This application was filed as an urgent chamber application, and, although I had misgivings about its urgency, I decided to set it down because it concerned a project of national interest. I therefore felt that I could not do justice to such an important matter by declining to hear it ...
This application was filed as an urgent chamber application, and, although I had misgivings about its urgency, I decided to set it down because it concerned a project of national interest. I therefore felt that I could not do justice to such an important matter by declining to hear it on my preliminary view that it did not deserve to be heard on an urgent basis.
For this reason, I directed that it be set down so that the parties could ventilate on the issue of urgency.
After the parties addressed me on the issue of urgency, I directed, without ruling on urgency, that the parties deal with the merits in case in my ruling on urgency I considered that the matter was urgent and therefore go into the merits.
The factual background of the matter is fairly straightforward.
The applicant and the second respondent entered into a joint venture agreement in November 201 for the formation of the third respondent with each party holding 50% shareholding in the third respondent.
The third respondent was locally incorporated and went into business of prospecting, exploration, and exploitation of mineral deposits as well as processing and selling of coal.
In or around 22 July 2015 the applicant and second respondent agreed to disengage with a view to terminating the joint venture agreement.
It was a condition of disengagement and termination, that, the second respondent would identify a new partner who would replace the applicant and pay compensation to the applicant for the applicant's shares.
The second respondent identified the first respondent who entered into an agreement with the applicant for the sale of the applicant's 50% shareholding in the third respondent.
The agreement between the applicant and the first respondent was subject to the condition, that, the purchase price would be paid before the 50% shareholding could be transferred to the first respondent.
Once the 50% shareholding was fully paid for, the applicant would ensure that its nominees on the Board of the third respondent resigned, obviously for the first respondent to replace them with its own directors.
The applicant, in support of the application, attached various documents which it believed made clear its case. These are annexures to the founding affidavit.
Annexure B is a joint venture agreement between the second respondent and the applicant.
At the commencement of the hearing, counsel for the three respondents raised a point in limine, namely, that the matter was not urgent.
In his submissions, he raised the point that the urgency to be satisfied in a case such as the present is what can be classified as commercial urgency as there was no fear of physical harm which could befall the applicant.
He further submitted, that, commercial urgency is the fear that the applicant could suffer so serious economic loss as would threaten the very existence of the applicant.
Submitting that the applicant is a company incorporated in China, whose interests in Zimbabwe are as a shareholder, the respondents counsel urged, that, as a shareholder, the applicant does not manage the Joint Venture Company (third respondent) and;
1. That the complaint that the first respondent had misrepresented itself as a shareholder had not caused any loss to the applicant.
2. The allegation that the first respondent has sourced equipment in China on behalf of the third respondent had not caused any loss to the applicant.
The allegation that the second respondent had appointed a Chief Executive Officer to the third respondent without following corporate governance rules i.e without a Board resolution, had not caused any harm to the applicant as it was the prerogative of the second respondent, between 2010 and 2016, to appoint such Chief Executive Officer for the third respondent.
Citing the authority of Silver Trucks and Anor v Director of Customs and Excise 1999 (1) ZLR 490, counsel for respondents submitted, that, no irreparable harm threatening the very existence of the applicant had been demonstrated as a consequence of the respondents conduct complained of.
The respondents counsel observed, that, the certificate of urgency was not helpful on the issue of urgency as its paragraph 6 was a bold allegation that the first respondent and the second respondent were undermining the third respondent as a going concern thus causing irreparable harm and prejudice to the applicant.
Counsel also took issue with the claim by the applicant that it only became aware of the respondents actions on 9 December 2015 as no cogent explanation had been given as to why the visit by the Chinese President, at the beginning of December 2015, had escaped the applicant's attention and knowledge.
Finally, the respondents counsel submitted that the events complained of had already taken place and there was no suggestion that they were to be repeated in future, as an interdict, as a remedy, is used to protect injury or conduct anticipated.
Counsel thus submitted, that, no proper case for the application to be dealt with on an urgent basis had been made out.
Counsel for the applicant submitted, that, the matter was indeed urgent as the first respondent had been conducting itself in several respects in breach of the Sale of Shares Agreement in that:
(a) The first respondent had not yet acquired the 50% shareholding in CASECO (third respondent) and it could not lawfully call itself a shareholder of the third respondent and that the disengagement of the applicant from the Joint Venture with the second respondent had not been finalised. He emphasised that the applicant was still the 50% shareholder of CASECO and the agreements with both the first respondent and the second respondent do not allow the respondents to act as if the applicant had completely disengaged.
The applicant's counsel presented argument showing breaches by the first and second respondents of the agreements but failed to show what loss the applicant would suffer as a consequence of such breach and how such loss could be considered as irreparable.
It is important to note, that, what is holding up the completion of disengagement is the need for the applicant to fulfil the Exchange Control conditions for the authority to disinvest to be granted unreservedly.
The applicant's argument, in regard to potential loss, is premised on the risk that the disengagement may fail in which case (at least its argued) it would remain attached to CASECO as a shareholder.
The applicant's counsel could not adequately explain why the applicant only got to know about the publication of the transactions related in the Herald, forming the basis of its complaint, on 9 December 2015 when the media was awash with the news of the Chinese President's visit from the 1st of December 2015.
In fact, he explained that the news complained of had been carried in newspaper articles of the 4th and 5th December 2015 contradicting a statement on oath that the applicant only got to know of the Herald interviews on 9 December 2015.
One of the documents produced by the applicant to show that the first respondent had been conducting itself in an unacceptable and injurious manner is letter dated 11 November 2015 addressed to CASECO Board Chair and copied to Board of Directors on p90 of the application.
In that letter, the following English version of the letter's contents says:
“However, recently, we have received some troubling information that may hamper the continued advancement of the project (Gwayi Coal–Electricity Integration Power Project).
Specifically, that, the potential investor, Yunnan Linkun Investments Group Co. Ltd (Yunnan Linkun) is engaging several Chinese enterprises and…, enquiries about equipment price as a legal shareholder and also declaring that Shandong Sunlight Investments Co. (applicant) has already transferred its shareholding rights to it.
In addition, Yunnan Linkun have purported to have signed a framework Agreement on the EPC of Gwayi Project with CASECO with relevant subsidiaries of Power China Ltd…,.
In order to seize the opportunity of the visit of China's top leaders to Zimbabwe and to effectively promote the Project with the EPC Contractors, we request that, as Chairman, with the concurrence of the Board of Directors issue an immediate directive for the company to conduct its current activities according to the law and forthwith cease all activities in contravention to Board resolutions to date.”
