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IN THE SUPREME COURT OF ZAMBIA SCZ JUDGMENT NO. 3 OF
2013
HOLDEN AT LUSAKA Appeal No.37/2009
(Civil Jurisdiction)

B E T W E E N:

ESQUIRE ROSES FARM LIMITED APPELLANT

AND
ZEGA LIMITED RESPONDENT

Coram: Chibesakunda, Ag CJ, Chibomba, JS and Lisimba, Ag JS.

On 9th May, 2013 and on 29th May, 2013
For the Appellant: Mr. A. Tembo of Tembo Ngulube and Associates.
For the Respondent: Ms. L. Kasonde of Mulenga Mundashi and Company.

JUDGMENT

Chibomba, JS, Delivered The Judgment Of The Court.

Cases and other Materials Referred to:

1. Air France Vs Mwase Import and Export Company Ltd (2000)ZR 66
2. J. Beatson’s Anson’s Law of Contract page 522
3. Chitty on Contracts, Volume 1 page 1465, paragraph 22-032

Legislation Referred to:

1. Air Services Act, Chapter 446 of the Laws of Zambia.

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The delay in the disposal of this appeal is deeply regretted.

This was due to retirement of two members of the panel that

heard

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the appeal on 12th August, 2009. As a result, it had to be heard

de-novo on 9th May, 2013.

The Appellant appeals against the Judgment of the High Court

in which the Court below held that the Respondent was an agent

of the Appellant and that as such, the Respondent was entitled to

be paid by the Principal, the Appellant, in this case.

The facts leading to this appeal are that the Appellant and

the Respondent entered into an oral agreement for the

Respondent to provide some freight services, pallet handling and

customs documentation for the Appellant. The Appellant was a

Shipper involved in the business of export of flowers from Zambia

to Europe and to other markets outside Zambia.

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The arrangement was that after the Respondent provides

services, the Respondent would then invoice the Appellant and

the Appellant would then settle the claim. There was, however,

an outstanding balance of US$79,346.864 due to the Respondent.

When the Respondent demanded for payment of this outstanding

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sum, the Appellant refused to pay claiming that there was

variation of the terms of the Contract to the effect that the

consignee would directly pay the Respondent for the services

rendered instead of the Appellant. This prompted the Respondent

to commence an action in the High Court’s Commercial List in

which the following reliefs were sought:

“I. Payment of the sum of US$79,346.86

II. General damages for breach of contract and interest

thereon at current bank lending rates.

III. Interest on US79,346.86

IV. Any other relief that the court may deem fit

V. Costs.”

The Court below received evidence from the parties and

submissions from both learned Counsel. After hearing and

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considering the evidence and the submissions, the Court below

came to the conclusions that the Respondent was entitled to the

sum of US$79,346.86 and entered Judgment in favour of the

Respondent.

(47)

Dissatisfied with this decision, the Appellant appealed to this

Court advancing two grounds of Appeal. These are:

“1. The Learned Trial Judge misdirected himself both in law

and in fact by failing to appreciate that the Plaintiff and
the Defendant voluntarily varied the contract whereby
the Plaintiff agreed to be paid directly by the Importer for
freight charges.

2. The learned Trial Judge misdirected himself in fact and in

law when he failed to appreciate the effect of Article 4(7)
of Regulation 2(2) in the Second Schedule of the Zambia
Air Services Regulations of the Air Services Act, Chapter
446 of the Laws of Zambia.”

The learned Counsel for the Appellant, Mr. Tembo, relied on

the Appellant’s Heads of Arguments.

In support of the first Ground of Appeal, it was contended

that as clearly stated by the trial Judge, the contractual

relationship between the parties was that originally, freight and

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other charges were being paid by the Appellant. That however,

after sometime, the consignees started paying the charges

directly to the Respondent. It was argued that this change in

payment was preceded by an agreement between the parties.

And that this later Agreement was not unilaterally done by the

Appellant even though

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it was first suggested by the Director of the Appellant. That the

Respondent accepted the agreement and that over a long period

of time, the Respondent received payments directly from the

consignees. It was submitted that the Respondent also furnished

its account details to the consignees and received payment

directly for over a long period of time and in fact that the

Respondent demanded payment from the consignee and

threatened to withhold any further shipment if the consignee did

not pay.

It was submitted that therefore, the Respondent could not in

one breath admit that it actually received payment directly from

the consignees over a long period of time and even demand

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payment from them and then deny that there was any agreement

for direct payment from the consignees. Otherwise, why not

demand payment from the Appellant?

It was further contended that even though there was no

express agreement, the Respondent’s conduct was consistent

with the agreement being there by demanding for payment

directly from the Consignees. Therefore, that under the principle

of estoppel, the

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Respondent is estopped from asserting otherwise. In summing

up, it was contended that there is sufficient evidence to show that

the Respondent agreed to collect charges directly from the

consignees and that as such, the trial Judge erred by failing to

appreciate this.

In support of the Second Ground of Appeal, it was contended

that the Appellant agrees with the learned trial Judge’s

sentiments that the real issue in the present case is: “does the

change in payment points i.e., from the shipper to the

consignee absolve the shipper of its contractual

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obligations with the plaintiff who was acting as agent on

its behalf?”

It was submitted that the Appellant, totally disagrees with

the learned trial Judge’s answer that “it does not”. The reason

being that under the provisions of Article 4(7) of Regulation 2 (2)

of the Second Schedule to the Zambia Air Services Regulations of

the Air Services Act, (hereinafter referred to as the Act), a Shipper

can be absolved from liability if he meets certain requirements

stated in that Article. Article 4(7) of the Act provides that:

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“By taking delivery of the consignment or the air-way bill or by
exercising any other right arising from the contract of
carriage, the consignee agrees to be jointly and severally
liable with the shipper for the aforementioned obligations. If it
is agreed that rates, charges or expenses are to be collected
from the consignee, the shipper remains liable for the payment
of the same. However, his obligations with respect to such
rates, charges or expenses shall cease upon delivery of the
shipment by carrier to the consignee.”

It was contended that although the authorities cited by the

learned trial Judge were appreciated, (Halsbury Laws of

England) and (Air France Vs Mwase Import and Export

Company Limited1,) the Appellant’s contention is that the

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conditions in the above provisions is that the shipper can be

absolved of its obligations to pay rates, charges or expenses upon

meeting the three conditions. These are:-

“1. The consignee must take delivery of the consignment or

the air-way bill or exercise any other right arising from
the contract of carriage.

2. There must be an agreement that rates, charges or

expenses are to be collected from the consignee.
3. There must be a delivery of the shipment by carrier to the
consignee.”

It was submitted that the Appellant met all the above

conditions. Hence, that as Shipper, the Appellant was absolved

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from paying rates, charges or expenses as the consignee had

taken delivery of the goods, the Air-way bill and there was an

agreement for the Respondent to collect the rates and charges

from the consignees. Further, that it was not suggested that any

of the shipment in respect of which the Respondent claimed for

charges had not yet been shipped as the Respondent based its

claim on the shipment that had been delivered to the consignees.

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It was agued that the learned trial Judge, therefore, erred by

failing to appreciate or contemplate that a Shipper can be

absolved in accordance with the provisions of Article 4(7) of

Regulations 2(2) of the Second Schedule of the Act. That as such,

the learned trial Judge misdirected himself when he failed to

appreciate the effect of Article 4(7), in that in accordance with

him, the above provision was not applicable because the air-way

bill that was prepared by the Respondent’s agents inserted an

amount of money under total “prepaid” instead of under total

“collect” and hence, the learned Judge’s reasoning that “had the

amount been inserted in the total collect column, the position would

have been different and the

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defendant’s liability would have ceased upon delivery of the

shipment by the carrier to the consignee.”

It was pointed out that there was however, no such condition

under Article 4(7) of the said Regulation. Further that even

assuming that the learned trial Judge was talking about the first

condition that the consignee must take delivery of the

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consignment or the air-way bill or exercise any other right arising

from the contract of carriage, the contents of an air-way bill was

not an issue as it is mere taking delivery of the air-way bill by the

consignee. And that the same condition is expressed in the

alternative as it states that apart from taking delivery of the air-

way bill, the condition can be satisfied by the consignee taking

delivery of the consignment or exercising any other right arising

from a contract of carriage.

It was argued that the consignees having taken delivery of

the consignment, there was no further requirement that they

should also take delivery of the air-way bill as the air-way bill can

hardly be a determining factor. Therefore, that the learned trial

Judge misdirected himself in fact and law when he failed to

appreciate the

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effect of Article 4(7). And that this Appeal should therefore, be

allowed with costs.

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On the other hand, in opposing this appeal, the learned

Counsel for the Respondent, Ms. Kasonde also relied on the

Respondent’s Heads of Arguments.

In response to the first Ground of Appeal, it was contended

that the single issue that was before the Trial Court for

determination is “who was liable to pay the expenses

relating to freight?” In response to the Appellant’s contention

that by accepting to be paid by the importers directly instead of

the Appellant as Shipper, the Respondent had varied the contract

and that as such, the Respondent cannot look to the Appellant for

payment and the argument that the variation in payment mode

was not unilaterally done by the Appellant; it was contended that

the email at page 189 of the record should not be read in isolation

but together with the email of 31 st October, 2007. That in the

earlier email, Mr. Limbada had asked Dinesh Kukreti of the

Respondent Company to send an email to Peter of Flodac (one of

the

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Consignees) to confirm when the payment would be made. It was

contended that the first email was sent after Mr. Kukreti was

requested by Mr. Limbada to do so as confirmed by the

Respondent’s only witness, Titus Shamane, under Cross-

examination. That Shamane told the Court below that based on

the information from Mr. Shiraz, his boss, Dinesh Kukreti,

communicated to Peter as requested by Mr. Limbada.

It was pointed out that this is reflected at page 305 of the

Record of Appeal. That the Appellant’s only witness, Boniface

Mutambalika Phiri, equally in the email at page 190 of the record,

stated that: “sorry to put the ball in your court”. That this

means that Mr. Shiraz Limbada asked Dinesh Kukreti to request

for payment on his behalf. Therefore, that the Respondent’s

contention is that the learned trial Judge was on firm ground as he

appreciated the fact that the Appellant had sole responsibility to

settle all the payments relating to freight.

It was further contended that it is trite law that in order to be

enforceable, a variation must fulfil the requirements governing

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formation of contract. This is inter alia, “offer, acceptance and

consideration”. That J. Beatson’s “Anson’s Law of Contract”2

states that:

"A variation involves a definite alteration, as a matter of

contract of Consensual obligations by the mutual
agreement of both parties. It must be supported by
consideration. In most cases, consideration for the
variation can be found in a mutual abandonment of
existing or the Conferment of new benefits by each party
on the other.”

In response to the Appellant’s contention that the

arrangement for direct payment from the Importers was

beneficial to the Respondent and the argument that the

Respondent, having freely varied the term for direct payment, the

Appellant was no longer required to pay the same to the

Respondent; it was argued that this however, is contrary to the

above quotation. It was pointed out that the fact that the

Respondent was receiving payment directly from the importers

did not qualify as a conferment of a new benefit to the

Respondent as it was necessary for the Respondent to receive the

payment for the services it rendered to the Appellants. That what

was cardinal to the Respondent was the receipt of payment for

the services rendered. And that the fact that the

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Appellant made arrangements with third parties (the consignees),

to pay freight directly to the Respondent did not qualify as a

variation of the terms of the agreement. And that as rightly

observed by the learned trial Judge, the question is: “Does the

change in payment points i.e. from the shipper to the

Consignee absolve the Shipper of its contractual

obligations with the Plaintiff who was acting as agent on

its behalf?”

Therefore, that the learned Trial Judge did not err in law or in

fact as he fully addressed and appreciated that there was no

variation of the contract between the parties.

In response to the second Ground of Appeal, it was

contended that the learned trial Judge did consider Article 4(7) of

the Act when the Appellant applied to review the Judgment as

shown in his Ruling at page 25 of the Record of Appeal. That the

learned Judge did infact quote Article 4(7) of the Act when he

stated that:
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“By taking delivery of the consignment or the Airway Bill or by

exercising any other right arising from the contract of
carriage, the consignee agrees to be jointly and severally
liable with the Shipper for the aforementioned obligations. If
it is agreed that rates, charges or expenses are to be collected
from the Consignee, the
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Shipper remains liable for the payment of the same. However,

his obligations with respect to such rates, charges or expenses
shall cease upon delivery of the shipment by the carrier to the
consignee.”

It was contended that in considering the effect of the above

provision, the learned trail Judge, quoted verbatim, the testimony

of the Appellant’s only witness, Boniface Phiri, as regards the

effect of the phrase: “Total Prepaid” and “Total Collect”. And

that in accordance with this witness, if the amount relating to

freight is inserted in the “Total Collect” column, the importer is

liable to pay freight.

It was submitted that the learned trial Judge was therefore

on firm ground when he held that had the amount relating to

freight been inserted in the “collect column”, the position would

have been different and that the Appellant’s liability could have

ceased upon delivery of the shipment by the carrier to the

Consignee.
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We have seriously considered this appeal together with the

grounds of Appeal, the arguments in the Heads of Arguments filed

and the authorities cited and the Judgment by the learned Judge

in the Court below. It is our considered view that this appeal

raises

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only one major question. This is whether in the circumstances of

this case, the Respondent was entitled to payment from the

Appellant there being no dispute that the Respondent was an

agent of the Appellant.

To ably determine this question, the facts of this case must

be borne in mind at all times. These are that the Appellant was a

grower and exporter of flowers from Zambia to Europe. The

Appellant engaged the Respondent to handle the export of the

flowers by air. The Respondent used to prepare airway bills. At

first, the Appellant used to pay the handling charges to the

Respondent. Later, the Consignees started paying the

Respondent directly. A dispute arose when one of the importers

was put in liquidation as the importer failed to pay the handling

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fees to the Respondent. The Respondent demanded payment

from the Appellant who refused to pay claiming that there was a

variation of the contract on the point of payment such that the

Respondent was to be directly paid by the Consignees. The

Respondent then filed an

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action in the High Court which resulted into this appeal claiming

for the handling charges.

The question before the Court below was: Did the change

of the payment points i.e., from the shipper to the

consignees absolve the shipper of its contractual

obligations to its agents to pay the agent’s charges? The

learned trial Judge came to the conclusion that this did

not.

The learned trial Judge agreed that the Respondent was an

agent of the Appellant and that the consignees were parties to

the contract between the Appellant and themselves and that

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since the consignees had failed to pay the agent, the Appellant,

as Principal, was liable for the freight charges as all exports were

“C and F” (Cost and Freight), meaning that the consignees paid

for the cost and freight to the Appellant who should in turn pay its

agents for the handling charges.

The first Ground of Appeal raises the question whether there

was a valid variation of the contract between the Appellant and

the

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Respondent to the effect that the Respondent would now receive

direct payment from the importers for handling charges. In

support of the argument that there was a valid variation, the

Appellant relied on the email at page 189 of the Record of Appeal

and on the fact that the Respondent was later receiving payments

directly from the Consignees for a long time and that the

Respondent had even demanded to be paid by the Consignees.

We have perused the email on page 189 and the rest of the

emails on record. This brings us to the question as to what

amounts to a variation.
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Chitty on Contracts3, states that:-

“The parties to a contract may effect a variation of the

contract by modifying or altering its terms by mutual
agreement. In Berry v Berry a husband and wife entered
into a separation deed whereby the husband covenanted to
pay to the wife a certain sum each year for her support. His
earnings proved insufficient to meet this obligation, so they
agreed in writing to vary the financial provisions. It was
held that this variation was valid and enforceable, and that
it could be set up by the husband as a defence to an action
against him on the original deed. A mere unilateral
notification by one party to the other, in the absence of any
agreement, cannot constitute a variation of a contract.”

The learned authors go on to state that:-

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“The agreement which varies the terms of an existing
contract must be supported by consideration. In many
cases, consideration can be found in the mutual
abandonment of existing rights or the conferment of new
benefits by each party on the other.”

And that:-
“A mere forbearance or concession afforded by one party to
the other for the latter’s convenience and at his request
does not constitute a variation, although it may be effective
as a waiver

As can be seen from the above quotations, in order for a

variation to be a valid defence at law, it must be by mutual

agreement of the parties to the contract. The variation must also

be supported by consideration. Such consideration can also be

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found in the mutual abandonment of existing rights or in the

conferment of new benefits by each party to the other.

This authority goes further to state that a mere forbearance

or concession given by one party to the other for the latter party’s

convenience does not constitute a variation.

In the current case, the e-mail at page 189 of the Record of

Appeal cannot by any imagination be stretched to amount to a

variation of the agreement between the Appellant and the

(62)

Respondent. We agree with the learned trial Judge that the e-

mail at page 189 did not constitute a valid variation. The learned

Judge also gave reasons why he believed that the Respondent

was entitled to payment by the Appellant as Shipper and

Principal. There was also no dispute that the Respondent was the

Appellant’s agent. We can not fault the learned Judge for coming

to these findings. The Appellant in this matter had direct

contractual relationship(s) with the Consignees to which the

Respondent was not party.

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It is also trite law that in an agent and principal relationship

(as it was in the current case), the agent is entitled to

remuneration for the services rendered to the principal. This is a

cardinal principle of the law of agency. Of course, there are

exceptions to this rule and one such exception is where the agent

has contracted to receive payment from a third party instead of

the principal. In such a case, the agent has to look to that third

party for payment.

In the current case, however, we are not satisfied that there

was such a contract or agreement between the Respondent and

the Consignees. We also note that this was a “C and F” contract

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concerning carriage of goods by air, meaning that the importer

was expected to have been paying directly to the shipper, the

“Cost and Freight”.

Further, perusal of the emails on record especially the one

relied upon by the Appellant do not support the Appellant’s claim

that there was a valid variation. There is also no tangible

evidence that proves that the alleged variation was consented or

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acquiesced to by the Respondent as to alter their contractual

obligations to each other. As the authors of Anson’s Law of

Contract2, put it, a variation involves a definite alteration and

must be agreed by both parties to the agreement and it must also

be supported by consideration. We are not able to see any of

these here.

We are also of the firm view that the fact that the

Respondent did receive some payments directly from the

importer did not qualify as a conferment of a new benefit or new

rights to the Respondent as has been suggested by the Appellant.

What the Respondent contracted was to receive payment for the

services rendered to its Principal, the Appellant. We therefore,

agree with the

(64)

submission that what was cardinal to the Respondent was to

receive payment for the services rendered. The fact that the

Appellant may have made an arrangement with third parties to

pay charges directly to the Respondent did not amount to a

variation of the contract with the Respondent so as to absolve the

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Appellant from its contractual obligation to the Respondent to pay

for the services rendered. We have quoted above what the

Learned authors of Chitty on Contracts3 have stated on

variation. We repeat here that a mere forebearance or

concession afforded by one party to the other party for the

latter’s convenience and at his request does not amount to a

variation.

Our conclusion is that the learned trial Judge was on firm

ground when he ruled that the change in payment points from the

Shipper to the Consignees did not absolve the Shipper of its

contractual obligations to its agent to pay for the services

rendered. Ground one of this appeal therefore, fails on ground of

want of merit. The same is dismissed.

(65)

Ground 2 of this Appeal attacks the learned trial Judge’s

holding that Article 4(7) of the Regulation 2 (2) of the

Second Schedule to the Act can absolve the shipper of his

obligation to pay charges to his agent where the Consignee has

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taken delivery of the consignment and the airway bill or where

there is an agreement for the agent to collect the charges from

the Consignee.

The major argument by the Appellant is that the learned

Judge ought not to have held as he did even though the

authorities that the learned Judge relied upon were agreed. The

Appellant’s position is that the Appellant met all the conditions

under Article 4 (7). Hence, as Shipper, the Appellant was

absolved from paying the charges as the Consignee had taken

delivery of the goods and the airway bills and there was also this

agreement for the Respondent to collect the charges directly from

the Consignees. It was argued that the learned trial Judge

therefore, failed to appreciate the effect of Article 4 (7) when he

ruled that the provision of Article 4 (7) of the Act did not apply

because the amount on the airway bill is inserted under “total

prepaid” instead of under “total collect” and that,

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had the amount been inserted in the “total collect” column, the

position could have been different as the Appellant’s liability

could have ceased upon delivery by the carrier to the Consignee.

We have considered the above arguments and paid

particular attention to the provisions of Article 4 (7) of the Act. It

is our considered view that the learned trial Judge was on firm

ground when he held that Article 4 (7) of the Act did not apply in

this case. In this case, the amount is not inserted in the “total

collect" column. Had it been inserted in the “total collect”

column, then the position could have been different as the

Appellant’s liability could have ceased upon delivery of the

shipment by the Carrier to the Consignees. We find no merit in

the Ground 2 of this Appeal. The same is dismissed.

(67)
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Both Grounds 1 and 2 of this Appeal having failed, this

appeal has failed on ground that it has no merit. The same is

dismissed with costs to the Respondent to be agreed and in

default thereof, to be taxed.

……..………………………………
L. P. CHIBESAKUNDA
ACTING CHIEF JUSTICE

…………………………………..
H. CHIBOMBA
SUPREME COURT JUDGE

………..........................................
M. LISIMBA
ACTING SUPREME COURT JUDGE