This is an opposed application for condonation of late noting of an appeal and extension of time within which to file a notice of appeal. The applicant brings the application in terms of Rule 43 of the Rules of Court 2018.
THE PARTIES
The first applicant is a former employee of the third respondent (the company). He was employed as its Chief Executive Officer. He was dismissed from employment sometime in 2015 following disciplinary proceedings.
The first applicant claimed to own 30% shares in the third respondent through the agency of the second applicant, a duly incorporated company, and, to that extent, a juristic person.
His claim to the directorship of the company is in dispute. He claims to be duly authorised to represent the second applicant, a factor which is also disputed by the respondents.
The first and second respondents are natural persons bearing the same surname of 'Chingwena'.
The third to ninth respondents are duly incorporated companies.
The 10th, 11th, 15th-22nd, 29th, 33rd respondents are also duly incorporated companies clothed with juristic personality.
The remaining parties, though cited, did not appear to oppose the appeal.
The 4th to 38th respondents are companies in which the first appellant alleges the company has investments liable to his 30% claim of the shares allegedly held by the third respondent therein.
THE LAW
The law relating to applications of this nature is well known such that it cannot be the subject of any controversy. The requirements for the application to succeed were spelt out in Kombayi v Berckout 1988 (1) ZLR 53 (S). These are:
(a) The extent of the delay;
(b) The reasonableness of the delay; and
(c) The prospects of success on appeal....,.
BRIEF SUMMARY OF THE CASE
The first applicant approached the court a quo in terms of section 196(1) as read with section 198 of the Companies Act [Chapter 24:03] complaining that the affairs of the company, Croco Holdings (Private) Limited are being, or have been, conducted in a manner that is oppressive or unfairly prejudicial to the interests of some part of the members including himself. The section provides as follows:
“196 Order on Application of Member
A member of a company may apply to the court for an order in terms of section one hundred and ninety-eight on the ground, that, the company's affairs are being, or have been, conducted in a manner which is oppressive or unfairly prejudicial to the interests of some part of the members, including himself, or that any actual or proposed act or omission of the company, including an act or omission on its behalf, is or would be so oppressive or prejudicial.”
The first applicant deposed to the founding affidavit wherein he averred, that, he owns 30% shares in the company whereas the first respondent owns the remaining 70%.
His complaint is that the first respondent has been, and is, abusing his position as the majority shareholder.
He alleged that the first respondent was conducting the company's affairs in an oppressive and prejudicial manner to its members including him.
He averred, that, the first respondent and he were the promoters and founding directors of the company. The first respondent had, however, fraudulently removed his name from the company's register of directors.
He proffered some documentary evidence tending to show that he was an initial subscriber of shares and Director of the company. To that end, he submitted, that, all the essential company records showed that he owned 30% of the shares in the company. He contended that he subscribed for the shares in terms of a shareholding agreement he signed on 27 May 2006.
The first applicant cast aspersions on the first respondent alleging that since 2014 he had conducted himself contrary to the Shareholders Agreement. He further accused the first respondent of making decisions outside the forum of the Board of Directors.
It was his averment, that, in frustration, he offered to sell his shares to the first respondent but he was evasive and non-committal. Eventually, the first respondent turned the tables against him and began to dispute his shareholding in the company. They, however, subsequently met and agreed that the shares be evaluated before disposal. Despite having ordered that evaluation of the shares be carried out, the first respondent, again, made an about turn and denied ever having entered into such an agreement with him.
Having failed to resolve their differences amicably, the first applicant alleged that the first respondent proceeded to suspend him from work leading to his dismissal from employment. He has since challenged his dismissal in the courts.
On that score, he complained, that, the first respondent had violated his rights as a shareholder which rights are protected by the Companies Act. Consequently, he implored the court a quo to provide him with the following relief:
“WHEREUPON after reading documents filed of record and hearing counsel;
IT BE AND IS HEREBY ORDERED THAT:
1. A forensic audit and valuation of the 3rd respondent and its investments in the 4th to 38th respondent be and is hereby ordered to be conducted by an accounting firm registered in terms of the Public Accounts and Auditors Act [Chapter 27:12] to be appointed by the 39th respondent within 5 days of granting this order, all fees and costs of the evaluation being paid by the 3rd respondent.
2. 3rd respondent be and is hereby ordered to pay the applicants the full value of thirty percent (30%) of its total issued ordinary shares and 30% of its investments in the 4th to the 38th respondents within 5 days of completion of the forensic audit and valuation; such value having been established in terms of paragraph 1 above.
3. 3rd respondent be and is hereby directed to reduce 3rd respondent's share capital once the full amount of its thirty percent (30%) issued ordinary shares have been paid by 3rd respondent.
4. The Sheriff of the High Court and/or his lawful deputies be and are hereby ordered to execute terms of paragraph 2 above.
5. The 1st respondent pays the costs of suit on a legal practitioner and client scale.”
The respondents opposed the application, arguing that the first applicant was never a shareholder of the company.
They accused him of relying on forged fraudulent documents and challenged him to prove how he had acquired the alleged company shares.
Riding on that challenge, they raised a point in limine disputing his locus standi.
They submitted, that, only a member of a company, in the form of a shareholder, can bring an application in terms section 196 as read with section 198 of the Companies Act. The first applicant, not being a shareholder of the company, was not a member of the company, and, therefore, not qualified to bring the application before the court a quo.
As a second point in limine, the respondents challenged the first applicant's authority to represent the second applicant.
FACTUAL FINDINGS OF THE COURT A QUO
The court a quo found, that, the application was founded on material falsehoods based on fraudulent documents. Both the Shareholders Agreement and the share transfer documents were adjudged to be fraudulent documents. It also found, that, in relation to the point in limine, the applicant was unable to explain two conflicting CR2 documents.
Thus, the court a quo upheld both points in limine.
Ultimately, the learned judge a quo upheld the two preliminary points, and, in the process, found, that, the application was bad at law in that it did not meet the requirements of section 95 as read with section 196 of the Companies Act.
In the result, he dismissed the application with costs.
PROSPECT OF SUCCESS ON APPEAL
The onus of proof lies squarely on the first applicant to prove, that, if granted the court's indulgence, he has reasonable prospects of success on appeal.
The case of Essop v S [2020] ZASCA 114…, provides guidance on what is required of the applicant to discharge the onus of proof. In that case, the court had occasion to remark that:
“What the test for reasonable prospects of success postulates is a dispassionate decision, based on the facts and the law that a court of appeal could reasonably arrive at a conclusion different to that of the trial court.
In order to succeed, therefore, the applicant must convince this court, on proper grounds, that, he has prospects of success on appeal and that those prospects are not remote, but have a realistic chance of succeeding.
More is required to be established than that there is a mere possibility of success; that the case is arguable on appeal; or that the case cannot be categorised as hopeless. There must, in other words, be a sound, rational basis for the conclusion that there are prospects of success on appeal.”
The applicants contention is that they have bright prospects of success on appeal because the court a quo ignored uncontested evidence which proved that the first applicant was indeed a shareholder in the third respondent. The first applicant further argued, that, the court a quo erred in holding that the Shareholders Agreement, and the share certificates, were fraudulent documents.
As we have already seen, the respondents challenged the first applicant's locus standi and invited him to prove what he alleged.
The respondent did not have to do more than to simply challenge the first appellant to bring forth credible evidence that would reasonably persuade the Appeal Court to come to a different decision from that of the court a quo.
The cardinal factual issue for determination in the court a quo was whether the first applicant was a shareholder of the company.
It is settled law in our jurisdiction that an Appeal Court will not easily interfere with factual findings made by a lower court. To that extent, case law has set the test for discrediting and upsetting factual findings by a lower court so high that they cannot easily be overturned on appeal.
In Reserve Bank of Zimbabwe v Granger and Anor SC34-01 this Court held that:
“An appeal to this court is based on the record. If it is to be related to the facts there must be an allegation that there has been misdirection on the facts which is so unreasonable that no sensible person who applied his mind to the facts would have arrived at such a decision; and a misdirection of facts is either a failure to appreciate a fact at all or a finding of fact that is contrary to the evidence actually presented.”
In this case, the court considered all the evidence placed before it and came to the conclusion that the documents relied upon by the first applicant were forged, fraudulent documents.
The applicant's contention is that the Shareholders Agreement, and the share certificate, are authentic and valid because they were prepared and signed by Gwatidzo, the auditor. He accuses the court a quo of ignoring evidence he proffered to the effect that Gwatidzo admitted that he prepared the documents.
As evidence of the alleged admission, he filed a transcript of a long telephone conversation that he had with Gwatidzo…,.
That transcript does not support his assertion that Gwatidzo admitted preparing the disputed documents.
This is what Gwatidzo said at p16 of the transcript:
“A. MR GWATIDZO: I actually do not remember preparing the shareholders agreement. Did I prepare the shareholders' agreement?
…,.
Q. FARAI: In all honest did you not prepare the transfer of shares?
A. MR GWATIDZO: No it was done by Bekker Tilly.”
It is axiomatic that the authenticity of the questioned document was premised on them having been prepared and signed by the auditor Gwatidzo.
Gwatidzo's denial that he is the author of the questioned documents was fatal to the applicant's case. It destroyed the whole foundation and basis of his case.
In his opposing affidavit, the first respondent averred, that, the first applicant forged the Shareholders Agreement document by super-imposing his genuine signature on a copy of the agreement and then photocopying it.
The first applicant did not lead any evidence to rebut the allegation.
Failure to rebut the allegation of forgery of the material document was fatal to the applicants case.
To make matters worse, the first applicant filed two conflicting CR2 Forms.
The first one showed that the company owned all the shares in the second respondent, Moses Tonderai Chingwena Family Trust. Upon realising that the first CR2 Form was fatal to his case, the first applicant filed another CR2 Form with his answering affidavit contradicting the first CR2 which asserted that the third respondent owned all the shares in the second respondent.
These examples of the first applicant's shenanigans portray him as a dishonest, devious person who is prepared to twist the truth in order to advance his nefarious cause.
In light of his deceitful character, the learned judge a quo cannot be faulted for holding, that, the first applicant's cause was founded on lies and fraudulent documents.
That finding is amply supported by the evidence on record.
For that reason, the learned judge a quo's reliance on the dictum of NDOU J in Leader Tread Zimbabwe (Pvt) Ltd v Smith HH131-03 is apt. In that case, the learned judge observed that:
“It is trite, that, if a litigant has given false evidence his story will be discarded and the same adverse inference may be drawn as if he has not given evidence at all: see Tumahole Bereng v R [1949] AC 253 and South African Law of Evidence IH HOFFMAN and DT ZEFFERT (3rd ed) at page 472.
If he lies about a particular incident, the court may infer that there is something about it which he wishes to hide.”
This should really be the end of the matter as the first applicant has proven to be an unworthy, dishonest litigant.
