BHUNU
JA:
1.
This is an appeal against the whole judgment of the High Court (the
court a
quo)
wherein it confirmed a provisional order against the appellants.
THE
PARTIES
2. Both
appellants are directors and shareholders of the second respondent, a
company under liquidation, duly registered in terms of the laws of
Zimbabwe. The first respondent is the executor dative of the estate
of the late Kennedy Mangenje who was a founder and director of the
second respondent company. The third respondent is cited in his
official capacity as the liquidator of the second respondent, whereas
the fourth respondent is the Sheriff of the High Court of Zimbabwe
cited in his official capacity as well.
FACTUAL
BACKGROUND
3. The
first respondent brought an application in the court a
quo
for the provisional liquidation of the second respondent in terms of
section 5(1)(b)(iii) of the Insolvency Act [Chapter
6:07]
(the Act). The section authorizes one or more members of a company
to apply for an order to wind up a company in circumstances where it
is just and equitable that the company be liquidated. Section 4(1)
of the Act clothes the first respondent, in his capacity as executor
with the authority to apply for the liquidation of the second
respondent as a debtor of the deceased estate. The first respondent
brought the application in a bid to protect the interests and rights
of the deceased estate for the benefit of its beneficiaries. The
appellants in turn countered by seeking to prove the quantum
of damages they suffered placing reliance on section 8 of the
Insolvency Act [Chapter
6:04]
(the Act).
4. The
court a
quo
granted the provisional order on May 2022. A final liquidation order
was granted on 28 September 2022 in the following terms:
“IT
BE AND IS HEREBY ORDERED THAT:
1.
The first respondent, MANGENJE BROTHERS (PRIVATE) LIMITED be and is
hereby finally wound up.
2.
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.
3.
The first respondent shall meet the costs of this application and the
liquidation proceedings.”
5.
The court a
quo
found that the
appellants as interested parties could not claim for damages in terms
of section 8 of the Act. Consequently it ruled that the provision
exclusively permits a debtor to claim the relief sought by the
appellants. It therefore ruled that the express mention of debtor
excludes all other parties to claim damages with the exception of a
debtor.
6. The
outcome of the confirmation proceedings did not go down well with the
appellants, hence this appeal. They accordingly mounted the appeal
on the following nine grounds:
GROUNDS
OF APPEAL
“1.
The court a
quo
grossly
misdirected itself and erred at law in failing to find as it ought to
have done that the provisional order issued on 4 May 2022 was a legal
nullity on account of the application's fatal non-compliance with
the mandatory provisions of section 5(4) of the Insolvency Act.
2.
The court a
quo
erred
at law and grossly misdirected itself in failing to find as it ought
to have done that the application before it was fatally defective and
could not be granted due to first respondent's failure to attach a
statement of affairs of the company as contemplated by section 5(4)
of the Insolvency Act.
3.
The court a
quo
erred
in finding that the two paged statement of assets and liabilities and
statement of liabilities attached to the application constituted a
statement of affairs of the 2nd respondent as required in terms of
section 5(4) of the Insolvency Act.
4.
The court a
quo
grossly
misdirected itself when it held that the appellant refused to supply
the requisite information for the sake of compliance with the
statute, when there was never any such request made by the
Provisional Liquidator as required in terms of the law and in
circumstances where the 1st
respondent was in possession of the company documents.
The
court a
quo
erred
at law and grossly misdirected itself when it held that appellant
did not show that they were prejudiced by the nature of the
application mounted by the 1st
respondent
without complying with Rule 59(1) of the High Court Rules
notwithstanding the clear demonstration made that the 2nd respondent
was not given any chance to oppose the application before the
granting of the provisional order and that once the provisional
order was granted, the appellants lost a right to oppose that
application before the granting of the provisional order and that,
once the provisional order was granted, the appellants lost a right
to oppose the liquidation on behalf of the 2nd
respondent which prejudice could not be cured by costs.
The
court a
quo
erred
and grossly misdirected itself in finding that the minutes of
proceedings of the first meeting of the creditors of the 2nd
respondent was the Master's report thereby proceeding without the
requisite Master's report as required in terms of the law.
The
court a
quo
erred
in failing to find that by leasing out its properties, the 2nd
respondent was actually trading and carrying on business as its
memorandum of association authorised it to do so.
The
court a
quo
erred
and grossly misdirected itself in finally winding up the 2nd
respondent when there was no just and equitable cause for its
winding up, yet the court never got to relate to the merits of all
the other grounds which the appellants had resisted the success of
the application save for the issue concerning first respondent's
non-compliance with section 5(4) of the Insolvency Act.
The
court a
quo
erred
at law and grossly misdirected itself in winding up the company on
the basis that it was now defunct when there was never any evidence
led or submissions made to the effect that the company was defunct.
In so doing it went on a frolic of its own.”
POINT
IN LIMINE
7. At
the commencement of the hearing of the appeal, counsel for the first
respondent Mrs. Mabwe,
raised preliminary points of objection in terms of Rule 51 of the
Supreme Court Rules 2018 (the Rules). Her initial objection is to
the effect that the purported appeal is fatally defective such that
there is no appeal before this Court. Mr Jera,
counsel for the second respondent pitched his tent with Mrs Mabwe
in
attacking the validity of the appeal. The preliminary points raised
are opposed by Mr O'chieng,
counsel for the appellants.
8. In
taking the point in
limine,
Mrs Mabwe
contended that the appeal is fatally defective because:
1.
The appeal does not comply with Rule 37(1)(d) and 37(1)(e) of the
Rules.
2.
The prayer sought is not exact.
3.
Grounds of appeal 4, 5 and 8 are fatally defective. The remaining
grounds of appeal cannot be related to because the prayer is
incurably bad.
Whether
the appeal complies with Rules 37(1)(d) and 37(1)(e) of the Rules
9. Both
Rules regulate the mandatory requirements for filing a valid appeal.
Rule 37(1)(d) provides as follows:
“CIVIL
APPEALS FROM THE HIGH COURT
37.
Entry of Appeal
(1)
Every civil appeal shall be instituted in the form of a notice of
appeal signed by the appellant or his or her legal practitioner,
which shall state —
(a)
the date on which, and the court by which, the judgment appealed
against was given;
(b)
if leave to appeal or condonation and extension of time to appeal was
granted, the date of such grant;
(c)
whether the whole or part only, and if so which part, of the judgment
is appealed against;
(d)
the grounds of appeal in accordance with the
provisions
of Rule 44;
(e)
the exact relief sought;
(f)
the address for service of the appellant or his or her legal
practitioner.
(2)
The notice of appeal shall be filed and served on a registrar, a
registrar of the High Court and the respondent in accordance with
Rule 38.
(3)
If the appellant does not serve the notice of appeal in compliance
with subrule (2) as read with rule 38, the appeal shall be regarded
as abandoned and shall be deemed to have been dismissed.”
10. Rule
37(1)(e) requires that the relief sought be exact. The relief sought
by the appellant is couched in the following terms:
“RELIEF
SOUGHT
FURTHER
TAKE NOTICE that
the appellant seeks the following relief:
1.
The present appeal be and is hereby allowed with costs.
2.
The judgment of the court a
quo
be and is hereby set aside and substituted with the following:
'(a)
The provisional order granted by the High Court on 4 May 2022 be and
is hereby discharged.
(b)
The respondent be and is hereby granted leave to prove the damages
suffered as a result of the winding up proceedings in terms of
section 8 of the Insolvency Act.
(c)
The applicant shall pay the costs of suit on an attorney and client
scale.'”
11. Having
considered the objection as to whether the appeal complies with Rule
37(1)(d) and (e), I am of the view that there was substantial
compliance such that this objection should not detain us any further.
That being the case, I now turn to deal with the real pertinent
issues for determination.
ISSUES
FOR DETERMINATION
12. The
grounds of appeal raise two pertinent issues for determination.
These are:
(a)
Whether or not the court a
quo
erred in finding that there was compliance with section 5(4) of the
Insolvency Act.
(b)
Whether or not the court a quo erred in dismissing the appellant's
claim for damages.
Whether
or not the court a
quo
erred in finding that there was compliance with section 5(4) of the
Insolvency Act
13.
The appellants contention is that the court a
quo
ought not to have confirmed the provisional order in circumstances
where the first respondent had failed to comply with the mandatory
provisions of section 5(4) of the Act. The section requires that
every such application must be accompanied by:
“(a)
A statement of affairs of the debtor corresponding substantially with
Forms A of the First Schedule.
(b)
A certificate of the Master issued not more than 14 days before the
date on which the application is to be heard by the Court that
sufficient security has been given for the payment of all costs in
respect of the application that might be awarded against the
applicant.”
14. The
court a
quo
found that it was not disputed that a request for the second
respondent's statement of its state of affairs was made on 12 June
2019. It further found that a two paged statement was availed by the
second respondent's legal practitioners, hence the first respondent
complied with the mandatory provision of section 5(4) of the Act. It
found that the second respondent could not benefit from its wrong by
providing a scanty document then turn around to challenge it on the
basis of its inadequacy. As regards the Master's Report, it ruled
that the Master's report though scanty was availed.
15. These
being findings of fact the appellants came nowhere near discrediting
the court a
quo's
factual findings in this regard. The finding that it was common
cause that these documents had been sought and availed, was
particularly damning to the appellant's case. The evidence tabled
before the court shows beyond question that it is the second
respondent's legal practitioners who supplied the document showing
the second respondent's state of affairs. The appellants being
directors of the company must be taken to have had a hand in the
preparation of the scanty document. They cannot now be allowed to
challenge the document and benefit from their own wrong.
16. As
regards the issue of the Master's report, it is germane to note
that the appellants are raising the issue for the first time on
appeal. This they cannot do as it is a point of fact not law, see
Austerlands
(Pvt) Ltd v Trade & Investment Bank Ltd & Anor
SC92/05. That case puts paid to the appellant's attempt to rely on
a point of fact on appeal not previously raised in the court a
quo.
17. The
respondents having amply demonstrated that there was compliance with
the mandatory provisions of r 5(4), we are constrained to determine
issue number one in the respondents favour.
Whether
or not the court a
quo
erred in dismissing the appellant's claim for damages
18. Mrs.
Mabwe
further took umbrage at the appellants suitability to claim damages
as prayed for in para 2(b) of the relief sought above. She contended
that section 8 of the Insolvency Act does not permit anyone other
than a debtor to claim damages. The section provides as follows:
“8.
Abuse of Court's procedures or malicious or vexatious application
for liquidation
1.
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.”
(My emphasis).
19. Section
8 of the Insolvency Act
is
couched in clear and unambiguous language. It specifically mentions a
debtor as the only person who may prove his or her damages. The
non-mention of any other person who may be entitled to prove their
damages excludes those not mentioned in the section. This is embodied
in maxim “expressio
unius est exclusio alterius”.
What this means is that it is only a debtor who is allowed to prove
his or her damages and not any other person who is not a debtor.
20. It
is common cause that the appellants are not debtors of the second
respondent but its directors. It is clear that section 8 of the
Insolvency Act makes no provision for directors of a company to prove
damages on behalf of anyone. The appellants are therefore non-suited
and lack the necessary locus
standi
to prove or claim any damages in terms of section 8 of the Insolvency
Act.
21.
That finding of fact leaves the appellants with no leg to stand on
with the result that the appeal cannot succeed. The fact that the
appellants lack the necessary locus
standi
to claim the relief that they seek in this respect disposes of the
appellants second issue in favour of the respondents.
DISPOSITION
22.
Above all, the court a
quo
exercised its discretion in considering the order of final
liquidation of the second respondent. It placed reliance on Hull
v Turf Mines Ltd
1906 TS 68 at 75, and many others. I did not hear the appellants
challenging the validity of the exercise of such discretion. That
being the case, no fault can be laid at the court
a
quo's
door.
23. Costs
follow the result.
24.
It is accordingly ordered that the appeal be and is hereby dismissed
with costs.
CHIWESHE
JA:
I agree
CHATUKUTA
JA:
I agree
Moyo
& Jera,
the
appellants legal practitioners
Chatsanga
& Associates,
the
1st
respondent's legal practitioners
