Shabtai tells former partner Sivan ‘it’s too early to celebrate court ruling’
Israeli businessman Gilad Shabtai has told his erstwhile business partner Ofer Sivan that there was nothing to celebrate from a “default judgment” made against him by Justice Tawanda Chitapi on Wednesday.
The two are engaged in a legal battle for the control of Adlecraft Investments and Sivan alleges fellow directors Shabtai and Munyaradzi Gonyora fraudulently siphoned US$1.3 million from the company after opening an account with a microfinance institution.
He approached the High Court citing Shabtai and Gonyora as respondents seeking the court to remove the two as directors of the company and to declare them to have committed acts of fraud against the company between March 2021 and August 2021.
He also sought the court to declare the two to have misappropriated funds for the company amounting to US$ 1 300 000 and for them to reimburse the funds with interest at five percent per annum from the date of summons to the date of payment.
Shabtai and Gonyora entered an appearance to defend the claim and made a special plea challenging Sivan’s locus standi in the matter.
They argued that Sivan is not a shareholder of the company for him to institute such an action.
“He is not a shareholder in, or a member of, the Second Plaintiff (Adlecraft) at all as required by section 61(3)(b) and (c) of the Companies and Other Business Entities Act (Chapter 24:31) to institute a derivative action.
“He does not hold at least ten (10) percent of the shareholding in the Second Plaintiff as required by section 61(3)(c) of the Companies and Other Business Entities Act (Chapter 24:31) to institute a derivative action.
“If the present action is not a derivative action the First Plaintiff (Sivan) cannot sue for wrongs done to the company as in all instances outside the derivative action, the proper Plaintiff for wrongs done to the company is the company itself.
“The Second Plaintiff is not properly before the Court and accordingly lacks standing.
“Its board of directors did not authorize the institution of these proceedings by it as a Plaintiff. A company cannot be a Plaintiff in a derivative action to protect its rights as this defeats the purpose of the derivative action since the company will be able to sue to protect its rights and interests,” they argued.
Sivan however yesterday obtained a default judgment, granted by Justice Tawanda Chitapi, which confirmed all he applied for, which Shabtai said he is going to challenge.
“This is a judgment wherein the court has not dealt with the merits of the case. It is a technical judgment which was, in our view, granted in error, as we shall expose in due course.
“Our client asserts that the other party, Ofer Sivan, knows very well that our client has an unassailable defence that is why he has rushed to snatch a technical judgment wherein he did not endeavour to inform the other party of the set down of that matter for hearing.
“This is particularly surprising where our clients had raised a technical objection, which was never dealt with and the Court related to the matter as if our clients had not raised any defence at all.
“Now that there is an order granted in default we shall take the necessary steps to approach the court and rectify this error.
“We have realised that the other party has gone to town celebrating a technical judgment in circumstances where that party did not place before the court the whole gamut of circumstances relating to the matter,” Shabtai’s lawyer Admire Rubaya said.