Before CHIDYAUSIKU CJ, In Chambers
This is an urgent Chamber application in which the applicants seek the
relief set out in the draft order. The
draft order reads as follows:
“1. The Registrar is hereby directed to set down case no.
SC 293/11 for an urgent
hearing on the next available date.
2.
The applicants shall file heads of argument
within five days of being called upon to do so by the Registrar.
3.
The first, second and third
respondents shall thereafter file their Heads of Argument within five days of
receiving the applicants' Heads of Argument.
4.
Pending the determination of the appeal under
case no. SC 293/11, the fifth respondent be and is hereby interdicted from
transferring the Pelhams Limited amounting to 376 976 840 shares from the
second, third and fourth applicants to the second respondent.
5.
Costs shall be costs in the cause
unless the application is opposed, in which case the party opposing shall meet
the costs of this application.”
In essence, the applicants were
seeking –
(a)
the setting down of the appeal in case no. SC
293/11 on an urgent basis;
(b)
an interdict stopping the transference of the
shares in Pelhams Limited to the second respondent pending the hearing of the
appeal in case no. SC 293/11.
The application was opposed. After submissions by counsel, I dismissed
the application as I was satisfied that it was devoid of any merit. My reasoning for so concluding was made very clear during my interaction with counsel during their submissions. I accordingly assumed that written reasons for
judgment were superfluous in this matter, as the parties were aware of my
reasoning process.
The appeal in case no. SC 293/11 has since in due
course been heard. The appeal was dismissed.
See judgment no. SC 12/13.
In a letter to the Registrar of the Supreme Court
dated 29 January 2014, the respondents'
legal practitioners, Messrs Atherstone & Cook, have requested my
reasons for judgment in this
application. I
can only surmise that
the respondents probably want
the
reasons for judgment for guidance as they were the successful parties in the application. Be that as it may, it is now trite that a
litigant is entitled to reasons for judgment.
I have already stated that I dismissed the
application without giving written reasons for judgment. The following are they.
The facts of this matter are succinctly set out in
the appeal judgment of GOWORA JA, judgment no. SC 12/13. It serves no useful purpose to restate
them in the same detail in this
judgment. I will only paraphrase those facts set out in the judgment of GOWORA
JA to the extent necessary to provide a proper context in this judgment.
The first applicant borrowed an amount of USD3
million (three million United States dollars) from the first respondent. The
terms and conditions of the loan agreement
were reduced into a written agreement, signed by both parties. One of
the material terms of the loan agreement provided that the first applicant
should surrender to the first respondent Pelham Limited shares totalling 380
000 000 in negotiable form. The first applicant duly surrendered the shares to
the first respondent in negotiable form. The first applicant was unable to
repay the loan by due date. The first respondent called up the loan and by
letter dated 11 March 2011 threatened to liquidate the security in his
possession by selling the Pelhams Limited shares. On 18 March 2011 Messrs Honey &
Blanckenberg, on behalf of the first
applicant, responded to the threat as follows:
“We act for the above named
Oliver Chidawu who has instructed us to respond to your letter dated 11
March 2011.
Your client's threat to start
liquidating the security tendered by our client without instituting
legal proceedings is a clear case of paratie executie.
Accordingly, unless we receive written undertaking from either yourselves or Mr
Shah (the first respondent) that he is not going to proceed
with the intended
sale of our client's
Judgment No. SC 10/14 4
Civil Application No. 293/11
security by
Monday 21 March 2011, we are under instructions to lodge an urgent application with the courts for relief.”
On 5 April 2011 the first respondent caused summons to be issued out of
the High Court against all the applicants, seeking payment of the sum of US$2
700 000 plus interest. The applicants entered appearance to defend. Thereafter
nothing happened until 13 October 2011, when Messrs Atherstone & Cook
addressed a letter to Messrs Honey & Blanckenberg in the following terms:
“We refer to previous
correspondence addressed to you in this matter. As you will recall, our
client is holding 357 million Pelhams shares in negotiable form.
Your client
owes an amount in excess of USD2 550 000.00 exclusive of collection commission.
We are happy to advise that our client has
found a buyer of the aforesaid
Pelhams shares. Accordingly, we advise that if your client fails to pay the
balance outstanding within 48 hours of receipt of this letter Messrs Lyton
Edwards Stockbrokers will be instructed by our client to sell the shares at a
floor price of USD0.00711. In the
event that the proceeds of the sale are not sufficient to cover the debt, our
client reserves the right
to proceed against yours in the usual manner.”
The response from Messrs Honey & Blanckenberg was to the same effect
as their previous letter of 18 March 2011. The letter threatened legal action
if they did not receive a written undertaking by 14 October 2011 to the effect
that the proposed sale of the shares would not be proceeded with. There was no
written undertaking given and on 20 October 2011 the applicants filed an urgent
Chamber application in the High Court to stop the sale of the shares. The sale of the shares was concluded
on 25 October 2011, which was the scheduled date of the hearing of the Chamber
application. The urgent Chamber application to stop the sale and transfer of
the shares was dismissed by MAKONI J on the basis that the founding affidavit
was fatally defective. MAKONI J concluded that there was no valid application
before her. On 8 November 2011 the
applicants made another urgent Chamber application to the High Court. UCHENA J dismissed the
urgent Chamber application on the ground that the papers supporting the
application were fatally defective. The
applicants noted an appeal
against
that
determination. It is the appeal against that
determination by UCHENA J that this Chamber application sought to
have heard on an urgent basis.
As I have already indicated, the
applicants sought –
(a)
to have the appeal against the judgment of
UCHENA J set down on an urgent basis; and
(b)
an interdict against the transfer of the
Pelhams shares from the applicants to
the second respondent.
I dismissed the application to
have the appeal heard on an urgent basis for
two
reasons –
(a)
in my view, the appeal had no prospects of
success (the appeal has since been heard and dismissed); and
(b)
the urgency arose from the desire to stop the
transfer of the Pelhams Limited shares from the applicants to the second respondent.
In my view,
it was not competent for me to grant the interim interdict sought by the
applicants. Consequently the urgency
fell away.
The interim interdict that the applicants sought is
set out in para 4 of the draft order. The applicants wanted the transfer of the
Pelhams Limited shares to the second respondent to be interdicted pending the
hearing of the appeal in case no. SC 293/11. The request for this interdict is predicated on the proposition that the Supreme
Court would
determine the issue of the transference of shares when it heard
the appeal. That proposition
is fallacious, as I shall demonstrate later in this judgment.
The first applicant delivered the Pelhams Limited
shares to the first respondent in negotiable form as security for the loan he
received. The inescapable inference to
be drawn from this is that the first
applicant freely consented to the shares being sold or negotiated in the event
of his failure to repay the loan. He failed to repay the loan and the shares
were sold by the first respondent. The applicants want the transfer
interdicted. The sale, as stated above,
had already been concluded. What remained was the transfer of the shares by the
stockbroker to the purchaser.
The papers in this matter show that the loan
agreement between the parties, voluntarily signed by the first applicant and
the first respondent, was transparent.
The parties were ad idem in
respect of all the terms and conditions of the loan agreement. The loan agreement correctly reflects the
contractual intentions of the parties. There is no allegation or suggestion of
any form of coercion or underhand dealings. The loan agreement appears to be a
normal business transaction between businessmen of substance. For the first
applicant to now seek the assistance of the law to renege on a contract he
openly and willingly entered into smacks of duplicity and deceit. It sounds crooked.
Be that as it may, I am aware of the divergence
of decided cases on the issue of paratie executie. On the one hand there
is the case of Findevco (Pty) Ltd v
Faceformat (Pty) Ltd 2001 (1) SA 251, which is authority for the
proposition that paratie executie is
unlawful; while on the other hand the cases of Osry v Hirsch, Loubser & Co Ltd 1922 CPD 531 and Changa v Standard Finance Ltd 1990 (2)
ZLR 412 are authorities to the contrary.
In this regard I wish to observe in passing
that clarity on the lawfulness or otherwise of paratie executie is on the way. On 5 March 2014 the full Bench of
the Constitutional Court is set to hear the matter between Glens Removal and Storage Zimbabwe (Pvt) Ltd v Patricia Mandala. In that case the lawfulness and the
constitutionality of paratie executie are
issues that will fall for determination. Accordingly, the law on the issue of paratie executie is set to be clarified by the highest court in
land shortly.
However, more importantly, I dismissed the relief for
an interdict because it was not a competent relief. Paragraph 4 of the draft
order reveals that the interim interdict
was relief pending the hearing of the appeal in case no. SC 293/11. A perusal of the Notice of Appeal in that case reveals that the
interdiction of the sale of the shares was not an issue to be determined in
that appeal. The Notice of Appeal reads
as follows:
“TAKE NOTICE that, leave
to appeal not being required, the appellants
hereby appeal against the whole judgment of the High Court (the
Honourable Mr Justice UCHENA in Chambers) in case no. HC 11119/2011 which was
given at Harare on 18 November 2011.
FURTHER TAKE NOTICE that the
appellants' grounds of appeal are as follows:
1.
The learned Judge a quo misdirected himself by rejecting as invalid the Certificate
of Urgency duly signed by Tecla Mapota on the basis that some statements in it
were similar to those in a Certificate of Urgency filed in case no. HC 10410/2011.
2.
The learned Judge a quo misdirected himself by making a factual finding that Tecla
Mapota did not apply her mind to the question of urgency on the basis of submissions made from the bar and in the
absence of any evidence to that effect.
3.
The learned Judge a quo misdirected himself, in any event,
by determining that the fact of common
passages or statements being found in the two Certificates of Urgency
invalidated Tecla Mapota's certificate.
4.
The learned Judge a quo misdirected himself as to the
legal effect of the similarities between some statements and passages in Tecla
Mapota's Certificate of Urgency and that of Sarudzayi Njerere.
5.
The learned Judge a quo misdirected himself by ignoring that the similarities in some
statements in the Certificates of Urgency were explicable by reference to the
similarities in the facts and circumstances as set out in the affidavits in
both HC 11119/2011 and HC 10410/2011.
6.
The learned Judge a quo misdirected himself in coming to the conclusion that there
was an unexplained delay starting from March 2011, when the facts clearly
showed that it was not necessary to institute proceedings then.
7.
The learned Judge a quo misdirected himself by determining that the appellants should have instituted the urgent
application to stop transfer of shares even before Justice MAKONI had
given her judgment
in case no. HC 10410/2011.
WHEREFORE the
appellants pray that the appeal may be allowed with costs and for the following
relief to be granted:
(a)
the judgment of the court a quo be and is hereby set aside;
(b)
the matter be and is hereby remitted to the
High Court for hearing on the merits;
(c)
the costs of the appeal shall be paid by the
first, second and third respondents jointly and severally the one paying the
others to be absolved.
FURTHER TAKE
NOTICE that the appellants hereby tender security for the respondents' costs in the appeal
and undertake to pay the costs for the preparation of the record.”
Quite clearly, the Supreme Court in case no. SC
293/11 was seized with procedural issues. The transfer of the Pelhams Limited
shares was not an issue that fell for determination in the appeal. The Notice
of Appeal relates entirely to the issue of whether the court a quo should have heard the matter on an
urgent basis or not. The court a quo did
not make a determination on the transference of the shares, in which case there
could be no appeal against a
non-existent determination.
Judgment No. SC 10/14 9
Civil Application No. 293/11
In the result I came to the conclusion that it was
nonsensical to grant an interdict pending the determination of an issue which
the Supreme Court was not going to determine,
namely the determination of
the transference of
the shares. (Judgment
no. SC 12/13 did not address or determine the issue of the transference
of the shares.)
It was for these reasons that I
dismissed the application.
Honey & Blanckenberg, applicants' legal practitioners
Atherstone & Cook, first respondent's legal
practitioners
Mtetwa & NyambiraiI, second and third respondents' legal practitioners
Kantor & Immerman, fourth respondent's legal
practitioners
Dube, Manikai &
Hwacha, fifth respondent's legal practitioners
