A
company is a person. It is a juristic person, or, in legal parlance,
a legal persona, but all the same a person. It has an identity
separate from that of its members. It can own property independently
of, and separately from, its members. Thus, a company's assets are
not the members' assets.
These
cardinal principles seem ...
A
company is a person. It is a juristic person, or, in legal parlance,
a legal persona, but all the same a person. It has an identity
separate from that of its members. It can own property independently
of, and separately from, its members. Thus, a company's assets are
not the members' assets.
These
cardinal principles seem to have been purposefully ignored or
inadvertently overlooked in this matter. The result has been
prolonged litigation for over five (5) years.
The
facts were largely common cause.
The
plaintiff was a duly registered private company. At all relevant
times, prior to 16 June 2008, its major asset was an immovable
property situate Stand 12896 Salisbury Township, measuring 3,066
square metres, held under Deed of Transfer No.39/76
and otherwise known as 98 Churchill Avenue, Gunhill, Harare
(hereafter referred to as “the property”). Its principal officer,
in the sense of being the majority shareholder and director, was the
third defendant (hereafter referred to as “Sandra Muir”).
On
21 May 2008, this court, MTSHIYA J, granted a default judgment in
HC1393/08. This followed an application by the first and second
defendants herein who therein were the first and second applicants
respectively. Hereafter, I shall refer to the first and second
defendants as “Mr and Mrs Gurupira” or “the Gurupiras”. The
default judgment effectively directed the plaintiff herein, the first
respondent therein, to transfer the property to the Gurupiras. Sandra
Muir, the second respondent therein, was ordered to sign the
necessary papers within 10 days of the order failing which the
Sheriff, who is the fourth defendant herein, or the Deputy Sheriff,
who is the fifth defendant herein and was also the fifth respondent
therein, would sign the transfer papers in place of Sandra Muir. The
order by MTSHIYA J read as follows:
“IT
IS ORDERED THAT;
1.
The 1st
Respondent [the plaintiff herein] is hereby interdicted from
transferring the property known as No.98 Churchill Avenue, Harare,
also known as a certain piece of land situate in District of
Salisbury Township Lands measuring 3,066 square metres under Deed of
Transfer 39/76 to anyone except the 1st
and 2nd
Applicants.
2.
The property in paragraph 1 above be transferred to Asswell Africa
Gurupira and Jean Jane Gurupira and the 2nd
Respondent [Sandra Muir] is directed to sign all the necessary
documents to finalise the transfer within 10 days of the Order.
3.
Should the 2nd
Respondent fail or refuse to sign the necessary documents to effect
transfer the 4th
or 5th
Respondent [Sheriff and Deputy Sheriff respectively] are hereby
directed to sign all the necessary documents to effect the transfer
by the 3rd
Respondent [Registrar of Deeds] to 1st
and 2nd
Applicants.
4.
The 1st
and 2nd
Respondents shall bear all the costs of this application on
attorney-client scale jointly and severally one paying the other to
be absolved.”
The
order was granted in default of appearance by the plaintiff and
Sandra Muir.
Through
their erstwhile lawyers, Manase and Manase, the Gurupiras said they
had served their application in HC1393/08 in a letter-box at the
property.
Following
that default judgment, the property was transferred to the Gurupiras
on 16 June 2008 under Deed of Transfer No. 4778/2008. The then Deputy
Sheriff for Harare had signed the transfer papers. Manase and Manase
had been the conveyancers. After that, Manase and Manase had applied
for, and had obtained, ex parte, an order of eviction from the
Magistrate's Court.
Meanwhile,
the plaintiff had changed hands.
One
John Legget had become the majority shareholder. This had followed a
series of agreements with Sandra Muir. She, on her part, had by then
emigrated to Israel. One Diniwe Chinyani (“Diniwe”) had been
staying at the property. She had been Sandra Muir's employee of 10
years and more. With the change of ownership of the plaintiff,
Diniwe's continued stay on the property, as an employee of the
plaintiff, had been through an arrangement with John Legget. As the
Messenger of Court was executing the ex parte order of eviction from
the Magistrate's Court Diniwe Chinyani raised alarm. It did not
help. She and her family were evicted. After that, the Gurupiras took
occupation and moved in.
The
plaintiff, through John Legget, filed an urgent chamber application
for rescission of judgment. However, the matter was adjudged to be
not urgent. The plaintiff then filed an ordinary court application
for rescission of judgment. It also sought the reversal of the
transfer of the property from the Gurupiras back to the plaintiff.
Finally, it also sought the eviction of the Gurupiras. The
application was filed under the reference no HC4211/08. The
application was said to have been brought in terms of both Order 9
Rule 63 and Order 49 Rule 449.
The
Gurupiras, through Manase and Manase, opposed the application.
The
matter came before PATEL J…, The learned judge felt that there were
serious and irreconcilable disputes of facts. On 24 September 2009 he
referred the matter to trial. The application would stand as a
summons. The parties would file further pleadings in accordance with
the rules of court. That was done.
The
trial came before me on 10 February 2014....,.
The
plaintiff called seven (7) witnesses. The first was one Paradzayi
Matambanadzo, a technician from Net One Cellular, a cellular network
provider. His evidence was that without a special device, which Net
One Cellular did not have, it was not possible for it to decrypt a
short message service (sms) transmitted through its platform by one
user to the other. This evidence was led to deal with one of the
issues in the matter. That issue was whether or not Sandra Muir had
transmitted to the Gurupiras an sms advising them of the Zimbabwean
dollar balance due by them to her in respect of the sale of shares.
It was in issue whether the purchase price would be paid in
Zimbabwean dollars or in foreign currency. These transactions had
been entered into before the advent of the multi-currency system
adopted by this country in February 2009.
The
second witness called by the plaintiff was one Leonard Nhari, a
forensic scientist. One of the issues was whether or not Sandra Muir
had acknowledged receipt of certain payments made by the Gurupiras.
Mr Nhari's evidence was that after he had examined Sandra Muir's
purported signatures on the questioned documents it was his
conclusion that the signatures were not hers but forgeries or
imitations.
The
third witness called by the plaintiff was John Legget himself. His
evidence was that at the time the Gurupiras had taken transfer of the
property, through a court order that they had obtained in default, he
had already become the owner of the plaintiff through an initial
allotment of 98 of the un-issued shares and a subsequent buy out of
the remaining two (2) shares still held by Sandra Muir.
John
Legget said that neither he nor the plaintiff had been aware of the
court application by the Gurupiras. Until the time of eviction he had
never heard of the Gurupiras, let alone of their interest in the
property. If their application had been served through the letter box
at the property then Diniwe Chinyani ought to have seen it. She
stayed permanently on the property. She would bring him all mail that
concerned Sandra Muir or the plaintiff. John Legget questioned why
Manase and Manase had chosen to serve the court application meant for
the plaintiff and Sandra Muir through a letter box when they were, at
all relevant times, duly represented by legal practitioners, Thompson
Stevenson & Associates. At that time there was already litigation
pending between the Gurupiras and Sandra Muir under HC6660/07. That
was an application by the Gurupiras to compel Sandra Muir to furnish
them with her local Bank account details allegedly to enable them to
deposit the balance of the purchase price.
The
fourth witness called by the plaintiff was Thompson David Stevenson.
He had, at all relevant times, been Sandra Muir's attorney. No
application had been served on him. He found it strange that Manase
and Manase had not directed that the court application in HC4211/08
be served on him. He was at that time still seized of Sandra Muir's
mandate in HC6660/07 in which she was vigorously contesting the
Gurupiras' claims. Mr Stevenson also said that nobody had
approached him for the original title deed for the property. It was
strange that Manase and Manase had resorted to applying for a
replacement copy in order to register the transfer of the property to
the Gurupiras.
The
fifth witness called by the plaintiff was Washington Meda. His firm,
Admew Management Services, had provided secretarial services to the
plaintiff. It had, among other things, registered the transfer of
shares in favour of John Legget and had drawn up the share
certificates for him.
The
sixth witness for the plaintiff was Diniwe Chinyani. She explained
that she checked the mail box everyday. She had seen no application.
Although at the particular time the application is alleged to have
been served Sandra Muir was now in Mozambique on her way to Israel,
her home country, she would remit all her mail or that of the
plaintiff to John Legget.
The
seventh and last witness for the plaintiff was one Anthony Neil
Purkis (“Mr Purkis”). He was a chartered secretary in real
estate. His evidence was that it was him that had fixed the sale of
shares agreement between Sandra Muir and John Legget. Initially, a Mr
Stephen Lennox Attwell had offered to buy Sandra Muir's
shareholding in the plaintiff. The agreed price had been around
US$220,000. However, Mr Attwell had only paid a deposit of $30,000
and had defaulted afterwards. The sale had been cancelled. Mr Purkis
had subsequently closed another deal with John Legget. That agreement
had been consummated. Out of the proceeds from John Legget, $30,000
would be kept in trust for Mr Attwell. Mr Purkis said he had not
heard of the Gurupiras prior to the agreement with John Legget. It
was only much later that he had heard of them from Sandra Muir. He
had heard that other than a trifle US$17,000, the Gurupiras had
failed to pay the sum required on the plaintiff's shares.
For
the defence, only Mr Gurupira gave evidence.
Basically,
his evidence was that following an advert in one of the local
newspapers they had learnt that the property was on sale. The
property was owned by the plaintiff. They had been advised that in
order to get the property they had to buy Sandra Muir's shares in
the plaintiff. Although they were not really interested in the
plaintiff they had signed an agreement for the purchase of those
shares. This was the only way to get the property. The agreed
purchase price had been ZW$7 billion payable over 6 months in local
currency. They had fully paid the purchase price; partly in foreign
currency, partly in local currency, and partly in kind.
Towards
the end, when the balance owing was ZW$6 billion, Sandra Muir had
started to prevaricate and it was becoming difficult to remit
payments to her. In November 2008, which was the deadline for payment
in terms of the agreement, they had had to apply to court for an
order to compel her to disclose details of her local Bank account to
enable them to make the last payment. This had been the application
under HC6660/07. However, that application had not been proceed with.
Sandra Muir had agreed to accept cash. She had received and had
signed for it on 13 November 2008. The date on the acknowledgement of
receipt had incorrectly been entered as 14 November. He had altered
it in long hand to read 13 November.
Mr
Gurupira denied that they had breached the agreement of sale. He
confirmed that Manase and Manase had applied on their behalf to
compel the plaintiff and Sandra Muir to transfer the property to him
and Mrs Gurupira. The actual registration of transfer had been in
terms of the court order.
The
defence closed its case after the evidence of Mr Gurupira.
Having
heard all the evidence and having read the voluminous record I was
left in no doubt that Manase and Manase had snatched a judgment for
the Gurupiras who, through their new attorneys, Sawyer and Mkushi,
were improperly clinging onto it. The words of McNALLY JA in Zimbabwe
Banking Corporation Ltd v Masendeke 1995 (2) ZLR 400 (S) (the Zimbank
case) have kept playing in my mind. At p402E the learned judge of
appeal made the following terse remarks (KORSAH JA and MUCHECHETERE
JA agreeing):
“Here
there was a mistake. It was clearly a mistake. Zimbank had no
possible reason to allow the claim against it…, to go by default.
No-one, and in that term I include My Moyo of Chikumbirike and
Associates, who acted for Masendeke, could have reasonably have
thought otherwise.”
The
facts of Zimbabwe Banking Corporation Ltd v Masendeke 1995 (2) ZLR
400 (S) (the Zimbank case) were far removed from those of the instant
case.
In
Zimbabwe Banking Corporation Ltd v Masendeke 1995 (2) ZLR 400 (S) the
respondent's suit had been preceded by a letter of demand. The
letter had been acknowledged and had been said to have been under
consideration. In the present case, apart from HC6660/07 which Sandra
Muir was defending to the hilt, there was no prior demand for the
transfer of the property prior to the application under HC421/08
being filed.
In
Zimbabwe Banking Corporation Ltd v Masendeke 1995 (2) ZLR 400 (S) the
summons had been served and had been acknowledged on behalf of the
applicant. It had been served on the accountant of one of the
branches of the applicant. The accountant had referred it to the
applicant's Head Office where it had reached the office of the
General Manager. In the present matter, the summons had been served
in a letter box, notwithstanding that Sandra Muir was, at that time,
duly represented by Mr Stevenson. The court application in HC4211/07
had actually cited the earlier application under HC6660/07 as a
reference matter.
In
one of Mr Gurupiras affidavit in opposition to the application for
rescission of judgment it was claimed that it was not competent to
have served the application on the legal practitioners in the absence
of evidence that they had the mandate to represent Sandra Muir in
that particular application.
Without
doubt, this was a self-serving subterfuge. If no confirmation had
been sought how could it be given?
In
Zimbabwe Banking Corporation Ltd v Masendeke 1995 (2) ZLR 400 (S) the
summons had been inexplicably filed away. The General Manager had not
seen it. Default judgment had been sought without any further
communication when no appearance to defend had been entered. The
judgment was easily rescinded. The respondent's lawyers, who had
unreasonably opposed the application for rescission of judgment, just
as in this case, narrowly escaped an order of costs de bonis
propriis.
In
this matter, it is unbelievable that given the surreptitious manner
in which Manase and Manase obtained the default judgment and the
order of eviction from the Magistrates Court, ex parte, they had the
audacity, not only to seek costs, and not only to seek such costs on
the higher scale of attorney and client against the plaintiff and
John Legget for having applied for rescission of judgment, but also
they sought costs de bonis propriis against the plaintiff's
attorneys, then, Matimba and Muchengeti.
In
this mater, to allow the default judgment to stand would make justice
turn on its head.
See
Zimbabwe Electricity Supply Authority v Maposa 1999 (2) ZLR 452
(S)…,.; and Pamire & Ors v Dumbutshena NO & Anor 2001 (1)
ZLR 123 (H)…,.
What
Manase and Manase were doing offends against all notions of justice
even
though the return of service by the Deputy Sheriff, on the
application to compel transfer, stated that the application had been
served through the letter box,
I
am sceptical that such a huge bundle of documents, which, from its
index, was 56 pages long, could be shoved into a standard letter box
and fit. The return did not even say that this had been done after a
diligent search for someone responsible to receive the papers. Diniwe
Chinyani and her children stayed at the property. None of them saw
the papers. This lends credence to John Legget's rejection that any
such documents had been placed in the letter box. Manase and Manase
deliberately avoided service on Sandra Muir's attorneys. It
obviously meant that the application was intended not to be served on
the plaintiff or on Sandra Muir.
Furthermore,
it was manifestly reprehensible for Manase and Manase to rush an ex
parte application for eviction through the Magistrate's Court. It
was clearly an abuse of the court process. The main matter was
playing out in the High Court. It is doubtful that the Magistrate's
Court had jurisdiction over such a matter. The High Court was avoided
deliberately because evidently no judge of this court would have
countenanced an application for such profound and life-changing
relief as eviction to be determined ex parte.
The
application for an order to compel transfer was itself replete with
patent falsehoods. It was claimed that Sandra Muir was the Managing
Director of the plaintiff; that she owned 32,000 shares allegedly
being the entire share capital of the plaintiff and that Sandra Muir
was the sole beneficial owner of the property.
That
was false.
Sandra
Muir did not own 32,000 of the plaintiff's shares. To the knowledge
of the Gurupiras and their lawyers, Manase and Manase, because this
was manifest in the agreement of sale, Sandra Muir owned only 2
shares. That was all that had been issued at that time. 32,000 shares
was the authorised share capital. Sandra Muir was not the beneficial
owner of the property. She may have enjoyed a right of occupation but
ownership of the property was vested in the plaintiff.
It
was further alleged in Mr Gurupira's affidavit that on 25th
day of some undisclosed month, but in the year 2007, Sandra Muir had
sold to him and Mrs Gurupira her entire shareholding in the plaintiff
and that those shares had entitled the holders thereof to an
exclusive right of ownership, occupation and use of the property. The
reference to Sandra Muir's “entire shareholding” could only
have been to the 32,000 shares that Sandra Muir was alleged to own.
This was calculated to mislead. Sandra Muir had sold to the
Gurupiras' only 2 shares. Whilst this was her “entire
shareholding” the reference in the preceding paragraph to her
owning 32,000 was evidently calculated to give the impression that
Sandra Muir had sold Mr and Mrs Gurupira the entire 32,000 shares.
Furthermore,
it was false to claim that the shares in the plaintiff gave the
holder an exclusive right of ownership of the property. The order by
MTSHIYA J directed that the property be transferred to the Gurupiras.
Clearly, that relief was sought erroneously. Clearly, it was granted
erroneously. Clearly, it was granted in the absence of the plaintiff.
There had been no proper service of the papers. Therefore, under Rule
449, the order was liable to be set aside.
I
am also satisfied that under Rule 63 the plaintiff has established
good and sufficient cause why the order should be set aside. In order
to show good and sufficient cause under Rule 63 the applicant has to
give a reasonable explanation for the default, the bona fides of the
application for rescission of judgment, and the prospects of success
on the merits: see Roland & Anor v McDonnell 1986 (2) ZLR 216
(S); Songore v Olivine Industries (Pvt) Ltd 1988 (2) ZLR 210 (S);
Stockill v Griffiths 1992 (1) ZLR 172 (S); and Enock Govha v Ashanti
Goldfields Zimbabwe Limited & Anor HH48-12.
These
aspects are considered cumulatively and not individually: Stockill v
Griffiths 1992 (1) ZLR 172 (S)…,.
I
have already considered that the plaintiff was not in wilful default.
Regarding the bona fides of the application for rescission; it is
quite clear that the plaintiff, without due process, was deprived of
its only major asset. Section 183(1)(b) of the Company's Act
[Chapter 24:03] prohibits the disposal of the whole or the greater
part of the assets of a company without the approval of the company
in a general meeting.
This
was not done in this case.
The
property was just about the only asset of significance owned by the
plaintiff. The evidence placed before me showed that the Gurupiras
never took transfer of the shares of the plaintiff. All that they
were ever interested in was the property even though their agreement
was for the purchase of the shares in the company, not the purchase
of its assets. The evidence also showed that by the time that the
Gurupiras took transfer John Legget had already become the majority
shareholder and the Managing
Director
of the plaintiff. Thus, transfer of the property to the Gurupiras was
a nullity. The plaintiff did not sanction it. Regarding the prospects
of success, I have decided to leave this aspect for determination at
the hearing of the main matter under HC1393/08.
Procedurally,
once I set aside the order by MTSHIYA J, as I must, the application
under HC1393/08 becomes alive again even though I have already heard
viva voce evidence on it. In the end, this court shall have to
pronounce the fate of the plaintiff and the fate of the assets owned
by it. In my view, and without in any way being prescriptive or
pre-emptive, some of the issues to be determined in the main
application includes the question of whether or not there had been a
double sale in the true sense; whether or not the Gurupiras breached
the agreement of sale with Sandra Muir by failing to pay the purchase
price either timeously or in full; and whether or not that agreement
had automatically lapsed.
There
is one final aspect of this matter.
When
the application was referred to trial and the parties were directed
to file further pleadings with the application taking the place of
the summons, the Gurupiras, through Manase and Manase, had purported
to join John Legget to the matter and had gone on to claim a
substantive relief against both him and the plaintiff. It was pleaded
that the sale and transfer of the shares in the plaintiff by Sandra
Muir to John Legget had been a nullity. The counter-claim was for the
reversal of that transfer of the shares.
At
the trial, however, counsel for the Gurupiras, wisely, abandoned the
counter-claim. John Legget had not been a party to the action. He had
not been joined properly. His name had just been inserted in the
citation as second defendant. Such crass conduct and wanton disregard
of the rules by Manase and Manase properly ought to have attracted a
penal order of costs at the very least. However, no such order was
asked for. But, it was a correct decision by counsel for the
Gurupiras to have abandoned the counter claim.
