Maritime Freight and Forwarding Limited v Zambia Breweries Plc (APPEAL NO. 99/2017) [2018] ZMCA 631 (3 October 2018)

' IN THE COURT OF APPEAL APPEAL NO. 99/2017 HOLDEN AT LUSAKA (Civil Jurisdiction) BETWEEN: . 0 3 OCT 20!8 ----- CIVIL REG!STHY 2 MARITIME FREIGHT AND FO ·(\?~Ii_-. ED APPELLANT AND ZAMBIAN BREWERIES PLC RESPONDENT . CORAM: Chisanga JP, Chashi and Kondolo, SC, JJA This 3 rd day of October 2018 For the Appellant: E. Mwitwa of Messrs Mwenye & Mwitwa Advocates For the Respondent: A. Tembo of Messrs Tembo Ngulube JUDGMENT CHISANGA JP, delivered the Judgment of the Court Cases cited: 1. Chibwe and Chibwe (2001) ZRl 2. William Carlisle Wise vs E F. Harvey Ltd (1985) ZR 179 3. Mazoka & Other vs Mwanawasa and Others (2005) ZR 4. 5. 6. 7. A G vs Clarke (2008) ZR 38 Vol 1 Zulu vs Avondale Housing Project (1982) ZR DPP vs Ngandu and Others (1975) ZR 253 National Airports Corporation Limited vs Zimba and Konie (2000) ZR 154 8. Society of Lloyds vs Robinson (1999) 1 All ER 5419. Jl 9. Investors Compensation Scheme Limited vs West Bromwich Building Society (1998) WLR 10. Ford vs Beech (1848) 11 QB 852 at 856 11. Hadley vs Baxendale (1854) 9 Ex. 354 12. Mutale vs ZCCM (1994) 13. Freeman & Lockyer vs Buckhurst Park Properties (Mangal) Ltd (1964) 2GB 480, 503 14. Sentance vs Hawley (1863) 13 C. B. (N. S.) 458 15. Phillips vs Hom/ray and Fothergill (1871) 6 Ch App 770 16. William Irvine vs The Union Bank of Australia (1876-77) 2 Appeal Case P 366 17. Morison vs London County and Investments Bank Limited (1914) 3 KBD 356 18. Pacific Carriers Limited vs BNP Paribas (20034) HCA 35 19. Thompson vs Palmer (1933) 49 CLR 507 20. Armagas Ltd vs Mudogas SA (1986) 1 AC 717 21. Inland Revenue Commissioners vs Raphael (1935) A. C. 96 at 142 22. The Starsin (2003) lALL ER (COMM) 625 23. Total Gas Marketing Ltd vs Arco British Ltd and Others (1998) UKHL 24. James Miller & Partners Ltd vs Whitworth Street Estates (Manchester) Ltd (1970) A. C. 572. 25. Robbins vs National Trust Company (1927) AC 515, 52 26. Richards vs Cellatley L. R. 7 C. P P. 131 27. Caskill vs Skene 114 QB 664 28. Birmingham and District Land Co vs L. N. W. R. (1888) 40 Ch DP 29. Charles Rickards vs Oppenheim (1950) 1 KB 6 30. Tool Metal Manufacturing Co. Ltd vs Tungten Electric Co. Ltd (1955) 1 W. L. R. 761 J2 • Legislation referred to: 1. Order XL of the High Court Rules CAP 27 of the Laws of Zambia 2. Halsbury's Law of England Third Edition Volume 1 (1952) London Butterworth & Co (Publishers) Ltd Other works referred to: 1. Odgers Principles of Pleading and Practice in Civil Actions in the High Court of Justice 2. Black's Law Dictionary 3. Doctrine of Privity of Contract 4. Chitty on contracts 5. Edwin Peel In Treitel, The Law of Contract, Thirteenth Edition 6. Phipson on Evidence, 17th Edition 2010, Thomson Reuters (Legal) Limited P150 7. Hudson's Building and Engineering Contracts, London, Sweet and Maxwell, 1995 P 139 to 140 8. Oxford Advanced Learner's Dictionary Current English Seventh Edition Oxford University Press The appellant was plaintiff in the court below. It sought the sum of ZMW 5,173,408.20 arising from miscalculation and over deduction of the Breakages in Transit and Missings Allowance, and Double Deduction of Debit Notes for the years January 2009 to March 2012. The claims arose from a contractual relationship between the parties, in which the appellant was transporter of the respondent's beverages to specified destinations. J3 ir • The contract in issue was entered into in June 2008, and commenced on 1st July 2008. It was to subsist for a period of three years, provided that either party could terminate the agreement for good cause on giving to the other 3 (three) months written notice of its intention to do so. Under this agreement, the consigner (respondent) was to be responsible for insurance of all goods transported by the carrier from the start of loading to completion of off-loading. The carrier was however to be responsible for settlement of any excess imposed by the consignor's insurer in the event of a claim. The excess amounted to US$10,000 as at the date of the agreement. The contract was terminated by the defendant, sometime in 2012 as the parties were unable to resolve issues that had arisen in the course of the agreement. The gravamen of the plaintiffs claim in the court below was that the plaintiff had been guided by the defendant's operations manager Christopher Thole, by letter dated 17th October 2007 on how to calculate the Broken In Transit (BIT) allowance. Contrary to the plaintiffs understanding the defendant however charged the plaintiff for all the broken empties. The defendant disregarded the letter dated 17th October 2007, and introduced another formula of calculating the BIT allowance. As a result, the defendant deducted a total of ZMWl,068,093.44, unjustifiably so, and consequently destroyed the plaintiffs business. J4 The defendant also deducted a total of K723,000 from January 2010 to December 2010 without furnishing the plaintiff details of those deductions. The plaintiff prayed for a refund as a result. The plaintiff asserted that the defendant was obliged to avail debit notes for the sums deducted, in order to ascertain the sum of K332,000.00 which the defendant effected on the plaintiffs account in February 2012. Additionally the sum of ZM 96,095.75 had to be refunded, as it was wrongly deducted. The defendant had also wrongly deducted the sum of K200,000.00. The plaintiff also claimed K99,545,925, as the difference between the correct calculation and the wrong one done by the defendant. It was asserted that on account of the defendant's failure to take return trips into account in calculating the BIT and Missings allowance for the years 2010/201 l and 2011/2012, the defendant was owed the respective sums of K884,727.11 and K719,861.30. It was further claimed that for the period from January 2010 to December 2010 the sum of K855,772.73 remained outstanding as the difference between the sums paid, and the correct computation. The defendant also owed the plaintiff the sum of K 245, 047.33 as the difference in the allowance allowed and paid, and the correctly computed sum J5 ... of ZMW 17,035.72 by debit note number 1401 for February 2012. The correct sum on debit note number 1401 should have been K18,381.71 as the BIT allowance, which should have been paid to the plaintiff and would have brought the total sum payable to K35,417.43. This equally applied to the wrong deduction in the sum of K66,983.71 made from the plaintiffs payment in April 2011, instead of Kl 1,993,482, on a wrongly calculated debit note number 1501 dated 31 st March 2012. Thus, the difference in respect of the said debit note in the sum of K54,990,230 fell to be paid to the plaintiff. Wrong deductions had been made for February 2012, and April 2011 on specified debit numbers. Thus, the difference of K54,990,230 was to be paid to the plaintiff. The total amount claimed was K5173,408.2, on the foregoing averments. In defence, the defendant asserted that operations managers had authority to respond to transporter's concerns and queries. They had no authority to alter contracts. It was the defendant's position that the BIT and Missings allowance was not claimable in monetary terms, but was introduced to cushion the effects of deductions for breakages and missings in transit. The transporters were charged for breakages and missings in transit through Debit Notes. J6 ... The defendant also averred that it never intentionally gave the plaintiff a BIT allowance of 0.1 % for return loads, but that breakages and missings on empties were covered by clause 5 of the carriage contracts. The letters of 17th October 2007 and 9 th August 2008 were procured by fraud and fraudulent misrepresentation perpetuated by Christopher Thole and Misheck Chatora as against the defendant. Christopher Thole had no authority to overrule the Operations Director who signed the subsisting carriage contract which stipulated how the BIT allowance was to be calculated. The originals of the two letters were not in the defendant's records and the plaintiff had failed to produce originals for purposes of submission to a handwriting expert for scrutiny. Mr. Ezekiel Sekele had denied signing on the letter dated 17th October 2007, and asserted that the signature on it is a forgery. Roland Chileshe had no authority to write the letter dated 12th January 2011. In terms of hierarchy, only the Managing Director could overturn the Operations Director's decision. The defendant averred that during the period under dispute, the BITs allowance was calculated using two different methods being:- (a) 0.25% x castle value plus empties x 1400 cases per truck. J7 . - From 2011 to the date of settlement of the defence, the defendant had upgraded its ERP system to IBIS system and was able to print summaries for every load carried by each transporter. This resulted in changing the formula for calculating the allowance to one based on every truck moved but at the lower rate of castle, coke, mixed loads without the empties value based on the actual product carried. This more accurately reflected the commercial point of the allowance. The change in methodology was applied to all transporters. Further, that the letter purportedly written on 17th October 2007 was to be understood to mean that missings and breakages allowances were applicable to the full trip, which included the return trip loaded with empties. The defendant denied deducting the sum of Kl,068,093.44 as claimed by the plaintiff, and averred that it had advanced the plaintiff the respective sums of KS00,000, KS0,000, K250,000, KS00,000 and K250,000 on various dates, bringing the total to Kl,550,000.00. The defendant also asserted that the debit notes, trip data sheets and remittance advices were availed to the plaintiff monthly. It was averred that the plaintiff did not protest or object to the formula used by . the defendant to calculate the BITs and Missings allowance throughout the subsistence of the contract. The plaintiff therefore acquiesced to the non implementation of the purported new terms introduced by the letter of 17th J8 . . October as it did not make any business sense. The actual quantity of 1470 case was used and the change effected though not in writing. The defendant denied deducting K529,000, or K2,000,000 on alleged return loads. It was averred that the claim of K723,000 which was denied, overlapped with another claim for a period which was replicated in part, for the months January, February and March 2010. Further, that the deductions of K723,000 occurred in the period January 2010 to December 2010 and relate to the 2009 missings and breakages in excess of the BIT allowance, which had not been deducted on time. The deduction of K200,000 in February 2011 related to recovery of an advance the plaintiff got from the defendant in December 2010/January 2011 to buy trucks. The defendant also denied the claims for the difference of K855,772, K245,047.33, the sum of K18,381,713, and K54,990,230, and averred that the deductions related to recovery of advances given to the plaintiff. The defendant also denied the sum of K266,000, as not having even been mentioned in the relevant paragraph. Upon hearing the matter, the trial judge held that Christopher Thole had no authority to alter contractual terms. That the BIT and Missings allowance was introduced to cushion transporters. That the letter of 17th October 2007 written by Christopher Thole was inapplicable. The lower court's further findings were J9 . . that the BIT and Missings allowances were not claimable in monetary terms . That clause 6.2 of the contract was ambiguous. The court applied a commercial sense interpretation, relying on the case of Society of Lloyds vs Robinson, opcit At the hearing, the learned advocates placed reliance on their respective heads of argument. They also submitted orally to stress some arguments, which we will not restate, as they are adequately stated in the heads of argument. We note that the appellant has filed lengthy heads of argument. We will endeavor to state the gist only, as we see no need to reproduce every sentence in the heads of argument. On ground 1, the argument advanced is that the court's holding that the respondent objected to the evidence in other claims was erroneous, as no objection was made to the cross examination of DW5 on the admitted recoveries made from the appellant's invoices as pleaded. The court itself allowed the appellant's advocate to cross examine the witness on the basis of deductions. The finding is not supported by the record. Chibwe and Chibwe 1 is recoursed for this argument. The respondent's opposing argument is that the court did not misdirect itself in holding as it did. The court adjudicates on pleaded matters. The respondent JlO . . may have · raised certain claims from the evidence it adduced in cross examination, but this did not amount to pleadings . The respondent did object to the leading of evidence on unpleaded matters. Reliance is placed on Odgers Principles of Pleading and Practice in Civil Actions in the High Court of Justice, Black's Law Dictionary, William Carlisle Wise vs E F. Harvey Ltd2 , and Mazoka & 2 Others vs Mwanawasa and Others3. Grounds 2, and 14 have been argued together. The appellant contends that the court below misdirected itself in law and fact by refusing to consider, thus rejecting the appellant's claims for the respective sums of ZMW 1,000,000, ZMW 610,087.66 and ZMW 100,000 on the basis that these sums were unpleaded, despite the fact that these sums were let into evidence by the respondent without any proof or justification as to why they were deducted from the appellant's invoices. It is further contended that it was a misdirection to hold that the appellant was not entitled to a refund of monies wrongly deducted from its invoices for alleged advances, when the appellant was so entitled, and proved its claims in relation to the unjustified deductions. The arguments in relation to these two grounds are that to the plaintiff's averment in paragraph 7 of the amended statement of claim that the respondent deducted a total sum of ZMW 1,068.093.44 from the appellant's monies on account of the wrong computation of the BIT allowance, the respondent's defence was that it deducted a total sum of Kl, 550,000 between Jl 1 January 2009 and December 2009 in recovery of advances given to the appellant. The appellant conceded having obtained K500,000, as well as K50,000 . These admissions came to K550,000, leaving a balance of Kl,000,000 made up of K250,000, K500,000 and K250,000 listed in paragraphs 19(c), (d) and (e) of the defence. The respondent was obliged to prove how and when the advances were made, and the appellant at liberty to canvass a refund . The respective sums of K610,087.66, Kl00,000 and K150,000 were admitted by DW5, Mrs. Degroot, as having been deducted in 2009 from the appellant's invoices. The appellant admitted owing the sum of K150,000 . The respondent failed to justify the deduction of K610,087.66, and Kl00,000, as it failed to prove having advanced the said sums. It was further argued that regarding the sum of K393,005.51, DW5 failed to state what portion of that amount was an advance. The court erred in describing the said sum as an advance. It was contended that it was an error to find that PWl asked for advances verbally, as there was no supporting evidence for this finding. It was a misdirection for the court to accept that the amounts listed at page J43 of the judgment being K393,0051.51, K200,000.00, K200,000.00,K150,000.00, Kl00,000,00 and K610,087.66 were cheque payments because as at 2009, no cheque payment could be made for a sum exceeding Kl00,000.00 in this jurisdiction. It was an error not to order a refund of these amounts because the amounts listed in paragraph 19 of the J12 Defence and those listed by the court are different. Section 13 of the High Court Act could have been recoursed by the court or it could have relied on the claim for any other relief. Therefore, the respondent should refund Kl,000,000, K610,087.66 and Kl,000,000.00. Mazoka & 2 Others vs Mwanawasa and Others3 and AG vs Clarke4 were relied on for these arguments. It was contended that the respondent should also pay K855,775 .73, K35,417.43 and K54,990.23 as claimed in paragraphs 20-23 of the amended statement of claim, as these amounts were deducted on account of the respondent's wrong calculation of the missings and breakages in transit allowance. The respondent's arguments in opposing those advanced by the appellant on grounds 2 and 14 were that as in the case of ground 1, these amounts were not pleaded. The court was therefore not obliged to deal with them. The respondent may have alluded to the said sums but these were not pleaded by either party. That it is incorrect to assert, as done by the appellant, that the said sums were pleaded in . the amended statement of claim, and the respondent's amended defence. The sums that were alluded to in the pleadings are not the same sums the appellant is claiming were pleaded. J13 ... The amounts were justifiable deductions for advances the appellant received from the respondent in 2009. As the appellant did not see it fit to specifically plead these sums, the court rightly refused to deal with them. It was contended that the granting of relief under section 13 of the High Court Act refers to a situation where a party requests for relief in the pleading. The appellants cannot rely on apparent entitlements not specifically pleaded. The court did not attach any weight at all to the unpleaded issues and the evidence purporting to prove them. In relation to ground 14, it was submitted that the court was on firm ground in holding that there were no unjustifiable deductions in relation to the appellant as the deductions were in relation to the advances from the respondent to the appellant. Reference was made to page 54 of the Record where the trial judge referred to a statement on which advances were indicated as having been made to the appellant, and concluded that advances were requested for verbally, as admitted by the appellant. Moreover, the appellant did not produce any documentary evidence before the trial court of the advances it had requested from the respondent to prove that the amounts deducted were erroneous or to rebut the presumption that they were given. It was further submitted that what was important was the fact of payment of the monies in issue, never mind the fact that cheque payments could not be made in Zambia in the stated amounts. J14 -: On ground 3, the appellant's argument is that the court below misdirected itself on the subject of the letter dated 22 nd October 2008. The letter was meant to demonstrate that Christopher Thole did in fact and effect amend contractual terms, which affected the appellant and the respondent, as well as other transporters. The letter was not intended to address the issue whether the BIT allowance was claimable on both fulls and empties. Moreover, the author of the forensic report did not testify in the court below to speak to the report. The report failed to disprove the appellant's evidence that the letter of 22 nd October 2008 existed. The holding that the letter was produced to demonstrate that DW5 was aware that the BIT allowance was applicable to both fulls and empties, and that the letter could not be relied upon, on account of the forensic report should be set aside. The respondent's opposing argument on this ground is that the letter related to transportation rates and not the BIT allowance. However, the court's finding on this aspect was beside the point, as the letter was found to be a forgery as stated in the forensic report. The finding of forgery cast serious questions on the authenticity of all the documents made by PWl in favour of the appellant, and that finding should be upheld, as per Zulu vs Avondale Housing Project5 and DPP vs Ngandu and Others6. J15 Regarding ground 4, the appellant's contentions were that the finding that Christopher Thole had no authority to amend contractual terms flew in the teeth of the uncontroverted evidence demonstrating that the said individual and some other managers wrote letters that amended the transportation contracts between the parties and some of these letters were accepted or implemented. Paragraph 24 of the amended defence, in response to paragraph 10 of the statement of claim confirmed this. The authenticity of the letter dated 7 th January 2009 was not questioned by the defendant. The letters dated 17th October 2007 and 7 th January 2009 altered clause 6 of the contract dated 24 th September 2007. Clause 6 of the contract did not provide that the BIT allowance was applicable to both empties and fulls . This was contained in the letter of 17th October 2007. Christopher Thole's authority is also revealed by his letter of 14th May 2008 in which he amended Anthony Grendon's letter of 11 th October 2007, increasing the insurance excess to US $10,000, which sum was included in all the contracts of the three contractors, and signed by Anthony Grendon. Furthermore, Christopher Thole was named among the contact persons in the letter dated 28the June, 2007 signed by Ezekiel Sekele. Therefore, Christopher Thole was in order to write the letter of 17th October 2007. The appellant pointed out that Anthony Grendon wrote a letter dated 28th February 2008, to all transporters, informing them that the respondent would J16 terminate the contracts within a month. Shepard Siamalambo, as Acting Distribution Manager wrote, informing the transporters that the effective date of termination would be 31 st May 2008, overruling Anthony Grendon's letter. Subsequently, Christopher Thole wrote a letter dated 16th April 2008, requesting transporters to submit proposals. This was not questioned by the respondent, and the letter of 10th March 2008 was implemented. It was also argued that Christopher Thole and Pierre Krige as Distribution Manager and Distribution Services Manager respectively wrote letters dated 9 th August 2008 and 1st July 2010 respectively, to change the rates. Therefore, the argument proceeded, the finding that amendments to contracts were effected by the operations manager was clearly at variance with the evidence on record. Moreover, Christopher Thole's authority was not indicated. Therefore, everything · Christopher Thole did was capable of creating or altering contractual terms between the parties, and the lower court should have so held. Reliance was placed on Zimba and Konie7 . The respondent's reaction to the arguments on Ground 4 was that the finding of fact made by the court below, that Mr. Thole did not have powers to alter contractual terms could not be faulted. The said individual admitted in cross examination that he had no authority to alter contracts. This was in addition to the court's finding regarding the forensic report. Moreover, the transporters never received the letters increasing the BIT allowance. The transporters also J17 testified as to how limited Mr. Thole's authority in relation to contractual maters was. The case of National Airports Corporation Limited vs Zimba and Konie7 was according to the respondent, distinguishable in that the appellant could not strictly be termed as an outsider with no knowledge of the respondent's dealings. It was well aware of the limited authority, Mr. Thole, who was operations manager possessed, as were other transporters. The appellant was not an innocent third party, falling to be protected at law, as they were aware of the want of authority. Turning to Grounds 5, 7 and 10, these were argued together by the appellant. It was submitted on these grounds that the contract did not define what a load was, and made no stipulation that an empties load was excluded from the BIT allowance. The court was required to confine itself to the wording of the contract. There was no justification for the court to read clause 6 or clause 5.2 as meaning that BIT allowance only applied to a "fulls load", or that absurdity arose. It was contended that the contents of the letter of 17th October 201 7 was by and large implemented by the respondents. Even Petandis contract stated that BIT allowance included empties. The defendant also pleaded that empties were included. DW5 affirmed the formula, saying the figure 1,400 was a mistake, as it should have read 1,470. J18 Furthermore, Roland Chileshe wrote a letter dated 12th January 2011 in which ,,, - he stated that BIT allowance would be recomputed in accordance with the letter of 17th October 2017, confirming the respondent's knowledge and acceptance of the letter. Additionally, the contract did not state that the BIT allowance was introduced to cushion transporters against the losses because the contract did not so state. In opposing ground 5, it was argued that the trial court did not err when it found that the BIT allowance only applied to fulls loads as there was no proper evidence before the court to the contrary. The contract between the appellant and respondent did not provide for such an allowance in relation to the appellant. The presence of such a clause in the contract of Petand Transport was irrelevant to the matter. This is because these contracts were individually negotiated. The Doctrine of Privity of Contract would prevent the appellant from relying on the contract between another transporter and the respondent. The lower court's holding that the letter dated 22nd October 2008 could not be relied upon as DW5's alleged signature was a forgery and that clause 5.2 provided for return of containers and bottles found to be missing were sustainable. It was argued that the evidence that was produced to support the claim that the BIT allowance applied to empties loads was not reliable. In relation to ground 7, it was the respondent's contention that the court below was on firm ground in finding that the BIT allowance was introduced to J19 ... cushion the transporters against losses. Support for this contention was said to be the letter at page 75 of the Record of Appeal in which the respondent decried the levels of breakages and missings and stated that missings and shortages would attract an extrapolated surcharge of Kl ,000 per case. It was argued that PWl admitted that before the BIT allowance was introduced, transporters were penalized for missings, shortages and breakages. Thus, the inference made by the court was reasonable. With regard to ground 10, it was argued that the respondent did not state that empties had a Missings and BIT allowance, nor did the appellant's statement of claim state that the BIT allowance was applicable to empties. Moving to grounds 6, 8, 9 and 11, the appellant argued that the court below erred in saying that BIT allowance was not claimable , and that DW 1 even refunded it. This was an error, as what DWl refunded related to double charging for return trips and not the BIT allowance. It was further argued that it was an error to state that clause 6.2 of the contract was ambiguous without stating what the ambiguity was. The word 'claimable' . it was argued, should have been given a literal meaning. The respondent admitted, in paragraphs 15 and 16 of the 3 rd amended defence, that BIT allowance was payable, in admitting the sum of K255, 569.74 . Even DW2 said he was called to go and collect the BIT allowance. The respondent's J20 .. employees knew that the allowance was payable. If clause 6 .2 was ambiguous, the court should have applied the contra proforentum rule, and not the commercial common sense interpretation of contracts in accordance with the Indo Zambia Bank case which binds this court and not the Society of Lloyds vs Robinson8 case, which has no binding effect on the court. Furthermore, the Sales and Distribution Director clearly stated that the allowance was paid to transporters in his letter of 24th June 2011. DW3 's evidence was crucial in resolving the question whether the allowance was payable to transporters. In support of the trial court's holding, the respondent argued that it was right for the court to assume that the charge DW 1 talked about included the BIT allowance, as DWl stated that the refund was in relation to the charge for the transportation of empties to which BIT allowance did not apply. Turning to ground 8 , it was submitted that clause 6.7 of the contract was ambiguous. Despite the ambiguity, the transporters knew what the phrase meant. It never meant remuneration in monetary terms. Even the appellant never issued invoices for this allowance until its contract was terminated. Investors Compensation Scheme Limited vs West Bronwich Building Society9 was referred to in this connection. J21 On ground 9, it was argued that the court was on firm ground in applying the commercial common sense interpretation of contracts instead of the contra proferentum rule. This is because the meaning attached to the clause was known by both parties. Reliance was placed on Chitty on Contracts in relation to interpretation of contracts, and to Ford vs Beech10 . According to counsel, what was cardinal was that the parties knew the meaning of the phrase, and not whether or not the phrase was ambiguous. Even the conduct of the parties prior to the suit reveals that in the minds of both parties, the BIT allowance was not a profit. Thus, in regard to Ground 11, it was concluded that the BIT allowance was not payable in monetary terms. Turning to ground 13, it was argued on the appellant's behalf that the court below mistook the sum of K135,000 with a similar amount appearing in paragraph 15 of the appellant's amended statement of claim. The amount claimed was ZMW 96,095.73, and not K135 ,000 .00. There was no claim relating to the sum of K135,000.00 in the Consent Partial Mediation Settlement Order, Nor did the said Order relate to CR63 or invoice number 287, which were all referred to in paragraph 15 of the appellant's amended statement of claim. Although the draft statement of claim referred to the disputed sum of K135,000.00, the actual amendment to paragraph 18 of the amended statement of claim made no reference to the said sum, but to the sum of K99,545,925 and K200,000. There was therefore no claim for K135,000.00. The issues in paragraph 18 of the amended statement claim made no reference J22 ... to the said sum, but to the sum of K99,545,925 and K200,000. These remained unresolved. The respondent's argument on this ground was that the appellant itself admitted that this sum was settled at mediation in its affidavit in reply to the affidavit in opposition to summons for leave to amend pleadings. Therefore, the appellant could not now claim that the court misdirected itself when it was evident and known by both parties that the said sum had been resolved at mediation. On ground 15, the appellant's submission was that the unjustified colossal deductions and miscalculation of the BIT allowance adversely affected the appellant's business operations. The failure to settle the CEEC loan was attributable to the Respondent's conduct and breach of the contract. The appellants complained in the letter dated 9 th December 2010, about the effect of the deductions. Reference was made to originating process issued by the Citizens Economic Empowerment Commission against the appellant. The opposmg argument on this ground was that the deductions were not unjustified. Further, a claimant was only entitled to damages that would be reasonably foreseeable, which was not the case here, even assuming the J23 .. appellant's claims were proved. Reference was made to Hadley vs Baxendale11 . The respondent did not have notice of the asserted fact. Turning to ground 16, the appellant contended that it should not have been ordered to bear its own costs, as it would have succeeded, had the court properly directed itself. Additionally, the respondent admitted owing the sum of K255,569.74 but did not pay the said sum into court. The trial court awarded the appellant some claimed amounts and should have awarded the appellant costs. The opposing argument is that as the court ruled in favour of both parties in relation to certain claims, it was only right that each party bears its own costs. Recourse was made to Mutale vs ZCCM12, as well as Order XL of the High Court Rules CAP 27 of the Laws of Zambia. Out of a claim of K9,000,000, the appellant only succeeded in the sum of K2,000,000. The court's discretion was properly exercised. We have given due consideration to the issues arising in this appeal. They were as formulated by the learned trial judge, and as recast by learned counsel for the appellant. In the main, they are: 1. Whether Christopher Thole, operations manager in the respondent company, had authority to alter or amend the contractual terms of the agreement between the parties. J24 . . 2. Whether on the proper construction of the contract, the Missings and Breakages in Transit allowance was applicable to both fulls and empties load trips. 3. What formula was applicable in determining the allowance, and whether it was claimable by the appellant in monetary terms. We will not deal with the grounds as argued, but will determine the arguments in the order we consider convenient. We will begin with Ground 4. This ground, attacks the trial judge's finding that Christopher Thole had no authority to amend contractual terms. The arguments advanced on the appellant's behalf indicate that reliance 1s placed on ostensible or apparent authority. The appellant contends, in effect that the said individual was held out as having authority to alter contractual terms. We will begin by adverting to the contract signed on 24th September 2007. The Missing and Breakage in Transit allowance was introduced by clause 6.1. It reads as follows: "6.1 The Missing and Breakage in Transit Allowance (BIT) of 0.1 % comes into effect. e.g. for a load of 1500 cases, the calculation is as follows 1500x0.1% = 1.5 cases. This allowance is claimable as a cumulative figure. The carrier is not liable for the loading/off-loading breakages at the Distributor where the activity is not carried out by the carrier. 6.2 6.3 6.4 J25 Less than a month later, Christopher Thole, then Operations Manager, wrote a letter dated 17th October 2007 to the appellant, stating that the allowance was applicable to both empties and fulls , and would be based on the value of a named product. We will refer to the letter in detail later. It is a settled principle that if a person represents to a third party, by words or conduct, that another person is reposed with authority to act on his behalf, he may be bound by the acts of that other person as if he had actually authorised those acts. See Freeman & Lockyer vs Buckhurst Park Properties (Mangal) Ltd13 . This doctrine will apply, inter alia, for our purposes, to situations where: 1. A person allows another who is not his agent to appear as though he was his agent. 2 . A principal allows his agent to appear to have more authority than he actually has. Thus, a representation must be made by words or conduct. It may be implied from acts of a general nature, such as putting the agent in a position that carries particular authority. It must be made by the principal, or someone else authorized in accordance with the law of agency to act for him. The affected party must act on the representation. A principal can validate the acts of his purported agent through ratification. The learned authors of Halsbury's Law of England Third Edition Volume 1 J26 (1952) London Butterworth & Co (Publishers) Ltd state the law, m paragraph 414, as being that ratification of an act by an agent must be evidenced either by clear adoptive acts or acquiescence equivalent thereto. The act or acts of adoption or acquiescence must be accompanied by full knowledge of all the essential facts and must relate to a transaction to which effect can be given. The said authors proceed to state in paragraph 419 that if the act alleged to be ratified is a fraudulent act, willful knowledge and unequivocal adoption thereafter must be proved, or the circumstances of the alleged ratification must be such as to warrant the clear inference that the principal was adopting the agent's acts whatever they were and however culpable. It is further stated that to constitute a binding adoption or ratification of acts done without previous authority, the acts must have been done for and in the name of the supposed principal, and secondly, full knowledge of them, and unequivocal adoption after knowledge must be proved or else, the circumstances must warrant the clear inference that the principal was adopting the acts of his supposed agent whatever their nature or culpability. The learned authors further state that in cases of ratification by acquiescence, the acquiescence must be in the particular fact and be incapable of referring to another state of facts. Acquiescence is stronger evidence of ratification where J27 the relationship of principal and agent previously existed between the parties, and the act to be ratified was rather one in excess of the agent's authority than one which was totally unauthorized . See Sentance vs Hawley14. Ratification can be effected by an agent, subject to the normal principles of authority. The agent who ratifies requires only authority to ratify, not authority to have performed the act ratified. The authority may in appropriate cases be apparent. See Bowstead & Reynolds on Agency Nineteenth Edition Sweet and Maxwell, London Reuters 2010 P 87. In Philips vs Homfray and Fothergill vs Philips15. A and B were tenants in common. A, without any authority from B, contracted for the sale of the estate. B, on being informed of it, objected, and said the price was too low, but a mortgagee threatened to sell the estate under his power unless this sale proceeded. B allowed the matter to go on, and gave no notice to the purchaser that he dissented; an abstract was delivered and negotiations as to title went on for about three years. It was stated that it was too late for B to object that the agreement was entered into without his authority. The effect of ratification is that the principal is obligated to perform the contract made by the agent in its entirety. It should be borne in mind that the third party's reliance on the representation need not have been to his detriment. J28 -. William Irvine vs The Union Bank of Australia16, illustrates how the principle of ratification operates. In that case, the powers of the directors to borrow and mortgage were in issue. The acts of the directors were done in excess of authority. The House of Lords held, inter alia, that the ratification of the report of 29 th October 1868, did not authorize the directors to obtain letter of credit No 153 in September 1869 or to borrow £5000 thereon in February 1871. It will be seen there that ratification of one previous act had no effect on later different unathorised acts by an agent. Morison vs London County and Investments Bank Limited17 is equally instructive. A had authority to draw and sign cheques for the purposes of the plaintiffs business. However, he paid in cheques so signed, for his own purposes and in fraud of the plaintiff, during a number of years, to his own account with the defendants, who in good faith and without objection by the plaintiff, collected them in ordinary course and placed the proceeds to A's Credit. The plaintiff sued the defendants for the amount of the cheques as damages for conversion, or alternatively, as money had and received. It was held that in regard to crossed cheques collected after the last year or two, the defendants, having during one or two years collected cheques for A, J29 without any protest from the plaintiff, were justified in assuming that A was acting within his authority and were protected by Section 82 of the Bills of Exchange Act 1882, as having acted without negligence. It was also held upon the facts, that in regard to cheques collected during the first year or two the defendants were not liable because the plaintiff had subsequently, either himself or though his accountants, ratified the acts of A. The accountants must be taken to have been aware, and these were persons to whom the plaintiff had entrusted the matter. Therefore the plaintiff must be taken to have ratified Abbot's transactions . The court stated that such a sufficient time had elapsed during which the customer had received back his passbook and his cheques and had raised no question as to the validity of the cheques, so that the defendants were entitled to assume that there was no cause for suspicion or inquiry. In Pacific Carriers Limited vs BNP Paribas18, the High Court of Australia, the highest appellate court in Australia, had occasion to consider the question whether an agent had authority to bind the bank. In that case, Ms Dhiri signed a letter of indemnity on behalf of BNP and affixed BNP's stamp. She was Manager of the Documentary Credit Department Supervising the day to day handling of import/ export collections, and the staff J30 of the Documentary Credit Department. NEAT dealt with her in relation to the whole transaction, including Pacific's request for letter of indemnity. BNP's Sydney office was of a relatively modest size and there were only five people, including Ms Dhiri, in the Documentary Credit Department. The stamp was one that was used for the purpose of letters of credit. The evidence showed that the issuing of indemnities and guarantees by BNP in Sydney was the function of the Guarantee Loan Department, not the Documentary Credit Department. Guarantees and indemnities were to be signed under Power of Attorney. An internal bank instruction, provided also to agents and correspondents, dealt with authorization to sign documents. All commercial Bills of Exchange and Certificates of deposit were to be signed by two persons one of whom had to be an "A" signatory. Other correspondence or documents to bind the bank had to bear two signatories. Ms Dhiri was an ordinary signatory, not an "A" signatory. The trial judge, Hunter J found that Ms Dhiri did not have authority to bind the bank to a guarantee or indemnity, and this finding was not contested on appeal to the High Court of Australia. The High Court of Australia observed that the absence of any practice within BNP for the guidance or instruction of Ms Dhiri as to communicating to the addressee of a letter of indemnity that the bank's signature in the document J31 was only for the purpose of verifying the signature that had been adopted by Royal's banker, was part of the explanation of Ms Dhiri's conduct. There was no established procedure for qualifying or limiting the terms upon which the bank signed; Ms Dhiri was left to her own devices and she signed and stamped the documents in an unqualified form. The court observed that on the facts found by Hunter J, there was no question of fraud on the part of Ms Dhiri and there was nothing to put Pacific on notice or enquiry as to her lack of actual authority to bind the bank. The court noted that the unusual feature of the case was that Ms Dhiri had authority to sign the documents in one capacity but not in another. There was also no suggestion that there was anything in the public documents of BNP inconsistent with the possibility that Ms Dhiri might have had actual authority to bind the bank. The court referred to its decision in which it had applied Freeman & Lockyer vs Buckhurst Park Properties (Mangal) Ltd13 and restated the applicable principles as follows: "Where an officer is held out by a company as having authority and the third party relies on that apparent authority, and there is nothing in the Company's Constitution to the contrary, the Company is bound by its representation of authority." The court went on to state that the representation, when acted upon by the Contractor by entering into a contract with the agent operates as an estoppel, J32 preventing the principal from asserting that he is not bound by the contract. It is not enough that the representation should come from the officer alone. Whether the representation is general or related specifically to the particular transaction, it must come from the principal, the company. In many cases the representational conduct commonly takes the form of the setting up of an organisational structure consistent with the company's constitution. That structure presents to outsiders a complex of appearances as to authority. The assurance with which outsiders deal with a company is more often than not, based, not upon inquiry, or positive statement, but upon an assumption that company officers have the authority that people in their respective positions would ordinarily be expected to have. In the ordinary case however, it is necessary, in order to decide whether there has been a holding out by a principal, to consider the principal's conduct as a whole. (Emphasis ours) The court referred to Thompson vs Palmer19 where Dixon J discussed the object of estoppel in pais. It then proceeded to state that within a commercial enterprise, such as a bank, there will normally be internal lines of authority, and procedures, designed to ensure that, when documents issue to third parties, appearances are reliable. Such an enterprise might induce or assist an assumption, not only by the representation conveyed by its organizational structure, and lines of communication with third parties, but also by a failure to establish internal procedures J33 designed to protest itself, and people who deal with it in good faith, from unauthorised conduct. [Emphasis ours] The court concluded that issuing a letter of indemnity which bound the bank (a bank endorsed absent bills of lading indemnity) was a transaction forming part of the ordinary course of business of a bank providing documentary credits in connection with international sale of goods transactions . The letters of indemnity in question were sought from and provided by, the employee of the bank whom the bank described as the manager of the Documentary Credit department. Pacific's reliance upon the letters of indemnity was based upon their form and contents. It was observed that the organisational structure of BNP in Sydney at the time was such that Ms Dhiri was the bank officer to whom Pacific's request, would be, and was communicated by NEAT. She was the person who dealt with the request and who communicated BNP's response to Pacific. That response, involving her signature on the letters of indemnity and fixing the bank's stamp to them would signify to a reasonable third party, and signified to Pacific, agreement to what was requested. The stamp was not BNP's common seal, but placing it on a commercial document which named the bank as a party strongly enhanced the appearance that the document was signed on behalf of BNP. J34 Ms Dhiri was given the stamp without any instruction on how she should use it. She was placed in a position to sign and stamp the documents and sent them to NEAT and Pacific, but without any internal check upon their final form, and in particular, without any qualification or limitation of the capacity in which the bank was participating in the transaction. The assumption made by Pacific, found by the trial judge to have been reasonable, upon which Pacific acted to its detriment, was induced and assisted by the conduct of BNP in placing Ms Dhiri in a position which equipped her to deal with the letters of indemnity as requested by Pacific. It would be unjust to permit BNP to depart from the assumption. [Emphasis ours] Turning to the instant case, it is rendered clear by the agreement signed by the appellant and the respondent that the person duly authorised to execute contracts on behalf of the appellant was Anthony Grendon the Operations Director. On top of the 2nd and 3 rd contracts were these words: Memorandum of Agreement for Carriage Entered into by and between ZAMBIAN BREWERIES GROUP (herein represented by Anthony Grendon in his capacity as Operations Director duly authorised) (herein ref erred to as the Consignor) MARITIME FREIGHT AND TRANSPORT AND (herein represented by Misheck Chatora in his capacity as Managing Director duly authorised) (hereinafter ref erred to as ''the carrier") J35 This wording revealed to Maritime at the earliest, that it was the Operations Director who had authority, as duly authorised, to commit the respondent to contractual terms. The second contract, which was for a year, was signed on the 24th September 2007 and was to run from the 1st October 2007. The third contract was signed in June 2008, for a term of three years. It will be noticed that initially, the provision relating to the renewal of the contract for a further period of three years was omitted. The Operations Director, Anthony Grendon, wrote to the Director of the appellant company, on 16th June, 2008, stating that clause 10 of the contract should be amended by stating that upon expiration of the contract, it would be renewed automatically for a further period of three years under the terms of the current contract provided the consignor did not raise any material concerns or reservations regarding the contract 90 days before expiry of the contract. Apart from the indication in the two contracts that the Operations Director was duly authorized to enter into the agreements on the respondent's behalf, no other communication was made to the appellant by the respondent that Christopher Thole had authority to enter into agreements on behalf of the respondent. It must be borne in mind that a purported agent cannot, himself state to the third party that he is agent of a principal. In Armagas Ltd vs Mudogas20, it was held by the House of Lords that notwithstanding M having been appointed by the defendants as Vice President J36 (transportation) and Chartering Manager, he was known not to have any general authority to enter into a three year charter party and he could not, in the absence of any representation by the defendant as to his authority, reasonably be believed to have specific authority to notify the other contracting party that the defendant's consent had been obtained, and thereafter, to complete the agreement. It was further held that although an employer whose servant, having made a fraudulent representation which has caused loss to an innocent party contracting with him, could be liable to bear the loss by reason of having by words or conduct induced the innocent to believe that the servant was acting in the course .of the employer's business, such circumstances did not exist where such belief although present, had been brought about through misguided reliance on the servant himself, when the servant was not authorized to do what he was purporting to do, when what he was purporting to do was not within the class of acts that an employee in his position was usually authorized to do, and when the employer had done nothing to represent that he was authorized to do it, and that, accordingly the defendants were not vicariously liable for M's deceit. [Italics ours for emphasis]. Drawing on these persuasive authorities, it is settled that in the absence of express indication by the respondent that Christopher Thole was duly authorized to enter into contractual agreement with the appellant, the J37 appellant could not just assume that this was so, from Christopher Thole's mere say-so. In fact Christopher Thole testified that he had no authority to alter contractual terms, except those in his area of operation. Again, whether he could alter terms within his area of operation fell to be determined on the evidence before the trial judge. On 28th June 2007, the Acting Operations Director, E. Sekele, wrote a letter to the appellant. Of note in that letter are the following paragraphs. Contact persons at Zambian Breweries PLC. The only authorized contact personnel at Zambian Breweries PLC and its subsidiaries in respect with your concerns, queries, operations are the following: Operations Manager - North & South Operations Director Finance Director Managing Director Plant Managers - Kitwe and Ndola plants in addition to the ones indicated above. We have observed that some of our Transporters, staff members have developed unusual contacts with staff who are not authorised to deal with transporter issues, notably being our employees in the Warehouse, Distribution and Planning Sections. Kindly note that for the purposes of mutual business relationship, we seek to uphold transparency and professionalism and hence your dealing with the right members of staff at Zambian Breweries Plc and its subsidiaries will be highly appreciated." As stated in the letter, the named persons were to be contacted with respect to concerns, queries and operations. We note that the list included the Operations Director who was duly authorized to commit the respondent to contractual terms . That alone however, could not be taken as an indication that all the named individuals had authority to alter contractual terms. The representation J38 made by the respondent in setting out the named persons was that those individuals . were duly authorised to deal with issues falling within their respective responsibilities. The argument that the respondent did not state what Christopher Thole could, and could not do does not impress us as giving him the purported authority to alter contractual terms. This is because the letter clearly spelt out what issues fell to be addressed by persons in the stated positions, and did not extend to alteration of contractual terms. In our view, the question whether Christopher Thole could bind the respondent to contractual terms has to be sought for in the realm of apparent or ostensible authority. This authority, as earlier stated, stems from representation or ratification. On the evidence as led before the trial court, we are unable to discern express authority on Christopher Thole's part. Did he then have apparent authority? Did the respondent conduct itself in such a way as to represent to the appellant that Christopher Thole had authority to alter contractual terms, so as to be estopped from resiling from purported alterations of contractual terms by the said individual? We have combed through the evidence, but have found no proof of representation through the conduct or words of the respondent that would give rise to the conclusion that Christopher Thole had apparent authority to alter contractual terms on the respondent's behalf. J39 The appellant having had notice that it was the operations Director who was duly authorized to enter into a carriage agreement on the respondent's behalf, it should have been put on its enquiry when Christopher Thole wrote the letter of 17th October 2007. The relevant paragraph of the said letter for present purposes is the following: "Further, we also wish to advise that the missings and breakages allowances of 0.1% as stated in the contract will apply to all cases (fulls and empties) carried on your truck. This allowance will be based on a 1500 case load of castle larger as the standard and its price per case at any given time irregardless of the product being transported nor the size of trailer used i.e. semi or inter-link. Please note that the above figures have been arrived at after an exhaustive sampling of fulls and empties coming into our warehouse. If you have any queries regarding this matter please do not hesitate to contact any of the authorized contact personnel or the under signed for clarification. We look forward to continued good relations with your company. Yours faithfully ZAMBIAN BREWERIES GROUP CHRISTOPHER THOLE OPERATIONS MANAGER CC Operations Director Operations Manager - North Management Accountant Warehouse Manager Supervisor Site Control" It is noteworthy that on being put on enquiry, the appellant would have noticed that the letter was copied to the Operations Director, reposed with authority to alter contractual terms. If he had had sight of the letter, and acquiesced in its contents, it would have been said the respondent had ratified the contents of the letter, as the operations Director had authority to enter into contracts, and J40 alter its terms, and his knowledge of the purported alteration would have been imputed to his employer, Zambian Breweries. However, the uncontroverted evidence of Ezekiel Sekele, who was Operations Director at the time was that he never saw this letter, nor was evidence led to prove that he received it. Therefore, it cannot be said that the respondent, through its Operations Director, ratified the contents of Christopher Thole's letter, on how the Missings and Breakages in Transit were to be computed. Be it remembered that the onus to prove acquiescence or ratification rests on the appellant as he asserts the affirmative. Equally noteworthy is that in paragraph 6 of the amended statement of claim, the plaintiff (appellant) stated that the defendant (respondent) was not taking into account all the loads carried in a month and the return loads of empties in calculating the BIT and Missings allowance. This averment means that the formula in the letter of 17th October 2007 was not applied when calculating the appellant's allowance. Ratification of the letter in that respect was therefore not proved. We should state here that how the respondent dealt with other transporters is of no assistance to the appellant, as it had its own contract with the respondent. The doctrine of Privity of Contract stands in the appellant's way in this respect. J41 In its defence, the defendant averred that the BITs allowance was calculated using two different methods being (a) 0.25% x castle value plus empties x 1400 cases per truck. The second method was not indicated. It was further explained that this method was used for trucks which actually experienced missings and breakages. The formula was used during 2009 to 2011. We gather, from the defendant's pleading, that the defendant changed this very formula later and began to apply one based on every truck moved at the lower rate of castle, coke, mixed loads without the empties, and that this formula was applied to every transporter. We will return to this issue later, but for purposes of Ground 4, we will confine ourselves to the question of ratification of the import of Christopher Thole's letter. It has been argued that this individual's letters were effected. We should state that if this was done, it was by way of ratification, as he had no express authority. The evidence reveals that Christopher Thole addressed a letter dated 7 th January 2009, to the appellant, advising that transport rates had been amended, effective 1st January 2009 and that the allowable rates for missings and breakages in transit had been revised upwards. For missings, 0.15% would apply, while the BIT allowance would be at 0.1 %. This letter was ratified by the defendant, as disclosed by its pleading in the defence, where it admitted this fact. It is the law that such an admission amounts to ratification. J42 It will be recalled however that ratifying one act does not imply that the .• concerned agent can proceed to bind the principal even when unauthorized subsequently. Where no representation is made by the principal, apparent authority does not arise. That being the case, ratification of later acts does not ratify different earlier unauthorized acts. See William Irvine vs The Union Bank of Australial 7. It is settled law that an agent may ratify unauthorized acts by a purported agent on behalf of a principal. It is in this connection argued that Roland Chileshe ratified the 17th October 2007 letter by letter dated 12th January 2011. This letter was in response to that of 21 st December 2010, addressed to the Credit Manager by the appellant. In that letter, the appellant wrote, inter alia, the following: "Your letter of 17th October 2007 should be strictly adhered to when computing the allowance for breakages and missings. In addition, we demand that a statement of breakages and missings should also be sent to us for verification before any deductions are effected on our account." The response by the Credit Manager, Roland Chileshe was that: "After careful consideration, we have resolved that no more deductions will be effected on your account until this matter is resolved conclusively by ourselves. In the interim, based on the letter of 17th October, 2007 from our operations department regarding this matter, we are in the process of recalculating the BITs and missings. In the event that it is found that we owe you, you will be refunded the full amount." J43 Mrs Degroot, Finance Manager at the time, denied seeing this letter, in cross .• examination, when she was asked whether she wrote a letter, presumably to the appellant, to the effect that Mr. Chileshe had no authority. T_~e cited authority leaves no doubt that ratification may only be done by an agent in a position to ratify the contents. We have seen no evidence that the Credit Manager had authority to alter contractual terms and thus could ratify the contents of the disputed letter. If, as in effect argued by the appellant, the respondent ratified the letter by suspending the deductions, the BIT and Missings allowance would have been recomputed as indicated in Roland Chileshe's letter. It will be noticed that Roland Chileshe's letter was not copied to Mrs Degroot. The trial court cannot therefore be condemned for not taking Roland Chileshe's letter as evidence that the respondent ratified the letter of 17th October 2007. It was contended that Christopher Thole wrote a letter dated 14th May 2008 in which he amended Anthony Grendon's letter which had amended clause 12 of the contract, by increasing the insurance excess to US$5000. Christopher Thole's letter increased it to US$10,000, and this was later incorporated in the contracts of the transporters. It appears that the Operations Director, who was duly authorized to enter into contractual relations ratified this increase of contractual excess. However, this act of J44 ratification has no effect on the letter of 17th October 2007. This is because the letter of 17th October 2007 was without any representation on the respondent's part, nor was it later ratified, as discussed above. The later ratification of the increase in the insurance excess cannot extend to ratification of the letter of 17th October 2007. We should stress that where there is no express indication that a particular individual has authority to bind a company to contractual terms, there must be representation on the company's part. This representation may be made by the very position the purported agent occupies, for he has authority to do those things a person in his position would do. An operations manager will ordinarily attend to operations. That would be his province. In the event he strays outside the remit of his authority and purports to undertake tasks not assigned to him, the alleged principal, to be bound, must ratify the act of the purported agent. If it does not so ratify, then, absent any representation on the alleged principal's part, it would be impossible to bind the principal to the contract or alteration of the contract done by the purported agent without authority. It is our considered view that the decision in National Airports Corporation Limited vs Zimba and Konie 7 is of no assistance to the appellant. It was held there that: "An outsider dealing with a company cannot be concerned with any alleged want of authority when dealing with a representative of appropriate authority or standing for the class or type of transaction." J45 The language employed clearly relates to apparent authority. A representative of appropriate authority or standing means a person in a position that ordinarily has authority to do acts, of a class or type in the position that he occupies. This decision does not confer authority on a purported representative who has no appropriate authority to do those transactions by the position he occupies. We turn to consider grounds 5, 6, 7, 8, 9 and 11 together as they relate to construction of the contract between the parties. The court below held that clause 6.2 was ambiguous, and proceeded to apply an interpretation that gave commercial sense to the contract, and not a literal interpretation. It is said the ambiguity was not identified, and that this should have been done. It is also argued that the clause was crystal clear, and should have been interpreted literally. The fact that other transporters' contracts stated the allowance was paid to transporters is referred to, and prayed in aid of the interpretation of the clause in issue. The contra proferentum rule of interpretation, it was said, should have been applied, instead of the commercial sense. It is therefore pertinent to advert to the workings of the said rule at law. Edwin Peel In Treitel, The Law Of Contract, Thirteenth Edition, 2011, Sweet and Maxwell, states in paragraph 7-015 that contra Proferentum is used to describe what are in fact two rules of construction. J46 The first is that in case of doubt, wording in a contract is to be construed against a party who seeks to rely on it in order to diminish or exclude his "basic obligation, or any common law duty which arises apart from contract.,, The second is that: "again in case of doubt, wording is to be construed against the party who proposed it for inclusion in the contract.,, In practice, both rules are likely to apply to an exemption clause since it seeks to diminish or exclude one party's obligations and it will usually have been inserted in the contract for the benefit of the party seeking to rely upon it. Both rules are said to apply when there is an ambiguity in the wording of the clause in question. That is certainly true of the second rule. It is a rule of last resort and can only apply if a document, properly interpreted, admits of doubt. The same is not necessarily true of the first rule, which applies specifically to exemption clauses. With this in mind, we turn to the contract, to determine whether there was in fact ambiguity admitting of doubt, and whether the stated rule ought to have been applied by the lower court as a result. We begin by referring to Inland Revenue Commissioners vs Raphael21 , where Lord Wright said: "I must however deal shortly with the authorities which have been so strenuously urged on behalf of the appellants as leading to the contrary J47 conclusion. It must be remembered at the outset that the court, while it seeks to give effect to the intention of the parties, must give effect to that intention as ex.pressed, that is, it must ascertain the meaning of the words actually used. There is often an ambiguity in the use of the word 'intention' in cases of this character. The word is constantly used as meaning motive, purpose, desire as a state of mind, and not as meaning intention as ex.pressed. The words actually used must no doubt be construed with reference to the facts known to the parties and in contemplation of which the parties must be deemed to have used them. Such facts may be proved by extrinsic evidence or appear in recitals; again the meaning of the words used must be ascertained by considering the whole context of the document so as to harmonise as far as possible all the parts: Particular words may appear to have been used in a special sense, which may be a technical or trade sense, or in a special meaning adopted by the parties themselves as shown by the whole document. Terms may be implied by custom and on similar grounds. But allowing for these and other rules of the same kind, the principle of the common law has been to adopt an objective standard of construction, and to ex.elude general evidence of actual intention of the parties, the reason for this has been that otherwise all certainty would be taken from the words in which the parties have recorded their agreement or their disposition of property. If in some cases hardship or injustice may be effected by this rule of law, such hardship or injustice can generally be obviated by the power in equity to reform evidence that there has been a real intention and a real mistake in ex.pressing that intention: these matters may be established, as they generally are, by extrinsic evidence. The court will thus reform or re-write the clauses in order to give effect to the real intention. But that is not construction, but rectification." This decision states the correct approach to interpretation of a contract. In Investors Compensation Scheme Ltd vs West Bromwich Building9, Lord Hoffman restated the principles of interpretation. He stated that Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the knowledge which would reasonably have been J48 availed to the parties 1n the situation in which they were at the time of the contract. He later refined this basic principle by referring to the 'reasonable person having all the background knowledge which is reasonably available to the person or class of persons to whom the document is addressed'. See The Starsin22• In that case, the document in question was a bill of lading and it was appropriate to ask what meaning it would have conveyed to the merchants or bankers to whom it was addressed and who would rely on it in their dealings. According to Edwin Peel in Treitel, The Law of Contract, supra, in a commercial context, the approach taken is that a business sense will be given to business documents. In Total Gas Marketing Ltd vs Arco British Ltd and Others23 , Lord Steyn stated that as in the case of all contracts, loyalty to the contractual text viewed against its contextual background is the first principle of construction. In the present case the recital of the contract executed in June 2008 read that the consignor (respondent) who was distributor of various beverages desired that the carrier (appellant) transport the said beverages and returnable containers on its behalf. The carrier was equally desirous of transporting the beverages for and on behalf of the consignor. The contract defined 'Goods' as: J49 "That quantity of the product range of the consignor (which comprises of beer, soft drinks containers, and the like) contained in bottles both glass and plastic, cans or packages as specified by the consignor for delivery to a destination." Under the contract, the appellant was to convey and deliver by road, the goods of the consignor to any depot, or point of destination nominated by the respondent. The respondent undertook that the appellant would be given a full load to transport every time, except in the case of empties and wooden pallets on a return journey back to the respondent's manufacturing depots. The appellant was to be remunerated by the respondent, free of commission. Receipt of the goods by the consignor at their destination was to be proved by the presentation to the consignor of a signed delivery note. The remuneration payable by the consignor to the carrier was to be calculated in accordance with a schedule. The appellant was to, on every occasion possible, collect and redeliver plastic containers with and without empty bottles as well as pallets, to the Brewery in Lusaka, Ndola or Kitwe. Pertinent in the contract were the following clauses: 5.2 All plastic containers with bottles returned to the brewery depot must contain 24 unbroken bottles each. Spot checks on empties returned to their destination will be conducted and the percentage of bottles found to be broken or missing will be extrapolated across the whole load and charged to the carrier. 6.1 The Missing and Breakage in Transit allowance (BIT) of 0.1 % comes into effect: J50 . - l S00x0. l % = 1. 5 cases . e.g. for a load of 1500 cases, the calculation is as follows: 6.2 6.3 This allowance is claimable monthly as a cumulative figure. Ullages are for the account of the Distributor/Customer and are not to be returned on the delivery vehicle unless an ex.press instruction is given by the Operations Director. 6.4 The carrier is not liable for the loading/off-loading breakages at the Distributor, where the activity is not carried out by the carrier. The cited persuasive authorities reiterate that the factual background is recoursed in interpreting a contract. The letter dated 28th June 2007, authored by E. Sekele, Acting Operations Manager, addressed to the appellant referred to above read in part as follows: "Missings, Shortages and Breakages. The level of Shortages, Missings, Breakages has not reduced and as you are aware this has negatively impacted our operating margins. This incremental cost will be charged to your account. We advise you to ensure that drivers do undertake "BLIND CHECK" of quantities being loaded on their trucks. Missings and shortages will attract an extrapolated surcharge of Kl000 per case." It was clearly not in the interest of the respondent to have shortages, missings and breakages. Under the contract running in 2007, the respondent sought to mitigate this loss, which negatively impacted their margins, by surcharging the appellant. This was part of the background against which the contract in question was drawn. The Missings and Breakages allowance was introduced against this backdrop. J51 Initially, before the allowance was increased, the appellant was entitled to 0.1 % of a load of cases. The allowance was claimable as a cumulative figure. Our considered view is that given this factual background, the word 'claimable' cannot be read in isolation from the background, made to transcend the purpose for which it was introduced and, culminate into a payable allowance. Firstly, it is clear that the allowance related to cases that would go missing, or break in transit. It will be recalled that the carrier was engaged to transport the respondent's product, and the respondent's interest was that the product be delivered without much shortfall to the intended recipient. The word 'allowance' means: The amount of something that is permitted, especially within a set of regulations or for a specified purpose 'your baggage allowance'. The amount of something that is allowed in a particular situation. See Oxford Advanced Learner's Dictionary Current English Seventh Edition Oxford University Press. The synonyms are allocation, allotment, quota, share, ration, grant, limit, portion, helping, slice, lot. Applying this meamng to the word 'allowance' as used in the contract, the conclusion that the word 'allowance' meant the quota that would be allowed to go missing or break in transit is inevitable. In other words, the respondent would turn a blind eye to the missings and shortages in transit if they did not J52 exceed the stated percentage. The percentage would apply to all loads carried in a month by the transporter, and would be taken into account by the defendant when offsetting the missings and breakages against a transporter's dues. Given the background, it would be absurd to reward the carrier for not having lost or broken the product in transit, when this would negatively impact the respondent's operating margins. It is our considered view that the word 'claimable' did not refer to monetary payment. It meant that the carrier could accumulate this allowance monthly, and thereafter claim it as allowable, so that it is not charged for the missings and breakages in transit to the allowed extent. We therefore find the Indo Zambia Bank case distinguishable, m that the contextual rendering of the contract gives rise to no ambiguity. We are not impressed by the argument that the construction of clause 6 must be done with the assistance of the conduct of the parties. It is settled law that the belief or subsequent conduct of the parties cannot affect the construction of a contract. The House of Lords held that it is not legitimate to use as an aid in the construction of the contract anything which the parties said or did after it was made. See James Miller & Partners Ltd vs Whitworth Street Estates (Manchester} Ltd24_ J53 Even the understanding of Anthony Grendon, that the allowance was 'paid to transporters' cannot assist the appellant. This is because a contract is construed objectively, and that construction is not assisted by the subsequent conduct of the parties. Having rendered a contextual construction of clause 6, we conceive no necessity to recourse the contra profentum rule, as urged on behalf of the appellant. As stated above, this rule is one of last resort, where the clause in question is ambiguous . We agree that reliance on DWl 's refunding of the monies was erroneous, as it related to double charging and not to BIT allowance. This however does not assist the appellant. We do not read paragraphs 15 and 16 of the respondent's amended defence as an admission that the BIT allowance was payable. The sum of K255,569.74 was stated to be differences in the figures as a result of applying a more accurate method of calculating the allowance. The evidence on record is that the appellant used to have breakages. Having construed the import of clause 6.1 against the permissible background, and considered the paragraphs in question, we opine that the K225,569.74 was over deducted, and fell to be refunded , on account of the method applied. There was evidence in the court below that transporters used to suffer deductions . on account of Missings and Breakages in Transit. The facts on J54 record, which include the background, make the inference drawable that this allowance was intended to mit_igate the cost to be borne by transporters as a result of missings and breakages in transit. It was not conjectural for the court below to hold that the allowance was introduced to cushion transporters, as ultimately, they would bear the cost. We agree that the contract did not define what a load was. It also did not stipulate that an empties load was excluded. Again, a contextual examination of the clauses is warranted. Clause 5 of the contract has been reproduced above. It is undeniable that an empties load could have m1ssmgs or breakages in transit. As clause 6 did not confine the allowance to full products only, but related to missings and breakages in transit, our considered view is that the allowance was applicable to empties. The respondent was rightly cognizant of this, as it used to include empties in its calculation of the Missings and BIT allowance, as revealed by the defence. We move to consider grounds 2 and 14 of the appeal as argued. It is helpful to refer to Phipson on Evidence, 17th Edition 2010, Thomson Reuters (Legal) Limited PlS0: J55 .. "Where a party has an evidentitial burden, it may be satisfied either by adducing evidence himself or by eliciting evidence from the witnesses of his adversary." One effect of the burden of proof is that if the party bearing the burden has not pleaded a positive case, the other party need not plead and prove that alternative states of affairs do not exist. In Robbins vs National Trust Company25 , the principle was stated that the burden of proof on any particular case depends on the circumstances in which the claim arises. The burden of proof lies on the party who asserts the truth of the issue in dispute. If that party adduces sufficient evidence to raise a presumption that what is claimed is true, the burden shifts to the other party, who will fail unless sufficient evidence is raised to rebut the presumption. It is generally the position that a party is required to plead his case. He cannot ambush his opponent by raising claims not pleaded at trial. However, if he leads evidence on unpleaded matters, and his opponent raises no objection, the court will consider that evidence in rendering judgment. In some cases, failure to plead relevant matters may react against the claimant. J56 In the present case, the appellant was entitled to payment for transporting the .• respondent's product. The respondent would pay the appellant after deducting sums it considered due to it, on account of unallowed missings and breakages. In paragraph 19 of the defence, the defendant averred that the plaintiff requested for and was given advances by the defendant, in the total sum of Kl ,550,000.00. Of this amount, the appellant admitted receiving the sum of K700,000 as advances, and claimed for all the sums of money deducted by the respondent. The learned trial judge relied on a statement produced by the defendant in its 2 nd supplementary bundle of documents, and held that the appellant was indeed advanced these sums of money. The appellant complains against this finding, stating that the amounts listed in paragraph 19 of the defence and those listed by the court are different. This observation is wrong. The statement relied on by the judge, which is at page 1048 of the record reveals that a sum of K500,000 was paid out to the appellant on 2 nd June 2009. K50,000 was also paid out on 16th July 2009. The further sum of K393,051 was paid out on 29 th September, 2011. A further sum of K200,000 was paid out on 27th April, 2011, the sum of K200,000 was paid out on 7 th February 2011, while the additional sums of K150,000 and Kl00,000 were paid out on 10th September 2009. K610,087.66 was paid out on 28 th December 2009. The statement also revealed that a total sum of K500,000 was paid out on 15th June 2009. J57 .. It will be seem that all these sums tally with paragraph 19 of the defence. The defence sates that KS00,000 was paid on 2 nd June 2009, KS0,000 was paid on 16th July 2009, K250,000 was paid out on 10th September 2009, KS00,000 was paid out on 15th June 2009, and that K250,000 was paid out on 28th December 2009. The only point of departure is the sum of K250,000, which is less than the sum of K610,087.66 showing on the statement. Had the appellant scruitinised the dates, it would have seen that the statement relates to the payments stated in the defence. It will also be noticed that the appellant, in its supplementary bundle of documents filed on 8 th January 2013, produced a schedule of deductions made by the respondent. At page 314 is indication that the respondent paid out a sum of K610,087 .659 on 28th December 2009. This tallies with the payment stated in the statement. Presumably, the parties exchanged lists of documents and conducted inspection of the documents proposed to be relied on at trial. We have seen no notice of non-admission on record. Therefore, the statement referred to by the trial court stood admitted as either an original or a true copy of what it is purported to be. The statement indicated cheques as having been issued to the appellant. We have seen no protestation by the appellant, upon seeing the said statement bearing cheque numbers on which the indicated sums were J58 purportedly paid to it. Had that indication been wrong, the appellant would have brought this to the respondent's attention. We are alive to the proposition that the fact that no reply has been sent to a letter received is as a rule, not regarded as an admission that the statements in it are correct. We are similarly alive to the position that the circumstances or the relations between the parties may be such that a reply might properly be expected, and in such cases, the failure to reply is some evidence that the statements in the letter are true. See Richards vs Gellatley26 . In some instances, once it is proved that certain correspondence has been received, the subsequent words and conduct may amount to admissions. See Gaskill vs Skene2 7 • The test 1s whether a denial could reasonably be expected m the circumstances. An inference of admission may be drawn from a failure to reply to letters alleging overpayment, or rendering accounts particularly if there has been a stream of correspondence. Richards vs Gellatley26 • In the instant case, the appellant itself having revealed that it received a payment in the sum of K610,087.66 which was indicated to have been made by J59 cheque as indicated in the statement, it is not, nor was it permissible for the trial court to ignore this payment, on account that at that time, no cheque could be issued in a sum exceeding Kl00,000. The lower court was therefore entitled to draw the inference it made, that the appellant had received the alleged payments. The judicial notice it was urged the court should have taken would have flown in the teeth of the evidence as led by the parties. Our considered view is that the appellant having had sight of the statement and having not refuted the alleged payments, when a denial would be expected if the cheques had not been received, thereby admitting that the cheques indicated thereon had been issued to it on the stated dates, the learned trial judge cannot be faulted for relying on the statement. Although it is correct to assert that no objection was taken to the cross examination of the witness on the advances regarding the advances, that does not assist the appellant in light of what we have said above. Admission of receipt of the cheques resides in the failure to refute the effect of the assertion in the statement, that it had been paid the amounts stated on the cheques. Having thus opined, the manner in which the requests for advances were made is inconsequential. We accept that there were some documents in relation to the advance of K500,000.00 and in relation to K150,000.00. However, having taken the statement into account, and having not seen written requests, the J60 • trial court elected to disbelieve DW2's testimony in preference for Mrs Degroot's testimony. We turn to address ground 12 of the appeal. The learned trial judge referred the sum of K723,000 for assessment and determination by the Deputy Registrar in line with the BIT allowance for the period starting from January 2009. The appellant was aggrieved with this order, and would have preferred an award of K723,000 by the Judge. This claim was raised in paragraph 13 of the statement of claim. The plaintiff asserted that the said sum had purportedly been deducted for debit notes from the appellant's payments for 2009 and 2010, which were not availed to the appellant. In paragraph 7 of the statement of claim, the appellant had claimed that the defendant deducted a total of Kl,068,093,438 from February 2009 to March 2010, and that these deductions were not justified. There appears to be an overlap in the sums, for the period between January - March 2010 in the two claims. This called for assessment, so that the correct sum could be ascertained. The lower court could thus not be faulted. This leads us to the question as to what formula was to be applied. Having upheld the lower court's finding that the letter of 17th October 2007 was written without authority, and did not bind the respondent, the conclusion that the applicable formula was that stipulated in the contract is inevitable. That formula was, at the time the contract was terminated, 0.25% per load. This J61 • -. • meant that the allowance was calculable by multiplying a load by 0.25%. The resulting sum was the number of cases the appellant was allowed to miss and break. The appellant's spirited complaint is that the loads with no breakages were not applied when calculating the BIT Missings and BIT allowances. It will be seen that the relevant provision did not state that the allowance was per load with missings and breakages in transit. It merely stated that it was per load. The clear meaning of the provision was that every load was included, and not just those loads with missings and breakages. The allowance was cumulative. The word 'cumulative' means: Having a result that increases in strength or importance each time more of something is added. See Oxford Advanced Leaner's Dictionary of Current English. Had the meaning assigned not been intended, the provision would have expressly confined the allowance to loads with missings and breakages. The pleadings reveal that the respondent did not apply the formula to all loads in calculating the missings and BIT allowance. The allowance was restricted to those loads with missings and breakages. This went on for a considerable time, in a contract that was to run for three years. There can be no doubt that the appellant waived the formula stipulated in the contract, accepting the one employed by the respondent. J62 • ( . At law, a waiver may arise where a party to a contract represents to the other expressly or by conduct that he will forego or dispense with a right which he enjoys under the contract or at law, and the other party alters his position as a result. Equitable estoppel on the other hand may arise if some other statement of intention is made on which the representee alters his position, if equity regards it as unconscionable to allow him to disregard his promise. A party will not usually be held permanently to his promise or waiver should he decide subsequently to withdraw it, due to lack of consideration. See Hudson's Building and Engineering Contracts, London, Sweet and Maxwell, 1995 P 139 to 140. In Birmingham and District Land Co vs L. N. W. R. 28 Bowen W articulated the applicable rule. He stated that a voluntary concession or waiver cannot be withdrawn so as to render the other party liable for the past acts or omissions done or made on the faith of the waiver, and that time should, if the facts warrant it, be allowed to enable a party once more called upon to fulfill the contract to place himself in the same position as before. It appears that reasonable notice should be given, as was stated in Charles Rickards vs Oppenham29. The party giving the concession need not give express notice of withdrawal of that concession, as any act showing that the concession has been withdrawn is J63 • .. , . • sufficient. This is what transpired in Tool Metal Manufacturing Co. Ltd vs Tungten Electric Co. Ltd30 where mere delivery of a counter claim in legal proceedings was held sufficient. It should also be borne in mind that the waiver may be rendered permanent and binding if restoration of the position becomes impossible. Turning to the appeal we are dealing with, the evidence is that on 21 st December 2010, the appellant wrote to the Credit Manager of Zambian Breweries regarding computation of the BITs and Missings allowance. Reference was made to a meeting held in the Credit Manager's office in the previous month, and it was pointed out that the appellant's concern about the wrong calculation of the allowance had not been addressed . Although the appellant wished to have the formula in the letter dated 17th October 2007, which we have discounted, applied, nonetheless, it is undeniable that the appellant had taken issue with the wrong computation of the allowance. This alone, in terms of the Tools case cited above, was sufficient revocation of its waiver of the correct computation in the preceding period. We have seen no earlier communication intimating that the appellant wished to be paid the correct allowance. Therefore, as at December 2010, the respondent had notice that the contractual computation was being insisted upon by the appellant. J64 • • • There is no evidence that the respondent had changed its position, and could not be restored, after withdrawal of the waiver. We opme that two months would have been reasonable notice for the respondent to abide by the strict terms of the contract. The meeting having been held in November 2010 over the matter, our considered view is that the respondent should have started to compute the allowance correctly, that is, at 0.25% per load, regardless of whether a load had breakages and missings, or not. On the foregoing, the appellant is entitled to re-computation of the allowance from February 2011 to date of termination of the contract. The value to be applied will be that of the actual product concerned, and not one particular product, as the clause in question made no such provision. The same applies to empties. The value of empty bottles will be applied in re computing the allowance on empties. The Deputy Registrar will assess the allowance payable accordingly. The appellant will thereafter be refunded its dues to the extent of the under-calculation of the allowance. The refund arises from the fact that had the allowance been correctly computed, the deductions made on the appellant's invoices would have been lower than inflicted. Turning to the complaint that the claims in paragraph 18 were not resolved, we equally refer the sums of K99,545.92 for assessment to the Deputy Registrar. J65 We turn to consider ground 15. It is settled law that for consequential loss to be compensated, it should have been in the contemplation of the parties at the time they entered into the contract. We have seen no evidence that it was within the contemplation of the parties that the appellant would borrow from the CEEC and would depend on payments from the respondent to settle its indebtedness. This ground is therefore devoid of merit. Going to ground 16, we agree that the appellant did succeed in the court below, as it was owed K255,000, which the respondent did not pay into court. The appellant would have equally succeeded to the extent stated on appeal. Therefore, the costs should have, and will follow the event in the court below and this court. We set aside the learned judge's costs order in the court below, and award the appellant costs in both courts, to be agreed and in default taxed. F. M. CHI JUDGE PR COURT I LJUDGE ?"'"...__ ___ ----.,------. M. M. KONDOLO,SC COURT OF APPEAL JUDGE J66