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Martin Kadzere Senior Business Reporter
THE High Court has dismissed an application by United Arab Emirates commodity broking company, Dominion Trading FZ-LLC, for an order to place Victoria Foods under liquidation.
Dominion sought the provisional liquidation order against Victoria Foods, claiming the local milling company owed it US$6,5 million for the supply of wheat, grain and rice.

Victoria Foods, a subsidiary of the Zimbabwe Stock Exchange-listed CFI Holdings, is disputing the quantities and value of the three products that Dominion says it delivered.

Victoria Foods also argued that Dominion was holding on to the wheat it claims to have delivered. During the process of reconciliation, Dominion agreed to reduce the figure to US$5,6 million which amount Victoria Foods is still disputing.

According to the agreement entered between the two firms, any dispute would be resolved through arbitration in the United Kingdom.
However, instead of the case being arbitrated in the UK, the parties agreed to refer the case to the Commercial Arbitration Centre in Harare and Retired Justice George Smith was appointed the arbitrator.

Presumably having grown extremely impatient with the arbitration process as the debt remained unpaid, Dominion shifted goalposts and applied for the provisional liquidation of Victoria Foods.

Victoria Foods opposed the application on the basis that the debt is not yet due because there are serious disputes on the amount owed.
It also argued the arbitration had to be undertaken to determine the exact amount it owed. In disputing the application, Victoria cited the alleged undelivered wheat worth US$465 000 included in the claim, weight differences valued at US$46 000 and US$167 500, a defective delivery worth US$14 000 and errors in computation of interests.

In her judgment last week, Justice Mathonsi ruled that liquidation was “unacceptable as it amounts to harassment or oppression of the respondent” (Victoria Foods).

“To my mind, the applicant is aware that arbitration which was agreed by the parties would not yield positive results and has therefore elected to employ the procedure for winding up in order to enforce payment of a disputed debt,” ruled Justice Mathonsi.

“In the first instance, the parties agreed to refer to the dispute to arbitration and that the arbitration process is yet to commence. Surely, referral of the matter to arbitration was upon a realisation that there was a bona fide dispute involving figures. In the second instance, without fair determination of the dispute, the applicant stopped midstream and then pursued this application for a winding up. In doing so it is seeking to deprive the respondent an opportunity, provided by the agreement between the parties, to have the dispute determined by arbitration.

“Indeed, the applicant would like the consequences of winding up to set in without it having proved its claim, (and) without subjecting the claim to the test of arbitration.

“More importantly, the respondent has been shown to have assets of substantial value. While the existence of assets will not necessarily disentitle the creditor to a winding up order, it is a factor that I cannot overlook especially in the circumstances of this case where the respondent has shown that not only has it been paying the debt, but also that it is in the genuine process of recapitalisation.”

Victoria Foods had already paid in excess of US$2 million towards clearing the Dominion debt.