Lunga N.O. & Anor v Gumo & Ors (HC 6388 of 2014; HC 8415 of 2015; HC 8496 of 2014; Ref HC 8447 of 2015) [2015] ZWHHC 743 (23 September 2015)

HH 743-15 HC 8415/15 Ref Cases HC 8447/15; HC 8496/14 & HC 6388/14 BARBRA LUNGA N. O. (In her capacity as Provisional Liquidator of Zexcom Foundation Investments Fund Limited) and BARBRA LUNGA versus JONAH GUMO and SHELTER MUCHECHESI MPOFU and THOMAS TONGAI SAMUNDA and MASTER OF THE HIGH COURT and DEPUTY MASTER, BULAWAYO HIGH COURT OF ZIMBABWE MAFUSIRE J HARARE, 14 & 18 September 2015 Urgent Chamber Application Prof. W. Ncube, for the applicant H. Chitima, for first, second & third respondents No appearance for fourth and fifth respondents MAFUSIRE J: This was an urgent chamber application. It was for an interdict to restrain the respondents from giving effect to, or implementing in any way, a judgment obtained in default in HC 6388/14 pending the determination of an application for rescission of that judgment that the applicant had already filed. From the various records before me, I have gathered this. Zexcom Foundation Investments Fund Limited (“Zexcom” or “the company”) was an economic empowerment vehicle for veterans of Zimbabwe’s war of liberation. The company was established in 1998 when the former fighters pooled their resources together. There was a dispute on the actual number of shareholders. The second applicant (hereafter referred to as “Barbra Lunga”) put HH 743-15 HC 8415/15 Ref Cases HC 8447/15; HC 8496/14 & HC 6388/14 them at five thousand. However, respondents 1, 2 and 3, themselves shareholders, disputed that figure and put it at seven thousand. But this is of no immediate concern or consequence. Virtually ever since its formation the company has never known peace. Judging by the current state of affairs, it is unlikely to ever know any peace. In this judgment, I can only give just but a snippet of the innumerable problems that have dogged it. By March 2001 the company was placed under provisional judicial management. Barbra Lunga was appointed the provisional judicial manager jointly with one other person. That was the first court case. There were just too many of them afterwards. I lost count. The ex-combatants have been fighting, both amongst themselves and against the company administrators, including the fourth and fifth respondents. They have fought in this court at Bulawayo and at Harare. They have fought in the magistrate’s court. Reports and complaints have been lodged with the police and the office of the fourth respondent (hereafter referred to as “the Master”). There have also been reports and complaints to the Attorney-General’s Office and the Estate Agents’ Council which Barbra Lunga is a member of. Above all one judge of this court stationed at Bulawayo had to recuse himself in some of the matters. There have been numerous complaints against judicial officers. In the case before me there are allegations, and counter-allegations, of serious collusion by one faction with the fifth respondent herein (hereafter referred to as “the Deputy Master”). All the factions claim to act, or to want to act, in the best interests of the company. They accuse each other of unrestrained looting of company assets. The parties are still fighting. Realistically, I see no end in sight. The background to the case before me was this. In July 2014 respondents 1, 2 and 3 (hereafter referred to as “the respondents”) filed with this court sitting at Harare, two applications, almost simultaneously. The one was an ordinary court application. The other was an urgent chamber application. The urgent chamber application was filed a day later. Both applications sought effectively the same relief. The substantive relief sought was the removal of Barbra Lunga from her position as provisional liquidator for Zexcom. Ancillary relief included the placement of all company assets into the custody and control of the Master pending the appointment of a new provisional liquidator, and an interdict against Barbra Lunga to bar her from making any further collection of rentals due to the company. HH 743-15 HC 8415/15 Ref Cases HC 8447/15; HC 8496/14 & HC 6388/14 Barbra Lunga had been appointed provisional liquidator by the Deputy Master on 21 July 2014. This had followed an order of this court, sitting at Bulawayo, by the HONOURABLE MAKONESE J on 23 January 2013, which directed such appointment. But the appointment had not been without a fight. Virtually every move concerning the company had to be fought for. What happened was that after the placement of the company under judicial management and the appointment of Barbra Lunga and one other person as joint judicial managers, the administration of the company under judicial management was subsequently entrusted, apparently with the consent of the shareholders, or some of them, and the Master, to some Trust bearing the company’s name, namely the Zexcom Development Trust. This development had been endorsed by this court, sitting at Bulawayo, on 6 October 2005. However, just two years later, that arrangement was set aside by an order of this court. The trust and its trustees were barred from exercising any form of control over the company. The company was given leave to administer its own affairs through directors to be appointed by the shareholders. On 4 December 2009 the company was provisionally wound up. One Victor Muzenda (“Muzenda”) was appointed the provisional liquidator. But he was removed on 23 January 2013, following an application by a faction fronted by one Elphas Kahwa (“Kahwa”). Barbra Lunga would be appointed in his place. But despite this court order on 23 January 2013, she was only formally appointed on 21 July 2014 as aforesaid. In between, the legal battles had raged on. Muzenda did not take his removal lying down. He appealed to the Supreme Court, thereby rendering his removal automatically suspended by operation of the law. Kahwa countered with an application for execution pending appeal. He was successful. That is why by the time of the two applications referred to above, some nine or so days after her formal appointment, Barbra Lunga was still the authentic provisional liquidator for the company. Barbra Lunga opposed the respondents’ urgent chamber application on both technical grounds as well as on the merits. On the technical grounds, she said the matter was not urgent. She also said the application was fatally defective in that, among other things, she had been cited N. O. (nomine officio), i.e. in her officially capacity, and that this meant that in effect it was Zexcom itself that had been cited and that therefore she herself, as a person, had completely been left out of those proceedings, yet the order sought affected her. HH 743-15 HC 8415/15 Ref Cases HC 8447/15; HC 8496/14 & HC 6388/14 On the merits, Barbra Lunga accused the respondents of forum shopping. She alleged that matters concerning Zexcom had consistently been handled by this court sitting at Bulawayo and that seeing that they were faring badly at Bulawayo, the respondents had suddenly switched the forum to try their luck at Harare. She argued that the application was the same matter that MAKONESE J had disposed of and that therefore it was improper for the applicants to bring it to Harare again. The urgent chamber application was placed before HUNGWE J. He declined to hear it for want of urgency. It appears that after this development in Harare the factions resumed their incessant battles at Bulawayo, with no less than five other applications being brought there. Nothing seemed to have happened further in Harare, until more than a year later. Both the chamber application and the ordinary court application had been served on Barbra Lunga at, or about, the same time. The court application was served on 4 August 2014. It gave Barbra Lunga the mandatory ten days within which to file any opposing papers. Barbra Lunga did not. Therefore, she was automatically barred. But not until 13 August 2015, i.e. more than a year later, did the respondents set the matter down in motion court for a default judgment. The default judgment was granted by the HONOURABLE MAWADZE J sitting at Harare on 19 August 2015. In terms of it Barbra Lunga was removed from office as provisional liquidator for Zexcom. Custody and control of all the assets for the company were entrusted to the Master until the appointment of a new liquidator. It was the default judgment by MAWADZE J that Barbra Lunga applied to have set aside. This was through an ordinary court application for rescission of judgment which was filed at Harare. It was pending the determination of that application that she now wanted to stay the effect of the default judgment through the urgent chamber application. The urgent chamber application was placed before me. I heard it on 14 September 2015 and reserved judgement. This now is my judgment. The respondents took two points in limine. The one was that Barbra Lunga was non- suited. It was argued that by the order of MAWADZE J she stood divested of her position as provisional liquidator. Therefore, she had no other known connection to, or with, the company. What she ought to have done, the argument continued, was to assemble persons with known interests in the company who would front for her. Respondents were HH 743-15 HC 8415/15 Ref Cases HC 8447/15; HC 8496/14 & HC 6388/14 shareholders in the company. They had a legitimate interest in, and direct connection with, the company. So she could not compete with, or against them, the argument concluded. The argument was not presented exactly like that. But that is how I understood it. It was a strange argument. I dismissed it. It was Barbra Lunga whose appointment had been revoked. She was saying the revocation had been done in her absence, never mind the reasons thereof. She wanted her appointment restored. She had filed an application for the restoration separately. That was in the form of the application for rescission of the default judgment. Meanwhile, pending the determination of her application for rescission, she did not want the respondents to enjoy the fruits of the default order. Thus, given those set of circumstances, I failed to appreciate how Barbra Lunga could be said to be non-suited. The respondents’ second point in limine was that the matter was not urgent. It was argued that the urgency was self-created. It was said to be self-created because she had refrained from filing any papers to the court application in HC 6388/14 and that she was only now springing into action because the relief had been granted. I also dismissed the second point in limine. The reasons are intrinsically linked to the merits. So I proceed to deal with the merits. On the merits, Barbra Lunga accused the respondents of base conduct. Although the officially recorded reason for the dismissal of the urgent chamber application in HC 6496/14 was lack of urgency, Barbra Lunga argued that his Lordship, the HONOURABLE HUNGWE J had accepted her argument that the application had been fatally defective by reason of the misjoinder of herself in person. Amongst her papers in the application for rescission of judgment, which she had incorporated in the urgent chamber application by reference, there was an affidavit by counsel that appeared for her before HUNGWE J, one Hilda Makusha Moyo (“Ms Moyo”). Excerpts of that affidavit read as follows: “4 At the hearing of the matters in Chambers, I proceeded to advance the arguments raised in limine on behalf of the Applicant namely, that there was improper citation of the Applicant and secondly that the matter was not urgent and thirdly that the Respondents were improperly before the High Court in Harare, as an identical case based on identical issues had already been heard and determined in Bulawayo. ……………………………………………………………………………….. HH 743-15 HC 8415/15 Ref Cases HC 8447/15; HC 8496/14 & HC 6388/14 5 7 After having heard submissions from both parties, the Court proceeded to make the ruling that the application was not urgent and declined to hear it on that basis. The Court also held in its oral judgement that the Applicant had been improperly cited and that she should not have been cited in her official capacity. ………… …………………………………………………………………………… The defects in both the Court Application under HC 6388/14 and the Urgent Chamber Application under HC 6496/14 had been pointed out by the letter to the Respondents’ legal practitioners in advance and I believe from my brief and contents of this letter that a telephonic discussion was held between my instructing legal practitioners and Respondents’ legal practitioners. It is my bona fide belief and submission that after the hearing before the Honourable Mr Justice Hungwe, it was understood by all that before Respondents could pursue the Court Application they would at the very least have to re-do their papers which would entail filing an amended application which would have to be served upon the Applicants’ attorneys.” So, in a nutshell, Barbra Lunga’s case before me was that given that both the urgent chamber application before HUNGWE J and the ordinary court application that had been filed a day earlier, sought the same substantive relief; given that both the relief and the grounds for it had been identical in both applications; given that both applications suffered from the same defects as pointed out by her and the judge, she had refrained from filing her notice of opposition to the ordinary court application because it was evident that the urgent chamber application, having been declined, the respondents would, and did, all but abandoned the ordinary court application. She argued that she could not imagine the respondents and their lawyers being so abusive of the court process as to resuscitate, more than a year later, an application that had long since been forgotten, and without so much as apprising the court of the material developments that had occurred subsequently to the filing of that court application, not least the five more court applications that had been dealt with by the court at Bulawayo. In answer to that, the respondents argued that Barbra Lunga may herself have decided to abandon the court application but that they themselves had not. In my view, Barbra Lunga’s argument is unassailable. The respondents’ inaction, for more than a year after filing the court application, was consistent with her assumption that the court application had all but been abandoned. It would have had to be either withdrawn or amended somehow. I accept the averments in Ms Moyo’s affidavit on what happened in HH 743-15 HC 8415/15 Ref Cases HC 8447/15; HC 8496/14 & HC 6388/14 HONOURABLE HUNGWE J’s chambers. It is first hand evidence by someone who was not only there, but also a participant. The averments have not been refuted. On the merits, I also find that if his Lordship the HONOURABLE MAWADZE J had been apprised of all the facts before considering the ordinary court application in motion court on 19 August 2015, in all likelihood he would not have granted the default judgment. Among other things, the sins that Barbra Lunga was being accused of, and which formed the basis of the two applications for her removal, had allegedly been committed some ten to thirteen years previously. She denied them, of course, and made the point that at that time she had been the provisional judicial manager for the company. She said she had successfully and competently discharged her functions as such and had eventually handed over, by the consent of all the stakeholders, and with the endorsement of the court, the management and control of the company to Zexcom Development Trust. Furthermore, she said, in January 2013, this court had seen it fit to have her appointed to that office despite pitched opposition. She was eventually appointed on 21 July 2014 by the Deputy Master. The applications for her removal were launched, in a different forum this time, a mere nine or so days after her appointment, and before she had even assumed office. I accept Barbra Lunga’s arguments. Before MAKONESE J in Bulawayo, there had been attempts by the respondents to be joined to the proceedings. However, they had been forced to withdraw the joinder applications and to tender wasted costs. So the result of the decision by MAKONESE J in Bulawayo on 23 January 2013, which led to Barbra Lunga’s appointment on 21 July 2014, was effectively what the respondents applied to have overturned in Harare, barely nine or so days later. That was effectively playing one judge of the same court against the other. I deprecate the conduct of the respondents and their legal practitioners which is exhibited in the records before me. It is an extreme form of abuse of the court process. One of their pitched arguments was based on a manifestly silly mistake in the citation of Zexcom on Barbra Lunga’s appointment as provisional liquidator. The company was mistakenly cited as Zexcom (Private) Ltd. From that, the respondents and the Deputy Master crafted the self- serving argument that Barbra Lunga’s appointment was not to Zexcom. Yet in a judgment on 17 July 2014 granting Kahwa the leave to execute despite Muzenda’s appeal to the Supreme Court, the HONOURABLE TAKUVA J, sitting at Bulawayo, expressly ruled that the mis- HH 743-15 HC 8415/15 Ref Cases HC 8447/15; HC 8496/14 & HC 6388/14 spelling of Zexcom in Barbra Lunga’s appointment was of no consequence as it was manifest that it was Zexcom that had been before the court in all the numerous proceedings concerning the company. Not only that, but on 21 January 2015, the HONOURABLE MOYO J, also sitting at Bulawayo, granted an order specifically correcting the error. Zexcom (Pvt) Ltd, wherever it appeared, was substituted with Zexcom Foundation Investments Fund Limited. So, how then could the respondents and their lawyers, more than a year later, simply set down in motion court the ordinary court application under HC 6496/14 without updating the court? In my view, such conduct seriously undermines the integrity of the courts and the entire justice delivery system. Barbra Lunga said the matter was urgent because her removal from office of provisional liquidator had created a vacuum in the administration of Zexcom. She said the development had opened the floodgates for further looting of the company’s assets. She had a point. Her fears were manifestly reasonable and justified. The second applicant, Shelter Muchechesi Mpofu, was a convicted criminal. The magistrate’s court had found him guilty of unlawfully collecting US$18 296 in rent money for Zexcom, and unlawfully converting it to his own use. Barbra Lunga also accused the respondents of purporting to run some kind of administration of Zexcom parallel to hers but without any lawful authority. Furthermore, they, or one or other of them, were occupying certain buildings belonging to the company without any authority and without any rent. They were making Zexcom ungovernable. They wantonly took the law into their own hands. They recognised no authority above theirs, not even that of the courts. All these allegations were quite evident from the records before me. In my view, the matter cried out for judicial intervention on an urgent basis. With regards, the Deputy Master, I find that he has become severely compromised. Among other things, he has openly aligned himself to the spurious argument that because of the mis-spelling of Zexcom in Barbra Lunga’s appointment, she was not the provisional liquidator for the company. On that basis he, among other things, released to the respondents, all the rentals and other income that he had collected during the interim period that he had been entrusted with the custody and control of the company’s assets. Efforts by Barbra Lunga to recover that money have been fruitless. HH 743-15 HC 8415/15 Ref Cases HC 8447/15; HC 8496/14 & HC 6388/14 Still on the Deputy Master, in the chamber application before me, despite being cited as a substantive party to the dispute, and despite serious allegations being made against him regarding his conduct of the affairs of the company, he filed a document, titled “MASTER’S REPORT”. This was purportedly in terms of Order 32 r 248 of the Rules of this Court. The “report” is manifestly biased against Barbra Lunga. In not so temperate language, it accuses Barbra Lunga of all manner of infractions, including dishonesty; approaching the court with dirty hands and trying to overreach the company by filing inflated and unjustified claims in favour of herself and her lawyers. I have simply disregarded the “report” because the accusations therein are not borne out by the evidence. Furthermore, not having been cited in his official capacity, the Deputy Master should have filed a proper notice of opposition if he wished to contest the allegations in Barbra Lunga’s papers. There is one more point about the Deputy Master. Barbra Lunga says because the Deputy Master had been refusing to issue her with a corrected certificate of appointment citing Zexcom’s name properly, she had been forced to apply to this court for an order to compel him to do so. That application had been set down in motion court at Bulawayo for hearing on 20 August 2015. However, it was on the previous day that the HONOURABLE MAWADZE J, sitting Harare, had granted the default judgment which removed her from office. The Deputy Master had then swiftly ensured that the default order in Harare would be freighted to Bulawayo and placed in the court record that was set down for 20 August 2015. With the Harare order now in the Bulawayo record, Barbra Lunga said the Deputy Master then caused the Bulawayo record to be removed from the roll. It was upon her counsel arriving at court to move for her order, and upon discovering that the matter had been removed from the roll that enquiries were made, only to find out that she was no longer the provisional liquidator for Zexcom because of the default order from Harare the previous day. It was this that triggered the application for rescission fo judgment and the urgent chamber application before me. If this conduct by the Deputy Master, which was not refuted, is not abuse of office, then one wonders what is. In my view, the applicant has satisfied all the essential elements of an interim interdict. These are set out in the myriad of cases on the point: see Setlogelo v Setlogelo 1914 AD 221 at 227; Tribac (Pvt) Ltd v Tobacco Marketing Board 1996 (1) ZLR 289 (SC) @ 391; HH 743-15 HC 8415/15 Ref Cases HC 8447/15; HC 8496/14 & HC 6388/14 Hix Networking Technologies v System Publishers (Pty) Ltd & Anor 1997 (1) SA 391 (A) @ 398I – 399A); Flame Lily Investment Company (Pvt) Ltd v Zimbabwe Salvage (Pvt) Ltd and Anor 1980 ZLR 378; Universal Merchant Bank Zimbabwe Ltd v The Zimbabwe Independent & Anor 2000 (1) ZLR 234 (HC) @ 238. They are these: (i) A prima facie right, even if it be open to some doubt In the present case, Barbra Lunga is a provisional liquidator by virtue of an appointment by this court. Any personal benefit accruing to her in that capacity is merely incidental. Otherwise it is an appointment for the good of the company and all its stakeholders, including the shareholders and the creditors. So the prima facie right is understood in the sense of her fiduciary responsibilities. (ii) A well-grounded apprehension of irreparable harm if the relief is not granted Given the well documented case of self-help to company funds and assets by the respondents1, 2 and 3 and against which there has been no coherent rebuttal, this ground stands proved. (iii) That the balance of convenience favours the granting of an interim interdict There can be no conceivable reason for the respondents to hurriedly want to enjoy the fruits of the default judgment in the face of the other pending court cases, inter alia, challenging not only Barbra Lunga’s removal from office, but also the respondents’ entire involvement in the company. (iv) That there is no other satisfactory remedy This ground is self-evident. A company under provisional liquidation has to be administered by a provisional liquidator properly appointed by the court. There is no one at Zexcom at the moment. The parallel administration established by the respondents is unlawful. It opens the way for looting of company assets. There can be no other satisfactory remedy apart from simply closing up the yawning gap immediately. For the above reasons the application is hereby granted. The provisional order sought by the applicant is hereby granted in principle. However, I have amended it slightly to avoid HH 743-15 HC 8415/15 Ref Cases HC 8447/15; HC 8496/14 & HC 6388/14 creating another vacuum if the Master of the High Court, the fifth respondent herein, should be included in the operation of the interim relief. His supervisory role in respect of companies under provisional liquidation in terms of the Companies Act, [Chapter 24: 03] should remain unaffected. Therefore the interim relief granted shall read as follows: INTERIM RELIEF GRANTED Pending the determination of this application on the return day, the first, second, third and fifth respondents herein are hereby interdicted and prohibited from giving effect to, or in any way putting into effect, or implementing any of the terms of the default judgment under HC 6388/14 or from dealing with the affairs of Zexcom Foundation Investments Fund Limited in any manner whatsoever which may be inconsistent with any of the existing orders or judgments of this court previously granted in favour of the applicant in all matters relating to the company. 18 September 2015 Joel Pincus, Konson & Wolhuter, applicant’s legal practitioners Mbidzo, Muchadehama & Makoni, first, second and third respondents’ legal practitioners