PRINCIPAL
REGISTRY
MATTER NO. IRC
304 OF 2002
BETWEEN:
-and-
C. Kazoka Legal Practitioner
Joseph Kankhwanga for
the CIAWU
Ngalauka Official
Interpreter
i)
Being wrongly commenced contrary to sections 222 and 219 of the Companies
Act;
ii)
Being an abuse of court process
iii)
For an order to strike out the applicant for being wrongly joined in
the proceedings; and
iv)
For costs of this application to be provided for contrary to section
227 of the Companies Act
The
motion was supported by an affidavit and opposed by the applicants.
Upon
a careful examination of the facts as presented by the respondents and the
applicant in this motion, the court finds that:
The
conduct of winding up Import and Export Malawi Limited (hereinafter referred to
as the company) was placed in the hands of a liquidator. During this time,
there was still a corporate personality; and all corporate acts such as the
institution of legal proceedings must be done in the name of the company. The
liquidator has powers under section 230 of the Companies Act to bring or defend
any action or other legal proceedings in the name and on behalf of the company.
He is also empowered to pay any class of creditors in full subject to section
287 of the said Act.
On
the other hand, a receiver and manager is appointed to realise the companys
assets to satisfy outstanding debt of the creditor on whose behalf he has been
appointed. He is also entrusted with managing the business until when a
liquidator is appointed. Once a liquidator is appointed, he allows the receiver
and manager to continue to act until the claims of his debenture-holder are met
out of the security.
There
is no duty on the receiver and manager to bring or defend legal action for or
on behalf of the company. His primary duty is to preserve the rights of the
debenture-holder who has appointed him.
The
applicants brought the action against the respondent before a liquidator was
appointed. During this time the
respondent had several meetings including the signing of an addendum with the
applicants, which outlined applicants terminal benefits. However, the
termination and addendum signed by the respondent did not vest any powers in
the respondent to defend legal actions on behalf of the company. The law is
clear that a receiver and manager is appointed to perform specific tasks and
these do not include bringing or defending legal actions on behalf of a company
in liquidation. Therefore, the applicants had indeed erred in bringing this
action against the respondent when the company was in the course of
liquidation.
The
respondents asked the court for an order that the action be struck off for
being an abuse of court process. The applicants are claiming terminal benefits
after termination of their services. The Employment Act 2000 stipulates that
upon termination of employment, an ex- employee should receive terminal
benefits within a specified period of time.
Nevertheless,
the court takes notice of the fact that the company is going through a process
of liquidation and there might be a number of processes taking place. These
include appointment of liquidator; handing over of management from directors of
the company to the liquidator; valuation of assets of the company; and
assessing its creditors and debtors. These processes might take time and
thereby slow down the process of paying off creditors including salaried
employees, who have priority over all other creditors. It is clear that the
company, through letters of termination acknowledges being indebted to the
employees. As such, it is the view of this court that the action might have
been brought prematurely.
However,
the court appreciates the anxieties of the applicants, to be paid off their
dues. Therefore, the action will not be struck off but rather, the action will
pend in the court files till such time when the liquidator will have finalised
his preliminary duties and started paying off creditors on behalf of the
company in liquidation.
The
court will not decide on the claim in (i) because it falls away with the
decisions in (ii) and (iii) above.
As
for costs, there are two situations under section 72 of the Labour Relations
Act, 1996, when this court can make such order. In this case, I cannot condemn
the applicants to costs due to the finding in (ii) above.
It
is therefore ordered that:
i. Respondent, Receiver and Manager in this action be substituted with the company in liquidation;
ii. Hearing of the action pend in the court files until a time when the company will have started paying off its creditors; and that time
iii. Procedure for commencing action against a company in liquidation should be adhered to.
Made in
Chambers this 21st day of November 2002 at LIMBE.
R. Zibelu
Banda (Ms.)
DEPUTY
CHAIRPERSON