Lin Ou v Lenny Dziviro

### Preamble
1
HH 501-18
HC 4485/16
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LIN OU

versus

LENNY DZIVIRO

HIGH COURT OF ZIMBABWE

CHAREWA J

HARARE, 7 June 2018 & 29 August 2018

Trial

J Muhonde, for the plaintiff

Mrs G Tavenhave, for the defendant

CHAREWA J: One Jianqiang Jheng issued out summons against the defendant on 3 May 2016 claiming $17 204 being arrear rentals for certain mining equipment leased to the defendant under an agreement dated 8 December 2013 and extending to 8 January 2014. Plaintiff alleged that defendant did not relinquish the mining equipment after the termination of the agreement and is liable for holding over damages at the rate of $700 per month, interest at the prescribed rate, collection commission and legal practitioner and client costs.

The defendant denied entering into any lease with Jianqiang Jheng, but that his agreement was with Sydstar Mine. Further, such agreement did not envisage any fixed rental and in any case, the lease agreement was extended beyond January 2014 such that holding over damages at $700 a month are unjustified. In any event, he paid the rental in ore, and any outstanding payments are because plaintiff frustrated his deliveries of ore to Sydstar.

On 8 May 2017, the summons was amended by consent to substitute Jianqiang Jhendg with Lin Ou. This was because Jianqiang Jheng had ceded his rights in the action to Lin Ou. Consequently, defendant filed an amended plea which added the defence that plaintiff holds defendant’s ore as confirmed by Zvishavane Magistrates Court in case number 154/15. He therefore defendant counterclaimed for $40 000 as the value of this gold ore.

The issues

The matter was referred to trial on the following issues:

Whether or not there is a lease agreement between the parties

Whether or not the defendant is indebted to the plaintiff in the sum of $5 514 being arrears for mercury, transport and milling under the lease agreement which terminated on 8 January 2014.

Whether or not the defendant is liable to pay to the plaintiff holding over damages for possession of mining equipment at the rate of $700 a month from 9 January 2014 to date of delivery.

Whether or not the defendant is liable to pay arrear rentals in the sum of $3 290 for lease of plaintiff’s compressor from 8 December 2013 to 5 January 2015.

Whether or not the defendant is liable to pay arrear rentals in the sum of $8 400 for lease of plaintiff’s compressor from 8 January 2015 to 8 February 2016.

Whether or not plaintiff is holding defendant’s gold ore amounting to 70 tonnes.

Whether or not plaintiff is liable to pay an amount of $40 000 claimed by the defendant as value for the 70 tonnes of gold ore.

Whether or not defendant should be ordered to pay costs on the legal practitioner and client scale.

Plaintiff’s case

The, plaintiff, Lin Ou, gave evidence on his own behalf. As a party who obtained his rights to the claim through a notarial deed of cession entered into on 6 April 2017, he obviously was not present nor had first-hand knowledge of what transpired before the claim was ceded to him. However, he testified that he was aware of the relationship between the defendant and cessionary from the cession agreement, the accounts handed to him by the cessionary, the lease agreement and subsequent knowledge he gained after the cession agreement.

He testified that Clause 2 of the lease agreement informed him of the equipment in issue, which equipment defendant still possesses to date. The lease agreement expired on 8 January 2014 and in terms of the lease agreement the equipment was returnable upon expiry of the agreement. The rental in terms of the lease is $700 per month and as at 8 January 2014, $17 204 was outstanding. Nothing has been paid since then to his knowledge.

The plaintiff asserted that the rental was fixed and there was never any oral agreement to extend the lease. He further denied processing any gold ore from defending or to be still holding any ore on defendant’s behalf.

The lease agreement was entered into the record by consent as Exhibit 1. The equipment listed in clause 2 therein is itemised as one compressor, one jack hammer, one air leg, one hose pipe, one drill stick and one drill bit. The notarial deed of cession was also entered into the record by consent as Exhibit 2.

Under cross examination, the witness confirmed that he only knows the defendant from the time of the cession agreement. He also confirmed that from Clause 7.2 of the lease agreement fixes the rent for the equipment at $700 per month. He testified that he never received any rental from the defendant, nor was he handed any proof of previous payments by the cessionary.

The witness confirmed that there was no other agreement beside the lease agreement and that upon its expiry defendant was requested to return the equipment failed to do so. He confirmed that this testimony is made from what he was told which he believed. He however confirmed that he was not told everything including the case instituted by the defendant at Zvishavane Magistrates Court. Or that there may have been an oral extension of the lease agreement.

Defence case

The defendant testified that he had a relationship with cessionary long before the lease agreement was entered into as he used to take his gold ore for milling at Sydstar Mine. He confirmed the lease agreement and that he leased the items listed therein. He asserted that he paid $60 before the delivery of the compressor and $700 after the compresser was delivered and successfully tested. Thereafter he paid $450 until the conclusion of his case at Zvishavane Magistrates’ Court. He averred that the initial rental was indeed $700 but more loads meant a reduction of rental. His rental was therefore $450 because he was supplying more than 8 loads. He averred that had he failed to pay, the equipment would have been repossessed.

The witness testified that at the expiration of the lease the cessionary advised him to continue using the compressor on condition that he kept supplying not less than 8 loads of gold ore to Sydstar Mine. He however confirmed that he refused to surrender the equipment when he was asked to do so by persons he alleges were not party to the lease agreement and on a date he could not remember.

He stated that venture was so productive that the cessionary’s son, one Alex proposed a joint venture by which the cessionary took over one of his mine shafts. As a result he sought clarification on the leased equipment which he was then allowed to continue using on the same terms. However, he testified than when he delivered his ore for milling the cessionary refused, whereupon he obtained the order from Zvishavane Magistrates Court for the cessionary to continue milling his ore. Cessionary defied the court order, but when he sought to retrieve his ore some of it was missing to the value of $40 000.

Under cross examination, the defendant confirmed that Sydstar Mine was not relevant to the claim or the lease which was between him and Jianqiang Jheng. He also admitted that the alleged oral agreement to extend the lease agreement was with Alex, and not the lessor. And the payments he made of $450 in rental where made to a Chinese woman whose name he does not know. He however confirmed that he never made any payment to the Lessor Jianqiang Jheng or to the current plaintiff Lin Ou.

The witness could not recall when he obtained the purported order in his favour from Zvishavane Magistrates’ Court but put it as between 2015 and 2017. He claimed that the order allowed him to take his gold ore after obtaining permission from Jianqiang Jheng. He failed to produce such Court order even though this matter has been before this court since 2016.

He further testified that he decided not to enforce such order and instead await the decision of the court in this case. When asked for the proof of the valuation of his ore, he claimed a document exists which he gave to his legal practitioner, which the legal practitioner denied, but which he has not put before the court.

Analysis

Is there a lease agreement between the parties?

I presume this issue seeks to confirm whether a lease agreement still subsists between the parties given that defendant alleges an extension of the original lease. It is evident from the wording of issue 2 that the parties entered into a lease agreement for mining equipment which agreement expired on 8 January 2014.

I also take note that in paragraph 7 of his founding affidavit in Zvishavane Magistrates Court case number 154/15, defendant submits that the lease agreement expired. He does not allege any extension thereof. Clearly therefore, issue one is redundant. Once the parties agree that the lease agreement terminated on 8 January 2014, a better elucidation of the issues for trial would have eliminated issue 1. One cannot extend something that has already terminated as it no longer exists.

Besides, the question of extension of the lease agreement does not even arise and I will dismiss it out of hand because the defendant alleges that he orally extended the contract with one Alex, not the lessor. He did not even aver that the said Alex was acting as the lessor’s agent. Nor does it make sense that defendant would give up a productive mine shaft to plaintiff, per his testimony, and still be made to continue to pay rental on mining equipment on the original terms. I find this as improbable as to raise questions as to credibility of the defendant.

There is therefore no lease agreement between the parties.

Whether or not the defendant is indebted to the plaintiff in the sum of $5 514 being arrears for mercury, transport and milling under the lease agreement which terminated on 8 January 2014, $3 290 for lease of plaintiff’s compressor from 8 December 2013 to 5 January 2015, and $8 400 for lease of plaintiff’s compressor from 8 January 2015 to 8 February 2016.

I cannot even fathom why a consolidated claim for $ 17 204 for arrears was broken down into its composite parts to create three issues. I will therefore deal with issues 2, 4 and 5 as one issue: whether or not defendant is liable to plaintiff for arrears for rent, supplies and services in the amount of $17 204.

There is no serious dispute that the lease agreement was entered into between defendant and Jianquiang Jheng. Defendant himself asserted this truth which was accepted by the court in Magistrate Court Case number 398/15. Nor is there any dispute that defendant, to this day, is still in possession of the plaintiff’s mining equipment, the subject of the lease agreement.

Further, the terms of the lease agreement by which he came into possession of the equipment, particularly clause 7 thereof, are common cause: he was expected to pay $700 per month as rental. However, in the first instance, he was expected to pay $350 in advance after the signing of the agreement. Five days before the end of the calendar month he was expected to pay $700. Before the equipment was moved on to site, he was expected to pay $60.

Thereafter, if the defendant maintained a supply of not less than six loads for a period of ten months, the rent would be reduced to $500. However, as long the grade of his ore was 3g/t the rental would be reduced by $50 subject to the quantity of loads supplied as follows:

3 loads					$700 per month

4 loads					$650 per month

5 loads					$600 per month

6 loads					$550 per month

7 loads					$500 per month

8 loads	and above			$450 per month

Any failure to adhere to these conditions would result in a withdrawal of the equipment. And upon expiry of the lease, the defendant was obliged to return the equipment in good condition without any damage or loss.

It seems to me that the lease agreement between the parties is quite clear. All the court can do is interpret the terms thereof in light of the actions the parties took to comply therewith. It is not for the court to make a new contract for the parties by allowing extrinsic evidence of other terms to vary, alter or contradict the original agreement between the parties. In that regard, I cannot accept any evidence by the defendant which seeks to bring in matters which are not part of the lease agreement between the parties; to wit, the alleged oral extension of the lease agreed between defendant and Alex, his father and one Mr Mafusire, or defendant’s relationship with Sydstar Mine, in circumstances where the lease agreement was clearly between defendant and Jianquiang Jheng.

By his own admission, defendant paid $60 for the equipment to be delivered on site. This payment was not disputed by plaintiff.

The defendant further claims that after the compressor was tested and working he paid $700. The plaintiff denies that such payment was made. Defendant goes on to state that he has been paying $450 every month because he has consistently delivered more than eight loads of ore per month. However, plaintiff proffers no proof whatsoever of any deliveries in excess of eight loads. Further, this payment of $450 per month, defendant testifies, was not paid to the lessor, but to a Chinese woman whose name defendant did not know. No receipts were produced by defendant to prove any of the disputed payments. The lease agreement having been a personal arrangement between him and plaintiff, it is not clear why he made payment to an unidentified Chinese woman. He did not allege that such woman was the agent of plaintiff or in the employ of plaintiff.

In the face of plaintiff’s assertion that no rental was paid at all, defendant was obliged to prove such payment which he failed to do. In any event, he clearly did not pay the $350 advance. I find therefore that defendant failed to hurdle the age old elementary principle that he who alleges must prove.

Further, plaintiff did not dispute that it received the supplies and services particularised in the first part of paragraph 6 of the declaration. Ergo, I take it as admitted that defendant received mercury, and was provided with transport and milling services as alleged.

I find there that the defendant is in breach of payment of rental and in the absence of proof of delivery of any ore more than the minimum of 3 loads, ought to be ordered to make of the arrears claimed by the plaintiff.

Whether or not the defendant is liable to pay to the plaintiff holding over damages for possession of mining equipment at the rate of $700 a month from 9 January 2014 to date of delivery.

I have great difficulty with the formulation of this claim which is extremely clumsy and inelegant. The summons claims holding over damages in the amount of $700 per month from 9 February 2014 (I take the reference to 9 February 2014 to be a typing error: the contract terminating on 8 January 2014 presupposes that plaintiff intended to say 9 January 2014) to date of return of equipment or payment in full, whichever occurs first. This position is echoed in paragraphs 3-5 of the declaration. However, paragraphs 6-8 of the declaration then go on to claim arrear payments up to 5 January 2015 for mercury transport milling hours and 8 February 2016 for arrear rentals of the compressor. Clearly this cannot be right. If arrear rentals are claimed up to 2016, then holding over damages cannot commence to accrue in 2014. The lease agreement pertains to mining equipment not transport, mercury or milling hours. The proper position therefore is that, plaintiff having already calculated the arrear rentals at $700 per month up to 7 February 2016, holding over damages at $700 per month are only claimable on rental arrears for the mining equipment from 8 February 2016. Further, plaintiff having demanded its equipment back, the prayer ought to have been for holding over damages until the date of delivery of the equipment.

Both parties do not seem to have noticed this anomaly. However, having already concluded that defendant is liable for rentals as claimed, it goes without saying that as long as he holds on to plaintiff’s equipment defendant ought to pay holding over damages. Such damages, in my view, are calculable from 8 February 2016 until the date the defendant returns the plaintiff’s equipment.

Whether or not plaintiff is holding defendant’s gold ore amounting to 70 tonnes, and if so whether or not plaintiff is liable to pay an amount of $40 000 claimed by the defendant as value for the 70 tonnes of gold ore.

Issue 6 and 7 are essentially one, as appears from my reformulation above. I have already commented on the failure of the defendant to produce any proof whatsoever of ore that he delivered. While he claims that 70 tons of his gold ore are held by plaintiff, defendant has not traversed any evidence at all of the dates and amounts of ore he delivered as against the ore that was milled in order to arrive at the amount of ore which remained with plaintiff. He has proffered no documentary evidence or witness’s testimony in support of his claim. The end result is that the court must weigh his evidence against the plaintiff’s. In circumstances were defendant has already stretched my credulity in other respects of his testimony, I am inclined to believe the plaintiff’s version, which is well documented.

Consequently, any claim for the value of an unproven tonnage of ore cannot stand. Besides, while the defendant claimed to have given the valuation report of his ore to his legal practitioner, the practitioner in question took the unprecedented step of denying, from the bar, her client’s averments. Ergo, there is no ore that is being held by the plaintiff, or if it is there, its value is unknown.

While the defendant’s evidence with regard to his court case against plaintiff was unsatisfactory, the court takes note and is grateful to the plaintiff for availing the relevant records in its bundle of documents. However, save to confirm that a certain company called Camlark Investments sued the defendant in Magistrate Court Case Number 398/15 claiming $ 48 802 and the return of the equipment, the subject of the lease agreement between the plaintiff and defendant, this does not take the defendant’s case further. In particular, the court correctly ruled, at the defendant’s instance, that the lease agreement was between defendant and Jianqiang Jheng, and thus the company had no locus standi.

Further, the order by Zvishavane Magistrate Court in case number 154/15 was to the effect that Sydstar Mine should not interfere with defendant’s mining activities or hold onto his ore. In the interim, Sydstar mine was ordered not to prevent defendant from carrying away his ore, and if it did the police were empowered to detain Sydstar’s Manager and Jianqiang Jheng. And contrary to defendant’s assertion, the court order did not require him to obtain Jianqiang Jheng permission to take his ore to another mill other than Sydstar. There is therefore absolutely no reason for defendant to be claiming, three years later that he has not enforced that order if indeed he had ore at Sydstar Mine’s mill, or for failing take appropriate measures to recover his ore there and then.

Therefore I find that the defendant’s claim to 70 tonnes of gold ore valued at $40 000 is unfounded.

Whether or not defendant should be ordered to pay costs on the legal practitioner and client scale.

Plaintiff claims that this is a case which ought to have been settled, thus saving the plaintiff unnecessary costs and wasting the court’s time. In particular, the plaintiff alleges that the defendant did not pursue its counterclaim at all and offered no shred of proof for its defence to plaintiff’s claim. For these reasons, defendant ought to be punished with costs on the higher scale.

It is trite that costs are in the discretion of the court. Costs on the higher scale are punitive and should not be lightly granted except where the conduct of the litigant is reprehensible, or frivolous and vexatious. I am not certain that the defendant falls into this class. My assessment of the defendant’s case is rather that it suffered from inadequate preparation and perhaps incompetence of the legal practitioner, the consequences of which I am loth to visit on the defendant. For instance, how else can one explain how three years after the institution of the matter, there was no valuation of defendant’s ore alleged to have been held by plaintiff, or that there was no documentation at all supporting the rental payments or gold ore deliveries made to plaintiff by defendant. I would have thought that a conscientious lawyer would have immediately, upon being given instructions by defendant in 2016, have advised him to ascertain the identity of the person he made rental payments to, or that he compile all his records pertaining to his mining activities. The same criticism applies to the manner in which the counterclaim was dealt with in the defendant’s evidence in chief.

In the circumstances, I will let costs follow the result and on the ordinary scale.

Disposition

Accordingly, the plaintiff’s claim is allowed as follows:

The defendant shall pay to the plaintiff the sum of $17 204 and interest thereon at the prescribed rate from the 8th of January 2014 to date of full and final payment.

The defendant shall pay to the plaintiff holding over damages at the rate of $700 per month from 8th February 2016 to date of delivery of plaintiff’s mining equipment.

The defendant’s counterclaim is dismissed

The defendant shall pay costs of suit

Muhonde Attorneys, plaintiff’s legal practitioners

Messrs Tavenhave & Machingauta, Defendant’s legal practitioners