This
is an appeal against a judgment of the High Court handed down on 18
May 2016.
BACKGROUND
FACTS
The
facts which gave rise to this appeal are somewhat convoluted.
Earthmoving Construction Company (Private) Limited, the second
appellant (hereinafter referred to as “the Company”), is a
private limited company duly registered as such under the laws of
Zimbabwe.
The
Company ...
This
is an appeal against a judgment of the High Court handed down on 18
May 2016.
BACKGROUND
FACTS
The
facts which gave rise to this appeal are somewhat convoluted.
Earthmoving & Construction Company (Private) Limited, the second
appellant (hereinafter referred to as “the Company”), is a
private limited company duly registered as such under the laws of
Zimbabwe.
The
Company had, at the time of incorporation, an authorized share
capital of $32, divided into 32,000 ordinary shares with a nominal
value of $0.001 each. Of those shares, only two had been issued. and
were, at the time that these events evolved, owned by one Sandra
Maureen Muir (“Mrs Muir”). This, in effect, gave 100 percent
ownership of the issued shares to Mrs Muir.
In
turn, the Company is the registered owner of an immovable piece of
land, situate in Harare, identified as a certain piece of land
situate in the district of SALISBURY TOWN LANDS measuring 3,066
square metres (also known as 98 Churchill Avenue, Gunhill, Harare).
This property is the sole asset of the company.
On
27 May 2007, Mrs Muir concluded a written agreement of sale with Mr
and Mrs Gurupira, in terms of which Mrs Muir sold to them the two
shares in the Company. In terms of the agreement between the parties,
the shares purchased by the Gurupiras' would entitle them to the
“exclusive right of use and occupation” of the immovable property
owned by the company. The purchase price for the shares was recorded
as ZW$7,000,000,000= (seven billion dollars), payable as to a deposit
of ZW$3,300,000= which was acknowledged as having been paid at the
time of signing of the agreement. The balance of ZW$3,370,000,000=
was to be paid within six (6) months from the date of the agreement.
The rate at which the outstanding balance was to be paid as well as
the frequency thereof were left to the discretion of the parties.
Although
the purchase price was quoted in the local currency, it is common
cause that the Gurupiras made sporadic payments sometimes in fuel,
sometimes in US Dollars, and sometimes in Zimbabwe Dollars.
Up
until the end of June 2007, the Gurupiras had made payment on eight
occasions, with payment being made as described above. The total
amount paid to Mrs Muir under this arrangement is in dispute between
the parties.
On
4 August 2007, the Gurupiras addressed a letter to Mrs Muir
indicating that they were encountering challenges raising the balance
of the purchase price and sought an extension of the time to make
payment but did not specify an exact date of expected payment. The
last date for payment under the agreement was 25 November 2007.
A
dispute ensued on the manner of payment, the currency of payment, and
the place at which payment should be effected.
The
Gurupiras alleged that at some point Mrs Muir started refusing
payment in the local currency and demanded that the balance be paid
in foreign currency. Mr Gurupira advised Mrs Muir that he could only
pay foreign currency if he was able to access it and that he was not
always in a position to obtain it. On 12 November 2007, Mr Gurupira
instructed his legal practitioners to write to Mrs Muir to provide an
account into which payment of the outstanding balance of the purchase
price could be deposited. There was no response.
On
23 November 2007, the Gurupiras filed an application in the High
Court seeking an order for Mrs Muir to provide a Bank account into
which payment of the outstanding balance of the purchase price could
be paid. In addition, they sought an order for specific performance
by Mrs Muir for the transfer of shares in the company to themselves
against a tender of payment of the balance of the purchase price.
This
application never saw the light of day having been withdrawn before
it could be set down.
The
record shows that on 6 September 2007, the Gurupiras made a payment
through wire transfer directly to Israel where Mrs Muir was now
residing. Also on record is a cheque payment, in February 2008, into
a Standard Chartered Bank account bearing Mrs Muir's name.
It
is common cause that during the period following the filing of the
above mentioned application Mrs Muir concluded a series of agreements
with the first appellant, (“Leggett”).
On
11 December 2007, Mrs Muir and Leggett concluded an agreement in
terms of which the latter would subscribe to 98 ordinary shares in
the company. Subsequently, on 27 May 2008, Leggett concluded an
agreement with Mrs Muir in terms of which the former purchased the
entire shareholding in the company from Mrs Muir. Just as in the case
of the Gurupiras, the purchase entitled him to “exclusive use and
occupation” of the immovable property which is the subject matter
of this appeal.
Subsequent
to the conclusion of the first agreement, the Gurupiras became aware
that Mrs Muir had placed advertisements for the sale of the immovable
property. As a consequence, on 7 March 2008, under Case No.
HC1393/08, the Gurupiras filed an application with the High Court in
which they sought, variously, as against the company, interlocutory
relief prohibiting the transfer of the immovable property, and, as
against Mrs Muir, an order for specific performance in respect of the
immovable property. The Registrar of Deeds, the Sheriff for Zimbabwe
and his Deputy were also cited as third, fourth and fifth respondents
respectively.
On
21 May 2018, the High Court granted an order in favour of the
Gurupiras, in default of appearance from Mrs Muir and the company, as
claimed in the draft order.
On
16 June 2008 the property was transferred to the Gurupiras under Deed
of Transfer No. 4778/08. They proceeded to evict the occupant, one
Diniwe Chinyani. She informed Leggett.
An
urgent application for rescission of the default judgment was filed
on behalf of the company. It was adjudged not urgent and was finally
set down for hearing as an opposed matter. However, the matter was
referred to trial on the premise that there existed material disputes
of fact.
Pending
the determination of the application for rescission, the company
filed a counter application in which it sought an order for the
eviction of the Gurupiras on the premise that it was the owner of the
property in question.
On
19 March 2014, after a full trial, the High Court gave an order in
terms of which the default judgment was set aside with leave being
granted for “the respondent” in the main application to file
opposing papers.
The
main application was heard by the High Court on 21 May and 18 June
2015. By this time, pursuant to an application by the Gurupiras,
Leggett had been joined as sixth respondent by order of the court. An
issue arose as to whether Mrs Muir was before the court. The
Gurupiras argued that she had not applied for the rescission of the
default judgment in the sense that only the company had sought such
rescission. It also transpired that Mr Stevenson, who purported to
represent her on the day of the hearing, had not filed papers on her
behalf nor did he appear to have the mandate to represent her.
On
18 May 2016 the High Court handed down its judgment and issued an
order:
1.
Declaring that the Gurupiras to be the lawful shareholders of the
entire shareholding in the first respondent (the company) and that
any purported transfer or appointment of directors by the sixth
respondent (Leggett) be deemed to be null and void. (sic)
2.
Directing the second respondent to sign all necessary documents to
effect transfer of the above-mentioned shares. (sic)
3.
That should the second respondent fail to sign the necessary
documents to effect transfer of the shares, the Sheriff of the High
Court be directed to sign all necessary documents to effect transfer
of the shares to the Gurupiras.
4.
The first and sixth respondents shall bear the costs of this
application on an attorney and client scale jointly and severally
each causing the other to be absolved. (sic)
5.
Dismissing the sixth respondent's counter-application.
It
is this decision that Leggett has brought on appeal...,.
ISSUES
FOR DETERMINATION ON APPEAL
Although
the Gurupiras obtained an order for specific performance against Mrs
Muir, which is the main issue in contention in this appeal, the
starting point revolves around the issue of rescission of the default
judgment of 21 May 2018.
1.
In this appeal, the court has to determine the effect of the order
for rescission given by MAFUSIRE J.
2.
Consequent thereto is the issue as to whether Mrs Muir, following
upon the rescission of the default judgment, was before the court a
quo for the determination of the main application.
3.
Additionally, there should be a determination as to whether the court
a quo was correct in finding that the Gurupiras were entitled to
specific performance. For the proper determination of this aspect on
the merits, it stands to reason that Leggett and the company could
only appeal if Mrs Muir was a party to the proceedings. Her absence
militates against their contentions in that regard.
4.
Lastly, the court had to decide whether Leggett was entitled to
relief in respect of the shareholding transferred to him by Mrs Muir.
Given
the issues raised in the rather extensive grounds, I have decided to
deal with each ground of appeal separately ad seriatim.
AD
GROUNDS 1 and 2 - WHETHER THE COURT A QUO ERRED IN FINDING THAT MUIR
HAD BEEN PROPERLY SERVED, THAT, AS A CONSEQUENCE, MUIR WAS NOT BEFORE
THE COURT AND HAD FAILED TO OPPOSE THE APPLICATION FOR SPECIFIC
PERFORMANCE
These
two grounds are interlinked as they are concerned with the same
issue.
The
application for the rescission of the default judgment was the sine
qua non for any party seeking to oppose relief being claimed by the
Gurupiras to have the leave of court to appear in opposition to such
application.
As
regards this issue, it was contended that the High Court had said
that the issue was whether or not Mrs Muir was before the court. It
was contended that due to the findings of fact made by MAFUSIRE J the
court had to find that the judgment had been rescinded, thus
affording her a right to oppose the relief sought by the Gurupiras.
Per
contra, counsel for the respondents submitted that Mrs Muir had not
appealed against the finding that she was not before the High Court.
As a consequence, there was no opposition filed by her to the order
sought by the Gurupiras.
The
court a quo made the following critical findings;
It
found that Mrs Muir had been properly served with the application.
Further to that, it found that due to her failure to have the
judgment granted in default rescinded as against her, she was not
before the court.
The
application for rescission was, on the order of the High Court,
converted to a trial given the seeming myriad material disputes of
fact on the papers. The witnesses called included Leggett, one Diniwe
Chinyanga, L. T Nhari, a forensic documents examiner, and Thomas
David Stevenson.
The
last witness was appearing in his capacity as the legal practitioner
of record for Mrs Muir.
Mrs
Muir, however, did not launch an application for the rescission of
the order made against her nor was she one of the witnesses who gave
evidence before the High Court in support of the application for
rescission of the default judgment.
Counsel
for the appellants, Leggett and the company, submitted that the court
a quo should have had regard to the evidence given to the court
during the trial wherein the rescission of the default judgment was
being considered.
It
is pertinent to note that when the matter was heard by MAFUSIRE J, on
10 and 11 February 2014, there was only one party referred to as the
plaintiff - and that was the company. Mrs Muir was cited as the third
respondent in that matter. This is because the company had made the
application for rescission. It cited Mrs Muir as a respondent. She
did not file any papers. The judgment reflects that there was no
appearance by Mrs Muir. The learned judge found that there had been
no proper service of the application to compel specific performance
as against Mrs Muir. He found, as a consequence, that there had not
been proper service on Mrs Muir.
The
critical question that begs an answer is what was before his
Lordship.
In other words, was Mrs Muir before his Lordship
in an application for the setting aside of a judgment granted in
default?
Such
an application is governed by Rule 63 of the Rules of the High Court,
1971. Rule 63 is couched 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 sub-rule
(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.
(3)
Unless an applicant for the setting aside of a judgment in terms of
this Rule proves to the contrary, he shall be presumed to have had
knowledge of the judgment within two days after the date thereof.”
In
my view, it was incumbent upon Mrs Muir, in the pursuit of the
protection of her rights under the agreement with the Gurupiras, to
apply, in terms of Rule 63, to have the judgment against her
rescinded or set aside.
Even
the order issued by MAFUSIRE J is of no assistance to her cause. It
orders that “the plaintiff shall file its notice of opposition
within ten days of the date of the order” - and it is common cause
that the plaintiff in those proceedings was the company.
Notwithstanding
his remarks on service, there is no order granting leave to Mrs Muir
to file opposing papers. This is due to her absence from the
proceedings from the beginning.
The
court a quo found that, despite the presence of Mr Stevenson, who
purported to act on her behalf, Mrs Muir was not before it. The court
said:
“It
is trite that where the Notice of Opposition or affidavit is to be
signed by a person other than the respondent, that person must show
that he is authorised to do so. The authors Herbestein & Van
Winsen - The Civil Practice of the High Courts of South Africa, 5th
Ed, p437 put it this way;
'Where
an application is made by an agent on behalf of a principal, an
averment of the agent's authority is essential, unless it appears
from the affidavits filed in the application that the principal is
aware of and ratified the proceedings. A statement that the applicant
is acting in the capacity of agent for the principal in question is a
sufficient allegation of authority to make the application.'”
In
casu, Mr Stevenson filed an affidavit. It is not clear whether it is
an opposing or supporting affidavit. In it he avers that he renounced
agency after being asked by Mrs Muir to hand over her files to some
other legal practitioners. In paragraph 7 he asserts;
“I
have been prevailed upon by interested parties to the instant matter
to act on behalf of the second respondent in the absence…,.
It
is a telling assertion.
He
filed the 'affidavit' without a mandate from Mrs Muir but did so
due to some pressure from 'interested parties.'”
In
the light of these facts, as emanating from the record, the finding
that Mrs Muir was not before the court a quo is beyond impeachment.
Counsel
for the appellants proceeded to argue that the finding by MAFUSIRE J,
that there had in fact not been proper service of the application,
was pertinent in this regard.
He
contended that it could not be argued that the company and Mrs Muir
could be said to have been in default, and, therefore, no order could
be made against either of them.
These
comments are made against the finding by the court a quo that Mrs
Muir did not file an application for rescission, which finding has
not been appealed against. The court stated:
“In
casu, Muir has not placed any facts before this Court, either in the
application for rescission or in the present matter, that she was not
served with the application. None of the witnesses, in the
application for rescission, could testify on her behalf on that
aspect.”
According
to the learned authors, HERBSTEIN and Van WINSEN,
The
Civil Practice of the High Courts of South Africa, 5ed…, Rule
31(2)(b) of the Uniform Rules of the High Courts of South Africa
provides that a defendant may, within twenty days after gaining
knowledge of a default judgment granted against him, apply to court
upon notice to the plaintiff to set aside the judgment.
I
must say that I much prefer the wording in that rule to the one in
our Rule 63.
The
former is clear and admits of no doubt as to who should make the
application. It is the defendant.
On
p715, the learned authors state the following:
“An
applicant for the rescission of a default judgment must show good
cause and prove that at no time did he renounce his defence, and has
a serious intention of proceeding with the case. In order to show
good cause, an applicant must give a reasonable explanation for the
default, the application must be made bona fide and must show that a
bona fide defence to the plaintiff's claim (exists).”
The
contentions by counsel for the appellants, that Mrs Muir was not in
default and was so found by MAFUSIRE J must, therefore, be considered
in the light of the provisions of Rule 63 above.
The
judgment of the learned judge in the court a quo is clear. As a
consequence, when MAFUSIRE J found that the plaintiff had not been in
wilful default such finding could only have related to the company.
Mrs Muir never made an application for the rescission of the default
judgment entered against her, and, as a consequence of such failure,
the judgment, as it related to an order aimed at her personally, was
not set aside. As a consequence, the setting aside of the order did
not mean that she had purged her default. She had not sought an order
permitting her to oppose the application filed against her.
According
to the agreement of sale, the domicilium citandi et executandi was 98
Churchill Avenue. The return of service by the Deputy Sheriff stated
that service had been effected at the domicilium citandi et
executandi. The court a quo found that service had been effected
because that is the address for service chosen by Mrs Muir in the
agreement. The court stated:
“It
is trite that the return of service of an officer of the court,
whether he be the Sheriff, the Deputy Sheriff or the Messenger, has
to be accepted as prima facie proof of what was stated therein,
capable of being rebutted by clear and satisfactory evidence. See
Gundani v Kanyemba 1988 (1) ZLR 226 (SC).”
It
is on record that she left Zimbabwe in September 2008. The documents
were served in March 2008. She needed to explain why the return of
service was not correct and why she had not seen the documents. There
was no explanation from her. The return must therefore be accepted as
correct.
In
the absence of an application for rescission challenging such manner
of service, a court hearing an application for rescission of a
default judgment does not have the jurisdictional base to proceed and
make conclusions touching on that process. It can only do so once
good and sufficient cause has been established for the setting aside
of the judgment. In this case there was none as related to Mrs Muir.
In
the final analysis, the finding by the court a quo that the judgment
against Mrs Muir was not set aside is unassailable. Grounds 1 and 2
of the appeal accordingly are without merit and must be dismissed.
