Opposed
Application
CHIWESHE
JP:
This
is an application for rescission of judgment in terms of Rule
449(1)(a) of the High Court Rules, 1971.
Rule
449(1)(a) provides as follows:
“449
Correction, variation and rescission of judgments and orders
(1)
The court or a judge may, in addition to any power it or he may have,
meru 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)……………………..”
The
requirements for such an application to succeed are clearly spelt out
in the wording of the rule;
The
judgment must have been erroneously granted, being granted in the
absence of the applicant where the applicant's rights or interests
must be affected by the judgment. See Motor Cycle Pvt Ltd v Old
Mutual Property Investments Corporation Pvt Ltd HH45/07 and Kaiser
Engineering Pvt Ltd v Makeh Enterprises Pvt Ltd HB6/12.
In
Theron NO v United Democratic Front and others 1984 (2) SA 532,
wherein the South African equivalent of our Rule 449(1)(a) was under
consideration, Vivier J had this to say at p536E:
“Rule
42(1) entitles any party affected by a judgment or order erroneously
sought or granted in his absence, to apply to have it rescinded. It
is a procedural step designed to correct an irregularity and to
restore the parties to the position they were before the order was
granted.”
And
at p536G the learned judge proceeded to explain that the court has a
discretion whether or not to grant the application:
“In
my view the court will normally exercise that discretion in favour of
any applicant where, as in the present case, he was, through no fault
of his own, not afforded an opportunity to oppose the order granted
against him, and when, on ascertaining that an order has been granted
in his absence, he takes expeditious steps to have the position
rectified.”
In
Banda v Pitluk 1993 (2) ZLR 60 (H) at 64D–F Robinson J
distinguished an application for rescission made under Rule 449(1)(a)
and an application for rescission of a default judgment under Rule
63. The latter requires the court, “before it sets aside a judgment
under it, to be satisfied that there is good and sufficient cause to
do so,” whilst the former enjoins the court, once it finds that the
judgment was erroneously granted against the defendant, to rescind
the judgment without further ado.
Similarly
in HH309-15 it was stated at p5 of the cyclostyled judgment as
follows:
“In
the case of Grantully (Pvt) Ltd and Anor v UDC Ltd CJ Gubbay ably and
lucidly outlined the purpose of r449 when he ruled that once it is
established that a relevant fact which ought to have been placed
before the court was not placed before it, there is no need for
further inquiry for there is no requirement for an applicant seeking
relief under r449 to establish good cause. In my view r449 is availed
to cater for situations were a judgment erroneously sought or issued
in error if allowed to stand would occasion on injustice.”
Does
the applicant meet the requirements for an order premised under
r449(1)(a)?
The
facts upon which the test must be applied are as follows:
The
founding affidavit is sworn to by the applicant's Chief Executive
Officer, one John Mafungei Chikura. It is to the following effect:
On
12 March 2014 under case number HC1405/13, Trust Bank Corporation
Limited obtained a court order against the respondent in terms of
which the respondent was ordered to pay the sum of $1,824,505.05 plus
interest on this sum, being the amount outstanding in respect of a
loan which Trust Bank had advanced to the respondent. On 8 October
2014, Trust Bank was placed under provisional liquidation by order of
this court given under case number HC2636/14. The applicant in the
present case, represented by its Chief Executive Officer, the
deponent to the founding affidavit in casu, was appointed the
provisional liquidator in terms of s57(1)(b) of the Banking Act
[Chapter 24:20].
On
7 May 2015, the respondent, without leave of court, filed an
application for variation of the court order which Trust bank had
earlier obtained against it to recover the sum of $1,824,505.05.
The
application for variation cited Trust Bank and the deponent to the
founding affidavit in casu, John Mafungei Chikura.
The
applicant in casu was not cited, despite according to Mr Chikura, it
having a direct and substantial interest in the matter, moreso as it
was the duly authorized representative of Trust Bank.
A
default judgment was subsequently obtained on 27 May 2015, in the
absence of the applicant, varying the order as prayed. The original
order was varied by the deletion of the sum of $1,824,505.05 and the
substitution thereof with the sum of $634,336.14 and by the deletion
of interest at the rate of 45 percent per annum and the substitution
thereof with interest at the rate of 25 percent.
The
applicant avers that in terms of s213 of the Companies Act, [Chapter
24:03] “no action or proceeding shall be proceeded with or
commenced against a company in liquidation or provisional liquidation
except by leave of court and subject to such terms as the court may
impose.”
Accordingly,
so argues the applicant, the application for variation having been
made against a bank which was under provisional liquidation without
leave of the court, the resultant order was, for that reason, void ab
origine and therefore of no legal force or effect.
If
the respondent had informed the court that the bank was under
provisional liquidation, and that leave of court had not been
obtained, the variation order would not have been granted.
For
that reason the variation order was issued in error and must in terms
of r449(1)(a) be set aside accordingly.
I
agree with that submission.
The
error that the applicant relies on relates to an application filed
against Trust Bank when it was under provisional liquidation.
Specifically the error arises because leave of court had not been
obtained to so file process against Trust Bank.
In
addition the deponent alludes to a further error, namely that the
applicant in casu had not been cited in that process. It should have
been cited because it is the provisional liquidator, and that the
deponent, though appointed provisional liquidator, was only so
appointed in a representative capacity, representing the applicant.
The
deponent insists that he was not appointed in his personal capacity.
In
short the argument advanced by the applicant is two-fold, viz:
(i)
The respondent filed the court application for variation without the
leave of the court; and
(ii)
The applicant was not cited as the provisional liquidator.
Had
these facts been disclosed to the court, the application for
variation would not have been granted. Accordingly the variation
order was granted in error.
Further
the deponent correctly observes that the Master of the High Court
should have been cited because the respondent company was under
provisional liquidation thus placing it under the supervision of the
Master.
The
opposing affidavit is sworn to by Gerry Mubata, the respondent
company's group financial controller, duly authorized to do so by a
company resolution dated 9 May 2016.
The
respondent has raised points in limine.
(i)
The first point in limine has no merit and may be dismissed off hand.
The
respondent alleges that the return date for the provisional
liquidation order was given as 4 April 2015 and that there is no
evidence to show that it was extended to cover the period under
review, specifically the 27 May 2017 when the variation order was
granted.
However
the truth of the matter is that the provisional order was confirmed
by Mafusire J on 19 May 2016 under case number HC2636/14. The order
is filed at p35 of the record.
(ii)
The second point in limine raised by the respondent is that the
applicant has no locus standi to bring the present application
because there is no order filed of record that confirms its position
as liquidator.
This
point too has no basis as the final order does appoint the applicant
as the liquidator.
(iii)
For the same reasons the third point in limine also has not merit as
it is based on the erroneous view that Trust Bank had not been
liquidated.
The
respondents have challenged Mr Chikura's authority to despose to
the founding affidavit in the absence of a resolution from the
applicant conferring authority to so act on its behalf.
The
respondent also challenges the locus standi of the applicant to bring
the present application.
It
is also contended that because of the conduct of the parties under
case numbers HC1405/13 and HC4155/15, HC4155/15 and HC4456/15 the
requirement for leave of court to be sought was waived by consent of
the parties!
Further
it is argued by the respondent that the applicant has no direct and
substantial interest in the proceedings and therefore there was no
need to cite it.
It
was sufficient to cite the Provisional liquidator, Mr Chikura
himself, so argues the respondent.
A
look at s57(1) of the Banking Act [Chapter 24:20] will shed light as
to the validity of the respondent's arguments vis a vis whether Mr
Chikura has authority to represent the applicant and whether the
applicant has locus standi to institute the present proceedings.
Section
57 of that act reads:
“57
Special provisions relating to winding up or judicial management of
banking institutions
(1)
Notwithstanding anything to the contrary in the Insolvency Act
[Chapter 6:04] or the Companies Act [Chapter 24:03] -
(a)
the Reserve Bank shall have the right to apply to the High Court for
?
(i)
the winding up of any banking institution; or
(ii)
an order placing any banking institution under judicial management or
provisional judicial management in terms of the Companies Act
[Chapter 24:03]; and the Reserve Bank shall have the right to oppose
any such application made by any other person;
(b)
the Reserve Bank shall appoint the Deposit Protection Corporation as
the provisional liquidator, provisional judicial manager, liquidator
or judicial manager of a banking institution;
(c)
the claims of -
(i)
depositors; and
(ii)
the Reserve Bank and the Deposit Protection Corporation, in respect
of any fees and expenses incurred in the exercise of their functions
under this Act or any other enactment; against a banking institution
that is being wound up shall enjoy such priority as may be
prescribed.”
The
powers bestowed upon the Reserve Bank are wide and far reaching.
Most
importantly for purposes of this application, the Reserve Bank is
required to appoint the applicant as provisional liquidator,
provisional judicial manager, liquidator or judicial manager of a
banking institution.
The
provision is mandatory.
The
Reserve Bank must appoint the applicant to act in those capacities.
It cannot appoint any other person.
It
is clear therefore that the applicant will always have locus standi
in all matters involving the liquidation or judicial management of
all banking institutions that fall under the purview of the Banking
Act.
Indeed
the orders of this court of 8 October 2014 (Provisional liquidation)
and 19 May 2016 (Confirmation of Provisional order) confirm this
position.
The
respondent's argument to the contrary must be dismissed in the face
of these clear statutory provisions.
Mr
Chikura is the Chief Executive Officer of the applicant. By virtue of
holding that appointment, he must be deemed to be authorised to act
on behalf of the applicant.
In
any event his authority was confirmed by order of this court dated 8
October 2014 in terms of which he was appointed provisional
liquidator representing the applicant. (See case No. HC2636/14). That
provisional order was confirmed on 19 May 2016.
The
respondent's opposition to this application has no merit.
The
applicant has satisfied the requirements set out under Rule
449(1)(a).
The
application for variation of the order under case number HC4155/15
was made without leave of court as required under s213 of the
Companies Act [Chapter 24:03]. That provision is peremptory and
cannot, as suggested by the respondent, be waived away.
As
a result the application for variation was not properly before the
court, rendering the resultant order a nullity.
If
the court had been informed that leave had not been sought to issue
the application, it would have declined to entertain the matter.
Clearly
the variation order was granted in error and thus liable to being set
aside.
That
the variation order was granted in the absence of the applicant is a
fact beyond dispute. It was a default judgment!
Further,
given the provisions of s57 of the Banking Act, there is no doubt
that the applicant's rights and interests as the liquidator would
have been affected one way or the other. Put differently, the
applicants, by virtue of their statutory rights and obligations, are
an interested party.
The
applicant should have been cited in the application for variation.
As
stated in the Grantully case supra, the applicant need not establish
good cause in order to obtain relief. The explanation by the
respondent as to the merits is therefore irrelevant.
For
these reasons the application must succeed. It is ordered as follows:
1.
The order of this court granted in favour of the respondents on 27
May 2015 under case number HC4155/15 be and is hereby rescinded.
2.
The Respondent shall pay the costs.
Chihambakwe,
Mutizwa & Partners, applicant's legal practitioners
C.
Kuhuni Attorneys, respondent's legal practitioners
