Crest Poultry Group (Private) Limited (t/a Hubbard Zimbabwe) v Godwills Masimirembwa

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CREST POULTRY GROUP (PRIVATE) LIMITED
(t/a HUBBARD ZIMBABWE)
versus
GODWILLS MASIMIREMBWA

HIGH COURT OF ZIMBABWE
PATEL J

Civil Trial

HARARE, 12 to 14 October 2010 and 18 January 2011

M.C. Mukome, for the plaintiff
M. Kamdefwere, for the defendant



       PATEL J:     The plaintiff claims a total sum US$14,875 being the

balance due in respect of two batches of broiler chicks delivered to the

defendant in October 2008 and February 2009. The defendant disputes

the principal claim on several grounds and counterclaims damages in

reconvention for the payment of US$9,331 in addition to set-off of the

total amount claimed by the plaintiff.


Evidence for the Plaintiff

       Dr. Hope Tariro Pachena is presently the Managing Director of

Hubbard Zimbabwe. He testified as follows. The plaintiff obtained a

licence from the Reserve Bank of Zimbabwe to trade in foreign currency

as from the 26th of September 2008 [Exhibit 4]. On the 30 th of October

2008, the plaintiff supplied 15,000 broiler chicks to the defendant for

US$7,875 [Exhibit 1] and, on the 21 st of February 2009, it supplied a

further 10,000 chicks for US$7,500 [Exhibit 2]. In January 2009, the

plaintiff paid a sum of US$500 in respect of the first batch [Exhibit 3].

Since then, the defendant has refused to pay the balances outstanding

on both batches, citing poor quality in respect of the second batch.
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      Soon after the second batch was delivered, on the 26 th of February,

the plaintiff sent its technical specialist (Munyaradzi Nyambiya) to the

defendant’s farm. The specialist, who has since left the plaintiff’s service,

compiled a technical visit report, dated the 4 th of March 2009 [Exhibit 5].

The witness admitted that the date of the visit and the date of the report,

as they appear on the report, are incorrect. According to this report,

there was inadequate equipment and heating as well as other

deficiencies in the defendant’s chicken runs. There were signs of

dehydration, yolk sac infection and physical deformities among the

chicks. Yolk sac infection normally occurs within one week after birth. It

could occur either at the plaintiff’s hatchery or at the customer’s farm.

The second batch was delivered a day after the chicks were born. The

mortality rate in this case was abnormally high and those chicks that

survived   showed    poor    growth.   This   was   attributable    to   poor

management on the farm. No problems were encountered with the

batches delivered to other customers on the same day.

      Under cross-examination, the witness explained that at the

material time he was based at the plaintiff’s subsidiary company in South

Africa. He was therefore not aware of the specific or special terms

relating to the plaintiff’s contracts with the defendant. He accepted the

possibility that, because the defendant was a long standing customer,

the plaintiff might have delivered the second batch to enable him to

recover his losses on the first batch. He also conceded that Exhibit 5 was

not signed by the technical specialist or by the defendant as having been

received by him or any of his employees. He could not explain the dating

errors on the report or the absence of its author’s signature. He was also

unable to explain why the report was not mentioned in the plaintiff’s Plea

in Reconvention. With reference to the plaintiff’s Flex Broiler Chart
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[Exhibit 6], this shows an undressed weight of 2.4 kg at 42 days and 2.9

kg at 49 days. Ideally, retailers should sell the chicks at 42 days. There is

an implied warranty that the genetic potential or weights stated in the

chart will be achieved, but this is subject to the disclaimer clause at the

bottom of the chart relative to differing conditions. He acknowledged

that the plaintiff had received the defendant’s letter of the 25 th of March

2009 regarding the high mortality rate in the second batch [Exhibit 7].

The plaintiff did not respond to it because the chicks were already four

weeks old. As regards the defendant’s letter of the 23 rd of April 2009

stating the extent of the damage suffered by the defendant [Exhibit 8],

the witness was not certain that it had been received by the plaintiff.


Evidence for the Defendant

      Godwills Masimirembwa, the defendant, testified as follows. He

has been doing business with the plaintiff on his farm since 2004. He

purchased the first batch of chicks from the plaintiff in October 2008 in

anticipation of being licensed to trade in foreign currency. The plaintiff

was aware of this. It was verbally agreed that he would obtain the batch

on credit and would pay the plaintiff in foreign currency from the

proceeds of sale. He failed to obtain the requisite licence from the

Reserve Bank of Zimbabwe. He then acquired the second batch in

February 2009 also on credit, having agreed with the then Managing

Director of the plaintiff that he would pay for both batches in foreign

currency from the proceeds of sale of the second batch.

      The second batch was defective with a very high mortality rate of

1702 chicks from the 21st of February to the 22nd of March (as shown on

the table attached to Exhibit 7). He told his Manager to take a sample of

dead chicks to the plaintiff for veterinary examination. On the 2 nd of

March, the plaintiff’s technical representative (Nyambiya) came to the
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farm and said that there was a hatchery problem due to yolk sac

infection. He advised the Manager to treat the surviving chicks with

Teranox but, despite his advice having been followed, the high mortality

rate continued. The Manager then sent the letter of the 25 th of March

[Exhibit 7] to the plaintiff.

       The defendant’s farm has standard poultry runs and the plaintiff

has over the years provided a general support service, including

veterinary examination and technical advice on the set-up of equipment.

The farm has the capacity to manage about 50,000 chicks, but the full

capacity has never been used. According to the defendant, the contents

of Exhibit 5 are completely untrue and he never received this report. It

was probably created after Nyambuya had left the plaintiff’s service. If it

did exist, the plaintiff would have responded to Exhibit 7 with a copy of

the report. On the 23rd of April, after the remainder of the second batch

had been slaughtered, the defendant wrote to the plaintiff detailing his

loss and claiming compensation [Exhibits 8 and 9].

       As a rule, the defendant slaughters his chicks at 49 days, not at 42

days, in order to meet his market for larger chickens. The computation of

the defendant’s loss appears from Exhibit 9. A total of 5700 chicks were

slaughtered at the abattoir of Fathson Enterprises between the 15 th and

17th of April with a yield of 6040 kg [Exhibit 10]. The remaining 957

smaller chicks were slaughtered at the farm and yielded 300 kg. The

selling price of US$2.70 per kg was the retail price prevailing at that time.

       The plaintiff supplied Exhibit 6 when the defendant moved from

the Crest breed to the Hubbard breed and said that the stipulated

weights could be achieved under normal conditions. Over the years, the

defendant has duly achieved the weights specified in Exhibit 6. Only the
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February 2009 batch has failed with under-weight chicks and a high

mortality rate.

      Blessing Mashambanaka has been employed as the defendant’s

farm Manager since 2004. He generally corroborated the defendant’s

evidence. He confirmed that he took samples of the dead chicks to the

plaintiff on the 27th of February 2009. He was advised to treat the live

chicks with Teranox but there was still no improvement. The technical

specialist (Nyambiya) came to the farm on the 2 nd of March to inspect the

chicken runs and equipment. He was satisfied with the set-up and said

that the chicks had a problem originating from the plaintiff’s hatchery.

Nyambiya undertook to write a report but the witness never received any

report from Nyambiya or from anyone else employed by the plaintiff. He

had not seen Exhibit 5 before the trial and its contents are not truthful

and contrary to what Nyambiya actually said. He wrote Exhibit 7 to the

plaintiff on the 25th of March but did not receive any written or verbal

response to his letter.

      Between 2008 and 2010, the witness handled 10 other batches of

Hubbard chicks supplied by the plaintiff. He encountered no problems

with any of these batches and achieved optimal weights from them, plus

or minus 0.5 kg. He only had a problem with the batch supplied in

February 2009, even though he gave the proper quality and amount of

feed to the chicks. Acting on Nyambiya’s advice, he took full measures to

save and enlarge the chicks. The total mortality figure in that batch was

3343 and the defendant lost about 9 tons of feed on the dead chicks (as

shown on Exhibits 8 and 9). He normally slaughters the chicks at 42 days

(and not 49 days as stated by the defendant). The faulty batch was

slaughtered at 56 days at Fathson Enterprises and at the farm. The retail
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price prevailing at that time ranged between US$2.70 and US$3.00 per

kg. The defendant sells his chicks within that price range.


Findings

      The parties have been in business with each other from 2004 to

2010. In October 2008 and February 2009 they concluded two contracts

for the sale of 15,000 and 10,000 chicks respectively. The chicks were duly

delivered on credit and were to be paid for in foreign currency in terms of

the applicable exchange control laws. Following delivery of the first

batch, the defendant failed to obtain a licence to trade in foreign

currency. It was therefore verbally agreed that he be supplied with the

second batch from the proceeds of which he would pay for both batches

in foreign currency. The defendant paid US$500 towards the first batch

but has thereafter refused to pay the outstanding balances on both

batches because of the excessively high mortality rate experienced on

the second batch.

      After the plaintiff was made aware of the problem encountered

with the second batch, it despatched its technical specialist to the

defendant’s farm. The specialist inspected the defendant’s chicken runs

and equipment and was satisfied with the conditions on the farm. He

accepted that the problem originated at the plaintiff’s hatchery. Despite

his advice on the way forward, the batch continued to suffer from an

abnormal mortality rate and under-weight chicks. The defendant’s

Manager then wrote to the plaintiff but received no written or verbal

response. About two months after the date of delivery, the defendant

had the remainder of the chicks slaughtered and sold. A few days later,

he wrote to the plaintiff claiming compensation for his loss but received

no reply to his claim.
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       At the trial, the plaintiff produced what purported to be its

specialist’s report on his technical visit to the defendant’s farm [Exhibit 5].

The dates shown on this report are admittedly incorrect and nonsensical.

Apart from these obvious anomalies, the report was not signed by the

technical specialist. Equally significantly, the report was never forwarded

to the defendant and was not mentioned at all in the plaintiff’s pleadings.

From this evidence, I am satisfied that Exhibit 5 was not compiled at the

relevant time, but was fabricated by the plaintiff much later in order to

counter the defendant’s claim in reconvention.

       The defendant has adequate capacity and equipment on his farm

to handle circa 50,000 chicks at any given time. The chicks in the second

batch were reared and treated under normal and proper conditions, i.e.

with appropriate equipment and adequate feed. The loss suffered by the

defendant on this batch was not attributable to poor management on his

part but to the hatch problem admitted by the plaintiff’s technical

specialist.


Disposition

       It is indisputably clear that the two contracts in casu were entered

into pursuant to the plaintiff’s licence to trade in foreign currency [Exhibit

4]. I am therefore unable to perceive any sound basis for questioning

their legality under the prevailing exchange control laws or otherwise. It

follows that both contracts were validly concluded and, barring any valid

defence to the plaintiff’s claim, they are legally binding and enforceable.

       Turning to the Flex Broiler Chart, Mr. Mukome submits that the

specifications on the chart do not constitute a warranty, as is explicitly

stipulated in the disclaimer clause in fine, but are simply guidelines to

customers on achieving maximum results. On the other hand, Mr.

Kamdefwere contends that the disclaimer clause should be struck down as
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being unfair in terms of sections 4 and 5 of the Consumer Contracts Act

[Chapter 8:03] as read with paragraphs 2 and 4 of the Schedule to the Act.

      There is no doubt that the disclaimer clause is clear and specific

and relatively unambiguous in its terms and that, as such, it would ex

facie negate any express or implied warranty contained in the chart. See

Agricultural Supply Association v Olivier 1952 (2) SA 661 (T). However, I shall

revert to this issue later. As for the scope of the Consumer Contracts Act,

its provisions are clearly confined to stipulations embodied in consumer

contracts. The term “consumer contract” is defined in section 2 of the Act

as:

            “a contract for the sale or supply of goods or services or
      both, in which the seller or supplier is dealing in the course of
      business and the purchaser or user is not, …”.

      It is abundantly clear that the Act only applies to a contract of sale

where the purchaser is not dealing in the course of business. In the

instant case, there is no doubt whatsoever that both the plaintiff and the

defendant were dealing in the course of business. The defendant was

obviously in the business of retailing chickens for profit and was clearly

not a consumer at the relevant time. It follows that there was no

“consumer contract” within the meaning of the Act and that the

argument for its application in this case is entirely untenable.

      In any event, notwithstanding what I have stated above, I take the

view that the plaintiff cannot rely upon the disclaimer clause in the Flex

Broiler Chart to exonerate itself from liability for the following reasons.

Firstly, the unchallenged evidence of the defendant is that the plaintiff

furnished the chart to the plaintiff with the representation that the

weights stipulated in the chart could be achieved under normal

conditions. This representation was in effect a dictum et promissum, which

was defined in Phame (Pty) Ltd v Paizes 1973 (3) SA 397 (A) at 418 as:
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            “a material statement made by the seller to the buyer during
      the negotiations, bearing on the quality of the res vendita and
      going beyond mere praise and commendation”.

      Secondly, it was not disputed that, between 2008 and 2010, the

defendant obtained 10 other batches of Hubbard chicks from the

plaintiff. No problems were encountered with any of these batches and

optimal weights were achieved from them. Only the batch supplied in

February 2009 failed to achieve as expected, even though the chicks were

given the proper quality and amount of feed. On these facts, by virtue of

the plaintiff’s material representation at the outset, coupled with

contractual usage between the parties over the years, it seems to me that

the genetic potential specified in the chart formed an integral term or

condition of the contract concluded in February 2009. In effect, the

disclaimer contained in the chart was superseded and rendered nugatory

in the contractual relationship between the parties.

      Additionally, quite apart from the chart, every contract of sale

carries an implied warranty of merchantable quality and fitness for the

purpose for which the res vendita is intended to be used, viz. an implied

warranty against latent defects. See Crawley v Frank Pepper (Pty) Ltd 1970

(1) SA 29 (N). In order to invoke the warranty, it is not necessary to prove

that the seller had any knowledge of the defect, so long as the buyer

proves that the defect existed at the time of sale. See Christie: Business

Law in Zimbabwe at pp. 166-167. In the instant case, the evidence shows

that the chicks in the second batch were infected and deformed ab initio,

before they were delivered to the defendant. This in itself constituted a

fundamental breach of contract, over and above any failure to achieve

the genetic potential delineated in the chart.

      It follows from all of the foregoing that the plaintiff’s claim must be

dismissed and that the defendant’s counterclaim in reconvention must be
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allowed. The defendant is entitled to recover the loss that he incurred on

the second batch. He is further entitled to claim set-off against the sums

outstanding on both batches. What remains is to determine the quantum

of damages due to the defendant.

      Apart from the Fathson tax invoices, the defendant did not

produce any other invoices, receipts or documentary evidence in support

of the figures and calculations set out in Exhibit 9. Nevertheless, his

evidence and that of his witness in this regard was not meaningfully

challenged and remains uncontroverted. I am satisfied that it constitutes

a sound and acceptable basis for quantifying the defendant’s claim. See

Ebrahim v Pittman N.O. 1995 (1) ZLR 176 (H) at 187-188.

      The only aspect that I would modify is the appropriate date for

slaughter under normal conditions. Having regard to the testimony of

Pachena and Mashambanaka, which is contrary to that of the defendant,

I am inclined to adopt the optimal date for slaughter as 42 days and not

49 days. On this basis, the defendant’s loss may be computed as follows:


      6657 (chicks) x 2.401 kg (weight at 42 days) = 15983.457 kg x 70%
      (expected dressed weight) = 11188.4199 kg x $2.70 (minimum
      retail price) = $30,208.73 (expected gross income).

      6340 kg (actual dressed weight) x $2.70 (retail price) = $17,118.00
      (actual gross income).

      $30,208.73 (expected gross income) – $17,118.00 (actual gross
      income) = $13.090.73 (loss on slaughtered chicks) + $4,409.22 (loss
      of feed on dead chicks) = $17,499.95 (total loss).

      $17,499.95 (total loss) – $7,500.00 (sum due on second batch) =
      $9,999.95 – $7375.00 (sum owing on first batch) = $2,624.95 (net
      loss).

      As regards costs, the plaintiff’s conduct as a litigant in relation to

the ex post facto concoction of Exhibit 5 is certainly reprehensible. In my
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view, it warrants a punitive award of costs in the particular circumstances

of this case. See Ndlovu v Murandu 1999 (2) ZLR 341 (S) at 350-351.


      In the result, it is ordered that:

      (i)     The plaintiff’s claim be and is hereby dismissed.

      (ii)    The plaintiff shall pay the defendant the sum of US$2,624.95

              (being the loss suffered by the defendant after set-off of the

              sums due to the plaintiff).

      (iii)   The plaintiff shall pay the costs of suit on a legal practitioner

              and client scale.




Muvingi, Mugadza & Mukome, plaintiff’s legal practitioners
Muringi Kamdefwere, defendant’s legal practitioners