Court name
Supreme Court of Zimbabwe
Case number
SC 15 of 2009
Civil Appeal 68 of 2006

Gonye v Gonye (68/06) (SC 15 of 2009, Civil Appeal 68 of 2006) [2009] ZWSC 15 (01 April 2009);

Law report citations
Media neutral citation
[2009] ZWSC 15

REPORTABLE ZLR (5)





Judgment
No. 15/09


Civil
Appeal No. 68/06








MASIYIWA
CLEOPAS GONYE v STELLA MARIS GONYE








SUPREME
COURT OF ZIMBABWE


SANDURA
JA, ZIYAMBI JA & MALABA JA


HARARE,
MARCH 25, 2008 & APRIL 2, 2009









O Takaindisa, for the appellant



J R Tsivama, for the respondent









MALABA JA: This is an appeal against part of the judgment given
by the High Court on 22 February 2006 in an action for a decree
of
divorce and ancillary relief commenced by the appellant against the
respondent. The question for determination is whether in
making the
order with regard to the division, apportionment or distribution of
the assets of the spouses, the court a quo failed to
judicially exercise the discretion conferred upon it under s 7(1) of
the Matrimonial Causes Act [Cap. 5:13](“the Act”) as
alleged in the grounds of appeal.







The marriage which was dissolved by the court a quo on 22
February 2006 had been solemnized by the parties on 20 May 1972 in
terms of the African Marriages Act [Cap. 238] (now the
Customary Marriages Act [Cap. 5:07]). It was a potentially
polygamous marriage relationship. For a period of thirty-five years
the parties enjoyed a happy marriage
relationship which was blessed
with four children, two girls and two boys. The children are all
adults. In 2002 irreconcilable
differences developed between the
parties leading to a voluntary separation on 7 October.







On 13 April 2004 the appellant, who had taken another wife, issued
out of the High Court summons commencing action in which he
claimed
against the respondent a decree of divorce and the division of the
assets in the manner he considered would be just and
equitable. The
respondent conceded that the marriage relationship had irretrievably
broken down. She claimed the division of
the assets in the manner
she too considered would be just and equitable. She also claimed
periodical payment of maintenance at
the rate of $2 000 000.00 per
month until she died or re-married.







At the end of the trial the court a quo made an Order in the
following terms:






“1. That a decree of divorce be and is hereby granted in terms of
the plaintiff’s claim;








  1. That the defendant be awarded all the household movable assets
    except the Imperial upright freezer and a washing machine which
    are
    awarded to the plaintiff.









  1. That the defendant be awarded:









    1. 25% of the value of the Mazda 626 and No. 12 Lomagundi Road which
      shall be valued by a valuer from the Master’s Office’s
      list of
      valuers.











    1. That the defendant be awarded 25% of the value of the Domboshava
      House.










  1. That the farm (Wonder Valley Farm), the farm equipment, farm
    movables including the herd of cattle be shared at the rate of 70%

    for the plaintiff and 30% for the defendant.









  1. That the defendant is awarded 25% of the value of Wonder Valley
    (Pvt) Ltd.








  1. That the value of the assets to be shared under 3(b), 4 & 5
    shall be obtained by adding the plaintiff’s and the defendant’s

    valuation and dividing that figure by two.








  1. That the plaintiff shall maintain the defendant at the rate of $2
    000 000 per month until she dies or re-marries.








  1. That the plaintiff is granted the option to buy out the defendant in
    respect of Orders 3, 4 and 5 by not later than the 30th
    of July 2006.








  1. That the plaintiff shall pay the defendant’s costs.”








The appeal was noted against the orders in paras 3, 4, 5 and 7. At
the hearing of the appeal Mr Takaindisa indicated that the
appellant was abandoning the appeal against the orders in para 4 and
5. He also said that he was unable to
point to any misdirection on
the part of the learned Judge to support the ground of appeal against
the order awarding the respondent
periodical payments of maintenance
in the sum of $2 000 000.00 per month until she died or re-married.







In arriving at the decision to order periodical payments of
maintenance in the amount fixed, the court a quo exercised a
broad discretion. For this Court to interfere with the exercise of
discretion by the court a quo, it had to be shown that one of
the grounds upon which an appellate court may interfere with the
exercise of discretion by a trial
court existed.







In Barros & Anor v Chimphonda 1999(1) ZLR 58(S) GUBBAY CJ
at 62G-63A said:







“These grounds are firmly entrenched. It is not enough that the
appellate court considers that if it had been in the position
of the
primary court it would have taken a different course. It must appear
that some error has been made in exercising the discretion.
If the
primary court acts upon a wrong principle, if it allows extraneous or
irrelevant matters to guide or affect it, if it mistakes
the facts,
if it does not take into account some relevant consideration, then
its determination should be reviewed and the appellate
court may
exercise its own discretion in substitution provided always it has
the materials for so doing. In short, this Court
is not imbued with
the same broad discretion as was enjoyed by the trial court.”







As the court a quo was not shown to have made any of the
errors referred to in the Barros case supra, this court
has no ground on which it can interfere with the determination of the
question of the liability of the appellant to
make periodical
payments of maintenance to the respondent until she died or
re-married.







The order in para 3 directing the appellant to pay the respondent 25%
of the value of the Mazda 626 registration No. 843-703S and
25% of
the value of Domboshava House was appealed against on the ground that
the learned Judge misdirected himself in treating
these assets as
“matrimonial property”. The contention was that the appellant
acquired the motor vehicle and completed the
construction of the
house long after the parties had separated. The same argument was
advanced in respect of Stand No. 12 Lomagundi
Road, Mount Pleasant.
It was argued further that the immovable property was registered in
the name of a third party. The effect
of the contention was that the
court in the exercise of the broad discretion conferred on it under s
7(1) of the Act should not
have granted the respondent the right to a
portion of the value of property purchased by the appellant when the
parties were on
separation.







The Mazda 626 motor vehicle was, indeed, purchased by the appellant
and registered in his name in 2003. He completed the construction
of
the Domboshava House in 2004. The construction commenced when the
parties were still living together. The intention had been
to use
the house as a matrimonial home whenever they visited the communal
area. Stand No. 12 Lomagundi Road, Mount Pleasant was
purchased in
July 2004. He registered the property in the name of his new wife.







It was also common cause at the trial that in 1994 the appellant
formed a company called Wonder Valley (Pvt) Ltd (“the company”).

The company had four shares of $1.00 each which the appellant
allotted to the respondent, two sons and himself. The nominal
shareholders did not pay for the shares. The object of the company
was to carry on farming business on Wonder Valley Farm (“the

farm”). The farm was owned by the appellant, so were all the
equipment and implements used at the farm. The appellant took
full
responsibility of managing the farming business which involved
growing cotton and maize. The respondent joined her husband
at the
farm in March 1987. She, however, did not play an active role in the
management of the farming business. She looked after
the matrimonial
house and the children. She started a poultry project and generated
income which she used as she pleased.







The respondent claimed 25% of the value of the Mazda 626 and the
immovable properties on the ground that the money used to purchase

the assets in question came from the proceeds of the farming
operations. The contention was that the money belonged to the
company
in which she had an interest. She said that the appellant
had no other source of income besides the farming business. The
appellant
did not deny that the money he used to purchase the assets
in question came from the sale of farm produce.







The learned Judge found that the money used by the appellant to
purchase the Mazda 626, Stand No. 12 Lomagundi Road, Mount Pleasant

and for the construction of the Domboshava house belonged to the
company. On the basis that the respondent had an interest in
the
company he held that she was entitled to 25% of the value of each
property. Whilst Mr Takaindisa argued that the learned judge
misdirected himself in approaching the question of the apportionment
of the proceeds used to purchase
these assets on the basis that the
respondent had a right to claim company property, he nonetheless
confessed that he was unable
to go so far as to contend that the
resultant apportionment was in effect not just and equitable when
viewed in a situation where
the corporate veil has been lifted.







It is important to note that a court has an extremely wide discretion
to exercise regarding the granting of an order for the division,

apportionment or distribution of the assets of the spouses in divorce
proceedings. Section 7(1) of the Act provides that the court
may
make an Order with regard to the division, apportionment or
distribution of “the assets of the spouses including an Order
that
any asset be transferred from one spouse to the other”. The rights
claimed by the spouses under s 7(1) of the Act are dependent
upon the
exercise by the court of the broad discretion.







The terms used are the “assets of the spouses” and not
“matrimonial property”. It is important to bear in mind the
concept
used because the adoption of the concept “matrimonial
property” often leads to the erroneous view that assets acquired by
one
spouse before marriage or when the parties are on separation
should be excluded from the division, apportionment or distribution

exercise. The concept “the assets of the spouses” is clearly
intended to have assets owned by the spouses individually (his
or
hers) or jointly (theirs) at the time of the dissolution of the
marriage by the court considered when an order is made with
regard to
the division, apportionment or distribution of such assets.







To hold, as the court a quo did, that as a matter of principle
assets acquired by a spouse during the period of separation are to be
excluded from the division,
apportionment or distribution a court is
required to make under s 7(1) of the Act is to introduce an
unnecessary fetter to a very
broad discretion, on the proper exercise
of which the rights of the parties depend.







It must always be borne in mind that s 7(4) of the Act requires the
court in making an order regarding the division, apportionment
or
distribution of the assets of the spouses, and therefore granting
rights to one spouse over the assets of the other, to have
regard to
all the circumstances of the case. The object of the exercise must
be to place the spouses in the position they would
have been in had a
normal marriage relationship continued between them. As was pointed
out by LORD DENNING MR in Watchel v Watchel [1973] 3 ALL ER
829 at p 842:







“In all these cases it is necessary at the end to view the
situation broadly and see if the proposals meet the justice of the

case.”







Each case must depend on its own facts.







I accept the contention by Mr Takaindisa that having found
that the money used to purchase the Mazda 626, Stand No. 12 Lomagundi
Road, Mount Pleasant and for the construction
of the Domboshava house
belonged to the company, the learned Judge erred in holding that the
respondent was entitled to make a
claim to a share of company
property. A company being a legal persona owns its own
property. Shareholders do not own company property.







Whilst accepting the principle that company property does not belong
to the shareholders and that only officials duly authorized
by
resolutions can claim company property from third parties, Mr Tsivama
argued that this was a proper case where the circumstances justified
the lifting of the corporate veil in order that justice could
be done
in the apportionment of the assets in terms of s 7(1) of the
Act. In other words the court a quo was faced with the
question whether the property rights, a proportion of the value of
which was claimed by the respondent, in reality
lay with the
appellant or the company.







In the Shipping Corp of India Ltd v Evdomon Corp & Anor 1994
(1) SA 550(A) at 566C-E, quoted with approval by SANDURA JA in Van
Niekerk v Van Niekerk & Ors
1999(1) ZLR 421(S) at 427H-428A,
CORBETT CJ said:







“It seems to me that, generally, it is of cardinal importance to
keep distinct the property rights of a company and those of
its
shareholders, even where the latter is a single entity, and that the
only permissible deviation from this rule known to our
law, occurs in
those (in practice) rare cases where the circumstances justify
‘piercing’ or ‘lifting’ the corporate veil.
… I do not find
it necessary to consider, or attempt to define, the circumstances
under which the court will pierce the corporate
veil. Suffice it to
say that they would generally have to include an element of fraud or
other improper conduct in the establishment
or use of the company or
the conduct of its affairs.”







In Cattle Breeders Farm (Pvt) Ltd v Veldman (2) 1973(2) RLR
261 the husband used the company to claim an eviction of his wife
from a matrimonial house leased by the company.
It was found that
the company was a “one man company”. The husband was its sole
effective shareholder. The court was prepared
to pierce the
corporate veil to do justice to the wife. BEADLE CJ said that the
husband owned the company and its mind was his.







The learned CHIEF JUSTICE went on say at p 267C-D that:







“In the circumstances of this particular case it seems to me that
the appellant company was nothing more than Veldman’s alter
ego,
and that the appellant company possessed no greater rights to eject
the respondent than Veldman himself possessed. … I propose
to
examine this application on the basis that it was Veldman himself who
brought the application because I cannot see on the facts
of this
case how it can be held that the appellant company could have any
greater rights than Veldman himself possessed.”







Had the corporate veil not been lifted, Veldman would have succeeded
in using the company to avoid the duty he owed to his wife
to provide
her with suitable alternative accommodation before evicting her from
the matrimonial house.







In this case, the respondent did not take any active part in the
administration of the affairs of the company. For all practical

purposes the company was a “one-man company”. The appellant was
the sole active director. He used his own land, implements
and
labour to generate the income which he used to purchase the
properties, the proportion of the values of which the respondent

claimed. The three assets which belonged to him constituted the
income producing assets. The share held by the respondent was
not an
income producing asset. In other words, there was no share capital
invested by the respondent in the company which contributed
to the
production of the money used to purchase the properties in question.







Stripped of the corporate veil, the proceeds from the farming
operations belonged to the appellant. The company was nothing more

than the appellant’s alter ego. It had no greater right to the
money than he possessed.







The question is whether, considering all the circumstances of the
case, the apportionment of the values of these assets ordered
by the
court a quo produced a just and equitable result. In other
words, did the apportionment achieve the main purpose of the exercise
which is
to place the parties in the position they would have been in
had a normal marriage relationship continued. I am proceeding on the

basis that the proceeds from the farming operations belonged to the
appellant and would have fallen within the category of the
“assets
of the spouses”.







The Mazda 626 motor vehicle and the Domboshava house belonged to the
appellant at the time the court a quo made the Order with
regard to the apportionment of their values. The fact that the
assets were acquired or created during the
period the spouses were on
separation does not put them outside the category of the “assets of
the spouses”. Mr Takaindisa properly conceded the fact that
when all the circumstances of the case are taken into account the
granting to the respondent of
the right to 25% of the value of each
of these assets was a proper exercise of discretion by the court a
quo
.







The 25% share in the proceeds from the farming operations which came
into the possession of the appellant before he used it to
purchase
Stand No. 12 Lomagundi Road, Mount Pleasant would have been a benefit
to which the respondent would have been entitled
had a normal
marriage relationship between the spouses continued. It is a benefit
she lost as a result of the breakdown of the
marriage. Section
7(4)(f) of the Act enjoins a court to have regard to the value of
such a benefit. To place the spouses in the
position they would have
been in had a normal marriage relationship continued, it was just and
equitable to award the respondent
25% of the value of Stand No. 12
Lomagundi Road, Mount Pleasant.







The real rights in the house vested in the new wife. The respondent
did not claim a share in the house. She claimed an amount
of money
equivalent to 25% of the value of the immovable property. The claim
did not affect the interests of the new wife in the
property. The
value of the property is necessary only for the purpose of fixing the
amount of money the appellant would be obliged
to pay to the
respondent. Since the respondent would have no right to enforce the
order by executing against the immovable property
owned by the third
party, it was inappropriate for the learned Judge to give the
appellant the right of option in para 8 to buy
out the respondent in
respect of Stand No. 12 Lomagundi Road, Mount Pleasant. The property
does not belong to him.







The order in para 8 must be read as excluding any reference to Stand
No. 12 Lomagundi Road, Mount Pleasant. It is also necessary
to
extend the time within which the option to buy out the respondent in
respect of the other assets referred to in para 8 of the
order may be
exercised to 30 July 2009.







The appeal is otherwise dismissed with costs.















SANDURA JA: I agree.















ZIYAMBI JA: I agree.











Scanlen & Holderness, appellant’s legal practitioners


Chihambakwe,
Mutizwa & Partners
, respondent’s legal practitioners