Lumus Agricultural Services Company Ltd and Anor v Gwembe Valley Development Company Ltd (SCZ Appeal 29 of 1997) [1999] ZMSC 72 (5 February 1999)

IN THE SUPREME COURT OF ZAMBIA SCZ APPEAL No.29 OF 1997 HOLDEN AT LUSAKA (CIVIL JURISDICTION) BETWEEN: LUMUS AGRICULTURAL SERVICES COMPANY LIMITED LUMUS AGRICULTURAL SERVICES COMPANY (ZAMBIA) LIMITED AND 1ST APPELLANT 2ND APPELLANT GWEMBE VALLEY DEVELOPMENT COMPANY LIMITED (IN RECEIVERSHIP) RESPONDENT Coram: Sakaia, Ag. D. C. J., Muzyamba and Lewanlka, JJS 10th December 1998 and 5th February 1999 For the 1st Appellant: R. Simeza, Simeza Sangwa and Associates For the 2nd Appellant: J. Mwanakatwe SC., J. M./Consultants M For the Respondent: A. A. Dudhia, Musa Dudhia and Company JUDGMENT Muzyamba, J. S. delivered the judgment of the court. CASES REFERRED TO; 1. DEEBLE v ROBINSON 1954 1 QB 77 2. NATIONAL AND GRINDLAYS BANK LTD ANO DHARAMSHI VALLABHJI AND OTHERS 1966 2 ALLER 626 This is an appeal against a finding by the High Court that the subsequent rectification or authentication of the notice of appointment of joint receivers and Managers of the respondent dated 28th September 1993 had a retrospective effect and that the notice was valid for use in Zambia in terms of Section 3 of the Authentication of Documents Act, Cap 75 of the Laws of Zambia, hereinafter referred to as the Act. The respondent cross appealed against a finding that the said notice of appointment was a document within the definition of that word in Section 2 of the Act and that if not authenticated it was not available for use in Zambia. When we heard the appeals we allowed the main appeal and dismissed the cross appeal and said we would give our reasons later. We now do so. The facts of this case are that the second appellant and the respondent are limited liability companies registered in Zambia. The first appellant is a foreign company. Both the first appellant and a company based in Germany called Deutsche Finanzier - ungsgesellschaft fur Beteilgungen J2 : hereinafter referred to as 'DEG' are shareholders in the respondent company and each gave the respondent a loan. The loans were secured by mortgage and Debenture dated 5th and 7th January 1988, respectively. The respondent failed to repay the loans on due dates and on 28th September 1993 DEG appointed John Stanley Ward and Elmo A. Jayetileke both of Price Water House, Lusaka as joint Receivers and Managers of the respondent in terms of the mortgage and Debenture Deeds. There then followed issuance of various causes in the Principal Registry. On 1st June 1994 the second appellant commenced an action by writ under cause No.1994/HP/1826 against the joint Receivers and Managers as 1st defendant and the respondent as 2nd defendant for a declaration that the respondent's assets should not be used 'until the 1st defendant has placed adequate safe guards in the management agreement to avoid the assets to deteriorate or waste' and for an injunction to restrain the 1st defendant from using the assets and occupying the residential premises situate at Lot number 2746/M Sinazongwe. The application for an injunction was listed for hearing on 7th June 1994 at 14.30 hours. On the appointed date the application was adjourned and when it was finally heard on 27th July 1994 it was refused on the ground that damages would be an adequate remedy. On 19th August 1994 the respondent commenced an action by writ under Cause NO.1994/HP/2857 against the 1st appellant for a declaration that the appellant was not entitled under the mortgage and Debenture Deeds to appoint a Receiver as it had assigned the power to do so to Zambia National Commercial Bank Limited and in the event that it had already appointed a Receiver that the Receiver was not entitled to exercise his powers over the Respondent's assets and undertaking . On the same day the respondent obtained an exparte order of injunction restraining the 1st appellant from appointing a Receiver and to restrain the Receiver, if already appointed from exercising his powers under the mortgage and Debenture Deeds. 25th August 1994 was fixed as the return day for interparty hearing. It is not clear from the record what followed thereafter but on 11th October 1994 the court made the following order: “UPON HEARING COUNSEL for the Plaintiff and Defendant AND UPON READING the Plaintiff's affidavits filed herein on the 19th August, 31st August and 7th October and the Defendant's Affidavits filed herein on the 25th August and 22nd September 1994 IT IS THIS DAY ORDERED as follows: J3 1. The interim Injunction dated the 19th day of August 1994 shall continue to be in full force and effect until the 19th day of October 1994 ON CONDITION that the Defendant on or before the 19th day of October 1994 pays into Court a fully secured bond from a Registered Commercial Zambian Bank in the sum of Three Billion Five Hundred Million Zambian Kwacha (K3,500,000,000-00). 2. In the event of the Defendant's failure to lodge into Court the aforesaid bond on or before the 19th day of October 1994 then the interim Injunction of 19th August 1994 shall become an interlocutory injunction and shall continue to be in force until the final determination of this matter." No bond was lodged and on 30th January 1995 the 1st appellant applied for special leave for a review of the above order. Leave was granted on 2nd March 1995 and on 14th March 1995 the 1st appellant filed summons for review returnable on 3rd May 1995 . Before then, on 28th November 1994 the 1st appellant filed a notice of motion under Cause NO.1994/HP/4906 against John Stanley Ward and Elmo Jayetileke for a declaration that their appointment as joint Receivers and Managers of the respondent by DEG was null and void and of no effect ab initio and for an order revoking their appointment. The motion was listed for hearing on 12th December 1994 before a different Judge. Before the return day, that is on 8th December 1994 the joint Receivers and Managers filed an application to strike out the cause as an abuse of the due process of the law as other causes were pending in court. The learned Judge who heard the application declined to strike out the cause and instead ordered consolidation of all the causes. This was on 19th January 1995. The three causes then stood as consolidated. When the 1st appellant challenged the appointment of the joint Receivers and Managers on the ground that the notice appointing them, having been executed in Germany, did not comply with Section 3 (d) of the Act the notice of appointment was then sent to Germany for authentication and this was done on 28th March 1996. On review of his order dated 11th October 1994 the learned Judge held that the notice of appointment of the joint Receivers and Managers was a document in terms of Section 2 of the Act and that since it was executed outside Zambia and not authenticated it was not available for use in Zambia. He went further and said, at pages 13 and 14 of the record of appeal and we quote: : J4 : “As earlier pointed out if the document is not authenticated it shall remain not available for purposes of use in Zambia. However, should the document be authenticated by way of rectification as has been the case in these proceedings the document shall be available for purposes of use in this country with effect from the time it was issued. The act of rectification can appropriately be referred to as the ‘validating act’ which essentially lies in complying with the formalities in Section 3 (d) of the act in order to make the document valid for use in Zambia. The validating act has in my view, no bearing on the appointment of the receivers of the plaintiff as it does not change or effect their appoint­ ment in any way. The example that can be used to amplify on what I mean by ‘validating act’ is found in Section 6 of the Lands and Deeds Registry Act, Chapter 287 of the laws which was mentioned in the submissions of the learned legal Counsel representing the plaintiffs. The section stipulates that if a document is not registered within the times specified under Section 5 it shall be null and void. However, under the proviso to Section 6 the court can validate the document for registration purposes by extending the time within which it should be regi­ stered, thereby curing the nullity or void, if the court is satisfied that the failure to register within the stipulated time was unavoidable and that no injustice will be caused by allowing late registeration. The proviso to Section 6 shows that it is the document that becomes null and void and not eligible for registration and not the contents of document. A deed of assignment, duly executed by the parties after the conclusion of a legally binding transaction will, in practice, mean that the purchaser has paid the purchase price and has taken occupation of the premises that is the subject of the deed of assignment. If the document is dated on the date of execution and is subsequently misplaced it will not be accepted for registration at the Lands and Deeds Registry if it has exceeded the stipulated period within J5 which it ought to have been registered. The rejection of the assignment because it is time barred does not mean that the transaction it is trying to record through registration is also null and void, for if it were so the injustice that would result from such a provision in law would be absurd - hence the proviso. On a balance of probabilities I find that the application for review of my order of the 11th Octobr 1994 has no merits at this stage because it has been overtaken by events following the recti­ fication of the instrument of appointment of the receivers on the 29th March 1996. The application is dismissed and in view of the importance of the application there will be no order for costs." The appellants then appealed to this court on the following grounds: 1. That the learned Judge erred in law in equating Section 3 of the Act with Section 6 of the Lands and Deeds Registry Act Cap 287, now Cap 185 which empowers the court to extend the time within which to register a document not registered in time. 2. That the learned Judge erred in law in holding that the subsequent rectification or authentication of the notice of appointment of the joint Receivers and Managers of the respondent had a retrospective effect and that the notice was therefore available for use in Zambia. The respondent cross appealed on the following grounds: 1. That the learned Judge erred in finding that the notice of appointment of the joint Receivers and Managers was a document in terms of Section 2 of the Act. 2. That the learned Judge erred in law in holding that if a document is not authenticated in accordance with Section 3 (d) of the Act it cannot be used in Zambia without limiting that use to evidential purposes and by not addressing his mind to the definition of the word ’authentication* in Section 2 of the Act. : J6 At the hearing of the appeals we called upon Mr. Dudhia to address us first as we saw no grounds on which he could seriously oppose the main appeal. We will first deal with the first ground of appeal in the cross appeal, namely whether or not the notice of appointment of the joint Receivers and Managers was a document in terms of Section 2 of the Act which provides: “2. In this Act, unless the context otherwise requires - document means any Deed, contract, power of Attorney, affidavit, or other writing, but does not include an affidavit sworn before a Commissioner of the High Court.'* Applying the ejusdem generies rule and quoting Maxwell on Interpretation of Statutes, 12th Edition by P. St. J. Langan and Mozley and Whiteley's Law Dictionary, 8th Edition by John B. Saunders the learned Judge found that the notice of appointment was a document in terms of the above Section. Mr. Dudhia argued that the learned Judge was wrong in so finding because the notice of appointment was not similar in nature to the documents enumerated in the Section and that the word 'other writing' refers to or must mean documents of a similar nature. In support of his argument he referred us to the case of Robinson (1) at page 80 where Bowen L. J. said: "I agree with what is stated in Craies on Statute Law 5th ed. p.197, that "where the word defined is declared to 'mean* so and so, the definition is explanatory and prima facie "restrictive". The writer goes on to say that "where the word defined is declared to 'include* so and so, the definition is "extensive." And at pages 82 to 83 where Denning L. J. said: "Where Parliament has specifically declared what the expression "shop" means in the Act I do not think it is open to the Courts to say that it means something else... In the present case, in relation to the word "shop" Parliament has not said it "includes" so and so. It has said that it "means" so and so. When Parliament has been thus specific we are not at liberty to depart from it." J7 : Mr. Dudhia concluded by saying that by using the word 'means1 Parliament intended to restrict the definition of the word 'document' to documents similar to those mentioned in the Section. Moreover, that the notice of appointment was just a letter and it was never signed by the appointees unlike a deed or contract which must be executed by both or all parties. In response Mr. Mwanakatwe argued that the notice of appointment has all the features or semblance of a deed and therefore not a letter but a document. That the learned Judge was therefore right in his finding that the notice of appointment was a document. In concurring with Mr. Mwanakatwe Mr. Simeza said that the notice of appointment at page 76 of the record of appeal spoke for itself that it was a document and not a letter. We have considered the arguments by Counsel and the authority cited by Mr. Dudhia and we agree with him that the words 'other writing' in Section 2 of the Act mean similar to the documents mentioned in the Section. The crucial question however is whether the notice of appointment is similar to a deed, contract, power of Attorney or affidavit. It is common knowledge that a power of attorney is signed by the donor only and witnessed and an affidavit is signed by the deponent and witnessed by a Commissioner for Oaths. Mr. Dudhia's argument that the notice is not a document because it is not signed by the appointees therefore fails because it is in the nature of a power of attorney. The matter does not end here. Is the notice of appointment 'other writing'. It is again common knowledge that a deed, contract and power of attorney confers rights and obligations on the parties and donee in case of the power of attorney and an affidavit places obligations on the deponent. It is in this context therefore that we have to decide whether or not the notice is similar to the documents enumerated in the Section or is 'other writing'. The notice of appointment at page 76 of the record reads in paragraph (4): "DEG in exercise of the powers conferred upon it by the Mortgage and the Debenture hereby appoints JOHN STANLEY WARD and ELMO A JAYETILEKE of Price Waterhouse, Seventh Floor, National Savings and Credit Bank Building North End, Cairo Road, P. O. Box 30942, Lusaka ("the Receiver") to be Receiver and Manager of all the Property, undertaking, other property assets and rights of the Borrower comprised in and charged or demised by way of security by the Mortgage and the Debenture upon the terms and subject to the powers and provisions contained in the Debenture (but not so as to limit any additional powers given to the Receiver at Law or otherwise).'' J8 : There is no doubt that the notice confers on the appointees i.e. the joint Receivers and Managers rights and obligations over the property and assets of the respondent. It is therefore 'other writing1 and a document in terms of Section 2 of the Act. The learned Judge was therefore right in arriving at the conclusion that he did. The cross appeal would fail on this ground. We will now turn to ground 2 that the learned Judge erred in law in deciding that if a document is not authenticated in accordance with Section 3 (d) of the Act it cannot be used in Zambia without limiting that use to evidential purposes and for not addressing his mind to the definition of the word authentication in Section 2 of the Act. On this ground Mr. Dudhia argued that authentication of a document simply means verifying the signature or signatures on a document and that if a document is not authenticated does not mean that it is invalid and cannot be used. That had the learned trial Judge properly addressed his mind to the definition of the word authentication he would have come to a different conclusion that though not authenticated the notice of appointment was available for use in this country. Moreover, that Section 3 was regulatory or directory and not mandatory and therefore failure to authenticate a document does not invalidate or render the document null and void. In support of this argument he relied on the case of National and Grindlays Bank (2). He further argued that the Section does not give a time limit within which a document may be authenticated and that where a document is not authenticated it cannot be used in evidence but may be used for other purposes. That the learned Judge therefore erred when he held that if a document is not authenticated it cannot be used at all. In response Mr. Mwanakatwe argued that it is quite clear from the wording of Section 3 that if a document is not authenticated as provided in the Section then it cannot be used either in evidence or for other purposes. That to decide or hold otherwise would defeat the object of the Act which is to protect interests of inhabitants of this country by deterring spurious businessmen or international crooks from obtaining unauthentic documents and use them in this country and in so doing ruin our country. That for this reason the provision is mandatory or prohibitive and not regulatory or directory. Mr. Simeza entirely agreed with Mr. Mwanakatwe. J9 : We have considered the arguments by Counsel and the Act. Section 2 of the Act defines authentication as verification of a signature or signatures on a document and Section 3 (d) provide as follows; "3. Any document executed outside Zambia shall be deemed to be sufficiently authenticated for the purpose of use in Zambia if- (d) In the case of a document executed in any place outside Her Britannic Majesty’s dominions (hereinafter referred to as a “foreign place") it be duly authenticated by the signature and seal of office- (i) of a British Consul-General, Consul or Vice- Consul in such foreign place; or (ii) of any Secretary of State, Under-Secretary of State, Governor, Colonial Secretary, or of any other person in such foreign place who shall be shown by the certificate of a Consul or Vice-Consul of such foreign place in Zambia to be duly authorised under the law of such foreign place to authenticate such document." It is quite clear from Section 3 that if a document executed outside Zambia is authenticated as provided then it shall be deemed or presumed to be valid for use in this country and if it is not authenticated then the converse is true that it is deemed not valid and cannot be used in this country. It was argued by Mr. Dudhia that if a document is not authenticated it is still valid and can be used for other purposes other than in evidence. In National and Grindlays Bank (2) cited by Mr. Dudhia it was held: "In the absence of any express provision in S.15 of the Chattels Transfer Ordinance, 1930 as to the consequence of non-attestation, the natural implication from the provisions of S.15 and its context and the scheme of the Ordinance was that an unattested instrument was valid between the parties but incapable of registration and so was ineffective against other persons; accordingly the letter of hypothecation was valid as between the appellant bank and the respondents and the acts of the aooellant bank were justified." □10 : That is a case in which the respondent obtained overdraft facilities from the appellant and as a security for the overdraft the respondent gave the appellant a signed letter of hypothecation over their stock in trade and certain other articles. The letter was neither attested nor registered. Later the respondent obtained more overdrafts and signed fresh documents and extended the letter of hypothecation and gave a new guarantee, the respondent exceeded the limits and when they were unable to repay the overdrafts the appellant seized the respondent's stock in trade. The respondent then brought an action against the appellant for damages for trespass. One of the issues that arose during trial was whether or not the letter of hypothecation was valid not being attested or registered. We agree with that decision that an instrument which is not attested or registered is valid between the parties but ineffective against other persons and that is precisely the position with the case presently before us. The notice of appointment can be said to be valid between DEG and the appointees, the joint Receivers and Managers but ineffective for purposes of Receivership and management of the affairs of the respondent, being the other person. For this reason we do not agree with Mr. Dudhia that a document not authenticated can be used for any purpose other than in evidence. More so that a document is created or made for a purpose and it is only when a dispute arises in the course of using that document for that purpose that the question of using it in evidence arises. We would therefore agree with Mr. Mwanakatwe that if a document is not authenticated it cannot be used in this country for any purpose at all. The learned Judge was therefore right in so holding. This means therefore that at the time the joint Receivers and Managers assumed their role in the respondent company the notice of appointment was invalid for that purpose. The next consideration is whether or not the authentification of the notice of appointment on 28th March 1996 was proper in the circumstances of this case and indeed whether such authentication could be retrospective. Here we bear in mind that Section 3 of the Act, unlike Sections 5 and 6 of the Lands and Deeds Registry Act, Cap 185 which, respectively give time limits for registration of deeds for conveyance of any interest in land and empowers the High Court to extend the time, does not limit the time within which a document may be authenticated. What this means is that a document may be executed to-day but be authenticated a year or so later but what is important is that such a document should not be acted upon or used in Zambia before it is authenticated. To this J11 : extent the learned Judge erred in law by equating Section 3 of the Act to Section 6 of Cap 185. It follows therefore that a document needing authentication cannot be authenticated ex post facto. The learned Judge therefore erred again in deciding that the authentication of the notice of appointment on 28th March 1996 had a retrospective effect. For the foregoing reasons we allowed the main appeal and the cross appeal failed on this ground too. The net result was that the main appeal succeeded and we dissolved the orders of injunction dated 19th August 1994 and 11th October 1994 and the judgment of the court below dated 10th September 1996 was reversed. The cross-appeal was dismissed. Costs of both appeals shall abide by the event and to be taxed in default of agreement. In passing off we wish to say that Mr. Dudhia wanted to raise a preliminary issue regarding the locus standi of the second appellant. We said it was not necessary and that we would comment upon it later. We now do so. Although the order of injunction dated 11th October 1994 was made against the first appellant yet the second appellant was a party to the ruling appealed against dated 10th September 1996 and is a joint party to the notice of appeal at page 2 dated 18th September 1996 and to all subsequent documents. It is for these reasons that we allowed them to be heard. E. L. SAKALA SUPREME COURT JUDGE W. M. MUZYAMBA SUPREME COURT JUDGE D. M. LEWANIKA SUPREME COURT JUDGE