Trinpac Investments (Private) Limited AND George Mutonhora AND Sandra Tsimba AND Medworth Properties (Private) Limited Versus CBZ BANK Limited

### Preamble
1
HH 285-13
HC 4821/12
TRINPAC INVESTMENTS (PRIVATE) LIMITED
and
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TRINPAC INVESTMENTS (PRIVATE) LIMITED
and
GEORGE MUTONHORA
and
SANDRA TSIMBA
and
MEDWORTH PROPERTIES (PRIVATE) LIMITED
versus
CBZ BANK LIMITED

HIGH COURT OF ZIMBABWE
CHIGUMBA J
HARARE, 15 July 2013, 11 September 2013

Opposed Application

N. Bvekwa, for applicant
Ms R. Makamure, for respondent

CHIGUMBA J. This is an opposed application in which the applicant seeks the rescission of a judgment granted in default in case number HC 4922/11, together with costs of suit. At the hearing of the matter, I dismissed the application with costs and indicated that my reasons for so doing would follow. These are the reasons:

Summons in case number HC4922/11 was issued on 20 May 2011 and served on applicant’s place of business number 118 Simon Mazorodze Road Harare. It is not in dispute that the Applicants are indebted to the respondent in terms of a facility letter dated 23 February 2010, in terms of which, respondent lent, and first applicant borrowed about two million United States dollars by way of overdraft. Second and third applicants bound themselves as surety and co-principal debtors for the due performance by the first applicant to the respondent, of its obligations in terms of the overdraft facilities. Certain immovable property belonging to the fourth applicant was ceded as security for the first applicant’s overdraft

Summons was served on 31 May 2011 by affixing on the outer principal door at the business address set out above. Judgment was obtained on 28 September 2011. In the founding affidavit, applicants aver that they became aware of the judgment, on 30 April 2012 when first applicant’s administrator saw an article in the Herald newspaper that fourth applicant’s property in Mutare was due to be sold by public auction. They filed this application on 21 March 2013, and set it down for hearing on 15 July 2013.

Applicants contend that they were not in willful default of entering appearance to defend because at the time that summons was served, on 31 May 2011, they were no longer using the premises at 118 Simon Mazorodze Harare. The applicants contend further, that their defense to the main matter is that respondent only disbursed USD$1 800 000,00 instead of the agreed US$2 500 00, 00 which resulted in working capital challenges that incapacitated them from servicing the overdraft as agreed. The applicants aver that the failure to avail the balance of US$700 000, 00 by the respondent constitutes a breach of the agreement between the parties.

Respondent maintained that number 118 Simon Mazorodze Harare was the applicant’s place of business at the time that summons was served. It relies on a letter written by first applicant to it, dated 31 March 2011, on a company letterhead, wherein the address for service is the same as the address where summons was served, in May 2011, two months later. Respondent contends that it was entitled to rely on the known address of service, and that the applicants had a duty to advise it of any change of address, which makes the applicants authors of their own misfortune.

In regards to the merits of the matter, respondent contends that applicants’ defense carries no prospects of success because in terms of the facility letter, first applicant was clearly offered an overdraft in the sum of two million dollars, clause 4 thereof.

Order 9, Rule 63 provides that:

“63. Court may set aside judgment given in default
(1) A party against whom judgment has been given in default, whether under these rules or under any other law, may make a court application, not later than one month after he has had knowledge of the judgment, for the judgment to be set aside.

(2) If the court is satisfied on an application in terms of sub rule (1) that there is good and sufficient cause to do so, the court may set aside the judgment concerned and give leave to the defendant to defend or to the plaintiff to prosecute his action, on such terms as to costs and otherwise as the court considers just”.

The court did not consider whether the applicants were properly before it in terms of rule 63. The point was not raised by any of the parties. The court became alive to that fact during the course of furnishing the reasons for its judgment. Suffice is to say, the court had proceeded to consider the merits of the application for rescission of judgment, in the absence of application for condonation of late filing of the application for rescission of judgment.

The principles to be applied in considering the merits of an application for rescission of judgment are:

(a) The reasonableness of the explanation for the default.
(b) The bona fides of the application
(c) The bona fides of the defense on the merits
(d) Whether the defense on the merits carries some prospects of success

See Stockil v Griffiths 1992 (1) ZLR 172(S) @ p173 D-F; Mdokwani v Shonhiwa 1992 (1) ZLR 269 (S); Songore v Olivine industries (Pvt) Ltd 1988 (2) ZLR 210(S); Zimbabwe Banking Group v Masendeke 1995 (2) ZLR 400(S)

In terms of the facility letter dated 23 February 2010, first applicant’s domicilium citandi et executandi is 1st Floor, Bristol House, Harare. According to the applicants, their address has always been 97 Kwame Nkrumah and to serve court papers at 118 Simon Mazorodze was tantamount to an ambush by the respondent. With all due respect to the applicants, it is my view that, that explanation is not reasonable. If applicants had contended that court process ought to have been served on the domicilium citandi et executandi, I would have had no problem in accepting that contention as being a reasonable one. All the correspondence between the parties, after 2010, was addressed to and from 118 Simon Mazorodze. The first applicant’s letterhead, listed 118 Simon Mazorodze as its address. Previous dealings between the parties had been successfully communicated using that address. In my view, it is disingenuous of the applicants to claim that it was mala fide on the part of the respondent to serve process at 118 Simon Mazorodze Road, when they themselves failed to discharge their duty to the respondent, and inform it of a change of address.

Their action of changing their business address and failing to inform respondent, whom they owed a good deal of money, could be construed as lacking in good faith. I find that respondent was entitled, on the basis of previous dealings with the applicants, to rely on their last known business address. My view would be different, had respondent been duly advised of a change of address but instead insisted on using an old address, which is not the domicilium citandi et executandi. I find that the applicant’s explanation for the default is not reasonable, and that it lacks good faith.

Turning to the applicant’s prospects of success in the main matter, in my view that can only be gleaned from the terms of the overdraft facility, which applicants kindly provided us with a copy of. In clause 4, the amount of the facility is clearly stated as two million dollars. In clause 6.1 it is stipulated that the overdraft facility is payable on demand and that it expires on 31 August 2010. Clause 9 unequivocally states that:

“The facility represents a line of credit and not a legal commitment to lend and unless previously withdrawn by us or extended for a further period, it will expire on 31 August 2010 by which date all monies due hereunder must be paid”.

The applicants’ defense, which on the face of it was standing on the proverbial one leg, on closer scrutiny, in my view, has no leg to stand on. There is no prima facie evidence that applicants can rely on, of an agreement to extend the facility beyond 31 August 2010, or to increase the sum to US$2 500 000, 00. I therefore find that the applicants have failed to show good and sufficient cause for the judgment granted in default to be rescinded. Their explanation for the default is not reasonable. They have no prospects of success in the main matter. This application is not bona fide; in fact it seems to me to be a mere time buying gimmick to postpone the evil day when payment becomes due. For these reasons, the application for rescission of judgment is dismissed with costs.

Bwekwa Legal Practice, applicant’s legal practitioners
Kantor & Immerman, respondent’s legal practitioners
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