Long Deal Enterprises (Pvt) Ltd t/a Southern Empire Reality v Hwange Local Board

### Preamble
1
HB 169/19
HC 3010/14
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LONG DEAL ENTERPRISES (PVT) LTD

t/a SOUTHERN EMPIRE REALITY

versus

HWANGE LOCAL BOARD

IN THE HIGH COURT OF ZIMBABWE

MAKONESE J

BULAWAYO 12 FEBRUARY & 7 NOVEMBER 2019

Civil Trial – Absolution from the instance

Advocate L. Nkomo for the plaintiff

Advocate P. Dube for the defendant

MAKONESE J:	This is an application for absolution from the instance at the close of plaintiff”s case.

On the 4th of February 2012 the parties entered into a written agreement in terms of which the defendant allocated to the plaintiff undeveloped land in Hwange, sufficient to accommodate a township with 2 000 low cost residential stands.  The plaintiff was to fully service the land by surveying, constructing roads, providing sewer reticulation and water connection in a manner approved by the defendant.  It was a term of the agreement that defendant would sell the residential stands at such price and on such terms as it would determine.  It was envisaged that only those people on the defendant’s housing waiting list would be given priority in the allocation of stands.  It was a further term of the agreement that no residential stand would be sold without the approval of the defendant.

Once the agreement was concluded, plaintiff commenced clearing the land.  Plaintiff recruited staff and began marketing the stands.  Plaintiff rented offices in Hwange Town for the purpose.  Plaintiff engaged consulting engineers, road contractors, quantity surveyors and other technical persons for the execution of the project.  An Environmental Impact Assessment was conducted, at the same time Survey Diagrams and Plans were prepared to facilitate the development work.

Plaintiff commenced selling stands on which houses would  be constructed.  A dispute subsequently arose between the parties.  The defendant alleged that the work done by plaintiff was behind schedule.  Defendant summarily terminated the agreement between the parties, repossessed the land and ordered the plaintiff to vacate the land.  Defendant, however, undertook to compensate plaintiff adequately and fairly for the resources that had been expended on the project.  The letter of termination dated 1st April 2014 addressed to the plaintiff was in the following terms:

“Proposed Empumalanga Phase 5 Housing Project: Withdrawal of Offer: Resolution B/86/13

I regret to advise that Hwange Local Board has resolved, B/86/13, to withdraw the offer of stands that had been made to yourselves for the above- stated housing project,  largely as a result of non-performance on your part.

Further note that it is the Hwange Local Board’s decision to compensate yourselves adequately and fairly for the resources you had already expended on the project to date.  It is pertinent to point out that this decision was a difficult one for Council which was under pressure from prospective beneficiaries who are residents of Hwange and under the jurisdiction of Hwange Local Board. (emphasis  added)

For engagement on the way forward, please contact the undersigned.

Yopurs faithfully

N. Mdlalose

Town Secretary”

This then, is the letter that triggered this current litigation.  The defendant in its plea denies liability and alleges that the plaintiff breached the agreement by selling stands without defendant’s approval.  In any event, the defendant contends, the plaintiff abandoned the project and closed its offices in Hwange and Bulawayo, making it impossible for the defendent to locate the plaintiff.  It was therefore not possible to give notice of its intention of cancellation of the agreement.  As regards the question of damages being sought by the plaintiff, the defendant avers in its plea as follows:

“…

The sum of damages is not only unrealistic but its  actuated by malice as its breakdown shows.  It is not justifiable under the circumstances and plaintiff is put to the strict proof thereof …

The expenses are inflated, unjustifiable and unrealistic and plaintiff is put to the strict proof.  Plaintiff is only entitled to justified expenses incurred in improving the land …

Defendant prays for dismissal of the claim with costs.”  (emphasis added)

The following clauses of the agreement are relevant to the determination of this application.  It is provided under clause 12 of the agreement as follows:

“Time frame

The full development and servicing of the piece of land shall be commenced within 6 months of the date of agreement and completed within 36 months or such extended period as the Board may be requested to give which permission shall not be unreasonably withheld.”

Under clause 16 of the agreement it is provided thus:

“Dispute Resolution

A dispute shall be deemed to have arisen when either party notifies the other party in writing to that effect.  The parties shall use all reasonable efforts to resolve any dispute that may arise under this agreement through good faith negotiations …”

Clause 17 of the agreement sets out the procedure to be adopted in the event of a breach.  It provides as follows:

“Should any party breach this agreement to other party shall give the innocent party written  notice calling upon the other party in breach to rectify such breach within 30 days.  Thereafter and in the event of such defect not being rectified the innocent party may cancel the agreement.

In the event that this agreement is cancelled when Southern Empire Reality has effected improvements on the land and transfer of the land has taken place it is agreed that Southern Empire Reality will at its expense transfer the land back to the Board and will receive compensation in respect of the improvements it may  have effected but only after the Board has been able to secure a third party to take over the land with improvements and has paid for such improvements to the Board.” (emphasis  added)

At the commencement of trial the plaintiff applied to amend the summons and declaration and all other pleadings.  The amount claimed as damages for breach of contract was substituted with US$9 340 203, 70.  The alternative amount claimed as liabilities and expenses incurred was substituted with a sum of US$1 276 297, 67.  The amendment was granted with the consent of the defendant.  The plaintiff adduced evidence through its managing director, John Kondo and after his testimony the plaintiff closed its case.  The defendant has filed an application for absolution from the instance.  Both parties filed extensive and detailed submissions in support of and against the application for absolution from the instance.

Advocate Nkomo, appearing for the plaintiff, contends that the application for absolution is not merited regard being had to the issues for trial in respect of which the plaintiff bears the onus of proof.  The plaintiff, it is argued managed to adduce sufficient oral and documentary evidence on the basis of which a court directing its mind, reasonably might find for the plaintiff.  The plaintiff avers that the defendant in its pleadings committed itself to compensate the plaintiff for improvements to the land up to the time of the termination of the agreement.  It is not in dispute that in the letter of termination the defendant committed itself to adequately and fairly compensate the plaintiff for improvements on the land.  Despite several meetings between the parties they failed to reach agreement on the quantum of damages suffered by the plaintiff.

Advocate P Dube, appearing for defendant, argues that the plaintiff failed to establish a prima facie case in that at the termination of the contract, plaintiff had breached the agreement.  Further, the plaintiff failed to place before the court any credible evidence for the damages allegedly suffered.  The plaintiff’s claim it is argued, is not capable of exact mathematical computation.  Further, it was argued on behalf of the defendant that the plaintiff’s calculations were confusing and subject to several variables.  Similarly, there was no clear indication from the plaintiff’s evidence what expenses were actually incurred in improving the land.  The defendant’s contention is that the costs in relation to environmental impact assessment, town planning surveys, earth works, soil tests, road construction and related expenses were not ascertained.  It has been argued for the defendant that in a case where the formula for the calculation of damages resided solely in the head of the witness, and was not imparted to the court, for the court to make its own assessment of damages suffered, no prima facie case could be said to have been established.

Applicable law in an application for absolution from the instance

The legal principles applicable in an application for absolution from the instance are trite.   In the case of United Air Charter (Pvt) Ltd v Jarman 1994 (2) ZLR 341 (S), at page 343, GUBBAY CJ stated thus:

“The test in deciding an application for absolution from the instance is well settled in this jurisdiction.  A plaintiff will successfully withstand such an application if at the close of his case, there is evidence upon which a court directing its mind reasonably to such evidence, could or might (not should or ought to find  for him) …

Moreover, in considering an application for absolution, the court should lean in favour of continuing the case rather than dismissing it …”

In Manyange v Mpofu & Ors 2011 (2) ZLR 87 (H) at page 93F, PATEL J (as he then was) explained the test as follows:

“The test to be applied is not whether the evidence for the plaintiff establishes what would finally be required to be established to obtain judgment.  It is whether the plaintiff has made out a prima facie case against the defendant on the basis of which the court could or might find for the plaintiff.  See Laurenco v Raja Dry Cleaners & Steam Laundry (Pvt) Ltd 1984 (2) ZLR 151 (S) per DUMBUTSHENA   CJ  at ;156-158.

In principle, a reticent defendant should not be allowed to shelter behind the procedure of absolution from the instance.  And in practice, the courts are loath to decide upon questions of fact without hearing all the evidence from both sides and have usually inclined towards allowing the cause to proceed …”

See also: Efrolou (Pvt) Ltd v Muringani 2013 (1) ZLR (H)

Applying the above test to the facts of the present case, and bearing in mind the issues for trial in respect of which the plaintiff bears the burden of proof, the court must first determine whether the cancellation of the agreement was lawful. The next issue for consideration is whether the plaintiff adduced sufficient evidence to show the amount of damages arising from the alleged breach of contract.  The application for absolution can only be granted on the facts of this case, if on the evidence before the court it is shown that the termination was lawful and that in fact no evidence was placed before the court to show that the plaintiff suffered any damages at all.  The totality of the evidence before the court is that in short, the defendant summarily terminated the contract by letter dated 1st April 2014.  In that same letter of termination, the defendant indicated its preparedness to compensate the plaintiff “adequately” and “fairly” for expenses reasonably incurred in the improvement to the land.

The parties attempted to resolve the matter amicably but got bogged down on figures.  The defendant alleged that the claim was unjustified and inflated.  The defendant further asserted that no documents were available to prove the claims.  When summons were instituted against the defendant, there was a tacit acknowledgment in the defendant’s plea in that the defendant states that plaintiff was only entitled to “justified expenses incurred in improving the land.”

In Wynina (Pvt) Ltd v MBCA Bank Ltd 2014 (1) ZLR 415 (S), GOWORA (JA) had this to say about damages arising out of breach of contract at p 425H;

“A plaintiff who sues for damages is required to prove his damages.  A court will not presume damages in the absence of proof of such damages by the plaintiff.  However, the principle that a plaintiff must prove his damages is not a strict rule, what is required of a plaintiff is to place before the court all the evidence that is reasonably available to him.  Before this principle can come into effect it must be established that the plaintiff has suffered some damages and that all that has to be established is the quantum of those damages. This was stated by SELKE J in Bowman & Anor v Stanford 1950 (2) SA 210 at p222……”

In the present case, the gravamen of the plaintiff’s claim for damages arising from the termination of the agreement between the parties by the defendant, is that plaintiff was deprived of the opportunity to carry out its obligations and establish a township with more than 2 000 housing units.  The plaintiff did expend some resources in carrying out its mandate.  The plaintiff adduced sufficient evidence to establish that he was deprived of the chance to realise a profit from the housing project.  The plaintiff is at law entitled to be placed in the same position he would have been were it not for the termination.  In an application for absolution from this instance, the plaintiff is not required to prove his claim.  The plaintiff’s calculations do not have to achieve exact mathematical precision for the claim to rise to the level of a prima facie case.  It seems to me that the defendant has argued its case as if all the evidence has already been heard from both sides.  This court is loath to dismiss a claim for damages without hearing the opposing side, more so where the defendant has acknowledged that there is a duty to compensate the plaintiff for “justifiable” expenses.  At this stage of the enquiry the plaintiff has placed all its evidence before the court.  The plaintiff is entitled to be placed in the same position as it would have been had the agreement been fulfilled, if it is proved that indeed the cancellation was unlawful.  The onus remains on the plaintiff to prove its  as set out in the summons and declaration claims on a preponderance of probabilities.

I am satisfied that in the inquiry for absolution from the instance, the plaintiff has established a prima facie case.  The application for absolution is not meritorious.

In the result, the application for absolution from the instance is hereby dismissed with costs.

Calderwood, Bruce Hendrie & Partners, plaintiff’s legal practitioners

Messrs Dube-Tachiona & Tsvangirai, defendant’s legal practitioners