Now Reading
Ex-Judicial Manager Sues Company for Share Acquisition

Ex-Judicial Manager Sues Company for Share Acquisition

Prosecutors ordered to go hard on Machete criminals

Former judicial manager of a gold mining firm Rolldice Mining Services, Edward Warhurst, has taken the company to court, claiming shares he and companies linked to him allegedly acquired when he was in charge of the company’s affairs.

Rolldice extracts gold at Gloy Mine in Mt Darwin and the mining claims are alleged to be personally owned by the company’s majority shareholder Mr Jacobus Carstens.

The company was placed under judicial management by the High Court in July 2015 and Mr Warhurst, a legal practitioner, was subsequently appointed provisional judicial manager in terms of the now-repealed Companies Act (Chapter 24:03).

the case filed in August 2022, the applicants are Expansion Investments, Tallentire Investments, and Mr Warhurst. Mr Carstens, the Minister of Mines and Mining Development, the mining commissioner (Mashonaland West District), Rolldice, and the Master of The High Court of Zimbabwe, have been cited as respondents.

In a founding affidavit deposed by Mr Warhurst in support of the application, the applicants are seeking declaratory orders and mandatory and prohibitory interdicts.

The declarators are to the effect that there is a valid joint venture between Mr Carstens and Mr Warhurst, with the former entitled to a 50 percent stake in the JV enterprise.  The JV should have been formed to conduct mining activities at Gloy Mine.

They are also seeking the court’s declaration to allow the JV to mine gold at Rolldice while interdicting Mr Carstens from selling Gloy Mine or interfering with the joint venture.

Mr Carstens opposed the application arguing that the applicants did not seek leave or authority of the court to sue Rolldice, which is under judicial management.

He argues that there are no signed joint venture agreements and the courts cannot be used to make contracts for parties or coerce parties into contracts.

In addition, Mr Carstens further argues that Mr Warhurst was conflicted as the judicial manager did not acquire shares but loaned some funding, some of which has since been repaid.

Rolldice’s current judicial manager, Mr Knowledge Hofisi, who took over from Mr Warhurst in November 2021 following his resignation, had raised several objections in support of the company’s notice of opposition. He raised the legal requirement to seek leave or authority of court for applicants to sue the company under the court-ruled administration.

He argues that the orders sought were based on conflicted interests and that the arbitration clause in the disputed joint venture agreement was not used by the applicants for dispute resolution.

Mr Hofisi further says the interdict sought was an incompetent relief. He disputes the existence of a valid joint venture agreement saying there was no signed document and no meeting of the minds. The judicial manager also averred that the funds paid into the company were loans some of which have been repaid while Rolldice was willing to pay the balance.

Mr Hofisi, on behalf of the company, also cited what he called material weaknesses in the alleged joint venture agreement such as the absence of clauses on duration or termination and argued that this was a ploy for the applicants to enjoy mining at Gloy Mine in perpetuity.

See Also
Colin Chibafa

He further argues that if in terms of the disputed joint venture agreement, a joint venture enterprise was to be established but was not formed, Rolldice can not be deemed to be the joint venture enterprise as this would violate the separate legal existence of the company.

He also argues that applicants were not shareholders in the company and that formalities required by the Companies Act (Chapter 24:03) and the company’s Articles of Association for the allotment of shares were not complied with.

The applicants, Mr Castens and Rolldice Mining Services (Private) Limited went on to file their heads of arguments with the High Court. The matter will be heard in the High Court’s Commercial Division on 16 May 2023.

This matter is likely to be a landmark, as it will determine whether judicial managers or corporate rescue practitioners can acquire a shareholding in companies in which they are entrusted to turn around.

In related issues, according to an audit report seen by this paper from reliable sources, Mr Warhurst reportedly transferred funds from the law firm Matizanadzo Warhurst to Rolldice’s account. According to narrations seen on some bank statements, some of the transfers were said to be done on behalf of clients, with some of the clients being named.

The auditors were not sure why the client’s funds would be transferred from the law firm’s bank account into the bank account of the company the former judicial manager was managing. Mr Carstens is also said to have reported Mr Warhurst to the Law Society of Zimbabwe for conflict of interest in the matter.

Source: Herald

Scroll To Top
error: Content is protected !!