John Steele v Nelson Garnet and Ors (2019/HP/0603) [2020] ZMHC 465 (23 October 2020)

IN THE HIGH COURT FOR ZAMBIA 2019/HP/0603 AT THE PRINCIPAL REGISTRY HOLDEN AT LUSAKA (CIVIL JURISDICTION) / BETWEEN: ,JOHN STEELE AND NELSON GARNET JACK JERE 2 3 ocr 2020 \ PLAINTIFF 1 ST DEFENDANT 2ND DEFENDANT Before the Honourable Mrs Justice Ruth Chibbabbuka on the 1 st day of September, 2020 For the Plaintiff: Mr M. Nkunika, Messrs Simeza Sangwa & Associates For the Defendants: Ms N. Tembo, Messrs Wilson & Comhill RULING Cases referred to: J. Attorney General us Punch Ltd and Another /2003/ 1 All E. R 289 2. R us City of London Magis trates ' Court and another 3. Ex-parte Green Green us Stuple.'> cmd Others /1 g97J 3 All E. R 55 4. American Cyanamid Company us Eth icon./ 1975] AC 396 5. Owners of cargo lately on hoard the uessel Sislcina and others v Distos Compania Naviera SA, Ths Sis/cina /1977/ 3 All ER 803 6. Kenya Commercial Bank Limited v Stage Coach Management Limited (2014) el(LR 7. International Trades Crystal Societe Anonyme v Northern Minerals (Zambia) Limited (1 985)Z. R. 27 8. Preston us Lucic (1884) 27 ChD 497 9. Ndove v National Education Council of Zambia Limited (1980) Z. R 184 10. Tu.mlcey Properties v Lusaka \,Vest Development Company Ltd and Others (1984) ZR 11 . Garden Cottage Foods Limited v 1Willc Ivlarlceting Board (1 984) AC 130 12. Kcisengele & Others v Zambia National Cornmerical Bank Pie 13. Royal British Bank v Turquand /1854/ EL & BL 326 14. Atlanta B akery Limited vs ZESCO Ltd, Appeal No. 27 of 2016, Murray Roberts Co11s truction, (20 17) SCZ No. 143 1 S. lntenwtional Tra des us Northern Minerals Zambia (1985) Z. R 27 Rl 16. Salomon vs Salomon & Co /1897/ A. C 22 1 7. Juldan Motors Limited, July Danobo us Nasser Ibrahim, Olypa Sibongile Danabo Appeal No. 20/2018 Legislation referred to: The Rules of the Supreme Court of England, (White Boole) 1999 Edition Other works referred to: Blade's Law Dictionary, Ninth Edition This is an application for an injunction by the defendants for an order that the plaintiff by himself his agents or servants be restrained from interfering with the process of disposal of subdivisions of Farm 411 / A, Chilanga. The application was made pursuant to Order 29 Rule 1 of the Rules of the Supreme Court of England, (White Boole) 1999 Edition. The defe nda nts jointly swore a n a ffidavit filed into Court on the 10th July, 2020 wherein they aver as follows: Master Butcheries Limited, the Company subject of this action obtained a loa n facility with Zambia National Commercial Bank (ZANACO) securc:d by a mortgage o n its property Farm 411/ A Chilanga which is a lso su bject of thi s c.1ction . Th ey are both shareholders and directors in Master Bu tcherics Limited (the com pa ny). The plaintiff executed the facility letter on behalf of the company which company has not been trading and as a result has defaulted in repaying the facility. Z/\NACO has issued a demand for the facility whose balance is ZM W 1,091 / 1-79 .25 and foreclosure proceedings are imminent. The company owes sundry <.:red itors m the sum of ZMW 720,076,00 a nd has an overdraft balance with ZANACO in the sum of ZMW 2, 185,888.00. Some creditors have commenced action against the company and one has obtai~1ed judgment a nd executed against the company's assets. The company executed two con tracts of sale to sell two portions of Farm 411 / A but the company h as not been able to conclude such sales because the plaintiff who resides at Fa rm 411 / A has physically chased purchasers a nd Surveyors trying to subdivide the land. The pla intiff's r esidence at the said prope rty is because he ,vr1.s employed as a Managing Director of the company and was a llowed to stay R2 there . The company needs to conclude the sale pursuant to the respective contracts at the cost of ZMW 6,700,000.00 and needs to sell three more portions to r edeem the farm, settle trade creditors and for operational capital as it is not trading at the moment. That unless restrained by an injunction, the plaintiff will continue to frustrate the company's efforts to redeen1 Farm 41 1 / A, a n d generate capital. In opposing this application, the plaintiff also swore an affidavit filed on the 20th August, 2020 in which h e avers as follows: The entire application for an order of inte1im injunction seems to be found ed on claims by a company called Master Butcheries Limited - the registered title holder to the property which is the s ubject of this application by the d efendants. Although the shareholding of the said Master Butcheries Limited forms part of the issues in dispute in this action, the company itself is however not pa rty to this action a nd the company cannot therefore seek rd ie fs or pursue cla ims against any of the parties to this action a nd especially sn when con s idered against the background that the d efendants hold s hare:--: in Master Butcheries Limited in trust for the plaintiff. Notwithsta ndin g the.; plaintiff's position with respect to the complaint by the d efe ndants is th at Mu s ter Bu tcheries has a t th e behest of the d efendants a lready sold su bst.a n li a l porli()ns of Farm No. 4 11 / A, in order to settle the compan y's debt/bank facilities with ZANACO but that the d efenda n ts who have previously conducted the sales h ave failed to account for th e proceeds of the sales as th e funds realised from the sale were diverted fron1 settling b a nk loans to other unauthorised u se. On 24 1h ,June, 2014, the d e fendan t facilitated the sa le of a subd ivision of Farm 41 1 / A Chilanga to MKP Capita l Zambia Limited at t h e consider ation of K2,000 ,000,000.00 (old curre ncy). However, t he defendants did not account for the monie s r ealised from the sale . On 3 0th October, 2 018, the defendants facilitated the sale of a further Subdivis ion of Farm 4 11 / A Chil~ga lo Joseph Ka p a mbweMulenga at the consider a tion of K4,000,000.00 and again Lhc defendants failed to account for the monies realised from the sale. Th e above transactions s how that the defendants h a ve previously sold subdivision s of Farm R3 !I I I I I 411 / A Chilanga under the guise of satisfying purported outstanding debts with ZANACO and other creditors but have mismanaged the funds derived therefrom by failing to pay for the said purported debts. He in any event has not seen evidence of any foreclosure action by ZANACO against Master Butcheries Limited and the records of Master Butcheries Limited's indebtedness to ZANACO is not clear as the defendants have produced incomplete records. His several requests for f1;1rther documentation to prove the depts and how the de)Jts came about and indeed his request for company accounting records which are held by the defendants have gone unanswered. By a letter dated 2 nd February, 2019 addressed to the 1 st defendant, h e demanded an account to be rendered of the sale, transfer, a nd /or conveyance of subdivisions of Farm 411/A Chilanga but neither the 1 st defendant nor the 2 11d d efendant rendered any such account. In the said letter, h e further requested the defendants to furnish reasons underlying th eir need to increase the overdra ft facility on various properties of Master Butcheries Limited a nd Automotive Radiators Limited to which he received no response. Th e property wh ere Automotive Radiators Limited is located is Stand No :322 l Lusaka and h e condu cted a search of the said property on the 2 nd ,July, 2020 at the L,.inds a nd Deeds Registry where he discovered that there is a Further Charge rc:gist.crcd against the property in the sum of Kl ,5 00 ,000,000 .00 (old currency) in favour of ZANACO. The defendants have demonstrated their own failure to manage the affairs of Master Butcheries Limited and Automotive Ra diators Limited. Further, the treatment of the funds to be realised from the proposed sale of the two portions, in the first, and three portions, in the second series of tra nsactions suggested in paragraphs 13 and 16 of the defendant's affidavit in support of the injunction application will be no different from the transaction s a bove . As a result of this and n1any other reasons he was compelled to bring this aclion against the defenda nts h erein whom he had entrusted with the management of the his business but who are now behaving as though they are the beneficial owners of the companies when they were m ere employees who hold shares in the compc:mies purely out of the trust they bestowed in them. Unless R4 restrained by this Court, the defendants threaten and intend to continue to operate Master Butcheries Limited and Automotive Radiators Limited in a manner that will expose his interests as a beneficiary to significant financial risk and prejudice any outcome of this action. In fact, the injunction order sought by the defendants herein will aid the defendants to continue with their misdeeds which undermine his interest in Master Butcheries Limited. For the foregoing reasons he seeks the indulgence of the Court to decline the order of interim injunction which order if granted will licence the defendant's destruction of the asset base for Master Butcheries Limited. The defendants filed a further affidavit in support on the 11 th August, 2020 1n which they attached a letter dated 4 th August, 2020 from ZANACO to the defendants and the plaintiff in their capacity as Guarantors of Master Butcheries Limited for the sum of ZMW 1, 103,928.10 on the loan and ZMW2, 163,807.26 on the Overdraft due to the Rank. On th e 2L! th August , 2020, the defendants filed into Court an affidavit in reply to the pla inti ff's <1ffidavi t in opposition in which the d efendants aver as follows: The d efenda nls in t Ii is a pplication seek to protect their interest as s hareholders of Mas te r Bu tc hc rics Limited which stands to lose its only fixed asset, Fa rm 441 / A Chi la nga. The defendants also seek to protect themselves and the plaintiff, a family friend of over thirty (30) years from personal legal action by the mortgagee for the fac ilities they personally guaranteed. The d efendants do not hold s hares or other beneficia l interest on behalf of the plaintiff. The plaintiff was never a shareholder of Master Su tcheries Limited and by an undated letter presented to the Board of Master Butcheries Limited, the plaintiff resigned as director and waived any pre-emptive rights to any shares in Master Butcheries Limited. The contracting of debt by Master Butcheries Lhnited was approved by the Board> the plaintiff inclusive. It is true that Mast<='r Butcheries Limited sold portions of the land as alleged in the affidavit in opposition but that the plaintiff as General Manager at a ll times knew that the proceeds were applied as follows: RS -- - -···-·-· I a. Sale to MKP Capital Limited, the proceeds in the sum ofK6,197,655.75 (unre based) less outgoings were applied t~ settle a facility with lnvestrust Bank Plc, a debt contracted to finance the purchase of Farm 441 / A Chilanga itself; and b. Sale to Cornerstone Properties Limited (Joseph Mulenga), the conveyance of the property h as not been concludec;l due to defaul~ by the purchaser who paid K2 ,250,000.00, which was utilized• to import containers of Mecha nically Deboned Mead for processing of meat products, the compa n y n eed s to subdivide the property to conclude the s ale . The m ortgagee, ZANACO h as issued a demand to Master Butcheries Limited , th e p laintiff and th e d efendants on the fa cility, currently in default. The pla intiff is obliviou s to t he loss Maste r Butcheries Limited and the defendants face in the event of forec losure. Th e pla in tiff has no legal intere~t in Automotive Rad ia tors Li m i tr.d. The pla intiff's a<lvu c;oHcs filed s keleton a rgum ents on the 26 th August, 2 0 20. Co unsel fo r t. h c p laintiff ra ised 6 points . On th e first point, counsel su bmitted th a t a n ord er o f inlcrlocu lory injunction must b e clear and unambigu ou s as to it s term s a n d tha t it mus t precise ly s ta te with sufficient clarity wh at acts a rc prohibited . Coun sel opined tha t the rationa le for this requirem en t is to en su re th a l a p er son is n ot pu t a t r isk of bein g in c ontempt of court by a n am biguou s orde r. To buttre ss this a r gument th e Court was referred to the cases of Attorney General vs Punch Ltd and Another 1 a nd R vs City of London Magistrates' Court and anothe r, 2 Ex-parte Gre e n Green vs Staples and Others3 . In the said Attorney General vs Punch cas e it was h eld a s follows: "An interlocutory injunction, like any other injunction, mus t be expressed in terms which are clear and ce rtain. The injunction must de.fine precisely what acts are p rohib ited . The court must ensure that the language of its ord er m akes p lain what is p er m itted a nd what is prohibited. This is a. w ell-establis hed , sound ly-based p rinciple. A R6 l I I person should not be put at risk of being in contempt of court by an ambiguous prohibition, or a prohibition the scope of which is obviously open to dispute. An order expressed to restrain publication of 'confidential information' or 'information whose risks damaging national security' would be undesirable for this reason." While in the R vs City of London Magistrates' Court case it was held that: "Although there is an obligation to comply strictly with the terms of an injunction the courts will only punish a person for contempt upon adequate proof of the following. (1) That the terms of the injunction are clear and unambiguous: see Iberian Tntst Ltd v Founders Trust and Investment Co Ltd / J 932] 2 KB 87 at 95, [ 1932] All ER Rep 176 at 179 p er Luxmoore J (2) That the particular defendant in the contempt. procec>dings had prop er notice of such terms (see RSC Ord 4 5, r 7). (3) Thu l he has broke n those terms. I n the presc:n.l crt ...,<' ne1llwr of the firs t two criteria is met. The terms of the inj unctio ns w ere a m higuou s both as to precisely what was to be done and by whom. it was to be done. Ordinarily a copy of the order mus t be served pers onally on the p ers on required to do or refrain from doing a specified act. " On this point counsel submitted tha t the terms of the injunction order sought herein do not place the plaintiff on sufficient notice as to the precise acts that he is to be restrain ed from doing with respect to the disposal of Subdivisions of Fa rm 411 / A Chilanga ("the property"). Counsel opined that disposal of property is a multifaceted process and it is unclear from the reading of the summons filed herein on which part of the said process is intended to be restrained or permitted. It wa s counsel's considered view that the summons do not define wha t will amount to interfering with the disposal process and further lha t the summons do not specify or identify the subdivisions affected by the R7 application herein as the property has several subdivisions proposed a nd it is not clear which ones are being referred to in the_ summons. Counsel went on to point out that as indicated in ·the defendant's affidavit in support of this a pplication that the p laintiff resides at · the said property thereby being in possession of the same. On this basis counsel was of the considered view that the d efendant's position therefore becomes muddled when juxtaposed with the . summons for the injunction as to what will amount to interfe~ence when the plaintiff resides at the said property. Counsel expla ined that as the pla intiff is a resident of the subject premises, it is unclear what posibve or negative acts will . . amount to interfering with the process of disposing of subdivisions of the property as the summons a re s ilent on this. Counsel a lso submitted th at Master Butcheries Limited is not a party to this a c tion and in that regnrd c ited Order 29 Rule 1 of the Rules of the Supreme Court. pursu ant to which thi s a pplication is made which provides: " J. A pplicatwn )<Jr injunction (1} l\n applicotion fo r the qrant of an injunction may be made by any party to a cause or m a tte r before or after the trial of the cause or matter, whe ther or not a. claim for the injunction was included in that party's writ, originuting s ummons, counterclaim or third party notice, • . .. as the case may be." Counsel submitted furlhcr thal Lhc defcnc:anti:; a rc nol themselves owners of the property or its subdivisions as lhe certificate of title produced as "JPJ l " in the defenda nts' own affidavit shows that the owner of the property is a company called Master Butcheries Limited. Counsel opined th at it follows therefore that neither the plaintiff nor the d efend a nts are the owners of the property which has given rise to th e injunc tion a pplication. Counse l contended furth er that the defendants may well b e shareholders in the company tha t owns the property, but that there is a clear distinction between the interests of s h a r e h old ers in a compan~• and the interests of the company. Counsel submitted tha t the correct R8 I party to have moved the Court to restrain the plaintiff from interfering with the process of disposal of the subdivisions of the property would have been Master Butcheries Limited the owner of the subject property and not the defendants as Master Butcheries is a separate person at law from the defendants. Counsel submitted further that in order to invoke the jurisdiction of the High Court under Order 29 of the Rules of the Supreme Gourt, the property which is the subject o~ the application for interjm injunction, mu$t be the property which is in dispute. in the suit and a party to the suit must by their actions risk the danger of that property being wasted, damaged or alienated. Counsel contended that in casu the su bclivisions of the property are not the prope rty that are in dispute in this action neither are they the subject matter of this action per se. Counsel went on t o argue that the defendants have not referred to any authority to support the proposition that it is legally tenable to obtain an injunction order which affects the rights or is intended to benefit a third party or a non-party to the cause in which the injuncti on is l. Jein g sough t. Cou n sel pointed out that Order 29 Rule 1 of the Rules of the . Supre m e Court ha s very limited application , in that the prov ision seek s to pr(; sc: rvc: d is put ed property pending the determination of the s uil which is not the cc1sc here in . In summing up t his point counsel referred the Courl to the case of American Cyanamid Company vs Ethicon4 where Lord Dip lock s tated that: "An injunction can only be sought between the parties to the proceedings .... The object of the interlocuto,·y injunction is to protect the plaintiff against injury by violation of his right for which he could not be adequately compensated in damages recoverable in the action if the uncertainty w ere resolved in his favour at the trial; but the plaintiffs need for such protection must be w eighed against the corresponding need of the defendant to be protected against injury resulting from his having been pre vented from exercising his own Leya/ rights for which he could not be adequately compensated under the plaintiffs widerta. Jcing in damages if the uncertainty were ,·<!sol ved in the defendant's favour at the trial." R9 I I Counsel concluded this point by submitting that the owner of the property over which the interim injunction order is sought herein is not the plaintiff Qr the defendants i11:_ this case and that on this ground alone this application ought to fail. Counsel on the second point sub1njtted that there is no cause of action between the party seeking an injunction that is Master Butcheries Limited an d the' party against whom it is being sought that is the plaintiff herein. The Court was referred to the case of Owners of cargo lately on board the vessel Siskina and others v Distos Compania Naviera SA, Ths Siskina5 wher e Lord Diplock I said: "A right to obtain an inte rlocutory injunction is not a cau se of action. It cannot stand on its own. it is dependent on there being a pre exis ting cause of action against the defendant arising out of an invasion, actual or thre ale necl, by him of a legal or equitable right of the plaintiff frJr lite e nforce ment of which the defendant is amenable to lhe juri.s ciicti()n uf the <.:ourl. The right to obtain an interlocutory injunction is merely ancillw~tJ and incidental to the pre-existing cause of action. It is grunted to preserve the status quo pending the ascertainment hy the court of the rights of the parties and. the g rant to the plaintiff of the relief lo which his cause of action e n.titles him, which may or may not include a final injunction." On the third point counsel subm itted that the right Lo seek injunctive relief is dependent on there being a pre-exis ting cau se of action by the pla intiff against th e defendant in the main action or d efendant against the plaintiff in a counterclaim. Counsel submitted that the defendant's application was not only unten a ble a t la w but also incompetently befor e this Court. In addressing the fourth point counsel submitte d that t he defendant's claim to be Shareholders and Directors in Master Butcheries Limited a nd th at as a result they have a right to bring this application against the p laintiff. RlO l • I Counsel argued that the defendants have not exhibited any corporate action or resolution to show that they h ave authority to bring this injunction application on behalf of'Master Butcheries Limited. Counsel submitted that a company can only validly make a decision to bring such an action or seek injunctive relief from <;~urt through a requisite resolution of its Directors and that as no such resolution was passed by Master Butcheries Limited in this case, the injunction . sought has no leg:3.l basis. To buttre~s this argument, the court was refer.red to the cases of Kenya Commercial Bank Limited v Stage Coach Management Limited6 and International Trades Crystal Societe Anonyme v Northern Minerals (Zambia) Limited7 . It was counsel's considered view that the actions of the defendants in seeking an injunction order to protect the interests of Master Butcherie~ Limited which is indebted to ZANACO and several other creditors is tantamount to bringing an action in the name of Master Butcheries Limited without the requi site Board resolution. Counsel submitted that based on the Supreme Court c1uthnrity of International Trades Crystal Societe Anonyme thi s applicaticm o ught l(J he dismissc-:d as Master Butcheries Limited is not before thi s Co urt and I he: defenda nts h ave no a uthority to speak into this cause of action on be J-1c1lf uf l\il::1s1.e; r Butc heries Limited. Coun sel in addr<;ssing the fifth point posed the question as to whether this injunc tion will preserve the status quo. Counsel submitted that one of the earliest prin ciples deve loped by I.he Courts in the context of interim injunctions is to aim at preservation of the status quo pendir~g the final d ecision of the Court. Counsel referred this Court to the case of Preston vs Lucks where Cotton w in his dicta stated that the object of a n injunction is: . "To keep things in status quo, so that if at the hearing; the plaintiff obtain a judgment in their favour, the defendants will have been prevented from dealing in the meantime with property in such a way as to make that judgment ineffectual." To buttress this point further the Court was also referred to the cases of Ndove v National Education Council of Zambia Limited9 and Turnkey Rll -··••- ···---···. I I Properties v Lusaka West Development Company Ltd and Others 10 • In the Turnkey case the Supreme Court held as follows: "An interlocutory injunction is appropriate for the preservation or restoration of a particular situation pending triat but it cannot in our considered view, be regarded as a device by which the applicant can attain or create new conditions, favourable only to himself, which tip · · the balance of the ·contending interests in such a way that he is able) or mo;--e likely, to influence the final outcome by bringing about an alteration to the prevailing situation which may weaken the opponents' case and strengthen his own. If we understood Mr. Hamir's third submission correctly, this is what the appellant would wish to achieve by continuing to build under the contracts in dispute and thus place the respondents in a position where they would most probably be able lo perform the contracts and unable to resist pe1forrnancc on their current arguments which, it is reasonable to assume, may be the present basis of their defence to the claims in the main action. " Coun sel pCJintccl out. that the defendants in their affidavit in support claim that Master Butcheries Limited owes Sundry Creditors the sum of K720,076.00 a nd has a n overdraft ba la nce with ZANACO in the sum of K2, 185,888.00. Counsel also pointed out that the defendants in the said affidavit depose that Master Butcheries Li1nited has been unable to con clude the sales because the plaintiff who resides at Farm 411 / A has physically chased purchasers and surveyors trying to subdivide the land and that Master Butcheries Limited needs to conclude the sales pursuant to the respective contracts at the cost of K6,700,000.00 and further that Master Butcheries Limited needs to sell three more portions to redeem the farm, settle trade creditors and for operational capital. lt was counsel's considered view that quite clearly, the injunction order sou ght by the defendants is not intended to maintain the status quo but to create new conditions favourable to the defenda nts. Counsel argued that as the R12 injunc~ion is intended to facilitate t he sale .of subdivisions of Farm 411/ A this was not the purpose for which injunctive relief could be granted. Counsel argued that an injunction is intended to maintain a particular situation pending trial and not to create new conditions. The Court was ref erred to the case of Garden Cottage Foods Limited v Milk Marketing Board11 where Lord Dipak guided that: "the relevant status quo in the status of affairs existing during the period immediately preceding the issue of the writ claiming the interim injunction or the period immediately preceding the motion for an injunction application. " Counsel submitte d that maintaining the status quo of Farm 4 11 / A C hila.nga would be t o keep things as they are not to alter them. Counsel opined Lhat if the order for an injunction was granted and it later turns out after the hea ring of th e m ain m;Jtt.r-r that the injunction order should not have been granted, there will br. 110 way of revers ing the sales of the subdivisions which the d e fendants wn nt tn t111dc rta ke. It \Vas co unsel's considered view that the d efendant's action~ an: clearly intended to undermine the proceedings before this Court. ln addressing the s ixt h a nd final point counsel the raised the issue of the equitable n ature of an injunctive relief. Counsel submitted that the granting of an injunctive relief is n ot only discretionary bpt is a lso based upon equitable considerations. On this point counsel submitted that the defendants failure to manage the affairs of Master Butcheries Limited and their failure to account for monies realised from previous sales of portions of Farm 411 / A suggests that the treatment of the funds to be realised from the proposed transactions will be no different from the transactions· referred to in the affidavit in opposition under exhibits "JS 1 to JS3" . Counsel subrnitted that the defendant's hands are clearly soiled as they previously have been untruthful as they have failed to account for fund s previously realised from sales of portions of Farm 411 / A. Counsel opined that lhis Court should be reluctant to open its doors of equity to the defendants Rl3 - - -·- -- . , -- . ----·-· when the defendants conduct 1s suspect a nd may well border on dishonest conduct. Counsel concluded his arguments by stating that the defendant's application fails to meet the requirements for the grant of an interlocutory order of injunction and prayed that the same be dismissed. I • The defendants filed in skeleton arguments in replf on the 1 st Septe~ber, . 2020. In response to the first point counsel submitted as follows; firstly that the . . summons clearly state that the plaintiff is required to refrain from interfering with the process of disposal of subdivisions of Farm 411/ A; secondly that the affidavit in support shows the m a nner in which the plaintiff has been interfering in the disposal of the s ubdivisions of Farm 411 / A and thirdly the order having n ot been granted yet may be given with more specificity if required by this Court. On the second point co unsel submitted that the position as stated by the counsel for th e plaintiff with rega rd the n eed for an injunction to only be sought by parties to thr; proc<'edings is correct. Counsel submitted further that in this matter, th e inj unctinn i~, sought by the defendants against the plaintiff ,vho are a ll parties of this cH.:tion and as such there was no violation of the requirement tha t the orde r be sou gh t. hy the p arties. Counsel r eferred this Court to the case of Kasengele & Others v Zambia National Commercial Bank p1c12 where the Supreme Court held th at: "Share holders e njoy, as a matter of right, ouerriding authority over (their) company's affairs, even over the wishes of the Board of Directors and Managers." · In relation to the third point counsel submitted that the plaintiff's argument on whether there is a cause of action see1ns to relate to Master Butcheries Limited. It was counsel's considered view that this question does not arise as the applicants in this case are the d efendants and not Master Butcheries. R14 I In responding to the fourth point on the defendant's authority to seek an injunctive relief against the plaintiff, counse'i submitted that Directors have the authority to act on behalf of the company. Counsel r eferred this Court to the case of Royal British Bank v Turquandl3 wh ere it was h eld that the internal affairs of a company are not the concern of third parties. On this basis counsel opined that there is therefore no n eed for proof of a resolution in order for the Court to. grant this order ~s this is outside the requirements ';Vith regard the relations with a ·third party. On the fifth point relating to the preservation of the status quo, counsel submitted that it is important to determine what would happen in the event that an injunction is not granted. Counsel submitted that if an injunction is n~t granted the Mortgagee will move into possession and the Sundry Creditors will execute on the a s sets of Master Butcheries Limited wherein the defendants are sh areh olde rs. Cou n sel wenl. on to s ubmit that if the Mortgagee fails to recover from the secu r ity th ey could m ove against the defendants and the plaintiff as gu a ra ntors. Counsd opined th a 1 th e grant of an injunction would actually m a inta in th e s l il.t u s q110 as the asset will remain in the hands of Master Butch eries Limi ted . Counsel su bmitted further that it is worth noting that the los s of Fa rm 4 11 / A i s not bein g pe rpetrated by the plaintiff, but that the plaintiff wa s m a kin g it impossible for th e defendants who are interested parties to address the actions of the plc=i intiff a nd that: by so doing the plaintiff is manifesting no intere st in Mas te r Butch eries Lirnited. In addressing the sixth a nd final point counsel submitted that as the plaintiff has no legal interest in the land there is no duty to account to the plaintiff for anything. Counsel in con cluding their arguments submitted that interest alleged by the plaintiff is one based on an oral trust whereas the defendants claim h as been proven by PACRA documents. Those were the subn1issions of the parties. RlS At the hearing of the matter the defendants advocates relied on the documents filed. Similarly the plaintiff's advocates also relied on the documents filed and proceeded to augment its opposition as follows: 1. The injunction order ~ought is not clear and certain as it is ambiguous. 2. The injurn;::tion order sought seeks to benefit a non-party to the action. 3. There is in fact no cause of action between the parties seeking the injunction and the party against whom the rnjunction is being·sought. 4. The defendants do not have authority to seek an injunctive relief. 5. The injunctive relief being sought if granted will in fact not preserve the status quo but create new conditions favourable only to the defendants. Counsel argued tha t in relation to the first ground, the defendants have s ubmitted tha t the affidavit in support shows the manner in which the plaintiff h as been interfering \Vith the disposal of the property in question. Counsel contended tha r the summons for this a pplication does n_ot disclose the interference upon whic lt the plaintiff is being restrained and he is left guessing on lhe sam e. C ou n~<:l ;:irgu ccl furth er that the summons do not show what process of a disposal is being restrained. 11. was counsel's considered view that for a n injunc tion of this n at ure being a prohibiting injunction, the summons oughl. lo expressly in clear term s s tale what is being prohibited or restrained. That in countering thi s view th e defendants' have gone ahead to suggest that the order not having been gra nted yet by this Court it may be granted with more specificity if required by this Court. Counsel contended that what the defendants are suggesting is that this Court should volunteer a Ruling as to what exactly the plaintiff ought to be restrained from doing. Counsel went on to argue that the Supreme Court in a plethora of cases has pointed out thal the Court ought to only determine the issues arising as between the parties. It is not in the place of a Court to volunteer a Ruling or grant a relief not sought. Counsel was of the considered view that what the defendants are asking is for this Court to go against set out principles laid out by the Supreme Court in cases such as Atlanta Bakery Limited vs ZESCO Ltd, Appeal No. 27 of 2016, Murray Roberts R16 Construction 14. Counsel argued that the defendants had conceded that the summon s and consequently the application before this Court is not c_lear or certain and merely ambiguous. Counsel prayed that on that basis the injunction a pplication should be dismissed for not being clear. In relation to the second ground, counsel for the plaintiff argued that the injunction sought seeks to benefit a non-party to the action which fact the defendants have expressly conceded to in th eir affidavit in reply. Counsel argued further that the injunction a pplication has been made pursuant to Order 29 Rule 1 of the Rules of the Supre m e Court which expressly stipulates that an a pplica tion for an injunction shall be m a d e by a party. Counsel pointed out that in th e defendants affidavit in support of this application there is exhibited a certificate of title whic h s hows that the property in issue is in fact owned by Master Butch eries Limited . Counsel contended that the parties in this case are J ohn S teele, Nelson Ca rnet a nd J ack Jere and that Master Butcheries is not a pa rty to these p rocf'.:eclin gs and ther e fore it cannot make an applic ation before thi s Court and neith ,~r ca n t.he d efendants make an application on behalf of Master Bu tch eries Limil.c:cl. Cou nsel a rgu ed furth er th at Order 29 of the Rules of the S upre m e Co urt rcqu ires tha t the property which is the subject of the injunction sou ght shou ld c:qu a lly be the subject of the dispute. Counsel conten ded tha l a peru sa l of Lil e plea dings will disclose that the property Farm 4 11 / A which is the s u bj ec.:t of lhis injunc tion is in fact not the subject of the proceedings before this Court. Counsel a rgued tl~at a lthou gh the Court had been referred to the case of Kasengele and others v ZANACO PLC wher e it was h eld that shareholders enjoy as a matter of right a n overriding a uthority of the companies affairs even over the wishes oft.he Board of Directors and Manaaers , this case had been applied out of context a nd is inapplicable to the case in casu. b Counsel argued with force that the injunction application is not one where Directors or third parties are challenging the decision of shareholders that have overridden a decision or decisions of Directors and that this was not the issue before this Court. Counsel emphasised that a n injunc tion can only be sought by a party to the proceedings as there is no law to suggest that an injunction can R17 ... - ·---- --- be obtained by a non-party for the benefit of a 3 r d party. To buttress this argument the Court was referred to the case of American Cynamid vs Ethicon which expressly states that an injunction can only be sought by parties to the proceedings. Counsel on this basis prayed that the injunction appiication be dismissed . In relatiqn to ground three (3), counsel for the plaintiff argued that there 1s no cause of action b etween the party seeking the injunction and the party against whom the injunction is being sought. Counsel pointed out that an injunction is not a cause of action a nd that there should be a cause of action between th e party seeking th e injunction and the party against whom the injunction is being sought. Counsel went on to explain that there is no cause of action between Master Butcheries Limited a nd the plaintiff as there was no set of facts that established a claim b etween Master Butcheries and the plaintiff. Counsel on this basis pr;)_ycd that the application be dismissed. In relation to ground four (4), cou nsel argued that the defendants do not have any auth ority 1 o s<:d; Lhe injunctive relief th at they s eek against the plaintiff. The court wa s rcft-rn;d to the case of International Trades vs Northern Minerals Zambia 15 where 1 he Court emphasised that where a d ecision is commenced on behalf of .:-1 company without a uthority tha t is by way of a resolution, the Court hc1s the power to dismiss su ch an action. Counsel a rgued that a perusa l of all the th ree affidavits filed by the d efend ants in this m a tter discloses th at t h ere is no su ch resolution . Cou n sel implor ed this Court to follow the Suprem e Court's dec ision in the International Trades case a nd prayed that the injunction a pplication be dismissed. In rela tion to the last ground coun sel a r gued that the injunction if granted by this Court will not preserve the status quo but will in fact create new conditions only favourable to the defendant. For this argument the Court was referred to th e case of Garden Cottage Foods Limited vs Milk Marketing Board A. C (1984) at page 130 where the Court emphasised that the s t atus quo is s imply a state of a ffa irs that exist immed iately befor e a writ is issued. It was R18 -· - ____ .... .. counsel's considered view that the granting of this i11.junction is aimed at frustrating the trial process before the Court and is aimed at making the judgment that may stem from the proceedings before this Court a mere academic exercise. Counsel prayed that the injunction application by the defendants be dismissed with costs_ to the plaintiff and that the Court a llows the matter to proceed to trial. · In response to these arguments, counsel for the defendants contended in relation to grou~d one that the defendants have in no way conceded that the summons are unclear and that in the premises the order should be granted as sought. The Court was referred to the first paragraph of the defendant's skeleton argume nts. In rela tion to the second ground, counsel for the defendants contended th at in this m atter , the inj unction is b eing sought by the defendants as against t h e pla intiff who are a ll pa rties to this action and therefore there is no violation of Order 29 Ru le 1 of the Ru les of the S upre m e Court. In rela ti on to gro und three, co u nsel r estated their position that the action is being sough t by the d efen da n ts in this a ction and not Master Butcheries. On this basis it w;:1s co unsel's con s ide red view that the issue of a cause of action between the pla in tiff a nd Mast<.;r Bu tch cries does not arise. ln re sponse to ground four, counsel reiterated their position that the injunction sought is by th e d efen da nts to this a ction a nd not Maste r Butcheries as proposed by the plaintiff. On this basis Counsel opined tha t the issue of authority to bring an action on beha lf of Master Butcherie s does not a rise. · In relation to the fifth ground, counsel argued that if the injunction is granted, the defendants will have the opportunity to save the property subject of th e injunction but that if the injunc tion was not granted the Mortgagee would ta ke possession of the property and sundry creditors ·would move into execute agains t the assets of the con1pa n y. Counsel went on to point out that if the mnrtgagee failed to re cove r from the sale of property then it would move against R19 the defendants and the plaintiff who guaranteed the loans. It was counsel's considered view that in actual fact the injunction would preserve ~he status quo of the property as it would remain in the hands of Master Butcheries Limited. Counsel argued that although the plaintiff's actions were not the cause of the loss··of Farm 411 / A, the plaintiff's subsequent actions were making it impossible · for the defendants who are interested parties to prevent loss of the said property. Coµnsel opined that l,oss of the propertY, at the hands of th.e mortgagee would. in fact render any judgment that may be obtained from this Court an academic exercise. Counsel prayed that the order sought be granted. I am indebted to counsel for their submissions and arguments. I have intently examined the documents in support of and against this application. At the heart of this a pplication is the question whether shareholders of a company can obtain an injunction on b e h a lf of a company over Ihe said company's land in a cause of action in which th e sa id company is not a party. The plaintiff t hrough his advocates has canvassed this question under three grounds which in my considered view a re a ll interrelated and will address them as such. The said grounds or points v.1hich the pla intiff r a ised are firstly that the beneficiary of th e orde r bein g suu g ht. is not a pa rty to the action, secondly whether there is a cau sc of action betwee n the p a rty seeking the injunction being Master Butch eries Limited a nd the pnrty again st whom the injunction is sought, thirdly whether the de fend a nts h ave authority to seek an injun ctive relief against the p laintiff. ·. It is trite law that a company limited by shares is a separate legal entity at law capable of suing and being sued. The celebrated case of Salomon vs Salomon & Co 16 is instructive on that princip1e as it was held in that case that: "The company was a separate and distinct person." Similarly, our Companies Act, 2017 under . section 22 paragraph (a) provides: R20 1 rr ! ·.' I I I'' : i , I . l l '' I . . ' ' -! .i - - - - --- ··· ···• ·· ... "A company shall have perpetual succession and a common seal, capable of suing and being sued in its corporate name and shall, subject to this Act, have power to do all such acts· and things as a corporate may by law do, or perform'' It is established that a company has the ability to perform functions at law including owning property, suing and being sued. The affidavit evidence before this Court has revealed that the property subject of the injunction order. sought being Farm 411 / A Chilanga is owned by Master Butcheries Limited. This means that Master Butcheries Limited is the rightful party to bring this particular application before this Court. I am fortified in this position by Order 29 Rule 1 of the Rules of the Supreme Court the provision pursuant to which this application is made which catego rically states that: "An application for the grant of an injunction may be made by any party to a cau se or matter before or after the trial of the cause or matter, whe ther or not a claim for the injunction was included in that party 's wril, originating s ummons, counterclaim or third party notice, a s the cuse muy he." Interestin gly, co un sel for the defendants in addressing the point raised by counsel for the plaintiff on the beneficiary of the injunction order sought not being a party, submitted th at there is no violation of the requirement that the injunction being sought is made by the parties t.o the action as the application has been made by the defendants who a re parties to this action. I do not agree with this simplistic approach adopted by counsel for the d efendants a s clearly that is not the law. The issue that is apparent in this application is that of locus standi. Black's Law Dictionary, Ninth Edition defines locus standi as: "The right to bring an action or to be heard in a given forum." The Court of Appeal in the case of Juldan Motors Limited, July Danobo vs Nasser Ibrahim, Olypa Sibongile Danabo 17 ably guided in this matter when ,Justice Mulongoti stated in their holding as follows: R21 . i I ! ·\ , I i ·. 1 : I I . I . ' • I I ; I .i ., l i "Section 22 of the Companies Act provides that: '(1) a company shall ha~e, subject to this Act and to such limitations as are inherent in its corporate nature, the capacity, rights, powers and privileges of an individual. This · means that the company has capacity to own property just like an individual. Nasser Ibrahim. whq testified as DWI that the property in question belonged to the company. Although N°:sser Ibrahim was?- s hareholder, ther;e is a system. thro7.,fgh which shareholders reap the benefits from the company, for example through dividends. He could not, without the property being given to him following a resolution after a duly constituted meeting simply get the company property for his own benefit. He was deriving an undue be;1efit for which h e must account." It is clear therefon.: th at S h areholders do not h ave the locus standi to apply for an injunction on bch;df of n company as that company has the capacity to do so itself unless 8 B<J::i.rd Rt~solu tion is made to that effect. Further, it is also a ppare n t that an injunuic,n application must be brought by parties to an action and in this cast'. Maskr l:3 utche::rics Limited the registered owner of the prope rty in qu estion is nut a party to thi s action. It goes without saying tha t evidently there is no ca u se of acti()n b etween Master Butch e ries Limited and the plaintiff h erein as Master Butcheries Limited is not a party to this actio n. As such I agree with the a rguments as u mvassed by counsel for the plaintiff that this application is incompetently b efore this Court because the d efendants did n ot have locus standi to make s u ch an application in th e first place. Additionally as counsel for the plaintiff rightly pointed out, there is no Board Resolution to show that the defendants were given a uthority to make this application for an injunction on behalf of Master Butcheries Limited reaffirming the position that the defendants lack locus standi. At this point I would like to point out that it h as not escaped this Court's attention that th e plaintiff in his Writ of Summons a lso a pplied for a n injunction to restra in th e Fir s t and Second Defe ndants from m a king a n y further R22 subdivisions and or/ sale of Farm 411 / A Chilanga which property belongs to Master Butcheries Limited. As the saying goes "what is good for the goose is good for the gander. JJ Counsel for the plaintiff has argued with force that the defendants cannot apply for an injunction over a property that belongs to another party, which party is not a party to this action. It follows that in the same vein the plaintiff cannot be seen to be applying for an injunction over Farm I I . ,· '. ' ., ! 411 / A Chilanga a property that belongs to Master Butcheries J:imited which . . . company is not a party to this cause of action, albeit the plaintiff not having formerly made the application. Given the fact this application 1s wrongly before this Court I will not ,, I address the issues that must be looked at in order to ascertain that an injunction is an a d equ ate rem edy, or the other points raised with the sufficiency or lack the reof of the summon s. In term s of re nde ring Justice to a ll the parties however, I have noted that that Master Butcheries Limit ed, Dome t Limited and Automotive Radiators need to be joined to this ac1 ion clue· lo the intri cate nature of the issues raised. On that basis I h e reby nrd<::r that lht: said companies be accordingly joined to this action . Th e upsh(Jl of th e maltc.:r is that, th e application for an injunction is dis missed for being incom petently before this Court. Costs of this application are awarded to the pla intiff to be: taxed in default of agreement. Leave to appeal is granty:I. Dated the ...... .. .. d, ............ day of.... . ........... ?,-'. .............. 2020 utc/l--- e / .. . 3 (J... ,, a .-A / Ruth Chibbabbuka JUDGE R23