Darkstone Investments Limited v Yapiray Demiryolu Insaat Sistermleri and Ors (2024/HPC/0626) (12 June 2025) – ZambiaLII

n :;:'-?;-,<). ·: f. -.._ , ... . t · 0 .--.~, • I ~. ..... ,".;I, • ·\ -~ ....__ ,!;_~•-•~Lt::' __ IN THE HIGH COURT FOR ZAMBfi\ .., ~024/HPC/0626 AT THE COMMERCIAL REGISTRY , -...---.:.~ . J .t ( H C O iv L i D l E Ju N r A is T d i L ct U io SA n) K A t_..,.,.__ 2 __ _ J U _ N 2 , " ._ .. J . / I LJ r , , ~\ . ! .f . -,::.:.-.: ..;-_... ;-~, ·•-~:J - BETWEEN: p O B"'· f. ~: 1 Ry t ~SJ··-s·7 ~ l.fJc:· r DARKSTONE INVESTMENTS LIMITED -....:~ -q -·~ LAINTIFF .._.J AND YAPIRAY DEMIRYOLU INSAAT SISTERMLERI DEFENDANT SANAYI VE TICARET ANONIM SIRKETI ZAMBIA RAILWAYS LIMITED FIRST THIRD PARTY INDUSTRIAL DEVELOPMENT CORPORATION LIMITED SECOND THIRD PARTY Before the Hon. Mr Justice K. Chenda on 12th June 2025, in Chambers For the Plaintiff : N / A For the Defendant : Mr M. Ndalameta of MAY & Co. For the First Third Party: Mr M. Mwiba, In House Counsel. For the Second Third Party: Mr C. Kaela of GM Legal Practitioners RULING On preliminary issue relating to third party proceedings 1. PREFACE 1.1 The Plaintiff took out this action by writ and statement of claim filed 29th August 2024 seeking the following reliefs: (i) payment of K3,175,571.96 for services rendered pursuant to a contract dated 1st June 2021; (ii) damages for breach of the contract; (iii) interest on (i) and (ii); (iv) any other relief the Court may deem fit; and (v) costs. 1.2 The Defendant took out third party proceedings against the two Third Parties on 18th September 2024 and settled its defence on 20th September 2024. th 1.3 The Third Parties settled their defences on 30 September 2024 and 14th October 2024, respectively. 1.4 The Plaintiff for its part settled a reply on 23rd September 2024 and the matter progressed to scheduling conference where after Bar-Bench consultation, yielded the following core issues for determination: (i) what is the correct extent of the account between the Plaintiff and the Defendant under the contract between them (the "services contract"); (ii) are the Defendant's payment obligations to the Plaintiff under the services contract subject to fulfillment of the Third Parties' payment obligations to the Defendant under the Engineering Procurement and Constrl}.ction Contract (the "EPC Contract") between the latter two; (iii) subject to harmonisation with cause no. 2024/230, are the Third Parties or either of them indebted to the Defendant under the EPC Con tract; (iv) is the Plaintiff ultimately entitled to relief against the Defendant in the circumstances; and (v) if the preceding issue is determined in favour of the Plaintiff, is the Defendant entitled to be indemnified by the Third Parties or either of them. 1.5 After fulfilment of the preparatory steps, the matter was set down for trial to take place on 6-8th May 2025. R2 1.6 On 21st March 2025, the Plaintiff filed an application for judgment on admission. Before the application could be heard, the Plaintiff and Defendant applied for entry of judgment by consent on terms drawn up by them and embodied in a proposed order of even date. 1.7 The resultant ruling, delivered 10th April 2025, resulted in a partial judgment entered against the Defendant, effectively settling the dispute between the Plaintiff and Defendant. 1.8 Thereafter, I invoked the provisions of Order 14A Rule 1(1) of the Rules of the Supreme Court of England (the "RSC") to raise the following preliminary issue: "whether the third-party claim is still tenable in view of the judgment dated 14th March 2025 delivered in cause 2024/HPC/0230." 1.9 I invited the Defendant and Third Parties to make filings in respect of the said issue and set the matter down for hearing on 12th June 2025. 1. 10 The Defendant tendered its foundation arguments on 13th May 2025, while the First and Second Third Parties filed their arguments on 16th and 20th May 2025, respectively in answer to the preliminary issue. R3 1.11 The final say was from the Defendant through arguments filed in reply on 27th May 2025. 1.12 I heard the application today and this is my decision, delivered ex-tempore, after carefully considering the arguments advanced and the material on record. 2. THE SCOPE OF THE PENDING THIRD PARTY PROCEEDINGS 2 .1 The parameters of the third party proceedings were set as follows in the third party notice dated 18th September 2024: "The Defendant claims against both the Third-Parties to be indemnified against the Plaintiff's claims and the costs of this action on the grounds that: 1. By an Engineering, Procurement and Construction Contract dated 5th March 2021 (the Contract"}, the Defendant contracted with the Third-Parties for the rehabilitation and modernisation of the Zambia Railways at the contract price of Euro 978,093,639 excusive of value added tax. 2. The Defendant is a foreign company and conducts no other business in Zambia apart from the work it was doing pursuant to the Contract. 3. It was a term of the Contract that the Defendant would submit a statement relating to work done, and it would be paid within 56 days, the amounts fairly determined by the First Third-Party to be due, and approved through an Interim Payment Certificate. R4 4. In fulfilment of the Contract, the Defendant engaged the services of the Plaintiff for the project on the understanding that the Third-Parties would honour the Contract. The work done by the Plaintiff related to the Contract, and several vehicles purchased from and through the Plaintiff were registered in the name of the First Third-Party. 5. In accordance with the Contract, the Defendant dutifully executed 92.3 per cent of their obligations and the First Third-Party issued 5 Interim Payment Certificates approving the amounts due to the Defendant. 6. Despite the approval and issue of the Interim Payment Certificates by the First Third-Party, the Third-Parties have not to date paid the Defendant the sum ofEuro 4,956,323.89. 7. The Defendant's actions complained of by the Plaintiff herein are as a result of the acts and/or omissions of you, the Third-Parties hereinbefore stated. The Defendant will show that when the Third Parties were making payments to the Defendant under the Contract, the Defe nda nt was able to meet its obligations towards the Plaintiff" 2.2 From the foregoing the basis of the third party proceedings can be described as follows. 2.3 The parties are the Defendant and Third Parties; the claim is for breach of contract; the subject matter is the EPC Contract and monies thereunder (€4,956,323.89) allegedly due from the Third Parties to the Defendant. RS 2 .4 The alleged breach is said to have had a domino effect on the Defendant's performance of its separate contract with the Plaintiff, hence the indemnity sought. 3. THE SCOPE OF CAUSE 2024/HPC/0230 AND ITS JUDGMENT 3.1 I sat as presiding Judge in cause 2024/HPC/0230, which can be described as follows. The parties were the Defendant and its consortium partner (Yapi Merkezi lnsaat Ve Sanayi A.S.), as well as the Third Parties herein as Plaintiffs and Defendants therein; the claim was for breach of contract; the subject matter was the EPC Contract and monies thereunder allegedly due from the Third Parties to the Defendant. 3.2 Of relevance to this stage of the case is the following part of the judgment dated 14th March 2025: "6.22 According to paras. 13 to 16 of the statement of claim, the allegedly outstanding sums of €4,956,323.89 and €1,433, 797.50 are rooted in IPCsl-6. Thus they are, by implication, dependant on the validity of the IPCs. 6.23 In the preceding parts of this judgment, I alluded to the fact that certification of works and their value was a preserve of the engineer (14. 6 at p. 77-78 agreed bundle), who could then issue an IPC. R6 6. 24 To that can be added that payments to TSR consortium had to be anchored on !PCs issued by the engineer (clause 14. 7 at p. 78-79 agreed bundle). 6.25 In short, a pre-condition to triggering the employer's payment obligation to TSR consortium was issuance oflPCs by the engineer. 6. 26 According to the index of the agreed bundle, the !PCs appear at p.441, 447, 465, 472, 482 and 492, and contrary to the statement of Mr Gedik that they were issued by the First Defe nda nt, they instead bear the Plaintiffs' endorsement at the foot. Whatever the case, the engineer (under the contract) had no hand in the !PCs. 6.27 It follows that in the absence of the expert oversight role of the engineer, none of the IPCs exchanging hands between TSR consortium and the employer had the seal of approval envisaged by the contract. 6.28 Consequently, from the material before Court, the Plaintiffs are not entitled to the sums of €4,956,323.89 and €1,433, 797.50 as the very IPCs on which they are based are not valid under the contract. So I.find." (Emphasis added) 3.3 The judgment concluded with guidance to the parties to follow through with the procedure under the EPC Contract, to determine inter alia the net positions of the parties (net owing or net owed). R7 4. ANALYSIS, CONCLUSION AND ORDERS 4.1 It is clear from the foregoing that the judgment in cause 2024/HPC/0230 found inter alia that the payment obligations in favour of the Defendant herein under the EPC Contract had not yet been activated. Further that the interim payment certificates upon which the claim including for €4,956,323.89 was based were invalid. 4.2 In African Life Financial Service Limited v Dickson Mtonga & Ors. - Appeal No. 163/2016 at p.J23-24, the Supreme Court guided: "In Mpongwe Farms Limited v. Dar Farms & Transport Limited, we set out a breakdown of the important facets of res judicata as a concept. We gave our understanding of res iudicata which is that it: Puts to rest and entombs in eternal quiescence every justiciable issue and question actually adjudicated upon or which should have been raised in the initial suit. And, the law is fairly settled and denned beyond peradventure in a plethora of cases decided by this court, that for a party relying on the defence of res iudicata to succeed, he must satisfy the following fi.ve conditions, namely (i) that the parties or their privies are the same in both the previous and the present proceedings; (ii) the claim or issue in dispute in both actions is the same; (iii) that the res (or the subiect matter of the litigation) in the two cases are the same; (iv) that the decision relied upon to support the plea of estoppel is valid, subsisting and fi.nal and; (v) that the court that gave the previous decision to sustain the plea, is a court of compet~nt iurisdiction." (Emphasis added) RS 4.3 From the earlier parts of this ruling, it is evident that the third party proceedings and cause 2024/HPC/0230 coincide in terms of parties, cause of action and subject matter. 4 .4 To be specific, the grievances in the third party proceedings herein (claiming the sum of €4,956,323.89) are a square fit subset of the wider dispute that was determined by the judgment in cause 2024/HPC/230. 4.5 There is no material before Court to show that the said judgment is no longer valid or subsisting (such as on account of a successful appeal). 4.6 Further, this Court as it sat in cause 2024/HPC/0230, was duly constituted as one of competent jurisdiction, just like it is with this case. 4. 7 Accordingly, the grievances sought to be ventilated in the third party proceedings are res judicata. 4.8 The onus is now on the Defendant to pursue the remedy prescribed in the judgment in cause 2024/HPC/0230 and if that results in a payment to the Defendant, then it would be for the Defendant and Plaintiff to fulfil the partial judgment herein. 4.9 Consequent to that the third party proceedings are hereby terminated in limine. R9 4.10 However, it is noteworthy that the termination has not been on account of any fault of the Defendant or credit to the Third Parties. 4.11 Instead it is the result of a material change in circumstances, whereby the proceedings herein have been overtaken by the judgment in cause 2024/HPC/0230. 4.12 Accordingly, I deem it fair and just that each of the Defendant and Third Parties shall bear their own costs of the third party proceedings. So it shall be, pursuant to Order 40 Rule 6 of the High Court Rules, under Cap 27. /L<&- . Dated at Lusaka this ------------------ day of ------- -- --------------------- 2025 ······-···-··· c.Q ···-·-·········· K.CHENDA Judge of the High Court RlO