WIN-WIN JUDGMENT

Zambian supreme court ruling in favour of Murray & Roberts a boost for confidence in that country

When a major project collapsed, construction firm Murray & Roberts could not have predicted that collecting on the debt it was owed would involve courts in two countries and become a test case before Zambia’s highest judges.

The failed project, Lusaka Premier Health Clinic, near the international airport in Lusaka, was to provide a world-class hospital facility for the central African region.

In 2011, after the scheme collapsed, the company won a judgment in the SA courts against the developers for more than

US$6.5M, but the scheme’s backers could not satisfy the debt in SA.

So Murray & Roberts then litigated in Zambia, where Lusaka Premier Health had assets. The plan was to obtain a judgment in the courts there, in terms of which it could sell a property owned by the debtor.

The company obtained a default judgment authorising payment of the money due as well as possession and sale of certain land in Lusaka. But a high court judge refused to allow enforcement of the default judgment, setting it aside as “irregular” and dismissing the whole action as an “abuse of court process”.

Murray & Roberts appealed to the Zambian supreme court — and its luck changed.

Three judges of that court have now overturned the earlier high court ruling, calling it “demonstrably wrong”, and confirming the steps that a judgment creditor, armed with judgment from the SA courts, must take to enforce such a judgment in Zambia.

There must have been some heart-stopping moments when the company first read the earlier decision against it. The judge said he had no difficulty finding that the process was “devoid of any legal basis” and that the default judgment, already obtained in Zambia, was the product of “a flawed and incurable procedural process”, largely because Murray & Roberts had “ignored the provisions of the Foreign Judgments (Reciprocal Enforcement) Act”.

Appealing to the supreme court, however, Murray & Roberts argued that SA was not one of the countries listed on the schedule of this Zambian law and so it had not been able to use the provisions of that law to realise the debt.

The three Zambian supreme court judges who heard the appeal — among them Mumba Malila, a judge with a growing international human rights reputation — said the high court judge “fell into a serious error”. For a company from SA, the only avenue available to a judgment creditor armed with a judgment from SA was to act exactly as Murray & Roberts had done. “We therefore have no hesitation in concluding that it was a serious misdirection on the part of the trial judge to hold that the process used by [the company]” in starting a fresh action to enforce the SA judgment “was devoid of any legal basis”.

Make reasons known

We have no hesitation in concluding that it was a serious misdirection on the part of the trial judge

The high court judge was also at fault because he gave no reasons for why he said the company was incorrect. A judge should not leave the parties “surmising” as to how a particular decision was arrived at, said the supreme court. Rather, the judge must make the reasons known to the parties.

Finally, if the high court judge had believed there was some irregularity in the way the default judgment had been obtained, and that there was an abuse of the court process, he ought to have asked the parties to address him on the disputed issues before making any order.

“We must fault the trial judge for setting aside the default judgment and wholly dismissing the entire action.”

Setting aside the flawed high court decision, the supreme court did more than simply permit the company to make good the debt: it will also help retain general SA confidence in Zambia as a country with which to do business.