The Sheriff for Zimbabwe and Jetmaster Zimbabwe (Pvt) Ltd v Barnabas Chisenwa & 39 Others

The respondents (judgment creditors) obtained an arbitral award against the judgment debtor (Jetmaster (Pvt) Ltd) on 14 October 2014 in the sum of US$18,633. On 10 November 2017, they applied to register the arbitral award in HC 10565/17, which was served on 22 November 2017 and registered on 7 October 2018. After the application for registration was served, the claimant (Jetmaster Zimbabwe (Pvt) Ltd) was incorporated on 30 April 2018. On 4 May 2018, the claimant entered an agreement with the judgment debtor to purchase all its assets, purportedly to restructure the group's operations. The purchase price was to be paid by issuing shares in the claimant to the judgment debtor. The agreement made no provision for payment of the judgment debtor's existing debts. When the respondents sought execution on 24 October 2018, the Sheriff attached property, and the claimant instituted interpleader proceedings claiming ownership of the attached property. The claimant and judgment debtor had common directors and belonged to the same group of companies.

• Whether the claimant proved ownership of the attached property in interpleader proceedings
• Whether the onus of proof in interpleader proceedings rests with the claimant or the judgment creditors
• Whether section 16 of the Labour Act Chapter 28:01 applies to transfers of undertakings to protect employees' rights against the transferee
• Whether the sale agreement between the claimant and judgment debtor, entered into pending litigation, constituted valid transfer of ownership
• Whether the transfer of assets amounted to asset stripping or fraud to evade the judgment debtor's obligations
• Whether a point of law (s16 of the Labour Act) can be raised for the first time in argument

1. The claimant's claim to all property listed in the Notice of Seizure and Attachment dated 24 October 2018 was dismissed. 2. The property attached in terms of the Notice of Seizure and Attachment dated 24 October 2018 was declared executable. 3. The claimant was ordered to pay the applicant's and judgment creditors' costs.

In interpleader proceedings, the claimant bears the onus of proving ownership by setting out facts and allegations which constitute proof of ownership. A sale agreement entered into in the face of pending litigation, which makes no provision for the transferor's existing debts and where no proof of consideration is provided, does not constitute adequate proof of ownership and raises a suspicion that its purpose was to evade the judgment debtor's obligations. Section 16 of the Labour Act (which protects employees in transfers of undertakings) allows judgment creditors who are employees to execute against property transferred to a new entity where the transfer was made without provision for employee entitlements. Asset stripping to render a judgment ineffectual will not be sanctioned by the courts. A point of law may be raised at any stage of proceedings.

The court made several non-binding observations: (1) The court declined to comment on allegations of fraud by the Phillip Chiyangwa Family Trust, noting that such party was not before the court and had not been accorded an opportunity to be heard, and that no evidence of fraud had been placed before the court. (2) The court characterized the conduct of the claimant and judgment debtor through their common directors as "at worst, fraudulent, or at best, amounts to asset stripping" and described it as "opprobrious conduct" which the court cannot be used to whitewash. (3) The court noted that whether judgment creditors' termination letters came from Jetmaster Engineering (Pvt) Ltd was irrelevant where that company had no employment contracts with them. (4) The court observed that it was not the court's role at that stage to review the arbitral award or the order for its registration.

This case is significant in Zimbabwean jurisprudence (applicable to South African context given similar legal principles) for several reasons: (1) It reinforces the principle that in interpleader proceedings, the claimant bears the onus of proving ownership with proper facts and evidence. (2) It demonstrates that courts will scrutinize transactions entered into pending litigation, particularly where they appear designed to defeat judgment creditors' rights. (3) It clarifies the application of labour law provisions protecting employees in transfers of undertakings, establishing that such protections allow employees to execute against assets transferred to a new entity. (4) It establishes that asset stripping or fraudulent transfers to evade obligations will not be given legal effect by the courts. (5) It confirms that courts can consider points of law raised at any stage of proceedings. The case serves as a warning against attempts to use corporate structures to evade legitimate debts and obligations to employees.