Home » Judicial » Swiss Firm Gets Nod to Sue SMM

The Supreme Court has granted a Swiss company permission to sue SMM Holdings (Pvt) Ltd administrator for refund of more than us$4,5 million after a chrome mining deal entered into between the parties failed to work.

The ruling follows an appeal by SMM administrator Mr Afaras Gwaradzimba, against the High Court decision to grant Gurta AG leave to sue for refund and cancellation of the deal.

Mr Gwaradzimba entered into an agreement of purchase and sale with Gurta AG in October 2009, in terms of which he sold certain chrome mining claims belonging to SMM, an entity under reconstruction, for US$4 350 000.

Gurta AG complied with all the procedural requirements and paid the purchase price.

The mining claims were subsequently registered in its name, but its assumption of operations on the mining location was met with fierce resistance from a third party who claimed ownership of the same location.

Lines of communication, which thereafter opened between Gurta AG and Mr Gwaradzimba to resolve the glitches yielded no positive results.

This resulted in Gurta AG applying to Mr Gwaradzimba for leave to commence litigation against SMM for cancellation or confirmation of cancellation of the sale agreement and refund of the purchase price paid.

The application was made in terms of Section 6 (b) of the Reconstruction of State Indebted Insolvent Companies Act (Chapter 24:27).

Having, gone for over a year without a response from Mr Gwaradzimba, Gurta AG sought the intervention of the High Court for leave to sue and was granted.

Mr Gwaradzimba appealed against the decision, but Justice Elizabeth Gwaunza, sitting with Justices Paddington Garwe and Bharat Patel upheld the lower court’s decision.

She rules that Mr Gwaradzimba’s appeal had no merit and should be thrown out, paving way for Gurta AG to sue SMM and Mr Gwaradzimba for breach of contract.

“In all respects, therefore, I find the appeal lacks merit,” said Justice Gwaunza. “It is in the result ordered . . . The appeal be and is hereby dismissed with costs.”

In her judgment delivered on Friday, Justice Gwaunza found no reason to fault the lower court judge’s reasoning.

“To my mind, there can be little doubt that the respondent (Gurta AG) did have a grievance,” she said.

She said the company paid $4, 5 million but, through no fault of itself, had not enjoyed nor been allowed to enjoy the benefit of its investment.

The judge was also swayed by the company’s argument that the factual position of the dispute as well as its merits and demerits would be a matter for the trial court.

“At this stage all that has been granted is leave for the respondent to commence proceedings against SMM, and possibly the appellant (Mr Gwaradzimba) as well, for redress that it wishes to secure,” said Justice Gwaunza.

All parties, she said, would therefore have their day in court as it were.

Source : The Herald