Account Mandates, Service or Maintenance Charges, Nostro Accounts, Freezing of Accounts and Custodial Services

View Appeal
HH273-10 : WYNINA (PRIVATE) LIMITED vs MBCA BANK LIMITED
Ruled By: PATEL J

Price Controls and In Duplum Interest At the conclusion of the trial, the Court questioned the legality of the defendant's account maintenance fees in terms of the laws controlling commodity prices and service charges at the relevant time. After having considered the governing legislation, counsel for the defendant accepted that the maintenance fees were unlawful and also that ...

HH43-06 : ZIMBABWE DEVELOPMENT BANK vs NAGA SALONS and NYARAI CHIWAURA and BETTY CHIWAURA
Ruled By: KUDYA J

In his testimony, Dumisani Sibanda explained that the $13,272,000= represented the processing fee calculated at the rate of 3.5% of the capital amount. He conceded, during cross-examination, that 3.5% of the capital amount was $8,750,000=….,. I am…, satisfied that the plaintiff proved that it is entitled to claim $8,750,000= as bank charges, representing the processing fee.

HH198-15 : MUCAL ENTERPRISES vs STEWARD BANK
Ruled By: TSANGA J

The defendant, Steward Bank, applies for absolution from the instance at the close of the plaintiff's case in matter founded on damages for breach of contract. The plaintiff is Mucal Investments. In its summons it seeks payment of US$553,544=42 by the defendant. The amount is sought as damages for loss of business between January and July 2013 ...

The defendant, Steward Bank, applies for absolution from the instance at the close of the plaintiff's case in matter founded on damages for breach of contract.

The plaintiff is Mucal Investments. In its summons it seeks payment of US$553,544=42 by the defendant. The amount is sought as damages for loss of business between January and July 2013 resulting from the plaintiff's bank account having been frozen by the defendant under circumstances which will be elaborated. Interest is also sought at the prescribed rate from the date of the summons to date of full payment. In addition, costs of suit are further sought as between attorney and client.

The damages are founded on the allegation that it was a tacit term of the agreement between the parties that the defendant would honour all cheques and negotiable instruments and transfers properly drawn.

The plaintiff, which was then engaged in the business of supplying vegetarian products states through its Director, Lion Chirove, that it could not access its account to effect business payments despite demands being made to the defendant and a court order having been obtained.

The plaintiff company was founded in 2006 and its Directors were then Avila Zvenyika and Lion Chirove. In May 2010, two brothers, Bruce Smith and Ahmad Smith, who had joined them in a business partnership, were made directors of the company. As explained in a “to whom it may concern letter” written in October 2010, being non-Zimbabweans and in the absence of a valid work or residence permit, the new partners could not sign on any Bank account. The letter explained that they had been temporarily removed from the company's CR14 form but that they were, in essence, still directors pending regularisation of their permits.

In September 2011, the plaintiff moved its banking account from CBZ to the defendant Bank.

At the time of opening the account its signatories were Lion Chirove and Avila Zvenyika. Mr Bruce Smith was however made a signatory in place of Mr Lion Chirove in a letter to the Bank dated 30 April 2012. It advised that a Board meeting had resolved to appoint him together with A Zvenyika. However, on 19 November 2012, following a dispute with the Smith brothers, Avila Zvenyika, the company's administrator, had written to instruct the Bank not to process any transactions unless it was authorised by the two Directors as captured on the CR14 form, namely, herself and Lion Chirove.

From the plaintiff's testimony, what flamed the dispute emanated from the fact that the Smith brothers had clandestinely registered a company in South Africa giving themselves a 100 percent shareholding when the agreement had been to go 50-50 with Mucal Enterprises. They had also registered a company in Zimbabwe giving themselves a 70 percent shareholding and the plaintiff and its director 30 percent. The dispute fully ignited when the Smith brothers proposed that a shareholder's agreement be signed between Mucal Investments and the two brothers as a separate agreement. Under the agreement, Mucal Enterprises would be owned by the Smith brothers in their South African company. The plaintiff's directors, Lion Chirove and Avila Zvenyika perceived this move as designed to swallow and push it out of business.

It was then that the instructions were given to the Bank regarding the change of signatories whereby Mr Chirove was reinstated as signatory in place of Mr Bruce Smith.

He further testified that on 21 January, when he tried to effect telegraphic transfers for the sum of R98,000= to a South African supplier (Fry Group), the defendant refused to honour the transaction, and, instead, froze the account. However, it emerged, in cross examination, that the reason why the Bank froze the account was that it had received instructions from Mr Bruce Smith that he had been improperly removed as a director and signatory.

The plaintiff's position is that the internal dispute was none of the Bank's business and that it was its responsibility to abide by the instructions of the directors as captured on the CR14 form. This showed the two directors as himself and his wife Avila Zvenyika.

Out of an abundance of caution, the defendant, on the other hand, had frozen the account until the dispute had been solved. At the time, the plaintiff held $24,797=35 in its account as per bank statement presented as Exhibit S.

That the dispute also set off a chain of events is not denied. Nonetheless, the plaintiff's position is that had the Bank risen above the dispute in light of its contractual obligations to its “true” client, none of the losses subsequently suffered would have occurred.

The chain of events is crucial to grasp as it places crucial variables to the otherwise linear causation of losses suffered as articulated by the plaintiff. The events were as follows:

1. On 23 January 2013 the Bank refused to effect the transactions following the representations made to it by Mr Bruce Smith that he had been improperly removed as signatory.

2. On 6 February 2013 a provisional order was sought by the plaintiff against the defendant in which it sought interim relief compelling the Bank to make accessible to “applicants directors” funds held under account 60101051739101 and to allow the free and unfettered transaction and operation by the applicant of its bank account. The provisional order was granted by consent of all parties. The final order sought to declare Lion Chirove and Avila Zvenyika as having the sole and exclusive right to transact under the relevant account.

Meanwhile, on this very same date, as the above order was being granted, the Registrar of Companies wrote to Mrs Zvenyika stating that they had received a complaint of fraudulent activities concerning removal of two directors (the Smith Brothers) without their knowledge and consent. She was asked, as company secretary, to clarify the position.

Criminal proceedings were also pending in the Magistrate's Court against the plaintiff's director, Lion Chirove, for fraud.

3. On 14 February 2013 the Smith brothers applied for an interdict, under HC882/13, to prevent Lion Chirove and Avila Zvenyika from accessing the account. The plaintiff's testimony was that this order was not granted as the court took the position that it was not possible to interdict an order granted by consent. Under cross examination it emerged that the crucial reason was also to provide the plaintiff a chance to seek for a final order articulating the rightful directors since what had been granted was simply a provisional order authorising “directors” to access the account.

4. On 11 March 2013 one Martha Chakanyuka, a Principal examiner in control of companies, signed a statement stating that the CR 14 form signed in October 2010 was fake and that the stamps and signatures were fake. She highlighted the procedures for change of directorship and averred that these had not been followed.

5. On 12 March 2013 Avila Zvenyika, in her capacity as company secretary, then replied stating that the claims were unfounded and highlighting that the company is wholly owned by its two directors, Lion Chirove and herself. She also explained that the two non-shareholding directors had been removed by a company resolution in October 2010. She also stated that the two directors, namely, the Smith brothers, had agreed to be removed back then to pave way for a loan since their immigration papers were not in order. She stated that everything had been done above board.

6. On 13 March 2013 the plaintiff's lawyers had written to the Bank regarding the opening of the account which was still not opened.

7. On 22 March 2013 the defendant's lawyers had written to the plaintiff's lawyers advising them of receipt of the statement made by the Registrar of Companies concerning the anomalies that had been detected. They also advised that the dispute needed to be resolved since the court had granted the order on the 6^th of February on the basis that the CR14 now under dispute had been the correct one. In view of these developments they also pointed out that their client, the Bank, was unable to accede to the request to activate the account.

8. On July 5, 2013 Martha Chakanyuka signed another statement - this time essentially confirming that following certain documents being availed that the CR14 form earlier criticised as improper was in fact proper. She confirmed that the Smith brothers had indeed been removed as directors on 4 October 2010.

9. On 16 July 2013 the plaintiff's directors finally accessed the account having been informed, according to the plaintiff, through a casual encounter with the Bank's manager, that the account had been reopened.

The Plaintiff's perceived loss

The gravamen of the plaintiff's evidence was that over the time when it was not allowed access to its account, it had contracts with several retail supermarkets as a supplier of vegetarian products. These included shops such as OK, Bon Marche and Spar shops. A contract with OK, dated 2010, was placed before the court as Exhibit E. The contract itself however did not indicate the value or volume of business between the parties.

From the OK and Bon Marche shops, the plaintiff valued its business for the relevant period when its account was frozen at $50,000= with a profit of $26,000= after expenses had been paid. Exhibits H1-H6 were handed in. Three of these were statements generated by the plaintiff's director while another three were said to be generated by OK although there was no official verification of these documents.

Also presented were the plaintiff's own calculations of business with the Spar shops (Exhibits G1-G5). However, the plaintiff did not produce any evidence or proof that business was actually being conducted constantly or on a monthly basis.

The plaintiff's director also presented its projections of business it was set to do with TM and Pick n Pay. It said the value lost amounted to approximately $74,000=. In addition, the plaintiff's company had a credit facility with TN Bank for up to $4,000= per month and was doing business with TN Harlequin (Exhibit F).

It terms of lost business, it had also secured an arrangement to supply the Seventh Day community with vegetarian products at its Adventist camp sites. With 52 campsites attended by about 5,000 people per camp annually, the plaintiff's estimation was that it lost a potential of US$5,000= per campsite giving a total loss of $260,000=.

In July 2012, the plaintiff had gotten another product for distribution from Good Hope International Enterprises for soya milk. It alleged that it would have been a sole distributor, and, on arrangement, would have been a regional distributor. However, no proof of this averment was produced. At the time, the plaintiff stated it had received an order by consignment from Good Hope for $30,000=. This would have been serviced from the account.

The plaintiff stated that, overall, it was expecting, during the period its account was frozen, a total of US$495,000= worth of purchases with Good Hope and from this amount $693,000= worth of sales thereby giving it profit of $198,000=. The plaintiff later clarified, in cross-examination, that it was still negotiating this contract and therefore no contract could be availed. However, it had received the order by consignment for $30,000= though, again, no proof was produced. From the Fry's Group, business lost over the seven month period was estimated to $102,712= after expenses.

The company, according to its Director, had also made inroads into the possible supply of meat-free products to Catholic schools around the country under which he estimated it would have made at least $20,000 - $25,000 per month.

All the above was the kind of business the plaintiff said it lost on probabilities. The devastating consequence arising from the defendant's perceived breach of contract was not only loss of income, according to the plaintiff's director, but also termination of contracts.

The distributorship business with the Fry Group was terminated in April 2013 and with Good Hope in September 2013. It lost all its suppliers because it failed to pay them. It lost all its clientele whom it failed to service. It was, according to him, a sole distributor of vegetarian products. It was also working with a “niche market”. It also lost its reputation in the process. By December 2012 the company, according to its director, had grown to 12 employees. Today it has none.

The plaintiff blames the defendant for the sum total of these woes because it could not access its account to conduct its business.

Interrogation of the loss in cross examination

The plaintiff was quizzed by the defendant's counsel…, on the company's financial accounting procedures.

The plaintiff's director conceded that he is fully aware of the need to keep proper books of account by any company. He agreed that such books would indeed vividly indicate the company's flow of business and any profit and loss made. He was also in agreement that annual tax returns would clearly indicate the actual profits made for tax purposes. He said all such documentation existed with respect to the plaintiff company but admitted that they had not been tendered as evidence.

He did not dispute that a Bank can place administrative requirements over those who operate accounts and that it is entitled to refuse access where it has concerns as to the authenticity of any representative. However, he was adamant that the Bank acted improperly, especially as it had been given the necessary information as who the directors were.

The plaintiff's director also confirmed that indeed the Smith brothers had come in as financial partners as the company was going through financial difficulties at the time. Their terms were to be shareholders on a 49-51 percent basis. The other condition was to secure them as signatories to the account.

It emerged from cross-examination that certain monies invested by the Smith Brothers had not been paid back by the plaintiff. The Smith brothers were therefore seeking to protect their investment.

He also agreed that no final order had been sought to the provisional order that had been granted by the court on 6 February 2013. He also conceded that the day that the order was granted, on 6 February 2013, was also the very day that the Registrar of Companies had written to the other director, Ms Zvenyika, seeking an explanation of allegations of possible fraudulent removal of directors. This information had not been before the court at the time that it was granting the provisional order.

He also did not deny that the Smith brothers had also sought an urgent chamber application to stay operation of the provisional order granted by the court on 6 February 2013.

He further agreed that he had not taken any concrete action to actively challenge the statement and that the statement was withdrawn in July against a backdrop of investigations the Registrar had carried out. He did however maintain that the statement was challenged when he was being prosecuted.

Although his view was that the provisional order granted on 6 February 2013 was clear as to its directive regarding the re-opening of the account. He did concede that it was the final order that specifically sought to confirm himself and Ms Zvenyika as the true directors of the company.

He admitted that no action was taken on his part to seek a final order as directed by Justice PATEL in HC882/13 which would have put an end to the dispute at least as way back as March 2013. He also admitted that on the same day that bail conditions were relaxed to allow him to operate the account was also the same day that the Registrar of Companies made the allegation that there was possible fraudulent activity.

The application for absolution

The defendant has applied for absolution from the instance largely on the basis that the plaintiff has essentially failed to make out a case against the defendant that is deserving of a reply. It is also argued that the plaintiff had failed to prove any breach of contract entitling it to special damages.

In terms of general principles on absolution from the instance the case of United Air Charter v Jarman 1994 (2) ZLR 341 (S) condenses the position as follows:

“The test in deciding an application for absolution from the instance is well settled in this jurisdiction. A plaintiff will successfully withstand such an application if, at the close of his case, there is evidence upon which the court, directing its mind reasonably to such evidence 'could or might (not should or would)' find for him.”

The above principle draws on cases such as Supreme Svc (1969) (Pvt) Ltd v Fox Goodridge (Pvt) Ltd 1971 (1) RLR 1; Lourenco v Raja & Steam Laundry (Pvt) Ltd 1984 (2) RLR 151.

The principles have also been canvassed in a number of cases such as Walker v Industrial Equity Ltd 1995 (1) ZLR 87 (S); Standard Chartered Finance Zimbabwe Ltd v Georgias & Anor 1998 (2) ZLR 547 (H); Dube v Dube 2008 (1) 326.

In seeking to put the defendants to its defence, it is argued, by the plaintiff, that the Bank knew who the directors were as these were indicated on the CR14 form. It is also argued that as the account in question was the plaintiff's sole business account it should have been apparent that it would suffer loss if it was not permitted to transact under that account. The dispute, it insists, could have been solved at a later stage. It argues that for reasons such as these, which are common cause, it has done enough to put the defendant on its defence.

The plaintiff also lays emphasis on the fact that at this stage it is not about whether the evidence is true or false. In its view, absolution should only be granted where it has failed to establish an essential element of its claim. The plaintiff emphasises its contractual relationship with the defendant; the fact that the defendant breached the contract. In support of this, the plaintiff points out that the money would have been paid to suppliers and not to themselves.

In opposing absolution from the instance, the plaintiff places reliance on the position articulated in the case of Standard Chartered Finance Zimbabwe Ltd v Georgias & Anor 1998 (2) ZLR 547 (H) that in considering absolution from the instance a judicial officer should always lean in favour of the case continuing. If there is reasonable evidence on which the court might find for the plaintiff, the case should continue.

However, the preponderance to 'lean in favour of' is not the same as saying a judicial officer must always lean in favour of the case continuing. It is in cases where there is doubt that the court should lean in favour of continuing as SMITH J emphasized in Standard Chartered Finance Zimbabwe Ltd v Georgias & Anor 1998 (2) ZLR 547 (H). Where a judicial officer has no doubt in their mind from the evidence submitted, then by all means absolution should be granted. The key issue for consideration therefore is whether sufficient evidence has been placed before the court upon which the court might find for the plaintiff.

Factual and legal analysis

While damages are sought against the defendant as the unitary cause of the loss of business suffered by the plaintiff, the facts informing the claim are far from being one-dimensional.

The evidence that has been placed before the court indicates that an internal dispute and competing claims within the plaintiff company where at the heart of the chain of converging events that led to operational problems for the plaintiff company including the freezing of its account. Yet, only one cause, the freezing of its account is isolated by the plaintiff as leading to his perceived loss.

Just because a plaintiff strongly believes that a factor that he has isolated is the predominant cause of its problems does not exclude other explanations which have a bearing on the matter from being considered by the court in deciding whether sufficient evidence has been placed before it to exclude their impact.

Where a problem is multiply-caused, as in this case, the question of whether or not the court might find for the plaintiff on the evidence adduced, of necessity, depends on whether the evidence placed before the court, on a balance, sufficiently rules out other explanations as causes for the loss suffered by the plaintiff. In other words, if, from the evidence adduced it cannot be inferred, on a balance of probabilities, that the single behavioural event isolated by the plaintiff was the cause of its loss, then the evidence is simply not sufficient. The evidence adduced must, on a balance of probabilities, sufficiently pry apart other variables such as to leave the one the plaintiff relies on as the dominant cause. If, at the close of the plaintiff's case, insufficient evidence has been placed before the court to support an averment, this will not change even if the defendant is put to its defence.

What this court has before it at the conclusion of the plaintiff's case is a convergence of multiple factors, predominantly emanating from events within the plaintiff company that complicated the issue for the plaintiff.

The defendant's actions were largely responsive to such outside stimuli as opposed to being the dictator of them. Also, the defendant's actions, in refusing to release the funds, have to be put in perspective of the events that unfolded.

The Bank's client was the corporation. There was a dispute regarding the directors of the corporation. A criminal complaint was made by a competing director. The Registrar of Companies, at first, also confirmed the allegations of fraud and it was only in July when their initial position was reversed. Although a provisional order was obtained it is instructive that on the very day of its obtainment the dispute escalated rather than abated. The Bank was essentially faced with divergent claims to the account by two feuding parties each claiming legitimacy.

The plaintiff argues that the defendant breached its contract in failing to pay on demand.

Yet, in light of the facts, the Bank would equally have found itself liable to a claim from either of the competing parties to the account for wrongfully paying out of the account or un-authorised payment since each side had laid claim to the account.

There was no breach since its client was the corporation and competing claims had been placed before it by two sides within that corporation relating to its directorship. Only where the dispute was resolved in terms of clarity of directors could the Bank safely pay out. Only a foolish Bank would have paid out to any of the claimants without a final court order as to the true status of each of the claimants.

While the defendant may have acted on the strength of the documents written by the Registrar of Companies it was not the author of these documents.

The plaintiff also rests its argument for dismissal of absolution on the basis that it suffered damages as a result of the breach.

The case of Trust Bank of Africa Ltd v Marques 1968 (2) SA 796 (T) is cited in support of the contention that a Bank which fails to honour cheques when funds are available risks a claim of damages. The plaintiff argues that the contracts it placed before the court were sufficient, namely, those from OK Zimbabwe and the TN credit facility.

Finally, the plaintiff also argues that its loss was not remote.

Special damages are ordinarily regarded in law as being too remote to be recoverable. They are claimable in situations where it can be deduced that the parties actually or presumptively foresaw that they would probably flow from a breach of contract and were within the contemplation of the parties. As stated by GUBBAY CJ…, in United Air Charter v Jarman 1994 (2) ZLR 341 (S) in determining whether they are claimable it is of assistance to look to;

(a) The subject matter and terms of the contract itself;

(b) The special circumstances known to both parties at the time they contracted.

I do not think that damages arising from a quarrel among the directors was within the contemplation of the parties. In any event, the core point remains whether sufficient evidence has been placed before this court to justify such damages.

One crucial manner a purportedly dominant claim, particularly one for damages, is strengthened is by way of statistical evidence to support it.

Being a claim of special damages, the plaintiff had the responsibility to prove its quantum of damages by placing all relevant evidence before the court in order to prove its claim. Such special damages will not be granted if they are too remote.

The defendant argues that the evidence placed before the court was too scanty. No proof of invoices or proof of orders that were received and needed honouring by the Bank were submitted to the court by the plaintiff. These would have provided irrefutable proof of business that was actually lost. Also, the plaintiff did not produce any evidence which would have supported their position that the money that the defendants refused to pay would have been going to suppliers and not to themselves.

In seeking absolution from the instance, the defendant further argues that the plaintiff's books of accounts and tax returns would have been proof of the plaintiff's profitability as alleged by its Director. The plaintiff's director, in cross examination, averred to the existence of these documents but admitted that they had not been brought to court. In its written arguments against absolution the plaintiff then stated that the audited accounts were taken by the Smith Brothers and that the tax returns are filed with the taxman and can always be taken into account in damages.

Even if the plaintiff's argument is accepted that the books were taken away and that the tax returns were filed, it cannot, in my view, escape the responsibility of ensuring that these were placed before the court given that they form the heart of the dispute. It is not for the defendant to go and extract tax returns for the plaintiff. That was clearly the plaintiff's own responsibility. It is also not the plaintiff's averment that the soft copies of the accounts are what was taken. They simply state that the accounts were taken by the Smith brothers.

As argued by counsel for the defendant, where evidence is available that would assist the court to properly quantify damages and it is not produced, then the matter must fail and the defendant must be absolved from the instance. The case of Monumental Art Co. v Kinston Pharmacy (Pty) Ltd 1976 (2) SA 111 was cited in support of this contention.

Also, a party who shies away from producing evidence cannot escape the inference that he knows that such evidence will not be favourable to him. The cases of Ntsomi v Minister of Law & Order 1990 (1) SA 512 (C); Tshishonga v Minister of Justice & Constitutional Development and Anor 2007 (4) SA 135 were cited by the defendant.

If accurate statistical evidence that is representative of the company's steady growth and success of over the years, as exemplified by tax returns, was available, then, it should have been obtained. How else would the court know from the outset that it is not dealing with isolated phenomenon in so far as the plaintiff's claims of a steady growth of the business over a number of years is concerned?

The plaintiff director's own testimonial evidence of growth and projected profits is not the kind of evidence that the court has in mind as constituting “sufficient evidence upon which the court might find for the plaintiff.”

In cases of this nature, where loss of business is alleged, tax returns and audited accounts constitute the type of evidence that would, on the face, constitute a sufficient basis for a claim upon which the court might find for the plaintiff.

Therefore, on the issue of damages for loss of business the strength of the plaintiff's evidence is essentially 'dead in the water' as a result of the failure to place the kind of credible evidence that one would expect of a company as pointed out by the defendant in its application for absolution from the instance.

At the close of the plaintiff's case, the preponderance of evidence did not point to the defendant as having been the actual cause of its loss or even being in any way the major cause of the plaintiff's loss. I am satisfied that there was insufficient evidence on which a reasonable court could or might find for the plaintiff.

The defendant seeks that costs be awarded on a higher scale especially on the grounds that the plaintiff had ample time to put all its evidence together in preparing for trial, and, as such, it has been put through an unnecessary expense.

Costs, in general, recompense a successful party for expenses to which he has been put in defending a claim. They are generally awarded on an ordinary scale. Courts are reluctant to award costs on a higher scale because they are highly punitive.

It would seem to me that the overall weakness of the plaintiff's case has emerged from the totality of having his day in court to present his case as he is entitled to. It would therefore be, in my view, tantamount to exercising hindsight to land him with costs on a higher scale.

The application for absolution from the instance succeeds with costs on an ordinary scale.

HH223-13 : HWANGE COLLIERY CO. LTD and HWANGE COAL GASIFICATION CO. PL vs HWANGE COAL GASIFICATION CO. PL and TENDAI SAVANHU and KINGDOM BANK LTD and STANBIC BANK LTD and GUO FENG and ORS
Ruled By: MAFUSIRE J

There has been ferocious litigation in a space of four months pitting several protagonists. The dispute was convoluted and the issues multi-faceted. At the centre was a company called Hwange Coal Gasification Company (Private) Limited. For ease of reference I shall refer to this company as the Coal Gasification Company. The one protagonist was a Chinese company by the name of Taiyuan Company Limited. The variants to that name, vehemently disputed by the other protagonists, were Taiyuan Sanxing Company Limited and Taiyuan Sanxing Economic and Trade Company Limited….,.Hereafter I shall refer to it as “Taiyuan”.

The other protagonists were two Chinese nationals and businessmen called Guo Feng (“Feng”) and Su Longmin (“Longmin”).

In the hearing before me, and for convenience, the two were referred to as the “Samukange faction”.The reason shall soon become apparent.

The next lot of protagonists were Zimbabwean nationals and businessmen Cephas Msipa (“Msipa”) and Gilbert Chahwanda or Chawanda (“Chawanda”). In the hearings they were referred to as the “Dzvetero faction”.

The next lot was Hwange Colliery Company Limited (“Hwange Colliery”). Three commercial Banks, Stanbic Bank Zimbabwe (“Stanbic”), Kingdom Bank Zimbabwe (“Kingdom”), and Allied Bank Zimbabwe (“Allied Bank”) were cited in some of the cases.

The last protagonist was one Tendai Savanhu (“Savanhu”).

Apart from the urgent chamber applications listed as cases 1 to 6 above there had been two others before them. They had pitted essentially the same parties. At the time of the hearing three other proceedings, in the form of a court application and two actions, were still pending.

The litigation related to the protagonists' investment in, and control of the two companies Taiyuan and the Coal Gasification Company.

The brief background is that in October 2006 some Chinese nationals, including Feng and Longmin, got associated in a joint venture with some Zimbabwean nationals that included Msipa, Chawanda and one Leo Mugabe (“Mugabe”). The object of the joint venture was to invest in various ventures. For that purpose, the Chinese nationals used Taiyuana as the special purpose vehicle. Both Feng and Longmin were directors. The special purpose vehicle used by the Zimbabwean nationals was a company called Stoat Mining (Private) Limited (“Stoat”) in which Mugabe, Msipa and Chawanda were directors.

In 2007, Taiyuan, now comprising both the Chinese and the Zimbabwean nationals, on the one part, and Hwange Colliery on the other, entered into a written agreement for the construction of a coke oven and a battery at Hwange Colliery on the basis of build, operate, own, and transfer (“the BOOT agreement”). In June 2011 the parties obtained an investment licence from the Zimbabwe Investment Authority (“the ZIA licence”). The ZIA licence stipulated a shareholding configuration of 75% for Taiyuan and 25% for Hwange Colliery.

The Coal Gasification Company was the special purpose vehicle formed by both Taiyuan and Hwange Colliery. The shares were held 75% by Taiyuan and 25% by Hwange Colliery.

The principal object of the Coal Gasification Company was the processing and carbonization of coal from resources within Zimbabwe. In terms of the BOOT agreement, the configuration of the Board of Directors for the Coal Gasification Company would be five (5) from Taiyuan and two (2) from Hwange Colliery. The chairman of the Board would be a Taiyuan appointee. Taiyuan's representatives on the first Board comprised Feng and Longmin as executive directors; Msipa and Chawanda as non-executive. Another Chinese national by the name of Zhang Jin Yuan (“JinYuan”) was the chairman. From Hwange Colliery came Savanhu and one Fred Moyo (“Fred Moyo”) then chairman and managing director respectively.

Taiyuan and Hwange Colliery soon clashed.

One of the points of contention by Hwange Colliery was that the Coal Gasification Company had breached the BOOT agreement. Hwange Colliery moved to cancel that agreement and to seek damages. Under HC537/13 it sued both Taiyuan and the Coal Gasification Company for damages amounting to $21 million. The matter was still pending at the time of the urgent chamber applications.

The other bone of contention by Hwange Colliery was that it had been induced to enter into an agreement with a non-existent company. This allegation stemmed from the confusion surrounding the identity of Taiyuan. The BOOT agreement and the ZIA licence identified Taiyuan as Taiyuan Sanxing Company Limited. However, Hwange Colliery alleged that such a company did not exist and that only after the BOOT agreement had been executed was a company called Taiyuan Sanxing Economic and Trade Company Limited formed in China.

Hwange's further bone of contention was that its BOOT partner, Taiyuan, was in turmoil. Its shareholders were at each other's throat. This allegation stemmed from the fact that the Chinese and the Zimbabwean nationals were bringing a series of applications against each other in the name of the Coal Gasification Company with both factions claiming to be the legitimate and authorised representatives of that company. Hwange Colliery was apprehensive that its investment in the Coal Gasification Company would be dissipated.

Hwange Colliery further claimed that Taiyuan had reneged on its pledge to bring into the country an amount of US$40 million as part of its injection into the joint venture. Therefore, Hwange Colliery was seeking cancellation of the BOOT agreement.

Within the Coal Gasification Company itself matters soon came to a head.

In March 2013 JinYuan, as chairman, called for the holding of an Annual General Meeting. It was scheduled for 24 April 2013. Feng and Longmin were vehemently opposed to that meeting. They moved to block it. On 19 April 2013 they filed an urgent chamber application under case no HC3003/13 in the name of Taiyuan Sanxing Economic and Trade Company Limited. Messrs G N Mlotshwa & Co represented the applicant. Hwange Colliery was cited as the substantive respondent. One Ananias Banda, the Company Secretary, and the Registrar of Deeds, were cited as nominal respondents.

The matter came before MAWADZE J.

A point in limine was taken that the Taiyuan as cited was not the Taiyuan as was recorded on the ZIA licence and with which Hwange Colliery had entered into an agreement. Mr Mlotshwa conceded. The application was dismissed with costs on the point in limine.

The Annual General Meeting (AGM) went ahead as scheduled. Among other resolutions, Feng and Longmin would be suspended from the Coal Gasification Company.

A day after the Annual General Meeting (AGM), i.e. on 25 April 2013, Feng and Longmin, in the name of Taiyuan Sanxing Economic and Trade Company Limited, filed an ordinary court application under HC3160/13 for an order nullifying the AGM and all the resolutions taken thereat. At the time of the hearings that application was still pending.

In May 2013 Feng and Longmin were formally suspended and called to a disciplinary hearing to answer various charges including one of fraud. The suspension letters were signed by Msipa as director. Feng and Longmin were eventually dismissed as executive directors in default of appearance at the disciplinary committee.

The Coal Gasification Company reconstituted its Board of Directors. The new Board wrote to the Banks, Stanbic, Kingdom and Allied Bank to “freeze” the company's accounts.

On 5 June 2013 Feng and Longmin, together with three other Chinese nationals, were barred access to some Harare premises rented by the Coal Gasification Company from Hwange Colliery. The one letter was signed by Chawanda. The other, in long hand, was signed by one Chininga who was said to be from Hwange Colliery. But this was disputed.

Feng and Longmin went on the attack.

They threatened the Banks and warned them not to take instructions from persons that were not signatories to the accounts. Feng reminded them that he was the signatory and that the signing instructions had been given by him. On 6 June 2013, before BERE J, Feng and Longmin obtained a spoliation order in the name of the Coal Gasification Company against Mugabe and Hwange Colliery. They were granted unhindered possession and control of the aforesaid premises. Mugabe and all those claiming rights through him were ordered to maintain peace and to allow undisturbed access to the applicant and to return any company documents and office keys. However, in subsequent proceedings, Hwange Colliery claimed that Feng and Longmin had been mala fide in that they had obtained the spoliation order not with any genuine intention to re-occupy the premises but merely to gain access in order to pilfer company assets such as office furniture and to cart them away to unknown destinations.

On 20 June 2013 Feng and Longmin filed two further urgent chamber applications (“the twin applications”). They were almost identical. They were both in the name of the Coal Gasification Company as the applicant. The applicant, in reality Feng and Longmin, was now represented by Venturas and Samukange. The one application was under HC4861/13. It is case no. 4 above. In that application it was sought to “unfreeze” the account at Kingdom Bank. The respondents were Kingdom, Chawanda and Msipa. Antonio & Dzvetero represented Chawanda and Msipa. Hwange Colliery was not cited. Kingdom remained neutral and sought to abide by the court order.

The other application was filed under HC4895/13. It is case no. 5 above. In that application the first respondent was Stanbic. That Bank also remained neutral and agreed to abide by the order of the court. Again, Hwange Colliery was not cited. HC4895/13 came before DUBE J. She heard it on 24 June 2013. The matter was settled by consent. The parties agreed to an interim order. The freeze on the Stanbic account would be uplifted. The authorised signatories would be Fred Moyo, one Tafara Gadzirai (“Gadzirai”) and Feng. These would have unconditional access to the account. Gadzirai would countersign for all withdrawals. The actual wording of the material portion of the order was as follows:

“That pending the final determination of this matter, Applicant is granted the following relief:

1. The 1^st Respondent be and is hereby ordered immediately and forthwith upon service of this order to unfreeze the Applicant's account being 0240057759001 held by the 1^st Respondent.

2. Applicant's authorised signatories named Fred Moyo, Tafara Gadzirai and Feng Guo shall have unconditional access to the account for the purposes of transacting on behalf of applicant provided that Tafara Gadzirai shall counter-sign for all payments.”

HC4861/13 came before MATHONSI J. He heard it on 26 June 2013. The parties also agreed to an interim order. It was almost identical to the one by DUBE J. However, before MATHONSI J could consider the application and the draft order by consent, Hwange Colliery applied to be joined to the proceedings. This was granted. The matter was postponed to the following week. As the Samukange faction filed the twin applications aforesaid the Dzvetero faction also filed its own. This was done on 21 June 2013, i.e. a day after the twin applications.

The Dzvetero application was filed under HC4897/13. It is case no.6 above. It was also in the name of the Coal Gasification Company as the applicant. The respondents were Feng, Longmin, Hwange Colliery, Allied Bank, Stanbic, Kingdom and a firm of chartered accountants called Welsa International Chartered Accountants. The Dzvetero application came before me. The basic relief sought was also to unfreeze the Bank accounts but to appoint the accountants as the sole administrators of those accounts pending the determination of the court application by the Samukange faction under HC3160/13. That was the application in which the validity of the Annual General Meeting (AGM) and the resolutions made thereat were being challenged.

It was upon perusal of the Dzvetero application that I became aware of the one Samukange application under HC4895/13 which had been placed before DUBE J. At that stage, I was neither aware of the other Samukange application under HC4891/13 that had been placed before MATHONSI J nor of the rest of the other proceedings referred to above. I did not immediately set down the Dzvetero application.

I had queries.

One of the averments in that application was that an Extraordinary General Meeting to resolve the entire shareholder issues in the Coal Gasification Company had been scheduled for 24 June 2013. Excluding the intervening weekend, the 24^thofJune 2013 was the next business day. So, in my view, there could have been no reasonable apprehension of an irreparable harm ensuing in that short space of time. Furthermore, it was common cause that it was the Dzvetero faction that had ordered the freeze on the Bank accounts. Therefore, I wondered why the intervention of the courts was being sought when the issue was now properly set for resolution in the boardroom by the “corporate parliament” of the company.

The supreme rule-making authority of a company rests with a general meeting of the members; see GOWER's Principles of Modern Company Law, 4^th ed…,.

At that stage, I was unaware that one of the issues that had triggered the twin Samukange applications was that the Banks had taken the position that given the apparent turmoil in the Coal Gasification Company, and that given the conflicting instructions and threats that they were receiving in respect of those accounts, the Banks would not unfreeze the accounts in the absence of a court order.

I called for the record of the one Samukange application under HC4895/13. But, by that time, the aforesaid order by consent by DUBE J had already been granted. However, I then became aware of the other Samukange application under HC4861/13 which had been placed before MATHONSI J and of the rest of the other applications referred to above. I then called for all the records.

Only thereafter did I get to appreciate the multifaceted disputes.

I set down the Dzvetero application for hearing on 27 June 2013. Mr T Mawere represented Hwange Colliery. Mr T Dzvetero represented the Dzvetero faction and the Coal Gasification Company. Mr J Samukange represented the Samukange faction and also the Coal Gasification Company.

At the hearing, Mr Mawere expressed concern that Hwange Colliery had not been cited in the twin Samukange applications and that the consent order by DUBE J had far reaching consequences that were prejudicial to Hwange Colliery in that, among other things, Fred Moyo, whom the two warring factions had selected as a co-signatory to the Bank accounts, was no longer employed by Hwange Colliery and that therefore he could not possibly represent it. It was further pointed out by Mr Mawere that the resolutions that the Samukange faction had used as authority to bring their twin applications in the name of the Coal Gasification Company had been signed by Savanhu - yet Savanhu had since been dismissed from the Board of Hwange Colliery.

In the premises, Mr Mawere gave notice that Hwange Colliery had filed, or would be filing, three urgent chamber applications;

(1) For an order that Hwange Colliery be joined to HC4895/13 and to vary the consent order by DUBE J so that Fred Moyo would be removed from the list of signatories and replaced by someone else properly appointed by Hwange Colliery;

(2) For an anti-dissipation interdict to prohibit the disposal of any of the assets of the Coal Gasification Company, especially the coal stocks, coking oven, and battery, by anyone purporting to act on behalf of that company until Hwange Colliery's claim for the cancellation of the contract and for damages under HC537/13 was determined; and

(3) For an interdict against Savanhu to stop him from masquerading as a director, representative, and appointee of Hwange Colliery on the Board of the Coal Gasification Company because he had been dismissed.

Mr Samukange vehemently opposed the intended applications.

Essentially, Mr Samukange's submission was that the choice of Fred Moyo as a co-signatory to the Bank accounts, in terms of the consent orders, was motivated not by his previous connection to Hwange Colliery but by the fact that he was a neutral person and that he was still a director of the Coal Gasification Company anyway even though he might have lost his employment with Hwange Colliery. Mr Samukange further submitted that, in terms of the agreement between the parties, Hwange Colliery would not be involved in the day to day management of the Coal Gasification Company; that the issue of signing on Bank accounts was one of management and that therefore Hwange Colliery was in effect seeking to sneak into the management of the Coal Gasification Company by the back door. He further submitted that the dispute between the two factions was not one for shareholders but one involving company management and that the interdict against Savanhu would be opposed on essentially the same basis, namely, that until Savanhu was properly removed from the Board of the Coal Gasification Company by that company itself Hwange Colliery had no right to do so especially given that it was just a minority shareholder.

The anti-dissipation order would be opposed on the basis that its effect would virtually paralyse and collapse the Coal Gasification Company the business of which was essentially the processing and disposal of coal.

Given the multi-faceted nature of the dispute and the issues between the parties, and given that they were so intertwined, it was readily agreed that all the matters would be consolidated and heard by a single judge.

Barring any unforeseen objections or complications it was agreed that I would hear the matters myself. The hearing was adjourned to a later date to be advised.

Hwange Colliery's three applications were subsequently filed under HC5171/13, being case no.1 above; HC5105/13, being case no.2 above and HC5331/13, being case no.3 above.

Eventually, I caused the matters to be set down for hearing on 5 July 2013.

Hwange Colliery was now represented by Advocate T Mpofu and Stanbic by Mr I Chagonda.

On that day, a new issue arose. It was on the consent order by DUBE J. It was for that single issue that Mr Chagonda was appearing. The new issue was this: it transpired that the parties could not agree on the interpretation of that order. Stanbic thought that the order could either mean that the three signatories Feng, Fred Moyo and Gadzirai had all to sign for any bank withdrawals but that the order could also mean that any two of them could sign for as long as one such signatory was Gadzirai.

The two factions favoured the interpretation that allowed any two to sign for as long as one of the signatories was Gadzirai. On the other hand, Hwange Colliery was vehemently opposed to that interpretation as it was feared that there could be connivance just to facilitate withdrawals. Consequently, Hwange Colliery favoured a restrictive interpretation that would allow withdrawals only when all the three signatories would sign.

On behalf of Stanbic, Mr Chagonda submitted that given the several threats for damages against it, the Bank would not permit any withdrawals until such time that the new signing arrangement was clarified.

The matter was adjourned to 11 July 2013 because Mr Samukange did not have some of the papers in the applications by Hwange Colliery. Before the resumption of the hearing on 11 July 2013 the Dzvetero faction had withdrawn its application under 4897/13. Therefore, the issue as to whether the interim management of the Bank accounts could be placed in the hands of the chartered accountants had automatically fallen away.

But, yet again, a new issue had arisen! It was also on the consent order by DUBE J.

Previously, on the day that the order had been granted, i.e. 24 June 2013, the Samukange faction had been represented by Advocate Firoz Girach. When the parties had come unstuck at Stanbic, as aforesaid, they had convinced themselves that what really they had consented to was the arrangement that any two of the three signatories could sign for any withdrawals for as long as one of such signatories was Gadzirai. Thus, the parties had then arranged to instruct Advocate Girach to approach DUBE J and seek an amendment of the consent order so that it would align with what allegedly was their true intention and true agreement. With Mr Dzvetero's consent, DUBE J had amended the order.

But there was a problem. Hwange Colliery had not been consulted.

Both factions had become aware, during the second sitting before me, that Hwange Colliery was disagreeing with such an interpretation and that not only would it be opposed to such an amendment but also that in its own application to be joined to those proceedings and for an amendment to that order it would move for an express provision that all the three signatories would have to sign for any withdrawals. Furthermore, since all the matters had been consolidated and would be heard by me, the propriety of pulling out the single record for purposes of amending the single order in terms which were disputed and in the absence of such an interested party as Hwange Colliery and without disclosing to both Advocate Girach and DUBE J that Hwange Colliery had in fact since filed its urgent chamber applications aforesaid was questioned.

Advocate Mpofu, for Hwange Colliery, expressed serious concern on the development. Be that as it may, I concluded the hearing on 11 July 2013. The crisp issues were;

(1) Whether Hwange Colliery was entitled to have the consent order by DUBE J amended in such a way as to remove Fred Moyo from the list of the Bank signatories and have him replaced by someone else from its stable;

(2) Whether Hwange Colliery was entitled to have that consent order further amended so that it would reflect that all withdrawals from the Bank accounts would be signed for by all the three signatories, whoever they would eventually be;

(3) Whether Hwange Colliery was entitled to the anti-dissipation interdict against the property of the Coal Gasification Company pending the resolution of its action for the cancellation of the contract and for damages in HC537/13; and

(4) Whether Savanhu should be interdicted from holding himself out as one with authority to represent the Coal Gasification Company and from attending meetings of, signing documents for and on behalf of and representing himself as one with authority to represent that company....,.

(1) WHETHER HWANGE COLLIERY WAS ENTITLED TO REMOVE FRED MOYO FROM THE LIST OF SIGNATORIES AND SUBSTITUTE HIM WITH ANOTHER

In its application under HC5105/13, filed on 27 June 2013, Hwange Colliery, after setting out the nature of the multi faceted dispute between the disparate parties, made the point that it was so undoubtedly an interested party that it was manifestly improper for it to have been excluded from the twin Samukange applications. As final relief, Hwange Colliery sought an order that it be joined to those proceedings. It also sought costs against any party that would oppose its application. As interim relief, Hwange Colliery sought an interdict against Fred Moyo to restrain him from representing the Coal Gasification Company in any capacity whatsoever, particularly as signatory to that company's accounts or as its director. Hwange Colliery also sought, as an interim relief, an amendment to the consent order by DUBE J so that it would read as follows:

“Applicant's authorised signatories, namely, Staford Ndlovu, Tafara Gadzirai and Feng Guo all signing together shall have unconditional access to the account for the purposes of transacting on behalf of Applicant.”

The effect of the amendment sought by Hwange Colliery was obviously to remove Fred Moyo from the list of the Bank signatories and to substitute him with Staford Ndlovu and to ensure that any bank withdrawals would have to be signed for by all three signatories.

The parties' arguments regarding the position of both Fred Moyo and Savanhu on the Board of Directors for the Coal Gasification Company has already been set out. During the hearing it appeared Fred Moyo, who was neither represented nor present, was contesting his termination of employment with Hwange Colliery. However, that was not the basis for opposition by the Samukange faction. Furthermore, that was not an issue before me. Hwange Colliery predicated its argument on clause 4.5 of the BOOT agreement. In both its application and in argument before me Hwange Colliery referred to that agreement as the joint venture agreement between itself and Taiyuan.

On the other hand, the Samukange faction stressed that it was not the joint venture agreement but just the BOOT agreement.

As a matter-of-fact, the written document neither called itself the joint venture agreement nor the BOOT agreement. In the preamble, it simply referred to itself as an “Agreement for the construction in Zimbabwe of a Coke Oven and Battery on a Build, Operate, Own and Transfer (BOOT) basis”.

In clause 4, it was recorded that the parties would incorporate a company in Zimbabwe with limited liability the principal object for which would be the processing and carbonization of coal from resources within Zimbabwe and that the name of such company, subject to the approval by the Registrar of Companies, would be known as “Zimbabwe Coal Gasification Company Limited, or, alternatively, Hwange Coal Gasification Company Limited ('the Company')”.

The term 'Company' was defined to mean “the project vehicle that will be incorporated for purposes of implementing the project”.

By 'Project' was meant the planning, feasibility study, design, engineering technical services, construction, commissioning, operation, owning in Zimbabwe and transfer of a coke oven battery, etc. as specified.

In my view, whether the agreement was a joint venture agreement or the BOOT agreement seems immaterial and nothing turns on it. I have consistently referred to it as the BOOT agreement simply for ease of identification.

Clause 4.5 dealt with the respective rights of the BOOT partners to appoint directors to the Board of the Coal Gasification Company. Taiyuan was entitled to appoint five (5) directors. Hwange Colliery was entitled to appoint two (2). The total number of directors would be seven (7).

Mr Mpofu argued that Fred Moyo and Savanhu had been appointed onto the Board of the Coal Gasification Company by Hwange Colliery. The two held their directorships in that company at the pleasure of Hwange Colliery. The choice of Fred Moyo as one of the signatories to the Bank accounts in terms of the consent order necessarily stemmed from his previous position as an appointee of Hwange Colliery on to the Board of the Coal Gasification Company. Fred Moyo, having lost his employment with Hwange Colliery and having been removed from its own Board, could no longer remain as its representative on the Board of the Coal Gasification Company. It was extremely harmful to the interests of Hwange Colliery in the Coal Gasification Company for Fred Moyo to be appointed signatory, even in an interim capacity, especially given the turmoil in that company.

On the other hand, Mr Samukange's argument was that the two factions had settled for Fred Moyo as the third signatory to the Bank accounts purely as he was considered to be a neutral party. It was not on the basis that he had previously been an appointee of Hwange Colliery onto the Board of the Coal Gasification Company. His appointment as a signatory was not for the purposes of representing Hwange Colliery. Mr Samukange further argued that Hwange Colliery was a mere minority shareholder in the Coal Gasification Company. It had no right, either in terms of the BOOT agreement or any other agreement, to be involved in the day to day management of that company. That right had been entrusted to Taiyuan, particularly his faction. Signing bank accounts was part and parcel of the day to day management of a company. By imposing its own choice of signatories Hwange Colliery was seeking to “sneak” into the management of the Coal Gasification Company by the back door. Mr Samukange referred to clause 7 of the BOOT agreement. It provided as follows:

“7. Management during Operation Period During the agreed 10-year Operation period after commissioning of the Project, Taiyuan shall:

7.1 Operate and manage the Project in terms of a Management Contract to be entered into with the Company; Management Contract shall stipulate details with respect to the content, method, and costs of management.

7.2 Ensure that the Project is operated, maintained, and managed according to accepted standards and shall report regularly to the Board of Directors of the Company.

7.3….,.

7.4…,.

7.5…,.”

Mr Mpofu argued that other than the BOOT agreement there were no further agreements entered into by the parties and that clause 7 was irrelevant.

In my view, it is evidently untenable for the Samukange faction to want to rely on any prior agreements or the status quo pertaining to the management of the Coal Gasification Company when everything else seemed to have gone wrong. The situation obtaining in the Coal Gasification Company was abnormal. One faction was getting a director or directors aligned to it to sign resolutions authorising it to bring proceedings in the name of the company. The other faction would do exactly the same.

At the hearing there was this remarkable situation that two sets of legal representatives purported to represent the same company.

As I observed at the beginning, this court had been called upon on numerous other occasions in just a space of four months to resolve boardroom wrangles. These were abnormal times for the Coal Gasification Company and all those associated with it. This was starkly demonstrated by the two orders which both factions had consented to.

Feng said before the disputes he had been the sole signatory. But, obviously, with the consent orders he now had to contend with two others. Furthermore, even accepting that the choice of Fred Moyo had been motivated by the fact that he was a neutral party, a position disputed by Hwange Colliery, he certainly was not a man from the street. If neutrality was the sole factor, no doubt there would be numerous other neutrals. The choice of Fred Moyo was demonstrably influenced by the fact that he had been a Board member of the Coal Gasification Company. He still appeared on the list of directors for that company's Form CR14.

I accept the argument that the tenure of Fred Moyo's directorship on the Board of the Coal Gasification Company was at the pleasure of Hwange Colliery. He having left Hwange Colliery, Fred Moyo no longer had any business being associated with the Coal Gasification Company in any capacity - including as signatory to the Bank accounts for that company. Hwange Colliery was the only other shareholder in the Coal Gasification Company - albeit a minority one. However, the majority shareholder, Taiyuan, was itself rocked by internal squabbles. It was not unreasonable for Hwange Colliery to become apprehensive. It was not unreasonable for it to seek to be involved in proceedings that had a material bearing on its interest in the company in which it had helped establish and in which it was the only other shareholder with reserved seats on the Board.

At any rate, the entire arrangement that persons who previously had no signing powers on the Bank accounts of the company now did was only an interim and stop gap measure taken with the reasonable view to keep everything intact or under control until the disputes were permanently resolved.

In terms of clause 7 of the BOOT agreement…, it was obviously contemplated to enter into a management contract for the management of the BOOT project. But, it appears that this never materialised. Therefore, the only guiding document on the rights and duties of the BOOT partners remained the BOOT agreement.

In the premises, I find that the application by Hwange Colliery in which it sought the amendment of the consent order by DUBE J to remove the name of Fred Moyo from the list of signatories and to have it substituted with that of Staford Ndlovu had merit.

However, before I grant that application, it is necessary to deal with the issue of joinder.

Hwange Colliery's application to be joined to the proceedings was sought as a final order. Strictly speaking, until it was joined it could not properly seek to interfere with the order to which it was not a party. Thus, it could not properly seek to have the consent order by DUBE J amended before it was joined.

However, I hold the view that this was merely a technical error in drafting. The relief sought as an interim order should first have sought the joinder and thereafter the rest of the orders sought. For the sake of expediency I am prepared to condone the error.

After all, the substantive relief being pursued is the removal of Fred Moyo from the list of the Bank signatories and his substitution thereof with someone else.

I also appreciate that the preparation of the papers could have been made in a rush in view of the perceived urgency.

Misjoinder or non-joinder of parties is governed by Order 13 Rule 87. The relevant provision is sub-rule (2)(b). It reads as follows:

“(2) At any stage of the proceedings in any cause or matter the court may on such terms as it thinks fit and just either of its own motion or on application –

[a]…,.

[b] Order any person who ought to have been joined as a party or whose presence before the court is necessary to ensure that all matters in dispute in the cause or matter may be effectually and completely determined and adjudicated upon, to be added as a party;”…,.

The purpose of joinder is largely convenience or necessity. Joinder saves time, effort, and costs.

HERBSTEIN & VAN WINSEN, The Civil Practice of the High Courts and the Supreme Court of Appeal of South Africa, 5^th ed…, state:

“A third party who has, or may have, a direct and substantial interest in any order the court might make in proceedings or if such an order cannot be sustained or carried into effect without prejudicing that party, is a necessary party and should be joined in the proceedings, unless the court is satisfied that such person has waived the right to be joined.”

Under Rule 87, the court is given a wide discretion. The court can order joinder even in the absence of an application by any person.

In this case, not only was there an application but also it was not opposed. The only mistake was that Hwange Colliery sought it as part of the final relief. Thus, Hwange Colliery is entitled to be joined as a party to the proceedings in HC4895/13. It is also entitled to have the consent order by DUBE J, on 24 June 2013, amended by the deletion of Fred Moyo's name therefrom and having it substituted thereof with that of Staford Ndlovu.

(2) WHETHER HWANGE COLLIERY WAS ENTITLED TO HAVE THE CONSENT ORDER BY DUBE J FURTHER AMENDED SO THAT IT WOULD REFLECT THAT ALL WITHDRAWALS FROM THE BANK ACCOUNTS WOULD BE SIGNED FOR BY ALL THE THREE SIGNATORIES

I was not satisfied that Hwange Colliery's reason for wanting all three signatories to sign for any withdrawals was properly articulated. In reality, this particular aspect seemed to have been raised as an appurtenance to the main concern relating to Fred Moyo.

These matters are really crying out for resolution in the boardrooms of the corporations involved. The court should not be extensively involved any more than it should.

After the consent order by DUBE J, the Dzvetero faction had become satisfied with the measure of protection afforded by that interim signing arrangement. As a result, it went on to withdraw its own application under HC4897/13 that had been placed before me.

The Coal Gasification Company is a going concern. One of the reasons cited for the urgency of the matters was that there were recurrent expenditures such as salaries and utility bills as well as ongoing contractual obligations that needed to be paid. That was why the freeze on the Bank accounts had to be lifted as a matter of urgency to avoid causing irreparable damage to the company.

I consider that by seconding one of its men to the Coal Gasification Company as an interim co-signatory to the Bank accounts of that company Hwange Colliery has achieved a measure of protection. It should now be up to the Board of that company to sort out the interim signing arrangement rather than to allow a minority shareholder to make further inroads into the management of the company.

In the absence of the consent of the other parties I am not convinced that Hwange Colliery should have its way on this. The court should not get involved in such detail. It was all right to do so when the original parties before DUBE J agreed between themselves and consented to the order. Furthermore, it appeared throughout the hearing that all the parties were satisfied with Gadzirai being a co-signatory in whatever signing arrangement. He was still a co-signatory even after the amendment of the order by DUBE J which relaxed the signing arrangement to allow any two to sign instead of all three.

In the premises, the further amendment sought by Hwange Colliery to have all three signatories signing for any Bank withdrawal is denied....,.

1....,.

2. The interim order by consent issued by Honourable Dube J on 24 June 2013 in HC4895/13 be and is hereby amended by the deletion of the name “Fred Moyo” wherever it appears and the substitution thereof with the name “Staford Ndlovu”. The interim signing arrangements agreed to, or ordered, in these matters shall apply in relation to all the Bank accounts for Hwange Coal Gasification Company [Private] Limited.

View Appeal
HH207-15 : G BANK ZIMBABWE LTD vs ZIMBABWE REVENUE AUTHORITY
Ruled By: KUDYA J

This is an appeal filed on 3 September 2013 by a registered commercial bank in the High Court in terms of section 65 of the Income Tax Act [Chapter 23:06]. It arises from taxation in the four areas of staff retrenchment costs, Nostro accounts, Nostro charges [non-resident tax on fees] and offshore loans.

At the appeal hearing, the appellant called the evidence of 6 witnesses and produced a compendium of documentary exhibits encompassing some 1,207 pages. These documents were contained in 2 large box files, 2 lever files and 1 flat file. In addition, 10 loose leaf documentary exhibits that served as a useful summary to the compendium were produced.

The respondent did not lead any evidence. It was content to rely on the averments made in the 15-paged Commissioner's case and the 76 paged Rule 11 of the Income Tax Rules documents.

On 16 November 2012, the respondent issued to the appellant three amended assessments in respect of income tax for the tax years ending December 2009, 2010 and 2011 [p 1-3 Rule 11 documents], respectively.

The respondent objected to the assessments on 12 December 2012. The objections in respect of the subject matter for which the present appeal is concerned with were disallowed on 15 August 2013 [p 4-7 of Rule 11 documents]. However, on 21 November 2013 the appellant proceeded to issue further amended assessments for the tax year ending 31 December 2010 and 31 December 2011, respectively, after allowing deductions for VAT expenses incurred in the two years in question.

The issues for determination were:

1. Whether the appellant correctly brought the provision for retrenchment costs to account in its income tax return in the 2009 tax year.

2. Whether the respondent was entitled to deem the appellant's offshore Nostro accounts as interest-bearing accounts and the appropriate rate of interest.

3. Whether the respondent was entitled to attribute interest earned by non-resident related parties on loans made to businesses in Zimbabwe to the appellant.

4. Whether bank charges raised by offshore Banks holding the appellant's Nostro accounts amounted to fees under paragraph 1 of the 17th Schedule of the Income Tax Act....,.

WITHHOLDING TAX

The last issue for determination is whether the bank charges that were raised by offshore Banks holding the appellant's Nostro accounts amounted to fees under paragraph 2(1) of the 17th Schedule of the Income Tax Act [Chapter 23:06]. The paragraph reads:

“2. (1) Every payer of fees to a non-resident person shall withhold non-residents' tax on fees from those fees and shall pay the amount withheld to the Commissioner within ten days of the date of payment or within such further time as the Commissioner may, for good cause, allow.”

Fees are defined in paragraph 1(1) of the 17th Schedule in the following terms:

“1. (1) In this Schedule, subject to subparagraph (2) —

'fees' means any amount from a source within Zimbabwe payable in respect of any services of a technical, managerial, administrative or consultative nature, but does not include any such amount payable in respect of…,.

(2) For the purposes of this Schedule —

(a) Fees shall be deemed to be from a source within Zimbabwe if the payer is a person who or partnership which is ordinarily resident in Zimbabwe;

(b) In determining whether or not non-residents' tax on fees should be withheld, the question as to whether or not —

(i) The payer is a person or partnership ordinarily resident in Zimbabwe; or

(ii) The payee is a non-resident person;

shall be decided by reference to the date on which the fees are paid by the payer;

(c) Fees shall be deemed to be paid to the payee if they are credited to his account or so dealt with in that the conditions under which he is entitled to them are fulfilled, whichever occurs first;

(d) Not relevant.”

The averments made by the appellant in paragraphs 34 to 37 of its case are that:

34. The foreign Banks in which the appellant held its Nostro accounts raised transaction-related charges in respect of cash repatriation, cash ordering or Visa card costs.

35. The appellant paid those charges directly to the Banks concerned without deducting therefrom any amount in respect of withholding tax.

36. The Respondent contends that the charges raised by the Banks holding the Nostro accounts, which were paid by the Appellant, constitutes fees.

37. The Appellant contends that the payments made were in respect of bank charges and not in respect of fees, whether of a technical, managerial or consultative nature and are not subject to the withholding tax.

The Head of Corporate Banking testified how transactions were conducted in the Nostro accounts.

A customer/client would instruct the appellant to make payment to a third party. The appellant generated a telegraphic transfer through SWIFT, a safe international payment processing platform used by all Banks to transfer money from one Bank to another, to transfer the funds from its relevant Nostro account to the third party's designated Bank account.

In line with international banking practice, Swift automatically charged a fixed rate against the Nostro account based on the number of clearing transactions that operated through the system. SWIFT charged the related account directly from that transaction by debiting the account without raising an invoice. He also stated that the Nostro Bank charged normal bank charges in line with the requirements of the regulatory authorities in which they reside.

When he was cross examined he equated the Nostro bank charges with fees paid by customers of local Banks for services rendered and charges levied for maintaining an account with the local Bank. He clarified that the appellant was charged fees for particular transactions that went through the Nostro accounts. He stated that the appellant maintained a mirror account for each Nostro account to track transactions in each account. He conceded that the debit represented money earned by the foreign Bank.

Counsel for the appellant submitted that the appellant was not liable for withholding tax on two grounds;

(i) The first was that the payment was not made from a source within Zimbabwe; and

(ii) The second was that the services for which the charges were levied were not of a technical, managerial, administrative or consultative nature.

He relied on Sunfresh Enterprises (Pvt) Ltd t/a Bulembi Safaris v Zimra 2004 (1) ZLR 506 (H).

In that case, CHEDA J held, inter alia, that payment of a commission by a foreign client to a foreign marketing agent of a local Safari operator outside the country did not, under paragraph 1(1) of the 17th Schedule of the Income Tax Act, constitute payment of fees from within Zimbabwe even though the originating cause was in Zimbabwe.

It seems to me that the facts in Sunfresh Enterprises (Pvt) Ltd t/a Bulembi Safaris v Zimra 2004 (1) ZLR 506 (H) are distinguishable from the present facts.

In casu, the appellant conceded, in its pleadings, that it paid the charges debited by the Nostro Banks. Paragraph 1(2) of the 17th Schedule of the Income Tax Act deems the source to be from within Zimbabwe if the payer is ordinarily resident in Zimbabwe. The appellant is ordinarily resident in Zimbabwe.

If the commission in Sunfresh Enterprises (Pvt) Ltd t/a Bulembi Safaris v Zimra 2004 (1) ZLR 506 (H) was deducted from the overall hunting fee remitted to the safari operator, as submitted by counsel for the appellant, I would, with respect, differ from the finding of CHEDA J. The payment by the foreign client to the foreign based agent, in my view, would simply constitute a prepayment on behalf of the safari operator. It would have been subject to withholding tax.

In the present matter, the charges were interchangeably referred to as fees by the Head of Corporate Banking.

Counsel for the appellant submitted that the Nostro bank charges were not subject to withholding tax as they did not fall under any one of the four categories of technical, administrative, managerial or consultative.

It seems to me that the four categories in question are merely adjectives which describe a particular activity. According to the Shorter Oxford English Dictionary 'administer' means, inter alia, “to manage;” “to handle” while 'administrative' is defined as “pertaining to management.” One of the many permutations of 'to manage' is “to deal with carefully”.

Like McDONALD JP, in Commissioner of Taxes v F 1976 (1) RLR 106 (AD)…, where he was of course referring to “transaction, operation or scheme”, I would agree that each of the words “technical, managerial, administrative and consultative” that is used in the paragraph under consideration:

“is of wide and general import and there are a few activities of a taxpayer which will not be appropriately described by one or other of them.”

The activities that were carried out by the Nostro Banks on the various Nostro accounts and by SWIFT clearances were administrative in nature. The clearing or processing of transactions by SWIFT were, in my view, both administrative and technical. They involved the use of software that does not issue invoices but systematically and automatically debits the cost of each transaction on the account.

I am satisfied that the charges raised by offshore Banks holding the appellant's Nostro accounts amounted to fees under paragraph 1 of the 17th Schedule of the Income Tax Act....,.

(d) In respect of the last issue, on withholding tax, I hold that the respondent properly raised withholding tax on the bank charges that were raised by offshore banks holding the appellant's Nostro accounts as they constituted fees under paragraph 1 of the 17th Schedule of the Income Tax Act [Chapter 23:06].

View Appeal
HH207-15 : G BANK ZIMBABWE LTD vs ZIMBABWE REVENUE AUTHORITY
Ruled By: KUDYA J

The appellant relied on the oral evidence of its Head of Corporate Reporting cum Deputy Chief Finance Officer who is also a member of the Bank's Asset and Liability Management Committee….,.

He defined a Nostro account as a current account (also known as a clearing account), which a Bank in one jurisdiction opens in another jurisdiction to facilitate customer transactions in the currency of that jurisdiction. It is thus a current account held by a Bank in the books of a correspondent Bank in another country.

Nostro accounts facilitate trade and transactions between countries of varied currencies. He produced the list of all the 22 Nostro accounts, exhibit 3 and pages 536-538 of the bundle, held by the appellant throughout the world. The appellant holds Nostro accounts with other Banks of the same name worldwide (related parties) and other Banks not related to it (unrelated parties). Ten (10) of the accounts were held with related parties. The Nostro accounts, whether with related or unrelated parties, are all held at arm's length.

The witness stated that the most active Nostro accounts for the appellant were the Rand account held in Johannesburg South Africa with an unrelated party and the United States dollar account held in New York with a related party. He stated that the deposits into the Nostro accounts are made by customers and not by the appellant. The money is deposited directly into the customer's account and reflected in the Nostro account simply because the appellant is the banker to the customer.

The witness testified that Nostro accounts do not earn interest; a fact confirmed by his Chief Finance Officer on p30 of the Rule 11 documents.

It was evident from the evidence of the Head of Corporate Reporting that the appellant did not earn any interest on the deposits in the Nostro accounts. He produced a letter, exhibit 5, from the Director Global Head of USD Clearing Product Management, Americas, dated 2 September 2014, in response to a query raised on interest rates on clearing accounts. The letter reads:

“We are writing to you in response to your recent enquiries with regard to the non-payment of interest on your clearing account held with us.

As you will be aware, the global economy entered a recession (the Great Recession) in 2009, which had significant implications on the banking sector. The Federal Reserve took extraordinary actions in response to the financial crisis to help stabilize the US economy and financial system.

The actions included reducing the level of short-term interest rates to near zero. The Federal Fund's average rate since 2009 has been about 13bps (0.13%) whereas the average yields for three month US Treasury Bills since 2009 has been 8bps (0.08%) (refer to appendix to this letter) [produced as exh 4].

As a result of such low yields, interest rates on deposits placed in banks in the United States were significantly impacted, with many banks paying very little or no interest on deposits. We are aware that in some cases some of our competitor banks would in fact charge to hold customer deposits - resulting in 'negative interest' to their customers. The low interest environment continues to persist to date.

[Related Bank] NY, in general, pays no interest on the majority of the clearing accounts held for our clients, regardless of whether they are from [related Bank group] or from external parties.

We therefore confirm that the non-payment of interest on your clearing accounts with us has been, and remains, in line with market practice.”

Exhibit 5 confirmed that the appellant did not earn interest income on deposits in its United States dollar Nostro account resident in New York in the United States of America. The witness also produced exhibit 4, the Bloomberg US Generic Government 3 months' bond yield for any placement funds for the period 2 January 2009 to 14 October 2011. The average interest earned during that period was 0.08%. He confirmed his Chief Finance Officer's observation that call accounts earn the highest rate in those foreign jurisdictions.

The witness indicated that the appellant could only earn interest on transfer of the deposits from the Nostro account to an investment account such as a call account. The Bank also earns interest from buying Treasury Bills or other interest-bearing instruments. Interest was paid on the placement funds and accounted for in the respective tax years.

In 2012, a directive from the Reserve Bank of Zimbabwe stopped the offshore investment of funds from Nostro accounts….,.

His testimony on the prevailing local position, before RTGS was introduced, tallied with the response of the appellant's Chief Finance Officer to the respondent of 10 December 2012 [p 30-33 of Rule 11 documents].The Chief Finance Officer indicated that in 2009 and 2010 before RTGS was introduced; the only option for local Banks was to hold foreign balances either as cash or Nostro balances. All Banks, including the Central Bank, opened correspondent Bank relationships and used Nostro accounts to hold such funds in foreign Banks. The entire Zimbabwe National Payment System in this period was conducted through Nostro accounts and the level of balances was high for all Banks reflecting the size of clients for each Bank. He set out four reasons for Nostro accounts. These were;

(i) To ensure Bank liquidity to curtail a run on the Bank;

(ii) To maintain minimum liquidity levels set at the time by the Reserve Bank of Zimbabwe at 25% of customers deposits;

(iii) To safeguard depositor funds by diligent, prudential lending and thorough risk assessments of prospective clients; and

(iv) To support prompt settlement of customers' transactions….,.

He revealed that the decision to move money from Nostro to RTGS to cash depended on the risk appetite and assessed needs of the Bank. He maintained that at the commencement of the multi-currency regime the Bank adopted a low asset to deposit ratio as it needed to fully understand the risk factors bedevilling the local economy.

HH86-09 : CHAWASARIRA TRANSPORT (PVT) LTD vs THE RESERVE BANK OF ZIMBABWE
Ruled By: BHUNU J

The respondent, that is to say the Reserve Bank of Zimbabwe is a body corporate established in terms of the Reserve Bank Act [Chapter 22:15]. Its function, among others, include acting as the Exchange Control Authority in terms of the Exchange Control Act [Chapter 22:05] as read with the Exchange ...

On the other hand, the applicant is a duly registered company which is in the business of exporting commodities.

In terms of section 7 of the Exchange Control Regulations (Currency Exchange) Order S.I.9 of 2004, the applicant is required to acquit its export documentation, that is to say, repay or settle its debts or obligations to the respondent arising from export receipts commonly known as CD3 forms. The section reads:

“7(1) With effect from the 1st January 2004, every business organisation engaging in the export of goods and services shall be required to acquit the export documentation in respect of those exports.”

Failure to acquit CD3 forms in terms of the Exchange Control Regulations (Currency Exchange) Order S.I.9 of 2004 amounts to a criminal offence punishable by the courts.

Sometime in 2000, the applicant fell into arrears with the acquittal of some of its CD3 forms.

As a result, it was prosecuted, convicted, and fined in the Magistrates Court. In sentencing the applicant, the trial magistrate found special circumstances for not ordering repatriation. As a result, he sentenced the applicant to a fine of $2,000,000 but declined to order repatriation as requested by the State.

Repatriation, in terms of the Exchange Control Regulations (Currency Exchange) Order S.I.9 of 2004 means to pay back.

Following the conviction and sentencing of the applicant, the respondent demanded the acquittal of the outstanding CD3 forms in terms of the Exchange Control Regulations (Currency Exchange) Order S.I.9 of 2004.

The applicant refused to repay or settle its debts to the respondent arising from the outstanding CD3 forms arguing that it had been absolved by the magistrate from paying its debts to the respondent whereupon the respondent allegedly invoked the sanction provided by section 7 of the Exchange Control Regulations S.I.9 of 2009.

The effect of which was to freeze the applicant's foreign currency account number 9440031502000.

The applicant then filed this application seeking a declarator to the effect that it has been absolved from regularizing or acquitting its CD3 forms by the Magistrates Court.

It also sought an order overriding the sanction imposed by the respondent.

The respondent has objected to the applicant's application on the basis that it has not exhausted its domestic remedies and that the magistrate's refusal to order acquittal of the CD3 forms did not amount to absolving the applicant from regularizing or acquitting its CD3 forms according to law.

The issues which arise from the undisputed facts is:

(i) Whether or not the magistrate, in sentencing the applicant, absolved it from regularizing or acquitting its CD3 forms according to law; and

(ii) Whether or not the applicant is properly before this Court.

While it is desirable that parties should be encouraged to exhaust their domestic remedies before approaching the courts, the mere existence of domestic remedies does not oust the unlimited jurisdiction of this Court.

The Court has therefore discretion whether or not to entertain the application.

Having regard to the fact that the regularization or acquittal of CD3 forms has a direct bearing on the fiscus, the country's economy, and the applicant's business operations, it is in the national interest that the matter be determined as soon as possible. That being the case, I have decided to determine the matter on the merits so as to avoid unnecessary delays which may have the effect of prejudicing both parties and the nation at large.

I now proceed to determine the application on the merits.

In sentencing the applicant, the trial magistrate declined to make a repatriation order on the basis that he had found special circumstances. In his reasons for sentence…, the magistrate remarked that:

“For all the forgoing reasons, it is this court's finding that special reasons or circumstances exist in relation to both the offence(s) and the offender. See S v Chisiwa 1981 ZLR 666 (H): S v Mbano 1990 (1) ZLR 270 (SC).

It will be considered favourable that the Accused Company is a first offender.

Of course, the message must be distinctly conveyed to the Accused Company, and would be offenders, that, CD3 forms must be acquitted within stipulated times as directed.

It will be noted also that quite substantial amounts of monies were not accounted for to the Reserve Bank and that this is to be discouraged by the meting out of a fairly stiff penalty for the conviction today, but not necessarily repatriation of the monies as urged by State Counsel.

The following is the Accused Company's sentence:-

Fined $2,000,000, (new currency) or, in default of payment, Warrant of execution against property.”

I have carefully gone through the trial magistrate's reasons for sentence and I have found nowhere he stated or suggested that the applicant was excused or absolved from acquitting its CD3 forms.

It is clear, from a proper reading of the trial magistrate's reasons for sentence, that, he was alive to the applicant's statutory obligation to acquit its CD3 forms hence his remarks to the effect that the message must be driven home to the applicant, and others, that, CD3 forms must be acquitted within the prescribed time limits.

Check the use of the compulsive word “must” and not “should”.

The acquittal of CD3 forms is a statutory obligation imposed by law. That being the case, it is not the function of the courts to excuse or absolve anyone from complying with the law.

The mere fact that in punishing the applicant during criminal proceedings the trial magistrate declined to order repatriation did not absolve or excuse the applicant from complying with the law.

By the same token, the refusal to order repatriation was no bar to the respondent from compelling the applicant to discharge its statutory obligations failure of which it was entitled to invoke any statutory penalties according to law.

Counsel for the applicant, placing reliance on the case of Flood v Taylor 1978 RLR 230 further argued, that, the matter is now res judicata in the sense that the rights of the parties have already been determined by the magistrate's judgment. It was his argument that:

“All rights and obligations of the Applicant and Respondent were concluded by the judgment delivered by the learned Magistrate and does not require the Applicant to exhaust domestic remedies.

Since the matter is now res judicata, it's apparent that the respondent failed to comply with the judgment granted by the magistrate. Contrary to the judgment, they are forcing the applicant to repatriate the monies or acquit CD3 forms, and, as they prohibit the applicant from carrying out transactions on his foreign account number 9440031502000. Strictly speaking, this is a clear violation of a court order hence it amounts to contempt of court.”

It is needless to say that counsel's reliance on the case of Flood v Taylor 1978 RLR 230 is grossly misplaced. That case held…, that:

“When res judicata is pleaded by way of estoppel, it amounts to an allegation that the whole of the legal rights and obligations of the parties are concluded by the earlier judgment and that the plaintiff is estopped by the findings of fact involved in that earlier judgment (see HALSBURY's Laws of England, 4th Edition, Volume 16, paragraph 1527). The central issue then is what the judgment prayed in aid should be treated as concluding and for what conclusion it is to stand.”

The applicant's plea of res judicata falters at the very first hurdle in that the respondent in this case was not a party to the criminal proceedings in the Magistrates' Court. It is common cause that the parties to that case were the State and the applicant.

In any case, the magistrate's judgment did not order or prohibit the respondent from compelling the applicant to discharge its statutory obligations of repatriating or acquitting its CD3 forms.

That being the case, the respondent cannot be bound by a judgment to which it was not a party and which made no specific order binding on it.

It is instructive to always bear in mind that in our law criminal proceedings are separate and distinct from civil proceedings such that criminal proceedings are not a bar to civil proceedings.

Section 4 of the Criminal Procedure and Evidence Act [Chapter 9:07] provides that:

“4 Neither acquittal nor conviction a bar to civil action for damages

Neither a conviction nor an acquittal following on any prosecution shall be a bar to a civil action for damages at the instance of any person who may have suffered any injury from the commission of any alleged offence.”

It is common cause that despite not being a party to the proceedings in the Magistrates Court the respondent suffered financial loss, damage, or injury arising from the commission of the crime. In fact, the trial magistrate made a specific finding of fact that the respondent suffered huge losses arising from the commission of the crime.

It must be borne in mind, that, the object of criminal proceedings is to punish the offender whereas the object of civil proceedings is to compensate or provide redress to the injured party.

The standard of proof in criminal proceedings is ordinarily proof beyond reasonable doubt whereas that for civil wrongs is proof on a balance of probabilities.

It is therefore not surprising, that, based on the same facts or evidence, a Criminal Court may arrive at a different decision from that of the Civil Court.

For instance, it is unthinkable that a person negligently injured in a road accident could be denied redress in the civil courts purely on the basis of findings made in the criminal courts.

It therefore stands to reason that criminal proceedings should not be a bar to civil proceedings.

For that reason, the respondent falls within the class of persons who are not barred from seeking redress in the Civil Courts notwithstanding the applicant's conviction in the Criminal Court arising from the same facts.

It makes good sense that what is not prohibited is allowed by law.

The respondent is therefore entitled to resort to all civil remedies at its disposal - including statutory remedies provided by law.

That being the case, the application cannot succeed. It is accordingly ordered that the application be and is hereby dismissed with costs.

HH11-15 : RM MINING AND INDUSTRIAL ZIMBABWE (PRIVATE) LIMITED vs STANBIC BANK ZIMBABWE LIMITED
Ruled By: MAFUSIRE J

Following certain concerns that I had raised on the form and content of the urgent chamber application herein, the applicant decided to withdraw it. However, it insisted that each party should bear their own costs. On the other hand, the respondent insisted not only on its costs, but also that ...

After full argument on costs I awarded them at the higher scale. Below are my reasons, most of which I had given ex tempore.

The urgent chamber application had been for an order that the respondent (“the Bank”) should uplift or remove the embargo that it had unilaterally placed on the applicant's account with it.

The applicant's deponent, one Richard Mayiya (hereafter referred to as “Richard”), was a Director of the applicant. He claimed that two other Directors, a husband and wife team based in South Africa, had resigned. He said that such a development had been communicated to the Bank with instructions to alter the signing mandate originally given to it. The mandate had included those Directors. The Bank had initially complied. Richard Mayiya said he had made some four withdrawals single handedly. However, the one ex-Director, the husband, one Reuben Munsamy (hereafter referred to as “Reuben”), had subsequently written to the Bank on the applicant's forged letter-head, denying that he had resigned from the applicant and that he was still a signatory to the account. The letter had warned the Bank of grave consequences if it should honour requests for withdrawals on the basis of Richard's single signature.

The Bank had filed a notice of opposition objecting to the urgent chamber application on both technical and substantive grounds. But since the application was withdrawn it became unnecessary to argue it on the merits, except in so far as they had a bearing on the question of costs.

At the hearing, the applicant had wanted a postponement. It transpired that as they had been waiting to be called into chambers the parties had had an opportunity to discuss the matter. It seems the issue had finally crystallised into whether or not Reuben Munsamy had indeed resigned as a Director of the applicant and was no longer concerned with the manner the applicant's account with the Bank would be run. The applicant wanted a postponement to present its second resolution that allegedly would prove that Reuben had indeed resigned. The first resolution was the one on which the application had largely been predicated upon. It had been challenged.

The Bank was opposed to a postponement. Among other things, it said the applicant had had ample opportunity to produce proof of Reuben Munsamy's resignation and that the purpose for which the applicant wanted the postponement, namely, to produce another resolution, would not change the complexion of the case. It seemed the Bank wanted Reuben himself to provide the proof of his resignation and to confirm the alteration of the signing arrangements.

There was a stalemate.

Counsel for the applicant formally moved the application for a postponement. Counsel for the Bank responded. It was before counsel for the applicant could reply that I raised my concerns in order that he could take them into account in his reply.

It had seemed to me, even before I had read the notice of opposition, that the urgent chamber application was defective in a number of ways. So I felt if the application was to be postponed I had to be satisfied that it was regular in the first place. It was at that point that the applicant decided to withdraw it. I felt it was a decision well-taken and I commended counsel for the applicant for it.

The applicant's grounds for insisting that each party should bear their own costs was that the Bank's action in “freezing” its account had been taken unilaterally; that it had not afforded the applicant a chance to make representation and that there had been no justification for such action given that proof of Reuben Munsamy's resignation, in the form of a Form CR14, had been furnished to the Bank. Furthermore, the Bank must have initially accepted the applicant's position because Richard Mayiya had made four withdrawals soon thereafter before the embargo had been placed.

In spite of the applicant's submissions, I not only awarded the costs against the applicant but also on the higher scale. My reasons were these.

The urgent chamber application was defective from the outset. It had not been in Form 29 of the Rules of this court as required by the proviso to Rule 241(2): see Zimbabwe Open University v Mazombwe 2009 (1) ZLR 101 (H); Minister of Higher & Tertiary Education v BMA Fasteners (Private) Limited & Ors HB42-14 and Base Minerals Zimbabwe (Private) Limited & Anor v Chirosva Minerals (Private) Limited HH559-14. Among other things, the grounds for the application had not been set out on the face of the application.

The certificate of urgency was also defective.

It did not comply with Rule 244. Among other things, it omitted the most basic of information on which the legal practitioner who had certified the matter to be one of urgency had based her conclusions on. Incidentally, she happened to be the same legal practitioner of record for the applicant – an aspect that I did not take issue with despite the respondent's protestation. Virtually all the averments in the purported certificate of urgency had been arguments on the merits of the case, essentially why the Bank had to be ordered to uplift the embargo.

In General Transport & Engineering (Pvt) Ltd & Ors v Zimbabwe Banking Corporation Ltd 1998 (2) ZLR 301 (HC), it was held that the reason behind the certificate of urgency is that the court is only prepared to act urgently in a matter where a legal practitioner is involved and has given his or her assurance that such treatment is warranted. The legal practitioner must apply his or her mind and judgment to the circumstances of the case and reach a personal view that the matter is urgent. He or she must support his or her judgment with reasons.

Apart from the form, the urgent chamber application was also defective in substance.

Among other things, Richard Mayiya's main proof that Reuben Munsamy had stepped down was some resolution allegedly reached on 24 October 2014.

However, this document clearly referred to Reuben's removal from a different entity altogether, an entity that was based in a different country altogether - South Africa. Richard Mayiya had alleged that the applicant, known as RM Mining and Industrial Zimbabwe (Private) Limited, and that the other entity, known as RM Mining and Industrial South Africa CC, had a “common shareholding”, whatever that meant. However, the two, being completely different entities despite their names sharing the same root, it was not explained why Reuben Munsamy's alleged resignation from the South African entity would automatically be a resignation from the applicant.

Counsel for the applicant argued that the applicant had subsequently updated its Form CR14 to align with the new development and that it was such proof as had been submitted to the Bank. However, Reuben, in a communication to the Bank, which was part of the applicant's papers, had denied that he had resigned. Under such circumstances it should have been obvious to the applicant that the only sensible thing for the Bank to have done would be to embargo the account.

Another document submitted by the applicant as proof that Reuben Munsamy had resigned and that the Bank had seemed to accept that fact, was an extract of a bank statement of the applicant's account. It showed some debit and credit entries between 13 November 2014 and 16 December 2014. The applicant alleged that communication to the Bank, of Reuben Munsamy's alleged resignation, had been on 10 November 2014. However, nowhere on the bank statement did it show that the transactions had been on Richard Mayiya's single signature. Furthermore, given that Reuben's warning to the Bank had been on 16 December 2014, it made sense that the Bank immediately placed the embargo. The applicant could not rationally expect the Bank to continue honouring Richard's unilateral withdrawal instructions in the face of Reuben's warning. For the applicant to have mounted an urgent application under such circumstances was rather irresponsible.

That was not all.

It was manifestly untrue for the applicant to allege, in its application, that the Bank had embargoed its account without warning. Its legal practitioners had written to the Bank on 18 December 2014 demanding the removal of the embargo. The Bank had responded on 23 December 2014. It advised of Reuben's communication and of the fact that it had informed Richard about it. It had asked Richard to provide resolutions and other documents to confirm Reuben's alleged resignation. The Bank had also expressly advised Richard that the two entities had been separate and that the document that it had initially been furnished with had been in respect of the South African entity and that it was irrelevant. Instead of dealing with the Banks' concerns, the applicant had rushed headlong with its urgent chamber application.

The draft provisional order sought the same relief in both the interim and final orders.

In both instances, it was, in essence, a final order being sought.

As I asked counsel for the applicant was it not obvious that the blocking of the account by the Bank was but a symptom of the underlying festering dispute between the parties? There had been no indication anywhere in the application that the applicant had brought, or was planning to bring, substantive proceedings to end the dispute so as to pave way for the opening of the account. Instead, the applicant had precipitously filed the urgent chamber application which avoided the main dispute. It should have been obvious to the applicant that there had been a serious misjoinder of parties and that the enormous dispute of fact, namely, whether or not Reuben had stepped down, could not possibly be resolved on the papers, let alone in summary fashion as is inevitable in an urgent chamber application.

Finally, when I had got seized of the matter, on New Year's eve, literally some few hours before the demise of 2014, I had agonised over whether or not to set it down on account of the numerous defects apparent on the face of the application. Eventually, I decided I would give the applicant its day in court. But seeing that the application was against the Bank only, and that this was a party that would not help bring out the full story, I expressly directed that the application and notice of set down be served, not only on the Bank, but also on the other Directors, and that proof of such service should be filed or produced at the hearing. Furthermore, realising that the other Directors may well have been out of the country and in their home country, South Africa, I further directed that if proper service was not going to be possible, given the short time available, at least the applicant had to inform the other Directors of the application and of the date and time of the hearing.

Surprisingly, at the hearing, no proof of service of the application and or of the notice of set down was available.

Counsel for the applicant advised that in response to my directive, another meeting of the applicant had been convened at which Reuben Munsamy had resigned - again. He said he had a copy of the resolution to that effect and would produce it if it was necessary.

That was hardly satisfactory. We were going round in circles.

In the end, I considered that there was no reason why the Bank had to be put out of pocket in respect of such a vexatious application. I felt costs on the higher scale were justified.

Appealed
HH287-20 : PENELOPE STONE and RICHARD BEATTIE t/a THE STONE/BEATTIE STUDIO vs CENTRAL AFRICAN BUILDING SOCIETY and RESERVE BANK OF ZIMBABWE and MINISTER OF FINANCE & ECONOMIC DEVELOPMENT
Ruled By: ZHOU J

Both the applicant and the first respondent accept that theirs is a banker-customer relationship.The relationship has its foundation in contract, hence the general principles of the Law of Contract apply to it. It, however, has its unique features which would distinguish it from other special contractual relationships. The relationship is ...

Both the applicant and the first respondent accept that theirs is a banker-customer relationship.

The relationship has its foundation in contract, hence the general principles of the Law of Contract apply to it. It, however, has its unique features which would distinguish it from other special contractual relationships.

The relationship is explained in a leading text on Banking Law, Paget's Law of Banking, 13th Ed by M. HAPGOOD QC…, as follows:

"The relationship of a banker to customer is one of contract. It consists of a general contract, which is basic to all transactions, together with special contracts which arise only as they are brought into being in relation to specific transactions or banking services. The essential distinction is between obligations which come into existence upon the creation of the banker-customer relationship and obligations which are subsequently assumed by specific agreement; or, from the standpoint of the customer, between services which a bank is obliged to provide if asked, and services which many bankers habitually do, but are not bound to, provide."

In the case of Standard Bank of South Africa v Oneanate Investments (Pty) Ltd 1995 (4) SA 510 (C)…, the Court examined how this relationship, of banker-customer, developed to its current status:

"The law treats the relationship between banker and customer as a contractual one. The reciprocal rights and duties included in the contract are, to a great extent, based upon custom and usage.

Although historically the original objective of a depositor was to ensure the safekeeping of his money; over time, jurists have considered characterizing and explaining the basic relationship as one of depositum, mutuum or agency.

All of these approaches have, on analysis, proved to be inadequate.

It is now accepted that the basic, albeit not sole, relationship between banker and customer in respect of a current account is one of debtor and creditor.

In the landmark 1848 case of Foley v Hill (1843-60) AII ER Rep 16 (1848) 2 HL Cas 28, it was strenuously argued that the banker should be treated as an agent with authority to use his customers money at his own discretion. The argument was rejected in favour of the finding that the nature of the ordinary relationship was one of debtor and creditor. The bank makes use of the money which the customer has deposited:

'It is then the money of the banker…, he makes what profit he can, which profit he retains for himself…, he has contracted, having received that money, to repay to the principal, when demanded, a sum equivalent to that paid into his hands.'”

In situations where the bank collects, on behalf of a customer, the proceeds of a cheque, the relationship remains the same, as articulated by ATKIN LJ in Joachimson v Swiss Bank Corporation 1921 (3) KB 110…,:

"The bank undertakes to receive money and collect bills for its customer's account. The proceeds so received are not to be held in trust for the customer, but the bank borrows the proceeds and undertakes to repay them. The promise to repay is to repay at the branch of the bank where the account is kept, and during banking hours. It includes a promise to repay any part of the amount due against the written order of the customer addressed to the bank at the branch, and as such written orders may be outstanding in the ordinary course of business for two or three days, it is a term of the contract that the bank will not cease to do business with the customer except upon reasonable notice.

The customer, on his part, undertakes to exercise reasonable care in executing his written orders so as not to mislead the bank or to facilitate forgery. I think it is necessarily a term of such a contract that the bank is not liable to pay the customer the full amount of his balance until he demands payment from the bank at the branch at which the current account is kept."

Where a current account is in credit, money deposited into the account ceases to belong to the account holder. The banker becomes the owner of the money and is free to use it as it pleases, as long as it pays the equivalent therefor on demand: see Zimbabwe Revenue Authority & Anor v Murowa Diamonds (Pvt) Ltd 2009 (2) ZLR 213 (S); Standard Chartered Bank of Zimbabwe Ltd v China Shougang International Ltd (2) ZLR 385 (S), SC49-13…,; ABC Bank v Mackie Diamonds SC23-13.

But, the kind of debtor-creditor relationship that exists between a banker and its customer is a complex one and has different facets.

MOSENEKE AJ…, described the relationship as a “conspicuously complex collection of juristic relationships:” see Standard Bank of South Africa Limited v ABSA Bank Limited 1995 (2) SA 740 (T)…,.

That is so, because, within that relationship, there may be other contractual dimensions, such as in situations where the bank offers custodial services to its customers, in which case the relationship becomes one of depositum, and, in a case where the account becomes overdrawn, in which case the bank becomes the creditor and the customer becomes the debtor.

It is in this context that the debtor-creditor relationship of a banker and its customer has been characterized as a contract sui generis: see G S George Consultants and Investments (Pty) Ltd v Datasys (Pty) Ltd 1988 (3) SA 726 (W)…,.; PEN & SHEA, The Law Relating to Domestic Banking, 2nd Ed…,.; MALAN on Bills of Exchange, Cheques and Promissory Notes…,.

It is a debtor-creditor relationship in a class of its own, with its own unique facets which demand careful approach when considering the obligations of the parties to it.

More than many other such relationships, the banker-customer relationship is the subject of regulation by different statutory bodies and constitutional entities...,.

SC141-21 : WISE GARIRA and SHEPHARD MASHINGAIDZE and BAYAI BAYAI vs NATIONAL ENGINEERING WORKERS UNION and FIRST CAPITAL BANK
Ruled By: GUVAVA JA, BHUNU JA and KUDYA AJA

This is an appeal against the whole judgment of the High Court (the court a quo) which ordered the removal of the three appellants from being signatories to the first respondent's Bank account with the second respondent.The appeal is opposed by the first respondent....,.BRIEF BACKGROUND OF THE CASEThe first respondent ...

This is an appeal against the whole judgment of the High Court (the court a quo) which ordered the removal of the three appellants from being signatories to the first respondent's Bank account with the second respondent.

The appeal is opposed by the first respondent....,.

BRIEF BACKGROUND OF THE CASE

The first respondent is a duly registered trade union representing the interests of employees in the Engineering, Iron and Steel sector (hereinafter referred to as “the Union”). The Union opened and maintains a Bank Account Number 6327897 with the second respondent Bank.

On the other hand, the first and second appellants were employed by the Union as its President and Secretary General, respectively, whereas the third appellant was its Trustee.

At the inception of the Bank account, the three appellants were appointed by Union resolution, dated 15 February 2019, as signatories to the said Bank account in their respective capacities as Union officials. The union then sought to remove the appellants from the panel of signatories to its Bank account on the basis that they had ceased to be union officials.

In its founding affidavit, deposed to by Ben Mambara, the Union averred, that, the first and second appellants were dismissed from employment following disciplinary proceedings on 22 April 2019 and 14 June 2019, respectively. The third appellant's trusteeship had expired through the effluxion of time.

The Union provided documentary evidence of the appellants dismissal from office.

The appellants however resisted their removals from being Bank account signatories on the basis that they were still Union officials.

They also challenged the authenticity of the Union resolution that authorised their removal as signatories to the Union bank account.

They challenged the legitimacy of Ben Mambara as the incumbent President of the Union and deponent to its founding affidavit.

In that vein, they refused to relinquish their respective mandates as signatories to the Union's bank accounts hence the application for their removal as Bank signatories in the court a quo.

The case has been the subject of various conflicting judgments in the court a quo which are now pending in this court on appeal.

On 23 January 2020, MUSHORE J issued a lengthy order in favour of the appellants under case number HC8111/19. The order basically declared that the three appellants were the legitimate office holders entitled to run the affairs of the first respondent without let or hindrance. On the other hand, the order declared Ben Mambara to be an illegitimate President of the first respondent.

In short, the judgment restored the status quo ante prior to the appellants dismissal from office.

The judgment is now a subject of appeal and it triggered a series of other appeals under appeal case numbers SC27/2020, SC32/2020, and SC34/2020.

Following the restoration of the status quo ante by MUSHORE J's order the respondents were aggrieved by the manner in which the appellants were handling the first respondent's funds.

Resultantly, the first respondent, represented by Ben Mambara, approached the court a quo under case number HC6844/19 seeking their removal from office as signatories of its Bank account.

The first respondent was successful in this respect.

The current appeal challenges the judgment on the basis that MUSHORE J's order had barred Ben Mambara and six others from acting as the Union's officers. The appellants claim to have been declared the legitimate signatories to the Bank account by the judgment which is still extant.

Notwithstanding the appeal, the first respondent sought leave of the court a quo to execute the order removing the appellants from being signatories to its Bank account under case number HC444/20.

CHIKOWERO J dismissed the application.

Another application, for the re-activation of the Union's bank account was dismissed by MUSITU J on 15 September 2020.

DETERMINATION OF THE COURT A QUO

The court a quo found, that, Ben Mambara had the requisite authority to represent the Union.

In coming to that conclusion, the learned judge a quo reasoned that the Union, being a legal persona, could only be represented by a natural person duly authorised thereto by a valid Union resolution.

Consequently, upon the removal of the first appellant from office as Union President, the Union, by resolution, dated 15 February 2019, replaced the first appellant with Ben Mambara. The resolution also conferred him with authority to represent the respondent in these proceedings.

The resolution reads in part:

“IT WAS RESOLVED:

2. That the President, Ben Mambara, shall sign documents and represent the Union and at NEC level.

SIGNED AT BULAWAYO this 15th February 2019.

Signed
……………………………………
(SECRETARY).”

Having found that Ben Mambara was properly appointed as the Union President and Union representative, the learned judge a quo proceeded to hold, that, the appellants were no longer Union officials. That being the case, they could no longer continue to be signatories to the Union's bank account.

On the basis of such finding, he proceeded to issue the following order:

“IT IS ORDERED THAT:

1. The first respondent be and is hereby ordered to delete or remove Shepard Mashingaidze, Wise Garira, and Bayayi Bayayi from being signatories of applicant's Account No.6327897 held with the 1st respondent.

2. The 2nd to 4th Respondents jointly and severally one paying the others to be absolved, pay costs at the legal practitioner and client scale.”

Counsel for the first respondent has not, however, sought to sustain and enforce the above order.

She has, in fact, implored the court to exercise its review jurisdiction under section 25 of the Supreme Court Act [Chapter 7:13] on account of perceived irregularity.

Wherefore she prayed for an order in the following terms:

“Having utilised the powers granted to it under section 25 of the Supreme Court Act [7:13], the following is ordered:

(a) Appeals under S-27-2020, S–32–2020, S–34-2020 and S222-20 be and are hereby set consolidated.

(b) The judgment of the High Court under HC8111/2019 granted by MUSHORE J on 23rd January 2020 be and is hereby set aside.

(c) The judgment of the High Court under HC6844/20 by TAGU J on 20th May 2020 be and is hereby set aside.

(d) The judgment of the High Court under HC444/20 granted by CHIKOWERO J on 8th July 2020 be and is hereby set aside.

(e) The judgment of the High Court under HC594/20 by MUSITHU J on 15th September 200 be and is hereby set aside.

(f) HC8111/19 is remitted back to the High Court for a hearing de novo before a different judge.

(g) Pending the determination of HC8111/19, 2nd Plaintiff, third plaintiff, 3rd-9th Defendants Plaintiff shall not take any steps that will interfere with the operations of the 1st Defendant.…,.

2. It is thus prayed.”

It is plain that the above relief sought is premised on the ill-conceived assumption that the court would grant the request for consolidation.

Paragraph 'g' of the draft order, however, seems to have some merits because it seeks to protect the Bank account from abuse by persons who are, for the time being, no longer its officials pending the final determination of the parties competing rights.

The Court, having dismissed the prayer for consolidation, paragraphs (a) to (f) of the first respondent's prayer cannot stand as they are premised on the envisaged consolidation which never materialised.

For that reason, the Court cannot interfere with appeals which are not before it.

I will therefore focus on the instant appeal before this Court.

No application for review can be brought in terms of section 25 of the Supreme Court Act. The court acts mero motu. Thus, counsel for the first respondent was merely raising the court's attention to exercise its discretion in this regard....,.

Paragraph (g) of the first respondent's prayer seeks to downgrade the order granted by the court a quo in HC8111/20 to a temporary interdict pending the determination of the main dispute on appeal.

There is need to interrogate that proposal on the merits.

It is common cause that the first and second appellants were employed by the Union. They were dismissed from employment following disciplinary proceedings. They have since appealed against their dismissal.

That much is not in dispute.

In terms of section 92E(2) of the Labour Act [Chapter 28:01] an appeal shall not suspend the decision appealed against.

In interpreting the section, in CFI Retail (Pvt) Ltd v Manyika SC08-16…, MALABA DCJ…, observed that:

“Section 92E(2) provides, that, the noting of an appeal to the Labour Court against a determination or decision does not have the effect of suspending the operation of the determination or decision appealed against.

The purpose of the section is to provide for the effect of the noting of an appeal in terms of the Act on the enforcement of the determination or decision.

The provision is the reversal of the common law principle that the noting of an appeal against a judgment or decision of a tribunal or lower court suspends the execution of the judgment or decision pending the determination of an appeal.”

The same applies to appeals against the judgments or decisions of the Labour Court.

This is because there is no statutory provision for the suspension of its judgments or decisions pending appeal. The common law rule, that an appeal suspends the decision appealed against, only applies to superior courts of inherent jurisdiction.

In Founders Building Society v Mazula 2000 (1) ZLR 529 the court held that:

“The rule that an appeal suspends the operation of the decision appealed against applies only to superior courts. It does not apply to other tribunals unless the relevant statute so provides.”

In the absence of statutory authorisation, the common law rule that an appeal suspends the judgment or decision appealed against does not apply to any appeals in terms of the Labour Act.

Had the appellants wanted to remain in office, despite their dismissal from employment, they should have successfully applied for an interim order staying execution pending appeal in terms of section 92E(3) of the Labour Act: see Greenland v Zimbabwe Community Health Intervention Research Project (ZICHIRE) HH93-13.

This they did not do.

What this means is that whether or not they have appealed against their dismissals in terms of the Labour Act, it does not matter whether or not the dismissals were correct at law. It is therefore an exercise in futility for both appellants, at this stage, to impugn or cast aspersions on the decision of the inferior tribunal that dismissed them from employment.

They stand dismissed from employment until their respective appeals have been reversed on appeal.

As regards the third appellant, it is common cause that he was appointed as Trustee by Union resolution and was removed from office by Union resolution on account of the expiration of his term of office.

Following his removal from office, he is de facto out of office.

The net result is that all the three appellants are de facto out of office as Union officials.

Although they have appealed against their removal from office, in the interim, the balance of convenience favours the respondents.

It is highly undesirable, and a recipe for disaster and irreparable harm, that a person dismissed from office, whether rightly or wrongly, continues to be a signatory to his/her principal's Bank account pending appeal.

Having come to the unassailable conclusion, that, the appellants are currently no longer officials of the first respondent, the court a quo cannot be faulted for holding, that, the appellants are unsuited to be signatories to the first respondent's Bank account as things stand.

The court a quo, however, fell into error in making a final order before the parties competing rights have been conclusively determined on appeal.

The mere fact that there were numerous conflicting decisions on the same matter emanating from the same court on various aspects of the matter meant that there was uncertainty on the appellants prospects of success on appeal.

Despite that knowledge, they chose not to obey judicial and administrative processes that removed them from office and ultimately from being signatories to the first respondent's Bank account.

It is always wrong for a person to insist on being a signatory to another's Bank account without that person's consent. Even assuming for one moment that the appellants had been wrongfully removed from office, they had no right to fasten onto being signatories to the Union's bank account without its consent.

Given the unsavoury chaotic state of affairs created by the various conflicting judgments emanating from the court a quo, this is, in my view, an appropriate case where the Court must resort to its inherent jurisdiction to restore order pending appeal.

In Williams & Anor v Msipha NO & Ors 2010 (2) ZLR 552 (S) this court held that:

“Once the Supreme Court is seized with a matter, it has inherent jurisdiction to control its process. That jurisdiction includes the power to control the process of the court, including the prevention of execution of a judgment pending the hearing of an application. It thus has the power to restrain the magistrate and the Attorney-General from relying on the magistrate's decision…,.”

What this means is that the court, in this case, can achieve justice without recourse to its review jurisdiction as requested by counsel for the first respondent.

In my view, it is always preferable for the Court to use its original inherent jurisdiction where it is possible to do justice without recourse to borrowed jurisdiction under section 25 of the Supreme Court Act.

I say borrowed jurisdiction because the section clothes this court with the jurisdiction of the High Court where there is a lacuna in its own jurisdiction.

COSTS

The courts always frown upon failure to obey court orders.

The appellants moral turpitude in this case was however ameliorated by the fact that theirs was not a naked disobedience of a court order as they appear to have been ill-advised to act on the basis of a court order that had been overtaken by events.

For that reason, punitive costs were not warranted.

The fact, however, stands, that, TAGU J's order, being a later order to that of MUSHORE J's order ought to have been obeyed.

This is however not to detract from the fact that there is need to preserve order and the Bank account from abuse pending the final determination of the dispute on appeal.

DISPOSAL

In the result, it is ordered that:

1. The appeal partially succeeds with each party bearing its own costs.

2. The order of the court a quo is set aside and substituted with:

“(a) Pending the determination of HC8111/19, 2nd, 3rd plaintiff and 3rd to 9th defendants shall not take any steps that will interfere with the operations of the first respondent pending.

(b) The applicants shall bear the costs of the application jointly and severally the one paying and the other to be absolved.”

Back Main menu

Law Portal
Zimbabwe

Account Mandates, Service or Maintenance Charges, Nostro Accounts, Freezing of Accounts and Custodial Services

View Appeal
HH273-10 : WYNINA (PRIVATE) LIMITED vs MBCA BANK LIMITED
Ruled By: PATEL J

HH43-06 : ZIMBABWE DEVELOPMENT BANK vs NAGA SALONS and NYARAI CHIWAURA and BETTY CHIWAURA
Ruled By: KUDYA J

HH198-15 : MUCAL ENTERPRISES vs STEWARD BANK
Ruled By: TSANGA J

HH223-13 : HWANGE COLLIERY CO. LTD and HWANGE COAL GASIFICATION CO. PL vs HWANGE COAL GASIFICATION CO. PL and TENDAI SAVANHU and KINGDOM BANK LTD and STANBIC BANK LTD and GUO FENG and ORS
Ruled By: MAFUSIRE J

View Appeal
HH207-15 : G BANK ZIMBABWE LTD vs ZIMBABWE REVENUE AUTHORITY
Ruled By: KUDYA J

View Appeal
HH207-15 : G BANK ZIMBABWE LTD vs ZIMBABWE REVENUE AUTHORITY
Ruled By: KUDYA J

HH86-09 : CHAWASARIRA TRANSPORT (PVT) LTD vs THE RESERVE BANK OF ZIMBABWE
Ruled By: BHUNU J

HH11-15 : RM MINING AND INDUSTRIAL ZIMBABWE (PRIVATE) LIMITED vs STANBIC BANK ZIMBABWE LIMITED
Ruled By: MAFUSIRE J

Appealed
HH287-20 : PENELOPE STONE and RICHARD BEATTIE t/a THE STONE/BEATTIE STUDIO vs CENTRAL AFRICAN BUILDING SOCIETY and RESERVE BANK OF ZIMBABWE and MINISTER OF FINANCE & ECONOMIC DEVELOPMENT
Ruled By: ZHOU J

SC141-21 : WISE GARIRA and SHEPHARD MASHINGAIDZE and BAYAI BAYAI vs NATIONAL ENGINEERING WORKERS UNION and FIRST CAPITAL BANK
Ruled By: GUVAVA JA, BHUNU JA and KUDYA AJA

Categories

Law Portal Zimbabwe

Account Mandates, Service or Maintenance Charges, Nostro Accounts, Freezing of Accounts and Custodial Services

View Appeal HH273-10 : WYNINA (PRIVATE) LIMITED vs MBCA BANK LIMITED Ruled By: PATEL J

HH43-06 : ZIMBABWE DEVELOPMENT BANK vs NAGA SALONS and NYARAI CHIWAURA and BETTY CHIWAURA Ruled By: KUDYA J

HH198-15 : MUCAL ENTERPRISES vs STEWARD BANK Ruled By: TSANGA J

HH223-13 : HWANGE COLLIERY CO. LTD and HWANGE COAL GASIFICATION CO. PL vs HWANGE COAL GASIFICATION CO. PL and TENDAI SAVANHU and KINGDOM BANK LTD and STANBIC BANK LTD and GUO FENG and ORS Ruled By: MAFUSIRE J

View Appeal HH207-15 : G BANK ZIMBABWE LTD vs ZIMBABWE REVENUE AUTHORITY Ruled By: KUDYA J

View Appeal HH207-15 : G BANK ZIMBABWE LTD vs ZIMBABWE REVENUE AUTHORITY Ruled By: KUDYA J

HH86-09 : CHAWASARIRA TRANSPORT (PVT) LTD vs THE RESERVE BANK OF ZIMBABWE Ruled By: BHUNU J

HH11-15 : RM MINING AND INDUSTRIAL ZIMBABWE (PRIVATE) LIMITED vs STANBIC BANK ZIMBABWE LIMITED Ruled By: MAFUSIRE J

Appealed HH287-20 : PENELOPE STONE and RICHARD BEATTIE t/a THE STONE/BEATTIE STUDIO vs CENTRAL AFRICAN BUILDING SOCIETY and RESERVE BANK OF ZIMBABWE and MINISTER OF FINANCE & ECONOMIC DEVELOPMENT Ruled By: ZHOU J

SC141-21 : WISE GARIRA and SHEPHARD MASHINGAIDZE and BAYAI BAYAI vs NATIONAL ENGINEERING WORKERS UNION and FIRST CAPITAL BANK Ruled By: GUVAVA JA, BHUNU JA and KUDYA AJA

Categories

Your Donation.

Law Portal
Zimbabwe

View Appeal
HH273-10 : WYNINA (PRIVATE) LIMITED vs MBCA BANK LIMITED
Ruled By: PATEL J

HH43-06 : ZIMBABWE DEVELOPMENT BANK vs NAGA SALONS and NYARAI CHIWAURA and BETTY CHIWAURA
Ruled By: KUDYA J

HH198-15 : MUCAL ENTERPRISES vs STEWARD BANK
Ruled By: TSANGA J

HH223-13 : HWANGE COLLIERY CO. LTD and HWANGE COAL GASIFICATION CO. PL vs HWANGE COAL GASIFICATION CO. PL and TENDAI SAVANHU and KINGDOM BANK LTD and STANBIC BANK LTD and GUO FENG and ORS
Ruled By: MAFUSIRE J

View Appeal
HH207-15 : G BANK ZIMBABWE LTD vs ZIMBABWE REVENUE AUTHORITY
Ruled By: KUDYA J

View Appeal
HH207-15 : G BANK ZIMBABWE LTD vs ZIMBABWE REVENUE AUTHORITY
Ruled By: KUDYA J

HH86-09 : CHAWASARIRA TRANSPORT (PVT) LTD vs THE RESERVE BANK OF ZIMBABWE
Ruled By: BHUNU J

HH11-15 : RM MINING AND INDUSTRIAL ZIMBABWE (PRIVATE) LIMITED vs STANBIC BANK ZIMBABWE LIMITED
Ruled By: MAFUSIRE J

Appealed
HH287-20 : PENELOPE STONE and RICHARD BEATTIE t/a THE STONE/BEATTIE STUDIO vs CENTRAL AFRICAN BUILDING SOCIETY and RESERVE BANK OF ZIMBABWE and MINISTER OF FINANCE & ECONOMIC DEVELOPMENT
Ruled By: ZHOU J

SC141-21 : WISE GARIRA and SHEPHARD MASHINGAIDZE and BAYAI BAYAI vs NATIONAL ENGINEERING WORKERS UNION and FIRST CAPITAL BANK
Ruled By: GUVAVA JA, BHUNU JA and KUDYA AJA