IN
CHAMBERS
KUDYA
AJA:
This
is an application for reinstatement of an appeal, which was not
deemed to have been dismissed, but was by consent, struck off at the
hearing on 24 November 2020 in SC99/20, for the reason (per para 18
of the applicant's founding affidavit) that the applicant “had
failed to file heads of argument as required by the rules of this
Honourable Court.”
The
applicant deliberately did not identify the rule under which he
lodged the application. However, in oral argument, Mr Mpofu,
for the applicant contended that it was filed in terms of para 5 of
Practice Direction No.3 of 2013 and not Rule 70(2) of the Supreme
Court Rules, 2018.
THE
BACKGROUND FACTS
The
main protagonists in this dispute are the applicant and the first
respondent. The dispute turns on the scope and extent of the first
respondent's shareholding in Adam Bede Manufacturing (Pvt) Ltd (the
third respondent).
The
second respondent is the majority shareholder in the third
respondent.
The
first and second respondents, with the assistance of a promoter of
companies (Hove), concluded a shareholders agreement in which they
became equal shareholders in Extreme Security Group (Pvt) Ltd (the
Special Purpose Vehicle or SPV).
They
further agreed to purchase the entire equity of Hunting Furniture
(Pvt) Ltd t/a Adam Bede (Hunting) through the SPV.
The
two prospective shareholders soon realized that the participation of
the first respondent would, at that time, be in conflict with his
employment contract.
They
sought to make Hove the first respondent's nominee shareholder,
but, for professional reasons, he declined to undertake that role.
On
the recommendation of the second respondent, and, again, with the
help of Hove, the applicant became the first respondent's nominal
shareholder in the SPV.
The
SPV purchased Hunting and re-registered it as the third respondent on
4 May 2017.
The
applicant and the second respondent were registered as the sole
shareholders and directors in the third respondent. They each held
one share apiece. The two directors became the sole joint signatories
of the third respondent's bank account.
The
conflict of interest situation that had previously bedeviled the
first respondent ceased.
He
sought to assume his role as the true shareholder and director in the
third respondent.
His
efforts were vigorously resisted by the applicant, who claimed to be
a 50% shareholder in the third respondent in his own right.
The
first and second respondents negotiated a settlement of the dispute
with the applicant.
They
concluded an oral agreement in which they restructured the
shareholding of the third respondent by allotting 40 shares to the
second respondent, 30 shares to the first respondent, 20 shares to
the applicant and reserved 10 shares to a future technical partner.
The
parties then reduced the oral agreement to writing but the applicant
refused to sign it.
The
applicant requisitioned an Extraordinary General Meeting on 3
November 2018 for the dismissal of the first respondent as a director
of the third respondent.
He
defaulted the meeting.
At
the meeting, the first and second respondents removed the applicant
as a director and company secretary of the third respondent.
He,
however, was restored to both positions, unopposed, by the High Court
in HC10298/18.
Thereafter,
the applicant insisted that he was a 50% shareholder in the third
respondent and sought to resile from the restructured shareholding
agreement.
His
assertions caused the first respondent to lodge a court application
in the High Court for a declaration of his rights as a shareholder
and director in the third respondent.
The
application was opposed by the applicant.
At
the hearing, a
quo,
the applicant raised three preliminary points:
(i)
The first was that there were material disputes of fact that could
not be resolved on the papers. (ii) The second was that several
paragraphs in the founding affidavit ought to be struck out in terms
of Rule 141 of the High Court Rules, 1971 for being argumentative,
irrelevant, inconsistent and contradictory.
(iii)
The last was that the supporting affidavit of Hove ought to be
expunged from the record for the reason that he was conflicted as he
had rendered professional registration services to the third
respondent.
On
the basis of the common cause documents filed of record such as the
draft shareholders agreement, the judgment in HC10298/18 and Form CR2
and CR14, the court a
quo
held that the material disputes of fact were more illusory than real
and could, therefore, be resolved on the papers.
Regarding
the second preliminary point, it held that the court's power to
strike out the impugned pleadings under Rule 141 of the Rules of
Court could only be exercised in action proceedings and not in
application proceedings.
Lastly,
that as the deponent to the supporting affidavit was not a legal
practitioner, he could not, therefore, be a conflicted witness and
his affidavit could not properly be expunged from the record.
All
the preliminary points were, accordingly, dismissed.
On
the merits, the court a
quo
found that the first respondent had established all the essential
requirements for the grant of a declaratory order.
He
had a direct and substantial interest in the application. He held
existing rights that were under threat from the applicant's
conduct.
The
applicant sought to impugn without evidence and appropriate to
himself the primary and pivotal role played by the first respondent
and the second respondent in purchasing the entire equity in Hunting
through the SPV.
The
court a
quo
further found that the first and second respondents had contributed
US$160,000 and US$180,000, respectively into the SPV for the purchase
price of, and as working capital in Hunting while the applicant had
not made any monetary or material contributions thereto.
The
court a
quo,
therefore, declared the first respondent to be the holder of 30
ordinary shares, against the 20 shares of the applicant and 40 shares
of the second respondent, in the third respondent.
It
also declared him to be a duly appointed director of the third
respondent; and, as consequential relief, ordered the restoration of
his name as a director on the company's letterheads.
The
applicant was also interdicted from misrepresenting to “clients and
associates of third respondent” the extent of his equity holding,
and the status of the first respondent, in the third respondent.
Lastly,
he was ordered to pay the costs of suit.
Aggrieved
by the decision a
quo,
the applicant appealed against the whole judgment of the court a
quo
to this Court in SC 99/20, within the prescribed period.
On
30 September 2020, a day before they were due, the applicant's
legal practitioners filed heads of argument, which, ex
facie,
bore the correct SC case number and designations of the parties.
It
was common cause that these heads were a truncated version of the
heads that had been filed a
quo
and
even embodied the parties respective designations a
quo.
They, also, did not relate to the grounds of appeal.
The
applicant raised the following four grounds of appeal:
“1.
The court
a
quo
erred in finding for the first respondent in para 2, 3 and 4 of the
order notwithstanding that such determinations were not supported by
any reasons for the decision.
2.
A
fortiori,
the
court a
quo
erred in making an order without considering the adverse factual
position presented by the now appellant which contradicted the first
respondent's version and not providing reasons for accepting the
first respondent's story and rejecting the appellant's rendering
its decision arbitrary and capricious.
3.
The court erred and grossly misdirected itself in finding that the
evidence of a professional who has previously acted for a company can
be accepted to support a litigant against a shareholder of the same
company without being conflicted.
4.
The court a
quo
erred in making an order declaring first respondent owner and holder
of 30 ordinary shares outside legally acceptable principles and norms
of property acquisition. In particular, the order of the court does
not relate with the cause of action proffered.”
The
relief sought by the applicant was for the appeal to be allowed and
the judgment a
quo
set aside and substituted with the dismissal of the application with
costs.
The
impropriety of the heads was brought to the attention of the
applicant in the first respondent's heads filed on 16 October 2020
and served on 20 October 2018.
The
applicant, however, sought to remedy the defect by filing
“appellant's supplementary heads of argument (enrolled for
hearing on 24 November 2020)” on 19 November 2020.
At
the appeal hearing, on 24 November 2020, an order was issued, by
consent, striking the matter off the roll with costs.
THE
PROPRIETY OF THE PRESENT APPLICATION
In
his opposing affidavit, the first respondent raised five preliminary
points against the application.
(i)
The first was that the applicant had merely headlined the application
as a “Chamber Application for the Reinstatement of an Appeal” and
deliberately avoided identifying the rule under which the application
was being made;
(ii)
Secondly, the application did not address the prospects of success in
any meaningful detail. (iii) Thirdly, the application did not embody
the order granted in SC 99/20;
(iv)
Fourthly, the application was filed outside the 15-day time line
prescribed in Rule 70(2) of the Rules of the Supreme Court, 2018; and
(v)
Lastly, the founding affidavit was deposed to by the applicant's
legal practitioner of record, who did not indicate that he was
authorised to depose to the affidavit.
The
applicant did not file an answering affidavit. Nor did the parties
file any heads of argument prior to the hearing of this application.
Mr
Madzoka,
for the first respondent, abided by the contentions made in the first
respondent's opposing affidavit. He sought the striking off of the
matter with costs on the higher scale.
Mr
Mpofu,
however, argued for the dismissal of all the preliminary points at
the hearing.
He
argued that the application was based on para 5 of Practice Direction
No. 3 of 2013, and not Rule 70(2) of the Supreme Court Rules, 2018.
The
Practice Direction provides a dies
induciae
of 30 days for filing a reinstatement in which a matter has been
struck off for failure to abide by the Rules of the Court. On the
other, hand, Rule 70(2) prescribes a dies
induciae
of 15 days within which to file a reinstatement of an appeal that has
either been deemed to have lapsed, or regarded as abandoned or deemed
to have been dismissed in terms of any provision of the Supreme Court
Rules 2018.
He
accordingly prayed for the dismissal of the first and fourth
preliminary points.
Regarding,
the third preliminary point he contended that the application raised
prospects of success, notwithstanding that the first respondent may
be dissatisfied with the manner in which they were addressed.
These
were raised in paras 23 to 26 of the founding affidavit.
The
thrust of these paras being that the decision of the court a
quo
is most likely to be overturned on appeal for being contrary to the
stipulations enshrined in the articles and memorandum of association
of the third respondent regarding the acquisition and allotment of
shares in the company, after registration.
Further,
that the judgment was based on a draft shareholding agreement that
had not been executed.
And
lastly, that the endemic material disputes of facts presented by the
parties were incapable of resolution on the papers without the
hearing of oral evidence.
On
the failure to attach the order of this Court in SC99/20 he argued
that the order and the circumstances under which it was issued had
been adequately adverted to in paras 17 and 18 of the founding
affidavit.
In
any event, being a document emanating from this Court, the judge in
chambers could always call for and refer to the order.
Lastly,
on the authorization of the applicant's legal practitioner of
record to depose the founding affidavit on his behalf, he argued that
it was trite that a legal practitioner who had personal knowledge of
the procedural facts is not precluded from filing a founding
affidavit for and on behalf of his client.
He
also took the point that the grounds of appeal were not prolix.
This
point had been raised by first respondent in the heads of argument
filed in the appeal that was struck off the roll.
Mr
Mpofu,
sought to rely on Afritrade
International Ltd v Zimbabwe Revenue Authority
SC3/21 for the further submission that the question of prolixity
could best be raised and dealt with at the reinstated appeal and not
in these proceedings.
I
turn to deal with the first preliminary point, which in my view is
dispositive of this application.
The
first respondent contended that the failure to identify the Rule
under which the application was lodged embarrassed him and prevented
him from adequately responding to the application. He did not know
whether the application was properly brought as a chamber application
for reinstatement of an appeal or is a disguised application for
condonation and extension of time within which to file an appeal.
It
was only at the hearing that Mr Mpofu,
pontificated that the application was premised upon para 5 of the
Practice Direction 3/13.
That
submission immediately raises the question of the propriety of
bringing the present application under this Practice Direction.
The
reinstatement of an appeal is dealt with under Rule 70 of the Supreme
Court Rules, 2018. The rule states that:
“70.
Reinstatement of appeals generally
(1)
Where an appeal is —
(a)
deemed to have lapsed; or
(b)
regarded as abandoned; or
(c)
deemed to have been dismissed in terms of any provision of these
rules; the registrar shall notify the parties accordingly.
(2)
The appellant may, within 15 days of receiving any notification by
the registrar in terms of subrule (1), apply for the reinstatement of
the appeal on good cause shown.”
Reinstatement,
for a matter that has been struck off for failing to comply with a
provision of the Rules of Court, is also dealt with in terms of para
3 to 5 of Practice Direction 3/13. It reads:
“Struck
off the roll
3.
The term shall be used to effectively dispose of matters which are
fatally defective and should not have been enrolled in that form in
the first place.
4.
In accordance with the decision in Matanhire
v BP & Shell Marketing Services (Pvt) Ltd
2004 (2) ZLA 147 (S) and S
v Ncube
1990 (2) ZLR 303 (SC), if a Court issues an order that a matter is
struck off the roll, the effect is that such a matter is no longer
before the Court.
5.
Where a matter has been struck off the roll for failure by a party to
abide by the Rules of the Court, the party will have thirty (30) days
within which to rectify
the defect,
failing which the matter will be deemed to have been abandoned.
Provided
that a judge may on application and for good cause shown, reinstate
the matter, on such terms as he deems fit.”
The
meaning of para 5 was rendered by GUVAVA JA in Bindura
Municipality v Mugogo
2015 (2) ZLR 237 (S) at 238G-240A.
That
application for reinstatement of an appeal concerned a fatally
defective notice of appeal that reflected the wrong date of judgment
and which had been served on the registrar of the Labour Court
outside the period granted in an order for leave to appeal.
At
238G, GUVAVA JA held that:
“Where
a matter has been struck off the roll because it has failed to comply
with the rules of court, one cannot simply apply for reinstatement of
the appeal as such an appeal is a nullity. This position has been
stated in a number of decisions of this Court.”
And
at pp239E-240A, relied on Hattingh
v Pienaar
1977 (2) SA 182 (O) to construe para 5 of the Practice Direction:
“It
seems to me that a proper interpretation of para 5 of the Practice
Direction 3/13 is that the applicant must, within thirty days,
rectify
the defect by applying for condonation for the late noting of appeal
and an extension of time within which he should comply with the
rules.
He may not do so after the window period which he has been given to
rectify the defect as the matter will be deemed to have been
abandoned. In this case the applicant correctly filed an application
within the prescribed period of thirty days. However, an application
for reinstatement is not the appropriate remedy…The appeal, having
been found to be fatally defective, cannot be reinstated after being
struck off the roll. The applicant's remedy to rectify the defect
is to apply for condonation and extension of time within which to
file a fresh notice of appeal in terms of Rule 6 of the Supreme Court
(Miscellaneous Appeals and References) Rules. He should do so within
the period of thirty days provided for in the Superior Court Practice
Direction.”
Mr
Mpofu
argued that the failure to file heads in SC99/20 did not render the
appeal fatally defective because it was, but for this anomaly, a
complete appeal that was ripe and ready for hearing.
His
argument in this respect is totally misconceived.
Were
he correct, then this Court would not have struck the matter off the
roll but would have, in the exercise of its inherent power to
regulate its own proceedings, have regarded it as abandoned and
deemed it dismissed as prescribed by Rule 70(1)(c).
The
power of this Court to act in this manner does not only arise from
its inherent power to control its own rules but is clearly codified
in Rule 53(3), which reads:
“53.
Dismissal of appeal in the absence of heads of argument or appearance
(3)
Where,
at
the time of the hearing of an appeal,
there is no appearance for the
appellant
or
no heads of argument have been filed by him,
the
court may, at its discretion,
determine
or dismiss the appeal
and make such order as to costs as it may think fit.” (Underlining
for emphasis)
Rule
53(3) confers a discretion on this Court by the use of the word “may”
as well as the repeated use of its synonym “discretion” to
determine or dismiss the appeal.
In
my interpretation of the underlined words, the power conferred on
this Court is not limited to determining or dismissing. It is trite
that “may” is directory.
In
its proper interpretation the subrule merely means that this Court
may or may not in its discretion determine or dismiss the appeal.
In
striking off the appeal this Court elected to not determine or
dismiss the appeal. This Court did, by consent, strike off the matter
from the appeals roll for the obvious reason that the appeal was
fatally defective and could neither be determined nor dismissed.
Otherwise,
were there room to salvage the matter, it would simply have by
consent removed the matter from the roll thereby making it eligible
for enrolment upon request. See Maparanyanga
v Van Schalkwyk
SC 64/02.
That
the application was fatally defective is apparent from a closer
scrutiny of the grounds of appeal sought to be reinstated.
All
the grounds of appeal are fatally defective in two main respects:
they are all vague and embarrassing.
In
the words of LEACH J in Sonyongo
v Minister of Law and Order
1996
(4) SA 384 at 385F:
“it
has been held that grounds of appeal are bad if they are so widely
expressed that it leaves the appellant free to canvass every finding
of fact and every ruling of the law made by the court a
quo,
or
if they specify the findings of fact or rulings of law appealed
against so vaguely as to be of no value either to the Court or to the
respondent, or if they, in general, fail to specify clearly and in
unambiguous terms exactly what case the respondent must be prepared
to meet.”
The
above cited words afflict the first ground of appeal.
It
is so vague as to be of no value to either this Court or the first
respondent. In addition, it is also simply inconceivable and in fact
incorrect to raise such a ground against a well-reasoned seven paged
judgment.
The
second ground of appeal is so widely cast that it leaves the
applicant free to attack every finding of fact and ruling of law made
a
quo.
The
manner in which the second ground of appeal is crafted has
consistently been deplored in this jurisdiction since 1957 when the
case of
R
v Emerson
1957 R&N 743 (SR) at 748D-E was decided. See also S
v Ncube
1990 (2) ZLR 303 (S) at 304; Chikura
NO & Anor v Al Shams Global BVI Ltd
2017 (1) ZLR 181 (S); Econet
Wireless (Pvt) v Trustco Mobile (Pty) Ltd
SC43/19.
This
Court has consistently reminded legal practitioners to desist from
drafting such vague and unacceptable grounds of appeal.
The
ground falls into the same general genre with those that litter our
law reports, some of which read as follows:
“the
learned magistrate erred in accepting the complainant's evidence”
or “the conviction is against the weight of evidence” or “the
evidence does not support the conviction” or “the conviction is
wrong in law”.
The
latest case that lamented this failure to draft cogent grounds of
appeal was Afritrade
International Ltd v Zimbabwe Revenue Authority
SC3/21 at pp5-6.
In
that case, the unacceptable ground of appeal impugned the judgment a
quo
for “rejecting
the evidence given on behalf of the appellant as being unreliable”.
It
was struck out on appeal for being too widely cast to such an extent
that it failed to identify the specific evidence that was unreliable
and to which the respondent and the court could relate.
The
third and fourth grounds are also afflicted by the same malady as the
first. They, too, are generalized, vague and embarrassing. They fail
to specify clearly and in unambiguous terms exactly what case the
respondent must be prepared to meet.
The
law to which ground number 3 is premised on is not specified nor are
the “legally acceptable principles of property acquisition”
identified. These are meaningless phrases that do not impugn the
specific findings of fact or law that were made by the court a
quo.
To
suggest, as Mr Mpofu
did, that these fatally defective grounds should be foisted upon an
appeal court for it to deal with them is simply preposterous.
To
do so, would not only constitute an abdication of my responsibility
as a gate keeper beholden to permit only deserving appeals to pass
through but would also result in a complete waste of valuable
judicial time for the panel that would be seized with the defective
appeal.
In
any event, the first ground of appeal appears to be contradicted by
the second, third and fourth grounds which in a misogynistic way
provide the reasons for the impugned orders.
They
are that the court a
quo
accepted the version of the first respondent because it was supported
by Hove's affidavit.
In
his affidavit Hove confirmed the existence of the share subscription
agreement between the first and second respondents prior to the
involvement of the applicant in the affairs of the third respondent.
In addition, the court a
quo
based its determination on the common cause fact that the applicant
and the first and second respondents negotiated a new shareholding
structure and concluded an agreement in respect of the third
respondent, which was critically captured in the draft written
agreement and official CR2 and CR14 documents that the applicant
failed to successfully impeach.
The
Court a
quo
also found that the probabilities supported the existence of the
first shareholders document and the second unsigned restructuring and
share allotment agreement. These were that: (i) firstly, Hove would
not have been approached to be the first respondent's nominee
shareholder had the Hunting deal been consummated by the applicant
and the second respondent. (ii) Secondly, the applicant only came
into the picture after Hove had declined the nomination. (iii)
Thirdly, the applicant had failed to impeach the existence of the
second agreement. His refusal to sign the agreement was inadequate to
dislodge the corroborated version of the first respondent.
The
recasting of the onus to the applicant to impeach the agreement was
restated by PATEL JA (as he then was) in the Afritrade
case, supra,
at p11. He stated that:
“In
principle, an unsigned agreement cannot ordinarily be relied upon as
creating a valid and binding contract. However, the surrounding
circumstances, including prior dealings between the parties
concerned, may give rise to the prima
facie
presumption that the terms and conditions embodied in an unsigned
agreement represent the true intention of the parties. The burden
then shifts to the party disputing the authenticity of the agreement
to show that it was not intended to be binding. This position was
affirmed by this Court in Associated
Printing and Packaging (Pvt) Ltd & Ors v Lavin & Anor
1996 (1) ZLR 82 (S) at 87.”
The
point I make by these references is simply that all the four grounds
of appeal were on 24 November 2020, fatally defective. That is why
the purported appeal was “by consent” struck off the roll.
Such
a defective appeal cannot be reinstated. See Bindura
Municipality v Mugogo, supra.
The
applicant misconceived the application of Practice Direction 3/13. It
does not apply to a fatally defective appeal that is struck off the
roll.
The
first preliminary point is resolutive of the whole application. It
is, therefore, not necessary for me to deal with the other
preliminary points or to delve into the merits of the application.
COSTS
I
agree with the first respondent's counsel that the import of
striking off, especially in the light of the interpretation rendered
to Para 5 of the Practice Direction 3/13 should have been apparent to
the applicant.
He
has, through his erstwhile legal practitioners, been making
elementary bleeps and blunders that have unnecessarily put the first
respondent out of pocket.
This
is an appropriate case to mulct him with an adverse costs order at
the scale of legal practitioner and client.
DISPOSITION
In
the circumstances, it is ordered that:
1.
The application be and is hereby struck off the roll.
2.
The applicant shall pay the first respondent's costs at the scale
of legal practitioner and client.
Munangati
& Associates,
applicant's legal practitioners
Mawere
Sibanda Commercial Lawyers,
1st
respondent's legal practitioners