GM Plastics Industry Limited v Shamrock Group Of Companies Limited (Commercial Cause 327 of 2018) [2025] MWHC 25 (26 November 2025)

\ {2 “) Republic of Malawi IN THE HIGH COURT OF MALAWI COMMERCIAL DIVISION BLANTYRE REGISTRY COMMERCIAL CAUSE NUMBER 327 of 2018 (Before Msungama, J.) BETWEEN: GM PLASTICS INDUSTRY LIMITED ..........sccccseeseeececesseeeeenecseesecees CLAIMANT AND SHAMROCK GROUP OF COMPANIES LIMITED ............ cecceceeceeeees DEFENDANT CORAM: M. T. Msungama, Judge Khan, of Counsel, for the Claimant Kausi, of Counsel, for the Defendant Makata, Court Clerk l. JUDGMENT The Claimant in this matter has at all material times been a limited liability company operating in the jurisdiction. The mainstay of its business is the manufacture of plastic bottles. The Defendant is also a locally based limited liability company. It was at all material times in the business of production and distribution of food products. It is common ground that the parties herein were in a business relationship through which the Claimant used to sell plastic bottles to the Defendant for packaging of its products. a taf re be * oi 3. The Claimant brought this action against the Defendant, claiming the local currency equivalent of the sum of US$25,000. The Claimant states that in or around February 2017, the parties agreed that the Defendant would pay the Claimant the sum of Malawi Kwacha equivalent of US$25,000.00 as compensation for loss resulting from the devaluation of the Malawi Kwacha following delays on the part of the Defendant to settle their account with the Claimant. It is the Claimant’s case that discussions between the parties culminated into an agreement that the said amount would be paid in or around September 2017. The Claimant complains that the Defendant has, however, neglected, or ignored to pay the agreed amount in breach of the above- mentioned agreement. 4, The Claimant further states that in view of the aforementioned matter, it has suffered loss for which it seeks relief and is claiming the sum as stated above, interest at the rate of 3% above the base lending rate with effect from 1* October, 2017 to the date of payment, reimbursement of lawyers’ fees and costs of the action. 5. The Defendant, while admitting that it had a business relationship with the Claimant, denies that it agreed to pay the Claimant any compensation for devaluation of the local currency as claimed or at all. The Defendant further asserts that all the business dealings it had with the Claimant was denominated in the local currency and not in US Dollars. Further, the Defendant asserts that the Claimant is not legally entitled to bring an action against it in US Dollars. It is important for me to quote the exact wording of this part of the Defendant’s defence. In paragraphs 4 and 5 thereof it is contended as follows: “4. The Defendant states that it is true that he (sic) conducted business with the Claimant, but avers that the said business was conducted as part of local trade using local currency (Malawi Kwacha) and not United States Dollars as claimed by the Claimant, and the Defendant puts the Claimant to strict proof thereof. 5 . The Defendant contends that the Claimant is not entitled to bring a claim in United States Dollars as the same is illegal since the business transaction was conducted in the local currency.” 6. Further, the Defendant denies that the Claimant has suffered any loss as claimed or at all and has put the Claimant to the strict proof thereof. 7. 10. The issue for the determination of the court is whether there was a valid agreement between the parties to the effect that the Defendant would compensate the Claimant with the Malawi Kwacha equivalent of the sum of US$25,000 as a result of delays in the settlement of amounts due to the Claimant. The legal burden of proof as to any fact in issue in a civil matter lies upon the party who affirmatively asserts that fact. In Joseph Constantine Steamship Line v Imperial Smelting Corporation Ltd [1942] AC 154, Viscount Maughan stated that “it is an ancient rule founded on good considerations of good sense and it should not be departed from without strong reason”. The essential elements of a claim or a defence are determined by reference to the substantive law. If a claimant fails to prove any essential element of his claim, the defendant will be entitled to judgment. The position of the defendant is, somehow, different. Since the claimant affirmatively asserts his claim, he bears the burden of proving his claim. However, if the defendant asserts a defence which goes beyond a mere denial (an affirmative defence), the defendant must assume a legal burden of proving such a defence. An affirmative defence is most easily recognised by the fact that it raises facts in issue which do not form part of the claimant’s case. If, for example, the claimant claims that the defendant injured him by a negligent act, the defendant may deny negligence without assuming any legal burden of proof. However, if the defendant goes on to assert that the claimant was injured through his own negligence, he asserts an affirmative defence not raised as a fact in issue by the claimant’s case, and must therefore bear the burden of proof of that fact. It is essential that every party prove each necessary element of their claim or defence. There are cases, however, where it is not easy to determine whose case a fact in issue is essential, and who should be held to fail if a fact in issue is not proved. In such cases, the courts have inclined to require proof of the party to whom the least difficulty or embarrassment will be caused by the burden. This in turn leads to two guidelines which are usually followed: a) each party should prove facts peculiarly within its own knowledge; and b) proof of a positive proposition is to be ' at 174 preferred to proof of a negative. In Joseph Constantine’, charterers claimed damages from the shipowners for breach of the charterparty. The defendants claimed that the contract had been frustrated by the destruction of the ship by an explosion, the cause of which was unclear. Such frustration would have concluded the case in favour of the defendants in the absence of any fault on their part. In view of the unsatisfactory state of the evidence, the question of who bore the burden of proving or disproving fault was of crucial importance. The House of Lords held that to require the defendants to prove a negative (the absence of fault) would be unduly onerous. The reality was that the claimants had asserted the existence of fault and should be required to prove it. 11. In Levison v Patent Steam Carpet Cleaning Ltd*, the defendants were guilty of the unexplained loss of the plaintiffs Chinese carpet, which had been delivered to them for cleaning. A clause in the contract signed by the plaintiffs would have exempted the defendants from liability for negligence, but not for fundamental breach of contract. It was necessary to determine where the burden of proof of the latter issue lay. The Court of Appeal held that the defendants would find the burden far less onerous, the circumstances of the loss being peculiarly within their knowledge, and accordingly, they bore the burden of proof. This is in accord with the rule in cases of bailment that it is for the defendant to show that the loss or damage was not caused by want of reasonable care on his part. Similarly, in a case where conversion is alleged, the burden lies on the bailee to show that he dealt with the goods consigned to him in good faith and without notice of the rights of any person who may transpire to be the owner of the goods’, 12. In Rhesa Shipping Co. SA v Edmunds [1978] QB 69, the plaintiff shipowners sought to recover against underwriters in respect of the loss of their vessel, the Popi M. The ship had been lost in the Mediterranean in calm seas and good weather, and the wreck could not be salvaged. The evidence showed that she had sustained a large hole in her side shell plating, which resulted in flooding which sank the vessel. It was the cause of this damage on which the case turned. The plaintiffs contended that the ship had struck a submerged submarine and ? Thid * Marcq v Christie Manson & Woeds Lid (trading as Christie's) [2002] 4 All ER 1005, Kuwait Airways Corporation v Iraqi Airways Co. [2002] 2 WLR 1353 4 13. argued that this amounted to a loss of the ship by the perils of the sea, which was covered by the policy. The defendants asserted that the loss was caused by ‘wear and tear’, i.e., the poor condition into which the plaintiffs had allowed the vessel to fall. The trial judge ruled out the explanation given by the underwriters because it did not adequately explain the known damage to the ship. Equally, however, he regarded the explanation about the submarine, which was wholly unsupported by independent evidence, as extremely improbable. On the basis of these findings, the judge found for the plaintiffs, since the defendants had provided no acceptable explanation to rebut the plaintiffs claim. The decision was upheld by the Court of Appeal. On appeal to the House of Lords, the underwriters prevailed. The House held that the trial judge had not been obliged to choose between two competing theories merely because the underwriters had chosen to put forward an explanation for the loss. The plaintiffs had borne the legal burden of proof on the issue of whether the ship had been lost by the perils of sea. Since the judge had found that the evidence adduced to support the claim was extremely improbable, he ought to have held that the plaintiffs had failed to discharge their burden of proof. The important point raised by this case is that the burden of proof is the burden to prove that the facts relied on are more probable than not, and not merely that they are more probable than an explanation advanced by the other side. The standard of proof in civil matters is proof on the balance of probabilities. This simply means that when you look at a version of facts as advanced by the parties, or which can be drawn from the inferences within the case, which one is more likely to have occurred than not. The court must form a judgment on the balance of probabilities as to which fact it accepts and which it does not before going on to find for one party or the other. There are a number of decided cases which have sought to clarify the definition of the term ‘proof on the balance of probabilities”. For example, in Secretary of State for the Home Department v. Rehman [2001] UKHL 47, Hoffman L, stated: “It would need more cogent evidence to satisfy one that the creature seen walking in Regent’s Park was more likely than not to have been a lioness than to be satisfied to the same standard of probability that it was an Alsatian. In this basis, cogent evidence is generally required to satisfy a civil tribunal that a person has been fraudulent or behaved in some other reprehensible manner. But the question is always whether the tribunal thinks it more probable than not.” 14. The law relating to contracts is well settled. For there to be a contract, the parties must have reached an agreement. The agreement is reached when there is an offer by one of the parties and an acceptance of that offer by the other party. An offer is an expression of willingness to contract on specified terms made with the intention (actual or apparent by the person to whom it is addressed) that it is to become binding as soon as it is accepted by the person to whom it is addressed. In the case of Storer v Manchester City Council [1974] 3 All ER 824 a conservative party-controlled company decided to sell council houses to their tenants at favourable prices. To help the tenants to purchase the properties without the need for full legal formalities, they created a standard application form for the tenants to use. The claimant applied using the application form, asking to purchase the house with a mortgage. The City Treasurer wrote back to the claimant, stating that the company would lend the claimant the full amount and enclosing a sale agreement. The letter instructed the claimant to sign the agreement and send it back, whereupon the company would send the claimant the version of the agreement they signed. The claimant duly did so. However, he failed to fill in a blank space in the agreement which specified the date on which the sale would be completed. Before the company could write back to the claimant, the Conservatives lost the local elections to the Labour party. This placed the company under the control of the Labour Party. The Labour party opposed the sale of council houses, so the City wrote to the claimant stating that they would not be proceeding with the sale. The claimant argued that there was already a completed contract. Accordingly, he sued for specific performance of the sale. The company argued that there was no completed contract until the agreement had been signed and exchanged (this being the usual practice in land sales). The Court of Appeal held that there was a contract concluded between the parties. The company’s scheme was objectively designed to dispense with the usual formalities associated with land sale. In light of this, the city treasurer accepted the claimant’s offer to buy the house when they wrote back. This was not a case in which the parties had implicitly or explicitly agreed that their arrangement would be ‘subject to contract’. There was, therefore, no need for an exchange of contracts. Lord Denning also noted that when assessing whether there is an intention to be legally bound, the court must look at what the parties objectively appeared to have intended. What they subjectively intended was irrelevant. 15. Under the objective test of agreement, an apparent intention to be bound may suffice; that is to say, the offeror may be bound by his words if his conduct were such that it would induce a reasonable man to conclude that he intends to be bound, even though there was no such intention on his part. In the case of Moran v University College Salford (No. 2) The Times, November 23, 1993 the defendant university offered the claimant a place to study at the university which he accepted. The university then claimed that it had made a clerical error and did not mean to offer him a place. The Court of Appeal held that there was a contract formed. The university’s apparent intent was to offer the claimant a place and the claimant had acted reasonably in accepting the place. 16. When parties negotiate with a view to making a contract, many preliminary communications may pass between them before a definite offer is made. In the course of such communication one party may invite offers which that party is free to accept or reject. Such invitations are called invitations to treat and are distinguishable from offers. ° An acceptance is an unqualified expression of assent to the terms proposed by the offeror. Acceptance can be by words or by conduct. Conduct will only amount to acceptance if it is clear that the offeree did the act in question with the intention, objectively assessed, of accepting the offer.° 17. The witness called by the Claimant was one Mudassir Anjun. He was at all material times the director in the Claimant’s company. He was the sole witness who testified in this matter. He adopted his witness statement and was cross-examined by the opposing counsel. It was his evidence that the two companies have enjoyed a good business relationship for some time, during which the Claimant has been supplying the Defendant with, among other items, plastic bottles for packaging of the defendant’s products. The goods were supplied on credit, and payment would be made based on the agreed terms. Sometime in February, 2017 the Claimant and the Defendant agreed that the Defendant would pay the Claimant the Malawi Kwacha equivalent US$25,000,000 as compensation for loss occasioned to the Claimant as a result of the devaluation of the Malawi Kwacha against the US$ following delays in the settlement of the Defendant’s accounts with the Claimant. The agreement was reached on the basis that the Claimant was using imported the raw materials for the manufacture of its products. The agreement was reached through discussions he had been having with Mr. Siku Haroon and Feroz Haroon, directors in the Defendant company. The witness attached to his witness ° Gibson v Manchester City Council [1979] 1 W. L. R. 294 ° Day Morris Associates v Voyce [2003] ECWA Civ 189 18. 19. statement copies of email and WhatsApp messages he exchanged with the two individuals. These were tendered in evidence as Exhibits MAI(a) and MA1(b). The witness stated that despite the agreement reached, the Defendant has neglected, ignored, and wilfully ignored to settle the agreed sum. In cross-examination by counsel for the Defendant, the witness stated that he did not remember how much in Malawi Kwacha was owed at the time the agreement was being made. He further stated that it was the Defendant itself that suggested the compensation be referenced using United States Dollars. This was the evidence in this matter, the Defendant having chosen not to call any witnesses and thereby effectively withdrawing the witness statement which it had earlier filed in these proceedings. Let me deal with the issue of the alleged illegality raised by the Defendant in its defence before we delve into the other matters. By pleading illegality in its defence, the Defendant is missing the point. It is clear from the Claimant’s the statement of case that the claim by the Claimant is for the Malawi Kwacha equivalent of US$25,000. The Claimant is not claiming US$25,000. Further, the Claimant is asserting that the agreement was that the Defendant would pay it Malawi Kwacha equivalent of US$25,000. Such an agreement, if proved would not, in my considered opinion, contravene the exchange control laws of this country. Indeed, in its evidence in support the claim, the witness called by the Claimant clearly stated that following the devaluation of the local currency, the parties agreed that the Claimant would be compensated for the loss occasioned by the devaluation by a sum in Malawi Kwacha that would be calculated using the exchange rate between the local currency and the US$, not that the Defendant would be required to pay the Claimant US$25,000. Kapanda J, as he then was, in Meditex v Huma Wholesalers Commercial Case Number 110 of 2008, (unreported), stated that: “It is my unmistakable understanding that this regulation does not prohibit the quotation of a price in foreign currency. Further, it is my judgment that the regulation does not prohibit the use of foreign currency for indexing or determining the Malawi Kwacha amount payable... Thus, the regulation deals with the currency of payment, not only quoting. The Plaintiff has, without a doubt, demonstrated that in the present case, he did not quote or demand payment in foreign currency. All the Claimant did was to quote and demand payment in Malawi Kwacha, with the United States Dollar being a reference currency. I find and conclude that there was no infringement of the said Exchange Control Regulation of 2006. I accordingly find.” 20. The witness called by the Claimant tendered several pieces of communication which he alleged was between the parties in the Claimant’s endeavour to convince the court that indeed there was an agreement that had been entered into by the parties to this effect. Exhibit MAI (a) is a WhatsApp exchange between the witness and one Faiz Shamrock, who the witness alleges is a director in the Defendant company. In this WhatsApp message, the witness asks Mr Shamrock, “Please advise me on a concrete date on when I can get a plan for the equivalent $25,000. Waiting without a date further does not make sense.” To this query, Mr Shamrocks responds as follows: “Will have to discuss with my auditor on how best we can make this payment. U might have to raise separate invoices for this”. Further, in an email exchange between the witness and Mr. Haroon, who the witness alleges is another director of the Defendant, on the 19" September, 2017 the witness wrote “.../ hope as agreed we will also get $25,000 as agreed in September and the big payment for the old account this week as mentioned by Mr. Siku.” To this email, Mr Haroon replied on the same day as follows: “Noted with thanks”. As stated, there was no witness called by the Defendant to either deny the existence of this correspondence or to contradict the Claimant’s witness’ assertion that the two individuals he was corresponding with were representatives of the Defendant, or at least to explain what the correspondence was all about in case it was about something else other than to do with the agreement of the parties in relation to the payment of the Malawi Kwacha equivalent of US$25,000. The legal position with respect to failure to call material witnesses by a party is generally that there is an assumption that the evidence from that particular witness, if called, would have been adverse to that party’s case. See Mpungulila Trading v Marketing Services Division [1993] 16 (1) MLR 346. In R v IRC ex parte T. C. Coombs & Co [1991] 2 AC 283 at 300 Lord Lowry stated as follows: “In our legal system generally, the silence of one party in the face of the other party’s evidence may convert that into proof in relation to matters which are, or are likely to be, within the knowledge of the silent party and about which that party could be expected to give evidence. Thus, depending on the circumstances, a prima facie case may become a strong or even an overwhelming case. But, if the silent party’s failure to give evidence (or to give the necessary evidence) can be credibly explained, even if not entirely justified, the effect of his silence in favour of the other party may be either reduced or nullified. 21. The judge continued to state that from this authority, certain principles could be derived, including that in certain circumstances, a court may be entitled to draw adverse inferences from 9 22. 23. the absence or silence of a witness who might be expected to have material evidence to give on an issue in an action. Further, if a court is willing to draw such inferences, they may go to strengthen the evidence adduced on that issue by the other party or to weaken the evidence, if any, adduced by the party who might reasonably have been expected to call the witness. There must, however, have been some evidence, however weak, adduced by the other party on the matter in question before the court is entitled to draw the desired inference: in other words, there must be a case to answer on that issue. If the reason for the witness’s absence or silence satisfies the court, then no such adverse inference may be drawn. If, on the other hand, there is some credible explanation given, even if it is not wholly satisfactory, the potentially detrimental effect of his/her absence or silence may be reduced or nullified. In my view, a party needs to take great care in making a decision not to call a material witness who is able to give evidence on an important factual issue and who might in the normal course be expected to give evidence. Any desire to shield a potential witness from cross-examination by not calling him has to be weighed against the danger of adverse inferences being drawn against the party who takes that decision. In the present matter, the Defendant has chosen not to call any witness to rebut the evidence given by the Claimant. Although a witness statement was filed by the Defendant, no explanation was proffered as regards why that witness was not called to testify. All the court was informed was that the Defendant had decided not to call the witness. The only inference this court is able to make is that the evidence which would have been given by the witness would have been adverse to the Defendant's case. In the circumstances, I am left with no other choice but to agree with the Claimant and conclude that there was an agreement between the parties to the effect that the Defendant would compensate the Claimant with the sum alleged. I also find that the Defendant has failed to honour such an agreement by failing to make payment to the Claimant. I, therefore, find that the Claimant has managed to prove its case on the balance of probabilities It is, therefore, ordered that the Defendant do pay the Claimant the Malawi Kwacha equivalent of the sum of 25,000 United States Dollars at the exchange rate prevailing as at today’s date. | also order that the Defendant pay the Claimant's collection costs. I do not make any order for the payment of interest at the claimed rate because the basis for such payment has not been properly articulated in the Claimant’s statement of case. 10 24. On the issue of party and party costs, these normally follow the event. In the present case, I do not see any reason for departing from this norm. The costs are, therefore, awarded to the Claimant. The quantum of these costs will either be agreed upon by the parties or assessed by the Assistant Registrar in case of failure of agreement. Delivered at the High Court of Malawi, Commercial Division, Blantyre Registry, this 26" day of November, 2025. M. T. Msungama JUDGE 11