PromedKlinik (Seychelles) Limited v PromedKliniken GmbH (CS 135 of 2019) [2024] SCSC 181 (11 December 2024)

SUPREME COURT OF SEYCHELLES Reportable CS135/2019 In the matter between PROMEDKLINIK LIMITED (formerly Eurika Medical Services Pty Limited) (rep. by Mr Ferley) (SEYCHELLES) Plaintiff 1 Counter defendant and PROMEDKLINIKEN (rep. by Ms Parmantier) GMBH Defendant / Counter plaintiff Neutral Citation: Promedklinik (Seychelles) Limited v Promedkliniken GmbH (CS 135/2019) Before: Summary: Heard: Delivered: SCSC (11 December 2024) Burhan J Rescission, breach of agreement, damages 25/03/21; 26/03/21; 31/05/21; 04/06/21; 17/09/21; 25/04/24 15/09/22; 13/09/22; 11 December 2024 03/04/23; 04/04/23; 23/09/21; 22/02/22; ORDER (i) (ii) (iii) (iv) (v) is in breach of the contractual agreement The Plaint is dismissed; The Plaintiff Defendant damages in the sum ofEUR448,175.70; The Plaintiff is prevented from further using the Defendant's brand name; Costs are ordered against the Plaintiff; and Interest from the date of the filing of the Plaint until such time when the total sum is paid to the Defendant. rate in the sum ofEUR448,175.70; is awarded at the commercial and as such pays the JUDGMENT BURHAN J [1] The Plaintiff, ProMedKlinik (Seychelles) Limited formerly Eurika Medical Services (Pty) Limited is a company registered under the Companies Act 1972. The company is engaged in the health care services business. The Defendant, ProMedKliniken GmbH is a company originating in Germany engaged in a similar line of business as the Plaintiff. [2] The Plaintiff and the Defendant entered into an agreement which states that the purpose thereof was to enter into a partnership and to collaborate according to the terms of the agreement in areas of mutual business interest. Such interest was to develop a private clinic. The agreement and its addendum were signed on 19th April 2018 (the "Agreement"). [3] The Plaintiff avers and the Defendant admits that the terms of the Agreement were as follows: (i) The parties were to collaborate to promote their mutual business interests in the provision of health care services in Seychelles. (ii) The Plaintiff was to issue shares amounting 55% to the Defendant. The consideration for the 55% shares was to be EUR306,860 which the Defendant was to pay the equivalent in kind by supplying to the Plaintiff medical equipment, medical supplies, surgical equipment, diagnostic equipment, laboratory equipment and reagents etc. Likewise, the monthly management fee of EUR 5,000 (including all travel costs) and commission for KIN-Taping would be applied until the total sum of EUR306,860 was arrived at. The 55% shares would only be issued once equipment to the value of EUR306,860 had been supplied and delivered, checked and installed; (iii) The Plaintiff as it then was Eureka Medical Services (Pty) Limited was to change its name to the current name ProMedKlinik (Seychelles) Limited; (iv) The share capital of the Plaintiff would be increased from SR 10,000 to SR 8,000,000 and the balance would be treated as Shareholders loans; (v) The parties expressly agreed to perform the agreement in good faith towards the other. [4] The Plaintiff further avers, and the Defendant admits, that in compliance with the terms of the agreement, the Plaintiff changed the name and status of the company from Eureka Medical Services (Pty) Limited to ProMedKlinik (Seychelles) Limited and converted it from a proprietary to a limited liability company. [5] The Plaintiff avers that the Defendant failed to perform any management services for the Plaintiff. This is denied by the Defendant who claims in the Defence that the Plaintiff having very little knowledge on how to run a medical clinic relied heavily on the Defendant's expertise and knowledge. The Defendant claims that its director, Mr Norbert Seis, was continuously involved in the innovation of the clinic and held various meetings with the governmental and private sectors in the Seychelles to promote the clinic. The Defendant further claims that he travelled to the Seychelles on a monthly basis to perform management duties and also performed these duties extensively from Germany. [6] The Plaintiff avers that the Defendant, through its director Mr Seis, supplied equipment that was mostly old, second-hand, refurbished, and reconditioned, with some items being in a poor state of repair upon delivery. The Plaintiff avers that they complained about the state of the equipment, but Mr. Seis insisted that the equipment was fit for purpose. The Defendant denies these claims, asserting that most of the equipment supplied was brand new and in good condition, with only a minority being second-hand, which had been disclosed to the Plaintiff. The Defendant claims that the Plaintiff never complained about the condition of the equipment and accepted all the items that were sent to them. [7] The Plaintiff further avers that it expressed a desire to procure equipment from other suppliers in China, but Mr. Seis insisted that all equipment had to be purchased from the Defendant, resulting in the Plaintiffs dependence on the Defendant for equipment and consumables. The Defendant denies this claim, asserting that the Plaintiff, by associating with the Defendant's brand, was required to adhere to its quality standards. The Defendant claims that the equipment proposed for purchase from China did not meet the brand's high European standards and was unsuitable for use under the Defendant's franchise. The Defendant claims that it would not have objected to sourcing equipment elsewhere ifit met the required quality standards. [8] The Plaintiff avers that it repeatedly requested the Defendant to provide documentary proof of the purchase prices of the equipment. Despite these requests, the Defendant refused to provide such documents to show the price paid for the equipment. The Plaintiff informed the Defendant that it was willing to transfer the 55% shares to the Defendant, provided proof was given that the equipment supplied was valued at EUR 306,860, but the Defendant continued to refuse. The Defendant denies this claim, asserting that the Plaintiff accepted all invoices provided without any complaint or indication that the documentation was insufficient, improper, or unfit for quantifying the value of the goods supplied. The Defendant further claims that all equipment and consumables were accepted and used by the Plaintiff in its clinic operations. [9] The Plaintiff further avers that the Defendant's director demanded the transfer of the 55% shares, claiming that the equipment supplied constituted payment for the shares. The Plaintiff asserts that it was an implied term of the agreement that the Defendant was required to provide proof of the equipment's value to give business sense to the agreement. Without such proof, the Plaintiff argues, it is impossible to measure whether the contribution ofEUR306,860 has been met. The Plaintiff further avers that the Defendant's director claimed that the agreement did not specifically require him to provide proof of the value of the equipment. The Defendant denies these claims, asserting that all relevant invoices were provided to the Plaintiff in respect of the equipment and other materials. The Defendant's director admits that he did ask the Plaintiff to transfer the 55% shares, as the Defendant had in fact invested over the agreed amount ofEUR306,860. [10] The Plaintiff avers that the Defendant, being a foreign entity, was required to meet certain legal and regulatory requirements, such as obtaining Government sanction for the transfer of shares, but the Defendant refused to adhere to these regulations or apply for the sanction. The Defendant denies this claim, asserting that the Plaintiff did not own land in the Seychelles at the material time and that this requirement was a tactic to delay the transfer of shares. [11] The Plaintiff further avers that the Defendant's director, instead of addressing the issues of the value of the Defendant's contribution and compliance with regulatory requirements, made numerous threats, including threats to send people to remove equipment from the Plaintiffs premises, which the Plaintiff claims demonstrate bad faith. The Defendant denies these allegations, asserting that the Defendant has been civil and respectful throughout. The Defendant claims that despite being deprived of over EUR306,860 in investment, management fees, equipment, and due shares in the Plaintiffs company, the Defendant has demonstrated patience and understanding. [12] The Plaintiff avers that the Defendant's refusal to provide proof of its contribution to quantify the value for the transfer of the 55% shares, as well as the Defendant's failure to comply with legal and regulatory requirements, constitutes a breach of the implied terms of the agreement. The Plaintiff claims that a consequence of the said breach the Plaintiff is entitled to rescission of the agreement. [13] In the amended Plaint dated 28th July 2020 The Plaintiff prays the Honourable Court for: (i) (ii) (iii) An order rescinding the agreement,' An order that the court deemsfit Cost of this suits. in the circumstances of the case; [14] The Defendant denies this claim, asserting that it has fully complied with its obligations under the contract by supplying the necessary equipment and materials, providing invoices to quantify the value, and offering managerial services as required. The Defendant avers that at no material times it has breached the contract. [15] The Defendant in its Defence repeats paragraphs 1-17 and counterclaims stating that it acted in conformity with the contract by: equipment, medical laboratory equipment (i) (ii) (iii) (tv) (v) in the value of Euros 324,247,' the Plaintiff/Counter Defendant medical sum claimed was amended during court proceedings providing supplies, surgical equipment, diagnostic equipment, and reagents, etc,' investing in equipment (total September 2022 to EUR304,604.20) providing invoices of all equipment and other materials purchased,' allowing Plaintiff/Counter Defendant the Defendant providing management services. brand name "Prc Medklinik"; 's/Counterclaimant's on 13th and to use and associate themselves with [16] The Defendant avers in the Counterclaim that the Plaintiff/Counter Defendant accepted and used all equipment and materials provided by the Defendant/Counterclaimant without raising any concerns regarding invalid invoices or unsuitable equipment. To date, the Plaintiff/Counter Defendant has used all the equipment and materials from the Defendant/Counterclaimant free of charge, has failed to transfer the promised 55% shares, and has not compensated the Defendant for any management services. [17] The Defendant claims that for the aforesaid reasons, the Plaintiff/Counter Defendant actions amount to a breach of contract in law, for which it is liable to the Defendant/Counterclaimant in damages. [18] The Particulars of Damages are: PARTICULARS OF DAMAGES (i) (ii) (iii) (iv) in equipment Investment (Counterclaim was amended during the court proceedings on 13th September 2022 to - Unpaid consumables Unpaid management fee Moral Damage for stress and inconvenience Total: Euros 324,247 EUR304,604.20) Euros 68,132.30 Euros j 05,000 Euros 5,000 Euros 482,736.50 [19] The Defendant prays the Honourable Court as follows: (i) (ii) (iii) (iv) (v) to dismiss the Plaintiff's Plaint; and to find that the Plaintiff has breached their contractual agreement and as such should pay the Defendant damages in the sum of Euros: 482, 736.50; to prevent to order costs against the Plaintiff; and any other order which the Court deemsfit. the Plaintiff from further using the Defendant's brand name; [20] In the Defence to Counterclaim the Plaintiff/Counter Defendant repeats paragraphs 1 to 16 of its Plaint and denies paragraphs 1 to 17 of the Defendant's Defence. The Plaintiff denies paragraph 19 and 20 of the counterclaim, asserting that the equipment and materials were meant as payment in kind for the shares, and claims that the Defendant refused to provide proof of the equipment's value. [21] The Plaintiff admits possession of the equipment and materials but states it was willing to transfer shares only upon the Defendant providing proof that the equipment met the agreed value ofEUR306,860. The Plaintiff further avers its willingness to return the equipment if the Court orders it. The Plaintiff prays for the dismissal of the Counterclaim with costs. Analysis of Submissions and Evidence [22] As appears from the submissions, rescission is sought on the basis that firstly, the Defendant did not comply with the implied term of the agreement, which was providing proof that the investment sum for equipment was as per the agreement, EUR306,860 by not providing documentary proof of purchase price. The Defendant provided two sets of invoices, custom invoices and commercial invoices, where the prices of the items differed, which confused the Plaintiff and made it suffer loss as they were selling consumables at a lesser price. The said invoices were also issued by the Defendant's German company and not by the manufacturer of the equipment. The original invoices from the manufacturer were held by auditors of the affiliated the Defendant's company, AKUD-Med. Secondly, the Defendant refused to comply with regulatory requirements for share transfer to a foreign entity. Thirdly, the Defendant supplied the Plaintiff with equipment and consumables that they did not require. There are further claims that some of the equipment was old and some of it the Plaintiff was not able to use. Fourthly, the Plaintiff claims that the Defendant failed to perform his management service duties and therefore not entitled to the management fee. Finally, such combined actions by the Defendant, and particularly the refusal to provide invoices from the manufacturer show bad faith. [23] The Defendant's position is that rescission is not possible. It was submitted that the remedy of rescission means that an entire contract is set aside and is treated as though it was never made; that whatever was done by the parties in making the contract is reversed, the parties are put back in the position they would have been in, as if the contract had never even been made. The defendant further submitted that for the remedy of rescission to be available the following factors must be present: the contracting party seeking the remedy must not have affirmed the contract: and restitutio in integrum must be substantially possible: both sides of the transaction must be able to be undone. [24] Further, the Defendant submitted that if those bars to rescission have not been satisfied, rescission should be available as a remedy for the cause of action to which it applies as a remedy. [25] In determining the issue of whether rescission of the contract is possible in the circumstances of this case it is to be observed that Plaintiff's Counsel has not specifically referred to any legal provision governing rescission but relies on Articles 1134 and 1135 of the Civil Code: "Article 1134 Agreements lawfully concluded shall have theforce of lawfor those who have entered into them. They shall not be revoked except by mutual consent orfor causes which the law authorises. They shall be performed in good faith. Article 1135 shall be binding not only in respect of what is expressed therein but also in Agreements respect of all the consequences which fairness, practice or the law imply into the obligation in accordance with its nature II [26] The Plaintiff further avers breach of contract and alleges bad faith on the part of the Defendant at Paragraph 16. As the submissions of the Plaintiff do not refer to a specific Article of the Civil Code applicable to rescission and the Plaintiffs averment of breach of contract in the Plaint, which prays for "rescission of the agreement" without referencing a specific Article of the Civil Code, creates a lack of clarity as to whether the Plaintiff seeks to annul the entire contract, terminate or discharge it for breach. [27] As observed by Dr. Mathilda Twomey, the effects of both relative and absolute nullity result in the contract being treated as if it never existed, requiring retroactive restitution. However, unlike English law, self-help measures for rescission are not permissible under the Civil Code. Rescission must be sought through judicial proceedings under Article 1184(4), which explicitly states, "Rescission must be obtained through proceedings" (Twomey, Legal Metissage in a Micro-jurisdiction: The Mixing a/Common Law and Civil Law in Seychelles, 2015, p. 89). [28] The Plaintiff also alleged bad faith on the part of the Defendant. Article 2268 of the Civil Code also provides that good faith is always presumed, and the burden of proving bad faith lies on the party making the allegation. [29] The concept of good faith is not defined in the Civil Code. The Court of Appeal held in Monthv 11 Government of Seychelles (SCA 37 of 2019) [2021] SCCA 73 (17 December 2021 ), a case concerning Rescission of 60-year lease, that the term generally encompasses honesty and integrity in fulfilling one's legal obligations. [30] From the evidence adduced before the Court, it is clear that the Plaintiff affirmed the contract by continuing to accept consignments of equipment, medical supplies referred to as consumables, and further requesting more supplies of consumables. Despite the evidence that there was 'confusion' with regards to prices listed on custom invoice and commercial invoice, the Plaintiff proceeded to submit the custom invoice to the customs in order to obtain the consignment. Furthermore, Plaintiff cleared and used the equipment supplied, they did not store it in warehouse or decline the delivery following the dispute of the original price and alleged old condition of the equipment. This indicates that the agreement was affirmed and therefore cannot now be annulled or rescinded in a sense that the contract is set aside from the start. The Defendant continued to supply numerous medical equipment and consumable medical supplies despite the deterioration of the business relationship. Further the Defendant showed that Mr Seis was involved in promoting the clinic. In the light of this evidence, this Court is of the view that the Plaintiff has failed to prove any bad faith on the part of the Defendant to substantiate the annulment of the Agreement. Breach of contract [31] For the purpose of this analysis the Plaintiff, who is also the Counter Defendant will be referred to as PMK Seychelles and the Defendant, who is also the Counter Claimant will be referred to as PMK Germany. [32] PMK Seychelles claims that PMK Germany breached an implied term of the Agreement by not providing proof of the amount of investment, proof of true price of the equipment. PMK Germany, on the other hand, claims that all the invoices were provided and there is no requirement under the agreement to provide any further proof such as a receipt from the manufacturer or a receipt from another supplier from which AKUD-Med bought the equipment. [33] It would be pertinent at this stage to set out the relevant terms of the Agreement (Exhibit PI) which read as follows: "PURPOSE: Whereas this Agreement outlines the basis upon which the Parties have mutually agreed to enter into a partnership and to collaborate in thefollowing way and in areas of mutual business interest: 1. The Parties affirm their desire to establish a business partnership and co operation between themselves with the view to: • Issuing Shares of EMS to PM/( amounting to 55% (fiftyjive percentum) of the registered and licensed business of EMS, • • That the value of the above 55% (fifty five percentum) equal to the current shareholders by the shareholders 5,063,162.00 or £306,860.00. shall be calculated as loans and equity already paid and disbursed to SRS as at the date hereof, amounting of EMS PM will contribute its 55% stake in the company 10 the equivalent of medical equipment, equipment, supplies, equipment, medical laboratory equipment and reagents, etc. for patient the fee of EUR 5,000 (including all travel costs) and the monthly management commission from KlN- Taping will be charged until the complete business share ofEUR 306,860.00 has been disbursed infull," treatment. Likewise, diagnostic surgical [34] Under the Addendum to the Agreement, the investment value from Mr Seis (PromMedKlinik) for 55% of the shares will be SCR5,063,162 (equivalent to EUR306,860.00 at that time as per the parties); and the investment value from Eurika for 45% of the shares is SCR4,142,587 (already invested to date). The share capital ofPMK Seychelles thereafter would be increased from SCRI0,000 to SCR8,000,000 and the balance would be treated as shareholders' loan. [35] Exhibit P5, an email correspondence between the parties explains the certain background of agreement further, particularly in relation to shareholders' loan. The email is dated 21 August 2018, which was after the signing of the Agreement, 19th April 2019. Mr Seis emailed Mrs Soundy stating that, "as Basil mentioned in our last meeting, that at Seychelles it doesn't make sense to provide a shareholder loan to the company and charge interest as it will be taxed, 1 face the opposite in Germany. If 1 provide the overseas company an interest free loan 1 will be taxed and charged from the tax authorities. " Mr Seis thereafter proposed to increase the present shares instead of providing shareholders' loans. This correspondent indicates that initial intention of the parties was for the investment to take the form of shareholders' loan. However, the parties subsequently decided that equipment equivalent to the investment amount be provided instead, and the balance will be treated as shareholders' loan. Presumably, in Exhibit P5, Mr Seis explained that shareholders' loan from his company was not beneficial for his company, and that he would rather prefer that share capital is increased. [36] Furthermore, although the agreement does not expressly require the Defendant to provide proof of the purchase price or valuation of the equipment, the Plaintiff argued that such proof is an implied term, breach of which justifies rescission. [37] From the above it is clear from the Agreement terms that the parties intended for each contribute a specific amount of investment into the company. PMK Seychelles (formerly Eurika) has already invested their share, while PMK Germany's obligation was to invest such sum equivalent of medical equipment, medical supplies, surgical equipment, diagnostic equipment, laboratory equipment and reagents, etc. for patient treatment. [38] It is also clear that PMK Germany is required to establish that they have indeed invested such amount, that they have provided the equipment equivalent to the said sum. However, the Agreement does not specify the method or documentation required to demonstrate this. [39] The evidence indicates PMK Germany provided PMK Seychelles with two invoices: a 'custom invoice' and a 'commercial invoice'. Commercial invoices are issued by ProMedKliniken (PMK Germany). Custom invoices are either from ProMedKliniken or AKUD-MedPharm. Both companies are affiliated with Mr Seis, which was not denied by him and was disclosed to Mr and Mrs Soundy (directors of PMK Seychelles). The issue between the parties arose because the invoice amounts in the custom invoices tendered were different from the amount specified in the commercial invoices for the same item. For instance, according to Exhibit P41, the commercial invoice amount for item Nikkiso Dialyses Devise DBB-05 is EUR5,890 per unit, EUR 11,780 per two units; whereas in the custom invoice it is EUR400. Upon examination of the invoices tendered, discrepancies in the amounts between the custom invoices and commercial invoices for several equipment are noted. [40] Mrs Soundy explained in her testimony that initially, they would receive a custom invoice from Mr Seis, followed later by a commercial invoice. Initially, this caused confusion regarding the prices for the consumables also, as the clinic was selling the medicine at prices based on the custom invoice. However, payment for the consumable was required to be made based on the commercial invoice. This discrepancy initially resulted in losses for the clinic. [41] Mrs Soundy further testified that the agreed practice was for the custom invoice to be submitted to customs rather than the commercial invoice. This is further evident from Exhibits PI} and P12, which are email correspondences between Mr Seis and Mrs Soundy. In the email dated November 17th (Exh P 11), Mrs Soundy explained the ambiguity in relation to prices and stated that "both custom and commercial invoice must be the same in both list of items and cost of items. They must not differ ". In the email of 19th November (Exh P 12) Mr Seis states that, "so I issue a monthly cumulated invoice based on several deliveries. In the container the items as per custom invoice ". Mrs Soundy then replies the following: "So we will apply for customs pass as per the customs invoice then and not the commercial. Best way to simplify for us all is each consignment has its own invoice, not cumulated because we do the costing/pricing and each invoice is attached to that. Will proceed for the container one now as per customs invoice but I assume that the real cost is as per commercial invoice. s s [42] From this email, it is clear that the custom invoice values of items were submitted to customs. It appears however that Mrs Soundy admits in this email her assumption that the 'real' cost is as per commercial invoice. From the evidence before Court, PMK Seychelles was paying for consumable according to the commercial invoice. The issue then arose as to the 'real' cost of the equipment and PMK Seychelles began to request the 'manufacturer receipts' from Mr Seis, as the costs of the custom and commercial invoices generated by his companies differed. [43] Mr Seis, in his evidence, explained the process of purchase and import as follows. He testified that equipment was purchased from AKUD-MedPharm because it is a wholesale company, having supplies to the Middle East, and the company gets special, cheaper prices. He further testified that his company, PKM Germany, is not a trading company and cannot sell or export the equipment, which is why AKUD-MedPharm was involved in shipping equipment to Seychelles and PMK Germany was issuing the invoices to PMK Seychelles. Mr Seis testified that directors of PMK Seychelles were aware of this process, they were aware that there are two invoices and that commercial invoices represented the accurate price (see page 17-19 of the proceedings on 13th September 2022 at 9am). Mr Seis explained the following regarding the different invoices (see pages 23-24 of the proceedings on 13th September 2022 at 9am): Q: A: Was there a necessity to have two invoices? Could you not have one? No because ProMed clinic Germany can't ship or export any items. I don't have a license to export. The license/or ProMed clinic in Germany is mainly management consulting and operating clinics. AKUD-MedPharm has a training license to import and export and you need like what they called the 11: 10:54 number so you can export items. Q: A: Q: A: Q: A: Q: A: What is the difference then between then between the customs and commercial invoice? The customs invoice isjust to get the items out of Germany. How did you calculate the figures It was just a number. For example, for example, the value is 10 Eurofor customs purposes. to put on the customs invoice? if you send the sample outside, you just put a It was said by the Soundys as well that this was a wayfor you to evade taxes. Is 1 correct? 1 do not based on which invoice they taxed - the items in Seychelles. Would the Soundys have benefited as wellfrom lower custom invoices? I have no idea. Asfar know, there is no tax on medical items. [44] Mr Seis then testified that PMK Seychelles only started to ask for the original invoices when he informed them that he had fulfilled his obligations and communication regarding share transfer had begun. [45] During cross-examination the following was put to Mr Seis (refer to page 33-34 of the proceedings on 15th September 2022 at 09.30am: Q: A: Q: A: Q: A: Q: A: Mr. Seis you are not telling the Court the truth. You have told anybody the truth in this matter. Explain to the Court, it is in evidence, why you decided to send commercial invoice and custom invoice differently? Two sets of invoicesfor the same materials that you are sending to Seychelles. Explain to this Court why you did that. 1 already explained on Tuesday. The buyer was AKUD-Med Pharm, which had transferred or sold equipment to ProMed Kliniken Germany. ProMed Kliniken Germany has sold the equipment to Pro Med Klinik Seychelles. Pro Med Klinik is not a trading Company. ProMed Klinik can't export any items abroad, so AKUD Medl'harm has purchased the items but is not an active partner Pro Med Klinik Seychelles, so we just bypassed the materials to send it to Pro Med Klinik Seychelles. What do you mean bypassed? Explain to the Court what do you mean by the word "bypass"? AKUD-MedPharm is not actively involved in the business. AKUD-MedPharm is just buying the things, selling it to ProMed Kliniken Germany and ProMed Kliniken Germany selling it to Pro Med Klinik Seychelles. Active means AKUD MedPharm would have sold the items directly to Pro Med Klinik Seychelles, but the partner of Pro Med Klinik Seychelles was ProMed Kliniken Germany. Who was exporting the materials? AKUD-MedPharm has issued his custom invoice to get the items out of Germany. Is that legal? Of course. Why not? [46] As it appears from the customs and commercial invoices and evidence adduced, PMK Germany was/could have been buying the equipment and/or consumables for the price below the market value. However, as long as the cumulative market value of the equipment provided amounted to the agreed investment amount, PMK Germany would have fulfilled that obligation. In the example ofNikkos device as long as the market value of the device is actually EURS,890, once PMK Seychelles owns the device the asset value is EURS,890, not EUR400. Therefore, the amount of investment is EURS,890. The amount that investor spent purchasing the equipment may be less, however, the value of the item is EURS,890. [47] Accordingly, if PMK Germany shows that market value, not the amount they spent on purchase, of the equipment (at the time of purchase) amounts to agreed investment sum, they would have performed their obligation. [48] The problem arose as PMK Seychelles became concerned whether the market value of the item was as declared by PMK Germany on their invoices. Their focus shifted to the custom invoices, which had lower price. Their concern is understandable as invoice was issued by the interested party in the agreement and not an independent invoice. However, arguably, they could have first checked the market value of the items which were new, themselves (the same way Mr Karanbash checked - online). Mrs Soundy for instance testified that looking at custom invoices for consumable she knew that prices were lower than usual. However, she did not request any manufacturer invoices for consumable and accepted to pay the commercial price, which was closer to the market price. For the refurbished items, an evaluator may have been needed in order to ascertain whether what PMK Germany states on their own commercial invoices actually represented the market value. Value of equipment [49] Therefore, this Court now needs to assess the value of the equipment. According to Exhibit P40 provided by PMK Seychelles, the amount of investment is EUR324,247. Mrs Soundy testified that the figure was based on the commercial invoices sent by PMK Germany, however, she does not agree that PMK Seychelles owes PMK Germany that amount as "the prices given were not justified because we never got the correct invoice from the Company selling these equipment" (see pages 34-3S of the proceedings of 17thSeptember 2021 at 9AM; page IS of the proceedings of 17th September 2021 at l.4Spm). During the same proceedings, a sum ofEUR47,63 1.35 was admitted as the sum that PMK Seychelles owes PMK Germany for the consumables (also refer to Exhibit P40). [50] Mr Seis testified and produced Exhibit D 11, which contains a list of equipment provided, with reference to invoices and prices of the equipment as 'purchase price' and 'equipment invoiced amount'. The document was prepared by him. The document notes that shipment costs are "not involved" in the statement, which are also part of the investment. The total 'invoiced' amount is listed as EUR304,604.20. This is the amount that PMK Germany counterclaims. [51] It should be noted at this stage that shipment costs were not specified as pari of the investment in the Agreement. Shipment costs do not necessarily increase the value of the item; they are the expenditure of the party responsible for the cost of shipment. It is observed that PMK Germany has not included shipment costs as pari oftheir counterclaim. [52] PMK Germany further engaged medical engineer Mr Ahmad Karanbash. His Biomedical Engineering Degree has been certified and recognised by the Seychelles Qualification Authority. PMK Seychelles disputed findings of Mr Karanbash in their submissions, alleging that, "to cover thefact that he [Mr Seis] was unwilling and refusing to produce the receipts he chose to bring a young man, Mr Karanbash, from Lebanon to give him cover in the guise of an expert witness". PMK Seychelles further stated that the method used by the witness to value the equipment was incoherent as he could not tell the year of manufacture of the equipment, could not identify the maker of some of the equipment and he based his pricing from information downloaded on the internet for the year 2023 and "based on what hisfriends in Lebanon related 10 him". It was submitted that he could not support his finding with any concrete fact, and he was not a credible witness. PMK Seychelles however did not provide any alternative expert evidence to the COUlievaluating the equipment. [53] This Court accepts evidence of his expertise and qualifications. He further produced his certificate in proof of his qualifications a Biomedical Engineering Degree. Learned Counsel for the Defendant also called a witness from the Seychelles Qualifications Authority who stated his qualification is recognised by the Seychelles Qualification Authority. [54] Mr Karanbash prepared two evaluation lists. Exhibit D12 lists the equipment that was found in Bodco Warehouse and Victoria Health Clinic; and Exhibit D 13 lists all the equipment supplied and values thereof, estimated according to the market prices. Exhibit D 13 includes the same items of equipment as list D 11 provided by Mr Seis. [55] Mr Seis listed the commercial invoice price in D 11, and Mr Karanbash listed the market price of the equipment for the invoiced year. It is observed that the price difference is not very significant, which illustrates that Mr Seis has not inflated the commercial invoice price and was indeed investing a sum close to the estimated market value of the equipment. Mr Karanbash's list (DI3) total value is EUR303,600. [56] Exhibit D 13 includes equipment, which was also not found by Mr Karanbash, but which was supplied according to Mr Seis. Certain items in D 12 (items found at Bodco and Victoria clinic) are not on the list exhibited in Dl1 and D13. Consequently, it is best to refer to the list of items in D13, which mirrors the items claimed by Mr Seis as investment equipment supplied by PMK Germany to PMK Seychelles in support of the counterclaim. The value that the Court will consider is the value estimated by Mr Karanbash at the invoiced year. Exhibit D12 shows that all the items found, except the gynaecology chair, were found in good condition. [57] Mr Seis' Exhibit D 11 refers to his commercial invoices exhibited by PMK Seychelles. All the missing items (not found at Bodco and Victoria Health clinic), apart from item 73 in Dll "GE Portable Ultrasound Device", valued at EUR8,000, can be found in the commercial invoices issued to PMK Seychelles. Mr Seis refers to invoice number 19/003 for the said item. This invoice was not exhibited. Therefore, this item will not be considered when calculating the total value, as the supply thereof was not proven as the relevant invoice was not exhibited. Total value of items listed in D13 is EUR303,600. The proven value of equipment items supplied by PMK Germany is EUR303,600 less EUR8,000, the totalofEUR295,600. [58] PMK Seychelles raised concerns over several items, equipment and consumables in their email dated February 1,2019 (Exhibit P 18). The concerns are related to items from various invoices dating back to April 2018 and up to December 2018. PMK Seychelles claims that certain items were not requested by them, certain items were not received, ultrasound was still not working, and several items were invoiced twice. [59] With regards to items allegedly not ordered by PMK Seychelles, from the evidence adduced before the Court, Mr Seis stated that he was a consultant to develop the clinic and had a vision of which equipment was needed for the future of the clinic, while the directors of PMK Seychelles had little experience in medical business. PMK Seychelles argued that Mr Seis was 'dumping' equipment on them, however, with the view that he would become a shareholder, it is more probable that Mr Seis would not be providing useless equipment and had indeed envisioned that such equipment would be needed. In addition, the parties discussed that certain items could be sold by the clinic. In any case, the equipment was provided and was in the possession of PMK Seychelles. Therefore, the Court will consider and include this equipment in calculating the amount of investment. [60] With regards to items allegedly not received: Electrode set - item 8 from Inv 18/007; RO for sterilizer - item 33 from Inv I8/008b; and Cytoscope - item 45 from in I8/008b, it is clear from the list of Mr Seis (Exhibit D 11) that he is not claiming sums for the said items (items are equipment). Invoice 18/007 is not referred to in D 11; and under invoice 18/008b only item listed is minivitas Lab Devise incl. PD, Monitor, Printer. PMK Germany's submissions also refer to 'sperm counting chamber' as item allegedly not received by PMK Seychelles. According to P 18, PMK Seychelles did not receive diluent and therefore cannot use the machine. They state that they requested diluent but at that time it was still not received. In any case, the machine was actually found at Bodco warehouse (Exhibit D12) but it was not included in the equipment items claimed by Mr Seis (Exhibit D 11). Consequently, it is not part ofPMK Germany claim even though PMK Seychelles has it. [61] Items that were allegedly invoiced twice (email items 8, 12, 18) are either claimed once or not claimed at all in D 11: Seeman Basis Set - claimed only under invoice 18/004; Memmert Incubator - claimed only under invoice 18/005 once; Monitor with SP 02 BP - not claimed under invoice I8/008b. [62] Regarding specific allegations about the equipment's functionality, PMK Seychelles claimed the ultrasound probe was not operational (Exhibit P 18). PMK Germany submitted that the probe was damaged due to improper use by the Plaintiff or their agents and that the equipment was in working order when it was shipped to the Plaintiff. Item 'Ultrasound Philips HDII with S probes' was found by Mr Karanbash at Victoria Health Clinic. He examined it as being in new condition. Item 'Repair of Philips Ultrasound Probe CS-2 Damaged by Doctor' was not found. Mr Seis testified that the damage to the equipment was due to the improper use. Mrs Soundy in her email (Exhibit P 18) stated that an invoice for repairs is needed; and that ultrasound is still not working, and she requested Mr Seis to ask the technician to come and check the equipment, but Mr Seis never responded. Further Mrs Soundy states that ultrasound was purchased at high price, given its age and "countless problems". The email, however, does not allege that ultrasound was broken when PMK Seychelles received it. Therefore, the court accepts PMK Germany evidence that equipment was damaged by improper use as more probable, and its value will be included in calculating the total cost of the equipment investment. [63] Findings regarding the equipment are summarised as follows. Out of the claimed investment amount of EUR304,604.20 as per amended Counter Claim, the evidence adduced before COUliestablishes the sum ofEUR29S,600 as per the market value indicated by Mr Karanbash in Exhibit Dl3 (less item 73, the invoice of which was not exhibited). It has further been shown that Mr Seis was not inflating the equipment prices as claimed by PMK Seychelles, as the invoiced price under commercial invoice and market value of the equipment only slightly differ as discussed above. Consumables [64] With regard to the consumables, PMK Seychelles admitted that the amount owed to PMK Germany is EUR47,631.3S. This was calculated by Mrs Soundy (Exhibit P40) and agreed during her testimony (page 16 of the proceedings of 17th September 2021 at 1:4Spm). [65] PMK Germany is claiming EUR68,132.30 in the Counterclaim. According to Exhibit D2, an email from Mrs Soundy to Mr Seis, dated 4th July 2019, the outstanding amount to be paid was EURl17,774.40. Mrs Soundy accepts the said outstanding amount in the email and indicated that EUR50,000 transfer was to be done next week and the balance at the rate of EUR3,OOOper week thereafter. The amount left to be paid after EUR50,000 would have been EUR67,774.40, which is slightly less than claimed by PMK Germany. According to Exhibit P29, an email from Mr Seis dated 2211e! July 2019, he indicates that outstanding amount for consumables is EUR65,575.70. [66] Therefore, upon analysis of the evidence produced, PMK Germany, who must prove its claims under the Counterclaim has not established the full amount claimed, namely EUR68,132.30. Both parties agreed as of 4th July 2019 that the outstanding amount was EUR67,774.40. Mrs Soundy, while claiming that only EUR47,63 1.35 remained to be paid for consumables, has not produced any proof of payment of invoices for consumables after 4thJuly 2019. Further correspondence of 2211d July 2019 indicates that outstanding amount had been reduced to EUR65,575.70 as indicated by Mr Seis himself. Consequently, the said amount will be awarded as unpaid amount for consumables. Management Fee [67] Term of agreement provides: "PMwil! contribute its 55% stake in the company to the equivalent of medical equipment, medical supplies, surgical equipment, diagnostic equipment, laboratory equipment and reagents, etc.for patient treatment. Likewise, the monthly management fee of EUR 5,000 (including all travel costs) and the commission from KIN-Taping will be charged until the complete business share of EUR 306,860.00 lias been disbursed infull. " (emphasis added) [68] The understanding of this term is that management fee is to be charged until business share has been disbursed of, meaning that fee is to be paid until PMK Germany becomes shareholder through fulfilment of the obligation. Through email evidence and testimony adduced before the Court, it appears that parties wished to include the management fee towards investment or as pari of the investment. However, from the term of the Agreement it is clear that it was supposed to be separate. [69] In the email of 8th November 2018 (Exhibit P9) Mr Soundy refers to unpaid management fee for six months, indicating that Mr Seis can invoice for the said fee. Further, in the email of 3rd July 2019, Mr Seis also states that no management fees have been paid. [70] This evidence indicates that no management fee was ever paid. Directors of PMK Seychelles argued that Mr Seis did not perform management services to their expectations, however, evidence before the COUli indicate to the contrary. Apart from the supply of equipment and consumables, Mr Seis, on behalf ofPMK Germany, further performed his obligations by negotiating deals which could have benefitted the clinic in the future. Therefore, the management fee is substantiated and shall be awarded. [71] In the email dated 9th August 2019 (Exhibit P30) Mr Seis informs PMK Seychelles that their order is ready for shipment pending outstanding payments amounts. In the email exchange of 20th August 2019 Mr Soundy insists upon delivery of goods, referring to payment of invoice 19/004 and Mr Seis informs him that PMK Seychelles have not paid their overdue amounts for previous deliveries. The email exchange establishes that despite the disagreement between the parties, PMK Seychelles was still requesting supply of consumables from PMK Germany. The Plaint was filed on 2nd October 2019, dated 30th September 2019. Which is just over a month after email exchange. [72] Therefore, this Court awards PMK Germany the monthly management fee for the period starting the following month of the date of the Agreement, 19th April 2018 until the date of filing of the Plaint. Amount until 2nd October 2019 is for 17 months (starting from 19th May as l " monthly fee until 19th September) and 12 calendar days (from 19th September until 2nd October). Amount for 17 months is EUR85,000. Amount for 12 calendar days would amount to approximately EUR2,000 (EUR5,000 per month is approximately 166.67 per calendar day). Total ofEUR87,000 shall be awarded. Determination [73] As established by the evidence adduced before the Court, at the time the business relations deteriorated between the parties, the investment sum contributed by PMK Germany in kind by supplying medical equipment amounts to EUR295,600. The prices on the commercial invoices were not inflated, as evidenced from the market value estimated by Mr Karanbash. [74] The outstanding amount to be paid by PMK Seychelles to PMK Germany for consumables is EUR65,575.70 as determined by the Court based on the adduced evidence. [75] Consequently, at that time, the amount of investment has not yet reached the agreed amount (as established by evidence); and consumables and management fee were not part of the investment. PMK Germany, at that time, provided commercial invoices for the equipment issued by PMK Germany. PMK Seychelles were not satisfied with the said invoices and requested manufacturer receipts. As the evidence now before the Court shows, invoiced amounts for equipment were not inflated as suspected at that time by PMK Seychelles. Due to the deteriorated relationship PMK Germany was not able to fulfil its investment obligation. The parties were still in communication regarding shipment of consumablcs til' to the end of August 20 J 9 despite their disagreements. PMK Seychelles filed the Plaint on 2nd October 2019 for rescission of the Agreement. [76] During the course of these proceedings, PMK Seychelles has sold the business (admitted by Mr Soundy - see pages 17-19 of proceedings of 31 May 2021 9.30; and testimony of the new owner). The sale was done despite the Court Order given in MA76 of 2020 on 3rd June 2020, granting a motion, which prohibited the disposal or transfer ofPMK Seychelles shares. [77] PMK Seychelles sold the shares in breach of the Agreement between the parties. Pi'v!l( Seychelles has not established that the Agreement should be nullified and set aside from the outset. PMK Seychelles has continuously affirmed the Agreement. . [78] Consequently, the Plaint filed by PMK Seychelles is dismissed. The counterclaim succeeds, and PMK Germany is awarded the amounts claimed to the extent established by the evidence before the Court. PMK Germany claimed moral damages, which the company has not substantiated. Therefore, moral damages are not awarded. [79] The final amounts to be paid in damages are: (i) (ii) (iii) in equipment - Investment Unpaid consumables - Unpaid management fee- EUR295,600 EUR65,575.70 EUR87,000 Total of: EUR448,175.70 [80J The Court grants PMK Germany the following prayers: (i) The Plaint is dismissed; (ii) The Plaintiff is in breach of the contractual agreement and should pay the Defendant damages in the sum ofEUR448, J 75.70; (iii) The Plaintiff is prevented from further using the Defendant's brand name; (iv) Costs are ordered against the Plaintiff; and (v) Interest at commercial rate on the sum of EUR448,175.70; from the date of the filing of the Plaint until such time when the total sum is paid to the Defendant. Signed, dated and delivered at Ile du Port on 11 til December 2024 Burhan J 22