Conarch Properties (Private) Limited v Munashe Shava N.O. (In his official capacity as the Administrator of Hwange Colliery Company Limited)

Conarch Properties (the applicant) and Hwange Colliery Company Limited (HCCL), a company under administration, engaged in negotiations from 2023 regarding the proposed redevelopment of HCCL's coal house in Harare under a Build, Operate and Transfer (BOT) model. The applicant submitted assessment proposals and incurred expenses for preliminary work including building evaluations, structural reports and feasibility studies. HCCL's Managing Director initially engaged with the proposals but later decided not to proceed with the BOT model, stating it did not align with their vision. No contract was ever concluded between the parties. The applicant claimed it incurred expenses of US$366,349.79 and sought to sue HCCL for damages for breach of pre-contractual duty and unjust enrichment. On 3 April 2025, the applicant sought leave from the respondent (administrator of HCCL) to institute proceedings against HCCL in terms of section 6(b) of the Reconstruction of State-Indebted Insolvent Companies Act. On 22 April 2025, the respondent refused to grant leave, stating that the claim for unjust enrichment and breach of pre-contractual duty was not substantiated and that there was no reasonable basis for the litigation to proceed. The applicant then approached the High Court on 30 July 2025 seeking judicial review of the administrator's decision.

• Whether section 6(b) of the Reconstruction of State-Indebted Insolvent Companies Act is unconstitutional as it violates the right of access to courts under section 69(3) of the Constitution
• Whether the administrator's decision to refuse leave to sue was unlawful, grossly unreasonable or procedurally unfair in terms of section 3(1) of the Administrative Justice Act
• What test should an administrator apply when deciding whether to grant leave to sue a company under administration
• Whether pre-contractual damages constitute a valid cause of action in Zimbabwean law
• Whether the applicant established a bona fide claim warranting leave to sue

The application for judicial review was dismissed with costs on the ordinary scale.

An administrator of a company under reconstruction, when considering an application for leave to sue under section 6(b) of the Reconstruction of State-Indebted Insolvent Companies Act, must assess whether the proposed claim is bona fide - that is, whether it is founded on a valid cause of action and is arguable, triable or carries prospects of success. The administrator need not determine the merits but must act lawfully, reasonably and fairly in accordance with section 3(1) of the Administrative Justice Act. A court reviewing such a decision will only interfere if the decision was unlawful, grossly unreasonable or procedurally unfair. Pre-contractual damages do not constitute a recognized cause of action in Zimbabwean law. Where no contract has been concluded between parties, claims for expenses incurred during preliminary negotiations cannot succeed absent a valid legal basis in contract, delict, statute or properly pleaded unjust enrichment. The doctrine of legitimate expectation creates procedural rights to be heard, not substantive rights to damages. Section 6(b) of the Reconstruction Act is constitutional and serves as a legitimate gatekeeping mechanism to protect financially distressed companies from frivolous litigation, and does not violate the right of access to courts under section 69(3) of the Constitution.

The court observed that while it has a duty under section 46(3) of the Constitution to develop the common law in the interests of justice, this duty must be exercised in appropriate cases. The court noted that counsel for the applicant relied on English law (Cobbe v Yeoman's Row Management Ltd [2008] UKHL 55) where pre-contractual losses have been recognized, but emphasized that English law is not part of Zimbabwean law and there must be a basis in Roman-Dutch law for any cause of action. The court remarked that the administrator may have gone further than necessary in his reasoning when refusing leave, but this did not constitute an irregular exercise of discretion. The court also observed that costs on a legal practitioner and client scale were not warranted merely because an applicant failed to meet the threshold for court interference with an administrative decision, as courts should not discourage litigants from approaching courts with genuine cases. The court noted that all statutes are presumed constitutional and the Legislature is presumed to have acted within constitutional parameters.

This case clarifies the standard that administrators of companies under reconstruction must apply when considering applications for leave to sue under section 6(b) of the Reconstruction of State-Indebted Insolvent Companies Act. It confirms that the administrator must assess whether there is a bona fide claim founded on a valid cause of action with prospects of success, without determining the merits. The case also confirms the constitutional validity of section 6(b) as a legitimate limitation on the right of access to courts. Importantly, it reaffirms that pre-contractual damages are not recognized as a valid cause of action in Zimbabwean law, and that parties who engage in preliminary negotiations without concluding a contract cannot claim compensation for expenses incurred during those negotiations absent a valid legal basis such as contract, delict, statute or unjust enrichment properly pleaded. The judgment emphasizes that parties seeking leave to sue must present substantiated claims with proper documentation, not skeleton applications. It also clarifies that the doctrine of legitimate expectation creates only procedural rights (to be heard), not substantive rights to damages.