Raftsman Investments (Private) Limited v Robbin Francis H Tebb

### Preamble
Judgment No. SC 138/20
1
Civil Appeal No. SC 747/18
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DISTRIBUTABLE	(130)

RAFTSMAN     INVESTMENTS     (PRIVATE)     LIMITED

V

ROBBIN     FRANCIS     H     TEBB

REGISTRAR     OF     DEEDS

SUPREME COURT OF ZIMBABWE

GARWE JA, MAVANGIRA JA & BERE JA

HARARE:  JUNE 20, 2019 AND OCTOBER 22, 2020

T Zhuwarara, for the appellant

F. Mahere, for the respondent

MAVANGIRA JA: This is an appeal against the whole judgment of the High Court sitting at Harare in which the court dismissed an application for the amendment of summons and plaintiff’s declaration in case number HC 9631/16.

FACTUAL BACKGROUND

The appellant issued summons against the respondents under Case No. HC 9631/16 to set aside as invalid and irregular a surety mortgage bond being bond No. 4250/11, registered against its immovable property held under Deed of Transfer No. 6844/2004. Pleadings were closed and the matter was ready for a pre-trial conference.

Before a pre-trial conference was convened the appellant made an application under Case No. HC 11213/17 for an order to amend its summons and declaration in Case No. HC 9631/16. The appellant sought to introduce a new additional prayer for the cancellation of another surety bond No. 2163/09 which it claimed was registered irregularly.

Under Case No. HC 9631/16 the first respondent filed a counterclaim against the appellant for the payment of a loan advanced to Whitebedge Enterprises (Pvt) Ltd, to which loan the appellant had stood as surety and co-principal debtor. The loan was in the sum of US$110 000.00.

The loan was obtained in the following circumstances. In 2001 Mr Rensburg and his wife lost their farm in Chinhoyi under the Land Reform Programme. They subsequently moved to Mutare where they purchased a piece of land of about 21 hectares in extent which they registered in the name of Raftsman Investment (Private) Limited. The land was registered under Deed of Transfer No. 6844/04.

Mr and Mrs Rensburg then started a timber extraction, saw milling and sales company known as Whitebedge Enterprises. Thus Whitebedge Enterprises was extracting timber, doing saw milling and conducting its business on the 21 hectares held by Raftsman Investments (Private) Limited. As the business progressed the first respondent and several other parties bought shares and became directors in both entities. However, after the introduction of the multi-currency system in 2009, the business did not perform as well as had been expected.

It became inevitable for the business to source funds for capital injection. Two loans were secured from MBCA Bank in the sum of US$100 000.00. A surety bond No. 2163/09 was issued by Raftsman Investments (Private) Limited in favour of MBCA Bank. The company defaulted in making payments to the bank and it was called upon to pay. It is at this stage that the first respondent stepped in and advanced a loan to Whitebedge Enterprises in the sum of US$110 000.00 to settle the debt owing to the bank.

The securing of this loan resulted in the cancellation of the surety mortgage bonds in favour of the MBCA Bank. Raftsman Investments (Private) Limited then registered a surety mortgage bond, No. 4250/11, in favour of the first respondent.

Subsequent to all these developments, one Mr Mhende bought the shares owned by Mr and Mrs Rensburg in both companies. Relations soured and Mr Mhende sought to challenge the regularity of the loan that was advanced by the first respondent to Raftsman Investments (Pvt) Ltd. It is against this background that the appellant sued for an order setting aside surety bond No. 4250/11. It instituted the proceedings in HC 9631/16.

Thereafter, the appellant made an application for the amendment of its summons and declaration. The effect of the amendment was to introduce a new and additional prayer for the cancellation of the subsequent surety bond No. 2163/09.

DETERMINATION OF THE COURT A QUO

After considering the matter before it the court a quo expressed its dismay in the manner in which the application had been made, lacking crucial information chief among which was the failure to attach the summons and declaration sought to be amended. In addition to that was the appellant’s failure to give a background to the matter as well as the failure to attach or refer to relevant pleadings.

The court a quo made the finding that the appellant’s application was an abuse of court process in that it sought to introduce a new claim at the pre-trial conference stage under the guise of amending pleadings. The court dismissed the appellant’s application.

Aggrieved by the decision the appellant filed this appeal on the following grounds:

GROUNDS OF APPEAL

The court a quo erred in refusing the appellant’s petition for the amendment of its summons and declaration under cause HC 9631/16. At law the amendment of a pleading in an action is always allowed unless it constitutes a palpable injustice that cannot be compensated by an order of costs. In casu no palpable injustice or prejudice was ever substantiated by the respondent nor was the question of the amelioration through costs adjudicated judiciously.

The court a quo erred grossly misdirected itself (sic) in holding that the appellant’s application to amend was mala fide and predicated on a desire to harass the respondent. The proposed amendment raised triable issues whose factual contestation had a material bearing in the resolution of the disputation of HC 9631/16; more so because the parties were yet to convene a Pre-Trial Conference under HC 9631/16 and define the issues for contestation.

The court a quo also erred determining (sic) that the application to amend was deficient and irregular in that the pleading to be amended had not been attached to the founding papers of the application to amend. The applicant had drawn the court a quo’s attention to the pleadings in HC 9631/16 by formally cross referencing such cause thereby obviating the need to plead the pleadings of the HC 9631/16.

Furthermore, the court a quo grossly misdirected itself in holding that the appellant’s intended amendment was extraneous to the disputation inter parties. The validity and lawfulness of bond No. 2163/09 remains central and intrinsic to the resolution of HC 9631/16. The aforementioned bond precipitated the registration of bond No. 4250/11 which is the very bond the appellant seeks to impugn under HC 9631/16. The court a quo ought to have taken into cognisance that the two instruments of security being interlinked cannot be resolved under two separated causes.

SUBMISSIONS BEFORE THIS COURT

Mr Zhuwarara for the appellant argued that an amendment of a pleading should always be allowed unless the application is mala fide or the amendment would cause an injustice or prejudice to the other party which cannot be compensated by an order of costs.

He submitted that the amendment sought was of paramount importance to the appellant’s case in HC 9631/16 in that it would reveal how mortgage bond No. 2163/09 had been unlawfully registered. The aforementioned bond, he argued, was anomalous in that it was registered without a shareholders’ agreement in circumstances where the encumbrance constitutes an alienation of more than half the appellant’s total assets.

It was his further submission that the court a quo erred in finding that the appellant’s founding affidavit had insufficient information to justify the amendment that it sought. He submitted that by virtue of the detailed response in its opposing affidavit, the respondent volunteered the missing information thereby fully appraising the court on the facts of the matter and that this ought to have been sufficient for the court a quo to make an informed decision.

Miss Mahere for the respondent, submitted that the appellant had misconceived the law pertaining to the amendment of pleadings. She argued that it is incorrect to assert that the amendment of pleadings is always allowed unless it constitutes a palpable injustice that cannot be compensated by an order of costs. Instead, an application for amendment, she submitted, ought to be refused when it is shown, as in this case, to be mala fide.

Miss Mahere further argued that the appellant had failed to lay a proper basis for its claim in the court a quo. It was her submission that it is trite that an application stands or falls on its founding affidavit. There was thus no basis upon which the court a quo could have found in the appellant’s favour when it had not established sufficient facts to justify the amendment sought.

THE LAW AND ITS APPLICATION TO THE FACTS

Applications for amendment of pleadings are governed by Order 20 r 132 of the High Court Rules, 1971. Rule 132 provides:

“132. Court may allow amendment of pleading

Subject to rules 134 and 151, failing consent by all parties, the court or a judge may, at any stage of the proceedings, allow either party to alter or amend his pleadings, in such manner and on such terms as may be just, and all such amendments shall be made as may be necessary for the purpose of determining the real question in controversy between the parties.” (the underlining is added)

It is apparent from the above rule that a party can apply to amend its pleadings at any stage during the proceedings; the main aim and objective being to do justice to the parties by deciding the real issues between them.

This Court stated as follows in Nexbak Investments (Pvt) Ltd & Anor v Global Electrical Manufacturers (Pvt) Ltd & Anor 2009 (2) ZLR (S) 270 at 275E-G:

“The importance of carefully pleading one’s case cannot be over-emphasised. As KUMLEBEN JA et NIENABER JA stated in Imprefed (Pty) Ltd v National Transport Commission 1993 (3) SA 94 (A) at 107 C-E:

‘At the outset it need hardly be stressed that:

The whole purpose of pleadings is to bring clearly to the notice of the court and the parties to an action the issues upon which reliance is to be placed.

(Durbach v Fairway Hotel Ltd 1949 (3) SA 1081 (SR) at 1082).

This fundamental principle is similarly stressed in Odger’s Principles of Pleading and Practice in Civil Actions in the High Court of Justice 22ed at 113:

The object of pleading is to ascertain definitely what is the question at issue between the parties; and this object can only be attained when each person states his case with precision,’”

In Agricultural Bank of Zimbabwe Ltd v Nickstate Investmnts (Pvt) Ltd & Ors 2010 (2) ZLR 419 (H) at 421 C – E GOWORA J (as she then was) stated:

“The law is abundantly clear on the question of amendments to pleadings, and the court has a very wide discretion not only in regard to the scope of the amendment but also with regard to the time when an amendment can be applied for. In the exercise of its discretion the court will generally be guided by the principle that such amendment should not be seen to cause prejudice to the other litigant which cannot be cured by an order of costs necessitated by the need to further postpone the matter. Invariably, therefore courts have been liberal in allowing amendment of pleadings, and it is trite that pleadings can be amended at any time before judgment is issued. It is also a general rule that the courts will grant an amendment to pleadings unless the application to amend is mala fide.”

Citing this case with approval CHITAKUNYE J (as he then was) stated in Cheney v Cheney (nee Turner) HH 78/18:

“A litigant can thus amend or alter their pleadings at any stage before judgment. The court or judge is granted wide discretion on whether to grant the amendment or not. Such discretion is guided by the need to ensure that the real issue between the parties is resolved and that the amendment does not prejudice the other party which may not be compensated by an order of costs.”

He further referred to the case of UDC LTD v Shamva Flora (Pvt) Ltd 2000 (2) ZLR 210 (H) at 216 G – 217 B where CHINHENGO J stated the position thus:

“The general approach of our courts has been to allow amendments to pleadings quite liberally in order to avoid any exercise that may lead to a wrong decision and also to ensure that the real issue between the parties may be fairly tried. This liberality is only affected where to allow the amendment would cause considerable inconvenience to the court or prejudice a party or where there is no prospect of the point raised in the amendment succeeding or where matters set out in the amendment are vague and embarrassing and therefore excipiable; … Thus the question of prejudice to the other party if the amendment is allowed is a paramount consideration. It is singularly important where such prejudice cannot be compensated for by an appropriate order of costs.”

In Nuvert Trading (Pvt) Ltd t/a Triple Tee Footwear v Hwange Colliery Company HH 791/15 MATHONSI J (as he then was) stated at p 5 of the judgment:

“… r 132 allows a party to amend a pleading any time before judgment is delivered. In Whittaker v Roos & Anor 1911 TPD 1092 at 1102 -3, the point was made that the business of pleading is not a game where if a mistake is made, the forfeit is taken. The real dispute between the parties is the main concern of the court which will allow an amendment which helps to ventilate that.”

He proceeded to further state that:

“What the court has regards to in deciding whether to allow an amendment or not was succinctly set out in UDC v Shamva Flora (Pvt) Ltd 2000 (2) ZLR 210 (H) at 217C – F namely:

The court has discretion whether to grant or refuse an amendment.

An amendment cannot be granted for the mere asking but some explanation must be offered therefor.

The applicant must show that prima facie the amendment has something deserving of consideration, a triable issue.

The modern tendency is that the court will generally grant an amendment if it facilitates the proper ventilation of the dispute between the parties.

The party seeking it must not be mala fide.

It must not cause an injustice to the other party which cannot be compensated by costs.

The amendment should not be refused simply as punishment to the applicant for neglect.

A mere loss of time is no reason to refuse the application.

If the amendment is not sought timeously some reason should be given.”

Notably, these considerations that a court must have regard to in applications for amendments were stated in Commercial Union Assurance Co. Ltd v Waymark NO 1952 (2) SA 73 at 77 F –I per WHITE J. See also Kingdom Merchant Bank Ltd v Shah & Anor HH 159/13.

In Lourenco v Raja Dry Cleaners and Steam Laundry (Pvt) Ltd 1984 (2) ZLR 151 (S) at 159 E-F this Court held that:

“The main aim and object in allowing an amendment to pleadings is to do justice to the parties by deciding the real issues between them. The mistake or neglect of one of parties in the process of placing the issues before the court and on record will not stand in the way of this unless the prejudice caused to the other party cannot be compensated for in an award of costs. The position is that even where a litigant has delayed in bringing forward his amendment, as in this case, this delay in itself, in the absence of prejudice to his opponent which is not remediable by payment of costs, does not justify refusing the amendment.”

It thus follows that where an amendment is without prejudice to the other party and is not made mala fide the court may grant such amendment. However, the court can also exercise its discretion by refusing such application on the basis of the facts and circumstances presented before it.

After taking note of r 132 the court a quo stated at p 3 of its judgment:

“My understanding is that a court can only allow a party to amend pleadings if the amendment sought is necessary for the purpose of determining the real question in controversy. The registration of bond No.4250/11 is a juridical act separate and distinct from the earlier registration of bond 2163/2009. There is no connection emerging in applicant’s papers. …”

The court a quo further took note that r 132 is subject to rules 134 and 151. It made reference to r 134 which provides:

“Amendment of summons or declaration: cause of action arising after the issue of summons

A summons or declaration may with the leave of the court or a judge be amended to substitute or to include a cause of action arising after the issue of the summons.

Provided that in the opinion of the court or a judge such an amendment does not change the action into or add to it, an action of a substantially different character which would more conveniently be the subject of a fresh action.”

The court thereafter stated inter alia:

“Any alleged irregularity or invalidity in the registration of bond 2163/09 would not be an occurrence subsequent to the summons in case No. HC 9631/16. While the applicant suggests that the invalidity or irregularity was discovered following an audit, the date of the audit is not stated. Actually according to the evidence submitted by first respondent in his opposing affidavit evidence (sic) the alleged audit was prior to the summons.

In any event the juridical acts giving rise to the two bonds are separate and distinct actions and there is no basis for conflating the two. It was up to the applicant if it had been diligent to bring both claims separately albeit (sic) in the same summons. However, now that the claim in case No. HC 9631/16 was brought separately, there is nothing preventing that claim from being determined on its own.

What the applicant intends to achieve is revealed by the notice of amendment itself. There is no correction or alteration sought in the notice of amendment but to add a new action.

Further it is difficult to appreciate how a court can be called upon to make a pronouncement on a bond that has already been cancelled. The bond which is 2163/09 is, in applicant’s words, no longer extant.

Leave to amend pleadings is granted as an exercise of judicial discretion. This Court will not allow the applicant to introduce a new claim at pre-trial conference stage under the guise of amending pleadings. It can commence fresh and separate proceedings.”

It was not only the issue of prejudice to the other party which cannot be compensated by an award of costs that was pertinent in the application before the court a quo. More fundamentally, the appellant failed to provide the court a quo with sufficient information such as to justify the granting of the intended amendment. The appellant failed to attach the summons and declaration sought to be amended. The appellant’s founding affidavit hopelessly failed to give the background to the matter, thereby failing to satisfy the court a quo of the justification for the amendment that it sought. As already noted above, an amendment cannot be granted for the mere asking; some explanation must be proffered.

It is trite that an application stands or falls on its founding affidavit. A founding affidavit, as explained by Herbstein & van Winsen, The Civil Practice of the High Courts of South Africa, 5ed, serves the purpose of establishing who the applicant is and their requisite locus standi to apply. A founding affidavit sets out the applicant’s interest in the matter, that the court has jurisdiction and the grounds on which relief is sought, being the cause of action. A founding affidavit must also set out a cause of action. If it does not, the respondent is entitled to ask the court to dismiss the application on the ground that it discloses no basis on which the relief can be granted.

The appellant’s argument that the court a quo was appraised with all the necessary information as the respondent’s opposing affidavit volunteered information that “cured the defect” and provided the relevant background which had not been furnished in the founding affidavit, is without merit. Where there is no consent the burden of establishing the justification for the success of an application is placed upon a founding affidavit and not on an opposing affidavit. An opposing affidavit does exactly what its name states, it opposes the application and is meant to outline the respondent’s defence. As stated by MAKONI J (as she then was) in Khan v Muchenje & Anor HH 126/13:

“The purpose of filing a notice of opposition is to notify the other party that the application is being opposed. The opposing affidavit then sets out the basis upon which the application is challenged.”

In Movement for Democratic Change v Minister of Justice, Legal and Parliamentary Affairs and Ors 2007 (2) ZLR 151 this Court, per CHIDYAUSIKU CJ, stated:

“It is now settled that in a court application the founding affidavit in support of the application sets out the applicant’s cause of action. The applicant’s case stands on the founding affidavit. Consequently, it can never be over-emphasised that care must be taken by legal practitioners representing applicants when drafting the founding affidavit. The founding affidavit must succinctly set out the cause of action. The cause of action should be clearly stated so that the respondent is left in no doubt as to what case he has to meet and the relief sought. The relief is usually contained in the draft order which forms part of the application. It is equally important that the opposing affidavit be sufficiently clear so that it informs the applicant and the Court of the defence the respondent is raising.”

Also pertinent is the following statement by MAKARAU JP (as she then was) in Hiltunen v Hiltunen 2008 (2) ZLR 296 (H):

“It is trite that in application proceedings, it is to the founding affidavit that the court will look (to) for the cause of action being alleged by the applicant and the evidence that the applicant has to sustain such a cause of action. Hence, as has been said in numerous cases before, an applicant must stand or fall by his founding affidavit and the facts alleged therein because those are the facts which the respondent is called upon either to affirm or deny.”   (the underlining is added)

In Crundall Brothers (Pvt) Ltd v Lazarus NO & Anor 1990 (1) ZLR 290 (H) SMITH J remarked:

“When as in this case the proceedings are launched by way of notice of motion, it is to the founding affidavit that the judge will look to determine what the complaint is.”

By parity of reasoning it would thus follow that the cause of action must be established in the founding affidavit because subsequent pleadings, including opposing affidavits, are not meant to inform the court or the respondent of the cause of action.

In casu the question arises whether in light of the inadequate founding affidavit juxtaposed with an overly informative opposing affidavit the court a quo ought to have granted the amendment sought.

It is apparent that courts will ordinarily lean in favour of granting an application for amendment guided by the principle that such amendment should not be seen to cause prejudice to the other litigant which cannot be cured by an order of costs where it is not made mala fide. However, an application by its nature relies on its founding affidavit to establish its success.  This is a trite position of the law. Where, as in casu, the founding affidavit is scanty and uninformative in material respects, leaving the respondent to fully enlighten the court on the issues, then the application does not meet the basic requirements that would enable the court to grant it.

On the facts of this matter it is clear that the cause of action was not established or proved in the founding affidavit. It is only the opposing affidavit that informed the court of the real issues between the parties. The appellant did not prove its case. The words of MALABA DCJ (as he then was) in Moyo & Others v Zvoma NO & Another 2011 (2) ZLR 345 (S) come to the fore when he stated that the matter “ought to have been dismissed or granted on the grounds on which the applicant made it.”

It is trite that an appellate court will not interfere with the discretion of a trial court unless it is satisfied that having regard to the evidence placed before it, the finding complained of is so outrageous in its defiance of logic that no reasonable tribunal, faced with the same facts, would have arrived at such a conclusion. Such has not been shown in casu. The appeal cannot succeed.

There is no justification for departing from the rule that the successful party is entitled to their costs.

In the result, the appeal being devoid of merit, it is accordingly ordered as follows:

The appeal is dismissed with costs.

GARWE JA:              		I agree

BERE JA:              		 I agree

Atherstone & Cook, appellant’s legal practitioners

Gill Godlonton & Gerrans, respondent’s legal practitioners