Daniel Kalombwe v Cleopatra Muke (APPEAL NO. 298/2022) [2023] ZMCA 332 (22 November 2023)

IN THE COURT OF APPEAL OF ZAMBIA APPEAL NO. 298/2022 HOLDEN AT NDOLA (Civil Jurisdiction) BETWEEN: DANIEL KALOBWE AND CLEOPATRA MUKE BEATRICE MKANDAWIRE 1 ST RESPONDENT 2ND RESPONDENT CORAM: CHASHI, NGULUBE AND PATEL, JJA. On 15th and 22nd November, 2023. For the Appellant : No appearance For the Respondent: Ms M. N. E. Zulu and Mrs M. M. Mudenda, National L egal Aid Clinic for Women JUDGMENT NGULUBE JA, delivered the Judgment of t he Court. Cases referred to: 1. Dunlop Pneumatic Tyres Co. Limited vs Se/fridges (1915) AC 847 2. Wesley Mulungushi vs Catherine Bwale Chomba (2004) Z. R 96 3 . 4. Inda Zambia Bank Limited vs Mushaukwa Muhanga (2009) ZR. 266 Power Equipment Limited vs Goldtronics Limited and Another (2012) ZR. 358 5. Mitsui Construction Company Limited vs Attorney General of Hong Kong (1986) 71 N. R. 285 (PC) 6. Esam vs Attorney General, SCZ Appeal number 96 of 2016 Legislation referred to: 1. The Statute of Frauds 1677 1.0 INTRODUCTION 1.1 This appeal is against a Ruling of the Commercial Division of the High Court delivered on 29 September, 2022, by Honourable Mr. Justice Kazimbe Chenda. The appeal challenges the decision of the court when it held that the sale agreement entered into between the parties dated 21 September, 2017, was not binding. The court was also challenged for making a decision on matters that were not pleaded by the parties regarding the validity of the sale agreement. 1.2 For the sake of clarity, we shall refer to the appellant as the plaintiff and the respondents as the defendants, which is what they were, when the matter was before the court below. J2 2.0 BACKGROUND 2.1 The background to this matter is that, the plaintiff commenced an action against the defendants in the court b elow, by writ of summons and statement of claim seeking the following reliefs- i) An order of specific performance of the contract d a ted 21 September, 2017; ii) Damages for breach of contract; iii) An order of injunction restraining the defendants either by themselves or their agents or their servants or whomsoever from taking possession of, entering or evicting the plaintiff from House Number CH3275, Chifubu Road, Ndola, until further determination of the matter; iv) Alternatively, refund of deposit paid with interest from 2 1 September, 2017; v) Any other relief the court may deem fit; vi) Costs. 2.2 In the statement of claim, the plaintiff averred that h e was th e purchaser and occupier of House Number CH3275, Chifubu J3 Road, Ndola, while the 1st and 2 nd defendants were the vendors of the aforementioned property. 2.3 The plaintiff averred that, the parties entered into an agreement for the sale of House Number CH3275, Chifubu and the agreed purchase price was ZMW85, 000. 00. The plain tiff paid a deposit of ZMWS0,000.00 to the defendants. He averred that he also made improvements to the property. 2.4 The plaintiff stated that the 1st defendant refused to acknowledge receipt of ZMWS0,000.00 which was part payment towards the purchase price of ZMW85,000.00. The 1st defendant stated that she was deducting the monthly rentals from the deposit that the plaintiff paid because h e had rental arrears. 2 .5 The plaintiff stated that, h e tried to pay the balance of ZMW35,000.00 to the 1st defendant before 31 December, 2017. It was averred by the plaintiff that the 1st defendant was evasive and d eclined to receive the balance of the purchase price, stating that the defendants were not selling the house to the plaintiff anymore. J4 2.6 Several letters were written to the defendants for them to pay damages for breach of contract and refund the deposit paid to the plaintiff. In the alternative, the plaintiff sought an order of specific performance of the con tract of sale dated 21 September, 2017. When his efforts did not yield anything, the plaintiff then commenced an action in the Commercial Division of the High Court. 2 .7 The defendants filed a Defence on 27 June, 2022. They averred that the plaintiff was a tenant of House Number 3275, Chifubu Road, Ndola and they offered him the house to buy at a purchase price of ZMW90,000.00, which was reduced to ZMW85,000.00 at the plaintiffs request. The said price was to be paid by 31 December, 2017, failing which the purchase price would revert to the original price of ZMW90 , 000. 00. 2.8 The plaintiff made a payment of ZMWS0,000.00 towards the said purchase price, but defaulted in paying rent for nine months. He then instructed the defendants to deduct rentals from the ZMWS0,000.00, that he earlier paid towards the purchase price of the house. JS 2.9 The defendants averred that the p laintiff failed to pay the balance of the purchase price amounting to ZMW35,000.00. They denied being evasive and ever refusing to receive the payment of ZMW35,000.00. The defendants averred that there was no contract of sale between the parties and that there was only a letter of offer. That when the plaintiff failed to pay the balance of ZMW35,000.00, the parties reverted to their original relationship of landlady and tenant. 2. 10 It was averred that the plaintiff cannot claim damages for breach of contract and specific performance, when he failed to pay the balance of the purchase price as agreed by 3 1 December 2017. 2.11 On 29 September, 2022, the lower court heard the parties at a preliminary hearing and the issue for determination was "Whether the agreement of 21 September 2017 constituted a valid binding and presently subsisting contract of sale to the plaintiff for House Number CH3275, Chifubu Road, Ndola. 3.0 DECISION OF THE LOWER COURT 3. 1 The lower court perused the agreement in issue and caine to the conclusion that the said agreement described the property in J6 issue, CH3275, Chifubu Road, Ndola, stated the purchase pnce, indicated who the parties were, and named the first def end ant as the vendor. The lower court highlighted one of the paragraphs of the agreement which stated that- "The main purpose of this letter is to serve as a description of intent to purchase the above-mentioned property and it is not affected as binding on either side." 3.2 The lower Court stated that it construed the wording of the agreement to mean that the agreement between the appellant and the first defen dant was not enforceable but a mere expression of terms that would interest the first defendant to transact with the plaintiff over the property. 3.3 The lower Court was of th e view that the agreement did n ot meet the requirements of section 4 of the Statute of Frauds 1677. The Cou rt went on to state that the agreement would have been enforceable and valid between the plaintiff and the first defendant if the second defendant did not have equitable interest in the property. 3.4 The Court however noted the disclaimer of intent and found that the agreement was not valid and binding. It found that any J7 payments that were made by the plaintiff relating to the agreement would be credited to the plaintiff for purposes of the core issues in the matter as em bodied in the Orders for Directions. 4.0 THE APPEAL 4. 1 The appellant was dissatisfied with the decision of th e lower court and has appealed to this Court advancing four grounds of appeal couched as follows- 1. The trial Court erred in law and fact when it held that the agreement entered into by the parties dated 21 st September, 2017, was not binding against the evidence on record; 2. The trial Court erred in law andfactfor not considering the receipt of part payment of the purchase price of the house as a waiver of the condition stated in the agreement that "it is not affected as binding on either side," having accepted the terms of the agreement within 7 days of its execution; 3. The trial Court erred in law and fact to have made a decision on matters that were not pleaded by the parties as the 2 nd respondent never challenged the validity of the sale agreement but embraced it through her pleadings and conduct; J8 4. The trial Court erred in law and fact to have held that the deposit paid be treated as a credit in favour of the appellant against the evidence on record. 5.0 APPELLANT'S ARGUMENTS 5.1 In arguing ground one, it was submitted that, for a contract of sale of land to be valid and binding to the parties, there must be an offer, acceptance, consideration and the parties must have contractual capacity. Furthermore, the contract of sale m u st be in writing and must be free of illegalities. 5 .2 It was argued that the agreement relating to the sale of property dated 21 September, 2017 satisfied the ingredients highlighted above. It was su bmitted that an offer was made which was accepted and a consideration of ZMW50,000 .00 was paid. The purchase price was ZMW85,000.00 and the balance of ZMW35 ,000.00 was due to be settled before 31 December, 2017. 5.3 It was con tended th at, since the appellant paid a deposit of ZMW50,000.00 towards the purchase price, the contract was binding and enforceable against both parties to it. Counsel contended that the contract of sale dated 2 1 September , 2017 J9 was in writing and that the statement of intent merely formed the basis on which further negotiations regarding the terms of contract wou ld be based. 5.4 It was argued that the contract of sale in casu went beyond merely being a statement of intent because an offer and acceptance were effected when the payment of ZMW50,000.00 was made as a deposit towards the purchase price of ZMW85,000.00. 5.5 Reference was made on Chitty on Contract, 29th Edition, paragraph 2-001 , on page 121 , where it was stated that in determining whether or not a contract has come into being, it must be established that there has been an agreement between the parties and that an off er was made by one party which was accepted by the other party. 5.6 It was submitted that there must be consideration for a plaintiff to prove the existence of a contract. The case of Dunlop Pneumatic Tyres Co. Limited vs Se lfridges1 was ref erred to where the House of Lords defined consideration. 5. 7 According to Counsel, for a contract of sale of land to be enforceable, it must adhere to section 4 of the Statue of J10 Frauds, 1677. The case of Wesley Mulungushi vs Catherine Bwale Chomba2 was referred to where the Supreme Court held that- "iii) where real property is the subject of the sale, there is need for the sale to be evidenced by a contract of sale. iv) For a note or memorandum to satisfy section 4 of the Statute of Frauds 16 77, t he agreement itself need not be in writing, a note or memorandum of it is sufficient, provided that it contains all material terms of the contract, such as names, or adequate identification of the subject matter and the nature of the consideration. 5.8 It was argued that, the letter dated 21 September, 2017, was a contract of sale between the appellant and the respondents which was valid and capable of being enforced at law. It was submitted that the contract of sale was valid and the following features were highlighted- i) There was an agreement between the appellant and the respondents which was signed by the 1 sl respondent. Jll ii) The appellant and the respondents h ad cap acity to contract. iii) The appellant acted on the promis e and paid consider ation in th e sum of ZMWS0,000.00 which was accepted by the respond en ts. iv) The agreement was in writing and was signed by the 1st respondent, it contains all material terms of the contract such as names, adequate identification of the subject m atter and the consideration, thus satisfying the requirements of the Statute of Frauds Act. 5. 9 On the interpretation of contracts, it was argued that the contract in issue was drawn by the respondents and execu ted by them and that as such, it should be interpreted against them on the basis of the contra proferentem rule. The case of Inda Zambia Bank Limited vs Mushaukwa Muhanga3 was referred to where it was held that- "The various authorities cited to us endorse the general principle to be applied when interpreting contracts or other legal instruments. The starting point is the document itself. As Lord Hoffman observed in the case of Norwich Union vs British J12 Railways Board. After all that analysis however, I come back to what seems to be the plain question, what as a matter of ordinary English do the words of the covenant mean." 5 . 10 Referring to the case of Power Equipment Limited vs Goldtronics Limited and another4, it was submitted that the contract of sale was drafted and signed by the 1st respondent and was not time barred regarding th e payment of the balance after the lapse of the agreed date, 3 1 December, 201 7. It was submitted that the contract be constituted against the respond en ts accordingly. 5.11 Turning to ground two , it was submitted that the lower court erred in law and fact, when it did not consider the receipt of part payment of the purchase price as a waiver of the condition stated in the agreement that "it is not affected as binding on either side," having accepted the terms of the agreement within seven days of its execution. 5 . 12 It was argued that there was no waiver to the implementation of th e contract as the parties even effected an offer, accepted part payment of the purchase price which was consideration. The case of Mitsui Construction Company Limited vs Attorney J13 General of Hong Kong5 was cited where Lord Bridge stated that the fact that the contract was badly drafted is no reason to defect from the fundamental rule of construction of contractual documents that the intention of the parties must be ascertained from the language that they used. 5.13 It was accordingly submitted that, the trial Court erred in law and fact, when it did not consider the receipt of part payment of the purchase price of the house as a waiver of the condition stated in the affidavit that "it is not affected as binding on either side". 5.14 In arguing ground three , it was submitted that the lower Court erred, when it made decisions on matters that were not pleaded by the parties. It was contended that the respondents did not challenge the validity of the agreement but embraced it through their pleadings and conduct. 5.15 Reference was made to the case of Esam vs Attorney General6 , where it was held that- "Courts are confined to reliefs that are pleaded and that a case is defined by its pleadings. " J14 5. 16 The Court was urged to allow ground three of the appeal for the aforestated reasons. 5.17 In arguing ground four, it was submitted that the trial Court erred in law and fact when it held that the deposit that the appellant made towards the purchase price would be treated as a credit in favour of the appellant against the evidence on record. It was argued that the payment of ZMWS0,000.00 was a deposit towards the purchase price of the hou se and was not a loan facility as found by the lower Court. 5.18 It was argued that the lower court's finding was against the wishes of the parties as demonstrated by the contract of sale. The Court was urged to allow the appeal and set aside the lower court's Rulin g. 6.0 RESPONDENTS' ARGUMENTS 6.1 The respondents filed their heads of argument on 12 January, 2023. Responding to ground one, it was submitted that, the lower Court was on firm ground when it held that the agreement that was entered into by the appellant and the respondents was not b inding and valid. JlS 6.2 The respondents argued that th e letter referred to as a contract merely stated the terms and did not create a binding contract. The respondents further argued that the appellant instn1cted the respondents to deduct rentals from the ZMWS0,000.00 that was paid as a deposit towards the purchase price. The respondents argued that there was a withdrawal of consideration. 6.3 Reference was made to the author of Trietel on Contract where the learned author stated that- "A breach of contract is committed where a party without lawful excuse fails or refuses to perform what is due from him under his contract or performs defectively or incapacitates himself from performing. A breach of contract may entitle the injured party to claim damages." 6.4 The respondents argued that, the appellant repudiated the contract when h e failed to pay the remainder of the purchase pnce. The respondents maintained that the letter dated 21 September, 20 17 did not constitute a valid contract for the sale of the house. 6.5 The respondents went on to argue that the appellant did not sign the contract of sale contrary to section 4 of the Statute of J16 Frauds, 1677. The respondents argued that the letter was not signed by the appellant and h e withdrew the consideration, thus making the transaction invalid. It was argued that the contra preferentum rule does not apply in this case as it is used in interpreting exclusion clauses. 6.6 The respondents submitted that the purported contract of sale was written in simple and plain English and following the literal interpretation, it was not affected as binding on either side. The Court was urged to dismiss ground one of the appeal for lack of merit. 6. 7 Responding to ground two, it was submitted that the trial court was in firm ground when it did not consider the receipt of part payment of the purchase price as it was withdrawn by the appellant when he instructed the respondents to deduct the rental arrears from the deposit. 6.8 It was contended that the appellant was in rental arrears prior to the payment of the deposit and later instructed the respondents to deduct the said rental arrears from the deposit. It was submitted that the withdrawal of the deposit repudiated J17 the contract of sale. We were urged to dismiss the second ground of appeal for lack of merit. 6.9 Responding to ground three, it was submitted that the challenge regarding the validity of the sale agreement was whether it was binding and presently subsisting. It was argued that although the second respondent was aware of the contract of sale, she did not sign it and that it failed to meet the requirements of section 4 of the Statut e of Frauds 16 77 as the name of the 2 nd respondent was not included on the letter dated 21 September, 2017. We were urged to dismiss the third ground of appeal for lack of merit. 6.10 Responding to ground four, it was submitted that the lower court was on firm ground when it held that the deposit that the appellant made would be treated as credit in favour of the appellant as this was in accordance with the evidence on record . 6.11 It was contended that the basic elements of a valid contract were absent as the contract lacked consideration since the deposit was withdrawn and utilized to pay rental arrears. The Court was urged to dismiss ground four for lack of merit. On the totality of the evidence, the respondents urged the court to J18 dismiss the appeal in its entirety for lack of merit and uphold the Ruling of the lower court with costs to the respondents. 7.0 CONSIDERATION OF THE MATTER AND DECISION OF THE COURT 7.1 We have anxiously considered the heads of argument and the record of appeal and the issues for determination as follows- 1. Whether the document on pages 27, 42 and 67 (the agreement) of the record of appeal constitutes a valid and binding contract of sale for the subject property; 11. Whether the part payment of KS0,000.00 made by the appellant should have been considered as a waiver of the condition stated in the agreement; 111. Whether the lower Court made a decision on matters which were not pleaded by the parties and whether the validity of the agreement was never questioned. 7 .2 In resolving the first issue, the starting point is Section 4 of the Statute of Frauds, 1677 which requires that where land is the subject of sale, there is need for the sale to be evidenced by contract. The agreement itself need not be in writing but a note or memorandum of it is sufficient, provided it contains all J19 the material terms of contract, such as names, adequate identification of the subject property and the consideration. These principles were elaborately discussed in the case of Wesley Mulungushi vs Catherine Bwale Chomba (supra). 7.3 We take the view that the lower Court rightly came to the conclusion that the agreement in issue described the property (CH 3275 Chifubu, Ndola, Zambia), contained the purchase price, and identified the vendor and the purchaser. The lower Court concluded that on face value, this met the requirements of Section 4 of the statute of Frauds interpreted in Wesley Mulungushi vs Catherine Bwale Chomba (supra). However, the lower Court noted the following paragraph of the document which states as follows- "The main purpose of this letter is to serve as a description of the intent to purchase the above mentioned property and it is not affected as binding on either side." 7 . 4 The lower Court construed the above sentence to mean that the 1st respondent did not intend for the agreement on its own to be enforceable at law, but a mere expression of terms that would interest h er to transact with the appellant over the property. We J20 do not find fault 1n the lower Court's interpretation of this clause. 7.5 However, the lower Court overlooked one fundamental issue. In as much as there is a dispute as to whether the agreement was a valid contract, it contained the terms upon which the parties intended to contract. The terms therein could be considered as an offer to the appellant which required him to make a deposit of KS0,000 .00. We take the view that the payment of the deposit in the sum of K50, 000. 00 which was not disputed was the appellant's acceptance of the offer, or indeed a confirmation of the parties' intention which became binding upon them. Upon payment of the said deposit the agreement ceased to be a mere expression of the parties' intentions and became binding. We concur with the submission by Counsel for the appellant that this amounted to a waiver of the condition in the agreement that it is a description of intent and was not binding on either side. 7.6 Further, we are of the considered view that the issue of whether the agreement was a valid contract should not have been determined at the preliminary stage by the lower Court, but should have been left for the trial. Additionally, the issue J21 whether the agreement was enforceable as between the appellant and the 1st respondent despite the exclusion of the 2 nd respondent is a triable issue which can only be determined at trial. 7.7 We are of the view that grounds two, three and four go to the merits of the matter. As such, we will not determine them. On the issue of whether the lower Court should have treated the deposit paid by the appellant as credit in favour of the appellant, this relates to the deposit which was paid by the appellant for the purchase of the property. We take the view that this issue should also have been left to be determined at the trial. This is because the manner in which the deposit will be treated will depend on a number of issues, such as whether there was a tenancy agreement. The fact that the rental arrears were deducted from the deposit will also affect the status of the agreement, which can only be determined at trial. In any event, the lower Court had already ruled that the matter shall be set down for trial for the remaining issues in controversy. We opine that the remaining issues in controversy cannot be isolated from J22 the issue of validity of the contract, making it n ecessary for the matter to go to trial. 8.0 CONCLUSION 8. 1 In view of the foregoing, we set aside th e lower Court's Ruling and order that the matter be remitted back to the High Court for trial b efore another Judge of the Commercial Court. Costs are awarded to the appellant, to be taxed in default of agreemen t and to be limited to out of pocket exp enses. P. C. M. NGULUBE COURT OF APPEAL JUDGE A. N. PATEL, SC COURT OF APPEAL JUDGE J23