SWAZILAND
HIGH COURT
CIVIL
TRIAL NO.2314/98
In
the matter between:
MT
& MB (PTY) LTD PLAINTIFF
AND
COUNCIL
OF SWAZILAND CHURCHES DEFENDANT
CORAM ANNANDALE
J
FOR
PLAINTIFF MR. A. SHABANGU
FOR
DEFENDANT ADV. P. FLYNN
(instructed
by Mlangeni & Co.)
JUDGMENT
9TH
SEPTEMBER 2002
In
this action, plaintiff company sues the Council of Churches for
damages it alleges arose from an unlawful lockout from its leased
premises, to the tune of just over E530 000, being loss of profit on
sugar sales, the value of trading stock and loss of business
reputation and goodwill, plus costs and interest.
During
the course of the trial, just prior to Plaintiff's case being closed,
exhibits A1 and A2 were admitted by consent between the parties.
These documents, headed "Schedule A" in manuscript and in
typescript: "MT+MB Office Contents" was referred to in
paragraph 9 of Plaintiff's particulars of claim, but not annexed to
the summons. It
2
comprises
a list of office furniture and equipment as well as kitchen and
cleaning equipment. This list was apparently drawn up by defendant's
financial officer, Ms. Nkambule on the 20th June 1997, about a month
after the offices were locked.
Also
by consent, a further prayer for relief was added to Plaintiff's
claim, which was said to have been omitted due to an oversight.
Prayer
6 of Plaintiff's claim now reads that "Defendant be ordered to
return the goods, as per "Schedule A" (exhibits A1 and A2)
to defendant".
From
the pleadings filed herein, it is common cause that plaintiff leased
its premises from defendant, the lease still being operative at
around the 14th May 1997, being the date when defendant is blamed for
locking up of the premises, which is alleged to have been the cause
of the complaint.
Defendant
denies that its alleged actions were the cause of any damages that
may have been suffered, calling on strict proof of damages. It
further denies that through its alleged actions, plaintiff was
prevented from removing its trading stock, stationary, furniture and
documents, pleading that plaintiff itself used a lock and chain to
secure the leased premises.
Notworthy
is defendant's reaction in its pleadings to the allegation that it is
the one who "...whilst the lease agreements were subsisting
locked the plaintiff out of the premises without any lawful
justification and in the absence of any court order" (paragraph
4 of the particulars of claim). Initially it pleaded (in paragraph
2.3) that "Defendant further avers that at the time in question
the Plaintiff closed the business premises, put a chain and padlock
at the door and disappeared for a long time" [my underlining).
It reiterated in paragraph 3.1 of its plea that "As stated
above, Defendant denies that it closed the shops and avers that it is
the Plaintiff that locked and left".
3
The
initial plea in paragraph 2.3 was subsequently amended after
defendant's witness gave evidence to the contrary, that indeed
defendant's financial officer locked the premises at the time as
alleged. The amended plea was dealt with during the course of the
trial on the 25th July 2002 in a ruling on the issue. The substituted
plea now has it that defendant locked the premises on the 14th May
1997, whereafter, on Saturday the 17th May, plaintiff removed his
lock and substituted it with its own, then to disappear for a long
time.
As
already mentioned in the course of the earlier ruling on the
amendment, it negatively impacts on defendant's case, as the plea is
self-contradictory, on the one hand a denial that it locked the
leased premises, on the other hand, an admission of having done just
that. It also has to be viewed in the context of when the amendment
was effected, namely after the presentation of its own evidence which
starkly conflicted with its plea in paragraph 2.3, but for an
unexplained reason did not also seek to amend the still conflicting
plea in paragraph 3.1.
In
the course of protesting the claim, defendant (in convention) filed a
counterclaim of E21 088.50 in respect of arrear rental pertaining to
the same premises said to be owed by plaintiff (in convention).
This
counterclaim is essentially non-disputed, save for pleading that an
unstated amount is to be deducted from it, being a refundable deposit
paid (on taking up the lease) and also reducing the amount by taking
into account the value of stock, furniture and documents on the
premises. The latter part hereof (stock etc) is inelegantly pleaded
in paragraph 3.2 of the plea of the counterclaim in that a number of
key words are omitted whereas the amount of the first assertion (the
deposit) was neither pleaded nor dealt with in evidence. Seemingly,
it is expected of the court to obtain the necessary papers, documents
and lease contracts from which the amount of the deposit is to be
gleaned, then to go to the premises and see if any of the mentioned
4
items
are still there and to place a value on it, after which processes the
quantum of the counterclaim must be reduced.
Even
if this is not expected, plaintiff does not succeed anywhere near
proof of any kind as to show how much should be deducted from the
counterclaim. What it does do is to say that all of its business
documents were locked up in the leased premises and that it could not
get hold of it, which may well be the case, but it does not further
the scope of the defence to the counterclaim.
The
evidence that was heard during the trial does not auger well for the
plaintiff, though one cannot help but sympathise with the position
its director, Mr. Mkhaliphi, found himself driven into -between a
rock and hard place.
According
to him, the business venture which concentrated on the sales and
export of sugar to neighbouring countries was a lucrative and
rewarding concept. Sugar quotas and sales agreements had the
potential of very high rewards, but market forces and unforeseen
events could take a heavy toll. Especially some fraudulent conduct by
an employee, a sales representative called Enock Dlamini, was said to
have been most destructive to the company. Apparently, the employee
acting in cahoots with a transport operator, one Faizal Latif, was
said to have siphoned off a large quantity of sugar at Simunye Mills,
by way of forged signatures and false details of trucks to load the
sugar. In this manner, plaintiff's director said that the company had
lost some E80 000 around May to June 1996.
As
a result of this loss, which also had a devastating effect on their
allotted sugar quota and loss of existing export contracts, with the
company having to make good for the losses and finding it difficult
to timeously arrange for sugar from other sources, financial drought
inevitably stepped in. In order to try and keep the company afloat,
its director made all sorts of arrangements with the Swaziland Sugar
Association and their clients, especially Callie Ellis Investments in
Mocambique, who needed sugar. Royal assistance in the form of
Princess Dlalisile was obtained to facilitate the supply of 500
tonnes of
5
sugar
from her own quota, and other sources to supply 1200 tonnes, from
which an order received on the 13th May 1997 would have resulted in a
handy profit to bridge the gap, with the client paying in advance to
receive 60 tonnes a week. Mr. Mkhaliphi said that from the 500 tonnes
alone, though not sure, he expected a gross profit realisation of no
less than E40 000. Sixty tonnes a week, or 240 a month, with a
truckloads of 30 tons each would have an estimated profit of +-E6 000
a load. Annually, it could have resulted in an expected E480 000
profit, again an estimated and anticipated profit, all things being
equal and market fluctuations excluded. He said more than E500 000
would be netted annually, were it not for the turn of events.
This
turn of events is blamed squarely on the shoulders of the defendant,
the landlord of Plaintiff's business premises in Manzini. Being
fraught with the fraudulent conduct of their employee and resultant
drying up of the fountain of money, a day after the big sugar order
was received, the Council of Churches decided to lock-up the
premises. It is common cause that the Council had no legal instrument
authorising it to do so as it did and that it did so despite pleas by
Mr. Mkhaliphi, which fell on deaf ears.
Due
to plaintiff's financial difficulties, it was unable to pay the rent
for a number of months. The director of plaintiff company said he
informed the Council of Churches of the fraud and resultant loss and
requested a period of grace as the annual swing in the cycle towards
better business was anticipated in the month of May. Since October
1996 it had difficulties to service the rentals, but through
negotiations with the landlord it managed to keep their offices open.
He claims to have told the Council of Churches about the pending deal
which would take it out of the doldrums, soon before the lock-up.
Surprisingly,
on the morning of the 14th May 1997 his wife, who assisted him to run
the business, found the business premises locked with chains around
the door handles. Mrs. Mkhaliphi told him that it was locked by
defendant due to unpaid rentals and her husband then
6
tried
to have it undone, to no avail. He tried to speak to the Council's
officers, who were in a meeting and wouldn't hear him. He was
referred to their attorneys, who he said denied having locked up the
shop or obtained any court order and again he returned to the meeting
of the defendant's officials. He received a cold shoulder once more,
and they would not hear of letting him remove the business documents,
books, trading licence, certificate of incorporation, etcetera from
the locked premises, with which he wanted to process the sugar
orders. The trading licence and certificate of incorporation was also
needed to renew sugar quotas every four months.
Mr.
Mkhaliphi's further evidence is that as a result of defendant locking
up his leased premises, due to non-payment of rental but without a
court order authorising it to do so, his whole operation collapsed.
Five employees lost their jobs, his sugar quota fell to pieces and
over E480 000 profit was lost. Also lost is office furniture and
effects, listed as per exhibits A1 and A2, which was said to have
remained in the locked offices over the ensuing years, no particular
value being placed on it.
His
evidence in chief did not particularise the claimed E100 000 in
respect of the claimed loss of business reputation and goodwill, nor
the claimed E7 000 pertaining to their trading stock of foodstuffs.
More importantly, as far as the main body of the claim is concerned,
the loss of profits so precisely claimed in the specific amount of
E425 997,00 (not E426 000 or any global type of figure) has not been
so shown to be such. He said "in excess of E480 000 was lost",
and that actually, it is nearer to E500 000 though in fact is should
have been "millions".
The
muddy waters in so far as the lack of precise details of monetary
losses are concerned were not cleared up during cross-examination by
Ms. Hlabangwane who appeared for defendant at the time. Nor did it
bring much clarity to the issues in dispute. He said that the office
was needed to process the administration of sugar dealings, the sugar
itself being kept at the mill from where it is
7
despatched,
but as the office was unlawfully locked, he was prevented from
operating the business, thus suffering his losses. He tried in vain
to have at least his papers released, through his attorneys'
assistance and his own contacts with the defendant's staff. He was
somewhat at a loss to explain the period over which the claimed
losses would have been incurred, whether it was for the 1996/7
financial year or from the time the offices were closed to the date
of his evidence.
It
is this lack of detailing the losses and the speculative nature of
estimation of it that is the downfall of plaintiff's evidence. He is
not a witness who cannot be believed - to the contrary, he made a
very favourable impression as witness as far as his veracity is
concerned. There is no reason to disbelieve him but it is another
story if his optimistic estimation of business profits is sufficient
proof to establish his claim as quantified on the papers filed. For
instance, no explanation was offered as to why the sum of E425 997.00
as "net profit on sames (sic) of sugar during the financial
year" was claimed in such a precise amount in if plaintiff's
estimation E480 000, or more than E500 000, or million of nett profit
would have been realised annually. I have already alluded to the E7
000 value of trading stock and especially the E100 000 loss of
business reputation and goodwill, which also have been quantified in
such a cavalier fashion.
I
have no doubt that plaintiff has suffered financial losses at around
the time their offices were closed, but have a difficulty to equate
that to proof that it was as a direct result of the closure and not
to a great extent due to extraneous factors. Equally if the claimed
losses have actually been proved above the level of optimistically
anticipated profits. The claimed loss of business reputation and
goodwill is even more jaundiced.
Despite
this, defendants attorney did not ask for absolution of the instance
at the close of plaintiff's case, for reasons unknown but open for
speculation, and proceeded to present the defendant's case.
8
Defendant's
financial officer, Ms. Nkambule, testified about the ongoing
difficulty to get plaintiff company to pay its rental for offices
leased from the Council of Churches. At some stage in February 1997,
a cheque of E5 000 in respect of arrear rentals was returned by the
bank.
This
was contested by Plaintiff's attorney in cross-examination, who said
that it was paid by the bank. The cheque was not handed in as
exhibit, as she contends that she returned it to the Plaintiff's
director. In its plea to the counterclaim, plaintiff (in convention)
also denied that its cheque was dishonoured. At a time when about E21
000 arrears had accrued, in May 1997, a letter was received from
plaintiff to have the lease terminated earlier, at the end of May,
instead of the end of July that year.
This
letter, exhibit "B", is dated the 2nd May 1997, written on
Plaintiff's company letterhead and signed by Mr. Mkhaliphi,
Plaintiff's director. It sets out the financial difficulties it
suffered, the inability to obtain overdraft banking facilities due to
"bureaucratic problems with the surity (sic) papers" but
also the hope to make a "projected gross profit of E47 499.75"
within the next two to three months. It asks to bring forward the
expiration of the lease agreement ("contract") (as also
testified by Ms. Nkambule) and also "to give us five equal
monthly instalments of E4 259.60 effective 31st May 1997 to pay all
our dues".
With
Plaintiff's returned cheque and thereafter the request for early
termination of the lease, and about E21 000 arrears due, she decided
to lock Plaintiff's office. It is common cause that she had no order
of court to do so on this occasion. The following day while the
council's officers attended a meeting she saw Mr. Mkhaliphi talk to
their Ms. Vilakati, trying to resolve the matter.
After
the ensuing weekend she discovered that the padlock she had used to
lock the office was replaced with a different one. While she has it
on hearsay from a security guard at a nearby restaurant, which guard
was not called as a witness, (he could not be traced), that this was
done by Mr. Mkhaliphi, there is no proof of it.
9
A
further witness called by defendant, Ms. Dube, a waitress at a
restaurant near the leased offices, testified that on the Saturday
after the closure, she noticed that the door had been opened and that
she saw two men at the offices. She did not confirm that Mr.
Mkhaliphi himself was there, nor that he opened and relocked the
doors. Mr. Mkhaliphi himself did not deny being there but he also did
not admit it, nor that it was him who would have unlocked the
premises and relocked it with his own lock. He did say that he did
not remove anything at all from the locked offices, not even a piece
of paper.
Thus,
apart from the hearsay evidence, there is no proof that Plaintiff's
director interfered with the lock of defendant, nor that he removed
any of his property from it. Due to the outcome of this matter, it is
not necessary to come to any firm finding on this issue.
Some
time later, Ms. Nkambule observed that items had been removed from
the office, notably a photocopier. She still anticipated that Mr.
Mkhaliphi would call on them to settle the outstanding rent, but
nothing happened. Then, on the 20th June 1997 she had the replacement
lock cut, opened the office and made the abovementioned inventory
(exhibit A1 and A2) i.e. the remainder of Plaintiff's effects in the
office.
Ms.
Nkambule was at a loss to explain how her evidence was different from
defendant's plea, where it was stated that it was the plaintiff
itself who locked the premises, and not the defendant. She has it
that she did explain to their attorney what the factual position was,
contrary to the version in their pleadings.
From,
the above abridged version of the evidence, it is clear that neither
of the litigants adduced evidence that supported the pleadings to a
level that is to be expected, especially given the very long period
of time to prepare for the trial. Not once was any mention made of
any effort to obtain important documentary evidence, ostensibly in
the possession of the other party or that such efforts were in vain.
If it is so, for instance, that all of the business books of
plaintiff are still with defendant, in the locked premises or
elsewhere, it is relatively easy to
10
obtain
it for trial purposes, in a legal manner. The same applies to the
cheque said to have been returned by Plaintiff's bankers to the
defendant. There is no evidence that plaintiff instituted spoliation
proceedings at any time during the ensuing years. If he wanted to
continue trading and realising the huge profits he said were on the
verge of being made, he certainly can be expected to have done
something about the situation. He is not only a businessman but also
has a degree in law. He had access to attorneys. What was done to
mitigate his losses? Did he take reasonable steps under the
circumstances to recover his documents and regain his sugar quota?
The question remains. If indeed he was able to make a fortune, was it
really the Council of Churches that prevented him from doing so, or
it was the culmination of various factors that converged at about the
same time? Nor has there been persuasive evidence to show to what
extent the anticipated profits would have materialised if not for the
lock-up, save for the naturally biased version of plaintiff's
director.
In
lengthy argument heard from Plaintiff's attorney at the conclusion of
evidence, Mr. Shabangu wants to have Plaintiff's claim found to be
proven beyond doubt and beyond the claimed amounts, if that would be
possible. His argument goes that if it was not for defendant's
unlawful closing of the premises, and its subsequent refusal to
amicably resolve the unpaid rental issue and release the required
documents and papers, plaintiff would have continued selling sugar
and earned the assured regular income and profits he testified about.
He based Plaintiff's action on both contract and delict, ultimately
arguing the claim to be founded on lex aquilia, of which all
components are said to have been satisfied, the culpa compounded by
defendant's persistent and unjustified disregard of the tenants
predicament it had caused, the diminishing patrimonial loss actually
being an actio iniuriarum due to the intent it displayed recklessly
of the consequences it knew about.
With
reliance on CORONATION BRICK (PTY) LTD VS STRACHAN CONSTRUCTION
COMPANY (PTY) LTD 1982(4) SA 371(D),
11
he
argues that pure economic loss is claimable if the wrongdoer knew
that such loss would result from an intentional wrong, vis-a-vis
patrimonial loss.
The
claimed damages are sought to be awarded "as the proven damages
far exceed the claim of E425 997.00 being the net profit on sames
(sic) of sugar during the financial year". I will revert to this
further down.
Mr.
Shabangu concedes that no evidence was adduced to support the second
part of the claim in respect of the loss of "trading stock of
foodstuffs" amounting to a claimed E7 000. Concerning the third
leg, E100 000 being loss of business reputation and goodwill, he
argues that it has been proven more than adequately.
He
argues that regard must be had to the relevant factors that makes up
this loss, general damages to be awarded 'on the value the court
places on it", submitting that E100 000 is a fair amount. The
court is expected "to decide how much to allocate", based
on the projected income, contracts asset base and the sugar quota.
Insufficient
persuasive evidence has been placed before me to determine an amount
that would be either realistic or fair. It can be no more than a shot
in the dark, a thumsouck figure.
The
sixth prayer, which was belatedly added during the course of the
trial, seeking to have some goods returned to the plaintiff, is all
that plaintiff can succeed in. It seeks an order by which defendant
is to return property belonging to plaintiff to it. It comprises
items listed in schedule A (exhibit A1 and A2), which list was
compiled by defendant's financial officer, Ms. Nkambule, soon after
the locking up of premises occurred, when she discovered that her own
lock had been substituted with another. There is no dispute that
those items are the property of plaintiff company. It was also not
pleaded or contended to be an attachment to perfect the landlord's
hypothec.
Defendants
counterclaim is sought to be dismissed on the ground that "no
evidence" was heard in support of arrear rentals, further that
plaintiff's cheque of E5 000 which was said to have been
12
dishonoured
by its bankers, has not been produced by defendant. In the event that
the court decides to award the counterclaim, it is further sought to
have that amount reduced by an unknown amount, said to have been paid
as deposit. Regard must also be had to Plaintiff's plea to the
counterclaim which reads that "...this paragraph is not disputed
save to state..."
For
reasons unknown, neither party sought to compel the other in the
pre-trial stage to produce documentary evidence allegedly in
possession of the other. The applicable document in this instance
would be the contentious cheque. Be that as it may, defendant does
not sue on the basis of the dishonoured cheque, but for unpaid
rentals. The cheque itself was said by defendant's witness, Ms.
Nkambule, to have been returned to Mr. Mkhaliphi personally. Were it
not for the fact that it was returned by the bank, the amount claimed
would have been reduced to that extent.
Although
the contract of lease was not proven at the trial, it is beyond doubt
that infact there was a lease agreement in place at the material
times, claimed for by defendant/plaintiff in reconvention. The
monthly amounts are also not disputed, save that plaintiff wants it
to be found that for the month of May, no rental should accrue as it
did not have full benefit from the middle of the month onwards.
At
the very best, plaintiff could be met halfway in respect of the month
of May 1997. Plaintiff sought to bring the lease to an early end,
prior to the expiry date, to have it terminated at the end of May,
the month during which defendant would not tolerate any further
occupation of its premises without receiving any rent. On the 14th
May, it locked the leased premises without any lawful order of court
authorising it to be done. For reasons unknown, but according to
plaintiff director's evidence due to ill assistance by his different
attorneys, no spoliation proceedings were brought to court. Having
regard to the available evidence, he most likely would have been
successful with such proceedings and would have been able to at
13
minimum
retrieve his business papers and documents, enabling him to continue
trading from other premises.
Through
its pleadings in the counterclaim, which claims unpaid rental only up
to the end of May 1997 and not until the end of July 1997, it seems
as if the landlord accepted early termination of the lease, as sought
by plaintiff in the letter of the 2nd May 1997.
Ms.
Nkambule did testify about the outstanding rentals and said that at
the time the abovementioned letter (exhibit B) was received,
plaintiff owed "about E21 000 rentals, which he had agreed to
pay before July". It was this letter, seeking early termination
of the lease, coupled with a dishonoured cheque tendered for rent,
which prompted her to go to the premises and sort it out with
plaintiff. Finding nobody there and acting on her instincts, she then
locked the premises.
Defendant
in reconvention cannot be heard to say that there was "no
evidence" in support of the counterclaim. Nor can it expect the
court to reduce the amount any more than meeting it halfway in
respect of rent due for the month of May 1997. Half of that amount
(E2 662.25) is El 331.13, which is the extent to which the
counterclaim is to be reduced, bringing it to E19 757.12.
As
remarked repeatedly earlier in this judgment, the plaintiff bears the
onus to not only establish the fact of patrimonial loss but also to
prove the quantum thereof. Apart from proving that the defendant is
the cause of his loss for which he claims damages, he is to prove how
much he must be awarded. The best available evidence must be produced
even though it might be difficult to assess the quantum from such
evidence. The failure to produce the best available evidence may cost
the plaintiff his remedy.
In
this matter, I have alluded to the conspicuous absence of evidence to
substantiate Plaintiff's claims for damages. No books of business
were sought from defendant, nor were they produced. No auditor's
reports on the business of plaintiff company were produced. No
evidence by any expert was adduced about the economic climate at
14
the
time and what plaintiff company stood to gain but lost, apart from
the subjective and rosy expectations held by its director, who
incidentally is by profession a prosecutor. No bank statements,
deposit slips or any related documents were proven. Plaintiff failed
to prove his claims on any measure of persuasive evidence.
In
ESSO STANDARD (PTY) LTD VS KATZ 1981(1) SA 964 (A) at 969-970,
Diemont JA with reliance on DE VILLIERS J IN LAZARUS V RAND STEAM
LAUNDRIES (1946) (PTY) LTD 1952(3) SA49 (T) held that:-
"It
has long been accepted that in some types of cases damages are
difficult to estimate and the fact that they cannot be assessed with
certainly or precision will not relieve the wrongdoer of the
necessity of paying damages for his breach of duty.... Not only is
the principle not a novel one but the English precedents which have
given some guidance on the problem have gone so far as to hold that
the court is doing the best it can with insufficient material may
have to form conclusions on matters on which there is no evidence and
to make allowance for contingencies even to the extent of a pure
guess.... Whether or not a plaintiff should be non-suited depends on
whether he had adduced all the evidence reasonably available to him
at the trial...".
I
am fully aware of these principles, and do not expect plaintiff to
prove the last cent what it claimed for. I am also conscious of Mr.
Mkhaliphi's evidence pertaining to the difficulties he had to get his
business papers from the locked premises, but also that he did not
seek an order compelling the Council of Churches to make it available
for purposes of the trial, if it would have helped his case. The
issue of mitigating his losses has also not been explored, most
likely due to the lack of evidence already mentioned. I do not find
that the plaintiff has adduced the evidence that is available to it.
A private company is by law compelled to have audited books of
account. Various other forms of evidence has also not been adduced.
Thus, the best evidence available has not been adduced, and
accordingly the plaintiff is nonsuited.
In
all, it cannot be found that plaintiff adduced proper proof of its
damages, showing such damages to be attributable to defendant's
15
conduct
in the closure of the leased premises. In these particular
circumstances, absolution of the instance in respect of prayers 1,2
and 3 of plaintiff's claim is ordered.
It
is further ordered that plaintiff's claim in respect of prayer 6 is
to succeed, and defendant is ordered to restore to Plaintiff's
possession all the items mentioned in Schedule "A"
(exhibits A1 and A2) forthwith.
Defendants
counterclaim succeeds to the extent of E19 757.12, with interest as
claimed.
Concerning
the issue of costs, Mr. Shabangu wanted it to be ordered on an
attorney client scale. I do not agree, especially so in view of the
outcome of the matter.
In
the event, with each litigant succeeding to some extent, the fairest
order would be that each party is to pay its own costs.
J.P.
ANNANDALE
Judge
