The appellant and complainant Tawodzera Davies Muhambi were co-directors in Eyeland Trading (Pvt) Ltd. The complainant was allegedly the sole shareholder prior to the alleged offence. In January 2012, the appellant allegedly approached the Registrar of Companies and misrepresented himself as secretary of Eyeland Trading, presenting a CR2 form (allotment of shares) fraudulently allotting himself 750 shares and the complainant 749 shares without the complainant's knowledge or consent. Armed with this form showing majority shareholding, the appellant instructed legal practitioners to file for liquidation of Eyeland Trading. A provisional liquidation order was granted on 15 March 2015. The complainant became aware of the share allotment on 25 November 2014 when served with liquidation papers. The state alleged potential prejudice of US$375,186. The appellant's defence was that he and complainant, along with two others, originally intended to incorporate the company as four shareholders, but two left after three months. He and the complainant became equal shareholders in practice. A consultant, Goodwishes Phiri, prepared the CR2 form to reflect this arrangement, which the appellant signed as Director. The complainant had authored a company profile describing himself and the appellant as shareholders and co-owners.
1. The appeal is hereby allowed. 2. The conviction and sentence is set aside.
In a criminal fraud prosecution under section 136 of the Criminal Law (Codification and Reform) Act, where an accused raises a defence of claim of right based on a genuine belief in entitlement, the state must prove beyond reasonable doubt that this belief was dishonest and the explanation false. An accused is entitled to acquittal if there is any reasonable possibility that his explanation is true, even if improbable. The court may not convict unless satisfied beyond reasonable doubt that the accused's explanation is false. Where the conduct of parties and documentary evidence (such as company profiles and banking resolutions) supports the accused's assertion of entitlement, and the trial court itself acknowledges that the relationship portrayed such entitlement, sufficient doubt is raised to warrant acquittal. The accused bears no onus to prove the truth of his explanation; he need only raise a reasonable doubt.
The court observed that fraud is "the crime of the liar, cheat or confidence trickster" that seeks to punish those who use deceit to obtain property or advantage from another person (citing Birchell, Principles of Criminal Law, 5th Edition). The court noted that where there is conflict in evidence between complainant and accused, it is not competent for the trial court to accept the complainant's evidence without rejecting the accused's evidence as not being reasonably possibly true. The court commented that the trial magistrate curiously appeared to contradict himself by acknowledging that the actual relationship between the parties "portrayed a picture" of co-shareholding, yet still convicting the appellant.
This Zimbabwean High Court judgment is significant for South African jurisprudence as it demonstrates the application of common law principles shared between Zimbabwe and South Africa regarding: (1) The standard of proof beyond reasonable doubt in criminal cases; (2) The application of the claim of right defence in fraud cases; (3) The principle that an accused need only raise a reasonable doubt, not prove innocence; (4) The proper application of the Difford principle regarding assessment of an accused's explanation. The case illustrates how corporate relationships conducted in practice (as opposed to formal documentation) can support a claim of right defence in fraud cases involving company shareholding. It reinforces that where there is conflict between prosecution and defence evidence, and the accused's version cannot be rejected as not reasonably possibly true, doubt must be resolved in favour of the accused.