Civil procedure – Limitation of actions – Fraudulent concealment of right of action – Meaning of
Civil procedure – Limitation of actions – Action for relief from the consequences of a mistake – When time begins to run
Civil procedure – Limitation of actions – Whether fraud or mistake are necessary allegations for postponement of limitation period
Civil procedure – High Court empowered to grant relief based on evidence available, even though not necessarily pleaded
On 15 June, 1987, the Respondent was employed by the Appellant as a clerk on permanent and pensionable terms. She subsequently rose through the ranks until she attained the position of branch manager. As branch manager, the Respondent started enjoying terms and conditions of employment which were applicable to management staff. On 5 May, 2007, the Respondent expressed a desire to retire from the Appellant with effect from 15 June, 2007. Upon accepting the Respondent's decision, the Appellant advised the Respondent that her last working day was to be 30 June, 2007 while her retirement dues were to be paid to her on the basis of 3 months' pay for each completed year of service. The Respondent retired and her dues in the sum of K939 372 914 were computed accordingly.
On 16 July 2014, the Respondent instituted an action seeking recovery of the sum of K994 824 by way of gratuity arising from her employment. In her statement of claim, the Respondent pleaded, inter alia, that the Appellant had 'failed, neglected or otherwise wrongfully omitted to pay the gratuity" to her. The Appellant then brought a preliminary application arguing that the Respondent’s action was statute barred as the gratuity the Respondent was seeking to recover via her court action ought to have been paid on 31 July
2007. The Respondent alleged that the gratuity she was seeking to recover had been fraudulently concealed from her by the Appellant and that she only discovered this fact when her former workmate Mushaukwa Muhanga was paid her gratuity in 2009 following a judgment which was pronounced in her favour by the Supreme Court.
The trial court found that the Appellant fraudulently concealed the gratuity from the Respondent and as such the matter was not statute barred. The Appellant appealed.
1. In order to show that a person 'concealed' the right of action 'by fraud', it is not necessary to show that he took active steps to conceal his wrongdoing or his breach of contract. It is sufficient that he knowingly committed it and did not tell the owner anything about it. He did the wrong or committed the breach secretly. By saying nothing he keeps it secret. He conceals the right of action. He conceals it by 'fraud' as those words have been interpreted in the cases. To this word 'knowingly' there must be added 'recklessly'. Like the man who turns a blind eye. He is aware that what he is doing may well be a wrong, or a breach of contract, but he takes the risk of it being so. He refrains from further enquiry least it should prove to be correct; and says nothing about it. The court will not allow him to get away with conduct of that kind. It may be that he has no dishonest motive; but that does not matter. He has kept the plaintiff out of the knowledge of his right of action; and that is enough. The Appellant in this case chose to say nothing and turned a blind eye to the possibility that what it had done by keeping the Respondent in the dark about a possible “right of action” which might have arisen in her favour on account of her unpaid gratuity in consequence of the Muhanga outcome could work against the Appellant. The Appellant concealed the respondent’s right fraudulently. The court cannot allow a party to get away with such conduct even if that party had no dishonest motive. (King v Victor Parsons and Co. (a firm)  1 All ER 206 approved).
2. Even if the conclusion in (1) above were wrong, the unscathed findings of the court below did point to the fact that both the Appellant and the Respondent or, at any rate, the Respondent, had been unaware, that is, prior to the Muhanga outcome, that the Respondent had been entitled to retirement benefits beyond what she received in
2007. Indeed, the Muhanga outcome served to awaken both the Appellant and the Respondent or, at least, the latter, to the reality that they, or, at any rate, she, had been mistaken (using this word in its ordinary grammatical sense of being 'incorrect' or 'wrong' or 'in error) by having believed that the Respondent/she had been paid her retirement benefits in full. Section 26 (c) of the Limitation Act, 1939 which is anchored on mistake still afforded the Respondent another window, which had served or operated to postpone the limitation period which was applicable to the cause of action around the Appellant's search for the relief which she had set about to pursue in the court below. As both parties, or, at least, the Respondent had been labouring under the mistaken impression that her full retirement benefits had been availed to her, the applicable limitation period for the Respondent's search for her gratuity only started running in 2009.
3. Section 26 of the Limitation Act, 1939 is a section of general application which applies to every sort of action which is affected by the said Act. Of these many can properly be said to be based on fraud or mistake. In all such cases fraud or mistake is a necessary allegation in order to constitute the cause of action. In other actions, fraud or mistake is not a necessary allegation at all. Beaman v ARTS Limited  1 All ER 465
4. Sufficient evidence (pointing to the Appellant and the Respondent's or, the Respondent's, mistaken impression) was deployed before the court below which had entitled that court even to grant the alternative relief founded on 'mistake' which the second window earlier described afforded. The High Court has jurisdiction under s.13 of the High Court Act, Chapter 27 of the Laws of Zambia to offer alternative relief or remedies where justified by the pleadings and the evidence. Edith Tshabalala v The Attorney-General (1999) ZR 139 followed
The situation that confronted the court in this case resulted in a situation where it was held that the Respondent’s right of action did not arise in 2007 upon retiring, and in fact ran from 2009, independent of any concealment by the Appellant in 2007. It was found as a fact that both the Appellant and Respondent found out about the Respondent’s entitlement to gratuity in 2009. The law on fraudulent concealment of a right of action has been said to recognise an important distinction between concealment committed at the point when the right of action arose, and concealment committed thereafter. In the case of Sheldon v RHM Outhwaite (Underwriting Agencies) Ltd  4 All ER 481 it was held, of section 32 (1) (b) of the
Limitation Act 1980, similar in terms to section 26 of the Limitation Act 1939, that fraudulent concealment after the cause of action has arisen will not intervene to stop time that has already started running. It was emphasised in the said case that section 26 can only prevent time from beginning to run, but is of no assistance where time already started running pursuant to the provisions in Part I of the Limitation Act, 1939.
Section 26 (c) of the Limitation Act, 1939 provides that "Where, in the case of any action for which a period of limitation is prescribed by this Act [and] the action is for relief from the consequences of a mistake, the period of limitation shall not begin to run until the plaintiff has discovered ... the mistake."