The
appellant in this case, Rio Tinto (Africa) Pension Fund, sought an order in the
High Court compelling the respondents to deliver to itself certain shares and
to pay the costs of the application. The
High Court dismissed the application with costs. Against that order, the
appellant has now appealed to this Court.The
background to ...
The
appellant in this case, Rio Tinto (Africa) Pension Fund, sought an order in the
High Court compelling the respondents to deliver to itself certain shares and
to pay the costs of the application. The
High Court dismissed the application with costs. Against that order, the
appellant has now appealed to this Court.
The
background to this matter is as follows:
The
appellant is a self-administered Pension Fund registered in terms of the law
for the benefit of employees of Rio Zim Ltd, a company registered according to
the laws of Zimbabwe. In 1992, the trustees of the appellant decided to employ
Sagit Stockbrokers (Pvt) Ltd to manage its share portfolio. Pursuant to this
decision, the appellant delivered the portfolio to Sagit Stockbrokers (Pvt) Ltd
whose mandate was to manage the portfolio. Such management entailed the
purchase and sale of shares, which, when purchased, would be held in a Sagit
Stockbrokers (Pvt) Ltd nominee company, Trust Nominees, or in the appellant's
name. Following further deliberations,
the appellant resolved to administer its own scrip and requested Sagit Stockbrokers
(Pvt) Ltd to surrender all the shares it was holding on its behalf. Sagit
delivered most of the scrip but a dispute arose regarding the quantity of the
shares due to appellant from Trust Nominees. After further investigations, a
new reconciliation of the outstanding shares was agreed between the appellant
and Sagit Stockbrokers (Pvt) Ltd. Sagit Stockbrokers (Pvt) Ltd proposed to
settle the matter by offering other shares. Sagit Stockbrokers (Pvt) Ltd was,
however, placed under liquidation by order of the High Court, dated 15 October
2008, and the first respondent, Arafas Mtausi Gwaradzimba, appointed
liquidator. In further correspondence between the appellant and the first
respondent, the latter acknowledged that the shares were due to the former and
undertook to deliver them against delivery of other shares that the appellant
was holding.
In
the meantime, following the liquidation of Sagit Stockbrokers (Pvt) Ltd, the
appellant submitted its claim at the second meeting of creditors. The claim was
provisionally accepted by the Master. After verification of the facts, the
first respondent accepted the appellant's claim for payment at a value of
$25,706=94. The first respondent arrived at that figure using the price per
share from the Zimbabwe Stock Exchange.
The
first respondent then prepared the first interim and distribution account which
he submitted to the Master in terms of section 279 of the Companies Act [Chapter
24:03]. Acting in terms of section 281 of the Companies Act [Chapter 24:03],
the first respondent proceeded to advertise the account in the Government
Gazette of 10 April 2009 as lying open for inspection at the Master's Office.
It is not in dispute that no creditor, including the appellant, filed any
objection against the contents, the form or amount awarded to each of the
creditors. There being no objections, the Master proceeded to confirm the
account on 13 May 2009. The first respondent then gave notice of such
confirmation in the Government Gazette of 22 May 2009 and further advised, in
the same Gazette, that he would start paying the proved creditors.
No
objections were received.
The
first respondent proceeded with the distribution of the assets and made
payments to all proved creditors. In the case of the appellant, the first respondent
paid $25,706=94, and, by letter dated 2 July 2009, advised the former of such
payment by electronic transfer to its Barclays Bank account. It is common cause
the appellant rejected the payment and transferred the same back to the first
respondent.
The
appellant then instituted proceedings for the delivery to itself of the shares.
In
the court a quo, the appellant argued that the first respondent had undertaken
to deliver the shares and not the value thereof. The appellant further
submitted that any shares that had been administered by Sagit Stockbrokers
(Pvt) Ltd had remained its property and did not fall to be regarded as part of
the estate of Sagit Stockbrokers (Pvt) Ltd in liquidation. The appellant also
argued that by paying cash under an interim account the first respondent had
not acted in good faith and that the appellant is not bound by the terms of any
interim distribution account.
The
first respondent, on the other hand, submitted that he had no difficulties with
the suggestion that he should deliver the shares to the applicant provided the
value thereof was equivalent to the value of the appellant's claim as reflected
in the distribution plan. He submitted that the appellant was aware that he did
not have the actual share certificates in his possession. He further submitted
that the appellant had been aware of the fact that the interim account was
lying open for inspection but had not objected. At no time did he agree to
deliver the shares outside the scope of the distribution plan as such agreement
would supercede the confirmed account and constitute an undue preference over
other creditors.
The
court a quo was of the view that once the interim account was confirmed, this
had the effect of a final judgment. The court was of the further view that
whilst there may have been some merit in the argument that the shares had never
become the assets of Sagit Stockbrokers (Pvt) Ltd, that submission was
irrelevant as long as there was no order authorizing the re-opening or setting
aside of the account and that unless this happened any attempt to deal with the
shares in a manner contrary to the confirmed final account would be unlawful.
On that basis, the court dismissed the application with costs.
In
its notice of appeal, the appellant has attacked the decision of the court a
quo on the following grounds:
1.
That the court a quo erred in holding that the shares in question had already
been dealt with in terms of a final sentence without addressing the question
whether those shares were part of the estate of Sagit Stockbrokers (Pvt) Ltd.
2.
The court a quo erred in holding that it could not grant the relief sought in
the absence of an order re-opening or setting aside the account. The court
should have found that the shares in question were never part of the estate and
that the confirmation of the account could not affect the appellant's claim.
3.
The court a quo misdirected itself in finding that the account that lay open
for inspection was a final account. It should, instead, have found that the
accounts were interim accounts which could be corrected without the necessity
of setting aside the account.
4.
The court a quo misdirected itself in failing to appreciate that the
irrevocable undertaking to deliver the shares was made after the confirmation
of the interim accounts.
5.
In the circumstances, the court a quo should have found that the respondents
were equitably estopped from denying the appellant its right to the said
shares.
6.
Alternatively, the court a quo should have found that the first respondent had
compromised the claim with an offer of delivery of the shares and should have
been held to such compromise.
7.
In as far as the second respondent is concerned, the court a quo should have
found that it would be iniquitous to allow the second respondent to shield
behind his official capacity.
From
the above grounds, it seems to me that the first issue that falls for
determination is whether the account in question was final, as the court held,
or whether it was merely interim, as argued by the appellant.
Section
279 of the Companies Act [Chapter 24:03] is the starting point. That section
provides:
“279 Liquidator to lodge with Master Accounts in winding up
(1)
Every liquidator shall, unless he receive an extension of time as hereinafter
provided, frame and lay before the Master, not later than six months after his
appointment, an account of his receipts and payments and a plan of distribution
or, if there is a liability among creditors to contribute towards the cost in
the winding up, a plan of contribution apportioning their liability. If the
account is not the final account, the liquidator shall, from time to time, and
as the Master may direct, but at least once in every six months, unless he
receives an extension of time, frame and lay before the Master a further
account and plan of distribution.”
Once
the account has been lodged with the Master, in terms of the above section, the
account must lie open for inspection and the liquidator is required to give due
notice thereof by advertisement in the Gazette. Section 281 of the Companies
Act [Chapter 24:03] provides:
“281 Inspection of accounts
(1)
Every liquidator's account shall lie open for inspection by creditors,
contributories or other persons interested for a period of not less than
fourteen days in the following manner -
(a)…,.
(b)…,.
(c)…,.
(2)
The liquidator shall give due notice thereof, by advertisement in the Gazette,
and shall state in that notice the period during which and the place or places
at which the account will lie open for inspection and shall post or deliver a
similar notice to every creditor who has proved a claim against the company.
(3)…,.”
Following
the advertisement referred to above, interested parties are permitted to lodge
objections at any time before the confirmation of the account – in this regard
see section 282 of the Companies Act [Chapter 24:03].
For
purposes of the present appeal, it is sections 283 and 284 of the Companies Act
[Chapter 24:03] that are particularly pertinent. Those sections provide as
follows:
“283 Confirmation of Account
When an
account has been open to inspection as hereinbefore prescribed and –
(a) No
objection has been lodged; or
(b)…,.
(c)…,.
the
Master shall confirm the account and his confirmation shall have the effect of
a final sentence, save as against such persons as may be permitted by the court
to re-open the account before any dividend has been paid thereunder.
284 Distribution of estate
(1)
Immediately after the confirmation of any account, the liquidator shall proceed
to distribute the assets in accordance therewith or to collect from the
creditors liable to contribute thereunder the amounts for which they may be
liable respectively.
(2)
The liquidator shall give notice of the confirmation of the account in the
Gazette, stating that a dividend is in course of payment or that a contribution
is in course of collection and that every creditor liable to contribute is
required to pay to the liquidator the amount for which he is so liable, and the
address at which the payment of the contribution is to be made, as the case may
be.”
The
facts of this case, which are virtually common cause, show clearly that the
above provisions of the Companies Act [Chapter 24:03] were complied with. The
first respondent lodged his account with the Master as he was required to in
terms of section 279 of the Companies Act [Chapter 24:03]. Thereafter, the
account lay open for inspection for the required period and the liquidator gave
due notice thereof by advertisement in the Gazette. There were no objections
lodged with the Master at any time before the confirmation of the account. In
terms of section 283 of the Companies Act [Chapter 24:03], because no objection
had been lodged, the Master confirmed the account.
It
is clear that when the Master confirmed the account, the account ceased to be
an interim account. It became a final
account. Nowhere in the Companies Act [Chapter 24:03] is there provision for
the Master to confirm an interim account. In terms of section 283 of the Companies
Act [Chapter 24:03], such confirmation shall have the effect of a final
sentence save as against such persons as may be permitted to re-open the
account before any dividend has been paid thereunder.
The
appellant was aware of the fact that the account was lying open for inspection.
Neither the appellant nor the other creditors filed any objections with the
Master who proceeded to confirm the same. On the facts, the court a quo cannot
be criticized for coming to the conclusion that this was a final account.
