Phiri v BHB Contractors (Z) Limited & Others (Appeal 136 of 2017) [2018] ZMCA 249 (27 June 2018)

',, IN THE COURT OF APPEAL FOR ZAMBIA HOLDEN AT NDOLA (Civil Jurisdiction) I I I I 1PPEALNo. 136/2017 I BETWEEN: MSANIDE PHIRI AND 2 7 jUN 20\J APPELLANT BHB CONTRACTORS (Z) LI~~~~~ 1 ST RESPONDENT STANSLOUS MUBANGA 2ND kESPONDENT BRIAN CHILUMBA I ; 3RD RESPONDENT This 20th day of February, 2018 and 27th June, 2018 Coram: Makungu, Kondolo SC and Majula, JJA ! I VFor the Appellant: For the Respondents: Mr. N. ;Nchito SC, of Nchito and Nchirl ' No Appearance JUDGMENT MAJULA, JA delivered the Judgment of the Court Cases cited: 1. Wilson Masauso Zulu vs Avondale Housing Project (1982:) ZR 172 (SC) 2. Konkola Copper Mines Pie vs Jacobus Keune Appeal No 19 of 2005 3. Konfos vs C Czamikow Ltd {The Heron 11) (1969) 1 A. C. 350 4. Hadley vs Baxendale (1854) 9 Ex Ch 341 5. Penarth Dock Engineering Co. Ltd vs Pound (1963) 1 Lio d's rep 359 6. The Mediana (1900) AC 113 J2 7. David Chiyengele & Others vs Scaw Limited SJ No.2 oJ 2017. 8. Barclays Bank Pie vs Patricia Leah Chatta Chipepa SJi No.16 of 2017. I Other Authorities referred to: 1. G. H. Trietel, The Law of Contract, 12th edition, (London: Sweet and Maxwell, 200~ \ 2. Harvey McGregor, McGregor on Damages, ]5th Edition, (London: Sweet and Maxwell, 1988) The genesis of the dispute in this matter is an oral contract entered into between one Cynthia Kaoma KampaJe now deceased with the respondents in or around January, 2014 t~ allow them use her Certificate of Title. The respondents had been aJarded a contract by the Rural Electrification Authority (REA) and Jey required the Certificate of Title as performance security for the sdJd contract. The terms and conditions of the ag.ceement be+een the parties were that the respondents would use the Title for a period of 4 months at a consideration of Kl00,000 after which Jiie Certificate of Title would be returned. As fate would have it, the C~rtificate of Title was not returned after the agreed 4 months' period\ compelling the appellant to issue a demand for payment of the outsfanding balance of forty thousand kwacha (K40,000/= as part of the initial contract. I The appellant proceeded to commence an actJon in the High Court demanding inter alia damages for breach of co~tract, payment of the K40,000 outstanding balance from the one huAdred thous~d J2 .. J3 kwacha (Kl00,000) agreed on orally and ' ! I I payme:rat of the sum of K25,000 for each month the Title was held over~ . The respondent reacted to the writ of summons by filing a defence in which they admitted the existence of the oral contract. I They, however, disputed that the Title Deed was to be returned after 4 months. According to the respondents, the Title wls to be returned afte< the completion of the REA prnject. \ The matter went for trial and the court below ai:ijudged that the duration of the contract was not agreed upon and be plaintiff was not entitled to damages or compensation for the \period that the Certificate of Title was held over. Aggrieved with this decision of the court below, the appellant has appealed advancing two grounds as follows: 1. The court below erred in law and fact when iv held that there was no meeting of the minds by the parties as td the duration of the use of the certificate of title between the pdrties when the evidence proved otherwise. 2. The court below erred in law and fact when i\ did not award damages to the appellant when there was evidence to the contrary to prove breach of contract by the respo~dents. . I The appellant filed heads of argument on 25th pctober 2017. When the matter came up for hearing of the appeal on 23rd January 2018 the appellant indicated that on account of thdl fact that the respondents' Advocates had withdrawn from acting for the J3 .. J4 I appellants, they had applied for substituted service which was granted on 17th January, 2017. They applied for ah adjournment in order to comply with the two clear days' notice f~r service on the respondents. The application was granted and ttle hearing of the appeal was adjourned to 12th February, 2018. On that date, counsel for the appellant Mr. Nchima Nchito, SC tenderJd an affidavit of service dated 31st January, 2018 confirming that Je had served the respondents by way of substituted service on 29th Jct 30th of January 2018 in the Zambia Daily Mail. On that basis wJ allowed him to proceed with arguing the appeal. To this effect Mr. Nchito SC informed the court that he would rely entirely on the heads of argument. On ground 1, the arguments by State Counsel Nchito is that, the court should take an objective approach tJ determine the existence of a contract. It was not in dispute that thb parties entered into a contract for the use of the Certificate of Title and the dispute arose as a result of the respondent's failure to return the Title on time. According to state counsel, contrary to the determination of the court below, there was evidence on record to prove tbe period of use and return of the Certificate of Title. Counsel submiited further that DW admitted in cross-examination that the REA \was to run for twenty-six (26) weeks which would place the returl of the Title at June, 2014 having run from December, 2013. However, the J4 JS I I Certificate of Title was only returned to the appellant in August 2015 which the 2nd respondent admitted was well over fif:ty weeks. Further, on 2nd October, 2014 the respondlnt wrote to the appellant to inform him that the completion date Jr the project will be at the month end of November, 2014. It was co~nsel's argument that the evidence objectively proves the parties w~re in agreement that the Certificate of Title would be returned not bbyond twenty-six months. Regrettably, the respondents retained the Title for well over fourteen months and continued to shift the comp+tion date. It is against this background that we are being urged to reverse the findings of the court below. Counsel has called in\ aid the case of Wilson Masauso Zulu vs Avondale Housing Project1 which outlines the circumstances under which an appellate court can reverse findings of fact by a trial court. It was held inter alia that: "The appellate Court will only reverse findings of fact by a trial court if it is satisfied that the findings in quesltion were either perverse or made in the absence of any relevant kvidence or upon a misapprehension of the facts." l Similar observations were made in the case of E · nkola Copper Mines Plc vs Jacobus Keune2. State Counsel furdier argued that the Court below ought to have found that the certifidate of Title was I Wilson Masausa Zulu vs Avondale Housing Project (1982) ZR 172 (SC) 2 Kankala Capper Mines Plc vs Jacobus Keune Appeal Na 29 of 2005 JS J6 I I I retained beyond the agreed time period. That coJrt below ought to have made a finding that there was in fact an agreed period for the use of the Certificate of Title. ! I We now turn to consider ground 2. The apbellant's bone of contention is that the 2nd respondent's own admissidn, the Certificate of Title was to be returned at the conclusion of the \project that was I I I to be 26 weeks. It was argued that the reasons for the delay in returning the Certificate of title were not the concer~ of the appellant and returning the Title 14 months after it was due, \was a breach of I the contract between the parties entitling the appellant to damages. The learned authors ofTreitel on the Law ofContra~t 12th Edition, in paragraph 17-049 at page 832 has been refenjed to us which states as follows: \ ' I "A breach of contract is committed when a party without lawful excuse fails or neglects to perform what is due ~ram him under the contract .... the breach may entitle the injure~ party to claim damages, the agreed sum, specific peif omumce a\ an injunction." And further at paragraphs 20 - 002 and 20 - 003, page 992, it provides that: "The action for damages is available, as of right, when a contract has been broken ...... As a general rule damageJ are based on loss to the claimant and not on gain to the defendhnt." It has been forcefully argued that the contract as\ agreed to was for a specific sum and duration. In holding over the Tihe beyond the J6 I I I I i I I I J7 contract period, the respondents breached the contract and deprived I the appellant of the use of the Title Deed for ove1 14 months. The respondents gained an advantage at the expense of the appellant who should be entitled to damages or compensation for loss of use. In relation to the principle on damages, tJe appellant has adverted to Lord Reid in Konfos vs C. Czarn\ikow Ltd3 who reformulated the principle laid down in Hadley vJ Baxendale4 as follows: "The crucial question is whether, on the information available to the defendant when the contract was made, he should, or the reasonable man in his position would, have ni\alized that such loss was sufficiently likely to result from the breach of that contract to make it proper to hold that the loss ~owed naturally from the breach or that loss of that kind s~ould have been within his contemplation." In addition, the learned authors of Treitel on the Law of Contract 1 have been referred to in determining the compensation to be paid. Specifically, page 994 paragraph 20 -005 citing the dase of Penarth Dock Engineering Co. Ltd vs Pound5 which states ~hat: 3 Konfos vs C Czamikow Ltd {The Heron 11) (1969) 1 A. C. 350 4 Hadley vs Baxendale (1854) 9 Ex Ch 341 5 Penarth Dock Engineering Co. Ltd vs Pound (1963) 1 Lloyd's rep 359 J7 J8 I i I I "Lord Denning rejected the argument sayinl that the test of measure of damages is not what the [Claimdntsj have lost but what benefit the defendant obtained by having the use of the berth." But the actual award was based on t~e fair rental value of the berth, and can be explained on the basis that the claimants I lost the chance of renting it." The appellant concluded by arguing that since! the contract sum was Kl00,000/= for a period of 4 months, this translated into K25,000 per month for each month the CertificatJ of Title was held over. Alternatively, even if it were to be considered !that the duration of the contract was 26 weeks, based on the lespondent's own admission this would translate to approximately KlS,000 per month for the duration of the project. The appellant beseeched us to award damages for holding over the Certificate of Title by the respondents with pre ahd post judgment interest. Pertaining to ground 2, our understanding <Df the appellant's argument is that the contract was for a fixed tirhe and duration. Lamentably the specified period was breached by !the fact that the respondent held over the title deed. The appellant bas cited various authorities on consequences that befall a party lwho breaches a contract. The appellant is now seeking what w would perhaps I In a nutshell the grievance describe as the rental value of the Title. J8 J9 stems from the fact that the respondent gained some commercial value from use of the Title at the expense of the app~llant. The failure to return the title was a breach and therefore enti~les the Appellate to compensation. The appellant has given us a lormula which he I . considers to be a fair 'rental value' of the Title Deed. We have carefully scrutinized the argumentl and authorities referred to us by Mr. Nchito SC. Having examined; the evidence on record, we are of the well-considered view that there was in fact in existence a contract between the parties. The terms of the oral contract were that the appellant would give the respondents the I I \ Certificate of Title as security or collateral for the Bank. This is . undisputed. It is however the duration of the agreed contract period that is in contention. After carefully analyzing the evidence before ls, we are of the considered view that the Title was given for the duration of the contract. The duration of the contract was 26 weeks. Having found that the contract was for a determinable period of 26 weeks, we come to the irresistible conclusion that any period beyond the agreed time frame would amount to a breach of the contract. 11he fact that the Title was given to a 3rd party was a matter between the respondent and the Lender. The appellant was entitled to rely on the assurance by the respondent and if the contract was to go be~ond the agreed period it was up to the respondent to renegotiate an extension. The failure to return the Title within the agreed period amounts to a breach of the contract. J9. JlO In light of what was have stated in the preceding paragraphs, we find merit in ground 1. Moving to ground 2 we must at once state that any breach of contract commands damages. Ground 2 therefdre turns on our finding in ground 1 that the contract was ~reached by the respondents. In order to award damages, the p+ claiming must prove the damage suffered. Mr. Nchito SC, has im:Rlored us to award damages for the time that the Title was held over cbd has proposed a formula to guide the court. This formula has bebn extracted from the amount that was agreed for four months which was Kl00,000, I translating into K25,000.00 a month. It has been expressed that the respondent did gain commercial value from the use of the Title Deed at the expense\ of the appellant. The extent of the actual loss suffered by the appellant as a result of being put out of use of the title has however not bee~ articulated. We are therefore left to speculate, which is undesirablel · damages. The learned author of McGregor on Damages, 2 Professor e question as to w at amounts to appropnate . is prompts th Th . · . Harvey McGregor has stated the following at paragraph 396.: I I I h "Technically, the law requires not damage but al injuria or wrong upon which to base a judgment for the plaintiff, and therefore an injuria, although without loss or damage, would entitle the plaintiff to judgment. " JlO .. Jl 1 i ' I I \ I I I Although the appellant failed to prove the actual loss or damage, there was a wrong committed by the responden~ entitling him to judgment for the legal injury or wrong. Having fouhd that there was an infraction of the appellant's legal right, it is our contemplation that the relief available to the appellant is nominal ;damages. We are fortified by the words of Lord Hals bury, L. C. ~n The Mediana6 where he expressed himself as follows: "Nominal damages" is a technical phrase which means that you have negatived anything like real damage, 'f(ut that you are affirming by your nominal damages that there is an infraction of I I a legal right which, though it gives you no nght to any real damages at all yet gives you a right to the vetdict or judgment because your legal right has been infringed." \ In light of what we have stated in the precedin~ paragraphs we find the appellant is only entitled to nominal dama~es. This is also in light of the cases of David Chiyengele & +hers vs Scaw Limited7 and Barclays Bank Plc vs Patricia Leah Chaka Chipepa8 • The sum of KS,000.00 in our view is sufficient with interest at the short term deposit rate from the date of Judgme t and thereafter at the current bank rate until full settlement. • The Mediana (1900) AC 113 7 David Chiyengele & Others vs Scaw Limited SJ No.2 o/2017. 8 Barclays Bank Pie vs Patricia Leah Chatta Chipepa SJ No.16 o/2017. Jl 1 J12 We award costs to the appellant in this court and the court i below to be taxed in default of agreement . ...... ~~--······· .............. . . C. K. MAKU GU COURT OF APPEAL JUDGE c-- == ......................................... ... ' - M. M. KONDOLO COURT OF APPEAL JUDGE ···········~NiA'.iU'L'A"'' COURT OF ,APPEAL JUDGE Jl2