THE Supreme Court has ruled that the actions of the liquidator prior to and post the purported liquidation of the Post Newspapers Limited, are of no legal effect whatsoever.
And the Supreme Court has observed that presiding judge Sunday Nkonde acted in an unjudicial way by shutting down the doors of justice in the face of appellants.
Meanwhile, The Supreme Court has ordered that Lusaka Lawyer Lewis Mosho should be joined to the winding up proceedings of The Post, before a different judge, so that he can bear personal liability of his actions.
Supreme Court judges consisting; Chief Justice Mumba Malila, justices Albert Wood and Jones Chinyama have held that Mosho’s actions in the liquidation of the Post Newspaper Limited were a faux.
The landmark decision has attracted different reactions from legal practitioners and various citizens, prominent among them, former Attorney General Musa Mwenye State Counsel, Chapter One Foundation executive director Linda Kasonde, Dr Charlotte Scott, Alliance for Community Action (ACA) executive director Laura Miti, to mention but a few.
In a post shared on his Facebook page, Mwenye noted that the sale of the Post assets and everything done by Mosho was of no legal effect whatsoever, adding that “what goes around comes around”.
“In a judgment delivered today, the 17th February 2022, the Supreme Court of Zambia has made the following landmark decision:’For the avoidance of doubt, we hold that the actions of the liquidator prior to and post the purported liquidation of the Post Newspapers Limited, are of no legal effect whatsoever’. The sale of the Post assets and everything done by the liquidator is of no legal effect whatsoever. What goes around does certainly come around,” stated Mwenye.
Kasonde tweeted, “The liquidation of The Post Newspaper has been overturned and the Liquidator is being made to answer for his actions. As Martin Luther King Jr. once said, “The Arc of the moral universe is long, but it bends towards justice”. Amen and amen!”
Dr Scott also tweeted that the closure of the Post newspaper was wrong in many ways.
“The Post has played such an enormous role in Zambia’s history. Its closure was just so wrong in so many, many ways. This has taken long, but the court has delivered justice. And for legal eagles – what happens next???” she tweeted.
And when one of her followers commented, “no justification on their liquidation whatsoever, but I think The Post did get rather too political”, Dr Scott immediately responded that “Whether or not a newspaper is “too political” is provided for in law. If it’s legal and customers want to buy it…then go right ahead!”
Miti described the judgement as the best news after the fall of Bill 10 and PF’s loss of elections.
“In probably the best news in the last 10 years, other than the fall of Bill 10 & resultant loss of PF, the Supreme Court has ruled that the liquidation of the Post was illegal. The vindictiveness of the Liquidator, Lewis Mosho, was just shocking. Congratulations Fred, Musa & team,” tweeted Miti.
Justice Malila, who delivered the judgement of the court, Thursday, described the liquidation of the Post Newspaper Limited in the manner undertaken by Mosho as a faux.
“For the avoidance of doubt, we hold that the actions of the liquidator prior to and post the purported liquidation of the Post Newspapers Limited, are of no legal effect whatsoever. The net result is that this appeal has merit and must succeed. In light of all the anomalies we have pointed out, the liquidation of the Post Newspaper Limited in the manner undertaken by the liquidator, was a faux. We note that much time has passed since the purported liquidation. We do not believe, however, that such passage of time has sanitized the wrongful manner in which the liquidation was conducted. We likewise note that the liquidator, Mr Mosho may have concluded with the liquidation and seemingly fallen off the picture. Furthermore, he was not a party to the winding up petition. This, however, matters not for purposes of rendering an account for accountability under the relevant law. For this purpose, we are entirely within our power to order him to be joined to the winding up proceedings,” the court ruled.
“We refer the matter to the High Court before a different judge to re-open the liquidation proceedings with a view to ensuring compliance with the relevant legal provisions. The action shall be between the original parties as they were when the petition was filed. However, for purposes of receiving all the necessary reports from the liquidator and considering his possible personal liability, we order joinder of the liquidator. For the avoidance of doubt, we direct that the liquidator, Mr Lewis Mosho, shall appear as a third party to the proceedings in the High Court. The appellants (Dr Fred M’membe and Post Newspapers Limited (in liquidation) shall have their costs to be taxed if not agreed.”
Earlier in the judgement, the court noted that Mosho was confirmed as liquidator via a consent judgment to which the parties objecting to his appointment were technically excluded.
“In this particular case, there was no inter-partes hearing as required by rule 8(4) over the confirmation of Mr Mosho as liquidator. He was instead confirmed via a consent judgment to which the parties objecting to his appointment were technically excluded. By reason of the dealing judge’s willful failure to hear the appellants’ position alongside that of the petitioners at what should have been the confirmation hearing of the provisional liquidator, the appellants’ right to due process guarantees to be heard, which right is donated by statutory provisions as set out in rule 8 of the Companies Winding Up Rules, was impaired. This, cannot, in our view, be without consequence,” he said.
“Aside the notorious fact of Mr Mosho, being related to the law firm which he appointed to represent the company in liquidation, [he] was as liquidator, engaged in hazardous proceedings, paying little regard to fairness and good judegment. It must have been apparent to him as liquidator that this was an unusual case and that issues of fact and credibility of allegations would loom large, and above all that the success of the petition, all relevant factors remaining equal, would depend on a number of difficult issues of fact and law which would have required proper judicial guidance by the dealing court.”
Justice Malila said the High Court abdicated its supervisory responsibility over the liquidation by allowing the parties to enter into a consent judgement on legally contestable positions, which effectively rendered the liquidation a sham.
“The point we make is that provisions of the law regarding winding up of insolvent companies entrust upon the court a heavy responsibility of consciously supervising the liquidation. It is a responsibility that the court must take very seriously and solemnly. Compliance with the provisions of the law at every stage cannot be departed from by the court, nor can the obligation to comply be cast upon any other entity, not even on the parties. The point is that a court cannot abrogate or abdicate its responsibility under insolvency law to make judicious decisions in winding up proceedings in fairness to all parties concerned,” he said.
“In our considered view, by allowing the parties to enter into a consent judgement on legally contestable positions as far as interested third parties are concerned, the High Court abdicated its supervisory responsibility over the winding up. So serious was such abdication that it adversely affected third party rights and effectively rendered the liquidation a sham.”
Judge Malila noted that the judge that dealt with the liquidation of the Post Newspapers was the same judge that was the subject of the court’s counsel in the case of involving himself and lawyer, John Sangwa.
“We think there is much to be said about the conduct of the dealing judge and the liquidator in this case. By sheer coincidence or otherwise, the judge that dealt with the liquidation of the second appellant in this case is the same judge that was the subject of our counsel in the case of John Sangwa v. Sunday Nkonde SC. In the silver lining judgment, we disapproved judicial conduct which has little or no resemblance to justice,” he said.
The background of the matter is that five former Post Newspaper employees; Abel Mboozi, Roy Habaalu, Andrew Chiwenda, Mwendalubi Mweene and Bonaventure Bwalya (who are respondents in this appeal) filed a petition in the High Court in November, 2016 for the winding up of the Post Newspaper Limited, and alleged that the latter had failed to pay them salaries and emoluments in the aggregate sum of K815,000.
The Zambia Revenue Authority, for its part, claimed that the company had failed to discharge its tax obligations.
The matter was allocated to High Court judge Sunday Nkonde and by an ex-parte order issued by him on November 1, 2016, Mosho was appointed as the provisional liquidator.
Mosho, as provisional liquidator, terminated the services of Messrs Nchito and Nchito as lawyers for the Post Newspapers Limited and in their stead, he appointed Messrs Lewis Nathan Advocates, a firm in which he apparently has interest as a partner, and another firm, Messrs Palan & George, to represent the Post Newspapers (in liquidation).
Dr Fred M’membe and the Post Newspapers applied to set aside the removal of Messrs Nchito and Nchito from representing them but the application too was not heard by the judge.
The respondents (who were petitioners in the High Court) and the Post Newspapers, thenceforth represented by Messrs Lewis Nathan, entered a consent judgment in January 2018, in terms of which Mosho was confirmed as Liquidator of The Post Newspapers Limited (in liquidation).
Dr M’membe proceeded to file a notice in terms of Rule 10 of the Companies Winding Up Rules (2004) as an interested party (being a shareholder/director) in the company under liquidation, protesting the appointment of Mosho as liquidator but the dealing judge never heard him.
The appellants (Dr M’membe and the newspaper) commenced a separate action seeking an order to set aside the consent judgement entered into between the respondents and the Post Newspapers on the basis that the same was procured illegally and fraudulently.
The new action was allocated to High Court judge Sharon Newa but in her judgment of June 25, 2019, she held that the appellant’s action was, in substance, intended to achieve a remedy against judge Nkonde who was not a party to the proceedings.
She consequently held that the appellant’s action was a wrong suit commenced to challenge a consent order and that she had no jurisdiction to deal with it and therefore dismissed the action.
The appellants then appealed to the Court of Appeal but the court equally dismissed the appeal and reasoned that the only party that has locus standi to commence a new action for the purpose of challenging a consent judgrnent is one who executed the judgment or, generally a person who was a party to the action.
Dissatisfied with the Court of Appeal’s decision, the appellants escalated their grievance to the Supreme Court.