Nicoz Diamond Insurance Ltd v Clovgate Elevator Company (Pvt) Ltd

In June 2014, one of two Otis Gen 2 elevators at plaintiff Nicoz Diamond Insurance Ltd's building at 30 Samora Machel Avenue, Harare, broke down. The existing service provider, Eleco, failed to repair it. Defendant Clovgate Elevator Company (Pvt) Ltd offered to fix the elevator, claiming to have the expertise, on condition that it also be awarded the service contract. In July 2014, the parties entered into a verbal repair contract whereby defendant would identify and submit quotations for necessary parts, plaintiff would fund the purchases, and defendant would provide labour to be paid upon successful completion of repairs. Defendant submitted quotations for various parts including an inverter board and motor board (US$3,000), then an encoder, none of which resolved the issue. In December 2014, defendant submitted a quotation for an elevator motor, traction belt and guide shoes totaling US$20,662.47, promising delivery within three weeks of payment to their South African account. Payment was made on 21 December 2014. Defendant failed to deliver the parts by the promised date, offering various excuses including Chinese New Year holidays and disputes with shipping agents. After 17 months without delivery or successful repair, plaintiff engaged Global Lifts, which successfully repaired the elevator after plaintiff purchased replacement parts. Global Lifts discovered excess spare parts, signs the motor had been dropped, and that defendant had dismantled the elevator unnecessarily and proceeded by trial and error. Defendant counterclaimed US$10,697.62 for work done.

• What were the terms of the verbal agreement between the parties?
• Did the plaintiff or defendant breach the terms of the agreement?
• If either party is in breach, what remedy is the innocent party entitled to?
• Was the contract one of locatio conductio operis (letting and hiring of work) or a service contract?
• When did payment for labour become due under the verbal agreement?
• Did defendant perform with the requisite skill and diligence?
• Was defendant entitled to payment for incomplete work?

The court ordered: (1) Cancellation of the verbal agreement confirmed; (2) Defendant to pay plaintiff US$20,662.47 (for undelivered parts); (3) Defendant to pay plaintiff US$3,269.45 (for unnecessary spare parts); (4) Defendant to pay plaintiff US$2,700.00 (for Global Lifts' re-assembly costs); (5) Interest on all amounts at 5% per annum from date of summons and counter-claim to date of full payment; (6) Defendant's claim in HC 800/17 dismissed with costs; (7) Defendant to pay plaintiff's costs of suit.

In a verbal contract for repair services constituting locatio conductio operis (letting and hiring of work), where a contractor undertakes to produce a specific result (a functioning elevator), payment for labour is due only upon successful completion of the work and achievement of the agreed result, unless the parties expressly agree otherwise. This principle derives from the essential characteristic of locatio conductio operis that the customer is interested in the result of labour, not the services as such. Trade usage in an industry may be applied to imply terms in a verbal contract. Where a contractor holds itself out as possessing special expertise and skill, it is required to perform with the appropriate skill and diligence expected in terms of the contract. Failure to deliver a result through negligent performance, including proceeding by trial and error rather than proper professional diagnosis, constitutes breach of contract. An innocent party whose rights have been violated is entitled to restitution and restitutionary damages sufficient to restore them to the position as if they had never contracted.

The court observed that the presence of excess functional spare parts at a work site is evidence that a contractor adopted a trial and error approach rather than proper professional diagnosis. The court noted that for the Otis Gen2 elevator model, proper diagnosis requires use of an Otis Test Tool rather than relying on trial and error replacement of components. The court commented that defendant could have claimed greater consequential damages had it been possible to quantify losses from the extended period during which the elevator was non-functional. The court emphasized the importance of calling all available witnesses on material issues, noting that failure to call technicians who performed the work warranted an adverse inference applying principles from R v Phiri 1958 (3) SA 161 (A) and Elgin v Fireclays Limited v Webb 1947 4 SA 744 (A).

This case provides important guidance on the nature and interpretation of verbal contracts in Zimbabwean law, particularly contracts for professional services. It clarifies the distinction between locatio conductio operis (contract for work/independent contractor) and locatio conductio operarum (contract of service/employment), applying Roman-Dutch law principles. The judgment emphasizes that in contracts for work to produce a specific result, payment is generally due only upon successful completion unless otherwise agreed. It demonstrates how courts imply terms in verbal contracts based on trade usage and industry practice. The case also illustrates the application of credibility assessment principles when determining terms of oral agreements, and the availability of restitutionary damages to restore an innocent party to their pre-contractual position following breach. It reinforces professional standards expected of contractors who hold themselves out as possessing special expertise and the consequences of negligent performance.