Jayesh Shah, a director of Al Shams Global BVI Ltd – a company registered in the British Virgin Island – that operates in Zimbabwe as a foreign company without a local address for court purposes, has lost a title deed dispute case in the High Court against the Deposit Protection Corporation (DPC) and Equity Properties, a local development company, inside a month.
Al Shams latest legal defeat is the second inside a month following lawsuits triggered by the action of the DPC, which is the liquidator of Interfin Bank Limited.
DPC, in its capacity as the liquidator of Interfin, finally gave Equity Properties (Pvt) Ltd its Title Deed, in what 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).
Shah did not want DPC to give Equity Properties the Title Deed, hence in response to such action by DPC, Shah on behalf of Al Shams first filed an urgent court application in the High Court under HC 5475/21 against DPC and Equity Properties, aimed at reversing the liquidator’s action but, lost the case.
Less than one month later, Shah made a second application in the High Court under case HC 6264/21 against Equity Properties and left out DPC to try and tip the scale in his favour, but once again lost the case.
Previously, Shah had won a number of legal cases against several businessmen in Zimbabwe.
The dispute between Equity Properties and Al Shams Global, 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 loan repayment was under a settlement agreement between Interfin Bank and Equity Properties on condition that DPC, on behalf of Interfin Bank, would release the title deed of Equity Properties in 10 days after such full repayment.
However, after the repayment, DPC failed to release the title deed within the prescribed 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 approval or leave of the court.
Analysts say the Peregrinus law is controversial and not in line with Zimbabwe’s laws, as it brings inequality between local and foreign companies operating in Zimbabwe, opening avenues for abuse of the law.
There are two types of foreign investors, market analysts say, those 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 include those that 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, ostensibly, 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 such Peregrinus law has been repealed 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 countries.
In Zimbabwe, in terms of the Companies Act, foreign businesses are required to have a registered local branch, but in Al Shams case claims such law has not applied to it thus far. The applicability of such a section of the Companies Act to Al Shams Global Act has not yet been determined by court as a core issue in the disputes with Shah.
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 there was a default judgement against Al Shams.
In terms of the default judgement 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 18 July 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 Al Shams 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 18 July 2018 and to stop Equity Properties from using such Replacement Title Deed.
The High Court under Order HH 752/19, then 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 the next court hearing on the matter.
Equity Properties appealed such High Court Order HH 752/19, but the Supreme Court under court order SC673/19 up held the temporary High Court Order HH 752/19 because of the rescission, which had earlier been granted by the court.
However, the Supreme Court in its court judgement SC673/19 in favour of Shah’s Al Shams Global, made it clear that it dealt only with a narrow issue of rescission of judgement arising from the issue of address of service, and did not deal with the core issues. Some of the core issues centre on how Shah took the Title Deed and Bankers Acceptance (BAs) of Equity Properties from Interfin Bank.
The position of Equity Properties and DPC on such core issues is that Al Shams Global took such Title Deed and BAs illegally from Interfin Bank. On the other hand, Al Shams claims that Interfin Bank gave him the Title Deed and BAs as security for the amount owed by Interfin Bank to Al Shams Global.
However, according to the court papers, the agreement between Jayesh Shah’s Al Shams Global and Interfin Bank on such security had a key requirement that the consent of Equity Properties was required before such title deed was given to Shah’s Al Shams Global.
Equity Properties did not consent to its title deed being given to Shah’s Al Shams Global. Furthermore, in terms of the Bills Exchange Act, the BAs are not transferable unless they are endorsed by the drawer or transferor to the transferee. In this case, Equity Properties as the drawer or originator of the BAs did not endorse the BAs to Interfin Bank or Al Shams Global.
However, the above mentioned 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.
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 cannot sue DPC without leave of the court.
Hence the Supreme Court ruling on such an issue of leave of court, gave Shah the taste of his own medicine because he has been using the Peregrinus law to prevent other aggrieved people from suing his company Al Shams Global.
After getting the Supreme Court Order SC 23/2020, DPC then applied for a Replacement Title Deed using the 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 the 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 18 July 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 September 7 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 Interfin 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.
As mentioned above Equity Properties complied with Supreme court order SC673/19 and handed over the 2018 first replacement title deed, and Al Shams is also expected to comply with Supreme court order SC 23/2020 granted in favour of DPC. The essence of SC 23/20 is that Al Shams Global cannot sue DPC without leave of court.
Contrary to the expectation, Shah in response to the action of DPC, first filed an urgent application in High Court under HC 5475/2021 against DPC and Equity Properties, with an aim of reversing the actions of DPC and Shah also hoped to be given an exception to the requirement that one cannot sue DPC without leave of the court.
However, Al Shams Global lost the legal case after both DPC and Equity Properties raised the above mentioned core issues in court and the fact Shah had sued DPC without leave of the court..
After losing the above mentioned first urgent court application Shah then made a second urgent application in High Court under HC 6264/21 against Equity Properties and deliberately left out DPC in such second lawsuit as Al Shams erroneously thought it could win against Equity Properties alone, but Equity Properties defended itself successfully and repelled an, Equity Properties also raised the above mentioned core issues in its opposing papers under the second lawsuit.
After being repelled by Equity Properties, Shah went back to the first urgent court application HC5475/2021 mentioned above and filed an appeal to the Supreme Court under SC 447/2021 against the High Court judgement under HC5475/2021 again without leave of the court to sue DPC. The Supreme Court under SC 23/20 has already ruled that Shah’s Al Shams Global cannot sue DPC without leave of the court.
According to the court papers, DPC, as the liquidator, resolved this matter professionally, by giving the 2021 Second Replacement Deed to Equity Properties and confirming to the court that Equity Properties repaid its loan fully to Interfin Bank Ltd.
Also DPC told the court that it is prepared to repay Shah’s Al Shams Global the money it is owed by Interfin Bank in accordance with the laws of liquidation of companies provided Al Shams does not circumvent such liquidation laws.