Prosper Loses Once Again at the High Court

The long lasting court battle between Tekleberhan Ambaye Construction Plc (TACON) and Prosper International Plc regarding a machinery rental deal concluded with a ruling against Prosper at the Lideta High Court. Prosper has decided to appeal the ruling to the Supreme Court, claiming the lower court’s ruling has a legal error.

The ruling that was passed on March 13, 2016 by the presiding judge Sintayehu Zeleke, rejected Prosper’s demand for a payment of 6.8 million Br for the time the machines were rented to TACON remained idle at project sites.

TACON was the first to file suit in the case, on December 27, 2014, for recovery of the advance payment it has given to Prosper for the rental of two wheel loaders and a dozer to carry out excavation works on its project at Yayu Fertilizer Factory in Illibabour zone, Oromia Region.

TACON asked for the recovery of the advance payment of 204,460 Br. It claims that the machines it rented from Prosper had mechanical problems, to the extent of stopping operations as of August 4, 2012. Therefore, TACON claimed, Prosper should pay back the money for the time the machines were not working.

TACON paid a down payment of 460,000 Br for the two loaders, to work for 400 hours each, and 1.05 million Br for the dozer, which was set to work for 500 hours. According to the agreement, the deal was for an unspecified time duration.

However, the two machines worked 355 hours less than they were supposed to, a time span which is worth 204,460 Br. TACON claimed the machines did not work due to mechanical problems. Prosper said that the machines did not work due to TACON’s own failure to use the delivered wheel loaders for jobs.

On February 1, 2015, Prosper, which was founded by Yemane Mekonnen, filed a counter charge, claiming 6.8 million Br from TACON for the time that the machines had spend at the project site.

Prosper also added that in the middle of the dispute, it had rented one of the machines to Felema Construction Plc, a construction company owned by the brother of the founder of TACON, Tekeleberehan Ambaye. However, it claimed that TACON prevented it from taking back the machines after the completion of Felema’s project. Prosper also stated that TACON had to deliver the machines back to the company, but failed to do so.

Prosper further claimed that the allegations against it by TACON were made in order to thwart it from making its legitimate claims. Prosper claimed that it never received any written notice that the machines failed to work.

The High Court rejected both claims on October 21, 2014, saying that TACON did not provide evidence showing that it had given notice of the machineries’ breakdown, and that there was evidence that Prosper had already taken all the money due when it took the advance payment.

After the High Court’s ruling, Prosper took the case to the Supreme Court, appealing the lower level court’s ruling on the grounds of legal errors in deciding that the machinery rental contract was closed and fixed only for 400 hours. Prosper argued the contract was for an undefined period.

TACON then presented a counter appeal to the Supreme Court, on the grounds that the lower court had seriously overlooked its requests.

The High Court did not pay attention to TACON’s detailed request for orders and documentary evidence, including the request for machinery inspection orders and documentary evidence from the regional meteorology office.

Both appeals were deemed admissible to the Supreme Court. The Bench examined the ruling of the lower court and heard oral litigation. Despite the long list of claims and counter claims and appeals, the Supreme Court Bench, presided over by Desta Gebru, Gebeyehu Feleke and Alemayehu Shunara, deliberated on three major points.

The ruling of the Supreme Court reasoned that the lower court had overlooked substantial questions that needed to be answered including the issue of returning the machines to the owner, the issue of Force Majeure (unforeseeable circumstances that prevent someone from fulfilling a contract) which was claimed by TACON, and had shown lack of rigour in assessing evidence and hearing witnesses.

The Supreme Court ordered the lower level court to assess documentary evidence, listen to oral litigation, and further amend its judgement that maintained the status quo. The two parties then faced each other again in the High Court.

When the case was returned to the lower level court, the claims about the dozer were excluded, leading Prosper to file another appeal with the Supreme Court to review it, if it was a typing error that excluded the dozer. However, the Supreme Court ruled that there was no typing error, nor was there a legal error that needed to be explained. Therefore Prosper took the case to the Cassation Bench, appealing that the exclusion of the dozer was incorrect. The case will be seen by the Cassation Bench on April 3, 2017.

Following the orders from the Supreme Court, the lower level court heard witnesses for both parties. Four of Prosper’s witnesses testified that the machines could not cover the remaining time, as TACON had not provided work for the machines. They also testified that although one of the loaders had mechanical problems in relation with a hose, it was fixed and working after a week of maintenance.

On the other hand, three witnesses for TACON explained that the machines could not work, as they had problems with their tires and linkage of their hoses. The repeated problems caused the machines’ non performance. The eventual start of the rainy season caused the total halt of the project work.

Prosper claims that one of TACON’s witnesses was related to the owners of the business, and was the former operator of one of the machines. But once he left Prosper, due to a disagreement, he was hired by TACON. Prosper alleges that he had a personal reason for testifying against them, and therefore his testimony should be discounted.

On the other hand, TACON claims that the operator was hired legitimately and before the case was filed.

According to the judge’s ruling, TACON’s witnesses explained the situation better than Prosper’s. The loaders could not work, not because of problems caused by TACON, but rather because continuous mechanical problems and the rainy season blocked them from working on the site.

The ruling also concluded that Prosper did not take the machines back on time after being informed by TACON. Therefore, TACON could not be held accountable for paying for the time that the machines remained idle at the project site, according to the ruling.

In addition to that, Sintayehu ruled that TACON did not sanction Prosper to remove the machines from the site. Therefore it would not be held accountable for the damages to the machines. The ruling also ordered Prosper to cover TACON’s legal expenses.

“From the beginning, the court should not have hear the testimony of the witnesses, as the contractual agreement could solve the case simply,” said the deputy manager of Prosper.

According to the agreement TACON had to return the machines to Prosper and pay for the time the machines stayed idle at TACON’s site. In addition, the contract was for an unspecified time frame, claims the deputy manager. But for a legal expert who specializes in construction and engineering contracts, the contractual agreement between the two companies clearly shows that they had specified duration.

Even if the agreement stated that the duration is unspecified, it clearly stated that the machines would work for 400 hours. In addition to that, it shows that Prosper received 400,000 Br. The space for the remaining payment is nil, which means the company received all due payments.

“From the beginning the case should not have been taken to court,” says the expert. ”The two parties could have reached an agreement through discussions.” He also explains that there are faults on both sides.

TACON did not give Prosper notice while it claimed the machines are broken down. In return Prosper had to take back the machines when the agreed 400 hours were completed whether the machines worked or not, claimed this expert. Therefore he concludes that the ruling of the High Court is legitimate.

“We accept the ruling of the High Court striking down our initial claim for the recovery of the advance payment because we did not notify the company with a written statement when the machines were not working and when we terminated the contract,” Nega Getaneh, TACON’s lawyer told Fortune.

“We will definitely appeal to the Supreme Court,” said Prosper’s deputy manager.

For the Record:

On our story published on March 26 2017, headlined “Prosper Loses Once Again At the High Court”, the statement of the legal expert reads that “TACON did give Prosper notice while it claimed the machines are broken down”. The statement should have read “TACON did not give Prosper notice while it claimed the machines are broken down”. We apologise for any inconvenience this mistake may have caused.

Editors’ Note: Mistakes may occur during information gathering, reporting, editing or designing. It is the policy of our newspaper to correct such mistakes when we realise them, or immediately after they are brought to our attention.