PORTNEX INTERNATIONAL (PROPRIETARY) LIMITED v ZIMASCO (PRIVATE) LIMITED and ANOTHER (194 of 2024) [2024] ZWHHC 194 (28 May 2024)

PORTNEX INTERNATIONAL (PROPRIETARY) LIMITED versus HH 194-24 HC 5959/21 ZIMASCO (PRIVATE) LIMITED and C H LUCAS N. O. HIGH COURT OF ZIMBABWE CHINAMORA J HARARE, 28 May 2024 Opposed court application Adv T Mpofu, for the applicant Adv D Tivadar, for the respondent CHINAMORA J: The present application is for the setting aside the decision of the second respondent dated the 4th of October 2021. The applicant brought this application in terms of Article 16 (3) of the Arbitration Act [Chapter 7:15] (hereinafter referred to as ‘the Act’). In the alternative, the applicant seeks that the award be set aside on the basis that it is contrary to the public policy of this country. The applicant’s case is premised on the following facts. A dispute arose between the Applicant and the first respondent which was referred to arbitration. The parties filed their relevant papers these include the statement of claim, statement of defence together with a counter-claim and a rely thereto. Before the hearing, applicant raise an objection in limine to the effect that the claim by the first respondent was irregular on the basis that a special dispensation was not obtained before the claim was lodged since applicant was under business rescue proceedings in South Africa. The parties presented their arguments on 27 September 2021 and the second respondent delivered his award dismissing the objection in limine. It is this award that the applicant seeks to have set aside in terms of Article 16 (3) of the Act. HH 194-24 HC 5959/21 I make the observation that the applicant contents that the partial award by the second respondent is outrageous as it goes to the root of the jurisdiction of the second respondent. The applicant argues that it was under business rescue and, I note that this was pleaded by the first respondent itself. That being the case, the question of capacity to be sued arose from the first respondent’s own pleaded case. According to the applicant, section 133 of the South African Companies Act 71 of 2018 makes it clear that an entity under business rescue cannot be sued in the absence of a special dispensation. The applicant also argues that, in terms of section 126 of the Insolvency Act [Chapter 6:07], a special dispensation is also required before proceedings can be brought against an entity under corporate rescue proceedings in Zimbabwe. Consequently, on the basis of both the law of Zimbabwe and that of South Africa, the proceedings against applicant are irregular. It has been further argued by the applicant that the issue raised before the second respondent and determined by him is a jurisdictional question. The question before him was whether the current status of the applicant took away the second respondent’s jurisdiction to hear a cause brought against it in the absence of the business rescue practitioner’s consent or the court’s leave. In the alternative, on the basis of the above, the applicant contends that the award is contrary to public policy and must be vacated. The first respondent opposed the application. In essence the first respondent raised several preliminary points to the effect that applicant must provide security for costs before it can be heard by this court. It was also asserted that the applicant did not disclose relevant papers, and that the application is contrary to statute, as well as that the draft order does not comply with the Model Law. In addition, the submission was that the applicant’s alternative basis conflicts with the applicant’s previous position adopted before this Honourable Court, if one considers the affidavit of Juanito Martin Damon. I now in turn deal with the preliminary points raised by the first respondent as follows. (a) Applicant is to provide security for costs It is first respondent’s contention that prior to proceeding with the present application the applicant was to provide security for costs. According to the first respondent this is because the applicant is a peregrinus, which is insolvent with no assets in Zimbabwe. The applicant did not file an answering affidavit in order to respond to this preliminary point or any other preliminary HH 194-24 HC 5959/21 points raised by the applicant. It appears from the record that the question of security for costs was referred to the Registrar of the High Court for the determination of costs. It is not clear from the record whether these costs were paid or not. In fact, no evidence has been availed to this court that the costs were determined by the Registrar of this court and paid by the applicant. As a result, I cannot ignore this preliminary point for the following reasons. It is common cause that applicant, as was indicated by first respondent and not denied, is a peregrinus. It is settled law in our jurisdiction that a peregrinus should provide security for costs before instituting proceedings in our courts. The purpose of this rule has been stated by MATHONSI J in Redstone Mining Corp (Pvt) Ltd and Ors v Diaoil Group (Zim) Zim Ltd and Ors HH 438-15 as follows: “The object of the rule relating to provision of security is to ensure that an incola will not suffer loss if he is awarded costs of the proceedings. It protects the interests of the incola …” In conclusion, I find that there is merit in the preliminary point raised by the first respondent, and no proof of payment of security for costs has been provided, and I am inclined to uphold it. As I have decided to dispose of this matter on the basis of the preliminary point on failure to pay security for costs, it is unnecessary for me to deal with the rest of the points in limine raised by the first respondent. In the result, I have no hesitation in upholding the point in limine on absence of security for costs, and striking off the application from the roll with costs. CHINAMORA J:…………………………………… Gill, Godlonton & Gerrans, applicant’s legal practitioners Madzima, Chidyausiku, Museta, first respondent’s legal practitioners