Bethel Baptist Church v Evans Ngubai (APPEAL NO. 145/2017) [2018] ZMCA 602 (4 October 2018)

IN THE COURT OF APPEAL FOR ZAMBIA APPEAL NO. 145/2017 HOLDEN AT LUSAKA (Civil Jurisdiction) BETWEEN: BETHEL BAPTIST CHURCH APPELLANT AND EVANS NGUBAI RESPONDENT CORAM: Mchenga DJP, Mulongoti and Lengalenga, JJA On 24t h April 2018 and 4 th October 2018 F or th e Appellant: Mr. H. Chizu, Chanda Ch izu & A ssocia tes For the R espondent: Mr. M. L. Mukande, M . L. Mukande& Co. JUDGMENT MULONGOTI,JA, delivered the Judgment of th e Court Cases referred to: 1. Mazoka v. Mwanawasa (2005} ZR 138 (SC} 2. Mbewe v Mwanza (2012} ZR 87 3 . Gilcon Zambia Limited v Kafue District Council and another SCZ Appe~No. 10/2010 4. Hilda Ngosi (suing as administrator of the estate of Washington Ngosi) v The Attorney General and another SCZ Appeal No.145 / 2010 5. Nkata and others v Attorney General (1966) ZR 124 (SC) 6. William Masautso Zulu v Avondale Housing Project Ltd (1982) ZR 172 (SC} 7. Attorney General v Marcus Achiume ( 1982) ZR 1 (SC) 8 . Frank Malichupa v Tanzania-Zambia Railway Authority (2008) 2 ZR 112 (SC) 9. Raphael Ackim Namang'andu v Lusaka City Council {978) ZR 358 (H. C\ This is an appeal against the Judgment of the High Court dated 28th April, 2017 which found that the appellant built a house on a piece of land, namely, Stand No. P74/ 1C5 (the property), th at did not belong to it, at its own peril and that the respon dent was an innocent purchaser of the property for value . At this stage, it is n ecessary to say a little about the background of this appeal. Th e respondent was employed by Kafue Textiles Zambia Limited (KTZ), in 1980 and occupied the property as an incident of his employment from 1996. Sometime in March 2004, the respondent and other employees were retrenched following the J2 decision to privatize KTZ. The house on the property which the respondent occupied was listed as one of the assets of KTZ transferred to Zambia Privatization Agency (ZPA) for sale purposes. The respondent was later offered the property by the government to purchase at a price of K44 ,550.00, which was subsequently reduced to K9,000.00, on 15th March 2016 following government intervention. The respondent accepted the offer and paid towards the purchase price. Prior to the respondent's occupation of the house, the appellant had a pplied for a plot to build a house for its pastor in 1971. It was allocated the property in question by INDECO and completed constructing the house in 1972 and one of its pastors took occupation. When the pastor was transferred in 1979, the appellant entered into an arrangement with KTZ to let the house to the company (KTZ) . Later , the a ppellant sought to yield vacant possession of the house for it to be occupied by one of its pastors. The appellant, however, ended up with another arrangement with the compa ny where it allowed the company to use the house as a guest house while the company rented a nother for the a ppellant's J3 pastor. The appellant out rightly stated that it had been allocated the property by INDECO under the mistaken belief that the property did not belong to anyone. There is also a series of correspondence on record showing that the INDECO admitted that it erroneously allocated the property to the appellant. Notably, the printout of the Lands Register shows that the property was not at any time registered in the name of the appellant. There is also correspondence showing that the company wrote to the appellant on 30th March, 2005 attempting to allocate another house to the respondent and have him vacate the property. Several attempts were made to remove the respondent from the house by the company. This prompted the respondent to seek legal redress. He sued the company as 1st defendant and the appellant as 2 nd defendant in the High Court seeking a declaration that the decision by the company to re-locate him to another house was wrongful, null and void and a declaration that he was lawful te nant of the house and was entitled to purchase it. J4 The trial court found that the appella n t built a house on land that did not belong to it and negotiations to r ectify the anomaly failed. That the app ellant was m isled by INDECO into believing that it had been properly granted a piece of land and the agreem ent of mutuality of an honest m istake does not aid the appellant's case. The agreement to rent th e house by the company from the appellant was pur ely on th e understanding that the appellant erected the h ouse bu t there was no transfer of ownership of th e property to the appellant. The trial court concluded by stating that the respondent was an innocent purchaser for value. Accordingly, J u dgmen t was entered in favour of the respondent with costs to be taxed in default of agreement. The appellant, in dissatisfaction of the High Court Judgment lodged an appeal to this Court and raised the following grounds of appeal: 1. The court below erred in fact and law by holding that the appellant had constructed a house on a piece of land that did not belong to it and the anomaly was not regularized regarding the transfer of the piece of land thereby disregarding the historical background of the issue as supported by the evidence on record. JS . ., l • • 2. The court below erred in law by disregarding the 1st defendant's pleadings which confirmed that the appellant had been recognized as the legal owner of the property known as P74/ 1 CS. 3. The court below misdirected itself by ignoring the appellant long vested interest in the propertyand instead re lied on the offers and documents which were created after the court matter had commenced. 4 . The court below misdirected itself in law and fact by holding that having received and accepted an offer to purchase the house by the owner, the plaintiff as a sitting tenant, had a sitting claim that superseded that of the appellant over the house in issue. 5. The court below erred in law by deciding that the plaintiff was an innocent purchaser for value who was entitled to complete the conveyance with the seller while disregarding the appellant's interest. 6. The court below erred in law in failing to adjudicate on the issues of counter-claim and compensation of the appellant for the house it built when the Government which the court has recognized to be the owner of the land had also been made a party to proceedings. In support of the grounds of appeal, the appellant filed Heads of Argument. Mr. Chizu, who appeared for the appella n t, argued in grounds one to four that the pleadings which were in the court below and specifically from Kafue Textiles Zambia Limited (KTZ)'s defence and correspondence show that th e appellant was entitled to the house J6 notwithstanding the fact that at time of privatization KTZ's title had not yet been separately issued to the appellant. It is argued that the history of the house clearly favours the appellant and KTZ recognized it as the owner. By the time the respondent was being allocated the house, the appellant who had built it in 1971 had a strong interest and affinity connection to it. Therefore, th e letter s of offer of 2014 and 2016 came after the facts upon which the dispute had already been brought to court. It was the very reason why the respondent sued so that the Court could determine whether he was entitled to be offered or not. This was an issue for determination by the Court as at the time of instituting the action. The respondent's pleadings were never amended to accommodate the new turn of events. The case of Mazoka v. Mwanawasa 1 was relied upon that: "The function of pleadi ngs, is to give a fair notice of t he case which has to be met and to define the issues on which the court will have t o adjudicat e in order to determine t he matters in dispu te betwee n J7 the parties. Once the pleadings have been closed, the parties are bound by their pleadings and the court has to take them as such". Thus, the Court erred and allowed the respondent to depart from the pleadings despite an objection by the appellants. The offer, acceptance and payment of the house came well after the appellant had shown that it was the ligitimately interested party in the house since 1971. The Court failed to appreciate that while KTZ was still in existence, it had never offered the house to the respondent for purchase and that at sometime KTZ rented a house for the appellant's pastor in exchange for the house in question. The swapping of a house for the pastor, is what led the respondent to take advantage and claim to be a sitting tenant thereby displacing the appellant. The respondent also took advantage of the privatization of KTZ to consolidate his stay in the house KTZ was renting from the appellant. Thus, the decision to deprive the appellant of the house they had built and giving it to the respondent was tantamount to unjust enrichment of the respondent and a clear misapprehension of facts by the trial court. J8 It is further argued that the respondent in fact gave untrue statement concerning the scheme of arrangement as there is nowhere in the scheme of arrangement where it stated that 50% of employment benefits would go towards the house . Ground five was argued on the basis that the respondent was not an innocent purchaser for value without notice as held by the trial court. The respondent was very much aware of the appellant's interest in the house and of the dispute over it which had even led h im to proceed to court. The case of Mbewe v Mwanza2 , was cited as authority on the doctrine of bonafide purchaser for valu e without notice as follows: "the first requirement is that a purchaser needs to satisfy or prove that h e acted in good faith. Any sharp or unconscionable condu ct may forfeit the privilege of a purchase r i n the e yes of equity in accordance with the general principles. The second requirement is that the person relying on the plea must be a purchaser for value. The words ''for value" are included to show that value must be given because ''purchaser" in its technical sense does not necessarily imply this. Value does not necessarily mean full value. It however means any cons iderat ion in money or money worth. The third requirement is that "of a legal estate". This e lement is very important b e cause the immunity from equity enjoyed by the J9 purchaser without notice is founded on equity's differences to the legal estate. The last requirement relates to notice. This is the most difficult and perhaps most controversial requirement to fulfil. There are three kinds of notice. Actual, constructive and imputed notice. First, a person be regarded as having notice of fact not because he knows it, but because of legal purposes he is taken to know it. Second, purchasers are required to inquire about equitable interest with no less diligence than about legal interest, which they ignore only at their own peril". In counsel's view, th e respondent failed to meet the requirement of having h a d no notice of the adverse interest by the appellant. He knew of the appella nt's historical equitable and legal interest in th e property. In ground six it is contende d that it was made clear by th e respondent's a dvocates in the court below, th at the government was a n interested party. A consent order joining the government to the case was executed and filed on 22nd July, 20 16 a nd signed by the trial Judge on 9 th November, 20 16. JlO The government should therefore, be ordered to compensate the appellant should we uphold the Judgment of the court below. The respondent also filed Heads of Argument. Mr. Mukande SC, who appeared for the respondent, argued in ground one that the trial court properly identified ownership of the property number 7 4 / 1 C5 as the issue for determination. It is counsel's opinion that reference to historical facts is irrelevant. The appellant conceded that the house was built on a land belonging to KTZ the respondent's former employer. The appellant do not, in their arguments state who gave them the plot. They also failed to adduce any evidence of consent from KTZ for them to build the house on its land. It is the further submission of State Counsel that there is no dispute that before construction of the house that by letter dated 18th October, 1971 a request was made on behalf of the appellant, to KTZ for surrender of a portion of the land to the church (appellant) for construction of their pastor's residence. However, Jll before approval could be given, the appellant embarked on construction. On 8 th January, 1988 KTZ wrote to the app ellants that: "Since no proper authority exists the house should be regarded as KTZ property". Consequently, the construction of the house withou t consent of KTZ was not only wr ongful, but illegal. Then in 1995 the appellant th ought they could circumvent the need for approval by applyin g for the same plot through INDECO as per letter at pages 6 1 and 62 of the Record of Appeal. INDECO had no locus standi in the matter, a fact they acknowledged. And that th ough INDECO a ppeared sympathetic to the appellant's dilemma, th ey a lso acknowledged in 1990 that the plot in issue was part of the land belonging to KTZ. In 1996 KTZ again reminded the appella nt that the transaction required board approval even after privatization. To date no approval has been obtained. The trial Judge took note of this and h eld that INDECO h ad no a uthority to a llocate titled land of a third party to another without their consent. J12 It is contended that in the above circumstances the issue of history does not favour the appellants at all. That even as late 2002, INDECO were still on their knees p leading their (appellant's) case with KTZ as the letters in the Record of Appeal reveal. It is submitted that ground two is tantamount to asking for a ride from a dead horse . According to counsel KTZ was by 2004 privatized and its assets and liabilities move d to ZPA for final disposal, a s held by the trial court: "At that point, the 1st defendant, as Kafue Textiles Limited, had ceased to exist and could not therefore; make any decisions through its former Chief Executive Officer in relation to the property of the company. It is also interesting to note that when the 2 nd defendant wrote to the Ministry of Finance to ask Government to revoke or cancel the offer to the plaintiff, there was no response implying that the Government was either not satisfied with the explanation or it was not sympathetic with the 2 nd defendant's predicament". According to the document on record, the process of privatizing the 1st defendant started towards the end of 2003 and by 31 st March, 2004, the employees were written to and told that they were all J13 being re trenched as there was going to be privatization. Inevitably, an inventory of it s assets was compiled and submitted to the Zambia Privatization Agency, the entity created and responsible for privatizing all Government owned entities includi ng the 1st defendant which was a parastatal entity". Thus, KTZ management had no authority to transfer assets of the company without authority from ZPA. Therefore, the actions of the caretaker manager of KTZ to attempt to transfer the property to the appellant were illegal and also yielded nothing. The caretaker manager intended to deprive the respondent of the right to purchase the property as a sitting tenant but was ignored by the Ministry of Finance and the house was sold to the respondent. The respondent was therefore a bona fide sitting tenant by virtue of employment with KTZ. Learned counsel argued grounds three, four and five together. Counsel stated that the trial court posed pertinent questions such as the one at page J 10 that: "does the developing of land that belongs to another on a m istaken belief that the owner has granted consent give rise to legal J14 t alienation of that piece of land to the developer by the owner? The answer to the question resolved the dispute". As determined by the trial court a lienation of land in Zambia is strictly controlled by legis lation. Additionally, that if the procedure is not followed, the wh ole transaction is null and void ab initio. And th at the offer to purch ase extended to the respond ent by the government is legitimate and backed by th e law. Accordingly, grounds thr ee to five are u n ten able and be d ismissed. In grou nd six, it is submitted that the whole counter-claim h inged on an illegality. It was pointless for the tr ial cour t to itemize rejection on each of the claim s . Reliance was p laced on Gilcon Zambia Limited v Kafue District Council and another3 and another where it was held that: "where a claim has no reasonable ground of success, the court is at liberty under order 18 rule 19 sub rule 6 of the rules of the Supreme Court, to dismiss the claim summarily even if counsel is not heard". JlS It is argued, that in casu, the appellant have admitted the illegality. It was therefore , proper for the court to dismiss the counter-claims without hearing counsel. It was the further submission of counsel that though the trial court spoke of the government, compensating the appellant for the loss, such compensation would be ex-gratia as there would be no legal basis for it. The Supreme Court decision 1n Hilda Ngosi (suing as administrator of the estate of Washington Ngosi) v The Attorney General and another4 was relie d upon that: "the 2 nd respondent was comp licit and was to a greater ex tent the author of its own misfortune as it participated actively i n the scheme to dispossess the appellant of her land. Any developments carried out by the 2 nd respondent were obviously u ndertaken at the 2 nd respondent's own risk and cannot b e compe nsated fo r by the appellant". Counsel observed that the appellant was advised by KTZ way back in 197 1 that Board approval was required for the transaction but J16 , '. they ignored it. Their cry is self-inflicted and they cannot be compensated for self-inflicted wounds. We have considered the arguments and Judgment appealed against. As we see it, the pertinent issue this appeal raises is whether title or ownership to the house in question had or can be passed to the respondent by virtue of the historical background and the fact that the appellant built the house in question, albeit on land belonging to KTZ. To put things in proper context we will consider grounds one to five simultaneously as they are interlinked. It was not disputed that the appellant built the house in question in 1972 albeit on the land belonging to KTZ. The land was erroneously allocated to the appellant by INDECO. Efforts by the appellant to obtain a title deed to the house proved futile. It was further not disputed that the J17 . I respondent was offered the house for purchase as an incidence of his employm ent. The trial Judge analyzed the facts and correctly identified the ownership of Plot P7 4 / 1 CS as the issue for determination. He found that the appellant constructed a house on a piece of land that did not belong to it . Furthermore, that there was no evidence that in due course, the anomaly was regularized as no transfer of the piece of land was made by the owner KTZ to the appellant. The trial Judge also observed that no certificate of title had been issued to the appellant in respect of the property and as such, no ownership devolved upon the appellant. Guided by the holding in Hilda Ngosi v The Attorney General and another4, the Judge concluded that "the appellant constructed the house at i ts own peril". We note that the Judge made these findings based on the facts before him. The appellant is essentially asking us to interfere with the findings of fact made by the trial court. It is settled law and authorities abound such as Nkata and others v Attorney General5 where the Supreme Court elucidated that: J18