Court records suggest that Choppies may have shot itself in the foot after telling former Zimbabwean Vice President Phelekezela Mphoko and son that they were minority shareholders in a company trading as Nanavac Investments in Zimbabwe.
This is contained in an appeal application that the Choppies has launched before Zimbabwe’s Supreme Court challenging Bulawayo High Court Justice Martin Makonese’s decision to throw out its exception plea.
The papers also suggest that Choppies is walking back its earlier comment it made that the Mphokos were the minority shareholders in the company.
In papers filed before the Zimbabwean Supreme Court, Choppies states that the respondents (Phelekezela and Siqokoqela) “are former majority shareholders of the 1st Appellant (Nanavac Investment (Private) Limited which trades as Choppies Supermarkets.”
The documents state: “They (Mphokos) previously held 51% in the 1st Appellant (Nanavac Investment).”
The court documents conflict Choppies chief executive officer Ramachandran Ottapathu’s response to Sunday Standard inquiries. Asked if the papers before the Zimbabwean Supreme court suggested that Choppies was now conceding that the Mphokos were majority shareholders, Ottapathu said: “No change in position.”
Chronicling the events that led to the current legal dispute, the papers detail how the Mphokos instituted action proceedings against the Choppies alleging that sometime in 2009 they (Mphokos) were forced to enter into a deed of settlement in which they deposed of their 51% shareholding in the 1st Appellant to Choppies for the amount of US$2 900 000.00 (two million nine hundred thousand United States dollars).
The deed of settlement stood as the sale agreement for the sale of shares between Choppies t and the Mphokos.
Choppies argues that, “If the deed of settlement was declared null and void because the price was induced by duress, it meant the sale agreement no longer existed for want of an essential requirement of a sale, the purchase price.”
According to Choppies, “Once the purchase price and in effect the sale agreement had been set aside, there was no cause of action to order payment of the purchase price at the amount of US$22 585 714.00.”
Suggesting that Choppies and the Mphokos are returning to the drawing board to have the matter settled for good, Choppies said: “Once the deed of settlement was set aside, the parties returned to the position before entering into the deed of settlement.”
Choppies argued that the Mphokos’ declaration was clear that prior to entering into the deed of settlement, the parties could not agree on the value of their shareholding.
Furthermore, Choppies said it was wrong for the High Court “to impose a fair purchase price on the parties thereby making a contract on behalf of the parties.”
“A court could not make a contract on behalf of the parties,” Choppies said.
On the issue that the cause of action under duress was vague and embarrassing, Choppies argued that: the Mphokos’ relief was contradictory and inconsistent in that they sought that the deed of settlement be declared null and void and yet did not tender the repayment of the amount they received under the alleged duress.
“It was inconsistent or contradictory to seek the declaration of invalidity and not tender return of the amount received under duress or to seek that it be set off against the alleged true value of the shares,” argued Choppies.
The supermarket said the basis of the exception was not that it wanted the Mphokos to plead the law.
“The Appellants (Choppies) wanted the Respondents (the Mphokos) to set out facts which show a cognisable cause of action at law for the order sought for payment of a new purchase price in the amount of US$22.5 million,” said Choppies. It states the only cause of action pleaded was the setting aside of the deed of settlement on the basis that it had been entered into because of duress.
“No further cause of action was set out as to why the court should then grant payment of a new purchase price of US$22.5 million once the other purchase price had been set aside on the grounds of duress,” Choppies said.
It says the deed of settlement stood as the sale agreement for the sale of shares between the plaintiffs and the defendants.
“If the deed of settlement was declared null and void as a result of the incorrect price induced by duress, it meant the sale agreement no longer exists for want of an essential requirement of a sale, the purchase price,” Choppies said.
It said once the deed of settlement was set aside, the parties returned to the position before entering into the deed of settlement.
Choppies said prior to the deed of settlement, there was no sale agreement for the shareholding because the parties could not agree on an essential requirement of a sale, the purchase price.
“By its nature, a deed of settlement is a settlement of disputed obligations. A deed of settlement arises from a position where the parties have disputed obligations the issue of which is uncertain. It, therefore, arises from a position where parties are not in agreement but choose to compromise and come up on a settled position,” Choppies said.
Choppies said the High Court erred at law in failing to uphold the exception that once the the Mphokos pleaded the setting aside of the purchase price and consequently the sale agreement, they were supposed to tender, in their declaration, the return of the amount they received under the sale agreement they sought to be set aside or to set it off against the alleged fair price.
Choppies also argued that the Mphokos in their declaration seek to rescind the deed of settlement to the extent that it incorrectly sets out as the true value of the Respondents (the Mphokos) shares which value was accepted under duress.
Choppies submitted that there was an obligation to tender return or to set off the amount received in the declaration. “It would be inconsistent to seek to set aside the deed of settlement and not tender return or set off the amount already received,” Choppies argued.
