MATHONSI
JA:
On 7 July 2021 the High Court (“the court a
quo”)
dismissed an application brought against the respondents by the
appellant for want of prosecution with costs. It also ordered the
appellant to pay the costs of the application, brought by the first
and second respondents for the dismissal of the main application.
This appeal is against that judgment.
THE
FACTS
Both
respondents are incorporated in terms of the laws of this country and
are sister companies. The second respondent is a medical aid society
while the first respondent is its investment vehicle. For quite some
time the appellant was the second respondent's Chief Executive
Officer, a position he vacated prior to the commencement of the
proceedings forming the basis of this appeal.
On
27 March 2018, the appellant brought a court application in the court
a
quo
for a declaratory order to the effect that he was the holder of ten
million shares, representing a 20% shareholding in the first
respondent. He also sought a declaration that the conduct of the
first and second respondents of regarding him as not being a
shareholder was unlawful, null and void and of no force or effect.
He also sought costs on the scale of legal practitioner and client.
The
basis of the application, as stated in the founding affidavit, was
that the appellant had purchased the ten million shares of the first
respondent on 29 July 2010. He attached a copy of a share
certificate issued to him and signed by two directors of the first
respondent whose names are not disclosed in the certificate. While
alleging that he paid for the shares, he did not produce proof of
such payment.
According
to the appellant, what prompted him to make the application for a
declaratory order was the first and second respondents refusal to
acknowledge him as the holder of the shares in question. This
followed a meeting of the second respondent held on 21 May 2015 which
resolved not to ratify the award of the 20% shareholding in the first
respondent to the appellant.
On
11 April 2018, the respondents filed opposition to the application
for the declaratory orders. The opposing affidavit was deposed to by
Jeremiah Bvirindi, the chairman of the Board of Directors of the
second respondent, who denied that the appellant was ever a
shareholder of the first respondent.
The
respondents also took the view that there were disputes of fact and
put in issue the circumstances under which the appellant had
purported to acquire the shares at a time he was the Chief Executive
Officer of the second respondent.
According
to the respondents, the appellant obtained the share certificate he
relied on “either illegally, fraudulently or without following due
process” as set out in the first respondent's regulations.
Significantly,
the respondents confirmed that the appellant had deposited a cheque
of Z$6,585,672,555.75 into the second respondent's bank account.
The
respondents view was that a mere deposition of the above amount in
the bank account was improper and motivated by fraudulent intent on
the part of the appellant.
In
any event, so the respondents argued, while the payment for the 15%
shares (not 20%), should have been made on 25 April 2007 it was only
made on 19 March 2008 when the amount had been ravaged by inflation
rendering it inequitable to the value of the shares.
It
was also the respondents case that the purported sale of the 15%
shares and a donation of 5% shares to the appellant was done without
the authority of the board and/or the shareholders. The appellant
took advantage of his position as the Chief Executive Officer to
influence the sale to their prejudice.
It
is common cause that the appellant did not act upon the notice of
opposition filed by the respondents within the time allowed by the
rules of court or at all. This prompted the respondents to file the
initial application for dismissal of the application for want of
prosecution under case number HC11129/18.
The
application was opposed by the appellant and subsequently set down
for hearing in March 2019.
Again,
it is common cause that on the date of the hearing, following
negotiations between the parties, the respondents withdrew the
initial application for dismissal for want of prosecution. This was
on the understanding that the appellant would purge his default by
filing the outstanding pleadings in the main application and
prosecute it.
He
did not.
PROCEEDINGS
IN THE COURT A
QUO
When
the appellant did not honour his undertaking to prosecute the main
matter for about 5 months, the respondents filed the second
application for dismissal for want of prosecution in terms of Rule
236(3)(b) of the High Court Rules, 1971 on 2 August 2019.
It
is that application which forms the basis of the present appeal.
In
the founding affidavit, again deposed to by the chairman of the Board
of Directors of the second respondent on behalf of both of them, the
respondents stated that following their filing of their opposition on
11 April 2018, the appellant had neither filed an answering affidavit
nor set the matter down for hearing.
The
respondents chronicled the appellant's tardiness in the handling of
his application which saw him failing to file heads of argument even
in the initial application for dismissal.
They
stated that even after being accorded the second chance to redeem
himself the appellant had snubbed the opportunity and done absolutely
nothing until a second application for dismissal was lodged.
After
stating that they had elected to file the application for dismissal
for want of prosecution instead of setting the main matter down for
hearing as they are entitled to do in terms of the rule, the
respondents ended there.
They
urged the court to grant the order for dismissal on that basis alone.
In
opposing the application, the appellant took issue with the authority
of the deponent of the founding affidavit to represent the
respondents.
He
contended that one person could not lawfully represent two separate
artificial persons and that the resolutions relied upon by the
respondents were invalid by reason that the signatories names were
not declared.
His
only explanation for the delay in prosecuting the application was
that, to the knowledge of the respondents, he had “not been feeling
well for a long time” which affected his ability to give
instructions to his legal practitioners to file an answering
affidavit.
The
appellant insisted that he owns 20% shares in the first respondent
and should be allowed to pursue his claim, otherwise his property
rights would be infringed.
It
is also important to note that the appellant made two assertions
which have a bearing on the resolution of this appeal.
In
para 6 of his opposing affidavit, in response to the accusation that
he had not filed an answering affidavit or taken steps to set down
the matter down, the appellant stated that:
“6.
Ad para 8-9
These
averments have been overtaken by events. On 19 August 2019, I filed
my answering affidavit and heads of argument in HC2821/18. What
remains is for the applicants herein, as respondents therein, to file
their heads of argument.”
Regarding
the question whether the respondents had made a good case for the
relief sought, the appellant stated at para 8:
“8.
Ad para 11-14
8.1.
I do not accept that the applicants have met (sic) the case for the
order they are seeking.
8.2.
The founding affidavit does not advance any grounds for the court to
exercise its discretion in favour of dismissal instead of determining
the main matter on the merits. The applicants just want a dismissal
because they are asking for it.”
The
court a
quo
found that it was both convenient and logical for the deponent of the
founding affidavit to represent the respondents as he had knowledge
of the shareholding structure of the first respondent. In the court a
quo's
view a company has the liberty to authorize anyone it deems fit and
proper to represent it in litigation.
It
found that the delay in responding to the pleadings was evidence of
the appellant's non-committal to finalize the matter because if it
had been of importance to him, the appellant would have pursued the
matter with diligence.
In
the court a quo's view the unsubstantiated claims of illness by the
appellants were not an acceptable reason for the delay.
It
granted the application for dismissal for want of prosecution.
PROCEEDINGS
BEFORE THIS COURT
The
appellant was aggrieved. He launched this appeal on the following
grounds:
1.
The court a
quo
misdirected itself and erred in law in not finding, in
limine,
that the respondents were not properly before it for the reason that
the deponent to the respondent's founding affidavit had no lawful
authority to institute the proceedings on their behalf.
2.
In dismissing the appellant's application under HC2821/18 for want
of prosecution, the court a
quo
improperly exercised its discretion in that it only took into account
one factor, namely the reasonableness of the explanation for
inaction, instead of also taking into account other mandatory factors
such as possible prejudice to the respondents appellant's (sic)
prospects of success on the merits and the balance of convenience.
3.
As an alternative to 2, the court a
quo
improperly exercised its discretion and erred in law in dismissing
the appellant's application under HC2821/18 for want of prosecution
without an analysis of, and application of its mind to all the
mandatory factors to be taken into account before such dismissal.
4.
With the court a
quo
having refused to take into account the established fact that the
appellant's application under HC2821/18 had been ready for set down
for a considerable period, its decision to dismiss the application
for want of prosecution was so unreasonable that no reasonable court,
applying its mind to the circumstances of the case, could ever have
made such a decision.
5.
The court a
quo's
finding that the appellant's explanation for the delay in
prosecuting his application was inexcusable was so unreasonable that
no reasonable court, applying its mind to the circumstances of the
case, could ever have made such a decision.
I
mention in passing that some of the 5 grounds of appeal are
repetitive and inconcise. They do not meet the threshold set by Rule
44.
As
the issue was not raised with the parties at the hearing of the
appeal, it shall not be considered in the determination of the
appeal.
ISSUE
FOR DETERMINATION
From
the grounds of appeal and submissions made by counsel only one issue
commends itself for determination in this appeal. It is whether the
court a
quo
properly exercised its discretion in dismissing the application for
want of prosecution.
SUBMISSIONS
ON APPEAL
At
the commencement of the hearing, Mr Madhuku
who appeared for the appellant submitted that, while not abandoning
grounds of appeal 1, 4 and 5 for which he stood by heads of argument
filed for the appellant, he would motivate the appeal on grounds of
appeal 2 and 3. In his view, those 2 grounds are dispositive of the
appeal. In fact, ground 3 is in the alternative to ground 2.
Mr
Madhuku
submitted that there are 3 factors which are relevant in considering
an application for dismissal of an application for want of
prosecution in terms of the old Rule 236(3) or (4) of the High Court
Rules. These are:
(a)
the length of the delay and the explanation for it;
(b)
the prospects of success on the merits; and
(c)
the balance of convenience and the possible prejudice to the
applicant caused by the delay. He relied on the authority of
Guardforce
Investments (Pvt) Ltd v Ndlovu & Ors
SC 24/16. It
was submitted that when deciding the matter, the court a
quo
only considered the reasonableness of the explanation for the delay.
Upon concluding that it was insufficient, the court a
quo
promptly granted the application without more. It did not consider
the remaining 2 relevant factors to be taken into account in
exercising its discretion. For that reason, the judgment of the
court a
quo
should be interfered with.
Per
contra,
Ms Mahere
for the respondents submitted that grounds of appeal 2 and 3 raise
brand new points of law not placed before the court a
quo,
without justification.
She
submitted that even the case law authority relied upon by the
appellant was not placed before the court a
quo.
Counsel suggested that the appellant cannot be allowed to do so as
those points were not pleaded.
Ms
Mahere
submitted further that even were one to consider the 2 factors to be
taken into account by the court before exercising its discretion to
grant or dismiss an application for dismissal for want of
prosecution, the onus to set those out is on the appellant, who was
the respondent a
quo.
It is him, according to counsel, who should show the prospects of
success of his application and the absence of prejudice over and
above providing a reasonable explanation for the delay.
Ms
Mahere
also made the point that the filing of an answering affidavit and
heads of argument in the main case by the appellant was of no moment.
He was precluded from doing so upon receiving the application for
dismissal for want of prosecution. In making that submission,
counsel relied on the authority of the High Court judgment in Melgund
Trading (Pvt) Ltd vs Chinyama & Partners
2016 (2) ZLR 547 (H).
In
that case the High Court remarked at p552B-E;
“The
respondent suggests that because it filed an answering affidavit and
caused the application for upliftment of bar before this application
was dealt with, this application has been overtaken by events. Rule
236(3) does not state so. It is not a defence for a respondent who
has been served with an application for dismissal for want of
prosecution to plead that he subsequently made arrangements for the
application to be set down. Once a litigant has been served with an
application for dismissal in terms of Rule 236(3), he cannot file any
other process in pursuance of the proceedings under scrutiny. The
application for dismissal has to be dealt with first. Once an
application for dismissal for want of prosecution has been filed, it
must be determined on the merits unless it is withdrawn or the bar is
uplifted by consent. If the courts were to allow a respondent who
has failed to comply with the requirements of Rule 236(3)(b), to jump
and set down the application complained against to defeat the
application for dismissal, this would be tantamount to the courts
allowing respondents to pull the carpet from under the feet of
applicants. The action that a respondent takes after an application
for dismissal has been made is of no consequence. The only option
open to him, is to oppose the application for dismissal and let it be
dealt with on the merits.”
Unfortunately,
the High Court did not cite any authority for the above proposition.
In
fact, one of the authorities cited in that judgment is Ndlovu
v Guardforce Investments (Pvt) Ltd & Ors
2014 (1) ZLR 25 (H), a judgment which is of no consequence.
More
importantly, as shall be seen shortly, the pronouncement by the High
Court cited above, sought to overturn the judgment of the Supreme
Court in Guardforce
Investments (Pvt) Ltd v Ndlovu & Ors, supra
SC 24/16.
ANALYSIS
Rule
236(3) of the High Court Rules (now Rule 59(15) of the High Court
Rules, 2021) does not set out the factors to be considered by a judge
or the court on an application for dismissal for want of prosecution.
CHIDYAUSIKU
CJ however set out those factors in the case of Guardforce
Investments (Pvt) Ltd, supra,
at
pp5-6 as:
“The
discretion to dismiss a matter for want of prosecution is a judicial
discretion, to be exercised taking the following factors into
consideration -
(a)
the length of the delay and the explanation thereof;
(b)
the prospects of success on the merits;
(c)
the balance of convenience and the possible prejudice to the
applicant caused by the other party's failure to prosecute its case
on time.
Dealing
with the delay and the explanation for the delay, there is no doubt
that there was a delay in this matter. However,
the delay and the explanation thereof in this matter alone cannot
form the basis for the dismissal. The other factors should also have
been considered in determining whether or not to dismiss the
application for rescission for want of prosecution. This is a
serious misdirection.”
(The underlining is for emphasis)
Later
in that page going on to p7, the learned Chief Justice went on to
state:
“There
is no rule of law which barred the appellant from proceeding with its
application for rescission of the default judgment despite the making
of the application for dismissal for want of prosecution. In fact,
under Rule 236 of the High Court Rules, when faced with an
application for dismissal of an application, the High Court is
enjoined to consider options other than dismissing the application
for want of prosecution. The fact that the appellant sat around and
did not attend to the setting down of the application for rescission
of the default judgment is a factor that weighs against the
appellant. If
anything, the chamber application ought to have triggered the
appellant to attend to the finalization of the application for
rescission of the default judgment. The only way the appellant could
have shown that it was serious about the application for rescission
was to proceed to have the matter set down after it was served with
the chamber application for dismissal for want of prosecution.”
(The underlining is for emphasis)
See
also Mashangwa
& Anor v Makandiwa & Ors
SC 95/21.
In
my view, this completely resolves the present appeal.
The
jurisprudence coming out of this Court is completely at variance with
that of the High Court. The judgment in Guardforce
Investments (Pvt) Ltd supra
was
delivered on 31 May 2016. The one in Melgund
Trading (Pvt) Ltd, supra
was only delivered on 16 November 2016 at a time when this Court had
already set out the law.
The
High Court was bound, by virtue of the stare
decisis
principle to follow the judgment of this Court in Guardforce
Investments (Pvt) Ltd, supra.
See
Commercial
Farmers Union v Mhuriro & Ors
2000
(2) ZLR 405 (S) at 407G – 408A.
By
the same token, the court a
quo
in the present case was bound to follow the requirements set out in
Guardforce,
supra
when it exercised its discretion to dismiss the appellant's
application for want of prosecution.
It
did not.
Instead
the court a
quo
only considered the extent of the delay and the reasonableness of the
explanation for it. It ignored the prospects of success on the
merits and the balance of convenience or prejudice.
By
the authority of Guardforce,
supra,
this
was a misdirection.
This
Court is, therefore, at large on appeal.
Earlier
on in this judgment I made reference to portions of the appellant's
opposing affidavit which unequivocally drew the court a
quo's
attention to the factors that it was required to take into account in
exercising its discretion.
He
made it clear that the inquiry on the delay was not the only factor.
He also drew attention to the filing of the answering affidavit and
heads of argument as measures taken to prosecute the application.
All
that was overlooked by the court a
quo.
This
was a misdirection.
Apart
from that, the appellant maintained his claim for ownership of the
20% shareholding in the first respondent.
There
was evidence that a payment had been made for the shares. Indeed,
both the payment and the existence of the agreement were acknowledged
by the respondents.
The
interests of justice require that the propriety of the appellant's
claim be interrogated fully and that a decision on the merits be
made. This is not a case for closing the door on the appellant
merely on the basis of the inordinate delay in prosecuting the
application.
In
my view, the court a
quo
did not take into account relevant considerations in exercising its
discretion to allow the application. This gives this Court a
foothold to interfere with that discretion. See Barros
& Anor vs Chimphonda
1999 (1) ZLR 58 (S).
The
appeal has merit and ought to succeed.
Regarding
the issue of costs both a
quo
and before this Court, there is no explanation why the authorities
upon which the matter has now been resolved were not brought to the
attention of the court a
quo.
This
is moreso regard being had that the principles set out in Guardforce
were
captured in the opposing affidavit.
To
that extent, Mr Madhuku
for the appellant conceded that their case could have been presented
more elegantly.
In
the exercise of the court's discretion on costs, the appellant will
not be awarded the costs a
quo.
The
costs on appeal are well deserved and there is no reason why they
should not follow the result.
I
say so because the respondents persisted with their contestation of
the appeal without regard to the authorities set out in the
appellant's heads of argument filed as far back as 26 November
2021.
In
the result, it be and is hereby ordered as follows:
1.
The appeal succeeds with costs.
2.
The judgment of the court a
quo
is set aside and substituted with the following:
“The
application is hereby dismissed with each party to bear its own
costs.”
MAKONI
JA:
I agree
KUDYA
JA:
I agree
Lovemore
Madhuku Attorneys,
appellant's legal practitioners
Muzangaza
Mandaza & Tomana,
respondents legal practitioners
