LUNGILE LOSES ESWATINI MOBILE SHARES TRANSFER CASE

MBABANE – Princess Lungile has failed to convince the court to declare the transfer of Victor Gamedze’s shares, which he held in Eswatini Mobile, invalid.
Judge Zonke Magagula yesterday dismissed Princess Lungile’s application with costs in favour of Cherrybite (Pty) Ltd. Gamedze’s shares, according to Princess Lungile, were transferred on May 28, 2019, by the executor of his estate, Derrick Jele, to Cherrybite (Pty) Ltd, which was reportedly represented by businessman Michelo Shakantu. She told the court that her late husband’s shares were transferred to Shakantu without her knowledge or consent. She approached the court after she learnt that the shares were reportedly being sold by Shakantu to Public Service Pensions Fund (PSPF). Among other business interests, Gamedze held shares in Eswatini Mobile through his company, Stage 1 Connections (Pty) Ltd.

Apart from dismissing the application yesterday, Judge Magagula also found that the princess, who was the applicant, did not have the right standing to institute these proceedings in court. According to Judge Magagula, the princess does not have the right standing to interfere or interject in the sale of the shares between Cherrybite and the PSPF without having first set aside the transfer of the shares.

Questions

“There may be questions regarding the agreement or purported agreement for the transfer of the shares to the fourth respondent (Cherrybite), but unless and until the transfer of the shares is set aside, the applicant (princess) cannot be heard to want to interfere,” said the judge in the ex tempore judgment. Reasons for the judgment will be issued in due course. In this matter, Princess Lungile sought an order that the purported sale and transfer of 1 000 shares between the executor in Gamedze’s estate and Cherrybite, duly represented by Shakantu, be declared null and void ab initio. She also sought an order that the transfer of the said shares by the executor to Cherrybite, dated 28 May 2019, pursuant to the sale, be declared null and void ab initio.The princess further prayed that the registrar of companies be directed and authorised to re-register the 1 000 shares in the name of Gamedze’s estate and that Stage 1 Connections (Pty) Ltd revert to the control of the executor forthwith.

Gamedze was the sole shareholder of Stage 1 Connections (Pty) Ltd. He held 1 000 shares which, according to the applicant, stood at over E20 million, as of June 30, 2024.When the matter was heard yesterday, Judge Magagula asked Ben J. Simelane, who represented Princess Lungile, to address the court on the ‘elephant in the room’. The ‘elephant in the room’, according to Simelane, was that the executor transferred Gamedze’s shares to Cherrybite without any form of consideration.

Discharge

Judge Magagula asked if the executor transferred the shares in the discharge of duties consistent with his position. Simelane argued that the complaint was that the executor purportedly acted in a manner not consistent with his fiduciary duties. He also argued that the executor entered into an agreement with Shakantu and Cherrybite to take over the estate’s indebtedness to EswatiniBank, where Gamedze or his estate owed E120 million. The judge said Cherrybite did not agree with the argument. That is the strange part, according to Simelane. He said Shakantu told of his ignorance regarding the acquisition of the shares.“They are not singing from the same hymn book. We say the agreement ought to be set aside,” said Simelane, adding that they were not shown the agreement to transfer the shares. The judge asked if Princess Lungile’s complaint was against Jele’s action as the executor. Simelane told the court that to some degree that was the complaint.

The court also enquired where the master of the High Court was. According to Simelane, they are of the view that the master does not feature anywhere as of now. The attorney further told the court that Princess Lungile got to know about the sale of the shares. “Her fear is that the shares might be dissipated. We are trying to arrest that by coming to court. The one who is about to be paid by PSPF is not entitled. We are trying to stop that. We will lose irreparably if PSPF pays Cherrybite,” submitted Simelane. Judge Magagula said the shares are now owned by Cherrybite, unless their transfer to the latter is reversed. “Cherrybite can sell them to whomever,” said the judge. Simelane said they were trying to stop that. “Cherrybite has not met basic conditions set by the executor. We don’t know if this was an improper arrangement, but the estate stands to suffer if this goes ahead,” the attorney stated.

Princess Lungile stated that the transfer was reportedly carried out without a purchase price and without obtaining the necessary approvals. She argued that the absence of a purchase price in the agreement rendered the purported sale null and void ab initio. Further, she told the court that all indications were that no evaluation of the shares was made prior to their purported disposal or transfer. However, Shakantu said the princess consented to the transfer of the shares in the presence of her attorney at the time. Emmanuel Shabangu of Robinson Bertram, on behalf of the executor, only clarified that the agreement in question was partly oral and written. Cyril Mamba of S.V. Mdladla and Associates appeared for Eswatini Mobile.

‘It’s not true Cherrybite agreed to pay all debts’

MBABANE – Advocate Thakane Mofokeng said it was not true that Cherrybite (Pty) Limited agreed to pay all the debts of the estate of the late Victor Mfana Gamedze.
“This is far from the truth,” said Mofokeng. In his answering papers, Michelo Shakantu submitted that his concern was limited to the exposure relating to Eswatini Mobile, not the entire indebtedness of Gamedze. “The deceased had other debts which were of no concern to Eswatini Mobile. The quantum of the claims made by EswatiniBank against the estate were known to both parties, that is, the executor and Cherrybite as well as the applicant (Princess Lungile). Mofokeng told the court that the EswatiniBank claim was for E9 844 667.59.

“This was the consideration for the shares,” he said. Princess Lungile in her papers said she had previously explained the issue of the consideration, and so had the executor, Derrick Jele, in his clarifying affidavit. She accepted that value would have been brought to the estate had Michelo Shakantu performed to date as the executor pointed out that he had not, despite being put in default. This response, according to Mofokeng, was not a denial that Shakantu was concerned with exposure relating to Eswatini Mobile, and not the entire indebtedness of Gamedze. “Crucially, it is not a denial that the consideration for the subject shares was E9 844 667.59. The executor has also not denied Mr Shakantu’s averments in this regard.
“In the circumstances, the allegation that the second respondent is ‘blowing hot and cold’ is clearly baseless and not supported by facts. There is clearly no ‘disagreement’,” Mofokeng argued.

EswatiniBank: Estate exposure was E9.8m

MBABANE – EswatiniBank wrote an affidavit stating that the exposure of the estate was E9.8 million and this is how much Michelo Shakantu could take care of. Advocate Thakane Mofokeng, on behalf of Shakantu, argued that, that was the consideration. Mofokeng, who was instructed by Banele Manzini of MJ Manzini and Associates, submitted that Princess Lungile said she did not see any proof of payment. The advocate pointed out that ‘here we are dealing with shares’. Mofokeng said Princess Lungile conceded the consideration. The EswatiniBank claim was for E9.8 million. According to the advocate, what Princess Lungile contemplates to vindicate are the shares which are the lawful property of Cherrybite.
Logically, and subject to fulfilment of all necessary legal requirements, the princess would, under the prevailing circumstances, be expected to institute an application to interdict Cherrybite from disposing of the shares pending the contemplated vindicatory action.

“That is an interdict to preserve the subject shares. Glaringly, the applicant contemplates the opposite. Applicant has made it abundantly clear in her affidavits, and this has been confirmed in open court, that she has no objection to the sale and transfer of the shares to PSPF. In fact, she wants the shares to be sold to PSPF, so that she can lay a claim to the proceeds of the sale,” stated Mofokeng in the supplementary heads of argument.

Inconsistent

He said her conduct was clearly inconsistent with the preservation of the shares. He also said her failure to apply for an interdict aimed at preserving the subject matter of the contemplated vindicatory action was fatal to her case. “Applicant has not proffered any explanation as to why the present interdict proceedings are not aimed at preserving the subject shares pending her ill-fated vindicatory (based on a real right and concerned with the ownership of a thing) action,” he submitted. “Apart from the above fatal error, applicant’s contemplated vindicatory or quasi-vindicatory action has zero prospects of success.” Quasi-vindicatory action seeks the delivery of specific property under some legal right to possession rather than as the owner or lawful possessor. Furthermore, Mofokeng argued that reliance on the presumption of irreparable harm in applications for interim interdicts relating to vindicatory or quasi-vindicatory claims is totally misconceived, as the said presumption does not apply in Princess Lungile’s case.

He also told the court that Princess Lungile, who is one of the beneficiaries, had no legal standing to bring a vindicatory action where an executor dative has been appointed. "This is so because the estate is not a legal persona, only the executor can sue or be sued on its behalf. The law is well settled on this point,” he said. “Applicant has not alleged any reason why the above settled legal principle does not apply to her case.” The advocate also argued that Princess Lungile had unequivocally averred that the proposed sale or transfer of the subject shares to PSPF should proceed and this defeats the very purpose of a demand for the return of what belongs to a plaintiff. The applicant in her Particulars of Claim has alleged that the shares are held by Cherrybite pursuant to a sale agreement entered into by the executor and Cherrybite.

Transfer

However, the Particulars of Claim do not allege that the sale and transfer of the shares has been set aside or terminated. In other words, the Particulars of Claim concede that Cherrybite is, as things stand, the lawful owner of the subject shares. On another note, Mofokeng argued that Princess Lungile appeared to confuse the remedy of the legal action by which a plaintiff demands that a defendant returns what belongs to the plaintiff with the remedy of cancellation of a contract. He pointed out that the princess averred that Cherrybite was clearly in default even though Shakantu denied it, and the issue of cancellation of the agreement entered into by and between the executor and Cherrybite is for the trial court and not for the interdict which seeks to preserve the estate asset. “Clearly, applicant relies on a non-existent ‘disagreement’ between the executor and Cherrybite regarding the sale, for the cancellation of the agreement.
Princess Lungile’s Particulars of Claim, according to Mofokeng, do not disclose a cause of action for cancellation of the sale agreement.

He said her Particulars of Claim are largely premised on the allegation that the sale agreement between the executor and Cherrybite was invalid. “The essential averments to sustain a cause of action for cancellation of the contract have not been made. Applicant cannot rely on the same Particulars of Claim to sustain a claim for cancellation, for a contract cannot be both void ab initio and be alive at the same time. “Applicants’ weak, if not non-existent, claim to cancellation of the sale agreement is further compounded by the fact that the executor has made a clear, unequivocal election to abide by the contract. The election by the executor is final and cannot be reversed,” the advocate argued.

Post your comment

Your name:

Your e-mail address:

Add your comments:

Please enter the code you see in the image:

Image:

Code: