The circumstances are that the second applicant, Ferbit
Investments (Pvt) Ltd (hereinafter referred to as FI), is a subsidiary of the
first applicant, Golden Reef Mining (Pvt) Ltd (hereinafter referred to as GRM),
in whose name some chrome claims are registered.
On 11 March 2011, both applicants and the respondent,
Mnjiya Consulting Engineers (Pvt) Ltd (hereinafter referred to as MCE), entered
into, and signed an agreement, the terms of which Mnjiya Consulting Engineers
(Pvt) Ltd (MCE) offered to acquire 40 per cent of the Ferbit Chrome Projects.
The offer was based on the initial proposal which was to the effect that Mnjiya
Consulting Engineers (Pvt) Ltd pays a total of US$400,000= being equivalent to
40 per cent of the projects with both parties contributing pro-rata to
shareholding towards project development. Subsequently, and on 26 June 2013,
the applicants and the respondent entered into, and signed a second Joint
Venture Agreement (JVA). The relevant provisions in the second Joint Venture Agreement
were that Golden Reef Mining (Pvt) Ltd (GRM) was to transfer all the other
mineral rights relating to Chrome Mining Project only to Ferbit Investments
(Pvt) Ltd (FI) by 31 December 2013. Further, Mnjiya Consulting Engineers (Pvt)
Ltd (MCE) was to be entitled to a 40 per cent shareholding in terms of the
provisions of clause 4.2. Clause 4.2 stipulated that Ferbit Investments (Pvt)
Ltd was to facilitate the transfer of shares equivalent to 40 per cent of the
issued share capital to Mnjiya Consulting Engineers (Pvt) Ltd (MCE) within 30
days of the signing of the Joint Venture Agreement.
The 40 per cent issued share capital to be issued to Mnjiya
Consulting Engineers (Pvt) Ltd (MCE) was on the basis of a contribution of $400,000=
(four hundred thousand United States dollars) that had been paid.
It is common cause that by the agreement of 26 June 2013,
the respondent obtained 40 per cent shareholding in the second applicant at the
price of $400,000=. Whilst the agreement was being implemented, and the agreed
mining operations were underway, the Government of Zimbabwe, according to the
applicants, issued a directive that chrome would only be exported in refined
and beneficiated form and not as un-refined ore. The second applicant, having
been capacitated only to operate as a mining entity, was no longer able to
export its un-processed chrome ore as a result of the impossibility created by
the Government directive, and, consequently, its business came to a halt.
On 11 December 2014, the respondent, represented by Mundia
and Mudhara Legal Practitioners, issued summons against the applicants under
Case No. HC11024/14. The respondent, as plaintiff, claimed payment from the
applicants (as defendants), in the sum of US$415,616=66 plus interest thereon
at the prescribed rate with effect from 1 May 2014 and costs of suit on the
scale of legal practitioner and client.
The applicants' address for service of the summons was
cited as 15 Harrow Avenue, Avondale Harare. The return of service filed of
record stated that “copy of summons and plaintiff's declaration served by
affixing to outer black gate after unsuccessful diligent search.”
On 7 January 2015, the applicants had not entered their
appearance to defend. On 2 February 2015, this court granted the order sought
in default in the absence of the applicants. Subsequently, on 27 February 2015,
the Deputy Sheriff of the High Court seized and attached equipment stationed at
the first applicant's mining site. That is the date the applicants became aware
of the default judgment, hence proceeded to make this application for
rescission of the default judgment.
The applicants are now arguing that the judgment entered
against them is entirely incorrect and should be rescinded on the basis that –
(1) They did not see the summons.
They claimed that their Head Office is at 16 Kenilworth
Road, Newlands, Harare, and that the summons should have been served at that
address which was also known by the respondent. That the cause of action for
the summons in HC11024/14 does not arise from an agreement entered between the
second applicant and the respondent; which the Joint Venture Agreement provides
the second applicant's domicilum citandi et executandi as 15 Harrow Avenue,
Avondale Harare.
(2) That there was no agreement to pay the respondent an
amount of US$415,616=66, and that even if the proposal made by the applicants
to pay the respondent the debt was to be taken as an agreement, the debt which
the respondent claimed is not yet due.
All the parties were in agreement that in order for an
application for rescission of default judgment to succeed, the applicants ought
to demonstrate that there is good and sufficient cause to do so. See Order 9 Rule
63(2) of the High Court Rules, 1971.
From the authorities cited by both parties, it is trite
that the factors which are taken into account in deciding whether a default
judgment should be rescinded are -
(i) The reasonableness of the applicant's explanation for
the default;
(ii) The bona fides of the application to rescind the
judgment; and
(iii) The bona fides of the defence on the merits of the
case and whether that defence carries some prospects of success.
See Chihwayi Enterprises (Pvt) Ltd v Atish Investments
(Pvt) Ltd 2007 (2) ZLR 89 (S)…,.; Deweras Farm (Pvt) Ltd v Zimbabwe Banking
Corp Ltd 1998 (1) ZLR 368 (S)….,.; Beitbridge Rural District Council v Russell
Construction Co. 1998 (2) ZLR 190 (S)…,.; Sixth Century Construction (Pvt)
Ltd v Zimbabwe Electricity Transmission
Company (Pvt) Ltd HH85- 14; and GD Haulage (Pvt) Ltd v Mumugwi Bus Services (
Pvt) Ltd 1979 RLR 447.
In this case, the two issues to be decided are;
(a) The reasonableness of the applicants' explanation for
the default; and
(b) The bona fides of the defence on the merits.
A. THE
REASONABLENESS OF THE DEFAULT
The sole issue to be decided is whether or not 15 Harrow
Avenue, Avondale, Harare was the proper address for service in casu.
Counsel for the applicants argued that a letter of demand
written by Jambo Legal Practice, which is annexure 'C', was addressed at 16
Kenilworth Road, Newlands, Harare, but the summons was served at 15 Hallow
Avenue, Avondale, Harare, hence it can be argued that there was no proper
service.
While counsel for the applicants conceded that paragraph
14.1.2. of the Joint Venture Agreement puts the domocilium citandi et
executandi of the applicants as 15 Hallow, Avenue, Avondale, the service was
defective because the summons was put by the gate and it was blown away by the
wind. He further, argued that in terms of paragraph 14.4.2. of the Joint Venture
Agreement, the summons should have been handed over to a responsible person. Counsel
for the applicants, therefore,
submitted that the applicants were not in wilful default. He referred the court
to the case of Zimbank v Masendeke 1995 (2) ZLR 400 (S) where the court, in
defining the concept of wilful default, remarked as follows:
“Wilful default occurs when a party, with full knowledge of
the service or set down of the matter, and of the risks attendant upon default,
freely takes a decision to refrain from appearing.”
In his heads of argument, counsel for the respondent said
that it is trite that where a defendant had chosen a domicilium citandi et
executandi, service at that address is good and proper service. See Downey v
Downey (1899) 16 SC 475; Robinson v Sarif 1946 WLD 25. Counsel for the
respondent, further, said that the applicants chose 15 Hallow, Avenue,
Avondale, Harare, as their domicilium citandi et executandi. He further,
submitted that even though the place chosen is a vacant piece of land, service
at a domicilium citandi et executandi is good and proper service. He referred
the court for this proposition to the case of I'ons v Freeman & Frock 1916 WLD 64.
As I stated above, the applicants and the respondent signed
two agreements which are filed of record. The two agreements relate to the 40
per cent shares acquired by the respondent. The dispute between the applicants
and the respondent is centred on the refund that the respondent made in
acquiring the 40 per cent shares. No other agreement has been filed in this
case. The first agreement, dated 11 March 2011, does not have any clause
relating to the domicilium citandi et executandi of the parties. Other than the
correspondences that exchanged hands between the applicants' legal
practitioners and the respondent's legal practitioners, which bear the address
16 Kenilworth Road, Newlands Harare, there is no written proof that the parties,
at any stage, agreed to use that address as domocilium citandi et executandi
for the applicants. The only agreement that bears the domicilium citandi et
executandi for the parties is the Joint Venture Agreement (JVA) dated 26 March
2013. For the avoidance of doubt, I quote the relevant paragraphs which read as
follows:
“14. DOMICILIUM
CITANDI ET EXECUTANDI AND JURISDICTION
14.1 Each party
chooses the following physical address, postal address, electronic mail
address, telefax number and telephone number as domocilium citandi et
executandi for all purposes under this agreement, whether in respect of court
process, notices, or other documents or communications of whatever nature, and,
in the event of change, each party shall inform the company and the other
shareholders annually at the annual general meeting of its chosen domicilium
citandi et executandi.
14.1.1. Mnjiya
Consulting Engineers (Pvt) Ltd Chooses: 167 – 14th Road
Noordwyk, Midrand
1685
Whitby Manor Office Estate
MCE House
South Africa
14.1.2 Ferbit
Investments (Pvt) Ltd Chooses: 15 Harrow Avenue
Avondale
Harare
Zimbabwe
14. 2…,.
14.3 Any Party
may, between annual general meetings, by notice to all other Parties, change
the particulars of their chosen domicilium citandi et executandi to another
physical address, postal address, electronic mail address, telefax number and
telephone number, provided that the change shall only become effective
vis-à-vis the other Parties on the 7th business day from the deemed
receipt of the notice by the addressees.”
In casu, no written notice was ever given by the applicants
to the respondent that they had changed their address, or, more particularly,
their domicilium citandi et executandi, from 15 Harrow Avenue, Avondale to 16
Kenilworth Road, Newlands, Harare. In my view, 15 Harrow Avenue, Avondale,
Harare, remained, for all intents and purposes, the applicants' chosen
domicilium citandi et executandi, hence service at that address was good and
proper service.
I agree with counsel for the respondent that even service
on a vacant piece of land is proper service as long as that has been chosen as
the address of service. In the current case, even service by affixing the
summons on the closed door or gate at the chosen address, after a diligent
search, is proper service.
The applicants', therefore, failed to give a
valid explanation for the default.
