Kayanje Farming Limited (Receivership) and Anor v Christopher Mulenga (Sued as Joint Receiver and Manager) and Ors (APPEAL NO. 73 OF 2010) [2013] ZMSC 59 (28 August 2013)

• !.,·~ THE SUPREME COURT OF ZAMBIA HOLDEN AT KABWE (ClVIL JURISDICTION) APPEAL NO . 73 OF 2010 BETWEEN: KAYANJE FARMING LIMITED (Receivership) CHRISTOPHER JAMES THORNE 1st APPELLANT 2 nd APPELLANT and CHRISTOPHER MULENGA (Sued as Joint Receiver and Manager) - EDGAR HAMUWELE (Sued as Joint Receiver and Manager) 1st RESPONDENT 2nd RESPONDENT ZAMBIA NATIONAL COMMERCIAL BANK PLC 3 No RESPONDENT CORAM: MAMBILIMA; DCJ, CHIRWAAND MWANAMWAMBWA, JJS; On 10th August, 2010 and 28th August, 2013 For the Appellants: For the Respondent: Mr. S. CHISULO, of Sam Chisulo & Co . Mr. M. MUSONDA, of M. M . Musonda & Co. MAMBILIMA DCJ, delivered the Judgment of the Court. JUDGMENT AUTHORITIES REFERRED TO: 1. BANK OF ZAMBIA VS JONAS TEMBO & OTHERS (2002) ZR 103 2. HILARY BERNARD MUKOSA VS MICHAEL RONALDSON 3. BRIKOM INVESTMENTS LTD VS CARR (1979) ZALL ER 753 at Page 760 4. SERIES 5 SOFTWARE LTD (1996) 1 ALL ER 853 at Page 864 5. GIDION MUNDANDA VS TIMOTHY MULWANI (1987) ZR 29 6. EDGAR HAMUWELE & CHRISTOPHER MULENGA VS LIMA BANK SCZ No. 4 of 2010 7. AMERICAN CYANAMID VS ETHICON LTD (1975) AL 396 THE LEGISLATION AND WORKS REFERRED TO: 1. THE HIGH COURT ACT, CHAPTER 27 OF THE LAWS OF ZAMBIA • 2. THE RULES OF THE SUPREME COURT (RSC) 1999 3. HALSBURY'S LAW OF ENGLAND, 4TH EDITION VOLUME 16 4. THE COMPANIES ACT CAP 388 OF THE LAWS OF ZAMBIA 5. THE LAW RELATING TO RECEIVERS, MANAGERS AND ADMINISTRATORS 3RD EDITION, Page 99 When we heard this appeal we sat with our brother CHIRW A JS. He has since retired. This, therefore, is the majority decision of the Court. This 1s an interlocutory appeal against the refusal by MUTUNA, J, to grant an interim injunction to the Appellants, to restrain the Respondents from proceeding or completing the intended sale of Farm No. 2059, Ngwerere, Lusaka, or otherwise dealing in assets, goods or chattels of the 1st Appellant on the said farm. The Appellants application for an interim injunction before the Court below was made under ORDER 27 OF THE HIGH COURT - ACT 1 , as read with Order 29 of the WHITE BOOK2 . In a lengthy affidavit in support of the said application, the 2 nd Appellant prayed that pending the determination of the Appellants' claims in paragraphs 12, 12©, 12(d) and 12(e) of said Statement of Claim, the Court should " ... . grant to the Plaintiffs an injunctive order in the terms prescribed under paragraph 12 (d) of the Statement of Claim; otherwise this action would be nugatory if and when the 1st Plaintiff's assets are sold either by private sale as is being arranged by the Defendants or by public auction. The portions of paragraph 12 of the Statement of Claim that the 2 nd Appellant referred to state as follows :- "12. That as at now, the l•t , 2 nd and 3 rd Defendants are conniving with Ainavel Limited to firstly secure the uplifting of the caveat by Ainavel Limited and secondly in consideration thereof to offer for sale the entire Farm No. 2059, Ngwerere Lusaka to Amavel Limited. This intended deal is an act of subterfuge against the l•t Plaintiff by the parties concerned and the 1 •t Plaintiff will suffer irreparable loss and injury. (a) (b) © (d) (e) that A declaration l •t and 2 nd Defendants have acted incompetently and against the interest of the company in that they have been derelict in their responsibilities and that by that conduct diminished the viability of the company. the An injunction to . restrain the 1st , 2 nd and 3 rd Defendants by themselves individually and severally or by their respective servants, agents or any of them or otherwise howsoever from proceeding with or completing the intended sale or selling of the whole Farm No. 2059 Ngwerere, Lusaka aforesaid or otherwise dealing in the assets, goods or chattels of the l•t Plaintiff and the said Farm No. 2059, Ngwerere, Lusaka (except the said Proposed Sub Division) for the purpose of completing or acting in furtherance of the said sale to Amavel Limited or whomsoever · pending the determination of the matters pleaded herein or until further order of Court. An order that the l •t Plaintiff and the 3 rd Defendant proceed to restructure the loan repayment based upon the contents of an electronic mail sent by the 3 rd Defendant to the l•t Plaintiff on Monday 29 th June 2009. That the said restructuring exercise should be undertaken after the 3 rd Defendant has received the proceeds of the sale of the Proposed Sub Division of Farm No. 20590, Ngwerere, Lusaka." 't The 1st and 2 nd Respondents opposed the application for an interim injunction. They filed an affidavit in opposition in which they described the Appellant's application for injunctive relief as not only misconceived and frivolous, but an abuse of the process of Court. This is on account of the fact that there was a similar application before KAJIMANGA J, in which a prayer for an injunction was refused. Mr. MUSONDA, the learned Counsel for the Respondent submitted that the application for ~ injunction before the Court was an abuse of the process of the Court because it had already been litigated upon in another Court. On this submission, the learned trial Judge found that the principle of res judicata could not be invoked in this case because the 1st Appellant was not a party to the case before KAJIMANGA J, although it was affected by the dismissal of the injunction. The 1st Appellant -was, therefore not heard on that application. The Judge also found that the cases in the two courts, did not involve the same parties and did not involve the same cause of action. To buttress his conclusion, he referred to the case of BANK OF ZAMBIA VS JONAS TEMBO AND OTHERS ~002 1 in which this Court held, inter alia, that in order for a .,.. • ? defence of res judicata to succeed, it must be shown that the cause of action was the same. Turning to the main application that was before him, the trial Judge began by alluding to one of the principles that govern the grant of interlocutory injunctions; and this is that a person seeking the relief must have a legal right to the claim that he seeks to protect. He referred to ORDER 29 RULE lA SUB RULE 5 OF THE - WHI1'E BOOK2 which states that: "The right to an interlocutory injunction cannot exist in isolation. It is always incidental to· and dependant on the enforcement of a substantive right, which usually although not invariably takes the shape of a cause of action. The Judge referred to our decision in the case of HILLARY BERNARD MUKOSA VS MICHAEL RONADLSON2 in which we observed that an injunction will be granted only to a Plaintiff who establishes that he has a good arguable claim to the right that he seeks to protect. The Appellants contended that they had a legitimate cause of action which was anchored on an agreement that the 1st Appellant had entered into with the Respondent before placing it into liquidation. According to the Appellants, the agreement was, inter alia that only a portion of the farm would be disposed of. The .. • • Respondents, on the other hand disputed the Appellants contention that they had a legal right to the relief that they sought to protect. They contended that their action against the 1st Appellant was in accordance with a floating debenture that was executed between the 1s t Appellant and the 3 rd Respondent. They submitted that the 1st Appellant defaulted in its obligations under the debenture resulting in the 3 rd Respondent invoking the provisions for placing - the 1st Appellant in receivership. The learned triill: Judge, upon considering the facts of the case, found that there was, indeed, a floating debenture between the 1st Appellant and the 3rd Respondent which entitled the 3 rd Respondent to appoint receivers and take over the affairs of the 1st Appellant in the event of default. That pursuant to this debenture, the 3 rd Respondent appointed the 1st and 2 nd Respondents as receivers to run the affairs of the 1s t Appellant, after it had defaulted on its loan repayments. The Court referred to Clause 2 of the floating charge under which all the Company's present and future assets \Vere charged to the 3 rd Respondent. These included the whole of Farm 2059, Lusaka and not a sub-division thereof. The Court agreed with the arguments advanced by the Respondents, ' . that the 3 rd Respondent merely exercised its legal rights under the debenture when it appointed the 1st and 2 nd Respondents as receivers, and that the Appellants, therefore, had no claim to the right that they sought to protect. The learned trial Judge did not agree with the contention by the Appellants, that only a portion of the farm would be sold. He found this argument to be untenable. He found that the entire farm It and its property were charged under the floating charge and that the 3 rd Respondent never waived its right to exercise the options under the floating debenture . Having found that the Appellants had no claim to the right that they sought to protect, the Judge found no need to address his mind to the other arguments that had been advanced in support of the application for an interim injunction. These were with regard to the balance of convenience and the notion of irreparable damages. He dismissed the Appellants' application. Dissatisfied with this determination, the Appellants have now appealed to this Court, advancing four grounds of appeal. These are that:- that found firstly, he 1. That the learned trial Judge misdirected himself in both fact and law the when -Appellants/Plaintiffs were relying for their application for an injunctive order to restrain the Respondents/Defendants from selling the farm in question was exhibit "CJT 1" (please see page 47 of the Record) and secondly erred when he ruled that the argument by and on behalf of the Appellants/Plaintiffs that the agreement was that only a subdivision of the farm in dispute would be sold is untenable. the agreement on which 2. That the learned trial Judge erred in law and fact when he failed to address his mind to and did not consider the legal effect of the contents of exhibit "CJT 3" in the Affidavit in Support of the Summons for an Injunction (at page 56 of the Record) on the provisions of the floating debenture (at page 137 of the Record) on which the trial Judge wholly based his Ruling declining to grant an injunction. 3. That the learned Judge erred in law and in fact by disregarding the plain and natural meaning of Order XXVII Rule 1 of the High Court Rules, Chapter 27 of the Laws of Zambia and proceeding on the basis that one of the principles that governs the grant of an injunction is that the person seeking the injunction must have a legal right to the claim he seeks to protect. 4. That the learned trial Judge fell into grave error when he elected not to address his mind and consider whether or not the balance of convenience weighed in favour of the Appellants/Plaintiffs and when he decided not to consider whether irreparable damage would be caused if the Respondents/Defendants alienated the property in question. The learned Counsel for the Appellants argued the 1st and 2 nd grounds of appeal together. He submitted that in his Ruling, the learned trial Judge in the Court below regarded exhibit "CJT 1 "; appearing on page 4 7 or the Record of Appeal, which is a letter offering credit facilities to the Appellant; as the agreement on which the Appellants relied on for their application for injunctive relief. Counsel contended that in fact, it is the e-mail marked "CJT 3" on page 56 of the record and not exhibit "CJT 1 ", that embodied the agree1nent" reached by the 1st Appellant and the 3rd Respondent after several meetings between them. The said e-mail was sent by Credo MWAKWEMBO to 1st Appellant Company on 29 th June, 2009. It was addressed to the 2 nd Appellant. It states as follows: "I refer to our meeting of this morning and wish to reaffirm our resolution that the Bank should proceed to place Kayanje Farming Limited under receivership. The objectives of the receivership shall be to facilitate sale of the proposed subdivision and to undertake a business review of farm operations leading to long term business survival. We shall identify appropriate name of receiver/manager to be appointed and negotiate receivership fees payable. The receivership fees will be pre agreed and will be t~ the account of Kayanje Farming. We shall expect you to .finalise discussions with Meanwood properties by Wednesday 1 st July 2009 as requested. We intend to appoint receiver managers by Thursday 2"4 July 2009." Counsel submitted that as a result of the Court's error, it followed that the Court's analysis, when it ruled that the Appellants' argument that only a sub-division of the farm would be sold, was legally untenable and flawed. According to Counsel, the learned Judge failed to appreciate that the agreement embodied in the e mail, could affect the 3 rd Respondent's rights arising from the floating debenture 1n several ways. That one such way was through the doctrine of promissory or equitable estoppels. To support his argument, Counsel referred us to a number of • authorities. One such authority is paragraph 1514, HALSBURY'S LAWS OF ENGLAND3 , which reads:- "When one party has, by his words or conduct, made to the other a clear and unequivocal promise or assurance which was intended to affect the legal relations between them and to be acted on accordingly, then once the other party has taken him at his word and acted on it, the other who gave the promise or assurance cannot afterwards be allowed to revert to their previous legal relations as if no such promise or assurance had been made by him, but he must accept their legal relations subject to the qualifications which he himself has so far introduced." Counsel also referred to the words of ROSKILL W in the case of BRIKOM INVESTMENT LTD VS CARR3 when he stated inter alia: "But, whichever is the right way of putting it, ever since HUGHES V METROPOLITAN RAILWAY Co, through a long line of cases of which there are many examples in the books, one finds that where parties have made a contract which provides one thing and where, by a subsequent course of dealing, the parties have worked that contract out in such a way that one party leads the other to believe that the strict rights under that contract will not be adhered to, the courts will not allow that party who has led the other to think the strict rights will not be adhered, suddenly to seek to enforce those strict rights against him." Counsel submitted that the real questicn in this case is not whether the 3 rd Respondent felt that it had waived its rights, but whether that which was communicated to the Appellant amounted to an enforceable contractual promise or gave rise to promissory estoppel or equitable considerations. He argued that the Court below should have looked at all the evidence, from the beginning to the end, to arrive at a bargain that was struck between the parties. According . . ' to Counsel, the lower Court took a simplistic approach to the matter in that it did not consider the totality of the evidence, thereby falling into a grave error by asserting that the 3 rd Respondent never waived its right to exercise its options under the floating debenture, and, finally finding that the whole farm was charged, thereby entitling the 3 rd Respondent to exercise dominion It over it \vhen the 1st Appellant admitted to have been in default. It is the contention of Counsel that with their own consent, the parties in this case entered into a series of negotiations, as confirmed by exhibit "CJT 3", and these negotiations had the effect of the Appellants supposing that the strict rights arising under the floating debenture would not be enforced but held in abeyance. He submitted that the 3 rd Respondent should not be allowed to revert to its rights under the floating debenture, as if no promise or - assurance regarding the objectives was made by it. The learned Counsel for the Appellant also argued the 3 rd and 4 th grounds of appeal together. The main contention under these two grounds of appeal is with regard to the learned Judge's decision not to consider the arguments that were advanced on the principles of balance of convenience and irreparable damage. Counsel argued that the paramount interest in RULE 1 OF ORDER 27 OF THE HIGH COURT ACT 1 is to stay and prevent wasting, damage or alienation of property which is in dispute in a suit. The said Rule provides that:- "In any suit in which it shall be shown, to the satisfaction of the Court or a Judge, that any property which is in dispute in the suit is in danger of being wasted, damaged or alienated by any party to the suit, it shall be lawful for the Court or a Judge to issue an injunction to such party, commanding him to refrain from doing the particular act complained of, or to give such Order, for the purpose of staying and preventing him from wasting, damaging or alienating the property, as to the Court or a Judge may seem fit .... " e Counsel argued that there is no requirement under this Rule for an Applicant to prove a legal right to a claim that he seeks to protect. That the only pre-requisite in the Rule is to have a suit before the Court. According to Counsel, the learned trial Judge in the Court below employed an approach in law that was done away with in this country and in the Commonwealth during the final quarter of the e 20 th century. To support his contention, Counsel cited the case of SERIES 5 SOFTWARE LTD4 and especially the words of LADDIE J, when he stated that: "Accordingly, it appears to me that in deciding whether to grant interlocutory relief, the Court should bear the following matters in mind. (1) The grant of an interlocutory injunction is a matter of discretion and depends on all the facts of the case. (2) There are no fixed rules as to when an injunction should or should not be granted. The relief must be (3) Because of the practice adopted on the hearing of kept flexible. applications for interlocutory relief, the Court should rarely attempt to resolve complex issues of disputed fact or law. (4) Major factors the court • can bear in mind are (a) the extent to which damages are likely to be an adequate remedy for each party and the ability of the other party to pay; (b) the balance of convenience; (c) the maintenance of the status quo, and (d) any clear view the court may reach as to the relative strength of the parties' cases." Counsel submitted that the learned trial Judge erred, when he abandoned or neglected to make an attempt to evaluate the pros and cons of granting an interlocutory injunction, on the basis that there was a mandatory initial hurdle which the Appellants had not surmounted. That since the Court doubted the existence of the Appellants' rights, it should have taken into consideration the balance of convenience· to the parties. Counsel further submitted, relying on the case of GIDEON MUNDANDA VS TIMOTHY MULWANl5, that damages cannot adequately compensate a party for loss of land. Counsel contended that the Respondents in this case have conducted themselves in a manner that directly and indirectly destroyed the Appellants' goodwill towards the ultimate goal of selling the 1st Appellant's assets and conveying the entire farm No. 2059. He contended that greater inconvenience has been occasioned and continues to plague the Appellants, who are likely to incur a loss of about US$500,000 on crops which the 1st Respondent did not care or tender, following the refusal of the injunction by the Court. He urged us to grant the Order of interim injunction and prayed that trial should proceed before another Judge of the High Court. In response to the arguments by the Appellants on the 1st and 2 nd grounds of appeal, the learned Counsel for the 1st and 2nd Respondents submitted that although the Court below referred to exhibit "CJT 1 ", as the document which evidenced the parties' e agreement to the effect that only a sub division of Farm 2059 would be sold, it is clear from a complete and fair reading of the judgment of the Court that the Judge was in fact referring to exhibit "CJT 3". That between the two documents, it is only "CJT 3" which contains the issue of the alleged agreement to dispose of only a portion of the farm. Counsel thus argued that although the Court erroneously referred to "CJT 1" when it intended to refer to exhibit "CJT 3", e the said error was neither material nor substantive, given that the Court had in mind the correct and material substance which it intended and actually referred to. He went on to state that the erroneous reference to exhibit "CJT 1" cannot negate the substance or the conclusion which the learned Judge reached. To buttress his argument, Counsel referred us to the case of MUSA ( ZIMBA VS LUCY ZIMBA & OTHERS5 in which this Court observed that:- "Although the learned trial Judge did not follow the right procedures, we uphold this decision because had he properly directed himself, he could still have arrived at the same decision." Counsel further submitted that the Court below was on firm ground when it took the view that it was wholly untenable for the Appellants to have taken the position that the agreement which was - evidenced by exhibit "CJT 3" precluded the 3 rd Respondent from selling the entire Farm Number 2059, Lusaka. He pointed out that in dealing with the argument, the Court observed, on page 21 of the record of appeal that:- "As the witness for the Third defendant stated the third Defendant never waived its right to exercise the options under the floating debenture." That the Court concluded that the whole Farm 2059 was charged and the 3 rd Respondent was entitled to exercise dominion over it. On the doctrine of 'equitable' or 'promissory' or 'quasi' e estoppels that has been raised by the Appellants, the learned Counsel for the 1st and 2 nd Respondent's understood the contention of the Appellants to be that the legal relations governing the placing of Kayanje Farming Limited in receivership had been made subject . \ l I to what was stipulated in exhibit "CJT 3". He pointed out the arguments based on this doctrine were not raised in the lower Court and further, that the doctrine, being rooted in equity, cannot be invoked in this case because the Appellants have come to Court with dirty hands. That the 1st Appellant admitted that it was in default with regard to its loan obligations to the 3 rd Respondent and is therefore not entitled to seek the aid of equity. That being e disentitled to equity, exhibit 'CJT3' could not have operated to negate or displace the_ normal operation of receivership laws that were set in motion once the 3 rd Respondent appointed the 1st and 2 nd Respondents as joint receivers/managers of the 1st Appellant. That exhibit "CJT 3" itself announced that the 3 rd Respondent was going to place the Farm under receivership and that the 3 rd Respondent intended to appoint receiver/ managers by "Thursday, 2 nd July 2009." Counsel further submitted that the decision to place Kayanje Farming Limited in receivership remained the prerogative of the 3 rd Respondent and the manner in which the said receivership was to be conducted was in the domain of the applicable receivership laws. That the 1st and 2 nd Respondents, having been appointed as joint ., .. receivers and managers, were legally obliged to discharge their functions in accordance with the relevant receivership laws. Relying on our decision in the case of MUNDANDA VS MULWANl5 Counsel submitted that parties to an agreement "should be presumed to contemplate a legal rather than an illegal course of proceedings." He argued that even if it was assumed that exhibit "CJT 3" embodied some agreement, the parties were still ti obliged to proceed in accordance with the applicable receivership laws as stipulated in Division 5.3 of the COMPANIES ACT4. Counsel further submitted that a receiver is appointed 1n relation to property "comprised in or subject to the charge". He referred to a portion of our judgment in the case or EDGAR HAMUWELE AND CHRISTOPHER MULENGA (as Joint Liquidators of Lima bank in liquidation) VS SIPALO & SIPALO6 in which we stated that:- "The appointment of a receiver under company law is a means by which a charge holder can enforce their security. The power to appoint a receiver and the circumstances in which such an appointment will be made should be outlined in the instrument under which the charge was created." Counsel submitted that the 1st and 2 nd Respondents were appointed as joint receivers and managers of the " ... undertaking property • and assets comprised in and charged by the Debenture" that was executed between the 1st Appellant and the 3 rd Respondent. Clause 7 of the said debenture empowered the 1st and 2 nd Respondents to, among others, " ... take possession of, collect and get in any property comprised in the debenture." Counsel contended that in the circumstances, the lower Court was on firm ground when it held that the 3 rd Respondent was entitled to 411 exercise dominion over the entire Farm 2059 and that the Appellants' contention that only a subdivision of the farm could be sold was 'untenable'. Counsel submitted also that the discussions relating to exhibit "CJT 3" were founded on a misapprehension of the correct legal position and ramifications of appointing the 1st and 2 nd Respondents as joint receivers and managers of the 1st Appellant. He stated that the mandatory provision of the law is contained in Section 110 of the Companies Act. That this provision required the 1st and 2 nd Respondents, once the receivership was in motion, to address preferential debts and not to limit the 3 rd Respondent in the manner that exhibit "CJT 3" sought to do. ' . ' The in house Legal Counsel of the 3 rd Respondent also filed written heads of argument. On the first ground of appeal, it was his submission that the matter that was before the learned trial judge was whether or not to grant an injunction and that in arriving at his decision, the Judge took into account legal grounds upon which an injunction may be granted as laid down in the case of AMERICAN CYANAMIDE VS ETHICAN LIMITED7 • Counsel argued that the 2 nd Appellant failed to disclose any reasonable cause of ac_tion against the Respondents. He submitted that the 2 nd Appellant defaulted in its loan repayments and the 3rd Respondent, being a secured creditor, exercised its powers of sale as provided in the debenture between the parties. He relied on the learned authorities of MEGARIE's MANUAL OF THE LAW OF REAL PROPERTY 6TH EDITION, page 473 when they stated that:- "The mortgagee will not be restrained from enforcing payment merely because the mortgagor has some large cross/ claim against him." Counsel pointed out that the receivership in this case is in place and it should continue until discharged by actual payment of the sum due. Counsel went on to state that the fact that the 2 nd Appellant thinks that he has some claims against the Respondents does not discharge the floating charge which the 3 rd Respondent . . ' has over the 1st Appellant. He submitted that the 2nd Appellant's claim to stop the Respondents from selling the secured property is not clear, and, on the basis of the authorities that have been cited is bound to fail. That the 1st Appellant, now being in receivership, is subject to the control and direction of the receivers. On the 2 nd ground of appeal, Counsel's response is that under Clause 2 of the floating debenture, all the property of the 1st - Appellant, including its future assets, were charged by way of security to the 3 rd R~spondent until all the monies which were secured are fully paid. He agreed with the learned trial Judge that consequently, the argument by the 2 nd Appellant that only a small portion of Farm No. 2059 should be the basis of the cause of action is untenable. On the 3 rd ground of appeal, it is the submission of Counsel that the learned trial Judge was on firm ground when he found as a fact that the 2 nd Appellant was relying on exhibit 'CJT 1' for his application for an injunctive Order to restrain the Respondent from selling the farm in question. He argued that the legal relationship between the 1st Appellant and the 3 rd Respondent was governed by the letter offering credit facilities appearing on page 4 7 of the record \ ' of appeal. According to Counsel, this is the letter which constituted the contract. He agreed with the trial Judge that the 1st Appellant was in clear breach of contract and properly admitted to have defaulted on its loan repayments, a situation which entitled the 3 rd Respondent to place the 1st Appellant in receivership, in accordance with the Debenture Deed. On the last ground of appeal, Counsel submitted that having 41 found as a fact that the Appellants had no likelihood of success at trial since they had no claim to the right that they sought to protect, the learned trial Judge was on firm ground not to go on to consider the notions of balance of convenience and irreparable damages. He argued that on the authority of the AMERICAN CYANAMIDE7 case, the Court can only go on to consider balance of convenience and irreparable damage if the case, in its opinion, is not tilted in favour of any of the parties on the question of a clear right of relief. We have considered the submissions of Counsel and the judgment of the lower Court. It is not in dispute that the 3 rd Respondent, Zambia National Commercial Bank, extended credit facilities to the 1st Appellant, KAYANJE FARMINING LIMITED. The security was Farm No. 2059 Ngwerere. There was also a floating debenture over all company assets and a floating agricultural charge over all crops to be grown from year to year to cover the outstanding amounts. In case of default, Clause 7.5 of the letter of off er provided that: - " ... in any such event, the full amount of the loan and any other facilities accorded to the borrower by the Bank, then outstanding, and all charges accrued thereon, together with additional interest as defined in this overdraft letter shall immediately become due and payable. In addition, the Bank shall have the right to exercise all other remedies available to them in terms of the Laws of the Republic of Zambia." Clause 6 of the floating debenture authorized the Bank to appoint " ... any person or persons to be a receiver or receivers of the property comprised in this security upon such terms as to remuneration and otherwise as the bank shall think fit. .. " at any time after the Bank has demanded payment or discharge of any liabilities secured by the credit and the demand is not satisfied. It is common cause that the 1st Appellant defaulted in the loan repayments after which the 3 rd Respondent appointed the 1st and 2 nd Respondents as receivers/managers under a Deed of Appointment dated 20 th July, 2009. The contention by Appellants, in the main, is that there was a subsequent agreement embodied in the e-mail marked 'CJT 3' which affected the rights of the 3 rd Respondent under the floating debenture through the doctrine of promissory or equitable estoppel. On this premise, the Appellants applied for interim injunctive relief arguing that the parties had agreed that only a portion of the secured property would be sold. In the first ground of appeal, the Appellants contended that the learned trial Judge misdirected himself when he found that the 9 Appellants were relying on the exhibit 'CJT 1 ', a letter offering credit facilities for thei~ application for an injunction, when in fact the Appellants relied on the e-mailed marked 'CJT 3'. The relevant portions of the Ruling by the Court below states as follows: into with the "The Plaintiffs have argued that they have a legitimate cause of action in that they seek the Defendants to abide by the agreement entered in receivership. The agreement was inter alia that only a portion of the farm would be disposed of and it also set out some of the obligations of the receivers which the first and second Defendants had allegedly breached. The agreement was produced and marked exhibit 'CJT 1' to the affidavit in support of this application sworn by the second Plaintiff." (underlining ours) . first Plaintiff prior to placing it · On page 21 of the record of appeal, the Court also stated: "The argument by the second Plaintiff and Counsel for the Plaintiffs that the agreement of the parties as evidenced by exhibit 'CJTl' was that only a subdivision of the farm would be sold is therefore untenable." \ . .,, c I J A copy of exhibit 'CJT 1' is produced on page 4 7 of the record of appeal. It is the letter offering credit facilities to the 1st Appellant. The document which alludes to " ... a sale of the proposed subdivision ... " is exhibit "CJT 3" appearing on page 56 of the record of appeal. Obviously, reference to exhibit 'CJT 1' in the Ruling must have been by mistake . It is clear to us that the application by the Appellants for an interim injunction was anchored on exhibit 'CJT 3', the document which alluded to an alleged agreement bet~een the parties to sell only a portion of Farm 2059, Lusaka. In evaluating the issues that were before him, the learned trial Judge was alive to the arguments, pleadings and the affidavits that were before him. Ultimately, he had to consider whether this was a proper case in which to grant an interim injunction. He alluded to the main issue contained in exhibit 'CJT 3', which is the alleged agreement to sell only a subdivision of the Farm in question. He also alluded to the provisions of the floating debenture vis-a-vis exhibit 'CJT 3' and came to the conclusion that the 3 rd Respondent never waived its rights to exercise the options under the debenture. The Judge reached this conclusion after finding that the whole farm had been charged. We, therefore, find that the erroneous reference to exhibit 'CJTl' instead of 'CJT 3' did not in any way derail or side track the learned trial Judge from the main issue that was in contention. We agree with Mr. MUSONDA, the learned Counsel for the Respondents that the erroneous reference to 'CJTl' did not in any way negate the substance or conclusion that the learned trial Judge reached. • The second limb of the argument in the first ground of appeal 1s that the learned ~rial Judge erred when he ruled that the argument by the Appellants that only a subdivision of the farm in dispute would be sold is untenable. We will deal with this argument together with the issues raised in the second ground of appeal; that the Judge did not address his mind to the to the legal effect of the contents of exhibit 'CJT 3' on the provisions of the floating debenture on which the Judge based his Ruling to decline to grant the interim injunction. The learned Counsel for the Appellants spiritedly argued that exhibit 'CJT3' affected the 3 rd Respondent's rights arising from the floating debenture in several ways, one of which was the doctrine of promissory or equitable estoppel. Several authorities have been cited to us on the doctrine of promissory estoppel. Arising from these authorities, the thrust of the Appellant's position is that while there was a floating debenture executed by the parties which bestowed rights and obligations on them, there was a subsequent agreement contained in exhibit 'CJT 3' which led the Appellants to believe that the rights and obligations arising from the debenture will not be adhered to. Indeed, promissory or equitable estoppel is aptly explained by the words of the learned authors of HALSBURY'S LAWS OF ENGLAND3 to which we have been referred by the learned Counsel for the Appellants. This is that: "When one party has, by his words or conduct, made to the other a clear and unequivocal promise or assurance which was intended to legal relations between them and to be acted on affect the accordingly, then once the other party has taken him at his word and acted on it, the other who gave the promise or assurance cannot afterwards be allowed to revert to their previous legal relations as if no such promise or assurance had been made by him, but he must accept their legal relations subject to the qualifications which he himself has so far introduced." We have looked at the Appellants' skeleton arguments and the list of authorities that were filed in the Court below in support of the exparte application for an interim injunction appearing from page 110 to page 114 of the record of appeal. These documents show that the application was made under ORDER 27 RULE 1 OF THE HIGH COURT ACT 1 and Order 29 Rule 1 of the White Book. Judicial precedents on the grant of injunctions were cited. The arguments advanced were on: 1. ·whether the injunction is necessary to protect the Plaintiffs from irreparable injury; 2. whether there were serious questions to be tried. One such questions was that the Court, in exercising its equitable jurisdiction, will have to determine whether " .... to allow the earlier proposed and agreed arrangement to sell only a portion of the farm for purposes of liquidating a large portion of the debt ... " 3. The balance of convenience. The Respondents responded through skeleton arguments appearing on page 165 to page 178 of the record of appeal. They argued inter alia, that the 1st Appellant was in default and the 3 rd Respondent, as a debenture holder could not, by force of injunction, be stopped from exercising its legal rights under the debenture. These are the issues that were placed before the lower Court for determination. The argument based on the doctrine of promissory or equitable estoppel was not invoked or argued. It has been advanced for the first time before us. The Court below was not, therefore, invited to apply this doctrine to the case at hand and more specifically whether the e-mail 'CJT 3' was intended to affect the legal relations between the parties as stipulated in the debenture. Consequently, the Court below interrogated the issues in the context of the pleadings and arguments that were advanced before it. Our task, as an appellate Court, is to ascertain whether, on the issues that were argued before it, the lower Court erred in its decision either on a point of law or fact or both. The lower Court found, notwithstanding exhibit 'CJT 3', that in appointing the 1st - and 2 nd Respondents as receiver/managers, the 3 rd Respondent was exercising its legal rights under the debenture and that the 3 rd Respondent never waived its rights under the instrument. As pointed out by the learned Counsel for the Respondents, the e-mail 'CJT 3' itself announced that the 1st Appellant would be placed in receivership. We agree with him that once the receivership was in place, the appointed receivers and managers had a duty to discharge their functions in accordance with the law, more especially the COMPANIES ACT4. H. PICARDA stated in his book "THE LAW RELATING TO RECEIVERS, MANAGERS AND ADMINISTRATORS5 , referred to us by Counsel, that . ' "The position of a receiver and manager appointed out of Court is always to be determined by reference to the floating charge or instrument under which he was appointed." The instrument under which the 1st and 2 nd Respondents were appointed as receivers and managers of the 1st Appellant is the Deed of Appointment of Receivers/Managers of 10th July 2009. It states that the two Respondents are appointed as " .... joint receivers and managers of all the undertaking property and assets comprised in - and charged by the debenture." The learned Counsel for the Appellant has submitted that the doctrine of equitable or promissory estoppel is rooted in equity. That the 1st Appellant, being in default in its loan obligations, is disentitled from seeking the aid of equity. We agree with this submission. Quite apart from the argument on promissory estoppel not having been raised in the lower Court, the Appellants e are running to equity when they are already in default. We cannot therefore fault the trial Judge when he found that the argument by the Appellants, that the agreement of the parties was that only a subdivision of the Farm in dispute would be sold, was untenable because the 3 rd Respondent never waived its right to exercise the options under the floating debenture. In our view, the trial judge '., properly considered the arguments with regard to exhibit 'CJT 3' in the light of the provisions of the floating debenture. The first and second grounds of appeal cannot therefore succeed. We will deal with the third and fourth grounds of appeal together. In the third ground of appeal, the Appellants argue that the Judge erred by disregarding the plain and natural meaning of Order XXVII Rule 1 of the HIGH COURT ACT 1 and proceeded on - the basis that one of the principles that govern the grant of an injunction is that the person seeking the injunction must have a legal right to the claim that he seeks to protect. In the fourth ground of appeal, the Appellants contend that the Judge fell into grave error when he elected not to address his mind and consider whether the balance of convenience weighed in favour of the Appellants; and when he decided not to consider whether irreparable damage would be caused if the Respondents alienated the property in question. According to the learned Counsel for the Appellant, the paramount interest in Order 27 Rule 1 of the HIGH COURT ACT 1 is to stay and prevent wasting, damage or alienation of property which is in dispute. He argued that the only pre-requisite in this rule is to have a suit before the Court. That there is no requirement in this Rule for an Applicant to prove a legal right to a claim that he seeks to protect. Counsel further submitted that when it comes to land, damages cannot adequately compensate for its loss. The response from the Respondents is that the lower Court carefully guided itself with the aid of well settled principles which govern the granting of injunctive relief. - We have carefully considered the arguments by the parties on the third and fourth grounds of appeal. In our view, the provisions of Order 27 Rule 1, are very clear. It empowers the Court or a Judge " ... to issue an injunction" directing a person " ... to refrain from doing the particular act complained of. .. " if it or he is satisfied that any property which is in dispute is in danger of being wasted, damaged or alienated by any party to the suit. It is our view that when exercising its jurisdiction under this Rule, the Court must be alive to the principles which govern the grant of interim injunctions. An interim injunction could be described as a premature judgment in that it is given before the Court has adjudged on the respective rights of the parties in the case. It is intended to protect ... I • < a legal right by preserving any property that is in dispute so that by the time that the Court makes its decision, the judgment would not be rendered nugatory or worthless. In our view, it is preposterous to suggest that a party should be granted such a remedy even when he/ she cannot establish a prima facie legal right to the claim he seeks to protect. As properly stated in Order 29 Rule 1 A (5) of the White Book; "The right to an interlocutory injunction cannot exist in isolation. It is always incidental to and dependent on the enforcement of a substantive right ... " The learned trial Judge alluded to this Rule. If an Applicant cannot establish a prima facie legal right to the claim that they seek to protect, the application must suffer a fatal blow. The notions of balance of convenience and irreparable damage can only come into consideration after a party has shown a prima facie rights to the - claim that they seek to protect. If a party fails to do so, it is an academic exercise or otiose to consider the balance of convenience or the notion of irreparable damage because there is no legal right to protect. The learned trial Judge was, therefore, on firm ground when he declined to embark on a fruitless voyage to consider issues -;vhich could not bring any life to the application. We find no merit in the third and fourth grounds of appeal. From the foregoing, we find that the whole appeal has no merit. It is dismissed with costs to the Respondents. re LC. Mambilima DEPUTY CHIEF JUSTICE GE 33