Perfect Investments Limited v Linksoft Communication System Limited (APPEAL NO. 140/2018) [2020] ZMCA 165 (20 February 2020)

IN THE COURT OF APPEAL OF ZAMBIA HOLDEN AT LUSAKA ( Civil Jurisdiction) APPEAL NO. 140/2018 Application No. 23/2019 BETWEEN: PERFECT INVESTMENTS LIMITED APPELLANT AND LINKSOFT COMMUNICATIO~ rt3 1tt..u SYSTEM LIMITED RESPONDENT Coram: Makungu, Sichinga, and Ngulube, JJA On the 17th day of April, 2019, 18th day of December, 2019 and 20th February, 2020 For the Appellant: Mr. J. Katati and Miss I. K. Chabe of Dove Chambers ✓ For the Respondent: Mr. N. Ndalameta and Ms. D. Nalishuwa of Musa Dhudia & Co. JUDGMENT Makungu JA delivered the Judgment of the Court. Cases referred to: 1. Zambia National Building Society v. Enerst Mukwamatala (1993) S. J. 33 # 2. Philip Mhango v. Dorothy Ngulube and Others SCZ Judgment No. 5 of 1983 3. David Chiyengele and Others v. Scaw Limited - Selected Judgment No. 2 of 4. Crossland Mutinta, Bashir Seedat v. Donovan Chipanda - SCZ Selected Judgment No. 53 of 2018 5. Zambia State Insurance Corporation Limited v. Anthony Muyana Musutu (1993-1994) ZR 133 - 6. Bluck v. Lovering (1985) ITLR 497 7. Kenny Sililo v. Local Authority Superannuation Fund - SCZ Appeal No. 161 of 2013 8. Presrstrello E. Companhia Limitada v. United Paint Co. Limited (1969) 3 ALL ER47 9. July Danobo T/ A Juldan Motors v. Chimsoro Farms Limited (2009) ZR 148 10. NFC Africa Mining PLC v. Techpro Zambia (2009) ZR 236 11. Buchman v. The Attorney General (1993-1994)ZR 131 12. Beale v. McGregor (1886) 2 T. L. R. 311 13. Evans v. Bartlam (1973) C. A. 4 73 at P480 Legislation referred to: 1. Supreme Court Rules, White Book 1999 edition ·· 2. Court of Appeal Rules, Statutory Instrument No. 65 of 2016 3. High Court Rules, High Court Act Chapter 27 of the Laws of Zambia 4. The Constitution of Zambia, Act No. 2_ of 2016. Other authorities referred to: 1. Mayne and McGregor on Damages, 12th edition, Harvey McGregor, Swe et and Maxwell Ltd, 1961 1.0 BACKGROUND 1.1. This appeal arises from the judgment of the High Court on assessment of damages delivered by the District Registrar Mrs . Ruth Mbambi - Chilembo on 18th June, 2018. The application for assessment of damages was made to the District Registrar - -J2- pursuant to Order 37 Rule 1 of the Rules of the Supreme Court, 1999 edition, following a judgment of the lower court dated 18th August, 2017. In that judgment, the learned Judge dismissed the action against the 2 nd defendant Airtel Networks (Z) Limited and found the 1st defendant Linksoft Communication System Limited, now respondent liable to the plaintiff, Perfect Investments Limited, now appellant, in the sum of K63, 757.00 being the balance of the construction charges for two communication towers which were constructed by the plaintiff as instructed by the 1st defendant. The said towers were constructed at · Chikonkomene Railway Station and Chikonkomene village in the Kabwe District of the Central Province of Zambia under purchase order no. LPO 006/LCSZM/Pl/2011 dated 16th May, 2016. The plaintiff was also granted damages for breach of contract to be assessed # with interest and costs. 1.2 The affidavit in support of the application was dated 18th September, 2017 cµid was deposed to by Jonathan Ngeleka, the Managing Director of the appellant company. In that - -J3- ,. affidavit, the appellant claimed the following damages purportedly arising from the breach of contract: (i) K60, 285. 94 for the delayed contract 1n increased preliminaries caused by the delay in mobilizing on site ( 15% of the total contract sum); (ii) K40, 190.63 costs resulting from inflation (10% of the total contract sum); (iii) K76, 363.02 for the works the plaintiff was prevented from completing by the 1st defendant at Chikonkomene Railway Station and Chikonkomene village sites in Kabwe as agreed in the contract; (iv) KS, 867.60 for building materials bought for the works the plaintiff was prevented from completing by the 1st defendant as agreed in the contract. (v) K300, 000.00 for inconvenience, disturbance and loss of # good will to the suppliers of building materials, Ngwala Electrical and Hardware Limited, after losing a credit facility held with them. (vi) KS, 000, 000. 00 for direct loss of the works to be achieved under NCC Classification Grade 4 category -J4- - General Civil Engineering Works as provided for by the National Council for Construction, and (vii) KS, 842, 326.38 loss of contract awarded by Food Reserve Agency (at 25% of the expected annual profit i.e. Hudson formula). The total amount claimed was Kl 1, 325, 033.57. 1.3 The appellant was absent during the hearing and did not file an affidavit in opposition. 2.0 JUDGMENT ON ASSESSMENT 2.1 Upon considering the affidavit evidence and the submissions made by the plaintiff, the learned District Registrar noted that the plaintiff was claiming amounts in percentages of the whole contract sum. She opined that it was irregular for the plaintiff to claim damages on the whole contract sum of K200, 953.16 ~ which was not subject of the proceedings nor subject of the judgment in default of appearance. The District Registrar noted that in paragraph 16 of the affidavit in support, the plaintiff was claiming damages in the total sum of Kl 1, 325, 033.57 which was far above the contract sum and that -JS- - awarding this sum as damages would go against the spirit of the case of Zambia National Building Society v. Ernest Mukwamatala Nayunda 111 on restitutio in integrum. 2.2 The claims under paragraphs 6(i) and (ii) of the affidavit in support i.e. K60, 285.94 for the increased preliminaries caused by the delay in mobilizing on site (15% of the total construction sum) and (ii) K40, 190.63 being costs resulting from inflation (10% of the total contract sum) were dismissed on the basis that there was no documentary evidence to prove these claims. 2.3 As for the claims under paragraphs 6(iii) and 6 (iv), the District Registrar relied on the cases of Philip Mhango v. Dorothy Ngulube and Others 121 where it was held inter alia that: "Any party claiming special loss needs to prove that loss with evidence which makes it possible for the court to determine the quantum of such damages with a fair amount of certainty." - -J6- r- 2. 4 The court also relied on the case of David Chiyengele & Others v. Scaw Limited 131 where it was held: "Where it is found that a party's contractual right has been breached but he fails to prove that he suffered actual damages, he is only entitled to nominal damages." 2.5 The District Registrar found that the plaintiff did not perform the works mentioned in paragraph 6 (iii) and is not entitled to be paid for the work which it did not do. To make such an award would unjustly enrich the plaintiff as was held in the Zambia National Building Society case supra. The plaintiff was therefore awarded the sum of K20, 000. 00 as nominal damages under paragraph 6 (iii). 2.6 As for the claim under paragraph 6 (iv), the District Registrar stated that it is clear that the building materials had not been used and the plaintiff is not entitled to the whole amount as this would amount to unjust enrichment. As a result, an - award of K2, 000. 00 as nominal damages was made. -J7- 2. 7 In relation to the claim under paragraph 6(v) of the affidavit in support, for K300, 000.00 for inconvenience, disturbance and loss of good will to the supplier of building materials, Ngwala Electrical and Hardware Limited, after losing a credit facility held with them, the District Registrar looked at 3 letters collectively marked as 'JN2'. The letters were from Ngwala Electrical and Hardware Limited to the plaintiff. The one dated 12th April, 2011 gave the plaintiff a line of credit to the limit of K300, 000, 000.00 (K300, 000·.00 rebased). Another letter dated 1st November, 2011 was for an over-due account in the sum of K33, 000, 000.00 (K33, 000.00 rebased) in which the plaintiff was being reminded to settle the bill for building materials obtained on credit by the plaintiff to construct two communication towers. The other letter was dated 16th January, 2012 withdrawing the credit facility. The ~ District Registrar's understanding was that the sum of K300, 000.00 was the whole credit facility availed to the plaintiff which sum the plaintiff was claiming for loss of good will. - -JS- 2.8 Upon looking at the definition of the term 'goodwill' in Black's Law Dictionary, 8 th edition at page 715, the District Registrar stated in her judgment that for the claim to succeed, it must be shown that the plaintiff had a good reputation or good will for a considerable period of time with Ngwala Electrical and Hardware Limited. The acquisition of the credit facility per -se is insufficient. The District Registrar found from the evidence on record that on 16th May, 2011 a contract was executed between the plaintiff and the 1st defendant and according to the letter dated 1st November, 2011 as of 5 th September, 2011 barely four months down the line, the plain tiff had discussions with Ngwala Electrical and Hardware Limited over their failure to pay up the sum of K33, 000.00 for the materials obtained on credit to build the two towers for the 1st defendant. On 26 th January, 2012 the credit facility was cancelled. 2. 9 Further that from the evidence, the plaintiff was not availed the credit facility due to goodwill. No evidence was led by the plaintiff to show h?w long they had transacted with Ngwala - Electrical for them to claim they had attained goodwill. The -J9- plaintiff had just started their journey to build a business relationship but the effort was futile because the plaintiff failed to honour its part of the bargain and therefore the facility lasted for about a year from April, 2011 to January, 2012. The plaintiff had no goodwill with Ngwala Electrical, in their short period of interaction. The claim under paragraph 6 (v) was therefore dismissed. 2.10 With regard to the claim under paragraph 6 (vi), the District Registrar considered exhibit 'JN3' which was produced in support thereof. The said exhibit was a letter dated 29 th November, 2016 which read in part that: " ... .. ... Kindly be notified that your request cannot be granted because all certificates that have been renewed for two or more years will be subjected to first registration re-assessment regardless of your having notified the Council ..... " - The District Registrar opined that the letter was written many years after the fact and there was no connection whatsoever to the contract between the plaintiff and the 1st defendant which -JlO- _,.. - and leave be granted to the appellant to amend the record of appeal and that costs be in the cause. 7.0 DECISION OF THE COURT 7. 1 We have carefully considered the application to dismiss the appeal. The application is based on two grounds; that the lower court had no jurisdiction to enter default judgment and that the appeal before us is incompetent for several reasons. 7.2 We shall start with the issue whether the lower court had jurisdiction to enter the d~faultjudgment because our decision of this issue may render the other issues otiose or lead us to determine them. 7.3 It is common ground that the issue of jurisdiction was not brought up in the court below because the respondent did not even appear before that court. Our position is that, that issue has been properly raised before us because a question of jurisdiction goes to the root of any court case and is a question of law that can be raised at any stage of the proceedings. We -J31- are fortified by the case of Crossland Mutinta, Bashir Seedat v. Donovan Chipanda. l4 l 7.4 Order X rule 22 of the High Court Rules which is quoted herein before on pages 17-18, makes it mandatory for a plaintiff who wishes to obtain a judgment in default of appearance and defence to prove to the court that the writ and statement of claim were served upon the defendant. Therefore, after serving the writ, the person who served it must within at least three days, endorse on the writ the day of the month and week of service thereof, otherwise the plaintiff shall not be at liberty, except where service was effected by an officer of the court appointed under part eight of the Act, in case of non-appearance to proceed by default. The same order and rule make it mandatory for every affidavit of service to indicate the date on which such endorsemen f was made. The rule applies to any mode of service used. 7.5 As rightly pointed out by Mr. Ndalameta, all the words of a section in a statute must be taken into account and given effect because no words in a statute may be regarded as -J32- - "' •, r worthless; the case of Zambia State Insurance Corporation Limited v. Anthony Muyana Musutu 161 refers. 7.6 We have therefore interpreted Order X Rule 22 of the High Court Rules accordingly. 7. 7 We take the view that before a judgment in def8:ult of appearance and defence can be entered, the plaintiff should prove to the court that the writ and statement of claim were served, by filing an affidavit of service and producing the writ duly endorsed with the date when the writ and statement of claim were served. A co1Jrt handling an application for such default judgment has the duty to look out for such evidence and in the absence thereof, to decline to entertain the application for lack of jurisdiction. - 7.8 In the present case, the appellant has failod to show that Order X Rule 22 of the High Court Rules was complied with before the default judgment was entered. The respondent on the other hand, has managed to convince us that the writ was not endorsed as required by the law and that there was no -J33- affidavit of service. The District Registrar, therefore had no jurisdiction to enter the judgment. As stated in the case of NFC Africa Mining PLC v. Techpro Zambia, 1111 rules of court must be strictly followed. The appellant failed to comply with a statutory requirement and this is a serious breach which renders the proceedings in which it occurred and any order made therein a nullity. 7.9 According to Order 13/9 / 12 of the White Book: "An application to set aside an irregular judgment should be made promptly and within a reasonable time (see 0.2 r 2). But the court will in a fit case disregard the lapse of time." "Apart from express rules, there is an inherent r power in the court to prevent an abuse of its proceedings and a judgment, ~ although the application is out of time, will be set aside if the circumstances require it." (Beale v. McGregor f12J) 7.10 In the case of Evans v. Bartlam 1111 Lord Atkin pronounced the principle that; "Unless and until the court has pronounced -J34- a judgment upon the merits or consent, it is to have power to revoke the expression of its coercive power where that has only been obtained by a failure to follow any of the rules of procedure." 7 .11 In light of the foregoing authorities, although the application to set aside the default judgment in this case was made late and indirectly, we have inherent jurisdiction to consider setting it aside and to set it aside. It is in the interest of justice that the matter be determined on its merits. 7.12 Article 118 (2) (e) of the Constitution of Zambia Act No. 2 of 2016 does not give a licence to litigants to breach mandatory rules of procedure. r 7.13 Since the lower court acted without jurisdiction by entering the default judgment, its decision amounts .. to nothing: The case of Crossland Mutinta, Bashir Seedat v. Donovan - Chipanda 141 applies. -J35- 8.0 CONCLUSION 8.1 All in all, the default judgment is nullified and the proceedings that followed were also a nullity. As a result, the other preliminary issues have become otiose. The appeal is accordingly dismissed. We award costs to the respondent in this court only. The same may be agreed upon between the parties or failing that, taxed. In the court below each party will bear its own costs as the respondent did not appear. C. K. MAKUNGU COURT OF APPEAL JUDGE . COUR NGA EAL JUDGE p~ ..........••....••...•..... ••.•......... P. C. M. NGULUBE COURT OF APPEAL JUDGE - -J36-