CALEB MULENGA v KANSASHI MINING PLC (Appeal No. 26/2023) [2025] ZMCA 71 (9 May 2025)

IN THE COURT OF APPEAL OF ZAMBIA Appeal No. 26/2023 HOLDEN AT LUSAKA (Civil Jurisdiction) BETWEEN: M EGST I CALEB MULENGA APPELLANT AND KANSASHI MINING PLC RESPONDENT CORAM : Siavwapa JP, Chishimba, and Makungu JJA On 16th January, 2024 and 91 May, 2025. For the Appellant: Mr. A. Hamwele & Mr. K. H. Nkuta of Messrs. Musa August Hill & Associates For the Respondent: Mr. S. Chisanga & Mrs. M. S Namwila of Messrs. Corpus Legal Practitioners JUDGMENT CHISHIMBA JA, delivered the judgment of the Court. CASES REFERRED TO: 1) The Moorcock (1889) 14 PD 64 2) Wastech Services Limited v Greater Vancouver Sewerage & Drainage District 2021 SCC 7 3) C. M. Callow Inc. v Zollinger 1 (Callow) 2020 SCC 45 4) C. F. Lombard North Central Plc v Butterworth (1987) QB 527 5) Craven (Inspector of Taxes) v White: Inland Revenue Commissioners v Bowater Property Developments Ltd: Baylis (Inspector of Taxes) v Gregory (1987) 3 All ER 27 APPj U mAl loll I J.2 6) Finance Bank & Another v Simataa Simataa SCZ Appeal No. 11 of 7) Colgate Palmolive (Z) Inc. v Shemu and Others, Appeal No. 11 of 8) West v Jones (1851) 1 Sim (N. S. 205, 207) 9) Friday Mwamba v Sylvester Ntenge, Monica Kapinga & Derrick Chekwe SCZ Judgment No. 5 of 2013 10) BJ Poultry Farms Limited v Nutri Feeds Zambia Limited SCZ Appeal No. 166 of 2015 11) Henry Nsama & 134 Others v Zambia Telecommunications Company Limited SCZ Appeal No. 158 of 2016 12) Wilson Masautso Zulu v Avondale Housing Project (1982) Z. R. 172 13) Sablehand Zambia Limited v Zambia Revenue Authority (2009) Z. R. 14) Nkongolo Farms Limited v Zambia National Commercial Bank & Others (2007) Z. R. 149 15) Kalusha Bwalya v Chadore Properties Limited & Ian Chamunora Nyalungwe Haruperi SCZ Judgment No. 20 of 2015 16) Hatchway v Potter Royalty Pool Mic 686,69 N. W 2. D 17) Abu Dhalsi National Tanker Co v Product Star Shipping Ltd (1993)1 Lloyd's Report LR 397 18) NBS Boland Bank v One Berg River Drive CC and Others ([1999] ZASCA 60). 19) Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District' 2021 SCC 7, (2021) 1 S. C. R. 32 20) Ali v Petroleum Company of Trinidad and Tobago (2017) UKPC 2 21) BP Refinery (Westernport) PTY ltd v Hastings Shire Council 1977, 52 A. L. 22) Marks and Spencer v BNP Parties Securities Services Trust Co (Jersey) Ltd 2015 ukse 23) Attorney General of Beloze v Belize Telecom Ltd (2009) 1 WLR LEGISLATION CITED: 1) The Mines and Mineral Development Act, 2008 (repealed) OTHER WORKS CITED: 1) Chitty on Contracts. Volume 1. General Principles, 281h Edition, paragraph 12-002 at page 583 2) Black's Law Dictionary 6th Edition 3) Haisburys Laws of England, Volume 9, 4th Edition 1.0 INTRODUCTION 1.1 The delay in the delivery of the judgment of the Court is regrettable, due to circumstances beyond the control of the J.3 Court. This appeal is against the judgment of the Hon. Mrs. Justice K. E. Mwenda-Zimba dated 51h October, 2022 in which she dismissed all of the appellant's claims against the respondent, having found that there was no joint venture agreement between the parties, but an outright sale to the respondent. And refusing to imply terms, as to time being of the essence and reasonable time within which to commence mining operations. The Court below dismissed the claim on allegation of fraud. The appeal deals with issues of a joint venture, implied terms and Net Smelter Return Royalty, contractual discretion and whether time was the essence of the contract. 2.0 BACKGROUND 2.1 On or about 4th and 5th September, 2013, the appellant and respondent company entered into a "Binding Term Sheet- Purchase of Prospecting Licence" (hereinafter referred to as the 'BTS'). The BTS set out the terms on which the respondent acquired the appellant's prospecting licence No. 17019-HQ-LPL, in Solwezi District, Northwestern Province, 2.2 Clause 2 in the BTS set the consideration at K5, 371,100.00 Clause 3 provided that the acquisition was conditional upon the parties obtaining all the necessary governmental, regulatory and other approvals to transfer the prospecting J.4 licence. 2.3 Pertinent to this appeal is Clause 7, the Net Smelter Return Royalty (hereinafter referred to as 'NSR') which was couched in the following terms: "If KMP (Kansanshi Mining Plc) commences mining operations, KMP will pay CAM (Caleb Amos Mulenga) the Net Smelter Return Royalty (NSR) of 1.5% (one and a half percent) on the following terms: a) The NSR shall be paid within forty five (45) days after the expiration of each calendar quarter following the commencement of mining operations. b) C) e) f) The maximum total NSR payable to CAM will be ZMW21,484,400.00. For the purpose of clarity, upon KMP making payments to CAM pursuant to the NSR totaling ZMW21,484,400.00 this NSR shall terminate and no longer be of any effect. For greater certainty, all matters with respect to the Mine Development, conduct and continuity and scale of mining operations including the disposal of overburden, waste and tailings shall be at the absolute discretion of KMP, and KMP is not required to take into account the interests of CAM as holder of the NSR in consideration of such matters." 2.4 Clause 7 was later amended with respect to the amount to read "US$4,000,000.00" instead of "ZMW2 1,484,400.00". 2.5 After some time, a dispute arose between the parties and the J.5 appellant commenced an action by writ of summons and statement of claim seeking the following reliefs: i) An order compelling the respondents to complete exploration activities; ii) An order compelling the respondents to disclose all the mineral deposits discovered in the exploration licence area from the date of the transfer of the Exploration Licence to date; iii) An order compelling the respondent to take any discovered deposits to production within reasonable time; iv) An order compelling the respondent to make an account, under oath, detailing the mining activities in the Exploration Licence area from the date of the transfer to date; v) An order for the payment of the NSR by the respondent to the appellant, in the sums of US$4,000,000.00 or alternatively, in lieu of payment, repudiation of the Binding Term Sheet, with attendant consequences at law; vi) Damages for breach of contract; vii) Interest on all sums found due from the date of the Binding Term Sheet to the date of full payment and costs. 3.0 DECISION OF THE COURT BELOW 3.1 After considering the evidence on record, the Learned Judge was of the view that the dispute between the parties revolves around the interpretation of the BTS. The Court below considered the parties' clause, together with clauses 1, 2, 7 and 18 and found that the BTS is binding in accordance with the settled principles of contract law. 3.2 The Learned Judge considered the law on implied terms in J.6 relation to the appellant's contention that the court should find that there was an implied term that the appellant was entitled to reports from the respondent, on its activities to enable him know that he was entitled to the NSR. The Court reasoned that to give business efficacy to the BTS, it could be implied that the appellant was entitled to reports as he was entitled to the NSR. 3.3 The lower court found that the use of the word 'if' in clause 7 shows discretion. Further, the last portion of clause 7 was explicit that, "... all matters with respect to mining development, conduct and continuity and scale of mining operations ... shall be at the absolute discretion of KMP, and KMP is not required to take into account the interests of CAM as holder of the NSR in consideration of such matters." 3.4 The Court referred to the definition of 'mine development' under clause 18 of the said agreement and held that commencement of mining was at the absolute discretion of the respondent. There being an express term in the contract, no implied term could be imposed to the effect that mining was to begin within a reasonable time. 3.5 The Court below dismissed the appellant's claim for an order compelling the respondent to complete exploration activities having found that the BTS made the commencement of mining activities discretionary and there being no evidence of J.7 an agreement between the parties that exploration ought to be concluded within a reasonable period or that it has been concluded. 3.6 After considering the terms of the BTS, the trial Court found that the BTS was a sale as it expressly stated so. The respondent paid a consideration of K5,371,100.00 for the transfer of title of the licence for the respondent's exclusive use, title and benefit 3.7 The Court dismissed the relief for an order compelling the respondent to disclose all mineral deposits discovered in the exploration licence area and to take them to production within a reasonable time there being no documentary evidence of mining in the subject area. The Court further stated that in any event, the respondent had absolute discretion as to when to commence. 3.8 As regards the claim for payment of the $4,000,000.00 NSR or in the alternative, repudiation of the BTS, the court refused to grant this, having found that there was no evidence that mining had commenced. There being no breach of contract, the claim for damages was dismissed. However, the Court held that the appellant remains entitled to payment of the NSR if the respondent commences mining. 3.9 As regards the claim for fraud in the manner the respondent J.8 altered its licence, the learned Judge took the view that the application was processed and granted by the Ministry of Mines which was not party to the suit. The Court could not properly determine the allegation without hearing from the Ministry that considered it fit to grant the licence. That a finding of fraud would invariably mean that the Ministry of Mines approved a fraudulent alteration. In any case, the appellant consented to the transfer of the licence and testified that the conditions precedent for the transfer were met. In this regard, the lower Court rejected the allegation of fraud in the manner the licence was altered. 3.10 All the reliefs, save for the entitlement to reports were dismissed. Each party was ordered to bear its own costs. 4.0 GROUNDS OF APPEAL 4.1 The appellant appealed against the judgment of the court below, advancing six grounds as follows: 1) That the lower court erred in fact and in law when it held that the respondent had discretion to commence mining operations despite the appellant being entitled to the Net Smelter Return Royalty in accordance with the Binding Term Sheet which could only be derived from the commencement of mining in the licensed area; 2) That the lower court erred in fact and In law when it held that the respondent being obliged to commence mining J.9 operations within a reasonable time is a term that could not be implied into the Binding Term Sheet; 3) That the lower court erred in fact and in law when it failed to find that time was of the essence in regard to the obligation to explore and mine under the Binding Term Sheet notwithstanding that the subject matter of the contract was a diminishing resource and that the remaining extent of the exploration licence expires in December 2022; 4) That the lower court erred in fact and in law when it held, on one hand that it is just and equitable for the appellant to have received reports from the respondent to know the progress in the exploration licence area, while on the other hand refusing to grant an order compelling the respondent to declare all mineral deposits discovered in the exploration licence area and/or in finding that the appellant did not lead evidence to prove that there were mineral deposits in the exploration licence area; 5) That the lower court erred in fact and in law when it held that it could not make a finding of fact and/or law on the appellant's allegation of fraud on account of the Ministry responsible for mines not being a party to the proceedings; and 6) That the lower court erred in fact and in law when it found that the agreement between the appellant and the respondent was an outright sale as opposed to a joint venture. 5.0 APPELLANT'S HEADS OF ARGUMENT 5.1 On 301h January, 2023, the appellant filed heads of argument. Grounds one, two and three were argued together. The appellant submits that to give the BTS business efficacy, a number of terms were to be implied into the agreement. Two J,10 of these terms were that the respondent had an obligation to commence exploration and subsequent mining activities in the exploration licence area within a reasonable time, and that time was of the essence regarding the performance of the respondent's obligations under the BTS. 5.2 Citing the case of The Moorcock (1), it was submitted that implied terms give business efficacy to the transaction as must have been intended at all events by both parties. Therefore, the finding of the Court that the use of the word 'if' was discretional, is erroneous firstly, because contractual discretion is not absolute. It must have its bounds in reason. For this, the Canadian Supreme Court decisions of Wastech Services Limited v Greater Vancouver Sewerage & Drainage District (2) and C. M. Callow Inc. v Zollinger 1 (Callow) (3) were cited for authority that a party exercising its seemingly unfettered contractual discretion unreasonably, will have breached the duty to exercise contractual discretionary powers in good faith, and may constitute a breach of the duty of honest performance. 5.3 It was submitted that the respondent touting superior exploration and mining techniques as motivation for the appellant transferring the exploration licence to the respondent, and the respondent not conducting any mining J.11 activities in the exploration area, is a breach of the respondent's duty to exercise their discretionary power in good faith, and thus a breach of the BTS. As such, the lower Court's finding that discretion was absolute on the part of the respondent is perverse and must be overturned. 5.4 The appellant submits that implying reasonableness does not contradict the express terms of the BTS. That the respondent's witness admitted that it was unreasonable for the respondent to sit on its hands and do nothing having acquired the exploration licence. On this basis, it was argued that the court below ought to have implied the term that the respondent was to conduct exploration activities and take the deposits discovered to production in the exploration licence area within a reasonable time of acquiring the licence into the BTS. That this is the only way to give business efficacy to the transaction between the parties. 5.5 It was argued that the parties did not agree for the appellant to transfer its exploration licence to the respondent only for the respondent to sit on it for over nine years without carrying out any exploration and the consequent derivation of resource. The intention was for exploration works to commence, followed by mining activities being conducted, J.12 which would lead to the appellant benefiting from the NSR in accordance with the spirit of the BTS. 5.6 Therefore, the respondent cannot rely on its own inactivity of failure to conduct exploration and/or taking to production the mining deposits to preclude the NSR clause from taking effect. 5.7 With respect to time being of the essence, the appellant referred to the case of CF Lombard North Central Plc v Butterworth(4) which holds that where time is of the essence in a contract, any delay by the promisor will entitle the promise to terminate the contract. Reference was made to the Mines and Minerals Development Act, 2008 (the law in force at the time) and the life of an exploration licence being 10 years. That at the time of execution of the BTS, the remainder was 7 years and 50% of the exploration area was relinquished to the State upon the first two renewals in accordance with section 24. It therefore, followed that time was of the essence in the performance of the obligations by the respondent. 5.8 Counsel submitted that the Court below erred in holding that even if the exploration licence had a timefrarne, it was subsumed and therefore the NSR only remains payable if mining commences. It was also an error for the Court to not make a finding that the portion of the exploration area not J.13 subsumed would expire at the end of the year 2022 without being explored. That this flies in the face of the right to the NSR. 5.9(cid:9) In ground four, the appellant submits that the belief that the respondent has actually conducted mining activities is anchored on the technical report at page 290 showing that the inferred resource rose from 365.3 million tonnes in November 2012, to 669 million tonnes as at May 2015, after his acquiring exploration licence; the increase in the measured resource from 88.9 million tonnes to 105 million tonnes during the same period; the recording of the highest annual copper production in its history in 2014, appearing at page 475 Volume 2 of the record; and that about $2,300,000.00 was spent on exploration. 5.10 The appellant contends that the only way to resolve these issues is for the Court to order that the respondent declares what resource was discovered. On this basis, it was submitted that the appellant did lead evidence that mining activities were conducted. The only way the appellant would have known the resources discovered, is through reports from the respondent, which the appellant never received. 5.11 In ground five, the appellant maintained that the respondent acted fraudulently in the manner in which it converted the J.14 exploration licence to a mining licence to the detriment of the appellant. Counsel revisited the evidence on record in an effort to show that there was fraud. 5.12 Maintaining that fraud was proved, it was submitted that the law is clear on the requirements for conversion of an exploration licence to a mining licence, and whether the Ministry of Mines is a party or not, the court must interpret the law. That the finding of fraud is on the basis of a breach of the law. To tie that interpretation to the joining of a party is an error. There was no claim by the appellant to have the conversion invalidated, which would have required the joining of the Attorney General. 5.13 Lastly, in ground six, the appellant maintains the view that the BTS between the parties is a joint venture as opposed to an outright sale, even though this was not pleaded. It was submitted that Courts have always taken the view that it looks at the actual substance of something, in this context, a document, as opposed to the mere form. To this end, we were referred to the cases of Craven (Inspector of Taxes) v White: Inland Revenue Commissioners v Bowater Property Developments Ltd: Baylis (Inspector of Taxes) v Gregory (5) where it was held that: J.15 "If it can be seen that a document or transaction was intended to have effect as part of a nexus or series of transactions, or as an Ingredient of a wider transaction intended as a whole, there is nothing in the doctrine [of IRC v Duke of Westminster [1936] AC 1, [1935] All ER Rep 259] to prevent it being so regarded ..." 5.14 Based on this authority, the appellant submitted that evidence adduced in the lower court reveals that the parties entered into ajoint venture through the execution of the BTS. That it was not necessary that the words joint venture' should be stated in the BTS. That there was a joint venture between the parties as opposed to an outright sale, thereby giving the appellant a continuing interest in the exploration licence area even after the transfer to the respondent. 6.0 ARGUMENTS BY THE RESPONDENT 6.1 The respondent filed heads of argument dated 3rd March, 2023 and responded in the manner the appellant argued the grounds. In response to grounds one, two and three, which are intertwined and relate to the commencement of mining operations as defined in the BTS, the respondent submits that parties of competent age and capacity have the freedom to contract under the terms and conditions they deem necessary and fit. Therefore, having expressly stated the terms and conditions that will govern a relationship, there J.16 can be no terms implied therein which are inconsistent with the terms so expressly stated. 6.2 Counsel submitted that following the execution of the BTS, the terms therein were binding on the parties, and any acts contrary thereto are actionable, subject to the submission of evidence of such wrong acts. Reference was made to the IBTS appearing at page 180 of the record of appeal. 6.3 The Court was referred to the cases of Finance Bank & Another v Simataa Simataa (6) and Colgate Palmolive (Z) Inc. V. Shemu and Others (7), which reaffirm the principle of freedom of contract by competent persons and that their contracts, when entered into freely and voluntarily, shall be enforced by Courts of justice. 6.4 The Court was further referred to the authors of Chitty on Contracts. Volume 1. General Principles, 2811 Edition, paragraph 12-002 at page 583 who state as follows: "Where the agreement of the parties has been reduced to writing and the document containing the agreement has been signed by one or both of them, it is well established that the party signing will ordinarily be bound by the terms of the written agreement whether or not he has read them and whether or not he is ignorant of their precise legal effect." 6.5 The parties, having entered into a contractual relationship for the sale and purchase of the licence, whose terms both J.17 parties agreed are binding, it follows that the BTS and its terms bind the parties with no need for external recourse in understanding the transaction between the appellant and Respondent. The parties cannot at any point imply terms into a contract that has express terms outlined. 6.6 Counsel submitted that clauses 1, 7 and 18 of the BTS provides for set binding terms, which address the issues in grounds one, two and three. These terms make it clear that mining operations were discretionary by the use of 'if' with regards to the commencement, but also that the discretion was solely the preserve of the respondent. The appellant executed the agreement knowing that it gave the discretion and liberty to explore the subject area to the respondent and is thus estopped from reverting from this position as was guided in West v Jones (8)• Therefore, the appellant cannot at this point demand for a timeline within which the respondent should act when a binding contract has stipulated in whom power to explore the subject area is vested and the terms therein, 6.7 To this end, we were referred to the case of Friday Mwamba v Sylvester Ntenge, Monica Kapinga & Derrick Chekwe (9) where the Supreme Court guided that: J. 18 "One can therefore see that where eligible persons voluntarily and unanimously enter into a contract, the contract will be personally binding and will be honoured by the courts except where there is a legal impediment. In this appeal, parties to the said shareholders agreements were unanimous. We assume, as there was no evidence to the contrary, that parties understood the implications of the Agreements to which they appended their signatures. As parties sign contracts consciously they cannot say that what was agreed upon has become untenable or unconscionable, the courts can only offer equitable intervention. In this appeal, facts do not permit such intervention." 6.8 Therefore, we were urged not to overturn the findings of the trial Court correctly made. For authority, the case of BJ Poultry Farms Limited v Nutri Feeds Zambia Limited (10) was cited. 6.9 As to when implied terms are applicable, we were referred to the case of Henry Nsama & 134 Others v Zambia Telecommunications Company Limited" where the Supreme Court guided that: "... it would be very slow to read in an implied term into an employment contract, or indeed any other contract, that parties make for themselves especially where the terms are unambiguous. The court will not even improve the contract which the parties have made for themselves, however desirable the improvement might be. The court's function is to interpret and apply the contract which the parties have made for themselves. If the express terms are perfectly clear and free for ambiguity, there is no choice to be made between different possible meanings the clear terms must be J,19 applied even if the court thinks some other terms would have been more suitable..." 6.10 Therefore, the BTS, being clear and unambiguous, expressly states the terms of the mining operations regarding who holds responsibility and the commencement thereto. The respondent submitted that it commenced exploration activities in the subject area, but did not commence mining operations as no viable mineral deposits were discovered to be taken to production. Reference was made to pages 572 to 576 of the record of appeal. 6.11 The respondent further submitted that in any event, mining operations were not mandatory as time was never of the essence as per the express terms of the BTS. The respondent is thus at liberty to commence mining operations as and when it saw it fit following the discovery of mineral deposits in line with clause 7 of the BTS. 6.12 In response to ground four, the respondent submits that the BTS was a clear sale of all rights and benefits that ensue from the subject area, and that there was no further obligation, save for payment of the NSR, should mining commence. In any case, clause 17(f) of the BTS made all matters in respect of mine development the absolute preserve of the respondent. J.20 6.13 As to the burden of proof, the Court was referred to the case of Wilson Masautso Zulu v Avondale Housing Project (12) that the plaintiff has the burden to prove with evidence his case before the court. Therefore, the Court could only compel the respondent to declare all mineral deposits discovered, if there was proof of any such discoveries. 6 14 On the alleged increase in the respondent's inferred resource and that the same is directly proportional to the licence, it was submitted that the appellant as plaintiff bore the burden of proof. Having failed and/or neglected to provide the evidence, the appellant cannot claim that there was mining that was done and an NSR was due to him, or that there should be an order compelling revelation of mineral resources that have not been proved to be in existence. 6.15 As for ground five, the respondent submits that in view of the fact that it has title to the licence following the sale and purchase under the BTS, the incorporation of the subject area into its mining licence owned by the respondent was within the respondent's right and preserve. That the IBTS did not provide that prior to the foregoing action being undertaken, the respondent had to obtain prior consent of the appellant. 6.16 In response to allegation of fraud, Counsel contends that the J.21 trial court was shackled from making a finding of fact as to fraud in the absence of evidence. The respondent cited several cases on what constitutes fraud including Sablehand Zambia Limited v Zambia Revenue Authority (13) and Nkongolo Farms Limited v Zambia National Commercial Bank & Others (14) whose import is that any claims pertaining to fraud must have particulars of the said fraud, be distinctly alleged and proved. 6.17 The provisions of section 99(1) of the Mines and Minerals Development Act, 2008 were referred to in submitting that what is paramount in alteration of a mining licence is simply that the said alteration should not affect a neighbouring right. That the law does not provide that any appendices should be attached thereto. In any case, Form 38 is not couched in mandatory terms to attach appendices. Notwithstanding, the above, the respondent did submit the necessary appendices pertaining to the adjustment area to alter the mining area. 6.18 It was further submitted that the Ministry of Mines has not raised any issue with the alteration of the mining right herein and that as such, the same should not be an issue for consideration. The respondent as exclusive owner of the J.22 licence, was at liberty to deal with the licence as it pleased, provided the same did not affect a neighbouring right. 6.19 Lastly, in ground six, the respondent submits that a joint venture was initially contemplated by the parties, but the same never culminated into formation. Instead, the BTS was executed. The definition of a joint venture by the learned authors of Black's Law Dictionary 6th Edition at page 839 was cited. 6.20 It was submitted that a joint venture connotes a labour, risk and profit sharing agreement, which the appellant failed to lead evidence to prove the labour, risk and profit sharing aspect with regard to the BTS. Therefore, there was no joint venture executed between the appellant and the respondent. What was executed between the parties was a contract termed 'BTS' and nothing more. 6.21 The respondent's position is that clauses 1, 7 and 18, of the BTS expressly stated that the transaction was a sale of all rights belonging to the appellant to the respondent without reservation. Therefore, neither the appellant nor the trial Court is at liberty to imply and/or vary the terms in the BTS save for where it has been mutually agreed. Reference was made to the case of Kalusha Bwalya v Chadore Properties Limited & Ian Chamunora Nyalungwe Haruperi (15)• 6.22 Lastly, it was contended that all prior negotiations or J.23 expressions of any intention to enter into a joint venture by the respondent, such as letters or any oral correspondences should not be considered because the BTS provided that it superseded all prior correspondences of the parties and is supreme herein. 6.23 We were urged to dismiss the appeal with costs. 7.0 ANALYSIS AND DECISION OF THE COURT 7.1 We have considered the appeal, the authorities cited and the arguments advanced by the Learned Counsel. Before considering the grounds of appeal in detail, we will briefly recap the facts. It is not in dispute that the parties were engaged in negotiations to enter into a joint venture, prior to the execution of the BTS. Thereafter, the parties executed the BTS agreement on the, terms stated earlier, which we will refer to in due course. 7.2 The grounds of appeal raise a number of issues as follows: (i) Whether the respondent had discretion as to when to commence mining operations in view of the NSR royalty entitlement pursuant to the . BTS agreement. (ii) Whether the term that the respondent was obliged to commence mining operations within a reasonable time J.24 is a term that could be implied in the BTS agreement between the parties. (iii) Whether time was of the essence in regard to the obligation to explore and mine under the BST, notwithstanding that the subject matter of the contract was a diminishing resource. (iv) Whether the order sought to compel the respondent to declare all mineral deposits discovered in the exploration licence area was tenable and whether it was proved that mineral deposits were found in the exploration licence area. (v) Whether fraud was established in the manner that the exploration licence was subsumed into the respondent's mining licence. (vi) Whether the contract between the parties was a joint venture or an outright sale agreement. 7.3 We shall start with determining the last ground of appeal, the nature of the contract between the parties. The appellant argued that the parties entered into a joint venture agreement. The appellant testified that he was the initial owner of the prospecting licence No. 17019 - HQ - LPL, commencing on 5th December, 2012 in respect of cobalt, copper, gold and Iron ore covering approximately J.25 210.1503km2 in Soiwezi. This licence was subsequently converted to an exploration licence. The respondent wrote to the Director of Geological Survey intimating that it was interested in entering into ajoint venture (hereinafter referred to as 'JV'), with the appellant and expressed interest in inclusion of its prospecting licence No 1871/6 - HQ - LPL in the area covered by the JV. On 5th September, 2013, the BTS was executed and all necessary consent to transfer the exploration licence was obtained. That the BST of 4th September is essentially a JV. According to the appellant, the BTS did not supersede all previous correspondence though to a large extent, he agreed that he is bound by the BST. As to the basis of JV, the appellant testified that he brought to the table his licence and expertise. 7.4 The respondent refuted having entered into a joint venture testifying that it entered into a BTS for the purchase of the appellant's exploration licence, which provided for payment of NSR. 7.5(cid:9) The question is, was the agreement in issue a joint venture? A joint venture is a commercial agreement between two or more parties who agree to pool their resources for the purpose of accomplishing an intended project or business. It can be formed for a specific project or business, Black's Law J.26 Dictionary, 8 1h Edition on page 2456, defines a joint venture as "a business undertaking by two or more persons engaged in a single project." 7.6 In the case of Hatchway v Potter Royalty Pool (16), a joint venture was stated to be an association by joint undertakers to carry out a single project for profit, with profits, costs and losses shared according to the terms of the contract. A joint venture agreement sets out the parties' rights and obligations. Upon execution, a special purpose company is formed with the aim of fulfilling the obligations and intent of the joint venture. It is a distinct legal form of commercial association/ agreement. 7.7 Determining existence of a joint venture depends on the facts and circumstances of each particular case. The following factors must be present: 7.7.1 a contribution by the parties of money, property, knowledge, skill or asset to the common undertaking; 7.7.2 a joint property interest in the subject matter of the venture; 7.7.3 right of mutual or management of the enterprise; and expectation of a profit, sharing of profits and losses, 7.8 We were invited to look at the substance of the document and not form. We have perused the letter dated 26th February, J.27 2013, from First Quantum Minerals Ltd by Hugh Carruthers, to the Director of Geological Survey Department entitled "Potential joint venture interest in prospecting licence with Caleb Mulenga prospecting licence 17019 - HQ - LPL". In the said letter, First Quantum Minerals Ltd wished to enter into a joint venture agreement to explore the said licence. Further, to include prospecting licence 18716 - HQ - LPL in the area covered by the joint venture. 7.9 On 41h September, 2013, the parties hereto executed a Binding Terms Sheet - Purchase of prospecting licence. The BTS stipulated that it supersedes any and all previous correspondences, agreements or understandings between the parties. Under the clause titled 'Acquisition', the appellant agreed to sell and KMP agreed to purchase all of the appellant's right, title and interest to the prospecting licence free from encumbrances for the sum of US$1,000,00000 (K5,371,10000) subject to fulfilment of the condition precedent stated therein. The said conditions were fulfilled by the appellant. Pursuant to the BTS agreement, the appellant applied to transfer his large scale prospecting licence to KMP through the Minister of Mines, Energy and Water Development, which was approved on 4/11/13. We refer to pages 189- 190 of the record of appeal and page 191, J.28 a letter to ZRA to transfer the said licence to KMP on "a joint venture agreement". 7.10 In our view, the correspondence dated 26th February, 2013 cannot be construed that the BTS was a joint venture because the BTS superseded all previous agreements between the parties. The letter to ZRA came after the BTS and was in furtherance of one of the conditions precedent, namely that the appellant makes arrangements for KMP to pay the property transfer tax, etc., for the necessary transfer of the prospecting licence. 7 11 In our view, from the facts and circumstances of this case, the factors pointing to a joint venture are not present. The appellant contends that he contributed his asset, i.e. the prospecting licence to the alleged JV. The evidence is to the contrary, as it shows that he sold his prospecting licence to the respondent for one million United States Dollars. The appellant contended that the respondent's contribution was state of the art equipment. That is not stated in the BTS. The BTS alludes to a sale of the prospecting licence. As regards profits sharing, the appellant's position being the payment of NRS at 1.5% upon commencement of mining. A Net Smelter Return Royalty payment cannot in our view be equated to profit sharing. NSR is defined in the agreement as a royalty J,29 of 1.5 % of the Gross Proceeds for all Minerals produced from the Mining Operation. 7.12 In our view, it can be equated to further consideration in respect of BTS agreement. Further, it cannot be said that there was a joint property interest in the prospecting licence that was sold to the respondent by the appellant. As regards mutual management of the alleged JV, we see none. The appellant neither had a part in the respondent's management of the prospecting licence subject of acquisition, which was subsequently converted to a mining licence under the respondent's main licence, nor was he to be charged with the costs of reasonably carrying out the alleged joint venture typical of such agreements. Mining joint ventures are typically expense and production sharing agreements. We hold that the BTS does not fit into the category of a joint venture nor can it be characterised as such. Therefore, we cannot fault the lower court for holding that the BTS was not a joint venture. 7.13 Grounds 1, 2, and 3 shall be dealt with simultaneously as they are interrelated. The appellant contends that the Court below erred by holding that the respondent had discretion as to when to commence mining operations despite the entitlement to Net Smelter Return Royalty (NSR). He assails J,30 the refusal by the Court to imply into the BST terms as to reasonable time within which to commence mining operations and to hold that time was of the essence. 7.14 The starting point is the relevant clauses in the BST, particularly the clauses under NSR and Mine Development. As earlier stated, the BTS provided for payment by the respondent to the appellant of NRS of 1.5% which was capped at US$ 4,000,000=00 7.15 The BTS provided as follows; "For greater certainty, all matters with respect to the Mine Development, conduct and continuity and scale of mining and scale of Mining Operations including the disposal of over burden, waste and tailings shall be at the absolute discretion of KMP, and KMP is not required to take into account the interest of CAM as holder of the NRS in consideration of such Interest." 7.16 Mine development was defined as the location, opening and development of mines and all activities necessary, expedient, conducive or incidental thereto, including, without limitation pre-stripping and the removal and disposal of overburden and waste, 7.17 Mining Operations were defined as "Commercial Mining Operations and all activities necessary, expedient conducive or incidental thereto including without limitations; (a) Mine Development; and (b) The weighing, sampling, assaying, mining, extraction, crushing, concentrating, refining, treatment, J.31 transportation, handing, storage, loading and delivery of Minerals. The timing, nature, manner and extent of any Mine Development and Mining Operations shall be within the sole discretion of KMP." 7.18 It is trite that freedom of contract a basic principle of common law, entails that parties are free to determine for themselves, what primary obligations or terms they will accept. Therefore, the Courts will not add to the agreement between parties by implying terms merely because it would be reasonable or necessary. Courts of law will not put a meaning on the words of a contract different from that which was clearly expressed. We refer to Chitty on Contracts volume 1 General Principles, paragraph 1 - 032 page 27. 7.19 The BST herein expressly provided that mining development would be at the absolute discretion of the respondent. It is trite that contracts sometimes confer discretionary powers on one party which, when exercised, affect not only their interest, but those of the other party, like the appellant in casu. Courts at times have implied terms to fetter contractual discretions. We will not delve in depth into the principle in relation to the exercise of a contractual discretion save to quote the case of Abu Dhalsi National Tanker Co v Product Star Shipping Ltd (17) in which Leggalt Li stated the following that: J.32 "Where A and B contract with each other to confer a discretion on A, that does not render B subject to A's unlimited whim. In my judgment the authorities show that not only must the discretion be exercised honestly and in good faith, but having regard to the provisions of the contract by which it is conferred, It must not be exercised arbitrarily, capriciously or unreasonably." 7.20 Did the respondent have absolute discretion as to when to commence mining? The answer is a matter of construction of the contractual clause. The express terms play a key role. We have examined the wording and substance of the clause on discretion. We hold the view that the respondent had the discretion as to when to commence mining operations despite the appellant being entitled to the NSR Royalty. 7.21 Clause 7 expressly stipulated that the Mining Development "shall be at the absolute discretion of KMP." 7.22 Further, clause 18, on definitions under Mine Operations, reiterated that the timing, nature, manner and extent of any mine development and mine operations shall be within the sole discretion of KMP. 7.23 Therefore, we cannot fault the lower Court for holding that the respondent had the discretion to commence mining operations. 7.24 Was the contractual provision on the discretion to commence mining operations exercised unreasonably by the respondent J.33 in the manner unconnected to the purpose underlying the discretion to amount to breach of contractual discretion? 7.25 The import of the case of Abu Dhabi National Tanker Co v Product Star Shipping Ltd is that, as a general rule even where a contract gives one party discretion, that discretion is not unlimited. In exercising that discretion, the party: (i) Must act honestly and in good faith; (ii) Must not act arbitrarily, capriciously, or unreasonably; and (iii) Must consider the purpose and context of the contract. 7.26 However, the sanctity of a contract was observed in the case of NBS Boland Bank v One Berg River Drive CC and Others 18 . The court in NBS Boland came to the view that: "...it is II thinki a rule of our common law, that unless a contractual discretionary power was clearly intended to be completely unfettered, an exercise of such a discretion must be made arbitrio boni yin". It was stated that: It was lawful for a consumer credit contract to provide that the lender could unilaterally vary the rate of interest in its absolute discretion subject to J.34 notice to the borrower as required by law. Such a provision did not conflict with para 19 of Sch 1 to the 1983 regulations, since the circumstances in which any variation may occur did not refer to external factors such as changes in the market rates of interest which might cause a variation, and neither the 1974 Act nor the 1983 regulations made such a provision unlawful. Accordingly, the lender was not obliged to set out the factors which could cause him to exercise his contractual power to increase the rate of interest. Nor was it necessary for such an agreement to state specifically that the lender had an absolute discretion or that it could raise the interest rate for any reason whatsoever. It followed that, since the agreement between the credit company and the defendant did not infringe para 19 of Sch 1 to the 1983 regulations, the appeal would be allowed. 7.27 In a more recent decision, the Canadian Supreme Court had occasion to discuss unfettered discretionary powers in a contract. Wastech Services Ltd. v. Greater Vancouver Sewerage and Drainage District'9. The court had this to say: J.35 The duty to exercise contractual discretion in good faith requires the parties to exercise their discretion in a manner consistent with the purposes for which it was granted in the contract, or, in the terminology of the organising principle in Bhasin, to exercise their discretion reasonably. The duty to exercise contractual discretion is breached only where the discretion is exercised unreasonably, in a manner unconnected to the purposes underlying the discretion. Where discretion is exercised in a manner consonant with the purpose, that exercise may be characterized as reasonable according to the bargain the parties had chosen to put in place. But where the exercise stands outside the compass set by contractual purpose, the exercise is unreasonable in light of the agreement for which the parties bargained and may be thought of as unfair and contrary to the requirements of good faith. The measure of fairness is what is reasonable according to the parties' own bargain. It is not what a court sees as fair according to its own view of the J.36 proper exercise of the discretion. Where the exercise of discretionary power falls outside of the range of choices connected to its underlying purpose - outside the purpose for which the agreement the parties themselves crafted provides- discretion - it is thus contrary to the requirements of good faith. Courts cn intervene where the exercise of the power is arbitrary or capricious in light of its purpose as set by the parties; however, their role is not to ask whether the discretion was exercised in a morally opportune or wise fashion from a business perspective. Courts must only ensure parties have not exercised their discretion in ways unconnected to the purposes for which the parties themselves grant that power. In a contractual context, these choices are ascertained principally by reference to the contract, interpreted as a whole - the first source of justice between the parties. 7.28 In light of these authorities and the circumstances of this case, it is our view that a party must show that the actions or exercise of discretion by the other party is arbitrary or capricious in light of its purpose and unreasonable for the J.37 Court to satisfy itself of unreasonableness. In the absence of such evidence, the sanctity of the contract must be maintained. There was evidence that the respondent conducted some mining activities that had not yielded any economically viable results. This in our view shows that the respondent made efforts to perform the contract. The Court cannot impose terms in a contract between the parties. In as much as we have tackled the issue of unreasonable use of unfiltered contractual discretion, which was not pleaded but is a point of law, we still come to the inescapable conclusion that the exercise of discretion fell within the purpose of the agreement. 7.29 The next issue to be determined raised in ground two is whether the term that the respondent was obliged to commence mining operations within a reasonable time could be implied in the BTS agreement. The parties have ably cited the position of the law on implication of terms in a contract, as well as case authorities. A summary of the applicable principles applied by courts in considering whether or not to imply a term into a contract, was stated in the case of All v Petroleum Company of Trinidad and Tobago as follows: "It is enough to reiterate that the process of implying a term into a contract must not become the re - writing of the J.38 contracts in a way which the court believes to be reasonable, or which the court prefers to the agreement which the parties have negotiated. A term is to be implied only if it is necessary to make the contract work, and this it may be if (i) it is so obvious that it goes without saying (and the parties, although they did not, ex hypothesis apply their minds to the point, would have rounded on the notional officious bystander to say, and with one voice, (oh course) and br (ii) it is necessary to give the contract business efficiency. Usually the outcome of either approach will be same. The concept of necessity must not be watered down. Necessity is not established by showing that the contract would be improved by addition. The fairness or equity of suggested implied terms is an essential but not a sufficient precondition for inclusion. And if there is an express term in the contract which is inconsistent with the proposed implied term, the latter cannot, by definition, meet these tests, since the parties have demonstrated that it is not their agreement" 7.30 There is a distinction between a term implied in fact and one implied in law. The test in the latter being broader and flexible. The former is implied into a particular contract in order to give effect to the intention of the parties, where as an implied term in law is implied as a general rule in all contracts of a certain type or standardized terms. We refer to paragraph 14-015 Chitty on Contract Volume 1 General principles 2018. 7.31 The term the appellant wants implied is the term that the respondent was obliged to commence mining operations J.39 within a reasonable time. Did the parties intend the above implication in question? Would it give business efficacy to the BTS or that the term sought to be implied represents the obvious unexpressed intention of the parties. In the case of BP Refinery (Westernport) PTY Ltd v Shire of Hastings (21) Lord Simon Glaisdale stated that: "For a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that "it goes without saying"; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract." 7.32 In the case of Marks and Spencer v BNP Parties Securities Services Trust Co (Jersey) Ltd (22) the Supreme Court of the United Kingdom stated that: "It was not enough to show that the term was a reasonable one or fair or that it would improve the contract, but the necessity test. i.e whether it is necessary to imply the term in order to make the contract work or give business efficiency to the contract." 7.33 The appellant challenges the holding of the lower Court that the respondent being obliged to commence mining operations within a reasonable time, is a term that cannot be implied in the BTS. The learned authors of Halsbury Laws of England, Volume 9, 4th Edition, state as follows: J.40 "Whether a term is implied is a question of law for the Court. A term will not be implied so as to contradict any express term; and in fact, a term might not be implied unless on considering the whole matter in a reasonable manner it is clear that the parties must have intended there should be the suggested stipulation. The Court has no discretion to create a new contract. Where a contract contains an express obligation by a party to the contract, it is for that party to show that this is some implied term which qualifies the obligation." 7.34 The BTS contains an express provision as to when mining operations may commence. This is provided under clause 7 which is explicit and states as follows: For greater certainty, all matters with respect to the mine development, conduct and continuity and scale of mining operations, including the disposal of overburden, waste and tailings shall be at the absolute discretion of K1TP, and KMP is not required to take into account the interests of CAM as holder of the NSR in consideration of such matters." (emphasis added) 7.35 There being an express term giving absolute discretion to the respondent with respect to mine development, which under clause 18 is defined as "the location, opening and development of mines and all activities necessary, expedient, conducive or incidental thereto ...", does it follow that the term that the respondent is obliged to commence mining operations within a reasonable time ought to be implied into the BTS contract? We hold the view that • even assuming that the term was necessary to make the J.41 contract work, it would not be an obvious term to a bystander and neither would it give the agreement the intended business efficacy. Most importantly, the term sought to be implied must not contradict the express terms of the contract. The BST agreement expressly stipulated that the mine development shall be at the absolute discretion of KMP. We are not persuaded that the said term ought to be implied into the BST agreement. We are fortified by the holding in the cited case of Attorney General of Beloze v Belize Telecom ltd (23) where it was stated that: "If a contract does not expressly provide for what is to happen when a particular event occurs or in a particular situation, the most usual inference to be drawn is that nothing is to happen and no term can be implied." 7.36 In our view, fettering the absolute discretion of KMP as to when to commence mining operations as expressly provided in the BTS would be inconsistent with the proposed implied term as to commencing mining within a reasonable time. This would be re-writing the contracts between the parties by the Court and does not meet the tests laid down in the Ali case(18). Having considered the term to be implied against the express terms of the BTS which is inconsistent/ contradicts the express term, it is not appropriate in the circumstances of J.42 this case to imply the term into the contract. The inconsistency is substantive and would not fit into the parties' rights and obligations under the express terms of the BTS. We, therefore, cannot fault the Court below for not implying the term to the effect that the respondent was obliged to commence mining operations within a reasonable time. 7.37 Ground three seeks to bring in the aspect of time being of the essence considering that the licence in issue was due to expire in December 2022. There is evidence on record by, the respondent that it subsumed the licence area into its mining licence to protect the area in issue from being taken away pursuant to the provisions of the Mines and Minerals Development Act, 2008. 7.38 Time is of the essence of contract refers to the performance of contract within a stipulated time frame. The question in casu is whether time was of the essence of the particular term as to performance which is alleged to have been broken. Not with respect to the contract as a whole. Therefore, where time is fixed for performance of contract, it must be completed as stipulated. It is trite that where no precise time for performance is specified i.e. where a party undertakes to do an act, the performance of which depends entirely on itself J.43 and the contract is silent as to the time of performance, the law implies on obligation to perform the act within reasonable time having regard to the circumstances of the case. We refer to paragraph 21 -021 of Haisburys laws (supra) for the above position of the law. 7.39 The appellant submits that time was of the essence in view of the reduced life span of the exploration licence. We are of view that time was not of the essence of the term as to performance. Clause 18 of the BTS agreement stated that the timing, nature, manner and extent of any mine development and mining operations shall be within the discretion of the KMP. Further, that "KMP was not required to take into account the interest of CAM (appellant) as holder of NRS in consideration of such matter". The time as to performance of the mining activities was at the discretion of KMP. Further, we cannot lose sight of the fact that this exploration licence was sold to the respondent. The appellant retained the right to payment of NSR upon commencement of mining activities. We cannot hold that in the particular circumstances of this case time was of the essence of contract. 7.40 We must obiter dicta make the following comments, that in this BST agreement between a giant Mining Corporation, the J.44 terms were oppressive and unfair to the appellant, who will be made to wait years to find out whether a commercially viable exploitive mineral discovery has been made on an exploration tenant for the royalty interest to be assigned or paid. The clauses were inadequately drafted with a bias towards KMP, resulting in the payee waiting years before production and receiving NRS. Be that as it may, Courts respect the sanctity of freedom to contract and enforcement of contracts freely entered into. 7.41 For the foregoing reasons, we cannot imply a term as to time being of the essence of contract between the parties. 7.42 Ground four lacks merit in that no evidence was led to show that exploration was done, which resulted in viable mineral deposits being discovered. The evidence from both parties shows that drilling took place in 14 sites, but the results showed that it was not commercially viable to commence mining operations. The Court below was on firm ground in refusing to grant an order to compel the respondent to declare all mineral deposits discovered in the area, when the evidence showed that from the sites so far drilled, no commercially viable minerals were discovered to warrant the sought order. 7.43 In ground five, the appellant argues that it led evidence of fraud notwithstanding the Ministry of Mines not being a J.45 party. Firstly, it is not in dispute that the respondent acquired all the rights, interest and title in the appellant's prospecting licence. Therefore, for all intents and purposes, the respondent was at liberty to apply for the incorporation of the exploration licence area into its mining licence as the licence area now belongs to it. 7.44 Secondly, the evidence on record shows that the respondent made an application to the Ministry of Mines for incorporation of the licence area, which application was considered and approved. Therefore, it cannot be said that the incorporation of the prospecting licence area was done fraudulently as the property was lawfully acquired by the respondent, which followed the law in incorporating it into its mining licence area. 7.45 Thirdly, though the appellant alleges fraud in the manner the exploration licence was incorporated into a mining area, it did not call evidence from the Ministry of Mines, the issuing/ licensing authority, to confirm that the licence in issue is a fraud. There was insufficient evidence adduced that the licence was fraudulently incorporated. We reiterate that the exploration licence was sold to the respondent, which incorporated it into its mining licence. In fact, this was to the appellant's benefit, as it preserved the subject area under the V.' V respondent's control, pursuant to which the NSR would be J.46 paid. 8.0 CONCLUSION 8.1(cid:9) We find no merit in the six grounds of appeal and accordingly dismiss the appeal. Costs follow the event. M. J. Siavwapa JUDGE PRESIDENT F. M. Chishimba C. K Makungu COURT OF APPEAL JUDGE COURT OF APPEAL JUDGE • ,