Waverley Plastics (Pvt) Ltd v CBZ Bank Limited and Others

Waverley Plastics (Pvt) Ltd brought an urgent chamber application seeking to interdict four banks (first to fourth respondents) from honouring any instructions by the fifth respondent (Aron Vico) in respect of the applicant's bank accounts. The application was deposed to by Belynda Halfon, who claimed to be a director. The basis was that the fifth respondent had been dismissed from employment as the applicant's manager following a meeting on 7 June 2019 held by two directors (Halfon and Amanda Berkowitz) who suspended and subsequently dismissed him. Letters were sent to the banks instructing them to remove the fifth respondent as signatory. However, the fifth respondent was the sole signatory on all the applicant's accounts. There was a dispute over control of the company. The fifth respondent challenged the authority of the deponent to institute proceedings and alleged material non-disclosure, producing a Form CR 14 showing he had been a director since 12 September 2013 and was also a shareholder. The applicant's papers falsely claimed he was merely a manager and not a director.

• Whether the deponent to the founding affidavit had authority to institute proceedings on behalf of the applicant company
• Whether there was material non-disclosure and misrepresentation of facts
• Whether the court could grant an order directing banks to change signature mandates in the absence of a valid board resolution
• Whether the relief sought was competent
• Whether a special costs order was warranted

The application was dismissed. Costs were ordered on the attorney-client scale to be paid by Amanda Berkowitz (nee Cohen), Belynda Halfon (nee Cohen) and Zweli Lunga de bonis propriis (from their own pockets).

A company can only act pursuant to a resolution of directors taken in accordance with law. When a director's authority to institute proceedings on behalf of a company is challenged, the company bears the burden of proving that the proceedings are properly authorized and not the director's personal adventure. A purported board resolution is invalid when a non-director attends the meeting as this vitiates the proceedings. Courts cannot grant orders directing banks to change signature mandates in the absence of valid board resolutions, as banks are bound by signature mandates in their records and cannot lawfully take instructions from attorneys to change signatures without proper corporate authorization. Applications based on patent falsehoods and material non-disclosure of facts (such as falsely claiming a director and shareholder is merely an employee) will be dismissed.

The court observed that it was implausible that a mere manager would be made the sole signatory on company accounts with balances running into millions of dollars, suggesting the applicant's version lacked credibility. The court noted an anomaly in the applicant's own documents where a Form CR 14 was dated 15 January 2013 but the Certificate of Incorporation showed the company was incorporated on 17 January 2013 (two days later), though no explanation was given. The court commented that the application appeared to be instituted by individuals acting on a frolic of their own rather than on behalf of the company, and that the continuation of proceedings after becoming aware of documents showing the fifth respondent was a director and majority shareholder was reckless.

This case is significant in Zimbabwean company law for: (1) reaffirming the principle that companies can only act through valid resolutions of directors taken in accordance with law (citing Madzivire v Zvarivadza); (2) emphasizing that when a director's authority to represent a company is challenged, the company bears the burden of proving proper authorization; (3) demonstrating that attendance of non-directors at board meetings can vitiate proceedings; (4) confirming that banks cannot lawfully change signature mandates based on instructions from attorneys without valid board resolutions; (5) illustrating the consequences of bringing applications based on material non-disclosure and falsehoods, including personal costs orders against directors and even their attorneys who participate in unauthorized resolutions. The case serves as a warning against attempts to use litigation to circumvent proper corporate governance procedures in disputes over company control.