National Bank of Malawi Limited v Continental Traders Limited and Another (MISCELLANEOUS APPLICATION NO. 11 OF 2003) ((MISCELLANEOUS APPLICATION NO. 11 OF 2003)) [2003] MWHC 107 (12 December 2003);

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                                             MALAWI
IN THE HIGH COURT OF MALAWI

PRINCIPAL REGISTRY

MISCELLANEOUS APPLICATION NO. 11 OF 2003

IN THE MATTER OF SECTION 337(1) OF THE COMPANIES ACT (1984)
AND
IN THE MATTER OF NATIONAL BANK OF MALAWI LIMITED- THE
JUDGMENT CREDITOR
                  AND
CONTINENTAL TRADERS LIMITEDcccccccccccc....ccccc.(THE DEBTOR)
                  AND
MARY NYANDOVI-KERcccccccccccccc..ccccccccc (THE REAL DEBTOR)

CORAM: THE HON. MR. JUSTICE F.E. KAPANDA
Mr. Salimu, of Counsel for the Plaintiff
Mr. Msisha, of Counsel for the Defendant
         Mr. Amos Rhodani, Official Interpreter/ Recording Officer

Heard on:        3rd November 2003
Decided on: 12th December 2003
Editorial Note

         The court is called upon to make a determination on how an application under Section 337(1) of the Companies Act, No. 19 of 1984 ought to be made. Further, and in particular, the court has to decide on the following issues arising in this application to set aside proceedings:

1.       Whether the application by the Bank, to lift a veil of incorporation, is irregular and/or a nullity.
        
2.      
Whether there was evidence before the court to prove that the business of Continental Traders Limited (the company) was carried on with intend to defraud or for any frandulent purpose.

         3.       Whether there was need for a consequential order for the purpose of               implementing an order lifting the veil of incorporation of the company.

         4.       Whether there was no such consequential order.

         5.       Whether the Real Debtor paid the judgment under protest.

6.       Whether the Real Debtor admitted owing the Bank.




______________________________________________________________
JUDGMENT

Kapanda, J:

Background

         On 1st February 2003 this court lifted a veil of incorporation in respect of Continental Traders Limited (the Company). The Court further ordered, inter alia, that Mrs Mary Nyandovi-Kerr (the real debtor), a shareholder and Co-Director of the company, be liable to pay the National Bank of Malawi (the Bank) money adjudged as owing to the Bank by the said Continental Traders.        

The orders mentioned above were made in a Miscellaneous Application No. 11 of 2003. The said application was by way of an ordinary summons and it was taken out pursuant to Section 337(1) of the Companies Act.

         There is now an application before me to set aside the proceedings under which the said order of 21st April 2003 was made. The present application was filed on 11th August 2003 and made returnable on 19th August 2003. This application follows in the heals of an abandoned application to set aside a default judgment that was set down for hearing on 16th June 2003. Put simply the default judgment against the Company has not been set aside.
Grounds of Application to set aside proceedings in       Miscellaneous Application No. 11 of 2003

The so called Real debtor seeks this court to make an order, inter alia, that the proceedings allegedly commenced by the Bank, in Misc. App. No. 11 of 2003, be struck out. The real debtor wants the said proceedings struck out on the following grounds viz:-

(a)     
That no originating process was taken out in the matter
(b)     
That, even if the proceedings were properly founded, there is no evidence that the company was carried on with intent to defraud any creditor or for any fraudulent purposes.
(c)     
That, even if the proceedings were properly commenced, Section 337 (of the Companies Act) merely authorizes the making of a declaration and in the event of a declaration being made consequential orders would be required for purposes of addressing the implementation of the Order and no such consequential orders were made.
(d)     
That the proceedings leading to the issuance of the enforcement orders against Mrs Nyandovi-Kerr are so irregular as to require striking out in their entirety.

         The real debtor also states in the summons that when Sherifffs officer visited her house to execute a Writ of fifa she paid the debt herein under protest. The summons further show that the real debtor bases her application on the premise that she at no time admitted owing the Bank in her own personal capacity the amount in respect of which the enforcement processes were issued. Thus, so the contention goes, the payment of the debt by her should not be taken as a waiver of the said irregularity.

         Further, it is to be observed that the so called real debtor is also desirous of having the garnishee proceedings and the writ of fifa issued against her struck out on the same grounds as set out above.

         The application is opposed by the judgment creditor.

                  The issues before this court

         As this court sees it, the issues for determination are to be discerned from the summons taken out on the part of Mrs Nyandovi-Kerr. The said issues, that this court has been invited to deal with, are:

(a)     
Whether or not the proceedings taken out by the Bank in Miscellaneous Application No. 11 of 2003 are irregular and/or a nullity.
(b)     
Whether or not, if the proceedings were regular, there was no evidence that the company was carried on with intent to defraud any creditor or for any fraudulent purpose.
(c)     
Whether or not, if the proceedings were properly commenced, there was need for a consequential order for the purpose of implementing the order lifting the veil of incorporation.