Feedlot company accuses BMC of breach of contract
Court of Appeal (CoA) will on Thursday this week, decide if the Botswana Meat Commission (BMC) should pay P9 million damages, for breach of performance contract with Northern Ranching Pty Ltd, a Botswana based feedlot company.
According to court documents Northern Ranching Pty Ltd and BMC entered into a cattle feeding contract which stated that the commission will deliver cattle to the feedlot company. The three-year contract which ended in 2014 stated that the main obligation of the feedlot company was to feed the cattle it receives from BMC and prepare them for slaughter.
Appearing before CoA, Collins Newman lawyer representing Northern Ranching, Mutande Kaluze argued that BMC breached the terms of the contract, as it never delivered cattle to the company during the three-year period and this resulted with the feedlot company losing over P2.5 million. It has emerged at CoA that before signing the feeding contract BMC ordered the company to build a world class feedlot facility for the feeding tender which was completed and human resourced by the time the contract was signed.
“BMC failed to deliver cattle so that the feedlot could start operating and following the commission’s failure to deliver the cattle for the entire period of the contract, the feedlot was unable to operate to repay its loan which was taken to construct feeding structures and the company also failed to repay its manpower expenses and suffered damages,” said Kaluze. The lawyer has indicated that as a result of non-performance of the contract, Northern Ranching suffered damages amounting to P2 764 111. “Capital expenditure, payment of salaries for manpower and maintenance costs were made because the feedlot was held in a state of readiness, awaiting delivery of cattle from BMC. For the 36 months that cattle were not delivered the feedlot company costs of maintenance was P2 764 111 which were the costs of constructing the facility and keeping it ready to receive cattle,” said Kaluze.
After maintaining the feedlot for 3 years, Northern Ranching is claiming P9 million from BMC which was the projected profit for the 36 months of the contract.
Northern Ranching further argued that the feedlot was made to accommodate 3000 to 3500 cattle per feeding cycle for three months and this was clearly stated in the contract. The company said BMC’s inability to deliver the agreed number of cattle was due to its own incompetence.
BMC has however argued that it had no obligation to supply the company’s feedlot with cattle and stated that it could not deliver cattle due to the outbreak of Foot and Mouth Disease (FMD). The Commission has indicated that when the feedlot was ready to be utilized several problems were encountered, including the shortage of cattle to be delivered to the feedlot while the other problem was the outbreak of foot and mouth disease in Zone 6 as well as the loss of the EU market due to non -compliance.
“There were some difficulties in rounding up cattle because of rain and the outbreak of foot and mouth in Zone 6 and some of the risks were provided for in the contract and some were not provided for,” said the commission in the heads of argument filed at CoA. BMC also argued that the agreement provided that it would be excused from performance where the delivery of cattle is made impossible by amongst other things Foot and Mouth Disease.
The commission insisted it does not owe the feedlot company any damages for non-performance of the contract but instead claims it is owed P650 000 which was loaned the company to buy feeds for the feedlot.