Approach, Partnership Agreement, Joint Ventures, Consortiums and Nature of the Business Relationship

HH01-09 : CONSTANTINOS BAKARIS vs GEORGE KATTAVENOS
Ruled By: KUDYA J

The parties are brothers-in-law. They own four immovable properties in equal shares...,. The parties are not able to work together.

HH01-09 : CONSTANTINOS BAKARIS vs GEORGE KATTAVENOS
Ruled By: KUDYA J

All four properties were purchased when the plaintiff's son was ten years old. Stand 244 of Mangula Township 2 of Lot 1 of Plateau, Mhangura, was transferred to the parties when he was ten years old, while the other properties were transferred when he was thirteen years old. He was too young to appreciate ...

HH01-09 : CONSTANTINOS BAKARIS vs GEORGE KATTAVENOS
Ruled By: KUDYA J

The totality of the documentation demonstrated, beyond a shadow of doubt, that the plaintiff and the defendant were equal holders of the four properties in question. In addition, the parties were partners in the Mhangura business operations.

HB74-09 : PATRICK SIKHOSANA vs MTHANDAZO DUBE and SIBANGANI NCUBE and VUSA DUBE
Ruled By: KAMOCHA J

The plaintiff's claim against the defendant was for:- “(a) An order that the verbal partnership agreement between plaintiff and first defendant be declared valid and binding on the first defendant; (b) An order that second defendant transfer the right, title, and interest in the motor vehicle, being a Mazda B2000 truck, registration number 824-526Y, to the joint names ...

The plaintiff's claim against the defendant was for:-

“(a) An order that the verbal partnership agreement between plaintiff and first defendant be declared valid and binding on the first defendant;

(b) An order that second defendant transfer the right, title, and interest in the motor vehicle, being a Mazda B2000 truck, registration number 824-526Y, to the joint names of plaintiff and first defendant;

(c) An order that the motor vehicle referred to in (b) above be sold to best advantage and the net proceeds shared between plaintiff and first defendant in the ratio of seventy-three percent to the plaintiff and the balance to first defendant;

(d) Alternatively to (c) above, in the event that first, second, and third defendants would have disposed of the motor vehicle referred to in (b) above, an order that plaintiff be compensated seventy-three percent of the current value of the motor vehicle;

(e) An order that the agreement of sale between second and third defendants, dated 8 August 2005, be declared void and of no force and effect; and

(f) An order that first and third defendants pay costs of suit on an attorney-client scale.”

When the parties attended a pre-trial conference meeting, they formulated the issues that they wanted to be determined by the trial court thus:-

“(a) Whether there was any verbal partnership agreement between plaintiff and first defendant;

(b) If so, whether such agreement related to the purchase of a Mazda B2000; and

Patrick Sikhosana, the plaintiff, gave viva voce evidence, and said the following.

He was in the business of buying and selling bricks from McDonald Bricks, where the defendant was employed. The plaintiff used to deal with the first defendant in buying bricks, and after dealing with him for a long time, there developed some friendship and trust between the two of them. The plaintiff would give the first defendant some money to go and buy bricks for him from his place of employment while he arranged for transport and paid the costs thereof. He also used to pay the first defendant for his services. Apart from buying and selling bricks, the plaintiff also sold cement, and other building materials.

The plaintiff alleged that on a certain day he received a telephone call from the first defendant, who told him about a car which was being sold by someone who was leaving for South Africa. The Seller wanted $325 million for the car. It was agreed that the first defendant should drive the car to the plaintiff. The defendant drove the vehicle to the plaintiff, in the company of Sibangani Ncube, who remained sitting in the car as the defendant and the plaintiff discussed about the car.

The two allegedly agreed to buy the vehicle. The verbal agreement was that the two would contribute towards the purchase of the vehicle according to their capabilities, and, after the sale of the vehicle, they would share the proceeds in the ratio of their contributions.

The plaintiff immediately contributed a sum of $182 million, which he gave to the first defendant, who was expected to come up with his share later. However, later that day, the first defendant approached the plaintiff and advised him that he had failed to raise any money. He then asked the plaintiff to lend him some money, which the plaintiff did, in the sum of $50 million. The plaintiff wrote a cheque in the first defendant's name. The first defendant was still unable to raise any money from anywhere else, and returned to the plaintiff asking for somemore money. The plaintiff wrote him another cheque for $13 million dollars. The first defendant, later still, approached the plaintiff asking for more money, which he alleged was for auction charges. He later sent one Thabani Ngwenya to collect the money. The plaintiff wrote a cheque for $30 million in the name of Thabani Ngwenya.

The vehicle went for sale at the auction but found no takers.

That being the case, the plaintiff impressed it upon the first defendant that he had used money that was meant for his business. Therefore, the vehicle had to be sold quickly.

The two allegedly decided to flight an advert in the Chronicle Newspaper. The first defendant took it upon himself to put the advert in the Chronicle, and Sunday News, classified smalls. He requested that five insertions be made on 9 January 2006, 10 January 2006, 11 January 2006, 12 January 2006, and 13 January 2006.

The first defendant gave his residential address as 1094 Old Luveve, and his mobile phone number, and that of the plaintiff. The advert read:

“B2000 For Sale; Cell 091704462/091718178.”

The advert in the Chronicle of 9 January 2006 was produced as exhibit 5.

Prospective buyers responded to the advert by phoning the plaintiff on his mobile, and he referred them to the first defendant. Unbeknown to the plaintiff, his partner was not selling the vehicle. He only discovered that the vehicle was not for sale when he took a prospective buyer to the first defendant.

The plaintiff expressed surprise at the suggestion by the first defendant that he had lent him $190 million so that he could take his mother to hospital for treatment. He said that would have been too much money for that purpose at that particular time.

The plaintiff told this court that all in all he had given the first defendant a total of $275 million, which translated to seventy-three percent of the total sale price of the vehicle.

The plaintiff was cross-examined at some length, although some of the suggestions during cross-examination did not make sense...,. The plaintiff was emphatic that the first defendant was lying when it was put to him that he had demanded the $190 million he had allegedly lent him for his mother's hospitalization.

The defendant's story was that the plaintiff used to buy bricks from his (defendant's) place of work. The two eventually became friends and reposed trust in each other, to the extent that the plaintiff would give the defendant some money to buy bricks from his workplace.

The defendant testified that on one occasion he wanted some money for his mother's medical treatment. He then went to borrow $190 million from the plaintiff. When he asked how soon the plaintiff wanted the money back he was told not to worry too much about that since the money was to be used for his mother's medication and hospitalization.

He said during those days he used to drive his brother's Mazda B2000 vehicle. The plaintiff used to see him driving it, and even knew that the motor vehicle belonged to the defendant's brother.

Despite the full knowledge that the vehicle did not belong to the defendant, the plaintiff still approached the defendant and suggested that they should sell it so they could buy two loads of cement which would be sold at a profit. Part of the profit would be used to replace the vehicle that was sold. He even suggested that the defendant's brother's vehicle should be sold for $1,2 billion. The defendant said he would not accede to such a suggestion because the vehicle did not belong to him.

The defendant alleged that that did not go down well with the plaintiff who immediately changed his attitude towards him. He, there and then, demanded back the $190 million he had lent the defendant. When the defendant allegedly went to give him back his money, he refused to accept it, and queried why the defendant brought the capital without any interest.

This, according to the defendant, was the beginning of a lot of trouble for him.

He was summoned to Luveve Police Station where he was subjected to painful treatment at the hands of a police officer called Chikwanha, who was a friend of the plaintiff. He was handed the plaintiff's affidavit wherein he was alleged to have agreed to pay the plaintiff the $600 million instead of the $190 million that he had actually borrowed. He was told that if he was unable to do so he should sell the car to raise that money, although he made it clear that the car did not belong to him.

His explanation was not accepted.

Instead, he was told to go and advertise the car in the Chronicle Newspaper, failing which he would disappear. Through fear, the defendant went to put an advert in the press. The defendant concluded that the plaintiff was bent on stealing his (defendant's) brother's car.

When people responded to the adverts, he told them that the car was not being sold. Eventually, the plaintiff took a potential buyer to the defendant. It was only then that the defendant told the plaintiff that the car was not for sale.

HB74-09 : PATRICK SIKHOSANA vs MTHANDAZO DUBE and SIBANGANI NCUBE and VUSA DUBE
Ruled By: KAMOCHA J

This court finds that the plaintiff paid the defendant a total of $275 million, representing seventy-three percent of the total sale price of the said vehicle. In the light of the foregoing, the order of this court is as follows. It is ordered that the first and third defendants, jointly and severally, the one paying the other ...

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HH126-11 : LAWRENCE BERNARD GWARADA vs DOUGLAS TANYANYIWA and DOUGLAS WARRIORS FOOTBALL CLUB
Ruled By: MUTEMA J

The plaintiff runs a tour operator company under the style of LED Travel and Tours (Pvt) Ltd. The first defendant owns Douglas Car Sales (Pvt) Ltd and he also owns the second defendant. The present feud between the parties has its genesis in matters of football and partnership.When the first defendant, in 2008, ...

When the first defendant, in 2008, found it difficult to run the second defendant due to financial constraints, he intimated to the plaintiff that he was thinking of either selling the second defendant's franchise or seeking a partnership in order to lessen the financial burden bedevilling him. The two subsequently concluded a Partnership Agreement whereby the plaintiff was to purchase 49,000 shares valued at US$49,000= representing a 49% stake in the second defendant while the first defendant would retain the balance. The plaintiff was to pay for 40% stake in 2009 and 9% in 2010. During 2009, the plaintiff and the first defendant were to each contribute towards the running costs of the second defendant in the ratios of 40% and 60% respectively, based on their respective “shareholding”. Pursuant to the Agreement, as at 10 October 2009, the plaintiff had paid to the first defendant US$36,807= for the purchase of shares and a further sum of US$35,533= being his prorata contribution towards the running costs of the second defendant.

In about November 2009, the partnership deal collapsed.

What engendered its collapse is the bone of contention between the parties. The plaintiff alleges that the first defendant occasioned the collapse when he, contrary to the Agreement, started claiming that the partnership was for the 2009 football season only. The plaintiff's contention is that the partnership had no time life limit, that shares cannot be bought only for one football season and that purchased shares must be transferred to the buyer. The plaintiff then issued summons claiming reimbursement of the two sums of money stated above.

The plaintiff's evidence was to the following effect:

He has known the first defendant since 2002 via his football club, the second defendant. Initially, he was just a supporter of the second defendant before he became the second defendant's treasurer for almost five years until 2008 when the first defendant approached him with the idea of buying shares in the second defendant. When he accepted the idea, the first defendant asked him to lodge a written application which he did on 27 December 2008. He produced the written application as exhibit 1. It is written on the plaintiff's company letterhead addressed to the first defendant in this vein:

“Re: APPLICATION TO BUY 49% STAKE IN DOUGLAS WARRIORS FOOTBALL CLUB

I submit my application to buy 49% stake in Douglas FC through my company LED Travel & Tours - coming in as the sponsor. The value of the shares is USD49,000= and as agreed in our meeting of 27 December 2008 – the payment plan is as follows:

Year 2009 – 40%

· USD10,000= to be paid by 5 January 2009 subject to availability of foreign bank account.

· USD5,000= by mid to end of January 2009.

· Payment of balance to be spread over a period of 10 months and mode of payment will be finalised in due course.

Year 2010 – 9%

· As agreed, the remaining 9% will be reserved for me in 2010 at same value. By then the team will be in Premier League.

My stake will be registered under my wife, Gracious Mawungwa, and, in future, will be managed by my two sons Bernard Gwarada Jnr and Lawrence Gwarada.”

The first defendant's response was via exhibit 2 – a letter dated 5 January 2009 titled Re: APPLICATION FOR A 49% STAKE IN DOUGLAS WARRIORS FOOTBALL CLUB. It states:

“The above matter refers and I acknowledge receipt of your application requesting for a 49% stake in Douglas Warriors Football Club.

I am pleased to notify you that your request has been accepted of which the conditions would be spelt out in the agreement document which will be availed to you upon receipt of the first instalment of USD10,000=.

I would want to express my appreciation for showing interest of running Douglas Warriors Football Club jointly with the current administration.

I look forward to a cordial working relationship.”

Following his $10,000= cash payment to the first defendant as first payment towards the purchase of the 40% stake, the first defendant wrote him a letter – exhibit 3 – acknowledging the above payment and stipulating how the balance should be paid. The January 2009 balance of $5,000= was to be paid on or before 31 January 2009. The remainder of $25,000= was to be paid thus:

USD5,000= cash on or before 31 March 2009.

USD5,000= cash on or before 31 May 2009.

USD5,000= cash on before 31 July 2009.

USD5,000= cash on or before 30 September 2009.

USD5,000= cash on or before 30 November 2009.

The final 9% stake to be paid for on or before 31 January 2010.

He said he did effect the cash payments to the first defendant, as proposed, until November 2009 when the partnership collapsed.

The plaintiff produced exhibit 4, which he said is the Partnership Agreement document that the first defendant gave him, spelling out the terms and conditions of their partnership. It was drafted by the first defendant's legal practitioner, Mr Gijima. After going through the document, Mr Gijima called him together with his legal practitioner, Mr Mujeyi, to come and sign the Agreement at his offices. The two of them went to Mr Gijima's offices where the plaintiff signed the Agreement which falls on all fours with exhibit 4 and Mr Mujeyi also signed it as his witness. The signed document remained with Mr Gijima for him to give to the first defendant for his signature. However, that was the last time he saw that document as it was never returned either to him or to Mr Mujeyi. He emphasised that clauses 2.1 – 2.3 of exhibit 4 accurately captured the Agreement the parties had reached regarding the shares which he was paying for. In those clauses reference to the first Director denotes the first defendant while reference to the second Director denotes himself.

He produced exhibit 5 – a letter by the first defendant dated 2 March 2009 acknowledging receipt of payments he made to the first defendant up to that date in respect of instalments for purchase of shares and operational costs. Exhibit 6 reflects the parties' pro rata contributions to the second defendant's operational costs. He also produced exhibit 9 – the expenditure he had made as at 10 October 2009 towards the second defendant's welfare reflecting the following amounts:

· USD36,807= for share purchase.

· USD35,533= for operational costs.

This document was compiled by the second defendant's Administrator and endorsed by both the first defendant and himself as the Directors.

He explained exhibit 18 as a letter to him from the first defendant advising him that the Partnership Agreement document was ready for signing. It is dated 29 October 2009. This document, the plaintiff said, is the one he later signed with his lawyer, Mr Mujeyi, at Mr Gijima's offices, which was never returned to him. Exhibit 20 is a letter by the first defendant, to him dated 4 November 2009 advising him, inter alia, that the partnership document was ready and if he could advise his lawyer to contact F G Gijima & Associates concerning it. The plaintiff ended his testimony by explaining that the shares that he paid for were never transferred to him and the purchase price he paid for them as well as the monetary contributions he made for operational costs of the second defendant whose combined total is US$72,340= was never refunded to him following the collapse of the partnership when the first defendant refused to sign the Agreement and started changing goal posts alleging that the Agreement was only for the 2009 soccer season, hence this suit….,.

For the defendants, two witnesses, viz the first defendant and Fredrick Garikai Gijima gave evidence.

The first defendant's evidence was this: he is self-employed. He owns Douglas Car Sales and the second defendant. He has known the plaintiff since 2004 when the latter joined the second defendant as Club Treasurer. Their working relationship was cordial. He formed the second defendant in 2000. In 2008, due to hyperinflation, he found it difficult to run the club. He contemplated selling the franchise, folding up the club or entering into a partnership. Among the people he approached for a partnership was the plaintiff who had earlier shown an interest in the club. They discussed the matter and when the plaintiff expressed interest he asked him to put in an application, which he did, and he accepted it. Exhibit 1 is the application in question. The partnership agreement was that he would be the first Director of the club with 60% stake while the plaintiff would be the second Director holding 40% stake with an option to buy a further 9% provided the club qualified into the premiership. The plaintiff's 40% stake was specifically for the 2009 season only as reflected in the application letter, exhibit 1. He explained that having run the club alone for nine years and letting the plaintiff acquire 40% for only $40,000= would not make any business sense. He gave an instance that if today they sold a player, say to South Africa, with the plaintiff getting 40% it would mean that the plaintiff would be entitled to $100,000= and this would not make good business sense on his part. This is why he still insists that the plaintiff's 40% stake was only for the 2009 season.

Exhibit 2 is his acceptance of the plaintiff's application. It does not spell out that the partnership was only for the 2009 season because he was basically answering to the plaintiff's application. He drafted the Agreement with the plaintiff and in their discussions in meetings held the tenure of the partnership was that the 40% was for 2009 and the 9% was for 2010 because the plaintiff believed that he would not want to put money in a Division One club in 2010.

He produced exhibit 27 – a draft partnership document done by his office under his supervision. The document was in layman's language to be sent to the club lawyer for a final draft. He said the plaintiff did contribute to this draft document verbally. Under the clause on shares it is clear that the agreement was only for the 2009 season. He did show the plaintiff this document but it is unfortunate that the latter now alleges that he never saw it. He said soon after discussing this draft with the plaintiff the document was sent to Mr Gijima. Exhibit 28 was also drafted by his office under his supervision and the same obtains in respect of exhibit 29. In both these draft agreements the clause relating to shares limits the tenure of the partnership to the 2009 season.

The Agreement document he got from Mr Gijima was the final draft which the plaintiff and his witness had signed. Exhibit 30 is not the final draft document but its contents are similar to the final one signed by the plaintiff and his witness and it limited the issue pertaining to the plaintiff's 40% shareholding to the 2009 season. After the plaintiff had backdated the date of signing the final draft to 1 January 2009 Mr Gijima sent the documents to him, and he, in turn, sent them to the plaintiff to correct that date under cover of exhibit 32 – a letter that he wrote. However, the plaintiff never returned those papers to him. Asked to comment on clause 2 of exhibit 4, relating to shares, he said he did not recall ever seeing exhibit 4 and he did not know why clause 2 of exhibit 4 is different from clause 2 of all other drafts; and he did not know who drafted exhibit 4.

In terms of the Agreement, the plaintiff was supposed to pay $40,000= for his 2009 season shares but he only paid $36,807= so he is claiming for the balance. He contended that it was the plaintiff who occasioned the collapse of the partnership by ignoring correspondence sent to him as well as by not honouring his part of the Agreement. Apart from the balance regarding purchase of the shares the plaintiff also failed to pay his pro rata share of the operating costs. He is entitled to those costs as well as per his counter claim.

He denied that he was unjustly enriched by the plaintiff's payments arguing that, in fact, the plaintiff made him poorer as he had not budgeted to run the club alone. This almost caused divorce from his wife because of lack of food at home. It was the plaintiff who was unjustly enriched through marketing his company products by having his company logo in front of the team jerseys and on his buses….,.

Before analysing the evidence adduced and the probabilities, there is a small matter of mathematics I must advert to. This relates to the value of each share, as given in all the drafts of the Partnership Agreements viz, exhibit 4, 27, 28, 29 and 30 in clause 2.1. Therein, it is stated that the club's shares shall be divided into 100,000 shares of US$1,000= each. This would mean that for 40,000 shares the plaintiff was to buy he would pay a total of $40 million. The correct share price was $1 each and the first defendant acknowledged this mathematical error.

The plaintiff…, called Bruce Bevan Mujeyi as his witness.

His evidence was this: He is a duly admitted legal practitioner practising under the style of Bruce Mujeyi Attorneys. His professional experience spans over some 13 years. The plaintiff is a client of his. In 2009, the plaintiff approached him with a draft Shareholder Agreement pertaining to the second defendant. He instructed that he intended investing in the second defendant and that Mr Gijima had drafted the particular document. He identified exhibit 4 as the draft document in question. The plaintiff also showed him other documents – exhibit(s) 1 – 3. Although he felt that exhibit 4 could have been drafted more elegantly the plaintiff's purpose was captured in paragraph 2 thereof, headed “Shares”. When the plaintiff showed him exhibit 4 payments had already commenced as shown in exhibit 3. The instructions he got from the plaintiff were that the plaintiff would purchase 40,000 shares in 2009 and in 2010 he had an option to purchase a further 9,000 shares of the stake. This is also what he gleaned from the document in question.

On a date he could not recall, the plaintiff and himself attended at Mr Gijima's offices for purposes of signing the Agreement as is, viz exhibit 4. They were given an exact copy of exhibit 4 and when he explained that they were not going to change the contents of the draft they waited for copies to be printed. He signed a document which falls on all fours with exhibit 4 as the plaintiff's witness. The first defendant was not present and Mr Gijima did not take issue with the draft document they signed. The document they signed had no provision that the Agreement was only for the 2009 soccer season. The effective date which they put on the document was for January 2009. This was done for tax purposes and Mr Gijima did not take issue with the date and he promised to explain this to his client the first defendant. The signed copies were handed to Mr Gijima's secretary; the arrangement being that once the first defendant appended his signature the plaintiff's copy would be sent to his (witness's) offices. However, no such copy was ever sent to his offices and he never got to know the reason why. He also has no knowledge of that copy being sent to the plaintiff. The document was supposed to be sent from legal practitioner to legal practitioner.

Later, when it became clear that there was a serious dispute between the parties regarding the Agreement, he advised the plaintiff to get independent legal advice. After his evidence, the plaintiff closed his case…,.

Fredrick Garikai Gijima gave the following evidence:

He is the Senior Partner in the law firm F G Gijima & Associates. He has known the first defendant since the early 1980s and to him the first defendant is almost a brother. The plaintiff is like a brother to him and he has worked with the plaintiff in various projects. He has acted as a legal practitioner for the two defendants for many years but has never acted as counsel for the plaintiff in any legal matter.

Regarding the parties' intended partnership he became involved in January/February 2008 when he received instructions from the first defendant that he intended to enter into a deal with the plaintiff for the management of the second defendant. He advised the first defendant to provide him with a draft of the points which they wanted to agree on to enable him to draft a document and have the parties discuss it. The first defendant, thereafter, gave him exhibit 27 – the draft document, save for the handwritten alterations on it. On page 32 of that draft document, instructions were that the parties were agreeing that the arrangement would be for the 2009 season only because the first defendant was finding it financially strenuous to single handedly sponsor the team. The plaintiff had approached him so that the two would co-sponsor the team during that season on two conditions, viz that the first defendant would retain 60% value stake in the second defendant and the plaintiff would purchase 40% stake in the team and that in the event that the team qualified into the Premier League, the plaintiff would have an option to buy a further 9% stake. By the term “shares” he understood, and was instructed, that the parties meant the percentages which each party would contribute in terms of expenses and which each would also suffer in terms of losses; also, it was also to enable them to arrive at a figure which the plaintiff would then pay to the first defendant as his 40% contribution to the value of assets of the team as at the beginning of 2009. According to him, the term “shares” was used loosely. On page 35 (his handwritten notes) of the defendants' bundle of documents he indicated that the total shareholding shall be for 2009 only. Exhibit 28 is the first printed document by his private assistant on the computer at his offices following the typing of his handwritten notes on pages 34 – 40 of the defendants' bundle of documents. Again, the last sentence of the first paragraph on page 42 of exhibit 28, under “Shares”, states that the agreement was for 2009 only. When the first draft was printed he went through it checking and then called the first defendant to his office and together they went through it with the first defendant adding the handwritten corrections. Regarding the parties' intentions he assumed they were discussing the issues at their level as it seemed they were very clear on how they wanted to relate and he never had any problems with them.

Exhibit 30 was the last document he did regarding the relationship between the parties. Clause 2 thereof, under “Shares”, again states that the shareholding was for the year 2009 only. This is an exact copy of the draft that he presented to the plaintiff and his witness, Mr Mujeyi, to sign on 12 November 2009. The plaintiff and his witness did not read the document at all. In fact, he had to run the document on the computer while they waited as they had come to his office without notice. He had the documents bound in three copies and he gave the three to the plaintiff and Mr Mujeyi. They seemed to be familiar with the contents because they quickly signed on the last page. Thereafter, he sent the three copies, with legal covers, to the first defendant with a covering letter – exhibit 31 – bringing his attention to the date that had been put by the plaintiff as the date of signing and imploring the first defendant to sign his portion and return the documents to him if he was agreeable to that date so that he would distribute them to the parties and retain a copy in his file. He also enclosed a statement of his account, exhibit 22.

That was the last time he saw the three documents. They were never returned.

He denied ever giving the plaintiff or Mr Mujeyi any of the documents, whether draft or final. He said the person he was communicating with throughout was the first defendant. Commenting on exhibit 4, he said, at a glance, it looks like one of his draft documents due to the font and arrangement, but he never gave the plaintiff any of his drafts. Regarding clause 2 of exhibit 4 he said there was a clear material difference as to the tenure of the Agreement. He was boggled as to how the plaintiff obtained exhibit 4. That exhibit 4 is materially different from the document the plaintiff signed is also borne out by the fact that para C of exhibit 4 is on page 1 whereas on exhibit 30 it is on page 2 and the words “Ephraim Gwiliza transferred to Dynamos Football Club” in that paragraph on exhibit 4 read “Ephraim Gwiliza, loaned to Dynamos Football Club in 2008.”

He also said from the onset he advised the first defendant that he was using the word “shares” loosely for these were not really shares stricto sensu. Limitation of the tenure to the 2009 season was premised on the fact that the first defendant said the second defendant had been in Division One for ten years failing to qualify into the Premier League and after the parties had agreed to co-sponsor the team the plaintiff saw an advantage in the deal in that 2010 would be the World Cup in South Africa and he wanted to market his travel and tours business. His instructions were that if the team failed to qualify into the Premier League in 2009 the partnership would end as the plaintiff wanted to be associated with a Premier League team while the first defendant did not wish to continue in Division One. He said that was the advice that he also gave to the first defendant.

After his evidence the defendants closed their case….,.

The essentials of the special contract of partnership, as stated in the case of Joubert v Tarry and Company 1915 TPD 277…, were present in the instant case, viz:

(i) That each of the partners brings something into the partnership, or binds himself to bring something into it, whether it be money, or his labour or skill;

(ii) That the business should be carried on for the joint benefit of both parties;

(iii) That the object should be to make profit;

(iv) That the contract should be a legitimate one.

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HH178-14 : WILLOUGHBY'S INVESTMENTS (PRIVATE) LIMITED vs PERUKE INVESTMENTS (PRIVATE) LIMITED and THE HONOURABLE MR JUSTICE (Ret) A. R. GUBBAY SC
Ruled By: ZHOU J

The background facts to the dispute which the second respondent was called upon to arbitrate are eminently summarised in the award. They are as follows: The applicant and the first respondent purchased two adjoining pieces of land, known as Stands 895 and 894, respectively. They are both 892 square metres in extent. The two properties are ...

The background facts to the dispute which the second respondent was called upon to arbitrate are eminently summarised in the award. They are as follows:

The applicant and the first respondent purchased two adjoining pieces of land, known as Stands 895 and 894, respectively. They are both 892 square metres in extent. The two properties are held under separate Deeds of Transfer. On the two pieces of land stands a building known as Lonrho House. Prior to 6 September 1999, the two properties were owned by one company, Lonrho Properties Zimbabwe (Private) Limited. That is the company from which the applicant and the respondent purchased the two adjacent properties. The greater portion of the building rests on Stand 894. It is common cause that what was advertised for sale was the building on the two pieces of land. The applicant paid for his property a figure which represented 30% of the purchase price while the first respondent paid 70% of the purchase price. Lonrho House was let to a third party as one unit despite the fact that it sits on the two contiguous Stands. The expenses for the building were shared equally between the applicant and the first respondent. The first respondent, which received the rentals, apportioned the net rentals on a ratio of 70% to itself and 30% to the applicant. The second respondent found, as a fact, that there was no agreement between the parties that the rentals would be shared in those proportions.

The issue which was referred to the arbitrator, the second respondent, was whether the net rental realised from the building should be shared equally by the parties or in the proportions of 70% to the first respondent and 30% to the applicant.

The second respondent came to the conclusion that the relationship between the applicant and the first respondent, in acquiring the two contiguous Stands “as a single entity, is one of co-ownership in proportion to the purchase price each paid. And, likewise, that in leasing the Stands to the World Bank, as a single unit, the relationship of the parties became one of co-lessors, each being due only its pro-rata share of income derived from the payment of rental.”

Based on that conclusion, he determined that 'the share of the income derived from the leasing of the two Stands, as one indivisible unit, be in proportion to the specific contribution made by each party to the purchase price of the single entity.”

Accordingly, the claim by the applicant to be awarded 50% of the net rental was dismissed. In the award, it is held that the same conclusion would be reached even if the relationship between the applicant and the first respondent was to be regarded as a partnership and the principles relating to partnerships were applied.

That is the award which the applicant invites this Court to set aside on the ground that it is contrary to the public policy of Zimbabwe….,.

Turning to the merits of the dispute, I need to consider, firstly, the true nature of the relationship between the parties and its implications on the sharing of the net rent, bearing in mind the fact that the parties paid different amounts as the purchase prices for their properties. Whatever conclusion I reach on that aspect, I will then need to consider whether the arbitral award rendered is impeachable on the ground of being in conflict with the public policy of Zimbabwe.

The instant case indubitably presents an unusual scenario that defies the straitjacket of the ordinary principles relating to ownership of immovable property. It is a situation sui generis. The parties own their two properties individually, each in terms of a separate Deed of Transfer. The building is, however, a part of the two immovable properties having acceded to them by inaedificatio in accordance with the Roman maxims, which have been received in the Roman-Dutch law, superficies solo cedit and omne quod inaedificatur solo cedit: everything which is built on or attached to the soil forms part of the soil. C. G. VAN DER MERWE & DE WAAL, The Law of Things & Servitudes…,. The building, being immovable property, cannot be said to be 'owned' jointly by the parties in the ordinary sense of the word, as there is no title deed relating to it in which the applicant and the first respondent are stated as the owners. What can be said is that it is indivisible property which has acceded to two separately owned contiguous pieces of land. It is now an integral part of the two pieces of land.

There is no evidence that 70% of the usable rentable area of the building is on the land belonging to the respondent and 30% of it on the applicant's Stand. For that reason, the parties' undivided shares in the building cannot be determined by reference to those proportions. I am not, therefore, persuaded that the conclusion by the second respondent that the relationship between the parties is one of co-ownership in proportion to the purchase price each paid and that, as co-lessors, the parties are entitled to a pro rata share of the net rent based on the proportions of their purchase prices in relation to the full purchase price for the two properties and the building, is legally sound. My understanding is that the entire space covered by the two Stands, including the area on which there is no building, is being leased in terms of the same lease agreement. Put in other words, the two Stands are being leased as one unit.

Counsel for the first respondent urged the court to find, as did the arbitrator, that the relationship was one of partnership. I have no difficulty with the conclusion that the relationship is one of a partnership insofar as the building is concerned. The second respondent found that capital contributions of the parties to the partnership were 30% from the applicant and 70% from the respondent.

I do not agree.

The parties' contributions were their immovable properties, not the money which they paid as the purchase price for the properties. The purchase price was paid, not into the partnership business, but to a third party, the seller of the immovable properties. Although the parties paid different purchase prices for the properties, they own those properties separately. Each of those properties contributes to the housing of the building. But it is not just the building which is leased by the tenant hence an inquiry into the proportions of the building on the two contiguous Stands is unnecessary. The parties have contributed equal pieces of land into the partnership. It is immaterial that a larger portion of the building is located on the Stand belonging to the respondent. The building is indivisible. It has not been shown that if the portion of the building which rests on the applicant's Stand is demolished the building can remain intact and still be leased at 70% of the rent or that it can be leased at all.

Article 34(2)(b)(ii) of the Arbitration Act [Chapter 7:15] provides that an arbitral award may be set aside by this Court if it finds that “the award is in conflict with the public policy of Zimbabwe.”

The test applied in determining whether an arbitral award is in conflict with the public policy of Zimbabwe is settled. In the case of ZESA v Maposa 1999 (2) ZLR 452 (S)…, the test is set out as follows:

“(T)he court does not exercise an appeal power and either uphold or set aside or decline to recognise and enforce an award by having regard to what it considers should have been the correct decision. Where, however, the reasoning or conclusion in an award goes beyond mere faultiness or incorrectness and constitutes a palpable inequity that is so far reaching, outrageous in its defiance of logic or acceptable moral standards that a sensible and fair minded person would consider that the conception of justice in Zimbabwe would be intolerably hurt by the award, then it would be contrary to public policy to uphold it.”

See also Delta Operations (Pvt) Ltd v Origen Corp (Pvt) Ltd 2007 (2) ZLR 81 (S)…,; Muchaka v Zhanje & Anor 2009 (2) ZLR 9 (H)…,.

Having found that the parties' contribution to their partnership is equal, in that they have each contributed a Stand, it seems to me that unequal sharing of the net rentals constitutes a palpable inequity that affronts the conception of justice in an intolerable manner. It has not been shown that the value of the contribution of the respondent's property to the lease is 70% while that of the applicant's is 30%. Equally, it has not been shown that the applicant holds an undivided 30% share in the building. The notarial lease agreement with the International Bank for Reconstruction and Development recorded the applicant and respondent as joint lessors without reference to any shares. It is common cause that the expenses were shared equally between the parties. The mathematical calculation posited by the first respondent in its heads of argument does not accurately reflect the effect of the parties sharing expenses equally. In any event, the fact that the expenses were shared equally is not disputed by the first respondent in its opposing affidavit. The trite principle of the law is that what is not denied in affidavits must be taken to be admitted. See Fawcett Security Operations (Pvt) Ltd v Director of Customs & Excise & Ors 1993 (2) ZLR 121 (S)…,. At the arbitration proceedings, the first respondent's witness, Mr Cranswick, confirmed that the deductions for expenses from the gross rentals were paid by the parties in the proportion of 50/50. It would be a palpable inequity to require the applicant to contribute 50% towards the expenses while receiving 30% of the net profit on the basis that it paid a lower purchase price for its Stand than that paid by the first respondent. Such an approach amounts to blowing hot and cold; to approbate and reprobate. It places the award in conflict with the public policy of Zimbabwe….,.

In the result, it is ordered as follows:

1. The arbitral award rendered by the second respondent, dated 25^th February 2011, be and is hereby set aside.

2. The costs of this application shall be paid by the first respondent.

SC03-17 : HAROLD CROWN and PORTRIVER INVESTMENTS (PRIVATE) LIMITED vs ENERGY RESOURCES AFRICA CONSORTIUM (PRIVATE) LIMITED and ENERGY RESOURCES AFRICA (PRIVATE) LIMITED
Ruled By: ZIYAMBI JA, GWAUNZA JA and PATEL JA

This is an appeal against an interdict granted by the High Court in favour of the respondents. The appellants contend that the interdict was improperly granted and seek that it be set aside. Briefly, the background to the appeal is as follows: The first appellant ('Crown') is a Director and the alter ego of the ...

This is an appeal against an interdict granted by the High Court in favour of the respondents. The appellants contend that the interdict was improperly granted and seek that it be set aside.

Briefly, the background to the appeal is as follows:

The first appellant ('Crown') is a Director and the alter ego of the second appellant, Portriver Investments (Private) Limited ('Portriver'), a limited liability company incorporated according to the laws of Zimbabwe. The second respondent, Energy Resources Africa (Private) Limited ('ERA') is also a limited liability company incorporated according to the laws of Zimbabwe. It appears from the record that its Directors are David Mashayamombe ('Mashayamombe') and one T P Ntaisi ('Ntaisi').

David Mashayamombe is the alter ego of Energy Resources Africa (Private) Limited.

Harold Crown and David Mashayamombe came together in 2011 for the purpose of two tenders floated by the City of Harare. The first tender was for the rehabilitation of the Firle Sewage Works. The second was for generation of power from the waste. The two agreed to form a consortium of which they would be Directors and Energy Resources Africa (Private) Limited and Portriver Investments (Private) Limited would be shareholders. The consortium formed in consequence of this agreement is the first respondent, Energy Resources Africa Consortium (Private) Limited ('ERAC'). It was incorporated according to the laws of Zimbabwe on 17 February 2011.

Harold Crown is resident in South Africa.

Energy Resources Africa Consortium (Private) Limited tendered for, and won, both projects. The value of the contracts was USD13,000,000=. In terms of the payment plan agreed with the City of Harare, monthly payments of US$300,000= were made to Energy Resources Africa Consortium (Private) Limited by the City of Harare into the account of Portriver Investments (Private) Limited.

Cracks in the relationship between Harold Crown and David Mashayamombe became apparent in or about May 2015. Correspondence between the parties' legal practitioners shows that their differences became irreconcilable so that in its letter dated 19 May 2015, Energy Resources Africa (Private) Limited, through its legal practitioners, declared:

“…, ERA hereby terminates the arrangements between the parties,”

And, Portriver Investments (Private) Limited, also through its legal practitioners, by letter dated 22 June 2015, “formally” accepted “the termination of the parties' relationship” warning that:

“Such acceptance, however, makes the US$423,428=66 and ZAR24,000= immediately due and payable to Portriver Investments (Proprietary) (sic) Limited (PTR).”

On 30 September 2015, David Mashayamombe, purporting to act on behalf of Energy Resources Africa Consortium (Private) Limited, took certain unilateral actions. He approached the Zimbabwe Revenue Authority ('Zimra') on the last day of a tax amnesty extended to erring companies. Having done so, he secured an undertaking from the Zimbabwe Revenue Authority to allow Energy Resources Africa Consortium (Private) Limited to benefit from the amnesty if certain conditions were observed. Two of the conditions were that a new Zimbabwe Revenue Authority registration form be completed by the Directors and a bank account be opened in the name of Energy Resources Africa Consortium (Private) Limited into which account all monies from the contract would be deposited. It is not clear on the record whether there was a time limit within which these conditions were to be fulfilled. However, he then, unsuccessfully, sought the co-operation of Harold Crown to sign the registration form and furnish his personal details for the opening of the new bank account.

He took the view, in the face of this lack of co-operation that an urgent situation had arisen.

He did not obtain a resolution from Energy Resources Africa Consortium (Private) Limited authorising his conduct. Instead, he turned to Energy Resources Africa (Private) Limited, his alter ego. The Board of Energy Resources Africa (Private) Limited passed a resolution which was signed by himself and TP Ntaisi. Armed with this resolution by Energy Resources Africa (Private) Limited, he approached the High Court, on an urgent basis, in the names of both Energy Resources Africa Consortium (Private) Limited and Energy Resources Africa (Private) Limited, seeking to compel compliance by Harold Crown with his wishes. The order, sought and granted, was as follows:

“Terms of the Final Order Sought

1. Respondents be and are hereby interdicted from performing any action under the contract between City of Harare and First Applicant which in any way violates the Income Tax Act [Chapter 23:06], the Value Added Tax Act [Chapter 23:12] and the Companies Act [Chapter 24:03].

2. Respondents shall take all steps necessary to comply with First Applicant's statutory returns as and when they fall due.

3. The Respondents be and are hereby ordered to pay costs of suit.

INTERIM RELIEF SOUGHT

That pending the determination of this matter, the Applicant is granted the following relief:-

1. The First Respondent (Crown), as the Director representing the interest of the Second Respondent (Portriver) in the First Applicant (ERAC), be and is hereby ordered, upon service of this order:

(a). To complete and sign the FBC Bank account application form which is required to open a bank account for the First Applicant at FBC Bank; and

(b) To complete and sign a Rev 1 ZIMRA form which is required by the First Applicant for purposes of its tax amnesty application.

2. Pending the determination by Zimra in First Applicant's application for tax amnesty, First Respondent be and is hereby interdicted from receiving any income due to First Applicant under the contracts with the City of Harare for the rehabilitation of Firle Sewage Works or for power generation.

3. First Respondent shall direct City of Harare to make payments due to First Applicant in terms of the contracts, into the FBC Bank account to be opened by First Applicant.”

The grounds of appeal are, briefly, as follows:

1. The application was not urgent.

2. The application was not authorised.

3. The second respondent, Energy Resources Africa (Private) Limited, had no legal interest in the matter.

4. No justification was shown for the grant of an interdict against receipt by Portriver Investments (Private) Limited of payments due from City of Harare.

5. Energy Resources Africa Consortium (Private) Limited and Energy Resources Africa (Private) Limited had no rights to secure by way of interdict.

6. The essence of the judgment is to stop Portriver Investments (Private) Limited from rendering service to City of Harare which was not cited by the respondents or heard by the court.

7. The court erred in not determining who had a contract with City of Harare because no relief could be afforded without a prior determination of this question.

I proceed to consider the first three grounds of appeal as, in the Court's view, they raise preliminary issues a determination of which would dispose of this appeal.

HB90-16 : L. SACRE KWETE MINGA vs ITAYI MATIVONESE GUNDA
Ruled By: TAKUVA J

R. H. Christie, Business Law in Zimbabwe 2nd Edition, Juta Co Ltd 1998…., defines a joint universal partnership as follows: “Universal partnerships may be of two types. In a partnership in all business affairs or societas universorum qual ex quaestu veniant, the partners retain their separate individual estates in respect of their private affairs, ...

HB100-16 : TEBEKWE SANDS and MATOVU INVESTMENTS JOINT VENTURE vs MIKE G. HUGHES
Ruled By: TAKUVA J

This is an urgent chamber application in which the applicant prayed for the following interim relief: “(a) Pending finalisation of this matter, the respondent be and is hereby interdicted from interfering with the day to day operations of Tebekwe Mine as the Mine Manager or any position whatsoever without the express approval of the Joint Venture ...

HH128-06 : DOBROCK HOLDINGS (PVT) LTD and TURNER AND SONS (PVT) LTD vs TURNER AND SONS (PVT) LTD and ANTHONY TURNER and MARTIN E. KING and ZAMBEZI PADDLE STEAMER (PVT) LTD and DOBROCK (PVT) LTD
Ruled By: KUDYA J

An order for the consolidation of these two matters was granted by UCHENA J, by consent, with no order as to costs, on 2 June 2006 for hearing before me on 7 June 2006 in case number 3157/06. The first application, case no. HC5186/05, concerns an order for specific performance while the second one, case no. ...

An order for the consolidation of these two matters was granted by UCHENA J, by consent, with no order as to costs, on 2 June 2006 for hearing before me on 7 June 2006 in case number 3157/06.

The first application, case no. HC5186/05, concerns an order for specific performance while the second one, case no. 5264/05, seeks an order for the provisional liquidation of Zambezi Paddle Steamer (Pvt) Ltd (hereinafter called ZPS)….,.

I directed that the parties argue the specific performance case first and thereafter proceed to argue the liquidation case.

On 12 October 2005, Dobrock (Pvt) Ltd filed the court application for specific performance against Turner and Sons and two others. It sought the following order:-

1. That the respondents, jointly as well as severally, the one paying the other to be absolved shall forthwith undertake all that is necessary and required, including making all payments and completion and signing all documents required in order to procure transfer without delay by first respondent to applicant of first respondent's entire shareholding in Zambezi Paddle Steamer (Pvt) Ltd.

2. That immediately upon registration of transfer in the share register of Zambezi Paddle Steamer (Pvt) Ltd (ZPS) applicant shall pay to first respondent the balance of the purchase price for the said shares such balance being the sum of $138 million.

3. That the respondents, jointly as well as severally, the one paying the other to be absolved, shall pay the costs of this application on the scale of legal practitioner and own client.

The application was served on the three respondents on 13 October 2005…,. The three respondents filed their opposition papers on 27 October 2005 and prayed for the dismissal of the applicant's case with costs on the higher scale and made reference to the liquidation claim, case number HC5264/2005.

Case number 5264/05 is a court application, brought on 17 October 2005 by Turner and Sons (Pvt) Ltd against Zambezi Paddle Steamer (Pvt) Ltd (ZPS) and Dobrock (Pvt) Ltd. It prayed for the winding up of Zambezi Paddle Steamer (Pvt) Ltd (ZPS) and that a liquidator be appointed in the following terms:-

1. That first respondent, Zambezi Paddle Steamer (Pvt) Ltd, be provisionally wound up pending the granting of an order in terms of paragraph 3 hereof or the discharge of this order.

2. That Mrs Theresa Grimmel of KPMG Chartered Accountants, Mutual Gardens 100, The Chase, Emerald Hill, Harare be appointed as provisional liquidator of first respondent company with the powers set out in section 221 of the Act.

3. Any interested party appear before this court sitting at Harare on (a date sixty days from the date of the order) to show cause why an order should not be made placing first respondent's company in liquidation and order that the costs of these proceedings all be costs of the liquidation.

4. That this order shall be published once in the Government Gazette and once in the Herald Newspaper. Publication shall be in the short form annexed to this order.

5. Any person intending to oppose or support the application on the return day of this order shall:-

5.1. Give due notice to the applicant at Messrs Byron Venturas & Partners, 2^nd Floor Tanganyika House, Corner 3^rd Street/Kwame Nkrumah Avenue, Harare.

5.2. Serve on the applicant at the address given above a copy of any affidavit which he files with the Registrar of the High Court.

The application for provisional liquidation was served on the respondents on 17 October 2005, who entered opposition on 31 October 2005 and filed, on that day, their opposing affidavit by fascimile. The actual opposing affidavit was filed on 9 November 2005.

These two applications were consolidated on the basis that the principal parties were the same and that the fundamental issue in each matter related to the ownership and management control of Zambezi Paddle Steamer (Pvt) Ltd (ZPS).

The pleadings in these consolidated matters are voluminous. The founding, opposing, answering and supplementary affidavits are reinforced by an assortment of attachments which consists of the Memorandum of Association of Zambezi Paddle Steamer (Pvt) Ltd (ZPS), electronic mail between the parties and other documents raised by various people who worked for the parties in various capacities.

I have read all these documents. It is apparent from these documents that there are areas in which the parties agree and others where they are at variance.

It is appropriate that I first deal with the facts as I have determined them to be from the wealth of information that is set out in the pleadings in both these cases.

The preliminary details on the formation of Zambezi Paddle Steamer (Pvt) Ltd (ZPS), on 3 April 1989, are set out in detail by Anthony Turner (Antony) in his founding affidavit in the liquidation matter, case HC5264/05 (Case No.2). Those details were admitted to by Peter Jameson Dobson (Peter) in his opposing affidavit in that case.

Turner and Sons (Pvt) Ltd (T&S) agreed with Dobrock (Pvt) Ltd, in 1988, on a joint venture to construct, and, thereafter, operate a 'Mississippi River Boat' for commercial use on Lake Kariba. The concept of the “Southern Belle” was created by Turner and Sons (Pvt) Ltd (T&S) who approached Dobrock (Pvt) Ltd. Dobrock (Pvt) Ltd agreed to become its joint partner in the venture and to provide working capital and investment in the project. Zambezi Paddle Steamer (Pvt) Ltd (ZPS) was incorporated as the special purpose vehicle through which the large commercial houseboat, MV Southern Belle, would be owned and operated.

Zambezi Paddle Steamer (Pvt) Ltd (ZPS) was incorporated in terms of the Companies Act [Chapter 24:03] with an issued share capital of $30,000= divided into 30,000 shares of $1= each fully paid up. Each of the two joint partners subscribed to 15,000 shares of $1= each in Zambezi Paddle Steamer (Pvt) Ltd (ZPS).

The joint shareholders agreed that Turner and Sons (Pvt) Ltd (T&S) would first build a model of the craft and thereafter carry out the necessary construction work and interior design of the vessel at a contracted price. Dobrock (Pvt) Ltd would source both local and foreign raw materials for this construction. The total costs of both these operations would be the total cost of the vessel and would be met equally by the joint shareholders. The agreement was reduced to writing and signed on 31 May 1991.

The arbitral award of 15 June 1994 indicated that the vessel was completed in 1994. The original construction price was set at $5,950,000=. The issue before the arbitrator centred on the amount by which the original contract price increased - which issue he resolved.

Zambezi Paddle Steamer (Pvt) Ltd (ZPS) was run for 18 months, from the completion of the vessel in 1994, by Turner and Sons (Pvt) Ltd (T&S). Dobrock (Pvt) Ltd thereafter took over the management control of Zambezi Paddle Steamer (Pvt) Ltd (ZPS) and appointed a Managing Director, Adamson, to run it.

It was common cause that from 2000 the tourism industry went into decline and this affected the bottom line of the MV Southern Belle Operations of Zambezi Paddle Steamer (Pvt) Ltd (ZPS).

There is evidence, in the form of electronic mail exchanged between Peter Jameson Dobson and Anthony Turner, the principal shareholders in Dobrock (Pvt) Ltd and Turner and Sons (Pvt) Ltd (T&S) respectively, between 19 January 2003 and 7 April 2004 that the joint shareholders were prepared to sell their respective shareholdings in Zambezi Paddle Steamer (Pvt) Ltd (ZPS) to the right suitor - if one came along. On 4 May 2004, Zambezi Paddle Steamer (Pvt) Ltd (ZPS) Managing Director presented a report which highlighted the difficult circumstances the commercial houseboat operations were in. It required urgent maintenance and refurbishment to attain its former glittering glory.

On 6 June 2004, Anthony Turner indicated his decision to sell his shares in the commercial houseboat to Peter Jameson Dobson. This was a clear pointer to his unwillingness to inject funds for maintenance and refurbishment of the houseboat. On 18 June 2004, Peter Jameson Dobson indicated his willingness to inject $250 million, for this purpose, provided his shareholding in Zambezi Paddle Steamer (Pvt) Ltd (ZPS) increased by 10% while that of Anthony Turner was reduced by the same percentage. He suggested that the houseboat was valued at approximately $3.5 billion. He followed up this by another e-mail of 25 June 2004. He received a response on that same day (contained in an email wrongly dated as 6 June 2004) from Anthony Turner in which he offered him his shareholding in Zambezi Paddle Steamer (Pvt) Ltd (ZPS) for the sum of $250 million. Peter Jameson Dobson duly accepted the offer. He came to Harare, and, during the period 28 June to 14 July 2004, discussed with Anthony Turner on the terms of payment of Anthony Turner's entire shareholding.

He agreed to procure payment where and when Anthony Turner wanted. The purchase price was agreed at $250 million. It was to be paid by Peter Jameson Dobson into the account of Anthony Turner's daughter, Jenny, in the United Kingdom; the bank account details of which he received.

The following day, after the terms of payment had been agreed, Anthony Turner requested part payment of the purchase price in local currency. Peter Jameson Dobson alleged that he made out cheque payments to Chitekeshe of $115 million and to Vretto of $25 million, as part-payment, a total of $140 million, which Anthony Turner used to buy a pick-up truck. This averment was not disputed by Antony, yet he maintained, in his other affidavits, that he was paid $138 million and $112 million remained outstanding.

Peter, in his prayer, and in counsel for Dobrock (Pvt) Ltd's submissions, on behalf of Peter's company, accepted that the outstanding purchase price was $112 million. No cheques or proof of payment in the sum of $140 million was produced. I am therefore prepared to hold that Peter paid $138 million and had an outstanding balance of $112 million.

Antony averred, in his opposing affidavit, that he required £12,000= to import a new engine for the craft that he was building, known as the “Zambezi Trader”. This craft would not be in competition with the houseboat at all and he was building it for his own account with the moral support and blessing of Peter. Peter agreed to pay this amount into his daughter's bank account in the United Kingdom. He repeated this allegation in paragraphs 31 and 32 of his founding affidavit in Case No. HC5264/05. This was to be in lieu of the balance of the purchase price of $112 million. In Case No. 5264/05, in paragraphs 26 and 27 of his opposing affidavit, Peter did not respond to these averments in so far as they refer to the alleged mode of payment in foreign currency.

That payment was to be in foreign currency is clear from Peter Jameson Dobson's own founding affidavit. In paragraph 18 he averred that even when he met Anthony Turner, per chance, at the Borrowdale Race Course, in November 2004, he re-assured him that notwithstanding the fall in the value of the Zimbabwean dollar against the Pound Sterling, the amount outstanding as the purchase price remained £12,000= being the amount in pounds in July 2004.

The two gentlemen agreed that the accountant and company secretary of Zambezi Paddle Steamer (Pvt) Ltd (ZPS), Paul Turner (Paul), a partner in Ernst and Young Chartered Accountants, would effect the share transfer and receive Anthony Turner's letter of resignation as a Director therein.

There was a delay in the transfer of the shares which was occasioned by Paul Turner's attempts to structure a tax avoidance scheme for the benefit, and at the insistence, of Anthony Turner. I make this finding based on Anthony Turner's deliberate failure to respond to Paul Turner's affidavit, which was filed in support of Peter Jameson Dobson's founding affidavit.

It was agreed that on 3 August 2004 and 21 August 2004 Peter Jameson Dobson wrote to Anthony Turner enquiring whether or not he had signed the necessary transfer documents and resigned as a Director of Zambezi Paddle Steamer (Pvt) Ltd (ZPS) - the two factors which would trigger the payment of the balance of the purchase price by Peter Jameson Dobson. It also appears that even on 5 November 2004, a date disputed by Anthony Turner who put it as being sometime in September 2004, when the two met at Borrowdale Race Course, Anthony Turner intimated that he had been too busy to visit Paul Turner. The parties re-affirmed that despite an adverse movement of the Zimbabwe dollar since July 2004, the balance of the purchase price would be paid into Anthony Turner's daughter's account in the United Kingdom at the exchange rate agreed in July 2004.

On 17 January 2005, Anthony Turner proceeded to appoint Peter Drummond and Martin King as Directors of Turner & Sons, in his stead, who were charged with the responsibility of overseeing Turner & Sons's interests in the Southern Belle. A flurry of e-mails followed which attempted to resolve the issue of the sale of Anthony Turner's shares in Zambezi Paddle Steamer (Pvt) Ltd (ZPS), who was claiming that the failure by Peter Jameson Dobson to pay the balance of the purchase price timeously amounted to repudiation of the contract. He therefore regarded himself released from the contract.

The negotiations by the parties culminated in a letter of 23 August 2004 by Turner & Sons's erstwhile legal practitioners to Dobrock (Pvt) Ltd's legal practitioners which set out the history of their association. In that letter, Turner & Sons indicated that it would seek an order to wind up the company in terms of section 206(g) of the Companies Act [Chapter 24:03]. Dobrock (Pvt) Ltd held the firm belief that it had purchased Turner & Sons shareholding and was therefore the sole shareholder in Zambezi Paddle Steamer (Pvt) Ltd (ZPS).

These disagreements resulted in the two applications for specific performance and liquidation that are now before me.

HH223-13 : HWANGE COLLIERY CO. LTD and HWANGE COAL GASIFICATION CO. PL vs HWANGE COAL GASIFICATION CO. PL and TENDAI SAVANHU and KINGDOM BANK LTD and STANBIC BANK LTD and GUO FENG and ORS
Ruled By: MAFUSIRE J

There has been ferocious litigation in a space of four months pitting several protagonists. The dispute was convoluted and the issues multi-faceted. At the centre was a company called Hwange Coal Gasification Company (Private) Limited. For ease of reference I shall refer to this company as the Coal Gasification Company. The one protagonist was a Chinese company by the name of Taiyuan Company Limited. The variants to that name, vehemently disputed by the other protagonists, were Taiyuan Sanxing Company Limited and Taiyuan Sanxing Economic and Trade Company Limited….,.Hereafter I shall refer to it as “Taiyuan”.

The other protagonists were two Chinese nationals and businessmen called Guo Feng (“Feng”) and Su Longmin (“Longmin”).

In the hearing before me, and for convenience, the two were referred to as the “Samukange faction”.The reason shall soon become apparent.

The next lot of protagonists were Zimbabwean nationals and businessmen Cephas Msipa (“Msipa”) and Gilbert Chahwanda or Chawanda (“Chawanda”). In the hearings they were referred to as the “Dzvetero faction”.

The next lot was Hwange Colliery Company Limited (“Hwange Colliery”). Three commercial Banks, Stanbic Bank Zimbabwe (“Stanbic”), Kingdom Bank Zimbabwe (“Kingdom”), and Allied Bank Zimbabwe (“Allied Bank”) were cited in some of the cases.

The last protagonist was one Tendai Savanhu (“Savanhu”).

Apart from the urgent chamber applications listed as cases 1 to 6 above there had been two others before them. They had pitted essentially the same parties. At the time of the hearing three other proceedings, in the form of a court application and two actions, were still pending.

The litigation related to the protagonists' investment in, and control of the two companies Taiyuan and the Coal Gasification Company.

The brief background is that in October 2006 some Chinese nationals, including Feng and Longmin, got associated in a joint venture with some Zimbabwean nationals that included Msipa, Chawanda and one Leo Mugabe (“Mugabe”). The object of the joint venture was to invest in various ventures. For that purpose, the Chinese nationals used Taiyuana as the special purpose vehicle. Both Feng and Longmin were directors. The special purpose vehicle used by the Zimbabwean nationals was a company called Stoat Mining (Private) Limited (“Stoat”) in which Mugabe, Msipa and Chawanda were directors.

In 2007, Taiyuan, now comprising both the Chinese and the Zimbabwean nationals, on the one part, and Hwange Colliery on the other, entered into a written agreement for the construction of a coke oven and a battery at Hwange Colliery on the basis of build, operate, own, and transfer (“the BOOT agreement”). In June 2011 the parties obtained an investment licence from the Zimbabwe Investment Authority (“the ZIA licence”). The ZIA licence stipulated a shareholding configuration of 75% for Taiyuan and 25% for Hwange Colliery.

The Coal Gasification Company was the special purpose vehicle formed by both Taiyuan and Hwange Colliery. The shares were held 75% by Taiyuan and 25% by Hwange Colliery.

The principal object of the Coal Gasification Company was the processing and carbonization of coal from resources within Zimbabwe. In terms of the BOOT agreement, the configuration of the Board of Directors for the Coal Gasification Company would be five (5) from Taiyuan and two (2) from Hwange Colliery. The chairman of the Board would be a Taiyuan appointee. Taiyuan's representatives on the first Board comprised Feng and Longmin as executive directors; Msipa and Chawanda as non-executive. Another Chinese national by the name of Zhang Jin Yuan (“JinYuan”) was the chairman. From Hwange Colliery came Savanhu and one Fred Moyo (“Fred Moyo”) then chairman and managing director respectively.

Taiyuan and Hwange Colliery soon clashed.

One of the points of contention by Hwange Colliery was that the Coal Gasification Company had breached the BOOT agreement. Hwange Colliery moved to cancel that agreement and to seek damages. Under HC537/13 it sued both Taiyuan and the Coal Gasification Company for damages amounting to $21 million. The matter was still pending at the time of the urgent chamber applications.

The other bone of contention by Hwange Colliery was that it had been induced to enter into an agreement with a non-existent company. This allegation stemmed from the confusion surrounding the identity of Taiyuan. The BOOT agreement and the ZIA licence identified Taiyuan as Taiyuan Sanxing Company Limited. However, Hwange Colliery alleged that such a company did not exist and that only after the BOOT agreement had been executed was a company called Taiyuan Sanxing Economic and Trade Company Limited formed in China.

Hwange's further bone of contention was that its BOOT partner, Taiyuan, was in turmoil. Its shareholders were at each other's throat. This allegation stemmed from the fact that the Chinese and the Zimbabwean nationals were bringing a series of applications against each other in the name of the Coal Gasification Company with both factions claiming to be the legitimate and authorised representatives of that company. Hwange Colliery was apprehensive that its investment in the Coal Gasification Company would be dissipated.

Hwange Colliery further claimed that Taiyuan had reneged on its pledge to bring into the country an amount of US$40 million as part of its injection into the joint venture. Therefore, Hwange Colliery was seeking cancellation of the BOOT agreement.

Within the Coal Gasification Company itself matters soon came to a head.

In March 2013 JinYuan, as chairman, called for the holding of an Annual General Meeting. It was scheduled for 24 April 2013. Feng and Longmin were vehemently opposed to that meeting. They moved to block it. On 19 April 2013 they filed an urgent chamber application under case no HC3003/13 in the name of Taiyuan Sanxing Economic and Trade Company Limited. Messrs G N Mlotshwa & Co represented the applicant. Hwange Colliery was cited as the substantive respondent. One Ananias Banda, the Company Secretary, and the Registrar of Deeds, were cited as nominal respondents.

The matter came before MAWADZE J.

A point in limine was taken that the Taiyuan as cited was not the Taiyuan as was recorded on the ZIA licence and with which Hwange Colliery had entered into an agreement. Mr Mlotshwa conceded. The application was dismissed with costs on the point in limine.

The Annual General Meeting (AGM) went ahead as scheduled. Among other resolutions, Feng and Longmin would be suspended from the Coal Gasification Company.

A day after the Annual General Meeting (AGM), i.e. on 25 April 2013, Feng and Longmin, in the name of Taiyuan Sanxing Economic and Trade Company Limited, filed an ordinary court application under HC3160/13 for an order nullifying the AGM and all the resolutions taken thereat. At the time of the hearings that application was still pending.

In May 2013 Feng and Longmin were formally suspended and called to a disciplinary hearing to answer various charges including one of fraud. The suspension letters were signed by Msipa as director. Feng and Longmin were eventually dismissed as executive directors in default of appearance at the disciplinary committee.

The Coal Gasification Company reconstituted its Board of Directors. The new Board wrote to the Banks, Stanbic, Kingdom and Allied Bank to “freeze” the company's accounts.

On 5 June 2013 Feng and Longmin, together with three other Chinese nationals, were barred access to some Harare premises rented by the Coal Gasification Company from Hwange Colliery. The one letter was signed by Chawanda. The other, in long hand, was signed by one Chininga who was said to be from Hwange Colliery. But this was disputed.

Feng and Longmin went on the attack.

They threatened the Banks and warned them not to take instructions from persons that were not signatories to the accounts. Feng reminded them that he was the signatory and that the signing instructions had been given by him. On 6 June 2013, before BERE J, Feng and Longmin obtained a spoliation order in the name of the Coal Gasification Company against Mugabe and Hwange Colliery. They were granted unhindered possession and control of the aforesaid premises. Mugabe and all those claiming rights through him were ordered to maintain peace and to allow undisturbed access to the applicant and to return any company documents and office keys. However, in subsequent proceedings, Hwange Colliery claimed that Feng and Longmin had been mala fide in that they had obtained the spoliation order not with any genuine intention to re-occupy the premises but merely to gain access in order to pilfer company assets such as office furniture and to cart them away to unknown destinations.

On 20 June 2013 Feng and Longmin filed two further urgent chamber applications (“the twin applications”). They were almost identical. They were both in the name of the Coal Gasification Company as the applicant. The applicant, in reality Feng and Longmin, was now represented by Venturas and Samukange. The one application was under HC4861/13. It is case no. 4 above. In that application it was sought to “unfreeze” the account at Kingdom Bank. The respondents were Kingdom, Chawanda and Msipa. Antonio & Dzvetero represented Chawanda and Msipa. Hwange Colliery was not cited. Kingdom remained neutral and sought to abide by the court order.

The other application was filed under HC4895/13. It is case no. 5 above. In that application the first respondent was Stanbic. That Bank also remained neutral and agreed to abide by the order of the court. Again, Hwange Colliery was not cited. HC4895/13 came before DUBE J. She heard it on 24 June 2013. The matter was settled by consent. The parties agreed to an interim order. The freeze on the Stanbic account would be uplifted. The authorised signatories would be Fred Moyo, one Tafara Gadzirai (“Gadzirai”) and Feng. These would have unconditional access to the account. Gadzirai would countersign for all withdrawals. The actual wording of the material portion of the order was as follows:

“That pending the final determination of this matter, Applicant is granted the following relief:

1. The 1^st Respondent be and is hereby ordered immediately and forthwith upon service of this order to unfreeze the Applicant's account being 0240057759001 held by the 1^st Respondent.

2. Applicant's authorised signatories named Fred Moyo, Tafara Gadzirai and Feng Guo shall have unconditional access to the account for the purposes of transacting on behalf of applicant provided that Tafara Gadzirai shall counter-sign for all payments.”

HC4861/13 came before MATHONSI J. He heard it on 26 June 2013. The parties also agreed to an interim order. It was almost identical to the one by DUBE J. However, before MATHONSI J could consider the application and the draft order by consent, Hwange Colliery applied to be joined to the proceedings. This was granted. The matter was postponed to the following week. As the Samukange faction filed the twin applications aforesaid the Dzvetero faction also filed its own. This was done on 21 June 2013, i.e. a day after the twin applications.

The Dzvetero application was filed under HC4897/13. It is case no.6 above. It was also in the name of the Coal Gasification Company as the applicant. The respondents were Feng, Longmin, Hwange Colliery, Allied Bank, Stanbic, Kingdom and a firm of chartered accountants called Welsa International Chartered Accountants. The Dzvetero application came before me. The basic relief sought was also to unfreeze the Bank accounts but to appoint the accountants as the sole administrators of those accounts pending the determination of the court application by the Samukange faction under HC3160/13. That was the application in which the validity of the Annual General Meeting (AGM) and the resolutions made thereat were being challenged.

It was upon perusal of the Dzvetero application that I became aware of the one Samukange application under HC4895/13 which had been placed before DUBE J. At that stage, I was neither aware of the other Samukange application under HC4891/13 that had been placed before MATHONSI J nor of the rest of the other proceedings referred to above. I did not immediately set down the Dzvetero application.

I had queries.

One of the averments in that application was that an Extraordinary General Meeting to resolve the entire shareholder issues in the Coal Gasification Company had been scheduled for 24 June 2013. Excluding the intervening weekend, the 24^thofJune 2013 was the next business day. So, in my view, there could have been no reasonable apprehension of an irreparable harm ensuing in that short space of time. Furthermore, it was common cause that it was the Dzvetero faction that had ordered the freeze on the Bank accounts. Therefore, I wondered why the intervention of the courts was being sought when the issue was now properly set for resolution in the boardroom by the “corporate parliament” of the company.

The supreme rule-making authority of a company rests with a general meeting of the members; see GOWER's Principles of Modern Company Law, 4^th ed…,.

At that stage, I was unaware that one of the issues that had triggered the twin Samukange applications was that the Banks had taken the position that given the apparent turmoil in the Coal Gasification Company, and that given the conflicting instructions and threats that they were receiving in respect of those accounts, the Banks would not unfreeze the accounts in the absence of a court order.

I called for the record of the one Samukange application under HC4895/13. But, by that time, the aforesaid order by consent by DUBE J had already been granted. However, I then became aware of the other Samukange application under HC4861/13 which had been placed before MATHONSI J and of the rest of the other applications referred to above. I then called for all the records.

Only thereafter did I get to appreciate the multifaceted disputes.

I set down the Dzvetero application for hearing on 27 June 2013. Mr T Mawere represented Hwange Colliery. Mr T Dzvetero represented the Dzvetero faction and the Coal Gasification Company. Mr J Samukange represented the Samukange faction and also the Coal Gasification Company.

At the hearing, Mr Mawere expressed concern that Hwange Colliery had not been cited in the twin Samukange applications and that the consent order by DUBE J had far reaching consequences that were prejudicial to Hwange Colliery in that, among other things, Fred Moyo, whom the two warring factions had selected as a co-signatory to the Bank accounts, was no longer employed by Hwange Colliery and that therefore he could not possibly represent it. It was further pointed out by Mr Mawere that the resolutions that the Samukange faction had used as authority to bring their twin applications in the name of the Coal Gasification Company had been signed by Savanhu - yet Savanhu had since been dismissed from the Board of Hwange Colliery.

In the premises, Mr Mawere gave notice that Hwange Colliery had filed, or would be filing, three urgent chamber applications;

(1) For an order that Hwange Colliery be joined to HC4895/13 and to vary the consent order by DUBE J so that Fred Moyo would be removed from the list of signatories and replaced by someone else properly appointed by Hwange Colliery;

(2) For an anti-dissipation interdict to prohibit the disposal of any of the assets of the Coal Gasification Company, especially the coal stocks, coking oven, and battery, by anyone purporting to act on behalf of that company until Hwange Colliery's claim for the cancellation of the contract and for damages under HC537/13 was determined; and

(3) For an interdict against Savanhu to stop him from masquerading as a director, representative, and appointee of Hwange Colliery on the Board of the Coal Gasification Company because he had been dismissed.

Mr Samukange vehemently opposed the intended applications.

Essentially, Mr Samukange's submission was that the choice of Fred Moyo as a co-signatory to the Bank accounts, in terms of the consent orders, was motivated not by his previous connection to Hwange Colliery but by the fact that he was a neutral person and that he was still a director of the Coal Gasification Company anyway even though he might have lost his employment with Hwange Colliery. Mr Samukange further submitted that, in terms of the agreement between the parties, Hwange Colliery would not be involved in the day to day management of the Coal Gasification Company; that the issue of signing on Bank accounts was one of management and that therefore Hwange Colliery was in effect seeking to sneak into the management of the Coal Gasification Company by the back door. He further submitted that the dispute between the two factions was not one for shareholders but one involving company management and that the interdict against Savanhu would be opposed on essentially the same basis, namely, that until Savanhu was properly removed from the Board of the Coal Gasification Company by that company itself Hwange Colliery had no right to do so especially given that it was just a minority shareholder.

The anti-dissipation order would be opposed on the basis that its effect would virtually paralyse and collapse the Coal Gasification Company the business of which was essentially the processing and disposal of coal.

Given the multi-faceted nature of the dispute and the issues between the parties, and given that they were so intertwined, it was readily agreed that all the matters would be consolidated and heard by a single judge.

Barring any unforeseen objections or complications it was agreed that I would hear the matters myself. The hearing was adjourned to a later date to be advised.

Hwange Colliery's three applications were subsequently filed under HC5171/13, being case no.1 above; HC5105/13, being case no.2 above and HC5331/13, being case no.3 above.

Eventually, I caused the matters to be set down for hearing on 5 July 2013.

Hwange Colliery was now represented by Advocate T Mpofu and Stanbic by Mr I Chagonda.

On that day, a new issue arose. It was on the consent order by DUBE J. It was for that single issue that Mr Chagonda was appearing. The new issue was this: it transpired that the parties could not agree on the interpretation of that order. Stanbic thought that the order could either mean that the three signatories Feng, Fred Moyo and Gadzirai had all to sign for any bank withdrawals but that the order could also mean that any two of them could sign for as long as one such signatory was Gadzirai.

The two factions favoured the interpretation that allowed any two to sign for as long as one of the signatories was Gadzirai. On the other hand, Hwange Colliery was vehemently opposed to that interpretation as it was feared that there could be connivance just to facilitate withdrawals. Consequently, Hwange Colliery favoured a restrictive interpretation that would allow withdrawals only when all the three signatories would sign.

On behalf of Stanbic, Mr Chagonda submitted that given the several threats for damages against it, the Bank would not permit any withdrawals until such time that the new signing arrangement was clarified.

The matter was adjourned to 11 July 2013 because Mr Samukange did not have some of the papers in the applications by Hwange Colliery. Before the resumption of the hearing on 11 July 2013 the Dzvetero faction had withdrawn its application under 4897/13. Therefore, the issue as to whether the interim management of the Bank accounts could be placed in the hands of the chartered accountants had automatically fallen away.

But, yet again, a new issue had arisen! It was also on the consent order by DUBE J.

Previously, on the day that the order had been granted, i.e. 24 June 2013, the Samukange faction had been represented by Advocate Firoz Girach. When the parties had come unstuck at Stanbic, as aforesaid, they had convinced themselves that what really they had consented to was the arrangement that any two of the three signatories could sign for any withdrawals for as long as one of such signatories was Gadzirai. Thus, the parties had then arranged to instruct Advocate Girach to approach DUBE J and seek an amendment of the consent order so that it would align with what allegedly was their true intention and true agreement. With Mr Dzvetero's consent, DUBE J had amended the order.

But there was a problem. Hwange Colliery had not been consulted.

Both factions had become aware, during the second sitting before me, that Hwange Colliery was disagreeing with such an interpretation and that not only would it be opposed to such an amendment but also that in its own application to be joined to those proceedings and for an amendment to that order it would move for an express provision that all the three signatories would have to sign for any withdrawals. Furthermore, since all the matters had been consolidated and would be heard by me, the propriety of pulling out the single record for purposes of amending the single order in terms which were disputed and in the absence of such an interested party as Hwange Colliery and without disclosing to both Advocate Girach and DUBE J that Hwange Colliery had in fact since filed its urgent chamber applications aforesaid was questioned.

Advocate Mpofu, for Hwange Colliery, expressed serious concern on the development. Be that as it may, I concluded the hearing on 11 July 2013. The crisp issues were;

(1) Whether Hwange Colliery was entitled to have the consent order by DUBE J amended in such a way as to remove Fred Moyo from the list of the Bank signatories and have him replaced by someone else from its stable;

(2) Whether Hwange Colliery was entitled to have that consent order further amended so that it would reflect that all withdrawals from the Bank accounts would be signed for by all the three signatories, whoever they would eventually be;

(3) Whether Hwange Colliery was entitled to the anti-dissipation interdict against the property of the Coal Gasification Company pending the resolution of its action for the cancellation of the contract and for damages in HC537/13; and

(4) Whether Savanhu should be interdicted from holding himself out as one with authority to represent the Coal Gasification Company and from attending meetings of, signing documents for and on behalf of and representing himself as one with authority to represent that company.

I now deal with each of these matters in turn.

HH223-13 : HWANGE COLLIERY CO. LTD and HWANGE COAL GASIFICATION CO. PL vs HWANGE COAL GASIFICATION CO. PL and TENDAI SAVANHU and KINGDOM BANK LTD and STANBIC BANK LTD and GUO FENG and ORS
Ruled By: MAFUSIRE J

(1) WHETHER HWANGE COLLIERY WAS ENTITLED TO REMOVE FRED MOYO FROM THE LIST OF SIGNATORIES AND SUBSTITUTE HIM WITH ANOTHER In its application under HC5105/13, filed on 27 June 2013, Hwange Colliery, after setting out the nature of the multi faceted dispute between the disparate parties, made the point that it was so undoubtedly an interested party ...

(1) WHETHER HWANGE COLLIERY WAS ENTITLED TO REMOVE FRED MOYO FROM THE LIST OF SIGNATORIES AND SUBSTITUTE HIM WITH ANOTHER

In its application under HC5105/13, filed on 27 June 2013, Hwange Colliery, after setting out the nature of the multi faceted dispute between the disparate parties, made the point that it was so undoubtedly an interested party that it was manifestly improper for it to have been excluded from the twin Samukange applications. As final relief, Hwange Colliery sought an order that it be joined to those proceedings. It also sought costs against any party that would oppose its application. As interim relief, Hwange Colliery sought an interdict against Fred Moyo to restrain him from representing the Coal Gasification Company in any capacity whatsoever, particularly as signatory to that company's accounts or as its director. Hwange Colliery also sought, as an interim relief, an amendment to the consent order by DUBE J so that it would read as follows:

“Applicant's authorised signatories, namely, Staford Ndlovu, Tafara Gadzirai and Feng Guo all signing together shall have unconditional access to the account for the purposes of transacting on behalf of Applicant.”

The effect of the amendment sought by Hwange Colliery was obviously to remove Fred Moyo from the list of the Bank signatories and to substitute him with Staford Ndlovu and to ensure that any bank withdrawals would have to be signed for by all three signatories.

The parties' arguments regarding the position of both Fred Moyo and Savanhu on the Board of Directors for the Coal Gasification Company has already been set out. During the hearing it appeared Fred Moyo, who was neither represented nor present, was contesting his termination of employment with Hwange Colliery. However, that was not the basis for opposition by the Samukange faction. Furthermore, that was not an issue before me. Hwange Colliery predicated its argument on clause 4.5 of the BOOT agreement. In both its application and in argument before me Hwange Colliery referred to that agreement as the joint venture agreement between itself and Taiyuan.

On the other hand, the Samukange faction stressed that it was not the joint venture agreement but just the BOOT agreement.

As a matter-of-fact, the written document neither called itself the joint venture agreement nor the BOOT agreement. In the preamble, it simply referred to itself as an “Agreement for the construction in Zimbabwe of a Coke Oven and Battery on a Build, Operate, Own and Transfer (BOOT) basis”.

In clause 4, it was recorded that the parties would incorporate a company in Zimbabwe with limited liability the principal object for which would be the processing and carbonization of coal from resources within Zimbabwe and that the name of such company, subject to the approval by the Registrar of Companies, would be known as “Zimbabwe Coal Gasification Company Limited, or, alternatively, Hwange Coal Gasification Company Limited ('the Company')”.

The term 'Company' was defined to mean “the project vehicle that will be incorporated for purposes of implementing the project”.

By 'Project' was meant the planning, feasibility study, design, engineering technical services, construction, commissioning, operation, owning in Zimbabwe and transfer of a coke oven battery, etc. as specified.

In my view, whether the agreement was a joint venture agreement or the BOOT agreement seems immaterial and nothing turns on it. I have consistently referred to it as the BOOT agreement simply for ease of identification.

Clause 4.5 dealt with the respective rights of the BOOT partners to appoint directors to the Board of the Coal Gasification Company. Taiyuan was entitled to appoint five (5) directors. Hwange Colliery was entitled to appoint two (2). The total number of directors would be seven (7).

Mr Mpofu argued that Fred Moyo and Savanhu had been appointed onto the Board of the Coal Gasification Company by Hwange Colliery. The two held their directorships in that company at the pleasure of Hwange Colliery. The choice of Fred Moyo as one of the signatories to the Bank accounts in terms of the consent order necessarily stemmed from his previous position as an appointee of Hwange Colliery on to the Board of the Coal Gasification Company. Fred Moyo, having lost his employment with Hwange Colliery and having been removed from its own Board, could no longer remain as its representative on the Board of the Coal Gasification Company. It was extremely harmful to the interests of Hwange Colliery in the Coal Gasification Company for Fred Moyo to be appointed signatory, even in an interim capacity, especially given the turmoil in that company.

On the other hand, Mr Samukange's argument was that the two factions had settled for Fred Moyo as the third signatory to the Bank accounts purely as he was considered to be a neutral party. It was not on the basis that he had previously been an appointee of Hwange Colliery onto the Board of the Coal Gasification Company. His appointment as a signatory was not for the purposes of representing Hwange Colliery. Mr Samukange further argued that Hwange Colliery was a mere minority shareholder in the Coal Gasification Company. It had no right, either in terms of the BOOT agreement or any other agreement, to be involved in the day to day management of that company. That right had been entrusted to Taiyuan, particularly his faction. Signing bank accounts was part and parcel of the day to day management of a company. By imposing its own choice of signatories Hwange Colliery was seeking to “sneak” into the management of the Coal Gasification Company by the back door. Mr Samukange referred to clause 7 of the BOOT agreement. It provided as follows:

“7. Management during Operation Period During the agreed 10-year Operation period after commissioning of the Project, Taiyuan shall:

7.1 Operate and manage the Project in terms of a Management Contract to be entered into with the Company; Management Contract shall stipulate details with respect to the content, method, and costs of management.

7.2 Ensure that the Project is operated, maintained, and managed according to accepted standards and shall report regularly to the Board of Directors of the Company.

7.3….,.

7.4…,.

7.5…,.”

Mr Mpofu argued that other than the BOOT agreement there were no further agreements entered into by the parties and that clause 7 was irrelevant.

In my view, it is evidently untenable for the Samukange faction to want to rely on any prior agreements or the status quo pertaining to the management of the Coal Gasification Company when everything else seemed to have gone wrong. The situation obtaining in the Coal Gasification Company was abnormal. One faction was getting a director or directors aligned to it to sign resolutions authorising it to bring proceedings in the name of the company. The other faction would do exactly the same.

At the hearing there was this remarkable situation that two sets of legal representatives purported to represent the same company.

As I observed at the beginning, this court had been called upon on numerous other occasions in just a space of four months to resolve boardroom wrangles. These were abnormal times for the Coal Gasification Company and all those associated with it. This was starkly demonstrated by the two orders which both factions had consented to.

Feng said before the disputes he had been the sole signatory. But, obviously, with the consent orders he now had to contend with two others. Furthermore, even accepting that the choice of Fred Moyo had been motivated by the fact that he was a neutral party, a position disputed by Hwange Colliery, he certainly was not a man from the street. If neutrality was the sole factor, no doubt there would be numerous other neutrals. The choice of Fred Moyo was demonstrably influenced by the fact that he had been a Board member of the Coal Gasification Company. He still appeared on the list of directors for that company's Form CR14.

I accept the argument that the tenure of Fred Moyo's directorship on the Board of the Coal Gasification Company was at the pleasure of Hwange Colliery. He having left Hwange Colliery, Fred Moyo no longer had any business being associated with the Coal Gasification Company in any capacity - including as signatory to the Bank accounts for that company. Hwange Colliery was the only other shareholder in the Coal Gasification Company - albeit a minority one. However, the majority shareholder, Taiyuan, was itself rocked by internal squabbles. It was not unreasonable for Hwange Colliery to become apprehensive. It was not unreasonable for it to seek to be involved in proceedings that had a material bearing on its interest in the company in which it had helped establish and in which it was the only other shareholder with reserved seats on the Board.

At any rate, the entire arrangement that persons who previously had no signing powers on the Bank accounts of the company now did was only an interim and stop gap measure taken with the reasonable view to keep everything intact or under control until the disputes were permanently resolved.

In terms of clause 7 of the BOOT agreement…, it was obviously contemplated to enter into a management contract for the management of the BOOT project. But, it appears that this never materialised. Therefore, the only guiding document on the rights and duties of the BOOT partners remained the BOOT agreement.

In the premises, I find that the application by Hwange Colliery in which it sought the amendment of the consent order by DUBE J to remove the name of Fred Moyo from the list of signatories and to have it substituted with that of Staford Ndlovu had merit.

However, before I grant that application, it is necessary to deal with the issue of joinder.

Hwange Colliery's application to be joined to the proceedings was sought as a final order. Strictly speaking, until it was joined it could not properly seek to interfere with the order to which it was not a party. Thus, it could not properly seek to have the consent order by DUBE J amended before it was joined.

However, I hold the view that this was merely a technical error in drafting. The relief sought as an interim order should first have sought the joinder and thereafter the rest of the orders sought. For the sake of expediency I am prepared to condone the error.

After all, the substantive relief being pursued is the removal of Fred Moyo from the list of the Bank signatories and his substitution thereof with someone else.

I also appreciate that the preparation of the papers could have been made in a rush in view of the perceived urgency.

Misjoinder or non-joinder of parties is governed by Order 13 Rule 87. The relevant provision is sub-rule (2)(b). It reads as follows:

“(2) At any stage of the proceedings in any cause or matter the court may on such terms as it thinks fit and just either of its own motion or on application –

[a]…,.

[b] Order any person who ought to have been joined as a party or whose presence before the court is necessary to ensure that all matters in dispute in the cause or matter may be effectually and completely determined and adjudicated upon, to be added as a party;”…,.

The purpose of joinder is largely convenience or necessity. Joinder saves time, effort, and costs.

HERBSTEIN & VAN WINSEN, The Civil Practice of the High Courts and the Supreme Court of Appeal of South Africa, 5^th ed…, state:

“A third party who has, or may have, a direct and substantial interest in any order the court might make in proceedings or if such an order cannot be sustained or carried into effect without prejudicing that party, is a necessary party and should be joined in the proceedings, unless the court is satisfied that such person has waived the right to be joined.”

Under Rule 87, the court is given a wide discretion. The court can order joinder even in the absence of an application by any person.

In this case, not only was there an application but also it was not opposed. The only mistake was that Hwange Colliery sought it as part of the final relief. Thus, Hwange Colliery is entitled to be joined as a party to the proceedings in HC4895/13. It is also entitled to have the consent order by DUBE J, on 24 June 2013, amended by the deletion of Fred Moyo's name therefrom and having it substituted thereof with that of Staford Ndlovu.

(2) WHETHER HWANGE COLLIERY WAS ENTITLED TO HAVE THE CONSENT ORDER BY DUBE J FURTHER AMENDED SO THAT IT WOULD REFLECT THAT ALL WITHDRAWALS FROM THE BANK ACCOUNTS WOULD BE SIGNED FOR BY ALL THE THREE SIGNATORIES

I was not satisfied that Hwange Colliery's reason for wanting all three signatories to sign for any withdrawals was properly articulated. In reality, this particular aspect seemed to have been raised as an appurtenance to the main concern relating to Fred Moyo.

These matters are really crying out for resolution in the boardrooms of the corporations involved. The court should not be extensively involved any more than it should.

After the consent order by DUBE J, the Dzvetero faction had become satisfied with the measure of protection afforded by that interim signing arrangement. As a result, it went on to withdraw its own application under HC4897/13 that had been placed before me.

The Coal Gasification Company is a going concern. One of the reasons cited for the urgency of the matters was that there were recurrent expenditures such as salaries and utility bills as well as ongoing contractual obligations that needed to be paid. That was why the freeze on the Bank accounts had to be lifted as a matter of urgency to avoid causing irreparable damage to the company.

I consider that by seconding one of its men to the Coal Gasification Company as an interim co-signatory to the Bank accounts of that company Hwange Colliery has achieved a measure of protection. It should now be up to the Board of that company to sort out the interim signing arrangement rather than to allow a minority shareholder to make further inroads into the management of the company.

In the absence of the consent of the other parties I am not convinced that Hwange Colliery should have its way on this. The court should not get involved in such detail. It was all right to do so when the original parties before DUBE J agreed between themselves and consented to the order. Furthermore, it appeared throughout the hearing that all the parties were satisfied with Gadzirai being a co-signatory in whatever signing arrangement. He was still a co-signatory even after the amendment of the order by DUBE J which relaxed the signing arrangement to allow any two to sign instead of all three. In the premises, the further amendment sought by Hwange Colliery to have all three signatories signing for any Bank withdrawal is denied.

(3) WHETHER HWANGE COLLIERY WAS ENTITLED TO THE ANTI-DISSIPATION INTERDICT AGAINST THE PROPERTY OF THE COAL GASIFICATION COMPANY PENDING THE RESOLUTION OF ITS ACTION FOR THE CANCELLATION OF THE CONTRACT AND FOR DAMAGES IN HC537/13

In a nutshell, the argument by Hwange Colliery on this point was said to be the need to preserve the assets of the Coal Gasification Company until the disputes, particularly its action for damages, were resolved. It was argued that Hwange Colliery had a serious apprehension of harm that given the upheaval in its BOOT partner, Taiyuan, and the free for all situation obtaining in that company, it was reasonable to interdict anyone associated with that company, as an interim measure, from taking any action that would dissipate its assets before the conclusion of the matters.

The draft order sought by Hwange Colliery was couched as follows:

“IT IS ORDERED THAT:

Pending the finalisation of litigation under case number HC537/13;

1. The 1^st (the Coal Gasification Company), 2^nd (Taiyuan), 3^rd (Msipa), 4^th (Feng), 5^th (Longmin) and 6^th (Chawanda) Counter Respondents acting together, or any one of them or any number of them in combination be and are hereby interdicted from selling, transferring or in any other way encumbering 1^st Counter Applicant's (sic) movable and immovable property, specially the coal stocks and coking oven battery currently situated at the 1^st Respondent's (sic) yard at Hwange without the prior written approval of the Counter Applicant through its nominated representatives.

2. In the event that the 1^st, 2^nd, 3^rd, 4^th, 5^th and 6^thCounter Respondents acting together, or any one of them or any number of them in combination sells the property aforementioned pending the final determination of the matter under case number HC537/13, they be and are hereby interdicted from using, moving and/or disposing of the proceeds of such sale without the prior written consent of the 1^st Respondent [sic], which proceeds shall be deposited into any of the accounts of the 1^st Counter Respondent held with 7^th (Kingdom), 8^th (Stanbic) or 9^th (Allied Bank) Respondents.

3. That 1^st, 2^nd, 3^rd, 4^th, 5^th and 6^th Counter Respondents acting together, or any one of them or any number of them in combination be and are hereby interdicted from opening any other Bank account with any other institution, or otherwise circumventing the three specific accounts held with 7^th, 8^th and 9^th Counter Applicants (sic).

4. That any Counter Respondent who opposes the Counter Application shall pay Counter Applicant's costs of suit on the higher scale of legal practitioner and client.”

During the hearing, it was clarified that the anti-dissipation interdict was not meant to affect funds held at the Banks.

I am satisfied that given that the Coal Gasification Company was a going concern with substantial financial commitments on a day to day basis such an order would cripple the company and eventually collapse it.

Whilst I found Hwange Colliery's fears to be reasonable under the circumstances, nonetheless, I have considered that; firstly, the signing arrangement above is a good measure of protection for everyone, and, secondly, that since the interdict related mainly to the coke oven and battery there was minimal danger of its dissipation. That was a structure that was fixed to the ground. It was in the nature of an immovable property. It could only be removed by stripping off its components. It was built on the premises of Hwange Colliery itself, therefore, Hwange Colliery could easily monitor the structure and take remedial action if anyone tried to tamper with it. The coal stokes are the raw materials for the production of the coke. Such an order, as Mr Samukange pointed out, would virtually close down the company. That would be unfortunate. Such a consequence is certainly not what was intended. It is for these reasons that Hwange Colliery's application under HC5171/13 is hereby rejected.

(4) WHETHER SAVANHU SHOULD BE INTERDICTED FROM HOLDING HIMSELF OUT AS ONE WITH AUTHORITY TO REPRESENT THE COAL GASIFICATION COMPANY AND FROM ATTENDING MEETINGS OF, SIGNING DOCUMENTS FOR AND ON BEHALF OF, THAT COMPANY

In resisting Hwange Colliery's application, Mr Samukange relied on the Articles of Association of the Coal Gasification Company. He argued that in terms of Article 17 the directors were appointed for life unless they resigned or were removed in terms of the specific circumstances outlined therein. He submitted that the court should bind the parties to their agreement.

He said Hwange Colliery was not entitled to recall Savanhu from the Coal Gasification Company even if he might no longer be with Hwange Colliery. It was up to the Coal Gasification Company itself to properly remove him from its Board in terms of its Articles of Association.

Article 17 reads as follows:

“17 NO ROTATION OF DIRECTORS

The provisions of Regulations 90 to 96 or Part 1 of Table 'A' shall not apply. A Director shall not be subject to retirement by rotation, and shall continue to hold office until he or she dies, resigns or is disqualified in terms of Regulation 89 of Part 1 of Table 'A' or removed from the office in terms of Regulation 97 of Part 1 of Table 'A'."

In brief, Regulations 90 to 96 of Table A in the First Schedule to the Companies Act [Chapter 24:03] provide for the rotation of directors of a company. In terms of those Regulations all the directors of a company retire from office at the first Annual General Meeting (AGM). One third of them retire in subsequent Annual General Meetings (AGMs) in the order specified. Retiring directors are eligible for re-election. The company may fill the vacancies of retired directors. The company can increase or reduce the number of its directors. The directors themselves can fill casual vacancies.

Thus, the net effect of the exclusion of Regulations 90 to 96 of Table A by Article 17 of the Articles of Association of the Coal Gasification Company and replacing them with its own peculiar provision was that any person appointed as director of that company held office for life unless he or she resigned or became disqualified in terms of Regulations 89 or 97.

It was common cause that Savanhu had neither resigned from the Coal Gasification Company nor had become disqualified in terms of Regulation 89 or 97.

Regulation 89 of Table A provides for the disqualification of a director on various grounds. These include the failure of a director to acquire a specified shareholding in the company where he or she is required to do so; a director becoming afflicted by a legal, mental or physiological disability such as insolvency, insanity or conviction of specified offences; a director who is under-age or who a court has removed from office; or a director with prolonged absenteeism from Board meetings.

None of these were issues before me in respect of Savanhu.

Regulation 97 of Table A provides for the removal of a director by a company itself through an ordinary resolution which is preceded by a special notice.

It was common cause that as far as Savanhu's directorship in the Coal Gasification Company was concerned this had not happened. On the contrary, it was submitted that he was still very much wanted and that he was still being called to that company's meetings.

On the Savanhu issue, the crisp point for determination was the effect to be given to Article 17 vis-a-vis clause 4.5 of the BOOT agreement. I should point out that clause 4.5 had, in essence, been duplicated in Article 11 of the same Articles. It was couched as follows:

“11 DIRECTORS

Hwange Colliery Company to appoint 2 [two] directors and Taiyuan Sanxing Company to appoint 5 (five).”

It was most unsatisfactory for me to have to determine the respective rights of the BOOT partners in such a summary fashion as the urgent chamber applications obliged me to do. The legal issues were of considerable importance. But they were not, and could not, have been properly canvassed or ventilated when the matters had come to court under certificates of urgency. Therefore, the conclusion that I have come to in this matter should be understood only in the context of the peculiar facts and circumstances of the matter.

As pointed out earlier, the Samukange faction was able to claim the authority to bring proceedings in the name of the Coal Gasification Company largely on the basis of a purported resolution of the Board of Directors for that company signed by Savanhu. Hwange Colliery's application to interdict Savanhu was based on what it claimed to be the harmful effects of Savanhu's conduct. Dealing specifically with this point, Hwange Colliery's deponent to the founding affidavit in HC5331/13, after setting out how Fred Moyo and Savanhu had been removed from its own Board and how that removal had been communicated to the Coal Gasification Company, through the Company Secretary, and how at the same time replacement names had been forwarded, went on to aver as follows:

“14. It is therefore beyond dispute that the 1^st Respondent (i.e. Savanhu) was removed from 2^nd Respondent's Board (i.e. the Coal Gasification Company) by his former appointee, the Applicant (i.e. Hwange Colliery).

15. However, sometime in June 2013, 1^st Respondent attended an opaque Board meeting which culminated in him signing a certain resolution authorising one Guo Feng to represent the company in certain litigation matters.

16….,.

17. After 1^st Respondent was dismissed by the Applicant, the term of office of Mr. Fred Moyo with whom 1^st Respondent formerly served on the Board of 2^nd Respondent as Applicant's appointees expired. The said Fred Moyo also ceased to be part of both Applicant and 2^nd Respondent.

18….,.

19. While all this happened, Mr. Guo Feng and Su Longmin, the other Board members of the 2^nd Respondent, being representatives of the Taiyuan Sanxin (sic) Company Limited were also dismissed by their principals and replaced….,.

20….,.

21. The harmful effects of 1^st Respondent's actions are seen by what resulted from this action. Armed with this resolution, Guo Feng filed a series of urgent chamber applications for control of signing rights over the 2^nd Respondent's Bank accounts. Applicant was conveniently not cited in any of these applications in spite of being a major shareholder in 2^nd Respondent….,.”

In my view, the directorship of the Coal Gasification Company was a closed shop if regard is had to clause 4.5 of the BOOT agreement and Article 11 of the Articles of Association.

The directors were appointed, not elected, by the two shareholders in terms of the agreed ratio. An appointee is one who is chosen or placed by someone else in a job or position of responsibility. This does not follow the process of an election which entails a formal appointment following a formal process of voting.

Article 17 referred to elected directors who would otherwise retire by rotation in terms of the provisions of the Regulations to the Companies Act.

In my view, the exclusion by Article 17 of the application of Regulations 90 to 96 in Table A did not take away the shareholders' rights to appoint their own directors to the Board of the Coal Gasification Company.

I accept the argument that Fred Moyo and Savanhu held office as directors of the Coal Gasification Company at the pleasure of Hwange Colliery. I consider that the power to appoint must have entailed the power to remove or to recall.

Having been removed from the Board of Hwange Colliery, and having been expressly recalled from the Board of the Coal Gasification Company, Fred Moyo and Savanhu no longer represented anyone in that company.

To hold that once having been appointed to the Board of that company they occupied the office for life unless removed in the circumstances proscribed by Article 17 would lead to absurd results. Among other things, it would mean Hwange Colliery would cease to have any representation on that Board. Even Taiyuan itself, the majority shareholder, would also cease to have any representation in the event that it also recalled its own appointees as was alleged in respect of Feng and Longmin.

I do not think that it was ever intended that the Coal Gasification Company would, at any time, be controlled by anyone else other than the appointees of the two respective shareholders in the prescribed proportion until the expiry of the BOOT agreement.

In the circumstances, I am prepared to grant the relief sought. After all, it is only an interim measure. The matter shall properly be argued on the return day.

COSTS

Except for Stanbic, virtually all the other parties sought costs against each other on the higher scale.

On the single day that he appeared, Mr Chagonda, for Stanbic, sought costs on behalf of that Bank and that they be paid by whoever would be ordered to pay the costs.

I consider that all the parties have been partially successful in some ways and partially unsuccessful in others. I consider that in view of the convoluted and multi faceted nature of the dispute this is a proper case for each party to bear their own costs.

In the final result it is ordered as follows:

1. Hwange Colliery Company Limited be and is hereby joined as a party to the proceedings instituted in this court under the case references HC4861/13 and HC4895/13.

2. The interim order by consent issued by Honourable Dube J on 24 June 2013 in HC4895/13 be and is hereby amended by the deletion of the name “Fred Moyo” wherever it appears and the substitution thereof with the name “Staford Ndlovu”. The interim signing arrangements agreed to, or ordered, in these matters shall apply in relation to all the Bank accounts for Hwange Coal Gasification Company [Private] Limited.

3. Mr Tendai Savanhu is hereby interdicted and restrained from holding himself out to any person or body whatsoever as one with authority to represent Hwange Colliery Company Limited in any manner or capacity.

4. Mr Tendai Savanhu is hereby further interdicted and restrained from attending any Board meetings of the Hwange Coal Gasification Company (Private) Limited or from signing any documents or making any representations or statement of authority in relation to that company.

5. The application by Hwange Colliery Company Limited for an interim anti-dissipation interdict against the property of Hwange Coal Gasification Company (Private) Limited be and is hereby dismissed.

6. Each party shall pay their own costs.

SC05-20 : GRANDWELL HOLDINGS PL vs ZIMBABWE MINING DEVELOPMENT CORPORATION and MARANGE RESOURCES PL and MBADA DIAMONDS PL
Ruled By: GWAUNZA DCJ, MAVANGIRA JA and MATHONSI JA

This is an appeal against the whole judgment of the High Court handed down on 26 October 2016 dismissing the appellant's application for specific performance with costs.

The facts are that the appellant and the second respondent are each the holders of fifty percent of the issued share capital in the third respondent, a special joint venture company incorporated in terms of a joint venture agreement entered into between the appellant and the second respondent on 21 July 2009.

In terms of the Joint Venture Agreement, the appellant would provide funding for the business of mining diamonds through the third respondent. The second respondent undertook to ensure that the mining rights held under special grants at Marange existed in perpetuity.

The first respondent, which is the sole shareholder in the second respondent, guaranteed the second respondent's performance of its obligations under the agreement.

Although the appellant performed its obligations under the agreement, the second respondent did not pay the special grants' renewal fees. The second respondent let the special grants, in terms of which the mining rights existed, expire.

When that happened, the second respondent did not secure the reinstatement of the special grants. The first respondent, which had guaranteed the second respondent's performance of its contractual obligations, also failed to do anything about that breach of the agreement.

On 30 September 2015, the first respondent addressed a letter to the Permanent Secretary for Mines and Mining Development which, because of its centrality in the resolution of this case, is reproduced hereunder:

“RE: RENEWAL OF THE MARANGE DIAMOND SPECIAL GRANTS: 4718, 4719, 4720, 4765, 5244, 5247, 5249 & 5769

Reference is made to the above matter. As per attached table below, ZMDC has five diamond Special Grants (SG) which expired in October 2013 and one in December 2010. These are SG Nos. 4718, 4719, 4720, 4765 and 5769.

From this date, the Corporation has to raise the required renewal fees, and, in 2014, the Ministry of Mines and Mining Development granted a 12 month exemption on the payment of the renewal fees for the said grants. Given the fact that ZMDC's financial position has remained severely constrained, the Corporation is applying for a further exemption on renewal fees for these SGs, which have currently expired.

Further, given the fact that actual mining is now taking place in the first four of the above SGs, it is necessary for the SGs to be converted from prospecting to mining SGs, a process that also requires cash outlay by ZMDC, which funds the Corporation is currently finding difficult to raise.

In addition, Marange Resources (Pvt) Ltd, a wholly owned subsidiary of ZMDC, which is currently mining on Block B under SG4720, has requested for a valid copy of SG4720, which it requires in its application for exemption of import duty for an X-Ray Transmography Machine (XRT machine) that it intends to import. Unfortunately, the Corporation is not able to assist, given the fact that the SG has expired.

Under these circumstances, therefore, the Corporation is appealing to the Ministry, for the Ministry to reconsider its earlier position not to extend the exemption of payment of renewal SG fees, and grant ZMDC an exemption to update its diamond SGs for a further period of 3 years to 2016, to allow Marange Resources to process its application for exemption of import duty.

Sir, we are kindly requesting for your favourable consideration to our submission of renewal of the ZMDC held diamond Special Grants Nos. 4718, 4719, 4720, 4765, 5244, 5247, 5249 & 5769 and conversion of SGs Nos. 4718, 4719, 4720 from prospecting to mining.

Yours faithfully
S. Simango General Manager.”…,.

It is clear from the contents of the letter that the special grants, in terms of which mining operations were to be carried out by the third respondent, had expired in 2010 and 2013.

The respondents did not have money to pay renewal fees and were thus asking for exemptions from the Secretary. They had relied on exemptions previously to renew the special grants because they again did not have money. If they were to be granted exemptions from paying renewal fees, only then would they apply for renewal or revival of the expired special grants.

The Secretary of Mines and Mining Development was not impressed. He rejected the request for exemptions in a letter to the first respondent dated 22 February 2016. It reads:

“RE: RENEWAL OF THE MARANGE DIAMOND SPECIAL GRANTS: 4718, 4719, 4720, 4765, 5244, 5247, 5249 AND 5769

The above matter refers.

We acknowledge receipt of your letter to our Ministry dated 30 September 2015 contents of which have been noted (copy attached for ease of reference). As clearly admitted and indicated by yourselves, you have neglected or failed to renew the Special Grants that were issued to you, some expired as far back as 2010 and others in 2013. An exemption had been extended to you but there has been no commitment on your part to rectify this anomaly which is in contravention of section 293 of the Mines and Minerals Act [Chapter 21:05].

Instead, you are requesting for a further exemption.

It has also come to our attention that there are some Special Grants that are purported not to have a duration period.

It is trite law that a Special Grant is issued upon application and its issuance is done in terms of section 291 of the Mines and Minerals Act [Chapter 21:05] which demands that a period for the subsistence of the Special Grant shall be specified failure of which renders the Special Grant void. In light of this, these Special Grants shall be deemed to have been granted for the period which the applicant had requested in its application.

After serious consideration of this matter, we do hereby notify you that the Ministry is not in a position to give any further exemptions for the renewal of all Special Grants, namely, 4718, 4719, 4720, 4765, 5244, 5247, 5249 and 5769 that were issued to you and neither are we renewing the same.

Prof. P.F. Gudyanga
Secretary for Mines and Mining Development.”…,.

After the rejection of the request for exemptions, it is common cause that the respondents did not do anything. They did not challenge the Secretary's decision. Neither did they raise money to pay for the renewal or revival of the expired Special Grants.

The appellant then launched an application in the High Court seeking an order directing the respondents to pay renewal fees for the Special Grants and to file renewal applications among other ancillary relief. The application was prompted by the third respondent's inability to carry out mining operations without regularisation of the special mining grants. The application was premised on the respondents' breach of the joint venture agreement.

The first and second respondents opposed the application.

They denied breaching the agreement asserting that they applied for both exemption to pay renewal fees and the renewal of the Special grants to the Secretary for Mines.

It therefore became an issue for determination by the court a quo whether the first and second respondents breached the terms of the Joint Venture Agreement by failing to perform specific acts in pursuance of their contractual obligations.

The court a quo held that the first respondent's letter of 30 September 2015 is indeed an application for renewal of the Special Grants. The court a quo found that the response to the application by the Secretary for Mines dealt with the issues of exemption and renewal of the Special Grants which had expired. The court a quo held that the Secretary for Mines had made a decision not to renew the Special Grants. It would therefore be incompetent, so the court a quo reasoned, for the court to order the Secretary to review his own decision by granting an order for specific performance.

This appeal is the fruit of the appellant's grief with that judgment of the court a quo. The grounds of appeal are that:

1. The court a quo erred and grossly misdirected itself in finding that an application for renewal of the Special mining grants had been filed by the first and second respondents in discharge of their contractual obligations to the appellant;

2. The court a quo erred and grossly misdirected itself in limiting the first and second respondents' contractual obligations to filing an application for renewal of the special mining grants whereas their obligation was to do all that was necessary to ensure the existence, in perpetuity, of the special mining rights.

Whether or not the court a quo correctly held the letter of the first respondent to the Secretary for Mines as an act of specific performance in terms of the parties' agreement

Generally, the policy of the law is to give effect to the contracts of the parties because it is salutary in our jurisdiction to uphold the freedom of the parties to contract lawfully. This notion is embodied in the principle of sanctity of contract.

Once the parties have contracted, it is not open to the courts to rewrite the contract they have entered into. In addition, the court will not excuse any of the parties from the consequences of the contract that they freely and voluntarily entered into with their eyes wide open. This is so even if the consequences are onerous or oppressive. See Magodora & Ors v Care International Zimbabwe 2014 (1) ZLR 397 (S)…,.

As to the remedy of specific performance in the Law of Contract, it is accepted that it is aimed at upholding the contract and obtaining the performance of the terms of the contract as agreed. Indeed, specific performance is the primary or default remedy for breach of contract and is usually claimable.

According to the learned author I MAJA, The Law of Contract in Zimbabwe, 2015, The Maja Foundation…,:

“The general rule, under Roman Dutch Law, is that an innocent party has a right, in every case of breach of contract, to a remedy of specific performance unless there are exceptional circumstances which justify refusal of an order for specific performance.

According to Farmers Co-operative Society (Reg) v Berry 1912 AD 343 at 350:

'Prima facie, every party to a binding agreement who is ready to carry out his own obligation under it has a right to demand from the other party, so far as it is possible, a performance of his undertaking in terms of the contract. As remarked by KOTZE CJ in Thompson v Pullinger the right of the plaintiff to the specific performance of a contract, where the defendant is in a position to do so, is beyond all doubt.'”

See also Smith & Ors v ZESA 2003 (1) ZLR 158 (H)…,; Savanhu v Marere N.O. & Ors 2009 (1) ZLR 320 (S).

However, the right to claim specific performance is predicated on the concept that the party claiming it must first show that he or she has performed all his or her obligations under the contract or is ready, willing and able to perform his or her side of the bargain.

Even then, the court has a discretion, which should be exercised judicially, to grant or refuse a decree of specific performance. It follows, therefore, that the court's discretion should not be exercised arbitrarily or capriciously. See Minister of Public Construction & National Housing v Zescon (Pvt) Ltd 1989 (2) ZLR 311 (S), where…, this Court stated:

“The law is clear. This is a remedy to which a party is entitled as of right. It cannot be withheld arbitrarily or capriciously.”

It is important to consider the specific terms of the contract entered into between the parties which the appellant wishes to enforce.

Clause 6.3 of the Joint Venture Agreement provides:

“6.3 Marange undertakes that it shall forthwith after the signature date and thereafter for the duration of this Agreement –

6.3.1 Pay all necessary fees and make application for the renewal and/or continued existence and do all that may be necessary so as to ensure that the special grants and rights thereunder are in good standing and remain valid for the duration of this Agreement allowing Marange to mine and prospect the concession area in perpetuity…,.”

The appellant's case is that the respondents breached that provision by failing to pay the necessary fees and to make the requisite application for the renewal of the Special Grants. As a result, the Special Grants lapsed.

The respondents submitted that the letter written by the first respondent to the Secretary of Mines, on 30 September 2015, constituted a valid application for the renewal of the Special Grants which application was rejected by the Secretary for Mines. They therefore fulfilled their part of the bargain.

It is common cause that the appellant fulfilled its own obligations in terms of the contract and was therefore entitled to demand specific performance. The court a quo found that the letter of 30 September 2015 was “an application for renewal” and that its heading was very clear needing no further explanation. The court said at p7 of the cyclostyled judgment:

“What is clear from the above is that it is an application for renewal. The heading is very clear and needs no further explanation. The first paragraph makes reference to the heading and therefore the renewal of the special grants.

The second paragraph relates to an exemption to pay renewal fees. Paragraphs 3 and 4 are not relevant to the determination of the issue at hand. Paragraph 4, again, relates to exemptions. The last paragraph puts paid to any doubt what the letter relates to. It talks about renewal.

I agree with Mr Tsivama that there is no procedure or format laid down in JVA as to how the application for renewal is to be submitted.”

With respect, the court a quo took a very simplistic, if not pedestrian, approach to the letter in question.

Clause 6.3.1 of the Joint Venture Agreement required the respondents, first and foremost, to pay all necessary fees for the renewal of the Special Grants. It also required them to make the necessary application for such renewal. It recognised the reality that the payment of fees was a pre-requisite for a valid and successful application for renewal. Such a situation is not what was obtaining on the ground, and, as such, the letter of 30 September 2015 cannot, by any stretch of the imagination, be regarded as a fulfilment of the respondents' obligations under Clause 6.3.1 of the Joint Venture Agreement.

Clearly, it was not a valid or competent application for renewal.

It is clear from the provisions of section 293 of the Mines and Minerals Act [Chapter 21:05] that the payment of renewal fees is central to the validity of an application for renewal. Section 293 of the Mines and Minerals Act provides:

“The person to whom a special grant is issued shall pay the prescribed fee in respect of the issue of a special grant or any renewal thereof.”

It is common cause that the respondents did not pay renewal fees. In fact, all the relevant special grants were allowed to expire years before the letter of 30 September 2015 was written. The contents of that letter are clear that the first respondent was seeking an exemption from paying renewal fees because of an incongruent financial position. Without the payment of renewal fees the renewal could only be done by the benevolence of the Secretary for Mines.

The respondents could not possibly be said to have performed their obligations of ensuring the mining rights existed in perpetuity. The rights had expired.

The court a quo fell into error in that aspect. The letter of 30 September 2015 did not constitute specific performance of the respondents' obligations in terms of the contract.

Whether the respondents did all that was necessary to ensure the Special Mining rights existed in perpetuity

Counsel for the appellant submitted that the obligations of the respondents set out in the contract were much broader than merely submitting an application for renewal of the Special Grants. They were required, so the argument goes, to ensure that the mining rights existed in perpetuity. They failed to perform to such an extent that the special grants expired in 2010 and 2013 - long before the respondents even submitted the letter they relied on.

I agree.

In fact, once it is accepted that the respondents did not pay renewal fees and that they allowed the grants to expire, it cannot be said at the same time that the respondents did all that was necessary to ensure the existence of the special mining rights in perpetuity. They could only so exist if there was full compliance with renewal requirements including the timeous payment of renewal fees and submission of the necessary applications.

Repeated requests for exemptions from payment would never ensure perpetuity as that left everything in the hands of the Secretary for Mines.

Whether the court should exercise its discretion in favour of granting specific performance

Counsel for the respondents submitted that the Secretary for Mines made a decision not to renew the Special Grants which decision is contained in his letter of 22 February 2016 quoted above. He submitted that the court a quo cannot be faulted for concluding that it would be incompetent for the court to direct him to review his own decision by granting specific performance.

Counsel for the appellant, on the other hand, sharply differed with that assertion.

In his view, there was no application for renewal placed before the Secretary for Mines. He could not grant an application which was not made and his response clearly showed his disquiet about the respondents' repeated failure to pay renewal fees.

I have said that the court has a discretion whether to grant specific performance but that discretion should be exercised judicially and not arbitrarily or capriciously. This is because specific performance is a remedy to which a party is entitled to as of right. See Minister of Public Construction & National Housing v Zescon (Pvt) Ltd 1989 (2) ZLR 311 (S).

The court a quo did not consider the circumstances that are relevant in deciding whether to grant a decree of specific performance or not. In its view that was unnecessary because it had come to the conclusion that the respondent's letter to the Secretary for Mines amounted to specific performance. I therefore do not agree with counsel for the respondents that the court a quo exercised judicial discretion and refused specific performance, which discretion can only be interfered with if exercised capriciously or upon a wrong principle.

The discretion was simply not exercised by the court a quo for obvious reasons, namely, its finding that specific performance had occurred.

There is no doubt that the Secretary for Mines was called upon to decide whether or not to grant the respondents exemption from paying renewal fees. He refused to do so because, according to him, an exemption had been granted previously but the respondents showed no commitment to rectify the anomalies. The respondents were not entitled to further exemptions.

What is significant to note is that the respondents' obligations, in terms of the contract, are not to apply for exemptions but to pay renewal fees.

It is clear from the letter of the Secretary for Mines dated 22 February 2016 that if renewal fees are paid the application will be favourably considered.

In light of that, I perceive no ground whatsoever for exercising the discretion reposed upon the court against the granting of specific performance. After all, it is the primary remedy for breach of contract. The appellant has shown that the respondents breached the contract. Specific performance is possible, and, as such, it should be granted.

In the result, it is ordered that:

1. The appeal succeeds with costs.

2. The judgment of the court a quo is set aside and substituted with the following order:

“2.1. The application be and is hereby granted.

2.2. The 1st and 2nd respondents be and are hereby directed to pay renewal fees in respect of the special grants constituting the concession on which the 3rd respondent was carrying out mining operations and which mining grants are referred to in the Joint Venture Agreement and the Shareholders Agreement attached to the application.

2.3. Thereafter, the 1st and 2nd respondents be and are hereby directed to file a renewal application in respect of the said special grants and to provide the renewing statutory authority with all that is required to enable the said authority to process the renewal application including a detailed written motivation to ensure urgent renewal of the special grants.

2.4. The 1st and 2nd respondents shall provide the applicant with copies of the renewal application together with proof of payment of fees.

2.5. The 1st and 2nd respondents shall pay the costs of this application jointly and severally the one paying the other to be absolved.

Appealed
SC24-21 : BIG VALLEY MASTERS (PRIVATE) LIMITED vs SHI JINWU
Ruled By: GWAUNZA DCJ, GUVAVA JA and MAVANGIRA JA

INTRODUCTIONThis appeal arises from the judgment of the High Court in which the court a quo ordered the appellant to pay the respondent the sum of US$89,000 with interest at the prescribed rate calculated from 11 December 2012 to the date of full payment.The appellant is a gold mining company. ...

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HH601-14 : SHI JINWU vs BIG VALLEY MASTERS (PRIVATE) LIMITED and PHILLIMON MUBATA
Ruled By: CHIGUMBA J

Zimbabwe adopted a policy that was dubbed “look east” as a way of combating economic sanctions that were imposed on it by the international community. The “look east” policy encourages a forging of closer business and trade ties with countries in the east as opposed to the west, the traditional former business and trade partners.

When this policy was adopted, a lot of Chinese nationals came to our country in pursuit of business opportunities, especially in the mines and minerals sector. Unfortunately, the language barrier has caused a lot of difficulty in the conclusion of contracts and the implementation of business deals.

The plaintiff is a Chinese national who does not speak English. He relied on the interpretation of a business associate who told him of the terms of the contract that he entered into with a Zimbabwean company called Big Valley Masters (Private) Limited (the first defendant). The company owns gold mining claims in Shurugwi (Sky Rocket Mine 1645). Mr. Phillimon Mubata (second defendant) is a director and shareholder in the first defendant.

The plaintiff issued summons against the defendants on 11 December 2012, claiming payment of USD$89,000 being a sum outstanding in respect of a loan advanced to the defendants, as well as interest thereon at the prescribed rate, and costs of suit.

In his declaration, the plaintiff averred, that, on 13 January 2011 he and the first defendant entered into a written agreement. The first defendant was represented by the second defendant when the agreement was concluded. The terms of the agreement included, among other things, an obligation on the plaintiff's part that he would pay for exploration work at the mine, invest capital and mining equipment, and use the block of claims which constituted Sky Rocket Mine 1645 as surety.

The parties agreed that the block of claims would subsequently be transferred into the name of a new investment company in which they would have equal shares, and which would be exclusively managed by the plaintiff.

The plaintiff averred, further, that, the parties agreed that he would advance a loan in the sum of USD$150,000 to the defendants, subject to repayment on certain conditions, for purposes of discharging pressing debts owed by the first defendant.

On 3 October 2011, the parties entered into a second agreement, in terms of which the defendants allegedly admitted to being indebted to the plaintiff in the sum of USD$89,000 and agreed to repay the loan, while allowing the plaintiff to run the mine.

The plaintiff is aggrieved because none of these undertakings given by the defendants have been honored.

The defendants filed their plea on 15 January 2013.

They did not dispute that the parties had entered into what they called a joint venture agreement relating to gold mining. They averred that the plaintiff breached the terms of the joint venture agreement by failing to provide capital to fund their joint venture, in the agreed sum of USD$150,000.

The second defendant denied that he entered into a loan agreement with the plaintiff, or that he entered into any agreement at all with the plaintiff in his personal capacity. He stated, that, at all times; he dealt with the plaintiff in a representative capacity as a director and shareholder of the first defendant.

In the plea, it was averred that the parties had agreed that any loan sums advanced by the plaintiff would be repaid using the proceeds of production at the mine.

After clearing the loan sums, by offsetting against the proceeds of production, the parties would subsequently enter into a profit sharing agreement.

The defendants averred that the plaintiff breached the agreement by failing to finance production through the agreed USD$150,000, and that this breach caused the collapse of the joint venture.

The defendants averred that the joint venture resulted in loss, which should be borne equally with the plaintiff, as an equal partner in the joint venture.

On 20 May 2013, the defendants filed an amended plea, in which they averred that the terms of the second agreement entered into by the parties were such that the plaintiff was obliged to advance the full USD$150,000, as agreed, before any repayment of that loan could be made.

The averment was that the plaintiff was not entitled to repayment until he paid USD$150,000 to the first defendant in full.

The defendants denied that they prevented the plaintiff from assuming control of the mining operations.

The defendants filed a counterclaim for the payment of USD$61,000 which they alleged was still due and owing to the first defendant in terms of the parties' first agreement.

In his replication to the amended plea and counter claim, dated 22 May 2013, the plaintiff denied being in material breach of the terms of the parties' agreements. In his plea to the counter-claim, he reiterated that the defendants themselves breached the agreement, by refusing to relinquish control of the first defendant's mining operations to him, as agreed.

This matter was referred to trial for the determination of these issues:

1. Whether the plaintiff was obliged to provide USD$150,000 towards the financing of a joint venture agreement.

2. Whether the defendants frustrated the contract and caused the non-fulfillment of its terms and conditions.

3. Whether the defendants breached the contract and caused the plaintiff to cancel it and demand re-payment of the USD$89,000 which he had advanced.

In terms of the joint pre-trial conference minute filed of record, on 29 May 2013, the defendants admitted that they received the sum of USD$89,000 from the plaintiff.

At the trial of the matter, Mr. Shi Jinwu gave evidence and told the court that he met the second defendant in February 2010 at a petrol station. He said that the second defendant told him that he was looking for investors for his mineral claims because he was experiencing financial difficulties, and invited him to form a partnership with him.

The plaintiff said that the second defendant invited him to tour his mining operations. He said that he asked him for a loan of USD$150,000. The loan was to be disbursed in phases. The second defendant offered to give up the certificates to his mining claims as collateral. He offered to let the plaintiff take over the day to day running of the mining activities.

The plaintiff told the court that the parties agreed that if he paid an initial USD$50,000 he would be allowed to take over the mining operations of the first defendant.

He said that he was surprised when the second defendant refused to let him assume control of the mining operations of the first defendant after he had paid the fifty thousand as agreed.

The plaintiff referred to Annexure 'A' to the summons, the agreement which the parties signed on 13 January 2011.

The plaintiff signed on behalf of “Chinese”. The second defendant signed that agreement on behalf of the first defendant. In fact, the plaintiff and second defendant are referred to as representatives.

The plaintiff told the court, that, despite the express terms of the agreement, the defendants refused to let him assume control of the mining operations, and, consequently, he was now seeking re-payment of the USD$89,000 which he had advanced to them.

He referred to a second agreement entered into on 3 October 2011 in which the defendants agreed to let him run the mine for purposes of recovering the USD$89,000 which he had advanced to them.

The plaintiff told the court, that, despite the signature of that second agreement, he was never given a chance to enter the mine.

He said that the defendants never prepared the relevant paperwork towards establishing a tribute agreement. There were no environmental and other requisite mining licenses. The plaintiff said that the second defendant kept on giving him excuses as to why he could not allow him to enter the mine and begin mining operations.

The plaintiff told the court that the spirit of the agreement never materialized.

He decided to cancel the partnership and to get a refund of his USD$89,000.

Finally, the plaintiff told the court, that, in his opinion, the second defendant ought to be bound in his personal capacity because he first knew him in his personal capacity.

During cross examination, the plaintiff told the court that he entered into the agreement with the first defendant in a representative capacity, as a representative of a company which is registered here in Zimbabwe, which he is a director of. He conceded that the name of this company was not part of any of the agreements entered into by the parties.

The plaintiff told the court that the first agreement was drafted by his friend who understands English, and that his friend explained the exigencies of the agreement to him. The plaintiff conceded that due to lack of understanding of the English language, he needed to have the agreements explained to him in Chinese.

He said that he was told of the contents of the agreements before he signed them, so he knew what he was signing for.

He called exhibit 1 a mining partnership agreement.

The plaintiff insisted that the partnership fell apart because he was not allowed to gain entry and to start mining operations.

He denied that the agreement known as exhibit 1 had anything to do with the loan agreement.

The plaintiff told the court that exhibit 1 was never followed that's why the parties entered into a second agreement - which was also never fulfilled.

The plaintiff told the court that the second defendant demanded that he pay USD$100,000 to him before he could allow him to enter and begin mining operations.

The plaintiff could not recall the exact dates when he cancelled the agreements entered into by the parties.

He could not comment on the letter shown to him, of 13 May 2011, from Messrs Danziger & Partners, which letter suggested that the parties had been at cross-purposes from the outset regarding the terms and conditions of their respective agreements.

He was unable to provide a cogent reason why the letter of cancellation did not mention that he had been denied entry to the mine, and suggested that the lawyers possibly misunderstood his instructions because of the language barrier.

The court had no problem following the logic of the plaintiff's evidence.

He was sincere in his belief of the terms of the agreements between the parties as they were explained to him in his language. The court believed that he told the truth as he knew it.

The plaintiff called Ms Hua Ding as his second witness.

She is also a Chinese national currently resident in Zimbabwe and South Africa. She told the court that she and the plaintiff met the second defendant at Gweru service station in December 2010. She was employed by the plaintiff as his assistant at the time. Ms Ding told the court that the second defendant invited them to tour his mining operations in Shurugwi and proposed that he enter into a joint venture agreement with the plaintiff to mine gold. She said that when the parties signed their first agreement, on 13 January 2011, she was not present but she witnessed some of the payments made to the defendants.

Ms Ding told the court that the agreement collapsed because the second defendant frustrated the plaintiff by denying him entry onto the mine site. She said that the second defendant had voluntarily surrendered the registration certificates to the first defendant's mining claims, as collateral against payment in full of the money advanced to the defendants as a loan.

Ms Ding told the court that the second agreement entered into by the parties was prepared by the second defendant.

She denied that the plaintiff breached the terms of this agreement, and insisted that it was the defendants who breached the agreement by failing to allow the plaintiff access to the mining site for purposes of conduction explorations, and to commence mining activities.

During cross-examination, Ms Ding remained steadfast that the plaintiff was denied access to the mine. She was unclear as to the reasons advanced for cancellation of the agreements, but she insisted, that, as far as she knew, the plaintiff was aggrieved when he was denied access to the mine despite clear provisions to the contrary in the two agreements signed by the parties.

Again, the court found this witness to be believable, although she could not shed light on some material aspects of the dispute between the parties. Ms Ding was articulate in English. It's a pity that when some of the material aspects of this matter were taking place she was in South Africa and is unable to assist the court to determine the truth.

The plaintiff's last witness was another Chinese national who is currently resident in Zimbabwe, Mr. Wei Ren.

He told the court that he was the plaintiff's mining manager from 2006 to 2010-2011. He confirmed that he was involved in the signing of the agreement between the plaintiff and the defendants.

Mr. Ren was responsible for structuring the mining partnership agreement.

He confirmed that he personally explained the exigencies of that agreement to the plaintiff, and satisfied himself that the plaintiff had understood the contents, before allowing him to append his signature to the agreement.

Mr. Ren also confirmed that exhibit 10, the second agreement between the parties, had been prepared by the second defendant.

He said that he signed that agreement on the plaintiff's behalf.

Before signing, he had consulted widely with the plaintiff who was in China at the time.

This witness told the court that the second defendant was given a loan by the plaintiff and that, he, in turn, had surrendered the certificates of registration to his mining claims to the plaintiff, as collateral for the repayment of the loan.

Mr. Ren told the court that the partnership collapsed because the second defendant denied the plaintiff access to the mine.

He said that the second defendant kept making excuses, but, at the same time, making requests for money to pay the first defendant's debts, until the plaintiff had disbursed a total sum of USD$89,000 to the defendants.

The witness told the court that the plaintiff lost his confidence in the second defendant because of the numerous lies he was told, and that, consequently, he elected to cancel the agreement of partnership.

He said that the second defendant never gave his permission to the plaintiff to commence mining operations, but, instead, kept on making incessant demands for more money.

Mr. Ren disputed the assertion that it was the plaintiff who breached the agreement between the parties. He insisted that it was the second defendant who failed to hold up his end of the bargain.

During cross examination, Mr. Ren confirmed that the plaintiff understood the entire contents of both agreements.

He told the court that a technical team was denied entry onto the mine after the initial USD$50,000 deposit had been paid. This happened fifteen (15) days after 13 January 2011, when the first agreement was signed.

The witness was unable to give a satisfactory explanation as to why the letter of cancellation of the agreement, dated 13 May 2011, had not mentioned that the plaintiff had been denied entry onto the mine as part of the reasons for cancellation.

When he was pressed, he blamed the legal practitioner for not following the plaintiff's instructions.

When it was suggested to him that the plaintiff's breach of clause 8 of the second agreement was the cause of the failure of the partnership, Mr. Ren denied this strenuously.

The plaintiff then closed its case.

Mr. Phillimon Mubata, the second defendant, testified on behalf of both defendants.

He told the court that it was the plaintiff who approached him and proposed that they enter into a joint venture. He said that this was after the plaintiff had proposed to buy the first defendant's mining claims and he had refused.

The second defendant told the court that the plaintiff was involved in a chrome mining project near to where the first defendant's mining claims were. He said that, contrary to what had been asserted by the plaintiff, the first defendant's legal documents were up to date, and all the requisite mining licenses were in place, and had always been in place.

The second defendant told the court that the parties agreed that a total of USD$150,000 would be paid to the first defendant, with an initial USD$50,000 to be paid, where after the second defendant would go to China with the plaintiff where water purification equipment would be bought, and paid for by the plaintiff, using the balance of USD$100,000.

After that, the parties would mine together using a new company which would be jointly owned.

He said that the parties agreed that the USD$150,000 would be repaid to the plaintiff using the proceeds of their joint mining efforts.

The second defendant told the court that the plaintiff breached the parties' agreement by failing to mount an exploration exercise at the mine. He said that he formed the view that the plaintiff ran out of money and was unable to bring the requisite equipment onto the mine. He also said that the plaintiff failed to bring technical experts onto the mine to conduct viability surveys as agreed.

The second defendant denied that the plaintiff was ever denied access to the mine. He said that at all material times, the plaintiff had personnel from his company present at the mine, taking soil samples, and finishing construction of certain buildings on the mine which they intended to use to accommodate their employees.

The second defendant told the court that the reason why the plaintiff purported to cancel the parties' first agreement was because he had refused to sell the mine to the plaintiff or to transfer the claim registration certificates to him.

On exhibit eleven, the parties' second agreement, the witness told the court that the plaintiff was extensively consulted over the telephone by Mr. Wei, and that he authorized Mr. Wei to sign the agreement on his behalf.

According to the second defendant, part of the problem with this matter is that the plaintiff relied entirely on Mr. Ren's interpretation and understanding of things, and there is a possibility that Mr. Ren could have distorted some things in his interpretation from English to Chinese, because Mr. Ren had ambitions to go into business for himself.

During cross-examination, the second defendant denied that it had ever been the parties' intention that he be personally liable or a party to the agreements in his personal capacity. He denied ever receiving any money in his personal capacity, and insisted that all transactions were done in the name of the first defendant, and that he never bound himself as surety.

Mr. Isaac Mhere testified as the defendant's second witness.

He said that he is employed as a Finance and Administration manager by the first defendant, and that the plaintiff, together with a group of other Chinese investors, came to the mine in January 2011 and asked if they could tour the mine and look at the mining operations.

He knew the plaintiff from the mine next door, so he agreed.

Mr. Mhere asked the second defendant for permission to allow the Chinese investors to tour their mining operations, and permission was granted.

Later, he was involved in the discussions for a joint venture, and present at the signing of the first agreement.

The witness told the court that the plaintiff paid the initial deposit of USD$50,000 in bits and pieces, and not as a lump sum as agreed. He personally receipted the payments. He said that the fifty thousand was not paid by the agreed date; it was paid much later than that.

Mr. Mhere said that the plaintiff was never denied access to the mine. He is in charge of the day to day running of the mine, and, if access was to be denied to the plaintiff, it would have been denied by him because he was in charge at the mine site and the second defendant normally operated from offices in Gweru city.

Mr. Mhere told the court, that, the purpose of the second agreement entered into by the parties was to rescue the first agreement and make it workable.

He said that the plaintiff breached the second agreement by failing to pay USD$61,000 as it stipulated; he failed to form a joint venture company; he failed to bring in equipment; he failed to conduct an exploratory survey; and he failed to provide working capital.

During cross examination, Mr. Mhere was adamant that the plaintiff was allowed access to the mine immediately after the first agreement was signed. He said that daily meetings were held on the site at the mine with the plaintiff's employees. He said the plaintiff was never blocked from coming onto the mine.

The defendant closed its case at this juncture.

The question for determination is a simple one: the Court must decide who is telling the truth between the plaintiff and the second defendant, regarding the question of breach of the parties' respective agreements.

Once the court determines this question, the next matter for consideration will be whether the plaintiff is entitled to be refunded USD$89,000, or whether the defendant is entitled to specific performance, and to payment of USD$61,000.

The law that governs contractual relationships is clear.

In interpreting a contract, a court must determine what the intention of the parties was when they entered into a contract.

In this case, did the parties intend to enter into a joint venture agreement in terms of which the plaintiff loaned one or both the defendants the sum of USD$150,000, or did the parties enter into a mining partnership agreement, in terms of which the plaintiff agreed to loan the partnership USD$150,000 which was to be re-paid from the proceeds of the mining venture?

The evidence shows that the parties had different ideas about their rights and obligations which emanated from both agreements which they entered into.

Were they ever of one mind, or there was never any consensus ad idem?

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Approach, Partnership Agreement, Joint Ventures, Consortiums and Nature of the Business Relationship

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Approach, Partnership Agreement, Joint Ventures, Consortiums and Nature of the Business Relationship

HH01-09 : CONSTANTINOS BAKARIS vs GEORGE KATTAVENOS Ruled By: KUDYA J

HH01-09 : CONSTANTINOS BAKARIS vs GEORGE KATTAVENOS Ruled By: KUDYA J

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Law Portal
Zimbabwe

HH01-09 : CONSTANTINOS BAKARIS vs GEORGE KATTAVENOS
Ruled By: KUDYA J

HH01-09 : CONSTANTINOS BAKARIS vs GEORGE KATTAVENOS
Ruled By: KUDYA J

HH01-09 : CONSTANTINOS BAKARIS vs GEORGE KATTAVENOS
Ruled By: KUDYA J

HB74-09 : PATRICK SIKHOSANA vs MTHANDAZO DUBE and SIBANGANI NCUBE and VUSA DUBE
Ruled By: KAMOCHA J

HB74-09 : PATRICK SIKHOSANA vs MTHANDAZO DUBE and SIBANGANI NCUBE and VUSA DUBE
Ruled By: KAMOCHA J

View Appeal
HH126-11 : LAWRENCE BERNARD GWARADA vs DOUGLAS TANYANYIWA and DOUGLAS WARRIORS FOOTBALL CLUB
Ruled By: MUTEMA J

View Appeal
HH178-14 : WILLOUGHBY'S INVESTMENTS (PRIVATE) LIMITED vs PERUKE INVESTMENTS (PRIVATE) LIMITED and THE HONOURABLE MR JUSTICE (Ret) A. R. GUBBAY SC
Ruled By: ZHOU J

SC03-17 : HAROLD CROWN and PORTRIVER INVESTMENTS (PRIVATE) LIMITED vs ENERGY RESOURCES AFRICA CONSORTIUM (PRIVATE) LIMITED and ENERGY RESOURCES AFRICA (PRIVATE) LIMITED
Ruled By: ZIYAMBI JA, GWAUNZA JA and PATEL JA

HB90-16 : L. SACRE KWETE MINGA vs ITAYI MATIVONESE GUNDA
Ruled By: TAKUVA J

HB100-16 : TEBEKWE SANDS and MATOVU INVESTMENTS JOINT VENTURE vs MIKE G. HUGHES
Ruled By: TAKUVA J

HH128-06 : DOBROCK HOLDINGS (PVT) LTD and TURNER AND SONS (PVT) LTD vs TURNER AND SONS (PVT) LTD and ANTHONY TURNER and MARTIN E. KING and ZAMBEZI PADDLE STEAMER (PVT) LTD and DOBROCK (PVT) LTD
Ruled By: KUDYA J

HH223-13 : HWANGE COLLIERY CO. LTD and HWANGE COAL GASIFICATION CO. PL vs HWANGE COAL GASIFICATION CO. PL and TENDAI SAVANHU and KINGDOM BANK LTD and STANBIC BANK LTD and GUO FENG and ORS
Ruled By: MAFUSIRE J

HH223-13 : HWANGE COLLIERY CO. LTD and HWANGE COAL GASIFICATION CO. PL vs HWANGE COAL GASIFICATION CO. PL and TENDAI SAVANHU and KINGDOM BANK LTD and STANBIC BANK LTD and GUO FENG and ORS
Ruled By: MAFUSIRE J

SC05-20 : GRANDWELL HOLDINGS PL vs ZIMBABWE MINING DEVELOPMENT CORPORATION and MARANGE RESOURCES PL and MBADA DIAMONDS PL
Ruled By: GWAUNZA DCJ, MAVANGIRA JA and MATHONSI JA

Appealed
SC24-21 : BIG VALLEY MASTERS (PRIVATE) LIMITED vs SHI JINWU
Ruled By: GWAUNZA DCJ, GUVAVA JA and MAVANGIRA JA

View Appeal
HH601-14 : SHI JINWU vs BIG VALLEY MASTERS (PRIVATE) LIMITED and PHILLIMON MUBATA
Ruled By: CHIGUMBA J