MAWADZE J: The tragic state of affairs in this case is that
the father (who later passed on) and son have been engaged in a seemingly
unending and bruising legal battle for over a period of seventeen years. Even
after the death of the father the swords are still drawn out and the battle far
from over. This is more so when one considers that the application before me is
simply for a rescission of a default judgment.
This is an opposed application for rescission of a default
judgment granted by this court.
On 7 September 2011 my sister judge GOWORA J (as she then
was) granted the following order in case number HC 6280/11 in which the first
and second respondents were the applicants and the late Ettore Pietro Fumia
(now represented by the applicant) and the third respondent were the first and
second respondents respectively:
“It is ordered that:
1. The purported allotment to
the first respondent on 15 November 1994 of eight shares in the second
respondent is declared to be unlawful and is set aside and;
2. The first respondent is
ordered to pay costs of the application.”
This order was granted pursuant to a court application in
HC 6280/11 filed in this court on 30 June 2011 and was apparently unopposed by
the two respondents cited therein. This is the order the applicant now seeks to
be rescinded.
I now turn to the facts of this case:
At the time this application for rescission of default
judgment was filed on 11 October 2011 Isabel Fumia represented the applicant
Ettore Pietro Fumia in her capacity as the curator ad litem
for Ettore Pietro Fumia. Isabel Fumia had been so appointed on 6 October 2011
as the now deceased Ettore Pietro Fumia was indisposed due to illness and
mentally incapacitation. However, before the matter could be argued in court,
Ettore Pietro Fumia passed on on 13 August 2012. This led to the appointment in
terms of r 85 A of the High Court Rules 1971 of Melina Matshiya as the
Executrix testamentary as per Letters of Administration granted in her favour
on 9 October 2012 to substitute the applicant and represents the interest of
the late Ettore Pietro Fumia.
The then applicant Isabel Fumia was married to the late
Ettore Pietro Fumia (“hereinafter late Ettore”). The first respondent George
Stephen Fumia and the second respondent Ellen Maria Fumia are husband and wife.
The first respondent George Stephen Fumia is the first son of the late Ettore
having been born to the late Ettore and his first wife (not Isabel Fumia) one
Fedora Fumia who passed away on 14 October 2007.
The third respondent Falcon Hauliers (Private) Limited is a
limited liability company duly registered in accordance with the laws of
Zimbabwe. Its address of service is given by the applicant as number 1000
Manchester Street, Kwekwe and by the first and second respondents as number 44
Cosham Avenue, Borrowdale, Harare which also happens to be the residence of the
first and second respondents.
The dispute between the parties is centred on the
shareholding in the third respondent which is a non-trading but a property
owning company whose sole asset is an immovable property number 981 Kariba
Township in Kariba (hereinafter the Nyami Nyami property). The third respondent
was incorporated on 2 July 1990. It would appear that it is not in issue that
at the incorporation of the third respondent two shares in the initial share
capital of the third respondent were subscribed for and held by the first and
second respondents who were also the initial founding directors.
It appears not to be in issue that in 1992 the late Ettore
purchased rights, title and interests in stand number 981 Kariba Township by
way of cession from one S Zhou for Zimbabwean $13 00-00 which was paid by way
of a cheque on 26 June 1992. It is also common cause that notwithstanding that
Ettore had purchased this immovable property number 981 Kariba Township (Nyami
Nyami property) he proceeded to register it in the name of the third
respondent.
At the material time the late Ettore was running a very
successful construction company called FMB Construction (Pvt) Ltd which
operated from Kwekwe. Isabel Fumia joined FMB Construction (Pvt) Ltd in May 1995
as a Secretary and at that time the second respondent Ellen Fumia was the
Administration Manager. During the same year 1995 Isabel married the late
Ettore who only had the first respondent George Stephen Fumia (“George”) as his
son. Later another son Luiguino Fumia was born out of the marriage between the
late Ettore and Isabel Fumia (“Isabel”). When Isabel married the late Ettore,
the second respondent Ellen Fumia resigned from FMB Construction (Pvt) Ltd and
Isabel took over as the Administration manager of FMB Construction (Pvt) Ltd a
position she holds to date. It is upon this background that Isabel alleges that
in this capacity she virtually handled all financial transactions of FMB
Construction (Pvt Ltd, the third respondent and affairs of the late Ettore.
Isabel claims to have access to all records and documents of the third
respondent and FMB Construction (Pvt) Ltd. This also informs the background
information she gave in much detail in her founding affidavit of how between
1993 and 1995 the late Ettore developed the Nyami Nyami property into a
palacious, a double storey home with six bedrooms at a cost Isabel puts at
Zimbabwe $288 269-85.
It is also common cause that at the material time the first
respondent George was running his own company called Dora Transport (Pvt) Ltd
which according to Isabel was set up with the financial help of Ettore. It is a
transport company. The parties are also agreed that when the Nyami Nyami
property was developed Dora Transport (Pvt) Ltd contributed to the construction
of this property although there is a dispute as regards the monetary value of
such contribution. What is not in issue is that Dora Transport (Pvt) Ltd
ferried building materials for the Nyami Nyami property from Bulawayo, Kwekwe,
and Harare to Kariba. At that time the relations between the late Ettore and
his son George were excellent. Dora Transport (Pvt) Ltd which owned a number of
haulage trucks later faced serious financial problems. Isabel attributes this
to financial mismanagement by George but the first and second respondents
blames the hyperinflation which this country at some stage experienced. What is
not disputed is that Dora Transport (Pvt) Ltd had borrowed heavily from
financial institutions and the late Ettore had bound himself as surety and
co-principal debtor. As a result Ettore together with FMB Construction (Pvt)
Ltd were exposed to the indebtedness of Dora Transport (Pvt) Ltd. What is
material is to state is that the borrowings by Dora Transport (Pvt) Ltd is also
alleged by Isabel to have been secured by a mortgage bond registered by the
third respondent which meant that the Nyami Nyami property in essence secured
the debt. According to Isabel this prompted the late Ettore who now risked
losing FMB Construction (Pvt) Ltd and the Nyami Nyami property due to George's
indebtedness through Dora Transport (Pvt) Ltd to pay off the first respondent
George's liabilities. According to Isabel Dora Transport (Pvt) Ltd was ruined
and George was totally financially ruined and problems then started between the
late Ettore and George around 2000.
I now turn to the gist of the dispute between the parties.
On 15 November 1994 there was an allotment of shares in the third respondent in
which the late Ettore got eight shares. On 8 June 1995, seven months after,
George wrote a letter indicating that there should be no further allotment of
shares to any of the directors of the third respondent without a meeting being
held involving all the directors which were presumably George, his wife Ellen
Fumia and the late Ettore. There is now a dispute as to the meaning of this
letter. The applicant contends that by writing such a letter George had
accepted the allotment of eight shares to the late Ettore in the third
respondent and simply wanted assurance that no further allotment would happen.
On the other hand the respondents contend that the letter of 8 June 1995 shows
that George did not approve of the allotment of eight shares in the third
respondent to the late Ettore. There are various correspondences regarding the
dispute between the parties in this regard, which dispute remains unresolved.
On 30 June 2011 the first and second respondents proceeded to file a court
application in case number HC 6280/11 seeking a declaratur to the effect that
the allotment of eight shares on 15 November 1994 in the third respondent to
the late Ettore was unlawful. This application was unopposed thus culminating
in the default judgment which the applicant now seeks to be rescinded.
I now proceed to deal with the merits of the application.
While this application for rescission of default judgment
was made in terms of r 63 of the High Court Rules 1971, the applicant argued in
the heads of argument that this default judgment should be set aside in terms
of r 449 (1) (a) of the High Court Rules which provides for the setting aside
or rescission of any judgment or order that would have been erroneously sought
or erroneously granted in the absence of any party affected thereby.
Advocate Mpofu for the applicant submitted that
the judgment sought to be rescinded was granted in error and this court should
proceed in terms of r 449 (1) of the Rules and set aside the judgment. Reliance
was placed upon the case of Banda v Pitluck 1993 (2) ZLR 60
(H) which is authority for the proposition that the fact that an application is
made under r 63 is not a bar to the court proceeding in terms of r 449 if
circumstances of the case so warrant.
The applicant contends that the order sought to be impugned
was granted pursuant to an error of law and proceeded to cite a litany of the
alleged errors which are that:
(i)
that the applicant could not have been in wilful default as he was both
physically and mentally incapacitated due to illness;
(ii)
that no proper service in terms of the rules was effected as service was
effected in Zimbabwe when the applicant (the late Ettore) was now resident in
Botswana;
(iii)
that the cause of action had prescribed as the allotment of shares complained
of had occurred on 15 November 1994 and the respondents only instituted these
proceedings in June 2011.
(iv)
that the proceedings in HC 6280/11 are a nullity as no curator ad litem
had been appointed in terms of r 249 of the High Court rules as the late Ettore
at the material time was alleged to be under mental and physical disability.
(v)
that the respondents should have proceeded by way of edictal citation in terms
of the rules and that no proper service of this application was effected on the
third respondent (then the second respondent in HC 6280/11).
While there is merit in all the factors listed above I am
not persuaded that I should proceed to deal with this matter in terms of r 449
(1). This court can exercise the powers bestowed upon it in terms of r
449 (1) mero motu or upon application of any party affected by the
judgment or order. In casu no formal application was made by the
applicant for the matter to be dealt with in terms of r 449 (1). This request
is made for the first time in the heads of argument. This in my view creates
problems. I am on the view that a party to any litigation should have clarity
of mind as to which rule is applicable in any given case and not, like in this
case seek rescission of judgment in terms of r 63 in the initial application but
then seeks to rely on r 449 (1) in the heads of argument. I am also not
satisfied that when this court granted the default judgment in HC 6280/11 it
was not aware of some of the facts alleged. An affidavit from one Peter
Carnegic Lloyd was attached after the court has raised certain queries
initially on 31 August 2011. A number of additional documents were then
attached which include inter alia documents relating to the nature of
the late Ettore's illness and correspondence between the legal practitioners of
the parties as regards the propriety of service effected. I am therefore not
persuaded that this is a proper case in which I can proceed to dispose of the
matter in terms of r 449 (1).
I now turn to r 63 of the High Court Rules of 1971. It
provides as follows:
“63
(1) Any party against whom judgment has been
given in default, whether under the rules or under any other law, may make a
court application, not later than one month after he has had knowledge of the
judgment, for the judgment to be set aside.
(2) If the court is satisfied on an application
in terms of subr (1) that there is good and sufficient cause to do so, the
court may set aside the judgment concerned and give leave to the defendant to
defend or to the plaintiff to prosecute his action, on such terms as to costs
and otherwise as the court considers just.”
It is clear that in order to set aside a default judgment
under r 63 the test is that the court should be satisfied that there is good
and sufficient cause. In the case of Dewaras Farm (Pvt) Ltd
& Ors v Zimbank 1998 (1) ZLR 368 (S) at 369 E-G the
Supreme Court deliberated on what constitutes good and sufficient cause to
warrant rescission of a default judgment in terms of r 63. While it is not
possible to give an exhaustive definition or list of factors of what constitute
good and sufficient cause to justify rescission of default judgment a number of
factors have been given and these include inter alia the explanation
for the default, the bona fides of the applicant and the prima facie
strength of the case. The court in exercising its powers imbued in r 63 enjoys
very wide discretion and should look into the circumstances of each case as
regards what constitute good and sufficient cause. In fact it has been held in
some cases that they may still be good and sufficient cause to warrant
rescission of default judgment even in circumstances where it is shown that a
party was in wilful default although it is also accepted that wilful default
generally denotes absence of good and sufficient cause.
In the case of Zimbabwe Banking Corporation v Masendeke
1995 (1) ZLR 400 McNALLY JA explains what constitutes wilful default as
follows:
“Wilful default occurs when a party with the full knowledge
of service or set down of the matter and of the risks attendant upon default,
freely takes a decision to refrain from appearing.”
I now proceed to apply these principles to the facts
of this case.
I am satisfied that if the number of issues raised by the
applicant are properly considered the inescapable conclusion is that there is
good and sufficient cause to set aside the default judgment granted. I now deal
with all these issues.
The facts of this case indicate that the applicant was not
in wilful default. That on its own is sufficient to establish good and
sufficient cause warranting the rescission of the default judgment.
The state of health of the late Ettore at the time the
court application in HC 6280/11 was made has not been disputed. In fact the
respondents in their opposing affidavits do not put in issue this fact other
than saying they are unable to comment on that fact. Despite the strained
relations between Ettore and the respondents I do not believe that the
respondents would not have known Ettore's state of health. The evidence on
record clearly shows that Ettore at the material time was indisposed. In fact
some of the medical reports were attached by the respondents in their
application in case number HC 6280/11. The evidence on record shows that Ettore
was suffering from prostate cancer and dementia. The description of Ettore's
state of health by Isabel Fumia in the founding affidavit is uncontroverted.
The diagnosis of his condition was terminal. Ettore had now a very poor memory
and would need assistance for all decisions as he was unable to take care of
himself. At the time the application was made he was under twenty-four hour
nurse care, he could no longer feed or bath himself, he was permanently on a
catheter and diaper. In fact Isabel Fumia's evidence is that Ettore was no
longer able to recognise his wife and kids due to poor memory and confusion. I
therefore have no doubt that Ettore had lost control of his mental faculties
and was physically incapacitated due to illness. Indeed this explains why on 6
October 2011, albeit after the granting of default judgment, Isabel Fumia was
appointed Ettore's curator ad litem. Ettore due to this
illness passed on on 13 August 2012. In fact Ettore's relocation to Botswana in
June 2009 as per Isabel Fumia's evidence was greatly influenced or necessitated
by Ettore's health that was deteriorating. He was in need of medical care which
at that time was increasingly difficult to access in Zimbabwe due to the
economic meltdown.
The state of health of Ettore at the relevant time clearly
shows that he was indisposed and could not have been able to appreciate the
proceedings instituted against him. From the evidence on record this was
brought to the attention of the respondents who agreed to suspend the
proceedings for a specific time pending the appointment of a curator ad
litem in terms of r 249 of the High Court Rules. For some strange reasons
the respondents believed that Isabel Fumia as the wife of Ettore had the legal
duty to have herself appointed Ettore's curator and litem and defend the
action instituted by the respondents. One would want to believe that once the
respondents were advised about Ettore's incapacity or alleged incapacity as per
r 249 (1) (a) it was incumbent upon the respondents who had commenced
proceedings to have a curator and litem for Ettore appointed in order for them
to properly execute the court application in HC 6280/11. Instead after the
expiry of the period the respondents had unilateraly imposed against Isabel
Fumia they nonetheless proceeded to set the matter down as unopposed matter
oblivious to the provisions of r 249. To my mind this is good and sufficient
cause to set aside the default judgment.
The next issue relates to the propriety or validity of the
service of this court application in HC 6280/11 which was effected by the
respondents. Before relocation to Botswana in June 2009 Ettore was resident at
number 4 Musgrave Road, Redcliff, Kwekwe. He was then issued with residence
permit together with Isabel Fumia by the Botswana Government on 9 September
2008 and they emmigrated to Botswana where they also operated businesses. The
respondents did not challenge this fact and I do not believe that the first
respondent being Ettore's son would not know of this. Despite being aware of
this the respondents proceeded to serve the court application on Ettore's
erstwhile legal practitioners on 18 July 2011 who protested to the respondents
that they had no authority to receive the process on behalf of Ettore. The
respondents conceded to this fact and indicated they had served the process on
the erstwhile legal practitioners out of courtesy. They nonetheless proceeded
on 19 July 2011 to effect service in a letter box at number 4 Musgrave Road,
Redcliff after the gardener present had refused to accept service. Again the
respondents had been advised that Ettore had relocated to Botswana but
nevertheless they deemed it fit to serve process in Zimbabwe. It should have
dawned on the respondents that they should have proceeded in terms of Order 6 r
44 by way of edictal citation. The respondents did not even bother to serve the
third respondent and if they did they served the process on themselves! It is
therefore clear that the serving of process in this matter was improper and
this again is good and sufficient cause to set aside the default judgment.
The next issue relates to the defence on the merits. The
first point raised by the applicant is that this matter has prescribed. The
allotment of shares which gave rise to this cause of action happened in
November 1994. The first respondent as already stated wrote the first letter in
this regard in June 1995. From the correspondence in the record the last
communication between the parties in relation to this issue was in February
2006. In essence the applicant's defence is that the claim is bad at law as the
remedy sought had been extinguished by the provisions of s 14 of the
Prescription Act [Cap 8:11]. The respondents did not advance
any meaningful argument in this respect despite some belated valiant efforts in
oral submissions that the Prescription Act does not apply to the cause of
action in this matter. This in my view is a valid point which the respondents
cannot dismiss off hand.
Lastly the applicant's defence is that he holds eight
shares in the third respondent and that the respondents acquiesced to this
allocation of the shares as per the letter dated 8 June 1995. I have already
alluded to the argument raised by both parties as regards the interpretation to
be accorded to the contents of the letter of 8 June 1995.
It is common cause that Ettore is the one who built the
sole asset owned by the third respondent, the Nyami Nyami which is the centre
of dispute. It is not disputed that during his lifetime Ettore had rights and
interests in the Nyami Nyami property. Ettore also claimed majority shareholding
in the third respondent during his life time. This defence at this stage is
clearly available to the applicant.
The sum total of all the factors considered above establish
that the applicant has shown good and sufficient cause in terms of r 63 which
warrants the rescission of the default judgment. The issues raised by the
applicant are real issues which the court would have to deal with in this case
in order to achieve justice.
As regards costs I am inclined to grant punitive costs
against the first and second respondents. This is a case in which the first and
second respondents should have properly consented to the setting aside of the
default judgment. Instead, after snatching the default judgment they stubbornly
and tenaciously clung to it thus causing the applicant to incur unnecessary
costs.
Accordingly, I make the following order:
1. The judgment granted by
this court on 7 September 2011, is hereby set aside.
2. The first and second
respondents shall pay the costs on an attorney and client scale.
Mtetwa & Nyambirai, applicant's legal
practitioners
Gill, Godlonton & Gerrans,
1st and 2nd respondents' legal practitioners
