Judgment
No. SC 14/08
Civil
Appeal No 159/07
CAPS
UNITED FOOTBALL CLUB (PRIVATE) LIMITED v
(1) CAPS HOLDINGS (LIMITED) (2) BUYMORE
FOOTBALL CLUB
SUPREME
COURT OF ZIMBABWE
CHEDA JA,
ZIYAMBI JA & MALABA JA
HARARE
MARCH 3, & SEPTEMBER 9, 2008
T Biti,
for the appellant
J C
Andersen SC, for the respondent
ZIYAMBI JA: On 18 June
2007, the High Court dismissed with costs an application made by the
appellant for an interdict in the following terms:
1. The first Respondent CAPS Holdings
Limited be and is hereby barred and
interdicted from unlawfully interfering, with the
goodwill, brand, colours, regalia and insignia of CAPS United
Football
Club and CAPS United Football Club (Private) Limited.
That
the Respondents be and are hereby barred from renaming Buymore
Football Club, CAPS Football Club, CAPS Rovers or any other
name
suffixed or prefixed with the acronym CAPS.
CAPS
Holdings (Private) Limited be and is hereby interdicted from the use
of the colours green and white, together with the acronym
CAPS in
respect of any football team that it may own or sponsor and register
to play with the Premier Soccer League and or with
the Zimbabwe
Football Association in any division.
That
the Respondents jointly and severally pay the other to be absolved
pay costs of suit.
The learned Judge was of the view that the matter was
so replete with grave factual disputes that it was incapable of
resolution
on the papers.
The dispute between the parties arises from the
following facts.
CAPS Holdings Limited (to which I shall refer as CAPS)
is a company duly registered in Zimbabwe and trades as a
pharmaceutical
manufacturing company from Manchester Road,
Southerton.
It is common cause that in 1973 CAPS (Pvt.) Ltd, a
subsidiary of CAPS, founded an association then known as CAPS Rovers
Football
Club but which later came to be known as CAPS United
Football Club (the Club). The Club soon rose to be a major
sporting
force in Zimbabwe producing some of the finest footballers
that the country has ever known. It now ranks among the top three
football
teams in this country, has acquired a considerable fan base
and has established unquestionable goodwill over the years.
On 5 September 2006 CAPS registered as a Trade Mark the
name CAPS in respect of education; providing of training;
entertainment;
sporting and cultural. Also registered as a Trade
Mark in favour of CAPS are the colours of the football team which are
green
and white. Accordingly, the name CAPS is not only
attached to the pharmaceutical business but also to the football
team.
In 1999, CAPS fell on hard financial times from which
arose its desire to disinvest from football. In pursuance of this
goal, it
commenced negotiations with Twin Con Industrial Suppliers
(Pty) Ltd (Twin Con) represented by its major shareholder
Mr Twine Phiri (Phiri). The two agreed to enter into equal
partnership of the Club and a joint agreement to that effect was
signed on 28 December
1999. From this point the parties differ.
According to Phiri, who deposed to the founding
affidavit on behalf of the appellant, pursuant to the joint venture
agreement, the
parties agreed that a new company CAPS United Football
Club (Pvt.) Ltd would be formed to take over the club and that the
shareholding
of that company would be owned equally by Twin Con and
CAPS. That company, the appellant, was indeed incorporated in
accordance
with the laws of Zimbabwe on 2 December 1999 with a
nominal share capital of $20 000.00 divided into 20 000 shares of
$1.00. Subsequently,
the appellant issued 20 000 shares divided
equally between Twin Con and CAPS.
However, towards the end of the 2000 soccer season, CAPS
lost all interest in the appellant. As a result, on 18 December
2000,
Phiri wrote to CAPS suggesting that the latter dispose of its
entire shareholding in the appellant to Twin Con. Negotiations
commenced
between the two parties and in January 2002 CAPS sold its
entire interest in the appellant to Twin Con for $900 000.00 bringing
an end to the long association between CAPS and the Club.
In 2006 CAPS acquired the ownership of the second
respondent (Buymore). Since the acquisition, CAPS has indicated
its intention
to transform Buymore into another CAPS United.
Buymore has, deliberately and consciously, unlawfully infringed on
the brand
of the appellant by allowing its players to wear Tee shirts
in the Clubs colours with the CAPS logo inscribed on them. This,
Phiri averred, as well as CAPS stated intention to rename Buymore
CAPS Football Club, was intended to confuse football
fans and
the football fraternity at large. It was his further averment that
at the time of execution of the agreement of 14
January 2002, it was orally agreed between
the parties that CAPS would be restrained from ever owning or
sponsoring another football
team or doing anything within its power
to affect the appellant, the Club and the goodwill and fan base which
has been built over
the years.
CAPS, on the other hand, averred that the appellant is
its wholly owned subsidiary and has no relationship whatsoever with
the Club
which is owned by Twin Con. Its group human resources
manager, Mr. Julius Chifokoyo, deposed to the opposing affidavit. He
averred
that the appellant was incorporated on 2 December 1999 on
instructions of CAPS, the intention being that the appellant would
take
over the running of the Club. Shortly thereafter, negotiations
commenced with a company by the name of Systech with a view to
getting a partner to inject funds into the running of the Club.
Negotiations with Systech failed. Thereafter Twin Con came onto
the
scene and negotiations with Twin Con culminated in a joint venture
agreement being signed on 28 December 1999.
In terms of the joint venture agreement, Twin Con was
to purchase half the franchise value of the Club which franchise
value
was arrived at by estimating the local market value of the 18
players within the team at an average of $100 000.00 per player
(old currency). The total value was calculated at a total of $1 800
000.00. Of this, Twin Con was to pay $900 000.00 which it
did. A new
company was to be formed to take over the running of the Club and the
name CAPS was to remain temporarily with
the Club until such
time as it was revisited by the Board of the new company. Meanwhile,
both CAPS and Twin Con were to enjoy equal
rights of advertising
their brands on the clothing and kit of the players. No mention was
made in the joint venture agreement
of the appellant. On the
contrary, clause 3 of the joint venture agreement provided:
that a new joint venture company would have to
be set up in whose favour a transfer of the ownership of CAPS United
Football franchise
would be effected.
Indeed, the joint venture company was never incorporated
as envisaged and there never was an agreement for the sale of shares
or
equity in the appellant.
The fact that the appellant is a subsidiary of CAPS, he
averred, is readily apparent from a perusal of the records of the
Registrar
of Companies and he deplored what he described as attempts
by Phiri to lodge, in desperation, certain annual returns in
the
form of a form CR14 which contained particulars of directors and
secretaries, allegedly of the appellant, and which was filed on
its
behalf with the Registrar of Companies by the legal practitioners of
Twin Con on 31 October 2006. This document purports
to show that
the directors and company officers of the appellant, appointed by
CAPS, resigned and were replaced by new appointees
of Twin Con,
including Phiri, on 17 January 2002. He avers that the CR14 the
only annual return filed on behalf of the appellant
since its
incorporation - was fraudulently filed by Twin Con without the
knowledge or consent of CAPS when it became known that
CAPS had
bought Buymore and speculation became rife that CAPS would name
Buymore after its name.
Mr Biti
contended that such disputes as there were could have and ought to
have been resolved by the court a quo
taking a robust approach. He referred us to the judgment in
Soffiantini v Mould
1956(4) SA 150, without directing us to any particular passage. In
that judgment at p 154 PRICE J.P. remarked as follows:
If by a mere denial in general terms a respondent can
defeat or delay an applicant who comes to Court on motion (court
application),
then motion proceedings are worthless, for a respondent
can always defeat or delay a petitioner by such a device.
It is necessary to make a robust , common-sense approach
to a dispute on motion as otherwise the effective functioning of the
Court
can be hamstrung and circumvented by the most simple and
blatant stratagem. The Court must not hesitate to decide an issue of
fact on affidavit merely because it may be difficult to do so.
Justice can be defeated or seriously impeded and delayed by an
over-fastidious approach to a dispute raised in affidavits.
While I respectfully agree with this statement of the
law, I am of the view that it is not applicable in the present case.
This
is not a case where bare denials have been raised in an attempt
merely to delay matters. Many relevant disputes have been raised
which are, to my mind, incapable of resolution on the papers. For
instance, the question whether the appellant is a subsidiary
of CAPS
and the related questions: If it is, then on what legal basis would
it sue its holding company? Who should be the applicant
or plaintiff
in this dispute? What exactly was sold by CAPS to Twin Con?
Despite Phiris averments, CAPS maintains that the
name CAPS was never sold - an allegation which finds support in
the affidavit
of Mudiwa Mundawarara which was filed by the appellant
in support of its case. It therefore appears on the papers that no
agreement
was reached in respect of the sale of the name CAPS.
If that is so, then it would seem that no legal basis has been
established
for the order sought by the appellant to restrain CAPS
from using its own name. Clearly, the affidavits do not provide
clear and
sufficient evidence to justify a robust approach by the
Court.
The learned Judge in the court a
quo set out the disputes as follows:
Following further negotiations between the parties in
2001 and 2002, the Chief Executive Officer of CAPS (Mudiwa
Mundawarara) wrote
to Twin Con on the 17th
of January 2002. The relevant portion of this letter states as
follows:
As discussed in our meeting of 17 January 2002, we
accept, in principle, your offer for our shareholding in CAPS United,
subject
to the receipt of the full amount offered.
As agreed, we will now have an agreement drawn up to
cover the agreed, terms and conditions of our disengagement and will
revert
with details once they are available.
Relying on this letter and Mundawararas affidavit,
Twin Con claims full ownership of the Club and the Company as well as
all
the ancillary rights and interests attaching to both entities.
As against this, CAPS contends that Mundawarara was not duly
authorised
to negotiate with Twin Con or to accept its offer and
that, in any event, no agreement was ever concluded between the
parties for
the disposal of CAPS remaining 50% shareholding in the
Company.
In support of its position, Twin Con adduces an unsigned
agreement of sale, dated the 18th
of January 2002, as well as two unsigned resolutions from the boards
of CAPS and Twin Con authorizing Mundawarara and Phiri, respectively,
to sign the requisite sale documents. It is common cause that this
2002 agreement of sale was never signed by any of the parties.
Even
Mundawarara acknowledges in his affidavit that the agreement was
never signed because of negotiations over the name.
The terms of the agreement itself, in clause 4, provide
that within seven days of the signature of the agreement CAPS should
lodge
several documents with Twin Con, to wit, share transfer
certificates, a resolution of the CAPS board authorizing or ratifying
the
transfer of shares to Twin Con, and letters from the CAPS
appointees on the Companys board tendering their resignations from
their directorships of the Company. CAPS denies that any of these
documents was created let alone lodged with Twin Con and, very
significantly, the latter was able to produce none of them in these
proceedings.
As regards the agreed payment of CAPSS shareholding
in the Company, Twin Con avers that full payment was effected
without
however clarifying when or how this was done. CAPS, on the
other hand, vehemently disputes having received any payment for its
shares in the Company. Again, the papers before the Court do not
conclusively substantiate or falsify the position of either party.
In further support of its position, Twin Con has adduced
the Companys CR14 forms (particulars of directors and secretaries)
and
annual returns for the years 2000 to 2005, inclusive. These
documents indicate, inter alia, that
the CAPS appointees on the Companys board of directors resigned
their posts on the 17th
of January 2002 and that the number of shareholders of the Company
was reduced from two to one in the year 2002. All of these
forms and
returns were filed with the Registrar of Companies on the 25th
of October 2006 and registered on the 31st
of October 2006.
Twin Con contends that while these documents remain
lodged with the Companies Registry they are conclusive evidence of
their contents.
CAPS submits that these documents were filed by a
person not duly authorized thereto and that, in any event, they are
fictitious
and were generated ex post facto
for the purposes of these proceedings. CAPS therefore disputes their
contents as to the number and identity of the Companys
directors
as well as the number of shares and shareholders of the Company,
particularly in the absence of any share transfer certificates.
It
is further submitted on behalf of CAPS that Twin Con has not produced
any minutes of the annual general meetings of the Company
referred to
in the annual returns and required by section 125 of the Companies
Act [Cap 24:03].
Having regard to all of the foregoing, it is apparent
that there are a number of material disputes of fact relating to the
second
agreement of sale as well as the shareholding and directorship
of the Company. It is also clear to me that these disputes cannot
be
resolved on the papers before me but require the giving of viva
voce evidence for
their resolution. Having regard to the extant material disputes of
fact, I take the view that Twin Con has failed
to establish, on a
balance of probabilities, that the 2002 agreement was properly
concluded and that its terms and conditions were
duly fulfilled.
Accordingly, having failed to justify its claim to the exclusive use
of the goodwill, brand, colours, regalia
and insignia in dispute, as
well as the CAPS acronym, Twin Con is not entitled to the
interdictory relief that it seeks as against
CAPS in these
proceedings.
It is clear from the above that the disputes of fact are
material and incapable of resolution on the papers placed before the
Court.
The learned Judges decision to dismiss the matter on that
basis is, in my view, unassailable.
Accordingly the appeal lacks merit and it is hereby
dismissed with costs.
CHEDA JA: I agree
MALABA JA: I agree
Honey & Blanckenberg,
appellants legal practitioners
Mutamangira, Maja & Associates,
respondents legal practitioners
