Goldenmillion Engineering (Pvt) Ltd v Mettalon Gold Zimbabwe (Pvt) Ltd

The plaintiff, a mining equipment supplier, sued the defendant, a mining conglomerate operating five gold mines in Zimbabwe, for payment of US$325,119.65 for electrical goods sold and delivered between 20 August 2009 and 12 December 2011. The parties had a ten-year mutually beneficial working relationship. The defendant paid for some supplies but withheld payment for others, claiming non-receipt of some goods and that certain mixers supplied were defective and failed to perform to expectation. The goods were delivered to four mines: Shamva Gold Mine (US$78,485.61), How Gold Mine (US$245,467.82), Redwing Gold Mine (US$626.96), and Mazowe Gold Mine (US$36,184.02). The defendant contested the claim, denying receipt of most goods and alleging the plaintiff failed to provide proper summaries of goods delivered. The defendant also sought set-off for defective equipment and undelivered pre-paid items including a motor control centre and six variable speed drives.

• Whether the defendant was indebted to the plaintiff in the sum claimed or any other sum
• Whether the defendant received all goods forming the subject of the plaintiff's claim
• Whether due and proper demand for payment was made to the defendant prior to issue of summons
• Whether the defendant was entitled to set-off against the claim for defective equipment
• Whether the defendant had repudiated or cancelled the contract for non-delivered pre-paid equipment

Judgment for the plaintiff. The defendant ordered to pay: (a) US$301,342.73 being the value of goods supplied; (b) interest at 5% per annum from date of service of summons to date of payment in full; (c) costs of suit.

Set-off or compensatio under common law requires mutual debts that are both liquidated and fully due, and must be pleaded and proved by the party raising it as a defence. A contract is not repudiated unless clear and unequivocal notice of cancellation is communicated to the other party. When no time for performance is fixed in a contract, a debtor must be placed in mora through proper demand before the creditor can cancel for non-performance. A purchaser who discovers defective goods has a reasonable time to elect whether to reject them or keep them and claim price reduction; failure to reject within reasonable time results in loss of the right to reject, though not necessarily the right to claim price reduction. Where a purchaser elects to retain defective goods and seek repairs under warranty rather than rejection, this constitutes loss of the right to repudiate the contract of sale.

The court observed that in exercising its discretion under Mtuda v Ndudzo 2001 (1) ZLR 710 (H), it may stray beyond the pleadings to determine the real issue between parties that has been fully ventilated at trial, where no prejudice results to the opposing party. The court noted the principle of reciprocity ("what is good for the goose must be good for the gander") in considering both the plaintiff's unpleaded increased claims and the defendant's unpleaded set-off defence, as both were fully ventilated. The court made factual observations about the reliability of the defendant's witnesses, finding contradictions between their documentary reports and oral testimony regarding the delivery and fate of the Mazowe mixers. The court also noted that the dispute over whether mixer failures were mechanical (latent defects) versus operational (failure to follow procedures) was resolved in favour of operational causes based on expert evidence, though the defendant failed to establish this was the basis for any remedy in any event.

This case clarifies important principles in Zimbabwean commercial law regarding: (1) the requirements for pleading and proving set-off under common law compensatio, requiring mutual liquidated debts that are fully due; (2) the necessity of placing a party in mora and giving clear notice of cancellation before repudiating a contract; (3) the loss of right to reject defective goods when a purchaser elects to retain them and seek repairs; (4) the court's discretion to determine issues fully ventilated at trial even if not properly pleaded, where no prejudice results; (5) the evidentiary value of delivery notes, purchase orders and reconciliation accounts in proving commercial debts; and (6) the requirements for a proper letter of demand before legal action. The case also demonstrates the importance of properly appropriating payments in ongoing commercial relationships and the burden of proof required to establish defences of set-off and repudiation.