The High Court has dismissed an application by a trade union seeking to place mining giant RioZim Limited under corporate rescue, ruling that the union had no legal standing to represent the company’s workers in insolvency proceedings.
Zimbabwe Diamond and Allied Minerals Workers Union, together with Precious Mwanza and Owen Kapeta, had approached the court seeking the commencement of corporate rescue proceedings in terms of the Insolvency Act, alleging that RioZim was financially distressed.
They had argued that corporate rescue would protect jobs, preserve shareholder value, and stabilise the company’s operations.
The union had also argued that the tragic death of the majority shareholder worsened the situation, and that there had been insufficient shareholder support and a lack of additional capital injection.
It submitted to the court that corporate rescue was founded on a broader sense of social justice, arguing that it is different from judicial management, which prioritises private corporate interests.
Mwanza was employed by RioZim, stationed at Renco Mine in Masvingo, while Kapeta is a former employee who was based at Cam and Motor Mine in Kadoma.
RioZim opposed the application, saying Zimbabwe Diamond and Allied Minerals Workers Union lacked legal standing to represent workers in insolvency matters.
The giant mining company told the court that the trade union is not mandated to represent its employees, but is registered to represent employees in the diamond, mining and allied industry, and as such cannot represent its employees.
RioZim also argued that the union failed to notify affected parties, as is required at law in matters dealing with corporate rescue.
It also argued that the union failed to properly commission its documents, especially affidavits.
Justice Gibson Mandaza upheld RioZim’s objections, finding that the applicants lacked legal standing to take the matter before the High Court.
The judge ruled that the union was not entitled, under the law, to act on behalf of RioZim employees in insolvency matters, rendering the entire application fatally defective.
“In casu, I hold that the first applicant lacks locus standi to pursue these proceedings.
The first applicant is just a ‘busybody’ in the strictest sense of the word.”
Justice Mandaza said the trade union did not have a direct and substantial interest in the matter as required by the Insolvency Act.
He noted that while the union was registered to represent workers in the mining industry generally, it was not registered to represent employees of RioZim specifically for purposes of corporate rescue proceedings.
The court further held that the Insolvency Act is explicit on who qualifies as an “affected person” entitled to initiate such proceedings.
According to Justice Mandaza, the Act does not recognise an industry-wide trade union as having standing unless it represents employees of the particular company concerned.
As a result, the judge ruled that the individuals who had associated themselves with the union in taking the application were similarly disqualified, since their standing was dependent on that of the union.
“It has no direct and substantial interest in the matter.
It does not fit into the definition of an affected person as contemplated by S121(1)(a)(ii) of the Act,” he said.
After upholding RioZim’s first objection, Justice Mandaza found no reason to deal with other arguments, including allegations that RioZim was in financial distress.
Justice Mandaza said it was unnecessary to deal with those issues once it had been established that the applicants were not properly before the court.
“On the merits, the first respondent submitted that the application must fail.
No proof of financial distress has been presented to the court.
The first respondent has not collapsed several months after the filing of this application.
There is thus no basis for the present proceedings.
The first respondent is not financially distressed.
The evidence placed before the court must be based on the current financial position and not on historical numbers.
In casu, the applicants have not placed before the court the first respondent’s current financial status.
The first respondent (RioZim) further submitted that the applicants’ failure to substantiate their application constitutes a clear abuse of court process,” ruled Justice Mandaza.
