Lamasat International Limited v African Banking Corporation Zambia Limited (formerly known as Finance Bank Zambia Limited) (APPEAL NO. 95 OF 2024) [2024] ZMCA 312 (28 November 2024)

.. IN THE COURT OF APPEAL OF ZAMBIA APPEAL NO. 95 OF 2024 HOLDEN AT K. ABWE (Civil Jurisdiction) BETWEEN: 2 8 NOV 2 L REGIS J • , LAMASAT INTERNATIONAL LIMITED APPELLANT AND AFRICAN BANKING CORPORATION ZAMBIA LIMITED (formerly known as Finance Bank Zambia Limited) RESPONDENT CORAM: Chashi, Sichinga and Sharpe-Phiri, JJA ON: 15th October and 28th November 2024 For the Appellant: J. A Wright, Messrs Wright Chambers For the Respondent: M. B. Mutuna, (Mrs) and M. L Kombe (Ms), Messrs Mweshi Banda & Associates Legal Practitioners JUDGMENT CHASHI JA, delivered the Judgment of the Court. Cases ref erred to: 1. Jonathan Van Blerk v The Attorney General & 5 Others - SCZ/8/03/2020 2. Zamguard Security Services Limited v Darson Chitembo & Others - CAZ Appeal No. 216 of 2020, ZMCA (2022) 93 ( 15th December 2022) -J2- 3. Nickson Chilangwa (Suing as Secretary General of the Patriotic Front Party) v The Attorney General - CAZ Appeal No. 216 of 2022, ZMCA (2024) 98 (3 rd May 2024) 4. Jonesco v Board ( 1930) 2 AC, 298 5. Takhar v Gracefi.eld Development Limited (2020) UKSC, 6. Tinkler v Esken Ltd (2023) EWCA. Civ, 655 Rules referred to: 1. The Supreme Court Practice (White Book) 1999 2. The Court of Appeal Rules, Statutory Instrument No. 65 of 2016 Other Works referred to: 1. Odgers' Principles of Pleading & Practice, 22nd Edition, London, Stevens & Sons, 1981 2. The University of Tasmania Law Review, Volume 14, No. 2 of 1995 3. Zambian Civil Procedure, Commentary and Cases, Volume 2 - Patrick Matibini, LexisNexis 4. Unravelling It All; Challenging Judgments Tainted by Fraud -Article by James Shaw, 31 st July 2023, Gatehouse Chambers 1.0 INTRODUCTION 1.1 On 7 th March 2019, we delivered our judgment in the consolidated matter of Finance Bank Zambia Limited -J3- V Lamasat International Limited - CAZ Appeal Nos. 17 5 /2017 and 27 / 201 8. 1. 2 In th e said Judgment, we overturned th e decision of th e lower court and disch arged the interim injunction wh ich was grant ed . We also set a side th e ruling of th e lower court declining to en ter judgm en t on admission and en tered judgm ent on a dmission in th e admitted su m of US$ 12 ,229,065.63 with agreed contractual interest. 2.0 MATTER IN THE COURT BELOW 2. 1 On 8 th September 2023, th e Appellant h er ein as plain tiff, commen ced an action by way of writ of summons , claiming the following r eliefs: (i) A declaration; that the judgment procured by the defendant from the Court of Appeal was procured unlawfully and/or fraudulently and/or by the deliberate concealment of relevant and material/acts. (ii) A declaration; that the judgment fraudulently procured by the defendant from the Court of Appeal is liable to be set aside and an order setting aside the said judgment. (iii) A declaration; that the appointment of a to Receiver Manager by superintend over the plaintiffs business for the recovery of a debt that was no longer subsisting and the issuance and execution of writ of Ji.fa; upon the plaintiffs business the defendant -J4- during the course of the receivership were fraudulent and unlawful; (iv) (v) A declaration that the defendant; even assuming it was entitled to appoint a Receiver Manager; is not entitled; to pari passu and/or simultaneously issue and execute a writ of fifa upon the plaintiff; A declaration that the defendant; though entitled to either sell and/or assign its debt to third party/s; is diversed of the locus standi in the recovery of the said debt that it had assigned and/or sold and fully recovered from its assignee. (vi) A declaration that the defendant; is not entitled to apply and/or charge compounded interest on a debt that it had sold and/or assigned and/or fully recovered from its assignee; (vii) A declaration that the defendant; is in breach of the fiduciary duty it owed to the plaintiff as imposed by Section 116 subsection (2) (a), (b), and (c) of The Banking and Financial Services Act No. 7 of 2017; (viii) An order for the payment of the sum of the US$477,169.58; by the defendant to plaintiff; being that was fraudulently demanded in excess of the amount that was actually due; the amount (ix) An order for payment of the sum of US$4,073, 704.32; by the defendant to the plaintiff; being the amount of compounded fraudulently interest unlawfully and/or applied and/or charged by the defendant on the debt that it had assigned and/or sold and fully recovered; -JS- (x) An order for the payment by the defendant to the plaintiff of the sums of US$963,138.00 and ZMWl0,363, 719.00 being the amounts paid by the plaintiff for the receiver manager's fees and costs incidental to the unlawful and fraudulent institution of the Receivership; (xi) An order for the payment of the sum of ZMW342,507.40 by the defendant to the plaintiff being the amount paid to the Sherri// of Zambia and its Bailiff; by the plaintiff for bailiff's fees for the costs of the execution of Writ of fifa upon the plaintiff. (xii) Damages for loss of profit in the amount of the amount of the period of USD9,197,059.00 and in ZMW69,571,935.00 during receivership; (xiii) Damages for loss of future profit in the sums of USD13, 770,685.74 and ZMW49,380,946.65; (xiv) An order for the award of exemplary damages against the defendant; (xv) And any other Orders and/or equitable relief the court shall deem fit; (xvi) Interest and costs 3 .0 PRELIMINARY ISSUES 3 .1 After the close of pleadings , th e Resp ondent, as th e defendant in th e court b elow, r aised prelimin ary issues p ursu ant to Order 14A/ 1 of The Rules of the Supreme Court 1 (RSC). Th e is sues for determination were as follows: -J6- (i) Whether this honourable court has jurisdiction to determine this action as alleged fraud referred to by the plaintiff would have been perpetrated against the Court of Appeal when it was arriving at its decision to grant the judgment on admission (the valid Judgment entered on appeal in its decision dated 7th March 2019) (ii) Whether this honourable court has authority to determine this action when the basis for the action was determined with finality by the Court of Appeal in the valid Judgment and thus res judicata and an attempt by the plaintiff to abuse the machinery of the court, and that if the question is answered in the negative, that these proceedings be dismissed. (iii) In the alternative, whether paragraphs 4 to 9, 17 to 24, 28 to 29 111 to XI and XII to XIV of the statement of claim should be struck out for being an abuse of the process of court in that -J7- they contain statements that will lead to re litigation of the matter that is now res judicata, and that if the answer is answered in the positive, that those paragraphs be struck out. 4.0 DECISION OF THE COURT BELOW 4.1 After considering the arguments by the parties, the learned Judge in her Ruling delivered on 23rd January 2024, as regards the first issue, held that it had jurisdiction to hear the matter, which was seeking to set aside the judgment of the Court of Appeal on allegations of fraudulent concealment, as a court of first instance. 4 .2 In respect of the second issue, the learned Judge took into consideration the case of Jonathan Van Blerk v The Attorney General & 5 Others 1 , and opined that the setting aside of the judgment procured by fraud and seeking to restore the parties to pre-judgment position cannot be said to be the same as the earlier action. The argument that the matter was res judicata was accordingly dismissed. -JS- 4. 3 As regards the third issue, after considering the prov1s10ns under Order 18 / 19 RSC and the endorsements on the writ of summons and statement of claim, the learned Judge opined that, the endorsements in issue had nothing to do with the process of obtaining the judgment that was being impugned for being fraudulent, as they related to steps that were taken by the Respondent in enforcing the judgment. 4 . 4 The learned Judge was of the view that, there was clearly an attempt to re-open the case, as the Appellant was challenging the debt that was owing and/ or the judgment of the Court of Appeal. According to the learned Judge , the Appellant had exceeded the scope of the fresh action, which was for the purpose of setting aside a judgment procured by fraud. 4.5 Further, according to the learned Judge, the endorsements in issue have nothing to do with the alleged fraudulent concealment of information and the resultant judgment of the Court of Appeal. The learned Judge determined that the endorsements at (iii) to (xiv) on the writ of summons and statement of claim were an -J9- abuse of cou rt process and a subtle attempt to relitigat e and as su ch , struck th em ou t. Consequen tly , p aragr aphs 4 to 9, 1 7 to 24 and 28 t o 29 of th e statem ent of claim , wh ich cont ain ed avermen ts anchored on the impugn ed endorsem ents, suffer ed th e s ame fate. 5.0 THE APPEAL 5 .1 Dissatisfied with the determination by th e learn ed Judge on the third issue , th e Ap pellant app ealed to this Court advancing nine (9) gr ounds cou ch ed as follows: 1. That the learned Judge in the court be low misdirected herself in both law and fact when she struck out almost the entirety of the appellants averments and relief claimed as endorsed in the writ of summons and statement of claim, on the grounds, that ''the averments and re lief "are an abuse of process and an attempt to re litigate," without taking into account and/or failed to appreciate, that she had earlier ruled vis; (i) That she had jurisdiction to hear the matter to set aside a judgment obtained by fraud; -JlO- (ii) That the matter is not res judicata; (iii) That the appellant's claim is afresh action; (iv) And without taking into account and failing to appreciate that the grounds for striking out pleadings and endorsement, on writ of summons and statement of claim: vide Order 18 rule 12 and Order 18 rule 19 of the Rules of The Supreme Court (1965) 1999 Edition (The White Book); were not engaged. 2. The learned Judge in the court below misdirected herself at law and fact when she failed to state which part of the appellant's claim as endorsed in the writ of summons and statement has convoluted the issues and/or which issues have been convoluted. And/or failed to give any reason and/or sufficient reason for her findings as to how and why; "the plaintiff has convoluted the issues by advancing claims which have nothing to do with the alleged fraudulent concealment of information and the resultant judgment of the Court of Appeal, with claims such as compounding interest, breach of fiduciary duty which claims should have well been raised in the first action." -Jl 1- 3. The learned Judge in the court below misdirected herself in both law and fact when she made conflicting findings on the one hand on page R35 of the Ruling that "the defendant's argument that this action is res judicata cannot be sustained and it is accordingly dismissed" while on the other hand at page R37 and R38 of the same Ruling she stated that she, "is of a considered view that the endorsements at iii to xiv as endorsed on the writ of summons and or statement of claim are an abuse of court process and a subtle attempt to re-litigate some of the issues which should have been raised in the first action." and as such ought to be struck out. This is notwithstanding; the fact that the appellant's claim is anchored uponfraud and she ruled not only that the matter is not resjudicata but also that the matter is a fresh action. 4 . The learned Judge, in the court be low misdirected herself in both law and fact when she ordered on page R39 of the Ruling that "the endorsements at paragraphs 4-9, 17-24, 28 to 29 and iii-xiv of the statement of claim are struck out for being an abuse of court process" thereby effectively pre-judging and disposing of the matter, without hearing the evidence. • -Jl2- 5. That the learned Judge in the court be low; failed to appreciate that the appellants allegation of fraud as pleaded, is one of a continuous nature and/or a continuous fraudulent action by the Respondent. 6. The learned Judge in the court below gave no sufficient and/or adequate reasons and conflicted herself; when she held on page R38 of the Ruling that ''the fresh action to set aside ajudgmentprocured by fraud should be limited to interrogating the process leading to the procurement of that Judgment." "It is not an opportunity to re-litigate issues which should have been raised in the first action." This is notwithstanding that she had found that the matter was not res judicata and fresh action. 7. That the learned Judge in the court be low contradicted herself and/or misdirected herself in both law and fact; when she held on page R37 of the Ruling that ''the plaintiffs claims re late to post judgment steps that were taken by the defendant in its quest to enforce the judgment and there is clearly an attempt to re- open the case as the plaintiff are challenging the debt that was owing and or that or the judgment sum of $12,229,065.63." This is • -Jl3- notwithstanding, the averment in paragraphs 8,9,10,ll,12,13, in toto and 14; of the appellants statement of claim to the effect that the Respondent in 2017 had assigned the Appellant's debt to a third party and the Respondent had not disclosed either to the Court of Appeal and to the Appellant that it had done so; but procured a judgment from the Court of Appeal based on a debt that it had assigned. 8. That the learned Judge in the court below erred in both law and fact when she concluded and made a finding on page R37 of her Ruling that the ''plaintiff had exceeded the scope of afresh action for purposes of setting aside a judgment procured by fraud". This is notwithstanding that the Appellant had a duty to bring all claims and reliefs that it seeks before the court and the trial court is reposed with the jurisdiction to determine all matters in controversy between the parties in finality. 9. The learned Judge in the court below, misdirected herself in both law and fact and gave no reason and/or sufficient reason , and or contradicted herself when she held on page R38 and 39 of the Ruling that "the enforcement • -Jl4- processes of the impugned judgment cannot be part of the fresh action on account that they are post judgment processes and had nothing to do with the procurement of the judgment alleged to be obtained by fraud" and that "once the plaintiff succeeds in setting aside the judgment by fraud, then it logically follows that the parties will be restored to their pre judgment status and whatever was premised on the impugned judgment may be reversed" and that ''the plaintiff will in that regard advance the claim that was before court before the impugned judgment by fraud." This is notwithstanding, the wider principle of the res judicata nt le; 6.0 ARGUMENTS IN SUPPORT OF THE APPEAL AND AGAINST 6.1 The Appellant in its h eads of argument, argued grounds ( 1) and (3), (2) (4) and (5) , (6) (7) and (8) and concluded with ground (9) , in that Order. The Respondent in its h eads of argument filed into court on 24th May 2024, tactfully argued the appeal wholly, which in our view was the right approach as the only issue the appeal raises for determination was whether the learned Judge was in order, in striking out the endorsements and • -Jl5- averments in issu e, as an a buse of court process. In any case, grou nds 1,2,3,7 and 9 are n arrative and argumen tative and offends Order 10 / 9 (2) of The Court of Appeal Rules2 (CAR) and ought to be stru ck out and are accordin gly stru ck ou t in line with our decision s in the cases of Zamguard Security Services Limited v Darson Chitembo & Others2 and Nickson Chilangwa (Suing as Secretary General of the Patriotic Front Party) v The Attorney General3 were we expunged the affected grounds. 6 .2 Th at leaves us with grounds 4 ,5,6 and 8 wh ich we s h all consider together as earlier alluded to. We will in that respect proceed to determine th e sole issu e for determination, with out recapitulating the arguments. 7 .0 OUR ANALYSIS AND DECISION 7 . 1 Order 59 / 11 / 1 7 RSC u nder which the cause of action in the court below is premised, provides as follows: "3. Judgment obtained by fraud - There is jurisdiction to set aside a judgment for fraud on a motion for new trial, but as a rule, an action must be brought for the purpose and if for special reasons a .. -Jl6- motion is permitted, the charge of fraud must be made with the same particularity as in an action and as strictly proved, and the same rules apply as to the burden of proof and admissibility of evidence ... where it is alleged that a judgment was obtained by fraud, the appropriate course would normally be to bring afresh action to set aside that judgment, because, in such cases, there will usually be serious and difficult issues of fact to be determined, and therefore a first instance court is, the most appropriate forum." 7.2 The learned authors of Odgers' Principles of Pleading & Practice 1 at page 344 states as follows : "where a judgment has been obtained by fraud, the appropriate procedure is to bring an action to set it aside, giving full particulars of the fraud alleged." 7 .3 In The University of Tasmania Law Review, Vol 14, Gino Dal Pont2 , in his introductory remarks on the subject of Judgments Fraudulently Obtained, The Forgotten Equity, had this to say: .. -J17- "Equity's jurisdiction to set aside judgments tainted by fraud, formed part of its general jurisdiction in cases of fraud, a jurisdiction it shared with common law. Its basis was twofold. First the equitable proceedings cast upon the errant party a personal obligation to give up the fruits of unconscionable conduct. Secondly equity will not tolerate a miscarriage of justice where fraud was proved." The underlining is ours for emphasis only). 7.4 In the leading case of Jonesco v Board4 at pages 301- 302, Lord Buckmaster observed as follows: "Fraud is an insidious disease, and if clearly proved to have been used so that it might deceive the court, it spreads to and infects the whole body of the judgment." 7.5 As observed by Gino Dal Pont , the jurisdiction illustrates equity's two principle proscriptions, its proscription against unconscionable conduct and its proscription against unfair outcomes. • -Jl8- 7 .6 From the aforestated authorities, it is clear that the setting aside of the judgment tainted with fraud is more concerned with the fraudulent conduct of a party and should not be used at this stage to reopen the merits of the judgment. This is in upholding the principle of finality of judgments. 7.7 The learned author, Patrick Matibini, in his book titled Zambian Civil Procedure, Commentary and Cases3 , Volume 2 at page 1136, on the finality of litigation, states as follows: "What the principle of finality dictates, therefore is that once proceedings in which all the concerned parties have participated have concluded in ajudgment on the merits and the normal appeal procedure has been exhausted, the judgment is sealed with a stamp of finality and cannot be re-opened subject only to the possibility of fraud." 7 .8 James Shaw, in his article titled Unravelling It All; Challenging Judgments Tainted by Fraud4 , 31 st July 2023, made the following observation: • -Jl9- "Final and conclusive Judgment, meaning Judgment of judicial bodies which bring litigation to an end and are not (or are no longer) subject of an appeal process have a special place in this jurisdiction. The principle of finality demands that they be respected, complied with and left undisturbed save in the most exceptional circumstances." 7. 9 In determining the issue, the learned Judge in the court below, observed that the affected endorsements had nothing to do with the process of obtaining the judgment that is being impugned for being fraudulent, as they relate to post judgment steps that were taken by the Respondent in its quest to enforce the judgment. That there was clearly an attempt to reopen the case. Further, that the Appellant had exceeded the scope of a fresh action for purposes of setting aside a judgment procured by fraud. The learned Judge observed that the Appellant had convoluted the issues by advancing claims which have nothing to do with the alleged fraudulent concealment of information and the -J20- resultant judgment of the Court of Appeal, with claims such as compounding interest, breach of fiduciary duty which claims should have well been raised in the first action. 7. 10 In another leading case of Takhar v Grace field Development Limited5 , it was held that: "To be successful in a claim to set aside a judgment for fraud, the claimant must establish conscious and deliberate dishonesty in relation to statements made or evidence given by the other side. It must also be shown that the dishonest conduct was an operative cause of the court decision to enter judgment in those terms." (the underlining is ours for emphasis only) 7. 11 In the case of Tinkler v Esken Ltd, 6 in analysing how a court should apply the established test as to when a judgment should be set aside on the basis of fraud , the Court of Appeal stated as follows: "Despite the traditional adage that 'fraud unravels all' an unsuccessful litigant must do • -J21- more than merely produce evidence of fraudulent conduct by its opponent in order to have the judgment set aside. It must satisfy a court that: (i) the successful party (or someone for whom it must take responsibility) committed conscious and de liberate dishonesty (ii) the dishonest conduct was material to the original decision." (the underlining is ours for emphasis only) 7 .12 More precise on the issue before us, the court in addressing the first ground of appeal in having th e judgment set aside due to fraud opined that, the claim was separate from the original claim. They went on to state as follows: "It is not an application in that original claim and does not involve a rehearing of all the evidence. Instead, it is a new case in which the claimant must prove that the original judgment was obtained by specific dishonest • -J22- conduct by the successful party. This is determined separately from the matters originally tried." 7.13 In our view, the learned Judge was on firm ground and we find no basis on which to fault her. In view of the aforestated, the appeal has no merit and is therefore dismissed with costs to the Respondent. Same to be taxed in default of agreeme . J. CHA · I COURT OF APPEAL JUDGE . D . COURTO ~ E-P& COURT OF APPEAL JUDGE