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Contract - Enforceability of an agreement to compromise an action - Whether compromising a disputed claim amounts to valuable consideration
Civil Procedure - Effect of mode of commencement on power of court to grant relief.
Evidence - Failure to challenge averment of a party at trial - Effect thereof
Civil Procedure - Award of interest under the Judgments Act, Chapter 81 of the Laws of Zambia - Whether applicable to declaratory judgment.
In 1997, the Respondent was shot at and wounded by State security forces as he was coming from attending a rally in Kabwe. The Respondent underwent an operation at Kabwe General Hospital where it was discovered that he had a wound on the cheek and skull and that some foreign metal object was embedded in his skull. The Respondent immediately lodged a letter of demand with the Government of Zambia, seeking compensation for the injuries that he sustained as a result of the shooting. The Government denied liability completely. The Respondent then left the country and went to live in Australia. In 2009, the Respondent engaged the Government with regard to his demand for compensation. He did this through; the Republican President, the Republican Vice President and the Attorney General. This time the Government agreed to compensate him. A package was worked out. It included compensation, interest and costs. The agreement and the terms thereof were embodied in, and evidenced by, a letter by the Attorney General to the Appellant’s advocates, Messrs Chilupe and Co, dated 29 October 2009. Difficulties were encountered in that the Compensation and Awards Fund run by the Ministry of Justice had been exhausted for the year 2009; and also, that the particular payment was not in the budget for the year 2010. It would appear that any effort to effect the payment ended at that point.
In April 2014, the Respondent, by originating summons, sought declarations that the agreement between him and the Government for the payment to him of US$ 6 743 918. 38 in full and final settlement of his claims was a valid, subsisting and enforceable agreement; the Government would pay interest at LIBOR rates on the sum of US$ 2 500 000; and the Appellant had a legal obligation to discharge the agreement. The High Court found and held that the agreement between the parties was valid and enforceable. The Court, then, granted the 3 declarations that the Respondent sought. In addition, however, the Court tacitly entered judgment for the Respondent in the sum of US$ 6 743 918. 38 and made a further order that the Appellant shall pay interest on the claim in accordance with section 2 of the Judgments Act, Chapter 81 of the Laws of Zambia, as amended by Act No 16 of 1997 until final settlement. The Appellant appealed.
1. A compromise of a disputed claim which is honestly made, whether legal proceedings have been instituted or not, constitutes valuable consideration, even if the claim ultimately turns out to be unfounded. It is not necessary that the question in dispute should be really doubtful, it is sufficient if the parties in good faith believe it to be so, even if such belief is founded on a misapprehension of a clear rule of law. Presumably the position will be similar where the dispute is as to the facts, though a settlement based upon a mistake of fact might be void for mistake. Certainly, the giving up of a contingent right to the costs of proceedings which are in the discretion of the court is consideration in law. In this case, the Respondent issued a letter of demand shortly after the shooting incident in 1997, threatening to take legal action. The Respondent told the court below how, when he came back to Zambia in 2003, he continued engaging with the Government concerning his claim until the Government agreed in 2009 to settle the claim. Therefore, the Respondent had a valid claim which he compromised in consideration of the promise made by the Government. In the circumstances, all the ingredients necessary for a valid and enforceable agreement were present in this case.
2. A look at the relief set out in the originating summons shows that the Respondent merely sought declarations of his rights and the obligations of the Government with regard to the agreement. The court below granted the declarations sought, but, however, went beyond what the Respondent sought and entered judgment in the sum of US$ 6 743 918.38, as well as an order that the Appellant shall pay interest on the claim in accordance with section 2 of the Judgments Act No 16 of 1997 until final settlement. Indeed, while the High Court is empowered by section 13 of the High Court Act, Chapter 27 of the Laws of Zambia to grant all such remedies or reliefs to which any of the parties may appear to be entitled, this power is excised only in respect of a claim or defence properly brought forward. In this case, the Respondent’s action was for, essentially, only 3 declarations. The Respondent correctly, commenced the action by originating summons. If the Respondent’s action had been one for breach of the agreement or judgment on the sum in the agreement, it would have had to be commenced by a different mode of commencement; that is by writ of summons. The court has no jurisdiction to entertain and award judgment on claims that have been wrongly commenced. In this case too, the court below had no jurisdiction to grant a relief that should have been brought forward by a different mode of commencement. The court below was in error when, in addition to granting the declarations, it entered judgment in the sum of US$ 6 743 918. 38. Chikuta v Chipata Rural Council (1974) ZR 241 applied
3. Indeed there was an averment by the Respondent in paragraph 17(b) of his affidavit in support of the originating summons in which he stated that it was an express or implied term of the agreement that the Appellant would pay simple interest at LIBOR on the principal sum of US$ 2 500 000 up to the date of payment. This averment came in the wake of his earlier averment in paragraph 15 of the same affidavit wherein he stated that he had sat with the Attorney General and re-visited several aspects, or heads of his claim, including interest at LIBOR. The record shows that, at the trial, the Respondent adopted the averments in that affidavit as his evidence. The record shows further that he was not cross-examined on that aspect of his averments. Therefore, the trial court cannot be faulted for reasoning and finding that since those averments were not challenged, then the parties did indeed agree that the Appellant would pay interest at LIBOR until date of payment.
4. Interest under the Judgments Act cannot be applied to a judgment that is merely declaratory of the parties’ rights.