BHUNU
JA:
This
appeal from the High Court has its genesis in the Magistrates Court
which acquitted both appellants on one charge of fraud as defined in
s136 of the Criminal Law (Codification and Reform) Act [Chapter
9:23]
and, secondly, operating an unregistered trust in contravention of s9
of the Private Voluntary Organisations Act [Chapter
17:05].
Aggrieved
by the acquittal of both appellants on the first count the respondent
appealed to the High Court (the court a
quo).
The
court a
quo
after full contest found that the trial court erred and misdirected
itself in that it misconstrued the facts in acquitting both accused.
On the basis of such finding it adjudged that the trial court ought
to have found both accused guilty as charged. It thus upset the
judgment acquitting the appellants and issued the following order:
“Accordingly
the court orders as follows:
1.
The appeal against the acquittal of first and second respondents (Now
appellants) in CRB R856 succeeds.
2.
The matter is remitted back to the trial court for sentencing.”
PRELIMINARY
OBJECTION
At
the commencement of the hearing, counsel for
the
respondent raised a preliminary objection arguing that the first
appellant, Israel Tangwena, should be barred from being heard on
account that he is a fugitive from justice on a warrant of arrest.
Counsel
for the appellants countered that they were taken by surprise as they
were not served with any warrant of arrest.
The
issue was being raised for the first time at the appeal hearing.
It
would be unfair and unjust for the respondent to ambush them with an
issue never raised before in the pleadings and heads of argument. In
any case, the same arguments for the second appellant would apply to
both appellants on the merits. There would therefore be no prejudice
if the first respondent was heard by the court.
Having
considered the appellant's response, counsel for the respondent
promptly withdrew his preliminary objection with the court's
approval.
FACTUAL
BACKGROUND
The
facts giving rise to both charges are hotly contested in the main.
What is however not in dispute is that the complainant, Douglas
Mamvura, was the owner of a company called Hedgehold Trading (Pvt)
Ltd trading as Manna Brands.
On
the other hand, the appellants were the owners of an agri-business
styled Makonde Industries. The business was in financial distress and
consequently under liquidation. Desirous to revive their
agri-business, the appellants approached the complaint with a
proposal for Hedgehold to buy the troubled agri-business and assume
its liabilities. It was a term of the agreement that the complainant
would allot the appellants shares in the company.
It
was further proposed and agreed that, because the complainant had a
clean financial record with the banks, he would be responsible for
obtaining loans from his bank and other financiers to fund the new
joint venture agri-business under the style of Hedgehold (Private)
Limited.
The
complainant bought into the idea and it was agreed that, as the sole
financier of the new joint venture rebranded Hedgehold (Pvt) Ltd, he
would be one of the Directors, Executive Chairman and majority
shareholder of the company. The other minority shareholders would be
the two appellants and the late Chimbindi Fanuel. Open Tribe
Foundation Trust was to be the fifth shareholder.
The
initial CR2 allotted the company's shares as follows:
1.
Douglas Mamvura (Complainant) 75%
2.
Tangwena Israel (1st
Appellant) 11%
3.
Muocha Tonderai (2nd
Appellant) 5%
4.
Chimbindi Fanuel (late) 5%
5.
Open Tribe Foundation Trust 4%
It
is common cause that the fifth shareholder, Open Foundation Trust,
was unregistered. Its object was nevertheless to cater for the
welfare of underprivileged orphans, widows, HIV and AIDS victims.
This
forms the basis of the second allegation against the appellants,
which is however not relevant to this appeal.
In
pursuit of the agreement, the complainant mortgaged his home and
various other properties, including his wife's car, to raise a
total of US$350,000 which he ploughed into the agri-business. The
business venture kick started with the complainant closely guarding
his investment for fear of losing his mortgaged properties and
investment.
The
learned judge in the court a
quo
found
that the strict administrative measures adopted by the complainant
must have unsettled the other Directors, thereby generating conflict
and irreconcilable differences.
The
conflict culminated in the minority Directors locking out the
complainant.
They
eventually filed a new CR2 with the Registrar of Companies in a bid
to strip the complainant of all his rights and interest in Hedgehold.
Despite
their concerted endeavour to terminate their business relationship
with him, they continued to hold onto his investment to his exclusion
and detriment.
In
a bid to achieve their fraudulent scheme, the appellants are alleged
to have crafted and filed fraudulent CR2, CR11 and CR14 documents
with the Registrar of Companies to divest the complainant of his
Directorship and shareholding in Hedgehold.
The
appellants denied the allegations of fraud both in the Magistrates
Court and in the court a
quo
on appeal.
THE
ISSUES FOR DETERMINATION
The
appellants attacked the court a
quo's
judgment on both procedural and substantive grounds. The grounds of
appeal however raise one crisp issue for determination. The single
issue for determination is: Whether or not the court a
quo
correctly found the appellants guilty of fraud as charged.
WHETHER
OR NOT THE COURT A
QUO
CORRECTLY FOUND THE APPELLANTS GUILTY OF FRAUD AS CHARGED
The
appellants challenged their conviction on the basis that the
respondent failed to discharge the onus of proving the essential
elements of fraud beyond reasonable doubt.
Section
136 of the Criminal Law (Codification and Reform Act) [Chapter
9:23]
provides for the definition and essential elements of fraud as
follows:
“136
Fraud
Any
person who makes a misrepresentation -
(a)
intending to deceive another person or realising that there is a real
risk or possibility of deceiving another person; and
(b)
intending to cause another person to act upon the misrepresentation
to his or her prejudice, or realising that there is a real risk or
possibility that another person may act upon the misrepresentation to
his or her prejudice;
shall
be guilty of fraud if the misrepresentation causes actual prejudice
to another person or is potentially prejudicial to another person,
and be liable to:
(i)
a fine not exceeding level fourteen or not exceeding twice the value
of any property obtained by him or her as a result of the crime,
whichever is the greater; or
(ii)
imprisonment for a period not exceeding thirty-five years; or both”.
The
Act defines the offence of fraud in simple though somewhat frosty and
verbose language, such that it needs further elucidation to give
effect to the intention of the lawmaker.
In
plain layman's language, fraud may however be defined as
dishonestly making a false misrepresentation with the intention to
cause actual or potential prejudice to another person.
The
intention of the legislature in s136 of the Act was to proscribe and
punish theft by deceitful means.
In
the context of the statutory definition of fraud, its essential
elements may be paraphrased as follows:
1.
Making a misrepresentation to another person.
2.
With the intention to cause another person to act on the
misrepresentation to the actual or potential prejudice of any person.
Section
136 of the Act is couched in broad terms encompassing a situation
where the misrepresentation is made to a person other than the
subject of the intended prejudice. To constitute fraud, it is
sufficient that a misrepresentation is made to any person with the
intention of causing any other person actual or potential prejudice.
In
casu,
it does not therefore matter that the misrepresentation was made to
the Registrar of companies with the intention of causing prejudice to
the complainant.
It
is plain from the evidence led in the trial court that the appellants
completed and submitted the alleged fake fraudulent CR2 document
dated 23 January 2013. The alleged fake CR2 form now reflects that
all the shares in Hedgehold were allotted to Open Tribe Foundation
Trust on 25 January 2013. The State alleged that the fake CR2 was
backed up by an equally fraudulent special resolution of Hedgehold
crafted in the following terms:
“IT
WAS RESOLVED THAT:
1.
Cancellation
of CR2
That
the unauthorised CR2 which sought to change the ownership of the
company in contravention of paragraph 4 and 5(b) of the company's
Articles of Association be amended and replaced.
2.
Allotment
of shares
That
the unissued shares in the company being 1870 (one thousand eight
hundred and seventy) shares of 1 (one) dollar each be allotted in
full to Open Foundation Trust Trading and that a form CR2, share
allotment form, giving effect to the allotment be lodged with the
Registrar within the prescribed time.”
The
effect of the amended CR2 form was to deceitfully strip and divest
the complainant of his entire shareholding and huge investment in
Hedgehold Pvt Ltd to the tune of US$350,000 without his consent.
We
therefore find no merit in the appellants' complaint that the court
a
quo
misdirected itself in substituting its own discretion for that of the
trial court. This is because the trial court's acquittal of the
accused in the face of overwhelming evidence was irrational and
grossly unreasonable.
In
Chiodza
v Siziba,
relied upon by the appellants, this Court held that:
“The
general rule regarding factual findings made by a trial court is that
they will not be upset by an appellate court unless there had been a
gross misdirection by that court on the facts so as to amount to a
misdirection in law in the sense that no reasonable tribunal applying
its mind to the same facts would have arrived at the conclusion
reached by the lower court.”
In
this case, the basis of the court a
quo's
interference was the failure by the magistrate to appreciate the full
extent of the State's case and the evidence on record leading to a
failure of justice.
The
court a
quo
found that there was clear cogent expert evidence establishing beyond
reasonable doubt that the documents admittedly crafted and presented
to the Registrar of companies by the appellants to the prejudice of
the complainant were fraudulent.
A
perusal of the record of proceedings shows that the learned judge a
quo's
remarks, at p10 of the cyclostyled judgment, to the effect that the
trial magistrate strangely went out of his way to justify the
fraudulent acts of the appellants, are beyond reproach.
That
being the case, the court a
quo
cannot be faulted for finding that the trial court misdirected itself
in acquitting the appellants in the face of overwhelming evidence
establishing the accused's guilt.
DISPOSITION
That
the State proved the accused's guilt beyond reasonable doubt is
beyond question. For that reason, the appeal can only fail.
It
is accordingly ordered that the appeal be dismissed.
GWAUNZA
DCJ: I
agree
PATEL
JA: I
agree
Warara
and Associates,
appellants'
legal practitioners
National
prosecuting Authority,
respondent's
legal practitioners.
1.
SC4/15 at p6
