Rio Zimbabwe Limited v Afrasia Bank Limited (In Liquidation)

### Preamble
Judgment No. SC 55/21
1
Civil Appeal No. SC 241/20
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DISTRIBUTABLE	(52)

RIO     ZIMBABWE     LIMITED

v

AFRASIA     BANK     LIMITED     (IN     LIQUIDATION)

SUPREME COURT OF ZIMBABAWE

MAVANGIRA JA, BHUNU JA & CHITAKUNYE AJA

HARARE: 02 OCTOBER 2020 & 17 MAY 2021

Girach. F, for the appellant

Siyakurima. F, for the respondent

CHITAKUNYE AJA: 	This is an opposed court application for rescission of a judgment handed down by this Court on  4 October 2019 under case number SC 116/18 as judgment number SC 76/19. The application is made in terms of r 73 of the Supreme Court Rules, 2018 as read with r 449 of the High Court Rules, 1971.

BACKGROUND FACTS

In February 2012, the respondent instituted summons against the applicant in the High Court under case number HC 1196/12 claiming payment of $1 959 148.58 and $6 074 449.65 together with interest and costs arising from an overdraft facility between the parties.  The claims were opposed and subsequently, a deed of settlement was concluded on 2 August 2013 (“the Deed”), in terms of which the applicant agreed to pay the respondent $4 556 777.78 in full and final settlement of the claims in the summons.

The applicant failed to pay in terms of the Deed. This prompted the respondent, on 6 February 2015, to approach the High Court with a chamber application seeking enforcement of the deed.  In opposing the application, the applicant contended that there were computation errors in the Deed and that it had erroneously acknowledged owing the balance as was reflected in the Deed.  It attached a report by Interest Research Bureau (the IRB Report) which was to the effect that the respondent had over charged the applicant on the interest. This report was said to have been certified by a Chartered Accounting Firm.

On 3 May 2017, the High Court per MAKONI J (as she then was) ruled in favour of the applicant and held that the Deed could not be given effect to as parties were not clear on their rights when they concluded it.  This prompted the respondent to appeal to this Court on 15 February 2018 under SC 116/18. Parties argued the matter on 5 June 2018. The court, per GWAUNZA DCJ, held that the High Court could not look into the validity of the deed in a chamber application for default judgment premised on a default clause in the deed.  It stated that the applicant’s defence to the chamber application for default judgment had to be within the confines of the Deed, to say it had not defaulted payment.  The court further concluded that the applicant’s defence to the claim had the hallmarks of a counter claim and that the applicant had used the opposing affidavit as a ‘sword’ and not a ‘shield’ that it was supposed to be. It held that absent a counter claim, the deed could only be set aside in proceedings instituted specifically for the setting aside of that deed. The court further found that the court a quo had proceeded to determine matters that were not properly before it. Accordingly, the court set aside the judgment of the High Court and in the substituting order, it granted the respondent’s chamber application for default judgment and consequently ordered the applicant to pay the respondent certain monies.  This is the judgment that the applicant prays be rescinded.

In its application, the applicant averred that on 29 January 2018, before an appeal had been filed, the applicant as the defendant in the main matter filed its plea and claim in reconvention as the judgment of the High Court declaring the Deed unenforceable was still extant and that the respondent then filed a special plea to the claim in reconvention in May 2018.  The applicant further averred that at the time of the hearing of the appeal, the counter claim had been filed before the High Court and that by the time the appeal was heard, the respondent had accepted that it owed the applicant. The applicant argued that the claim that the respondent sought to pursue before the court had been compromised as the liquidator had accepted that the respondent in fact owed the applicant. This, it averred, was not brought to the attention of the court and that had the court known, it would have refused to entertain the appeal.  It is in this regard that the applicant argued that the claim was erroneously granted where it ought not to have been pursued and prayed for the reversal and setting aside of the judgment of the court.

The respondent opposed the application and contended that the matter is not only res judicata, but this Court is now functus officio, and in a bid to enforce finality to litigation the applicant ought not to be allowed to have a second bite of the cherry.  It contended that it was not indebted to the applicant and that the applicant lost the argument that the deed was concluded as a result of a mutual error when the appeal was heard before the court. The respondent further contended that if the applicant had a valid claim, it should have filed a plea and a claim in reconvention and not conclude the Deed.  The respondent also contended that the plea and the claim in reconvention filed in the High Court could only be valid if the deed of settlement had been found to be invalid.  It also contended that the Supreme Court judgment rendered any processes filed after the hearing of the matter in HC 1196/12 invalid and of no force.

The respondent denied having admitted that it owed the applicant and submitted that the claim was provisionally accepted by the Master, and not by the liquidator, and that the issue was always contested. Accordingly, the respondent contended, that the alleged compromise is non-existent and that it was incumbent upon the applicant to have brought the alleged compromise to the attention of the court.  Lastly, the respondent averred that the applicant could have cross appealed against the High Court judgment by MAKONI J (as she then was).

ISSUE FOR DETERMINATION

Whether or not the judgment of the court in SC 116/18 ought to be rescinded in terms of r 449.

SUBMISSIONS BEFORE THIS COURT

In motivating this application, Counsel for the applicant argued that the judgment of the court was erroneously given as parties withheld certain information which was material in the matter, and that the information was common cause. He submitted that two years before the appeal in SC 116/18 was filed, the respondent had accepted that there was a compromise and that there was an over payment by the applicant. He argued that had the court been aware of this information, it would not have taken the position it took in its judgment. Counsel further argued that although the applicant was legally represented at the time of the hearing of the appeal, r 449 is not concerned with who committed the error and rather is only concerned with the existence of a material error. He further submitted that litigation is not a game of hide and seek and therefore even the respondent could have brought the information to the attention of the court.

In response, Counsel for the respondent submitted that there was no compromise as alleged by the applicant and that, in any case, the terms of such compromise had not been placed before the court. Counsel further submitted that the respondent had not at any point admitted that the applicant had overpaid it, and that the applicant’s claim which had been provisionally accepted had not been subsequently confirmed by the liquidator. Lastly, he submitted that r 449 of the High Court Rules was wholly inapplicable as the applicant was simply not happy that the appeal was determined in favour of the respondent. He accordingly contended that the judgment of the court was not erroneously given.

THE LAW

Rule 449 of the High Court Rules upon which the applicant premised its application for rescission of judgment provides, inter alia:

“449. Correction, variation and rescission of judgments and orders

The court or a judge may, in addition to any other power it or he may have, mero motu or upon the application of any party affected, correct, rescind, or vary any judgment or order—

That was erroneously sought or erroneously granted in the absence of any party affected thereby; or

(b) 	In which there is an ambiguity or a patent error or omission, but only to the extent of

such ambiguity, error  or omission; or

(c) That was granted as the result of a mistake common to the parties.”

The rule provides for three scenarios as noted in (a), (b) and (c) above when a court may vary, correct or rescind its own judgement.

The first scenario is whereby such judgment was erroneously sought or erroneously granted in the absence of the party so affected. In Zuze v The Trustees of Bongayi Rushworth Mlambo & Anor SC 69/19, at p6 of the cyclostyled judgment, the court per PATEL JA explained the above rule in the following words:

“For the purposes of r 449(1) (a), an error occurs where there is a relevant fact that was not brought to the attention of the court and the nature of that fact or the given circumstances are such that, had that fact been brought to its attention at the relevant time, the judgment to be rescinded would not have been granted.”

In that case, the court held that the High Court ought to have granted rescission as at the time it heard the matter, it was not alerted of the fact that the respondent therein was not the registered owner of a certain property and therefore the court could not have dealt with the legality or otherwise of the eviction.

In Matambanadzo v Goven 2004 (1) ZLR 399 (S) SANDURA JA had the following to say regarding applications for rescission in terms of rule 449(1)(a):

“It is interesting to note that this Rule is identical to r. 42(1) (a) of the Uniform Rules of Court in South Africa which reads as follows:

‘The court may, in addition to any other powers it may have, mero motu or upon the application of any party affected, rescind or vary:

an order or judgment erroneously sought or erroneously granted in the absence of any party affected thereby …’

Commenting on the purpose of Rule 42(1) in Theron N.O. v United Democratic Front and Ors 1984 (2) SA 532 (C) at 536D-F, VIVIER J said the following:

‘Rule 42(1) entitles any party affected by a judgment or order erroneously sought or granted in his absence, to apply to have it rescinded. It is a procedural step designed to correct an irregularity and to restore the parties to the position they were in before the order was granted. The court's concern at this stage is with the existence of an order or judgment granted in error in the applicant's absence and, in my view, it certainly cannot be said that the question whether such an order should be allowed to stand is of academic interest only.’” (my emphasis)

Clearly therefore the judgment must have been:

erroneously sought or erroneously granted;

in the absence of the affected party (applicant).

The second scenario is where there is an ambiguity or patent error or omission. In such a case the correction allowed is only to the nature and extent of the ambiguity, patent error or omission. The applicant must point out clearly the ambiguity, patent error or omission relied upon.

The term “ambiguity”, according to Webster’s Universal Dictionary & Thesaurus means “double or dubious significance; vagueness.”

This entails that it is unclear and is open to more than one interpretation. In such a situation a correction would be required to remove the ambiguity.

Patent error or omission refers to an error or omission that is plain or apparent.

The third scenario is where a judgment was granted as a result of a mistake common to the parties.

In Wedzera Petroleum (Pvt) Ltd & Others v Metropolitan Bank of Zimbabwe HH25/19 in considering an application under r 449 (1)(c) at p 9 the court stated as follows:

“The question  is whether or not the consent order in respect of which rescission is sought was granted as a result of a mistake which is common to the parties in terms of r 449 (1) (c) of the rules of court. NESTARDIT JA clarified the meaning of the phrase ‘mistake common to the parties’. He did so in Tshivane Road Council v Tshivane, 1992 (4) SA 852 (A). The learned judge stated that the requirements which must be satisfied for r 449 (1) (c) to be successfully invoked are that:

there must have been a mistake which is common to the parties in the sense that they

should be ad idem on a particular matter—and

there must be a causative link between the mistake and the granting of the order.”

In casu, the applicant did not specify in terms of which sub rule the application was being pursued. When this was brought to the attention of Mr. Girach he indicated that the application was in terms of sub rules (b) and (c). It was clear that the application could not be in terms of subrule (a) as both parties had been present and fully argued their cases.

Though adverting to subrule (b) and (c), Mr. Girach could not point to any ambiguity, patent error or omission in the judgment which needed to be corrected. He instead motivated his case on the allegation that at the time of the judgment the court was not made aware of the fact that the applicant had, since the time of the High Court judgment, filed its plea and counter claim, which counter claim the court had said was needed in its judgment.  He argued that had the court been informed that the counter claim had in fact been filed, albeit after the High Court judgment, it would not have granted the judgment it did.

It was common cause that the filing of a counter claim was after the High Court judgment had been delivered in May 2017.

It is trite that the correctness of any judgment is always determined on the basis of the facts as they were in existence as at the date of that judgment and as submitted to the court. In Goto v Goto 2001(2) ZLR 519(S) at 526F, this Court aptly stated that:

“It is a well-established principle that the duty of an appellate court is to determine whether the trial court came to a correct conclusion on the case submitted to it.”

The applicant’s case, in casu, was that the judgment of the court in SC 116/18 was erroneously granted as there are certain facts that the court was not privy to at the time it granted a judgment in favour of the respondent.  The facts that the applicant relied on were facts that occurred after the High Court had already passed its judgment and so were ex post facto. The issue before this Court was whether, in the absence of proceedings to set aside the Deed of Settlement, the court a quo erred in refusing to grant the default judgment sought on the basis of justus error relating to the conclusion of the Deed by the parties. It is common cause that as of 3 May 2017 when the court a quo determined the matter there was no counter application for the setting aside of the deed. What the applicant had done was to simply file an opposing affidavit. It is in this respect that this Court aptly observed that:-

“The respondent’s attack had the hallmark of a counter claim. It thus used its opposing affidavit as a ‘sword’ instead of the ‘shield’ that it was supposed to be………

Given that the validity of the Deed was not properly made an issue before the court a quo, neither had the Deed itself been set aside in any proceedings specifically instituted for that purpose, the respondent was fully bound by the terms it affixed its signature to in relation to the compromise.”

This Court thus concluded that the court a quo had gone on to determine matters that were not properly before it. As the issue before the court pertained to the correctness or otherwise of the court a quo’s decision as at 3 May 2017, the finding by this Court cannot be said to have been erroneous due to events that occurred post the decision of 3 May 2017. Thus the argument that the judgment of the court in SC 116/18 ought to be rescinded on the basis that when the matter was heard, the court was not aware that a counterclaim and a plea had been filed by the applicant to the matter that was before it in 2018 before the appeal was heard is without merit. The filing of this subsequent process did not have the effect of correcting a wrong determination by the court a quo.

As already alluded to above, an appellate court’s determination is premised on the facts placed before the court a quo at the time it made its decision.

In my view, having regard to the above, had the court known that a counterclaim and a plea had been filed in the court a quo, this would not have affected the position the court intended to take in the matter. This can be inferred from a reading of the judgment, particularly at p 11 where the court stated as follows:

“The upshot of it all is that the respondent failed to properly defend the case that it had to meet. The defence it put up constituted matters that should have properly founded a counterclaim for the setting aside of the Deed in question. This approach was procedurally wrong, not least because it denied the appellant the opportunity to adduce evidence in a proper defence to what was effectively a counter claim mounted against it. As already stated, the respondent, after properly opposing the chamber application in question, was at liberty to resort to r 229A (1) of the High Court Rules in seeking the setting aside of the Deed. Such claim would then have been seen in the light of having been formally and duly filed at the instance of the aggrieved party, that is, the respondent. (See Georgias’ case (supra)).” (my emphasis)

From the above, the ratio decidendi of the court was that in the absence of a counter claim seeking the setting aside of the deed, the High Court, in an application for default judgment, could not look into the validity or otherwise of the deed which was the basis upon which a default judgment was being sought. It emphasised that the Deed could only be set aside in proceedings duly instituted only for the setting aside of that deed. It is not disputed that as at 3 May 2017 when the High Court passed its decision there was no counter claim for the setting aside of the deed.

For the sake of completeness, it is pertinent to consider the date on which the plea and counter claim, on which the applicant based its arguments, were filed. The High Court handed down its judgment on 3 May 2017 and the plea and claim in reconvention were filed on 29 January 2018. The respondent then noted an appeal against the High Court judgment on 15 February 2018. This was after a plea and a claim in reconvention had been filed. The appeal was then heard by the court on 5 June 2018.  It is clear from this sequence that at the time the appeal was heard, the applicant was aware that its plea and counter claim had been filed in the High Court proceedings and judgment, whose correctness or otherwise, this Court was being called upon to consider.

The applicant knew of the filing of the plea and claim in reconvention as is apparent from its founding affidavit. In my view, as the applicant knew that certain pleadings had been filed as at the date of the hearing of the appeal, it had a duty to notify the court of these subsequent documents which were filed before the appeal had been noted if it felt that they had any relevance to the issue at hand. It is also important to note that the applicant was present and represented by a legal practitioner at the hearing of the appeal. For it to then say that the judgment in SC 116/18 was erroneously given is an attempt to stretch r 449 too far and beyond the purpose which it is intended to serve.

To grant rescission in casu would lead to a situation where litigants do not give the court sufficient information even when they know of its existence, or are reasonably expected to have known of such facts at the time they appear in court just to wake up and say that the judgment was erroneously given because they had themselves deliberately failed to avail certain information to court. Allowing rescission in such instances would be tantamount to allowing them to have a second bite at the cherry and will lead to revisiting of cases that have already been concluded by the court without proper justification.

In addition, no explanation has been tendered by the applicant to justify why it did not inform the court at the hearing of the appeal that it had filed a plea and claim in reconvention. Counsel for the applicant admitted that there was no reasonable explanation for the failure to inform the court of the pleadings sought to be relied upon. Allowing rescission opens the flood gates to litigants who do not disclose all the information that the court should be aware of at the relevant time. Hence, after all that has been said, it cannot be said that the judgment in SC 116/18 was erroneously granted or was a result of a mistake common to the parties.

Upon a perusal of the filed counter claim it was apparent to me that it did not address the key point of setting aside the deed. The applicant’s prayer in the counter claim was that the respondent pay the applicant $532 800.  Although it alleged that the deed was void as it had errors, the applicant did not pray that the deed be set aside. A reading of the counter claim clearly shows that the applicant was in effect alleging that the respondent also owed it some money, and did not in any way seek to have the deed set aside. In this regard, the counter claim that was filed cannot be taken to be the one that this Court made reference to in its judgment when it said as follows at p 10-11:

“… This approach was procedurally wrong, not least because it denied the appellant the opportunity to adduce evidence in a proper defence to what was effectively a counter claim mounted against it. As already stated, the respondent, after properly opposing the chamber application in question, was at liberty to resort to r 229A (1) of the High Court Rules in seeking the setting aside of the Deed. Such claim would then have been seen in the light of having been formally and duly filed at the instance of the aggrieved party, that is, the respondent.” (my emphasis)

This is because the plea and counter claim which the applicant says the court did not have regard to when it heard the matter and gave its judgment will not affect or render the judgment incorrect in the circumstances.  The counter claim envisaged in that judgment is one seeking the setting aside of the deed and not one wherein the applicant simply alleged that the respondent also owed it.

DISPOSITION

I am of the view that the application has no merit. The facts that the applicant averred were deliberately not placed before the court and were not relevant to the determination of the correctness or otherwise of the High Court’s decision delivered on 3 May 2017. In the result there was no error as a result of a mistake common to the parties warranting rescission of this Court’s judgment in terms of r 449 of the High Court Rules.

The circumstances of the case warrant that costs follow the cause.

It is accordingly ordered as follows:-

“The application is hereby dismissed with costs.”

MAVANGIRA JA:			I agree

BHUNU JA:				I agree

Mushoriwa Pasi Corporate Attorneys, applicant’s legal practitioners.

Sawyer and Mkushi Legal Practitioners, respondent’s legal practitioners.