Trinipack Investments obtained a loan from CBZ Bank (first respondent). Medworth Properties (Pvt) Ltd (second respondent) bound itself as surety and co-principal debtor for the loan. When Trinipack Investments failed to service the loan, CBZ Bank obtained judgment against Medworth and the other sureties. Medworth was placed under provisional liquidation on 6 August 2014 under HC 3343/14, which was confirmed on 14 September 2014. Noxon Investments (the applicant), which is the 100% shareholder of Medworth, subsequently filed an application to set aside the liquidation order on the basis that Medworth was not properly served with the winding up application. The application for winding up had been served at 118 Simon Mazorodze Road, Southerton, Harare on 29 April 2014, which was Medworth's registered business address. However, Medworth had already been evicted from these premises, and CBZ Bank was aware of this fact. The applicant approached the court on an urgent basis seeking to stay execution of the winding up order and to stop the sale of Medworth's assets pending the determination of the application to set aside the liquidation order.
The court granted an interim order: 'Pending the finalization of this application and the application for the setting aside of the liquidation order, the sale and leasing out of the 2nd respondent's properties around the country be and is hereby suspended.'
The binding legal principles established are: (1) A 100% shareholder of a company qualifies as a 'contributor' under section 202 of the Companies Act and has sufficient locus standi to challenge a liquidation order affecting the company. (2) Section 227 of the Companies Act allows contributors (among others) to apply to stay or set aside winding up proceedings without first seeking leave of the court; section 213's requirement for leave applies to claims against companies under liquidation, not to challenges to the liquidation order itself. (3) Where a petitioner seeking to wind up a company knows that the company has vacated its registered office or business address, Rule 5(2) of the Companies (Winding Up) Rules, 1972 requires the petitioner to attempt service on the company's officials (directors or secretary) rather than serving process at the vacated address. Service at a known vacated address does not constitute proper service in winding up proceedings. (4) Companies sought to be placed under liquidation must be afforded a meaningful opportunity to be heard before a liquidation order is granted, given the serious consequences of such an order (loss of control over assets, diminution in status). (5) A liquidation order granted on the basis of improper service is 'incurably bad' and liable to be set aside. (6) An interim stay of liquidation proceedings will be granted where the applicant establishes: (a) a prima facie right (an arguable case that the liquidation order should be set aside); (b) irreparable harm if the stay is not granted; (c) balance of convenience in favour of the stay; and (d) no alternative remedy.
The court made several non-binding observations: (1) The court strongly criticized CBZ Bank's conduct in serving the application at an address it knew was vacated and in filing returns relating to a different company (Trinipack Investments), describing this conduct as 'deceitful and wrongful' and stating that CBZ Bank 'hoodwinked the court' and 'snatched at a judgement.' (2) The court observed that 'litigants who are fond of playing hide and seek games with their opponents should not cry foul when the courts come down hard on them and express their displeasure at their conduct.' (3) The court noted that this type of conduct 'attracts censure of the courts and deserves to be penalised with orders of costs at a higher scale' and stated that CBZ Bank 'must count itself fortunate in that it was not penalised for this conduct.' (4) The court observed that the fact that the liquidation order was subsequently advertised in the papers upon confirmation 'is neither here nor there and does not assist the respondents' in curing the defective service. (5) The court noted that there appeared to be a mix-up in the court files, with returns of service for Trinipack Investments (HC 3344/14) being included in the Medworth file, and that 'the court seems to have acted on papers relating to a different company.'
This case is significant in Zimbabwean company law and civil procedure for several reasons: (1) It clarifies that shareholders of a company (as 'contributors' under section 202 of the Companies Act) have locus standi to challenge liquidation orders affecting the company. (2) It establishes that applications under section 227 of the Companies Act to stay or set aside winding up proceedings do not require prior leave of the court, distinguishing such applications from claims against companies under liquidation under section 213. (3) It emphasizes the importance of proper service in winding up proceedings and the court's duty to ensure that companies sought to be placed under liquidation are given a fair opportunity to be heard. (4) It interprets Rule 5(2) of the Companies (Winding Up) Rules, 1972 as requiring petitioners who know that a company has vacated its registered address to attempt service on the company's officials rather than insisting on service at the registered address. (5) It demonstrates the court's willingness to set aside liquidation orders obtained through improper service and condemns deceitful litigation practices. (6) It reaffirms the application of the Setlogelo test for interim interdicts in the context of staying liquidation proceedings.