MAKONESE
J:
The
proceedings in this matter relate to interpleader relief being sought
by the claimant pursuant to the provisions of Order 30 of the High
Court Rules 1971. As contemplated by the provisions of Order 30, Rule
208 of the Rules, the applicant has declared no interest in the
matter other than in respect of his costs and charges. The applicant
undertakes to comply with any order or direction given by this court
in accordance with the provisions under Rule 208 of the Rules.
The
judgment creditor was awarded judgment against Christian Van Wyk
under case number HC12341/15 for the payment of the sum of
US$64,643,20 together with interest and costs of suit. In execution
of the order, the judgment creditor instructed the applicant to
attach various movables.
On
24th April 2018, the applicant attached in execution property located
at Henfrick Mine, Shangani. The property included a compressor, a
John Deere tractor, a Nissan NP 300 motor vehicle, a grinding mill, a
electric motor, 2 x tractor bodies, 6 trailers, 10,000 tonnes of
metal and KIPO generator and various other movables.
The
claimant lay claim to the attached property and duly instructed the
applicant to institute interpleader proceedings.
The
claimant contended that the property belonged to it and not to the
judgment debtor. Both claimant and the judgment creditor have filed
documents in support of their claims. It is against this background
that this court is being called upon to decide on these three
principal issues:
1.
Whether the claimant is a separate legal entity from the judgment
debtor.
2.
Whether the circumstances of the case justify the lifting of the
corporate veil.
3.
Whether the interpleader claim should succeed.
It
is a well established principle of our law that a company bears
separate legal personality from the individuals who incorporate it.
This time honoured principle was laid out in Salomon v Salomon &
Company Ltd [1897] AC 22.
It
is trite that for the corporate veil to be lifted there ought to be a
justifiable legal and factual basis for doing so.
On
the facts of this matter there can be no dispute that the claimant is
a separate legal entity from the judgment debtor. The fact that the
judgment debtor may be a director of the claimant does not per se
imply that the claimant and the judgment debtor are one and the same
entity.
The
courts will not lightly pierce the corporate veil, and will do so
only when it is demonstrated that a party is seeking to hide behind
the shield of the corporate veil.
In
Deputy Sheriff Harare v Trimpac Investments (Pvt) Ltd & Another
HH121-11, the court cited with approval US v Milwaukee Refrigerator
Transit Company (1905) 42 Fed at page 255 as follows:
“When
the notion of a legal entity is used to defeat public convenience,
justify wrong, protect fraud or defend crime, the law will regard the
corporation as an association.”
The
question which therefore arises is whether the judgment debtor,
Christian Van Wyk is the alter ego of the claimant.
I
hold the view that a company is considered to be a mere alter ego if
it is incorporated for the sole benefit of the person in question,
who seeks to hide behind the veneer of corporate liability. Further,
the day to day running of that company ought to be that of the person
in question.
On
the papers filed by the parties in this matter it cannot be said by
any stretch of imagination that it has been established that the
business of the claimant is solely that of the judgment debtor.
In
any event, the judgment debtor is not the sole director of the
company.
This
issue was addressed in the case of Cape Pacific Ltd v Lubner
Investments (Pvt) Ltd and Others 1993 (2) SA 784 (C), where the court
observed as follows:
“When
the corporation is the mere alter ego or business conduct of the
person it may be disregarded …”
In
the matter before me, no fraud has been alleged. The judgment
creditor has not alleged that the claimant was organised as a device
to evade an outstanding legal obligation and to frustrate execution.
The
separate legal existence between Christian Van Wyk and the claimant
has to be maintained and observed by this court.
In
interpleader proceedings it is trite that the onus is usually upon
the claimant to set out such facts as would prove his/her ownership
of the attached property on a balance of probabilities. In such
proceedings the claimant is, as a general rule, made the plaintiff,
and the burden rests upon him where the goods seized were at the time
of seizure in the possession of the judgment debtor, possession being
prima facie evidence of title.
If,
however, the claimant was in possession at the time of seizure, the
burden of proof may be upon the execution creditor, thus reversing
the ordinary rule, and the execution creditor may be made plaintiff.
See The Deputy Sheriff of the High Court v Shepherd Mayaya & Ors
HH494-15.
The
claimant refuted the allegations that the property belonged to the
judgment debtor and in a bid to prove ownership of the attached
property, the claimant attached some receipts and agreements of sale
as proof of the attached assets.
An
agreement of sale is taken as prima facie proof of ownership.
Where
a claimant tenders some acceptable proof of ownership of the attached
goods, then the onus must necessarily shift to the judgment creditor
disproving the claimant's ownership of the attached gods.
It
is not disputed that the attachment was made at claimant's business
address at Henfrick Mine at Shangani. The property was not attached
at the debtor's personal address and therefore the presumption that
the property belonged to the debtor does not arise. See Deputy
Sheriff Marondera v Travese Investments (Pvt) Ltd & Anor HH11-
09.
The
issue to be resolved is whether in the circumstances of this case the
claimant has proved on a balance of probabilities that all the
attached property belonged to it and not the judgment debtor.
I
have already noted that the claimant produced documentation proving
ownership of most of the attached goods. In particular, an agreement
for the Nissan NP 300 motor vehicle, an invoice for the purchase of
the KIPO generator, and a fixed asset register for property belonging
to the claimant as at 31st December 2017 were produced.
What
is required in interpleader proceedings is proof on a balance of
probabilities indicating that the attached property belongs to the
person claiming it. The claimant is not required to prove beyond
reasonable doubt that each and every item listed on the writ of
execution belongs to it. This is more so where the attached property
is not found at the judgment debtor's personal address.
The
claimant has shown that most of the attached property belongs to the
company and relevant documents have been produced. In the result, the
claimant has succeeded in proving on a balance of probabilities that
the attached property does not belong to the judgment debtor. I
therefore make the following order:
1.
The claimant's claim succeeds.
2.
The Deputy Sheriff is ordered to release forthwith all the attached
property to the claimant.
3.
The judgment creditor is ordered to pay the costs of suit including
the costs of execution.
Messrs
Dube-Banda, Nzarayapenga & Partners, applicant's legal
practitioners
Ncube
& Partners, claimant's legal practitioners
Mhishi
Nkomo Legal Practice c/o Danziger & Partners, judgment creditor's
legal practitioners
