Al Wasatiya General Trading FZE v NRB Pharma Zambia Limited (APPEAL NO.65/2024) (5 November 2024) – ZambiaLII

IN THE COURT OF APPEAL FOR ZAMBIAr ( PPEAL NO.65/2024 HOLDEN AT LUSAKA { ',u ~ y0 \,'· (Civil Jurisdiction) " n• · · '· ., ' I r l, .. \ bt·l BETWEEN: 0 S ~('~'; '!Q ~· ) ·--- -- J • I IN THE MATTER OF: ~RATION IN THE MATTER OF: SECTION 11 (C) AND (D) OF THE ARBITRATION ACT NO. 19 OF 2000 IN THE MATTER OF: RULE 9 ( 1) (4) AND (5) OF THE ARBITRATION (COURT PROCEEDINGS) RULES 2001 S.I. NO. 75 OF 2021. IN THE MATTER OF: AN APPLICATION FOR AN INTERIM MEASURE OF PROTECTION BETWEEN: AL WASATIYA GENERAL TRADING FZE APPELLANT AND NRB PHARMA ZAMBIA LIMITED RESPONDENT CORAM: MCHENGA DJP, MUZENGA AND CHEMBE JJA On 14th October, 2024 and 6th November 2024. For the Appellant No Appearance (Notice of non attendance filed) For the Respondent Mr. S. K. Simwanza - Messrs Steve Osborne Advocates JUDGMENT CHEMBE, JA delivered the judgment of the Court Cases referred to: 1. Shell BP Zambia Limited vs Conidaris and Other (1975) Z.R. 174 2. Ahmed Abad vs Turning and Metals Limited (1987) Z.R. 86 (S.C). 3. Getway Services Satation Limited vs Engen Petroleum Zambia Limited (2007) ZMSC 164 4. Joseph Mwanza and Another vs Betternow Finance Company Limited and Others 2019/HP/ 1572 5. Hambali M. Hatontola vs The Council of the University of Zambia Appeal No. 215/2014 6. Zambia Consolidated Copper Mines Limited vs Joseph David Chileshe SCZ Judgment No. 21 /2002 7. Mofya vs Stalyon Employment and Investment Ltd and Ecobank Limited 2014 ZMSC 113 8. Wilson Masauso Zulu vs Avondale Housing Project Limited SCZ Judgment No. 31 of 1982 9. Ndongo vs Moses Mulyango & Another SCZ Judgment No. 4 of 2011 10. Susan Mwale Harman vs Bank of Zambia (2020) ZMSC 120 11. Lloyds Bowmaker Ltd vs Britannia Arrow Holdings Plc (1988) 3 All ER 178 12. Undi Phiri vs Bank of Zambia (2007) Z.R.186 13. Christopher Mundia vs Sentor Motors Limited (1982) Z.R 186. 14. Benard Chisanga Mukupa and Others Appeal No. 105/2018 15. American Cyanamide Co. v Ethicon Limited [1975} AC 396 16. Mobile Zambia Limited vs Msiska (1983) Z.R 86 17. Tau Capital Partners Incorporation and Anar vs Mushinge and Others (2008) Z.R. 187 18. Nkhata and Others vs The Attorney General (1966) Z.R. 14 7 Legislation referred to: 1. The Rules of the Supreme Court (White Book) 1999 Edition. J2 2. Halsbury's Laws of England, 4th Edition Volume 24. Works referred to: 1. Zambian Civil Procedure Commentary and Cases. 1.0 INTRODUCTION 1. 1. This is an appeal against a Ruling on the granting of an interim measure of protection (injunction) by the High Court Judge Honourable Mr. Justice B. C. Mbewe delivered on 25th October, 2023. 2.0. BACKGROUND 2 .1. The brief background of this matter is that the Respondent on 27th December, 2018 executed a sale agreement with the Appellant herein for the sale of its pharmaceutical plant in the sum of US$ 6,200,000.00. It was an agreed material term of the agreement that in the event any dispute arose, such would be settled by arbitration. It was further agreed that upon the payment of the installment, the Appellant would take over the operations of 1st the plant. J3 2.2. The Appellant breached the terms of the agreement by failing to effect payments as agreed at the execution of the agreement and also on 9th November, 2019 when the parties mutually revised the outstanding payments. 2.3. On 4th February, 2021 the Respondent demanded for the payment of the outstanding balance but the Appellant offered no response whatsoever. Subsequently the Respondent discovered that the Appellant had leased out the plant to Pharmanova Zambia Limited without any authorization from the Respondent. The Respondent further discovered that there had been structural modifications made to the plant and some equipment removed. Attempts to have dialogue with the Appellant's Managing Director over the issue proved futile. 2.4. In a bid to protect its property from third parties, the Respondent entered into a lease with Pharmanova Zambia Limited and also paid some liabilities that the Appellant had accrued. The Respondent thereafter terminated the agreement with the Appellant. Notwithstanding the termination of the agreement, the J4 Appellant continued sending its officers and third parties to the plant thereby interfering in the operations there. 2.5. Disturbed by this conduct, the Respondent initiated arbitration proceedings at the London Court of International Arbitration by sending a request for arbitration on 12th July 2023. On 14th July 2023, the Respondent filed an application seeking an order for an interim measure of protection from the lower court which was granted. 3.0. DECISION OF THE LOWER COURT 3.1. The lower court in its ruling made a finding that the Respondent herein satisfied the test set down in applications interim injunctions and had demonstrated that there was a likelihood that it would suffer irreparable damage if the application to restrain the Appellant from accessing the plant pending the determination of the arbitration proceedings was not granted. JS 4.0. GROUNDS OF APPEAL 4.1. Dissatisfied with the ruling of the lower Court, the Appellant filed a notice of intention to appeal and a memorandum of appeal containing four grounds of appeal as follows: 4.1. l That the lower court erred in fact and in law when it held that the Respondent is at a real risk of suffering irreparable injury or inestimable loss which cannot be adequately compensated or atoned for in damages should the injunction not be granted, when in fact damages are an appropriate remedy for a monetary claim such as the one that was before the lower court. 4.1.2. That the lower court erred in/act and in law when it held that the Appellant's license to the plant in question was terminated by a termination notice and the Appellant is now trespassing, when in fact the Appellant had operational control of the plant as per the Memorandum of Agreement. 4.1. 3. That the lower court erred in fact and in law when it held that the Appellant did not produce any evidence to show that the Appellant raised the issue of the plant's unmerchantability with the Plaintiff, which holding discarded the fact that there was correspondence demonstrating that the Plant in question was not of merchantable quality. 4.1.4 The lower court erred in both law and/act when it held that the Respondent would suffer reputational injury when the same was not pleaded in the court below. J6 5.0. APPELLANT'S ARGUMENTS 5.1. The Appellant filed Heads of Argument on 13th March, 2024. It was argued, in ground one, that the Respondent took third parties to the property who posed a risk to the Appellant's interests. It was submitted that the lower court erred when it held that the Respondent would suffer irreparable and inestimable loss when the Respondent's claim is entirely monetary in nature. The Appellant cited the cases of Shell BP Zambia Limited vs Conidaris and Others1 and Ahmed Abad vs Turning and Metals Limited2 It was argued that the case of Getway Service . Station v Engen Petroleum Zambia Limited3 cited by the lower court is distinguishable from the present case as this case involves quantifiable factors whereas as in the former it involved intangible and unquantifiable factors. The Respondent's claim at arbitration is for unpaid sums that are entirely quantifiable. The case of Joseph Mwanza and Another vs Betternow Finance Company Limited and Others4 was cited in support of this position. 5.2. Under-ground two it was submitted that the lower court pre judged the matter and erred in finding that the license was J7 terminated when that was an issue which was subject to determination at arbitration. It was submitted that courts must desist from pre-empting matters meant for the main trial and the cases of Hambali M. Hatontola vs The Council of the University of Zambia5 Zambia Consolidated Copper Mines , Limited vs Joseph David Chileshe6 and Mofya vs Stalyon Employment and Investment Ltd and Ecobank Limited7 were brought to our attention. 5.3. In ground three the Appellant argued that the finding of fact by the lower court that the Appellant did not raise issue regarding the state of the plant with the Respondent was an error. It was submitted that the Appellant engaged the Respondent in various correspondence to address the plant's unmerchantability. The Appellant made it known to the Respondent that the plant did not meet the acceptable standards set by the Zambia Medicines Regulatory Authority and the World Health Organization. It was submitted that this was a proper case for an Appellate court to overturn a finding of fact by the lower court. The cases of Wilson Masauso Zulu vs Avondale Housing Project Limited8 Ndongo , J8 vs Moses Mulyango & Another9 and Susan Mwale Harman vs Bank of Zambia10 were cited. 5.4. The Appellant argued further that the Respondent failed to disclose material information in the application for an injunction and therefore approached the court with unclean hands. The case of Lloyds Bowmaker Ltd vs Britannia Arrow Holdings Plc11 was referred to in support of this submission. 5.5. Under the last ground of appeal, it was submitted that the reputational injury claimed by the Respondent was not pleaded. The Appellant referred to the cases of Undi Phiri vs Bank of Zambia12 and Christopher Mundia vs Sentor Motors Limited13 on the function of pleadings. 5.6. In conclusion the Appellant submitted that the Respondent failed to meet the threshold in applications for injunctions and as such the appeal had merit. 6.0. RESPONDENT'S ARGUMENTS 6.1. The Respondent filed Heads of Argument on 10th April, 2024. It was submitted that the dispute pending arbitration was not one for a monetary claim but that of ownership of the plant 1n J9 question. It was submitted that the injunction sought was to prevent the Appellant from unlawful interference with the operations at the plant. In relation to the Gateway case cited by the lower court, it was submitted that the said case was cited for the definition of the term 'irreparable injury'. It was the Respondent's submission that going by the definition, where there is a disruption of business, damages cannot be assessed and as such an injunction is the only remedy in the circumstances. The case of Benard Chisanga Mukupa and Others14 was refe rred to in which we restated the guidelines for granting injunctions. It was submitted further that the guidelines are not cast in stone and a court can decide an application on the basis of the evidence presented. 6.2. In relation to ground two it was argued that the consideration of the termination notice by the lower court did not imply that the court pre-empted the matter. Reference was made to Halsbury's Laws of England in submitting that the Respondent needed to show that there was a serious issue to be tried. The lower court was on firm ground to consider the terms of the agreement. Similarly, on the argument that the Appellant had operational JlO control of the plant, it was submitted that the Appellant lost control of the plant after it had defaulted on the payment terms and the Respondent discovered that the Appellant had leased out the plant to a third party. 6.3. With regard to the argument on merchantability of the plant in ground three, the Respondent referred to page 33 paragraph 2 of the record where the lower court specifically stated that it was not an issue the court could determine as it would be settled at arbitration. It was submitted that the lower court could not be faulted for the decision it made. 6.4 Lastly in ground 4, it was submitted that the injunction was granted based on the affidavit evidence presented and not on the pleadings. The Respondent submitted further that the authorities relied upon by the Appellant were cited out of context as they are not applicable to the case before court. The lower court was therefore on firm ground to grant the injunction and the appeal should be dismissed for lack of merit. Jll 7.0. CONSIDERATION AND DECISION 7 .1. We have carefully considered the appeal, the ruling of the lower court, and the arguments by both parties. The main issue for determination is whether the Respondent herein satisfied the test for granting an injunction established in the case of American Cynamide Company v Ethicon Limited15 In that case it was • held that the key considerations in an application for an injunction are whether there is serious question to be tried, whether the payment of damages would be adequate and where there is doubt on the adequacy of damages, where the balance of convenience lies. 7.2. It is a settled principle that the court in exercising its discretion will only grant an injunction if the right to relief is clear and the injunction is the appropriate remedy to protect the applicant from irreparable injury which cannot be atoned for by damages. In the case of Mobile Zambia Limited vs Msiska16 the Supreme , Court stated as follows: "In considering whether or not an injunction should be granted, a most important consideration is whether or not damages are an adequate remedy. A court will not J12 generally grant an interlocutory injunction unless the right to relief is clear and unless the injunction is necessary to protect the plaintiff from irreparable injury; mere inconvenience is not enough. Irreparable injury means injury which is substantial and can never be adequately remedied and atoned for by damages, not injury which cannot possibly be repaired." 7.3 In ground one, the Appellant challenges the finding of the court below that the Respondent risked suffering irreparable injury when the dispute at arbitration was a monetary claim. We note that the arbitral proceedings have not commenced but what can be gleaned from the request for arbitration at pages 76 to 79 of the record of appeal is that the Respondent is stating that the agreement has been terminated due to breaches by the Appellant and seeks forfeiture of the USD$3,000,000.00 which was paid. 7.4 Whilst the claim is for a quantifiable sum of money, our view is that at the center of the dispute is a Plant which in terms of the agreement fell under the operational control of the Appellant. Our understanding is that in applying for an injunction, the Respondent seeks to protect the Plant from ruin in the event it succeeds in its claim at arbitration. J13 7. 5 Perusal of the record of appeal on page 24 shows that the lower court took into consideration that the agreement between the parties had been terminated by the Respondent. That despite the termination the Appellant continued to interfere with the plant. The record further shows on page 50 that after the Appellant breached the terms of payment in accordance with the executed agreement, the Respondent discovered that the Appellant had leased out the property to a third party being Pharmanova Zambia Limited, that it had made structural changes to the plant without the knowledge or consent of the Respondent and further removed several computers and one stability chamber from the Plant. 7.6 We refer to the Supreme Court authority of Gateway Service Stations Limited refe rred to by the lower court on the inadequacy of damages. The Court below found that it would be difficult to assess damages for disruption of business. Similarly, in the case of Tau Capital Partners Incorporation and Another vs Mushinge and Others17 the court granted an , interlocutory injunction to prevent further trespass by the defendants. J14 7.7 We are inclined to agree that the Respondent stands to suffer irreparable harm from loss of business if the Appellant is allowed to continue interfering in the operations of the Plant. We therefore find no basis for interfering with the finding of the court below in that regard. 7.8 Regarding the 2nd ground of appeal, the Appellant submits that the court below erred when it held that the Appellant's licence to the Plant had been terminated when it had operational control of it as per memorandum of agreement. The Appellant's argument in support of this ground does not appear to have any connection with the ground as couched. The argument advanced is that by holding that the agreement was terminated, the learned trial judge had determined an issue which could only be decided at arbitration. And by doing so the court below had determined the rights of the party. 7. 9 There is a plethora of authorities in this jurisdiction including the cases of Ham.bali M. Hatontola v the Council of the University of Zambia, Mo/ya v Stalyon Employment and Investment Limited and Ecobank Limited, Zambia Consolidated Copper JlS Mines v Joseph David Chileshe and Harton Ndove v Zambia Education Company of Zambia Ltd (1980) ZR 184, where judges have been cautioned against delving into the merits of the main matter when considering applications for injunctions. In the Ndove case it was held that although the court is not called upon to decide finally the rights of the parties, it is necessary for the court to be satisfied that there is a serious question to be tried and that on the facts there is a probability that the Applicant is entitled to the relief. The court is therefore expected to look at the facts presented and make prima facie findings without delving into the merits of the matter. 7.10 We note that at page 35-36 of the record of appeal, the judge in the court below was keenly aware of the need to avoid deciding the rights of the parties at that stage. He stated the following: "I am of the firm position that the evidence of termination of agreement given to the Defe nda nt by the Plaintiff, on the face of it, terminates the agreement." (Emphasis ours) 7. 11 Our view is that the choice of words by the Judge in the Court below suggest that he was making a prima facie finding and not J16 finally deciding the rights of the parties. We therefore find no merit in the 2nd ground of appeal. 7. 12 As for the third ground of appeal, we observed that the court below declined to deal with the argument pertaining to merchantability or otherwise of the Plant as this was an issue for determination at arbitration (see page 33 lines 11 to 13 of the record of appeal). In our view, the issue was not relevant to the determination of the application for an injunction. The 3rd ground is devoid of merit and it fails. 7.12 In the 4th ground of appeal, the Appellant alleges that the court below made a finding that the Respondent would suffer reputational loss if the injunction was not granted which was not pleaded. We agree with the Respondent's submission that there was no finding by the court below that there was a risk of reputational damage. The finding of the court below at page 39 paragraph 58 of the record of appeal was that the Respondent was at a risk of suffering irreparable injury or inestimable Zoss which cannot be atoned for in damages. The 4th ground of appeal is misconceived and fails. J17 7.13. Having found that the Respondent satisfied the test required in injunctions, this is not an appropriate case in which we can interfere with the findings of fact of the lower Court as was held in the case of Nkhata and Others vs The Attorney General18 • 7 .14. In view of the afore stated, we find the appeal before us lacks merit and it is accordingly dismissed with costs to the Respondent. C.F.R. MCH N DEPUTY JUDGE PRESI Y. CHEMBE COURT OF APPEAL JUDGE COURT OF APPEAL JUDGE J18