Formscaff (Private) Limited v Formal Construction (Private) Limited

In December 2008, the defendant hired scaffolding equipment from the plaintiff for 6 weeks and paid for the hire. The parties had a longstanding business relationship spanning over 17-20 years. Due to this relationship, certain procedures had been relaxed - the defendant was not required to sign a formal agreement or provide a purchase order, and was allowed to collect equipment before payment. The defendant collected the equipment on 15 and 17 December 2008, with its driver signing Hire Advice Notes (HANs) bearing the defendant's name and address. Payment of ZW$40.5 trillion and ZW$37.18 trillion was made on 14 January 2009 by Freddy Chigwida to the plaintiff's cashier, with receipts issued in the defendant's name. The defendant failed to return the equipment after the 6-week hire period expired. The plaintiff eventually recovered some equipment itself in August-September 2009, but certain items remained missing. The defendant claimed it was merely acting as agent for Anchor Yeast (also known as Health and Hygiene Zimbabwe Private Limited), the client for whom it was the main contractor on a factory construction project in Rusape. The plaintiff issued summons in April 2011 claiming US$20,128.60 in unpaid rental balance to 1 April 2010, ongoing rental charges of US$472 per month from 1 May 2010 until return of equipment or payment of replacement value, and US$13,881.01 as replacement value of unreturned equipment.

• Whether the defendant or Anchor Yeast was the party that hired the scaffolding equipment from the plaintiff
• Whether the defendant could escape liability by claiming to have acted as agent for Anchor Yeast
• Whether the plaintiff proved its claim for unpaid rental charges of US$20,128.60
• Whether the plaintiff was entitled to ongoing rental charges (holding over damages) and if so, for what period
• Whether the plaintiff was required to mitigate its damages
• Whether the plaintiff could claim both holding over damages and replacement value of the equipment
• Whether the plaintiff proved its claim for the replacement value of US$13,881.01

1. The defendant shall pay the plaintiff US$20,128.60 being the balance outstanding for scaffolding equipment hired in December 2008; 2. The defendant shall pay the plaintiff US$5,664 being holding over damages; 3. The defendant is absolved from the instance in respect of the plaintiff's claim for US$13,881.01 for replacement value; 4. The defendant shall pay the plaintiff's costs of suit.

1. Where a defendant admits facts alleged in a claim but seeks to avoid their legal consequences by asserting other facts (confession and avoidance), the evidential onus shifts to the defendant to prove those avoidance facts, though the overall onus remains on the plaintiff to prove the case on a balance of probabilities. 2. A party who claims to have acted merely as agent and not as principal must provide clear evidence that it disclosed its agency status to the other contracting party; in the absence of such disclosure, the party will be personally liable on the contract. 3. The principle of holding over damages applies not only to immovable property in landlord-tenant situations but also to hire agreements for movable property. Where a hirer fails to return hired equipment after the hire period expires, the hirer is liable for holding over damages calculated at the previously agreed rental rate until the equipment is returned or its value is paid. 4. The principle of mitigation of damages established in employment law cases such as Ambali v Bata Shoe Co Ltd applies equally to commercial hire situations. A party claiming damages has a duty to take reasonable steps to mitigate its loss. In the context of unreturned hired equipment, this may include replacing the equipment and seeking reimbursement, or expeditiously seeking legal relief rather than allowing rental charges to accumulate indefinitely. 5. Where a plaintiff claims damages that cannot be calculated with mathematical precision, the court must assess damages using the best evidence reasonably available to the plaintiff. However, where the plaintiff has not adduced the best available evidence to establish quantum, absolution from the instance is appropriate even where the principle of entitlement to damages is established.

The court observed that standard terms and conditions printed on the back of transaction documents (in this case HANs) may not be incorporated into a contract if they are only made available after the contract has been concluded and payment made, and where there is no evidence they were brought to the customer's attention. The court also noted that in a longstanding business relationship spanning 17-20 years, it is reasonable and makes business sense for parties to relax certain terms and conditions to accommodate each other, such as allowing collection of equipment before payment despite standard 'cash upfront' terms. The court commented that the title 'Conditions of Sales' on hire agreement terms and conditions was inappropriate for a hire contract, and noted that the printing contained grammatical and spelling errors. The court suggested that the concept of 'holding over damages' is 'probably more readily understood in a landlord and tenant situation in respect of an immovable property' but is equally applicable to movable property hire. The court indicated that a claim for straightforward hire charges 'takes no account of the myriad of other contingent factors such as loss of, or damage to, the equipment, natural wear and tear, and the like', suggesting these factors are relevant when assessing damages claims.

This case is significant for several reasons: (1) It clarifies the law on 'confession and avoidance' defenses and the shifting of the evidential burden of proof in civil cases, applying principles from Pillay v Krishna & Anor 1946 AD 946; (2) It establishes that a party claiming to have acted as agent must provide clear evidence of disclosure of agency to avoid personal liability; (3) It extends the principle of holding over damages beyond the traditional landlord-tenant context to commercial hire agreements for movable property; (4) It applies the mitigation of damages principle from employment law (Ambali v Bata Shoe Co Ltd 1999 (1) ZLR 417 (S)) to commercial hire situations, requiring plaintiffs to take reasonable steps to minimize their losses rather than allowing damages to accumulate indefinitely; (5) It demonstrates that where damages cannot be calculated with mathematical precision but pecuniary loss is certain, courts must assess damages using the best available evidence (applying Hersman v Shapiro & Co 1926 TPD 367 and Esso Standard SA (Pty) Ltd v Katz 1981 (1) SA 964 (AD)); (6) It shows the importance of proper documentation and record-keeping in commercial relationships, even long-standing ones; (7) It illustrates that absolution from the instance is appropriate where a plaintiff has not adduced the best available evidence to prove a claim, while the principle of the claim remains valid.