Africa Commercial Agency v Attorney General (Commercial Cause 61 of 2018) [2019] MWHC 259 (14 August 2019)

IN THE HIGH COURT OF MALAWI COMMERCIAL DIVISION BLANTYRE REGISTRY COMMERCIAL CAUSE NUMBER 61 OF 2018 APRICA COMMERCTAL AGENCY rccesccoccciiccecces unde carnevinepenereneparé rennbenginenew os CLAIMANT VERSUS ATTORNEY GENERAL 6 vice cen fed ected ncwne dace suey seies nen eng Oe napa ed st DEFENDANT CORAM: HON. JUSTICE J. KATSALA A. Nampota and N. Alide, of counsel for the claimant N. Chisiza, Senior State Advocate for the defendant A. Nyirongo, Court Clerk RULING Introduction This is a ruling on the hearing of an application by the defendant to this Court for an order setting aside a Settlement Agreement the parties executed in this matter on 30 April 2018 following a mediation. It is the defendant's contention that the Settlement Agreement was entered into under a mistake of fact. It is alleged that at the time of the Settlement Agreement the defendant did not know that the claim herein had already been settled. The claimant opposes the application and prays for its dismissa! with costs. Facts . ‘ The claimant took out a writ of summons against the defendant claiming the sum of K2,721,271,577.60 being the price of goods (uniforms and equipment) L |; 4'GH CouRT KIB A fey TE aa renege supplied to the Department of Immigration in April 2015. The claimant also claimed interest on the amount at 10% above the commercial bank base lending rate with effect from date of default until full settlement of the debt. The claimant also claimed 15% of the amount being claimed as debt collection costs in terms of the Legal Practitioners (Scale and Minimum Charges) Rules. In its defence the defendant admitted entering into an agreement for the supply of goods worth K720,287,275.00 and that the agreement was extended to cover goods worth K4,796,129,880.00. The defendant alleged that, contrary to the terms of the agreement, the claimant raised invoices for the sums of K1,677,847,852.79 and K485,309,804.81 allegedly as devaluation adjustments, and also inserted into the invoices a term for interest at the rate of 10% above bank lending rate. It was also alleged that the Chief Immigration Officer acting under a mistake induced by the claimant’s letter dated 20 April 2016, confirmed to the claimant that the defendant owed the claimant the sum of K2,721,271,577.60 for goods supplied when the said amount included the invoices for the devaluation adjustments. Thus the defendant denied being liable to the claimant for the amount claimed on the ground that there was no agreement -between the parties that they would adjust the prices due to devaluation of the local currency. The defendant also denied being liable for interest at 10% above bank lending rate and debt collection costs as claimed in the writ of summons. In its reply to the defence the claimant stated that the terms complained about were part and parcel of the claimant’s Bid Submission Sheet. And by awarding the contract to the claimant it meant that the defendant had accepted those terms. The matter was set down for mediation during which the parties reached an agreement on a settiement of the claimant’s claim. They executed a settlement agreement in which the defendant was to pay an agreed amount plus debt collection costs in full and final settlement of the claim herein. However, subsequent thereto, the defendant made the present application seeking an order setting aside the Settlement Agreement on the ground that it was entered into under the mistaken belief that the debt was still owing. But an audit at the Department of Immigration has since revealed that the claimant was already paid for the goods claimed for in the present action. Consequently, the oe . desirous of defending the matter so that the claimant should prove its claim if it disputes that it was already paid for the goods. Law and analysis I heard counsel from both sides in arguiient. I wish to agree with the claimant’s submission that the defendant has not followed the correct procedure for setting aside the Settlement Agreement. Order 13, rule 8 (2), 2 (3) and (4) of the Courts (High Court) (Civil Procedure) Rules, 2017 provides as follows: - “(2) Where the parties reach an agreement on a settlement of the dispute— (a)the Judge shall immediately thereafter draw up a settlement agreement in conjunction with the parties; and (b)the parties shall. sign the settlement agreement in the presence of each other, and the Judge shall also sign the settlement agreement in the presence of the parties. (3) The Judge shail furnish a copy of the signed settlement agreement to each of the parties and the agreement shall be deemed to be a judgment of the Court and may be enforced as such. (4) An appeal shall not lie against a settlement agreement under sub rule (3}.” Since a settlement agreement is deemed to be a judgment of the Court and can be enforced as such, it means that a settlement agreement is just as good as a judgment entered by the Court. It has the full force of a judgment duly entered by the Court. And because it is executed out of the consensus of the parties, it is just as good as a judgement entered by the mutual consent of the parties, that is, a consent judgment. In essence, a settlement agreement is a consent judgment. That is why no appeal can lie against a settlement agreement just as it cannot lie against a consent judgment. The only option available where it turns out that a party is, for one reason or another, aggrieved by it is to have it set aside just as is the case with a consent judgment. See Shiptrade International Company Ltd v Transglobe Produce Exports [1997] 1 MLR 37. On that basis, it is my view that the principles that apply on the setting aside of a consent judgment would be applicable on an application to set aside a settlement agreement. It is also my, view that in respect of procedure to be followed, the practice and procedure, applicable for setting aside a consent judgment would also be appropriate for setting aside a mediation settlement agreement. I have always understood that the procedure Is to institute a fresh action seeking the setting aside of a comsent judgment. And not making an application within the same proceedings wherein the consent judgment has been entered. I would like to think that.just like a consent judgment, a settlement agreement has the binding effect of a contract. Thus, it can only be set aside by a consenting party by an action commenced specifically for S that purpose. The applicant must show that the settlement agreement just like is the case with a consent order was based on fraud, mutual mistake or misrépresentation. See In re KK Millers Ltd and In re Companies Act [1995] 2 MLR 458, Huddersfield Banking Company Ltd v Henry Lister and Son Ltd [1894] Ch D 273 and Purcele v FC Trigel Ltd [1971] AC 358. Likewise, I would expect the defendant to commence a fresh action if he is desirous of setting aside the settlement agreement. Conclusion and disposal On the foregoing, it would be improper for the Court to grant the defendant’s application because that kind of application is untenable in the circumstances of present proceedings. It ought not to have been made. Therefore, I do not hesitate to hold that the application must fail. I refuse to set aside the Settlement Agreement. The application is dismissed. The defendant may wish to apply for an order staying the execution of the Settlement Agreement pending the determination of the action he intends to commence, if he is minded to do so. The defendant will bear the costs of the application. - Pronounced at Blantyre this 14" day of August 2019. Katsala JUDGE