2008 to 2009. He was later the company’s general manager from May 2009 until he left the company. His evidence was that prior to the damage, numerous attempts through emails and phone calls had been made to Bak Storage to attend to roof leaks at the storage house. Examples of such correspondence was provided such as a letter written on 27 October 2008 in which Saltlakes indicated that there had been failure, despite numerous complaints to Bak Storage to attend to HH 48-16 HC 1393/10 roof leaks at its Bak 2 Storage warehouse and to drainage at its Birmingham warehouse. Written evidence was additionally produced regarding its communication on 26 November, 2008 with respect to the 14 bales in question. Evidence was also produced of written communication from Bak storage dated 8 December 2008 in which it stated that things were now under control and apologised for the inconvenience caused. (Pp 66 -70 of Saltlakes’ bundle of documents). In computing the figure arrived at for damages sustained to 14 of its bales due to the leakages, Mr Nhemwa indicated that this had been arrived at using the average price of tobacco and an average bail weight which was $62.95 per bale at the time. In support of the various claims were internal schedules of tobacco purchase as well as schedules for storage of tobacco for specified periods. Claim 2 The second instance of damage to its tobacco occurred on or about December 1 of 2008 when a further 190 bales stored at Bak Storage’s HFC warehouse were damaged after a tap was left open at the warehouse. Of these, 67 bales worth US$32 164.81 were said to be completely destroyed. A further 35 bales worth $12 597.01 were left mouldy and could not be resold, whilst 88 bales worth $38 894.46 partially damaged and sold for US$ 15 640.28 resulting in a loss of $ 23 254.18. In computing these losses, F’s evidence was again that the average price of tobacco had been used. Claim 3 The third instance of damage to its tobacco arose on 5 December 2008 when 1500 bales worth $303 255.00 stored at a warehouse along Birmingham/Simon Mazorodze were damaged by water from a water hydrant which flooded the warehouse. Saltlakes says it only recovered the sum of $189 150.00 upon selling the damaged tobacco, resulting in a loss of $114 075.00. Mr Nhemwa’s evidence was that the loss sustained was estimated by SOCOTEC, an investigating company, who assessed the damage to be $300 000.00. He also stated that SOCOTEC’s conclusion in its report was that someone had applied force to the hydrant pipe. His further evidence was that Bak Storage had not rendered any contrary evidence regarding the findings by the investigating company. The report by SOCOTEC was attached as evidence. (P 31-35 of Saltlakes’ bundle). This incidence of damage was according to him, also well documented in the media. HH 48-16 HC 1393/10 Claim 4 In the fourth instance of damage to its tobacco which occurred on 13 December 2008, 59 bales worth $22 069.00 stored at HFC warehouse were damaged due to poor drainage at the warehouse. The bales were eventually sold for $9 696.12 resulting in loss of US$ 12 372.97. Mr Nhemwa indicated that there had been some efforts by Bak Storage to conceal the evidence of water damage in this incident. He also highlighted that for some of the tobacco they had been able to use the actual ticket value hence the discrepancy in the figures. Claim 5 The fifth instance of damage is said to have occurred on 8 January 2009 when a further 55 bales worth US$ 15 234.68 stored at Bak 2 warehouse were damaged owing to poor storage at the warehouse. The tobacco was said to have eventually sold for $5 959.54. Claim 6 As regards the claims for loss of tobacco, Saltlakes claim is that on various occasions between October 2008 and June 2009, 661 bales worth $133 621.15 which Bak Storage was transporting from auction floors to its warehouses went missing, between the auction floor and the warehouse. Mr Nhemwa led evidence to the effect that there was an agreement with Bak storage that it would transport purchased tobacco to its warehouses and that there were clear instructions on the arrangement. As such, he averred that as the purchased tobacco was in the hands of Bak Storage, it should assume responsibility for any that went missing. Claim 7 Saltlakes final claim under its counter claim relates to alleged wrongful release of its tobacco to a third party in May 2009. It had sold 26 433 bales of tobacco in storage to a party called Savanna. Only 20 164 were said by Savanna to have been received. It is said that Bak Storage released 5608 bales worth $1, 133 657.20 to another party that was not Savanna and that the tobacco ended up being smuggled to Zambia. Mr Nhemwa said there was a clear line of authorisation regarding release of tobacco from the warehouse. (Letter on p 82 and 83 of Saltlakes’ bundle). The contract between Saltlakes and Savanna was also availed in evidence as was the acknowledgement by Savanna of receiving the 20164 bales only. (See p 36-38 and p 92 of Saltlakes’ bundle.) Whilst acknowledging that a criminal complaint had been filed against some of Saltlakes’ employees regarding the theft of the tobacco, Mr Nhemwa’s HH 48-16 HC 1393/10 evidence was that it was the responsibility of Bak Storage to dispatch the tobacco according to instructions it had been given. It was emphasised that these instructions related only to Savanna. Bak Storage’s plea to Saltlakes’ claims is that it is exempt from liability by virtue of the standard terms and conditions which governed the contractual relationship between the two parties. The said terms and conditions, which are not yet presented as evidence are said to speak to lack of responsibility for damp, defect in premises, or liability for theft or vandalism. They also speak to the duty to insure. Mr Nhemwa’s evidence was that Saltlakes never received any terms and conditions from Bak Storage. He also emphasised that at no point in the correspondence to them regarding the damages to its tobacco did Bak Storage ever raise the defence that it was not liable because of its terms and conditions. This was also supported by Saltlakes second witness, Mr George Tatenda Marere, who was employed from 2008 to 2009 as Saltlakes’ finance manager. He had been one of the parties who signed the contract. His evidence was that when the contract with Bak Storage was signed the terms and conditions were not brought to Saltlakes’ attention. He stated in cross examination that the onus to show that Bak Storage provided Saltlakes the terms and conditions, was on Bak Storage. He denied that there had been any negligence in signing the contract without considering the terms and conditions. He further supported the evidence by Mr Nhemwa that when claims for damages were made, at no point had Bak Storage intimated that the complaints were illegitimate because of its terms and conditions in the contract. THE ARGUMENTS FOR AND AGAINST ABSOLUTION The arguments for absolution arose from the evidence led above, and, the issues raised in the cross examination of Saltlakes’ witnesses. In his submissions for absolution Mr Magwaliba challenged the evidence of Mr Nhemwa on the basis that by virtue of this position as a client liaison manager at the time of the above incidents, he was far removed from the events upon which he led evidence. It was said that he was not a buyer, nor a finance manager nor a director at the time but was simply a client liaison officer. Mr Magwaliba argued that as such, it was surprising that that a person who had never dealt with the matter, had become the lynch pin of the evidence led in the counterclaim. In opposing the claim for absolution on this ground, Mr Mpofu position was that a reticent defendant cannot through expediency of absolution, try to shield itself from giving HH 48-16 HC 1393/10 evidence. He emphasised that in an application for absolution, a court cannot resolve factual issues of credulity unless it has heard both parties. His position therefore was that that Mr Nhemwa’s credibility could not be assessed by the court before the end of the trial. As regards Mr Nhemwa’s standing, he argued that in terms of the Civil Evidence Act [Chapter 8:01], even if he was testifying on hearsay evidence, this would be acceptable and that in any event a finding on credibility could not be made until other witnesses had testified. Mr Magwaliba also argued that the conditions of storage were taken to be admitted by Saltlakes since this was contained in the plea and there had been no replication by Saltlakes to this aspect of the plea by Bak Storage. He emphasised that r 104 of the High Court Rules, 1971 specifies that the defendant must have dealt with every allegation specifically. As such, his standpoint was that the issue of the terms and conditions not having been dealt with by Saltlakes was thus admitted. Mr Mpofu’s response was that the applicable rules as set out in Tubb (Pvt) Ltd v Mwamuka 1996 (2) ZLR 27 (S) are that the court must be satisfied that the exclusionary clause was brought to the attention of the contractant. Furthermore, he maintained that an exclusionary clause cannot exclude damage arising out of theft and negligence. He also pointed out that the document said to refer to the conditions had not yet been placed before the court by Bak Storage. He further emphasised that it is the role of Bak Storage to produce this document since it is the one that has raised the issue of the conditions as a defence. He also said that Bak Storage must render an explanation as to why the document is dated 2005 when the contract with Saltlakes is from 2008. In addition, he stated that they must explain why throughout the communication about the damage, no reference was ever made to the conditions. The quest for absolution of Saltlakes’ claim was also founded on the grounds that Saltlakes had deliberately withheld information that is available as revealed by the fact that Mr Nhemwa had indicated in his evidence that receipts for the claims made could be produced if needed. Mr Magwaliba argued that no documents had been produced by Saltlakes to substantiate any aspect of its financial claim other than a document from its own internal records regarding how much tobacco it had purchased and at what price. He queried these figures as being based on averages as opposed to actual loss. In response, Mr Mpofu argued that if Bak Storage is in disagreement with the figures used to compute the damages sought, then it should put forward its own figures. He denied the allegation that Saltlakes had withheld information pointing out that the figures used as the HH 48-16 HC 1393/10 basis of the claim, had been clearly articulated as either stemming from the averaged figures and average weight, or using the actual figures on the dockets on the bales in question. He therefore argued that it is up to Bak Storage to explain its own position if it deems this method of computation as unacceptable. Regarding specific claims, Mr Magwaliba argued that for the claim for the loss of 661 bales in transit to the warehouse to succeed, Saltlakes ought to have produced documents showing acceptance of the total quantity tobacco by Bak Storage. (Claim 6). He queried how Bak Storage could be expected to account for tobacco which had not been proven to have been entrusted to it. Mr Mpofu’s response to this argument was that the issue of the weight had been misunderstood by Bak Storage in the sense that what Saltlakes maintains is that it purchased a specific quantity of tobacco for upliftment by Bak Storage, and that a lesser amount to that purchased had been uplifted. He thus argued that the difference between that purchased and that uplifted tobacco must be accounted for by Bak Storage to whom it entrusted upliftment of that purchased. As such, he argued that what had been actually delivered could only be legitimately raised after evidence has been led by Bak Storage. Regarding the 1500 bales said to have been damaged and some salvaged in the water hydrant case (Claim 3), Mr Magwaliba argued that there was no proof of sale of any salvaged tobacco and that the court is being expected to act on mere say so. Mr Mpofu, in response, highlighted that the SOCOTEC report is clear on the loss and that no other evidence was demanded in the plea. With respect to the 5 608 bales said to have been released to a wrong party under claim 7, Mr Magwaliba argued that the CEO of Saltlakes had issued a statement pointing to the suspects, all of whom were involved in giving instructions for release of tobacco. Furthermore, he pointed out that Saltlakes does not state what efforts it took to recover the tobacco apart from merely being content to claim from Bak Storage. (Claim 7) Mr Mpofu’s counter argument to this ground for absolution was that Bak was misconstruing the claim, as the reality is that it was exclusively within its knowledge why it released the bales in question. As such, he maintained that it must give its evidence. Furthermore, he highlighted that if instructions for release where issued to Bak Storage by Saltlakes, the issue to be dealt with by Bak Storage’s evidence is whether these instructions amounted to 5 608 bales. HH 48-16 HC 1393/10 Regarding the 190 bales damaged by a water tap, Mr Magwaliba argued that no value has been established, as was also the case for the 59 bales under claim 4 and the 14 bales under claim 1, when, according to him, the duty to establish the value lay with Saltlakes. He relied on the case of Mavheya v Mutangiri 1997 (2) ZLR 462 at p70 for the principle that where damages can be calculated by exact mathematical calculation, and a plaintiff does not bring evidence to court, the claim ought to be denied. He further pointed out that in his evidence, Mr Nhemwa had indicated that the average price used for calculating the loss was $3.11 and that the average weight used was 62.95kg per bale yet the sums claimed were completely at variance with these figures. He stated that from the amounts claimed, the average bale weight would be 154 kg indicating that the witness was not being truthful. For reasons such as this, he argued that there was no cogent case for Bak Storage to answer. Mr Mpofu counter argued on this point relating to the 59 bales that evidence has been placed before the court showing that Bak Storage tried to conceal the damage and that it is necessary for them to explain why they acted in that way. Furthermore, he pointed to the fact that the concerns with the warehouses regarding the claims mentioned had been raised innumerable times and that it was unfathomable that Bak Storage could now argue that it has no case to answer. Mr Mpofu standpoint in essence was that the application for absolution had been raised to harass Saltlakes and that it should be dismissed with a separate order as to costs. REASONS FOR DISMISSAL OF THE APPLICATION FOR ABSOLUTION It was my overall view that each of the grounds for opposing the application for absolution had merit and that there was a case for Bak Storage to answer. The primary consideration posed in an application for absolution is whether the plaintiff has made out a prima facie case for its claim. The test to be applied in relation to how much evidence is necessary to proceed is that there should be evidence which supports the essential elements of the opponent’s case. (See Supreme Service Station (1969) (Pvt) Ltd v Fox Goodridge (Pvt) Ltd 1971 (1) RLR (A); Lourenco v Raja Dry Cleaners & Steam Laundry (Pvt) Ltd 1984 (2) RLR 151; United v Jarman 1994 (2) ZLR 341 (S) at p343 –C; Dube v Dube 2008 (1) ZLR 326 for the articulation of the guiding principles. Also, as articulated in Hanger v Regal & Anor 2015 (3) SA 115 (F B) at p117 E-F: “Although the standard of proof is slightly less than that at the end of the entire case, i.e not quite on a balance of probabilities, a plaintiff must at least show that it has a prospect of succeeding with its claim at the end of the case.” HH 48-16 HC 1393/10 The significant point is that in the initial instance, whether or not the evidence is deemed sufficient or not lies in the discretion and judgment of the trial court after assessing for itself whether the evidence led is sufficient or not. I was therefore mindful of the reality that the role of the court in the face of a motion for absolution is to examine the evidence of the plaintiff and inferences from it in order to assess whether the evidence can sustain a judgment. Having heard arguments by both counsel, my conclusion was that the countervailing arguments against the application clearly hold sufficient merit to put Bak Storage to its defence, as I will illustrate briefly below. Regarding the query raised by Mr Magwaliba as to the competency of Mr Nhemwa to have given the evidence in question, s 27 (1) of the Civil Evidence Act [Chapter 8:10] indeed provides for first hand hearsay evidence being admissible in civil proceedings if the direct oral evidence by that person (deemed competent) of the fact in question, would be admissible in those proceedings. Also without Bak Storage giving its evidence, I am unable to ascertain at this point, what aspects of the witness’s evidence raise issues of credibility by virtue of his standing. Whether there is indeed countervailing evidence, conflict of evidence or impeachment of this witness cannot be said to be the case without hearing such evidence that Bak Storage considers as controverting the facts to which he has spoken. Regarding the claims for damages arising from negligence from roof leakages and the poor drainage system, the written evidence at this stage shows that Saltlakes raised its concerns numerous times regarding the defective state of the warehouses in order to try and avert what it regarded as an impending disaster if the issues were not addressed. The negligence attributed to Bak Storage giving rise to the claim for damages, is in its failure to attend to the defects that had been pointed out to it. I have not heard any countervailing evidence which impeaches Saltlakes’ witnesses with regard to the evidence it has led that the claims arose out of negligence, which it is said was conceded at the time. Also, Bak Storage admits in its plea that the tobacco under claim 2 for instance, which relates to the 190 bales of tobacco that was exposed to water after a tap was left open but gives the quantity as 14 612 kgs. It states that all of it was dried and sold to a third party. The evidence of this being the position is yet to be provided by Bak Storage. In its plea, Bak Storage also admits to the damage to 59 bales under claim 4 as a result of poor drainage at its warehouse but relies on the terms of conditions to escape liability. In fact, Bak Storage’s primary line of defence to all claims is essentially centred on the fact that the contract was governed by specific terms and conditions. The evidence is yet to be led HH 48-16 HC 1393/10 regarding whether, and if so how these were actually availed to Saltlakes, since this has been disputed by the Saltlakes’ witnesses. All that has been said thus far by Bak Storage is to raise in its plea and in cross examination is that these were part of the contract. As Mr Mpofu pointed out in his arguments against absolution, this document on terms and conditions, which bears a 2005 date, is yet to be formally admitted in evidence. Also he stated, an explanation is necessary regarding why the directors who signed that document are different from those who signed the contract. In essence, whether the document with the terms and conditions was in fact given to Saltlakes or not remains unclear. In any event, where a reasonable inference can be made either way, and the other party has not yet given evidence, it would indeed be improper not to accord the benefit of the doubt at this stage in favour of the party who has given their evidence. Furthermore, as a general principle, the courts generally lean towards a case continuing. (See Standard Chartered Finance Zimbabwe Ltd v Georgias & Anor 1998 (2) ZLR 547 (H). Also, there has also not been any evidence presented to show that the claim that some bales had actual prices on them is not true. I am therefore in agreement with Mr Mpofu on this point that if Bak Storage disputes the monetary claims on the basis that the figures are exaggerated, it cannot refuse to give its own evidence on what figures should be applicable. Bak Storage also needs to give its version of why it cannot be held responsible for the loss of tobacco that was in its custody and of how, in its view, it clearly adhered to contractual instructions. Regarding the figures used to compute the damages claimed, the evidence led in chief and in cross examination was that the methods used to compute the figures included the average price, the average bale weight, and in some cases the actual price on some of the bales. Even if, as Mr Magwaliba argued in his application for absolution, the evidence on some of the aspects of the claims is unfavourable to Saltlakes, there has not been any cogent proof that the figures given as the basis for computation are totally irrelevant or inaccurate. Cognisant of the fact that the counterclaim constitutes of a multiplicity of claims, I took the position that even if evidence on some of the claims may appear to be not as favourable, absolution should be denied where, as in this instance, the evidence making out a prima facie case is, on the whole, substantial. Also, at this point where it is only one side that has given its evidence, such evidence and all inferences arising from it, are, unless there is clear evidence to the contrary, to be considered in a light most favourable to the party opposing absolution. HH 48-16 HC 1393/10 I therefore maintain that on the evidence led thus far, for this court to do justice between the parties, it is necessary for Bak Storage to present its evidence in its defence to the counter claim. It was for the above reasons that I dismissed the application for absolution. Winterton’s, plaintiff’s legal practitioners Chitewe Law Practice, defendant’s legal practitioners