MATHONSI J: The bulk of what the applicant relies upon in
making out a case for the relief that she seeks is contained in Heads of
Argument filed by her counsel. It is not only improper but also wrong, utterly
absurd and completely unacceptable to purposely avoid presenting evidence in
affidavits which would put the other party on guard and enable that party to
respond to such evidence in its opposing affidavit, in the forlon hope of
influencing the court by placing it in arguments. It is an undesirable ambush.
In this application the applicant seeks an order declaring all decisions of the
board of directors of the second respondent, a company incorporated in
Zimbabwe, made from 19 March 2010 to be a nullity and of no legal effect. She
also seeks a declaration that all orders given to the second respondent and an
entity known as Empowerment Corporation (Pvt) Ltd from 19 march 2010 to
be a nullity on the pain of costs on the scale of legal practitioner and
client.
In her founding affidavit, the applicant claims to be the chairperson, director
and shareholder of the second respondent. Together with other Zimbabwean
citizens, whose identities she does not disclose, the applicant claims to have
formed Empowerment Cooperation (Pvt) Ltd which went into a joint venture with
the first respondent to operate a telecommunications business in Zimbabwe. This
arrangement led to the incorporation of Telecel Zimbabwe (Pvt) Ltd, the second
respondent, as a vehicle through which that business was run. There are only 2
shareholders of the second respondent, namely the first respondent and
Empowerment Corporation (Pvt) Ltd, she being a shareholder of the latter.
The first respondent and Empowerment Corporation (Pvt) Ltd entered into a
shareholders' agreement governing the management of the second respondent. In
particular Empowerment Corporation (Pvt) Ltd had the responsibility of chairing
all meetings of the board of directors. The applicant states that one
James Makamba was the first chairperson of the board of directors but when he
was incarcerated, she was appointed the acting chair gravitating towards being
the substantive chairperson automatically when Makamba left the country and
became a fugitive from justice.
At a meeting of the board of directors of the second respondent held in London
on 19 March 2010, a resolution was taken suspending the applicant from the
position of chairperson, the position of director and suspending her benefits
as a director. In her view that decision is a nullity because there was no
quorum in that the meeting was not chaired by a representative of Empowerment
Corporation (Pvt) Ltd. She does not state who chaired it. The directors of the
first respondent cannot make decisions binding upon her or the second respondent.
It is not clear from the papers whether the application was served upon the
first respondent. It has not filed opposition but the second respondent has. In
its opposing affidavit deposed to by Aimable Mpore, its Managing director, the second
respondent disputes that the applicant ever held the position of chairperson of
the second respondent, insisting instead that she was only an acting
chairperson until her suspension on 19 March 2010. She has never been a
shareholder of the second respondent which has only 2 shareholders, the first
respondent and Empowerment Corporation (Pvt) Ltd.
Referring to clause 5.1 of the Shareholders Agreement entered into between the
first respondent and Empowerment Corporation (Pvt) Ltd, Mpore maintained that
the chairperson of the second respondent proposed by the latter in terms
thereof is James Makamba who has always held that position while the Managing
Director was proposed by the first respondent in accordance with that
provision.
Mpore stated that the applicant was properly notified of the board meeting but
chose not to attend. The meeting was properly constituted in terms of clause
6.5 of the Shareholder's Agreement and for that reason the resolution passed
was legal. It suspended the applicant from her acting position of chairperson
and as director although it did not suspend her benefits which she continues to
enjoy. In order to be valid, resolutions of the board require the presence, in
person or by proxy, of half the directors of which at least one director
representing each shareholder must be in attendance in terms of Clause 6:5. As
the provision does not require the chairperson to be one of the
representatives at all times, there was nothing wrong with the constitution of
the meeting.
What is clear is that the applicant seeks to impugn the meeting of 19 March
2010 in terms of the Shareholders Agreement between the first respondent and
Empowerment Corporation (Pvt) Ltd signed on 11 June 1997. This is the basis of the
application in both the founding affidavit and the answering affidavit. The
applicant's case then loses track in Heads of Argument filed by her counsel, in
which new evidence is improperly introduced.
In those Heads of Argument, it is alleged that Makamba was charged with 11
counts of contravening sections of the Exchange Control Act [Cap
22:05]. He was declared a specified person in terms of s 6 of the Prevention of
Corruption Act [Cap 9:16]. He was removed from the position of
chairperson of the second respondent's board. The applicant was given short
notice to attend the London meeting and could not do so because she was on bail
whose conditions required that she surrenders her passport. It was impossible
for her to obtain a visa to the United Kingdom. For these reasons the meeting
was designed to prevent the applicant from attending while according a fugitive
from justice, Makamba, an opportunity to attend and chair the meeting as he was
the only alternative chairperson in the absence of the applicant. The meeting
was contrary to public policy and a fundamental violation of Zimbabwean legal
order.
None of this is contained in the affidavits and it is amazing that counsel saw
it fit to include those allegations in Heads of Argument, when there is no
shred of evidence to sustain them. The allegations should have been made in the
founding affidavit to accord the respondents an opportunity to respond to them
and generally to put the respondents on guard as to what case they faced. Heads
of Argument are not evidence and counsel cannot be allowed to lead evidence
from the bar as it were: Angeline Enterprises (Pvt) Ltd v Albco
(Pvt) Ltd 1990 (1) ZLR 6 (H) 11 E.
Mr Venturas for the applicant could not defend the inclusion of evidence
in Heads of Argument. He only maintained that even if it were to be ignored,
the applicant's case stands firm by virtue of what is contained in the
affidavits.
Where allegations are contained only in Heads of Argument and not in evidence
submitted on behalf of a party, in the form of affidavits deposed to by
witnesses, the court will simply ignore such evidence or allegations as I
intend to do in this matter: Kanyanda v Muzhawidza 1992 (1)
ZLR 229 (S) 231 C. The logic of that position is pretty obvious. It is that the
party against whom such allegations are made is entitled to an opportunity to
rebut them.
Coming back to the Shareholders Agreement of the parties, it is the one which
governs the conduct of meetings held by the board of directors. It has been
argued on behalf of the applicant that she has a right to remain as chairperson
and as a director of the second respondent and that the respondents have a
binding obligation under the shareholders agreement to reinstate her. As the
only legally recognised member of Empowerment Corporation (Pvt) Ltd, the other
shareholder of the second respondent after the first respondent, Makamba having
absconded, she should be allowed to assume those roles in fulfilment of the
Shareholders Agreement.
When this was drawn to Mr Venturas' attention, who surprisingly did
not address me on the point taken by Mr Fitches for the second
respondent that the matter should have been referred to arbitration by virtue
of Clause 17 of the shareholders agreement, he took the view that the said
provision related only to a dispute among shareholders. The dispute that the
applicant seeks to have determined by this court is one between directors. I do
not agree. In fact that is a classic case of a distinction without a difference
which also ignores the reality that a director is merely an employee of a
company bringing into play another point taken by Mr Fitches that if
approached from that perspective, the matter would become a labour matter in
which this court would not enjoy jurisdiction.
I do not intend to be bogged down on that at all. To the extent that the
applicant seeks to enforce the shareholders agreement, she cannot escape the
imperatives of that agreement. She must submit herself to the provisions of the
agreement. She cannot pick and choose what provisions she would like to be
upheld. Indeed the applicant anchors her application on Art 5 of the
Shareholders Agreement which reads:
“5.1. Unless the shareholders unanimously agree otherwise:
(a) The
chairman of Telecel Zimbabwe (Pvt) Ltd shall be proposed by EC;
(b) The Managing
Director of Telecel Zimbabwe (Pvt) Ltd shall be proposed by TIL.
5.2.
TIL shall assist the Managing Director for the daily management of the Company
in accordance with the provisions of the Management Agreement attached
hereafter as Annex A as previously approved by the parties in the Pre- Bid
Protocol.”
The same Shareholders Agreement has an arbitration Clause, being Art 17. It
reads:-
“-
This Agreement shall be governed by and construed in accordance with the laws
of Zimbabwe.
-
All disputes which could
arise among the Shareholders relating to this agreement shall be submitted to
arbitration in accordance with the Arbitration Act [Cap 7:02].
The arbitration shall be
conducted by one sole arbitrator appointed jointly by the shareholders. Such
arbitrator shall have an acknowledged experience in the telecommunication
field. In case the parties to the dispute could not agree on the choice of
arbitrator, either party may, on giving not less than seven (7) days notice to
the other, request the Commercial Arbitration Centre in Harare (or any
successor to that Centre) to appoint an arbitrator.
Unless the parties to the
dispute were to agree otherwise:
1)
The arbitration shall take place in Harare;
2)
The arbitration shall be conducted in English;
3)
The costs of arbitration shall be borne by the losing party.
The parties hereto irrevocably
agree that the decision in those arbitration
proceedings:
-
shall be final and binding upon them
-
shall be carried into effect;
-
may be made an order of any court of competent jurisdiction.”
Just how the clear provisions of Art 17 could have escaped
the attention of the applicant and indeed counsel is difficult to fathom. This
court is not in the habit of making contracts for the parties who shall forever
remain free to contract as they please. It is a celebrated principle of the
concept of sanctity of contract that when the parties have so contracted, the
contracts made freely and voluntarily shall be held sacred and enforced by the
courts, as I propose to do in casu: Delta Operations (Pvt) Ltd v
Origen Corp (Pvt) Ltd 2007 (2) ZLR 81 (S) 86 F-G.
The applicant had no business bringing this matter to this
court. It should have been referred to arbitration. No meaningful argument has
been advanced to justify the route that the applicant has taken contrary to the
dictates of the covenant governing the relationship between the parties. Having
taken a wrong turn, the applicant must face the consequences of her actions.
Accordingly, the application is dismissed with costs.
Messrs Venturas & Samukange, applicant's legal practitioners
Messrs
Scanlen & Holderness, second respondent's legal practitioners.
