William Saunders v Pemba Lapidiaries Limted and Anor (SCZ/8/28/2023) [2025] ZMSC 5 (15 January 2025)

Rt IN THE SUPREME COURT OF ZAMBIA HOLDEN AT LUSAKA {CIVIL JURISDICTION) SCZ/8/28/2023 BETWEEN: WILLIAM SAUNDERS AND PEMBA LAPIDIARJES LIMITED LAPEMBA TRADING LIMITED CORAM: E. M. Hamaundu, JS j 5 )1\1~ 2iJ2j -·------ CCun- 50067. L, APPLICANT 1 ST RESP0NDENT 2 110 RESPONDENT For the Applicant : Mr W. Yosa, Messrs May and Company For the Respondent: Mr M. Mando, Messrs Mando & Pasi, Advocates RULING HAMAUNDU, JS delivered the Ruling of the court. Cases referred to: 1. Ethiopian Airlines Limited v Sunbird Safaris Limited, Sharma's Invcistment Holding Limited and Vijay Babula! Sharma (2007) ZR 235 1.0 Introduction 1.1 The applicant, William Saunders, wishes to appeal to the Supreme Court against a judgment of the Court of Appeal. R2 The applicant contends that his proposed appeal meets two of the thresholds prescribed in Section 13 of the Court of Appeal Act, No. 7 of 2016, namely; (i} That the intended appeal raises questions of public importance that require consideration by the Supreme Court; and (ii) That the intended appeal has reasonable prospects () of success. 1.2 It is also his application that, should leave be granted, there be a stay of execution of the judgment until the appeal is determined. 2.0 Background 2.1 The two respondents and a company known as Industrial Credit Company (in which the applicant was a shareholder) were in litigation against each other in the High Court at Ndola. That litigation culminated into judgment being entered in favour of the two respondents in 2011. 2.2 The judgment was eventually assessed on 23rd February, 2018. The assessed amount is uncertain as there is no R3 document that has been filed to evidence it. However, it is not in dispute that the respondents did not proceed to levy execution by way of writ of fifa. 2.3 Shortly, thereafter, about a month later, the respondents took out two applications before the Deputy Registrar; one was for the lifting of Industrial Credit Company's Corporate veil, while the other was for the joinder of the applicant and a company known as Pan African Building Society to the proceedings in which Industrial Credit Company was already a judgment debtor in the assessed sum. The ultimate desire by the two respondents in the two applications was for the applicant and Pan African Building Society to be joined to the said proceedings and be made to pay the judgment debt of Industrial Credit Company. 2.4 According to the respondents, they adopted this approach because they had since discovered that, shortly after the judgment in 2011, Pan African Building Society, a company in which the applicant was the majority shareholder had acquired all the assets of Industrial R4 Credit Company and that the applicant signed the acquisition agreements on behalf of both companies. 2.5 The Deputy Registrar granted both applications and ordered the applicant and Pan African Building Society to pay the judgment sum. 2.6 The applicant then appealed to a judge at chambers who reversed the findings and orders of the Deputy Registrar. 2.7 This prompted the two respondents now to appeal to the Court of Appeal, which reversed the High Court Judge's decision and upheld the original decision of the Deputy Registrar. 3.0 The Arguments 3.1 Counsel for the applicant, Mr Yosa, has argued that at the core of the proposed appeal is the question concerning the procedure and the threshold to be met when lifting the corporate veil. Counsel submits that there is a question whether the corporate veil can be lifted on an application for joinder; and after judgment has been delivered in the matter. According to counsel, this is a question which requires the Supreme Court to shed light on the applicable 0 RS principles and provide clarity on the manner in which the corporate veil can be lifted. Mr Yosa submits therefore that this is an appropriate cause in which leave to appeal should be granted. 3.2 Mr Mando, counsel for the respondents has submitted that, in this case, the respondents in their applications had shown that all the assets of the judgment debtor have been hived away, leaving none that could be used to satisfy a judgment debt. It is Mr Mando's further submission that the applications did reveal that, in the transactions that hived away the assets, the applicant was; a Director in the judgment debtor, a shareholder in the purchaser; and also a shareholder in the company that provided secretarial services to the agreement. Mr Mando argues that it was on those facts that the Court of Appeal held that the applicant should be held personally liable for the debts of the judgment debtor. It is Mr Mando's submission that the applicant's conduct of hiving off the judgment debtor's assets to defeat the execution of the judgment constituted improper conduct. 0 R6 3.3 Mr Mando goes on to argue that, as regards procedure, the law is well settled; and there is nothing more to be added. Among other authorities, counsel has cited the case of Ethiopian Airlines v Sunbird Safaris111 and argues that no trial is required to be held in order to establish that a director has run a company fraudulently. 4.0 The Decision 4.1 I tend to agree with the Mr Yosa that proceedings in which the lifting of the corporate veil is sought ought to be more comprehensive because there is evidence to be adduced and facts to be established on a burden of proof whose standard is quite high. I do not think that a joinder application would permit one to adequately defend themselves against such an application. In the case cited by Mr Mando, \Vhose full citation is Ethiopian Airlines Limited v Sunbird Safaris Limited, Shanna's Investment Holding Limited and Vijay Babula! Sharmal 1l, the 3 rd respondent, against whom the order to lift the corporate veil was sought, was a party to the proceedings which were brought for the purpose of 0 R7 winding up the 2nd respondent and lifting the corporate vail against the 3 rd respondent, after the appellant had failed to recover a judgment sum owed to it by the 2nd respondent by way of writ of .fifa. In my view, the case of Ethiopian Airlines Limited provides a good example of how a judgment creditor may go about lifting the corporate veil. • 4.2 Consequently, I find that the proposed appeal has reasonable prospects of success. I grant the applicant leave to appeal to the Supreme Court against the judgment of the Court of Appeal. I also grant the applicant an order of stay of execution until the proposed appeal is determined. Dated the ... ../.~day of ........ .2.--:c ,',;':,./.✓.. / E. M. i!!i!:,/ SUPREME COURT JUDGE " ............. 2025