COTIM TRADING (PVT) LTD
Versus
ZIMBABWE POWER COMPANY
t/a HWANGE POWER STATION
IN THE HIGH COURT OF ZIMBABWE
MUTEMA J
BULAWAYO 8, 9, AND 16 OCTOBER 2013& 16 JANUARY 2014
C. Dube-Banda for the plaintiff
J. Sibanda for the defendant
Civil Trial
MUTEMA J: Plaintiff issued summons against defendant claiming US$11 247,00 with interest thereon at the prescribed rate with effect from 3 January, 2013 to date of full payment plus costs of suit on attorney-client scale. The claim is based upon non-payment for water treatment chemicals supplied by plaintiff to defendant at the latter’s specific instance and request.
Defendant’s defence is simply that it has no obligation to pay what is being claimed on the basis that plaintiff delivered a different chemical from what it had ordered.
Plaintiff’s evidence, adduced through its managing director Jasper Nare, was to the following effect:
He holds a Bachelor of Science Honours Degree in Chemistry, obtained from the University of Zimbabwe in 1993. He has work experience in the field of chemistry spanning over twenty years. He joined Delta in 1993 as production trainee in the process and quality assurance department. In 1995 he was appointed process chemist. In 1997 he was promoted to quality control manager and in 1999 he was promoted to plant manager, with overseer responsibility over water treatment till 2003 when he left to form the plaintiff company.
The company is involved in the distribution and selling of industrial chemicals to various clients in Zimbabwe that include water utilities, power stations, mine houses etc. Prior to the current dispute plaintiff had made deliveries to defendant of ion exchange resins similar to the ones in dispute now. Ion exchange resins are water treatment chemicals used to remove hardness in water which is not required in water used in boilers for power generation.
Page3 of the parties’ bundle of documents (exhibit 4) is the purchase order sent by defendant for mixed bed cation exchange resin 1000 H and page 4 (exhibit 5) is another purchase order for mixed bed anion exchange resin 4200 CL. Following receipt of the purchase orders plaintiff contacted various overseas suppliers and J H Resin in China was the front runner in terms of ability to supply the chemical timeously. Plaintiff had dealt with this supplier before and on 19 January 2012 plaintiff had delivered a similar chemical to defendant. Plaintiff then placed an order with J H Resin which it received on 2 February, 2012 and dispatched the consignment to defendant on 3 December, 2012 as per exhibits 6 and 7 – the delivery notes on pages 5 and 6 of the bundle of documents. These delivery notes have a goods return portion stipulating that goods not meeting the customer’s requirements must be returned intact within seven days.
Exhibits 8 and 9 are the respective tax invoices for mixed bed anion exchange resin Amberjet 4200 CL for $5 623,50 and mixed bed cation exchange resin Amberjet 1000 H for $5 623,50 sent to defendant for payment within thirty days. On 3 January, 2013 one Zimuto who was in charge of defendant’s finance department said defendant could not pay as it had no money. On 4 March, 2013 plaintiff wrote defendant a letter of final demand for the payment within seven days – exhibit 10. On 8 March, 2013 plaintiff got a letter from Zimuto to the effect that defendant was not obliged to pay because the product did not meet their specification. When he tried to engage James Muyambiri the chemist and his superior Freddy Magaisa he hit a brick wall as both were demanding to be bribed first.
Exhibit 12 is a picture of the package of ion exchange resin Amberjet 1000 H which plaintiff supplied to defendant while exhibit 13 is a picture of the package manufactured by Dow. He explained that the difference in the packaging emanates from the fact that the two are different products by different manufacturers. Exhibit 14 is a picture of the packaging similar to the one plaintiff supplied to defendant, that is ion exchange resin Amberjet 4200 CL.
He commented on exhibit 15 – a report by Rohm and Hass of the analysis of samples from plaintiff’s consignment sent for chemical analysis by defendant – saying the comparison shows minor differences between their sample and what plaintiff supplied but the chemicals remain basically the same. He said the variations shown in the report are acceptable margins in the chemical industry. Plaintiff then closed its case.
Defendant led evidence from two witnesses. Cooneous Jacobus Bester is the Dow Chemical Company Technical Services manager. The post is responsible for the products which the Dow Chemical company manufactures, quality control of those products, trouble shooting and designing. He is a qualified analytical chemist and has done twelve years with Rohm and Haas and four years with Dow Chemicals which is the holding company.
His company is the manufacturer of ion exchange resins and in particular the trade-marked product Amberjet. In April, 2013 he visited the defendant upon request to investigate suspected resins which had been delivered to them. He inspected the packages and labeling and photographed them and took samples of the resins which were sent to their laboratory in France for analysis. A report number SA 13067 exhibit 15 was subsequently, on his instruction, prepared under his supervision. The report states that two samples of new ion exchange resins Amberjet 1000 H and Amberjet 4200 CL were received and the objective was to identify the resins and confirm whether this was Amberjet type or not.
The report concluded following total volume analysis that the resins samples were not Amberjet. For instance, the samples had a high percentage of beads as compared to that of Amberjet and in terms of particle distribution, the samples were found not uniform whereas Amberjet has uniform particle distribution. Also, the packaging pictures showed that the samples were not that of Dow Chemical on the basis of colour of the bags, colour of the ink, absence of identification of resins by means of trade mark, batch number, material number and labeling.
Page 17 of the report shows Dow specifications in the right hand column which are the required minimum. For instance, on chemical characteristics, the total volume exchange capacity (which is the ability to exchange salt from water in relation to total resin volume) the sample had 1.77 as opposed to 1,8 for Dow which is the minimum acceptable specification. Under physical characteristics, for instance uniformity coefficient for Amberjet should be less than 1.3 yet for the sample it was found to be 1.74 which indicates that this was not a uniform size resin. The second last line refers to ? 425 micron and Amberjet 1000 H has a specification of ? 2% maximum whereas the sample had 3.45%. Page 18 shows optical difference by means of microscope between the sample beads and those of Dow for 1000 H.
Page 19 shows the chemical and physical characteristic differences for resin 4200 versus the sample while page 20 shows microscopic analysis between sample beads and Amberjet 4200. The sample has much difference between large and small beads as compared to Amberjet 4200. There is also presence of cracked beads in the sample which is absent in Amberjet 4200. Page 21 shows presence of bubbles in the beads of the sample which is absent in the Amberjet resins.
Page 22 refers to photographs of the packaging. The first two top bags are of resin sample which were compared with resins bags by Dow. On the top pictures the resin type, that is, Amberjet 1000 H and Amberjet 4200 CL are fixed onto the bag by means of a label whereas the two bags below are photos of bags used as packaging by Dow and can be clearly distinguished by a diamond which is a registered trade mark of Dow. The bottom picture indicates product number, name and batch number are shown by mean of a stencil on the side of the bag and this identifies contents and enable traceability of product.
He explained that Amberjet is used in water treatment purification for industrial and power generation. In defendant’s case, it is used for demineralization of water to have purified water fed into the boiler to generate steam which in turn is passed through a turbine and the turbine generates electricity. The resin samples that were analysed are not Amberjet and if anything not being Amberjet is used in the demineralization, the plant could suffer from:
- High pressure drop
- Loss of resin due to back wash
- Locked strainers
- Lower capacity
- Short of running cycles
- Poor separation of mixed resins
- Resultant poorly treated water to the boiler
The effect on the boiler could lead to transport of resin fines into the boiler, subsequent breakdown of the resin fines could lead to boiler chemistry and outage in the boiler.
The peroration of his evidence dealt with the manufacture of Amberjet and the ownership of its trademark. He said Amberjet is a uniform manufacture of resins by means of proprietary manufacturing techniques. Its manufacture is unique as compared to conventional resins. Conventional resins are manufactured by means of batch reactor (a glass-lined vessel with a stirrer) and the batch reactor has a heat source and the bead formation is controlled by means of a suspension mechanism in the batch reactor, the stirring speed and the temperature. From a batch reactor, it is consistent that beads size ranges from 0,3mm to 1,2mm in diameter. On the other hand, the Amberjet technique uses jetting where beads are formed by means of jetting (copolymer). Using this chemical process, bead formation occurs through an orifice which controls size of the bead ranging from 0,6mm to 0,8mm in diameter.
Regarding the Amberjet trademark, its registration was lodged in several countries including China. Rohm and Haas is the registered proprietor of Amberjet so only it can legally manufacture Amberjet resin.
The defendant’s station chemist James Muyambiri has been employed for six and half years. He holds a BSc Honours Degree in Applied Chemistry from the National University of Science and Technology. He is responsible for running defendant’s laboratory and treatment plant and environment issues.
Following receipt of the resin consignment from plaintiff the stores staff advised him that the packaging was not the usual one. He went and saw that indeed the packaging was unusual. There were stickers written Amberjet, stuck on the bags. He advised his superiors accordingly. Plaintiff was requested to supply further information regarding the packages. Plaintiff supplied data sheets indicating that the product was Amberjet. One data sheet had Dow letterhead while the other a different letterhead. Samples of the resin were then forwarded to Dow South Africa for analysis in February 2013. The analysis results came indicating that the resins were not Amberjet resins. He denied ever communicating with Mr Nare of plaintiff before issue of summons. He only met him at the pre-trial conference.
The gravamen of defendant’s refusal to pay for the supplied resins is simply that the resins do not meet defendant’s specifications. The question that begs the answer is what are those specifications? The answer to the question must necessarily derive from the two purchase orders – exhibits 4 and 5. The description of the item to be supplied is stated in exhibit 4 as mixed bed cation exchange resin 1000 H and in exhibit 5 as mixed bed anion exchange resin 4200 CL. This description does not specify that the resin type must be Amberjet and manufactured by Dow Chemical or J H Resin Technology Co. Ltd or some other manufacturer.
Plaintiff supplied a water treatment chemical named Ion Exchange Resin Amberjet 1000 H and Ion Exchange Resin Amberjet 4200 CL. Muyambiri said what raised defendant’s eyebrows was the difference in the usual packaging of the resins. But he said he does not know whether the plaintiff had previously supplied water treatment resins to defendant, let alone in different packaging. Plaintiff’s witness said they had previously and as recent as 19 January, 2012 supplied defendant with the same chemicals in similar packaging without any query. This evidence was not disputed. It then baffles logic as to how he managed to tell that the packaging was this time unusual or different without basis for comparison. This raises eyebrows and tends to lend credence to Nare’s averment that the real reason for the dispute between the parties is his refusal to pay the demanded bribe by Magaisa and Muyambiri – an elongation from his earlier alleged refusal to bribe Magaisa in 2011 after he had supplied chemicals for Reverse Osmosis project to defendant. This is one strand of evidence (circumstantial) which together with others to be stated later will make such inference irresistibly the only reasonable one.
The consignment was delivered on 3 December, 2012 as per delivery notes exhibits 6 and 7. These delivery notes clearly state that goods that do not meet customer requirements must be returned within seven days intact. Despite the alleged unusual packaging whose date of discovery has not been disclosed, defendant did not return the goods. Even after discovering that the chemicals did not meet the alleged specifications following the laboratory analysis the goods were not returned and as we speak defendant still has not returned them - a year later. Tax invoices for the consignment exhibits 8 and 9 were also issued by plaintiff on 3 December, 2012 and received by defendant on that date. Nare, who I must say gave his evidence in a clear and straight forward manner and I have no reason not to believe him, said he contacted Zimuto of the defendant’s finance department telephonically after the 30 day period within which the money was supposed to be paid had expired and was told that defendant had no funds at the time to pay its creditors. He continued pestering Zimuto for payment on a weekly basis getting the same explanation. After ninety days exhibit 10, a letter of final demand was written on 4 March 2013 to defendant threatening legal action. Only then did defendant start alleging that it would not pay for the chemicals because what plaintiff supplied did not meet its specifications. I find this unreasonable and it tends to lend credence to the bribery allegations alluded to supra.
Exhibit 15, the analysis report defendant seemed to rely upon in its defence for refusal to pay is not without trammel for several reasons chief among them being the following:
The taking of the two samples defendant says were sent to France for analysis is shrouded in controversy. Muyambiri said they were extracted by him in February, 2013 from four bags – two of each resin type – and put in plastic bottles with a screw cap. Bester said they were extracted in April, 2013 from two bags – one of each resin type – and put in plastic bottles closed by a screw cap. While Bester said he witnessed the samples being extracted, Muyambiri did not allude to this at all. And while there remains a dispute as to whether no one could have tampered with the samples or even whether the samples came from plaintiff’s consignment and whether the samples could not have been affected by the handling and transportation as well as temperatures, it is not known what quantum of each sample was analysed or whether the same quantity of Dow’s product was also analysed and compared with the one said to have come from plaintiff’s consignment. The extraction of the samples was also shrouded in secrecy – it is not explained why defendant did not invite plaintiff’s representative (s) to witness the event and why the containers in which they were put were not sealed and tamper-proof.
The plaintiff’s Nare’s qualifications and experience in chemistry are well documented as stated above. Bester’s qualifications were not stated, when he qualified and where yet he purported to speak like a fundi in chemistry. In any event he did not perform the chemical analysis let alone compile the report, exhibit 15. The analysis was done by D. Scherer – J. Henry and the compiler of the report is D. Scherer. Bester is indicated only as the Sales and marketing contact person. So over and above the fact that his qualifications are unknown, bester is not qualified to vouch for the authenticity of the analysis and report. All he could do was to refresh memory on the basis that he said the report was done on his instructions. The probative value of the report therefore cannot be given any consideration in the absence of evidence to that effect by D. Scherer. Also, it was improper for defendant to have an interested party do the sample analysis.
The pith of defendant’s defence seems to be hinged on the fact that Amberjet is a registered trade mark of Rohm and Haas and only they can legally manufacture Amberjet resin. The dispute however, is not one involving infringement of trademark. It involves non-payment for water treatment chemicals which defendant ordered and plaintiff supplied. No specifications for the water treatment chemicals were stipulated apart from they being mixed bed cation exchange resin 1000 H and mixed bed anion exchange resin 4200 CL. This, the plaintiff substantially complied with as the product was the same as it had supplied defendant previously from 2003 without any complaints from the latter.
In the event, the plaintiff has managed to prove its case on a balance of probabilities and I make the following order:
Judgment be and is entered for the plaintiff against the defendant in the sum of US$11 247,00 with interest at the prescribed rate calculated from 3 January, 2013 to date of full payment plus costs of suit.
Dube-Banda, Nzarayapenga and Partners, plaintiff’s legal practitioners
Messrs Job Sibanda and Associates, defendant’s legal practitioners
