19951023 TZCA Dar es Salaam

IN THE COURT OF APPEAL OF TANZANIA AT DAR ES SALAAM :,; (OQRAM: RAMADHA?ifi.._JoA., MNZAVASr.. J.A., And MFALILA, J.A.) CIVIL APPEAL NOo 5 OF 1995 BETWEEN ·~ WILLIAM KIMARO & 475 ·OTHERSo • • • APPELLANTS COOPERS AND LYBRAND AS AND I JOINT LIQUIDJ\TIONS - ZAMBIA .• • • RESPONDENTS TA1'lZANIA ROAD SERVICE.S LTD. (Appeal from the Judgement of the High Court of Tanzania at Dar es Salaam) (~aha ti; J.). dated the 12th day of February, 1991 in Civil Case Nd. 195 of 1989 JUDGEJIIJENT OF THE COURT MFALILA, J.A.: The appellant W'illiam Kimat-o filed a representative suit in the High Court; on behalf of himself and 475 other fellow ex- employees of Zambia Tanzania Road Services Ltd • . The suit was filed against the liquid~tors of the said company because it was then under liquidation. The liquidators are Coopers & Lybrand, the present respondents. The appellant demanded a total of Shs~ a·4, 779, 770.'0S being the difference betwe1?.n repatriation eosts paid in July 1987 but calculated at the rates obtaining on 8/8/85 when the company was wound up, and those actually obtaining in . July 1987. • ••• /2 2 Perhaps a brief background to the claim would clari~y the position. Zambia Tanzania Road Services Ltd. was a Limited liability company incorporated in Zambia and was registered in Tanzania as a branch of a foreign company, but the shareholders of the company were the Governments of Tanzania and Zambia and an Italian Company named INTERSOMMER CONDRJ\D SPA. The appeil,ant and his colleagues were employees of the Tanzania branch of the company. In August 1985 the shareholders passed a resolution .to liquidate the company. On 26/8/85 the respondents as Liquidators terminated the employment of all the employees except a few. But due to financial difficulties, the liquidators could not pay.the employees' terminal benefits immediately. All that the liquidators could do in the circumstances was to ask all employees to leave for their respective homes but to leave their contact addresses behind through which they could be reached. The ·appellant said that he and his colleagues could not leave for their homes because they had no money to pay for themselves and their families as well as freight for their personal belongings. They therefore rema"ined at their respective stations in Dar es Sal.aam, Iringa and Mbeya, The respondents were faced with the problem of paying the appel:l.ants who were classified as ·unsecured creditors ahead of other sec::ured creditors of the company. To get round the problem, the respondents approached one of the shareholders, the Government of Tanzania for a loan equivalent to the sum claimed by the appellants. The Government of Tanzania agreed and advanced the amount needed to the respondents th.rough the National Transport Corporation. On receipt of this loan, the liquidators paid the appellants all their entitlements which included salaries and/or allowances and ·repatriation costs. All these amounted to ••. /3 3 Shs .. 32,761,927 /=. These payments were effected in July 1987, ioe. two years after the payments were due in August 1985 when the company was liquidatedo The appellants accepted these payments as r~presenting their full claims and that they had no further claims against the respondents. · However, the appellants later became of the view that these payments fell·far short of their actual requirements and ~edged fresh claims with the respondents who rejected them, maintaining that the appellants no longer had I any claims cgainst them, they having been paid in full all their entitlementso Following the rejection of their additional claims by the respondents, the appellants lodged this claim in the High Court and in paragraph 14 of their plaint,· they stated: 140 That the plaintiffs are claiming_from the defendants a total of Shs.84,779,770/05 being r~patriation costs, luggage allowance and outstation allowance. The plaintiffs -are entitled to be paid the same· by the · defendants because the defendants failed and/or ne~lected t6 pay them their terminal benefits immedintely after serving them the notices of termina,tion as required by the law and had a duty to pay them the repatriation costs, luggage allowances and outstation allowances taking into account the devaluation of the Tanzania shilling, increased transport costs and outstation ·allowances". The appellants also claimed an interest of 30% _per annum on the sum claimed from the date of filing to the date of final judgement plus costs. • •• --/4 .. I 4 We agree with the trial judge that the claim as· framed was vague although it appears to have been drawn up by a very brilliant lawyer, the late Malingu_mu Rutashobya. Howeve·r, in the course of the hearing, the evidence revealed that the appellants were actually claiming the difference between the repatriation costs including luggage allowances which were paid in July 1987 but calculated at 1985 rates when the_ company was wound up and the actual costs of repatriation in July 1987 at the time of payment. The appellants also made i t clear that.this figure of Shs. 84,779,77o}os includes subsistance allowances for 664 days which they spent while waiting " at their respective stations to be paid their entitlements. At the commencement of the trial, three issues were framed, issues on which would depend the outcome of the caseo .These were as follows: (1) J whether the defer.dants assurP.d the plaintiffs that all terminal benefits would be paid immediately. {2) - whether the defendants requested the ' plaintiffs to remain at their respective work stations a·fter j_ssuing them with notices of termination. (3) whether the defendants neglected to provide or pay the plaintiffs' terminal benefits. (4) To what reliefs are entitled. With regard to issues (1) and (2), the appellant who gave evidence as PW.1 told the trial Court: • 0 • • /5 5 were IIWe :::r,:: informed that the company had been wound up and we were given 2 weeks leave. After that the General Manager announced that their services were being terminated and that they would be paid their terminal benefits ------ it was -the Liquidator who was actually terminating our employment. We were requi_red to ieave an addresses for the purpose of future correspondence.· But we did not le ave any addresses because we had not been paid our benefits as employees." It is clear that this st8tement does not contain any suggestion that the_ respondents as liquidators promised the appellants that all their terminal benefits would be paid immediately, and also that they were told to remain at their respective stations after being issued with notices of termination pending the payment in full of their claims. In the circum'stances, the trial judge answered both these issue·s in the negative. , With r~gard to the third issue, the trial judge accepted the evidence given by the Liquidator Mr. Mundolwa, that -th<:! respondents as liquidators did not pay the appellants' terminal benefits sonner because of negligence, he said that the appellants' terminal henefits could not be paid immediately because there was no money, .the company was insolv~nt. He produced documents to establish this contrary and that on the c,: . · · every effort was made to secure the necessary funds from one of the shareholders, efforts which enabled the appellants to be paid even ahead of sacu~ed creditors. In the circumstances; the· judge held that it could not be said that the respondents neglected to pay the appellants their terminal 6 benefits, because there was no money available for this purpose until after the same was borrowed from one of the shareholderso Accordingly he also e.nswered this issue in the negative. Having answered all the main issues in the negative, the trial . ' . judge then proceeded .to deal with the L,ist standard ancillary issue, namely, to what reliefs are the parties entitled? In answering this question the judge asked himself whether the appellants' two pronged claim is maintainable in law. The first prong concerned their claim for the difference between the rates of fare 3nd freight charge,s obtain.ing on 26/8/85 when they were computed and July 1987 when the payments were made, arguing that between these two dates the fares to their homes as well as freight charges had almost doubled. The second prong concerned their claim for subsistence allowances for 664 days they spend waiting to be paid their terminal benefits. The· judge held that both these claims were properly made and ore supported by Section 53 of the Employment Ordinance, but he dismissed them because they had not been proved as required by the Companies (Winding Up) Rules, ahd that therefore the entire claim'· was premature. In this appeal, Mr. Semgalawe who appeared for the appellants, •filed only one ground of appeal, namely that the trial judge erred in law in holding that the suit is premcture and that therefore there was no cause of action. At the hearing of this appeal and in support of this ground, Mr. Semgalawe argued that there ~as no need ~or further proof of the debt made up of additional claims because t.he liquid'ator was merely being asked to pay what he had already paid particularly when what was being asked were statutory claims. • ••• /7 7 On our part we think it was not correct for the trial judge to determine -the validity of these cl.aims after saying that they were premature. 'rhis was virtually pre-empting the decision of the liquidator. The liquidator should be left free to determine the validity of each debt submitted to him. In our view, the trial judge should have based his <'lecision on the reasons he gave at page 131 of his jurtgement and should not have discussed the validity of the claims in law. In this passage, the judge stated: "I agree with Mrs. Maajar that whatever claims there may be they must be brought in accordance with the Companies (Windit"g Up) Rules 1929. In paragraph 15 of the plaint, it is stated that "plaintiffs ha~e repeatedly demanded the aforementioned amount from the defendar.ts but the defend?.nts have refused and/or neglected to pay them the same". This may be so, but that would not be enough because the Companies (Winding Up) Rules 1929 require any debt to be proved by an affidavit veryfying the debt. The plaintiffs do not claim to have done soa Therefore until such p'roof is done there canr.ot be any cause of action." .' We agree+ ana say that the Rules dO not make any distinction between debts arising out of different claims. The original c+aims were subjected to proof and paid+ and additio~al claims must be treated separately and subjected to the same process of proof under the Rules. l This was not done, accordingly we agre.e with Dri Nguluma Counsel for the respondents that the two claims in this suit amounting to Shs. 84, 779• 770/05 were prematurely lodged in Court. There is• no I ! ..•• /8 r. 8 need to go farther than this lest we prejudice any proceedings that may come before the Liquidator for proof of these claims. merit AoS.Lo RAMADHANI JUSTICE OF APPEAL N.S. MNZAVAS JUSTICE OF APPEAL r LoM. MFALILA STICE OF APPEAL ,, - h·, t t is a true copy cf the original • \\\4f .fJ~'/~f! ; "'.'l·,\i.;;,,.,, . ,..,,. .,~.. ► ~ .,,. - ';,I ~'It" ,, ... ~~- ~· ( M.S~I) DEPUTY REGISTRAR