Court name
Court of Appeal of Tanzania

William Kimaro & Others vs Coopers and Lybrand & Another () [1995] TZCA 22 (23 October 1995);

Law report citations
1996 TLR 252 (TZCA)
Media neutral citation
[1995] TZCA 22
Mfalila, J.A.

Mfalila, JA:
The appellant William Kimaro 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 D suit was filed against the liquidators 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 84,779,770.05/= being the difference between repatriation costs paid in July 1987 but calculated at the rates obtaining on 8 August E 1985 when the company was wound up and those actually obtaining in July 1987.
Perhaps a brief background to the claim would clarify the position. Zambia Tanzania Road Services Ltd was a limited liability company incorporated in Zambia and was F 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 Condrad Spa. The appellant and his colleagues were employees of the Tanzania branch of the company. In August 1985 the shareholders passed a G resolution to liquidate the company. On 26 August 1985 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 H 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 I freight for their personal belongings. They therefore remained at their respective stations in Dar es Salaam, Iringa and Mbeya. The

respondents were faced with the problem of paying the appellants who were classified A as unsecured creditors ahead of other secured 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 B Tanzania agreed and advanced the amount needed to the respondents through 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 Shs 32,761,927/=. These payments were C effected in July 1987, ie two years after the payments were due in August 1985 when the company was liquidated. The appellants accepted these payments as representing 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 Drequirements and lodged fresh claims with the respondents who rejected them, maintaining that the appellants no longer had any claims against them, they having been paid in full all their entitlements. Following the rejection of their additional claims by the respondents, the appellants lodged this claim in the High Court and in para 14 of their E plaint, they stated:
   `14.   That the plaintiffs are claiming from the defendants a total of Shs 84,779,770/05/= being repatriation costs, luggage allowance and outstation allowance. The plaintiffs are entitled to be paid the same by the defendants because the defendants failed and/or neglected to pay F them their terminal benefits immediately after serving them the notices of termination 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 G transport costs and outstation allowances.'
The appellants also claimed an interest of 30 per cent per annum on the sum claimed from the date of filing to the date of final judgment plus costs. H
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 Malingumu Rutashobya. However, in the course of the hearing, the evidence revealed that the appellants were actually I 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 A 1987 at the time of payment. The appellants also made it clear that this figure of Shs 84,779,770/05/= includes subsistence 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 B depend the outcome of the case. These were as follows:
   (1)   whether the defendants assured the plaintiffs that all terminal benefits would be paid immediately C
   (2)   whether the defendants requested the plaintiffs to remain at their respective work stations after issuing them with notices of termination
   (3)   whether the defendants neglected to provide or pay the plaintiff's terminal benefits D
   (4)   to what reliefs are entitled.
With regard to issues (1) and (2), the appellant who gave evidence as PW1 told the Trial Court: E
   `We were informed that the company had been wound up and we were given two 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 required to leave an address for the purposes of future correspondence. But we did not F leave any addresses because we had not been paid our benefits as employees.'
It is clear that this statement does not contain any suggestion that the respondents as G 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 circumstances, the Trial Judge answered both these issues in the negative. H
With regard to the third issue, the Trial Judge accepted the evidence given by the liquidator Mr Mundolwa, that the respondents as liquidators did not pay the appellants' terminal benefits sooner because of negligence, he said that the appellants' terminal I benefits could not be paid immediately because there was no money, the company was insolvent. He produced documents to establish this

and that on the contrary every effort was made to secure the necessary funds from one A of the shareholders, efforts which enabled the appellants to be paid even ahead of secured creditors. In the circumstances, the judge held that it could not be said that the respondents neglected to pay the appellants their terminal benefits, because there was B no money available for this purpose until after the same was borrowed from one of the shareholders. Accordingly he also answered this issue in the negative.
Having answered all the main issues in the negative, the Trial Judge then proceeded to deal with the last standard ancillary issue, namely to what reliefs are the parties entitled? C 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 and freight charges obtaining on 26 August 1985 when they were computed and July 1987 when the payments were made, arguing that D 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 E claims were properly made and are supported by s 53 of the Employment Ordinance, but he dismissed them because they had not been proved as required by the Companies (Winding up) Rules, and that therefore the entire claim was premature.
In this appeal, Mr Semgalawe who appeared for the appellants, filed only one ground of F appeal, namely that the Trial Judge erred in law in holding that the suit is premature 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 was no need for further proof of the debt G made up of additional claims because the liquidator was merely being asked to pay what he had already paid particularly when what was being asked were statutory claims.
On our part we think it was not correct for the Trial Judge to determine the validity of these claims after saying that they were premature. This was virtually pre-empting the H 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 decision on the reasons he gave at p 131 of his judgment and should not have discussed the validity of the claims in law. In this passage, the judge stated: I
   `I agree with Mrs Maajar that whatever claims there may be they

   must be brought in accordance with the Companies (Winding Up) Rules 1929. In para 15 of the A plaint, it is stated that "plaintiffs have repeatedly demanded the aforementioned amount from the defendants but the defendants 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 verifying the debt. The plaintiffs do not claim to have done so. Therefore Buntil such proof is done there cannot be any cause of action.'
We agree, and say that the Rules do not make any distinction between debts arising out C of different claims. The original claims were subjected to proof and paid, and additional claims must be treated separately and subjected to the same process of proof under the Rules. This was not done, accordingly we agree with Dr Nguluma, counsel for the respondents that the two claims in this suit amounting to Shs 84,779,770/05/= were D prematurely lodged in court. There is no need to go further than this lest we prejudice any proceedings that may come from the liquidator for proof of these claims.
For these reasons we are satisfied that this appeal has no merit and we dismiss it in its entirety with costs. E