Morgan Naik v Amadeus International Limited (APPEAL NO. 264/2023) [2024] ZMCA 242 (22 August 2024)

IN THE COURT OF APPEAL OF APPEAL NO. 264/2023 HOLDEN AT LUSAKA (Civil J u ris d iction) BETWEEN: MORGAN NAIK AND r.. ... APPELLANT AMADEUS INTERNATIONAL LIMITED RESPONDENT CORAM: KONDOLO SC, MAJULA, BANDA-BOBO JJA On 15th August and 22nd August, 2024 For the Appellant : I n Person For the Respondent : Mr. M. Nkunika & M rs. N. Mwila of Messrs Simeza Sangwa & Associates JUDGMENT KONDOLO SC JA delivered the Judgment o f the Court. CASES REFERRED TO: 1 . Oliver John Irwin v Leopard In vestmen t Company Limited (Intervening Party) SCZ/ 14/2006 (2006) ZLR 66 2. Zambia Co-operative Federation, Victor Mwaimba, Ivis Mwaimba v The Registrar of Lands & Deeds, The " J2 of 20 Attorney General, Gertrude Mukuka Chawatama, Maybin C Mukuka SCZ/202/2013 3. Lenton Holdings Limited v Airforce Moyo SCZ/9/ 1984 4. Morgan Naik v Simon David Burgess & Others CAZ 45/2020 5. Macaura v Northern Insurance Limited (1925) AC 619 6. Short v Treasury Commissioners [1948] 1 KB 116 122 , LEGISLATION REFERRED TO: 1. High Court Rules, Chapter 23, Laws of Zambia 2. Lands and Deeds Registry Act Chapter 185, Laws of Zambia 1. INTRODUCTION 1.1. This is an appeal against a Ruling of the High Court delivered by Justice Mrs. C. Mikalile on 3 rd June, 2023 in which she granted the Respondent's application to remove caveats placed against land owned by the Respondent. 1.2. The Respondent was the Applicant in the High Court and the Appellant was the 1st Respondent, the Registrar of Lands and Deeds was the 2 nd Respondent and the 3rd Respondent was the Attorney General. J3 of 20 2. BACKGROUND 2.1. The Appellant, purporting to hold a proprietary interest, lodged caveats against land to which the Respondent holds title. 2.2. The Respondent reacted by filing an originating summons dated 29th January 2018, claiming the following reliefs ; 1. An order that the caveats placed on the properties by the 1st Respondent be removed forthwith. 2. An order that the 2 nd Respondent rectifies the Lands Register for the 3 properties by reversing entries related to the said caveats. 3. An order for compensation against the 1st Respondent for maliciously placing caveats on the Applicants properties. 4. Costs 3. High Court Proceedings 3.1. During the High Court proceedings, the Respondent produced certificates of title as proof that it was the registered owner of t he subject properties. J4 of 20 3.2. That the Appellant had previously placed caveats on the property using other identities but they were all lifted by the Courts. 3.3 . That the Respondent's banker, Zambia National Commercial Bank (ZANACO) holds securities over the subject properties and the Appellant maliciously informed the bank about the caveats with the result that the bank withheld providing the Respondent with additional financing of K8,500,000 until the issue of the caveats was resolved. 3.4. The Appellant responded by saying that he was an original shareholder in, and director of the Respondent company. That he was fraudulently and unlawfully divested of his shares and removed as director of the company. 3.5. The Appellant provided numerous other reasons to support his purported proprietary interest in the land but which we see no need to recount. He added that there was nothing wrong in telling ZANACO about the caveats and that, in any event, the Bank's securities could not be affected because t h ey were registered earlier than the caveats. 3.6. In reply, the Respondent stated that the Appellant was no longer a shareholder in the Respondent company and denied JS of 20 that the Appellant advanced the Respondent a loan for the purchase of properties on behalf of the Respondent. 3.7. That the issues with regarding his removal as a director, and forfeiture of his shares , was litigated and dismissed by a Ruling of the High Court dated 27th September, 2019 exhibited in the affidavit in support of the application before Court. 4. High Court Decision 4.1. The learned trial Judge found that the Appellant was removed as a director and made to forfeit his shares in 1997. That despite the Appellant's insistence that he was defrauded, the current position is that there is no Judgment declaring the Appellant's removal as a director and forfeiture of his shares as illegitimate. 4.2 . Further, that as a corporation, the Respondent was a distinct legal person and its property was the property of the shareholders. 4.3. The lower Court held that the evidence showed that the Appellant has no caveatable interest in the properties and found that he had failed to show cause why the caveats should not be removed. J6 of 20 4.4 . The lower Court ordered that the caveats placed by the Appellant on the properties known as Farms 1872, 1873 and 1088 Kabwe, belonging to the Respondent, be removed forthwith and that the 2 nd Respondent reverses the entries related to the said caveats. 5. APPEAL 5.1 Discontented with the High Court Judgment, the Appellant appealed on 7 grounds but at the hearing told us that he was abandoning grounds 1, 2 and 3 which we shall not bother to reproduce. We shall however refer to the remaining grounds as 4, 5 6 and 7 and couched thus: 4. The Court below erred in law and fact when it proceeded to hear the Respondents originating summons for removal of caveats after a lapse of more than one year since the last proceedings. 5. The Court below erred in law and fact, despite not having had the necessary authority conferred upon it, so as to have proceeded to prepare and deliver its judgement of 9 th June, 2023, when it failed to appreciate and consider the Appellants uncontroverted evidence, in his J7 of 20 affidavit in opposition to the originating summons, to the effect that, the issue of the acquisition of his 25% fully paid up shares in the Respondent stems from the same transaction or subject matter as his beneficial interest in its properties, the basis upon which caveats herein were registered, which issue is anchored to the hitherto still pending three-in one interlocutory application of 14th June, 2018, and that as such, the said interlocutory application has a direct bearing on the originating summons for removal of caveats, and that the hitherto non-hearing and determination of the said interlocutory application is the cardinal subject of this appeal hitherto still pending first appeal under CAZ/08/088/2022,AppealNo. 158/2022. 6. The Court below erred in law and fact, despite not having had the necessary authority conferred upon it so as to have proceeded to prepare and deliver its judgement of 9 th June, JS of 20 2023, when it had failed to appreciate and consider that, the issue of fraud and forgery, raised by the Appellant in his affidavit in opposition to the originating summons as regards breach of trust in the manner in which his 25% fully paid up shares in the Respondents were forfeited by the Respondent and its deponent, are not only inextricably linked to his beneficial interest in the Respondent's caveated properties but are also clearly contentious, as highlighted in his hitherto still pending three in-one interlocutory application of 14th June, 2018. 7. The Court below erred in law and fact despite not having had the necessary authority conferred upon it, so as to have proceeded to prepare and deliver its judgement of 9 th June, 2023, when it had held that, the evidence had clearly shown that the Appellant has no caveatable interest, without having considered the totality of the Appellants uncontroverted J9 of 20 evidence, to the contrary, in his affidavit in opposition to the originating summons, and without having the said evidence tested through a full trial, particularly as regards the informal agreements and a formal unregistered agreement of 10th May, 1996, between the Respondent's founding four (4) shareholders including the Appellant, as well as a letter dated 26th July, 1996, from the Respondents deponent to the Appellant, and without also having such evidence brought within the confines of section 76 ( 1) of the Lands and Deeds Registry, Act. 5.2 The Appellant filed voluminous heads of arguments in support of his appeal (in excess of 70 pages) in response to a 15-page Ruling. 5.3 Appellant's Arguments 5.4 The Appellant's submissions provided the following background to the appeal. 5.5 The Respondent's application to remove the caveats placed by the Appellant was made on 29 th January, 2018 and on 14th June, 2018, the Appellant filed an interlocutory application JlO of 20 seeking the following; 1. Leave to file a counterclaim 2. Leave to amend affidavit in opposition 3. Joinder of a party to the proceedings. 5.6 The application to remove the caveats was heard on 8 th November, 2021. The Appellant was absent and the trial Court ordered the Appellant to file written submissions in reply to the Respondent's submissions and set Judgment for 14th January, 2022. 5.7 Meanwhile, the interlocutory applications filed on 14th June, 2018 were still pending hearing and on 25th November, 2021 the Appellant filed an application for the Court to vary its orders on the basis that, the said interlocutory applications be heard before the Court delivered its Judgment. The application was dismissed on 13th May, 2022 and leave to appeal was granted and the Appellant appealed under Cause No. CAZ/08/88/2022. The trial Court granted the Appellant an ex parte order staying proceedings pending appeal. 5.8 On 5th October, 2022 the Respondent lodged an application to set aside the ex parte order staying proceedings. According Jll of 20 to the Appellant, the application was filed before a different Judge , namely Judge Lombe Phiri who discharged the inter partes order, granted leave to appeal and referred the matter back to the Judge in charge for re-allocation to Mikalile J. The Appellant promptly appealed under Cause No. CAZ/08/ 129/2023. 5. 9 Grounds 1, 2 and 3, alleged that Mikalile J lacked jurisdiction to determine the matter in the manner that she did. As indicated earlier the said grounds of appeal have been withdrawn. 5.10 Ground 4 5.11 In ground 4, the argument was that since the last activity on the record on 8 th June, 2020 no activity took place on this matter until after 26th August 2021. 5 .12 That the mandatory provisions of Order 2 Rule 2 HCR require that where a matter has been idle for a period exceeding 12 months , a party cannot proceed with the matter without first issuing a notice of intention to proceed. 5.13 It was pointed out that when Mikalile J heard the originating summons for removal of caveats she lacked jurisdiction to do so because a period of over 12 months had elapsed between J12 of 20 the date on which she h eard the said application and the previous proceedings before her. The case of Oliver John Irwin v Leopard Investment Company Limited (Intervening Party) 11 l was cited in support. 5 .14 Grounds 5, 6 and 7 5.15 The argument in grounds 5, 6 and 7 is that the Appellant's stated beneficial interest on the land fell within the ambit of section 76 ( 1) of the Lands and Deeds Registry Act Chapter 185, Laws of (The Act). The said interest arose from his allegation that whilst a Director of the Respondent, he had advanced a loan to the Respondent as his contribution towards the Respondent's purchase of the subject land. He cited t he case of Zambia Co-operative Federation, Victor Mwaimba, Ivis Mwaimba v The Registrar of Lands & Deeds, The Attorney General, Gertrude Mukuka Chawatama, Maybin C Mukuka SCZ/202/2013 l21 ("Co operative Case") in which the Supreme Court cited its decision in the case of Lenton Holdings Limited v Airforce Moyo (3l in which it decided that in the circumstances of that case, developments on land by a squatter amounted to a beneficial interest. J13 of 20 6. RESPONDENT'S ARGUMENTS 6.1. The Respondent submitted that none of the grounds of appeal in the memorandum of appeal assail the said Judgment as being erroneous either in law or fact contrary to Order 10 Rule 3 and Order 10 Rule 9 (2) which r equires grounds of appeal to be concise and not include narrative or arguments. 6 .2. We have omitted the Respondent's arguments in relation to grounds 1, 2 and 3 because the grounds of appeal were withdr awn. It was submitted that grounds 4 to 7 have been the subject of appeal before this Court in an appeal between Morgan Naik v Simon David Burgess & Others (4 l which was dismissed by this Court. 6.3. Further in ground 4 , it was submitted that Order 2 Rule 3 HCR applies to the parties and not the Court. That the ex parte order obtained by the Appellant effectively arrested the Judgment and in any event, all that remained in casu was for the Court to deliver its Judgment. 6.4. On grounds 5, 6 and 7 on the Appellant's alleged beneficial interest in the land, it was submitted that there was none. That shareholders of a company do not have a beneficial interest in the land owned by the compan y . That the J14 of 20 Appellant had failed to meet any of the requirements of section 76 ( 1) of the Act. 6 .5. That in any event the Appellant ceased to be a shareholder 15 years ago and has unsuccessfully tried to regain his position for several year s. The Respondent cited the case of Macaura v Northern Insurance Limited is, in which the Court held that "Now, no shareholder has any right to any item of property owned by the Company, for he has no legal or equitable interest therein". 6.6 . It was prayed that the appeal be dismissed. 7. APPELLANT'S REPLY 7 .1. The Appellant's reply basically reiterated and amplified the arguments he had already advan ced in his heads of argument. 8. HEARING 8 .1. As already indicated, at the hearing, the Appellant informed us that he had decided to abandon grounds 1, 2 and 3 . He further indicated that he would argue ground 4 alone, and grounds 5, 6 and 7 as one. JlS of 20 9. ANALYSIS AND DECISION 9.1. We have considered the record of appeal and the arguments advanced by the parties and note that following grounds 1, 2 and 3 being withdrawn, two main issues remain for determination as follows; 1. Was Mikalile J bereft of jurisdiction on account of the Respondent not having filed a notice to proceed as required by Order 2 Rule 3 HCR? 2. Did the Appellant have a caveatable interest in the subject land? 9.2. On the first issue with regard to the Respondent not having filed a notice to proceed, the Appellant submitted that after the proceedings of 18th March, 2019, when the Appellant filed a notice to withdraw his appeal under CAZ/08/203/2018 , the next proceedings were on 26th August, 2021 when the matter came up for a status conference before Mikalile J. That this was a period of over two years. • Jl6 of 20 9 .3. It was furth er submitted that even if the proceedings u n der Chita bo J on 8 th June, 2 02 0 were con sider ed a s the start date for counting t h e period , it was still over 12 months and as p rovided by Order 2 Rule 3 HCR the Respond ent should h ave filed a n otice to proceed. That fa ilure to d o so rend ered null and void all th e proceedings that occu rred after the 12- month period had elapsed. Order 2 Rule 3 HCR aforesaid read s as follows; 3. In any cause or matter in which there has been no proceeding for one year from the last proceeding had, the party who desires to proceed shall give one month's notice to the other party of his intention to proceed. A summons on which no order has been made shall not, but notice of trial although countermanded shall be deemed a proceeding within this rule. 9.4. Order 2 Rule 3 HCR is directed at the parties, and the Court does not h ave to issue a notice of intention to proceed. Litigation is court driven a nd t h e Court is therefore at liberty to call statu s con ferences and to make orders for the J17 of20 purpose of expediting and concluding matters over which it has conduct. 9 .5. Even though a period of over 12 months had elapsed between the status conference called by Mikalile J and the previous proceedings, the learned tria l Judge was not bound by Order 2 Rule 3 HRC and did not need to issue a notice of intention to proceed. There was no breach of Order 2 Rule 3 HRC by the Respondent in the period between the status conference and when Mikalile J delivered her Judgement. Ground 4 is consequently dismissed. 9.6. On the second issue of whether the Appellant had a caveatable interest, section 76 (a) of the Act reads as follows; 76. Any person- (a) claiming to be entitled to or to be beneficially interested in any land or any estate or interest therein by virtue of any unregistered agreement or other instrument or transmission, or of any trust expressed or implied, or otherwise howsoever; or (emphasis mine) (b) transferring any estate or interest in land to any other person to be held in trust; or • J18 of 20 (c) being an intending purchaser or mortgagee of any land; may at any time lodge with the Registrar a caveat in Form 8 in the Schedule. 9. 7. It must be stated from the onset that the mere mention of a beneficial interest does not entitle one to lodge a caveat. The claimed beneficial interest must be tangible and directly connected to the land in the manner prescribed by the Act, 9.8. The Appellant placed much capital on the holding in the Lenton Holdings Limited Case in which a squatter who developed a piece of land belonging to an absentee landlord was held to have a caveatable interest. It must h owever be noted that the squatter was held to have a caveatable interest because he developed the land on the advice of the authorities and there was a degree of impropriety by the Appellant. The squatter was able to show a direct connection or interest in the land. 9 . 9 . The facts in casu are quite distinguishable because according to the Appellant, his beneficial interest arose because he (as director at the time) together with other directors had loaned money to the Respondent company for the purpose of buying the subj ect land. That is the length and breadth of his alleged beneficial interest. J19 of 20 9 .1 0. In th e case of Short v Treasury Commissioners 16 l cited by t h e Respondent the Court stated that "shareholders are not, in the eyes of the law, part owners of the undertaking. The undertaking is something different f rom the totality of the shareholding." 9.11 . The Respondent Company is a private limited company. The company is a legal person with a distinct personality from its shareholders and directors. Any assets and land registered in the Company's name belong to the company and ownership is not shared with its shareholders and/ or directors . The shareholders' interest is limited to their shareholding in the company and does not extend to the company's assets . 9 . 12. It is thus clear that the beneficial interest claimed by th e Appellant, if any, was connected to the Respondent company and not to the land. His alleged interest can at best be seen as an equity contribution to the company but quite distinct a nd disconnected from a n y beneficial interest in the land. .. J20 of 20 The in vestment in t h e la nd was by the Respondent and n ot t h e Appella n t. 9 . 13. In th e p remises grou n d s 5, 6 and 7 fail a nd th e a ppeal is dismissed in its entir ety, with costs to th e Respond ent to be taxed in d efault of agreem en t. C .......................................... M. M. KONDOLO SC COURT OF APPEAL JUDGE t ' B. M. AJULA COURT OF APPEAL JUDGE ········~ ················ A. M. BANDA-BOBO COURT OF APPEAL JUDGE