IN
CHAMBERS
MAKARAU
JA:
This
is an urgent chamber application for stay of execution in terms of
Rule 73 of the Supreme Court Rules 2018 as read with Rule 244 of the
High Court Rules, 1971.
On
19 December 2018, the High Court handed down a judgment registering
an arbitral award against the applicants. The judgment also dismissed
an application by the applicant to set aside the arbitral award. The
applicant became aware of the judgment on 29 January 2019 after the
first respondent had caused the third respondent to attach its
equipment and assets to satisfy the debt. On 31 January, the
applicant's legal practitioners advised the first respondent's
practitioners that they intended to appeal against the judgment and
were accordingly filing an application for condonation and extension
of time within which to note the appeal. In the same letter, the
applicant inquired whether the first respondent was inclined to stay
execution in light of the applicant's intention to appeal the
judgment. Whilst the first respondent's practitioners responded to
the letter, they did not advise on whether or not they were inclined
to stay execution as requested. To avoid the attached property being
removed, the applicants issued a security bond in terms of the High
Court Rules.
The
application for condonation was filed on 5 February 2019 and was duly
served on the respondents. The applicant once again made inquiry of
the first respondent as to whether or not it was inclined to stay
execution. It gave the first respondent up to 8 February to respond.
Instead of responding to the inquiry, the first respondent, on 11
February, caused further attachment of the applicant's property. On
13 February, 2019, the applicant filed this application.
In
the application, the applicant contends that the matter is urgent,
that it has prospects of success in the application for condonation
and that the balance of convenience favours the granting and not the
denial of the interim protection that it seeks. On this basis, the
applicant seeks an order staying execution pending the determination
of its application for condonation and extension of time within which
to note an appeal.
At
the hearing of this application, it was common cause that the
application for condonation and extension of time within which to
note the appeal is now ready for hearing and is simply awaiting set
down.
The
application was opposed on four main grounds.
Firstly,
it was contended that the matter is not urgent. Secondly, it was
argued that the application was improperly before me. The first
respondent contended, thirdly, that the applicant's prospects of
success in the application for condonation and extension of time to
note the appeal are not bright and lastly, it was argued that the
balance of convenience favours the denial of the application.
It
is convenient that I deal with this application on the basis of the
four grounds of opposition that have been advanced by Mr McGowan
for the first respondent, but not in the order in which he presented
them as the second ground goes towards jurisdiction and should be
dealt with first.
Whether
or not the application is properly before this court
It
was contended on behalf of the first respondent that the applicant
ought to have applied for the judgment against it to be rescinded in
the court a
quo
as a default judgment. The basis of this contention is a statement by
the applicant in its founding affidavit in the application for
condonation contending that the effect of the striking out of the
opposing affidavit in the application for registration of the award
was that the application was granted unopposed. To this extent, the
contention proceeds, it was a default judgment yet the order of the
court a
quo
did not reflect this state of affairs and gives the impression that
the order was granted on the merits.
It
is common cause that the court
a quo
upheld the point in limine
raised by the first respondent that the deponent to the applicant's
affidavit was incompetent to swear positively to the contents of the
applicant's affidavits. Having done so, it dismissed the
application by the applicant and granted the application by the first
respondent. It is therefore not in dispute that the court a
quo
did not render a judgment in default of appearance or of filing
relevant papers in the two matters but dismissed the one and granted
the other after hearing arguments from the parties on the basis of
papers filed of record. The court considered that the applicant was
properly before it and accepted argument from it on the point in
limine.
It follows therefore, that the judgment that it rendered thereafter
on that point cannot by any imagination be described as a default
judgment as envisioned by the High Court Rules. The applicant was
clearly before the court and did not default in the filing of any
papers. It was simply not persuasive in its argument before the court
a
quo
on the point in
limine.
The ensuing judgment was made in its presence, on the basis of its
papers but against it.
It
appears to me that having struck off the applicant's papers, the
court a
quo
ought to have either dealt with the matter on the merits, or refer it
to the unopposed roll for a “proper” default judgment to be
entered against the applicant. It did neither.
As
matters stand, the only way that the applicant could have had the
correctness of the judgment against it tested was by way of an
appeal. It could not conceivably have done so by way of an
application for rescission of the judgment as argued for and on
behalf of the first respondent.
Notwithstanding
that the applicant itself may have incorrectly referred to the
judgment of the court a
quo
as a default judgment, I find that it was not a default judgment
capable of correction by way of rescission. I further find that
applicant, once having made an application to this Court for
condonation of late filing of its appeal and an extension of time
within which to note the appeal, is properly before this Court in
this application. The jurisdiction of this Court in this matter is
not inherent but is ancillary to the application for condonation that
this Court is seized with.
It
is the settled position at law that once this court is seized with a
matter, it is then imbued with inherent jurisdiction to control and
protect its processes and this includes jurisdiction to stay the
judgment appealed against. (See Net
One Cellular (Private) Limited v 56 Net One Employees & Anor
SC 40/05).
Urgency
Clearly
the matter before me is urgent. What has created the urgency is the
first respondent's unwillingness to advise the applicant in time
its intention to proceed with execution notwithstanding the filing of
the application for condonation and extension of time within which to
note an appeal. Had that intention been communicated to the applicant
when it was solicited on 29 January 2019, this application may have
been filed earlier than it eventually was.
I
am constrained by the facts of this matter to note in passing that it
is eminently ethical practice for legal practitioners to be upfront
with colleagues and advise them of client's instructions,
especially when an indulgence sought is not being granted. To the
contrary, it is sharp practice, one that this Court frowns upon, for
legal practitioners not to respond to a direct inquiry on an
indulgence sought, and then surreptitiously proceed with the course
of action which is the subject of the inquiry.
As
correctly contended on behalf of the first respondent, the need to
act in this matter arose on 29 January 2019 and the applicant would
have been at fault had it failed to take action then in the absence
of any explanation. The applicant has however taken the court into
its confidence and has explained all the steps that it took during
this period, including the issuance of a security bond and the
sending of the two unrequited written inquiries to the first
respondent on whether or not it was inclined to suspend execution
pending the determination of the application for condonation.
It
is on the basis of the above that I view this matter as being urgent.
Prospects
of success
It
was contended on behalf of the first respondent that the applicant's
prospects of success on appeal are not bright.
In
considering this factor I am aware that another court is yet to
consider the same prospects of success on appeal when it determines
the application for condonation of late filing of the appeal and
extension of time within which to file the appeal. I am however
comforted by the fact that my findings herein are not binding on that
other court.
The
applicant contends that the court a
quo
erred in several respects.
It
argued in the main, that the court a
quo
erred in holding that a director of a company who had read the
arbitral award, the record of proceedings and had access to the
records and other institutional memory of the company could not
depose to an affidavit in an application to set aside the award and
to the opposing affidavit in an application to register the award.
Its main contention was that corporations, being persons in
perpetuity and lacking corpus, can only be represented in legal
proceedings by authorised officers and a director, so authorised is
competent to depose to an affidavit on behalf of the corporation. In
circumstances where a corporation is so represented, it cannot be
said that it has no voice before the court and only the other party
will be heard.
Per
contra,
the first respondent argued that the director who represented the
applicant in the proceedings a
quo
did not participate in the negotiation of the arbitral agreement, was
not a witness to the arbitration proceedings, did not attend the
meetings where the dispute was discussed and did not set out the
basis of his knowledge of the facts that he deposed to in the two
affidavits. On account of this failing, it is argued that the court a
quo
correctly held that the applicant's affidavits in both matters be
struck off.
There
is clearly an argument in the two competing contentions advanced by
the parties that may detain the Supreme Court. There is no ready
answer to each of them and the court will have to rely on one or more
underlying legal principles in company law and in the interpretation
of the rules of procedure to resolve the argument.
The
contention by the applicant that a corporation can be represented by
any of its authorised directors who has access to company records and
other reservoirs of institutional memory has some prospects of
success on appeal.
Having
found that there is an argument relating to one of the grounds of
appeal is sufficient basis for a finding that there are prospects of
success in the application for condonation. On this basis alone, I
would grant the relief sought in the application. For completeness of
the record though, I will briefly consider the other grounds upon
which the judgment of the court a
quo
has been attacked.
It
has further been argued on behalf of the applicant that the court a
quo
erred in registering an award that does not sound in money. The award
was not attached to the application and I am none the wiser as to its
contents. In opposition to this averment by the applicant I expected
a vehement denial by the first respondent of the allegation. It was
not there. Instead, the argument advanced was that the applicant was
aware of the amount of the award, presumably from some other sources
that are not the judgment nor the award itself. Assuming that the
complete information is placed before the court determining the
application for condonation of late filing of the appeal and
extension of time within which to note the appeal, this may be
another arguable position to be referred to the Supreme Court for
determination.
It
was yet and further argued that the court a
quo
erred in rendering a judgment without reasons.
After
summarising the arguments of the first respondent, the court a
quo
in a rather terse judgment held that it was “accordingly
persuaded that the opposing papers, such as they are in case no HC
1186/18 ought to be struck out ….”
The
court a
quo
made a similar statement regarding the founding affidavit in the
application for setting aside the arbitral award.
Applicant
contended that the above did not constitute “reasons” for the
decisions that the court finally made. Per
contra,
the first respondent argued that the statements coming as they do
immediately after the court a
quo
had summarised the arguments of the first respondent, the statements
must be read as an endorsement of those arguments which then
constitute the reasons for the decisions made.
Again,
there is content in both arguments that may detain the Supreme Court.
The court may find that the court a
quo
misdirected itself by not clearly articulating its reasons for
judgment and may consequently find that the ratio
decidendi
of the court a
quo
cannot be and should not be discerned from the opposing arguments as
argued for and on behalf of the first respondent. In my view, this
argument enjoys some prospects of success on appeal.
Finally,
it is argued on behalf of the applicant that the court a
quo
made two contrary findings regarding costs. In the body of the
judgment the court made a finding that it ordered that the applicant
bears the costs of the two applications on the higher scale. It
proceeds to give reasons for the decision and in doing so, ultimately
orders that the applicant bears costs only in the one matter on the
ordinary scale while in the other, each party is to bear its own
costs.
Mr
McGowan
for the first respondent has sought to downplay the apparent
contradiction regarding costs by submitting that the contradiction
can be corrected under Rule 449 of the High Court Rules 1971. It is
not necessary that I comment on whether this course of action is
feasible or not. What is clear to me is that the Supreme Court also
enjoys jurisdiction on appeal to decide on whether or not the
contradictory pronouncements by the court a
quo
on the issue of costs was an irregularity meriting its attention and
possible rectification.
On
the whole, I am satisfied that the application for condonation for
the late noting of appeal and extension of time within which to note
the appeal has some prospects of success on one or more of the
grounds raised by the applicant.
Balance
of convenience
An
application for stay of execution pending the determination of some
other process by the court is a hybrid application. It combines the
factors that a court takes into account when considering an
application for an interim interdict generally and the factors that a
court considers when granting an indulgence in an exercise to control
and protect its own proceedings. (see Makaruse
v Hide and Skins Collectors (Pvt) Ltd
1996 (2) ZLR 60 (S) and TM
Supermarkets (Private) Limited v Avondale Holdings (Private) Limited
and Another
SC37/17. In both instances, the court must always bear in mind the
balance of convenience or more importantly, where the interests of
justice lie.
Comparing
itself to the biblical David against an international corporation
that it likened to Goliath, the first respondent has painted a vivid
picture of a small local company that is being brought to its knees
by the delays in receiving payment from an arbitral award that it has
been awarded and has since had registered. Against the proceeds of
projects that are worth at least US1,2 billion, the amount due to the
first respondent in the sum of US1,5 million, appears trifling and
will or should not cause a financial dent to the applicant.
If
this was the only factor that I had to consider, I would have been
persuaded by the submission made by the first respondent regarding
the crippling effect that delay has had on its operations, to be on
its side and deny the application. Taking into account all the
factors cumulatively as I must, I find myself on the applicant's
side. The applicant has exhibited utmost good faith in the manner in
which it has proceeded after learning of the judgment against it, it
has taken out a security bond and has tried to engage the first
respondent regarding the stay of execution of the judgment a
quo
in vain. Further the period of the interim order sought is fairly
short as the order will hold only up to the determination of the
application for condonation. Yet further, there are clear challenges
with the judgment a
quo
that may need commenting on and possible rectification by this court
before the judgment can be executed upon.
Disposition
and costs
It
is my finding that it is in the interests of justice that pending the
determination of the application for condonation for late noting of
appeal and extension of time within which to note the appeal,
execution be stayed. The applicant has succeeded in this application.
It is entitled to its costs. No argument was advanced by either side
as to why the ordinary incidence of costs following the cause, should
not apply.
Accordingly,
I make the following order:
1.
The application is granted with costs.
2.
Execution of the judgment in case no HC825/13 is hereby stayed
pending determination of the application for condonation and
extension of time within which to note an appeal filed under case no
SC41/19.
Manokore
Attorneys,
applicant's legal practitioners.
Machekano
Law Practice,
1st
respondent's legal practitioners
