Desmond Mubiana and Anor v Abraham Simwanza (2022/HN/393) (17 October 2024) – ZambiaLII

REPU8LIC OF ZAMBI !\ µ I r • • 1 r 7 i\ M 8 JA '' - 7 rctA IN THE HIGH COURT F R-·Z.f\MBIA 2022/HN/393 I.flt~ / I AT THE DISTRICT REG OCl Z¼ ..i.=-' HOLDEN AT NDOLA t -·-· ,.i." · > - ,!, - - I !' (Civil jurisdiction) BETWEEN: DESMOND MUBIANA 1 PLAINTIFF ST / ISAAC MBEWE PLAINTIFF 2ND AND ABRAHAM SIMWANZA DEFENDANT BEFORE THE HONOURABLE MADAM JUSTICE M.C. MULANDA IN OPEN COURT. FOR THE PLAINTIFF: Mr. D.S. Libati - Messrs. D.S. Libati Legal Practitioners FOR THE DEFENDANT: .~ konde - Messrs. Legal Aid ? T CASES REFERRED TO: 1. Wilson Masauso Zulu v. Avondale Housing Project Limited [1982] Z.R. 172. 2. Khalid Mohamed v. The Attorney [1982] Z.R. 49. 3. Zambia State Insurance Corporation v. Serios Farms Limited (1987) Z.R. 93 J2 OTHER MATERIALS REFERRED TO: 1. Chitty on Contracts, Beale, H.G 2sth Edition, London: Sweet and Maxwell Paragraph 12-002 Page 583. 1.0 INTRODUCTION 1.1 In a Writ of Summons issued on 7th October 2022, from the District Registry at Ndola, the Plaintiff claims the following reliefs: a. Payment of the sum of K350, 300.54, being the outstanding payment due to the Plaintiffs. b. Damages for breach of the Fish Supply Contract. c. Interest. d. Any other relief that the Court may deemfit. e. Costs. 2.0 PLAINTIFFS' STATEMENT OF CLAIM 2.1 The Writ of Summons was accompanied by a Statement of Claim in which it was avowed that the Plaintiffs and the Defendant entered into two contracts. The first contract was an oral contract while the second one was a written contract. In both contracts, the parties agreed that the Plaintiffs would supply fish to the Defendant for sale. J3 2.2 The contracts stipulated that when the Defendant sold the fish, the Plaintiffs would be refunded the value at which they had ordered the fish, and the remaining amount, constituting the profit, would be split equally between the parties, being the Plaintiffs and the Defendant, at a ratio of 50:50. 2.3 With regard to the first oral contract, in October 2021, the Plaintiffs supplied the Defendant with fish. From the sale of the fish, the Plaintiffs were owed K29, 800.00 by the Defendant. In respect of the second contract, in May 2022, the Plaintiffs supplied the Defendant with 528 x l0Kgs of fish worth K219, 575.18. On sale, the Defendant realized a profit of K70, 824.82. From the two contracts, the total outstanding amount due to the Plaintiffs as at 12th September 2022 was K350, 030.05. 2.4 It was further avowed that the Defendant had failed and/or neglected to pay the outstanding amount to the Plaintiffs despite several requests and demands for payment. As a result, the Plaintiffs had been deprived of the use of the monies due to them. J4 2.5 DEFENDANT'S DEFENCE 2.6 On 25th October 2022, the Defendant filed a defence in this matter. The Defendant did not deny that he had entered into the two contracts in issue with the Plaintiffs. He, however, avowed that he did not enter into the said contracts in his individual capacity, but did so, on behalf of Masala Fish Center and Investments Limited as its Managing Director. Confirmation of this can be derived from the fact that the business dealings between him and the Plaintiffs did not occur at his residence, but rather at his place of business. 2. 7 The Defendant avowed that he signed the contract in question in the mistaken belief that he was signing on behalf of his company, and not in his individual capacity. He avowed that he had no intention of creating legal relations whatsoever with the Plaintiffs in his individual capacity. 3.0 PLAINTIFFS' REPLY 3.1 On November 2022, the Plaintiffs filed a reply to the 3rd Defendant's defence. The Plaintiffs denied that the Defendant executed the contracts in issue on behalf of Masala Fish Center and Investments Limited as its Managing Director. J5 They avowed that in all the contracts, the Defendants signed in his personal capacity and not on behalf of the said limited Company. 4.0 TRIAL OF THE MATTER 4.1 On 20th November 2023, at the hearing of the matter, the Defendant was not before Court. His Counsel, Mr. Nkonde, sought an adjournment of the matter. He informed the Court that his client had a bereavement. Mr. Libati, Counsel for the Plaintiffs, objected to the application for adjournment for not complying with Statutory Instrument No. 58 of 2020. I declined to adjourn the matter and proceeded to hear the Plaintiffs' witness. 5.0 PLAINTIFFS' CASE 5.1 The Plaintiffs filed witness statements upon which they relied during trial. PWl was Desmond Mubiana, the 1st Plaintiff herein. In his witness statement which was filed on 23rd February 2023, PWl repeated in all material substance the averments contained in the Statement of Claim. I shall, therefore, not reproduce them here. J6 5.2 In cross-examination, PW 1 confirmed that the Plaintiffs were claiming against the Defendant a total sum of K350, 030.05. He stated that the Plaintiffs relied on the contracts signed by the parties to arrive at the said figure. He admitted that the actual amount realized after the sale of the fish was not in the contract. 5.3 PWl further admitted that the amount the Plaintiffs bought the fish for, of K2 l 9, 575.18, and the profit realized, of K70, 000.00, as well as the K29, 000.00 outstanding on the first contract, cannot reach the claimed sum of K350, 000.00. That, adding all the figures above, the total amount owed would be K320, 000.00. He admitted that the Plaintiffs had not shown any document as proof that the Defendant owed them K29, 000.00. PWl further admitted that the Defendant was entitled to half of the K70, 000.00 profit realized after the sale of fish. 5.4 Still in cross-examination, PW 1 admitted that all the business transactions occurred at the Defendant's trading place. He also acknowledged that the Defendant's Company name was clearly displayed at the business location. J7 5.5 In re-examination, PWl stated that the figures representing profits were communicated to him by the Defendant after he had sold the fish. 6.0 PLAINTIFFS' SUBMISSIONS 6.1 On 30th November 2023, written submissions were filed on behalf of the Plaintiffs. I have taken note of the submissions and I shall refer to them where necessary. 7 .0 COURT'S DECISION 7.1 I have carefully considered the evidence in this matter, as well as the submissions filed on behalf of the Plaintiffs. 7.2 The facts in this case are straightforward and are not in contention. The Plaintiffs and the Defendant entered into two agreements; an oral agreement and a written agreement. In the said agreements, the parties agreed that the Plaintiffs would supply the Defendant with fish for sale. Upon the sale of the fish, the parties were to share the profit in the ratio of 50:50 while the capital was to be returned to the Plaintiffs. JS 7 .3 Following the execution of the oral contract, the Plaintiffs supplied the Defendant with fish. The price at which the Plaintiffs ordered the fish was not given to Court; so was the profit realized after the sale. What the Plaintiffs merely stated was that, from the first contract, K29, 800.00 remained unpaid. No evidence was led by the Plaintiffs on how they came up with the same figure. 7.4 With regard to the written contract, the Plaintiffs asserted that they supplied the Defendant 528 x l0kgs of fish, which they bought at K219, 575.18. After the Defendant sold the fish, he realized a profit of K70, 000.00. However, the Defendant did not pay the Plaintiffs, either the profit realized, or the money used to order the fish. The Plaintiffs avowed that the Defendant owes them an accumulated sum of K350, 300.54. The said sum consists of the outstanding balance of K29, 800.00 on the first contract, as well as K219, 575.18 and profit of K70, 000.00 in respect of the second contract. 7.5 It is a well settled principle of law in civil cases, as was stated in the case of WILSON MASAUSO ZULU Vs. AVONDALE HOUSING PROJECT LIMITED1 that the burden of proof rests , on the Plaintiff to prove his case on a balance of probability, J9 whatever may be said of the Defendants' case. Further, in KHALID MOHAMED Vs. THE ATTORNEY GENERAL2, the Supreme Court concisely guided that the failure of the Defendant's case does not automatically entitle the Plaintiff to a judgment in his favour, as the duty lies on the Plaintiff to prove his case. 7.6 In casu, as already alluded to above, the Plaintiffs did not lead evidence to show how the claimed sum of K29, 800.00 came to be outstanding. Further, the Plaintiffs did not lead evidence to show that they purchased the fish in the second contract at K219, 575.18. 7. 7 Be that as it may, the Defendant did not deny in his defence, that the sum of K29, 800.00 was outstanding in the first contract. Further, he did not deny that the Plaintiffs supplied him with fish which they bought at K219, 575.18, and that, after he sold the fish, he realized K70, 000.00, as profit. 7.8 The Defendant's only defence is that it was his Company, Masala Fish Center and Investments Limited, which entered into those two agreements with the Plaintiffs. He contended that he merely signed the agreements in his capacity as the JlO Company's Managing Director, and not 1n his individual capacity. 7.9 It is clear that the Defendant is pleading limited liability for the debts incurred purportedly by his Company, Masala Fish Center and Investments Limited, from the business transactions he had with the Plaintiffs. Indeed, it is a settled principle of law, as held in numerous decisions, that a company is a legal entity distinct from its members. As a result of such distinction, the members, just like directors of a company, are not directly personally liable for the debts and obligations incurred by the company in its own name. 7 .10 The question to resolve is whether or not it was the Defendant in his individual capacity who entered into those contracts with the Plaintiffs or it was his Company in its own name. I have scrutinized the contract on pages 1-4 of the Plaintiffs' Bundle of Documents. I note that the parties to the contract are Abraham Simwanza, a natural person, who trades as Masala Fish Centre, and the Plaintiffs. Nowhere in the contract is it indicated that it was the Company which entered into the contract with the Plaintiffs. The contract identifies Jll Abraham Simwanza, as a natural person, who had entered into the contract, and not the Company. 7.11 Having considered the contract exhibited, I refuse to accept the Defendant's argument that it was his Company which entered into the contract with the Plaintiffs. I accept the Plaintiffs' contention that the Defendant executed the contract in issue in his individual capacity. 7.12 The other contention by the Defendant is that he executed the contract in question on a mistaken belief that he was signing the contract on behalf of the Company. It is trite that a party who signs a contract is bound regardless of whether he has read the contract or is ignorant of the terms of the said contract. The learned authors of Chitty on Contracts Beale, H.G 28th Edition, London: Sweet and Maxwell Paragraph 12-002 Page 583, concisely put it thus: "Where the agreement of the parties has been reduced to writing and the document containing the agreement has been signed by one or both of them, it is well established that the party signing will ordinarily be bound by the terms of the written agreement whether or not he has read them and whether or not he is ignorant nl' tJu~.;r nroMc:o 1onn1 ol'l'o,-t" J12 7.13 Based on the foregoing guidance, I refuse to accept the Defendant's defence that he signed the contract 1n the mistaken belief that he was signing it on behalf of the company. I hold that he is personally liable for the debt he incurred arising from the contracts he entered into with the Plaintiffs. 7 .14 Having so found, I hold that the Defendant breached the contract. 7 .15 As regards whether the Plaintiffs are entitled to payment of damages for breach of contract, I am guided by the decision of the Supreme Court 1n the case of ZAMBIA STATE INSURANCE CORPORATION Vs. SERIOS FARMS LIMITED3 , wherein it was held that: "Payment of interest is normally regarded as equivalent to an award of damages for the detention of a debt." The Supreme Court went on to state that: "As the learned authors of Chitty on Contracts, 25th Edition, point out at paragraph 1704, damages for breach of contract normally relate to financial loss." J13 7 .16 In casu, the financial loss which the Plaintiffs suffered, and which they are claiming in this matter, is a liquidated sum of K350, 030.05. The Plaintiffs have also claimed interest on this debt which the Defendant owes them. Having been guided by the decision of the Supreme Court in the aforementioned case, that damages for breach of contract normally relate to financial loss, and further, that interest is equivalent to an award of damages for detention of a debt, I decline to award the Plaintiffs damages for breach of contract. I hold that an award of a liquidated sum for the financial loss that the Plaintiffs suffered as a result of the breach of contracts, plus interest, will suffice. 7.17 I, however, note that, in cross-examination, PWl failed to show how the Plaintiffs arrived at K350, 030.05 which they are claiming. Even after adding all the sums they claim to be due, the figure could not add up to K350, 030.05. The figure only came to K320, 199 .18. PW 1 further admitted that from the profit of K70, 000.00 realized, the Defendant was entitled to half, which is K35, 000.00. It is, therefore, not correct to state that the Defendant owes the Plaintiffs K350, 030.15 which they are claiming. What is correct, however, is that the Jl4 Defendant owes the Plaintiffs money which can only be ascertained after assessment. 7 .18 Accordingly, I refer this matter to the Registrar to ascertain the actual amount the Defendant owes the Plaintiffs. I award interest on the sums to be found due at the average of the short-term deposit rate per annum prevailing from the date of the writ, to the date of judgment, and thereafter at the current lending rate as determined by the Bank of Zambia from the date of judgment until the same shall be satisfied. Costs shall be for the Plaintiffs against the Defendant, to be taxed in default of agreement. 7.19 Leave to appeal is granted. ~ 0~ DELIVERED AT NDOLA THIS.J. ...D AY OF. .......................2 024. LADY JUSTICE M.C. MULANDA HIGH COURT JUDGE