An order for the consolidation of these two matters was granted by UCHENA J, by consent, with no order as to costs, on 2 June 2006, for hearing before me on 7 June 2006 in Case Number 3157/06.The first application, Case No. HC5186/05, concerns an order for specific performance while ...
An order for the consolidation of these two matters was granted by UCHENA J, by consent, with no order as to costs, on 2 June 2006, for hearing before me on 7 June 2006 in Case Number 3157/06.
The first application, Case No. HC5186/05, concerns an order for specific performance while the second one, Case No.5264/05 seeks an order for the provisional liquidation of Zambezi Paddle Steamer (Pvt) Ltd (hereinafter called ZPS).
On 7 June 2006, at the request of the parties, I postponed the hearing to 13 July 2006.
When the hearing resumed, Mrs Wood, for Turner and Sons (Pvt) Ltd, applied for the forced recusal of Mr de Bourbon, for Dobrock (Pvt) Ltd, on the basis that he had been an arbitrator between these parties in 1994.
She referred to Pertisilis v Calaterra & Anor 1999 (1) ZLR 70 (H) as authority for the proposition that the legal practitioner who acted for a former client is precluded from representing a different client in circumstances where a conflict of interest is likely to arise between the former and present client. SMITH J set out the basis of the rule…, as being that:
“A legal practitioner who represents the adversary of his own client in litigation would clearly be violating his or her duty of loyalty and the common law rules against conflict of interest.”
He proceeded to survey American, English, South Africa, and Zimbabwean decided cases on the point at pages 74C–77F.
While he held that neither a partner nor his employee could represent an opponent of a former client in order to fulfill the adage that justice must not only be done but that it must manifestly and undoubtedly be seen to be done, he nevertheless permitted a partner to represent the opponent on the basis that there was no allegation that the other partner had acquired information from the papers in the possession of his firm which could be used to the former client's disadvantage.
Mrs Wood contended, that, justice will not be seen to be done if Mr de Bourbon was allowed to represent Dobrock (Pvt) Ltd, especially on the liquidation case, where Turner and Sons allege a deadlock has manifested itself between the joint shareholders, a fact found by Mr de Bourbon, as arbitrator, to exist in his 25 June 1994 ruling.
She further foresaw a need to call Mr de Bourbon on the deadlock issue in the liquidation case.
Mr de Bourbon countered by contending that he did not represent either Dobrock (Pvt) Ltd or Turner and Sons (Pvt) Ltd but acted in a quasi-judicial capacity.
He knew of no law which debarred him from representing either party as long as he had not possessed confidential information which could be used to the detriment of his client's adversary. He referred to Benmac Manufacturing (Pvt) Ltd v Angelique Enterprises (Pvt) Ltd 1988 (2) ZLR 52 (H).
In that case, Mr de Bourbon accepted a general retainer from Angelique Enterprises in a matter in which that company was involved in a dispute with Albco. He was, at that time, already seized with a retainer for Benmac Manufacturing in its contest with Angelique Enterprises, supra. He had accepted the retainer in the matter against Albco after assurance from his instructing attorney that there would be no conflict of interest.
It was accepted, in that case, by that attorney, that, he had not come into contact with any confidential information which would prejudice Angelique Enterprises in its contest with Benmac. The Law Society, and two other counsel, had absolved him of any impropriety, but, the Managing Director of Angelique Enterprise, Mr Holland, was not satisfied with their findings and advice.
REYNOLDS J held, that, Angelique Enterprises had not shown that Mr de Bourbon had in fact become acquainted with information that could be used to its detriment which would result in real mischief and real prejudice if he continued to act for Benmac Manufacturing. He did express his reservation on a legal practitioner acting for and against his client in the same or different matters.
Mr de Bourbon submitted that he had not acquired any information that he could possibly utilize to the prejudice of Turner and Sons (Pvt) Ltd and that his impartiality in 1994 had not been impugned by any of the parties.
I went through the arbitral award.
It concerned and dealt with the share of each joint shareholder in the extra costs, which were above the original cost of construction of the large commercial houseboat which Zambezi Paddle Steamer (Pvt) Ltd (ZPS) was to own.
Turner and Sons (Pvt) Ltd was not able to show what information Mr de Bourbon accessed which could prejudice its present defence and claim. If anything, I was satisfied that the arbitral award stands on its own and there would be no need to call the arbitrator to testify on it.
I accordingly dismissed the application for the forced withdrawal of Dobrock (Pvt) Ltd's counsel.
I also postponed the hearing sine die and granted, by consent, authority to Turner and Sons (Pvt) Ltd to file a further affidavit in response to Dobrock (Pvt) Ltd's supplementary affidavit.
I further reserved the question of costs in the provisional liquidation claim to which these additional affidavits pertained.
I eventually set down the matter for hearing on 1 November 2006. I directed that the parties argue the specific performance case first and thereafter proceed to argue the liquidation case.
On 12 October 2005, Dobrock (Pvt) Ltd filed the court application for specific performance against Turner and Sons (Pvt) Ltd and two others. It sought the following order:
“1. That, the respondents, jointly as well as severally, the one paying the other to be absolved shall forthwith undertake all that is necessary and required, including making all payments and completion and signing all documents required in order to procure transfer, without delay, by first respondent to applicant of first respondent's entire shareholding in Zambezi Paddle Steamer (Pvt) Ltd.
2. That, immediately upon registration of transfer in the share register of Zambezi Paddle Steamer (Pvt) Ltd (ZPS) applicant shall pay to first respondent the balance of the purchase price for the said shares; such balance being the sum of $138 million.
3. That, the respondents, jointly as well as severally, the one paying the other to be absolved, shall pay the costs of this application on the scale of legal practitioner and own client.”
The application was served on the three respondents on 13 October 2005 (see Peter Dobson's opposing affidavit of 9 November 2005 for which this averment was accepted by Antony Turner on 2 December 2005).
The three respondents filed their opposition papers on 27 October 2005 and prayed for the dismissal of the applicant's case with costs on the higher scale and made reference to the liquidation claim, case number HC5264/2005.
Case number 5264/05 is a court application brought on 17 October 2005 by Turner and Sons (Pvt) Ltd against Zambezi Paddle Steamer (Pvt) Ltd and Dobrock (Pvt) Ltd. It prayed for the winding up of Zambezi Paddle Steamer (Pvt) Ltd and that a liquidator be appointed in the following terms:
“1. That, first respondent, Zimbabwe Paddle Steamers (Pvt) Ltd be provisionally wound up pending the granting of an order in terms of paragraph 3 hereof or the discharge of this order.
2. That, Mrs Theresa Grimmel, of KPMG Chartered Accountants, Mutual Gardens, 100 The Chase, Emerald Hill, Harare be appointed as provisional liquidator of first respondent company with the powers set out in section 221 of the Act.
3. Any interested party appear before this court sitting at Harare on (a date sixty days from the date of the order) to show cause why an order should not be made placing first respondent's company in liquidation and order that the costs of these proceedings all be costs of the liquidation.
4. That, this order shall be published once in the Government Gazette and once in the Herald Newspaper. Publication shall be in the short form annexed to this order.
5. Any person intending to oppose or support the application on the return day of this order shall:
5.1. Give due notice to the applicant at Messrs Byron Venturas & Partners, 2nd Floor Tanganyika House, Corner 3rd Street/Kwame Nkrumah Avenue, Harare.
5.2. Serve on the applicant, at the address given above, a copy of any affidavit which he files with the Registrar of the High Court.”
The application for provisional liquidation was served on the respondents on 17 October 2005, who entered opposition on 31 October 2005 and filed, on that day, their opposing affidavit by fascimile. The actual opposing affidavit was filed on 9 November 2005.
These two applications were consolidated on the bases that the principal parties were the same and that the fundamental issue in each matter related to the ownership and management control of Zambezi Paddle Steamer (Pvt) Ltd (ZPS).
The pleadings in these consolidated matters are voluminous.
The founding, opposing, answering and supplementary affidavits are reinforced by an assortment of attachments which consists of the Memorandum of Association of Zambezi Paddle Steamer (Pvt) Ltd, electronic mail between the parties, and other documents raised by various people who worked for the parties in various capacities.
I have read all these documents.
It is apparent from these documents that there are areas in which the parties agree and others where they are at variance.
It is appropriate that I first deal with the facts as I have determined them to be from the wealth of information that is set out in the pleadings in both these cases.
The preliminary details on the formation of Zambezi Paddle Steamer (Pvt) Ltd (ZPS), on 3 April 1989, are set out in detail by Anthony Turner (Antony) in his founding affidavit in the liquidation matter, case HC5264/05 (Case No.2). Those details were admitted to by Peter Jameson Dobson (Peter) in his opposing affidavit in that case.
Turner and Sons (Pvt) Ltd agreed with Dobrock (Pvt) Ltd, in 1988, on a joint venture to construct and thereafter operate a 'Mississippi River Boat' for commercial use on Lake Kariba.
The concept of the “Southern Belle” was created by Turner and Sons (Pvt) Ltd who approached Dobrock (Pvt) Ltd.
Dobrock (Pvt) Ltd agreed to become its joint partner in the venture and to provide working capital and investment in the project.
Zambezi Paddle Steamer (Pvt) Ltd was incorporated as the special purpose vehicle through which the large commercial houseboat, MV Southern Belle, would be owned and operated.
Zambezi Paddle Steamer (Pvt) Ltd was incorporated in terms of the Companies Act [Chapter 24:03] with an issued share capital of $30,000 divided into 30,000 shares of $1 each fully paid up. Each of the two joint partners subscribed to 15,000 shares of $1 each in Zambezi Paddle Steamer (Pvt) Ltd.
The joint shareholders agreed that Turner and Sons (Pvt) Ltd would first build a model of the craft, and, thereafter, carryout the necessary construction work and interior design of the vessel at a contracted price. Dobrock (Pvt) Ltd would source both local and foreign raw materials for this construction. The total costs of both these operations would be the total cost of the vessel and would be met equally by the joint shareholders.
The agreement was reduced to writing and signed on 31 May 1991.
The arbitral award, of 15 June 1994, indicated that the vessel was completed in 1994. The original construction price was set at $5,950,000.
The issue before the arbitrator centred on the amount by which the original contract price increased, which issue he resolved.
Zambezi Paddle Steamer (Pvt) Ltd was run for 18 months, from the completion of the vessel in 1994, by Turner and Sons (Pvt) Ltd. Dobrock (Pvt) Ltd thereafter took over the management control of Zambezi Paddle Steamer (Pvt) Ltd and appointed a Managing Director, Adamson, to run it.
It was common cause, that, from 2000, the tourism industry went into decline and this affected the bottom line of the MV Southern Belle operations of Zambezi Paddle Steamer (Pvt) Ltd.
There is evidence, in the form of electronic mail exchanged between Peter Jameson Dobson and Anthony Turner, the principal shareholders in Dobrock (Pvt) Ltd and Turner and Sons (Pvt) Ltd, respectively, between 19 January 2003 and 7 April 2004, that, the joint shareholders were prepared to sell their respective shareholdings in Zambezi Paddle Steamer (Pvt) Ltd to the right suitor - if one came along.
On 4 May 2004, Zambezi Paddle Steamer (Pvt) Ltd Managing Director presented a report which highlighted the difficult circumstances the commercial houseboat operations were in. It required urgent maintenance and refurbishment to attain its former glittering glory.
On 6 June 2004, Anthony Turner indicated his decision to sell his shares in the commercial houseboat to Peter Jameson Dobson. This was a clear pointer to his unwillingness to inject funds for maintenance and refurbishment of the houseboat.
On 18 June 2004, Peter Jameson Dobson indicated his willingness to inject $250 million, for this purpose, provided his shareholding in Zambezi Paddle Steamer (Pvt) Ltd increased by 10% while that of Anthony Turner was reduced by the same percentage. He suggested that the houseboat was valued at approximately $3.5 billion. He followed up this by another e-mail of 25 June 2004.
He received a response on that same day (contained in an email wrongly dated as 6 June 2004) from Anthony Turner in which he offered him his shareholding in Zambezi Paddle Steamer (Pvt) Ltd for the sum of $250 million.
Peter Jameson Dobson duly accepted the offer.
He came to Harare, and, during the period 28 June to 14 July 2004, discussed with Anthony Turner on the terms of payment of Antony's entire shareholding.
He agreed to procure payment where and when Anthony Turner wanted.
The purchase price was agreed at $250 million. It was to be paid by Peter Jameson Dobson into the account of Antony's daughter, Jenny, in the United Kingdom, the bank account details of which he received.
The following day, after the terms of payment had been agreed, Anthony Turner requested part payment of the purchase price in local currency.
Peter Jameson Dobson alleged that he made out cheque payments to Chitekeshe of $115 million and to Vretto of $25 million, as part payment, a total of $140 million which Anthony Turner used to buy a pick-up truck.
This averment was not disputed by Anthony Turner, yet, he maintained, in his other affidavits, that, he was paid $138 million and $112 million remained outstanding.
Peter Jameson Dobson, in his prayer, and in Mr de Bourbon's submissions on behalf of Peter's company, accepted that the outstanding purchase price was $112 million.
No cheques or proof of payment in the sum of $140 million was produced.
I am therefore prepared to hold, that, Peter Jameson Dobson paid $138 million and had an outstanding balance of $112 million.
Anthony Turner averred, in his opposing affidavit, that, he required £12,000 to import a new engine for the craft that he was building, known as the “Zambezi Trader”. This craft would not be in competition with the houseboat at all and he was building it for his own account with the moral support and blessing of Peter Jameson Dobson.
Peter Jameson Dobson agreed to pay this amount into his daughter's bank account in the United Kingdom.
He repeated this allegation in paragraphs 31 and 32 of his founding affidavit in Case No. HC5264/05.
This was to be in lieu of the balance of the purchase price of $112 million.
In Case No. 5264/05, in paragraphs 26 and 27 of his opposing affidavit, Peter Jameson Dobson did not respond to these averments in so far as they refer to the alleged mode of payment in foreign currency.
That payment was to be in foreign currency is clear from Peter Jameson Dobson's own founding affidavit.
In paragraph 18, he averred, that, even when he met Anthony Turner, per chance, at the Borrowdale Race Course, in November 2004, he reassured him, that, notwithstanding the fall in the value of the Zimbabwean dollar against the Pound Sterling, the amount outstanding as the purchase price remained £12,000 being the amount in pounds in July 2004.
The two gentlemen agreed, that, the accountant and company secretary of Zambezi Paddle Steamer (Pvt) Ltd, Paul Turner (Paul), a partner in Ernst and Young Chartered Accountants, would effect the share transfer and receive Anthony Turner's letter of resignation as a director therein.
There was a delay in the transfer of the shares which was occasioned by Paul Turner's attempts to structure a tax avoidance scheme for the benefit and at the insistence of Antony Turner.
I make this finding based on Antony Turner's deliberate failure to respond to Paul Turner's affidavit, which was filed in support of Peter Jameson Dobson's founding affidavit.
