Noors Motors Ltd v Sakuwaha (Appeal 57 of 2017) [2018] ZMCA 383 (26 March 2018)

IN THE COURT OF APPEAL FOR ZAMBIA HOLDEN AT LUSAKA (Civil Jurisdiction) APPEAL 57/2017 BETWEEN: NOORS MOTORS LIMITED EDWARD SAKUWAHA (Suing as Administrator of the estate of the late Felisters Sakuwaha) Coram: Makungu, Chashi, and Kondolo, SC, J. J,A On 12th September, 2017 and 26th March, 2018 For the Appellant: Mr. K. M. G. Chisanga & Mrs S. B. M. Miti of Messrs KMG For the Respondent: Mr. M. J. Katolo of Milner and Paul Legal Practitioners Chisanga Advocates JUDGMENT MAKUNGU JA, delivered the Judgment of the Court Cases referred to: 1. L’Esrange v. Graucob (F) Limited (1934) 2 KB 394 2. Bartlett v. Sidney Marcus Limited (1965) 1 WLR 1013 3. Examination Council of Zambia v. Reliance Technology Limited, SCZ No. 46 of 2014 4. Nkhata and Others v. Attorney General (1966) ZR 124 5. Ace Audit Expertise (Z) Limited v. Africa Feeds Limited (2009) ZR 196 6. B S Brown & Son Ltd v. Craiks Ltd (1970) 1 ALL ER 823 7. Mususu Kalenga Building Limited & Another v. Richman’s Money Lenders Enterprises (1999) ZR 27 8. Holmes Limited v Build Well Construction Company Limited (1973) ZR 97 -JI- Legislation referred to: 1. Sale of Goods Act 1893 - Ss. 11 (2), 14, 20 Other authorities referred to: 1. Roy Goode in Commercial Law (3rd edition) (2004) Lexis Nexis 2. Judgments Act, Cap 81 of the Laws of Zambia This is an appeal against the judgment of the lower court made on 25th November, 2016. The brief facts of the matter are that: On 27th June, 2011 a Vehicle Order Agreement for a Nissan UD Bus was made between the parties. A deposit of US$20,000 was paid upon execution of the contract. On 17th October, 2011, before the bus was delivered to the respondent, the balance of US$18,000 was paid. The bus was delivered on 28th October, 2011. The respondent was aware that the bus was blowing and overheating before it was delivered and that the appellant had worked on it before delivery. The respondent therefore reluctantly signed a ‘Declaration’ after making a verbal agreement with the appellant's director that the said problems would be resolved by the appellant. The terms and conditions contained in the said Declaration were as follows: “1. That the vehicle is sold to the client “As is where is basis.” 2. That the client has checked the vehicle interior and exterior and he/she is fully satisfied on present condition of the vehicle at the time of delivery. -J2- 3. That the client has taken the test drive and he/she is fully satisfied on the vehicle performance. 4. No one has the right to cancel the deal, neither the buyer nor the seller after the signature of this declaration. 5. That the client has read and understood the terms and conditions. 6. Client will make arrangements for insurance on her own behalf. 7. The company shall not be liable for any loss once the vehicle leaves his premises. ” After delivery to Solwezi from Lusaka, the bus was test driven and in the process, the exhaust pipe started blowing at which point the respondent phoned the manager of the appellant company and they agreed that the respondent should take the bus for brazing at the appellant’s cost. However, the brazing costs were not refunded. On 5th November 2011, Mr. Chimwanghaza, a professional driver selected by the appellant drove the bus on the first business trip. While driving, the problem of overheating recurred and the respondent immediately called the appellant to complain. The appellant advised the respondent to drive back to Solwezi where repairs would be made. Later, the appellant's mechanics advised the driver by telephone not to drive the bus any further but after three hours he drove it to Kasempa junction where it completely broke down. The respondent then booked another bus for K2, -J3- 000. 00 to take the passengers to their destinations. She also paid for towing of the bus to Mufumbwe for safe keeping. On 7th November, 2011 the appellant sent some people to work on the bus. Upon examining the engine, they discovered that it had knocked and it needed an overhaul. A written report made by Promise Kembe Dube a mechanic who worked on the bus, revealed that it had seized, the pistons had melted out, there was no water in the radiator, the oil cap had melted out due to intense heat, the cylinder had developed internal cracks and the crank shaft was also burnt. It was also in evidence that there was a crack in the engine block due to the knocking. There was a dispute as to who was supposed to bear the costs of the repairs. The bus was towed to Kitwe by the appellant at the cost of KI9, 000.00. After the repairs, the engine was returned to the respondent on 29th December, 2011. However, it could not function properly as it overheated again and some pistons got burnt. As a result, the respondent rejected the bus and requested for a refund. The lower court found that the bus was not reasonably fit for the purpose for which it was bought as it was not of merchantable quality; the engine had a problem of overheating even before the contract of sale was executed. It was also her finding that there was a breach of an implied term of the contract as to merchantability and that the respondent is entitled to a refund of the sum of US$ 38,000. 00 being the purchase price with interest at the London Interbank Offered Rate (LIBOR) of 6% per annum from the date of the Judgment, thereafter at 3% until full -J4- payment. Further that, the interest awarded covers damages for breach of contract. The respondents claim for loss of business was dismissed for lack of proof. The court also dismissed the counter claim of K63, 233.00 for costs incurred by the appellant for staff allowances, towing, servicing and repairing the bus on the ground that there was no agreement for the respondent to bear such costs. The appellant has framed five grounds of appeal as follows: 1. The honourable judge erred in law and in fact when she held that the bus was not of merchantable quality at the time of delivery. 2. The learned trial Judge erred in law and fact when she overlooked the discrepancies in the testimony given by PW2 whose evidence was crucial in determining the merchantability or otherwise of the bus. 3. The honourable judge erred in law and fact when she discounted the evidence of DW2 and DW4 that the reason for overheating was due to the negligent handling of the bus by the driver of the respondent and when she held that the overheating of the bus was in existence from inception. 4. The honourable judge erred in law and fact when she held that whether or not risk had passed on to the respondent herein, the issue is that the goods delivered were not reasonably fit for the purpose for which they were purchased. 5. The trial judge erred in law and in fact when she held that there was no evidence before the court to support the appellant's counter claim for the refund of repair costs. -J5- At the hearing of the appeal, both counsel relied on their heads of argument. In support of ground one, the appellant’s counsel Mr. Chisanga submitted that the lower court rightly noted the definition of merchantable quality to mean being fit for the purpose for which the goods were bought. He argued that the bus in issue was fit for the purpose for which it was bought having covered a total distance of 2, 590 kilometers from Dar - es- Salaam via Lusaka to Kitwe. He in this regard referred us to the Declaration set out in the earlier part of this Judgment and argued that the respondent is bound by the Declaration because she signed it freely and voluntarily and understood the terms and conditions therein. He said the evidence of Sakuwaha Junior on page 371 of the record of appeal (Hereinafter referred to as the record) also indicates that the bus was merchantable. He contended that the respondent was aware that the appellant was a direct importer of used Japanese vehicles and ought to have known that the bus was second hand. It was counsel’s submission that the learned trial judge’s finding that the bus required brazing to stop the overheating and blowing was a misapprehension of facts. That the Judge in arriving at her decision, overlooked the evidence of the respondent’s witness to the effect that the brazing was done for purposes of fixing the exhaust pipe following the damage caused by the bad roads in Solwezi. This evidence was supported by the appellant’s witness, Promise Kembo Dube (DW4). He further stated that DW3’s testimony clearly showed that the bus was not overheating from inception. -J6- To support his arguments, he placed reliance on the case of L’Estrange v. Graucob (F) Limited W where it was held as follows: "... The plaintiff, having put her signature to the document, and not having been induced by any fraud or misrepresentation, cannot be heard to say that she is not bound by the terms of the document because she did not read them." He also relied on Section 14 of the Sale of Goods Act 1893 W which provides that; 1) Where the buyer, expressly or by implication, makes known to the seller the particular purpose for which the goods are required, so as to show that the buyer relies upon the sellers skill or Judgment, and the goods are of a description which it is in the course of the sellers business to supply (whether he be the manufacturer or not), there is an implied condition that the goods shall be reasonably fit for the purpose, provided that in the case of a contract for the sale of a specified article under its patent or other trade name, there is no implied condition as to its fitness for any particular purpose. 2) Where goods are bought by description from a seller who deals in goods of that description (whether he be manufacturer or not) there is an implied condition that the goods shall be of merchantable quality; provided that if the buyer has examined the goods there shall be -J7- no implied condition as regards defects which such examination ought to have revealed." He went on to cite the case of Barlett v. Sidney Marcus Limited <2) on the application of the law on implied warranties to second hand goods; wherein the court made the following observations: “Applying those tests here, the car was far from perfect. It required a good deal of work to be done on it but so do many second hand cars. A buyer should realize that when he buys a second hand car, defects may appear sooner or later; and in the absence of an express warranty, he has no redress. Even when he buys from a dealer, the most he can require is that it should reasonably be fit for the purpose of being driven along the road. This car came up to this requirement. The plaintiff drove the car away herself..." Counsel for the appellant also relied on the case of Examinations Council of Zambia v. Reliance Technology Limited where the Supreme Court held inter alia that: “There is a strict duty to provide goods which are of merchantable quality and which are reasonably fit for the purpose for which they were being sold. In Grant v. Australian Knitting Mills Ltd, Dixon J. at page 418 provided useful guidance as to the meaning of the term merchantable quality as follows: - “The goods should be in such a state that the buyer, fully acquainted with the facts, and -J8- therefore knowing what hidden defects and not being limited to their apparent condition would buy them without abatement of the price obtainable for such goods if in reasonable sound order and without special terms," In the same case, the Supreme Court considered Section 14 (2) of the Sale of Goods Act and stated that: “The defects that plagued the printer from inception had seriously compromised its functional character. We hold, therefore, that the printer was not merchantable. We further hold that the appellant as buyer was entitled to exercise the primary remedy available to it when there is a breach of a condition, namely, to reject the printer as provided for in section 11(2) of the Sale of Goods Act." In arguing ground two, Mr. Chisanga stated that the Judge identified the discrepancies in the testimony of PW2 whose evidence was vital in the determination of the question of merchantability. He further contended that the trial court misdirected itself in deciding that PW2’s decision to drive the bus further after overheating and thereby causing the break down was not a determining factor of whether the bus was fit for the purpose it was bought. He urged us to interfere with that finding. He relied on the case of Nkhata and Others v. The Attorney General W wherein it was held; -J9- “A trial Judge sitting alone without a Jury can only be reversed on fact when it is positively demonstrated that; a. By reason of some non-direction or misdirection or otherwise the trial Judge erred in accepting the evidence which he did accept; or b. In assessing and evaluating the evidence the Judge has taken into account some matter which he ought not to have taken into account, or failed to take into account some matter which he ought to have taken into account. On ground three, counsel relied on the evidence of Nawa Kasimba (DW2), a mechanic who stated that lack of water in the radiator, the damaged fan and malfunction of the thermostat caused the overheating. That the crack in the engine block developed because there was no water in the radiator. It was also his testimony that the respondent’s driver was negligent when he continued driving while the engine was hot. He went on to refer to the evidence of DW4 to the effect that there were no problems during the trip from Kitwe to Solwezi save for the exhaust pipe that broke as a result of the poor state of the road. That the crack was caused by the lack of water in the engine and as such, the trial Judge erred to overlook the evidence of DW4. He argued further that it is every driver’s duty to ensure that there is water or a cooling agent in the engine and the failure to do so amounts to negligence and incompetence. -J 10- Therefore, the trial Judge should not have allowed the respondent to profit from her own wrongdoing. On ground four, Mr Chisanga submitted that Section 20 of the Sale of Goods Act is very clear and it provides that once the property passes to the buyer, the goods are at his risk unless otherwise agreed. He argued that the parties had agreed that the appellant was not liable for any loss after the bus left its premises as shown on page 84 of the record. The said agreement is in accordance with Section 20 of the Sale of Goods Act, W Therefore, the trial Judge should have applied Section 20 and considered the evidence before her in determining who bore the risk at the time of the breakdown. To further fortify his arguments, Counsel relied on the text book Roy Goode on Commercial law W wherein the following was stated: “Once the buyer has acquired both possession and property in the goods, their subsequent fate, except so far as due to some breach by the seller, is not the latter’s concern, and if the goods are damaged or destroyed, it is the buyers loss, unless the parties have otherwise agreed ... ... A more reasonable rule would have been to link risk with control, for the person in control of goods (whether by physical possession or by having the right to give directions as to the goods to a third party holding them? Is best able to take proper steps for their protection and to cover loss by insurance.)” -Jll- In arguing ground five, it was submitted that if it had not been for the respondent’s driver’s negligence, the appellant would not have incurred the costs of repairing the bus as itemized on pages 99 - 121 of the record. Mr. Chisanga argued that the lower Court did not take into account these factors. That it was DWl’s testimony that the agreement to have the appellant repair the bus and have the respondent refund the expenses was made verbally. He therefore urged us to interfere with the lower Courts findings. In response to ground one, Mr. Katolo argued that in determining the merchantability of the bus, page 43 lines 13 -18 of the record shows that the lower court took into account the evidence of the witnesses and their demeanour. He relied on the case of Ace Audit Expertise (Z) Limited v. Africa Feeds Limited. (5> Counsel further argued that the lower court cannot be faulted on her findings to the effect that the bus was not fit for the purpose for which it was bought as it had the problem of overheating prior to its collection. To define merchantability, counsel referred us to the case of B S Brown & Son Limited v. Craiks Limited where Lord Guest stated inter alia as follows: “What sub - s (2) now means by ‘merchantable quality9 is that goods in the form in which they were tendered were of no use for any purpose for which goods which complied with the description under which these goods were sold would normally be used, and hence were not saleable under that description.99 This is the objective test: “were of no -J12- use for any purpose..." must mean “would not have been used by a reasonable man for any purpose..." He submitted that the bus was of no use as it broke down on its first trip as a public passenger vehicle. Mr. Katolo stated that the second ground of appeal is misconceived as the trial Judge did not just look at the evidence of PW2 but considered the evidence in totality. He added that the evidence of PW3 to the effect that he saw the temperature rising and that the radiator was flushed and removed was also vital. This led to the court’s conclusion that the bus had latent defects entitling the respondent to reject the same. Also, the lower court was able to establish that the problem with the bus persisted after the engine had been overhauled and remounted. In response to ground three, Mr. Katolo submitted that the lower court found that PW2 was a competent driver. Mr. Katolo submitted that ground four raises an issue of passing of risk relating to section 20 of the Sale of Goods Act W which was not raised in the court below. The document at page 84 of the record does not make any reference to the time when risk would pass from the appellant to the respondent. He relied on the case of Mususu Kalenga Building Limited & Another v. Richman9 s Money Lenders Enterprises W and stated that such a ground is incompetent. In arguing ground five, he submitted that the Judgment did not state that there was no evidence to support the appellant’s -J 13- counter-claim. The trial court merely stated that there was no agreement placing liability for costs of the repairs on the respondent. He therefore urged us to dismiss the appeal with costs. In reply, Mr. Chisanga merely echoed what was in his heads of argument save to state that the case of B S Brown <6> referred to by the respondent highlights the appellant’s contention that the bus was of merchantable quality when it was purchased. The mere fact that the bus was driven from Dar-es-salaam to Lusaka and then Kitwe meant that it was fit for the purpose for which it was bought. He in this regard referred us to Bartlett v. Sidney Marcus Limited <2) wherein Lord Denning stated that a second hand car is merchantable if it is in a usable condition, even though not perfect. He contended that the issue of risk, was raised by the appellant in its submissions and adjudicated upon by the trial Judge on page 47 of the Judgment, lines 6 - 20 in reference to the submissions made by the appellant. He therefore urged us to allow the appeal in its entirety. We have considered the record of appeal. We are indebted to both Counsel for their submissions. Grounds one, two and three will be determined together because they raise issues that are inter­ related. The third and fourth ground will be dealt with separately. In addressing grounds one, two and three, we accept the submission by counsel for the appellant that the Declaration was freely and voluntarily entered into by the parties. However, we note that the declaration was signed by the respondent after she was re-assured that the problems with the bus would be resolved -J 14- by the appellant at its own cost. In the case of Holmes Limited v. Build Well Construction Company Limited, <8) it was held that; “ Where the parties have embodied the terms of their contract in a written document, extrinsic evidence is not generally admissible to add to, vary, subtract from or contradict the terms of the written contract. By way of exception to the above rule, extrinsic evidence may be admitted to show that the written instrument was not intended to express the whole agreement between the parties. In order to invoke the exception, the burden of proof was in this case upon the plaintiffs,” In the present case, there was consensus ad idem that the bus was bought for the purpose of transporting passengers. It goes without saying that for the goods to be of merchantable quality, they have to be fit for the purpose for which they are purchased. The evidence is clear that the engine had complications even before the execution of the contract. It is noteworthy that PW1 found the respondent attempting to rectify the overheating of the engine when he went to collect it. The respondent was verbally assured by DW1 that the bus would be repaired. Therefore, in light of the Holmes Limited case, extrinsic evidence was admissible as an exception to the general rule to show that the declaration did not express the whole agreement between the parties. -J15- We agree with the appellant’s contention that the trial Judge misapprehended the facts before her with regard to the reason for subjecting the car to brazing because evidence on record indicates that the brazing was intended to fix the holes in the exhaust pipe and not necessarily to stop the engine from overheating. Notwithstanding the misconception by the trial Judge, the fact remained that the bus was not fit for the purpose for which it was bought. We reject the appellant’s argument that the bus was merchantable since it was driven from Dar - es- Salaam to Zambia without overheating. We say so because there was cogent evidence that the engine was overheating within Zambia before the bus was delivered to the respondent. As observed by the Supreme Court in Examinations Council of Zambia v. Reliance Technology Limited W there is a strict duty to provide goods which are of merchantable quality and which are reasonably fit for the purpose for which they are sold. In casu, the engine which was susceptible to overheating seriously affected the functioning of the bus. Therefore, the respondent was entitled to return it pursuant to Section 11(2) of the Sale of Goods Act.1 The appellant breached its duty to provide a merchantable bus to the respondent. As stated by Roy Goode the seller should bear the consequences of such breach. L’Estrange v. Graucob (F) Limited M applies. The trial Judge was therefore on firm ground when she found that the bus was not merchantable from inception. She properly applied Section 14 of the Sale of Goods Act W to the facts before -J 16- her at pages 33 and 34 of the Judgment. We find that PW2’s decision to drive the bus further contrary to the advice of the qualified mechanics was not the determining factor of whether the bus was fit for its purpose. We say so because, as established, the bus was not of merchantable quality when it was delivered to the buyer. On ground four, we have carefully read Section 20 of the Sale of Goods Act. W The said provision clearly states that once the property passes to the buyer, the goods are at his risk unless otherwise agreed (underlined for court’s emphasis). We find that in this case, there was a contrary intention by the parties who had agreed that the damages would be repaired by the appellant at its own cost. Ground five has merit to the extent that the appellant is vicariously liable for the actions of his driver who negligently drove the bus further after it had overheated. There was no evidence that the driver had taken any proper precautions like putting a coolant in the engine before driving. He merely waited for three hours for the engine to cool down. It is clear from the evidence that it had not cooled down because it knocked after being driven for a short distance. Therefore, the respondent is partially to blame for the knocked engine. As a result, the appellant is entitled to the counter-claims for spares K20,460,000.00 (unrebased), Engine Block repairs K850,000.00 (unrebased), clutch rebuilding K200,000.00 (unrebased) and labour charges K3,500,000.00 (unrebased). The total is K24,160,00.00 and the said costs are as per list contained in the counter-claim which was supported by receipts and invoices on -J 17- pages 99 - 121 of the record of appeal. All other claims are disallowed for lack of merit as some of the invoices appear not to have been paid. We note that the other listed spares such as heater plugs, washer and bearings are covered under the subheading - spares. In our view the Appellant is responsible for its own staff allowances, therefore we have not awarded the said staff allowances. To clarify our position, we must state that the respondent shall bear only half of the claimed amount of K7,000,000.00 for labour because the appellant was to blame for the delivery of a non- merchantable bus. The appellant was going to suffer some repair costs even if the respondent’s driver had not been negligent. The bus was going to be towed at the appellant’s cost whether or not it had not knocked as it was seriously damaged. Therefore, the respondent is spared from paying towing costs, hire of Canter, fuel, brazing and miscellaneous items. The total award is payable in rebased kwacha with interest in accordance with the Judgments Act 2 as amended i.e. at the average short term commercial bank deposit rate from the date of the writ to the date of this judgment, thereafter at the current bank lending rate until full settlement. We order that the award to the appellant be offset against the award made to the respondent by the lower court. Before we leave this appeal, we must comment on the trial court’s omission to change the name of the respondent in the Judgment inspite of the Order to Substitute parties which was made on 25th November, 2013 reflected on page 359 of the -J18- record, to the effect that late Felistus Sakuwaha is substituted with the Administrator of her estate, namely Edward Sakuwaha. We have therefore indicated the correct names of the respondent in this Judgement. Counsel should have taken the responsibility of citing the correct party despite the Judge’s omission. For the foregoing reasons, the appeal has partially succeeded. The appellant will bear the costs incurred in the lower court as ordered by that court. Each party shall bear its own costs for the appeal. Dated at Lusaka this 26th day of March, 2018. C. K. MAKUNGU OURT OF APPEAL JUDGE J/0HASHI M. M. KONDOLO, S. C. COURT OF APPEAL JUDGE COURT OF APPEAL JUDGE -J19-