Business Reporter
The Deposit Protection Corporation (DPC), the liquidator of Interfin Bank, has finally given Equity Properties (Pvt) Ltd its title deed, in a move that is expected to resolve once and for all the long running legal disputes between the property firm and Jayesh Shah’s Al Shams Global BVI Ltd (Al Shams).
The recent Supreme Court judgement SC 673/19, where it upheld the temporary High Court Order HH 752/19 against Equity Properties, was overtaken by events following another Supreme Court Order 23/2020 in favour of DPC.
The dispute between Equity Properties and Al Shams originates from a loan of US$1,6 million that Equity Properties obtained from Interfin Bank, which was secured by a mortgage bond over the firm’s property. The mortgage bond was subsequently cancelled by the court.
Equity Properties repaid fully the loan from Interfin Bank – US$3,2 million – including interest in 2016 before the local currency was devalued. The payment was under a settlement agreement between Interfin Bank and Equity Properties on condition that DPC on behalf of Interfin Bank shall release the title deed of Equity Properties in 10 days after such full repayment.
However, after the repayment, DPC failed to release such title deed within 10 days and later on revealed for the first time that it was unable to give Equity Properties such title deed because it had been taken “illegally” by Jayesh Shah’s Al Shams Global from Interfin Bank. It also emerged that Jayesh Shah was refusing to return the document.
However, it has not been easy to bring Jayesh Shah’s Al Shams to justice because of the Peregrinus law and lack of a local business address for Jayesh Shah’s Al Shams.
In terms of Peregrinus law, a local company cannot sue a foreign company without approval from the court, but a foreign company can sue the local firm without leave of the court.
Sources say this Peregrinus law is controversial and not in line with the new Constitution of Zimbabwe as it brings inequality between local and foreign companies operating in Zimbabwe and can easily be abused.
There are two types of foreign investors;
The first type comprises of foreign investors who come and abide by the laws of the host countries in good faith and contribute to the development of that country.
The second type of foreign investors are those who violate the laws of the host country or exploit loopholes in the laws of the host country including abusing its legal processes. Such foreign investors operate in bad faith and regard Africa as a dark continent which does not have modern laws or which cannot understand its own laws.
In other countries the Peregrinus law has been done away with, and foreign businesses operating in those countries are required to provide a local address (also known as Domicilium Citandi) for purposes of serving court papers in case they violate the laws of the host country.
Previously, Equity Properties had overcome such problems of Peregrinus Law and local address by applying for leave of the court to sue and serve court papers on the Zimbabwean lawyers of Jayesh Shah’s Al Shams Global, because Al Shams was being evasive and not wanting to face the law.
Equity Property was then given permission by the court to sue Al Shams and serve court papers at the address of Al Shams Global’s lawyers in Zimbabwe. Equity Properties then sued Al Shams Global, seeking the court to grant it a replacement title deed.
After being served with the above mentioned court papers at its local lawyers, Al Shams Global did not respond in time to the court case, and consequently Al Shams got a default judgement. In terms of the default judgment the Registrar of Deeds was authorised to issue a replacement title deed to Equity Properties. The Registrar of Deeds then issued replacement title deed number 2370/2018 on July 18, 2018.
However, later on Al Shams Global exploited a loophole in the law and applied to court for rescission of the default judgement on the basis that it had changed lawyers by the time the court papers were served.
The court then rescinded the judgement on the basis that the respondent had not been served court papers at his address of choice. On the basis of such rescission of judgement Al Shams further applied to court for nullification of the replacement title deed number 2370/2018 issued on July 18, 2018 and to stop Equity Properties from using such replacement title deed. The High Court then under order HH 752/19, issued a temporary provisional order where it nullified the replacement title deed number 2370/2018 as well as stopped Equity Properties from using such replacement deed number 2370/2018, until next the court hearing on the matter. Equity Properties appealed such High Court Order HH 752/19, but the Supreme Court recently under court order SC673/19 up held the temporary High Court Order HH 752/19 because of the above mentioned rescission.
However, the Supreme Court in its recent court judgment SC673/19, made it clear that it dealt only with a narrow issue of rescission of judgment and not with the core issues and it further agreed that the core issues of the dispute will be dealt with under HC 8113/16, where all the legal cases between Equity Properties and Al Shams are consolidated. Under HC 8113/16, Equity Properties is the plaintiff and Al Shams is the defendant. Equity Properties’ position is that Al Shams Global took its title deed and Bankers Acceptances (BAs) illegally from Interfin Bank. Al Shams as defendant will have to explain how it took the title deed and BAs from Interfin Bank.
While the dispute between Equity Properties and Al Shams Global was going on, DPC as the liquidator of Interfin Bank was also fighting Al Shams on the same matter among other issues. DPC then won its case in the Supreme Court against Al Shams Global under SC 23/2020, where the Supreme Court nullified all claims of Al Shams on Interfin Bank, including the claim on the title deed of Equity Properties by Al Shams. The Supreme Court emphasised that Al Shams can not sue DPC without leave of the court. Hence the Supreme Court decision countered the Peregrinus legal protection, which Al Shams always uses.
After getting the Supreme Court Order SC 23/2020, DPC then applied for a replacement title deed using such Supreme Court Order and the Registrar of Deeds granted DPC the replacement deed number 2310/21 for Equity Properties. DPC then gave Equity Properties the second replacement title deed number 2310/21 in line with previous agreement where DPC had undertaken to give Equity Properties its title deed after full repayment of the loan.
In summary, three title deeds were issued for the same property, namely the original title deed held by Al Shams Global, the first replacement title deed number 2370/2018 issued on July 18 2018 which Equity Properties applied for, and the second replacement title deed number 2310/2021 issued on September 7, 2021, which DPC applied for and got.
According to the Deeds Registries Act, at any one time there is only one valid title deed, and by operation of the law, the Replacement Title Deed nullifies the original title deed.
Firstly Equity Properties has returned the first replacement title deed number 2370/2018 to the Registrar of Deeds for cancellation, in compliance with the court orders HH 752/19 and SC673/19.
However, the second Replacement title deed number 2310/2021 issued on 7th September 2021, after DPC’s application, also nullifies the original title deed held by Al Shams Global.
This second replacement title deed number 2310/21 was not nullified by any court. In fact, it was issued following a Supreme Court order SC 23/2020 granted to DPC.
DPC as the bank’s liquidator then gave the second Replacement Title Deed number 2310/2021 to Equity Properties. Thus as things stand the only valid title deed is the second replacement title deed number 2310/2021 held by Equity Properties.
The DPC agreed to the cancellation of the mortgage bond on the property of Equity Properties, and also confirmed that Equity Properties was not owing money under the BAs.
From the above, Equity Properties complied with Supreme court order SC673/19 and handed over the demanded replacement deed, and Al Shams is also expected to comply with Supreme Court order SC 23/2020 granted in favour of DPC.