Judgment no. HB 32/2002

                                          Case No. HC 300/97

 

GILBERT ZVIZHINJI

t/a REDCLIFF EARTHMOVING

 

versus

 

STANDARD CHARTERED BANK LIMITED

 

HIGH COURT OF ZIMBABWE

KAMOCHA J

BULAWAYO 10, 11, 12 JULY 2001 AND 16 MAY 2002

 

B. Paradza for the plaintiff

R. M. Fitches  for the defendant

 

Civil Trial

 

      KAMOCHA J:  The plaintiff in this matter was claiming payment of

 

damages in the sum of $6 624 750,00, interest thereon and cost of suit.  The damages

 

were alleged to have arisen from the cancellation of an ancillary contract between the

 

plaintiff and the Zimbabwe Mining and Smelting Company Limited - “ZIMASCO”.

 

      In his declaration the plaintiff stated that ZIMASCO hired from him a D9

 

bulldozer for the sake of removing slag from a slag dump at its Kwekwe plant.  The

 

agreement was that ZIMASCO would pay plaintiff at the rate of $750,00 per hour.  The

 

plaintiff was required to remove the slag for a period of at least eleven hours per day

 

which would earn him $8 250,00 per eleven hour working day.  Plaintiff would work

 

for seven (7) days a week.  The contract was for an indefinite period for as long as

 

plaintiff was able to fulfill his obligations in terms thereof.

 

      At the time of the said contract the plaintiff operated a personal account with

 

the defendant.  He claimed that there was an agreement between him and the

 

defendant in terms of which the defendant allowed him to deposit into his personal

 

account any cheques issued by ZIMASCO in favour of Redcliff Earthmoving. 

 

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Plaintiff claimed that he then furnished defendant with a copy of the contract between

 

him and ZIMASCO.

 

      The same mandate which authorised him to deposit cheques from ZIMASCO

 

into his personal account also allegedly authorised him to withdraw from any such

 

deposited cheques without the need to wait for 14 days for their clearance.  So he did

 

not need to wait for 14 days in order for the cheques to be cleared since by agreement

 

his cheques were cleared immediately to ensure availability of funds when he issued

 

cheques to his suppliers.  The defendant agreed to honour such cheques.

 

      On 16 July 1996, ZIMASCO issued a cheque for $18 248,00 payable to Redcliff

 

Earthmoving.  The plaintiff deposited it into his personal account and it was

 

immediately cleared as per agreement.

 

      However, when he deposited another cheque from ZIMASCO into his same

 

personal account on 7 August 1996 the defendant - “the bank” rejected and reversed

 

the deposit on 8 August 1996 resulting in the unavailability of funds to meet any

 

cheques issued by the plaintiff to his suppliers.

 

      For instance the plaintiff drew a cheque in favour of one Lawrence Whittal of

 

W.S. Agencies for an amount of $1 614,70 to purchase materials for the bulldozer but

 

the bank dishonoured the cheque.  The result was that the supplier refused to supply

 

the required service materials for the bulldozer.  It could, therefore, not be serviced

 

and would not operate.

 

      Consequently on 20 August 1996 ZIMASCO notified the plaintiff of the

 

contract between it and him.  He then lost earnings as a result.  In conclusion the

 

plaintiff alleged that the bank was fully aware of the consequences and the prejudice

 

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the dishonouring the ZIMASCO cheque would cause to him.  He asserted that the bank

 

was also fully aware of the contract between him and ZIMASCO and the need to ensure

 

that the bulldozer was well supplied with service materials and that anything done by

 

the bank to stop plaintiff’s suppliers would be highly prejudicial to his business

 

interests with ZIMASCO.  It was his assertion that the bank acknowledged its mistake

 

and made various attempts to discourage him from instituting these proceedings.

 

      The damages allegedly suffered by him in the sum of $6 624 750,00

 

represented his loss of earnings and damages to his credit worthiness.  The issues that

 

this court was called to adjudicate upon were agreed at the pre-trial conference as

 

being these:

      “(1)  Was there an agreement whereby plaintiff was entitled to draw                 immediately on cheques issued by ZIMASCO and deposited into its               current account with defendant?

      (2)   Did defendant breach the agreement?

      (3)   Has plaintiff suffered damages in the sum of $6 624 750,00 or any                   amount as a result of the breach?

      (4)   Were the damages, if any, suffered by plaintiff within the                    contemplation of the parties?

      (5)   Were the damages, if any, suffered by plaintiff too remote?

      (6)   Has plaintiff failed to mitigate its damages?; and

      (7)   Is plaintiff entitled to interest on its damages, if any, with effect from          15 August 1996?”

 

      The plaintiff had the burden of proof in respect of issues 1, 2, 3, 4 and 7 while

 

issues 5 and 6 had to be proved by the defendant.  The plaintiff had no witnesses to

 

call in order to discharge the onus that rested on him but he gave viva voce evidence

 

himself.  His evidence was similar to what is contained in his above declaration I

 

therefore need not recount it in great detail.  In brief the plaintiff stated that in June

 

1996 ZIMASCO hired his bulldozer operated for 11 hours a day.

 

 

 

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      After securing the contract he alleged that he then approached the bank and

 

advised it about the contract he had secured with ZIMASCO.  He said he informed the

 

bank that his trade name was going to be REDCLIFF EARTHMOVING.  He had

 

operated a personal account with the bank for four years in his name Gilbert Zvizhinji.

 

      At the bank he spoke to an official known as Stonewell Zemura.  He asserted

 

that he discussed with Zemura the question of him depositing into his personal current

 

account cheques from ZIMASCO made in favour of Redcliff Earthmoving.  The

 

plaintiff further stated that he told Zemura that he wished to withdraw money

 

immediately after banking the cheques.  That, according to him, was acceptable to

 

Zemura who acceded to the proposal.  After sealing the agreement Zemura gave the

 

plaintiff agreement forms to fill in which he duly did.  The duly completed form was

 

given to the bank but the plaintiff was not given a copy of the agreement.  The filling

 

of the agreement form entitled him to make withdrawals as soon as he paid in the

 

cheques.

 

      The plaintiff said he had to go into that agreement because he did not have

 

money and if he waited for 14 days in order for the cheques to be cleared he would lag

 

behind in his job.  He needed cash for the maintenance of the bulldozer.

     

      The bank demanded that the plaintiff produce proof of his contract with

 

ZIMASCO and he allegedly furnished it with a letter of acceptance from ZIMASCO and

 

a purchase order.  Believing that the bank was going to abide by the terms of the

 

agreement he, on 7 August 1996, deposited a cheque for $7 957,42 from ZIMASCO

 

made in favour of Redcliff Earthmoving.  He then immediately started to pay his

 

suppliers using that money.  But the bank dishonoured a cheque he had made in

 

favour of his supplier.

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      He went to the bank to find out why that had happened.  He discussed the

 

matter with an official known as Paul Chinyeure who told him that he could not

 

deposit cheques made in favour of Redcliff Earthmoving into his personal account. 

 

He was advised that the cheque he had deposited had been returned to him by post. 

 

When the cheque arrived it was written “payee signature required”.  He took it back to

 

the bank wanting to re-deposit it but Chinyeure told him it was no longer possible to

 

deposit it into his personal account without giving reasons.

 

      He took the cheque back to ZIMASCO and requested that they issue another

 

cheque in the name of Zvizhinji Earthmoving.  He was accordingly given a

 

replacement cheque which he deposited into his personal account.

 

      The plaintiff complained that due to the unavailability of funds he was unable

 

to service his bulldozer resulting in it not being operational for some time.  As a direct

 

consequence of that his business came to a halt.  He wrote to ZIMASCO advising that

 

the bank had maliciously caused him to have problems with his suppliers.  He then

 

asked ZIMASCO to bear with him.  To his surprise ZIMASCO wrote to him in these

 

terms:

 

      “Dear Sir

 

      Subject: Cancellation of Contract

 

      It is not possible for us to wait until you have to repair your machine.  We have   to maintain certain budgets and we are unable to do this as your machine is out of order.

 

      Therefore could you please remove your machine from our premises as soon      as possible.

 

      Yours faithfully

 

      J A Kriek”

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      Thereafter considerable correspondence took place between the plaintiff and
 

the bank.  In the correspondence filed of record by the plaintiff it was established that

 

the bank held one mandate authorising cheques in favour of Zvizhinji Earthmoving to

 

be deposited into the plaintiff’s personal current account.  He was informed that

 

Redcliff Earthmoving was completely a different account and could not be deposited

 

into Zvizhinji Earthmoving.  It was made clear to him that it was against company

 

policy for him to hold two mandates with different titles on one account.

 

      He was advised that the second mandate in respect of Redcliff Earthmoving

 

which he had handed to Chinyeure had not been accepted by the bank and that the one

 

cheque for $18 000 accepted by the teller had been accepted in error.

 

      The basis for claiming $6 624 750 was that his contract with ZIMASCO was for

 

a duration of two years.  He would have earned that amount during the period had the

 

contract not been prematurely cancelled.

 

      The plaintiff was cross examined at some length.  He was not a convincing

 

witness.  He sought to make the court believe that his machine could not operate

 

because it simply had not been serviced when the documents he filed clearly reveal

 

that the machine had broken down and needed to be repaired.  He also avoided

 

questions by not giving direct answers to the questions put to him.  For instance when

 

asked  if he had kept copies of the mandate which he claimed had been accepted by

 

the bank his answer was that he did not anticipate litigation.  And when asked why he

 

did not get a cheque in the name of Zvizhinji Earthmoving instead of Redcliff

 

Earthmoving to avoid that problem, he replied that he did not know.

 

 

 

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      Four witnesses gave evidence on behalf of the bank.  The first witness was one

 

John Alfred Kriek - “Kriek”.  He worked for ZIMASCO as a technical assistant.  He

 

said the company hired the plaintiff’s bulldozer which was an old machine.  The

 

plaintiff’s bulldozer was required to work at their slag dam to reclaim Ferro chronic. 

 

The target was to do 100 metric tonnes per day.

 

      The plaintiff managed to achieve the targets for some time but his machine

 

broke down.  It was in that state for sometime resulting in ZIMASCO not being able to

 

meet their budgets of 100 metric tonnes per day.

 

      Kriek alleged that the plaintiff’s machine had serious engine problems relating

 

to pistons and rings.  Plaintiff was given a reasonable time within which to repair the

 

machine.  But because he failed to do so Kriek, on behalf of ZIMASCO, wrote the letter

 

quoted supra on 20 August 1996 cancelling the contract.  Kriek was emphatic that the

 

machine had broken down.  It was not merely a question of lack of servicing or

 

maintenance it.  He went on to say the plaintiff had not brought to his attention that he

 

had any cash flow problems.  If the plaintiff had done so the company would have

 

assisted him by lending him oil and other consumables which were normally used for

 

servicing.  This was an existing practice at the company.  The company would

 

thereafter deduct the money of the consumables from any amount due to the plaintiff. 

 

He said that principle was used to give contractors diesel.  He was adamant that the

 

plaintiff had not informed him that he had problems with his bank.  He said it was

 

clear in his mind that the cancellation was caused by the breakdown of the plaintiff’s

 

machine.  Kriek was a good and fair witness who was not shaken under cross

 

examination.

 

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      The next witness was Stonewell Zemura - “Zemura”.  He told the court that he

 

did not authorise the plaintiff to withdraw money immediately the cheques from

 

ZIMASCO were deposited.  He in fact had no power to grant such authority.

 

      When the plaintiff approached the bank with a cheque in favour of Redcliff

 

Earthmoving he was given a mandate form to fill in.  As he presented the duly filled

 

in form it was found out that another mandate in the name of Zvizhinji Earthmoving

 

was still in force.  Zemura said the new mandate in respect of Redcliff Earthmoving 

 

did not have a copy of the contract with ZIMASCO attached to it.  Since an existing

 

mandate was still in force the application for a second one was rejected.

 

      Zemura was also a fair witness who gave his evidence well.  What comes out

 

clearly from his evidence is that he at no stage sanctioned the plaintiff to withdraw

 

money from uncleared cheques since he himself would have no authority to do that.

 

      The next witness for the defendant was Paul Chinyeure who was the bank’s

 

check clerk at the time.  He was responsible for checking the correctness of mandates

 

and verifying the signatures.  Thereafter, he would refer the new mandate to the

 

manager for approval.  The manager would approve by stamping the mandate with an

 

approved stamp.

 

      He stated that Zemura brought to him a new application for an account

 

mandate - “In name of Sole Partner” in the name of Redcliff Earthmoving.  He made a

 

check in the files and found that the plaintiff had an existing mandate on file.  He

 

referred the matter to the manageress drawing her attention to an already existing

 

mandate.  The application was then rejected by the bank on that basis.

 

 

 

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      The witness told the court that he was not aware of any authority entitling the

 

plaintiff to withdraw money immediately after the depositing of cheques.  If such

 

authority existed he would have certainly been aware of it.  He also denied that

 

mandate form was accompanied by contract documents such as the acceptance letter

 

or purchase order as suggested by the plaintiff.  He also denied ever acting with

 

malice.

 

      The witness made it clear that the cheque that was dishonoured was

 

dishonoured because it was deposited into a wrong account.  The witness made

 

concessions where they needed to be made.  His evidence was clear and fair.

 

      The last witness to give evidence on behalf of the bank was its manageress

 

Mrs Grace Mutasa whose evidence corroborates that given by the previous witnesses. 

 

She said the bank did not authorise the plaintiff to withdraw money immediately after

 

the cheques were deposited.  She further confirmed that the plaintiff’s application for

 

a second mandate was rejected by the bank.  She denied acting maliciously in her

 

dealings with the plaintiff.  Mrs Mutasa gave her evidence well and was also a fair

 

witness.

 

      The court makes a finding that all witnesses for the defence gave their

 

evidence well and fair.  They are worth to be believed.  The plaintiff on the other hand

 

appeared to have some form  of arrogance which even manifests itself in the

 

correspondence filed of record.  He also avoided answering questions directly.

 

      The court also finds that ZIMASCO canceled its contract with the plaintiff

 

because his bulldozer had broken down and had not been repaired for some time.  It is

 

also found that a second mandate in the name of Redcliff Earthmoving was rejected

 

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by the bank.  Further, it is found that there was no authority entitling the plaintiff to

 

immediately withdraw money after cheques from ZIMASCO were deposited.  The

 

plaintiff failed to prove that there was such an agreement.  Having found that such

 

agreement was non existent there can, therefore, be no talk of a breach of agreement.

 

      If the plaintiff lost earnings and damages to his credit worthiness that can not

 

be attributed to any breach by the bank because it breached no agreement.  In any

 

event the contract between the plaintiff and ZIMASCO was cancelled because his

 

machine had been broken down for quite sometime.

 

      In the result the order I make is that the plaintiff’s claim be and is hereby

 

dismissed with costs.

 

 

 

 

Paradza & Partners plaintiff’s legal practitioners

Messrs Webb, Low & Barry, defendant’s legal practitioners