MAKONI
JA:
This
is an appeal against the whole judgment of the High Court sitting at
Harare in which the court dismissed an application for rescission of
a default judgment entered against the appellant on 23 July 2015.
BACKGROUND
FACTS
On
19 March 2015, the respondent issued summons against the appellant in
the High Court under Case No. HC2525/15, wherein it claimed the sum
of US$521,083.41 being the capital claim of US$258,019.29, interest
adjusted by the in duplum rule in the sum of US$258,019.29 and bank
charges in the sum of US$5,044.83. The respondent further claimed
interest on the amounts at the rate of 28 percent per annum from the
date of demand, being 24 February 2015, to the date of full and final
payment.
The
summons were served on the appellant on 30 April 2015. He filed a
Notice of Appearance to Defend (the notice) on 12 May 2015 through
his legal practitioners Messrs Nyikadzino, Simango & Associates.
The notice was duly served on the respondent's legal practitioners
on 20 May 2015.
The
notice, so filed and served, had no reference of the legal
practitioner handling the matter on behalf of the appellant.
Pursuant
to this notice, the respondent filed a Notice to Plead and Intention
to Bar on 27 May 2015. It was served on Messrs Nyikadzino, Simango &
Associates on 1 June 2015 with no reference of the legal practitioner
handling the matter on behalf of the appellant, as it had not been
provided on the notice.
On
receipt of the Notice to Plead, the appellant did not file any plea
or other response. As a result, a bar was effected on 23 June 2015. A
copy of that bar was served on Messrs Nyikadzino, Simango &
Associates on 25 June 2015.
On
10 July 2015 the respondent filed a chamber application for default
judgment. The default judgment was duly granted on 23 July 2015.
On
24 July 2015, a day after judgment had been granted against him, the
appellant filed a chamber application for the upliftment of the bar
in terms of Rule 84 of the High Court Rules 1971 (the Rules).
Subsequently, he filed the application for rescission of the judgment
on 12 August 2015.
The
appellant's explanation for not responding to the Notice to Plead
was that he had filed a request for further particulars on or around
28 May 2015, personally, without the aid of his legal practitioners,
as he had a fall out with his legal practitioners. He further averred
that, upon receipt of the Notice to Plead the firm handling his
matter was unable to identify the legal practitioner seized with the
matter as there was no reference on the notice. They only got to know
that it was a Mr Gwizo after he (the appellant) had made a follow up
on his case. By then Mr Gwizo had left the employ of the firm. As a
result of this lack of reference his legal practitioners were unable
to respond to the Notice to Plead.
DETERMINATION
OF THE COURT A QUO
The
court a quo dismissed, with costs, the application for rescission of
the default judgment. It made the point that the onus lay on an
applicant to show good and sufficient cause for the setting aside of
a default judgment. It found that the appellant's legal
practitioners took a lackadaisical approach to the matter and that
the predicament that the appellant found himself in emanated from the
legal practitioners of his choice. They failed to include a reference
on the notice. They, again failed to act diligently when served with
the notice to plead. As if that was not enough, the firm tried to
shift blame on to the respondent's legal practitioners for failure
to include the reference on the notice to plead.
The
court a quo thus concluded that the explanation proffered by the
appellant was not credible and was an attempt to cover up an
inexcusable tardiness on the part of his legal practitioners.
On
the issue of the appellant having filed a request for further
particulars, the court a quo found that he was not being candid with
the court. It noted that taking into account the cavalier approach
displayed by both the appellant and his legal practitioners, it may
well be that the request for further particulars was not properly
filed or served on the respondents. It also noted that whilst the
appellant claimed to have fallen out with his lawyers, the request
for further particulars bore the address of his legal practitioners
and the appellant still went to that law firm to check on the
progress of his matter.
On
the bona fides of the defence and the prospects of success the court
a quo found that the appellant had no defence on the merits. He did
not explain how he arrived at the figures he admitted owing the
respondent. Despite the detailed figures given by the respondent in
its opposition, the appellant gave scant details in his answering
affidavit.
The
appellant also challenged the interest rate of 28 per cent per annum.
He averred that in terms of the agreement the interest rate was 12
per cent per annum. When it was pointed out to him, in the notice of
opposition, that the interest rate was increased in terms of clause
7.1.2 he had no meaningful response.
As
such, the court a quo found that the appellant had no defence on the
merits and therefore no prospects of success at all. It concluded
that the application for rescission was a mere fishing expedition on
the part of the appellant.
Aggrieved
by that decision, the appellant noted the present appeal based on the
following grounds:
GROUNDS
OF APPEAL
“1.
The court a quo erred in determination, finding as fact that the
amount (quantum), claimed by the respondent was correct, when in
actual fact it was overcharged by US$59,000.00, plus 28% interest,
contrary to the 12% as per agreement.(sic)
2.
The court a quo grossly misdirected itself in ignoring clear evidence
and accepted evidence that the respondent had discharged his duty to
apply for default judgment, despite the fact that there was a request
for further particulars filed of record, and proceeded to bar
appellant unfairly.
3.
The court a quo also erred in awarding respondent, in excess of the
principal amount, thereby violating the IN DUPLUM RULE.” (sic)
SUBMISSIONS
ON APPEAL
Counsel
for the appellant, Mr Zhuwarara, made the following submissions.
The
court a quo erred in dismissing the application for rescission of
default judgment. The finding by the court a quo made it seem as a
fact that the appellant was in wilful default by finding that the
sins of his legal practitioners should be visited on him.
The
court a quo used the wrong test in determining whether or not the
appellant had established good and sufficient cause for the setting
aside of the default judgment. He argued that the court a quo dealt
with negligence on the part of the appellant's legal practitioners
as opposed to the deliberate and conscious act by the appellant not
to file his plea. Negligence and a deliberate act are different
concepts.
The
test for rescission of judgment was enunciated in Saitis & Anor
(Pvt) Ltd v Fenlake (Pvt) Ltd 2002 (1) ZLR 378 (H), that rescission
cannot be granted if the applicant was in wilful default.
Regarding
the appellant's defence Mr Zhuwarara contended that the assessment
of the defence at the rescission stage is not the actual veracity of
the averments but rather whether the appellant has raised a triable
issue.
There
was a dispute pertaining to the figures and the appellant was raising
the defence of error in calculation. It ought to be related to at
trial.
The
appellant's defence was raised in para 4 of his founding affidavit
and although it was inelegantly drafted it puts across the appellants
defence.
In
respect of the interest charged, Mr Zhuwarara submitted that there
was a dispute regarding the interest rate in that the rate that was
agreed on was not the one used to calculate the amount claimed. The
court a quo relied on clause 7.1.2 which requires that notice be
issued before the adjustment of the interest rate. No such notice was
ever given. A trial ought to have been conducted so that the question
of the interest rate could have been resolved.
On
the other hand, Mr Biti for the respondent contended that the test
for an application for rescission of default judgment, as set out in
Rule 63 is whether 'good and sufficient cause' has been shown.
He
submitted that what was required for the appellant to prove was the
explanation for the default and its reasonableness, the bona fides of
the application and his defence on the merits.
Regarding
the reasonable explanation for the default, Mr Biti submitted that
there was no attack, in the notice of appeal, in respect of the
finding made by the court a quo on this issue. Mr Biti further
submitted that some attempt is made in the second ground of appeal to
attack the court a quo's finding that it was doubtful whether the
appellant had filed and served the request for further particulars.
To
his credit, Mr Zhuwarara did not utter a word regarding that ground.
Clearly
there was no basis of attacking the finding of the court a quo on
this point.
Regarding
prospects of success Mr Biti submitted that the summons is very
detailed and has attachments to it. The appellant's response is
found in para 4 of his founding affidavit where he does not explain
where the figure of $198,000.00, he admits owing, had come from and
why he was disputing the interest rate. He submitted that the Bank
had the right to alter the rate of interest on notice in terms of
section 7.1.2 of the credit facility agreement. The appellant does
not mention clause 7.1.2 in his para 4.
The
issue of not being served with the requisite notice is not part of
the appellant's case. There is no averment that the alteration of
the interest rate was unilateral. As a result, he was of the view
that the appellant had no prospects of success in the main matter.
ISSUES
FOR DETERMINATION
1.
Whether the court a quo applied the correct test for the setting
aside of a default judgment.
2.
Whether or not the court a quo violated the in duplum rule in finding
that the amount claimed by the respondent and the claim of interest
at the rate of 28 percent per annum was correct.
THE
LAW
Order
9 Rule 63 of the High Court Rules, 1971 (hereinafter referred to as
the Rules) sets out the procedure and the requirements for the
rescission of a default judgment as follows;
“1.
A party against whom judgment has been given in default, whether
under these rules or under any other law, may make a court
application, not later than one month after he has had knowledge of
the judgment, for the judgment to be set aside.
2.
If the court is satisfied on an application in terms of subrule (1)
that there is good and sufficient cause to do so, the court may set
aside the judgment concerned and give leave to the defendant to
defend or to the plaintiff to prosecute his action, on such terms as
to costs and otherwise as the court considers just.”
The
factors which a court will take into account in determining whether
an applicant for rescission has discharged the onus of proving 'good
and sufficient cause' are well established. They have been
discussed and decided in a number of cases. See Barclays Bank of
Zimbabwe Ltd v CC International (Pvt) Ltd S-16-86 (not reported);
Songore v Olivine Industries (Pvt) Ltd 1988 (2) ZLR 210 (S) at 211
C-F; Zinondo v CAFCA Limited SC 64-17.
From
these authorities, it is clear that the test for 'good and
sufficient cause' involves the establishment of the following
factors:
(a)
explanation for the default and whether it is reasonable;
(b)
the bona fides of the application to rescind the judgment;
(c)
the bona fides of the defence on the merits of the case which carries
some prospect of success.
APPLICATION
OF THE LAW TO THE FACTS
Before
dealing with the above requirements it might be pertinent to dispose
of the issue of the correct test to be applied in such applications
as raised by Mr Zhuwarara.
It
was his argument that the court a quo erred by applying the wrong
test in determining the application for rescission of default
judgment. He argued that the court a quo ought not to have used the
test of negligence on the part of the appellant's legal
practitioners but that of wilful default on the part of the
appellant.
This
argument advanced by the appellant is confused and confusing.
The
authority that he relies on of Saitis & Co (Pvt) Ltd v Fenlake
(Pvt) Ltd (supra) does not support his proposition. At p386 B-D the
following was stated;
“The
conclusion I have come to is that the test for rescission of judgment
whether in the High Court (under Rule 63) or the Magistrates Court
(under Order 30) (unless it is a refusal of rescission because wilful
default exists) is but one: the applicant has to establish good and
sufficient cause or, simply put, sufficient cause for the relief he
seeks. That this is so, and has always been so, is evident from
MCNALLY JA's words in Dewera Farm (Pvt) Ltd & Ors v Zimbank
Corp Ltd 1998 (1) ZLR 368 (S) where at 369F he said:
'While
it may generally be true to say that when there is wilful default
there will usually not be good and sufficient cause, I believe we
fetter our discretion improperly if we lay down a fixed rule that
when there is wilful default there is no room for good and sufficient
cause.'”
From
my understanding of the above authorities wilful default is but one
of the essential elements of good and sufficient cause in the same
manner as lack of diligence on the part of one's legal
practitioner.
The
judgment of the court a quo is clear that the judge was alive to the
correct test to be applied.
At
the outset he stated that the onus was on the appellant to show that
there was good and sufficient cause for his default. He then went on
to examine the authorities defining good and sufficient cause and
later on analysed the facts in relation to the factors constituting
good and sufficient cause. He therefore applied the correct test.
I
now proceed to deal with the issue of whether the appellant managed
to satisfy the requirements for the setting aside of a default
judgment as established by the above mentioned authorities.
THE
EXPLANATION FOR THE DEFAULT AND WHETHER IT WAS REASONABLE
The
explanation proffered by the appellant was that he failed to file a
plea as the Notice to Plead and Intention to Bar had no reference of
the lawyer seized with the matter at Messrs Nyikadzino, Simango and
Associates. The law firm was therefore unable to identify the lawyer
seized with the matter. They only found out that it was one Mr Gwizo,
who had left the employ of the firm, after the appellant showed up at
their offices inquiring on the progress of his case.
The
appellant further averred that the respondent ought not to have
applied for default judgment as he had filed a Request for Further
Particulars on the 28 May 2015 which particulars were never furnished
to him. He claimed that he filed the Request for Further Particulars
by himself because he had a fall out with his legal practitioners,
although the pleading bore the address of his legal practitioners.
As
was correctly observed by Mr Biti there is no challenge to the
findings made by the court a quo that there was no reasonable
explanation for the delay, in the notice of appeal.
An
attempt to attack that finding is made in the second ground of
appeal.
Mr
Zhuwarara, in his submissions, and to his credit, did not advance any
argument on that point. He instead raised the argument regarding
whether the court a quo applied the correct test which issue I dealt
with above. The finding by the court a quo therefore cannot be
faulted.
PROSPECTS
OF SUCCESS
Mr
Zhuwarara contended that the appellant was not obliged to prove his
defence at this stage but to simply outline it.
In
as much as there was no obligation to prove the defence, there
certainly was an obligation to establish a prima facie defence. The
bare denial made by the appellant that he did not owe the respondent
the sum claimed but a lesser figure was not sufficient.
The
point was made in Songore v Olivine Industries (supra) at 213 D-E
where the following was stated;
“Before
I go further, I think it is necessary to say something about the kind
of allegations one may expect from an applicant for rescission of
judgment.
The
effect of the cases is summed up to p371 of the third edition of
Herbstein and van Winsen The Civil Practice of the Superior Courts in
SA as follows:
'The
applicant must show that he has a bona fide defence to the
plaintiff's claim, it being sufficient if he sets out averments
which, if established at the trial, would entitle him to the relief
asked for; he need not deal with the merits of the case or produce
evidence that the probabilities are actually in his favour.'
It
is dangerous to generalise, and each case differs from others, but
nonetheless I think it must be said that bald general allegations of
fact may not be enough in every case to show bona fides. It might be
argued that 'I do not owe the money' is 'an averment which, if
established at trial, would entitle him to relief asked for'.
In
most cases, and particularly where there is a suspicion that the
defence is not bona fide, more specific allegations of fact will be
required.”
The
appellant, in his founding affidavit devoted only two paragraphs out
of twelve to the issue of whether he had a bona fide defence to the
claim.
He
alleged that he was not indebted to the respondent in the sum of
US$258,019.29 but to the sum of US$198,000.00 together with interest
at the rate of 12 percent per annum. He concluded by saying that;
“I
therefore submit that I have prospects of success in the main
matter.”
In
Delta vs Murandu SC38/15, GWAUNZA JA (as she then was) had this to
say;
“I
take the time to point out that parties are expected to argue their
cases so as to persuade the court to see the merit, if any, in the
arguments advanced for them. They are not expected to make bold,
unsubstantiated averments and leave it to the court to make of them
what it can.
In
as much as the court is handicapped in terms of being able to
properly determine this point, so too is the respondent. He has not
been given enough detail to enable him to understand, and properly
defend, the case posed against him in this respect.
The
effect of this, in my opinion, is to visit unfairness on the
respondent.
The
appellant bore the burden to prove its case on this point but
lamentably failed to do so.”
Although
she was dealing with a different issue from the one before me the
remarks are apposite where an applicant fails to address prospects of
success in its founding affidavit as in casu. Such bald general
allegations cannot be deemed to suffice to convince a court that a
party has a bona fide defence on the merits.
PATEL
JA in Maxwell Sibanda vs Gwyne Stevenson SC556/15 described such
failure to address prospects of success as a “grave omission”.
The
respondent, on the other hand expressed its claim in quite some
detail.
The
respondent specified that the debt arose from a credit facility
between the parties. The total sum lent in respect of the facility
was a sum of US$257,000.00 including a rollover of US$175,00.00 from
a previous agreement and an additional US$82,000.00 for the 2010/1011
summer cropping season.
The
respondent explained the interest charged and the total debt after
taking into account the in duplum rule.
The
court a quo made the finding that the appellant merely made bald
assertions in both the founding affidavit and the answering affidavit
yet the respondent's explanation of its figures was made in a clear
and meticulous manner.
The
loan agreement signed on 1 December 2010, tallies with the figures
presented by the respondent.
Having
considered all the above, the finding made by the court a quo that
the appellant had no defence on the merits cannot be faulted.
The
appellant further alleged the violation of the in duplum rule in that
the respondent charged interest in excess of the capital debt at a
rate that was not agreed to by the parties.
In
terms of clause 7.1.1 interest was to be payable at a rate of 12
percent per annum plus 4 percent facility fee to be charged upon
acceptance of facilities offered. Clause 7.1.2 went on to provide;
“The
Bank reserves the right to give notice at any time of any alteration
in the rates of interest and, thereafter, the Bank shall be entitled
to charge such other rate as it may prescribe.
If
the Borrower continues to avail of the facilities after receipt of
the aforesaid notice by not fully repaying the amount due to the
Bank, the Borrower shall be deemed to have agreed to the change in
interest rate.”
Mr
Zhuwarara argued, at length, that for the respondent to alter the
rate of interest from 12 percent to 28 percent per annum, it ought to
have given prior notice to the appellant in terms of clause 7.1.2. As
such a unilateral variation in interest could not be permissible. The
result would be a violation of the in duplum rule, in that the
interest charged would be in excess of the principal debt of
US198,000.00.
As
was correctly pointed out by Mr Biti this argument, regarding the
unilateral variation of interest, was not pleaded by the appellant in
his founding papers. It was not his case before the court a quo
neither was it raised in the grounds of appeal.
It
is trite that a new point may be advanced for the first time on
appeal if its consideration then involves no unfairness to the party
at whom it is directed. AC Cilliers, C Loots and HC Nel in Herbestein
and Van Winsen, The Civil Practice of the High Courts, (5th ed Juta &
Co Ltd, Cape Town, 2009), at pp 1246, explains as follows;
“A
question of law may be advanced for the first time on appeal if its
consideration then involves no unfairness to the party against whom
it is directed…
A
second requirement for the raising of a new point on appeal is that
the point must be covered by the pleadings. Where it is not clear
that the point has been fully investigated (ie that all the evidence
which might have been placed before the court if the point had been
taken was in fact led), the court will not allow a new point to be
raised for the first time on appeal.”
In
Donelley v Barclays National Bank Ltd 1990 (1) SA 375 at 380 H, the
court held as follows;
“Secondly,
it is clearly a wholly new line of defence now being taken. It was
not mentioned in the summary judgment proceedings nor in the plea. It
was never referred to in evidence or argument at the trial. Its mere
novelty, of course, is no ground per se for rejecting it. However,
generally speaking, a Court of Appeal will not entertain a point not
raised in the court below and especially one not raised on the
pleadings in the court below.”
Applying
the above principles to the present matter, this would not be a
proper case to allow the appellant to raise, for the first time on
appeal, this new point.
The
point was not raised in the pleadings and was not argued before the
court a quo.
Accordingly,
no basis has been laid out to attack the court a quo's finding that
the sum claimed by the respondent was not in violation of the in
duplum rule and consequently that the appellant has no prospects of
success in the main matter. This ground of appeal must also fail.
From
the foregoing, I find that the appeal lacks merit and must be
dismissed.
The
respondent had, in its Heads of Argument prayed for costs on a
punitive scale. No basis was advanced either in the Heads of Argument
or in submissions before the court for an award of costs on the
punitive scale. I will therefore award costs on the ordinary scale.
In
the result I make the following order:
The
appeal is dismissed with costs.
GWAUNZA
DCJ: I agree
GUVAVA
JA: I agree
Tendai
Biti Law, respondent's legal practitioners
Messrs
Mabundu & Ndlovu Law Chamber, appellant's legal practitioners
