Seed Co wins US$1m claim against Credcorp Investments

By Mthandazo Nyoni

The High Court has ordered Credcorp Investments to pay Seed Co Zimbabwe a sum of US$1,01 million for damages for breach of contract, Standard business can report.

According to court papers seen by Standardbusiness, the case on hand concerns the production of three types of crops during the 2018/2019 agricultural season, namely sugar beans, soya beans and sorghum.

They were grown on four farms operated by Credcorp.

Seed Co funded the full cost of production in anticipation of Credcorp delivering all the new seed to it, but Credcorp, in stark breach of the agreement, only delivered 44,7 metric tonnes of sugar bean seed and sold the rest to third parties.

“The quantity of the seed the defended (Credcorp) side marketed, in metric tonnes, was 75 sorghums, 70 sugar beans and 560 soya beans,” the papers read in part.

“The plaintiff (Seed Co) 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 pivot. The plaintiff admits the defendant paid.

“In regards to its claim before the court, the plaintiff avers that the defendant was at all times aware that all the seed that it had been contracted to grow would be sold to third parties by the plaintiff, that the plaintiff had ready markets for such seed, that by reason of the defendant’s breach it has suffered damages and that the defendant should make good those damages, together with costs of suit on the legal practitioner and client scale.”

In its plea, the court said Credcorp simply made a bare denial of everything of substance alleged by Seed Co. From there, Credcorp pleaded the alleged compromise.

It averred that the compromise was reached at the September meeting. In terms of that compromise, among other things, on or before September 30, 2019, Seed Co was to provide a price for 44mt of sugar beans delivered and that Credcorp was to pay in full the balance of the debt owed by it on or before October 15, 2019.

It alleged that pursuant to that arrangement, it paid Seed Co an amount in the sum of US$364 265,62 on October 15, 2019 in full and final settlement of its claim and that therefore plaintiff’s 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 the Seed Co, the contractual relationship between the parties had effectively come to an end, that the claim for damages has no basis at all and that after the breach the seed crop would only be regarded as commodity which fetches only normal commodity prices.

It puts the plaintiff to the “strictest” proof of all its claims and seeks dismissal with costs.

However, the High Court ruled that Credcorp failed to prove that there was a compromise in regards to Seed Co’s right to receive the seed for which the parties had executed and consummated those contract growers’ agreements

It said the breach prevented Seed Co from assuming ownership and control of the seed. It prevented it from selling the seed for profit.

“The plaintiff has to be placed in the position that it would have been had the defendant performed its side of the contract in so far as this can be done by the payment of money.

“That is the whole essence of damages for breach of contract,” the judgement delivered on January 30, 2023, reads in part.

“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.”

Seed Co is a leading seed company in Africa, providing certified crop seeds and vegetable seeds to farmers across the continent.

Credcorp is a Zimbabwean company involved in crop production in the country.

In its plea, the court said Credcorp simply made a bare denial of everything of substance alleged by Seed Co. From there, Credcorp pleaded the alleged compromise.

It averred that the compromise was reached at the September meeting.