Thursday, October 28, 2021

Businessman loses a multi-million Pula lawsuit against BMC

A Francistown based businessman, David Givens who had taken Botswana Meat Commission (BMC) to court for breach of contract and demanding over P10 million for damages, recently lost his case with costs before Francistown High Court Judge, Zibani Makhwade. The court also ordered that he pay BMC over P600 000 as a counter claim.

The businessman claimed in his court documents that in 2009, BMC required farmers in the North Region who had interest in developing feedlots to feed cattle for its Francistown abattoir. Givens who owns Northern Ranching (Pty) a company in the outskirts of Francistown developed interest and entered into a Cattle Feeding Contract with BMC on the 21st of December 2010.

He then purchased land and developed it according to specifications which were given by the then General Manager of BMC Livestock Procurement Department, Clive Marshall. 

The period of the contract was supposed to take three years. He claimed that in terms of their contract, BMC had to loan him P650 000 for feeding the cattle and was to supply him with 3 000 cattle in the three year period. Givens said he never received any cattle from BMC at the same time incurring costs of close to P53, 000 per month due to maintenance of the feedlot and logistics costs. He said that he at some point wrote a letter to the then Chief Executive Officer of BMC, Dr David Falepau expressing his frustrations over failure by BMC to deliver cattle. He said that he was then informed that BMC was facing financial problems. Givens said that he then received an email from Clive Marshall in January 2011 informing him that BMC was willing to deliver 100 cattle. Givens then turned down the offer as he felt the number was not enough to run a viable and profitable feedlot.

The plaintiff (Givens) ultimately took BMC to court demanding the organization to pay him P7 720 934.40 as value of the sum that he would have made in three years and a further claim of P2 764 111.00 as special damages. He told court through his lawyer, Roger Calendar, that prior to the signing of the feeding contract BMC had sent an expression of interest letter to him. The plaintiff upon receipt of this letter proceeded to build a feed lot to a standard and specification that was acceptable internationally. He said that when the feeding contract was signed, him and the defendant(BMC) were aware of the following facts; that the feedlot was complete and ready for use and it was built at a tremendous cost, he had already hired the necessary man power to run and operate the feedlot, that the plaintiff required the defendant to deliver 1 000 heads of cattle per year, that should the defendant fail to deliver the cattle, the plaintiff would be unable to operate the feedlot and would be unable to pay its loan to the defendant for its manpower expenses and it would suffer damages.

Represented by Advocate Luc Spiller, BMC on the other hand also raised several defenses in court. The first defense was that there was no obligation on the part of BMC to supply cattle to the plaintiff.  The lawyer also said in the alternative it was pleaded that there was an outbreak of foot and mouth disease, which outbreak amounted to an act of God in terms of clause 11 in their contract. He said according to the clause the defendant is not liable to pay for any damages that may have occasioned. It was also the defendant’s position that BMC was not liable for any special damages because at the time of entering the agreement, the plaintiff’s feedlot had already been constructed. BMC also claimed that it could not supply the cattle to the businessman as agreed as there was an outbreak of Foot and Mouth disease in the zone six region which caused a freeze in the movement of cattle in the area where the feedlot was located. The defendant also said another major problem was the loss of the European Union (EU) market due to compliance issues.

Advocate Spiller also pleaded on behalf of the defendant that after containment of the foot and mouth outbreak, the plaintiff refused to accept cattle that were offered by the defendant. BMC filed a counterclaim of P650 000 which had been advanced to the plaintiff as a loan. BMC’s position was also that a period of three years had elapsed since the signing of the contract amount was due and payable and the plaintiff had failed or refused to pay the same.

However Givens argued that the counterclaim was to be deducted by the defendant from the amount due to the plaintiff for feeding services provided. He maintained that the defendant breached the contract by not delivering any cattle for feeding.

Delivering his verdict, Justice Makhwade agreed with the defendant that there was nothing in the contract that showed that BMC was obliged to supply cattle to the plaintiff.

On special damages, the Judge rubbished the claim saying that it is clear from the context of this case that the plaintiff got excited about the project and proceeded to embark on it on the basis that it was going to make financial gain. He said while both the plaintiff and defendant acted in good faith in the hope that each of the parties will benefit from this exercise, there is no doubt that there was no guarantee given to the plaintiff that his business would be a successful one.

“The only contract that was executed as per the evidence of the Livestock Procurement Manager was the contract signed in December 2010. This contract did not guarantee any cattle to be supplied to the plaintiff. If the plaintiff expected a risk free business, he should have ensured that he is properly covered before embarking on this project. It follows that the plaintiff cannot succeed with respect to special damages,” he said.

On counter claim, Justice Makhwade said there was no breach of contract by the defendant. He said in fact according to the defendant which evidence is common cause, 100 cattle were offered to the plaintiff after the containment of the foot and mouth disease in 2012 and he declined to accept the cattle.

“It is clear that no cattle belonging to the plaintiff were fed and the purpose for which the loan was advanced has not been realized. The agreement between the two parties has elapsed and there is no further opportunity under that contract for it to be implemented. It follows that therefore that the amount had been disbursed must be paid back to the defendant,” the Judge said “The following order is made; the plaintiff’s claims are hereby dismissed, the defendant’s counter claim succeeds. The plaintiff shall pay the defendant a sum of P650 000. The same shall attract an interest at the rate of prime minus 2 percent per annum and compounded monthly and the plaintiff shall pay the defendant’s costs,” concluded the Judge.

RELATED STORIES

Read this week's paper