Global Horizon (Private) Limited and Godfrey Chindomu and Nomusa Chindomu v FMC Finance (Private) Limited and Sheriff of High Court N.O and Registrar of Deeds N.O

### Preamble
1
HH 76-22
HC 177/22
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GLOBAL HORIZON (PRIVATE) LIMITED

and

GODFREY CHINDOMU

and

NOMUSA CHINDOMU

versus

FMC FINANCE (PRIVATE) LIMITED

and

SHERIFF OF HIGH COURT N.O

and

REGISTRAR OF DEEDS N.O

HIGH COURT OF ZIMBABWE

DEME J

HARARE, 17 and 21 January, 2022 and 3 February 2022

Urgent Chamber Application

Mr.  T.K. Hove, for the 1st, 2nd and 3rd applicants

Mr. T.W. Nyamakura with Mr.  R.M. Dhaka, for the 1st respondent.

No appearance for the 2nd and 3rd Respondents.

DEME J: The first, second and third applicants approached this court on an urgent basis seeking an order for the stay of execution of judgment. More particularly, the applicants’ provisional order is as follows:

“TERMS OF FINAL ORDER

That you show cause to this Honourable Court why a Final Order should not be made as set out in the Interim Relief granted hereunder;

That the Respondents be and are hereby ordered and directed to stay the execution of Applicants’ movable and immovable properties, pending the outcome of the  Application for Rescission of Judgment instituted by Applicants against 1st Respondent.

The 2nd Respondent be and is hereby empowered to appoint a firm of charted Accountants  to calculate the interest  due to 1st Respondent using the prescribed rate of interest as provided for in the Money Lending and Rates of Interest Act [Cap 14:14]

That 1st Respondent pays the costs of suit on an attorney / client scale.

INTERIM RELIEF GRANTED

That the Respondents be and are hereby ordered and directed to stay the execution of Applicants’ movable and immovable properties, pending the outcome of Application for Rescission of Judgment instituted by  Applicants against 1st Respondent.

SERVICE OF PROVISIONAL ORDER

This Provisional Order shall be served by the Sheriff of the High Court of Zimbabwe or the Applicant’s Legal Practitioners or their authorised agents.”

According to the Applicants, the first Respondent obtained default judgment against the Applicants after instituting an action by way of summons for provisional sentence. This matter was instituted under case number HC 6333-21.  After discovering there was default judgment against them, the Applicants proceeded to file application for rescission of default judgment under case number HC 7268-21 and the application is still pending.

According to the Applicants, on 19 November 2020, the first Respondent and the Applicants entered into the loan agreement in terms of which the first Respondent advanced the sum of money to the Applicants. The sum of money is in dispute. The Applicants alleged that they applied for US$ 55 000 (fifty-five thousand United States Dollars). On the other hand, the first Respondent averred that the capital sum for the loan was US$ 100 000 (one hundred thousand United States Dollars). According to the default judgment, the first Respondent was entitled to the sum in excess of US$ 142 000. The first Respondent and the Applicants signed the deed of settlement in terms of which the Applicants undertook to repay the loan.

After obtaining the default judgment in its favour, the first Respondent issued a Notice of Seizure and Attachment in order to recover US$ 284 785, 08.  The Applicants have attached the Notice of Seizure and Attachment which is marked Annexure A. According to the Applicants, the rate of interest charged by the first Respondent of 18 per cent being ordinary interest per month together with the monthly interest of 25 per cent being penalty interest is in the circumstances excessive. The total compounded monthly interest is 43 per cent.  According to the Applicants, they have made efforts to settle the loan in July 2021 and January 2022 in local currency. However, the first Respondent submitted that the amount settled is too insignificant.

In opposition to the relief sought by the Applicants, the first Respondent raised two points in limine.

The first point   in limine raised by the first Respondent is that the present application lacks urgency. The first Respondent averred that the Applicants were served with a copy of summons   for provisional sentence on 12 November 2021. The Applicants did nothing to defend after being served with summons, according to the first Respondent. The first Respondent further averred that the Applicants wilfully defaulted. The first Respondent further averred that the need to act arose on the date when they were served with the summons.

On the other hand, the Applicants averred that they did not defend since they verily believed that the first Respondent and the Applicants were finalising talks for the payment plan. They further averred that the need to act arose on the date when they were served with Notice of Attachment.

The issue of whether or not the matter is of urgency has been settled in our jurisdiction. In the case of Kuvarega v Registrar General and Another, the court held that:

“What constitutes urgency is not only the imminent arrival of the day of reckoning. A matter is urgent if at the time the need to act arise, the matter cannot wait. Urgency which stems from a deliberate or careless abstention from action until the deadline draws near is not the type of urgency contemplated by the rules. It necessarily follows that the certificate of urgency or the supporting affidavit must always contain an explanation of the non-timeous action if there has been any delay.”

On 3 January 2022, the Applicants were served with notice of seizure and attachment which called upon them to settle the judgment in the sum of US$284 785, 08 being capital debt and costs.  According to the default judgment, the first Respondent is entitled to recover US$ 142 392, 54.  The default judgment was entered against the Applicants on 1 December 2021.  Thus, the   debt had doubled within thirty-three days from the day of default judgment. In light of this, I am of the considered view that the need to act arose on 3 January 2022 when the Applicants were served with a copy of notice of seizure and attachment calling upon them to honour their debt which had  ballooned to unprecedented levels.

The Applicants have explained why they did not defend themselves. The Applicants, who were self-actors, at the time they were served with summons for provisional sentence, did not fully appreciate the consequences associated with failure to   defend themselves. Reference is made to the case of Maujean t/a Audio Video Agencies v Standard Bank of South Africa Ltd, where King J. defined wilful default in the following terms:

“More specifically, in the context of a default judgment, ‘wilful’ connotes deliberateness in the sense of knowledge of the action and of its consequences, i.e its legal consequences and a conscious and freely taken decision to refrain from giving notice of intention to defend, whatever the motivation, for this conduct might be.”

The Applicants did not appreciate the legal consequences for default. Thus, I am of the view that the Applicants did not wilfully default. In the circumstances, I find no merit in the first Respondent’s point in limine.

The second point in limine raised by the first Respondent is to the effect that the Applicants failed to make a material disclosure. According to the first Respondent the Applicants did not disclose the fact that the whole matter revolves around the deed of settlement signed by the Applicants in acknowledgement of debt.

On the other hand, the Applicants, through submissions of their counsel, Mr. Hove, submitted that the Applicants referred the court to all records that are relevant. Thus, according to the Applicants’ counsel, there was no misrepresentation or non-disclosure of material facts.

Having referred this court to the relevant records, I am of the opinion that there was no misrepresentation on the party of the Applicants. Accordingly, I dismiss the point in limine related to the non-disclosure of material facts.

I will now move to the merits of the present application. The Applicants are applying for stay of execution of the default judgment entered against them under case number HC 6333-21. It is important to have reference to the applicable principles to the present matter.

“The principles that a court must have regard to in an application for stay of execution are akin to those considered when deciding whether or not to grant leave to execute pending appeal”.

See the case of Chingwena v. SMM Holdings (Pvt) Ltd and Others, Nzara v. Tsanyau and Others  and Old Life Mutual Assurance Company (Pvt) Ltd v Macgatho. The principles include the following:

“1. An appellant has an absolute right to appeal and test the correctness of the decision of the lower court before he or she is called upon to satisfy the judgment appealed against.

2. Execution of the judgment of the lower court before the determination of the appeal will negate the absolute right that the appellant has and is generally not permissible.

3. Where, however, the appellant brings the appeal with no bona fide intention of

testing the correctness of the decision of the lower court, but is motivated by a desire to either buy time or harass the successful party, the court, in its discretion, may allow the successful party to execute the judgment notwithstanding the absolute right to appeal resting in the appellant.

4. In exercising its discretion, the court has regard to the considerations suggested by   CORBETT JA in South Cape Corporations (Pty) Ltd v Engineering Management Services (Pty) Ltd 1977 (3) SA 534 (A) at 545.

5.  Where the judgment sounds in money and the successful party offers security de

restituendo and the appellant has no prospects of success on appeal, the court may exercise its discretion against the appellant’s absolute right to appeal.

6.  An application for leave to execute pending appeal cannot be determined solely

on the basis that the appellant has no prospects of success on appeal, especially where the whole object of the appeal is defeated if execution were to proceed (see Woodnov Edwards and Another 1966 RLR 335.”

It is the Applicants’ case that an interest rate of 43 per cent per month including penalty for default is usurious. Consequently, Mr. Hove submitted that the deed of settlement ceases to be valid as a result of such usurious interest rate.   The first Respondent is of the view that the Applicants signed a deed of settlement wherein they undertook to repay the loan upon such rate. It is also the first Respondent’s view that the interest rate is not excessive. Mr. Nyamakura further submitted that the interest rate is subject to common law. Both counsel referred me to the case of ZB Bank Limited v Eric Rosen (Pvt) Ltd and Others.

According to the case of ZB Bank Limited v Eric Rosen (Pvt) Ltd and Others (supra), Mafusire J. commented as follows:

“My view of this case is that a rate of interest of 50% per annum, albeit designed as a penalty for default, is, on the face of it, too high, given that the dominant functional currency in the economy is the United States dollar. On the face of it, such a rate induces a sense of shock. It stifles economic growth.”

Thus, in light of the case of ZB Bank Limited v Eric Rosen (Pvt) Ltd (supra), I am of the view that the Applicants do have a case which is reasonably arguable. They should be allowed to have their day in court and defend themselves against the interest rate which is in dispute.

As I have highlighted before, the requirements of the present application are similar to those of application for stay of execution of judgment pending appeal. Thus, it is important to note other principles for consideration when determining the present application. Such principles were postulated in the case of South Cape Corporation (Pty) Ltd v engineering Management Services (Pty) Ltd, cited with approval in the case of Old Mutual Life Assurance (Pvt) Ltd v Macgatho (supra), where the court held that:

“In exercising this discretion (to grant leave to execute pending appeal), the court should, in my view, determine what is just and equitable in all the circumstances, and in doing so, would normally have regard, inter alia, to the following factors:

(1) The potentiality of irreparable harm or prejudice being sustained by the appellant on appeal (respondent in the application) if leave to execute was were to be granted;

(2) The potentiality of irreparable harm or prejudice being sustained by the respondent on appeal (applicant in the application) if leave to execute was refused;

(3) the prospects of success on appeal, including more particularly the question of whether the appeal is frivolous or vexatious or has been noted not with the bona fide intention of seeking to reverse the judgment but  for some indirect purpose, eg to gain time or harass the other party; and

(4) Where there is the potentiality of irreparable harm or prejudice to both appellant and respondent, the balance of hardship or convenience, as the case may be.”

It is apparent that real and substantial injustice may occur if the present application is not granted. It is in the interest of justice that the present application be granted. If execution of judgment is not stayed, this will result in incurable prejudice to the Applicants who want to challenge, before the court, the interest rate that is in dispute.

The scales for balance of convenience favour the Applicants, according to my view. The Applicants must be given an opportunity to defend themselves against the interest rate which is in dispute. The 1st Respondent will suffer less prejudice than that which is likely to be suffered by the Applicants if default judgment is executed.

In the case of Mungwambi v Ajanta Properties (Pvt) Ltd, the Court emphasised that in determining such an application, stay of execution of judgment can only be granted where real and substantial justice requires such a stay or conversely where injustice would otherwise be done.

In the circumstances, it is in the interest of justice that the application for stay of execution of judgment be granted. This will prevent the Applicants from suffering irreparable harm.

With respect to costs, the first Respondent has claimed costs De bonis propriis against the counsel for the Applicants.  The basis for the first Respondent’s claim is that the counsel for the Applicants is abusing the court process. Mr. Nyamakura also submitted that the Applicants must bear the costs of the application on an attorney and client scale. The Applicants’ counsel submitted that the present application is not an abuse of court process. The Applicants are entitled to defend themselves, Mr. Hove further submitted.

Textual authorities and case law have dealt with the issue of costs in a variety of ways. Hebstein and Van Winsen, have this to say, in relation to costs:

“The award of costs in a matter is wholly with the discretion of the Court, but this is a judicial discretion and must be exercised on grounds upon which a reasonable person could have come to the conclusion arrived at. The law contemplated that he should take into consideration the circumstances of each case, carefully weighing the various issues in this case, the conduct of the parties and any other circumstances which may have a bearing upon the question of costs and then make such order as to costs as would be fair and just between the parties…”

I am not convinced with the first Respondent’s position. It was emphasised that the costs should not deter persons from accessing justice. See the case of Crief Investments (Pvt) Ltd and Another v Grand Home Centre (Pvt) Ltd and Others. It is in the interest of justice that costs be in the cause. Such costs are, in my view, just and fair between the parties.

In the result, it is ordered as follows:

The interim relief be and is hereby granted in terms of the Provisional Order.

Costs of this application shall be in the cause.

TK Hove and Partners, Applicants’ Legal Practitioners.

Matizanadzo and Warhurst, first Respondent’s Legal Practitioners.