Katete Dairy Farm (1999) Limited v Ghambi & 2 others (Miscellaneous Civil Application 171 of 2013) [2025] MWHC 26 (20 November 2025)

IN THE HIGH COURT OF MALAWI COMMERCIAL DIVISION BLANTYRE REGISTRY MISCELLANEOUS APPLICATION NUMBER 171 OF 2013 (Before Msungama, J) BETWEEN: KATETE DAIRY FARM (1999) LIMITED. .............0cssesseseeeseeeeee CLAIMANT AND RUPI GHAMBL.,.............ccccecccceceeccccccccucccececesesccesseeencucs 15' DEFENDANT BENSON ALLEN GHAMBIL..............ccccccccccceccecceccccecccecs 28? DEFENDANT LUSAKO ALLEN GHAMBIL............ccccsccscccccccccccccccceeccees 38D DEFENDANT CORAM: Msungama, J. Katundu, of Counsel, for the Claimant B. Theu, of Counsel, for the Defendants Makonyo, Court Clerk RULING 1. This is a follow-up ruling on another one which the Court delivered on the 17" day of March, 2023, in this matter. In that other ruling, the Court dismissed the Claimant’s application to dismiss the Defendants’ applications to set aside the judgment in this matter, to vacate an ex parte injunction restraining the Defendants from carrying out or conducting any business on behalf of the Claimant until a final determination of the matter and another one to add and substitute defendants. In other words, the court allowed the Defendants to pursue an application to set aside the judgment herein, vacate an injunction and also to proceed to add and substitute defendants. The application to add and substitute defendants was dealt with by an agreed order of the parties in which they agreed that the 1*' Defendant at the time, one Vincent Ghambi, be removed as a party and that Rupi Ghambi be the 1* Defendant. It was further agreed that Benson Allen Ghambi and Lusako Allen Ghambi be added as 2"? and 3 Defendants, respectively. The issue of substitution and addition of defendants having being dealt with by the agreed order, what remained to be dealt with by the court, were the applications for an order to set aside the judgment and vacate the injunction order. This ruling is, therefore, on those applications which are opposed by the Claimant. . The judgment in question was delivered by the late Justice Manyungwa (may his soul rest in eternal peace), on the 5"" February, 2013 in which the Honourable Judge granted the Claimant the following reliefs: a) A declaration that the Defendants, having failed to pay up for the call on their shares, had forfeited their shareholding in the company, (the said company is actually the Claimant in this matter); b) An order that the Defendants were no longer members of the Company. The injunction in question was granted on the 1“ June, 2012, before the commencement of the action on 9" January 2013. . The historical background of this matter is somehow hazy and not very easy to follow. However, the court will have to make do with what it is able to discern from a painstaking reading of the file. Just as the court did in the ruling of 17" March, 2023, for this ruling to make any sense to the reader thereof and at the risk of repeating matters which were already alluded to in the earlier ruling, it will be important to give some background to the matter. Brigadier Allen Winston Ghambi and one Chiphamaso Russel Ndovi, who were friends, acquired from the government during the privatisation drive, a farm known as Katete Dairy Farm located in Lilongwe. They incorporated the Claimant in the year 2000 with each of them holding 50% shareholding. The farm became the main asset of the Claimant. Both gentlemen are now dead (may their souls rest in eternal peace). Vincent Ghambi, a bother to the late brigadier and an administrator of the deceased estate at the time of commence of the proceedings, was the original 1° Defendant but has now since been replaced as such by Rupi Ghambi (through the agreed order alluded to above), one of the children left behind by the late Brigadier. In the action, the Claimant claimed that after the death of the original shareholders in the Claimant company, it was realised that they had not paid for their shareholding therein. As a result, it was agreed by the two families that each shareholder should pay for their shareholding by injecting fresh capital in the company in the sum of MK 15, 000,000 each. The Claimants claimed that the Ndovi family paid their part of the agreed additional share capital whilst the Ghambi family failed to do so. It was claimed that as a result of this state of affairs, the company resolved that the Ghambi family had forfeited their shareholding in the company. The court proceeded to grant the Claimant the reliefs it sought and ordered that the Ghambi family was no longer a shareholder in the company. The judgment was a default judgment on account of failure by the Defendants to file any papers in defence and their failure to appear at the hearing. It is not disputed that the reason why the Defendants did not defend the action is that they were not served with the originating summons which had a return date of 21* January, 2013. The said summons was sent by post to a wrong postal address. Upon realising that there was a judgment passed against them, the Defendants applied to have the judgment set aside. However, their summons to set aside the default judgment was filed after the time for filing such an application had already expired. In the circumstances, the Defendants filed an application for an order extending the time within which the application could be filed. The application was granted by the court. The Defendants, since they already had their application on the court file, were not required to file fresh papers. The application to set aside the default judgment and vacate the injunction were heard on the 12" November, 2013 in the absence of the Claimant who did not turn up for the hearing at the court and gave no reasons for the non-attendance. The court proceeded to set aside the judgment and also vacated the injunction on the basis that the originating summons had not been served on the Defendants. The Court also ordered that the originating summons should be heard on 26"" November, 2013. The Claimant was, however, not pleased with the order of the court setting aside the judgment and vacating the injunction order. Therefore, the Claimant filed an application for stay of the order made on the 12‘ November, 2013. Upon being impressed with the Claimant’s application, the court proceeded to set aside its own order thereby restoring both the judgment and the injunction order. Later on, the court once again allowed the Defendants to make an application to set aside the default judgment and to vacate the injunction order. The Claimant was not happy with this decision and launched an appeal to the Supreme Court of Appeal against the court’s decision allowing the Defendants to proceed with their application. However, the Justice of Appeal (JA) who dealt with the appeal as a single member of that court, remitted the matter back to this Court to deal with the issue of the default judgment. The JA also directed that the Judge in Charge of this Division 10. if. should, within a period of 28 days from the 19" day of December, 2016, place the matter before a different judge other than the one who had dealt with it previously. The issue for the determination of the court is whether this is a proper matter in which the court should set aside the default judgment and vacate the injunction. All relevant events in as far as this matter is concerned took place before the CPR 2017 came into effect. In fact, even the application which the court is dealing with was filed long before the CPR 2017 came into effect. It is, therefore, pertinent that we look at the law at the time the application was filed. 0.35 r. 1 (2) RSC provided that when a matter is called for trial and one party does not appear, the judge may proceed with trial of the action or any counterclaim in the absence of the other party. Further, it was provided that any order or judgment obtained where one party does not appear at the trial may be set aside by the court on the application of that party. The practice notes made under 0.35/1/1 RSC gave some guidance as regards how a court should proceed in considering whether or not such a judgment should be set aside. Where a party had an opportunity to be heard but never took any steps to appear, then he would be bound by the decision of the court. If a judgment has been given after trial, then unless the absent party was able to show good reasons for its absence, the court would not set aside such judgment. If setting aside the judgment would result in retrial, then the court would not set aside the judgment unless there were very good reasons to do so. Further, unless there were prospects of successfully defending the action, the court would be hesitant to set aside the judgment. Delay in lodging the application to set aside the judgment would be a relevant factor that would be taken into account by the court. Another important aspect was that of prejudice. The court would consider whether an order setting aside the judgment would prejudice the successful party and whether such prejudice would be compensated by an order of costs or any other order of the court. The court would like to observe that the new rules of practice (CPR 2017), in relation to the issue of setting aside default judgments, have not materially departed from the above position. It has not been disputed that the originating summons which was issued by the court initiating the action herein, was served by post to a wrong address. It is, therefore, a fact that the Defendants never got those papers. They were not served. The Judge who heard the originating summons clearly proceeded on the basis that the Defendants were served as there was an affidavit of service purportedly evidencing 12. 13. 14. La. such service. Clearly, had the judge been aware that the Defendants were not served with process, he would not have proceeded to hear the summons. The Claimant argues that regardless of the fact that there was no service of the originating process on the Defendants, they have been guilty of inordinate delay in bringing their application to set aside the judgment. It argues that the position of the law is that where there is inordinate delay to prosecute an application to set aside a default judgment, the court will refuse such an application. The Claimant has cited the following case authorities in support of their stand, viz: Lawson Chitao & Monica Dzanjalimodzi vy Malawi Property Investment Compny Ltd Civil Ap. No.5 of 2010, Mbewe v Agricultural Development and Marketing Corporation [1993] 16 (1) MLR, Allen v Sir Alfred McAlpine & Sons [1968] | All ER 543, Sabadia v Dowset Engineering Ltd 11 MLR 417. According to the Claimant, the Defendants have failed to give cogent reasons for the delay to prosecute their application to set aside the judgment and vacate the injunction. It contends that this delay is prejudicial to it as the passage of a long time will make it difficult not only to secure witnesses, but even if available, they would not vividly remember facts relating to the events which occurred decades ago. The court finds that the genesis of the problems at hand in this case lie in the fact that there was no service of the origination summons on the Defendants. Had the Claimant sent the papers to a correct postal address, it is most unlikely that we would have been here at this time dealing with this application. It will further be noted that when the court at some point made a decision to allow the Defendant to proceed with an application to set aside the judgment and vacate the injunction, it was the Claimant who actually obtained an order from the Supreme Court of Appeal staying the proceedings pending the hearing of an appeal against the order allowing the application to proceed. The Claimant, therefore, should also take a slice of the responsibility for some of the delay in this matter. The court notes that after the Supreme Court of Appeal delivered its ruling on 19" December, 2016 setting aside the stay and remitting the file to this court with directions that the matter be dealt with by a different judge, none of the parties was aware of the ruling until in the middle of 2023. Further, the Supreme Court of Appeal order was clear. It ordered the Judge in Charge of this Division to take the necessary steps to have the matter assigned to a different judge. The file does not show as regards when the file came back from the Supreme Court of Appeal. It is therefore difficult to point a finger at anyone, 16. 17. including the then Judge in Charge for any delays that occurred between when the JA made his order and when the parties became aware of his ruling and direction. What the evidence on the file shows is that as soon as the Defendants became aware of the ruling by the Supreme Court, they took measures to prosecute their application, which, by the way was filed in June 2013, not long after becoming aware of the deafult judgment against them. On the issue of prejudice. As seen above, the Claimant says that setting aside the default judgment is likely to prejudice it in that witnesses may no longer be available, and, if available, they may no longer have a clear recollection of the facts. The court disagrees with this position. At the heart of the matter are shares in a company. The Claimant asserted in the action that the Ndovi family paid additional capital in the Company whilst the Ghambi family failed to do so. It was upon the court finding that this is what actually happened that it proceeded to grant the reliefs which were sought by the Claimant. Clearly the documentary evidence pertaining to the payment of the funds in respect of the additional capital injection into the company and other records in the form minutes or otherwise in respect the meetings of the company which passed the relevant resolutions should be available or will, at least, not be difficult to find. At least there is no assertion on the part of the Claimant that these are no longer available. The court expects that the relevant documents would have been preserved especially in view of the fact that there is ongoing litigation proceedings involving ownership of the company. Further, the nature of the evidence that would need to be adduced, if retrial is ordered, will depend on what is contained in the company records. This is not a road traffic accident matter where witnesses will be expected to remember how exactly an accident occurred. Witnesses who will be called should be able to give evidence on the basis of the available records. Further, the Claimant has not asserted that any of the relevant witnesses have either died or are untraceable. The court finds that the likelihood of prejudice in terms of evidence is very minimal, if any at all. The court has also had an opportunity of perusing the affidavit in opposition to the originating summons. It is clear that the Defendants are denying that there was any agreement that the shareholders should put in additional capital in the company. They further state that, in fact, the Ndovi family did not push in any additional capital as contended. These are matters that go to the heart of the dispute in this matter. The court is of the view that the Defendants have demonstrated that they have a defence that has a chance of success if the judgment is set aside and the matter goes to trial. They have, so to speak, a defence on the merits. 18. In view of the sentiments above, the court feels that this is a proper case in which it should it should proceed to set aside the default judgment and vacate the injunction. In the circumstances, the default judgment of late Manyungwa J dated 5"" February, 2013 is set aside. Further, the interlocutory injunction is also vacated. Each party will pay its own costs. 19. In terms of way forward, it is ordered that the parties herein, through their respective counsel, present themselves before the Court in chambers on the 2" day of December, 2025 at 11 O’clock in the morning to map the way forward. Delivered in chambers at the High Court, Commercial Division, Blantyre registry, this 20" day of November, 2025. M. T. Msungama JUDGE