MUTEMA J: The applicant is the Deputy Sheriff for Bulawayo. Steelnet
(Zimbabwe) (Pvt) Ltd (Steelnet) is the holding company of BMA Fasteners (Pvt)
Ltd. In case No. HC 3078/11 the Minister of Higher and Tertiary Education
(the judgment creditor herein) sued and obtained a judgment, as plaintiff,
against BMA Fasteners for US$9350.13. Following the issue of a writ of
execution the applicant attached property belonging to BMA Fasteners.
Steelnet, which had been placed under judicial management
in September, 2011 initiated the current interpleader proceedings as
claimant. Steelnent's argument is simply that by virtue of the fact that
BMA Fasteners is a wholly owned subsidiary of Steelnet (which is under judicial
management), the judicial management order applies with equal force to BMA
Fasteners whose property should also not be attached without leave of the
court.
At the hearing Mr Dube-Banda raised two
preliminary issues. The first point is that the claimant is barred for
non-filing of a notice of opposition and the second is that claimant, for
failure to file heads of argument, is again barred. Mr Majoko
was at great pains trying to persuade the court that his client was not
barred. In his peroration of the incomprehensible argument he prayed that
if the court could grant him the right of audience, if only as a friend of the
court to clarify certain facts. The court ruled that it could neither see
nor hear him on the basis of the two bars alluded to supra.
The reasons for so holding are these:
Ad failure to file notice of opposition
Order 30 Rule 207(b) stipulates that an interpleader notice
shall call upon the claimant to deliver particulars of their claim in the form
of a notice of opposition on Form 29A. Rule 209 provides that Order 32
shall apply to any application made in terms of this Order, that is inter
alia filing and service of notice of opposition, opposing affidavits and
heads of argument.
In the instant case, Steelent, instead of filing and
serving its notice of opposition in terms of Order 32 Rule 233 (1) and (2)
respectively, filed what it termed a “Founding Affidavit of Erick Makarimayi”
that was plucked from case No. HC 1940/12 in which it was the applicant while
the judgment creditor, the applicant and one Bruce Jones were 1st, 2nd
and 3rd respondents respectively. This so-called affidavit is
neither signed by the deponent nor by a commissioner of oaths. In it,
Erick Makarimayi says he is the Managing Director of BMA Fasteners (Pvt) Ltd
and was authorised by one Christopher Maswi, Steelnet's judicial manager to
depose to it avering that since BMA Fasteners is a 100% owned subsidiary of
Steelnet (under judicial management) its property is also immune to attachment
in the same way as that of Steelnet.
Clearly this so-called affidavit does not constitute a
notice of opposition as stipulated in Rule 207 (b) neither does it constitute
an opposing affidavit since it is headed “Founding Affidavit---“ over and above
it not being a valid affidavit as stated above. Rule 233 (3) provides
that a respondent who has failed to file a notice of opposition and opposing affidavit
in terms of subrule (1) shall be barred. Steelnet was accordingly indeed
barred. Following the filing and service of the judgment creditor's
notice of opposition and opposing affidavit Steelnet had the effrontery to file
what is headed “Confirmatory Affidavit of Christopher Maswi” wherein Maswi the
judicial manager was seeking release of the attached BMA Fasteners goods on the
grounds advanced in Erick Makarimayi's purported affidavit. Our rules do
not provide for a confirmatory affidavit after the filing of an opposing
affidavit. They provide for an answering affidavit. It is therefore
not known what this so-called confirmatory affidavit is in aid of.
Ad failure to file heads of argument
On 23 October, 2012, Steelnet was served with the judgment
creditor's heads of argument but until the date of hearing Steelnet had not
filed its heads of argument. Order 32 Rule 238 (2b) specifically provides
that where heads of argument have not been filed as required the offending
party shall be barred. Steelnet was accordingly barred again.
Ad Merits of the claim
In Ellingbarn Trading (Pvt) Ltd v Assistant Master of
the High Court and People's Own Savings Bank HB 82/13 and Zimbabwe
International Trade Fair Company v Viking Plastics (Pvt) Ltd and Another HB
83/13 – two cases which I also heard on the same day – I bemoaned the rampant
abuse of court process that is getting increasingly apparent in this
court. The same sentiments apply with equal force in casu.
Steelnet as applicant in HC 1940/12 filed an urgent
chamber application seeking to have the intended sale of BMA Fasteners'
attached property declared unlawful. The basis of that application was
that the property belonged to Steelnet which was under judicial
management. The urgent chamber application was dismissed – see Steelnet
(Zimbabwe) Pvt Ltd v Minister of Higher and Tertiary Education and Others
HB 171/12. It is clear that a judgment was, on merits, given by a
competent court in a matter between the same parties concerning the same
subject matter which Steelnet is again seeking in casu by way of
interpleader. The matter is clearly res judicata – see Boshoff
v Union Government 1932 TPD 345. It clearly amounts to serious abuse
of court process that a matter that has been properly disposed of in court
involving the same parties and the same subject matter is sneaked back into
court via the back door under the guise of interpleader.
The high watermark of Steelnet's contention is that it owns
100% of the shares in BMA Fasteners (Pvt) Ltd and since Steelnet is under
judicial management, then the judicial management order staying execution of
process against Steelnet applies with equal force to its 100% owned
subsidiary. The fallacy of this argument has been laid bare since time
immemorial. In Salomon v Salomon and Co. Ltd [1897] AC22 (HL) at
30 the court held:
“It seems to me impossible to
dispute that once a company is legally incorporated it must be treated like any
other independent person with its rights and liabilities appropriate to itself,
and that the motives of those who took part in the promotion of the company are
absolutely irrelevant in discussing what those rights and liabilities are
--. A company has legal existence with --- rights and liabilities of its
own.”
This is a time-honoured concept of separate legal persona
of corporate entities. At law a company is a legal entity entirely
distinct from its members who compose it. It has neither body parts nor
passions but it can have rights and duties of its own. And such rights
and duties do not attach to the members of the company but to the company
itself. A company cannot eat or sleep but it can keep a house and do
business: De Beers Consolidated Mines Ltd v Howe [1906] CA 455 (HL).
As regards liability of a holding company for the debts of
a subsidiary, the legal principle is clear: “the separate legal existence of
the constituent companies of the group has to be respected” per Lord
Wilberforce in Ford & Carter Ltd v Midland Bank Ltd (1979) 129 N L J
543, 544. The rule in Salomon v Salomon & Co. Ltd supra thus
prevails.
BMA Fasteners is an incorporated entity and is not the one
under judicial management. Steelnet may own a 100% shareholding in BMA
Fasteners but that does not mean that BMA loses its time-hallowed status of
being a separate legal entity.
It is apparent from the history of the suit that Steelnet
and BMA Fasteners through its managing director Erick Makarimayi were acting in
connivance in abusing court process. They filed a hopeless urgent chamber
application to stay execution of a judgment against BMA on spurious legal
grounds. That application having been properly dismissed with costs, they
were undaunted. They proceeded to initiate this spurious interpleaded
application on the same dismissed grounds when that matter was clearly res
judicata. I have reservations about the bona fides of Mr Majoko
in bringing this interpleader application and I will let him narrowly off the
hook regarding costs de bonis propriis on the simple ground that the
papers before me do not ventilate that he played a part in the aborted urgent
chamber application.
In the result I make the following order:
(1) that the
claimant's claim be and is hereby dismissed;
(2) that the
attached goods being 800 harrows be and are hereby declared executable;
(3)
that BMA Fasteners (Pvt) Ltd and its managing director Erick Makarimayi de
bonis propriis' pay costs of suit on an attorney and client scale jointly
and severally, the one paying the other to be absolved.
Dube-Banda, Nzarayapenga and partners, judgment creditor's legal practitioners
Majoko
& Majoko, claimant's legal practitioners
