Gary Seabrooke v Huka Mining (Private) Limited & 5 Ors

### Preamble
1
HH 432-21
HC 1327/20
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GARY SEABROOKE

versus

HUKA MINING (PRIVATE) LIMITED

and

BLESSING HUNGWE

and

FARAI KAJESE

and

TSUNGAI HUNGWE

and

PANASHE MUGUZA

and

SHERIFF OF ZIMBABWE

HIGH COURT OF ZIMBABWE

MUSITHU J

HARARE:25 September 2020&26 August 2021

Opposed application–Exception

Mr T. Makamure, for the plaintiff

Mr N. Chimuka withT. Sena& N. Sithole, for the3rd&4thdefendants

MUSITHU J:The third and fourth defendants filed an exception to the plaintiff’s claim on the grounds that the summons were defective and that the cause of action pleaded was incomplete. The third and fourth defendants sought the dismissal of the plaintiff’s claim with costs on that basis. The exception was opposed.

FACTUAL BACKGROUND

The relief sought is grounded on the following factual basis. On 24 February 2020, the plaintiff issued summons against the six defendants claiming the following relief as set out in the summons:

“a) An order that the 2nd – 5th Defendants are to sign the Share Transfer Forms, CR2, Share Certificates and all such documents as are required by the Registrar of Companies to ensure that the 40 (Forty) percent shareholding in the 1st Defendant, which translates to 800 (eight hundred) shares is transferred to the Plaintiff or his duly appointed nominee within five (5) days of the date of this order;

b)	An order that in the event of 2nd-5th Defendants refusing, neglecting and/or failing to sign such documents, in terms of Paragraph 1 above, the Sheriff for Zimbabwe, be and is hereby authorised to sign the CR2 and all such documents as are required by the Registrar of Companies to ensure that the 800 (eight hundred) shares which translates to a 40% (forty percent) shareholding in the 1st Defendant is transferred into the name of the Plaintiff or his duly appointed nominee.

c)	Costs of suit on the scale of legal practitioner and own client.”

The plaintiff’s claim, as further amplified by the declaration which was filed simultaneously with the summons, can be summarised as follows. The second to fifth defendants are directors and shareholders in the first defendant. On 6 July 2018, the plaintiff and the second to fifth defendants entered into a memorandum of understanding (the MOU) for the exploration and undertaking of mining activities in an area known as the Golden Kopje Mine in Chinhoyi. The plaintiff represented himself while the second to fifth defendants were represented by Farai Kajese, the third defendant herein. The third defendant acted in that capacity as a duly authorised representative of the second to fifth defendants, all shareholders of the first defendant.

The material terms of the MOU were that: the second to fifth defendants were required to transfer 40(forty) percent of their shares, which translated to 800 (eight hundred) shares to the plaintiff or his duly appointed nominee within 7 (seven) days of the signing of the MOU; as consideration for the 40 (forty) percent shares, and after the transfer of the 800 (eight hundred) shares in the first defendant, the plaintiff was required to pay US$250 000.00 (two hundred and fifty thousand United States Dollars) towards the exploration and development of the project; the transaction was to be completed with the parties signing a Shareholders Agreement within 6 (six) months of the date of the MOU; the plaintiff was also required to invest US$250 000.00 within the same period of six months; the plaintiff had an option to earn up to a maximum of 70% equity in the first defendant on completion of the exploration work on the project, up to a maximum value of US$3,000,000.00 (three million United States dollars); the parties reserved an option to transfer the project to a Special Purpose Vehicle (SPV), with the first defendant retaining 60% of the shareholding and the plaintiff  getting 40%.	Consequent to the signing of the MOU, the plaintiff and the first to fifth defendants prepared a Shareholders Agreement, whose shareholding structure was to be resultantly as follows:

Gary Seabrooke 	40%;

Blessing Hungwe	30%;

Farai Kajese		12%;

Tsungirirai Kajese 	12%;

Panashe Muguza	6%.

Following the signing of the MOU, the second to fifth defendants were expected to transfer the 800 shares in the first defendant to the plaintiff. Nineteen months lapsed and no such transfer was done. The second to the fifth defendants allegedly refused and/or neglected to sign the Shareholders Agreement. The plaintiff notified the second to the fifth defendants of their breach, and his intention to approach the courts for an appropriate relief. The defendants were unrelenting.

THE 3RD AND 4TH DEFENDANTS’ EXCEPTION

Following the service of summons and declaration, the third and fourth defendants filed an exception to the summons and declaration. The exception attacks the two sets of pleadings on two bases. These are: firstly, that the summons is defective for want of compliance with order 3 rule 11(c) of the High Court Rules, 1971 (the Court Rules), in that it does not disclose the cause of action on its face, and neither does it contain a true and concise statement of the nature, extent and grounds of the cause of action; secondly, the defendants averred that the cause of action was incomplete in that whilst the plaintiff prayed for the transfer of shares, he himself had failed to tender the consideration in both the summons and declaration. As a result, the claim was bad at law.

THE PLAINTIFF’S RESPONSE TO THE EXCEPTION

The plaintiff averred that his cause of action arose ex contractu. It was based on a commercial transaction in which the second to fifth defendants were required to transfer their shareholding in the first defendant to him for a consideration of US$250 000.00 (Two Hundred and Fifty thousand United States Dollars). The plaintiff contended that such allegation was made in the declaration.

As regards the issue of performance, the plaintiff argued that the obligation to pay the sum of US$250 000.00 (Two Hundred and Fifty Thousand United States Dollars) only arose after the second to the fifth defendants had transferred their shares to the plaintiff. The transfer of shares was antecedent to the transfer of funds. The plaintiff averred that the exception was therefore meritless and ought to be dismissed with costs.

THE SUBMISSIONS

At the commencement of the oral submissions Mr Makamure for the plaintiff submitted that the exception had been filed out of time in violation of rule 119 of the Court Rules. Mr Chimuka for the defendants submitted that the delay was occasioned by the confusion emanating from the operationalization of Practice Direction 1 of 2020 (Court Operations during the 21 Day Covid-19 National Lockdown). Mr Chimuka applied for condonation of the late filing of the exception on behalf of the third and fourth defendants. Having considered the submissions and the explanation for the delay, the court condoned the defendants’ delay in filing the exception. Counsel proceeded to argue the matter on the merits.

Mr Chimuka submitted that the summons did not comply with Order 3 Rule 11 (c) of the Court rules, as it did not contain “a true and concise statement of the nature, extent and grounds of the cause of action and of the relief or remedies sought in the action”. He further submitted that the summons only contained a prayer of what the plaintiff claimed, but not the exact case that the defendants were required to respond to. Mr Chimuka further submitted that the defects that afflicted the summons could not be cured by the declaration since the rules applicable to these two sets of pleadings were different.

As regards the second ground of the exception, Mr Chimuka submitted that at law a party that sought an order of specific performance must have tendered performance or pleaded compliance with their obligations under the contract. He cited the case of Grandwell Holdings (Private) Limited v Zimbabwe Mining Development Corporation & 2 Others. Mr Chimuka further submitted that the plaintiff ought to have pleaded that he tendered the sum of US$250 000.00, or was ready and willing to pay the said amount. He did not do so. The payment was not even going to the shareholders, but to the first defendant. The transaction was one for share subscriptions in terms of section 100(6)(a) of the Companies and Other Business Entities Act, and not one for the sale of shares.

In reply, though admitting that the summons did not disclose a cause of action, Mr Makamure submitted that the defect was cured by the declaration. The summons had to be read together with the declaration. In the heads of argument, the plaintiff submitted that a reading of the summons and the declaration showed that the plaintiff was alleging a breach of contract based on an MOU consummated by the parties. The cause of action was disclosed and the relief sought was open and clear. The infirmities alluded to by the defendants were therefore groundless.

THE ANALYSIS

The defendants’ exception to the plaintiff’s claim stands on two grounds. I now turn to deal with these individually.

That the summons is defective for want of compliance with Rule 11(c) of the Court Rules

Rule 11 (c) states that:

“11. Contents of summons

Before issue every summons shall contain—

(a) ………………………;

(b) ……………………….;

(c) a true and concise statement of the nature, extent and grounds of the cause of action and of the relief or remedies sought in the action”

It is not in dispute that the summons as it stands does not reflect “a true and concise statement of the nature, extend and grounds of the cause of action”. It merely states the relief sought by the plaintiff. The issue that arises is whether that anomaly is fatal to the plaintiff’s claim and cannot be salvaged by the declaration filed concurrently with the summons. In Nuvert Trading (Private) Limited t/a Tripple Tee Footwear v Hwange Colliery CompanyMATHONSI J (as he then was) dealt with this issue as follows:

“Clearly the summons which says, “A statement of the plaintiff’s claim is set out in the declaration, a copy of which is annexed to this summons”, does not meet the requirements of r 11(c). I said earlier that the issue does not form the main subject of the present inquiry because the applicant has not sought to amend the summons to comply with r 11(c). However, the respondent mentions that defect in augmenting its argument that the summons is a nullity. I do not agree.

Ordinarily such a defect would be dealt with by way of an exception or special plea. The respondent has not excepted or filed a special plea. In any event, even were such an exception be made, if upheld, the plaintiff would be afforded an opportunity to amend the summons within a fixed period of time. It would not amount to an outright dismissal of the claim: Alder v Elliot 1998 (2) ZLR 283 (S) 292B; Auridiam Zimbabwe (Pvt) Ltd v Modus Publications(Pvt) Ltd 1993 (2) ZLR 359 (H) 373 C – D; Murozvi Chawatama Signs & Ors HH 481/15. (Underlining for emphasis)”

In the case of Sanctuary Insurance Company (Pvt) Ltd v BG Insurance (Pvt) Ltd T/A BGI Financial Services CHAREWA J explained the position as follows:

“I will go further to state that whatever deficiencies are in the summons are amply supplemented by the declaration. The plaintiff’s cause of action and the facts upon which it is based are therefore quite apparent from the summons as read with the declaration. Hence, the defendant cannot claim that he is unaware of the details of the claim, the basis thereof and the relief sought unless the court endorses a rigid and mechanical approach which defeats the cause of justice.”

In the latter case, the court had also found that the summons was defective, as it merely stated the relief sought, without relating to the precise nature, extent or legal basis for the claim. What emerges from the two authorities above is that the kind of defect that afflicts the plaintiff’s summons does not render them a nullity. In Sanyangombe vChalimba and 3 othersMATHONSI J held that:

“I must mention that a failure to include a statement of the nature, extent and grounds of the cause of action and of the relief sought on the face of the summons is an omission that is easily curable by an amendment of that summons.”

It is therefore my finding that the failure to disclose a true and concise statement of the nature, extent and grounds of the cause of action does not make the summons incurable. Such omission is curable through an amendment to the summons. At any rate, this court takes the view that the relief sought, as set out in the summons and read together with the declaration, clearly establishes the claim that the defendants are expected to answer to.

INCOMPLETE CAUSE OF ACTION

The defendants’ contention is that a party whose claim is founded on a breach by the party allegedly in default must themselves show compliance with their obligations under the contract. The plaintiff allegedly failed to tender payment for the same shares that he wanted transferred to him. The relevant portion of the plaintiff’s claim as set out in the declaration reads as follows:

“12.1	2nd – 5th Defendants were to effect transfer of 40 (forty) percent of their shares, being 800 (eight hundred) shares to the Plaintiff or his duly appointed nominee within 7 (seven) days of the signing of the Memorandum of Understanding;

12.2 	As consideration for the 40 (forty) percent equity, and after transfer of the 800 (eight hundred) shares in the 1st Defendant company, Plaintiff was to pay the sum of US$250 000 (Two Hundred and Fifty Thousand United States Dollars) towards the exploration and development of the Project.”

The two paragraphs above appear to have been extracted from the MOU between the parties. A closer reading of the two paragraphs shows that the plaintiff was expected to tender payment of the consideration after the transfer of the shares. The plaintiff was only required to comply with his own obligations after the transfer of the shares to him. All that was expected of the plaintiff was to wait for the defendants to comply with their obligations under the MOU. What triggered an approach to this court was the failure by the defendants to comply with their obligations under the MOU.

It is not within the dominion of this court to interrogate the wisdom of this arrangement that only obliged the payment of the consideration after the transfer of the shares.The factual allegations as contained in the declaration must be taken as correct.Can the defendants’ argument be sustained under the circumstances? I think not. In my view, the plaintiff set out the material allegations on which the cause of action is grounded. This a typical case in which the defendants ought to have sought further clarification, if such was needed, through a request for further particulars. The court finds no merit in the defendants’ argument that the cause of action was incomplete.

COSTS

Rule 140 (1)(b) requires a party making a complaint to any pleading to state the cause of such complaint by way of a letter to the other party at the outset. Though the requirement does not appear to be obligatory, it is intended to forewarn the other party so that the cause of the complaint may be addressed before parties approach the court. No such letter was generated by the defendants to the plaintiff. Even though the defendants have been partly successful, this is a matter which justifies the granting of an order that costs remain in the cause.

DISPOSITION

Resultantly, it is ordered as follows:

1. The exception to the summons is upheld.

2. The plaintiff shall amend his summons within ten days of the service of this order, failing which the third and fourth defendants shall be entitled to pray for the dismissal of the plaintiff’s claim.

3. The exception to the declaration is dismissed.

4. Costs shall be in the cause.

Mlotshwa & Maguwudze, legal practitioners for the plaintiff

ChimukaMafunga Commercial Attorneys, legal practitioners for the third and fourth defendants