(1) ZIMCOR TRUSTEES LIMITED
(2) BOKA INVESTMENTS (PRIVATE) LIMITED (3) MATTHEW BOKA
(1) WEBSTER TONGOONA RUSHESHA AND OTHERS
SUPREME COURT OF ZIMBABWE
MALABA DCJ, GARWE JA & PATEL JA
HARARE, NOVEMBER 6, 2014 & MAY 18, 2015
A.P. de Bourbon, for the first appellant
F. Girach, for the second and third appellants
T. Mpofu, for the first, second and third respondents
PATEL JA: This judgment consolidates two separate appeals, namely, Case Nos. SC 453/13 and 446/13, which were heard together by special request and consent of all the parties concerned. They both involve the sale of shares and assets in the same company, initially by the first respondent to the first appellant and then subsequently by the first appellant to the second and third appellants, and both emanate from the same judgment of the High Court in Case No. 6829/10 handed down as HH 385-13 on 30 October 2013.
The first appellant, who is the appellant in Case No. SC 453/13, is Zimcor Trustees Ltd (Zimcor), while the second and third appellants, who are the appellants in Case No. 446/13, are Boka Investments (Pvt) Ltd (Boka Investments) and Matthew Boka (Boka). The first respondent is also the first respondent in both appeals. He is Dr. Webster Tongoona Rushesha (Rushesha) acting in his capacity as the legal guardian of his minor children Panashe and Tivonge. For the sake of convenience, I shall refer to the parties concerned by name rather than their citation as appellants or respondents respectively.
It is not in dispute that Rushesha acquired Stand 671, Mount Pleasant Township, before proceeding to the United Kingdom for professional employment. What is in dispute is what transpired after the property was initially acquired.
According to Rushesha, he asked his brother-in-law, Alexio Dera, to set up a company called Rasar Investments (Pvt) Ltd (Rasar Investments). The immovable property was then registered in the name of Rasar Investments as its only asset. The directors of the company were Rushesha, his wife and Dera, and the registered shareholders were the two Rushesha minors. When the Rusheshas moved to the United Kingdom in 2003, the property was leased to the South African embassy and the rental income was paid directly into Rushesha’s bank account.
In February 2009, Dera concluded an agreement for the sale of shares in Rasar Investments to Zimcor, which was represented by its director, Frank Buyanga. The directors of Zimcor then replaced the previous directors of Rasar Investments. Subsequently, in September 2009, the new directors of Rasar Investments sold the property to Boka Investments, represented by its director, Boka.
A year later, in September 2010, Rushesha issued summons in the High Court to reclaim the shares in Rasar Investments and the property itself. The claim was founded on the assertions that the sale of shares to Zimcor was a fraudulent sham perpetrated by Dera and that the subsequent sale of the property to Boka Investments was consequently invalid.
The court a quo found that the agreement for the sale of shares was a disguised transaction to secure a loan advanced to Dera by Zimcor and Buyanga. Therefore, the transfer of shares to Zimcor, pursuant to Dera’s default on his loan, was effected by way of a pactum commissorium which rendered the entire transaction illegal and unenforceable. This invalidated the initial sale of shares in Rasar Investments and the consequential alteration of its directorship, as well as the subsequent sale of the property to Boka Investments. The court accordingly declared that the previous directors of Rasar Investments be reinstated and that the original deed of transfer in the name of Rasar Investments remained valid. All the defendants were ordered to bear the costs of suit.