Mazowe Mining Company Pvt Ltd v Hungwe Mining Syndicate & 18 Ors

### Preamble
1
HH 569-25
HC 3789/25
---------


MAZOWE MINING COMPANY PVT LTD

versus

HUNGWE MINING SYNDICATE

and

WORKERS CONSORTIUM MINING SYNDICATE

and

MARTINMANG MINING SYNDICATE

and

MASHONALAND MINING SYNDICATE

and

VISION 2030 MINING SYNDICATE

and

KAT MINING SYNDICATE

and

BATMAN MINING SYNDICATE

and

SANDSPRING MINING SYNDICATE

and

NUCLEOUS MINING SYNDICATE

and

RUFARO MINING SYNDICATE

and

COMMONWEALTH MINING SYNDICATE

and

MMS MINING SYNDICATE

and

STONEMABLE MINING SYNDICATE

and

JCB MINING SYNDICATE

and

MADSAY INVESTMENT PRIVATE LIMITED

and

LICANTA MINING PRIVATE LIMITED

and

SOS WEST MINING SYNDICATE

and

GUDGAL MINING SYNDICATE

and

GABRIELLA MINING SYNDICATE

HIGH COURT OF ZIMBABWE

CHITAPI J

HARARE, 4,5,8,21 & 27 August, 1 & 26 September 2025

T Zhuwara, for the applicant

R G Gumbo, for the respondents

Urgent Chamber Application

Ruling on Preliminary Points

CHITAPI J:  The applicant is a duly registered company in terms of the laws of Zimbabwe.  All respondents save for respondents 15 and 16 are registered mining syndicates whilst the 15th  and 16th respondents are like the applicant, registered companies.  The dispute which forms the basis of this application is an alleged unlawful occupation and mining on the applicant’s registered mining claim situate in the Mazowe area by the respondents.  The applicant is the registered holder of a mining lease called lease 35.  It claims for the eviction of the respondents who it accuses of carrying out illegal gold mining activities on the said lease 35 and without the consent of the applicant.  In relation to 15th respondent, the applicant averred that the 15th  respondent was its erstwhile lessee over a portion of lease 35 but that the lease between them expired and was not renewed.

The applicant averred that the respondents claims made in other proceedings to the effect that they were mining on the claim with the knowledge and consent of the applicant were false.  Further, the applicant averred that the allegations by the respondents that they sent the gold ore to the applicant for milling in an arrangement whereby the applicant would retain 30% of the gold output was not correct.  The applicant averred that there was wanton plunder of its resources as well as damage to the applicants underground mining shafts amongst other complaints.  The applicants also attached pictorial evidence of the alleged damage to land, machinery and infrastructure which they allege to have been caused by the respondents.

The respondents vehemently opposed the application.  In the course of their opposition, they raised several points in limine.  One such point which has resulted in this judgment was the objection by the respondents to the locus standi of the applicant to bring or institute these proceedings.   The respondents averred that the applicant had been placed under corporate rescue by virtue of the existence of pending proceedings filed by other parties in case No HCH 84/24 which seek for an order to place the applicant under corporate rescue.  The applicant countered that the pending application did not disqualify or remove its locus standi.

It is common cause that case No HCH 84/24 is a court application pending in this court in the Commercial Division following its filing on 15 February, 2024.  The parties therein are Gilbert Gwavava and 2 Ors v Mazowe Mining Company (Pvt) Ltd and 2 Ors.  It is an application made in terms of s 121 as read with ss 124 and 131 of the Insolvency Act, [Chapter 6:07].  The arguments which arise in the application in casu do not require that I should get bogged down in outlining the facts of case No HCH 84/24.  It suffices to state that it is a pending case allocated to my brother Manzunzu J.  The draft order in that application reacts:

“IT IS ORDERED THAT

Mazowe Mining Company (Private) Limited, the first respondent herein be and is hereby placed on corporate rescue in terms of s 121 as read with s 124 and s 131 of the Insolvency Act.

Knowledge Hofisi is hereby appointed the interim corporate Rescue Practitioner of Mazowe Mining Company (Pvt) Ltd.

Costs of suit to be costs payable by the Corporate Rescue Practitioner in the discharge of his duties from revenues generated from his running of the affairs of the company.”

The legal issue requiring an answer is a narrow one.  It is whether upon the filing of case No HC 84/24, corporate rescue proceedings commenced at law and whether the effect thereof was to disable the respondent from acting through its directors on the grounds that the filing of the corporate rescue application divested the directors from exercising directors powers.  If, this be so, then the resolution of the applicant in casu, to file this application has no force.  If such be case, the application would have to be struck off the roll.

At my behest, I directed the parties to file heads of argument on the issue.  I issued an order on 5 August 2025 as follows:

“1. Postponed to 13 August 2025 at 10am.

2. The parties shall file heads of argument solely on the issue of the validity of the resolution produced by the applicant authorising the applicant to institute this application in view of the existence of case No HCH 84/24 pending in the Commercial Court of Zimbabwe.

3. The respondents shall file their heads of argument on or before 7th August 2025 and the applicant shall file its heads of argument on or before 8th August 2025.”

I must note that the respondents had upon filing the notice of opposition on 4 August 2025 concomitantly filed heads of argument which addressed other points in limine and the merits.  They thus filed further heads of 7 August 2025 and these deal with the narrow issue of locus standi.

It is common cause that in instituting this application the applicant purported to rely on a resolution of the applicants’ directors.  The applicant annexed an extract of the minutes of its directors meeting held on 28 July 2025 where it passed a resolution couched as follows:

“IT WAS RESOLVED

That the company should file an application to interdict and evict the miners operating illegally within the company’s mining lease 35 and Mr Hapson Makotore, the Company Secretary is hereby authorised and empowered to represent the company in the court proceedings.

Mr Makotore shall have power and authority to sign affidavits on behalf of the company and do all such things as may be necessary in connection with the court proceedings or any related proceedings.?”

It is settled law that the applicant as a company requires a valid board resolution to institute or defend proceedings involving the company.  Such a resolution must be passed at a properly constituted meeting of the directors.  The directors must have capacity to pass the resolution.  The position of the law is set out in several judgments of this court and in particular in the Supreme Court judgment of Cuthbert Dube v Premier Service Medical Aid Society and Anor SC 73/19 wherein at p 14 of the cyclostyled judgment Garwe JA reiterated the principle set out in Madzivire and Ors Zvarivadza and Ors 2006(1) ZLR 514 (S) as follows:

“…A company being a separate legal person from its directors cannot be represented in a legal suit by a person who has not been authorised to do so.  this is a well established principle which the courts cannot ignore.  It does not depend on the pleadings by either party.  The fact that the person is the managing director of the company does not clothe him with the authority to sue on behalf of the company in the absence of any resolution authorizing him to do so.  The general rule is that directors of a company can only act validly when assembled at a board meeting.  As exception to this rule is where a company has one director who can perform all judicial acts without holding a full meeting…”

It is also settled that the resolution must identify the nature of the proceedings to be instituted.  The issue of the requirement that a company must pass a valid resolution of its directors to institute proceedings and that the nature of such proceedings are detailed therein is not however, the crux of the point in limine.  The crux of the point in limine is the respondents averment that the applicants directors had no capacity to pass the resolution with the applicant contending otherwise.

The issue raised calls for an examination of certain provisions of the Insolvency Act, s 125 provides as follows:

“125 Duration of Corporate rescue proceedings

Corporate rescue proceedings begin when-

The company-

Files a resolution place itself under supervision in terms of s 122(3); or

Applies to the court for consent to file a resolution in terms of s 122(5)(b)

An affected person applies to the court for an order placing the company under supervision in terms of s 124(1); or

A court makes an order placing a company under supervision during the course of liquidation proceedings, or proceedings to enforce a security interest, as contemplated in s 124(7).

Corporate rescue proceedings end when-

…”

The respondents submitted that the corporate rescue proceedings against the applicant began upon the filing of case No HC 84/24.  They interpreted s 125(1)(b) of the insolvency Act to mean that upon the filing of an application for corporate rescue, corporate rescue proceedings begin at that moment.  The respondents further averred that by virtue of the provisions of s 130(2) and (4) which read as follows:

“130 Effect on Shareholders and directors

…

During a company’s corporate rescue proceedings, the board of the company will be deemed to be dissolved and each director of the company:

May no longer exercise the functions of director, and

May only exercise a management function within the company in accordance with the express instructions or direction of the corporate rescue practitioner, to the extent that it is reasonable to do so.

…

If during a company’s corporate rescue proceedings one or more directors of the company at the time the corporate rescue proceedings commenced purports to take any action on behalf of the company, that action is void unless approved by the corporate rescue practitioner.”

In the case of Metallon Gold Zimbabwe (Pvt) Ltd v Shalowarn Investments (Pvt) Ltd and 3 ors SC 107/21, the Honourable Chief Justice Malaba CJ extensively discussed the incidences and purport of the   institution of corporate rescue proceedings.  Significantly, the learned Chief Justice stated at page 16 of the cyclostyled judgement as follows:

“Furthermore, the board of directors is deemed to be dissolved during corporate rescue proceedings and directors can no longer exercise their functions”

The respondents also referred to the decision of Chilimbe J in the case Dimitros Aivanus No (executor of estate Vassaliki Jwaries) v Tetrad Investments Bank HH 516/23 wherein the learned judge stated as follows per para 2 of the judgement.

“[2]  The dispute before the court hinges on a simple question. When do corporate rescue proceedings commence? And flowing from that, what is the effect of such commencement especially on the mandate and office of directors affected?  And of course, one may ask; What is the position regarding institution of legal proceedings against the entity.”

The learned judge noted that according to the Metallon Gold Zimbabwe (Pvt) Ltd v Shaliowa case, the filing of the corporate rescue application marked the start of corporate rescue proceedings.

In para 30 of the cyclostyled judgment aforesaid the learned judge continued,

“[30] I am satisfied that corporate rescue proceedings for Tetrad commenced on 3 February 2023 upon the filing of HCH 82/23.  This takes us to the residual issues on effect of rescue proceedings.”

Upon commencement of corporate rescue by filing of the application for corporate rescue the company assumes immunity against legal proceedings which may be instituted and existing ones are stayed save in cases covered by exceptions in s 126.”

The applicants argued that the filing of an application for corporate rescue under s 124 of the insolvency Act did not have the effect of stripping the applicants board of direction of all its authority including the authority to institute this urgent chamber application. It was submitted that to adopt such a construction contradicted binding authority and was devoid of legal reasoning. It was submitted that such a construction produced absurd and un workable results and defeats the whole concept of corporate rescue which is to protect companies. Counsel for the applicant argued that if the company’s board was rendered inoperative upon the filing of the application and before a corporate rescue practitioner is appointed, it means that the company will be plunged into “leaderless chaos” to use counsels words. As I understand the applicants argument, it is that it is not intended that there should be a period of a vacuum in the control of the company. In other words, the applicant’s position is that the board of directors remains in place until the appointment of a corporate rescue practitioner who then takes over and exercises the directors power.

In the case of Zimbabwe Diamond and Allied Minerals Workers Union v Rio Zim and Ors HH 467/25 Dembure J was called upon to determine the question of the meaning and effect of s 130(2) of the insolvency Act.  The applicant objected to the propriety of the filing of the notice of opposition by the first respondent therein on the basis that the directors powers were non existent as the board was deemed dissolved following the filing of corporate proceeding against the respondent.  It was argued before the learned judge that the board resolution authorizing the second respondent to defend the application was a nullity since the directors who purported to pass it could not exercise directors powers.

In his lengthy judgment Dembure J stated of s 130 (2) of the Insolvency Act in para 31 of the judgement as follows:

“[31] Further, s 130 (2) would only apply in the context of an application by an affected person which is yet to be determined if it has merit or not, takes effect upon the order issued commencing corporate rescue proceedings in terms of s 124(4) (a) and a further order in terms of S 124 (s).  It was never the intention of the legislature to create a vacuum in respect of who should represent the interests of the company during the period after the filing of the application but before the court is satisfied that the corporate rescue is warranted under s 124 (4) (a).  To adopt a literal interpretation of s 130 (2) to mean that the stage where the court is yet to assess the merits of the application the company is already without legal representation would in my view result in an absurdity; militate against logic and would lead to an unbusiness like result and undermine the purpose of the section.  The company is entitled to be heard in the corporate rescue proceedings in the present application”

In para 33 of the judgment, the learned judge stated:

“[33] The correct interpretation in the context where a hearing itself is required as part of due process and the company’s right to representation and to be heard means that S 130 (2) cannot be extended to cover the period before the application under section 124 (1) is heard and determined. This resonates with   the fact that under S 124(4) (a) the court after considering if satisfied, may make an order placing the company under supervision and commencing corporate rescue proceedings.  That is the context under which S 130 (2) ought to be viewed as to hold otherwise would simply mean that there is a vacuum which could not have been the intention of the legislative.  That vacuum would have serious unconstitutional consequences of denying the company the right to be hard in a matter affecting it.”

The learned judge relying on the South Frican judgment in Sundays River citrus Company (Pvt) Ltd and Anor, In RE Bouwers v Lonetree Citrus CC and Ors stated in para 34 as follows:

“[34] While there are other interventions such as the general moratorium under s 126 which are meant to protect its assets pending the determination of the application in my view the power to institute proceedings by the company or to defend itself in such proceedings is not what was meant to be prohibited. I therefore, cannot accept that there is no board of directors at this stage, when the court is yet to exercise its powers in assessing the merits of the application a process it cannot purportedly take while the company’s hands are tied up or its mouth sealed.”  The deeming provisions of s 130(2) can only therefore be trigged in the context of the court when the court exercises its power under s 124(4) (a) and read with s 124(5)”

I have considered the well-reasoned views of my brother Dembure J as noted above.  Essentially, he takes the view that upon his interpretation of s 130(2) of the Insolvency Act, the board of directors of a company against whom corporate rescue proceedings have been filed or instituted retain their positions and function until the court has granted an order for corporate rescue.  If I am correct in so understanding his dicta, I respectfully do not share the same view and I regrettably depart therefrom.

It appears to me to be very clear upon a literal interpretation of s 130(2) that the board of directors is deemed dissolved during corporate rescue proceeding in terms of the provisions of subsection (4) of s 130.  Any attempted actions by one or all directors to take action on behalf of the company is prohibited unless the corporate rescue practitioners’ authorizes such action.

The provisions of S 125 (1) (b) are clear on when corporate rescue proceedings begin.  They begin interalia when an affected person files with the court an application for the placement of the company under supervision in terms of s 124 (1).  An application for placement of the company under supervision is in this case pending.  Corporate rescue proceeding began upon the filing of the application.  The Chief Justice Malaba CJ stated as follows at p 16 of his judgment in the case Metallon Gold Zimbabwe (Pvt) Ltd and Ors v Shatirwa Investments (Pvt) Ltd and Ors SC 107/21

“ The mere filing of the application with the Registrar of the High Court, even before the merits of the application are considered has the effect of commencing corporate rescue proceeding.  The temporary moratorium regarding the supervision of the right of creditors will therefore start at this stage.  The law requires the protection of the troubled company assets so that corporate rescue practitioners do not inherit shells.  This is an important change to the old regime.”

If as stated by the learned Chief Justice, the mere filing of the application commences the corporate rescue proceedings, then the process starts even before a corporate rescue practitioner has been appointed and before the court has dealt with the matter.  The reason for corporate rescue arises from the failure by the company for whatever reason to sustain itself.  The directors are part of such failure.  This is why they step aside into management under direction of the corporate rescue practitioners once appointed.  The directors are divested of directors’ powers.  This does not create a vacuum. The director are not usually the company’s operatives or management which sees to the day to day operations of the company.  The directors in any event are not without recourse nor can they not take steps legally to protect or further the interests of the company.  Section 126 (1) (b) of the Insolvency Act opens a window for institution of legal proceedings against a company during corporate rescue proceedings.   It says:

“ 126(1) During corporate rescue proceedings no legal proceedings including enforcement action against the company or in relation to any property belonging to the company or lawfully in its possession may be commenced or proceeded with in any forum except-

With the written consent of the practitioner, or

With the leave of the court in accordance with any terms the court considers suitable”

It seems to me therefore that the directors whose powers of directorship of the company are removed by law may still approach the court for leave to institute proceedings or defend proceedings as envisaged in r 126(1).  The directors can therefore still represent the company in legal proceedings as aforesaid but can only do so with the leave of the court.  Thus should need arise for the directors to act and a corporate rescue practitioner has not yet been appointed, leave to act for the company may be sought from the court.

I do not wish to get entangled in the argument on whether the law on Insolvency limits the directors right to be heard.  I have already noted they can act with the leave of the court.  The law must be applied as it is. If the constitutionality therefore, falls for challenge, such challenge is filed and heard separately as a constitutional application.

In my view, when all is said and considered, the Supreme Court judgment of the learned Chief Justice in the Metallon Gold case clearly holds that corporate rescue proceedings begin upon the filing of the corporate rescue application  and attended consequences commence at that stage.  That includes the divesting of directors of their power.  There has been no application for leave to institute these proceedings made by the applicants’ directors.  They have no power to pass a resolution on behalf of the company as they purported to do.

The point in limine that there is no locus standi by the directors to institute these proceedings is upheld.  The effect thereof is that there is no proper application before the court.  The application must be struck out.  In relation to costs I consider that an appropriate order is that each party pays its own costs.  I have considered that the matter in the end really involved an interrogation of the law where counsel for both parties have been very assistive.  There are competing judgments on the point of the locus standi of directors as discussed herein.  I propose not to make an order of costs.  This application is determined as follows:

IT IS ORDERED THAT

The application be and is hereby struck out.

No order of costs.

Chitapi J:……………………..

Scanlen Holderness, applicant’s legal practitioner

Gumbo and Associates, respondent’s legal practitioner