DSS Coal Extraction and Suppliers and Ors v Maamba Collieries Limited (APPEAL No. 236/2022) (1 August 2024) – ZambiaLII

IN THE COURT OF APPEAL OF ZAMBIA APPEAL No. 236/2022 HOLDEN AT LUSAKA (Civil Jurisdiction) //- BETWEEN: ( COAL EXTRACTION A~D-sui;:i;:;'i DSS 1 APPELLANT ST DAVY SOMWANI SIAMUSOKWE 2ND APPELLANT AND MAAMBA COLLIERIES LIMITED RESPONDENT CORAM: Chashi, Sichinga and Sharpe-Phiri, JJA ON: 19th June and 1st August 2024 For the Appellants: N/A For the Respondent: T. Mvu la-Kamanga (Mrs), Messrs Theotis Mutemi Legal Practitioners JUDGMENT CHASHI JA, delivered the J udgment of the Court. Cases referred to: 1. Twampane Mining Co-Operative Society Limited v E & M Sarti Mining Limited (2011) Vol 3 ZR, 67 2. Peter David Lloyd v. J.R Textiles Limited - SCZ Appeal No. 137 of 2011 -J23. William David Carlisle Wise v E.F. Harvey Limited (1985) ZR, 179 4. Daniel Mwale v Njolomole Mtonga (sued as Administrator of the Estate of the late Gabriel Siwanamutenje Kapuma Mtonga) and The Attorney General - SCZ Judgment No. 25 of 2015 5. Maningi Safaris Limited v Attorney General - SCZ Appeal No. 85 of 2018 6. Christoper Lubasi Mundia v Sentor Motors Limited (1 982) ZR, 66 7. City Express Service Limited v Southern Cross Motor Limited (2007) ZR, 263 8. Admark Limited v Zambia Revenue Authority (2006) ZR, 43 9. Mwale v Mtonga and Anor - SCZ Appeal No. 06 of 2012 l 0. Zambia Consolidated Copper Mines Limited v John David Chileshe (2002) ZR, 86 11. Stella Upton v William Derek Walker (1971) ZR, 192 12. Letang v Cooper [1965} l QB 232 Legislation referred to: 1. The Limitation Act, 1939 Rules referred to: 1. The Court of Appeal Rules, S.I No. 65 of 2016 -J3Other authorities referred to: 1. Halsbury's Laws of England, 4th Edition, Vol 28 1.0 INTRODUCTION 1.1 This is a second appeal against the Judgment of Honourable Mrs. Justice C.B. Maka-Phiri, delivered on 25th March 2021, in which the learned Judge dismissed the Appellants' appeal as being statute barred. 2.0 BACKGROUND 2.1 The brief background is that on 23rd February 2009, the 1st Appellant submitted an application to the Respondent, seeking to provide a service for the extraction of coal rejects at the Respondent's Maamba Mine area. In response to the application, the Respondent, via a letter dated 18th March 2009, advised the Appellants that before considering the proposal, the Appellants should first carry out a physical demonstration of the process. This requirement was intended to allow the Respondent to -J4assess the 1st Appellant's ability and capacity to execute the proposed services. 2.2 Following the completion of the hand-picking coal demonstration, the Appellants, on 8th May 2009, wrote to the Respondent requesting permission to sell the recovered coal, to offset operational costs and to pay the workers involved in the exercise. In a letter dated 29th June 2009, the Respondent agreed to dispose of the coal and instructed the Appellants to find buyers who would place orders through the Respondent's sales team. The Respondent would handle the sales and pay the Appellants ZMK 91,840.00 (unrebased) per metric ton sold. 2.3 However, 1n a letter dated 10th July 2009, the Respondent's position changed. The coal orders were still to be placed through the Respondent's sales team, but the Respondent would now sell the coal to the Appellants at US$20 per ton. The Appellants would then sell to their clients and pay the Respondent the total order amount. This letter superseded the one from 29th June 2009. -JS2.4 The Appellants proceeded to order coal on credit from the Respondent and sold it, as noted in a letter dated 10th November 2009, requesting an additional 400 metric tons on top of the 100 metric tons already ordered. The total sales amounted to ZMK 58,089,083.36, which the Appellants acknowledged was not paid to the Respondent. 2.5 Subsequently, on 25th November 2010, the Appellants demanded payment for labour involved in handpicking 1,282 metric tons of coal, totalling ZMK 177,738,880.00 at an agreed rate of ZMK 91,840.00 per ton. On 4th January 2011, the Respondent denied responsibility for the payment and claimed the Appellants owed ZMK 58,089,083.36. On 17th January 2011, the Appellants acknowledged the debt, but requested it be offset against the amount owed by the Respondent, leaving a balance of ZMK 59,649,796.64. 2.6 Further correspondence followed, with the Appellants demanding payment and the Respondent maintaining it owed nothing. The final letter on 6th October 2017, from -J6the Respondent, stated it would have no further communication on the matter. 2.7 This prompted the Appellants on 8th August 2019, to commence an action against the Respondent, seeking inter alia an Order compelling the Respondent to pay ZMK 59, 649.796.64 being the outstanding balance and compensation for loss of business. 2.8 In the statement of claim, the Appellants alleged that following the physical demonstration, the Respondent's technical service manager and mine manager verbally instructed them to produce 1,500 metric tons while an agreement was being drafted. By the time operations were halted, 1,282 metric tons were produced, at ZMK 91,840.00 per ton, amounting to ZMK 117,738.880.00. The Appellants claimed the Respondent promised payment for the coal produced after its sale. 2.9 The Respondent settled its defence on 11th September 2019, denying any agreement with the Appellants for payment for the demonstration or extraction services. The -J7Respondent claimed a draft contract for the sale of handpicked coal was prepared but never finalized. 2.10 The Respondent alleged the Appellants bought 522.10 metric tons of extracted coal on credit, amounting to ZMK 58,089,083.36, promising to pay after resale, which they failed to do. The Respondent argued that this was the only binding agreement, and thus, the Appellants owe the Respondent, not the other way around. Alternatively, the Respondent argued that the Appellants were barred from pursuing the action due to their own delay and relied on section 2 of The Limitation Act.1 3.0 JUDGMENT OF THE SUBORDINATE COURT 3.1 After considering the evidence and submissions of the parties, the learned Magistrate was of the view that, although the issue of statutory limitation was raised through submissions, it was necessary to address it first because its outcome would affect the court's jurisdiction to determine the matter. 3.2 The learned Magistrate noted that, there was no contract signed between the parties, but observed from the -J8correspondence that the Appellants began demanding payment from 2011, indicating that the due date for payment was by or before 2011. The Appellants only commenced an action on 8th August 2019, more than six years after the cause of action arose, thereby violating the prov1s10ns of section 2 of The Limitation Act.1 Consequently, the court had no jurisdiction to entertain the matter and accordingly dismissed it. 4.0 APPEAL IN THE COURT BELOW 4.1 Disgruntled with the decision of the Subordinate Court, the Appellants launched an appeal in the court below advancing the sole ground of appeal as follows: The lower court erred in law and fact when it deemed my action to be statute barred by stating that my cause of action arose in 20 l O and 2011 and not 2017 when the parties' negotiations failed and a dispute was declared between the parties the same year. 4.2 In support of the appeal, the Appellants contended that the cause of action arose on 6th October 2017, when the -J9Respondent sent a letter terminating any further communication on the Appellant's claims. Thus, the action was not statute barred, as it was commenced soon after receiving the said letter. The Appellant maintained that earlier legal action was not possible due to ongoing settlement negotiations. Therefore, the Appellant argued that the matter should have been heard and determined. 4.3 In opposing the appeal, the Respondent argued that the cause of action arose in 2009 when the Appellants were asked to cease operations. The Respondent asserted that excuria settlement discussions did not stop time from running or affect the accrual date of the cause of action. The Respondent cited the cases ofTwampane Mining Co operative Society Limited v E & M Sorti Mining Limited1 and Peter David Lloyd v JR Textiles Limited2 to support the argument that excuna settlement negotiations do not suspend the running of time. 4.4 In reply, the 2nd Appellant reiterated the arguments 1n support of the appeal. -Jl05.0 DECISION OF THE COURT BELOW 5.1 After considering the appeal and the submissions by both parties, the learned Judge was of the view that the issue falling for determination was whether or not the action by the Appellants was statute barred. 5.2 The learned Judge noted that section 2 of The Limitation Act1 sets a six-year limitation period for all contracts and tort actions. The Judge emphasized that the crucial factor is the date when the cause of action accrued to determine if the limitation period had expired. 5.3 In this case, the learned Judge found that the cause of action accrued in 2009, when the Respondent directed the Appellants to halt the coal processing project and indicated payment for the produced coal. According to the Judge, the Appellants, who claimed to be owed money, were entitled to sue at that time, as there was an identifiable party to sue (the Appellants) and a party to be sued (the Respondent). Thus, a cause of action had arisen. 5.4 The learned Judge observed that the Appellant did not sue due to ex curia discussions. However, the Judge clarified -Jllthat such discussions do not suspend the limitation period once a cause of action has accrued. Referring to the Peter David Lloyd case, the Judge highlighted that negotiations do not bar a defendant from invoking the statute of limitations, even if they cause delays. 5.5 The Appellants' argument that the cause of action accrued on 17th September 201 7, was deemed misconceived and their claim that the period from 2009 to 201 7 was for discovery and activities was found to be legally baseless and misleading. 5.6 The Judge concluded that the Respondent was entitled to rely on the statute of limitations, as the Appellants had neglected their rights for nearly ten years. As a result, the appeal was dismissed. 6.0 THE APPEAL 6.1 Dissatisfied with the Judgment, the Appellant has appealed to this Court advancing two grounds couched as follows: (i) The court below erred in law and fact when it ruled that our case was statute barred as -Jl2providedfor under section 2 (1) of Statute of Limitations Act 1939, without considering when the injury occurred. We shall aver at trial that injury occurred in this matter when Maamba Collieries closed the door for further dialogue through their letter of 6th October 2017, not in 2011 as alleged by the Respondent; and (ii) The court erred in law and fact when it did not consider the indebtedness of the Respondent to the Appellant which the Respondent do not dispute. 7.0 ARGUMENTS IN SUPPORT OF THE APPEAL 7 .1 The two grounds have been argued together under four points. Firstly, the Appellants argued that the court below misdirected itself when it focused on the Respondent's argument that the matter was statute barred under section 2(1) of The Limitation Act1 without addressing , the Appellants' actual claims for unpaid monies owed by the Respondent. According to the Appellants, the -J13Respondent did not dispute its obligation to settle the claim but relied on The Limitation Act1 as a defence to avoid payment. 7.2 The Appellants questioned why they were penalized with costs in a straightforward case and criticized the lower court for dismissing the appeal based on The Limitation Act1 which excused the Respondent from paying the owed , monies. 7 .3 Secondly, it was argued that the cause of action arose on 6th October 2017, when the Respondent declared their refusal to entertain further communication regarding the Appellants' claims. According to the Appellant, this marked the point where negotiations ceased and legal action became necessary. 7.4 The Appellants reiterated their argument that The Limitation Act1 was invoked as a shield after the Respondent failed to address the Appellants' claims. Moreover, the six year period stipulated by the Act had not expired when the matter was commenced on 8th August 2019. -J147 .5 The Appellants urged this Court to disregard the Respondent's rationale for not settling the claims, noting that the Respondent acknowledged the Appellants' successful completion of the contract, as evidenced by a letter dated 28th June 2011 and meeting minutes from 28th April 2011. According to the Appellants, these documents confirmed that the 1st Appellant produced 1,282 metric tons of coal at a cost of ZMK 117,738,880.00, with Z·MK 58,089,083.36 recovered, leaving a balance of ZMK 59,649,796.64 owed to the 1st Appellant. The Respondent's failure to pay this balance violated the contract terms. 7 .6 Thirdly, the Appellants argued that the lower court erred by allowing the Respondent's request to have the matter resolved through written submissions without an open court hearing. According to the Appellants, this decision enabled the Respondent to rely on The Limitation Act1 as a defence. It was argued that written submissions should follow oral submissions in an open court, with parties -J15invited to submit their written arguments only after the oral proceedings are complete. 7. 7 With respect to the fourth argument, our attention was drawn to the report appearing on pages 46 to 49 of the record of appeal (the record), for a meeting held at the Respondent's Human Resources Manager's office on 28th April 2011, to address the 1st Appellant's claims. In the said report, the 1st Appellant demanded payment for 1282 metric tons of coal supplied to the Respondent at K91,840.00 per metric ton. In response, the Respondent's Human Resources Manager sought an amicable resolution but erred when it proposed that the advance payment of ZMK 58,089,083.36 be forfeited. 7 .8 According to the Appellants, it is clear that at the end of the contract, the 1st Appellant owed the Respondent ZMK 58,089,083.36, to be recovered from coal sales. The 1st Appellant produced coal worth ZMK 117,738,880.00, from which the debt was to be deducted, leaving a balance of ZMK 59,649,796.64. Therefore there is no question of forfeiture as the outstanding debt was settled, and the -Jl6Respondent now owes the balance of ZMK 59,649,796.64, which they refused to pay. 8.0 RESPONDENTS ARGUMENTS IN OPPOSITION 8.1 Mrs Kamanga, Counsel for the Respondent, relied on the filed heads of argument dated 11th November 2022. In response, the Respondent contended that the Appellants' heads of argument raised the following issues: 1. Whether or not the matter was statute barred; 2. Whether or not the Respondent was entitled to file written submissions in an open court matter; 3. Whether or not ex-curia settlement discussions stop time from running; and 4. Whether or not the Respondent was entitled to costs in the lower court. 8.2 Regarding the first issue, the Respondent argued that under Section 2(1) of The Limitation Act1 claims based , on simple contracts must be filed within six years from when the cause of action arose. Claims filed beyond this period are statute barred. The Respondent referred us to Black's Law Dictionary definition of a cause of action and · Jl 7the case of William David Carlisle Wise v E.F. Harvey Limited3 and asserted that a cause of action arises when a factual situation entitles one party to sue another or seek a court remedy. 8.3 In this case, it was argued that the Appellants' cause of action accrued when the Respondent instructed them to cease operations and the Appellants began demanding payments that were not met between 2009 and 2011. It was argued that time started to run from this point. Therefore, when the Appellants commenced their action on 8th August 2019, eight years had passed, rendering their claim stale. 8.4 The Respondent cited the case of Daniel Mwale v Njolomole Mtonga (Sued as Administrator of the Estate of the late Gabriel Siwonamutenje Kapuma Mtonga) and Attorney General4 where the Supreme Court , emphasised the policy behind time limitation periods to prevent stale claims. Additionally, the case of Maningi Safaris Limited v Attorney General5 was referred to, affirming that the limitation period starts when the cause -J18of action anses, and failure to commence proceedings within six years poses risks to the claimant. Based on the foregoing, it was submitted that section 2 of The Limitation Act1 was correctly applied in this case, as the Appellants chose to commence the matter more than 8 years after it began demanding payments. 8.5 Regarding the second issue and in response to the argument that the Respondent only raised The Limitation Act1 in its submissions and after closing its case, we were referred to page 42 of the record of appeal, specifically to paragraph 11 of the Respondent's defence which clearly showed that the Respondent had pleaded the defence of The Limitation Act1 from the outset and its written submissions merely elaborated on this defence. 8.6 Moreover, by pleading The Limitation Act in its defence, it was argued that the Respondent provided adequate notice of its case and the disputed issues to the Appellant. In support thereof, the case of Christoper Lubasi Mundia v Sentor Motors Limited6 was cited on the role of pleadings. -Jl98. 7 The Respondent further contended that the record clearly shows that, at the close of the defence's case, the Respondent's Counsel requested to make written submissions. Initially, the Appellants opted not to file written submissions but later did so in response to the Respondent's submissions. Therefore, the Appellants had the opportunity to make written submissions, which the trial court considered. As such, the Appellants cannot raise an issue with the fact that the Appellants filed written submissions. 8.8 Furthermore, the Respondent submitted that it is well established that the defence of The Limitation Act1 can be raised at any stage of the proceedings. In support of this argument, the cases of City Express Service Limited v Southern Cross Motor Limited7 Admark Limited v , Zambia Revenue Authority8 and Daniel Mwale v Mtonga and Anor9 were cited to illustrate that invoking The Limitation Act1 involves raising a point of law that can be considered at any stage in the proceedings. -J208.9 Regarding the third issue, the Appellants contend that the lower court should have considered 6th October 2017, as the date the cause of action accrued, since that was when negotiations ended and the Respondent refused further communication. However, the Respondent argued that time does not stop running simply because parties are engaged in negotiations. In support of this argument, the Respondent cited the cases of Zambia Consolidated Copper Mines Limited v John David Chileshe10 and Daniel Mwale4 case. The Respondent maintained that the Appellant was entitled to sue as early as 2011, when the payment for the sale of coal allegedly became due and demands were being made. 8.10 Regarding the Appellants' reference to the letter on page 50 of the record as evidence of the Respondent's admission of indebtedness, it was argued that this letter did not clearly and unequivocally admit debt and thus did not entitle the Appellants to a fresh accrual of a cause of action. Furthermore, even if the said letter which is dated -J2128th June 2011, was considered as an admission, the claim remains statute barred since 8 years had passed. 8.11 In addressing the Appellants' argument that The Limitation Act1 was used to avoid settling the claim, it was pointed out that the merits of the case are irrelevant if it is statute barred. In support of this argument, the case of Stella Upton v William Derek Walker11 and the Peter David Lloyd2 case were cited. 8.12 Regarding the fourth issue on costs, the Respondent contended that the Appellants did not raise the issue of costs in the Memorandum of Appeal. Therefore, this Court should not consider the said argument. However, in the event that we are inclined to consider it, it was argued that it is a well-established legal principle that costs follow the event, allowing the court to exercise its discretion to award costs to the successful litigant. 8.13 Therefore, the lower court was justified in awarding costs to the Respondent, as the Judgments in both the Subordinate Court and the High Court favoured the -J22Respondent. Consequently, the Appellant, as the unsuccessful party, was rightly ordered to bear the costs. 9.0 ARGUMENTS IN REPLY 9.1 In reply, the Appellant began by pointing out that the Respondent had significantly delayed in submitting their heads of argument. Instead of submitting their arguments two weeks after being served, the Respondent submitted theirs more than three months after being served. Consequently, the Appellant sought our position on this delay. 9.2 Alternatively, the Appellant proceeded to respond to the Respondent's arguments. The Appellant reiterated their arguments in their heads of argument, maintaining that the cause of action arose on 6th September 2017, when the Respondent ceased communication and refused to settle the outstanding balance of K59,649.79 for 1282 metric tonnes of coal supplied. It was argued that The Limitation Act1 does not apply in this case as the matter is not statute barred, with the cause of action having arisen in 201 7. . . -J2310.0 ANALYSIS AND DECISION OF THE COURT 10.1 We have considered the Judgment being impugned and the arguments by the Appellants and Counsel for the Respondent. 10.2 First and foremost, regarding the delay by the Respondent in filing the heads of argument, we note that the Respondent filed their heads of argument on 11th November 2022, within 30 days of being served as stipulated by Order 10 / 16 of The Court of Appeal Rules1 (CAR). However, the Respondent only served the Appellant on 19th January 2023, more than two months after filing, which is contrary to the rules of this Court. Nonetheless, we believe that this delay by the Respondent did not prejudice the Appellant in any way. 10.3 Moreover, the Appellant filed their heads of argument in reply on 3rd February 2023 more than 7 days after being served, contrary to Order 10 (17) CAR. It would appear that the Appellant was equally in breach of procedural rules, thereby invoking the principle of "he who comes to equity must come with clean hands." The Appellant, 4 I -J24having also violated the rules of this Court, cannot now object to the Respondent's procedural missteps without acknowledging their own. However, in the interest of justice, we will proceed to hear the appeal and caution both parties to strictly adhere to procedural rules to avoid having their arguments expunged in future. 10.4 Reverting to the main issue, the Appellants have contended that the issue of The Limitation Act1 was introduced belatedly in the Respondent's submissions after the close of the defence and therefore should not have been considered. However, upon thoroughly examining the record, it becomes evident that the Respondent initially raised this issue in their defence, appearing at pages 40 to 42 of the record and was subsequently elaborated upon in the submissions. Therefore, the Appellants' claim that the Statute of Limitations was introduced solely during the submissions is both inaccurate and misguided. 10.5 Regarding when the cause of action arose against the Respondent, the Appellants argue that it materialized on 6th October 2017, when the Respondent sent a letter 4 I -J25terminating any further communication regarding the Appellants' claims. Conversely, the Respondent contends that the cause of action accrued in 2009, when the Appellants were instructed to cease operations. 10.6 The landmark case that defines a cause of action is the William David Carlisle Wise3 case. In that case, a cause of action was described as follows: •~ cause of action is disclosed only when a factual situation is alleged which contains facts upon which a party can attach liability to the other or upon which he can establish a right or entitlement to a judgment in his favour against the other." 10.7 Additionally, Diplock L.J. 1n Letang v Cooper further clarified a cause of action as: "Simply a factual situation the existence of which entitles one person to obtain from the Court a remedy against another person." 10.8 To determine the precise onset of the cause of action against the Respondent, an examination of the -J26correspondence exchanged between the parties 1s essential. Notably, on 25th November 2010, the Appellants formally demanded payment for labour services involved in handpicking 1,282 metric tons of coal. The total amount claimed was ZMK 177,738,880.00, calculated at the rate of ZMK 91,840.00 per ton. 10.9 Subsequently, on 4th January 2011, the Respondent responded by explicitly denying any responsibility for the payment and countered with a claim that the Appellants owed them ZMK 58,089,083.36. 10.10 In our view, after reviewing the communications exchanged between the parties, the materialisation of the cause of action can be pinpointed to 4th January 2011. On this date, the Respondent explicitly disavowed responsibility for the payment demanded by the Appellants, thereby creating a concrete factual basis upon which the Appellants could establish a legal claim. 10.11 However, despite this clear stance by the Respondent, the Appellants continued to persistently write letters demanding payment. Throughout this period, the -J27Respondent consistently maintained its position. It was not until 6th October 2017, when the Respondent formally notified the Appellants that it would cease any further communication on the issue, that the Appellants decided to pursue legal action. Even then, the Appellants waited nearly two years before finally commencing the action. 10.12 The Appellants argued that they could not commence legal action earlier due to ong01ng excuna settlement discussions. While we do recognise that negotiations are an essential part of dispute resolution, the law is settled that engaging in negotiations does not pause the statutory limitation period. Halsbury's Laws of England, 4th Edition, Volume 28, at Paragraph 608, states: "The mere fact that negotiations have taken place between a claimant and a person against whom a claim is made does not debar the defendant from pleading a statute of limitation, even though the negotiations may have led to delay and caused the claimant not to bring his action until the statutory period has passed. It -J28seems, however, that the defendant will be debarred from setting up the statute if, during the negotiations, he has entered into an agreement for good consideration not to do so, or, if he has represented the desires that the plaintiff should delay proceedings and that the plaintiff will not be prejudiced by the delay, and the plaintiff has acted on the faith of his representation". 10.13 Based on the foregoing, it is clear that once the statutory period elapses, the right to sue is lost, regardless of the merits of the case. As we see it, allowing negotiations to suspend this period could lead to potential manipulation, with parties prolonging discussions to avoid litigation. Therefore, parties are urged to remain vigilant and protect their legal rights while engaged in negotiations. With that being said, the Appellants' argument regarding excuria settlement discussions is fundamentally flawed and lacks merit. -J2910 .14 In the Daniel Mwale4 case, the Supreme Court stated as follows: " .... the Statute of Limitation when raised, brings forth a serious legal question as to whether the Court has jurisdiction to entertain the action before it, given that it was brought outside the limit period. It hardly bears repeating that the issue of jurisdiction is a threshold question and a lifeline for continuing any proceedings. Where a Court holds the opinion that it has no jurisdiction, the very basis for continuation of the proceedings before it - It must forthwith cease to deal with that matter. In our view, the issue of statutory bar when raised is as much about the jurisdiction of the Court as it is a statutory defence for a party. It is a legal point touching on both the court's jurisdiction and a provision of a statute. ... " 10.15 In light of the above, when the Appellants formally commenced legal action on 8th August 2019, the statutory -J30limitation period as per section 2 of The Limitation Act1 had already expired resulting in the extinguishment of the Appellants' right to sue. Consequently, the lower court had no jurisdiction to deal with the matter. We find that both grounds of appeal lack merit and fail to justify overturning the lower court's decision. 11.0 CONCLUSION 11.1 The Appeal is devoid of merit and is accordingly dismissed. taxed in default of a J. CHASHI COURT OF APPEAL JUDGE I... .L.Y: ~I I C ' HING ~ HARPE-g IRI COURT 0F APPEA COURT OF APPEAL JUDGE