Riozim (Pvt) LTD V Trust BANK Corporation LTD (IN Liquidation)

### Preamble
1
HH 534-18
HC 1108/18
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RIOZIM (PVT) LTD

versus

TRUST BANK CORPORATION LTD (IN LIQUIDATION)

HIGH COURT OF ZIMBABWE

KWENDA J

HARARE, 23, 27 July 2018 and 3 August 2018 & 19 September 2018

Opposed Matter

T Magwaliba, for the applicant

L Uriri, for the respondent

KWENDA J: This is application made in terms of s 213 of the Companies Act [Chapter 24:03] for leave to institute proceedings against the respondent, a company in liquidation. Should leave be granted, the applicant intends to file an application in terms of r 449 of the High Court Rules 1971, for correction of a default judgment entered against it in in favour of the respondent on 12 March 2014.	A draft of the application to be filed once the anticipated leave was submitted with applicant’s papers. The application, should leave be granted, will be a second bite since an earlier attempt in the year 2015 succeeded initially but collapsed on appeal in the Supreme Court on 26 January 2018.

At the hearing I complained that the applicant’s case was difficult to follow. The founding affidavit is unnecessarily long and winding. It contains information largely irrelevant. The error necessitating the intervention of the court in terms of r 449 is not clearly decipherable since it is not correctly articulated. The impression created in applicant’s founding affidavit as read with the prayer in the application to be filed is that the judgment debt was overstated because the respondent applied an inflated rate of interest of 45% per annum as opposed to 15% per annum. (See para 7 of applicant’s founding affidavit and the draft order at page 89 of the consolidated papers). However that position cannot be reconciled with applicant’s assertion in an earlier case that the correct rate of interest is 25% per annum.

At the hearing a lot of energy and time was expended on extracting from the huge mass of documents submitted with the application what it is that the applicant says went wrong in case No. HC 1405/13 which needs correction by this Court. After lengthy deliberations it turned out the applicant’s case could be stated clearly and concisely. I will summarise it below.

The respondent was placed under provisional liquidation the 8 October 2014.

Final liquidation was confirmed by this Court on the 19 May 2016 whereupon the Deposit Protection Corporation was appointed liquidator.

Prior to provisional liquidation, on 12 March 2014, this Court had entered default judgment against the applicant in favour of the respondent for the payment of

$1 824 505.05.

On 7 May 2015 the applicant filed an application for the variation of the default judgment.

The application was filed and prosecuted without the leave of this court notwithstanding the provisional order for liquidation. In addition to that the applicant failed to cite the Deposit Protection Corporation despite its direct and substantial interest as liquidator.

Be that as it may the application succeeded and the judgment in case HC 1405/13 was rescinded on 27 May 2015.

Subsequently, the Deposit Protection Corporation approached the court in terms of r 449 (1) for rescission of judgment on the grounds that the applicant had erred in failing to cite it in the case yet it was clearly an interested party.

This court granted the application and rescinded the judgment in case No.

HC 4155/15.

The effect of the rescission of judgment was that the original court order in case no. HC 1405/13 entered against the applicant for the payment to respondent of

$1 824 505.05 popped up again and became operational. In his reasons for the judgment, the Honourable Chiweshe JP in case No. HH 390/17 (HC 4203/16) observed as follows:-

the failure by applicant to obtain leave of the court before instituting proceedings against the respondent in case No. HC 4155/15 was fatal.

s 213 of the Companies Act [Chapter 24:03] is peremptory and proceedings instituted against the respondent without leave of the Court and the resultant court order were a nullity.

In addition to being liquidator, the Deposit Protection Corporation, is an interested party by operation of s 57 of the Banking Act and failure to cite in proceedings against the respondent which is under liquidation rendered such proceedings fatally defective.

Applicant’s appeal to the Supreme Court against the judgment of the Honourable Judge President was dismissed on 26 January 2018 meaning that the default judgment in case No. HC 1405/13 remains extant.

Applicant is still aggrieved by the judgment in case No. HC 1405/13 and wants it corrected in terms of r 449 (1). However it can only file its application with leave of this Court.

It is alleged that when respondent applied for judgment in case No. HC 1405/13 it did not disclose to this court that applicant had made payments to the respondent after summons had been issued thereby reducing the debt by $1 381 166. The argument, therefore is that when judgment was entered on 12 March 2014 the correct amount owing was around $500 000 and not $1 824 505.05 and the respondent had the obligation to advise the court of the payments. In other words the complaint is not about the interest rate applied but an act of non-disclosure by the respondent of payments effected subsequent to the summons.

After hearing both counsel I concluded that this application for leave is without merit. My reasons are as follows:

The intended application to correct judgment has no prospects of success at all.

The alleged payments are said to have been made after judgment had been entered.  I will quote para 7 of the founding affidavit at page 3 of the application

“…. respondent caused a writ in the sum of $1 824 505.05 to be issued against the applicant. This is an incorrect balance as applicant had made subsequent payments of $1 381 166.”

Applicant’s complaint, therefore, is not against the judgment but the writ. If applicant

made certain payments after judgment, it is the writ that requires correction and not the judgment. In practice when payments are made after judgment has been entered, the judgment needs no correction but the judgment creditor simply issues a writ for a lesser amount or if the writ has already been issued, instructs the Sheriff to collect a lesser amount. If the judgment creditor collects more than necessary, that can only give rise to an enrichment claim. The correctness of an order is not affected by payments subsequent to its issuance.

The applicant boldly asserts in para 7 of its founding affidavit that it paid a sum of

$138 166.00 but fails to attach proof. The payment is disputed. Indeed in argument counsel for the applicant failed to point to any proof of alleged payment. All payments on the papers preceded the summons.

In papers filed in case no. HC 4155/15 the provisional liquidator of the respondent, one John Mafungei Chikura, justified the figure of $1 824 505.05 (see pp 118 – 119 of this application). He said:-

‘On 2 April 2014, the then applicant’s legal practitioners wrote to Chihambakwe, Mutizwa & Partners saying

“Our client has been effecting payment(s) to your client and has paid to your client a total of $1 381 166.

Please confirm by return that you will not be seeking to recover from our client the amount 	reflected in the order dated 12 March 2014…”

On 23 April 2014 Chihambakwe, Mutizwa & Partners responded.

“….if payments were made which reduced the debt then certainly our client will not be entitled to execute on the judgment debt but appropriate instructions will be issued to the Sheriff to recover only the amount which will be outstanding.”

The difference between the parties’ respective positions arose from the fact that the 	applicant was using interest rate of 25% which was never agreed upon by the parties.

……the liquidator took into account all the payments made by the applicant’

The respondent has therefore always insisted since the year 2014, that the amount due to it as stated in the judgment debt is correct.

After the position taken by the provisional liquidator of the respondent in the correspondence quoted above, the applicant could have applied for rescission of judgment as early as 2014 if it was aggrieved by the judgment. It did not. The correspondence reveals that the judgment debt in HC 1405/13 is correct but applicant simply wanted certain payments claimed by it to be deducted from the writ.

Applicant filed an application for correction of judgment in HC 4155/15 more than a year after the correspondence quoted above i.e. on 7 May 2015. The application made in terms of r 449 (1) was fatally defective. (See the judgment of the Honourable CHIWESHE JP’S judgment discussed above)

This application is intended to afford the applicant a second attempt.

The draft application which applicant intends to file if it gets leave is attached (see p 35 to 89 of this application). Sadly applicant does not intent to cite the Deposit Protection Corporation again. In other words the applicant wants leave to file another defective application.	If I grant this application I would be granting the applicant leave to file a fatally defective application.

The applicant has exhibited lack of diligence since the proceedings in case no HC1405/13 were commenced against it. It did not properly defend the claim resulting in a default judgment. The emails exchanged by the parties and the pleadings filed of record reveal that the respondent unsuccessfully pushed for a settlement. The applicant did not act after service of a notice of intention to bar. It did not apply for rescission of judgment in 2014 when it became aware of the judgment in the matter. It only filed an application a year later in the year 2015. On filing the application it failed to pay attention to rules resulting in an adverse Supreme Court order. It failed to articulate this case with clarity. The founding affidavit contains hung statements. Such lack of diligence cannot be condoned.

See Ndebele v Ncube 1992 (1) ZLR 288 (S).

Gugulethu Hwasha v CABS & Ors HH 974/15

The respondent is already distressed. This unnecessary litigation is likely to make matters worse and prejudice creditors. This application is an abuse of process because it has no merit at all.

I order as follows

Application is dismissed with costs on a legal practitioner client scale.

C Kuhuni Attorneys, applicant’s legal practitioners

Chihambakwe Mutizwa & Partners, respondent’s legal practitioners