Richard Mwapela v Chen Xian Hua and Anor (APPEAL NO 38/2017) [2017] ZMCA 164 (13 October 2017)

IN THE COURT OF APPEAL HOLDEN AT LUSAKA (Civil J uris diction) APPEAL NO 38/2017 RICHARD MWAPELA APPELLANT · AND CHEN XIAN HUA RESPONDENT DAVISON JERE (PARAMOUNT CHIEF MPEZENI) THIRD PARTY Coram: Chisanga, JP, Chishimba and Sichinga JJA · On the 6th day of June 2017 and 13th October, 2017 For the Appellant: For the Respondent: For the Third Party: NIA L. Linyama of Messrs E1i c Silwamba Jalasi and Linyam a Legal Practitioners NIA JUDGMENT Chisanga, JP, delivered the judgmcnt of the court. Cas es referred to: 1. Admark limit ed vs Zambia Revenue Authority (2006) ZR 43 2. Cavmont Merchant Bank vs Amaka Holdings SCZ Judgment No. 12 if 3. Anderson Maz oka and others vs Levy Mwanawasa & others (2005) ZR ' 4. Mpongwe Farms Limited vs Dr Farms Transport Limited, Appeal No. 208 of 2015 5. Mwe empe vs Attorney General. Interpol and another, Appeal No. 15 of2008 6. Carver Joel Jere vs Shamayuwa and Attor ney General (1978) ZR 208 7. Kumar vs Mutale, Appeal No. 35 of 2011 8 . Attorney General vs Tall and another Appeal No. 77 of 1994 9 . Scott LJ's words in Applesen vs H Lit tle wood Limited (1939) 1ALL ER 4 64 10. Rankine vs Garten Sons & Company Limi ted, (1979) 2 ALL ER 1185 Other Authorities Referred t o : 1. Bullen and Leak and Jacob's precedents _on pleadings 1. 2. H J acobs (975) 12th Edition Sweet & Maxwel, Pages 919-924 3 . Halsbury's Law of England Vol. 1 4 th Edn Para 91 This is an appeal against the order or lhe learned judge in the cou rt below, whereby she entered judgment on admission against the appellant, who is the defendant to the action, on an application by 1.he respondent, who is the Plaintiff. The claim arises in the following alJcged circumstances. The defendant purported to be a businessman duly registered to deal in raw timber including the mukula tree, which he expressly represented he was licensed to export. On that. premise, the parties entered into an agreement in which t~e defendant would secure and export five containers of mukula tree logs every .fortnight Free on Board (FOB) Durban in the Republic of South Africa. To that effect, a written contract of agency dated 2~th July, 2015 was drawn in the above stated terms, including the terms of paymept, which were that an advance payment of 30% would be made to lhe defendant, with 35% of the consideration - being paid upon receipt of the requisite Bills of Lading. It was an express term of the contract that the tim~er to be conveyed was properly licenced for export. The defendant further indicated that he was sourcing the timber from Paramount Chief Mpe~cni, a legitimate source, a n d holder of a valid export permit. J2 The defendant fraudulently represented himself as having valid licenses for ' exportation of mukula tree, and that he would purchase and deliver Mukula timber to the Plaintiff through Durban in the Republic of South Africa for onward transmission to China. Relying on Lhat misrepr,esentation, and pursuant to the agreement of 25th July, 2015, the plaintiff made the following payments: US$ 20,000.00 on 25th July, 2015 US$ 23,750.00 on 27th July, 2015 ZMW 300,000.00 on 10th August, 2015 ZMW 159,200.00 on 18th August, 2015 ZMW 300,000.00 on 18th August, 2015 ZMW 101, 833.00.00 on 28th Augusl, 2015 US$ 2,500.00.00 on 26th October, 2015 Additionally, a sum of ZMW 300,000.00 was deposited into a bank account in the names of Lungowe Mwapela who was introduced as the defendant's spouse. Despite these payments, the defendant has not delivered the mukula tree, and his - total indebtedness now stands at. US $ 46, 250.00 and ZMW 701, 833.00 respectively, which has remained unpaid, despite the defendant undertaking to pay the same through his lawyers. The Plaintiff thus claimed the said sums. In his defence, the defendant denied acting dishonestly in the execution of the agency agreement, or ever represen ling himself as a dealer in mukula logs, or as authorised by the Government of Zambia to deal in this protected species of trees. J3 He went on to aver that the seller of the mukula logs, and recipient of the consideration was Paramount Chief Mpezeni, who had refused or neglected to perform his part of the bargain, and not the defendant. The defendant went on to state that he made np admissions as to the excuriae efforts which were in any event privileged. He denied the alleged liability, loss and damage and denied all allegations as though t+i,ey were set out and traversed seriatim. 4t The defendant also took out a third-party notice against Davison Jere {Paramount Chief Mpezeni}. Therein, he claimed indemnity :against the Plaintiff's claims in that the said Davison Jere had been paid the su,ms in issue for the purchase of mukula logs. After the defendant had filed the def cnce and taken out the third-party notice, Mr Linyama, learned counsel seized with conduct i)f this matter on behalf of the Plaintiff, took out summons for entry of judgment ;on admission pursuant to Order XXXI rule 6 of the High Court Rules as read wtth Order 27 Rule 3 RSC 1999 edition. In the affidavit in support of the application, learned counsel noted that the defendant did not dispute collecting the stat~d funds from the Plaintiff, but averred that the recipient of the funds was Chief Mpezeni. He also noted that the ' defendant had taken out a third-party notice, seeking indemnity against the third party. In learned counsel's view, the defence and '.third-party notice revealed that there was no complete traverse or the Plaintiffs claim as liability was being I J4 apportioned by the defendant and third-party ~:m their own admission. He thus urged the Court to enter judgment on admission . • This application was opposed by the affidavit sworn by the defendant. He deposed therein that the contract entered between him and the Plaintiff disclosed that he I was merely acting as an agent for Paramount 9hief Mpezeni who was to supply the mukula timber. Under clause 6 of the agreeyment, payment to Chief Mpezeni was to be made through him. This is what occurred, as the payments were made through the defendant, and received by the : third-party, whose identity the defendant disclosed in the agreement between t~e Plaintiff and the defendant. Upon hearing the application, the learned trialjudge observed that the defence did not traverse specifically or otherwise, the :a11egations of fact contained in paragraphs 7, 8 , 9 and 10 of the statement of claim, as the defendant had admitted t hem. She as a result, entered judgement on admission for the Plaintiff in the sum of United States Dollars US$ 46, 250.00 and ZMW 101,833.00. The rest of the ' ' claims were remitted to trial. 41 The defendant wa s dissatisfied with that ruling, and now appeals against it on the following grounds: 1. The learned judge in the Court below erred dn law and in fact when she held that the defence of agency was not available to the appellant because it had not been pleaded in the defence. 2 . The learned judge in the Court below erred in law and in fact when she held that by not specifically traversing paragraphs 7, 8, 9 and 10 of the Plaintiffs JS statement of claim the defendant had admitted liability when the defendant had expressly stated that the seller of the inukula logs and recipient of the money paid by the respondent was the thir;d-party. 3. The learned judge erred in law and fact w:hen she ignored the third-party proceedings and proceeded to enter judgmept against the defendant in spite of the pending third-party proceedings. Heads of argument were filed in by both parties. In arguing ground 1 on behalf of the appellant, r~ference is made to an averrnent in the defence, wherein the defendant stated that the seller of the mukula logs and recipient of the consideration was Paramount Chief Mpezeni who had refused or neglected to perform his portion of the bargain an'd not the defendant. It is then argued that this avermen t provides the1 basis for the defence of agency pleaded by the appellant, and gives rise to the defence of agency. It is further argued that a defence of agency is a point oflaw as it is settled law that where an e agent discloses the identity of the principal on whpse behalf he is contracting, the ! I agent is not liable on the contract. Learned counsel's further contention is premised on the principle that a trial Court is not precluded from considering evidence on a ±natter not pleaded where such evidence has been adduced and not objected to. · Reference is also made to the principle that failure to plead a def cnce does not : ipo facto exclude such defence J6 from being admitted. Admark limited vs Zambia Revenue Authority1 , Cavmont Merchant Banlc. vs Amaka Holdings2, Ande1;son Mazoka and others vs Levy Mwanawasa & others3, Mpongwe Farms Limited vs Dr Farms Transport I I Limited4 , Mweempe vs Attorney Ge neral, Int erpol and another5, and Jere vs Shamayuwa and Attorney Ge neral 6 are piayed in aid for these arguments . Learned counsel contends that on the strength ,of these authority, even assuming without admitting that the defence of agency was not pleaded, the defence of ' agency should on the strength of the authorities cited, have been admitted by the learned judge in the Court below. e · The a rguments on ground two are Lhat by stating that the seller of the mukula logs and recipient of the money was Chief Mpezeni, and that it was Chief Mpezeni who h a d failed or neglected to perform his portion of the bargain, t h e appellant had responded to and traversed the issues or all~gations contained in paragraphs 7, 8, 9 and 10. The issues were covered by the <j!-Verment repr oduced above. Learned counsel further contends I.hat Order 5~ Rule 6(2) HCR d oes not require - a defendant to respond to each paragraph of the statement of claim. It is sufficient if the defendant traverses the allegations of fact rhade in the statement of claim. It is submitted further that it was an error to e?{pect the defendant to address paragraphs 7, 8, 9 and 10 as opposed to consi~ering whether the allegations of fact in these paragraphs had been traversed by the appellant. J7 Turning to ground three, learned counsel's argument is that as the identity of the ' supplier of the mukula logs was disclosed and; made known to the Plaintiff, the appellant as agent could not be held liable upder the contract, per Cavmont Merch ant Limited vs Amaka Holdings2. It is argued that the Supreme Court ! has emphasised that in the interest. of justice, and to avoid multiplicity of actions, claims involving similar parties and similar i~sues should be tried together. Kumar vs Mutale7 and Attorney Ge neral vs Tall and anothe r8 are relied upon I in that respect. In learned counsel's view, as the issues between the parties and the third-party are interrelated, it is in the interest. of justice that the matter between the three ' ' parties is heard at the same time. In responding to the arguments on grounds 1 and 2 of the appeal, it is argued, on behalf of the respondents that the appellant did pot plead agency in his defence, contrary to the requirements that il be specifically pleaded, per Bullen An d Le ake and Jacob's pre cede nt's on pleadings1 • H J ac qbs (975) 12th Edition Swe et & - Maxwell2. Reliance is equally placed on Order ;13 Rule 1 1 RSC 1999. It was therefore not open to the learned judge to review the defence filed in the court ' below by considering matters that were not specif~cally pleaded. Regarding the argument that evidence not objected to would be considered by the Court even though it was not pleaded, learned counsel's response is that objection was made to the proposed introduction of the purported defence of agency. J8 Learned counsel's further argument is that in considering the application before her, the learned judge was restricted to exarpining the defence and assessing ,. whether it was a bare denial. It is argued that the appellant admitted having received the funds paid by the I respondent. The defence was not a traverse at;all, and the Court rightly entered I judgement on admission. We are urged to upho,ld the said judgment. The opposing arguments on ground three ate that the third-party admitted receiving funds from the appellan I., but denied the existence of agency. The l appellant failed to dispel or traverse the third-party's assertion. It is submitted that the mere fact that a third-party notice is issued does not insulate a defendant from entry of judgement on admission pursuant to the applicable rule. According to learned counsel, as both the appellant and thle third-party clearly admitted the allegations in paragraph 7, 8, 9 and 10 of the statement claim, there was no issue ' to be determined by the trial Court. We have considered the arguments of both parties. The first paragraph of the ; defence is of relevance to the first ground of a~peal. It was averred therein as follows: 1. The defendant denies that he has in any way acted dishonestly against the Plaintiff in the execution of the agency agreement or ever represented himself as a dealer in ; mukula, or in any manner authorised by the Government of Zambia, to deal in this protected l species of trees. J9 .. • By this averment, the agency agreement was brought to the fore. It in fact became part of the defence, and the learned judge in ·tr~e Court below was obliged to refer to the same, in determining the application for: entry of judgement on admission. The agency agreement was exhibited to the M"fidavit in opposition to the said application. Scott LJ's words in Appleson v.s H Littlewood Limit ed (1939}9, I are Instructive and persuasive. He said, at pag~ 466: " ..... Under modern pleadi ng, a refer~nce in the ple ading to a document in the nat ure of a contract'. brings into the pleading the whole document, so that the Court can refer to t hat as a part of the pleading just as if it had b~en set out under t he old pre-judicature A ct procedure of setting out a document on oyer. Consequently, the state ment of claim itself must be t reat ed as contai ning the rules which I read from para 6 of the defe nce.'' Similarly, in the instant case, the agency agr~ement executed by the parties required to be adverted to by the learned judge in ~he Court below, and not ignored as was done. This is because by referring to -it, the defendant brought that I document into the pleading. It will be seen that by the agency agreement produ;ced as exhibit RM, the appellant was named agent of CHEN XIANG HUA. The appellant was required to undertake ' specified tasks. He was to arrange five containers ?f timber from Paramount Chief Mpezeni of Chipata District to supply to an unnam'.ed designation every two weeks. ; 35% down payment was to be advanced to the agent when signing the contract. JlO Five days later, the appellant was required to ensure that the timber was at the loading bay in Durban, in readiness to depart to the Durban Port. Within five days from the date of payment, the agent was ~o mobilise the containers from the shipping agency/transporters to the loading b~y in Chipata. After five days, site inspection would be conducted by the buyer to9ether with the agent and the buyer would be responsible for the logistics and accommodation for both parties until the containers leave the Durban PorL. Upon verification of the stock by both parties, 30% payment would be paid to the suppliers through the agent before the truck· leaves for Durban with 25 tons container each. The remaining 35°/c, of the paY:ment would be made to the agent after the buyer would h ave been availed the Bill of Lading. The agent was to be paid his commission of one thousand five hundred Dollars (US$ 1,500). A cursory glance at the agency agreement which was signed by the appellant as agent, and pursuant to which the payments were made to him suggests that the seller of the goods was Paramount Chief Mpezeni,- The agent was to arrange timber from the stated seller. Paragraph 6 of the agre~ment indicates that the payment was to be made to the seller. It appears that the agent was to procure timber from the named seller on behalf of the buyer, who i~ respondent to this appeal. He 1e would be paid a commission for undertaking th'.ese tasks. On the foregoing, the learned judge clearly erred in finding that agency was not pleaded, as the agency agreement, having been referred to in the defence, was imported into the pleading. Jll In our con sidered view, paragraph 2 of the 9efence, though terse, sufficien t ly answered pa r agraphs 7, 8, 9 and 10 of the statement of claim. Pa r agraph 2 of the I defence bears repet ition, and reads: The defendant avers that the seller , of the mukula logs, and recipient of the consideration, is Paramount Chief Mpezeni, who has refused or neglected to perform his portion of the bargain and not himself. e By this averment, the appellant was tacitly ackn owledging having received the tabulated amounts but went on to impliedly state that the consider ation was passed on to Paramount Chief Mpczen i who had refu sed or n eglected to do h is part. This was not a bare denial at all, as it spoke to the material aver ment s -in the stated paragraphs whose contents were that the defendant h ad been paid US$46,250 and ZMW 701,833.00 but had not delivered the timber . - v- -;J,,,.l?-~ The application fof ~ admission was made p~r suant to Order 53 rule 6 HCR. That provision states: "(2) The defence shall specifically traverse ev,ery allegation of fact made in the statement of claim or counterclai m as the case may be; (3) A general or bare denial of such allegatipn or a general state ment of non-admission of them shall not be trave rs e thereof: (4) A defence that fails to m ee t t he requirerri.ent of this rule shall be deemed to have admitte d the allegations not specifically traversed; J12 (5) Where defence falls under sub-rule (4) t'!ie plaintiff or defendant or the court on it:> own motion, may in an appropriate case, enter judgment on • admission. " Order 18/ 13 RSC is in the following terms: 13 -(1) Any allegation of fact made by a partµ in his pleading is deemed to Be admitted by the opposite party unless it is traversed by the party ! in his pleading or ajoinder of use un4er rule 14 operates as a denial ofit. (2) A traverse may be made either by a statement of non-admission and either expressly or by necessary implication. (3) Every allegation of fact made in a or a counterclaim which the party i on whom it is served does not intend to admit must be specifically traversed by him in his defence or defence to counter claim, as the case may be; and a general denial of such allegations, or a general I statement of non-admission of them, i t not a sufficient traverse of them. We have opined above that the appellant answer;ed the paragraph s in is su e, and it will be noticed that Order 18/ 13/2 recognises ·that a traverse may be made by necessary implication. Th is is wh at the defendar1t d id . J13 It is settled law that agency is in the nature 'Of a contract for personal services. When money is placed in the hands of the agent for a specific purpose, he becomes a trustee of the principal. No agent is under a1,'.ly personal liability to his principal I upon any contract made by him on his behalf µnless he is made personally liable by usage or unless he is acting as a del cre~ere agent or unless he otherwise ' contracts to be so liable see Halsbury' Laws of England 3 • I A del credere agent is an agent employed t~ sell goods who undertakes that purchasers he procures will pay for any goods they take. He only undertakes that ! they will pay, and does not make himself liable to his principal if his buyer refuses to take delivery. On the foregoing, il is undeniable that on the f~cts as disclosed on the pleadings I in the present case, judgement on admission could not properly be entered. We would refer to Rankine vs Garten Sons & Company Limited9 in that connection. I rt was held by the Court of Appeal inter alia that: "Where admission of fact had been maqe by one party the Court was empowered under RSC Order 27 Rule 3 to give the other party only such judgement or order upon these admissions he may be entitled to". (underlining ours for emphasis) I \ Facts in the matter were that the Plaintiff was employed by the defendants as a . ' I lorry driver. He brought an action against the~ claiming damages for personal injuries sustained as a result of their negligence. In his statement of claim he J14 • alleged that, on dismounting from his lorry, he had slipped on a pool of glucose lying on the floor of the defendants' filling sbi.ed and injured his shoulder. The defendants served a defence in which they (i) made no admissions as to the alleged I incident, (ii) denied that they had been negligent and/ or alternatively that any I negligence on their part had caused or contri~uted to the alleged accident, and (iii) alleged that even if the Plaintiff had sustained injury in the manner alleged the injury was caused or contributed to by his ow~ negligence. The defendants' solicitors subsequently sent the Plaintiff a letter stating that they were authorised to inform him that 'notwithstdnding the terms of the defence the ! defendants now admit that the incident alleged' in the statement of claim resulted I from negligence for which they were responsible': The solicitors went on to say that I when they received the medical report they woul'd be reporting to their clients 'who will no doubt be giving us instructions to explore the possibilities of amicably terminating the proceedings'. The Plaintiff, believing that the defendant had ~hereby admitted liability, applied - under RSC Ord 27, r 3a for an order giving him leave to enter judgment with damages to be assessed. The mast.er made the '. order. The defendants appealed, I contending that the order ought nol. to have beeh made because they had merely I admitted negligence and not that the plaintiff's injuries resulted from their I negligence. The appeal succeeded as no admission had been made concerning the alleged injuries. J15 • In the instant case, the facts as pleaded do not amount to an admission, as earlier stated. Grounds 1 and 2 of the appeal are thu$ allowed. We should remark that reference to those cases that establish that evidence not objected to when led falls ' to be considered by a trial court was misplace4!. The reason is that no trial w a s held at which unpleaded matters were referred to. Rather, the application before the court was one on the papers, and there could be no question of letting in unpleaded matters. The cases were Lherefore cited out of context. Ground>l and 2 having succeeded, it is otiose ;for us to consider ground 3. The ; a ppeal is a ccordingly allowed with costs to the appellant to be agreed and in I default taxed. F . M. CHISANGA JUDGE PRESIDENT COURT OF APPEAL -JJI :~ . . ...................................... . F. M. CHISHIMBA COURT OF APPEAL JUDGE : 1 \ .. £~~ a .... s;.\~t~~t. .. :.:-..;jl ............. . D. I:,/ Y. SI I HINGA COURT ;oF APfEAL JUDGE I J16