Munongowarwa v Madimbira & Anor (HC 8800 of 2016; HH 223 of 2017) [2017] ZWHHC 223 (5 April 2017)

1 HH 223-17 HC 8800/16 HERBERT MUNONGOWARWA versus ELIAS MADIMBIRA and SOUTHERTON SECURITY (PVT) LTD HIGH COURT OF ZIMBABWE DUBE J HARARE, 23 February 2017, 1 March 2017 & 9 March 2017, 5 April 2017 Opposed Matter S Banda, for the applicant T J Madotsa, for 1st respondents S Chabuka, for the 2nd respondents DUBE J: This is a common law application for rescission of judgment. This application was initially brought by 181 applicants. All except applicant failed to file supporting affidavits to the application resulting in them withdrawing their applications. The applicant is a former employee of second respondent. The first respondent is a former director and operations manager of second respondent. The Registrar was cited in his official capacity and did not oppose the application. The background to this application is as follows. The applicant and others were engaged in a labour dispute with the second respondent. Judgment was handed down in their favour by the Labour Court. The decision of the Labour Court was registered and the applicant instructed the Sheriff to attach second respondent’s movable property on 20 April 2016. The attached property did not satisfy the judgment debt. Consequently, they instructed the Sheriff to attach stand 11637 Glen View Township of Glen View, registered in the name of second respondent. The property was attached and the sale scheduled for 26 August 2016. On 25 August 2016, the applicant was served with a letter from first respondent’s legal practitioners intimating that the first respondent had been granted an order compelling transfer of the said property to him. The applicant claims that the application by the first respondent and the manner in which the order was obtained speaks of fraud. The applicant takes issue with the fact that he and his fellow employees were not cited although they have a HH 223-17 HC 8800/16 vested interest in the property and have a caveat over the property. The applicant avers that the respondent colluded with second respondent to defeat the sale in execution. The first respondent submitted as follows. The second respondent bought the property for him to occupy in 2013 and he has been staying there ever since. Second respondent started experiencing operational challenges and began laying off workers. He entered into an agreement of sale of the property with second respondent on 25 August 2015 as part of his retirement package. In December 2015, second respondent ceased operations. Former employees approached the Labour court for redress and an order was granted in their favour. He obtained an order compelling the second respondent to transfer the property to him by consent of second respondent. There is no fraud as the order was obtained with the intention to give effect to the agreement. The caveat registered on 31 May 2016 does not stand in the way of a court order as it was placed on the property well after the application to compel transfer was already issued on 9 May 2016. The second respondent submitted that it sold the property to first respondent to offset its indebtedness to first respondent. At the time of sale, the property was not subject to any judicial attachment and the applicant had no interest in the property. The order was properly obtained and the allegations of fraud are not supported on the evidence available. It is trite that a judgment procured by fraud by one of the parties cannot be allowed to stand. Erasmus in Superior Court Practice @ B1-306 states the following of common law fraud. “At common law a judgment can be set aside on the grounds of fraud, Justus error (on rare occasions ) in certain exceptional circumstances when new documents have been discovered, where judgment has been granted by default and in the absence between the parties of a valid agreement to support the judgment on the grounds of justa causa.” See also Gurupira and Anor v The Sheriff of Zimbabwe N. O and Ors HH 80/08, Mudzingwa v Mudzingwa 1994 (4) SA 17 (ZS).” Herbstein Van Winsen, The Practice of High Court South Africa 5th Ed @ 939-40 weighs in on the subject and states the following: “A judgment procured by fraud of one of the parties, whether by forgery, perjury or in any other way such as the fraudulent withholding of documents cannot be allowed to stand … It must however, be shown that the successful litigant was a party to the fraud or perjury on the ground of which it is sought to set aside the judgment. Furthermore, there must be proof that the party seeking rescission was unaware of the fraud until after the judgment was delivered. It is not sufficient for the applicant for rescission to prove merely that a fraud was practised on the court, which resulted in a wrong judgment. The person seeking the relief must be able to show that because of the fraud of the other party, the court was misled into pronouncing a judgment which but for the fraud, it would not have done.” HH 223-17 HC 8800/16 See also Viljoen v Federated Trust Limited 1971 (1) SA 750 (OPD), Swadif (Pty) Ltd V Dyke N. O 1978 (1) SA 928 (A), Swart v Wessels 1924 OPD 187, for the requirements of fraud. A party seeking to rely on the common law ground of fraud to rescind a judgment is required to show that the judgment was obtained in his absence and that a fraud or intentional and material non-disclosure was made by the successful litigant. There must be evidence of fraud and it must be shown that the misrepresentation or non- disclosure was made with the intention of misleading the court and was relied on by the court. Further that, had the court had the true facts placed before it, it would not have granted the order. Rescission of a judgment or order obtained through fraud is a tool used to defeat orders acquired fraudulently. Once an applicant points to fraud, he is without further ado entitled to rescission. Courts will not allow an order obtained by fraud to stand. This approach derives from equity and is based on the Latin principle Commodum Ex Injuria Sua Nemo Habere Debet which translates to mean that a wrongdoer should not be enabled by law to take any advantage from his actions. The Labour Court order was registered on 26 April 2016 and thereafter the Sheriff attached movable property of second respondent. The attached goods failed to satisfy the debt resulting in the applicant instructing the Sheriff to attach the property which is the subject of this dispute. On 9 May 2016 the first respondent filed a chamber application to compel transfer of the property which resulted in the order sought to be rescinded. On 2 June 2016, the immovable property was attached. The sale of the immovable property was set for 26 August 2016. The order by consent was granted on 24 August 2014. The applicant challenges the manner in which the application to compel transfer and the judgment was obtained. He argued that there was some fraud by the respondents. When the first respondent realised that the applicant and others were likely to get his property attached, he filed the chamber application. The manner in which the application was generated causes concern to me. The first respondent hastily brought an application to compel transfer of the property when he realised that the other employees might go for the property. The application made by the first respondent cites only the second respondent as a party. The legal practitioner who commissioned the first respondent’s founding affidavit in the chamber application, a Mr Godfrey Mapaya, was the second respondent’s legal practitioner at the time. That is most improper. The respondents were unable to explain why the legal practitioner commissioned the affidavit. He certainly had an interest in that matter. I am stunned that Mr HH 223-17 HC 8800/16 Mapaya would go ahead and commission a founding affidavit where proceedings were being brought against his own client by a former employee. Subsequent to this, Mapaya and Associates filed affidavits in which directors of second respondent acknowledged that first respondent bought the property, resulting in an order being granted by consent on the unopposed roll. Mr Mapaya subsequently renounced agency on 25 September 2016 well after the application to compel transfer had been granted. The conduct of Mr Mapaya of commissioning a founding affidavit where his client was being sued by its former employee, subsequent failure of the second respondent to oppose the matter and the consent to the order sought smacks of collusion between the first and second respondent. No effort was made to get Mr Mapaya to explain his conduct in this application. This sort of conduct discloses a serious conflict of interest. The second respondent tried to give an explanation of the part Mr Mapaya played from the bar. It is unprocedural and unethical for a legal practitioner who represents a respondent, to commission a founding affidavit for an opponent in a matter where proceedings are being brought against his own client. The circumstances surrounding the commissioning of the founding affidavit suggest that first respondent who was the successful party in the application to compel transfer acted in cahoots with the second respondent to ensure that he obtained transfer of the house into his name and was a party to some fraud. The applicant wasn’t shown to have been aware of the fraud as he did not become aware of the application until it was granted. The conduct of the respondents suggests that the sale was a sham. The court was a result misled into believing that the founding affidavit and the consent to judgment were above board. There is no evidence to suggest that the first respondent served the application on himself as alleged. It was infact served on a Mr Choto at second respondent’s premises. The first respondent set the basis of the application as the fact that he bought the property. He says in his founding affidavit that an agreement of sale was entered into between him and the second respondent. He speaks to the order the applicant and others obtained against the second respondent. He makes reference to the fact that the other employees were looking for second respondent’s property to attach to satisfy their order. In his founding affidavit, first respondent avers that the other employees had been granted an order in their favour and that they are currently looking for the employer’s property to attach. He feared that the property may be attached by the Sheriff to satisfy the award granted to the employees. He then does not advise the other employees of his intentions and files the application to compel transfer without citing them. He does not serve them with a copy of the application. Although first HH 223-17 HC 8800/16 respondent filed his application well before the immovable property was attached, he knew that the other former employees would make an attempt on the disputed property which was still in the name of the second respondent. Although the respondent disclosed all these facts to the court, it was never his intention that the application come to the knowledge of the other employees. Even after attachment of the property, he did not advise them of the application. He knew that even if he disclosed all these details to the court, the other employees would never get to know of the application and oppose it because they were not cited and he already had the cooperation of second respondent. The trick was to ensure that the second respondent would not oppose the application by getting its cooperation. A transfer of property made with the intention to defeat or delay creditors of the transferor is a fraudulent transfer. This is specially so if the transfer is sought in the face of an attachment of the property. Such a transfer is voidable. By filing the chamber application to compel transfer of the property and seeking an order, without advising interested parties of the development, the respondent intended to defeat the claims of the other employees and hence acted fraudulently. It is apparent from the founding affidavit that the application was filed to defeat the applicant and others who were looking for the second respondent’s property to attach. The idea was to get the property into his name and beat them to it thereby defeating their efforts. When the order was granted on 24 August 2016 on the unopposed roll, the property had already been attached in lieu of the order obtained by the other employees. The first respondent was aware of the attachment and deliberately did not bring this fact to the attention of the court, thereby defeating the sale in execution. When the Sheriff attaches property in execution of a debt, that property seizes to be under the control of the owner and vests under the Sheriff’s control. Any person who lays a claim to the property attached is required to file an interpleader claim. The claimant may not transfer the property into his name or obtain an order compelling the seller to transfer the property without the consent of or advising the Sheriff. Despite the attachment, the first respondent proceeded and obtained the order without advising or seeking the consent of the Sheriff or the applicant who had an interest in the property. The first respondent ought to have disclosed to the court that the property had now since been attached. This course reveals that first respondent was bent on snatching at a judgment and in fact did so. The first respondent did not reveal that a caveat had been placed over the property. Had all these factors been brought to the attention of the court that granted the application to compel transfer, it is unlikely that the court would have proceeded and granted the application unopposed. The first respondent pulled the carpet from HH 223-17 HC 8800/16 under the applicant’s feet. The evidence discloses that there were material non-disclosures and fraud on the part of the successful party. The applicant has an arguable case in the main matter. He is entitled to the order sought. Accordingly it is ordered as follows; 1. The default judgment granted under HC 4725/16 be and is hereby rescinded. 2. The 1st and 2nd respondents are to bear the costs of this application. J Mambara & Partners, applicant’s legal practitioners Madotsa & Partners, 1st respondent’s legal practitioners Magaya, Mandizvidza and Partners, 2nd respondent’s legal practitioners