Miyombo Investments Limited v Ecobank Malawi Limited (APPEAL NO. 069/2017) [2018] ZMCA 414 (1 February 2018)

IN THE COURT OF APPEAL FOR ZAMBIA HOLDEN AT KABWE AND LUSAKA (Civil Jurisdiction) BETWEEN: .-,i:...:-·I • APPEAL NO. 069/2017 MIYOMBO INVESTMENTS LIMITED =c APPELLANT AND 0 1 F'.:3 Li!J ...... .... ~~~= - ! 11 3 - .. r: '"' -- . ECOBANK MALAWI LIMITED RESPONDENT Coram: Mchenga, DJP, Mulongoti and Sichinga JJA On 4th October 2017 and 1st February 2018 For the Appellant: M. Mutemwa SC, Mutemwa Chambers For the Respondent: A. Shongo Jnr. SC, w ith S. Lungu, Shamwana & Company JUDGMENT Mchenga, DJP, delivered the Judg me nt of the court. Cases referred to: 1. Communication Authority v Vodacom Zambia Limited, SCZ Judgment No. 21 of 2001 2. Edgar Hamuwele (Joint Liquidator of Lima Bank Zambia Limited (In Liquidation)) and Another v Ngenda Sipalo and Another, SCZ Judgment No. 4 of 2010 3. Sharp v Wakefield House [1981] A. C. 17 4. Attorney General v Achiume [1983] Z. R. 1 5. House v R [1936) 40, 55 CLR 499 6. Zulu v Avondale Housing Project [1982] Z. R. 172 -J2- 7. Zambia Telecommunication s Company Limited v Aaron Mweene Mulwanda and Another, SCZ Judgment No. 7 of 2012 8. Nkolongo Farms Limited v Za mbia National Commercial Bank and two Others, SCZ Judgment No. 19 of 2007 9. S Brian Musonda (Receiver of First Merchant Bank (In liquidation) v Hyper Food Products and Two Others [1999] Z. R. 124 10. Aetna Financial Services Limite d v Feigeiman and Others [1986] LCR( comm) 11. Minister for Aboriginal Affairs and Another v Peko-Wallsend Limited and Others [1987] LRC (const.) 822 Legislation referred to: 1. The High Court Act, Chapter 27 of the Laws of Zambia The circumstances surrounding this a ppeal can be summarised as follows; on 29 th May 2014, Miyombo Investments (M alawi) Limited, obtained a short-term loan facility for US$15,000,000.00 from th e respondent. The loan was at an interest rate of 11.5% and repayable in 12 mo nl hs. Further, it was secured by a corporate guarantee issued by the appellant, M iyombo Investments Limited. Miyombo Investments (Malawi) Limi1ed defaulted on the loan and in March 2016, the respondent issued a demand notice for US$ l 3,137,788.74, plus interest. Th e respondent subsequently commen ce d an action against Miyombo Inve stm ents (Malawi) Limited in the High Cour1 of Malawi and obtained Judgment on 61h October 201 6. -J3- ln April and July 2016, the respond en t took out demand notices to the appe lla nt for US$ l 3,137,788.74 plus interest. Th e appellant did not respond and on 24th November 2016 , the respondent took out a writ against the appellant in the Hig h Court in Zambia. They claimed US$ l 4, 277 ,835.30, plus interest at 11 .5% and cos ts which was said to be owing as at 3 1st October 2016. After reconciling the amounts owing, a consent Judgement, in the sum o f US$ l l ,248,403.88, plus interest at 11 .5% per annum , was entered into on 31 st Marc h 2017. It was also agreed that the a p pellant was at liberty to apply to settle the Judgment debt in instalments, with in 14 days. On l 0th April 2017, the appell a nt, applied to settle the Judgment deb1 by instalments . The appellant proposed to settle th e debt as follows: US$7 50,000 in the year 2018, US$ l ,800,000 .00 in 2019 , US$ 2,900,000.00 in 2020, US$4,200,000.00 in 202 l, US$3,600,000 .00 in 2022 and the bal a nce, if any, in 2023 . After hearing the parties , the trial Judge ordered that the Judgement debt be settled in four quarterly instalments, the first being due on or before l st October 2017. She also directe d that should there be default, the wh ole amount would fall due. This appeal is against the order that the Judgment debt be paid in four quarterly instalments. It is contended that the trial Judge misdirected herself when she ordered that it be paid in quarterly instalments . At the hearing, Mr. Mutemwa SC , re lied on the appellant 's Heads of Argum e nt filed on 29 th June 2017, which he co m plimented with oral submissions. -J4- The gist of his submission was that th e essence of Order 36 of the High Court Rules, is to allow a Judgment debtor w ho cannot make a single payment, pay in instalments. This is achieved by a Judge coming up with a payment plan , tha t can be met; the cases of Communication Authority v Vodacom Zambia Limited 1 and Edgar Hamuwele (Joint Liquidator of Lima Bank Zambia Limited (In Liquidation)) and Another v Ngenda Sipalo and Another2 were referred to. He also referred to Sharp v Wakefield 3, Attorney General v Achime4 and House v R5 and submitted that the trial Judge did no t exercise her discretion judiciously when sh e came up with the plan that the Judgment debt be paid in four quarterly instalments. In arriving at that decision , she did not take into consideration all material issues, neither did she fairly , valuate all th e evidence before her. He pointed out that the trial Judge fo iled to consider the fact that the appellant's core business, the supply of fertilizer, had been greatly affected by a change in Government policies in the sector. Neither did she consider the appellant's desire, as a result of the changes, to com m ercialise their activities in 2018. Further, th e order that the Judgment debt be settled within 12 months is indicative that what she considered was the respondent ' s position and not that of the appellant. State Counsel also submitted that th e trial Judge neglected to give reasons of how she arrived at 12 months as the p eriod within which the debt should be paid. Had she properly evaluated the evi d ence before her, she could not have com e to that conclusion. He then referred to Zulu v Avondale Housing Project6, Zambia Telecommunications Company Limited v Aaron Mweene Mulanda 7 and -JS- Nkolongo Farms Limited v Zambia National Commercial Bank and two Others8 and S Brian Musonda (Receiver of First Merchant Bank (In liquidation) v Hyper Food Products and Two Others 9 and submitted that though we are an appellate court, we can interfere with the !rial Judge's findings because she did not consider all the evidence before he r before arriving at her decision. That being the case, she did not exercise her d iscretion as required by Order 36 rule 9 of the High Court Rules. He concluded by urging us to uphol d the appeal and set aside the payment plan by the trial Judge. We were urged to substitute it with the payment plan proposed by the appellant. On behalf of the respondent, Mr. Sh o ngo SC and Mr. Lungu addressed the court orally, complementing the respon de nt's Heads of Argument filed on 27 th July 2017 . The first point they made was that under Order 36 rule 9 of the High Court Rules, a Judge acting in exercise of discretion is not limited to deciding whether the Judgmen t debt can be paid in instalments, the Judge must also decide what those instalments should be. They agreed that even if we are an a ppellate court, we have the power to review the trial Judge's exercise of discretio n . Notwithstanding, they referred to the cases of Aetna Financial Services Limited v Feigeiman and Others 10 and Minister for Aboriginal Affairs and Another v Peko-Wallsend Limited and Others 11 and submitted that an appellate court c an only interfere with a trial Judge's exercis e of discretion if; the principles of law DOverning the application of discretion were -J6- misapplied; the decision was based extraneous or irrelevant matters; or there was a mistake of fact or material evi d ence was not taken into account. Th e y submitted that none of these situati o ns arose in this case. Counsel also submitted that the appellant's argument that the trial Judge fail e d to properly exercise her discretion, is not supported by the evidence. Examination of her ruling shows that though sh e did not accept the appellant's payment proposal, she found that it was a c a se in which it was fit to allow the Judgm e nt debt to be paid by instalments. Th ey also made reference to various portions of her ruling and submitted that it is not c orrect to claim that she did not give reasons for her decision or that she did not ta ke the appellant's position into consideration when arriving at her decision. Further, they submitted that the tria l Judge's ruling shows that she did evaluate the evidence before her and foun d that it would have taken the appellant six years to liquidate the Judgement d e bt and this would have been an injustice on the respondent. They ended by submitting that there is no basis for interfering with the lower court's decision and this a p peal be dismissed. We have considered the evidence o n record and the submissions by counsel. It is common cause that when the tri o l Judge ordered that the Judgment debt of US$ l l ,248,403.00 plus interest at l l .5% be paid in four quarterly instalments, sh e was acting in exercise of discretiona ry powers. It is also common cause that as an appellate court, we can, in cert o in circumstances, review the exercise of discretion by a trial Judge. -J7- ln this case, we have been invited to review the exercise of discretion by the trial Judge on the ground that it was no1 exercised judiciously. It was submitted by Mr. Mutemwa SC that all the issues ma1 e rial to the determination of the application were not taken into account and that there was an unbalanced assessment of the evidence . It was also submitted lhat the trial Judge did not advance reasons of how she arrived at the four quarte rly instalments. We agree with Mr. Mutemwa SC' s submission that when the trial Judge was considering the application to pay o Judgment debt in instalments under Order 36 rule 9 of the High Court Rules, sh e was acting in exercise of her discretionary powers and she was supposed to act judiciously. We also agree with his submission that where a court is ac ting in exercise of discretionary powers and matters material to the determinatio n of the issue before it have not been taken into account or where there ha s been an unbalanced evaluation of th e evidence, then such court has not e xercised its discretion judiciously. The decision is then amenable to review and th e Court of Appeal has the power to interfere with the trial Judge's findings. This is 1he cumulative effect of the principles set out in Communication Authority v Vodacom Zambia Limited 1, Attorney General v Achime4 , Zambia Telecommunications Company Limited v Aaron Mweene Mulanda 5 and S Brian Musonda (Receiver of First Merchant Bank (In liquidation) v Hyper Food Products and Two Others9 . In her ruling, the trial Judge recoun1 e d the contents of the affidavit in support of the appellant's application to pay the Judgment debt in instalments deposed by their Executive Director. She also referred to the attachments to the affidavit that -J8- included a cash flow projection an d the appellant's historical debt and assets. At page R l O of the ruling, she pointed o ut as follows: "In considering the Defendant's a pplication I have to consider as to what constitutes "sufficient reason " as en vi saged under Order 36 Rule 9 High Court Rules, Cap 27 of the Laws of Zambia. The factors I have taken into consideration is the financial status of the Defendant an d whether the Judgment debtor has the means to pay the Judgement debt immediately or in the future; whether the Judgment debtor will comply with the Order for payment by instalments, how long the proposed instalment payments will take to pay the debt ; whether or not the Judgment Creditor will suffer hardship by the proposed length of time, the age and nature of the debt, the facts adduced against the application by the Judgment Creditor." Thereafter, the trial Judge consi dered the respondent's assertion that the appellant was not entitled to an order allowing them to pay the Judgment d ebt in instalments because full disclosu re of their assets and liabilities had not be en made. She also considered the ass ets, liabilities, income and expenditure of th e appellant . She found that some of the documents, which were exhibited in court setting out assets, liabilities, income cmd expenditure of the appellant were either vague or inadequate and she assi g ned her reasons for such findings. She th en considered the appellant's cash flow plan and came to the conclusion that they could not settle the Judgment debt in one instalment. Having accepted that the Judgme n t debt could not be paid in one installment, she then considered the instalment p ayment plan. She found that there were no earnings indicated for the year 201 7. At page R 13, she observed as follows: "It is trite that an order for instalment payments must be on reasonable terms and not at the dictates or whims of any party or the comfort of any of the parties. I am mindful of the Defendant's impecunious position and at the same time the Plaintiff should not be denied the enjoyment of the fruits of its Judgment." -J9- She also noted that the proposal th c:rt the Judgment debt be paid over a period of 5 years would not be reasonabl e for a loan obtained in 2014. We find, that it cannot, in the circumstances be se riously argued that the trial Judge did not assign reasons for how she arrived a I the four quarterly instalments. The loan wa s for a year, 3 years down the line it had not been paid and the appellant wa s asking for 5 years more to pay the Judgment debt. As regards the argument that there w as unbalanced assessment of the evidence, we find that there was a balanced assessment of the evidence. The trial Judg e did not accept the respondent's argument that the appellant be denied th e opportunity to pay the Judgment d e bt by instalment because they did not make a full disclosure of their assets an d liabilities . She then pointed out particular inadequacies in the disclosure and still granted the application that th e Judgment debt be paid by instalme nts. The mere fact that she did not accep t the appellant's payment plan can not be a basis for finding that there was an unbalanced assessment of the evid e nce. From the foregoing , we find that it ccmnot be seriously argued that the trial Judg e did not consider all the issues materia l to the determination of the appellant 's application to pay the Judgment debt in instalments. Her ruling shows that she took the appellant's financial positi on and the age of the debt. In our view, thes e considerations were material. We agree with Messrs Shongo SC and Lungu's submissions, which are anchored on Aetna Financial Services Limited v Feigeiman and Others 10, that the appellant -JlO- has not demonstrated that the trial Judge failed to apply the principles governin g the exercise of discretion to warra nt our interfering with her decision that the Judgment debt be paid in four qua rterly instalments. In addition , the appellant's argument that material evidence w os not taken into account is not supported by the text of her ruling. We find no merit in this appeal an d we dismiss it. We uphold the trial Judg e's decision that the Judgment debt b e paid in four quarterly instalments with th e first instalment having been due on or about l51 October 2017. Costs to the respondent. . ... J?/lluJt);&d-: J. Z. Mulongoti•v .....- COURT OF APPEAL JUDGE ......... . . D. L. Y. COURT O - . ........ . C UDGE