Alick Kambani v Pulse Financial Services Limited (T / A Entrepreneurs Financial Center) (APPEAL NO. 85 OF 2023) [2025] ZMCA 36 (25 February 2025)

I l'l THE COURT OF APPEAL APPEAL NO. 85 OF 2023 H OLDEN AT NDOLA (Civil Jurisdiction ) BETWEEN: ALICK KAMBANI AND itr\JBLIC 0 COURT OF APp€A, 1_ 6'._t<j · 2 5 FEB 2025 APPELLANT PULSE FINANCIAL SERVICES LIMITED RESPONDENT (T / A Entrepreneurs Financial Ce nter) CORAM: KONDOLO SC, MAJULA, MUZENGA JJA On 20th February, 2025 and 25 th February, 2025 For the Appellant: Mr. 0. Mudenda of Mess rs Dindi & Co. For the Respondent: Ms Wendy Chiman/caca of Messrs Shama/camba & Associates. JUDGMENT KONDOLO SC JA d elivered the Judgment of the Court. CASES REFERRED TO : 1. William David Carlisle Wise v E. F. Harvey Limited ZR 98 (1985) 2. Drummond - Jackson v British Medical Association & Others 170 ALL ER 1094 3. Water Wells Ltd v William Samuel Jackson 4. Mwambazi v Morrester Farms Limited J2 of 23 LEGISLATION REFERRED TO: 1. The Supreme Court Rules, 1999 Edition [Whitebook] (RSC) Court of Appeal Act No. 7 of 2016, Laws of Zambia 2 . Anti-Corruption Commission Act No.3 of 2012 , Laws of Zambia 1 . INTRODUCTION 1.1. This appeal is against the Ruling of Mrs. Justice S . M. Wanjelani delivered on 15th November, 2022. 1.2 . In the High Court , the Appellant was the Plaintiff and the Respondent was the Defendant. In this Ru ling we shall refer to the parties as Appellan t and Respond ent. 2 . BACKGROUND 2 . 1. Appellant's Case 2 .2 . The Appellant's statement of claim in the High Court averred that he held various accounts with the Defendant's financial institution and investment agreements were entered into on various accounts between the parties some of which expir ed and were r enewed including in respect of the following accou nts ; 1. account no. 007 007 0000 1999 (INVA 1) J3 of 23 2. account no. 001 005 0003 9319 (INVA 2) 3. account no. 008 005 0000 1915 (INVA 3) 2.2 According to the Appellant he , invested various sums of money into the said accounts on agreed terms as follows ; 2 .3 INVA 1 2.3.1 The sum of K3,000 ,000 attracting an interest rate of 26% to be paid to the Appellant monthly at the rate of K65 ,000 per month from 30Lh July 20 19 to 5Lh August 2 020. 2 .3.2 The total interest payable over the period was K780 ,000 and the principal a mount of K3,000 ,000 was to be paid back at the end of the contract. 2.3.3 The agreement was r enewed for a further nine months up to 5Lh May, 2021. 3 . 1. INVA 2 3. 1. 1. The sum of K 1,500,000 attracting an interest rate of 26°/o to be paid to the Appellant monthly at the rate of K32 ,500 per month from 27th December, 2019 to 5Lh February, 2020. J4 of 23 3.1.2. The total interest payable over the p eriod was K390 ,000 and the principal amount of Kl,500 ,000 was to be paid back at the end of the contract. 3.2. INVA 3 3.2.1. The sum of KS00 ,000 attracting an interest rate of 2 5% to be paid to the Appellant monthly at the rate of Kl0,416.67 per month from 11 th June , 2020 to 19t h June , 2021. 3 .2 .2 . The total interest payable over the period was Kl 25,000 and the principal a mount of KS00 ,000 was to be paid back at the end of the contract. 3.3. The Appellant states that the Anti-Corruption Commission (ACC) restricted all three investment accounts from 8 th February, 2021 until 1st May, 2022. 3 .4. According to the Appellant, the Respondent breached the agreements by paying back the principal sums late as follows; 1. INV A 1 - The principal of K3 , 000 , 000 was only paid on 18th May, 2022 , about 22 months late . JS of 23 2. INVA 2 - The principal of Kl ,500 ,000 was only paid on 8 th May, 2022 about 15 months late . 3. INVA 3 - The Appellant was only paid back the principal of K S00,000 on 18th May, 2022, nearly 11 months late. Further , 3.5. The Appellant claimed inter est from the dates on which the said m onies should h ave been made availa ble to him to the 18 th May 2022 being the date when th e monies were paid to him. According to him, these amounted to the sums of K807,258.06, K487,500 and Kl 14, 583.37 in r espect of INVA 1, 2 and 3 respectively. He further claimed unpaid amounts of interest on INVA 2 and 3 in the sums of Kl92,533.33 and K93 ,750 respectively. 3 .6. Respondent 's Case 3 . 7. The Responden t disagreed with th e Appellant's assertions and averred that quite to th e con tr ary that the Respondent opened term deposits for the Appellant as follows; 1. INVA 1 - The deposit was K3 ,000,000 on 30 th July 2 01 9 to 5 th August, 2020 at 2 6% per annum J6 of 23 amounting to interest of K.790,833.33 of which the Appellant withdrew the sum of K.780 ,000 leaving a difference of Kl0,833.33. 2. INVA 2- The deposit was Kl,500,000 on 5 th February 2020 to 27 th December, 2020 at 26% per annum amounting to interest of K.348 ,833.33 of which the Appellant withdrew the sum of K163 ,500.00 leaving a difference of K.153 ,833.33. 3. INVA 3 - The deposit was KS00,000 on 11 th June , to 19th June, 2021 at 25% per annum amounting to interest of Kl27 ,777.78 of which the Appellant withdrew the sum of Kl0 ,400 leaving a difference of Kl 17 ,377 .78. 3 .8. The Respondent averred that the sums were withdrawn by the Appellant in interest payments and denied that any of the terms of th e agree men ts were ever renewed . 3 . 9. That on 5 th August, 20 2 0 and 5 th May 2021 the ACC issued restriction Notices directing the Respondent not to dispose of or otherwise deal with the Appellant's term deposits. J7 of 23 3 . 10. On 5 th November 2021, the ACC issued the Respondent with a warrant of seizure in respect of the Appellant 's term deposits. The Appellants accounts were consequently froze n and all transactions on the respective accounts ceased. 3 . 11. That the parties we re proscribed from any kind of transactions on the accoun ts and could consequ ently not invest th e Appellants deposit's and could therefore not pay any interest on them. 3 . 12. The Appellant s erved the Respondent with a letter dated 29 th April, 2022 from ACC unfreezing the accounts. This was confirmed to the Respondent by the ACC on 18th May, 2022. 3 . 13. Following instructions from the Appellant the Respondent transferred the Appellant's monies to his accoun ts at ABSA Bank Zambia Limited . 3 . 14. After filing this defence, the Respondent filed summons to raise a preliminary issue . 3 . 15. Preliminary Application 3 . 16 . The Respondent moved the Court pursuant to Order 14A as read with Order 33 Rule 3, The Supreme Court Rules JS of 23 [Whitebook], 1999 Edition (RSC) asking the Court to determine whether the Plaintiff has a cause of action. 3 .17. The application was supported by an affidavit stating that on 5 th August, 2020 and 5 th May, 2021, the ACC served the Respondent with restriction notices ordering the Respondent not to dispose of or otherwise deal with the Appellant's term deposits. 3 . 8. That the Appellant's accounts were frozen on account of the restrictions and seizure and the Respondent could therefore not transact on them. This meant that the Respondent could not invest the Appellant's deposits and could therefore not pay interest on the sums during the period covered by the restrictions and seizure. 3.19 . That despite being aware of the seizures and notices , the Appellant proceeded to commence this legal process against the Respondent. The Respondent therefore sought the Court to determine whether the Appellant had a cause of action and that if he didn't, the lawsuit should not be entertained. 3.20. Appellant's Arguments J9 of 23 3 .21. According to the Respondent, the purpose of the restriction notice and seizure was to prevent him from accessing the money and not to restrict the accumulation of interest. 3.22. That the Respondent transferred the monies from INVA 2 and INVA 3 to an investment account from which they continued to derive a benefit. He produced statements of account as exhibits to prove his case. 3 .23. The Appellant attested that the Respondent debited INVA 2 and INVA 3 on 5Lh February, 2020 and on 11 Lh June, 2020 with the sums of Kl ,500,000 and KS00 ,000 respectively. According to the Appellant the Respondent transferred the debited sums into its investment account for its own benefit. He further attested that INVA 1 was treated in the same way. 3 .24. He opined that once his accounts were restricted the Respondent should have paid the monies back into his various accounts or into escrow pending the outcome of the restriction. 3 .25. The Appellant stated that at trial he intended to produce evidence that during the restriction the Respondent moved money from his accounts to their investment account where it JlO of 23 was used to carry out the Respondents business and make profits . . 3 .26. He further said that it was necessary to test this allegation at trial where the witnesses of both parties would be interrogated on the issue . 3 .27 . He further pointed out that claims (iv) and (v) of his statement of claim were from unpaid balances on contractual interest which was yet to be paid despite the restriction having been lifted . 3.28 . That there were serious triable issues that ought to be allowed to proceed to trial. 4 . HIGH COURT DECISION 4 .1. The learned trial Judge considered the pleadings, affidavits and evidence led by the parties, noted that the purpose of the preliminary inquiry was for the Court to determine whether the Appellant had a cause of action against the Respondent and that, if the Court found that there was none, that the Appellant's action be dismissed. Jl 1 of 23 4.2 . The lower Court cited the case of Wise v E. F. Harvey Limitedl1l where a cause of action was d efined as a factual situation, the existen ce of which entitles one person to obtain from th e Court a remedy against another p erson . The Court warned itself that as h eld in the case of Drummond - Jackson v British Medical Association & Others 121 , the power to dismiss an action for want of a cause of action must be exercised sparin gly. 4.3. The Court observed that it was not in dispute th at the Appellant's accounts were restricted by the ACC and the learn ed trial Judge observed that one of the' restriction notices was issued pursuant to section 60 ( 1) of the Anti-Corruption Commission Act No .3 of 2012 which provides that t h e Director General of th e ACC m ay direct that a r estricted property should not b e disposed of or otherwise dealt with without the consent of the Director General 4.4. The learn ed trial Judge noted the relevance of section 60 (4) of the Act which provides for penalties including imprisonm ent of any person who disobeys section 60 ( 1) . Jl2 of 23 4.5. Taking into consideration section 60 (4) the learned trial Judge held that having been served with the restriction notices, the Respondent could not without consent of the Director General deal with the Appellant's monies in any way. The Court disagreed with the Appellants averments that the restriction notices did not stop the Respondent from applying interest to the restricted monies because that would be tantamount to "otherwise" dealing with the said monies. 4.6 . The learned trial Judge found that this matter does not disclose any cause of action because the restriction notices prohibited any transactions from occurring on the restricted accounts. 5 . APPEAL 5.1. The Appellant promptly appealed on the following grounds; 1. The learned trial Judge erred in law and fact when she held that no transaction could be done on the Plaintifrs Accounts held with the Defendant even after finding that the Plaintifrs money was held in the Defendant's Investment Account, and there was need to establish the Jl3 of 23 nature of the Investment Account and whether or not the Defendant benefited from the Plaintifrs money held in that account; and 2 . The learned Puisne Judge erred in law and fact when she failed to consider that the Plaintiff was also claiming unpaid interest during the period when there was no restriction notice and warrant of seizure issued by ACC in respect of the Plaintiffs Accounts held by the Defendant. 5 .2. The Appellant argued the two grounds together. 5 .3. According to the Appellant, after his accounts were restricted the Respondent should have considered the investment agreement between the parties as frustrated and send his monies sitting in in the investment accounts back to the Appellant's accounts or put it in escrow pending conclusion of the restriction issues. He referred to his statement of claim at pages 23 - 27 of the record of appeal (ROA) and the proposed reply to the Appellant's defence at page 79-81 ROA J14 of 23 5.4 . The App ellant submitted that he had r aised numerous triable issues in his statement of claim including a claim that upon being served with the restrictions, the Respondent moved the Appellant's money to an investment account from which it m ade profits thus unjustly enriching itself. 5.5. It was opined that the Appellant had raised numerous triable issues which could only be settled by the lower Court analysing the evidence to be presented by the parties. The case of Water Wells Ltd v William Samuel Jackson (3 l and Mwambazi v Morrester Farms Limited (4 I in which it was held that when dealing with bonafide interlocutory appli cations, Courts should allow triable issues to come to trial as it is not in the interests of justice to deny a party the right to have his case heard. 5 .6 . He submitted that this application be dismissed as it was not suitable for summary Judgment under Order 14A RSC on account of the triable issues raised by the Appellant. 5.7. RESPONDENTS ARGUMENTS Jl5 of 23 5.8 . In ground 1, the Responden t argued that the learned trial Judge was on firm ground because when she held that th e implications of the Appellant's account being restricted was that no transactions could be carried out on the account. 5. 9. It was submitted that when an account is restricted everything is froze n meaning that the Respondent could not inve st the Appellants monies to generate profits from which he could b e paid inte rest. 5 . 10. That if the Respondent h a d in a n y way dealt with the Appellant's account, section 60 (4) of the Anti-Corruption Act provide s they could h a ve b een p enalised including b eing sent to jail. That section 60 (4) is drafted in absolute terms and paying in terest on the restricted account would h ave amounted to contravening the s tated law. 5 . 11. It was further submitted that instead of suin g the Respondent, the Applican t should have a pplied to t h e High Court under Section 5 of the Anti-Corruption Act to reverse or vary t h e restriction. Jl6 of 23 5 . 12. On ground 2, it was argued that the interest being claimed in ground 2 at paragraphs 7 to 9 of the Statement of Claim refer to the period between 8 th February, 2021 when the restrictions were served on the Respondent and May 2022 when the restrictions were lifted. That no interest could be paid during this period. 5.13 . It was opined that the Appellant's Statement of Claim does not disclose any triable issues and does not disclose a cause of action in the sense of an alleged factual situation alleged which contains facts upon which the Appellant can establish a right or entitlement to Judgment. That the lower Court correctly cited the case of William David Carlisle Wise Case supra on the definition of a cause of action. 5 .14. It was prayed that the application be allowed. 6 . HEARING 6 .1. At the hearing both parties relied on the record of appeal and their respective heads of argument. 6 .2 . Their oral submissions were essentially the same as the contents of their heads of arguments Jl7 o f 2 3 7 . ANALYSIS AND CONSIDERATION 7 . 1. This was the Respondent's application for summary Judgment seeking to dismiss the Appellan t's case because according to the Respondent the Appellant had not disclosed a cause of action. 7 .2. The application was made pursuant to Order 14A and Order 33 Rule 3 RSC which respectively allow for matters ; to be disposed of on a point of law or construction of any document; and, for any question or issue arising in a cause or m atter, whether of fact or law to be tried before, at, or after the trial of the cause or matter. 7 .3. The Respondent asked the Court to determine as a qu estion of law and fact, whether the Appellant had a cause of action and if it was found that he didn 't then his action be dismissed with costs. 7.4. In casu, the question of law for consideration rests on the definition of a cause of action. The learned trial Judge cited the definition by the Supreme Court in the case of Wise v E. F. Harvey Limited supra that, a cause of action is a factual J18 of 23 situation the existence of which entitles one p erson to obtain from the court a remedy against another. 7.5. Citing the case of Drummond - Jackson v British Medical Association & Others supra the learned trial judge correctly observed that striking ou t a m atter for want of disclosing a cause of action should be done very sparingly and only wher e it was very clear and obvious that all the allega tions in said cause of action are likely to fail. 7 .6 . We observe that the statement of claim filed by the Appellant shows the following points and allegations; 1. The Appellants accounts were restricted by the ACC whilst the monies in them were the subject of an investment agreement between the Appellant and the Respondent. 2 . The Appellant holds the view that the restriction by the A CC had the effect of frustrating the investment agreement between the Appellant and the Respondent. 3. The Appellant claims that following the investment agreement, the Resp ondent moved the Appellant's • • J19 of 23 monies into Investment Accounts. He believes that because the investment agreement was frustrated, the Respondent should have instead sent his monies back to the appropriate accounts or held them in Escrow. 4. That by not transferring the monies back to his account, the Respondent instead unjustly enriched itself by transferring the monies into an investment account from which it made profits for itself 5. That there w ere unpaid amounts of interest due of Kl 92,533.33 and K93, 750 on INVA 2 from interest that should have been paid between 11 th June, 2020 and 11 th June, 2021. 7 .7. The Respondent's defence revolved around its interpre tation of section 60 of the Anti-Corruption Act which demands absolute obedience from a party served with a restriction order. The Respondents view was that it did nothing wrong by not paying interest to the Appellant in accordance with the investment agreement entered into by the parties. J20 of 23 7 .8. The reasoning was that the Respondent could not comply with the investment agreement as a matter of law and for that reason the facts upon which the Appellants case was built showed that the alleged cause of action was ill-fated. The learned trial Judge agreed with this position and allowed the application resulting in the Appellant's action being dismissed. 7.9. It appears to us that the learned trial Judge did not consid er the Appellants argument that the restriction and seizure of his accounts frustrated the contracts and that should have reverted the parties to the status quo ante. 7.10. According to the Appellant, Paragraphs 7 , 8 and 9 of his affidavit in opposition at pages 68 and 69 of the record of appeal (ROA) refer to exhibits AK 1, AK2 and AK3 respectively show that INVA 1, INVA 2 and INVA 3 were accruing intere st during the pendency of the r estriction and seizure of the Appellant's account. 7 .11 . The accounts were restricted from 8 th February 2021 to May 2022. A cursory look a t the exhibits shows that the principal • • J21 of 23 investment sums were de bited and some amount of interest , albeit small, remained accumulating on the said accounts. 7. 12. Neither the Respondent nor the trial Judge addressed or cla rified where the m on ey was transferred and wh a t the activity on the statement m eant. The question as to where th e principal investment sums went and the continued activity on the accounts can only be clarified with evidence at trial. 7.13. Based on the activity on th e statem ents of account, the Appellant made a claim of unjust enrichment against the Respondent. We agr ee with th e Appellant that this too would require evidence to be interrogated at trial. 7 .14. The trial Court seems to have not considered that by claiming that the investmen t agreem ent contract was frustrated , th e Appellant was actually releasing th e Respondent from its responsibilities under the agreement. His main grievance appeared to be the manner in which th e Respondent managed his accounts after they were restricted. • J22 of 23 7 . 15. Lord Pearsons opinion in the Drummond-Jackson v British Medical Association and others [1970] supra is quite h elpful on the qu estion of striking out a Statement of claim; "Over a long period of years, it has been firmly established by many authorities that the power to strike out a statement of claim as disclosing no reasonable cause of action is a summary power which should be exercised only in plain and obvious cases . . In my opinion the traditional and hitherto accepted view - that the power should only be used in plain and obvious cases-is correct according to the evident intention of the rule for several reasons. First, there is in r 19 (1) (a) the expression 'reasonable cause of action', to which Sir Nathaniel Lindley MR called attention in Hubbuck & Sons Ltd v Wilkinson, Heywood and Clark Ltd ((1899} 1 QB 86 at 90, 91, f 1895-99} All ER Rep 244 at 24 7). No exact paraphrase can be given, but I think 'reasonable cause of action' means a cause of action with some chance of success, when (as required by r 19(2)) only the • • • • J 2 3 of 2 3 allegations in the pleading are considered. If when those allegations are examined it is found that the alleged cause of action is certain to fail, the statement of claim should be struck out." 7.16. We hold the view that this matter is not suitable for disposal under Order 14A RSC . This appeal is allowed and we order that the main matter proceeds to trial. Costs are awarded to the Appellant, to be taxed in default of agreement. ~ \__ M. KONDOLO COURT OF APPEAL JUDGE ::::----,.. ' B~ A NGA COURT OF APPEAL JUDGE COURT OF APPEAL JUDGE