TINASHE KAIRIZA AN appeal lodged at the Supreme Court by Justice, Legal and Parliamentary Affairs minister Ziyambi Ziyambi seeking approval to impose a Reconstruction Order on coal miner Hwange Colliery Company Limited (HCCL) has been dismissed with costs.
Prior to the latest judgment by the Supreme Court, under reference number SC67/22, Ziyambi had initially filed an application at the High Court on February 12, 2020, seeking confirmation of the Reconstruction Order. The High Court dismissed Ziyambi’s application with costs, prompting him to appeal to the Supreme Court.
The impact of the Reconstruction Order, which was announced in an Extraordinary Gazette on October 31, 2018, resulted in the dissolution of the enterprise’s board.
The government holds a 52% stake in the entity, whose debt obligations stood at US$333 million owed to various creditors as at December 31, 2016.
Following the announcement of the Reconstruction Order four years ago, Ziyambi appointed Bekithemba Moyo as the company’s administrator, whose responsibility was to ostensibly steer the loss-making coal miner back to profitability under the reconstruction exercise.
Great Dyke Investments chief operating officer Munashe Shava and Mutsa Remba, former managing director at Dube, Manikai and Hwacha Legal Practitioners, served as Moyo’s assistants.
Relating to the latest Supreme Court ruling handed down by Deputy Chief Justice Elizabeth Gwaunza, she struck off the roll Ziyambi’s appeal application with costs, highlighting that the minister acted “contrary” to the relevant statute when he placed the company under reconstruction.
Justices Samuel Kudya and Nicholas Mathonsi also sat on the Supreme Court bench.
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The judgment reads: “The order which the minister issued 17 months into the scheme of arrangement no doubt violates Section 2(a) of the Act. It is trite that an order which is issued in direct violation of the law stands on no leg. It is a nullity.
“Similarly, an application which is premised on a nullity cannot stand. Nothing begets nothing … It is by parity of reasoning, evident that the application which the minister made to confirm a nullity cannot stand. It will simply collapse.”
In passing the judgment, the Supreme Court judges emphasised that Ziyambi’s appeal application was bound to crumble “on the basis that the foundation upon which it is predicated does not exist. The court, in other words, cannot confirm a nothing”.
Ziyambi, who is cited as the appellant, was represented by Thembinkosi Magwaliba while the respondents, Juliana Muswe, Ntombizodwa Masuku, Edward Tome and Messina Investments were represented by Thabani Mpofu.
Muswe, Masuku and Tome are board members of the embattled company which is listed on the London and Johannesburg bourses.
Businessman Nicholas van Hoogstraten is also one of HCCL’s major shareholders through Messina Investments.
Andrew Lawson, a chartered accountant, was the scheme chairperson and a trustee appointed by the scheme creditors to represent their collective interests is cited as the fourth respondent in the court case.
Prior to Ziyambi’s moves to impose a Reconstruction Order on HCCL, the company’s shareholders and creditors had agreed on a Scheme of Arrangement, also known as “the scheme” whose sole purpose was to raise fresh capital, restructure management and rescheduling and settling debt. The scheme was led by Lawson.
As part of the court case proceedings, culminating in the judgment, the judges weighed Ziyambi’s submission premised on the view that placing HCCL under reconstruction, in light of the operational challenges it was facing would save the company from total collapse.
Ziyambi’s legal counsel had argued: “The scheme had failed to turn around the fortunes of Hwange due to mismanagement for which the directors were ultimately responsible. He was impelled by the exigencies of the situation to act with speed to protect the public investment and a national strategic asset.
“Being the largest shareholder and creditor, government of Zimbabwe could not countenance the delays associated with the legal process for the dissolution of the scheme that was specified in the trust deed to which it was a party.”
But, the respondents countered Ziyambi’s averments, noting that his unilateral decision to place HCCL under reconstruction was illegal and meant to dismantle the company’s legally constituted board, thereby prejudicing its shareholders.
“The respondents took several preliminary points a quo, against the confirmation of the Reconstruction Order. The directors and the fifth respondent contended that Part II of the Act violated the provisions of Section 56(1) (the equality and right to equal protection clause), 68(1) (the right to administrative justice clause), 69(1) (right to a fair hearing before an independent and impartial tribunal clause) and 71(1) (the right to the protection of private property) of the Constitution of Zimbabwe,” reads the judgment.
“They contended that the power reposed in government of Zimbabwe by the impugned provisions to act as both a prosecutor and a judge in its own cause and to unilaterally circumvent the audi alteram partem rule was inconsistent with these constitutional provisions.
“They further contended that the application did not disclose a cause of action in the face of an extant court order sanctioning the scheme.”
The aggrieved respondents, who opposed Ziyambi’s plans to place HCCL under judicial management, underscored that the minister was abusing his authority by passing orders which only favoured a single shareholder being government.
The judgment reads: “They (respondents) also contended that the invocation of the Act in favour of one shareholder constituted an abuse of authority.
“Finally, they argued that the appellant’s failure to make the material disclosure of the mala fides the minister harboured against them arising from some alleged impropriety he committed during his chairmanship of the board between 13 May 2016 and 8 December 2017 (when he assumed ministerial office), rendered the RO a nullity.”
After assessing the submissions by the contending parties, the Supreme Court Justices dismissed Ziyambi’s application, citing that it lacked merit.
“Accordingly, the following order will ensue: The appeal be and is hereby dismissed. The appellant shall pay the first to fifth respondents’ costs on the ordinary scale. The order of the court a quo is set aside and substituted with the following: The application is struck off the roll with costs,” the judgment reads.
At its prime, HCCL used to consistently supply coal to the Zimbabwe Power Company (ZPC) for the generation of 400MW of electricity and to commerce, industry and agriculture.
Between 2013 and 2016, due to a host of reasons attributable to antiquated equipment and undercapitalisation, the company suffered endemic losses that peaked at US$100 million in 2015 before tapering off to US$87 million in 2016.