UCHENA
JA: 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 first respondent, and 50 percent by 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 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
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's
chairman, David Kassel, Grandwell's engagement was bona
fide.
The
engagement continued till the events of 22 February 2016. According
to paras 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 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 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 para 39 of its founding affidavit it was not
taking a position of non-co-operation as it would “seek to
accommodate Government requirements wherever reasonably possible”.
It was therefore not a deadlock as to whether or not Mbada 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.
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. The evidence on
record does not support the allegation that Marange Resources (Pvt)
Ltd directly participated in despoiling Mbada Diamonds. It merely
proves Marange's willingness to join the merger before receiving
further information while Grandwell 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 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 the 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 were also aggrieved by the
decision of the court
a quo and
appealed to this Court on the following grounds.
-
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 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.
-
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.
-
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.
-
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.
-
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.
-
Whether
or not the appellants despoiled the second respondent.
I
will consider and determine the first issue.
Whether
or not derivative action was available to the First Respondent.
Mr
Uriri
for the first appellant challenged the first respondent's right to
institute the application in the court a
quo
on
behalf of the second respondent, a company which in terms of the law
is entitled to enforce its own rights. Mr Tsivama
for the second, third, and fourth appellants agreed with Mr Uriri's
submissions. It was argued for the appellants that the first
respondent did not have the right to institute action on behalf of
the second respondent without evidence that the second respondent was
unable to institute the proceedings to protect its interests. On the
other hand Mr Mpofu
for the first respondent argued that its right to institute the
application arose from derivative action since the second respondent
was not able to act on its own behalf. The issue is therefore on when
a shareholder of a company can institute proceedings on behalf of a
company.
It
is a trite principle of company law that a company should itself
enforce its rights when it is wronged. This was considered as the
rule in Foss
v Harbottle [1843]
2 Hare 461, 67 ER 189. The rule in Foss
v Harbottle
is that, the proper plaintiff in an action in respect of a wrong
alleged to be done against a company is prima
facie
the company itself. Thus as a general rule, where the company is
wronged, the proper plaintiff to institute an action to remedy the
wrong is the company itself. No other person has the right to
institute an action on behalf of the company if the company is able
to vindicate its rights. However, the rule as explained in Foss
v Harbottle
is not inflexible and can be relaxed where necessary in the interest
of justice. Gibson, South
African Mercantile and Company Law,
8th
Ed at pages 370-371, states the following:
“But
the rule in Foss
v Harbottle
is not universal. It is subject to exceptions. It does not apply
where the interests of justice require the rule to be dispensed with
(Russell
v Wakefield Waterworks Co (1875) LR 20 Eq 474).
So
where a wrong has been done to a company, a court will allow
dissentient members to bring an action in their own names against
those responsible, where the latter hold and control the majority of
the shares in the company and will not allow any action to be brought
in the name of the company.
“(emphasis
added)
The
rule in Foss
v Harbottle
does not in appropriate circumstances prevent an individual member
from suing through derivative action. Derivative action is an
exception to the rule in Foss
v Harbottle.
In Zimbabwe, derivative action has been recognised in many cases.
(See
L Piras and Sons (Private)
Limited
v Piras 1993
(3) ZLR 245 (S)
and Lameck Kufandada v Dairiboard Zimbabwe and Others HH
564/15). In the Piras
case GUBBAY CJ said the following:
“The
derivative action is an exception to the rule in Foss
v Harbottle (1843)
67 ER 189 and was expounded thus by Lord Denning MR in Wallersteiner
v Moir (No 2) [1975]
1 All ER 849 (CA) at 857 d-f:
'It
is a fundamental principle of our law that a company is a legal
person, with its own corporate identity, separate and distinct from
the directors or shareholders, and with its own property rights and
interests to which alone it is entitled. If it is defrauded by a
wrongdoer, the company itself is the one person to sue for the
damage. Such is the rule in Foss
v Harbottle.
The rule is easy enough to apply when the company is defrauded by
outsiders. The company itself is the only person who can sue.
Likewise, when it is defrauded by insiders of a minor kind, once
again the company is the only person who can sue. But
suppose it is defrauded by insiders who control its affairs - by
directors who hold a majority of the shares - who then can sue for
damages? Those directors are themselves the wrongdoers. If a board
meeting is held, they will not authorise proceedings to be taken by
the company against themselves. If a general meeting is called, they
will vote down any suggestion that the company should sue them
themselves. Yet the company is the one person who is damnified. It is
the one person who should sue. In one way or another some means must
be found for the company to sue. Otherwise the law would fail in its
purpose. Injustice would be done without redress.'
The
nature, then, of a derivative action is that it is a device designed
to enable the court to do justice to a company controlled by its
wrongdoers and prevents a serious wrong from going unremedied. A
shareholder is allowed to appear as the plaintiff. He acts, not as
representative of the other shareholders, but as a representative of
the company to enforce rights derived from the company. The action is
brought by him in his own capacity to vindicate the company's
rights.” (emphasis
added)
It
is important to note that derivative action is available when certain
requirements are met. It must be clear that the company has been
prevented from instituting proceedings by alleged wrongdoers in
control of the company. It must be alleged and proved that the
wrongdoers (the majority shareholders or the other shareholder in the
case of equal shareholders) have refused to institute the action and
have prevented the company from instituting action using their
majority or equal votes. In order for the company to institute
proceedings on its own behalf, the shareholders must agree through a
resolution. Thus if the majority shareholder, using his majority
vote, or the equal shareholder using his equal vote, blocks the
attempt by the company to institute action to remedy the wrong, the
minority or other equal shareholder is entitled to approach the court
through derivative action.
In
this case, Mr Uriri
for the first appellant, submitted that derivative action was not
available to the first respondent because there was no finding that
the second respondent was prevented from instituting proceedings and
that there are no findings that the second respondent refused or
failed to act in its own interest. Mr Uriri
relied
on the fact that the second respondent itself responded to the
application filed by the first respondent. According to the first
appellant this shows that the second respondent was capable of
instituting the proceedings to safeguard its interests. In support of
that, Mr Tsivama,
counsel for the second to fourth respondents, submitted that in order
for the court to find whether or not derivative action was available
to the first respondent, the court ought to ask itself whether there
was any wrongdoing against the company by the majority shareholders
or those in control of the company, before the party which seeks to
rely on derivative action can succeed.
On
the other hand, Mr Mpofu
for the first respondent submitted that derivative action was
justified on the basis that the seeking of a resolution for the
second respondent to institute proceedings would be a futile exercise
since the third appellant, the other shareholder of the second
respondent, would have made that impossible. Mr Mpofu
further submitted that the futility of the meeting was known as the
first respondent tried to call for the meeting with the other
shareholder. Mr Mpofu
submitted that an attempt was made to call for a shareholders'
meeting but was declined by the other shareholder.
A
perusal of the record reveals that there is no evidence that an
attempt was made for the shareholders of Mbada Diamonds to convene a
meeting to decide whether or not Mbada should institute spoliation
proceedings to protect its rights. There are only two shareholders of
Mbada Diamonds, the first respondent (Grandwell) and the third
appellant (Marange Resources). There is no evidence on record that
the other shareholder actively prevented the company from instituting
such proceedings. On record is a letter from the first and second
respondents' South African legal practitioners threatening to
institute proceedings on their behalf.
Whether
or not the first respondent attempted to call for a meeting with the
third respondent is a question of fact which must be proved by
evidence. In this case, it was not proved that an attempt was made.
As a result, it was not established that the second respondent was
actively prevented by the third appellant from instituting the
proceedings a
quo
in its own name.
According
to Gower L.C.M Principles
of Modern Company Law pages
649-650, for derivative action to be justified:
“It
must be shown that the alleged wrongdoers control the company. The
clearest way of doing this will be to show that both the directors
and the general meeting have been invited to institute proceedings in
the name of the company and have refused to do so, and that the
refusal was because of the votes cast by the wrongdoers.
However, the English
cases recognise that there is no point in formally asking the
directors to institute the proceedings if they are to be the
defendants, and that it is not necessary to convene a general meeting
and to invite it to resolve upon proceedings in the company's name,
provided that the court can be satisfied aliunde
that the wrongdoers are in effective control.”
(emphasis added)
It
is therefore clear that derivative action can be relied on in two
circumstances. In the first situation, it must be proved that a
meeting was called for the shareholders to pass a resolution for the
company to institute proceedings. In the event that the other
shareholders refused or prevented the meeting from taking place, the
other shareholders can rely on derivative action to institute action
on behalf of the company. However, this is not what happened in this
case. No attempt was made by the shareholders of Mbada Diamonds to
convene a meeting to pass a resolution for the company to institute
the proceedings.
The
court a
quo,
conscious of there being no such evidence, at pages 12 to 13 of its
judgment, said:
“In
casu, the
position of the American courts, as stated by Gower above, seemed to
have been Mr Hashiti's point. He submitted that in the absence of
an invitation by Grandwell to Marange for a meeting to pass a
resolution to sue in the name of Mbada; that in the absence of
evidence that such an invitation had been turned down; that coupled
with Werksmans' letter aforesaid, and Luciyano's affidavit, it
could not be said Mbada had been unable to bring the urgent chamber
application by itself and that therefore the derivative action was
not available to Grandwell.”
I
recognise the force of the respondent's argument. But in my view,
the position of the English courts seems to accord more with notions
of justice and the spirit of the derivative action. The law must not
be rendered impotent. In
casu,
the Minister moved with exceeding speed. For six or seven years'
operations at Chiadzwa had gone on unhindered. But on 22 February
2016, in one fell swoop, things were turned upside down. Mining was
abruptly terminated; Mbada's personnel were forcibly expelled from
site; inadequate security had exposed the precious diamonds, the
expensive equipment, personal belongings, and more to destruction and
theft. The situation was one of dire emergency. Werksmans letter of
demand of 23 February 2016, sent by email, had been ignored. There
had been no let-up in the looting, forcing Grandwell, four days
later, to run to the law.
Marange
itself had already passed a resolution to adopt the Minister's
plans for the consolidation of diamond mining companies, including
Mbada into one single entity without agreement with Grandwell, its
co-shareholder. This was in spite of the outstanding details
Grandwell had requested on the proposed scheme. Further,
the evidence showed that it was officials from Mbada, as the
Minister's representatives, with the assistance of the police, who
had executed the Minister's directives.
In
my view, the spirit of the derivative action, being an exception to
the rule in Foss v Harbottle, is that
“—the
claims of justice would be found superior to any difficulties arising
out of technical rules respecting the mode in which corporations are
required to sue.”
These
are the reasons which swayed the court a
quo
to allow derivative action by Grandwell (the first respondent).
The
second situation, which basically reflects the English position, is
that if it is proved that calling a meeting was an exercise in
futility, the other shareholder can institute proceedings on behalf
of the company without seeking a resolution that the company
institute the proceedings. For the shareholder who seeks to rely on
derivative action to rely on this option, the court must be satisfied
that the majority shareholders or equal shareholders, who are the
wrongdoers and would not want the company to institute proceedings,
are in effective control. The second respondent is owned by the first
respondent and the third appellant in equal shares of 50 percent
each. This means, if a meeting was to be called to pass a resolution
for the company to sue and one shareholder votes against such a
resolution, the company could not sue in its own name. It can also be
established that the other shareholder was in effective negative
control.
According
to evidence on record Marange Resources was chaired by the Secretary
of Mines who authored the letter of 22 February 2016. The same
Secretary also chaired the second and fourth appellants. The special
grants which enabled Mbada to mine belonged to Marange Resources
which is wholly owned by the second appellant. The Zimbabwe
Consolidated Diamond Company, fourth appellant, which was to replace
Mbada Diamonds and other diamond mining companies into mere 50
percent shareholders, is chaired by the Secretary of Mines. The
Secretary's office was responsible for crafting Government policy.
It was responsible for the granting of special grants. It also was
entitled to make definitive orders on mining operations as it did on
22 February 2016. In view of the above there is no doubt that, in
spite of formal equality as between the two shareholders, power and
control were on Marange Resources' side. The Secretary's word was
administratively final.
It
was also established and proved that the third appellant as the other
shareholder opposed the application. That alone made it pointless to
call for a meeting to resolve that the company institute application
proceedings which the other equal shareholder was opposing. There was
clearly no chance that such a resolution could be passed. Therefore,
derivative action was justified, because it would have been futile to
call for a meeting to resolve that the company should sue in its own
name. Marange Resources would clearly not have agreed that Mbada
Diamonds should apply for an order against its own chairman and the
Minister's decisions and conduct.
In
this case the first respondent relied on an assumption that the third
appellant would have made it impossible for the resolution to be
passed. That assumption is supported by sufficient evidence that it
would have been futile to call for a meeting to resolve that Mbada
Diamonds should make the application. The futility was clearly
explained by the court a
quo.
It entitled the first respondent to rely on derivative action. There
was proof that the third appellant was fully entangled to the will of
its chairman and the other appellant companies he chaired. There was
therefore evidence aliunde
that it was impossible for the second respondent to institute
spoliation proceedings in its own name.
It
is clear that the right to institute proceedings using derivative
action is meant to remedy wrongdoing against a company by its
directors or majority or equal shareholders. In this case, the court
a
quo
correctly relied on the futility of expecting the first respondent to
call for a meeting to resolve that the company should sue the
appellants for spoliation as the other equal shareholder's position
on the application was known. It was opposing the application. It
clearly would not have supported a resolution for the company to make
an application it was opposing. The first respondent was therefore
entitled to rely on derivative action to sue on behalf of the
second
respondent.
GUVAVA
JA:
I fully concur with UCHENA JA's assessment of the facts leading up
to the institution of the proceedings a
quo
and his conclusion on the first respondent's entitlement to sue by
way of derivative action on behalf of 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 at p79 D-E:
“It
is clear law that in order to obtain a spoliation order two
allegations must be made and proved. These are:
That
the applicant was in peaceful and undisturbed possession of the
property; and,
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.
-
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) at 739 G 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 ZMDC and Marange 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.
-
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 second respondent and forcibly shut down its operations.
The security team of 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 employees were threatened with violence and were
forced to leave the mine during the evening of the 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.
The
court a
quo
thus correctly found that the second respondent had been unlawfully
removed without its consent.
It
seems to me that the factors which must be proved in order to grant
spoliatory relief had been met and the court a
quo
was correct to grant the order as prayed.
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
regards the first issue, the question of locus
standi a quo,
the authorities cited above relate primarily to the situation where
an aggrieved minority in a company seeks to represent it in a
derivative action against an oppressive majority. In
casu,
the position is slightly different in that the situation to be
addressed is that of one 50 per cent shareholder taking up cudgels as
against the other equal shareholder. Neither holds a majority
shareholding in the company but either is capable of frustrating the
legitimate claims of the other by declining to participate in matters
concerning the good governance and best interests of the company. It
is in this sense that either shareholder can be said to be in
effective negative control of the company. As is aptly reasoned by
UCHENA JA, this scenario fully justifies the entitlement of either
shareholder to proceed against the other by way of a derivative
action in order to protect or vindicate its rights.
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.
In
the result, both appeals in this matter must fail. It is accordingly
ordered that the appeals herein be and are hereby dismissed with
costs.
GUVAVA
JA: I
agree.
PATEL JA: I
agree.
Civil
Division, Attorney-General's Office,
appellant's legal practitioners
Sawyer
& Mkushi, second,
third and fourth appellants' legal practitioners
Scanlen
& Holderness, first
respondent's legal practitioners
