Zambia Railways Ltd v Ilton Agencies Ltd (Appeal 22 of 1987) [1987] ZMSC 77 (21 December 1987)

IN THE SUPREME COURT OF ZAMBIA APPEAL NO. 22 OF 1987 HOLDEN AT LUSAKA (Civil Jurisdiction) BETWEBi: ZAMBIA RAILWAYS LIMITED Appellant and ILTON AGENCIES LIMITED Respondent CORAM: Ngulube, D. C. J., Qaxtinex and Sakala JJ. S 22 September 1987 and 21st December 1987 For the Appellant : Mr. M. A. N. Nsefu, Legal Counsel, Zanbia Railways For the Respondent : Mr. R. M. Mandona of Permanent Chambers JUDGMENT Sakala, J. S. delivered the judgment of the court. For convenience we will refer to the appellant as the defendant and the respondent as the plaintiff. This appeal consists of two parts: an appeal against a consent judgment dated 21st February, 1985 entered in favour of the plaintiff in the sun of K64,859.50, representing the price of two tons of steel, and an appeal against a High Court judgment dated 24th April, 1986 entered, after a trial on matters which were not admitted, in favour of the plaintiff in the sum of K137,000.00 representing the price of five tons of steel. The history of the case is that the plaintiff has been a constant supplier to the defendant of various goods. Sometime in March 1984 the parties agreed that the plaintiff would sell to the defendant and that the defendant would purchase from the plaintiff a certain quantity of steel. It was common cause that the amount of steel ordered and supplied was delivered in two lots. The first lot delivered and accepted by the defendant consisted of three tons of 6mm mild steel valued at K39,000.00. It was not in dispute that this sun had been J2 paid to the plaintiff. There is ample evidence that the defendant used two tons of this steel. On about the 12th July, 1984 the plaintiff supplied to the defendant another lot of steel which consisted of seven tons 10mm mild steel at K27.00 per kg. Upon receipt of the second lot the defendant observed that the price being charged by the plaintiff for this lot was grossly exorbitant. It is not in dispute that as a result of this observation on the part of the defendant negotiations between the parties were held in which the defendant offered to buy the seven tons of 10mm mild steel at a lower price and if that offer was not acceptable to the plaintiff to return whatever steel that had not been used. It is quite clear from the evidence that by the time of this new contract the defendant had not used any of the steel from the lot of seven tons. Consequent upon the new agreement a Mr. Sikazwe, the acting Supplies Manager of the defendant company, wrote to the director of the plaintiff company a letter dated 20th September, 1984 in the following terms: "Dear Sir, RE: MILD STEEL I write to inform you as indicated to you earlier that Zambia Railways has made arrangements to return to your premises 7} tonnes of the above steel. The reason for our returning of the steel is well known to you. Our representative in Ndola will make sure that this is signed for by yourself on receipt of the steel at your premises. As indicated to you we are still endeavouring to purchase and replace the two tonnes of steel that we consumed. This too once purchased, will be returned to yourself. Yours faithfully, ZAMBIA RAILWAYS LIMITED C. G. SIKAZWE Acting Supplies Manager c.c. Managing Director c.c. Corpany Secretary & Legal Counsel c.c. Chief Civil Engineer", In the bundle of documents there is an undated letter from the plaintiff to the defendant which reads: - J3 - "The Supplies Manager, Zambia Railways, P. O. Box 80695, KABWE. Dear Sir, Further to our discussion concerning the supply of steel and compressors, a decision has been made as follows: 1. Compressors It has been agreed to reposses the compressors as they are not in compliance with your horsepower requirement as per orders placed on us. We supplied 1/6 and 1/5 horsepower whereas you wanted 1 and 1/2 horsepower. 2. Steel - 10mm round rods As we have in all respects complied with your requirement in this matter, and are informed that you have already consumed 3 tons of this steel we demand payment for the steel consumed. Thanking you. Yours faithfully, for ILTON AGENCIES LTD J. MANDE DIRECTOR" While the two letters confirm that the parties had held discussions concerning the supply of steel, the defendant was talking of returning seven tons of 10mm and half a ton of 6mm mild steel and that they would replace the balance, and the plaintiff was demanding payment for 3 tons of steel consumed. This to us seems to have been the starting point of the event: that followed. It was not disputed that at this point the defendant had received ten tons of steel in all. It was common cause that seven and half tons of steel had been dispatched back to the plaintiff by the defendant. The plaintiff, however, rejected the steel which had been returned. The plaintiff issued a specially endorsed writ claiming, among other things, the total amount of the seven tons of 10mm mild steel. They applied for summary judgment. The susnons was supported by an affidavit. The defendant filed two affidavits in opposition in whichii it was explained that under the varied conditions of the agreement J4 - the defendant had to be paid the amount equivalent to the value of the used steel which was two tons and not K39,000.00 which was the amount for three tons. This apparent concession led to the consent judgment and later to the final judgment after trial. It would appear to us that the plaintiff understood the two affidavits in opposition as suggesting that the two tons of steel consumed were from the seven tons of 10mm mild steel. The plaintiff obtained a consent judgment for an equivalent amount of the value of two tons of steel allegedly consumed out of the seven tons. The learned trial judge held the defe­ ndant liable after a trial and entered judgment against the defendant on the equivalent amount of 3 five tons of 10mm mild steel. It is quite clear to us, on an examination of the documents, pleadings and the oral evidence, that after the discussions between the parties, they were no longer ad idem throughout all the events leading to the consent judgment and the trial. Consequently, the misdirection cm the part of the parties led the learned trial judge to make erroneous findings. On behalf of the defendant Mr. Nsefu argued four grounds of appeal against the consent judgment. These grounds are as follows: (a) The consent judgment was made pursuant to gross error of fact that which prevailed over the nature of steel which the appellant conceded to have consumed. (b) There prevailed a misapprehension of fact that the steel which had been consumed had not been paid for when in fact it had already been paid for in full. (cH The consent judgment distorted the true intents of the appellant in this matter and further in so far as it was relied upon by the trial court in reaching its final decision misled the court resulting in its making erroneous findings of fact as to whether the new agreement had been complied with or not. (d) One Chisha George Sikazwe was wrongly quoted by the appellants* advocate as having conceded that two (2) tonnes . of steel were consumed from a lot of seven (7) tonnes and was not paid for when in fact the two (2) tonnes consumed were from a lot of three tonnes which had been paid for in full." J5 - Mr. Nsefu also filed six grounds of appeal against the final judgment which are substantially the same as those filed against the consent judgment. An application by Mr. Nsefu for leave to adduce fresh affidavit and documentary evidence was refused. Grounds 1 and 2 were argued together. In arguing grounds 1 and 2 Mr. Nsefu pointed out that when the plaintiff applied for summary judgment the defendant filed two affidavits in opposition which, he submitted were misunderstood by the advocates for the plaintiff to mean that two tons of 10mm mild steel out of seven tonnes had been consumed. According to Mr. Nsefu this led the advocates for the plaintiff to appeal against the order granted to the defendant for unconditional leave to defend the action, the basis of that appeal having been that there was no triable issue on account of the fact that the defendant had conceded to having consumed two tons of steel out of the seven tons 10mm mild steel. According to Mr. Nsefu the plaintiff's advocates' assertion that the defendant had conceded to having used two tons of steel was so strong that the defendant's advocate submitted to the misapprehension and efforts to correct the plaintiff's advocates on the issue of which steel had been used landed on deaf ears. Mr. Nsefu pointed out that at the time of the consent judgment the defendants advocate had not known the exact amount of steel that had been returned and had been consumed. Consequently the plaintiff's advocates took advantage of the defendant's ignorance. He submitted that had the plaintiff's advocates correctly read the defendant's affidavits in opposition, he should have appreciated that the amount of steel that they were discussing had already been paid for. Counsel contended that the whole mistake came about from a misunderstanding of the two affidavits sworn by one Chisha George Sikazwe in opposition to an application for summary judgment. Mr. Nsefu also pointed out that the plaintiff had been told that seven and half tons were being returned. He submitted that this was in consideration of returning the whole lot J6 including the initial three tons. He submitted that in these circunstances there was an error as to the amount of steel consumed and its nature. This error reigned in the minds of both parties. Turning to the third ground it was Mr. Nsefu1 s argument and submission that the consent judgment distorted the true intents of the defendant and in so far as it was relied upon by the trial judge in reaching his final decision it misled the court resulting in the making of an erroneous finding of fact on the question of whether the new agreement had been complied with or not. Mr. Nsefu argued that the new agreement was that the consumed steel had to be paid for and the unused to be returned. Counsel submitted that the steel was being returned under the new agreement but the impression created was that the concession to payment for the two tons of steel after the commence­ ment of legal proceedings, meant that the defendant had been in breach of the agreement to return unused steel and pay for the used steel. It was Mr. Nsefu's further argument that the consent judgment operated on the mind of the trial judge thereby convincing him that the defendant ordered seven tons of mild steel and used three and paid only for two tons. He submitted that it did not occur to the trial judge that the two tons paid for referred to the initial three tons of 6mm mild steel. Turning to ground four Mr. Nsefu argued that the affidavit evidence by Mr. Chisha in opposition to the summons for summary judgment was very clear stating that the plaintiff was oily entitled to payment for two tons of steel used by the defendant and that the affidavit clearly stated that the two tons had already been paid for. He submitted that the plaintiff's advocate wrongly quoted Mr. Sikazwe as having conceded to consuming two tons out of seven tons of steel. At the conclusion of the submissions on the grounds of appeal against the consent judgment, the court indicated to Mr. Nsefu that - J7 - it was not necessary for him to proceed to argue the appeal against the whole judgment but that the heads of argument would be taken into account. Reacting to the submissions by Mr. Nsefu, Mr. Mandona appearing for the plaintiff submitted that the issue of mistake never existed because the endorsement on the writ of sumons was for 10mm mild steel and the various purchase orders and the delivery notes clearly indicated that the defendant ordered lOrpm mild steel and the Statement of Claim talked of 10mm mild steel and the Defence, admitted using two tons out of the seven tons. He submitted that the alleged mistake in these circunstances did not exist and any argument that there was a mistake was intended to confuse the issue. He pointed out that even the evidence of Mr. Chisha was to the effect that three tons were paid for in July 1984 before the seven tons 10mm mild steel were supplied. Mr. Mandona's contention was that no appeal lies from a consent judgment but he had no authority for this proposition. He concluded his submissions by pointing out that the evidence on record does not establish a mistake to warrant setting the judgment aside. * We have carefully examined the documentary and oral evidence on record. We have also very carefully considered the trial judge's final judgment. It is quite dear to us that the parties proceeded with the trial on the basis that the two terns of mild steel paid for by the defendant were out of the seven tons. The learned trial judge having accepted that the initial agreement had been varied found that the defendant was in breach of the varied agreement by returning the five tons. The issue as we see it is whether there was a possible mistake between the parties. If we accept that there was a possible mistake between the parties we shall have no hesitation whatsoever in setting aside the consent judgment. The first paragraph of the learned trial judges' judgment reads as follows: - J8 - "The plaintiff's claim is for the sum of K181,000.00 for the goods sold and delivered by the plaintiffs to the defendants between 12th and 24th July, 1984. The original claim was for a sum of K247,889.50 but, by consent, judgment was entered for the plaintiffs on 21st February, 1985 in the sum of K64,859.50 representing the price of two tons of steel and graphite powder. The balance of K183,000.00 was amended to read K181,000 cm 20th November, 1985 by application of Counsel for the plaintiffs. The sum, therefore, which is in dispute is KI81,000 and not K183,000 as claimed by counsel in his submissions." We agree with Mr. Nsefu* s submission that the consent judgment distorted the true intents of the defendant and resulted in the learned trial judge also making a mistake. The document at page 13 which we set out at the beginning of this judgment in our view was confirming the varied agreement and this defendant was returning the seven and half tons of mild steel in accordance with that agreement. We cannot agree * with the learned trial judge that the defendant was in breach of the varied agreement by returning the unused steel. The affidavits in opposition to an application for summary judgment clearly indicated that one Chisha George Sikazwe was saying that, while they were not disputing ordering the steel, the plaintiff was only entitled to payment for two tons of steel consumed but that they had paid for three tons of the initial three tons ordered, The oral evidence of George Sikazwe was to the effect that the Civil Engineering Department had ordered in total ten tons of steel, three tons were received first and two tons of these three tons were used before the seven tons were supplied. It is quite clear from this witness's evidence that it had been agreed to pay only for the steel that had been used and to return that which had not been used. We are satisfied on a careful examination of the record that the parties to the consent judgment were not ad idem and that at the trial the parties were talking at cross purposes. The result of all this was that the trial proceeded on the basis that two tons of the steel out of the seven tons had been used and that the defendant had consented to this. Thus on the evidence on record there was clearly a mistake. The misdirection on the part of the J9 - parties resulted in the judge making a conclusion that the defendant breached the varied agreement by not paying for one ton of the steel used and by returning the four tons and by suggesting a replacement of the steel used. On the facts of this case we hold that there was a mistake in this case. The consent judgment was wrongly entered. We agree with all the submissions made by Mr. Nsefu. This being the case the consent judgment cannot stand. We accordingly set it aside. We have taken into account the written submissions by Mr. Nsefu in relation to the appeal against the final judgment. It is quite clear to us that the consent judgment having been entered under mistake the trial also proceeded under a mistake which resulted in the learned trial judge making a wrong finding. That judgment is also set aside. We consider this to be a proper case to order a re-trial. The appeal against the consent judgment and against the final judgment is allowed. We order that the case be re-tried before a different judge. The question of costs is reserved to the trial court. M. M. S, Ngulube DEPUTE CHIEF JUSTICE B. T. Gardner SUPREME COURT JUDGE E. L. Sakala SUPREME COURT JUDGE