BHUNU
JA:
[1]
This is an appeal against the entire judgment of the High Court (the
court a
quo)
which placed the first respondent in final liquidation.
BRIEF
BACKGROUND OF THE CASE
[2]
The first respondent Versapak Holdings (Private) Limited (the
company) is a juristic person incorporated in terms of the laws of
Zimbabwe whereas the second respondent is the company's liquidator.
[3]
The company has three shareholders being:
(i)
Sunko
Mauritius (C15289)
an offshore Mauritian company with a shareholding of 1,100 ordinary
shares.
(ii)
Versapak
Employee Trust
with a shareholding of 73 ordinary shares.
(iii)
Versapak
Management Trust
with a shareholding of 49 ordinary shares.
[4]
The appellants have since acquired all the shares of the company with
the result that it is now 100 per cent foreign owned.
[5]
The company is in the business of manufacturing expanded polythene
products which have since been banned by government through Statutory
Instrument 84 of 2012. Owing to the banning of its products, scarcity
of foreign currency and competition from cheap imports, the company
fell on hard times. As a result, it became unviable as it was running
at a loss. This prompted the directors of the company to initiate the
process of winding down the company.
[6]
On 14 December 2016 the company passed a special resolution
authorising one Rangarirai Dadirai to commence the winding down
process. They appointed the second respondent as the company
liquidator. The Resolution reads as follows:
“------------------------------------------------------------------------------------------
WRITTEN
RESOLUTIONS OF THE DIRECTORS OF THE COMPANY
PASSED
ON THE 14TH
DAY OF DECEMBER 2016
----------------------------------------------------------------------------------------------
WINDING
DOWN OF THE COMPANY
----------------------------------------------------------------------------------------------
SPECIAL
RESOLUTION/S
IT
IS HEREBY RESOLVED THAT:
1.
The Company shall commence the winding down of its operations as it
is no longer capable of operating profitably. The main factors
leading to the crippling of the company among others are:
(a)
The liquidity crunch and lack of foreign currency to pay for imported
products and purchase raw material.
(b)
Stiff competition from cheap imports which affected the sales of the
Company.
2.
The Company will be wound down in terms of section 206 of the
Companies Act [Chapter
24:3]
that is winding down by the Court.
3.
Rangarirai Dadirai is appointed to sign all affidavits and
documentation for purposes of process issued in the High Court of
Zimbabwe in winding down the Company.
4.
Rangarirai Dadirai be and is hereby authorised to appoint experts to
assist in the attainment of the shareholders? Objective being the
procedural winding up of Versapak Holdings (Private) Limited.
5.
The liquidator of the Company shall be Mr Cecil Madondo of Tudor
House Consultants.”
[7]
Pursuant to the special company resolution authorising the winding
down of the company, it filed an exparte
court application for a provisional order for its winding down. The
application was duly supported by the Master's report dated 7 March
2017. The Provisional Order sought was granted ex
parte
that
is to say in the absence of the other
interested
parties.
[8]
The order was crafted in the following terms:
“IT
IS ORDERED THAT:
1.
The applicant Versapak Holdings (Pvt) Ltd be and is hereby
provisionally wound up, pending the grant of an order in terms of
paragraph 3 or the discharge of this order.
2.
Subject to Subsection (1) of Section 274 of the Companies Act
[Chapter
24:03],
Cecil Madondo of Tudor House Consultancy (Pvt) Ltd is appointed as
provisional liquidator of the above mentioned company with the powers
set out in Section 221(2)(a)–(g) of the Act.
3.
Any
interested party may appear before the court sitting at Harare on
Wednesday the 15th
of March 2017, to show cause why a final order should not be made
placing the applicant company in liquidation and ordering that the
costs of these proceedings shall be costs of liquidation.
4.
The order shall be published once in the Government Gazette and once
in the Herald newspaper in a Friday edition.
Publication shall be in short form annexed to this order.
5.
Any person intending to oppose or support the application on the
return day of this order shall:
5.1.
Give due notice to the applicant on or before 10th
of March 2017 at Nyakutombwa Mugabe Legal Counsel, 49 Old Enterprise
Road, Newlands Harare, ref
Joseph T Tazunguzwa.
5.2.
Serve
on the applicant a copy of any notice
of
opposition which he files with the Registrar of the High Court.”
(My emphasis)
[9]
As can be seen, in respect of the time honoured audi
alteram partem
rule, the exparte
order provided a return date to afford all interested parties a
chance to be heard on the issue before a final binding order could be
made. The return date was set for 15 March 2017. It was widely
published both in the Government Gazette and the Herald newspaper and
it invited any interested person who had any objection to the final
order sought to lodge their objection with the Registrar of the court
a
quo
and
also to appear on the return date. For the avoidance of doubt it
read:
“In
the petition of Versapak, Holdings (Private) Limited, applicant.
TAKE
NOTICE that on Wednesday the 15th
of February, 2017, and before Mr Justice Foroma, the High Court at
Harare issued an order for the provisional liquidation of Versapak
Holdings (Private) Limited, and Cecil Madondo has been appointed
provisional liquidator of the company.
Any
interested person who wishes to oppose the winding up of the company
shall file a notice of opposition with the Registrar of the High
Court at Harare on or before the 10th
of March, 2017, and shall serve a copy of the notice on the
applicant's legal practitioners. He/she should then appear before
the High Court at Harare at the hearing of this matter on 15th
March, 2017 to show cause why the company should not be wound up.
A
copy of the application and of the full order granted by the court
may be inspected at the office of the Registrar of the High Court at
Harare, and the office of the applicant's legal practitioners –
Joseph Tuzunguzwa, c/o Nyakutombwa/Mugabe Legal Practitioners 49 Old
Enterprise Road, Newlands, Harare.”
(My
emphasis)
[10]
The return date was subsequently extended to 26 April 2017 by court
order under case number HC2304/17 on the same terms and conditions as
before. Any person intending to oppose the confirmation of the
provisional order was now required to file their notice of opposition
and serve a copy on the second respondent on or before 19 April 2017.
[11]
The appellants did not file any notice of opposition or serve a copy
on the second respondent by the due date as mandated by the
provisional court order advertised in the Government Gazette and the
Herald Newspaper. The appellants instead filed a separate application
seeking the discharge of the provisional order on the basis that it
had been issued by mistake.
[12]
No founding affidavit was filed with the application for discharge of
the provisional order. Only a supplementary affidavit for the
application was belatedly filed on 21 April 2017 praying for an order
discharging the provisional order on the return date which had
already come and gone. They also sought an order directing the second
respondent to return the cash and any documents belonging to the
company. The appellants did not apply for any condonation or reprieve
for noncompliance with the court order. The application was opposed
by the second respondent resulting in both applications in cases
HC377 of 2020 and HC773 of 2017 being consolidated and referred to
the opposed roll.
ISSUES
FOR DETERMINATION BEFORE THE COURT A
QUO
[13]
Both applications raised the substantive issue of whether the
application for the winding up of the company should be confirmed or
discharged. At the commencement of the court hearing the second
respondent however raised three points in
limine
for
determination. In his first point in
limine
the second respondent objected to the appellants locus
standi
that is to say their right to stand and be heard in the court a
quo.
SUBMISSIONS
FOR THE SECOND RESPONDENT BEFORE THE COURT A
QUO
[14]
Counsel for the second respondent took a two pronged approach to
attack the appellants locus
standi.
Firstly, he argued that the effect of the court order placing the
company on provisional liquidation was to divest the appellants of
their directorships in the company and vesting them in the second
respondent in his capacity as provisional liquidator. For that
proposition of law, counsel placed reliance on the case of Volkskas
BPK v Darrenwood Electrical (Pvt) Ltd.
He further argued that the appellants had no locus
standi
because of their failure to comply with the mandatory terms of the
provisional court order.
SUBMISSIONS
FOR THE APPELLANTS BEFORE THE COURT A
QUO
[15]
The appellants took the view that they had the necessary locus
standi
to appear and be heard in the court a
quo.
Counsel for the appellants accepted that upon issuance of a
provisional liquidation order directors of a company lose their
rights and powers which are vested in the provisional liquidator.
He
however countered that despite having lost their power and rights as
directors they retain the residual power
to challenge the liquidation process. For that proposition of law he
placed reliance on the case of Thaw
Trading & Investments 005 CC v Central Lake Trading 214 (Pty)
Ltd
(30 May 2013 para 11-13). Counsel complained that although the point
was raised in the court a
quo,
the learned judge a
quo
did not determine the legal point raised.
[16]
As regards the second limb of the second respondent's argument,
counsel for the appellants conceded that the appellants did not
comply with the mandatory time lines set out in the provisional
liquidation court order. He however argued that the parties entered
into a consent order in which they agreed to purge the appellants
breach of the time lines set out in the provisional court order.
APPLYING
THE FACTS TO THE LAW
[17]
It is convenient to deal with the procedural issue first as it has
the potential of resolving all the other issues between the parties
without delving into the substantive issues.
[18]
It is common cause that the appellants did not file and serve their
notice of opposition by the due date of 19 April 2017 in terms of the
mandatory provisions of the provisional liquidation court order. It
is also correct that the parties entered into a purported consent
order which was not sanctioned by the court.
[19]
The purported consent order reads:
“IT
IS ORDERED BY CONSENT THAT:
1.
In the matter under case No. HC773/2017 (Ref Case No. HC2304/2017).
The Provisional Liquidator, Dr Cecil Madondo, hereby agrees and
consents to the late filing of the Notice of Opposition and opposing
affidavit by Sunko (Mauritius) and Judex Burnett.
2.
The late filing of the Notice of Opposition and opposing affidavit by
Sunko (Mauritius) and Judex Burnett in the matter under case No.
HC773/2017 (Ref Case No. HC2304/17) be and is hereby condoned and the
Notice of Opposition and Opposing Affidavit filed on 21 April 2017 in
the said matter be and is hereby deemed to have been properly filed
of record.
3.
The chamber application for condonation filed under case No.
HC6963/2017 is withdrawn.
4.
The parties shall be at liberty to file Supplementary Heads of
argument in the matter under case No. HC773/17 (Ref Case No.
HC2304/2017) should they deem it necessary and shall proceed to set
down the said matter for hearing on the opposed roll.
5.
The costs of the application for condonation filed under cases No.
HC5341/2017 and HC6963/2017 shall be costs in the cause of this
matter.
Signed Signed
_______________________ ____________________
COSTA
& MADZONGA SCANLEN & HOLDERNESS
HARARE
(NRM) HARARE (GN)
Not
signed ______________________”
JUDGE/REGISTRAR
[20]
It is a misnomer to say that the above pact constitutes a court order
because it was not given or signed by any court. The effect of the so
called consent order is a futile attempt to alter the provisional
liquidation order issued by the court a
quo
without its involvement and consent. It is trite that once a court
has made an order it binds all and sundry concerned. Everyone bound
by the court order has a duty to obey the order as it is until it has
been lawfully altered or discharged by a court of competent
jurisdiction or statute. In Hadkinson
v Hadkinson
ROMER
LJ recited the duty to obey court orders with remarkable clarity when
he said:
“It
is the plain and unqualified obligation of every person against or in
respect of whom an order is made by a court of competent jurisdiction
to obey it unless and until that order is discharged. The
uncompromising nature of the obligation is shown by the fact that it
even extends to where the person affected believes it to be irregular
or even void.”
[21]
What this means is that it was not within the parties power to agree
to condone the appellant's failure to comply with the extant
provisional court order. It was equally not within their power to
extend the period of compliance beyond 19 April 2017. The parties
purported consent order was therefore a nullity and of no force or
effect as it sought to usurp the function and powers of the court a
quo.
[22]
The appellants disregard of the time lines set out by the court a
quo
triggered an automatic bar shutting them out from being heard by
operation of law. Consequently, the appellants were effectively
divested of their locus
standi
before the court upon default. That being the case, the court a
quo's
finding that the appellants had no locus
standi
is beyond reproach. That finding of fact effectively put the
appellants out of court rendering it unnecessary to consider any
submissions they would have made. This is for the simple but good
reason that they were not entitled to be heard by the court a
quo
on any issue pertaining to the case.
[23]
The appellants disdain of the time lines laid down by a court of law
could only be purged by that court on the merits in a proper
application for condonation and extension of time within which to
comply with the terms set out in the provisional order. The
appellant's withdrawal of that application sounded the death knell
for any lawful reprieve for the appellants considering that the court
a
quo
had already issued a substantive order confirming the provisional
order.
DISPOSAL
[24]
In the result the Court finds that there is no substance in this
appeal. Costs follow the result. There is no reason why the
respondents should be burdened with costs incurred by persons with no
locus
standi.
It is accordingly ordered that the appeal be and is hereby dismissed
with costs.
MALABA
CJ:
I agree
CHIWESHE
AJA:
I agree
Tafadzwa
Ralph Mugabe Legal Counsel,
the
appellants legal practitioners
Hongwe
Nyengedza Attorneys,
respondents
legal practitioners
1.
1973 (2) SA 386
2.
(666/2012) [2013] ZANWHC 47
3.
19 522 All ER 567 (CA) at 569C
