FUMIA & ANOR v MATSHIYA (In her capacity as executrix testamentary of the estate of the late Ettore Pietro Fumia) & ANOR

HIGH COURT, HARARE

[Opposed Application HH 31-16]

May 27, 2015 and January 20, 2016

HUNGWE J

Company law  –  Prescription  –  Whether a claim for a declaratur prescribes  –  Continuing cause – What amounts to  –  Application under section 118 of the Companies Act [Chapter 24:03]  –  Whether such application amounts to enforcement of a debt  –  Whether statutory right can prescribe.

Company law  –  Rectification of share register  –  What amounts to.

First applicant’s now deceased father had established a company in which applicants were represented as the shareholders each holding a single share. Sometime in the year 1994, first applicant’s father caused the company secretary to allocate eight shares to him, representing his actual interests in the company. Applicants had protested the allocation but had not done anything in terms of challenging it. Two decades later when the father was terminally indisposed, applicants brought an application alleging that the Articles of Association had not been complied with in the allocation of the shares in 1994 to their father. The executrix took the point that the remedy sought to be enforced by applicants had been extinguished by extinctive prescription. Upholding the point:

Held, that the claim was for a debt as contemplated by the law in that its success would leave applicants as the sole shareholders in the company and the deceased’s estate without any interests in the property holding company and was therefore liable to prescription.

Held, further, that the cause of action relied upon by applicants was not a continuing one. There are two distinct types of claims: either there is a single wrongful act which causes an ongoing harm or there is an ongoing wrongful act which gives rise to a claim in law from moment to moment. The claim in casu fell into the former category and was liable to prescription.

Held, further, in dismissing applicant’s attempted reliance on provisions of s 118 of the Companies Act [Chapter 24:03], that whilst a statutory right does not prescribe, the application before the court was not for the rectification of a share register and did not meet the requirements for such an application. An application brought under s 118 of the Companies Act must meet certain requirements chief of which is that the applicant must establish that there was no justa causa for the change effected to the register.

Cases cited:

Evins v Shield Insurance Co Ltd 1979 (3) SA 1136 (W), referred to

Gaffoor and Another NNO v Vangates Investments (Pty) Ltd and Others 2012 (4) SA 281 (SCA), distinguished

Hakos Cabinet Makers (Pty) Ltd v Pretoria City Council 1971 (4) SA 465 (T), referred to

Maravanyika v Hove 1997 (2) ZLR 88 (H), referred to

Minister of Finance and Others v Gore NO [2006] ZASCA 97; 2007 (1) SA 111 (SCA); [2007] 1 All SA 309 (SCA), referred to

Truter and Another v Deysel [2006] ZASCA 17; 2006 (4) SA 168 (SCA), referred to

Unilever Bestfoods Robertsons (Pty) Ltd and Others v Soomar and Another [2006] ZASCA 172; 2007 (2) SA 347 (SCA), referred to

Legislation considered:

Zimbabwe:

Companies Act [Chapter 24:03], s 118, 118 (1)(a), (b)

Prescription Act [Chapter 8:11]

South Africa:

Prescription Act (68 of 1969), ss 10, 15 (1)

Book cited:

Wessels JW The Law of Contract in South Africa (2nd edn, Butterworths, Durban, 1951) Vol II

AP de Bourbon SC, for the applicants

T Mpofu, for the respondents

HUNGWE J:

The applicants seek an order declaring as unlawful the allotment of certain shares in second respondent by Ettore Pietro Fumia to himself. They also seek an order for costs against the first respondent. The allotment was done on 15 November 1994. This application was filed on 30 June 2011. It is not in dispute that by that date the said Ettore Pietro Fumia had become indisposed and was no longer compos mentis. He has since died and the executrix, on behalf of the deceased’s estate, has resisted the present application.

The factual background to this matter needs to be given in as much detail as possible for reasons which will become clear later. The first applicant is married to second applicant. The late Ettore Pietro Fumia was the father to the first respondent. The second respondent is a limited liability company. The company was incorporated on 2 July 1990. On its incorporation, the applicants were both directors and shareholders of the company each holding a share in the company. The company was not trading and had no assets to its name. On 26 June 1992 the late Ettore Fumia purchased from one S Zhou, stand number 981 Kariba for ZWD 13 000. Notwithstanding the fact that he personally paid for the stand, the late Ettore Fumia registered it in the name of the second respondent. Between 1993 and 1995 the late Ettore Fumia built a double storey six bed-roomed house which he called “Nyaminyami” at a cost of ZWD 288 269.65. Of that amount, Dora Transport (Pvt) Ltd, a company in which both applicants were directors and shareholders, contributed only ZWD 50 000 being the cost of transporting material from Harare, Bulawayo, and Kwekwe to Kariba. This contribution amounts to about 17 per cent of the total cost of developing the Kariba stand. On 15 November 1994 the late Ettore Fumia was allotted eight shares in the second respondent and this allotment was duly registered by Taylor & Co who were, at the time, the company’s accountants. This allotment was made with first applicant’s knowledge. He accepted it as can be clearly seen in his correspondence addressed to Mr Taylor of Taylor & Co, the company’s accountants. The letter to Taylor & Co by first applicant is dated 8 June 1995. In its relevant portions it recites the following:

“Taylor & Co

PO Box 264

KWEKWE

RE: Issuance of Shares

With reference to the above, we are writing to advise that no further shares whatsoever shall be issued to any of the directors of this company without a meeting being held at your office with all the directors and yourself present.

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