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 s2 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
