Aldercraft Investments (Private) Limited v Dave Capsopolous and Others

The applicant claimed to be a 90% majority shareholder in the third respondent (Dorota Trading (Pvt) Ltd) based on share certificates showing it owned 900 ordinary shares out of 10,000 authorized shares. The first and second respondents each owned 50 shares. The applicant had instituted separate proceedings under HC 4601/18 seeking a declaratory order confirming its majority shareholding. In 2015, the third respondent entered into a loan agreement with Gila Shabtai for US$2,800,000 for property development. This loan was preceded by a 2014 joint venture agreement between the third, fourth and fifth respondents for development and subdivision of land owned by the fourth and fifth respondents. In July 2018, the applicant discovered that the first or second respondent were allegedly disposing of the third respondent's rights and interests in developments on the fourth and fifth respondents' property, which the applicant claimed constituted the sole asset of the third respondent. The applicant alleged this disposal was being done without shareholder approval and that it had been denied access to the third respondent's bank accounts. The applicant sought urgent interim relief to interdict further disposal and to freeze the third respondent's bank account.

• Whether the applicant had a cause of action to challenge the disposal of assets
• Whether the matter was urgent and whether the applicant had established irreparable harm
• Whether there was lis alibi pendens (matter pending elsewhere) given the pending proceedings under HC 4601/18
• Whether disposal of housing units developed under the joint venture agreement required shareholder approval under section 183(1)(b) of the Companies Act

The application was removed from the roll of urgent matters. The applicant was ordered to pay the first, second and third respondents' costs.

The binding legal principles established are: (1) For purposes of establishing a cause of action based on claimed shareholding rights, a party need not have obtained a final declaratory order confirming those rights, provided there is prima facie evidence of shareholding (such as share certificates) and the matter has not been judicially determined against the claimant. (2) In applications for interdicts to prevent disposal of company assets under section 183(1)(b) of the Companies Act, the applicant must demonstrate that the assets being disposed of constitute 'the whole or the greater part of the assets' of the company and must particularize the extent of the disposal. (3) Where a disposal of property is undertaken pursuant to and in contemplation of a pre-existing joint venture agreement, such disposal does not necessarily constitute a disposal of company assets requiring shareholder approval under section 183(1)(b), particularly where the underlying property is owned by third parties and not the company itself. (4) For urgent relief, establishing that action was taken timeously is necessary but not sufficient; the applicant must also establish irreparable harm that will result from refusal of interim relief.

The court observed that the draft order sought by the applicant was 'inelegantly drawn.' The court also noted that had the applicant managed to overcome the challenge to urgency, it would have exercised its discretion to hear the matter on the merits despite the argument of lis pendens, citing Metallon Gold Zimbabwe (Pvt) Ltd v Collen Gura. The court further observed that if the matter had proceeded to the merits, the applicant would have been found wanting in its failure to particularize the extent of the disposal of assets. These comments suggest procedural deficiencies in the application beyond the fatal failure to establish irreparable harm.

This case illustrates the strict requirements for urgent applications in Zimbabwean law, particularly the need to establish irreparable harm beyond merely showing that action was taken timeously. It also clarifies the application of section 183(1)(b) of the Companies Act regarding shareholder approval for disposal of assets, demonstrating that not all disposals by a company constitute disposal of 'the whole or greater part of assets' requiring such approval. The case emphasizes that where assets are disposed of pursuant to a pre-existing joint venture agreement that contemplated such disposal, shareholder approval may not be required. It also demonstrates that disputed shareholding claims, while pending determination, can form the basis of a cause of action, but this does not automatically satisfy other procedural requirements for urgent relief.