Commercial Bank Limited v Central Province Marketing Union Ltd (SCZ APPEAL No. 55 OF 1995) [1995] ZMSC 56 (9 November 1995)

• IN THE SUPREME COURT OF.' 2:. AMBIA SC: APPE~L No . :,3 0~ 1995 HOLD~N ~f LUS~KA --•--- (Civi l Jurisdiction ) 8 E T W E E N : COMMERCIAL BANK LIMITED Appellant and CENTRAL PROVINCE MARKETING UNION LTD Respondent Coram: Ch,;.ila, Chirwa and Muzyamba, JJs at Lu,3aka on 9th November 1995 and For the Appell2nt Mr. F. Chishimba, Jaques and Partners :1c. 13.1·!. Mutemwa, Mutemwa Chambers J U D G M E N T Case referred to: [1]. SITHOLK v STATE LOTTERIES BOARD (1975} ~R 106 T n is is :rn 8. pr,!:al by Comm~ :•ce S-'3.nt< l,i:nit ~d (in thia jud~ment referred to as "the Bank 11 ) against this judgment in the High Court in favour of the Central Province Co-operative Union 1.,td ( in this judgment refer.red to as "the Co-operative}, By an Originating Notice of Motion the Co-operative applied to the court fo~ orders:- (a) rnat tne purported l"egist.ration of .3. mot'tgaga en Jtanrl Ho . 6300 by the B~nk be annul~d as i~ was deliberately fraudulent, and cannot, in any event assume priority over the interest of the Co-opiH'ative. (b) That the eventual ~~le of the said stand No. 6300 by the Sheriff of Zambia at a public auction to Oakbridge Trading and Inve3t.mants 7'i3. S V.'.llid. / 2 •• - • J2 The b4ckground of this action is that the co-operative nad an action against a third party GONDE AORIC AND M~CHANICAL ENGINEERING CO 1.. TD under cause number 199!1/HB/06 to enforce the judgment a writ of eligit was lesued on 3rd August 1994 they were suocessful and in which ( and was executed on Stand No. 6300 L.u11aka belonging to the defendant 1n that action. This writ of eliglt was never registered at the l.ands and Daed1 Re8istry. The Sheriff advertised io the press to sell that property and a publio auction was duly held and the property was sold to Oakbridge Trading and Investmente limited. The bank got involved 1n thisproperty because Oonde Agric and Mechanical Engineering L.imi ted was their client long before 1992 and 1 t borrowed from the bani< by way of overdraft large amount and this overdraft waa growing bigger and bigger. In order to protect its interest, the bank caused a mortgage deed to be executed between it and Gonde Agrlc anij Mechanical. Enginearing L.im!ted and thia deed is dated 25th July 199lt. Tha Sheriff on 11th August 1994 advertised a sale by public auction of a number of properties on the strength nr the ,...rit of 1:1lii,!:it and fifa and among the property to be auctioned was "Oonde Agricultural and Mechanical Engineering workshop including all the buildinga 11 • No description of the property to be sold such ae stand number and location wel"e given. The bani< got concerned and inquired whether the mortgage had been registel"ed throu.gn their lawyers. It transpired that their lawye.t" had not registersd the mortgage. To protect their intereata further they instructed their lawyers to put a caveat on the property and this they did on 8th August 1994. The mortgage deed was r1nally registered in the Lands and Deeds Registry on 15th August 1994. Apparently the public auction advertised by the Sheriff did not take place because the same was re-advertised on 26th September 19 9 l.i. - J3 - IVld•n•• ••• 1•4 br bOtb per\1•• ln t~1• Qale and ln pa~\ioular •• wlah ,o ,~1etl1 r•t•~ to the ••t••noe ot DV2 vbo 1a ta• Cbter lea1•t~ar er ~•nda and Deeda. H!a evld•aQe waa to \n• etreGt th•~ ant deed or doouaent• purport1na to lm &ft1 reg1stefed 1an4 ought to ~• etrect an, 1nte~o•t tn.e legiairt vi lhln speoit1c pel".tod• railura reai ate red 1 n H• al•o ·••11•1nt ~••O••· n.all and VOS.cl . to Wblob t,l\at land •iatad \bat a wrii ot ellg.lt •ftect• u1 an4 f>ll&bt 1.0 ba'fe been reat at.er ad. l.tttveen a11d Gend• \he ln•1••••111g L.1•1'-•d waa realatare, th• .. • Aazoieultwral a11c1 wae ao •nouebet'aaoe •n tn• la11d, c.be aa•••t. ... 11ot1i:-et1 b1 the ,ank hav1n1 be•n v1\hdrawR. Th• v~1, or •l1&1t ~a•in1 not b••n ... ,1a\er•d vlth tb• aeaiatrr prlo~ 10 tb• aoriaa1• na4 no erteo\ Ofl tb• prop•rty . ,na aof'"&•a• tu.f"tbeP a\a\ed t.l:lat J.n,oreat :Ln cl••d lliank ••1en Ke turth•~ On tb• tota11,, &t tn• ••1deaae tfte l•ar•aed tP1a1 J\ildge t.t,ai there •a• tr•v• in that DV2 •• '" overall boas touad wowl4 not kttov 1r t~aa4 na4 beeA oo•e1tted bf ft1• le&1air, the Sberltr ••r••d Cl•~k. not1oe io the ,an••• adveoat•• vh ■ n ,hey wi~bdr•w th• caveat •nd recle\ore4 t~• ■or~1•1• •• the ae1su~• and 1oiended ,ale by Sbe~ttr w•~• ad••~\1eed and he •~•nted ihe ord•~• prared tor by tbe Co- 011erat.tve,. It lo a1a1ne\ ~bis J-.d,s ■ •nt that. tbe -•nk ha• ap1eale4. the adver\i••••nt by Th•~• were ,br•• gro~Dda or appeal . Tfte tire~ related ,o \be tl"aud. 1, va• ataued \hal one vtso all•«•• rraud I\ vaa ai-a.a•4 baa a oao.-e ue.-101.11 \hat the co-op•rat1 ve railed io d1•ohars• \h1• dut1 and b~• oa•• of' .&1?101. B Y 11'&11 LOTtll :IEs 80 1.. RD C 1 l va• reterr ■d to. the Ii was •ubatite4 thal no tnard•n or pr0Yin1 1 t.. traud ha, b••n ,~o••4 ~, Co-opel'"at.ive and ttlel"efor-e tb• lllanlC prop•r-ly registered 1.t,a som-t.ga,1e •••d• th• aeoond groynd vaa tbai a1noe ihe vrit or eli11t o~••'•• an inter••' in land in t••~ur or J~d1aent oredilor a• i i or ea tea a t.eaaac,, that 1ntereat. ou,bt to have 'l••n ~•a1•\•~•d at lh• ~and• and g••d• Jea1atrt •• p~o,Lded ~~dor th• Act and that since it wae not regietered it cannot take interest regietered, namely a aortgage priority over an deed in tavour of the bank. The third ground was that under Order 42 rule 4 or the High Court Rules the Sheritr waa supposed to conduct an inquiaition and in the preaent case there ia no evidence that the same was conducted and aa auah the aale conducted by the Sl'leriff was irregular and i t d1d not transfer good title to the third party, naaaely Meea.-a Oakbridge Trading and Investments Limited. In reply, 1t was argued on behalf of the Co-operative tnat fraud 11aa proved tn thia aaae •• betore the sale or the property by the Sheriff, the said sale wa• advertised in the pr••• and aa such both the bank and Gonde Agriaultural and Mechanical Ena1ne•ring Limited had notice or to prooeed with the property and enou ■ beranoe on the the registration or the mortgage deed waa fraudulent or at leaat irregular or inequitable. It waa aooepted by the respondent that unleaa the writ or eligit va.a registered within the atlpulated time it is null and void but then the time vithin vhloh to regieter 1 t had not expired before the mortgage deed waa reglatered and at the time or the auction the writ vas still valid. We have looked at the evidence on reoord and al•o the judgment or the learned trial court below. We bear in mind aubm1aa1ona by Counsel. On the question or rraud, the lav we stated in the SITBOLI v TB& STl TI l. OTTBIIIS 80&11> [1J on the burden or proor or fraud etill ■ tanda •• good law. The burden or pl"oof 1• ,1reater than a aimple balance ot probabil1t1••• It ia oon■ on cauae that the writ of eligit ot'eatea an interest in land and aa auoh it ought t.o be reg11tered in the ~ands and Deede Registry within etipulated time. It was not canvassed by the reepondent that any at&ps vera taken to regi ■ tet' this, not even a ■ere lodgement with the Deeds Registry. Any person with an interest in land haa /5 •••• - JS - a duty to protect his interest and the bank having seen the Sheriff's advertisement in the press had to take steps to protect their interest and if the writ o{ eligit had been registered at the time they went to lodge a caveat, the Co-operative' s interest would have been protected and the bank would have had the interest second to that of the Co-operative. W'e cannot see how the learned trial judge would fault the evidence of DW2 that at the time the mortgage deed was registered there was no encumberance this is a fact and fraud cannot be proved on speculation that since OW2 was the Chief Registrar he could not know if fraud had been committed by his Registry staff. If there had been a lodgement of t_he writ of eligit in the registry before the caveat or mortgage deed by the bank, and that this was hidden or destroyed by the registry clerk and the bank was aware of it, then one can say that was fraud committed. The advertisement of the au¢tion sale by the Sheriff did bring out that there were many diverge interests in the property and anyone with an interest had to protect 1t and the bank moved in fast and registered their interest. This cannot be said to be fraudulent. We are of the opinion that fraud had not been proved in this case. The registration of the mortgage deed by the bank on Stand No. 6300 was perfectly legitimate as the writ of eligit had not been earlier registered. The fact that at the time the mortgage was registered the time within which to register the writ of eligit had not expired cannot affect the mortgage which had been registered. We would therefore allow this appeal the sale of and to Oakbridge Trading and Investments is subject to the mortgage of the bank. Appeal the stand allowed with costs to be agreed, in default to be taxed. . . . . . . . . . . . . . . . . . . . . . . M. S. Chaila SUPREMB COURT JUDGE O. K. Chirwa SUPRRHE COURT JUDGE W. M. Muzyamba SUPBBMB COURT JUDGE