Sinkamba and Anor v Credit Africa Bank (Appeal 94 of 2002) [2007] ZMSC 163 (16 May 2007)

IN THE SUPREME COURT OF ZAMBIA HOLDEN AT NDOLA (CIVIL JURISDICTION) BETWEEN APPEAL NO 94 OF 2002 PETER SINKAMBA PC INVESTMENTS LTD 1st Appellant 2nd Appellant and CREDIT AFRICA BANK Respondent Coram: 16‘h May 2007 Chirwa, Chitengi and Silomba JJS on 5th September 2006 and For the 1st Appellant: In Person For the 2nd Appellant: N/P (Hangala & Co.) For the Respondent: Mr Z Muya, Muya & Co. JUDGMENT Chirwa, JS delivered the judgment of the Court: - The inordinate delay in the delivery of this judgment is deeply regretted. This was due to misplacement of the record and the inability of the court staff to bring to the attention of the Court about this pending judgment in time. We apologise any inconvenience and anxiety caused by this delay. The matter arose from an action by the respondent, CREDIT AFRICA BANK, to recover monies advanced to the appellants by way of an overdraft in the sum of K5,000,000 and secured by a mortgage on Stand No 4913 Kitwe, property of the 1st Appellant. Because of interest charged on the principal, the debt increased to <85,213,144 at the time the respondents issued an originating Summons. In the J2 Originating Summons, the Respondents prayed for the payment of this sum, delivery of the property to itself and for foreclosure. These were granted as there was no affidavit in opposition and this was on 8th December 1997. After this judgment, there were numerous applications on the judgment. The judgment was stayed pending review but this was struck out. There was also an application to set aside the order for foreclosure; this fell through because of non-attendance of the appellants. There was an application to pay the debt through instalments; this too fell through. In his search for justice, the 1st Appellant filed an appeal against the judgment of the High Court but this was abandoned on 29th June 2001. In the meantime, when all these applications were going on, the house subject of the mortgage was sold. However, in further attempt to get justice, the 1st Appellant filed an application on 1st December 1998 to set aside the order for foreclose. The summons were returnable on 13th January 1999. On that date, none of the parties appeared before the Court; the Court in its discretion struck out the application to set aside the foreclosure order. On 29th June 2001, the 1st Appellant filed notice to restore the matter that was struck out on 13th January 1999 and the learned trial judge refused to restore the matter as the delay was inordinate and no good reasons were advanced for this day. It is against this refusal to restore the application to set aside the foreclosure order that the Appellants have appealed to this Court. J3 According to the Memorandum of appeal, there are three grounds of appeal and these are:- 1. The trial judge erred in law and fact by refusing to set aside order for foreclosure which was obtained in the absence of the dependants (appellants). 2. The trial judge erred in law and fact by holding that the sale of the Mortgaged property, House/Stand No 4913, Riverside Kitwe was lawful when in fact the Advocates of the Plaintiff (Respondent) did not seek leave of the Court to sale the said property as by then the Plaintiff was under receivership, contrary to the Companies Act. 3. The trial judge misdirected himself by holding that the sale of mortgaged property, Plot 4913 Riverside Kitwe was lawful when in fact the order for foreclosure was not made absolute and there was no application or order to sell the mortgaged property. In support of the appeal, the 1st Appellant filed detailed arguments on these grounds of appeal. For the Respondent, Mr Muya merely referred us to the supplementary record of appeal that he had filed and drew our attention to the fact that the house had been sold after it was advertised as reflected at Page 74 of the record. J4 On ground one the Appellant’s argument is that although one may tell lies about the delay in making an application, a default judgment should be set aside if there are triable issues disclosed. The triable issues, according to the 1st Appellant are the unethical manner in which Messrs Lloyd Siame & Co. acted as agents for his Advocates and then later as advocates for the Respondent; the capacity of the Respondent as there was no leave of the Court for the Respondent under receivership to proceed with any litigation; and lastly the un disclosure of penal or compound interest charged. On ground two, as a follow up to triable issue no. 2 in ground one, the Court will be failing in its duty if it does not enforce the law on liquidation and receivership as this may lead to loss of investor confidence as there will be no protection. The Court, it was argued, should have nullified the sale of the house. Further, it was argued that the buyer was aware that there was no authority or leave of the Court for the Respondent to continue litigation as it was under receivership and as such it could not transfer good title. On ground three, it was argued that the Respondent could only sell the property if the foreclosure had been absolute after the Appellants had been given time to pay and only in default could the Respondent sell the property. Before then, the appellants still had an equitable interest. On these grounds, it was prayed that the appeal be allowed. J5 We have considered the conduct of the parties, evidence and judgment in these proceedings and also the grounds of appeal as argued in the written heads of argument and also the oral submissions by the 1st Appellant. On the first ground where the Appellants are arguing that it was unethical in the manner in which Messrs Lloyd Siame & Co. conducted themselves in this matter, first as agents for the advocates for the Appellant's advocates and then as advocates for the Respondent. We do not wish to say much; suffice it to say we have looked at the explanation given by Mr Muya at Page 25 of the record of appeal. It appears that Messrs Lloyd Siame were not actually appointed as agents for the Appellant's advocates. In any event, this conduct of Messrs Lloyd Siame & Co does not go to root of the matter because the Appellants do not dispute the debt because even when the complaint against Messrs Lloyd Siame & Co. was raised, Counsel for the Appellants states that the debt had been paid in full through the Court although this statement, made on 26th September 2001 cannot be true as there are on record “Notices of Payment into Court" filed after this date. If the appellants have a serious complaint over the conduct of Messrs Lloyd Siame & Co., they can lodge their complaint with the Law Association of Zambia. On ground 2 of the appeal, the appellant states that the proceedings leading to the sale of the house were a nullity because there was no leave of the court for the respondent in liquidation to proceed with the Court proceedings. Section 281 of the Companies Act on which the appellants rely on reads:- “281. When a winding-up order has been made or a provisional liquidator has been appointed no action or proceedings shall be proceeded with ar commenced against the Company except by leave of the Court and subject to such terms as the Court may impose”, (underlying our own) It is clear from the Section that leave is required to commence or proceed with any action against a company in liquidation. It does not apply to actions by a company under liquidation through its liquidator or receiver. It follows that leave of the Court was not required by the respondent. We note that from the record that Order for foreclosure was made on 19th November 1998 and the Appellants only made an application to set aside this order in January 1999 and the matter was struck out for non-attendance. The Appellants sat back until 29th October 2001 when they applied to have their application to set aside the foreclosure that was struck out for non-attendance in January 1999. The application to restore the application to set aside the order for foreclosure was refused on the ground of inordinate delay so that the ground of appeal that the proceedings were a nullity because the Respondent was in liquidation and there was no leave of the Court does not go to attack the reason for refusing to restore the application. The reasons given at Page 21 of the record of appeal for the delay in making the application was based on the ground that the appellants had paid into Court the full amount demanded and the parties had still been arguing the question of interest payable. We have already referred to the fact of full payment into Court. But we wish to observe that the house was advertised for sale on 15th March 2001 and we are