Moneygrow Savings and Credit Co-operative Society Limited v Mauden Shula and Ors (2023/HP/1879) [2024] ZMHC 164 (7 October 2024)

. IN THE HIGH COURT OF ZAM AT THE PRINCIPAL REGISTR HOLDEN AT LUSAKA (Civil Jurisdiction) BETWEEN: R1 LIC OF 14 COURT OF z4m6, PRINCIPAL REGISTRY · 2 OXS0067, 2023/HP/ 1879 MONEYGROW SAVINGS & CREDIT CO-OPERATIVE SOCIETY LIMITED PLAINTIFF AND MAUDEN SHULA PAUL MUBANGA DR FABIAN MALOLO KAY MWINJI LUNGU IREEN MUBITA REUBEN PHIRI BRIGHT SIATONTOLA CHARLENE MWENDA MUSA MWANZA KONI MWANZA 1st DEFENDANT 2nd DEFENDANT 3rd DEFENDANT 4th DEFENDANT 5th DEFENDANT 6th DEFENDANT 7th DEFENDANT 8th DEFENDANT 9th DEFENDANT 10th DEFENDANT BEFORE HON MRS JUSTICE S. KAUNDA NEWA IN CHAMBERS THIS 7th DAY OF OCTOBER, 2024 For the Plaintiff For the Defendants : Mr P. C Muya, Messrs Muya & Company : Mr S. M Mwila, Messrs MK Achiume and Associates RULING CASES REFERRED TO: 1. Chikuta v Chipata Rural Council 1974 ZR 241 2. Zambia Revenue Authority v Hitech Trading Company Limited SCZ No 40 of 2000 3. Kalusha Bwalya v Chadore Properties Limited 2012 Vol 1 ZR 341 4. Nkwilimba v Salwanja 2014 ZMHC 174 5. Zambia Cooperative Federation Limited v Mukuka 2015/HP/125 LEGISLATION REFERRED TO: 1. The High Court Rules, Chapter 27 of the Laws of Zambia 2. The Legal Practitioners Act, Chapter 30 of the Laws of Zambia R2 1. INTRODUCTION 1.1 The Defendants in this matter, being Mauden Shula and the others, on 17th June, 2024, filed a Notice of Objection to the Notice of Appointment of Advocates for the Plaintiff, Moneygrow Savings and Credit Co-Operative Society Limited, being Messrs M. K. Achiume and Associates. 1.2 The Notice was filed pursuant to the Ruling of the Court dated 15th December, 2023, as read with Part II of the Legal Practitioners Act, Chapter 30 of the Laws of Zambia. The said Notice was supported by an affidavit and a List of Authorities and Skeleton Arguments in support. 1.3 The grounds raised in the Notice were as follows: 1. That the Ruling of the Court dated 15th December, 2023, gave all the appointing powers to the Registrar of Societies; 2. That all other persons have no authority to conduct the business of Moneygrow Savings and Credit Co- Operatives Society Limited; 3. That the appointment of advocates for Moneygrow Savings and Credit Co-Operatives Society Limited is irregular, and all the documents filed are incompetent, and should be expunged from the record; and 4. Costs be in the cause. 1.4 In response, an affidavit in opposition and a List of Authorities and Skeleton Arguments were filed on 19th July, 2024. R3 2. SUBMISSIONS AT THE HEARING SUBMISSIONS BY COUNSEL FOR MONEYGROW SAVINGS & CREDIT CO-OPERATIVE SOCIETY LIMITED 2.1 At the hearing, only Counsel for Moneygrow Savings & Credit Co-operative Society Limited was before Court. He informed the Court that they had filed an affidavit in opposition and a List of Authorities in opposition to the Notice on 19th July, 2024. However, they had not received any reply. 3. DECISION OF THIS COURT 3.1 I have considered the Notice. It was made pursuant to this Court's Ruling dated 15th December, 2023 as well Part II of the Legal Practitioners Act, Chapter 30 of the Laws of Zambia. AFFIDAVIT IN SUPPORT 3.2 In the affidavit which was filed in support of the application, Phill Chola Muya, Counsel seized with conduct of the matter on behalf of Mauden Shula and the others, deposed that as shown on the record, when the matter was commenced, Messrs Linus E. Eyaa and Partners represented Moneygrow Savings 86 Credit Co-operative Society Limited. 3.3 It was also stated that Messrs Linus E. Eyaa and Partners applied for an Order of injunction against Mauden Shula and the others. Further averment was made, that opposition was filed to that application, and the Court on hearing the application, delivered a Ruling which restrained the board which comprised Mauden Shula and the others, and the board that was removed which consisted of Mwangala R4 Chakalashi, Raphael Lubanga, Charles Liywali, Oliver Munenga and Enestina Lubanga. 3.4 It was deposed that this Court instead gave all the powers in relation to the running of Moneygrow Savings 86 Credit Co- operative Society Limited to the Registrar of Societies until further Order of the Court. The averment was that this Court directed that all documents and assets relating to Moneygrow Savings 86 Credit Co-operative Society Limited be surrendered to the Registrar of Co-operatives, by all persons who were in possession of the same. 3.5 It was added that this Court further directed that disobedience of the Order risked persons being cited for contempt of Court. 3.6 The contention was that prior to this Court delivering its' Ruling, the advocates, Messrs Linus E. Eyaa and Partners withdrew as acting for Counsel for Moneygrow Savings 86 Credit Co-operative Society Limited. 3.7 Still in averment, Counsel stated that despite the powers of running Moneygrow Savings 86 Credit Co-operative Society Limited being vested in the Registrar of Societies, a law firm practicing under the name and style of M. K Achiume and Associates, purporting to be advocates for Moneygrow Savings 86 Credit Co-operative Society Limited, was appointed by unknown persons, to represent the interests of Moneygrow Savings & Credit Co-operative Society Limited. Exhibited as `PCM2' was a letter of appointment of advocates dated 26th January, 2024. R5 3.8 It was deposed that upon Counsel enquiring with the Registrar of Societies, he was informed that the law firm, M. K Achiume and Associates was not appointed to represent Moneygrow Savings 8; Credit Co-operative Society Limited. LIST OF AUTHORITIES AND SKELETON ARGUMENTS IN SUPPORT 3.9 In the List of Authorities and Skeleton Arguments in support, Section 49 of the Cooperatives Societies Act, Chapter 388 of the Laws of Zambia, was cited as empowering the Registrar of Cooperatives, when a cooperative is being wound up, to appoint a legal practitioner in any proceedings. 3.10 Further reliance was placed on the case of Zambia Cooperative Federation Limited v Mukuka (5) stating that the Court in that matter, appointed the Registrar of Cooperatives to manage the affairs of the Federation, and to appoint legal representatives on its' behalf. 3.11 It was also argued that a cooperative can be likened to a company, and that in the case of Nkwilimba v Salwanja (4) the Court in injuncting the directors of the company, placed the company under the care and control of the Registrar of Companies. 3.12 The argument was also that the Legal Practitioners Act Chapter 30 of the Laws of Zambia, under Section 9 deals with the appointment of advocates by a client, and the Act provides guidelines for the conduct and discipline of legal practitioners in Zambia. That in that regard, it was argued R6 that the Act emphasizes that appointment should be done by the correct parties, and that from there, stems the requirement to notify the Court of such representation. AFFIDAVIT IN OPPOSITION 3.13 In the affidavit in opposition, Simon Mulenga Mwila, the Advocate seized with conduct of the matter on behalf of Moneygrow Savings 86 Credit Co-Operative Society Limited, alleged that Mauden Shula and the others are not members of the subsisting board, and that Charles Liywali is not a board member, but the Chief Executive Officer of Moneygrow Savings 86 Credit Co-Operative Society Limited. 3.14 Further averment was made, that Oliver Munengwa is not a board member, but a service provider to Moneygrow Savings 86 Credit Co-Operative Society Limited. 3.15 It was deposed that following the Court's Ruling dated 15th December, 2023, Moneygrow Savings 86 Credit Co-Operative Society Limited wrote to the Registrar of Cooperatives to surrender all documents and assets by a letter dated 20th December, 2023, which was exhibited as `SMM1'. It was stated that exhibit `SMM2' was a copy of the letter showing the list of assets, while exhibit `SMM3' was a copy of the letter dated 25th March, 2024, which was addressed to the Director Registration and Regulations. 3.16 However, in breach of the Court's Order, the Registrar of Cooperatives did not collect the documents until 10th July, 2024, when he sent the interim management that he R7 appointed on 18th April, 2024, to collect the documents and the assets. 3.17 Assertion was made that Simon Mulenga Mwila was further advised that the team which had been appointed by the Registrar, comprises agents of Mauden Shula and the others who have continued to issue threats to Mwangala Chakalashi, Raphael Lubanga, Mutinta Chakalashi, Enestina Lubanga, Charles Liywali and Oliver Munengwa. 3.18 Exhibited as `SMM4', was a copy of the letter authored by Mr. Paos Munzele, the Deputy Registrar, with assertion being made that he chaired the illegal extra ordinary meeting of 13th October, 2023. 3.19 Also exhibited as `SMM5' was a letter which was addressed to Munansangu and Company from the Ministry of Small and Medium Enterprises Development, which gave false information about the composition of the board of Moneygrow Savings 86 Credit Co-Operative Society Limited. 3.20 Then exhibited as `SMM6', was a copy of a complaint to the police by Mr. Chilala, who is a member of the current interim committee, and `SMM7' a copy of the screenshot of threats of violence to Mwangala Chakalashi by Mr. M. Chilala. Other exhibits were `SMM8', being a copy of the screenshot of the notice to Moneygrow Savings 86 Credit Co-Operative Society Limited members, warning them about Mr. Chilala and `SMM9', a copy of the letter from Afrocentric Technologies Zambia Limited to the Ministry of Small and Medium Enterprises Development. R8 3.21 Admission was made that immediately after the hearing of the application for an Order of injunction on 29th November, 2023, Messrs Linus E. Eyaa and Partners withdrew as advocates for Moneygrow Savings 86 Credit Co-Operative Society Limited. The statement from the Law Association of Zambia over the violence exerted on Mr. Linus E. Eyaa was exhibited as `SMM10'. 3.22 It was deposed that Messrs M. K Achiume and Associates, the current advocates for Moneygrow Savings 8s Credit Co- Operative Society Limited, were appointed as advocates through a directive of the board, prior to the Court Order dated 15th December, 2023. Averment was made that Simon Mulenga Mwila, had been advised that the board had power up to 15th December, 2023 to act when the board was restrained from running the affairs of the Cooperative. 3.23 It was stated that Messrs M. K Achiume and Associates were already employed by Moneygrow Savings 86 Credit Co- Operative Society Limited, and were dealing with other Court matters prior to this matter, in which Moneygrow Savings 86 Credit Co-Operative Society Limited was sued in the case of CEEC v Moneygrow Savings & Credit Co-Operative Society Limited and Four others under cause number 2023/HPC/0866. 3.24 It was denied that Messrs M. K Achiume and Associates were appointed by unknown persons, but rather, that they were appointed immediately upon the withdrawal of Messrs R9 Linus. E. Eyaa and Partners, despite the Notice of Appointment having been filed on 26th January, 2024. 3.25 Assertion was made, that the Registrar in breach of the Court Order, had appointed interim management which had abandoned all the outstanding claims by the members, whom the Court is protecting. It was also averred, that the new team had embarked on a new business, and the funds in the members wallets had been abandoned. 3.26 Exhibited as SMM11', was a copy of a notice of a meeting at which the Registrar appointed the interim management team, and `SMM12', a letter appointing Ms Nelly Mambwe as Secretary, `SMM13' a copy of the letter of change of the logo for Moneygrow Savings 85 Credit Co-Operative Society Limited, and `SMM14' a letter for the new account for Moneygrow Savings 85 Credit Co-Operative Society Limited. 3.27 The contention was that the Ruling of the Court restrained the two boards and not management, from operating and that it was the same management, that needed to hand over the assets to the Registrar. Exhibited as `SMM15' and `SMM16' were copies of the letter from the Registrar to Mwangala Chakalashi and Raphael Lubanga, and a response to the Registrar from Mwangala Chakalashi and Raphael Lubanga respectively. LIST OF AUTHORTIES AND SKELETON ARGUMENT IN OPPOSITION 3.28 In the List of Authorities and Skeleton Arguments in opposition, it was argued that Oliver Munengwa was a R10 service provider, and not a board member who terminated his services with Moneygrow Savings & Credit Co-operative Society Limited. It was also argued that Charles Liyawali was never a board member, but the Chief Executive Officer who was charged with running the day to day business together with the management team. 3.29 Emphasis was made, that the Order of injunction restrained Moneygrow Savings 86 Credit Co-Operative Society Limited and Mauden Shula and the others, from continuing to manage the affairs of Moneygrow Savings 86 Credit Co- Operative Society Limited until official handover to the Registrar was done. 3.30 It was also argued that agents of Mauden Shula and the others, attacked Counsel for Moneygrow Savings 86 Credit Co-Operative Society Limited, Mr Linus E. Eyaa and Partners within the Court premises, which act was condemned by the Law Association of Zambia through a public statement. It was stated that on account of the same, Mr Linus E. Eyaa withdrew from acting for Moneygrow Savings 86 Credit Co-Operative Society Limited. 3.31 The argument was further that due to the same, a lot of law firms when approached, declined to represent Moneygrow Savings 86 Credit Co-Operative Society Limited in fear of being attacked like Mr Linus E. Eyaa. Thus, as Messrs M. K Achiume and Associates were already representing Moneygrow Savings 86 Credit Co-Operative Society Limited in the case of Moneygrow Savings & Credit Co-Operative R11 Society Limited in cause number 2023/HPC/0866, a decision was made, when the Ruling dated 15th December, 2023 was delivered, to engage them as advocates for Moneygrow Savings 85 Credit Co-Operative Society Limited. 3.32 Further argument was made, that in compliance with the Ruling of the Court, Mwangala Chakalashi and Raphael Lubanga wrote to introduce Charles Liywala and his team to the Registrar giving details of the management to help with the smooth hand over. However, there was no response to that letter, and another letter was written, to the Registrar requesting compliance with the Court's Order, by taking possession of the documents and the assets. 3.33 It was stated that possession of the documents and the assets was only taken when a letter of complaint was written to the Attorney General that failure by the Registrar to take possession of the documents and the assets, would result in contempt proceedings being instituted against the Registrar. 3.34 Other arguments were made in relation to the Registrar convening meetings and forming an interim management committee and its' composition, and the argument was that under Order 3 Rule 2 of the High Court Rules, Chapter 27 of the Laws of Zambia, this Court has discretion to make any interlocutory Orders in the interests of justice. DECISION 3.35 The gist of the application is that Messrs M. K Achiume and Associates have no authority to act as advocates for Moneygrow Savings 86 Credit Co-Operative Society Limited R12 as by the injunction dated 15th December, 2023, all the parties in this matter were restrained from managing the affairs of the said Cooperative. 3.36 Before I deal with that issue, I wish to make observation on the averments that were made in the affidavit in opposition and arguments in the List of Authorities and Skeleton Arguments in opposition. 3.37 Counsel from M. K Achiume and Associates, Simon Mulenga Mwila deposed to the affidavit in opposition. However, it will be noted that the said affidavit, is replete with averments alleging facts, which are not within the personal knowledge of Counsel, and are in fact contentious. Where Counsel stated the source of his belief, he merely stated that he had been advised, but he did not state by whom, or the basis of his belief. 3.38 Order 5 Rules 15, 16 and 17 of the High Court Rules, Chapter 27 of the Laws of Zambia, state as follows: "15. An affidavit shall not contain extraneous matter by way of objection or prayer or legal argument or conclusion. 16. Every affidavit shall contain only a statement of facts and circumstances to which the witness deposes, either of his own personal knowledge or from information which he believes to be true. 17. When a witness deposes to his belief in any matter of fact, and his belief is derived from any source other than his own personal knowledge, he R13 shall set forth explicitly the facts and • circumstances forming the ground of his belief." 3.39 Clearly, the affidavit in opposition was sworn in breach of the said provisions. 3.40 Further, in the case of Chikuta v Chipata Rural Council ( 1) it was held that: "The evidence in the case was entirely contained in affidavits made by the respective advocates on each side. These affidavits were entirely hearsay. I would like to say that I have noticed an increasing practice amongst lawyers in introducing evidence in such a manner. In my view this is not merely ineffective, but is highly undesirable, particularly where the matters are contentious. In the instant case the affidavit made by the advocate on behalf of the defendant made serious allegations against the chairman of the Council, and it was clearly improper for the defendant's advocate personally to make such hearsay allegations. Furthermore, as the deponents of affidavits may be cross-examined thereon, the position can arise in which each of the advocates would be cross-examining the other. I hope that this practice will now cease." 3.41 Then in the case of Kalusha Bwalya v Chadore Properties Limited ( 3) the Court noted that: R14 "Although the two Courts in the Chikuta (2) case, and the Shell and BP Zambia Limited (1) case, have expressed their misgivings about counsel swearing affidavits based on hearsay evidence and in contentious matters, they do not give a direction as to the fate of such evidence and or affidavits. However, it is safe to say that such evidence would be inadmissible, because Doyle, C. J., in his holding in the Chikuta (1) case, states that it is "ineffective" for counsel to swear an affidavit in those circumstances." 3.42 When it comes to the List of Authorities and Skeleton Arguments in opposition, they argue facts which are not deposed to in the affidavit in opposition, and I have noted that Counsel in the affidavit in opposition, did not give the basis of his contentions or the source of the information that he deposed to, making the affidavit hearsay evidence. 3.43 It is trite that skeleton arguments are not a substitute for sworn evidence, such as an affidavit. In the case of Zambia Revenue Authority v Hitech Trading Company Limited (2) the Supreme Court held that: "Arguments and submissions at the bar, spirited as they may be cannot be a substitute for sworn evidence." 3.44 Therefore, all the aveiments in the affidavit in opposition which Counsel deposed to, without stating the source of that information or the basis of his belief, are hearsay, and the R15 arguments in the Skeleton Arguments which are not supported by any factual averments cannot stand. 3.45 Coming to the appointment of M. K Achiume and Associates as advocates for Moneygrow Savings & Credit Co-Operative Society Limited, my Ruling of 15th December, 2023 read as follows: "Article 39 of the by-laws of Moneygrow Savings & Credit Co-operative Society Limited empowers the Registrar of Co-operative Societies, to exercise powers in relation to the co-operative following due legal process. Those powers include suspension and removal of any officers from their office, employees and members of the Board, if it is in the interest of the co-operative. Pursuant to that provision, there being legal proceedings relating to the leadership and management of Moneygrow Savings & Credit Co- operative Society Limited, I direct that having issued an Order of injunction restraining both parties in this matter from assuming the leadership and management of the co-operative, that the said powers shall be exercised by the Registrar of the Co-operative societies until further Order of the Court. All the documents and assets relating to Moneygrow Savings & Credit Co-operative Limited shall forthwith be surrendered to the Registrar of R16 Co-operatives, by any persons who are in possession of the documents. Any disobedience of the Order shall risk such persons being cited for contempt of Court." 4. CONCLUSION 4.1 In view of the above, it cannot be argued, as had been argued by Simon Mulenga Mwila that the Order of injunction did not restrain management from carrying out its' duties, but only the parties. There is difference in the functions of the board and management, and that is why the Order of injunction was clear that leadership and management were restrained from carrying out any affairs in relation to Moneygrow Savings 86 Credit Co-operative Limited. 4.2 It was conceded that M. K Achiume and Associates were purportedly appointed as advocates for Moneygrow Savings 86 Credit Co-operative Limited by an Order of appointment which was filed into Court on 26th January, 2024. 4.3 The Ruling on the injunction was delivered on 15th December, 2023, and it cannot be successfully argued that Messrs M. K Achiume and Associates were appointed as Advocates for Moneygrow Savings 86 Credit Co-operative Limited, immediately after Messrs Linus E. Eyaa and Partners ceased to act for Moneygrow Savings 86 Credit Co- operative Limited, after the hearing of the application for an Order of injunction on 29th November, 2023. 4.4 Messrs Linus E. Eyaa and Partners filed the application to withdraw as advocates on the said 29th November, 2023, and R17 • • I granted the application on 7th December, 2023. The Ruling was delivered on 15th December, 2023, and it restrained the parties and management. Therefore, only the Registrar of Cooperatives could properly engage Counsel to represent Moneygrow Savings &, Credit Co-operative Limited following the Ruling of the Court. 4.5 That being the position, M. K Achiume and Associates cannot continue appearing in these proceedings as advocates for Moneygrow Savings 86 Credit Co-operative Limited and I accordingly so direct. All the documents that the said firm filed are accordingly expunged from the Court record. The matter shall come up on 1st November, 2024 at 08:20 hours for a status conference. Costs shall be in the cause, and leave to appeal is granted. DATED AT LUSAKA THE 7th DAY OF OCTOBER, 2024 REPUBLIC OF ZAMBIA HIGH COOPT rIF P‘ - - i \ (h,c-ct &6, S. KAUNDA NEWA HIGH COURT JUDGE 0 7 OCT NA S. NE. V4,;',., O. BOX SOO?, LUSAKA