Zambia National Commercial Bank Plc and Anor v Keren Motors Limited (Application No.37/2025) (4 November 2025) – ZambiaLII

BETWEEN ZAMBIA NATIONAL COMMEROI~ _,QANKf LC 1 APPLICANT ST CLEMENT MUGALA (Sued in his capacity as 2NDAPPLICANT Receiver and Manager of Keren Motors Limited) AND KEREN MOTORS LIMITED RESPONDENT CORAM: Siavwapa JP, Chishimba and Patel, JJA On 19th August, 2025 and 4th November, 2025 For the Applicants: Mr R.M Simeza & Mr.Z. Sampa of Messrs Simeza Sangwa & Associates For the Respondent: Mr. L. M. Mukande S.C of Messrs M.L Mukande & Co. & Mr. J .C Kalokoni of Messrs Kalokoni & Co. RULING CHISHIMBA JA, delivered the ruling of the Court CASES REFERRED TO: 1. JCN Holdings Limited and 2 Others v Development Bank of Zambia SCZ No 22/2013 2. Rondel v Worsley (1966) 3 WLR 950 3. Emmanuel Mwamba v Cosmos Tembo and 3 Others CAZ Appeal 40/203 J2 4. African Banking Corporation Zambia Limited and 3 Others CAZ Appeal No 18/2021 5. Michelo Chozombe v Edgar Changwa Lungu 7 Others 2003/CCZ/0021 6. Grassley Holdings Ltd v Cabinet Secretary, Ministry of Agriculture Livestock, Fisheries and Cooperatives & 3 Others: Richard Ochieng Ogendo & Another eKLR (2021) 7. Betty Mulongoti and Others v Intermated Banking Corporation Limited Appeal No 111/2015 SCZ 8. Chinene v AON Zambia & 2 Others Appeal 217 of 2015. 9. Delphis Bank v Chattel & 6 Others (2005) KLR 10. Prince Jefri Bolkiah v KPMG Ca Firm (1999) ALLER 51 11. Pamodzi Hotel v Nyangu Appeal 15 of 2022 12. Apia Quality Meats Limited v Westfield Holdings Limited (2007) 3 LRC 13. Jopa Villas LLC v Overseers Private Investments & 2 Others 2014 KEC 132 KLR 14. Dipak Parmar & Parmar Kanchan Prabhudas v Radian Stores Limited & Radian Stores Retail Limited (2015) ZR Vol 1 page 228 15. Hotelier Limited & Oddy Works Limited v. Finsbury Investments Limited 2011/Hp/260 LEGISLATION REFERRED TO: 1. The Rules of the Supreme Court of England 1999 Edition (White Book) 2. The Legal Practitioner's Practice Rules 2002 3. The Court of Appeal Act 2016 OTHER WORKS: 1. Black's law Dictionary 8th Edition, Bryan A. Garner 1.0 INTRODUCTION I.1 The Applicants on the 25th of April 2025, filed a Notice of Motion to vary, reverse and set aside the ruling of a single Judge dated 11th April 2025, ordering the recusal of the Applicants' Counsel, J3 Messrs Simeza, Sangwa and Associates on grounds that they have a conflict of interest. I.1 The appeal deals with the important issue of conflicts of interest in the legal profession, which can undermine the integrity of the legal system and erode public trust reposed in the profession. It addresses the legal Practitioners' fiduciary duty to act in the best interest of their clients and to avoid conflicts. I.2 The appeal also, deals with the issue of whether a law firm/ Advocates can act for both the Bank (Debenture holder) and the Receiver appointed by the holder of the Debenture against the Debtor Company subject of receivership. I. 3 The motion to vary, reverse and set aside the ruling of single Judge was on grounds that: i) The application was incompetent as it was brought pursuant to Order 14A of the Rules of the Supreme Court. i) There is no discernible conflict of interest occasioned by the Applicant' Counsel in acting for both the 1st and 2nd Applicants in this matter. ii) The application was premised on matters that were never raised before the High Court and have been raised for the first time. J4 1.0 BACKGROUND 1.1 The Respondent, Keren Motors Limited obtained Judgment in its favour dated 31st July 2023. The Applicants lodged an appeal before this Court. Prior to the determination of the appeal, the Respondent filed a motion dated 20th January 2025 for the determination of a preliminary point of law not touching on the main appeal. The said motion was made pursuant to Rule VII ( 1) of the Court of Appeal Rules (CAR) as read with Order 14A of the Rules of the Supreme Court (Supreme Court Practice) 1999 and Rules 32 and 33 of the Legal Practitioners Practice Rules of 2002. The Respondent sought an Order that Simeza Sangwa and Associates are conflicted in this Appeal and therefore do not qualify to represent the Appellants on grounds that: Messrs Simeza Sangwa and Associates (the Firm) are 1. · Lawyers on record who provided professional legal advice to both the Bank and the Receiver Manager in this Receivership. The core issues in dispute in this matter relate to some legal 11. documentation prepared by the said firm to which the no Respondent was a party but had independent legal JS advice, and to the legality or lack thereof of the entire professional legal advice they rendered to the Applicants in this Receivership both of which are being challenged in this matter. The continued representation by the law Firm of the 111. Appellants is contrary to the Legal Practitioners' Rules of 2002 and the guidance which the Superior Courts have given to the Legal Profession in Zambia on Conflict of Interest and is against the Lawyers' paramount duty to the Court. 2.0 AFFIDAVIT IN SUPPORT OF THE NOTICE OF MOTION 2.1 The Managing Director of the Respondent, Mr. Kibron, deposed that the company obtained a loan from the 1st Applicant Bank. The Bank placed it under Receivership by way of an Out of Court Appointment. The 2nd Applicant was appointed Receiver and Manager of Keren Motors Limited. 2.2 The deponent stated that Messrs Simeza Sangwa and Associates (Messrs SSA) were the legal Advisers for both the Bank and the Receiver, Mr. Clement Mugala. The said Receiver/Manager had testified that Messrs SSA had advised J6 him and the Bank on the legality of the security investments and his appointment prior to the Court matter. 2.3 The Respondent went on to state that the Practice Rules for Lawyers do not allow Lawyers to act in a case where they are likely to be conflicted. The Respondent was being prejudiced as a result of the firm acting for both their clients i.e., the Bank and the Receiver. That the noble legal professional does not allow to act for both clients when they render legal advice as in casu. 3.0 AFFIDAVIT IN OPPOSITION OF THE NOTICE OF MOTION 3.1 The 1st Applicant Bank deposed an affidavit dated 10th February 2025. The deponent therein stated that Messrs SSA hold a retainer from the 1st and 2nd Applicants and represent both the Bank and the Receiver. Further, that Messrs SSA did render the requested advice as expected of any lawyer to both the Bank and the Receiver during the course of the receivership. In addition, Messrs SSA have never rendered legal Advice to Keren Motors the Respondent herein or held retainer therein. 3.2 The deponent therein concluded by stating that neither the Bank nor the Receiver have ever raised a complaint about any J7 alleged conflict of interest against the firm or breach of confidences towards the Bank or the Re 4.0 AFFIDAVIT IN REPLY 4.1 In the affidavit in Reply dated 3rd March 2025, Mr. Kibron, states that the Bank confirmed that the law firm acted for both bank and the Receiver. This creates a collision or conflict between the Lawyer's duty to the Court and to the course of justice on one hand and the lawyers' duty to the client. The deponent reiterated that the Firm is bent on defending both their legal advice and the documentation prepared, making it hard for them to maintain professional independence in this matter. That though the Bank has not raised any complaint, the bank is a beneficiary of the said legal advice and the 1st Appellant in the matter. 5.0 SKELETON ARGUMENTS BY THE RESPONDENT The Respondent relied on its skeleton arguments dated 20thJanuary 2025. It was submitted that the main grievance by Keren Motors is that Messrs SSA acted as lawyers for both the Bank and the Receiver in this Receivership. The law firm prepared some legal documents and rendered professional legal J8 advice to the Bank and the Receiver which 1s subject of litigation. 5.1 According to the Respondent, the legal Profession needs the Court's guidance as to whether in a dispute arising from a Bank/Customer relationship, a lawyer who prepared legal documentation and rendered professional advice to both the Bank and the Receiver, can later represent the Clients in the event both the legal advice and legal documents are challenged by the Bank's customer in a Court of law. 5.2 It is the Respondent's position that the law firm is not legally competent to represent the Appellants in this matter on account of being conflicted. Reference was made to Rule 22(1) (2)(f) and Rules 32(2) of the Legal Practitioners Practice Rule, 2002 in arguing that the law firm is defending its own legal advice given to the bank and has deprived the firm of the independence and objectivity required of lawyers when representing clients. That Practitioners' risk of engaging in conduct prejudicial to the administration of justice is high. 5.3 Further, that the legal firm's conduct is likely to diminish public confidence in the profession or bring it into dispute contrary to J9 provisions of the Rule 32(i)(iii) of the said Practice Rules. In addition, the Respondent contends that Messrs SSA are potential witnesses in this matter having advised the Receiver in this Receivership and drafted the Supplemental Deed of Appointment of Receiver, contrary to Rule 33(1)(d) of the Practice Rules. 5.4 The Respondent cited the case of JCN Holdings Limited and 2 Others v Development Bank of Zambia 11 1 affirming the case of Rondel v Worsley 121 on the paramount duty of an Advocate to the Court, and the code of honour which requires a barrister to disregard his client's specific instructions if they conflict with his duty to the Court. The Respondent contends that the Advocate's overriding duty is to the Court, the cause of truth and justice are bring comprised. Our decision in the case of Emmanuel Mwamba v Cosmos Tembo and 3 Others 131 was cited on the issue of professional conflict in which we referred to rules 33 and 34 as well as 3(2)(c) of the Legal Practices Rules, 2002. 5.5 In conclusion, the Respondent submits that Messrs SSA are conflicted in the matter and that they must be compelled to JlO hand over the case to a law firm that is not conflicted at all to avoid the legal profession being brought into public ridicule and contempt. 6.o SKELETON ARGUMENTS BY THE APPLICANTS/ APPELLANTS 6.1 The Applicants/ Appellants filed skeleton arguments 1n opposition to the Notice of Motion for determination of a preliminary point of law dated 10th February 2025. They submit that the requirements for a party to invoke the procedure under Order 14A of Rules of the Supreme Court have not been meet, such as finally disposing of the main matter without full trial. The cases of African Banking Corporation Zambia Limited Copper Harvest Foods Limited and 3 others 4 and Michelo l l Chizombe v Edgar Changwa Lungu 7 Others l 5 l were cited on the determination of question of law under Order 14A of the Rules of the Supreme Court. 6.2 On the issue of conflict of interest alleged to arise from the rendering of legal advice to the Bank and Receiver, the position of the Appellants is that the Respondent has not disclosed the nature of advice given by the Firm to its clients. In any event, the Respondent is not privy to it and can only speculate on this. Jll 6.3 In regard to the prepared documents, the Appellants refute having prepared the Floating and Fixed Debenture, Deed of Appointment of Receiver and Manager and Fixed Debentures. The said documents were prepared prior to the Firm's retention, and the allegations therein have no basis. 6.4 Our attention was drawn to the definition of conflict of interest in Black's Law Dictionary and to the Kenyan case of Grassley Holdings Ltd v Cabinet Secretary, Ministry of Agriculture, Livestock, Fisheries and Cooperatives & 3 Others: Richard Ochieng Ogendo & Another 161 (Interested Parties) as well as Rule 34 ( 1) of the Legal Practitioners Practice Rules (LPP). The gist of the argument is that a Practitioner can only cease to act in a matter where there is conflict or risk of conflict between the interest of anyone or more of his clients, or there appears to be a risk of breach of confidence, where his knowledge of affairs of one client would give undue advantage to another client. The v case of Betty Mulongoti and Others lntermarket Banking Corporation Limited l 7 I was cited. Further, that where Counsel represents a party against a former client, Counsel should not act in opposition to the interest of the former client as supported by the Supreme Court in Chinene v AON Zambia & 2 Others,18l J12 such as using confidential information 1n his possession without the former Clients consent. 6.5 In this matter, the Appellants represented by the Law Firm have not raised any issue relating to the alleged conflict. Instead, and shockingly, it is the opposing party that has raised the alleged conflict issue. That Rule 34(1)(a) the LLP Rules is meant to protect confidences among clients which can only arise where there is or there used to be a client/lawyer relationship. The Kenyan case of Delphis Bank v Chattel & Others 191 was cited on the issue of conflict where securities were drawn by the Advocate. 6.6 In response to the contention that Messrs SSA are witnesses in this matter, having advised the Appellants in Receivership and drafted the Supplemental Deed of Appointment of Receiver, the Applicants contend that if at all there is anything objection, it should have been raised in the Court below at trial. 6. 7 In regard to the duty of confidentiality, between Lawyer and Client, the case of Prince Jefri Bolkiah v KPMG (Firm) 1101 was cited on the likelihood of conflict or significant risk of conflict, that the client must show that the Solicitor was in receipt of J13 confidential information relevant to a matter for which the solicitor is acting against the former client's interest. 6.8 It was submitted that the motion is devoid of merit and should be dismissed. 6.0 SKELETON ARGUMENTS IN REPY 6.1 The Respondent filed skeleton arguments 1n Reply dated 3rd March 2025 and submits that Order 14A is applicable to all superior Courts as the White Book is an integral part of Zambian Civil Procedure. That in any event, its application is based on the inherent jurisdiction of the Court, the Legal Practitioner's Practice Rules and anchored on Order VII Rule 1 of the CAR. 6.2 The Respondent reiterates that having rendered legal advice to the Bank and Receiver, the law does not allow the law Firm to represent the Bank and Receiver in the Appeal. The duty of Counsel to the Court being paramount was restated as held in Pamodzi Hotel v Nyangu 1 11 1 That the happenings in this case which are prejudicing the Respondent, show that the law firm has lost its sense of paramount duty to the Court and is prioritising self - preservation and not assisting the Court in the administration of justice. J14 7.0 RULING OF THE SINGLE JUDGE The single Judge ruled that Messrs SSA have a conflict in continuing to represent the Appellants and ordered that it recuses itself from acting for the Appellants. Hence, the motion to vary, reverse or set aside the above decision of the single Judge. 8.0 THE HEARING OF THE NOTICE OF MOTION 8.1 The learned Counsel for the Parties reiterated their arguments, which we shall not rehash. 9.0 ANALYSIS AND DECISION OF THE COURT 9.1 We have considered the motion by the Applicants to vary, reverse or set aside the decision of the single Judge. It is trite that a motion from a decision of a single Judge to the full Court is essentially a rehearing (renewal) of the application, based on the same material that was placed before the single Judge. Hence, our earlier recital of the affidavits and skeleton arguments by the parties before the single Judge. The first ground upon which the Applicants seek to set aside or reverse the decision of the single Judge is that the application was incompetently brought pursuant to Order 14A of the Rules of the Supreme Court of England. JlS 9.2 The single Judge proceed to hear the matter based on the Courts' inherent jurisdiction. The Court of Appeal has deliberated on the issue of Order 14A of the Rules of the Supreme Court. Whether the Court has inherent jurisdiction to hear and determine preliminary issues on point of law made pursuant to the said Order. We are of the view that since the effect of Order 14A of Rule of the Supreme Court is to dispose of the whole action (appeal), the point of law raised in respect of conflict of interest would not determine the appeal. Therefore, reference to Order 14A of Rules of Supreme Court was wrong as it is inapplicable in· the circumstances of the issues raised for determination. 9.3 The substantive issues raised in the motion before the single Judge for determination are as follows: Whether Messrs Simeza Sangwa and Associates are 1. conflicted in this appeal and do not qualify to represent the Applicants/ Appellants Whether the continued representation by the law firm is 11. contrary to the Legal Practitioners' Rules 2002. 9.4 In renewed applications to vary or set aside the single Judge's decision we have looked at the exercise of her discretion, J16 whether it was properly or judiciously exercised in arriving at the conclusion reached of conflict of interest by the lawyers representing the Appellants \Applicants and ordering their removal/recusal from representing their clients. 9. 5 We take seriously the gravity of the issues raised in the motion for the Applicant's advocates to be removed from representing their client, which must not be taken lightly. A litigant enjoys the constitutional right to be represented by an advocate of his choice, aside from the right to a fair hearing. 9.6 Is it the Court's business to decide which lawyers should or should not represent a client in litigation. Each party to litigation has the right to choose his or her own representation. Under what circumstances can we interfere? It must be shown that the interest of justice would not be served if particular lawyers are allowed to act in this manner. The Court without doubt has inherent jurisdiction to control the conduct of proceedings and of counsel appearing before it. Factors considered in the removal of an advocate from proceedings are conflict of interest, actual or potential breach of duty to protect confidential information or misconduct. Resort to removal of an advocate being a drastic remedy, must . . be considered only in the most serious circumstances aimed at safeguarding the future integrity of proceedings. 9.7 We will begin by setting out the circumstances under which a Court will bar an advocate from acting for a party on grounds of conflict of interest and the definition therein. Black's Law Dictionary, 10th Edition, defines conflict of interest as "A real or seeming incompatibility between the interests of two of a Lawyers clients, such that the lawyer is disqualified from representing both clients if the dual representation adversely affects client or if the clients do not consent." 9.8 In a nutshell, a conflict of interest arises where there is a substantial risk that the Advocates' representation of the clients will be materially or adversely affected by their own interest or by the Advocates' duties to another client, former or third party. 9. 9 The Supreme Court of Samoa in the case of Apria Quality Meats Limited v Westfield Holdings Limited !12 1 quoted in the Kenyan decision of Jopa Vilas LLC v Overseers Private Investment Corp & 2 Others ! 13 1, stated on the issue of removal of an Advocate from proceedings, that "such an application has to be considered under the relevant legal principles on the Courts exercise of inherent jurisdiction .. J18 ·- to control the conduct of the proceedings and those that appeared before it as counsel. The factors to be considered are conflict of interest, actual or potential breach of the duty to protect confidential information or misconduct. Removal of an Advocate from acting for a party in proceedings was an extraordinary and drastic remedy to be contemplated only in the most extraordinary circumstances, requiring misconduct so serious that removal was the only way of safeguarding the future integrity of the proceedings." 9.10 There is a plethora of decisions on the issue of conflict-of interest vis 'a vis the protection of confidential information disclosed by clients to Lawyers, such as Dipak Parmar & Another v Radian Stores Limited & Radian Stores Retail Limited t 141 and Hotelier Limited & Oddy's Works Limited v Finsbury Investment Limited 1151. 9 .11 It is trite that lawyers are Officers of the Court, subject to its jurisdiction. The duty of the lawyer to the Court and administration ofj ustice is paramount to the duty to the client with the latter taking precedence. See the cited case of Pamodzi Hotel PLC v Rosemary Nyangu Appeal (supra) as . ' J19 authority. The dilemma involves conflict between the various duties owed to the Court, to the client, to the administration of justice, to the profession and the public at large. Conflict of interest typically arises from client\lawyer relationships and arises where a lawyer acts for both parties in a matter, a former client and where personal interest are involved resulting in a conflict of duties or interest or breach of fiduciary duty owed to the client or former client. We shall not attempt to categorize exhaustively the various scenarios of conflict of interest, which is extensive, save to define it as actual, potential or perceived. The Courts have inherent jurisdiction over lawyers and can restrain or enjoin lawyers from continuing to act for parties in proceedings. 9.12 However, it must be stated that we must not act as arbiters of ethics or morals, reserved for the LAZ relevant committee. 9.13 The contention by the Respondent is that Messrs SSA acted for both the Bank and Receiver, rendered professional legal advice and drafted the legal document in contention. 9.14 Rule 33 (i)• a-f of the Legal Practitioners Rules which stipulates as follows. "(d) the matter is one in which the practitioner has reason to believe that the practitioner is likely to be a witness or in J20 which whether by reason of any connection of the practitioner (or of and partner or other associate of the practitioner) with the client or with the Court or a member of it or otherwise, it will be difficult for the practitioner to maintain professional independence or the administration of justice might be or appear to be prejudiced; (e) the practitioner has been responsible for deciding on a course of action and the legality of that action is in dispute in the proceedings; (fl there is or appears to be some conflict or significant risk of some conflict either between the interest of the practitioner, or any partner or other associate of the practitioner and some other person or between the interest of any one or more of their clients." 10.15 Rule 33(i) (e) is the pertinent provision relied upon. It is not in dispute that Messrs. Simeza Sangwa & Associates drew up the documentation i.e. the supplemental Deed of Appoin~ent of Receiver subject of the dispute in the lower Court. And further that prior to litigation they had advised the Bank and Receiver on the debentures in issue. 10.16 The circumstances or facts of this matter as it relates to conflict of interest are that Messrs SSA are representing both parties. They are not acting against either of its clients but represent both on the same side dispute. Therefore, issues of conflict or breach of fiduciary duty or breach of confidentiality do not arise. The mere representation of two clients on the same side J21 of litigation does not breach the principle of confidentiality in lawyer\c lient fiduciary relationships. 10.17 The question we ask ourselves is whether it has been shown to the Court that the interest of justice would not be served if Messrs SSA continue representing the Appellants. What real mischief or prejudice will result in them continuing representation of both? 10.18 The Respondent's contention is that the law Firm drew up the Supplemental Deed of Appointment as Receiver. Arguing in the first instance, they are defending the legal advice given to the Appellants. In the second instance, that the law Firm is a potential witness in this matter having advised the Bank and Receivers and drawn up the said supplemental Deed of Appointment of Receiver. 10. 19 We are confounded by this above contention that because Lawyers participated in drafting the said document, they are potential witnesses. Trial of the matter took place in the lower Court. The Respondent did not raise this issue before the lower Court but now raised it on appeal. Determination of the appeal is based on proceedings (ROA) in the lower Court. We do not see how the continued representation in the appeal J22 would render them potential witnesses, trial having been concluded and judgment delivered. 10.20 We are alive to the position that where an Advocate is a potential witness, he ought not to act for the client. Perhaps the real question is whether Advocates\ Lawyers can act for both the Debenture holder (Bank) and the Receiver appointed by the holder of the Debenture against the Debtor Company subject of receivership. Is there a real likelihood of conflict or mischief? That is the test to be applied and not the mere perception of potential conflict. 10.21 In our view, the same legal practitioners/firm can act for a Receiver and the debenture holder (Bank) in proceedings against the company in receivership. There is no general rule that an Advocate cannot act for both clients. 10. 22 Having considered all the circumstances of this case, not as a matter of form but as a matter of substance, we are not satisfied that real mischief or prejudice will result by the representation of the Appellants by Messrs SSA. The Respondent has failed to persuade the Court that there is a real possibility that a conflict of interest would arise if the firm 1s allowed to represent both Appellants against the J23 Respondent. No material upon which to decide that there are real grounds that the Firm is conflicted has been shown to us to warrant the drastic order to bar the said Firm. 10.23 Trial, having already taken place, the disqualification of Messrs SSA on basis of being potential witness becomes otiose. We reiterate that this point ought to have been raised in the Court below, where the Court would have considered whether the said Lawyers' potential witness testimony was necessary, and relevant. The mere averment that the firm acts for both Appellants is not sufficient to bar or disqualify Messrs SSA from acting for the said Appellants. In any event, what confidential information gained connected to the issues at hand would be used to its client's detriment. 11.0 CONCLUSION 11. 1 We come to the inescapable conclusion that the Respondent has failed to prove the existence of factors such as conflict of interest actual or potential and breach of confidential information or misconduct on the part of the lawyers. Having failed to establish the factual basis for disqualification of Messrs SSA, we hold that the single Judge did not judiciously J24 exercise her discretion to order removal of the Firm from representing the Appellants in the appeal. 11.2 For the forgoing reasons, we hereby set aside and discharge the decision of the single Judge. We hold that there is no discernable conflict of interest occasioned by the Firm acting for both Appellants. Due to the wide interest of this topic to legal Practitioners, and the public at large, we order that the parties shall bear their own costs. The pending appeal before us shall be heard in the January 2026 session of the Court in Lusaka. M. J. Siavwapa JUDGE PRESIDENT ....... -b.~. . f '.:':.'.?:-c: ..... F. M. Chishimba A. N. Patel S.C COURT OF APPEAL JUDGE COURT OF APPEAL JUDGE