IN THE MALAWI SUPREME COURT OF APPEAL
AT BLANTYRE
MSCA CIVIL APPEAL NO. 38 OF 1997
(Being High Court Civil Cause No. 132 of 1995)
BETWEEN:
JUSTIN
MOSE
SIMIYONI............................................APPELLANT
- and -
S J
KANYATULA.........................................................RESPONDENT
BEFORE: THE HON.
MR JUSTICE MTEGHA, JA
THE HON. MR JUSTICE KALAILE,
JA
THE HON. MR JUSTICE TAMBALA,
JA
Bazuka Mhango, Counsel for the
Appellant
Mandala, Counsel for the Respondent
Ngaiyaye (Mrs), Official
Interpreter/Recorder
J U D G M E N T
Kalaile, JA
In this case, the appellant
claims that there was an agreement for the sale of a Mitsubishi truck,
registration number MC 223, to the respondent. The respondent denies the existence of such a contract of sale.
According to the appellant’s
amended statement of claim, the respondent offered for sale a truck to the
respondent on condition that the latter pays to Stansfield Motors Limited a sum
of K226,061.43 in order to redeem the said truck which had been re-possessed by
Stansfield Motors Ltd. After the
redemption of the truck, the appellant was to pay a sum of K140,000.00 as the
full purchase price for the truck.
The appellant’s pleadings also
aver that he obtained a loan from SEDOM amounting to K250,000.00 and used
K226,061.00 from the loan proceeds in order to redeem the truck from Stansfield
Motors Ltd.
Needless to say, the
respondent denies these allegations.
It is interesting to note that
the unamended statement of claim stated in paragraph 2 that in accordance with
the agreement, the appellant, on behalf of the respondent was to pay Stansfield
Motors Ltd a sum of K226,061.43 and redeem the truck. Further to this, the appellant offered the respondent
K140,000.00 as the purchase price but the respondent refused the offer.
The respondent’s pleadings
state that the appellant agreed with the respondent to first redeem the truck
from Stansfield Motors Ltd by first paying off the loan and thereafter the
parties would agree on the sale. After
the appellant redeemed the vehicle, the parties failed to agree on the sale.
Going back to the
evidence-in-chief of the appellant, we find that he testified that he met Mr
Saguga, the Credit Controller at Stansfield Motors Ltd, who told him that the
respondent had a debt with Stansfield Motors Ltd. This is what prompted the appellant to hold discussions with the
respondent on the sale of the truck. At
first, they agreed that after redeeming the truck, the appellant would pay the
sum of K90,000.00. At the second
meeting, the respondent demanded K140,000.00.
But when the appellant offered the sum of K140,000.00 to the respondent,
the respondent now raised the figure to K650,000.00 inclusive of the amount
paid to Stansfield Motors Ltd. At this point, the appellant sought legal advice
to resolve the issue.
The appellant, therefore,
sought an order for specific performance to compel the respondent to comply
with the terms of the agreement, or, in the alternative, the appellant claimed
damages and a refund of the sum of K226,061.43 including interest at 46% per
annum.
It is now timely for us to
examine the judgment of the trial Court in view of the facts which we have
outlined so far in this judgment.
The trial Judge observed,
correctly in our view, that the respondent informed the Court that while it was
true that the respondent was in default and the vehicle had indeed been
impounded by Stansfield Motors Ltd, the situation had not reached a point where
the vehicle was being offered for sale to the general public. This was so because the respondent had
negotiated for time to arrange for payment on a future date. Although the respondent was in financial
difficulties, he had managed to persuade Stansfield Motors Ltd to give him up
to the end of the crop season to raise the money from the sale of his tobacco
crop. The respondent had no intention
of selling the vehicle until the appellant came and persuaded him to do so.
The respondent testified that
the appellant made several offers including the K90,000.00 and K140,000.00
which the respondent did not accept, but that he was eventually persuaded that
the appellant should redeem the
vehicle on his behalf, and thereafter, negotiate the
sale. After
the vehicle was redeemed, the two parties met, but could not agree on the
price.
We share the conclusion
arrived at by the trial Judge that the truth of the matter is that Stansfield
Motors Ltd had not offered to the appellant the vehicle for sale, and this
explains why the appellant was referred to the respondent. Otherwise there was no reason, and none was
given in the Court below, why the appellant was negotiating the sale with the
respondent rather than Stansfield Motors Ltd.
The story given by the appellant in the Court below that someone was
about to purchase the truck
at Blantyre was
obviously a figment
of his imagination which is not
supported by the evidence of the Credit Controller at Stansfield Motors Ltd.
Furthermore, we share the
views of the trial Judge that what must have happened was that the appellant
must have learnt from an employee of Stansfield Motors Ltd that the respondent
was having difficulties in paying for the vehicle and that it might be sold at
some future point, whereupon the appellant went to persuade the respondent to
sell the vehicle to him before Stansfield Motors Ltd offered it for sale on the
open market.
The trial Judge, quite
properly, summed-up the position by stating that at best, the two parties
merely agreed to agree without reaching a binding agreement. The Judge cited as authority on this
point the case of Sudbrook Trading Estate Ltd
v. Eggleton & Others
(1983) AC 444 at 459, where Templeman, LJ reading the judgment of
the court said that:
“The principles which emerge
from the authorities may be summarised thus:
first, in ascertaining the essential terms of a contract, the court will
not substitute machinery of its own for machinery provided by the parties, however
defective that machinery may prove to be.
Secondly, where machinery is agreed for the ascertainment of an
essential term, then until the agreed machinery has operated successfully, the
court will not decree specific performance, since there is not yet any contract
to perform. Thirdly, where the
operation of the machinery is stultified by the refusal of one of the parties
to appoint a valuer or an arbitrator, the court will not, by way of partial
specific performance, compel him to make an appointment.
All three of these principles
stem from one central proposition, that where the agreement on the fact of it
is incomplete until something else has been done, whether by further agreement
between the parties or by the decision of an arbitrator or valuer, the court is
powerless, because there is no complete agreement to enforce it: see Kay, J in Hart v. Hart
(1881) 18 Ch. D. 670, at 689.”
Another pertinent case cited
in the Sudbrook case is that of Milnes v. Gery (1807)
14 Ves. Jun. 400. In that case, there
was a contract for sale at a price to be determined by two valuers or an umpire
chosen by the valuers. The valuers were
appointed but were unable to agree on the choice of an umpire. The vendors sued for specific performance
and asked the court to appoint a valuer or to make a valuation. Sir William Grant, MR dismissed the
action, saying, at p.406:
“The only agreement, into
which the defendant entered, was to purchase at a price, to be ascertained in a
specified mode. No price ever having
been fixed in that mode, the parties have not agreed upon any price....”
And Grant, MR continued at page 409 by saying:
“If you go into a court of law
for damages, you must be able to state some valid legal contract, which the
other party wrongfully refuses to perform;
if you come to a court of equity for a specific performance, you must
also be able to state some contract, legal or equitable, concluded between the
parties; which one refuses to
execute. In this case, the plaintiff
seeks to compel the defendant to take this estate at such price as a master of
this court shall find it to be worth;
admitting, that the defendant never made that agreement; and my opinion is, that the agreement he has
made is not substantially, or in any fair sense, the same with that; and it could only be by an arbitrary
discretion that the court could substitute the one in the place of the other.”
Coming back to the facts of
the present case, we find that it is the appellant who took the initiative to
persuade the respondent to have the vehicle redeemed from Stansfield Motors Ltd
before the sale price was agreed. It
would appear that the appellant hoped that whatever offer he made to the
respondent would be acceptable to the respondent, since the respondent was
having financial difficulties in meeting his loan obligations with Stansfield
Motors Ltd.
The appellant was offering the
respondent a total of K366,061.43 (which comprised the sum of K266.061.43 paid
to Stansfield Motors Ltd plus the additional sum of K140,000.00). The appellant claimed in re-examination that
when he went to Stansfield Motors Ltd at Blantyre with the respondent, they
were told that the vehicle was on sale at a price of K375,000.00. To start with, this was hearsay evidence,
because no one from Stansfield Motors Ltd testified to that effect. Secondly, if the vehicle was being sold by
Stansfield Motors Ltd at K375,000.00, why did the appellant not pay that amount
so that the respondent would receive the balance after Stansfield Motors Ltd
deducted what was owed to them? All
this leads to the conclusion that no purchase price was agreed upon between the
parties. The respondent consistently
denied agreeing on the purchase price with the appellant. We do not find any reason for disagreeing
with the trial Judge’s findings on this point.
Now, specific performance is
an equitable remedy, and “he who comes to equity must come with clean
hands”. “The conduct of the party
applying for relief is always an important element to be considered” [I
Chitty on Contracts, 24th Edn, para. 1652, at 785 1977)]. In this case, we find that it was the
appellant who was trying to stampede the respondent into selling the vehicle at
a price determined by the appellant.
Mr Mhango, who appeared for
the appellant, cited a number of authorities in an effort to establish that
there was a binding contract between the parties. The first of such authorities is Lowe v. Lombank Ltd
[1960] 1 WLR 196. This case is
about a hire purchase agreement and the court held that the plaintiff was not
estopped by signing the delivery receipt from relying on the breach of the
implied condition that the car was reasonably fit for use as a means of
transport, since the defendants had failed to prove the three requirements
necessary to establish estoppel, namely, that the statement in the receipt was
clear and unambiguous; that the
plaintiff had intended that the defendants should act upon it; and lastly, that the defendants had believed
the representation in the receipt to be true and had acted upon it. With respect, we cannot see how this case
has any bearing on the facts of the case under consideration. The respondent made no representations on
which the appellant acted upon. Next,
Mr Mhango cited the case of Reigate v. Union Manufacturing Company
[1918] 1 KB 592. Again, he seemed to have gone off at a tangent from the
point for determination in this appeal.
This appeal is about whether or not there was in existence a valid
contract between the appellant and the respondent to sell a vehicle, whereas
the Reigate case is about a contract by a company to employ an
agent for a fixed period of time and the consequences of terminating such an
agency by a voluntary winding up of the company before the fixed time of
employment of the agent had expired.
Clearly, this case does not advance the appellant’s argument at
all. A similarly unhelpful case is that
of Ajayi v. Briscoe (Nigeria) Ltd. This case held that the principle of promissory estoppel as
defined by Bowen, LJ in the Birmingham and District Land Co’s
case and confirmed in Tool Metal Manufacturing Co Ltd v. Tungstein
Electric Co Ltd [1955] 1 WLR 761; [1955] 2 All ER 657, HL (E) was that
when one party to a contract in the absence of fresh consideration agreed not
to enforce his rights an equity would be raised in favour of the other
party. That equity was, however,
subject to the qualifications: (1) that
the other party had altered his position, (2) that the promisor could resile
from his promise on giving reasonable notice, which need not be a formal
notice, giving the promisee a reasonable opportunity of resuming his position;
and (3) the promise only became final and irrevocable if the promisee could not
resume his position. On the same
grounds for rejecting the relevance of the Lowe case, we also see
no relevance of this authority on the issues which we are required to determine
in this appeal.
Counsel followed by
citing the following passage from a dictum of Scrutton, LJ
in Rose and Frank Co v. J R Crompton and Bros. Ltd:
“Now it is quite possible for
parties to come to an agreement by accepting a proposal with the result that
the agreement concluded does not give rise to legal relations. The reason of this is that the parties do
not intend that their agreement shall give rise to legal relations. This intention may be implied from the
subject matter of the agreement, but it may also be expressed by the
parties. In social and family
relations, such an intention is readily implied, while in business matters, the
opposite result would ordinarily follow.
But I can see no reason why, even in business matters, the parties should
not intend to rely on each other’s good faith and honour and to exclude all
ideas of settling disputes by any outside intervention, with the accompanying
necessity of expressing themselves so precisely that outsiders may have no
difficulty in understanding what they mean.
If they clearly express such an intention, I can see no reason in public
policy why effect should not be given to their intention.”
Counsel cited this passage,
but omitted certain sentences from the middle of the passage, which we have
included, because the omitted sentences make the passage even clearer in its
import. Our reading of this complete
passage is that it supports our conclusions which we have already expressed in
this judgment.
Another authority cited by
Counsel for the appellant is Sinclair v. Brougham & Another
[1914] AC 398 at p.415. This case
does not support the appellant’s appeal because it is authority, amongst
others, for the proposition that depositors to a building society were not
entitled to recover moneys paid by them on an ultra vires contract of a
loan on the footing of money had and received by the society to their use. At page 415 of the Sinclair
case, to which we were referred by Counsel for the appellant, is the following
dictum of Viscount Haldane, LC:
“Consideration of the
authorities has led me to the conclusion that the action was in principle one
which rested on a promise to pay, either actual or imputed by law. Moses v. Macferlan(1760) 2 Burr.
1005 is the leading cased on this point.
It was an action on the case for money
had and received under circumstances where any notion of an actual
contract was excluded. But Lord
Mansfield explained how in such circumstances the law treated the defendant
as being in the same position as if he had incurred a debt: ‘If the defendant
be under an obligation, from the ties of natural justice, to refund; the law implies a debt, and gives this
action, founded on the equity of the plaintiff’s case, as it were upon a
contract.’”
Mr Mhango, Counsel for the
appellant, further cited cases such as Pfizer Corporation v. Ministry of
Health [1965] AC 512, Carlill v. Carbolic Smoke Ball Company [1893]
1 QB 256. In both cases, the
defendant made a promise to the plaintiff and the plaintiff acted on the basis
of that promise. This is not what
happened on the facts before us. In the
Pfizer case, Lord Reid was referring to a patient having a
statutory right to demand a drug from the Ministry of Health on payment of the
sum of 2 shillings. Lord Reid
goes further, at page 536, to state
that:
“The hospital has a statutory
obligation to supply it on such payment.
And if the prescription is presented to a chemist he appears to be bound
by his contract with the appropriate authority to supply the drug on receipt of
such payment.”
Now, what relevance has this
passage to the issues for determination before us? Counsel referred us to this page in his skeleton arguments and we
are at a loss to appreciate what that page has to do with the case before us.
Other cases, which we shall not
even bother to distinguish, which were referred to us in argument are the cases
of Yabu v. Nyasaland Garage Ltd 4 ALR (Mal.) 209 and Chupa
v. Malawi Hotels Ltd 12 MLR 226.
What, then, are the remedies
left to the appellant? The appellant is
entitled to the amount of K226,061.43 which was paid into court in July 1995
(see page 41 of Court Record). Although
the amended statement of claim shows that the appellant obtained a loan to pay
off Stansfield Motors Ltd, it appears the loan was obtained in April 1995, when
the debt with Stansfield Motors Ltd was paid off between February and
March 1995, long
before April 1995.
We cannot,
therefore, accept 46% as the appropriate interest
rate, because that was the SEDOM interest rate, which cannot apply on the facts
before us.
The relevant interest rate
which we will apply from the date the amount owing was paid to Stansfield
Motors Ltd will, therefore, be that which is prescribed by s.65 of the Courts
Act. That section states that:
“Every judgment in civil
proceedings shall carry interest at the rate of five percentum per annum or
such other rate as may be prescribed.”
Any other rate of interest
would have to be specifically pleaded:
see O.18, r.8 of the Rules of the Supreme Court. Although the appellant’s pleadings
specifically pleaded for interest at 46% per annum, we cannot allow
this rate which
was stated in the SEDOM
loan, because the loan was obtained a month after the
payments were made to Stansfield Motors Ltd.
In granting the statutory
interest rate, we have exercised our discretion pursuant to the provisions of
s.11(a)(v) of the Courts Act as read with s.65 of the said Act. Section 11(a)(v) provides that without
prejudice to any other written law the High Court shall have jurisdiction to
direct interest to be paid on debts. We
have applied the provisions of
s.11(a)(v) in consonance with the decision of this Court in John Bryan
Tabord v. David Whitehead & Sons (Malawi) Ltd, MSCA Civil Appeal No. 11
of 1988, wherein Chatsika, JA summed up the position by stating
that:
“Finally, the appellant claims
interest on the damages we have awarded in this matter. It is to be observed on this aspect that
section 11 of the Courts Act confers jurisdiction on the High Court to award
interest, but as was stated by this Court in Gwembere v. Malawi Railways
Ltd, 9 MLR 369, this jurisdiction is confined to cases of debts, as
distinct from damages.”
As was the case in the Court
below, we decline to award damages and interest thereon, but award interest of
5% per annum on the amount of K226,061.43 calculated from the date when the
money was paid to Stansfield Motors Ltd up to the date when the money was paid
into Court. We also award all the accrued
interest which had been earned since then up to the date of payment. The 5% interest rate is usually applied for judgment
debts, however, this is a simple debt and we have used our discretion in
applying the 5% statutory interest rate, otherwise the appellant would not have
earned any interest, since contractual
interest rates must
be pleaded: see Practice Direction
issued by the Queen's Bench Division [1982] 3 All
ER, page 1151, which states:
"Contractual interest
The statement of claim must
give sufficient particulars of the contract relied on, and, in particular, must
show (i) the date from which interest is payable, (ii) the rate of interest
fixed by the contract, (iii) the amount of interest due at the issue of the
writ."
Each party shall pay its own
costs since the appellant has failed in his main appeal on damages and
succeeded with regard to the matter of interest on the debt only.
DELIVERED in open Court this 23rd day
of February 1999, at Blantyre.
Sgd ...................................................
H M MTEGHA,
JA
Sgd ...................................................
J B KALAILE,
JA
Sgd ....................................................
D G TAMBALA,
JA