Fred M’membe, Nchito Opposed to DBZ application to consolidate case

Fred M’membe of the Post Newspaper and the Nchito brothers have advanced technicalities to oppose an application by the Development Bank of Zambia to consolidate its case in the recovery of K14million they borrowed through defunct Zambian Airways.

They claim that the DBZ application by writ of summons and statement of claim were defective because:

-the demand was statute barred
-The original loan agreement was not effectual
-Piercing the corporate veil was unprocedural

Central to their opposition is the argument that the application and therefore demand is time barred because it comes six years after the circumstances that brought about the claim.

They therefore feel that the DBZ application to introduce more defendants, expunge evidence, remove corporate veil and making fundamental changes to the case were time barred.

They have also argued that vital elements of the agreement that were a pre-requisite to the agreement, regarding the buy back of shares were not fulfilled thereby invalidating the entire loan agreement.

They have therefore opposed the amendment of the writ of summons and statement of claim which would among other things make M’membe, Nchima Nchito and former DPP Mutembo Nchito personally liable for the loan by virtue of their directorship of Zambian Airways.

They have argued that the corporate veil should not be lifted because the procedure used was “starling” and that it was time barred.

They are arguing that a clause in the facility agreement, exonerates them from the debt, because at the time the loan was being negotiated the buyback facility in Clause 7 had not been full filled.

“The plaintiffs were advised that the contract would not be effectual unless the conditions precedent specified under clause 7 of the facility agreement were fulfilled or settled; this has has been the Defendants’ defence all along and this defence is fortified by the due diligence report.” They have argued in the affidavit in opposition.

“It is trite that even before the question of lifting the corporate veil arises, there must first liability on the part of the company. In this case however, the cause of action relating to the debt that the plaintiff against Mines Air Service Limited is statute barred. Without that liability on the part of Mine Air Services, there cab be no question of the proposed 3rd to 7th Defendant paying the proposed 1st Defendant’s debt.”

They have further said that “The plaintiff(DBZ) is now attempting to change its cause of action and expunge evidence which exonerates the Defendant. This is not only unlawful; it smacks of conspiracy to defeat the course of justice.”

The trio have refused any attempts to prove they were liable and required to honour the terms and conditions of the K14 billion loan they acquired for the operationalization of Zambian Airways.

In a defendants skeleton argument in opposition to the plaintiff’s application to add parties and for leave to re-amended statement of claim filed before the Lusaka High Court, the trio alleged that the law of limitation restricted such action as addition of new evidence after the expiration of six years from date on which the cause of action accrued.

Nchito said the excepted portion of the statute of Limitation premised on a simple contract that it could not be brought to court if six years had elapsed since the commencement of such a matter.

They argued that by way of summons to, inter alia, join Mine Air Services Limited, Zambian Airways Limited, Fred M’membe and Nchima Nchito, SC filed on July 31, 2015, more six years after the plaintiff commenced the action, the plaintiff wanted to amend its Writ and Statement of Claim by adding new claims.

“Is it lawful to join parties to an action by amending pleadings in such a manner that the effect is to commence actions on issues that are statute barred?

“This is by virtue of the British Acts Extension Act, Chapter 10, and Volume 2 of the Laws of Zambia. The Limitation Act in Section 2 provides in part, thus’

“ ‘2(1) the following actions shall not be brought after the expiration of six years from the date on which the cause of action accrued, that is to say: (a) Action founded on simple contract or tort,” the affidavit explained.

“In this case, any alleged breaches of contract or tortious acts on the part of the intended defendants could not have been committed after January 13, 2009 and therefore any actions against the said intended defendants could not be brought to court after January 13, 2015,” Mr Nchito added.

They have also questioned the legality of an action of amending a Writ and Statement of Claim by adding causes of action, which could affect the existing defendants when such causes were state barred.

The defendants have also advised against plans to expunge documents from an earlier submission which they suspected could be for the purpose of finding them liable notwithstanding existing evidence.

They explained that the legal due diligence to be expunged was part of sworn evidence submitted by then company secretary Andrew Musukwa, that exonerated the defendants and the plaintiff’s attempt should not be allowed, adding …”that the Legal Due Diligence is one of the documents which exonerate the Defendants and the Plaintiff’s attempt to expunge the said document not be allowed”.