Firoza Moosa v Prorand Enterprises (Pvt) Ltd

### Preamble
1
HH 561-18
HC 180/18
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FIROZA MOOSA

versus

PRORAND ENTERPRISES (PVT) LTD

HIGH COURT OF ZIMBABWE

CHIKOWERO J

HARARE, 17 & 26 September 2018

Opposed application

C Mucheche, for the applicant

C Damiso, for the respondent

CHIKOWERO J: This is a court application for a declaratur.

The relief sought reads:

“IT IS ORDERED THAT:

The removal of the applicant from being a director of the respondent be and is hereby declared null and void.

The CR 14 dated 4 July 2014 be and is hereby declared invalid.

The CR 14 dated 26 October 2016 be and is hereby declared null and void

The respondent pays costs of suit.”

I have looked at the case of Munn Publishing (Pvt) Ltd v ZBC 1994 (1) ZLR 337 (S).

It was therein held that the conditions precedent to the granting of a declaratory order are as follows. The applicant must be an interested person, in the sense of having a direct and substantial interest in the subject matter of the suit which could be prejudicially affected by the judgment of the court. The interest must relate to an existing, future or contingent right; the court will not decide abstract, academic or hypothetical questions unrelated to such an interest. But the existence of actual dispute between persons interested is not a statutory requirement to the exercise, by the court of such jurisdiction nor does the availability of another remedy render the grant of a declaratory order incompetent.

Further, the court must go on to decide whether the case is a proper one for the exercise of its discretion. Where there is some tangible or justifiable advantage in relation to the person with reference to an existing, future or contingent legal right or obligation apparently flowing from the granting of the declaratory order, a proper case would have been made for the exercise of the court’s discretion.

The requirements are summarised in the headnote in Munn Publishing (supra) at p 338 E-G.

The applicant’s case is straightforward. She contends that she is a shareholder and Director of the respondent. She was then unlawfully removed from the directorship of the respondent.

In essence, therefore, she moved the court to declare such removal as null and void.

The other heads of relief flow from that main prayer.

The case requires that I determine first, whether the applicant is a shareholder of the respondent.

I am satisfied that she is. She has proved that on a balance of probabilities. There is sufficient documentary evidence in this regard. These are Annual Tax Returns for each of the years ending 31 December 2010, 2011, 2012, 2013 and 2014, in respect of the respondent.

All were signed by Guy Edmunds in his capacity as a Public Officer of the respondent, and submitted to the Zimbabwe Revenue Authority.

The applicant and Guy Edmunds names, addresses and shareholding are reflected on the Annual Tax Returns.

Guy deposed to the opposing affidavit. He did not deny signing the Annual Income Tax Returns. All he says is he was ill when he appended such signature. He does not suggest that he did not know what he was signing.

In light of his admission his contention on behalf of the respondent that either certified or original copies of the Annual Tax Returns ought to have been annexed to the Founding Affidavit does not assist the respondent at all.

I find that the Annual Tax Returns were genuine and authentic. I have noted that they are Zimbabwe Revenue Authority documents and bear the taxman’s date stamp as proof of receipt.

Further, two copies of share certificates were attached to the applications. These reflected the applicant and Guy’s shareholding in the respondent.

Section 104 (1) of the Companies Act [Chapter 24:03] provides that a share certificate is prima facie evidence of ownership of shares.

I accept that the supporting affidavit of Sharain Fazilahmed has portions containing clear hearsay evidence. It also is not divided into numbered paragraphs and does not contain the usual preliminaries of identifying the parties to this suit, among other shortcomings.

But one cannot deny that it is an affidavit. It was deposed to at Harare on 3 July 2017 before a Commissioner of Oaths.

It corroborates the applicant’s testimony that Guy and the applicant were shareholders and directors in the respondent. It sets out their shareholding. She was at the material time employed as a Bookkeeper by the respondent. I find that in her capacity as bookkeeper Sharain acquired personal knowledge of the shareholding and directorship of the respondent at the material time.

Her admissible evidence is in sync with the documentary evidence already referred to.  It was not disputed that she forwarded the Annual Tax Returns in question to the Zimbabwe Revenue Authority.  Those returns were signed by Guy.

Relative to the removal from the directorship, the position is equally clear.

The applicant was not removed from the directorship through the Deed of Settlement dated July 27 2017. That Deed provided for payment of applicant’s damages in lieu of reinstatement. Apart from being a director and shareholder in respondent, applicant had also been an employee of the respondent. The Deed related to that status as an employee.

I therefore agree with Mr Mucheche that this matter is distinguishable from Gomwe and Another v Associated Newspapers of Zimbabwe Pvt Ltd 2001 (2) ZLR 415 (H).  This court ruled in the Gomwe (supra) case that a director who is also an employee may lawfully be dismissed from his directorship under the labour laws rather than under the Companies Act [Chapter 24:03] (“the Act”)

In fact, had applicant not been a director, there would have been no need to have convened the shareholders meeting of 16 July 2016 in the first place. It was at that shareholders’ meeting that applicant was purportedly removed from her directorship.

The problem with the resolution made at the shareholders meeting was that only two shareholders were in attendance.  The applicant was not in attendance.

There was no evidence that she was notified of that shareholders’ meeting.  There was consequently no evidence that she waived her right to attend it.

In fact, respondent’s position is that there was no need to give notice to the applicant in as far as that meeting was concerned because applicant is not a shareholder.  I have already found that applicant is a shareholder.

The respondent therefore did not comply with the dictates of s 175 of the Act.  It reads:

“175. A company may, by resolution of which special notice has been given, remove a director before the expiration of his period of office notwithstanding anything in its articles or in any agreement between it and him.”

Two other pronouncements proceed from my finding that the removal of applicant from being a director of the respondent was null and void.  These are they.  The CR 14 dated 4 July 2014 wherein applicant is reflected as one of the directors is valid.  The CR 14 dated 26 October 2016 wherein applicant is omitted from the list of directors and the following persons included as directors, without applicant’s consent, is likewise null and void. These are Mellisa Louise Edmunds, Linda Elizabeth Clark and Fiona Sarah Annabel Edmund.

As appears within the body of this judgment, all the requirements of a declaratory order were proved.

Further, this is a proper case for the exercise of my discretion in favour of granting the relief prayed for.

None of the preliminary points had merit.  In fact, it cannot be a preliminary point to contend that action proceedings should have been instituted by dint of supposed material disputes of fact incapable of resolution on the papers.  This is so because one needs to go into the merits of the matter to discover that which it is averred cannot be determined on the affidavits.  In the circumstances, I did not find any merit in the contention.

The res judicata argument, founded on the Deed of Settlement, was not well taken.  It was clearly unsustainable.  I dismiss it.

Finally, I did not find anything premature in the institution of the court application.  The illegal removal of applicant from the directorship had been done.  The cause of action was complete.

At the end of it all, therefore, it is ordered as follows:

The removal of applicant from being a director of the respondent be and is hereby declared null and void.

The CR 14 dated 4 July 2014 be and is declared valid

The CR 14 dated 26 October 2016 be and is hereby declared null and void.

The respondent shall pay the applicant’s costs of suit.

Matsikidze and Mucheche, applicant’s legal practitioners

Atherstone and Cook, respondent’s legal practitioners