Tetrad Holdings Ltd v SIZY Security (Pvt) Ltd & Ors (HC 2091 of 2015) [2015] ZWHHC 258 (16 March 2015)

1 HH 258-15 HC 2091/15 TETRAD HOLDINGS LIMITED and SIZY SECURITY (PRIVATE) LIMITED and ANNE BUTLER PROPERTY COMPANY (PRIVATE) LIMITED and VG SEVEN INVESTMENTS (PRIVATE) LIMITED and VG EIGHT INVESTMENTS (PRIVATE) LIMITED and VG NINE INVESTMENTS (PRIVATE) LIMITED and VG TEN INVESTMENTS (PRIVATE) LIMITED and VG ELEVEN INVESTMENTS (PRIVATE) LIMITED and VG TWELVE INVESTMENTS (PRIVATE) LIMITED and VG FOURTEEN INVESTMENTS (PRIVATE) LIMITED and VG FIFTEEN INVESTMENTS (PRIVATE) LIMITED versus NATIONAL SOCIAL SECURITY AUTHORITY and THE SHERIFF FOR ZIMBABWE N. O. HIGH COURT OF ZIMBABWE MAFUSIRE J HARARE, 12 & 17 March 2015 Urgent chamber application T. Mpofu with S. M. Hashiti and P. R. Zvinavashe, for the applicants S. J. Chihambakwe with A. Demo, for the first respondent No appearance for second respondent MAFUSIRE J: This was an urgent chamber application for a stay of execution. It was filed on 6 March 2015. It was brought to my chambers at 17:15 hours three days later, i.e. on 9 March 2015. There were eleven applicants. Their case was that on 6 March 2015, i.e. the date the application was filed, the Sheriff, the second respondent herein, was scheduled to sell HH 258-15 HC 2091/15 a number of properties belonging to applicants two to eleven. The basis for seeking a stay was that the first respondent, hereafter referred to as “NSSA”, had a judgment against the first applicant, hereafter referred to as “Tetrad Holdings” or simply “Holdings”. It was said that that judgment had been obtained in error. NSSA’s debt was said to be with Tetrad Investment Bank Limited, hereafter referred to as “Tetrad Bank” or simply “the Bank”, and not with Tetrad Holdings. Apparently the Bank was a subsidiary of Holdings. However, in the founding papers it was stressed that the Bank and Holdings were two distinct and separate entities. As such, it was said that an application for the rescission of NSSA’s judgment against Holdings had already been filed with this court. Thus, it was argued, if the Sheriff’s sale went ahead there would be prejudice, not only to the shareholders of the applicants but also to the creditors. After reading the papers I agonised over whether or not to set down the matter for hearing. The application was extremely economic with information. For example, other than describing all the applicants as companies incorporated according to the laws of Zimbabwe, and mentioning that NSSA had a judgment against Tetrad Holdings, which judgment was what the Sheriff was executing, the founding papers said nothing about the nature of the relationship between NSSA, as the judgment creditor, and the rest of the applicants. But the main matter in which the writ of execution had been issued being a debt collection claim I guessed that respondents two to eleven must have been guarantors or sureties of some sort. As it turned out, indeed they were. But that was not all. The certificate of urgency, signed on 6 March 2015, said the matter was urgent because the sale was scheduled to take place that day; that Holdings was not, and had never been, NSSA’s debtor, but that it was the Bank that was; that for that reason the application for rescission of judgment had excellent prospects of success and that if the matter was not heard on an urgent basis there was a risk of irreparable prejudice to the applicants’ shareholders and creditors. Only one date was mentioned, namely 6 March 2015, the date of the sale. Nothing was said about when NSSA had obtained the judgment. It was not mentioned when the applicants had become aware of that judgment. No information was given as to what action, if any, the applicants had taken upon getting to know about that judgment. Neither the date of NSSA’s writ nor that of the Sheriff’s attachment was given. The property that the Sheriff had attached and was selling was not disclosed. Finally, it was not said when the application for rescission of judgment had been filed. HH 258-15 HC 2091/15 I turned to the founding affidavit and the rest of the papers. They were essentially an extension of the certificate of urgency. Only two other dates were mentioned, namely 8 August 2014 and 16 February 2015. It was said 8 August 2014 was when Tetrad Bank had held a Scheme Meeting with its creditors which NSSA had attended, which, allegedly signified NSSA’s acceptance that its debt was with the Bank, not Holdings. It was said 16 February 2015 was when the Sheriff had served the notice of sale on Tetrad Bank. That was about all that the founding affidavit ever disclosed by way of additional information. The rest were basically legal arguments on why the sale had to be stopped. The draft order sought a permanent stay of execution by way of a final order. The interim relief sought a stay pending the determination of the application for rescission of judgment. The case number for that rescission application was just left blank! In the alternative, it was sought that if the sale had gone ahead already, then the Sheriff was to be ordered not to confirm it. He was also to be ordered to release into the applicant’s custody the property that he had attached. The urgent chamber application was classically a dog’s breakfast. But in spite of my serious misgivings at that stage I set it down for hearing on 12 March 2015. I decided to let the applicants have their day in court. In the morning of the day of the hearing NSSA filed a notice of opposition. It tore into the applicant’s case. On urgency it was said NSSA’s judgment had been given on 28 March 2014. That was almost a year ago. NSSA’s writ had been served on 15 August 2014 but the applicants had turned the Sheriff away on the basis that execution had been suspended pending an order for leave to convene a Scheme Meeting in terms of the Companies Act (Cap 24:03). On 20 August 2014 and 10 October 2014 NSSA had sent the Sheriff back to the applicants with the writ. Movable properties for applicants two to eleven had then been attached. Thus, NSSA argued, the applicants had been aware of the attachment as far back as August 2014 but had chosen to do nothing until the day of the sale, almost seven months later. On 16 February 2015 the applicants had been served with the notice of sale. Again they had chosen to do nothing. Only on 27 February 2014 did they file an ordinary court application for the condonation of the late filing of the application for rescission of judgment. However, they had withdrawn that application on 5 March 2015. They had then proceeded to file the urgent chamber application on the next day, 6 March 2015. NSSA said the Sheriff’s sale had gone ahead as scheduled. HH 258-15 HC 2091/15 Turning to the urgent chamber application itself, NSSA said the certificate of urgency was defective in more or less the reasons that I have outlined above. On the merits, NSSA maintained Holdings was its proper debtor even though it might have entered into some arrangement with its subsidiary, the Bank, to issue the requisite deal notes and basically manage the debt. It was said applicants two to eleven had all signed surety bonds, inter alia, guaranteeing Holdings, not the Bank, as NSSA’s principal debtor. It was said that the fact that NSSA had attended the Scheme Meeting, on invitation for that matter, did not mean that it was absolving Holdings from the debt. On the main action, it was said that the applicants had deliberately refrained from filing their plea because they knew they had no defence. As I invited the parties into my chambers it was manifestly obvious that the applicants could not reasonably persist with their urgent chamber application in the state that it was in. Indeed Mr Mpofu, for the applicants, duly assisted by Mr Hashiti, both instructed by Ms Zvinavashe, advised that it was no longer necessary to argue the aspect of urgency and waste the court’s time. He said that what the applicants would now request was that the matter be removed from the roll for urgent matters and referred to the ordinary roll. The parties could be granted the liberty to file supplementary affidavits. The costs could be made in the cause. He submitted that the applicants were not prepared to withdraw their urgent chamber application, and that they could not be forced to do so. He said whether I could strike off the matter from the roll for urgent cases or simply refer it to the ordinary roll would amount to the same thing because, ultimately, the matter would one day be heard on the ordinary roll. Unfortunately for the applicants, their stance was not an agreed position with NSSA, something which Mr Mpofu, from the remarks which prefaced his submissions, had obviously anticipated. Mr Chihambakwe, for NSSA, insisted that the matter should simply be dismissed with costs on the higher scale of attorney and client because the application had undoubtedly been an abuse of the court process. Seeing my inclination towards dismissing the application with costs, Mr Mpofu, argued forcefully that where a judge decides that a matter brought to him under a certificate of urgency, is in fact not urgent, the proper course is to refer it to the ordinary roll or strike it off the roll for urgent matters. The judge should then leave the question of costs for determination together with the merits of the case. He said if I were to order costs at that stage, the applicants would have to seek my leave to appeal to the Supreme Court, thereby entailing the matter being heard again. He submitted that if I were to dismiss the application it would mean that I would have decided the merits of the case yet these had not been argued HH 258-15 HC 2091/15 before me. He said there were a number of Supreme Court decisions to the effect that if a judge finds the matter not to be urgent the proper course is to strike it off and not to dismiss it. At that stage Mr Mpofu did not have the citation of those cases but only remembered some of the parties involved. He offered to make the judgments available to me later on. After hearing argument from both sides I was of the view that the applicants’ case for urgency had lacked merit right from the onset; that by refusing to withdraw it and insisting that it be referred to the ordinary roll where they would try and patch it up by filing supplementary affidavits, and that by also insisting that the question of costs be left over for determination together with the merits, the applicants were trying to have their cake and eating it. I felt I had the discretion to refer or not to refer to the ordinary roll an application that is brought under a certificate urgency when it is not urgent. However, in this case it was my strong view that the applicants had not supplied me with any useful information that would have enabled me to decide whether or not their case merited to be dealt with on an urgent basis. They had dragged the respondents to court. When they had submitted their application in the first place they had obviously taken the view that it had been complete. However, it was obvious that they now realised how seriously defective it had been. So instead of doing the logical thing, namely to withdraw it and tender wasted costs, they were now cleverly trying to salvage the situation by seeking a referral of the matter to the ordinary roll so that they could supplement their pleadings. In the process they hoped to avoid paying the wasted costs. I considered that such conduct was inappropriate and that the applicants had to be mulcted in costs. In the end I dismissed the application with costs on an attorney and client scale. I stressed in my ex tempore pronouncement that it was because of the serious lack of merit on the aspect of urgency that I was dismissing it. Subsequent to my order, Mr Mpofu supplied a number of authorities on the point that where a judge decides that an urgent chamber application is in fact not urgent, the proper course is to strike it off the roll. The first was a judgment of this court by UCHENA J in African Consolidated Resources Plc & Ors v Minister of Mines and Mining Development & Ors1. At p 215D - E of his judgment the learned judge said: “Mr Mutamangira urged this court to dismiss the application if the court found in favour of any of the respondents’ preliminary issue. As I cannot deal with other issues in view of my finding that the application is not urgent, the order sought by the 1 2010 (1) ZLR 208 (H) HH 258-15 HC 2091/15 respondents is not appropriate. A finding that a case is not urgent does not mean that the applicant’s case has no merits. It means the case does not qualify for hearing on an urgent basis in terms of r 244 of the High Court Rules. It should simply take its place among cases awaiting to be set-down for hearing in terms of the rules applicable to [non]-urgent applications. See the comments of CAMERON JA in Commissioner, South African Revenue Service v Hawker Air Services (Pty) Ltd; Commissioner, South African Revenue Services v Hawker Aviation Partnership & Ors 2006 (4) SA 292 (SCA) at 299F – 300A. A case judged to be not urgent should simply be struck off the roll for it to be proceeded with like any other case.” The second case was that of Phineas Mariyapera v Eddies Pfugari (Private) Limited & Anor2. On pp 1 and 2 of the cyclostyled judgment ZIYAMBI JA said: “Mr Uriri, for the appellant in his submissions before us raised two points. Firstly, that having found the matter was not urgent, the court a quo should simply have removed the matter from the roll and not dismissed it. Secondly, that the order of punitive costs was an improper exercise of the court’s discretion and that an award of costs on the ordinary scale would have been the appropriate order. Dealing with the first issue, Mr Uriri conceded that although the court dismissed the application, such dismissal was not on the merits and therefore would not give rise to a plea of res judicata in any future proceedings. This was, in our view, a proper concession. However, the point needs to be made that in a case such as this one the correct order to be made would be that the matter be removed from the roll, rather than dismissed. The order of the court a quo will be amended accordingly. On the second issue, namely, the award of costs on the higher scale, we find that the court a quo did make certain findings of fact which could not properly be made without an enquiry into the merits of the matter. However, there were other findings of fact which were either common cause or apparent on the papers and undisputed which were properly taken into account by the Court in the determination of the issue. ……………………………….. We accordingly find that there is no basis on which it can be said that there was an improper exercise of the court’s discretion in awarding costs on the higher scale such as would warrant interference by this Court.” The third case was Air Zimbabwe (Private) Limited & Anor V Stephen Nhuta & Ors3. At p 5 of the cyclostyled judgment, ZIYAMBI JA said: 2 SC 3/14 3 SC 65/14 HH 258-15 HC 2091/15 “The first ground of appeal makes no sense because the court a quo did not decline to hear the matter. Indeed, having found that the matter was not urgent it nevertheless proceeded to hear and determine it on an urgent basis. In so doing the court a quo contradicted itself. What it should have done once a finding of lack of urgency was made, was to strike or remove the mater from the roll of urgent matters and not proceed to hear the merits for, once a hearing has taken place and a decision made on the merits, the question of urgency becomes irrelevant.” The fourth and last case was that of Edward Tawanda Madza v The Reformed Church in Zimbabwe Daisyfield Trust & Ors4. Again the same learned judge of appeal said5: “The learned Judge was of the view that the urgency was created by the appellants ……………………. We do not find any impropriety in the learned Judge’s exercise of his discretion in this regard. However, having concluded the matter was not urgent, the proper course would have been to remove the matter from the roll of urgent matters to allow the appellants, if so minded, to place the matter before the High Court on the ordinary roll for determination. The order of dismissal was improper in the circumstances. Accordingly it is ordered as follows: 1. 2. …………………………………………………………….. The judgment of the court a quo is altered to read as follows: ‘The matter is not urgent. It is removed from the roll. The applicants shall pay the costs of this application.’ 3. ……………………………………………………………..” It seems to me that what the above authorities were concerned with was the dismissal of the entire urgent chamber application as if it would have been determined on the merits. That was neither the order that I gave in this case nor the import of it. In my view, an urgent chamber application is one in which there is, unavoidably, the initial or opening application for the matter to be heard on an urgent basis. Only after this has succeeded can the merits of the dispute be considered. In my view, the application for the matter to be treated as urgent is an inevitable adjunct of the actual application on the merits. Urgency has its own set of 4 SC 71/14 5 At p 7 – 8 & 10 HH 258-15 HC 2091/15 considerations. So what I dismissed in this case was that antecedent application for the matter to be heard on urgent basis. Even though both parties and myself did from time to time touch on the merits during the hearing, nonetheless I restricted my order of dismissal to the aspect of urgency. The applicants had not been prepared to withdraw it. I could not force them to do so. But I did not feel bound to accede to their request to have the matter referred to the ordinary roll. What they had presented to me in the first place had been a complete application by itself. They had made their bed of roses. They could only lie on it. My order of costs on the higher scale was informed by the spuriousness of the application for the matter to be heard on an urgent basis, and the applicants’ attitude that notwithstanding their realisation and manifest acceptance of the paucity of their papers they nonetheless, sought to avoid paying the costs that they had caused the respondents to incur. I found it unacceptable. 17 March 2015 G N Mlotshwa & Co, applicants’ legal practitioners Chihambakwe Mutizwa & Partners, first respondent’s legal practitioners