Premesh Bhai Megan Patel v Rephidim Institute Limited (Appeal No. 53/2005; SCZ JUDGMENT NO. 3 OF 2011) [2011] ZMSC 40 (22 February 2011)

J 1 (77) SCZ JUDGMENT NO. 3 OF 2011 Appeal No.53/2005 IN THE SUPREME COURT OF ZAMBIA HOLDEN AT LUSAKA (Civil Jurisdiction) BETWEEN: PREMESH BHAI MEGAN PATEL APPELLANT AND REPHIDIM INSTITUTE LIMITED RESPONDENT Coram: Sakala,CJ, Silomba, JS and Chibomba, JS. On 20th October 2009 and on 22nd February 2011. For the Appellant: Mr. R. Mainza of Mainza and Company. For the Respondent: Mr. L. Kalaluka of Ellis and Company. JUDG M ENT Chibomba, JS., Delivered the Judgment of the Court. Cases and Other Materials referred to:- Edition, 2001 at page 330 1. Phipson & Elliot Manual of Law of Evidence, 11th 2. De Lassale vs. Guildford (1901) 2 KB 215 3. Beckett vs. Nurse (1947) 1 KB 535 4. Water Wells Limited vs. Jackson (1984) Z. R. 98 5. Holmes Limited vs. Build Well Construction Company Limited (1973) Z. R , page 77, 6. Halsbury's Laws of England, 4th Edition, Volume 9 at page 230 paragraph 356 7. Wilhelm Roman Buchman vs. The Attorney General SCZ No. 74 of 1994 8. Mususu Kalenga Building Limited vs. Richmans Money Lenders Enterprises (1999) Z. R. 27 Legislation referred to:- 1. The Lands and Deeds Registry Act, Chapter 185 of the Laws of Zambia When we heard this appeal, Hon. Mr. Justice S. S. Silomba sat with us. He has since retired. This is, therefore, a Judgment by the majority. J2 (78) The appellant appeals against the decision of the High Court contained in the Ruling dated 20th October 2004, whereunder the learned Judge in the Court below, refused to set aside the default judgment on ground that the Defendant had not shown a defence on merit. The brief history of this matter is that on 14th February 2002, the appellant and the respondent entered into a lease agreement for the respondent to lease Farm No. 6909, Lusaka West, to the appellant for a term of 5 years from 1st March 2002. The lease agreement is at pages 24 to 30 of the Record of Appeal. On 3rd May, 2004, the respondent, who was the Plaintiff in the Court below, filed Court process against the appellant claiming the following relief:- "1. Damages for breach of Lease Agreement relating to portions of Farm 690a, Lusaka West. 2. 3. 4. s. 6. 7. Further or in the alternative, damages for quantum meruit in respect of the work done in the preparation and execution of the Lease Agreement relating to portions of Farm 690a, Lusaka West. K12,337,500.00 being legal costs incurred in preparing the Lease Agreement relating to Farm 690a, Lusaka West. US$10,000 being 4 months rent during which the portions of Farm 690a, Lusaka West were kept in waiting for occupation. Interest at commercial bank lending rate on the amounts found due to the Plaintiff. Any other relief the Court may deem fit. Costs." J3 (79) The Writ and Statement of Claim were served on the respondent on 18 th May, 2004. The appellant did not however, file an appearance. On 14 th June, 2004, Judgment in default of appearance was entered against the appellant. Following this entry of Judgment, the appellant applied to set it aside. As stated above, the learned Judge declined to set the default judgment aside on ground that the appellant had not, in his Affidavit in Support, explained the failure to enter appearance and defence and that the appellant did not say that he was not served with the Court Process. On the question whether or not it was a term of the Lease agreement between the parties that the respondent would put an irrigation system and install ZESCO power lines, the learned trial Judge agreed with the respondent that it was not a term or condition of the Lease agreement that the respondent would install irrigation system and ZESCO power lines as alleged as this was not incorporated in the Lease agreement. The trial Judge accordingly held that a defence on the merit had not been shown. Dissatisfied with the refusal to set aside the default Judgment entered against him, the appellant lodged an appeal in the Supreme Court advancing one ground of appeal. This is that the Court below misdirected itself in law and in fact when it held that the Defendant had failed to show a defence on the merits J4 {80} in his Affidavit in Support of Summons to set aside Judgment in default of appearance and defence. In support of this ground of appeal, Heads of Argument were fi led upon which, t he learned Counsel for the appellant, M r. Mainza, relied. The maj or argument by the appellant was that even though the Lease agreement may not have expressly contained the t erms that an irrigation system and ZESCO power installations were a term and condition of the Lease, extrinsic evidence is admissible to prove any omitted terms which w ere expressly or impliedly agreed upon by the parties before or after executing the contract. In support of this contention, reference was made t o Phipson and Elliot's Manual of the Law of Evidence1, where the learned authors stated that:- "(b) Expectations (1) Omitted Terms: Where a contract, not required by law to be in writing, purports to be contained in a document which the Court holds was not intended to express the whole agreement between the parties, proof may be given of any omitted term expressly or impliedly agreed between them before or at the same time, if it be not Inconsistent with the documentary terms." Counsel also referred to the case of De Lassalle vs. Guildford2 , in which, the Defendant, in the course of negotiations for the letting of his house for a term of three years to the Plaintiff the terms of which were reduced in writing, the Defendant verbally represented that the drains were in good order whereupon the Plaintiff handed the counterpart of the lease to the Defendant. The lease contained no reference to drains. The drains were subsequently found not to be in (81) good order prompting the Plaintiff to take out an action for damages for breach of warranty. The Court of Appeal held that the representation made by the Defendant as to the drains being in good order was a warranty which was collateral to the lease and for breach of which action was maintainable. Counsel quoted what Smith, MR. 1 stated in the above cited case and this is that:- " ... There is the evidence that the Plaintiff would not take the lease unless the drains were guaranteed, and surely the statements made by the Defendant were not made on the assumption that they were to be of no avail to the Plaintiff except they were made fraudulently. In my Judgment everything necessary to establish a warranty has in this case been proved." "It was also shown that the lease did not contain the whole contract between the parties. The lease is entirely silent about the drains, though there is a covenant that the lessee during the term should do the inside repairs, and the lessor the outside repairs, which would, I suppose, include the drains which happened to be inside or outside the house. There is nothing in the lease as to the then condition of the drains - i.e., at the time of the taking of the lease which was a vital point in hand. Then why is not the warranty collateral to anything which is to be found in the lease? The present contract or warranty by the Defendant was entirely independent of what was to happen during the tenancy. It was what induced the tenancy, and it in no way affected the terms of the tenancy during the three years, which was all the lease dealt with. The warranty in no way contradicts the lease, and without the warranty the lease never would have been executed ... " Reference was also made to Beckett vs. Nurse3 in which the Plaintiff as administratrix and widow of her husband, claimed specific performance of an agreement to sell him a plot of land. The document on which she relied as constituting the agreement stated : J6 {82) "Received from (the Plaintiff's husband) the sum of seventeen pounds being a deposit for the field situate near the Fox Inn. Sold for fifty pounds." Across a two penny stamp were written the date and the Defendant's signature. To the right of it was a second signature by the Defendant, with his address. The document also contained a sketch plan showing the position of the field. The Defendant pleaded and gave evidence of an oral agreement containing various other terms including a condition that the intending purchaser should build a bungalow on the land and live in it as the Defendant's servant. The Plaintiff alleged and the Defendant denied that part performance of the agreement if oral. The county court Judge held that the receipt amounted to an agreement in writing. He accordingly refused to admit evidence to contradict or vary it and gave Judgment for the Plaintiff." On appeal, the Court of Appeal held inter-alia that: "The wording of the document did not show that it was intended to contain all the terms of the agreement between the parties and that it was accordingly open to the Defendant to give evidence to show that the oral agreement between the parties contained terms not appearing in the document and that the case must be remitted for that evidence to be taken." Counsel pointed out that paragraphs 4 to 7 of the Affidavit in Support of the Summons to Set Aside the Default Judgment filed in the Court below, showed that there were other terms applicable to the lease agreement and that the lease was subject to a condition precedent. He argued that since the lease agreement did not contain all the terms agreed upon, the appellant can adduce evidence to show that there were other terms which were not reduced in writing. For clarity, paragraphs 4 to 7 of the said Affidavit are recast hereunder and provide as follows:- "4. THAT I entered into a lease agreement with the Plaintiff to rent Farm no. 690a, Chanyanya, Lusaka West, Lusaka on condition that the Plaintiff would put up proper irrigation system which would cover the 500 hectares and which the Plaintiff failed to do. J7 (83) 5. 6. 7. THAT I could not live in the said premises because the Plaintiff did not also install ZESCO power lines in time as agreed and that the water was not good for human consumption. THAT on 4th June 2004, the Plaintiff obtained Judgment in Default stating that I should pay damages for breach of Lease Agreement. THAT my not moving to the Plaintiff's premises was not my fault and therefore I pray to this honourable Court that I be granted a stay." Counsel argued that the learned Judge in the Court below misdirected himself in law and in fact by holding that the appellant had failed to show a defence on the merits in the Affidavit in Support. Further that the terms of the Lease agreement on installation of irrigation system and installation of ZESCO power lines and clean water provision raised triable issues which justified the setting aside of the default judgment. The case of Water Wells Ltd vs. Jackson4 was cited in which it was held that:- "Although it is usual on an application to set aside default judgment not only to show a defence on the merits but also to give an explanation of the default, it is the defence on the merits which is the more important point to consider." That the Ruling should therefore be quashed and the appeal should be allowed. In highlighting the issues not covered in the appellant1s Heads of Argument, Mr. Mainza, referred us to the agricultural lease at page 26 of the Record of Appeal. He pointed out that the lease was for a period of ten years from 1st March 2002, but that the respondent did not register it under Section 4 of the JS (84) Lands and Deeds Registry Act, Chapter 185 of the Laws of Zambia. Mr. Mainza argued that the effect of non-registration of the lease rendered it invalid and that the proceedings leading to this appeal were therefore misconceived. He submitted that even though this issue was not raised in the Court below, this Court is obliged to consider it as it is a legal issue. That the appellant's prayer is therefore that this appeal should be upheld with costs. On the other hand, the learned Counsel for the respondent, Mr. Kalaluka, in opposing this appeal, relied on the respondent's Heads of Argument and the List of authorities filed herein. On the issue of the non registration of the lease and in response to Mr. Mainza's contention on this issue, Mr. Kalaluka argued that it is a well established principle of law which this Court has addressed several times that a party is not allowed to raise issues which were not raised in the Court below. That therefore, the appellant waived his rights on the issue of non-registration of the lease agreement and he cannot now bring it before this Court. In response to the case of De Lassalle vs. Guildford2 cited by the learned Counsel for the appellant, Mr. Kalaluka argued that this case is distinguishable from the current case in that in the earlier case, there was correspondence between the parties to the effect that the terms which were not contained in the lease agreement were part and parcel of the lease between the parties whereas J9 (85) in the current case, there is no such correspondence on the installation of irrigation system and ZESCO power lines. Further that the appellant has not in the Affidavit or in the proposed defence indicated that such correspondence exists and that there is no indication that the appellant ever complained to the respondent over these issues. That therefore this defence is an after-thought and has no merit. It was contended that therefore the Court below did not misdirect itself in law and in fact when it held that the appellant failed to show a defence on the merits so as to justify the default judgment entered being set aside. And that perusal of the lease in question clearly shows that these terms were not part of the lease agreement. That the appellant did not show that the lease agreement was not intended to express the whole agreement between the parties. And that it is not enough to merely allege that the lease agreement did not express the whole agreement as it must be shown that the lease agreement was not intended to express the whole agreement between the parties. In support of this submission, Counsel cited the case of Holmes Limited vs. Build Well Construction Company Limited5 , in which this Court 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." J 10 (86) "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." Further that the case of Beckett vs. Nurse3 cited by the learned Counsel for the appellant should be distinguished from the current case in that in the earlier case, it was quite clear that the document relied upon as constituting the agreement was not intended to express the whole agreement between the parties as the document read: "Received from (Plaintiff's husband) the sum of seventeen Pounds being deposit for the field situate near Fox Inn. Sold for Fifty Pounds. Counsel contended that the lease in question is a formal written document between parties which embodied detailed terms upon which the premises were to be leased to the appellant and that since the lease did not mention the installation of an irrigation system and ZESCO power lines, this is clear evidence that these were not terms or conditions of the lease agreement especially that the installation of a proper irrigation system covering 500 hectares would be so fundamental that it could not reasonably have been left out of the lease agreement even assuming that there was such a discussion. Counsel contended further that if the question of installation of the irrigation system and the ZESCO power lines or water supply were discussed, then these were suppressed by the written lease agreement. In support of this J 11 {87) contention, Counsel cited the case of Holmes Limited vs. Build Well Construction Company Limited5 in which this Court stated that:- "Any discussion of verbal conditions before the written agreement was completely suppressed by the written document." Counsel also referred to Halsbury's Laws of England6 , where the learned authorities stated that:- "Whether a term is implied is a question of law for the Court. A term will not be implied so as to contradict any express term; and in fact, a term might not be implied unless on considering the whole matter in a reasonable manner it is clear that the parties must have intended there should be the suggested stipulation. The Court has no discretion to create a new contract, Where a contract contains an express obligation by a party to the contract, it is for that party to show that this is some implied term which qualifies the obligation.'' It was contended that the learned Judge in the Court below did address his mind to the question whether there were some implied terms and that he decided that there were none. That in this regard, no useful purpose would be served to let the matter proceed to trial on the question of law as there is no indication that the parties ever intended to be bound by any implied terms as has been alleged by the appellant. Counsel argued that as such, to uphold such implied terms would amount to the Court creating a new contract for the parties but that this Court has no discretion to do so. That on this premise, the appellant has failed to show any defence on the merits so as to justify the matter going through trial. And that no useful purpose will be achieved by allowing the matter to proceed to trial as the appellant will merely be making unfounded terms or J 12 (88) conditions which are not embodied in the lease agreement. That accordingly, the Court should dismiss this appeal with costs. In reply, the learned Counsel for the appellant submitted that the appellant is not estopped from raising legal issues in the Supreme Court even though the issues were not raised in the Court below. Counsel contended that Section 4 of the Lands and Deeds Registry Act is very clear on the consequences of non registration of a lease and that this is that the lease agreement cannot be of any benefit to this Court if not registered. Counsel, accordingly, urged us not to keep a blind eye to the breach by the respondent. He argued that the respondent should suffer the consequences of their failure to comply with the legal provisions of Section 4. We have seriously considered this appeal together with the arguments advanced in the respective Heads of arguments, the oral submissions by the learned Counsel for the parties and the authorities cited. We have also considered the Ruling by the learned Judge in the Court below. 1n resolving this appeal, we shall begin with the last issue raised by the learned Counsel for the appellant concerning the non-registration of the lease agreement and its effect on the lease agreement. The law in Sections 4(1) and 6 of the Lands and Deeds Registry Act is that a document purporting to grant, J 13 {89) convey or transfer land or any interest in land, or be it a lease, if it is for a longer term than one year, it must be registered and that if it is not registered, the document shall be null and void and cannot therefore be relied upon in Court. In the current case, the contention by Mr. Mainza was that since the lease agreement was not registered, it is a nullity. Our firm position on this issue is that we have no quarrel with the provisions of Sections 4 and 6 of the Act for this is the law. However, in the current case, since the appellant did not raise this issue in the Court below, he cannot now raise it before us as the appellant waived his right to raise this issue. We are fortified by our decision in the case of Wilheim Roman Buchman vs. Attorney General7 in which we stated that a matter that was not raised in the Court below cannot be raised as a ground of appeal in this Court. We repeated this position in our later decision in Mususu Kalenga Building Limited vs. Richman's Money Lenders Enterprises8 • We therefore dismiss this ground of appeal. With respect to the main ground of appeal which is that although not included in the lease agreement, it was a term and condition of the lease agreement that the respondent would install irrigation system and ZESCO power lines and provide clean water supply and the contention that since the J 14 (90) respondent did not do this, a defence on the merits was disclosed. We wish to restate that in dealing with an application to set aside a default Judgment, the question is whether a defence on the merits has been raised or not and whether the applicant has given a reasonable explanation of his failure to file a defence within the stipulated time and that it is the disclosure of the defence on the merit which is a more important point to consider. In the current case, our perusal of the Affidavit in Support of the application to set aside the default judgment entered has revealed that no defence on the merit was disclosed. We say so because the lease agreement does not state that installation of an irrigation system and installation of ZESCO power lines and clean water supply provision was a term of the lease agreement. Mr. Mainza's argument that the installation of the above can be implied raises the question of law as to whether such a term can be implied in this particular case. The position of the law however, is that a term will not be implied so as to contradict any express term and that a term might not be implied unless on considering the whole matter in a reasonable manner, it is clear that the parties must have intended that there should be the suggested stipulation . In this case, we see no such intention. Further, if indeed, the proposed systems were intended to be part and parcel of the lease agreement, no viable J 15 (91) explanation was given for the omission of such a fundamental term from the written formal lease agreement. Provision of an irrigation system to cover 500 hectares of farm land is such a large area such that it cannot reasonably be argued that it was left out of the formal lease agreement. We also agree with Mr. Kalaluka's submission that if indeed, this issue was discussed and agreed, then it was suppressed by the written lease agreement which does not at all mention it. The case of Holmes Limited vs. Build Well Construction Company Limited5 fortifies our position as it states that any discussion of verbal conditions before the written agreement is completed can be suppressed by the written document. There is therefore no proof that indeed, the appellant could not have signed the lease agreement if the alleged systems were not installed or provided let alone the proof that the alleged term was discussed and/or agreed. Further, Halsbury's Laws of England6 states that the Court has no discretion to create a new contract for the parties. In the current case, it would amount to the Court creating a new contract for the parties if the appellant's proposition was upheld. We decline to do so. Although Mr. Mainza has cited a number of authorities which show that extrinsic evidence can be admitted to prove any terms which were expressly or J 16 (92) impliedly agreed by the parties before or after execution of the contract, our perusal of these authorities has revealed that in order for such a position to exist and as stated above, there must be evidence which indicates that the agreement was not intended to incorporate all the terms and conditions of the contract. This is not the position in the current case. Therefore, the current case should be distinguished from those authorities. In the De Lassalle vs. Guildford2 case cited by Mr. Mainza, correspondence was produced in Court which showed that the terms which were not contained in the lease agreement were part and parcel of the lease agreement between the parties. In the case at hand, no such correspondence was produced to this effect. The case of Beckett vs. Nurse3 , can also be distinguished from the current case in that in the earlier case, it was shown that the agreement was not intended to express the whole agreement between the parties whereas in the current case, we have a formal written lease agreement which contains very clear terms and conditions. As stated above the lease agreement does not at all mention any of the alleged term. For the reasons given above, we agree that no defence on the merits was disclosed to warrant this matter going to trial. The learned Judge in the Court J 17 (93) below was therefore on firm ground when he declined to set aside the default judgment. This appeal, therefore, fails. The same is dismissed with costs to the respondent to be taxed in default of agreement. E. L. SAKALA CHIEF JUSTICE S. S. SILOMBA SUPREME COURT JUDGE (RETIRED) H. CHI BOMBA SUPREME COURT JUDGE