Investor Link Minerals Limited v Prospect Resources Limited (2024/HPC/0481) [2024] ZMHC 181 (11 October 2024)

IN THE HIGH COURT FOR ZAMBIA AT THE COMMERCIAL REGISTRY HOLDEN AT LUSAKA (Civil Jurisdiction) BETWEEN: 2024/HPC/0481 INVESTOR LINK MINERALS LIMITED PLAINTIFF AND PROSPECT RESOURCES LIMITED DEFENDANT Before the Honourable Mr Justice K. Chenda on 11 th October 2024 in Chambers For the Plaintiff For the Defendant : Mr D. Musonda of Mulilansolo Chambers : Mr C. J. Mumba of Chibesakunda & Co. RULING After Preliminary Hearing ------------------------------------------------------------------------------------------------- .:·· ~ i.',- ( INTRODUCTION AND BACKGROUND 1.1 The Plaintiff and the Defendant are companies registered in Zambia and Australia, respectively. 1.2 Following the entry into a non-disclosure agreement ("NDA") dated 6th June 2023, differences arose between them. The Plaintiff eventually took out this action by writ of summons a:qd statement of claim filed on 30th July 2024 (and slightly amended on 17th September 2024), seeking to enforce the NDA to obtain the following relies- (i) an order that the Defendant compensates the Plaintiff for brokering/linking the transaction between the Defendant and Global Development Consulting Zambia Limited; (ii) assessment of the compensation; (iii) damages for breach of contract; (iv) interest; (v) costs; and (vi) further and other reliefs the court may deem fit. 1.3 The Defendant contested the action by defence filed on 30th August 2024. Thereafter, I convened a scheduling conference and after consultation with Counsel, core issues were framed for preliminary hearing held on 4 th October 2024. 1.4 This is the resultant decision based also on the affidavits and arguments filed by the Defendant and Plaintiff on 12th September 2024 and 26th September 2024, respectively. The Defendant's affidavit in reply and arguments of 2nd October 2024 were also closely consi,dered. 1.5 The decision is deemed to have been delivered ex-tempore since its publication was simply postponed by a week to allow the parties explore the possibility of amicable resolution, following a discussion I had with Counsel. PRELIMINARY ISSUE NO. 1: "whether the agreement pleaded in para. 3 of the statement of claim satisfied the requirements of s. 32(4) of th'e Companies Act, No.1 O of 2017 and if not whether that renders the agreement invalid and unenforceable" 2.1 The Companies Act in s.32(4) prescribes: "32.(1) A company shall have a common seal bearing its name and the words "common seal" in legible letters. (2) The chairperson, vice-chairperson and the secretary or any other person authorised by a resolution of the Board, shall authenticate the affixing of the seal. (3) A common seal referred to in subsection (1), shall not be used for any purpose, except in accordance with the articles and this Act. (4) A document or deed shall be validly executed by or on behalf of a company- (a)by the affixing of the common seal; or (b)if the document or deed bears the signatures or signature of- (i) two authorised signatories; or R2 (ii)a director whose signature witness. is attested by a (5) A document signed, in accordance with subsection (4)(b), shall have the same effect as if executed under the common seal of the company." 2.2 According to the convergence of evidence, the NDA was not executed as a deed but under hand by only one signatory from each party and without being witnessed. This is evident from para. 6 of the Defendant's primary affidavit and para. 4 of the Plaintiff's affidavit. It can also be gleaned from the attestion clause of the NDA exhibited by the Defendant as "MM 1 ". The issue is significaHt' because the words of inducement in the originating process introduce the Plaintiff as a company incorporated in Zambia. 2.3 Even the arguments filed by Counsel coincide on the point that the NDA was not executed in conformity with s.31(4) of the Companies Act. The point of departure is on the legal implication thereof. 2.4 The Plaintiff has argued that the enforceability of the NDA is preserved by clause 5 thereof which, it ,•( :, is · argued, imports severability. The Plaintiff has cited inter alia the case of Gideon Mundanda v Timothy Mulwani & Ors. ( 1987) ZR 29 and argued that the NDA can still be complied with lawfully notwithstanding the issue with its attestation clause. 2.5 Clause 5 of the NDA reads: "5. Severability and Integration ' ·1 . If a court finds any provision of this Agreement invalid or unenforceable, the remainder of this Agreement shall be interpreted so as to best effectuate the intent of the parties. This Agreement expresses the complete understanding of the parties with respect to the subject matter and supersedes all prior R3 proposals, and understandings. This Agreement shall not be amended except in writing and signed by both parties." representations agreements, 2.6 The Defendant for its part has argued that the NDA is simply invalid, void and unenforceable and has relied on inter alia the case of Rating Valuation Consortium & Anr. v LCC & Anr. - Appeal No. 89 of 2003. 2.7 In resolving the impasse, I searched around for a companies statute from other countries which has a provision that closely resembles s.32(4) of our Companies Act, No. 10 of 2017 and I stumbled upon the UK Companies Act, 2006 couched as follows in s.44(2): "(2)A document is validly executed by a company if it is signed on behalf of the company- (a)by two authorised signatories, or (b)by a director of the company in the presence of a witness who attests the signature." (Emphasis added) 2.8 As for jurisprudence interpreting s.44(2) of the UK Companies Act, the decision of the Court of Appeal in Roger Williams & Ors. v Redcard Ltd. & Ors.(2011) EWCA Civ 466 is useful. Lord Justice Mummery expressed: "I note a number of points on the purpose, context and language of the section. relates ( 1) Section 44, like its neighbouring sections 43 and formalities of doing 45, business, in particular the formalities for the making of contracts and the execution o.f documents by companies. the to (2) The purpose of s.44 was to facilitate the formalities of the execution of documents by companies by allowing signatures either of two authorised signatories or of one dini'ctor, if attested, to count as execution by a company under its the common seal. R4 (3) In order to achieve that resul{ ·s.44 uses the familiar legislative technique of "deeming." Thus, in the case of a document signed in accordance with s.44, the document has the same effect "as if" executed seal." the (Emphasis added) common under 2.9 Going by that interpretation and the close similarities between s.32(4) of our Companies Act and s.44(2) of the UK Companies Act, it is safe to conclude that s.32(4) prescribes the formalities by which a company incorporated under our Companies Act can validly enter into a contract. 2.l0if those formalities are not met then quite frankly, it cannot be said that the relevant company has actually entered into the contract. 2.11. Since the formalities are contained in a statute, to accept the Plaintiff's argument that the severability clause 5 of the NDA is a saving grace would be to allow the parties .. ' ' to ouster the requirements of s.32(4) of the Companies Act through the NDA. 2.12The Supreme Court guided in Ndola Energy Co. Ltd. v Lamamuda Ltd. - Appeal No.62/2014 at p. J20 that parties cannot by use of a contract exclude statutory provisions from applying to them. It is different if the statute itself stated that its provisions are applicable unless otherwise agreed by the parties. 3 CONCLUSION AND ORDERS 3 .1 The first pn(liminary issue has been determined that the NDA was not a valid agreement for want of execution in accordance with the prescriptions of s.32(4) of the Companies Act. 3.2 Therefore, it becomes otiose to consider the rest of the preliminary issues as the entire action was founded on the NDA. RS 3.3 It follows that the action ought to be and is hereby dismissed in limine. 3.4 As for costs, they are a matter of discretion for the Court in terms of Order 40 Rule 6 of the High Court Rules, in Cap. 27. Further, in terms of exercise of that discretion, I heed the Supreme Court's judgment in A/rope Zambia Limited v Anthony Chate & Ors - Appeal No. 160/2013 at p. J16. 3.5 The guidance from Wood, JS in the said authority was that a successful party should not normally be deprived of his costs unless there is something in the nature of the claim or in. _tl;ie conduct of . ,.. ·,.,' ~ . the party which makes it improper for him to be awarded costs. 3.6 In the case' before Court, the record shows that the Plaintiff and Defendant had attempted to have some dealings through the now invalidated NDA. I thus deem it appropriate to order that they will bear their own costs of this action in the hope that it will leave room for the spirit of good will to prevail with a view to creating the relations between the two, this time properly. ·, Dated at Lusaka this ---------~---------- ! . I ___ d~/of)---------------------------------- 2024 ~ / j ' K. CHENDA Judge of the High Court R6