SOUTHWEST GOLD (PVT) LTD
SINDISO SHEPHERD MAZIBISA
IN THE HIGH COURT OF ZIMBABWE
BULAWAYO 20 JULY & 27 DECEMBER 2014 AND 4 JUNE 2015
J. Sibanda for the applicant
Advocate L. Nkomo for the respondents
TAKUVA J: This is an application for summary judgment. The applicant is a duly registered company in terms of the laws of Zimbabwe. The respondents trade together in partnership as Cheda and Partners Legal Practitioners. The respondents through 1st respondent were tasked by the applicant and one Gugulethu Henrieta Dube to draw up an agreement of sale of certain company shares that were being sold by Gugulethu H. Dube, a client of the respondents. An agreement was then crafted on the 8th day of February 2013. On 19 March 2013, applicant deposited in terms of the agreement $335 536,55 to the Trust Account of the three respondents. The agreement between applicant and one Gugulethu Dube was cancelled after the latter failed to deliver the shares. The applicant then demanded a refund of the amount it had paid to the respondents which they failed to pay.
However, respondents through 1st respondent thereafter made several written undertakings to refund the amount. Notwithstanding these promises respondents failed to do so prompting applicant to institute proceedings under case number HC 711/14 claiming payment of the part deposit in the sum of $335 536,55 paid into the trust account of respondents pursuant to the written agreement of sale. Respondents entered appearance to defend and applicant applied for summary judgment which the respondents oppose.
The application is premised on Order 10 Rule 64 which states:
“(1) Where the defendant has entered appearance to a summons, the plaintiff may, at any time before a pre-trial conference is held, make a court application in terms of this rule for the court to enter summary judgment for what is claimed in the summons and costs.
(2) A court application in terms of sub-rule (1) shall be supported by an affidavit made by the plaintiff or by any other person who can swear positively to the facts set out therein, verifying the cause of action and the amount claimed, if any, and stating that in his belief there is no bona fide defence to the action.
(3) A deponent may attach to this affidavit filed in terms of sub-rule (2) documents which verify the plaintiff’s cause of action or his belief that there is no bona fide defence to the action.
In Scropton Trading (Pvt) Ltd vs Khumalo 1988 (2) ZLR (SC) at 313 it was stated that:
“A plaintiff seeking summary judgment must bring himself squarely within the ambit of R64 (2) of the High Court Rules, which requires that the cause of action must be verified. It must be substantiated by proof and the supporting affidavit must contain evidence which establishes the facts upon which reliance is placed for the contention that the claim is impeachable.”
In Global Insurance Co. Ltd v Topnotch Computers (Pvt) Ltd HB-62-07, NDOU J stated:
“The starting point is considering whether the applicant’s claim is unassaible. The special procedure of summary judgment was designed so that a mala fide defendant might summarily be denied, except under onerous conditions, the benefit of the fundamental rule of audi alterm parterm. So extraordinary an invasion of basic tenet of natural justice will not lightly be resorted to and it is well established that this is only when all proposed defences to the plaintiff’s claim are clearly unarguable, both in fact and in law, that this drastic relief will be afforded to plaintiff – Rex v Rhodian Investments Trust (Pvt) Ltd 1957 (4) SA 631 (SR); Shingadia v Shingadia 1966 (3) SA 24 (R) (my emphasis)
In van Hoogstraten v James & Ors 2010 (1) ZLR 608 (H) it was held per MAKONI J that:
“The summary judgment procedure is a drastic remedy in which a plaintiff, whose belief is that the defence is not bona fide and entered solely for dilatory purposes, should be granted immediate relief without the expense and delay of a trial. It has far reaching consequences as it effectively denies the defendant the benefits of the fundamental principle of the audi alteram partem rule. It can only be granted to the plaintiff when all proposed defences to the claim are clearly unarguable, both in fact and in law. The defendant does not have to establish his defence on the probabilities. All he needs to do is to allege facts which disclose a defence. These facts, if pleaded and accepted at the trial, must be sufficient to establish a defence.” (my emphasis)
Finally, in Ashanti Goldfields Zimbabwe Ltd v Matimura & Ors 2011 (1) ZLR 270 (H) at p 271B – E it was held that:
“To show that he has a prima facie defence, a defendant only needs to allege facts which, if he can succeed in establishing at the trial, would entitle him to succeed in his defence at the trial. It is not necessary for the defendant to make out a case for the probable success of his defence at this stage. The onus on him at this stage is much lighter than at the trial stage. What is required, therefore, of a defendant is that he should place before the court such facts as would show a prima facie defence to the application for summary judgment. The facts must be sufficiently detailed to the extent that the court hearing the application can be satisfied that the defence being proffered is a plausible one … In addition, the averments in the affidavit must themselves lead to a plausible defence or be such that a court hearing the application will conclude that an injustice is likely to occur if summary judgment were to be granted in favour of the plaintiff. In effect, the defendant has to allege facts which convince the court that there are triable issues between the parties and that an order for summary judgment would result in an injustice to one if not both parties.” (my emphasis)
First respondent’s opposition is based on the following purported defence:
“Gugulethu Henrieta Dube has made adequate plans and arrangements assisted by myself to clear off the purchase price outside the four corners of the agreement of sale”. This is not a defence at all, let alone a bona fide one. I say so for the simple reason that 1st respondent surprisingly does not say anything about annexures “B”, “C”, “D”, “E” and “F” which are acknowledgements of debt that he authored on behalf of the respondents. Clearly, there is no triable issue here and not surprisingly, 1st respondent has not said what issue it is he wants tried. Apart from waffling in his opposing affidavit, 1st respondent has totally failed to allege facts which disclose a plausible defence.
As regards 2nd and 3rd respondents, their arguments can be synthesized as follows:
- The resolution appointing Titus Ncube is defective
- Titus Ncube has not averred that he can smear positively to the facts
- They paid the money to Ms Dube who was the owner of the money.
The first two grounds are intertwined and I will deal with them simultaneously. The authority of Titus Ncube to represent the applicant in this application is clear from Annexure A which is a company resolution passed by the applicant. Company resolutions do not necessarily follow a specific format and respondents have not set out facts to show that the resolution is a sham. Further, on the facts it cannot be doubted that Titus Ncube is the face of the applicant. See for example Annexures “C”, ”D”, “E” and “F”, where respondents directed all their communication to Titus Ncube. In Annexure F, respondents specifically acknowledged that Titus Ncube represented the “Directors of Southwest Gold (Pvt) Ltd”.
Also, the fact that the supporting affidavit does not contain the words “verify the cause of action” is not fatal to the application in that it is clear from the Annexures referred to supra that from inception, it is Titus Ncube who dealt with the matter and is without doubt knowledgeable about the facts. In my view therefore, this defence is fanciful.
As regards the 3rd issue, 2nd and 3rd respondents being legal practitioners allege quite unashamedly that:
“the payment of the purchase price was made directly to the seller through her agents (i.e. themselves). There is therefore no way the applicant alleges that the purchase price paid was trust money to be held in trust by the agents. The purchase price was money belonging to the seller and the money was legally released to the seller who was the owner of the funds.”
Such a defence from registered legal practitioners is mala fide and shocking in that they pretend that the seller had no duty to deliver. Not only that, they are the ones who drafted the agreement of sale wherein the seller’s “undertakings” and “warranties” are listed. The following are some of the seller’s warranties under the agreement.
“The seller undertakes that against payments by the purchaser of the purchase price in full, it will on effective date deliver to the purchaser the following documents;
a) The share certificates relating to the shares, together with appropriate share transfer forms relating to the transfer, all duly completed and signed by the seller.
b)A resolution passed by the directors of Chakata Resources (Zimbabwe) (Pvt) Ltd authorizing the transfer of the shares.
e)The seller shall provide a complete and amended CR 14 and all other company statutory documentation including but not limited to Certificate of Incorporation, Memorandum of Association and Articles of Association, the Tax Clearance Certificate, CR 2, Share Register, Share Certificates.” (my emphasis)
Some of the seller’s warranties are listed as:
“(d) That the Company will have complied up to the effective date with all provisions and requirements of the Companies Act (Chapter 24:03) and other fiscal laws as amended, and all licensing statutes bye laws, rules and regulations.
(k) The seller has obtained the necessary approvals and resolutions from fellow share holders and or partners to consummate and execute this transaction as contemplated in this agreement.” (my emphasis)
A share is an “item of incorporeal movable property owned by the shareholder to whom it is issued or transferred and entitling him to such rights and subjecting him to such duties as may be created by the memorandum and articles, the Act and the common law”. R. H. Christie Business Law In Zimbabwe 2nd Edition Juta & Co 1998 at page 393.
In terms of the Companies’ Act, the method of transferring shares is governed by the articles and must involve the delivery of an instrument of transfer to the transferee. According to the law of sale, the seller has a duty to deliver the property. In Rhodesian Wine Industries (Pvt) Ltd v A & J Construction 1964 RLR 456, it was held that the reciprocal duty to pay against delivery comes into operation when the seller tenders delivery by alleging his preparedness to perform.
Respondents were aware of all these obligations but deliberately and craftily chose to rely on some obscure clause they inserted in the agreement relating to the payment of the purchase price. Respondents simply paid themselves as partners “agents commission” before the shares were transferred to the buyer. Further if the money was paid to the seller because respondents believed that it was Ms Dube’s money, why then, did respondents promise on numerous occasions to pay it back to applicant? It is apparent that respondents were aware that as legal practitioners registered with the Law Society of Zimbabwe were obliged to hold the money in trust pending delivery of the shares. Until delivery was effected, the money remained the buyer’s money. Such funds can only become the “seller’s money” upon transfer of the shares. See Simbarashe Manhandu v Stanley Mtetwa & Ziweni & Co HH-25-03.
For these reasons, the respondents have no plausible defences on the merits and the applicant has a clear and unanswerable claim.
As regards costs, I agree with Mr Sibanda that “the court can, and must, take judicial notice of the fact that the three respondents are senior legal practitioners of this court. Instead of making arrangements to settle the money that they had no right to misuse anyway, they are putting the applicant further out of pocket when they do not have any defence at all and have not raised one in their papers.”
Accordingly, it is hereby ordered that:
- An order for summary judgment is granted in favour of the applicant directing respondents to pay to the applicant, jointly and severally, the one paying to absolve the others, the sum of US$335 536,55.
- The respondents pay the costs of this application on the attorney – client scale.
Messrs Job Sibanda & Associates, applicant’s legal practitioners
Cheda & Partners, respondents’ legal practitioners