Songxiang Industry Investments (Pvt) Ltd v Simon Chivere & 3 Ors (HC 6533/18) and Lugania Investments (Pvt) Ltd v Rose Natalie Heuer & 2 Ors (HC 6440/18)

### Preamble
1
HH 484-18
HC 6533/18
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1.	SONGXIANG INDUSTRY INVESTMENTS (PVT) LTD

versus

SIMON CHIVERE

and

LUGANIA INVESTMENTS (PVT) LTD

and

ROSE NATALIE HEUER

and

MINISTER OF MINES AND MINING

DEVELOPMENT (N.O)

and

OFFICER IN CHARGE – ZIMBABWE

REPUBLIC POLICE MASHAVA POLICE STATION (N.O)

2.	LUGANIA INVESTMENTS (PVT) LTD					HC 6440/18

versus

ROSE NATALIE HEUER

and

THE PROVINCIAL MINING DIRECTOR

and

THE MINISTER OF MINES AND MINING DEVELOPMENT

HIGH COURT OF ZIMBABWE

MUZOFA J

HARARE, 13,18, 19 and 25 July 2018 & 15 August 2018

Urgent Chamber Application

1.	C. Daitai, for the applicant

I. Mataka, for the 1st and 2nd  respondents

No appearance for 3rd respondent

P. Macheka, for the 4th respondent

2.	I. Mataka, for the applicant

J. Tshuma, for the 1st respondent

No appearance for the 2nd and 3rd respondents

MUZOFA J: The two urgent chamber applications were consolidated upon request by parties, on the basis that the parties are substantially the same and the resolution of one application has a bearing on the outcome of the other. For convenience l will refer to parties by their names.

The background to the case which is undisputed is as follows. Rose Natalie Heuer “Rose” is the owner of several mining claims collectively known as Empress Mine in Mashava. Lugania Investments (Pvt) Ltd ‘Lugania’ is a registered company in terms of the law. Lugania entered into a tribute agreement with Rose to mine at Empress Mine. The tribute agreement expired and the parties entered into an agreement of sale. The agreement of sale is subject of a pending matter HC 5673/18 in which Lugania seeks transfer of the mining claims from Rose. Simon Chivere “Simon” was or is one of the shareholders in Lugania. There is an agreement of sale wherein Simon together with two other shareholders in Lugania, sold their entire shareholding in the company to Songxiang Industry Investments (Pvt) Ltd “Songxiang”. The sale agreement is subject of a pending matter under HC 172/18 wherein Simon seeks cancellation of the agreement of sale.

In case HC 6533/18 Songxiang approached the court on an urgent basis seeking spoliatory relief and an interdict as follows;

That you show cause to this Honourable Court why a final order should not be made in the following terms;

Terms of Final Relief Sought

The 1st respondent, his agents and assignees be and are hereby interdicted from entering, taking over operations or interfering in any manner whatsoever with the applicant’s lawful operations at Empress Mine until the determination of HC 172/18 in his favour or unless he is authorised to do so by any competent court.

Pending determination of HC 172/18 and HC 5673/18 the 4th respondent’s decision to stop the applicant’s lawful operations at Empress Mine be and  is hereby set aside.

The 1st respondent shall pay legal costs on a legal practitioner-client scale.

Interim Relief Granted

That pending the determination of this matter on the return day, the applicant be and is hereby granted the following relief:

The 1st respondent, his assignees and agents be and are hereby ordered to return possession and control of Empress Mine to the applicant upon service of this order.

The 1st respondent, his agents and assignees be and are hereby interdicted from entering Empress Mine without the authority of the applicant or interfering in any manner whatsoever with the applicant’s lawful operations at Empress Mine until the determination of HC 172/18 in his favour.

Pending determination of HC 172/18 and HC 5673/18 the applicant be and is hereby granted authority to carry out lawful mining operations at Empress Mine.

The 1st respondent shall pay legal costs on a legal practitioner-client scale.

Songxiang claims that, on the 4th of July 2017 it bought the entire shareholding in Lugania from Simon and the two other shareholders. It paid in full the purchase price of

US$1 500 000, upon signing of the agreement it took control and management of the mining claims under Lugania. The owner of the mining claims Rose was aware of this take over. Sometime in April 2018 Simon claimed he had not sold his shareholding in Lugania and instituted legal proceedings in this Court for the cancellation of the agreement of sale under HC 172/18. Despite the pending matter Songxiang continued to be in control of the operations in Lugania. To Songxiang’s surprise, before the determination of HC 172/18, on 6 July 2018 Simon took over the control of the company without a court order or even Songxiang’s consent. Simon claimed to be the majority shareholder. Following this takeover, Songxiang says it reported the matter to the police at Mashava Police Station and parties engaged but no amicable solution was found. On the 9th of July 2018, Simon started the process of elution of gold that was mined by Songxiang; Simon was likely to convert the proceeds of the sale of gold to his own use thereby prejudicing Songxiang causing irreparable harm. On the same day a letter was written to Simon by Songxiang’s legal practitioners to cease the activities he had engaged in at Lugania but he did not respond. To that extent Simon resorted to self help and despoiled Songxiang.

The application was opposed.	Simon deposed to an opposing affidavit in his capacity as first respondent and on behalf of Lugania. Simon’s authority to represent Lugania has been challenged in HC 6440/18. I shall not delve into that challenge because in this matter he deposed the affidavit in his personal capacity too.  Simon averred that the application is not urgent on two fronts. Firstly that Songxiang has no legal right to make any claim in Lugania because it was not involved in the sale of Empress Mine. In any event the sale has not been concluded and is subject of litigation under HC 5673/18 and no rights accrue to Songxiang, the applicant. On the second front he alleged that, the need to act arose on the 3rd of May 2018 when Songxiang was served with summons under case HC 172/18 in which he seeks cancellation of the purported sale of shares to Songxiang. Further to that, that Songxiang should not have proceeded by way of application since there are material disputes of fact that require being resolved by way of evidence.

On the merits various issues were raised. That the agreement of sale was of no legal force for non compliance with relevant regulations, that Songxiang paid for 35% of the shares and that Simon signed the agreement of sale while on a hospital bed. He states that Songxiang could not have taken control of Lugania in July 2017 when Empress Mine had not yet been transferred into Lugania’s name. Rose is the legal owner of the mine and Songxiang has no rights in the mine. Simon denied that he despoiled Songxiang at all. He stated that he has been in control of the company carrying on mining operations at Empress Mine with the knowledge of Songxiang.

Rose the 3rd respondent opposed the application too. She stated that she is the owner of Empress Mine. She entered into a sale agreement with Lugania. Lugania has since breached the conditions of sale and she has cancelled the agreement. A counterclaim shall be made for confirmation of the cancellation in HC 5673/18.Currently Lugania has no right to mine because  the sale agreement has been cancelled and that right has been taken away by the 4th respondent ‘the Minister’.

For the 4th respondent “the Minister” it was submitted that Lugania has no right to mine at Empress Mine. As the administrator of mines it knows Rose as the lawful holder of mining rights at Empress Mine. Lugania can only mine at Empress Mine if it has a tribute agreement with Rose or where it is the legal owner. Lugania has no such rights. The Court was referred to Section 275 (6) (a) of the Mines and Minerals Act. It was said an agreement of sale is not enough. No pleadings were filed in respect of the 5th respondent.

I am satisfied on urgency. This is because where a party alleges spoliation, there is an urgent need to stop the unlawful conduct and self-help and restore the status quo ante until the law has taken its course. In this case, if indeed Songxiang purchased the whole shareholding in Lugania in July 2017 and took control of the company and Simon without authority took control of Lugania on 9 July 2018, then there could be a valid basis for the matter to be head on an urgent basis.

I do not believe the need to act arose in May 2018 when the applicant was served with the summons in HC 172/18. The need to act could only arise when Simon purportedly took over   the control of Lugania when Songxiang was in peaceful possession or control of Lugania. This is an appropriate case to be heard on an urgent basis. `

This is primarily a dispute between the shareholders of Lugania over its control and ownership.

Spoliation

In an application for spoliation relief, the onus is on the applicant to prove that it was in peaceful possession and was dispossessed. The relief sought in such an application is final in effect and therefore the onus on the applicant is on a balance of probabilities. HERBSTEIN J in Kramer v Trustees Christian Coloured Vigilance Council, Grassy Park 1948(1) SA 748(C), at 753 said:

". . . two allegations must be made and proved, namely,  (a) that applicant was in peaceful and 	undisturbed possession of the property, and (b) that the respondent deprived him of the 	possession forcibly or wrongfully against his consent"

ADDELSON J in Bennett Pringle (Pty) Ltd v Adelaide Municipality 1977 D (1) SA 230 (E), at 233 observed that:

". . . it is not necessary that the possession be continuous, either by the claimant or his servants, if 	the nature of the operations which he conducts on the premises do not require his continuous 	presence In terms of all the authorities cited, the 'possession', in order to be protected by a 	spoliatory remedy, must still consist of the animus - the 'intention of securing some benefit to' the 	possessor; and of detentio, namely the 'holding' itself . . . If one has regard to the purpose of this 	possessory remedy, namely to prevent persons taking the law into their own hands, it is my view 	that a spoliation order is available at least to any person who is (a) making physical use of 	property to the extent that he derives a benefit from such use; (b) Intends by such use to secure 	the benefit to himself; and (c) is deprived of such use and benefit by a third person."

In Runsin Properties (Pty) Ltd v Ferreira 1982(1) SA 658(SE), at 670, the same learned judge said this on how the court should approach this remedy:

"The essence of the remedy by way of spoliation is that it is a robust one. Discretion and 	considerations of convenience do not enter into it."

In relation to what rights have to be determined in Oglodzinski v Oglodzinski 1976 (4) SA 273 (D) at 274 LEON J had this to say:

"In a spoliation application the Court does not decide what - apart from  possession - the rights of 	the parties to the spoliated property were before the act of spoliation but merely orders that the 	status quo be restored."

The requirement that the respondent's act of dispossession was unlawful can be met by showing that the respondent despoiled without recourse to a court of law and without the applicant's consent.

In this case the first issue for determination is whether Songxiang was in peaceful possession or control of operations at Lugania. As properly submitted for Lugania, there are material disputes of fact as to whether Songxiang bought the whole shareholding in Lugania and thereafter took control of operations.	Songxiang, the applicant said it bought all the shares in Lugania in July 2017 and attached the purported sale agreement and the proof of payment. There are material disputes as to whether the agreement of sale is perfecta. Whether the sale agreement was perfecta is relevant as it is the basis upon which Songxiang claims it took control of Lugania. Songxiang just alleged that it took control of Lugania in July 2017 there is nothing to support this averment. This was necessary in the light of Simon’s averment that Songxiang only paid for 35% shareholding, that on 18 July 2017 the three shareholders in Lugania confirmed such shareholding and produced a document confirming this position. If this were so then Songxiang could not take control of all the operations. Most importantly, Simon indicated that he has always been in control of Lugania. Lugania attached to its opposing papers a letter dated 11 August 2017 advising AMB (Global) of its shareholding, and that one Xiang Pigang was appointed a director with a 35% shareholding. The letter was signed by all the three shareholders that sold the shares to Songxiang. A letter dated 23 August 2017 signed by Simon as director and chairman of Lugania to Xiang Pigang was also attached. The letter advised Xiang Pigang of his appointment as director and holder of 35% shares in Lugania and the requirements to be met to regularize operations.

The letters contradict Songxiang’s assertion that it took control of Lugania in July 2017 for by August 2017 the understanding was that it was a holder of 35% shares only. Xiang Pigang was one of the directors. Beyond the said letters there is nothing to show who was in control of Lugania. It can only be inferred that by then Songxiang and the other three shareholders were on board.

There is no information how Simon took over operations at Lugania, what exactly did he do. This information could only be provided by a person who was present on 6 July 2018. The deposer of the affidavit for Songxiang does not say he was present on 6 July 2018 to explain how the takeover took place. It is necessary in such an application to file supporting affidavits to confirm the averments set out in the founding affidavit see Swimming Pool and Underwear Repair (Pvt) Ltd & Others v Jameson Rushwaya & Another SC 32/12.  Nothing was filed to confirm the events of the 6th of July. Songxiang’s application was not supported and it remained a bare allegation. The onus is on Songxiang to show that it was in peaceful possession and it was dispossessed. No affidavits were attached to confirm such possession and the dispossession.

It was submitted that Simon did not deny that he was involved in the elution of gold process at Lugania. Indeed this was not denied, what the applicant overlooked is that Simon said he has always been at Lugania, operating there. It therefore follows that the elution of gold on 9 July 2018 was just but part of operations.

I did not hear Songxiang make any meaningful submissions on the apparent disputes of fact that presented themselves in this case and the procedure adopted. The applicant was content to proceed with the matter under such circumstances. In Manduna v Mutizwa 1992 (2) ZLR 90 (SC) in a matrimonial case where the husband alleged spoliation the wife disputed that he was in control of the property. The Court accepted that there was a dispute of fact that could not be decided on the papers. It is my view that in this case there are material disputes of fact that cannot be resolved on paper as to the control of Lugania.

I am satisfied that Songxiang has failed to show that it was in peaceful possession or control of Lugania and was dispossessed on the 6th of July 2018 and  cannot grant  the spoliatory relief sought. Songxiang failed to discharge the onus placed on it by the law.

Interdict

For an applicant to succeed in an application for an interdict it should show.

A prima facie right even if it is open to doubt.

An infringement of such right by the respondent or a well-grounded apprehension of such an infringement.

A well-grounded apprehension of irreparable harm to the applicant

The absence of any other satisfactory remedy.

The balance of convenience favours the granting of the interlocutory interdict. See Setlogelo v Setlogelo  1914 AD 221

In this case the right that Songxiang has to show, is the right to operate or mine at Empress Mine.

According to Songxiang, it bought all the shareholding in Lugania. A copy of the agreement of sale was produced which show that Simon and two other shareholders in Lugania sold all their shareholding. The price and method of payment was agreed on. The applicant also produced the proof of payments. Although the agreement has been challenged by the first respondent, for the purposes of this case it remains valid and binding until the cancellation has been confirmed by a competent court.

The agreement of sale is prima facie evidence of Songxiang’s right in Lugania whether its shareholding is 35% or 100%. The terms of the interdict indicate that Songxiang seeks to prohibit Simon and his agents from interfering with its lawful operations at Empress Mine. In other words that Simon does not interfere with operations at Lugania. Songxiang therefore speaks on behalf of Lugania. The prima facie right to be established is Lugania’s right to operate. However it is not Lugania that is seeking the relief it is Songxiang a shareholder which is inappropriate.

Rose’s objection is unsustainable. This is because Rose and Lugania entered into a sale agreement. This sale agreement is still extant until its cancellation is confirmed by a competent court. Clause 6 of the agreement provides:

“6.	Risk Profit and Loss

The risk, profit and loss in the claims shall pass from the seller to the purchaser on payment of

the first instalment referred to above and from that date the purchaser shall be entitled to all profits (in any) accruing from the claims and shall be liable for all fees, taxes and other expenses and imports levied thereon and all other expenses of whatsoever, nature, in respect of the said claims however that it is hereby agreed …..”.

According to Rose the first instalment was paid. The consequences of the payment therefore were triggered in terms of clause 6. Whether Lugania eventually breached the other conditions to entitle cancellation is not for this court to determine. Rose’s objection therefore cannot defeat this application.

However it is not in dispute that the Minister through the Provincial Mining Director suspended underground operations at Empress Mine on the 17th of April 2018. A reading of the letter suspending the underground operations shows that Empress Mine was expected to meet certain conditions before it can be given authority to resume underground operations. In the event that the conditions are met the operations may resume. I do not believe that the mining rights were taken away in toto what transpired is an operational issue that could be addressed. What Songxiang seeks is to conduct lawful mining operations. My understanding of that is that it cannot conduct underground operations without the Minister’s authority.

The submissions made for the Minister were not controverted. Songxiang neither produced a valid tribute agreement nor a certificate of registration from the Mining Commissioner in terms of s 275 of the Act to demonstrate Songxiang’s right to mine at Empress Mine. In any event Songxiang by itself has no rights in Empress Mine, whatever dealings for the mining that took place were between Lugania and Rose and this application is not made by Lugania but by Songxiang a separate legal persona.  Where there is no prima facie right no interdict can be granted. Songxiang is not Lugania, these are two separate legal personalities where one is a shareholder in the other.

By mining at Empress Mine without a tribute agreement or a certificate of registration Songxiang would be acting outside the law. It is trite that litigants who act outside the law cannot approach the courts for relief until they have complied with the law CFU and Ors v Minister of Lands and Ors SC 31/10. The court cannot be seen to aid and abet an illegality.

The order sought in terms of paragraph 3 of the provisional order cannot be granted on account of the foregoing reasons. Songxiang has not shown that it has any right to mine at Empress Mine. The company that entered into an agreement with Rose is Lugania and it is not synonymous with Songxiang.

There is no merit in the application.

In case HC 6440/18 Lugania is the applicant and seeks an order in the following terms.

That you show cause to this Honourable Court why a final order should not be made in the following terms;

Terms of Final Order Sought

That 2nd respondent should not issue applicant with a resumption certificate for the applicant to resume operations at Empress Mine, following compliance by the applicant and inspection of underground workings thereon by 3rd respondent’s Mines Inspection Personnel

2nd respondent be and is hereby ordered to issue the applicant with the resumption certificate to resume underground operations in terms of the 3rd respondent’s Mines inspection personnel’s report.

2nd respondent be and is hereby ordered to comply with the mining laws when discharging the mandate on behalf of the 3rd respondent in the transactions between the applicant and 1st respondent for disposal of mining claims as per the mining claims as per the agreement of sale dated 7 September 2017 between the applicant 2017 between the applicant and 1st respondent.

Interim Relief Granted

2nd respondent be and is hereby ordered to issue a certificate of resumption for underground operations at Empress Mine Mashava.

2nd respondent be and is hereby ordered to comply with communication procedures when officially communicating with the applicant relating to mining operations.

The 2nd defendant be and is hereby ordered to pay costs of this application.

I inquired from Lugania’s legal representative whether it is competent for this Court to regulate how an administrative body discharges its duties as to compel it to issue a certificate of resumption. I asked because the second respondent the Provincial Mining Director “the Mining Director’ has to exercise his or her discretion on a proper consideration of pertinent issues. Certainly this Court cannot exercise that discretion on behalf of the Mining Director. Following that enquiry an amendment was sought for the interim relief and final order to read;

“(a)  	2nd respondent be and is hereby ordered to issue a written response to the applicant’s letter dated 3rd of May 2018 for underground operations at Empress Mine Mashava.

(b)	The 2nd respondent be and is hereby ordered to pay costs of this application.”

The application was not opposed and I granted it.

Simon deposed to an affidavit on behalf of Lugania and stated that Lugania and Rose entered into an agreement of sale for the sale of mining claims collectively known as Empress Mine. The Mining Director approved the sale agreement but the third respondent the Minister’s permission was not sought. On the 17th April 2018 the Mining Director suspended underground operations at Empress Mine following a gassing incident that occurred underground. Empress Mine was required to satisfy certain conditions before resuming operation. According to him the requirements have since been fulfilled and the Mining Director by letter date 3 May 2018 was advised. However the Mining Director has neglected or refused to issue a resumption certificate. Due to work stoppage ground water is rising, damaging shaft lining. Lugania shall incur huge costs in pumping the water from underground. To that extent Lugania would suffer irreparable harm.

The application was opposed. The first respondent “Rose” deposed to an opposing affidavit. She stated that Simon has no authority to represent the Lugania, no board resolution was filed. In addition she states that there is a shareholder dispute within Lugania, Simon sold his entire shareholding in Lugania to Songxiang. The application therefore has not been brought by Lugania but by Simon. On the merits Rose said Lugania has no rights to operate or mine at Empress Mine because it has failed to fulfil the conditions in the agreement of sale between the parties. Rose has since advised the applicant of the cancellation of the agreement of sale and will make a counter claim in the pending case HC 5673/18 for the cancellation of the agreement and demand vacant possession of the mining claims and equipment. According to Rose the applicant cannot seek a resumption letter to continue operations where it has no ownership rights to mine. The application should be dismissed with costs de bonis proprii as against Simon who alleges to represent Lugania yet he does not have the authority to do so.

For Lugania it was conceded that no board resolution was filed but insisted that Simon had authority to represent Lugania by virtue of his being a director and shareholder in Lugania.

As correctly submitted on behalf of Rose, the position of the law is that a company is a legal person separate from its directors, it cannot be represented by a person who has not been authorised to do so by a board resolution Madzivire and Others v Zvarivadza and Others SC 10/06. In Burnstein v Yale 1958 (1) SA 768  cited in the Madzivire case the court noted that as a general rule the directors of a company can only act validly when assembled at a board meeting. It means therefore that a company can speak through  a person appointed by its directors by way of a board resolution. I am also cognisant of authorities that are for the proposition that where there are sufficient facts placed before the Court  to warrant a conclusion that it is the company that is litigating the court can accept the representation in the absence of a board resolution see Direct Response Marketing (Pvt) Ltd v Shepherd 1993 (2) ZLR 218 (H), Thelma Court Flats (Pty) Ltd v Mc Swigin 1954 (3) SA 457 (c), Parsons Barkly, Mall (Cape) (Pty) Ltd v Merino Ko-operaise BPK 1957 (2) SA 347 (c). The common thread in these cases is that it is not always necessary for a board resolution to be produced, the Court should satisfy itself that the company is the litigant.

Applying both positions Simon cannot validly represent Lugania. There is no board resolution giving authority to Simon to represent Lugania in this case. So he cannot speak on behalf of Lugania. Considering the facts of this case the more reason a board resolution should be filed. The shareholders are embroiled in a dispute of ownership of the company. It was submitted for Simon that since there is conflict the directors could not meet. That then points to the need for evidence that it is Lugania litigating otherwise one shareholder through its appointed directors may be on a frolic of their own, in the process prejudicing Lugania. On that basis I am not satisfied that it is Lugania that is litigating.

In light of the finding on the incapacity of Simon to represent Lugania it is unnecessary to delve into the merits of the application .There is no litigant before the court.

Rose requested for costs against Simon and I agree with her. Since there is a dispute among the directors of Lugania it is not proper to saddle the company with costs incurred by it due to a decision by one director. In this case Simon had no authority to litigate on behalf of Lugania, it was his sole decision to litigate therefore he should pay costs on an ordinary scale.

From the foregoing the following order is made.

The application in HC 6533/18 be and is herby dismissed with costs.

The application in HC 6440/18 be and is hereby dismissed with costs to be borne by Simon Chivere.

Messrs Magwaliba & Kwirira, applicant’s legal practitioners

Makonese, Chambati & Mataka, 1st & 2nd respondents’ legal practitioners