Zambia National Commercial Bank PLC v Chainama Hotel Ltd and Anor (Appeal 85 of 2011) [2011] ZMSC 26 (22 July 2011)

I IN THE SUPREME COURT FOR ZAMBIA APPEAL NO. 85/09 HOLDEN AT LUSAKA (Civil Jurisdiction) ZAMBIA NATIONAL COMMERCIAL BANK PLC APPELLANT AND CH AIN AM A HOTEL LIMITED SONNY PAUL MULENGA 1st RESPONDENT 2nd RESPONDENT Coram: Chibesakunda, Phiri and Muyovwe J. J. S On the 17th February, 2011 and 22nd July, 2011 For the Appellant: H. M. Mulunda, In-house Counsel For the Respondent: M. Katolo, Messrs Milner Katolo & Associates JUDGMENT MUYOVWE, JS, delivered the Judgment of the Court. Cases, Legislation and Materials referred to: 1. Wilson Masauso Zulu vs. Avondale Housing Project Limited (1982) Z. R. 172 2. Sentor Motors Limited vs. 3 Other Companies SCZ No. 9 of 1996 3. Section 9 (2) and 13 of the High Court Act Cap 27 of the Laws of Zambia 4. Black’s Law Dictionary 3rd Edition 5. Zulu vs. The People (1968) Z. R. 92 6. R. vs. Cripps ex-parte Muldoon (1984) 2 All E R 705 7. Halsbury’s Laws of England Volume 29, 4th Edition 8. Re Harrison’s Settlement (1955) 1 All E R 185 9. BP Zambia Pic vs. Interiand Motors SCZ No 5 of 2001 10. Bank of Zambia vs. Jonas Tembo and Others SCZ No. 24 of 2002 11. Mirolad Saban & Another vs. Gordin Milan (2008) Z. R. 233 12. FAI General Insurance vs. Southern Cross Exploration NL (1988) JI 165R 268 13. Tata Zambia Limited vs. Shilling Zinka (1986) Z. R. 51 14. Code of Banking Practice in Zambia 15. Stanbic Bank Zambia Limited vs. A. S. & C Enterprise Limited & Others (2008) Z. R. 259 16. Zambia Revenue Authority vs. Hitech Trading Company Limited SCZ Judgment No. 40/2000 This is an appeal against the Order of the High Court which referred the matter to the Deputy Registrar for Assessment/Reconciliation and also to assess whether there was an overpayment by the Respondents in a matter where the judgment debt had been paid by the Respondents five years earlier. The Appellant’s main bone of contention is that the lower Court abdicated its duty by failing to adjudicate on the preliminary issue which they presented before the Court following the Respondents’ application to compel them to produce Statements to prove the Judgment debt. The brief back ground of the matter is that the 1st Respondent was advanced a credit facility by the Appellant on 6th November 1996. Due to failure by the Respondents to service the debt, the Appellants commenced legal action against them by Originating Summons and at time of commencement of the action the amount owing stood at K261,026,776.65. On 14th July, 1998 the lower J2 Court granted the Appellant a foreclosure Order. Thereafter, the Respondents made various applications for stay of execution and the record shows that on 20th December 2002 a stay of execution was granted subject to reconciliation of the account by both parties and settlement of the debt by 27th December 2002. The Respondents failed to comply with the agreement. The Respondents applied for stay of execution later but this was denied by the Court below on the 31st July 2003. The Notice of Motion filed in the Supreme Court and heard by Judge Mambilima was refused. In her Ruling dated 28th August 2003, Judge Mambilima noted that the judgment in this case was passed in 1998 and it had remained unsatisfied thereby depriving the Appellant the fruit of its judgment. The Respondent then took out Summons for Review of Judgment in which the Respondents sought to re-open the case ‘as they had come across fresh facts which would turn the course of this case’. The application was abandoned on 20th November 2007 and the Respondents applied for an adjournment to file an application to set aside judgment with special leave of Court adding that they needed time to attempt an ex curia settlement. Instead, on 24th September, 2008 the Respondents filed Summons to Compel the Appellant to J3 produce bank statements pursuant to the Consent Order dated 2nd January 2003 read together with Order 88 rule 5 of the Supreme Court Rules of 1999 and were also asking for an Order that if the Appellant failed to produce the statements, the judgment should be set aside and the moneys paid by the Respondents should be refunded with interest. This application was set for hearing on the 3rd November 2008. Meanwhile, the Appellant’s Counsel filed on 28th October, 2008 Notice to Raise Preliminary issue for the determination of whether ‘the Court had the jurisdiction to hear the Defendant’s application, 10 years after it concluded it’. The Appellants also filed skeleton heads of Argument. On the 26th November 2008, the Respondents’ Counsel filed their skeleton arguments in answer to the Preliminary issue raised. Suffice to note that when the matter came up for hearing on 3rd November, 2008, there was no appearance on behalf of the Respondents and learned Counsel for the Appellant informed the Court that the case would have been closed, if not for the Respondents’ applications. The matter was adjourned due to non-attendance of the Respondents’ counsel and was next heard on 29th January 2009. On that date, learned Counsel for the Appellant informed the Court that they had J4 filed a Notice to raise preliminary issue but the Court proceeded to set a fresh date of hearing and on 31st March 2009 the learned Judge made an Order referring the matter to the Deputy Registrar for Assessment/Reconciliation. It is against this order that the Appellant has filed this appeal. On behalf of the Appellant, Mr. Mulunda in his filed heads of Argument which he augmented with oral submissions, argued that that this Appeal is premised on the non-adjudication by the lower Court of the preliminary issue raised and on the referral of the matter by the lower Court to the Deputy Registrar. Mr. Mulunda advanced three grounds of Appeal. However, he argued Grounds 1 and 2 together. The first ground is that the learned Judge erred in fact and law when he failed to adjudicate on the preliminary issue raised by the Appellant and the second is that by referring the matter to the Deputy Registrar to assess or reconcile figures, the learned trial Judge erred in fact and law as this constituted reopening of the matter. Mr. Mulunda submitted that 10 years after conclusion of the matter, the Respondents on 24th September 2008 made an J5 application compelling the Appellant to produce bank statements to prove that the Respondents were indebted to the Appellant in the sum of K261,026,776.65. He argued that this application was a strategy by the Respondent to provide a defence to the Appellant’s Originating process which was commenced in February 1998. The same application also sought to set aside the judgment dated 14th July 1998. He pointed out that the Appellant’s action was never defended and the judgment entered was never challenged by way of appeal and the applications for stay of executions failed including one in this Court. He contended that in fact the debt in question was never in dispute going by the numerous correspondences between the parties in which the Respondents made proposals to pay the debt in installments. It was submitted that upon realizing that the application by the Respondents was coming 10 years later, the Appellant filed a Notice to raise a preliminary issue supported by skeleton arguments. He submitted that the gist of the preliminary issue was that the Respondent having settled the debt and the judgment of the Court having been perfected, the Court was functus officio. He contended that failure by the learned Judge to hear the preliminary issue by the Appellant amounted to abdication J6 of responsibility. He submitted that there is evidence on record to show that the Appellant sought to be heard on the preliminary issue but instead the Court directed the parties to file respective affidavits in the matter and that following this Order the Appellant filed an Affidavit Verifying Facts on 20th March 2009. Mr. Mulunda contended that this Court has stated that a trial Court has a duty to adjudicate upon every aspect of the suit between the parties so that every matter in controversy is determined in finality. In support of this argument he relied on the cases of Wilson Masauso Zulu vs. Avondale Housing Project Limited1, Sentor Motors Limited vs. 3 Other Companies2 and Section 9 (2) and 13 of the High Court Act Cap 27 of the Laws of Zambia3. Mr. Mulunda submitted that the failure by the Court below to hear the preliminary issue denied the Appellant justice. Further, Mr. Mulunda referred us to the definition of 'functus officio" in Black’s Law Dictionary at Page 1924 which defines it as: “....having discharged his duty. Refers to one who has exercised his authority and brought it to an end in a particular case.” Learned Counsel for the appellant cited various authorities on this point including Zulu vs. The People5; R. vs. Cripps ex-parte J7 Muldoon6 ; Halsbury’s Laws of England para 390 Vol. 297 , and Re Harrison’s Settlement8 . He submitted that the Order of 14th July 1998 was perfected prior to the Respondents’ application of 24th September 2008 as the Respondents had settled their debt with the last instalment paid on 12th December 2003. He argued, therefore, that not only was the judge functus officio but he lacked the authority to entertain the Respondents’ application ab initio let alone refer the matter to assessment. Further, he submitted that sending the matter for assessment amounted to re-opening the matter which was concluded 10 years earlier. He posed the question: what was to be determined 10 years after the matter was concluded as the debt was paid off five years after the judgment was perfected? Ground 3 is that the learned Judge erred in fact and law when having directed the Appellant to produce the bank statement overlooked the affidavit verifying facts on the judgment sum of K261,062,038.00 and the submissions of Counsel for the Appellant. It was submitted that following the Court’s directive that the parties filed Affidavits verifying facts on the matter. The gist of Mr. Mulunda’s argument on this ground is that the Affidavit Verifying J8 Facts filed on 20th March 2009 showed how the amount owing was arrived at. He contended that even after they filed the Affidavit Verifying Facts as ordered, the Court failed to adjudicate on the matter but sent the matter to the Deputy Registrar which was an error. It was submitted that there being no triable issues and the matter having been settled 10 years earlier and there having been no dispute as to the amount owing, this Court should set aside the Order which referred the matter to the Deputy Registrar. He cited BP Zambia Pic vs. Interiand Motors9 and Bank of Zambia vs. Jonas Tembo and Others10 in which this Court invoked the maxim interest republican us sit finis litium which means that it is in the public interest that there should be an end to litigation. Mr. Mulunda urged this Court to reaffirm that this matter was concluded following the judgment of the Court on 14th July 1998 and the payment of the full judgment debt in 2003. In response, Mr. Katolo learned Counsel for the Respondents who also filed his heads of argument and augmented them with brief oral submissions, contended as regards ground 1 that the lower Court was on firm ground when it proceeded to make the J9 Order referring the matter to the Deputy Registrar for Assessment. He pointed out that the Notice to raise preliminary issue was filed on 20th October 2008 and the Appellant on 20th March 2009 filed an Affidavit Verifying Facts which was in response to the Respondents’ application to compel the Appellant to produce Bank statements. Mr. Katolo contended that by the Appellant filing the Affidavit Verifying Facts on 20th March 2009 this amounted to them abandoning or waiving their right to raise a Preliminary issue and opted to defend the application on the merits. It was submitted, citing the case of Mirolad Saban & Another vs. Gordin Milan11 that a party who opts to defend a case on the merits must not be allowed to fall back on an abandoned defence when it appears that he is losing on the merits. He also referred to Order 2 rule 2 (4) of the Rules of the Supreme Court 1999 Edition. It was submitted that the record shows that learned Counsel for the Appellant who appeared in the Court below merely mentioned in passing, that they had filed a Notice to Raise a Preliminary issue. Further, he contended that Ground 1 is a ground against a non-existent Order adding Counsel did not insist on being heard on the preliminary issue. It was submitted that by the Appellant filing the Affidavit j io ) Verifying Facts long after the Notice to Raise Preliminary issue was filed amounted to a fresh step in the action in terms of Order 2 rule (2) of the RSC 1999 Edition. Coming to ground 2 he contended that by referring the Assessment or Reconciliation to the Deputy Registrar, the lower Court was not re-opening the case but was merely giving effect to the intention of the parties as expressed in the Consent Order executed on 2nd January 2003 and which was drawn by the Appellants. It was submitted that the reconciliation not having taken place, the Respondents were in order to insist upon it. He submitted that there was another Order referring the matter for assessment to the Deputy Registrar dated 8th April 2009 and that the Appellant did not take issue with this Order. Mr. Katolo submitted that what was referred to the Deputy Registrar for assessment was whether there was an overpayment by the Respondents. He insisted that referring the matter for assessment/reconciliation could show either an overpayment or an underpayment adding that this would not prejudice any of the parties especially that the Appellants have already been paid. jh He cited FAI General Insurance vs. Southern Cross Exploration12. According to Mr. Katolo the two Orders dated 2nd Januaiy 2003 and 20th April, 2009 were not complied with and it is this non-compliance by the parties that led to referring the matter for assessment and/or reconciliation to the Deputy Registrar. He argued that it is only by conducting a reconciliation that justice will manifestly be seen to be done especially against the background that the Respondents have always contended that the Appellant did not furnish them with bank statements to establish how the judgment debt of K261,027,776.65 was arrived at. He submitted that after the writ of fifa was issued, the Respondents attempted to obtain a stay of execution and when this failed the only option was to pay but without losing the right to have the debt proved by the Appellant, hence the Summons to Compel the Appellant to produce bank statements filed on 24th September 2008. Relying on Tata Zambia Limited vs. Shilling Zinka13 he submitted that although the default Judgment appears to have been perfected, this is not a bar to the Respondent making an application that the judgment debt be proved. Further, he argued that the issue of the Court being functus officio cannot arise as the J12 issue of reconciliation of the figures was still a pending issue before the Judge. Responding to ground 3 he contended that the learned Judge was on firm ground when he directed the Appellants to produce bank statements and that he did not ignore the Affidavit Verifying Facts. It was submitted that the exhibits did not contain any Bank Statements. He cited the Code of Banking Practice in Zambia14; Stanbic Bank Zambia Limited vs. A. S. & C Enterprises Limited & Others15; and Zambia Revenue Authority vs. Hitech Trading Company Limited16 arguing that the Appellant was obliged to furnish the Respondent with Bank Statements and failure to do so amounted to negligence adding that the Court was not obliged to take into account Counsel for the Appellant’s submissions no matter how spirited they were as they were not anchored on sworn evidence. We have considered the evidence on record, the Ruling which is being appealed against and the submissions by both learned Counsel. J13 With regard to Ground 1 that the learned Judge erred in fact and law when he failed to adjudicate on the preliminary issue raised by the Appellant, the record shows that the Notice in question was filed on 28th October 2008 and the Respondents’ Summons to Compel the Appellant to produce Bank statements was set for hearing on the 3rd November 2008. When the matter came up for hearing, the Respondents’ Counsel was not in attendance. The Court noted that the matter had been inactive for over 24 months and that the matter had been concluded by Consent Judgment in 1998 or 2003. The matter again came up for hearing on 29th January, 2009 and learned Counsel for the Appellant indicated to the Court that they had filed a Notice to Raise Preliminary issue ‘that ordinarily would have to be heard.” However, the Court ignored Counsel’s submission and adjourned the matter to 31st March 2009 to allow the parties to get organized. It is important to bear in mind that, at this time, there was already filed before Court skeleton arguments from both the Appellant and the Respondents in respect of the Notice to Raise Preliminary issue. Mr. Katolo’s argument is that since the Appellant’s Counsel went ahead to file the Affidavit J14 Verifying Facts on 20th March 2009, this indicated that they had abandoned or waived their right to raise the preliminary issue and, therefore, opted to defend the application on the merits. We do not agree with him. It is a fundamental rule of procedure that once an application is filed, the Court is obliged to hear it. As we have noted above, in this case even the Respondent had filed their skeleton arguments on 26th November, 2008. This confirms that both parties expected a hearing and a Ruling on the Preliminary issue raised by the Appellant. In our view, having brought the application to the attention of the Court, we do not believe that Counsel should have insisted to have the application heard as suggested by Mr. Katolo. If Counsel took the way suggested by Mr. Katolo, she would have started arguing with the Court which a prudent lawyer cannot be expected to do. It was sufficient that Counsel reminded the Court of the existence of the preliminary issue and if the Court decided not to hear the application, we do not think that Counsel should bear the blame. We agree with Mr. Katolo that the Court did not refuse to hear the preliminary issue. Instead the Court proceeded to Order the parties to file documents without first hearing the preliminary issue raised by the Appellant. This was a serious misdirection and J15 as we said in the case of Sentor Motors Limited vs. 3 Other Companies2: “It is the duty of the Court to adjudicate matters brought before it. The Court in this matter had abdicated its responsibility and this amounted to a denial of justice.” Mr. Katolo also contended that the Appellant waived its right to be heard on the preliminary issue after it filed an Affidavit Verifying Facts. The record shows that the Appellant was merely complying with the Court’s directive by filing the documents and so we do not agree with Mr. Katolo’s contention that the Appellant opted to defend the Respondents’ application on the merits. In our view, the fact that the learned Judge did not make any Order refusing to hear the preliminary issue goes to confirm that he erred in law and fact in not hearing it. We find that the failure to hear the preliminary issue amounted to denying the Appellant the right to be heard and a denial of justice. Ground 1 therefore succeeds. In ground 2 the Appellant argued that by referring the matter to the Deputy Registrar to assess or reconcile figures, the learned trial Judge erred as this constituted re-opening the matter. First of J16 all, we note that this ground is somewhat tied to Ground 1. We need not repeat that before making the Order referring the matter to the Deputy Registrar, the learned Judge ought to have heard the preliminary issue. The record shows that at the time of taking out the Summons to Compel the Appellant to produce bank statements, this case had laid in abeyance for over 12 months. Quite obviously, the Respondents had gone to sleep on their rights. It was argued by Mr. Katolo that by referring the case to the Deputy Registrar, the learned Judge was merely giving effect to the intention of the parties expressed in the Consent Order dated 2nd January 2003. According to Mr. Katolo the Consent Order dated 2nd January 2003 and the Order dated 20th April 2009 “were not complied with and it is this non-compliance by the parties that led to the referring of the matter for assessment and/or reconciliation to the Deputy Registrar.” We are surprised that Mr. Katolo included the Order dated 20th April 2009 which is the subject of this Appeal, as one of the Orders which were not complied with. This submission by learned Counsel is misleading. At this stage, we feel it is necessary to reproduce the Summons filed by the Respondents on 24th September 2008 and it J17 is found at page 32 of the Record of Appeal and it reads in part: SUMMONS TO COMPEL THE PLAINTIFF TO PRODUCE BANK STATEMENTS PURSUANT TO THE CONSENT ORDER DATED 2/1/2003 AND READ TOGETHER WITH ORDER88 R 5 OF THE SUPREME COURT PRACTICE OF 1999 ETC. LET ALL PARTIES concerned attend before the Honourable Mr. JUSTICE T. KAKUSA in chambers on the 3rd day of November 2008 at 0900 hours or so soon thereafter as Counsel may be heard on an application on behalf of the Defendants to compel the Plaintiff to produce the 1st Defendant’s Bank Statements in support of its claims in this matter within seven (7) days from date of the Order. AND also for an Order that in the event of failure to produce the said statements setting aside the default Judgment and ordering the Plaintiff to refund all the monies paid by the Defendants with interest, (emphasis ours) The wording of the above Summons makes interesting reading and is clear proof that the Respondent’s aim was to seize an opportunity to defend themselves after the case was already concluded. Another argument advanced by Mr. Katolo was that although the default Judgment had been perfected, this was not a bar to the Respondent’s application that the judgment debt be proved. The case of Tata Zambia Limited vs. Shilling Zinka13 relied upon by Mr. Katolo can be distinguished from the present case. In the case of Tata Zambia Limited vs. Shilling Zinka,13 there was an J18 application to set aside the default judgment but in the present case, the Respondents did not challenge the default judgment at all. In our view, learned Counsel cited this case out of context and it is not applicable. We have perused the proceedings in this case and we agree with Mr. Mulunda that the Court was functus officio as it had already made its decision on the matter and had literally closed the door to the Respondents who seemed to be making application after application but without success as their applications had no merit. We have said time and again that there must be finality in litigation - See also Wilson Masauso Zulu vs. Avondale Housing Project Limited1 and Section 13 of the High Court Act.3 The question of compliance of the Consent Order dated 2nd January 2003 could, therefore, not arise after they had paid off the debt. The Respondents had all the time while paying off their debt to follow up on the statements from the time that the Consent Order was executed on 2nd January 2003. Regarding the Order dated 8th April, 2009 Mr. Katolo accused the Appellant of not taking issue with this Order. The record shows that the Appellant filed an appeal against this Order on 15th April 2009. Notably, the Order has different dates J19 on it but it is quite clear that the Order dated 8th April 2009; 25th April 2009 and 31st March 2009 is one and the same Order. Looking at the correspondence between the parties and the background to the Summons in issue, we have our doubts about the sincerity of the Respondents in making the said application which sparked off this Appeal. We do not find any merit in learned Counsel (Mr. Katolo’s) arguments on this ground. To this end, ground 1 having succeeded, it follows that ground 2 must succeed as well. With regard to Ground 3 which relates to the Order of the learned Judge that he directed the appellant to produce Bank Statements but that he overlooked the Affidavit Verifying Facts on the judgment sum of K261,062,068.00 and the submissions of Counsel for the Appellant, our considered view is that this ground automatically falls away. This is obviously due to the fact that this ground is inter-related with the other two grounds which have succeeded. We, therefore, do not find it necessary to delve into it. In conclusion, it is evident that the Respondents sat on their rights over the years and the demand for enforcement of a Consent J20 Order made in 2003 should not have been entertained. The Respondents did not defend the action and they could not redeem their lost opportunity by applying to compel the Appellant to produce Bank Statements. From the foregoing, we find merit in the Appeal and we allow it and set aside the Order of the Court below referring the matter for assessment to the Deputy Registrar. The costs in this Court and in the Court below shall be for the Appellant to be taxed in default of agreement L. P. CHIBESAKUNDA SUPREME COURT JUDGE G. S. PHIRI SUPREME COURT JUDGE E. N. C. MUYOVWE SUPREME COURT JUDGE J21