Isaac Kalumbwa and Anor v Mpenge and Ors (Appeal 19 of 2005) [2007] ZMSC 124 (4 December 2007)

IN THE SUPREME COURT OF ZAMBI HOLDEN AT NDOLA Appeal No. 19/2005 (Civil Jurisdiction) BETWEEN: ISAAC KALUMBWA PATRICK MWAMPEPA AND 1st appellant 2nd APPELLANT NDUBULULA GREGORY MPENGE KASHALE JOSEPH MPENGE JIMMY KALUNGA 1st RESPONDENT 2nd RESPONDENT INTERVENER CORAM: Sakala, CJ., Chibesakunda and Chitengi, JJS. On 5th June, 2007 and 4th December 2007 For the Appellants: Mr. M. Chanda of York partners For the Respondents: Mr. J. M. Kapasa of J. M. Kapasa and Company. For the Intervener: Mr. C. Magubbwi of Messrs Magubbwi and Company. J U D G MENT Sakala, CJ., delivered the Judgment of the Court. Cases Referred to: 1. Water Wells Limited Vs Wilson Samuel Jackson (1984) ZR 98 2. Stanely Mwambazi V. Morrester Farms Ltd [1977] ZR 108 This is an appeal against a ruling of the learned High Court Judge at chambers. In his ruling, the appellate Judge quashed the Deputy Registrar’s ruling, set aside the Default Judgment, and declared that the execution of the said Default Judgment was null and void and ordered that each party bears its own costs. For convenience, the 1st and the 2nd Appellants will be referred to as the 1st and 2nd Plaintiffs, respectively; while the 1st and 2nd Respondents will be referred to as the 1st and the 2nd Defendants, respectively, which designations they were before the Deputy Registrar. It must, however, be observed that according to the record before the Deputy Registrar, the writ of summons and the statement of claim were issued against the 1st defendant only; but in the subsequent documents, the 2nd defendant appears as a claimant. Before the J appellate Judge, he appeared as the 2 respondent. On the other hand, there is a third party who was joined to these proceedings as intervener upon application when hearing this appeal. The history of this appeal is that by a writ of summons and statement claim filed at Ndola High Court, the plaintiffs claimed for foreclosure of Plot No. 9 and stand No. 5546, Ndola. In the alternative, the plaintiffs claimed for payment of the principal sum of K301,815,000 and interest at the rate of 55% per annum from 30th June, 2003 until actual payment. The 1st defendant did not enter appearance and did not file a defence. The plaintiffs, consequently, entered Judgment in Default on J 25 February, 2004 and obtained leave to execute the judgment Later, the 2 defendant interpleaded in respect of Plot No. 5546 Chisokone Avenue and the 1st defendant applied to set aside the Default Judgment and also applied for stay of execution. The 2nd defendant also applied for stay of execution pending the determination of the Inter-pleader summons. In both applications, stay of execution was ordered pending the determination of the interpleader summons and summons to set aside the Default Judgment. Subsequently, in a ruling dated 15th September, 2004, the Deputy Registrar dismissed the summons to set aside the default judgment and discharged the stays of execution. The Deputy Registrar did not, however, make a ruling on the interpleader summons. The defendants appealed to a Judge at Chambers against the Deputy Registrar’s ruling of 15th September, 2004 advancing four grounds of appeal; namely: 1. That the learned Deputy Registrar erred both on fact and law by disregarding the evidence in the Defendant’s Affidavit in support of summons to set aside judgment for irregularity in so far as it related to the defendant having been out of jurisdiction, when the purported service of Court process was allegedly done; 2. That the learned Deputy Registrar erred both on fact and law by discharging an order staying execution granted in favour of the 2nd defendant without hearing his inter-pleader summons; 3. That whilst accepting that the purported mortgage document was controversial, the learned Deputy Registrar erred by not making a finding that this controversy raised triable issues; and 4. That given that the reason for the default of appearance was given and a defence on the merits given, the learned Deputy Registrar erred by denying the defendants a benefit of doubt by not allowing the matter to proceed to trial. The learned appellate Judge considered the arguments and submissions on behalf of the parties on the four grounds. On the 1st ground, the appellate Judge ruled that there was no indication that the 1st defendant, after being served, was asked to acknowledge receipt by signing on the original or other copy of the process; that for a Defendant to suffer a Default Judgment, there must be proof of service in accordance with Order X; that the Deputy Registrar did not consider the affidavit evidence of the 1st defendant that he was in Congo on the date the process was purported to have been served on him; and the appellate Judge concluded on ground one that there were sufficient grounds for setting aside the Default Judgment. On the 2nd ground of appeal, the learned appellate Judge found that the Inter-pleader Summons were still pending before the Deputy Registrar and therefore it was a misdirection to discharge the stay before disposing of it On the 3rd ground, the appellate Judge ruled that the Mortgage was a contentious issue which gave rise to the Interpleader proceedings; and that the Deputy Registrar should have given the benefit of doubt to the 1st defendant to have the matter go to trial. On ground 4, the appellate Judge, relying on the case of Water Wells Limited Vs Wilson Samuel Jackson(1) ruled that in applications to set aside a Default Judgment, the applicant should not only show a defence on the merits, but also give an explanation for that default; and that in the instant case, an explanation for the default was given. The appellate Judge also noted that in the defence, it had been pleaded that the properties pledged as security were not the defendant’s lease hold properties but belonged to third parties. The appellate Judge quashed the ruling of the Deputy Registrar dated 15 September 2004, set aside the default judgment; and declared that the execution of the default Judgment was null and void. The appeal was, accordingly, allowed. Each party was ordered to pay its own costs. The plaintiffs appealed to this Court against the ruling of the appellate Judge delivered in chambers on 11th January 2005. The plaintiffs filed a memorandum of appeal containing three grounds of appeal; namely: 1. That the appellate Judge erred in not considering the fact that the defendants did not show sufficient cause to warrant the setting aside of the Default Judgment and that the 1st defendant could not shield behind the name of his son when he in fact voluntarily surrendered the Certificate of Title to plot No. 9, President Avenue Ndola to the plaintiffs as surety; 2. That the appellate Judge omitted to dwell on the sworn fact that the 1st defendant was personally served with Court process and it was never explained under what circumstances the visas showing that he was in the Democratic Republic of Congo were made or obtained; and 3. That the appellate Judge should have considered the fact that the issue of the alleged Third Party was between the defendant and the Intervening Party, who is his son. The defendants, as well as the plaintiffs, filed written heads of argument based on the three grounds. As already indicated, at the hearing of the appeal, the Intervener was joined to the proceedings after the Court granted a summons, supported by an affidavit, for joinder of an Interested Party to the proceedings. Counsel for the Intervening Party also filed written heads of argument which supported the application for the Intervening party to be joined to this appeal. The arguments did not touch on the merits of this appeal. Both Counsel for the defendants and the plaintiffs relied on their written heads of argument. They made no oral submissions. The summary of the arguments and submissions on ground one, on behalf of the plaintiffs, is that there was no sufficient cause to have warranted the setting aside of the Default Judgment; and that for a party to enjoy the benefit of having a default Judgment set aside and the case heard on the merits, certain considerations must be satisfied, namely: no unreasonable delay, no mala fides and no improper conduct on the part of the applicant. The case of Stanely Mwambazi V. Morrester Farms Ltd(2) was cited in support of these arguments. It was pointed out that documents on record confirmed the 1st defendant’s indebtedness to the plaintiffs; and that there is no documentary evidence on record to establish that the 1st defendant paid the money owing or part of it to the plaintiffs. It was argued that the conduct of the 1st defendant in going to live outside the jurisdiction at about the time he defaulted in repaying the plaintiffs and the action imminent, indicated malice on the part of the 1st defendant; and that he was clearly using his stay in the Democratic Republic of Congo as a way to defeat the course of justice; and ultimately to escape the responsibility of repaying of the monies he 8 borrowed from the plaintiffs. It was submitted that the 1st defendant ought not to have been given the favourable treatment of setting aside the Default Judgment on the principles of Mwambazi(2) case in view of his “malafide” conduct of hiding in the Democratic Republic of Congo. Referring to paragraph three of the defence where the 1st defendant pleaded that the Certificate of Title to both properties were given to the plaintiffs merely to demonstrate that the 1st defendant meant well in requesting to be assisted with some monies, it was argued that this defence clearly fell short of admitting that the Title Deeds were deposited with the plaintiffs as security for the monies obtained by the 1st defendant. It was submitted that the fact that the 1st defendant was a father to the title holder must lead to the conclusion that the 1st defendant had authority to pledge the deeds as security. The plaintiffs further argued that equity must not allow the 1st defendant to use a statute as an instrument of fraud. It was further argued that what was created herein was an equitable mortgage and not a legal mortage, hence dispelling any need for registration as . a mere deposit of title deeds is said to create an equitable mortgage; and that payment of money and execution of a memorandum in writing are all sufficient acts of part performance supporting existence of an equitable mortgage herein. The authors of Megarry and Wade, the Law of Real Property, 4th Ed. Page 901 were cited in support of these arguments. It was submitted that in the premises, there was no real defence on the merits against the plaintiffs’ claims; and that it was not enough to raise a triable issue by alleging lack of consent of the defendant’s son. The response to arguments and submissions on ground one on behalf of the defendants is that there are no findings of fact and law that could be said to be erroneous; that the appellate Judge properly addressed himself on acknowledging receipt by signing on the original or other copy of the process; and that the Court went further to stress that for the defendant to suffer a default Judgment, there must be proof of service; and that this requirement applies to execution of Judgment in accordance with Order X. It was pointed out that the 1st defendant had exhibited his passport, which clearly indicated that at the time of the purported service of Court process, he was in Congo. It was submitted that the appellate Judge correctly arrived at its findings that the Deputy Registrar did not consider the evidence when he summarily dismissed the 1st defendant’s assertions. It was further submitted that quite apart from the 1st defendant’s absence from jurisdiction at the time of the purported service, the 1st defendant exhibited a defence on merits; and that on that basis, the appellate Judge made a correct finding when it held that there were sufficient grounds for setting aside the default Judgemnt and correctly followed the principles in the case of Water wells Ltd V. Wilson Samuel Jackson.(1) On the issue that the 1st defendant could not shield behind the name of his son when he voluntarily surrendered the Certificate of Title of Plot No. 9, President avenue, Ndola, to the plaintiffs as surety, it was pointed out that the purported surrender of the Title of Plot No. 9 and stand No. 5346, was very clearly on the basis that the properties belonged to third parties; that it was evident that the 2nd defendant filed an Interpleader Notice of Claim as well as an Interpleader summons showing the beneficial owner. It was submitted that the Deputy Registrar having granted a stay to the 2nd defendant pending determination of the Interpleader Summons, the appellate Judge was on firm ground to have made a finding that it was a misdirection for the Deputy Registrar to have discharged the stay before disposing of the Interpleader Summons. On Mortgage documents, it was submitted that in terms of Section 4 (1) of the Lands and Deeds Registry Act, Cap 185, the said documents were required to be registered and if not are null and void in terms of Section 6 of the same act. It was concluded in responding to ground one that the appellate Judge properly allowed the defendants appeal by quashing the Deputy Registrar’s Ruling of 15th September, 2004, setting aside Default © Judgment and holding that the execution of the Default Judgment was null and void. We have carefully considered the arguments and submissions on ground one by both learned Counsel. We have also examined the Ruling of the appellate Judge. In dealing with the issue of service of process, the appellate Judge noted that the Writ of summons and Statement of claim were filed on 16 January, 2004, that the deponent of the affidavit of service claimed to have served the 1st defendant on the same day; yet there is no indication that he requested the party served to acknowledge receipt by signing on the original or other copy of the process as required by the Rules. The appellate Judge then cited Order X Rule 1 (3) which reads “Any person serving a writ of summons or other originating process, default of appearance to which would under Order XII, entitle the plaintiff to final judgment, shall request the party served to acknowledge receipt of signing on the original or other copy of the process or on some other document tendered for the purpose, and the fact of any refusal to sign shall be so endorsed by the person serving, ” Thereafter, the appellate Judge observed as follows: For a defendant to suffer a default judgment there must be proof of service. Even when it comes to execution of a default judgment there must be proof of service in accordance with Order X. See Order 42 Rules of the High Court Act As it turned out the 1st appellant has through his affidavit evidence shown that he was in Congo on the date the process was purportedly served on him. Exhibit “NGM1” show that the 1st appellant returned to Zambia on 13th July 2004. The learned Deputy Registrar did not consider this evidence when he summarily dismissed his assertions. There were sufficient grounds for setting aside the default judgment. ” We have also considered the Deputy Registrar’s Ruling of 15th September, 2004. We agree with the appellate Judge that the Deputy Registrar did not consider the evidence of proof of service and the evidence that the 1st defendant was in Congo on the date the process was purportedly served on him. We uphold the appellate Judge that there were sufficient grounds for setting aside the default Judgment. We find it unnecessary to delve into the issue of the legality of the Mortgage documents as this goes to the merit of the whole case. We, accordingly, dismiss ground one of appeal. There were no substantive submissions on ground two except the contention that the defendant was served at a known residential address. The residential address was not in dispute. In our view, the issue was not residential address, but proof of service. The appellate 13 Judge found that there was no proof of service. Ground two must also fail. On the third ground, the argument was that if the defendant’s son was not happy with the father’s actions, his recourse would have been against his father and not to interfere with the rights that the plaintiffs had bona fide acquired; and that the default Judgment ought not to have been interfered with on that score, especially that the supposed third party had never even applied to be joined as a party. In dealing with the third ground, the appellate Judge observed that the issue of a mortgage was contentious and had given rise to Interpleader proceedings and that the matter should go to trial. We agree with this observation. The 1st defendant had filed a defence in which he explained and showed that he was out of jurisdiction at the time of the purported service of the process. The appellate Judge noted that there was a case of third party interests involved in the mortgage. It is not in dispute that although the Deputy Registrar discharged the stays of execution, which had been granted pending hearing of summons to set aside Judgment, and Interpleader Summons, the Deputy Registrar, while he heard the Summons to set aside the default Judgment, he did not hear the Interpleader Summons. We are satisfied that the third party has an interest in these proceedings. The Deputy Registrar should have heard the Interpleader Summons before discharging the stay. Ground three of appeal is, therefore, dismissed as having no merit. We uphold the appellate Judge in quashing the ruling of the Deputy Registrar and in setting aside the default Judgment as well as declaring the Order of execution of the default Judgment null and void. The appeal is, accordingly, dismissed. We order that the matter goes to trial to be determined on merits and that the Intervening party, who was joined to this appeal, be served with the process. Costs will abide the outcome of the trial. E. L. Sakala CHIEF JUSTICE L. P. Chibesakunda SUPREME COURT JUDGE SUPREME COURT JUDGE e