Urban Brands Asset Management Limited and Anor v Impala Hotels and Suites Ndola Limited and Ors (2023/HPC/0813) [2024] ZMHC 309 (18 January 2024)

IN THE HIGH COURT FOR ZAMBIA AT THE COMMERCIAL REGISTRY HOLDEN AT LUSAKA (Ciull Jurisdiction} 2023/HPC/0813 IN THE MATTER OF: IMPALA HOTELS AND SUITES NDOLA LIMITED IN THE MATTER OF: SECTION 134 OF THE COMPANJES ACT, NO. 10 OF 2017 IN THE MATTER OF: ORDER XLIV OF THE HIGH COURT RULES, CHAPTER 27 OF THE LAWS OF ZAMBIA BETWEEN: ,, "' URBAN BRANDS ASSET ~AGEMENT LIMITED, ::----.._ ' \ \ ·' \1 . /y - "' 1 u Jr,l. 11, ' < • , \ I ~·~ "( I '.;I J .,,,.. " ,:_,9 · ., , ~ .. :,r. t '-._ • ,,, · / > JGX LIMJTED AND IMPALA HOTELS AND SUITES NDOLA LIMITED l st' PETITIONER 2ND PETITIONER 1ST RESPONDENT AFRICAN LIFE FINANCIAL SERVICES (ZAMBIA) LIMITED 2ND RESPONDENT SANDVIK MINING PENSION TRUST SCHEME LIMITED 3RD RESPONDENT CEC PENSION TRUST SCHEME INDENI PENSION TRUST SCHEME 4TH RESPONDENT 5™ RESPONDENT LARFAGE CEMENT PLC PENSION TRUST SCHEME 61'11 RESPONDENT KONKOLA COPPER MINES PLC PENSION TRUST SCHEME 7™ RESPONDENT Before: The Hon. Mr. Justice L. Mwanabo on 18th January, 2024 For the Petitioner: Mr. Y. Yosa of Messrs. MAY & Co. For the Respondents: Mr. P, Chomba with Mr. D. M. Sllavwe both of Messrs Mulenga Mundashi Legal Practitioners l--- RULING Cases referred to: 1. Citibank Zambia Limited v Suhayl Dudhia CAZ Appeal No. 16/2020 2. Chikuta v Chipata Rural Council (1974) ZR 241 3. New Plast Industries v the Commissioner of Lands and Attorney General (20011 ZR 58 Rules and Books referred to: 1. High Court Rules Cap 27 of the Laws of Zambia 2. Rules of the Supreme Court of England 1965 (White Book) 1999 Edition 3. Order LWB of the Rules of the Supreme Court, 1883 4. D. G. Hemmant, the Companies Act, 1929, With Explanatory Notes and References to Decided Cases, 9th Edition., London, Jordan & Sons Limited, 1930 at pages 621 to 623 1.0 INTRODUCTION 1. l This is an application by the Respondents by way of summons pursuant to Order 2 Rule 2 of the Rules of the Supreme Court of England of 1965 1999 Edition (White Book) and the inherent jurisdiction of the Court. 1.2 The application is supported by affidavit, list of authorities and skeleton arguments. The basis of the application is that the Petitioners used a wrong mode of commencement of the action herein. 1.3 The Petitioners filed Notice of motion to raise preliminary objections on points of law and for dismissal of the Respondents' preliminary issues pursuant to Order 14A and Order 33 Rule 3 of the Rules of the Supreme Court of England and raised three questions for determination as follows: 1.3.1 Whether this Honourable Court has power to dismiss the Petitioners' action pursuant to Order Rule 2 of the White Book; R2 1.3.2 Whether the Respondents' application to set aside the Petition and to dismiss the matter for want of jurisdiction is competently before this Court; and 1.3.3 Whether Messrs. Mulenga Mundashi Legal Practitioners have authority to represent the 1st Respondent in the absence of a members' or board of Directors' resolution. 1.4 The Notice of Motion is supported by an affidavit, skeleton arguments and list of authorities. 1.5 The Appellants also filed and affidavit in opposition to summons for an order to set aside the Petitioners' petition for irregularity which is supported by an affidavit, skeleton arguments and list of authorities. 1.6 The genesis to the application is that the Petitioners sued the Respondents over what they perceived as unfair treatment of minority shareholders relating to the intended sale of the 1st Respondent. The Respondents are of the view that the action by the Petitioners was wrongly commenced. That the action should have been commenced by writ of summons and not by way of petition hence the application to set aside the petition. The Petitioners have filed notice of motion to raise preliminary issues and to dismiss the Respondents' preliminary issues but also filed affidavit in opposition. 2.0 AFFIDAVIT EVIDENCE AND ARGUMENTS IN SUPPORT OF THE APPLICATION 2.1 The Respondents' application is premised on the assertion that the Petitioners used a wrong mode of commencement in bringing their action premised on Section 134 of the Companies Act, Act No 10 of 2017 l;>y way of petition contrary to Order XLIV and Order VI of the High Court Rules Cap 27 of the Laws of Zambia. 2.2 The Respondents argued that a reading of Order 44 of the High Court Rules points to the fact that actions under the Companies R3 Act of our laws should be commenced in the manner prescribed by the Rules of the Supreme Court of England in force immediately prior to the coming into effect of the Companies Act 1948 of the United Kingdom and the general practice thereunder as regards applications under the 1929 UK Companies. That the relevant rules are as provided under Order LUIB of the Rules of the Supreme Court of England (Companies) 1883. According to the Respondents Order LIIIB of the Rules of the Supreme Court of England (Companies) 1883 does not cover applications under Section 134 of the Companies Act and that the default position is to look to Order 6 of the High Court Rules and argued that an action under Section 134 of the Companies Act should be commenced by writ of summons. 2.3 The Respondents contend that the application to set aside the petition is a jurisdictional issue which can be raised at any stage of the proceedings and must be dealt with immediately. In fortifying the argument my attention was drawn to the case of Citibank Zambia Limited v Suhayl Dudhia1 among others. 4.0 AFFIDAVIT EVIDENCE AND ARGUMENTS IN OPPOSITION TO THE APPLICATION 4.1 The Petitioners as earlier indicated filed a notice of motion to raise preliminary objections on points of law and for an order for dismissal of the Respondents' prelimina1y issue on the following grounds: 4.1.1 Whether this Honourable Court has power to dismiss the Petitioners' action pursuant to Order Rule 2 of the White Book; 4.1.2 Whether the Respondents' application to set aside the Petition and to dismiss the matter for want of jurisdiction is competently before this Court; and R4 4.1.3 Whether Messrs. Mulenga Mundashi Legal Practitioners have authority to represent the 1"' Respondent in the absence of a members' or board of Directors' resolution. 4 .2 The evidence led in the affidavit in support of the notice of motion is that there was no resolution by the 1st Respondent appointing Messrs. Mulenga Mundashi Legal Practitioners as its advocates in this matter and that they were acting without authority. The 2n11 issue is that, this Court has no power to dismiss the petitioners' action pursuant to Order 2 Rule 2 of the Rules of the Supreme Court of England, 1999 Edition and that the Respondents' application is incompetently before this Court. 4.3 The Petitioners cited Order 2 of the Rules of the Supreme Court cited above in full and placed emphasis on Rule 1 where it is provided that the Court must not set aside the whole action for an irregularity raised under that Order on the basis that the action was commenced using a different mode to the one that should have been used. 4.4 According to the Petitioners, it had met all the four requirements for raising its notice of motion under Order 14A of the Rules of the supreme Court of England. Further arguments were advanced concerning the corporate status of a company and the requirement for a company to be represented in Court by an advocate but that there should be a resolution for appointment of the advocates which was lacking concerning the Messrs. Mulenga Mundashi Legal Practitioners in representing the 1st Respondent. 4.5 In the affidavit in opposition to the Respondents' substantive application to set aside petition. the Petitioners contend that the deponent of the affidavit in support of the Respondents' summons did not produce any resolution of appointment to represent the 1st Respondent and that this Court has jurisdiction to determine the RS petition because the Respondents conducted themselves m a manner that is unfairly prejudicial to the Petitioners. 4.6 According to the Petitioners, they insist that the correct mode of commencement of the action as provided by Order 44 of the High Court Rules for an action based on Section 134 of the Companies Act, Act No. 10 of 2017. The Petitioners' reading of Section 134 of the Companies Act and Order 44 of the High Court Rules is that the permissible interpretation of the law is that the position obtaining under the UK Companies Act and the later Acts should be resorted to when bringing an action under our Companies Act. 5.0 HEARING OF THE APPLICATION 5. 1 At the hearing of the matter the parties relied on their respective documents as filed into court and augmented the same with oral arguments. In their oral arguments both Counsel merely drew the Court's attention to what is already in the parties' respective affidavits and written arguments. 6.0 ANALYSIS AND DECISION 6.1 I have considered the affidavit evidence and arguments presented before me by the parties. The first issue is the Plaintiffs notice of motion to raise preliminary objections on points of law and for dismissal of the Respondents' preliminary issue. The application is made pursuant to Order 14A and Order 33 Rule 3 of the Rules of the Supreme Court of England. I took time to look at the Orders in issue and when they can be employed. My view is that the full reading of the Orders in issue and not just picking portions from them appear to be applicable when raising questions of law or preliminary issues that relate to the main matter and not against an interlocutory application raised by the other party. Furthermore, even one of the four questions to be answered R6 affirmatively in an application under Order 14A is that the question of law or construction is suitable for determination without a full trial of the action. The issues raised by the Petitioners herein are against the Respondents' application that has nothing to do with the main action herein. There is a growing tendency by Counsel to take the easy route of rushing to Order 14A and Order 33 Rule 3 of the White Book invariably when raising issues against the opponent's application that are peripheral to actual action before Court. The issue of whether a resolution to appoint a law firm to represent a party was issued has nothing to do with action itself. It is even questionable whether under the Legal Practitioners' Act, it is in order for Counsel to engage the opposing party to the action directly when there is already filed into Court a Notice of Appointment of Advocates to find out if the advocates were properly engaged. I need not say more on this issue. 6.2 Coming to the questions raised, I find the question on the alleged lack of resolution to appoint Messrs. Mulenga Mundashi Lagal Practitioners to be premised on hearsay as there is no formal correspondence from the l •t Respondent confirming the alleged position. The question is accordingly dismissed for lack of proper evidence to support the allegation. On the question of whether this Court has power to dismiss the petitioners' action pursuant to Order 2 Rule 2 of the White Book, it is my firm position that while the reading of Order 2 Rule 1 (3) of the White Book appears to support the Petitioners' contention that the Court cannot wholly set aside any proceedings or writ or other originating summons on the ground that the proceedings were required by the rules to be begun by a different originating process the submission it is not entirely correct as the this rule does not cuts across all situations. Further reading under the same rule but on Rule 2/ 1 /2 and Rule 2 / 1 / 3 shows that there are exceptions to the general rule as R7 provided by Order 2 Rule l / 3 particularly where there is failure to comply with statutory requirements or other improprieties so as to render the proceedings or any order made therein a nullity, Order 2/ 1/3 is meant to cure irregularities consisting of failure to comply with the rules and to prevent injustice being caused to one party, However, it does not give power to remedy failures of a more fundamental kind. The Court therefore can under Order 2 Rule 2 of the White Book in a proper case set aside an action or proceedings if the failure is fundamental and goes to affect the jurisdiction of the Court to determine a matter. 6.3 On the question of whether the Respondents' application to set aside the Petition and to dismiss the matter for want of jurisdiction is competently before me, my deliberations and answer to the preceding question has taken care of this question as well. The answer is yes: the application is competently before me because the rule pursuant to which the application was made gives me powers to set aside an action or proceedings where I lack jurisdiction to determine the action by virtue of the mode of bringing the action. Furthermore, the Order 2 Rule 2 of the White Book also clearly provides for the bringing of an application to set aside for irregularity, The issue raised by the Respondents alleges irregularity in bringing this action by way of petition before this Court. The question for me to determine is whether the irregularity raised by the Respondents is so fundamental that it would make any order or proceeding under the action a nullity. 6.4 In light of the foregoing, all the issues raised by the Petitioners in the Notice of motion are unsuccessful and dismissed forthwith. 6.5 The Respondents' application herein is premised on Order 2 Rule 2 of the White Book and the inherent powers of the Court. The meat and potatoes of the Respondents' application is that the mode of commencement of an action based on Section 134 of the Companies Act No. 10 of 2017 is not covered by the procedure RS referred to under Order 44 of the High Court Rules which provides as follows: "The Rules of the Supreme Court of England in force immediately prior to the coming into effect of the Companies Act, 1948, of the United Kingdom, and the general practice therein as regards the procedure on applications under the Companies Act, 1929, of the United Kingdom, shall apply as far as circumstances may penntt to all applications made under the Companies Act or any Act in amendment or substitution thereof, except if and so far as any such Act otherwise prouides." 6.6 In order to confirm the Rules of the Supreme Court in force immediately prior to the coming into effect of the Companies Act, 1929 I looked at the book by D. G. Hemmant, the Companies Act, 1929, With Explanatory Notes and References to Decided Casea, 9 th Edition, London, Jordan & Sons Limited, 1930 at pages 621 to 623. On page 621 there is reference to 'The Rules of the Supreme Court !Companies), 1929 and section 2 thereof reads as follows: "The following Rules shall stand as Order LTl1B of the Rules of the Supreme Court, 1883". Therefore, the applicable Rules referred to under Order 44 of our High Court Rules are the Rules of the Supreme Court, 1883. 6.7 Rules 5, 6, 7 and 8 of the said Order and Rules provide for four different modes of commencement of actions, namely: Petition, Motion or Summons, Motion only and Summons only. The matters that can be commenced under each of the modes are clearly outlined. The action by the Petitioners herein is not on any of the lists. The petitioners in their response did not state why the action herein was commenced by way of petition and not by motion or summons which are also stipulated under the Order LIIIB. The words used under all the four options are: 'The following R9 applications shall be made by ... .' The provisions in issue are in mandatory terms which calls for strict adherence. Furthermore, the 1883 Rules as amended in 1929 do not provided for default procedure where the matter or the issue is not covered under the four options. I must add that even Rule 3 of Order LIIIB which gives the scope for the rules does not suggest that a party has an option to pick any of the four options if their issue is not specifically covered by the given options. I accordingly agree with the Respondents that this action was wrongly commenced by way of Petition. 6.8 The question 1s whether the application herein is within the exceptions to Order 2 of the White Book which restricts setting aside of actions to fundamental irregularities. Our case law shows that the mode of commencement of an action is very cardinal and where a wrong mode is used the Court has no jurisdiction to make declarations. Furthermore, Order 5 Rule 5 or the Rules or the Supreme Court or England 1999 edition provides that: "Proceedings may be begun by originating motion or petition tf, but only (f. by these rules or by or under any Act the proceedings in question are required or authorized to be so begun." The Supreme Court in the case of Chikuta v Chipata Rural Council2 and in the case of New Plast Industries v the Commissioner or Lands and Attorney Genera12 guided that where the matter is commenced wrongly the Court has no jurisdiction to grant any reliefs or make any declarations. The Petitioners herein have sought a number of declarations which going by the cases I have referred cannot be granted since a wrong mode was used to commence this action. I am persuaded by the Respondents' application to set aside the action herein as the irregularity in issue is fundamental in light of the decided cases by our apex Court of our land. The argument by the Petitioners to RlO deem the matter as though commenced by writ is not supported by any of our rules and practice. The deeming of actions as if commenced by writ apply to originating summons as provided by Order 28 of the Rules of the Supreme Court of England and not to petitions. In the absence of any other provision for bringing an action under Section 134 of the Companies Act, No. 10 of 2017, Order 6 of our High Court Rules remain as the available guide on the mode of commencement of such actions. I accordingly set aside the action herein as it was wrongly commenced with costs against the Petitioners. The ex parte order of interim injunction earlier granted in this matter on 23rd November, 2023 is accordingly discharged. In the event that the Petitioners would wish to file a fresh action using the correct mode, they should consider whether Section 134 of the Companies Act is available for their action in light of the side noting in the Act which is to the effect that the section is meant for take over situations though the bod ion does not appear to be so restricted. 6.9 Leave to appe nted. Lastone Mwanab HIGH COURT JUDG Rll