Stanford Nyoni and 380 Others v Bopse Land Developers (Pvt) Ltd (In Liquidation) and Others

The 1st Respondent (Bopse Land Developers) acquired land from the 4th Respondent (City of Bulawayo) on 2 December 2002 for development. The land was surveyed into 381 residential stands. The 1st Respondent was contracted to develop the area but ran into financial difficulties and failed to complete the development. The Applicant and 380 other individuals entered into agreements of sale with the 1st Respondent to purchase the surveyed stands. The purchasers paid fees including legal fees for transfer and received written confirmation that they had satisfied all requirements for transfer. They were issued development permits and by April 2012 were at different stages of constructing houses on the stands. The 4th Respondent had begun processing transfer documents. In May 2012, the 1st Respondent went into voluntary liquidation. The liquidator (2nd Respondent) sought to include the 381 stands as assets in the liquidation process and scheduled a creditors' meeting. The Applicant and 380 others filed an urgent application seeking to prevent the inclusion of the stands in the liquidation process.

• Whether Stanford Nyoni had locus standi to bring the application on behalf of the 380 other stand-holders
• Whether the order sought against the Assistant Master of the High Court was competent at law
• Whether the liquidator was entitled to include the 381 residential stands in the liquidation process
• Whether the requirements for granting a final interdict were satisfied

The Provisional Order granted on 17 November 2011 was confirmed. The 2nd Respondent (acting as Liquidator) was debarred from including the Applicant and 380 stand-holders of Pumula South Housing Scheme in creditors' meetings. The Assistant Master was compelled not to entertain any future creditors' meeting involving the Applicant and 380 stand-holders. The 4th Respondent (City of Bulawayo) was ordered to transfer immediately the interests, rights and title of the Applicant and the 380 others into their names. The 1st and 2nd Respondents were ordered to pay costs of the application on an attorney and client scale.

A liquidator in insolvency proceedings may only take into possession or control assets and property to which the company is entitled at the commencement of liquidation. Where a company has entered into valid agreements of sale, received payment, relinquished rights, title and interest in property, and allowed purchasers to take possession and make improvements, such property cannot be included in the liquidation process as it no longer belongs to the company. The requirements for granting a final interdict (as set out in Setlogelo v Setlogelo) are: (a) a clear or definite right established on a balance of probabilities; (b) an injury actually committed or reasonably apprehended; and (c) the absence of similar protection by any other remedy. A person may have locus standi to institute proceedings on behalf of others where clear proof exists of authorization, even if not in writing, and such determination must be made on the facts of each case.

The court observed that the liquidator's actions in seeking to include stands that had been sold and on which houses were being constructed had no other explanation than a desire to cause real prejudice to the applicants. The court noted that it is enjoined to afford protection to innocent purchasers of land. The court also commented that first and second respondents should not be allowed to realize and liquidate property that is no longer theirs, and it was wrong for them to stop the City of Bulawayo from concluding the transfer process which had already commenced.

This case is significant in Zimbabwean insolvency law as it clarifies the limits of a liquidator's powers in relation to assets that have been disposed of prior to liquidation. It establishes that a liquidator cannot include in the liquidation process property to which the company has no legal entitlement at the commencement of liquidation, particularly where agreements of sale have been concluded and purchasers have taken possession and made improvements. The case also demonstrates the court's willingness to protect innocent purchasers of land from attempts by liquidators to claw back property that has been legitimately sold. The judgment confirms the application of section 222(3) of the Companies Act which allows aggrieved persons to apply to court to challenge acts or decisions of liquidators. The case also provides guidance on locus standi requirements where one person seeks to represent a group with common interests, confirming that authority need not always be in writing if clearly established by other evidence.