IN THE HIGH COURT FOR ZAMBIA 2022/HPC/0176

AT THE COMMERCIAL REGISTRY

HOLDEN AT LUSAKA
(Civil Jurisdiction)

BETWEEN:

EVEN AMI CIVIL ENGINEERING LIMITED PETITIONER

AND

L.M ENGINEERING LIMITED 12 MAY 2022 RESPONDENT

Before Honourable Mr Justice K. Chenda in Chambers on 12th May 2022.

For the Petitioner : Mr B. J. Abwino of Ranchod Chungu Advocates

For the Respondent : Mr M. Nyirenda of SLM Legal Practitioners

EX-TEMPQRE RULING
On Application to Dismiss Petition on Point of Law and for Abuse of Process

Legislation referred to:

1. The Corporate Insolvency Act No. 9 of 2017, ss. 56 and 57

Rules of Court:

2. The Rules of the Supreme Court of England 1965, contained in the

White Book 1999 Edition, Order 14A Rule 1(1) and explanatory note
18/19/18

Case law:

3. Castanho v Brown & Root (UK) Ltd & Anr (1981) 1 All ER 143 at p. 148
4. Amadeus International Limited v Rana Marketing Limited - Appeal No.
84/2008 at p.J18
5. Anderson Mazoka & Ors v Levy Mwanawasa & Ors (2005) ZR138 at
p. 158-159
1 INTRODUCTION

1.1 The Petitioner as an unsatisfied creditor took out this action for
winding up of the Respondent company. The Petitioner also made an
application for appointment of a provisional liquidator which I
directed to be heard inter partes.

1.2 However, before the said interlocutory hearing and before I could also
hear the petition, the Respondent launched its own an application
seeking dismissal of this action in limine:

1.2.1 on a point of law; and

1.2.2 for alleged abuse of the process of the Court.

1.3 I scheduled both applications for hearing today and decided to hear
and dispose of the Respondent’s application first since its outcome
has the possibility of affecting the fate of the substantive matter.

1.4 After listening attentively to the arguments verbalised from the Bar
and studying the competing documentation followed by a careful
consideration, my decision is as set out below.

2 THE CONTENDED ABUSE OF PROCESS

2.1 In the case before Court the Petitioner and Respondent are
respectively the judgment creditor and debtor in the sum of
K725,000 by virtue of a consent judgment dated 18th Februaiy 2022
entered in cause 2021/HPC/0613.

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2.2 The affidavit evidence also shows that the judgment debt is the
subject of a pending application for payment in instalments in the
said cause coupled with a subsisting order for stay of execution.

2.3 It is the pursuit of this petition in these circumstances that lead the
Respondent to complain that it constitutes an abuse of the process
of the Court.

2.4 The Rules of the Supreme Court of England2 (“RSC”) contain a

useful exposition on the topic of "abuse of process' and the Court's power to

deal with it summarily. The explanatory note 18/19/18 in particular

provides:

"18/19/18

‘Abuse of the process of the Court’

Para. (l)(d) confers upon the Court in express terms powers
which the Court has hitherto exercised under its inherent
jurisdiction where there appeared to be "an abuse of the process
of the Court." This term connotes that the process of the
Court must be used bona fide and property and must not
be abused. The Court will prevent the improper use of its
machinery, and will, in a proper case, summarily prevent
its machinery from being used as a means of vexation and
oppression in the process o f litigation (see Castro v. Murray
(1875) 10 Ex. 213; Dawkins v. Prince Edward of Saxe Weimar;
Willis v. Earl Beauchamp (1886) IIP. 59, per Bowen L. J. at 63).”
(Emphasis added)

2.5 Equally insightful but brief are the words of Lord Scarman in the
English case of Castanho v Brown & Root (UK) Ltd & Anrh

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 “The court has inherent power to prevent a party from
obtaining by the use of its process a collateral advantage
which it would be unjust for him to retain—” (Emphasis added)

2.6 In the case before Court it has not been established by the
Respondent that this petition has been deployed as a tool of
oppression or vexation against it.

2.7 The Respondent has also not demonstrated that the Petitioner is
otherwise using this action to achieve some collateral purpose.

2.8 Infact since there is an undisputed debt due from the Respondent to
the Petitioner, it shows that the latter arguably had just cause to
petition, subject to further interrogation at the substantive hearing.

2.9 This can be contrasted with a situation where a debt is contested as

guided by the Supreme Court in Amadeus International Limited v
Rana Marketing Limited4 wherein Wood, JS stated at page J18
that:

“It was not necessary for the respondent to embark on

winding up proceedings concerning a debt that was
contested and found to be statute barred. This, as the learned
trial Judge properly adjudged, was an abuse of the petition
procedure. ” (Emphasis added)

2.10 Thus there is no basis for me to rule that the filing and prosecution
of the petition constitutes an abuse of the legitimate process of this
Court. Consequent to that the Respondent’s ground for dismissal of
the petition, anchored on this, is unsuccessful.

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3 THE CONTENDED POINT OF LAW

3.1 The contention under this limb is that the petition was premature
having been allegedly filed less than 30 days after the date of a
statutory demand for payment as prescribed by s. 57(3)(a)(i) of the
Corporate Insolvency Act.1

3.2 The Respondent’s argument is tempting to accept given the fact that
the demand letter exhibited by it is dated 17th March 2022 whilst the
petition was filed less than two weeks later on 30th March 2022.

3.3 However, the Petitioner has in its opposing affidavit exhibited a

preceding demand letter dated 21st February 2022, thereby
demolishing the evidential basis of the Respondent’s argument.

3.4 Furthermore, close perusal of s.57(3)(a) of the Corporate Insolvency

Act relied on by the Respondent shows that its application is

confined to a debt comprising ‘a prescribed fee’.

3.5 The Respondent has not established that the judgment debt due
from it to the Plaintiff qualifies as, or stems from ‘a prescribed fee’ in
terms of s.57(3)(a). Thus the date of filing the petition versus date of
last demand letter is of no legal significance.

3.6 This too is fatal to the Respondent’s point of law argument and
ground, which I hereby dismiss.

3.7 The business in this application should ordinarily end here but I did
at the hearing invoke the provisions of Order 14A Rule 1(1) of the
RSC to raise the following issue from the Bench:

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 1 Whether given the status of the Petitioner as a judgment
creditor, the petition can be brought on grounds of the
Respondent’s inability to pay before the Petitioner has first
exhausted the processes of execution of the consent judgment in
cause 2021/HPC/0613.’

3.8 I invited submissions from Counsel and the Petitioner argued that
since multiple demands for payment were made and unheeded, there
is no bar to the Petitioner taking out these winding up proceedings
without first exhausting the enforcement mechanisms available in
cause 2021/HPC/0613.

3.9 The Respondent’s submission on the issue was that it would be in

the interests of justice for the Petitioner to enforce the consent
judgment before resorting to a winding-up petition.

3.10 From the originating process, the Petitioner seeks the winding up of
the Respondent on the ground of inability to pay its debt pursuant
to ss. 56 and 57 of the Corporate Insolvency Act. I reproduce the
text of the sections as:

“56. (1) Subject to this section, a company may be wound-up by

the Court on the petition of-

(a) the company;

(b) a creditor, including a contingent or prospective creditor of

the company;

(c) a member;

(d) a person who is the personal representative of a deceased

member;

(e) the trustee in bankruptcy of a bankrupt member;

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 (f) a liquidator of the company appointed in a voluntary
liquidation; or

(g) the Registrar or Official Receiver.

57. (1) The Court man order the winding-up of a company on

the petition o f a person other than the Official Receiver if-

(a) the company has by special resolution resolved that it be

wound-up by the Court;

(b) the company is unable to pay its debts;

(c)
(d) -;

(e) —;

(f) or

(9) —•
(2) The Court may order the winding-up of a company on the
petition of the Registrar or the Official Receiver on the grounds
specified in subsection (1) (b), (d), (e) or (f) or on the ground that
the company has persistently failed to comply with any of the
provisions of this Act.

(3) For purposes of this section, a company is unable to pay

its debts if-

(ajthere is due, from the company to any creditor,

including a creditor by assignment, a prescribed fee,
and-

(i) the creditor has, more than thirty days previously,

served on the company a written demand requiring
the company to pay the amount due; and

(ii) the company has failed to pay the sum or to secure

or compound it to the reasonable satisfaction of the
creditor;

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 (b) execution or other process issued on ajudament, decree
or order of any Court in favour of a creditor of the
company is returned unsatisfied in whole or in part: or

(c) the company is unable to pay its debts as they fall due.

(4) The Court shall, in determining whether a company is unable to

pay its debts, take into account the contingent and prospective
liabilities of the company.” (Emphasis added)

3.11 In Anderson Mazoka &> Ors v Levy Mwanawasa & Ors5 the
Supreme Court guided as follows in terms of interpretation of
legislative provisions -

“It is trite law that the primary rule of interpretation is

that words should be given their ordinary grammatical
and natural meaning. It is only if there is ambiguity in the
natural meaning of the words and the intention of the legislature
cannot be ascertained from the words used by the legislature
that recourse can be had to the other principles of
interpretation... ” (Emphasis added)

3.12 Applying the aforesaid principles, my interpretation of s. 57 (3) of the

Corporate Insolvency Act is that (a) and (c) thereunder relate to a
debt that has not been endorsed by the the adjudicative system of
the Courts while (b) relates to a debt that has crystallised into a
judgment debt.

3.13 Thus where a debt has graduated into a judgment debt, a would be
petitioner must adhere to the requirement under s.57(3)(b) of the
Corporate Insolvency Act to exhaust the enforcement mechanisms

available for realising the judgment debt, which if unsuccessful can

be grounds for a winding-up petition.

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3.14 In the case before Court, there is no record that the Petitioner (as
judgment creditor in cause 2021/HPC/0613) followed through with
its threat of execution against the Respondent.

3.15 Further, the fact that there is a pending application for payment in
instalments and a subsisting stay of execution means that the
process of execution would logically follow (if necessary) after the
ongoing post judgment business is concluded. Accordingly, this
winding up petition is premature.

4 CONCLUSION AND ORDERS

4.1 Under the Corporate Insolvency Act, a winding up petition on

grounds of inability to pay may (in a manner of speaking) be made
by two categories of creditors:

(i) creditors whose debt has not been endorsed by a Court of

competent jurisdiction (s. 57(3)(a) and (c); and

(ii) judgment creditors (s.57(3)(b).

4.2 Where the intending Petitioner is a judgment creditor, he must first

exhaust the processes of execution available in the cause where the
judgment (or payment order) was entered before resorting to a
winding up petition under the Corporate Insolvency Act.

4.3 Any resultant petition must state and exhibit proof that execution
was attempted but unsuccessful (partially or wholly) in realising the
judgment debt.

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4.4 A winding up petition brought by a judgment creditor before such
execution is levied is premature and liable to be dismissed by the
Court (on its own volition or upon application).

4.5 The Petitioner herein having failed to heed the above, before
commencement of this action, renders the petition premature and it
is hereby dismissed.

4.6 With the substantive matter at an end it is otiose to hear the

interlocutory application for appointment of a provisional liquidator.

4.7 Given that the petition was precipitated by the neglect of the
Respondent to settle the judgment debt and also that the termination
was on a point of law from the Bench, it would be fair and just for
each party to bear its own costs. So I order.

Dated at Lusaka this 2022.

K. CHENDA
Judge of the High Court

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