Bitumen Construction Services (Pvt) Ltd v Tinphil Investments (Pvt) Ltd t/a Skyview Earthmoving (Pvt) Ltd

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BITUMEN CONSTRUCTION SERVICES (PVT) LTD
versus
TINPHIL INVESTMENTS (PVT) LTD T/A SKYVIEW
EARTHMOVING (PVT) LTD



HIGH COURT OF ZIMBABWE
CHIRAWU-MUGOMBA J
HARARE, 17, 18, 19, 20 and 26 September 2018



CIVIL TRIAL


C Rungwandi, for the plaintiff
T Goro, for the defendant


         CHIRAWU-MUGOMBA J: Going through the pleadings in this matter was akin to
charting through the maze. It is an example of how “not to file pleadings” before carefully
considering a matter. The plaintiff issued summons against the defendant on 24 May 2016
seeking payment of the sum of $20 140.00 being rental arrears arising from the hire of a Plant
Bell Grader in terms of a lease agreement dated the 8 th of July 2015; interest at the prescribed
rate of 2% per month, calculated from the 21 st of October 2015 to date of full and final
payment both dates inclusive and costs of suit on a legal practitioner to client scale. In its
plea, the defendant raised the point that the defendant was not properly before the court for
want of a proper citation. Prior to the defendant filing its plea on 23 November 2016, the
plaintiff had on 21 November 2016 filed a ‘court application’ for default judgement. On 24
November 2016, the plaintiff filed a notice of withdrawal of the ‘court application’ for
default judgement. On 8 May 2017, the plaintiff filed a notice of amendment in which the
citation of both the plaintiff and the defendant were amended. On the same date, the plaintiff
filed its pre-trial conference issues wherein it included for the first time a claim for holding
over damages despite such claim not being part of the summons and declaration. On 10
November 2017, the plaintiff and the defendant prepared a joint pre-trial conference minute
wherein it was stated that the two issues for trial were as follows; - (1) Whether or not there
were breakdowns between the periods 26th of July to the 12th of August 2015. If yes, whether
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the plaintiff is entitled to charge for daily minimum hours for this period in terms of clause 4
of the agreement and (2) whether or not the plaintiff is entitled to payment of holding over
damages for the equipment from the 12th of August 2015 to the 28th of August 2015 after
termination. It is pertinent to point out that these issues were not as originally claimed in the
summons and declaration and as an analysis of the evidence led will show, they were actually
part of the facts in dispute and not necessarily the issues in dispute for purposes of trial. On 7
September 2018, the plaintiff filed a notice of amendment to substitute the initial claim of
$20 140 to $ 21 350.36. An amended joint pre-trial conference minute was filed which
reflected the issues for trial to be the following:

    a. Whether or not the plaintiff is entitled to payment of $15 237.45 together with interest
        at the rate of 2% per month from the 21 st of October 2015 to date of full and final
        payment?

    b. Whether or not the plaintiff is entitled to payment of legal costs on a higher scale?

        To note also from this amended minute is the fact that the plaintiff and the defendant
agreed on certain issues the most important one being the fact that the defendant admitted
owing $5750.36 from the second claim.
             In its plea, the defendant stated that it was unlawful for the parties to agree to
payment of interest at the rate of 2% per month. Further that plaintiff breached the terms and
conditions of the agreement by failing to appoint competent operators to operate the
machinery and that this was done by the defendant at its own expense. Contrary to the
agreement and in breach, plaintiff failed to mobilise and demobilise the machinery to and
from site and this was done at the plaintiff’s own expense. The defendant denied liability for
the statements of account in annexure B to the declaration and pleaded that the correct
statements were signed by the plaintiff’s personnel who were on the ground. The defendant
denied owing plaintiff the sum of $40 278-54 or at all and put the plaintiff to the proof. The
defendant stated that it was plaintiff who had breached the terms and conditions of the
equipment lease agreement and as a result defendant had terminated the lease agreement. The
defendant further stated that it had requested for a proper reconciliation to be done taking into
account the breaches but this was not done. Further that it was the plaintiff which had
demobilised plaintiff’s property from the work premises.
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          The plaintiff and the defendant each called one witness and the evidence can be
summarised as follows:-The plaintiff led evidence through its acting General Manager
Gilbert Marebe. Before assuming the office of General Manager in March 2017, he was the
plaintiff’s Finance Director. His evidence was to the following effect. The plaintiff and the
defendant entered into a written agreement in terms of which the plaintiff leased to the
defendant a grader for use in a project in Hippo Valley. The lease agreement was signed on
the 8th of July 2015 although the grader was already on site in Hippo Valley. The plant hire
was at a rate of $80 per hour and outside normal working hours the rate was to increase by
10% meaning that it would cost $88 per hour. The contract also provided that there would be
a minimum charge of six hours per day in the event that the grader may have not been used or
had been used for less than six hours per day. The minimum hour condition could be waived
if the defendant reported a breakdown. The terms of payment were that the defendant was to
make payment within a period of 14 days after being presented with an invoice and if the
amount remained outstanding, it would attract interest at the rate of 2% per month. The
plaintiff was seeking payment of the sum of $15 237. 45 being outstanding payments from a
balance of $40 258 less a set off figure of $18 928 and other agreed payments. The figure was
based on three invoices being numbers 2892, 2893 and 2894 which were supported by
progress claims indicating the hours. The witness disputed the fact that they had appointed
incompetent operators as claimed by the defendant. A calculation of the figures in court
however revealed that the amount outstanding was actually $15 600 and not $15 237.45. The
witness averred that the major dispute relates to the issue of standby hours which according
to him are the minimum hours charged when the grader is not working or works for less than
six hours. The defendant did not report any breakdowns to the plaintiff and hence the charges
levied. The hours charged were based on daily returns signed by the plaintiff and the
defendant’s representatives based on the hours. The witness admitted that they noted that
there were breakdowns from the 23rd to the 25th of July 2015. From the 26 th of July 2015,
there were no daily returns since the plaintiff’s personnel had been moved from the site at the
insistence of the defendant on the basis that they were incompetent. The defendant terminated
the contract on 12 August 2015 via email which was contrary to the written lease which
required seven-days’ notice period. The grader was only returned to the plaintiff on 29
August 2015 and due to this, the plaintiff was entitled to charge the defendant based on a
minimum charge of six hours. Under cross examination, the witness conceded that the
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plaintiff ought not to have charged for the breakdown dates of 23-25 th of July 2015 and hence
the claim on the second invoice should be reduced by $1360 representing 17 hours of non-use
since on 25 July 2015, the grader was billed for a hour of use. The second invoice should
therefore be reduced from $23 912 to $22 552. After this concession, the disputed amount
was reduced to $14 240.36. The witness admitted that the defendant disputed part of invoice
number two and the whole of invoice number three.
         The defendant led evidence through one Phillip Nherera who is a director of the
defendant. He gave a history of the relationship between the defendant and the plaintiff in
respect of leasing equipment to each other. The plaintiff’s holding company Gombe
Resources (Pvt) Ltd had hired an excavator from the defendant and upon failure to pay, they
defendant then hired the grader. He confirmed the charge of $80 per hour and the fact that the
grader was on site on or around the 19 th of June 2015. He admitted that the defendant was not
disputing claim number one but part of claim number 2 and 3 was in dispute. He averred that
there had a different understanding of the meaning of stand-by hours and also that they could
not pay for the time when the grader was broken down. He stated that standby hours are
approved by the site supervisor after being generated by the operator. Daily returns for 1-25
July 2015 were available but the second invoice included standby hours which were not
provided for in the daily returns. He gave a history of the gradual breakdown of the grader
which at one point they had to have repaired as the contract allowed minor service. The
defendant could not attend to the major breakdown which caused the grader to completely
stop functioning on 25 July 2015. The witness stated that the plaintiff’s operator actually
drove the grader away on 26 July 2015. He averred that the plaintiff’s personnel left the site
on 25 July 2015 after being instructed to leave by the plaintiff. Under cross examination the
witness stood by the defendant’s plea except in relation to the part on incompetent operators.
He stated that the defendant was not in dispute of the interest claimed as long as it was
charged correctly.
           This matter turns on whether or not the defendant breached the contract and if so,
what relief is the plaintiff entitled to. The fact that the parties reduced the lease agreement of
the grader into writing places this matter within the realm of the parole evidence rule. In
Marquard and Co v Biccard 1921 AD 366 @373, SOLOMON JA adopted one of the best
known English formulations of the rule:
       “The rule of the law of evidence upon which he relies is nowhere more clearly stated
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        than by Lord Denman in the well -known case of Goss v Nugent (5 B and AD 54)-‘By the
        general rules of the common law if there be a contract which has been reduced into writing,
        verbal evidence is not allowed to be given of what passed between the parties either before
        the written instrument was made or during its preparation, so as to add to or subtract from or
        in any manner to vary or qualify the written contract”.
        The purpose of damages for breach of contract is to place the wronged party in a
position that s/he would have occupied had the contract been performed in so far as that can
be done by the payment of money and without undue hardship to the defaulting party. See
Victoria Falls and Tvl Power Co Ltd v Consolidated Lnaglaagte Mines1915 AD 122.
        The defendant admitted that it has not made any payment to the plaintiff even for the
admitted figure of $5750. 36. Clause 5 of the lease agreement covers the issue of payment
and also includes set off of a debt owed By Gombe Resources (Pvt) Ltd to the defendant. By
failing to pay even for the admitted amount, the defendant is in breach of the written contract.
The defendant stated that it was not disputing claim number one in the sum of $6430. 54 but
did not tender proof of payment of that sum to the plaintiff and again this places the
defendant in breach of the lease agreement.
            From the evidence led, it is clear that the plaintiff and the defendant differ on part
of claim number 2 and the whole of claim number 3. It is therefore important to scrutinize
these two claims in relation to the written lease agreement. According to the agreement, the
rental rate to be paid as set out in clause 4 is as follows:-
        “4. The rental rate to be applied during normal working hours shall be US$80 per hour; DRY
        RATE, excluding VAT. Outside normal working hours, a 10% surcharge on the rental rate
        shall be applied. The property shall be hired out for a minimum of six (6) hours per day, a
        minimum amount which can only be waivered (sic) only if the lessee has reported that the
        property has experienced a breakdown.”
        The agreement defines normal working hours as hours that are calculated during
standard working hours namely Monday to Friday between 0730 hours and 1730 hours.
Outside normal working hours is defined as hours that fall within the scope of a public
holiday, Saturday or Sunday. It also includes hours that occur during a standard working day
after the hours of 1730 hours.

        With respect to the terms of use, clause 8 of the agreement states as follows:

        “ 8. The property shall be operated by a competent operator appointed by the lessor. The
        starting and ending times as it relates to the operation of the property and standby times shall
        be recorded in the lessor’s logbook and plant daily return sheets shall be signed as provided
        by the lessor’s representative, by the lessee after every shift.”
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       The evidence led indicates that daily returns were available for the first claim and in
relation to the second claim at least up to the 25 th of July 2015. The defendant disputed part of
the second claim in relation to standby hours and the whole of the third claim. It is pertinent
to note that the agreement did not define standby hours. The Oxford dictionary defines
standby as, “readiness for duty or immediate deployment”. The Cambridge dictionary defines
the word to mean, “To be waiting and ready to do something or to help”. The Collins
dictionary defines the word to mean, “Ready to be used when needed”.
       The parole evidence rule is not cast in stone but allows external evidence to be
admitted to give meaning to words- see Old Mutual Property Investments v Metro
International (Pvt) Ltd and Anor HH-53-06. According to the plaintiff, standby hours refers
to the minimum hours charged where plant has not worked or has worked less than six hours.
According to the defendant, standby excluded the period when the grader was not working
and this then relates to part of the second claim and the whole of the third claim which was
based on standby hours. The second claim being invoice number 2893 shows the number of
hours billed including the ‘outside normal hours’ claims. The progress claim showing the
hours finds support in the written lease in its definition of normal working hours and outside
working hours. Clause 4 is also very clear that the grader was to be hired for a minimum (my
emphasis) of six hours per day. This also supports the meaning of standby hours as defined
by the plaintiff. The defendant’s major bone of contention was that the grader stopped
working on 25th July 2015 but there is no proof as to when exactly the breakdown occurred.
An email addressed by the defendant to the plaintiff dated the 12 th of August 2015 does not
indicate the date of the alleged breakdown. Another email addressed by the defendant to the
plaintiff dated the 5th of August 2015 states as follows, We are going to make payment for the
first clain (sic) then the second will be done after confirmation. The plaintiff as stated earlier
conceded that a sum of $1360 was to be subtracted from the sum of $23 912 on the second
invoice leaving a balance due of $22 552. It is my finding that the plaintiff proved its claim
for the stated amount beyond a balance of probabilities.
         The basis of the plaintiff’s third claim is purely in relation to standby hours since the
grader was not working according to the defendant and also that it was only returned on 29
August 2015. The plaintiff and the defendant were not agreed as to who terminated the lease
first but what is clear is that the grader was only returned on 29 August 2015. On 4 August
2015, the defendant addressed an email to the defendant stating that, “Please note that there
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are no standby costs for a faulty grader”. During cross examination, the defendant’s witness
was taken to task on the meaning of a faulty grader. He explained that a faulty grader is one
that is not able to perform duties mechanically. On the other hand under- performing means
that it cannot perform what it is tasked to do and it can operate and this depends on the reason
for the fault. Fault eventually leads to breakdown. It was put to the witness that fault and
underperforming do not render the grader inoperable to which he responded that it depends
on the nature of the fault. He conceded that despite being ‘faulty’, the grader was still
operating but below capacity if regard was had to the hours until finally on 23 July 2015, it
stopped working. The email referred to above does not state that the grader had broken down
but that it was faulty. This is unlike the email by the defendant to the plaintiff dated the 12 th
of August 2015 which stated clearly that the grader had broken down. This then meant that
the plaintiff was now aware of the breakdown and in terms of the lease, there was supposed
to be a waiving of the charges as from the 13 th of August 2015. The plaintiff averred that
they charged for August 2015 period because as long as the grader had not been returned, it
was on the minimum six hours per day charge. The plaintiff not having its grader meant that
it could not use it or lease it to other persons. On the other hand, the defendant’s view was
that the plaintiff was not supposed to get paid since the grader had broken down. Clause 8 of
the contract as already outlined envisaged payments to be effected based upon daily returns
signed by both the plaintiff and the defendant’s representatives. Both the plaintiff and the
defendant’s witnesses confirmed that the plaintiff’s personnel left the site on 26 July 2015
though they were not agreed on the circumstances of the departure. In the absence of daily
returns for August 2015, the plaintiff cannot claim any payment.
         The legal question in relation to the third claim becomes this- can the payments for
the period from the 1st to the 28th of August 2015 be said to have been in the contemplation of
both parties (the contemplation principle) given the fact that the grader was returned on 29
August 2015? These damages fall into a special category of damages – see Shatz Investments
(Pty) Ltd v Kalovyr-nas 1976(2)SA 545 and BAT Rhodesia Ltd v Fawcett Security
Organisation (Salisbury) (Pvt) Ltd 1972(2)RLR 22 (G). It is clear from the authorities that
the relevant time is the making of the contract and not the committing of the breach. Such
damages must be alleged in the pleadings and established by evidence. Perhaps this is what
the plaintiff meant by ‘holding over damages’ but they were not pleaded in the summons and
declaration. The parties never contemplated a situation where the personnel of the plaintiff
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would not be available to confirm the daily returns. The plaintiff cannot therefore succeed on
the third claim. The total amount due to the plaintiff therefore is $10 054.36 calculated as
follows:
Claim number one (not disputed)                                             = $ 6 430 .54
Claim number two (reduced)                                                  = $22 5521
SUB-TOTAL                                                                   = $ 28 982.54


Less Gombe Holdings Debt (as per signed lease)                               = $ 18 928.18
TOTAL                                                                        = $10 054.36


TOTAL DUE                                                                     = $ 10 054.36
       The issue of 2% interest per month in the event of default was not canvassed in great
detail. The plaintiff merely stated that the contract stipulated that interest at the rate of 2%
per month was payable in the event that the defendant did not pay after 14 days of being
invoiced. The plaintiff’s witness was not cross examined on the issue of interest. As stated
already, the defendant’s averment was that it was not in dispute of the interest claimed as
long as it was charged correctly. The witness was never asked to explain what they meant by
this. S 4 of the Prescribed Rates of Interest Act, [Chapter 8:10] provides as follows:

       “If a debt bears interest and the rate at which interest is to be calculated is not governed by
       any other law or by an agreement or trade custom or in any other manner, such interest shall
       be calculated at the prescribed rate as at the date on which such interest begins to run, unless a
       court of law, on the ground of special circumstances relating to that debt, orders otherwise .
       (Emphasis added).


        In Chikomo v Yehudah HH-29-12, MAVANGIRA J (as she then was) stated as follows:

       “In casu the rate at which interest is to be calculated is governed by agreement as reflected in
       the acknowledgment of debt. The respondent cannot therefore, in my view find any escape
       from the applicants’ claim for 25% interest as this is based on or governed by the agreement
       between the parties.”
       The defendant agreed in the signed lease to the payment of interest at the rate of 2%
per month in the event of default. The defendant admitted that it had not paid any money to
the plaintiff in settlement of the debt even for amounts it admitted owing.
1
 The sum of $5750.36 was partly admitted by the defendant for claim number 2 and is
therefore part of the $22 552
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         The plaintiff sought costs on a higher scale against the defendant. It is trite that costs
are always at the discretion of the court. There is nothing in this present case to justify
awarding costs on a higher scale. The defendant actually managed to reduce part of the
plaintiff’s second claim and the whole of the third claim.
In the result, it is ordered as follows:

    1. The defendant be and is hereby ordered to pay plaintiff the sum of $10 054.36 with
        interest at the rate of 2% per month calculated from the 21 st of October 2015 to the
        date of payment.

    2. The defendant shall pay costs of suit.




Matsika Legal Practitioners, plaintiff’s legal practitioners
Mbidzo, Muchadehama, Makoni, defendant’s legal practitioners