Online Reporter
Zimpapers Business Hub
The Zimbabwe Diamond and Allied Minerals Workers union (ZDAMWU) has accused mining giant RioZim Limited of manipulating insolvency laws by selectively invoking corporate rescue to shield assets from seizure while simultaneously opposing the very proceedings that provide such protection.
In its appeal against the High Court’s dismissal of its corporate rescue application, the union alleges that RioZim is engaging in contradictory legal manoeuvres, invoking a moratorium to block creditors from seizing assets while simultaneously opposing the very rescue proceedings initiated by ZDAMWU.
“The legal significance of approbation and reprobation lies primarily in the principle that a party cannot simultaneously accept and reject the same legal instrument or judgment,” argues the union.
“It prevents a person from taking two inconsistent positions to gain an advantage from one while denying the other. In essence, one cannot both approve and disapprove of the same act or document in a legal context, which ensures consistency and fairness in legal proceedings.
“The first respondent approves corporate rescue proceedings to defend asset seizure by invoking section 126 of the Insolvency Act, which grants a moratorium upon the filing of corporate rescue but disapproves of the same process because it detests the nominated rescue practitioners.”
The High Court dismissed the union’s application for lack of legal standing to bring these proceedings. ZDAMWU, alongside RioZim employees, including Precious Mwanza and Owen Kapeta, had earlier approached the High Court, alleging that RioZim was in severe financial distress.
The union sought an order placing the company under the supervision of a corporate rescue practitioner, arguing that it was commercially insolvent due to liabilities exceeding assets, among other reasons.
However, RioZim successfully argued that ZDAMWU was a trade union for the “mining industry” in general, rather than specifically for RioZim, as defined by the Insolvency Act.
In its Supreme Court appeal, ZDAMWU argued that the High Court erred in dismissing the case on a technicality.
It maintains that the union approached the court as a registered trade union representing the employees of RioZim under Section 121 (1) (a) (ii) of the Insolvency Act.
Additionally, the union is recognised as a creditor and an affected person under the same Act. The union argued that the court erred when it ruled that the union lacked the right to initiate corporate rescue proceedings.
It maintained that, as a registered trade union representing RioZim employees and as a creditor owed statutory subscriptions, they are an “affected person” under the Insolvency Act.
Further, ZDAMWU also argued that the court erred in law by dismissing the matter without pronouncing on the legal standing of the other two applicants.
The appeal points out that individual employees clearly have standing to seek rescue proceedings because they are owed significant salary backlogs. RioZim, which is listed on the Zimbabwe Stock Exchange and owns several gold-mining assets, including Renco Mine, Dalney Mine, and Cam and Motor Mine, has consistently maintained its solvency. However, the Court did not rule on the merits of the case.
The company maintains that it is not insolvent and that the union’s application is “frivolous and vexatious and an abuse of the court process.”
However, the union alleges that RioZim owes in excess of US$200 million, including amounts owed to public entities such as the Zimbabwe Revenue Authority (Zimra) and amounts related to employment matters, and that it approves and disapproves court proceedings when it suits its own interests.
The union and the other two employees seek the Supreme Court’s intervention to set aside the High Court’s ruling and grant the corporate rescue order immediately. Alternatively, they seek to have the case referred back to the High Court for a hearing before a different judge by the Supreme Court.
