Judgment No SC 28/13

Civil Appeal No. 107/07

JENA     MINES     (PVT)     LTD    

v    

AMTEC     (PVT)     LTD

SUPREME COURT OF ZIMBABWE

ZIYAMBI JA, GARWE JA & OMERJEE AJA

HARARE, MARCH 27, 2012 & JUNE 24, 2013

J R Tsivama, for the appellant

H Zhou, for the respondent

ZIYAMBI JA:           This is an appeal against the judgment of the High Court dismissing with costs a claim by the appellant seeking, inter alia, specific performance of a contract.

 The appellant issued summons in the High Court, against the respondent in July 2004. It was alleged in the declaration as follows:

“3. In April 2004 the plaintiff purchased a motor vehicle T.3500 Truck from the plaintiff for $133 million.

4.  In terms of the defendant’s quotation for the truck delivery of the motor vehicle was to be done within one week of payment of the purchase price.

5.  The plaintiff duly paid the full purchase price on the 22^nd of April 2004 but despite demand defendant has failed or neglected to deliver the truck.

6. As a result of the defendant’s failure to deliver the truck by the 28^th of April 2004 in terms of their quotation plaintiff had no option but to hire alternative transportation at a total cost of $58 260 300 as at 30 June 2004”.  

 The respondent denied liability.  It alleged that a pro forma invoice for the purchase of a Mazda T35 truck was given to the appellant on 23 February 2004 but the appellant only placed an official order on 20 April 2004.  It was indicated on the pro forma invoice that “PRICES ARE SUBJECT TO CHANGE WITHOUT NOTICE.”  While it was stated in the pro forma that delivery would be effected within a week, that was meant to be one week from the date of placement of the official order and the conclusion of a binding contract for the purchase assuming the appellant was going to place an order, and make payment, immediately.  At the time of issue of the pro forma invoice no agreement had been concluded by the parties.  By the time the appellant placed an order it had already been appraised of the difficulties and delay then obtaining in procuring the T35 truck.  The respondent contended that it was under no legal obligation to deliver the truck within one week of 22 April 2004 the date when the purchase price was paid by the appellant.

Regarding the claim for damages it was pleaded by the respondent that if the losses claimed by the appellant were indeed suffered by it they could have been avoided had the appellant accepted the respondent’s reasonable offer of a similar model of truck or a refund of the purchase price with which the appellant could have obtained a similar truck from other car dealers.

The issues for determination at the trial were whether there was a valid agreement between the appellant and the respondent; whether the respondent was obliged to deliver the T35 vehicle; and the quantum of damages, if any, payable to the appellant.

The High Court found that while there was an agreement concluded between the parties, it was not the agreement which was envisaged on 23 February 2004 when the pro forma invoice was issued.  It found, and that was common cause at the trial, that the pro forma invoice was given to the appellant on the understanding that the appellant would immediately forward a purchase order and payment for the truck.  At that time a truck was available and the respondent was ready to deliver within seven days.  It was never in the contemplation of the parties that the appellant would take eight weeks to forward the purchase order and payment in terms of the pro forma invoice.  Accordingly, by the time the appellant was ready to make payment, the respondent had no vehicles in stock.  This change of circumstances regarding the availability of the T35 trucks was communicated to the appellant before it placed the purchase order and made payment for the vehicle. The learned Judge found that a date of delivery had not been specified in the agreement which was finally concluded by the parties. Accordingly delivery was to be made within a reasonable time.

 The learned Judge’s finding in this regard accords with the evidence.  The delivery period stated in the purchase order, issued by the appellant on 29 March 2004, is fifteen days (29 March to 13 April).  The appellant was clearly not relying on the seven day delivery period at the time it issued the purchase order.  Indeed, on the evidence adduced by the appellant it is difficult to understand what delivery period was in fact being relied upon by it because the 13^th April came and went with no payment being made by the appellant.   Only on 22 April 2004 did the appellant make payment for the vehicle.  It was on that date that a contract for the purchase of the T35 was concluded by the parties. Since no delivery period was specified, (the payment having been made nine days after the delivery date stated in the purchase order) delivery was to take place within a reasonable period.  In view of the above the appellant could not possibly rely, as it did in the summons, on the seven day period stated in the pro forma invoice.

  Whether the respondent is obliged to deliver the T35 vehicle to the appellant.

On 15 June 2004, less than 2 months after making payment, the appellant wrote to the respondent complaining about the delay in delivering the T35 truck and asking for “a firmer position as to when supply is going to be”.  The respondent replied on 22 June 2004.  It apologised for the late delivery of the truck which was as a result of a delay in the arrival of assembly kits at Willowvale Motor Industries.  It advised that according to recent information received, the truck would only be available in early October 2004 and that there would be a price change the quantum of which would be advised as soon as it was known to the appellant.  In the event that this was not acceptable to the appellant, it suggested a refund of the purchase price.

No more was heard of the matter until 2 July 2004 when the appellant’s legal advisor wrote to the respondent in the following terms:

“We refer to the above matter and write to advise that we are extremely displeased by the non-delivery of the truck since the 29 April 2004, the contractual date of delivery.

Your reasons for the non-delivery are totally   unacceptable and so is your offer to deliver the truck in October 2004 at a revised price.

 Please note that presently Jena Mines is incurring a transport bill of $20 000 000 per month due to the non-availability of the truck. By mid-July Jena Mines will have been financially prejudiced in the sum of $50 000 000.

If the truck is not delivered to Jena Mines by close of business on 16 July 2004 together with payment in the sum of $50 000 000 then you will leave us with option but to institute legal proceedings for the delivery of the truck, payment of damages in the sum of $50 000 000, holding over damages in the sum of $666 666,66 per day, interest thereon and costs of suit.”

One notes here that the contractual date of delivery is said to be 29 April 2004. (The declaration states it to be 28 April 2004).  As discussed above the delivery date which was stated in the purchase order was 13^th April.  By that date no payment had been made so there was no contract between the parties.  The basis for using 29 April 2004 as the delivery date is unclear.  The resultant confusion is compounded by the provision in the purchase order that “unless otherwise stated in writing this order is hereby cancelled 30 days after the delivery date given above”.(That date is 13^th  April which means that cancellation of the agreement would  automatically take place on 13 May 2004.)

That aside, it was the respondent’s evidence that once it received payment on 27 April 2004 at its Gweru branch (for some reason the payment had been made by cheque dated 22 April 2004 to their Harare head office), an order was placed with Willowvale Motor Industries (“Willowvale”), who then advised that there were a few units left and that Willowvale was awaiting the arrival of finishing kits including door panels with which to assemble the T35 trucks. This information was communicated to the appellant who indicated its readiness to await the arrival of the kits.

When, in answer to the letters by the appellant, the issue arose of a price change or, alternatively, a refund as set out above, the appellant’s response was the letter set out above demanding delivery by 16 July 2004 with which date it knew that the respondent could not comply.  Needless to say, the respondent was unable to, and did not, comply with the demand and summons was issued on a date in July which is not clear from the record.

In a further attempt to resolve the dispute, the respondent, on the 17 August 2004, offered to the appellant a Mitsubishi Canter truck which it said was readily available at the same price as the Mazda T35.  The vehicle offered was of the same tonnage and engine capacity as the T35.  In the alternative, an offer of a refund of the purchase price with interest was again made to the appellant.

Both offers were flatly refused by the appellant.  It was submitted by Mr Zhou on behalf of the respondent that

“It is common cause that during the material period, Zimbabwe’s economy was undergoing unprecedented hardships which were not of any of the parties doing and which affected every one, particularly those doing business in sectors utilising foreign currency. Foreign currency was in short supply and the rate of inflation prevailing then had never been seen either locally or anywhere else in the world. This was an extraordinary and extremely painful business environment which made it impossible for businesses to operate normally. Planning was rendered meaningless by the hyperinflationary environment. All these are facts which the parties are aware of and, it is submitted respectfully, this Hon. Court should take judicial notice of. To insist on a strict application of the ordinary rules of commerce in such a highly unusual environment would not only be unreasonable but would result in great injustice”.

The learned Judge found, in my view correctly, that the conduct of the appellant was unreasonable in view of the prevailing circumstances. Indeed the appellant’s conduct was ill advised bearing in mind the economic conditions prevailing at the time and the common knowledge that the Zimbabwean dollar was depreciating at a rapid rate.  In such an environment and despite the offer of a refund or an alternative vehicle, the appellant, heedless of its obligation to mitigate its damages[1] proceeded recklessly to  incur vehicle hire charges for which it held the respondent liable because of the latter’s perceived failure to deliver the T35.

The court a quo found as follows:

“In August 2004 the defendant again offered plaintiff an alternative truck of a similar tonnage and engine capacity or a refund of the purchase price plus interest, but again plaintiff would not have that. The offers by defendant were reasonable and appeared to have been made in good faith. Had the plaintiff accepted the offer it would have greatly mitigated its loss. The plaintiff’s attitude was in my view unreasonable and oblivious of its own contribution to the malaise.

I thus hold that whilst the parties entered into an agreement on the 22^nd April 2004, the plaintiff’s attitude was such that the defendant cannot now be obliged to deliver the T35 truck. Neither can the defendant be held liable for any damages plaintiff may have suffered as this was authored by plaintiff’s own delays”.

Its reasoning is unassailable.  The appellant’s woes were self inflicted.  It has only itself and its advisers to blame for poor administration and a bad business decision. Not  only was the period of delivery not shown to be unreasonable in the circumstances but the evidence shows that the appellant contributed to the delay by waiting for eight weeks before placing a purchase order and making payment of the truck in circumstances where it was well aware of the dangers attendant on its failure to act promptly.

The appeal is therefore devoid of merit and it is dismissed with costs.

GARWE JA:                        I agree

OMERJEE AJA:                 I agree

Sawyer & Mukushi, appellant’s legal practitioners

Jumo Mashoko & Partners, respondent’s legal practitioners