Member Chipamba and Linda Dewa v Lees Inn Hotel (Private) Limited (under final liquidation)

The first and second applicants were shareholders and directors of Lees Inn Hotel (Private) Limited, which company was under final liquidation. The applicants initially instructed legal proceedings to place the respondent under provisional judicial management, and Mr Winsley Militala was appointed provisional judicial manager on 18 December 2013. The applicants subsequently had a falling out with the judicial manager and their original lawyer, Mr G N Mlotshwa. On 16 April 2014, an order for provisional liquidation was granted with a return date set for 30 July 2014. No official notice was served on the applicants. Notices were placed in the Herald and Government Gazette on 9 July but only appeared on 18 July 2014, giving interested parties only 5 working days (until 25 July 2014) to file opposing papers. The applicants filed their opposing papers on 28 July 2014, three days late. On 30 July 2014, they attended court but were barred. The court granted a final order placing the respondent under final liquidation. The applicants then filed an application for rescission of that judgment.

• Whether the applicants as shareholders and directors were entitled to notice of the liquidation application under section 306(m) of the Companies Act
• Whether the applicants were properly served with the provisional order as required by Rule 247(3)(c) of the High Court Rules 1971
• Whether the dies inducae (time period for filing opposing papers) created by the publication rather than the court order was valid
• Whether the 5-day period given for filing opposition was adequate
• Whether the applicants were in wilful default justifying the bar
• Whether the court had jurisdiction to rescind the final liquidation order

1. The application for rescission of judgment was granted. 2. The final order for liquidation of Lees Inn Hotel (Pvt) Ltd (under provisional liquidation) was set aside. 3. Each party was ordered to bear its own costs.

The binding legal principles established are: (1) Shareholders who are subscribers to a company's memorandum are 'members' as defined in section 30(1) of the Companies Act and are entitled to 14 days' notice under section 306(m) in winding-up proceedings; failure to provide such notice makes the process fatally irregular. (2) Rule 247(3)(c) of the High Court Rules 1971 requires service of provisional orders relating to winding up of a company on interested parties whose interests are known, and failure to serve constitutes a procedural defect. (3) A dies inducae (time limit for filing opposing papers) must be specified in the court order itself and cannot be validly created only through publication notices. (4) Where there is no proper dies inducae in the order and no compliance with service requirements under Rule 247(3)(c), any purported bar for late filing is a nullity and affected parties should have been heard. (5) A final liquidation order will be set aside where procedural irregularities are such that, had the court been aware of them, it would not have granted the order.

The court made obiter observations that: (1) The standard period for filing opposition papers in court applications or provisional orders is 10 days, not the 5 days given in this case. (2) While it is the prerogative of the judicial manager to apply for cancellation of judicial management and seek a winding-up order under section 306(m), this must be done procedurally with relevant notices and due compliance with the rules. (3) The court noted it was unnecessary to deal with other grounds raised in the papers which counsel correctly did not address as they were not pertinent to the determination. (4) The court observed the unusual circumstance where the shareholders who initiated judicial management proceedings were subsequently marginalized when the judicial manager 'ran away with the process', making service on them even more appropriate. The court also acknowledged the principle from INRE: Stand Five Four Nought (Pvt) Ltd that where allegations of barment arise from failure to file within the dies inducae and no Form 29D is used, one should refer to the order to determine whether barment applies.

This case is significant in Zimbabwean company law and civil procedure for establishing important principles regarding procedural fairness in liquidation proceedings. It reinforces that shareholders, as members of a company under section 30(1) of the Companies Act, have substantive rights to notice under section 306(m) in winding-up proceedings. The judgment emphasizes strict compliance with service requirements under Rule 247(3)(c) of the High Court Rules, particularly where the interests of parties are known. It also establishes that a dies inducae must emanate from the court order itself and cannot be arbitrarily created through publication notices. The case demonstrates the courts' commitment to procedural fairness even in company liquidation matters and provides important guidance on when default judgments in liquidation proceedings will be set aside for procedural irregularities.