AFJ Television v Airtel Malawi Ltd (47 of 2014) [2015] MWCommC 455 (25 November 2015);

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IN THE HIGH COURT OF MALAWI

COMMERCIAL DIVISION

BLANTYRE REGISTRY

COMMERCIAL CASE NO. 47 OF 2014

 

BETWEEN:

AFJ TELEVISION …………………………………………. ……………………PLAINTIFF

-and-

AIRTEL MALAWI LIMITED ……………...…………………………..………DEFENDANT

 

CORAM

HON. JUSTICE RACHEL SOPHIE SIKWESE

Chijere;of Counsel for the Plaintiff

Kauka;of Counsel for the Defendant

Chirundu; Court Interpreter

 

JUDGMENT

SIKWESE J

 

Introduction

The Plaintiff is a registered company in the business of television broadcasting. Its claim is for the sum of K3 572 000-00 being damages for breach of contract. It also claimed other damages and costs as outlined below. The defendant is a registered company providing telecommunication services. It denied the allegations.

The plaintiff alleged that in July 2012, it hired a shortcode from the defendant at a rate of K190 000-00 to be used in its programs for one year. This contract was allegedly breached by the defendant giving rise to this claim. It was averred that it was an express term of the contract that the plaintiff would be entitled to 30 per cent of any revenue generated from the use of the shortcode. It also averred that it was an implied term of the contact that the shortcode would be fully operational during the contract period. In breach of the contract, the defendant’s shortcode performed erratically.

The plaintiff also claimed that the defendant has not accounted for the revenue that was generated. Consequently the plaintiff has not received its share of the revenue. The particulars of the claims can besummarized as follows: (a) breach of contract occasioning loss of revenue amounting to K3 572000-00, (b) loss of goodwill, (c) damages for loss of goodwill (d) an account of the revenue generated by the defendant and (e) costs of the action.

The plaintiff called one witness to prove itscase, Felix Zalimba, who also happens to be its Chief Executive Officer.He said the shortcode was meant to be used to generate revenue through text messages (sms) for a period of 12 months. During the period no accounts of revenue generated have been remitted to it and the short code operated erratically. In explaining the damage, he said, the plaintiff could not monitor frequency of sms traffic generated through the shortcode. The problem was never rectified until the expiry of the contract.In explaining the arrangement, he said through the short code their viewers would send sms’s to the station. The more sms’sreceived using the shortcode the more revenue generated.

In order to encourage viewers to send more sms’s, the station was running an sms’s competition. Viewers were eligible to win assorted prizes just by sending sms’s. Since the plaintiff could not monitor the flow of sms’s it was not able to announce the winner of the competition. This failure to announce the winner led to loss of goodwill enjoyed so far on the part of the plaintiff.

It was further the plaintiff’s contention that had the shortcode operated as expected for the duration of the contract, it would have generated MK3 572 000-00. The basis of this submission was the flow of text messages on 8 August 2012. It was contended by the plaintiff that on this particular day, the shortcode operated smoothly. The plaintiff was able to monitor sms’s received. It produced a printed list of sms’s which was tendered as FZ10. It contained information relating to actual textsof sms’s received on that day. Based on the computations of those text messages, the plaintiff was able to project that had the short code worked well everyday of the contract it would have given them the revenue as claimed. A summarized analysis of the computation was tendered in a document marked FZ9.

On its part the defendant denied the allegation. It stated that it was not under any contractual obligation to maintain the short code. It said it had an account of the revenue generated and that the plaintiff’s claim must be dismissed. The defendant produced a document D1 being an account representing MK8 784-00 being 30% due to the plaintiff.One witness, Tione Kafumbu, the defendant’s Marketing Officer was called to the stand. In his testimony he conceded the existence of the contract. He also conceded that the defendant received hire feesfor use of the short code. He also agreed with the plaintiff on revenue sharing arrangement. He disputed that the contract run its course. He also disputed the fact that the defendant was responsible for managing the shortcode. In summary he stated that the plaintiff terminated the contract on 26 October 2012. The defendant accepted the termination. Therefore the claim for 12 months is without basis. He further averred that the plaintiff had a management agreement with a third party, Christo Systems (Chris Chalira) whose responsibility was to ensure that the shortcode was operational. In terms of good will the defendant through their counsel reckoned that without particulars of the claim in the pleadings, the plaintiff could not sustain the claim.

Issues, Analysis and the Law

The issuesfor the court’s determination can be summarized as:

Whether there was a contract between the parties, and what were its terms in terms of duration and distribution of revenue?

The facts disclosed that a contract existed between the parties. This issue was not contested. The Court so finds. The plaintiff averred that the contract between the parties was for duration of 12 months. The defendant on the other hand asserted that the contract was subject to termination at any point at the instance of any party communicating such fact of termination to the other party. It seemed to the Court that the defendant was making a case for manner of termination rather than contract period. It is basic law that mode of terminating a contract and duration of a contract are two different terms in a contract and that unless expressly provided a party cannot claim that the two terms meant the same thing. This is basic law which this Court need not belabor itself elaborating especially considering the experience of counsel for the defendant. It is this Court’s finding that the duration of the contract was 12 months.

In terms of distribution of revenue, it was not in dispute that the parties would share revenue in shares of thirty percent for the plaintiff and seventy percent for the defendant. The Court finds that these were the share percentages as agreed by the parties. It is so found.

Whether the plaintiff terminated the contract in October 2012

It was the defendant’s case that the plaintiff terminated the contract on or around 26 October 2012. It was therefore its prayer that the plaintiff’s claim for 12 months’ revenue be dismissed. This argument by the defendant was not supported by evidence. For instance, the written contract was signed by both parties in or around June 2013, way after October 2012. Going by the contract and conduct of the parties, the contract run its course from the date the shortcode became operational on 20 July2012 to 20 July 2013.It is therefore this Court’s finding that the contract was not terminated on 26 October 2012 as alleged by the defendant. It is so found.

Whether any revenue was generated and how much?

It was not in dispute that some revenue was generated. It was a fact that revenue was generated. The bone of contention was the amount of revenue generated and due to the plaintiff for the contract period. It was the defendant’s position that the shortcode generated MK24 437-11 during the period between 1 August and 26 October 2012. Of this amount, MK7 331-13 representing thirty percent was due to the plaintiff. A computation of the revenue was submitted in court as exhibit D1.The defendant did not produce monthly reports for the other months. Therefore until such reports are produced and remitted to the plaintiff for reconciliation the revenue submitted by the defendant is not representative of the intention of the parties as agreed in the contract. It is dismissed.

On the other hand, it was the plaintiff assertion that the revenue generated and due to the plaintiff between July and end of the contract was MK3 572 000-00. In support of this assertion the plaintiff produced and exhibited FZ9. This document was prepared by the plaintiff and among others it contained tabulated information in summary form comprising programmes, time slots, number of sms’s per programme and amount generated per sms.The summary was prepared from another document exhibit FZ10 which was a computer generated print out comprising four columns as follows: a code (FJKTV), date, column with number 2.66E+11 which was not explained by any of the parties and actual text of sms.FZ10reflected three dates; 1 August, 8 August and 6 September 2012. It was the defendant’s contention that these dates reflected the actual dates when the accompanying sms’s were received by the plaintiff using the shortcode.

The plaintiff however averred that FZ10 contained sms’s received on one day, 8 August 2012.Unfortunately the plaintiff was not able to explain the existence or appearance of the two other dates, namely 1 August and 6 September. This anomaly has to be resolved against the plaintiff because in law a party who alleges must prove. It was his duty to explain why dates other than 8 August also appeared on the document. It is the Court’s finding that in actual fact the sms’s were received on 1 August, 8 August and 6 September 2012.

It was further the plaintiff’s case that from FZ9 his station received 750 sms’s per one hour programme.He ofcourse explained how he took into account some marginal errors that could have affected the sms count. It was only after taking into account the marginal errors that he came up with the 750 sms’s to predict his revenue. A closer scrutiny of FZ9 did not support that assertion. This is because it was noted that some sms’s were incomplete. The plaintiff was not able to explain this anomaly or produce full texts of the sms’s. The plaintiff’s witness attributed the anomalies to the erratic or malfunctioning of the shortcode. That being the case, it was strange that he wanted the Court to use the same material obtained from an unreliable (erratic) devicefor his case.

It was rather the defendant’s assertion regarding sms’s per page which seemed more probable. It showed that the printer used by the plaintiff was not properly set to capture and print full text messages per line or lines. As a result some text in the sms’s may have spilled over to a different page thereby creating a duplication of pages per sms. The plaintiff did not explain the number of texts in the sms’s which made no sense.  It is the Court’s finding that the basis for the claim that 750 sms’s were received per programme was not satisfactory. In other words, from the evidencethe plaintiff has not satisfied the Court thatFZ9 and FZ10 translates to a claim for MK3 572 000-00.

The legal position in a claim for special damages, is that the claimant must prove strictly the basis of his claim.This does not raise the standard of proof from that required in civil matters on a balance of probabilities to proof beyond reasonable doubt. “Rather, what it means is that special damages cannot be presumed as is the case with general damages.  The plaintiff who claims special damages must adduce evidence or facts which give satisfactory proof of the actual loss he alleges in his pleadings to have suffered... A follow up question is, does it mean that a plaintiff must always produce receipts or other documentary evidence in support of his case?” Although “such receipts would proffer the best evidence, there is no rule of law which requires a party to adduce such evidence, best evidence that is, in order to prove a civil case. It is principally a question of whether the plaintiff’s evidence, even if only oral, is believed by the court”, per, Omar T/A Cotton Centre V Securicor Malawi and another [MSCA Civil Appeal Number 19/2010 (unreported)].

From the analysis of the evidence and the law it cannot be said that the plaintiff has satisfied this requirement in his claim for MK3 572 000-00. He relied on a document that was far from reliable, his explanation on anomalies was not convincing and his assumptions even taking into account the so called marginal errors were not supported by any evidence whether in the form of previous dealings with the defendant, or trade usage or practice or any form whatsoever. It is dismissed.

Whether or not the defendant breached any terms of the agreement?

It was the plaintiff’s contention that it was an implied term of the contract that the shortcode wouldnot perform erratically.The question is which one of the parties was responsible for ensuring that the shortcode did not run erratically? It was the plaintiff’s case that the defendant was responsible for making sure that shortcode was operational at all times. The fact that the shortcode was not operating smoothly was the defendant’s fault and the defendant must be liable for breach of contract. The plaintiff did not show the Court any evidence to support this claim. Further it did not explain the role that the defendant was supposed to play in order for the short code not to operate erratically.

On the other hand the defendant averred that the contract was for the defendant to hire out a shortcode to the plaintiff at a fee. The plaintiff would then engage services of a technical firm (a third party) to assist it with the technical aspects of running the shortcode system. Through this system, a television station like the plaintiff would give its viewers aspecial number on which the viewers could send sms’s to the station. Each sms received by the station using this number attracts a fee. The more sms’s received on this number, the more fees generated.

According to the contract especially clauses 2.2.3, 2.2.4, 2.2.5 and 2.2.6 the plaintiff also referred to as PRSP was responsible for obtaining, maintaining, fitting technical requirements, installation and keeping in good working order the ‘devices’ that would facilitate smooth operation of the short code. For instance, the plaintiff was required to provide its own SMS server which had to satisfy certain specifications under the contract. The plaintiff did not show any exclusion clauses to this position. Further, the court record, in particular FZ25 an email from the plaintiff’s Chief Executive Officer to Mr Chris Chalira seems to support this contractual position. It was sent on 18 July 2012, titled: RE AFJ TV SHORT CODE. “Hello Chris, Now that Airtel seem to have finalized their procedures on the Short Code, what follows next and how soon can we be up and running?”

A response came through the following day, 19 July 2012. The said Chris assured the plaintiff that he was working with the IT on implementation, scheduled for the next day, 20 July. The short code was indeed effected on that date.The plaintiff did not explain the role of Chris Chalira in operation of the short code neither did it contradict the defendant’s analysis of Chris Chalira’s role in implementation of the short code.A mere allegation that the shortcode was not operating smoothly and that therefore this was the defendant’s fault cannot suffice.

It was up to the plaintiff to convince the Court on a balance of probabilities that the defendant breached a term of the contract. A deponent should never state that he believes something unless he has applied his mind to the matter and concluded that there are good grounds for his belief, see, Council of the University of Malawi v State President of Malawi and others Ex- parte Chancellor College Academic Staff Union and Others (being concerned Academic Members of Staff of Chancellor College) [MSCA Civil Appeal Number 41/2011 (unreported)]. The belief could arise from express terms of the contract or from custom, practice or usage or indeed it can be implied by the Court. In this matter the plaintiff asks this Court to imply that the shortcode was offered on condition that it would run smoothly. Implied terms of contract are a matter of law. The intention of the parties together with the language used in the contract and surrounding circumstances of the contract in question need all to be considered by the court, see Hahn v Spearhead Holdings Ltd and others [1990] MLR 143. This claim is therefore dismissed.

Whether an account of the revenue generated by the defendant through the use of the shortcode was submitted to the plaintiff.

The plaintiff’s counsel through cross examination of the defendant’s witness drew this Court’s attention to Clauses 6.4, 7.3 and 7.6 of the contract. These clauses relate to charges and fees and billing and collection. In summary the defendant was obliged to remit monthly reports to the plaintiff comprising details of number of sms received, premium value that included taxes and excluded taxes, total premium value excluding taxes, revenue share and payable amount. It was conceded that these monthly reports were not remitted to the plaintiff other than the information contained in D1. Such being the case, the plaintiff succeeds in its claim for this Court to compel the defendant to produce and remit the reportsand revenue arising therefrom as per the contract for the duration of the contract period as determined by this Court. This order is effective within 14 days of this date.It is so ordered.

Whether the claim for goodwill is sustainable?

The plaintiff claimed damages for loss of goodwill due to the nonperformance of the short code. It was his evidence that viewers sent in sms’s in anticipation of winning prizes. However because the short code did not perform according to plan, the station was unable to determine a winner. This failure to announce a winner lost them good will.The plaintiff did not support this claim with any evidence. The lossitself was not particularized. It is the duty of a claimant to plead and prove his case. It is no business of the court to guess or speculate what the claimant is seeking from the justice system. In an adversarial judicial system like Malawi, it is the parties themselves who set out the issues for determination by the court through their pleadings, see generallyNseula v Attorney General and another [1999] MLR 313. A mere statement of fact as was the case in this claim is not a pleading. By not articulating the particulars of loss the plaintiff is deemed to have abandoned his claim for damages for loss of good will, see generally Omar (supra).The claim is dismissed.

Costs

Costs are in the discretion of the court. However that discretion must be exercised judicially. In practice, costs are awarded to the successful party. In this case each party has been successful in some aspect. It is therefore the Court’s determination that each party must bear own costs. It is so ordered.

Pronounced in Open Court this 25th day of November 2015 at High Court (Commercial Division) Blantyre.

 

Rachel Sophie Sikwese

JUDGE