Orchid Loses Fierce Court Battle Over Machinery


Justices of the Cassation Bench closed the case ruling in favour of Yonas's ownership of machinery




Justices at the Cassation Bench of the Supreme Court closed a five-year court battle between former business partners over machinery ownership, awarding Yonas Kassahun three pieces of construction equipment valued at 106,000 euros.

During their last session held on October 15, 2018, the five justices including the president of the Supreme Court, Dagne Melaku, passed a final verdict unanimously overruling the judgement of the Supreme Court. Eight months ago the Federal Supreme Court had closed the case upholding the ruling of the lower court that granted Orchid Business Group ownership of the machinery.

The court battle was initiated on March 4, 2013, when Orchid filed a lawsuit petitioning the court to rule over sales contract and order Yonas pay punitive damage for days the machinery remain idle. In this initial legal suit, Orchid claimed that it purchased three bobcat crown loaders, a wheel loader and a forklift during a bid it won to rent out the machinery to two companies – Petronas and Ford – engaged in oil exploration in the southern parts of the country.

Orchid’s general manager, Akiko Seyoum, found the German Bobcat Bensheim GmbH company while browsing the internet and signed a contract with the company for the purchase of the machines through a Dubai-based company, Soldan International, claims Orchid.

“The machinery was imported to the country using the duty privilege of Yonas, following his offer,” reads the charge.

Shipped into the country under the name of Yonas and Yared Fikre, who held power of attorney from Yonas they received the shipment and then transferred the machines to Orchid, according to the lawsuit. Yonas signed a sales agreement to sell the machines to Orchid for 1.9 million Br and the two companies started the ownership transfer process, states the petition.

During this process, Yonas created a nuisance that led to the detainment of the machinery by police for 104 days, according to Orchid’s initial charge. The plaintiff filed the law suit in the High Court demanding compensation of four million Birr for the delay.

Yonas’s statement of defence submitted on April 15, 2013, argued that the plaintiff had no cause of action and that Orchid had no right to file the case. Yonas asserted that he never agreed to transfer his duty-free privileges and mentioned its illegality. He also stated that he has agreed with Orchid to obtain an investment license for a construction machinery rental business and intended to rent the machine to Orchid.

According to his statement of defence, he had obtained investment and trade licenses through his delegate Yared, after procuring the machines from Germany. He also asserted that he made the payment for the machines, explaining Orchid’s claim of making the settlement via the internet is nothing more than an unauthenticated message.

Later, Yonas filed a counterclaim by stating that his agent, Yared, who was also an employee of Orchid, abused his delegated power by transferring the machines to Orchid. He also noted that Orchid had given him a guarantee letter in July 2012 with an assurance that it would pay him 4.5 million Br in rental fees, excluding VAT in a three-month period.

In his counter-charge, Yonas requested the court deem the purchase agreement between the two as null and void and order Orchid to return the machinery and pay him 13,140 Br a day for each machine for the length of time they remained under Orchard’s control.

On July 17, 2017, after reviewing the case, the Federal High Court ruled Orchid as the owner of the machines stating that the e-mail exchange between Orchid and the German equipment supplier Bobcat Bensheim GmbH, was a sales agreement. However, it relieved Yonas from the four million Birr punitive damage payment claimed by Orchid.

Disagreeing with the ruling of the High Court, Yonas appealed to the Supreme Court arguing that the lower court had made fundamental errors of law in granting Orchid ownership of the construction machinery. However, on March 5, 2018, justices at the Supreme Court upheld the ruling of the lower court, stating they found no fundamental error of law in the High Court ruling.

Yonas petitioned the Cassation Bench on April 5, 2018, claiming both lower courts made fundamental errors of law. In his appeal, Yonas argued that the lower court’s grant of ownership to Orchid was in error since the company did not petition for a judgement of ownership. He requested that the Bench grant him ownership of the machinery.

The Bench, which reviewed the case for the past seven months, ruled in favour of the plaintiff, citing that Yonas has ownership of the machinery as evidenced by entitlement documents and receipts of payment made during the procurement of the machinery.

“The High Court made a fundamental error of law in failing to follow the proper fact-checking process whether the ownership documents Yonas holds were issued by a legitimate authority or not,” reads the judgement.

The Bench, which overruled the lower court’s decision, remanded the case back to the High Court where Yonas has filed a counter charge claiming compensation payments for the machines held by Orchid for the past seven years.

“We will file with the High Court as soon as possible,” said Solomon Emiru, one of Yonas’s lawyer.

“The case concerns machines we paid for,” said Akiko. “We are in possession of evidence to prove it, and we still have legal avenues to pursue the case.”

The lower courts have examined the issues in great detail and have determined likewise that the current ruling differs, according to Akiko.  In any event, the decision concerns three pieces of second-hand machinery that cost, at the time of purchase ten years ago, a mere 106,000 euros. At current exchange rates an amount well below 3.5 million Br, she adds.

“We will seek all legal avenues until the truth comes to light,” Akiko said. “For us the truth matters, and if that requires some patience, so be it.”

The two are also involved in another court battle at the Federal High Court over a 42 million Br payment for material supply for South Sudan’s Independence Day celebration held on July 11, 2011, organised by Orchid.



By FASIKA TADESSE
FORTUNE STAFF WRITER

Published on Oct 22,2018 [ Vol 19 ,No 965]


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