John W. Clayton v Hybrid Poultry Farm Ltd (SCZ 15 of 2006) [2006] ZMSC 27 (24 March 2006)

IN THE SUPREME COURT OF ZAMBIA HOLDEN AT KABWE (Civil Jurisdiction) BETWEEN: (180) SCZ JUDGMENT NO 15 OF 2006 APPEAL NO. 49 OF 2004 JOHN W K CLAYTON APPELLANT AND HYBRID POULTRY FARM LIMITED RESPONDENT CORAM: LEWANIKA, DCJ, CHIBESAKUNDA AND SILOMBA, JJS. On the 5th April, 2005 and 24th March, 2006. For the Appellant: Mr. C. Mundia, C. L. Mudia and Company For the Respondent: Mr. C. Chonta, Lewis Nathan Advocates JUDGMENT SILOMBA, JS, delivered the judgment of the court. Cases referred to:- 1. Water Wells Limited -Vs- Jackson (1984), ZR 98. 2. Augustine Kapembwa -Vs- Danny Maimbolwa and The Attorney General (1981) ZR, 127. 3. Nkata and Others -Vs- The Attorney General (1966), ZR 124. The delay in delivering this judgment is deeply regretted. The delay was due to events beyond our control. J2 This appeal is against the judgment of the High Court dated the 10th of November, 2003 in which the learned trial Judge refused to set aside a default judgment on the ground that the defence did not disclose triable (181) issues. The facts not in dispute are that by a writ of summons filed in the Commercial List the respondent sought, among other reliefs, the kwacha equivalent of US $43,091,being the balance on the price of day old chicks supplied to the appellant. The writ was accompanied by a statement of claim in which the respondent averred that through an exchange of letters the appellant and the respondent reached an agreement in which the appellant was to pay for 81, 084 day old chicks supplied to him by the respondent through the delivery of 300 metric tonnes of maize at US $130 per tonne. There was no appearance to the writ and no defence was filed within the prescribed time, prompting the respondent to enter judgment in default of appearance and defence. The appellant applied to set aside the default judgment. The summons was supported by an affidavit sworn by the appellant. The salient features of the affidavit in support alleged that when the appellant received the writ of summons and statement of claim he went to the respondent to find out why a suit had been take against him and others. The others, according to the writ, were Allan Geoffrey Olmesdahl as second defendant and Nakalunga Farming Enterprises Limited as third defendant. These have not appealed because they were not affected by the default judgment. According to the affidavit, it is alleged that after some discussions the management of the respondent was convinced that it made a J3 (182) mistake to sue the defendants. The affidavit does not go further to show that the respondent affirmed the concession in writing. As far as the appellant was concerned, he was convinced that the respondent was going to discontinue the proceedings. He further deposed that he never procured the day old chicks from the respondent. The last time the appellant conducted business with the respondent was in 1999 and 2000. In the year 2001, when the transaction, the subject of appeal, took place the appellant allegedly introduced Allan Geoffrey Olmesdahl (2nd defendant in the lower court) to the respondent as the possible replacement producer of maize. The introduction of Olmesdahl to the respondent was, according to the affidavit, without responsibility on his part and from henceforth he never got involved in the business of poultry with the respondent but Olmesdahl. He accordingly prayed for the setting aside of the default judgment. The summons to set aside the default judgment was opposed. In the affidavit in opposition, the respondent exhibited letters exchanged between the appellant and the respondent, which culminated into the agreement to supply day old chicks to the appellant in exchange for 300 tonnes of maize, being payment for the chicks by the appellant. Once the agreement was reached, the respondent set out a delivery schedule to which the appellant responded by proposing a collection schedule. There were agreed terms and conditions specifying the deliveries on the specified dates and the need for the parties to undertake to honour the respective obligations to supply the commodities as agreed. One of the letters from the appellant, exhibited by the respondent in the affidavit in J4 (183) opposition, showed that Ohnesdahl was to be the agent of the appellant with authority to discuss details with the respondent on his behalf The learned trial Judge considered the affidavit evidence, the skeleton arguments and the submissions of counsel representing both parties. On the basis of the exhibits accompanying the respondent’s affidavit in opposition, the learned trial Judge was satisfied that a contract existed between the parties whose significance could not be dismissed by the appellant’s mere assertion that he was not a beneficiary under the contract. On the authorities cited to him, the learned Judge said that he had jurisdiction to set aside a default judgment where the applicant had shown that he had a defence on the merits. The learned Judge did not think that the appellant’s affidavit disclosed a defence to the respondent’s claim or that there were triable issues raised, which should be allowed to go to trial. As far as he was concerned, there was no letter that showed that Olmesdahl was acting in the matter as a principal party. On the basis of his reasoning, the learned Judge allowed the default judgment to stand and dismissed the appellant’s application with costs. There are two grounds of appeal that have been advanced by the appellant in support of the appeal. These are as follows:- 1. The trial Judge erred in law and in fact by holding that the appellant was liable for the judgment debt when, in fact, there was an admission by a third party or 2nd defendant in the lower court that he owed the whole debt claimed. J5 (184) 2. The trial Judge erred in law and in fact by refusing to set aside a default judgment when, in fact, the purported failure to enter an appearance and file a defence was actuated and/or caused by the respondent’s agent. In support of the two grounds of appeal, Mr. Mundia relied on the written heads of argument, which he reinforced with oral submissions. Under ground one, the contention of counsel, both in his oral submissions and written arguments, was that it was wrong to single out the appellant as being liable under the default judgment when the main action was against three defendants, including himself (appellant). Mr. Mundia pointed out that the appellant was not the beneficiary under the contract but Allan Geoffrey Olmesdahl (2nd defendant in the court below); that the pleadings in paragraph 5 of the statement of claim clearly confirmed this fact as asserted by the respondent. Counsel stated that the admission of liability by Olmesdahl should have been taken into account and set aside the default judgment to allow the dispute to go to trial on the merit since affidavit evidence was inadequate to cover all aspects of the dispute. On ground two, Mr. Mundia did not submit orally. From his written heads of argument, Mr. Mundia stated that the failure to enter appearance was due to the assurances the appellant was given by the management of the respondent that it was a mistake to have sued him. As a layman, who was un-represented, he took the assurance as normal and in the course of business. He should not have been doubted by the trial court and his deposition should have been regarded as sufficient evidence to allow the matter to be tried on the merit. He relied on the case of H ater Wells Limited J6 (185) -Is- Jackson (1) and urged us to set aside the default judgment so that the dispute is tried on merit by the lower court. In response, counsel for the respondent relied on the filed heads of argument and submitted orally. In opposition to ground one, counsel said that the learned trial Judge was on firm ground when he found the appellant liable on the debt. Counsel was of the view that ground one was based on a finding of fact and wondered whether the appellate court could interfere with such a finding without being caught up by precedent as per the cases of Augustine Kapembwa - Vs- Danny Maimbolwa and The Attorney General (2) and Nkata and Others-Vs- The Attorney General.(3) As far as he was concerned, the issue was whether the appellant was a party to the contract. The evidence, according to counsel, was to be found in the letters the appellant exchanged with the respondent, which clearly showed that he was a party to the contract. The letter at page 100 of the record in fact placed Allan Geoffrey Olmesdahl in the position of agent, counsel said. He referred us to a passage from Chitty on Contracts: Specific Contracts, 28th Edition, paragraph 32.057 which states, and we quote:- H'here a person by words or conduct represents to a third party that another has authority to act on his behalf, he may be bound by the acts of the other. The doctrine called the doctrine of apparent or ostensible authority applies to cases where a person allows another who is not his agent at all to appear as his agent. He submitted that the issue before the trial court was not about who the beneficiary was under the contract but one of liability under the contract. With regard to ground two, counsel submitted that he learned trial Judge was on firm ground when he refused to set aside the default judgment because J7 (186) the affidavit of the appellant did not disclose any possible defence or triable issues fit for trial on the merits. We have duly considered the record of appeal and the judgment of the learned trial Judge, as well as, the written heads of argument from both sides, the authorities relied upon and the oral submissions of counsel. We take note that the action by the respondent against the appellant was commenced at the Commercial List Registry and not at the Principal Registry as averred in the affidavit of the appellant. An action began in the Commercial List is immediately elevated to a class of cases that are governed by fast track rules for disposal of cases. Once a writ of summons and statement of claim were served on the appellant, it became his duty to provide a swift response by way of a memorandum of appearance and an elaborate defence. The defence pleadings were, as a rule, supposed to be filed and served on the respondent within the stipulated time. What happened in this case was unheard of, to say the least. By his own averment, the appellant went to “negotiate” with the respondent over a matter that was already pending in court. And after the so called discussions, he had no documentary proof of what was agreed upon with the respondent to present to the court when he sought an order to set aside the default judgment. In such circumstances, and considering the urgency with which Commercial List cases are subjected to, who could believe him that he failed to file an appropriate response to the respondent’s writ of summons and statement of claim because he was assured by the respondent that the suit against him was a mistake? J8 From our preview of the fast track rules, ground two seems to have been covered very well because the reasons advanced in the affidavit of the appellant for the lapse in the filing of a memorandum of appearance and defence are not plausible in a case of this nature. Ground two has, (187) therefore, failed. With regard to ground one, we note that the action was founded in contract. In the affidavit in opposition of the respondent, vital correspondence was exhibited, which showed the terms of the contract the respondent and the appellant concluded. In one of the letters exhibited in the affidavit of the respondent, i.e. exhibit ‘EMI’ (found at page 100 of the record), the appellant referred to Allan Geoffrey Ohnesdahl as someone who could discuss details with the respondent in his absence. The details to be discussed in the absence of the appellant could only be those relating to the contract between the respondent and the appellant. The view we take of the evidence is that Allan Geoffrey Ohnesdahl was not a party to the contract whose terms and conditions are derived from the letters exhibited by the respondent. If Olmesdahl received any day old chicks, as shown in the statement of claim, he must have done so as an agent of the appellant to whom he is accountable. We wish to add also that the issue before the learned trial Judge related to an application for an order to set aside the default judgment that had been entered due to the appellant’s failure to appear to the writ and file a defence. The application was to be considered under the provisions of Order XII, Rule 2 of the High Court Rules, which is couched in the following terms. J9 (188) “2. Where judgment is entered pursuant to the provisions of this order, it shall be lawful for the court or a Judge to set aside or vary such judgment upon such terms as may be just.” The above Order deals with default of appearance, especially in liquidated claims, like was the case in this appeal. The law in Rule 2, quoted above, has been explained in many of our decisions but the case that immediately comes to mind, that sets out the terms upon which default judgments may be set aside by the trial court, is the case of Water Wells Limited -Is- Jackson (t) in which this court had this to say:- “.... Although it is usual on an application to set aside a default judgment, not only to show a defence on the merits but also to give an explanation of the default, it is the defence on the merits, which is the more important point to consider. We agree ... that it is wrong to regard the explanation for the default, instead of the arguable defence, as the primary consideration.” Simply put, an applicant does not have to concentrate too much on why he failed to enter appearance and file a defence as the appellant tried to do in this case. An applicant has to show that he has an arguable defence on the merits by providing prima facie evidence, such as, documentary proof “that he was no longer bound by the contract as earlier concluded but Olmesdahl.” In this appeal, we find that the appellant lamentably failed to show that he had an arguable defence on the merits so as to entitle the J10 (189) learned trial Judge to set aside the default judgment. The appeal has no merit and it is dismissed with costs, to be taxed in default of agreement. D. M. Lewanika, DEPUTY CHIEF JUSTICE. L. P. Chibesakunda, SUPREME COURT JUDGE. S. S. Silomba, SUPREME COURT JUDGE.