Chilindo Investments Limited and Ors v Credit Management Services Limited (APPEAL NO. 164 OF 2002) [2004] ZMSC 139 (16 September 2004)

IN THE SUPREME COURT OF ZAMBIA- APPEAL NO. 164 OF 2002 HOLDEN AT KABWE AND LUSAKA (CIVIL JURISDICTION) BETWEEN: CHILINDO INVESTMENTS LIMITED 1st Appellant z. C. CHAFWA C. C. CHAFWA J. P. CHAFWA And 2nd Appellant 3 rd Appellant 4th Appellant CREDIT MANAGEMENT SERVICES Respondent LIMITED. Coram: Sakala CJ, Mambilima and Silomba JJS. On the 7 th August, 2003 and 16th September, 2004. For the Appellant Mr. G. Locha of D. H. Kemp & Company. For the Respondent Mr. N. Nchito of MNB Standing in for Mr. K. M. Simbao of Mulungushi Chambers. JUDGMENT Mambilima JS, delivered the Judgment of the Court. Authorities referred to: I. Development Bank of Zambia and Peat Marwick vs Sunset Pharmaceuticals [1995-97] ZR 187. This is an appeal against the Ruling of the Court below, refusing to vary a Consent Order which the Parties to this appeal had executed. The Consent Order in question was signed and filed in the Court below on 18th April, 2000. It states, inter alia: "BY CONSENT of Parties, it is hereby ordered that the sale of the mortgaged property known as Plot No. 1645 Lusaka repossessed by the Plaintiff on 27th January, 2000 be stayed upon the defendant making an under taking to pay a sum of K30,000,000.00 at the execution of this order and thereafter to be making monthly payments of KS million on the 15th of each month, commencing 15th May 2000 until the debt of Kl07,736844.00 plus interest and costs is settled. If there shall be default in making any installment, the Plaintiff shall be at liberty to sell the foreclosed property without leave of Court". The Consent Order was signed by Mrs. Justice E. N. C. Muyovwe. The record of proceedings in the Court below shows that Mrs. Justice E. N. C. Muyovwe was first seized with this matter in March 1999. The Respondent, through an Originating Summons had applied for various remedies under an equitable mortgage which included an Order for possession and foreclosure. These proceedings culminated in the Consent Order referred to above. In March 2001, the Appellants applied to vary the Consent Order and to Stay Execution of Judgment. At the hearing of the application on 25th June, 2001 before Justice Muyovwe, Counsel for the Appellants submitted that the question of interest had not been agreed upon. He contended that since the Respondent was not a registered financial institution, it could not charge compound interest. The Judge Ordered that the question of interest be resolved by way of mediation. A Stay of Execution was granted pending the determination of the matter. It is not clear from the record whether the matter did, in fact go for mediation as it was listed for hearing again before Justice E. N. C. Muyovwe on 5 th March 2002, and on that date, it was adjourned to 25 th March 2002 due to the absence of the Appellants' lawyer. There are no proceedings for 25 11 1. March 2002 on record but the case appears to have changed hands because Mr. Justice T. K. Ndhlovu sat to hear it on the 23ni of September 2002 and on 2n° October 2002. The Respondent prayed for the discharge of the Order of Stay of Execution which was granted. On 3 rd October 2002, the Appellants argued the application to vary the Consent Order before Justice Ndhlovu.. The Respondent objected to the application on the ground that a Consent Order can not be varied unless fraud, or illegality or mistake are established. The Judge agreed with this submission. He dismissed the application upon finding that the applicants did not refer to any element of fraud, mistake or illegality to justify interference with the Consent Order. It is against this Ruling by the Judge that the Appellants have appealed to this Court. In their Memorandum of Appeal, the Appellants had advanced five grounds of appeal but at the hearing of the appeal however, Counsel for the Appellants informed us that they had abandoned grounds three and five, leaving the first, second and fourth grounds of appeal. Counsel argued the first and second grounds of appeal together, and the fourth ground of appeal in the alternative. The first two grounds of appeal are that: 1. The Court below erred in law and fact by re-hearing de novo the consent Order dated 1sth April 2000 as the same was resjudicata, the issues in respect of the said application had been determined by another Court with equally competent jurisdiction and it had earlier Ordered that the Appellants, having paid the Principal sum of KS0,000,000.00, the issue of interest should be determined by way of mediation between the parties hereto and that execution of Judgment be stayed until determination. 2. The Court below erred in law and fact by re-hearing de novo the application to vary the Consent Order aforesaid and dismissing the Appellants' purported application in that such dismissal was tantamount to the review and/or setting aside of an order, ruling, decision and/or judgment made by a Court with competent jurisdiction by another with the same jurisdiction." In support of these two grounds of appeal, Mr. Locha, in his written heads of argument which he augmented with oral submissions, contended that the application to vary the consent order had already been heard by another Judge of the High Court with the same jurisdiction. He argued that since Judges of the High Court have equal jurisdiction, none of them can vary or review a Judgment or Order made by a fellow Judge of the High Court. Mr. Locha referred us to the proceedings on page 89 of the record of appeal showing that the earlier Judge had sent the matter for mediation. He submitted that there is no indication on the record, to show that the parties went before a Mediator. He stated further that there is no record as to how the matter went before the second Judge. He argued that by rehearing the application which was before another Judge, the second Judge reviewed the decision of another Judge, which he had no power to do. He submitted further that the action by the second Judge brought about the problem of the same Court giving conflicting decisions. According to Mr. Locha, the first Judge upheld the application to vary the Consent Order while the second Judge refused it. In his view, if the action by the second Judge is upheld, it will open the floodgates. He relied on our decision in the case of Development Bank of Zambia and Peat Marwick vs Sunset Pharmaceuticals( 1) in which we discouraged the practice of commencing a multiplicity of actions. Mr. Locha urged us to quash the Ruling by the second Judge. The fourth ground of appeal states: "Without prejudice to the contents of the preceding grounds of appeal and assuming that the court below had competent jurisdiction to re-hear de novo the Appellants purported application to vary the consent Order aforesaid, the said court erred in law and fact by dismissing the said application in that there was ample evidence on record showing that there was justification for interfering with the Consent Order because the Appellants entered into the loan Agreement to be advanced the sum of KS0,000,000.00 by the Respondent under the assumption that the latter was a registered financial institution under the Banking and financial services Act, 1995, and the Respondent not then being so registered and without the knowledge of the Appellants, they were under a fundamental mistake. Therefore, the said consent Order could be interfered with by way of Variation by the Court below. Mr. Locha submitted that even if it is assumed that the trial Judge had power to review, he erred when he refused to vary the Consent Order because there was ample evidence to show that the Appellants were under a mistaken belief that the Respondent was a registered financial institution. According to Mr. Locha, had the Judge addressed his mind to this fact, he would not have arrived at the decision he did. Mr. Locha conceded that a Consent Order can only be interfered with where elements of fraud, illegality or mistake are established. He argued however, that in this case, there is evidence on record to show that the Respondent was not a registered financial institution at the material time. He went on to state that the Appellants were under a mistaken belief that the Respondent was a registered financial institution which could lend and charge interest accordingly. He prayed that the Order made by the Court below should be set aside with costs and that the Order made by the first Judge on 25th June, 2001 be restored and the matter be referred to mediation. In reply, Mr. Nchito referred us to page 93 and 94 of the record of appeal and submitted that the application to vary the Consent Order before the second Judge was made by the Appellants themselves. He pointed out that after the first Judge had referred the matter to Mediation, which failed, the Apellants pursued the application for variation. Mr. Nchito also relied on Mr. Simbao's written heads of argument. Replying to the first two grounds of appeal, Mr. Simbao in his written heads submitted that to interfere with the consent Judgment, there was need for all parties to agree or in the alternative, the Applicant had to prove fraud, deceit or a mistake. On the 4 th ground of appeal, Mr. Simbao submitted that the question of the Respondent's status was fully addressed before the signing of the consent Judgment. He referred us to his submission, in the lower Court on page 84 of the record of appeal in which he had stated that the Respondent was acting as an agent of the Government when it lent the money to the Appellants. We have considered the submissions by Counsel and the issues raised. The gist of the Appellants' argument in the first two grounds of appeal, is that Justice T. K. Ndhlovu erred when he heard the Appellants' application to vary the Consent Order because according to them, the said application had already been heard by Justice E. N. C. Muyovwe, From the record of appeal, it is evident that the Consent Order in question was signed and filed on 18th April, 2000. The application to vary the Consent Order was filed on 14ui March 2001. It was heard by Justice Muyovwe on 25th June 2001 in the absence of the Counsel for the Respondent. At that hearing, Counsel for the Appellants contended that the outstanding amount was with regard to interest and that the same had not been agreed upon. The Appellants further contended that the Respondent, not being a registered financial institution, should not have charged compound interest. The short Ruling by Justice Muyovwe was in the following terms: "Having heard the Counsel for the defence, I Order that the question on interest be resolved by way of Mediation. In the meantime, a Stay of Execution is granted to the Defendants until the matter is determined. Costs in the cause". It is common cause that there has been no mediated settlement. The contention by the Appellants in their application was with regard to interest. We do not get an impression from the Ruling by Judge Muyovwe that she granted the Order to vary the Consent Order with regard to interest. It is clear that the application was not considered and the Judge referred the matter to mediation. It is also evident from the record that the Apellants presented the application to vary the Consent Order before Judge Ndhlovu after the failure or lack of Mediation. He duly considered it and refused to grant the Order sought. The proceedings before Justice Ndhlovu cannot, by any stretch of imagination, amount to review of Judge Muyovwe's decision as she had not made any decision to vary the Consent Order. We find it odd that the Appellants could now argue that Justice Ndhlovu ought not to have considered their application when they are the ones who moved the Court to consider their application and no argument was advanced by them that the Judge was incompetent to hear it. On the alternative argument raised in the fourth ground of appeal, the gist of which is that the Appellants were under a fundamental mistake when they entered into the agreement because they believed that the Respondent was a registered financial institution under the Banking and Financial Services Act 1995, when in fact it was not; we have perused the record of proceedings in the Court below. This was one of the arguments raised on 22nd July 1999 before Justice Muyovwe. The proceedings for that day as reflected from pages 84 and 85 of the record of appeal show that Mr. Simbao, then representing the Respondent submitted, on the basis of affidavits which were before the Cour t that the party loaning the money was the Government and the Respondent was a mere agent; indeed, the agreement, a copy of which appears on page 13 of the record of appeal states inter alia: "THIS AGREEMENT IS MADE BETWEEN CHILtNDO INVESTMENTS LTD. REPRESENTED BY ZIZWANI c. CHAFWA P. o. Box 37215, LUSAKA OF THE FIRST PART, HEREINAFTER TO BE CALLED "THE DEBTORS,, AND THE GOVERNMENT OF THE REPUBLIC OF ZAMBIA REPRESENTED BY CREDIT MANAGEMENT SERVICES LTD., P. O. BOX 80468, KABWE HEREINAFTER TO BE CALLED " THE AGENCY" OF THE SECOND PART", The Consent Order was executed on 18t h April, 2000> long after the submissions of 22nd July 1999. As a t that date therefore, the parties were agreed on all issues in contention including the status of the Respondent as a financial institution. It is trite law that a Consent Judgment can only be varied if it is shown that one of the parties acted under a mistake or can prove fraud or illegality. In the circumstances and facts of this case, the Appellant failed to prove any of these aspects. We cannot therefore fault the Judge in the Court below when he found that they failed to prove mistake, fraud or illegality to justify interference with the Consent Order. We find no merit in the whole appeal. It is dismissed with costs to be taxed in default of agreement. E. L. Sakala CHIEF JUSTICE. I. C. Mambilima SUPREME COURT JUDGE S. S. Silomba SUPREME COURT JUDGE ; f ■fltRIHtfttthi: tftJltff ltffflffJt I We find no merit in the whole appeal. I . t is dismissed with costs to be taxed in default of agreement. ~ •.:J-) \ u ; ) .., ----------------------------- E. L. Sakala CHIEF JUSTICE. ------------------------------ I. C. MambHima SUPREME COURT JUDGE ,~~ ------~------~ ---------------- S. S. Silomba SUPREME COURT JUDGE 12