Zimbabwe Development Bank and International Finance Corporation v David Scott and Others

The appellants jointly petitioned for the liquidation of Shagelok Chemicals (Pvt) Ltd on 23 August 2003. The first respondent was appointed as liquidator. At a creditors' meeting before the Master, the first appellant proved a claim of US$1,600,000 and the second appellant proved a claim of US$1,944,757.70. The liquidator disposed of assets and paid creditors from the proceeds. The second respondent dispatched cheques to the appellants (Z$35,789,794.20 for the first appellant and Z$36,338,172.05 for the second appellant). The appellants returned the payments, arguing that the conversion rate used was the rate prevailing at the time of liquidation rather than the rate prevailing when payment was effected. The Master confirmed the liquidation and distribution account on 29 September 2004, and the appellants became aware of this on 4 October 2004. However, they only filed an application on 18 November 2005 (over 14 months later) seeking to set aside the confirmation and re-open the account. Dividends had already been paid to all creditors.

• Whether the second appellant was properly before the court given issues with the authorization of the deponent
• Whether the appellants complied with the procedural requirements for review applications under the High Court Rules
• Whether a liquidation and distribution account confirmed by the Master can be re-opened after dividends have been paid, in terms of section 283 of the Companies Act

The appeal was dismissed with costs.

Once a liquidation and distribution account has been confirmed by the Master under section 283 of the Companies Act [Chapter 24:03] and dividends have been paid thereunder, the court is precluded from re-opening the account. The payment of any dividend to any creditor triggers this bar - it matters not whether payment has been made to one or more creditors. Additionally, where a party seeks to review a decision of the Master under section 296 of the Companies Act, they must comply with the procedural requirements of the High Court Rules, including the eight-week time limit prescribed in Order 33 Rule 259. Furthermore, for a corporate entity to be properly before the court, there must be sufficient evidence that the deponent is authorized by the company to institute proceedings on its behalf.

The Court referred with approval to the South African text "The Law of Insolvency by Catherine Smith 3rd edition" which explained that the legislative intention behind the finality provision is to ensure that trustees should not be put in a position of having to try to recover dividends from those to whom distribution has been made as required by the Act. The Court also noted that actual payment of a dividend must have occurred - mere posting of cheques that were subsequently stopped would not constitute payment. The Court observed that the appellants and their legal practitioners appeared not to have had proper recourse to the Companies Act, otherwise they would have noted that the correct procedure was to file an application for review in accordance with the High Court Rules.

This case establishes important principles in Zimbabwean company law regarding the finality of liquidation and distribution accounts. It confirms that once the Master has confirmed a liquidation account and dividends have been paid, courts have no power to re-open the account, even if creditors are aggrieved. The case also emphasizes strict compliance with procedural requirements for review applications under the High Court Rules, including time limits and proper authorization of deponents in corporate litigation. The judgment demonstrates the Zimbabwean courts' willingness to adopt persuasive South African authority on similar legislative provisions.