CHATUKUTA J: This is an
opposed application in which the applicant sought the following
relief, that:
“1. The affairs of the Second
Applicant shall be run by the Board of Directors of the First
Applicant.
2. The Ninth Respondent shall
forthwith recognize any person appointed by the First Applicant and
the two representative (sic)
of the Second Applicant.
3. The First, Second, Third,
Fourth, Fifth, Sixth, Seventh and Eighth Respondents shall cease to
run the affairs of Dynamos otherwise than through the structures set
by the First Applicant.
4. First to Eighth Respondent
(sic)
shall pay the costs of this application.”
The 2nd
applicant is a football club (herein referred to as the Club). It is
an unincorporated voluntary organization. It was established in 1963
under the Constitution of the Dynamos Football Club of Salisbury
Rhodesia (the Constitution). A Board of Trustees was established in
terms of clause 5 of the Constitution. The Board of Trustees was
constituted of the founder members and former players who joined the
Club within the first year of its existence.
The Board of Trustees was mandated to be the policy organ of the Club
(Clause 5.1.3). It was further empowered to appoint the executive
committee, managers, head coach and other committees of the club. The
executive committee was mandated to administer and manage the affairs
of the Club.
Clause 16 of the Constitution provided for the registration of a
company, Dynamos Football Club (Pvt) Ltd (the Company). Upon
registration of the Company, the Board of Trustees was to constitute
the Board of Directors of the Company.
The 1st
applicant is the company that was formed pursuant to clause 16 of the
Constitution.
The applicants averred that the
1st
respondent in connivance with the 2nd
to the 8th
respondents formed an association which they termed the “Board of
Trustees”. They proceeded to appoint an executive committee which
is now illegally running the affairs of the Company.
It was contended that the Board of Trustees and the executive
committee are illegally running the affairs of the club as it has
usurped the powers of the Board of Directors of the Company.
The application was opposed by
the 1st
to the 8th
respondents whom I shall refer to as “the respondents”.
The respondents raised two points
in limine.
(i) The first point is that
Morris Longstaff Sifelani (Sifelani), who deposed to the founding
affidavit, did not have the authority to represent both applicants.
It was contended that Sifelani purported to act for two separate
entities and was required to satisfy the court in the founding
affidavit that he had the authority to represent the applicants.
The applicants filed minutes of a meeting of Board of Directors of
the Company, held on 22 May 2007, which purported to authorise
Sifelani to institute the proceedings in the Answering Affidavit.
I say “purported” because the legality of the Board of Directors
is challenged by the respondents.
The respondents contended that the proof of authority only arose in
the Answering Affidavit instead of the Founding Affidavit. This
amounted to introducing new evidence. The applicants should
therefore have applied for leave of the court to introduce the new
evidence. It was contended that an application must stand or fall by
its founding affidavit.
The applicants contended that the
minutes were adequate to cure the irregularity raised by the
respondents. It was further contended that s12 of the Companies Act
[Chapter 24:03]
raises a presumption that the acts of the company are regular.
Outsiders should therefore not inquire if the rules of the company
have been complied with.
(ii) The second point in
limine is that there
is a material dispute of fact that cannot be resolved on the papers.
It was contended that Sifelani
does not have the authority to represent the applicants. It was
further contended that Sifelani was not a Director of the 1st
applicant. He was not a member of the Board of Trustees of the 2nd
applicant at the time the 1st
applicant was incorporated. He therefore could not have been a
director of the 1st
applicant.
It was further contended that the
1st
respondent has disputed Sifelani's authority and membership of the
2nd
applicant in other cases. The applicants therefore ought to have
known that a material dispute of fact would arise and should
therefore have proceeded by way of motion.
The applicants contended that the court should adopt a robust
approach and resolve the dispute on the papers.
It was contended that the
production of Form CR14 on the appointment of directors was adequate
proof that Sifelani is a Director of the company. It was submitted
that the Form was, prima
facie proof of
Sifelani's directorship.
It is my view that the two issues are entwined and the first issue is
subsumed by the second issue, whether or not there is a material
dispute of fact.
I shall therefore deal with first issue in that context.
It is clear that the court has a
discretion as to whether or not to dismiss an application where there
are material disputes of fact which cannot be resolved on the papers.
In exercising its discretion, the Court must take into account when
the applicants became aware that there were disputes of fact in the
matter. (See Masukusa
v National Foods Ltd &
Anor 1983 (1) ZLR
232).
I will deal first with the
applicant's contention that the decision that Sifelani represents
the 1st
applicant in these proceedings is covered by section 12 of the
Companies Act.
It appears to me that the presumption of regularity of the acts of a
company does not apply in this case and the applicants' reliance on
the rule is misplaced.
As stated by MALABA JA in
Ngatibataneyi (Private)
Limited v Tobias Venganayi Moyo and Anor
SC13/07, s12 of the Companies Act embodies the common law principles
of estoppel enunciated in the case of Royal
British Bank v Turquand
1856) 119 E.R. 886 (generally known as the Turquand Rule).
The Turquand Rule is intended to protect the rights of third parties
dealing with companies. It is therefore a rule that a third party
would rely on when a company or office bearer of a company seeks to
avoid liability.
It is my view that s12 was red herring.
The question of the Sifelani's
locus standi
or authority to institute legal proceedings on behalf of the
applicants is not new to this Court.
The present application is a sequel to other applications brought on
behalf of the applicants.
On 2 August 2005, the Club filed
an Urgent Chamber Application in case no. HC3803/05 against the 1st
and 9th
respondents in the present matter and another. The applicants were
challenging the dissolution of the then incumbent executive committee
on 25 July 2005 by the 1st
respondent. It appears from the Consolidated Index to the application
that Sifelani deposed to a supporting affidavit. However, the
affidavit is not in the record. The application was opposed. The 1st
respondent, in paragraph 12(ii) of the Opposing Affidavit, listed the
original members of the Board of Trustee. The list does not include
Sifelani. The application was dismissed on the basis that it was not
urgent and that the deponent to the Founding Affidavit, one Phillip
Mugadza, did not have the authority to represent the Club.
On 12 September 2005, the present
applicants, Sifelani and three others filed an Urgent Chamber
Application in case no. HC4530/05, against the 1st
respondent in the present matter. Sifelani deposed to the applicants'
founding affidavit on behalf of all the applicants. The applicants
were again challenging the 25 July 2005 dissolution of the Club's
executive committee by the 1st
respondent. Sifelani averred that he was the executive director and
executive chairman of the company. He further averred that he was a
founder member and a trustee of the Club. The application was almost
a replica of HC3803/05. It appears that the respondents had not filed
any opposing papers. Letters filed of record indicate that the
respondents were going to oppose the application. The application was
withdrawn and the applicants, except for the Company and the Club,
were ordered to pay costs on a legal practitioner and client scale.
On 23 February 2006, the same
applicants as in case no. HC4530/05, filed yet another court
application against the 1st
respondent in case no. HC1065/05. The cause of action was the same as
in the other two applications. Sifelani deposed to the founding
affidavit again averring that he was a founding member and Trustee of
the Club and that he was the chairman and chief executive officer of
the Company. The application was again opposed. Sifelani status was
again put into issue in paragraph 8 of the opposing affidavit.
On 29 May 2007, the applicants filed the present application. At the
core of the application is again the question as to who should run
the Club. The application was again opposed and Sifelani's
directorship and trusteeship put into issue. In issue is also his
status as the chairman and chief executive officer of the company.
It is clear that when the applicants brought the application it must
have been in their contemplation from the previous applications that
a dispute of fact would arise.
The Form CR14 produced by the applicants does not seem to resolve the
issue.
The Form is merely prima
facie proof of the
directorship of Sifelani. The proof has been put into issue with the
production of what the respondents purport to be the first Trustees
of the Club who subscribed to the formation of the Company. It is
these Trustees who were mandated under the Club's Constitution to
form the Company and constitute the Board of Directors. The document
therefore questions Sifelani's assertion that he is one of the
founding members and a trustee of the Club when his name does not
appear on its face. It further raises the question how Sifelani
became a director of applicant as at 10 October 2002 as appears on
the Form CR14.
The minutes of the Board of Directors that purportedly authorized
Sifelani to institute these proceedings were challenged by the
respondents.
The 1st
respondent challenges the holding of the meeting and the passing of
the resolution.
It is not in issue that the 1st
respondent is a director of the company. It appears from the minutes
of the meeting that he did not attend the meeting. There is no
indication from the applicants whether or not notice of the meeting
was given as is required under the Companies Act.
Despite previous challenges of Sifelani's authority to represent
the company, the minutes were only annexed to the answering
affidavit.
It is my view that these disputes of fact cannot be resolved on the
basis of the affidavits filed of record.
As already alluded to, these are disputes of fact that the applicants
should have anticipated and adopted the proper procedure for their
resolution.
What is left, I believe, is for me to decide whether or not, in view
of the apparent material dispute of fact, I should dismiss the
application as prayed for by the respondents.
As stated in Adbro
Investments Co Ltd v Minister of Interior
1956 (3) SA 345 AD;
“Where
the facts are in dispute the court has a discretion as to the future
course of the proceedings. It may dismiss the application with costs
or order the parties to go to trial or order oral evidence......
The first course may be
adopted when the applicant should have realised when landing his
application that a serious dispute of fact was bound to develop.”
Ordinarily, because of the apparent material dispute of fact, this is
a case where the respondents would have been entitled to their
prayer. However, I consider this case not an ordinary one.
It appears that there is a tug of
war between individuals who purport to be representing the
applicants, particularly the Club. In almost all the applications,
there are two people who are featuring prominently, challenging each
other's status within the Club, that is Sifelani and the 1st
respondent. When the elephants fight, the grass suffers. In this case
it is the Company and the Club which appear to be suffering. This, in
my view, is not healthy for the two applicants.
It should be noted that the dispute as to who should control the Club
has spilt into the Supreme Court following an appeal against a
decision of this court.
The issue before the Supreme
Court in Dynamos
Football Club (Private) Ltd and Anor v Zimbabwe Football Association
and Ors SC93/06, was
the independence of the Club to run its own affairs following a
dissolution of the executive committee by Zimbabwe Football
Association (ZIFA). The second issue was whether or not a 1994
amendment of the Club's constitution was valid. The court ruled
that the Club was to manage its own affairs without any interference
from the respondents. It was also declared that the ownership and
management of the club was in terms of the 1963 Constitution until
such time as it was lawfully amended or repealed.
Although the case did not deal
with Sifelani's locust
standi, it brings to
the fore the unending fight for the control of the Club. The
multiplicity of court applications has not resolved the issue. It is
my view that the fight should be brought to an end in the interest of
the applicants.
This is one of the cases where it is therefore necessary to adopt a
robust approach and refer the matter to trial so that all the issues
are properly ventilated.
On the question of costs, the
court can order costs against the applicant even where it has not
dismissed the application as a sign of its displeasure. (See
Herbstein and Van Winsen supra
at 392). However, in Van
Answegen and Another v
Drotkskie and Anor
1964 (2) SA 391 at 395 SMUT AJ stated -
“It
does of cause not follow that because a dispute of fact is reasonably
foreseeable that an application on notice of motion will always be
dismissed with costs. There may still be circumstances present which
will persuade a court not to dismiss an application but to order the
parties to go to trial together with an order that the costs of the
application be costs in the cause or else that the costs stand over
for determination at the trial.”
This is a case where authorization of the institution of the
proceedings is in issue.
I do not believe that an order for costs at this stage would be in
the interest of justice where the decision to institute the
proceedings may later be found not to have been authorized by the two
applicants.
In the result, it appears only just that the question of costs be
deferred for determination at trial.
In the result, it is ordered that:
1. The matter be and is hereby
referred to trial with the court application standing as the summons.
2. The applicants be and are
hereby ordered to file a declaration within 10 days of the date of
this order.
3. The respondents' notice of
opposition shall stand as the appearance to defend.
4. All further pleadings shall be
in accordance with the rules of this Court.
5. The costs of this application
shall stand over for determination at the trial.
Atherstone & Cook, applicants' legal practitioners
Gill, Godlonton & Gerrans, 1st
-8th respondents'
legal practitioners
