American Stores Ltd v Attorney General (Civil Cause No. 713 of 1994 ) (713 of 1994) [2004] MWHC 39 (29 June 2004);






                   Msisha SC, Counsel for the Plaintiff


This is an order for assessment of damages pursuant to the judgment of Mwaungulu J dated the 22nd day of October, 2003 and a further order of the Judge made on 30th day of March, 2004 directing that assessment of damages be made by the Registrar.

The plaintiff, American Stores Limited by Originating Summons issued on the 7th day of April, 1994 commenced this action against the defendant, the Attorney General seeking the determination of the following questions:

1.  Whether the Forfeiture Act under which the plaintiff’s assets        were seized was in contravention of the constitution and the Universal Declaration of Human Rights.

2.  Whether the application of the said Act to the plaintiff was constitutional.
3. Whether the failure to inform the plaintiff of the grounds for the application of the provision of the said Act did not render the defendants’ action unconstitutional and invalid as being contrary to natural justice.

4. Whether it was lawful to apply the provision of the said Act to a limited company.

Further, the plaintiffs sought for an order for an account for assets seized and disposed of by the Government of Malawi.

The court granted the orders prayed for and directed that assessment of damages be before the Registrar.

The defendants despite being served with notice of appointment to assess damages did not attend the assessment.  The plaintiff brought one witness.

Edward Augustine Kavwenje of Kavwenje Associate, P O Box 1406, Blantyre testified on behalf of the plaintiff.  It was his testimony that he is a fellow of Association of Chartered Accountants since 1993 and that he has 15 years experience in public auditing in which he has worked for various auditing firms auditing for for organizations, companies, donor funded projects etcetera.  He informed the court that he knows the plaintiff company as a result of an assignment he was given to work out the current value of the company which was valued at K11,250,000 in 1983.  He further informed the court that he considered the valuation from two perspectives namely: rates of exchange in relation to US dollars and interest rates prevailing in Malawi from 1983.  In following the exchange rate approach he informed the court that in 1983 US $1.00 was equal to K1.13 and in June 2004 the exchange rate is at US $1.00 for K110.  it was therefore his further testimony that in 1983 K11,250.000 translated to $9,956,000 which in 2004 converts to K1,095,160,000.00, that is assuming the money was just locked up somewhere without being used, that is the conservative approach.

He then took the court through the interest approach.  He informed  the court that he used this approach to signify that if the money had been placed in a deposit earning account it would have generated some money through interest.  He therefore informed the court that he considered a rate below the prevailing current bank lending rates, hence also adopting a conservative approach.  In that respect he informed the court that between 1983 and March 1992he adopted a rate of 15% per annum which translates to 1.25% per month and between April 1992 and April 2004 he adopted a rate of 35% which therefore translates to a total accumulative interest of K1,722,320,485.00 which would have been earned.  (He tendered Exhibits ‘EAK1’ sheet of exchange rates; and ‘EAK 2’ sheet of computations).

This witness then informed the court that during the period in question the rate on return on Treasury Bills averaged over 40% and that if he had assumed this money was being traded then the returns would be very high on capital from 35% to over 50%.  Furthermore that when two approaches give slightly different figures then one ought to take the average.  In that respect he calculated the average of the two figures which came to K1,408,740,243.

Mr Msiska, SC made a strong and detailed submission on behalf of the plaintiff and I thank him for assisting the court.  He has therefore submitted that all things considered the plaintiff ought to be awarded sufficient damages to compensate for the deliberate acts of the State which grossly interfered with and interrupted the running and growth of a business venture.  He has further submitted that the plaintiff business was likely to have grown although the figures worked out assume a static business.  He finally submits that in the instant case the plaintiff is entitled to K1,408,740,243.00.

The matter arises as a result of the seizure of assets of the plaintiff company by Government and therefore damages awarded ought to be for conversion.

It has been stated by the learned author of Mc Gregor on Damages, 14th edition at page 717 that the normal measure of damages for conversion is the market value of the goods converted.  This is said to be well settled as per Lord Macmillan in Caxton Publishing Co. v. Sutherland Publishing Co.  [1939] AC 178/190:

“The principle on which damages for conversion should be awarded ……. Is well settled.”

The same principle is well emphasized in the words of Greer, L.J. in Hall v. Barclay [1937] 3 ALL ER 620 at p. 623 as follows:

“where you are dealing with goods which can be readily bought in the market, a man whose rights have been interfered with is never entitled to more than what he would have to pay to buy a similar article in the market.”

The plaintiff in this matter having lost its assets in 1983 if the same were to be restored they would be entitled to the present market value of the assets.  The problem arises where there is no market value or the market value cannot be ascertained.  Nevertheless courts have held that the value may be calculated as at the time of conversion or at any subsequent time because the plaintiff might have had a good opportunity of selling the goods if they had not been detained Greening v. Wilkinson [1825] 1 C9P. 625.

The learned author of Mc Gregor on Damages 14th ed. P. 719 further submits as follows:

“….the soundest approach is to start off with the value at the time of conversion as the prima facie measure: this is in accord with the general principle that damages are to be assessed as at the date of the wrong.  The effect upon this measure of damages of increases and decreases in the value between wrong and judgment must then be considered….”

This view was further enunciated  and emphasized in Sachs v. Miklos [1948] 2KB 23 at p. 39 where the court of Appeal stated thus:

      “The value of the goods converted at the time of their conversion, is one thing…. but it does not follow that the sum is the measure of the plaintiff loss.  The question is what is the plaintiff’s loss, what damage he has suffered, by the wrongful acts of the defendants.”

The plaintiff as already stated herein brought one witness who satisfied the court that he is an expert witness.  By employing the two approaches be  used  he has assisted the court in coming up with a figure representing in a way what the plaintiff’s company would be valued as at of April 2004.  He has explained to the court as to the loss occasioned to the plaintiff as a consequence of the defendants’ wrongful actions.

Furthermore this witness, to the satisfaction of the court explained why he settled for the average of two two figures from the two approaches he followed, to ascertain the loss incurred by the plaintiff.  His testimony was unchallenged and therefore it ought to stand.

In the circumstances I am satisfied that the loss occasioned to the plaintiff as a result of the defendants wrongful act amounts to K1,408,740,243.00 and I consequently award damages for conversion in that sum of K1,408,740,243.00 to the plaintiff with costs.

MADE in Chambers this 29th day of June, 2004 at Blantyre.

S A Kalembera