Hung Yuen Wong and Shuwai Wong and Yuyu Tsoi v Hsiao Cheng Liu and Sheriff of the High Court

### Preamble
1
HH 380-13
HC 8755/13
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HUNG YUEN WONG

and

SHUWAI WONG

and

YUYU TSOI

versus

HSIAO CHENG LIU

and

SHERIFF OF THE HIGH COURT

HIGH COURT OF ZIMBABWE

MATHONSI J

HARARE, 23 October 2013 and 30 October 2013

Urgent chamber application

Z. Makori with T. Chiurayi & W. Magaya, for the applicants

E.T. Samkange with T.Hungwe, for the 1st respondent

2nd respondent in default

MATHONSI J: The applicants are Chinese nationals resident in Hong Kong who are seeking an order for stay of execution of a judgment obtained against them in default by the first respondent, another Chinese national, on 23 September 2013 in terms of which they were ordered, jointly and severally, the one paying the others to be absolved, to pay the first respondent the sum of US$12 million together with interest at the prescribed rate and costs of suit, being damages for malicious prosecution.  They have since filed an application for the rescission of that judgement in HC8709/13 which application is yet to be determined and as such they would want execution to be stayed pending the hearing of the rescission of judgement application.

In historical perspective, the first respondent sued the 3 applicants in HC434/13 by summons issued on 21 January 2013 seeking damages totalling a sum of US$60 900 000-00 which he claimed arose out of his arrest and detention at the instance of the applicants in October 2012.  He was detained for 2days before being released on bail and in due course the criminal case came to naught after the court refused his further remand on 7 January 2013.

At the hearing of this application Mr Samukange took a preliminary point that the applicants should not be heard because they being peregrini, they have not given security for costs to protect the first respondent.  While conceding that the applicant himself is a Chinese national and an international businessman, he was of the view that the first respondent is a resident of Zimbabwe running about 7 companies in this country.  He submitted that the $20 000-00 security offered by the applicants is inadequate.

Mr Samukange relied on the authority of O.A’ Gormain v Forestry Commission & Ors HH 107/06 in which GOWORA J (as she then was) stated at p2 of that cyclostyled judgment that:

“It is trite that under our law any person who is a foreigner or who is not ordinarily resident within this jurisdiction may, as plaintiff, be called upon to provide security for costs unless he can prove that he has immovable property sufficient to pay the costs which may arise.  In casu the applicant has not denied that he has an obligation to provide the security for the costs.  He has not indicated what amount would constitute a reasonable sum.  The court has a discretion to dispense with the provision by a peregrinus to provide security for costs but only in exceptional cases.”

In my view that decision does not even support Mr Samukange’s submission that the applicants should not be heard to the extent that it is distinguishable by the fact that in the present case the applicants have offered $20 000 as security.  GOWORA J (as she then was) also recognised the discretion of the court to dispense with security in exceptional circumstances.

In this jurisdiction, there are no rules providing for an order for security for costs.  The issue of security for costs arises out of judicial practice.  The court however retains the exclusive discretion to make such order or not to: Bowes & Ors v Manolakakis HB103/11 at p 4.  A party seeking the remedy of  security for costs must satisfy the court that is incola before the protection can flow to it.  Incola connotes the element of residence, not temporary residents but it constitutes domicile in a country.

The basis of the rule requiring a peregrinus to provide security for the costs of an incola defendant was explained by SANDURA J.P (as he then was) in Zendera v Mc Dade & Anor 1985(2) ZLR18(H) 20A- D as :

“The issue relating to the furnishing of security for costs by a plaintiff who is peregrinus is discussed by the learned authors of The Civil Practice of the Superior Courts of South Africa, 3rd ed, at p 25.  There the learned authors have this to say:

‘A peregrinus who initiates proceedings in our costs must as a general rule give security to the defendant for his costs, unless he has within the area of jurisdiction of the court immovable property with a sufficient margin unburdened to satisfy any costs which may arise.

The presence of immovable property is a defence to a claim for security but the doctrine has not been extended to include movable property.  The court has, however, a discretion to dispense with security in exceptional cases but should exercise its discretion sparingly’

The rule requiring a peregrinus to give security for the defendant’s costs was laid down as far back as 1828 in Witham v Venables (1828) 1 Menz 291 and subsequently explained in Lumden v The Kaffraian Bank (1884-51) 3 SC 366.  The object of the rule is to make sure that an incola will not suffer any loss if he is awarded the costs of the proceedings.  The rule exists primarily to protect the interests of an incola who is sued by a peregrinus.”

(The underlining is mine)

In Bowes & Ors v Manolakakis (supra) I quoted with approval the following passage in Herbstein and Van Winsen (supra) at p251 in drawing the conclusion that the protection of provision of security for costs is only available to an incola in this country:

“The burden of proving that the respondent is a peregrinus lies on the applicant, i.e the defendant, but if it appears that until recently the plaintiff have been an incola of some foreign country the onus is on him to show that he has changed his domicile and has become an incola of the Republic.  In such a case, it is not sufficient for him merely to make a statement to the effect that he has changed his domicile but he should place before the court facts from which it is able to judge of the reliance to be placed upon his statement.  The court will scrutinize such evidence closely, but if the court is satisfied that there is nothing improbable in the evidence that it would not be justified in declining to accept it, an order for security for costs will be refused even where the respondent has come to this country for the express purpose of instituting an action.”

The first respondent is a Chinese national cherishing his domicile in that part of the world although with business interests within the territorial jurisdiction of Zimbabwe.  He is insisting on the applicants providing security for costs before their application can be heard.  The authorities I have cited above state that the protection for security for costs is only available to an incola of this jurisdiction.  The respondent enjoys no automatic right to security for costs he also being a peregrinus who has brought a suit against the applicants in this country.  I would therefore not countenance granting such an order in this matter even in there was an application for it before me.  There isn’t.

Even if I am wrong in that conclusion, I would still not grant an order for security as l have a discretion to dispense with security in exceptional cases.  In my view this case is such exception given the fact that it is an urgent application for a stay of execution of an order for payment of a huge sum of $12 million as damages for malicious prosecution which, on the face of it appears to have been granted in error.  To that extent, the parties still have an opportunity in the main action to deal with the issue of security for costs.  In any event the applicants have made an offer for costs. It is for the foregoing reasons that I dispensed with the provision of security for costs in this matter.

I proceed, to deal with the merits of the application which is opposed by the first respondent. In the summons and declaration the applicants’ address was given as “c/o Manase and Manase Legal Practitioners, 9th Floor Megawatt House, 44 Samora Machel Avenue, Harare”. The Deputy Sheriff for Harare, purported to serve the summons upon that firm of legal practitioners on 22 January 2012 and in his return of service, he remarked:

“Served on Thelma receptionist for Messrs Manase and Manase Legal Practitioners, first, second, and third defendants’ legal practitioners of record, who accepted service on behalf of the defendants”.

The Deputy Sheriffs does not say in that return that he was shown any authority on the part of that firm to receive summons given that a summons is a process commencing action in terms of r 9 of the High Court Rules and ordinarily has to be served upon the defendant or his authorised agent. He  could not properly claim that Manase and Manase were the “first, second and third defendants’ legal practitioners of record” when he had not had sight of either a power of attorney given to them to receive summons or a notice of assumption of agency filed by that firm.

Indeed, Manase and Manase were quick to point out in letters written to the first respondent’s legal practitioners, Venturas & Samukange, the Deputy Sheriff and the Registrar of this court, that they did not have authority to receive summons on behalf of the 3 applicants. In fact those protestations regarding lack of authority and the residence of the applicants were made by the erstwhile legal practitioners days before the purported service of summons upon them, and even after the service. Let it suffice to quote just one such letter dated 15 January 2013 addressed to Venturas & Samukange:

“RE: HUNG YUEN WONG v HSAIO CHENG LIU & THREE OTHERS – CASE NO HC 135/13

We refer to the above matter instant and your attempted service of summons at our law firm and the subsequent meeting our Mr W. T. Pasipanodya had with the Deputy Sheriff and the ensuing tele-conference with your Mr J. Samukange.

We write to reiterative that we do not have instructions to represent the defendants. They reside in Hong Kong China and you should serve them there personally.

We shall consequently advise the Registrar of this position. Kindly be advised accordingly.

In the mean time we shall remain.

Yours faithfully

MANASE & MANASE” .

A similar letter was written on the same date to the Registrar. Therefore when the Deputy Sheriff returned to that firm on 22 January 2012 purporting to serve the summons on the instructions of Venturas & Samukange, that was an exercise in mischief. Not only was it known that Manase & Manase did not have authority to receive summons as they did not even represent the applicants, it was also within the knowledge of the first respondent’s legal practitioners that the applicants were peregrini cherishing residence in Hong Kong.

Indeed, in his opposing affidavit the first respondent makes it clear that he was aware that the applicants are based in Hong Kong and that they possess no property whatsoever in this jurisdiction. He however makes the shocking point that because Manase & Manase represented them in the criminal prosecution against him and even visited them in Hong Kong, they were obliged to enter appearance to defend and thereafter transfer the summons to the applicants’ current legal practitioners. No attempt is made to lay a legal foundation for this strange assertion.

The knowledge of the applicant’s residence in Hong Kong should have triggered in the mind of the first respondent’s legal practitioner the question of jurisdiction of this court assuming that issue had escaped his gaze before that. To the extent that the defendants in that action are known to reside in Hong Kong, the plaintiff in that matter should have sought leave of the court in terms of Order 6 r 44 to serve the process in Hong Kong not to force service upon Manase & Manase. He did not do that.

As if that was not enough, the mere fact that the first respondent cited the address of Manase & Manase as the address for service of the applicants and admits that they are residents of Hong Kong means that he knew very well that they did not have an address in this jurisdiction as they are peregrini. The first respondent was therefore proceeding rough shod against all procedures set out in the rules, disregarding the rules and the law in razzmatazz fashion.

I say so because our civil practice and procedure is clear that a person domiciled and resident in a foreign country cannot be sued in this court as it does not have jurisdiction over that person. For that reason there is need for an attachment ad fundandam jurisdictionem of that person or his property in order to make him amenable to the jurisdiction of the court. Such person or his property can only be attached while he or it is within the jurisdiction of the court and only after an attachment order has been issued by the court.

It is important to point out that the attachment order should be issued by the court before the summons is issued against that person. In Chirongoma v Tdg Logistics & Anor 2011(1) ZLR 98(H) 101 H and 102 A-B I had occasion to quote with approval Herbstein and van Winsen, The Civil Practice of the Superior Courts of South Africa, 3rded (1979) at pp 788 and 789 where the learned authors state:

“Where an incola wishes to sue a peregrinus and none of the usual grounds upon which the court might have jurisdiction is present, attachment is a condition precedent to the action, for it is upon the attachment that the court’s jurisdiction is founded…….

In addition to he grounds mentioned by De VILLIERS CJ, quoted above, a court will have jurisdiction to try a suit arising out of a delict committed within the area of its jurisdiction, whether the suit be between an incola and a peregrinus or between two peregrini. But in an action ex delicto a peregrinus cannot obtain an attachment where none of the ordinary grounds of jurisdiction exist”.

Clearly therefore where a peregrinus is being sued, even if he is within Zimbabwe or has property located in Zimbabwe, the plaintiff must seek and obtain an attachment order in order to found or confirm jurisdiction. Even where the court acts in terms of s 15 of the High Court Act [Cap 7:06] to direct service of process without an attachment order, it can only do so if satisfied that the person or his property concerned is within Zimbabwe and is capable of attachment or arrest.

The question of jurisdiction is one which the court is entitled to raise meromotu even where the parties have not done so. In my view, had the attention of BERE J who granted the default judgment in favour of the first respondent been drawn to the letters written by Manase & Manase protesting the absence of authority to receive summons on their part and the lack of jurisdiction, he would not have granted default judgment. It is unfortunate that the letters were not included in the bound record placed before the Honourable Judge. Clearly there was no proper service and there is still a need to inquire into whether this court has jurisdiction especially as the summons was issued without an order of attachment to found or confirm jurisdiction. Without declaring the summons to be invalid, it being unnecessary to do so at this stage, it is an issue that has to be investigated.

For the present matter, it is enough to state that the applicants have made a solid case for a stay of execution of the default judgment as it is susceptible to rescission on the grounds that it was granted in error. In addition, the first respondent was awarded damages of $12 million without a thorough inquiry as to the propriety of that award given that the court did not have the benefit of opposition to the claim. This is a factor I cannot ignore in the interest of justice.

Accordingly I grant the provisional order as amended, the interim relief of which reads:

“INTERIM RELIEF GRANTED

Pending determination of this matter, the applicants are granted the following relief –

The execution of the default judgment of this court handed down on 23 September 2013 is hereby stayed.

In the event that any of the applicants’ property has been attached and removed in pursuance of a writ of execution issued out of this court, such property should forthwith be released.

Coghlan, Welsh & Guest, applicants’ legal practitioners

Messrs Venturas & Samkange, 1st respondent’s legal practitioners