RIOZIM LIMITED v MINISTER OF DEFENCE AND WAR VETERANS AFFAIRS N.O. and ANOTHER (349 of 2024) [2024] ZWHHC 349 (16 August 2024)

1 HH 349-24 HC 8946/18 RIOZIM LIMITED versus MINISTER OF DEFENCE AND WAR VETERANS AFFAIRS N. O. and MINISTER OF MINES AND MINING DEVELOPMENT HIGH COURT OF ZIMBABWE CHINAMORA J HARARE, 16 August 2024 Opposed Application Adv T Zhuwarara, for the applicant Adv L Uriri, for the respondents CHINAMORA J: The present application seeks to review the first respondent’s decision in declaring the area described in the schedule to Statutory Instrument 145/2018 as a Cantonment Area, acting in terms of section 89 of the Defence Act [Chapter 11:02] (“the Defence Act”). It is applicant’s case that it is the holder of two hundred and sixty mining claims in the Darwendale area of Mashonaland West mining district. Relevant to this matter are claims known as Wendale 42 and Wendale 43 Block which are registered under certificates number 18006BM and 18007BM respectively. The said mines are situated partly on Darwendale South Eclipse farm and New Burnside farms, and Darwendale B Farm. The applicant’s further contention is that sometime around August 2018, the first respondent acting in terms of section 89 of the Defence Act, published a notice, which notice is cited as Defence (Cantonments) Notice 2018 (No.51). The notice stipulated that the area described in schedule shall be cantonment for the purposes of Part IX of the Act. The Notice described the area as follows: “A piece of land in the District of Lomagundi, being Darwendale on the 1:50 000 map Darwendale 1730 DI Edition 2, held at the office of the Surveyor-General, Harare. The land being Darwendale North Farm bounded on the North by Abercon on the east by Greenside ranch, on the south and south west by Darwendale A and Darwendale South and on the north-west by HH 349-24 HC 8946/18 Maryland. A 10 Kilometre radius from and around 3 referenced points in inclusive with grid points 389, 599, 395, 528, 434, 483, 369, 398, 408, 399, 364, 371, 368, 365 and more clearly indicated by a plan which may be inspected free of charge at the office of the Secretary of Defence, Defence House, Kwame Nkrumah Avenue, Harare are situated in Darwendale, Zimbabwe.” The applicant alleges that the area covered in the notice covers all of its two hundred and six mining claims. The applicant avers that the decision of the first respondent to issue the notice was not carried out lawfully, reasonably and in a fair manner. The deficiencies in the decision are understood better after appreciating the background of the relationship between the applicant and the first respondent’s proxies. Sometime in February 2018, a company namely Falcon Resources (Pvt) Ltd wrote a letter to the applicant in which it requested that the applicant grant it a tribute in respect of the applicant’s Chrome Ore claims in Darwendale, curiously indicating that these claims must be ten kilometres away from an area which they described as Darwendale Military Zone. The applicant did not respond to this letter as it did not and does not intend to tribute any of its Chrome Ore claims to the said Falcon Resources (Pvt) Ltd or any other entity. On 30 May 2018, the applicant received information that Falcon Resources (Pvt) Ltd in conjunction with Rusununguko Nkululeko (Pvt) Ltd were mining at its claims namely Wendale 43 Block, Darwendale. The applicant then held several meetings with the said entities with a view of stopping all mining activities at its claims and be compensated for the loss occasioned. Falcon Resources (Pvt) Ltd and Rusununguko Nkululeko (Pvt) Ltd rejected the applicant’s request and indicated that the mining activities were being done in a military cantonment and continued mining. At this juncture, the representation that the area was a military cantonment was not true as the area had not been declared as a military cantonment. This led to the filing of an urgent chamber application under HC 5212/18 which was heard and the interim relief was granted by this court in favour of the applicant. Falcon Resources (Pvt) Ltd and Rusununguko Nkululeko (Pvt) appealed against the decision of this court in HCH 5212/18 under SC 476/18 and the appeal was dismissed. In the application before me, the applicant avers that the declaration by the first respondent of the area covering the applicant’s mining claims as a cantonment area in terms of Statutory Instrument 145 of 2018 is reviewable on the following grounds: HH 349-24 HC 8946/18 1. The first respondent’s decision was exercised in a manner that contravened the duty to act lawfully, reasonably and fairly; 2. The decision was grossly irregular and ultra vires, as the first respondent exercised power for a purpose other than that which the power was conferred; and 3. The first respondent failed to follow the proper procedure as set out in Section 3 of the Administrative Justice Act [Chapter 10:28] and in terms of natural justice. It is on the above facts that the applicant seeks the following order: “IT IS HEREBY ORDERED THAT: 1. The declaration by the first respondent of the area described in the schedule to Statutory Instrument 145 of 2018 as a cantonment area in terms of section 89 of the Defence Act be and is hereby set aside. 2. The first respondent shall pay costs of suit on a legal client and practitioner scale.” The first respondent opposed the matter by essentially raising two preliminary points to the effect that, the applicant did not comply with Order 33 Rule 257 of the now repealed High Court Rules, 1971. In this respect, the first respondent’s contention is that the application is defective for the non-compliance with the peremptory provisions of Order 33, Rule 257 of the High Court Rules which requires that a court application for review ‘shall’ state shortly and clearly, the grounds upon which the applicant seeks to have the proceedings set aside or corrected and the exact relief prayed for. The applicant contends that the notice of application, in particular paragraph (e), addresses this issue. It provides clearly as follows: “The decision by the first Respondent gives rise to a serious miscarriage of justice which cannot be redressed by means other than an application for review. The relief that the applicant seeks is an order setting aside the declaration of the cantonment area made by the first Respondent.” [My own emphasis] In light of the above, it is clear that the preliminary object raised by the first respondent lacks merit and ought to be dismissed. In addition, the first respondent raised another preliminary point to the effect that applicant lacks locus standi. In this regard, the first respondent submits that the applicant has no mining claims in the area covered by Statutory Instrument 145 of 2018, Defence (Cantonments) Notice 2018 (No. 51). The effect of the Statutory Instrument is that it declared a ten-kilometre radius shown on the plan as a restricted area. Furthermore, the first respondent argues that the applicant did not provide any proof of valid and current title of mining claims failing within the restricted area. The first respondent maintains that it has sufficient HH 349-24 HC 8946/18 personal interest in the present matter in that it is the holder of the mining claims which include Wendale 42 Block and Wendale 43 Block whose certificates have been produced. Furthermore, applicant’s rights with respect to Wendale 43 were confirmed by the High Court in HCH5212/18 which decision was upheld by the Supreme Court under SC476/18. It is for this reason that I find that the question of locus standi is res judicata. It has already been entertained in favour of the applicant, not only under HCH 5212/18 but also the Supreme Court technically ruled on the point. Consequently, the preliminary point lacks merit for the said reasons. On the merits, the first respondent argues that the applicant has not brought itself within the jurisdictional requirements of the Administrative Justice Act [Chapter 10:28], which require that the review court should be provided with the reasons for the decision which applicant seeks to have set aside. The first respondent concedes that Statutory Instrument in question was published. However, the first respondent denies that the area described in the statutory instrument covers any of applicant’s purported claims, let alone, the alleged two hundred and six claims. It was contended on behalf of the first respondent that the applicant had no valid title to any mining claims within the covered area as both Wendel 42 and 43 have been re-pegged and now have new registration numbers different from those provided by Applicant. It is first respondent’s argument that the decision to declare the area in dispute as a military cantonment was carried out lawfully, reasonably and in a fair manner. According to the first respondent, the process culminating in SI 145/2018 has been ongoing for a number of years and in fact, prior to SI 145/2018. When the consultations which ultimately informed the decision were made and finalized, security measures had already been put in place to restrict and monitor movements within ten-kilometre of the cantonment. This was many years before Falcon commenced its mining operations on the Great Dyke. In addition, the first respondent avers that the promulgation of SI 145/2018 was in made in the exercise of its prerogative as provided for in terms of section 212 of the Constitution of this Land. Furthermore, first respondent argues that the facts and considerations that have informed the decision to declare military cantonment are governed by the Official Secrets Act [Chapter 11:09] whose provisions preclude the deponent from publicly disclosing details of those considerations. The first respondent also noted that the dispute between Falcon and applicant had no bearing at all, and did not influence first respondent to promulgate SI 145/18. HH 349-24 HC 8946/18 The first respondent filed two supporting affidavits, one by Felix Kanaveti a Senior Officer in the Zimbabwe Defence Forces with the rank of Major holding the title of Senior Technical Ammunition Maintenance Office at the Ordinance Directorate. In essence he noted that mining operations should not be co-located with military ammunition depots on the basis that: (a) Both operations involve the use and or storage of explosives and incendiary materials. (b) An explosion at one location can cause sympathetic detonation of ammunition explosives at another location in the vicinity. (c) Operations which use or store explosives are recommended to be at least beyond ten- kilometres away from ammunition dumps or storage sites. The other supporting affidavit was deposed to by one Bethrode Nyarufuro, a geologist by training. In his supporting affidavit, he noted that the Great Dyke area which covers the area over which a despite between the applicant and the first respondent has arisen was declared a reserved area by the Ministry of Mines and Mining Development, through the publication in The Government Gazette of reservation RA MSW 002/03 of 2016. After the gazetting of the reservation, no person can apply for and hold new mineral rights (claims), over that area except through a special grant issued by the Ministry of Mines. With regards to the location of mining operations and military cantonment/depots, he noted that mining is by nature highly mechanical, and in particular, chrome mining involves intensive excavations, drilling and blasting and the utilization of heavy earth moving equipment which disturb the integrity of the underlying geology generating vibrations which can oscillate to reasonable distances depending on the lithological heterogeneity and or homogeneity and in some cases can be felt for more than ten- kilometres from the epicentre. According to Nyarufuro, oscillations or sin waves in particular from rock explosions are known to trigger sympathetic detonations of explosive material stored or kept at a distance. In relation to location of applicant’s mining claims, he noted that he had analysed the applicant’s map and made the following observation: (a) the area within the 10 km radius of the cantonment in question, the restricted area covers 31, 420 hectares and not 75 000 hectares. HH 349-24 HC 8946/18 (b) Annexure A from the Applicant’s founding affidavit does not include all the claims within the 10km radius. (c) It is not clear which of the claims stated in Annexure ‘B’ are being said to be affected by SI 145/2018. The applicant filed the present application and one Vaibhav Shantilal Harsora (‘Harsora’) deposed to the applicant’s founding affidavit. In essence, Harsora stated that he is a director of the applicant and it was in that capacity that he was authorized to depose to the affidavit. The applicant invoked Rule 29 (1) (a) of the High Court, 2021. The facts relied on by the applicant are that sometime in September 2021 entered into a deed of settlement in the sum of USD 14 000 being monies that were due to 15 employees. The applicant alleges that it paid the sum of USD 8 450. On 25 October 2022, the first respondent filed an application placing applicant under corporate rescue under HC 6383/22. I note from the record that the application was premised on the basis that the applicant failed to pay the outstanding balance. It was contended that the applicant did not have sight of the applicant despite the fact that there was a Certificate of Service to the effect that the service was effected on number 5 Hurtsview Road, Harare. The applicant argued that the application ought to have been served on number 1 Chiriseri Road, Virginia Turnoff, Glendale, Mazowe which is the domicilium of the applicant. Additionally, the applicant stated that the court application was served by the Sheriff by affixing to the outside of the letter box at the said wrong address. As a result, the applicant did not have sight of the court application until he received telephone calls and letters from the first respondent demanding financial statements to commence the corporate rescue. The applicant submitted that it had direct and substantial interest to the proceedings but never had sight of the court application. It is further contended that the issues in HC 6383/22 did not conform to the rules of procedure in particular as prescribed in the Insolvency Act. Furthermore, the applicant contends that the 1st respondent was privy to its financial status. Therefore, there was no way that 1st respondent could establish that applicant was under financial distress. The applicant alleges that it has prospects of success on the basis that it made part payments towards settling what was due to the 1st respondent’s employees and that it was ready to settle the outstanding balance. Lastly, the applicant argued that the first respondent will suffer no prejudice if the applicant was to be granted. It is on these grounds that the applicant prays for the rescission of the default HH 349-24 HC 8946/18 judgment, the removal of the applicant from corporate rescue and that the applicant be allowed to file its notice of opposition together with opposing affidavit. The second and third respondents did not oppose the application. In other words, they elected to abide by the decision of this court. On the other hand, the first respondent opposed this application by raising three preliminary points, namely, that the deponent lacked authority to act on behalf of the applicant; that the application was prematurely filed; and that the deponent has dirty hands. On the merits, the first respondent contends that the board of directors was divested of its powers by the placement of the applicant under corporate rescue proceedings. As a consequence, the board of directors could not purport to have passed a resolution in favour of Harsora to represent the company. The first respondent also contends that the applicant was part of the proceedings as service was effected by the Sheriff of the High Court at its known address of service. As a result, the order was not erroneously granted. In support of this position, the first respondent avers that the return of service is sufficient proof that applicant was served and in particular the deponent of the affidavit resides at the address upon which the application was served. The first respondent additionally stated that applicant’s representative, Harsora, met with the representatives of the first respondent on 14 October 2020 and requested that the matter under HC 6383/22 be withdrawn. The representatives of the first respondent turned down the request on the basis that the matter was now subjudice. It was also stated that the applicant’s representative, on 15 October 2022 sought legal advice on the matter from Lawman Law Chambers. Consequently, the applicant cannot purport to have been unaware of the corporate rescue proceedings. Finally, the first respondent argues that the present application is an abuse of court process, in that the applicant was aware of the application well before the dies induciae expired. It is first respondent case that, for the application to be successful, it ought to show that the company is financially stable and out of distress. In summation, it is first respondent’s case that applicant ought to demonstrate a sound financial position which shows that it now has sufficient funds to resume commercial mining operations as opposed to gold panning; it has enough funds to meet capital expenditure and operational expenditure to meet all its medium to long term capital requirements; it has managed to service all its debts and cleared itself on all matters pending in courts and that it has cleared all employment-related obligations including unremitted pensions, MIPF, WCIF, ZIMDEF, NEC for mining industry, NSSA contributions, ZIMRA HH 349-24 HC 8946/18 obligations and ZESA. It is on these grounds that the 1st respondent prays the application be dismissed with costs. I will deal now with the preliminary points, and start by addressing whether or not the deponent had authority to act on behalf of the applicant. The starting point is section 130 (2) of the Insolvency Act [Chapter 6:07], which is a deeming provision that provides as follows: “(2) During a company’s corporate rescue proceedings the board of the company will be deemed to be dissolved, and each director of the company – (a) may no longer exercise the functions of director; and (b) may only exercise a management function within the company in accordance with the express instructions or direction of the corporate rescue practitioner, to the extent that it is reasonable to do so.” Furthermore, I notice that subsection (4) provides that if during a company’s corporate rescue proceedings, one or more directors of the company at the time the corporate rescue proceedings commenced purports to take any action on behalf of the company, that action is void unless approved by the corporate rescue practitioner. Gleaning from the above-cited extracts of the Insolvency Act, it is clear that the control of the company shifts to the corporate rescue practitioners once a company is placed under corporate rescue. Whilst the Company and Other Business Entities Act [Chapter 24:31] confers original powers on the board to manage the business affairs of the company and to exercise all the company’s powers and perform its function, it operates only to the extent to which the Act provide otherwise. I observe in this context that, section 130 (2) of the Insolvency Act installs the practitioner as the authority with full management powers and duties, in charge of the company and mandated to run it for the duration of the corporate rescue. From the foregoing, it is evident that the first respondent’s contention that the deponent to applicant’s founding affidavit lacks authority to depose to applicant’s affidavit is properly founded at law. As highlighted above, this proposition is anchored on the fact that when a company is placed under corporate rescue, it ceases having a life of its own. Once corporate rescue proceedings have commenced, the directors are divested of their powers and as such there cannot be any board resolutions to talk about. In addition, all the affairs of the company will be in the hands of the corporate rescue practitioners. HH 349-24 HC 8946/18 By way of emphasis, I reiterate that the position at law is that once corporate rescue proceedings have commenced, the board of directors is divested of its powers, any action taken by the director during the proceedings without the approval of the corporate rescue practitioner is void. In casu, Harsora submitted that he is a director of the applicant and it is in that capacity he is authorized to depose the affidavit. The relevant part reads: “IT WAS RESOLVED: THAT, VAIBHAV SHANTILAL HARSORA, in his capacity as the Director of the Company respectively, be and is hereby authorized to sign all legal documents, depose to affdavits (sic) and appear in Court on behalf of the Amcast (Pvt) Ltd in any matter between Zimbabwe Diamond and Allied Minerals Workers Union and Amcast (Pvt) Ltd…” [My own emphasis] A perfunctory reading of the resolution shows that it was pursuant to a meeting of the board of directors of Amcast (Pvt) Ltd, whose powers were divested by the appointment of the corporate rescue practitioner. Clearly, the actions of Harsora were not approved by the corporate rescue practitioner, Obert Madondo. In terms of subsection (4) of the Insolvency Act such actions are null and void. Having come to the conclusion that the deponent to applicant’s affidavit had no authority or approval by the corporate rescue practitioner, I make the finding that the application is fatally defective. I will decide the applicant on this basis. For that reason, I consider it unnecessary to deal with the remaining preliminary points or the merits of the application. As I have resolved the matter on the basis of the aforesaid preliminary point, there is no application before the court. In the result, I make the following order: 1. The point in limine that the application is fatally defective is upheld. 2. The application is struck off the roll with costs. Winterons, applicant’s legal practitioners Mutumbwa Mugabe & Partners, first respondent’s legal practitioners