ZCDC future hangs in the balance 

Source: ZCDC future hangs in the balance | The Herald June 23, 2018

Fidelis Munyoro Chief Court Reporter
Zimbabwe Consolidated Diamond Company (ZCDC)’s future hangs in the balance after the Supreme Court this week dismissed Government’s appeal challenging a High Court decision to allow Mauritius-registered firm Grandwell Holdings to remain at Chiadzwa.

Grandwell Holdings holds a 50 percent controlling stake in Mbada Diamonds (Pvt) Limited.
Then Mines and Mining Development Minister Walter Chidhakwa, Zimbabwe Mining Development Corporation (ZMDC), Marange Resources (Pvt) Ltd and ZCDC had appealed against the High Court decision.

The three Judges of Appeal – Justices Tendai Uchena, Antonia Guvava and Bharat Patel – unanimously concurred to uphold the lower court ruling in three separate judgments.

The judges unanimously agreed that ZCDC occupation of Mbada claims was unlawful and Mr Chidhakwa acted unlawfully and violently when he evicted Mbada Diamonds from its concession area in the diamond fields.

It was also unanimously ruled that Grandwell (Pvt) Ltd was entitled to institute a derivative action to protect the rights of Mbada Diamonds (Pvt) Ltd at its Marange concession.

Derivative action is a lawsuit brought by a shareholder of a corporation on its behalf to enforce or defend a legal right or claim, which the corporation has failed to do.

The ruling is very significant in that it makes the various orders which had been made pending appeal, final.
Those orders, provided among others, that the pending appeal the ZCDC and the police as well as those acting on their behalf be interdicted from collecting, from Mbada Diamonds’ concession area, diamond ore mined by Mbada Diamonds (Pvt) Ltd.

They also bar Zimbabwe Consolidated Diamond Company (Pvt) Ltd from accessing areas secured by Mbada’s security personnel or otherwise interfering in any manner with security arrangements made by Mbada Diamonds (Pvt) Ltd in respect of its concession area.

In his ruling, Justice Uchena said the right to sue derivative action was meant to remedy wrongdoing against a company by its directors or majority or equal shareholders.

“In this case, the court a quo correctly relied on the futility of expecting the first respondent (Grandwell Holdings) to call a meeting to resolve that the company should sue the appellants (Mr Chidhakwa, ZMDC, Marange and ZCDC) for spoliation as the other equal shareholders’ position on the application was known,” said Justice Uchena.

“It was opposing the application. It clearly would not have supported a resolution for the company to make an application it was opposing. The first respondent was therefore entitled to rely on derivative action to sue on behalf of the second respondent.”

In her concurring judgment, Justice Guvava said it was clear that State agents descended on the Mbada Mine premises on February 22 2016 while ZMDC and Marange were the implementing agents of the scheme which culminated in Mbada Diamonds being removed from the mining site.

“The evidence given by the second respondent (Mbada Diamonds) clearly stated that the armed police were hired by the first to fourth appellants,” said Justice Guvava.

“It would be an absurdity to find that the police and other officials acted in the manner they did without the authorisation and knowledge of the first appellant.”

Justice Guvava added that the facts in the matter showed that Mr Chidhakwa was primarily instrumental in the removal of Mbada Diamonds from the mining site.

“The removal was unlawful as it was carried out without due process,” she concuded.
Justice Patel also concurred with the other two judges saying Mbada Diaomonds was in peaceful and undisturbed possession of the mining location in question at the time irrespective of the continuing validity or otherwise of its special grants and notwithstanding the supposed expiry of its rights to carry out mining operations at Chiyadzwa.

“It is equally indisputable that the appellants acting in concert contrived to abruptly and unceremoniously deprive Mbada of its possession of the mining location, forcibly and wrongfully against its consent through the agency of the commissioner-general of the police and his cohorts,” said Justice Patel.
Grandwell lawyer Mr Sternford Moyo welcomed the ruling saying ZCDC had been finally ordered not to enter the concession

area where Mbada was mining prior to its unlawful and violent removal.

“The ruling confirmed what Parliament concluded that Mbada was unlawfully and violently evicted in mafia style,” said Mr Moyo who was the instructing attorney to Advocate Thabani Mpofu who argued the appeal.

“They were all ordered to pay costs. It remains to be seen whether ZCDC will survive the potential damages claim arising from these unlawful activities.”

Mr Moyo said the former minister ignored several orders ordering ZCDC and the police out of Mbada concession pending the appeal.

“Now that it has lost the appeal as well, it will have to live with the risk of having acted unlawfully,” he said.
“ZCDC has due to the unlawfulness associated with its formation remains a painful symbol of lawlessness, something alien to the new dispensation and totally inconsistent with investor confidence.”

Mr Moyo said ZCDC was born out of brazen seizure of property rights of investors under the previous administration.
Adv Lewis Uriri of the Temple Bar Zimbabwe and Mr Ralph Tsivama appeared for the appellants.