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IN THE HIGH COURT FOR ZAMBIA 2011/HPC/0023

AT THE COMMERCIAL REGISTRY
HOLDEN AT LUSAKA
(Civil Jurisdiction)

BETWEEN:

ELMAR ENGINEERING LIMITED PLAINTIFF

AND

ALLEGRA MINING ZAMBIA LIMITED DEFENDANT

BEFORE THE HON. JUSTICE NIGEL K. MUTUNA ON 13th DAY OF JULY, 2011

For the Plaintiff : Mr. Madaika of Simeza Sangwa & Associates

For the Defendant : Mr. P. Chungu Ranchod Chungu Advocates

RULING

Cases referred to:

1. Smith –VS- Peters (1895) LR.

2. Bank Mellat –VS- Nikpour (1985) Com. L.R. 158.
3. R –VS- Kensignton Insurance Tax Commissioners Ex-parte Polynac (1917)
1KB 486.
4. Third Chandris Corporation –VS- Unimarine SA (1979) QB 645.
5. London and Blackwall RY –VS- Cross (1886) 31 Ch D 345.
6. Aristogerasimos Vangelatos –VS- Demetre Vangelatos, Detective
Constable Chishimba and V.B. Malambo (Partner Malambo and Company)
(2005) ZR 132.
7. Mareva Compania Navera SA –VS- International Bulkcarriers SA (1980) 1
ALL ER page 213.
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Other authorities referred to:

1. Supreme Court Practice, 1999, Volume 1.

2. Halsbury’s Laws of England third edition, Volume 21 page 343.
3. Commercial Litigation: Premptive Remedies, third edition Sweet
and Maxwell 1997 page 207.

On 13th May, 2011, I granted an ex-parte order for a mareva injunction in

favour of the Plaintiff against the Defendant. The matter came up on inter
parte hearing on 8th June, 2011. The relief sought by the Plaintiff as endorsed
in the summons is as follows;
“(i) The Defendant whether by itself, its servants or agents or any
of then or otherwise howsoever be restrained from removing from the
jurisdiction or in any way dealing with or diminishing the value of
any of its assets whether held in its own name or not and whether
solely or jointly owned;
(ii) The Defendant whether by itself, its servants or agents or any
of them or otherwise howsoever be restrained from disposing of,
assigning, charging or otherwise dealing with any of its assets
within the jurisdiction whether held in its own name or not and
whether solely or jointly owned; and
(iii) The Defendant do cause to be sworn and filed into Court
within 7 days from date of the Order an affidavit in which it
discloses all its assets (including bank accounts) whether held in its
own name or not and whether solely or jointly owned, giving the
value, location and details of all such assets and exhibiting all
documents to evidence ownership, custody or control.”

The affidavit in support was sworn by one Elizabeth Grobbelaar and it began
by highlighting the business relationship between the two parties. It went on
to state that certain third parties had obtained an injunction against the
Defendant which undermined the relationship of the two parties and put the
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equipment which is the subject of this dispute at risk. This prompted the
Plaintiff to remove some of the said equipment from the Defendant’s premises
to a safe place. The deponent went on to state as follows in relation to the
status of the Defendant; it does not have substantial assets in Zambia to
enable it satisfy any judgment that may be entered in favour of the Plaintiff; it
is merely a subsidiary controlled, financed and operated by the main company
in Australia; it has no permanent status in Zambia and it carrys out its mining
operations using a third party’s licence; and the Defendant’s bank account is
with Standard Chartered bank and it is now almost dissipated. She also listed
the assets held by the Defendant in Zambia.

The affidavit in opposition was sworn by one Kenneth James Fitzgerald and it
revealed as follows; that the Defendant is not indebted to the Plaintiff; the
subject matter for which this injunction is sought is restrained under cause
number 2010/HP/1155; the Defendant is a Zambian company incorporated
under the laws of Zambia and it operates independently. It has not operated
any where else other than Zambia; the Defendant does not own motor vehicles
ABZ 4365 and ABZ 3755, nor does it own any quad bike; the Defendant’s
account with Standard Chartered Bank is not depleted; and the Plaintiff has
not made full and frank disclosure of the Defendant’s assets and has only
made insufficient inquiry on the subject.

When the application came up for hearing, counsel for the two parties not only
relied on the skeleton arguments filed but they also made verbal submissions.
Mr. Madaika for the Plaintiff began by stating that the application was
anchored on order 29 rule L subrule 35A of the Supreme Court Practice
(white book). He went on the highlight the relief sought as endorsed in the
summons and the grounds upon which it was sought, being that; the
Defendant had no permanent status in Zambia and merely operates through a
third party; and the Plaintiff is not aware of any fixed assets nor other
investments other than those disclosed, belonging to the Defendant. It was
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therefore argued that there was need for the grant of the order sought in order
to preserve the property otherwise the Plaintiff would suffer irreparable injury
in the event of success. This it was argued would ensure administration of
Justice within the inherent jurisdiction of the Court so that any judgment this
Court would render would be enforceable. My attention in this respect was
drawn to Practice Note 29/1A/0 under Order 29 rule 1A of the white book and
the case of Smith –VS- Peters (1).

The second limb of counsel for the Plaintiff’s argument related to assets
disclosure. It was argued that this Court has a discretion to grant an order for
assets disclosure in circumstances such as this where an order of injunction
had been granted. My attention in this respect was drawn to order 29 rule 1A
of the white book.

Mr. P. Chungu for the Defendant advanced his submissions on three limbs.
The first limb was that since the relief sought was an equitable one, the
Plaintiff was obliged to come to Court with clean hands. It was argued that in
obtaining the ex parte order the Plaintiff misrepresented in certain facts and
withheld material facts. Counsel went on to highlight the misrepresentation of
facts as being those relating to the Defendant’s alleged assets and the status of
the Defendant’s account.

In the second limb, counsel addressed the need for full and frank disclosure on
the part of the Plaintiff in making the application. My attention in this respect
was drawn to the cases of Bank Mellak –VS- Nikpour (2), R-VS- Kensignton
Insurance Tax Commissioners Ex parte Polignac (3) and Third Chandris
Corporation –VS- Unimarine SA (4). It was argued in this respect that there
was non disclosure in respect of the amounts in the Defendant’s bank account.
Further that, there was no frank disclosure that the vehicles did not belong to
the Defendant.
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The third limb of counsel’s argument related to damages and irreparable

injury. It was argued that the Plaintiff is not entitled to the relief sough as the
injury it is bound to suffer can easily be atoned in an award of damages. In
arguing this ground counsel made reference to the case of London and
Blackwell RY –VS- Cross (5) and Aristogerasimos Vangelatos –VS- Demetre
Vangelatos, Detective Constable Chishimba and V. B. Malambo (Partner
Malambo and Co) (6).

The fourth limb of counsel’s argument was to the effect that the purpose of an
injunction is to maintain the status quo. By this application it was argued, the
Plaintiff intended to do the exact opposite. Therefore, the Court should not
grant the order. Reliance was made on Halsbury’s Laws of England, third
edition, in articulating this argument.

In counsel’s concluding remarks, he drew my attention to the six-hundle test

that must be satisfied for one to be entitled to a mareva injunction. In doing so
he made reference, Commercial Litigation: Pre-emptive Remedies third
edition. It was argued that the Plaintiff had failed to satisfy most of the tests
laid down therein.

Before I determine this application it is important that I state what my task is

at this stage of the proceedings. It is simply this that, I have to determine if
this is a proper case for the grant of a mareva injunction. I am not at this
stage called upon to determine the merits and demerits of the matter as that is
reserved for the full trial of this matter. I am prompted to make the foregoing
comment because in both the evidence and arguments the parties have gone to
great length at addressing me on their respective positions as they relate to the
main claim before me.
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The circumstances under which a mareva injunction will be granted have been
aptly stated under order 29 rule L subrule 36 of the white book. The said
order states thus;
“In an action in which the Plaintiff seeks to recover his property,
the Court has jurisdiction to grant an interlocutory injunction
restraining the disposal of property over which the Plaintiff has a
proprietary claim. The single most significant feature of the
Mareva jurisdiction is that it goes beyond this and enables the
Court to grant the Plaintiff an interlocutory injunction restraining
the Defendant from disposing of, or even merely dealing with, his
assets, being assets over which the Plaintiff asserts no proprietary
claim but which after judgment may be attached to satisfy a
money judgment. One of the hazards facing a Plaintiff in litigation
is that, come the day of judgment, it may not be possible for him to
obtain satisfaction of that judgment fully or at all. By a Mareva
injunction a Defendant may be prevented from artificially creating
such a situation; a Defendant is not to be permitted to thwart in
advance orders which the Court may make.”

Further its origins are in the Mareva Compania Navera SA –VS-

International Bulk-Carriers SA (1) case, where Lord Denning MR had this to
say at page 215 in respect of what instances such injunctions will be granted
in;
“If it appears that the debt is due and owing, and there is a danger
that the debtor may dispose of his assets so as to defeat it before
judgment, the Court has jurisdiction in a proper case to grant an
interlocutory injunction so as to prevent him disposing of those
assets.”

(The underlining is the Court’s for emphasis only).

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It is evident from the foregoing authorities that the test is that; there must be a
debt due and owing; and there must exist a danger that the debtor may
dissipate or dispose of his assets so as to defeat any judgment the Court may
grant in favour of the Plaintiff.

The question, whether or not there is a debt due and owing is left for the main
hearing. For now it is safe to say that the endorsement in the summons
suggests that this is the position. Regarding the second test, the arguments
advanced are that the Defendant has no meaningful existence in Zambia as it
is funded and operated by a foreign entity. Also that it is carrying out its
operations through a third party’s licence. Further, that any judgment that
this Court may grant in favour of the Plaintiff may not be satisfied as the
Defendant does not have sufficient assets to meet the judgment and is
dissipating its bank account held at Standard Chartered Bank.

The first argument alleging the Defendant’s lack of presence does not have the
support of Order 29 rule L subrule 35A of the white book and the Mareva (7)
case as that is not one of the criteria laid down for the grant of such an
injunction. In arriving at the foregoing finding I am alive to the holding in the
case of Third Chandris Shipping Corporation and Others –VS- Unimarine
SA (4) in which the Court stated inter alia as follows;
“The mere fact that a Defendant having assets within the
jurisdiction of the Commercial Court is a foreigner or a foreign
corporation cannot, in my judgment, by itself justify the granting
of a Mareva Injunction.

There must be facts from which the Commercial Court, like a

prudent, sensible commercial man, can properly infer a danger of
default if assets are removed from the jurisdiction… what they
have to do is to find out all they can about the party with whom
they are dealing, including origins, business domicile, length of
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time in business, assets and the like, and they will probably be
wary of the appearance of wealth which are not backed by known
assets. In my judgment the Commercial Court should approve
applications for Mareva injunctions in the same way. Its Judges
have special experience of commercial cases and they can be
expected to identify likely debt dodgers as well as, probably better
than, most businessmen,. They should not expect to be given of
previous defaults or specific incidents of commercial malpractice.
Further they should remember that affidavits asserting belief in, or
the fear of, default have no probative value unless the sources and
grounds thereof are set out: see RSC Order 4, r.5 (2). In judgment
an affidavit in support of a Mareva injunction should give enough
particulars of the Plaintiff’s case to enable the Court to assess its
strength and should set out what enquiries have been made about
the Defendant’s business and what information has been revealed,
including that relating to its size, origins, business domicile, the
location of its known assets and the circumstances in which the
dispute has arisen. These facts should enable a commercial Judge
to infer whether there is likely to be any real risk of default.

Default is most unlikely if the Defendant is a long-established,

well-known foreign corporation or is known to have substantial
assets in countries where English judgments can easily be enforced
under the Foreign Judgment (Reciprocal Enforcement) Act 1933 or
otherwise. But if nothing can be found out about the Defendant,
that by itself may be enough to justify a Mareva injunction.”

(Underlining is the Court’s for emphasis only).

It is clear from the foregoing that the fact that a company is a foreign company
does not in and of itself entitle a person claiming a debt against it to a mareva
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injunction. There must be something more in the form of real danger of

dissipation of assets.

The second argument alleges a fear of dissipation of assets by the Defendant.

In making the said allegations, the Plaintiff does not specify its source of the
information or the basis of the fear. This falls far short of the test laid down in
the Third Chandris (4) case for the need for affidavits to set out the sources
and grounds to enable the Court to assess its strengths. There has been a lack
of proper investigation by the Plaintiff not only into the status of the
Defendant’s assets but also their composition. This is evident from the fact
that the Plaintiff alleged ownership of certain vehicles by the Defendant which
are properties of third parties. (see exhibits “KF2” and “KF3” to the affidavit in
opposition. There is, in my considered opinion, no proof whatsoever that the
Defendant is about to dissipate its assets.

Regarding the issue of an assets disclosure affidavit, counsel for the Plaintiff
argued that where an injunction is granted such as in this matter, the Court
can go ahead and order the filing of an assets disclosure affidavit. Reliance
was made on Order 29 rule 1A of the white book.

Order 29 rule 1A of the white book states as follows;

“Cross –examination of assets disclosure affidavit
Where –
(a) The Court has made an order restraining any party from
removing from the jurisdiction of the High Court, or otherwise
dealing with, any assets.
(b) That party has in compliance with the order, or any order made
in connection with it, filed affidavit evidence as to his or any
other assets, and
(c) The Court has ordered that that party shall be cross-examined
on his affidavit,
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The Court may order that the cross-examination shall be conducted

otherwise than before a judge, in which case the cross-examination
shall take place before a master or, if a master so orders, before an
examiner of the Court.”

It is clear from the foregoing order that it make provision for an applicant to
cross examine a party against whom a restraining order has been granted
preventing him from removing his assets from jurisdiction, on his affidavit
evidence. It does not make provision for the ordering of the filing of an assets
disclosure affidavit.

In view of what I have stated in the preceding paragraphs, I find that this
application lacks merit and I accordingly dismiss it. Consequently the ex parte
order granted on 13th May, 2011 is discharged. I also award costs the
Defendant.

Leave to appeal is granted.

Delivered on the 13th day of July, 2011.

Nigel K. Mutuna
HIGH COURT JUDGE