Allan Mulemwa Kandala v Zambia National Commercial Bank and Ors (2012/HPC/0381) [2023] ZMHC 82 (28 February 2023)

' IN THE HIGH COURT FOR ZAMBIA 2 ,._~'\at AT THE COMMERCIAL REGIS/~ - : f.l\ M t 0 \- ,. 2012/HPC/0381 HOLDEN AT LUSAKA (Civil Jurisdiction) ~ [ BETWEEN: I' Cl ALLAN MULEMW A KAND ALA PLAINTIFF AND ZAMBIA NATIONAL COMMERCIAL BANK 18T DEFENDANT EDGAR HAMUWELE CHRISTOPHER MULENGA (Sued in his capacity as Receiver and Manager of Top Star Breweries) 2ND DEFENDANT 3RD DEFENDANT ATTORNEY-GENERAL 4TH DEFENDANT GRANT THORNTON ASSOCIATES LTD 5TH DEFENDANT ITOS HARDWARE DR. PATRICK MATIBINI 6™ DEFENDANT 7TH DEFENDANT REA SEA GENERAL DEALERS IMPORT & INTERVENER EXPORT Coram: Hon. Lady Justice Irene Zeko Mbewe Appearances For the Plaintiff Mr. M Katolo & Ms K. Tembo of Messrs Milner Paul Legal Practitioners For the F 1 , 2nd, 3rd & 5'h : Mr. Robert Simeza SC , Mr L Mwamba and Defendants Mr Nkunika of Messrs Simeza Sangwa and Associates Jl!Page For the 6th Defendant Mr. E. B. Mwansa and Mr S Kachamba of For the Intervener NIA Messrs EBM Chambers JUDGMENT Cases referred to: 1. Foss v Harbottle [1843} 67 ER 189 2. Lascomme Limited v United Dominions Trust (Ireland) Ltd [ 199 3 J 3 I. R. 412 3. Avalon Motors Limited (In Receivership) v Bernard Leigh Gasden and . Another SCZ Judgment No 7 of1998 4. Robert Mbonani Simeza (Sued as receiver/manager of Ital Terrazo Limited), Finance Bank (Zambia) Limited v Ital Terrazzo Limited SCZ Judgment No 194 of2009 5. Magnum Zambia Limited v Quadri (Receiver/Manager) and Another [1981} ZR 141 6. Re Gospel of God Church, Isaac Matongo v. Shadreck Masedza and the Attorney General [J 977} ZR 292 7. Stanbic Bank Zambia v Savenda Management Service No 47 of 2018 8. Platinum Gold Equity Limited and v DEZ & Others 9. Jimmy Kalunga, Kalumbe Enterprise Limited v Stanbic Bank Zambia Limited Appeal No 60 of2017 10. Chilufya Silwamba and Another v Stanbic Zambia Limited Appeal 205 of 2016 1 l. McClearly v McPhi/lip[2015} IEHC 591 12. R (On application of Mercury Tax Group Limited) v Revenue and Customs Commissioners [2008} EWHC 2721 13. Jade Overseas Holidays v Sanctuary [2017} JMCC Comm 16 14. Buchler v Talbot [2004} 2 WLR 582 15. Banana Enterprises Limited v Nova Toledo Limited and Provident Bank and Trust of Belize Limited No 400 of2007 16. Lister Limited v Dunlop Canada Limited [1980} 105 DLR J2 I P age 17. Jim Landry Pontiac Buick Limited v CIBC [1987) 40 DLR 18. McMahon v North Kent ironworks [1891) 2 Ch 148 19. Merrow Limited v Bank of Scotland [2013) IEHC 130 20. Zambia National Building Society v Ernest Mukwamataba Nayunda SCZ Judgment No 11 of 1993 21. Crystal Wealth Management Services v JC Food Services [2020) ABCA 369 22. N Y Community Bank v Vermonty 68 AD 3d 1074 [2009] 23. Philip Boyd Trimble and James William Trimble v John Patrick Cassidy and Stephen Mckenna [2022) NICh 7 24. Lindsay Petroleum Company v Herd [1874] LR 5 PC 221 25. George Neil Baird and Another v Fredrick Kinyua and Another [2004] EK. LR 26. Khalid Mohammed v Attorney-General [1982) ZR 49 27. Hunt v lock [1902] 1 Ch 428 28. Sir John Bageire v Ausi Matovu CA No 07 of 1996 29. Nora Mwaanga Kayoba and Alizani Banda v Eum·ce Kumwenda Ngulube and Andrew Ngulube SCZ Judgment No 19 of2003 30. Business Mortgage Finance 6 Plc v Roundastone Technologies Limited [2019} EWHC 2917 (Ch) 31. Audrey Wafiva Gondwe v Supa Baking Company Limited (In Liquidation) and VU Akubat SCJ No 9 of 2001 32. Prudence Chilufya Mulenga (Suing as Administratrix of the Estate of the Late John S Mulenga) v Serioes 1998 Limited and 4 Others Appeal No 52 of 2009 33. Zambia Consolidated Copper Mines limited v Eddie katayi and Max Chilango SCJ No 2 of 200 I 34. Damales Mwansa v Ndola Lime Company Limited SCZ Appeal No 201 of 35. Rookes v Barnard [1964) AC 1129 36. Times Newspaper Limited v Kapwepwe [1973] ZR 292 37. RolandHarrison v Attorney-General SCZ Judgment No 15 of 1993 38. Sinyangwe v Barclays Bank Zambia limited SCZ Appeal No 10212015 39. Attorney-General v D G Mpundu SCZ Judgment No 7 of2014 40. Mccall v Abelesz and Another [1976] 1 QB 585 41. Emmanuel Mponda v Mwansa Christopher Mulenga and Others Appeal No 82 of 2015 Bl Page Legislation 1. Companies Act, Cap 388 of the laws of Zambia 2. Lands and Deeds Registry Act, Cap 185 of the Laws a/Zambia 3. Christopher Burgess "Commonwealth Caribbean Company Law 4. Osborne's Concise Law Dictionary, 1 J'h Edition 5. HWR Administrative Law, 5th Edition 6. Phipson on Evidence, 17th Edition, Thomson Reuters 2010 ( \ 7. Hubert Picard in The Law Relating to Receivers, Managers and Administrators 3rd Edition 8. Cheshire, Fifoot and Furmstones Law of contract, 13th Edition, Butterworths, 9. Kerr and Hunter on Receiverships and Adminstration 18'h edition, London: Sweet and Maxwell (2005) JO. Paget's Law of banking, 1 Jlh Edition 11. Black's Law Dictionary, 10th Edition I 2. Salmond and Heuston on the law of torts, 2 JSt Edition London: Sweet and Maxwell I 3. Hals bury 's Laws of England, 4th Edition [ 1.1] The Plaintiff commenced these proceedings against Zambia National Commercial Bank who is the 1st Defendant, Edgar Hamuwele and Christopher Mulenga, the 2nd and 3rd Defendants (sued in their capacity as Receiver and Manager), Grant Thornton Associates Limited who is the 5th Defendant and Itos Hardware Limited is the 6th Defendant. The Intervener is Red Sea Import and Export who never cared to attend Court. J41Page [1.2] Thls case has a long history and has been in the judicial system since 2012. It has been to the Supreme Court and back to the High Court. The parties have made numerous applications particularly on amendment of pleadings. [1.3] The matter was commenced by way of amended writ of summons and statement of claim filed on 22nd May 2018 seeking the following reliefs: (i) A declaration that the substantive agreement in place and enforceable between the JS' Defendant and the Plaintiff {Top Star Breweries Limited) is the facility letter dated 5th October 2007 and not any other agreement against Top Star Breweries Limited including the purported floating debenture pursuant to which the 2nd and 3rd Defendants were appointed as joint receivers and manager of Top Star Breweries Limited (in Receivers hip). (ii) A declaration and order that the placement of Top Star Breweries Limited into receivership by the JS' Defendant without any event of default following the restructuring of the facilities was irregular and null and void. (iii) A declaration that the appointment of the 2nd and 3rd Defendants as joint receivers and manager executed on 17th October 2007 without the JS' Defendant's seal is null and void. (iv) An Order that the purported appointment of the 2nd and 3rd Defendants by the JS1 Defendant as receivers and managers for Top Star Breweries Limited was a nullity and null and void ab-initio. JS I Page (v) A declaration that the advertisement by the 5th Defendant for the sale of Top Star Breweries properties was done without authority and therefore null and void. (vi) An Order for damages for ZMW15,000,000.00 for advertisement of Top Star Breweries Limited (In Receivership) by the 5th Defendant. (vii) A declaration that the erasure of Top Star Breweries Limited a title holders ( and mortgagors of Stand No. 194 and the inserting of the 2nd and 3rd Defendants as title holders and mortgagors on the same property was illegal, fraudulent and null and void. (viii) A declaration that the conveyance of Stand 194 and 345 to the Intervener by the 2 nd and 3rd Defendants was illegal, fraudulent and null and void. (ix) A declaration that the Intervener is not a bona fide purchaser for value without any notice of defect whatsoever in obtaining the transfer of suit properties being MAT Stand 194, MAT 345 and MAT 346from the 2nd and 3rd Defendants. (x) An Order cancelling any title issued to the Intervener and the 6th Defendant. (xi) An Order that the original land comprising MAT stand No. 194, 345 and 346 be resurveyed and to be restored to its original boundaries within 30 days of this Order. J6 I Page (xii) An Order directing the 4th Defendant, the Commissioner of Lands and the Chief Registrar to reinstate the original entries on the land Register relating to Stand No. MAT 194, 345 and 346. (xiii) An Order for vacant possession and delivery of the suit land belong MAT Stand No. MAT 194, 345 and MAT 346. {xiv) An Order for return of the brewery equipment valued at ZMW2, 000, 000. 00 ( by the JS1 Defendant as of 5th October 2007 with interest. (xv) An Order for payment of business value ofZMW102,600,000.00 by 1st , 2nd and 3rd Defendants based on the projections submitted to the JS1 Defendant by the Plaintiff (TSE) the basis on the facility letter dated 5th October 2007 was approved. (xvi) An Order for general damages for conversion and trespass by the JS1 , 2nd and 3rd Defendants. (xvii) An Order for aggravated, punitive and exemplary damages of ZMW5, 000, 000. 00. (xviii) An Order for damages for pain, mental anguish and suffering by the directors and shareholders of the TSE in the sum ofZMW5,000,000.00. (xix) As against the 7th Defendant an Order for damages for breach of duty of care and professional negligence arising from the failure to safeguard the title deeds in respect of MAT 345 and MAT 346. J7 I Page (xx) Interest on any amount that may be found due. (xxi) Any other relief (xxii) Costs. [I .4] During the course of the action, a Consent Order was entered into between the Plaintiff and the 4th Defendant, whilst the 7th Defendant was disjoined from the matter on 28th January 2020. ( [1.5) Consequently, any claims against the two Defendants are redundant. In respect to the 4th Defendant, claim (xii) where the Plaintiff sought an Order directing the 4th Defendant, the Commissioner of Lands and the Chief Registrar to reinstate the original entries on the land register relating to Stand No. MAT 194, 345 and 346, a Consent Order was entered. [ 1.6) In respect to the 7th Defendant, claim (xix) where the Plaintiff was seeking an Order for damages for breach of duty of care and professional negligence arising from the failure to safeguard the title deeds in respect of MAT 345 and MAT 346, Lusaka is redundant. [2.0] Plaintiff's case [2.1] The Plaintiffs factual case is set out in its amended statement of claim and the Plaintiffs amended witness statement is on record and the evidence shall be reflected in the Judgment. JS I Page [2.2] In brief summary, the Plaintiffs case as pleaded in the statement of claim is that on or about June 2005, TSBL was availed an overdraft facility for ZMW50,000.00 to finance working capital and the same was secured by a floating debenture dated 28th June 2005 valid for one year and a legal mortgage over Stand No MAT 194, Lusaka was registered on 4th August 2005 and an equitable mortgage was created over Stand No MAT 345 and 346 to the maximum ofZMW185,000.00. ( [2.3] The Plaintiff avers the floating debenture dated 17th June 2005 was neither registered at Companies Registry nor at the Lands and Deeds Registry. [2.4] An overdraft facility was enhanced to ZMWl00,000.00 in August 2005 and was overdrawn to ZMW285,000.00 by September 2006. l2.5] The Plaintiff avers that on or about 3151 March 2006 the pt Defendant placed caveats as intending mortgagees on Stand No MAT 346 and 345, Lusaka. [2.6] On or about September 2006, the 1st Defendant availed to TSBL further credit facilities in the sum of K875 million for capital expenditure to facilitate the acquisition of brewery equipment and K600 million as an overdraft facility as well as a cheque guarantee of ZMWl00,000.00. [2.7] According to the Plaintiff only ZMW325,000 was accessed by TSBL as the ZMW285,000.00 went towards settling its obligations in respect of the mortgage securing the maximum of ZMWI 85,000.00 registered on 4th August 2005. The I st Defendant registered a fixed charge on 11 th April 2007 in respect of the said facilities. J9 I Page (2.8] The gist of the Plaintiff's case is TSBL was wrongly placed in receivership and he challenges the appointment of the receivers/managers by the 1st Defendant. [3.0] 1st Defendant's case [3 .1] In the pt Defendant's amended defence, it confirms it is a financial institution registered under the Banking and Financial Services Act, Cap 387 of the laws of Zambia. The 2 nd and 3rd Defendants were ( appointed joint receivers/managers for TSBL pursuant to a floating debenture dated 17th June 2005. (3.2] TSBL was granted an overdraft facility of ZMW50,000,000.00 (unrebased) and denies the floating debenture was valid for a period of one (1) year. The facility was secured by legal mortgage over Stand Nos MAT 194,345 and 346, Lusaka. [3.3] The debenture was registered at PACRA on the Yd August 2005 and at Lands and Deeds Registry on 4th August 2005. The !51 Defendant denied the claim it conveyed Stand No MAT 194, 345 and 346, Lusaka or indeed any other property of the Plaintiff fraudulently. [3.4] The pt Defendant states the company was already indebted to the !51 Defendant in the sum of K285,000.00 arising from the overdraft and when the limit was increased to K600,000 the company could only access the balance less the K285,000.00 already used up. The K285,000.00 was thus not paid to the 1st Defendant nor applied towards the mortgage as it was money the Plaintiff had used up but not paid back as at the date of the advanced overdraft limit. JlO I Page [3.5] The 1st Defendant denied that facilities availed to the company namely the overdraft and loan account were co-mingled and were different in nature with different re-payment dates and would have made combining the loan and overdraft facilities impossible. [3.6] The l st Defendant averred it invoked clause (a) in the other tenns of the facility letter agreement after reports of intended execution on the company assets charged to the 1st Defendant by other creditors. [3. 7] The 1st Defendant denied the company account was segregated on account of non-segregation of the credit facilities. It is further stated that because of the bad performance of the accounts, there was need to avail the company new terms to enable the company perform better. [3 .8] The l st Defendant restructured the facility granted to the company and it took the form of amalgamating the existing facilities granted to the company into one loan. [3 .9] The 1st Defendant admits it did appoint the 2nd and 3rd Defendants as joint receivers/managers of TSBL but denies such appointment was made before the securities could be executed and perfected. The debenture of 17th June 2005 was a continuing security and did secure the restructured debt. [3 .1 O] The I st Defendant states it did formally make a demand for payment before appointing the joint receivers/managers and were appointed pursuant to the floating debenture and the Registrar of Companies issues a certificate of registration of the charge in terms of section 100 of the Companies Act. Jll I Page [3 .11] It did appoint the 2nd and 3rd Defendants as joint receivers and managers after it came to its attention through the press and otherwise that some of the creditors of TBSL in order to recover funds owed to them were in the process of realizing some of the company's assets on which the 1st Defendant had an interest and had financed. The printout from P ACRA showed the company was placed under receivership by the I st Defendant was TBSL and not as alleged by the Plaintiff. ( l3.12] The 1st Defendant admitted the it discharged the mortgage registered against Stand No MAT 194, Lusaka for purposes of facilitating its sell and in no way suggested the company had paid its debts or that the 1st Defendant did not intend to proceed with the receivership process. r3.13J It maintained the debenture registered on 17th June 2005 was a continuing security to the I st Defendant notwithstanding any subsequent actions by the 1st Defendant such as restricting of the facility. The 1st Defendant avers that an event of default had occurred. The l st Defendant denies the Plaintiff is entitled to the reliefs sought ranging from declaratory reliefs, special and general damages and the various orders sought for and on behalf ofTSBL a corporate sole. [ 4.0] Reply to 1st Defendant's defence [ 4.1] In a rather lengthy reply to the pt Defendant's defence, the Plaintiff's testimony was the overdraft facility of ZMWS0,000.00 was for a period of one year and expired on 8th September 2006 when a new enhanced facility was offered to TSBL with different terms that included a J12 I Page floating debenture which superseded the floating debenture dated 17th June 2005. [ 4.2] The only document allegedly registered at Lands and Deeds and P ACRA was the legal mortgage dated 4th August 2005 and not the floating debenture dated 17th June 2005. (4.3] Further, the pt Defendant had no legal mortgages in respect to Stand Nos MAT 345 and 346 between the 1st Defendant and the Plaintiff in which it could have exercised a power of sale and the title deeds used in the conveyance of the said properties were illegally obtained without the Plaintiffs occun-ence and or applicable Court Order. [ 4.4] According to the Plaintiff, the 1st Defendant had no authority to appoint the 2nd and 3rd Defendants as joint receivers/managers of TSBL before the expiry of 30 days provided for under clause 7.3 under other terms of the facility letter dated 5th October 2007 as no event of default had occurred. [ 4.5] In respect to the facility letter of 5th October, 2007, the Plaintiff avers the securities were never perfected and registered and was conditional that the 1st Defendant could not appoint the 2nd and y d Defendants as joint receivers/managers before the execution of all relevant security documents which was a pre-requisite. (4.6] The floating debenture dated 17th June 2005 was not a continuing security as it was superseded by the floating debenture of the facility letter dated 8th September 2005 and 5th October 2007. J13 I Page [ 4. 7] The Plaintiff avers he is entitled to the reliefs sought against all the parties including the l st Defendant. [5.0] 2 nd and 3 rd Defendant defence [5.1] In the 2nd and 3rd Defendants amended defence, it states the statement of claim does not disclose a reasonable cause of action in favour of the Plaintiff and the reminder of the defence is pleaded without prejudice. [5.2] The 2nd and 3rd Defendant admit they were appointed joint receivers/ managers of TSBL now in receivership by the 1st Defendant on 17th October 2007 pursuant to the terms of a debenture including a floating charge dated 17th June 2005 created in favour of the 1st Defendant for purposes of securing the moneys and liabilities which were then and thereafter to be due from the company to the 1st Defendant. [5.3] The purpose of their appointment was to realise or sell the assets of TSBL in order to enable the company pay off the moneys which it still owed and still owes the 1st Defendant and to meet all other payments which are prescribed by the applicable receivership laws. That the 2nd and 3rd Defendants have no knowledge of the matters pleaded by the Plaintiff. [5.4] The 2nd and 3rd Defendants denied, in so far as the alleged that they used title deeds for Stand Nos MAT 345 and 346, Lusaka to fraudulently convey the properties to the Intervener. (5.5] The 2nd and 3rd Defendant deny the insinuation that the title deeds for Stand Nos MAT 345 and 346. Lusaka somewhat mysteriously moved J14 I Page from Messrs PATMAT Legal Practitioners to the 2nd and 3rd Defendants. [5.6] That the 2 nd and 3 rd D c d e1en ants were appointed joint receivers/managers of TSBL and have acted and continued to act as receivers/managers. The appointment was on 17th June 2005. [5 .7] The 2nd and 3rd Defendants deny that the advertisement published in the Zambia Daily Mail for sale of the leasehold prope1ties was done by the 5th Defendant as alleged. Subject and without prejudice, in their capacity as joint receivers/managers, they acted professionally and diligently discharged all their responsibilities as required of them by all applicable laws. (5.8] The 2nd and Yd Defendants deny the Plaintiff has suffered any plausible loss or damage on account of any allegations or that the Plaintiff is entitled to the misapprehended reliefs sought in the statement of claim or any one of them or any relief and will put the Plaintiff to strict proof of his misconceived allegations. [5.9) The 2nd and yd Defendant pray that the action be dismissed with costs as constituting an abuse of the process of this Court. Reply to 2nd and 3rd Defendants [5.10] In its reply to the 2nd and yd Defendants defence, the Plaintiff maintained there was an overdraft facility of ZMWS0,000 for a period of one year tied to the overdraft facility for a period of one year which expired on 8th September 2006 and when a new enhanced facility was 11s I Page offered to TSBL with different terms it included a floating debenture. The new floating debenture superseded the floating debenture dated 17th June 2005. (5.11] The overdraft facility dated 17th June 2005 was secured by a legal mortgage over Stand No MAT 194, Lusaka but no legal mortgages were registered with respect to MAT Stand Nos 345 and 346, Lusaka. That the only document that was registered at Lands and Deeds Registry and PACRA was the mortgage dated 4th August 2005 and not the floating debenture dated 17th June 2005. ( (5.12) Due to the non-existent registered floating debenture at P ACRA, the l 5t Defendant on 29th May 2007 offered TSBL a credit facility of ZMW200,000.00 for settlement of judgment debt. [5.13] The I st Defendant had no legal mortgages in respect of MAT Stand No 345 and 346, Lusaka between the l st Defendant and the Plaintiff on which to exercise a power of sale and that the title deeds used by the 2nd and 3rd Defendants in a conveyance of the said properties were illegally obtained without the Plaintiffs concurrence or applicable Court Order from the 7th Defendant who at the time was the Plaintiffs Advocates. [6.0) 5th Defendant [6.1] The 5th Defendant filed a defence in which it pleaded it had no knowledge of the matters pleaded by the Plaintiff in its statement of claim. The 6th Defendant denied it has placed an advertisement for sale of TSBL leasehold properties or assets as it was done by the 2nd and yct J16[ Page Defendants in their capacities as Joint Receivers and Managers of TSBL. [6.2] The 5th Defendant avers the statement of claim does not disclose any reasonable cause of action against the 5th Defendant and is an abuse of the process of court. [7.0] 6th Defendant's defence [7 .1] The 6th Defendant filed its defence and denied the Plaintiffs claims on the basis it is a mere bona fide purchaser for value without any notice of any debtor or knowledge of any disputes relating to the subject properties. (7.2] The 6th Defendant denied having been party to any of the alleged transactions, omissions, or registrations. [7 .3] The 6th Defendant averred that sometime in 2015 did purchase Stand No MAT 194, 345 and 346, Lusaka from the Intervener in good faith as a bona fide purchaser for value without notice of any defect or knowledge of any disputes relating to the said property. It did nothing wrong when accepting the offer to buy the said properties from the Intervener as a bona fide purchaser acquiring a legal interest in the subject properties. [7.4] The 6th Defendant denies the particulars of professional negligence as stated and the particulars of fraud against the 1st, 2 nd , 3rd , 4th and 5th Defendants and the Intervener and the same is within the peculiar knowledge of the Plaintiff as it does not in any way allege any statement J17 I Page of fact relating to or implicating the 6th Defendant as having been party to the alleged transactions, omissions or registrations but rather relate to the other 6 Defendants and Intervener. [8.0] Plaintiff's reply to 6th Defendant's defence [8 .1] In reply to the 6th Defendant, the Plaintiff avers that at the time of purchasing Stand Nos MAT 194, 345 and 346, Lusaka from the Intervener, the 6th Defendant was not a bona fide purchaser for value without notice as it had notice of the Plaintiffs interest in the properties as there was at the time an interlocutory Ruling registered against the properties and the matter was active before this Court. [8.2] The Intervener had no good title to pass to the 6th Defendant as the 2nd and 3rd Defendants had transferred the properties in respect of Stand Nos MAT 194, 345 and 346 through fraud, misrepresentations and impropriety while the matter was pending before this Court. It is averred that whatever developments caused by the 6th Defendant having not been a bona fide purchaser for value did make such developments at its own peril. [8.3] The Plaintiff maintained the 6th Defendant was not a bona fide purchaser for value without notice as it had knowledge of the disputes relating to the properties in question through the Ruling which had been registered against the said properties at Ministry of Lands. ( l [9.0] Plaintiff's evidence Jl8 I Page material time the title deeds in respect of Stand No MAT 345 and 346, Lusaka were with the lawyers Messrs Patmat Legal Practitioners. [9 .31 J In regard to the discharge of the mortgage over Stand No MAT 194, Lusaka, it was his belief the floating debenture was equally discharged. Relating to whether the floating charge included land, the Plaintiff told the Court it was meant to only cover equipment. As far as he knew, at the time the receivers purportedly sold the properties, TSBL was not in default in terms of the executions as the grace period of30 days had not lapsed. ( (9.32) In respect to clause 7.3 of the facility letter of 5th October 2007, the Plaintiff maintained it gave the company a grace period of 30 days to remedy any execution. The Plaintiff told the Court that during the grace period, the 1st Defendant appointed receivers/managers on 17th October 2007 which was nine days within the same grace period. The Plaintiff insisted the facility letter of 5th October 2007 was the only subsisting one therefore the company should have been given a grace period of 30 days and not the 7 days within which to discharge the executions. [9.33) The Plaintiff clarified it is TSBL that stopped some of the executions and the appointment of the receivers/managers was therefore void. According to clause 6 (f) of the facility letter, it did not specifically indicate who was to discharge the executions. TSBL paid a sum of K150,000.00 to stay the executions thereby discharging them as per clause 7.3 of the facility letter dated 5th October 2007. This is because the 1st Defendant paid the fees discharging the executions on behalf of TSBL. J26 I Page [13.0) Submissions [13.1] Counsel for the Plaintiff, the I si, 2°\ 3 rd and 5 th and 6 th Defendants filed detailed written submissions and I am indebted for the succinct submissions and shall make reference to the same in the Judgment. [14.0] Analysis and consideration [14.1] During the course of the trial, many issues were brought to the fore. All parties adduced evidence relating to their respective cases and documents all of which are on record and have carefully considered them in the detennination of this matter. This case had lengthy pleadings and submissions particularly filed by the Plaintiff, 1 si, 2 nd , 3 rd and 5th Defendants. [14.2] I caution parties that I may not have reproduced all evidence. This by no account does not mean I have not considered the evidence. I have weighed the competing submissions when evaluating the evidence. [14.3] Before I proceed with the substantive claims, a perusal of the record shows the Plaintiff is a shareholder and director in TSBL (In Receivership). It is in that capacity he sued the Defendants herein. [14.4] Counsel for the 1st, 2 nd ,3 rd and 5th Defendants Mr Simeza SC raised the issue in their submissions that the Plaintiff has no legal standi to bring an action on behalf of the company. I am alive to the legal principle it is only the company that can bring an action on behalf of a company. However, in a derivative action a shareholder or director may bring an action as per holding in the case of Foss v Harbottle < ) . BO I Page [14.5] Notwithstanding, I agree with Mr Katolo that I need not embark on determining this particular issue as the record shows a Ruling was rendered allowing the Plaintiff to sue. This point is illustrated by Justice Keane in the case of Lascomme Ltd v United Dominions Trust (Ireland) Ltd <2> at p. 416-417 where he said: "It is clear that when a receiver is appointed by a debenture holder under the powers in that behalf in the debenture, the powers vested by law in the directors of the company are not thereby terminated. They may not, however, be exercised in such a manner as to inhibit the receiver in dealing with and disposing of the assets charged by the debenture or in a manner which would adversely affect the position of the debenture holder by threatening or imperilling the assets which are subject to the charge. Subject to that important qualification, the powers vested by law in the directors remain exercisable by them and include the power to maintain and institute proceedings in the name of the company where so to do would be in the interests of the company or its creditors." [14.6] Mr Katolo stressed the following passage from the of Avalon Motors v Gasden <3> where the Supreme Court guided that: "Whenever a current receiver is the wrongdoer ( as where he acts in breach of his fiduciary duty or with gross negligence) or where the directors wish to litigate the validity of the security under which the appointment has taken place or in any other case where the vital interests of the company are at risk from the Bl I Page receiver himself or from elsewhere but the receiver neglects or declines to act, the directors should be entitled to use the name of the company to litigate" [I 4.7] In the case of Robert Mbonani Simeza (Sued as receiver/manager of Ital Terrazo Limited), Finance Bank (Zambia) Limited v Ital Terrazzo Limited C > the Supreme Court held as follows: "In Avalon Motors, the question was, when the directors and shareholders of the company under receivership can be allowed to maintain an action in the name of the company. This Court upheld the decision in Magnum Zambia Limited v Quadri (receiver/manager) and Another. It then held that directors and shareholders of a company under receivership, as well as anybody who is properly interested and who has beneficial interest to protect, can sue a wrongdoing receiver or former receiver, in their own names and in their own right." [14.8] In Magnum Zambia Limited v Quadri (Receiver/Manager) and > it was held that: Another < "directors and shareholders of a company under receivership as well as anybody who is properly interested who has beneficial interest to protect, can sue a wrongdoing receiver or former receiver, in their own names and in their own right ..... " [ 14.9] From the cited authorities, the Plaintiff is within his rights to bring an action challenging the appointment of the 2nd and 3rd Defendants as receivers/managers by the 1st Defendant as a debenture holder. I hold the J321P age view that a director retains residual powers hence the Plaintiffs challenging the appointment of the receivers/managers. I am of the view the Plaintiff is an interested party and has loci standi in this matter. I shaJl proceed on that basis. [14.10] I remind myself that in civil cases, the burden of proof lies with the Plaintiff herein in line with the adage that he who alleges must prove. The learned authors Phipson on Evidence, 17th Edition, Thomas Reuters 2010 states as follows: "So far as the persuasive burden is concerned, the burden of proof lies upon the party who substantially asserts the affirmative of the issues. If, when all the evidence is adduced by all parties, the party who has this burden has not discharged it, the decision must be against him. It is an ancient rule founded on considerations of good sense and should not be departed without strong reasons. " [14.11] I shall now proceed to determine the substantive issues. Some of the claims have a common theme and are interconnected and to avoid repetition shall be dealt with simultaneously. [15.0) A declaration that the substantive agreement in place and enforceable between the 1st Defendant and the Plaintiff (Top Star Breweries Limited) is the facility letter dated 5th October 2007 and not any other agreement against Top Star Breweries Limited including the purported floating debenture pursuant to which the J33 I Page 2nd and 3rd Defendants were appointed as joint Receivers and manager of Top Star Breweries Limited (In Receivership). [15.1] The Plaintiff seeks a declaration that the substantive agreement in place and enforceable between the 1st Defendant and the Plaintiff (Top Star Breweries Limited) is the facility letter dated 5th October 2007 and not any other agreement against Top Star Breweries Limited including the purported floating debenture pursuant to which the 2nd and 3rd Defendants were appointed joint receivers/manager of Top Star Breweries Limited (in Receivership). [15.2] In this respect, I frame the issues for determination as follows: 1. Whether the facility letter dated 5th October 2007 is the only subsisting one between the parties. 2. Whether the floating debenture dated 17th June 2005 used by the 1st Defendant in appointing the 2nd and 3rd Defendant as receivers/managers is subsisting. [15.3] First and foremost, the Plaintiff seeks a declaratory Order. In Osborn's Concise Law Dictionary, 11th Edition, it defines a declaratory judgment as follows: ''declaratory judgment. A judgment which conclusively declares the legal relationship of the parties without the appendage of any coercive decree. Such a declaration may be made whether or not a consequential relief is or could be claimed. So a declaratory judgment may be made along with other relief, example, damages or injunctions. " J34 I Page [15.4] The learned author H W R in Administrative Law, 5th Edition m describing the remedy of declaratory order stat as follows: "A declaratory judgment by itself merely states some existing legal situation. It requires no one to do anything and to disregard it will not be contempt of court. By enabling a party to discover what his legal position is, it opens the way to the use of other remedies to give effect to it, if that should be necessary. " [15.5] It is trite law that declaratory Judgment or orders are discretionary and ordinarily ought not to be granted where the litigant has alternative reliefs. The discretion is exercised in the particular context and facts of the case. Instructive is the case of Re Gospel of God Church, Isaac Matongo v. Shadreck Masedza and the Attorney General < 6>, where Sakala J as he then was, put it this way: "The first question that arises, for consideration in this application is whether or not an application for declaration is an appropriate remedy in this case. in my view although the R16 question appears to be a preliminary one, its determination is whether or not an application is appropriate remedy in this case. In my view, although the question appears to be a preliminary one, its determination, inevitably necessitates the review of the whole evidence and the consideration of the whole case. His Lordship went on as follows:- the High Court has a discretionary power to grant a declaration. (ii) The power to grant a declaration should be exercised with proper sense of responsibility and with full realization that judicial BS I Page pronouncement ought not to be issued unless there are circumstances that call for their making. The discretion should be exercised with care and caution and judicially. " [15.6] Following, the issue is whether the Plaintiff is entitled to a declaratory Order. Facility letter dated 5th October 2007 [ 15.7] Both parties raised a number of sub-issues. Counsel for the 1st, 2 nd , yd and 5th Defendant Mr Simeza SC contends the facility letter dated 5th October 2007 was merely an offer not accepted by TSBL in the manner prescribed in the same letter as it failed to initial on every page, nor was it implemented or actualized. Reliance was placed on the case of Stanbic Bank Zambia Limited v Savenda Management Services < > which dealt with a similar issue. [15.8] In examining the facility letter of 5th October, 2007, I shall have to ascertain the intention of the parties. In so doing, 1 am guided by the learned authors Cheshire, Fifoot and Furmstones, of Law of Contract, 13th Edition Butterworths, 1996 at page 29 who state as follows: "Behind all forms of contract, no doubt, has the basic idea of assent. A contracting party, unlike a tort feasor, is bound because he has agreed to be bound. Agreement, however, is not a mental state but an act, and as an act, is a matter of inference J36 I Page from conduct. The parties are to be judged not by what is in their minds, but by what they have said or written or done" [ 15 .9] The facility letter and its terms appear at page 54 and 51 of the Plaintiffs amended bundle of documents. The relevant part states as follows: "Re CJIBDIT FACILITY We refer to your application and advise that the Bank is pleased to offer Top Star Breweries Limited a credit facility as outlined below: Facility K2, 745,634,728, 73 plus interest Purpose of facility 3.1 This is a consolidation of all the existing facilities and restructured into a medium term loan. Security 5.1 Legal mortgage for Kl,560 billion over Stand No 194, 345 and 346 Muzilikazi Road Lusaka in the name of Top Star Breweries Limited valued at Kl,560 billion by Mak Associates Consulting Services on 16th April 2007. 5.2 Fixed Debenture for 2.8 billion over plant and machinery. "1. Facility 1.1 K2, 745,634,728.73 plus interest (Kwacha Two Billion Seven Hundred and Forty Five Million Six Hundred and Thirty Four Seven Hundred and Twenty Eight only) restructured medium term loan facility. 3.1 Purpose of facility J37 I Page This is a consolidation of all the existing facilities and restructured into a medium term loan. 5. I Security Legal mortgage for KJ,560 billion over Stand no 194,345 and 346 Muzililkazi Road, Lusaka in the name of Top Star Breweries Limited valued at Kl,560 billion by Mak Associates Consulting Services on 16th April 2007. 5.2 Fixed debenture for 2. 8 billion over plant and machinery. IO Other terms 10. 2 Utilisation of the facility is subject to execution of all relevant security documents. It is not in dispute the facility is a restructured medium term loan facility as expressed in clause I of the subject facility letter. [15.10] From gleaning the subject facility letter, it is duly executed by one of the director of TSBL the Plaintiff herein and the second signature is blank. The issue then is what is the effect of this? ls there no acceptance as argued by Mr Simeza SC? Mr Katolo contends the 1st Defendant should be estopped from propounding this position as paragraph 21 of its defence made reference to the same letter. I remind litigants not to flip flop on particulars and issues before Court. [15.11] I do not subscribe to Mr Simeza's argument that there was no acceptance as in my considered view, the fact the document was not co signed by two directors did not invalidate it. Clause 11 of the subject facility letter states as follows: J381 Page "To indicate your acceptance of the foregoing, please initial each page of the enclosed copy of this letter, and sign the final page of this letter and return it to the Manager- manda Hill within 7 calendar days from date of this letter. " [15.12] At page 56 of the pt Defendant's bundle of documents it reads as follows: "We accept the term loan facility under the terms stated above.'' The I st Defendant is estopped from resiling from its pleadings. [15.13] Mr Simeza SC canvassed that the implementation of the facility letter was subject to execution of the security documents which TSBL did not execute and renders it ineffective. In paragraph 27 of the Plaintiff's amended witness statement, he avers that none of the securities under the restructured facility were executed nor registered at Lands and Deeds Registry as well as at P ACRA. This position was confirmed by the Plaintiff in cross examination. [15.14] Mr Simeza SC placed reliance on the case of Platinum Gold Equity Limited and v DBZ & Others (S) where the Court held inter alia that since the borrower did not comply with the conditions precedent prior to disbursement of funds, the borrower could not rely the facility letter. In my view this case is distinguishable as TSBL had continuing securities which shall be dealt in the course of the Judgment. [15.15] I form the view the facility letter of 5th October 2007 is subsisting and enforceable and the I st Defendant makes reference to it in its defence J391Page and is estopped from denying its enforceability. I agree with Mr Katolo that the 1st Defendant be estopped from resiling what is admitted in its defence. I shall proceed on that basis. Variation [ 15.16] Mr Simeza SC argues there is no deed of variation. Clause 3 .1 clearly states the facility is a consolidation of all the existing facilities and restructured into a medium term loan. Ordinarily the restructured facility will expressly have a variation clause. However, for all intents and purposes, I find the subject facility letter was in essence a variation to the extent stated and did not necessarily require a deed of variation as argued by Mr Simeza SC. Restructuring [I 5.17] It is trite a restructuring loan is one that replaces the outstanding balance on the older loan and is paid over a longer period usually with a lower interest amount to accommodate a borrower in financial difficulty as pronounced by the Court of Appeal in the case of Jimmy Kalunga, Kalumbe Enterprise Limited v Stanbic Bank Zambia Limited Appeal No 60 of 2017 <9 >_ This is the correct statement of law. Continuing securities [15.18] I shall now move to the issue of continuing securities. Due to the longstanding relationship between TSBL and the 1st Defendant, a number of securities were executed. In the fixed charge registered on 16th April 2007, TSBL charged all of its equipment contained in the J40 I Page schedule (page 2 of the Plaintiffs amended bundle of documents). The relevant clause states as follows: " this security shall be a continuing securitv to the Bank notwithstanding any settlement of account or other matter or thing whatsoever and shall not prejudice or affect any secur;ty which may have been created by any deposit of title deeds or other documents which may have been made with the Bank prior to the execution hereof relating to any hereditaments and premises or any other security which the Bank may now or at any time hereafter hold in respect of moneys hereby secured or any of them or any part thereof respectively. " [15.19] At page 20 of the 1st Defendant's bundle of documents is a debenture registered on 4 th August 2005 which the 1st Defendant emphasised was used in appointing the joint receivers/managers. The relevant part states as follows: "21. This security shall be a continuing security to the Bank notwithstanding any settlement of account or other matter or thing whatsoever and shall not prejudice or affect any security which may have been created by and deposit of title deeds or other documents which may have been made with the bank prior to execution hereof relating to any hereditaments and premises or any other security which the Bank may now or at any time hereafter hold in respect of moneys hereby secured or any of them or any part thereof respectively. 23 . ....... . J41 I Pa ge 24. The total amount recoverable hereunder shall be unlimited and accordingly the security hereby constitutes is to be available for such amounts as any be outstanding from time to time together with interest as specified in clause I herein from the date of demand for payment of the moneys and liabilities hereby secured and also all costs charges and expenses which the Bank or any receiver may pay or incur in perfecting or enforcing the security .... " [15 .20] Paragraph 21 of the 1st Defendant's amended defence states as follows: "The 1st Defendant admits that it did appoint the 2nd and 3rd Defendants joint receivers and managers of Top Star Breweries Limited as stated in paragraph 25 of the statement of claim but denies such appointinent was made before the securities could be executed and perfected. The JS' Defendant will say that the debenture of 17th June 2005 was a continuing security and that it did secure the restructured debt. The 1st Defendant will further stay that it did formally make a demand for payment before appointing the joint receivers and manager. [ 15.21] In putting matters in context, a continuing security is a continuing obligation and remains in force as long as the borrower such as TSBL has any liability or obligation to the 1st Defendant until fully discharged. It also covers all future advances. There is no evidence TBSL paid off its loan resulting in the restructuring of the loans. J42 I P age (15.22] Mr Simeza SC called in aid the case of Chilufya Silwamba and Another v Stanbic Zambia Limited (IO) where the Supreme Court held: "We have, in African Banking Corporation (Z) Limited {TIA Bank ABC) v Plinth Technical Works Limited SJ No 28 of2015 interpreted the expression continuing security' to mean further facilities or advances. '' [15.23] In applying the principle on continuing security to the present facts, in essence, the 1st Defendant maintained the securities held which continued to be required to cover any outstanding and future advances. [ 15.24] Mr Simeza was emphatic the receivers/managers were appointed pursuant to the debenture. The debenture is duly executed by TSBL ' s representatives. There is a floating charge registered on 4th August 2005 securing unlimited sums of money to be outstanding from time to time (page 22-30 Plaintiff's bundle of documents). It is a continuing security meaning it continued to subsist and covered future liabilities including those under the restructured facility. (15.25) Therefore, even if the security requirements under the facility letter of 5th October 2007 were not duly registered and perfected as rightly pointed out by Mr Katolo, the debenture already provided for continuing securities covering any future facilities availed to TSBL. [15.26) Still on registration of the securities, in paragraph 28 of the Plaintiff's amended witness statement, the Plaintiff averred that following the restructuring of the loan facilities on 5th October 2007, he never J43 I Page executed any floating debenture or legal mortgage in respect of Stand Nos MAT 194, 345 and 346, Lusaka between TSBL and the I st Defendant. This is immaterial as the simple answer is there was already in existence continuing securities and this is what the l st Defendant relied on. [15.27] The Plaintiff argued that in the P ACRA documents the company registration number did not refer to TSBL. In my view any error on the form cannot be attributed to the I st Defendant nor does it distract from the fact that logically speaking, it could only have been in reference to TSBL. [I 5.28] For the foregoing reasons, I decline to grant the Plaintiff a declaration that the substantive agreement in place and enforceable between the 1st Defendant and the Plaintiff (Top Star Breweries Limited) is the facility letter dated 5th October 2007 and not any other agreement against TSBL including the purported floating debenture pursuant to which the 2nd and 3rd Defendants were appointed as joint receivers/manager ofTSBL (in Receivership). The claim lacks merit and fails. [16.0] The Plaintiff claims for a declaration and order that the placement of TSBL without any event of default following the restructuring to the facilities was irregular null and void. [16.0] The Plaintiff claims an Order that the purported appointment of the 2nd and 3 rd Defendants by the pt Defendant as Receiver J44 I Page managers for Top Star Breweries Limited was a nullity and null and void ab-initio. [16.1] These two reliefs have a common theme and to avoid repetition I shall deal with them simultaneously. The issue for determination is whether the conditions under the debenture for appointment of the receivers have been satisfied. In so doing, I have to look at what the procedure is for appointment of receivers and formalities to be satisfied and what falls within that scope as provided in the contractual document. [16.2] The Plaintiff argues the 1st Defendant was not entitled to appoint the 2nd and 3rd Defendants as receivers/managers when there was no event of default. Secondly, it is argued there was no default because the 1st Defendant prematurely appointed the 2nd and 3rd Defendants before fresh securities were executed and perfected as per clause 5 and 5 .2 of the securities and before draw down as utilization was subject to execution of all relevant security documents. I quickly dispel this argument on the premise there were continuing securities upon which the 1st Defendant could appoint receivers/managers. (16.3] A convenient starting point is to ascertain how a receiver is appointed pursuant to the terms of the debenture, scrutinize provisions on any events of default, and this will lead me to whether the receivers/managers were validly appointed. In my view the determination of these issues will ultimately decide the direction of the Judgment and which reliefs are available to the Plaintiff. J45 I Page (16.4] A summary of the applicable principles in appointing a receiver are found in the case ofMcClearly v McPhiUip <11> where the Judge said: "(]) The receiver's authority to act is derived from the contracts, or mortgages, or deeds of charge entered into between the bank and the borrower; (2) The receiver is to be appointed according to the terms of the contract between the parties,· (3) Because a receiver's authority is derived from the instrument under which he is appointed, an appointment is not valid unless it is made in accordance with the terms of that instrument. (4) The consequence of non-compliance with the formalities for the appointment of a receiver in accordance with the terms of the instrument that appointment is void. " [ 16.5] The law on receiverships is well established. In Kerr and Hunter on Receivers and Administration 18th Edition, London: Sweet and Maxwell (2005) paragraph 20-15 page 469 the learned authors discussed that: "2. A debenture .. : provides . . . a Receiver with power to carry on the Company's business ... either with a view to reviving the company or with a view to the beneficial sale of the undertaking as a going concern. "if the debenture holders are contractually entitled to exercise a right to appoint a Receiver, they do not, when deciding whether J46 I P age to exercise the right, owe any duty of care to the company, or to any guarantors of its liabilities, although perhaps they may owe a duty only to exercise it in good faith; this may include the duty not to appoint an incompetent person. But DH who can in what they consider is good faith, to be their own interests, can exercise their contractual right to appoint a Receiver, without regard to its effect upon the company or on a guarantor. " [16.6] In R (on application of Mercury Tax Group Ltd) v Revenue and Customs Commissioners [2008] EWHC 2721 (12> Underhill J saw nothing wrong with holding parties to strict formal requirements when it came to execution of certain agreements. [16.7] The principles on appointment of receivers/managers 1s fmiher underscored by the learned author's Hubert Picard in The Law Relating to Receivers, Managers and Administrators 3rd Edition at page 88 cited by Mr Katolo as follows: " The importance of the strict observance of the due requirements of the debenture is underlined by two further considerations. Such a receiver is not an officer of the Court, but if he is duly appointed, his title is superior to that of a person interfering with the assets under h;s control and the Court will then grant an injunction. If a receiver were unable to prove his title according to the terms of his contract, it is doubtful whether he would be entitled to an injunction. In such a case it seems only right and proper that the debtor company should be entitled to insist upon the fulfilment of the terms of the debenture as regards J47 I P age appointment as a condition of its liability. Contractual terms as to the form and method of appointment are to be strictly observed. " [16.8] At this juncture_, I go back to the governing document which is the debenture dated 17th June 2005. Even though the parties went to lengths on this issue, I have narrowed the issues as to what constitutes an event of default. This is because the 1st Defendant through DWI testified that in appointing the 2nd and 3rd Defendants as joint receivers/managers, it relied on clause 6 (e) of the said debenture and this will be my focus. [16.9] In the debenture dated 17th June 2005 and registered at P ACRA on 4 'h August 2005, the events of default are stipulated in clause 6 as follows: "AT any time after (a) The Bank has demanded payment of any money or discharge of any money or discharge of any liabiiities hereby secured; or (b) The Company ceases or threatens to cease to carry on business; or (c) An effective resolution is passed or an order is made for the winding up of the Company; or (d) An encumbrance takes possession or a recelver 1s appointed of the whole or any part of the asset or undertaking of the Company,· or (e) Anv distress or execution is levied or enforced upon or issued out against any of the chattels or propertv of the J48 I Page appointment as a condition of its liability. Contractual terms as to the form and method of appointment are to be strictly observed. " l 16.8] At this juncture, I go back to the governing document which is the debenture dated 17th June 2005. Even though the parties went to lengths on this issue, I have narrowed the issues as to what constitutes an event of default. This is because the 1st Defendant through DWI testified that in appointing the 2 nd and 3rd Defendants as joint receivers/managers, it relied on clause 6 ( e) of the said debenture and this will be my focus. [16.9] In the debenture dated 17th June 2005 and registered at PACRA on 4th August 2005, the events of default are stipulated in clause 6 as follows: " AT any time after (a) The Bank has demanded payment qf any mom:.y or discharge of any money or discharge of any liabilities hereby secured,· or (b) The Company ceases or threatens to cease to carry on business,· or (c) An effective resolution is passed or an order is made for the winding up of the Company; or (d) An encumbrance takes possession or a receiver is appointed of the whole or any part of the asset or undertaking of the Company,· or (e) Any distress or execution is levied or enforced 111;011 o,:__ issued out against any of the chattels or propertv of the J48 I Page Company which is not discharged within seven days of being levied,· (I) The Company for the purpose of section 272 of the Companies Act or any amending or repealing enactment deemed to be unable to pay its debts ... .... " then and in anv o(the said cases the Bank may in writing under the hand of any person hereinafter authorized to make a demand under this securitv appoint any person or persons to be a receiver or receivers ofthe property comprised in this security upon such terms as to remuneral ion and otherwise as the Bank think fit and may in the manner from time to time remove anr receiver or receivers so appointed and appoint another or others in his or their place. " [16.10] In construing clause 6 ( e ), my understanding is it provides a two-step process, namely there should there be a distress or execution levied or enforced on the assets of TSBL. Secondly, after execution, the same should be discharged within seven days of being levied. [16.11] I accept both Counsels position on the law that a receiver can only be appointed pursuant to a contractual instrument such as a debenture or mortgage. It 1s DWI 's testimony the appointment of receivers/managers was made pursuant to the debenture and mortgage over Stand No 194 Matero, Lusaka. He went on to explain that at the time of appointment, there was a default by TSBL. The following is taken verbatim from the cross examination of the DWI: J49 I Page "A Now as receiver and manager, presented with a situation by the Bank that there is a customer who has de.faulted, is it in your interest to be satisfied that indeed there has been a de.fault warranting the appointment of the receiver? A Q My Lady it is in our interest. And in this case you satisfied yourself that there was a default. A Yes, we satisfied ourselves that there was a condition that was urgent and needed to be resolved. If I may take the Court back a bit, what caused the receivership to commence was at the time when there were 23 decided cases against the company and the Sher~[( of Zambia had moved in and took possession of some assets as well as taking walking possession of other assets that were invaded by the Bank. At that stage ZANACO in line with the sworn in debenture realized that the assets where they have the security were in danger of being sold. And they actually advertised by the Sheriff of Zambia to sell those assets within a day or two of our appointment. '' [16.12] It is not in dispute a total of 23 executions were levied against TSBL as confirmed by the Plaintiff, DWI and 2nd Defendant. Mr Simeza SC argued the undischarged executions against the assets of TSBL were sufficient to trigger invocation of clause 6 ( e) of the floating debenture. In that respect he is partially right, and the 1st Defendant has satisfied the first step. JSO I P age [16.13] I now come to the second tier as to whether the executions were discharged within 7 days. In cross examination, the Plaintiff testified execution had been levied and the l st Defendant was required to give 7 days' notice to TSBL so as to avail an opportunity to TSBL to make good. [16.14] The Plaintiff testified that following executions, the next thing they knew, was joint receivers/managers had been appointed by the 1 ~, Defendant on 17th October 2007 who swiftly stayed the executions using the restructured amount availed to TSBL which fact was uncontroverted. [16.15] The 1st Defendant appointed the joint receivers/managers on the basis 7 days had lapsed. When pressed under cross examination as to whether 7 days had lapsed between execution and when the 2nd and yd Defendant were appointed as receivers/managers, DWI told the Court he was aware the appointment was done after 9 days. This assertion was not supported by any documentary evidence. The 2nd Defendant vaguely stated that once execution was done, a sale was usually within 3-5 days after seizure. [16.16] In submissions, Mr Simeza SC argued the notice of Sheriffs sale by public auction placed on 13 th October 2007 in the Zambia Daily Mail was prepared on 12th October 2007 implying execution must have taken place around the gm October 2007 based on the Plaintiffs testimony that an advertisement would be placed 3-4 days from execution. On record is an advertisement dated 21 st October 2017 but does not indicate the date of execution (page 57 of 1st Defendant's bundle of documents). JSl I P ag e (16.17] The lodgment of a notice of appointment of receiver or receiver and manager on 17th October 2007 (page 65 Plaintiffs amended bundle of documents) states as follows: "Dear Sir., Appointment of Joint Receivers/managers for Top Star Breweries Limited (In Receivership) and request/or statement of affairs as at 17 October 2007 This letter serves to inform you that Mr Edgar Hamuwele and Mr Christopher Mulenga with effect.from 17 October 2007 were appointed Joint receivers/manager of Top Star Breweries Limited (In Receivership) pursuant to a debenture agreement dated 28th June 2005 in favour of the Zambia National Commercial Bank Pie ....... " [16.18] It is not in dispute the Plaintiff did not discharge the executions. l agree with Mr Katolo that from the evidence adduced, it is difficult to asce1iain whether the 7 days had actually lapsed before appointing the 2nd and 3rd Defendant as joint receivers/ managers ofTSBL. Mr Katolo contends the actual number of days that had lapsed cannot be properly deciphered from the evidence on record to the detriment of the company when the Defendant's should have produced proper evidence to establish this fact. I agree. [16.19] Similarly, DWI and DW2 were unable to commit on whether the said days had lapsed. I expected the 1st Defendant to have had a record of the chronology of events leading to the appointment of the joint Js2 I Page receivers/managers. The Court would not be in the dark had documentary evidence been produced by the l st Defendant who took control of the executions at the material time. J cannot leave it to speculation. [ 16.20] In the absence of cogent evidence, I find there is nothing shown to support the assertion 7 days had lapsed from date of executions to warrant the appointment of the 2nd and 3rd Defendants as receivers/managers by the 1st Defendant. Since the second step was not satisfied by the 1st Defendant, the overall effect is there was no event of default to trigger the appointment of the receivers/managers. Even assuming I am wrong, I come to the issue of crystallisation. Crystallisation fl6.21] The second limb of argument canvassed by Mr Kato lo is there •,;vas no event of default that caused the crystallization of the floating debenture which gave the 1st Defendant liberty to appoint the 2nd and 3rd Defendant as receivers/managers. This particular point was strenuously and passionately argued by both Mr Katolo and Mr Simeza SC. [ 16.22] Mr Simeza SC proposition is there was an automatic crystallization of the debenture upon default by the borrower hence the reliance on ciause 6 (e) of the debenture which provides for defaulting events. [16.23] In a nutshell, crystallization is a process by which a floating charge converts into a fixed charge. Upon crystallization, the floating charge attaches to all existing assets within ihe scope of the charge and 153 I Page becomes fixed. Automatic crystallization refers to an event agreed between the parties to the floating charge to trigger crystallization without requiring the debenture holder to do any act. Upon occurrence of an event, the floating charge crystallises and security interest of the debenture holder is attached to the charged assets and the charge becomes a fixed charge. The lender can then dispose of those assets without the consent of the borrower, in this case TSBL. [ 16.24] In my exploration of authorities on automatic crystallisation, l came across an article by Christopher Burgess "Commonwealth Car;bbean Company Law at page 422-432 cited in the case of Jade Overseas Holidays v Sanctuary (l > of persuasive value that "An area in the law relating to crystallz'saizon whJch remains very unsettled is that of the legal effectiveness of whut are referred to as ''automatic e1ystallization clauses. " Autornatic crystallisation clauses are clauses found in debentures which provide for the floating charge to crystallise on the occurrence of specified events of default and this is whether or not the debenture-holder knows that the event has occurred and whether or not the debenture-holder wants to enforce the charge as o result of the happening of the event. An evaluation of the case lm1-• indicates that the older authorities, without deciding the issue, point to the theory that automatic crystallisation clauses are legally ineffective . . . The more recent cases are somewhat equivocal but on balance appear to incline in favour of the effectiveness of automatic crystallisation ... It is submUted that the crux of the doctrinal problem associated 11·ith automatic JS4 l P a e e crystallisation lies in whether parties are free to contract in respect of crystallization events. If they are, automatic crystallisation clauses are ipso Jure legally valid; if they are not, but their contractual freedom is restricted, then such clauses are invalid. The better view appears to be that courts have no legal basis on which to ignore the contractual agreements of parties. '' [I 6.25] It is customary that the appointment of a receiver is a mechanism for the enforcement of security granted by a company by way of a fixed and or floating charge over its assets. In other words, the debenture holder appoints a receiver who then takes control of the assets within the scope of the floating charge. Upon an event of default, the lenders powers are exercisable and a receiver may then be appointed and for that proposition, Mr Katolo relied on the case of Buchler v Talbot t 141 where the Court held as follows: "a floating charge oystallises it becomes a fixed charge attaching to the assets of the company which falls within its terms." [16.26] Mr Katolo submits that after crystallization, the floating debenture becomes fixed only to the assets which faH within its terms and one cannot impute an automatic crystallization of the debenture. Under this head, Mr Kato lo relied on the case of Banana Enterprises Limited v Nova Toledo Limited and Provident Bank and Trust of Belize Limited (JS) where it was held inter alia that an automatic crystallization of a debenture cannot be imputed but must be agreed between the parties. JSS IP age [ 16.27] Conversely, Mr Simeza SC argues that pursuant to the terms of the debenture, there was an automatic crystallization resulting in the appointment of the joint receivers/ managers. He submits that since one of the events justifying the appointment of a receiver under clause 6 ( e) had occurred, the appointment of the 2nd and 3rd Defendant as receivers/managers crystallised the debenture holder's charge upon the assets of TSBL. [ I 6.28] To shed more light on crystallization, clause 2 of the debenture states as follows: " The Company as beneficial owner hereby charges by way of floating . . . the Company's property and assets and rights whatsoever and .. (including its uncalled capital and goodwill) both present and future payment and discharge of all such sums of money and all such liability are or shall fi·om time to time become payable or due under the covenant so that the Company shall not be at liberty without the writ of the Bank to create any mortgage or charge of the property hereby priority or pari passu with this security or to sell the undertaking of . . . any portion thereof or to deal with its book and or other debts or securities otherwise than in the ordinary course of business. " The Bank mav at anv time by notice in writing to the Compa11r convert Floating Charge into a specific charge as regardr, am1thing specifying notice which ;sin danger o[being seized or sold under anv form of execution levied or threatened mav appoint a receiver thereof .... (underlined for emphasis only) J56 I P age [ 16.29] I accept Mr Katolo's submission that crystallization cannot be imputed into a security document and should be expressly provided for, or where it is not provided for, the enforcing party should apply to Court for crystallization or take the necessary steps outlined in the security document. It follows, there must be a clear intention in a floating charge on whether crystallization is automatic or not. In the present circumstances, I find no clear language to indicate there was an intention for an automatic crystallization. (16.30] In this vein, I agree with Mr Katolo that crystallization is a condition precedent to the I st Defendant exercising its right to enforce the floating debenture. Specifically, clause 4 of the debenture states as follows: " The Bank mav at any time by notice in writing to the Company convert the said floating charge into a specific charge as regard~ anything specified in the notice which is in danger of being seized or sold under anv form of distress or execution levied or threatened and mav appoint a receiver thereof " [16.31] From a reading of clause 4 above, the 1st Defendant was at liberty in specified circumstances to convert the floating charge into a specifi(; charge, which it did. However, as a condition precedent, the Court is mindful the I st Defendant was required to give notice in writing to TSBL converting the floating charge into a specific charge. [16.32] Since crystallisation was a condition precedent, the I st Defendant was required to give written notice which I find they did not do. I accept Mr Kato lo' s submission that the 1st Defendant fell into grave error when it J57 I P ~ g e proceeded, at crystallization of the floating charge, to appoint the 2 nd and 3rd Defendant in the absence of written notice to TSBL. Notice [16.33] At this juncture, it is convenient to discuss the significance of a notice. The purpose of a notice is to inform the recipient of what is required of them and to leave them in no doubt. Indeed, a notice must be brought to the mind or attention of a debtor such as in this instance, TSBL. [16.34] The issue of notice or the lack of it is paramount and has been consistently referred to by Mr KatoJo. Mr Simeza SC argues there was no requirement for a demand notice under clause 6 (e) of the debenture and states it could be invoked where no arrears were outstanding on the facility. That it comes into play automatically when there is an execution levied against the assets of the company not discharged within 7 days and is an automatic defaulting event. [16.35] In my view, it is clear the clause refers to anything specified in the notice which is in danger of being seized or sold under any form of execution levied or threatened. Mr Simeza SC is splitting hairs by contending that clause 4 deals with a threatened situation before it happens whilst clause 6 ( e) deals with execution which has happened. Even though I accept Mr Simeza SC submission that the Isl Defendant could appoint a receiver/manager over a particular asset threatened with execution or sale, I find it is not open ended and is subject to following the requirements under the invoked clauses. J58 I Page [16.36] I accept the submissions put forth by Mr Katolo that it is established by law an event of default must occur before the Bank such as the l st Defendant can proceed to have its interests protected. Reliance was placed on the case of Lister Limited v Dunlop Canada Limited 06> where the Court held: " It may well be that security became enforceable when the default occurred, but that does not answer the question how soon Dunlop could move to enforce the security. If a terms of payment instantly on demand, and without delay on any pretense whatever can be construed as meaning that a reasonable time to be allowed to meet the demand, then I think that the terms of s. 61 (of the debenture) should be construed as meaning that although the security became enforceable, it would not be enforced until the debtor had been given a reasonable time to make payment of the amount due. '' [16.37] I adopt the reasoning advanced in the cited passage and opine it is incumbent upon a debenture holder such as the 1st Defendant herein to give the debtor TSBL reasonable notice of its intention to enforce the security and reasonable time to pay following a notice of intention. In other words, TSBL should have been given some semblance of notice on which it might reasonably expect to be able to act. DWI has not convinced this Court that requisite notice was given to the bonower before the appointment of the receivers/managers. DW2 assumed notice had been given leading to their appointment as receiver/manager. J59 I P age [16.38] Mr Katolo called in aid the case of Jim Landry Pontiac Buick Limited v CIBC <17l, where the Court held it cannot be reasonable to have a default in the mind of the creditor without it being communicated to the debtor and allowing the debtor to respond to the purported default. From the cited authority, I subscribe to Mr Katolo's submission that a demand is essential in order to ensure both parties know what is happening and whether the default in issue can be remedied. This principle is underscored by the learned authors of Paget's Law of Banking, 11 th Edition at page 244 cited by Mr Kato lo where it was stated: "The making of a valid demand is of practical importance in two contexts. First, the date of demand is normally the date from which interest is claimed on overdue amounts. Second, the making of a valid demand is normally a pre-condition to the right to realise the security'.' [ 16.39] I find this to be the conect principle of law and in my view makes commercial and legal sense. From the facts herein, it appears the 1st Defendant did not have any intention to give TSBL notice, not even a short one for reasons best known to itself. [16.40] On Mr Kato lo and the Plaintiffs contention relating to the grace period of two months provided in the facility letter of 5th October 2007 which estopped the 1st Defendant from exercising its rights in appointing the 2nd and 3rd Defendants as receivers/managers in the event of default, I find this argument unsustainable as the provision is in respect to payments. J60 I Page [16.41] Mr Simeza SC introduced another dimension by submitting the 151 Defendanl invoked clause IO of the facility letter dated 5th October 2007 relating to 'the Other terms' which provides for assets being in jeopardy and in this instance did not require written notice. I find it interesting to note the 1st Defendant is blowing both cold and hot air over the issue of the enforceability of the facility letter of 5th October 2007. In one breath, he seeks not to rely on the said facility letter, but goes on to make reference to the events of default in the same letter. [16.42] Clause 10 in the facility letter provides as follows: "10.1 The Bank reserves the right to recall the facility at any time, if in the opinion of the bank there is a change in ownership of the company resulting in change of control whether such change be by way of management and policies through the acquisition of shares by contract or otherwise or if rhe bank obtains any information which it deems adverse to its interest." [16.43] This clause is objective and dependent on the prevailing situation. The 1st Defendant received information about the executions, panicked and enforced its securities. It is apparent the 1st Defendant could not tum a blind eye when the assets ofTSBL were in jeopardy. I adopt the dictum in the case of McMahon v North Kent Ironworks Company (IS) cited by Mr Simeza SC where the Court held: "In my opinion, upon principle, the application is right, though I am not aware of any direct authority upon the point. As a matter of principle a mortgagee has the right to the protection of his J61 I P r1 g e security if it is in jeopardy. Accordingly, I appoint Mr Young receiver of the property and assets of the company comprised in the Plaintiff's security ..... " [16.44] If anything it would be absurd for a lender to wait whilst the assets are in jeopardy. I agree the 1st Defendant in such a situation should come in to protect the pledged or charged assets of TSBL and its borrowings. However, it is of significance to give notice. ' [16.45] Going by Mr Simeza SC argument of there being no requirement for a lender to give a borrower notice where goods are in jeopardy, I find the l st Defendant again fell into grave error when it failed to give reasonable notice even if the clause did not expressly provide for it. I find there was an implied te1m that notice be given. This is in no way a trivia] issue. [16.46] After an evaluation of the evidence on record, it all boils down to the consequences of a failure to give notice, if any? I form the view the consequences are dire as the 1st Defendant acted outside the terms of the debenture by its failure to give TSBL notice of crystallisation and notice of an event of default contemplated in clause 6 ( e) of the debenture. [16.4 7] Where there 1s non-compliance with the requirements under the contracting document, it means the appointment of the joint receivers/managers is null and void on the basis there was no an event of default per se, and there was no written notice under clause 6 ( e) of the debenture and on crystallisation of the floating charge under clause J62 I Page 4 of the debenture. These conditions had to be met prior to appointment of any receiver/manager. [16.48] Consequently, I grant an Order that the purported appointment of the 2nd and 3rd Defendants by the 1st Defendant as receivers/managers for TSBL was null and void ab-initio. The claim succeeds. [17.0] A declaration that the appointment of the 2 nd and 3rd Defendants as joint receivers and manager executed on 17th October 2007 without the 1st Defendant's seal is null and void. [17.l] The Plaintiff seeks a dec1aration that the appointment of the 2nd and yd Defendants as joint receivers/managers executed on 17th October 2007 without the 1st Defendant's seal is null and void. [ 17.2] In the case of Merrow v Bank of Scotland <19>, it was held that: "Since a receiver's authority is derived from the instrument under which he is appointed, an appointment is not valid unless it is made in accordance with the terms of that instrument. '' [17.3] It follows that where the formalities and requirements are not followed, an appointment of a receiver shall be void. A party cannot deviate from what is provided in the instrument such as the debenture herein. Having arrived at a finding that the appointment of the 2nd and 3rd Defendant as receivers/managers were a nullity ab initio, this claim becomes academic. J63 I Page [17.4] I therefore decline to grant a declaratory order that the appointment of the 2 nd and 3 rd Defendants as joint Receivers and manager executed on 17th October 2007 without the 1st Defendant's seal is null and void as the same will serve no useful purpose in the face of other reliefs the Plaintiff seeks. [ 18.0) A declaration that the advertisement by the 5th Defendant for the sale of Top Star Breweries properties was done without authority and therefore null and void. [18.1] The Plaintiff seeks a declaration that the advertisement by the 5th Defendant for the sale of TSBL properties was done without authority and therefore null and void. The Plaintiff argues the 5 th Defendant put up an advertisement for sale of the subject properties and assets of TSBL. [18.2] Following the purported appointment of the 2nd and 3 rd Defendant as joint receivers/managers of TSBL, the duo advertised for the sale of TSBL' s assets on 19th March 2008 in the daily mail newspaper (page 70 1st Defendant's bundle of documents). A second advertisement was made appearing at page 82 of the Plaintiffs bundle of documents for sale of land, building equipment. [ 18.3] The evidence on record shows it is the 2nd and 3 rd Defendant who placed the advertisement in the newspaper and in this regard support the evidence adduced by DW2. I note the place of business is that of the 5u, Defendant. In my view, this claim is directed at the wrong party and it is for that reason I find it otiose. J64 I Page [18.4] I therefore decline to grant a declaration that the advertisement by the 5th Defendant for the sale of TSBL properties was done without authority and therefore null and void. The claim is without merit. (19.0] An Order for damages for ZMW15,000,000.00 for advertisement of Top Star Breweries Limited (In Receivership) by the 5th Defendant. [19.l] The Plaintiff seeks an order for damages for ZMW15,000,000.00 for advertisement of TSBL by the 5th Defendant. In Zambia National Building Society v Ernest Mukwamataba Nayunda <20> the Supreme Court held: "the essence of damages has always been that the injured pany should be put as far as monetary compensation can go in about the same position he would have been had he not been injured" [19.2] These damages are quantified and there is no supporting evidence as to how this amount was arrived at nor documentary evidence to support the claim. I am inclined to agree with Mr Simeza SC that this claim is for the benefit ofTSBL and not the Plaintiff as a director. The claim is without merit. [20.0] A declaration that the erasure of TSBL as title holders and mortgagors of Stand No 194 and the inserting of the 2nd and 3 rd Defendants as title holders and mortgagors on the same property was illegal, fraudulent and null and void. J65 I Page A declaration that the conveyance of Stand 194 and 345 to the Intervener by the 2nd and 3rd Defendants was illegal, fraudulent and null and void. (20.1] It is convenient for me to deal with the two claims simultaneously as they are interconnected and to avoid repetition. (20.2] Mr Katolo submitted the list of particulars of the mortgaged property enlisted only one portion of land being Stand No 194, Lusaka. It is argued the debenture secured all present and future assets which did not include land. Therefore, if at all the debenture included land, it would only be Stand No MAT 194 Lusaka which mortgage was discharged. (20.3] It is trite law that where a charge is created on entire assets of a company, it shall stipulate the nature of the charge and the assets charged. The charge shall only be valid if registered. In the present case, the debenture dated 17th June 2005 was duly registered on 4:h August 2005. (20.4] Clause I refers to moneys and liabilities which are now or at any time hereinafter may be due or owing from or incurred by the Company. Clause 2 refers to charges by way of floating the Company's property and assets and rights whatsoever and including its uncalled capital and goodwill. In my view, contrary to Mr Katolo's position, I find TSBL's assets included immovable property such as immovable property in this instance land, which fell within the scope of the debenture. Stand No MAT 194, Lusaka J66 I Page [20.5] The P]aintiff testified there was fraud in the manner Stand No MAT 194, Lusaka was sold by the receivers/managers to the Intervener since the 1st Defendant had relinquished its interest in the mortgage through the discharge of the mortgage. It is not in dispute a caveat was placed on Stand No MAT 194, Lusaka by the pt Defendant after the initial mortgage was discharged. In response, DW 1 explained the mortgage was wrongly discharged by the lawyers as they had not confirmed receipt of the monies from TSBL from the l51 Defendant. [20.6] Mr Simeza SC argument in this regard is that the property was not sold pursuant to a legal mortgage but sold by the receivers/managers in exercise of their duty to realise all the assets including land belonging to TSBL. Mr Simeza SC argues it is misguided for the Plaintiff to argue that the 2nd and 3rd Defendant could not sell Stand No MAT 194, Lusaka because the mortgage had been discharged as the receivers drew their authority and power of sale of the properties from the debenture. [20.7] Even assuming the receivers/managers exercised their power of sale under the debenture, in respect to Stand MAT 194, Lusaka, it is not in dispute the mortgage was discharged by the I st Defendant to facilitate a sale which did not materialize as alluded to by the DWI and DW2 (page 78 Plaintiffs amended bundle of documents). The Plaintiff also confirmed a discharge of the mortgage on the subject property. [20.8] At this juncture, I have to deal with the consequences of a discharge of a mortgage. It is trite that a mortgage is discharged when the borrower has fully paid the respective debts owed to the lender in this case the 1st Defendant. The Plaintiff has not shown monies were paid by TSBL to J67 I Page discharge the loan obligations. In cross examination, when queried about TSBL' s indebtedness, the Plaintiff responded in the affirmative. [20.9] Section 67 (2) of the Lands and Deeds Act, Cap 185 of the laws of Zambia provides that where there is a discharge of a mortgage, the interest ceases in that property. In a letter dated 5th December 2012, the Plaintiff complained to the 1st Defendant's lawyers on gross misconduct relating to the irregular sale ofTSBL properties namely MAT 194, 345 and 346 (page 86 Plaintiffs bundle of documents). [20.1 O] The documentary evidence shows the memorandum of discharge is dated 17th May 2012 and duly registered at Lands and Deeds Registry on 19th May 2012. The 2nd and 3rd Defendants were appointed joint receivers/managers on 17th October 2007. The assignment of Stand No MAT 194, Lusaka is erroneously dated 16th May 2005 before the receivers/managers were appointed. This was sufficiently explained by the 4th Defendant that an error occurred due to the migration of the system at the Lands and Deeds Registry. I need not belabor the point. [20.11] The consequences of a discharge of a mortgage were aptly stated in the Canadian case of Crystal Wealth Management Services v JC Food Services (ZI), where Justice Brown in dealing with the erroneous discharge of a mortgage had this to say: "The accidental discharge of a mortgage discharges that mortgage but does not satisfy the underlying debt secured by the mortgage. It calls for equitable relief otherwise Crystal will be unjustly enriched. " J68 I P age [20.12] Did the l st Defendant forego the debt and TSBL the right of redemption? This point is illustrated in the case of NY Community Bank v Vermonty < ), which is of persuasive value where faced with similar facts as the present, a mortgage was erroneously discharged. The Court said: "The mortgage may have an erroneous discharge of mortgage without concomitant satisfaction of an underlying mortgage debt is to set aside and have the mortgage re-instated where there has not been detrimental reliance on the erroneous recording. " (20.13] In the present case, the 1st Defendant did not re-instate the mortgage but instead the 2nd and 3rd Defendant proceeded to advertise the property for sale. The l st Defendant should have rectified the error. ~1y take from the cited authorities, is the effect of discharging the mortgage relating to Stand No MAT 194, Lusaka is the p t Defendant was no longer was able to sue TBSL on covenants contained in the mongage as the discharge operated to extinguish the mortgagee's security interest whilst TSBL no longer had the right of redemption. [20.14] Coming to Mr Simeza SC's argument that the power of sale was derived from the debenture and not the mortgage, ordinarily that would have been the case. But from the facts before me, and having made a finding the 2nd and 3rd Defendant were invalidly appointed as receivers/managers, it goes without saying they had no power to dispose of any assets under the debenture. Any empowerment as attorneys on behalf of TSBL to convey or assign any instrument for purposes of effecting any registration falls away. J69 I Page [20.15] Interestingly, by letter dated 16th December 2012, the consent to assign Stand No MAT 194, Lusaka was withdrawn by Commissioner of Lands. This meant the purported sale of Stand No MAT 194, Lusaka could not proceed. [20.16] I have duly considered the submission advanced by Mr Katolo that Stand No MAT 194, Lusaka was not encumbered and I agree. If anything, at the time the purpotied joint receivers/ managers being the 2nd and 3rd Defendants sold the said property to the Intervener, they had no authority to do so. [20.17] On the issue of the TSBL 's indebtedness to the 1st Defendant, the discharge of the mortgage purpotiedly or incorrectly stated the mortgagor had fully paid when not as confirmed by the Plaintiff. The accidental discharge of a mortgage discharges that mortgage but does not satisfy the underlying debt secured by the mortgage. I find TSBL is in default and indebted to the 1st Defendant. It calls for equitable relief otherwise TSBL will be unjustly enriched. [20.18] From the facts on record, I grant a declaration that the erasure of TSBL as title holders and mortgagors of Stand No MAT 194, Lusaka and the inserting of the 2nd and 3rd Defendants as title holders and mortgagors on the same property was illegal, fraudulent and null and void. [20.19] Following, I find the conveyance of Stand MAT 194, Lusaka by the 2nd and yd Defendant to the Intervener was illegal, null and void ab initio. Stand MAT 345 Lusaka J70 I P a ge [20.21] The 2nd Defendant testified Stand No MAT 345, Lusaka was in the name of Lusako Sichali who then signed the deed of assignment in favour of TSBL. He confirmed the two properties were sold to Red Sea Import and Export the Intervener herein and the assignments were signed off by the joint receivers/managers. [20.22] The Plaintiff argues Stand No MAT 345 and 346, Lusaka were not included in the debenture. I find this to be a misconception as earlier stated and alluded to, the debenture included all assets of TSBL which included immovable property such as Stand MAT 345, Lusaka. [20.23] The Plaintiff in cross examination testified that title deeds relating to Stand No MAT 345 and 346, Lusaka had been deposited with the l st Defendant to create equitable mortgages since the two were in the names of third parties (page 1 and 38 of the l51 Defendant's bundle of documents). The Plaintiff admitted the same were deposited at the I st Defendant's Manda Hill branch and signed by him on 17th June 2005. [20.24] Counsel questioned why the parties would execute separate mortgages for the said properties being Stand No MAT 345 and 346, Lusaka which had already been contemplated under the floating debenture? The simple answer is that following the consolidation of the facilities~ the 1st Defendant required the securities to cover the consolidated amounts. This is reflected in a letter from the 1st Defendant urging TSBL to execute the assignments relating to Stand No MAT 345 and 346, Lusaka, notwithstanding the continued securities. 171 I P age [20.25] In the case of Stand No MAT 345, Lusaka, a caveat was placed by ZANACO (page 119 Plaintiffs bundle of documents). However, arising from my earlier finding that the 2nd and 3rd Defendants appointment as receivers/managers were void ab initio, it follows they had no authority to convey any property to any person. [20.26] I accept that should the 2nd and Jfd Defendant have been properly appointed, they would have invoked section 113 Companies Act, Cap 388 of the laws of Zambia allowing them to dispose of properties pursuant to their appointment. [20.27] In supp01i of my findings, in the persuasive English case of Philip Boyd Trimble and James William Trimble vs John Patrick Cassidy and Stephen Mckenn < 23J, it sums up the consequences of an invalidly appointed receiver purported conveyance of any of the company prope11y under an instrument. The Court said: " The appointment being void would mean that any purported sale under the void appointment would be made without lavi;jitl authority or any power to convey the property and therefore the purported conveyance would be void. As Fisher and Lightwood, Law of Mortgage I 5th Edition at p608 comment, "The validity of the acts of the receiver depend upon the validity of his appointment, so that if he is invalid he will be at risk against the mortgagor, mortgagees trustee in bankruptcy or liquidator as appropriate and other interested parties such as other mortgagees. " 172 I Page .• [20.28] Again, I observe that despite the withdrawal of consent to assign Stand No MAT 345, Lusaka by the Commissioner of Lands on 4th December 2012, there is no further correspondence showing the go ahead with the conveyance. Notwithstanding, the said property was conveyed to the Intervener by the 2nd and yct Defendant. It has not been explained how the parties completed the conveyance in the absence of consent to assign. [20.29] From the chronology of events, I do not believe the I si, 2nd 3rd Defendants and Intervener have proved they conducted the conveyance in a transparent manner. The whole process is fraught with illegalities and misconduct on the part of the 1st, 2nd and Yd Defendants. [20.30] Secondly, the 1 s1, 2nd , 3rd and the Intervener were all aware of the civil suit commenced by the Plaintiff against them. The writ of summons was filed on 22nd May 2012. The purported conveyances ,-verc completed in 2015. The claims in the suit related to the appointment of the receivers/managers and the subject properties. Despite been aware of this, the conveyance proceeded. Since the conveyance was done by the 2nd and 3rd Defendants who were not validly appointed, their action comes to nothing. You cannot pass on something you do not have. [20.31] For the foregoing reasons, I grant a declaratory order that the conveyance of Stand No MAT 194 and 345, Lusaka to the Intervener by the 2nd and 3rd Defendants was illegal, fraudulent and null and void. [20.32] For the foregoing reasons, I grant a declaration that the erasure ofTSBL as title holders and mortgagors of Stand No MAT 194, Lusaka and the J73 I Page insetting of the 2nd and 3rd Defendants as title holders and mortgagors on the same property was illegal, fraudulent and null and void. The claims succeed. [21.0) A declaration that the Intervener is not a bona fide purchaser for value without any notice of defect whatsoever in obtaining the transfer of suit properties being MAT Stand 194, MAT 345 and MAT 346 from the 2nd and 3rd Defendants. (21.1] The Plaintiff seeks a declaration the Intervener is not a bona fide purchaser for value without any notice of defect whatsoever in obtaining the transfer of suit properties being Stand No MAT 194, 345 and 346 from the 2nd and 3rd Defendants. (21.2] There is no better starting point than to stress the point that generally, a bona fide purchaser for value without notice means a good faith purchaser who buys for value without notice of any other party's claim or equitable interest against a property. Black's law Dictionary, 10th Edition defines bona fide purchaser for value as follows: "Someone who buys something without notice qf another's claim to the property and without actual or constructive notice of any defects on or infirmities, claims or equities against the seller's title, one who has in good faith paid valuable consideration for property without notice of prior adverse claim. " [21.3] From this definition, it follows that where a buyer is or ought to have been aware of the other party's interest in the property, the person J74 I P age _. cannot be said to be a bona fide purchaser for value without notice. Those holding competing adverse claims may bring an action only against the party who fraudulently transferred the property to the bona fide purchaser. [21.4] In regard to the Intervener, he was offered the properties some time in 2013 by the 2nd and 3rd Defendant. This was despite the withdrawal of consent to assign by the Commissioner of Lands on 4th December 2012. [21.5] Mr Simeza SC raised the defence of laches. In Lindsay Petroleum Company v Herd < ) at page 239, Lord Selborne in discussing the doctrine of laches said: " Now the doctrine of !aches in court of equity is not an arbitry or a technical doctrine. Where it would be practically unjust Lo give a remedy, either because the party has, by his conduct, done that which might fairly be regarded as equivalent to a waiver of it, or whereby his conduct and neglect he has though perhaps not waiving that remedy, yet put the other party in a situation in which it would not be reasonable to place him if the remedy was afterwards to be asserted, in either of these case lapse of time and delay are most material. '' [21.6] The record shows a letter from the 1st Defendant to TSBL for the attention of the Plaintiff written on 17th October 2007 following the appointment of the receivers/managers. The company immediately sued the 1st Defendant. The suit was later withdrawn and the Plaintiff commenced the present suit in 2012. This shows the Plaintiff was J75 I P age proactive by instituting legal action. From inception, the Plaintiff had challenged the appointment of the receivers/ managers. Based on the factual circumstances, the defence of laches cannot be entertained. [21. 7] Mr Katolo argues the doctrine of lis pendens is available to the Plaintiff in seeking revocation and cancellation of the illegal conversion of the properties. In Black's Law Dictionary, it defines !is pendes as the jurisdiction, power of control acquired by a court over property while a legal action is pending. Lis Pendens means litigation pending or pending suit and is drawn from the concept based on the maxim pendente lite nihil innovature which means that nothing new must be introduced while a litigation or suit is pending. The doctrine states any transfer of property should be restricted when there is a litigation pending on the title or rights that arise directly involving an immovable property. [21.8] In support of the doctrine of !is pendens, Mr Kato lo cited the Kenyan case of George Neil Baird and Another v Fredrick Kinyua and Another <25.i where the Judge said: " The doctrine of /is pendes intends to prevent not only the dPfendant fi·om transferring the suit property when the litigation is pending but is equally binding on those who derive their title through the defendant, whether they had or had not notice of the pending proceedings. Expediency demands that neither party to the suit should alienate his interest in the suit property during the pendency of the suit so as to defeat the rights of the other party" J76 I P <-1 g e [21.9] Mr Katolo submits the 1st, 2 nd and 3rd Defendants had been sued in the action in 2012 and an earlier suit in 2009 which was dismissed on a technicality. It is not in dispute the present case revolves around the validity of appointment of the receivership and the properties which were subsequently disposed during the pendency of the purported receivership. ( [21.10] The Plaintiffs point of contention is at the material time, the case was subsisting in Court, and the Intervener had knowledge of the same but proceeded to purchase the property. The Intervener did not file any defence in this matter. However, as said in the case of KhaHd Mohammed v Attorney-General (26>: '' An unqualified proposition that a plaintiff should succeed automatically whenever a defence has failed is unacceptable tu me. A plaintiff must prove his case and if he fails to do so, the mere failure of the opponent 's defence does mot entitle him to" [21.11] In the amended witness statement, the Plaintiff avers that 011 29th May 2012, the Intervener offered to purchase the subject properties and a caveat was placed on Stand No MAT 194, Lusaka in favour of Petros Mogos a former shareholder in TSBL and on Lemsen Estates Limited a company owned by the Intervener. (21.12] On 16th December 2012 the Commissioner of Lands in reply to the Plaintiffs letter of J 1th December 2012, revoked the consents to assign J77 I Page in respect to all the subject properties being Stand No MAT I 94, 345 and 346 Lusaka (page 94-96 Plaintiffs bundle of documents). [21.13] In my view, the completion of the conveyance is shrouded m controversy. Again, without sounding repetitive, there is no plausible explanation from the 1st, 2nd and 3rd Defendants as to how the conveyance was completed since consent was withdrawn by the Commissioner of Lands on 4th December 2012 and never renewed. 1 agree w ith Mr Katolo that this evidence was never rebutted by any of the Defendants meaning the title obtained by the Intervener is defective. [21.14] The computer print-out from Lands and Deeds Registry shows 27th February 20 15 as the date the assignment was registered and the Intervener became the title holder on the same date (page 158-159 Plaintiffs amended bundle of documents). On 1 l th June 2015 barely 4 months later, the Intervener sold the property to the 6th Defendant and the certificate of title was duly issued to the 6th Defendant. [21.15] I take judicial notice the Intervener had previously been sued by TSBL though the matter was withdrawn. It was followed by the present suit and the Plaintiff where he is contesting the conveyance of Stand No MAT 194, 345 and 346, Lusaka which the Intervener purchased from the 2nd and 3rd Defendants in their capacity as joint receivers/managers. [21. I 6] The Intervener is a party to this current suit and evidently knew its subject matter but proceeded to complete the conveyance. The court proceedings related directly to land in which the 1st and 6th Defendant and the Intervener had an interest. J78 I P a t e. [21.17] In the case of the 2nd and yd Defendant as receivers/managers the subject property belongs to TSBL and ordinarily all things being equal, are entitled to execute any deed of transfer to a would be purchaser on behalf of TSBL. However, my view is, it was the subject of a lis pendens. This was sufficient for the Intervener to restrain from dealing with the subject properties. The Intervener should have exercised caution before purchasing the subject properties. [21.18] I am further persuaded by the case of Hunt v Lock (Z ) cited by Mr Katolo where the English Court in discussing constructive notice held: "Constructive notice is the knowledge which the Courts impulse to a person upon a presumption so strong of the existence of the knowledge that it cannot be allowed to be rebutted either from his knowing something which ought to have put him to further inquiry or from his wilfully abstaining from enquiry to avoid notice." [21.19] In my view the Intervener had constructive and actual knowledge of the court case and purchased the property at his own peril. [21.20] For the foregoing reasons, I grant a declaration that the Intervener is not a bona fide purchaser for value without any notice of defect whatsoever in obtaining the transfer of suit properties being Stand No MAT 194, 345 and MAT 346 Lusaka from the 2nd and 3rd Defendants. The claim succeeds. J79 I P c1 g e [22.0] An Order cancelling any title issued to the Intervener and the 6th Defendant. [22.1] The Plaintiff seeks an Order cancelling any title issued to the Intervener and the 6th Defendant. The factual background is the l st Defendant having placed TSBL in receivership appointed the 2nd and yd Defendants as joint receivers/managers. [22.2] DW6 testified that in 2015, it accepted an offer from the Intervener to purchase Stand No MAT 194, 345 and 346 Lusaka. The search indicated the Intervener was the lawful and rightful title holder of the said properties. Prior to entering into the contract of sale, the search results proved the dispute relating to the said properties was dismissed in favour of the Intervener by the Supreme Couit. [22.3] The question that begs an answer is whether the 6th Defendant is a bona fide purchaser for value. In its defence, the 6th Defendant denies the Plaintiffs claim as it is merely a bona fide purchaser for value without any notice of any defect and or knowledge of any disputes relating to the said properties. That the 6th Defendant purchased the properties from the Intervener in good faith as a bona fide purchaser for value without any defect and did nothing wrong when it accepted the offer from the Intervener. [22.4] Counsel for the 6th Defendant Me E B !v1wansa SC submitted that following the receivers/managers decision to sell the properties and assets of TSBL, it placed an advertisement in the daily newspapers. The Intervener responded to the advertisement and after conveyancing 180 I P age fonnalities became the registered owner of Stand No 194, 346 and 345, Lusaka who then sold the subject properties to the 6th Defendant. (22.5] The 6th Defendant conducted a search at Lands and Deeds Registry and DW6 testified there was no encumbrance and proceeded to purchase the said properties from the Intervener. The 6 th Defendant partially developed the said properties and sold to a third party. DW6 testified that at the material time of purchase, there was no caveat on the said properties or any injunction when the 6th Defendant sold to Mohammed Adbulgani Patel and Decotex Zambia Limited who have since placed caveats on the said properties. The latter are not part of the present proceedings. ( f22.6] It is not in dispute the 6rh Defendant purchased the property from the Intervener and at page 94-100 Plaintiffs bundle of documents is a contract of sale between TSBL (In Receivership) and the Intervener where the vendor is selling as beneficial owner. [22.7] In the case of Sir John Bageire v Ausi Matovu C 28>, Justice Okello JA had this to say about due diligence in a land transaction: "lands are not vegetables which are bought from unknown sellers. Lands are very valuable properties and buyers are expected to make thorough investigations not on~y of the land but also of the owners before purchase. '' [22.8] I associate myself with the cited passage and remind parties that the buying of land is not like buying fruits at a fruit vendor along Cairo Js1 I Page Road in Lusaka where the seller is unknown. It is serious business and due diligence should be exercised. [22.9] I accept Counsel for the 6th Defendant's Mr E B Mwansa SC submission where he made reference to the case of Nora Mwaanga Kayoba and Alizani Banda v Eunice Kumwenda Ngulube and Andrew Ngulube <29> where the Supreme Court held: ( such transaction with much more serious inquiries to establish "In purchasing real property, parties are expected to approach whether or not the property in question has encumbrances." I adopt the reasoning in the cited case and fully associate myself with the conclusion reached by the apex Court. [22.1 OJ In regard to a bona fide purchaser for value without notice as defined in paragraph 21.2, I have to ascertain whether the 6th Defendant had actual or constructive notice. In this context, constructive notice being knowledge that a person could or would have acquired if he had made all the usual and proper inquiries. Can the 6th Defendant be said to have turned a blind eye to the behind the scene intricacies relating to the receivership and the properties in question? [22.11] The 6th Defendant testified he conducted a search at Lands and Deeds Registry and found everything in order. Is a search at Lands and Deeds sufficient for purposes of a due diligence? [22.12] The Lands and Deeds Registry Act, Cap 185 of the laws of Zambia provides for a general search under section 22 and an official search J82 I P a g e under section 23 as read with regulation 13 of the said Act. Once an official search is conducted, the Registrar of Lands issues a certificate. Therefore, as the dynamics in land transactions have changed over the last years as can be seen by the numerous land disputes, I form the view it calls for a paradigm shift when selling or purchasing land. [22.13] In my view, a due diligence or a search should go beyond Lands and Deeds Registry. It should include investigating the instrument under which a vendor obtained title. In the present case, the search at Lands and Deeds should have alerted the 6th Defendant of the background of this matter moreso that the 6th Defendant was already a party to the present suit. [22.14] Notwithstanding, I am first to admit it would be too onerous to place an obligation on the 6th Defendant to have conducted a search on the appointment of the receivers/managers and to ascertain whether there was an irregularity in their appointment. The fact there was an ongoing case relating to the same subject properties, should have raised a red flag. [22.15] Mr Katolo invoked the latin legal maxim "nemo dat quod non habet" meaning nobody gives what he does not have, which is the basic rule relating to the passing of any ownership of land, chattels rights etc. In my considered view, of importance is the fact the 6th Defendant was while aware of the present action, but proceeded to sell the subject properties to Mohamed Adbulgani Patel and title was issued and Decotex Paints Zambia Limited placed a caveat on the said property as intending purchaser. In the English case of Business Mortgage J83 I P a g e Finance 6 Pie v Roundastone Technologies Limited <3 0) which 1s persuasive in value, the Court held : ".... That a purchaser of a charged assets from a receiver was unable to argue that it was a bona fide purchaser for value of the legal estate of those assets, without notice of any irregularity relating to the receiver's appointment as the receiver had no actual or ostensible authority" [22.16] It is for the above reasons, I reject Mr Simeza SC argument that the 6th Defendant is a bona fide purchaser for value. The Supreme Court has guided and I am bound by the doctrine of stare decisis that in purchasing property, one should look at the root of the title. From the facts of the present case, the 6th Defendant is not a prudent or innocent purchaser. [22.17] In my view, the 6th Defendant buried its head in the sand when purchasing the subject properties from the Intervener. Therefore, the Intervener could not pass good title to the 6th Defendant. I accept Mr Kato lo' s position that bad title passed from the Intervener to the 6th Defendant. The splash of illegality vitiates the particular sale to the 6th Defendant of the subject properties. For all intents and purposes, I hold the 6th Defendant is not a bona fide purchaser for value contrary to Mr Mwansa SC contention. [22.18] The question that begs an answer is whether the third purchaser Mr M Patel/Oecotex Paints have good title from the 6th Defendant who is not a bona fide purchaser for value? J84 I Page [22.19] In the case of Audrey Wafwa Gondwe v Supa Baking Company Limited (In Liquidation) and VU Akubat <31> the Supreme Court said as follows: "Where the property has already passed to the third party, the third party is an innocent Purchaser for value without notice of an adverse claim. " [22.20] The principle espoused by the Supreme Court in the foregoing case is an exception to the nemo dat quad non habet rule which means no one can give what they do not have. As I have earlier found, the 6th Defendant did not obtain good title to the property for reasons stated above. However, the new purchaser purchased the property in good faith for value without actual or constructive notice that another person had an adverse claim. [22.21] I find that the conveyance between the 6th Defendant and the new purchaser should not be disturbed as the third party is an innocent purchaser for value without notice of any adverse claim. My findings are supported by section 59 of the Lands and Deeds Registry Act Cap 185 of the Laws of Zambia which provides that: "Nothing in parts Ill to VII shall be so interpreted as to render subject to action for recovery of damages, or for possession, or to deprivation of any land in respect to which a Certificate of Title has been issued, any purchaser or mortgage bona fide for valuable consideration of such land on the ground that his vendor or mortgagor may have become a Registered Proprietor J85 I Page throughfraud or error, or under any void or voidable instrument, and this whether such fraud or error consists in wrong description of the boundaries or of the parcels of any land, or otherwise howsoever. " [22.22] I accept the dictum of the Supreme Court in the case of Prudence Chilufya Mulenga (Suing as Administratrix of the Estate of the Late John S Mulenga) v Serioes 1998 Limited and 4 Others <32> cited by Mr Simeza SC where it was held: "We agree entirely with Mr Mwewa 's submissions that a certificate of title is prima facie evidence of property ownership unless it is proved that it was obtained by fraud, forgery or misrepresentation and the onus is heavy on the person alleging the element. " .. . I fully associate myself with the conclusion reached by the Court and apply the same to the facts of this case. [22.23] Section 34 of the Lands and Deeds Registry Act, Cap 185 of the Laws of Zambia states inter alia as follows: "34 (1) No action for possession, or other action for the recovery of any land, shall lie or be sustained against the registered proprietor holding a certificate of title for the estate or interest in respect to which he is registered, except in any of the following cases, that is to say: (a) The case of a mortgage as against a mortgagor in default ... ,· J86 I Page (b) The case o{a person deprived of any land by fraud as against the person registered as proprietor of such land through fraud, or against a person deriving otherwise than as a transferee bona fide for value from or through a person so registered through fraud; [22.24] I find the third party is an innocent purchaser for value who had no reason to suspect there was an adverse claim. There is no evidence to suggest the third party knew of any existing right or interest of the Plaintiff or TSBL at the time he purchased the subject properties from the 6th Defendant. However, I find no proof of any fraud between the Intervener and third party despite the supersonic speed at which the conveyance between the two parties was completed. [22.25] In this regard, the Supreme Court in the case of Zambia Consolidated Copper Mines Limited v Eddie Katayi and Max Chilango < l Ngulube Chief Justice as he then was had this to say- "It was not possible without basis to ignore the rights of an innocent Purchaser for value and who had no reason to suspect there was to be an adverse claim ... there would be no justification to inflict injustice on the third party in the name of justice. " [22.26] I can say with confidence that the third party in this case is an innocent purchaser who in my view should not suffer the defects, infirmities or iniquities against the Intervener's title. J87 I Page [22.27] Mr E B Mwansa SC submits that should the Com1 find the 1st, 2nd and 3rd Defendant did not pass any good title to the 6th Defendant, then it should order the 151, 2nd and 3rd Defendants to refund the purchase sum to the 6 th Defendant including pay damages and full value of developments made on the subject properties. Arising from my findings, this argument is academic. [22.28] It is for the foregoing reasons that a declaratory order in this instance will serve no useful purpose in light of my earlier findings. I decline to grant an order cancelling any title issued to the Intervener and the 6th Defendant as the sale was not void ab initio. The claim fails. [23.0] An Order that the original land comprising Stand No. MAT 194, 345 and 346 be resurveyed and to be restored to its original boundaries within 30 days of this Order. [23 .1] The Plaintiff seeks an Order that the original land comprising Stand No. MAT 194, 345 and 346, Lusaka be resurveyed and to be restored to its original boundaries within 30 days of this Order. [23.2] From the circumstances of this case and my earlier findings relating to the legal status of the subject properties, I decline to grant an Order that the original land comprising Stand No. MAT 194, 345 and 346, Lusaka be resurveyed and to be restored to its original boundaries within 30 days of this Order. The claim is without merit. J88 I Page [24.0) An Order directing the 4th Defendant, the Commissioner of Lands and the Chief Registrar to reinstate the original entries on the land Register relating to Stand No. MAT 194, 345 and 346. An Order for vacant possession and delivery of the suit land belong MAT Stand No. MAT 194,345 and MAT 346. [24.1] I shall deal with the two claims together. The Plaintiff seeks an Order directing the 4th Defendant, the Commissioner of Lands and the Chief Registrar to reinstate the original entries on the Land Register relating to Stand No. MAT 194, 345 and 346, Lusaka. The Plaintiff further seeks an Order for vacant possession and delivery of the suit land being Stand No. MAT 194, 345 and 346, Lusaka. The Plaintiff seeks a reversal of transactions that occurred almost 10 years ago when the 6 th Defendant purchased the property and subsequently sold it to a third party. [24.2] Mr Simeza SC pointed out that the Plaintiff sat on his rights following the discharge of an injunction under cause No 2012/HP/ no further steps were taken to refrain the sale of the properties. Even though that may be the case, the fact is the 2nd and 3rd Defendant were invalidly appointed. This means they had no power to convey any prope1iy of TSBL. [24.3] In the circumstances of this case, having declared the third party as a bona fide purchaser for value without notice, I decline to grant an Order for vacant possession and delivery of the suit land Stand No. MAT 194, 345 and MAT 346, Lusaka. J89 I Page The claim fails . (25.0) An Order for return of the brewery equipment valued at ZMW2,000,000.00 by the 1st Defendant as of 5th October 2007 with interest. [25.2] The Plaintiff seeks an order for return of the brewery equipment valued at ZMW2,000,000.00 by the I st Defendant as of 5th October 2007. [25.3] The brewery equipment was part of the floating debenture dated 5th June 2005. There is no evidence led by the Plaintiff that the brewery equipment was valued at ZMW2,000,000.00. A valuation report would have been useful. In any case, the Plaintiff is not entitled to claim the brewery equipment which belonged to TSBL. The claim is without merit and fails. (26.0] An Order for payment of business value of ZMWl 02,600,000.00 by Pt, 2nd and 3rd Defendants based on the projections submitted to the 1st Defendant by the Plaintiff (TSBL) the basis on the facility letter dated 5th October 2007 was approved. [26.1] The Plaintiff seeks an Order for payment of business value of ZMW102,600,000.00 by Pt, 2nd and 3rd Defendants based on the projections submitted to the 1st Defendant by the Plaintiff (TSBL) the basis on the facility letter dated 5th October 2007 was approved. The said projections appear at page 44 of the Plaintiffs amended bundle of documents). J90 I Page [26.2] From the relief sought, the Plaintiff claims a liquidated amount of ZMW102,600,000.00. The Supreme Court in the case of Damales Mwansa v Ndola Lime Company Limited < 34> defined liquidated damages as follows: "damages which have been agreed between the contracting parties in advance of any breach of contract. They are not equivalent of compensation, rather they form an acceptable and agreed alternative to compensation. The amount agreed needs to be a genuine estimate of what loss is likely to be, but in the event that amount could be, indeed is likely to be, either greater or less than the actual loss" [26.3] I find there is no independent verification of the said projections nor was any evidence led to justify the amounts stated in the projections. In any case projections are merely indicative and a further forecast with assumptions which could be right, exaggerated or even wrong. [26.4] I find the Plaintiff has not tendered any evidence and I cannot merely rely on projections without any independent corroborating evidence. Importantly, is the fact that the Plaintiff is not entitled to payment of the business value of TSBL as a director and shareholder. [26.5] It is for the above reasons that I decline to award the payment of business value of ZMW102,600,000.00 as these are special damages which should have been specifically pleaded and secondly cannot accrue to an individual director and shareholder. The claim is without merit and is dismissed. J91 I Page [27.0] An Order for general damages for conversion and trespass by the ist, 2 nd and 3rd Defendants. [27. l] The Plaintiff seeks an order for general damages for conversion and trespass by the 1 si, 2nd and 3rd Defendants. Trespass is a wrong to actual possession. In Black's Law Dictionary, trespass means an unlawful act committed against the person or property of another especially wrongful entry ton another's real property. In Salmond and Heuston on the Law of Torts, 21 st Edition, London Sweet and Maxwell 1996 at page 40, trespass is defined as follows: " (1) Entering upon land in the possession of the Plaintiff; or (2) Remaining upon such land,· or (3) Placing or projecting any object upon it- in each case will be unlawful justification and more generally as the unjustifiable inte,ference with the possession of land. " [27.2] In this case TBSL was possessor of the goods at the material time. There was an invasion of actual possession. I take judicial solace in the case of McClearly v McPhillips < ) where Peter Gibson LJ aptly summed up the consequences of an invalidly appointed receiver as follows: "The wrongful taldng of control of intangible assets by an invalidly appointed receiver leading to loss which but for the receivership would have been avoided ought to have consequences in law. " J92 I Page [27.3] A receiver who is not appointed in accordance with the terms of the debenture is not validly appointed, and consequently may be a trespasser on TSBL property. Since the 2nd and 3rd Defendant's appointment as receivers/managers was invalid, they can be found liable for damages for trespass and conversion as there was no justification in taking possession of TSBL's assets without giving sufficient notice of their intention. [27.4] Mr Katolo submits the activities and functions of the two receivers/managers throughout the years from J 7th October 2007 is a trespass to TSBL and the two should be found liable for trespass and conversion for trespassing on the company's property and disposing of real property and machinery. In this regard, I accept the submission posited by Mr Katolo's that a director or shareholder can bring an action on behalf of TSBL and the repealed Companies Act Cap 388 of the laws of Zambia had no provision for a derivative action hence the present action by the Plaintiff. [27.5] In response, Mr Simeza SC submits the Plaintiff as an individual is not entitled to any damages for trespass or conversion. [27.6] As earlier stated, the Plaintiff was allowed to bring this action as a shareholder and director of TSBL as aptly described in the amended statement of claim. In my view, the Plaintiff is exercising his residual powers as a director by bringing this action. [27.7] The wrongful taking of control of assets by an invalidly appointed receiver leading to loss which but for the receivership would have been J93 I P .i g e avoided ought to have consequences in law. An invalidly appointed receiver/manager may be a trespasser on the property in question. [27.8] However, the issue is whether the Plaintiff can seek damages for trespass on behalf ofTSBL on the basis he is a shareholder and director. I find it is TSBL that has suffered. [27.9] In the circumstances of this case, it is difficult to award any damages to the Plaintiff for trespass and conversion by the 2nd and 3rd Defendant. [27.10] For the foregoing reasons, I decline to award damages for trespass and conversion to the Plaintiff. The claim fails. [28.0] An Order for aggravated, punitive and exemplary damages of ZMWS,000,000.00. [28.1] The Plaintiff seeks an Order for aggravated, punitive and exemplary damages of ZMW5,000,000.00. [28.2] Damages are awarded for the invasion of rights to tangible immovable or movable property and are intended to provide compensation for loss. Damages are designed to compensate the Plaintiff for losses they have suffered. Paragraph 1174 of Volume 9 of Halsbury's Laws of England, 4th Edition states that - "In cases of breach of contract, the contract breaker is responsible for resultant damage which he ought to have J94 I Page foreseen or contemplated when the contract was made as being unlikely. " [28.3] On the other hand, exemplary damages are punitive damages and they are awarded in addition to actual damages when the Defendant has acted with recklessness, malice or deceit. The purpose of exemplary damages is to punish wrongdoers for conduct, which, in some cases, is referred to as contumelious or highhanded disregard of a claimant's rights or behavior described as arrogant, flagrant, oppressive or outrageous. It is also made to act as deterrence against potential offenders. [28.4] In discussing exemplary damages, Lord Devlin's cautions in Rookes v Barnard <35 > against awarding such damages save in cases where compensatory and aggravated damages were insufficient punishment for the defendant's outrageous conduct. The Judge explained that his substantial award of exemplary damages was intended. to address the following five concerns: l. that the court will not condone a clear violation of the rule of law that requires a debenture-holder to give reasonable notice; 2. that the court will not condone an abuse of its process for commercial advantage; 3. that because no crime had been committed, no other form of punishment was available; J95 I Page 4. that the bank's conduct caused grave and irrevocable consequences to the business of its client; 5. that courts are entitled to expect honest behaviour from the major chartered banks. [28.5] Aggravated damages serve a compensatory function. This was discussed in the case of Times Newspapers Limited v Kapwepwe <36> where the Supreme Court held that the law in Zambia relating to exemplary damages should be the law as it was understood in England before Rookes v Barnard <35>, namely that exemplary damages may be awarded in any case where the Defendant has acted in contumelious disregard of the Plaintiffs rights. Instructive is the case of Roland Harrison v The Attorney General <37> where the Supreme Court held: " In Zambia, exempla,y damages maybe awarded in any case where the Defendant has acted in contumelious disregard of the Plaintiff's rights. " [28.6] I respectfully agree that compensatory damages should take into account the whole of any aggravating conduct of the Defendant, and that only if such compensatory damages are insufficient to punish a paiticular Defendant should a further sum be awarded as punitive or exemplary. [28.7] Having set out the law and principles on damages, what evidence has been presented by the Plaintiff to support his claim for punitive, J96 I P r1 g e exemplary and aggravated damages? To obtain punitive damages, the Plaintiff should demonstrate to this Court the 1st 2nd 3rd 5th 6th ' ' ' ' Defendants and Intervener's wrongful conduct was deliberate or resulted from gross negligence or even malice. [28.8] The Plaintiff seeks the liquidated sum of KS0,000,000.00 as damages. Liquidated damages are an amount that is a pre-estimate of the loss likely to be caused or suffered by one party where a contract has been breached by the other party. The non-defaulting party is entitled to recover in the event of breach without being required to prove actual damage. [28.9] The issue is whether the Plain ti ff can in the circumstances of this case be granted aggravated, punhive and exemplary damages of ZMWS,000,000.00. [28.10] It is clear the 1st Defendant violated the terms of the debenture by its failure to give reasonable notice to the borrower TSBL. The Court will therefore not condone an abuse of its process for commercial advantage and the I st Defendant should not benefit from its wrong. The 1st Defendant's conduct caused grave and irrevocable consequences to the business of TSBL or whatever was left of it. Again the conduct is towards TSBL and not the directors and shareholders. [28.11] For the above reason, I decline to award aggravated, punitive and exemplary damages to the Plaintiff. J97 1 P a g e [28.12] The claim for aggravated, punitive and exemplary damages in the sum of ZMW5,000,000.00 fails. [29.0] An Order for damages for pain mental anguish and suffering by the directors and shareholders of the TSB in the sum of ZMW 5,000,000.00 [29.1] The Plaintiff further seeks an Order for damages for pain mental anguish and suffering by the directors and shareholders of the TSB in the sum of ZMW5,000,000.00. Mental distress or inconvenience are not recognized heads of tort but are heads of damages that are recoverable after a party has proved liability for a tort or breach of contract. Hence one cannot claim them without first proving the commission of a tort or the breach of a contact as espoused by the Supreme Court in the case ofSinyangwe v Barclays Bank of Zambia Limited and Others < 38>. [29.2] In the case of Attorney-General v D G Mpundu < ) where the Supreme Court relied on the case of McCall v Abelesz and Another <40> where it was held that: "It is now settled that the court can give damages for mental upset and distress caused by the defendant's conduct in breach of contract. " [29.3] In the present case, the claims by the Plaintiff are for damages for mental distress and inconvenience arising from the I 51, 2nd and 3rd Defendants action placing TSBL in receivership a company where the Plaintiff is a shareholder and director. J98 I P age [29.4] It is apparent the Plaintiff has suffered mental anguish and inconvenience as the 2nd and 3rd Defendants were invalidly appointed as receivers of TSBL. In my view, this is sufficient enough to award damages for mental stress and inconvenience occasioned by the I st Defendant's action. [29.5] Mr Simeza SC contends that one cannot make a liquidated claim in a tortious action. This is in consonant with the pronouncement of the Supreme Court in the case of Emmanuel Mponda v Mwansa Christopher Mulenga and Others < > cited by Mr Simeza SC. Mr Simeza SC where it was held that: "It is a matter of elementa,y lrnowledge indeed that the type of damages which are awardable on account of any unproven tortious wrong or wrong are of the second type, that is unliquidated damages. Needless to say, unliquidated da,-nages are unspec[fied and, are therefore, subject to assessment or establishment or fixing by the court. Arisingfrom the foregoing, it was patently wrong and irregular for the appellant to have specified or pre-estimated or fixed the amount of damages which he was seeking to record his action founded in tort. " [29.6] From the cited excerpt, it is patently wrong and irregular for the Plaintiff to have made a pre-estimation of the quantum of damages. In that respect, the claim is clearly misconceived. [29.7] However, since the receivers/ managers were invalidly appointed, I award nominal damages for pain, mental anguish and suffering to the J99 I P 1:1 g e Plaintiff in the sum ofK35,000.00 to express my disapproval of the is1 Defendant's conduct as it had a responsibility to ensure the requirements and processes under the debenture were complied with. The impact has been far reaching to a company such as TBSL notwithstanding they are still indebted to the 1st Defendant. To that extent the claim succeeds. [29.8] In respect to the other directors and shareholders, I find it inconceivable for the Plaintiff to make a claim on behalf of the other directors and shareholders as the type of claim is in personam and therefore restrictive in scope. [29.9] For the reasons stated above, I decline to grant an Order for damages for the claimed sum of ZMW5,000,000.00 for pain mental anguish and suffering to the directors and shareholders of TSBL. To the extent stated the claim succeeds. [30.0) As against the 7th Defendant an Order for damages for breach of duty of care and professional negligence arising from the failure to safeguard the title deeds in respect of l\1AT 345 and MAT 346. [30.1] The Plaintiff claims as against the 7th Defendant an Order for damages for breach of duty of care and professional negligence arising from the failure to safeguard the title deeds in respect of MAT 345 and MAT 346. J100 I rage [30.2] This claim is redundant following the filing of a Consent Order between the Plaintiff and 7th Defendant. [31.0J Interest on any amount found to be due [3 l. l] The Plaintiff seeks interest on any amount that may be found due. Having awarded nominal damages for mental anguish and suffering to the Plaintiff, interest shall accrue at 6'% per annum from date of writ of summons until full payment. [32.0] Costs [32.1] Costs are awarded at the. Court's discretion. In casu, I award costs to the Plaintiff against the against the JS\ 2nd , 6 th Defendants and , 3 rd Intervener. The Plaintiff shall pay the 5th Defendant's costs. [33.0] Conclusion and disposal [3 3 .1] On a balance of probabilities, the Plaintiff has proved its case against the Defendants to the extent stated. I Order as follows: (i) r decline to grant a declaration that the substantive agreement in place and enforceable between the 1st Defendant and the Plaintiff (Top Star Breweries Limited) is the facility letter dated 5th October 2007 and not any other agreement against Top Star Breweries Limited including the purported floating debenture pursuant to which the 2nd and 3rd J101 I P Jg e Defendants were appointed as joint Receivers and manager of Top Star Breweries Limited (in Receivership). {ii) I grant a declaration and order that the placement of Top Star Breweries Limited into receivership by the 1st Defendant without any event of default following the restructuring of the facilities was in-egular and null and void. (iii) I decline to grant a declaration that the appointment of the 2nd and 3nJ Defendants as joint Receivers and manager executed on 17th October 2007 without the 1st Defendant's seal is null and void. -(iv) I grant an Order that the purported appointment of the 2nd and 3 nJ Defendants by the 1st Defendant as receivers/managers for Top Star Breweries Limited was a nullity and null and void ab-initio. (v) I decline to grant a declaration that the advertisement by the 5th Defendant for the sale of Top Star Breweries properties was done without authority and therefore null and void as it is without merit. (vi) I decline to grant an Order for damages for ZM\Vl 5,000,000.00 for advertisement of Top Star Breweries Limited (In Receivership) by the 5th Defendant. The same is misconceived and without merit. (vii) I grant a declaration that the erasure of Top Star Breweries Limited a title holders and mortgagors of Stand No MAT 194 and the inserting of J102 I Pa g e the 2nd and 3rd Defendants as title holders and mortgagors on the same property was illegal, fraudulent and null and void. (viii) I grant a declaration that the conveyance of Stand No MAT 194 and 345 to the Intervener by the 2nd and 3rd Defendants was illegal, fraudulent and null and void. (ix) I grant a declaration that the Intervener is not a bona fide purchaser for value without any notice of defect whatsoever in obtaining the transfer of suit properties being MAT Stand 194, MAT 345 and MAT 346 from the 2nd and 3rd Defendants. (x) I decline to grant an Order cancelling any title issued to the Intervener and the 6th Defendant. (xi) I decline to grant an Order that the original land comprising Stand No. MAT 194, 345 and 346 be resurveyed and to be restored to its original boundaries within 30 days of this Order. (xii) I decline to grant an Order directing the 4th Defendant, the Commissioner of Lands and the Chief Registrar to reinstate the original entries on the land Register relating to Stand No. MAT 194, 345 and 346, Lusaka. (xiii) I decline to grant an Order for vacant possession and delivery of the suit land belong MAT Stand No. MAT 194, 345 and MAT 346, Lusaka. J103 I Page (xiv) I decline to grant an Order for return of the brewery equipment valued at ZMW2,000,000.00 by the 1st Defendant as of 5th October 2007 with interest as it is without merit. (xv) I decline to grant an Order for payment of business value of ZMWI 02,600,000.00 by 1st, 2nd and 3rd Defendants based on the projections submitted to the l st Defendant by the Plaintiff (TSBL) the basis on the facility letter dated 5th October 2007 was approved. It is ( without merit. (xvi) I decline to grant an Order for general damages for conversion and trespass by the I 5 ', 2 nd and 3rd Defendants. (xvii) I decline to grant an Order for aggravated, punitive and exemplary damages of ZMW5,000,000.00. (xviii) I decline to grant an Order for damages for pain mental anguish and suffering by the directors and shareholders of the TSBL in the sum of ZMWS,000,000.00. In its place, I award nominal damages in the sum of K35,000.00 to the Plaintiff for pain mental anguish and suffering. (xix) I decline to grant an Order against the 7th Defendant an Order for damages for breach of duty of care and professional negligence arising from the failure to safeguard the title deeds in respect of MAT 345 and MAT 346. The same was settled through a Consent Order. J104 I Page (xx) I award interest under (xviii) at 8% per annum from date of writ until full payment. (xxi) Costs to the Plaintiff against the Pt, 2nd , 3rd , 6th Defendants and Intervener. Costs awarded to the 5th Defendant against the Plaintiff. The same to be taxed in default of agreement. Leave to appeal granted. ( Delivered under by hand at Lusaka this 28th day of February 2023 HIGH COURT JUDGE J105 I Page