MTSHIYA J: In this application the applicant prays for
the following order:-
"IT
IS ORDERED against both respondents jointly and severally the one paying and
the other to be absolved:
1.
That
respondents forthwith deliver to applicant 913 253 shares in OK Zimbabwe
Limited 370 356 in Pelhams Limited and 46 025 in Old Mutual PLC;
2.
Costs
of the Court Application".
The background to this case and the
facts of same are well captured in the applicant's
founding affidavit. I shall
therefore, for the sake of clarity, reproduce the relevant paragraphs of the
applicant's founding affidavit. In the relevant paragraphs the applicant states
as follows:-
"In or about 1992 the Trustees of
the applicant decided to employee Sagit Stockbrokers (Pvt) Ltd (Sagit) to
manage its share portfolio. Accordingly the portfolio was delivered to Sagit
and some of the shares were registered in the applicant's name and others in
the name of Sagit's nominee company called Trust Nominees. The mandate given by
the applicant to Sagit was to manage applicant's portfolio on applicant's
behalf. This entailed the purchase and sale of appropriate shares which, when
purchased, were either held in the name of Trust Nominees or in Applicant's
name. At no time did any of these shares become the property of Sagit but were
held in Trust for applicant.
Communications from Sagit stopped at
the end of 2002 and enquiries led applicant to discover that Sagit had been
sold to new shareholders and there had been management changes. Applicant's
trustees resolved to administer its own scrip and Sagit was formally asked to
surrender all shares it was holding on behalf of applicant. Sagit managed to
deliver most of the shares which were initially registered in the name of the
applicant and part of the scrip held through nominees. A dispute arose
regarding the actual quantity of the shares which were due to the applicant
from Trust Nominees prompting the applicant to approach the Zimbabwe Stock
Exchange for arbitration.
A Sub-committee comprising officials
from the Stock Exchange, the applicant and Sagit was formed to resolve the
dispute but it failed to achieve any results. Applicant went on to appoint Mr
Rodwell Mujumi, a former employee of Sagit, as consultant in an attempt to
resolve the problem. Mr Mujumi produced a report which tracked share movements
between the two institutions. It was only after this report and further
reconciliations that Sagit agreed to settle most of the initial claims with the
exception of Old Mutual PLC...
When no scrip was received after
some considerable time, a follow up was made with the Zimbabwe Stock Exchange
and it was only then that the applicant learnt that Sagit had filed for
voluntary liquidation and that a second creditors meeting was about to beheld.
Applicant managed to lodge its claim using the last reconciled position which
both parties had agreed to.
Applicant submitted its claim to
first respondent after which Mr Tondori, a Manager of the applicant was advised
by first respondent that he had doubts about the validity of the applicant's
claim because of a letter written to the Chief Executive Office of the Stock
Exchange dated the 19th of July.
As a result of that letter the first
respondent's legal practitioners wrote to the applicant's legal practitioners
in a 'without prejudice' letter dated the 16th of April 2009 in
which the first respondent acknowledged that the Old Mutual shares were due to
the applicant and agreed to release them to the applicant.."
The
record shows that in subsequent correspondence the first respondent actually undertook
to deliver the shares it was holding against delivery of the Old Mutual
shares'. However, on 2 July 2009 the first respondent's legal practitioners
advised the applicant's legal practitioners that a sum of US$ 25 706.94 had
been paid to the applicant in respect of the shares held by first respondent.
The applicant had rejected the payment preferring instead to receive the actual
shares.
The above background facts indeed
reveal that at the end of it all the first respondent
ended up offering to pay the
applicant US$25 706-94 in respect of the shares in question contrary to the
applicant's expectation of receiving the actual shares. This is confirmed by
the respondent in the following document.
"SAGIT STOCKBROKERS (PRIVATE) LIMITED (IN
LIQUIDATION)
LIQUIDATOR'S OFFER IN FULL AND FINAL
SETTLEMENT TO RIOZIM CLAIM PROVISIONALLY ACCEPTED BY THE LIQUIDATOR ON 4
FEBRUARY 2009
No
of shares Value as
at
17/03/09
US$
Counter owed to RioZim
OK Zimbabwe 913
253 9 132.55
Pelhams 370
356 15 648.50
Old Mutual
46 025 925.89
_______ A 25
706.94
Less:
Shares already held by Riozim
Dawn Properties Limited 68 884 (2410.94)
Zimbabwe Sun Limited 68 884 (3444.20)
_________ B (5855.14)
__________
Balance due to RioZim per Liquidation &
Distribution
Account (C=A-B) 19851.80
Counters offered to RioZim in full and
final settlement of claim
Medtech Holdings Limited 1 318 417
13184.17
Zimplow Limited
153 718 2305.77
Mashonaland Holdings Limited
116 223 4646.92
_________
D 20138.86
_________
Balance due to Sagit from RioZim (See note 2) (E=D-C)
(287.06)
_________
Notes
1.
As
stated in the Liquidation and Distribution Account, creditors will be awarded
shares at their market price as at 17 March 2009. The Liquidator hereby offers
RioZim the above counters to liquidate its claim based on figures as at 17
March 2009 as per the Liquidation and Distribution Account.
2.
By
reason of the fact that the shares could not be divisible, RioZim owes Sagit
US$287.06, which is the excess of the share values of the counters offered to
RioZim over the RioZim claim. This amount is payable to the Liquidator on
collection of the shares listed above.
3.
Regarding
the value of a creditor's claim creditors are directed to the provision of s 63
of the Insolvency Act [Cap 6:04]".
The election by the
first respondent to pay US$25 706.94 instead of delivering shares is
what led to the filing of this
application on 20 July 2009 wherein the applicant seeks the relief indicated on
the first page of this judgement.
Notwithstanding the detailed
background to this matter the issues for determination can briefly be stated as
whether or not, given the under taking by the first respondent to deliver
actual shares, it was proper for the first respondent to elect instead to pay
cash to the applicant and whether or not the second respondent, in his personal
capacity, acted in bad faith and can therefore be held personally liable.
I heard this matter on 23 February
2010 and reserved judgment. On 2 March 2010, without leave of court, the
applicant filed further and final submissions. The first respondent responded
to same by filing further submissions on 15 March 2010. On March 2010, through
my clerk, I caused an enquiry as to whether or not the applicant's further and
final submissions had been served on the second respondent. Thereafter the
second respondent filed its further submissions on 19 March 2010.
The second respondent, in his
submissions, correctly pointed out that he filing of further and final
submissions by the applicant without leave of court was wrong and improper.
Upon reserving judgment I had indeed not given any further directives and as
such I fully agree with the second respondent that leave of the court was
required for any further action in the matter. On that basis I shall,
accordingly, ignore the applicant's further and final submissions.
In
seeking the relief referred to at page one of this judgment, the applicant's
thrust of argument is that the shares in question were at all material times
its property as a pension fund and the shares were being held in trust by the
first respondent. The applicant submits that the shares never became part of the entity in
liquidation. Furthermore, it was argued, as a pension fund, the applicant's
mandate was severely curtailed in that it could not enter into a compromise
agreement without the authority of the beneficiaries of the fund i.e the
members of the fund.
The
applicant went further to submit that the fact that the Estate accounts lay
open for inspection for the requisite period provided for in law was irrelevant
because the shares were never assets of the Estate. That position, it was
argued, had been accepted by the respondent through its legal practitioners and
a promise had been made 'to release the shares to your client' or indeed to
'deliver the said shares without prevarication subject to yours having
delivered first as the law prescribes'. Given that position, it was submitted,
it was up to the respondent to decide in what capacity to act in satisfying the
relief sought by the applicant.
On
his part, the first respondent argued that Sagit Stockbrokers (Pvt) Ltd (Sagit)
had been liquidated in terms of law and therefore its assets fell to be
distributed in terms of the final liquidation and distribution account which
had already been confirmed by the Master of the High Court. The confirmed
account included the shares which form the subject of this application. It was
argued that any payment made outside the confirmed final liquidation and
distribution account would be unlawful and impeachable. The respondent had not rejected
the applicant's claim to the shares. That was confirmed by the inclusion of the
shares in the final liquidation and distribution account and indeed the
subsequent tender of payment of what was due to the applicant (ie in respect of
the value of the shares). This was so, it was argued, because like all other
creditors, the applicant had proved its claim and was therefore entitled to
payment in accordance with the law relating to the payment of creditors from
the assets of a company in liquidation.
The
first respondent further submitted that, in law, the confirmation of the final
liquidation and distribution account had the effect of a final judgment unless
lawfully re-opened. The account had not been re-opened or set aside. There had
been no attempt on the part of the applicant to have the confirmed account
re-opened or set aside.
This
application is anchored on the way the first respondent dealt with the shares
being claimed by the applicant. It is common cause that Sagit was placed under
liquidation by order of this court on 15 October 2008 (HG 4292/08). That being
the case, it follows therefore that at this stage any relief sought by the
applicant ought to be in terms of or regulated by the Companies Act [Cap 24:03] (the Act). Section 296 of
that Act provides as follows:-
"1. Any person aggrieved by any decision,
ruling, order, appointment or taxation of the Master under this Act may bring
the same under review by the court and to that end may apply to the court by
motion, after due notice has been given to the Master and to any person whose
interests are affected:
Provided that where the general body of creditors or
contributors is affected notice to the liquidator shall be notice to them
2. Any person aggrieved by any decision,
ruling or order of the officer presiding at any meeting of creditors or
contributories may bring the same under review by the court in the same manner,
mutatis mutandis, as is prescribed in
subsection (1).
4.
Nothing
in this section shall authorize the court to re-open any duly confirmed account
or plan of distribution or of contribution otherwise than as is provided in
section two hundred and eighty-three".
In line with the above provision s
283 of the same Act provides as follows:-
"When
an account has been open to inspection as hereinbefore prescribed and-
(a)
no
objection has been lodged; or
(b)
an
objection has been lodged and the account has been amended n accordance with
the direction of the Master and has again been open for inspection, if
necessary, as in subsection (5) of section two hundred and eighty-two
prescribed, and no application has been made to the court within the prescribed
time to set aside the Master's decision; or
(c)
an
objection has been lodged but withdrawn or not sustained and the objector has
not applied to the court within the time prescribed in section two hundred and
eighty-two;
the Master shall confirm the account
and his confirmation shall have the effect of a final sentence, save as against
such persons as may be permitted by the court to re-open the account before any
dividend has been paid there-under".
As
has already been stated, the relief sought in this application is not that of
re-opening the account or setting aside the account. Whilst there could be
merit in advancing the argument that the shares were never the assets of Sagit,
and should not have been part of the Estate account, that argument comes to
nought when there is no court order to re-open or set aside the account. (See Zimbabwe Development Bank/International
Finance Corporation v David John Scott & 6 Ors HH 25/2008). There is in
place already a 'judgment' which deals with the shares in question.
Indeed
as I write this judgment, there is, in law, a final judgment (i.e. the
confirmed final liquidation and distribution account) which the applicant has
not sought to have re-opened or set aside. That 'final sentence' deals with the
shares that form the subject matter of this application. I therefore take the
view that unless re-opened or set aside, any attempt to deal with the shares in
a manner that is contrary to the confirmed final liquidation and distribution
account would be against the law.
In casu, I am not dealing with an application for setting aside or
re-opening the account. However, the
applicant can only proceed to ventilate on the relief it seeks once the account
is re-opened, or set aside. The applicant
was alive to the liquidation process before the confirmation stage and does not
dispute that the confirmation of the account was in terms of the law. The law
has since taken its course without any challenge. The applicant's attempt to
mount a challenge in the form of this application is futile. The shares have
already been dealt with in terms of a 'final sentence' which is still in force.
The
foregoing conclusions dispose of this matter. In the absence of any fraudulent
act relating to the manner in which the account was confirmed by the Master of
the High Court, I see no need to dwell at length with the issue of whether or
not the first respondent should have been sued in his personal capacity as
well. There is nothing in the record to suggest that after 8 April 2008 when
the applicant learnt that Sagit had filed for voluntary liquidation, the second
respondent then secretly or fraudulently proceeded to procure
confirmation of the account. The record shows that the account was procedurally
confirmed on the basis of the reconciled position agreed to by both parties.
My
finding is therefore that the relief sought cannot be granted outside the
existing confirmed, final liquidation and distribution account.
The
application is accordingly dismissed with costs.
Gill, Godlonton &
Gerrans,
applicant's legal practitioners
Wintertons, 1st respondent's legal
practitioners
Chihambakwe,
Mutizwa & Partners, 2nd
respondent's legal practitioners
