Simon Chinganga v Tapson Madzivire and Munashe Shava

### Preamble
1
HH 791-18
HC 10298/18
SIMON CHINGANGA
versus
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SIMON CHINGANGA
versus
TAPSON MADZIVIRE
and
MUNASHE SHAVA

HIGH COURT OF ZIMBABWE
CHIRAWU-MUGOMBA J
HARARE, 21, 22 and 26 November 2018

URGENT APPLICATION

S. Hashiti, for the applicant
S Mushonga for the 1st respondent
K Madzedze for the 2nd respondent

CHIRAWU-MUGOMBA J: On 10 November 2018, I made an endorsement that this matter is not urgent. On 15 November 2018, the applicant’s legal practitioners wrote a letter through the Registrar requesting for audience on the issue of urgency. I caused the matter to be set down for hearing in my chambers on 21 November 2018. This set down torched a storm with the first respondent’s legal practitioner as will be explained later in the judgement.

In this matter the applicant seeks the following relief:-

TERMS OF FINAL ORDER

1. The resolutions purportedly made by the 1st respondent on the 3rd of November 2018 and afterwards concerning the applicant’s position in Adam Bede manufacturing (Pvt) Ltd (THE COMPANY) are invalid and hereby set aside.

2. It is declared that the 1st respondent has no casting vote in a meeting of the shareholders and cannot impose resolutions on applicant.

3. 1st respondent shall pay costs of suit on a legal practitioner client scale.


TERMS OF THE INTERIM ORDER

1. The status prevailing at Adam Bede Manufacturing (Pvt) Ltd as at Friday 2 November that Tapson Madzivire and Simon Chinganga are co-shareholders duly registered as such shall remain until the finalization of the matter.

2. If any changes were effected beyond what is contained in paragraph 1 above without the knowledge of Simon Chinganga those changes are suspended and the administration of the company shall remain as shown on the CR 14 dated the 15th of September 2017.

3. Ist respondent shall ensure the reinstatement of the applicant as a signatory to all Adam Bede Manufacturing (pvt) ltd bank accounts with CBZ with immediate effect.

4. 1st respondent shall ensure that the applicant’s email account known as schinganga@adambede.co.zw is re-activated.

SERVICE OF ORDER

The provisional order shall be served by the Sheriff/his deputy or the applicant’s legal practitioners.

As already stated, the set down elicited an unusual response in the manner which is expected of legal practitioners to raise issues. I would have expected the 1st respondent’s legal practitioner to appear at the hearing and raise any preliminary issues on behalf of his client. Instead S Mushonga addressed a letter to the Registrar of the High Court in which he raised issues some of which are as follows:-

1. Our client received the urgent application on Friday the 9th November 2018 and they have up to 23rd November 2018 to respond to the ordinary application since it was ruled, “NOT URGENT”.

2. Our worry and displeasure is that:

   a. Has her ladyship changed her mind from what is stated on Annexure AA hereto? (the letter indicating that I had endorsed the matter as not urgent)

   b. Does her ladyship have the mandate to revisit her own decision aforesaid?

   c. If so in terms of what rule of law can her ladyship revisit her earlier decision?
 d. We thought once she made the statement she becomes **functus officio**. She cannot sit in appeal against her own earlier decision.

e. May we urgently know the basis of the re-hearing of this urgent application probably there are new rules we are not aware of and will gladly accept them and a reschedule hearing of the same to allow us to respond accordingly.

f. We have directed this letter to the Judge President and the Judicial Service Person Chairperson because we believe we need their guidance in this matter.

At the hearing, the issue of whether or not I was **functus officio** therefore became the first preliminary issue.

**Whether or not a judge who endorses a matter as not urgent without hearing the parties becomes functus officio?**

At the hearing, *S Mushonga* persisted with the preliminary point that I was **functus officio**. *K Madzedze* did not take the same preliminary point. *S Hashiti* referred to the decision in *Church of the Province of Central Africa v Diocesan Trustees, Diocese of Harare*, 2010 (1) ZLR @ 346 in which a similar preliminary point was raised and he actually gave *S Mushonga* a copy of the judgement. Despite this, *S Mushonga* persisted with his stance that I was **functus officio**. To put the matter beyond doubt, I can do no better than quote what was aptly stated by *Mavangira J* in that case (as she then was) as follows:

> “I dismissed this preliminary point at the hearing for the following reasons. The endorsement that the matter is not urgent was made on a consideration of the papers without hearing any oral arguments by the parties. It was the court’s *prima facie* view of the matter as regards the issue of urgency. The parties were not heard by the court on the merits of the issue of urgency. It is my considered view that this court cannot be *functus officio* in such circumstances. Had the parties been heard orally and a determination made thereafter, such determination would be consequent upon full ventilation by the parties on the pertinent issue. In my view, the court would then become *functus officio*.”

In this matter, I had not heard any of the parties when I made the *prima facie* view that the matter was not urgent. *S Mushonga* in his submissions further inquired as to what then would happen after the *prima facie* view that the matter is not urgent? Three courses of action are open to litigants in such a scenario. Firstly, the applicants can accept this preliminary view and the matter will proceed as an ordinary application. Secondly, the applicant can request to be heard on the issue of urgency as happened in this matter. Lastly, the litigants can request to be availed reasons for the endorsement. In the *Church of the*
 Province of Central Africa, the court proceeded to hear the application and to grant an amended provisional order despite the earlier endorsement that the matter was not urgent. In Balasore Alloys Ltd v Zimbabwe Alloys Ltd and Ors, HH-228-18, CHITAPI J, stated as follows, ‘In dealing with an urgent chamber application for example, the judge may rule that it is not urgent without hearing the parties. Parties however can request for reasons for the decision and to be heard on that issue’- see also Kasinauyo v ZIFA HH-279-16. It is also critical to point out that a judge can request that parties appear before her or him and make representations on urgency – Rule 244 and that the judge can require that the applicant or any deponent to an affidavit appear in chambers or in court to furnish further information as may be required - Rule 246(1) (a) or may require either party’s legal practitioner to appear to present further argument as the judge may require – Rule 246(1) (b).

To that end, the preliminary point has no merit and is dismissed.

MATTER NOT URGENT

In a judicial world full of tests and standards, one that has stood the ‘test’ of time is the Kuvarega v Registrar General & Anor\(^1\) decision on what constitutes urgency.

In Denenga & Anor v Ecobank Zimbabwe (Pvt) Ltd 7 Ors HH 177-14 MAWADZE J, based upon decided cases summarised the urgency requirements as follows:

(a) It cannot wait the observance of the normal procedural and time frames set by the rules of the court in ordinary applications as to do so would render negatively the relief sought;
(b) There is no other remedy;
(c) The applicant treated the matter as urgent by acting timeously and if there is a delay to give good or sufficient reason for such delay; and
(d) The relief sought should be of an interim nature and proper at law.

In Nixris Investments (Pvt) Ltd v Chinhoyi University of Technology and Anor,\(^2\) CHIGUMBA J stated as follows on urgency:

(a) The matter cannot wait at the time when the need to act arises.
(b) Irreparable prejudice will result, if the matter is not dealt with straight away without delay.
(c) There is prima facie evidence that the applicant treated the matter as urgent.

\(^1\) 1998(1) ZLR 188

\(^2\) HH-18-16


(d) Applicant gives a sensible, rational and realistic explanation for any delay in taking action.

(e) There is no satisfactory alternative remedy.

In support of the contention that the matter is urgent, S Hashiti submitted as follows: the second respondent in the opposing affidavit does not take the point that the matter is not urgent. A commercial dispute is urgent because commercial interests are difficult to reverse and decisions taken are crucial. He averred that the actions of the respondents amount to spoliation since applicant was divested of his shares illegally and spoliation by nature is urgent. The acts complained of occurred on 3 November 2018 and on 9 November 2018, the applicant had already taken action. The applicant was evicted from a meeting that he was supposed to be in and the court needs to intervene to restore order and applicant’s rights. The respondents do not deny that they acted unlawfully in evicting the applicant. The balance of convenience favours the applicant who has been divested of control and ownership of his shares. He has no other remedy as any decisions made without him regarding the company that may be to his detriment.

In response, S Mushonga stated as follows- the allegations that the applicant was manhandled are denied, the meeting of the 3rd of November 2018 was called by the applicant, at the meeting members present added other agenda items, issues were discussed and resolutions made. Further that the company was acquired by the first respondent and someone else and that the applicant was a mere invitee to the company. The resolutions were passed in the presence of the applicant. The articles of association allow for the removal of a director. The applicant if he feels aggrieved has recourse, for instance he can claim damages. The matter was therefore not urgent.

K Madzedze despite the first respondent not having taken issue with urgency of the matter nonetheless submitted that the matter is not urgent. The issue at stake relates to decisions taken at a duly constituted Extra-Ordinary General meeting and decisions taken are valid and cannot be set aside. Such disputes do no warrant the jumping of the queue if someone is not happy with them. Contrary to the assertions by S Hashiti, the matter does not constitute an application for a spoliation. Paragraph one of the interim order seeks restoration of the status quo at the company and paragraph two seeks that if any changes have been effected these should be reversed. This does not amount to a spoliation order. In essence, what the applicant seeks is a declaration of his rights and such application does not warrant urgency. The applicant did not contribute anything to the company and therefore he cannot be heard to cry foul.

If regard is had to the applicant’s submissions, there is no denying that he acted within time from the date that the conduct complained of arose. From the affidavits filed of record by the first and second respondents, it is clear that there is a dispute between the parties. Both the first and second respondents strongly averred that the applicant did not contribute any money to Adam Bede manufacturing (Pvt) Ltd but failed to explain how he ended up with shares in the company. Annexure AA1 shows that the resolutions purportedly resulted in the applicant being removed from office as a director, shareholder and company secretary. The first respondent admits that some of the resolutions were made in the applicant’s absence. This actually boosts the applicant’s contention that the court has to act urgently to protect his rights given the fact that whatever decisions that are made in his absence or actions that are taken as alluded to by S Hashiti, if the court finds in his favour, such decisions will affect him – See section 318 of the Companies Act [Chapter 24:03]. Accordingly, the balance of convenience favours the applicant.

I therefore find that the matter is urgent.

Merits of the matter

The background to this matter is as follows: - According to the applicant, a company (Adam Bede Manufacturing (Pvt) Ltd was incorporated on 4 May 2017. In support of his contention, applicant attached the certificate of incorporation, the CR 14 being a list of directors, articles and memorandum of association. The CR14 shows that the applicant is both a director and the company secretary. The applicant averred that he own (1) share which he has not transferred to anyone in terms of article 1 of the articles of association. At a certain point, a shareholding agreement was drafted to include the second respondent as a shareholder but this never materialised. The applicant called for an extra ordinary meeting which was held on 3 November 2018. The meeting degenerated into chaos and at some point, the applicant left the meeting. Certain resolutions were made at the meeting which were to the effect that the applicant was no longer a shareholder, director and company secretary. Furthermore he discovered that his email had been blocked and that he had been removed as a signatory to the company’s bank accounts.


In response, the first respondent on the merits disputed the applicant’s version of events. He averred that resolutions were made as per annexure AA1 in tandem with Articles of Association item 59 (g). The applicant cannot be heard to cry foul when some of the resolutions were made in his presence and he is the one who called for the meeting. The applicant was not involved in the setting of the company which was actually started through a memorandum of agreement for the sale of a business between Hunting Furniture (Pvt) Ltd and Extreme Security Group (Pvt) Ltd represented by the first respondent. The applicant cannot impose himself as he was a mere ‘invitee’ to the company.

The second respondent averred that the applicant was not present when the company was formed. At the time that the company was formed, the second respondent was involved in a number of companies as a board member and he could therefore not sit on the board since he required clearance. The applicant was therefore invited as a proxy to take up one nominal share for purposes of incorporation until the second respondent had been cleared. The applicant never contributed financially to the setting up of the company but he was a mere proxy. The position on the CR 14 has changed and the second applicant has since been cleared to sit on the board of the company but the applicant refused to vacate his seat. The shareholding of the company was amicably restructured so that applicant holds 20% shares, first respondent 40% shares and second respondent 30% shares. In support of his contention, second respondent attached the share allotment and change in directorship registered with the registrar of companies. He averred that he was a signatory on the CBZ accounts from day one since he is the one who caused them to be opened. The applicant had improperly planned to have the second respondent removed from the company at the extra –ordinary general meeting.

Before going into the merits, S Mushonga took another preliminary point that both the interim and final order sought pertain to the company, which at law is a legal persona. However, such company is not before the court. The non-citation of the company by the applicant is deliberate. Therefore any order given against the company will be unenforceable. The Registrar of Companies is also not cited and yet there applicant seeks an order for certain acts to be done by the Registrar. In response, S Hashiti stated that joinder or non-joinder of a party is not fatal to an application.

Rule 87 provides:

“No cause or matter shall be defeated by reason of the misjoinder or non-joinder of any party and the court may in any cause or matter determine the issues or questions in dispute so far as they affect the rights and interests of the persons who are parties to the cause or the matter”. (See *Rollex (Pvt) Ltd v Delta Beverages (Pvt) Ltd* HH 66-15.”)

Furthermore, the court at any stage of the proceedings, either on its own motion or upon application can join a party to proceedings (Rule 87 (2) (b). In my view, the nature of this dispute is about conduct relating to the ejectment of applicant from proceedings at an extra ordinary general meeting; the removal of applicant’s signature from bank accounts, the removal of applicant as director, shareholder and company secretary and the blocking of his email account. It is pertinent to note that the second respondent does not deny that the applicant was not present throughout the 3rd November 2018 meeting where certain resolutions were made and that the applicant’s signature was removed from bank accounts, that resolutions were made purportedly removing the applicant as director, taking away his shareholding and removing him as company secretary. I did not read the applicant’s affidavit as attributing these acts to the company and in any event, these acts go to the root when the dispute if finally resolved as to who are the legitimate shareholders and directors of the company.

I therefore dismiss this preliminary point.

Rule 246(2) makes it clear that a provisional order as prayed for **or as varied (my emphasis)** is granted if a judge is satisfied that a **prima facie** case has been established. In the *Balasore Alloys Ltd* matter Chitapi J stated as follows:

“A *prima facie* case in my view can be holistically described as one that does not merit absolution from the instance. ……………..In determining whether a *prima facie* case is established the focus should not be to determine whether the applicant has provided evidence to establish what the applicant must finally establish. The approach is to determine whether the applicant has placed evidence before the judge from which a court properly directed and applying its mind to the evidence could or might find for the applicant. The standard of proof required to establish a *prima facie* case is much lower than proof on a balance of probabilities. In other words, the judge only needs to be satisfied that there is a case made by the applicant which merits referring to the court for further and fuller argument so that a final determination is made by the court which still hears full argument. It is seldom though that urgency of a matter can be divorced from a finding on the existence of a *prima facie* case.”

In considering whether or not the applicant has established a *prima facie* case, five documents that have been submitted by the parties are critical. Annexure B of the applicant’s affidavit is a list of directors of the company, annexure F is a notice to members of an extraordinary general meeting to be held on 3 November 2018. Agenda items are clearly spelt out including the following:


2.1 Mr T Madzivire (THE 1\textsuperscript{ST} RESPONDENT) shall remain Director. He was appointed upon inception of the company and the terms has not yet expired.

2.2 Mr S Chinganga (THE APPLICANT) shall remain Director. He was appointed upon inception of the company and the terms have not yet expired.

Item 8 is as follows;

8. To give Shava (THE 2\textsuperscript{ND} RESPONDENT) a notice of termination of his engagement with Adam Bede Manufacturing (Pvt) Ltd.

Annexure AA1 of the 1\textsuperscript{st} respondent’s affidavit are purported resolutions made on the 3\textsuperscript{rd} of November 2018. I use the word ‘purported’ because the applicant has his own set of purported minutes. From annexure AA1, the following are critical:

2.3 It was noted that Mr Simon Chinganga was invited by Mr Tapson Madzivire to the company without any financial contribution.

3.1 It was resolved that Mr Munashe Shava by virtue of his contribution financially and materially be appointed as an Additional Director and Shareholder of the company.

3.2 It was resolved that Mr Simon Chinganga be removed from the directorship of the company with immediate effect and from being company secretary.

7.1 It was resolved that the remaining Directors namely Mr Tapson Madzivire and Mr Munashe Shava are the signatories to the bank accounts of the company.

7.2 It was resolved that since his removal Mr Simon Chinganga stops to be a signatory of the bank accounts forthwith.

8. With immediate effect Mr Tapson Madzivire to be both the Company Chairman and Acting Company Secretary and Chief executive Officer of the Company.

The second respondent attached to his affidavit annexure B1 being a copy of return of allotments date stamped the 25\textsuperscript{th} of October 2018 showing the first respondent as having 39 shares, the applicant 19 shares and the second respondent 30 shares. B2 is the CR 14 date stamped the 25\textsuperscript{th} of October 2018. It shows no change of status of the applicant and the first respondent. It shows the second respondent having been appointed on 2 October 2018.

Annexure B confirms that the applicant has been a director of the company since May 2017. Annexure AA1 confirms the applicant’s contention that he has been removed from being a director, his shareholding has been taken away and he is no longer a signatory to the accounts. Despite all the parties agreeing that the applicant is the one who called the 3rd of November 2018 extra-ordinary general meeting, there is no explanation from the first respondent on why some of the ‘resolutions’ were not matters envisaged as agenda items on annexure F. There is also no explanation as to why it was resolved as per annexure AA1 to appoint the second respondent as an additional director and shareholder on 3 November 2018 and yet he was allocated shares and appointed as director on 2 October 2018. There is no explanation as to whether or not the agenda items as set out by the applicant which included the removal of the second respondent from the company were ever debated. It is curious as to why the second respondent would be unable to sit on the company board as the reasons were not disclosed or why a proxy was made a director, shareholder and company secretary.

In casu as has already been stated, the fact that the applicant according to the allotment has shares in not denied; the fact that these shares were purportedly taken away from him at a meeting which he had called for but which he did not attend in full is not denied. I did not see the relevance of the continuous assertion advanced by S Mushonga for first respondent and K Madzedze for second respondent that the applicant had not contributed financially to the setting up of the company as the issue at stake is not about financial contribution but shares being taken away. It is curious to note that despite this assertion, the applicant still remained director and shareholder as per annexures B1 and B2. S Mushonga and K Madzedze also pointed out to what they viewed as applicant’s ‘lies’ in his founding affidavit. In my view this merely points to the fact that there are disputes in the company, different views and perspectives but what is important is to consider whether or not the applicant has set out a prima facie case which in my view he has.

Once a prima facie case has been set, the provisional order sought should be granted. I note however, that the interim relief sought by the applicant if granted will have the effect of a final order which the courts frown upon – see the Kuvarega case. The court is however not precluded from varying the interim order sought as long as it does not cause prejudice to the other litigants – see Chitiyo NO vs. Chiguba and others, HH-292-17.

DISPOSITION

The application for a provisional order succeeds as follows:

TERMS OF FINAL ORDER


That you show cause to this Honourable Court why a final order should not be made in the following terms:-

1. The resolutions purportedly made by the 1st respondent on the 3rd of November 2018 and afterwards concerning the applicant’s position in Adam Bede manufacturing (pvt) Ltd are invalid and hereby set aside.

2. It is declared that the 1st respondent has no casting vote in a meeting of the shareholders and cannot impose resolutions on applicant.

3. 1st respondent shall pay costs of suit on a legal practitioner client scale.

**TERMS OF THE INTERIM ORDER**

Pending determination of this matter, the applicant is granted the following relief:

1. The resolutions passed on the 3rd of November 2018 which appear on annexure AA1 of the 1st respondent’s opposing affidavit and any changes effected thereafter to the shareholding or directorship of Adam Bede Manufacturing (pvt) Ltd be and are hereby suspended.

**SERVICE OF ORDER**

2. The provisional order shall be served by the Sheriff/his deputy or the applicant’s legal practitioners.

*Munangati and Associates, Applicant’s Legal Practitioners*

*Mushonga, Mutsvaïro and Associates, 1st respondent’s Legal Practitioners*

*Mawere Sibanda, 2nd respondent’s Legal Practitioners*
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