The
first appellant, (hereinafter referred to as Chidawu), is the beneficial holder
of all the shares in the rest of the appellants (hereinafter referred to as the
appellant companies). In turn, the appellant companies owned,
cumulatively, in excess of 380 million shares in Pelhams Limited.
On
9 February 2011, Chidawu borrowed an amount of USD3 million from the first
respondent, (hereinafter referred to as Shah). The terms and conditions
attaching to the loan were recorded in two written documents signed by the
parties on 9 and 10 February 2011 respectively. The second document,
referred to by the parties as Annexure “B” provided, in clause 2.1, that in the
event of any inconsistencies in any of the provisions of the two documents, its
provisions would prevail.
The
material terms of the agreement were these;
(i)
Firstly, the loan would attract an interest rate of 18% per annum compounded
monthly. The loan was repayable on or before 20 February 2011, subject to an
extension to 20 March 2011 at the sole discretion of Shah.
(ii)
Secondly, as security for the loan, Chidawu was obliged to provide sureties in
the form of Deeds of Surety executed by each of the appellant
companies. The execution of a Deed of Surety was to be accompanied by the
surrender of the share certificate each appellant company held with Pelhams
Limited.
Chidawu
was also obliged to surrender the said share certificates in negotiable form to
Shah or his nominees by 10 March 2011 in the event that repayment of the loan
would not have been effected by that date. On 9 February 2011, Chidawu
handed over the shares certificates and executed the necessary transfer
documents.
Chidawu
was unable to pay the loan by due date.
Through
his legal practitioners, Messrs Atherstone & Cook,
Shah called up the loan, and by letter dated 11 March 2011, threatened to
liquidate the security in his possession. On 18 March 2011, Messrs Honey & Blanckenberg, on behalf of Chidawu, responded
to the threat as follows:
“We
act for the above named Oliver Chidawu who has instructed us to respond to your
letter dated 11 March 2011.
Your
client's threat to start liquidating the security tendered by our client
without instituting legal proceedings is a clear case of paratie executie. Accordingly, unless we receive written
undertaking from either yourselves or Mr Shah that he is not going to proceed
with the intended sale of our client's security by Monday 21 March 2011, we are
under instructions to lodge an urgent application with the courts for relief.”
On
5 April 2011, Shah caused summons to be issued out of the High Court against
all the appellants, claiming payment of the sum of USD2,700,000=, interest at
the rate of 18% per annum and costs of suit. The appellants entered appearance
to defend and filed a joint plea in which they denied being indebted to
Shah. There does not appear to have been any further communication between
the parties until 13 October 2011, when Messrs Atherstone
& Cook addressed a letter to Honey & Blanckenberg
in the following terms:
“We
refer to previous correspondence addressed to you in this matter. As you will recall, our client is holding 357
million Pelhams shares in negotiable form.
Your
client owes an amount in excess of USD2,550,000= exclusive of collection
commission. We are happy to advise that our client has found a buyer of the
aforesaid Pelhams shares. Accordingly, we advise that if your client fails to
pay the balance outstanding within 48 hours of receipt of this letter Messrs
Lynton Edwards Stockbrokers will be instructed by our client to sell the shares
at a floor price of USD0.00711. In the event that the proceeds of the sale are
not sufficient to cover the debt, our client reserves the right to proceed
against yours in the usual manner.”
The
response from Honey & Blanckenberg was to the
same effect as their previous letter of 18 March 2011. The letter threatened
legal action if they did not receive written undertaking by 14 October 2011 to
the effect that the proposed sale of the shares would not be proceeded with.
There was no written undertaking given, and, on 20 October 2011, the appellants
filed an urgent chamber application to stop the sale. The sale was concluded on
25 October 2011 which was the scheduled date for the hearing of the chamber
application.
It
is common cause that an application to amend the provisional order to
incorporate the sale of the shares and interdict their transfer was dismissed
by the learned judge before whom the application had been placed. She also
found that the founding affidavit had not been commissioned. As a result she
held that there was no application before her.
On
8 November 2011, the appellants made the urgent chamber application, which is
the subject of the appeal. It was opposed by all the respondents, who raised a
preliminary issue on the validity of the certificate of urgency filed with the
application.
It
was contended by the respondents that there were obvious substantive
similarities between the certificate of urgency signed by Miss Njerere, which was attached to the application filed on 20
October under case no. HC10410/11, and the certificate by Miss Mapota accompanying
the application under case no. HC11119/11. It was contended, further, that
in view of the alleged similarities it was demonstrably clear that Miss Mapota did not apply her mind to the facts of the case when
she certified that the matter was urgent. The learned judge found that Miss Mapota's certificate of urgency was a product of copying
and pasting from the certificate filed by Miss Njerere. He
found that she had not applied her mind to the facts of the case. Accordingly,
the learned judge held that he could not act on the certificate of urgency as a
valid document. He dismissed the application with costs.
The
appellants filed the appeal on the following grounds:
1.
That the learned judge a quo misdirected
himself by rejecting as invalid the certificate of urgency duly signed by Tecla
Mapota on the basis that some statements in it were similar to those in the
certificate of urgency filed in case no. HC10410/11.
2.
The learned judge a quo misdirected himself by
making a factual finding that Tecla Mapota did not apply her mind to the
question of urgency on the basis of submissions made from the bar in the
absence of any evidence to that effect.
3.
The learned judge a quo misdirected himself, in
any event, by determining that the fact of common passages or statements being
found in the two certificates of urgency invalidated Tecla Mapota's
certificate.
4.
The learned judge a quo misdirected himself as to
the legal effect of the similarities between some statements and passages in
Tecla Mpota's certificate of urgency and that of Sarudzayi Njerere.
5.
The learned judge a quo misdirected himself by
ignoring that the similarities in some statements in the certificates of
urgency were explicable by reference to the similarities in the facts and
circumstances as set out in the affidavits in both HC11119/2011 and
HC10410/2011.
6.
The learned judge a quo misdirected himself in
coming to the conclusion that there was an unexplained delay, starting from
March 2011, when the facts clearly showed that it was not necessary to institute
proceedings then.
7.
The learned judge a quo misdirected himself by
determining that the appellants should have instituted the urgent application
to stop transfer of the shares even before Justice Makoni had given her
judgment in case no. HC10410/2011.
Rule
244 of the Rules of the High Court provides:
“Where
a chamber application is accompanied by a certificate from a legal practitioner
in terms of paragraph (b) of subrule (2) of Rule 242 to the effect that the
matter is urgent, giving reasons for its urgency, the Registrar shall
immediately submit it to a judge, who shall consider the papers forthwith.”
It
follows that the Certificate of Urgency is the sine qua non
for the placement of an urgent chamber application before a judge. In
turn, the judge is required to consider the papers forthwith and has the
discretion to hear the matter if he or she forms the opinion that the matter is
urgent. In making a decision as to the urgency of the chamber application, the
judge is guided by the statements in the certificate by the legal practitioner
as to its urgency. In this exercise, the court is therefore entitled to read
the certificate and construe it in a manner consistent with the papers filed of
record by the applicant.
In
certifying the matter as urgent, the legal practitioner is required to apply
his or her own mind to the circumstances of the case and reach an independent
judgment as to the urgency of the matter. He or she is not supposed to take
verbatim what his or her client says regarding perceived urgency and put it in
the certificate of urgency. I accept the contention by the first respondent
that it is a condition precedent to the validity of a certificate of urgency
that a legal practitioner applies his mind to the facts. GILLESPIE J had occasion
to discuss the duty that lies upon a legal practitioner who certifies that a
matter is urgent in General Transport & Engineering (Pvt)
Ltd & Ors v Zimbank Corp (Pvt) Ltd 1998 (2) ZLR 301, where he
stated…,.:
“Where
the rule relating to a certificate of urgency requires a legal practitioner to
state his own belief in the urgency of the matter, that invitation must not be
abused. He is not permitted to make, as his certificate of urgency, a
submission in which he is unable to conscientiously concur. He has to apply his
own mind and judgment to the circumstances and reach a personal view that he
can honestly pass on to a judge and which he can support, not only by the
strength of his arguments but on his own honour and name.
…,.
It is therefore
an abuse for a lawyer to put his name to a certificate of urgency where he does
not genuinely believe the matter to be urgent. Moreover, as in any situation
where the genuineness of a belief is postulated, that good faith can be tested
by the reasonableness or otherwise of the purported view. Thus, where a lawyer
could not reasonably entertain the belief he professes in the urgency of the
matter he runs the risk of a judge concluding that he acted wrongfully, if not
dishonestly, in giving his certificate of urgency.”
Whilst
the remarks of the learned judge were not concerned with the validity or
otherwise of a certificate of urgency, they are apposite and pertinent in that
the requirement that a lawyer must apply his or her mind to the facts of the
case is emphasised. In order for a certificate of urgency to pass the test of
validity it must be clear, ex facie the
certificate itself, that the legal practitioner who signed it actually applied
his or her mind to the facts and the circumstances surrounding the dispute.
The
appellants filed two chamber applications. Inevitably, the court had to have
recourse to the certificate of urgency which accompanied each of the chamber
applications. The question of urgency was addressed in five paragraphs in Miss Mapota's certificate of urgency - viz, paragraph(s) 5 to 9
in which she stated the following:
“5.
The first respondent issued summons out of this honourable court under Case No.
HC3403/11 praying for an order that the applicants pay an amount USD2,700,000=.
The applicants defended the action on the basis that they are not indebted to
the first respondent in any manner or in the amount claimed. Further, the
applicants said that the agreement and sureties were void for illegality. The
matter has been referred to trial and is awaiting set down.
6.
On 13 October 2011, the first respondent, through his legal practitioners,
wrote to the applicants' legal practitioners stating that he had found a buyer
for the Pelhams shares.
7.
On 20 October 2011, the applicants filed an urgent application seeking to
interdict the first respondent and anyone acting for him from selling the
shares. The matter was set down for 25 October 2011 which is the same date that
the first respondent then purported to sell the shares. The sale was conducted
after the first respondent had been served with an urgent chamber application
to stop the sale.
8.
The urgency arises from the fact that although the first respondent instituted
proceedings which were referred to trial to enable him to claim the amount he
alleges he lent to the first applicant he has now proceeded to liquidate the
security which had been tendered by the first applicant. This, in my view,
amounts to paratie executie and is unlawful.
9.
If the shares are transferred to second respondent the applicants will suffer
irreparable harm because the shares can be freely traded to multiple buyers on
the stock exchange and the applicants will have no recourse against bone fide purchasers.”
When
one considers the averments made in the certificate, it is obvious and leaps to
the mind that there is an omission in the manner in which the facts surrounding
the matter have been set out. There is no explanation as to what transpired on
25 October 2011 when the first urgent application was scheduled to be heard.
The appellants, in order to have their application heard as urgent, had to
explain what circumstances had arisen after 25 October to justify their
need to have the matter dealt with on an urgent basis. The explanation of
urgency in the certificate dealt with the execution by the first respondent of
the security given to him by the first appellant. This is the same
situation that existed when the initial urgent application was made. The
complaint was that the first respondent had chosen to execute against the
security instead of awaiting the outcome of the proceedings that had been
instituted for payment of the monies that were alleged to be owed.
The
belief that a matter is urgent must be a matter of substance rather than form.
The genuineness of the belief postulated in the certificate must be tested by
reference to all the surrounding circumstances and facts to which the legal
practitioner is expected to have regard. The appellants have not denied that
there is very little difference between the substance of the certificate of
urgency signed by Miss Mapota to that signed
by Miss Njerere. In both certificates, the urgency is said to
arise from the execution, by the first respondent, of the security granted in
compliance with the loan. The words used are the same. The conclusion that
Miss Mapota copied and pasted Miss Njerere's certificate of urgency is inescapable. Once such
a finding is made, it follows that Miss Mapota failed to apply her mind
to the facts of the case before certifying the matter as being urgent.
In
respect of the certificate signed by Miss Mapota, the learned
judge said:
“Mr
Zhou (now ZHOU J) for the applicants' response was that
this was due to the there being a standard way of doing things among legal
practitioners. Mr Uriri, however, argued that it
was demonstrably clear that Mapota did not apply her mind to the facts of the
case before she certified that the application was urgent. The deficiencies are
extensively dealt with from p (p) 2 to 5 of the second respondent's opposing affidavit.
In para 3.1(a) of the second respondent's opposing affidavit it is pointed out
that the loan should have been repaid by March 2011, after which the shares
which had been tendered together with signed share transfer forms in negotiable
form could have been transferred to the first respondent or a third party. This
means the shares had been exposed to disposal by the first respondent from that
date, yet no action was taken to stop the possible sale of the shares till 20
October 2011. It was pointed out that Mapota did not deal with or explain that
delay in her certificate of urgency proving that she did not apply her mind to
the facts of this application before certifying the application as meriting the
urgent attention of this court. I accept that this should have been
explained and that failure to do so shows a failure by Mapota to apply her mind
to the facts of this application.
In
para 3.1(b), the second respondent questions the applicants' failure to
institute litigation when the two notices of sale of the shares were given by
the first respondent. Again, Miss Mapota, did not deal with that issue in her
certificate of urgency, again, demonstrating her failure to deal with the facts
of the application before certifying it as urgent.
In
para(s) 3.1(e) and (g), the second respondent questions why the applicants did
not communicate with second respondent on realising that it was buying the
shares. The second respondent was only engaged through these proceedings
eighteen days after the applicants became aware of the sale of the shares to
it. Again, Mapota did not deal with this issue in her certificate of urgency.
She should have explained why the applicants did not engage the purchaser of
the shares if they were treating this matter as one of urgency. She also
did not explain the delay between the application which was dismissed by MAKONI
J and this application in spite of it being common cause that the applicants'
attempt to amend that application was dismissed. This means from that date the
applicants were aware of the need to make this application but did not do so
until 8 November 2011. Mapota should, if she was applying her mind to the
urgency of this matter, have explained this delay.”
The
learned judge cannot be faulted in his reasoning. There were pertinent issues
regarding delays in instituting proceedings which should have been obvious had
Miss Mapota been applying her mind. There
was an evident delay in the proceedings which had to be explained before the
matter could be considered as being of an urgent nature. The appellants had
tendered the share certificates together with signed transfer forms. Once
the due date for the settlement of the loan passed without payment, it must
have occurred to the appellants that the first respondent had the right to sell
the shares. The fear of irreparable harm arising from the sale of the
shares would have arisen on 10 March 2011. There is no explanation from Miss Mapota as to why no action was taken soon after 10 March
2011 to stop the sale….,.
The
defects relating to her certificate of urgency show that Miss Mapota was
doing no more than parroting Miss Njerere's opinion as
expressed in the earlier application. She failed to deal with patent and
pertinent facts placed before the court by the parties. These facts were known
to her at the time she certified the application as urgent. Critically, the
inescapable conclusion is that her opinion, tested against the yardsticks of
those common facts, cannot stand scrutiny. It cannot be genuine.
She
did not apply her mind to the facts.
