Chez Deenu Ltd v Seychelles Breweries Ltd (Civil Side No. 169 of 2008) [2011] SCSC 42 (30 May 2011);

THE REPUBLIC OF SEYCHELLES

IN THE SUPREME COURT OF SEYCHELLES HOLDEN AT

VICTORIA

Civil Side No. 169 of 2008

Chez Deenu Ltd …...................................................................................Plaintiff

Versus

Seychelles Breweries Ltd ….................................................................Defendant

 

 

Karen Domingue for the Plaintiff

Francis Chang-Sam for the Defendant

 

 

 

JUDGMENT

 

 

 

Egonda-Ntende CJ

1. The plaintiff is body corporate engaged in import, wholesale and retail trading activities in Seychelles and for purposes of this case was a distributor for the defendants' products in Mahe at all material times. The defendant is a body corporate manufacturing soft and alcoholic beverages. The last written agreement between the parties was in 2004 and thereafter it was subsequently renewed until it was terminated by notice on 1st December 2007.

2. The plaintiff contends that it incurred heavy losses between 2004 and 2007 as the commission paid to it by the defendant was low. Much as the defendant kept promising that it would increase the commission it informed the plaintiff in November 2007 that it would not increase the commission. In order to avoid further losses to the plaintiff upon the defendant confirming that it would not raise its commission in August 2007 the defendant was compelled to give notice of termination of the agreement dated 22nd July 2007.

 

3. The plaintiff continued supplying the defendant with its distribution services up to the end of November 2007 while the plaintiff continued to negotiate for an increase in commission. By the defendant's conduct the defendant did not accept the plaintiffs notice of termination until on the 23 November 2007 it suddenly informed the plaintiffs that as from the 1st December 2007 the distribution agreement would come to an end.

4. The plaintiff further contends that this sudden and unexpected acceptance of the plaintiffs termination of the distribution agreement caused the plaintiffs business to reach a standstill and the plaintiffs clients stopped paying their dues to the plaintiff, resulting in heavy financial losses to the plaintiff.

5. The plaintiff asserts that it would not have continued with the distribution agreement had the defendant not promised that it would increase the commission it paid to the plaintiff. The plaintiff therefore seeks to recover from the defendant losses suffered from 2004 to 2007 amounting to Rl,822,894.75. The plaintiff further contends the defendant has been unjustly enriched and the plaintiff correspondingly impoverished in the sum of Rl,822,894.75.

6. In the alternative the plaintiff contends that had it invested Rl,822,894.75 it would have received financial benefit to the tune of Rl ,211,947.00 for which the defendant is liable. The plaintiff prayed for costs of this action.

7. The defendant opposed this action. It denied all allegations in the plaint except those specifically admitted. The plaintiff entered into a distribution agreement with the defendant for certain products and that this agreement was terminated by the plaintiff. The defendant was not aware of the persons and establishments to whom or which the plaintiff sold the defendant's products and the terms and conditions thereof.

8. The defendant admits that the plaintiff had requested for an increase in commission but the defendant had rejected this request upon which the plaintiff made other proposals of increased share of the market to 50% and a transport contract for products to the Inter Island Quay, all of which were not accepted by the defendant. The commission to be paid to the plaintiff was discussed before the renewal of any agreement with the defendant. The defendant categorically denied ever promising to increase the commission as claimed by the plaintiff.

 

9. The plaintiff after notifying the defendant of the termination of the distribution agreement put the termination on hold as it sought new terms, including a 50% share of the market on Mahe, which were rejected by the defendant. The plaintiff continued distribution of the defendant's products on an ad hoc basis at the same rate of commission. The defendant denied that its acceptance of the termination of the agreement was not abrupt given that its letter of 23rd November 2007 was in response to the plaintiffs letter of 20th November 2007 notifying the defendant that it was terminating the distribution agreement on 1st December 2007.

 

10. The defendant denied that it was responsible for the losses incurred by the plaintiff as the plaintiff entered into the distribution agreement voluntarily. The plaintiff agreed to enter into the subsequent renewals voluntarily until the agreements expired and on 14th August 2007 when it provided notice to terminate the agreement.

 

11. The defendant contends that the claims of the plaintiff are misconceived in law, an abuse of process and vexatious.

 

12. In her submission to mis court Ms Karen Domingue, learned counsel for the plaintiff, submitted that the plaintiffs claim is based on unjust enrichment rather than contract as the plaintiff cannot avail himself of another action in contract, or quasi-contract, delict or quasi-delict. She submitted that all the losses that it is claiming from the defendant are directly related to the fact that the plaintiff was supplying the defendant with its services.

 

13. Ms Domingue argued a second head of liability which she called loss of opportunity. She submitted that the conduct of the defendant caused the plaintiff lost opportunity in the sum of Rl ,211,947.00 which the plaintiff would have earned had the plaintiff directed its resources into other investments. The plaintiff did not do so as he had all along been promised by the defendant that it would review the terms and conditions of the agreement between the parties. Ms Domingue relied on article 1135 of the Civil Code of Seychelles.

 

14. Mr Francis Chang-Sam, learned counsel for the defendant, submitted that the plaintiffs contract was or ought to be grounded in contract or at the very least in quasi contract. Combining this claim with a claim for unjust enrichment ran afoul of the law. He referred to section 1381 of the Civil Code of Seychelles as well as Robert Labiche V Desita Ah-Kong SCA 33 of2009 in support of that proposition.

 

15. I agree with Mr Francis Chang-Sam that the law bars combining a claim for unjust enrichment with a claim based on contract or quasi contract. As Hodoul JA stated (with the rest of the court concurring) in Robert Labiche V Desita Ah-kong SCA 33 of2009.

 

' [15] Where a concubine knows or is advised that, on the facts, that he /she is unable to establish a societe de fait, as the ultimate resort available is an action de in rem verso (unjust enrichment), grounded on article 1381-1 that such action de in rem verso is only available where a concubine cannot bring an action in contract or quasi-contract, "...if the person suffering the detriment cannot avail himself of another action in contract, or quasi-contract, delict or quasi-delict;.."

[16] In the present case, it is our finding that the claimant is combining a claim based on societe de fait with one based on "unjust enrichment" or de in rem verso, which article 1381-1, CCS, clearly prohibits. This constitutes a fundamental error which, on its own, is fatal to the action.'

 

16. When one reads the plaint it is clear that the relationship of the parties is rooted in contract. The parties had a written agreement which they had signed. The parties rolled over this agreement and until the plaintiff finally decided to give notice of termination of this agreement effective 1st December 2007 and the defendant accepted the said notice. Any losses from that relationship can only be governed by their agreement, unless the agreement is set aside on grounds of duress, fraud, mistake or other acceptable ground.

 

17. The submission of Ms Domingue that this action is not rooted in contract but unjust enrichment does not fly in the face of the pleadings including the claim for loss of opportunity which are firmly rooted in the agreement between the parties. Following the decisions of the Court of Appeal in Robert Labiche V Desita Ah-kong SCA 33 of2009 and Macdonald Isaac v Andre Ouilindo SCA No. 25 of20091 find that it is a fundamental error to bring an action for unjust enrichment coupled with an action in contract, or where the cause of action can only lie in contract, or quasi-contract.

 

18. It is not sufficient, as Ms Domingue has done, to claim that an action is not grounded in contract when the only relationship that binds the parties together and from which any legal relationship would arise is the agreement between the parties. Article 1134 of the Civil Code of Seychelles provides,

'Agreements lawfully concluded shall have the force of

law for those who have entered into them.

They shall not be revoked except by mutual consent or

for causes which the law authorises.

They shall be performed in good faith.'

 

19.Given my finding as above, I find it unnecessary to review the evidence adduced by the parties. In the result I dismiss this action as untenable in law with costs.

 

Signed, dated and delivered at Victoria this 31st day of May 2011

FMS Egonda-Ntende

 

Chief Justice