Court name
Supreme Court of Zimbabwe
Case number
SC 23 of 2007
Civil Appeal 191 of 2006

Chihwayi Enterprises (Pvt) Ltd. t/a Paint & Tools Hardware v Atish Investments (Pvt) Ltd. (191/06) (SC 23 of 2007, Civil Appeal 191 of 2006) [2007] ZWSC 23 (06 September 2007);

Law report citations
Media neutral citation
[2007] ZWSC 23













REPORTABLE (19)


Judgment
No. SC 23/07


Civil
Appeal No. 191/06








CHIHWAYI
ENTERPRISES (PRIVATE) LIMITED T/A PAINT &
TOOLS HARDWARE





v
ATISH INVESTMENTS (PRIVATE) LIMITED








SUPREME COURT OF
ZIMBABWE


SANDURA JA, CHEDA JA
& MALABA JA


HARARE, FEBRUARY 6 &
SEPTEMBER 7, 2007





F M Katsande,
for the appellant





O Mushuma, for
the respondent






SANDURA JA: This is an appeal against a judgment of the High
Court which set aside a default judgment granted in favour of the
appellant (“the Hardware”) on 3 September 2003.







The background facts in this case may be tabulated conveniently as
follows –






1. On 20 June 1995 the respondent (“Atish”) acquired a piece
of land (“the stand”) from the City of Harare.







2. In July 2005 Atish decided to sell the stand. Accordingly, it
instructed a registered estate agent and valuer to inspect the
stand
and prepare a valuation report. Thereafter, the estate agent
inspected the stand and reported to Atish that the stand was
in the
possession of the Hardware.







3. Following that discovery, Atish instructed its lawyers to
investigate the circumstances in which the Hardware acquired the
stand.







4. On 4 August 2005 the lawyers conducted a search at the Deeds
Registry, and on the following day visited the High Court where
they
perused the record of case no. HC 6950/2003. They discovered
that on 7 May 2002 a Mr James Muindisi (“Muindisi”)
fraudulently sold the stand to the Hardware, and that a purported
agreement of sale had been signed by Muindisi purporting to represent
Atish, and by a Mr Patrick Chihwayi (“Patrick”) representing
the Hardware.







5. The lawyers also discovered that the agreement of sale was drafted
by Mr F M Katsande (“Katsande”) of Messrs F M
Katsande & Partners, the Hardware’s lawyers, and that Katsande
signed the agreement of sale as a witness.







6. The search at the Deeds Registry established that the transfer of
the stand from Atish to the Hardware had been facilitated by
a
default judgment obtained by the Hardware against Atish on
3 September 2003 in case no. HC 6950/2003, in which the
High
Court ordered that:







“(a) within 10 (ten) days of service of this order on the
respondent it shall deliver the documents necessary to enable Messrs
Coghlan, Welsh & Guest, legal practitioners, to pass transfer of
Stand 17027, Graniteside, Harare, to the applicant, failing
which the Deputy Sheriff is hereby directed to procure and sign such
documents as may be necessary to enable the conveyancers (to)
pass
transfer to the applicant.







(b) The respondent shall pay the costs of this application.”







7. On 21 September 2005 Atish commenced a civil action in the
High Court (case no. HC 4738/2005) against the Hardware,
Muindisi, Patrick and the Registrar of Deeds, seeking, inter alia,
an order nullifying the sale and transfer of the stand to the
Hardware.







8. On 23 September 2005 Atish filed a court application in the
High Court (case no. HC 4809/2005) against Patrick, the
Hardware
and the Registrar of Deeds, seeking an interdict restraining the
Hardware from disposing of the stand pending the finalisation
of case
no. HC 4738/2005. The interdict was subsequently granted on
12 January 2006.







9. On 7 March 2006 a pre-trial conference was held in case no.
HC 4738/2005. At that conference the Hardware sought leave
to
amend its plea in order to allege that Atish could not secure the
nullification of the sale and transfer of the stand to the Hardware
unless the default judgment granted against Atish on 3 September
2003 had been rescinded. That amendment was granted with
the
consent of both parties.







10. Consequently, on 6 April 2006, Atish filed a court
application in the High Court (case no. HC 1998/2006), seeking
an
order condoning the delay in filing the application for the
rescission of the default judgment, and setting aside the default
judgment.
That relief was granted by the High Court on 13 July
2006.







Aggrieved by that result, the Hardware appealed to this Court.







There are three main issues to determine in this appeal.







The first issue is whether the default judgment granted in favour
of the Hardware in case no. HC 6950/2003 on 3 September
2003 was properly granted. I do not think it was.







I say so because the service of the court application on Atish in
case no. HC 6950/2003 did not comply with the provisions
of
r 39(2)(d) of the High Court rules, 1971 (“the Rules”),
which reads as follows:






“Subject to this Order, process other than process referred to in
subrule (1) may be served upon a person in any of the following
ways –







(a) – (c) …;







(d) in the case of process to served on a body corporate -







(i) by delivery to a responsible person at the body corporate’s
place of business or registered office; or







(ii) if it is not possible to serve the process in terms of
subparagraph (i), by delivery to a director or to the secretary
or public officer of the body corporate.”







The certificate of service filed in case no. HC 6950/2003 as
proof of the service of the court application upon Atish reads
as
follows:



“I, Francis Munetsi Katsande, the Legal Practitioner of record for
the applicant, do hereby certify that on the 5th day of
August 2003, at 1628 hours, at the offices of Attish (sic)
Investments (Pvt) Ltd, Stand 17021, Sande Crescent, Graniteside,
Harare, for the respondent, I served the following document:







Court Application







By handing it to the Director, Mr Muindisi.”







In my view, it is clear from the record that Muindisi was not a
director, secretary or public officer of Atish. On the contrary,
he
was a fraudster. In addition, if the court application was handed
to Muindisi, as the certificate of service alleges, it was
not handed
to “a responsible person at the body corporate’s place of
business or registered office”.







Mukesh Patel (“Patel”), a director of Atish, who deposed
to the founding affidavit in this case, vehemently denied that
Muindisi was a director of Atish and that Atish had offices at
Stand 17021, Sande Crescent, Graniteside, Harare.







In para 23 of the founding affidavit Patel averred as follows:



“After the respondent (i.e. the Hardware) filed the court
application, it proceeded to obtain a default judgment by fraudulent
means, more particularly in that –







23.1 The court application was never served upon the applicant (i.e.
Atish). A purported Certificate of Service signed by
Mr F M Katsande
on 26 August 2003, contained
false and misleading information more particularly that -







(a) the applicant never had any offices at Stand 17021,
Sande Crescent, Graniteside, Harare, but Mr Katsande stated
and certified that the applicant had offices at the stand.







(b) Mr James Muindisi is not a director of the applicant and did
not claim to be such in all his correspondence with the respondent,
but Mr F M Katsande stated and certified in the
Certificate of Service that he had handed a copy of the court
application
‘to the Director, Mr Muindisi’. …







23.2 If the court application had been properly served upon the
applicant the default judgment could not have been granted.”







It is pertinent to note that the averments made by Patel in para 23
of the founding affidavit were not denied by the Hardware
in its
opposing affidavit. What that means is that the averments were
admitted by the Hardware.







As McNALLY JA said in Fawcett Security Operations (Pvt) Ltd
v Director of Customs and Excise and Ors
1993 (2) ZLR 121 (S) at
127F:



“The simple rule of law is that what is not denied in affidavits
must be taken to be admitted.”







In the circumstances, the court application in case no.
HC 6950/2003 was not served upon Atish and, consequently, the
default
judgment granted on 3 September 2003 should not have
been granted.







Before dealing with the second issue in this appeal, I wish to
state that in view of the fact that Patel alleged that the
certificate
of service prepared and signed by Katsande contained
false and misleading information it was undesirable for Katsande to
appear for
the Hardware in the High Court and in this Court.
Instead, Katsande should have filed an affidavit explaining the rôle
he played
in the matter.







Having said that, I now proceed to consider the second issue in the
appeal, which is whether the provisions of r 63 of the
Rules
apply to the rescission of the default judgment granted on
3 September 2003 in case no. HC 6950/2003. I do not
think
they do.







The rule reads as follows:



“63 (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
subrule (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.”







In my view, the provisions of this rule only apply to the
rescission of a default judgment given “under these rules or under
any other law”. They would not apply to the rescission of a
default judgment obtained fraudulently or improperly, such as the
one
granted in favour of the Hardware in case no. HC 6950/2003,
because such a default judgment could not be described as a
default
judgment granted “under these rules or under any other law”.







Consequently, there was no requirement on the part of Atish to seek
condonation of the delay in filing the court application for
the
rescission of the default judgment granted against it in case no.
HC 6950/2003.







I now come to the third and final issue to be considered in this
appeal, which is whether Atish established a basis for the rescission
of the default judgment in terms of the common law. I have no doubt
in my mind that it did.







The principles applicable in determining this issue were set out by
MILLER JA in Chetty v Law Society, Transvaal 1985 (2) SA
756 (A) at 764I-765C as follows:



“The appellant’s claim for rescission of the judgment … must be
considered in terms of the common law, which empowers the Court
to
rescind a judgment obtained on default of appearance, provided
sufficient cause therefor has been shown. (See De Wet and
Ors v Western Bank Ltd
1979 (2) SA 1031 (A) at 1042, and
Childerly Estate Stores v Standard Bank of SA Ltd 1924 OPD
163). The term ‘sufficient cause’ (or ‘good cause’) defies
precise or comprehensive definition, for many and various
factors
require to be considered. (See Cairn’s Executors v Gaarn
1912 AD 181 at 186 per INNES JA). But it is clear that in
principle and in the long-standing practice of our Courts two
essential
elements of ‘sufficient cause’ for rescission of a
judgment by default are:







(i) that the party seeking relief must present a reasonable and
acceptable explanation for his default; and







(ii) that on the merits such party has a bona fide defence
which, prima facie, carries some prospect of success.
(De Wet’s case supra at 1042; P E Bosman
Transport Works Committee and Ors v Piet Bosman Transport (Pty) Ltd

1980 (4) SA 794 (A); Smith NO v Brummer NO and Anor; Smith NO
v Brummer
1954 (3) SA 352 (O) at 357-8).”







Applying the test set out above, I am satisfied that both essential
elements of “sufficient cause” for the rescission of the
default
judgment granted in case no. HC 6950/2003 were established by
Atish.







With regard to the first essential element, Atish presented a
reasonable and acceptable explanation for its failure to oppose the
court application. The explanation was that the court application
had not been served upon it by Katsande, and that Muindisi, upon
whom
the court application was allegedly served, was not a director,
secretary or public officer of Atish.







On the merits, the defence raised by Atish was that the stand had
been fraudulently sold to the Hardware by Muindisi. In my view,
the
defence appears bona fide and carries some prospect of
success.







In the circumstances, the appeal is devoid of merit and is
dismissed with costs.















CHEDA  JA: I agree















MALABA  JA: I agree















F M Katsande & Partners, appellant's legal
practitioners



Mushuma Law Chambers, respondent's legal practitioners