J J Lowe (Zambia) Ltd v Nemerit Enterprise Ltd (Appeal 147 of 2005) [2008] ZMSC 147 (30 May 2008)

IN THE SUPREME COURT OF ZAMBIA Appeal No. 147/2005 HOLDEN AT NDOLA (Civil Jurisdiction) BETWEEN: J. J. LOWE (ZAMBIA) LIMITED Appellant AND NEMERIT ENTERPRISES LIMITED Respondent Coram: Chirwa, Chitengi and Silomba, JSS on 10th May, 2007 and 30th May, 2008 For the Appellant : Mr. W. Mweemba of Messrs Mweemba 8s Company For the Respondents: Mr. M. Sakala of Messrs Corpus Legal Practitioners JUDGMENT Chitengi, JS, delivered the Judgment of the Court Cases referred to: - 1. Attorney-General V Marcus Kampumba Achiume (1983) ZR1 2. Tropics Limited V Ramaswamy Vaitheswaran (1996) ZR 129 Works referred to: 1. Hudson Building and Engineering Contracts 10th Edition by L. Duncan Wallace Sweet & Maxwell, London 1970 at Page 742. - J2 - In this judgment we shall refer to the Appellant as the Plaintiff and the Respondent as the Defendant which is what they were in the High Court. The facts of this case are that the Defendant was contracted by the Zambia Revenue Authority to undertake some road works at their Chirundu Border Post. The Defendant sub contracted the Plaintiff to do the surfacing and hired from the Plaintiff equipment for carrying out the works at the site. After approaches by the Defendant to the Plaintiff to do the surfacing works and after discussions between the parties the Plaintiff made a written offer to the Defendant in a letter dated 10th January 1997. Leaving out what is not relevant to the determination of this appeal, the letter read: - “Further to our discussions we hereby confirm our proposal and rates for pre-mix on the new temporally Border Post at Chirundu as follows: - 1. Following evaluation of the working conditions at the temporary Border Post, we believe that 40mm thick asphalt wearing course compacted to 96% of marshal density will stand up to normal use by trucks parking and turning at this border post 2................................................................................................. 3................................................................................................. 4................................................................................................. 5................................................................................................. 6. - J3 - 7. .......................................................................................... 8................................................................................................. 9................................................................................................. 10. Our rate is based on tonnage basis, as per delivery notes accompanying each load of premix and produced by the weigh bridge at M. O. W’s Crushing Plant, Kajue. Estimated quantities based on 4500m2 surfacing at 49mm thick should require approximately 430 tons of asphalt. 11. Our rate for supply and laying 40mm asphalt is U$127- 90/tonne (approx U$ 12.22/M2). We hope this meets with your approval. ” The Respondent replied to the Plaintiff’s letter on 23rd January 1997. Leaving out what is not relevant, the Defendant’s letter read: - “Reference is made to your quotation of 10th January, 1997 for 40mm prefix at Chirundu Border Post. We now write to advise that your quotation has been accepted at the rate ofU$12/M2.” The Plaintiff executed the pre-mix works. However, there were some base failing which were the responsibility of the main contractor, the Defendant. According to Mr. Dave Brown, the Plaintiff’s Projects Manager, and the author of the offer to the Defendant the agreed rate for the premix was US $127.90 cents per tonne. However, Mr. Brown later said in cross examination that final rate agreed upon was US $12 per square metre but that charging per tonne was the more accurate method. - J4 - He also agreed that there would be a difference between calculations per tonne and calculations per metre. He said in engineering works premix is computed by tonne. The Defendant paid for the works leaving a balance of US $56,685.08. The Plaintiffs accounts were reconciled and there was no overpayment by the Defendant. According to Mr. Festus Ntinda, (DW1) the Respondent’s quantity surveyor, the agreed rate for the premix works was US $12 per square metre. When the works started there were some delays due to rains and variations and the Plaintiff claimed 14 days’ time related costs. On the advice of their consultant the Defendant paid the Plaintiff for only 3 days. But the Plaintiff insisted on 14 days and instead of charging per square metre for the pre mix, the Plaintiff charged per tonne. Because the Plaintiff billed for 14 days time related costs instead of 3 days and charged the rate of the pre mix per tonne instead of per square metre, the total invoice came to US $201,494.58 instead of US $187,842 resulting in an overpayment of US $13,652.58 which the Defendant now counter claims. With respect to the time related costs, the authority to certify the days were the Consultants Messrs Peter Richards and Partners. The Plaintiffs did not comment when the Consultants certified three days. The client, Zambia Revenue Authority, would only pay on days certified by the Consultant. There was no agreement to pay interest on accruals as the Plaintiff now says. The evidence of Mr. Fredrick Shabani Mutamira (DW2) a Quality Surveyor and Resident Partner of Peter Richards and Partners were - J5 - commissioned by Zambia Revenue Authority to produce tender documents, that is bill of quantities and advise payments to the contractor. The contractor would apply for payments and the Consultants would verify to ensure that the work has been done. The Consultant would verify the quantum and costs. This valuation would then be sent to the Architect for certification and if the Architect certifies then the client is bound to pay. In this case, Defendant applied for 14 days time related claim and the Consultants recommended three days. The Plaintiff were domestic sub contractor. The Plaintiff claim 14 days time related cost which the Defendant passed on to the Consultants for evaluation. The basis for 14 days extra time was evaluated and only 3 days was found justified. The Consultants was to safe guard the interest of the client. Curiously, after the defence had closed their case, the Plaintiff called a witness to testify on the amended Defence and Counter Claim. No reason was given for this procedural lapse. Be that as it may one Rajasingam Suntharujan, an Accountant with the Plaintiff gave evidence. Mr. Suntharujan, gave evidence which is rather difficult to follow. He testified that invoices for US $24,360.00 and US $8,490 were not included in the invoices presented to the Defendant. The Plaintiff does not owe the Plaintiff any money. According to the statement on P71 of the record of appeal the invoices for US $24,360.00 and US $8,490.00 were for plant hire and not for premix. On this evidence the learned trial Judge found that the Plaintiff’s claim arose because the Defendant charged for more days on time related costs than those recommended by the Consultant and used the wrong formular of per tonne instead of per square metre. With respect to the Counter Claim, the learned trial Judge found that there - J6 - was an overpayment of US $13,628.58 also arising from the Plaintiffs use of wrong formular and charging more days on time related costs than those certified by the Consultants. For these reasons the learned trial Judge dismissed the Plaintiffs claim and found for the Defendant on the counter claim. The Plaintiff now appeals to this court against the judgment of the High Court, advancing two grounds of appeal. The first ground of appeal is that the learned Judge in the court below misdirected himself in law and fact when he held that the total of the invoices was US $187,482 while the total payment was US $201,494.50 creating a difference payment of US $13,652.58 and thus overlooking the evidence of PW2 to the effect that the Defendant’s reconciliation left out two of its invoices of US $24,360.00 and US $8,490.00 bringing the total invoices value to US $237,631.00. The second ground of appeal is that the learned Judge in the court below erred in law and fact when he held that the claim in this action arose because of overcharging on the days contrary to the Consultant’s estimates and the use of wrong formular not agreed to in the contract, overlooking the fact that the Appellants sub contract with the Respondent had nothing to do with the Consultant supervising the main contract to which the Plaintiff was not privy and the invoices referred to in (1) above were plant hire invoices which were hourly charges and had nothing to do with volume or area. Counsel filed written heads of argument. Mr. Mweemba entirely relied on his written submissions. Mr. Sakala augmented his written heads of argument with oral submissions. - J7 - In his written heads of argument on ground one, Mr. Mweemba, learned counsel for the Plaintiff, submitted that the invoices for US $24,360 and US $8,490 which appear on pages 67 and 68 of the record respectively do not appear on the Defendant’s reconciliation on page 72 of the record of appeal. It was Mr. Mweemba’s submission that the learned trial Judge misdirected himself by not analyzing this evidence. He said that had the learned trial Judge considered this evidence the court would have found that the value of these two invoices (US $32,890.00) if added to the sum of US $187,842 which the learned trial Judge found as the total invoice value, would have raised the total invoice value to US $215,692. Mr. Mweemba pointed out that after deducting the amount of US $201,494.58 paid by the Defendant from the total invoice of US $215,692 the overpayment of US $13,652.58 does not arise and consequently the Counter Claim does not also arise. It was Mr. Mweemba’s submission that the learned trial Judge misapprehended the evidence of second witness for the Plaintiff which he recited. Citing the case of Attorney-General V Marcus Kampumba Achiumel1) where this court stated the grounds on which an appellate court can interfere findings of fact by a trial court, Mr. Mweemba urged us to interfere with the learned trial Judge’s finding that the defendant overpaid because the learned trial Judge misapprehended the evidence. Mr. Mweemba ended on this ground by submitting that had the learned trial Judge properly evaluated the evidence he would have found that the Defendant did not overpay but rather owe the Plaintiff, with the result that the counter claim would not arise. - J8 - The argument on ground two is that the Defendant did not dispute that there were time related costs due; what was in dispute is the quantum; according to the Plaintiff he was due 14 days time related costs; but according to the Defendant the time related costs were for only 3 days as advised by the client’s (Zambia Revenue Authority) Consultants. It was Mr. Mweemba’s submission that it was wrong for the Defendant to ask a Consultant’s supervising the main contract between the Defendant and the Client to determine the Plaintiff’s claims related to sub contract between the Defendant and the Plaintiff because the Plaintiff was not privy to the main contract; nor was the client privy to the sub contract between the Plaintiff and the Defendant. Mr. Mweemba pointed out that in fact the evidence shows that most of the invoices were paid without the approval of the Consultants. Citing Hudson Building and Engineering Contracts^1) as authority Mr. Mweemba made the proposition that a domestic sub contractor is not, by Building and Engineering Law and Practice bound by the terms of the main contract. It was Mr. Mweemba’s submissions that the Defendant did not deny the claim for 14 days time related costs as such but only relied on the Consultant’s assessment which was not binding on the Plaintiff. That being the case, Mr. Mweemba submitted that there was no overcharge as the learned trial Judge found; that in fact the 11 days time related cost represented by US $33,660 is owing to the Plaintiff. With regard to the learned trial Judge’s finding that the Plaintiff used wrong formular, Mr. Mweemba submitted that the claim arose because the Defendant omitted to settle two invoices referred to in ground one. These invoices referred to plant hire which the learned trial Judge correctly observed in his judgment had hourly charges. - J9 - Mr. Mweemba ended his written heads of argument by saying that there was no wrong formular used because the Plaintiff did not use the formular for charging premix and slurry for plant hire and vice versa. Mr. Mweemba emphasized that the issue here is the invoices relating to plant hire. In his written heads of argument on ground one, Mr. Sakala, learned counsel for the Defendant, submitted that the learned trial Judge did not misdirect himself in law and fact when he held that the total value of the invoice was US $201,494.56 there by creating an overpayment of US $13,652.58. Further, Mr. Sakala submitted that the learned trial Judge did not overlook the evidence of PW2 to the effect that the Defendants reconciliation omitted two invoices of US $24,360 and US $8,490.00 thereby bringing the total invoice to US $237,631.00. Mr. Sakala pointed out that the learned trial Judge in fact found that the total invoice was US $187,842 when the total payment was US $201, 494.58 thereby creating an overpayment of US $13,652.58. According to Mr. Sakala the learned trial Judge made this finding on pages 9 and 10 of the records. In fact these are no findings of fact by the learned trial Judge; they are recitals of the evidence of the Defendants witnesses. It was the submission of Mr. Sakala that the learned trial Judge considered the evidence of the Plaintiffs second witness and said the overcharging arose because of overcharging on the days contrary to the Consultants estimates and the use of wrong formular not agreed to in the contract; that the over payment, which is the subject of the counter claim, also arose for the same reason. Because of this, Mr. Sakala submitted that the learned trial Judge considered the evidence - J10 - of Rajasingam Suntharurajan before making a finding of fact that the evidence (sic) was based on the wrong formular. It is Mr. Sakala submission that this ground attacks a finding of fact by the learned trial Judge. He argued that the Plaintiff has not shown any of the grounds stated in the cases of Attorney-General V Marcus Kampumba Achiumet1) and Tropics Limited V Ramswamy Vaith.eswara.nl3> upon which an appellate court can interfere with a finding of fact made by the trial court. Mr. Sakala’s written arguments to ground two are that the learned trial Judge did not error when he found that the claim arose because of overcharging on the days contrary to the Consultant’s estimates and the use of wrong formular not agreed upon in the contract. In answer to the argument that the Plaintiff was not privy to the contract between the Defendant and the client for the Plaintiff to be bound by the Consultant’s directives, Mr. Sakala submitted that there was an express term of the contract between the Plaintiff and the Defendant that the Plaintiff will adhere to the Consultant’s directive. For this submission, Mr. Sakala relied on sentence in the penultimate paragraph of the Defendant letter of 23rd January, 1997 to the Plaintiff which reads: “........please execute the work on schedule and to specifications to the satisfaction of the Consultants......... ’’ It was Mr. Sakala’s submission that the Plaintiff was bound by this letter and as such the payment for 3 days and not 14 days was justified as much of the delay was caused by the constant break down of the Plaintiff’s machinery and climatic conditions. - JI 1 - On use of wrong formular Mr. Sakala submitted that the monies claimed were arrived at by reason of miscalculations and poor record keeping. Mr. Sakala’s basis for this submission is that Mr. Brown, the Plaintiffs first witness testified that although the agreed rate was US $12 per square metre the Plaintiff charged per tonne, resulting in a higher figure. Further, Mr. Sakala said Mr. Brown testified under cross examination that he was unable to deny the overpayment because of the Plaintiffs poor or lack of proper records. Mr. Sakala then repeated his earlier submission that the appeal is basically on appeal against a finding of fact. In the face of those submissions Mr. Sakala, in another document which he called Respondent’s final submission, made submissions, to the effect that the letters exchanged between the parties revealed that the parties’ minds did not meet and, therefore, there was no contract between the parties. We find these submissions startling and we say no more about them. In his oral submissions on ground one Mr. Sakala submitted that the learned trial Judge in his judgment at page 7 referred to the evidence of the Plaintiff’s first witness before arriving at a finding that the formular was contrary to what the parties agreed upon. But when asked by the court, Mr. Sakala conceded that the learned trial Judge misapprehended the facts as to the charge rate. On ground two Mr. Sakala submitted that the claim relating to the two invoices was not pleaded in the Writ and Statement of Claim. He said the claim was for supply of premix. According to Mr. Sakala the evidence relating to hire of equipment was, therefore, in appropriate. It was Mr. Sakala’s submission that since the learned trial Judge had misapprehended the facts it cannot be concluded that the Defendant - J12 - had not paid in full thereby disentitling the Defendant to the US $13,652.58 which the learned trial Judge found as an overpayment. On costs Mr. Sakala submitted that each party should pay his costs because the learned trial Judge misapprehended the facts. In reply, Mr. Mweemba submitted that the learned trial Judge never evaluated the evidence of the Plaintiffs second witness. He said the invoices on pages 67 and 68 were pleaded in paragraph 4 of the Statement of Claim. On costs Mr. Mweemba submitted that costs are due to a successful party unless there are strong reasons against it. We have carefully considered the evidence that was before the learned trial Judge, the submissions of counsel and the judgment appealed against. We shall deal with the grounds of appeal seriatim. The complaint in the first ground of appeal is that the learned trial Judge misapprehended the evidence when he found that the total invoice was US $187,842 while the Respondent paid US $201,494.58; that the learned trial Judge overlooked two invoices of US $24,360.00 and US $8,490 which the Defendant omitted from his reconciliation statement; that had the learned trial Judge properly considered the evidence he would have found that the two omitted invoices, amount to US $32,890.00 which if added to the sum of US $187,842 would have brought the total invoice to US $215,692; that when the sum of US $201,494.58 which the Defendant paid is deducted from US $215,692 the alleged overpayment and Counter Claim of US $13,652.58 does not arise. - J13 - For these reasons Mr. Mweemba submitted that the learned trial Judge misapprehended the facts and in accordance with the principles laid down by this court in Attorney-General V Marcus Kampumba Achiumet1) we should interfere with the finding of fact made by the learned trial Judge. Mr. Sakala’s submission on this ground is that the learned trial Judge did not misdirect himself because he found that the claim arose as a result of overcharging; that the Plaintiff charged per tonne instead of per square metre. But when asked by the court whether the learned trial Judge did not misapprehend the fact, as to the charge rate, Mr. Sakala conceded that the learned trial Judge misapprehended the facts. In fact, after this concession Mr. Sakala used the learned trial Judge’s misapprehension of the facts as a ground for the Defendant to resist the claim and payment of costs. On the evidence, we are satisfied that the learned trial Judge misdirected himself when he found that the Plaintiff overcharged and that the Defendant overpaid. In the event, we interfere with the learned trial Judge’s finding of fact that the Defendant over paid by US $13,652.58. This ground of appeal, therefore, succeeds. The second ground of appeal deals with the alleged charging on the number of days. The dispute here is that, according to the Plaintiff, he is supposed to be paid for 14 days time related costs. But according to the Defendant, the Plaintiff is entitled to only 3 days time related costs as recommended by the employer’s (ZRA) Consultant. The gist of Mr. Mweemba’s submissions on this ground is that the Plaintiff cannot be bound by what the consultant said because the Plaintiff is not privy to the main contract; nor was the client (ZRA) privy to the contract between the Plaintiff and the Defendant. Finally - J14 - citing Hudsons Building and Engineering Contracts!2) as authority, Mr. Mweemba made the proposition that a domestic sub contractor is not by Building and Engineering Law and Practice bound by the terms of the main contract. Mr. Sakala’s reply to this argument is that there was an express term in the contract between the Plaintiff and the Defendant that the Plaintiff will adhere to Consultant’s directives. But there is no such term in the letters exchanged between the parties which form the contract between the parties. Mr. Sakala relied on the statement “Please execute the work on schedule and to the specification of the consultant.............. ” This statement is clear. It does not mean that the consultant had authority over the Plaintiff to determine the time related costs. The statement means that the Plaintiff must execute the works on time as agreed between him and the main contractor and the work should be according to the specification to the satisfaction of the consultant. We are not here dealing with the specifications. We are dealing with time related costs over which according to the agreement between the parties, the Consultant had no authority to give directives. In the event, we agree with Mr. Mweemba that the Plaintiff was not bound by what the consultant said. In the same vein we agree with Mr. Mweemba that the learned trial Judge misdirected himself when he disallowed 11 days out of the 14 days labour related costs. For the reasons we have given, we also reject Mr. Sakala’s submissions that the Plaintiff was bound by any term in the main contract which subjects him to the authority of the Consultant. This ground of appeal also succeeds. Both grounds of appeal having succeeded, the appeal succeeds. We reverse the learned trial Judge and enter judgment in his favour in the - J15 - sum claimed with interest at 5% per annum from the date of the Writ until payment. About costs, Mr. Sakala opposes the award of costs on the ground that the learned trial Judge misapprehended the facts of this case. All we can say about this submission is that it is very startling. We find no basis in this case upon which a successful party can be denied his costs. We award the Plaintiff his costs both in this court and in the court below to be agreed upon and in default to be taxed. D. K. CHIRWA SUPREME COURT JUDGE SUPREME COURT JUDGE SUPREME COURT JUDGE