Access Finance Shareholder’s Dispute Gets More Intense

Harare | The legal dispute over whether the problematic points in the primary shareholders’ sale of shares deal should be resolved through arbitration or in court is escalating in the case of Access Finance Group, a local financial services and remittance company.

According to recent court filings, Access Finance prefers arbitration over litigation to settle outstanding disputes, especially those involving title deeds to the properties involved in the transaction.

Senziwani Sikhosana, a former shareholder and managing director, is another person the corporation is putting off paying in full or transferring the assets since a conveyance cannot be finalised without title deeds.

Rather than fulfilling their responsibilities, Access Finance executives are using a number of legal technicalities, such as jurisdiction, locus standi, and incompetent relief, to delay the process.

A major obstacle to the share sale transaction is that the title deeds to the properties involved are not yet available because Value Added Tax (VAT), which is 15% of the value of the real estate development valued at least US$3.9 million, has not been paid to the Zimbabwe Revenue Authority (Zimra).

15% VAT is applied on the transfer of land that has already been developed by a registered property developer.

In other words, Zimra is owed at least $5,855,000 by Access Finance. Given that the anticipated value of the property development is between US$3.9 million and US$4.4 million, the amount could end up being much more than US$600,000.Access Finance shareholders created and own Mountbatten Complex.

Thus, the Zimra tax issue is now a major obstacle to the selling of the shares.In relation to townhouse title documents valued US$320 000, Sikhosana, a former managing director and shareholder of Access Finance, and his business entities have filed a lawsuit against Singathini Raymond Chigogwana, the former chief executive, and related firms.

The two ex-business partners are currently at odds over a real estate development in Marlborough, Harare called No. 36 Mountbatten Complex. The building contains 37 townhouse units that are valued at least US$3.9 million. The two had a brutal shareholding dispute.

The legal dispute concerns three of those properties.Before a nasty fight broke out over shareholding last year, which resulted in the court action, Chigogwana and Sikhosana were business partners running several companies, including Access Forex (Pvt) Ltd, Access Finance (Pvt) Ltd, Tara Capital (Pvt) Ltd, Thirty-Six Mountbatten (Pvt) Ltd, and Access Forex SA (Pty) Ltd.

In the High Court case HC1007/23 concerning the properties, the respondents are Tara Capital, Chigogwana, Bwerinofa, Thirty-Six Mountbatten, Access Finance, Access Forex, Tara Capital, the Sheriff of the High Court, and the Registrar of Deeds and Companies.

The applicants are Sikhosana and his entities Ferden Investments, Rock Drill Mining, and Seanmart Investments.Sikhosana demands that Chigogwana give over the real estate or money that was part of their acrimonious divorce settlement. He requests that the court make an order allowing his former partner’s assets to be attached if that is not done.

In addition, he demands that his former colleague cover all transaction-related expenses, imposts, and transfer taxes. In accordance with Clause 9 of the Share Purchase arrangement (SPA) and the arrangement for the sale of his shares and property, Sikhosana states that he must place Chigogwana in mora (default) and give him 14 days to resolve the matter. He will be entitled to cancel the agreement or seek remedies in casu (during the case) if the breach is not corrected.

Isau Bwerinofa, their chairman, held 24% of the company’s shares, Sikhosana, the managing director, owned 20%, and Chigogwana, the chief executive, held 56%.

But in his opposing or responding affidavit, Bwerinofa has taken a hard line against Sikhosana in court, arguing that since there is now a disagreement about the terms of the agreement (SPA), arbitration should be used instead of going to court.

Bwerinofa challenges Sikhosana on several grounds, including arbitration, jurisdiction, locus standi, incompetent relief, and agreement fulfilment. In addition, he addresses certain concerns based on merit.

Bwerinofa discloses Since VAT has not yet been paid, Access Finance is unable to provide Sikhosana with his title deeds because they are missing. He wants the issue to be arbitrated in relation to cash payment.Bwerinofa also brings up a number of limine or preliminary issues—mostly legal technicalities—in his replying affidavit.Authority

Bwerinofa first claims that the court lacks authority to consider Sikhosana’s application.

Bwerinofa states, “I have been advised by my legal counsel, which counsel I accept, that this honourable court does not have jurisdiction to deal with this matter.”

“Any dispute out of or in connection with the interpretation, the effect or the implementation of, the existence, validity or termination of, or any other matter arising directly or indirectly out of this agreement shall be referred to and finally resolved by arbitration in terms of this clause,” states Clause 21.1 of the Share Purchase Agreement (hereinafter referred to as “the SPA”).

inadequate relief Second, Bwerinofa adds that Sikhosana is requesting an order that the court is unable to provide, making the relief incompetent.

The petitioners assert that the corresponding sale agreements serve as the foundation for their claims of damages or particular performance.

The third respondent (Thirty-Six Mountbatten) and the second through fourth applicants (Ferden Investments, Rock Drill Mining, and Seanmart Investments) entered into individual selling agreements.

Individual sale agreements allegedly relied upon by the applicants are not known to the First (Chigogwana), Second (Bwerinofa), Fourth, Fifth, and Sixth respondents (Access Finance, Access Forex, and Tara Capital, respectively) in this case.

Since contracts only generate personal rights, my legal professionals have taught me—advice that I accept—that the only parties to a contract may execute contractual remedies against one another.

Third, Bwerinofa asserts that Sikhosana lacks the authority and competence to file the application and appear in court.

It is evident that the First Applicant (Sikhosana) lacks the legal standing to initiate any court proceedings in his own name, even if the assertion is made to avoid the arbitration process and to show that the court proceedings are about the enforcement of the individual sale agreements of the housing units. He is not the sale agreements’ counterpart.

Because of this, the court must rule that the plaintiff lacks standing to file the current lawsuit if it decides that the matter should not be submitted to arbitration.

On merits Lastly, a number of topics are brought up on merit, some of which overlap with the preceding ones. Among these are personal matters.The topic of title deeds comes up frequently, as does the fact that Access Finance and Zimra are still negotiating over VAT. Stalled property transactions and arbitration are also brought up.

Bwerinofa contends that arbitration, not the courtroom, is where the dispute should be resolved.

Sikhosana’s upcoming replying affidavit will address points brought up in Bwerinofa’s opposing or answering documents.

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