Rex Amon Natala and Ors v Lazarus Nchimunya Natala (APPEAL NO. 16 OF 2002) [2006] ZMSC 51 (5 July 2006)

IN THE SUPREME COURT OF ZA_"l\1BIA. APPEAL N0.16 OF 2002. HOLDEN AT LUSAKA. (Civil Jurisdiction) BETWEEN: REX AMON NATALA GRACE HABANJI NATALA NATALA FAMILY RANCH LIMITED 1 ST APPELLANT 2ND APPELLANT 3RD APPELLANT And LAZARUS NCIDMUNYA NATALA RESPONDENT CORAM: LEW ANIKA, DCJ, MUMBA AND MUSHABATI, JJS. On 23rd March, 2006 and 5th July, 2006 ~ For the Appellants: N. Nchito ofMNB Legal Practitioners. For the Respondent: D. K. Kasote of George Kunda and Company. JUDGMENT Mushabati, JS., delivered the judgment of the Court. Cases referred to: 1. 2. Mohammed vs. Attorney General (1982) Z. R. 48 Lumbwe vs. The People (1986) Z. R. 93 Legislation referred: Constitution of Zambia (Act 27 of 1973) Cap. 1 - Arts. 32 to 36 J2 This is an appeal against the High Court judgment of 20th August, 2002. In this appeal we shall be referring to the three appellants as first defendant, second defendant and third defendants respectively and the respondent as the plaintiff as this is what they were in the court below. The undisputed facts of this case are that the plaintiff, who is the 1st defendant's uncle, bought two farms namely Farm No.340 (a) and Farm No. 3138 Mazalibuka in his own name from one Reginald Hully in 1968. The 1st defendant was then in diplomatic service. The plaintiff had just returned from South Africa where he had been working. The farms were later registered in the name of Natala family Ranch Limited, a company whose shareholders were the 1st defendant, the 2nd defendant and the plaintiff. The plaintiff decided to sue the defendants because he was not happy with the composition of the shareholders. He sued the defendants for the fol1owing:- l. A declaration that the purported allotment of shares of 40,000 to the 1st defendant, 2,500 to the second defendant and 5000 to the plaintiff in the 3rd defendant company be declared wrongful and unlawful and therefore null and void because this was done without any meeting which the plaintiff attended. 2. For an order that the defendants do pay to the plaintiff value of the assets which were taken over from him when the third defendant company was incorporated on 1st February, 1980. The assets comprised of two farms namely Farm No. 3138 and Farm No. 340a/A Mazabuka and 120 heads of cattle. 3. That the defendants be ordered to account for all transactions or operations~ of the company since its incorporation for the purpose of determining what is owing to the plaintiff. J3 Tue serious bone of contention in this case, as we see it is over the financing of the purchase of the two farms which are at the centre of the dispute between the plaintiff and the 1 ~t defendant. In his evidence in court the plaintiff stated that he bought the two farms for K22,000. He raised this money from his savings, amounting to K5,000,000 which he brought with him from South Africa and from the sale of some cattle. He also obtained a loan from Agricultural Finance Company. After he had bought the two farms he was approached by the 1st defendant, who advised him that as Members of Parliament they were told that al] those that owned big fanns were going to have part of their fanns reclaimed by the state and if the plaintiff did not want that to happen to him he had to register the farms in his children's names. The plaintiff told the 1st defendant that it was not his wish but that his intention was that any of his children who were to fall out of formal education (school) should be able to go and stay at the said farms. The first defendant insisted that the plaintiff could still register the said farms in the name of Natala Fann Ranching even if his children were still in school. When the 1st defendant brought the document that was given to him after the two farms were registered, he realized that the names on that document were those of 1st defendant, second defendant and plaintiff, of which the plaintiff was not pleased. He protested and in the process he was reported to Mazabuka Police Station by the I st defendant on an allegation that he nearly shot at him. Despite owning or given some shares in the 3rd defendant company, the plaintiff received no money from the Company. When the plaintiff attempted to sell some of the assets he was prevented from doing so through a court order. The plaintiff further stated that 1st defendant and his wife, the 2nd defendant, did not contribute any capital in the company whereas he (the plaintiff) contributed 120 heads of Cattle. The dairy Cattle, which were on the farm, were all sold by the previous owner. The only assets on the farm were a house and Cattle structures. The Cattle he owned were branded ZJ58 but this was changed when the third defendant company was formed. P. W.2 Christopher Natala told the court that he was the first Company Secretary for the Natala Family Ranch and that at the time the company was incorporated his father, the plaintiff, was told to surrender the farms to Natala Family Ranch by the then General Manager, now the I st defendant. The company, which started off badly, began to pick up because a number of animals (Cattle) were acquired. The acquired animals were however, recorded as belonging to the 1st defendant. The company bought various assets such as vehicles and some houses. One house that was bought in Lusaka was registered in the 1st defendant's son's name. Some adjoining pieces of land (settlements) were acquired by the company but were registered in the I st defendant's own name. The company used to buy Cattle which they sold to Cold Storage Board of Zambia. Some money was raised from sales of cash crops such as maize and sun-flower. The company generated a lot of money of which the plaintiff never benefited from. The plaintiff was never informed of how the farm was performing or shown statements of account. No annual general meetings were held. This is the gist of the plaintiffs case. The 1st defendant told the court that in 1967 he was re-ca11ed from Congo D. R. after he had worked there for 3 years. During a parliamentary by-election, caused by Mr. Mubuma's resignation, he came across two farms which were on sa]e by Reginald Charles Daniel Hulley. He declared his interest to purchase the said farms. The 1st defendant's father also got interested in the said farm. His uncle, the plaintiff, who upon his return from South Africa settled in Maimbo village, did not then have a permanent home. The 1st defendant negotiated to purchase the said farms and this was in April, 1968. He sourced for the money through a loan from Credit Organization of Zambia. Since he was a government employee, he could not be registered as the owner because of the leadership code and so he invited his uncle, the plaintiff, to be registered as the owner. The sale agreement was therefore, put in Lazarus Natala's name. This was done because the 1st defendant would not be on the farm most of the time and so this was necessary for administrative convenience and for the sake of acquiring agricultural in-puts. When they applied to buy the said farms their application was rejected but they were able to purchase it after his personal appeal to the then Vice President Mr. Kapwepwe and Minister of Agriculture and Lands. When the farms were offered to them the l st defendant made a down payment of K2,000 after he had sold his 20 animals. After the initial payment they obtained a medium loan of K6,000 for the purchase of farm implements. They also obtained a long term loan of K.20,000. It was then that he then left the fann in the hands of his uncle and one John Milimo, his cousin. Since the long term loan was not being serviced it rose to K46,700=00 and this worried the I st defendant because there were some threats to reposses the farms. He negotiated to be given more time to pay off the loan, which he eventually did. The company called Natala Family Ranch was formed after he contributed K40,000, his uncle K5,000 and his wife K2,000. The three of them were directors. The plaintiff was however a dormant partner who took no active role in any activities but was never side-lined as the plaintiff claimed, in the running of the farm. This was evidenced by the fact that his son Christopher Natala was engaged as the Secretary for buying cattle. The general administration of the farm, which was very involving, both in terms of activities and risks, was in the hands of the 1st defendant. He kept the plaintiff, now deceased, for 32 years. The defendant used to tell the plaintiff about his 5000 shares of which the 1st defendant was prepared to pay him back. D. W.2 Patrick Natala merely said he was requested by the 1st defendant in 1981 to help him run the farm as a General manager. The trial judge reviewed the above evidence and concluded that the plaintiff was greatly disadvantaged and did not receive a fair share of the family "Cake", and made the following declaration:- The shares allocated to both the 1st and 2 nd defendants were not supported by any evidence of capital contribution. So both these shares and those allocated to the plaintiff i.e 5000 shares were null and void. The matter was referred to the Deputy Registrar for assessment of the operations of the 3rd defendant bearing in mind the plaintiffs contributions of two farms and 120 heads of Cattle. In short the trial judge found as a fact that the two fanns were acquired or bought by the plaintiff alone. The plaintiff therefore, contributed the two farms and 120 heads of Cattle in the incorporation of the Natala Family Ranch Limited whereas the 1st and 2nd defendants contributed nothing. The defendants appealed. They have filed three grounds of appeal namely:- ]. The learned trial judge misdirected himself in fact and law when he held that the Respondent was the legal purchaser of the Farm No. 340 and also Farm No. 3138 when there was evidence adduced that the 1st Appellant was the actual purchaser and that J7 the Respondent's name was only used because of the leadership code that existed at the time. 2. That the learned trial judge in the Court below erred both in law and fact by holding that the Respondent was deliberately starved of all informati.on about the incorporation of the 3rd Appellant when the Respondent admitted in both his Statement of Claim and affidavit in Reply to Affidavit in Opposition to Application for interim injunction that he was informed of the reason of incorporation and further during trial the Respondent failed yo adduce evidence to establish fraud on the pan of the 1st Appellant. 3. That the Learned tria[judge erred in law and fact by holding that the shares allotted to the P 1 and 2nd Appellant and the Respondent were null and void as there was no evidence justifying this decision as the shares had been properly allotted. Both counsel tendered in detailed written heads of arguments which were augmented with oral submissions. In his first argument the counsel for the defendants did concede that a Certificate of Title is conclusive evidence as to ownership of land. He however, added to say that the matter now under review did not end there. The court must look at the evidence which proved that the loan with which the farm was bought was obtained and repaid by the 1st defendant and so this made him a legal owner as wel~ applying principles of equity. This is in relation to the frrst ground. In reply to this, counsel for plaintiff argued that it was true that Certificate of Title is, under Sections 33 and of 32 of the Lands and Deeds Registry Act, conclusive evidence of ownership or entitlement to land but J8 the defendants failed to exhibit such Certificate of Title. The Certificate of Title dated 15th December, 1984 which was relied upon by the defendants could not be used to prove the defendants' rights over the said farms because it was issued 16 years after the farms were bought by the plaintiff. We have considered these two arguments. It would appear the learned counsel were at variance. Whereas the counsel for the defendant was acknowledging the fact that the plaintiff possessed Title Deeds for the said farms, the plaintiffs counsel misunderstood this to mean defendants had Title Deeds. We say so because the counsel for the defendant argued the defendants' proprietary interest in the farms on equity on the ground that although the 1st defendant had no Title Deeds to the two farms he contributed greatly to the redemption of the loan. This argument was not argued in the court below and so it cannot be raised now. The argument before the lower court was that the farms were bought by the 1st defendant and the plaintiff was merely used as a front because of the leadership code which forbade leaders to own businesses. Why did the defendant depart from their original line of argument? The learned trial judge found as a fact that the farms were in fact bought by the plaintiff using his own money or means. The plaintiff was however, not properly guided by 1st the defendant when he advised him to have the two farms registered in the name of Natala Family Ranch Limited. He chose not to tell him the truth and the implications thereof. He did so for his benefit, as the evidence on record has shown. We totally agree with the lower court' s fmding that the plaintiff was misled by the 1 st defendant to have his farms transferred in the third defendant' s name. J9 We are not satisfied that the leadership Code, behind which the 1st defendant was trying to hide the truth of what transpired, was in existence in 1968. It only came into being when Act No. 27 of 1973, which repealed the 1964 Zambia Independence Act and Constitution, was enacted. This was provided for under Part IV of that Constitution Under Articles 32 to 36. The leadership Code came into being long after the two farms were acquired by the plaintiff in 1968. This showed how economic the I st defendant was with the truth. The lower court cannot therefore, he faulted in any way on this finding. The first ground of appeal is, in our view, interrelated to the tltird ground which attacked the lower court's finding of fact that the shares allotted in this case were not supported by proper evidence. The said shares were declared null and void. The 1st defendant's argument on the third ground was that it was he who had provided the capital for the purchase of the two farms but in his first ground of appeal his stance was that he redeemed the loan which was obtained for the purchase of the two farms. In one breath the 1st defendant says he provided the funds for the purchase of the farms but in the second breath he says, 'yes the plaintiff acquired the farms through a loan but failed to service such loan' and so he ( first defendant) had to redeem it using his own money. Such inconsistencies on the part of the 1st defendant clearly buttressed the plaintiff's case that the 1st defendant did not tell him the truth as to what his real intentions were when he persuaded him to have his farms registered into a company. The lower court was justified in finding that the I st defendant had in fact concealed some material facts from the plaintiff. He used his position a Member of Parliament or as a Government employee to misinform the plaintiff that if he did not have the farm registered in his children's names the land, being large, was going to be grabbed from him. Even when the two fanns were registered into a company, none of the plaintiffs children was made a shareholder in that company. We are satisfied that there was enough evidence on record that only the plaintiff contributed capital in form of the two farms and some heads of cattle when the Natala Family Ranch Limited was incorporated. The third ground of appeal therefore fails as well. We wish now to consider the second ground of appeal. The gist of the defendants' argument on the second ground was that the lower court was wrong in finding that the plaintiff was denied or starved of information on the operations oftbe third defendant company. In reply to this argument counsel for the plamtiff submitted that the court was justified in its finding. He further argued that it was not true that the company was formed in order to secure a loan from the Development Bank of Zambia, because the loan was obtained in 1980, long after the company was formed. We have carefully examined the evidence on record and the arguments advanced by both counsel. The evidence on record showed that the company, after being formed operated for sometime without the said loan from the Development Bank of Zambia. The company was formed in 1968 and the loan was obtamed much later. The letter written to 1st defendant, though not dated, by the Development Bank of Zambia invited him to a meeting on 4th February, 1980 for the purpose of him to confirm his acceptance of the loan. This letter referred to the 1st defendant's letter of 30th September, 1979. It is clear from this document, which is at page 113 of the record of appeal, that this loan was obtained when the third defendant company was already operational. This letter requested for a resolution by the third defendant company regarding this loan. The Bank must have realized that the 1st defendant was acting in his private capacity and not on behalf of the company, which he purported to represent. The plaintiff was not aware of such a resolution. This all went to show that the 1st defendant ran the company single handedly to the exclusion of the plaintiff, hence the fmding that he was starved of the information on the operations of the Natala Family Ranch Limited. We have no doubt that the learned trial judge was on firm ground in -~ his findings in this case, which were mostly findings of fact which, as previously stated in numerous other cases, such as Mohamed vs. The Attorney-General (1) and Lumbwe vs. The People (2), this court cannot lightly over-tum. The second ground of appeal also fails. We find no merit in this appeal and we dismiss it with costs. In default of agreement the costs shall be taxed. ,f D. M.~1/wanika · DEPUTY CHIEF JUSTICE F. N. N. Mumba SUPRKME COURT JUDGE C. S. Mushabati SUPREME COURT JUDGE