Capital Bank Corporation Limited (Formerly Renaissance Merchant Bank Limited) v Renaissance Financial Holdings (Pvt) Ltd & 30 Ors

### Preamble
1
HH 781-18
HC 5001/14
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CAPITAL BANK CORPORATION LIMITED (Formerly Renaissance

Merchant Bank Limited)

versus

RENAISSANCE FINANCIAL HOLDINGS (PVT) LTD

and

EDWIN CHAVORA & 30 OTHERS

HIGH COURT OF ZIMBABWE

ZHOU J

HARARE, 24 May & 21 November 2018

Opposed Application – Costs

T. Zhuwarara for the applicant

G. R. J. Sitholefor the first respondent

Miss V. Tavaziva for the second to thirty-first respondents

ZHOU J: This matter was argued for the purpose of determination of the costs to be paid to the respondents consequent upon withdrawal of the application. The notice of withdrawal of the application which was filed on behalf of the applicant on 16 February 2018 tendered costs on the ordinary scale.  The respondents rejected the tender of costs on the ordinary scale.  They reacted to the notice of withdrawal by filing supplementary heads of argument.  The respondents sought costs on the attorney-client scale against the National Social Security Authority which they argued is the “effective litigant” in the application.  Alternatively, costs were sought against Messrs Kantor & Immerman the erstwhile legal practitioners for the applicant who renounced agency prior to the withdrawal of the court application.  The applicant contested the special order of costs being sought by the respondents and submitted that the application was properly withdrawn as the notice of withdrawal was accompanied by a tender of costs on the ordinary scale.  In support of this position Mr Zhuwarara for the applicant pointed to the opposing affidavits of the respondents in which costs were sought on the ordinary scale (Record 68, para. 23 of the first respondent’s opposing affidavit; Record 189, para. 13.1.1 of the opposing affidavit of Edwin Chavora).  He also submitted that the proceedings were instituted by way of an ex parte application which was not served upon any of the respondents but the respondents intervened on their own, thereby electing to participate in the proceedings.  In order to place the debate on costs into context, the following background to the matter is apposite.

On 18 June 2014 the application in casu was instituted seeking a provisional order for its winding up and for the appointment of a provisional liquidator.  The deponent to the founding affidavit is one James Mwaiyapo Matiza who states that he is the General Manager of the National Social Security Authority (hereinafter referred to as NSSA) which holds majority shareholding in the applicant.  The resolution by which James Mwaiyapo Matiza acted to institute the proceedings is of the NSSA Board, not of the applicant’s Board of Directors.  He says so in para 5 of the founding affidavit.  The copy of the resolution which is an annexure to that affidavit confirms that James Mwaiyapo Matiza in his capacity “as the General Manager of NSSA” was being authorized “to sign contracts, instruments, legal documents, notices for and on behalf of NSSA as per section 19 of the NSSA Act CAP 17:04”.  The resolution makes no reference to the applicant; neither does it purport to authorize the deponent to the founding affidavit to institute the proceedings on behalf of the applicant.

The first respondent, Renaissance Financial Holdings Limited filed a notice of opposition and opposing affidavit on 1 July 2014.  Edwin Chavora and the other thirty senior managerial employees of the applicant filed a notice of opposition and opposing affidavits contesting the application.  The applicant went on to file an answering affidavit and heads of argument.  The respondents also filed their heads of argument.  In these main heads of argument the second to 32nd respondents sought costs on the attorney-client scale against NSSA.  The first respondent did not seek a special order of costs. The applicant’s erstwhile legal practitioners filed supplementary heads of argument on 11 January 2016.  There is an order of this court in terms of which, among other things, the matter was removed from the roll on 21 January 2016, which suggests that it had been set down for hearing on the unopposed roll for that day.  The order directed that the matter should be set down on the opposed motion roll. On 8 February 2016 Kantor & Immerman renounced agency. The applicant’s current legal practitioners assumed agency on 17 February 2016.  Two years later on 16 February 2018 the applicant’s current legal practitioner filed the notice of withdrawal of the application which has been referred to earlier on.  The respondents requested that the matter be set down for argument on the question of the scale of costs as well as who should pay the costs.

The questions for determination in this case are the scale of costs and whether costs should be ordered against NSSA or Kantor & Immerman.  A letter was written and delivered by the first respondent’s legal practitioners to Kantor & Immerman on 18 May 2018.  In that letter the applicant’s erstwhile legal practitioners were notified that costs de bonis propriis would be sought against them at the hearing of the matter on 24 May 2018.  They did not attend the hearing which means that they elected to abide by the order to be made.  The issue of costs is a matter within the discretion of the court. The discretion must be exercised judicially upon a consideration of all of the relevant facts.

Legal practitioner and client costs, which are sometimes referred to as attorney-client costs, are awarded in special cases.  In the case of Chadoka v Chombo NO & Ors 2012 (2) ZLR 15(H) at 23B-C the following leading statement on attorney-client costs is cited from the case of Nel v Waterberg Landbouwers Ko-operative Vereniging 1946 AD 597 at 607:

“The true explanation of awards of attorney-client costs not authorized by statute seems to be that, by reason of special considerations arising either from the circumstances which gave rise to the action or conduct of the losing party, the court in a particular case considers it just, by means of such an order, to ensure more effectively than it can do by means of a judgment for party and party costs that the successful party will not be out of pocket in respect of the expense caused to him by the litigation.”

The vexatiousness of a matter is a ground for awarding costs on the attorney client, see Chadoka v Chombo NO & Ors 2012 (2) ZLR 15(H) at 23D-F; Guard-Alert (Pvt) Ltd v Mukwekwezeke & Anor 2012 (2) ZLR 83(H) at 90B. The application in casu is devoid of merit and constitutes an unacceptable abuse of the procedures of this court.  It was an application instituted by a third party, NSSA, yet it purported to be an application by the applicant.  The papers are unduly voluminous and burdensome.  The applicants were made to incur unnecessary costs because of the application.  The fact that in the opposing affidavits they had not sought the punitive order of costs does not prevent them from seeking such an award, especially as the record became very bulky and entailed a lot of work.  I therefore conclude that the respondents are entitled to attorney-client costs.

The next question pertains to who should be responsible for the payment of these costs.  It is clear that the applicant did not institute the application but the application was instituted in its name by NSSA. Where there is litigation in the name of a company but the persons effectively litigating are not the company but some other persons such as directors or owners of the company, it is competent for the court to order one or other of them to pay costs de bonis propriis, see Francarmen Delicatessen (Pty) Ltd v Gulmini & Anor 1982 (2) SA 485(W) at 488D; Dowjee Co Ltd v Waja 1929 TPD 66 at 81-82; Lawrence v Lawrich Motors (Pty) Ltd 1948 (2) SA 1029(W).  The effective litigant in this matter is NSSA upon whose resolution and through whose General Manager the proceedings were instituted. For that reason it is appropriate that it and not the applicant be mulcted with the order of costs. The manner in which the erstwhile legal practitioners for the applicant handled the matter is a matter of concern to this court.  However, because of my finding that NSSA was to blame for instituting the proceedings and the fact that they renounced agency albeit after a lot of expenses had been incurred, the legal practitioners may be excused from paying the costs.

In the result, IT IS ORDERED THAT:

the application having been withdrawn, the National Social Security Authority (NSSA) shall pay the respondents’ costs on the attorney-client scale.

G. N. Mlotshwa & Company, applicant’s legal practitioners

Muza & Nyapadi, first respondent’s legal practitioners

Tendai Biti Law, 2nd to 31st respondents’ legal practitioners