On 27 July 1996, the second defendant, whilst driving a vehicle belonging to the third defendant in the course of his employment, collided with a motorcycle belonging to and being ridden by the plaintiff. Liability was not disputed. The plaintiff issued summons on 31 January 1997 claiming damages for personal injuries and repairs to his motorcycle. The personal injury claim was settled. Initially the plaintiff claimed $149,223 for repairs. The parties agreed that the motorcycle would be repaired using second-hand parts. The first defendant (insurer) paid $50,000 for repairs, but the plaintiff was not satisfied with the condition of the motorcycle. The plaintiff returned the motorcycle and amended his claim to $864,429 for the cost of new parts. The first defendant pleaded that the pre-accident value was less than $95,000 but tendered $150,000 for replacement value. The first defendant only filed its plea on 14 March 2002, more than 5 years after summons was issued.
The defendants were ordered jointly and severally (the one paying the other to be absolved) to pay the plaintiff: (1) $864,429 with interest at 30% per annum from the date of the order to the date of payment; (2) costs of suit.
The binding principle is that while the general rule in delict is that damages are assessed at the date of the delict based on the diminution in market value (and cost of repairs cannot exceed pre-accident value), a court may depart from this rule in exceptional circumstances where: (1) there has been inordinate and culpable delay by the defendant in defending the action; (2) there has been extreme hyperinflation that has caused severe erosion in the value of the currency; and (3) the prescribed interest rate is wholly inadequate to compensate for the inflationary loss. In such circumstances, equity requires that damages be assessed at current values to avoid manifest injustice to the plaintiff. The court must balance fairness to both plaintiff and defendant, and where the defendant's delay has contributed to the problem, the plaintiff should not be penalized by receiving damages based on historical values that bear no relationship to current replacement costs.
The court observed that it would be 'grossly inequitable to fix blindly in every case, that the date for assessing damages is the date of the delict.' The court took judicial notice that inflation was officially said to be in excess of 110%, but economists put the figure closer to 160%, while the prescribed rate of interest was only 30%, which was 'nowhere near the rate of inflation.' The court commented that had the first defendant made the offer of $150,000 within a year or two after summons was issued, the court would have accepted that as reasonable, but not in 2002 given the high levels of inflation over the last two years. The court noted that present day values of goods such as motorcycles had 'escalated tremendously since 1996.'
This case is significant in Zimbabwean law as it recognizes an exception to the general rule that delictual damages are assessed at the date of the delict. In circumstances of extreme hyperinflation and unreasonable delay by the defendant in filing a plea, the court held that equity requires damages to be assessed at current values rather than historical values. The case illustrates that while the general principle remains that damages are assessed at the date of the delict (as per Parish v King), courts retain discretion to depart from this rule where strict application would lead to manifest injustice due to economic circumstances beyond the plaintiff's control and culpable delay by the defendant. The case also demonstrates the practical limitations of the prescribed interest rate as adequate compensation when inflation far exceeds the interest rate.