WARAMBWA and OTHERS v SIMBAMUKAKA (PVT) LTD and OTHERS (175 of 2024) [2024] ZWHHC 175 (15 May 2024)

1 HH 175-24 HCH 6409/23 BEVAN F. M WARAMBWA and MORDECAI T. M WARAMBWA and ANNE FLORENCE SHONHAI (as the duly appointed executrix of the Estate Late Failas F. R Mushipe DR 1179/12) and CHARLES CHIRATIDZO NYAMAYARO SANYIKA (As the duly appointed Executor of the Estate Late Philip Nyamayaro Sanyika DR 396/23) versus SIMBAMUKAKA (PVT) LTD and JABULANI CHISORO and THE REGISTRAR OF DEEDS N. O HIGH COURT OF ZIMBABWE CHIKOWERO J HARARE; 28 March 2024 & 15 May 2024 Opposed Application C Madhlabe, for the applicants G R J Sithole, for the 1st and 2nd respondents No appearance for third respondents CHIKOWERO J: INTRODUCTION 1) This is an application for an order for placement of a caveat on five pieces of land owned by the first respondent under Deed of Transfer Registration Number 1563/85. 2) The application is resisted by the first and second respondents primarily on the basis that there is no good cause for granting such relief. FACTUAL BACKGROUND 3) There is pending litigation between the same parties before this court under case number HC 3966/21 (“the main matter”). HH 175-24 HCH 6409/23 4) Therein, the applicants are the plaintiffs with the respondents, including the Registrar of Companies, as the defendants. 5) The relief sought in the main matter reads as follows: registration “1. That the removal of the second defendant from the first defendant’s CR 14 as Directors of the first Defendant be and is hereby declared illegal, null and void. 2. That the third Defendant be and is hereby directed to reinstate and adopt the CR of the first Defendant dated the 27th of September 1984 under company number 476/84 as the valid and lawful CR 14 of the first defendant. 3. It is further declared that the Plaintiffs are the valid and legitimate shareholders of the first Defendant, the shareholding structure being as follows: f) Nyamayaro Philip Sanyika 12.9% g) Bevan F. M Warambwa 32.26% h) Jabulani Chisoro 12.9% i) Mordecai T. M Warambwa 3.23% j) Failas F. R Mushipe 38.71% 4. The second defendant shall pay costs of suit.” 6) In respect of the main matter, the parties await allocation of a pre-trial conference date. 7) What gave rise to the main suit were allegations that Bevan and Mordecai Warambwa and the now late duo of Failas Mushipe and Philip Nyamayaro Sanyika teamed up in or about 1984 and founded a company called Simbamukaka (Pvt) Ltd. The allegations are that they not only became shareholders of the said company but were also its only directors. It is said that they formed the company as a vehicle to carry out farming activities and, to realize this objective, they pooled resources part of which they employed to purchase five pieces of land, registered title thereof in the name of the company, and commenced farming operations on the land in question. 8) A perusal of the pleadings in the main matter, made available to me as part of this application, discloses allegations that Jabulani Chisoro (the second respondent) took advantage of his position as Managing Director of the company to nichodemously remove the Warambwas, Mushipe and Sanyika from their positions as shareholders and directors of the company. 9) I note in passing that the main suit is defended on the basis that the said removal was pursuant to a financial settlement between the main protagonists justifying such a course of action. 10) The applicants apply for an order for placement of a caveat on the five pieces of land on the basis that they fear that the second respondent may dispose of the five pieces of land, which are the only immovable properties of the company, before the resolution of the pending shareholders and directors hip dispute in respect of the company. They HH 175-24 HCH 6409/23 told me that they contributed money towards the purchase of the pieces of land in question and a caveat would protect their interests in that property pending resolution of the main matter. 11) I have no difficulty in dismissing the application. I think that the law is against the applicants. THE PERTINENT LEGAL PRINCIPLES ON CAVEATS 12) In Stenhop Investments (Pvt) Ltd v Mukoko and Anor HH 132/18 DUBE J (as she then was) said at pp4 – 5: “The term ‘caveat’ is a Latin term which means ‘let a person beware.’ It is a notice or warning that is registered over a property by a person who claims to have some interest in the property concerned. The purpose of a caveat is to preserve and protect the rights of a person who seeks to have a caveat placed on a property, known as a caveator. effect of a caveat on a property is that the property cannot be sold or disposed of The giving effect to the caveator’s interest. Once a caveat is placed over a without property, the said property cannot be transferred, mortgaged or disposed of without the consent. No further dealings over the property are allowed unless the caveator’s consents to the upliftment of the caveat, it lapses, is cancelled, withdrawn or caveator Any person who deals with the property does so at his own risk.” removed. 13) At p5, HER LADYSHIP continued: “The law does not permit a person to lodge a caveat over another’s property without good cause. An applicant who applies to place a caveat over a property must show that he has an interest in the property concerned. The interest claimed must exist at the time the caveat is lodged and should not be an interest that arises in the future. The caveator must show that his claim arises from some dealing with the registered property. It is only those interests that are connected to the land that can be subject of a caveat. The interest must attach to the property, thus a person seeking to place a caveat over a property is required to show that he has a caveatable interest to lodge the caveat. A caveator does not have to show that the other party is about to dispose of the property. The applicant has to show that he has a matter pending concerns the property. The moment the pending matter is determined, the caveat lapses by operation of law. The caveat cannot continue in perpetuity. The interest claimed by the caveator may be challenged by the owner of the property. It is the duty of the court to that determine the validity and correctness of the application for a caveat.” 14) This decision was cited with approval in the case of The Cold Chain Zambia Ltd v Kingsley and Ors HH 379/20 where MANGOTA J, at p 7, underscored that: “(e) the caveator’s interest must be in existence at the time the caveat is lodged; (f) the caveator must show that his claim arises from some dealing which he had with the owner of the caveated property. (g) the caveator’s interest must attach to the property. (h) the caveator must show that he has a matter pending which relates to the property; (i) when the pending matter is decided the caveat lapses – and (j) a caveat can only be placed on another’s property where the caveator has shown good cause for the same, like an interest in the property.” HH 175-24 HCH 6409/23 APPLICATION OF THE LAW TO THE FACTS 15) I agree with Mr Sithole that the applicants failed to show that they have good cause to lodge a caveat over the pieces of land in question. It is common cause that the land belongs to the first respondent, a registered company. It belongs neither to the shareholders nor to the directors of that company. The pending dispute in the main matter, relating to the identity of the shareholders and directors of the company, has nothing to do with the fact that it is the company itself, not its directors and shareholders, (whoever those persons will turn out to be) which owns the land in question. That a company is a legal person capable of owning property distinct from its members is a settled principle of company law. Of this, Dadoo Ltd v Krugersdorp Municipal Council 1920 AD 530 has INNES CJ saying at pp 550-551: “Taking the intention then [of the legislature] to be the prohibition of ownership of fixed property by Asiatics and the prohibition of the acquisition and the occupation of mining rights by coloured people, I come to enquire whether the transaction complained of is a contravention of the statutes. In other words, whether ownership by Dadoo Ltd, is in substance ownership by its Asiatic shareholders. Clearly in law it is not. A registered company is a legal persona distinct from the members who compose it……. Nor is the position affected by the circumstance that a controlling interest in the concern may be held by a single member. This conception of the existence of a company as a separate entity distinct from its shareholders is no merely artificial and technical thing. It is a matter of substance; property vested in the company is not, and cannot be, regarded as vested in all or any of its members.” 16) The position is the same in this jurisdiction. 17) What this means is that as I write this judgment, the applicants’ interests in the land, if any, is not in existence. 18) Further, the applicants failed to show that their claim arises from some dealing with the registered property. In Stenhop Investments (Pvt) Ltd (supra) the court granted the application for placement of a caveat on the property involved in that matter because the applicant established, among other things, a direct and existing interest in the property. The applicant was in possession of title deeds of the property that were pledged as security for a debt. In the instant matter the applicants’ claim does not arise from any dealing with the registered property. 19) The pending matter does not concern the registered property. A perusal of the terms of the relief sought therein, set out elsewhere in this judgment, demonstrates this. The pending matter concerns a dispute over the identity of the shareholders and directors HH 175-24 HCH 6409/23 of the first respondent. It has nothing to do with who the owner of the registered property is and how the ownership rights are to be exercised. As the pending matter does not concern the registered property, this is another basis for not acceding to the application. 20) I agree with Mr Sithole that the applicants’ interest, if any, relate to their status and position in the second respondent rather than in the registered property itself. That would explain why they are seeking, in the main matter, relief speaking to their being directors and shareholders in the first respondent. The financial or other interest that success in that matter may bring in its wake is not directly connected to the registered property. See Burdock Investments (Pvt) Ltd v Time Bank of Zimbabwe Ltd and Ors 2003(2) ZLR 437(H). It cannot be subject of a caveat. COSTS 21) No justification was established for requiring the applicants to pay costs on a punitive scale. 22) There was no abuse of court process associated with the institution of the application. 23) The application has failed on the basis that the applicants appear not to have reflected on the law relating to caveats and testing it against the facts before instituting proceedings. The applicants cannot be penalized merely because they have not been successful. They have a right of access to the court for adjudication of a disputed matter. 24) In the result, it is ordered that: 1. The application be and is dismissed. 2. The applicants shall jointly and severally the one paying the others to be absolved pay the first and second respondents’ costs of suit. CHIKOWERO J:…………………… Hove Legal Practice, applicant’s legal practitioners Mabuye Zvarevashe-Evans, first and second respondents’ legal practitioners HH 175-24 HCH 6409/23