Apex Holdings (Private) Limited (in liquidation) & Reggie Francis Saruchera N.O v Venetian Blinds Specialists

### Preamble
Judgment No. CCZ 11/19
Const. Application No. CCZ 22/16
1
REPORTABLE (11)
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REPORTABLE	(11)

(1)     APEX     HOLDINGS     (PRIVATE)     LIMITED     (in     liquidation)     (2)     REGGIE     FRANCIS     SARUCHERA     N.O

v

VENETIAN     BLINDS     SPECIALISTS

CONSTITUTIONAL COURT OF ZIMBABWE

MALABA CJ, HLATSHWAYO JCC, MAVANGIRA JCC,

UCHENA JCC, ZIYAMBI AJCC, CHIWESHE AJCC,

MAKONI AJCC, CHITAKUNYE AJCC & CHATUKUTA AJCC

HARARE, 19 JULY, 2017 AND 17 JULY, 2019

T. Mpofu, for the applicants

J.R Tsivama, for the respondent

MAVANGIRA JCC:	This is an application that has been brought before this Court in terms of s 85 (1) (a) of the Constitution of Zimbabwe Amendment (No. 20) Act, 2013 (“the Constitution”). In what appears to be a disguised appeal, the applicants are seeking an order framed in the following terms:

“IT IS ORDERED AS FOLLOWS:

It is declared that the common law rule that a Court determining a matter in respect of the registration for purposes of recognition and enforcement of a foreign judgment should not delve into or consider the merits of the proceedings in a foreign Court offends the fundamental right to a fair hearing under section 69 of the Constitution of the Republic of Zimbabwe and is therefore invalid.

It is declared that the common law rule that a Court determining a matter in respect of the registration for purposes of recognition and enforcement of a foreign judgment should not delve into or consider the merits of the proceedings in a foreign Court offends the fundamental right to equality before the law and equal protection and benefit of the law under section 56(1) of the Constitution of the Republic of Zimbabwe and is therefore invalid.

It is declared that the proceedings in the matters HC 1658/2008, HH 408/2012, HH 87/2010 and SC 383/2012 are unconstitutional and invalid.

The respondent is to pay the costs in respect of all the proceedings listed in paragraph 3 above including costs incident to the employment of two instructed counsel.”

The factual background leading to this application is set out hereunder.

Factual Background

The first applicant is a Zimbabwean company incorporated in terms of the laws of Zimbabwe. The respondent on the other hand is a foreign company incorporated in Malawi according to the laws of that State. The first applicant is now in liquidation and the second applicant is the liquidator of the first applicant.  For convenience, I will refer to the first applicant as “Apex Holdings” and the respondent as “Venetian Blinds Specialists.”

Apex Holdings and Venetian Blinds Specialists entered into an agreement in terms of which the trading division of Apex Holdings would supply and deliver a consignment of certain goods to Venetian Blinds Specialists in Malawi for cash. Pursuant to this agreement, Apex Holdings delivered the goods to Venetian Blinds Specialists.

Venetian Blinds Specialists found the quality of the delivered goods to be unsatisfactory. It sued Apex Holdings for breach of contract in the Malawi High Court. The matter was ventilated in a fully-fledged trial after which the Malawi High Court found in favour of Venetian Blinds Specialists.  Apex Holdings was ordered to pay Venetian Blinds Specialists damages for breach of contract. It paid MK4 000,000 in compliance with the said order. The amount paid to US$37,107.78.

Dissatisfied with the quantum of damages awarded by the Malawi High Court, Venetian Blinds Specialists appealed to the Malawi Supreme Court. The Malawi Supreme Court upheld the appeal and issued an order increasing the amount of damages to be paid by Apex Holdings to Venetian Blinds Specialists. The increased amount of damages was the equivalent of US$884 662.50 as special damages and the amount of MK 120, 928.50 plus interest for loss of profit.

In a bid to enforce the judgment, Venetian Blinds Specialists instituted proceedings in the High Court of Zimbabwe sitting at Harare seeking an order recognising as binding and enforceable against Apex Holdings, the judgment dated 11 September 2007 of the Supreme Court of Malawi. Apex Holdings defended the claim and filed a plea in bar. It argued that the Malawi Supreme court judgment could not be recognised and enforced in Zimbabwe for the reason that Malawi is not a “designated country” in terms of the Civil Matters (Mutual Assistance) Act [Chapter 8:02]. The plea in bar was dismissed.  Apex Holdings then proceeded to plead to the merits. In its plea it challenged the correctness of the Malawi High Court and Supreme Court judgments.

In judgment number HH 87/2010 handed down by PATEL J, as he then was, (PATEL J) (the 2010 judgment), the High Court dismissed the action for the recognition of the Malawi Supreme Court judgment as binding and enforceable. The dismissal was solely on the basis that the judgment of the Supreme Court of Malawi had been overtaken by events in that Apex Holdings had already paid the damages as determined by the High Court of Malawi. It is significant to note that this was the sole reason for the dismissal of the action.

It is also pertinent to note that despite the dismissal, in his judgment, PATEL J, made a specific finding that the defendant had failed to demonstrate any public policy consideration precluding the recognition of the Malawi judgment in Zimbabwe. The sole ground for the dismissal was that payment for the damages had been sufficiently made by Apex Holdings.

Aggrieved by the judgment of the High Court at Harare, Venetian Blinds Specialists appealed to the Supreme Court of Zimbabwe. The Supreme Court set aside the High Court judgment and remitted the matter to the High Court for a determination on the rate of exchange applicable at the time of payment of the amount that had been paid by the Apex Holdings as damages to the respondent as well as the applicable rate of interest to the sum of US$848,662,50 awarded by the Supreme Court of Appeal of Malawi.

Subsequent to the remittal the High Court heard the matter. In its judgment number HH 408/2012 (the 2012 judgment) delivered by PATEL J, the High Court declared that the judgments of the Malawi High Court and Malawi Supreme Court, handed down on 11 February 2003 and 11 September 2007 respectively, be recognised as legally binding and enforceable in Zimbabwe. Apex Holdings was accordingly ordered to pay Venetian Blinds Specialists the sum of US$840 958.00 with interest thereon at the prescribed rate, calculated from the date of the judgment to the date of payment in full and costs of suit on the ordinary scale.

Aggrieved by the judgment of the High Court recognising the Malawi Court judgment and ordering that Apex Holdings pays Venetian Blinds Specialists the sum of US$840,958.11, both parties appealed to the Supreme Court. The basis of the counter appeal by Venetian Blinds Specialists was its dissatisfaction with the decision that interest accrued from the date of judgment as opposed to the date of the institution of the proceedings. In a judgment delivered by GOWORA JA on 25 June 2015, both the appeal and the cross appeal were dismissed.

This Application

Unhappy with the recognition of the Malawi Courts’ judgments, the applicants filed this application. The applicants are essentially seeking a declaration that the common law rule that a Court determining a matter in respect of the registration for purposes of recognition and enforcement of a foreign judgment should not delve into or consider the merits of the proceedings in a foreign Court, offends certain rights guaranteed in the 2013 Constitution. The applicants are also seeking the invalidation of the proceedings in the following matters, HC 1658/2008, HH 408/2012, HH 87/2010, SC 171/2010 and SC 383/2012.

Preliminary Issues

The parties filed extensive heads of argument in this matter with the respondent raising two important points in limine. The first point taken is that the application filed by the applicants is incompetent and bad at law for the reason that it seeks to allege violation of rights under the current Constitution, which Constitution was not yet promulgated when the alleged cause of action arose. In other words, the High Court judgment recognising the Malawi Supreme Court of Appeal judgment was handed down before the promulgation of the Constitution. The rights that the applicants allege were violated by the recognition of the Malawi judgments were therefore not in existence under the Constitution.

While the applicants’ stance was that the cause of action arose in 2015, with particular reference being made to the 2015 Supreme Court judgment, the respondent’s contention was that in reality the cause of action arose when the 2010 judgment was issued.

It was the submission of Mr Tsivama, for the respondent, that on the basis of this point alone, the application ought to be dismissed with costs on the punitive scale as it was ill advised for the applicant to persist with the application when its shortcomings had been brought to the applicants’ attention.

The second point taken in limine is a challenge to the authority of the second applicant, the liquidator, to depose to the founding affidavit. The point was raised that the application was instituted by the liquidator who did not comply with s 221 of the Companies Act [Chapter 24:03] in that neither the court, nor the creditors and contributories, nor the Master of the High Court gave him the requisite leave or authority as the liquidator of Apex Holdings to institute the proceedings. Furthermore, he did not bother to seek ratification after his actions, even when the point was raised and brought to his attention. Consequently, so it was contended, without the leave of the court or a resolution of creditors and contributories, he has no locus standi to institute the proceedings or action on behalf of Apex Holdings.

Mr Tsivama urged the Court to dismiss the application on this basis also. He also submitted that the liquidator should bear the costs on the legal practitioner and client scale. It was his further submission that there was no reason or justification why the respondent should be put out of pocket for defending an ill-advised application.

The material issues arising from the points in limine raised are set out hereunder.

Issues

Whether or not the cause of action arose in 2010 or in 2015

Whether or not the second applicant had the requisite authority to commence proceedings.

I will proceed to deal with the first issue.

1. Whether or not the cause of action arose in 2010 or in 2015

Counsel for the applicants argued that the cause of action arose on 25 June 2015 when the Supreme Court, per GOWORA JA, delivered its judgment in the matter. The appeal that was before the Supreme Court then was in relation to the judgment of the High Court recognising a judgment of the Malawi Supreme Court. The High Court judgment per PATEL J was handed down on 8 November 2012. This was after the High Court had heard the matter pursuant to the remittal by the Supreme Court following an appeal against the 2010 judgment by the same court. The sequence of these judgments has already been set out earlier under the heading “Factual Background”.

The respondent raised the argument that the cause of action arose in 2010 by virtue of the 2010 High Court judgment, per PATEL J (as he then was) recognising the Malawi judgments. The said position taken by the respondent is supported by the papers filed of record. This will become apparent once the legal concept of “cause of action” is taken into consideration. It is therefore important for the meaning of the often stated concept phrased as “cause of action” to be revisited.

The term “cause of action” was defined in McKenzie v Farmers’ Co-operative Meat Industries Ltd 1922 AD 16 at 23 as:

“… every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the Court. It does not comprise every piece of evidence which is necessary to prove each fact, but every fact which is necessary to be proved."

See also Peebles v Dairiboard Zimbabwe (Pvt) Ltd 1999 (1) ZLR 41 (H).

The South African Appellate Division also had occasion to define what a cause of action is in Evins v Shield Insurance Co Ltd 1980 [2] SA 814 (A) at 825G where it stated:

“’Cause of action’… is ordinarily used to describe the factual basis, the set of material facts that begets the plaintiff's legal right of action.” (my emphasis)

The import of the above quoted definitions seems to me to be that a cause of action relates to the material facts that a claim is founded on.  In this case, the fundamental issue that was before the High Court in case number HC 1658/08 which culminated in the 2010 judgment (HH 87/2010) was the question of recognition of the judgment of the Malawi Supreme Court. In his judgment PATEL J found and specifically stated at p6 of his judgment “I accordingly find that the recognition of the judgment of the Malawi Supreme Court would not be contrary to public policy under the law of Zimbabwe.” He further stated at p10, “As I have found earlier, the defendant has failed to demonstrate any public policy consideration in casu precluding the recognition of the Malawi judgment in Zimbabwe.”

Although the High Court dismissed the matter for the reason that the amount claimed had already been paid, there can be no dispute, in view of the above quoted excerpts, that the High Court in 2010 pronounced on the recognition of the judgment of the Supreme Court of Malawi.

The sequence of events clearly shows that the respondent appealed against the 2010 High Court judgment. The first applicant did not. The judgment was set aside and the matter was remitted to the High Court. Thereafter, the High Court, in the 2012 judgment again pronounced on the issue of the recognition of the Malawi judgment and declared that the judgments of the Malawi High Court and Supreme Court handed down on 11 February 2003 and 11 September 2007 respectively, be recognised as legally binding and enforceable in Zimbabwe. Furthermore, the High Court ordered Apex Holdings to pay Venetian Blinds Specialists US$ 840 958. 00.

What emerges from these judgments is that the question of the recognition of the Malawi judgments was decided on in the 2010 judgment (HH 87/2010) which finding was subsequently confirmed in the 2012 judgment (HH 408/2012.)

The rationale, as stated in the 2010 judgment, of recognising the Malawi Supreme Court judgment was that the first applicant had failed to demonstrate any public policy consideration precluding the recognition of the judgment.

The recognition by the Zimbabwe High Court of the Malawi Supreme Court judgment having been pronounced in the 2010 judgment, it follows that the material facts that begat the applicants’ right of action arose then, in 2010. The 2010 judgment, insofar as it pronounced on the recognition the Malawi judgments, gave rise to the factual basis for the raising of the allegation that is now raised in casu.

The allegation raised in casu is that the common law rule that a court determining a matter in respect of registration for purposes of recognition and enforcement of a foreign judgment should not delve into the merits of the proceedings in a foreign court offends existing Zimbabwean law. The first applicant did not file such an application or institute the necessary proceedings when the pertinent facts came into existence in 2010 by way of the recognition of the Malawi judgment without any delving into the merits of the Malawi court proceedings by the Zimbabwe High Court. Neither did it appeal against the decision.

What the first applicant did was to appeal, unsuccessfully though, against the 2012 judgment insofar as it ordered that payment be made to the respondent. Sight ought not to be lost of the fact that the said judgment also recognised the Malawi courts’ judgment as binding and enforceable and this finding was not challenged. The squabbling that continued in the courts was merely to do with issues of quantum.

The cause of action having arisen in 2010 as stated earlier, the applicants opted not to challenge the constitutionality of the common law that allows for the enforcement of foreign judgments without delving into the correctness of the judgments on the merits.

Counsel for the applicants contended that the judgment that gave life to the application in casu was the 2015 judgment. It appears to me that this contention is not supported by the facts on the record. The material facts that gave potential life to this application arose in 2010 when the 2010 judgment was handed down. Furthermore, it is common cause that the 2010 and 2012 judgments that recognised the Malawi judgments are still extant. An appeal and the cross appeal against the 2012 judgment were both dismissed. The 2012 judgment therefore remains extant.

The next question is whether or not the applicants can lawfully claim rights under the 2013 Constitution. The applicants are seeking a declaration that the common law rule that a Court determining a matter in respect of the registration for purposes of recognition and enforcement of a foreign judgment should not delve into or consider the merits of the proceedings in a foreign Court offends ss 56 (1) and 69 of the Constitution of the Republic of Zimbabwe, 2013. The question arising in turn begets the question whether the Constitution applies retrospectively to enable the applicants to claim these rights under the Constitution.

It is common cause that the Constitution of Zimbabwe Amendment (No. 20) Act, 2013 was promulgated in 2013. The judgment that gave the applicants the impression that Apex Holdings’ constitutional rights were violated was handed down in 2010, well before the promulgation of the Constitution. A judgment handed down before the promulgation of the Constitution cannot possibly violate rights under a non-existent law. Generally, one cannot claim a right under a law that was non-existent when the dispute arose.

The Constitution does not apply retrospectively. There is no provision in the 2013 Constitution that suggests that it ought to have retroactive application.  It is generally settled at law that there is a presumption against retrospective application of legislation. That presumption has not been rebutted in casu. The applicants have not contended or raised any argument on the possible retrospective application of the Constitution.

The submission by Mr Mpofu that the right infringed by the recognition of the Malawi judgments was already in existence before the promulgation of the Constitution was not elaborated in detail. In any event, that submission does not seem to be of any assistance to the applicants’ case in circumstances where they opted not to take any action and thus did not appeal when the recognition of the Malawi judgments was pronounced on. The only action taken in respect of that recognition is this application. The assumption derived from the inaction is that the applicant was not aggrieved by the decision and that the present application is an afterthought.

It is for these reasons that the application lacks merit. A party cannot sit on its laurels only to purport to act at the eleventh hour on the basis of a new law that did not exist when the cause of action arose. If this were to be allowed, this Court would be flooded with cases where parties claim rights based on events that happened before the enactment of a later law that has no retrospective application. This would be unacceptable unless the enacted law would have expressly provided for its application retrospectively.

The applicants did not file an application raising the challenge that they now do immediately or soon after the cause of action arose. There was in existence before the promulgation of the 2013 Constitution, another Constitution. It is only that earlier Constitution that could have been the basis of their application if its provisions were such as to enable the contention that they now raise. In the absence of clearly articulated submissions on this aspect, it is not possible or competent for this Court to dwell on it or make any determination based on such a contention. In the absence of such submissions, the reference to or citation by Mr Mpofu of S v Pennington & Anor 1997 (4) SA 1076 (CC) and the purported distinction thereof cannot be of any avail to the applicants’ case. To the contrary, the following excerpt from the said authority, at 1091 paras 35 – 36, runs against his argument:

“The appellants were tried and convicted at a time when there was no Bill of Rights. According to the Supreme Court of Appeal they were fairly tried in accordance with the law then in force and they were correctly convicted in accordance with that law. The subsequent introduction of a Bill of Rights in the interim Constitution and the 1996 Constitution did not convert what were regular proceedings at the time of their trial, into irregular proceedings; nor could it give rise to a right to claim that the conduct of the trial at a time when the new constitutional order was not in force impaired the appellants’ constitutional right to dignity.

There is nothing in the 1996 Constitution which suggests that the decision as to retroactivity in Du Plessis v De Klerk is no longer applicable, or that it was intended that the 1996 Constitution should have retroactive application. It should perhaps be added that even if the phrase ‘unless the interests of justice require otherwise’ was wide enough not only to make the provisions of the 1996 Constitution applicable to pending proceedings in appropriate cases, but also to make them applicable retroactively, it could hardly be said to be ‘in the interests of justice’ to allow completed trials to be reopened and to be dealt with in accordance with laws of procedure and evidence which were not in force at the time of the trial.”

In casu, in terms of para 3 of the Sixth Schedule to the 2013 Constitution, [Chapter 4], the Declaration of Rights, came into operation on the publication day, which was 22 May 2013. In terms of para 4 thereof ‘the former Constitution is repealed with effect from the effective date’. It follows therefore that the applicants can only rely on the current Constitution to challenge any purported violations that occurred after the effective date. In any event, the constitutional argument was not raised before the High Court in 2010 or 2012.

During the hearing counsel for the applicants argued that, in the 2015 judgment by GOWORA JA, the Supreme Court hinted that applicants could lodge a constitutional application. A perusal of the judgment shows that a remark was made in passing in the process of the Court making a determination on an application for postponement that the first applicant appeared to have half-heartedly made in those appeal proceedings. The remark was not the ratio decidendi of the judgment. For the avoidance of doubt, the learned judge stated the following at p3 of the judgment:

“There was no explanation in casu why the postponement was being sought other than a reference to a desire to mount a constitutional application. The submission from counsel suggested to us that the constitutional issues, if any, were yet to be formulated. Counsel did not address the issue of prejudice, if any, the appellant was likely to suffer if the application for postponement was not granted. In any event, it was not suggested that the hearing of the appeal would be a bar to the appellant’s right to mount a direct constitutional application.”

A contextual reading of the above shows that the remark does not provide fortification for the contention made on the applicants’ behalf before this Court. The remark does not seek to validate in advance the instant application.

It also does not escape notice that as at 2015 no constitutional issue had ever been formulated, only to be formulated almost a year later.

From the foregoing it can be noted that the cause of action arose in 2010 before the inception of the 2013 Constitution. The applicants have not taken the argument that the 2013 Constitution applies retrospectively. They cannot claim rights under a non-existent law.

For these reasons the application lacks merit. It ought to be dismissed. In the circumstances, there is no perceivable need to proceed to deal with the second preliminary point regarding whether or not the second applicant had the requisite authority to commence proceedings.

Costs

The respondent (Venetian Blinds Specialists) averred that this was a clear disregard of the law. Because of this disregard of the law, the respondent submitted that the second applicant must bear costs personally on an attorney and client scale as there is no reason why creditors must be burdened with the costs of litigation of this matter. The respondent further submitted that the cause of action was not with the liquidator but with the company under liquidation. In the event that the cause of action is with the company under liquidation, the liquidator may only act with the leave of the court or with authorisation from creditors and contributories. This position is in accord with the provisions of the Companies Act.

Regarding costs, Mr Tsivama’s initial stance as reflected in his heads of argument was to urge this Court to dismiss the application and make an award in the respondent’s favour in terms of which the second applicant pays the respondent’s costs de bonis propriis and on the legal practitioner and client scale. In his oral submissions he however indicated that whilst the second applicant must bear the costs on the legal practitioner and client scale, he was abandoning his earlier claim for costs to be borne by the second respondent “de bonis propriis.”

Mr Mpofu in response conceded that generally costs are awarded to the successful party but submitted that the second applicant ought not to be burdened with paying costs de bonis propriis as his conduct of the matter was influenced by advice that he got from four different legal practitioners at various stages of the matter.

It is common cause that Apex Holdings is in liquidation and the second applicant is the liquidator. In terms of s 221 (2) of the Companies Act [Chapter 24:03], a liquidator of a company in liquidation can only bring an action on behalf of the company in liquidation with leave of the court or with the authority of creditors and contributories. The section is couched in peremptory terms. It is undisputed that the second applicant did not obtain leave of court or authorisation from creditors and contributories before making this application.

It is trite that the issue of costs is always in the discretion of the Court. I am of the view that the facts of the case do not call for the awarding of costs on an attorney and client scale but on an ordinary scale.

An award of attorney-and-client costs by its nature serves to register the court’s displeasure with a litigant’s conduct. The common ground on which a court will order a party to pay the other party’s attorney-and-client costs is where the former party has been guilty of dishonesty or fraud in conducting the suit, or where his or her motives have been vexatious, reckless or malicious, or where he or she has seriously misconducted himself or herself in the course of the proceedings.

Venetian Blinds Specialists has abandoned the claim for payment of costs by the second applicant. However, it has not in my view, established a valid basis for an award of costs on an attorney-and-client scale against the first applicant. In any event, the Court has a discretion in awarding costs.

In light of the foregoing, the following order is made:

It be and is hereby ordered that:

The application be and is hereby dismissed with costs.

MALABA CJ			I agree

HLATSHWAYO JCC	I agree

UCHENA JCC 		I agree

ZIYAMBI AJCC		I agree

CHIWESHE AJCC		I agree

MAKONI AJCC 		I agree

CHITAKUNYE AJCC	I agree

CHATUKUTA AJCC	I agree

Venturas & Samukange, applicant’s legal practitioners

Sawyer & Mkushi, respondent’s legal practitioners