African Banking Corporation Zambia Limited v Chakaka Village Country House Limited and Others (HPC 122 of 2015) [2015] ZMHC 165 (9 December 2015)

, - • Rl IN THE HIGH COURT FOR ZAMBIA 20I5/HPC/OI22 AT THE COJMERCIAL HOLDEN AT LUSAKA I I I IN THE MATTE (Civil Jurisdiqtion) REGIS ft1."" fo.,'* Of' ~M,,:a/:'l -( 0" '"" t\: .•.•f'o,;;.\1"t<'" 0 ~'.l' ~.r ~~~c.~~ c\~~'" • ~ 'IQ.~'" J0 C\.\.~ RTGAGE ACTION RELATING CO",••• ~ 0' .,.' . PROPERTIES THE THE COMPROMISED FIRST LEGAL MORTGAGE AND FURTHER CHARGE OVER SID 47 OF FARM NO. 3370 LUSAKA UNDER BETW EN: AFRICAN BANKING CORPORATION ZAMBIA LIMITED APPLICANT ANO CHAKAfA VILLAGE COUNTRY HOUSE LIMITED (Sued a Customer) FIRST RESPONDENT LAWRENCE SIKUTWA (Sued a~ersonal Guarantor) CHAKA (Sued a Corporate Guarantor) PROCUREMENT COMPANY LIMITED MADISON GENERAL INSURANCE COMPANY ZAMBIA! LIMITED (Sued a Financial Guarantor) SECOND RESPONDENT THIRD RESPONDENT FOURTH RESPONDENT Before on. Mr. Justice Nigel K. Mutuna on this 9th day of December 2015 For the Applicant: Mr. R. Simeza Be and Mr. K. Chcnda Simeza of Messrs Sangwa & Company For th First, Second & Third I Respondents: For the Fourth Respondent: I RULING of Messrs Mulenga Legal Mr. M. Chiteba and Mr. B Chakoleka Mundashi Practitioners Mr. J. Jalasi of Messrs Eric Silwamba, Jalasi and Linyama Kasonde Cases Referred to: 1) Pandol er and Sons Limited and Others us African Banking Corpor tion (T! A BANC ABC) SCZ 119 of 20 13 , .. • R2 2) Deuel rmet Bank of Zambia and Another us Sunvest Limited and Another (1997) SJ 12 3) Kelvin Hang'andu and Company (a jirm) vs Webby Mulubisha (2008) ZR 82 (Vo1.2) 4) Match Corporation vs Development Bank of Zambia (1999) ZR page 13 5) 1nntrereneur Pub Co. (GL)vs East Crown Ltd (2000) Vol.2 Lloyd's Report page 611 Other Auth riUes Referred to: 1) Supre e Court Practice, 1999 Volume 1 2) Black' Law Dictionary, By Bryan A. Gamer, 8th edition, Thomson West, USA The Applica t, African Banking Corporation Zambia Limited has moved this motion, for he exclusion of the First Respondent's cause of action. The application i made pursuant to order 15 rule 5 (2) urthe rules of the Supreme Court of Eng and, (white book) and it seeks the following relief: 1) That t First Respondent's cause a/action be excluded/rom this action; 2) 3) is action may be continued to the applicant's cause of action and the Fir t Respondents alleged claims in rebuttal; re be an order for all consequential amendments to be made; 4) That Of costs of and occasioned by this application be in the cause In effect, the] Applicant seeks an order striking out the First Respondent's counter clai The backgro nd leading up to this action is as follows. The Applicant took out this action 23rd March 2015 against, Chakaka Village County House Limited, Law ence Sikutwa, Chakaka Procurement Company Limited and Madison Gen ral Insurance Company Zambia Limited, respectively sued as the First, Sec nd, Third and Fourth Respondents. The action seeks an order of payment 0 the sum of USD9,442,461. S0, as at IS'h March 2015, which sum of mane is claimed pursuant to facility letters dated 12th April 2010, 24th cJanuary 012 and addendum dated 12th September 2012. It also seeks . " • R3 to enforce t e security which is by way of a legal mortgage over subdivision 47 of Farm 370 Lusaka, jl guarantees by way of an order of possession, foreclosure and respect of the Second, Third and Fourth Respondents. After the process was served upon the Respondents, the First Respondent applied for directions to file a counter claim. This was granted and on 13th August 2015, the First Re pondent filed a notice of points of counter claim. It is the cause of action aribing from this counter claim that the Applicant now seeks to exclude. The Applica t's application is supported by an affidavit filed on 14th September 015, and deposed by one Patricia Kalaba, the Debt Recovery Manager for he Applicant. Her evidence revealed that the First Respondent filed a notice of points of claim in which it is pleaded under paragraphs 5 and 6 that ther \vas an exchange of correspondence between the First Respondent nd Applicant which it is alleged culminated into the two entering into a syndi ation agreement by which the Applicant agreed to be lead manager for unds for the First Respondent to the tune of USD6,530,OOO. OO. Further that, the counter claim cites various correspondence passing between the Applican and First Respondent \vhich allegedly evidences the entering into the said yndication agreement by the two. The evidenc also revealed that the applicant's claim as reflected in the amended ori inating summons is premised on the relationship of the parties as created b the facility letter of 12th April 2010 which was later redefined through the acility letter of 24th January 2012 and its addendum of 12th September 2 12. The First R 'pondents affidavit In opposition was filed and deposed by Lawrence S va Sikutwa, the Second Respondent in this matter and Executive Di ector of the First and Third Respondents. The gist of the deponent's e dence was such that it traced the background leading up to the filing of the otice of counter claim, with emphasis on the fact that the Applicant did not raise objection to the same. The evidence also discussed the various appli ations that came before this court after the filing of the notice of counter cl im at which the Applicant allegedly omitted to raise issue with .. , • R4 the notice 0 counter claim. It concluded by revealing the following facts, that is to say: th t the deponent had been advised by counsel and verily believed that after tJis court gave directions for the counter claim it has become functus affie 0; that there arc no grounds upon which this court can reverse the orders that it has given in relation to the counter claim; that the counter I claim is paJtly premised on the syndication agreement which is readily admitted by the Applicant in the affidavit in reply; and the facility letter dated 24th Januat 2012 is part of the same transaction as the syndication agreement a d arc both part of the same agreement as is evidenced by clause 4 of the said facility letter. The applicat on came up for hearing on 15th October 2015. Counsel for the Applicant, M . R. Simeza SC and Mr. K. Chenda indicated that they relied on the affidavit n support and the skeleton arguments. They also made verbal submissions The major ighlights of the arguments by counsel for the Applicant as contained in he skeleton arguments were as follows: the counter claim by the First Respon ent is incompatible with the mortgage action brought by the Applicant; It is therefore a separate cause of action which ought to be dealt with separat ly outside the mortgage action; and that the First Respondent is at liberty to p rsue the counter claim in an independent action. Counsel relied on order 15 Ie 5(21of the white book which they quoted as follows: "5. Co rt may order separate trials etc (1) .. (2) I it appears on the application of any party against whom a unter claim is made that the subject matter of the counter claim ght for any reason to be disposed of by a separate action, the urt may order the counter claim to be struck out or may order it be tried separately or make such other order as may be Counsel wen on to argue that in a decision recently handed down by the Supreme Co rt in the case of Pandoliker and Sons Limited and Others vs • RS African Banking Corporation Zambia Limited (1) the principle in order 15 rule 5(2) of tbe white book had been applied when it was held as follows at pages 20 and 21: I "In thil regard, we accept the submission by the leamed counsel for the Respohdent to the extent that the parties redefined their relationship through the new banking facility letter of 28th September 2011, any default or breaches under the previous relationship could not be part of the neL credit affair that started with the 28th September 2011 banking facility letter ... Even assuming that the appellants had adduced suffiei nt evidence to show that their counter claim was well founded to raise defence, the perceived breaches of the Respondent's pre. restru1ured facility in an action premised on the post structured facility, would n our view be anachronistic". In the verbal arguments, counsel for the Applicant argued that the powers of the court u der order 15 rule 5 sub-rule 2 of the white book are discretionary Further that they had cited a Supreme Court decision in the Pandoliker ase which provides an example of circumstances where the court can ex ude a counter claim. It \vas argued that a perusal of paragraphs 5 and 6 of th notice of points of counter claim and paragraphs 10, 11 and 12 of the affida "t in support shows that the alleged agreement that forms the bed rock of t e counter claim was allegedly made in the year 2011. On the other hand t e mortgage action is based on the facility letters which effectively modified the relationship bet\veen the Applicant and First Respondent. Counsel argued that a perusal clause 16 of exhibit "PKl" to the affidavit in support of orJ support of t inating summons and paragraphs 4, 5 and 6 of the affidavit in is application prove this fact. Further that based on the Pandoliker ase, this court is bound by the principle of stare decisis to give effect to the rinciples in the Supreme Court decision, counsel prayed that the applicatio should be granted. Counsel for t e First, Second and Third Respondents Mr. M. Chiteba and Mr. D. Chakolek indicated that they relied on the skeleton arguments and affidavit in op osition filed herein. Counsel also made verbal submissions. , " • R6 In the skcIcton arguments, counsel for the First, Second and Third RcspondcntJ argued that the Pandolikercasc was decided on its unique facts and is not afPlicable to this case. It was argued that this can be discerned from the ratro decidendi of the case which is a t page 21 which is as follows: "Even laSSUming that the Appellants had adduced sufficient evidence to show !hat their counter claim was well founded to raise a defence, the percei1ed breaches of the Respondents pre-structured facility in an action premised on the post structured facility, would in my view be anach;onistic". It was argue~ that it is clear from the foregoing that the Appellants in the Pandoliker ~asc hinged their counter claim on pre-structured facility whilst the Rcspondbnt's claim was premised on the post structured facility. This, it ls not the case before this court because the First Respondent's is not anachronistic to thc action commenced by the Applicant. counter clai was argued, That the Fir t Respondent's counter claim is based on delays in disbursing funds under the facility which is the subject of these proceedings and is embodied in the facility lettcr dated 24th ,January 2012, as read with the addendum t ereto dated 12th September 2012, and marked "PK" in the affidavit in s pport of originating summons. Thb said addendum, counsel argued provi es for the manner in which disbursements were to be made and it is on the asis of the Applicant's failure to make the disbursements as agreed, that e counter claim arose. Counsel argued that this fact is further confirmed b the contents of paragraph 17 of the Applicant's affidavit in opposition to the counter claim filed on 27lh August 2015 and paragraph 12 of the affidav t in reply filed on 5th June 2015. It was therefore argued that the counter laim is not anachronistic to the mortgage action and it is compatible t and relates to the facility letter. Counsel argu d further that the second limb of the counter claim is based on the fact that he Applicant is in breach of the syndication agreement. It was argued that t e issue of the syndication cannot be separated from this action as it was pa of the same transaction. This fact, it was argued, has been acknowledge by the Applicant as can be discerned from paragraphs 5, 7, 9 • •• R7 and 10 of tHe Applicants affidavit in reply filed on 5th June 2015. Counsel argued that the facility letter of 24th January 2012 at paragraph 4 make reference to he issue of syndication as follows: "The .ank will avail the BOTTower with a seven year loan facility in United State Dollars under syndication by African Banking Corporation Holdings. African Banking Corporation Zambia has not participated in dication, the Bank's role is to arrange and lead the syndication. )) the Syrl It was argue that the foregoing clause demonstrates that the syndication agreement cdnnot be separated from the facility letter upon which this action is prcmisedJ Therefore, the counter claim is properly before this court. Counsel arg cd that if the Applicant is allowed to separate the actions, as it wishes to dof it will result multiplicity cy actions which this court frowns upon. drew my attertion to the cases of Development Bank of Zambia vs Sunvest in the possibility of conflicting decisions and a In this regard counsel Limited an Another (2) and Kelvin Hang'andu and Company (afirm) vs Webby Mulu isha (3). In their cone uding remarks counsel argued that this court is functus officio as it relates to the issue of the raising of the counter claim by the First Respondent. his, it was argued, is on account of the fact that the First Respondent led a motion before court prior to the raising of the counter claim, which motion the Applicant did not object to and pursuant to which this court ga e directions for the raising of the counter claim. The position it was argued i compounded by the fact that the Applicant has adequately responded to he counter claim. In the verbal submissions Mr. D. Chakoleka restated the arguments in the skeleton argu ent. The only departure was in the argument he advanced that the Applican has not advanced any grounds that would justify this court exercising its iscretion under order 15 rule 5 sub-rule 2 of the white book. In the verbal ubmissions Mr. M. Chiteba restated the arguments advanced in the skeleto arguments. The departure from the skeleton arguments \vas as follO\vs: c unsel drew my attention to paragraph lOaf the Applicant's " • R8 affidavit in rePlY to originating summons and argued that the deponent confirms tha the Applicant acted in line with the syndication agreement; and that since thb said paragraph is an admission, which the First Respondent is entitled to rcJYupon i~accordan~e with order 38 TU,Ie 2 sub-rule of the white I book, there IS no basIs upon whIch the counter claIm can be excluded. In his sUbmlsSions Mr. J. Jalasi indicated that his client relied upon the position as artiCUlated by the First Rcspondcnt. In response ~o the Respondents' arguments, Mr. K. Chanda argued that the facility lcttc~s are DO record and none of them make reference to the tol syndicate made in the year 2011. This agreement according to agreement the points of rountcr claim, is for the sum of USD6.5 million, counsel argued. As regards the argument that the Pandoliker case is not applicable to this case, it was a gued that in the Pandolikercase, as in this case, the proponent was African an king Corporation Zambia Limited in a mortgage action based on, inter alia, a facility letter. This, it was argued, is the same situation in this case in terms of the proponent and the basis of the claim. To this end, counsel referred me 0 paragraph 8 of the affidavit in support which effectively confirms tha this action by the Applicant is based on relationships defined in document. after the syndication mandate. As regards th argument by Mr. M. Chiteba on the contents of the Applicant's affidavit in re ly datcd 5th June 2015, it was argued that the said affidavit is not relevant t this application because it addresscs the issue of the counter claim. On the effect of order 15 rule 5 of the white book, counsel argued that the order does n t preclude a party from resorting to it if the party has taken steps in defe ding the counter claim. Further that the order docs not curtail wer if an application is made after directions for raising the counter clai were not opposed. It was also argued that the order does not set a time li it or stage within which such an application should be madc. This, it was a gued, is evident from the explanatory note to the order under order 15 rul 5 sub-rule rule 1 at page 217, which statcs that such an " R9 application an be made at the substantive hearing or at trial. Counsel therefore s bmitted that supported + any authority and is alien to the broad discretionary powers of the suggestion of waiver or preclusion is not this court under order 15 rule 5 of the white book. As regards the argument advanced by the First, Second and Third Respondent , that having given directions for the raising of the counter claim, this court i functus officio, and counsel began by quoting Black's Law Dictionary n the definition of the term jimctus officio. It was argued that the directions w ich the First Respondent sought related to the manner in which the counter claim was to be raised. That the argument by the Respondents would be re evant if the Applicant was challenging the manner in which the points of co nter claim are before the court. The issue before court, counsel argued, is t e subsistence of the counter claim and whether it should be heard in the mort age action before court. This, it was argued, is an issue that has not been rai ed before by any party nor has this court made a determination on it. Furth r that the order pursuant to which the application has been made does not pr clude an application to be made where directions for raising of a counter clai have been given. Counsel we t on to respond to the argument that the counter claim is part of the restruct red facility, thus: the court is urged to see paragraphs 5 and 6 of the notic points of counter claim; paragraph 5, 10, 11 and 12 of the affidavit su orting of counter claim filed on 13th August 2013; and paragraph 2.8 of the s eleton arguments in support of this application. It was argued that the fa)lity letter which is produced as "PKl" to the affidavit in support of originati g summons, makes no cross reference to an agreement to syndicate t e sum of USD6.53 million and made in the year 2011. Further that clause .2 and 5.1 of the said facility letter state that it is capped at USD 3.5 million. That there is also clause 16 in the said facility letter which indicates t at the facility which excludes and supersedes all prior arrangemens without exception. By way of concluding arguments, counsel argued that the grant of this application will not lead to a multiplicity of actions bee use this action is a mortgage action premised on facility letters, R10 whilst the c unter claim is based on a syndication agreement. It was argued that, the pnnciples in the cases of Sunvest (2) and Hangandu (3) case are therefore no~ applicable to this matter. That there are two separate causes of action in re!pect of the claim and counter claim and that the beneficiary to the Syndic~tion agreement is also different from the beneficiary in the mortgage a tion. As such there can be no confiicting decisions if the First Respondent decides to sue on the counter claim separately. That even assuming t at the principle in the Pandoliker case is in conflict with those in the Sunvest and Hangandu cases, this court is bound to follow the latest decision of +e Supreme Court in line with the case of Match Corporation vs Development Bank of Zambia (4). Counsel prayed that the application should be gianted. I have cons dered the affidavit evidence and the arguments by counsel. The Applicant's ontention in this application is that the counter claim has no relationship to the Applicant's claim and is a separate cause of action which cannot be p rsued under the claim. The basis for the said contention is that it is alleged at the claim is governed by the facility letters, whilst, the counter claim is gov rned by the syndication agreement. The First Respondent on the other hand, has contended that the counter claim is part and parcel of this claim as it . rises from the syndication agreement to which the facility letters were subjec . It is import nt that I first state the effect of order 15 rule 5 sub-rule 2 of the white boo and the Pandoliker case before I determine this application. Order 15 rule 5 sub rule 2 of the white book states as follows: "If it ppears on the application of any party against whom a counter claim 's made that the subject - matter of the counter claim oughtJor any reaso to be disposed of by a separate action, the court may order the count r claim to be struck out or may order it to be tried separately or uch other order as may be expedient". The this rule is that it grants this court discretion to strike out a counter clai or order that it be tried separately from the main claim. This is .. R11 in a situatio where a court finds that subject matter of counter claim ought, for any reas n, to be disposed of by a separate action. The explanatory notes to the order give examples where counter claims will be excluded as follows: where it wo Id unduly delay the action; where it would be embarrassing; where it world substantially delay the Plaintiffs action for trial and would othenvise bi inconvenient by greatly enlarging the area of dispute between the Defendarts with which the Plaintiff was not connected; and where a fresh action would be statute barred. The list is n~t exhaustive and merely highlights some examples. The test is, as I have 5t ted in the early parl of this ruling that, should the subject matter of the count r claim for any reason to be disposed of by a separate action. Further, th wording of the order is such that it does not preclude an application 'here directions for the counter claim have been given and neither does it limit n application to a particular stage in the proceedings. I therefore dismiss the rgument by counsel for the First Respondent to that effect. My finding is fu ther enhanced by the fact that the explanatory notes on the order do not expr ssly or by implication suggest that such limitations exist in the making of t e application. I have also dismissed the argument that this court is functus 0 lcio on the issue at hand. I have arrived at this decision based on the fact tha the grant of directions for the counter claim is totally different from the iss e now before me of whether or not the counter claim should be struck off. I m therefore not functus officio. I now turn t consider the effect of the Pandoliker case. The facts of that case were that t e Respondent commenced an action against the Appellants, in the court b low by way of originating summons of 16th February 2012. The claim was fa payment of all sums due and owing under a loan facility secured by a mortg ge, which sums stood at USDI,20S,533.06, as at 1st February 2012. The espondent also claimed foreclosure on, and delivery up of the mortgaged roperty. The backgr dated 24th nd to the claim was that the Respondent, by a banking facility ecember, 2007 advanced to the First Appellant the sum of " • R12 K1,600,OOO, 00.00 (un rebased). The said sum was to attract interest at21 percent per unum and was secured by a legal mortgage over property known as plot 724, Lusaka. In January 009, a further facility of USO 1,350,000.00 was availed to the First Appell nt pursuant to which a further charge date 12th February 2009. in favour of he Respondent, was executed by the First Appellant. The further charge was ecured by a demise of stand number 829 and plot 724 Lusaka and was Sil ~ect to interest at the rale of 14 percent per annum. The further charge was btained for purposes of effecting further development of stand no.829 Lus ka and the disbursement of the loan amount was to be made periodically pon request by the First Appellant. There was default on the loan repay cnt and the Respondent was prompted to sell one of the mortgaged operties, being Plot 829 Lusaka, at the price of US0800,OOO.00. After the s Ie, the USD800,OOO.00 was applied to the loan amount of USDI,350,O .00 which reduced the loan to US0870,148.55. There was urthcr default by the Appellant in repaying the outstanding amount, wh ch prompted the Respondent to recommend that the Appellants' loan facility hould be restructured. Pursuant to this, and by way of banking facility lette dated 28th September, 2011, the Respondent offered the First Appellant a banking facility in the sum of US01,180,149.00 which was a consolidatio of the balances on the two loans of Kl,600,OOO,OOO. OO and USD 1,300,0 0.00. The loan was also converted to an eight year United States Dollars den mination loan with interest placed at 12 percent per annum. The restruc ured loan was secured by a first legal mortgage dated 14th January, 2008 made between the First Appellant and the Respondent over property kn wn as plot 724 Lusaka. It was also secured by a company guarantee b the Second Appellant, a subordination of directors' loans by the Third and F fth Appellants and directors' personal guarantees by the Third, Fourth and iith Appellants. In opposin the application the Appellants averred that as regards the mortgage 0 r plot 724, the First Appellant had been up-to-date with its .. • R13 repayments until the Respondent started defaulting in the disbursement of funds towar s the developments at stand no.829. Further that in relation to stand 829, he First Appellant had informed the Respondent that it did nol need the U D1,350,000.00 to be disbursed at once but that released to iion request as per construction requirements. The First Appellant it should be listed the detays in the disbursements of the drawdowns complained of which it contende~ resulted in severe loss of business as a consequence of non-usc of stand no. 29 in thc sum of USD614,400.00. The Appellants accordingly counter clai ed the said sum from the Respondent. It was also contended that the del ys in releasing the moneys by the Respondent resulted in the First Appell nt procuring building materials at higher prices than those budgeted fo , thereby increasing costs, which costs were stated at USD21, 500.00. Fur her that the First Appellant was sued by a third party supplier of building rna erials for non-payment of K70,000,OOO.00plus interest. The said sum was at ributed to the Respondent's failure to disburse moneys timely. Other com lications the Appellants contended were attributable to the Respondent default in disbursement of loan amounts were that: the First Appellant p id the sum of USD36,520.00 to Standard Chartered bank; it spent its 0\ 'n resources amounting to USD879,215 towards construction works at sta d no.829; it had to redesign the ground floor of the said property and resub it plans for purposes of planning permission when the Respondent breached the agreement to occupy the ground floor of stand nO.829 for' s offices, which cost the First Appellant placed at the sum of USD6,364.0 of its own resources; that the First Appellant paid USD40,OOO.0 property transfer tax following the sale of the mortgaged property ini iated by the Respondent; and that a sum of K7,800.00 paid by the First Ap ellant on 1st February 2012 had not been taken into account. The Appella ts contended that owing to all these factors, the First Appellant defaulted b cause it was applying rentals for Plot 724 to finance the developmen of stand 829. As such the Respondent was not entitled to the reliefs claim d. .. • R14 The questio that the Supreme Court considered was \I,!hether there was a misdirectio on the part of the learned High Court Judge when he dismissed the Appella is' counter claim. In determination this question the Supreme Court held as follows at pages ,J19, 20 and 21; ((Toth extent that by this facility letter, the loan arrangement between the p rties was restructured, the letter provided a nexus between, the new rrangement and the old, the facility as originally arranged howe er, ceases to exist in the onginal fonnat ... In au view, by deciding to restructure the loan facility through the banki g facility letter of 28'" September, 2011, the parties redefined their relati ships so that reference to the old order had henceforth become lmpe "nent. It is, therefore, not surprising that the affidavit in support of the 0 'ginating Summons, in the court below showed that the legal mortg ge Tights that the Respondent sought to enforce emanated and were ferable to the banking facility letter of 281h September, 2011 '" In this r gard, we accept the submission by the learned counsel for the Respo dent that, to the extent that the parties redefined their relationship throu h the new banking facility letter of 28'h September, 2011, any defau ts and breaches under the previous relationship could not be part of the new credit affair that started with the 28th September, 2011 banki g facility letter. Even ssuming that the Appellants had adduced sufficient evidence to show hat their counter claim was well founded, to raise as a defence, the p eeived braehes of the Respondent's pre-restroetured loan facility In an etion premised on the post stroetured facility would in our view, be an ehronistic," The effect 0 the foregoing holding is that once parties enter into a fresh arrangemen as to the borrowing by one of the parties, the initial arrangement in relation t creta falls away, Further, a party cannot rely on breaches and defaults of he other party committed on the previous arrangement as a .. • R15 counter clai In relation to the claim by another raised through the new arrangcmcn for borrowing. This tics in squarely with the provisions of order 15 rule 5(21 of the white book to the extent that this court is empowered, where it dee s that a subject matter of a counter claim ought for any reason be disposed of by a separate action, to strike out the counter claim. In the pandoliker1case, the counter claim was deemed inappropriate as against the claim because it arose from a different transaction from the mortgage action from which I he claim arose. This is the argument the Applicant in this that matter has Iso advanced. That is to say, it is contended that the Applicant's claim arises rom the facility letter while the First Respondent's counter claim arises from the syndication agreement which is separate from the facility letters. On the other hand the Respondents contend that syndication agreement i part and parcel of the facility letter. The determi ation of this matter therefore lies in the interpretation to be put on the facili y letters and the syndication agreement. There are three facility letters date 12'" April 2010, 24'" January 2012 and 12'" September 2012. The facility tters are all marked exhibit "PKI" to the affidavit in support of originating ummons. The first facility lettcr is dated 12th April 2010, and in the first par' graph of the said letter the parties are described as the Applicant and the Firs Respondent. Clause 1 indicates that the tenure of the loan was seven years vhilst its purposc is stated under clausc 2 as being to assist the borrower co struct the main lodge, conference centre and completion of forty chalets. Th amount advanced is stated under clause 3 as not exceeding USD3,500,0 0.00. The second facility letter datcd 24'" January 2012, also describes t e partics as the Applicant and the First Respondent. It then describes t' loan type as being, a ne\\' seven year term loan facility with a one year m ratorium on principal repayments and as a continuation of the USD3,500,0 0.00 seven year loan facility. Clause 2 described the purpose of the loan as eing to assist the borrower complete the construction of the lodge, meet constr ction costs and partly cover the purchase of fixtures and fitting for the lodg . Clause 3 states the amount as not exceeding USD3,500,OOO. OO . '. .. R16 and as a continuation of the loan that as at that dale stood at USD3,387,2 7.21. Under clause 4 the facility letter states in part as follows: "The ank will avail the Borrower with Q seven year loan facility deno1inated in United States Dollars under a syndication by African Bankihq Corporation Holdings. " A rical Rankin Cor oration Zambia Limited has not miid ated in the s ndi alion, the Bank's role is to arrange and lead the syndication ... " (The underli iog is the court's for emphasis only). By the said lausc, the letter indicates that the syndication will be by African Banking Co poration Holdings and that the Applicant has not participated in the syndica on. The third fa ility letter dated 12'h September 2012 varied clauses 1, 9, 11, 17 and 18 of th facility letters. These clauses related to the following: the tenure of the loan cility; the securities pledged; incorporation of other conditions; the period 0 the loan; and repayment terms. The facility letter also describes itself as an ddendum to facility letter number L-500625-3 dated 24 January 2012 which is the second facility letter. It is also i portant to restate that the facility letters were executed by the Applicant d First Respondent and not African Banking Corporation Holdings a d the First Respondent. The letters were also subject to the securities w ich included, but not limited to mortgages. The first two facility letters also had clause 16, a no prior agreement clause, which states as follows: "This acility, as of the signature thereof, represents the entire agreement n the Borrower and the Bank and consequently cancels and super edes any and all prior documents, agreements or understandings er oral or written, exchanged or delivered during negotiations leadi 9 up to this facility." As the allegations that the Applicant and First Respondent had entered int a syndication loan, it is apparent from the pleadings that there ," .. R17 was no for al agreement entered into, but that the same was allegedly consummal d by way of exchange of correspondence. This can be discerned from paragrrph 6 of the Notice of Points of Counter Claim by the First Rcspondcnd:lated 13th August 2015. The said paragraph states as follows: "The )S! Res ondent will sa that b virtue a the exchan e a the letters referred to in paragraph 3 hereof, the 1st Respondent and the Applicant had ebtered into an agreement ("Agreement to Syndicate") under which the A~ licant was to act as lead arranger in raising the Syndicated Loan requir dfor the completion of Phase One of the Hotel." (The underli ing is the court's for emphasis onlYl The letters efcrred to in the paragraphs arc exhibits to the affidavit in opposition t originating summons dated 20th April 20 15, specifically, exhibits "L553", "L5 4" and "L555". I will not comment on the effect of the said letters, that is whe her or not they constituted a binding contract, because this is reserved for nother stage in these proceedings. My task at this point is merely to determin whether or not the counter claim arises from the same cause of action warr nting its determination in this action. It is also important to note that whilst e Applicant and First Respondent were engaged in the exchange of the letter I have referred to, the Applicant had advanced moneys to the First Respo dent by way of facility letter dated 12th April 2010 and further funding by way of facility letter dated 24th . January 2012. What can be discerned fr m the foregoing, is that the syndication agreement contemplated a situation vhereby the Applicant as lead arranger, under the auspices of African Ba king Corporation Holdings, would arrange funding from other financial in Applicant f mortgage tr show, and titutions to extend to the First Respondent. This is opposed to the nding the First Respondent on its own, as was the case in the nsaction from which the claim arises. The pleadings appear to r reasons I shall not go into at this point, that this syndication arrangeme t did not take off and that the funds that were extended to the First Respo dent only came from the Applicant. This can be discerned from the affidavi evidence by the Respondent and the notice of points of counter . ., .. claim. In th latter, the important paragraphs arc 19 and 22 which state as follows: Paragraph 1 "That],Ubsequent to Afriexim availing the Term Sheet, the parties entered into v rious discussions with a view to progress matters so as to complete the applicant was not keen to the p,bject. campi Ite the project. On the 9'1> of December, 2014 the Applicant advised It would appear however, the 1s Respondent that Afriexim had after preliminary analysis of the propo a1 of the 1st Respondent ... declined to consider the 1st Respo dent's request for funding. I will specifically refer the court to the exhibi marked "LS518" in the Affidavit in Opposition which is the letter dated 9th December, 2014 from the Applicant to the 1st Respondent." Paragraph 2 "That it is the 1st Respondent's position that the Applicant has refused and Ineglected to arrange full syndicated finance as contemplated the agreement to syndicate which has led to loses that the 1st unde Resp dent is counter claiming ... " The effect f the foregoing paragraphs, when read with the facility letters reveals that here were two separate transactions. The first being the mortgage transaction evidenced by the two facility letters and the second being the syndication agreements evidenced by the exchange of correspondence. In the former, the pplicant individually extended moneys to the First Respondent, while in the latter, the Applicant was to be lead arranger in organising and in conjunctio with other financiers, funding the First Respondent's project. Consequcn upon this, the cause of action which arises in relation to the mortgage a tion i.e. the originating summons, filed by the Applicant arises out of the t '0 facility letters. Whilst the cause of action that arises from the syndication agreement arises from the exchange of correspondence that I have referred to arlier. These are two separate and distinct causes of actions, arising out f two separate and distinct agreements. This is re-inforced by the fact that cl se 16 in the two facility letters which I have quoted in the earlier ~ ., . Ri9 part of this ling excludes reference to any other agreement. This is an entire agreement lause whose effect is that the clause constitutes a binding contract between the parties that the full contractual terms are to be found in the docu4ent (in this case the facility letters) containing the clause and not elsewhere. This I I INNTREPRENEUR follows at page 116: is in accordance with the holding in the case of PUB CO. (GL) vs EAST CROWN LTD (5) which states as ''The Iurpose of an entire agreement clause was to preclude party to a writte agreement from threshing through the undergrowth and finding in the course of negotiations some chance remark or statement on which to fou d a claim as to the existence of a collateral warranty; the entire agreeJ ent clause obviated the occasion for any such search and the peril to thl contracting parties posed by the need which might arise in its abset ce to conduct such a search; the clause constituted a binding agree ent between the parties that the full contractual tenns were to he foun in the document containing the clause and not elsewhere, and any proml es or assurances made in the course of the negotiations should have 0 contractual force; and the operation of the clause was not to rend evidence of the collateral warranty inadmissible in evidence but to de ude what would othenvise constitute a collateral warranty of legal effect (see p.614, col. I)". In vic\v of y finding in the preceding paragraph, the firm view I take is that the two c1ai s cannot be pursued in one action. To that extent I find merit in the Applica t's claim. In arriving at the foregoing finding, I have considered the argum nt by Mr. M. Chiteba that clause 4 of the facility letter of 24th January 2 12 reinforces the fact that the syndication agreement cannot be separated om the facility letters upon which this action is founded. 1 have dismissed he said argument because as I have demonstrated in the earlier part of thi Ruling, clause 4 sets out African Banking Corporation Holdings as the ban that would participate in the syndication and not the Applicant. The issue ow is, what is the fate of the First Respondent's counter claim. The Applicant as argued that it should be struck out. Order 15 rule 5 sub-rule ( ..•. R20 2 of the whi e book, upon which this application is anchored, gives me the option of eifher striking out the counter claim, ordering it to be tried separately or. make any other order which may be expedient. I am inclined to order that t at the counter claim be tried separately, and I so order. Having hived off th counter claim from the claim I order and direct as follows in relation to t e future conduct of this matter: a) The Applicant's claim 1) Th t in view of the fact that the parties have filed an affidavit in su port one in opposition and one in reply, the matter is ready for he ring. It will therefore come up for hearing on 21st day of January 20 6 at 9:00 hours 2) Pe ding the hearing in 1 above, the Applicant is at liberty to amend its affidavit in support of originating summons within 7 days of the da e hereof and the Respondents to amend theirs in opposition 7 days th reafter. The purpose of the foregoing exercise is to remedy any sh rt comings to the affidavits which are consequent upon the overall de ision I have made b) The c unter claim 1) Th matter to come up for directions as to the conduct of the counter cl "m on 21" day of January 2016 at 8:30 hours As regards ost, I award same to the Applicant against the First Respondent. Dated at Lusaka this 9th day of December 2015 ,