Stanbic Bank Zambia Limited v Jason Jack Robert Kombo and Ors (APPEAL NO./001/2022) [2022] ZMCA 129 (11 November 2022)

IN THE COURT OF APPEAL OF ZAMBIA APPEAL NO./001/2022 HOLDEN AT LUSAKA ( Civil Jurisdiction) STANBIC BANK ZAMBIA LIMITED APPELLANT AND JASON JACK ROBERT KOMBO 1ST RESPONDENT REMMY MUSONDA DINGISWAYO NDHLOVU ~ . \ '~ 2ND RESPONDENT / _::._. __ --2-,"' 3ao RESPONDENT ._i~ N~~022j~ ' RESPONDENT LASTONMUMBA ~O F AP~ · JOSEPH CHILINDA ~ R. EGI~ COMVEX EQUITY LIMITED ENDED INTERESTED PARTY OX .500 67 • \. No INTENDED INTERESTED PARTY CASHFIN ZAMBIA LIMITED 3ao INTENDED INTERESTED PARTY CORAM: CHASHI, SIAVWAPA, AND BANDA-BOBO, JJA On: 11th October, 2022 and 11th November, 2022. For the Appellant: Ms. J. R. Mutemi of Messrs Theotis Mutemi Legal Practitioners For the Respondents: N / A For 3 rd Intended Party: Mrs. M. Sinkala Silishebo of Messrs A. K. M. Legal Practitioners JUDGMENT BANDA-BOBO, JA, delivered the Judgment of the Court Cases referred to: 1. Jamas Milling Company Limited v Imex International (Pty) Limited (SCZ 20 of 2 002) - (2 002) ZR, 7 9 2. Sakala & Another v F ert Seed and Grain Pty Limited & Another Appeal No. 85 of2 015 3. Phillip Mutantika & Mulyata v K enneth Chipungu (SCZ Judgment No.1 3 of 2 01 4) J1 4. C & B Enterprises Limited v Liege Zambia Limited 2015/HP/ 1669 5. Development Bank of Zambia & Another v Star Energy Limited & Others SCZ (Appeal No.160/ 2016) 6. Midland Bank Limited v Stamps (19 78) 3 All ER 1 7. Savenda Management Services v Stanbic Bank Zambia Limited, SCZ Appeal No.37 of2017 Selected Judgment No. JO of2018 8. EMC Truck Centre Zambia Limited and Another v Access Bank (Zambia) Limited (SCZ Judgment No.48/2014) 9. B. Y. Enterprises Limited v Inda-Zambia Bank Limited SCZ '(208/ HPC/ 0304) 10. Nyimba Investments Limited v Nico Insurance Limited (Appeal No.30/2016) 10. Zambia National Holdings Limited and UNIP v Attorney General (1993/ 1994 Z. R. 115) 11. Derrick Prigle (Suing in his own behalf and on behalf of the United Church of God) and Another v Kambani Banda and Others (2011) Z. R. Vol. 3 475 Legislation referred to: 1. The Constitution of Zambia, as amended by Act No.2 of2016 2. The High Court Rules Chapter 27 of the Laws of Zambia 3. The High Court Act, Chapter 27 of the Laws of Zambia Other Works referred to: 1. Halsburys Laws of England, Volume 37, 4th Edition 1.0 . INTRODUCTION This is a judgment on an appeal against the whole Ruling of Hon. Mr. Justice K. Lim bani delivered on 15th June, 2021 at Kabwe. 1.2 In the impugned Ruling, the erstwhile Judge ruled that the court in the District Registry could hear any matter of a family, industrial and contractual nature. That if a party commenced a matter before that jurisdiction, then unless otherwise, the matter had to be heard and determined. He stated further that in the interest of speedy justice and considering that the issues in J2 dispute could be settled by his court, the application was dismissed and ordered the matter to proceed to trial before him. 2.0. BACKGROUND 2.1 The Appellants herein commenced, by an amended Writ of Summons and Statement of Claim, an action against the Respondent at the District Registry at Kabwe. In the said action, the Appellants claimed the following reliefs:- (i) a declaration that the first and second Plaintiffs are the rightful shareholders of the fifth Plain tiff; (ii) An order that the 4th Defendant was in breach of its duty owed to the 3rd Defendant; (iii) An order that all unauthorized transactions on account number 9130004174433 be reversed; (iv) In default of the above, an order that the Registrar of the High Court executes share transfers in the 5 th Plaintiffs name on behalf of the 1st and 2nd Defendants in favour of the 1 st and 2 nd Plaintiffs· ' (v) An injunction restraining the Defendant, and each of them either through their agents, employees or servants from interfering with operations of the 5 th Plaintiff in any manner whatsoever; J3 (vi) Any further or other relief which may seem just and equitable to the Hon. Court and (vii) Costs of and incidental to this application. 2 .2 In the main matter, the action related to the sale and transfer of shares by way of an agreement dated 1st June, 2020, between the 1st and 2nd Defendants and the 1st and 2nd Plaintiffs, wherein the Defendants agreed to sell and the Plaintiffs agreed to buy 100% shares in the 3rd Defendant at a price of US$10,000 . The same was to be paid in two equal instalments. The first instalment was paid to the 1st Defendant on 1st June, 2020, while the second instalment was paid on 30th June, 2020 into account No. 9130004106044, belonging to Epitome Investment Limited, at the behest and instruction of the 1st Defendant. 2 .3 As a consequence, the 1st Defendant surrendered the original copies of the company's share capital certificates, certificate of incorporation and licence to buy, distribute and export petroleum products. As a result, the 1st and 2nd Plaintiffs became the beneficial owners of the 5 th Plaintiff after payment of the full purchase price. Meanwhile, the 1st Defendant was required to change signatures on the 3rd Plaintiff's account pending transfer formalities. Thereafter the 1st Defendant signed a mandate for the J4 2nd Defendant to be the sole signatory on all the 3rd Defendant's accounts with the 4 th Defendant, and having paid the full purchase price, the 1st to 4th Plaintiffs secured an order to procure and supply 2000 tons of Heavy fuel oil, to Konkola Copper Mines at a total of US$1,600,000. The proceeds of this procurement were paid into the 3rd Defendant's account No. 91300041744 22 held at the Ndola Branch of the 3rd Defendant. 2.4 Unfortunately, the 2nd Defendant was informed that he had been blocked from accessing the account by the 4th Defendant who had received instructions from the 1st Defendant to change signatories on grounds that he was unaware of the whereabouts of the 2nd Defendant. It was stated that the 1st Defendant had fraudulently misrepresented to the 4th Defendant that he was still the beneficial owner of the 3rd Defendant and therefore entitled to the funds in the 3rd Defendant when infact not. The particulars, of misrepresentation were particularized. 2.5 In their defence, the 4th Defendant denied liability. 3 . 0 Summons for An Order to Transfer matter from the District Registry to the Commercial List of the High Court JS 3.1 Before the matter could proceed further, the 4 th Defendant applied, pursuant to Order 3 rule 2 and Order LIII rule 2 (i) of the High Court Rules, Cap 271 1 for an order to transfer the action from the District Registry to the Commercial Division of the High Court. In the main, the reasons for seeking the transfer of the action were that it was a commercial action, considering the subject matter of the agreement between the parties. It was averred that the relationship between the parties arose from transactions relating to commercial trade, and the issues that will arise from the facts of the case had commercial connotations. Further, that the 4th Defendant had been sued on account of the contractual relationship of banker and customer that existed between the 3rd and 4th Defendants. That therefore this action ought to have been commenced in the Commercial Court as opposed to the District Registry; and since there was no Commercial Registry at the Kabwe High Court, this was a matter fit for transfer to the Commercial Division of the High Court. 3.2 Further that it would be more convenient and cost effective for the parties, because the majority of the parties and their advocates were based in Lusaka. J6 3.3 The application was opposed by way of an affidavit in opposition, sworn by the 3rd Plaintiff. He basically was of the view that the matter arises from the fraudulent actions of the 1st and 2nd Defendant after the purchase of the 100% shares in the 3rd Defendant by the 1st and 2nd Plaintiffs. That the action was commenced against the 4 th Defendant due to the alleged negligent actions in relation to the 3rd Defendant's bank account; fraud and breach of duty. That therefore there was need to summon witnesses to testify to the purported fraudulent actions of the 2 nd and 3rd Defendants, as the burden of proof was higher and this evidence and testimony cannot be presented by way of witness statements. All in all, the deponent averred that contrary to what the 4 th Defendant asserted, this matter was founded on fraud and negligence. That he had been reliably informed by counsel that the Court had jurisdiction to hear and determine the matter; as it had original and unlimited jurisdiction in civil matters. That this therefore was a proper and fit case in which the Hon. Court could dismiss the 4 th Defendant's application for being mis concerned. 3.4 Both parties filed skeleton arguments in support of their respective positions and which the lower court duly considered before coming to its decision. J7 4. 0 Decision of the Lower Court 4.1 The lower court's decision on this application 1s as set out at paragraph 1.2 herein. 5 .0 The Appeal 5 . 1 Riled by the decision, the Appellants have now appealed to this Court advancing three (not four) grounds of appeal couched as follows :- (i) The court below erred in law and fact when it held that as a Court in the District Registry, it had jurisdiction to hear and determine a commercial action, solely on the basis that the commercial action had been filed in the District Registry contrary to the trite position of the law on commercial actions; (ii) The court below erred in law, when in one breath it held that the High Court has jurisdiction to hear matters prescribed by law, with its respective divisions hearing matters of a particular nature and held in another breath that the court can hear any matter of a family, industrial and contractual nature; J8 (iii) The learned Puisne Judge erred in law when he declined to transfer the matter in total disregard of the factors applicable in an application to transfer a matter. 6.0 Arguments in Support 6.1 In arguing the appeal, grounds 1 and 2 were argued together, while ground three was argued on its own. 6.2 In arguing these grounds, we were referred to the Ruling of the learned Judge as it appears at pages 11 - 12 of the Record of Appeal. The Appellants then adverted to Article 133 (2) of the Constitution of Zambia, Act No. 2 of 2062 , on the establishment of the Commercial Division as one of the Divisions of the High Court, and which states that: - " 133 / (2) There are established, as divisions of the High Court, the Industrial Relations Court, Commercial Court, Family Court and Children's Court." 6 .3 As regards the Commercial List, we were referred to Order LIii rule 2 sub rule 1 of the High Court Rules, Cap 27 of the Laws of Zambial which says that:- "There shall be a commercial list in which commercial actions in the court shall be entered in accordance with these Rules." 6 .4 As for the proposal for establishing the Commercial Court, our attention was called to the guidance given by the Supreme Court J9 1n the case of Jamas Milling Company Limited v. Imex Internationall. 6.5 Based on the above, it was submitted that the Commercial Division is a fast-track court, specialized at resolving cases of a commercial nature which arise from the business community. 6.6 That to refuse to transfer a case of a commercial nature to the Commercial List, commenced on the General List, on grounds that the lower court had jurisdiction merely because the matter was commenced before it, def eats the purpose for which the Commercial Division was created. That in fact the holding by the lower court was an affront to Article 133 (2) of the Constitution2. 6 .7 It was submitted that the definition of a Commercial Court is found in Order LIII (i) of the High Court Rules 1, which states that: " ... means any cause arising out of any transaction relating to commerce, trade, industry or any action of a business nature" and Halsbury's Laws of England, Vol. 37, 4 th Edition at para 5911. 6.8 It was submitted that in casu a perusal of the amended Statement of Claim as appear at pages 26 to 28, 31 and 34 of the Record of Appeal shows that the action stems from a sale Agreement made on 1st June, 2020; which Agreement was for the purchase of 100% shares in the 3 r d Interested Party Company and which Agreement JlO is alleged to have been breached. Further, that the Appellant was sued on account of the contractual relationship of banker and customer that subsisted between itself and the 3rd Interested Party, as is evident from the amended Statement of Claim, and specifically at paragraph 1 7 appearing at page 33 of the record of appeal. That it is in the same statement of claim as appear at paragraphs 18 and 21 where there are allegations of breach of duty by the Appellant. It was submitted that it was in light of this and the definition of a commercial action that they contended that the relationship between the parties arose from a transaction pertaining to commercial trade and or matters of a business nature and subsequently, the issues in the court below have commercial overtones. It was submitted that having established that the action arose out of a commercial transaction, it had to be determined whether such an action like this one ought to be determined by the Commercial Court. To respond to the above, counsel reverted to Order Lill rule 2 sub rule 2 and Rule 5 of the High Court Rules 1; which rules, it was submitted, are mandatory. That that being the case, the court below had no discretionary powers. To buttress on the submission that the use of the word "shall" in a provision is mandatory, regard was had to the cases of Jll Sakala and Another v. Fert Seed and Grain Pty Limited and Another2 where it was held inter alia that:- " ... the section uses the word "shall", which means that the Rule is couched in mandatory terms. So failure to comply with it renders an appellant's appeal incompetent" and Philip Mutantika and Mulyata v. Kenneth Chipungu3. 6.9 It was contended that it is mandatory for all matters concerning commercial transactions to be commenced in the Commercial List. In furtherance of this argument, reliance was also placed on the case of C & B Enterprises Limited v. Liege Zambia Limited4 , which for purposes of this appeal, we believe was cited for persuasive value only. 6.10 It was argued that this matter was fit for transfer to the Commercial List. In support, the cases of Development Bank of Zambia and Another v. Star Energy Limited and Otherss, Midland Bank Limited v. Stamps6 were referred to. It was argued that taking into consideration the cited authorities, it is evident from the facts of this matter that the action is wholly appropriate for determination in the Commercial Court. That therefore the matter is suitable for transfer to the Commercial List. 6.11 Counsel adverted to the arguments in opposition proffered by the Respondents in the court below, where they opposed the J12 application on grounds that the matter is founded on fraud and negligence. That as a consequence, the Respondents argued that the lower court's District Registry had the requisite jurisdiction to hear and determine this action and not the Commercial Division. It was submitted on this point that even the Supreme Court has determined matters emanating from cases relating to fraud and negligence, in commercial matters. In support, the case of Savenda Management Services v. Stanbic Bank Zambia Limited7 was cited to show that the Commercial Division of the High Court can adjudicate upon cases relating to negligence arising out of the banker-customer relationship. For emphasis on this point, the cases of EMC Truck Centre Zambia Limited and Another v. Access Bank (Zambia) Limited8 and B. Y. Enterprises Limited v. Indo Zambia Bank9 were adverted to. It was submitted that it was clear from these cases that the Commercial Division of the High Court can adjudicate on commercial matters where the claims evolve around negligence and or fraud. The case of Nyimba Investments Limited v. NICO Insurance Zambia Limited10 was also referred to, where the High Court, Commercial Division, dealt with a matter involving fraud, false representation or deceit; but basically, to put across the J13 point that the Commercial Division can equally adjudicate on issues of fraud . 6.12 Further, and regarding the High Court's original and unlimited jurisdiction as enunciated by the Supreme Court in the case of Zambia National Holdings Limited & UNIP v. Attorney General11 , it was contended that the High Court is not exempt from adjudicating in accordance with Order LIII of the High Court Rulesl, which makes it mandatory for all commercial actions to be commenced in the Commercial Division. We were urged, on the basis of the above, to find merit in grounds 1 and 2 of the Appeal. 6.13 In Ground 3, it was submitted that in determining the place of trial, due regard ought to be had to the convenience of the parties, their witnesses, as well as the cost to the parties. It was contended that this issue was not adjudicated upon by the learned Judge. To buttress, our attention was drawn to Halsbury's Laws of England, Vol. 37, 4 t h Edition at page 63 1. It was submitted that the court was obliged to consider the various factors applicable in an application to transfer a matter. The case of Derrick Prigle (suing in his own behalf and on behalf of the United Church of J14 God) and Another v. Kambani Banda and Others12 was brought to our attention on this issue. It was submitted that a number of factors were advanced in support of the argument that the matter was fit for transfer to the Commercial Court, namely that the Respondent's lawyers have their offices in Lusaka; as did counsel for the 3 rd Interested Party and the Appellant. 6.14 We were beseeched to reverse the decision of the learned Judge in the court below and allow the matter to be transferred to the Commercial Division of the High Court. The Appellants prayed for costs. 7.0 Hearing 7 .1 At the hearing, counsel for the Respondent was not present. We also noted that they had not filed any arguments in opposition to the appeal. Having established that they were served by the Appellant and also served with the Notice of hearing, we allowed the matter to proceed. 7 .2 Ms. Mutemi, counsel for the Appellant, in arguing the appeal relied on the grounds of appeal and the heads of arguments. Mrs. Sinkala-Silishebo, counsel for the 3rd Intended Interested Party intimated that they supported the appeal. JlS 8.0 Consideration and Decision 8.1 We have perused the Ruling of the court below and the entire record of appeal, the written and oral submissions by learned counsel for the parties herein. In our view, in grounds one and two, the Appellant contends that the High Court, sitting at Kabwe, did not have jurisdiction to hear and determine the matter before it on grounds that the matter is a commercial action. That, that being the case, it ought to have been transferred to the Commercial Division of the High Court, as that was the right division to deal with the issues raised in the action. 8 .2 We agree that Article 133 (2) of the Constitution of Zambia, No. 2 of 20162 established various divisions of the High Court, one of which is the Commercial Division. Order LIII Rule 2 of the High Court Rules of the High Court Act, Cap 27 1 is on the establishment of a Commercial Division, and what actions would be considered in the Commercial List. It is couched thus:- "There shall be a commercial list in which commercial actions in the court shall be entered in accordance with these rules." 8.3 The same Order LIII, in rule 1 defines a commercial action as:- " ... means any cause arising out of any transaction relating to commerce, trade, industry or any action of a business nature" J16 It is pertinent to mention at this point that the above cited order provides for the transfer of an action at any stage. Order LIii rule 11 subrule 1 and 2 are couched thus: - "1. A party to an action may at any stage, prior to the scheduling conference, apply to a judge for the transfer of the action to, or out of the commercial list." 2. A judge shall determine whether the cause of action and issues of fact and law likely to arise or the proceedings to be followed in an action, make the action suitable for inclusion or exclusion in the commercial list." 8.4 On the facts of this case, it is not difficult to ascertain that the Agreement entered into on 1s t June, 2020, by the parties for the sale of 100% shares in the 3 rd Respondent was a commercial transaction, which made it fall into the category of a commercial nature, trade and industry of any action of a business nature as defined above. It is also not difficult to discern that there existed between the 4th Respondent and the Appellant, a banker-client relationship . 8.5 It is our view that on the facts of this case, this is a matter that fell in the realm of a commercial action, and it ought to have been filed in the Commercial List. As has been clearly seen, the law allows for a party to an action, at any stage, prior to the scheduling J17 conference to apply to a judge for a transfer of the action to, or out of the Commercial List. Once that is done, the judge will determine if the cause of action and issues of fact and law are likely to arise, or the procedures to be followed in the action make it suitable for inclusion or exclusion in the Commercial List. 8.6 As regards the argument surrounding the issue of jurisdiction by the lower court to hear the matter because the High Court has unlimited jurisdiction, we agree with the Appellant that although the High Court has unlimited jurisdiction, that jurisdiction is not limitless as it is required to adjudicate within the confines of the law. The case of Zambia National Holdings Limited and UNIP v . Attorney General11 is pertinent. In this regard, we agree with the Appellant that the lower court was not exempt from adjudicating in accordance with Order LIII of the High Court Act3, despite having unlimited jurisdiction, as the said jurisdiction is not limitless. 8.7 We do not agree with the Respondent's position that because the action in the lower court is founded on a lleged fraudulent actions, with elements of negligence, it therefore could not be determined in the Commercial List, and that therefore the lower court had jurisdiction to hear and determine it. As has been shown by the J18 Appellant herein, and with whom we agree, there are a plethora of cases that show that the Commercial List of the High Court can adjudicate on actions that touch on fraud and negligence. The determining factor in our view, is whether the action is rooted in a transaction relating to trade, commerce and industry or an action of a business nature. As has already been shown, this action has its genesis in the Agreement for the sale of 100% shares in the 3rd Respondent; which in our view is a commercial transaction. We find merit in grounds one and two of the appeal. 8.8 In ground three, the Appellant faults the learned Judge for declining to transfer the matter, claiming that this was in total disregard of the factors applicable in an application to transfer a matter. 8.9 We have noted the authorities brought to our attention regarding the transfer of a matter. However, we note that these authorities relate to the transfer of a matter over a place of trial and not a transfer from the General Division or the District Registry to the Commercial List. The case of Derrick Pringle 12 brought to our attention is pertinent where it was stated that:- "I think that in making or varying an order as to place of trial, the court or judge ought to have regard to the convenience of the parties, their witnesses, as well as to J19 the locality of the object viewed when a view is desirable. The cost to the parties is no doubt, also a corollary factor in such a consideration." (underline for emphasis only) 8.10 We are confirmed in our view because the application made before the lower court was specific that the application was for:- "an order to transfer this action from the District Registry to the Commercial Division of the High Court " Clearly and despite mentioning the factors applicable for change of place of trial, the main reason for seeking such a transfer was because the Appellant considered that the matter was suitable for determination as a commercial matter. The Judge, therefore, could not be faulted for not considering the other arguments, as in our view, they were peripheral to the real issue for the application. 8.11 It is common cause that a party to an action may, prior to a scheduling conference, apply to a Judge for the transfer of the action to or out of the Commercial Court. Order LIII sub rule II rules 1 and 2 is clear to that effect. It is also patent that such an application is made to a Judge. In the Interpretation Rule, of Order LIII, the court, refers to a High Court Judge, dedicated to the Commercial List, and designated as such by the Chief Justice under Rule 4 . J20 8 .12 In casu, the application to transfer the matter was made to a Judge, on the general list, and not a judge of the Commercial List. From the cited provisions, it is patent that the lower court, not being on the Commercial List had no jurisdiction to grant an order to transfer the action to the Commercial List. Under sub rule 2 of Order LIii (II), a determination whether the cause of action and issues of fact and law likely to arise or the procedures to be followed in an action, make the action suitable for inclusion in the Commercial List, is a preserve of judges on the Commercial List. 8.13 We find merit in grounds one and two while ground three lacks merit and it is dismissed, accordingly. 9.0 CONCLUSION 9.1 Having found that the learned Judge in the court below lacked jurisdiction to either hear the application or to make an order transferring the matter to the Commercial Division, we order as follows:- 1. The matter be and is hereby remitted to the Commercial Division for the hearing and determination of the application to transfer the matter to itself. 2. Whenever, a Judge on the General List is faced with an application to transfer a matter to the Commercial Division, J21 the Judge shall stay procee s and ref er the application to 10. termination. n the High Court. J. C SHI COURT OF APPEAL JUDGE j ...•.•....•••..•.................... M. J. SIAVWAPA COURT OF APPEAL JUDGE .............• ~ ............... . A. M. BANDA-BOBO COURT OF APPEAL JUDGE J22