UCHENA JA: On 14 March 2016 we heard the
appellant's appeal against the decision of the High Court. After hearing the
parties we dismissed the appeal with costs on a legal practitioner and client
scale. We indicated that detailed
reasons for judgment would follow. These
are the reasons for our decision.
The
appellant Stand Five Four Nought (Pvt) Ltd is a company registered in terms of
the laws of Zimbabwe. It owns the
property known as Stand 540 Salisbury Township.
It entered into a surety-ship agreement in which it bound itself as a co-
principal debtor and surety in the sum of $750 000-00 to the respondent Salzman
ET CIE S.A. a company registered in terms of the laws of the Republic of Panama
in respect of a loan of US$1 245 000.00 granted by Salzman ET CIE S.A to
Myramar Farming (Pvt) Ltd. Myramar
Farming (Pvt) Ltd failed to pay the debt and has since been placed under
judicial management. The appellant was,
by letter of demand dated 25 February 2014 and summons filed on 8 September
2014, called upon to pay the debt. To avoid its liability it secretly by ex parte application sought and obtained
a provisional judicial management order. On the return day the court a quo dismissed the provisional judicial
management order.
The appellant appealed to
this Court against the dismissal of the provisional judicial management order. The appeal is premised on the following
grounds of appeal.
1.
The learned judge a quo erred at law in failing to appreciate that:-
1.1
The deponent to the Opposing Affidavit
filed by the Intervener, Salzman ET CIE SA was not properly authorised by the
company to represent it in proceedings against the Appellant. The Intervener
was improperly before the court.
1.2
The shortened form of the provisional
judicial management order published in the Government Gazette and Herald
newspaper created a dies induciae for
interested parties to file opposing papers and consequently that the intervener
was barred for failure to file its Notice of Opposition before the 30th
of September, 2014.
1.3
The appellant has an intention to
discharge the debt owed to Salzman ET CIE SA in a manner that will ensure the
company does not plunge into liquidation. Consequently it is just and equitable
to place the company under final judicial management.
The
issues which fall for determination in this appeal are;
1.
Whether the deponent to the opposing
affidavit by the respondent had proper authority to represent the respondent in
the proceedings.
2.
Whether the respondent was barred for
failure to file its notice of opposition by 30 September 2014.
3.
Whether it is just and equitable to place
the appellant under final judicial management.
AUTHORITY TO REPRESENT
THE RESPONDENT
The respondent's opposing
affidavit was deposed to by Melina Matshiya on the strength of the authority
granted to her by respondent's special Power of Attorney dated 24 and 26 June
2014.
The
court a quo held that she was, by
that Power of Attorney, properly authorised to represent the respondent. Miss Mahere for the appellant submitted that
she was not authorised to represent the respondent because the Power of
Attorney was granted in respect of proceedings by or against Myramar Farming (Pvt)
Ltd. She further submitted that the
power of Attorney was not lawfully granted because it was signed by the
respondent on 24 June 2014 while the Notary Public signed it on 26 June 2014. She submitted that it was not properly
authenticated as it should have been signed by the representatives of Salzman
ET CIE SA before the Notary Public.
Mr
de Bourbon for the respondent
conceded that the Power of Attorney was granted in respect of proceedings by or
against Myramar Farming (Pvt) Ltd, and was not properly authenticated. The concession was properly made. It is apparent that Melina Matshiya was
granted authority in respect of Myramar Farming (Pvt) Ltd. That authority cannot be extended to the
respondent, as suggested by the court a
quo, when it does not mention the respondent by name or reference. The Power
of attorney was granted long before issues arose between the appellant and the
respondent.
The authentication of the
Power of Attorney calls for comment as the ruling thereon by the court a quo may create a wrong precedent. In determining the issue of whether or not
the power of attorney was properly authenticated in view of the two dates, the
court a quo said:-
“I
do not intend to be detained by an argument which appears to have been conjured
by a desperate litigant clutching on straws. Even the untrained eye can see
that the special power of attorney was typed and printed with a date of 24 June
2014 for the signature of the creditor. The Notary Public who authenticated the
signatures appended his own date stamp with 26 June 2014 and signed. There is
therefore no basis for suggesting that the document was signed on different
days. I am prepared to surmise that the correct date of signing by all the
parties was 26 June 2014 and reject the suggestion that the document was signed
on different dates. Errors of that nature do occur in the heat of the moment
and are so insignificant that they should not be allowed, on their own to decide
the outcome of important litigation.”
The Power of Attorney was
allegedly executed before a Notary Public in the Republic of Panama. No evidence was led from the signatories on
the assumed error. Even if it were to be
accepted without evidence that such errors occur in our jurisdiction, which I
hold should not be accepted, can the courts take judicial notice of them and
determine issues in the absence of evidence proving such errors? I am of the
view that if an error occurs evidence should be led before the document can be
relied on. A court cannot take judicial notice
of the occurrence of such errors. The proper authentication of a document gives
it validity. Once the authentication is rendered questionable the court cannot
rely on such a document.
C. H. Van Zyl in his work “The Notarial
Practice of South Africa” at p 81 says:-
“The
object of authentication is to ensure the genuineness of the signatures to
deeds. Prima facie this authentication is a guarantee that all the required
solemnities or requisites of the law in due execution of a deed have been
complied with and that the parties therein named have duly signed it in the
presence of the witnesses and that the notary in whose presence it was signed
was qualified to act as such.”
In this case we are
dealing with a document authenticated in the Republic of Panama. Even if the courts could take judicial notice
of errors which occur in the confirmation of documents locally, which they in
my view should not, they can certainly not assume that the same errors occur in
the Republic of Panama and take judicial notice of them. I am therefore satisfied that the court a quo misdirected itself when it held
that the two dates are a result of an error and do not invalidate the power of
attorney. Assuming as the court a quo did that the 24th was
merely typed in as part of the document and is not the date of signing by the
respondent's representatives it should have been cancelled and counter signed
by the representatives and the notary public. C.H. Van Zyl in his Book “The Notarial
Practise of South Africa” commenting on how alterations should be done says:-
“If
before a deed is signed, an alteration is necessary, words deleted should be
done in such a way that they can still at all times be read and understood, and
the alterations, additions, or variance should appear in the margin of the deed
or at the end, and be duly attested by the appearer, the witnesses, and the
notary”.
Section
3 of the High Court (Authentication of Documents) Rules, 1971 (RGN No 995 of
1971), provides that any document executed outside Zimbabwe shall be deemed to
be sufficiently authenticated if it is authenticated by a notary public, or
specified officers of the Zimbabwean Embassy in that country. It provides as follows:-
“3. Any document
executed outside Zimbabwe shall be deemed to be sufficiently authenticated for
the purpose of production or use in any court or tribunal in Zimbabwe or for
the purpose of production or lodging in any public office in Zimbabwe if it is
authenticated —
(a)
by a notary public, mayor or person holding judicial
office; or
(b)
in the case of countries or territories in which
Zimbabwe, has its own diplomatic or consular representative, by the head of a
Zimbabwean diplomatic mission, the deputy or acting head of such mission, a counsellor,
first, second or third secretary, a consul-general, consul or vice-consul.”
In terms of s 2 of the High Court (Authentication of
Documents Rules 1971 the word authenticate in relation to a document is defined
as meaning “the verification of any signature thereon;” A signature cannot be
said to have been verified if it is not clear whether or not it was signed in
the presence of the Notary Public.
The respondent's power of Attorney filed of record is
afflicted by a further problem. The
portion after the words “Salzman ET CIE SA” is written in a foreign language. It is a legal requirement that deeds executed
in foreign languages and documents in foreign languages must be translated into
the English language. Section 49 of the
High Court Act [Chapter 7:06] provides
for the language in which proceedings in the High Court should be conducted. It states:-
“Save as is otherwise provided in rules of
court or in any other enactment, all proceedings in the High Court shall be
carried on in open court and the
pleadings and proceedings thereof shall be in the English language.” (emphasis
added)
English is the language through which proceedings are
conducted. Evidence should be presented
in English. If a witness uses a language
other than English his evidence should be led through an interpreter who
understands that language and is able to interpret it into the English
language. This also applies to documentary
evidence presented in a foreign language. An interpreter must translate it into the
English language.
This was not done. We therefore have on record a power of
attorney that the court can understand up to the words “Salzman ET CIE SA,”
after which the rest is unknown. The
part in the foreign language is crucial because I assume it deals with the
authentication and the qualification of the person before whom the
authentication took place if it did. This renders the Power of Attorney of no
legal value.
WHETHER OR NOT THE RESPONDENT WAS BARRED
Miss Mahere
for the appellant submitted that the respondent filed its notice of opposition
when it had already been barred for failing to file it by 30 September 2014. In terms of the short form annexed to the
court order published through the Government Gazette and the Herald any notice
of opposition should have been filed by 30 September 2014. Paragraph 3 of the
provisional judicial management order reads as follows:-
“This order shall be published once in the
Zimbabwe Government Gazette and once in the Herald newspaper. Publication shall be in the short form annexed to this
order.” (emphasis added.)
Mr de Bourbon
for the respondent submitted that the provisional order granted by the Court a quo was not in form 29 D as provided
by r 247(3) of the High Court Rules 1971, and therefore the respondent was not
barred as the dies induciae in terms
of para 1 of the provisional judicial management order was 26 November 2014. Paragraph 1 of the provisional judicial
management order reads as follows:-
“Any interested party shall show cause to this Court sitting in Harare
on the 26th day of November 2014, why an order should not be
made in the following terms…“ (emphasis added)
A correct reading of the provisional judicial
management order indicates 26 November 2014 as the date of hearing and 30
September 2014 as the date by which opposing papers should have been filed.
There seems to be a misconception that 30 September 2014 appears in the
appellant's shortened form of the provisional order and not in the court's
order. I say it is a misconception
because the court in para 3 specifically said, “Publication shall be in the short form annexed to this
order.” This means the annexure became
part of the court's order. The Court
therefore, irrespective of whether or not r 247(3) was complied with,
ordered that any opposing papers should be filled by 30 September 2014. The respondent filed its opposing papers on 20
November 2014, when it had already been barred. The respondent's papers were therefore not properly
before the court a quo. Its submissions through them should not have
been relied upon by the court a quo.
It was however conceded by Miss Mahere for the appellant that the respondent as creditor was
entitled to appear before the court on the return day in person or through
counsel who had properly assumed agency on its behalf, and to make
representations in person or through counsel.
Wilmot
& Bennett, legal practitioners for the respondent,
filed a notice of assumption of agency on behalf of the creditor in HC 7596/14,
on 1 June 2015. They were therefore
entitled to appear in court on 23 September 2015 the date to which the return
day was extended and make representations on behalf of the respondent. This they could do in spite of the defective
special power of attorney as a legal practitioner does not need a Power of Attorney
to assume agency on behalf of a client. There
is unfortunately no record of the respondent's counsel's submissions before the
court a quo from which its opinion
can be gleaned.
WHETHER IT IS JUST AND EQUITABLE FOR THE APPELLANT TO
BE PLACED INTO FINAL JUDICIAL MANAGEMENT
Miss Mahere
for the appellant and Mr de Bourbon
for the respondent agreed that this issue should be resolved by considering the
provisions of s 305 of the Companies Act. Miss Mahere
submitted that final judicial management should have been granted because
Myramar Farming (Pvt) Ltd may in future be able to pay the debt. In response Mr de Bourbon submitted that the appellant is seeking judicial
management to avoid paying a due debt. He
further submitted that the appellant's offer to pay the debt while under final
judicial management if Myramar fails to pay, would not be just and equitable as
the appellant would pay the debt over a period of about 30 years from its
rentals of US$15 000-00 per year, when the appellant had contracted to pay on
Myramar's Farming (Pvt) Ltd's failure to do so.
The appellant's appeal must, as a result of its
success on the first two grounds of appeal, be determined on the merits of its
own case. The common cause facts on
which such determination should be made are:-
1.
The
appellant bound itself as a surety and co-principal debtor to the respondent
for a loan of US$1 245 000-00 advanced by the respondent to Myramar Farming (Pvt)
Ltd.
2.
Myramar
Farming (Pvty) Ltd is the appellant's sister company. The deponent to appellant's
founding affidavit Serish Pershotam Ranchod is the common denominator between
the two sister companies. He holds a 20 percent shareholding in Myramar Farming
(Pvt) Ltd and a 50% shareholding in the appellant. He thus has interests in
both companies.
3.
The
appellant registered a mortgage bound against its property Stand Five Four Nought
as security for the payment of the loan advanced to Myramar Farming (Pvt) Ltd.
4.
Myramar
Farming (Pvt) Ltd failed to pay the debt and placed itself beyond immediate
execution by obtaining an order of judicial management.
5.
The
respondent turned to the appellant for payment of the debt in terms of the surety
ship and mortgage agreements.
6.
The
appellant being privy to the avoidance of the debt by Myramar Farming (Pvt) Ltd
sought to employ the same trick against the respondent.
7.
It
initially succeeded and was granted a provisional judicial management order.
8.
On
the return day the court a quo
identified the appellant's trickery and dismissed the provisional judicial
management order. Right from the outset on page 1 of its judgment record page
161 the court reasoned as follows;
“The basis for
seeking that order is contained in paragraph 10 of the founding affidavit of
Serish Pershotam Ranchod, a director of the applicant. He says:
'10. the application is made on the
following basis:
10.1 Applicant
company registered a mortgage bond over its sole immovable property as security
for a loan extended to an affiliate company, Myramar Farming (Pvt) Ltd by
Salzman ET CIE SA a company registered in Panama.
10.2 Myramar
Farming (Pvt) Ltd has since been placed under judicial management under case No
HC 5914/14 because it is currently unable to pay its debts although it has high
prospects of discharging its debts under judicial management. (Refer to
Annexure D). Consequently, Applicant's property faces execution by Salzman ET
CIE SA.
10-3 Execution of
applicant's sole property will result in applicant plunging into certain
liquidation as it will no longer be able to conduct its main objective of
holding and managing the immovable property.
10.4 It is
therefore just and equitable that the applicant be placed under provisional
judicial management as a moratorium granted by judicial management will prevent
execution of applicant's property whilst Myramar Farming (Pvt) Ltd the
principal debtor to Salzman ET CIE SA liquidates its debt under judicial
management.'
One should give
credit to the applicant; at least it is brutally honest. Judicial management is not being sought for
any other reason than to circumvent the consequences of a surety ship which the
applicant went into wherein it secured a huge loan taken by its sister company
from a creditor who has been unable to realise any outlay from the principal
debtor because it has also sought and obtained a judicial management order
under case number HC 5914/14. It is
therefore not paying the debt of $750 000-00 which it owes to the creditor.
Although the applicant stood as surety for the due settlement of that debt and
registered a surety mortgage bond over its immovable property, being stand 540
Salisbury Township in favour of the creditor, it has no intention whatsoever to
pay the debt.
It is for that reason that it has elected
to shelter under judicial management for no other reason than to ensure that
its property is safe from execution while Myramar Farming (Pvt) Ltd, the
principal debtor, hopefully pays the debt owed to the creditor. It has not escaped my gaze that the deponent
of the founding affidavit is the common denominator in all this in that he
holds a 20% shareholding in Myramar Farming (Pvt) Ltd, the principal debtor
which benefitted from the loan. He also
has an interest in the applicant hence he has already avoided paying the debt
under Myramar Farming (Pvt) Ltd by obtaining a provisional judicial management
order. Using the same modus operandi he has moved quickly to
avoid paying the same debt under the present applicant by securing a
provisional order for judicial management for all the wrong reasons, that way a
creditor which entrusted a large sum of money to these companies has to be left
without a remedy when Ranchod and his associates have fully benefitted from the
loan. Is that the reason why the
procedure for judicial management was invented?”
The court a quo
was alive to what is an apparent abuse of the judicial management procedure. It chronicled the history of the debt. The appellant secured the debt to enable
Myramar Farming (Pvt) Ltd to be granted the loan. It promised the creditor payment secured by
mortgaging its only property Stand 540 Salisbury Township. The eventuality for which the bond was
registered arrived. The appellant now
wants to avoid doing what it contracted to do. It now argues that stand 540 is its only
property when it has always been its only property. The appellant now seeks to shift goal posts.
That is a clear violation of its contract with the respondent. The courts cannot assist a party to avoid its
liability. The court a quo posed the question is this why
judicial management was invented? An
answer to that question will determine this appeal. The court a
quo on p 2 of its judgment answered its question by considering what the
court should consider in an application for provisional judicial management. It considered the provisions of s 300 of the
Companies Act [Chapter 24:03] which
provides as follows:
“The court may grant a provisional
judicial management order in respect of a company —
(a)
on
an application referred to in paragraph (a) of subsection (1) of section
two hundred and ninety-nine, if it appears to the court—
(i) that by reason
of mismanagement or for any other cause the company is unable to pay its debts or
is probably unable to pay its debts and has not become or is prevented from
becoming a successful concern; and
(ii) that there is
a reasonable probability that if the company is placed under judicial
management it will be enabled to pay its debts or meet its obligations and
become a successful concern; and
(iii) that it
would be just and equitable to do so; or
(b) on an
application referred to in paragraph (b) of subsection (1) of section two
hundred and ninety-nine, if it appears to the court that—
(i) if the company
is placed under judicial management the grounds for its winding up may be removed
and that it will become a successful concern; and
(ii) that it would
be just and equitable to do so.”
In
terms of s 300 a provisional judicial management order can be granted, if it appears to the court; that due to
mismanagement or other cause the company is unable to pay its debts and is
being prevented from becoming a successful concern, and there is hope that
judicial management will enable it to pay its debts, meet its obligations and
become a successful concern; and that it would be just and equitable to do so.
Or
if it appears to the court that; placing it under
judicial management may remove the grounds of its being wound up and it will
thereafter become a successful concern; and that it would be just and equitable
to do so.
The court should therefore carefully consider an
application for provisional judicial management before making a determination. If the court which granted the provisional
judicial management order had carefully considered the application it would not
have granted it because it was apparent that the appellant was merely seeking
shelter from having to pay a due debt in terms of surety ship and mortgage bond
agreements. There was no allegation of
mismanagement being the cause of its failure to pay the debt. The appellant's business is simply to
maintain and rent out its property and receive rentals. No explanation was given as to why such a
simple operation needed the involvement of a judicial manager for it to
succeed. All the applicant was asking
for a moratorium to hide under judicial management until Mayramar Farming (Pvt)
Ltd pays its own debt. The court a quo
correctly assessed this when it said;
“To grant such relief would therefore be
contrary to all notions of security for debt and the principles of freedom and sanctity
of contract. In addition the application constitutes an abuse of court process
in order to frustrate and/or delay a just claim while not laying out a proper
case for the grant of a judicial management order.”
This answers Miss Mahere's submission that the court a quo did not consider the equitability
of the appellant's application. The
above proves that it did and found that it was not just and equitable to grant
the appellant's application.
Section 305 of the Companies Act provides for the
circumstances under which final judicial management can or cannot be granted. It provides as follows:
“(1) On the return
day fixed in the provisional judicial management order, or on the day to which
the court or a judge may have extended it, the court, after considering—
(a)
the opinion and wishes of the creditors and members of the company, and;
(b)
the report of the provisional judicial manager prepared in terms of section three
hundred and three, and;
(c)
the number of creditors who did not prove claims at the first meeting of
creditors and the amounts and nature of their claims; and
(d)
the report of the Master, and;
(e)
the report of the Registrar; may grant a final judicial management order if it appears to the court that there is a
reasonable probability that the company concerned, if placed under judicial
management, will be enabled to become a successful concern and that it is just
and equitable to grant such an order, or it may discharge the provisional
judicial management order or make any other order that it thinks just”
In terms of s 305 of the Companies Act, the
court should on the return day take the following into consideration; opinions
of creditors and the company's members, report of the provisional judicial
manager, the number of creditors who did not prove their claims, the Master's
report and the Registrar's report. These should enable the court to decide
whether or not to grant a final judicial management order. It will grant a judicial management order if
it appears to it that, if placed under
judicial management, the company will be enabled to become a successful concern
and that it is just and equitable to grant such an order. If not it should discharge the
provisional judicial management order or make such other order, as it thinks
just.
THE OPINION AND WISHES OF THE CREDITORS
AND MEMBERS OF THE COMPANY
It is apparent from the appellant's frantic efforts to hide under
judicial management that the respondent has called upon it to pay after
Myramar's failure to pay the debt. Its knowledge of the creditor's intention to
sue for the debt, is disclosed in paras 21 to 29 of its founding affidavit
where appellant details the predicament into which its debt to the respondent
has placed it. It seeks a moratorium
through judicial management. Its conduct
is indicative of a debtor who had to resort to under hand dealings to avoid
meeting its creditor in court. It made
an ex parte application for
provisional judicial management when it was aware that the creditor had made
demands for payment and issued summons. It did so without even citing the
respondent. The mortgage bond agreement
makes it clear why the appellant did not want to meet its creditor in court. It states in para 8:- Default and Breach;
“vi. Should the Mortgagor at any time;
commence proceedings for its liquidation, judicial management, scheme
of arrangement or winding up; then and in any of those events the full amount
of the Capital Sum and interest then outstanding under this Bond shall become
immediately due and payable and lawfully claimable without the necessity of
prior demand to the Mortgagor and the Mortgagee shall have the right forthwith
to proceed for the recovery thereof.”
The ex parte provisional application for
judicial management was therefore made to deliberately avoid this clause. The appellant was, through an abuse of
process, circumventing contractual obligations. It therefore cannot be just and
equitable to grant it a final judicial management order.
The
appellant avoided having to serve the creditor with the provisional order as
required by r 247 3) (c) by misleading the court into ordering it to make
adverts through the Government Gazette and the Herald which it obviously knew
could not inform the respondent a foreign based creditor. The appellant's argument on appeal that this
rule is not mandatory cannot stand scrutiny in view of the provisions of the
mortgage Bond agreement which clearly spells out the effect of such an
application.
It is
unfortunate that the court which granted the provisional judicial management
order did not pursue its concern about the creditor not being served with the
application. That inquiry was necessary
because ex parte applications by
their nature should not be lightly entertained as they breach the audi alterum partem rule. They are provided for by r 242 in respect of chamber
applications in specified circumstances and on the strength of a legal
practitioner's certificate explaining why the respondent or interested persons
have not been or should not be served.
Mr de Bourbon correctly submitted that the
appellant's application was a Court application which in terms of r 131 of the
High Court Rules 1971 should have been served on the respondent. The court application on record does not cite
a respondent. This demonstrates a
deliberate avoidance aimed at getting a provisional judicial management order
without alerting the respondent that such an application was being made. This again proves that the application is one
which cannot justly and equitably be granted.
THE REPORT OF THE PROVISIONAL JUDICIAL
MANAGER
The report of the provisional judicial
manager on record thoroughly discredits the appellant's appeal. It gives the value of buildings on Stand 540 as
$650 000-00. This contradicts the value
of $1 900 000-00 given in the appellant's Statement of Financial Position
as at 30 June 2014. The wide discrepancy
in the value of the same buildings given within three and half months of each
other betrays an intention to mislead the court into granting a final judicial
management order on the pretext that the proceeds of the sale of the property
will not be sufficient to pay off the creditor when in actual fact it can,
leaving the appellant with a healthy balance from which it can pick its pieces
and move on.
Commenting on the general state of the
company, the provisional judicial manager said:
“No proper handover takeover
has been conducted. The members have been very difficult in meeting
appointments for the exercise”
This suggests that the members of the
company after obtaining the provisional judicial management order, were not cooperating
with the judicial manager to advance the recovery of the company to a
successful concern. The provisional
judicial management order was granted on 10 September 2014. The provisional
judicial manager's report is dated 13 October 2014. This means the members of the company were
deliberately delaying handing over the operations of the company to the
provisional judicial manager, when in view of their having applied for the
order, they should be co-operating and assisting him to take over the management
of the company. The above confirms the
court a quo's view that judicial
management is not being sought for genuine reasons.
As to the circumstances preventing the
company from being a successful concern, the judicial manager commented as
follows:-
“The company is not involved
in serious trading other than simply managing the rentals from its sole asset.
The company had found itself in dire straights because of the mortgage bond it
extended to an offshore bank on behalf of a sister company Myramar.”
This confirms that the company's
operations are simple and need no judicial manager to turn the company around. It also shows that the company does not have other
debts or problems necessitating the appointment of a judicial manager. Its only problem is the creditor whom it does
not want to pay in terms of the suretyship and mortgage bond agreements.
Regarding the measures intended to be taken
in order to turn round the company's fortunes, the judicial manager further
commented:-
“There is not much that the
provisional judicial manager can do in the premises other than taking control
of the property management, that the members seem to be dragging their feet on.
The company's fate is determined by the success of Myramar's judicial
management which it has no control over.”
This demonstrates the hopelessness of the
appellant's application for a final judicial management order. The provisional
judicial manager said it all, “there is not much that he can do”. He is further hampered by the members who over
and above not cooperating with him as earlier said are dragging their feet
showing signs of not wanting to give him control. He then says all depends on the judicial
management of Myramar. This proves the
appellant does not genuinely need judicial management.
The following are the recommendations of
the provisional judicial manager:-
“The company is more of an
asset holding company and survives from the rentals it receives. The rentals
will remain constant for a while under the prevailing environment and to
imagine that the company can realize enough to settle the Salzman dues would be
farfetched. The company's survival from the jaws of liquidation is highly
dependent on the prospects of Myramar. In my opinion, the company should be
placed into final judicial management until the picture at Myramar is clearer.”
I find this recommendation to be both
frank and misleading. It says nothing
about what the judicial manager will do to turn the appellant around. He acknowledges his limitations and
hopelessness due to the current economic environment. His recommendation for judicial management
until the picture at Myramar is clearer, is not what judicial management is
about. His comment that, “to imagine
that the company can realize enough to settle the Salzman dues would be
farfetched” confirms Mr de Bourbon's submission that it would take about 30
years for the appellant to pay the debt through rentals. That makes the appellant's last resort offer
to pay through rentals while under judicial management if Myramar fails to pay,
unjust and in equitable.
Section 300 clearly provides that the
purpose of judicial management is to take a company from mismanagement into
proper management with a view to turning around the company and enabling it to
become a successful concern which will be able to pay its debts. The provisional judicial manager does not explain
how this can be done. He merely pleads
for the appellant's placement under judicial management pending the outcome of
Myramar Farming (Pvt) Ltd's judicial management.
Judicial management's prospects of success
or lack of it should be based on the circumstances of the applicant and not that
of a third party. In this case the court
a quo correctly found that judicial
management was being sought for the wrong reasons. This has been confirmed by the appellant's own
papers. There is no need to inquire into
the other requirements of s 305. The
application was an abuse of process. It
was correctly dismissed by the court a
quo.
The appeal is accordingly devoid of merit.
ZIYAMBI JA: I agree
GOWORA JA: I agree
G.N Mlotshwa & Co, appellant's legal practitioners
Wilmot & Bennett, respondent's
legal practitioners
