Exxon Petroleum and Ors v Luapula Energy Limited (APPEAL NO. 251/2022) [2023] ZMCA 330 (22 November 2023)

IN THE COURT OF APPEAL OF ZAMBIA HOLDEN AT NDOLA (Civil Jurisdiction) APPEAL NO. 251/2022 BETWEEN: EXXON PETROLEUM PETRO TECH ENERGY LIMITE KAFULA MUBANGA AND 1 ST APPELLANT ND APPELLANT APPELLANT LUAPULA ENERGY LIMITED RESPONDENT CORAM: SIAVWAPA JP, CHISHIMBA AND CHEMBE, JJA On 14th and 22nd November 2023 FOR THE APPELLANT: Not in attendance FOR THE RESPONDENT: Not in attendance J U D G M E N T SIAVWAPA, JP delivered the Judgment of the Court. Legislation referred to: 1. Rules of the Supreme Court of England 1999 Edition (White Book} 2 . High Cou rt Rules Chapter 29 of the High Court Act 3. The Corporate Insolvency Act No 9 of 2017 4. The Court of Appeal Rules S. I. No 65 of2016 1.0 INTRODUCTION 1. 1 This is a n appeal against an order of the High Court, Commercial division, deliver e d by the Honourable Mr. Justice E. L Musona, dated 11 th August, 2 021. 1.2 By that order, the learned Judge appointed an interim Receiver for the 1st and 2 nd Appellants and restrained all the Appellants from having access to the 1st and 2 n d Appellants' accounts and other assets . 2.0 BACKGROUND 2. 1 By a writ of summons dated 23rd June, 2021, the Respondent commenced an action in the Court below claiming from the Appellants, inter alia, the sum of ZMW3,506, 195. 90 for petroleum supplied, an order for the appointment of a Receiver over the 1st an d 2 nd Appellants to recover the said amount and damages. 2.2 On the same date, the Appellant filed a composite summons for the appointment of a receiver and for an interim injunction pursuant to Order 30 Rule 1 of the Rules of the Supreme Court, Order 27 Rule 1 and Order 29 Rule 1 and 2(3) of the High Court Rules. 2.3 The Respondent sought the appointment of a receiver on grounds that the 1st Appellant had become insolvent and that if Judgment were passed against it; it did not have assets on which the Respondent could levy execution. 2.4 The Respondent therefore, sought to secure the 1st and 2 nd Appellants' obligation to pay the amount claimed as it feared J2 that the Appellants would transfer money out of their bank accounts or conceal receipt of any monies. 2.5 When th e matter came up for hearing on 14th July, 2021, the learned Judge adjourned it to 9 th August, 2021 because the Respondent had served court process on th e Appellants less than 2 days before the hearing date. 3.0 RULING OF THE HIGH COURT 3. 1 Before rendering his ruling, the learned Judge recounted the events that transpired before the hearing date . He stated that on 1st July 2021 he declined to hear the matter ex-parte and scheduled it for an inter partes hearing. 3.2 When the matter came up for hearing on the 9 th August, 2021 , the Appellants had not filed a response to the application and both parties did not appear before the Court. 3.3 By order dated 1 Ith August, 2021 , the learned Judge appointed one Mr. Stanford Mtamira as receiver for the 1st and 2nd Appellants to secure the re-payment of the sum of ZMW3, 506, 195.90. 3.4 The order restrained the Appellants from freely accessing the 1st and 2nd Appellants' bank accounts, property, debtors and other assets. J3 3.5 Further, the order restrained the Appellants from transferring, redirecting, wasting or in any way alienating any funds received by the 1st and 2 nd Appellants. 4.0 THE APPEAL 4.1 Dissatisfied with the order of the Court below, the Appellants have appealed to this Court on three grounds as follows: 1. The trial Court erred in law and in fact when it granted an order dated 11 th August on the strength of an application of Order 30 Rule 1 of the Rules of the Supreme Court in default of the Corporate Insolvency Act No 9 of 2017 2. The trial Court below erred 1n law and fact when it granted the order dated 11 th August 2021 when the respondent failed to demonstrate the requirements under section 4 of the Corporate Insolvency Act No 9 of 3. The trial Court erred in law and fact when the respondent failed to demonstrate the requirements of Order 30 Rule 1 of the Supreme Court as required by law 5.0 ARGUMENTS IN SUPPORT 5.1 The Appellants argued the three grounds of appeal together. 5.2 The gist of the argument is that since sections 4 and 5 of the Corporate Insolvency Act provides for applications for J4 appointment of receivers, the learn ed Judge should not have applied Order 30 rule 1 of the Rules of the Supreme Court 1999 edition. 5 .3 Further, that the Respondent had failed to demonstrate that the Appellants h ad become legally amenable to be placed under receivership pursuant to either section 4 of the Corporate Insolvency Act or Order 30 rule 1 of the Rules of the Supreme Court to warrant the appointment of a receiver. 6.0 ARGUMENTS IN OPPOSITION 6.1 The Respondent filed its h eads of argument in opposition on 9 th November, 2023, by which it argues the appeal on two limbs namely, that the appeal is incompetent on account of a defective record of appeal. The second limb is that the appeal lacks merit. 6.2 We will start by considering whether the Respondent's heads of a rgument are properly before us. This is in light of the fact that the Record of Appeal was filed on 28th October, 2022. 6.3 Order x rule 9 (9) of the Court of Appeal Rules provides as follows; "The Appellant shall, within fourteen days of filing the record of appeal together with heads of argument under subrule (8), serve a copy thereof on each party who has been served w ith the notice of appeal and has filed a notice of address for service, except that if there is more than one respondent represented by one practitioner, it s hall be sufficient to serve one on that p ractitioner. " JS 6.4 In this case, the Respondent has not indicated when it was served with the Record of Appeal and heads of argument and we shall assume that the Appellant complied with the rule cited above. That being the case, we turn to Order x rule 9 (16) of the Court of Appeal Rules which provides as follows; "The respondent shall, within thirty days of being served with the record of appeal and heads of argument, deliver twenty-one hard copies and an electronic copy of the respondent's heads of argument together with a list of authorities of each head to be cited and a supplementary record of appeal, if any, to the Master and one copy to a party to the appeal." 6.5 Fourteen days from 28th October, 2022 would bring us to 11th November, 2022 as the final date on which the Appellant should have served the record of appeal and heads of argument on the Respondent. Thereafter, the Respondent had thirty days within which to file the twenty-one hard copies and an electronic copy of the respondent's heads of argument with the Master. Thirty days from 1 Ith November, 2022 would bring us to 10th December, 2022 as the last date on which to file the respondent's heads of argument. 6.6 Having filed the respondent's heads of argument on 9 th November, 2023, means that the Respondent was late by eleven months . This delay was inordinate and could only be cured by obtaining a Court order for leave to extend time within which to file respondent's heads of argument pursuant to Order xiii rule 3 (3) of the Court of Appeal Rules. J6 6. 7 We have not seen any such order on the record extending time within which the Respondent could file its heads of argument. This means that the heads of argument are improperly before us and therefore, liable to be expunged from the record. We accordingly expunge the respondent's heads of argument from the record and the same shall not be considered in this Judgment. 7.0 OUR ANALYSIS AND DECISION 7 .1 The only issue in contention is whether the learned Judge directed himself properly when he made an order appointing a receiver for the 1st and 2 nd Appellants pursuant to Order 30 rule 1 of the Rules of the Supreme Court in view of the provisions of sections 4 and 5 of the Corporate Insolvency Act No. 9 of 2017. 7.2 We have considered the evidence on record, the order of the Court below as well as the arguments advanced by the Appellants as well as the provisions of section 4 of the Corporate Insolvency Act and Order 30 rule 1 of the Rules of the Supreme Court. 7 .3 For ease of reference, we reproduce the two prov1s10ns hereunder starting with Order 30 rule 1 of the Rules of the Supreme Court 1999 edition which provides as follows; ( 1) An application for the appointment of a receiver may be made by summons or motion. J7 (2) An application for an injunction ancillary or incidental to an order appointing a receiver may be joined with the application for such order. (3) Where the applicant wishes to apply for the immediate grant of such injunction, he may do so ex parte on affidavit. (4) The Court hearing an application under paragraph (3) may grant an injunction restraining the party beneficially entitled to any interest in the property of which a receiver is sought from assigning, charging or otherwise dealing with that property until after the hearing of the summons for the appointment of the receiver and may require such a summons returnable on such date as the Court may direct, to be issued. 7.4 Section 4 of the Corporate Insolvency Act provides as follows; (1) Where a charge over property of a company has become enforceable, the Court may, on the application of the chargee, appoint a receiver of the property. (2) The Court may, in the case of a floating charge, whether or not the charge has become enforceable, on the application of the chargee, appoint a receiver of the property and undertaking of the company if the charge is satisfied that events have occurred or are about to occur which render it unjust to the chargee that the J8 company should retain power to dispose of the company's assets. (3) A person may appoint a receiver under deed of appointment. (4) An individual shall not be appointed as a receiver unless the individual is eligible for appointment as provided in section 9. (5) A person shall not be appointed as a receiver as a means of enforcing a debenture where there is no secured interest. 7 .5 Section 5 of the Act provides as follows; (1) A person who obtains an order for the appointment of a receiver, or who appoints a receiver under a deed of appointment, as specified in section 4, shall, within fourteen days after obtaining the order or making the appointment, lodge a notice of the order or appointment with the Registrar, in the prescribed form (2) A person who is appointed as a receiver shall, within fourteen days after the appointment, lodge with the Registrar and the Official Receiver a notice in the prescribed form. (3) Where a person ceases to be a receiver, the person shall, within seven days after ceasing to be a receiver, lodge with the Registrar a notice that the person has ceased to be a receiver. J9 (4) The Registrar shall, on the lodgement of a notice as specified in subsection ( 1) or (3), cause a notice of the appointment of the person as a receiver or the cessation of the person as receiver, to be published in the Gazette. 7.6 Our reading of the two provisions is that whereas sections 4 and 5 of the Act provide for the appointment of a receiver to properties under a charge that has become enforceable, Order 30 Rule 1 of the Rules of the Supreme Court simply provides for the mode of commencing an application for appointment of a receiver. Further, the Order also provides for an order of injunction ancillary or incidental to the order of appointment of a receiver. 7 . 7 In this appeal, the Respondent moved the Court on the basis that the Appellants had failed to pay for the petroleum products the Respondent had supplied to them. In other words, this was a simple unsecured debt which did not fall under the provisions of sections 4 and 5 of the Corporate Insolvency Act. 7 .8 Further to the above, sections 4 and 5 of the Corporate Insolvency Act do not provide for an order of injunction ancillary or incidental to the appointment of a receiver. The Statement of Claim occurring from page 90 of the Record of Appeal shows that the Respondent claimed, inter alia, interim orders of injunction against all the Appellants. JlO 7. 9 To the extent that the Corporate Insolvency Act does not provide for the interim order of injunction, then it is deficient in that respect, leaving room for recourse to Order 30 rule 1 of the Rules of the Supreme Court 1999 Edition. 7 .10 The learned Judge was therefore, right to grant the appointment of a receiver and grant an interim order of injunction pursuant to Order 30 rule 1 of the Rules of the Supreme Court. 7 .11 Having disposed of the main appeal, we have observed that the Appellants filed summons to stay execution of and set aside a default judgment dated 12th May, 2022 on 24th August 2022 as seen at page 49 of the Record of Appeal. 7 .12 One of the claims in the said writ of summons was for the appointment of a receiver over the 1st and 2 nd Appellants. 7 .13 By the default Judgment, which is not on the record, but referred to by the Appellants, the learned Judge granted an order appointing a receiver. The Appellants in tum applied to stay execution of the default judgment and to set it aside . The Learned Judge granted an interim order of stay pending the determination of the application to set aside the default Judgment. Jll 7.14 By extempore Ruling dated 12th December, 2022, the learned Judge declined to set aside the default Judgment. 7.15 By further order dated 18th January, 2023, the learned Judge granted the Respondent a garnishee order absolute. 7 .16 Given the above circumstances, it is clear that the appeal herein was overtaken by events once a default judgement was entered. In any event, both the order subject of this appeal and the default Judgment are in favour of the Respondent. It follows therefore , that the appeal ought to be dismissed on the basis of the non-applicability of section 4 of the Corporate Insolvency Act and for being overtaken by the subsequent orders of the Court. 7. 1 7 We accordingly dismiss the appeal with costs to the Respondent here and below to be taxed in default of agreement. j M. J. SIAVWAPA JUDGE PRESIDENT F. M. CHISHIMBA COURT OF APPEAL JUDGE Y. CHEMBE COURT OF APPEAL JUDGE J12