Sunshare Construction Limited v Project IQ Consultancy Limited (2024/HPC/372) (29 July 2024) – ZambiaLII

IN THE HIGH COURT FOR ZAMBIA 2024/HPC/372 AT THE COMMERCIAL REGISTRY HOLDEN AT LUSAKA (Civil Jurisdiction) BETWEEN: SUNSHARE CONSTRUCTION LIMITED PL.t1INTIFF AND t. I. J PROJECT IQ CONSULTANCY LIMITED f:~l<iTR\I DEFENDANT p Before: The Honourable Lady Justice Chilombo Bridget Maka. • For the Plaintiff: Ms. K. Kasonde - Messrs. NCO Advocates. For the Defendant: Mr. L. Mwiche - Messrs. Jaques & Partners Legal Practitioners. RULING Legislation Referred to: 1. The High Court (Amendment) Rules, 2012. Case Referred to: • 1. Lamasat vs. Finance Bank (2017) ZMHC, 365 2. China Copper Mines Limited vs. Tikumbe Mining Limited Appeal No. 17 of 2017 3. Chazya Silwamba vs. Lamba Simpito (2010) Z.R. Vol. 1,475 4. China Henan International Economic Technical Cooperative vs. Mwange Contractors Limited SCZ Judgment No. 7 of 2002. 5. Rubis Energy Zambia Limited vs. Swiss Sky Enterprises Limited Appeal No. 201 of 2022. \ 1. Introduction. 1.1. This is the Plaintiffs application for an order for entry of partial Judgment on admission. The application is made pursuant to Order 53 Rule 6 of the High Court Rules, read together with Order 27, Rule 3(4) of the Rules of the Supreme Court, 1999 edition. 1.2. The application was accompanied by an affidavit in support and skeleton arguments both dated the 20th June, 2024. 1.3. The Defendant opposed the application and filed an • affidavit in opposition accompanied with skeleton arguments dated 4th July, 2024. 2. Background. 2.1. The Plaintiff commenced action against the Defendant on 23rd May, 2024. The claims endorsed on the writ are as follows:- i. An order for the payment of the sum of ZMWl,309,626.56 being a refund for the • differences in the amount of money paid by the Plaintiff so far less the value of work actually done by the Defendant. ii. An order for the payment of the sum of ZMW12,643,157.56 being the accrued liquidated damages in accordance with the Guarantee of 30th April, 2023. iii. Damages for breach of contract. R2 iv. Interest on the amount due. v. Costs incidental to this action; and vi. Any other relief the Court may deem fit. 2.2 According to the statement of claim, the plaintiff u nder paragraphs 5, 6, and 7 relevant to this application averred as follows: "5. During the period for performing the contract, the Defendant received steady payments from the Plaintiff. • Despite this, the Defendant did not complete the project within the 3 months agreed in the contract. As a result of the non-completion of the project as agreed in the contract, the Defendant, by letter dated 30th April, 2023, provided the Plaintiff with a guarantee that the project would be completed on or before 22nd June, 2023 failure to which the Defendant would incur the following by way of liquidated damages for every week delayed: i. 1 week - deduction of ZMW30,000.00 .. 11. 2 weeks - deduction of ZMW40,000.00 • ... 111. 3 weeks - deduction of ZMWS0,000.00 iv. 4 weeks - deduction of ZMW300,000.00 v. 5 weeks and each week thereafter - ZMW450,000.00 6. Following the guarantee, the Plaintiff and Defendant agreed, via additional addendum to the contract dated 8th May, 2023, that additional works would be done thereby increasing the contract price by an additional ZMW3,000,000.00 bringing the total amount payable R3 by the Plaintiff to the Defendant ZMW9, 795,058.44. Despite this, the additional addendum still recognized 22nd June, 2023 as the date of completion of the project as stated in the Defendant's guarantee and determination of the balance owed by the Plaintiff to the Defendant on completion of the project. 7. Despite the foregoing and the payment of ZMWS,068,216.6 by the Plaintiff to the Defendant representing about 82% of the total value of the contract, the Defendant failed to complete the project within the agreed upon period, completing only about • 69% of the work. In light of this default, the Plaintiff, through letter dated 23rd February, 2024, terminated the contract and demanded the payment of the sum of ZMW12,642,157.56 being the accrued liquidated damages for non-completion of the project for 35 weeks over the agreed date of completion. 2.3 The Defendant entered appearance and settled its defence and Coun terclaim on 10th June, 2024. Of relevance to this application are paragraph 5 and 6 reproduced below; • "5. Paragraph 5 of the statement of claim is admitted to the extent that the project was not completed in the agreed 3 months but the Defendant will aver at trial that delays were occasioned by the following reasons: (i) Firstly, the Plaintiff did not have a connection with ZESCO at the commencement of the proje.ct which meant the Defendant could not carry out certain works without ZESCO's approval. R4 \ (ii) Secondly, the Plaintiffs failure to adhere to the agreed payment plan which made it difficult for the Defendant to make timely acquisition of materials required for the construction as agreed under the contract. (iii) Thirdly, a 1-kilometre portion of the project could not be worked on as the Plaintiff insisted that the Defendant pass the overhead lines over fish ponds which ZESCO refused to approve due to safety reasons and so the stretch was left unattended. 6. The contents of paragraph 7 are admitted only to the • extent that the Defendant did not complete the work before the termination of the contract however the Defendant denies that the works done 69% as the Defendant will aver at trial that it completed 80% of works to be done. 2.2. The settlement of the defence was followed by summons for an Order of entry of partial Judgment on admission which the plaintiff filed into court on 20th J u ne ,2024, being the current application. 3. The Plaintiff's Case. • 3. 1. The gist of the evidence was that the Defendant has not in its defence traversed paragraph s 5, 6 and 7 of the statement of claim. 3. 2. It was noted that of the allegation of fact to the effect that the completion date was agreed to be extended upon acceptance of the Defendant's guarantee was not specifically traversed. That the Defendant failed to complete the project within the extended period and RS that by its own guarantee, the Defendant agreed to incur specific liquidated damages for every week of delay. 3.3. That consequently, partial Judgment on admission for the sum ofZMW12,643,157.56 should be entered, being the accrued liquidated damages. 4. The Defendant's Case. 4 .1. The gist of the evidence 1n opposition was that the admissions in the defence are not unequivocal as they • are based on failures by the Plaintiff to fulfil its obligation under the contract. The said failure made it difficult for the Defendant to continue and complete the works on time. 4.2. It was contended that the Defendant's failure to complete the project on the agreed dates was not meant to bind the Defendant as it was arising out of the Plaintiff's failure to honor its obligations. 5. Affidavit in Reply. • 5.1. On 17th July 2024, the Plaintiff filed an affidavit in reply . The main contention was that the defence did not address the Defendant's failure to complete the project by the amended completion date of 22nd June 2023. Instead, the Defendant linked its failure to complete the project with the previously agreed 3-month period. 5.2. It was argued that the admission does not need to be unequivocal because it is based on the failure to dispute R6 the factual allegations contained in the statement of claim. 5.3. It was reiterated that because the Defendant failed to specifically traverse the allegations of fact contained in paragraphs 5, 6 and 7 of the statement of claim, the Court should exercise its discretion and enter Judgment on admission 6. Hearing of the Application 6.1. Both parties were represented by Counsel at the hearing • of the application on 18th July, 2024 . 6.2. Ms. Kasonde, on behalf of the Plaintiff, informed the Court that she was relying on the documents filed in support of the application. 6.3. Additionally, Counsel argued that this is a suitable case to enter Judgment on admission due to the Defendant's failure to dispute allegations in paragraphs 5, 6, and 7 of the statement of claim. 6.4. It was further argued that Order 53 Rule 6 of the High Court (Amendment) Rules, stipulates that every • allegation must be specifically traversed; otherwise, the Defendant will be deemed to have admitted those allegations. 6.5. Counsel prayed for the application to be granted. 6.6. Mr. Mwiche, Counsel for the Defendant, also relied on the filed documents. He specifically referred to cases cited in the skeleton arguments, namely Lamasat vs. R7 Finance Bank11 and China Copper Mines Limited vs. J Tikumbe Mining Limited(2l. 6. 7. The essence of the decisions 1n these cases is that admissions must be deliberate and conscious. In this instance, the Defendant merely mentioned the breaches by the Plaintiff which allegedly rendered the completion of the work impossible, leading to the counterclaim. 6.8. Lastly, it was argued that paragraphs 5, 6, and 7 of the statement of claim are crucial to the case. Therefore, entering Judgment on admission would effectively • conclude the matter . 6.9. In response, Ms. Kasonde argued that the Defendant had misunderstood the nature of the application. She clarified that the application is grounded in Order 53 Rule 6 of the High Court ( Amendment) Rules, not Order 21 of the High Court Rules as suggested by the Defendant. 6.10. She emphasized that the admission stems from the Defendant's failure to dispute the factual allegations in the statement of claim. Therefore, she contended that • the issue of unequivocal admission does not apply in this case. 6.11. Counsel urged the Court to grant the Plaintiff's application. 7. Consideration and Determination. 7 .1 I have reviewed all the affidavit evidence and the skeleton arguments submitted by both parties. R8 ' 7 .2 The application to enter Judgment on admission is anchored on Order 53 Rule 6 of the High Court (Amendment) Rules, which states as fallows: "6(1) A statement of claim or counterclaim, as the case may be, shall state in clear terms the material facts upon which a party relies and shall show a clear cause of action, failing which the statement of claim or counterclaim may be struck out or set aside or the action dismissed by the Court, on its own motion or on application by a party. (2). The defence shall specifically traverse every allegation of • fact made in the statement of claim or counter claim, as the case may be. (3). A general or bare denial of allegations of fact or a general statement of non-admission of the allegations of fact shall not be a traverse thereof. (4). A defence that fails to meet the requirements of this rule shall be deemed to have admitted the allegation not specifically traversed. (5). Where a defence fails under sub-rule (4), the Plaintiff or Defendant or the Court on its own motion, may, in an appropriate case, enter Judgment on admission" . • 7 .3 The aforementioned provision clearly supports the entry of Judgment on admission in suitable cases where the defence neglects to specifically contest the allegations in the statement of claim. These provisions were applied in the case of Chazya Silwamba vs. Lamba Simpito131 , where the High Court ruled that 'an admission may also arise by virtue of the rules, for instance, where a Defendant fails to contest an allegation of fact in the R9 statement of claim, or where there is default in filing a defence. 7 .4 The Plaintiff asserts that the Defendant has not traversed paragraphs 5, 6, and 7 of the statement of claim. Therefore, the Plaintiff contends that partial Judgment on admission should be entered in its favor. 7.5 On the other hand, the Defendant argues that the admissions are not unequivocal and are based on the Plaintiffs failure to fulfill its obligations under the contract. • 7.6 I have examined paragraphs 5, 6, and 7 of the statement of claim as against paragraphs 5 and 6 of the defence which are 1n response thereof. My view 1s that Defendant did not traverse the allegation of fact pertaining to what transpired after the agreed three months completion period had expired. 7. 7 Additionally, the allegation of fact pertaining to the guarantee in the letter dated 30th April, 2023 that was given by the Defe nda nt should the project fail to complete by 22nd June, 2023 was not specifically • traversed . 7.8 Furthermore, paragraph 6 of the statement of claim is wholly not traversed as the defence is devoid of any averments pertaining to the additional works and the completion date of 22nd June, 2023. 7.9 According to Order 53 Rule 6, (4) (5) of the High Court (Amendment) Rules, where a defence fails to meet this rule, it shall be deemed to have admitted the allegations RlO ' 11ot specifically traversed and the Court has discretion to enter Judgment on admission. 7 .10 In the case of China Henan International Economic Technical Cooperative vs. Mwange Contractors Limited(4)the Supreme Court stated as follows:- "The new dispensation in Commercial matters is that parties must place their cards on the table in the litigation to assist in narrowing issues of contention and for the real issues in the dispute to surface. It is not prudent for a party to want for trial before exposing their side of the story. ...i n keeping • with the practice directions, where a defence in a Commercial matter does not satisfy the requirements of rule 2, the Court is entitled to enter Judgment on admission in an appropriate case". 7 .11 The above case clearly guides the approach to be adopted when the defence does not met the requirements of Order 53 rule 6 of the High Court Rules. 7 .12 It should be noted that th e entry of Judgment on admission on account that the defence has failed to • traverse specifically the allegations of fact or consists of bare denials, is differentiated from a Judgment on admission entered pursuant to Order 21 of the High Court Rules. The considerations in the latter are that the admission must be clear and unequivocal in which case the case of China Copper Mines Limited vs. Tikumbe Mining Limited(2 would be applicable. ) 7 .13 In casu, the consideration is not whether the admission is clear and unequivocal but whether by virtue of the Rll defence having failed to specifically traverse allegation of fact, Judgment on admission should be entered. 7.14 However, it 1s well-established that the Court's authority to enter Judgment on admission 1s discretionary. Dr. Matibini, a learned author of Zambian Civil Procedure -Commentary and Cases argues at page 609 commented on the subject as follows: "A Judgment on admission is not a matter of right for the • party in whose favour the admission has been made. It is a matter within the discretion of the court. Thus, the Court has power to pronounce the Judgment on the basis of admissions only if the court is satisfied that the admissions are certain and clear, and don't require further investigation. Therefore, the court may refuse an application for Judgment on admission if it appears to it that the question in the action is such that it ought not to do so. For instance, it has been held that where there is a counterclaim, Judgment on admission ought not to be given, unless it is clear that the counterclaim is frivolous or insubstantial." • 7.15 Consequently, the Court may reject an application for Judgment on admission if it deems the issue in the case are unsuitable for such a decision. 7 .16 In casu, I am of the considered view that this is not an appropriate matter in which to exercise the discretion to enter Judgement on admission. 7 .17 Having considered the entirety of the pleadings, it is evident that the Defendant has raised issues suggesting R12 that the Plaintiff is responsible for the project's failure to be completed by the agreed or guaranteed date. The Defendant's defence implies that the Plaintiffs entitlement to guaranteed liquidated damages is being challenged due to the alleged breach by the Plaintiff. 7 .18 I am fortified in this approach by the decision of the Court of Appeal in the case of Rubis Energy Zambia Limited vs. Swiss Sky Enterprises Limitedl5 wherein ) it was stated at page J l 9-20 that:- • "Although at the time, the learned Judge in the Court below decided to deal with the defence, it was not at a scheduling conference, he was however, considering the pleadings, that is the statement of claim and the defence and counterclaim. He was therefore in order to and in line with the China Henan International case at liberty to deal with the pleadings holistically." 7.19 Additionally, since there is a counterclaim in the defence, the entry of a Judgment on admission is deemed inappropriate and it is prudent to consider and • resolve all issues raised at once . 8 Conclusion. 8.1 On account of the foregoing, I find that this is not an appropriate case in which to exercise the discretion to enter Judgment on admission. 8.2 Consequently, the Plaintiff's application for the entry of partial Judgment on admission is dismissed. R13 8. 3 Costs shall be in the cause. 8.4 Leave to appeal is granted. Delivered at Lusaka this 29th day of July, 2024 . ~.: ....•......••.... .......... . Chilombo Bridget Maka HIGH COURT JUDGE • • R14