GWAUNZA JA:
[1] This is an appeal against the
entire judgement of the High Court handed down on 11 May 2016.
[2] The factual background to
the matter is as follows. The Kingdom Bank Limited advanced overdraft
and loan facilities to an entity referred to as Stir Crazy Group of
Companies ('the Stir Crazy Group'). This was done through a
series of offer letters. In acceptance of the facilities offered,
the offer letters were signed on behalf of 'Stir Crazy Group of
Companies' by Ronald John Coumbis and Phillipa Ann Coumbis (third
respondent in casu), whose designations were given as 'Director.'
On the 28 January 2010, 23 February 2010 and 4 May 2009, the first
to the third respondents respectively bound themselves as sureties
and co-principal debtors for the repayment of all the sums advanced
to the Stir Crazy Group. The court a quo aptly elaborated on all the
agreements entered into between the parties, as well as related
documents as follows:
“a.
Loan agreements:
They were all in the name Stir
Crazy Group of SA Companies;
b. Unlimited guarantees:
There is none by the first
defendant. Second defendant's is in favour of Stir Crazy
Investments (Pvt) Ltd. Third defendant's is in favour of Stir Crazy
Group of Companies.
c. Surety Mortgage Bonds:
They are all in favour of Stir
Crazy Investments (Pvt) Ltd.
d. Company Resolutions to take
up the plaintiff's loan offers:
They were all on behalf Stir
Crazy Group of Companies.
e. Powers of Attorney to pass
security mortgage bonds:
They were all in favour of
securing the loans advanced to Stir Crazy Group of Companies.”
[3] The respondents failed to
honour the guarantees in question and on 9 January 2014 Kingdom Bank
Limited issued summons against them as sureties and co -principal
debtors, for the repayment of the outstanding capital and interest
arising out of the advances made to the Stir Crazy Group.
The first and second respondents
in their plea raised a preliminary point to the effect that the
appellant had no cause of action against them. The third respondent
also defended the claim on the ground that the unlimited guarantee
that she purportedly signed was not enforceable against her because
the facility or loan in question was advanced to a non-existent
entity.
It is not in dispute that Stir
Crazy Group of Companies does not exist.
[4] This circumstance having been
brought to its attention in the respondents' pleas, Kingdom Bank
Limited, in its replication, did not deny the erroneous citation of
the Stir Crazy Group as the principal debtor. It however averred
that the defect was a non- material error common to the parties,
which did not vitiate the various agreements entered into between
them. Without attending to the rectification of the principal loan
documents that cited the Stir Crazy Group, Kingdom Bank submitted
that as a matter of fact, Stir Crazy Investments (Pvt) Ltd ('Stir
Crazy Investments') was the principal debtor with respect to all
the agreements in terms of which it had extended overdraft and loan
facilities. On this basis, the bank took the position that the
respondents had effectively bound themselves as sureties and
co-principal debtors in respect of the loans and facilities advanced,
in reality, to Stir Crazy Investments (Pvt) Ltd.
[5] After the commencement of
litigation, Kingdom Bank Limited was taken over and substituted as
the appellant, by Afrasia Bank Limited which was subsequently placed
under liquidation. The respondents also filed a notice of intention
to amend their plea as they wished to incorporate the plea of
prescription. The respondents aver correctly that the amendment
sought was granted without opposition from the appellant.
[6] At the pre-trial conference,
the parties agreed that the issues that fell for determination in the
court a quo were the following:
(i) whether the appellant's
claims against the first and second respondents had prescribed;
(ii) whether the appellant had
locus standi to continue with proceedings in view of the fact that it
went into liquidation after the close of pleadings; and
(iii) whether the appellant had a
cause of action against the respondents in view of the fact that the
guarantees and surety mortgage bonds that it relied on were premised
on loan agreements with Stir Crazy Group of Companies, a non-existent
entity.
[7] The court a quo found in
favour of the respondents on the last two issues. In relation to
locus standi the court relied on the case of Allied Bank Limited v
Caleb Dengu and Anor HH 583-15, and held that the appellant lacked
the requisite locus standi because it did not seek the leave of the
court to continue with the proceedings after it went into
liquidation.
On the issue of whether the
appellant had a cause of action against the respondents, the court a
quo held that since the specified principal debtor (Stir Crazy Group)
did not exist, the principal debt could not be enforced against any
alleged surety and co- principal debtor thereto. The court further
found that the guarantee and any security mortgage bond based thereon
were invalid. Further, that the mistake common to the parties, as
alleged by the appellant, had not been established.
On the issue of prescription, the
court a quo held that the respondents had not proved to its
satisfaction that the appellant's claims had prescribed in terms of
section 15(d) of the Prescription Act [Chapter 8:11].
[8] The appellant was aggrieved
by the whole decision of the court a quo and noted this appeal on
grounds that in the court's view raise two issues for
determination, viz: -
(a) whether the plaintiff had a
cause of action against the respondents, and, if so;
(b) whether the issue of
prescription was properly raised and considered.
It was noted and conceded before
us that the decision in Allied Bank (supra) was subsequently set
aside by this Court on appeal in Allied Bank Limited v Dengu and
another SC52/16. As a result, the appellant abandoned the ground of
appeal that pertained to the appellant's locus standi.
WHETHER OR NOT THE APPELLANT
HAD A CAUSE OF ACTION AGAINST THE RESPONDENTS
[9] Of the two main issues for
determination before this Court, the court a quo dealt first with
the question of whether or not the appellants had a cause of action
against the respondents.
The record of proceedings a quo
shows that the court heard argument on this and the other issues
listed for determination from counsel representing the parties,
considered the evidence contained in the papers before it, and found
against the appellant. The appellant charges, in light of this, that
the court a quo misdirected itself in fact and law in not recognising
that the point in limine relating to the cause of action, was
actually an exception1
subject to its own procedural strictures.
It is the appellant's further
contention that in a special defence such as one pertaining to cause
of action and prescription, the party raising such defence is
regarded as the claimant 'quoad that defence' and bears the onus
to prove its case on a balance of probabilities.2
The appellant avers that the
objection relating to the absence of a cause of action on the basis
that the relevant loan documentation referred to the Stir Crazy
Group, a non- existent entity, was essentially a special plea
requiring evidence. In its view, that evidence would have led to a
rectification of its pleadings and the documentation concerned based
on the error it says was common to all parties.
The appellant argues on the basis
of a number of authorities that special pleas involve the averment of
a new fact and therefore were susceptible of replication and of a
hearing at which evidence on this new fact alone may be led.3
The appellant submits, in view of
this, that the court a quo, by determining the matter otherwise than
by trial, had deprived it of the opportunity to 'amend and rectify'
as necessary.
[10] The respondents dispute
that the appellant was not afforded the opportunity to submit
evidence in rebuttal of the special defence that they raised. They
argue essentially that the special plea regarding cause of action was
taken 'initio litis' since it was raised in the respondents'
plea by consent, replicated to by the appellant and included among
the issues for determination as set out in the joint Pre-trial
Conference Minute.
Further, that the facts relied
upon appeared ex facie the pleadings and were therefore common cause
and not open to any challenge.
The third respondent refers
specifically to the fact that the appellant itself had attached to
its papers copies of the principal loan agreements that cited the
principal debtor as the Stir Crazy Group.
[11] For their contentions, the
respondents relied on the following dictum taken from a decision of
this Court in National Employment Council for the Construction
Industry v Zimbabwe Nantong International (Pvt) Ltd SC 59/2015: -
“There are instances where the
defence relied upon is not evident ex facie the declaration and
involves the averment of some new fact or facts to be proved with
fresh matter. The procedure by way of special plea enables the
plaintiff to rebut the defence raised by replication and the
adduction of further evidence where necessary. In exceptional cases
however, where the special defence in question is apparent ex facie
the declaration itself, the court may allow the matter to be decided
on exception. This is subject to the qualification that the plaintiff
has nothing to adduce in rebuttal and will not be prejudiced by a
decision being taken on exception. (my emphasis)”
[12] I am persuaded by the
respondents' contentions as outlined and find that the remarks of
PATEL JA in National Employment Council for the Construction Industry
v Zimbabwe Nantong International (Pvt) Ltd (supra) are fully
applicable to the circumstances of this case.
The remarks clearly articulate an
exception to the general rule regarding special pleas and the
adduction of fresh evidence, that the appellant argued for. The
special defence regarding the appellant's lack of a cause of action
against the respondents was apparent ex facie the appellant's
declaration a quo to the extent that the appellant attached to it
copies of the founding loan documents as well as the sureties and
guarantees relied on. These cited the principal debtor as the Stir
Crazy Group, a non- existent entity.
The special defence, in my view,
therefore did not require the averment, by the respondents, of some
new fact or facts needing to be proved with fresh evidence. The
appellant, in my view, properly took the opportunity, in its
replication, to advance argument aimed at rebutting the special
defence.
[13] It is significant that the
appellant did not suggest it wished to adduce new evidence to prove
that the Stir Crazy Group existed and had been properly cited in the
founding loan agreements as well as some of the guarantees signed by
the respondents. Rather, the appellant's aim was to itself adduce
what could only have been new evidence aimed at persuading the court
to allow it to amend its pleadings or to rectify the loan agreements
and guarantees so as to cite Stir Crazy Investments as the principal
debtor.
This would in my view be
irregular.
[14] As the appellant itself
correctly submitted, the party that raises a special defence is in
that respect regarded as the claimant and bears the burden of proving
it on a balance of probabilities. This would place the other party,
in this case the appellant, in a position akin to that of a
respondent. The latter, is in terms of civil law and procedure,
expected to adduce evidence in rebuttal of the claimant's special
defence.
He would not be expected to
adduce evidence constituting a new case against the claimant. The
appellant, in my view, accordingly sought to improperly and
unprocedurally initiate a claim for rectification of the founding
loan agreements and guarantees under the guise of rebutting the
respondent's special defence. On this basis, the court a quo cannot
be faulted for assuming the attitude that the appellant had nothing
to adduce in rebuttal of the respondent's special defence regarding
its lack of a cause action against them.
[15] The court a quo was, in any
case, and, in my view, quite correctly, disinclined to rectify the
loan documentation and guarantees in question, for the reasons it set
out, as follows:
“My disinclination to amend the
loan agreements, and all subsequent security documents to guarantee
these loans are further influenced by the fact that neither Stir
Crazy Group of Companies, nor Stir Crazy Investments (Pvt) Ltd, are
before me. Therefore, for me to interfere in agreements wherein I
have not heard some of the parties involved is not, in my view,
proper.” (my emphasis)
The court also expressed itself
on the salutary principle of our law to the effect that a court
cannot correct an agreement between the parties as if it were
pleadings as that would amount to making a contract for the parties.
See Ballantyne Butchery (Pvt) Ltd v Chisvinga and Others, SC 6/15,
Christie: The Law of Contract in South Africa (5th ed) at p 366.
Clearly, the appellant could not
have properly moved for an amendment to its pleadings, nor to the
relevant loan and security guarantees, without the joinder of Stir
Crazy Investments to the proceedings a quo. There is no doubt that
the company had substantial interest in the subject matter of the
dispute and was therefore entitled to be heard before a decision
affecting it could be considered.
[16] I am satisfied in the light
of all this that the court a quo properly allowed the matter to be
determined on evidence and facts that were evident ex facie the
pleadings before it. It falls to reason, given that the appellant's
intended evidence would not have rebutted the special defence in
question, that no prejudice to it could have ensued based on the
procedure adopted by the court a quo in its determination of the
matter.
I find accordingly that there is
no merit in the appellant's ground of appeal in that respect.
[17] The appellant's two
grounds of appeal against the court a quo's finding on cause of
action read as follows:
“1. The court a quo misdirected
itself in fact and in law in determining the matter on the points in
limine rather than by trial, thereby depriving the appellant of the
opportunity to amend or rectify as necessary; and
2. The court a quo misdirected
itself in fact and law in not recognising that the point in limine
relating to the cause of action was actually an exception subject to
its own procedural strictures.”
It is evident that these grounds
of appeal confine themselves to impugning the procedural aspects of
the court's determination on the special defence raised by the
respondents, rather than its substance. This is despite the
appellant's assertion in its heads of argument that it had, a quo,
filed a replication on the merits of the special defence itself.
The appellant seeks an order
setting aside the judgment of the court a quo, and substituting it
with one dismissing the 'points in limine' and allowing the trial
to continue.
Given the relief sought by it,
one would have expected the appellant to have articulated and
motivated grounds of appeal that challenged the lower court's
decision on the merits. Despite not having done so in both its
ground of appeal and heads of argument, the appellant nevertheless
implores this Court to set aside a fully reasoned and considered
decision of the court a quo on the point in question. Quite evidently
this is not the manner that appeals, by their nature, are meant to be
determined. The relief sought by the appellant is, on that score,
incompetent.
Accordingly, the court a quo's
judgment to the effect that the appellant had no cause of action
against the respondents, not having been challenged on appeal,
remains extant.
PRESCRIPTION
[18] I have already determined
that the court a quo properly dealt with the respondent's special
defence on cause of action and that its decision on the merits stands
unchallenged on appeal. I entertain the view, in the light of this,
that once the appellant is found, as in casu, to have had no cause of
action against the respondents, no useful purpose would be served by
considering the question of whether or not the various claims brought
against them have prescribed. This is because the running of
prescription and any attendant considerations like its interruption,
if any, cannot be determined in a vacuum, but must be anchored on
facts that establish a valid cause of action.
[19] One matter in relation to
prescription however, calls for comment. The appellant averred in
relation to the third respondent that the court a quo misdirected
itself in fact and law in not holding that, in any event, the
prescriptive period relating to a mortgage bond was thirty years.
However, a perusal of the
judgment of the court a quo shows that the court did not determine
this issue on its merits. Rather, it did so on another basis, that
is, the non-existence of a cause of action, as is evident from the
following excerpt therefrom:
“And since I was not inclined
to amend the loan agreements between the plaintiff and Stir Crazy
Group of Companies to refer to Stir Crazy Investments (Pvt) Ltd,
there is no causal connection between the loan agreement and the
security mortgage that the third defendant provided. Therefore, I
cannot find that the prescription period ought to be 30 years.
Consequently, I cannot hold that the Plaintiff's claim against the
third defendant had not prescribed.”
The appellant's ground of
appeal in this respect is therefore misplaced. I have, in any case,
found that the question of prescription became irrelevant once the
absence of a cause of action against the respondents was established.
DISPOSITION
[20] The appellant in this appeal
restricted itself to challenging the procedure followed by the court
a quo in determining the respondents' special defence of lack of a
cause of action against them. The court having found against the
appellant on this issue, their appeal is devoid of merit and stands
to be dismissed.
It is in the result ordered as
follows:
The appeal be and is hereby
dismissed with costs.
GARWE JA: I agree
MAVANGIRA JA: I agree
Sawyer & Mkushi, appellants' legal practitioners
Wintertons, first & second respondent's legal practitioners
Atherstone & Cook, third respondents' legal practitioners
1. This is according to the appellant's grounds of appeal. In
elaborating on this ground in its Heads of Argument however, the
appellant refers to the special defence in question as a special plea
and argues on that basis. The court will consider the reference to
'exception' as an error
2. Authority for this is cited as MB Investments (Pvt) Ltd v Oliver
1974 (1) RLR 169
3. See for instance Doelcam v Pichanick & Others 1999 (1) ZLR 390
H; Herbstein and Van Winsen's 'Civil Practice of the Superior
Courts of South Africa' 3rd Ed. at 324
