A local company, Lilongwe City Mall Limited, has filed a statement of claim at the High Courtâ€™s Commercial Division of about K0.5 billion (about $1.9 million) kwacha over breach of contract.
Lilongwe City Mall Limited, according to the statement of claim published in Mondayâ€™s edition of The Nation, signed a binding leasing proposal outlining basic terms of tenancy in Lilongwe with South African-based firms, Truworth and Woolworth.
Truworth is one of South Africaâ€™s leading fashion retailers with over 350 stores in South Africa and 19 franchise operations in Africa and the Middle East while Woolworths runs a chain of retail stores offering customers a selected range of clothing, food, homeware, beauty and financial services under its own brand name.
The South African firms, after entering the agreement, were on February 14 last year expected to come to Malawi to occupy the premises the Lilongwe City Mall Limited designed for them, but failed, according to the statement of claim.
The local company, through its lawyer Maziko Sauti Phiri, is claiming the sum of $598 793 (about K150 million) being expenses for specialised installation incurred for two shops, $1 093 035 (over K273 million) for loss of income and interest rate to be determined by the court and cost of the court action.
The amount claimed, minus interest rate and cost of the court action, is K460 177 216 (about $1,840,708.864 at current exchange rate).
Lilongwe City Mall Limited used substitute service to serve the summons on Woolworth and Truworth, which is by publication in a newspaper in general circulation in the country, and the order for substituted service was granted by Judge Frank Kapanda.
This service is used when the claimant is unable to trace the defendant or when the defendant is deliberately dodging service of summons. The court, within a specified period, hears the matter and enters a default judgement if no acknowledgement of service is made.
Sauti-Phiri, who is representing Lilongwe City Mall Limited, said he was unable to take questions because he was at the airport and about to fly out of the country. He asked for a questionnaire.
By the time we went to press, he had not yet responded to an emailed questionnaire in which Business News sought to know why his client opted for substitute service.
According to the summons, on or about January 28 2010, Lilongwe City Mall Limited entered into agreement stipulating that Truworth and Woolworth would rent Shop NO GF34 and Shop NO 15 respectively, with lease commencement date of December 1 2010.
The two companies agreed that the premises were to be let as basic shell and that shop lay-outs and design are the responsibility of the tenant.
But the defendant later asked the plaintiff to undertake the specialised installations in both shops, thereby incurring expenses as is indicated to be part of the claim after the defendant failed to occupy the premises.