Coolland Trading (Pvt) Ltd and Others v Phillip Ndlovu N.O.

On 27 March 2015, Phillip Ndlovu, acting as provisional liquidator of Tradepower (Pvt) Ltd, Chitrins Garage (Pvt) Ltd, Ralema Investments (Pvt) Ltd and RST Investments (Pvt) Ltd, applied for and was granted a chamber application in terms of section 221(2) of the Companies Act [Chapter 24:03]. The application sought leave to sue various parties, but the applicants (Coolland Trading, Hawkflight Enterprises, Mncane Ncube, and Ntombizanele Ngwenya) were not cited in that application and were not served with the application. When the applicants became aware of the court order, they realized it adversely affected them despite being granted without any of them being served or heard. They then filed the present chamber application seeking to be cited as parties in the original application so they could exercise their rights to be heard.

• Whether a court order granting a provisional liquidator leave to sue can be validly obtained without citing or serving parties who will be affected by such order
• Whether the applicants were entitled to be heard before such an order was granted against them
• Whether the order violated the rules of natural justice, particularly the audi alteram partem rule
• Whether the applicants should be allowed to be cited as parties to oppose the application for leave to sue on the basis that it may be frivolous and vexatious

The court granted the application in chambers, allowing the applicants to be cited as parties in the original application and to exercise their rights to be heard regarding the provisional liquidator's application for leave to sue.

A court order granting a provisional liquidator leave to sue under section 221(2) of the Companies Act that affects specific parties cannot be validly obtained without citing and serving those parties. Such an order, if granted without affording the affected parties the right to be heard, violates the audi alteram partem rule and the rules of natural justice. Parties potentially affected by such orders are entitled to be heard and to oppose the application on grounds including that the proposed suit is frivolous and vexatious.

The court observed that allowing a provisional liquidator to obtain leave to sue without citing affected parties would permit the initiation of suits, including frivolous and vexatious ones, while the liquidator enjoys full protection in that capacity, which would be an unjust outcome.

This case is significant in Zimbabwean jurisprudence as it reinforces the fundamental principle of natural justice that parties who will be affected by a court order must be given an opportunity to be heard (audi alteram partem) before such order is granted. It establishes that even in applications by provisional liquidators for leave to sue under section 221(2) of the Companies Act, parties who will be directly affected by such orders must be cited and served, and cannot be bound by orders made in their absence. The case protects the rights of potential defendants to oppose applications for leave to sue on grounds such as the suit being frivolous and vexatious, ensuring that the protection afforded to liquidators does not override fundamental procedural fairness rights.