Pemba Lapidaries Limited and Anor v Industrial Credit Company and Ors (2019/HP/1720) [2023] ZMHC 71 (18 September 2023)

IN THE IIlGH COURT FOR ZAMBIA AT THE PRINCIPAL REGISTRY HOLDEN AT LUSAKA (Civil Jurisdiction) BETWEEN PEMBA LAPIDARIES LIMITED LAPEMBA TRADING LIMITED AND INDUSTRIAL CREDIT COMP ANY WILLIAM SAUNDERS PAN AFRICAN BUILDING SOCIETY 2019/HP/1720 1 ST PLAINTIFF 2ND PLAINTIFF 1sTDEFENDANT 2ND DEFENDANT 3RD DEFENDANT Before the Hon. Lady Justice C. Lombe-Phiri in Chambers For the pt & 2nd Plaintiffs: Ms R . Phin' - Mando & Pasi Advocates For the 2nd Defendant: Mr M Ndalamela - Musa Dudhia & Co RULING ON APPLICATION TO SET ASIDE PRAECIPE AND WRIT OF FIERI FACIAS FOR IRREGULARITY AND DISCHARGE OF STAY Cases referred to: 1. Match Corporation Limited v Development Bank of Zambia and the Attorney General (SCZ Judgment No.3 of 1999) 2. Kasote v the People (1977) ZR 75 3. CLA Commercial Vehicles Limited and Auto Guard Engineering Services Limited (CAZ APPEAL NO. 248/2020) 4. Finance Bank Zambia and Dimitrios Monokandilos and Filandria Kouri (Appeal No. 120/2020) Other works referred to: 1. The Supreme Court Rules (Whitebook) 1999 edition 2. High Court Rules, Chapter 27 of Laws of Zambia 1. INTRODUCTION 1. 1 The 2nd Defendant moved the Court by way of summons and affidavit pursuant to Order 2 Rule 2 and Order 47 (1 )(8) ofthe Supreme Court Rules rwhitebook) 1999 edition for an order that the Praecipe and Writ of Fieri Facias (Fifa) dated 21 st December 2022 be set aside for irregularity. Pending the hearing of this application the 2nd Defendant was granted a stay of execution of the Writ of Fifa. Parties filed into court their respective affidavits and skeleton arguments. They also appeared at the hearing where they submitted on their respective positions. The Court did undertake to deliver its Ruling by 17th March, 2023 but was inundated with high volume of work leading to the delay in the disposal of the application. 2. 2ND DEFENDANTS CASE 2.1 In support of the application an affidavit was deposed to by one Deborah Chanda Nonde, holding a Special Power of Attorney in behalf of the 2nd Defendant. The essence of the affidavit was basically to state that a Writ of Fifa had issued against the 2nd Defendant. Also, to exhibit the embodiment order of the Court of Appeal. In her averments it was stated that the Judgment of 28th October 2022 and the embodiment order dated 19th December R21Page 2022 seemed to suggest that the lifting of the corporate veil of the 1st Defendant is for the purpose of joining the 2nd Defendant to the proceedings. It was averred that however, no direction had been given as to what should happen next. It was also averred that the Writ of Fifa purports to apply interest on the alleged judgment sum from January 2011, a period that predates the alleged liability. It was further pointed out that the Writ of Fifa was filed a day after service of the embodying order, before the required time period for service of a decision has elapsed. It was also averred that there was an inconsistency between the Praecipe and the Writ of Fifa in that the Writ of Fifa required that it be sealed upon a judgment dated 20th May 2019 and 14th January 2011. Further that there is no proof that the 2011 judgment was ever served on the 2nd Defendant. It was on these facts that the application rides. 2.2 It was submitted in the arguments in support of the application that Order 2 Rule 2 ofthe Rules o[Suvreme Court o[England gives the Court jurisdiction to set aside for irregularity any proceedings, any step taken in any proceedings or any document, judgment or order made within reasonable time and before the party applying has taken any fresh step after becoming aware of the irregularity. It was submitted that in this case the execution was irregular as no ascertained sum was ordered to be paid by the 2nd Defendant. It was stated that the Judgment of 20th May, 2019 did not order the 2nd Defendant to pay $8,963,663. It was stated that the Ruling of 20th May charged the judgment sum on Stand No.1200 Ndola. It was additionally submitted that the Judgment of 28th October, R31Page 2022 does not order 2nd Defendant to pay the sum of $8,963,663 nor does the order embodying of the judgment. It was also submitted that the present application had been made timeously as the execution was levied on 28th December, 2022. In addition the 2nd Defendant had not taken any fresh steps. 2.3 Further in aid of the application reliance was placed on Order 47 (1)(8) of the Whitebook. It was stated that the rule makes it clear that an execution may be set aside even where it is already carried out provided that the same was improperly issued. It was further submitted that contrary to Order XLII Rule 5(2) ofHigh Court Rules, Chapter 27 ofthe Laws of Zambia the Writ of Fifa was issued before the 3 days provided for had elapsed. It was also argued in submission that the 2nd Defendant was not a party to the original action. Authorities were cited in that regard. It was reiterated that there was no judgment before the Court ordering the 2nd Defendant to pay the judgment sum. It was submitted that the Judgment of the Court of Appeal merely pierced the corporate veil and then ordered that there would be proceedings after that to ascertain the extent of the 2nd Defendant's liability. That before this could happen the Plaintiffs have proceeded to execute the Judgment sum against the 2nd Defendant. It was submitted that in view of the foregoing submissions it was a fit and proper case for the Court to set aside the Praecipe and Writ of Fifa as they were irregularly issued. R41Page 3. PLAINTIFFS' RESPONSE 3.1 The Plaintiffs in response to the application filed into Court an Affidavit in opposition deposed to by one Musonda Mulenga, the Administration Manager of the Plaintiffs. It was firstly averred that the affidavit of deposed to by Deborah Chanda Nonde, on the part of the 2nd Defendant was defective as her averments amounted to hearsay evidence because the evidence was not in the deponent's personal knowledge. It was further averred, with an extract from the Court of Appel's Judgment, that the lifting of the corporate veil made the 2nd Defendant personally liable for the debt of the Company. It was further averred that there was nothing irregular about either the Praecipe or the Writ of Fifa as both documents make reference to the Judgment date 14th January, 2011 which contains the Judgment sum. It was further averred that the 2nd Defendant in obtaining the stay of execution had done so without fully disclosing in his affidavit the fact that the issue of stay had already been dealt with by the Court of Appeal. The Order granted by the Court of Appeal was exhibited. It was further averred that the 2nd Defendant was seeking a pronouncement on an issue already determined by the Court of Appeal. It was averred that nondisclosure of vital facts in an Affidavit amounts to an abuse of the court process. 3.2 In arguing in opposition to the application it was submitted that the application before the Court was not motivated by merit but by expense owing to the undisputed fact that the relief sought by the 2nd Defendant has been sufficiently dealt with by the Court of RSI Page Appeal in an Order dated 9th November, 2022. It was submitted that the application for stay of execution was made before the Court of Appeal on 28th October, 2022 and the stay was granted. It was stated that the 2nd Defendant had now approached this Court applying for stay of Writ of Fifa without full disclosure of the fact that the issue of stay had already been dealt with by the Court of Appeal. It was submitted that non - disclosure of material facts in an affidavit amounts to an abuse of the court process and this Court had the inherent jurisdiction to dismiss the application. 3.3 It was further submitted that the implication of piercing the corporate veil is to make directors of a company personally liable for debts and liabilities of a company. It was also submitted that the Judgment of the Court of Appeal was clear that in piercing the corporate veil the 2nd Defendant became liable for the assessed sum of $8,963, 663. This amount was upheld by the Court of Appeal in its Judgment. 3.4 It was also submitted that this Court had no jurisdiction to stay the judgment or decision of a superior court. Reliance was placed on the case of Match Corporation Limited v Development Bank of Zambia and the Attorney General (SCZ Judgment No.3 of 1999)0> wherein the Supreme Court reiterated its position in the case ofKasote v the People (1977) ZR 75<2>. It was submitted that based on the principle of stare decisis this Court was bound to follow the decisions of the Court of Appeal in this matter as the RGIPage Court of Appeal had already determined the issues raised by the 2nd Defendant. 4. ANALYSIS AND DECISION OF THE COURT 4.1 In dealing with the application before the Court I will begin by addressing the issue raised by the Plaintiffs as to whether the application is properly before the Court. The Plaintiffs have argued that the application is not properly before Court as the issues being raised by the 2nd Defendant are issues that were conclusively dealt with by the Court of Appeal - in particular the issues relating to the stay and also the sum total effect of the order to lift the corporate veil. The stay of execution granted to the 2nd Defendant was exhibited. A perusal of the same shows that the stay that was granted by the Court of Appeal on 22nd September, 2022 was subject to the embodiment of the Judgment of the Court in an order. In the application before me the issue is the stay of execution of the judgment pending an application to consider the irregularity of the Praecipe and Writ of Fieri Facias. As I view it these are two different issues. In the first instance the stay was granted to prevent an execution of the judgment sum until the orders of the Court of Appeal were embodied in an Order. In the instant case there are irregularities in the execution process that are being challenged. In that regard there is no decision of the superior Court of Appeal that is being disregarded by the High Court. Quite to the contrary the High Court is acting within its jurisdiction to preside over matters related to the execution of a judgment. In the case of CLA Commercial Vehicles Limited and R71Page Auto Guard Engineering Services Limited (CAZ APPEAL NO. 248/2020)<3> the Court of Appeal in considering the course of action taken by the High Court when confronted with similar circumstances had this to say: "the trial Judge ought to have stayed execution of the fifa until she had heard the application to set it aside for irregularity." 4.2 Now as has been submitted by the 2nd Defendants, where there is an irregularity in the execution of a Writ of Fifa the same can be set aside by this Court. In the case of Finance Bank Zambia and Dimitrios Monokandilos and Filandria Kouri (Appeal No. 120/2020)<4> the Court of Appeal stated as follows: It is trite that there is no provision to conduct running litigation in appellate courts. It follows therefore that the judges in the high court have jurisdiction to attend to any matter arising from the applications regarding enforcement orders. 4.3 It therefore follows, that although it was a judgment of the Court of Appeal that was being enforced it is the High Court that has jurisdiction to hear applications that relate to issues of enforcement. This Court is therefore well versed to deal with the application before it 4.4 In view of the foregoing it was imperative on the part of this Court to stay the execution and consider the irregularities that had been raised by the 2nd Defendant. The issue raised by the Plaintiffs therefore does not have merit. RSjPage 4.5 Turning to the main issue in this application, the 2nd Defendants have claimed a number of irregularities in the execution of the Fifa. Firstly, it is stated that the issuance of the Praecipe and Writ of Fifa was done prematurely. It has been stated that Order XLII Rule 5(2) provides that a writ of execution can only be issued 3 days after the date of the Judgment or order of the Court. The 2nd Defendant has demonstrated by affidavit evidence that the Order which embodied the Judgment of the Court of Appeal was dated 19th December, 2022 while the Praecipe and Writ of Fifa were issued on 21 st December, 2022. Clearly, the three days prescribed by the law was not followed in this case. Now the same provision of the law also provides that the Court may order the immediate execution of a judgment. From a reading of the provision the requirement to waive the three days is purely within the discretion of the Court or the Judge, after considering the circumstances of the case. For avoidance of doubt the full citation of Order XL VII Rule 5(2) provides that: (2) In every case, the writ of execution shall not be issued, except by express leave of the Court or a Judge, until three days after the day of the date of the order or judgment, but if the Court or a Judge sees it fit, it or he may order immediate execution. 4.6 A further reading of the provision shows that leave of Court ought to be sought. In this case there was no leave of Court sought in issuance of the Writ of Fifa before the prescribed time. This is definitely an irregularity in the manner that the Writ was issued. R9jPage 4. 7 The other irregularity that the 2nd Defendant has pointed out relates to the fact that the judgment sum was not endorsed on the Writ of Fifa. It was submitted that the order of the Court of Appeal was the charging of the property of the judgment sum and not the payment of the judgment sum. It was additionally added to this argument that the Court of Appeal only pronounced that the corporate veil had been pierced in relation to the 2nd Defendant but did not pronounce itself in what manner and to what extent the 2nd Defendant was liable. It was argued that there was need for a whole new trial to ascertain the extent of liability of the 2nd Defendant. On the other hand the Plaintiffs have submitted that the Judgment sum had already been assessed and the said assessment was upheld by the Court of Appeal. It was also stated that the extent of the 2nd Defendant's liability was well settled by the decision of the Court of Appeal when it was pronounced that the 2nd Defendant was to be held personally liable for the debts and liabilities of the 1st Defendant. Now this argument raised by the 2nd Defendant required that the Judgment of the Court of Appeal be read in full and depth. A reading of the judgment of the Court of Appeal is that the 2nd Defendant is personally liable. Just to appreciate the context the following in quoted from the Judgment: "CONCLUSION 95. The net result of the foregoing is that we find merit in this appeal. We hereby allow it. We set aside the ruling of the lower court below and uphold the decision of the Registrar to grant the appellant's application to pierce the first respondent's corporate veil RlO I Page and to join the second and third respondents to these proceedings. We also fally endorse the decision of the Registrar to consequently charge the third respondent's property known as Stand No. 1200, Ndola, (also referred to as Stand No. 44 Buteko Avenue, Ndola), with payment of the judgment sums in this matter. " 4.8 Now from the foregoing it is very clear that the Court of Appeal did in fact give direction as to what ought to happen. Further, in granting stay of execution of the Judgment, a condition precedent was provided that execution could only be done after an order embodying the judgment had been filed into Court. This condition precedent was complied with by the Plaintiffs. To require fresh or further proceedings to determine liability of an entity that has been joined purely for execution of the judgment where liability is already clearly determined is not necessary. The essence of the act of piercing the corporate veil is to extend liability to persons who might want to hide behind the shroud of incorporation at whatever stage of the proceedings, but more so for purposes of enforcement of orders of the court. In this case it is clear that the order of the court did just that by extending personal liability to the 2nd Respondent. I find that there was no need for any further proceedings to regard the extent of liability. Further as the Judgment sum was already assessed and the stated assessed amount endorsed by the Court of Appeal the amount for execution was very clear. The express reference to the Judgment of the Court on the Writ of Fifa suffices. There was nothing irregular about the manner that the extent of liability was endorsed on the Rll IP age Writ of Fifa. A perusal of the Praecipe and Writ of Fifa both show that the amount was endorsed. Clearly on the return form the amount was not indicated however, this cannot, in my opinion, nullify the Praecipe and Writ that was clearly endorsed with the assessed judgment sum. It was, however, irregular for the Praecipe and Writ of Fifa to include the issue of interest which was not pronounced by the Court of Appeal in its Judgment or in the order embodying the judgment. The issue of interest must be clearly pronounced by the Court if it is to be applied to a judgment. 4.9 In view of the foregoing findings that there were irregularities in the process of issuance and in the substance of the Praecipe and the Writ of Fifa the same are accordingly set aside. As the application for setting aside has been dealt with the stay of execution that was granted ex-parte to the 2nd Defendant is discharged forthwith. The Plaintiff may proceed to regularize the proceedings by following the correct procedure in the issuance of the Praecipe and Writ ofFieri Facias against the 2nd Defendant. 4.10 Costs follow the event. 4.11 Leave to appeal is granted. ~}'- Dated at Lusaka this .. l ..... day of September, 2023. f- .... •••..........•••......••... C. LOMBE PHIRI JUDGE Rl2 I Page