Registered Trustees of Smallholder Farmers Fertilizer Revolving Fund of Malawi v Ndta Farm (19988) Ltd (3043 of 2000) [2006] MWCommC 1 (01 August 2006);

CIVIL CAUSE NO. 3043 OF 2000





CORAM:   Hon. Justice Katsala
                  Nyirenda, of counsel for the plaintiff

                  Defendant, absent
                  Chuma, official interpreter


Katsala J
The plaintiff claims from the defendant the sum of K164, 00.00 being the price of fertilizer it supplied to the defendant, interest at bank lending rate and costs, including debt collection costs at the rate of 15 % of the amount claimed.
The defendant served a defence to the claim in which it denies owing the plaintiff the alleged sum of money and or interest.
The plaintiff’s evidence is unchallenged. The defendant did not appear at the hearing of the matter despite being duly served with the notice of hearing.
The plaintiff’s case is that on divers dates in the month of December 1996, it supplied to the defendant, at the defendant’s request, CAN and 23:21:0 fertilizers to the total sum of K164, 700.00. The plaintiff has produced copies of invoices which show the quantities and the types of fertilizer supplied. Despite repeated demands, the defendant has failed and or refused to pay for the fertilizer.
In order to put the matter in its proper perspective, it is necessary that I give a brief narration of the history of the matter. At the time that the alleged sale of the fertilizer was made, the defendant was part of a group known as Malawi Dairy Industries (MDI) which was owned by the Government of the Republic of Malawi. It was a public enterprise. Before the debt was paid, the Government decided to privatise MDI. The task was given to the Privatisation Commission (the Commission), a body corporate established under the Public Enterprises (Privatisation) Act 1996. The Commission is the agent of the Government responsible for the implementation of its privatisation polices. The Commission was given the power and authority to negotiate the privatisation of MDI as seven separate units which comprised three dairy manufacturing businesses, three dairy farms and a head office.
By an agreement made between the defendant and the Commission, dated 21st September 1998, the defendant acquired one of the dairy farms known as Ndata Farm. In terms of the sale agreement, it was specifically provided that the defendant acquired the lawful business, assets, liabilities, rights, obligations and operations of Ndata Farm. The fertilizer, the subject matter of the plaintiff’s claim was supplied specifically to Ndata Farm, hence the plaintiff’s claim against the defendant.
The defendant in its defence denies ever buying the alleged fertiliser from the plaintiff. It also denies that it purchased Ndata Farm together with the farm’s liabilities. It alleges that any liabilities of the farm before the sale to the defendant were excluded by the sale agreement.
In response to the issues raised by the defence the plaintiff tendered in evidence the sale agreement between the Commission and the defendant which as I have already said specifically provided that the defendant acquired both assets and liabilities of Ndata Farm. I do not therefore see how the defendant can run away from the plaintiffs claim. In my view the plaintiff’s claim was one of the liabilities of Ndata Farm at the time of its sale to the defendant. Further in a letter dated 8th March 1999 the Commission advised the defendant that in terms of the sale agreement the defendant is responsible for the settlement of debts incurred prior to the handover of the farm. There is therefore no room for escape, as it were.
As said earlier in this judgment the defendant chose not to appear at the hearing of the case. The plaintiff’s evidence therefore goes in unchallenged. However, I have looked at the evidence submitted by the plaintiff and in my judgment, I find that the plaintiff has proved its case. I therefore enter judgment for the plaintiff for the sum of K164, 700.00. On the principles governing the award of compound interest as propounded in Wallesteiner V Moir, [1975] 1All ER 855, Gwembere v Malawi Railways Limited, 9 MLR 369, and Zgambo v Kasungu Flue Cured Tobacco Authority, 12 MLR 311, it is my view that the plaintiffs are entitled to such interest. I therefore award interest to the plaintiffs on the judgment sum at the bank-lending rate with effect from 16th January 1997 until full payment.
On the plaintiffs claim for collection costs, my understanding of the law has always been that such costs are not payable by the debtor where legal proceedings are commenced, see Kankhwangwa and others v Liquidator of Import and Export (Mw) Limited, MSCA Civil Appeal Number 4 of 2003 (unreported). I have not been persuaded to change my understanding. This claim therefore fails.
In my view the plaintiffs should be awarded the costs of this action, and I so order.
Pronounced in open court at Blantyre this 1st day of August 2006.
J. Katsala