Zambia Agricultural Development Ltd (In liquidation) v Zulu & 4 Others (SCZ 8 68 of 2002) [2003] ZMSC 4 (23 September 2003)

IN THE SUPREME COURT FOR ZAMBIA SCZ APPEAL NO.8/68/2002 APPEAL NO. 124 OF 2002 HOLDEN AT LUSAKA (CIVIL JURISDICTION) ZAMBIA AGRICULTURAL DEVELOPMENT LTD (cid:9) APPELLANT (IN LIQUIDATION) AND EDWARD ZULU AND FOUR OTHERS (cid:9) RESPONDENT Coram: (cid:9) Sakala, CJ., Chibesakunda and Chitengi, JJS 2th March and 23rd September, 2003. For the Appellant (cid:9) Mr. C. Muneku of Charles and Charles For the Respondent, (cid:9) Mrs. T. Sampa, Senior Legal Aid Counsel. Associates. Sakala, C. J. delivered the Judgment of the Court. JUDGMENT On 27th March, 2003, when we heard this appeal, we allowed the appeal. We ordered that no execution should be levied against the Appellant until the process of liquidation had been completed. We made no order as to costs. We indicated then that we shall give our reasons later. We now give our reasons. This is an appeal against a ruling of the Deputy Chairperson of the Industrial Relations Court ordering that execution be levied on the Appellant's goods while the Appellant was under liquidation. The brief facts leading to the appeal are that the Respondents obtained a Judgment against the Appellants on a claim for retrenchment based on a collective agreement entered into between the parties. After obtaining the said Judgment, there was an assessment in favour of the Respondents. Following that assessment, the Respondents issued a writ of fifa against the Appellant's liquidator. Subsequently, the Sheriff of Zambia seized the goods complained of from the liquidation Manager's office. The Appellants applied for a stay of execution of the seized goods. The Deputy Chairperson of the Industrial Relations Court refused to stay the execution. This meant that the fifa obtained by the Respondents was still valid, hence the appeal to this court. Four grounds of appeal were filed, three of them alleging gross misdirection on the part of the Deputy Chairperson in issuing a writ of fifa against the Appellant's Liquidator and directing the Sheriff of Zambia to seize the property under the control of the liquidator; in failing to find that a Judgment against the Appellant in liquidation can not be executed before completion of the liquidation process; in failing to find that creditors of the Appellant in liquidation have to wait to be ranked on a priority list; in failing to find that the Appellant's liquidator and any goods or items under his control which do not belong to the Appellant in liquidation should not have been made part of the matter; and that the court should have found that the judgment beneficiaries should bear the costs of the unlawful seizure of the goods effected by the Sheriff of Zambia pursuant to a flfa wrongfully issued against the Appellant's liquidator for the goods which were not the property of the Appellant. The written heads of argument centred on these five grounds. In the oral submissions, Mr. Muneku pointed out that notwithstanding the judgment and the assessment, the position remained that the Respondents were supposed to be ranked on the priority list by the liquidator and if any dividends were to be distributed to the creditors they could then have been dealt with accordingly. Mr. Muneku pointed out that the Deputy Chairperson refused to accept this argument. Thus, the effect of the refusal to grant the stay led to the enforcement of the flfa resulting in the goods being subsequently seized. Counsel submitted that had the stay been granted the seizure would not have been effected. He urged the court to order that a company in the process of liquidation should not be subject to an order of execution on property in liquidation as the creditors should wait to be ranked in priority if they have to be any dividends to be distributed. Mrs. Sampa in response (cid:9) briefly pointed out that in the instant case the Appellants had accepted liability and it had made part payment but were unable to pay the full amount. The short answer to this appeal is as contended by counsel for the Appellant. A company under going the process of liquidation should not be the subject of execution until the liquidation process has been completed. We agree that it was a misdirection on the part of the Deputy Chairperson to fail to find that a judgment against the Appellant in liquidation could not be executed before the completion of the liquidation process. It was also a misdirection on the part of the Deputy Chairperson to issue a writ of fifa against the Appellant's liquidator. It was further a misdirection for the Court not to find that creditors of the Appellant in liquidation had to wait to be ranked on a priority list if they• had to be any dividends to be distributed. Indeed, it was an error for the court to order seizure of the goods that did not belong to the Appellant's liquidator. For the foregoing reasons, we allowed the appeal and ordered that no execution should take place against the Appellant until the process of liquidation had been completed. We made no order as to costs. E. L. Sakala CHIEF JUSTICE I L. P. Chibesakunda SUPREME COURT JUDGE SUPREME COURT JUDGE