Rice supplier loses Sh400m claim against Pangea Minerals

Dar es Salaam. The Commercial Division of the High Court has dismissed a lawsuit in which rice supplier, Isaka Commercial Agency Limited, was claiming Sh401.8 million from Pangea Minerals Limited in damages for alleged breach of contract.

The court said the rice supplier has failed to prove that the mining company breached the 2018 contract for the supply of 121 tonnes of white polished rice.

Isaka brought a law suit against Pangea in 2019 in which it sought a declaration that the mining firm breached agreement for supply of rice. It also sought payment of Sh125.2 million for the loss caused by the breach of contract.

The supplier of polished white rice to mining companies operating in Tanzania also sought payment of Sh276.6 million as payable price of the wrongfully neglected rice.

The rice supply deal was sealed on May 12, 2018 under which Isaka was to supply 121 tonnes of white polished rice to Pangea Minerals at Sh304.4 million for the period of 20 months which were to run consecutively.

During that period, Isaka was to supply 6,046 kilogrammes of the rice to Pangea Minerals per month at Sh15.7 million.

Deal turn sour

In the lawsuit, Isaka alleged that on October 25, 2018 the mineral firm informed them they would terminate the supply contract with effect from November 1, 2018, only after supplying them with 36 tonnes.

Two months later, Isaka claimed it received an e-mail communication from Pangea that officially terminated the agreement and, instructed them to communicate with the third party on the same deal.

Isaka claimed that the cancellation of the contract caused them huge losses.

The company further claimed that the loss came about because it had secured a loan from Azania Bank which was invested in the buying, processing of the bulky stock, human labour, working tools and leasing storage facilities for the sake of ensuring a steady and smooth supply of quality rice contracted for by the minerals company.

Pangea denies breach

In defence, Pangea Minerals denied the Isaka’s claims and instead accused Isaka of breaching the rice supply contract after failing to supply the consignment of rice within the time agreed under the contract.

Pangea Minerals also blamed the changes on unforeseen events which forced them to cutback its workforce and out source catering services.

One of their witness had told the court that Isaka’s loss was self-inflicted for failing to supply the agreed quantity on the agreed date, and, to the contrary, supplied it on portions.

Another witness testified that at the time of placing the order, the mineral company used to handle catering services through its own department but change in business environment forced them to go for major operational changes.

“The defendant’s (Pangea’s) mining activities were later scaled down, leading to the retrenchment of its employees and outsourcing of some of its core and supporting services in June 2018, and that by October 2018 their Facility Service Section was closed down, with 34 employees being laid off.

“Due to the laying-off of the workers, the numbers of staff who were consuming rice supplied by the plaintiff (Isaka) decreased and, by 1st November 2018, all catering services were outsourced to Nice Catering Services who was responsible for cooking, storage and mobilisation of cooking supplies,” said the witness.

Shareholder and the managing director of Isaka Commercial Agency Limited, Moses Wanankulya, conceded in court that there was no place in the purchase order that categorically stated that his company was to supply 121 tonnes of rice to the mining firm.

He further acknowledged during cross questioning that they did not file any bank statement in court to prove that the alleged breach of contract caused them to fail to repay a loan which they took from Azania Bank to support their business.

It was Pangea’s contention that the loan which Isaka took from Azania Bank on October 3, 2018 had nothing to do with the Pangea’s rice supply order. He maintained that the loan was issued past the agreement to supply rice

Court dismisses lawsuit

Judge Deo Nangela said in his recent decision that the conduct that the mineral company after unforeseen events and its attempts to solve the issue amicably was enough to exonerate it from the liability of breach of conduct.

“Considering the effort taken by the defendant to ensure that the dispute between the two parties is dissolved amicably, it is clear to me that the allegation that the defendant had breached the contract cannot stand,” said the judge.

The judge said Pangea Mineral’s intention to continue with the supply of the remaining tonnes as well as the change of circumstances regarding delivery of what was contracted were all relevant factors why it was not responsible for the alleged breach of contract.

“A buyer who had no intention to repudiate the contract cannot be said to be in breach of that contract,” said the judge.

The court also sided with the mining firm that there was unforeseen event which forced them to reduce its operations, a move which had impact on the rice supply contract.

“There was indeed a scaling down of defendant’s operations but this in my view, did not have much effect on the parties’ relations taking into account the defendant’s efforts to end the matter amicably,” he said.

The judge further said that the plaintiff suffered no loss and or damages in the hands of the defendant.

“In my view, if any losses were incurred by the plaintiff, those were self-inflicted and the defendant cannot be on the erring side regarding such losses,” said the judge.

Isaka was represented by Mr Armando Swenya while the mining company enjoyed the service of Mr Faustine Malongo and Miss Caroline Kivuyo.