Tom Sayer v Madison Asset Management Company and Anor (2023/HKC/ 06) [2023] ZMHC 50 (24 July 2023)

IN THE HIGH COURT FOR ZAMBIA 2023/HKC/ 06 AT THE COMMERCIAL DIVISION REGISTRY- .~ HOLDEN AT KITWE (Civil Jurisdiction) • ,. ~~\ I t><. ~'/ (', \ · ~\. 'L\\L~ ,, , Jj \.-'" , "l u. ) f ' L, L f" BETWEEN: ~ PLAINTIFF TOM SAYER AND MADISON ASSET MANAGEMENT COMPANY 1 ST DEFENDANT TRUSTEES OF THE MADISON UNIT TRUSTS 2ND DEFENDANT Before the Hon. Mr. Justice E. Pengele on 24th July, 2023. For the Plaintiff: Mr. C. Tafeni of Messrs. Suba, Tafeni and Associates. For the 2 nd Defendant: Mr. D. S Libati of Messrs. D. S. Libati Legal Practitioners RULING \ Cases referred to: ~ ·' ,s.. 1. Pritchard V. Westminister Bank Limited (1 969) 1 A 2. Bloo mfield V. Serenyi (1945) All ER 646; 3. WEA Records Limited V. Visions Channel 4 Limited (1983) 1 WLR 721; 4. Harrods Limited V. Tester (1937) 2 All ER 236; and 5. American Cyanamid Company V. Ethicon Limited (1975 ) AC 396. Legislation referred: a. Rules of the Supreme Court of England, 1999 Edition (White Book). 1. INTRODUCTION AND BACKGROUND 1.1 This Ruling follows an application by the 2 nd Defendant for an order to set aside garnishee order to show cause dated 14th June, 2023. The application was filed on 23rd June, 2023, by summons and affidavit in support pursuant to Order 32, rule 6(30) of the Rules of the Supreme Court of Englanda. In addition, the learned Counsel for the 2nd Defendant filed a list of authorities and skeleton arguments. 1.2 On 27 th June, 2023, the Pla intiff filed an affidavit in opposition to the 2 nd Defendant's application. In addition, the learned Counsel for the Plaintiff filed skeleton arguments in opposition of even date . 1.3 The r elevant background to t his application is that on 14 th June, 2023, this Court granted the Plaintiff a garnishee order to show cause. The garnishee order to show cause ordered to the effect that all debts due from the Garnishee, Stanbic Bank Zambia, to the 1st Defendant be attached to these proceedings. 2 AFFIDAVIT IN SUPPORT 2.1 The affidavit in support is deposed to by Pfumai Nyambe . The crux of his depositions is that AMG Global Trustees are the Trustees of Madison Unit Trust (MUT), which is a separate legal entity that is m anaged by Madison Asset Managem ent Company Limited, the 1st Defend ant. -R2- 2.2 The deponent has stated that both the 1st Defendant and the 2 nd Defendant hold bank accounts with Stanbic Bank Zambia Limited on behalf of Madison Unit Trust. On account of the 1st Defendant being under supervisory possession of the Securities and Exchange Commission (SEC), SEC has issued instructions to Stanbic Bank to the effect that the Bank should only act on instructions that have been authorized in writing by either one or both of the Joint Interim Managers of the Trustees of MUT, which is AMG Global Trustees Limited (the 2 nd Defendant) . 2. 3 The deponent went on to say that on the basis of the instructions from SEC t o Stanbic Bank, the Bank wrote to the 1st Defendant's Joint In terim Managers on 21 st June , 2023 . The Bank informed the Joint Interim Managers that, pursuant to an order of this Cou rt , the Bank has proceeded to garnishee some listed bank accounts held in favour of various account holders . 2 .4 The deponent went on to depose th at the affected accounts belong not only to the 1st Defendant but also to the 2nd Defendant. For this reason, the garnishee has n egatively affected the MUT and investors under the MUT whose redemptions ca nnot be process ed due to the garnish ee order. 2 .5 It was Pfumai Nyambe 's further deposition tha t the garnish ee order h as affected third p arty fund s received a nd h eld on trust by the 1s t Defendant for variou s clients and investors . The -R 3- order has also affected funds of th e 2 nd Defen dant with regard to MUT. The 1st Defen dant's Joint Interim Managers are now failing to mal<:e certain distributions that they are mandate to do on behalf of investors under th e 1st Defen dant. 2.6 Nyambe went on to say that the MUT is furth er failing to pay statutory and n on-statutory obligations such as ground rates , taxes and u tility bills . MUT runs the risk of defaulting on those obligations . 2.7 He added th at the garnishee order has affected other third party funds su ch a s those in th e stockbroking account. 2.8 He proceeded to say that th e garnishee order was issued despite the fact tha t th e 2 nd Defendant h ad earlier obtained a stay of execu tion of the judgment in default . 2 . 9 Nyambe wen t on to depose th at there are proceedings in the Lu saka High Court under Cau se No. 201 9 / HPC /376 to convene a creditor's m eeting and agree on a scheme of arrangements between th e 1st Defendant and its creditors. Since th e proceedings are still subsisting, the present action amoun ts to a multiplicity of actions and an abuse of court process. 2.10 He further stated that the Plaintiff cann ot be granted th e equitable relief of a garnishee order because he is on a list of creditors who ou ght to be treated equ a lly. -R4- 3 2N° DEFENDANT'S SKELETON ARGUMENTS 3.1 The kernel of the skeleton arguments filed by Counsel for the 2 nd Defendant is that, since the Plaintiff is on the list of creditors, he ought to be treated equally with the other creditors. He cannot, therefore, be entitled to the equitable remedy of specific performance. To reinforce the foregoing, Counsel relied on the decision of the Court of Appeal in the case of Pritchard V. Westminister Bank Limited 1 for the holding that all creditors should be treated equally. Further that a garnishee order which has the effect of giving a Plain tiff preference over other creditors ought not to have been m ade absolute. 3.2 Counsel further argued that the Plaintiff is not entitled to a garnishee order because he did not make a full disclosure that there are proceedings at Lusaka High Court. To reinforce his submissions, Counsel cited the cases of Bloomfield V. Serenyi2 and WEA Records Limited V. Visions Channel 4 Limited3 . 3 .3 It was Counsel's further argument that the garnishee order would operate as a tool of injustice against the third parties who are beneficiary interested in the garnisheed funds. To support the foregoing, Counsel relied on the ca se of Harrods Limited V. Tester4 . -RS- 3.4 Counsel invited m e to apply the principle of ba lance of convenien ce enunciated in , inter alia, the case of American Cyanamid Company V. Ethicon Limited5 • 4 AFFIDAVIT IN OPPOSITION 4 . 1 In his affidavit in opposition, the Plaintiff wondered why the 2nd Defendant is making efforts to in terven e on behalf of the 1st Defendant. He stated that, in its affidavit dated 3rd May, 2023, in support of an application to stay execution of the default judgment, the 2nd Defendant argued that it was n ot involved in the m an agement and assets of the 1st Defen dant. 4.2 The deponent went on to state that the letter written by Stanbic Bank was not written to the 2nd Defendant. In stead , th e letter was written to the 1st Defendant and copied to the Securities a nd Exchange Commission. Therefore , the 2nd Defendant is a stranger to that communication. For that reason, the 2nd Defenda nt should not respond on behalf of the 1st Defendant, which is the owner of the bank accounts. 4.3 The Plaintiff added th a t , with regard to th e s tay of execu tion granted by this Court, the 1st Defend ant never applied for a stay. There is no s t ay of execution in favou r of the 1st Defen dant. 4.4 He proceeded to d epose that th e proceedings under Cause No. 20 19/HPC/376 in the Lusaka High Court were for the specific -R6- purpose of convening a creditors' meeting. The proceedings already served the intended purpose. 4 .5 He further deposed that there is no list of creditors or agreement for payment of creditors. The 1st Judgment debtor has continued to operate without any scheme of arrangement. The 1st Defendant is not undergoing winding up proceedings or receivership. On 24th December, 2020, Madison Financial Services Plc, the main shareholder of the 1st Defendant issued a further cautionary u pdate and market announcement where it stated that there would be capital injection into the 1st Defendant and that there were no plans to liquidate the 1st Defendant. 5 PLAINTIFF'S SKELETON ARGUMENTS 5.1 In their skeleton arguments, Counsel fo r the Plaintiff has submitted that the Plaintiff has shown that the 1st Defendant is a going concern. There are no in solvency proceedings going on in relation to the 181 Defendant . The 1st Defendan t has not opposed the garnishee order nisi. 5.2 Counsel argued thal, by brin ging garnish ee proceedings, the Plaintiff has shown diligent steps to recover the money due to him. Counsel referred me to the case of Pritchard V. Wes tminister Bank Limited1, where Lord Denning said a t page 4 thal "The general principle, when there is no insolvency, is that the person who gets in first gets the fruits of his diligence .. .. " Counsel pointed out that Lord -R7- Denning clarified that the exception 1s when there are insolvency proceedings or when there 1s an agreement of creditors. 5.3 Counsel submitted that in this case the Plaintiff has shown that there are no insolvency proceedings and there is no agreement by creditors. 6 AFFIDAVIT IN REPLY 6 .1 The affidavit in reply is deposed to by Pfumai Nyambe. The depositions in that affidavit are essentially a repetition of what he deposed to in the affidavit in support. 7 CONSIDERATION AND DECISION 7 .1 I have carefully considered the 2 nd Defendant's application and the opposition by the Plaintiff. I have also considered the skeleton arguments filed by Cou nsel for the parties. 7 .2 In his affidavit in opposition, the Plaintiff has wondered why the 2 nd Defendant h as intervened on behalf of the 1 s t Defendant in the garnishee proceedings. According to th e Plaintiff, the garnishee proceedings do not concern the 2 nd Defendant because the 2 nd Defenda nt has consistently disassociated itself from the management and assets of the 1 s t Defendant. Counsel for the Plaintiff has argued that, in fact, the 1s t Defendant has not even opposed the garnishee order nisi. -RS- 7.3 Conversely, in the affidavit in support of this a pplica tion, Pfumai Nyambe h as deposed that both the 1st Defendant and the 2 nd Defendant hold bank accounts with Stanbic Bank on behalf of MUT. The deponent h as gone on to swear that the accounts affected by the garnishee order belong not only to the 1st Defendan t but also to the 2 n d Defendant. 7.4 I have taken time to carefully review the above contending positions of the parties. The question that I must resolve at this point is whether or not the 2 n d Defendant has locus standi to challenge the garnishee proceedings . 7. 5 A cursory review of the record of this case establishes that this Court entered a judgm ent in default of appearance and defence on 26 th April, 202 3 . On 3 rd May, 2023 , th e 2 nd Defendant applied for an order to stay execution of the default judgm ent. The ex-parte summons clearly stated in part th at it was for the- " ... hearing of an application on the part of the 2 nd Defendant for an Order to Stay Execution of Judgment in Default of Appearance and Defence dated 26th April, 2023 pending the determination of an application to set aside the judgment Obtained in Default of Appearance and Defence dated 26th April, 2023." [Underlined for emphasis only] 7.6 It is clear from th e a bove extract that the application for stay of execution was made by only the 2 nd Defendant. Pursuan t to -R9- that application by the 2nd Defendant, this Court granted th e 2 nd Defendant an ex-parte order of stay of execu tion couched, in the relevant part, as follows: "UPON hearing Counsel for the 2 n d Defendant and UPON reading the affidavit in support filed h erewith. IT IS hereby ORDERED that the Judgment in Default of Appearance and Defence against the 2 nd Defendant dated 26th April, 2023 BE and IS HEREBY staye d pending the determination of t he 2 nd Defendant's application to se t as ide t he said Judgment in Default of Appearance an d Defence." [Underlin ed for emph asis only] 7. 7 The above order u n mistakably sh ows that the s tay of execution related exclu sively to th e 2 nd Defendant. The order did not stay the defau lt judgmen t in so far as it relates to the 1st Defendant. In fact, in my Ruling dated 28 th June, 2023, on th e 2nd Defendant's application to set aside the default judgmen t, I held specifically that the judgment in default of appearance a nd defence was set aside only in so far as it related to the 2nd De fendant. I stated th at th e default judgment still remains valid and subsisting in relation to 1st Defenda nt. 7 . 8 In view of the foregoing, it is untenable for the 2nd Defendant to contend that the Plaintiff was not en titled to apply for a garnishee order nisi against the 1st Defendant in light of the -R l O- stay of execution. As rightly submitted by Counsel for the Plaintiff, the garnishee order to show cau se related only to the 1st Defendant. There is nowhere in that order where the 2 nd Defendant is m entioned. For the avoidance of doubt, the relevant portions of th e garnis hee order to show cause are couched as follows: "IT IS ORDERED that all debts due or accruing due from the above-mentioned Garnishee to the above-mentioned 1s t Judgment Debtor in the sum of USDl,035,427.78 be attached to answer a judgment recovered against the said 1s t Judgment Debtor by the above-named Judgment Creditor in the High Court on the 26th April 2023 and interest and costs together with the costs of the garnishee proceedings on which judgment the sum of USDl,035,427.78 remains due and unpaid. IT IS ORDERED that the said Garnishee attend the Judge in chambers on the 28th day of July 2023 at 08:30 hours, on an application by the said Judgment Creditor that the said Garnishee do pay to the said Judgment Creditor the debt due from the said Garnishee to the said 1st Judgment Debtor, or so much thereof as may be sufficient to satisfy the said judgment, together -Rll - with costs of the garnishee proceedings." [Underlin ed for emphasis only] 7. 9 It is manifestly clear from the above portions of the garnishee order to show cause that the order relates only to the 1st Defendant and th e bank accoun ts held by the 1st Defendant with Stanbic Bank. The order does attach any debt accruing from Stanbic Bank to the 2 nd Defendant. In other words, the order does not garnishee any account h eld by the 2 nd Defendan t with Stan bic Bank. 7.1 0 In light of the a bove- mentioned, the deposition by Pfumai Nyambe, that the garnishee order to show cause should be set aside becau se it h as affected accounts held by the 2nd Defendant with Stanbic Bank, is devoid of m erit. If Stanbic Bank has garnisheed the 2 n d Defendant 's accounts as alleged, the action by Stanbic Bank is clearly not pursuant to the garnishee order issu ed in this case . 7 .11 It is clear from the foregoing that the garnish ee order to show cause has only affected accounts held by the 1st Defendant with Stanbic Bank and not accounts h eld by the 2nd Defendant with Stanbic. Order 32/6/30 of the Rules of th e Supreme Court, 1999 Edition, which the 2 nd Defendant has referred me to, provides that- "Rule 6 embodies the fundamental rule o f practice that a party affected by an ex parte order may apply to the Court to discharge it, -R12- inasmuch as he has not had an opportunity of being heard." [Underlined fo r em ph asis only] 7 . 12 It is eviden t from th e a b ove Order th a t it is only a party affected by an ex-parte order wh o can a pply to th e Cou rt to have the order disch arged. The 1s t Defendant , wh o has been affected by th e su bject ex-parte order, h as not made any application to this Cou rt for th e disch arge of th e garnishee order to show cau se. 8 CONCLUSION 8.1 On the totality of the foregoing, I find ab solutely no merit in the 2 nd Defendan t's a pplication to set aside garnish ee order to show cause. I dismiss the 2 nd Defendant's application with costs to be taxed in default of agreement. 8. 2 Leave to appeal is granted. De livered at Kitwe this 24th day of July, 2023 . .... ~ --· E. PENGELE HIGH COURT JUDGE -Rl3-