Michael Kahula v Finance Bank Zambia Limited (APPEAL NO. 190/2018) [2019] ZMCA 341 (17 July 2019)

IN THE COURT OF APPEAL OF ZAMBIA APPEAL NO. 190/2018 Jl HOLDEN AT LUSAKA (Civil Jurisdiction) BETWEEN: MICHAEL KAHULA APPELLANT AND FINANCE BANK ZAMBIA LIMITED RESPONDENT CORAM: MAKUNGU, SICHINGA AND NGULUBE, JJA. On 27th March and 17th July 2019. For the Appellant: Mr. K. Khanda, Messrs Cen tral Ch a mbe rs. For the Respondent: Mr. M. Moonga, Messrs Te mbo Ngulube and A ssociates JUDGMENT NGULUBE, JA d elivered the Judgment of the Cour t. Cases referred to: 1. BP Zambia PLC and Interland Motors Limited S. C. Z Judgment Number 5 of 2001 . 2. Bank of Zambia v Jonas Tembo, S. C. Z Judgment Number 24 of 2000. 3. Development Bank of Zambia and Another v Sunvest Limited and Another, S. C. Z Judgment Num ber 3 of 1997 Legislation referred to: 1. High Court Act, Chapter 27 of the Laws of Zambia. Works referred to: 1. Black's Law Dictionary, 8 th e d ition, 2004, at p age 14 04 J 2 1. INTRODUCTION 1.1. This appeal arises from a Judgment of the High Court delivered on 7 th February, 2018, in which the Court found that the respondent had proved its claim on balance of probabilities that the appellant owed the respondent money arising from a car loan of K55,000=00 which it advanced to the appellant on 23rd January, 2008 as well as a personal loan of K22,000=00 which was also advanced to the appellant on 24th January, 2011 . 1.2. The court further found that the amount due to the respondent would have to be recalculated so that simple interest would be charged. Judgment was entered in favour of the respondent against the appellant and the outstanding debt was referred to the Registrar for assessment. 2. BACKGROUND 2.1. The brief background of the matter is that the appellant commenced an action by writ of summons on 17th March, 2011 seeking the following reliefs- J3 (i) The sum of K63,007 ,813.67; (ii) Interest; (iii) Any other relief the Court would deem fit; (iv) Costs. 2.2. According to the statement of claim, on or about 23rd January, 2008, the appellant who was in the employ of the respondent was advanced a car loan facility in the sum of K55,000 ,000=00. The respondent further advanced the sum of K22,000,000=00 to the appellant on or about 12th October, 2009 by way of a personal loan. The appellant did not settle the loans and was indebted to the respondent in the sum of K63,007,813 .67 as at 24th January, 2011. 2.3. The appellant filed a defence and a counter claim on 28th March, 2011 averring that the re spondent had been paid in full and counterclaiming that he had not b een paid his terminal benefits amounting to K300,000=00. He accordingly claimed for the immediate payment of his terminal benefits, damages for the inconvenience caused due to non-payment, with interest and costs. J4 2.4. The respondent averred in its defence to the counterclaim that the appellant was paid all his dues in accordance with the pension scheme that was established in 1999 and that the counterclaim was before the Industrial Relations Court under Complaint Number 87 /2010, therefore res judicata was pleaded. 2.5. In addition, regarding the counterclaim the respondent raised the defence of res judicata as the dispute under Complaint Number 87 /2010 concerned the termination of the appellant's employment while the dispute in casu relates to loans that the appellant obtained while in employment. 2.6. Upon hearing the appellant and his witnesses as well as the respondent's witnesses, the court found that the appellant had been in the employ of the respondent for 21 years before he left employment in September, 2010 and that he got two loans from his employer in 2008 and 2009. The court found that the Bank had the right to convert the car loan facility into a commercial loan. Regarding the JS personal loan, the court took judicial notice of the fact that it is common banking practice for bank employees to be charged using the commercial interest rate once they cease to be employed by the bank. The court found that there was no express agreement between the appellant and the respondent to charge compound interest on the loans. 2.7. The court further found that the appellant did not acquiesce to the charging of compound interest on his staff loans which converted to commercial loans when his employment was terminated. The court stated that the Supreme Court's direction was that the appellant would be paid terminal benefits for the period 1988 to 1999 using the minimum wages and conditions of employment order. 2.8. The court also found that the issue of the appellant's terminal benefits was determined by the Ind us trial Relation Court on 30th November, 2011. Accordingly, the counterclaim was dismissed with costs to the respondent, to be taxed in default of agreement. J6 3. GROUNDS OF APPEAL 3.1. Dissatisfied with the Judgement, the appellant raised two grounds of appeal as follows- ( 1) That the learned trial Judge erred in law and fact when he held that the counterclaim was not only an abuse of court process but was incompetently before the trial court as it was debarred by the legal doctrine of res judicata when in fact, at the time the plaintiff filed its reply and defence to counterclaim, the proceedings in the Industrial Relations Court had not been fully adjudicated upon to qualify the defence of res judicata following an appeal to the Supreme Court in the same cause. (2) That the learned trial Judge erred in fact when in holding that the counterclaim for the immediate payment of terminal benefits due to the defendant fallowing the commencement of the action by the plaintiff was an abuse of Court process when in fact J7 the counterclaim is an absolute defence to the plaintiff's claim as it is a classical equitable set-off. 4. THE ARGUMENTS PRESENTED BY THE PARTIES 4.1. In support of the first ground of appeal, it was submitted that the counterclaim was not an abuse of court process and could not be de barred by the legal doctrine of res judicata as there was no Judgment of the Industrial Relations Court settling the issue arising in the counterclaim. It was contended that the appellant filed its defence and counterclaim on 28th March, 2011 and that issues relating to his terminal benefits were determined under Complaint number 87 /2010 on 30th November, 2011. A final decision was rendered by the Supreme Court on 24th July, 2014 under Appeal Number 96/2012 . 4.2. It was submitted that a Judgment is not final for the purpose of res judicata when it is appealed or when the time limit fixed for perfecting the appeal has not yet expired. It was contended that the defendant's claim was not an abuse of court process as the issues that the J8 appellant raised had not been fully settled at the time. The court ought to have considered the counterclaim as it was competently before it. 4.3. We were urged to set aside the lower court's order which dismissed the defendant's counterclaim and urged to order the assessment of the amounts owed to each party as evidence was led to inform the court which was not upset. 4.4. In arguing ground two, it was argued that the learned trial Judge erred in law and fact in holding that the counterclaim was an abuse of court process when in fact, the counterclaim was and is an absolute defence to the plaintiff's claim as it is a classical equitable set-off. It was submitted that the respondent had an outstanding issue with the appellant which was sufficient for a set off and that this is what the Deputy Registrar ought to be ordered to assess. It was contended that the lower court did not consider the merits of the counterclaim. The appellant prayed that the court finds merit in the appeal. J 9 4.5. The respondent filed its heads of argument on 20th March, 2019. Responding to ground one, it was submitted that the main question that begs for an answer is whether the counterclaim raised the same claims and reliefs sought in the notice of complaint filed in the Industrial Relation Court on 20th December, 2010 as to constitute an abuse of court process. 4 .6. Counsel submitted that the undisputed facts of the matter are that the respondent filed a statement of claim against the appellant on 17th March, 2011, in which it sought payment of unpaid loans. The appellant then filed its defence and counterclaim on 28th March, 2011, which appears on pages 115 and 116 of the record of appeal. In the counterclaim, the appellant sought to recover terminal/ separation benefits. On 3 rd June, 2011 the respondent filed its defence to the counterclaim in which it contended that the subject matter is the same and was an abuse of court process on account of multiplicity of actions, as the Industrial Relations Court was yet to determine the Jl O complaint that the appellant filed into court on 20th December, 2010. The court was referred to page 56 of the r ecord of appeal in this regard. 4 . 7. On 1st August, 2014, the Supreme Court directed that the appellant be paid his terminal/ separation dues. The lower court ruled that the counterclaim fell within the legal caveat of res judicata as the issue of the appellant's terminal benefits was before the Industrial Relations Court in a complaint filed on 20th December, 2010 and determined by the court in a Judgment delivered on 30th Novembe r, 2011 and cannot therefore be the subject of the proceedings herein. The court stated that the Industrial Relations Court's Judgment of 30th November, 2011 was the subject of the Supreme Court holding in the case of Michael Kahula v Finance Bank Limited Appeal No. 96 of 2012. 4 .8. Counsel referred to order 15/2/4 of the White Book, 1999 edition which states that- J l 1 "A counterclaim is substantially a cross action not merely a defence to the plaintiffs claim, it must be of such a nature that the court would have jurisdiction to entertain it as a separate action. " 4.9. Counsel contended that when the appellant filed a counterclaim against the respondent on 28th March, 2001, he did effectively institute a fresh and separate action for recovery of his terminal/ separation benefits. There was a subsisting but yet to be determined action in the Industrial Relations Court on substantially the same claims and reliefs and that this was a flagrant abuse of court process. 4. 10. We were referred to the case of BP Zambia PLC and lnterland Motors Limited1 , where the concept of abuse of court process was comprehensively dealt with 1n in terpreting Section 13 of the High Court Act in the fallowing terms- "In terms of the section and in conformity with the court's inherent power to prevent abuse of its processes, a party in dispute with another over a particular subject J 12 should not be allowed to deploy its grievances piecemeal in scattered litigation and keep on hauling the same opponent over the same subject matter before various courts. The administration of justice would be brought into disrepute if a party managed to get conflicting decisions or decisions which undermined each other from the two or more different Judges over the same subject matter." 4.11. Counsel contended that the appellant's action to institute a fresh and separate claim against t h e respondent by way of a counterclaim when there was a subsisting similar claim in the Industrial Relations Court was a multiplicity of actions and hence an abuse of court process as the two actions dealt with the same parties over the same subject matter. Counsel submitted that the counterclaim ought to be shot down on the grounds of abuse of court process premised on multiplicity of actions. 4.12. It was further submitted that the Industrial Relations Court delivered its Judgment on 30th November, 2011, J 13 which became a subject of the appeal to the Supreme Court under Appeal Number 96/2012 before the High Court proceedings were concluded. The Supreme Court then delivered its Judgment on 1st August, 2014, which appears on pages 55 to 82 of the record of appeal. 4.13. Counsel contended that by the time the counterclaim was heard in the High Court, both the Industrial Relations Court and the Supreme Court had delivered their respective Judgments on the issue of unpaid terminal benefits. Counsel submitted that the counterclaim was barred by the legal doctrine of res judicata since there were two Judgments from the Industrial Relations Court and the Su preme Court. 4 . 14. We were referred to the case of Bank of Zambia v Jonas Tembo,2 where the court held that- "A plea of res judicata must show either an actual merger or that the same poi nt had been actually decided between the same parties" Jl4 4.15. It was submitted that the trial court's hands were tied as it had n o option but to dismiss th e coun terclaim . We were therefore urged to dismiss ground one of the appeal as it lacks merit. 4.16. Responding to ground two, it was submitted that the critical question that requires an answer in ground two is wheth er a party that has obtained Judgment in another cause can set up a defence of set-off by way of a counterclaim in a subsequent matter. 4 . 17. Counsel referred to Black's Law Dictionary, eighth edition, 2004, at page 1404 which says - "Set-off is defined to be a counter-demand, generally of a liquidated debt going out of an independent transaction for which an action might be maintained by the defendant against the plaintiff." 4 . 18. Counsel submitted that whilst the appellant is entitled to plead set-off again st th e respondent's claims, this only applies to an existing demand that a party may have, but not to a Judgment that was obtained in another court JlS under a different cause which provides for its own enforcement m echanism. 4 . 19. It was further submitted that a party who has obtained Judgment in a different cause cannot conveniently purport to plead a set off in a subsequent action by way of a counterclaim. This is because when a set off is pleaded as a counterclaim, it pre-supposes a fresh and distinct action which has to be prosecuted and proved at trial. Counsel therefore prayed that the second ground of appeal be dismissed for lack of merit with costs to the respondent. 4.20. The appellant filed h eads of argument in re ply wherein it was submitted that the counterclaim was neither an a buse of court process nor was it incompetent as to the issues raised . That the counterclaim was raised as an a bsolute defence to the plaintiff's claim as it is a classical equitable s et-off. It was submitted that the court erred by not regarding the counterclaim as a defence to the plaintiffs claim and this led to the dismissal of the counterclaim as an abuse of court process. J16 4.21. It was contended that the court ought to have pronounced a final Judgment taking into consideration the fact that at the material time, the defendant was entitled to relief from the plaintiff as a matter of set-off of what was due to him. Thus, the court fell into gave error when it arrived at the decision appealed against. Counsel prayed that the court finds merit in the appeal and sets aside the judgment. 5. DECISION OF THE COURT. 5.1. We have considered the record of appeal and the arguments by both parties. The first ground of appeal raises the question whether the counterclaim was not only an abuse of court process but was incompetently before the trial court and whether it was debarred by the legal doctrine of res judicata. 5.2. In the case of Development Bank of Zambia and Another v Sunvest Limited3 , the Supreme Court stated that it disapproves of parties commencing a multiplicity of procedures and proceedings and a multiplicity of actions on the same subject matter. In casu, the appellant J17 counterclaimed in the lower court for the sum of K300,000=00 being unpaid terminal benefits. The appellant contended that the claim under Complaint Number 87 /2010 was for the payment of terminal benefits. 5.3. We are of the view that the counterclaim was a multiplicity of actions. While the action under Complaint Number 87/2010 was yet to be determined, the appellant commenced a fresh action in pursuant of the payment of terminal benefits. Clearly, the appellant engaged in forum shopping by commencing actions in two different courts on essentially the same issues. The justice of the case demands that the appellant should have raised whatever issues that he had in the earlier action before the Industrial Relations Court. The circumstances were indicative of an abuse of court process. We therefore do not find merit in ground one of the appeal and it is accordingly dismissed. 5.4. We move to consider ground two, which is that the lower court e rred when it h eld that the appellant's counterclaim for the terminal benefits was an abuse of court process J 18 when the counterclaim was an absolute defence to the respondent's claim as it was a classical equitable set-off. 5.5. We understand that the appellant sought to prosecute a new demand for the payment of terminal benefits, which was by way of set-off. However, the matter was already dealt with by the Supreme Court and the counterclaim was barred by the legal doctrine of res judicata. We do not find merit in t h is ground of appeal and it is dismissed. 6. CONCLUSION 6 .1. The net result is that this appeal is dismissed for lack of merit. Costs are awarded to the respondent to be taxed in default of agreement. ~ ~ c. K. MAKuG u COURT OF APPEAL JUDGE D. L. Y. S ICHI COURT OF APPEA P. C. M. NGULUBE COURT OF APPEAL JUDGE