Garikai Mafirakureva

HARARE – High Court Judge Justice Sylvia Chirawu-Mugomba yesterday reserved judgment on an application for leave to institute a class action by a group of victims of an alleged Ponzi scheme, which was being run by a former honorary diplomat from the Asia who is also African Businesswomen Association (ABWA) CEO, Shamiso Fred.

The five—Blaman Sekete, Grace Pumhu, Vimbainashe Mahwiridi, Dr. Ayanda Chakawa, and Felix Witness Mambondiani who are being represented by Jacob Mutevedzi of Clairwood Chambers, seek to recover millions worth of investments in which Fred is alleged to have milked the unsuspecting victims through a Ponzi scheme disguised as a collective investment focusing on egg production and dairy farming investment schemes.

Advocate Regina Mabwe, who was briefed by Fred’s lawyer Rungano Mahuni of Mahuni, Gidiri Law Chambers, argued that the Joint Venture Agreement contains an arbitration clause, so the matter should be taken to an arbitrator, not the High Court. She also argued that the Joint Venture was a partnership, so all the parties should equitably share profits and losses.

However, Advocate Reginald Mutero, who appeared together with Jacob Mutevedzi representing the five, argued that a court can only stay proceedings before it if arbitration is the dispute resolution method of first instance. He went on to assert that the arbitration clause should exclusively avail arbitration and not an assortment of other dispute resolution methods. In this case, the Agreement referred to mediation as an initial dispute resolution method, thus opening the door to the High Court to get involved.

“In Shell Zimbabwe (Pvt) Ltd v. ZIMSA (Pvt) Ltd 2007 (2) ZLR 366, the court, per MAKARAU J, held that while courts are bound to give effect to arbitration clauses in contracts, they are only able to do so where arbitration is the expressed or implied first choice dispute resolution mechanism for the parties.

“Similar sentiments were expressed by DUBE J in Chimedza v. City of Harare and Others HH 130/20. It is submitted that this arbitration clause does not oust the jurisdiction of the Court,” argued Mutevedzi.

The applicants rebutted the argument by Fred that the joint venture amounted to a partnership. They argued that Fred had exclusive management of the project and owned all the assets. The Agreement expressly states that the investors are entitled to a specific monthly profit share. Even assuming it was a partnership, a partner can still be sued for specific performance of contractual obligations in terms of the “actio pro socio.”

It is alleged that on different occasions, Fred entered into multiple contracts with various persons at an agreed capital contribution for business projects, which were to run for periods ranging from 22 months to 48 months. In return, the investors were each entitled to an agreed monthly profit share.

Part of the heads of arguments reads: “WHEREFORE the Applicant prays for the relief sought in its application, persists with the points in limine raised in its Answering Affidavit, and prays for the striking out of the Respondent’s notice of opposition with costs on an attorney and client scale.”

According to the application, if the present motion is granted, the applicants intend to issue notice to other potential claimants through publication in Zimbabwean newspapers and announcements on radio and television on three different dates. The most affected are people in the diaspora, particularly those based in the United Kingdom, who invested amounts ranging from $2,000 to $60,000. Among the investors are widows and elderly people who invested their entire life savings and lost everything.

In November last year, Fred appeared before Harare regional magistrate Marewanazvo Gofa facing fraud charges and was granted US$500 bail. She was ordered to surrender her passport and to report once a fortnight at the Criminal Investigation Department (CID) Commercial Crime Division (CCD).