This
is a court application filed in terms of Order 49 Rule 449 of the
Rules of the High Court, 1971, on 8 August 2013, in which the
following relief is sought:
“IT
IS ORDERED THAT:
1.
The order issued by this Honorable Court, under case number
HC4641/13, dated 10th
July 2013, be rescinded and/or varied by the deletion from the order
of paragraph 2 thereof requiring applicant to pay interest on the sum
of US$70,719= calculated at the rate of 5% per annum calculated from
the 1st
of December 2008 to the date of payment in full.
2.
The order issued by this Honorable court, under case number
HC4641/13, be rescinded and/or varied by the deletion of paragraph 3.
3.
The respondent shall pay the costs of this application.”
In
the founding affidavit, the applicant averred that, on 31 December
2008, the respondent obtained an award issued by the Commercial
Arbitration Centre, the operative part of which read as follows:
“1.
Tel One is to pay Unitrack an amount of ZWD equal to 70,719=
multiplied by the parallel market rate obtaining on the day of
payment, which is to be within 48 hours of the uplifting of this
award.
2.
TelOne is to pay Unitrack an amount of ZWD equal to 164,781
multiplied by the parallel market rate obtaining on the day
subsequent to the 702 voltage regulators having been examined and
tested and certified as complying to specification.
3.
Tel One is to pay the costs of Unitrack in accordance with the latest
tariff of fees fixed by the Law Society of Zimbabwe.”
The
applicant averred, further, that it forwarded a cheque to the
respondent's legal practitioners, in the sum of ZWD11,668,635=50,
in full and final settlement of the Arbitral award.
The
applicant attached a letter addressed to the respondent's legal
practitioners, dated 23 March 2009, and a reply to that letter from
the respondent's legal practitioners, dated 31 March 2009, part of
which reads as follows:
“1.
We have no authority to receive payment on behalf of our client.
2.
The cheques are purportedly in full and final settlement of our
client's claim but we draw your attention, at this early stage, to
the statement by the Honorable T. Biti, the Minister of Finance, that
was presented in Parliament on 18 March 2009 wherein he stated thus:
'Our
national currency, has, thus, become moribund. Financial assets
denominated in Zimbabwe dollar have become valueless…, the Zimbabwe
dollar is no longer a currency that the public, or any trader, will
accept…,.'
3.
The computation was done by yourselves and we do not know how it is
arrived at but you however refer to a parallel market rate as at 23
March 2009. We are instructed the parallel market has ceased to
exist. Accordingly, the cheques are returned herewith and will revert
to you once we have had sight of the Arbitration Award and taken
further instructions from our client.”
Subsequently,
the respondent approached this court, under case number HC2142/09,
for an order for the suspension of the Arbitral Award pending
determination of an application to have the Arbitral Award
denominated in United States dollars. On 24 November 2009, this court
ordered that arbitrators to make an award that was not contrary to
public policy. On 3 June 2013, the Arbitration panel gave an award
which amended paragraph one of the Arbitral award handed down on 31
December 2008, as follows:
“Tel
One is to pay Unitrack an amount equal to US$70,719= obtaining on the
day of payment, which is to be within 48 hours of the uplifting of
this award.”
On
13 June 2013, the respondent filed a chamber application for
registration of the Arbitral award for purposes of enforcement under
case number HC464/13. On 19 June 2013, the applicant's legal
practitioners wrote a letter to the respondent's legal
practitioners in which they expressed the view that the application
for registration of the Arbitral award was unnecessary and premature
at that stage.
Thereafter,
the applicant proposed to settle the Arbitral award in three
installments. The parties agreed that the applicant pay US$50,000= by
27 July 2013 and the balance on or before 31st
August 2013. The respondent obtained an order for the registration of
the arbitral award on 10 July 2013, which read as follows:
1.
The award by the Commercial Arbitration Centre, dated 3 June 2013, is
hereby registered as a judgment of this court.
2.
The respondent shall pay the applicant the sum of US$70,719=, or its
equivalent, in a currency recognized as legal tender in Zimbabwe
together with interest thereon at the rate of 5% per annum calculated
from 31 December 2008 to the date of payment in full.
3.
The costs of this application will be borne by the respondent on a
legal practitioner client scale. …,.
The
respondent caused a writ of execution to be issued on 29 July 2013.
The
applicant's contention is that the Arbitral award of 31 December
2008 did not provide for interest on the amount of US$70,719= at the
rate of 5% per annum calculated from December 2008 to the date of
payment. The applicant contends, further, that, the addition of
interest to the Arbitral award was erroneous, that it was erroneously
prayed for and erroneously granted, and that, consequently, that part
of the arbitral award ought to be varied or rescinded in terms of
Order 49 Rule 449 of the rules of this court.
The
respondent filed its opposing affidavit to this application on 21
August 2013….,.
The
respondent contended that the applicant ought to have appealed
against the terms of the order granted when the Arbitral award was
granted, not filed an application for correction of the judgment, and
that the applicant had adopted the wrong procedure.
In
regards to the merits of the matter, the respondent submitted that
the applicant had only made payment of the sum of US$70,719= after
its bank accounts had been attached on 1 August 2013. This, it was
contended, exhibited a lack of good faith on the part of the
applicant, which had not bothered to oppose the court application for
registration of the Arbitral award.
The
respondent submitted that the agreement between the parties, to
settle the award in three monthly instalments, was made after the
arbitral award had been registered, and the applicant subsequently
failed to honor its undertaking to pay. The respondent submitted the
that applicant is misleading the court when it states that it was not
aware that the respondent had registered the arbitral award at that
stage. The respondent contended that it was entitled, at law, to
recover interest. The respondent contended that the award was
supposed to have been paid within 48 hours, and that, the lapse of
the 48 hour period placed the applicant in morae. The respondent
contended that interest began to accrue on the arbitral sum from the
date when the money became due. For this reason, the respondent
contended that there was no error on the part of the court when it
registered an order for payment of interest on the sum of US$70,719=.
The
respondent accepted that the original arbitral award did not provide
for interest on the amount of the award and suggested that the
stipulation that the award be paid within 48 hours contemplated that
interest would begin to accrue from the date the award became due….,.
The
applicant submitted that the application is proper because of the
order that was erroneously granted in default.
In
its heads of argument, the applicant stated that it was trite that a
court has no jurisdiction and should be wary of interfering with an
arbitral award except in a limited sense, to interpret the meaning of
a word, and relied on the following cases as authorities for this
proposition: Schoeman & Schoeman v Schoeman 1928 LPD 564; Keen v
Durban City Council 1951 (2) SA 548 (N); and on Jacoba Law of
Arbitration in South Africa…,.
The
applicant also cited the case of Conforce (Private) Limited v City of
Harare 2000 (1) ZLR 445 where the court stated that:
“I
agree that a court should not interfere with an Arbitrator's award
so as to alter it to accord with what the court thinks the Arbitrator
actually decided.”
The
respondent, in its heads of argument, contended that this application
ought not to have been made, for the reason that the applicant was
aware of the proceedings by which judgment was obtained, having been
served with a copy of the application for registration of the
arbitral award, in case number HC4641/13.
The
respondent contended that this court ought to consider whether a
person who has ignored legal proceedings which he was aware of can
subsequently turn around and assert that the relief afforded was
sought in error.
Rule
449 of the rules of this court provides as follows:
“449.
Correction, variation and rescission of judgments and orders
(1)
The court or a judge may, in addition to any other power it or he may
have, mero motu or upon the application of any party affected,
correct, rescind, or vary any judgment or order -
(a)
That was erroneously sought or erroneously granted in the absence of
any party affected thereby; or
(b)…,.
(c)…,.
(2)…,.“
The
respondent sought to rely on the case of Banda v Pitluck 1993 (2) ZLR
60 (HC) as authority for the proposition that the power given to the
court in terms of Rule 449(1)(a) ought to be exercised in proceedings
in which the complaining party was unaware. The respondent submitted
that a complaining party who was aware of the proceedings, and of the
fact that the order was erroneously sought, ought to be precluded
from seeking to have the order set aside because the party ought to
have opposed the granting of the order on the basis that it was
erroneously sought.
In
Banda v Pitluck 1993 (2) ZLR 60 (HC), the applicant approached the
court for rescission of default judgment in terms of Rule 63 of the
rules of this court. The court rescinded the judgment on the basis
that it had been erroneously granted in terms of Rule 449(1)(a). The
court rescinded the judgment mero motu. Judgment had been granted in
default of entry of appearance to defend. The court had failed to
notice that appearance to defend had been duly entered but not served
on the other side in contravention of the rules. The applicant for
default judgment did not erroneously seek it, being unaware that
appearance had been entered. The court erroneously granted it….,.
I
am not persuaded that this case is authority for the proposition that
a party who had notice of the proceedings ought to be precluded from
seeking rescission because that party does not qualify as a party who
was absent from the proceedings. In my view, being absent from the
proceedings for purposes of Rule 449(1)(a) simply means not
participating in the proceedings when judgment is given. Nothing in
Rule 449(1)(a) suggests that the non-appearance must be willful or
not willful. The Rule simply requires that judgment must have been
erroneously sought or granted in the absence of any party affected by
it. The reasons for the absence or lack of participation in the
initial proceedings are not entirely relevant to the question of
locus standi or permission to avail oneself to the remedy provided by
the Rule, in my view.
My
view is buttressed by the following dicta, at page 64, in Banda v
Pitluck 1993 (2) ZLR 60 (HC), the court said:
“Let
me reiterate, immediately, that rescission of a judgment under Rule
449(1)(a) is entirely different and must therefore be distinguished
from an application for rescission of a default judgment under Rule
63 which requires the court, before it sets aside a judgment under
that Rule, to be satisfied 'that there is good and sufficient cause
to do so'. Nor is the court concerned with the issue of whether the
defendant has 'a good prima facie defence to the action', the
test to be applied by the court under Rule 66(1)(b) when considering
an application for summary judgment.
In
my view, when considering the question of rescission of a default
judgment under Rule 449(1)(a) on the ground that it was 'erroneously
granted in the absence of any party affected thereby', once the
court finds, as it has found in this case, that the judgment was
erroneously granted against the defendant; either because of an error
on the part of the judge before whom the application for default
judgment was placed in failing to observe the Notice
of Appearance
to Defend
contained in the court file, or, as is much more likely, because of
the absence of the Notice
of Appearance
to Defend
in the court file through delay on the part of the Registry staff in
placing the notice in the court file, then that is an end to the
matter and the court should rescind the judgment.”
In
Matambanadzo v Goven 2004 (1) ZLR 399 (S), the court stated that:
“The
issue which I now wish to consider is what the applicant for an order
rescinding a judgment or court order ought to show in order to
establish that he has the requisite locus standi in judicio. That
question was answered by CORBETT J, as he then was, in United Watch &
Diamond Company (Pty) Ltd & Ors v Disa Hotels Ltd & Anor 1972
(4) SA 409 (C) at 415 A-C, as follows:
'In
my opinion, an applicant for an order setting aside or varying a
judgment or order of Court must show, in order to establish locus
standi, that he has an interest in the subject matter of the judgment
or order sufficiently direct and substantial to have entitled him to
intervene in the original application upon which the judgment was
given or order granted.”
Applying
this test to the facts of the matter under consideration, I have no
doubt that the applicant in casu has the requisite locus standi in
judicio to bring this application. The applicant does have a direct
and substantial interest in the matter of the order granted by this
court. Clearly, the applicant would have been entitled to intervene
in the original application for registration of the arbitral award.
The
next question for determination by the court is whether the
respondent was entitled to interest on the arbitral award when the
award itself was silent on that aspect.
Section
4 of the Prescribed Rate of Interest Act does not answer this
question. Section 5 appears to imply that such interest is payable
from the date when the debt became due. In this case, such a question
would have to be placed before the arbitrator for consideration. It
is common cause that the arbitral award did not provide for payment
of interest. Therefore, the High Court order of 10 July 2013, which
provided for payment of interest from 31 December 2008, was
erroneously sought and erroneously granted. There was no legal basis
for acceding to that application for interest in an application for
registration of an arbitral award for purposes of execution - in the
absence of provision for interest in the award itself.
At
the hearing of the matter, counsel for the applicant conceded that
costs are always at the discretion of the court, and that,
consequently, the proper procedure to get the order for costs set
aside would be to appeal against the order and obtain the court's
reasons for acceding to a request for costs on a higher scale.
For
these reasons, the following order is granted:
IT
IS ORDERED THAT:
1.
The order issued by this Honorable Court, under case number
HC4641/13, dated 10th
July 2013, be rescinded and/or varied by the deletion from the order
of that part of paragraph 2 thereof requiring applicant to pay
interest on the sum of US$70,719= calculated at the rate of 5% per
annum calculated from the 1st
of December 2008 to the date of payment in full.
2.
The respondent shall pay the costs of this application.
