Mahomed Essof Waqf Trust v Winchmore Investments (Private) Limited

### Preamble
1
HH 251-2012
HC 8743/11
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MAHOMED ESSOF WAQF TRUST

versus

WINCHMORE INVESTMENTS (PRIVATE)

LIMITED

HIGH COURT OF ZIMBABWE

KUDYA J

HARARE, 13 June 2012

Opposed Application

Ms D Ndawana, for the applicant

DM Foroma, for the respondent

KUDYA J: This is an application contemplated by s 350 of the Companies Act    [Cap 24:03] for security of costs in the sum of US$20 000-00 filed on 7 September 2011. The applicant also seeks a stay of the main matter until such costs have been paid and costs of the present application. It arises from a letter written by the respondent’s legal practitioners on 9 May 2011 confirming that the respondent was a dormant company with no assets save for the property in dispute.

Section 350 reads:

“350 Security for costs

Where a company or foreign company is plaintiff or applicant in any legal proceedings, the court may at any stage, on sufficient proof that there is reason to believe that the company or foreign company or the liquidator or judicial manager thereof will be unable to pay the costs of the defendant or respondent if successful in his defence, require sufficient security to be given for those costs and may stay all proceedings till the security is given.”

The application arises from an action in HC 8733/10 filed out of this court on 1 December 2010 by the respondent as plaintiff against the applicant as defendant. The applicant entered appearance on 8 December 2010; requested further particulars on 20 December 2010 which were supplied on 20 January 2011. It filed its plea on 22 July 2011. On 5 August 2011, the respondent requested further particulars to the plea. These particulars are not in the record of the main matter.

The respondent opposed the application and offered to pay security for costs in the sum of US$8 000-00. In its answering affidavit the applicant averred that the estimate of the respondent was based on flawed reasoning.

I am satisfied that the respondent concedes that it has an obligation to provide security for costs. It has not demonstrated any ability to pay the applicant’s costs sought on the scale of legal practitioner and client were it to lose in the main matter. In my view, it seems to me that the respondent has an uphill battle to prove its entitlement in the main matter. The transfer of the property consequent on execution of a sale agreement took place in 1980. The resolution of 16 May 1991 authorised transfer to the respondent on payment of            ZW$120 000-00 and confirmation of certain listed individuals as directors and shareholders. That resolution varied the initial agreement that purportedly gave Moosa Essof Hassan the option to repurchase the property by 30 September 1980 for ZW$12 000-00. It seems to me that the intention of the parties as demonstrated in the initial agreement and resolution of 1991  was to retransfer the property to the respondent on payment of value equivalent to ZW$12 000-00 at the time the sale or loan agreement was executed. As framed in the summons, the claim by the respondent for transfer on payment of ZW$12 000-00 will, in my considered estimation, be dismissed with the contempt it deserves. The action is doomed to fail. The respondent is not driven by the spirit of the agreement executed in 1980 and the resolution passed in 1991. If the respondent were solvent, it would well be advised to negotiate with the applicant in good faith to repurchase for value the properties at their prevailing market values. There is clear justification for the dismissal of the respondent’s claim with costs on the scale of legal practitioner and client as requested in the applicant’s plea.

In its heads, the applicant has justified its estimate on the costs so far incurred and those to be incurred in calling two of its trustees to testify who are now resident in South Africa. The bulk of the estimated cost are for senior counsel that were set at US$3 000-00 a day. The estimate for senior counsel was not disputed by the respondent in its opposing affidavit. Out of an abundance of caution, I requested the applicant’s counsel to breakdown the figure of US$3 000-00 per day for the estimated duration of trial of five days. The applicant intends to utilise senior counsel based in South Africa. The airfares were estimated at US$1 500-00 return and the cost of hotel accommodation for six days was estimated at US$ 900-00 while counsel’s daily fees were estimated at US$1 400-00. The applicant thus established the estimated cost of senior counsel of US$3 000-00 a day. The respondent conceded that the cost of the two non-resident trustees will amount to US$3 000-00. The erstwhile legal practitioners of record estimated their own costs at US$7 000-00.

I am satisfied that the applicant has established that it is likely to incur costs in the region of US$20 000-00. In the light of what appears to be a weak claim against it, I would grant the applicant’s prayer for security of costs in terms of the draft order.

Accordingly, it is ordered that:

The plaintiff in case No HC 8733/10 lodge with the Registrar of this Honourable Court security for costs of the defendant in the sum of US$10 000-00.

The proceedings in case No HC 8733/10 are stayed until such time as such security for costs has been lodged.

The respondent shall pay the costs of this application.

Gill Godlonton & Gerrans, applicant’s legal practitioners

Sawyer & Mkushi, respondent’s legal practitioners