High Court dismisses FQM’s application in ZCCM-IH’s fraud suit against them
By Lillian Zulu on January 29, 2018
LUSAKA High Court judge Winnie Mwenda has dismissed an application in which First Quantum Minerals Limited and six others were seeking to dismiss a case where ZCCM-IH sued them for fraud involving over US$2.3 billion.
“While it is obvious that the plaintiff’s case hinges on the allegation of fraud and that numerous issues of contention have arisen regarding the plaintiff’s allegations and the defendant’s responses in rebuttal, I hold the view that the same issues deserve to be put on trial on their merit,” she ruled.
In this matter, ZCCM-IH cited FQM chairman and chief executive officer Philip Pascall, directors Arthur Pascall, Clive Newall, Martin Rowley and Kansanshi Mining Plc.
ZCCM-IH, which holds the country’s stake in foreign-run privatised mines, sued FQM in the High Court in November 2016 and simultaneously filed a Notice of Arbitration in London claiming the Vancouver-based company swindled it out of US$2.3 billion.
ZCCM-IH had further accused FQM of defrauding it by using money from its Kansanshi Mining Plc as cheap financing for its other operations as well as investing in greenfield projects without the Zambian State’s investment company’s consent.
But the defendants had asked the court to dismiss the action on, among others, grounds that it was irregular for indicating the wrong time in which to enter appearance.
The defendants also wanted the matter to be dismissed alleging that the action was statute barred and that it was incompetent for lack of board resolution to commence and maintain it.
The defendants further wanted the matter to be dismissed because it was null and void for want of leave to issue process outside jurisdiction.
In her ruling, judge Mwenda ordered that the matter proceeds to trial.
“I have examined the evidence of all the parties regarding the alleged fraud and whether the plaintiff, through its representative or otherwise, was aware of the facts leading to the said fraud, I am of the view, prima facie, that the evidence exhibited in the parties’ affidavits reveals absolute divergent views as regards the knowledge, by the plaintiff, of the transactions forming the basis of the alleged fraud. While the defendants have alleged that the plaintiff was aware of the transactions since 2007, the same seems to have been rebutted by the plaintiff through its evidence that they sought clarity from the defendants, concerning the said transactions; and through its further evidence that the parties had failed to reach a consensus at the 68th board meeting held on 26th September, 2014,” she said.
Judge Mwenda said the issues raised by the parties in their respective affidavits were so contentious that disallowing them to go to trial would not serve justice well.
“Based on the foregoing reasons, the defendant’s ground to set aside the plaintiff’s writ of summons and statement of claim for irregularity by reason of the action being statute barred, fails. I find, therefore, that this court still has jurisdiction to hear and determine this matter,” she said.
Judge Mwenda said counsel for the plaintiff were in order to proceed to serve process out of jurisdiction as the same was properly authorised.
The judge also found that the commencement of the action by ZCCM-IH had authority.
Judge Mwenda further ruled that the plaintiff does not have the right to claim fraud in tort, provided it was in line with the requirements for fraud in civil matters as it should be sufficiently alleged and its particulars clearly stipulated.
The judge expunged from the ZCCM-IH’s statement of claim words alleging fraud.
The judge said the statement should now read that the defendants’ by their actions took or converted the monies to use of the first, second and FQM Group with the intention of using it within the FQM Group and was deemed to have done so fraudulently.
