Graphlink Inv. (Pvt) Ltd. v Puzey & Payne (Pvt) Ltd. (HC 2150 of 2015; HH 401 of 2016) [2016] ZWHHC 401 (6 July 2016)

1 HH 401/16 HC 2150/15 GRAPHLINK INVESTMENTS (PVT) LTD versus PUZEY & PAYNE (PVT) LTD HIGH COURT OF ZIMBABWE TAGU J HARARE, 29 February, 1 March and 6 July 2016 CIVIL TRIAL N. B. Munyuru, for the plaintiff T. Nyandebvu, for the defendant TAGU J: The background facts of this matter are common cause. It is common cause that the plaintiff and the defendant entered into an agreement of sale in terms of which the defendant agreed to sell to the plaintiff a Yutong 60 Seater Bus. The material terms of the agreement were that the total purchase price of the bus was US$ 131 120-00. The plaintiff was to pay a deposit of US$ 22 000-00 and monthly instalments of US$ 4 546-67 payable over a period of 24 months from date of delivery. In terms of clause 4 of the agreement the defendant undertook to deliver the bus to the plaintiff within 12 weeks of the payment of the deposit. The plaintiff paid the deposit and the defendant failed to deliver the bus. As a result of the defendant’s failure to deliver the bus the plaintiff issued summons claiming the amount of US$ 22 000-00 paid as deposit and damages resulting from the breach of contract. The defendant admitted owing plaintiff the sum of US$ 22 000-00 and has so far paid US$ 5 000-00 towards refund leaving an outstanding balance of US$ 17 000-00 to which judgment has since been entered together with interest at the rate of 12 % per annum. The issues for determination at the trial were as follows: a) Whether or not the plaintiff is entitled to the payment of the sum of US$ 144 000 being damages for loss of business together with interest at the rate of 5% per annum from date of summons to date of full payment? b) Whether or not the plaintiff is entitled to the payment of US$ 36 400 being the difference the plaintiff will have to pay for a bus of a similar model together with interest at the rate of 5% per annum from date of summons to date of full payment? c) Whether or not the plaintiff is entitled to costs of suit on a higher scale? HH 401/16 HC 2150/15 ANALYSIS OF EVIDENCE The plaintiff led evidence from its sole witness Craden Masiiwa. This witness stated that he represented the plaintiff in the agreement with the defendant in which the defendant sold a 63 Seater Yutong bus to the plaintiff as per exhibit A. He testified further as to how a deposit of US22 000-00 was paid and that the defendant failed to supply the bus in terms of clause 4 of the memorandum of agreement. The witness also testified that he had been in the transport business for almost ten years from 2006. He further told the court that he makes an average of twelve trips per month which translates to about three trips a week. He however, told the court that from his experience transport business becomes low when one uses an old bus as compared to a new bus. The witness further testified that he specifically purchased the bus in question from the defendant to boost his business. He produced trip monitoring sheets as exhibits C where he outlined the plaintiff’s income and expenses. He told the court that he was entitled to damages to the tune of US 144 000-00 from his calculations of US$1 000-00 per trip over a period of one year. It was clear from the evidence produced by the plaintiff as per quotations exhibits E, F and G that the prices of buses of a similar model had increased to an average price of US$ 160 000-00 and therefore the defendant was supposed to pay the difference arising from the current market value and the price in the agreement of sale which included cost price, duty, VAT, freight and clearing fees. On the other hand the defendant led evidence from its sole witness one Grant Musiyarira a new Vehicle Sales Executive. The witness did not say much. The witness confirmed that he was not conversant with the terms of the agreement entered between plaintiff and defendant because at the time the agreement was concluded he was away in Mutare where he was then working for the defendant as a technician. In short the witness did not dispute the terms of the agreement. He however, conceded that one can incur losses in this type of business but in casu he said the plaintiff was only entitled to the bus and not damages. The impression given to the court by this witness was that he was just generalising his evidence. Of importance he admitted that current value of a similar bus is in the region of US$163 000-00 inclusive of duty and VAT. Under cross examination by the counsel for the defendant Mr Craden Masiiwa did not finch. His evidence went unchallenged by the defendant’s witness and struck this court as a credible witness. On the other hand the defendant’s witness Mr Grant Musiyarira was at HH 401/16 HC 2150/15 labour under cross examination by the counsel for the plaintiff to explain why the plaintiff was not entitled to damages in the circumstances. THE LAW It is a well-established principle of civil procedure that he who avers or alleges must prove on a balance of probabilities what he is averring. See High Court Sheriff v Kwekwe Consolidated Mines (Pvt) Ltd HH 39/15, Pillay v Krishna 1946 AD 946. In casu the court has to determine whether or not the plaintiff managed to prove his claims on a balance of probabilities. I will therefore deal with each issue separately. Damages For Loss of Business The governing principle behind the award of damages arising from breach of a contract is to place the plaintiff in the same position he would have been had the breach not occurred. See Wyninia (Pvt) Ltd v MBCA Bank Ltd SC 13/11. The position was long confirmed in Victoria Falls Tvl Power Co Ltd v Consolidated Langlaagte Mines Ltd 1951 AD 1 where it was said- “the sufferer should be placed in the position in which he/she would have been had the contract been performed properly so far as this can be done without undue hardship to the defaulting party.” See also Van Immerzeel & Pahl v Samncor Ltd 2001 (2) SA 90 (SCA), Tweespruit Dairies Ltd v Mitchelsen 1914 CPD 995 and Sommer v Wilding 1984 (3) SA 647 (A). In the present case the plaintiff has managed to prove, and it was even confirmed by the defendant that there was a breach of contract in that the defendant failed to supply a bus after the plaintiff paid the agreed deposit as per agreement. Having found that the bus was intended for use in the transport business and that due to the failure by the defendant to supply the bus, the plaintiff lost some business, the difficulty now faced by the court is the quantification of such loss. Christie [The Law of Contracts in South Africa 2nd Edition] gives a guideline of how damages ought to be assessed and /or calculated. The principle is that if there is evidence that damages have been sustained but it is difficult or almost impossible to arrive at the exact estimate thereof, the court must endeavour with such material as is available to arrive at some amount which in the opinion of the court will meet the justice of the case. The counsel for the plaintiff submitted that in light of the evidence placed before the court it was clear that the HH 401/16 HC 2150/15 plaintiff suffered losses and where it is apparent that loss has been suffered then the court is obliged by making a value judgment based on the best information it has before it to assess the value of that loss. The counsel for the plaintiff relied on the remarks of Vughan Williams L J in the case of Chaplin v Hicks [1911] 2 KB 786 at 791 where he said- “…. Now, the moment it is admitted that the contract was in effect one which gave the plaintiff a right to present herself and to take her chance of getting a prize, and the moment the jury find that she did not have a reasonable opportunity of presenting herself on the particular day, we have a breach attended by neglect of the defendant to give her a later opportunity; and when we get a breach of that sort and a claim for loss sustained in consequence of the failure to give the plaintiff an opportunity of taking part in the competition, it is impossible to say that such a result and such damages were not within the contemplation of the parties as the possible direct outcome of the breach of contract. I cannot think these damages are too remote, and I need say no more on the question of remoteness. …….. It was said that the plaintiff’s chances of winning a prize turned on such a number of contingencies that it was impossible for anyone, even after arriving at the conclusion that the plaintiff had lost her opportunity by the breach, to say that there was any assessable value of that loss. It is said that in a case which involves so many contingencies it is impossible to say what the plaintiff’s pecuniary loss was. I am unable to agree with that contention. I agree the presence of all the contingencies upon which the gaining of the prize might depend makes the calculation not only difficulty but incapable of being carried out with certainty or precision. The proposition is that, whenever the contingencies on which the result depends are numerous and difficulty to deal with, it is impossible to recover any damages for the loss of the chance or opportunity of winning the prize. In the present case I understand that there were fifty selected competitors, of whom the plaintiff was one, and twelve prizes, so that the average chance of competitor was about one in four…. I do not agree with the contention that, if certainty is impossible of attainment, the damages for breach of contract are unassessable.” The counsel for the defendant urged the court to depart from such rule on the ground that the material submitted by the plaintiff did not reflect a true picture of the loss and submitted that it was too speculative such as the chance that gold claims would have proved profitable or a race horse would have won prizes. Christie supra page 641. See also Jooste & Mathews v Chester & Gibb 1890 (30) SAR 127 and Trichartdt Van de Lindee 1916 TPD 148. In casu the plaintiff led evidence to the effect that as a result of the breach the plaintiff lost business to the tune of US$ 144 000-00. In trying to prove its loss the plaintiff produced 15 copies of trip monitoring sheets which showed that the plaintiff was earning on average an amount of US$474-00 to US$1 084-00 per trip after factoring in expenses. If one analyses the 15 trip monitoring sheets it is apparent that the total amount earned by the plaintiff for the 15 trips after factoring in the expenses amounted to US$ 15 404-00 which translates to an average of US$ 1026-93 per trip. In arriving at a figure of US$ 144 000-00 the plaintiff told the court that he used an average of US$ 1 000-00 per trip calculated over a period of one year. In his evidence the plaintiff told the court that he used to make an average of twelve HH 401/16 HC 2150/15 trips per month which translates to about three trips a week. That is the figure the plaintiff claimed to have lost as a result of the breach of contract by the defendant. Basing on the best evidence available and being aided by the materials supplied by the plaintiff I now turn to the assessment of damages. See Enslin v Meyer 1960 (4) 520. In my view the remarks of Holmes JA in Anthony and Anor v Cape Town Municipality 1967 (4) SA 445 are applicable where he said- “I therefore turn to the assessment of damages. When it comes to scanning the uncertain future, the court is virtually pondering the imponderable, but must do the best it can on the materials available, even if the result may not inappropriately be described as an informed guess, for no better system has yet been devised for assessing general damages for future loss.” In light of the above position of the law the court is satisfied that the plaintiff managed to prove on a balance of probabilities loss of business to the tune of US$144 000-00 and I accordingly award the plaintiff its claim in entirety without discretion. Difference for a bus of a similar model The general position of the law is that the difference between the contract price and the market value of the res vendita at the time of performance is usually awarded to the injured party in case of the breach of a contract of sale where such loss was contemplated by the parties. This proposition of the law was well captured in the case of Novick v Benjamin 1972 (2) SA 842 (A) where it was said – “….the adverse difference between the contract price and the market value of the res vendita at the time of performance which is usually awarded to the injured party in the case of the breach of a contract of sale, represents the loss that the parties themselves normally contemplated as likely to ensue on such a breach. See Culverwell & Another v Brown 1990 (1) ALL AS 253 (A).” In the present case the contract of sale was to the effect that the defendant was to sell a Yutong 60 Seater bus to the plaintiff at a purchase price of US$131 120-00. Despite that the plaintiff paid a deposit of US$22 000-00 the defendant failed to supply the bus as per clause 4 of the agreement. The defendant is now forced to purchase a bus of the same model from a different supplier. By the time the plaintiff sourced for the other bus the market price of the same bus had gone up. Three quotations were supplied to the court by the plaintiff showing the current market value of the same bus. The same bus if purchased through Croco Motors now costs US$ 157 500-00 inclusive of VAT. If bought through Unifreight Engineering the HH 401/16 HC 2150/15 bus now costs US $ 154 225-00. The quotation from Duly Trucks shows a cost price of US$ 160 000-00. In his own evidence the witness for the defendant said a similar bus now costs about US$ 163 000-00. In casu the plaintiff claimed the difference of US$36 400-00. However, going by the cheapest quotation the difference is US$ 23 105-00. I am persuaded by the counsel for the defendant that the object of damages is compensatory and not retributive. In Mouton v Die Mynwerkersunie 1977 (1) SA119 [A] it was said that in calculating damages plaintiff’s net loss has to be ascertained and where there is a difference he is not entitled to be compensated for his gross loss. See also British Transport Commission v Gourley 1956 AC 185. Using the above principle I will award the plaintiff the difference calculated using the cheapest quotation. An award of US$ 23 000-00 is reasonable. Scale Of Cost Of Suit The general position is that costs follow the cause. The plaintiff has been successful in its claim and is therefore entitled to its costs. The court has discretion when it comes to costs. In terms of clause 9.7.4.4 of the agreement the parties expressly agreed that in the event of either party instituting legal proceedings against the other party, seeking enforcement of any of its rights under this agreement, the party found to be in breach of this agreement shall be obliged to reimburse the other party all the legal costs incurred, including those on the legal practitioner and client scale and collection commission. The court finds no justification for not imposing costs on a higher scale considering how the defendant conducted itself in this matter. Costs will be awarded on a higher scale. In the result it is ordered that: 1. The defendant pays the plaintiff the sum of US144 000-00 being damages for loss of business together with interest at the rate of 5 % per annum from date of summons to date of full payment. 2. The defendant pays US$23 000-00 being the difference the plaintiff will have to pay for a bus of a similar model together with interest at the rate of 5% per annum from date of summons to date of full payment. 3. The defendant to pay costs of suit on a legal practitioner and client scale. HH 401/16 HC 2150/15 Muvingi & Mugadza, plaintiff’s legal practitioners Sibanda & Partners, defendant’s legal practitioners.