William BAIN & Company Holdings [Pvt] LTD V Engineer Oswald Chikwanda

### Preamble
1
HH 290/13
HC 2704/11
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WILLIAM BAIN & COMPANY HOLDINGS [PVT] LTD

versus

ENGINEER OSWALD CHIKWANDA

HIGH COURT OF ZIMBABWE

MAFUSIRE J

HARARE, 1 July 2013&11 September 2013

Opposed application

G. Nyamayi & Drury, for applicant

O. Mushuma, for respondent

MAFUSIRE J: This is an application for the uplifting of the automatic bar. The applicant had failed to enter an appearance to defend respondent’s summons which had claimed payment of an amount of US64 000-00 as damages for breach of contract. The summons had been served on applicant’s sales man, one Misheck Sande [Sande]. Sande is said to have passed on the summons to the receptionist. The receptionist was not mentioned. There was no information on what the receptionist had done with the summons.

In the application to uplift the bar the applicant’s founding affidavit was deposed to by its finance director, one Bright Mudzvova [Mudzvova]. He averred that it was company policy that any company employee that received court process would pass it on to either himself or the finance manager. He said that in the present case that procedure had not been followed. He had not seen the summons. No one in management had seen or become aware of it.

The applicant had got to know about respondent’s claim through its legal practitioner. The legal practitioner had attended the unopposed motion court in respect of her other matters on the day that the respondent happened to have enrolled his claim for a default judgment. She had engaged the respondent’s legal practitioner and had subsequently telephoned the applicant. The default judgment had apparently not been entered. However, it was not explained whether this had been due to the efforts of the applicant’s legal practitioner or some other reason. But having realised that it had automatically been barred the applicant had immediately launched the present proceedings.

Respondent opposed the application on the basis that the applicant had been in wilful default and that on the merits it had no bona fide defence. Respondent maintained that there had been no reasonable explanation for the applicant’s failure to enter an appearance to defend timeously. No affidavit from the receptionist had been filed to explain what he or she had done with the summons. Bright Mudzvova, the applicant’s deponent, was not the only director of the applicant to whom process could be referred.

Respondent’s other submissions were that long before his summons had been issued the parties had, through their lawyers, written each other letters of demand and had both threatened action. On his part the respondent had proceeded to issue summons and had had it properly served. Thus, according to respondent, applicant must have anticipated that the process would be issued after his letter of demand.

On why he had chosen to serve the summons directly on the applicant when he knew that it was duly represented, respondent maintained that he had had no obligation to do so. Once it had received the process it should have been up to the applicant to refer the summons to a legal practitioner of its choice.

On the merits the respondent maintained that the applicant had no defence. His claim had arisen as a result of the applicant’s failure to make timeous delivery of a potato digger which the respondent had purchased from the applicant.

Respondent version of events was that he had wanted to import a potato digger to facilitate the harvest of 10 hectares of potatoes. He had sourced this machine from a German company. He would import it via an agent in South Africa. But before he had committed himself to the importation of the implement he had approached the applicant for an assurance that it would be able to provide him with back up spares. The applicant was in the business of manufacturing agricultural equipment. Respondent said he had held discussions with the applicant’s managing director who had convinced him that the applicant could manufacture the implement amongst its range of products. He had been dissuaded from pursuing the importation route and had been persuaded to place an order with the applicant.

According to the respondent the price for the machine had been agreed upon. A deposit of around one half of the purchase price had been paid. The balance would be paid upon delivery. It had also been agreed that the machine would be delivered by not later than the first week of December 2011. He said this period had been critical. Among other things, this would be the harvesting time. Failure to deliver timeously would pose a huge risk. The crop could be ruined by the elements. However, contrary to the express terms of the agreement, the applicant had not only failed to deliver the machine on time but also when it had done so towards the Christmas period the machine had malfunctioned owing to poor workmanship. Applicant’s repeated attempts to fix it had initially failed. It had eventually succeeded only in January of the following year. But by that time it had become too late. Due to the incessant rains that had fallen from mid-December 2011 to January 2012, the potato crop had been ruined. The amount claimed was said to be the damages incurred by the respondent as a result of the applicant’s breach. Respondent the contract had been concluded with no less than applicant’s senior personnel that had included the managing director; the finance director himself, Mudzvova, who was the deponent to the applicant’s founding affidavit; the general manager of the applicant’s manufacturing division and the general manager of the applicant’s trading division.

On its part, the applicant acknowledged the contract. However, it disputed virtually everything else said by the respondent. In particular, it denied that the contract had been specific on the time of delivery. It denied that any of the senior personnel mentioned by the respondent had been part of the meeting during which the contract had been concluded. The managing director was said to have since left the applicant by the time of the meeting alleged by the respondent. None of the rest of the other senior members of management alleged by the respondent, including Mudzvova himself, had known anything about the meeting. Applicant further averred that not only had it intended to defend the respondent’s claim but also that it had intended to sue the respondent for the balance of the purchase price.

Applicant further claimed that respondent’s summons was defective in numerous respects; not least the alleged failure by the respondent to plead the names of the parties to the contract and, purportedly, his attempt at setting off what was clearly a delictual claim against a liquidated.

After hearing argument I granted the application ex tempore but ordered that the applicant would pay the respondent’s costs of suit. I said my full reasons would be made available on request. The respondent has written to request judgment on the matter. Below is my judgment.

An application for the uplifting of the automatic bar in default of appearance to defend is made in terms of Order 12 r 84 of the High Court of Zimbabwe Rules [the Rules]. That rule reads as follows:

“84. Removal of bar

A party who has been barred may-

make a chamber application to remove the bar; or

make an oral application at the hearing, if any, of the action or suit concerned;

and the judge or court may allow the application on such terms as to costs and otherwise as he or it, as the case may be, thinks fit.”

The court or judge hearing the application for the removal of the bar undoubtedly has an unfettered discretion to grant or refuse the application. That discretion is of course exercised judiciously and not capriciously or whimsically. The current r 84 was amended in 1996 by SI 33/96. The rule sets out no guidelines or parameters on how that discretion might be exercised. Undoubtedly it is left to the court or the judge. The old rule offered some guidance, albeit very little. An application for the removal of the bar had to be supported by an affidavit of merits and other sufficient grounds. The old rule read as follows:

“The court may upon an affidavit of merits and other sufficient grounds order the removal of a bar on such terms as to costs or otherwise as it deems just” (emphasis added).

However, despite the amendment, and as the respondent rightly points out in his heads of argument, it is still a requirement under the new r 84 that an application for the removal of the bar has to show good and sufficient grounds. Not only must there be a reasonable explanation for the default but also the applicant must show its defence on the merits. Dealing with the new r 84 GARWE JA stated as follows in Grain Marketing Board v Martin Muchero 2008 (1) ZLR 216 (S), at p 220D - F:

“It is clear from the above provisions that, once a party is barred, the matter is treated as unopposed unless the party so barred makes an application before the court for the upliftment of the bar. It is also clear that, in making the application to uplift the bar, the party that has been barred can either file a chamber (not court) application to uplift the bar or, where that has not been done, the party can make an oral application at the hearing. The practice in the High Court, so far as I am aware, is that only in very few instances have oral applications to uplift the bar been entertained by the court. This is because, in such a case, the applicant must explain the reason for the delay, and thereafter convince the court that he has a bona fide defence on the merits” (emphasis added).

What constitutes wilful default and a bona fide defence depends on the merits of each case. In Zimbabwe Banking Corp Ltd v Masendeke 1995 (2) ZLR 400 (SC), [hereafter referred to as the Zimbank case] the Supreme Court, in the judgment by McNally JA, held that wilful default occurred when a party freely takes a decision to refrain from appearing with full knowledge of the service or set down of the matter.

In my view, wilful default is akin to a waiver of one’s rights. If a party, with full knowledge of his or her rights decides not to follow up on them and fully appreciating the consequences of not doing so, is deemed to have waived such rights, see Chidziva & Ors v Zimbabwe Iron & Steel Co Ltd 1997 (2) ZLR 368 (SC).

The concept of wilful default may be quite easy to define on paper but somewhat difficult to identify in practice. It is seldom clear-cut. In most cases it is a question of the degree of negligence by the defaulting party that the court is called upon to weigh and to determine whether or not that negligence amounts to wilful default in any given case. In the Zimbank case the learned judge of appeal put it as follows, at p 403:

“The wilfulness 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 wilfulness. 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 Songore v Olivine Industries (Pvt) Ltd 1988 (2) ZLR 210; Stockil v Griffiths 1992 (1) ZLR 172; and Mdokwani v Shoniwa supra.”

The case of Deweras Farm (Pvt) Ltd & Ors v Zimbabwe Banking Corp 1997 (2) ZLR 47 (HC) in many ways helps to illustrate the concept of wilful default. For many years it had been the practice that a claim for the repayment of a bank loan, for example, would be presented without a clear breakdown of the various components of that loan such as the capital advance, the interest accrued, the bank charges and the appropriation of the repayments made. That position changed with the land mark decision by this court in the case of Commercial Bank of Zimbabwe Ltd V M M Builders & Suppliers (Pvt) Ltd 1996 (2) ZLR 420 (H) in which it was held, among other things that, irrespective of the manner of its computation and the manner of the appropriation of the repayments by the borrower the interest accrued on a bank loan or overdraft does not lose its identity as such and that a claim for the repayments of a bank loan or overdraft has to specify the different components of the debt.

The applicants in Deweras Farm case had purposefully refrained from defending the claim when the bank had sued for the repayment of the overdraft. Its reason for not defending had been that it had relied on the bank’s expertise in calculating the indebtedness and that the decision not to contest the claim had been made in the honest and reasonable belief that the bank had correctly calculated the amount outstanding and the interest accrued. However, in the advent of the MM Builders’ case, applicants applied for rescission of judgment on the basis that they had been unable to calculate the capital sum, that the interest rates had not been agreed upon and that the appropriation of the interest had been contrary to the manner approved in the MM Builders’ case.

GILLESPIE J, citing, inter alia, the Zimbank case, held that the traditional perception of wilful default is that it occurs when a party, with full knowledge of the service or set-down of the matter and the risks attendant on the default, freely takes a decision to refrain from appearing. He repeated that the wilfulness of a default is seldom, if ever, clear-cut and that there is almost always an element of negligence. In such a situation there is a certain weighing of the extent of the negligence and the merits of the defence.

The applicants in the Deweras Farm case had explained that their deliberate default was because they had entertained a genuine belief that the debt had been due and that no defence had existed and that they would not have acquiesced had they known of the availability of the defence. GILLESPIE J noted that the explanation had been satisfactory and acceptable in principle but nonetheless he still held that the default had been wilful. Furthermore, the applicant had failed to show a good and sufficient cause for the rescission. By virtue of the default judgment against them, the amount had been due by them. They had failed to proffer a prima facie defence to that debt or provisional calculations in defence of the balance.

In the present matter I damned the applicant but nonetheless granted it the relief it sought. In my view applicant was demonstrably sluggard in the protection of its interest. At the stage when the parties were still exchanging letters applicant was the first to make demand for payment. However, faced with an emphatic counter claim applicant recoiled into its shell. When the respondent’s summons eventually came applicant messed up. It has failed to account for that summons despite the admission that Sande, the salesman, had received it. If it had been company policy that all court processes had to be submitted to the finance director or the finance manager, why then did Sande take the summons to the receptionist? Had he given instructions that the summons be forwarded to the finance director or the finance manager in line with the alleged company policy? Unfortunately the application did not say.

In the application there was no affidavit by Sande. The receptionist who was said to have received the summons remained unnamed. Needless to say there was no affidavit from him or her as well. Mudzova denies virtually everything else said by the respondent about the terms of the contract but proffered no version of his own. He admitted the contract. He rejected all the names mentioned by the respondent as having represented the applicant during the conclusion of the contract, including himself. But he did not tell who then the parties were. He did not tell when it was that delivery of the potato digger had to be made to the respondent. In my view Mudzvova’s affidavit concealed more than it revealed.

However, in spite of my very serious misgivings about the applicant’s explanation of the default I felt that the circumstances of this case were remarkably similar to those of the Zimbank case. In that case the Supreme Court took a dim view of the conduct of the respondent’s legal practitioner whom it considered had not only snatched at a judgment but had also unreasonably clung to it.

In the Zimbank case, as in the present matter, the respondent’s suit had been preceded by a letter of demand. The letter had been acknowledge and had been said to have been under consideration. In the present case the applicant had not merely acknowledged the letter of demand but had expressly denied liability. It had also categorically promised to issue its own summons which it had earlier on warned about.

In the Zimbank case the summons had been served on the accountant of one of the branches of the applicant. The accountant had referred it to applicant’s Head Office where it had reached the office of the General Manager. In the present matter the summons had been served on the salesman who had referred it to a receptionist. In the Zimbank case the summons had been inexplicably filed away. The General Manager had not seen it. In the present case it is not known what had become of the summons. But neither Mudzvova, the finance director, nor the finance manager had seen it.

Just as in this case default judgment had in the Zimbank case been sought without any further communication when no appearance to defend had been entered. In the Zimbank case the applicant had become aware of the default judgment on the day that it had been granted. In the present case, the applicant, through its legal practitioner, became aware of the effort to take judgment on the day the case had been enrolled in motion court. In the Zimbank case an application for rescission of judgment was filed on the same day that the judgment had been granted. In the present case an application for the upliftment of the bar was filed just a few days afterwards.

In the Zimbank case the Supreme Court expressed disquiet over the conduct of the respondent’s legal practitioner in contesting the application for rescission of judgment. He narrowly escaped an order of costs de bonis propriis. McNALLY JA, at p 402E, made the following terse remarks (KORSAH JA and MUCHECHETERE JA) agreeing:

“Here there was a mistake. It was clearly a mistake. Zimbank had no possible reason to allow the claim against it… to go by default. No-one, and in that term I include My Moyo of Chikumbirike and Associates who acted for Masendeke, could have reasonably have thought otherwise.

“The mistake was, like many mistakes where documents go astray in the filing system of an organisation, inexplicable. And one wonders how the court would benefit if a minute and detailed investigation were to reveal how the summons came to be filed without coming to the attention of the General Manager. The important explanation is that it was filed, and it did not come to his attention” (emphasis added).

At p 403D – F:

“Speaking for myself, I would say that a lawyer in Mr Moyo’s position must have at least suspected, when no appearance was entered by Zimbank, that something had gone wrong. A telephone call to Zimbank’s legal department would, as we can now see by hind-sight, have saved a lot of trouble and expense.

“He did not do that. He obtained default judgment. But he must have at least half-expected that what did in fact happen, would happen. In future cases, we may have to consider awarding costs personally against legal practitioners who not only ‘snatch at their judgments’ but then stubbornly and unreasonably cling to them” (emphasis added).

In casu, Mr Mushuma for the respondent, despite the applicant’s heavy reliance on it, made no reference to the Zimbank case. So while the absence of explanatory affidavits from the receptionist and Sandewere conspicuous such minute detail would not benefit the court when Mudzvova was saying neither he nor the finance manager had seen the summons. No-one, including Mr Mushuma could reasonably have thought that the applicant, which had a liquid claim against the respondent and had already denied liability for respondent’s claim for damages, would allow the claim against it to go by default, and particularly given the size of that claim.

It was after a careful consideration of the approach in the Zimbank case that I allowed the application for the upliftment of the bar.

On the question of the costs of the application in this court the Supreme Court, in the Zimbank case, at p 403C – D, had this to say:

“We were in no doubt that the appeal should succeed with costs, but were in more difficulty about the costs of the application for rescission. We may have been over generous in allowing Mr Masendeke his costs. On the other hand, it is difficult to say that he should not have opposed the application when in the event the learned judge found his opposition to be not only reasonable but compelling” (emphasis added).

In casu I felt that despite its success the applicant ought to bear the respondent’s costs. I did not think that, even with Zimbank’s case in mind, the respondent’s opposition was unreasonable. It was compelling. There were quite a number of issues that went unexplained. Apart from the issues of the absence of an explanation from the receptionist and why Sande would go against company policy, the most disquieting thing was that applicant denied virtually everything said by the respondent in respect of the meetings that led to the conclusion of the contract. It denied the terms of the contract as alleged by the respond but said nothing of its own. It was evident during argument that the applicant’s two counsel had adopted the attitude that since applicant’s circumstances were similar to those of Zimbank in the Zimbank’s case it was entitled to the relief sought. It was largely for that reason that I felt that the applicant had to bear the costs of the application.

Honey & Blanckenberg, legal practitioners for applicant

Mushuma Law Chamber, legal practitioners for respondent