Sockrain Investments (Pvt) Ltd v Kingcash Finance (Pvt) Ltd

### Preamble
1
HH 549-18
HC 7638/17
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SOCKRAIN INVESTMENTS (PVT) LTD

versus

KINGCASH FINANCE (PVT) LTD

HIGH COURT OF ZIMBABWE

TAGU J

HARARE, 17 July & 19 September 2018

Opposed Matter

P Hamunakwadi, for applicant

B Moyo, for respondent

TAGU J: This is an application for rescission of default judgment granted against applicant on 19th of July 2017 in terms of r 63 of this Honourable Court’s Rules 1971 on the basis that the notice of set down for trial was served on applicant’s erstwhile legal practitioners, Mutumbwa Mugabe Legal Practitioners, who went on to renounce agency and never notified applicant of the set down date.

The facts are that on the 21st of March 2016 the respondent issued summons out of this court claiming payment of US$144 934.00 which it alleged was the amount due to it out of a loan agreement entered into between applicant and respondent. The applicant duly entered appearance to defend. At the pretrial conference the applicant said it was agreed that the parties were to file a deed of settlement the following day in respect of the capital debt of US$66 000.00.  However, a deed of settlement and a consent order in an amount of US$98 800.00 was filed by the parties on the 26th July 2016. The only matter that was referred to trial was the issue of interest payable on the capital debt which the applicant said was more than the capital debt. The respondent went on to apply for a trial date in respect of the interest. The trial was set for the 19th of July 2017. The notice of set down for trial was served on applicant’s erstwhile legal practitioners Mutumbwa Mugabe and Partners on the 4th of July 2017. However, the applicant’s erstwhile lawyers went on to renounce agency on the 5th of July 2017. Contrary to normal procedure after renouncing agency Mutumbwa Mugabe and Partners did not inform applicant of the set down date and kept quiet until default judgment was entered against applicant. When the court order granted in default was served on Mutumbawa Mugabe and Partners that is when they sent an image of the order to the applicant. The applicant then got knowledge of the default judgment on the 20th of July 2017 through the image that was sent by their erstwhile lawyers. The applicant was then advised by the current legal practitioners of the need to launch this present application.

The application is strongly opposed by the respondent.

In an application under Rule 63 of this Honourable Court it is essential for the Court to find whether the applicant has shown good and sufficient cause to grant rescission. The considerations thereof were dealt with in the case of Stockil v Griffiths 1992 (1) ZLR 172 (S) which aptly noted that:

“The factors which a court will take into account in determining whether an applicant for 	rescission has discharged the onus of proving “good and sufficient cause”, as required to 	be shown by Rule 63 of the High Court of Zimbabwe Rules 1971, are well established. 	They have been discussed and applied in many decided cases in this country. See for 	instance, Barclays Bank of Zimbabwe Ltd v CC International (Pvt) Ltd S-16-86 (not 	reported); Roland & Anor v McDonnell 1986 (2) ZLR 216 (S) at 226 E-H; Songore v 	Olivine Industries (Pvt) Ltd 1988 (2) ZLR 210 (S) at 211C-F. They are (i) the 	reasonableness of the applicant’s explanation for the default; (ii) the bona fides of the 	application to rescind the judgment; and (iii) the bona fides of the defence on the merits 	of the case which carries some prospects of success. These factors must be considered not 	only individually but in conjunction with one another and with the application as a 	whole.”

WHETHER OR NOT THE APPLICANT WAS IN WILFUL DEFAULT?

The applicant submitted that the notice of setdown was served on its erstwhile legal practitioners Mutumbwa Mugabe legal practitioners on the 4th of July 2017 who renounced agency on the 5th of July and who in turn did not advise applicant of the same. The applicant submitted further, that it was not therefore, in wilful default because it was never advised of the setdown date.

In the case of Zimbabwe Banking Corp v Masendeke 1995 (2) ZLR 400 (S) wilful default was defined as-

“Wilful default occurs where a party with the full knowledge of the service or set down of 	the matter and of the risks attendant upon default freely takes a decision to refrain from 	appearing.”

It was further said in the same case that-

“The willfulness of a default is seldom, if ever, clear-cut. There is almost always an 	element of negligence, and the question arises whether it was gross negligence and 	whether it was so gross as to amount to willfulness. And in coming to a conclusion there 	is a certain weighing of the balance between the extent of the negligence and the merits 	of the defence.” (See also V Saitis & Co (Pvt) Ltd 2002 (1) ZLR 378 at 381A).

The applicant said assuming it was informed via phone call to collect the notice of set down, failure to do so cannot amount to a conscious decision to refrain from appearing. Such negligence if any was not so gross as to amount to willfulness. It referred further to the case of Deweras Farm (Private) Limited & Others v Zimbank Corporation 1997 (2) ZLR 47 (H) where it was said-

“On a proper approach to the concept of willfulness default in the High Court matters, it 	should be seen that the expression refers to that extreme of circumstance where the 	expression for default reveals that the applicant for rescission knowingly and deliberately 	refrained from opposing the relief sought. He acquiesced in the judgment being taken 	against him.”

The respondent in its submissions maintained that the applicant was advised telephonically and in writing of the set down date but deliberately refrained from attending. It was its contention that the applicant was in wilful default. To support its contention the respondent attached a letter written by the applicant’s erstwhile legal practitioners dated the 21st August 2017 wherein the legal practitioner who handled the matter on behalf of the applicant G Dzitiro said among other things that-

“We advise that we renounced agency in this matter and prior to our renunciation clients 	had been advised of the effect of our non-attendance to their matters. A copy of this 	confidential communication was emailed to Sockrain Investments and Mr Rungwave, the 	contact person appearing on file, and is dated 15th February 2017.

Our notes appearing on file indicate that a request was made via telephone attendance for 	Mr Rungware to come and collect the notice of set down for trial. It appears the notice of 	set down was never collected. We urge you to refer to the confidential correspondence 	dated 15th February 2017 together with the need for a telephone request that Mr 	Rungwave should collect a copy of the Notice of set down.

A copy of this response has also been sent to Mushoriwa Pasi Attorneys.”

In casu a proper Notice of set down was therefore duly served on the applicant’s erstwhile legal practitioners before they renounced agency. The applicant was advised not only of the renunciation but also of the need to come and collect the Notice of set down. The applicant’s representatives for reasons known to them- selves deliberately refrained from going to collect the notice of set down resulting in the default judgment being granted against the applicant. For this reason I am satisfied that the applicant was in wilful default but now wants to soil the reputation of their erstwhile legal practitioners by peddling falsehoods. There is therefore no reasonable explanation for the default. Even if it is true that the applicant’s legal practitioners did not advise the applicant, which I do not believe, the applicant will have to swim or sink with its erstwhile legal practitioners who were served before they renounced agency.

WHETHER OR NOT THE APPLICATION IS BONA FIDE?

The explanation for the default is unsatisfactory and aimed at tainting the erstwhile legal practitioners. It therefore follows that the application also fails to meet the second requirement required in rescinding default judgment. The explanation that the former legal practitioners negated their duty is malicious especially where the applicant was notified of the notice of set down by the erstwhile legal practitioners before they renounced agency but deliberately decided not to go and collect the notice of set down. While the applicant has cast blame on the erstwhile legal practitioners, it is important that the integrity of this Honourable Court should not be undermined. Litigants, it has been said time without number that they should approach this Honourable Court with clean hands and while placing true facts before the Court otherwise they risk being penalized by an order of costs on a higher scale. See Ramwide Investments (Private) Limited v Ronde Building Zimbabwe and Others HH-757-15.

The applicant therefore failed the second hurdle required in rescinding the default judgment.

WHETHER THERE ARE PROSPECTS OF SUCCESS?

The applicant’s defence is that the interest seemed to be higher than the debt. In the recent case of ZB Bank Limited v Eric Rose (Private) Limited and Others HH-183-15 the Court held that-

“At common law there is no fixed customary rate that can be described as a standard rate 	beyond which it can be said that a transaction becomes usurious. Rates of interest vary 	with the nature of the financial transaction, the social and economic standing of the 	parties, the risks and so on. The mere fact that the amount of interest seems high is not 	sufficient to make the transaction usurious. What then is there in a transaction which 	make it usurious? If it is not the mere amount of interest, what other circumstances are 	there? A party claiming rescission of contract on the basis of usury must show extortion 	or oppression or something akin to fraud. That approach is consistent with the balance 	that has to be struck between, on the one hand, the liberty to regulate one’s life by freely 	engaged contracts and, on the other, the striking down of the unacceptable excesses of 	freedom of contract. It also accords with the notion that judges should approach with 	restraint the task of intruding upon the domain of the private powers of citizens.”

In my view applicant is attempting to renounce the contractual obligations by alleging the interest charged is usurious. However, while general it is accepted that interest must not exceed the debt, if properly pleaded the applicant may succeed. But applying the factors stated in Stockil v Griffiths supra these factors must be considered not only individually but in conjunction with one another and with the application as a whole. If one takes a literal approach if an applicant loses on one or some of the factors, and win one or some, one loses all. But if one takes a golden approach if one loses some and wins some, one may win all. But I do not think that was the intention of the court when it said “these factors must be considered not only individually but in conjunction with one another and with the application as a whole.”

The applicant therefore has failed to satisfactorily discharge the onus of proof in respect of the requirements for rescission of default judgment. Default was wilful and there is no plausible defence to the main matter which has been raised by the applicant. The application will be dismissed with costs on a legal practitioner and client scale.

IT IS ORDERED THAT

The application for rescission of the default judgment granted on the 19th of July 2017 is dismissed with costs on legal practitioner and client scale.

Garikayi & Company, applicant’s legal practitioners

Mushoriwa Pasi Corporate Attorneys, respondent’s legal practitioners