Zimbabwe Reinsurance Company Limited v Mohammed A. K. Ramjan and Beltchley Trading (Pvt) Limited

On 19 March 2003, plaintiff (Zimbabwe Reinsurance Company Limited) contracted with defendants to supply two Mercedes Benz C200 Kompressor vehicles for $170,000. The vehicles were to be second hand and delivered within three weeks. Plaintiff made full payment. Upon visiting South Africa to inspect the vehicles, the first defendant was not satisfied with their condition. After communication, parties agreed plaintiff would opt for new vehicles with prices to be finalized upon delivery. Defendants purchased new vehicles which were driven to Beitbridge Border Post for clearance. The clearing agents (Speedlink) acted outside their mandate by trying to clear the vehicles through an unauthorized clerk, resulting in the vehicles being seized and eventually forfeited to the State. Defendants had surrendered their Ferrari motor vehicle to plaintiff as security for the $170,000, with a cession agreement allowing plaintiff to sell it if defendants failed to deliver. Despite several meetings between parties trying to resolve the seizure issue, defendants failed to deliver the vehicles. Plaintiff issued summons two years later. By the time of trial, defendants had made full refund of the purchase price plus interest, leaving only the issue of damages to be determined.

• Whether defendants breached their contractual obligation to supply the motor vehicles
• Whether plaintiff suffered damages as a result of the breach and if so, the quantum of such damages
• Whether the damages should be assessed based on the cost of new or second-hand vehicles
• Whether plaintiff failed to mitigate its loss by not selling the Ferrari held as security
• Whether the US$15,000 allegedly paid by defendants for new vehicles should reduce the damages claim

1. Defendants shall pay plaintiff damages in the sum of US$94,654.00 less the price of the two Mercedes Benz at the time of breach of the contract. 2. Interest at the rate of interest applicable in the United States of America. 3. Cost of suit.

In a breach of contract claim for damages: (1) the wronged party is entitled to damages that place them in the position they would have been had the contract been properly performed (citing Pamire & Ors vs Dumbutshena & Anor 2001 (1) ZLR 123); (2) damages are assessed at the time of breach; (3) where parties agreed to vary the contract from second-hand to new goods, and the new goods could not be delivered due to breach, damages may be assessed based on the cost of new goods where the original second-hand goods were substantially similar to new (minimal usage); (4) the onus is on the defendant to prove that plaintiff failed to take reasonable steps to mitigate damages; and (5) a plaintiff does not fail to mitigate where: (a) parties were actively working together to resolve the breach, (b) there was no market for the security held, and (c) practical impediments (such as lack of keys) prevented disposal of security.

The court observed that the usage of 3,500km and 6,500km on the originally contracted vehicles was "negligible" even for the class of vehicle in question, making those vehicles "substantially new." The court also made observations about the credibility of the defendants' claim regarding the US$15,000 payment, noting that the failure to produce receipts and the raising of this issue only at trial (not in pleadings) cast doubt on its veracity. The court noted that if the payment had been made, it would have been easy to produce receipts. The court also commented that the defendants' breach was caused by their agents acting outside their mandate, though this did not relieve defendants of liability.

This case is significant in Zimbabwean contract law for affirming established principles on assessment of contractual damages, particularly: (1) the principle that damages should restore the wronged party to the position they would have been in had the contract been performed; (2) that damages are assessed at the time of breach; (3) the application of the duty to mitigate loss in the context of secured transactions; (4) the onus on the defendant to prove failure to mitigate; and (5) the approach to valuing damages where parties agreed to substitute performance (changing from second-hand to new vehicles). The case also illustrates the court's approach to claims raised for the first time at trial without supporting documentary evidence.