Afrochine Energy (Private) Limited v Chen Shangsong and 7 Others

### Preamble
1
HH 351-21
HC 3403/21
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AFROCHINE ENERGY (PRIVATE) LIMITED

versus

CHEN SHANGSONG

and

XU KEMIN

and

CHEN SHENG

and

ZHOU ZHUQIANG

and

GAOYANMIN

and

TSINGSHAN MINING INVESTMENT

and

ZIMBABWE (PRIVATE) LIMITED

and

AFROCHINE SMELTING (PRIVATE) LIMITED

HIGH COURT OF ZIMBABWE

TAGU J

HARARE 1 and 7 July 2021

Urgent Chamber Application

P. Ranchhod, for applicant

T.Mpofu, for respondents

TAGU J: This application has been filed on a certificate of urgency. The brief facts of the matter are that the Applicant and sixth Respondent acquired shares in the seventh Respondent in 2012 in terms of a Shareholders Agreement. In terms of the Shareholders Agreement the Board of the seventh Respondent was to comprise of five (5) directors, one to be appointed by the Applicant and four by the sixth Respondent. However, an extra board member was appointed under unclear circumstances. This application has been filed in terms of Section 60. 62 and 65 of the Companies and Other Business Entities Act [Chapter 24.31]. The reason being that the first, second, third, fourth, and fifth Respondents purported to issue public statements in both local and international media relating to proposed billion dollar investments to be effected by sixth Respondent in terms of which the seventh Respondent purportedly undertook to invest up to US$1 500 000 000.00 in new projects in Zimbabwe. As a director of the seventh Respondent the deponent to the founding affidavit one Philip Chi Chiu Man was not consulted or made aware of these intended statements nor the proposed investment and how it is to be implemented. When he became aware of these public statements he requested the secretary of the seventh Respondent to convene a Board meeting to deliberate on this issue and other relevant matters that required urgent attention. Notwithstanding the notices of such meeting the Respondents ignored and deliberately did not respond. It is the deponent’s contention that the first to fifth Respondents have acted contrary to their statutory duty as directors to act in the best interests of the seventh Respondent. They issued statements intended to mislead and possibly embarrass the Ministry of Mines and Mining Development and Government of Zimbabwe and the Applicant. They are alleged to have been engaging in activity that may be in direct breach of the laws of Zimbabwe, if the media report about the reliance of an expired environmental impact assessment certificate is proven to be accurate.  Further, they tried to illegally remove the deponent as a director in 2015 in violation of the repealed Companies Act but when he complained about their illegal action, they reinstated him to the Board. Hence such willful misconduct must not be condoned or tolerated by this Honourable Court and those directors must be censored and penalized. In fact first to fifth Respondents’ deliberate and willful misconduct constitutes a breach of their duties as directors to the seventh Respondent and their conduct is deliberately oppressive of the rights of the Applicant and must be removed as directors.

The Applicant seeks the following order-

“IT IS ORDERED THAT

First, Second, Third, Fourth and Fifth Respondents, as directors of the Seventh Respondent, 	shall immediately cease any conduct or action that has or will result in the Seventh 	Respondent being in breach of the laws of Zimbabwe.

First, Second, Third, Fourth and Fifth Respondents, as directors of Seventh Respondent, 	shall cease to issue any resolutions or make public statements except on the authority of a 	meeting of the full Board of Directors.

The resolution of directors issued on 23 February 2021 and subsequent notice of call on 	Applicant’s shares issued on 23 February and 2021 are declared void and invalid in terms 	of Section 65 of the Companies and Other Business Entities Act [Chapter 24.31] and any 	action or consequence arising from such resolution and notice of call on Applicant’s 	shares is hereby set aside.

First, Second, Third, Fourth and Fifth Respondents are hereby removed from such 	office in terms of Section 62 (2) (b) of the Companies and Other Business Entities 	Act [Chapter 24:31] for conduct determined to be unlawful and oppressive of the 	rights of Applicant and shall not hold such office in the Seventh Respondent.

First, Second, Third, Fourth and Fifth Respondents shall each, jointly and severally, pay 	the Applicant’s costs of suit on a legal practitioner/client scale, including the costs of 	Counsel.”

The Respondents filed their Notice of Opposition. In their Notice of Opposition the Respondents raised five points in limine. These were that there is no application before this Honourable Court. That the matter is not urgent. That the requirements for an interdict have not been satisfied. That the relief sought is incompetent and that the dispute is subject to an Arbitration clause. The court decided to dispose of the points in limine first before hearing submissions on the merits since these appear, if upheld, to have the potential of disposing of the matter at this stage.

The points in limine were strongly opposed by the counsel for the Applicant.

IS THERE NO APPLICATION BEFORE THIS HONOURABLE COURT?

The contention by the Respondents was that in terms of Order 32, Rule 241 (1) of the High Court Rules, 1971 where a chamber application is to be served on an interested party, it shall be in Form 29 with appropriate modifications. It was further submitted that the use of the word “shall” denotes that this is a peremptory provision and that failure to follow a mandatory provision is fatal to the validity of the proceedings. Mr. T.  Mpofu in his oral submission argued that the form used by the applicant excluded fundamental elements upon which the application is founded and that those elements are material in that the respondents were not informed on what to do to show opposition to the application. That is the form did not give notice to the respondents, it did not provide the dies induciae in which opposition should be mounted and more particularly, it did not inform the respondents of their rights. He therefore submitted that this application should be struck of the roll. Reliance for the above contention was made basing on the authorities in Veritas v Zimbabwe Electoral Commission, Minister of Justice legal and Parliamentary Affairs, Attorney General of Zimbabwe and Firinne Trust also known as Veritas v Zimbabwe Electoral Commission, Minister of Justice legal and Parliamentary Affairs and Attorney General of Zimbabwe SC 103/20, Marick Trading (Private) Limited v Old Mutual Life Assurance Company of Zimbabwe (Private) Limited and The Sheriff for Zimbabwe HH 667/15 as well as Base Minerals Zimbabwe (Private) Limited and Peter Valentine v Chiroswa Minerals (Private) Limited and Chiroswa Syndicate  and John Richard Needham Groves HH 559/14.

In its answering affidavit the Applicant submitted that Xu Kemin did not allege in what manner the form of the application is fatally defective. It said the form complies with the provisions of this Honourable Court and that the Applicant’s Counsel will argue the incongruity of this objection at the hearing. In his oral submissions Mr. Ranchhod argued that in the Veritas case supra, proper form was not followed. In the present case he argued that the form used laid the basis or grounds upon which the application has been made hence the application is not fatally defective.

The rule pertaining to the form that such applications should take is r 230, and it provides as follows:

“C. COURT APPLICATIONS

230. Form of court application

A court application shall be in Form No. 29 and shall be supported by one or more affidavits setting 	out the facts upon which the applicant relies.

Provided that, where a court application is not to be served on any person, it shall be in Form 29B 	with appropriate modifications.”

The application in this case was brought before the court on the basis of a form which reads as follows:

“TAKE NOTICE that the application is hereby made for an Order in terms of the order annexed to 	this application on the grounds that:

the application is urgent and Applicant is subject to unlawful and oppressive conduct by 	the First to Fifth Respondents:

the conduct of the First to Fifth Respondents is in breach of their statutory duties and is 	causing harm or prejudice to the Applicant.

The accompanying affidavit and documents are tendered in support of this application.

The Applicant’s address for service is care of Hussein, Ranchhod & Co. c/o The Chambers 	(Advocates of Zimbabwe), Mutual Centre, Third Street, Harare.”

This application was to be served, and indeed it was served on the Respondents. It is therefore not an application provided for in Form 29B. Contrary to the requirements of Form 29, which are peremptory, there was no attempt to give notice to the respondents of what was required of them to oppose the application. The Form used excludes those fundamental elements upon which an application is founded, which are material for purposes of giving notice to the respondents of their rights as regards the application. It did not state the dies induciae operating against the respondents for purposes of mounting any opposition. What it only contains is the basis upon which the application was being mounted. In this case the Applicant nor its legal practitioner did not state why the application did not contain the proper Form by way of notice other than saying the basis on which the application was mounted have been stated. On the basis of the authorities cited by Mr. T. Mpofu I hold that the application is defective hence there is no application before the court.

IS THE MATTER URGENT?

The Respondents argued among other things that a reading of the founding affidavit as well as the certificate of urgency show that there are two complaints, firstly, that there are certain newspaper articles issued by the first to the fifth Respondents in the past two weeks that have alarmed the Applicant and jolted him into action and a board meeting in which a call on shares was made by resolution. However, the Applicant and the certificate of urgency does not show the dates when the need to act arose. The Applicant seemed to suggest that the need to act arose two weeks ago yet the need to act arose as far back as February 2021 the date of the alleged publications. However, at page 35 of the application appears a letter by the Applicant dated 28 May 2021 where he signals knowledge of the articles in question. The application was only filed on 25 June 2021, nearly a month later and no explanation has been proffered for the delay. According to the Respondents the need to act arose sometime around 23 of February 2021 and not two weeks ago. The certificate of urgency does nothing to disclose why the deponent believes that the matter is urgent and should receive priority and the steps it took to safeguard its rights. They argued that dates are very important in determining when the need to act arose but these have not been stated. As to what constitutes urgency the court was referred to the case of Kuvarega v Registrar General and Anor 1998 (1) ZLR 188.

In its answering affidavit the Applicant averred that the complaints raised regarding their misconduct starkly demonstrates the continuing unlawful conduct that the First to the Fifth Respondents are engaged in as directors of the Seventh Respondent. In short it was argued that they are not responsible for a single, isolated act of misconduct, they have allowed the Seventh Respondent to engage in activity that may be illegal and which has been publicly condemned. They have breached the Articles of Association of the Seventh Respondent and in the process have deliberately caused direct prejudice to the Applicant. When the media reports were made Applicant sought an urgent meeting of the directors and requested that a Board meeting be convened to address the issue of the media statements and reports but the First to Fifth Respondents ignored that request. As to the invalid resolution and purported call on Applicant’s shares was raised with Respondents’ legal Practitioner repeatedly from March 2021, their Legal Practitioners only responded that they were seeking instructions, hence the delay in filing the application.

Counsel for the Applicant sought to demonstrate the urgency of the matter by saying that there is another urgent matter before Justice Chikowero under HC 3399/21. To him the Applicant treated the matter as urgent.

What is clear from the reading of the papers and the submissions made is that by the 28th of May 2021 the deponent to the Applicant’s founding affidavit was aware of the articles in question but the application was only filed on 25 June 2021 nearly a month later. That Board meeting is the true gravamen of the Applicant’s complaint. The date of that board meeting occurred in February 2021, but no swift action was taken until June 2021. Yes the conduct of the Respondents might have been continuing, but the question is why not take action when the need to act arose? The Applicant seemed not to have treated this matter with the urgency it deserved. Besides, the mere fact that there is another matter before the courts is not the basis for urgency.

In the celebrated case of Kuvarega v Registrar General and Anor supra, it was stated that:

“What constitutes urgency is not only the imminent arrival of the day of reckoning; a matter is urgent, 	if at the time the need to act arises, the matter cannot wait. Urgency which stems from a deliberate 	or careless abstention from action until the dead-line draws near is not the type of urgency 	contemplated by the rules. It necessarily follows that the certificate of urgency of the supporting 	affidavit must always contain an explanation of the non-timeous action if there has been any 	delay.”

In casu the need to act arose in February 2021 but the Applicant did not take action then. Even if it is accepted that the Applicant called for Board meetings, when these did not materialize the Applicant did not act swiftly. I therefore agree that if there is an urgency in this matter it was self-created and does not meet the requirements stated in the Kuvarega case supra.

HAVE REQUIREMENTS FOR AN INTERDICT SATISFIED?

While this point was raised in the Notice of Opposition that the requirements for an interdict have not been met, this point in limine was not argued when oral submissions were made by both the Applicant and the counsel for the Respondents. I will not labour myself on this point.

IS THE RELIEF SOUGHT INCOMPETENT?

The complaint raised by the Respondents is that an order in an urgent chamber application such as that filed in casu must contain a provisional order compliant with Order 32, Rule 247 (1) of the High Court Rules, 1971. The order sought by the Applicant does not comply with the aforementioned rule. In fact the order does not contain a provisional order at all. Therefore a reading of the order to the application reveals that the Applicant is attempting to seek a final order on an urgent basis. The Respondents’ argument was that the object of an urgent chamber application is to get interim protection, therefore that one cannot seek final relief on an urgent basis. For this reason the Respondent prayed that the application fails.

Mr. Paresh Ranchhod conceded that the order sought by the Applicant on an urgent basis does not contain a provisional order but a final order. However, he argued that the present application has been brought in terms of section 60, 62 and 65 of the Companies and Other Business Entities Act [Chapter 24:31] which provides for the cause of action, recourse and relief. He therefore submitted that final relief may be granted on an urgent basis. For this contention he referred the court to the case of Elvis Chikiwa HH 586/20 where the court made remarks to the effect that the relief sought is determined by the circumstances of each case.

With the greatest of respect I do not agree with Mr. Ranchhod’s submissions. I agree with Mr. T. Mpofu’s submission that one cannot seek a final relief on an urgent basis without filing heads of argument. Sections 60, 62 and 65 of the Companies and Other Business Entities Act call for substantive reliefs which cannot be sought on an urgent basis. What must be claimed is provisional relief. If regard is heard to the relief sought you cannot dismiss or remove second, third and fifth Respondents on a provisional basis.

IS THE DISPUTE SUBJECT TO ARBITRATION CLAUSE?

Having upheld the above points in limine, this court is of the view that it is no longer necessary to deal with this last point in limine as it will not change anything. The application before the court can be resolved on the points in limine already upheld. I hold that the application is defective and there is no application before the court.

IT IS ORDERED THAT

The application is struck of the roll or urgent matters.

There is no order as to costs.

Hussein, Ranchhod & Co., applicant’s legal practitioners

Mushoriwa Pasi Corporate Attorneys, respondents’ legal practitioners.