Sodimiza Mines v Meridien Biao Bank Zambia Ltd (in liquidation) (SCZ 149 of 1997) [2001] ZMSC 156 (1 June 2001)

IN THE SUPREME COURT OF ZAMBIA HOLDEN AT LUSAKA (Civil Jurisdiction) SCZ APPEAL NO.149/97 BETWEEN: SODIMIZA MINES APPELLANT AND MER1DIEN BIAO BANK ZAMBIA LIMITED (IN LIQUIDATION) RESPONDENT Coram: Chaila, Chirwa, Muzyamba, JJS 20th May 1999 and Is1 June 2001 For the Appellant: Mr. L. P. Mwanawasa, SC For the Respondent: Ms C. Kunda of Corpus Globe JUDGMENT Chaila, JS, delivered the judgment of the court. When this appeal was heard, the panel included the late Hon. Mr. Justice W. M. Muzyamba who is no longer with us. The decision therefore is a majority decision. This is an appeal against the decision of the High Court (Chitengi, J), dismissing the appellant’s application for orders that the liquidation matters affecting the respondent should be dealt with under the Companies Act. The brief facts of the case as found by the learned trial Judge were that the appellant was a customer of the respondent bank. The appellant had money in that bank. The Bank of Zambia placed, due to some financial IN THE SUPREME COURT OF ZAMBIA HOLDEN AT LUSAKA (Civil Jurisdiction) SCZ APPEAL NO. 149/97 BETWEEN: SODIMIZA MINES APPELLANT AND MERIDEEN BIAO BANK ZAMBIA LIMITED (IN LIQUIDATION) RESPONDENT Coram: Chaila, Chirwa, Muzyamba, JJS 20<h May 1999 and........................................ For the Appellant: Mr. L. P. Mwanawasa, SC For the Respondent: Ms C. Kunda of Corpus Globe JUDGMENT Cliaila, JS, delivered the judgment of the court. When this appeal was heard, the panel included the late Hon. Mr. Justice W. M. Muzyamba who is no longer with us. The decision therefore is a majority decision. This is an appeal against the decision of the High Court (Chitengi, J), dismissing the appellant’s application for orders that the liquidation matters affecting the respondent should be dealt with under the Companies Act. The brief facts of the case as found by the learned trial Judge were that the appellant was a customer of the respondent bank. The appellant had money in that bank. The Bank of Zambia placed, due to some financial - J2 - difficulties the respondent was going through, under compulsory liquidation and appointed a liquidator. The appellant attempted to get their money from the bank but to no avail. The appellant took out summons for the liquidator to operate under the Companies Act. The learned trial Judge considered the evidence and the application and dismissed the application and ruled that there was no lacuna in the Banking and Financial Services Act and that the matters affecting the respondent and the liquidation should be dealt with under the Banking and Financial Services Act. The appellant has relied upon the following grounds: 1. That the provisions of the Companies Act cited by counsel for the appellant in the court below apply and since there was no conflict as postulated under Section 85 of the Banking and Financial Services Act, the court ought to have given the relief sought. 2. That in all the circumstances of the case, it was unconscionable that the respondent should not be liable as claimed or at all. In arguing the appeal before us, counsel for the appellant Mr. Mwanawasa, SC, heavily relied on his written heads of argument. The respondent’s counsel equally relied on her written heads, which are very brief. On ground 1, Mr. Mwanawasa submitted that the appeal was against the holding that there was a conflict between the Companies Act and the Banking and Financial Services Act. In his written submissions, Mr. Mwanawasa talked about voluntary winding up or liquidation of the banks - J3 - and he drew our attention to various sections of the Companies Act and the Banking and Financial Services Act, particularly Section 85 of the Banking and Financial Services Act. He submitted that in the Banking and Financial Services Act, there was no provision for appointment of a liquidator. He maintained that the Companies Act has merely filed a lacuna created by the Banking and Financial Services Act. He urged the court to send the court to another Judge for him to consider the sections of the two Acts. Ms Kunda, counsel for the respondent submitted that there was no need for the case to be sent back to the High Court for re-hearing. She drew our attention to Section 399 of the Companies Act, which section excludes the application of the Banking Act from the provisions of the Companies act. She argued that under the Banking and Financial Services Act, the powers of the liquidator fall on the Bank of Zambia and that the Bank of Zambia appoints an agent who is answerable to it. She relied on Section 106(1) of the Banking and Financial Services Act which protects the depositors (see also Section 108(1). She maintained in her submission that the general statute should not override the provisions of the special provisions of the Banking and Financial Services Act and in this case the Bank of Zambia is the liquidator and should account to the court. She further drew our attention to Section 338 of the Companies Act. She further discussed the provisions of Division 13.7 of the Companies Act. This Division deals with the general winding up of the companies, which are not under the Banking and Financial Services Act. - J4 - The learned trial Judge considered in detail the submissions presented to him in the lower court and concluded that the liquidation of the banks falls within the provisions of the Banking and Finance Services Act. We are grateful to both counsel for their learned arguments and their written submissions. We have read the submissions and we have taken them into consideration in our judgment. We have carefully read the two Acts in question, that is the Companies Act and the Banking and Financial Services Act. The intentions of introducing the Banking and Financial Services Act are clearly spelt out in the Act. We agree with the learned trial Judge’s conclusion when he says: “It is clear from the provisions in Chapter 7 of the Banking and Financial Services Act that the person one has to deal with when the Bank of Zambia has put a bank under compulsory liquidation is the Bank of Zambia itself and not the Bank in liquidation. It is also clear from the provisions under Chapter 7 of the Banking and Financial Services Act that liquidation of a bank is a special liquidation. It is good sense and good law because of the supervisory jurisdiction the Central Bank has on the banks in order to achieve the objective of the Banking and Financial Services Act The object of the Banking and Financial Services Act would not be achieved if the liquidator appointed by the Central Bank were to act under the provisions of Division 13.7 of the Companies Act because he will have to report to the wrong persons and file reports and accounts to the Registrar of Companies and not the Bank of Zambia as required by Chapter 7 of the Banking and Financial Services Act” We have considered the learned Judge’s reasoning on the Banking and Financial Services Act and we find that there is no fault on the part of that conclusion. Section 85 of the Banking and Financial Services Act is very - 5 - clear. The entire provisions of the Banking and Financial Services Act Cap. 85 of the Laws of Zambia have clearly taken out matters dealing with banks and insurance companies and their liquidation from the Companies Act. The learned trial Judge was on a firm ground when he ruled in favour of the respondent and the appeal cannot, therefore, succeed on this ground. The second ground talks about the defendant not being liable. The evidence and the motions were talking about powers to have the liquidation dealt with under the provisions of the Companies Act. We do not quite understand why the appellant is talking about liability. The appellant merely sought adequate and mandatory orders against the liquidators and the respondent bank. We do not see how the second ground is relevant and we are of the view that it should not have been put in the Memorandum of Appeal. We have noted that Mr. Mwanawasa himself was not very emphatic although he argued it in his written heads. Tire appeal of course cannot succeed on this ground since it was not relevant. For the reasons we have given, the appeal is dismissed with costs. M. S. CHAILA SUPREME COURT JUDGE D. K. CHIRWA SUPREME COURT JUDGE