Finance Bank Zambia Limited v African Vsat Systems Limited (CAZ/08/089/2022; CAZ Appeal No. 062/2022) [2023] ZMCA 389 (1 August 2023)

J.l IN THE COURT OF APPEAL OF ZAMBI HOLDEN AT LUSAKA (Civil Jurisdiction) AND AFRICAN VSAT SYSTEMS LIMITED RESPONDENT CORAM : Siavwapa JP, Chishimba and Banda-Bobo JJA On 25th April, 2023 and 1st of August 2023 For the Appellant : Mr. L. Phiri & Ms. C. Sakal.a of Messrs. August & Hill Associates For the Respondent : Mrs. I. N. Samulozela of Messrs. Howard & 1\1[ arietta Legal Practitioners JUDGMENT CHISHIMBA JA delivered the judgment of the Court. CASES REFERRED TO: 1) Maningi Safaris Limited v The Attorney General CAZ Appeal No. 85 of 20 l 8 2) Gibbs v Gibbs (1881) 8 Q. B. D. 296 3) Turnkey Propertie s v Lusaka West Development Company Ltd., B. S. K. Chiti (Sued as Receiver) & Zambia State Insurance Corporation Ltd. (1984) Z. R. 85 4) Tulani Chisenga v MTN Zambia Limited & Another CAZ Appeal No. 23 of LEGISLATION CITED: 1) The Limitation Act, 1939 J.2 OTHER WORKS CITED 1. Andrew McGee. 2006. Limitation Periods. 5th edition. London: Sweet & Maxwell 1.0 INTRODUCTION 1. 1 This is an interlocutory appeal against the ruling of the Hon. Mrs. Justice Irene Z. Mb ewe dated 23rd March, 2022. The learned Judge dismissed the preliminary issue on a point of law raised by the appellant, as to whether the claims by the respondent as set out in paragraphs 4 to 37 of the its amended Statement of Claim are statute barred by virtue of section 2( l)(a) of the Limitation Act, 1939 and should be struck out that basis. 1.2 In the ruling subject of this appeal, the learned Judge held that there was a contract between the parties from 2007 to 2018. Therefore, there was a continuing obligation on the appellant to pay for the services rendered by the respondent. 2.0 BACKGROUND 2.1 On 20th January, 2020, the respondent issued a writ of summons and statement of claim as amended on 5th August, J.3 2020 claiming inter alia, the payment of the sum of US$494, 328. 94 being money for unsettled invoices for services provided by the respondent, interest, costs, and any other relief the court may deem fit . 2.2 The appellant filed a conditional memorandum of appearance on 21 st January, 2020 and applied to set aside the originating process for irregularity on 4 th February, 2020. On 19th November, 2020, the appellant filed its defence traversing each and every allegation. 2.3 In its amended statement of claim, the respondent averred that it was contracted by the appellant to provide information technology and communication services which involved connectivity via satellite to enable the appellant transfer data between its remote branches at Nakonde, Kaoma, Mwinilunga, Kabompo, Chinsali, Isoka, Mbala and Mpulungu, and Lusaka. This was between 11th December, 2007 and 7 th May, 2018. In 2018 the appellant gave notice of termination of the contract. 2.4 The respondent averred that during the contract period, it set up and commissioned the VSAT link between the appellant's head office and the remote branches, carried out repair works J.4 as and when called upon at the different sites. On diverse dates, it issued invoices for works done and generated monthly bills separate for each site to the appellant. 2.5 Between 1st October, 2017 and 1st April, 2018, the appellant paid some invoices amounting to US$173, 321.40 while others remained outstanding. However, the appellant disputed some of the invoices on the basis that the respondent failed to provide sufficient information in the form of an order or request, job card and authorization to carry out the works, proof of work satisfactorily done and service of the invoice. 3.0 APPLICATION SUBJECT OF THIS APPEAL 3.1 The appellant issued summons to raise a preliminary issue on a point of law to determine the issue: Whether the claims set out in paragraphs 4 to 37 of the respondents' statement of claim are statute barred in view of the fact that at the time of service of the writ of summons and statement of claim) they were baTTed by section 2(1)(a) of the Limitation Act, 1939. The appellant further sought the striking out of the said paragraphs in the event the court below determined the question in the affirmative. J.5 3.2 The supporting affidavit was deposed to by Milan Dipakkumar Desai, legal counsel in the appellant. The deponent stated that the amended statement of claim was filed on or about 5 th August, 2020. That a perusal of paragraphs 4 to 37 of the statement of claim revealed that the respondent was referring to facts that took place or invoices that were issued and/ or work allegedly carried out more than six years prior to the commencement of the action. 3. 3 The ref ore, it was proper for the court to dismiss the claims that allude to facts and invoices that establish a cause of action which is statute barred. The said cause of action was commenced more than 6 years after accrual. 3.4 The respondent opposed the application in an affidavit deposed to by Heather Anne Chalcraft, a director in the company. She stated that the demands or claims for payments of all invoices that have been outstanding goes as far back as the years 2007, 2009, 2010, 2011, 2013 and 2014. This was confirmed by the communications exhibited 1n the plaintiff's bundle of documents. 3.5 In its skeleton arguments, the appellant contended that the J.6 claims put forth in paragraphs 4 to 37 of the statement of claim arose during the period 2007 to 2014 more than six years before the commencement of the action and should be dismissed. In support thereof, the case of Maningi Safaris Limited v The Attorney General 111 was cited which states that time begins to run when the cause of action arose and does not stop running simply because the parties have entered into ex curia negotiations. 3.6 The respondent submitted that paragraphs 4 to 21 of the statement of claim provide a detailed account of the services rendered to the appellant. Further that paragraphs 22 to 32 are a narration of the costs involved, and not claims for payment to constitute a basis upon which the court should find the said paragraphs to be statute barred. 3.7 It was contended that section 2(1)(a) of the Limitation Act, 1939 does not apply to the debts being claimed by the respondent. That as of June, 2018, the appellant had paid the sum of US$118, 840.40 for the debt being claimed. On the 1st October, 2019 the appellant requested for the latest statement J.7 and invoices amounting to 0S$504, 639.94 for the appellant's finance department to review. 4.0 DECISION OF THE COURT BELOW 4. 1 In her ruling, the learned Judge considered the preliminary issue raised. Guided by the cases of Maningi Safaris Limited v The Attorney General Ill and Gibbs v Gibbs !21, the learned Judge reasoned that in contracts, time begins running from the date of breach of the contract. She accepted the evidence of the respondent that the paragraphs in issue give an account of facts that transpired between the parties from the time they entered into the contract for provision of information technology and communication services and the tasks undertaken by the respondent as well as invoices issued between 2007 to 2013. 4.2 The court below found that the appellant had acknowledged that it had not settled all the amounts due in 2007, 2009, 2010, 2011, 2013 and 2014. Therefore, there was a continuing obligation on the appellant to pay for the services rendered by the respondent which meant that the cause of action accrued at the end of the period of the contract. The learned Judge dismissed the preliminary issue with costs. 5.0 GROUNDS OF APPEAL J.8 5.1 Aggrieved with this decision, the appellant has appealed advancing three grounds couched as follows: 1) The court below erred in law and fact when it proceeded to make remarks on the existence of a contract between the appellant and the respondent which is an issue in the main matter, in the course of determining the interlocutory application that was before it. 2} The court below erred in law and fact when it held that the cause of action emanating from the services provided by the respondent to the appellant and the corresponding invoices for the said services only accrued at the end of the alleged contract period, when the establishment of the existence or non-existence of a contract between the parties is one of the issues in dispute in the main matter; and 3) The court below erred in law and fact when it held that the respondent's claims in respect of the invoices issued between 2007 and 2014 were not statute barred in terms of section 2(1J(a) of the Limitation Act, 1939. 6.0 APPELLANT'S HEADS OF ARGUMENTS 6.1 The appellant filed heads of argument dated 25th July, 2022 in which grounds one and two, which relate to the pronouncements made by the court below relating to the existence of a contract between the parties, were argued together. 6.2 The appellant contends that it is improper for a court hearing J.9 an interlocutory application to make comments or determinations which have the effect of deciding upon or pre empting issues which are to be decided upon on the merits at the trial. As authority Counsel referred us to the guidance of the Supreme Court in the case of Turnkey Properties v Lusaka West Development Company Limited, B. S. K. Chiti (Sued as Receiver) & Zambia State Insurance Corporation Limited 131. We were further ref erred our decision in the case of Tulani Chisen.ga v MTN Zambia Limited & Another 141. 6.3 The appellant argued that the court below had no jurisdiction to hold that the cause of action emanating from the services provided by the respondent and the corresponding invoices only accrued at the end of the alleged contract period because the existence of a contract between the parties is one of the issues in dispute in the main matter; Hence, it was beyond the scope of the interlocutory application. 6.4 Reference was made to the amended statement of claim at pages 10 to 21 of the record of appeal where the respondent averred that though there were a number of draft contracts exchanged J.10 between the parties, no contract relating to the manner and mode in which the parties were to carry out their business dealings was ever executed. It was further argued that a reading of the defence also shows that there was no contract executed between the parties. In addition, that a reading of the amended statement of claim and defence appears to suggest that the parties were conducting their affairs or business on a case-by case basis or as and when the need arose. 6.5 Therefore, it was improper for the court below to hold that the invoices forming the basis of the respondent's claim only accrued at the end of the contractual period as the nature of the dealings between the parties, is an issue that needs to be determined at trial by the lower court. 6.6 In ground three, the appellant submits that the law circumscribes the duration or period within which an action may legally be brought and, by implication, after which actions for certain claims or reliefs may not be brought to court for legal redress. The rationale for the limitation, as espoused by Black's Law Dictionary 10th Edition, page 1636 referred to. 6. 7 It was submitted that the matter in casu is founded on contract. J.11 Therefore, the provisions of section 2(l)(a) of the Limitation Act, 1939 apply. While conceding that the respondent was engaged to provide various services to the appellant, the appellant contends that the engagement was never reduced to a formal executed contract. Further, the terms relating to the nature of the respondent's engagement were not agreed upon. The respondent was engaged from time to time as and when its services were needed. 6.8 The appellant contends that a perusal of paragraphs 4 to 37 of the respondent's statement of claim refers to alleged facts that took place and invoices that were issued more than 6 years prior to the commencement of the action. Additionally, the said claims were not indorsed on the writ of summons. Hence the preliminary issues raised. 6. 9 In this regard, the appellant contends that the limitation period, with regard to the time within which a claim should be brought to court arising out of simple contract, is six years. That the time starts to run from when the cause of action arose. In casu, the cause of action arose at the point following the lapse of J.12 timeframe within which the invoices were to be settled after being issued to the appellant. 6.10 In support of this argument, the case of Maningi Safaris Limited 111 was cited as authority that time does not stop running on account of the parties being engaged in negotiations. Therefore, the fact that the appellant and the respondent were engaged in discussions aimed at arriving at some form of common ground and eventual settlement regarding the sums to be paid to the respondent for the services rendered, did not stop time from running. A party cannot seek to benefit from a delay which may have been caused by negotiations or discussions. 7.0 ARGUMENTS BY THE RESPONDENT 7. 1 No heads of argument were filed by the respondent on the record. Counsel submitted on points of law. We cautioned the Advocates present that in future we will not entertain submission by a party that has not filed heads of arguments on record. Mrs. Samulozela submitted that the legal question to determine in grounds one and two was whether there was a continuing relationship between the parties. Whether there is J.13 a single contract that can give rise to the relationship. Counsel conceded by arguing that there was obviously a relationship between the parties as per invoices paid. However, that the mere relationship over a period of time does not establish a continuing relationship. Therefore, the court erred to hold that the claims arising from the relationship are not statue barred. Each invoice constitutes a different transaction. We were urged to dismiss the appeal with costs. 8 .0 ANALYSIS AND DECISION OF THE COURT 8.1 We have considered the grounds of appeal, the authorities cited and arguments advanced. It is not in issue that the respondent provided information t echnology and communications services to the appellant. The issues for determination in our view are as follows: (i) Whether the court below erred by making re marks on the existence of a contract between the parties (ii) Whether the claims by the respondents in respect of znvozces issued between 2009 and 2014 are statute barred. J.14 8.2 The appellant contends that the court below erred by making remarks on the existence of a contract between the parties, being an issue to be resolved in the main matter. Perusal of the ruling shows that the learned judge's starting point was appreciating the nature of the action and understanding the relationship between the parties. The court below stated that perusal of the amended statement of claim shows that there was a contractual relationship between the parties for the provision of ITC services. This, in our view was for the purpose of establishing that the action arose from simple contract falling within the ambit of section 2(1)(a) of the Limitation Act. 8.3 The appellant moved the court below by raising a preliminary issue for determination on a point of law to have certain paragraphs struck out of the statement of claim alleging that the claim for US$494, 238.94 in unsettled invoices for services rendered by the respondent to the appellant between 2007 and 2014, is statute barred having been brought more than 6 years after the cause of action arose. The claim being founded on simple contract and the court being asked to determine whether or not the claim was statute bar·red meant that the court-below J.15 had to first satisfy itself that there was a contractual relationship between the parties. The question of whether or not there was a contractual relationship was by necessary implication unavoidable to the determination of the preliminary issue on a point of law raised by the appellant. 8. 4 We hold the view that there was indeed a contractual relationship between the parties. Though the appellant averred that it did not execute a singular contract with the plaintiff, it pleaded that the dealings with the respondent were in the form of instructions on a case-by-case basis. In any case, whether or not there was a one-off contract or several contracts between the parties does not alter the fact that the parties were in some form of contractual relationship. 8.5 This shows that there was a contractual relationship between the parties. Stating that there was a contractual relationship is not determining the main dispute, which has to be proved at trial. We hold that the court below was on firm ground to state that there was a contractual relationship between the parties. 8.6 As regards the issue raised in grounds two and three, whether the claims by the respondent are state barred, the starting point J.16 is the Limitation Act 1939 applicable to Zambia by virtue of the British Extension Act Chapter 2. Section 2(1)(a) of the Limitation Act stipulates that actions founded on simple contract or tort shall not be brought after the expiration of six years from the date on which a cause of action accrued. The defence by the appellant is twofold. It denies requesting or making any order to the respondent to carry out the works alleged in its claims. In the alternative it pleads that the invoices issued between 2007 and 2014 did not accrue within six years before the present action was brought. 8. 7 A perusal of the defence and affidavit in support of summons to raise preliminary issue on a point of law, shows that the appellant is not disputing that services were rendered by the respondent during the period 2007 to 2014 and that some money was paid towards the services rendered. 8.8 The appellant contends that it was wrong for the lower court to make a finding that the cause of action herein accrued at the end of the alleged contract period. As stated in ground one, the court below was on firm ground to hold that a contractual J.17 relationship existed between the parties as it was necessary in arriving at a decision whether or not the claim is statute barred. 8. 9 The issue is whether the cause of action by the respondent is statute barred. It is not in dispute that several works were undertaken by the respondent on behalf of the appellant and performed between 2007 to 2018. Payments were made in respect of some of the invoices issued with balances alleged to be outstanding. The appellant continued to make payments towards the invoices up to 1s t of April 2018. The contractual relationship continued up to 2018. In 2019 a letter of demand was written, and court action instituted. 8.10 As to when the cause of action accrued, the learned Judge in the court below found that there was a continuing obligation on the appellant to pay for the services rendered by the respondent for which reason the cause of action accrued at the end of the contract period. She placed reliance on the learned author, Andrew McGee. 2006. Limitation Periods. 5 th edition. London: Sweet & Maxwell, who at page 217 paragraph 10.024 states that: J.18 "The general point that may be extracted from these cases is that it is vital to establish exactly when the breach of contract occurs; this may also involve, as in Shaw v Shaw, describing carefully the content of the obligation. Where the obligation can be performed at any time during an extended period, the cause of action cannot accrue before the beginning of that period and will accrue at the latest at the very end of that period." 8.11 The appellant in its defence, paragraph 61 at page 29 of the record averred that it acknowledged the obligation to settle what was owed based on the invoices issued by the respondent at the completion of each of the works done and continued making payments up to 5 th of July 2019. 8.12 We refer to section 23(4) of the Limitation Act, 1939 on acknowledgement and part payment of an obligation which reads as follows: 23. Fresh accrual of action on acknowledgement or part payment (4) Where any right of action has accrued to recover any debt or other liquidated pecuniary claim, or any claim to the personal estate of a deceased person or to any share or interest therein, and the person liable or accountable therefor acknowledges the claim or makes any payment in respect thereof, the right shall be deemed to have accrued on and not before the date of the acknowledgment or the last payment: J.19 Provided that a payment of a part of the rent or interest due at any time shall not extend the period for claiming the remainder then due, but any payment of interest shall be treated as a payment in respect of the principal debt. 8.13 It is not in issue that the appellant made payments from 1st October, 2017 based on invoices previously issued by the respondent as demonstrated in paragraphs 61 to 65 of the defence appearing at pages 29 to 30 of the record. This denotes both an acknowledgement and partial payment of the obligation by the appellant to pay for the services rendered by the respondent as per the invoices issued between 2007 and 2014. The appellant having pleaded that it had not made payments on any invoices where there was insufficient information provided by the respondent in the form of an order or request made, the job card raised or proof of service of invoice. Further that it was the respondent that failed to provide the above information. 8.14 Can the court below be faulted for holding that the respondent's claims in respect of invoices issued between 2007 and 2014 were not statute barred in terms of section 2(1)(a) af the Limitation Act, 1939? We hold the view that the court below was on firm ground. The claims in casu emanate from J.20 1nvo1ces issued by the respondent between 2007 and 2014 which debts the appellant acknowledged and made part payments up to July 2019. Therefore, the cause of action was not statute barred. In the circumstances of this case the matter should proceed to trial where the claims will be put to strict proof. 8.15 CONCLUSION We reiterate that the court below was on firm ground in holding that the claims by the respondent are not statute barred, the appellant having acknowledged and made partial payments towards the invoices issued for services rendered during the period in issue. We order that the matter proceed to trial for determination. Costs to the respondent to be taxed in default of agreement. M . J. Siavwapa JUDGE PRESIDENT F . M Chishirnba COURT OF APPEAL JUDGE ········ ~ A. M. Banda-Bobo ·· ····· ........ . COURT OF APPEAL JUDGE