Dave Mashayamombe (Zimbabwean resident) and Harold Crown (South African resident) were co-directors of the first applicant, Energy Resources Africa Consortium (Pvt) Ltd, a Zimbabwean company. Mashayamombe was also a director of the second applicant, Energy Resources Africa (Pvt) Ltd, which was a shareholder in the first applicant. The second respondent, Portriver Investments (Pvt) Ltd, was the alter ego of Crown's South African company CEMO Pumps (PTY) Ltd. In 2011, the applicants entered into two contracts with the City of Harare worth over US$13 million for the rehabilitation of Firle Sewage Works and power generation. Despite the large sums involved, the companies had been operating illegally since inception by failing to comply with tax obligations under the Income Tax Act, Value Added Tax Act, and Companies Act. The applicants sought to regularize their operations through ZIMRA's tax amnesty program which expired on 30 September 2015. Crown, who resided in South Africa, refused to cooperate by signing necessary documents (FBC Bank account application form and Rev 1 ZIMRA Form) required for the tax amnesty application. Despite correspondence from applicants' lawyers on 2, 7 October 2015, no cooperation was forthcoming from Crown, prompting this urgent application filed on 9 October 2015.
The application was granted. The respondents were interdicted from violating the Income Tax Act, Value Added Tax Act, and Companies Act. Harold Crown was ordered to complete and sign the FBC Bank account application form and Rev 1 ZIMRA Form. Pending ZIMRA's determination, Crown was interdicted from receiving income due to the first applicant under the City of Harare contracts. Crown was to direct the City of Harare to make payments into the FBC Bank account to be opened by the first applicant.
Directors of a company have a fiduciary duty to ensure the company complies with mandatory statutory obligations including tax laws under the Income Tax Act, Value Added Tax Act, and Companies Act. Where one director refuses to cooperate in regularizing the company's tax position, the court may compel that director to sign documents and take steps necessary for tax compliance. A director's residence outside Zimbabwe does not absolve them of their duty to ensure the company complies with Zimbabwean tax laws. The balance of convenience in such applications favors compliance with statutory obligations over maintaining an illegal status quo. For purposes of urgency in applications, the time to act arises when a regulatory deadline approaches and previous efforts to obtain cooperation have failed, not necessarily when the underlying obligation first arose. Under sections 169-170 of the Companies Act, where one director is evasive and fails to attend board meetings, the other director has authority to act on behalf of the company for matters of legal compliance.
The court observed that shareholders and directors must comply with the laws of the land. The court noted with disapproval that the companies had been operating illegally since 2011 despite contracts worth over US$13 million. The court commented that dismissing the application would be tantamount to blessing and abetting a tax avoidance scheme, which would not be in the interests of the applicants or the fiscus. The court noted that there might be disagreements over other issues that resulted in pending summons, but this does not stop parties from complying with mandatory legal requirements. The court also made observations about the existence of extradition processes between Zimbabwe and South Africa in the context of tax enforcement, though this was not determinative. Regarding answering affidavits filed without leave of court after the court had already made its decision on points in limine, the court indicated such documents should not be considered part of the record. The court also commented on applications for recusal that amount to forum shopping after adverse preliminary rulings.
This case is significant in Zimbabwean company and tax law for several reasons: (1) It affirms that courts will compel directors to fulfill their fiduciary duties to ensure companies comply with mandatory tax obligations, regardless of the director's residence status. (2) It demonstrates that tax compliance is not optional and courts will not allow foreign-resident directors to shield themselves from local tax obligations while benefiting from lucrative contracts. (3) It establishes that urgency for purposes of urgent applications can arise from a combination of approaching regulatory deadlines and the recalcitrance of other parties, not merely from the applicant's delay. (4) It clarifies that directors have personal authority to act on behalf of companies when co-directors are deliberately evasive, particularly for matters of legal compliance. (5) The judgment reinforces that courts will not tolerate tax avoidance schemes and will use their equitable jurisdiction to ensure compliance with fiscal legislation. (6) It provides guidance on when technical defects in certificates of urgency will be overlooked where the legal practitioner genuinely applied their mind.