Zesco Limited v El Sewedy Illumination and Anor (APPLICATION 94/2023) [2023] ZMCA 293 (29 December 2023)

IN THE COURT OF APPEAL OF ZAMBIA HOLDEN AT LUSAKA (Civil Jurisdiction) APPLICATION 94/2023 BETWEEN BLICOF IJRTOF-Ap ZESCO LIMITED APPELLANT AND 2 9 DEC 2023 LIMITED ZAMBIA ELECTROMETER 2ND RESPONDENT ATTORNEY GENERAL 3RD RESPONDENT 151 RESPONDENT CORAM: Muzenga, Patel and Chembe, JJA On 7th December 2023 and 29th December 2023 For the Appellant: Mr. G. Hakainsi of Messrs LM Chambers For the 1st Respondent: Mr. M. Nkunika Sangwa Advocates & Mr. N. Mwila of Simeza RULING Muzenga, JA, delivered the Ruling of the Court. Cases referred to: 1. Burden Mufungwe and Another v. Moshen Zarad Hainder and Another -CAZ/06/062/2019 2. Zambia Revenue Authority SCZ Judgment No. 18 of 2016 v. Post News Papers Limited - R2 3. Attorney 4. Molly Pelekamoyo v. LAZ (2008) Vol. 1 ZR 21 Washington General v. New Plaza -CAZ Appeal No. 147 of 2021 S. Lazarous Kamukwamba Mining -SCZ Appeal No. 136 of 2012 and Others v. First Quantum 6. Attorney General v. Major Samuel Mbumwae and Others - SCZ Appeal No. 3 of 2010 7. Trusted Society of Human Rights Alliance v. Mumo Matemu and Another - Petition and Another v. No. 12 of 2013 The Republic -Petition 8. Francis Maruatetu No. 15 of 2015 9. John Mumba, Danny Museteka and Others v. Zambia Red Cross Society 10. Zambia Revenue (2006) ZR 137 Authority v. Post News Papers - Limited SCZ Judgment No. 51 of 2014 11. Salomon 12. Associated v. Salomon (1897) AC 22 Chemicals Limited & v. Hill and Delamain & Ellis Company -SCZ Judgment No. 7 of 1998 And Others v. Mabvuto 13. Abel Mulenga Adan Avuta Chikumbi 14. Finsbury and Others and The Attorney Limited -SCZ Judgment Investments and Another General (2006) and Others v. Antonio Ventriglia No. 17 of 2013 ZR 33) Alias Chief Liteta v. Phanwell Chikalasha 15. Charles Mulando Alias Chief Chitanda, And Munokalya Siloka Mukuni XIX -CAZ/08/ Morgan Ngulube Alias Chief Chamuka Mukuni Alias Chief Munokalya 434/ 2021 16. Sonny Paul Mulenga & Others v. Investrust Bank Merchant Limited (1996) ZR 10 17. Fred Mmembe and Another v. Abel Mboozi and 5 Others - SCZ Appeal No. 7 of 2021 Legislation referred to: 1, The Court of Appeal Rules, Statutory Instrument No. 65 of 2016. 2. The Court of Appeal Act, No. 7 of 2016. R3 1.0 INTRODUCTION 1.1 This is a renewed application for stay of enforcement/execution of a charging order issued by the High Court pending the determination of the appeal pursuant to Order 10 Rule 2(8) and Rule 5 of the Court of Appeal Rules, 2016 (CARs) and Section 9(b) of the Court of Appeal Act, 2016. 2.0 BACKGROUND 2.1 The background to this application is that the 1st respondent sued the 2nd respondent in the court below claiming a sum of USDl,288,112.00 among other claims. A judgment in default of appearance was entered against the 2nd respondent on 23rd September 2022. 2.2 When the 2nd respondent failed to settle the judgment debt, the 1st respondent applied for a charging order nisi in respect of Stand No. 5252, Ndola which was granted on 3rd November 2022, after which the matter was set down for hearing of an application to make the charging order absolute. 2.3 It was at this point that the appellant applied on 6th December to be joined to the proceedings in the court below as intervening party claiming an interest in the subject property, which application R4 the court below denied. Disconsolate with the aforementioned Ruling, the appellant lodged an appeal to this court. 2.4 The appellant then proceeded for stay of to make an application proceedings and enforcement/execution of the Charging Order issued in respect of Stand No. 5252 Ndola pending determination of the appeal. The lower court declined the application on account that the appellant was not a party to the proceedings. 2.5 The appellant then proceeded before the to renew the application single judge of this court, who declined to grant it on the grounds that the appeal had no prospects of success. The appellant thus moved the full court to renew the application, culminating into this Ruling. 3.0 APPLICANTS' ARGUMENTS 3.1 Learned counsel for the applicant argued that an appeal does not operate as a stay, hence the within Counsel application. contended that before granting a stay, the court must preview the grounds of appeal in order to ascertain if the prospects of success exist. For this argument, counsel relied on the cases of Burden Mufungwe and Another v. Moshen Zarad Hainder and Another1, and Zambia Revenue Authority 2 It v. Post News Papers Limited. was learned counsel's submission that the pending appeal has high RS prospects of success as can be gleaned from the grounds of appeal contained in the memorandum of appeal. 3.2 Counsel further the 2nd submitted that if a stay is not granted, respondent will sell the charged property and the appeal will be rendered nugatory. Counsel argued that the Apex court has time and again expressed the undesirability of determining a matter where the orders sought would serve no purpose for being academic. Reliance was placed on the case of Attorney General v. LAZ.3 3.3 It was contended that the pending appeal raises a point of law relating to charging orders issued under Order SO of the Rules of the Supreme Court of England, 1999 Edition. Reliance was placed on our decision in the case of Molly Pelekamoyo Washington v. New Plaza.4 3.4 Counsel prayed that the applicati on for stay be granted. 4.0 1 ST RESPONDENT'S ARGUMENTS 4.1 Counsel for the respondent opposed the application and in doing so posed three questions for our determination. The first being whether the appellant being a non-party, only appealing against the ruling relating to joinder can seek an order to stay a charging order which is not the subject of the appeal. 4.2 In support of the first issue, learned counsel contended that a non­ R6 party cannot take out an application that has a bearing on an existing order, until the joinder has been made. Counsel argued that the appeal has nothing to do with a charging order and that it has to do with a ruling refusing joinder. Reliance was placed on the cases of Lazarous Kamukwamba and Others v. First Quantum Mining5 and Attorney General v. Major Samuel Mbumwae and Others6 among other cases in support of this argument. It was learned counsel's contention that a non-party has no locusto take out an application that has an adverse on an effect existing matter. Therefore, an order to stay a charging order will be contrary to the law cited by counsel. 4.3 The second issue raised by counsel is whether the appellant even as an intervenor can stay execution of any orders made in this action? On this issue, counsel the argued that even assuming appellant was made an intervenor, it would not have acquired the right to stay execution as intervenor in this matter. In placing reliance on the Kenyan cases of Trusted Society of Human Rights Alliance v. Mumo Matemu and Another7 and Francis Maruatetu and Another v. The Republic, 8 learned counsel submitted that an intervenor cannot raise issues such as an ,, R7 application to stay proceedings or indeed to stay execution in an action in which he has been joined as an intervenor when the principal parties to the action have not made such an application. It was contended that the order sought by the appellant is beyond the scope of issues or applications the intervenor can take in an action. 4.4 The third issue learned counsel raised is whether the appellant has met the threshold for the grant of a stay. Under this limb, learned counsel for the pt respondent has submitted that there is nothing to stay herein as the proceedings in the court below terminated by the issuance of a charging order absolute. Counsel argued further that the charging order has since been registered with the Lands and Deeds Registry. It was learned counsel's submission that when there is nothing to stay, an order for stay cannot be made. Reliance was placed on the cases of John Mumba, Danny Museteka and Others v. Zambia Red Cross Society 9 and Zambia Revenue Authority v. Post News Papers limited. 4.5 It was counsel's argument that the appellant has not demonstrated the likelihood of the appeal succeeding. It was contended that the appellant being a shareholder in the 2nd respondent company is a separate legal entity and as such has no interest, legal or equitable R8 rights in its property. Reliance was placed on the cases of Salomon v. Salomon11 and Associated Chemicals Limited v. Hill and Delamain & Ellis & Company.12 It was counsel's contention that there are no prospects of the appeal succeeding. 4.6 We were urged to dismiss the application for want of merit with costs. 5.0 AT THE HEARING 5.1 At the hearing of the application, the court that the parties informed they would rely on their various filed documents and augmented briefly. 6.0 DECISION OF THE COURT 6.1 We have meticulously considered the appellant's application, affidavits, skeleton arguments for and against the motion. We shall first consider the issue of locus standi raised by learned counsel for the 1st respondent. 6.2 Counsel contended that the appellant, having not been joined to the cause in the court below cannot seek to stay a charging order in the matter in which it was not a party. The general rule is that only parties to an action can seek remedies under the said cause. A person must ordinarily apply to be joined to the proceedings and the court will not ordinarily grant the application unless the intended R9 party discloses sufficient interest or locus standi (see Abel Mulenga And Others v. Mabvuto Adan Avuta Chikumbi and Others and The Attorney General. 6.3 It is not in dispute that the appellant is and was not a party to the proceedings in the court below. It can therefore, in a way, be considered to be a stranger to the proceedings. In our jurisdiction, it is very rare that a stranger may obtain an order in proceedings in which they are not parties. We have said 'very rare' but not impossible. The Supreme Court was faced with such a situation for the first time in the case of Finsbury Investments Limited and Others v. Antonio Ventriglia and Another14 where the apex to say: court had the following to the effect we agree with counsel that there is case law, albeit that one does not need to be in which an injunction arose for the none from our that this is the first time that this court has "In this regard, applicants jurisdiction, a party to the proceedings for them to have locus standi to apply for the dissolution of that injunction. however, by strangers been faced with an application, action, granted an injunction to discharge in which they are not parties. We have painstakingly discuss locus standito apply for the discharge which affects non-party them. These authorities a court, to an in a matter scrutinized the authorities relating of an injunction that a establish to have an injunction that having legal principles to a non-party We must reiterate, can approach RlO discharged, been affected by the injunction." if that non-party can show that they have 6.4 It is clear therefore that a stranger to proceedings may actually obtain an order from court under very exceptional circumstances. A single judge of this court in the case of Charles Mulando Alias Chief Liteta v. Phanwell Chikalasha Alias Chief Chitanda, Morgan Ngulube Alias Chief Chamuka And Munokalya Siloka Mukuni Alias Chief Munokalya Mukuni XIX,15 after referring to the Finsbury to say: case supra had the following mere inconveniency, is not to be allowed to apply to or dissatisfaction must be affected he will be left with no option disapproval "In order for stranger dissolve an injunction, discomfort, sufficient. The stranger otherwise or materially, but to apply to join proceedings. will be If a stranger allowed willy nilly to make applications which they are not it would lead bodies turning our justice These rules of locus standi are well intended be followed." in causes in to busy parties, and must system into a mockery. personally 6.5 We therefore hold the firm view that even if considered as a complete stranger, the appellant would still, in the circumstances be entitled to seek to stay or injunct an order that would be injurious to it. R11 6.6 In casu, the appellant is not a complete stranger. It applied to join proceedings in the court below, with a view that they challenge the charging order made in respect of property to which it alleges has interest in. Having lost the bid to be joined, it appealed the ruling to this court. In these proceedings before us, the appellant is entitled to apply to stay the execution of the order in the court below. Whether or not the application would be granted depends on whether the threshold has been satisfied. 6.7 We have no hesitation therefore in stating that an appellant, in the circumstances of this case, is entitled to apply for a stay and this court has the jurisdiction to hear the same on the basis of the pending appeal before us. We therefore find no merit in this argument it. and we dismiss 6.8 The second issue seems to be challenging the scope of the rights. intervenor's what We see it unwise at this stage to consider an intervenor once joined, can or cannot do. Doing so would have effect prejudicial as those are issues the lower court will have to determine should the appellant We have be joined as an intervenor. already held that the appellant is entitled to apply for a stay. 6. 9 Counsel contended in the third issue that there is currently nothing to stay as proceedings in the High Court terminated upon the R12 charging order nisi being made absolute and that the same was since registered in the Lands and Deeds Registry. We agree with counsel, only to the extent that proceedings in the High Court cannot be stayed as currently there are no existing proceedings. However, we do not agree that the registration of the charging order means that a stay cannot be issued. It would have been different if the charged property has since been sold. It is our considered view that a stay is still tenable as execution is not completed. 6.10 We now turn to consider the gist of this application. The Supreme Court has in a plethora of cases guided on what must be taken into consideration when deciding whether or not to grant a stay. In the case Sonny Paul Mulenga & Others v. Investrust Merchant Bank Limited 16 the Supreme Court stated that: to ask for a stay solely because the court below or this court an appeal does not as a stay of execution and it is an to be More is required pointless "In terms of our rules of court, automatically operate utterly appeal has been entered. advanced to persuade that it is desirable, judgment pending be denied immediate should only on good and sufficient its discretion whether to preview is entitled appeal." proposed necessary to grant a stay or not, the court the prospects of success of the party appeal. The successful and just to stay a enjoyment ...... grounds of a judgment In exercising 6.11 Learned counsel for the appellant vigorously submitted that the R13 pending appeal has high prospects of success whereas learned counsel for the 1st respondent has with equal force argued that the appeal is bereft of merit. There is an interesting argument by learned counsel that the appellant being a shareholder has no interest whatsoever in the property belonging to the 2nd respondent due to separate legal personality between a company and its shareholders. 6.12 We must state that this is a long standing principle and it is still good law. However, we cannot also turn a blind eye to the fact the owners of a limited company have interest in the stake of the company as they may stand to lose should anything detrimental happen to it or its properties. This position was recently recognised by the Supreme Court in the case of Fred Mmembe and Another v. Abel Mboozi and 5 Others17 , a case which dealt with the Liquidation of the Post News Paper, in the following terms: "8.50 It is, in our view, elementary fairness and rights affected, is to be adversely that a person whose property justice (shareholding) should know before hand and be afforded an early opportunity, make representation decision makers. if he so wishes, to to dissuade the R14 view, is 8.51 The bottom line, in our considered that the first appellant party and in the peculiar this case, was competent consent judgment that adversely his rights. Such challenge whatever means lawfully available, including was an interested circumstances to challenge of a affected a fresh action." commencing could be by 6.13 We therefore hold the view that shareholders have interest in a company they form. Having a very strict approach may stop a shareholder from suing in occasions where the company has clearly embarked on a self-destraction mode detrimental to the shareholders. 6.14 We have had sight of the grounds of appeal and without delving deep into the merits of this case, we hold that the appeal has reasonable prospects of success. We say so especially in the light of the manner in which the High Court was moved to obtain the charging order. If this argument holds water, then the charging order is a nullity. We cannot thus refuse to grant a stay, consequently facilitating the enforcement of a possibly void order. 6.15 We therefore find it necessary and just to grant a stay of execution of the charging order. We therefore grant the application. The charging order issued by the lower court dated 15th June 2023 is RlS hereby stayed until determination of the appeal or until further order of th is court. 7 .0 CONCLUSION 7.1 Having found merit in the application , we have granted a stay of execution of the charging order absolute of pending determination the appeal. 7.2 Costs will be in the cause. K. MUZENGA COURT OF APPEAL JUDGE A. N. PATEL, SC .............. �k ............ . Y. CHEMBE COURT OF APPEAL JUDGE COURT OF APPEAL JUDGE