THE Trustees OF Kuzota Three Family Trust N.O V Diamond Precision (Pvt) LTD

### Preamble
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HH 454-24
HCHC 67/24
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THE TRUSTEES OF KUZOTA THREE FAMILY TRUST N.O

Versus

DIAMOND PRECISION (PVT) LTD

HIGH COURT OF ZIMBABWE

COMMERCIAL DIVISION

CHILIMBE J

HARARE 26 September & 9 October 2024

Opposed application

V.Mhungu for applicants

T. Madzvamuse for respondent

CHILIMBE J

BACKGROUND

[1] This application may well have been avoided had the applicants` counsel capitalised on the facility provided by rule 53 (2) of the High Court (Commercial Division) Rules SI 123-20 (“the Commercial Court Rules”) to manage postponements.

[2] As a result, applicants failed to meet a set down commitment at 12:00 noon on 27 June 2024.I proceeded to strike its matter off the roll with costs. Applicants had in that matter sought an order to place respondent under corporate rescue in terms of section 124 of the Insolvency Act [Chapter 6:07].

[3] Applicants filed present application 9 days later. It prayed for a condonation of breach of rule 53 (2), as well as an order reinstating its original application. I commence by discussing rule 53 (2) which I reproduce hereunder in full; -

53(2); - The court or judge may on good and sufficient reasons grant a request by any party to the proceedings for a postponement or adjournment of the hearing in terms of Order 49 Rule 445 on condition that—

(a) the party applying for a postponement or adjournment pays the prescribed fee for postponements or adjournments, unless the court or judge orders a waiver of such fees;

(b) where the fee for postponements or adjournments has not been waived the same shall be paid before the date of the next hearing unless the court or judge directs otherwise;

(c) no postponement or adjournment shall be granted at the request of a party, or parties except where the circumstances are shown to be beyond their control;

(d) the fact that the legal practitioner of a party is engaged in another court, shall not be a ground for a postponement or adjournment unless that legal practitioner is appearing before the Constitutional Court or the Supreme Court or in another division of the High Court where another matter in that division is shown to have been set down prior to the set down of the matter before the court;

(e) where the illness of a legal practitioner or his or her inability to conduct the case for any reason other than his 653 High Court (Commercial Division) Rules, 2020 or her being engaged in another court, is put forward as a ground for postponement or adjournment, the court or judge shall not grant the postponement or adjournment unless it or he or she is satisfied that the party applying for adjournment could not have engaged another legal practitioner to handle the matter in time;

(f)  in the event of a postponement or adjournment at the instance of the court, the reasons for the postponement or adjournment shall be recorded and the next hearing date shall be fourteen (14) days after the postponement or adjournment unless circumstances dictate otherwise, in which case the next hearing date shall be within the shortest period possible;

(g)  a party seeking a postponement shall be liable for the wasted costs of the innocent party or parties unless he or she or it is excused on good and sufficient cause shown. [Underlined for emphasis]

[4] This rule 53 (2) seeks to achieve, in simple terms, the responsible, orderly and pragmatic postponement and adjournment of matters after same have been set down for hearing. Generally, requests for postponement are recognised as an unavoidable eventuality. As such courts will accommodate them but not with munificent indulgence. In the Commercial Division of the High (“Commercial Court”), postponements actually attract a court fee.

[5] In many respects, rule 53 (2) complements other case management and disposal arrangements found in the rest of the rules of court.  Further, rule 53 (2) also obliges the party unable to meet a set down commitment to show courtesy to the court and other litigants. Such respect is an indispensable aspect in the quest to uphold the court`s dignity and resultant convenience and efficiency of its processes.

[6] I dwelt on the need for parties to take initiative in resolving minor case management matters like postponements in Grandwell Holdings (Pvt) Ltd v Minister of Mines and Mining Development & 4 Ors HH 286-23. The guidance therein supports the facilities in the rules of court meant to ensure that the Commercial Court delivers on mandate. The mandate in question was set out in the Chief Justice`s enabling proclamation under General Notice (GN) 640 of 2017. GN 640/17 published in the Gazette on 27 October 2017 that; -

“NOTICE is hereby given in terms of section 46A of the High Court Act [Chapter 7:06], that after consultation with the Judge President and in the interest of expediting justice delivery and promoting the ease of access to justice, a specialised division of the High Court to be known as the Commercial Division of the High Court is hereby created to adjudicate commercial law disputes and hear all appeals, reviews, applications and petitions which lie to the High Court relating to commercial disputes. HON. L. MALABA, 27-10-2017.” [ Underlined for emphasis]

[7] This prelude is set out as a reminder to litigants and legal practitioners that in the rules of court lie tools for the expeditious disposal of disputes. As such, compliance with the rules of court is an indispensable prerequisite to justice delivery. I now turn to the matter before me.

THE DISPUTE BETWEEN THE PARTIES

[8] I will retain the terms “applicants” and “respondent” to refer to the parties both in the present and main application. (Both matters were filed under the same case number HCHC 67/24). Applicants are described as a family trust whose objects are not for present purposes relevant. Respondent is a diamond process and polishing entity.

[9] The facts relevant to present dispute are as follows; -applicants aver that it structured, on 7 October 2022, a loan security arrangement in favour of respondent`s financier, one Mr. Tyanai Mutombo. Under that arrangement, applicants offered; -for a fee- its immovable property as security for the loan.

[10] The property, Stand 760 of Borrowdale Township of Stand 46 Borrowdale Township 3 (“the Borrowdale property”), was described by applicants as a dwelling house owned by it-the Kuzota Three Family Trust. In terms of Clause 1 (ii) of the agreement, respondent was obliged to pay applicants certain sums of money including US$30,000 in 3 equal instalments as “title deed usage”, US$20,000 in 2 equal instalments and a total of US$50,000 between October and December 2022.

[11] The loan amount was not stated in the agreement. But according to Clause 1 (ii) (f) of that agreement, respondent was to liquidate the loan due to Mr. Mutombo. Respondent was further mandated to secure the release and return of the title deeds to the Borrowdale property. Respondent disputes that the loan was for its exclusive benefit. It alleges that both parties were co-principal debtors and recipients of the loan proceeds.

[12] That disputed position aside, it is common cause that there was default and the financier obtained an order of this court per KWENDA J dated 11 December 2023.] The order directed the applicants and respondent to pay Mr. Mutombo the capital sum of US$392,483 plus interest, plus ancillary fees and costs. The applicants` Borrowdale property, earlier surrendered as collateral, was declared specially executable. The property was eventually sold to realise part of the obligation, though under a subsequent deed of settlement between the herein parties and Mr. Mutombo.

[ 13] The applicants then turned on respondent. It demanded a total of US$778,000 under various heads whose causa drew from the financing structure adverted to above. Respondent denied liability prompting applicants to bring, on 6 February 2024- the main application in terms of section 124 of the Insolvency Act [ Chapter 6:07] seeking an order placing respondent under corporate rescue.

[14] The basis of such application being that respondent was not in a position to meet its liabilities but could, under proper statutory management, be turned round to viability. The application was opposed with a number of points in limine being taken. The points were disallowed and matter was set down for argument on the merits virtually on 27 June 2024 at 12:00 noon.

[15] Mr. Madzvamuse for respondent (then and now), duly joined the proceedings on time. There was no appearance for the applicants. Mr. Mhungu only joined in almost half an hour late-too late for the matter to proceed. He tendered neither explanation nor apology apart from stating that he had been held up at the High Court. I struck the matter off the roll for non-compliance with rule 53 (2). Applicants have since approached the court seeking clemency for failure to seek an adjournment or postponement in terms of that rule 53 (2).

THE APPLICATION FOR CONDONATION

[16] In the present application, applicants` counsel Mr Mhungu, has expressed compunction and tendered a fuller explanation for his late appearance on 27 June 2024.In his founding affidavit, Mr. Mhungu deposed to the founding affidavit. Therein, sought a reprieve for the applicants on the basis that as counsel, his conduct had not been derelict.

[17] Counsel explained that the predicament leading to his late appearance arose from the fact that he was counsel of choice in three different matters; - all set down in the High Court that day. Two of those matters were in the General Division whilst one -HCHC 67/24, was set down in the Commercial Court.

[18] Although counsel accounted for two of those matters, I note that he rather obfuscated on the third. The first matter was case number HCH 6629/23 which had been set down for 10:00 hours before Hon TAKUVA J. This matter took off an hour late “due to the induction on newly-appointed judges” so submitted Mr. Mhungu. He stated further that he endeavoured to communicate with the Judge`s Research Assistant (formerly Judge`s Clerk/Assistant) assigned to my office in order to appraise her of his unconcluded commitment before Hon TAKUVA J.

[19] Mr Mhungu proceeds to state that he received a note from Hon TAKUVA J`s Research Assistant confirming that his message had been relayed. A scrap of paper with a handwritten message was copied and attached to the applicants` papers. It was, as stated, but a scrap of paper with some wording scribbled thereon.

[20] The note bore neither date nor indication of who had authored it. I make this point not to demand formality in hastily scrawled missives; -but simply to emphasise the need to observe rule 53 (2). Such adherence will avoid the sort of levity as that now characterising the learned counsel`s affidavit and submissions. Elevating mundane administrative matters to the court`s attention risks belittling the dignity of the court by calling into question, communication or dealings between court users and staff, issues which should ordinarily remain the background.

[21] Again, I reiterate my earlier guidance on the need for appropriate action to be taken to resolve diary conflict. I say so, noting that according to Mr Mhungu, the treble booking on that day was not entirely of his making. The High Court runs continuous rolls and allocates slots as they become available. This being the very reason why provisions such as rule 53 (2) have been factored into the rules to address such anomalies.  I need not detail all of counsel`s travails in the General Division that day. I may state however that frenetic were his efforts to diffuse the demands for a legal practitioner to be in two places at one time.

[22] In sustaining his plea for indulgence, Mr Mhungu drew my attention to the leading authorities on condonation. He deposed -in the affidavit, and submitted in argument- that the applicants were deserving of the court`s mercy in that the neither the breach nor delay were inordinate. Counsel also exhorted the court not to visit the aberration of applicants` legal on the litigants.

[23] He further submitted that the applicants had a good case on the merits. Their claim against respondent was based on the rights of a creditor under the Insolvency Act. He drew attention to the fact that a number of preliminary objections raised by respondent in the main matter had all been dismissed, arguing that this development counted in favour of applicants` prospects.

THE TWO POINTS IN LIMINE

[24] Two points in limine preceded the respondent`s opposition. Respondent contended that both the application itself and the relief sought were blighted by incurable defects. Firstly, the application was based not on Form CC 11 A as required by the rules, but on an alien form. Secondly, although the application was for condonation for failure to abide by rule 53 (2) and a prayer for reinstatement, there was no prayer for condonation in the draft order.

[25] I find none of the two points in limine sustainable for the following reasons. Firstly, it beyond issue that parties must abide by the rules of court. In FBC Bank Limited v Chiwanza SC 31-17, the court held at page 3 that; -

“It hardly needs mention that rules of court must be followed in order to ensure proper and good administration of justice. In Sibanda v The State, the court quoted the case of S v McNab 1986 (2) ZLR 280 (S) at 284E where DUMBUTSHENA CJ noted the following: - “I have dealt at length on this point because it is my opinion that laxity on the part of the court in dealing with non-observance of the rules will encourage some legal practitioners to disregard the rules of court to the detriment of the good administration of justice.”

[26] This need for compliance prompted the opening remarks in this judgment. That need, however, is one born of the need to ensure that ultimately, justice is done as between parties. The court does not demand compliance with its rules as an end unto itself. It is partially in recognition of the need for flexibility that the Commercial Court rules specifically provide as follows; -

Adoption of incorrect form of application

28. (1) Notwithstanding anything said in these rules, the fact that an applicant has instituted—

(a) a court application when he or she should have proceeded by way of a chamber application; or

(b) a chamber application when he or she should have proceeded by way of a court application;

shall not in itself be a ground for dismissing the application unless the court or judge, as the case may be, considers that—

(i)  some interested party has or may have been prejudiced by the applicant’s failure to institute the application in proper form; and

(ii) such prejudice cannot be remedied by directions for the service of the application on that party with or without an appropriate order of costs.  [Underlined and emboldened for emphasis]

[27] In mounting and persisting with his objection, I expected Mr. Madzvamuse to address himself specifically to the import of this rule. It was necessary for him to do so but he did not. This is because one must not indulge in what HLATSHWAYO J (as he then was) described as “a sterile dispute about forms” way back in 2009 in Zimbabwe Open University v Mazombwe 2009 (1) ZLR 101 (H) at page 103 C.

[28] The Supreme Court recently reaffirmed the pragmatic approach to the issue of wrong forms and held thus per GUVAVA JA at paragraph [ 19] in Chiangwa v Apostolic Faith Mission SC 5-23; -

[19] I agree. The above ratio dicidendi puts to rest the complaint by the appellant about the use of the wrong procedure. From the above it is apparent that the rule was designed to ensure that justice delivery prevails. It also has the added advantage of curbing the associated problem of dismissing or striking off matters which may have merit solely on the basis of procedural mishaps. The rule gives the court discretion to allow access to a party who has not approached the court in the proper form provided there is no prejudice to an interested party. In exercising its discretion, the court must have regard to the exceptions set out under r 58 (13) (c) and (d). It follows that the bringing of an application either as a chamber application or a court application does not automatically in itself amount to a basis for the dismissal of the application unless there is prejudice. The court must consider whether the wrong procedure will prejudice an interested party and if such prejudice cannot be cured by giving directions for the service of the application on that party with or without an appropriate order of costs.

[29] With no prejudice having been shown, the point in limine cannot stand. I will only linger on this point before dismissing it to stress one issue. The duty of that party objecting to the usage of wrong form to show prejudice must be met by a corresponding explanation from the party in breach to assure the court that no prejudice was occasioned. It would not be remiss for the defaulting party to further reinforce its case (and evade adverse rulings on costs) by taking the court into his confidence and show that breach was not a result of inexcusable derelict.

[30] The second point in limine amounted to a fastidious protest over a minor defect that can be easily rectified. That point similarly cannot succeed. In support of this view,  I refer to the remarks of MAKARAU JA (as she then was) in Reggie Saruchera & Anor v Silo Foods Industries & 2 Ors SC 104-20. The Learned Judge of Appeal discussed the authority of a court to remedy errors (and omissions) in draft orders where the cause of action warranted as order and opined as follows [ at page 6]; -

“Whilst draft orders have to be attached to all applications for completeness of form and to conform to the rules of court, they do not bind the court. The court retains in all instances and in all respects, the power to issue an order that is consistent with the relief sought by the applicant and is in accordance with the law. It also stands to reason that the court, having the final word in the matter, issues an order that is devoid of grammatical and other elementary errors.

The conduct of the court a quo in amending the draft order as it did must be contrasted with and distinguished from the conduct that was criticized in Shorai Mavis Nzara and Others v Cecilia Kashumba N. O. and Others SC 18/18. In that matter, the lower court was found to have gone on a frolic of its own. It gave an order which it thought was fair and equitable, an order that had not been sought by any of the parties and all this in an effort to find what it considered to be middle ground in the dispute.”

THE OPPOSITION AND LAW ON CONDONATION

[31] The respondent disputed that applicants` legal practitioner had a plausible cause for failure to attend court on time. Mr Madzvamuse described Mr. Mhungu` s account as a “skeletal” explanation wholly insufficient for required purpose. The opposing affidavit detailed what respondent considered to be a serious lack of preparedness on the part of applicants` counsel on the day in question.

[32] The deponent went further to allege elements of dishonesty and non-disclosure on the part of Mr.Mhungu. In that regard, the court was urged to treat the disdain of its authority with appropriate severity and deny the reprieve sought. Mr. Madzvamuse similarly argued that the papers exposed applicants` lack of prospects on the merits. Again the opposing affidavit referred to the transaction insisting that applicants had no basis to claim the status of creditor to respondent.

[33] In particular, the respondent averred that both parties were borrowers who benefitted from the loan amount. Additionally, respondent alleged that applicants` case was riddled with inconsistencies. Firstly, in paragraph 22 of the affidavit founding the main application, applicant claimed an amount of US$ 784,391. In the same breath, applicant changed the amount for the same claim to US$778,000.

[ 34] Secondly, in the same founding affidavit, applicants stipulated its claim for lost income as US$ 111,391.Herein, this amount was altered to US$105,000.Thirdly, respondent accused applicants of inflating the fee for usage of applicants` title deeds as security from the agreed US$30,000 to US$140,000.Finally, respondent averred that the value of the collateral property jumped from US$220,000 to US$550,000.In the end, respondent reiterated that applicants had failed to establish its status as creditor, a prerequisite to locus standi under section 124 of the Insolvency Act.

[35] In dealing with the arguments, I commence by restating the well-established position on the requirements for condonation. The critical considerations in an application of this nature revolve around the nature and extent of breach, delay in taking steps to rectify it, the reasonableness of the explanation for such breach as well as the applicants` prospects of success. In Paul     Hoyland     Read versus   John     Stewart     Mathews     Gardiner    and Another, SC  70-19, [ page 5], the court outlined the requirements as follows [ enumerated];-

“The extent of the delay involved or non-compliance in question.

The reasonableness of the explanation for the delay or non-compliance.

The prospects of success should the application be granted.

The possible prejudice to the other party.

The need for finality in litigation.

The importance of the case.

The convenience of the court.”

[36] These considerations must be taken cumulatively. In David Chiweza & Anor v Munyaradzi Paul Mangwana & 4 Ors HH 186-17 DUBE J (as she then was), sounded the following reminder [ see page 4]; -

“The court is required to consider the requirements for an application for condonation cumulatively and weigh them against each other. The application for condonation is not decided on one exclusive factor.”

[37] Based on the cumulative or global approach recommended in Chiweza v Mangwana (supra) I will proceed to make the following observations. The court is faced with the instance of a legal practitioner whose main failing is making proper arrangements to have a matter stood down or postponed. The legal practitioner in question was late for court by twenty-two minutes to be precise. Despite the rough patches observed in his explanation, it is not in dispute that counsel was engaged in another court in a different Division of the High Court.

[38] The facts of this matter point to no suggestion that such application, made timeously, would have been refused. The infraction in my view, amounts more to discourtesy rather than gross dereliction. Clearly, counsel for applicants could have organised his diary more efficiently. I have already expressed the court`s displeasure over that conduct. Such chastisement must trigger chagrin within counsel and that in my view should suffice as punishment for his error. I find nothing else before me to warrant disentitling applicants from pursuing their matter on the merits to settle the controversy to finality.

[39] Such would be consistent with the need for finality to litigation and addressing a matter on the merits. Especially given the fact that the matter is quite important to both parties. Applicants pursue what appears to be significant financial recompense, whilst respondent resists a drastic intervention into its corporate status.  On that basis I see no prejudice befalling a respondent who knew well enough that the matter could be revived because it was merely struck off rather than dismissed.

[ 40] I was fortified in reaching these conclusions by the following further factors. The aberration before us was committed by the legal practitioner rather than the litigant. Whilst the errors of a legal practitioner will normally be laid upon the client`s door, the court must always consider the justice of the case. The legal practitioner in question deposed to an affidavit being the appropriate route suggested in decisions such as TFS Management Co (Pvt) Ltd v Graspeak (Pvt) Ltd & Anor, 2005 91) ZLR 333 and Mandaza v Mzilikazi Investments (Pvt) Ltd 2007 (10 ZLR 77.

[41] His was a matter of being late by half an hour, a default which applicants moved to rectify by filing present application within 9 days. As stated, the legal practitioner`s conduct, though frowned upon cannot be described as a gross breach of the rules. The underlying dispute is important to both parties. It also lies in an area of the law which is still developing under a relatively new statute-the Insolvency Act. In the matter before, the fuller definition of who or what is a creditor as defined by the Act will come to fore.

[42] I will also borrow from the Supreme Court`s jurisprudential guidance in Rainbow Tourism Group v Kabasa & Anor SC 52-14 on dealing with matters novel or uncertain. Whilst that matter and the principle are obviously not precisely on all fours with the facts before me, the underlying persuasion is relevant to the herein discretionary considerations. The court held as follows at page 4; -

“It would appear to me that this is an issue which is awaiting final determination by the Supreme Court in due course. Given the uncertainty of the law pending the determination by the Supreme Court, I am satisfied that the learned Judge of the Labour Court misdirected herself in refusing the applicant leave to appeal to the Supreme Court. Where the law is uncertain and a decision is pending in the Supreme Court, a Judge of the lower court cannot hold that such an appeal has no prospects of success on appeal. The leave to appeal has to be granted on the basis that the Supreme Court is yet to speak and until that happens it cannot be said that the applicant’s case has no prospects of success.”

[43] I finally deal with the prospects of success. The approach to take is obviously not to proceed and assume the role of the trial court but merely to preempt it. I was referred on this point by both counsel to Essop v S 2016 [ZASCA] 114; and Zimbabwe Consolidated Diamond Company (Pvt) Ltd v Adelcraft Investments (Pvt) Ltd CCZ 2-24. The court in the latter decision laid out the following principles to address the question of prospects of success; -

“The test for reasonable prospects of success postulates an objective and dispassionate decision, based on the facts and the applicable law, as to whether or not the applicant has an arguable case in the intended application should direct access be granted. The prospects of success must not be remote but must have a realistic chance of succeeding. In this respect, a mere possibility of success will not suffice. There must be a sound rational basis for the conclusion that there are prospects of success in the main matter. In short, this Court must be satisfied that the applicant has an arguable prima facie case and not a mere possibility of success. See Essop v S 2016 [ZASCA] 114; S v Dinha CCZ 11-20, at p 6.”

[44] Mr Madzvamuse asserted in his submissions, the respondent`s spirited contentions that the applicants` claim was “all over the place”. I note that the applicants` claim their status as a creditor on the basis of what may be termed as established or unestablished claims. Part of their claims constitute damages for breach of contract.

[45] What is critical to note is that the applicants strive to confirm its status as a creditor. The entire claim is based on a contract between the parties. There are a number of common cause factors -including the financial prejudice that befell both parties. It is not in dispute that under that structure, respondent assumed certain financial obligations in favour of applicants.

[46] What the applicants will need to prove is that they are owed some money. Not necessarily all that has been claimed. The respondent insists that applicants were a co-principal debtor. But of the two debtors, it is applicants that placed an immovable property as collateral. The underlying prayer by applicants is to have applicant placed under corporate rescue on the basis that it has failed to meet its liabilities.

[47] Such process will entail inventorying the respondent`s assets and liabilities in order to verify the said claims. This being the very reason then that I invited parties to file supplementary submissions on the question of a “creditor”. The respondent has admitted to defaulting on the loan repayments. It concluded, together with applicants, a deed of settlement with the financier Mr. Mutombo. It does appear to me that the applicants` prospects cannot be dismissed as fanciful or merely academic.

DISPOSITION

[48] I am satisfied that applicants have made a plausible case for earning this court`s reprieve. But on the basis of the displeasure already expressed, the applicants, though successful will be disentitled from their costs. They must instead, recompense respondent in that regard. Accordingly, it is hereby ordered that; -

The application for condonation for failure by applicants to appear on the appointed set down date be and is hereby granted.

The application under case number HCHC 67/24, which was struck off the roll-on 27 June 2024 be and is hereby reinstated with the parties to progress it in terms of the rules.

Applicants to pay respondent`s costs of suit.

Chasi Maguwudze Legal Practice -applicants` legal practitioners

Chinawa Law Chambers -respondent`s legal practitioners.

[CHILIMBE J___9/10/24]