Minister of Higher and Tertiary Education Science and Technology Development v Midsec (Pvt) Ltd

### Preamble
1
HH 126-18
HC 9656/17
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MINISTER OF HIGHER AND TERTIARY EDUCATION

SCIENCE AND TECHNOLOGY DEVELOPMENT

versus

MIDSEC (PVT) LTD

HIGH COURT OF ZIMBABWE

MUNANGATI-MANONGWA J

HARARE, 13 & 15 February 2018

Opposed matter

Ms G Wagoneka, for the applicant

T Gombiro, for the respondent

MUNANGATI-MANONGWA J: The applicant applied for leave to continue with proceedings under case number HC 242/17 (ref case No. HC 12080/16) against the respondent who is under judicial management for the recovery of $42 624.86. The applicant is one of about 25 creditors who are owed money by the respondent.

It is common cause that the respondent was placed under final judicial management by the order of this court on 10 September 2017. Hardly a month thereafter the applicant herein made this court application. The respondent is not denying owing the amount and it indicates that the applicant has been attending creditors meetings. The respondent argued that the applicant had not shown that the judicial manager is failing to meet the process of judicial management. It is further argued on behalf of the respondent that the applicant has failed to show that the interests of justice favoured the invocation of the judicial discretion by the court. The judicial manager could not have been expected to turn around the company within 5 months of the final order for judicial management.

The applicant’s legal practitioner Ms Wagoneka relying on the case of Bindura University of Science Education v Tetrad Investment Bank Limited (under Provisional Judicial Management) and Anor HH 319/17 submitted that the respondent had failed to satisfy the court viz the aspects pertaining to the impact on the company of the granting of the leave, whether other creditors would be prejudiced, the issue of balancing the interests of justice and that the objectives of judicial management would be frustrated.

The granting of leave to proceed against a company under judicial management lies in the discretion of the court. Sight should not be lost that the reason for the requirement that leave of the court be obtained first, is for the protection of the company from a multiplicity of legal proceedings which can be both expensive, time consuming and have devastating consequences to a company which is being nursed to financial recovery. The circumstances of each case determines whether in the exercise of its discretion, the court will grant such leave.

The University of Bindura case cited supra is distinctive from this case. The University is a small entity as compared to the applicant herein. The funds owed to the University were a deposit to Tetrad bank and not an obligation or a debt. The amount obviously had an impact on the operations of the University. The situation herein is different. The funds the applicant seeks emanate out of statutory obligations due by the respondent. Without undermining the need for adherence to statutory obligations, the delay in payment of the amount of $43 000 will not seriously impact upon the applicant a much larger institution. Further, to expect a company which has hardly had an opportunity to recover and has just been under final judicial management for 5 months (as at date of hearing) to start honouring liabilities given the economic dry spell would be exerting upon a company unnecessarily. In contrast, Tetrad Bank had been under judicial management for more than two (2) years in which period marked development or improvement could have been noted.

A judicial manager requires room to work on the company, working out its potential and creating strategies on how best to quickly nurse it to financial health without distractions from hovering creditors. For that reason, the court will always proceed with caution when faced with such applications and will judiciously exercise the discretion bestowed upon it before granting leave.

The respondent company has debts exceeding $4 000 000-00 and granting leave at this early stage will not only open floodgates as the rest of creditors will seek leave, but will totally kill the chances of recovery, leading to the demise of the company. It is the court’s considered view that the move by applicant to apply for leave hardly one month after the granting of an order for final judicial management was haste and ill-conceived. Granting the relief sought would not be in the interests of justice and will frustrate the very objectives of judicial management.	Accordingly the application is dismissed with costs.

Dube Badza Nzarayapenga and Partners, applicant’s legal practitioners

Mberi Chimwamurombe legal practice, respondent’s legal practitioners