Urgent
Chamber Application
HUNGWE
J: This
matter was placed before me through the Chamber Book on 25 January
2012.
After
I perused the papers I directed that the matter be set down for
hearing the next day.
On
this day the parties addressed me on the issue of urgency. I found
the matter to be urgent and the respondents asked for more time to
prepare and file their opposing papers which indulgence was granted.
The
hearing was postponed to 31 January 2012.
Applicant
seeks the following interim relief;
“INTERIM
RELIEF
Pending
the determination by this Honourable Court of the issues referred to
above, it is ordered that:
1.
The First to Fourth Respondent be and are hereby interdicted from
disposing of the immovable property in the name of the First
Respondent to any third party, registered under Deed of Transfer
Number 1598/11, pending confirmation of this order.
SERVICE
OF PROVISIONAL ORDER
Copies
of this Provisional Order shall be served upon the Respondents by the
applicant's legal practitioners.”
In
its founding affidavit the applicant's director makes the following
averments:
The
applicant bought 50% shareholding in the first respondent on or about
9 June 2009 under a sale of shares agreement for US$600,000,00 under
certain terms and conditions. This sum, it is contended, has been
paid in full. The first respondent is resisting the transfer of
shares in favour of the applicant. As a result the applicant has
instituted proceedings in this Court compelling transfer.
In
the meantime the applicant has learnt that the respondents are
seeking to dispose of the only immovable asset owned by the first
respondent being a business premises.
The
applicant's director confirms that people in the oil industry have
visited the service station to inspect the premises. The applicant
fears that if this asset is sold, it will suffer irreparable harm as
it is the only asset in the first respondent's books. The applicant
states that it has no other remedy besides seeking the present
relief.
On
the other hand, the third respondent as director of first respondent
stated the following;
The
agreement of sale was concluded in August 2009. The full purchase
price was to be paid by 1 November 2009. The applicant failed to pay
the full purchase price by that date. As a result, the agreement of
sale was duly cancelled and a refund of the payment made towards the
purchase price tendered to the applicant's legal practitioners.
The
applicant has not made any effort to supply its bank account details
to the respondents to facilitate transfer of the said payments.
Because
the sale was cancelled, the first and second and third respondent
believes the applicant has no right to be at the premises.
The
third respondent states that the second respondent who is his mother
is entitled to sell her shares in the first respondent but does not
wish to do so at this point in time.
The
third respondent avers that the premises are owned by three
shareholders. He states that he is entitled to sell his shares since
they are not subject to any legal dispute and in any event even if
the applicant were to succeed in the matters before the courts, all
applicant will be entitled to is only 50% share of the premises and
not the entire property. He confirms that he is seeking to sell his
40% share but goes on to assure the court that since the second
respondent does not wish to sell her shares till the matter pending
before this court is resolved, there is no prejudice to the
applicant's interests should he succeed in selling his assets.
According
to the third respondent the applicant seeks to interdict the sale of
immovable property, wherein it has no prima
facie
right, and therefore not entitled to the title deeds.
Mr
Uriri,
for the applicant, pointed out that there is a matter pending before
this court in HC1589/12. The issue for decision in that matter is
whether the sale of shares agreement entered into by the parties is
liable to be cancelled or whether the applicant is entitled to take
transfer of the shares in the first respondent.
The
first respondent is the registered owner of the immovable property, a
petrol station, subject of this application. The third respondent
holds the other 40% and there have been attempts to sell this
shareholding. The fourth respondent confirms this in his affidavit.
Should
the applicant succeed in HC4208/12 then it would be entitled to the
50% shareholding in the first respondent, which translate to a right
to claim 50% share of the immovable asset subject of these
proceedings.
By
Article 5(b) of the first respondent's Articles of Association,
the applicant will be entitled to a right of pre-emption of the
remaining 50% shareholding in the first respondent which the third
respondent has attempted to sell. Such sale in the present situation
would result in irreparable harm to the applicant.
On
the facts admitted by the respondent, Mr Uriri
agreed, applicant is entitled to the relief it seeks.
Mrs
Wood
for the respondents argued that on these facts, the applicant is not
entitled to the remedy of an interim interdict since, to start with,
the sale which would have entitled the applicant some prima
facie
right to the immovable property was cancelled.
In
short according to this argument, the applicant has failed on its
first hurdle.
Second,
there has to be an actual or reasonably apprehended injury.
As
the applicant's rights were extinguished by the cancellation of the
sale, the applicant could not possibly reasonably entertain such fear
of injury to non-existent rights. In any event even if the court held
that the applicant has some right capable of injury, since any sale
of property under administration by the executor is a nullity, the
applicant could easily seek the setting aside of the sale with ease.
As such, there are other remedies should the applicant's rights
suffer any harm at the hands of the respondents.
Mrs
Wood
argued that the application before this court related to immovable
property whereas the conduct giving rise to the urgency was the third
respondent's dealings with his shares in the first applicant.
If
I understood her correctly, which I am sure I did, her argument is
that the present application seeks to interdict the sale of the
immovable property. As there is no application being made against the
third respondent's dealing with his shareholding in the first
respondent, then the application, in its present form, cannot
succeed.
I
need not show to counsel the effect of the order sought but it seems
necessary to do so.
The
claim by the applicant is that the third respondent seeks to sell his
shares in the first respondent. This entails a share transfer. Such
sale of shares is in effect sale of the immovable property in
question because share transfer arises where the property is owned by
a company as its sole asset. Instead of transferring the property
from the company to the purchaser, the company retains ownership of
the property and the shares in the company are sold to the
purchasers.
It
seems to me seeking to interdict the sale of immovable property by
the respondents will achieve the same result which an interdict
against share transfer would achieve.
I
agree with Mr Uriri
that the applicant has established a prima
facie
right to some share in the immovable property owned by the first
respondent. The validity of this safe is subject of the litigation in
HC4208/12.
Having
decided that the applicant has established a prima
facie
right, does he have a well-grounded apprehension of irreparable
injury?
The
third respondent says that the second respondent, his mother, has no
intention of selling her shares till the final determination of the
matter which is pending in this court. However, he alleges that he
has every right to sell his shares in the first respondent as they
are not subject to any legal dispute.
The
fact that one of the respondents such as he commands control in the
first respondent company should give the applicant grounds for some
apprehension that the third respondent intends to sell the whole
immovable property for his own advantage.
I
say this because the second respondent is now beyond the court's
jurisdiction. The executor who holds a power of attorney for the
mother confirms these attempts at sale.
Clearly
nothing will prevent the third respondent putting himself in a
position where he could dispose of it without the concurrence or
knowledge of the executor.
It
is clear, moreover, that an interdict is the only remedy that can
protect the applicant from the harm that he apprehends may be
inflicted.
In
Eriksen
Motors (Welkom) Ltd v Protea Motors & Anor 1973 (3) SA 685 (A) at
691
HOLMES JA said that the granting of an interim interdict pending an
action is an extraordinary remedy within the discretion of the court.
After referring to the requisites laid down by INNES JA in Setlogelo
v Setlogelo 1913 AD 221 at 227 he said:
"In
exercising its discretion the court weighs, inter alia, the prejudice
to the applicant, if the interdict is withheld, against the prejudice
to the respondent if it is granted. This is sometimes called the
balance of convenience."
The
second respondent, it has been indicated, is prepared to await the
final determination of the matter pending between her and the
applicant before selling her shares.
Therefore
if an interim interdict is granted in the terms prayed for, she would
hardly suffer any prejudice. On the other hand, as I have
demonstrated above, should this court not grant the interim
interdict, there is a very real danger that the applicant's rights
in the first respondent will most likely be jeopardised irreparably.
On
the balance of convenience therefore I consider that the court should
exercise its discretion in favour of the applicant and grant an
interim interdict in the terms prayed for.
It
is ordered:-
1.
The First to fourth Respondent be and are hereby interdicted from
disposing of the immovable property in the name of the First
Respondent to any third party, registered under Deed of Transfer
Number 1598/11, pending confirmation of this order.
2.
There is no order as to costs.
Atherstone
& Cook
, applicant's legal practitioners
Venturas
& Samukange,
1st
– 4th
respondents' legal practitioners
