Chuulu and Ors v Lumpa and Anor (Appeal 162 of 2013) [2016] ZMSC 250 (9 March 2016)

1 IN THE SUPREME COURT OF ZAMBIA HOLDEN AT NDOLA (CIVIL JURISDICTIOIV) APPEAL NO 16212013 SCZ/8/ 182/2013 BETWEEN: MONICA CHILALA CHUULU (cid:9) GODFREY MALWELE (cid:9) MARTHA MUSHYANI (cid:9) ESTHER PHIRI (cid:9) GEORGE SAKALA (cid:9) JOB MUKUKA (cid:9) AND 1ST APPELLANT 2ND APPELLANT 3RD APPELLANT 4TH APPELLANT 5TH APPELLANT 6TH APPELLANT CHRISTY LUMPA (Sued as Liquidator of UBZ Limited) (cid:9) DEMETRE VANGELATOS (cid:9) 1ST RESPONDENT 2ND RESPONDENT Coram: Mwanamwambwa, DCJ, Muyovwe and Hamaundu JJS, on the 2nd March, 2016 and 9th March, 2016 For the Appellants: (cid:9) Mr J. B. Theu, Messrs Mwansa Phiri and Partners For the 1st Respondent: No appearance For the 2nd Respondent: Mr C. Sianondo, Messrs Malambo and Company JUDGMENT HAMAUNDU, JS, delivered the Judgment of the Court Cases referred to: 1. Beatrice Meamui V Sylvia Chanda SCZ No. 50 of 2000 2. Frank Malichupa & Others V Tanzania Railways Authority (2008) Z. R (Vol. 2) 112 (cid:9) (cid:9) J2 3. Edgar Hamuwele (Joint Liquidator of Lima Bank Ltd (in Liquidation) and Christopher Mulenga (Joint Liquidator of Lima Bank Ltd (in Liquidation) V Ngenda Sipalo and Another (2010) Z. R (Vol. 1) 160 4. Dorothy Changwe V Charity Katongo Mphanza SCZ No. 26 of 2007 5. Clement Chuuya and Hilda Chuuya V J. J Hankwenda SCZ No. 3 of 2002 6. Rajan Patel V The Attorney General SCZ No. 14 of 2002 7. Zambia Revenue Authority V Agro-fuel Investment Limited (2008) Z. R Vol. 1 299 Legislation referred to: The Companies Act, Chapter 388 of The Laws of Zambia • This is an appeal against a judgment of the High Court which dismissed the appellant's action seeking to annul the sale, by the liquidator of the United Bus Company of Zambia to the respondent, of the flats which the appellants used to occupy as an incidence of their employment with the United Bus Company of Zambia. The facts giving rise to this appeal are common cause and 40 (cid:9) are these: All the six appellants used to be employed by the United Bus Company of Zambia, a parastatal company. As a result of the Government's privatization policy, the company was placed under liquidation in the mid 1990's. A liquidator was appointed. The first liquidator was Rogers Sombe. He was later replaced by the 1st respondent. In 1995, the liquidator advertised the flats J3 occupied by the appellants for sale. Responding to the advertisement, the 2nd respondent offered to buy the flats at a price of K120 million. The liquidator accepted the offer. The parties, then, started preparing the contract of sale. By the 25t January, 1996, the parties had exchanged contract. On the 261h January, 1996, the 2' respondent approved the draft contract. On the same day, the liquidator wrote to the appellants, offering them first option to purchase their flats. The offer was valid for twenty one days. The appellants were also required to show documentary proof of their ability to buy the flats. The offer price was K32,500,000. The 1st appellant responded four days later. She expressed willingness to buy the house using her terminal benefits and from her own resources. She expressed reservations with the price which, according to her, was the open market price. She pointed out that the policy of her former employer and indeed that of other parastatal companies and local authorities was that employees who were sitting tenants were to be offered to purchase the houses at book value taking into account the condition of the house. J4 The 2nd respondent also replied four days later. He accepted the offer. However, he requested the liquidator to consider giving him a discount since he was a former employee and a sitting tenant. It is not known what the responses of the other appellants were. The liquidator did not get back to the appellants to give them his reaction to their proposals. However, on the 19t February, 1996, he proceeded to execute the contract of sale with the 2nd respondent. On the 1st March, 1996, the 2'1c respondent also executed his part of the contract and paid a deposit of K30 million towards the purchase price. It is not clear when the writ was filed but the 2nd respondent sued the liquidator for specific performance and delivery of vacant possession of the flats in cause number 1996/HP/2248. This culminated into a consent judgment for the two reliefs which was signed by the Deputy Registrar on the 2nd May, 1996. With that order, the 2d respondent proceeded to evict the appellants from the flats. The appellants commenced this action two years later on the 23rd November, 1998. They sought a declaration that they (cid:9) (cid:9) J5 were entitled to occupation of the flats. They sought specific performance of the contract between them and the liquidator but also sought an order that the purchase price should be the book value of the flats. They further sought a declaration that the sale of the flats by the liquidator to the 2nd respondent was null and void. At the hearing, the testimony of the appellants was that after they received the offers, they sought an audience with the President of the Republic of Zambia who assured them that the flats would be sold to them at book value and that payment would be through their terminal benefits. This did not happen. They were evicted from the flats by the 2' respondent. In his testimony, the 2nd respondent insisted that his offer was in response to an advertisement placed in the newspaper by • the liquidator and that the offer was accepted. Regarding the declaration sought by the appellants that they are entitled to occupation of the flats, the trial court held that since the flats had been sold to the 2nd respondent and no longer belonged to their former employer, it saw no basis upon which it could make such a declaration. (cid:9) (cid:9) J6 On the appellants' claim for specific performance, the trial court held that no valid contract was created between the appellants and the liquidator because the appellants made counter offers to the liquidator's offer. In the case of the 1st appellant, the trial court held that the counter-offer lay in her request to the liquidator to revise the price in line with Government policy on the sale of Government houses. In the case p (cid:9) of the 2ndappellant, the trial court held that the counter-offer lay in his request for a discount on the purchase price. On the appellants' claim for a declaration annulling the sale between the liquidator and the 2d respondent, the trial court recounted the events that took place from the time that the liquidator advertised the flats in the newspaper up to the assignment of the flats and the issuance of a certificate of title to the 2nd respondent. The trial court came to the conclusion that the flats legally belonged to the 2'' respondent and that, therefore, there was no basis on which his title could be disturbed. On those grounds, the trial court dismissed the appellant's action. The appellants filed three grounds of appeal. The grounds are as follows: J7 (i) The learned trial judge erred and misdirected herself both in law and fact by holding that there was no valid contract between the plaintiffs and the 1st defendant when that is not one of the criteria set by the State. (ii) The learned trial judge erred and misdirected herself both in law and fact by ignoring the criteria for the sale of properties to sitting employee tenants such as the ones in dispute. (iii) The learned trial judge erred and misdirected herself both in law and in fact by holding that the property legally belongs to the 2d respondent. The parties filed written heads of argument which their respective counsel relied on entirely at the hearing. In the first ground, learned counsel argued that the State had come up with the policy to empower its nationals with housing. Counsel outlined what he said were the conditions or criteria set by the State for the sale of property belonging to the Government and Parastatal companies and argued that, in the circumstances, the court erred when it held that there was no valid contract between the appellants and the liquidator. J8 In the second ground, counsel repeated his arguments in the first ground and submitted that the trial court ignored the criteria set by the State, which was a misdirection. In the third ground counsel submitted that the purported offer by the liquidator to the appellants was a sham because he had already committed himself to sell to the respondent. Counsel argued that the 2nd respondent did not meet the criteria set by the State for one to qualify to purchase a house belonging to the Government or a Parastatal company. We were referred to a number of cases, namely; (i) Beatrice Meamui and Sylvia Chanda' (ii) Frank Malichupa & Ors V Tanzania Zambia Railway Authority (2) (iii) Edgar Hamuwele and Christopher Mulenga V Ngenda Sipalo and Brenda Sipalo and Another (3) and (iv) Dorothy Changwe V Charity Katongo Mphanz&4 Learned counsel urged us to allow the appeal and order that the 2' respondent recover his purchase price from the liquidator on the authority of Clement Chuuya and Hilda Chuuya v J. J. Hankwend&5 and also Rajan Patel v The Attorney General6. J9 In response to the first and second grounds, counsel for the respondent submitted that the appellants' belief that they were entitled, as of right, to buy the flats was anchored on Cabinet Circular No. 12 of 1996 which was issued on the 13th September, 1996. Counsel argued, however, that the appellants have conveniently ignored the fact that their former employer was in liquidation. Counsel set out the functions of a liquidator as outlined in Section 289(3) (c) (d) and (i) of the Companies Act, Chapter 388 of the Laws of Zambia and argued that it was the duty of the liquidator to raise funds for the creditors who included the appellants. Counsel went on to cite authorities on what constitutes a counter-offer and the effect thereof. We shall not review those authorities or the arguments advanced on this issue because the appellants' appeal is not based on that subject. Responding to the third ground, counsel argued that the liquidator was empowered by Section 289(3) of the Companies Act to enter into a contract with any person. Counsel submitted that, in this case, the liquidator entered into a contract of sale with the 2' respondent; he assigned the flats to him, and; a certificate of title was issued in the name of the 2nd respondent. J 1 Counsel submitted that all these events took place long before the cabinet circular was issued. Counsel argued that, in those circumstances, the home ownership scheme could not affect the transaction. For that argument, counsel referred us to the case of Zambia Revenue Authority V Agro-fuel Investment Limited 7 , whose decision, in our view, has no direct bearing with this case. Counsel argued, finally, that, in any case the liquidator was under no obligation to sell to a sitting tenant who had terminated his original offer. For that argument he referred us to the case of Frank Malichupa & Ors V Tanzania Zambia Railway Authority(2). We have considered the arguments. The underlying argument in all the grounds of appeal is that the liquidator ought to have sold the flats to the appellants in accordance with the Government's policy to sell houses belonging to the Government and Parastatal companies to former employees who occupied them. That is the only issue that we have been called upon to decide. The 2nd respondent's argument is that the Government policy was issued long after the flats were sold to the 2nd respondent. We agree with the 2nd respondent. The Government policy was issued in September, 1996. This was long after the flats had been sold to the 2d respondent and the appellants were evicted from them. The liquidator publicly advertised the flats for sale in the newspapers. There was no reaction from the Government or, indeed, the appellants; a clear sign that the Government policy was not in place then and therefore there was nothing wrong with the approach which the liquidator took. We agree, again, with the 2nd respondent that the Government policy, which came after the sale to the 2ncl respondent had been concluded, could not be used to annul the sale. In our view, therefore, the appellants cannot reply on the Government policy as the basis for their entitlement to the flats. The policy was not there when the flats were sold. That being the only issue on which this appeal is based, the appeal herein fails. We dismiss the appeal. We award costs to the 2'' respondent, to be taxed in default of agreement. - wñãfriwambwa DEPUTY CHIEF JUSTICE TE. N. C. Muyovwe SUPREME COURT JUDGE E. M. Hamaundu SUPREME COURT JUDGE