Goshen Farms & Agro Dealers Limited v Forestcol Fertilizer Zambia Limited (APPEAL/250/2022) [2023] ZMCA 335 (23 November 2023)

IN THE COURT OF APPEA HOLDEN AT LUSAKA -:-:_. --:_:_:_--=-__.. PEAL/250/2022 - (Civil Jurisdiction) BETWEEN: ,. GOSHEN FARMS & AGRO D APPELLANT AND FORESTCOL FERTILIZER ZAMBIA LIMITED RESPONDENT CORAM: KONDOLO SC, MUZENGA AND CHEMBE JJA On 16th and 23rd day of November, 2023 For the Appellant: Not In Attendance For the Respondent: Mr. A Simunyola of Messsrs Eric Silwamba, Jalasi and Linyama Legal Practitioners JUDGEMENT KONDOLO SC JA d elivered the Judgment of the Court. CASES REFERRED TO: 1. John W. K. Clayton v Hybrid Poultry Farm Ltd (2006) ZR 70 2. Stanley Mwambazi v Morester Farms Limited ( 1977) ZR 103 3. Wilhelm Roman Buchman v The Attorney General SCZ/14/1994 4. Mutantika & Another v Chipungu SCZ/ 13/2014 5. Nkhuwa v Lusaka Tyre Services Limited ( 1997) ZR 43 LEGISLATION REFERRED TO: 1. High Court Act, Chapter 27, Laws of Zambia 2. High Court (amendment) Rules of 2020 (HCR Amendment) 3. The Supreme Court Rules, White Book, 1999 Edition Page 2 of 20 1. INTRODUCTION 1. 1. This appeal is against a judgment delivered by Kafunda J in which he dismissed the Appellants application to set aside judgment in default of appearance and defence to counter claim in favou r of the Defendant. 1.2 . The Appellant was the Plaintiff in the lower court and the Respondent was the Defendant. We shall refer to the parties throughout the judgment as Appellant and Respondent. 2 . BACKGROUND 2.1. The Appellant and the Respondent entered into a contract for the sale of Compound D and Urea Fertilizer in which the Respondent was the seller and the Appellant was the purchaser. 2.2. The Respondent supplied the goods and issued delivery notes against which Appellant would effect payment by bank transfer. 2 .3 . Along the way the Appellant accused th e Respondent of providing the police and Drug Enforcement Agency with false information resulting in the Appellants business being disrupted, its directors being detained and its property being seized. 2.4. The Appellant commenced legal proceedings against the Appellant seeking the following relief: Page 3 of 20 1. Damages for malicious falsehood 2. Compensation for loss of business in the sum of K27,827,030 3 . Interest on the amount found due 4 . Any other relief the court may deem fit 5 . Costs 2.5. Upon being served with the process, the Respondent entered appearance and filed its defence which included a counter claim. 2.6. The Respondent denied providing law enforcement agencies with false information a bout the Appellant and further attested that the Appellant had not paid for all the goods supplied to it. 2.7. That the Appellant was owing the sum of K3,345,844 and h ad on 7th February 2018 expressly acknowledged th e debt in a letter dated 7 th February, 2018. 2.8. The Respondent made the following counter claims; 1. The sum of K3,345,844 being the balance remaining unpaid on the fertilizer delivered. 2 . Specific performance. 3. Interest on the sums claimed at the Commercial Bank le nding rate . 4 . Such further and other relief as may be just 5. Costs. Page 4 of 20 2.9. The Appellant did not respond to the defence and counter claim and th e Respondent obtained Judgement in Default of Appearance and Defence in the sum of K3 ,345,844 plus interest and costs. 2.10. The Appellant reacted, on 17 th May, 2022, by filing the following applications and pleadin gs; 1. Summons for leave to amend pleadings by which it sought to amend the statement of claim by adding particulars of loss of business. 2. Reply and defence to counter claim 3 . Summons for stay of execution default judgment 2. 11 . On 20 th May, 2022, the Appellant filed summons for an order to set aside the default judgment en tered on 17th May 2022. 3 . APPLICATION TO SET ASIDE DEFAULT JUDGEMENT 3.1. The Appellants application was supported by an affidavit attested by George Siame, its director. He attested that he and his wife were unable to give instructions to his lawyers regarding th e defen ce and cou nterclaim because his phone Page 5 of 20 had a problem and his wife had no phone at that time and their lawyers were unable to get in touch with them. 3.2. He stated that he lives in Nakonde and was unable to travel to Lusaka due to financial constraints. He however replaced his phone on the 12th May and received a call from his lawyers on 13th May requesting instructions and he travelled to Lusaka on 15 th May, 2022 and the Appellants reply and defence to counter claim were filed on 17th May, 2022. 3 .3. He was surprised when the following day 18th May 2022 his lawyers informed him that he had been served with a default judgment. 3.4. He attested that with regard to the counterclaim, the Appellant had denied owing the money and had an arguable defence on the merit and this was a matter that needed to go to trial to enable the parties to present evidence to the Court. 3.5. Respondents Opposition 3.6. Counsel for the Respondent Lubinda Linyama swore the affidavit in opposition on behalf of the Respondent. 3 .7. He attested that the Appellants advocates were served with the defence and counterclaim on 14th April, 2022. Page 6 of 20 3 .8. That the Judgement in default of appearance and defence was filed on 3 rd May 2022 but only signed by the learned trial judge on 17th May 2022. 3. 9. It was further attested that the Respondents purported defence to the counterclaim contained a bare denial. The Appellant exhibited as "LL 2" a letter from the Respondent to the Appellant admitting a debt of K3,5615,884 and proposing how to pay it. 3 .10. That the reasons provided by the Respondent for failing to file its reply and defence to counter claim in good time are misplaced and counsel was fully aware of the proceedings and should have been diligent enough to file a defence within the prescribed time. 3.11. It was also noted that the writ of summons showed e-mail addresses for both the Respondent and its lawyers to enable them to communicate with each other effectively. 3.12. Appellant's Reply 3.13. The Appellant filed an affidavit in reply stating that the exhibited letter purportedly admitting owing the sum of K3,515,884 was 4 years old and the Appellant had not shown any proof that the money was not paid. Page 7 of 20 3.14. The Appellant further pointed to paragraph 3 of the said letter where it states, "we further accept to return some bags of fertilizer from Eastern Province as directed by Forestcol Management to further reduce the amount owe d ,, ..... . 3 . 15. The Appellant denied the sum claimed stating that some bags of fertilizer were returned to the Respondent and the Appellant therefore had a defence on the merit. 3 . 16. That even though the Appellants lawyers were aware of the counterclaim they were unable to contact the Appellant as apart from not having a phone, he was facing challenges with receiving e-mails. 4. HIGH COURT DECISION 4 . 1. The trial judge set aside the appearance and defence to counterclaim filed by the Appellant after judgment in default was entered, stating that it was irregular as it offended Order 11 Rule 1 (3) High Court Rules (HCR). 4.2. The learned trial judge stated that the Respondent had not shown that it had a defence on the merits because all it did was deny owing the money allegedly owed and merely stating that the money for the fertilizer was paid off. Tha t contrary to Page 8 of 20 the guidance in the case of John W. K. Clayton v Hybrid Poultry Farm Ltd,111 the Appellant had not provided prima facie evidence, such as documentary proof, to show that he had an arguable defence on the merits. 4.3. The lower Court further found that it was the Appellant who set the action in motion and looking at the nature of the dispute, it should have anticipated tha t the Respondent would file a counterclaim and hence should have been diligent in looking out for the Respondents reaction and not going incommunicado. That the explanation on the email seemed to be an afterthought. 4.4. The learned trial judge declined to set aside the Judgment in default and dismissed the Appellants application with costs. 5. APPEAL 5.1 . Dissatisfied with the outcome, the Appellant has appealed advancing 4 grounds as follows; 1. The Court below erred in law and fact when it found that there was no basis to set aside the judgment in default despite having observed on page R6 that "There is mention of money subject of a report to the police but arising from the same contract between the parties" which is reason to set aside Page 9 of 20 the default judgment and allow the matter to go to trial where parties can present evidence before Court. 2. The Court below erred in law and fact when it relied on the case of John W. K. Clayton v Hybrid Poultry Farm Ltd in finding that the Defence failed to meet the test set out in that case without regard to the letter dated 7 th February, 2018 in which the Plaintiff averred that it had accepted to return some bags of fertilizer to further reduce the amount owed. 3. The Court below erred in law when it found that there was no defence on the merit to warrant setting aside of the default judgment without due regard to the averments by the Plaintiff in its defence that it is not owing the Defendant (Respondent) the amount of K3,345,884 as claimed by the Defendant. 4. The Court below erred in law and fact when it set aside the filed Defence to counter claim after finding that the Plaintiff was out of time to file appearance and Defence to counter claim without Page 10 of 20 due regard to the fact that a Defence to counterclaim comes with a reply and that that no orders for directions were issued to file a Reply after the Defendant filed its Defence and Counterclaim. 5.2. Appellants Arguments 5.3. The Appellant submitted that it would begin by arguing ground 4 which would determine whether the other grounds are worth arguing on the merit or not and the remaining 3 grounds are argued in the alternative with grounds 1 and 3 being argued together and ground 2 argued on its own . 5.4. In ground 4 it was submitted that Order XIX Rule2 (1) of the High Court (amendment) Rules of 2020 (HCR Amendment) provides as follows : 2 ( 1) A judge shall within 30 days after filing of the Defence under Rule 1 of Order XI give Orders for direction with respect to the following matters: (a) Reply and Defence to Counterclaim Page 11 of 20 5.5. It was submitted that the order imposes a mandatory duty on the judge and the record shows that the trial judge did not issue orders for directions within the prescribed 30 days. 5.6. In grounds 1 and 3 it was submitted that paragraph 16 of the defence to counter claim stated that the Respondent had been paid for all the deliveries it made and that the Respondent had initially reported the matter to the police as a theft of fertilizer. 5.7. It was submitted that the letter dated 7 th February, 2018 which the Respondent was relying on as an admission of the debt clearly indicated that the Appellant would return some bags of fertilizer which meant that the Appellant was not admitting the sum claimed. 5.8. The Appellant made a number of references to the Rules of The Supreme Court [White Book] (RSC) and cited a number of foreign cases all of whose import was in consonance with the law in this jurisdiction that every allegation on a statement of claim must be traversed and a bare or general denial of them is not sufficient. A reason must be given for the denial. It was submitted that the Appellant had denied owing any money and the reason it gave was that it had Page 12 of 20 actually paid for all the goods it had been supplied by the Respondent. 5. 9. The Appellant stated that in casu there was a defence on the merits, no unreasonable delay, no mala fides and no impr oper con duct on the part of the Appellant and th e appeal should be allowed on the basis of th e holding in Stanley Mwambazi v Morester Farms Limited121 and other cases cited by the Appellant in which it was h eld that in such circumstances a default judgment may be set aside and that where there is a defence to an action it is p referable that a case shou ld go for trial rather than be prevented from so doing by procedural irregularities. 5.10. In ground 2 it was argued that quite contrary to the lower Courts findings , t h e Appellant did in fact meet the test set in the case of John W. K. Clayton v Hybrid Poultry Farm Ltd (supra). 5 .1 1. It was submitted that the letter of 7 th February 2018 which allegedly admitted the debt did in fact state th at some fertilizer was to b e taken back so as to reduce the debt. According to the Appellant, this means that the Responden t was not owed the amount claimed in the letter and giving judgment in that sum would amount to unjust enrichment. Page 13 of 20 5.12. The Appellant reiterated that it was averred in the defence to counterclaim that all the goods supplied by the Respondent had been paid for. 5.13 . It was submitted that this issue be allowed to proceed to trial because triable issues had been disclosed. 5.14. Respondents Response 5.15. On ground 4, the Respondent pointed out that there was no escaping the fact that the defence to counterclaim was improperly before court because it was filed after judgment in default of defence to counter claim had a lready been entered. That the trial judge could not be faulted for setting aside the defence to counter claim after applying order XI ( 1) (3) HCR which reads as follows: "The Court shall not accept an appearance after the entry of judgement in default of appearance unless the Judgement in default of appearance has been set aside." 5.16. That the Appellant admitted that it had defaulted by failing to file the defence to counter claim with the 14-day period prescribed by the rules and that its reliance on the judge not having issued orders for directions within 30 days of the Respondent filing its defence was misplaced. 5.17. The Respondent observed that the use of the words "if any" Page 14 of 20 in Order XIX Rule 2 (1) (a) HCR (Ame ndment) meant that at the time the Court is issuing Orders for Directions and it happens that a Reply and defence to counterclaim is not filed, the judge should accommodate the filing of the said reply and defence to Counterclaim. 5.18. It was further submitted that nothing prevents a party from filing a defence and counter claim before the lapse of 30 days. That the Appellant slept on its rights to file its defence to counter claim within 14 days. 5.19. The Respondent submitted that the reasons given by the Appellant for failing to file its defence to counter claim within the prescribed period were unsatisfactory. 5.20. That in the lower Court the Appellant did not at any time state that it had delayed to file the defence to counter claim because it was awaiting orders for directions. The reason given for failing to do was that the Appellants counsel could not file a defence to counterclaim without instructions from the Appellant. 5.21. The case of Wilhelm Roman Buchman v The Attorney Genera1131 and other similar cases were cited where it was Page 15 of 20 held that a matter not raised before the trial court cannot be raised for the first time on appeal. 5.22. It was on that basis submitted that ground 4 should be dismissed. 5.23 . In grounds 1 and 2 our attention was drawn to the letter of 7 th February, 2018 which according to the Respondent expressly admitted the sums owed. It was submitted that oth er than being improperly before court the Appellants defence to counter claim consisted of bare denials. Reference was made to Order Lill Rule 6 (2), (3), (4) and (5) HCR which specifies that every allegation in a statement of claim must be specifically traversed and a bare denial amounts to an admission . The Appellant cited several cases to support this position. 5.24. It was submitted that the Appellant had failed to produce a defence on the merits and also failed to provide good reasons for failing to file its defence to counter claim. We were urged to dismiss grounds 1 and 3. 5.25. It was further submitted that the tone of the Appellants letter to the Respondent admitting the debt was clear and unequivocal. 5.26. The long and short of the Appellants arguments was the Page 16 of 20 Appellant admitted the debt and even though it stated that it was working on a repayment plan and claimed to have settled the debt nothing was presented to court to prove this fact. It was submitted that the trial court had correctly relied on the case of John W. K. Clayton v Hybrid Poultry Farm Ltd (supra) and that the appeal should be dismissed. 6. THE HEARING 6.1. The Appellant was absent from the hearing without notice and we decided to proceed on the basis that we would consider the Appellants heads of argument filed together with the record of appeal on 28 th October, 2022. 6.2. Mr. Simunyola on behalf of the Respondents stated that the Respondent was relying on its heads of argument filed on 6 th December 2022 which he believed addressed all the grounds. 7. CONSIDERATION AND DECISION 7.1. We have considered the record of appeal and the arguments advanced by both parties. We propose to address ground 4 on its own and thereafter grounds 1, 2 and 3 will be addressed together. Page 17 of 20 7.2. In ground 4 with regard to Order XIX Rule 2 (1) (HCR Amendment) we shall begin by stating that the order does not indicate that it does away with any mandatory timelines that the rules impose on parties. 7.3. In our view, the Appellant correctly submitted that the Order cited by the Respondent does not prevent a party from filing its defence to counter claim and as we see it, and quite importantly so, the cited order does not prevent a party from seeking judgment in default where the other party has defaulted on the prescribed period for filing court process. 7.4. In any event, the issue is moot as the said defence to counterclaim was filed after judgment in default had been obtained in contravention of Order XI (1) (3) HCR which makes it mandatory for a judge to not accept an appearance after entry of judgement in default of appearance. The learned trial judge was therefore on firm ground when he set aside the Respondents appearance and defence to counterclaim. 7.5. We have considered the reasons advanced by the Appellant for failing to file the defence to counter claim within the prescribed period. We agree with the learned trial judge that the reason advanced is unacceptable and notably, it was the Page 18 of 20 Appellant who started the court process. He should have been following up the progress of his case with his lawyers. The excuse of a broken down phone and a problematic e-mail are quite unconvincing and we cannot fault the trial judge for arriving at the conclusion that he did. 7 .6. We would remind the Respondent and any party in similar circumstances that when they have a matter before the courts they are expected to be in contact with their lawyers. It is imperative that they recall that we have said time and again that problems and inefficiencies between parties and their lawyers are no concern of ours. See the case of Mutantika & Another v Chipungu. 141 7.7. We have also stated on numerous occasions that parties who suddenly come back to life and only react after an application to dismiss their case has been made do so at their own peril. See the case of Nkhuwa v Lusaka Tyre Services Limited.151 7.8. Grounds 1, 2 and 3 are related as they all strive to show that the Respondent had raised triable issues and established a defence on the merits. Page 19 of 20 7.9. We have considered the arguments advanced by both parties and paid particular attention to the Appellants efforts a t establishing that it had disclosed a defence on the merits. 7.10. The Appellants counterclaim is clear and precise. It traces its origin to a contract entered into between the parties for the supply of fertilizer by the Respondent to the Appellant. 7.11. In its affidavit in opposition to the Respondents application to set aside the default judgment, the Respondent exhibited the letter of 7 t h February, 2018 in which the Respondent admitted owing the sum of K3515,884 and offering to return some fertilizer to the Respondent so as to reduce the debt. 7.12. The Respondent focused on the offer to return some fertilizer which it claims to have done and also claims to have paid the debt in full. 7 .13 . In our view the averments amount to bare denials because absolutely no detail was provided as to how and when the alleged payback was concluded. Further, no detail was provided regarding any fertilizer that may have been returned to the Respondent. Page 20 of 20 7.14. The learned trial judge was on firm ground when he quoted the holding in the case of John W. K. Clayton v Hybrid Poultry Farm Ltd (supra) as follows: "An applicant has to show that he has an arguable defence on the merits by providing prima facie evidence, such as documentary proof that he was no longer bound by the contract as earlier concluded .... " 7 .15. The learned judge was on firm ground when he fou nd that the Appellant had provided unconvincing reasons for failing to file his defence to counter claim within t h e prescribed time frame and had not provided a defence on the merit. 7 . 16. This appeal h as no foot to stand on and is consequently dism issed with costs to th e Respondent. ~ ""\.. .......• ......•.• ........... ....•.•••.•... M. M. KONDOLO, SC COURT OF APPEAL JUDGE ::::-:,. K. MUZENGA COURT OF APPEAL JUDGE Y. CHEMBE COURT OF APPEAL JUDGE