Edmore Taperesu Mazambani v International Export Trading Company (Private) Limited & C. Chitiyo

### Preamble
Judgment No. SC 88/20
1
Civil Appeal No. SC 281/19
REPORTABLE
(76)
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REPORTABLE 	(76)

EDMORE     TAPERESU     MAZAMBANI

v

INTERNATIONAL     EXPORT     TRADING     COMPANY      (PRIVATE)     LIMITED     (2)     C. CHITIYO

SUPREME COURT OF ZIMBABWE

UCHENA JA, MAKONI JA & MATHONSI JA

HARARE: MAY 26, 2020 & JUNE 29, 2020

M. Gwisai, for the appellant.

T. Zhuwarara, for the first respondent.

No appearance for the second respondent.

MATHONSI JA:	 This is an appeal against the whole judgment of the High Court handed down on 4 September 2018, dismissing with costs, an application made by the appellant in terms of Article 34 of the Arbitration Act (Chapter 7:15) for the setting aside of an arbitral award issued in favour of the first respondent by the second respondent.

BACKGROUND

The appellant and the first respondent entered into a maize-growing agreement on 30 September 2013 in terms of which the first respondent advanced the equivalent of $147 627,44 in farming inputs and money to the appellant.  The advance was to enable the appellant to grow, harvest and deliver to the first respondent 650 metric tonnes of maize on or before 31 July 2014, which date was later extended to 30 August 2014.

At the agreed time of delivery, the appellant only delivered 108.834 metric tonnes of maize which was short by 541.166 metric tonnes of maize due to the first respondent.  This prompted the first respondent to demand payment of the sum of $211 054,74 being the value of the outstanding maize.  The appellant denied liability resulting in a dispute arising between the parties as the appellant maintained that the first respondent had breached the agreement by taking a wrong insurance policy on his behalf.  In addition, the appellant asserted that the first respondent had failed to take out credit risk insurance.

Central to the dispute was the question whether the appellant was liable to the first respondent in the amount claimed or at all.  The dispute was referred to arbitration in terms of Clause 12.2 as read with Clause 12.7 of the agreement.  After some haggling on the choice of the arbitrator, the second respondent was appointed by the President of the Law Society of Zimbabwe as provided for in clause 12.7 of the agreement.

For some reason the process of arbitration commenced on 24 May 2016 and was only concluded on 26 October 2016 when the arbitral award was delivered.  The award was in favour of the first respondent.  The appellant was ordered to pay the first respondent the sums of $210 393,85 being the value of the undelivered maize tonnage, $284,30 being the Grain Producers Association levy, $2 952,55 being administrative fee, interest and costs of suit on a legal practitioner and client scale.

There followed a series of applications filed in the court a quo including an application made by the appellant in case number HC 9657/16 for the recusal of the second respondent as arbitrator, an application for the registration of the arbitral award filed by the first respondent in case number HC 900/17, an application by the appellant in case number HC 2857/17 for rescission of the registration order and an application by the first respondent in case number HC 1638/18 for the dismissal of the rescission of judgment application for want of prosecution.

It is significant to mention at this stage that the application for the setting aside of the arbitral award, the subject of this appeal, was filed on 6 February 2017 and that the award was recognised or registered by the High Court in case number HC 900/17.  The application for setting aside the award, filed as case number HC 1064/17, was obviously filed after the former application, in view of the sequence in numbering.

Be that as it may, the appellant still forged ahead with the application for setting aside the award, even though his application for rescission of the registration order failed.  The basis of the application was four-fold namely that the second respondent was incapable of impartially and independently  arbitrating the dispute, the dispute was incapable of settlement by arbitration, the arbitral award was in conflict with the public policy of Zimbabwe, and the second respondent failed to treat the parties equally.

PROCEEDINGS A QUO

The appellant contended that the second respondent could not impartially arbitrate because she was a partner at the law firm of Atherstone & Cook where one Innocent Chagonda is the managing partner.  Chagonda is one of the directors of Zimnat Lion Insurance Company which provided insurance cover for the maize crop forming the basis of the dispute between the parties.  The Insurance Company repudiated the claim.  The appellant’s gripe was that the second respondent failed to disclose her relationship with Chagonda at the time of her appointment as arbitrator as required by the Arbitration Act.

In addition, the appellant asserted that the arbitration proceedings established that there was no valid contract between the first respondent and himself.  This was so because a provision of the contract requiring that he furnishes collateral security was not satisfied, thereby nullifying the contract.

According to the appellant, the decision by the arbitrator to ask him to leave the room when the first respondent’s first witness was testifying because he was also a witness thereby denying him his right of attendance during proceedings constituted a breach of the rules of natural justice.  As such, it yielded an arbitral award which was in conflict with the public policy of Zimbabwe.

Further, it was the appellant’s case that the arbitrator admitted fraudulent evidence which had a direct bearing in the determination of the dispute.  The evidence in question was in the form of a weather insurance policy produced before the arbitrator in which some original pages had been removed and replaced with ones which were not authentic.

Apart from that, the arbitrator did not treat the parties equally in that the first respondent’s representative was allowed to remain in attendance throughout the proceedings when he was removed during the testimony of one of the first respondent’s witnesses.  His application for a postponement was dismissed but the one made by the first respondent was granted.

The court a quo was not impressed.  On the appellant’s complaint about the second respondent’s lack of impartiality the court a quo found that the appellant had become aware of the source of disquiet during the arbitral proceedings.  He had every opportunity to challenge the arbitrator in terms of Article 12 (2) of the Model Law but chose not to.  After the appellant had made a verbal application for the arbitrator’s recusal, the latter gave him an opportunity to make written submissions challenging the arbitrator’s involvement within a period of fourteen days as required by Article 13 (2).

The court a quo dismissed the challenge on the arbitrator’s capacity because the appellant had not complied with the requirements of the law for mounting such a challenge. It observed that even the appellant’s court application for recusal which had been filed in complete defiance of the law given that it was not in compliance with Article 13 (2), was withdrawn.

In view of the unprocedural manner in which the challenge had been mounted, the court a quo proceeded to apply the test for bias as provided for in the common law.  The court found that the manner in which the second respondent had “bent over backwards” to accommodate the appellant during lengthy periods when proceedings were stalling meant that there was no sign of bias against the appellant on the part of the second respondent.  To the contrary, the record of proceedings shows that the second respondent did her best under very difficult circumstances.  She conducted herself in a very fair and professional manner.

Regarding the appellant’s temporary exclusion from the hearing, the court a quo found that it was wrong for the second respondent to have ordered so.  However, there was no intention to “muzzle” the appellant.  It was a genuine error which did not result in the first respondent gaining an unfair advantage over the appellant.  The appellant’s legal practitioner was always in attendance taking notes of the evidence of that witness.

When the second respondent realised her mistake, she set about rectifying it.  She stopped the proceedings and availed her notes to the appellant and his legal practitioner to enable the appellant to acquaint himself with what the witness had said in his absence.  The court a quo found no merit whatsoever in the complaint about temporary exclusion.

In the court a quo’s view, the second respondent was furnished with a contract signed by both parties which contained an arbitration clause providing for the referral of disputes to arbitration.  The subject matter of the dispute was common cause before the arbitrator, namely the breach of the appellant’s contractual obligation to deliver a certain tonnage of maize.  The court a quo found that the appellant’s claim that the dispute could not be settled by arbitration was therefore “more far–fetched than it is real.”

The arbitrator was required to determine the liability of the appellant to the first respondent.  That issue could not have fallen outside the scope of arbitration.  The arbitrator, in the court a quo’s view, properly applied her mind to the issues, acquitted herself very well and found the appellant liable he having admitted that he received inputs and money but short-delivered.  The court a quo found no basis for setting aside the arbitral award.

GROUNDS OF APPEAL

The appellant was aggrieved.  He noted this appeal on three grounds which I reproduce hereunder verbatim.

Having properly noted that non-disclosure of material facts by the arbitrator is fatal

to the whole proceedings, the court a quo erred in holding that an otherwise

unlawful act can become lawful by passage of time.

The court erred at law in making a finding that the right to be heard was not violated

when the second respondent temporarily excused the appellant from the

proceedings.

The court further fell into error by failing to consider some other grounds before it.

Mr Gwisai who appeared for the appellant readily conceded that the third ground was not a ground of appeal at all.  It is inconcise and unclear and therefore does not comply with r 44 (1) of the Supreme Court Rules, 2018.  It is therefore susceptible to being struck out and is so struck out.

PRELIMINARY ISSUES

Two preliminary issues arose at the commencement of the appeal hearing.  The first one relating to the validity of the relief sought by the appellant was taken by Mr Zhuwarara for the first respondent.  The second, on the effects of the extant order of the court a quo recognising and registering the arbitral award which is the subject of the appeal came from counsel’s engagement with this court.  I now deal with those issues in turn.

VALIDITY OF THE RELIEF SOUGHT

Mr Zhuwarara, rose to take the point on behalf of the first respondent that the appeal should be struck off the roll by reason of the fact that the notice of appeal contains a fatally defective prayer.  This is because in the court a quo, the appellant could only ask the court a quo to set aside the impugned arbitral award and not to substitute its own decision.  In the prayer before this court the appellant seeks, in addition to setting aside the award, the substitution of an order that the first respondent’s claim be dismissed with costs.  Mr Zhuwarara submitted that the last part of the prayer, being incompetent, renders the entire notice of appeal defective.  It should suffer the fate of all such appeals and be struck off the roll.

Mr Gwisai conceded, on behalf of the appellant, that there exists a defect in the prayer in respect of the substitution order which is clearly incompetent.  He however took the view that the defect does not render the entire notice of appeal a nullity.  Mr Gwisai made an application to sever the offending part in order to leave the valid part of the appeal.  This is because severability without prejudice to the first respondent is possible in the wording of the prayer.

In terms of r 37 (1) (e) of this Court’s Rules, every civil appeal shall be instituted in the form of a notice of appeal signed by the appellant or his or her legal practitioner and shall state “the exact relief sought.”  The authorities make it clear that every notice of appeal must strictly comply with the mandatory Rules of court and that a failure to comply with the mandatory provisions of the rules renders an appeal a nullity.  See Matanhire v BP Shell Marketing Services (Pvt) Ltd 2004 (2) ZLR 147 (S); Chikura N.O and Anor v AL Sham’s Global BVI Ltd 2017 (1) ZLR 181 (S); Sambaza v AL Sham’s Global BVI Ltd SC 3/18

The impugned relief sought is crafted as follows:

“1. That the instant appeal succeeds.

2. The judgment of the court a quo in case number HC 1064/17 be and is hereby

set aside and in its place is substituted with (sic) the following:

The application be and is hereby allowed with costs.

b) The arbitral award granted by the second respondent be and is hereby set

aside and in its place, be substituted with the following,

The claim by the first respondent be and is hereby dismissed with

costs.”

Mr Zhuwarara agreed that there was nothing wrong with the wording of the relief right up to the middle of clause 2 paragraph (b).  He conceded that if the prayer had ended with the words: “The arbitral award granted by the second respondent be and is hereby set aside,” it would have been in full compliance with r 37 (1) (e).  He however took issue with the tail end of the relief relating to a proposed substitution order of dismissal of the claim.  The court a quo could only set aside the award but could not dismiss a claim.  Accordingly, this court cannot grant, on appeal, that which the court a quo could not grant at the first instance.

Mr Zhuwarara relied heavily on the authority of the Sambaza case, supra.  In my view that case is distinguishable from the present.  In that case, this court was confronted with what was, inter alia, a fatally defective prayer which sought the dismissal of an “appeal” when what was before the lower court was an application.  It also sought in the second part that “the judgment of the court a quo” be set aside and substituted with another.  The court a quo could not set aside its own order.  The substituted orders were therefore a nullity and fatally defective.

Citing the cases of Dabengwa & Anor v ZEC & Ors SC 32/16 and Matanhire v BP Shell Marketing, supra, the court expressed the view:

“A fatally defective prayer which does not state the exact nature of the relief sought cannot be amended.”

That case is distinguishable from the present case in that the prayer that has been challenged sets out “the exact relief sought” as required by r 37 (1) (e).  It has a defect arising from gratuitous additions which ought not be in the prayer at all.  As the prayer stands, this court can grant the relief of allowing the appeal with costs and setting aside the arbitral award.   The court cannot however grant the substituted order because it is incompetent.

It occurs to me that the original relief sought contains all the averments to prosecute this appeal.  What is unfortunate is that whoever drafted it went on to include a substitution order which was not only clearly unnecessary but incompetent as well.  The question I have to resolve is whether the inclusion of what was an unnecessary substitution order renders the relief sought a nullity as urged by Mr Zhuwarara. I do not think so.

My view is that the inclusion of the offending portion did not lead to a nullity.  This is because, but for, the unnecessary addition, the entire notice of appeal meets all the requirements of the rules as correctly conceded by Mr Zhuwarara.  I tend to agree with Mr Gwisai that where an otherwise valid notice of appeal is rendered defective by an incompetent substitution order and severability of the offending words is possible without causing prejudice to the other party, severability should be allowed.

I derive comfort in taking that position from the provisions of s 22 of the Supreme Court Act (Chapter 7) reposing certain powers to this court in civil appeals.  In terms of    s22(1)(b)(ix) of the Act;

“(1) Subject to any other enactment, on the hearing of a civil appeal, the

Supreme Court

…………………………

may, if it thinks it necessary or expedient in the interests of justice-

…………………………

(ix) take any other course which may lead to the just, speedy and in-expensive

settlement of the case.”

Mistakes of the nature made by the appellant’s legal practitioner in the formulation of the relief sought happen all the time.  It is only when such mistakes lead to a complete nullity that this court will insist on compliance and will not come to the aid of such an appellant, it being trite that a nullity cannot be amended.  See Matanhire v BP Shell Marketing Services (Pvt) Ltd, supra.

Where, however, the notice of appeal is, for all intents and purposes, valid but there is need for an amendment to be effected to clean it up, by severing offending portions of it, this court should lean in favour of granting the amendment.  After all, this Court has the power in terms of r 41 to grant an amendment, not only of the grounds of appeal, but also “of any pleading.”  In addition, as I have already stated, s 22(1) (b) (ix) of the Act empowers the court to take any course leading to a just, speedy and inexpensive resolution of the case.

The appellant cannot be expected to start all over again, should the appeal be struck off, when the offending words can be severed leaving a valid appeal.  This is a court of justice which is required to resolve the real issues between the parties.  It should not dabble too much into small technicalities.  A lot of time is spent by legal practitioners appearing before this court arguing small technicalities and trying to deploy the court’s rules to frustrate the disposal of cases. It is unacceptable.  The amendment to delete the substitution order in the relief sought is granted.

REGISTRATION OF THE ARBITRAL AWARD

It is common cause that the High Court granted an order registering the arbitral award made by the second respondent in HC 900/17 as an order of the High Court before the application for setting aside the award was heard by the court a quo.  The learned Judge made the observation, not only that the first respondent had successfully applied for registration of the award in HC 900/17, but also that an effort made by the appellant in HC 2857/17 to have the registration order rescinded ended with the dismissal of that application for want of prosecution.

At the time the appellant sought to have the award set aside on grounds, inter alia, that it was contrary to the public policy of Zimbabwe and potential bias on the part of the arbitrator, the award had already been recognised and registered by the same court.

An application for the setting aside of an arbitral award is made in terms of Article 34 of the Model Law in the Arbitration Act.  Article 34(2) allows the High Court to set aside an arbitral award if a party making an application for setting aside the award furnishes proof that the parties’ agreement is not valid under the law to which the parties have subjected it to, where the party was unable to present his or her case, the award deals with a dispute not contemplated by or falling within the terms of arbitration and the composition of the arbitral tribunal was not in accordance with the parties’ agreement.

The High Court may also set aside the award if it finds that the dispute is not capable of settlement by arbitration under Zimbabwean law or the award is in conflict with the public policy of Zimbabwe.

What is clear is that the requirements for the setting aside of the award calls upon the High Court to engage in a thorough interrogation of the arbitral award.  It involves an inquiry into whether the award conforms with the law.  It is only when such an examination of the award has been conducted and the award has failed the test, that the High Court may exercise its discretion to set the award aside.

On the other hand, in terms of Article 35, an arbitral award shall be recognised as binding and, upon application in writing to the High Court, it shall be enforced as an order of that court.  Clearly therefore, recognition and enforcement are deliberate judicial acts taken by the High Court upon compliance with the Model Law.

It is significant that Article 36 sets out grounds for refusing recognition or enforcement of an arbitral award which are exactly the same grounds set out in Article 34 for the setting aside of an arbitral award.  Hence, in terms of Article 36 (2):

“If an application for setting aside or suspension of an award has been made to a court referred to in paragraph (1)(a)(v) of this article, the court where recognition or enforcement is sought may, if it considers it proper, adjourn its decision and may also, on the application of the party  claiming recognition or enforcement of the award, order the other party to provide appropriate security.”

The drafters of the law were cognisant of the conflicting nature of the two remedies, that is, for recognition and enforcement on the one hand and for setting aside of an award on the other hand.  They appreciated that the High Court may be called upon to resolve those conflicting interests and made provision for deferment of a decision to recognise or enforce an award until such time that an application seeking its setting aside has been resolved.  What they did not do was to state what should happen where the High Court has already registered an award for enforcement.  Perhaps that was not necessary bearing in mind that the High Court cannot do both.

What it means is that the High Court, which had already passed judgment recognising the arbitral award for enforcement, could not be called upon to then sit in judgment over the same issue to decide whether to set aside the award.  There was an extant order registering the award as an order of the High Court for enforcement.  In other words, the rights and obligations of the parties had already been determined by a court of competent jurisdiction.  Indeed one may ask rhetorically; if the High Court had set aside the arbitral award, what would have happened to the recognition order in case number HC 900/17?

MAKARAU JA was faced with a similar set of circumstances in Ellephant College v Victor Chiyangwa & Anor SC 77/20 where arbitral awards had been registered in the magistrate’s court before the appellant brought an application to the High Court for a declaratory order. The appellant petitioned the High Court to declare that the Prescription Act was applicable to arbitral awards conducted in terms of the Labour Act and that awards cannot be registered and executed after 3 years from the date of issue.

The learned Judge of Appeal reasoned that the High Court could not issue a declaratory order in respect of a right or obligation which had been defined and given content to by an extant judgment.  She then eminently pronounced;

“Whilst the default judgment of 2014 registering the awards was still extant, the appellant could not validly bring the application for a declaratory order as it did.  The rights and obligations forming the subject matter of the declaratory order had already been determined against it albeit, by implication. Quite clearly, the appellant was of the view that the magistrates court erred in registering the awards three years after the date of issue.  It initially took the correct legal route to correct matters by applying to have the erroneous default judgment rescinded and being unsuccessful, appealing against the judgment denying it rescission.  By abandoning the appeal against the refusal of rescission, the appellant may have shot itself in the foot as the appeal process was one of the avenues available to the appellant to correct what it perceived to be an erroneous decision, the other avenue being a review of the proceedings.

It is therefore my finding that after the magistrates court had registered the awards, it was not competent for the appellant to approach the High Court for an order declaring the same rights that had been determined and defined in the default judgment registering the awards.  Any such approach was invalid. Put differently, in the circumstances of this matter, the appellant could not avoid the default judgment against it by filing an application for a declaratory order as it did.  The extant magistrates court decision which defined and gave content to the rights of the parties to the dispute, robbed the High Court of any discretion in the matter at first instance.”

(The underlining is for emphasis)

The learned judge of appeal went on to dismiss the appeal with costs after remarking that the pronouncements made by the court a quo on the merits were completely unnecessary in the circumstances.

The same should be said about the fate of the appellant’s application for setting aside the arbitrator award.  He initially took the right course of action when he made an application for rescission of the registration order meaning that the order may have been granted in default.  He failed to prosecute that application resulting in its dismissal for want of prosecution.  The result, as I have said, left the registration order whose effect is to recognise the arbitral award as an order of the High Court, extant.

The existence of an extant registration order of the High Court precluded the appellant from seeking to have the award set aside.  More importantly, it precluded the High Court from pronouncing itself for the second time on the propriety of the same award.  The court a quo was therefore engaging in judicial futility when it pronounced itself on the demerits of the application for setting aside the award.  Applying the same test, the same principles and the same yardstick, the High Court had already pronounced itself on the respective rights and obligations of the parties viz-a-viz the arbitral award.

The appeal is without merit.  I see no reason why the costs of the appeal should not follow the result.

In the result it is ordered that:

The appeal is dismissed with costs.

UCHENA JA			:		I agree

MAKONI JA			:		I agree

Messrs Chinyama & Partners, appellant’s legal practitioners

Hogwe Nyengedza, 1st respondent’s legal practitioners

Messrs Atherstone & Cook, 2nd respondent’s legal practitioners