This is an application for reinstatement of an appeal, which was not deemed to have been dismissed, but was, by consent, struck off at the hearing on 24 November 2020 in SC99-20, for the reason (per paragraph 18 of the applicant's founding affidavit) that the applicant “had failed to file heads of argument as required by the rules of this Honourable Court.”
The applicant deliberately did not identify the Rule under which he lodged the application.
However, in oral argument, counsel for the applicant contended, that, it was filed in terms of paragraph 5 of Practice Direction No.3 of 2013 and not Rule 70(2) of the Supreme Court Rules 2018.
THE BACKGROUND FACTS
The main protagonists in this dispute are the applicant and the first respondent. The dispute turns on the scope and extent of the first respondent's shareholding in Adam Bede Manufacturing (Pvt) Ltd (the third respondent).
The second respondent is the majority shareholder in the third respondent.
The first and second respondents, with the assistance of a promoter of companies (Hove), concluded a Shareholders Agreement in which they became equal shareholders in Extreme Security Group (Pvt) Ltd (the Special Purpose Vehicle or SPV).
They further agreed to purchase the entire equity of Hunting Furniture (Pvt) Ltd t/a Adam Bede (Hunting) through the special purpose vehicle (SPV).
The two prospective shareholders soon realized that the participation of the first respondent would, at that time, be in conflict with his employment contract.
They sought to make Hove the first respondent's nominee shareholder, but, for professional reasons, he declined to undertake that role.
On the recommendation of the second respondent, and, again, with the help of Hove, the applicant became the first respondent's nominal shareholder in the special purpose vehicle (SPV).
The special purpose vehicle (SPV) purchased Hunting Furniture (Pvt) Ltd t/a Adam Bede and re-registered it as Adam Bede Manufacturing (Pvt) Ltd (the third respondent) on 4 May 2017.
The applicant and the second respondent were registered as the sole shareholders and directors in the third respondent. They each held one share apiece. The two directors became the sole joint signatories of the third respondent's bank account.
The conflict of interest situation that had previously bedeviled the first respondent ceased.
He sought to assume his role as the true shareholder and director in the third respondent.
His efforts were vigorously resisted by the applicant, who claimed to be a 50% shareholder in the third respondent in his own right.
The first and second respondents negotiated a settlement of the dispute with the applicant.
They concluded an oral agreement in which they restructured the shareholding of the third respondent by allotting 40 shares to the second respondent, 30 shares to the first respondent, 20 shares to the applicant and reserved 10 shares to a future technical partner.
The parties then reduced the oral agreement to writing but the applicant refused to sign it.
The applicant requisitioned an Extraordinary General Meeting on 3 November 2018 for the dismissal of the first respondent as a director of the third respondent.
He defaulted the meeting.
At the meeting, the first and second respondents removed the applicant as a director and company secretary of the third respondent.
He, however, was restored to both positions, unopposed, by the High Court in HC10298/18.
Thereafter, the applicant insisted that he was a 50% shareholder in the third respondent and sought to resile from the restructured shareholding agreement.
His assertions caused the first respondent to lodge a court application in the High Court for a declaration of his rights as a shareholder and director in the third respondent.
The application was opposed by the applicant.
At the hearing, a quo, the applicant raised three preliminary points:
(i) The first was that there were material disputes of fact that could not be resolved on the papers.
(ii) The second was that several paragraphs in the founding affidavit ought to be struck out in terms of Rule 141 of the High Court Rules 1971 for being argumentative, irrelevant, inconsistent, and contradictory.
(iii) The last was that the supporting affidavit of Hove ought to be expunged from the record for the reason that he was conflicted as he had rendered professional registration services to the third respondent.
On the basis of the common cause documents filed of record, such as the draft shareholders agreement, the judgment in HC10298/18 and Form CR2 and CR14, the court a quo held that the material disputes of fact were more illusory than real and could, therefore, be resolved on the papers.
Regarding the second preliminary point, it held that the court's power to strike out the impugned pleadings, under Rule 141 of the Rules of Court, could only be exercised in action proceedings and not in application proceedings.
Lastly, that, as the deponent to the supporting affidavit was not a legal practitioner, he could not, therefore, be a conflicted witness and his affidavit could not properly be expunged from the record.
All the preliminary points were, accordingly, dismissed.
On the merits, the court a quo found, that, the first respondent had established all the essential requirements for the grant of a declaratory order.
He had a direct and substantial interest in the application. He held existing rights that were under threat from the applicant's conduct.
The applicant sought to impugn, without evidence, and appropriate to himself the primary and pivotal role played by the first respondent and the second respondent in purchasing the entire equity in Hunting Furniture (Pvt) Ltd t/a Adam Bede through the special purpose vehicle (SPV).
The court a quo further found, that, the first and second respondents had contributed US$160,000 and US$180,000, respectively, into the special purpose vehicle (SPV) for the purchase price of, and as working capital in Hunting Furniture (Pvt) Ltd t/a Adam Bede while the applicant had not made any monetary or material contributions thereto.
The court a quo, therefore, declared the first respondent to be the holder of 30 ordinary shares, against the 20 shares of the applicant and 40 shares of the second respondent, in the third respondent.
It also declared him to be a duly appointed director of the third respondent; and, as consequential relief, ordered the restoration of his name as a director on the company's letterheads.
The applicant was also interdicted from misrepresenting to “clients and associates of third respondent” the extent of his equity holding, and the status of the first respondent, in the third respondent.
Lastly, he was ordered to pay the costs of suit.
Aggrieved by the decision a quo, the applicant appealed against the whole judgment of the court a quo to this Court in SC99-20, within the prescribed period.
On 30 September 2020, a day before they were due, the applicant's legal practitioners filed heads of argument, which, ex facie, bore the correct SC case number and designations of the parties.
It was common cause that these heads were a truncated version of the heads that had been filed a quo and even embodied the parties respective designations a quo. They, also, did not relate to the grounds of appeal.
The applicant raised the following four grounds of appeal:
“1. The court a quo erred in finding for the first respondent in para 2, 3 and 4 of the order notwithstanding that such determinations were not supported by any reasons for the decision.
2. A fortiori, the court a quo erred in making an order without considering the adverse factual position presented by the now appellant which contradicted the first respondent's version and not providing reasons for accepting the first respondent's story and rejecting the appellant's rendering its decision arbitrary and capricious.
3. The court erred and grossly misdirected itself in finding that the evidence of a professional who has previously acted for a company can be accepted to support a litigant against a shareholder of the same company without being conflicted.
4. The court a quo erred in making an order declaring first respondent owner and holder of 30 ordinary shares outside legally acceptable principles and norms of property acquisition. In particular, the order of the court does not relate with the cause of action proffered.”
The relief sought by the applicant was for the appeal to be allowed and the judgment a quo set aside and substituted with the dismissal of the application with costs.
The impropriety of the heads was brought to the attention of the applicant in the first respondent's heads filed on 16 October 2020 and served on 20 October 2020.
The applicant, however, sought to remedy the defect by filing “appellant's supplementary heads of argument (enrolled for hearing on 24 November 2020)” on 19 November 2020.
At the appeal hearing, on 24 November 2020, an order was issued, by consent, striking the matter off the roll with costs.
THE PROPRIETY OF THE PRESENT APPLICATION
In his opposing affidavit, the first respondent raised five preliminary points against the application:
(i) The first was that the applicant had merely headlined the application as a “Chamber Application for the Reinstatement of an Appeal” and deliberately avoided identifying the Rule under which the application was being made;
(ii) Secondly, the application did not address the prospects of success in any meaningful detail;
(iii) Thirdly, the application did not embody the order granted in SC99-20;
(iv) Fourthly, the application was filed outside the 15-day time line prescribed in Rule 70(2) of the Rules of the Supreme Court 2018; and
(v) Lastly, the founding affidavit was deposed to by the applicant's legal practitioner of record, who did not indicate that he was authorised to depose to the affidavit.
The applicant did not file an answering affidavit: nor did the parties file any heads of argument prior to the hearing of this application.
Counsel for the first respondent abided by the contentions made in the first respondent's opposing affidavit. He sought the striking off of the matter with costs on the higher scale.
Counsel for the applicant, however, argued for the dismissal of all the preliminary points at the hearing.
He argued that the application was based on paragraph 5 of Practice Direction No.3 of 2013, and not Rule 70(2) of the Supreme Court Rules 2018.
The Practice Direction provides a dies induciae of 30 days for filing a reinstatement in which a matter has been struck off for failure to abide by the Rules of the Court. On the other hand, Rule 70(2) prescribes a dies induciae of 15 days within which to file a re-instatement of an appeal that has either been deemed to have lapsed, or regarded as abandoned, or deemed to have been dismissed in terms of any provision of the Supreme Court Rules 2018.
He accordingly prayed for the dismissal of the first and fourth preliminary points.
Regarding, the third preliminary point, he contended, that, the application raised prospects of success, notwithstanding that the first respondent may be dissatisfied with the manner in which they were addressed.
These were raised in paragraphs 23 to 26 of the founding affidavit.
The thrust of these paragraphs being that the decision of the court a quo is most likely to be overturned on appeal for being contrary to the stipulations enshrined in the Articles and Memorandum of Association of the third respondent regarding the acquisition and allotment of shares in the company after registration.
Further, that the judgment was based on a draft shareholding agreement that had not been executed.
And, lastly, that the endemic material disputes of facts presented by the parties were incapable of resolution on the papers without the hearing of oral evidence.
On the failure to attach the order of this Court in SC99-20, he argued that the order, and the circumstances under which it was issued, had been adequately adverted to in paragraphs 17 and 18 of the founding affidavit.
In any event, being a document emanating from this Court, the judge, in chambers, could always call for and refer to the order.
Lastly, on the authorization of the applicant's legal practitioner of record to depose the founding affidavit on his behalf, he argued that it was trite that a legal practitioner who had personal knowledge of the procedural facts is not precluded from filing a founding affidavit for and on behalf of his client.
He also took the point that the grounds of appeal were not prolix.
This point had been raised by the first respondent in the heads of argument filed in the appeal that was struck off the roll.
Counsel for the applicant sought to rely on Afritrade International Ltd v Zimbabwe Revenue Authority SC03-21 for the further submission, that, the question of prolixity could best be raised and dealt with at the reinstated appeal and not in these proceedings.
I turn to deal with the first preliminary point, which, in my view, is dispositive of this application.
The first respondent contended, that, the failure to identify the Rule under which the application was lodged embarrassed him and prevented him from adequately responding to the application.
He did not know whether the application was properly brought as a chamber application for reinstatement of an appeal or is a disguised application for condonation and extension of time within which to file an appeal.
It was only at the hearing that counsel for the applicant pontificated that the application was premised upon paragraph 5 of the Practice Direction 3/13.
That submission immediately raises the question of the propriety of bringing the present application under this Practice Direction.
The reinstatement of an appeal is dealt with under Rule 70 of the Supreme Court Rules 2018. The Rule states that:
“70. Reinstatement of appeals generally
(1) Where an appeal is —
(a) Deemed to have lapsed; or
(b) Regarded as abandoned; or
(c) Deemed to have been dismissed in terms of any provision of these rules; the registrar shall notify the parties accordingly.
(2) The appellant may, within 15 days of receiving any notification by the registrar in terms of subrule (1), apply for the reinstatement of the appeal on good cause shown.”
Reinstatement, for a matter that has been struck off for failing to comply with a provision of the Rules of Court, is also dealt with in terms of paragraphs 3 to 5 of Practice Direction 3/13. It reads:
“Struck off the roll
3. The term shall be used to effectively dispose of matters which are fatally defective and should not have been enrolled in that form in the first place.
4. In accordance with the decision in Matanhire v BP & Shell Marketing Services (Pvt) Ltd 2004 (2) ZLA 147 (S) and S v Ncube 1990 (2) ZLR 303 (SC), if a Court issues an order that a matter is struck off the roll, the effect is that such a matter is no longer before the Court.
5. Where a matter has been struck off the roll for failure by a party to abide by the Rules of the Court, the party will have thirty (30) days within which to rectify the defect, failing which the matter will be deemed to have been abandoned.
Provided that a judge may, on application, and for good cause shown, reinstate the matter, on such terms as he deems fit.”
The meaning of paragraph 5 was rendered by GUVAVA JA in Bindura Municipality v Mugogo 2015 (2) ZLR 237 (S)…,.
That application for reinstatement of an appeal concerned a fatally defective notice of appeal that reflected the wrong date of judgment and which had been served on the registrar of the Labour Court outside the period granted in an order for leave to appeal.
At 238G, GUVAVA JA held that:
“Where a matter has been struck off the roll because it has failed to comply with the rules of court, one cannot simply apply for reinstatement of the appeal as such an appeal is a nullity. This position has been stated in a number of decisions of this Court.”
And, at pp239E-240A, relied on Hattingh v Pienaar 1977 (2) SA 182 (O) to construe paragraph 5 of the Practice Direction:
“It seems to me that a proper interpretation of para 5 of the Practice Direction 3/13 is that the applicant must, within thirty days, rectify the defect by applying for condonation for the late noting of appeal and an extension of time within which he should comply with the rules.
He may not do so after the window period which he has been given to rectify the defect as the matter will be deemed to have been abandoned.
In this case, the applicant correctly filed an application within the prescribed period of thirty days.
However, an application for reinstatement is not the appropriate remedy….,. The appeal, having been found to be fatally defective, cannot be reinstated after being struck off the roll.
The applicant's remedy to rectify the defect is to apply for condonation and extension of time within which to file a fresh notice of appeal in terms of Rule 6 of the Supreme Court (Miscellaneous Appeals and References) Rules. He should do so within the period of thirty days provided for in the Superior Court Practice Direction.”
Counsel for the applicant argued, that, the failure to file heads in SC99-20 did not render the appeal fatally defective because it was, but for this anomaly, a complete appeal that was ripe and ready for hearing.
His argument in this respect is totally misconceived.
Were he correct, then, this Court would not have struck the matter off the roll but would have, in the exercise of its inherent power to regulate its own proceedings, have regarded it as abandoned and deemed it dismissed as prescribed by Rule 70(1)(c) of the Supreme Court Rules.
The power of this Court to act in this manner does not only arise from its inherent power to control its own rules but is clearly codified in Rule 53(3) of the Supreme Court Rules, which reads:
“53. Dismissal of appeal in the absence of heads of argument or appearance
(3) Where, at the time of the hearing of an appeal, there is no appearance for the appellant or no heads of argument have been filed by him, the court may, at its discretion, determine or dismiss the appeal and make such order as to costs as it may think fit.”…,.
Rule 53(3) of the Supreme Court Rules confers a discretion on this Court by the use of the word “may” as well as the repeated use of its synonym “discretion” to determine or dismiss the appeal.
In my interpretation of the underlined words, the power conferred on this Court is not limited to determining or dismissing. It is trite that “may” is directory.
In its proper interpretation, the subrule merely means that this Court may or may not, in its discretion, determine or dismiss the appeal.
In striking off the appeal, this Court elected to not determine or dismiss the appeal. This Court did, by consent, strike off the matter from the appeals roll for the obvious reason that the appeal was fatally defective and could neither be determined nor dismissed.
Otherwise, were there room to salvage the matter, it would simply have, by consent, removed the matter from the roll thereby making it eligible for enrolment upon request: see Maparanyanga v Van Schalkwyk SC64-02.
