Attorney General and Anor v Gunduzani (Appeal 109 of 2007) [2017] ZMSC 268 (5 May 2017)

IN THE SUPREME COURT OF ZAMBIA APPEAL No. 109/08 HOLDEN AT LUSAKA (Civil Jurisdiction) BETWEEN: THE ATTORNEY GENERAL P. M. NAWA AND 1st APPELLANT 2nd APPELLANT SAMUEL JOSEPH GUNDUZANI RESPONDENT CORAM: Muyovwe, Hamaundu, JJS and Lisimba, Ag. JS On 5th February, 2015 and 5th May, 2017 For the Appellants: No appearance For the Respondent: Mr. A. J. Shonga Jnr. S. C., Messrs ' Shamwana and Company JUDGMENT MUYOVWE, JS delivered the judgment of the court. Cases referred to: 1. Kitwe City Council vs. William Nguni 2. Hadley vs. Baxendale (1854) 9 Exchequer 341 3. Times Newspaper Zambia Limited vs. Lee Chisulo SCZ judgment No. 19 of 1984 4. Zambia National Building Society vs. Ernest Mukwamataba Nayunda (1993-94) Z. R. 29 5. Smart Banda vs. Wales Siame (1988-1989) Z. R. 81 6. Irene Chinjavata vs. The Administrator General (2004) Z. R. 184 JI When we heard this appeal, we sat with Mr. Justice Lisimba. He has since retired therefore, this judgment is by the majority. This is an appeal arising from an award of damages by the Deputy Registrar against the 1st appellant, the State. Suffice to note that this appeal though filed on behalf of both appellants, the State is main contender. Briefly, the facts of the case were that the respondent Mr. Samuel Joseph Gunduzani was an employee of the General Post Office the forerunner of the Zambia Postal Services. Eventually, he was posted to Mazabuka where he was accommodated by his employers. When the government started selling government houses and quasi- government houses to sitting tenants and employees, Mr. Gunduzani applied to buy the said house but he was evicted and the house was instead offered to the 2nd appellant Mr. Nawa. Mr. Gunduzani approached various government agencies for help including State House but to no avail. On the 15th October, 2003 Mr. Gunduzani took out an action against the appellants for a declaration that he was entitled to purchase the J2 government pool house No.57, Mazabuka and alternatively that he be awarded damages for consequential loss. After analyzing the evidence before him, the learned trial judge found in favour of Mr. Gunduzani and ordered the State to offer him a similar house on similar terms and conditions. Alternatively, the learned trial judge ordered that the State pays him damages for consequential loss to be assessed by the Deputy Registrar. The State failed to offer Mr. Gunduzani another house and the matter proceeded for assessment before the learned Deputy Registrar as ordered by the learned trial judge. In his judgment dated 17th August, 2007, the learned Deputy Registrar stated that: “I recall once more the orders by Mr. Justice Banda, that the plaintiff (Mr. Samuel Gunduzani) was entitled to consequential damages arising from the loss of the house. Had Mr. Samuel Gunduzani been offered the house in 1999 he would have bought it at K3.8 million unrebased. That was the special or discounted price under the Presidential Housing Empowerment Initiative. In 2003 the house had appreciated to an economic value of K59.1 million unrebased. Where the plaintiff to sell the house in 2003 he would have realized the sum of K59.1 million unrebased. In other words his investment of K3.8 million in 1999 would have realized him the sum of K55.3 million unrebased in 2003 which is the difference between the two figures.” Further, the learned Deputy Registrar took into account the diminution in the value of the kwacha, and awarded interest at the J3 average deposit rate from the 1st January, 2003 to 21st October, 2005 being the date of judgment and thereafter interest to accrue at 6% per annum until final settlement. Costs were also awarded to the respondent. The State being dissatisfied with the assessment of the learned Deputy Registrar appealed to this court advancing three grounds of appeal. In ground one and two, it is contended that in arriving at the consequential damages due to the respondent, the learned Deputy Registrar misdirected himself when in assessing the damages he used the difference between the value of the house at the time of the offer in 1999 and the valuation of the house in 2003 thus arriving at the award of K55.3million unrebased. Further, that the learned Deputy Registrar should not have held that the diminution in value of the kwacha should be effective from 2003 to the date of assessment since the date of the valuation was not given. In ground three, the issue in contention is the Deputy Registrar's finding that the State had not filed any submissions at the time of judgment. At the hearing of this appeal, there was no appearance on behalf of the appellants. We were pleased to note, however, that heads of argument were filed by the State. State Counsel Shonga, on behalf of the respondent relied on the respondent’s heads of argument filed herein. We have considered the submissions by the parties. We do not find it necessary to reproduce in great detail the submissions by learned Counsel for the parties but we will refer to the submissions in this judgment as we deal with all three grounds of appeal together. Firstly, we wish to address the issue of the learned Deputy Registrar's failure to consider the submissions by the parties. This argument is common to both parties. We will not belabour this issue as we have pronounced ourselves on the effect of a court's failure to address the submissions filed by Counsel. In the case of Kitwe City Council vs. William Nguni1 we held that the court is not bound to consider counsel's submissions because submissions are only meant to assist the court in arriving at a judgment. The main issue in this appeal is that the learned Deputy Registrar erred when he awarded the respondent K55.3 million J5 unrebased being the difference between the offer value of the house in 1999 and the valuation of the house in 2003. The argument by learned Counsel for the State is that Mr. Gunduzani did not demonstrate that he had suffered consequential loss as a result of not having purchased the house in issue. According to Counsel for the State, at assessment the learned Deputy Registrar should have determined whether the State should be held liable for damages that it was not aware would be incurred as a result of the breach of contract and Mr. Gunduzani should have pleaded for such relief. Counsel relied, inter alia, on the case of Hadley vs. Baxendale2 which, according to Counsel for the appellants, outlines the basic rule on how to determine the scope of consequential loss that arises out of a breach of contract that one is liable for all losses that ought to have been within the contemplation of the parties. We were also referred to the case of Times Newspaper Zambia Limited vs. Lee Chisulo3 where we emphasized that an appellate court will not interfere with an assessment of damages unless the lower court had misapprehended the facts or misapplied the law or where the damages are so high or so low as to be an entirely erroneous estimate of the damages to which a plaintiff is properly entitled. In J6 fact the learned Deputy Registrar was accused of digressing from the judgment of the High Court dated 21st October, 2005 that ordered the assessment. Basically, the appellants contend that the award by the learned Deputy Registrar was excessive. On the other hand, Counsel for the respondent vigorously defended the decision of the learned Deputy Registrar arguing, inter alia, that the rule in Hadley vs. Baxendale2 supports the respondent's case in that the requisite degree of foresight is attributed to the contract breaker. Counsel submitted that in the case of Hadley vs. Baxendale2 at Page 354 Alderson B stated as follows: "where two parties have made a contract which one of them has broken the damages which the other party ought to receive...... should be such as may fairly and reasonably be considered either as arising naturally, that is to say according to the usual course of things, from the breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract as the probable result of the breach of it." It was argued that the damages for consequential loss due to the respondent are not only a natural consequence of the J7 appellants' breach of the contract of sale but also are reasonably supposed to have been in the contemplation of the parties at the time of the contract. They argued that in this case, the learned Deputy Registrar neither misapprehended the facts nor misapplied the law and the damages cannot be considered to be too high. It was pointed out that in fact, going by the damages assessed, it is quite possible that Mr. Gunduzani may not be able to purchase another house due to the escalating prices on the market. We must state that we do not appreciate the appellants' argument because as Counsel for the respondent has argued, the very fact that Mr. Gunduzani lost the opportunity to purchase the house obviously led to consequential loss. This is an undisputable fact which cannot be driven away by spirited legal arguments advanced by the appellants. Further and more importantly, it must be borne in mind that the learned Deputy Registrar was only following the order of the trial judge that should the State fail to offer Mr. Gunduzani another house, then he should be paid damages for consequential loss. Therefore, the State having failed to offer Mr. Gunduzani another house, it followed that the Deputy Registrar had to assess the damages. J8 With regard to the assessment there was evidence before the learned Deputy Registrar that the rateable value of the property in 1999 when the house was offered for sale was K3.8 million unrebased and in 2003 the rateable value was K59.1 million unrebased. These figures provided guidance to the learned Deputy Registrar in assessing the damages. Certainly, the learned Deputy Registrar did not pluck the figures from the air. Had Mr. Gunduzani bought the house in contention, he would have bought it at the reasonable government rate but due to the circumstances which the State put him in, he may now purchase another house at a higher price on the open market. All these factors had to be taken into account by the lower court and we cannot fault the learned Deputy Registrar when in assessing the damages, he used the difference between the contract price and the market value at the time of the breach. In the case of Zambia National Building Society vs. Ernest Mukwamataba Nayunda4 which appeal centered on the question of excessive compensation awarded by the learned Deputy Registrar in that case, at Page 31 we stated that: “The essence of damages has always been that the injured party should be put, as far as monetary compensation can go, in about the J9 same position he would have been had he not been injured. He should not be in a prejudiced position nor be unjustly enriched. Bearing this in mind and also what we said in Miller's case, courts should adequately compensate the injured party.” Further, in the case of Smart Banda vs. Wales Siame5 we stated that: “It is a settled principle of this Court that we will not interfere with any award of damages unless we find it to be totally inadequate, or, ... ‘inordinately high,’ or unless the trial Court has misdirected itself.” Having considered the facts and circumstances of this case and the authorities we have considered herein, we do not find that the award by the learned Deputy Registrar was unreasonable or excessive. The learned Deputy Registrar was on firm ground in using the formula that he used in arriving at the award of damages. After the learned Deputy Registrar determined the difference between the offer value of the house in 1999 and the valuation of 2003, it followed that he had to take into account the diminution in the value of the kwacha since 1999. The State has taken issue with this and argued that this is not backed by law especially that in its view, the learned Deputy Registrar misapprehended the facts as J io well as misapplied the law. As we have stated above, the facts of this case were established before the trial judge who found in favour of Mr. Gunduzani and therefore the question of the learned Deputy Registrar misapprehending the facts could not arise. We are of the firm view that the formula used by the Deputy Registrar cannot be faulted and it was reasonable and just in the circumstances for him to take into account the diminution in the value of the kwacha. In fact, it is the appellants who have misapprehended the facts and the law hence this appeal. Our holding in the case of Ireen Chinjavata vs. The Administrator General6 (cited by Counsel for the respondent) is quite instructive. We held that: Where there has been inflation, a plaintiff who has been deprived of something must be awarded realistic damages which will afford him a fair recompense for his loss. We also went on to hold that awards for damages must take the devaluation of the Kwacha into account. Having stated thus, we must correct the learned Deputy Registrar on the effective date which he indicated as being the 1st January, 2003. It is not clear how the learned Deputy Registrar jn arrived at the effective date of 1st January, 2003. We hereby order that the effective date should be the 10th October, 2003 which is the date of writ. In conclusion, this is a case where Mr. Gunduzani was entitled to be compensated by the State for his loss and we find no reason to disturb the award by the learned Deputy Registrar which was reasonable under the circumstances. We find no merit in all the three grounds of appeal and the appeal is dismissed accordingly. Costs to follow the event. E. N. C. MUYOVWE SUPREME COURT JUDGE E. M. HAMAUNDU SUPREME COURT JUDGE J12