Court name
Supreme Court of Zimbabwe
Case number
SC 51 of 2003
Civil Appeal 113 of 2003

Stanmarker Mining (Pvt) Ltd. v Metallon Corporation Ltd. (13/03) (SC 51 of 2003, Civil Appeal 113 of 2003) [2004] ZWSC 51 (14 January 2004);

Law report citations
Media neutral citation
[2004] ZWSC 51













REPORTABLE
(42)


Judgment
No. SC 51/03


Civil
Appeal No. 113/03








STANMARKER
MINING (PRIVATE) LIMITED





v
METALLON CORPORATION LIMITED








SUPREME
COURT OF ZIMBABWE


SANDURA  JA,
CHEDA JA & GWAUNZA JA


HARARE,
NOVEMBER 25, 2003 & JANUARY 15, 2004








J
C Andersen SC
,
with him
G
Mutha-Valla
,
for the appellant





E
W W Morris
,
for the respondent






SANDURA  JA:
This is an appeal against a judgment of the High Court which
dismissed with costs the appellant’s application
for an order,
inter
alia
,
confirming the jurisdiction of the High Court in a dispute between
the appellant (“Stanmarker”) and the respondent (“Metallon”),
and granting leave for the service of Stanmarker’s summons and
declaration in respect of its claim for damages against Metallon
to
be effected at Metallon’s registered office in Johannesburg,
South Africa.





The
factual background is as follows. Stanmarker is a mining company
registered in terms of the laws of Zimbabwe, and Metallon
is a
South African company with its registered office in
Johannesburg.






On or about 24 June 2002,
Stanmarker and Metallon concluded a written agreement in respect of
their intended acquisition of
the shares in Independence Mining
(Private) Limited (“Independence”), a Zimbabwean company which
owns five gold mines in Zimbabwe
– How Mine, Shamva Mine,
Arcturus Mine, Mazowe Mine and Redwing Mine. The
acquisition was to be effected
through a company to be incorporated
in Zimbabwe (“Newco”).





At
the relevant time Independence was a wholly owned subsidiary of
Cableair Limited (“Cableair”), a private company limited
by
shares and incorporated in the United Kingdom. In turn,
Cableair was a wholly owned subsidiary of Lonmin Public Limited
Company (“Lonmin”), incorporated in the United Kingdom.
Lonmin was, therefore, the holding company of Cableair, which
was the
holding company of Independence, which owned the five mines.





Lonmin
intended to dispose of its shares in Cableair and, consequently,
divest itself of its interests in Independence. Thus,
on 28 October
2002 Lonmin wrote to the Minister of Mines and Mining Development
(“the Minister”) as follows:





“May
we take the opportunity first of all to explain that the sale of our
Zimbabwe assets is the result of a decision taken, and made
public
some time ago, to concentrate on our core business only, which is the
mining and refining of platinum group metals.”





The
agreement concluded by Stanmarker and Metallon on 24 June 2002
was in the form of written Heads of Agreement (“the Heads”).

Clause 2.2 thereof provided as follows:





“These
Heads set out the main principles upon which the parties will
negotiate the detailed written agreements referred to herein.
These
Heads (save for 2.3, 9, 10 and 11) accordingly do not constitute
legally binding rights and obligations on the parties hereto.
These
Heads will fall away and be of no force and effect upon the signing
of the detailed written agreements and them becoming
unconditional in
accordance with their terms.”





Thus,
the only legally binding rights and obligations were those set out in
Clauses 2.3, 9, 10 and 11.





Clause 2.3
provided as follows:





“The
parties undertake with effect from the signature date and until the
expiry of three months thereafter that they will negotiate
with each
other in good faith in respect of the detailed written agreements and
that, subject to 3.5, they will not negotiate with
Lonmin or any
other person in respect of any matter relating to the acquisition of
all or part of the share capital, assets or business
of Independence
or its immediate holding company.”





Clause 3.5,
referred to in Clause 2.3, provided as follows:





“Metallon
shall, on behalf of Newco, negotiate with Lonmin and make an offer to
acquire Independence or its immediate holding company
for the amount
of approximately twelve million US Dollars or such other amount
agreed upon between the Shareholders.”





Finally,
Clause 11.1 provided as follows:





“From
the signature date and for a period of three months thereafter,
neither party shall, without the prior written consent of the
other
party, engage in or enter into discussions with any other party with
an interest in acquiring the share capital or business
of
Independence or its immediate holding company and/or engage in or
enter into discussions with any other party desirous of achieving
similar objectives than, or competing with, Newco.”





Subsequently,
Metallon pursued negotiations with Lonmin which resulted in an
agreement of the sale of the shares in Cableair to
Pemberton
International Investments (Pty) Ltd (“Pemberton”), a company
incorporated in terms of the laws of the British Virgin
islands with
its registered office in the Virgin Islands. Regrettably, in its
opposing affidavit Metallon did not indicate what
its relationship
was with Pemberton.





However,
it is pertinent to note that whilst Metallon alleged that the shares
in Cableair were acquired by Pemberton, on 5 November
2002
Mzilikazi Khumalo (“Khumalo”), the chief executive of
Metallon, wrote to the Minister as follows:





“This
serves to confirm that
Metallon
Corporation Limited
, a
black-owned South African company controlled by myself,
has
acquired 100% of Independence Gold Mining Zimbabwe (Private) Limited
from Lonmin Plc

(emphasis added)





It
does appear, therefore, that either Pemberton was a wholly owned
subsidiary of Metallon, or that it acquired the shares in Cableair
for and on behalf of Metallon.





Whilst
Metallon admitted that it pursued negotiations with Lonmin which
resulted in the sale of the shares in Cableair being concluded,
it
denied that the negotiations were embarked upon before the restraint
period of three months, specified in Clauses 2.3 and
11.1 of the
Heads, expired.





In
the circumstances, Stanmarker decided to institute a civil action in
the High Court against Metallon claiming damages for breach
of
contract in the sum of US$27 315 797.00. However, as
Metallon is a
peregrinus,
and the High Court did not, therefore, have the jurisdiction to
entertain such an action, which sounded in money, unless the
defendant
was within Zimbabwe, or property belonging to the defendant
was within Zimbabwe and could be attached in order to confirm the
jurisdiction
of the High Court, Stanmarker applied in the court
a quo
for an order confirming the jurisdiction of that court in the
proposed action.





That
application was subsequently dismissed with costs on the ground that
the beneficial interest which Metallon had in Independence
was not
the kind of interest which could be attached to confirm the
jurisdiction of the court. Aggrieved by that decision, Stanmarker
appealed to this Court.





The
common law position on the attachment of property in order to confirm
jurisdiction was set out by BECK J (as he then was)
in
African
Distillers Ltd v Zietkiewicz and Ors

1980 ZLR 135 (GD) at 136 F-H as follows:





“The
well settled common law, for which there is no dearth of judicial
authority, is that for claims that sound in money brought by
an
incola
or a
peregrinus
against a
peregrinus,
there must be an arrest of the person of the defendant
peregrinus
or an attachment of his property within the territorial jurisdiction
of the Court in order to found jurisdiction, or to confirm
jurisdiction
in those cases where some other jurisdictional ground
exists in relation to the claim – such as, for example, that it
arises from
a contract concluded or a delict committed within the
Court’s territorial limits of jurisdiction. Such arrests or
attachments
are necessary in order to satisfy, albeit only partially
and imperfectly in some cases, the doctrine of effectiveness, for the
Court
will not concern itself with suits in which the resulting
judgment will be no more than a
brutum
fulmen
. (Foord
v Foord
1924 WLD 81 at
87;
Thermo Radiant Oven
Sales (Pty) Ltd v Nelspruit Bakeries (Pty) Ltd

1969 (2) SA 295 (AD) at 300D and 307A-311E).”





The
common law position was altered by s 15 of the High Court of
Zimbabwe Act [
Chapter 7:06]
which reads as follows:





“In
any case in which the High Court may exercise jurisdiction founded on
or confirmed by the arrest of any person or the attachment
of any
property, the High Court may permit or direct the issue of process,
within such period as the court may specify, for service
either in or
outside Zimbabwe without ordering such arrest or attachment, if the
High Court is satisfied that the person or property
concerned is
within Zimbabwe and is capable of being arrested or attached, and the
jurisdiction of the High Court in the matter shall
be founded or
confirmed, as the case may be, by the issue of such process.”





Thus,
whereas under the common law “there must be an arrest of the person
of the defendant
peregrinus
or an attachment of his property within the territorial jurisdiction
of the court in order to found jurisdiction, or to confirm
jurisdiction
in those cases where some other jurisdictional ground
exists in relation to the claim”, the court now has a discretion as
to whether
the arrest of the defendant
peregrinus
or the attachment of his property should be ordered. However, the
plaintiff still has to show that the defendant
peregrinus
is within Zimbabwe or that property belonging to the defendant
peregrinus
is within Zimbabwe and is capable of being attached.





In
the present case, as the contract in question was concluded in
Zimbabwe, a
causa
jurisdictionis
, apart
from attachment of Metallon’s property, exists. Nevertheless,
Stanmarker had to establish that Metallon had property in
Zimbabwe
which could be attached.





Having
said that, I now wish to deal with Stanmarker’s application to
adduce further evidence on appeal. The application was
made at the
hearing of the appeal and was opposed by Metallon. After hearing
both counsel, we reserved our decision on the matter
and indicated
that the decision would form part of the main judgment in this
appeal.





The
basic requirements which must be satisfied by the applicant in an
application for leave to adduce further evidence on appeal
were set
out by HOLMES JA in
S
v de Jager
1965
(2) SA 612 (A). At 613 B-E the learned JUDGE OF APPEAL said:





“Accordingly,
this Court has, over a series of decisions, worked out certain basic
requirements. They have not always been formulated
in the same
words, but their tenor throughout has been to emphasise the Court’s
reluctance to re-open a trial. They may be summarised
as follows:





(a) There
should be some reasonably sufficient explanation, based on
allegations which may be true, why the evidence which it is sought
to
lead was not led at the trial.





(b) There
should be a
prima facie
likelihood of the truth of the evidence.





(c) The
evidence should be materially relevant to the outcome of the trial.





See
R v de Beer
1949 (3) SA 740 (AD) at p 748;
R
v Wiemers and Ors
1960
(3) SA 508 (AD) at pp 514-5;
R
v Madikane
1960 (4) SA
776 (AD) at p 780;
R
v Nkala
1964 (1) SA
493 (AD); …”.





The
above requirements were subsequently quoted with approval by this
Court in
S v Mutters
and Anor
1987 (1) ZLR
202 (SC) at 204G-205A;
S
v Osborne
1989 (3) ZLR
326 (S) at 336 D-G; and
S
v Kuiper
2000 (1) ZLR
113 (S) at 116 A-C.





I
now wish to examine Stanmarker’s application in order to determine
whether the requirements set out above have been met.





In
the founding affidavit, a director of Stanmarker averred as follows:





“… at
the time of the preparation, argument and determination of the case
in the court
a quo,
the appellant did not have the additional information relating to the
acquisition by the respondent of Independence Gold Mining
Zimbabwe
(Private) Limited that it seeks leave to produce. However,
subsequent to the handing down of the judgment of the court
a quo
on 25 March 2003, and as a result of the conduct of the
respondent in respect of the operations of Independence Gold Mining
Zimbabwe (Private) Limited and its own corporate activity in
Zimbabwe, the appellant has become aware of or has received from
various
sources, documentation which clarifies the relationship
between the respondent and Independence Gold Mining Zimbabwe
(Private) Limited
and sets out in more detail the exact nature of the
respondent’s interest in Independence Gold Mining Zimbabwe
(Private) Limited.”





In
determining the validity of these averments, the date when the
proceedings in the court
a quo
were instituted is of crucial importance. The proceedings were
instituted as an urgent
ex
parte
chamber
application on 30 January 2003. When it was subsequently
placed before the learned judge in chambers, he directed
that it be
served on Metallon, and agreed to hear it later on an urgent basis.
The application was later heard on 8 March
2003 and the judgment
was handed down on 25 March 2003.





Some
of the documents sought to be produced as additional evidence on
appeal are not dated, for example, those prepared for the
occasion
marking the launching of Metallon in Zimbabwe. These documents
show,
inter alia,
Metallon’s “Family Tree”, and describe Independence as a
division of Metallon. The documents would not have been available
to Stanmarker when the urgent chamber application was filed in
January 2003 because Metallon was only launched in Zimbabwe on
3 April
2003.





However,
the most important documents sought to be produced are dated, and
shed a lot of light on Metallon’s control over Independence
and its
assets.





The
first of these documents is a letter bearing Metallon’s letterhead
and which was written to the Minister by Nonkqubela Maliza
(“Maliza”), Metallon’s head of corporate affairs. It is dated
12 March 2003, long after the urgent chamber application
had
been filed, and reads as follows:





“Dear
Minister …





RE:
INVITATION TO THE LAUNCH OF METALLON GOLD IN ZIMBABWE AND A TOUR OF
SHAMVA MINE





The
Chairman of Metallon Corporation, Mr Mzi Khumalo, would be
honoured if the Minister could join him and his colleagues
as
they launch Metallon Gold in Zimbabwe
.
We would appreciate it greatly if the Minister would avail himself
to deliver the keynote address at this event.





This
event will be held on 03 April 2003 at 18H00 at Amanzi
Restaurant, Harare, and will be followed by a visit to Shamva Mine
on
Friday 04 April at 10H00.” (emphasis added)





The
second document is another letter to the Minister, dated 28 March
2003. It was written by Maliza and, in relevant part,
reads as
follows:





“Honourable
Minister





Further
to the telephone discussion between the undersigned and Honourable
Minister … we are pleased to forward:





A
letter detailing
our
partnership with the Manyame Consortium in Independence Gold and an
outline of our production and expansion plans for Independence
Gold

…”. (emphasis added)





The
third document is a letter written by Greg Hunter, a director of
Metallon. It is dated 28 March 2003 and, in relevant
part,
reads as follows:





“Honourable
Minister





CURRENT
STATUS OF INDEPENDENCE GOLD MINES (PVT) LIMITED





1. SALE
OF SHARES IN THE COMPANY





As
mentioned in my letter dated 27
th March
2003, I indicated that we had now signed Heads of Agreement with a
grouping of local Zimbabweans that would allow them
to purchase up to
30% of the company. The grouping have elected to call themselves
the Manyame Consortium. …





The
structure of the deal will result in the formation of a private
company, Newco, which will hold the 30%.





We
have also agreed that Cableair and Newco will procure the formation
of the staff incentive trust (SIT), which will acquire up to
5% of
Newco’s shareholding … .








2. OPERATIONAL
ISSUES





… An
initiative we have instituted
to
support our operations and to ensure that they are able to produce
without disruption
is
the procurement of maize meal, rock drill spares, cement, steel
balls, pump spares and even cyanide outside of Zimbabwe. To
date we
have outstanding orders for the above amounting to some R18.3m over
the next 3-6 months.





We
are also actively looking at the sponsorship of the School of Mines
in Bulawayo, a bursary scheme for the University and we have
already
injected more than Z$1m into our local school bursary fund. In
addition we continue to look at the best option for
upgrading
the buses at our mines, a programme for the upgrading of housing …
and the upgrading of clinics
.





All
the above issues are continually examined, planned and where possible
executed. …





We
are committed to building a substantial and profitable gold producer
in Zimbabwe and we have the assets and the people to do this.”

(emphasis added)





The
fourth and last document of relevance in the application for leave to
adduce further evidence is a letter to the Minister.
It is dated
2 September 2003 and was written by Collen Gura, a director
of Independence. The significance of this letter
is that it shows
that Independence’s letterhead had been altered so as to indicate
that the company had become a division of Metallon.
In addition,
the letter shows that Independence has three directors – A J Reve
(“Reve”), G Hunter (“Hunter”)
and C Gura (“Gura”).





It
is pertinent to note that Reve and Hunter, both of whom are
South African, are also members of Metallon’s Board of
Directors
in Johannesburg.





Applying
the test set out in
S v
de Jager supra
, I
am satisfied that Stanmarker has proffered a reasonably sufficient
explanation as to why the evidence sought to be adduced on
appeal was
not led in the court
a quo.
In addition, I am satisfied that the evidence is cogent and
materially relevant to the outcome of this appeal. The application
for leave to adduce further evidence is, therefore, granted.
However, I make no order as to costs as neither party was at fault.





Having
said that, I now revert to the main issue in this appeal.





The
legal requirements for an order such as the one sought by Stanmarker
in the court
a quo
were set out by OLIVIER J in
Numil
Marketing C C and Anor v Sitra Wood Products PTE Ltd and Anor

1994 (3) SA 460 (C). At 463 F-I the learned judge said:





“It
is common cause that an applicant for attachment must show that:





(1) it
has a
prima facie
cause of action against the defendant;





(2) the
defendant is a
peregrinus
of the Republic; and





(3) the
defendant is within the area of jurisdiction of the Court or that the
property in which the defendant has a beneficial interest
is within
that area.





…
The
requirement to establish a
prima
facie
cause of action
means, in this context, that the applicant must tender evidence
which, if accepted, will establish a cause of action.
The fact that
such evidence is in dispute does not preclude an order for attachment
being granted. (See
Longman
Distillers Ltd v Drop Inn Group of Liquor Supermarkets (Pty) Ltd

1990 (2) SA 906 (A) at 914 E-F;
Inter-Science
Research and Development Services (Pty) Ltd v Republica Popular de
Mocambique
1980 (2) SA
111 (T) at 118H-119A).”






In
my view, those are the requirements which Stanmarker had to meet in
the court
a quo.
The learned judge correctly fond that the first two requirements
had been met.





However,
with regard to the third requirement he concluded that although
Metallon had a beneficial interest in Independence, that
was not the
kind of interest which could be attached to confirm jurisdiction.
In my view, the learned judge erred in this regard.





An
interest in property short of ownership nevertheless constitutes a
right capable of being attached and sold in execution. Thus
in
Nkwana v Hirsch
1956 (2) SA 219 (T), a decision of the Full Bench of the Transvaal
Provincial Division, DE WET J said the following at
221H:





“It
seems to me that any vested right or interest which a debtor is
himself able to sell or dispose of for value is capable of attachment
and capable of being sold in execution for the benefit of a judgment
creditor.”





Similarly,
in
Soja (Pty) Ltd v
Tuckers Land Development Corporation (Pty) Ltd and Anor

1981 (2) SA 407 (W) at 409 F-H NESTADT J said:





“The
question that arises is whether what was purportedly attached was
capable of attachment. A creditor, having been granted a judgment
sounding in money against its debtor and not obtaining satisfaction
thereof, is entitled to have issued a writ of execution which
serves
as a warrant to the Deputy Sheriff … to take possession, by
attachment, of so much property of the debtor as will realise
by
public sale the amount of the judgment and costs. Such property
includes the judgment debtor’s incorporeal rights (Herbstein
and
Van Winsen
The
Civil Practice of the Superior Courts in South Africa

3 ed at 615, 635). The learned authors give a number of
examples of incorporeal rights which may be attached in execution.

One of them is the right, title and interest of a litigant in an
action (Marais v
Aldridge and Ors
1976
(1) SA 746 (T) at 750).





The
test or criterion would seem to be that laid down by the Transvaal
Full Bench in
Nkwana v
Hirsch
1956 (2) SA 219
(T) which was approved in
Nkwana
v Hirsch
1956 (4) SA
450 (A).”





Thus,
various types of interests and incorporeal rights in property are
capable of being attached and sold in execution. In our
jurisdiction, the procedure to be followed in attaching incorporeal
property or incorporeal rights in property is set out in r 343
of the High Court Rules, 1971. Once the right or interest is
identified, there should be no difficulty in attaching it.





In
the present case it was common cause that Metallon had a beneficial
interest in Independence. In addition, and more importantly,
it is
clear from the additional evidence admitted on appeal that Metallon
has complete control over Independence and its assets.





In
the first place, the documents produced by Stanmarker show that two
of the three directors of Independence are also directors
of
Metallon. That means that Metallon is in effectual and constant
control of Independence.





Secondly,
the documents indicate that all the production and expansion plans
are prepared for Independence by Metallon.





And,
thirdly, Metallon is directly involved in all operational issues
affecting Independence, which include the procurement, outside
Zimbabwe, of maize meal, cement, rock drill spares, steel balls, pump
spares and even cyanide. In addition, Metallon takes decisions
on
matters such as the upgrading of buses, houses and clinics at the
five mines, matters which in fact should be handled by Independence.

Undoubtedly, it is Metallon which would decide whether the mines
should be sold or not.





In
my view, the control which Metallon has over Independence and its
assets is of great commercial value. It is property which
can be
attached and sold in execution. I find support for that view in the
House of Lords’ decision in
Short
and Anor v Treasury Commissioners

[1948] AC 534 (HL).





In
that case, all the shares of a company called Short Brothers
(Rochester and Bedford) Limited (“Short Brothers”) were being
acquired by the Treasury under a Defence Regulation which provided
for payment of their value as between a willing buyer and a willing
seller. Each share was valued on the basis of the quoted market
price.





However,
the shareholders argued that as all the shares were being acquired,
stock exchange prices were not a true criterion, and
that there were
two ways of determining the real value of the shares. The first was
that the whole undertaking should be valued
and the global price thus
determined apportioned among the shareholders; and the second was
that the value of the shares should be
the price which one buyer
would pay for all the shares, which price should then be similarly
apportioned.





Although
the alternative ways of determining the value of the shares were
rejected, it was conceded by the Court of Appeal and the
House of
Lords that had any individual shareholder held a sufficient block of
shares to give him control of the company, then he
might have been
entitled to a higher price than the total stock exchange value of all
his shares, since he would then have been selling
an item of property
– control – additional to his shares.





At
546 LORD UTHWATT said:





“I
desire only to add that if some one shareholder held a number of
shares sufficient to carry control of the company, it might well
be
that the value proper to be attributed to his holding under the
regulation was greater than the sum of the values that would be
attributed to the shares comprised in that holding if they were split
between various persons. The reason is that he has something
to
sell – control – which the others considered separately have
not.”





I
respectfully agree with the learned LAW LORD.





Accordingly,
the learned judge in the court
a quo
ought to have granted the order sought by Stanmarker to enable it to
litigate at home.





In
the circumstances, the following order is made –





1. The
appeal is allowed with costs.









2. The order of the court a quo
is set aside and the following is substituted –






“(a) The jurisdiction of this
court in the dispute between the applicant and the first respondent
is hereby confirmed.






(b) The applicant is granted
leave to serve the Summons and Declaration in respect of its claim
for damages against the first respondent,
together with a copy of
this Order, upon the first respondent’s legal practitioners, Messrs
Gill, Godlonton & Gerrans.






(c) Service of the Summons and
Declaration, together with a copy of this Order, may be made on the
first respondent, or any responsible
person, at 161 Rivonia
Road, Sandton, Johannesburg, South Africa, by the Sheriff of
Johannesburg, Gauteng Province, South Africa,
or his lawful
Deputy or Assistant. The said Sheriff, Deputy or Assistant shall
certify service of the said documents by affidavit
sworn to before a
Notary Public in South Africa and filed of record with this
Court.






(d) The costs of this application
shall be paid by the first respondent.”





CHEDA
JA: I agree.


GWAUNZA
JA: I agree.


Kantor
& Immerman
,
appellant's legal practitioners


Gill,
Godlonton & Gerrans
,
respondent's legal practitioners