Intent or Animus Contrahendi re: Simulated or Disguised Agreements

HH67-10 : JAMES MUTETWA vs BARRIE DIXON and MARKO MAVHURUNE N.O. (as Executor Estate Late Samuel Mushaninga) and KENIAS MUTYASIRA N.O. (as Executor Estate Late Salome Chisvo) and REGISTRAR OF DEEDS
Ruled By: MAKARAU JP

In or about January 2006, the applicant and the first respondent entered into an Agreement of Sale in respect of certain immovable property called Stand Number 584 Greystone Park Township of Greystone. In terms of the written agreement, the purchase price for the property was the sum of $400,000,000= and this was to be paid in ...

HH95-10 : TIISO HOLDINGS (PTY) LIMITED vs ZIMBABWE IRON & STEEL COMPANY LIMITED
Ruled By: PATEL J

The plaintiff in this matter has issued summons for payment of the sum of EUR6,640,295=94 together with interest and costs of suit.

The claim arises pursuant to a default judgment of the Regional Court of Frankfurt entered in favour of Kreditanstalt fur Wiederaufbau (KFW) as against the defendant on 25 July 2006.

On 20 May 2008, KFW assigned its rights in the judgment to the plaintiff.

The latter then obtained judgment on the Frankfurt award for an equivalent sum in the High Court of Botswana on 5 June 2009.

The defendant has not satisfied either the Frankfurt or the Botswana judgment.

The plaintiff's claim in this Court is founded on the Frankfurt judgment.

The defendant has filed a Plea in Abatement challenging the enforceability of that judgment on various grounds.

At the hearing of this matter, counsel for the defendant abandoned several of these grounds relating to, inter alia, the impact of the in duplum rule on the interest claim, the non-payment of security for costs by the plaintiff as a peregrine suitor, and the non-enforceability of the Botswana judgment. The last aspect was not pursued in light of the concession by counsel for the plaintiff that its claim was premised solely on the Frankfurt award and not on the Botswana judgment.

Following these concessions, the issues for determination in casu are as follows:

(a) Whether the Deed of Assignment between KFW and the plaintiff is a mere sham depriving the plaintiff of any locus standi to sue on the Deed....,.

Validity of Deed of Assignment

On 21 July 2009, KFW instituted proceedings against the Government of Zimbabwe in the High Court of South Africa to enforce an arbitral award rendered on 5 December 2006 by the International Court of Arbitration. This award relates to repayments due under two loan agreements (Nos. F2971 and F3040), including the amount assigned to the plaintiff.

In this regard, the defendant contends that, if the assignment were valid and genuine, KFW qua assignor would have divested itself of any right or interest in the debt assigned. Therefore, inasmuch as the assignor is claiming the amount assigned in other litigation, it must be inferred that the Deed of Assignment between KFW and the plaintiff is a mere sham.

In my view, the defendant's position is clearly misconceived for the following reasons:

In the Deed of Assignment between KFW and the plaintiff, the former has assigned to the latter its rights to the debt claimed as against the defendant. This assignment does not embrace KFW's rights as against the Government of Zimbabwe in its capacity as guarantor under the loan agreements in question. These are separate rights founding a separate cause of action and KFW is undoubtedly entitled to proceed against the Government on its guarantees through separate litigation. This should not entail any double jeopardy to the defendant or unjust enrichment of the plaintiff, as anything recovered on either claim must obviously be set-off against the amount recovered through the other.

It follows that there is nothing untoward in the assignment between KFW and the plaintiff and that the latter is duly vested with the requisite locus standi in judicio to claim the debt assigned.

HH135-15 : D BANK LTD vs ZIMBABWE REVENUE AUTHORITY
Ruled By: KUDYA J

The appellant entered into an undated one-paged loan agreement…, with the related party…,. The respondent contended that the loan agreement was not a genuine one notwithstanding that three repayments were made. The disquieting features he advanced were the short form nature of the agreement; it was interest free; it was not dated; it did not set out specific repayment dates…,. ...

The appellant entered into an undated one-paged loan agreement…, with the related party…,.

The respondent contended that the loan agreement was not a genuine one notwithstanding that three repayments were made. The disquieting features he advanced were the short form nature of the agreement; it was interest free; it was not dated; it did not set out specific repayment dates…,. He contended that the cumulative effect of these factors was that the loan agreement did not make commercial sense and submitted that the real substance and purpose of the loan agreement was to benefit the appellant by bestowing a grant or subsidy to it.

In Commissioner for South African Revenue Services v MWK Ltd 2010 ZASCA 168; 2011 (2) SA 67 (SCA); (2011) 73 SATC 55…, LEWIS JA stated that:

“[55] In my view, the test to determine simulation cannot simply be whether there is an intention to give effect to a contract in accordance with its terms. Invariably, where parties' structure a transaction to achieve an objective other than the one ostensibly achieved they will intend to give effect to the transaction on the terms agreed. The test should thus go further and require an examination of the commercial sense of the transaction: of its real substance and purpose. If the purpose of the transaction is only to achieve an object that allows the evasion of tax, or of a peremptory law, then it will be regarded as simulated. And the mere fact that parties do perform in terms of the contract does not show that it is not simulated: the charade of performance is generally meant to give credence to their simulation.”…,.

The three witnesses from the related party justified the use of the short form agreement. It was an intra-group agreement for which detailed terms and conditions redolent in similar agreements with unrelated parties was not necessary. It was meant to record the existence of the loan and to satisfy accounting and audit requirements….,.

In my view, the loan agreement contained the essential features that constitute such an agreement. The loan amount was not specifically stated but it was easily ascertainable….,. The loan agreement also stated the date on which repayment of the loan was due….,. That the loan agreement was genuine was also demonstrated by the three repayments of 19 January, 18 June and 6 August 2009 in the aggregate sum of ZAR3,597,753=73….,.

It cannot, from the facts, be found that the only purpose for concluding the loan agreement was to evade tax.

Accordingly, I hold that the loan agreement did not constitute a simulated agreement.

View Appeal
HH385-13 : WEBSTER RUSHESHA (guardian of Panashe and Tivonge Rushesha) and RASAR INV PL vs ALEXIOUS DERA and ZIMCOR TRUSTEES LTD and FRANK BUYANGA and BOKA INV PL and MATTHEW BOKA and ANOR
Ruled By: ZHOU J

Turning to the merits of the claim, the background to the dispute may be summarised as follows: The first plaintiff is a medical practitioner of Zimbabwean origin. He is presently resident in the United Kingdom together with his wife and children. He is married to the second witness, Aquilina Rudo Rushesha. They had two sons together before ...

Turning to the merits of the claim, the background to the dispute may be summarised as follows:

The first plaintiff is a medical practitioner of Zimbabwean origin. He is presently resident in the United Kingdom together with his wife and children. He is married to the second witness, Aquilina Rudo Rushesha. They had two sons together before they moved to the United Kingdom, namely, Panashe Ralph Rushesha (hereinafter referred to as “Panashe”) and Tivonge Sacha Rushesha (hereinafter referred to as “Tivonge”).

The first defendant, Alexious Mashingaidze Dera, is his brother-in-law, being a brother to his wife….,.

The first plaintiff's evidence was that before he went to the United Kingdom he acquired an immovable property known as Stand 671 Mount Pleasant Township 20 of Lot 57 of Mount Pleasant, also known as 3 Justice McNally Close, Mount Pleasant, Harare (hereinafter referred to as “the property”). He asked the first defendant, who is an accountant by profession, to help him form a company in which the shareholders would be the two children mentioned above. The second plaintiff is the company which was then established for the benefit of the children. The reason for incorporating the company, according to the first plaintiff, was to have the immovable property registered in the name of the company. The directors of the company were to be Acquilina Rudo Rushesha and the first defendant. The property was duly registered in the name of the second plaintiff and was its only asset….,.

At the time that the property was acquired, Panashe was ten years old while Tivonge was about a year old. The witness paid the purchase price for the property using his own resources.

When the first plaintiff and his family moved to the United Kingdom in 2003 they leased the property to the South African Embassy. The first defendant was their contact person on some matters relating to the property but the rentals were paid directly into his account. Thus, the first defendant did not receive any rentals in respect of the property; neither did he spend any money on the property.

In or about June 2010 the first plaintiff and his family discovered that the first defendant had sold shares in the second plaintiff to the second defendant represented by the third defendant. That discovery was only made when the first plaintiff's wife came to Zimbabwe from the United Kingdom. They discovered that the shares had been sold for a sum of US$36,350=. Subsequent to the sale of the shares in the second plaintiff the immovable property was then sold to the fourth defendant represented by the fifth defendant. The first plaintiff spoke to the fifth defendant by telephone. The fifth defendant advised him that he had purchased the property from the first defendant. In that conversation the fifth defendant admitted that he had known that the property belonged to the first plaintiff's wife. The first plaintiff stated that different amounts were given as to the price at which the immovable property had been sold. Initially a sum of US$90,000= was mentioned. Later on, a figure of US$125,000= was stated as having been paid for the immovable property. The first plaintiff denied that he authorised the sale of the shares in the second plaintiff or the sale of the immovable property. He, in fact, still holds the original Deed of Transfer for the property….,.

The second witness for the plaintiff was Aquilina Rudo Rushesha, wife of the first plaintiff. She is the mother of the two children, Panashe and Tivonge. She was one of the directors of the second plaintiff company at the time that it was incorporated. She never resigned her directorship. She came to Zimbabwe from the United Kingdom in June 2010. That was when she discovered that the immovable property had been alienated by her brother, the first defendant. She approached the police to help her access the property. She also approached Gerald Mlotshwa, a legal practitioner. A meeting was held which culminated in an affidavit being prepared and sworn to by the first defendant.

The plaintiffs also called Fortune Tapiwa Chasi who is a relative of the first plaintiff's family. He testified that he knew both the third and fifth defendants at a personal level. The witness was notified of the sale of the property to the Boka company by the first plaintiff. He spoke to the fifth respondent about the matter. From his conversation with the fifth defendant the latter knew that the first defendant had borrowed money from the second defendant and used the immovable property as security for the loan. The fifth defendant also stated to him that he was aware that the property did not belong to the first defendant but to the first plaintiff. He also communicated to the third defendant, by telephone and e-mail, about the transactions relating to the immovable property. The third defendant stated to him that matters related to that were to be directed to his legal practitioners, and that his affairs should be separated from those of the second defendant.

The last witness called to testify for the plaintiffs was the first defendant, Alexious Mashingaidze Dera. He was, at all material times, a director of the second plaintiff. As stated above, he is a brother to Aquilina Rudo Rushesha and a brother-in-law to the first plaintiff. Although he was cited as the first defendant he did not enter appearance to defend the matter. He only came as a witness at the instance of the plaintiffs after being subpoenaed to attend.

His testimony was that in February 2009 he obtained a loan in the sum of US$36,350= from the third defendant in order to finance his business of purchasing sugar from Triangle for resale. As security for the loan, the witness then entered into an agreement for the sale of the shares in the first plaintiff to the second respondent, a company in which the third defendant has an interest. The agreement of sale was reduced to writing. His name is recorded as the seller and beneficial owner of “the 2 issued shares in the company”, the second plaintiff. The memorandum acknowledges that the second plaintiff is the registered owner of the immovable property in dispute. He stated that he repaid to the second and third defendants an amount of money between US$7,000= and US$10,000= in an attempt to liquidate the debt, but could not catch up with the increasing interest which was being charged on the amount loaned. He stated that he had known the fifth respondent as a friend prior to meeting the third defendant. He was introduced to the third defendant by the fifth defendant. He then approached the third respondent for a loan which he was duly given as stated above. When he was having problems in repaying the loan the third defendant approached the fifth defendant to inquire as to whether the witness had property which could be sold to raise money to repay the balance outstanding on the loan which had gone up to US$70,000=. Interest was being charged on the outstanding amount every month. In his evidence, the fifth respondent then went and paid to the third respondent the amount outstanding. At the time that the fifth respondent paid off the amount it had gone up to about US$90,000=. The witness stated that the fifth defendant wanted to be paid US$100,000= for having settled the debt owed to the second and third defendants. He deposed to an affidavit prepared by Mr Mlotshwa, a legal practitioner who had been instructed by the first plaintiff?s wife, on 24 June 2010. The affidavit was produced as part of the plaintiffs documents.

The second defendant led evidence through one Simon Charehwa who is its Public Officer. His evidence was that the second defendant, represented by Frank Buyanga, the third defendant, purchased shares in the second plaintiff from Alexious Mashingaidze Dera, the first defendant. The witness stated that the person who dealt directly with the plaintiff was the third defendant. He, the witness, was responsible for compilation of the information in the files of the second defendant. He stated that Dera handed over to Frank Buyanga share certificates relating to the shares as well as resolutions authorising the sale. The share certificate, according to the witness, was taken to the United Kingdom. The rest of the documents were kept in the file at the local office. The witness identified a document…, as the resolution which was given by Alexious Dera to the third defendant. At the time that the transactions were conducted he was a clerk. In cross-examination, he readily admitted that he was not involved when the agreement between the first defendant and the second defendant, acting through the third defendant, was concluded. He stated that the shares in the first plaintiff were purchased for US$36,350=. He stated that the house in dispute, which was the only asset of the first plaintiff, was sold by the second defendant to the fourth defendant for a sum of US$110,000= in September 2009. He stated that he knew the first defendant prior to the transaction relating to the shares of the first plaintiff as he used to render accounting services to the third defendant on a part-time basis.

The fifth defendant gave evidence on his behalf as well as on behalf of the fourth defendant. He is a director of the fourth defendant which is a family company. He stated that he purchased the immovable property in dispute on 15 September 2009. At the time of the agreement he was shown a Form CR14 and a Form CR6 and a resolution by one James Nqindi. According to him, James Nqindi and Frank Buyanga were the directors of the second plaintiff at the time that he purchased the property. He stated that he first knew the first defendant in 2007. He denied that they were friends but that he was just someone he knew.

The witness stated that he had known the third defendant since 2004. He stated that the property was vacant at the time that he purchased it. He indicated to the Court that the fourth defendant was prepared to relinquish the property if it was paid back the money it had paid for the property. He stated that he purchased the property from the second plaintiff. The fourth defendant took transfer of the property in 2010….,. At the time of the purchase there was, according to him, a derelict tennis court. He removed the tennis court with the intention of resurfacing it….,.

The issues which were referred to trial are set out in the joint pre-trial conference minute as follows:

1. Whether or not a valid agreement of sale of shares, allegedly belonging to the minor children (herein represented by the first plaintiff), was entered into between the first and second and third defendants.

2. Whether or not the changes relating to the second plaintiff?s directors and shareholders effected as a result of any such agreement is valid. If not, whether or not such directors and shareholders should revert back (sic) to the period before the 12^th February 2009.

3. Whether or not the second plaintiff validly entered into an agreement for the sale of the immovable property, being Stand Number 671 Mount Pleasant Township 20 of Lot 57 of Mount Pleasant, with the fourth and fifth defendants. If not, whether the registration of title into the fourth defendant (sic) must be set aside and the original Deed reinstated.

4. Whether or not the plaintiffs have any claim for damages against the second to fifth defendants arising out of the structural alterations to the immovable property. If they have a claim, what the quantum of damages recoverable is.

5. Whether or not if the plaintiffs succeed, the fourth defendant should remain in possession of the immovable property on the basis of a lien and until any such claim as it may have (has) been realised.

The question of the validity of the sale of shares to the second defendant must be considered in the context of the nature of the agreement between the first defendant, Alexious Dera, on the one hand and, on the other hand, the second and third defendants. If a finding is made that there was no sale then the legal consequences of that finding will ensue. On the other hand, if the conclusion is that there was a sale the Court will then consider whether such sale can be impeached on the grounds submitted by the plaintiffs.

The plaintiffs case is that the agreement was one of a loan in terms of which money was advanced to the first defendant by the second and third defendants. The shares were, according to the plaintiffs, surrendered to the second and third defendants as security for the repayment of the loan.

In determining the above issues, the Court must look at the evidence in its totality or as a whole and not piecemeal. All the parties agree that the second plaintiff's sole asset was the immovable property at 3 Justice MacNally Close, Mount Pleasant, Harare….,. The defendants relied on an agreement of sale of shares signed on 12 February 2009 as proof that the second defendant purchased the entire shareholding in the second plaintiff from the first defendant. In terms of that agreement, the entire shareholding was sold for a sum of US$36,350=. A document was also produced, signed by the first defendant, to acknowledge receipt of a sum of US$36,350= “being the purchase price for the entire shareholding in Rasar Enterprises (sic) (Pvt) Ltd”.

The first defendant's testimony was that the agreement of sale was a disguised loan transaction.

The third defendant, who was the person who was involved in the transactions on behalf of the second defendant, did not testify. That leaves the testimony of the first defendant unchallenged. No explanation was given regarding the last minute default of the third defendant.

The witness who testified for the second defendant, Simon Charehwa, was not privy to the discussions leading to the agreement. He was only a clerk at the material time.

In any event, the second and third defendants version does not accord with the probabilities in this case. A purchase price of US$36,350= for the entire shareholding in the second plaintiff does not stand scrutiny, it being common cause that the transaction would, in essence, be a purchase of the immovable property which was the only asset of the company. The fifth defendant stated that a vacant piece of land within the area of Mount Pleasant would cost between US$30,000= – US$50,000=. Simon Charehwa stated that the immovable property was “sold” to the fourth and fifth respondents for a sum of US$110,000= some seven months after the second defendant acquired it for US$36,350=. There is no conceivable explanation as to how the value would have trebled within such a short time. The only reasonable explanation is that the payment was meant to cover the debt owed by the first defendant to the second and third defendants which escalated rapidly because of interest charged. The time that the multi-currency regime was introduced in the country would not, in my view, explain payment of a sum of US$36,350= for that property. No evidence was tendered in support of that assertion.

The first defendant stated, in his evidence, that by the time the shares were appropriated by the second defendant he had paid about US$7,000= towards reduction of the debt. That assertion was not contested. Simon Charehwa did not know about that payment.

I have considered, too, that the parties involved were not strangers to one another. Frank Buyanga was known to the first defendant after being introduced by the fifth defendant. Simon Charehwa stated that he used to see the first defendant “a lot” at the offices of the second defendant where he used to render accounting services to the third defendant on a part-time basis. The fifth defendant was also known to the first defendant prior to that transaction. When he proceeded with the registration of the immovable property in the name of the fourth defendant, in July 2010, he had already become aware that the transactions were being disputed.

It is not uncommon for parties to enter into disguised transactions where, as happened in the instant case, property which is given as security is disguised as the subject of a sale. In the case of Hoffmeyer v Gous (1893) 10 SC 115…, the court remarked as follows:

“There is not a more common device than that by which a pledge is disguised as a sale.”

In such transactions the approach of the Court is settled. The court looks at the substance and not the form of a transaction. See Zandberg v Van Zyl 1910 AD 302…,.; MacAdams v Fiandies' Trustees 1919 AD 207. The rationale for that approach is easy to fathom. Court proceedings are not a game of chess. They are a serious inquiry into and determination of the rights of the participants in the proceedings.

On the facts of this case, I have no difficulty in concluding that the agreement between the first defendant and the second and third defendants was not a sale of shares. Instead, the shares were given to secure a loan given to the first defendant by the second and third defendants. The taking of ownership of the shares by the second defendant makes the transaction a pactum commissorium. See Vasco Dry Cleaners v Twycross 1979 (1) SA 603 (A). In the case of Chimutanda Motor Spares (Pvt) Ltd v Musare & Anor 1994 (1) ZLR 310 (H)…, this Court, citing with approval a passage from the case of Van Rensberg v Weiblen 1916 OPD 247…, embraced the following definition:

“A pactum commissorium is defined as 'a pact by which the parties agree that if the debtor does not within a certain time release the thing given in pledge by paying the entire debt, after the lapse of the time fixed, the full property in the thing will irrevocably pass to the creditor in payment of the debt'.”

See also Kufandirori v Chipuriro & Ors 2004 (1) ZLR 74 (H)..,.; Upper Class Enterprises (Pvt) Ltd v Oceaner (Pvt) Ltd & Ors 2002 (2) ZLR 599 (S)…,.

The simple position of the law is that a pactum commissorium is illegal and unenforceable. Upper Class Enterprises (Pvt) Ltd v Oceaner (Pvt) Ltd & Ors 2002 (2) ZLR 599 (S)…,.; Kufandirori v Chipuriro & Ors 2004 (1) ZLR 74 (H)…,.; Chimutanda Motor Spares (Pvt) Ltd v Musare & Anor 1994 (1) ZLR 310 (H)…,.; Sun Life Assurance Co of Canada v Kuranda 1924 AD 20…,.

The jurisprudential principles which underpin the unenforceability of a pactum commissorium and the circumstances in which exceptions may be accepted have been the subject of academic and judicial discourse. See Mapenduka v Ashington 1919 AD 343…,.; Chimutanda Motor Spares (Pvt) Ltd v Musare & Anor 1994 (1) ZLR 310 (H)…,.; Oceaner (Pvt) Ltd & Anor v Upperclass Enterprises (Pvt) Ltd & Anor 2001 (2) ZLR 130 (H)…,.; SILBERBERG & SCHOEMANN, The Law of Property 3^rd Ed. by Kleyn & Boraine; WILLES's Principles of South African Law 8^th Ed…,.

They need no further discussion.

In casu, in the light of the settled position of the law, the sale and transfer of shares in the second plaintiff by the first defendant to the second defendant was therefore illegal, and, consequently, null and void ab initio. The illegality necessarily invalidates the Form No. CR14 in terms of which Frank Buyanga, the third defendant, and one James Nqindi were appointed as directors of the second plaintiff. The fate of the sale and transfer of the immovable property to the fourth respondent in terms of a memorandum of agreement of sale dated 15 September 2009 is decidedly sealed in the words of LORD DENNING MR in the celebrated case of MacFoy v United Africa Co Ltd [1961] 3 All ER 1169…,:

“If an act is void, then it is, in law, a nullity. It is not only bad, but incurably bad…,.. And every proceeding which is founded upon it is also bad and incurably bad. You cannot put something on nothing and expect it to stay there. It will collapse.”

Accepting the above exposition of the law, the Supreme Court, in Muchakata v Netherburn Mine 1996 (1) ZLR 153 (S) held that an act which is void ab initio is “void at all times and for all purposes. It does not matter when and by whom the issue of its (in) validity is raised; nothing can depend on it.”

In short, the sale of the immovable property to the fourth respondent is a legal nullity. The effect of my conclusion is to dispose of issues 1, 2 and 3, as set out in the joint pre-trial conference minute, in favour of the plaintiffs and against the defendants….,.

In the circumstances, judgment is given in favour of the plaintiffs against the defendants. It is accordingly ordered as follows:

1. The purported sale and transfer of shares in Rasar Investments (Private) Limited by the first defendant to the second defendant is hereby declared to be illegal and null and void ab initio.

2. The Form No. CR 14 presented for filing with the Registrar of Companies by Mutamangira & Associates, on 11 February 2009, in terms of which the third defendant and James Nqindi were appointed as directors of the second plaintiff is hereby declared to be null and void ab initio and the directors of the second defendant, prior to the filing of that Form, are hereby declared to be in office.

3. The sale and transfer to the fourth defendant of the immovable property known as Stand 671 Mount Pleasant Township 20 of Lot 57 of Mount Pleasant, otherwise known as 3 Justice McNally Close, Mount Pleasant, Harare, is hereby declared to be null and void, and is set aside.

4. The Deed of Transfer in terms of which Stand 671 Mount Pleasant Township 20 of Lot 57 of Mount Pleasant, registered in the name of the second plaintiff, is hereby declared to be valid.

5. The Sheriff is hereby directed to sign all documents necessary to reinstate ownership of the immovable property described in paragraph 4 hereof to the second plaintiff.

6. The fourth and fifth defendants and all persons claiming occupation through them be and are hereby ordered to vacate Stand 671 Mount Pleasant Township 20 of Lot 57 of Mount Pleasant, otherwise known as 3 Justice McNally Close, Mount Pleasant, Harare, within fourteen days from the date of service of this order, failing which the Sheriff be and is hereby directed to take all steps necessary to eject them from the property.

SC83-20 : ARISTON HOLDINGS LIMITED vs THE COMPETITION AND TARIFF COMMISSION OF ZIMBABWE
Ruled By: GWAUNZA DCJ, PATEL JA and MAKONI JA

It is apposite to look at the substance rather than the form of the transaction as was reiterated by the Competition Appeal Court of South Africa in Gold Fields Limited v Harmony Gold Mining Company Limited and Another [2005] ZACAC 1; [2005] 1 CPLR 74 (CAC), where it held:“There is ...

HH551-15 : W AND D CONSULTANTS (PRIVATE) LIMITED vs SEAN THOMAS NIELSON DORAN
Ruled By: DUBE J

This dispute came before me as a trial matter. The parties agreed to dispense with the need to call oral evidence there being no disputes of fact arising from the facts. Thereafter, the parties filed heads of argument and a Statement of Agreed Facts.After argument, the court granted the following ...

This dispute came before me as a trial matter. The parties agreed to dispense with the need to call oral evidence there being no disputes of fact arising from the facts. Thereafter, the parties filed heads of argument and a Statement of Agreed Facts.

After argument, the court granted the following order;

“IT IS ORDERED THAT:

1. The defendant shall give vacant possession of No.7 St. Michaels Lane, Borrowdale otherwise known as the remaining extent of Stand 10 Reitfontein Township of Lot 1AB Reitfontein measuring 4,714 square meters within (7) seven days from the date on which the order is served on the defendant.

2. If the respondent, or any person occupying the property through him, remains on the property after that date, the Sheriff is authorised to remove them and their possessions from the property.

3. Payment of holding over damages in the sum of US$2,000 dollars per month from the 7th of February 2013 to the date of ejectment.

4. Costs of suit.”

Brief reasons for the order were given. The court has now been requested for detailed reasons for its order.

The salient facts of this dispute are common cause.

On 12 July 2013, the plaintiff issued summons claiming the ejectment of the defendant and all persons claiming occupation through him from No.7 St Michael's Lane, Borrowdale, Harare and holding over damages at $3,000 per month from January 2013 to the date the defendant vacates the property.

The plaintiff is the registered owner of the property in dispute having bought it at a sale in execution and subsequently transferred it into its name. The defendant, who is in occupation of the property with his family, has refused to vacate the property.

The brief background of this case is aptly summarised in the Statement of Agreed Facts as follows;

“1. A judgment by default for the payment of an amount of US$415,951=91, under case number HC5917/10, was obtained by Kingdom Bank against the defendant, Dreibond Investments (Private) Limited (“Dreibond”) and 9 other defendants on the 14th of February 2011.

2. The judgment also provided that a certain piece of immovable property known as certain piece of land situate in the District of Salisbury called the Remaining Extent of Stand 10 Rietfontein Township of Lot 1AB Reitfontein measuring 4,714 square meters (“the Property”) be declared executable.

3. The Property was registered in the name of Dreibond. Dreibond is not a trading company.

4. The defendant holds all the issued shares in Dreibond.

5. The directors of Dreibond, as per the Company Office records, are Louise Nielson-Doran and the defendant.

6. A writ of execution against immovable property was issued in matter HC5917 on the 15th of April 2011.

7. The Property was attached into execution and duly advertised for sale by public auction on the 19th of October 2012.

8. The Plaintiff, represented by Tsitsi and Prince Zireva, bid for the Property, and the Sheriff for Zimbabwe, on the 7th of November 2012, duly declared the Plaintiff the highest bidder and purchaser of the Property at a purchase price of US$284,000.

9. The Property was transferred to and registered in the name of the Plaintiff on the 5th of February 2013.

10. On the 7th of February 2013, the Plaintiff demanded that the Defendant vacates the Property.

11. The Defendant has refused to vacate the Property and contends that he has the right to remain in occupation in terms of a lease agreement allegedly executed between Dreibond and his wife, Louise Nielsen Doran, on the 28th of September 2012. A copy of the alleged lease agreement is attached hereto marked Annexure “A”. The alleged lease agreement provides for the payment of rentals at the rate of US$1,500 per month.

12. The Defendant and/or his wife have not paid any rentals whatsoever to the Plaintiff. The Defendant tendered rent to the Plaintiff on the 24th of July 201.

13. The Defendant and the other 10 defendants applied for the rescission of the default judgment of the 14th of February 2011 under case number HC9634/11. The application was dismissed on the 17th of October 2013. Judgment HH363-13 refers.

14. On the 19th of March 2013, the Plaintiff obtained a report from Clipcrunt Real Estate which put market rentals for the property at US$3,000 per month. A copy of the report is attached hereto marked Annexure “B”.

15. Defendant obtained two (2) independent evaluation reports from Estate Agents which put the rentals for the Property at US$1,500. Copies are attached marked as Annexure “C” and “D”.

16. The Parties have agreed that a fair market rental for the Property is in the amount of $2,000 per month.”

At the hearing of this matter, the defendant raised preliminary points which I will deal with in seriatim....,.

The defendant further submitted that the defendant has the lawful right to remain in occupation of the premises through his wife, Louise Nielsen, who has a legal and binding lease with the former owners of the property thus, Dreibond Investment (Private) Limited.

The defendant submitted that the new owner, the plaintiff, is bound to observe and adhere to that lease agreement on the basis of the huur gaat voor koop concept.

Further, that the defendant's wife ought to have been joined to these proceedings on the basis that she is the holder of that lease.

I propose to deal with this point when I deal with the merits of this case as this point is intrinsically intertwined with the merits of this matter....,.

I now come to the merits of this matter.

I will deal, first, with issues related to the making of the lease agreement and the correctness of the parties before the court.

The ownership structure of the company reveals the following:

(i) The defendant is the sole shareholder of Dreibond Investments (Pvt) Ltd, the former owner of the property which is subject of this dispute.

(ii) The company is not a trading company.

(iii) The defendant and his wife are the only directors of that company.

(iv) The property was registered under the defendant's company and was sold in order to settle the defendant and his company's indebtedness to Zimbank Bank.

The cardinal principle is that a company is a separate entity which has a separate and distinct legal existence from that of its members: see Salomon v Salomon (1897) AC 22 (HL). There are exceptions to this rule and these are grounded on policy considerations.

In US v Milwaukee Refrigerator Transit Company (1905) 42 Fed 247…, the court said of exceptions to the rule;

“When the notion of a legal entity is used to defect public convenience, justify wrong, protect fraud, or defend crime, the law will regard the corporation as an association.”

In such cases, the courts will lift the corporate veil and investigate the activities of the company.

In Cape Pacific Ltd v Lubner Controlling Investment (Pty) Ltd and Others 1993 (2) SA 784 (C) the court held as follows;

“The general principle underlying this aspect of the law, of lifting the veil, is that, when the corporation is the mere ego or business conduit of a person, it may be disregarded. This rule has been adopted by the courts in those cases where the idea of the corporate entity has been used as a subterfuge and to observe it would work an injustice.”

In Waltersteiner v Moir; Moir v Waltersteiner and Others (1974) 3 ALL ER 217 (CA) DENNING MR was prepared to treat various companies through which the appellant, Dr Waltersteiner, had operated as if they were “just puppets of Dr Waltersteiner.” At 1013 of the judgment, LORD DENNING held as follows;

“He controlled their every movement. Each danced to his biding. He pelted the strings. No one else got within reach of them. Transformed into legal language, they were his agents to do as he commanded. He was the principal behind them. I am of the opinion that the court should pull aside the corporate veil and treat these concerns as being his creatures for whose doings he should be and is responsible.”

The evidence that emerged during the trial shows that the defendant and his wife have always been in occupation of the house. They then devised a scheme to save the property from the sale that was imminent. They entered into a lease agreement between themselves on the eve of a sale in execution of the house.

It is necessary to unwrap the lease agreement and reveal its true nature.

On 14 February 2011, Kingdom Bank obtained a default order against the defendant's company. A writ of execution against the property was issued on 15 April 2011 resulting in the property being attached. The property was advertised for sale by the Sheriff on 19 August 2011. The defendant tried to stop the sale by filing an urgent chamber application under HC12308. That application was not to yield any fruit.

The defendant's company states that he only got to know of the default judgment on 19 August 2011 when adverts appeared in the Herald Newspaper advertising the sale in execution. The property was going to be sold on 2 September 2011. The property was sold soon after the urgent chamber application on 7 November 2012.

On 28 September 2011, the defendant's company entered into an agreement of lease over the property. The defendant signed the agreement on behalf of his company. The defendant and his wife continued in occupation of the property.

The lease agreement was entered into after the Sheriff had indicated that the property was going to be sold.

The defendant and his wife were aware, from as far back as April 2011, when judgment was entered against them, that this property was going to be sold. The defendant's company and his wife entered into a lease agreement solely for purposes of defeating the sale in execution that was imminent and so that they could remain in occupation of the property after the sale.

The circumstances of the making of this lease agreement call for the court to pierce the corporate veil and investigate the activities taking place thereunder.

This case is akin to the Cattle Breeders Farm (Pvt) Ltd v Veldman (2) 1973 (2) RLR 261 case. This case involved a husband who used his company to try and evict his wife. The court ruled that the husband could not hide behind the company to seek eviction of his wife.

The defendant has tried to hide behind his wife and the company by leasing the property in issue to her and to escape eviction.

The lease agreement was deliberately offered to the wife even though there is no actual distinction between the wife, the defendant, and the company.

Our courts have held that a husband and wife hold a uniquely special relationship and that they normally have a common interest and household: see Warren Park Trust v Antony Ernest Pahwaringira and Others HH39-09 and Masiyiwa Cleopas Gonye v Stella Mavis Gonye SC15-09.

The facts of the case involved a company formed by the appellant which he, his wife, and sons were shareholders. The court held that the company was part of the matrimonial estate. The court held as follows:

“Stripped of the corporate veil, the proceeds of the farming operations belonged to the appellant. The company was nothing more than the applicant's alter ego. It had no greater rights to the money than he possessed.”

When one considers the defendant's position in the company, and that of his wife, one cannot avoid the conclusion that the property was, before the sale, part of the matrimonial estate of the defendant and his wife.

The transaction entered into is a simulated and dishonest transaction.

The court is not deceived by its form but is concerned about its substance. It appears to me that this is a mere paper agreement. It cannot become a real agreement.

In Kilburn v Estate Kilburn 1931 AD 501 the court held that;

“…, a court of law will not be deceived by the form of a transaction; it will rend aside the veil in which the transaction is wrapped and examine its true nature and substance.”

In Boots Company (Pvt) Ltd v Somerset West Municipality 1990 (3) SA 216 (C)…, the court set out the law on simulated contracts as follows:

“I take the law on this question from the case of Skjelbreds Rederi A/S and Others v Hartless (Pvt) Ltd 1982 (2) SA 710 (A) in particular, I cite the following passage from the (as he then was), reading from p732:

'The law relating to the question of simulated, or disguised, agreements is summed up in the well-known Roamanism, plus valet quod I agituraquam quod simulate concipitur. In Justiniaris Codex 4.22.1 the rule is briefly stated in the following terms: In Contractibusrei veritas debet, i.e. in contract the truth of the matter, rather than the writing, must be looked at.'”

In Zandberg v Van Zyl 1910 AD 302 INNES JA dealt with this subject and held that in a simulated contract, parties enter into such a contract in order to secure some advantage which otherwise the law would not give or escape some disability which the law would otherwise impose. He says, at 309, that such parties;

“Endeavour to conceal its (transaction) real character. They call it by a name, give it a shape intended not to express but to disguise its nature, and, when a court is asked to decide any rights under such agreement, it can only do so by giving effect to what the transaction really is and not what it, in form, purports to be.”

It is easy to detect this simulation.

This is to be done by considering the facts leading up to the contract and circumstances under which it was made.

It is apparent that the transaction, or agreement, was entered into simply to retain the property.

The defendant company and the defendant's wife entered into the lease agreement in order to thwart the sale of the house. They devised a plan wherein they would remain in occupation of the property despite the sale and defeating the sale in execution that was in progress. The agreement was entered into after the writ of execution had been issued and after the property had been placed under judicial management. They wanted to defeat the sale at all costs. They devised a strategy to defeat the sale.

The defence of huur gaat voor koop is being raised to frustrate the plaintiff's rights.

The defendant now resists the eviction on the basis of this lease agreement. He seeks to hide behind his wife. His partner in crime. It is clear that the lease agreement was made simply to save the property. The parties to the lease agreement were not bona fide when they entered into the lease agreement.

The court has considered, in coming up with this position, that the defendant is a sole shareholder and owner of the company. He is, in effect, the sole owner of the company. His company, represented by himself, entered this contract with his own wife, a director of the company. The defendant signed the lease agreement in the face of a pending execution. The defendant benefits from the existence of the lease. He is actually in occupation of the property with his wife. He was well aware that he would benefit from the agreement he was signing. The parties were in occupation of the property without a lease agreement prior to the sale.

One wonders why there was now a need for a lease agreement.

The defendant clearly sought to protect his property. Any threat to the property was a threat to him. This cannot be a genuine lease agreement. There is no doubt in my mind that the lease agreement was simulated.

The evidence reveals that the defendant entered into the lease agreement to evade a creditor who was pursuing his company and property. The lease agreement was fraudulently entered into.

This is a proper case in which to lift the corporate veil and investigate the activities of the company.

The defendant is the alter ego of the company. The defendant controlled the company as he was the sole shareholder. He and his wife were the only two directors of the company. The company is a one-man company. He is the company. The defendant's company is his. There is no separation between the defendant and his company. The company is simply a tool through which the defendant owned the property. He cannot be separated from the company. The defendant has involved in activities, through the company, which are irregular and fraudulent. The defendant used his company to justify wrong and protect fraud.

This lease agreement is irregular. This agreement cannot stand in the way of the plaintiff's claim. The lease agreement is a nullity and no rights flow from it.

The plaintiff is, on the basis of this reason alone, entitled to evict the defendant, his company, and his family from the house in issue.

SC01-15 : FIRSTEL CELLULAR (PRIVATE) LIMITED vs NETONE CELLULAR (PRIVATE) LIMITED
Ruled By: ZIYAMBI JA, GARWE JA & PATEL JA

Generally speaking, although the integration rule may not invariably apply where the true nature of an agreement is in issue, extrinsic evidence cannot be allowed to negate the express and clear terms of the agreement: see the remarks of ZIYAMBI JA in Nhundu v Chiota Another 2007 (2) ...

SC40-15 : INDIUM INVESTMENTS (PVT) LTD vs KINGSHAVEN (PVT) LTD and DANIEL SHUMBA and LINDA SHUMBA
Ruled By: CHIDYAUSIKU CJ, GWAUNZA JA, GOWORA JA, HLATSHWAYO JA and MAVANGIRA AJA

On 28 February 2008, under case no. HC1239/08, the appellant caused summons to be issued against the respondents seeking an order for the cancellation of a lease, and, consequent thereto, the eviction of the respondents from the leased premises.

On 10 December 2008, a second summons was issued by the appellant under case no.6969/08 wherein it sought the eviction of the respondents due to the expiry of the lease.

The High Court dismissed the claims with costs.

The appellant was aggrieved by the dismissal and has noted this appeal....,.

The basic facts surrounding the dispute are the following:

The appellant (hereinafter referred to as “Indium”) is the registered owner of certain immovable property, being Stand 450 Avondale West Township of Stand 390 Avondale West, also known as 108 West Road, Strathaven, Harare, (hereinafter referred to as “the premises”). The first respondent (hereinafter referred to as “Kingshaven”) is a private company registered as such under the laws of Zimbabwe. The second respondent (hereinafter referred to as “Shumba” and the third respondent, his wife, are the only shareholders of and directors in Kingshaven.

Kingshaven carries on business in the hospitality sector and is in occupation of the premises by virtue of a lease concluded on 14 December 2007 with Indium. Notwithstanding the date of signing, the agreement was to come into force on 10 December 2007 and was to endure for a period of 365 days, terminating automatically on 9 December 2008.

Shumba and his wife are shareholders in a Close Corporation, ERF Bryanstan Cc, which is duly registered as such under the laws of South Africa.

ERF Bryanstan is the registered owner of an immovable property, being Portion 2 of ERF 825 Bryanstan Township also known as 17 Portman Road, Bryanstan Sandton, Johannesburg.

In 2007, ABSA Bank, in whose favour ERF Bryanstan had registered a mortgage against the property, called up the mortgage and executed against the same.

In an effort to save the property, Shumba approached Jayesh Shah (hereinafter referred to as “Shah”) for financial assistance, and this culminated in a number of agreements.

The first agreement consists of a loan between Shah, on the one part, as lender, and Shumba and ERF Bryanstan Cc, on the other, as borrowers. The loan amount is UD$500,000.

The second agreement is for the sale of the entire shareholding in Indium concluded by Shumba and his wife, on the one part, as sellers, and Jayesh Shah and Shaleetha Mahabeer, on the other, as purchasers.

The last agreement is the lease agreement concluded between Indium, as lessor, and Kingshaven, as lessee on 14 December 2007.

The two matters instituted by Indium were, by consent of the parties, consolidated for trial before the High Court.

In dismissing the claims, the court a quo stated:

“He intended to secure a windfall by all means legally possible. His legal practitioner advised a web of agreements to ensure he remained within the realms of the law. A loan here, a purchase of shares there and a lease with a buy-back option to crown it all, was all it took to secure apparent control of the debtor's immovable property in Zimbabwe without any reference to its true value.

Clearly, whatever the parties decided to call it, the agreement to take over control of the plaintiff company from Shumba, without paying for it, amounted, in my view, to a pactum commissorium.

It is the substance, not the form, to which the court looks when deciding the true nature of an agreement.

Consequently, therefore, the second issue, whether annexure “C” amounts to a pactum commissorium is determined in defendants' favour.

I have already found that the payment, in South Africa, by Shah, was intended as a loan, as pleaded by plaintiff; therefore, there is no evidence to suggest that the same payment doubled as payment for shares in Indium Investments (Private) Limited.

That issue is resolved in favour of the defendants as well.

The transactions were clearly in fraudum legis. The law in this jurisdiction is clear. Where the contract which is in fraudum legis is performed, the court cannot come to either party's assistance.”

The appeal is premised on the following grounds:

1. That, the court a quo erred in not finding, that, in the absence of a plea for rectification of a contract, the parole evidence rule operates to exclude extrinsic evidence to disprove the contents of a written contract. (sic)

2. The court a quo erred in not finding, that, returns lodged with the Registrar of Companies are prima facie proof of the correctness thereof, and the same cannot be impugned without the joinder of the Registrar of Companies.

3. Consequently, and for the stronger reason in view of grounds of appeal 1 and 2 above, the court a quo erred in holding that the respondents had discharged the onus of justifying possession of the appellant's property within the context of the actio rei vindicatio.

4. The court a quo erred in fact and in law in holding that the agreements in question were simulated agreements which “mimicked” the South African agreements.

5. The court a quo erred in any event in holding, that, the agreements the subject of the litigation were in fraudem legis in that they sought to evade the exchange control legislation, in view of the fact that free funds were paid to the credit of a South African resident, and in not finding, that, the fact that such South African resident was a citizen of Zimbabwe and did not give rise to the need for exchange control approval.(sic)

6. The court a quo erred in fact and in law in holding, that, the agreements the subject of the litigation a quo were a pactum commissorium.

Counsel for the appellant urged us to find, that, the learned judge in the court a quo had not dealt with the case that was placed before him.

It was his contention, that, the matter before the court was principally for the cancellation of the lease agreement between Indium and Kingshaven and consequential relief. He argued that it was essentially a rei vindicatio.

What the court a quo did, however, it is argued, was to turn its focus on a completely different issue which it could not competently determine and made findings which cannot be supported.

It is contended, that, the court thereby misdirected itself.

In my view, the dispute can be resolved by this court having regard to the manner in which the court a quo dealt with what it referred to as the simulated agreements, and, secondly, dealing with the actio rei vindicatio in accordance with the claims in the summons....,.

In answer to the claim for the eviction of Kingshaven from the premises, the respondents raised various defences, namely, that Shumba and his wife had borrowed a specified sum of money from Shah, and that, as security for their due performance thereon, the latter had demanded security in Zimbabwe in the form of shares in Indium. They pleaded, further, that the parties entered into a simulated agreement for the sale of shares in Indium which ultimately resulted in the lease agreement providing for a buy-back option in favour of Shumba and his wife.

There is no suggestion on the papers that Indium participated in any of the agreements except the lease.

It then begs the question which parties the court a quo referred to when it concluded that the agreements were fraudum legis.

It is common cause, that, the loan agreement was between ERF 825 Bryanston Cc, in which Shumba and his wife owned shares, and Shah.

ERF Byanston Cc was not cited as a party to the proceedings before the court a quo.

Shah only appeared in the proceedings in the court a quo as a witness on behalf of Indium.

In the circumstances, the court could not have properly considered the loan agreement, or its legality, in the absence of the parties thereto.

I turn next to the “share sale” agreement in relation to the shares in Indium.

The parties to the sale of the shares were, on the one part, Shumba and his wife, as sellers, and, on the other part, Jayesh Shah and Shaleetha Mahabeer.

The last two were never before the court as parties and the agreement for the sale of shares could therefore not be scrutinised to any extent by a court in their absence.

Consequently, the determination by the court of the issues related to the lease agreement concluded by Indium and all the respondents in reference to the share sale agreement was highly irregular.

It follows, therefore, that, any issues referred to the trial court for determination in relation thereto would be irregular. It is therefore logical to conclude that the court a quo dealt with matters and issues that were not before it.

This leaves Indium, Kingshaven, Shumba and his wife.

They were parties to a document, being the lease agreement, which is the only document properly before the court.

Those were the parties that were before the court, and, therefore, the only dispute for determination was that arising from the lease agreement in respect of which the court had to determine the respective rights and obligations of the parties before it.

In the absence of a counter-claim for declarations of invalidity in respect of the agreements discussed above, the court could not grant relief to the effect that the agreements were invalid. At best, it was argued, the court ought to have granted absolution from the instance.

I think the criticism is well taken.

At p8 of the cyclostyled judgment, the learned judge in the court a quo stated:

“In my view of the facts, the defendants have adduced sufficient evidence to rebut the presumption of legality of the transactions described above. Generally, one of the most common forms of tax avoidance is where the parties to a contract attempt to disguise its true nature in order to qualify for a tax benefit that would not be available if the true contract between them were revealed. The courts require no statutory powers to ignore pretence of this kind and the law will always give effect to the real transaction between the parties.”

The court a quo then went on to consider the agreements in question, and, at p11 of the judgment, concluded:

“In my view, the true nature of the Zimbabwean agreements was that they were additional securities to the South African loan despite the fact that they in effect apparently passed ownership and control to Shah. The buy-back option as well as the fact that the loan had been secured by a mortgage bond gave Shumba the belief (that) these agreements will be respected by the parties as pledged to the underlying loan agreement. I therefore find for the defendant in respect of the first issue.

As to whether annexure “C” amounts to a pactum commissorium, it follows from my reasoning, that, once the interpretation given by the defendant is upheld, the court must find in his favour on this point as well.

I do so for the following reasons:

A pactum commissorium has been defined as a 'pact by which the parties agree that if the debtor does not, within a certain time, release the thing given in pledge by paying the entire debt, after the lapse of the time fixed, the full ownership in the thing will invariably pass to the creditor in payment of the debt:' see Chimutanda Motor Spares (Pvt) Ltd v Musare & Another 1994 (1) ZLR 310; Van Rensberg v Wieblen 1916 OPD 247 at 252.”

Undoubtedly, the court was correct in its statement of the principle of a pactum commissorium.

However, it was incorrect in applying that principle to the facts of this case.

It gave the respondents far reaching relief which they had neither sought nor prayed for....,.

It is common cause, that, in their plea to the claim for eviction, the respondents raised the issue related to the loan between Shah and Shumba and his wife, the agreement for the sale of shares in respect of Indium, and the lease agreement in terms of which Kingshaven, and through it, Shumba and his wife occupied the premises.

A plea is a defence, and, as such, can be likened to a shield. It is not a weapon or a sword. No relief can attach to a party through a plea.

In the same plea, the respondents averred, that, by separate process, Shumba and his wife would approach the High Court for a declaration of invalidity of the two Zimbabwean agreements.

No such process was ever launched.

Clearly, the court a quo misdirected itself in that it resolved a dispute that was not before it.

Some of the parties to the dispute in question were not before it and they were denied the right to be heard in their own cause.

The ratio of the decision of the court strikes at the rights of Jayesh Shah and Shaleetha Mahabeer without affording them the right to be heard.

I say so for the reason, that, a judgment in which the court stated that the acquisition of shares by the two was a nullity could not be made in their absence and in proceedings in which they have not been cited as parties.

The question that arises for determination is whether such a judgment can be said to be valid and binding as against Jayesh Shah and Shaleetha Mahabeer.

In Hundah v Murauro 1993 (2) ZLR 401, the point was made, that, for a party who has a real interest in the matter in dispute before a court to be bound by a judgment of the court, such party should be cited. At p404E-G the court stated:

“We have drawn attention to this point previously on a number of occasions: see e.g. Munemo v Muswera 1987 (1) ZLR 20 (S) at 21G-H; often in conjunction with the other important point that the local authority should be cited in proceedings of this kind since it has real interest in the property in dispute: see e.g. Ncube v Mkandla SC123-89. If it indicates, in writing, beforehand, that, it is happy to accept whatever the court decides, well and good. But, otherwise, it should be cited, if only to ensure that it is bound by whatever judgment is given. Such an order does not bind it if it was not a party.”

Additionally, the court only had regard to the Zimbabwean agreements.

In the event that its conclusion, that the lease agreement was a simulation and that the “share sale” agreement was security for the loan, such finding could not be arrived at without considering the South African agreements.

The court declined to have regard to them on the basis that the order sought did not depend upon their validity.

This was despite the fact that the pactum commissorium depended on the loan agreement, which was a South African agreement, and which the court had properly declined to consider.

The contradiction is obvious and the misdirection can thus not be in dispute.

Appealed
SC08-21 : WELLI-WELL (PVT) LTD vs MALVERN IMBAYAGO and THE SHERIFF OF ZIMBABWE
Ruled By: BHUNU JA, MATHONSI JA and CHITAKUNYE AJA

In the process of executing a judgment of the High Court against B.M. Graphics (the judgment debtor), the Sheriff placed under judicial attachment certain movable property found at Stand No. 499 Goodwin Road, Willowvale, Harare.

The appellant lay a claim to that property resulting in interpleader proceedings being instituted.

In a judgment delivered on 20 November 2019, the High Court dismissed the appellant's claim to the property in question and declared it executable. The appellant appealed against the whole judgment of the High Court to this Court. After hearing argument, we dismissed the appeal and stated that the reasons would follow. These are the reasons.

THE JUDGMENT

The facts of the matter are clearly set out in the judgment a quo. They are that a consent order was granted by the court a quo on 21 August 2017 in terms of which the judgment debtor was required to pay to the first respondent (the judgment creditor), the value of 2,000 square metres of Stand No. 449 Goodwin Road, Willowvale, Harare together with improvements thereon. On his part, the first respondent would vacate the Stand in question, which he was occupying, within a given period of time.

Following valuation of the property in terms of the order of the court, the judgment debtor failed to pay. The sheriff attached an assortment of property found at Stand No. 499 Goodwin Road, Willowvale, Harare which he believed belonged to the judgment debtor.

The property was claimed by the appellant as its own.

The High Court correctly found, that, in inter pleader proceedings, the onus was on the claimant to prove ownership of the property in dispute on a balance of probabilities.

The claimant does so by setting out facts which establish ownership of the property in question on a balance of probabilities.

The court a quo noted, that, the basis of the appellant's claim to the property was that it owned the Stand where the property was found by virtue of being the sole shareholder of a company known as Jon's Engineering (Private) Limited. It is the latter company which is said to be the registered owner of Stand No. 499.

The court a quo observed that the judgment debtor was initially the holder of two ordinary paid up shares in Jon's Engineering (Private) Limited. It then sold its shares to the appellant.

The argument before the court a quo was that given the fact that the property in dispute was attached in execution as an immovable property owned by a company wholly owned by the appellant, that property belonged to the appellant and the onus was on the first respondent, as judgment creditor, to prove that it belonged to the judgment debtor.

The appellant's claim was rejected by the court a quo which found discrepancies in the purported sale agreements involving the immovable property. The court a quo found, that, despite the two agreements allegedly signed by the appellant and the judgment debtor, initially on 30 October 2015, and a second one signed on 28 October 2016, the judgment debtor had consented to the court order being executed. It was the reasoning of the court a quo that the judgment debtor would not have consented to a court order on 21 August 2017, in terms of which an immovable property it had already sold was to be valued and its value paid to the judgment creditor.

The court a quo concluded from those facts, that, the agreement of sale was a most recent fabrication, an afterthought meant to stem the appellant's claim that it had purchased the entire shareholding in Jon's Engineering (Private) Limited. The claim by the appellant, that it bought the immovable property from the judgment debtor and took occupation as far back as 28 October 2016 was rejected because the evidence before the court showed that the judgment debtor had in fact been in occupation of same at the time of the consent order on 21 August 2017....,.

The court a quo found that the appellant had failed to discharge the onus resting on it to prove ownership of the movable property placed under attachment. It found that not a single piece of evidence was submitted by the appellant to show that it owned the property in question. That way, the appellant's claim was dismissed....,.

The court a quo made a factual finding that the appellant was not in possession of the property when it was placed under attachment.

In the court a quo's view, the agreement of sale between the appellant and the judgment debtor, upon which the appellant claimed ownership, was a clumsy fabrication.

As I have already pointed out, the court a quo took the view that there existed no explanation why the judgment debtor would have consented to a court order, on 21 August 2017, involving the Stand in question, if it had alienated it more than a year earlier.

In addition to that, the court a quo also made a factual finding, that, at the time of the grant of the consent order, the judgment debtor had been in possession of the Stand and not the appellant as it claimed.

It accordingly found, that, the appellant's testimony was untruthful.

It is trite that an Appellate Court may only interfere with the factual findings of a lower court on the ground of gross unreasonableness: see Chioza v Siziba SC16-11.

No gross unreasonableness in the findings of the court a quo has been alleged or established.

Quite to the contrary, there is an existing order of the High Court showing that, as at 21 August 2017, the judgment debtor was in occupation of the premises. In that regard, the court a quo was standing on firm ground when it concluded that the appellant's story, that it had moved into the premises in 2016, was unbelievable.

It cannot be faulted at all.

Appealed
SC09-21 : ANDERSON MANJA and 98 OTHERS vs SHERIFF OF ZIMBABWE and GURTA MINING AG
Ruled By: MAVANGIRA JA, UCHENA JA and MATHONSI JA

This is an appeal against the whole judgment of the High Court handed down on 3 June 2020 which upheld the second respondent's claim to immovable property and/or mining claims located in Mashonaland West placed under judicial attachment by the first respondent for sale in execution of a judgment.The judgment ...

BACKGROUND FACTS

The appellants were employed by Amble Mining (Private) Limited. A labour dispute between them and their employer yielded an arbitral award which was registered as a judgment of the High Court. Upon execution of that judgment, a chrome mine comprising of mining claims, 110 compound houses, a shop, 6 round thatched guest houses, 3 separate guest houses, and a workshop were seized by the Sheriff.

The Sheriff sought to recover the judgment debt of USD1,199,251=88.

Following attachment, the second respondent, a company incorporated in terms of the laws of Switzerland, claimed all the property as its own.

The appellants did not admit the claim. This forced the Sheriff to institute interpleader proceedings in the court a quo to settle the conflicting claims.

The second respondent admitted that the mining claim once belonged to the judgment debtor. Its case, however, was that it had bought the property from the judgment debtor in 2009 during which year it also took transfer of the claims.

As proof of the sale, the second respondent produced a Board Resolution of a company known as Maranatha Ferrochrome (Private) Limited, the holding company of Amble Mining (Private) Limited.

The second respondent also produced a copy of a certificate of registration of the mining claim issued by the Ministry of Mines and Mineral Development in its name.

In addition to that, the second respondent also produced two letters written by the Acting Provincial Mining Director for Mashonaland West.

The letters in question are contradictory.

The first, dated 31 May 2018, stated that the mining claims belonged to the judgment debtor. The second, dated 5 July 2018, apologised for what it referred to as a “gaffe” in the earlier letter and stated that the mining claims belonged to the second respondent.

The appellants' case was that there was collusion between the Acting Provincial Mining Director, the second respondent, the judgment debtor, and Maranatha Ferrochrome (Private) Limited in order to confound creditors.

The appellants moved for the lifting of the veil of incorporation so as to expose the second respondent, the judgment debtor, and Maranatha Ferrochrome (Private) Limited as companies of the same Group.

The purported sale of the mining claims would be shown to be a sale between subsidiary companies.

The court a quo found that after producing the documents I have alluded to, the second respondent had discharged the onus of proving ownership. It had set out a prima facie case of ownership which had the effect of shifting the onus to the judgment creditors, the appellants herein, to prove otherwise.

The court a quo further found that the appellants did not adduce any evidence. As such, the prima facie case provided by the second respondent “mutated” to proof of ownership.

The appellants were aggrieved and noted this appeal on four (4) grounds.

GROUNDS OF APPEAL

1. The court a quo grossly erred by granting inter-pleader claim in the circumstances where the second respondent failed to prove ownership of the attached property on a balance of probabilities.

2. The court a quo grossly erred by failure to consider connivance between the judgment debtor and the second respondent to defeat execution of a court order.

3. The court a quo grossly erred by shifting the burden of proof to the appellants instead of the second respondent.

4. The court a quo erred by granting costs on an attorney client scale against the appellants where there was no basis for such.

THE APPEAL

Although there are four grounds of appeal, they crystallize around essentially one issue that falls for determination in this appeal. It is whether the court a quo erred in upholding the claimant's claim to the property.

It was submitted, on behalf of the appellants, that, the second respondent did not discharge the burden of proving ownership because the evidence tendered by the second respondent shows that itself, Maranatha Ferrochrome (Private) Limited, and the judgment debtor are one and the same thing. The whole arrangement, so the argument goes, to transfer the mining claims from the judgment debtor to the second respondent was meant to shield the property from execution.

To illustrate that point, counsel for the appellants drew attention to the Board Resolution relied upon as evidence of the existence of a sale agreement involving the mining claims. It was argued that a resolution is not a sale agreement but is a pre-requisite for the conclusion of a sale agreement by a company. If indeed the judgment debtor had gone on to enter into an agreement of sale, in terms of which it alienated the property to the second respondent, it was argued, then the latter would have produced, not only the agreement of sale, but also proof of payment as consideration for the mining claims.

Apart from that, counsel submitted, the fact that it is common cause that Andrew Lawson, who attended the Board of Directors' meeting of 13 October 2009, in Italy, at which the resolution was made, is also a director of the judgment debtor, is suggestive of the resolution being a sham and the transfer of the claims being an elaborate hoax.

In view of its centrality in the resolution of this appeal, the resolution, which is an extract from the minutes of an Extraordinary Meeting of the Board of Directors of Maranatha Ferrochrome (Private) Limited held on 13 October 2009 is reproduced below:

“Minutes of an Extraordinary Meeting of the Board of Directors of Maranatha Ferrochrome (Pvt) Ltd held on Tuesday 13 October 2009 in the offices of Sineco Spa in Ceparano, Italy

Present:
Mr Gialuigi Ghezzi - Chairman
Mr Giorgio Barelli – Director
Mr Andrew Lawson – Director

Apologies:
Mr. George Mashavatu – Director

The following resolutions were agreed and passed unanimously by the board of directors of Maranatha Ferrochrome (Private) Limited -

1. Maranatha Ferrochrome (Private) Limited hereby agrees to sell all mining claims and leases owned by this company and its subsidiary, Amble Mining (Pvt) Ltd, Gurta A.G. of Switzerland. These claims are, in total, to be sold for a sum of USD1,350,000 (one million three hundred and fifty thousand united state dollars). It was noted that Mr. Andrew Lawson has authority to sign and accept ownership of the said claims and mining lease on behalf of Gurta A.G. by means of a Power of Attorney from Gurta A.G.

2. Mr Keith Beck – ID NO. - 32-058218 N00 is hereby empowered to transfer ownership of the above-mentioned mining claims and leases on behalf of Maranatha Ferrochrome (Pvt) Ltd and Amble Mining (Private) Limited.”…,.

A simple interpretation of this resolution, which is obviously not an agreement of sale, is that Andrew Lawson, a director of the alleged seller of the mining claims (Maranatha) was given a power of attorney by the alleged purchaser of those claims, the second respondent, to receive delivery of the claims from the same seller in which he is a director. He was to hold the claims on behalf of the alleged new owner.

This was a classic case of the seller selling to itself.

It is also remarkable, that, after agreeing to sell the mining claims, the alleged seller does not appear to have progressed further to accomplish the mission. No sale agreement was produced. In addition, the closest the second respondent came to proving movement of funds to purchase the claims, is an invoice dated 18 December 2018 setting out the values of the 54 Blocks of Ngezi mining claims being US$1,050,000. It also shows the value of the 6 Blocks of Mapanzura mining claims, being US$300,000.

It is needless to say that the invoice, being neither a receipt nor a bank statement, does not prove anything.

I mention, in passing, that, if indeed money had changed hands, the second respondent would not have had any difficulties producing proof of payment.

Counsel for the appellants also made reference to the lease agreements produced by the second respondent.

Again, because of its importance in shedding light to the dispute between the parties, I reproduce the pertinent part of the standard document hereunder:

“LEASE AGREEMENT

A settlement agreement was negotiated between Upthrow Trading (Private) Limited, Maranatha Ferrochrome (Pvt) Ltd, Amble Mine (Private) Limited, Gurta AG, Glossy Investments (Private) limited and Honourable Paul Mangwana and signed in Italy on 3 October 2013. In terms of this settlement agreement, following the completion of the handover of the mining claims, Maranatha Ferrochrome (Private) Limited representing Gurta AG who are the legitimate owners of the mining claims in Ngezi do hereby offer the Lease Agreement Arrangement for the property known as:

WHITE HOUSE ROOM 3

The lessee hereby agrees to rent the said property (on) for a period of 3 months with effect from 1 September 2015 expiring on 3 November 2015 subject to the payment of monthly rentals amounting to US$25 to Maranatha Ferrochrome (Private) Limited. Lease may be terminated by either party giving two weeks as notice of termination.”…,.

Again, a simple interpretation of the lease agreements which the second respondent entered into with its alleged tenants shows that six (6) years after the second respondent had purportedly purchased the mining claims and their environs from the judgment debtor, the latter was still being listed on the lease agreements as having an interest in the property.

Not only that, the second respondent was still not visible on the ground to an extent that the leases were written on the letterhead of Maranatha Ferrochrome (Private) Limited - the parent company of the judgment debtor.

If that set of facts was not disconcerting enough, then, it should indeed be remarkable to note that Maranatha Ferrochrome (Private) Limited was also receiving rentals for the leased properties.

Those facts cannot be ignored.

The documents from the Ministry of Mines and Mineral Development, relied upon by the second respondent, had their own challenges.

Counsel for the appellants submitted that the certificate of registration purportedly showing that the claims had changed hands was a photocopy. Although the second respondent was challenged to produce the original, it failed to do so.

More importantly, when the Ministry was requested to confirm the status of the mining claims, it initially wrote a letter dated, 31 May 2018, signed by one M. Maisera, the Acting Deputy Provincial Mining Director for Mashonaland West, which states in part:

“This office acknowledges receipt of your letter dated 24 May 2018 in which information of mines held by Amble Mining (Private) Limited is requested.

According to records held by this office, Amble Mining (Private) Limited is the holder of the following chrome blocks…,.”

It is common cause that the listed blocks are those that were placed under attachment and form the dispute between the parties.

There may have been a change of the Acting Provincial Mining Director for Mashonaland West because, on 5 July 2018, S. Mpindiwa, writing under that title, was singing a different tune.

In S. Mpindiwa's letter to the appellants' legal practitioners, he/she apologised for what he/she referred to as “a gaffe” in stating that the judgment debtor owned the mining claims. Instead, that office then stated that the mining claims were long transferred to the second respondent.

Unfortunately, the letter did not explain how the “gaffe” came about.

Counsel for the appellants pointed to this contradiction as proof of collusion, or, at the very least, that the information from the Ministry of Mines could not be relied upon.

Counsel for the second respondent strongly defended the judgement of the court a quo.

He submitted that sufficient proof of ownership of the property in dispute was produced by the second respondent in the form of the certificate of registration of the mining claims in the second respondent's name and the confirmation letter from the Mines Ministry.

Counsel for the second respondent insisted that the court a quo was correct in finding that the second respondent had managed to adduce prima facie evidence of ownership.

Counsel for the second respondent further submitted that the court a quo could not possibly pierce the corporate veil because the appellants never asked it to do so.

In addition, so it was argued, there exists no grounds for piercing the veil in the circumstances of this case.

In my view, that argument is misleading.

On that issue, the court a quo pronounced itself…, thus:

“Still, on lifting the corporate petticoat (sic) of Gurta and peering behind it, I see no other exceptional circumstance justifying the same. The judgment creditors told me, both in heads of argument and at the hearing, that, Maranatha Ferrochrome (Private) Limited, the judgment debtor, and the claimant are a single economic entity. I was therefore invited to go behind the claimant's skirt (sic), disregard the three companies' separate corporate personalities and order execution of the mining claim even though registered in the claimant's name to satisfy the judgment debt owed by Amble Mining (Private) Limited.

Mr Zimudzi referred me to Deputy Sheriff Harare v Trinpac Investments (Private) Limited and Anor HH121-11.

That case is distinguishable.

Here, there is no evidence at all as to who the shareholders of the claimant are. There is completely no evidence to prove that they are the same persons as the shareholders of the judgment debtor and its holding company, Maranatha Ferrochrome (Private) Limited. Neither is there any evidence that the directorship of the claimant is the same as that of the other two companies. The bare allegation that claimant is a 'baby' of the 'Ghezzi family' was not substantiated. I therefore refuse to interfere with claimant's corporate regalia.”

It is apparent from the foregoing passage in the judgment that indeed the court a quo was invited to lift the corporate veil. It considered the submissions made justifying such course of action and rejected them.

The issue before this Court now is the correctness of that finding.

APPLICATION OF THE LAW TO THE FACTS

Although the evidence of ownership of the mining claims was discredited by the appellants; in my view, the case turns on whether the second respondent, as the claimant, could be said to be a different entity from the judgment debtor sufficiently to dis-entitle the appellants from executing against the mining claims.

The position of the law regarding the separate legal persona principle is well established. It was succinctly articulated by PATEL J…, in Deputy Sheriff Harare v Trinpac Investments (Private) Limited and Anor 2011 (1) ZLR 548 (H)…, where the learned judge quoted with approval Cape Pacific Limited v Labner Controlling Investments (Private) Limited & Ors 1995 (4) SA 790 (A)…,:

“It is undoubtedly a salutary principle that our Courts should not lightly disregard a company's separate personality, but should strive to give effect to and uphold it. To do otherwise would negate or undermine the policy and principles that underpin the concept of separate corporate personality and the legal consequences that attach to it.

But, where fraud, dishonesty, or other improper conduct (and I confine myself to such situations) is found to be present, other considerations will come into play.

The need to preserve the separate corporate identity would, in such circumstances, have to be balanced against policy considerations which arise in favour of piercing the corporate veil…,; and, a court would then be entitled to look to substance rather than form in order to arrive at the true facts; and, if there has been a misuse of corporate personality, to disregard it and attribute liability where it should rightly lie. Each case would obviously have to be considered on its own merits.”

This court approved that judgment is Stylianou & Ors v Mubita & Ors SC07-17.

The courts have purposely refrained from attempting to define all the circumstances under which the corporate veil will be lifted. This has been done, commendably, to avoid unnecessarily fettering with what is clearly the exercise of a wide judicial discretion.

What comes out from the authorities is that the court will disregard a company's separate personality where an element of fraud or other improper conduct in either the establishment or use of a company or in the conduct of the company's affairs exists.

When refusing to lift the veil of incorporation, the court a quo was exercising judicial discretion.

An Appeal Court is generally loathe to interfere with the exercise of discretion. The basis for interference, on appeal, is however well settled in this jurisdiction.

An Appeal Court may interfere where it appears that some error has been made in the exercise of discretion. Where the lower court acts on a wrong principle; if it allows extraneous or irrelevant matters to guide or affect it; if it mistakes the facts; if it does not take into account some relevant consideration; the Appeal Court will review the lower court's decision and substitute its own discretion: see Barros and Anor v Chimphonda 1999 (1) ZLR 58 (S)…,.

I am of the firm view that the court a quo completely disregarded important facts pointing to the inseparable nature of the second respondent and the judgment debtor. The court a quo completely ignored the evidence showing that even the alleged sale of the mining claims by the judgment debtor to the second respondent was a hoax.

The Board resolution, which stood as proof of the sale agreement, there being no agreement of sale at all, shows that a director of the seller also represented the purchaser. Andrew Lawson attended the meeting which resolved to sell the claims to the second respondent as a director of the judgment debtor. He was part of the decision-making process.

At the same time, he was the holder of a power of attorney issued to him by the second respondent. It empowered him to take delivery of the mining claims from the judgment debtor on behalf of the second respondent. He literally acted as both the seller and the purchaser.

If that does not point to a sham, nothing will.

That is not all.

The court a quo completely overlooked the lease agreements relied upon by the second respondent. I have already stated that those agreements were written on Maranatha Ferrochrome (Private) Limited letterhead. They show that Amble Mine (Private) Limited, the judgment debtor, was also listed as one of the lessors of the premises being leased out. More importantly, they show that rentals were being paid to Maranatha Ferrochrome (Private) Limited, which is literally the judgment debtor by virtue of its controlling authority over the judgment debtor.

DISPOSITION

These factors, together with the absence of any evidence pointing to the existence of a proper agreement of sale, and the payment of the purchase price, can only lead to one conclusion. It is that there was collusion between the judgment debtor and the second respondent.

Indeed, there is no distinction between the judgment debtor and the second respondent. They are one and the same thing. The purported transfer of the mining claims from the judgment debtor was an elaborate scheme designed to confound creditors.

This is a classic case for disregarding the separate corporate personality of the companies in order to assign liability where it belongs.

Corporate personality is being misused in order to dodge liability, and, for that reason, policy considerations require that it be disregarded.

The appeal has merit given that the court a quo clearly misdirected itself in material respects.

The appellants asked for costs to be awarded on the higher scale owing to the dishonest manner in which the second respondent conducted itself.

No good case for such a punitive measure has been made, but, there is no reason why costs should not follow the result in the usual manner.

In the result, it is ordered as follows:

1. The appeal be and is hereby allowed with costs.

2. The judgment of the court a quo be and is hereby set aside and substituted with the following:

“(a) The claimant's claim to all the property which was placed under attachment in execution of the judgment in case number HC5852/17 be and is hereby dismissed.

(b) A certain chrome mine, comprising of the mining claim, being a block of 25 mining claims known as BEE 47, registered as number G31 OBM be and is hereby declared executable.

(c) The claimant shall bear the costs.”

View Appeal
HH351-20 : THE SHERIFF OF ZIMBABWE and GURTA AG vs ANDERSON MANJA and 98 OTHERS
Ruled By: CHIKOWERO J

JUSTIFICATIONThe HOLY BIBLE, CONCORDANCE AUTHORIZED KING JAMES VERSION, 2013 p1078 reads, in Ecclesiastes 4:09-12:“9. Two are better than one; because they have a good reward for their labour.10. For, if they fall, the one will lift up his fellow: but woe to him who is alone when he falls; for ...

JUSTIFICATION

The HOLY BIBLE, CONCORDANCE AUTHORIZED KING JAMES VERSION, 2013 p1078 reads, in Ecclesiastes 4:09-12:

“9. Two are better than one; because they have a good reward for their labour.

10. For, if they fall, the one will lift up his fellow: but woe to him who is alone when he falls; for he has not another to help him up.

11. Again, if two lie together, then they have heat: but how can one be warm alone?

12. And, if one prevail against him, two shall withstand him; and a threefold cord is not quickly broken.”

I therefore refer to a number of legal sources as well as illustrations in determining this inter pleader application.

CLAIMANT BEARS THE ONUS TO PROVE THAT THE ATTACHED PROPERTY BELONGS TO IT AND MUST DISCHARGE THAT ONUS ON A BALANCE OF PROBABILITIES

In Sabarauta v Local Authorities Pension Fund and the Sheriff SC77-17, UCHENA JA, writing for the Zimbabwe Supreme Court, said:

“Interpleader proceedings are instituted by the Sheriff in respect of property attached by him when a third party claims ownership of that property. In such proceedings, it is necessary for the party claiming the attached property to prove ownership by clear and satisfactory evidence.”

In The Sheriff for Zimbabwe v Mahachi and Leomarch Engineering HMA34-18, MAFUSIRE J puts it thus…,:

“One common thread running through such cases, and several others on the point, is that there is a rebuttable presumption that where someone is found in possession of movable goods, they are presumed to be the owner of that property.

Where someone else other than the possessor claims to be the owner of those goods, they have the onus to prove, on a balance of probabilities, that they are the owner. There are no hard and fast rules on how they may go about proving such ownership. Every case depends on its own facts. The claimant may have to produce some evidence, such as receipts or other documents, if available, to prove ownership. A bald assertion that they are the owner is not enough.”…,.

The facts of each matter ultimately resolves the question whether clear and satisfactory evidence has been tendered by a claimant to satisfy the court, that, on a balance of probabilities, the property attached belongs to the claimant. The road to proving ownership is not a one way street.

WHERE THE CLAIMANT HAS PRODUCED SUFFICIENT EVIDENCE TO CONSTITUTE PRIMA FACIE PROOF OF OWNERSHIP THE ONUS SHIFTS TO THE JUDGMENT CREDITOR TO DISPROVE SAME BY PRODUCING EVIDENCE TO THE CONTRARY

The claimant does not need, at this stage, to prove, on a balance of probabilities, that the attached property belongs to it. All that is required of it is to show, on the face of it, that the property probably belongs to it.

That is what prima facie proof means in civil cases.

The onus then shifts to the judgment creditor to disprove the claimant's prima facie evidence of ownership by producing its own evidence to the contrary.

If the contrary evidence satisfies the court, the claim fails and execution proceeds. The converse is true.

The judgment creditor cannot successfully disprove the claimant's prima facie evidence of ownership by making unsubstantiated assertions in its own opposing affidavit. Neither can it do so through composing heads of argument based on the bare assertions in the opposing affidavit.

It follows also that argument at the hearing of the inter pleader application is no substitute for a judgment creditor's failure to produce contrary evidence to disprove the claimant's prima facie evidence of ownership of the attached goods.

If the judgment creditor cannot disprove the claimant's prima facie evidence of ownership, the result is this: What was prima facie evidence of ownership is transformed into proof on a balance of probabilities. The attached goods are then declared not executable and their release from attachment ensues.

This procedure has a parallel in Criminal Law.

If the State establishes a prima facie case against an accused who then opens and closes his defence case without without leading any evidence at all that person will be convicted. The conviction is not based on the prima facie case. It is no longer that. It has graduated to become proof beyond a reasonable doubt for want of any competing evidence.

In (1) Smit Investments Holdings SA (Proprietary) Limited (2) Genet Mining (Proprietary) Limited v (1) The Sheriff of Zimbabwe (2) Pungwe Mining (Private) Limited SC33-18 PATEL JA, with whom MALABA CJ and HLATSHWAYO JA concurred, said…,:

“In a bid to prove its ownership of the assets, the first appellant produced statements of account for Mbada Mine which showed that some payments, but not all, had been made by Mbada Mine. In addition, both appellants produced detailed agreements concluded with Mbada Mine (on 15 July 2012 and 22 July 2015), respectively, which stipulated that ownership of the assets would remain with the appellants until the full purchase price was paid. It was the court a quo's finding that the agreements were not authentic and that there was collusion between the appellants and Mbada Mine.

It was alleged, by the second respondent, that, the agreements were doctored by Mbada Mine and the appellants ex post facto and that there was no paper trail to show that the assets belonged to the appellants.

However, no evidence was led to substantiate the second respondent's allegations of collusion.

The court relied on the bald averment by the second respondent that the documents were not authentic and simply took that to be correct.

It is the second respondent that levelled allegations of inauthenticity and collusion. Consequently, it is the second respondent that should have proven the same.

This position was succinctly captured in the case of Circle Tracking v Mahachi SC4-07, where the court held that the principle that he who alleges must prove is a basic concept of our law.

No evidence was adduced by the second respondent to substantiate the alleged inauthenticity of the agreements.

The appellants produced documents which show that the assets had been procured by them and initially belonged to them. They also produced the agreements concluded with Mbada Mine in 2012 and 2015 which show that ownership was reserved in favour of the appellants until the full purchase price was paid. The relevant provisions are contained in clauses 4.3 and 11.6 of the first appellant's agreement and clause 7.7 of the second appellant's agreement.

The second respondent alleged that the documents supporting the appellants' claims were a recent fabrication meant to frustrate the execution of the assets, but, the dates when the agreements were concluded reveal that they were executed well before the second respondent instituted any legal proceedings in this matter. There is also nothing in the record to give credence to the allegations that the documents were fabricated by the appellants in collusion with Mbada Mine. It is my view, therefore, in the absence of any evidence to the contrary, that the agreements are genuine and that their provisions and the agreed compacts contained therein must be accepted as being authentic, as well as commercially and legally cognizable.”

This court's decision in the Sheriff of Zimbabwe v Senital (Pvt) Ltd t/a Frank B Mine and Zimbabwe United Passenger Company Ltd HB233-18 underscores this point. There, MAKONESE J expressed it in these words…,:

“The claimant refuted the allegations that the property belonged to the judgment debtor, and, in a bid to prove ownership of the attached property, the claimant attached some receipts and agreements of sale as proof of the attached assets. An agreement of sale is taken as prima facie proof of ownership. Where a claimant tenders some acceptable proof of ownership the onus must necessarily shift to the judgment creditor disproving the claimant's ownership of the attached goods.”

Similarly, CHITAPI J explained in The Deputy Sheriff Marondera v Hombarume and 7 Ors HH521-18…,:

“In my view, this claimant's claim is not far fetched. The claimant did not just attach the registration book as proof of legal ownership. He attached the official motor vehicle extract from Central Vehicle Registry. It gives details of the importation of the vehicle by the claimant and proof of payment of import duty and police clearances. In such a situation, the onus to prove that the third claimant is not the owner of the vehicle must shift to the judgment creditor. Where the claimant places before the court acceptable evidence of ownership or of some other legally recognizable ground warranting release of the attached property from execution, the onus shifts on the party who impugns such evidence to controvert it.”...,.

THE FACTS

The judgment creditors were employees of Amble Mining (Private) Limited. The latter traded as Amble Mine.

On 24 May 2010, an Independent Arbitrator granted an award ordering the Mine to reinstate the 99 employees with effect from March 2006 without loss of salary and benefits. As an alternative, the Mine was to pay them certain sums for back pay, damages for loss of employment, punitive damages, housing allowance, cash in lieu of leave and cash in lieu of notice. The total amount was US$1,199,251=88.

The date when the matter was referred to the Arbitrator is not disclosed in the papers. Also kept under wraps is the history of the labour matter leading up to the award.

Amble Mining (Pvt) Ltd is the judgment debtor.

On 28 June 2017, the employees filed a court application for registration of the arbitral award. The application to register the award as an order of this court was granted, unopposed, on 16 August 2017.

A Writ of Execution Against Movable Property must have been issued. I have not seen it. What I have perused, both in the court record relating to registration of the arbitral award and the present matter is a Writ of Execution against immovable property. It was issued on 18 June 2018. In the writ is a statement speaking to a nulla bona return of service. The nulla bona return of service was not placed before me. I do not know when it was issued. I am also in the dark as to where the Sheriff had sought to effect the attachment.

However, as regards the immovable property, the Sheriff was instructed to attach and execute what was said to be the judgment debtor's property being a certain chrome mine comprising of:

(i) The mining claim, being a block of 25 mining claims known as BEE 47 registered as No. G310 BM.

(ii) 110 compound houses.

(iii) 1 x shop.

(iv) 6 x round thatched guest houses tiled/geyser.

(v) 3 separate guest houses.

(vi) Workshop.

This was to realize the sum of US$1,199,252=99 which was the alternative remedy to reinstatement.

On 26 June 2018 the Sheriff wrote to the Provincial Mining Director, Mashonaland West Province attaching the mining claim in question together with everything else listed on the writ of execution against immovable property.

Gurta AG is the claimant. It is a company incorporated in terms of the laws of Switzerland. It is therefore a peregrinus. It has paid security for costs.

Gurta AG filed an affidavit with the Sheriff claiming ownership of all the attached property. The affidavit was deposed to by Carlo Ghezzi. He is a Board member and Chairman of the claimant.

The claimant admits that the mining claim used to belong to the judgment debtor. However, the claimant purchased the same sometime in 2009 and took transfer the same year.

In an endeavor to prove its claim, Gurta AG annexed certain documents to the affidavit delivered to the Sheriff.

Those documents are copies each of the certificate of registration of the mining claim after transfer; a Board Resolution of Maranatha Ferro Chrome (Pvt) Ltd, signed by the chairman and secretary on 15 October 2009, reflecting that the Board agreed, on 13 October 2009, to sell all its mining claims as well as those of its subsidiary, Amble Mining (Pvt) Ltd, to Gurta AG for US$1,350,000; an unsigned document on Maranatha Ferrochrome's letterhead said to be an invoice relating to the Sale and a Lease Agreement on Maranatha Ferrochrome's letterhead, dated 9 September 2015, in terms whereof Joseph Wirima rented one of the rooms at the mining claim for a period of 3 months running from 1 September 2015 to 30 November 2015 at a rental of US$25 per month.

The judgment creditors rejected the claim.

This led to the Sheriff instituting these inter-pleader proceedings.

The claimant, in a bid to prove its claim before this court, again filed an affidavit by the same deponent. It annexed thereto copies of the same documents as previously laid before the Sheriff. This time, it attached also copies of two letters written by the Acting Provincial Mining Director Mashonaland West on behalf of the Secretary for Mines and Mining Development. The letters are dated 5 July 2018. One was addressed to the judgment creditor's then legal practitioners, Citizens Legal Society and Advisory Trust. The other was addressed to the Sheriff's office.

In both letters, the Ministry of Mines and Mining Development, through the author, set the record straight by advising that the mining claim in question belongs to the claimant as evidenced by records reflecting transfer as having been effected to Gurta AG on 26 October 2009.

The author apologized to both addressees for a mistake which had been made in an earlier letter to Citizens Legal Society and Advisory Trust on 31 May 2018 which stated that the mining claims, and two other claims, belonged to the judgment debtor.

THE JUDGMENT CREDITORS' POSITION

Besides the letter of 31 May 2018 from the Ministry of Mines and Mining Development (which was superseded by the letters of 5 July 2018 from the same Ministry) the judgment creditors did not produce any evidence to contradict that tendered by the claimant.

They alleged collusion between the Acting Provincial Mining Director, Mashonaland West, the claimant, the judgment debtor, and Maranatha Ferrochrome (Pvt) Ltd to cook up the documentary evidence which the claimant placed before me.

I was told that there was therefore no sale of the mining claim in question to the claimant because all the documents speaking to such sale and transfer of the claim were fabricated.

The judgment creditors, in opposing papers, heads of argument, supplementary heads of argument, and oral argument at the hearing said this:

No paper trail leading up to transfer of the mining claim to the claimant had been put before me. There was therefore neither sale nor transfer of the mining claim in favour of Gurta AG. The claim was still registered in the name of the judgment debtor and therefore executable.

The argument was premised upon section 275 of the Mines and Minerals Act [Chapter 21:05] which reads in relevant part:

“275 Registration of transfer of mining locations and transfer duty payable

1. When any registered mining location or any interest therein is sold or otherwise alienated in any manner whatsoever, the seller or person who so alienates shall notify the mining commissioner of the transaction within sixty days of the date of such transaction, and shall inform him of the name of the person to whom such location or interest is sold or otherwise alienated and of the amount of the valuable consideration, if any, agreed upon and the date of the transaction.

2. When any registered mining location, or any interest therein, has been sold or otherwise alienated, whether before or after the first November, 1961, in any manner whatsoever, for valuable consideration, transfer duty at the rate fixed by Parliament shall be paid by the purchaser, which terms shall include any person becoming entitled to such location or interest therein by way of sale, exchange or other like transaction;

1….,.

2….,.

3….,.

4. Subject to this Act, any person entitled to be registered as the holder of a registered mining location, or any interest therein, shall make application to the mining commissioner for the transfer of such location or interest, and every such application shall be in writing and signed by or on behalf of the applicant, and shall be accompanied by the following particulars -

(a) The last issued certificate of registration or of special registration of the location or the holder's copy of the mining lease, as the case may be;

(b) Certificates by the transferor and transferee in the prescribed form;

(c) A duplicate original grosse or notarially certified copy of any and every existing written agreement affecting or bearing upon the sale, alienation, exchange or transfer;

(d) In the event of there being no such existing written agreement, certificates by the transferor and transferee to that effect;

(e) The original or notarially certified copy of any power of attorney which may be required to authorize an agent to act on behalf of any party to the transfer; if the original power is lodged with the mining commissioner and the applicant does not wish the mining commissioner to retain it, he shall furnish with it a copy which the mining commissioner shall compare with the original, certify to be a true copy and retain;

(f) If such application is in respect of the transfer of any mining location registered for precious stones or any interest therein, a certificate from the secretary that the Minister has granted the permission required under section two hundred and eighty two in respect of such transfer.

5. The mining commissioner shall, on receipt of such application and other documents, and of the transfer duty or, if no such duty is or may in the future be payable or the whole of such duty has been remitted under subsection (9) of the prescribed fee, and if he is satisfied that the other provisions of this Act have been complied with, register transfer by making the necessary entries in his registers and other records: Provided that -

(i) No transfer, as aforesaid, shall be valid unless it has been registered by the mining commissioner, and no such registration shall be made -

(a) Where such location is liable for forfeiture or under attachment;

(b) Until dues, fees, royalties, rents or other moneys due and payable to the mining commissioner under this Act in respect of the property to be transferred have been paid;

(c)…,.

(d) Where the transferee is not a permanent resident of Zimbabwe, unless the mining commissioner, after consultation with the Reserve Bank of Zimbabwe, is satisfied that all requirements imposed by or under the Exchange Control Act [Chapter 22:05] have been complied with;

(i)…,.

(ii)…,.

(8) The mining commissioner shall also, on receipt of the prescribed fee, issue to the transferee a certificate in the form prescribed and such certificate shall record the interest of the transferor, whether whole or otherwise, in such block.”

The judgment creditor's alternative argument was this:

Should I find that there was a sale then I should pierce the corporate veil on two grounds:

(i) Gurta AG, Amble Mining (Pvt) Ltd, and Maranatha Ferrochrome (Pvt) Ltd were companies in the same Group. The first two were subsidiaries of the third. Therefore, the sale was between subsidiary companies.

(ii) Secondly, there was fraud involved because the sale and transfer of the mining claim were designed to defeat the judgment creditors' entitlement to attach the mining claim by taking it out of the judgment debtor's hands.

THE ANALYSIS

I am satisfied that the claimant established, prima facie, that the mining claim belongs to it. The precise legal position is that the holder of a mining claim has the right to work such claim to the exclusion of everyone else.

The totality of the documentary evidence tendered by the claimant satisfies me in this regard.

It is true that the date stamp on the copy of the certificate of registration on record is not legible to the extent that the day and month of registration of the transfer is not visible. But the year of registration of that transfer is reflected on the document as being 2009. The two letters from the Ministry of Mines and Mining Development, dated 5 July 2018, clearly state the date of registration of the transfer as 26 October 2009. So, the letters cure the deficiency appearing on the copy of the certificate in question.

What I have is a copy of the certificate, not the original.

The transfer number for the certificate in question is given in the letter which was addressed to Citizens Legal Society and Advisory Trust. It is TR 6627. That is the transfer number appearing on the copy of the Certificate of Registration after transfer tendered by the claimant. When issuing a duplicate original Certificate of Registration to a holder, the office of the Mining Commissioner obviously retains the original on file.

The Certificate of Registration is documentary evidence issued and signed by the Mining Commissioner in Harare. The letters of 5 July 2018 are pieces of documentary evidence authored by the Acting Provincial Mining Director, Mashonaland West in Chinhoyi. All three documents confirm that the claimant is the registered holder of the claim in question since 2009.

No contrary evidence was led by the judgment creditors to demonstrate that the certificate of registration was cancelled by the Mining Commissioner for whatever reason or disowned by him as being inauthentic or that the letters of 5 July 2018 contain falsehoods.

This court is not the Mining Commissioner. This court does not issue certificates of registration of mining claims. The person who must be satisfied that section 275 of the of the Mines and Minerals Act has been complied with is the Mining Commissioner. It is him, and not myself, who is under obligation to receive, peruse, and be satisfied with the documentation required before he issues a certificate of registration.

No evidence was placed before me, by the judgment creditor, to demonstrate that the certificate of registration in question was issued outside the statutory requirements.

The judgment creditor's criticism of the Board resolution to sell the mining claim to the claimant, the invoice, and the lease agreement, cannot be evidence tendered by the judgment creditor disproving the authenticity of the sale and transfer.

The courts have accepted that business persons often record their dealings in terms which perfectly make sense to them but are often wanting in clarity to the legal mind. One must therefore read commercial documents sensibly. A mere reading of a commercial document, standing alone, may not make much sense because the context of its making may not appear within the four (4) corners of the document.

This is how I have looked at the invoice, the lease agreement, and the Board resolution.

For example, the lease agreement entered into on 9 September 2015, at Ngezi Mining Area, with the tenant, Joseph Wirima, is recorded as:

“A Settlement Agreement was negotiated between Upthrow Trading (Pvt) Ltd, Maranatha Ferro Chrome (Pvt) Ltd, Amble Mining (Pvt) Ltd, Gurta AG, Glossy Investment (Pvt) Ltd and Honourable Paul Mangwana and signed in Italy on 3 October 2013. In terms of this Settlement Agreement, following the completion of the handover of the mining claims, Maranatha Ferro Chrome (Pvt) Ltd, representing Gurta AG who are the legitimate owners of the mining claims in Ngezi, do hereby offer the Lease Agreement/Arrangement for the property known as: WHITE HOUSE ROOM 3…,.”

The judgment creditor led no evidence from Joseph Wirima (the tenant), C Mutema (the witness to the lease agreement), Upthrow Trading (Pvt) Ltd, Glossy Investments (Pvt) Ltd and Honourable Paul Mangwana.

In respect of Joseph Wirima and C Mutema, there was no evidence that the lease agreement between the former and the claimant, represented by Maranatha Ferro Chrome (Pvt) Ltd, was inauthentic and not entered into on 9 September 2015 but after the attachment of the mining claim on 27 June 2018 - almost 3 years later.

Similarly, the judgment creditor adduced no evidence from Upthrow Trading (Pvt) Ltd, Glossy Investments (Pvt) Ltd and Honourable Paul Mangwana on the nature of the Settlement Agreement between these companies, Paul Mangwana, the judgment debtor, and the claimant.

(1) Smit Investments Holdings SA (Proprietary) Limited (2) Genet Mining (Proprietary) Limited v (1) The Sheriff of Zimbabwe (2) Pungwe Mining (Private) Limited SC33-18, Sheriff of Zimbabwe v Senital (Pvt) Ltd t/a Frank B Mine and Zimbabwe United Passenger Company Ltd HB233-18, and The Deputy Sheriff Marondera v Hombarume and 7 Ors HH521-18 are clear that where the claimant has made out a prima facie case that it is the owner of the attached goods the onus shifts to the judgment creditor to controvert such evidence.

Evidence can only be controverted by other evidence, not through heads of argument or oral submissions - the sole purpose of which is to endeavour to punch holes into a case which is already prima facie established.

The sale and transfer of the mining claim occurred in 2009.

This arbitral award was not yet in existence. Accordingly, there was no basis for the judgment creditor's assertions of fraudulent conduct and collusion between the claimant, the judgment debtor, and Maranatha Ferro Chrome (Pvt) Ltd.

There was no execution to defeat at the time of sale and transfer of the mining claims.

It was not even disclosed by the judgment creditor when it is that litigation in their labour case with the judgment debtor was instituted: see S v Stead 1991 (2) ZLR 54 (S); Mkombachoto v Commercial Bank of Zimbabwe Ltd and Another 2002 (1) ZLR 21 (H).

Still, on lifting the corporate petticoat of Gurta and peering behind it, I see no other exceptional circumstance justifying the same.

The judgment creditor told me, both in heads of argument and at the hearing, that, Maranatha Ferro Chrome (Pvt) Ltd, the judgment debtor, and the claimant are a single economic entity. I was therefore invited to go behind the claimant's skirt, disregard the three companies' separate corporate personalities and order execution of the mining claim, even though registered in the claimant's name, to satisfy the judgment debt owed by Amble Mining (Pvt) Ltd.

Counsel for the judgment creditor referred me to Deputy Sheriff Harare v Trinpac Investments (Pvt) Ltd and Anor HH121-11.

That case is distinguishable.

Here, there is no evidence at all as to who the shareholders of the claimant are. There is completely no evidence to prove that they are the same persons as the shareholders of the judgment debtor and its holding company, Maranatha Ferro Chrome (Pvt) Ltd. Neither is there any evidence that the directorship of the claimant is the same as that of the other two companies.

The bare allegation that the claimant is a 'baby' of the “Ghezzi family” was not substantiated. I therefore refuse to interfere with the claimant's corporate regalia: see Sibanda v JLF (Pvt) Ltd & Anor SC117-04.

HAS CLAIMANT PROVED ITS CASE ON A BALANCE OF PROBABILITIES?

In The Sheriff for Zimbabwe v Mahachi and Leomarch Engineering HMA34-18, MAFUSIRE J stated that there are no hard and fast rules on how a claimant goes about proving ownership of attached goods.

I fully subscribe to that view.

Examples abound, both at law and in life experiences. It is not every case where ownership is proved through production of receipts and agreements of sale. Also, in encouraging pupils to think outside the box, teachers would sometimes say, even after John had answered a question:

“Yes, there are many ways of killing a cat, Mary what is the answer?”

The route does not always matter. What is important is a safe journey.

For example, it is a fact notorious for judicial notice to be taken of that people in most African countries would, if travelling by air, have to board a plane to London or Paris first before connecting to a flight back to their African destinations. That does not make London or Paris the destination.

Olivia Charamba and The Fishers of Men realised this when they sang:

“Kana uchienda
Uchienda
Kwaunoda
Kwaunoda
Kune nzira
Kune nzira
Dzakawanda
Dzakawanda
…,..
Nzira dzekuenda kuGweru:
Kune Kadoma;
Chivhumudhara;
…,.”

These Shona lyrics simply mean that a traveller has a choice on the route to take to a destination. The gospel musician and her band then gave the example of the availability of two options when travelling to the Midlands Province city of Gweru: either through the Mashonaland West town of Kadoma or through the Mashonaland East town of Chivhu (also called “Chivhumudhara” or “The Republic of Enkeldorn”).

The judgment creditors were rigid.

They were of the view that ownership could only be proven by the claimant producing the documentation listed in section 275 of the Mines and Minerals Act [Chapter 21:05]. That was too narrow a view of the matter.

They appear not to have been alive to the law relating to shifting of the onus as laid down by the Supreme Court and applied in numerous decisions of this court. The result is that they did not realize that they had no defence to the claim right from the word go.

Full instructions appear not to have been taken and exhaustive legal research seems not to have been conducted by their legal practitioners.

On perusal of the claimant's initial affidavit and annexures laying claim to the property, the legal practitioners should have gone to the office of the Mining Commissioner in Harare to peruse the Ministry of Mines and Mining Development's file relating to the claim in question rather than being content in seeing permanent and unshifting onus on the shoulders of a party who did not bear the same.

The legal practitioners should thereafter have fully researched on the law relating to interpleader matters.

The law on interpleader claims is simple and readily available both in the textbooks and decided cases of the Supreme Court and this court. In the course of this judgment, I referred to some of those decisions. I also referred to the words of wisdom from two legal practitioners: the first an academic and the other one of the finest court lawyers that this nation has produced.

My view is that the two sets of legal practitioners who represented the judgment creditor in this matter, at different stages, should clearly have done better.

COSTS

The claim should never have been opposed. At the very least, the judgment creditor's legal practitioners should have gathered sufficient facts and evidence, both oral and documentary, for purposes of properly advising their clients.

I add that considering that the judgment creditors were a staggering 99 persons, the importance of the matter, its effect on them, and the monetary value of the arbitral award, a thorough job needed to be done to advance their interests rather than exposing them to further unwarranted financial prejudice in the form of legal fees and costs. If properly advised, the judgment creditors may not have opposed this claim.

It is for these reasons that I exercise my discretion on costs. I do not order punitive costs. The fault in defending the claim, as I have found, lies elsewhere.

ORDER

In the result, the following order shall issue:

1. The claimant's claim to all the immovable property which was placed under attachment in execution of judgment in HC5852/17 be and is hereby granted.

2. All the mining claims attached in terms of the letter written to the Provincial Mining Director, Mashonaland West, dated 26 June 2018, are declared not executable.

3. The judgment creditors shall jointly and severally, the one paying the others to be absolved, pay the claimant and the applicant's costs of suit.

View Appeal
HH746-19 : SHERIFF FOR ZIMBABWE (APPLICANT) vs WELLI-WILL INDUSTRIES (PVT) LTD (CLAIMANT) and MALVERN IMBAYAGO (JUDGMENT CREDITOR)
Ruled By: DUBE-BANDA J

This is an interpleader application and the Sheriff of Zimbabwe is the applicant.

The facts of this case are interwoven and intricate. It is therefore important that I give a detailed background of the facts preceding this application.

For ease of reference, and where the context allows, I will refer to the following parties by their names, i.e. BM Graphics (Pvt) Ltd (judgment debtor); Welli-Will Industries (Pvt) Ltd (claimant); Jon's Engineering (Private) Limited (owner of Stand Number 499 Goodwin Road, Willowvale, Harare) and Melvin Imbayago (judgment creditor).

For a clear understanding and appreciation of the factual matrix in this case, it is significant to quote in verbatim the court order granted by this court on 21 August 2017 (main judgment). This court granted a consent order worded as follows:

“IN THE HIGH COURT OF ZIMBABWE CASE NO. HC1660/14 HELD AT HARARE In the matter between:

BM GRAFICS PRIVATE LIMITED PLAINTIFF And MELVERN IMBAYAGO 1st DEFENDANT PIPE CENTRE 2ND DEFENDANT

Harare, 21st day of August, 2017

Before the Honourable Ms Justice Charewa

Mr B Diza for the plaintiff
Mrs A Dururu for the defendants

Whereupon, after reading documents filed of record and hearing counsel IT IS ORDERED BY CONSENT THAT:

1. The Registrar of the High Court be and is hereby directed, forthwith, to appoint a realtor firm to conduct a valuation of the 20,000 square meters piece of land and the developments thereon which form subject of litigation on property known as Stand 499 Willowvale, Harare.

2. The realtor firm so appointed in terms of paragraph 1 shall undertake the valuation exercise, taking into account the market values, and produce a sworn valuation report within seven days of his appointment which valuation report shall be filed with the Registrar of the High Court.

3. The valuation of the 2000 square metres and improvements thereon arrived at in terms of paragraph 2 above shall be final and payable to the defendants by plaintiff within seven days of its production.

4. The defendants and all those claiming occupation through them shall vacate the property known as Stand No.499 Willowvale, Harare within thirty days of this order or within 30 days of full payment, whichever occurs first.

5. The valuation costs shall be paid in equal proportion by both parties.

6. Each party shall bear its own costs.”

Notwithstanding the fact that BM Graphics (Pvt) Ltd was the plaintiff in the main action, it is the judgment debtor in these proceedings. Malvern Imbayago, who was the first defendant in the main action, is the judgement creditor in this case.

BM Graphics failed to pay for the value of the 2000 square metres piece of land in terms of paragraph 3 of the main judgment, and, consequently, Malvern Imbayago caused a writ of execution calling for payment in the sum of US155,000 to be issued and served on BM Graphics.

In executing the writ, the Sheriff proceeded to Stand No.499 Goodwin Road, Willowvale, Harare (the Stand) and placed under judicial attachment an assortment of property which he believed to be the property of BM Graphics.

This is the property claimed by Welli-Will Industries (Pvt) Ltd, and which is subject of these proceedings.

One Wilbert Makonese, a director of Welli-Will Industries deposed to an affidavit on 16 July 2019 alleging that all the goods placed under judicial attachment belonged to the claimant, and not the judgment debtor.

The said affidavit was submitted to the applicant, prompting him to institute these interpleader proceedings in terms of Order 30 of the High Court Rules, 1971 (the Rules).

The Law and the Facts

The law on inter-pleader applications is settled in this jurisdiction. The onus is on the claimant to prove ownership of the property so claimed: see the case of Phillips and Anor v Ameen and Anor HH108-89; Bernstein v Visser 1934 CPD 270…,; and Deputy Sheriff, Marondera v Travese (Pvt) Ltd and Anor HH11-03.

In the case of Bruce N.O. v Josiah Parkers and Sons Ltd 1972 (1) SA 68…, it was succinctly stated, that, in proceedings of this nature, the claimant must set out facts and allegations which constitute proof of ownership. The claimant bears the onus to prove, on a balance of probabilities, that it owns the property the Sheriff attached: see Deputy Sheriff Marondera v Traverse Investments (Pvt) Ltd and Another HH11-03.

In Sheriff of the High Court, Harare v Smit Investments Holdings SA (Proprietary) Limited t/a Geeko Projects and Others HH668-17 DUBE J…, said:

“In Ebrahim v Deputy Sheriff, Durban and Anor 1961 (4) SA 263 where the court made the following remarks on a claimant's onus. The test whether a claimant has discharged the onus of proving his ownership to movable property…, is whether, in the result, the probabilities are balanced in his favour. The strength of the evidence he has to produce to succeed depends upon the circumstances of the particular case…,. Apart from other considerations, the court would no doubt, in such case, require the claimant to produce clear and satisfactory proof of his ownership.”

The high watermark of the claimant's case is that Number 499 Goodwin Road, Willowvale, Harare, where the Sheriff executed the writ, is its Stand.

It says the judgment creditor had no business instructing the Sheriff to attach property belonging to a third party in a bid to satisfy a judgment obtained against the judgment debtor.

It says the Stand was purchased by the claimant on 28 October 2016.

A copy of the agreement of sale shows that BM Graphics (Private) Limited was the registered owner of two ordinary paid up shares in Jon's Engineering (Private) Limited. It sold its shares to the claimant, which then now becomes the registered owner of the two fully paid up shares in Jon's Engineering.

Jon's Engineering is the owner of Stand Number 499 Goodwin Road, Willowvale, Harare.

It is argued, that, since the claimant is the sole shareholder in Jon's Engineering, it is then the owner of the Stand.

The argument culminates in that since the writ was executed at the Stand, the property attached was in the possession of the claimant. It is then submitted, that, since the attached property was in the possession of the claimant, the onus is on the judgment creditor to prove, that, notwithstanding possession, the attached property belongs to the judgment debtor.

The judgment creditor argues that the agreement of sale is suspicious.

The agreement of sale was allegedly concluded on 28 October 2016. On 21 August 2017 BM Graphics (Pvt) Ltd consented to a court order whose terms directed the Registrar of this court to appoint a realtor firm to conduct a valuation of the same Stand the claimant says it purchased in 2016. At the time the court order was made, there was no mention that the Stand subject to the court order had already been sold to the claimant.

Counsel for the claimant attempted to answer this query by arguing that the court order only refers to two thousand square meters of the Stand, while the whole Stand is measuring 5,036 square meters.

This argument does not avail the claimant because the agreement of sale between it and BM Graphics (Pvt) Ltd is for the whole piece of land, not only 3,036 square meters.

The claimant produced another copy of an agreement of sale between it and BM Graphics (Pvt) Ltd signed on 30 October 2015. It says this one was cancelled because it was realised that the land belongs to Jon's Engineering, which had to be involved in the sale of the Stand.

Correspondence was also produced in an attempt to show that the agreement of sale is authentic.

The claimant could not explain why BM Graphics (Pvt) Ltd could, in August 2017, consent to a court order which related to a Stand it no longer owned.

In fact, counsel for the claimant represented the judgment debtor in the main case - this does not bolster the claimant's case at all. It in fact gives weight to the allegations of connivance between the claimant and the judgement debtor.

I agree with the judgment creditor's counsel that the agreement of sale is not authentic.

It was drawn as an after-thought to give credence to the alleged sale of shares in Jon's Engineering to the claimant.

BM Graphics (Pvt) Ltd could not have consented to the order of 21 August 2017 when, on the 26 October 2016, it had already sold the shares in Jon's Engineering which owns the Stand.

Further, in the first affidavit that prompted the applicant to institute these proceedings, the claimant says BM Graphics sold the Stand to it; it (BM Graphics) moved out of the Stand, and, to that end, the property that has been attached by the Sheriff belongs not to the judgment debtor but the claimant. In the affidavit filed in opposition to the interpleader application, the claimant says the Stand was purchased by the claimant on 28 October 2016.

The deponent to the affidavit continues and says the premises had nothing to do with the judgment debtor as of 28 October 2016. The deponent continues, in the supplementary affidavit, that, the claimant bought the property from the judgment debtor and took occupation of same upon conclusion of the agreement of sale.

What the claimant conveniently forgets is that BM Graphics, the judgment debtor, was on the premises on 21 August 2017 - well after 28 October 2016.

The story of the sale of the Stand falls on its own like a deck of cards.

My view is that it is a fabricated version calculated to deceive the judgement creditor and this court.

View Appeal
HH601-14 : SHI JINWU vs BIG VALLEY MASTERS (PRIVATE) LIMITED and PHILLIMON MUBATA
Ruled By: CHIGUMBA J

In interpreting a contract, a court must determine what the intention of the parties was when they entered into a contract....,.In researching what the law says on how to interpret the intention of parties to a contract, I came across the following:In the case of Chikoma v Mukweza 1998 (1) ...

In interpreting a contract, a court must determine what the intention of the parties was when they entered into a contract....,.

In researching what the law says on how to interpret the intention of parties to a contract, I came across the following:

In the case of Chikoma v Mukweza 1998 (1) ZLR 541 (SC) the Supreme Court stated that:

“…, the approach that the courts will adopt to the issue of whether a contract is void for vagueness will be to help the parties towards what they both intended rather than obstruct them by legal subtleties and allow one of the parties to escape the consequences of all he has done and all he has intended. The courts will interpret contracts fairly and broadly, without being quick to find defects, following the principle ut res magis valeat quam pereat.”

The court said that:

“Against this scenario, the approach to be adopted to the issue of vagueness must be that expressed by PRICE J in Hoffmann & Carvalho v Minister of Agriculture 1947 (2) SA 855 (T) at 860, namely:

'Where parties intend to conclude a contract, think they have concluded a contract, and proceed to act as if the contract were binding and complete, I think the court ought rather to try to help the parties towards what they both intended rather than obstruct them by legal subtleties and assist one of the parties to escape the consequences of all that he has done and all that he has intended....'”

Not to be overlooked, as well, are the wise words of LORD WRIGHT in Hillas & Co Ltd v Arcos Ltd [1932] All ER Rep 494 (HL) at 503I; (1932) 147 LT 503 (HL) at 514:

“Businessmen often record the most important agreements in crude and summary fashion; modes of expression sufficient and clear to them in the course of their business may appear to those unfamiliar with the business far from complete or precise. It is, accordingly, the duty of the court to construe such documents fairly and broadly, without being too astute or subtle in finding defects; but, on the contrary, the court should seek to apply the old maxim of English Law, verba ita sunt intelligenda ut res magis valeat quam pereat.”

The mutual intention of the parties, at the time of the contract, will govern the court's resolution of a contractual dispute if that intention can be determined and if that intention is lawful.

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Intent or Animus Contrahendi re: Simulated or Disguised Agreements

HH67-10 : JAMES MUTETWA vs BARRIE DIXON and MARKO MAVHURUNE N.O. (as Executor Estate Late Samuel Mushaninga) and KENIAS MUTYASIRA N.O. (as Executor Estate Late Salome Chisvo) and REGISTRAR OF DEEDS
Ruled By: MAKARAU JP

HH95-10 : TIISO HOLDINGS (PTY) LIMITED vs ZIMBABWE IRON & STEEL COMPANY LIMITED
Ruled By: PATEL J

HH135-15 : D BANK LTD vs ZIMBABWE REVENUE AUTHORITY
Ruled By: KUDYA J

View Appeal
HH385-13 : WEBSTER RUSHESHA (guardian of Panashe and Tivonge Rushesha) and RASAR INV PL vs ALEXIOUS DERA and ZIMCOR TRUSTEES LTD and FRANK BUYANGA and BOKA INV PL and MATTHEW BOKA and ANOR
Ruled By: ZHOU J

SC83-20 : ARISTON HOLDINGS LIMITED vs THE COMPETITION AND TARIFF COMMISSION OF ZIMBABWE
Ruled By: GWAUNZA DCJ, PATEL JA and MAKONI JA

HH551-15 : W AND D CONSULTANTS (PRIVATE) LIMITED vs SEAN THOMAS NIELSON DORAN
Ruled By: DUBE J

SC01-15 : FIRSTEL CELLULAR (PRIVATE) LIMITED vs NETONE CELLULAR (PRIVATE) LIMITED
Ruled By: ZIYAMBI JA, GARWE JA & PATEL JA

SC40-15 : INDIUM INVESTMENTS (PVT) LTD vs KINGSHAVEN (PVT) LTD and DANIEL SHUMBA and LINDA SHUMBA
Ruled By: CHIDYAUSIKU CJ, GWAUNZA JA, GOWORA JA, HLATSHWAYO JA and MAVANGIRA AJA

Appealed
SC08-21 : WELLI-WELL (PVT) LTD vs MALVERN IMBAYAGO and THE SHERIFF OF ZIMBABWE
Ruled By: BHUNU JA, MATHONSI JA and CHITAKUNYE AJA

Appealed
SC09-21 : ANDERSON MANJA and 98 OTHERS vs SHERIFF OF ZIMBABWE and GURTA MINING AG
Ruled By: MAVANGIRA JA, UCHENA JA and MATHONSI JA

View Appeal
HH351-20 : THE SHERIFF OF ZIMBABWE and GURTA AG vs ANDERSON MANJA and 98 OTHERS
Ruled By: CHIKOWERO J

View Appeal
HH746-19 : SHERIFF FOR ZIMBABWE (APPLICANT) vs WELLI-WILL INDUSTRIES (PVT) LTD (CLAIMANT) and MALVERN IMBAYAGO (JUDGMENT CREDITOR)
Ruled By: DUBE-BANDA J

View Appeal
HH601-14 : SHI JINWU vs BIG VALLEY MASTERS (PRIVATE) LIMITED and PHILLIMON MUBATA
Ruled By: CHIGUMBA J

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Law Portal Zimbabwe

Intent or Animus Contrahendi re: Simulated or Disguised Agreements

HH67-10 : JAMES MUTETWA vs BARRIE DIXON and MARKO MAVHURUNE N.O. (as Executor Estate Late Samuel Mushaninga) and KENIAS MUTYASIRA N.O. (as Executor Estate Late Salome Chisvo) and REGISTRAR OF DEEDS Ruled By: MAKARAU JP

HH95-10 : TIISO HOLDINGS (PTY) LIMITED vs ZIMBABWE IRON & STEEL COMPANY LIMITED Ruled By: PATEL J

HH135-15 : D BANK LTD vs ZIMBABWE REVENUE AUTHORITY Ruled By: KUDYA J

View Appeal HH385-13 : WEBSTER RUSHESHA (guardian of Panashe and Tivonge Rushesha) and RASAR INV PL vs ALEXIOUS DERA and ZIMCOR TRUSTEES LTD and FRANK BUYANGA and BOKA INV PL and MATTHEW BOKA and ANOR Ruled By: ZHOU J

SC83-20 : ARISTON HOLDINGS LIMITED vs THE COMPETITION AND TARIFF COMMISSION OF ZIMBABWE Ruled By: GWAUNZA DCJ, PATEL JA and MAKONI JA

HH551-15 : W AND D CONSULTANTS (PRIVATE) LIMITED vs SEAN THOMAS NIELSON DORAN Ruled By: DUBE J

SC01-15 : FIRSTEL CELLULAR (PRIVATE) LIMITED vs NETONE CELLULAR (PRIVATE) LIMITED Ruled By: ZIYAMBI JA, GARWE JA & PATEL JA

SC40-15 : INDIUM INVESTMENTS (PVT) LTD vs KINGSHAVEN (PVT) LTD and DANIEL SHUMBA and LINDA SHUMBA Ruled By: CHIDYAUSIKU CJ, GWAUNZA JA, GOWORA JA, HLATSHWAYO JA and MAVANGIRA AJA

Appealed SC08-21 : WELLI-WELL (PVT) LTD vs MALVERN IMBAYAGO and THE SHERIFF OF ZIMBABWE Ruled By: BHUNU JA, MATHONSI JA and CHITAKUNYE AJA

Appealed SC09-21 : ANDERSON MANJA and 98 OTHERS vs SHERIFF OF ZIMBABWE and GURTA MINING AG Ruled By: MAVANGIRA JA, UCHENA JA and MATHONSI JA

View Appeal HH351-20 : THE SHERIFF OF ZIMBABWE and GURTA AG vs ANDERSON MANJA and 98 OTHERS Ruled By: CHIKOWERO J

View Appeal HH746-19 : SHERIFF FOR ZIMBABWE (APPLICANT) vs WELLI-WILL INDUSTRIES (PVT) LTD (CLAIMANT) and MALVERN IMBAYAGO (JUDGMENT CREDITOR) Ruled By: DUBE-BANDA J

View Appeal HH601-14 : SHI JINWU vs BIG VALLEY MASTERS (PRIVATE) LIMITED and PHILLIMON MUBATA Ruled By: CHIGUMBA J

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Zimbabwe

HH67-10 : JAMES MUTETWA vs BARRIE DIXON and MARKO MAVHURUNE N.O. (as Executor Estate Late Samuel Mushaninga) and KENIAS MUTYASIRA N.O. (as Executor Estate Late Salome Chisvo) and REGISTRAR OF DEEDS
Ruled By: MAKARAU JP

HH95-10 : TIISO HOLDINGS (PTY) LIMITED vs ZIMBABWE IRON & STEEL COMPANY LIMITED
Ruled By: PATEL J

HH135-15 : D BANK LTD vs ZIMBABWE REVENUE AUTHORITY
Ruled By: KUDYA J

View Appeal
HH385-13 : WEBSTER RUSHESHA (guardian of Panashe and Tivonge Rushesha) and RASAR INV PL vs ALEXIOUS DERA and ZIMCOR TRUSTEES LTD and FRANK BUYANGA and BOKA INV PL and MATTHEW BOKA and ANOR
Ruled By: ZHOU J

SC83-20 : ARISTON HOLDINGS LIMITED vs THE COMPETITION AND TARIFF COMMISSION OF ZIMBABWE
Ruled By: GWAUNZA DCJ, PATEL JA and MAKONI JA

HH551-15 : W AND D CONSULTANTS (PRIVATE) LIMITED vs SEAN THOMAS NIELSON DORAN
Ruled By: DUBE J

SC01-15 : FIRSTEL CELLULAR (PRIVATE) LIMITED vs NETONE CELLULAR (PRIVATE) LIMITED
Ruled By: ZIYAMBI JA, GARWE JA & PATEL JA

SC40-15 : INDIUM INVESTMENTS (PVT) LTD vs KINGSHAVEN (PVT) LTD and DANIEL SHUMBA and LINDA SHUMBA
Ruled By: CHIDYAUSIKU CJ, GWAUNZA JA, GOWORA JA, HLATSHWAYO JA and MAVANGIRA AJA

Appealed
SC08-21 : WELLI-WELL (PVT) LTD vs MALVERN IMBAYAGO and THE SHERIFF OF ZIMBABWE
Ruled By: BHUNU JA, MATHONSI JA and CHITAKUNYE AJA

Appealed
SC09-21 : ANDERSON MANJA and 98 OTHERS vs SHERIFF OF ZIMBABWE and GURTA MINING AG
Ruled By: MAVANGIRA JA, UCHENA JA and MATHONSI JA

View Appeal
HH351-20 : THE SHERIFF OF ZIMBABWE and GURTA AG vs ANDERSON MANJA and 98 OTHERS
Ruled By: CHIKOWERO J

View Appeal
HH746-19 : SHERIFF FOR ZIMBABWE (APPLICANT) vs WELLI-WILL INDUSTRIES (PVT) LTD (CLAIMANT) and MALVERN IMBAYAGO (JUDGMENT CREDITOR)
Ruled By: DUBE-BANDA J

View Appeal
HH601-14 : SHI JINWU vs BIG VALLEY MASTERS (PRIVATE) LIMITED and PHILLIMON MUBATA
Ruled By: CHIGUMBA J