Militis v Chiwala (SCZ Judgment 3 of 2009) [2009] ZMSC 170 (13 February 2009)

JI (54) IN THE SUPREME COURT OF ZAMBIA SCZ JUDGMENT NO. 3 OF 2009 HOLDEN AT LUSAKA APPEAL NO. 148 OF 2004 (Civil Jurisdiction) BETWEEN: PETER MILITIS AND APPELLANT WILSON KAFUKO CHIWALA RESPONDENT CORAM: CHIRWA, CHIBESAKUNDA AND SILOMBA, JJS. On the 26th April, 2007 and 13th February, 2009 For the Appellant: Mrs. P. Yangailo of P. H. Yangailo and Company For the Respondent: In Person JUDGMENT SILOMBA, JS, delivered the Judgment of the Court. Cases referred to:- 1. 2. Raineri -Vs- Miles (1980) 2 AER, 161. The Medians (1900) A. C. 113,116. We regret the delay in the delivery of the judgment, which was occasioned by a busy work schedule. J2 (55) The facts of this case appear to be quite simple and straightforward. The appellant, as plaintiff in the court below, sued the respondent (then defendant) for an order of specific performance of an agreement made between the appellant and the respondent. The agreement was for the sell by the respondent to the appellant of Stand No. 2088, Lusaka, in consideration of which the appellant paid to the respondent the sum of K70,000.00. In support of the claim, the appellant testified before the learned trial Judge that the respondent and himself were old friends, having been together as such for fifteen years. Their friendship went as far back as the time when the respondent was working for the then liquidated Cold Storage Board of Zambia. When the respondent lost his job, he was always with the appellant who sustained him by supplying him with offals from his (appellants') butchery for resale. On some day he could not recall, the respondent informed the appellant that his former employer was selling houses to its employees and sitting tenants, of which he was one of them. The respondent further told the appellant that he wanted to buy the house but that he had no money. The selling price was K70,000.00. Thereafter, they agreed that the appellant would pay for the house and that the respondent would later resale the house to the appellant on payment of another K70,000.00, bringing the total to K140,000.00. The appellant and the respondent went to D. H. Kemp and Company, a firm of lawyers, and disclosed their agreement to Mr. Motala, a lawyer in the firm, who told them that the transaction could be done. The further evidence of the appellant was that he issued a bank certified cheque payable to the Cold Storage J3 (56) Board of Zambia in the sum of K70,000.00. After sometime, the appellant went and inspected the register in respect of Stand No. 2088, Lusaka, only to find that the property had been registered in the name of the respondent. When the respondent was reminded about the promise he made to vest the stand in the name of the appellant he replied that he could not remember anything about the promise. The appellant denied that the money he paid to the Cold Storage Board of Zambia was a loan to the respondent or that he had paid to simply help a friend. The appellant also told the trial court in cross-examination that there was no written contract of sale that they executed because he and the respondent did not see the need for one. Mr. Ibrahim Motala, a lawyer at D. H. Kemp and Company, who attended to both the appellant and the respondent, confirmed that the Cold Storage Board of Zambia had offered a house on Stand No. 2088, Lusaka, to the respondent who had no money to pay for it; that when the appellant and the respondent went to see him they told him that they had agreed that the appellant would pay for the house and that the respondent would in turn transfer the house to the appellant. Mr. Motala suggested to the duo to commit the agreement in writing but the appellant declined the suggestion because the respondent was his friend and that it would not be possible for him to renege on his promise to transfer the house to him (appellant). He also confirmed that it was the appellant who paid the purchase price to the Cold Storage Board of Zambia; that thereafter he attended to the transfer of the property to the respondent. He had, however, learnt that after he left D. H. J4 (57) Kemp and Company the respondent refused to transfer the property to the appellant and the turn of events really surprised him. Mr. Motala did not think that the money the appellant paid to the Cold Storage Board of Zambia was a loan to the respondent as the two parties did not express the intention that it was. In his oral evidence in support of his defence to the appellant's claim, the respondent told the trial court that on the 1st of October, 1986 he was offered the house he occupied as an incidence of employment by his employer, Cold Storage Board of Zambia. The house was fixed at K70,000.00. He confirmed that at the time he was offered the house he did not have the money. He also confirmed that the appellant was his best friend who assisted him to buy the house. His evidence was that after the appellant had assisted him to meet the full purchase price of the house he (appellant) also used the appellant's lawyers, D. H. Kemp and Company, to effect the sale from the Cold Storage Board of Zambia to himself (respondent). The evidence of the respondent was that when they went to see the lawyers, the appellant introduced him and the subject of their visit to the lawyers and thereafter left, leaving him alone with the lawyers. As far as the respondent was concerned, there was no agreement between him and the appellant about the sale of the house to the appellant. After successfully paying for the house, he was issued with a certificate of title in his name. The respondent denied that he knew Mr. Motala as the one who facilitated the transfer of the stand to him. As far as he could recall, Mr. Motala was not the lawyer at D. H. Kemp and Company who attended to the transaction. J5 (58) After giving due consideration to the evidence before him and the only written submission of counsel for the appellant, the learned trial Judge found, on the evidence, that the appellant and the respondent were men of full mental capacity to enter into an agreement whether written or oral. He also found that K70,000.00 was a lot of money in 1986 capable of securing a high cost house; that for the appellant to part with that kind of money meant that he and the respondent had a specific intention which formed the core of their arrangement, which the appellant acted upon. After reviewing the evidence on record, the learned trial Judge came to the conclusion that there was an oral contract of sale conditional upon the disputed property being paid for and transferred to the respondent and thereafter being re-assigned to the appellant upon payment of a further sum of K70,000.00. He also concluded that the respondent breached the oral contract. As far as the learned trial Judge was concerned, proprietary estoppel applied to the case because the promise, the subject of the oral contract, was intended to be binding, intended to be acted upon, and was in fact acted upon. He accordingly entered judgment for an order of specific performance. Further, the learned trial Judge ordered a valuation of the property to determine the current value of the property which the appellant was to pay to the respondent in lieu of the K70,000.00 which was not paid. On a claim for mesne profits from renting the property, the learned trial Judge found that the appellant was entitled to the same but ordered that the same shall be paid from the date of the judgment. J6 (59) There are three grounds of appeal. The first one was that the learned trial Judge misdirected himself in law and fact in holding that the appellant should pay the respondent the current market value of the house in dispute when he found as a fact at trial that the appellant had paid K70,000.00 to the respondent in 1986 as part payment of the agreed purchase price of K140,000.00. The second one was that the learned trial Judge misdirected himself in law and fact in holding that he found no justifiable basis upon which he could order the defendant to pay the appellant a backdated rental charge for the whole period from the time the dispute was filed. The third one was that the learned trial Judge misdirected himself in law in holding that the respondent should pay the appellant mesne profits from the date of the judgment instead as from the date of the writ of summons. Mrs. Yangailo filed the appellant's heads of argument, which she reinforced with oral submissions. In support of ground one, it was contended in the heads of argument that the appellant was always willing to complete his side of the contract but that the respondent refused to accept performance and prevented the appellant from paying the balance on the purchase price. On the basis of the foregoing, counsel contended that the appellant should not be punished by being ordered to pay the current market price of the property as the conduct of the respondent was deliberate. In her oral submission, Mrs. Yangailo submitted that one party to a contract could not complete the contract without the concurrence of the other. She submitted that it was factually and legally wrong for the lower court to order the appellant to pay the current market value of the house when it had earlier ruled J7 (60) that the oral contract of 1986 requiring the appellant to pay an additional K70,000.00 to the respondent was legally binding. On ground two, Mrs. Yangailo submitted in the heads of argument that where there had been a delay in completion, damages might be awarded in addition to specific performance. With regard to the case at hand, she submitted that there was a breach of contract when the respondent failed to perform, resulting in the appellant suffering loss of mesne profits that he could have earned from renting the property. She cited the case of Raineri -Vs- Miles (1) to support the view that failure to complete a contract for the sale of land on the due date has been treated by the courts as a breach of contract giving rise to a claim of damages. Mrs. Yangailo conceded in the heads of argument that the appellant never testified in chief on the loss suffered as a result of the failure to complete by the respondent. But she pointed out that the loss was pleaded in the statement of claim and the learned trial Judge was obliged to consider the pleading which was never rebutted and award damages for loss of expectant rent. She submitted that had the respondent performed his part, the disputed property would have vested in the appellant in 1987 from which date the rent would have accrued to the appellant. In the alternative she argued that if actual loss was not provable, the appellant should have been awarded nominal damages, citing the case of The Mediana (1900) (2) as her authority and the fact that the learned Judge had acknowledged that the repudiation of the contract had caused loss to the appellant. J8 (61) In her oral submission, she reiterated the contents of the heads of argument just to emphasise the points outlined above. On ground three, Mrs. Yangailo contended in the heads of argument that the learned trial Judge should have awarded mesne profits from the date of the writ of summons instead of from the date of judgment. As far as she was concerned, the order of the learned Judge could not be justified because had the respondent performed the contract the appellant would have been enjoying profits from the property from 1987. She argued that the claim for mesne profits was based on the expectant rent lost and with the abundant justifiable evidence available on record we were urged to award the appellant mesne profits from the date of the writ. In her oral submission, Mrs. Yangailo merely emphasized what was contained in her heads of argument. In rebuttal, Mr. Chiwala relied on his heads of argument both in support of the main appeal and the cross-appeal and did not submit orally. Mr. Chiwala submitted in his heads of argument in relation to ground one, that if the house was sold to a non-employee of the Cold Storage Board of Zambia it would have cost a hundred time, or more than it was sold to him. With regard to the submission that the appellant was to pay K70,000.00 to the respondent upon completion of the transfer, Mr. Chiwala contended that the amount was not enough even to buy a bicycle. As far as the respondent was concerned, the appellant wanted to enrich himself fraudulently by pretending that he gave him K70,000.00 to buy the house for him (appellant) from the respondent's former employer. All he could J9 (62) remember, he submitted, was that he borrowed K70,000.00 from the appellant to buy the house from his employers for himself. He argued that if he was to sale the house today he would sale it at not less than K500,000,000.00. He accordingly supported the learned trial Judge's order for a valuation of the house in order to ascertain the current price. On ground two, he submitted that there was no misdirection on the holding except that it was based on wrong principles. According to him, the appellant did not prove that the respondent had contracted to sale the house to him after he had bought it for K140,000.00. Again, according to him, the evidence that was before the trial court was that the respondent had borrowed K70,000.00 from the appellant to buy the house from his employers; that the appellant, being a friend of him for along time, willingly lent him the money and that, as such, he could not pay any form of rent for a house that was lawfully his. On ground three, the respondent, after quoting the meaning of "mesne profits" from Mozley and Whiteley's Law Dictionary, as well as, after quoting Section 33 of the Lands and Deeds Registry Act, Chapter 185 of the Laws, contended in the heads of argument that there was no evidence before the lower court to show that he obtained the certificate of title fraudulently so as to empower the learned trial Judge to cancel his certificate of title. As far as the respondent was concerned, it was a serious error for the trial court to order him to pay mesne profits from the date of the judgment when it was not proved that he was in wrongful possession of the property. He submitted that he was the sole and lawful owner of the property. J10 (63) We have carefully considered the evidence tendered in the court below, including the judgment of the trial court, and the submissions of both parties. Before we deal with the issues raised in the submissions, we would like to deal with the first preliminary issue raised by the appellant through his counsel. Counsel sought an order of the court to have the supplementary record of appeal filed on the 29 of August, 2006 expunged because it contained th documents, which were not before the trial court and, therefore, not relevant to the proceedings on appeal. We allowed the application and expunged the record. We promised to give reasons for our order in this judgment which we now do. Under Rule 58(1) of the Supreme Court of Zambia Rules the record of appeal shall include a memorandum of appeal and copies of the proceedings in the High Court and in any court below. However, if the respondent is of the opinion that the record filed by the appellant is defective he may, under Rule 59(1) of the same Rules, file copies of a supplementary record of appeal containing copies of any further documents, which in his opinion are required for the proper determination of the appeal. It must be emphasized that the record of appeal is only composed of copies of the proceedings in the High Court and in any court below. Only if there are proceedings in the High Court and in any court below, which have been left out by the appellant can the respondent invoke Rule 59(1) and prepare a supplementary record of appeal for the proper determination of the appeal. In any other situation or circumstances, the law does not permit the production of a supplementary record of appeal on extra - judicial matters. With regard to the Jll (64) second preliminary issue, we think that it will be appropriate to dispose of it when we come to deal with the cross-appeal. Having disposed of the preliminary issue relating to the supplementary record of appeal, we now turn to the main appeal. In relation to ground one, we are persuaded by the reasoning of the learned trial Judge in his judgment, which is the subject of appeal. At page 19, lines 17-24 ((Jll) of the record of appeal, this is what he wrote:- "There is no doubt in my mind that both plaintiff and defendant in this case, besides being friends, were men of full mental capacity to enter into an agreement whether written or oral. K70,000.00 in 1986 was a substantial sum of money capable of procuring high cost property and I have no doubt in my mind that for the plaintiff to part away with that kind of money, he and the defendant had a specific intention, which intention formed the core of their arrangement which was acted upon by the plaintiff! He continued at page 20, lines 15 to 24- " I have no doubt in my mind that the parties were entitled to the terms that they agreed orally and in the circumstances of this case, I am persuaded by the evidence on record to presume that the parties contemplated a legal rather than an illegal course of proceedings notwithstanding that there was nothing in writing. I, therefore, find that there was an oral contract of sale conditional upon the disputed property being paid for and being assigned to the defendant upon payment of the purchase price and thereafter being re-assigned to the plaintiff upon J12 (65) payment of a further sum ofK70,000.00 equal to the purchase price at the time." The two passages we have extracted from the judgment of the learned trial Judge accord well with our approval. From the evidence on record it would appear to us that when the respondent secured the certificate of title dated 27th of July, 1990 he had already altered his position not to be bound by the oral contract to sell the property to the appellant. Had he done the transfer then, and as the learned trial Judge rightly pointed out, the K70,000.00 would have been used to secure another high cost house to himself. In the circumstance, we hold the view that calling for a valuation to determine the present market value of the property would be a contradiction of the terms of the contract intended to punish the appellant as if he was the one at fault. The order for valuation is reversed and the terms of the oral contract will apply. Like the learned trial Judge, we are not convinced by the argument of the respondent that the K70,000.00 the appellant paid for the purchase of the disputed property on behalf of the respondent was a loan to the respondent. Apart from being too much an amount at the time, the appellant had to instruct his lawyers to effect the transfer of the property from the vendor to the respondent, a process that he had to pay for on behalf of the respondent or the vendor. Even if they were very good friends, the amount involved was too much to support a friendship in which the respondent needed the appellant more than the appellant needed him. Ground one fails. J13 (66) We have examined grounds two and three and in our view we find it neater to deal with them together rather than separately because they are inter-related. In ground two, the appellant is contending that he is entitled to damages because the respondent failed to complete the contract for the sale of land. The damages he is claiming are in form of rent from mesne profits he would have earned had the respondent sold the property to him in 1987. In ground three, the issue in contention is from which date the order for mesne profits should take effect. While the learned Judge ordered that the appellant was entitled to mesne profits from the date of the judgment the appellant wants it to be backdated to the date when the writ was filed into court. As the learned trial Judge found, there was no written contract of sale but an oral one in which the parties agreed for the appellant to pay for the purchase price of the property on behalf of the respondent upon which the respondent was to sale the property to the appellant. The total purchase price the appellant was to pay was K140,000.00. The foregoing arrangement meant that the property once paid for, was to vest in the respondent first before he (respondent) could assign it to the appellant. So at the stage the oral contract was entered into, there was no need for a written contract of sale because the respondent was not the legal owner of the disputed property and there was, therefore, nothing he could assign. As stated above, the respondent became the legal owner of the disputed property on the 27th of July, 1990 when certificate of title No. L2724 was issued to him. From the evidence on record, it is quite clear that there was no contract of sale entered into after the respondent had obtained the certificate of title J14 (67) because he refused to sale the house to the appellant, hence these proceedings. At trial, he tried to show that the K70,000.00 the appellant paid for the house was a gift (or a loan on appeal) to him but the learned trial Judge rejected the evidence, which we have also rejected. He tried to show that there was no agreement to sale but all was in vain. What was the status of the respondent vis-a-vis the house or property in dispute up to the time the appellant sued for an order of specific performance and damages? In our view, he remained the owner of the house until the learned trial Judge pronounced his decision on the matter. While we recognize the entitlement of the appellant to damages resulting from the breach or failure to honour the oral agreement our task is to ascertain from which date the damages must be assessed. The damages we are talking about arise from loss of mesne profits that the appellant would have earned from the rent of the property. What is mesne profits and when are they due? In Halsbury's Laws of England, Vol. 28, 3 Edition at page 561, paragraph 1230, the legal position is that rd the landlord may recover in an action for mesne profits damages which he has suffered through being out of possession of the land. Mesne profits, being damages for trespass, can only be claimed from the date when the defendant ceased to hold the premises as a tenant and became a trespasser. The action for mesne profits does not lie unless either the landlord has recovered possession or the tenant's interest in the land has come to an end. We have said above that for the period the respondent was a holder of a certificate of title he was the owner of the property. As owner of the property, an action for mesne profits cannot be sustained until some event has taken place J15 (68) capable of extinguishing his interest in the land. In this case the event that extinguished the respondents' interest in the land was the order of the learned trial Judge specifically ordering the respondent to honour the oral agreement and transfer the property to the appellant. From the date the order was made the respondent became legally dispossessed of the land. His continued stay in the house puts him in the spot of a trespasser and must, therefore, be condemned to pay damages based on the loss of mesne profits that the appellant would have earned if he had rented the house. We, therefore, affirm the decision of the learned trial Judge that mesne profits will accrue to the appellant from the date of the judgment. The contention of the appellant that the payment of mesne profits should have been with effect from the date of the writ or indeed from any other earlier date cannot be legally justified. Grounds two and three are allowed but for different reasons. In essence, the appellant has succeeded on one ground of appeal. This means that each party to the appeal will bear its own costs in this court and in the court below. We now come to the cross-appeal. The respondent advanced three grounds of appeal, two of which have been challenged by way of preliminary objection by the appellant as having been filed without the leave of the court pursuant to Rule 68 of the Supreme Court of Zambia Act. When we heard submissions on the matter from both parties we ruled in favour of the preliminary objection and promised to give reasons for our decision in this judgment, which we now do. J16 (69) We note from page 8 of the record of appeal that the respondent filed his memorandum of cross-appeal on the 27 of July, 2004 in which he stated one ground only, that is, that "The learned trial Judge erred in law and fact when he held that there was an oral contract of sale on the disputed property No. 2088 between the appellant and the respondent." However, from the filed heads of argument, the respondent has addressed us on the three grounds of appeal and yet the record does not show that this court granted him leave to file two additional grounds of appeal. Under Rule 68(1) aforesaid, it is provided that the court or a single Judge may, at any time, allow amendment of any notice of appeal, or respondents' notice, or memorandum of appeal or other part of the record of appeal on such terms as the Court or such Judge thinks fit.... From the heads of argument on the cross-appeal, it would clearly appear to us, that the two additional grounds of cross-appeal were filed on the 16th of December, 2005, which was more than a year after the respondent had filed the only ground of appeal on the 27 of July, 2004. We note that although the respondents' notice of cross-appeal and the grounds of cross-appeal were stamped no application to amend the notice as well as the grounds of cross-appeal was ever placed before the court or a Judge. What the respondent should have done is to apply to the court at the commencement of the hearing of the appeal for an amendment and the court would have considered the matter before proceeding on the main appeal. This was not done even when an objection was raised leaving us with no option but to expunge the additional grounds from the record. J17 (70) With regard to the only ground of cross-appeal, we note that this has been covered in the main judgment and it would be otiose to deal with it here. We dismiss the cross-appeal and make no order for costs. D. K. Chirwa, SUPREME COURT JUDGE. L. P. Chibesakunda, SUPREME COURT JUDGE. S. S. Silomba, SUPREME COURT JUDGE.