This is an appeal against part of the judgment of the High Court
granting a spoliation order, and other consequential relief, in an
application at the instance of a shareholder on behalf of a company.
The facts leading to the application before the court a quo are as follows:
The
first respondent (Grandwell Holdings (Private) Limited), a private
foreign company, entered into a commercial arrangement with the
Government of Zimbabwe for the purpose of mining diamonds in the
Chiadzwa area in Manicaland Province.
In 2009, the third
appellant (Marange Resources ((Private) Limited), a wholly owned
subsidiary of the second respondent (Zimbabwe Mining Development
Corporation), and Grandwell Holdings (Private) Limited signed an
agreement.
The agreement resulted in the incorporation of the
second respondent, Mbada Diamonds (Private) Limited, a private company,
owned 50 percent by the first respondent, and 50 percent by the third
appellant. Mbada Diamonds was to mine diamonds at Chiadzwa on special
grants granted to Marange Resources (Private) Limited.
Marange
Resources (Private) Limited and Zimbabwe Mining Development Corporation
are companies controlled by the Government of Zimbabwe. This extended
Government's influence to the operations of Mbada Diamonds, through
Marange Resources (Private) Limited, which has a 50 percent shareholding
in Mbada Diamonds.
In 2015, the Government of Zimbabwe, through
the first appellant (Minister of Mines and Mining Development), crafted a
policy to merge all diamond mining companies at Chiadzwa into one
single entity, the fourth appellant (Zimbabwe Consolidated Diamond
Company).
The parties engaged, with a view of agreeing over this initiative. Meetings were convened from about March 2015.
Grandwell
Holdings was hesitant, but said it was not opposed in principle. It
required a blueprint on the merger to enable it to decide whether or not
Mbada Diamonds should join the merger. Communication between parties to
the proposed merger continued in good faith. According to Grandwell
Holding's chairman, David Kassel, Grandwell Holding's engagement was
bona fide.
The engagement continued till the events of 22 February 2016.
According
to paragraphs 43 and 44 of the first respondent's founding affidavit,
the shareholders of Mbada Diamonds held a meeting to resolve on whether
or not Mbada Diamonds should join the proposed merger of diamond mining
companies. That meeting ended with what the first respondent called a
deadlock as the shareholders could not agree on whether or not to join
the merger without further information.
Marange Resources
(Private) Limited (the third appellant) was willing to join the merger
on the available information. Grandwell Holdings, though not opposed to
the merger, was taking a cautious approach. It wanted a blueprint with
information which could help it make a decision on that issue. It had
placed it on record, that, it was, in principle, not opposed to the
merger.
According to paragraph 39 of its founding affidavit, it
was not taking a position of non-cooperation, as it would “seek to
accommodate Government requirements wherever reasonably possible.”
It
was therefore not a deadlock as to whether or not Mbada Diamonds could
eventually join the merger. The difference between the shareholders was,
therefore, merely on their then current positions.
On 22
February 2016, the Government, through the Secretary for Mines and
Mining Development, wrote to Mbada Diamonds advising it, among other
things, that it had discovered that the special grants entitling it to
mine diamonds had expired, and that, with no title, Mbada Diamonds had
to cease all mining activities with immediate effect and vacate the
mining site.
Mbada Diamonds was given 90 days to remove all its
equipment and other valuables. Any further access to the mining site
would be upon request to the first appellant (Minister of Mines and
Mining Development).
On the same day, the first appellant called a
press conference to announce the new development, that, Mbada Diamonds,
and other diamond mining companies, no longer had valid special grants
or other rights on the basis of which they could continue with their
mining operations. The first appellant further announced, that, those
companies should cease operating and vacate the mining locations within
90 days. The first appellant specifically directed those companies to
remove all their machinery, equipment, and other related materials from
the mining locations.
On 27 February 2016, the first respondent
brought an urgent chamber application in the court a quo seeking an
interdict and a spoliation order.
The first respondent alleged,
that, when the first appellant issued a press statement, Mbada Diamonds
operations were forcibly stopped by armed police assisted by some of
Mbada Diamonds senior employees. It alleged, that, after the first
appellant's announcement, the police, and officials from the first
appellant, moved into Mbada Diamond's processing plants and shut them
down. Mbada Diamonds security team was disbanded and evicted from site
and other employees were forcibly evicted both from their work stations
and their on-site residences. Security systems were paralysed.
The
first respondent also alleged, that, Marange Resources (Private)
Limited, the other shareholder of Mbada Diamonds, was in support of the
initiative to consolidate the mining companies into a single entity and
was therefore acting in concert with the first appellant to despoil the
second respondent (Mbada Diamonds).
The evidence on record does
not support the allegation that Marange Resources (Pvt) Ltd directly
participated in despoiling Mbada Diamonds.
It merely proves
Marange Resource's willingness to join the merger before receiving
further information while Grandwell Holdings needed further information
before it could decide on whether or not Mbada Diamonds should join the
merger.
It was on these facts that the first respondent sought an
interim order declaring, that, the conduct of the appellants, in
removing Mbada Diamonds representatives from its mining site and
effectively assuming control of Mbada Diamond's mine, constitutes an act
of spoliation.
The first respondent also sought an order
directing the appellants to vacate Mbada Diamond's mining site with
immediate effect and interdicting the appellants from interfering with
Mbada Diamonds operations.
Mbada Diamonds, through an affidavit
signed by its Chief Executive Officer, Luciyano, supported the first
respondent's application.
The application was opposed by the
appellants, who raised several preliminary points, including that the
first respondent, as a shareholder of Mbada Diamonds, had no locus
standi to institute an action on behalf of the company.
The appellants argued, that, Mbada Diamonds should have made the application to enforce its rights.
The
first respondent argued, that, it was entitled to institute proceedings
on behalf of the company through a derivative action. The appellants
argued that derivative action was not available to the first respondent.
The
court a quo dismissed the preliminary point raised by the appellants
and held, that, derivative action was available to the first respondent.
The court a quo held, that, it would have been futile for the first
respondent to seek a resolution to sue the appellants given the stance
Marange Resources (Private) Limited had already taken towards the
intended merger.
The court a quo found, that, since Marange
Resources (Private) Limited was acting in concert with the other
appellants, it would have been futile for the first respondent to have
called for a meeting to resolve that Mbada Diamonds should vindicate its
rights. The court a quo held that the circumstances of the case
justified the procedure adopted by the first respondent.
In any
event, the court a quo also found that the first respondent, as a
shareholder of the second respondent, had a direct interest in the
second respondent, and, therefore, had the necessary locus standi to
institute the proceedings.
On the merits, the court a quo held
that the appellants committed an act of spoliation on the second
respondent (Mbada Diamonds). The court therefore granted the application
for spoliation.
The first appellant was aggrieved by that decision and appealed to this court on the following grounds:
1.
The court a quo erred in not finding, that, to the extent the first
respondent had alleged facts which went beyond the question of
spoliation, and, rather, sought to assert a right to mine, and
consequently, of possession; the appellant was entitled to demonstrate
the absence of the same, and that, upon the court a quo accepting the
absence of such rights, the first respondent could not be granted the
relief of spoliation.
2. The court a quo erred in finding, that,
the shareholder's derivative action was available to the first
respondent when the founding affidavit had not made out a case for the
same, and that, in any event, the first respondent had locus standi in
judicio to institute the proceedings.
3. The court a quo further
erred in finding, that, the first respondent had peaceful and
undisturbed possession of the mining concessions, in its capacity as
project manager, and that, therefore, it was entitled to spoliatory
relief in its personal capacity when the founding affidavit did not make
such allegation and relief was not sought on that basis.
4. The
court a quo further erred in finding, that, the appellant had committed
an act of spoliation against the fifth respondent when, in the
circumstances, the appellant was not found to have done anything to
evict the fifth respondent from mining concessions.
5. The court a
quo further erred in entitling, authorising, and empowering the fifth
respondent's security personnel, with all its chain of command, to
remain at the mining concessions until resolution of a matter that was
resolved on 22 February 2016 when the relevant statutory functionary
exercised his discretion against the further extension/renewal of the
special mining grants in question.
The second, third and fourth
appellants (Zimbabwe Mining Development Corporation, Marange Resources
(Pvt) Ltd and Zimbabwe Consolidated Diamond Company) were also aggrieved
by the decision of the court a quo and appealed to this Court on the
following grounds:
1. The court a quo erred in finding, that, the
appellants had committed acts of spoliation against the first and
second respondents in the absence of evidence, or even an allegation,
that the appellants evicted the said respondents and in the face of
evidence from the sixth respondent to the effect that its actions and
presence at the mining site were for purposes of preventing unlawful
mining activities as well as securing State property.
2. The
court a quo erred in finding, that, the first respondent had been
despoiled when no evidence had been placed before it, or even alleged,
regarding any peaceful and undisturbed possession of the mining site or
spoliation by the appellants.
3. The court a quo erred in
finding, that, the first respondent had locus standi and/or that the
shareholder's derivative action was available to the first respondent in
the absence of evidence that the second respondent was unwilling or
unable to institute the proceedings.
4. The court a quo erred in
concluding, that, the appellants (including the first appellant) were
effectively a single economic unit when their relationship is defined by
law and each acted or exercised its rights as provided by law.
Having
read the record and considered the submissions made by counsel for the
appellants and the first respondent, I find that, although the appeal is
premised on many grounds, only two issues arise for determination:
1.
Whether or not the first respondent had locus standi to bring the
application on behalf of the second respondent through derivative
action, or, whether or not derivative action was available to the first
respondent.
2. Whether or not the appellants despoiled the second respondent....,.
Once
it has been found, that, the first respondent had locus standi to bring
the application, then, the second issue must be determined....,.
Whether or not the Appellants Despoiled the Second Respondent
In my view, the facts of this case disclose a classic text book case of spoliation.
In the case of Botha & Anor v Barrett 1996 (2) ZLR 73 (S) GUBBAY CJ stated as follows…,.:
“It is clear law, that, in order to obtain a spoliation order, two allegations must be made and proved. These are:
(i) That, the applicant was in peaceful and undisturbed possession of the property; and
(ii) That, the respondent deprived him of the possession, forcibly or wrongfully, against his consent.”
In
order to make a determination of whether or not the second respondent
was despoiled, it is necessary to prove the two factors stated above.
I propose to deal with each factor in turn.
(i) Whether or not the second respondent was in peaceful possession
It
was submitted, firstly, by the appellants, that, the second respondent
was not in peaceful possession as the special grants entitling it to
mine had expired. The appellants argument was that, since the possession
was unlawful, it could not be peaceful.
It has been stated in a number of cases, that, issues of rights are irrelevant in spoliation proceedings.
In Yeko v Oana 1973 (4) SA 735 (AD)…, it was stated that:
“The
fundamental principle of the remedy is that no one is allowed to take
the law into his own hands. All that the spoliata has to prove is
possession of a kind which warrants the protection accorded by the
remedy, and that he was unlawfully ousted.”
In the case of Chisveto v Minister of Local Government and Town Planning 1984 (1) ZLR 248 (H) the court remarked:
“Lawfulness
of possession does not enter into it. The purpose of the mandamus van
spolie is to preserve law and order and to discourage persons from
taking the law into their own hands. To give effect to these principles,
it is necessary for the status quo ante to be restored until such time
as a competent court of law assess the relative merits of the claims by
each party….,. In fact, the classic generalisation is sometimes made,
that, in respect of spoliation actions, even a robber or thief is
entitled to be restored possession of the stolen property.”
It is
apparent from the facts of this case, that, the first respondent, being
a 50 per cent shareholder of the second respondent, was in possession
of the mining fields through the second respondent.
Possession, in legal terms, depicts both the mental and physical elements.
It
is not in dispute, that, the second respondent was in physical
possession of the mining fields at the relevant time and was carrying
out mining operations.
Secondly, the appellants also alleged that
there was no evidence on the record that the appellants had committed
the acts complained of.
The first appellant stated, that, the
mere fact that he had called a press conference, and stated that the
possession of the respondents was unlawful, does not in itself amount to
spoliation. In any event, he argues, that, he was not at the scene nor
was any evidence given to link him to the persons who had despoiled the
respondents.
It is not in dispute that agents of the State descended on the mine premises on 22 February 2016.
It
was alleged, in the founding affidavit, that, Zimbabwe Mining
Development Corporation (ZMDC) and Marange Resources were the
implementing agents of the scheme which culminated in Mbada Diamonds
being removed from the mining site.
The evidence given by the second respondent clearly stated, that, the armed police were hired by the first to fourth appellants.
In
my view, it would be an absurdity to find, that, the police and the
other officials would have acted in the manner they did without the
authorisation and knowledge of the first appellant.
The acts
complained of were carried out immediately after the delivery of the
letter from the Permanent Secretary of the first appellant stating that
the special grants had expired. This was immediately followed by the
press conference held by the first appellant, reiterating that position
and giving the second respondent notice to vacate the mining claims.
It
seems to me that the facts, as set out, establish that the first
appellant was primarily instrumental in the removal of the second
respondent from the mining site.
I am satisfied, that, the court a
quo correctly found that the second respondent was in peaceful
possession before the appellants acted in common purpose in removing the
second respondent from its peaceful possession of the mining site.
(ii) Whether or not the second respondent was forcibly and wrongfully deprived of possession
It
is not in dispute that on 22 February 2016, after the press conference
by the first appellant, armed police and officials from the Ministry of
Mines moved onto the mining site, which was being operated by the second
respondent, and forcibly shut down its operations.
The security
team of the second respondent was disabled, and its employees were
evicted from both their work stations and their on-site accommodation.
These actions were conducted without a court order.
All
Mbada Diamonds employees were rounded up and their communication with
the outside world was cut off. They were also subsequently forced off
and barred from the mining site.
The officials proceeded to
switch off the machines and equipment which were in operation. The armed
police officers remained on site and stopped employees from accessing
the plant. Mbada Diamonds employees were threatened with violence and
were forced to leave the mine during the evening of 23 February 2016.
The third respondent, the Commissioner General of Police, confirmed that the police had acted in the manner complained of.
In
my view, in spite of the protestations of the third respondent, the
police would not have acted in such a manner if they had not been called
upon to do so by the appellants, who stood to benefit from the unlawful
removal of the second respondent.
There is no doubt in my mind,
that, these facts show that the second respondent was removed without
its consent. The removal was unlawful as it was carried out without due
process....,.
PATEL JA: I have read the separate opinions rendered by UCHENA JA and GUVAVA JA on the two issues for determination in this matter. I fully endorse and concur with their respective conclusions for the following reasons:...,.
As for the second issue, revolving around the question of spoliation, I can do no more than adopt the succinct reasoning of GUVAVA JA.
There can be no doubt that Mbada Diamonds was in peaceful and undisturbed possession of the mining location in question at the relevant time, irrespective of the continuing validity or otherwise of its special grants, and, notwithstanding the supposed expiry of its right to carry out mining operations in that location.
It is equally indisputable that the appellants, acting in concert, contrived to abruptly and unceremoniously deprive Mbada Diamonds of its possession of the mining location, forcibly and wrongfully against its consent, through the agency of the Commissioner General of Police and his cohorts.
