Mumu Designs and Clothing Limited v Magaret Banda (T/A Marty Business Solutions) and Anor (2021/HP/114) [2022] ZMHC 111 (30 March 2022)

• fl IN THE HIGH COURT FOR ZAMBIA AT THE PRINCIPAL REGISTRY HOLDEN AT LUSAKA (Civil Jurisdiction) 2021/HP/114 o uRTOFZA PR1Nc11tAL y,.~ 1 1~ r l 3 0 M4ft 2121 G!L ] BETWEEN: REGISTRY . OX 50067, L . MUMU DESIGNS AND CLOTHING LIMITED PLAINTIFF AND MAGARET BANDA (T/A MARTY BUSINESS SOLUTIONS) 1ST DEFENDANT GEOFFREY SICHAMBA 2ND DEFENDANT BEFORE THE HONOURABLE MRS. JUSTICE M. C. KOMBE For the Plaintiff' Mr. Michael Mutwena - Messrs. MAK Partners. For the 2 nd Defendant: Mr. Paul Mulenga - Messrs. Paul Mule nga Advocates. RULING Cases referred to: 1. African Banking Corporation Limited v. Mubende Country Lodge Limited, Appeal No. 116/2016 . 2. Nahar Investment Limited v. Grindlays Bank International (Zambia) Limited (1984) Z. R Sl(S. C). 3 . Kufamuyeke Mukelabai v . Esther Nalwamba, Commissioner of Lands and Attorney General (2013)2 Z. R 312. 4. Malla Rodger Chilele v. Patson Mbao [2022] ZMCA 15. 5 .. Bimal Thaker v. Access Finance Services Limited (In Liquidation) and 2 Others [2021] ZMCA 122. 6. Aristogerasimos and Another v Metro Investment (SCZ No. 35 of 2016). Legislation and other material referred to:- 1. The Arbitration Act, No.19 of 2000. 2. The Rules of the Supreme Court of England, 1999 Edition. This is a ruling on the 2 nd Defendant's Notice of motion raise a preliminary issue pursuant to Order 14A of the Rules of the Supreme Court 1999 edition (White book) for the determination of the following points of law: i) Whether or not the Honourable Court has jurisdiction to entertain this action when the nature of the dispute is subject to an arbitration clause in terms of section 10 of the Arbitration Act of 2000. ii) Whether or not this action is properly before this Court, when the parties agreed that disputes are to be referred to arbitration. iii) Whether in view of (i) and (ii) above, this action is not liable for setting aside or dismissal with costs for want of jurisdiction of this Court and procedural irregularity. -R2- The 2nd Defendant filed into court an affidavit in support of the application on 3rd March, 2021, deposed to by PAUL MULENGA, the Advocate seized with conduct on behalf of the 2nd Defendant. He deposed that the Plaintiff issued out of this Court a writ of summons and a statement of claim against the Defendants and that the subject matter of the action and the basis was the alleged breach of the contract executed on or about 24th July, 2020, between the parties. Paragraph 4 of the statement of claim stated as follows: "The Plaintiff shall aver that on the 24th July, 2020, it signed a contract with the 2 nd Defendant, who was acting for and behalf of the 1st Defendant, for the supply of 300,000 disposal surgical facial masks and 50,000 N95 facial masks to the said 1st and 2nd Defendants." That the contract or agreement referred to in paragraph 4 above was exhibited and marked "PM2". A perusal of the said contract or agreement under the heading: Common Agreements at paragraph 6 read as follows : - "Any disputes that may arise will be resolved amicably between the two parties, however, in the -R3- ! unlikely event, the elaborated arbitration procedure of the laws of Zambia shall be followed." In view of the foregoing and the clear provisions of the Arbitration Act No. 19 of 2000, this Court had no jurisdiction to hear and determine the Plaintiffs action . The Plaintiff filed an affidavit in opposition and deposed to by MICHAEL M. MUTWENA, counsel seized with conduct of this matter on behalf of the Plaintiff. He deposed that on 3 rd March, 2021, the 2nd Defendant filed a Notice to Raise a Preliminary Issue, affidavit in support and the skeleton arguments. In paragraph 7 of the said affidavit, it was alleged that this Court had no jurisdiction to hear and determine this matter because of an alleged provision in the contract in issue that allegedly made no mention of arbitration. Contrary to the claim made in the said paragraph 7 of the affidavit, this Court had jurisdiction to hear and determine this mater because the clause referred to in the said affidavit only made mention of arbitration procedure, and a proper reading of the same clause revealed -R4- l that it did not amount to an arbitration clause in order to warrant referring of this matter to arbitration, as required by the Arbitration Act No.19 of 2000. Further, that the Defendant's Notice of Motion to raise a preliminary issue was irregular and incompetent because they did not follow the rules that applied to the law that they used to move this, Court. The parties relied on the affidavits and skeleton arguments filed 1n support and in opposing the application. In the skeleton arguments, learned counsel for the 2nd Defendant Mr. Paul Mulenga submitted that this application was annexed on Order 14A of the Rules of the Supreme Court of England. He submitted that the gist of this application was that the contract or agreement which was at the centre of this dispute and marked as exhibit "PM2" to the affidavit in support would show that any dispute between the parties was to be subjected to arbitration. He submitted that the relevant portion of the contract under the heading: COMMON AGREEMENTS: under paragraph 6 stated as follows:- -RS- "Any disputes that may arise will be resolved amicably between the two parties; to however in the unlikely event, the elaborated arbitration procedure of the Laws of Zambia shall be followed." Counsel submitted that this was an arbitration clause. He referred to Section 10 of the Arbitration Act No.19 of 2000 which provides as follows: "A Court before which legal proceedings are brought, in a matter which is subject to an arbitration agreement shall, if a party so requests, at any stage of the proceedings and notwithstanding any written Law, stay those proceedings and refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed." It was submitted that the arbitration clause herein was covered in very clear and unconfusing terms which made it operative and capable of being performed. He further submitted that in the circumstances of this case, the Court had no jurisdiction to hear and determine the matter and he prayed that the action be set aside or dismissed or stayed for the parties to be referred to arbitration. -R6- Learned counsel for the Plaintiff, Mr. M. Mutwena submitted that the Arbitration Act defines an arbitration agreement as: "An agreement, whether in writing or not, by the parties to submit to arbitration all or certain disputes which have arise or which may arise between them in respect of a defined legal relationship, whether contractual or otherwise." He submitted that it was clear from the above that in a valid arbitration agreement, the parties must expressly submit to arbitration and that it was not the case in this matter, in that the wording used only made casual reference to arbitration procedure of the laws of Zambia. That did not qualify as an arbitration clause. As such, the 2nd Defendant's application lacked merit. He argued that even if the purported arbitration clause was valid, the 2nd Defendant's motion would still b e irregular and incompetent because of the arguments hereunder. Counsel referred the Court to Section 10( 1) of the Arbitration Act and Order 14A rule 1 and also rule 2 sub rule 3 of the Rules of the Supreme Court, which the 2nd Defendant relied on. -R7- He submitted that a proper analysis of Section 10( 1) of the Arbitration Act, revealed that the law only gave powers to the Court to stay such proceedings if there was a valid arbitration clause and that provision did not give powers to the Court to dismiss such a matter. It was argued that under paragraph (c) of Order 14A Rule 2 Sub-rule (3) of the Rules of the Supreme, it was clearly spelt out that one of the mandatory r equirements for employing Order 14A, as relied upon by the 2 nd Defendant, was that such determination must be final as to entire cause or matter and that went against the provisions of Section 10( 1) of the Arbitration Act, in that it only provided for a stay of such proceedings pending arbitration and not as a final determination or dismissal of the matter. Based on the foregoing, he submitted that the 2 n d Defendant's application by way of motion premised on Sections 10(1) of the Arbitration Act and Order 14A of the Rules of the Supreme Court was irregular and incompetent because the two provisions spoke two different languages. It was further argued that in paragraph (a) of Order 14A rule 2(3) another mandatory requirement for employing Order 14A was that the -RS- Defendant must have given notice of intention to defend. He submitted that it was clear from the record that the 2nd Defendant only filed a conditional memorandum of appearance and did not file a Defence. As such the law that was purportedly used to move this Court was not available to the 2nd Defendant because of his decision not to file a Defence. Inevitably, this also made the 2nd Defendant's motion premised on Order 14A irregular and incompetent. Counsel referred to the case of African Banking Corporation Limited v. Mubende Country Lodge Limited 111 where the Supreme Court held that Order 14A of the Rules of the Supreme Court cannot be invoked by a litigant who had not filed a Defence. The case of Nahar Investment Limited v. Grindlays Bank International (Zambia) Limited 12 1 was also referred to where the Supreme Court emphasized that: " .... Applicants who sit back until there is an application adverse to their case before making their own applications do so at their own peril." -R9- It was argued that the 2nd Defendant chose not to file his Defence and as held by the Supreme Court, the 2nd Defendant did so at his own peril, and further sat on his own right. It was submitted that on the authorities cited above, the 2 nd Defendant's application be dismissed with costs to the Plaintiff as it lacked merit and was also irregular and incompetent. I have carefully considered the submissions made by the parties and the also the affidavit evidence adduced. By this application, the 2nd Defendant seeks determination of the following questions: i) Whether or not the Honourable Court has jurisdiction to entertain this action when the nature of the dispute is subject to an arbitration clause in terms of section 10 of the Arbitration Act of 2000. ii) Whether or not this action is properly before this Court, when the parties agreed that disputes are to be referred to arbitration. iii) Whether in view of (i) and (ii) above, this action is not liable for setting aside or dismissal with costs for want of jurisdiction of this Court and procedural irregularity. -RlO- Order 14A of the Rules of the Supreme Court provides for determination of questions of law or construction on a point of law as follows: "(1) The Court may upon the application of a party or of its own motion determine any question of law or construction of any document arising in any cause or matter at any stage of the proceedings where it appears to the Court that- (a) such question is suitable for determination without a full trial of the action, and (b) such determination will finally determine (subject only to any possible appeal) the entire cause or matter or any claim or issue therein. (2) Upon such determination the Court may dismiss the cause or matter or make such order or judgment as it thinks just." It is clear from the foregoing authorities that the court may determine any question of law or construction of any document arising in any cause or matter at any stage of the proceedings where it appears to the Court that such question is suitable for determination without a full trial of the action. -Rll- The gist of the 2 nd Defendant's argument is that the contract or agreement entered into with the Plaintiff contains an arbitration clause covered in very clear terms making it operative and capable of being performed. It is therefore contended that this Court has no jurisdiction to hear and determine the matter and that it should therefore be set aside, dismissed or stayed for the parties to be referred to arbitration. The Plaintiff on the other hand argues that the Court has jurisdiction to hear and determine this matter because the clause referred to makes mention of arbitration procedure and its proper reading reveals that it does not amount to an arbitration clause warranting a referral to arbitration as required by the Arbitration Act. The Plaintiffs further contention is that the Defendant's Notice of Motion to raise a preliminary issue is irregular and incompetent because they did not give a notice of intention to defend. Before I go into the merits of the application, I find it imperative to consider the procedure adopted by the 2 nd Defendant in filing this application. Section 10(1) of the Arbitration Act, No.19 of 2000 already referred to by the Plaintiff provides that: -R12- • "A Court before which legal proceedings are brought, in a matter which is subject to an arbitration agreement shall, if a party so requests, at any stage of the proceedings and notwithstanding any written Law, stay those proceedings and refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed." Section 10 above is clear that in a matter which is subject to an arbitration agreement, the Court shall stay the proceedings at any stage and refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed. This provision applies where the Court finds that the agreement between the parties is subject to an arbitration agreement or contains an arbitration clause. However, I agree with the Plaintiffs argument that invoking Order 14A, envisages that such determination must be final as to entire cause or matter and that goes against the provisions of Section 10(1) of the Arbitration Act. This is because determination of the point of law would lead to a final determination of the matter as opposed to merely staying proceedings pending arbitration as envisaged by Section 10(1) of the Arbitration Act. -R13- • In addition, and for the avoidance of doubt, Order 14A/ 1-2/2 provides for th e requirem ents for employing the procedure under this Order as follows: "The requirements for employing the procedure under this Order are the following: (a) the defendant must have given notice of intention to defend; (b) the question of law or construction is suitable for determination without a full trial of the action (para. l(i)(a)); (c) such determination will be final as to the entire cause or matter or any claim or issue therein (para. l(i)(h)); (underlined for emphasis) The rule fu rth er provides that: "The wording of para. 1(3) makes it clear that the determination of any question of law or construction under this Order can only be made if the defendant has given notice of intention to defend." It is clear from the above rule that on e of the requisites for employin g the procedure under Order 14A is for th e Defendant to give a notice of -R14- • " intention to defend and that such determination will be final as to the entire cause or matter therein. In the case of Kufamuyeke Mukelabai v. Esther Nalwamba, Commissioner of Lands and Attorney General (3 ) at page 312, a High Court ruling by Justice Chali (J) as he then was, held inter alia that: "The giving of a notice to defend is a prerequisite to making an application under Order 14A whether by summons or orally at the hearing of the cause or matter or of the interlocutory application ... no appearance was entered or defence f°lled on behalf of the 2 nd and 3 rd Defendants up to the time the preliminary issue was raised as a result, in terms of the requirements for a party to qualify to raise an issue of the law for determination by the court under Order 14A, the 2 nd and 3rd Defendants are precluded from making any application of the nature they did." Furthermore, in the case of African Banking Corporation v. Mubende already referred to by counsel for the Plaintiff, the Supreme Court stated that: "There are certain requirements which must be satisfied before a matter can be disposed of on a point of law. One such requirement, according to Order 14A/ 1-2/2 of the -RlS- • White Book is the giving of notice of intention to defend. What constitutes a notice of intention to defend, in the context of the High Court rules, is the filing of a memorandum of appearance which is accompanied by a defence. It therefore, follows that the filing of a memorandum of appearance with a defence is a pre requisite to launching an application under Order 14A of the White Book. Contrary to Order 11 rule 1 of the High Court rules, the Appellant did not file a memorandum of appearance and a defence before invoking Order 14A of the White Book." Similarly, the Court of Appeal in the most recent case of Maila Rodger Chilele v. Patson Mbao 14l stated that: "It is plain and simple that the Appellant did not satisfy the requirements of Order 14A which require the filing of an intention to defend. That, instead the Appellant opted to file a conditional memorandum of appearance which according to the above authorities does not constitute an intention to defend. Therefore, in the absence of an intention to defend, the Appellant could not rely on Order 14A RSC to contest the proceedings." It is clear from the above authorities that the giving of notice of intention to defend is a requirement to be fulfilled b efore invoking the procedure under Order 14A. What then constitutes a n otice of intention to defend, -R16- • • is the filing of a memorandum of appearance accompanied by a defence. It therefore, follows that the filing of a memorandum of appearance with a defence is a pre-requisite to launching an application under Order14A. I have perused the record herein and I have noted that the 2nd Defendant entered a conditional memorandum of appearance but did not file his Defence. The 2nd Defendant cannot therefore invoke the procedure under Order 14 A or contest these proceedings for failure to give notice of intention to defend. My view is further fortified as already alluded to by the fact that the determination of the point of law would lead to a final determination of the matter as opposed to merely staying proceedings pending arbitration as envisaged by Section 10(1) of the Arbitration Act. In another recent case of Bimal Thaker v. Access Finance Services Limited (In Liquidation) and 2 Othersl5l the Court of Appeal held regarding failure to file notice of intention to defend that: "It follows, therefore that the failure by the Respondents to meet the conditions favourable to invoking Order 14A RSC rendered the application incompetent and consequently, the court was devoid of jurisdiction .... Based on the foregoing, the lower court had no -R17- • jurisdiction to hear and determine the Respondents' application as it was improperly before the court." It is abundantly clear from the Bimal Thaker case that contesting proceedings without filing a notice of intention to defend renders the application incompetent and robs the court of the jurisdiction to hear and determine the application. It is trite that forum goes to jurisdiction as espoused in the case of Aristogerasimos and Another v. Metro Investment 161 where the Supreme Court stated that: • • • the absence of jurisdiction nullifies whatever decision follows from such proceedings. 11 What is clear from the above is that the decision of the court which purports to exercise jurisdiction it does not have amounts to nothing, and that jurisdiction must b e acquired before judgment is given. In view of the foregoing, I find that I do not have the jurisdiction to hear and determine the application before me. Consequently, I cannot proceed to consider the merits of the 2nd Defendant's application as I would be exercising jurisdiction which I do not have. If the 2 nd Defendant sought to move this Court to determine whether or not this -R18- ,. matter should be referred to arbitration, he should have invoked the correct procedure which is provided for under the law. The net result of my findings is that the 2nd Defendant's preliminary issue is irregularly before this Court and I accordingly dismiss it with costs to the Plaintiff. DELIVERED AT LUSAKA THIS 30th DAY OF MARCH, 2022 -R19-