MATHONSI J: At the request of the parties to these 2
applications I agreed to hear both of them simultaneously given that the
matters are related and arise from the same issue. In the first application,
namely HC 3020/13 the applicant seeks to join the 15th respondent,
the Eastern and Southern African Trade and Development (PTA) Bank (“the PTA
Bank”) as a party to the proceedings brought by the first respondent (“Capital
Bank”) in HC 999/13.
In the second application, namely HC 3114/14, the same applicant seeks leave to
serve process in HC 999/13 upon the PTA Bank at Chaussee du Prince Loise
Rwangasore, Bujumbura in Burundi, by edictal citation. This judgment therefore
disposes of both applications.
Capital bank sued the applicant and 13 others on the basis of agreements
entered into on 19 July 2010, 2 September 2010 and 9 December 2010 in terms of
which the applicant was loaned sums of money the balance of which allegedly
stood at US$ 2 575 038-70 as at 31 March 2012. The other defendants in that
matter who are also respondents herein were sued as sureties and co-principal
debtors in that action.
The defendants contested that suit and in due course the
applicant, who is the first defendant in that action, filed a plea in which,
pleading rectification, prayed that the action be stayed pending the
determination of its counterclaim for the rectification of the contract upon
which Capital Bank sued as well as the determination of another matter being HC
5427/12 in which it had sued Capital Bank and others for certain damages.
The applicant then filed a counterclaim in that matter
wherein it cited the PTA bank as the 15th defendant. It averred that
itself and Capital Bank had executed the loan agreements I have already
referred to but that such agreements do not correctly record the agreement of
the parties in that it records Capital Bank as the lender when in actual fact
the lender was the PTA Bank which granted the applicant a loan facility of
US$2,5 million. It averred further that the PTA Bank could not register the
loan in its books because; Munyaradzi Kereke who is the 13th
defendant in that matter and is associated with the applicant, was on the
European Union sanctions list. The PTA Bank had then appointed Capital Bank's
predecessor, Renaisance Merchant Bank Limited as its escrow or disbursement
agent as a sanctions bursting measure. The applicant then sought an order
rectifying the contracts by the substitution of the PTA Bank in the place of
Renaisance Merchant Bank and costs of suit on the legal practitioner and client
scale.
For completeness I must
mention that the action in HC 999/13 is still to be set down for trial.
Meanwhile, the applicant has brought these 2 applications. In HC 3020/13,
Munyaradzi Kereke, reiterated what is contained in the plea in HC 999/13 in his
founding affidavit, that the applicant applied to the PTA Bank for an offshore
line of credit of US$2,5 million. He attached a copy of the application which
is headed “PTA Bank, $2,5 Million Loan Application” dated 21 July 2010. He
deposed that the PTA Bank granted the facility and as proof of that he attached
what is termed “Indicative Term Sheet; Proposed Structured Amortized Medium
Term Import Financing Facility for Fairdrop Trading Private Limited Trading as
Rock Foundation Medical Centre July 2010.”
Kereke stated that although Capital Bank has issued summons
as the principal lender, there is no privity of contract between the parties.
As the applicant has pleaded rectification and counterclaimed for it and cited
the PTA Bank as a defendant, leave was being sought to join the PTA Bank in the
proceedings. In the event of the counterclaim being granted, the dispute in the
claim in convention cannot be decided without PTA Bank. For that reason the
applicant sought to invoke third party procedure to join the PTA Bank as a
party.
The application is strongly opposed by Capital Bank and in
the opposing affidavit of Lawrence Tamayi, its Managing Director, it denied the
allegation that it was the escrow or disbursing agent of the PTA Bank. He
stated that clause 19 of the credit facility letters specifically excludes any
other terms or conditions or agreements which are not recorded in the credit
facility letters. The said clause reads:
“This offer, once accepted, constitutes the entire
agreement between the parties who acknowledge that there are no other oral or
written undertakings or agreements between them relating to the subject matter
of this agreement. No amendment, consensual cancellation or other modification
of this agreement shall be valid or binding on a party hereto unless reduced to
writing and executed by both parties hereto.”
As Kereke signed the agreement on behalf of the applicant,
he being an accomplished banker, he knew the import of that provision and it
bound the applicant to the agreement and nothing else. Tamayi vehemently denied
that the application form to PTA Bank relied upon by the applicant is a binding
contract between the applicant and the PTA Bank as it makes it clear that the
PTA Bank was not making any undertaking to legally bind itself to lend on the
terms set out therein and that any agreement reached would be subject to the
written approval of the PTA Bank.
In any event, Tamayi argued, the document applicant relies
on, makes it clear that it is governed by the laws of England. In addition, the
applicant and sureties provided security to Capital Bank in the form of
mortgage bonds, notarial bonds and unlimited guarantees. These securities were
not given in favour of the PTA Bank. Significantly, the applicant made loan
payments amounting to US$ 634 794-95 to Capital Bank and not the PTA Bank.
According to Capital Bank the application is designed to delay the finalisation
of the action and nothing else. It accessed funds from the PTA Bank by a
separate arrangement and lent the funds to its clients including the applicant
which explains why its predecessor made reference to the “PTA Bank credit
facility” in correspondence.
The second application, HC 3114/13, is made in terms of
Order 6 r 44 for edictal citation. The applicant insists that this court has
jurisdiction over the matter because:
“8.1. the court has
already assumed jurisdiction in respect of the claim in convention, in which
rectification has been pleaded, and
8.2.
the rectification necessarily requires that the PTA Bank be a party in the
counter claim, and
8.3.
the PTA Bank is the principal lender, and
8.4
the PTA Bank's loan to the applicant constitutes
sufficient assets to found jurisdiction in addition to the fact that it has
other numerous assets in Zimbabwe.”
The issues for determination in this matter are whether this is a proper case
in which the PTA Bank should be joined as a party to the proceedings and
whether this court does have jurisdiction over the PTA Bank and the agreement,
if any which was entered into between the applicant and the PTA Bank, which is
an entity cherishing its domicile in Burundi.
Mr Uriri for the applicant submitted that the applicant seeks third
party joinder in respect of the claim in reconvention which it has already
filed and in which it has gone on to cite the PTA Bank as a defendant.
For that reason the PTA Bank is already in court and it would be undesirable to
have it as a party in reconvention and not a party in convention. He
conceded that a joinder is discretionary on the court.
I take the view that in order for the court to exercise its discretion in
favour of the applicant, it must be satisfied, not only in the procedure
adopted but also on the question of jurisdiction. It would be pointless
to join a party to the proceedings when the court enjoys no jurisdiction over
that party. In fact, even the grant of leave for edictal citation is
predicated upon the existence of jurisdiction. In terms of r 44 (3) of
the High Court of Zimbabwe Rules, 1971:
“Application for leave of the
court or of a judge shall be made by application in terms of Order 32 setting
out concisely –
(a)
the facts upon which the cause of action is based;
(b)
the grounds upon which the court has jurisdiction to entertain the claim;
(c)
the manner of service which the court or judge is asked to authorise, and if
personal service cannot be effected the last-known whereabouts of the person to
be served and the inquiries made to ascertain his present whereabouts.”
Mr Uriri submitted that
while the PTA Bank is a foreign entity domiciled in Bujumbura Burundi, it has
valuable property within this jurisdiction which can found or confirm
jurisdiction. In addition, the debt which is the subject of the
litigation is itself sufficient to found jurisdiction. The court having
already assumed jurisdiction in the main lis, it should do so in
respect of the counter claim. I have serious difficulties with that
argument.
I stand by the pronouncement
that I made in Wong & Ors v Tsoi & Anor HH 380/13 (as
yet unreported) where at p 5 of the cyclostyled judgment, I stated:
“The first respondent was therefore proceeding rough shod
against all procedures set out in the rules, disregarding the rules and the law
in razzmatazz fashion. I say so because our civil practice and
procedure is clear that a person domiciled and resident in a foreign country
cannot be sued in this court as it does not have jurisdiction over that
person. For that reason there is need for an attachment ad fundandam
jurisdictionem of that person or his property in order to make him
amenable to the jurisdiction of the court. Such person or his property
can only be attached while he or it is within the jurisdiction of the court and
only after an attachment order has been issued by the court. It is
important to point out that the attachment order should be issued by the court
before the summons is issued against that person.”
The point is also made by the authors of The Civil Practice of the Superior
Courts of South Africa, Herbstein and Van Winsen, 3rd ed (1979)
at pp 788-789 that where an in cola wishes to sue a peregrinus
and none of the usual grounds upon which the court might have jurisdiction is
present, attachment is a condition precedent to the action for it is upon the
attachment that the court's jurisdiction is founded.
I therefore, do not agree with Mr Uriri that the presence of
unspecified and undefined property belonging to the PTA Bank or the debt which
is the subject of the dispute is enough for the court to exercise
jurisdiction. Where a peregrinus is being sued, even if it has
property in Zimbabwe, the plaintiff must first seek and obtain an attachment
order to found or confirm jurisdiction, as the case may be. Even if the
court were to act in terms of s 15 of the High Court Act [Cap 7:06]
which allows the court to direct service of process without an attachment
order, it can only do so if satisfied that the person or his property is within
Zimbabwe and is capable of attachment or arrest. Chirongoma v Tdg
Logistics & Anor 2011 (1) ZLR 98 (H) 101H and 102A – B.
The existence of a claim in Zimbabwe which claim is the subject of the dispute,
no matter how substantial that claim is, cannot satisfy the requirement
relating to jurisdiction. Bowes & Ors v Manolakakis
2011 (2) ZLR 59(H) 63C; Ginsbera v Estate Kulf 1924 SNA 1 at
2.
Mr Uriri for the applicant sought to rely on the authority of Voicevale
Ltd v Freightlink (Malawi)Ltd 1987 (2) ZLR 22 (S) to submit that
the subject matter of the litigation can be a basis upon which jurisdiction is
founded. In that case both parties were peregrini and the peas
which were the subject of the contract were in Harare when one of them
terminated the contract. The other party had sought an order for
attachment of the consignment of peas to found jurisdiction for an order of
specific performance against the respondent. The Supreme Court held that
the High Court had jurisdiction by virtue of being the forum rei sitae,
the court within whose area of jurisdiction the subject matter of the dispute
is situated.
In my view that case is clearly distinguishable from the present. There
the matter involved an application for leave to attach in order to found
jurisdiction. The goods sought to be attached were pointed out and firmly
located in Harare, Zimbabwe. This is not an application for leave to
attach in order to found jurisdiction. It is an application for leave to
serve process outside Zimbabwe, a process which has been issued before an order
of attachment and without leave. The case of Ex Parte Mor-tal
Construction Co (Pvt) Ltd 1962 (2) SA 664 (SR) does not advance the
applicant's cause either because in that case the court already had
jurisdiction against the peregrinus not dependant solely on attachment
of property, as the cause of action arose within its jurisdiction.
Mr Magwaliba for the first respondent submitted that this is not a
case in which I should exercise my discretion in favour of joinder because
Capital Bank, which is the plaintiff, does not have any claim against the PTA
Bank. What has happened is that one of the 14 defendants in the main
suit, the applicant herein, seeks the joinder in order to substitute a
creditor. Strange indeed. The 2 applications are a grand scheme in order
to avoid liability. He maintained that the applicant's counter-claim,
apart from it having been issued without the leave of the court where leave was
required, cuts against the provisions of r 120 of the High Court Rules.
That rule allows a defendant in an action to set up by way of claim in re-convention
any right or claim he may have against the plaintiff. In casu,
the applicant's claim is against the PTA Bank and should be made separately.
To my mind these applications are meant to cloud an otherwise straight forward
case. They bring inconvenience to the parties which is as unnecessary as
it is undesirable. The applicant seeks to import into the dispute an
intended transaction with the PTA Bank which does not appear ex facie
the papers, to have been consummated. It was proposed and as to when it
transformed into a fully-fledged agreement, we are not told.
Significantly, not only is the PTA Bank a peregrinus whose property
has not been attached to found jurisdiction, the intention of the parties in
the document relied upon was to be governed by the “Laws of England” not of
this court. It had certain conditions precedent which do not appear to
have been fulfilled.
The applicant does not dispute that it paid substantial sums to Capital Bank
towards satisfaction of the debt without demanding that payment be made to the
PTA Bank. It is noteworthy that the securities given for the debt were
given in favour of Capital Bank and not the PTA Bank. It is difficult to
comprehend what the rectification the applicant is seeking would achieve.
In my view, the balance of convenience favours the refusal to grant the
indulgence of joinder. To the extent that third party joinder is
discretionary upon the court, I cannot exercise such discretion to cause
inconvenience under circumstances where the applicant can still rely on the
defence it has elected without the need of having the PTA Bank in court.
It occurs to me that these applications should not have been made at all.
They are an attempt to frustrate and harass the first respondent by a litigant
trying to construct a defence which is probably as limping as it is
non-existent. It is a matter be fitting an award of costs on the punitive
scale. It is only that way that such conduct can be discouraged.
In the result, I make the following order that:-
1.
The application in case number HC 3020/13 is hereby dismissed.
2.
The application in case number HC 3114/13 is hereby dismissed.
3.
The applicant shall bear the costs of suit in respect of both applications on
the legal practitioner and client scale.
Honey and Blackenberg,
applicant's legal practitioners
Danziger
and Partners, respondent's legal practitioners
