Kudakwashe Shana and Others v Manala Loveness Motsi N.O. and Others

The late Samson Shana and his wife Smolly Shana (2nd applicant) incorporated Shanana Distributors (Pvt) Ltd (3rd applicant), each holding 50% shareholding. Their son, Kudakwashe Shana (1st applicant), was appointed a director on 1 January 2006. Mr Shana divorced his wife and married the 1st respondent, Manala Loveness Motsi. Upon Mr Shana's death, the 1st respondent was appointed executrix dative of his estate on 2 September 2014. On 12 November 2014, the 1st and 2nd respondents altered the company's CR14 form by removing the 1st applicant's name as director and inserting their own names as directors. The applicants challenged this alteration as wrongful and fraudulent, obtaining a provisional order on 4 February 2016 interdicting the respondents from acting as directors and interfering with the 1st applicant's duties.

• Whether the 1st and 2nd respondents could lawfully assume directorship of the 3rd applicant company by altering the CR14 form
• Whether the appointment of the 1st and 2nd respondents as directors should be declared null and void
• Whether the 1st and 2nd applicants' directorship should be confirmed
• Whether actions taken by the 1st and 2nd respondents on behalf of the company should be declared null and void
• Whether costs should be awarded on an attorney-client (punitive) scale or ordinary scale

The court granted the final order as follows: (1) The appointment of the 1st and 2nd respondents as directors of the 3rd applicant was declared null and void; (2) It was confirmed that the directors of the 3rd applicant are the 1st and 2nd applicants until they resign or are otherwise removed in terms of the law; (3) The 3rd respondent (Registrar of Companies) was ordered to expunge the names of the 1st and 2nd respondents regarding their directorship and to reinstate the CR14 dated 24 March 2014; (4) The 1st and 2nd respondents were interdicted from unlawfully interfering in the affairs of the 3rd applicant; (5) All actions carried out by the 1st and 2nd respondents purportedly on behalf of the 3rd applicant were declared null and void; (6) The 1st and 2nd respondents were ordered to pay costs of the application on the ordinary scale.

An executrix of a deceased shareholder's estate does not, by virtue of that appointment alone, have the authority to appoint herself or others as directors of a company in which the deceased held shares. Any purported appointment of directors made without proper legal authority by altering the company's CR14 form is null and void. The alteration of company records by persons without proper authority to effect changes in directorship is unlawful and such actions taken on behalf of the company are liable to be declared null and void.

The court observed that while the alteration of the CR14 could provide evidence from which fraud or recklessness might be inferred, the context must be considered. The court noted that the 1st respondent may have acted bona fide, albeit mistakenly, in believing that her appointment as executrix entitled her to run the company without the 1st applicant's interference, with the intention of protecting the interests of other beneficiaries. The court reiterated the principle from Mudzimu v Chinhoyi Municipality 1986 (3) SA 140 (ZH) that courts look upon orders for attorney-client costs with disfavor and are loathe to penalize a person who has exercised a right to obtain a judicial decision. The court also noted that the respondents' prompt concession once they received proper legal advice should weigh heavily in their favor when considering whether to award punitive costs.

This case illustrates important principles in Zimbabwean company law regarding the limits of an executrix's powers over a deceased's shareholding in a company. It clarifies that appointment as executrix of a deceased shareholder's estate does not automatically confer authority to assume directorship of the company or to unilaterally alter company records such as the CR14 form. The case also demonstrates the court's approach to costs, reaffirming that attorney-client costs are awarded only in exceptional circumstances involving dishonesty, fraud, vexatious conduct or grave misconduct, and that bona fide but mistaken belief in one's authority, coupled with subsequent concession when properly advised, militates against punitive costs.