Permanent Chambers v Ichaki & Others (Appeal 97 of 2011) [2015] ZMSC 55 (4 September 2015)

IN THE SUPREME COURT OF ZAMBIA APPEAL NO. 97/2011 HOLDEN AT NDOLA (CIVIL JURIDICTION) BETWEEN: PERMANENT CHAMBERS (Suing as a firm) APPELLANT AND GAOl ICHAKI GOVIN GUPTA KAGEM MINING LIMITED HAGURA MINING LIMITED CORAM: Phiri, Wood and Malila, JJS. 1ST RESPONDENT 2ND RESPONDENT 3RD RESPONDENT 4TH RESPONDENT On 1st September, and 4th September, 2015. For the Appellant: Mr. R. Mandona-Messrs Chilupe and Permanent Chambers. For the 1st Respondent: N/ A. For the 2nd Respondent: N/A. For the 3rd Respondent: Mr. E. C. Banda, SC - Messrs E. C. B Legal Practitioners. Mr. K. Botha- Messrs William Nyirenda and Company. For the 4th Respondent: N/ A. J2 JUDGMENT Wood, JS, delivered the judgment of the Court. CASES REFERRED TO: 1. Anderson Kambela Mazoka v Levy Patrick Mwanawasa and others (2005) Z. R. 138. 2. Corbett v Bond Pearce (Afirm) 3 All ER. 769. 3. Lewanika and four others v Chiluba, (1998) Z. R. 79. 4. Khalid Mohamed v The Attorney-General (1982) Z. R. 49. 5. YB and F Transport Limited v Supersonic Motors Limited (2000) Z. R. 22 6. Costa Tembo vs Hybrid Farms Limited (2003) 2. R.98. 7. General Nursing Council of Zambia v 1ng'utu Milambo Mbangweta (2008) Z. R, 105, volume 2. LEGISLATION REFERRED TO: 1. The Practitioners' (Conveyancing and Non-contentious Matters) (Costs) Order of 200 1. 2. Order 62 of the Rules of the Supreme Court, 1999 Edition. The facts of this appeal are that sometime in December, 2004, the 151 and 2nd respondents sought the services of the appellant in their quest to have the 41h respondent acquire 42% shares that the Government of the Republic of Zambia held in the 3rd respondent J3 mining company. The 1st and 2nd respondents were directors in the 3rd respondent company and at the same time, were directors in the 4th respondent company. During the Chiluba administration, the agreement for the sale of the shares to the 4th respondent was concluded, but when the late President Levy Patrick Mwanawasa SC took over office, his administration found the US$1,800,000 consideration that was agreed upon inadequate and decided to re- open negotiations for the sale of Government interest in the 3rd respondent. The Government was now asking for a higher price for its shares in the 3rd respondent company. To ensure that the shares in the 3rd respondent went to the 4th respondent, the 1st and 2nd respondents instructed the appellant to assist with side negotiations with government officials. Although these instructions were not in writing, the witness for the appellant, Mr. Mandona, gave details of meetings that he held with the 1st and 2nd respondents as well as high ranking government officials. He stated that even though he was not present during the final negotiations, he was the one who negotiated the final price at which the shares were sold to the 4th respondent. With regard to the appellant's fees, Mr. Mandona stated that the 1st and 2nd respondents instructed J4 him to collect any money he may need for logistics from the 3rd respondent and to that effect, he collected a cheque of K2,OOO. OO from a Mr. Batarchari, the then Chief Executive Officer of the 3rd respondent, which he used for logistics during one of his many meetings. After the negotiations between the Government and the 4th respondent were concluded, the appellant rendered a bill of 3% of the price at which the shares were sold, less the K2,OOO. OO paid by the 3rd respondent. When the bill remained unpaid, the appellant took out an action against the respondents claiming the sum of US$107,574.47, interest and costs. The 1st, 2nd and 4th respondents entered appearance and filed in a defence but did not appear at the hearing of the matter. In her judgment, the learned trial Judge found that the 3rd respondent was not liable to pay the appellant's fees as it did not retain them. She found that the appellant sued the 3rd respondent on the basis of the K2,OOO. OO that it paid to Mr. Mandona, but that this did not amount to a retainer as this sum was paid upon the request of the 4th respondent for Mr. Mandona's logistics. The J5 learned trial Judge held that the letter dated 11th April, 2005, that the Solicitor-General wrote to the appellant proved that the appellant was acting for the 4th respondent and not the 3rd respondent. She also found that even though the 1st and 2nd respondents were directors in the 3rd respondent company, they could not issue instructions on the purchase of the shares on behalf of the 3rd respondent because it was the subject of the sale. Therefore, the 1st and 2nd respondents instructed the appellant as directors of the 4th respondent not as directors of the 3rd respondent. On the evidence before her, the learned trial Judge refused to lift the corporate veil of the 3rd and 4th respondents and hold them as one economic entity which benefitted from the professional servIces rendered by the appellant. The learned trial Judge, however, found that the appellant had proved its case against the 1st, 2nd and 4th respondents. The appellant was not satisfied with the judgment as it related to the 3rd respondent and filed in five grounds of appeal. Ground one of the appeal was that the learned trial Judge misdirected herself in law and fact when she held that the 3rd respondent was J6 not liable to the appellant in any way or at all in respect of the appellant's claim against it. Ground two of the appeal was that the learned trial Judge misdirected herself in failing to appreciate the significance of the undisputed evidence on record relating to or showing the 3rd respondent's active participation in the instructions given to the appellant by the 1st, 2nd and 4th respondents who were the directors and managers respectively, of the 3rd respondent. In ground three of the appeal, it was contended that the learned trial Judge erred in law and fact in failing to appreciate that the issuance of a cheque worth K2,OOO. OOby the 3rd respondent to the appellant for payment to the appellant, m the appellant's professional capacity of a deposit on account of costs was by itself, instructions in writing and also a confirmation of instructions by the 3rd respondent to the appellant. Ground four of the appeal was that the 3rd respondent did not adduce any evidence to show what the payment of K2,OOO. OOrepresented and did not adduce evidence to show that it was not paid as a deposit to the appellant. In ground five, it was contended that the order awarding costs in favour of the 3rd respondent was unconscionable in view of the circumstances of the case. J7 Mr. Mandona argued grounds one to four of the appeal as one. In respect of these four grounds of appeal, Mr. Mandona submitted that the evidence on record showed that the 3rd respondent paid the appellant the sum of K2,OOO. OO by cheque on instructions of the 1st and 2nd respondents who at the time, were directors in the 3rd respondent company. He argued that this money represented a retainer which authorised the appellant to act for the respondents. He contended that the issuance of a cheque signified written instructions to the appellant to render legal servIces to the respondents. Mr. Mandona further argued that at the meeting where the cheque was received, the 3rd respondent's Chief Executive Officer indicated that privatisation of the 3rd respondent would greatly benefit the 3rd respondent and the surrounding communities. The fact that the 1st and 2nd respondents were directors in the 3rd respondent company and the company knew of the benefits that would flow from it being privatised made the 3rd respondent liable as it was aware that the money it was providing was in respect of the provision of legal services connected to the privatisation. J8 Mr. Mandona submitted that if the K2,OOO. OOwas paid by the 3rd respondent on behalf of the 1st, 2nd and 4th respondents, the 3rd respondent should have called a witness to testify to that effect. In the absence of evidence from the 3rd respondent on what the K2,OOO. OOrepresented, the only evidence before the court was that the payment was made prior to the provision of professional services by the appellant at the instance of the respondents. In response to grounds one to four of the appeal, counsel for the 3rd respondent submitted that in arguing that the 3rd respondent should have brought a witness to explain the circumstances under which the K2,OOO. OOwas paid, the appellant was attempting to abrogate the fundamental principles of law as they relate to the burden and standard of proof. Counsel submitted that the appellant could not shift the burden of proof onto the appellant and to support this submission, cited the case of Anderson Kambela Mazoka v Levy Patrick Mwanawasa and others! in which we reaffirmed the position that the burden of proof lay on the party making the allegation. Counsel submitted that in its defence, the 3rd respondent had indicated that the sum of J9 K2,OOO. OOwas paid to the appellant on request by the 4th respondent. The onus in this case, was on the appellant to prove the existence of a lawyer-client relationship between the appellant and the 3rd respondent by way of a retainer. Counsel for the 3rd respondent submitted that where there is an allegation of a retainer having been paid, the lawyer must be able to outline the instructions given and the corresponding duties thereto. In support of this argument, counsel cited the case of Corbett v Bond Pearce (A firmJ2 in which the court stated that: "The retainer is the basis of the duties which a solicitor owes to his client. And the extent of his duties depends on the terms and limits of that retainer and any duty of care to be implied must be related to what he is instructed to do. " It was argued that the terms of a retainer are a question of fact and the burden of proof was upon the appellant to establish as a matter of fact, the causal link between instructions given by the 3rd respondent (if any) and the actions taken by the appellant. It was contended that the appellant had lamentably failed to adduce any evidence of what instructions the 3rd respondent gave it. What existed on record were instructions from the 1st and 2nd respondent to ensure that the 4th respondent purchased the 42% shareholding HO m the 3rd respondent company. It was argued that the 3rd respondent could not give instructions to the appellant as it was the subject of the sale. It was also argued that the appellant's claim against the respondent failed because the appellant failed to establish the existence of a lawyer-client relationship created by the existence of a retainer. The only reason that the appellant added the 3rd respondent on its bill of costs was because the 3rd respondent was a beneficiary of the sale, not because it retained the appellant to act for it. We have considered the judgment appealed against and the heads of argument filed in support of grounds one to four of the appeal. In his evidence, the appellant's only witness, Mr. Mandona, admitted that the 3rd respondent was not a party to the agreement as it was the subject of the sale. Even the letter dated 18th April, 2005 which the Solicitor-General wrote to the appellant showed that the appellant was acting for the 4th respondent and not for the 3rd respondent. Further, in his evidence appearing in the record of appeal before us, Mr. Mandona clearly stated that the appellant was involved in the negotiations on behalf of the 4th respondent at the • instance of the 1st and 2nd respondents. He also admitted that he discussed the bill rendered with the 1st and 2nd respondents who felt that the bill was too high and asked him to adjust it from 5% to 3% which he did. He did not hold any discussions of this nature with Mr. Batarchari, the then Chief Executive Officer of the 3rd respondent company. In his evidence, Mr. Mandona clearly stated that he was to agree on the appellant's fee and how it would be paid with the 1st and 2nd respondents and that if there was any money needed for logistics before the parties could agree, it could be obtained from the 3rd respondent. There was no representation that the 3rd respondent would be responsible for the appellant's fees or that the sum of K2,OOO. OO signified a deposit of the fees. Mr. Mandona also admitted that The Practitioners' (Conveyancing and Non-contentious Matters) (Costs) Order of 2001, places an obligation on counsel in non-contentious matters to agree on fees with the client before an assignment is undertaken. It states as follows in Section 3: "On taking instructions, a practitioner shall agree with the client the fee scale to be applied in accordance with the scales set out in the Schedule to this Order." • J12 Clearly, there was no such agreement with the 3rd respondent. The conversation Mr. Mandona had with Mr. Bathachari, in which Mr. Bathachari indicated that the 3rd respondent and the surrounding community would greatly benefit from the privatisation of the 3rd respondent by the 4th respondent, cannot be construed as instructions to act on behalf of the 3rd respondent. The 1st, 2nd and 4th respondents admitted to instructing the appellant in some way and this was confirmed by the letter the then Solicitor-General wrote to the appellant on 18th April, 2005. The evidence on record clearly shows that the 1st and 2nd respondents retained the appellant in their capacities as directors of the 4th respondent to ensure that the 4th respondent acquired the Government shares in the 3rd respondent company. They did not act in their capacities as directors for the 3rd respondent as the appellant argued. The appellant failed to adduce any evidence of what instructions the 3rd respondent gave with regard to the sale of its shares. It is our considered VIew that the appellant failed to prove that their involvement in the side negotiations with the Government was on account of instructions given by the 3rd respondent. Clearly, the J13 K2,OOO. OOwas meant for logistics during the period that the 1st and 2nd respondents were out of the country. The appellant's argument that the 3rd respondent should have brought a witness to explain the payment of K2,OOO. OOlacks merit as it amounted to shifting the burden of proof onto the 3rd respondent. The burden of proving that the cheque for K2,OOO. OO amounted to a deposit towards the appellant's fees lay with the appellant the entire time. In the case of Lewanika and four others v Chiluba3 we stated that: ".. .for the petitioners to succeed, it is not enough to say that the respondents failed to provide a defence or call witnesses, but that the evidence adduced establishes the issues raised to a fairly high degree of con vincing clarity ..... " Further in the case of Khalid Mohamed v The Attorney- General4, we held that: "A plaintiff cannot automatically succeed whenever a defence has failed; He must prove his case. " Clearly, the failure by the 3rd respondent to call any witnesses to explain the circumstances under which the cheque of K2,OOO. OO was given to the appellant did not, in itself, entitle the appellant to • • succeed in its claim against the 3rd respondent. Grounds one to four of the appeal lack merit and are accordingly dismissed. Mr. Mandona did not address us on ground five of the appeal relating to costs. However, counsel for the 3rd respondent submitted that the learned trial Judge did not err when she awarded costs to the 3rd respondent as there was no evidence of any wrongdoing on the part of the 3rd respondent. In support of this submission, counsel cited the case of YB and F Transport Limited v Supersonic Motors LimitedS in which we held that: "The general principle is that costs should follow the event; in other words a successful party should normally not be deprived of his costs, unless the successful party did something wrong in the action or in the conduct of it." We have considered the brief submissions made by counsel for the 3rd respondent with regard to ground five of the appeal. We agree with counsel that the learned trial Judge exercised her discretion judicially when she awarded costs to the 3rd respondent in this matter. A perusal of Order 62 of the Rules of the Supreme Court, 1999 Edition, shows no authority in support of Mr. Mandona's argument that costs should not be awarded simply because doing so would be unconscionable. In this case, • • the 3rd respondent has been put to expense in defending the action against it. In the case of Costa Tembo v Hybrid Farms Limited6 we held that a successful litigant is entitled to costs. Further in the case of General Nursing Council of Zambia v!ng'utu Milambo Mbangweta7, we held that: "It is trite law that costs are awarded in the discretion of the court, such discretion is however to be exercised judicially. Costs usually follow the event." It follows that ground five of the appeal equally lacks merit. We are of the view that this appeal did not require two advocates to argue elementary principles of contract on behalf of the 3rd respondent. We, therefore, consider additional counsel at the hearing of this appeal a luxury whose costs should not be foisted on the appellant by the 3rd respondent. This is the position under Order 62/3/3 of the Rules of the Supreme Court, 1999 Edition which states that "It might be inappropriate to order an unsuccessful applicant to bear more than one set of costs if the Secretary of State and the Local Planning Authority both appeared and advanced duplicated arguments." J16 Mr. Botha did not 'add anything new to the appeal as he relied on the heads of argument that State Counsel Banda filed. The 3rd , •• respondent will, therefore, be responsible for Mr. Botha's costs and ,; 4: ,:. ••.. 4: expenses in connection with his brief appearance in this appeal, We must add here that had State Counsel Banda been appearing with Mr. Botha, which he would have been entitled to do by virtue of his rank, the appellant would have borne Mr. Botha's costs as well. A limited order for costs in the circumstances of this case cannot be said to be improper. The net result is that the entire appeal is dismissed with costs to the 3rd respondent as stated above, to be taxed in default of agreement. ("- / .\?' .k\ ~.l,., r' , I .••..l (;..~ . , G. S. PHIRI SUPREME COURT JUDGE \ ~ 0. •.••••.......•........ f\ \ . , \ . \. I'~J\ . .........'A"M'.~6'o6'''''''''''' SUPREME COURT JUDGE . MALILA SC SUPREME COURT JUDGE