Isaac Tigere Tichareva (In his capacity as the Duly appointed executor dative of the estate of the Late Kennedy Mangenje DRMRE 329/18) v Mangenje Brothers (Private) Limited and The Master of the High Court

### Preamble
1
HH 670-22
HC 2801/22
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ISAAC TIGERE TICHAREVA (In his capacity as the Duly appointed

executor dative of the estate of the Late Kennedy Mangenje

DRMRE 329/18)

versus

MANGENJE BROTHERS (PRIVATE) LIMITED

(For a Provisional Order for winding up of company and for the appointment

of a liquidator)

and

THE MASTER OF THE HIGH COURT

HIGH COURT OF ZIMBABWE

TAGU J

HARARE, 19 & 28 SEPTEMBER 2022

Opposed Matter

R Mabwe, for the applicant

E Jera, for Collins Mangenje

GRJ Sithole, for Godwin Mangenje

TAGU J:   This is an application for the confirmation of a provisional order granted by this court on 4 May 2022 for the provisional liquidation of the first respondent MANGENJE BROTHERS (PRIVATE) LTD.

The brief facts are that the applicant, in his capacity as the duly appointed executor dative of the estate late Kennedy Mangenje DRMRE 329/18 applied for the provisional liquidation of the first respondent in terms of s 5 (1) (b) (iii) of the Insolvency Act [Chapter 6.07] (the act). The provision order for the provisional liquidation of the first respondent was duly granted on 4 May 2022. On two occasions Godwin Mangenje and Collins Mangenje as interested parties sought to anticipate the return day and have the provisional order discharged. On both occasions the court struck off the applications with cost. Those judgments are extant. The applicant has now sought the confirmation of the provisional order with the result being the placement of the first respondent under final liquidation.

The request is being opposed by both Godwin Mangenje and Collins Mangenje who claim to be “the interested parties” i.e. directors and shareholders of the first respondent in this matter on the ground that:-

The provisional order was granted in error as the mandatory provisions of s 5 (4) of the Insolvency Act [Chapter 6.07] were not complied with. It is therefore a legal nullity.

The whole application was fatally defective for non-compliance with the provisions of Rule 59 (1) of the Rules of this honourable court.

There is no just and equitable cause for the winding up of the first respondent under the circumstances of this case.

The applicant is abusing the liquidation proceedings to settle personal scores on behalf of some of the beneficiaries of the estate that is winding up.

A fraud was perpetrated in the filing of the application as some of the supporting affidavits have forged signatures. There is therefore no proper application before this honourable court.

That the court ought to proceed in terms of Section 8 of the Insolvency Act and make an order for damages against the applicant.

WHETHER THE PROVISIONAL ORDER WAS ISSUED IN ERROR?

The respondents as interested parties, submitted that the Provisional Order in the hands of the applicant was issued in error for two reasons namely:

The application did not comply with the mandatory provisions of Section 5(4) of the Insolvency Act.

The application also did not comply with the Rules of this honourable court hence was fatally defective.

The argument by the respondents was that since the application for the winding up of the first respondent was filed in terms of s 5(1) (b) (iii) of the insolvency Act, s 5 (4) (a) of the insolvency Act ought to have been complied with.

Section (5) (4) (a) of the Insolvency Act provides that:

“Every application to the Court referred to in subsection (1) ….must be accompanied by…a 	statement of affairs of the debtor corresponding substantially with Form A of the First 	Schedule….”

They argued that in this case the statement of affairs corresponding substantially with Form 	A was not attached to the application. The application was therefore not in compliance with 	the law. They submitted further that s 14 (1) under which the Provisional Order was issued 	requires that before the provisional order is issued, the court granting it must be satisfied 	that on 	the face of the documents that ‘the applicable requirements of Section 4, 5, or 6 have been 	complied with…’

They contended further, that failure to comply with a mandatory provision of a statute is fatal to the application.  I was referred to the cases of The Garrat Trust v Creative Credit (Private) Limited SC 146/21, Chirosva Minerals (Pvt) Ltd v Minister of Mines and Ors 2011 (2) ZLR 274; Air Duct Fabricators (Pvt) Ltd v A.M. Machado & Sons (Pvt) Ltd HH 54/16.

The respondents relied mainly on the case of The Garrat Trust (supra), where the Supreme Court made the following remarks:

“It is correct that the learned judge a quo found that the applicant failed to comply with the 	strict mandatory provisions of the law and that therefore the application before him was a 	nullity. At page 5 of his cyclostyled judgment the learned judge properly relied on the dictum in 	Air Fabricators (Pvt) Ltd v A.M. Machado & Sons (Pvt) Ltd. That case is authority for the 	proposition that failure to comply with a mandatory course of action invalidates the thing done.”

The Supreme Court in the Garrat Trust case supra further said:

“What this means is that the main application that was launched in the court a quo without the 	statement of affairs of the debtor and the master’s certificate as required by law was void 	and to that extent a legal nullity.” (my emphasis)

They rubbished the argument raised by the applicant with respect to the issue of the statement of affairs of the first respondent as being inconsistent in that on one breath argued that the statement of affairs is there (pages 43-44) of the record, and on the other hand said the directors of the first respondent refused to furnish the same.  It was submitted that what is referred to by the applicant as a statement of affairs is actually a statement of assets and liabilities of the company as at 25 June 2019 and at page 44 is a statement of liabilities which is not dated.  On this basis they prayed that the Provisional Order be discharged.

The applicant disputed respondents’ submissions. Its contention being that the opposition before the court is not a r 29 (1) of the High Court Rules, 2021 application. In other words, when deciding to confirm the provisional order or not, this court does not seek to establish if there is a basis upon which it can interfere with the earlier order of this court.  Applicant submitted that the court is not sitting in the capacity of a court seized with rescission powers, neither is it reviewing the earlier decision of 4 May 2022 or deciding it as if it were a review. The court deals with the confirmation proceedings as if it were hearing the matter de novo.  In support of this contention I was referred to the case of Ex Parte St Clair Lynn 1980 (3) SA 163(W) at 164E-F where the court said:

“…Judges on the return days are inclined to establish mainly whether there was proper service of 	the rule, without themselves deciding, or turning their attention particularly to the point, whether 	the relief ought to be given at all. The mere fact that a rule nisi is issued, very clearly does not 	finally determine the issue in any shape or form. Frequently it is simply a case of the Judge who 	issues the rule nisi believing that there is prima facie case. Obviously the question whether that 	relief is claimable or not, may have to be considered on the return day, particularly if confirmation 	of the rule is opposed.”

Reliance was also made to the case of Development Bank of Southern Africa Ltd v Vans Rensburg NNO 2002 (5) SA 435(S), where the same sentiments were echoed:

“[39] This conclusion, that the rule nisi did not have finite and definitive effect, is patently correct. 	An interim order is by its nature both temporary and provisional, its purpose is to preserve the status 	quo pending the return day…If the order authorizing attachment is provisional and subject to 	confirmation, it must follow that an attachment effected and any entitlement acquired on the 	strength thereof must likewise be provisional and subject to confirmation…..”

Applicant said the above position is buttressed by the provisions of s 14 which requires the judge who grants the provisional order only need to be ‘satisfied on the face of the documents.’ The court had the discretion to grant the relief sought.  After all it is provisional relief whose effect is to arrest a situation temporarily. See Safcor Forwarding (Johanesburg) (Pty) Ltd v National Transport Commission 1982 (3) SA 654 at 674H-675A.

In casu it was submitted that the court a quo had a discretion to grant the rule nisi based on the papers filed before it and it did not err.

WHETHER THERE WAS NON- COMPLIANCE WITH S 5(4)?

The applicant’s position is that this point is ill taken and must not detain this court for two reasons. The uncontroverted evidence is that a request for the respondent’s statement of affairs was made on 12 June 2019 (p 42 of the application).  A two paged statement was availed by the respondent’s legal practitioners and appears on pp 43-44.  The statement is therefore apparent from the papers.  According to the applicant the case of Garrat Trust v Creative Credit (Private) Limited SC146/21 referred to by the respondents though a leading case on this issue, is inapplicable as there was nothing before the court a quo to justify the relief sought. In this case the statement is there although scant. Further, the respondents as the interested parties admitted that they could not furnish a comprehensive statement because at some point the company was under liquidation. So the court has parties refusing to provide information for the sake of compliance with statute who wants to rely on such non-compliance.  According to the applicant, our law does not allow one to derive a benefit from one’s or their own wrong. The court was referred to the case of Riggs v Palmer (1899) 115 NY 506, NE 188 where it was stated that:

“All courts may be controlled in their operation and effect by general, fundamental maxims 	of the common law. No one shall be permitted to profit by his own fraud, or to take advantage 	of his own wrong, or to found his own claim upon his own inequity or to 	acquire property by his 	own crime.”

WAS THERE FRAUD OR FORGERY ON THE PART OF THE APPLICANT?

In the opposing affidavit filed by Godwin Mangenje on 12 July 2022, Godwin Mangenje indicated that there was forgery of signatures on the supporting affidavits.  He said he is based in South Africa, hence challenged the applicant to prove that he came to Zimbabwe on 8 April 2022 and signed the supporting affidavit in question.

The applicant’s stance is that the interested parties cannot raise the issue of fraud on the return date, for reasons that the provisional order is simply that; provisional. Where they insist on the aspect of fraud being a basis upon which relief currently sought, they cannot infer it from their papers by simply alleging that Godwin Mangenje is in South Africa, this is a triable issue upon which evidence must be led. See Courtney Clarke v Bassingthwaighte 3 All SA 625, Gilbey Distilers & Vintners (Pty) Ltd v Morris NO 1990 (2) SA 217.

The applicant submitted that in the absence of evidence and clear proof to determine the aspect of forgery, this court cannot so make a determination on it.

ANALYSIS

It is not in dispute that a request for the respondent’s statement of affairs was made on 12 June 2019.  At page 47 to 48 of the application there is also a copy of the letter dated 28 January 2019, second paragraph which reads as follows:

“Kindly furnish us with the Statement of Affairs of Mangenje Brothers (Pvt) Ltd as this 	would 	enlighten us on the Assets that belongs to the Company and Assets that belongs to the 	deceased. There are allegations that the deceased was operating his own entities at the 	premises of Mangenje Brothers (Pvt) Ltd and that Mangenje Brothers (Pvt) Ltd was not trading. 	It is also alleged that each and every Director was using Mangenje Brothers (Pvt) Ltd 	premises to trade in whatever they wish to earn a living.”

On page 49 there is a response to the letter dated 12 June 2019 and it reads as follows:

“We refer to your letter dated 12 June 2019. We hereby attach an unaudited statement of assets 	and liabilities for Mangenje Brothers (Pvt) Ltd. Will show clearly detail of the immovable 	properties and other properties belonging to the company. The title deed numbers are also indicated. 	The only immovable property which was left is that of Kingsley Estate Deed of transfer 3754/81 	which was gazetted for resettlement by Government (Extraordinary Government gazette of 27 	April 2001).”

A two paged statement was therefore availed by the respondent’s legal practitioners. I therefore agree with the applicant that the provisional order for the liquidation of the first respondent was properly granted and the case of Garrat Trust v Creative Credit (Pvt) Limited SC 146-21 although it is now a leading case on compliance with s 5(4) of the Act in that there has to be a statement of affairs and Master’s report when applying for a provisional liquidation of a company, is distinguishable from the present case in that in the Garrat Trust case (supra), the lower court had granted an order for provisional liquidation without a statement of affairs and the Master’s report. In casu the Master’s report was there and the statement of affairs was there although scant. The respondents supplied the scant statement, thereby refusing to provide information for the sake of compliance with the statute. Hence they cannot rely on such non-compliance because our law does not allow one to derive a benefit from one’s own wrong. See Riggs v Palmer (supra).

ARE RESPONDENTS ENTITLED TO AN AWARD OF DAMAGES?

The respondents relied on s 8 of the Act to claim for damages. Section 8 provides that:

“Whenever the Court is satisfied that an application for the liquidation of a debtor’s estate is an 	abuse of the Court’s procedures or is malicious or vexatious, the Court may allow the debtor 	forthwith to prove any damages which he or she may have sustained by reason of the application, 	and award him or her such compensation as it considers appropriate”

In my view interested parties cannot claim for damages under s 8.  That section exclusively permits a debtor only to so claim and no other. The express mention of ‘debtor’ excludes all other parties (interested parties included) - exclusio alterious. Even if I may be wrong in my interpretation of s 8, they cannot claim for damages, which damages are at any rate not even quantified. Section 8 clearly say the debtor should forthwith prove any damages which he or she may have sustained by reason of the application. In the present case no damages have been proved and or quantified.

The other issue raised by the respondents was that the applicant did not comply with r 59 (1).  Rule 58 (13) of the High Court Rules, 2021 settles the non-issue raised by the interested parties. This issue was raised before and the court dismissed the same. For avoidance of doubt r 58 (13) provides:

“(13) Without derogation from rule 8 but subject to any other enactment the fact that an applicant 	   has instituted-

a court application when he or she should have proceeded by way of chamber application; 	or

a chamber application when he or she should have proceeded by way of a court application;

shall not in itself be a ground for dismissing the application unless the court or judge, as the 	       case may be, considers that-

and

such prejudice cannot be remedied by directions for the service of the application on that 	party with or without an appropriate order of costs.”

In the present case the deponent did not show that he was prejudiced by the nature of the application mounted.  He further has not proved that such prejudice cannot be cured by way of costs. Cadit.

Lastly, the respondents submitted that it is not just and equitable that the first respondent be liquidated. They said a reading of the applicant’s application shows that he is a disgruntled shareholder who raises some reasons for desiring to have the company liquidated, namely:

The 1st respondent is not trading or is not doing its business.

The family of the deceased shareholder has suffered upon the death of the deceased and the surviving shareholders have helped them despite being extended family members.

The remaining directors entitled to Director’s fees when the company is not trading.

Dividends not being declared.

Real value of the 25% shareholding of the deceased cannot be ascertained.

Ballooning debts, and;

Consideration of the interests of the estate and the beneficiaries.

The respondents argued that these cannot be grounds to infer that it is just and equitable for the company to be liquidated.

The applicant’s position is that this application was brought in terms of s 5 (1) (b) (iii) of the Insolvency Act.  It argued that the basis upon which the confirmation of provisional order of 4 May 2022 is sought is that it is just and equitable that the company be so wound up.  I was referred to s 5 of the Act, which the applicant quoted in extenso which provides thus:

“(1) 	An application to the court for the liquidation of a debtor other than a natural person or 		    partnership may be made –

by the debtor itself if it has resolved that it be liquidated by the court in terms of a liquidation 	resolution and the debtor is not prevented by law, agreement or any other legally enforceable 	reason, from passing such resolution; or

by the company, or by one or more directors or by one or more members for an order to wind 	up the company on the grounds that-

the directors are deadlocked in the management or the company, and the members are unable to break the deadlock, and –

(a)  irreparable injury to the company is resulting, or may result, from the deadlock, or

(b)  the company’s business cannot be conducted to the advantage of members generally, as a result 	of deadlock;

the members are deadlocked in voting power, and have failed for a period that includes at least two financial years to elect successors to directors whose terms have expired; or

it is otherwise just and equitable for the company to be liquidated…..”

Just and equitable’ is a broad conclusion of law and facts providing a basis upon which a company may be wound up. Hull v Turf Mines Ltd 1906 TS 68 at 75, 1967 (3) SA 131 (T) 136, Moosa v Mavjee Bhawan (Pty) Ltd 1967 All SA 168 (T), Erasmus v Pentamed Investments (Pty) Ltd 1982 (3) ALL SA 145(W), 1982 (1) SA 176 (W) 181, Sweet v Finbain 1984 (4) ALL SA 61 (W), 1984 (3) SA 441 (W) 444.

According to Rand Air (Pty) Ltd v Ray Bester Investments (Pty) Ltd 1985 (2) SA (W) 349, it is also:

“a special ground under which only certain features of the way in which a company is being 	run or conducted can be questioned to the point of requiring the Court to wind it up.”

As correctly submitted by the applicant in his heads of argument, in order to grant the relief sought to date, the court must exercise its discretion and look to s 15 of the Act. That section provides:

“(1) The Court may make an order for the final liquidation of the estate of a debtor at the hearing 		of an application contemplated in section 4, 5, or 6 or pursuant to a rule nisi contemplated in 	section 14(2), if –

the applicable requirements of section 4, 5, or 6 as the case may be, have been complied 	with,

the debtor is unable to pay its debts in terms of section 3; and

in the case of a debtor who is a natural person, there is reason to believe that it will be to 	the advantage of the creditors of the debtor if his or her estate is liquidated, and

any of the following, where applicable, are not more appropriate than issuing a liquidation 	order-

corporate rescue proceedings in terms of Part XXIII;

a compromise in terms of section 148; or

a pre-or-post-liquidation composition in terms of section 119 or 120.”

In the present case the Master’s report appears on record (pages 92-93).  What the interested parties insist on is that there is no statement of affairs. The onus to maintain such a statement rests on the first respondent both in terms of the Companies and other Business Entities Act as well as the Insolvency Act. See s 21(5). The interested parties failed to furnish the applicant with the statement so required.  The statement that is available is that appearing in the papers filed of record. This cannot be challenged.  At any rate, the interested parties have from July until to date filed not even an iota of evidence with this court to substantiate the allegation that they are indeed trading, other than their mere say so.  In any case the interested parties could not refute the suggestion that the first respondent is not trading but is leasing out its properties. What they managed to produce are the rates payment receipts, which are due anywhere, nothing on record affirms that the company is viable and has been carrying on business. The fact is that it is defunct and on account of that and the reasons already set out, it must be wound up.

Disposition

IT BE AND IS HEREBY ORDERED THAT

The first respondent, MANGENJE BROTHERS (PRIVATE) LIMITED be and is hereby finally wound up.

Subject to Section 41 of the Insolvency Act [Chapter 6.07], CECIL MADONDO is hereby appointed as the final liquidator of the first respondent Company with the powers set out in Part X of the Insolvency Act.

The first respondent shall meet the costs of this application and of the Liquidation proceedings.

Chatanga & Partners, applicant’s legal practitioners

Moyo & Jera, respondent’s legal practitioners

TAGU J:…………………………………………..