Eustina Chanda Simusamba v African Banking Corporation Limited (CAZ AppealNo. 115/2021) [2024] ZMCA 141 (31 January 2024)

-Jl- IN THE COURT OF APPEAL OF ZAMBIA HOLDEN AT LUSAKA (Civil Jurisdiction) CAZAppealNo. 115/2021 CAZ/08/005/2021 BETWEEN: 3 I JAN 2024 EUSTINA CHANDA SIMUSAMBA APPELLANT AND AFRICAN BANKING CORPORATION LIMITED RESPONDENT CORAM : Siavwapa, JP, Chishimba and Banda-Bobo JJA On 16th January, 2024 and 31 st January, 2024 For the Appellant : Mr. D. Mwengwe of Messrs Iven Mulenga & Co. For the Respondent : Mr. R. Ngulube ofTembo Ngulube & Assocates. JUDGMENT CHISHIMBA JA delivered the judgment of the court. CASES REFERRED TO: 1) Remmy Kabanda Kaindu Mushota v The Law Association of Zambia (1985) Z. R. 146 2) Phillips v Copping (1935) 1 KB 1 3) Re Cooper, Cooper v Vesey (1882) 20 Ch. D. 611 4) Re De Leeuw, Jakens v Central Advance & Discount Corporation Limited (1922) 2 Ch. D. 540 5) Gondwe v Ngwira SCZ Appeal No. 37 of 2015 6) Sithole v The State Lotteries Board (1975) Z. R. 106 7) Joseph Constantine Steamship Line Limited v Corporation Limited (1941} 2 All ER 165 Imperial Smelting 8) Sablehand Zambia Limited v Zambia Revenue Authority (2005) Z. R. 109 3 ' JAN 202~ -J2- 1.0 INTRODUCTION 1.1 This appeal arises from the judgment of Mrs. Justice Irene Zeko Mbewe delivered on 14th December, 2020. In that judgment, the learned Judge granted the followings reliefs sought by the respondent; foreclosure, possession and sale of mortgaged property, stand No. 3523 Kabwe, enforcement of personal guarantee against the appellant and costs. The court however dismissed the appellant's allegations of fraud. 2.0 BACKGROUND FACTS IN THE COURT BELOW 2.1 The respondent bank commenced a mortgage action by way of originating summons against a company called Cross-Border Network Africa Limited, the appellant herein, Bernard Sikunyongana and Titus Sankisha as 1st, 2nd, 3rd and 4th respondent respectively. It sought several reliefs inter alia: (i) Payment of the sum of Kl, 006, 868.68 being the outstanding sum of monies owed by the 1st respondent company to the bank in respect of banking facilities in the form of bank guarantee availed by the bank to the company; (ii) By failure of the company to pay the sum of monies, the third-party legal mortgage created by the company and the appellant in favour of the bank be enforced by an order of foreclosure, possession and sale of the mortgaged property, namely Subdivision No. 3 of Stand No. 3523 Kitwe, Copperbelt Province; -J3- (iii) Enforcement of the personal and directors' personal guarantees against the 2nd, Jrd and 4th respondents respectively should the proceeds of sale of the mortgaged property not be sufficient to liquidate the judgment debt; (iv} Payment of all costs and expenses recoverable out of or in connection with the enforcement of the third-party mortgage; and (v} interest. 3.0 EVIDENCE ADDUCED IN COURT BELOW 3.1 Sera Agness Mwale, the Recoveries and Collections Manager for the bank, swore an affidavit to the effect that on 30th November, 2015, Cross Border Network Africa Limited was availed a banking facility in the form of a Bank Guarantee in the sum of US$60, 000.00 to be repaid within six months. The facility was secured by a third-party legal mortgage over Subdivision No. 3 of Stand No. 3523 Kitwe, Copperbelt Province. The said property belonged to the appellant who was warned of the consequences of her intended actions and advised to seek independent legal advice. 3.2 The appellant voluntarily pledged her property as security for the facility availed to the company. The said bank guarantee was also guaranteed by the personal guarantees of the appellant, Sikunyongana and Sankisha. Cross Border Network Africa Limited failed to perform its repayment obligation. As at -J4- 13th July, 2018, the total sum of Kl, 107, 555.40 was outstanding on the company's statement of accounts. 3.3 The appellant opposed the application by the bank. She denied having entered into a third-party mortgage agreement with the respondent. The appellant stated that the company, Sikunyongana and Sankisha merely called her to make an arrangement to use her property as collateral. She denied signing any third-party mortgage over her property with the respondent. She further alleged that the mortgage was fraudulently created without her knowledge or permission. In addition, the appellant refutes engaging any lawyers or executing any consent form pledging her property as security. 3.4 The appellant stated that she was not aware that there was a guarantee/mortgage placed over her property and reiterated that the respondent, the company, Sikunyongana and Sankisha fraudulently arranged the loan facility against her property without her lawful permission. She denied being indebted to the respondent. 3.5 In the affidavit in reply, the respondent maintained that prior to the loan facility being availed to the company, the appellant indicated her intention to offer her property as security for the -JS- debt to be advanced to the company. That the appellant was written to by the bank advising her to obtain independent legal advice in understanding the nature, implications and ramifications of her intention to execute the guarantee and mortgage. 3.6 In cross-examination, Sera Mwale stated that she did not know the place where the third-party mortgage was at. 3. 7 The appellant admitted in cross-examination, that she knew Sikunyongana and Sankisha as persons that were facilitating the change of ownership of her certificate of title. She also admitted meeting the two men to discuss pledging her property to secure the bank guarantee. She surrendered her certificate of title to the two men in 2015 after they informed her that the respondent needed to see the original document to test its authenticity. However, she denied signing the consent form or that the signature appearing on it was hers. 3.8 The appellant told the court below that she only came to discover that her certificate of title was with the respondent in 2019. All the while, it was her belief that the respondent was being shown the title. She denied ever meeting Monica S. Mumba, the lawyer whose names appear on the consent form but admitted that the signature on the guarantee was similar -J6- to hers. 4.0 DECISION OF THE COURT BELOW 4. 1 The learned Judge narrowed down the issues for determination as follows: 1) Whether the respondent advised the appellant to seek independent legal advice before executing the third-party mortgage; 2) Whether the appellant had proved fraud to vitiate the third party mortgage and personal guarantee; and 3) Whether the applicant is entitled to the reliefs sought. 4.2 Having found that the appellant had a discussion with Sikunyongana and Sankisha to secure a facility with the respondent using the appellant's certificate of title as collateral, the court found that the appellant had pledged the property for purposes of a bank guarantee. 4.3 The court below noted that the respondent's witness contradicted herself on whether the mortgage was executed by the appellant. Further, that the lawyer for the bank who acted on its behalf was not called as a witness. The court below also observed that the appellant denied having executed the ·J7- consent form. However, upon scrutinizing the appellant's signature on the consent form, she found that there was a striking similarity between the signature on the consent form and the jurat in the appellant's affidavit in opposition. 4.4 The court went on to state that the appellant made allegations of fraud without leading evidence to substantiate them. The learned judge then concluded that the appellant failed to prove fraud and found that the appellant executed the mortgage and personal guarantee. 4.5 Consequently, the lower court found for the respondent and granted all its claims with costs against the appellant. 5.0 GROUNDS OF APPEAL 5.1 Aggrieved with the decision, the appellant has appealed advancing three grounds of appeal couched as follows that: 1} The lower court erred both in law and in fact in concluding that the third-party mortgage is valtd and enforceable; 2} The lower court erred both in law and in fact when it ordered the respondent to foreclose, take possession and sale the appellant,s property; and 3) The lower court erred both in law and in fact when it granted an order of enforcement of the personal guarantee against the 2 nd respondent (appellant herein). 6.0 APPELLANT'S HEADS OF ARGUMENTS 6.1 On 31 st May, 2021, the appellant filed heads of argument in -J8- support of the appeal. In respect of ground one, it was submitted that it is not in dispute that the loan facility was granted to Cross Border Network Africa Limited and not the appellant who is the owner of Subdivision 3 of Stand No. 3525, Kitwe. The relationship between the appellant, Sikunyongana and Sankisha and how the certificate of title found itself in the possession of the two men is demonstrated at page 215 of the record of appeal. 6.2 With respect to the consent form witnessed by Monica Mumba and relied upon by the respondent, it was contended that the said Monica Mumba was not a qualified lawyer at the time she executed it, but an employee of the law firm. Therefore, her action was illegal, null and void. In support of this, the case of Remmy Kabanda Kaindu Mushota v The Law Association of Zambia 111 was cited where the court stated as follows: "··· In the same way, we do not consider that section 42, which is a prohibition on any unqualified person issuing out any summons or process, is intended to be a prohibition on the clerks or employees referred to in section 54. The section is obviously designed to prevent an unqualified person from holding himself out as a qualified legal practitioner and issuing process in his own name . ... " 6. 3 Therefore, the purported legal advice alleged to have been -J9- rendered to the appellant and the alleged witnessing of the purported consent form by an unqualified person, is an illegality not to be ignored by this court. The case of Phillips v Copping12l was called in aid that illegality, once brought to the attention of the court, overrides all questions of pleadings, including any admission made therein. 6.4 The bank guarantee and the facility letter, having been secured by a purported third-party mortgage whose execution was unknown as the deponent was not present when it was executed, the mortgage is a forgery. Therefore, the mortgagee cannot rely on forged documents as was stated in Re Cooper, Cooper v Vesey 131• It was contended that the third-party mortgage was a very strange document in the eyes of the appellant. 6.5 In disputing the signature on the mortgage, the appellant relied on the case of Re De Leeuw, Jakens v Central Advance & Discount Corporation Limited 141 where Peterson, J held that: "a deed which bears a false signature is a forgery and creates no rights whatever.• ·J10- The appellant submitted that in view of the illegalities noted, the purported third-party mortgage deed, is invalid and unenforceable. 6.6 In ground two, the appellant contends that it has been demonstrated that the transaction was illegal and unlawful. Therefore, the court below misdirected itself by granting the respondent foreclosure, possession and sale of the appellant's property. 6.7 Lastly, in ground three, it was argued that the appellant led evidence in the court below demonstrating that the transaction among the respondent, Cross Border Network Africa Limited, Bernard Sikunyongana and Titus Sankisha was illegal and unlawful. Therefore, an order of enforcement of the personal guarantee against the appellant should not have been granted. 6.8 The appellant prayed that the appeal be upheld with costs in her favour. 7.0 ARGUMENTS BY THE RESPONDENT 7.1 The respondent filed heads of argument on 1 Jth November, 2022. It is submitted that the success of grounds two and three, is dependent on ground one, being the main ground of -Jll- appeal. 7.2 The respondent submitted that the appellant has pleaded fraud in the manner in which the bank procured the mortgage and guarantee deeds in her affidavit in opposition, as her defence. Therefore, the only question for determination by this court, is whether, on the evidence, the appellant succeeded in proving the defence of fraud regarding the manner in which the third-party mortgage and guarantee deeds were procured. 7.3 The respondent cited the case of Gondwe v Ngwira 151 where the court guided that: "In civil cases, fraud must be proved to a standard higher than a mere balance of probabtltttes. Fraud usually takes the form of a statement that ts false or suppression of what is true." In that regard, it was argued that the onus of proving fraud squarely lies on the person alleging it and that the burden of proof is deemed to be much higher than the ordinary balance of probabilities. 7 .4 The respondent contends that a fair review of the evidence on record shows that the appellant lamentably failed to prove her defence of fraud even at the barest minimum. This is because -112- the only evidence she led at trial to prove the allegation was that she did not sign the mortgage deed, guarantee deed and consent form without adducing any corroborating evidence to support this. 7.5 The evidence led by the appellant was that she did not sign the consent form and that Monica Mumba who purported to explain the consequences of the mortgage transaction and acted as a witness, was not a qualified legal practitioner. However, she admitted in cross-examination that the signature on the consent form was similar to her signature as appears on the affidavit in opposition. In this regard, it was contended that the only logical course of action the appellant could have taken, was to enlist the services of a handwriting expert to help the court in arriving at a determination. 7.6 For the role of a handwriting expert, the case of Sithole v The State Lotteries Board 161 was called in aid where the court guided that: The function of a handwriting expert is to point out similarities or differences in two or more specimens of handwriting and the court is not entitled to accept his opinion that these similarities or differences exist but once it has seen for itself the factors to which the expert draws attention, it may accept his opinion in regard to the significance of these factors. -Jl3- 7. 7 The court was invited to note that the appellant did state that the respondent gave her the consent form to enable her engage a lawyer to explain the legal consequences and to execute it. Therefore, it cannot be disputed that the appellant actually went to see a lawyer with the consent form. However, the appellant failed to adduce evidence to prove that Monica Mumba was an unqualified person at the material time, or that she was reported to the Law Association of Zambia or the Zambia Police Service. 7 .8 The respondent submitted that in the absence of evidence to this effect, the appellant's allegations were nothing but conjecture. That there exists ample and sufficient evidence on record to suggest that the appellant was directly and intimately connected to the loan transaction involving the principal debtor, Cross Border Network Africa Limited and its directors. 7. 9 The evidence on record shows that the appellant and directors knew each other after she gave them an assignment to change title on her behalf; that she had a business relationship with them and met them to discuss the pledging of her property as collateral. Her evidence that she was not aware that valuers -J14- had visited her home to conduct a valuation exercise of the property only goes to show that she was untruthful and incredible witness. 7 .10 The respondent dismissed the appellant's evidence that the directors of the company pledged her property without her consent and knowledge, because she admitted in cross examination to giving them the title in 2015. That it is inconceivable that for four years the appellant did not know where her title was, though she later conceded that she knew that it was with the respondent. 7 .11 The respondent submits that the appellant cannot be heard to argue that she did not mortgage her property as collateral to the respondent because the totality of the evidence shows that she did. 7 .12 Ground one being devoid of merit, the respondent submitted that grounds two and three cannot survive and should all be dismissed with costs to the appellant. 8.0 ANALYSIS AND DECISION OF THE COURT 8.1 We have considered the appeal, the arguments and authorities cited by the learned counsel for both parties. It is not in dispute that Cross Border Network Africa Limited obtained a -J15- loan facility in the sum of US$ 60,000. The issue in dispute is the collateral pledged as security, namely the appellant's property stand Number 3523 Kitwe. The collateral being a third party mortgage alleged to have been executed by the appellant in favour of the respondent. In addition, the appellant guaranteed the said loan. The main issue to be determined in this appeal is as follows; (f) Whether the third party mortgage is valid and enforceable. 8.2 The three grounds of appeal are inter-related and shall be addressed as one. The appellant contends that the third-party mortgage deed between the appellant and the respondent is invalid and unenforceable, and as such, the court below should not have ordered foreclosure, possession and sale of the property, and enforcement of the personal guarantee against the appellant. 8.3 In arguing that the third-party mortgage is invalid and unenforceable, the appellant has pleaded fraud on several fronts as follows: 1) That she neither executed the third-party mortgage deed nor the consent form; -J16- 2) That the signature on the consent form is similar to hers but not hers; 3) That she did not seek legal advice from Monica Mumba, who was an unqualified legal practitioner at the material time; 4) That she does not know how her certificate of title ended up with the bank; and 5) That she cannot recall being informed that her property had been valued by valuators. 8.4 It is trite that a person who alleges fraud must strictly prove it. In Joseph Constantine Steamship Line Limited v Imperial Smelting Corporation Limited 171 , it was held that there is no presumption for fraud: it must be alleged and proved. Further, the Supreme Court guided in Sablehand Zambia Limited v Zambia Revenue Authority 181 that: 1. Where fraud is an issue in the proceedings, then a party wishing to rely on it must ensure that it is clearly and distinctly alleged. Further, at the trial of the cause, the party alleging fraud must equally lead evidence, so that the allegation ts clearly and distinctly proved. 2. Allegations of fraud must, once pleaded, be proved on a higher standard of proof, than on a mere balance of probabilities, because they are criminal in nature. 8.5 Was fraud proved by appellant in the court below? We hold -J17- the view that the evidence of fraud led by the appellant was unsatisfactory and failed to meet the required standard of proof. The court, on the authority of Sithole v The State Lotteries Board 16l, was entitled to find that the signature on the mortgage deed and consent form were similar to that in the jurat of the affidavit in opposition. The appellant merely made bare denials that she did not execute the documents in issue without adducing evidence of fraud to enable the court make a finding in her favour. 8.6 The lower court was on firm ground to hold that no evidence was adduced to confirm that Monica S. Mumba was an unqualified person to render legal advice to the appellant due to the absence of supporting evidence of any complaint having been made to either the Law Association of Zambia or the Zambia Police service. In any event, upon being advised to seek independent advice from a lawyer, the appellant herself sought the services of Ms. Monica Mumba. The bank did not refer her to the said person. 8.7 Further, the evidence adduced by the appellant in cross examination as well as her affidavit in opposition shows that -J18- she voluntarily surrendered her certificate of title to the directors of Cross Border Network Africa Limited to enable the respondent have it assessed for use as collateral. She told the court that she met the directors of the company to discuss the use of the property as collateral and that she was given the consent form by the respondent to seek legal advice before executing it. This evidence shows that she pledged the property as security for the loan facility. Therefore, the lower court cannot be faulted for finding that neither the third-party mortgage deed nor the consent form is null and void for illegality. 8.8 Having failed to prove fraud, the court below was entitled to find that the third-party mortgage was valid and enforceable to entitle the respondent to the reliefs of foreclosure, possession and power of sale over the mortgaged property; and enforcement of the personal guarantee against the appellant should the proceeds of sale of the mortgaged property be insufficient to liquidate the judgment debt. 8. 9 We hold that there was no fraud in the execution of the third party mortgage and guarantee. The appellant consented to the use of her title deeds as collateral and executed the said third party mortgage. The borrower defaulted and the appellant is -J19- liable. 8.10 CONCLUSION Having held that the third party mortgage is valid and enforceable, that the appellant failed to prove fraud as alleged, we find no merit in the appeal. We uphold the judgment of the lower court. The appeal is accordingly dismissed with costs to the respondent to be taxed in default of agreement. .•.•...••.........• . .•......•....•....•• I i M. J. Siavwapa JUDGE PRESIDENT F. M. Chishimba A. M. Banda-Bobo COURT OF APPEAL JUDGE COURT OF APPEAL JUDGE