Tue, 14 Mar 2017 10:57:12 +0000
IN THE HIGH COURT FOR ZAMBIA IN THE
COMMERCIAL DIVISION HOLDEN AT LUSAKA
( Civil Jurisdiction)
BETWEEN:
FRED M’MEMBE: PIAINTIFF
AND
INVESTRUST BANK PLC : DEFENDANT
Before: Hon. Lady Justice Dr. W. S. Mwenda in Chambers on the I 0th day of March, 2017.
For the Plaintiff : No Appearance
For the Defendant: Mr. 0. Sitimela of Messrs Fraser
Associates appearing with Mr. B. Msidi, Defendant’s
in-house Counsel.
RULING
Cases referred to:
- Salomon v. Salomon and Company Limited (1897) A.C. 22.
- Christopher James Thorne v. Christopher Mulenqa, Edgar Hamuwele and Zambia National Commercial Bank Pie (2010) Z.R. Vol. 1, p. 221.
- Bank of Zambia v. Aaron Chunqu, Access Leasing Limited and Access Financial Services Limited (2008) Z.R. Vol.1, p. 159.
- Development Bank of Zambia and KPMG Peat Marwick v. Sunvest Limited and Sun Pharmaceuticals Limited (1995 – 1997) Z. R. 187.
- Kelvin Hanq’andu and Company (a firm) v. Wehby Mulubisha S.C.Z.
Judgment No. 39 of 2008.
- Muyawa Liuwa v Attorney General S.C.Z. Judgment No. 38 of 2014.
Legislation referred to:
- Order 18 rule 19 (1) of the Rules of the Supreme Court, 1999 Edition (White Book).
- Order 53 rule 6 (1) of the High Court Rules, Chapter 2 7 of the Laws of Zambia.
- Section 10 of the High Court Act, Chapter 2 7 of the Laws of Zambia.
- Section 13 of the High Court Act, Chapter 2 7 of the Laws of Zambia.
Publication referred to:
- G. H. Treitel The Law of Contract (London: Sweet and Maxwell, 2003) p.588.
This is an application by the Defendant herein to dismiss the action for being an abuse of court process. The application is made pursuant to Order 18 rule 19 (1) of the Rules of the Supreme Court, 1999 Edition (White Book). The application, by way of Swnmons and Affidavit in Support thereof, was filed into court on 14th February, 2017.
The brief background to this application is that on 3rd February, 2017 the Plaintiff herein commenced legal action against the Defendant by way of Writ of Summons issued out of the Commercial Registry wherein he claimed the following relief, namely-
(i) A declaration that the Consent Order of 27th January, 2017 staying matters in 2016/HPC/518 be set aside;
(ii) A declaration that all the actions taken by the Defendant in attempting to assign the debt owed to it by Post Newspapers Limited to an entity aligned to Mr.• Mosho pursuant to the above mentioned Consent Order in 2016/HPC/518 are null and void for having been done pursuant to a Consent Order signed without the authority of the Plaintiff;
(iii) A declaration that because the entire winding up process is being challenged for fraud and illegality, which fact the Defendant is fully aware of, it is wrong for the Defendant to act in a manner prejudicial to its customer Post Newspapers Limited who is challenging the said winding up;
(iv) An Order that to protect Post Newspapers Limited the Plaintiff is entitled to have the debt described above paid by him, satisfied or assigned to him as a shareholder challenging a fraught liquidation for adequate compensation;
(v) An interim injunction restraining the Defendant from assigning the debt described above to Mr. Mosho or his proxy or otherwise dealing with Mr. Mosho in relation to the Post Newspapers Limited debt;
(vi) Costs; and
(vii) Any other equitable remedy the Court may order.
The grounds upon which the Defendant has based its application
to dismiss the action for being an abuse of court process are that:-
(a) It discloses no reasonable cause of action; or
(b) It is scandalous, frivolous or vexatious; or
(c) It is otherwise an abuse of the court process.
To buttress the summons, is an Affidavit in Support of Summons to Dismiss Action for Being an Abuse of Court Process sworn by one Isaiah Griffiths Chindumba, the Chief Operating Officer in the Defendant Bank who deposed that from the advice given to him by the Defendant’s advocates, which he verily_ believed to be true, the originating process herein is essentially an abuse of the court process for reasons which follow.
It is the deponent’s contention that a perusal of the Writ of Summons and Statement of Claim reveals that the factual foundation of the Plaintiff’s action is premised on two other matters, namely, cause numbers 2016/TAT/03/VAT/DT and 2016/HPC/518, which are pending before the Tax Appeals Tribunal and High Court, respectively, under which some rulings and/or orders have been granted which the Plaintiff is not satisfied with and therefore, still seeks further redress on the same.
The deponent further avers that the Defendant engaged the Plaintiff as his representative, following the issuance of a Warrant of Distress against the Post Newspapers Limited in or about June, 2016, and advised him that the Defendant considered the action by Zambia Revenue Authority (ZRA) as an event of default pursuant to the facility documents between the Post Newspapers Limited and the Defendant.
In addition, the deponent deposes that on or about l8th November, 2016 under cause number 2016/HPC/518, the Hon. Justice S. B. Nkonde, SC., appointed Lewis Chisanga Mosho of Messrs Lewis Nathan Advocates as Provisional Liquidator of the Post Newspapers Limited as per the Order of Appointment exhibited as “IGCl” in the Affidavit in Support of Summons to Dismiss Action for Being an Abuse of Court Process.
Further, that clauses 6 and 7 of the Deed of Debenture which was registered at the Patents and Companies Registration Agency (PACRA) which created fixed and floating charges over both present and future assets of the Post Newspapers Limited to secure the sum of ZMW11,000,000.00 plus interest, entitled the Defendant to appoint a Receiver to protect its interest as a secured creditor under the said Deed.
Pursuant to the above, the Defendant as debenture holder appointed Mr. Kaongo Musonda of Ventus Legal Practitioners as Receiver of the Post Newspapers Limited, which appointment the Plaintiff did not object to.
Consequent to the appointment of a Receiver, the Defendant was joined to cause number 2016/HPC/518 at the instance of Petitioners under that cause who proceeded to obtain ex-parte, an order staying the appointment of the Receiver over the assets of the Post Newspapers Limited and compelling the Defendant herein to hand over all security and documents of title of the Post Newspapers Limited held or managed by the Defendant, pending an application to quash the appointment of the Receiver. The ex-parte Order of Stay was returnable on 9th February, 2017. On 24th January, 2017, the Defendant obtained an ex-parte order staying execution of the order obtained by the Petitioners referred to above, pending an application to set aside and/or vary the said order. The said applications were made returnable tnter-partes, on the 6th and 9th February, 2017, respectively.
The deponent asserts further that the Defendant, on or about 27th January, 2017 also applied ex-parte, under the liquidation proceedings, for a stay of execution of the ruling joining the Defendant to the said liquidation proceedings pending an application for leave to appeal, which application had not been heard or given inter-partes return dates in the alternative, as at the date of swearing the affidavit.
. The deponent contends that the Defendant herein is and has always been interested in recovering what is due to it from the Post Newspapers Limited and consequently, engaged the Provisional Liquidator to explore the best way though which the Defendant could recover its money.
According to the deponent, the parties to the liquidation proceedings agreed that whilst the ex-curia negotiations were going on, the flurry of applications be adjourned sine die pending the said possible amicable settlement but that the applications were to proceed to be heard on the merits in the event that the parties did not amicably conclude the negotiations by 141h February, 2017. That as far as is known to the Defendant, other than giving notice to the Petitioners under cause number 2016/HPC/518, the Plaintiff has not been joined as a party to the winding up proceedings nor has he made any such application for joinder.
Further, that in pursuance of an amicable settlement to recover its money under the facility documents, the Defendant has since opted to assign and/or transfer the outstanding amounts . to a third party, namely, Unapologetic Trading (Pty) Limited by Deed of Assignment of Debt dated 31st January, 2017 by virtue of clause 16.1 of the General Terms and Conditions Relating to the Loan Facility it granted to the Post Newspapers Limited.
The deponent avers that it is clear that all the facility documents relating to the debt owed were entered into between the Post Newspapers Limited and the Defendant and as such, any contractual rights and/or obligations derived therefrom can only be exercised by the parties to the facility documents. He contends that in any event, neither the Consent Order under the winding-up proceedings nor the assignment of the debt preclude the Plaintiff herein from challenging the petition under the liquidation proceedings or paying the amount outstanding to the assignee, Unapologetic Trading (Pty) Limited.
The deponent avers that as the Court record will show, the Plaintiff herein is seeking a final relief to set aside the Consent Order entered into under the winding up proceedings which Consent Order the Plaintiff is not a party to. He asserts that he has been advised and verily believes the same to be true, that the Plaintiff’s conduct herein amounts to “forum shopping” as by the Plaintiff’s own admission he has indicated in his Statement of Claim that he made an application under the winding up proceedings to set aside the appointment of Provisional Liquidator granted therein.
That in light of the foregoing, it is clearly discernible that the Plaintiff through this action and/or relief, is subtly attempting to defeat or negate the court rulings or orders under the winding up proceedings and that as such, the Plaintiff’s conduct is plainly an abuse of the court process.
The Plaintiff did not file any documents in opposition to this application. The application first came up for hearing on 27th February, 2017. However, Counsel for the Plaintiff applied for an adjournment to 1st March, 2017 on the ground that he did not have instructions from his client to facilitate the preparation and filing of an Affidavit in Opposition. This Court granted the adjournment notwithstanding an objection to the same from the Defendant, but condemned the Plaintiff to a hearing fee of K500.00 payable on or before the next hearing date, being lst March, 2017. The hearing fee was not paid as ordered and neither the Plaintiff nor his Counsel attended the hearing of the application on 1st March, 2017.
Mr. Sitimela, learned Counsel for the Defendant, submitted at the hearing that they had endeavoured in the Skeleton Arguments filed in support of the application to show to this Court that each of the five claims by the Plaintiff as they appear on the Writ of Summons and Statement of Claim, cannot be sustained. Counsel proceeded to give a summary of the arguments raised in the Skeleton Arguments filed in support of the application and the authorities that augment the arguments.
It was Counsel’s submission that the authority pursuant to which this application is brought before Court gives three grounds which once established, enables the Court to exercise its power to dismiss a matter. These three grounds are:-
(i) that the matter discloses no reasonable cause of action; or
(ii) that the matter is scandalous, frivolous or vexatious; or
(iii) that the matter is otherwise an abuse of the court process.
It was Counsel’s considered view that from the facts relied upon and authorities cited, the Defendant has established, on a preponderance of probabilities, the existence of the three conditions enumerated above. Counsel further urged the Court to dismiss the action with costs in accordance with the guidance from the Supreme Court decisions before Court in order to deter others from contemplating similar abuses of the court process.
Order 18 rule 19 (1) under which the application before this Court has been brought provides as follows:-
” 19-(1) The Court may at any stage of the proceedings order to be struck out or amended any pleading or the endorsement of any writ in the action, or anything in any pleading or in the endorsement, on the ground that –
(a) It discloses no reasonable cause of action or defence, as the case may be; or
(b) It is scandalous, frivolous or vexatious; or
(c) It may prejudice, embarrass or delay the fair trial of the action; or
(d) It is otherwise an abuse of the process of the Court; and may order the action to be stayed or dismissed or Judgment to be entered accordingly, as the case may be.”
It is opportune at this juncture, to point out that Order 53 rule 6 (1) of the High Court Rules, Chapter 2 7 of the Laws of Zambia also has a somewhat similar provision which gives the Court power to strike out, set aside or dismiss an action either on its own motion or on application by a party, if a statement of claim does not show a clear cause of action. The rule states as follows:
“6.1 A statement of claim or counter-claim, as the case may be, shall state in clear terms the material facts upon which a party relies and shall show a clear cause of action, failing which the statement of claim or counter-claim may be struck out or set aside or the action dismissed by the court, on its own motion or on application by a party.”
This Court has noted that the Defendant has brought the application under Order 18 rule 19 (1) of the Rules of the Supreme Court, and not Order 5 3 rule 6 (1) of the High Court Rules. However, it is the Court’s view that the application is not invalidated by that fact because the Supreme Court Practice, 1999 (White Book) forms part of our laws as it provides default provisions by virtue of section 10 (1) of the High Court Act. Thus the Defendant has relied on Order 18 rule 9 (1) which provides two additional grounds which if established, and whose existence the Defendant seeks to prove, gives the Court the power to dismiss the action. These are:
(i) that the matter is scandalous, frivolous or vexatious; or
(ii) that the matter is otherwise an abuse of the court process.
The Court shall, therefore, consider the Plaintiff’s claims as endorsed on the Writ of Summons and Statement of Claim in order to determine whether or not they fit any of the criteria set forth in Order 18 rule 19 (1) of the Rules of the Supreme Court.
- A declaration that the Consent Order of 27th January, 2017, staying the matters in 2016/HPC/518 be set aside; and
- A declaration that all the actions taken by the Defendant in attempting to assign the debt owed to it by Post Newspapers Limited to an entity aligned to Mr. Mosho pursuant to the above-mentioned Consent Order in 2016/HPC/518 are null and void for having been done pursuant to a Consent Order signed without the authority of the Plaintiff.
By the claim in (i) above, the Plaintiff is asking this Court to give a declaratory order setting aside the Consent Order granted by another Judge of the High Court in cause number 2016/HPC/518.
To Be Continued
