The judgment creditor (Zimbabwe National Water Authority) obtained judgment against Saiss Incorporation (Pvt) Ltd for $38,133.99 on 11 June 2015. A writ of execution was issued on 1 June 2015. On 21 June 2017, the judgment creditor instructed the Sheriff to execute at the premises of the directors and shareholders of the judgment debtor, including Askeland Media (Pvt) Ltd at 19 Rhodesville Road, Eastlea, Harare. On 21 July 2017, the Sheriff attached seven vehicles belonging to Askeland Media (the claimant). All vehicles were registered in the claimant's name. The claimant was a 50% shareholder in the judgment debtor, with the other 50% held by Southern Africa International School of Sport. The judgment creditor justified execution on the claimant's property on grounds that: the claimant was a shareholder and director of the judgment debtor; it was the alter ego of the judgment debtor; it acted fraudulently by undertaking to be responsible for the judgment debtor's liabilities when acquiring equity; and that the claimant and judgment debtor were a single entity.
1. The claimant's claim to the vehicles placed under judicial attachment in case No. HC 10683/14 on 21 June 2017 is granted. 2. The said property is not executable. 3. The judgment creditor shall pay the claimant's and applicant's costs on a legal practitioner scale.
A company has existence separate and distinct from its members and shareholders (applying Salomon v Salomon [1897] AC 22). A judgment creditor cannot execute against the property of a shareholder of a judgment debtor company merely on the basis that the party is a shareholder, director, or holds equity in the judgment debtor. The corporate veil will not be pierced absent proof on a balance of probabilities that the shareholder is the alter ego of the company or that there are grounds in law to disregard the separate legal personality. Shareholding, even at 50%, does not by itself constitute control or justify treating the shareholder and company as a single entity for execution purposes.
The court observed that the suggestion that a company can be a director of another company 'boggles the mind' as companies are fictional persons that act through natural persons. The court also commented that the instruction to execute on the claimant's property was 'absolutely unwarranted and deserves of censure', indicating judicial disapproval of the judgment creditor's conduct in directing execution against property without proper legal basis.
This case reinforces the fundamental principle of company law in Zimbabwe regarding the separate legal personality of companies and the protection of shareholders from liability for corporate debts. It demonstrates the high threshold required to pierce the corporate veil and hold shareholders liable for company debts. The case also establishes that mere shareholding, even at 50%, does not automatically make a shareholder liable for a company's debts or constitute grounds for execution against the shareholder's property. The judgment serves as an important reminder to judgment creditors and sheriffs about the limits of execution and the need for proper legal grounds before attaching property of third parties who are shareholders in judgment debtor companies.