Court name
Supreme Court of Zimbabwe
Case number
SC 10 of 2006
Civil Appeal 293 of 2005

Madzivire and Others v Zvarivadza and Others (93/05) (SC 10 of 2006, Civil Appeal 293 of 2005) [2006] ZWSC 10 (26 June 2006);

Law report citations
Media neutral citation
[2006] ZWSC 10













REPORTABLE (18)


Judgment
No. SC 10/06


Civil Appeal No. 293/05








(1) TAPSON
MADZIVIRE (2) PHINIAS NGARAVA (3) JOSEPH
MUBWANDARIKWA (4) CRUSH SECURITY
(PRIVATE)
LIMITED v





(1) MISHECK
BRIAN ZVARIVADZA (2) COBRA SECURITY (PRIVATE)
LIMITED (3) THE REGISTRAR
OF COMPANIES








SUPREME COURT OF
ZIMBABWE


CHIDYAUSIKU CJ,
SANDURA JA & CHEDA JA


HARARE, JANUARY 17 & JUNE 27,
2006








H Zhou, for the
appellants





H Simpson, for
the respondents






CHEDA JA: The first, second and third appellants are directors
of the fourth appellant. The first respondent is also a director
of
the fourth appellant. The first appellant is the managing director
of the fourth appellant.





Sometime in March
2004 the first appellant discovered that there were documents filed
in the office of the third respondent which
related to the fourth
appellant. According to him, these documents were forged. The
documents were allotment forms for shares
to persons who were not
allocated shares in the fourth appellant, and minutes of meetings
which had never taken place.





The first appellant
proceeded to make an application to the High Court asking for the
following order:






“1. The Return of Allotments form No. CR 2 filed of record
with the Registrar of Companies (the third respondent) on 28 February
2003 and date-stamped on 13 March 2003 be and is hereby declared
null and void ab initio.





2. The third respondent
be and is hereby ordered to cancel the Return of Allotments form No.
Cr 2 (referred to in paragraph 1
above).





3. The forms of Annual
Returns for 2000, 2001, 2002, 2003 and form CR 6 be and are
hereby declared null and void ab initio.





4. The third respondent
be and is hereby ordered to cancel the said forms of Annual Returns
for 2000, 2001, 2002, 2003 and form CR 6.





5. In the event that
the third respondent fails to act in accordance with the terms of
paragraphs 2 and 4 of this order, the Deputy
Sheriff be and is hereby
directed to cancel all documents/forms mentioned in this order.





6. The first, second
and third applicants be allowed/authorised to regularise the fourth
applicant’s papers/documents/forms to be
properly filed of record
with the third respondent as required by the Companies Act.





7. The first and second
respondents be and are hereby ordered to (the one paying the other to
be absolved) pay the costs on Attorney-client
scale.”






The High Court
dismissed this application.






However, it was established at the hearing in the High Court that
the documents had in fact been forged, but the first respondent
denied that he was the one who had forged the documents.





On appeal the
appellants have submitted the following as their main arguments:






“1. There was only one issue which the court a quo was
being called upon to determine in the light of the evidence placed
before it, which was whether the impugned documents must be
expunged
from the record of the fourth appellant kept by the Registrar of
Companies.





2. The question of the
locus standi of the appellants or the authority of the fourth
appellant to institute the application did not arise from the
papers.”







While it is correct that the issue of the locus standi of
the appellants or the authority of the fourth appellant was not
raised in the papers, there is no indication at all that authority
was granted to the first appellant by the fourth appellant to
institute proceedings on its behalf.





In his affidavit, the
first appellant says he was making the founding affidavit on his own
behalf and on behalf of the fourth appellant,
as well as on behalf of
the second and third appellants. These last two appellants have
filed affidavits to confirm this, but there
is nothing to that effect
from the fourth appellant.





Section 9 of the
Companies Act [Chapter 24:03] reads as follows:






“A company shall have the capacity and powers of a natural person
of full capacity in so far as a body corporate is capable of
exercising such powers.”






It is clear from the
above that a company, being a separate legal person from its
directors, cannot be represented in a legal suit
by a person who has
not been authorised to do so. This is a well established legal
principle, which the courts cannot ignore.
It does not depend on
the pleadings by either party.





The fact that the
first appellant is the managing director of the fourth appellant does
not clothe him with the authority to sue
on behalf of the company in
the absence of any resolution authorising him to do so.





In Burnstein v
Yale
1958 (1) SA 768, it was held that the general rule is that
directors of a company can only act validly when assembled at a board
meeting.





There is no evidence
that there was any service of a notice of a meeting to pass the
required resolution authorising the first appellant
to represent the
fourth appellant. Even if the first, second and third appellants
had agreed on the action, there is no indication
that the first
respondent, who is one of the directors, was served with a notice of
a meeting of directors to pass the resolution
of authority. Both
the fourth appellant and the first respondent are entitled to be
served with a notice of meeting so that a resolution
be passed
authorising the first appellant to represent the fourth appellant.
This was not done, and failure to do so renders the
decision to
represent the fourth appellant invalid.





An exception where a
meeting of directors and a resolution would not be required is where
a company has only one director who can
perform all judicial acts
without holding a full meeting. See African Diamond Distributors
(Pvt) Ltd v Van de Wetheuzen N.O. and Ors
1988 (4) SA 726.





Having said that, I
should add that even if the appellants could have sought an order in
their own right, such an order would not
be proper if the order would
have the effect of interfering with the records of the fourth
appellant when it had not been served.





The above reasons
support the conclusion that the court a quo arrived at,
and I find no misdirection in its refusal to grant the application.





However, it is clear
that the appellants have a genuine case that needs to be resolved,
because the fact that the entries in the
company’s records are
false is not disputed by the respondents.





For that reason,
closing the door by dismissing the application is not the appropriate
resolution of the matter.



I therefore make the
following order –






“1. The appeal is dismissed.






2. The order of the court a quo dismissing the
application is set aside.






3. The respondents are
granted leave to file a resolution duly passed by the fourth
respondent’s board of directors, authorising
the institution of
legal proceedings against the respondents.






4. The matter is
remitted to the court a quo (before the same or a
different judge) to determine it on the merits after the resolution
in paragraph 2 of this order has been
filed.







5. The costs of this appeal shall be borne by the first, second and
third appellants jointly and severally, the one paying the others
to
be absolved.”















CHIDYAUSIKU CJ:
I agree.














SANDURA JA: I
agree.
















Mhiribidi, Ngarava & Moyo, appellants' legal practitioners


Mushonga &
Associates
, respondents' legal practitioners