A MINORITY shareholder in ZCCM-IH, Dennis Mumba, has argued that provisional liquidator of Konkola Copper Mines (KCM), Milingo Lungu, is not a nominal party in a matter where he wants the High Court to review the manner in which the mine was sold to Vedanta Resources Plc at a cheap price.
In law, a nominal party is a plaintiff or defendant who has no real interest in the result of the suit or no actual interest or control over the subject matter of the litigation, but is solely joined because a technical rule of practice requires their presence in the record.
Mumba submitted that Lungu should be a substantive defendant when the matter commences.
Mumba is seeking redress on behalf of Zambia Consolidated Copper Mines Investment Holdings (ZCCM-IH) over the alleged fraudulent purchase of KCM by its majority shareholder Vedanta Resources at a bargain price of US $25 million instead of $62.4 million.
Mumba, in November 2004, cited ZCCM-IH as the respondent and Zambia Copper Investments Limited, Vendanta Resources Plc, KCM, and provisional liquidator Milingo Lungu as defendants.
He wants leave of the Lusaka High Court to commence a derivative action pursuant to the companies Act No.10 of 2017.
A derivative action is a lawsuit brought by a shareholder of a corporation on its behalf to enforce or defend a legal right or claim, which the corporation has failed to do.
Mumba claims that Vedanta illegally took over from ZCCM-IH as the owner of KCM without paying any consideration and purportedly became illegitimate shareholders and appointed the board of KCM and corporate officers through its fraudulent conduct.
But ZCCM-IH had asked the Court to set aside the proceedings against Lungu for being wrongly sued.
In an affidavit in support of summons to raise preliminary issues and dismiss the matter on a point of law, Lombe Mbalashi an in-house counsel of ZCCM-IH, said the applicant’s affidavit described allegations related to or affecting Lungu and not the respondents.
He explained that Lungu was not a nominal party to the intended proceedings.
“The respondent is wrongly cited as the nominal defendant in the intended writ of summons in the applicant’s affidavit in support of his application. The applicant (ZCCM-IH) is not eligible to commence the intended action as the originating notice of motion does not properly describe the respondent(Lungu),” Mbalashi said.
He said the affidavit did not fulfill the requirements of the authentication of documents Act.
“I humbly crave the indulgence of this court to dismiss the application or in the alternative the application be set aside,” said Mbalashi.
But in an affidavit in opposition to ZCCM-IH’s summons to raise preliminary issues and dismiss the matter on point of law, Mumba through his lawyer Mwape Moono, said the matter was correctly before court.
Moono said ZCCM-IH was a shareholder in KCM and by virtue of being the shareholder it had the authority to sue all the intended defendants for losses it incurred as a result of the transaction.
“Being a shareholder, ZCCM-IH suffered losses as a result of the fraudulent transaction that transferred corporate control of KCM to Vedanta Resources Plc,” Moono said. “Lungu is not a nominal party but will be an actual substantive defendant once the writ of summons is filed, and this averment proves that ZCCM-IH agrees with Mumba in this respect.”
Moono said Lungu was correctly cited, as the company on whose behalf the derivative action is taken must be a nominal defendant to the proceedings.
He said Mumba was legally eligible to commence a derivative action on behalf of ZCCM-IH by virtue of being a shareholder in the company.
Moono said a shareholder may commence an action against the company or a director for an illegality done by either parties, or breach of a duty owed by the company or director to the shareholder.
He said the skeleton arguments were not required when filing originating process in the commercial registry as they were only required for interlocutory or intermediate stages.
“Further that the court has power to order any deficiency to be rectified, and order that an affidavit be re-sworn as no prejudice will be occasioned to ZCCM-IH,” said Moono.
The matter comes up for hearing on November 19,2020.