Barloworld Equipment Zambia Ltd v NAC 2000 Corporation Ltd (Appeal 46 of 2009) [2011] ZMSC 29 (14 April 2011)

JI IN THE SUPREME COURT OF ZAMBIA HOLDEN AT LUSAKA (Civil Jurisdiction) PEEALNO. 46/2009 COURT OF BARLOWORLD EQUIPMENT ZAMBIA LIMITED APPELLANT AND NAC 2000 CORPORATION LIMITED RESPONDENT Coram: Chirwa, Chibesakunda, and Mwanamwamba, JJS. 1st September 2009 and 5th April, 2011. For the Appellant: Mr. IV. Nyirenda, SC., of Messrs William Nyirenda&> Company. For the Respondent: Mr. S. Lungu of Messrs Shamwana and ________________________ Company.____________________________________ _________________________ JUDGMENT___________ Chibesakunda, JS Delivered the Judgment of Court. Cases re ferred to: 1. DEVELOPMENT BANK OF ZAMBIA VS MANGOLO FARMS LIMITED (1995-97)ZR \ 2. EASTERN CO-OPERATIVE UNION LIMITED VS YAMENE TRANSPORT LIMITED PAGE 67. (1988-89) ZR, 126. \ 3. B. P. ZAMBIA PLC VS. INTERLAND MOTORS LIMITED (2001) ZR 37. 4. ZAMBIA CONSOLIDATED COPPER MINES LIMITED V EDDIE KALAYI AND MAX CHILONGO (20011 Z. R. 20. 5. PHILLIP MHANGO VS DOROTHY NGULUBEJ19831Z. R. 21. Other authorities: 6. THE OXFORD ADVANCED LEARNER’S DICTIONARY OF CURRENT ENGLISH 4TH EDITION. 7. SECTION 3 OF THE DISPOSAL OF UNCOLLECTED GOODS ACT CAP 410 OF THE LAWS OF ZAMBIA. We regret the delay in delivering this Judgment. This has been due to pressure of work. J2 This is an appeal against a High Court Judgment, in a claim filed in the Commercial Registry, by the Respondent, claiming:- (a) For damages for breach of contract; (b) For damages for loss of business and loss of use of the said Folk Lift; (c) For an order that the Appellant replaces the said gearbox transmission or in the alternative an order that the Appellant refunds to the Respondent monies to purchase another Folk Lift; (d) Interest; (e) Costs and (f) Any other relief the Court may deem necessary. The facts on which there is common ground are that: (1) In J July, 2001, the Appellant sent its gearbox transmission; engine number AA70218 U578304 to the Respondent for the purposes of repairing it; (2) This gearbox transmission was not operational; (3) This gearbox transmission was in the possession and control of the Appellant until it was discovered missing; (4) Before it went missing, the Respondent had stripped it but had not repaired it; (5) The Respondent had not paid any deposit neither did it pay any money for stripping the gearbox to the Respondent; (6) The Respondent did not even collect this gearbox transmission within the stipulated period of 30 days. J3 The Appellant’s case before the High Court is that; (1) It expected as per its own terms and conditions at page 79, which it attached to its quotation as per its practice (see Clause No. 9(a)(b) of its Bulletin at page 79), that the Respondent would pay a deposit J before carrying out repairs to the gearbox transmission; (2) It expected the Respondent to pay a sum for stripping the gearbox transmission before commencing any repairs; (3) It expected that the Respondent would comply with Bulletin No. 9 term No. (d), of its own terms and conditions at page 79 of the record which reads as follows:- “the component or machine shall be collected within 30 days from the rejection date of the quotation. If the component or machine in question has not been collected within the stipulated 30 days period, Barloworld Equipment reserves the right to dispose of the component in question.” It is also the Appellant’s case before the High Court that, as the Respondent did not collect the machine after it failed to pay a deposit, and after the Appellant had given two quotations to it, the Appellant had every right to invoke Section 3 of the Disposal of Uncollected Goods Act6. The Appellant therefore rightly sold the gearbox transmission as spare parts. The Respondent’s case before the High Court was that, there was no understanding to the effect that it had to pay a sum of J4 money to the Appellant for stripping the gearbox transmission. Neither was there an understanding that it had to pay a deposit to the Appellant before commencing the repair of the gearbox transmission. Its case was that it was never informed of these conditions quoted at 79 of the record. Its understanding was that the prices for spare parts were to be paid in full together with labour. The Respondent’s evidence further was that, the Appellant did not even request or inform them to pick up the gearbox after it failed to pay a deposit as well as other labour costs for stripping the gearbox transmission. Neither did the Appellant inform it that it (the Appellant) was to invoke Section 3 of the Disposal of Uncollected Goods Act6. Its evidence was that, the Appellant sold the gear box transmission without consulting it. According to Respondent, since the Appellant exchanged emails with its official without mentioning the fact that it had sold the gearbox transmission, the Appellant impliedly agreed that the gearbox transmission was not sold, it went missing whilst it was in the possession and control of the Appellant. The Respondent’s case also is that the email correspondence established that the Appellant accepted liability as can be seen from the two email correspondences between Mr. Joshua Nguluwe, the J5 Respondent’s Customer Service Manager, and the Appellant’s Manager Mr Keith Williams. One such correspondence was a letter addressed to Mr. Nguluwe from Mr. Keith William, dated 19th September, 2005 which reads as follows “Good day Mr Ngulube, we have sent you a report on the additional work required on the unit in question.............. I am still looking for a replacement transmission as the discussions we had and the price you were expecting to pay for a second hand unit even with us contributing is well below the market price of good unit...... Please bear with us a little longer.” Another e-mail came from Mr Keith Williams on the same day which reads “Good day Mr Ngulube, with regard to the attached, I will be available for our appointment tomorrow (20 September 2005) at 09:00 hours. However, I wish to advise that, we have been working with people in SA to obtain and replace transmission for the machine. We can discuss all the delays, etc., during your visit tomorrow.” From these exchanges of e-mails, according to the Respondent, the parties tried to resolve this issue of the missing gearbox amicably. There was no dispute by the Appellant of its own liability. The Respondent’s case is that from these emails, it clear J6 that the Appellant never informed the Respondent that it had sold the gearbox transmission in accordance with Section 3 of Disposal of Uncollected Goods Act6. The learned trial Judge, with that evidence before the Court, held in favour of the Respondent hence this appeal. The Appellant has advanced three grounds of appeal:- (1) That the learned trial Judge erred in law and in fact to grant the Appellant’s claim without specifying which alternative claim was to be granted when the Appellant had claimed under (c) of the paragraph 8 of the Statement of Claim for ‘an order that the Defendant replaces the said gear box transmission, or in the alternative an order that the Appellant refunds the Plaintiff the monies to purchase another forklift.’ (2) That the learned trial Judge erred in law and in fact to have granted the Respondent in so far as the learned Judge ordered the refund of the Respondent monies to purchase another folk lift and loss of business and damages. (3) That the learned trial Judge erred in law and in fact to order that the Appellant refunds to the Respondent monies to purchase another forklift when the Appellant had not been given any monies for a forklift or at all. Before this Court, Mr Nyirenda SC., relied on his written heads of argument. He augmented these written heads of arguments by a J7 brief oral submission. In his written heads of arguments, on ground 1, Counsel argued that the learned trial Judge erred in law and in fact in granting the Respondent the claim without specifying which of the alterative award was to be granted to the Respondent as the Respondent had claimed under(c) of paragraph 8 of the Statement of Claim for: an order that the Defendant replaces the said gearbox transmission, or in the alternative an order that the Defendant refunds to the Plaintiff monies to purchase another Forklift/ Counsel went on to quote a portion of the Judgment which reads: “In the event, therefore, the Plaintiffs claim succeeds with costs. On the claim for damages for loss of business and use of forklift, I will not make any inspired guesses as to what that loss in monetary terms. Rather, I refer the matter to the Deputy Registrar for assessment. According to Counsel, the foresaid holding of the Court below was flawed in at least two respects:- (1) It granted the Respondent’s claim carte blanche notwithstanding that the Respondent’s claim related to the replacement of the gearbox on one hand and replacement of the forklift on the other hand in the alternative; and (2) It did not specify what it is that was awarded between replacement of a gearbox on one hand and replacement of a forklift on the other hand. J8 He referred to the Respondent’s claims as endorsed on the Writ of Summons which reads as follows: - (a) Damages for breach of contract with respect to the repair of gearbox transmission of the Respondent’s forklift with engine number AA70218 U58304; (b) Damages for loss of business and loss of use of the said forklift; and (3) An order that the Appellant’s replaces the said gearbox transmission or in the alternative an order that the Appellant refunds to the Respondent monies to purchase another forklift.” He pointed out to the Court that, after this Judgment, the Respondent proceeded to file an application for assessment of damages before the Deputy Registrar and effectively sought payment of inter alia the following:- 2.4.1. New and used Hysiter forklift truck (Record of Appeal, page 163, line 4). The value of a new Hysiter forklift: US$43,475 (Record of Appeal page 191, lines 35). The value of a used forklift: US$22,677.50 (Record of Appeal page 192 line 12). 2.4.2. US$335,000 for loss of business and loss of use of the forklift from January, 2002 to September, 2007. He cited the case of BP Zambia Pic- vs. Interiand Motors Limited3 and urged this Court to adopt its rationale in which the principles on alterative awards were clearly spelt out. In his view, this award J9 given to the Respondent under the circumstances of this principle left wide room for controversy. He therefore urged this Court to disturb that holding. On ground 2, he argued firstly that, the learned trial Judge erred in law and in fact to have granted the Respondent’s claims indiscriminately, thus unduly enriching the Respondent. He explained this by stating that, the learned trial Judge ordered the Appellant to refund the Respondent monies to purchase another forklift as well as damages for loss of business. He argued that, this award in its form, stood to unduly enrich the Respondent in that, while the Respondent took to repair a non functioning gearbox, described by DW1 at pill as “extensively damaged.” Now the Respondent was being awarded a working gearbox, at the same time, a running forklift as well as damages for loss of business. He cited the case of Development Bank of Zambia vs Mangolo Farms Limited1 and argued that this Court in that case cautioned itself against unjustly enriching a party in the awarding of damages. Secondly, that the Court had to remind itself of the duty of the Respondent to mitigate its losses. Counsel argued that the damages awarded to the Respondent for loss of business, were remote because he contended that, the Appellant ought not to have been J10 blamed for the Respondent’s failure to use the forklift as the Respondent was at all material times under an obligation to mitigate its loss. He cited the case of Eastern Co-operative Union Limited vs Yamene Transport Limited2, where Ngulube DC J (as he was thenjsaid: “we find that in keeping with the principles which require a Plaintiff to mitigate his loss, a Plaintiff who has a profit-making chattel damaged beyond economic repair is under obligation to replace that chattel and in this regard the poverty or otherwise of the Plaintiff is quite irrelevant. The damages must be assessed therefore, on the basis that a prudent Plaintiff would have taken steps to replace the chattel which has been damaged” Thirdly, on the award, by the learned trial Judge "for refund of the Respondent’s monies to purchase another forklift”, he argued that although the Respondent was awarded this claim, there was no evidence to justify this award. This award should not have been awarded as it was clearly not in keeping with the circumstances of the case and it was against the very essence and meaning of the concept of refund. He went on to define the word 'refund’ as per the Oxford Advanced Learner’s Dictionary of Current English 4th Edition5 as "Pay back (money received); reimburse (expenses incurred)....” He submitted that, the evidence before Court is that, no money passed from the Respondent to the Appellant. So there fl JI 1 was no money to be refunded. The contractual obligation of the Appellant was to repair the gearbox. So the award was wrong in principle. The Respondent’s arguments in response were that, the learned trial Judge was on terra firma when she found for the Respondent. On ground 1, it was Counsel’s argument that, the issue for determination by the Court was whether, the learned trial Judge, by not specifying the alternative award in default to be granted to the Respondent, prejudiced the Appellant. Counsel maintained that, although the learned trial Judge did not specify which of the two remedies was to be in default, that did not make such an award wrong in principle. According to Counsel, the award in the alternative left no room for controversy. Citing the case of B. P, Zambia Pic vs Interiand Motors Limited3 as well, Counsel contended that, had the learned trial Judge specified which alternative award was to be granted, this would have placed un due difficulties on the parties. According to Counsel, the Respondent’s two claims showed that satisfying either of the two awards, would be acceptable. He cited the case of Zambia Consolidated Copper Mines Limited v Eddie Kalayi and Max Chilongo4 where it was held that: “The simple truth is that the alternative prayer for J12 compensation was the more realistic one and there can be no ground for the Appellants to resist such alternative” According to Counsel, given the circumstances in this case, this approach was what the Court had in mind. Counsel argued ground 2 and 3 together; he argued that there are no findings in the Judgment on which these grounds were based on. Therefore, the two grounds were misconceived and as such needed no response. These were the arguments before us. We have considered the record and submissions before this Court. We have also considered the Judgment of the lower Court. We will deal with all 3 grounds of appeal all rolled up as one. Looking at the totality of the arguments by the Appellant, liability on breach of contract by the Appellant, was not being denied. What • I was being challenged, in our view, is the award in its totality. Most facts in this case were not disputed. These facts were that: (1) The Appellants with the consent of the Respondent collected the gearbox transmission for repairs; (2) The gearbox transmission was not functional; (3) It was stripped; (4) The forklift remained in the possession and control of the Respondents; (5) The Respondent paid no deposit; (6) The gearbox transmission went missing. J13 Before the lower Court, there were two versions of what led to this course of events. The Appellant’s story was that after receiving the gearbox transmission, it, as per its trade practice, made quotations and handed them over to the Respondent attaching to these quotations its conditions and terms stated page p.79. Its case was that the Respondent did not respond. The Appellant’s case also is that once again made another quotation and handed it over to the Respondent. The Respondent did not react. The Appellant ■ invoked Section 3 of the Disposal of Uncollected Goods Act and deposed of the gearbox transmission as spare parts. The Respondent’s story was that, the Appellant did not give them the quotation neither did they give them information of their terms nor conditions as shown at page 79 of the record. Therefore, the Respondent did not know that it had to pay for labour costs for dismantling the gearbox; neither did it know that it had to pay deposit before the Appellant commenced repairs. Looking at the facts on which there was common ground, in particular, the fact that the forklift was not part of the deal and the fact that no money passed from the Respondent to the Appellant, we agree with learned State Counsel that, the learned trial Judge misdirected herself when she awarded carte blanche the J14 replacement of the gearbox on one hand and the refund of money to the Respondent to buy a forklift without stating specifically what it is that was awarded between the replacement of the gearbox transmission and refunding the Respondent money to buy a forklift on the other hand. We hold the view that this award was wrong in principle as we echo our decision in the cited case of B. P. Zambia Pic vs Interiand Motors Limited3, where we opined as follows:- “We wish to state that there is basically nothing wrong in principle in the award of remedies in the alternative where one is in default of the other provided that, in the circumstances of the particular case, this does not leave room for further controversy and litigation. In some cases, it is possible to put one of the parties to her/his election so that the selected remedy will be at that party’s option while in other cases this would not be workable. The Court should have regard to the facts and circumstances disclosed in the individual cases.” (Emphasis supplied.) Therefore, having regard to all the facts established in this case, we entirely agree that, the award by the learned trial Judge left wide room for controversy as there was no indication as to which of the alternative remedies was the award in default. More also, we are conscious of the principle that, in making any award, a Court should not unjustly enrich the party claiming at the expense of a loosing party. In the case of Development Bank of J15 Zambia vs Mangolo Farms Limited this Court, on this principle of unjustly enriching a loosing party, had this to say: “We agree that the Respondent should not be unjustly enriched.” We make these remarks taking into account the facts already indicated in our Judgment on which there was common ground, especially the facts that, the Respondent did not pay any money to the Appellant and that, a non functioning gearbox transmission was sent for repairs. Also even if we accept the Respondent’s story as the learned trial Judge did, that the Appellant was not given information at page 79, according to the evidence, the Respondent made no inquiry as to what its obligations were in the contract. It made no inquiry for a period of three months after sending the gearbox transmission for repairs. We base our remarks on the principle that in every contract, there is a core or fundamental obligation by each of the parties to a contract to be performed. If a party fails to perform such a fundamental obligation, such a party is liable in breach of contract. We therefore agree with the learned State Counsel that with these circumstances, the learned trial Judge misdirected herself. We therefore quash the award granted by the lower Court and in place order that the Appellant replace the gearbox transmission. J16 The next question is whether or not the gearbox to be replaced has to be new or otherwise. We are guided by the correspondences in the emails at pages 48 and 49. We realize that even looking at these emails, the parties were not in agreement as to whether the gearbox transmission to be replaced, had to be new or second hand. They were also not in agreement as to whether or not both parties had to contribute to the purchase of this gearbox transmission. We have therefore pondered over these issues. In trying to get an answer to the question poised even at this sage, taking into account the fact that there was no evidence of how old the gearbox was when it was sent for repairs and the fact that it was non functional, in trying to make an intelligent guess, given all these circumstances of this case, we order that the Appellant pay the Respondent the value of a second hand gearbox with interest at Bank of Zambia deposit rate from the time of issuing the Writ up to time of the High Court Judgment, thereafter Bank of Zambia recommended lending rates up to the payment of the Judgment debt. As regards to the award on loss of business, we entirely agree k with learned trial Judge at page 13 of the record that since it was common ground that the gearbox which the Appellant accepted to • J17 repair was non functional and was “extensively damaged/’ no one can claim loss of business for a non functional item. However, as the learned trial Judge concluded, had it been repaired timeously, it would have resumed its functions sooner than not at all. As such the Respondent is entitled to an award on loss of business. In line with the case of Phillip Mhango Vs Dorothy Ngulube, the learned trial Judge was right to have sent this matter to the Deputy Registrar for assessment. However, we want to point out that a party who succeeds in the claim has a duty to mitigate this loss. We note from the evidence that the Respondent had not really tried to mitigate its loss for the period between July, 2001 and May 2007 the date of the trial as the forklift which remained in their custody was not used. We are therefore directing the matter to the Deputy Registrar to assess damages if any for loss of business had the gearbox been repaired bearing in mind the issues we have raised In conclusion, the Appellant is partially successful. We therefore order that, costs be borne by each of the parties. D. K. Chirwa SUPREME COURT JUDGE J18 L. P. Chibesakunda SUPREME COURT JUDGE SUPREME COURT JUDGE wa