United Methodist Publications and Stationers Foundation Trust (In Liquidation) v Givemore Chingwerewere and Others

The applicant, a department of the United Methodist Church Zimbabwe West Annual Conference, terminated the employment of the first to sixth respondents with immediate effect on 11 December 2012 without paying wages and terminal benefits. The respondents obtained an arbitral award in their favour on 4 July 2013. On 17 January 2014, a default judgment was granted against the applicant. The Deputy Sheriff served the applicant with a notice of judicial attachment on 31 January 2014, with removal scheduled for 5 February 2014. After the arbitral award was granted, the applicant made a chamber application on 11 December 2013 for voluntary liquidation, which was granted. On 6 February 2014 (after the scheduled removal date), the applicant filed an urgent chamber application seeking a stay of execution pending an application for rescission of the default judgment.

• Whether the application was urgent
• Whether the voluntary liquidation application was bona fide or made solely to frustrate execution
• Whether section 213 of the Companies Act applied to prevent execution proceedings against the applicant in liquidation
• Whether the application constituted an abuse of court process
• Whether an unregistered association could be voluntarily wound up under the Companies Act

The application was dismissed with costs on a legal practitioner-client scale.

A decision to place an entity under voluntary liquidation that is made solely for the purpose of frustrating creditors (particularly employees) from executing their judgment, rather than being a bona fide liquidation decision, will not attract the protections of section 213 of the Companies Act preventing execution proceedings. Courts will examine the circumstances and timing of liquidation applications to determine whether they are genuine or constitute an abuse of process. Where a department of a fully functional organisation seeks liquidation only after an adverse arbitral award and judgment, without advising interested parties, this demonstrates a lack of bona fides that will result in the court refusing to grant stay of execution relief.

The court observed that even if the bona fides of the liquidation were accepted, the applicant had failed to demonstrate seriousness by not filing its rescission application and not serving interpleader proceedings on the respondents. This showed lack of sincerity. The court also noted that section 323(b) of the Companies Act provides that no unregistered association shall be wound up under the Act voluntarily, and that the United Methodist Church and the applicant department were essentially one and the same entity, with the church remaining fully functional and capable of meeting its obligations. The court commented that the applicant wished to liquidate only a department while leaving the church and its other departments functioning, which was improper.

This case is significant in Zimbabwean labour and insolvency law as it illustrates that courts will not allow companies (or their departments) to abuse the voluntary liquidation process to frustrate legitimate claims by employees. It establishes that where a decision to place an entity under liquidation is not made bona fide but solely to avoid paying workers their due wages and terminal benefits, the protections afforded by section 213 of the Companies Act will not be extended to shield the entity from execution. The case reinforces the principle that courts will look behind the form of liquidation proceedings to examine their substance and prevent abuse of court process. It also highlights that departments of functional organisations cannot seek liquidation while the parent organisation remains operational as a means to evade obligations to creditors, particularly employees.