CHAMBER
APPLICATION
BHUNU
JA:
[1] This
is an opposed application for condonation of late noting of an appeal
and extension of time within which to file a notice of appeal. The
applicant brings the application in terms of Rule 43 of the Rules of
Court 2018.
THE
PARTIES
[2] The
1st
applicant is a former employee of the 3rd
respondent (the company). He was employed as its Chief Executive
Officer. He was dismissed from employment sometime in 2015 following
disciplinary proceedings. The 1st
applicant claimed to own 30% shares in third respondent through the
agency of the 2nd
applicant a duly incorporated company and to that extent a juristic
person. His claim to the directorship of the company is in dispute.
He claims to be duly authorised to represent the second applicant, a
factor which is also disputed by the respondents.
[3] The
1st
and 2nd
respondents are natural persons bearing the same surname of
'Chingwena'. The 3rd
to 9th
respondents are duly incorporated companies. The 10th,
11th,
15th-22nd,
29th,
33rd
respondents
are also duly incorporated companies clothed with juristic
personality. The remaining parties though cited did not appear to
oppose the appeal.
[4]
The 4th
to 38th
respondents are companies in which the 1st
appellant alleges the company has investments liable to his 30% claim
of the shares allegedly held by the 3rd
respondent therein.
THE
LAW
[5] The
law relating to applications of this nature is well known such that
it cannot be the subject of any controversy. The requirements for the
application to succeed were spelt out in Kombayi
v Berckout.
These are:
(a) The
extent of the delay;
(b) the
reasonableness of the delay; and
(c) the
prospects of success on appeal.
THE
EXTENT AND REASONABLENESS OF DELAY
[6] It
is common cause that the applicants filed their appeal within the
prescribed 15 days period upon delivery of judgment on 7 September
2020. Owing to the tardiness of their legal practitioners they
fortuitously failed to serve a copy of the appeal on the Registrar of
the court a
quo
in
breach of the Rules. The registrar was served only a day after the
expiry of the dies
induciae.
In the circumstances, I find that the delay of only one day is not
inordinate and that there is a reasonable explanation for the delay.
Having come to that conclusion what remains to be determined are the
appellants prospects of success on appeal.
BRIEF
SUMMARY OF THE CASE
[7] The
1st
applicant approached the court a
quo
in terms of section 196(1) as read with section 198 of the Companies
Act [Chapter
24:03]
complaining that the affairs of the company Croco Holdings (Private)
Limited are being or have been conducted in a manner that is
oppressive or unfairly prejudicial to the interests of some part of
the members including himself. The section provides as
follows:
“196
Order on application of member
(1) A
member of a company may apply to the court for an order in terms of
section one
hundred and ninety-eight
on
the ground that the company's affairs are being or have been
conducted in a manner which is oppressive
or
unfairly prejudicial to the interests of some part of the members,
including himself, or that any actual or proposed
act
or omission of the company, including an act or omission on its
behalf, is or would be so oppressive or
prejudicial.”
[8] The
1st
applicant deposed to the founding affidavit wherein he averred that
he owns 30% shares in the company whereas the 1st
respondent owns the remaining 70%. His complaint is that the 1st
respondent has been and is abusing his position as the majority
shareholder. He alleged that the 1st
respondent
was conducting the company's affairs in an oppressive and
prejudicial manner to its members including him. He averred that the
1st
respondent and he were the promoters and founding directors of the
company. The 1st
respondent had however fraudulently removed his name from the
company's register of directors.
[9] He
proffered some documentary evidence tending to show that he was an
initial subscriber of shares and Director of the company. To that end
he submitted that all the essential company records showed that he
owned 30% of the shares in the company. He contended that he
subscribed for the shares in terms of a shareholding agreement he
signed on 27 May 2006.
[10] The
first applicant cast aspersions on the 1st
respondent alleging that since 2014 he had conducted himself contrary
to the shareholders agreement. He further accused the 1st
respondent of making decisions outside the forum of the Board of
Directors.
[11] It
was his averment that in frustration he offered to sell his shares to
the 1st respondent
but he was evasive and non-comital. Eventually the 1st
respondent turned the tables against him and began to dispute his
shareholding in the company. They however subsequently met and agreed
that the shares be evaluated before disposal. Despite having ordered
that evaluation of the shares be carried out, the 1st
respondent again made an about turn and denied ever having entered
into such an agreement with him.
[12] Having
failed to resolve their differences amicably, the 1st
applicant alleged that the 1st
respondent proceeded to suspend him from work leading to his
dismissal from employment. He has since challenged his dismissal in
the courts. On that score he complained that the first respondent had
violated his rights as a shareholder which rights are protected by
the Act. Consequently, he implored the court a
quo
to provide him with the following relief:
“WHEREUPON
after reading documents filed of record and hearing counsel;
IT
BE AND IS HEREBY ORDERED THAT:
1. A
forensic audit and valuation of the 3rd
respondent and its investments in the 4th
to 38th
respondent be and is hereby ordered to be conducted by an accounting
firm registered in terms of the Public Accounts and Auditors Act
[Chapter
27:12]
to be appointed by the 39th
respondent within 5 days of granting this order, all fees and costs
of the evaluation being paid by the 3rd
respondent.
2. 3rd
respondent be and is hereby ordered to pay the applicants the full
value of thirty percent (30%) of its total issued ordinary shares and
30% of its investments in the 4th
to the 38th
respondents within 5 days of completion of the forensic audit and
valuation such value having been established in terms of paragraph 1
above.
3. 3rd
respondent be and is hereby directed to reduce 3rd
respondent's share Capital once the full amount of its thirty
percent (30%) issued ordinary shares have been paid by 3rd
respondent.
4. The
Sheriff of the High Court and/or his lawful deputies be and are
hereby ordered to execute terms of paragraph 2 above.
5. The
1st
respondent pays the costs of suit on a legal practitioner and client
scale.”
[13] The
respondents opposed the application arguing that the 1st
respondent was never a shareholder of the company. They accused him
of relying on forged fraudulent documents and challenged him to prove
how he had acquired the alleged company shares. Riding on that
challenge they raised a point in
limine
disputing his locus
standi.
They
submitted that only a member of a company in the form of a
shareholder can bring an application in terms section 196 as read
with section 198. The 1st
respondent not being a shareholder of the company was not a member of
the company and therefore not qualified to bring the application
before the court a
quo.
[14] As
a second point in
limine
the
respondents challenged the 1st
applicant's authority to represent the 2nd
applicant.
FACTUAL
FINDINGS OF THE COURT A
QUO
[15] The
court a
quo
found that the application was founded on material falsehoods based
on fraudulent documents. Both the shareholders agreement and the
share transfer documents were adjudged to be fraudulent documents.
It also found that in relation to the point in
limine
the applicant was unable to explain two conflicting CR2 documents.
Thus the court a
quo
upheld both points in
limine.
[16] Ultimately
the learned judge a
quo
upheld the two preliminary points and in the process found that the
application was bad at law in that it did not meet the requirements
of section 95 as read with section 196 of the Act. In the result he
dismissed the application with costs.
PROSPECT
OF SUCCESS ON APPEAL
[17] The
onus
of proof lies squarely on the 1st
applicant to prove that if granted the court's indulgence he has
reasonable prospects of success on appeal. The case of Essop
v S
provides guidance on what is required of the applicant to discharge
the onus of proof. In that case the court had occasion to remark
that:
“What
the test for reasonable prospects of success postulates is a
dispassionate decision, based on the facts and the law that a court
of appeal could reasonably arrive at a conclusion different to that
of the trial court. In order to succeed therefore, the applicant
must convince this court on proper grounds that he has prospects of
success on appeal and that those prospects are not remote, but have a
realistic chance of succeeding. More is required to be established
than that there is a mere possibility of success, that the case is
arguable on appeal or that the case cannot be categorised as
hopeless. There must in other words, be a sound, rational basis for
the conclusion that there are prospects of success on appeal.”
[18] The
applicants contention is that they have bright prospects of success
on appeal because the court a
quo
ignored uncontested evidence which proved that the 1st
applicant was indeed a shareholder in 3rd
respondent. The 1st
applicant further argued that the court a
quo
erred in holding that the shareholders agreement and the share
certificates were fraudulent documents.
[19] As
we have already seen the respondents challenged the 1st
applicant's locus
standi
and invited him to prove what he alleged. The respondent did not have
to do more than to simply challenge the 1st
appellant to bring forth credible evidence that would reasonably
persuade the appeal court to come to a different decision from that
of the court a
quo.
[20] The
cardinal factual issue for determination in the court a
quo
was
whether the 1st
applicant was a shareholder of the company. It is settled law in our
jurisdiction that an appeal court will not easily interfere with
factual findings made by a lower court. To that extent, case law has
set the test for discrediting and upsetting factual findings by a
lower court so high that they cannot easily be overturned on appeal.
In Reserve
Bank of Zimbabwe v Granger and Anor
This
Court held that:
“An
appeal to this court is based on the record. If it is to be related
to the facts there must be an allegation that there has been
misdirection on the facts which is so unreasonable that no sensible
person who applied his mind to the facts would have arrived at such a
decision. And a misdirection of facts is either a failure to
appreciate a fact at all or a finding of fact that is contrary to the
evidence actually presented.”
[21]
In this case the court considered all the evidence placed before it
and came to the conclusion that the documents relied upon by the 1st
applicant were forged fraudulent documents. The applicant's
contention is that the shareholders agreement and the share
certificate are authentic and valid because they were prepared and
signed by Gwatidzo the auditor. He accuses the court a
quo
of
ignoring evidence he proffered to the effect that Gwatidzo admitted
that he prepared the documents.
[22] As
evidence of the alleged admission he filed a transcript of a long
telephone conversation that he had with Gwatidzo.
That transcript does not support his assertion that Gwatidzo admitted
preparing the disputed documents. This is what Gwatidzo said at p 16
of the transcript:
“A.
MR
GWATIDZO: I
actually do not remember preparing the shareholders agreement. Did I
prepare the shareholders' agreement?
…
Q. FARAI:
In all honest did you not prepare the transfer of shares?
A. MR
GWATIDZO:
No it was done by Bekker Tilly.”
[23] It
is axiomatic that the authenticity of the questioned document was
premised on them having been prepared and signed by the auditor
Gwatidzo. Gwatidzo's denial that he is the author of the questioned
documents was fatal to the applicant's case. It destroyed the whole
foundation and basis of his case.
[24] In
his opposing affidavit the first respondent averred that the 1st
applicant forged the shareholders agreement document by superimposing
his genuine signature on a copy of the agreement and then
photocopying it. The 1st
applicant did not lead any evidence to rebut the allegation. Failure
to rebut the allegation of forgery of the material document was fatal
to the applicants case.
[25]
To make matters worse the 1st
applicant filed two conflicting CR2 forms. The first one showed that
the company owned all the shares in the 2nd
respondent Moses Tonderai Chingwena Family Trust. Upon realising that
the first CR2 form was fatal to his case the 1st
respondent filed another CR2 form with his answering affidavit
contradicting the first CR2 which asserted that 3rd
respondent owned all the shares in 2nd
respondent.
[26]. These
examples of the 1st
applicant's shenanigans portray him as a dishonest devious person
who is prepared to twist the truth in order to advance his nefarious
cause. In light of his deceitful character the learned judge a
quo
cannot be faulted for holding that the 1st
respondent's cause was founded on lies and fraudulent documents.
That finding is amply supported by the evidence on record. For that
reason the learned judge a
quo's
reliance
on the dictum of NDOU J in Leader
Tread Zimbabwe (Pvt) Ltd v Smith
is
apt. In that case the learned judge observed that:
“It
is trite that if a litigant has given false evidence his story will
be discarded and the same adverse inference may be drawn as if he has
not given evidence at all- see Tumahole
Bereng v R [1949] AC 253 and South African Law of Evidence
IH
Hoffman and DT Zeffert{3rd
ed) at page 472. If he lies about a particular incident, the court
may infer that there is something about it which he wishes to hide”.
[27] This
should really be the end of the matter as the 1st
applicant has proven to be an unworthy dishonest litigant. For the
sake of completeness, I however feel constrained to briefly deal with
his other complaint that after finding that the 1st
applicant had no locus
stand
the court a
quo
ought to have struck the matter off the roll instead of dismissing
it.
[28] There
is absolutely no merit in this submission for the simple reason that
the court was clothed with an unfettered discretion. It is trite that
appellate courts are always loath to interfere with the exercise of
judicial discretion save where the exercise of such discretion is
injudicious or contrary to public policy.
[29] The
learned judge a
quo
was alive to the fact that he had discretion whether or not to
dismiss the application. Having carefully examined the facts and the
law he exercised his discretion with admirable efficacy. In
dismissing the application he placed reliance on the case of Masukusa
v National Foods Ltd & Anor
where McNally J as he then was, had this to say:
“Where
the facts are in dispute the court has discretion as to whether to
dismiss the application or allow the matter to go to evidence. The
first course is appropriate where an applicant should, when launching
his application, have realised that a serious dispute of fact was
inevitable.”
[30] The
learned judge a
quo
took the view that the applicant took a conscious risk by taking the
application route in the face of glaring facts pointing to a serious
dispute of facts. For that reason he had to bear the consequences of
the ineptitude of his lawyers who chose the wrong procedure. The
course of action taken by the learned judge a
quo
finds
support in the dictum
of MULLER JA in Tamarillo
(Pty) Ltd v BN Aitken (Pty) Ltd
quoted
with approval in
the
Masukusa
case supra
where
he observed that:
“A
litigant is entitled to seek relief by way of notice of motion. If he
has reason to believe that the facts essential to the success of his
claim would probably be disputed, he chooses that procedure at his
peril, for the court in the exercise of its discretion, might decide
neither to refer the matter for trial nor to direct that oral
evidence on the disputed facts be placed before it, but to dismiss
the application.”
[31] The
1st
applicant had previously engaged the 1st
respondent and they had failed to reach an amicable settlement. He
therefore knew as a matter of fact that the respondents were
disputing his claim that he was the owner of any shares in the
company. By extension he knew or ought to have known that they were
also disputing his documentary evidence tending to prove that he had
a 30% shareholding in the company otherwise they would not have
disputed his claim.
[32]
The 1st
applicant's conduct in providing fraudulent evidence as
demonstrated elsewhere in this judgment could only aggravate matters
to his detriment. This is therefore a proper case where the naivety
of the applicants lawyers was properly visited on their clients as
the applicants were not entirely free from blame.
[33] In
the final analysis no fault or misdirection can be laid at the
learned judge a
quo's
door in his treatment of the substantive issues and verdict.
COSTS
[34]
In view of the 1st
applicant's deplorable unbecoming behaviour in manufacturing
fraudulent documents to deceive the court, costs at the punitive
scale were eminently deserved in the court a
quo.
In
the current proceedings before me there is no reason for departure
from the general rule that costs follow the result.
DISPOSAL
[35] In
the final analysis I hold that the appellants have no reasonable
prospects of success on appeal. It is accordingly ordered that the
application for condonation of late noting of appeal and extension of
time within which to make an appeal be and is hereby dismissed with
costs.
Mutamangira
& Associates, the 1st
and 2nd
the applicants legal practitioners
Atherstone
& Cook, the 1st,
3rd
and 9th respondents
Bera
Masamba, the legal practitioners for the 10th,
11th,
15-22nd,
29th
and 33rd
respondents
1.
1988 (1) ZLR 53 (S)
2.
[2020] ZASCA 114 at para 6
3.
SC34/01
4.
Pages 16 to 29 of 1st
respondent's answering affidavit
5.
HH131-03
6.
1983 (1) ZLR 232 (HC)
7.
1982 (1) SA 398 (AD) at 430G-H
