Ultaralloy (Pty) Limited v Elite Industries Limited and Anor (2021 /HPC / 0497) [2025] ZMHC 36 (25 June 2025)

IN THE HIGH COURT FOR ZAMBIA AT THE COMMERCIAL REGISTRY HOLDEN AT LUSAKA (Civil Jurisdiction) BETWEEN: 2021 /HPC / 0497 ULTARALLOY (PTY) LIMITEDL' 5 }-.,'iV r - - r., . J JUDGMENT CREDITOR AND ELITE INDUSTRIES LIMITED 1sT JUDGMENT DEBTOR YUNUS PANDOR 2ND JUDGMENT DEBTOR Before: The Honourable Mr. Justice L. Mwanabo on 25th June, 2025 F or the Plaintiff: Mr. V. S . Mwanza of Messrs. Chibesakunda and Company F or the Judgme nt Debtors: Mr. R. Nyirenda of Messrs. Ferd J ere and Company RULING Cases referred to: 1. Kapesika Enterprises and 2 Others v Cavmont Bank Zambia Limited Appeal No. 166/2023 ~ 2. Tata Zambia Limited v Zinka SCZ Judgment No. 13 of 1986 3. Evaristo Mwaba Chitwaka v Dunlop Zambia Limited SCZ 8/140/2010 4 . Attorney General v Tall and Zambia Airways Corporation Limited (1995- 1997) ZR 54 (SC) 5 . Magnum (Zambia) Limited v Basit Quadri (Receiver/Manager) & Grindlays Bank International Zambia Limited (1981) ZR 141 (HC). Le islation referred to: 1. The High Court Rules, Chapter 27 of the Laws of Zambia 2 . The Rules of Supreme Court of England 1965 (White Book) 1999 Edition 3. The Corporate Insolvency Act No. 9 of 2017 1.0 APPLICATION 1.1 The 1st Judgment Debtor herein filed an application on 12th February, 2025 for an order to alter party to proceedings. 1.2 The application was by way of summons pursuant to Order 26 Rule 1 of the High Court Rules 1 and is supported by an affidavit, list of authorities and skeleton arguments. 2.0 INTRODUCTION 2.1 The Ju_sigment Creditor commenced this action by way of Writ of Summons on 27 th August, 2021 against the Judgment Debtors claiming the following reliefs: (i) A Declaration that the Defendants are in breach of contract on account of failure to pay for goods supplied to the 1 st Defendant; (ii) A Payment of the sum of US$59,640. SO being the purchase price for the supply of the delivered goods; (iii) Damages for breach of contract by the Defendants against the Plaintiff following the Defendant's failure to pay the purchase price; (iv) Interest on the above; and (v) Costs. 2.3 The Judgment Creditor obtained a Judgment in Default on 25th November, 2021. On 18th April, 2024, the Judgment Creditor made an application for an Order that the Judgment Debtors appear for examination as to their means of settling the Judgment Debt. During the hearing for this application, I ordered that the Judgment Debtors file a bundle of document which they intended to rely on including financial statements and/ or Receiver's report on the status of the 1st Judgment Debtor before 7 th February, 2025. A bundle of document was filed on 7 th February, 2025 by the 1st Judgment Debtor, which inter alia included a Deed of appointment of Receiver. The 1st Judgment Debtor later filed this application on 12th February, 2025. R2 3.0 EVIDENCE AND ARGUMENTS IN SUPPORT OF THE APPLICATION 3.1 The 1st Judgment Debtor's affidavit in support was sworn by Lukundo Nambule an advocate in the . employ of the firm representing the 1st Judgment Debtor. 3.2 It was disclosed that Mr. Clement Mugala of AMG Global Chartered Accountants was appointed as the Receiver of the 1st Judgment Debtor on 18th July, 2022. That the 1st Judgment Debtor lacks the capacity to act through its Directors who were capable to issue instructions with regards to this matter from the time matter commenced up to appointment of the receiver. Further, that the deponent has not received instruction from the receiver of the 1st Judgment Debtor. 3.3 The deponent stated that the liability of the 1st Judgment Debtor and any obligations are now carried out by the Receiver on its behalf. A copy of the Deed of Appointment was exhibited and marked as "LNl" . It was further stated that in the premises, it is absolutely necessary that the 1st Judgment Debtor be substituted with ELITE INDUSTRIES LIMITED (in Receivership) . 3.4 The 1s t Judgment Debtor's in its skeleton arguments relied on Order 16 Rule 1 of the High Court Rules 1 and Order 15 Rule 7 of the Rules of the Supreme Court of England2 . It was argued that according to the above provisions, where at any stage of the proceedings there has been a transmission or assignment of liability of a party to the proceedings to some other party, the court can order a substitution of parties. 3.5 It was submitted that the record will show that the proceedings are at a stage where the Judgment Debtors are appearing for Examinations as to their means. Thus, the court should order the relief sought, which is an order for substitution of parties. 3.6 The 1st Judgment Debtor further submitted that it is m receivership by virtue of the appointment of Mr. Clement Mugala on 18th July, 2022. Therefore, the Company's Director ceased to R3 have authority to act and issue instruction on behalf of the company. That this, therefore, entails that the right party to this action is Elite Industries limited (in receivership). 3.7 1s t Judgment Debtor's prayer is that this Court should order that the proceedings in this matter be continued as between the Plaintiff and Elite Industries Limited (in receivership) and the 2 n d Judgment Debtor and that costs be in cause. 4.0 EVIDENCE AND SUBMISSIONS BY THE JUDGMENT CREDITOR 4.1 The Judgment Creditor filed an affidavit in opposition to the 1st Judgment Debtor's affidavit in support of summons for an order to alter party proceedings on 3rd March, 2025. The affidavit in opposition was accompanied with list of authorities and skeleton argument~. 4.2 The affidavit m opposition was sworn by Valentine Mwanza, Counsel for the Judgment Creditor. It was deposed that applying reasonable skill, care and due diligence, the deponent for the 1st Judgment Debtor's affidavit in support knew or ought to have known that the 1st Judgment Debtor was in receivership. 4.3 Further, that the 1st Judgment Debtor shared the Deed of Appointment of Receivership and Manager (exhibit MN3 in the Affidavit in Support) with the office of the Sheriff over a year ago. A copy of the acknowledgment copy of a letter sent to the Sherrif with the 1st Judgment Debtor's advocates was exhibited and marked "VM 1". 4.4 The deponent disclosed that on 13th September, 2022, the 1st Judgment Debtor's advocates filed into this Court, a Notice of Claim on behalf of Elite Industries Limited. That at the time of the 1st Judgment Debtor's advocates filing the Notice of Claim, they are believed to have known or ought to have known that the 1s t Judgment Debtor was purportedly in receivership as the Deed of Appointment of Receiver and Manager pre-dates the Notice of Claim. · R4 4.5 It was further disclosed that the Judgment Creditor's advocates conducted a search at the Patents and Companies Registration Agency (PACRA) on 18th February, 2025 against the name of the 1st Judgment Debtor. A copy of the search result in form of a PACRA print out was marked and exhibited as "VM2". 4.6 In fu rther opposition, it was stated that a change in capacity to sue and be sued is an ingredient necessary for this Court to exercise its discretion. The deponent contended that the PACRA printout is prima facie proof that the 1st J udgment Debtor is not in receivership and further that the capacity of the 1st Judgment Debtor has not ch anged . 4.7 In its skeleton arguments , the J u d gment Creditor quoted Order 6 Rule 1 of the High Court Rules 1 . Additionally, the case of Kapesika Enterprises and 2 Others v Cavmont Bank Zambia Limited1 was a dver ted to where it was held that: ''the High Court is clothed with power to order the alteration of parties pursuant to Order 16 rule 1 of the High Court Rules, where after the institution of a suit, any change or transmission of interest or liability occurs in relation to any party to the suit, on application by any person or on the court,s own motion, for the proper carrying on or proceedings.,, 4.8 It was submitted that the above authority clearly establish that a change or transmission of interest is a necessary condition for the court to exercise its jurisdiction to alter the parties in a suit. That as stated in the Affidavit in Opposition, there has been no change in the 1st Judgment Debtor that has been proven. The Judgment Creditor contended that the 1st Judgment Debtor's application has no basis and is nothing more than speculation without proof. It was further argued that it is insufficient for the 1st Judgment Debtor to simply state that it is in receivership without recognition from PACRA, an institution tasked with providing business registration. RS 4. 9 The Judgment Creditor posited that the Court's objective is to try the merits of the cases that come before it and allow only amendments that are necessary to determine the real question in dispute between the parties, as long as they do not cause injustice or prejudice to the other party. In addition, it was argued that a change in parties without substantial proof will prejudice the Judgment Creditor, particularly, at this stage of the proceedings, which is the execution stage. 4.10 The case of Tata Zambia Limited v Zinka2 was called to aid to buttress the point that the court has the authority to prevent any abuse of the court process by parties before it. It was submitted that the conduct of the 1st Judgment Debtor in this application to seek an alteration is a clear abuse of the court process and is one of frivolous nature with no proof or basis. The Judgment Creditor also referred to the case of Evaristo Mwaba Chitwaka v Dunlop Zambia Limited3 to cement the point that the 1st Judgment Debtor has not provided sufficient reason to be granted the order. 5.0 JUDGMENT CREDITOR'S FURTHER AFFIDAVIT AND 1 8 T JUDGMENT DEBTOR'S REPLY TO FURTHER AFFIDAVIT IN OPPOSITION 5.1 When the matter came up for hearing on 11th March, 2025, I ordered that the Judgment Creditor files a further affidavit. The Judgment Creditor submitted further affidavit in opposition of the 1st Judgment Debtor's affidavit in support of summons for an order to alter parties to proceedings on 1st April, 2025. 5 .2 It was stated that when the matter came up for hearing on 11th March, 2025 neither the 1st Judgment Debtor nor its Advocates were in attendance and that the Court took note of their absence. It was disclosed that the Court proceeded to hear the Judgment Creditor's Opposition. 5.3 The deponent revealed that the Court directed that the Judgment Creditor's Advocates inter alia wrote to the Registrar of PACRA to R6 verify the status of the 1st Judgment Creditor. A copy of the acknowledgment copy of letter sent to the Registrar of PACRA was exhibited and marked "VMl". It was further revealed that on 28th March, 2025 the Director of Corporate Planning and Compliance for the Registrar of PACRA responded to their letter advising that the 1st Judgment Debtor is not only active but also seem to have abandoned their application for insolvency. The response letter marked as "VM2" was exhibited. 5.4 Furthermore, the deponent disclosed that this Court also directed that Advocates for the Judgment Creditor contact the purported Receiver/ Manager to confirm the status of the 1s t Judgment Debtor. Additionally, that the Judgment Creditor's Advocates wrote to Zambia National Commercial Bank (ZANACO) who advised that they should rely on their findings at PACRA and could not provide more information in light of ongoing litigation against the 1st Judgment Debtor. A copy of the same correspondence was exhibited and marked as "VM3". 5.5 Lastly, it was stated that the 1st Judgment Creditor (sic) ( I presume the deponent meant 1st Judgment Debtor) is acting in its own name, which the deponent believed to be the correct name and capacity under cause CAZ/ 08 / 632 / 2023 before the Court of Appeal. A search form marked "VM4" was exhibited. 5.6 The 1st Judgment Debtor filed its affidavit in reply to the further affidavit in opposition to the 1st Judgment Debtor's affidavit in support of summons for an Order to alter a party to the proceedings on 4 th April, 2025. It was stated that contrary to the affiant's deposition, it is not within the 1st Judgment Debtor's authority or jurisdiction to abandon receivership proceedings because at the point of a Receiver being appointed, all the powers of the directors and all other agents of the 1st Judgment Debtor to act for it ceased and were accordingly retained by the Receiver. 5.7 It was contended that the letter marked "VM2", which letter does not bear the official stamp or seal of the Patents and Company R7 Registration Agency (PACRA), produced in the Affidavit does not dispute the placing of the 1st Judgment Debtor under receivership. That the said VM2 merely suggest that the proceedings have been abandoned but does not clearly give the current status of the receivership proceedings. 5 .8 Furthermore, it was disclosed that the email from ZANACO, which is the holder of the charge by virtue of which the receiver was appointed, neither proves or disproves the status of the 1st Judgment Debtor's receivership proceedings. Additionally, that the said ZANACO has not notified the Registrar of the cessation or removal of the receiver, if any, in accordance with the law if done would have reflected in the PACRA printout and VM2 being the letter from PACRA. 5 .9 The deponent contended that contrary to paragraph 14 of the further affidavit in opposition, there is no proof that the 1st Judgment Debtor was acting in its own capacity in the mat ter under cause number CAZ/08 / 632/2023 as the search from produced as VM4 in the Affidavit does not bear the names of the parties involved and has not indicate anything, even with regard to the 1st Judgment Debtor herein. It was further contended that the affiant also exhibited some handwritten notes on a plane document which document is unverified and does not bear a Court s t amp. 5 .10 La stly, it was stated that the Judgment Creditor has not produced any eviden ce clearly stating that the 1st Judgmen t Debtor is no longer under r eceive rship and can accordingly act in its own n ame. 6.0 HEARING OF THE APPLICATION 6. 1 The first h earin g d ate for this a pplication wa s 11th March , 2 0 25. Only Coun sel for th e Jud gment Creditor a ppeared. Counsel relied on t h e submitted written d ocu ment s and supp lemen ted them with oral submission. Counsel submitted that the affidavit in support of the application was deposed to by Counsel for the 1st Defendant (1 st Judgment Debtor) as opposed to the purported receiver of the RB st Judgment Debtor who would have been able to demonstrate that he has acted in accordance with the provisions of the Corporate Insolvency Act3 , in the protection and collection of property that is subject of diverse claim. 6 .2 Lastly Counsel submitted that the 1st Judgment Debtor's application was an abuse of court and an attempt to sabotage these proceedings. The case of Attorney General v Tall and Zambia Airways Corporation Limited4 was cited, where it was held that a joinder must be necessary to ensure that matters may be effectively and completely determined and adjudicated upon to put an end to any further litigation. 6.3 I noted that from the documents filed by the parties there was uncertainty on the issue of appointment of a Receiver. I directed that the Judgment Creditor file further affidavit in opposition to ascertaining the status after seeking clarification from PACRA and ordered status and another hearing on 7 th April, 2025. 6.4 At the hearing held on 7 th April, 2025, Counsel for the Judgment Creditor relied on the submitted further affidavit in opposition filed on 1st April, 2025. Counsel for the 1st Judgment Debtor relied on the further affidavit in reply submitted on 4 th April, 2025. 7.0 ANALYSIS AND D E CIS ION 7 .1 I have carefully considered the evidence and arguments by the parties as regards the 1st Judgment Debtor's application for an order to alter parties to proceedings. The issue I am called upon to determine is whether the 1st Judgment Debtor can be substituted with Elite Industries Limited (in Receivership). 7.2 The application herein is anchored on Order 16 Rule 1 of the High Court Rules 1 which provides as follows: "Where, after the institution of a suit, any change or transmission of interest or liability occurs in relation to any party to the suit, or any party to the suit dies or becomes incapable of carrying on the suit, or the suit in R9 any other way becomes defective or incapable of being carried on, any person interested may obtain from the Court or Judge any order requisite for curing the defect, or enabling or compelling proper parties to carry on the proceedings Provided that any person served with such an order may within such time as the Court or a Judge in the order directs apply to the Court or Judge to discharge or vary the order." 7 .3 According to the 1st Judgment Debtor, Mr. Clement Mugala of AMG Global Chartered Accountants was appointed as the Receiver on 18th July, 2022. It is argued that the 1st Judgment Debtor lacks the capacity to act through its Directors who were capable to issue instructions with regards to this matter from the time the matter commenced up to appointment of the receiver. The Judgment Creditor has disputed this assertion and argue that Counsel for the 1s t Judgment Debtor knew or ought to have known that the 1st Judgment Debtor was in receivership. It was argued that the 1s t Judgment Debtor shared the Deed of Appointment of Receivership and Manager with the office of the Sheriff over a year ago and a letter marked "VMl" was shared to that effect. Additionally, that the 1st Judgment Debtor's advocates even filed into Court a Notice of Claim on 13th September, 2022 a date earlier than the Deed of Appointment of Receiver. 7 .4 I have perused through the record. The Judgment Creditor in its further affidavit in opposition produced a letter marked "VM2" written on 28th March, 2025 by the Director of Corporate Planning and Compliance for the Registrar of PACRA, which advised that the 1st Judgment Debtor is not only active but also seem to have abandoned their application for insolvency. A correspondence from ZANACO also reveals that the Judgment Creditor was advised to rely on the findings at PACRA. It has also further been revealed that the 1st Judgment Debtor in a case in RlO the Court of Appeal under cause CAZ/08/632/2023 is acting in its own name. 7 .5 The 1s t Judgment Debtor contends that the letter from PACRA does not bear PACRA'S official stamp or seal of the Patents and Company Registration Agency (PACRA) and does not dispute the placing of the 1st Judgment Debtor under receivership. On the correspondence from ZANACO, the 1st Judgment Debtor contends that the email from ZANACO neither proves nor disproves the status of the 1st Judgment Debtor's receivership proceedings. That ZANACO has not notified the Registrar of the cessation or removal of the receiver, if any, in accordance with the law and if done, it would have reflected in the PACRA printout and the letter from PACRA. 7 .6 On the search form regarding cause CAZ/08/632/2023, it is argued that the same does not bear the names of the parties involved and has not indicated anything, even with regard to the 1st Judgment Debtor herein. It was further contended that the affiant also exhibited some handwritten notes on a plane document which document is unverified and does not bear a Court stamp. It is the 1st Judgment Debtor's contention that the Judgment Creditor has not produced any evidence clearly stating that the 1st Judgment Debtor is no longer under receivership and can accordingly act in its own name. 7 .6 An appointment of a receiver is governed by Section 4 of the Corporate Insolvency Act3 wp.ich provides as follows: "4. (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 Rll undertaking of the Corporate Insolvency {No. 9 of 2017 297 company if the charge is satisfied that events have occurred or are about to occur which render it unjust to the chargee that the company should retain power to dispose of the company's assets. (3) A person may appoint a receiver under deed of appointment." (Emphasis my own} 7 .7 What is clear from the above citation is that a person can appoint a receiver under deed of appointment. In the affidavit in support of the application, the 1s t Judgment Debtor exhibited a deed of appointment of receiver and manager in the name of Clement Mugala dated 18th July, 2022. The appointment was made by the Zambia National Commercial Bank. The deed bears a stamp from PACRA dated 20th July 2022. The duty to lodge the notice of appointment of receiver, according to Section 5 (1) of the Corporate Insolvency Act3 , is on the appointing person and the rest of the notifications and submissions with PACRA are supposed to be done by the receiver. Therefore, despite the absence of records with PACRA on the appointment of a receiver over the 1s t Judgment Debtor, the duly executed deed of appointment is sufficient evidence of appointment of receiver. Moreover, the document bears a stamp from PACRA. 7.7 The Response from PACRA cannot be used to overlook the deed of appointment. In fact, PACRA raised an issue different from the issue of appointment of receiver. I say so, because the issue of application for insolvency is different from that of appointment of receiver. As rightly argued by the Judgment Creditor, the letter from Zambia National Commercial Bank did not address the issue of its appointment of receiver because the Bank did not provided evidence of lifting its appointment of the receiver. The dearth of records of appointment of receiver at PACRA is an internal issue within PACRA bordering on how accurate its R12 • records are in light of the fact that the deed of appointment bears its stamp. Moreover, the law does not say absence of records of placement on receivership at PACRA renders the appoint invalid. I am inclined to hold that a receiver over the 1st Judgment Debtor was appointed by the Zambia National Commercial Bank by d eed of appointment dated 18th July, 2022. 7 .7 It is an established principle of company law that a company under receivership has no locus standi independent of it s receiver. As long as a company continues to be subjected to receivership only the receiver can sue or be sued in the name of the company. In this, I am persuaded b y the case of Magnum (Zambia) Limited v Basit Quadri (Receiver/Manager) & Grindlays Bank International Zambia Limited5 . 7 .13 The net result is that the 1st Judgment Debtor's application succeeds. The application is, therefore, granted. The 1st Judgment Debtor is substituted for Elite Industries Limited (In Receivership). I make no order as to costs because the application was solely for the benefi of the 1s t Judgment Debtor nt debt in favour of the Judgment Creditor. R13