Ngulube v Malipenga (Appeal No. 18/2011) [2015] ZMSC 1 (12 January 2015);

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         SCZ JUDGMENT NO. 3/2015

IN THE SUPREME COURT FOR ZAMBIA                      APPEAL NO.18/2011

HOLDEN AT KABWE                                                         SCZ/8/216/2010

(CIVIL JURISDICTION)

BETWEEN:

PATRICK DICKSON NGULUBE                                                      APPELLANT

AND

RABSON MALIPENGA                                                               RESPONDENT

Coram: Mwanamwambwa, Ag. DCJ, Wood and Kaoma, JJS.

             On 4^th November, 2014 and 13^th January, 2015

For the Appellant:     Mr. N. Nchito, SC-Messrs Nchito & Nchito

For the Respondent: Mr. N. Okware- Messrs Okware and Associates.

______________________________________________________________________________

JUDGMENT

______________________________________________________________________________

Wood, JS, delivered the judgment of the Court.

CASES REFERRED TO:

1. King Farm Products Limited and Mwanamuto Investments Limited v Dipti Rani Sen (2008) Z.R. 72.
2. Ford and another v White & Co.(1964)1W.L.R.885.
3. Oates v Pitman (1998) 76 P & C.R.490.
4.  
5. Eastwalsh Homes Limited v Anatal Developments Limited 1993 12 OR 675 (C.A).
6. Philip Mhango v Dorothy Ngulube and others (1983) Z.R. 61.
7. JZ Car Hire Limited vs Malvin Chala and another (2002) ZR. 112.
8. Rodwell Kasokopyo Musamba v M. M. Simpemba (T/A Electrical and Building Contractors) (1978) Z.R. 175.
9. Mutale v Zambia Consolidated Copper Mines (1993-1994) Z.R.94.

LEGISLATION REFERRED TO:

The Rules of the Supreme Court, 1997 Edition.

OTHER WORKS REFERRED TO:

1. Clerk and Lindsell on Tort, 20^th Edition.
2. McGregor on Damages, 18^th Edition.

This is an appeal against a decision of the Deputy Registrar on assessment of damages that had been referred to him by a Judge of the High Court.

The brief facts giving rise to this appeal are these: On 13^th July, 2004, the appellant commenced an action against the respondent who is a legal practitioner for the repayment of K166, 000.00, damages, interest and costs. This claim arose because earlier, the appellant had entered into a contract with one Loveness

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Munchini Chilwalo, whose real name is Florence Chita, for the purchase of Stand Number 1856, Lusaka for the sum of K160, 000.00. Both the vendor and the purchaser were represented by the respondent who was also the stakeholder. The evidence on record shows that a search was conducted at the Lands and Deeds Registry and a printout was generated showing that Loveness Munchini Chilwalo was the owner of Stand Number 1856, Lusaka. The evidence also shows that a contract was prepared, an assignment was drawn up and executed by the parties and State’s consent to assign was even obtained. Further evidence, suggests that the respondent had completed a Provisional Return for payment of Property Transfer Tax in the sum of K4, 800.00. Quite clearly, from a conveyancing point of view, the transaction had reached an advanced stage.

The appellant assumed all was well and had delivered to the property flat stones, sand and cement so that he could carry out renovations. He even painted the gate to the property. Problems emerged when a Mr. Brian Ngoma claimed the property as his and

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had proof to that effect. It also emerged that the title deed in the name of Loveness Munchini Chilwalo (who had by this time vanished), were not only a forgery, but related to the adjacent property which was owned by the real Loveness Munchini Chilwalo, a nurse at the University Teaching Hospital. To complete the narration, Florence Chita was arrested, tried and convicted for her role in the swindle.

On 2^nd November, 2006, the appellant and respondent executed a consent order which effectively entered judgment against the respondent for the sum of K166, 000.00 with interest at 20% and costs of K10, 000.00. The judgment debt was to be paid over a period of ten months. The consent order also stated that damages should be assessed by the Deputy Registrar. The principal sum and interest accrued have since been paid.

The Deputy Registrar considered the matter that had been referred to him and found that the appellant had not proved any special loss due to lack of evidence. He dismissed the claim for rent at US$1000.00 per month due to insufficient proof. He further

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analysed the position of the parties and concluded that the respondent was neither a vendor nor a purchaser, but was a mere stakeholder whose duty was to hand over the money paid to him to the rightful party. He then decided that since the appellant had recovered his money plus interest from the stakeholder, there was nothing more to be settled and he promptly dismissed the claim.

On appeal, the appellant raised three grounds of appeal. The first ground of appeal was that the Deputy Registrar erred in law in holding that the respondent was a mere stakeholder in the transaction resulting in this action. The second ground of appeal was that the Deputy Registrar employed a wrong measure of damages in carrying out the assessment and the last ground of appeal was that the Deputy Registrar erred in law and fact in rejecting the appellant’s evidence of the US$1000.00 monthly rent lost out by the appellant, as a consequence of the failed transaction on the ground that there was no evidence to that effect.

In respect of ground one of the appeal, State Counsel Nchito submitted that the evidence showed that the respondent was sued

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by the appellant as an advocate, which capacity went beyond a mere or ordinary stakeholder at law, as a negligent advocate was liable to his client in contract and tort. He relied on the following passage from Clerk and Lindsell on Tort, 20^th Edition, which is found in paragraph 10-110 in support of his argument:

“It was once thought that a solicitor in contractual relation with his client owed no parallel duty in tort. But this view was decisively rejected by Oliver J. in Midland Bank v Hett, Stubbs and Kemp on the basis that it was inconsistent with Hedley Byrne v Heller and Esso Petroleum Co. Limited v Mardon; and Oliver J.’s opinion has since been accepted by the House of Lords. It follows that any solicitor acting for reward now owes concurrent duties in Contract and Tort – a matter that may be of some importance, in for example, limitation cases. Barrister’s presumptively have no contract with their clients, but there is now no doubt that they do owe a duty in Tort.”

He submitted that money had and received was not a cause of action pleaded by the parties in the court below and that it was not disclosed in the evidence to warrant the Deputy Registrar’s consideration in deciding the case. In any event, what was in issue before the Deputy Registrar was not the question of liability but quantum of damages. By holding the respondent as a mere

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stakeholder, the Deputy Registrar ignored the contents of the pleadings and evidence on record, which was to the effect that the respondent was sued in his capacity as an advocate for damages arising out of the failed transaction that resulted in the present proceedings.

In his response to this ground, Mr. Okware submitted that there was no merit in it. This was so because an advocate plays the role of a stakeholder or agent in a conveyancing transaction much as an estate agent does. The respondent was neither the vendor nor the purchaser. He held the purchase money for and on behalf of the parties which he handed over, albeit to a fraudster. He was not acting in any other capacity than as a stakeholder or agent of the parties to the relevant conveyancing transaction. As such, the appellant could not turn around and state that the respondent was being sued as a vendor when the pleadings expressly stated that he was being sued in his capacity as stakeholder.

We must state that Mr. Okware’s response to the first ground of appeal is overly simplistic and does not take into account all the

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evidence relating to the failed transaction. By the respondent’s own admission, he was acting on behalf of both parties and had in fact received the sum of K6, 000.00 as his legal fees for acting on behalf of the respondent. Even though he was described as a stakeholder in the pleadings, which he was, he was more than that. The role of the respondent went beyond that of merely handing over the money to the vendor. Paragraph 10-109 of Clerk and Lindsell on Torts, 20^th Edition states that:

“When a solicitor is engaged for reward, there is no doubt as to the existence of a contractual duty to exercise care and skill on behalf of his client.”

The respondent was the advocate for both parties and as such was obliged to protect the interests of both parties by ensuring that he conducted a proper due diligence in respect of the transaction, to establish that the vendor was indeed the owner and further that  there were no encumbrances. This duty goes beyond that which a mere stakeholder owes the parties. The issue now raised is what amounts to due diligence by an advocate in a conveyancing transaction? We are of the view that as part of his due diligence, an

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advocate should conduct a detailed search of the Lands Register and verify the authenticity of the title deed in his possession relating to the property in issue. An advocate should also crosscheck that the physical property corresponds with the survey diagram. In addition, an advocate should obtain a photocopy of the vendor’s national registration card for purposes of obtaining Property Transfer Tax clearance. This would also assist the advocate to verify the true identity of the vendor. We have observed that the purported vendor’s national registration card number was conspicuously missing from the Provisional Return for Property Transfer Tax completed by the respondent. Had this been done in this case, the forgery would have been discovered much earlier. We, therefore, agree with State Counsel Nchito that the Deputy Registrar erred in law in holding that the respondent was a mere stakeholder in the transaction resulting in this action.

The appellant has, in this ground of appeal, attempted to argue negligence on the part of the respondent in handling this   transaction on his behalf. Just like in any other case relating to

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professional negligence, the onus of proving negligence in an action against a lawyer lies on the claimant. A perusal of the pleadings shows that there was no mention of negligence in the statement of claim. It was only mentioned in passing in paragraphs 2 and 6 of the reply. The reply also contains no particulars of the alleged negligence and the proceedings before the court do not raise the issue of negligence on the part of the respondent. The appellant cannot, therefore, now rely on negligence that had not been properly pleaded in the first place. See Order 18 Rule 12(18) of the Rules of the Supreme Court, 1999 Edition.

The second ground of appeal revolved around the wrong measure of damages in carrying out the assessment. State Counsel Nchito submitted that the task of the Deputy Registrar was to ascertain the quantum of damages. In the circumstances, it was not open to the Deputy Registrar to find that there was “nothing more” to be settled as this was tantamount to varying the order of the trial Judge. He cited the case of King Farm Products Limited and Mwanamuto Investments Limited v Dipti Rani Sen¹ in support of the

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submission that a Deputy Registrar cannot vary an order made by a Judge whether in chambers or in open court. Mr. Okware seems to agree with State Counsel Nchito’s submission as he has not responded to this particular issue in his arguments in response to the second ground of appeal.

We agree with State Counsel Nchito that the Deputy Registrar had no power to vary the order for assessment made by the Judge in Chambers. The Deputy Registrar’s role was to determine the quantum of damages and not to conclude that there were no damages to be assessed because the appellant had been paid the principal sum and interest.

State Counsel Nchito also submitted that a party claiming damages for legal malpractice was entitled to be put in the position he would have been in had the defendant performed his duty. We agree with this proposition which can be found in paragraph 10-141 of the 20^th Edition of Clerk and Lindsell on Torts. However, the difficulty the appellant had with this argument was that negligence was not properly pleaded and could not be raised on appeal. Even

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assuming that it had been properly pleaded, the appellant would not have possibly been awarded the difference between the sum of K160, 000.00 and the valuation sum of K450, 000.00, which is what the appellant was seeking in his affidavit in support of assessment of damages. This is because the approach taken by the appellant has no support at law, as it was based on improvements carried out to the property by a third party, long after the appellant had failed to buy it as a result of the fraud. At the most, the appellant would have been entitled to the difference between the purchase price and the actual value of the property, as at the date the transaction fell through. In the case of Ford and another v White & Co.², solicitors failed to notice building restrictions on land being purchased. Free of restrictions, the value of the land would have been worth one thousand pounds more. The court held that:

“Where property was purchased at a price in excess of the then market value as a result of wrong advice, the relevant measure of damages was the difference between that market value and the price actually paid, but as the plaintiffs had acquired a property equal in value to the price they paid for it, they suffered no special damage.”

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In the latter case of Oates v Pitman³, the purchasers’ solicitors negligently failed to notice that the planning laws precluded the intended use of the premises as a nursing home. The purchasers recovered the difference between the price paid and the actual value of the premises, but not the profits they would have made if the restriction had not existed. This was because had the solicitors acted properly, they would not have purchased those premises at all.

We are, therefore, persuaded by Mr. Okware’s argument when he cites the case of Eastwalsh Homes Limited v Anatal Developments Limited⁴, that Courts should be reluctant to award damages for speculative claims. We uphold this ground of appeal in so far as it relates to the quantum for damages.

With regard to the third and last ground of appeal, State Counsel Nchito relied on the case of Philip Mhango v Dorothy Ngulube and others⁵ and urged this Court to make an intelligent or inspired guess as to the value of the special loss on the meager

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evidence before us. In the case of JZ Car Hire Limited vs Malvin Chala and another⁶ we held that:

“It is for the party claiming any damages to prove the damages”

The appellant gave evidence before the Deputy Registrar that he had lost the sum of US$1000.00 per month as a result of not buying the property. This, in our view, was a figure plucked from the air. The appellant did not explain how the sum of US$1000.00 was arrived at or if he had any potential tenants who had agreed to pay him that sum. In short, he was unable to prove the loss of US$1000.00. We agree with State Counsel Nchito that sometimes, the Court fills in the gaps for litigants who take a casual approach to litigation in order to do justice. In so doing, Courts have been driven into making intelligent and inspired guesses on insufficient evidence before them. However, this case does not qualify to be placed in this category because there is no basis upon which we can make an inspired or intelligent guess. In the case of Phillip Mhango vs Dorothy Ngulube and others⁵ that the appellant has relied on, we held that:

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“Any party claiming a special loss must prove that loss and do so with evidence which makes it possible for the court to determine the value of that loss with a fair amount of certainty.”

There is no such evidence before us. We therefore find no merit in this ground of appeal.

We, however, accept that there was some damage suffered and Mr. Okware did not object to nominal damages being awarded to the appellant. We are of the considered view that this is an appropriate case for nominal damages in the sum of K10, 000.00.  We accordingly set aside the judgment of the Deputy Registrar and award the appellant nominal damages in the sum of K10,000.00 (rebased) with interest at the short term deposit rate from the date of the writ, to the date of this judgment and thereafter at the average lending rate as determined by Bank of Zambia, up to date of payment.

We now turn to the issue of costs. In the case of Rodwell Kasokopyo Musamba v M. M. Simpemba (T/A Electrical and Building Contractors)⁷ it was held that:

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“The ordinary rule is that, where a plaintiff has been successful he ought not to be deprived of his costs, or at any rate, made to pay costs of the other side, unless he has been guilty of some sort of misconduct. In applying the rule it is necessary to decide whether the plaintiff really has been successful. A plaintiff who recovers nominal damages is not necessarily "successful".”

 In the latter case of Mutale v Zambia Consolidated Copper Mines⁸ we held the following with regard to the argument on costs in a case where nominal damages are awarded:

“With regard to costs, the general rule is that a successful party should not be deprived of his costs unless his conduct in the course of the proceedings merits the court’s displeasure or unless his success is more apparent than real, for instance where only nominal damages are awarded.”

Order 62/3/2 of the Rules of the Supreme Court, 1997 Edition states that where a plaintiff is successful on the issue of liability but recovers nominal damages only, the normal order for costs is in the defendant’s favour. Our view is that the circumstances of this appeal allow us to depart from making what is considered the normal order for costs when nominal damages are awarded. We do not feel that this is a case in which the appellant should be ordered to pay the respondent’s costs. This is because on the facts of this

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case, the appellant was justified in bringing this appeal on account of the ruling of the Deputy Registrar. We order that each party shall bear his own costs.

………………………………..……………..

M.S. MWANAMWAMBWA

ACTING DEPUTY CHIEF JUSTICE

………………………………..…..

A.M. WOOD

SUPREME COURT JUDGE

…………………………….………

R.M.C.KAOMA

SUPREME COURT JUDGE