Judith Senior Maswela N.O (In her capacity as Executrix Dative for the Estate Late Owen Wini Maswela) v The Master of the High Court and Others

Kunganda Farm (Private) Limited was placed under liquidation with the second respondent appointed as liquidator. The company's only asset was a farm which was subdivided into two portions. The shareholders (applicant and third respondent) instructed the liquidator to sell the remaining portion in US dollars to preserve value against local currency fluctuations. On 19 June 2019, the liquidator concluded a sale agreement for US$180,000.00 and received US$70,000.00 in cash. Five days later, on 24 June 2019, Statutory Instrument 142 of 2019 was promulgated prohibiting the use of US dollars in local transactions. The liquidator deposited the US$70,000.00 into a local currency account at the interbank rate. When the Second Interim Liquidation and Distribution Account was prepared, it did not clearly show the US$70,000.00. The applicant and third respondent objected, arguing the amount should have been deposited into a Nostro Foreign Currency Account to preserve its value. The Master dismissed the objection, finding the money was included in the total figure and that the liquidator had discretion in how to deal with it.

• Whether the liquidator properly accounted for the US$70,000.00 received in cash
• Whether the liquidator acted with due diligence in converting US dollars to local currency instead of depositing into a Nostro Account
• Whether the Master correctly dismissed the objection to the Second Interim Liquidation and Distribution Account
• Whether the liquidator's discretion in dealing with foreign currency was properly exercised
• The duties of a liquidator to preserve the value of assets and properly account for their movement

1. The Master's decision to dismiss the applicant's objection to the Second Interim Liquidation and Distribution Account was set aside. 2. The Second Interim Liquidation and Distribution Account filed by the second respondent in October 2019 was set aside. 3. The Master was directed to investigate and establish how the US$70,000.00 received in cash on 19 June 2019 was dealt with by the liquidator and, consequent upon such investigation, to direct the liquidator to amend the account or give such other appropriate directions. 4. The second respondent (liquidator) was ordered to pay the costs of suit.

A liquidator has a duty of care to the company, its shareholders and creditors, and must act with due diligence to avoid causing unnecessary loss to company assets. When a liquidator receives foreign currency in cash with the agreed objective of preserving value, the liquidator must properly account for and document the movement of such funds. The mere assertion that foreign currency was deposited into a local currency account, without providing supporting documentation such as deposit slips or bank records, constitutes an irregularity that renders a liquidation and distribution account improper. The Master, when exercising supervisory functions under section 282(3) of the Companies Act, must address any noted irregularities or discrepancies in liquidation accounts, even if not specifically raised as grounds of objection, and cannot dismiss objections while simultaneously acknowledging unexplained anomalies in the account. A liquidator's discretion in dealing with company assets must be exercised consistently with the duty to preserve asset value and in accordance with instructions from shareholders where such instructions are reasonable and lawful.

The court observed that while it is desirable that a company in liquidation be cited as a party in proceedings concerning its liquidation and distribution account, non-joinder does not render an application fatally defective where the liquidator (who made the decision being challenged) is properly cited and can competently respond to the complaint. The court also noted that preliminary objections based on the merits of an application (such as that proceedings are frivolous and vexatious) are misplaced and should be dealt with when considering the merits rather than as points in limine. The court referenced the dual capacity of a liquidator as described in A M S Marketing Co (Pty) Ltd v Holzman 1983 (3) SA 263(W): in one sense a liquidator is a primary organ of the company in whom powers formerly residing in directors are vested, and in another sense the position is similar to that of a trustee of an insolvent estate with power to recover, realize and distribute assets.

This case clarifies the duties and responsibilities of liquidators in Zimbabwe, particularly regarding the proper accounting and preservation of company assets during liquidation. It emphasizes that liquidators must provide proper documentation and evidence for all transactions involving company assets, and cannot simply assert that funds were properly dealt with without supporting proof. The judgment reinforces the Master's supervisory role under section 282 of the Companies Act to ensure proper accounting, including the duty to address irregularities even if not specifically raised as grounds of objection. The case also demonstrates that a liquidator's discretion is not unfettered and must be exercised consistently with the duty to preserve asset value and act in the interests of shareholders and creditors. It provides important guidance on the treatment of foreign currency during liquidation, particularly in the context of currency controls and fluctuating exchange rates.