Mhende v CIMAS (HC 5652 of 2015) [2015] ZWHHC 572 (22 June 2015)

1 HH 572-15 HC 5652/15 CHESTER NHAMO MHENDE versus CIMAS MEDICAL AID SOCIETY HIGH COURT OF ZIMBABWE MTSHIYA J HARARE, 17 June 2015 and 23 June 2015 Urgent Chamber Application R. H. Goba, for the applicant R. Moyo, for the respondent MTSHIYA J: This is an urgent application wherein the applicant prays for the following relief: “ TERMS OF FINAL ORDER SOUGHT 1. It is declared that the 3500 proxies filed by applicant with respondent are valid and applicant is entitled to vote on them at the Annual General Meeting to be convened in terms of this Order. 2. The items specified in the applicant’s notice dated 8 June 2015 be and are hereby declared to be part of the agenda of respondent’s Annual General Meeting to be reconvened in terms of this Order. 3. The notice issued by Applicant dated 8 June 2015 is declared to be proper, and the period of notice to be adequate. 4. The respondent be and is hereby directed to reconvene its Annual General Meeting within 14 days of this Order. TERMS OF INTERIM RELIEF SOUGHT PENDING THE FINAL DETERMINATION OF THIS MATTER IT ORDERED THAT: 1. The Annual General Meeting of respondent scheduled for 17 June 2015 at 11:30 a.m. be and is hereby postponed to a date to be fixed by this Honourable Court on the return day. 2. Respondent shall not accept any proxies that were not duly filed with respondent not less than 48 hours of 11:30 a.m. and of the 17th June 2015, being the date of the Annual General Meeting, prior to the postponement sought by Applicant.” I dismissed the application with costs for lack of urgency and said detailed reasons would follow later. These are they. The applicant is a member of the respondent, a registered medical aid society. The facts leading to the request for the above relief are contained in correspondence between both parties I shall, for the sake of a full appreciation of the issues involved, produce part of the correspondence in full. HH 572-15 HC 5652/15 On 20 May 2015 the respondent issued the following public notice; “NOTICE OF ANNUAL GENERAL MEETING NOTICE is hereby given that the Seventieth (70th) Annual General Meeting of Members of Cimas MEDICAL AID SOCIETY will be held on Wednesday 17 June 2015 at 11:30 a.m. at Royal Harare Golf Club, Fifth Street Extension, Harare to transact the following business:- ORDINARY BUSINESS 1. Notice Convening Meetings. 2. To confirm the Minutes of the Sixty-Ninth Annual General Meeting held on Wednesday 14 May 2014. 3. To adopt the Annual Report and Audited Financial Statements for the year ended 31 December 2014. 4. To approve the payment of fees to members of the Board for the period 1 January 2014 to 31 December 2014. 5. To elect one (1) member of the Society’s Board; Mr L. M. Ngwerume retires by rotation, and being eligible, has offered himself for re-election. 6. To appoint auditors for the ensuing year. Deloitte & Touche, the current auditors, have indicated their willingness to be re-appointed. 7. To consider any other competent business of which proper notice has been given. NOTES Members or Member Firm representative are entitled to attend and vote at the Meeting, and appoint proxies, who shall also be members of the Society, to attend and vote in their stead. Proxy forms should be forwarded to reach the Society not less than 48 hours before the scheduled time of the Meeting. Members any, upon demand, obtain proxy forms, copies of the Annual Report and Financial Statements from any of the Society’s following offices:- Harare Head Office: Cimas House, 9 Jason Moyo Avenue, Harare Cimas Bulawayo: Suite 4 Medical Centre, Josiah Tongogara Street/8th Avenue, Bulawayo Cimas Gweru: No. 23 Sixth Street, Gweru Cimas Mutare: Cimas House, 98 Second Street, Mutare M. T. Chaora GROUP CHIEF EXECUTIVE OFFICER 20 May 2015” Following the publication of the above notice, on 8 June 2015, the applicant drew up the following notice/petition which he served on the respondent on 9 June, 2015: “Notice is hereby given in terms of Section 12(1) (g) of the constitution of CIMAS that at the AGM of the Society that is due to be held on 17th June, 2015, a motion shall be proposed to impeach, or pass a vote of no confidence on the following members of the board of CIMAS on the basis that the powers that the members enjoy under Sections 25 and 26 of the Constitution of CIMAS to nominate and appoint members to the Board of CIMAS must necessarily include the power to remove them, and further that the delegated powers of board members to remove each other under Section 16 (2) of the Constitution implies the existence of superior powers on the part of the members themselves to remove board members. The following are the names of Board Members and management proposed for removal and the grounds on which it is proposed to remove them: HH 572-15 HC 5652/15 1. Timothy Johnston, Mordecai Mahlangu, Matts Valela and Luke Ngwerume are all associated with the Old Mutual Group in that Timothy Johnston and Mordecai Mahlangu currently sit on the board of Old Mutual and, or its subsidiaries or associates. Matts Valela is the Finance Director of Delta Breweries and sits on the board of Delta Corporation, an entity in which Old Mutual has a significant shareholding interest. Luke Ngwerume is a former CEO of Old Mutual. These cross relationships result in the over representation of the Old Mutual Group on the board of the Society which is not representative of the broad membership of the Society. In addition, Matts Valela’s first term on board was by co-option by other members the majority of whom are associated with the Od Mutual group. He was required to retire at his first AGM held on 26 June, 2013 and subject himself to election by members but did not do so. Although the board sought to purge the illegality at the previous AGM, the manner in which he was brought to the board in the first place does not inspire confidence. 2. Emma Fundira and Bart Mswaka were first introduced to the board as appointees of the sitting board members the majority of whom were from the Old Mutual stable. At their first AGM held on 26th June, 2013, they were not subjected to election by the members as required by the Constitution. This irregularity was only rectified at the previous AGM. This makes their continuation on the board of CIMAS suspect. 3. Macdonald Chaora, the Chief Executive Officer is proposed to be removed on the grounds that the Financials as proposed for adoption at the AGM do not make some necessary disclosures, including the amounts of money spent on free medical cover and treatment by board members and employees, the justification for expenditure amounting to $15milion on ICT, the justification for involvement with another Air Rescue Ambulance service on a capitation basis necessary to give viability after pulling out of MARS, the failure to declare interest to members in the new Air Rescue Service, and the rationale for employing Chibvongodze at CIMAS while Chibvongodze is associated with the Air Rescue Service that is a potential competitor in business with CIMAS as one of the owners along with a Mrs Chawora. The Chairman of the Society and its Chief Executive Officer are hereby requested to include this proposed motion on the Agenda of the AGM. We shall publish this notice in the press so as to ensure that other members of the Society are fully aware of our intention. Dated At Harare this 8th day of June 2015 1. Name CHESTER N MHENDE National ID 63-181260G70 Membership Number 2. And more than 100 other members listed on the attached ” On 15 June 2014, the respondent, through its Group Chief Executive Officer, responded to the above notice/petition in the following terms: “RE: YOUR RECENT MEMORANDUM & NOTICE On behalf of Cimas Medical Aid Society I acknowledge receipt of your memorandum and notice of 10 June 2015 and note that in it you give notice of your intention to have five members of the board of Cimas removed together with myself. I wish to advise that on account of the content of your memorandum and notice I referred this to the Chairman of the Board of Cimas for his attention. He wishes for me to advise you as indicated below. What you seek to do is to place before the Annual General Meeting to be held on the 17th of June 2015 your prosed resolution as a business of the annual general meeting. The Chairman HH 572-15 HC 5652/15 points out that in terms of the Constitution of Cimas the only business that can be considered at an Annual General Meeting is that business of which not less than twenty one (21) days’ notice has been given. In this particular case you ought to have requested the inclusion of your business within such a time as to make it possible for a notice thereof to be properly published so that members have no less than twenty one days’ notice of same. Further the Constitution of Cimas does stipulate the business that has to be dealt with at an Annual General Meeting and it is the view of the Chairman that the business that you propose is not competent business interms of Section 12 (1) (g) of the Cimas Constitution. Consequently therefore your request as above described cannot be acceded to. In any event the Chairman has no authority to include in the Annual General Meeting Agenda the item that you have raised for the reasons indicated above. On behalf of Cimas I do have a further concern which is this. The signatories attached to your petition occasion difficulty. The members who are alleged to be from Nyaradzo Funeral Assurance Company have since indicated in writing that they do not support your proposed motion but appended their signatures after you represented to then that the purport of your document was to complain about the withdrawal of the online drug facility and other services. The rest of the signatories appear to be University of Zimbabwe Students who are members of a special scheme with no individual voting rights. To the extent therefore that the signatories were intended to bolster your position they do not in fact do this but rather suggest that in each case you appear to have misled the signatories about your intentions. The Chairman of Cimas has asked me to inform you that your notice and memorandum are matters of considerable concern and will be placed before the Board of Cimas and dealt with as appropriate. Yours faithfully MR M. T. CHAORA GROUP CHIEF EXECUTIVE OFFICER CIMAS MEDICAL AID SOCIETY” It is the contents of the above letter that led to the filing of this application on an urgent basis. On the issue of urgency, the applicant, in his founding affidavit, states: “URGENCY 6. There is going to an Annual General Meeting of respondent tomorrow the 17th June 2015 at 11:30 a.m. Today at 10:28 a.m. I received a letter dated 15 June 2015 from respondent a copy of which is attached hereto marked ‘B’. 7. Annexure ‘B’ constitutes a rejection of the agenda items that I had proposed for consideration by the Annual General Meeting through a notice that I delivered to respondent on the 9th June 2015, which was more than 7 days before the date of the Annual General Meeting. 8. In addition to rejecting the proposed agenda items, Annexure ‘B’ also seeks to nullify the 3500 proxies that I have received from members of respondent. I delivered these proxies to respondent at 09:10 am yesterday, 15th June 2015, not less than 28 hours before the meeting as is requires by the respondent’s constitution. 9. The grounds on which respondent rejected the agenda items that I proposed and sought to nullify the proxies given to me by members of respondent are not valid. I shall deal with them at a later stage. HH 572-15 HC 5652/15 10. If the agenda items that I have proposed are not dealt with by the meeting, and if I am not allowed to exercise the voting rights conferred on me by the members whose proxies I am, both the members giving the proxies and I shall suffer irreparable harm. We will have been denied an opportunity to express ourselves in respect of all the issues on the agenda of the Annual General meeting without just cause. 11. The urgency of this matter has been triggered by Annexure ‘b’ hereto. I do not know why it took the respondent all this time from the 9th June 2015 to communicate the position contained in Annexure ‘B’. I can only speculate that respondent did not take my notice seriously until it saw the 3500 proxies that I am entitled to vote with. Therefore Annexure ‘B’ is calculated to frustrate those voting rights to perpetuate the continued abuse of membership rights and interests by those who are in control of respondent.” Upon receiving a call after midnight on 17 June 2015, I directed the Registrar to set the matter down for 9:00 am. That certainly did not give the respondent the opportunity to file opposing papers. However, at the hearing of the application, Mr Moyo, for the respondent, raised some points in limine, the main one being that the application was not urgent. After listening to arguments from both sides, I agreed with the applicant and dismissed the application with costs for lack of urgency. In his submissions Mr Moyo also indicated that the applicant, as a member of the respondent, could in his own right bring this application before the court. He, however, said the applicant’s, right to represent 3500 others was questionable since there were no affidavits to support his claim. I took the view that the issue of the 3500 other members could only require interrogation if I had found that there was indeed an urgent application before me. It would then have been necessary to determine who infact was entitled to the relief sought, and also the issue of locus standi. To the extent that the applicant himself was properly before the court, it became necessary for me to deal with the question of urgency. This I then proceeded to do notwithstanding the issue of arguments on locus standi relating to the said 3500 other members. There was before me a proper application in as far as the position of the applicant himself was concerned. I also take the view that upon dismissing the matter for lack of urgency, I became estopped from going into the merits of the matter. Advocate Goba, for the applicant, submitted that the matter was urgent mainly because the respondent had failed to interpret the meaning of “proper notice” referred to in s 12 (g) of the respondent’s Constitution (the Constitution). His argument was in line with HH 572-15 HC 5652/15 averments made by the applicant in para 18 of his founding affidavit where the applicant says; “18. The respondent’s Constitution does not have a specific provision on how much notice a member is required to give in order to introduce items onto the agenda on an Annual General Meeting. Section 12 (1) (g) merely provides that an Annual General Meeting may deal with “any other competent business of which proper notice has been given.” Proper notice is not defined. Such notice cannot be 21 days’ notice because members become aware of the date of an Annual General Meeting after the 21 days’ notice has already been issued. Consequently, I contend that proper notice means reasonable notice. I gave 7 days’ notice. In terms of section 25(2) of respondent’s Constitution 7 days’ notice is required to be given for the nomination of a board member. It is my contention that 7 days’ notice for the removal of board members as proposed in our notice of 8 June 2015 is proper in these circumstances.” It is important to bring out the main provisions of the respondent’s constitution that the parties are relying on. Sections 9,10,11 and 12 of the respondent’s constitution provide as follows: “9. General Meetings (1) In each year the Society shall hold an Annual General Meeting provided that such Annual Meeting shall be held within Six (6) months after the expiration of the financial year of the Society. (2) Other general meetings may be called by direction of the Board or on a Requisition (stating clearly the purpose of the meeting) signed by not less than one hundred (100) members and sent to the Society. (3) General Meetings which are requisitioned in terms of Subclause (2) here shall be held within Six(6) weeks from the date of receipt by the Society of the Requisition. (4) All general meetings shall be held at such time and place as the Board shall appoint. 10. Notice of General Meetings (1) All General Meetings, including Annual General Meetings, shall be called upon the giving of not less than Twenty-One (21) day clear notice by way of advertisement in a sufficient number of newspapers to ensure national coverage. (2) Such notice shall set out the date, time and place of, and the business to be transacted at, The General Meeting. (3) In addition such notice shall specify the place or places where members can obtain, upon demand, copies of proxy forms, the annual report and audited accounts and any other documents related to the general meeting if question. 11. Attendance at General Meetings Every member and every member firm as represented by its One (1) appointed representative shall be entitled to be present at a general meeting of the Society or to appoint One (1) proxy to attend in his or its stead. 12. Proceedings at General Meetings (1) The Annual General Meeting shall deal with and dispose of the following matters:- (a) Confirmation of the minutes of the previous Annual General Meeting; (b) The Chairman’s Annual Report; (c) The audited statement of accounts; (d) The appointment of auditors for the ensuing year; (e) The approval of Board member fees for the previous year; (f) The election of qualified and properly nominated persons to fill vacancies existing on the Board; (g) Any other competent business of which proper notice has been given. HH 572-15 HC 5652/15 (2) All business laid before Any other general meeting shall be considered special business. No special business except such as stated in the notice convening such meeting shall be transacted at any General Meeting, other than the Annual General Meeting.” It is further important at this stage to note that in terms of s 10 (1), both the Annual General Meeting and any other General Meeting that can be convened in terms of s 9 (2) require 21 days’. In terms of s 10 (2) of the Constitution any business to be transacted either at the Annual General Meeting or any other General Meeting requires 21 days’ notice I appreciate the applicant’s self-created predicament in failing to appreciate how a notice of 21 days could have been given before the notice of publication of the meeting on 20 May 2015. He is saying he could not give notice before knowing when the Annual General Meeting would be held. That view leads him to the suggestion that the reasonable notice to be given should be 7 days as required for the nomination for election of Board members. However, the 21 days’ notice under s 10 of the Constitution, is meant, in my view, to give members adequate time to acquaint themselves with the nature of the business to be transacted at any such Annual General Meeting or at any other General Meeting. The constitution requires that the business to be transacted at the meeting should be included in the notice. That business may of course include the election of Board members but when it comes to the nomination of those members s 25 (2) of the Constitution then comes into play. It is clear to me that s 9 (2) of the Constitution explains the procedure to be followed in respect of General Meetings that may become necessary before or after the Annual General Meeting. The remedy under s 9 (2) is always available to the applicant before or after an Annual General Meeting. I believe a member can, if he so wishes, still give proper notice for competent business to be transacted at the Annual General Meeting before the publication of the notice. There is nothing, in my view, to stop a member, such as the applicant, from approaching the respondent with proposed business well before the publication of the 21 days’ notice, so that such business, as required by s 10(2) of the Constitution, may be included in the notice. The applicant, having served on the respondent’s Board for more than 34 years, must have anticipated the Scheduled Annual General Meeting. As a board member he has always known that Annual General Meetings are held “within six (6) months after the expiration of the financial year of the Society”. The unintended attachment of Annexure ‘G’ to the application tells one that the applicant was even aware of the fact that the last Annual General Meeting was held on 14 May 2014. HH 572-15 HC 5652/15 I cannot help but note that on 20 April 2015 when the applicant filed his summons in court, (HC 355) he, as a former member of the board, must have anticipated as to when the respondent’s Annual General Meeting for the year 2015 would be held. In his summons he raised similar issues to the ones being raised in this application. He, however, waited until 9 June 2015 when he served his notice on the respondent. The court cannot allow self-created urgency. (See Kuvarega v Registrar General & Another 1998 (1) ZLR 188 HC). Having failed to meet the target, the applicant sought to proceed in terms of s 9 (2) of the respondent’s constitution without bravely saying so. The reference to “more than 100 other members” clearly confirms under which section of the constitution the applicant wanted to proceed. He is entitled to do so as the constitution then allows for a General Meeting to be called and not for an Annual General Meeting to be converted to a General Meeting. Section 12 (2) clearly states that the business conducted at such a General Meeting “shall be considered as special business.” As can be seen, apart from the applicant having had ample time to anticipate the current Annual General Meeting, the Constitution still gives him the leeway to proceed in terms of s 9 (2) of the Constitution. There can therefore be no irreparable harm on the part of the applicant. Financial harm would obviously visit the respondent who, I believe, has used considerable financial resources to organise the Annual General Meeting. It would be unjust to interfere with the process. The balance of convenience clearly favours the respondent. The applicant is not a simple member of the respondent. He has served on its Board for a considerable time and is well acquainted with the procedures relating to special business. He waited to do that until 9 June 2015. He created urgency and therefore granting him the relief bought is tantamount to allowing him to smuggle into the official Agenda items for which members have not had proper notice. It is also clear from the notice of 20 May 2015 that, under the notes thereof, there is no invitation for new business to be included on the Agenda. This is so because only where proper notice will have been given can additional business be included on the Agenda before publication of the notice. In view of the foregoing, I dismissed the application with costs for lack of urgency. Messrs Mtetwa & Nyambirai, applicant’s legal practitioners Messrs Gill, Godlton & Gerrans, respondent’s legal practitioners