Konkola Copper Mines Plc v Mitchell Drilling International Ltd and Anor (SELECTED JUDGMENT NO. 22 OF 2015) [2015] ZMSC 192 (13 July 2015)

SELECTED JUDGMENT NO. 22 OF 2015 P568 APPEAL NO. 156/2013 scz 8/089/2013 IN THE SUPREME COURT OF ZAMBIA HOLDEN AT LUSAKA (Civil Jurisdiction) BETWEEN: I J JUL ) C(, IJ KONKOLA COPPER MINES PLC APPELLANT AND MITCHELL DRILLING INTERNATIONAL LTD 1 ST RES PO ND ENT MITCHELL DRILLING ZAMBIA LTD 2ND RESPONDENT CORAM: Chibomba, Hamaundu JJS and Kaoma, Ag JS On the 8 th May, 2014 and 25th June, 2015 For Appellant: Mr. N. Nchito, SC & Mrs. S. Kateka - Nchito & Nchito For Respondents: Mr. J. P. Sangwa, SC - Simeza Sangwa & Associates JUDGMENT Kaoma, Ag JS, delivered the Judgment of the Court. Cases referred to: 1. Mususu Kalenga Building Limited and another v Richmans Money Lenders Enterprises. 2. Mersey Steel & Iron Co. Limited v Naylor, Benzon & Co (1884) 9 AC 434 3. Crown Corle Company (Z) Limited v Pamela Helen Jackson (Married Woman) (1988-89) Z. R. 82 J2 P569 4. Johnson v Agnew [1980} AC 367 5. United Scientific Holdings Ltd v Burnley BC [1977} 2 All ER 62 6. Charles Rickards v Oppenheim [1950} 1 KB 616 7. New Zealand Shipping Co Ltd v Societe des Ateliers et Chantiers de France (1919) ALL ER 552 Other works referred to: 1. Chitty on Contracts-General Principles, Sweet and Maxwell, 2004. 2. Halsbury's Laws of England 4 th Ed Volume 34, Butterworths & Co 1985 3. Contract Law, Elliot and Quinn, 6"1 ed. 2007 This appeal is against parts of the judgment of the High Court dated 14 th March, 2013 that holds that the appellant is liable to pay the respondents the total sum of €731,546.31 and dan1ages to be assessed by the Deputy Registrar. The facts not in dispute are that on 27 th June, 2008 the appellant and the 1st respondent executed a Service Agreement (the agree1nent), for the carrying out of surface drilling and reverse circulation drilling at the appellant's Konkola and Nchanga mines from August, 2008 to November, 201 l. The scope and specifications were stipulated in article 2 of the agreement. The 1st respondent sub-contracted the 2 nd respondent under article 6.2. An advance of €200,000 was to be paid to the respondents under article 5.4.6 on contract execution. €100,000 of the amount was mobilisation fee to be recovered from monthly payments at €20,000 per month starting from the fifth month. J3 P570 The respondents commenced work in November, 2008. On 1st December, 2008 they issued two invoices, each for €116,000.00 for the advance payment and mobilisation fee. The invoices were payable on 29 th December but the appellant failed to pay. The respondents suspended work due to inadequate financial resources. After discussions, and on 28 th January, 2009, the parties agreed in writing that the respondents would resume work and the appellant would settle the two invoices by 2 nd February, 2009. The invoice for advance payment was paid on 25th January, 2009 but the 1nvo1ce for mobilisation fee was paid on 13th March, 2009. In line with article 5.4.2 of the agreement, the respondents submitted certified invoices to the appellant on the fifteenth day of each month for the jobs done. The invoices were to be paid within 15 days of the invoice date at the rates specified in Schedule 1. It was agreed under articles 5.4.3 and 5.4.4 that if any item or part of an item of an invoice was disputed, the payment of the remainder of the invoice was not to be withheld and that any disputed 1nvo1ces were to be settled within 5 days of receipt of the same. J4 P571 It was further agreed under article 9.5, that in the event of the appellant failing to settle the invoices within 45 days from the due date, the respondents were to give notice to the appellant to remedy the breach within 15 days of receipt of the notice and in the event of the appellant failing to remedy the breach, the respondents had the right to tern1inate the agreement by giving 15 days notice. In such event, all payments due to the respondents were to be paid before settlement of all dues to the parties. It was also agreed under article 9. 6. 1, that if the appellant suspended the agreement or part of it, not because of material breach by the respondents, or wet weather or adverse drilling condition, the respondents would be entitled to be paid hourly rates for standby time as detailed in Schedule l. Schedule 1 also stated that if the appellant terminated the contract before contract completion, it would pay the respondents demobilisation fee. On 6 th May, 2009 the respondents issued a notice of default to the appellant in line with article 9.5 citing failure to provide certified payment within 45 days of due date and the appellant's admission that it was unable to pay its debts when due. The respondents J5 P572 required the appellant to remedy the default within 15 days. The parties engaged in further negotiations over the issue. On 15 th May, 2009, the respondents issued a second default notice again requiring the appellant to remedy the situation within 15 days. On 22 nd May, 2009 the respondents gave the appellant 15 days notice to terminate the contract on 13th ,June, 2009. But that notice was withdrawn on 24 th May, and replaced with one to terminate the contract on 8 th June, 2009. On 26 th June, 2009, the respondents informed the appellant that as a result of the breach of contract and subsequent termination, the contract was at an end and they would not be returning to site. The respondents had issued a total of thirty five invoices, all valued at €1,466,522.23, out of which the appellant paid €632,075.92 leaving a balance of €834,446.31 which included demobilisation costs, standby time and legal costs. The respondents agreed that they got fuel from the appellant on the understanding that the cost of the fuel would be split at 50 % between them. The appellant's position was that after termination of the contract, it paid a sum of€14,121.88 to the respondent in full and JG P573 final settlement of the claim. In arriving at that amount, it deducted invoices 18, 21 and 33 raised during the period of standby time for work stoppages caused by the respondents and invoice 34 for demobilisation costs as it was liable only in circumstances where it tenninated the contract. The appellant declined to pay invoices 24, 26, 29 and 32 relating to KLB 147 borehole on the ground that it was inco1nplete and set off the su1n of€76,897.95 already paid. The appellant also deducted €100,000 from the €200,000 advance payment since the amount was to be recovered in monthly instalments. 50% from the €100,000 mobilisation fee was also withheld for the reason that instead of 4 rigs, the respondents mobilised only 2 rigs. €36,303.44 was also removed for fuel given to the respondents. A sum of €4,397.95 was also deducted as liquidated damages under article 10.1 of the agreement since the respondents did not meet the completion schedule. The appellant also declined to pay for legal fees because by article 8.2.2; it was only liable in situations where it failed to comply with performance of the contract. The appellant counterclaimed a total €267,596.34 in respect of the sums deducted from the respondents' invoices. J7 P574 On these facts, the court below awarded the respondents a total sum of €731,546.31 and damages to be assessed and dismissed the appellant's counterclaim apart from the claim for €100,000 advance payment which was allowed. The appellant has now appealed on eight grounds. At the hearing of the appeal, both learned State Counsel relied on their detailed heads of argument which they amplified orally. We have perused the arguments, but we shall only consider salient points for each ground of appeal. The first ground of appeal attacks the holding by the court below that the appellant committed a repudiatory breach of the contract warranting the respondents to terminate the contract. To support this ground, State Counsel Nchito submitted that not every breach of contract entitles the innocent party to repudiate the contract; the innocent party may either waive the breach or terminate the contract. If the innocent party terminates the contract, it is the one that has terminated and not the party in breach. He quoted a passage on discharge by breach at paragraph 24-001 of Chitty on Contracts-General Principles, 2004. JS P575 He submitted that the alleged breach that purportedly warranted the respondents to terminate the contract was delay in making payments for issued invoices stipulated in the notice to terminate dated 6 th May, 2009 but the respondents were not entitled to repudiate the contract on that ground as the parties had not specifically made time for payment of the essence in the contract; and breach of a contractual provision on time for payment does not, as a general rule, an1ount to a repudiatory breach. He again cited Chitty on Contracts at paragraphs 21-011 to 21- 014, where the author quotes three instances that would justify an innocent party to repudiate a contract for breach of a term relating to a stipulation for time of payment as: where the parties have by express agreement made time for payment of the essence; where the circumstances of the contract or nature of the subject-matter indicate that the fixed date must be exactly complied with; and where the innocent party issues notice making time of the essence. He also quoted paragraphs 21-018 and 21-053 on the same matter. Further or alternatively, State Counsel Nchito argued that the court erred in holding that the appellant failed to rectify the J9 P576 breaches set out in the notice to terminate, thereby warranting the respondents to terminate the contract in terms of article 9.5. That the notice to tern1inate shows invoices that were overdue by 45 days but the notice was extended by the respondents on 15th , 22 nd , and 24th May, 2009 and brought the notice period to 8 th June, 2009 but that the respondents terminated the contract on 26 th June, 2009. It was argued that consequently the appellant's duty to remedy the breach specified in the notice to terminate was extended up to 26 th June, 2009 and the respondents had by so extending the notice, coupled with the receipt of payments, affirmed or waived their right to terminate the contract on the grounds cited in the notice. As authority for this argument, State Counsel Nchito quoted paragraph 21-016 of Chitty on Contracts. He argued further, that as at the date of termination the appellant had in fact paid off the su1ns due on the invoices, the subject of the notice to terminate, so there was no reason for the respondents to terminate the contract. In reply, State Counsel Sangwa urged us to recognise the bargain agreed between the parties in the contract which he terms a "schedule of rates contract". He argued that the agreement was not JlO P577 an entire obligation, meaning it was divisible as it set out clear mechanisms for payment, what constituted default by the appellant of its obligations, and the n1anner of terminating the contract in case of the appellant's default. He argued that if it were an entire obligation, it would require the respondents to complete the three year period of drilling before they could be entitled to render an account and be paid for services provided. We have considered the respondent's argument that the contract is severable. As we understand it, a contract is said to be severable where payment becomes due at various stages of performance, rather than in one lump sum when performance 1s complete. Therefore, in a severable contract, the price for each stage can be claimed when that stage is completed even though the party concerned may be in breach of the contract for not completing successive stages. And whether a contract is entire or severable is a question of construction of the intention of the parties in each particular case (Contract Latu, Elliot and Quinn, 61" ed. 2007 p. 275). In this case, we have no doubt just from article 5.4 and Schedule 1 Jll P578 of the agreement, that the contract between the parties was divisible or severable and not an entire obligation. State Counsel Sangwa submitted, on ground 1, that if it is accepted that the appellant repudiated the contract, then it follows that it is the appellant, and not the respondent that breached the contract. That the appellant repudiated the contract as it failed to pay for the services rendered by the respondents as set out in the contract; and the failure to remedy its wrongs continued even after being given due notice of default, signifying repudiation of the contract and the court below adequately dealt with the issue in relation to payment of demobilisation fee. He also submitted that the court below found that the breaches by the appellant left the respondent with no option but to treat the contract as repudiated. According to hi1n, the issue was not whether the respondents were entitled to repudiate the contract, but what the effect of the appellant's breaches was and in terminating the agreement, the respondents followed the procedure provided for under clause 9.5. J12 P579 Further, that the appellant's argument that the respondents had extended the time for payment and waived the right to deern the contract repudiated is misplaced and the appellant did not plead, call evidence or make submissions on the issue in the court below and must be estopped from raising the issue now. He cited Mususu Kalenga Building Limited and another v Rich1nans Money Lenders Enterprises 1 • He argued that the appellant's position was that the respondents acted unreasonably by terminating the contract when the parties were engaged in negotiations; and the notices of default letters do not indicate any extension of time; to constitute an extension, clear and unambiguous words would have been used. We have considered the arguments and authorities cited by the parties on this ground of appeal. It is the contention of State Counsel Nchito that there was no repudiatory breach because time for payment of the invoices was not of the essence of the contract. It is trite that when there is a time stipulation in the contract, then that is the time for performance and the effect of late performance depends upon whether or not time is of the essence of J13 P580 the contract. When time is of the essence, any failure to perform on ti1ne justifies the termination of the contract, even if little or no hardship is caused (Contract Law, Elliot and Quinn (supra), p. 276). State Counsel Nchito, has set out the three main ways in which a contract may be classified as one in which time is of the essence and we agree with him that where there is a repudiatory breach, the innocent party will either treat the contract as still effective, or treat it as terminated. Breach in itself does not discharge the innocent party from his obligations. He 1nust accept the breach. And when the contract is treated as terminated; it is tern1inated for the future as from the moment the acceptance of the breach is com1nunicated to the defaulting party and the defaulting party will be liable in damages both for any earlier breaches and also for the breach leading to the discharge of the contract, but will be excused any further perforn1ance (Johnson v Agnew4 ). In this particular case, we note, immediately that the appellant did not, in its pleadings, evidence or submissions in the court below raise the issue that time of payment of invoices was not of the J14 P581 essence, or as submitted by State Counsel Sangwa, that the respondents extended the time for payment and waived their right to terminate the agree1nent on the ground of delayed payment or that at the date of term.ination the appellant had paid off the sums due on the invoices, the subject of the notice to terminate. So these are non-issues on appeal (Mususu Kalenga Building Lim.ited 1 case). The appellant's position in the court below which is evident fron1 its defence and counter-claim, the testimony of DWI and the written submissions was that the parties were engaged in negotiations over the payment of the invoices as the values of some of the 1nvo1ces were disputed and the respondents acted unreasonably when they terminated the agreement despite the negotiations. In fact DWI made it very clear that the dispute related to payments being claimed by the respondents and he agreed that they did not pay the invoices as per contract and by June, 2009 they were not up to date with the payments. Moreover, we note that the appellant contended in the written submissions that the respondents' letter of termination of 26th ,June, 2009 was couched in unequivocal terms and amounted to JlS P582 acceptance of repudiation by the appellant; and the option to terminate the contract in the circumstances that prevailed was the preserve of the respondents both at law and according to the terms of the contract (underlining ours). The only point made by the appellant was that it was incorrect to assert that the contract was terminated at its instance. On the evidence, the learned judge was right to find that the appellant's failure to pay the respondents' invoices was the cause of the contract coming to an abrupt end and it amounted to repudiation of the contract which the respondents accepted. Therefore, we find no merit in ground 1 of the appeal. The second ground of appeal assails the holding by the court below that the appellant was liable to pay the respondents the sum of €46,690.00 in respect of standby ti1ne. It is the submission of State Counsel Nchito that the parties agreed in express terms when and how standby time would be payable under clause 9.6.3 and it is clear that all the work suspensions were done at the instance of the respondents, so they are not entitled to standby time. J16 P583 In reply, State Counsel Sangwa argued that the court's reasoning is in accord with a well established principle of law expounded in the case of New Zealand Shipping Co Limited v Societe des Ateliers et Chantiers de France7 that " ... no one can ... take advantage of the existence of a state of things which he hirnself produced." He cited the failure to pay mobilisation fee and advance payment resulting in the respondents financing operations for November and December, 2008; and failure to pay invoices issued within fifteen days as per contract. State Counsel Sangwa also argued that the agreement was actually varied in line with article 14.5, in relation to the payment of standby time because on 28 th January, 2009 the parties executed a variation regarding invoices 1 and 2 wherein it was agreed that should the appellant fail to pay the said invoices in full by close of business on Monday, 2 nd February, 2009, the respondent would be paid associated standby time. That the appellant only paid invoice 2 on 13 th March, 2009; and invoices 18, 21 and 33 relate to standby charges arising out of interruptions of work occasioned by the appellant's failure to pay the invoices as per contract. Jl7 P584 We accept that under article 9.6.1 of the agreement, the appellant was liable to pay for standby time in situations where it gave written notice of suspension of work. That was the clear intention of the parties when they signed the contract and there is no evidence that the appellant ever suspended work during the subsistence of the agreement. However, the variation of 28 111 January, 2009 relating to payment of outstanding invoices l and 2 in full by 2 nd February, 2009 entitled the respondents to standby time if the invoices were not paid. The letter reads in part: "Your signature below confirms your agreement to the above terms and Mitchell Drilling Zambia agrees to recommence drilling on the current wells suspended once an original of this signed letter is received by us. On signing this letter, KCM also accepts that if the payment is not received in full by close of business this Monday, that all Mitchell Drilling Zambia operations will once again be suspended, and all associated standby time and cost will be accepted by KCM". Additionally, while State Counsel Nchito contended that the letter was restricted to the unpaid invoices 1 and 2; and that 1nv01ces 18, 21 and 33 were not issued with respect to suspensions of work 1n connection with the appellant's failure to pay the two invoices, in reality, DWI conceded in cross-examination that in the J18 P585 January, 2009 letter, they agreed that in case of stoppage the respondents would charge for standby time and that they were entitled to do so and he could not find any objection to the invoices in their bundle of documents. This fact was considered by the learned judge who opined that it would be a perverse of justice to give a literal interpretation of clause 9.6 in the circumstances where the respondents stopped work on account of the appellant's default in fulfilling its obligations to settle the invoices and the appellant should not be allowed to benefit from its own default. In fact, a scrutiny of the reconciliation at page 211 of the record of appeal shows that invoices 162 / 09 / 3A, 163/09/2A and 163/09/3A which are actually invoices 18, 21 and 33 relate to standby time for February and March, 2009. In these circumstances, we cannot fault the learned judge for concluding that having accepted to pay for standby time arising from the stoppage of work on account of the appellant's default; the appellant could not state that invoices for standby time were properly deducted. The finding of the lower court is supported by J18 P585 January, 2009 letter, they agreed that in case of stoppage the respondents would charge for standby time and that they were entitled to do so and he could not find any objection to the invoices in their bundle of documents. This fact was considered by the learned judge who opined that it would be a perverse of justice to give a literal interpretation of clause 9.6 in the circumstances where the respondents stopped work on account of the appellant's default in fulfilling its obligations to settle the invoices and the appellant should not be allowed to benefit from its own default. In fact, a scrutiny of the reconciliation at page 211 of the record of appeal shows that invoices 162 / 09 / 3A, 163/09/2A and 163/09/3A which are actually invoices 18, 21 and 33 relate to standby time for February and March, 2009. In these circumstances, we cannot fault the learned judge for concluding that having accepted to pay for standby ti1ne arising from the stoppage of work on account of the appellant's default; the appellant could not state that invoices for standby time were properly deducted. The finding of the lower court is supported by J19 P586 evidence and we decline to disturb the award of €46,690.000 for standby time. Ground 2 also fails for lack of merit. The third ground of appeal attacks the holding by the court below that the appellant was liable to pay the sum of €148,631.49 for works done on the KLB147 borehole. State Counsel Nchito submitted that there was a total failure of consideration on the part of the respondents to merit payment given that the respondents abandoned the borehole which occasioned loss of geological information and article 2.3 of the contract specified that core recovery was of the essence, a fact admitted by PWs 1 and 2. That it was erroneous for the court to find that the invoices regarding the drilling of the borehole were in order when no core was recovered. In reply, State Counsel Sangwa argued that the appellant is oblivious to the fact that the agreement had an applicable schedule of rates and the works done by the respondents were charged in accordance with that schedule; and PWl testified that there was no loss of geological data as every core recovered was given to the appellant for analysis; and the court found that the respondents were contracted to be paid for the amount of work done monthly. J20 P587 It is agreed that article 2.3 provided that core recovery was of the essence and this was accepted by the learned trial judge. It was only in cases such as of force majeure and or adverse drilling conditions that payment was not to be linked to core recovery. Further, article 2.3(a) required the respondents to give 100% core recovery. But it also provided the penalty for core recovery which was a drop in payment by the percentage indicated therein. In such case, the payment would depend on the measure1nent specified in article 2.3(b) which required all the boreholes to be measured jointly for the depth of the hole and core length recovered on a daily basis with the calculation of core recovery being over the entire cored section and the appellant to take delivery of the cores and samples at the drill sites. So, in normal conditions, payment for the boreholes drilled was linked to core recovery. However, there was uncontroverted evidence by PW l, which the judge believed that there was no loss of geological data as each metre of core recovered was given to the appellant who was responsible for generating data. It was also undisputed that they dug up to 1000m or that they had to intersect the ore body but had J21 P588 not done so when they abandoned the site. On his part, DWl said there was no agreement that the respondents were to be paid only upon completing the hole; they were to be paid according to the metres drilled and the decision not to pay was made by the appellant alone. The learned judge found that the respondents contracted to be paid 111 accordance with a schedule of rates agreement as provided 111 article 5.4 and they were to submit invoices to the appellant in accordance with article 5.4.2 on the fifteenth day of each month for jobs executed, and the appellant had an obligation to settle the invoices also on monthly basis within fifteen days of receipt of the same. He rejected the claim by the appellant that intersecting the ore body was of the essence of the contract. The judge also referred to clause 1 of Schedule 1 which shows that the appellant agreed to pay €45.00 per metre for reverse circulation drilling, €30.00 per metre for tricone drilling and varying escalating an1ounts every 200 metres drilled in case of diamond drilling and opined that article 5.4 does not tie payment to J22 P589 completion of the entire contract but to service rendered every month on the basis of metres drilled. We agree entirely with the judge that the deduction of invoices 24, 26, 29, and 32 in respect of KLB 147 borehole was wrong. The findings of fact were supported by the evidence and we have no basis to disturb a well reasoned and thought out conclusion. As for the argu1nent that the respondents abandoned the site before intersecting the ore body, it will suffice, that when the respondents treated the contract, as terminated, it was terminated for the future as from the moment the acceptance of the breach was communicated to the appellant, meaning the respondents were excused from further performance. For these reasons, ground 3 equally fails for lack of merit. On the fourth ground of appeal, the appellant faults the court below for holding that it was liable to pay the sum of €348,000.00 to the respondent in respect of demobilisation costs. It is the argument of State Counsel Nchito that the parties expressly agreed on the occasion warranting payment of demobilisation costs as set J23 P590 out in clause 3 of Schedule 1; and demobilisation was payable only when it was the appellant that terminated the contract. In response, State Counsel Sangwa contended that articles 9.6.3 and 11.5 of the agreement provided for additional circumstances where demobilisation was payable by the appellant and in tenns of clause 3 of Schedule 1, the pre-condition for payment of demobilisation was termination of the contract by the appellant before its completion. He argued that the agree1nent was to run from 1st August, 2008 to 31 st July, 2011 but it ended in ,June, 2009 as a result of repudiation by the appellant, so the respondents are entitled to demobilisation and denying the claim would amount to rewarding the appellant for its wrong doing. He again relied on the New Zealand Shipping Co Ltd 7 case. It is agreed yet again that under article 9.6.3, the appellant was liable to pay demobilisation fee where it terminated the contract under clause 11.5 and by clause 3 of Schedule 1, the appellant was liable where it terminated the contract before contract completion and we agree with State Counsel Nchito that J24 P591 the duty of the court is to interpret the terms of the contract under the doctrine of sanctity and not to introduce new tern1s. It is also clear that the learned judge accepted that the situation here is different from the circumstances envisaged by articles 9.6.3 and 11.5. But he considered that the contract which was for 3 years lasted for less than one year as it came to an abrupt end due to the appellant's default in paying for the services rendered which amounted to repudiation. He concluded that even if repudiation of the contract in these circumstances was not envisaged in the contract, and the contract did not run its full life, not on account of a force majeure event caused by the appellant, the latter's failure to pay the invoices was the cause of the contract coming to an abrupt end, so as the respondents had incurred costs in mobilising for the contract they assumed would run its full life, they were legitimately entitled to claim demobilisation costs in full. We cannot fault the learned judge for arriving at that conclusion because, even though the respondents were the ones that terminated the contract, the appellant was the one that repudiated the contract and the respondents accepted the J25 P592 repudiation. By repudiating the contract before contract completion, the appellant refused to perform its obligations under the contract. For this reason, we uphold the award for demobilisation costs and dismiss ground 4 of the appeal. The fifth ground 5 of appeal attacks the holding by the court below that the appellant was not entitled to deduct the sum of • €50,000 from the €100,000 mobilisation fee. To support this ground, it was submitted that only two out of four rigs had been mobilised on site as is evident from the communication between the parties dated 24 th March, 2009 at page 209 of the record of appeal. In contrast, State Counsel Sangwa contended that the appellant is ignorant of the evidence of its own witness 1n cross examination who conceded, when shown the drilling reports, that in fact four rigs were mobilised and the court explained its reasoning • in awarding the respondents the amount of€100,000. We find the appellant's argument on this ground flawed. The learned judge found that though not all the four rigs were mobilised at the same time there was incontrovertible evidence that the respondents had mobilised four rigs. And as rightly argued by State J25 P592 repudiation. By repudiating the contract before contract completion, the appellant refused to perform its obligations under the contract. For this reason, we uphold the award for demobilisation costs and dismiss ground 4 of the appeal. The fifth ground 5 of appeal attacks the holding by the court below that the appellant was not entitled to deduct the sum of €50,000 from the €100,000 mobilisation fee. To support this ground, it was submitted that only two out of four rigs had been mobilised on site as is evident from the communication between the parties dated 24 th March, 2009 at page 209 of the record of appeal. In contrast, State Counsel Sangwa contended that the appellant is ignorant of the evidence of its own witness 1n cross examination who conceded, when shown the drilling reports, that in fact four rigs were n1obilised and the court explained its reasoning in awarding the respondents the amount of€ 100,000. We find the appellant's argument on this ground flawed. The learned judge found that though not all the four rigs were mobilised at the sarne time there was incontrovertible evidence that the respondents had mobilised four rigs. And as rightly argued by State J26 P593 Counsel Sangwa, DW 1 conceded that there were four rigs altogether, and the judge said the witness confinned the drilling reports for KLB 14 7 borehole signed by both parties relating to rigs 138, 139, 162 and 163. Therefore, we find no merit in ground 5. On ground 6 the appellant faults the trial judge's holding that it was not entitled to recover the €36,004.44 for fuel expenses incurred in the drilling process from the respondents. State Counsel Nchito argued that paragraph vii of Schedule 3 allowed the appellant to recover 50% from the cost of the fuel utilised by the respondents and the daily drilling records show that they utilised fuel in excess of 2,550 litres and this evidence was not challenged, so the court's finding that there was no evidence showing the quantity of fuel used is contrary to the evidence. On his part, State Counsel Sangwa argued that the judge accepted that the parties were to equally share the cost of the diesel, but the appellant failed to adduce evidence on the cost of the fuel; and in any case, the issue is only the value of the diesel and the share to be apportioned to the respondents. But since the appellant had not proved the value of the 2,500 litres of diesel, it J27 P594 was not clear how it arrived at the sum of €36 ,304 .44 to be set off for diesel used at both Nchanga and Konkola Mines. It is clear that the appellant was authorised to recover 50% fr01n the cost of the fuel utilised by the respondents, a fact accepted by the learned judge. While we agree that the appellant did not prove how it arrived at the sum of €36,004.44, we find that the judge was wrong to dismiss the claim simply because the appellant had not adduced evidence on the cost of the fuel when the quantity was not disputed. Since the respondents concede that the issue is just the value of the fuel and the share to be apportioned to them we enter judgment for the appellant and refer the matter to the Deputy Registrar to assess the cost of the fuel used by the respondents. The cost must then be deducted fro1n the amount awarded to the respondents. Therefore, ground 6 succeeds. The seventh ground of appeal attacks the holding by the court below that the appellant was not entitled to charge liquidated damages of €4,395.00. State Counsel Nchito argued that the total metres drilled by the respondents were only 6,110.40 and it is clear the respondents did not drill according to the schedule, and thereby J28 P595 entitled the appellant to claim. liquidated damages 1n terms of article 10 of the contract. State Counsel Sangwa responded that article 10 allowed the appellant to deduct a maximum of 0.5% from the respondents' payment as liquidated damages if drilling was not achieved according to the completion schedule due to reasons not attributed to the appellant. That liquidated damages were to be recovered quarterly, but the appellant did not adduce evidence to establish in which quarter a claim for liquidated damages was made, the quantum of drilling required and the shortfall occasioned by the respondents, and the appellant could not benefit from the claim since its failure to settle invoices on time was the reason the respondents were unable to fulfil their drilling obligation. It is clear that under article 10, the quantum of drilling as per terms was the essence of the contract and the appellant was entitled to recover liquidated da1nages where failure to attain the completion schedule was not attributable to it. The respondents agreed that they did not meet the drilling specifications. J29 P596 But the appellant was in breach of contract resulting in the respondents' failure to 111eet the completion schedule and it is trite that a party cannot benefit by taking advantage of the existence of a state of things he himself produced (New Zealand Shipping Co Ltd7). The learned judge was on firm ground when he rejected the claim for liquidated damages. We find no merit in ground 7 of the appeal. The last ground of appeal faults the learned judge for not crediting the appellant the sum of €14,121.88 paid to the respondents when calculating what was due to the latter. State Counsel Sangwa conceded that this amount ought to have been deducted from the sum awarded to the respondents. Since there is no dispute that the appellant paid €14,121.88 as full and final settlement of the respondents' claim after the contract was terminated; we allow this ground of appeal as it has merit. With regard to the appeal against the award of damages, as rightly argued by State Counsel Sangwa, even though the amended notice of appeal assails the award to the respondents of damages for breach of contract to be assessed, none of the eight grounds of appeal in the 111emorandum of appeal relate to this issue; and the J30 P597 appellant has not, in its heads of argument touched on the issue. For that reason, this aspect of the appeal fails of sheer inanition. In all, we allow this appeal on grounds 6 and 8 and dismiss the rest of the grounds as they lack merit. In the circumstances, we order each party to bear own costs . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . H. CHIBOMBA SUPREME COURT JUDGE (f/>;-;) ................... -~~ .. --;. ;~: .......... . E. M. HAMAUNDU SUPREME COURT JUDGE R. M. C. KAOMA SUPREME COURT JUDGE