Saturday, September 23, 2023

The Mphoko’s closing in on Choppies

Choppies has lost its bid to stop Zimbabwe’s former Vice President Phelekezela Mphoko and his son Siqokoqela from launching fresh legal action demanding US$22.5 million  compensation.

The demand emanates from shares they held in an entity identified as Nanavac Investments rather than the US$2,9 million that the retailer had previously paid them.

The decision of the High Court of Zimbabwe clears the way for Botswana’s former President and former Chairperson of Choppies Festus Mogae and the company’s Chief Executive Officer Ottapathu Ramachandran among others to be dragged before the Court to testify.

Court records show that Choppies, in response, had through their lawyers Dube-Banda & Nzarayapenga asked the High Court to make an exception in a bid to block the Mphokos’ fresh application and also stop the matter from proceeding to trial. But the High Court shot down the exception.

Asked to comment, Ramachandran said: “We are not aware of new cases.” But when pressed further, he said; “This was the further proceedings of a case filed by them in 2020. The matter was settled in 2019. It’s not a new case.”

Fresh court papers, bearing High Court of Zimbabwe stamp show that some of the papers were filed in September this year. 

The Mphoko family seeks an order declaring that they are entitled to payment of the true value of the 51 percent shareholding which they held between them and Choppies before they “were unlawfully divested of the entire shareholding by the Second Defendant, being the sum of US$22 585 714.00 (twenty-two million five hundred and eighty-five thousand seven hundred and fourteen United States dollars.”

They also seek an order declaring that the deed of settlement which recorded the compensation due to them from Choppies for 51 percent shareholding in Nanavac Investments be considered null and void. The said settlement deed resulted in the Mphokos being compensated US$2.9 by Choppies.

Mphoko family’s lawyers, Ncube and Partners state in court papers that Mphoko and his son were majority shareholders in Nanavac Investments, holding an aggregate of 51 percent shares in the company. Siqokoqekela held 25.5% of the shareholding and his father also held 25.5% of the shareholding in the company while Choppies held 49%.

The lawyers explained that in 2018, disputes arose between Siqokoqela and Choppies which resulted in Choppies instituting legal proceedings against Siqokoqela and his wife.

“The Plaintiffs (Mphokos) and the 2nd and 3rd Defendants (Choppies) prior to the 9th January 2019 and on the said date agreed to the disinvestment of the Plaintiffs from 1st Defendant but did not agree on the value of the Plaintiff’s shareholding in the 1st Defendant,” Ncube and Partners argued.

The lawyers said in order to secure the consent of Siqokoqela and his father to the sum of money which he was proposing as compensation for the disinvesture, Choppies instituted “malicious and false criminal complaints to the police resulting in the arrest and detention” of Siqokoxela and his wife.

“While the 1st Plaintiff (Siqokoxela) and his wife were in detention and in order to secure the consent of the Plaintiffs to its terms of settlement, the 2nd Defendant (Choppies) presented to the Plaintiffs a deed of settlement for their signature setting out the value due to the Plaintiffs upon disinvesture as the sum of US$2 999.00 (two million nine hundred thousand United States dollars,” the lawyers revealed.

They said in order to secure the release of Siqokoqela and his wife from detention and for no other purpose, they signed a deed of settlement on the 9th of January 2019 in which the existence of prior agreements was recorded in addition to the setting of the amount of compensation.

The lawyers said Choppies knew all along that the Mphokos were not in agreement with the sum it proposed as settlement figure of disivesture and that they would not have agreed to the sum of US$2.9 million which was by far an understatement of their shareholding in Nanavac Investments and further that upon a proper valuation of the shareholding, a much higher figure would have been payable by Choppies to the Mphokos upon disinvestment.

“But for the duress, both physical and economic brought to bear upon the Plaintiffs, the Plaintiffs would not have agreed to being paid the sum of US$2 900 000 (two million nine hundred thousand United States dollar) but would have claimed a higher figure. Upon a proper valuation, the amount due and payable to the Plaintiffs in respect of 51% shareholding in the 1st Defendant in the sum of US$22 585 714.00 (twenty-two thousand five hundred and eighty-five thousand seven hundred and fourteen United States dollars.”

For their part, Choppies lawyers argued that, “The cause of action under duress is vague and embarrassing and the summons and declaration do not disclose a cause of action for the payment of US$22 585 714.00 and interest on that amount.”

They said the objection that a pleading is vague and embarrassing strikes at the formulation of the cause of action and not its validity.

Choppies complains that the lawsuit is “drafted in a manner which is vague and embarrassing so as to prejudice the defendant if forced to plead.”

“The summons and declaration under duress should in addition to declaring the deed of settlement null and void, tender the repayment of the amount the plaintiffs received under the alleged duress or seek the set off such amount against the alleged true value,” the lawyers said.

The lawyers for Choppies argued that, “It is consistent 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.”

They said the true value claimed by the plaintiffs in the amount of US$22 585 714.00 should be less the amount of or value of US$2 900 000 that has already been received by Mphoko family members.


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