Macquire Farming (Pvt) Ltd v Twairob Investments (Pvt) Ltd (Under Provisional Judicial Management)

The applicant sought a final judicial management order in respect of the respondent company, which had been placed under provisional judicial management by a court order on 17 March 2015. Winsley Evans Militala of Petwin Executor and Trust Company Limited was appointed as provisional judicial manager. On 4 June 2018, the applicant and provisional judicial manager signed a consent order seeking to place the respondent under final judicial management. However, interested parties, namely Benard Mahara Mutanga (on his own behalf and on behalf of Takesure Magoronga and Mai Kai Real Estate Development Trust), had filed opposition on 8 September 2015. The underlying issue involved shareholder disputes pertaining to ownership and management of the company between the Macquire brothers and Mutanga. The applicant had served the provisional order and urgent application at Makomo Farm, Crowhill Road, Borrowdale Harare, but there were issues regarding proper service given the ownership wrangle. The matter was set down for hearing without compliance with section 305(1) of the Companies Act.

• Whether interested parties (Mutanga and others) had locus standi to oppose confirmation of the provisional judicial management order
• Whether the opposition was filed out of time
• Whether service of the provisional order and application was properly effected
• Whether the requirements of section 305(1) of the Companies Act [Chapter 24:03] had been complied with before seeking confirmation of the provisional judicial management order
• Whether a provisional judicial management order granted to manage shareholder disputes rather than enable the company to pay debts and become a successful concern should be confirmed

1. The provisional judicial management order is extended to 9 August 2018. 2. The applicant is directed to ensure compliance with the provisions of s305(1) of the Companies Act [Chapter 24:03]. 3. The costs shall be in the cause.

1. In judicial management proceedings, all interested parties are entitled to appear before court on the return date and oppose confirmation of a provisional order, in accordance with rule 247(3) of the High Court Rules, 1971. 2. Before confirming a provisional judicial management order, the court must have before it full compliance with section 305(1) of the Companies Act [Chapter 24:03], including the opinion and wishes of creditors and members, the provisional judicial manager's report, information about creditors who did not prove claims, the Master's report, and the Registrar's report. 3. A court cannot determine whether to confirm or discharge a provisional judicial management order in the absence of the statutory reports and documents required by section 305(1). 4. Where an applicant is aware of interested parties with a stake in a company sought to be placed under judicial management (particularly in cases involving shareholder disputes), the application and provisional order should be directed to such interested parties.

The court observed that provisional judicial management orders may be granted under section 300(a)(iii) of the Companies Act if it would be just and equitable to do so, even where the purpose is to manage shareholder disputes rather than strictly to enable the company to pay its debts. However, the court noted that the authority in Feigenbaum and Another v Germanis N O & Others 1998 (1) ZLR 286 (H) suggests that judicial management orders should be sought for statutorily prescribed purposes (to enable the company to pay debts and become a successful concern) rather than to manage shareholding disputes. The court indicated it could not determine the propriety of the judicial management order without the required section 305(1) compliance. The court also noted that it was unfortunate that the provisional order did not specify that it had to be served on Mutanga and other interested parties, which created challenges with service.

This case is significant in Zimbabwean corporate law jurisprudence as it affirms the procedural requirements for judicial management proceedings, particularly the mandatory compliance with section 305(1) of the Companies Act before a provisional judicial management order can be confirmed. It emphasizes that interested parties have a right to oppose confirmation of provisional orders even where there may be technical issues with service, and that courts must ensure all statutory reports are filed before determining whether to grant final judicial management orders. The case also clarifies that the interests of all parties involved in shareholder disputes must be recognized and protected in judicial management proceedings.