African Gold (Zimbabwe) (Private) Limited v Modest (Private) Limited

On 30 April 1999, the respondent obtained a provisional winding up order against the appellant company from the High Court at Bulawayo without serving copies of the chamber application and notice of set down on the appellant beforehand. The order was granted pursuant to a certificate of urgency and was returnable on 18 June 1999. The appellant only became aware of the provisional liquidation on 12 May 1999 when the Deputy Sheriff served the documents and the provisional order. On 14 May 1999, the appellant urgently applied to set aside the provisional order on grounds it was improperly obtained. The High Court dismissed the application with costs on a punitive scale, holding that Rule 247(3) of the High Court Rules and Form 29D permitted obtaining a provisional winding up order without affording the company an opportunity to be heard. The respondent's counsel conceded at the Supreme Court that Rule 5(2) of the Companies (Winding Up) Rules had not been complied with.

• Whether a provisional winding up order can be properly obtained without prior service of the application and notice of set down on the respondent company
• Whether compliance with Rule 5(2) of the Companies (Winding Up) Rules is mandatory
• Whether Rule 247(3) of the High Court Rules dispenses with the requirement to serve the company before obtaining a provisional winding up order
• What remedy is available to a company against whom a provisional winding up order has been improperly obtained

1. The appeal was allowed with costs. 2. The High Court order was altered to read: "The application to set aside the provisional order of winding up is allowed with costs." 3. The chamber application for provisional winding up (HC 2028/99) was to be set down for rehearing before the High Court at Bulawayo as a matter of urgency. 4. All affidavits filed in the matter were to be taken into account in determining whether a provisional winding up order should be made.

Compliance with Rule 5(2) of the Companies (Winding Up) Rules, which requires service of the petition and notice of set down upon the respondent company before the hearing of an application for provisional winding up, is mandatory. Rule 247(3) of the High Court Rules does not dispense with this requirement - it only governs the form, content, publication and service of the provisional order once made, and enshrines the company's right to be heard on the return day for confirmation. A respondent company must not be deprived of the opportunity to oppose the grant of a provisional winding up order before it is made, given the serious consequences that flow from such an order including diminution in personal status and removal of control over assets. A provisional winding up order obtained without compliance with mandatory service requirements is improperly obtained and must be set aside.

The court observed that while it may be correct that procedure by way of petition has been discontinued (per s 15(2) of the Interpretation Act), any reference to a petition should be construed as a reference to an application. The court also commented that there was no justification whatsoever for the High Court's imposition of costs on the punitive scale of legal practitioner and client. Gubbay CJ cited with approval the approach in Ex parte Smith NO: In re Dodge Mineral Production Company (Pvt) Ltd 1964 RLR 93 (HC), where Beadle CJ emphasized that depriving a company of the opportunity to be heard violates a fundamental rule of the legal system, and South African authorities on sequestration (Mackay v Cahi 1962 (4) SA 193 (O); Walsh v Kruger 1965 (2) SA 756 (ECD)) which recognize similar principles regarding serious consequences of provisional orders.

This case establishes important procedural safeguards in winding up proceedings in Zimbabwe (and has persuasive value in South African law given the similarity of company law provisions). It clarifies that the right to be heard is fundamental even in urgent winding up applications, and that a company cannot be deprived of the opportunity to oppose a provisional winding up order before it is granted. The judgment distinguishes between rules governing the obtaining of provisional orders (which require prior service) and rules governing the form and publication of such orders once made. It emphasizes the serious consequences of provisional winding up orders - immediate diminution in personal status and removal of control over assets - which justify strict compliance with procedural requirements. The case also demonstrates the court's willingness to remedy procedural irregularities by setting aside improperly obtained orders and directing a proper hearing.