IN
THE HIGH COURT OF MALAWI

LILONGWE
REGISTRY

CIVIL
CASE NO. 174 OF 2008

BETWEEN

TEMBO
KAMPUNDI PHIRI ……………………………………………………………....
APPLICANT

AND

SAIFRO
LTD …………………………………………………………………………………
RESPONDENT

CORAM : Chombo,
J.

: Makono,
Counsel for the Applicant

: Mwale,
Counsel for the Respondent (Absent)

: Gonaulinji,
Court Interpreter

RULING

The
application before me is for a prayer to have a caution entered into
by the defendant and one Patricia Chikapa of Nelson Civil
Engineering
and Borehole Drilling Contractors discharged. The application is
supported by an affidavit and skeletal arguments.
The application is
opposed by the responded who also filed an affidavit and skeletal
arguments. On the day of hearing the application
the respondent was
absent and unrepresented. The Court proceeded to hear the
application undefended when the applicant demonstrated
that there was
proof of service of the summons thereof.

The
brief history of the matter is that Nelson Engineering and Borehole
Drilling Contractors, through its managing director, Patricia

Chikapa, entered into two separate agreements with the respondent
dated 7^th January
2006 and 20^th
February 2006. The agreements were in respect of subcontracting of
borehole drilling in Nkhotakota and Ntchisi of a total of 66

boreholes. The two agreements have been exhibited before Court and
marked as “ARK1” and “ARK2” respectively. After completion

of the work, Nelson Engineering failed to pay the respondent in full
and left a balance of K2,359,436.20. The respondent is further
owed
the sum of K192,793.20 loaned to the said Patricia Chikapa. Having
failed to pay the outstanding sums, Patricia Chikapa
assigned her
property known as Title No FE/1/895, subject of this action, to the
respondent. The said property was purchased from
a Mr. Michael
Inglis but at the time of the said assignment transfer of title had
not yet been effected. The said authorization
to assign the property
dated 20^th March
2006 was exhibited in this Court as “ARK4”. On 19 October, 2006,
a caution in favour of the respondent was entered over
the said
property by Messrs Makolego & Company, now representing the
applicant. The said caution was registered and is exhibited
as ARK5.

Patricia
Chikapa, with full knowledge of the said caution, managed to sell the
property to the applicant herein. She made a representation
to the
respondent by exhibit “ARK6” that she wanted to use the said
property to obtain a loan from the bank to settle the
outstanding
loan with the respondent and needed to have the caution discharged.
She swore an affidavit of commitment to replace
the caution in the
said exhibit “ARK6”. One of the undertakings in that affidavit
of commitment was that if the loan failed
to materialize she would
release the title documents for the property in question back to the
respondent as continued security.
Soon the caution was removed, the
said Patricia Chikapa sold the property to the applicant as evidenced
by Sale Agreement exhibited
as “TPK1” and the outstanding debt to
the respondent remains unsettled. After the respondent was informed
that the loan had
not materialized the respondent replaced the
caution. It was this caution that prevented the applicant to be
granted consent to
transfer the title into his own name. The
respondent now claims that he can not have the caution removed
because (a) the said
Patricia Chikapa does not have any other
property registered in her name thus discharging the caution will
destroy his security
(b) he obtained judgment in his favour in Civil
Cause No. 498 of 2007 in respect of the same outstanding sums of
money which sums
have not been settled yet. (c) He has priority over
other creditors including the applicant over the property in question
because
his caution was registered prior to the sale. The applicant,
on the other hand submits that the loan between Patricia Chikapa and

the respondent has or must have nothing to do with the property and
therefore the caution must be discharged and the applicant
allowed to
transfer a good title to himself.

The
record of events does not show, nor has the applicant argued the
point, that there was a search in the Lands Registry to establish
if
the property was free from encumbrances at the time or immediately
before the purchase of the said property. If the pre-purchase
search
had been carried out the applicant would have, no doubt, become aware
of the true state of the property. The applicant,
by failing to do
the needful threw caution to the wind. Nyirenda,
J. as he then was in Pushpa Parmer v
Joyce Parmer & 4 Others¹

“A purchaser who is oblivious about title documents
to a land transaction could never be a bona fide purchaser. Such a
purchaser
is like a person who chooses to avoid doing that which is
necessary for fear of discovering the truth. Surely such a person
can
not be a bona fide purchaser”

It
is a cardinal rule that any buyer of land who buys land without
carrying out the necessary search does so at their own peril.
The
said agreement to sale the property dated 19^th
January 2007, shows that the property under sale shows Patricia
Chikapa as vendor and the applicant as purchaser. However, the
title
transfer is between Michael Inglis and the applicant. And the two
transactions are over the same property FE/1/895 Falls
Estate. It is
the same property over which the same Patricia Chikapa had earlier
authorized the respondent to enter a caution
and the same is dated
6^th October 2006.
It is also of interest that the said Patricia used the same legal
practitioner to execute the two different transactions.
There is no
doubt that Patricia Chikapa was either not given the necessary legal
implications of her transactions, or she chose
not to listen to
advice, or indeed there was some deliberate oversight of the
seriousness of the matters herein. And it is the
same legal
practitioner who assisted Patricia Chikapa to accomplish the double
dealings that now represents the applicant in his
action seeking to
discharge the caution. I can not help comment on these observations
which, in my view seem odd and dubious.

The
applicant submits that because the change of ownership is from one
Michael Inglis to him then the respondent has no right or
interest to
claim any right or oppose the discharge of the caution. It is my
finding however that the applicant should be quizzing
the purported
vendor how it was that (a) property in one person’s name was sold
in another person’s name (b) how it is that
Patricia Chikapa gave
authority for a caution to be registered over property that did not
belong to her – if indeed that property
did not belong to her.

The
applicant has clearly demonstrated that he bought the property from
Patricia Chikapa, paid the money to her but that only change
of
ownership was effected with the said Michael Inglis; and the sale
agreement was between Patricia Chikapa and himself and not
the said
Inglis and himself. Any reasonable person would come to the
conclusion that the real owner of the said property is Patricia

Chikapa. And exhibit “ARK3” actually bears evidence of sale of
property between Inglis and Patricia Chikapa. Then Patricia
freely
decided to use her property as security for a loan or outstanding
debt she had with the respondent. Since the caution was
registered
earlier than the sale of the property, and the outstanding debt is
still unsettled, the respondent’s interests must
take priority over
the interests of any other stakeholders. The first party to record
its security interest in real property has
priority over a later
recorded interest of third party.

In
order to have the Initial caution removed the said Patricia, made an
affidavit of commitment in which she, among other things,
states as
follows:

“I guarantee that if the loan fails to materialize
for any reason whatsoever, I will release the necessary documents
back to SAIFRO
which will be free to replace the caution”.

Patricia
Chikapa swore the said affidavit fraudulently knowing that she did
not intent to apply for a loan to discharge her debt
to the
respondent but that she intended to sell the said property to the
applicant and thus deprive the respondent of the only
security he
had. When therefore the said loan, did not materialize the
respondent exercised his right and replaced the caution
and he was
perfectly entitled to do so.

It
will be noted that although the respondent successfully sued Patricia
for the recovery of the said money, the money has not been
paid and
Patricia, through her lawyer, applied for stay of execution. I do
not therefore agree with the applicant that since the
respondent got
a judgment in his favour then he can not have a right to maintain the
caution. The respondent has every right to
maintain the caution,
especially after the dubious conduct of the said Patricia Chikapa,
until every penny is paid, especially
that he has every right in law
because of the caution that was registered long before the fraudulent
agreement to sell the house
was effected.

Let
me offer some free advice to the applicant, his best bet is to fight
out the matter with the said Patricia Chikapa and not the
respondent.

At
the end of the day I must therefore find that the application must be
dismissed with costs.

MADE
in Chambers this 13^th
day of June 2008.

E.J.
Chombo

J
U D G E