Edmore Kasirori & 219 Others v Rio Zim Limited

### Preamble
1
HCC 38/25
HCC 12/25
---------


EDMORE KASIRORI & 219 OTHERS

Versus

RIO ZIM LIMITED

HIGH COURT OF ZIMBABWE 
BACHI MZAWAZI J
Chinhoyi, 22 May & 13 June 2025

Opposed Application:  Ruling On Point of law

K. Masasire, for the Applicants
D. Matawu, for the Respondents

BACHI MZAWAZI J:

Brief Overview

[1] On the 24th of January 2025 an application for the registration of a labour arbitration award was filed by the applicants with this court. The Labour Appeal Court had confirmed the arbitral award against the respondent, the employer. This prompted the current registration procedural step by the applicants, to enable enforcement.  The matter was set down for hearing on the 22nd  of  May 2025. It was opposed.

[2] On the 21st of May 2025, a day before the hearing the respondent generated a letter to the court via the Registrar advising her of the developments that had taken place necessitating the need to remove the matter from the roll. They intimated that an affected party, the Zimbabwe Diamond Allied Workers Union, had filed an application before this court seeking to place the Respondent under corporate rescue in terms of section 124 of the Insolvency Act [Chapter 6:07], under Case Number HC1945/25.   The application for corporate rescue proceedings had been filed with the High Court on the 28th of April 2025.

[3] As such, the gist of the letter was that in view of the fact that, Section 126 of the Insolvency Act [Chapter 6:07] provides for a general moratorium on all legal proceedings against a company undergoing corporate rescue proceedings, it logically follows that the   respondent’s set down matter be removed from the roll.

[4] In essence, what has been raised in the letter dated the 21st of May 2025 is a point of law which elicited a response from the other litigants. As a standard rule of practice, a matter is not removed from the roll, not only, a day before the hearing and certainly not through a letter. The parties had to appear to make proper formal applications and notifications before the court, not only as a matter of courtesy, but again as a standard rule of practice.  Had the respondent decided not to appear on the set down date on the faith of that letter, they ran the risk of a default judgment as the applicant had showed up virtually as set.

Point of law raised

[5] At the commencement of the virtual hearing, the respondent motivated the point they had raised in their letter in greater detail. The applicants opposed the application for removal from the roll on the basis that it was a point in limine that commences the hearing so the hearing had to proceed as scheduled.  The applicants also propagated an argument that the moratorium referred to is only operative if an order for Corporate Rescue has been issued by the court actually placing the respondent on corporate rescue.

[6] In view of the stalemate, I asked the parties to file supplementary heads of argument addressing and limited to only the point of law that had been raised to enable the court to make an informed decision. Directions as to the timeframes upon which each party was to file their heads of argument were also given. They agreed to then appear virtually for the ruling.

[7] The parties reconvened on the 13th of June 2025, digitally. After perusing the parties’ supplementary heads of argument, I asked the applicants whether in view of the respondent’s heads they still insisted with their argument. They maintained their stance outlined above.

Applicants’ Submissions

[8] Of note, Mr, Masasire for the applicants did not even bother to support his arguments with the law. Instead, he argued that the headnote of s124 of the Insolvency Act [Chapter 6:07], says, “Court order to commence corporate rescue proceeding’’. As such, he regurgitates that the moratorium only applies if the Respondents present a court order to the effect that they had been placed under corporate rescue.

[9] According to their interpretation, the mere filing of an application for placement on corporate rescue which can either be denied or confirmed by the court does not commence corporate rescue proceedings. It is the Applicants’ argument that such proceedings only commence when a corporate rescue practitioner has been appointed by an order of this court. In the absence of such a court order, they urge the court to proceed as they were ready to argue on the merits of their application.  The applicants adverted that, in any event, there is no harm nor prejudice in having the arbitral award registered but then the execution process be suspended pending the conclusion of the corporate rescue proceedings.

[10] In the absence of justifying arguments supported by the law, this court will not entertain the applicant’s contention that s125 of the Insolvency Act is in contradiction with s124. I need arguments upon which my decision will then be rested as the crafting of legislative provisions is the domain of the Legislature. All the court is empowered to do is to interpret and give effect to those provisions and as a last resort invalidate them on cogent reasons but on very rare occasions if properly raised.

Respondent’s submissions

[11] The respondent’s retaliatory submission is that, their application to suspend these proceedings is within the confines of the law. In their view, corporate rescue commenced with the application lodged with the High Court Act under case HC1945/25 on the 28th of April 2025 if s125 of the Insolvency Act is to be accorded its clear and unambiguous meaning.   They substantiate that the corporate rescue court application was launched by an affected person as dictated by s124(1). Hence, by virtue of the stated legal framework, there is no need for court order so as to signal commencement of corporate rescue.

[12] It is the respondent’s further submission that their position is not only statutorily sanctioned but also finds expression in the Supreme court decision in Metallion Gold Zimbabwe (Pvt) Ltd &Ors v Shatira Investments (Pvt) Ltd & Ors SC107/21. In the above case the Supreme court settled the position once and for all that, the filing of an application in terms of s124(1) of the Insolvency Act marks the commencement of corporate rescue proceedings.

[13] The second part of the respondent’s argument is also based on s126(1) of the same Act which outlines the moratorium on all legal proceedings pending or to be instigated against the entity upon whose an application for corporate rescue has been commenced.

The Legal Framework

[14] Insolvency Act [Chapter 6:07], section 121 (1)(b) defines,

"corporate rescue" means proceedings to facilitate the rehabilitation of a company that is financially distressed by providing for-

the temporary supervision of the company, and of the management of its affairs, business and property;

and   a temporary moratorium on the rights of claimants against the company or in respect of property in its possession…….

[15] The case of, Metallion Gold Zimbabwe (Pvt)Ltd & Ors v Shatira Investments (Pvt) Ltd &Ors SC107/21, as correctly cited by the respondents articulates that,

“The filing of an application in terms of s124 (1) marks the commencement of corporate rescue proceedings. The legislature’s deliberate wording recognises that rescue is a process, not an event and that need to preserve the distressed entity arises immediately upon the filing of the application.”

[16] Section 124 reads, Court order to commence corporate rescue proceedings

Unless a company has adopted a resolution contemplated in section 122, an affected person may apply to a Court at any time for an order placing the company under supervision and commencing corporate rescue proceedings.

An applicant in terms of subsection (1) must—

(a) serve a copy of the application on the company, the Master and the Registrar of Companies; and

(b) notify each affected person of the application by standard notice.

Each affected person has a right to participate in the hearing of an application in terms of this section-.

[17] An analysis of s124(2) (b) however, gives the impression that these provisions where not complied with. What is clear on the record of proceedings before me is that though the respondents were aware of the legal developments triggered by the application under HC1945/25 on the 28th of April 202, a good four months after the current application has been filed, nothing shows that the applicants were notified of the same in terms of that proviso.

[18] Had they been notified, and had been given an opportunity to participate in the said application as envisaged under s124(3) above, there would not have been any need for the letter applying for the removal of the matter from the roll nor this current hearing and ruling.

[19] Further, the Insolvency Act clearly stipulates the time frames upon which all other interested parties must be informed and the manner of such communication.

[20] Nonetheless this is beside the point. What is important is that by operation of the law, in particular s126(1) all legal proceedings pending, in progress or to be instituted are placed on hold once an application for corporate rescue detailed above has been commenced.

[21] Section 126 provides; General moratorium on legal proceedings against company

(1) During corporate rescue proceedings, no legal proceeding, including enforcement action, against the company, or in relation to any property belonging to the company, or lawfully in its possession, may be commenced or proceeded with in any forum, except—

(a) with the written consent of the practitioner; or

(b) with the leave of the Court and in accordance with any terms the Court considers suitable; or …

[22] Section 125 Duration of corporate rescue proceedings

(1) Corporate rescue proceedings begin when—

(a) the company—

(i) files a resolution to place itself under supervision in terms of section 12(3); or

(ii) applies to the Court for consent to file a resolution in terms of section 122(5)(b);

or

(b) an affected person applies to the Court for an order placing the company under supervision in terms of section 124(1); or

[23] As clearly expressed by the respondents, s125 of the Act provides for two mechanisms upon which corporate rescue proceedings are commenced. One is through the voluntary act of the company through a board resolution via the Master of the High Court route or through an application made by an affected person.

Issues

[24] The sole issue to be considered is whether or not the respondents are justified in their application for the removal of pending litigation on the basis that corporate rescue proceedings have commenced?

Discussion

[25] Discernibly from the above highlighted legal principles, corporate rescue is a legal process. Its purpose has been spelt out in several cases, among them the case of Absa Bank Limited vs Caine No and Another, 2014 ZAF SCH 48, where it was held that;

“ Business rescue proceedings are much more flexible and financially distressed company friendly than judicial management.  The potential business rescue plan provided for in ss 128(1)(b)(iii) has two objects in mind, the primary object being to facilitate the continued existence of the company in a state of solvency and secondly and in the alternative, in the event that the primary objective cannot be achieved or appears not to be viable, to facilitate a better return for the creditors or shareholders of the company than would result from immediate liquidation.”

[26] It suffices to conclude that an affected person may apply to a Court at any time for an order placing the company under supervision and commencing corporate rescue proceedings. The corporate rescue proceedings are deemed to have commenced with effect from the date that the court application is filed. In addition, no legal proceedings may be instituted in any forum against a company that is under corporate rescue. This includes enforcement of orders against the company or any property belonging to it. The moratorium has been described as the cornerstone of corporate rescue proceedings.

[27] The rationale for the moratorium, as amply stressed in Murray N.O & Anor v Firstrand Bank Ltd t/a Wesbank 2015 (3) SA 438 (SCA), is to provide the company under corporate rescue with the much-needed breathing space or a period of respite to enable the company to restructure its affairs. The moratorium allows the practitioner, in conjunction with the creditors and other affected parties, to formulate a business rescue plan designed to achieve the purpose of the whole process.

[28] That being the case, the applicant’s application for removal of the matter from the roll on the basis of the commenced corporate rescue proceedings succeeds. Notwithstanding that the applicants cause has not been destroyed. It is a temporary derailment or set back. As it is of vital importance to note that corporate rescue proceedings are governed by strict timelines which must be adhered to.  Section 125(3) of the Act stipulates that proceedings must be completed within a time period of three months.

[29] The case Koen & Another v Wedgehood Village Golf & Country Estate (Pty) Limited & Others 2012 (2) SA 378 (WCC which is of authoritative persuasion, observed, that,

“It is axiomatic that business rescue proceedings, by their very nature, must be conducted with the maximum possible expedition. In most cases a failure to expeditiously implement rescue measures when a company is in financial distress will lessen or entirely negate the prospect of effective rescue. Legislative recognition of this axiom is reflected in the tight timelines given in terms of the Act for the implementation of business rescue procedures if an order placing a company under supervision for that purpose is granted”.

Disposition

[30] It is my finding that, given the embattled history and the struggle by the employees to enforce their rights against their employer, Mr Masasire’s adamant position is understandable but not supported by the law.

[31] The law is indeed an ass, so they say. The respondent tactfully sought refuge from the law at the detriment of the employee’s rights thereby throwing their legitimate course of action off course. Arguably, yet another delaying tactic by the respondents which caught the applicants off guard. The law is the law nonetheless. It has to be obeyed unless or until it is repealed or overturned.

[32] The actions taken by the respondents to seek removal of the matter from the roll pending the application that has been made by an affected party are within the precincts of the law. Corporate rescue is a creature of statute, a life line thrown to enable a company in financial distress to be rehabilitated in order to make a financial turnaround so as to meet its obligations.

[33] The application by an affected party in terms of the law, the Zimbabwe Diamond Allied Workers Union commenced the corporate rescue proceedings against the respondents. Again, in terms of s126 it will be ultra vires the law to even proceed with these proceedings let alone register the award given the moratorium embodied in that section.

Accordingly,

The application succeeds.

The matter is removed from the roll.

Each party to pay its own costs.

Masasire Law Chambers, Applicant’s legal practitioners

Coghlan, Welsh &Guest, Respondent’s legal practitioners