Opposed
Matter
KWENDA
J:
This
is application made in terms of s213 of the Companies Act [Chapter
24:03] for leave to institute proceedings against the respondent, a
company in liquidation.
Should
leave be granted, the applicant intends to file an application in
terms of r449 of the High Court Rules 1971, for correction of a
default judgment entered against it in favour of the respondent on 12
March 2014.1
A
draft of the application to be filed once the anticipated leave was
submitted with applicant's papers.
The
application, should leave be granted, will be a second bite since an
earlier attempt in the year 2015 succeeded initially but collapsed on
appeal in the Supreme Court on 26 January 2018.
At
the hearing I complained that the applicant's case was difficult to
follow.
The
founding affidavit is unnecessarily long and winding. It contains
information largely irrelevant. The error necessitating the
intervention of the court in terms of r449 is not clearly
decipherable since it is not correctly articulated.
The
impression created in applicant's founding affidavit as read with
the prayer in the application to be filed is that the judgment debt
was overstated because the respondent applied an inflated rate of
interest of 45 percent per annum as opposed to 15 percent per annum.
(See para 7 of applicant's founding affidavit and the draft order
at page 89 of 1 case No. HC1405/13 the consolidated papers).
However
that position cannot be reconciled with applicant's assertion in an
earlier case2
that the correct rate of interest is 25% per annum.
At
the hearing a lot of energy and time was expended on extracting from
the huge mass of documents submitted with the application what it is
that the applicant says went wrong in case No. HC1405/13 which needs
correction by this Court.
After
lengthy deliberations it turned out the applicant's case could be
stated clearly and concisely.
I
will summarise it below.
On
7 May 2015 the applicant filed an application for the variation of
the default judgment. The application was filed and prosecuted
without the leave of this court notwithstanding the provisional order
for liquidation.
In
addition to that the applicant failed to cite the Deposit Protection
Corporation despite its direct and substantial interest as
liquidator.2
Be
that as it may the application succeeded and the judgment in case
HC1405/13 was rescinded on 27 May 2015.
Subsequently,
the Deposit Protection Corporation approached the court in terms of
r449(1) for rescission of judgment on the grounds that the applicant
had erred in failing to cite it in the case yet it was clearly an
interested party.
This
court granted the application and rescinded the judgment in case No.
HC4155/15.
The
effect of the rescission of judgment was that the original court
order in case no. HC1405/13 entered against the applicant for the
payment to respondent of $1,824,505.05 popped up again and became
operational.3
In
his reasons for the judgment, the Honourable CHIWESHE JP in case No.
HH390/17 (HC4203/16) observed as follows:
(a)
the failure by applicant to obtain leave of the court before
instituting proceedings against the respondent in case No. HC4155/15
was fatal.
(b)
s213 of the Companies Act [Chapter 24:03] is peremptory and
proceedings instituted against the respondent without leave of the
Court and the resultant court order were a nullity.
(c)
In addition to being liquidator, the Deposit Protection Corporation,
is an interested party by operation of s57 of the Banking Act and
failure to cite in proceedings against the respondent which is under
liquidation rendered such proceedings fatally defective.
Applicant's
appeal to the Supreme Court against the judgment of the Honourable
Judge President was dismissed on 26 January 2018 meaning that the
default judgment in case No. HC1405/13 remains extant.
Applicant
is still aggrieved by the judgment in case No. HC1405/13 and wants it
corrected in terms of r449(1).
However
it can only file its application with leave of this Court.
It
is alleged that when respondent applied for judgment in case No.
HC1405/13 it did not disclose to this court that applicant had made
payments to the respondent after summons had been issued thereby
reducing the debt by $1,381,166.
The
argument, therefore is that when judgment was entered on 12 March
2014 the correct amount owing was around $500,000 and not
$1,824,505.05 and the respondent had the obligation to advise the
court of the payments.
In
other words the complaint is not about the interest rate applied but
an act of non-disclosure by the respondent of payments effected
subsequent to the summons.
After
hearing both counsel I concluded that this application for leave is
without merit. My reasons are as follows:
1.
The intended application to correct judgment has no prospects of
success at all.
2.
The alleged payments are said to have been made after judgment had
been entered. I will quote para 7 of the founding affidavit at page 3
of the application:
“….
respondent caused a writ in the sum of $1,824,505.05 to be issued
against the applicant. This is an incorrect balance as applicant had
made subsequent payments of $1,381,166.”
Applicant's
complaint, therefore, is not against the judgment but the writ.
If
applicant made certain payments after judgment, it is the writ that
requires correction and not the judgment.
In
practice when payments are made after judgment has been entered, the
judgment needs no correction but the judgment creditor simply issues
a writ for a lesser amount or if the writ has already been issued,
instructs the Sheriff to collect a lesser amount.
If
the judgment creditor collects more than necessary, that can only
give rise to an enrichment claim.
The
correctness of an order is not affected by payments subsequent to its
issuance.
The
applicant boldly asserts in para 7 of its founding affidavit that it
paid a sum of $138,166.00 but fails to attach proof.
The
payment is disputed.
Indeed
in argument counsel for the applicant failed to point to any proof of
alleged payment.
All
payments on the papers preceded the summons.
In
papers filed in case no. HC4155/15 the provisional liquidator of the
respondent, one John Mafungei Chikura, justified the figure of
$1,824,505.05 (see pp118–119 of this application). He said:
“On
2 April 2014, the then applicant's legal practitioners wrote to
Chihambakwe, Mutizwa & Partners saying:
'Our
client has been effecting payment(s) to your client and has paid to
your client a total of $1,381,166. Please confirm by return that you
will not be seeking to recover from our client the amount reflected
in the order dated 12 March 2014…'
On
23 April 2014 Chihambakwe, Mutizwa & Partners responded:
'….if
payments were made which reduced the debt then certainly our client
will not be entitled to execute on the judgment debt but appropriate
instructions will be issued to the Sheriff to recover only the amount
which will be outstanding.'
The
difference between the parties' respective positions arose from the
fact that the applicant was using interest rate of 25 percent which
was never agreed upon by the parties. ……the liquidator took into
account all the payments made by the applicant.
The
respondent has therefore always insisted since the year 2014, that
the amount due to it as stated in the judgment debt is correct.”
After
the position taken by the provisional liquidator of the respondent in
the correspondence quoted above, the applicant could have applied for
rescission of judgment as early as 2014 if it was aggrieved by the
judgment.
It
did not.
The
correspondence reveals that the judgment debt in HC1405/13 is correct
but applicant simply wanted certain payments claimed by it to be
deducted from the writ.
Applicant
filed an application for correction of judgment in HC4155/15 more
than a year after the correspondence quoted above i.e. on 7 May 2015.
The
application made in terms of r449(1) was fatally defective. (See the
judgment of the Honourable CHIWESHE JP'S judgment discussed above).
This
application is intended to afford the applicant a second attempt.
The
draft application which applicant intends to file if it gets leave is
attached (see p35 to 89 of this application). Sadly applicant does
not intent to cite the Deposit Protection Corporation again.
In
other words the applicant wants leave to file another defective
application.
If
I grant this application I would be granting the applicant leave to
file a fatally defective application.
The
applicant has exhibited lack of diligence since the proceedings in
case no HC1405/13 were commenced against it. It did not properly
defend the claim resulting in a default judgment. The emails
exchanged by the parties and the pleadings filed of record reveal
that the respondent unsuccessfully pushed for a settlement. The
applicant did not act after service of a notice of intention to bar.
It did not apply for rescission of judgment in 2014 when it became
aware of the judgment in the matter. It only filed an application a
year later in the year 2015. On filing the application it failed to
pay attention to rules resulting in an adverse Supreme Court order.
It failed to articulate this case with clarity. The founding
affidavit contains hung statements.
Such
lack of diligence cannot be condoned. See Ndebele v Ncube 1992 (1)
ZLR 288 (S). Gugulethu Hwasha v CABS & Ors HH974/15.
The
respondent is already distressed.
This
unnecessary litigation is likely to make matters worse and prejudice
creditors.
This
application is an abuse of process because it has no merit at all.
I
order as follows:
Application
is dismissed with costs on a legal practitioner client scale.
C
Kuhuni Attorneys, applicant's legal practitioners
Chihambakwe
Mutizwa & Partners, respondent's legal practitioners
1.
The respondent was placed under provisional liquidation on 8 October
2014
2.
Final
liquidation was confirmed by this Court on the 19 May 2016 whereupon
the Deposit Protection Corporation was appointed liquidator
3.
Prior to provisional liquidation, on 12 March 2014, this Court had
entered default judgment against the applicant in favour of the
respondent for the payment of $1,824,505.05
