Chronicle Editor
Sikhulekelani Moyo, [email protected]
THE High Court has ordered seed producers, Credcorp Investments to pay SeedCo Zimbabwe (Pvt) Ltd over US$1 million in damage claims for failing to honour its contractual obligations by violating agreed terms and conditions of a contract entered between the two parties.
The ruling by Harare High Court judge Justice Joseph Mafusire on Tuesday last week follows an application by SeedCo in which it was suing Credcorp Investments for failing to fulfil its obligation.
SeedCo took legal action against Credcorp Investments after the latter breached their agreement for seed production in the 2018/19 season.
Credcorp Investments failed to deliver the contracted seed crops of soya bean, sugar bean, and sorghum grown on its four farms.
According to court papers filed by SeedCo, through its lawyers. Honey and Blanckenberg Legal Practitioners, the plaintiff (SeedCo) sponsored the growing and production of the three seed varieties by various growers.
The seeds were grown on four farms operated by Credcorp. Under its business model, Credcorp supplies farmers with parent seeds and covers the production costs associated with growing new seed crops.
SeedCo funded the full cost of production in anticipation of Credcorp delivering all the new seed to it, but Credcorp, in breach of the agreement, only delivered 44,7 metric tonnes of sugar bean seed and sold the rest to third parties.
According to court papers, the quantity of the seed Credcorp side marketed was 75 metric tonnes (MT) of sorghum, 70 MT of sugar beans and 560 MT of soya beans.
The plaintiff further alleges that at a meeting of the parties on 24 September 2019, it was agreed that the defendant would trace the seed which it had side-marketed. It was also agreed it would repay the production costs plus the cost of some centre pivots. SeedCo admitted that Credcorp paid.
In its application, SeedCo avers that Credcorp at all times was aware that all the seed that it had been contracted to grow would be sold to third parties by the plaintiff.
SeedCo said it had ready markets for the seed in Zimbabwe, Madagascar, Namibia and Mozambique, and argued that by virtue of Credcorp’s actions, it suffered damages and that the defendant should make good those damages, together with costs of suit on the legal practitioner.
In its plea, through its lawyers Samukange Hungwe Attorneys, Credcorp said the compromise was reached at the September meeting.
It argued that in terms of that compromise, among other things, on or before 30 September 2019 the plaintiff was to provide a price for 44Mt of sugar beans delivered and that the defendant was to pay in full the balance of the debt owed by it on or before 15 October 2019.
Credcorp alleges that pursuant to that arrangement, it paid SeedCo an amount in the sum of US$364 265, 62 on 15 October 2019 in full and final settlement of its claim hence the case before the court was bad in law.
Credcorp further alleged that having paid in full the value of the inputs advanced to it by SeedCo, the contractual relationship between the parties had effectively come to an end, and that the claim for damages has no basis at all.
“The seed crop would only be regarded as a commodity which fetches only normal commodity prices. It puts the plaintiff to the strictest proof of all its claims and the defendant seeks dismissal with costs,” argued Credcorp’s lawyers.
Due to Credcorp’s breach of agreement, SeedCo said it incurred financial losses and sought compensation, and Justice Mafusire ruled in its favour.
The judge Justice ordered Credcorp to pay SeedCo US$1,014,483 (or the equivalent in local currency, at the current official exchange rate) with interest accruing at the prescribed rate from the date of judgment until the full amount is paid.
Justice Mafusire also ordered Credcorp to pay the legal costs of the lawsuit.
“The defendant shall pay the plaintiff the sum of US$1 014 483 or the equivalent thereof in local currency at the rate of exchange prevailing at the time of payment, together with interest thereon at the prescribed rate from the date of this judgment to the date of payment in full, plus costs of suit,” he ruled.
Justice Mafusire said Credcorp Investments breached the agreement by engaging in side marketing of the contract seed thereby failing to deliver, hence the defence of compromise having failed, liability cannot be an issue.
“The nature of the damages claimed flowed naturally from the breach. The whole purpose of the contract growers’ agreements is so that the plaintiff has seed for stock and sale to its own markets,” said the judge. – @SikhulekelaniM1.
Online Reporter
Londile Moyo