Nature of Trust https://old.zimlii.org/taxonomy/term/11323/all en Dengu & Anor v EAstern & Southern African Trade & Development Bank t/a PTA Bank & 2 Ors (HH 684-20, HC 7592/16) [2020] ZWHHC 684 (04 November 2020); https://old.zimlii.org/zw/judgment/harare-high-court/2020/684 <div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p> </p> <p> </p> <p>CALEB DENGU</p> <p>and</p> <p>CALEB DENGU FAMILY TRUST</p> <p>versus</p> <p>EASTERN &amp; SOUTHERN AFRICAN TRADE &amp; DEVELOPMENT BANK t/a PTA BANK </p> <p>and</p> <p>RESERVE BANK OF ZIMBABWE</p> <p>and</p> <p>REGISTRAR OF DEEDS N.O</p> <p> </p> <p> </p> <p> </p> <p>HIGH COURT OF ZIMBABWE</p> <p>MUSHORE J</p> <p>HARARE, 15 March 2019 &amp; 4 November 2020</p> <p> </p> <p> </p> <p><em>B Mtetwa</em>, for the plaintiffs</p> <p><em>Chiuta</em>, for the 1stdefendant</p> <p> </p> <p><strong>Civil Trial: cession of a loan debt</strong></p> <p>            MUSHORE J: The first plaintiff is a Mr Caleb Dengu, who also is a Trustee of the CALEB DENGU FAMILY TRUST. The Trust is cited as the second plaintiff in this matter. The second plaintiff is being represented by the first plaintiff. The 1stdefendant (Eastern and Southern Africa Trade and Development Bank (also known as “PTA Bank”) 1stDefendant is an international financial institution dealing with and offering financial support to financial institutions in member states; or constituent countries, of which Zimbabwe is such a constituent country. The second defendant is the Central Bank of Zimbabwe. The third defendant is the Registrar of Deeds. </p> <p>On the 12thJune 2001, the first defendant loaned a company known as Onclass Investment Company (Private) Limited the sum of UAPTA585 000.00. Onclass Investment Company Limited had two Directors, other than the first plaintiff. One main conditionfor securing the loan was that the debtors had to put up security for the loans advanced, as is common business practice. The plaintiff and the other Directors agreed to the first defendant’s requirement and accordingly they put up various securities on order to be granted the loanfacility.On the part of the plaintiff’s the 1stplaintiff signed a limited personal guarantee; and registered a mortgage bond in the sum of ZW50 million dollars on the 2ndplaintiff’s immoveable property described as Stand 731 Glen Lorne Township 15 of lot 41 of Glen Lorne in favour of the 1stdefendant to that limit. The Glen Lorne property is the property of the 2ndplaintiff. The Glen Lorne property remains encumbered by the mortgage bond.</p> <p>The plaintiffs are suing the defendants for the cancellation of the limited mortgage bond registered on the Glen Lorne property; and or alternatively a declaration of rights stating that the property is unencumbered. </p> <p>The plaintiffs claim for cancellation of the mortgage bond is founded upon the plaintiffs’ perception that theyhave already made a tender to the first defendant to extinguish the debt arising from the loan which they were granted by the 1stdefendant in terms of the loan agreement; and that such a tender should be taken to mean that they do not owe the first defendant any more money. According to the plaintiffs, the plaintiffs’ made such a tenderto the 1stdefendant, pursuantto obtaining an order from this courtin their favour, in an unopposed application in another matter case number HC1791/2006. The reason why the plaintiffs and the other members of Thirdline/Onclass instituted that application ( HC1791/2006); arose from their conviction that the loan could be paid back in Zimbabwe Dollars and thus they sought an order from the court to deem the loan to be payable in Zimbabwe Dollars. In that matter the other two applicants who were Banterbury Estate (Pvt) Ltd; and Artwell Seremani were the two other debtors to the loan from the PTA Bank; and the first respondent was Eastern and Southern African Trade Development Bank (PTA BANK”). The relief being sought by the applicants in that matter was that of a <em>mandamus </em>for the 1stdefendant (in the present matter) to accept payment of the loan in Zimbabwe dollars. The court sitting on the 10thMay 2006, gave the following order on the unopposed roll:</p> <p>“IT IS ORDERED THAT:</p> <ol> <li>Against payment in the currency of Zimbabwe Dollars of such sums as are currently due to the first respondent: <ol> <li>By the first applicant under mortgage bond ……</li> <li>By the second applicant under mortgage number 11422/2001 hypothecating the immovable property called stand 731 Glen Lorne Township 15 of Lot 41 of Glen Lorne in the district of Salisbury held under Deed of Transfer 11317/2001.</li> <li>By the third applicant under mortgage bond… respectively, first respondent shall take all steps as are necessary to effect cancellation of the said mortgages and to return to the applicants their title deeds.</li> </ol> </li> </ol> <ol> <li>The respondents bear the costs of this application”</li> </ol> <p>The effect of the order was to allow the plaintiffs and the other two applicants to make a tender of payment of the loan <strong>in the Zimbabwe Dollars equivalent of UAPTA 585 000-00</strong>. </p> <p>In their declaration, the plaintiffs pleaded that the parties had jointly entertained the notion that by registering the mortgage bond that the mortgaged sum of ZW50 million represented the full extent of the 2ndplaintiff’s liability to the 1stdefendant.</p> <p>In its plea, the 1stdefendant denied that it was ever intended by the parties, that the amount secured by the mortgage bond (50 million dollars) on the Glen Lorne property. represented the plaintiff’s total l extent of the plaintiffs’ indebtedness to the 1stdefendant. Meanwhile, the plaintiffs contend that the consequences of the 1stdefendant denying that the tender of 50 million Zimbabwe dollars represent what they deem to be the full extent of their loan obligation towards the second defendant; and that the second defendant’s refusal to accept a tender of 50 Million Zimbabwe dollars, constitutes an act of waiver by them of a claim for repayment of the debt in foreign currency.</p> <p>Be that as it may it remains clear that after the order was granted in HC 1971/2006, the matter was not resolved. This is because the first defendant’s case remains that it is owed payment in the amount and currencyof the amount loaned to ONCLASS; that being an amount stated in foreign currency.</p> <p>DEFENDANTS’ CASE</p> <p>The defendants’ case rests upon the interpretation of the terms of the loan agreement. It is the defendants’ case that when the plaintiff’s mortgage bond was registered against second plaintiff’s Glen Lorne property; and thereafter when title deed for that property was handed to the second respondent as part security for the loan; it was done on the understanding that in the event of non-repayment of the loan the security/i.e., the securities mortgaged in favour of the PTA Bank by members of ONLINE would become immediately executable in terms of section 8.1 of the agreement. To that extent, the respondents are contesting the plaintiffs’ claimthat the loan was repayable in ZW Dollars. The defendants insist that when the loan was called in, the second plaintiff’s Mortgage Bond became executable in UAPTA Dollars because it secured a loan which had been advanced in UAPTA dollars.</p> <p>Thus the present matter turns upon resolving the currency to be applied for repayment of the loan and whether it can be concluded that the mortgage bond registered in ZW Dollars was done to alter the meaning of “Dollars” and thus changed the currency for repayment to ZW Dollars,  as opposed to UAPTA or US Dollars.</p> <p>Pleadings were filed in the ordinary course of a defended matter leading to the holding of a Pre-Trial Conference; from which the parties agreed that the issues to be determined by this court be as follows:</p> <ol> <li><strong>ISSUES</strong></li> </ol> <ol> <li>Whether the tender of payment made by the Plaintiffs to the 1stdefendant constituted a valid legal action which discharged their obligations to the 1stDefendant?</li> </ol> <p>1.1       What was the effect of the tender of payment by the Plaintiffs to the 1stDefendant?</p> <ol> <li>Whether there was a valid cession of Onclass’ indebtedness to the 2nddefendant [RESERVE BANK]?  <ol> <li>If thecessionwas not advised to the Plaintiffs, whether they had any obligations to deal with the 2ndDefendant?</li> </ol> </li> </ol> <p> </p> <ol> <li>Whether the 1stand 2nddefendants lodged their claims with the liquidator of Onclass Investments?</li> </ol> <p> </p> <ol> <li>If not whether the 1stand 2nddefendants can thereafter pursue the plaintiffs.</li> </ol> <p> </p> <p>4.         Whether the plaintiff’s obligations were limited to the amount of the bond and in the currency of the mortgage bond</p> <p>            </p> <p>4.1       Whether the mortgage bond is security for any amount denominated in United       States Dollars?</p> <p>5          Whether the Plaintiffs have any obligation to pay the full amount owed by OnclassInvestments in an amount denominated in United States dollar?</p> <p>5.1       Whether the Plaintiffs are indebted to the defendants in any amount and how such alleged indebtedness arose? </p> <p> </p> <p>My determination of those issues against the pleadings and the documents and witness testimony is as follows.</p> <p>DID THE TENDER OF PAYMENT MADE BY THE PLAINTIFFS DISCHARGE THEIR OBLIGATION TO THE 1STDEFENDANT IN FULL?</p> <p><strong>Currency of the loan advanced.</strong></p> <p>The agreement describes the currency loaned and the currency for repayment. Paragraph 1.2 of the loan agreement defines the PTA loan as follows-</p> <p>SECTION 1- INTERPRETATION.</p> <ol> <li>In this agreement, except where the context otherwise requires:</li> </ol> <p>“<strong>The PTA Bank loan</strong>” means the amount in UAPTA Five Hundred Eighty-Five Thousand (UAPTA 585.000) equivalent in various foreign currencies and which shall include any part thereof for the time being outstanding of all moneys advanced by PTA Bank hereunder.</p> <p>“<strong>UAPTA</strong>” means the Unit of Account of the Preferential Trade Area equal to one Special Drawing Right (SDR) of the International monetary fund”</p> <p>“<strong>US$”</strong>or “<strong>Dollars</strong>” denotes Dollars in the currency of the United States of America;</p> <p>“<strong>Currency</strong>” includes the UAPTA</p> <p>                Currency for repayment.</p> <p>The answer to that question can be ascertained from:</p> <ol> <li>The pleadings in matter number HC 1971/2006 wherein the parties stated certain facts under oath; and</li> <li>the loan agreement itself</li> </ol> <p>In HC 1971/2006 the full record of which formed part of the plaintiffs’ bundle of documents, the plaintiffs admitted under oath, that they took out the loan from the first defendant in foreign currency and that they accept that the loan was to be paid back in foreign currency. The plaintiffs also admitted that the amount owed to the first defendant was approximately US$400,000-00’. This is what the plaintiffs stated in matter number HC 1971/2006; when they fully associated with the submission made on oath by the 1stapplicant (Banterbury Estates) regarding the liability to PTA bank: </p> <p>6.         On 12thJune 2001, First Defendant (PTA Bank) and ONCLASS INVESTMENTS (PVT) LTD (“ONCLASS) a company with which the applicants had an association entered into a written agreement of loan in terms of which1strespondent undertook to advance to ONCLASS the equivalent of the sum of UAPTA 585,000-00 <strong><em>in foreign currencies (‘the loan’</em></strong>)</p> <p>The loan document is lengthy and purposes of economy, is not attached hereto.</p> <p>Suffice it to say that for the purposes of argument, 1stapplicant admits that an amount of approximately US$400,000-00 was duly lent and advanced to ONCLASS.</p> <p>ONCLASS was not able to effect repayment timeously of the loan and 1strespondent (PTA Bank) has brought proceedings before this Honourable Court for recovery thereof”</p> <p>Yet in the present matter, and in stark contrast to their earlier sworn testimony, the very same plaintiffs want the court to believe that the loan was repayable in Zimbabwe dollars. The latter stance adopted by the plaintiffs cannot be reconciled with the repayment currency clearly mentioned in the loan agreement itself. For when reading the loan agreement itself, its terms are unequivocal in that the plaintiff and the other two borrowers applied for and were advanced UAPTA dollars payable in foreign currencies together with 16% interest.</p> <p><strong>SECTION 1-INTERPRETATION </strong></p> <p><strong>“The PTA Bank Loan</strong>” means the amount of UAPTA 585,000-00N equivalent in various foreign currencies, and which shall include any part thereof for the time being outstanding of all moneys advanced by PTA Bank hereunder;</p> <p>“<strong>UAPTA</strong>” means the Unit of Account of the Preferential Trade Area equal to one Special Drawing Right (SDR) of the International Monetary Fund”</p> <p>The 1stplaintiff acknowledged that the plaintiffs participated in the foreign currency designated loan and drawdown facilities made available to them by the 1stdefendant. The loan agreement was the main document produced by the plaintiffs upon which they proposed they had <em>causa</em>in the present matter.  The loan agreement shows that the plaintiffs bound themselves to pay any amounts loaned to them in foreign currency. For example, clause 4.1(2) of the agreement specifies that:</p> <p>“SECTION 13-PAYMENTS FALLING DUE TO PTA BANK</p> <p>13.1     Every sum falling due to PTA Bank shall be denominated in the currency of disbursement and shall be paid in that currency into an account in the name of PTA Bank in such Bank as may from time to time be advised in writing. Save for the extent (if, any) that PTA Bank may at any time and from time to time otherwise notify the Borrower in writing, no obligation of the Borrower to pay any such sum to PTA bank in the aforesaid currency and place shall be deemed to have been discharged or satisfied by any tender made in any other currency or any other place.</p> <p>It is my view that the plaintiffs cannot be allowed to retreat from an admission which they made under oath in matter HC1971/2006 an extract of which is recorded above. The binding admissionwas part of the impetus behind the decision in that matter and it is apparent from the contents of that affidavit that the plaintiffs have already acknowledged that the loan is repayable in US Dollars to its full extent of the equivalent foreign exchange value of UEPTA 585,000-00 as at the date when the 1stdefendant decided to recall the loan. Section 8 of the loan agreement reads as follows:-</p> <p><strong> SECTION 8- IMMEDIATE REPAYMENT</strong></p> <p>“8.1      Notwithstanding the foregoing provisions of this Agreement, in any of the following events, PTA Bank shall by notice to the Borrower, suspend the right of the Borrower to make withdrawals on account of the PTA Bank Loan or declare the principal amount of the PTA Bank loan then outstanding together with all unpaid interestwhich has accrued and which is due and payable immediately in which latter case the security or securities  issued hereunder shall be come enforceable <strong>and all sums due</strong>by the Borrower to PTA Bank under this agreement shall become payable forthwith notwithstanding anything to the contrary or in the security documents contained”</p> <p>“<strong>All sums due</strong>” [<em>bolded over for emphasis</em>] mean the sum due plus interest; separate from the amount tendered and held as security of the loan agreement) </p> <p>DID THE PLAINTIFFS’ TENDER OF THE VALUE OF THEIR MORTGAGE BOND CONSTITUTE FULL AND FINAL PAYMENT OF THE LOAN? </p> <p>The agreement itself {see above excerpts} answers this question and clarifiesthe commitment made by the plaintiffs to pay back that the loan and interest in full AND to enforce the securities given. The mortgagebonds merely motivated the first defendant’s decision to extend the loan to the plaintiffs. To that end, liquidating the mortgage bond did not in itself fully discharge the plaintiff’s obligation toward the first defendant. The wording in the loan agreement specifically allows the first defendant to demand payment in full and reduce the sum owed by liquidating the security bond in its favour. It was never intended by the parties when they signed the loan agreement that the mortgage bond could be taken in isolation as being the sole means of repayment of the loan. The parties did not agree that the enforcement of the securities (in this case the mortgage on the Glen Lorne property) was to be taken as being a full and final payment of the loan agreement itself. The position is thus that the tender of the value of the mortgage bond does not constitute full and final payment of the loaned sums due to the first defendant.</p> <p>WHAT WAS THE EFFECT OF THE PLAINTIFFS TENDER TO THE FIRST DEFENDANT?</p> <p>Mr Caleb Dengu was the plaintiffs’ sole witness. He was an unsure witness and his evidence was riddled with inconsistencies. He made a very poor impression to the court as a reliable witness; sometimes giving rambling incoherent answers. </p> <p>Mr Dengu himself admitted that he had no personal knowledge whether ornot the tender of payment which he spoke off as having been made to the second defendant had ever been made. In his own testimony, he thus failed to establish a basis for suing the defendants at all. This was his evidence when he clearly acknowledged that he was unsure if in fact the tender had been made to the Reserve Bank by his lawyers.</p> <p>Record, pages 17 to 18</p> <p>“Q.       I am just going by what you say in your letter to the Reserve Bank?</p> <p>A.        We paid 50 million dollars to the lawyers. I think it was this question of them not accepting it, Ziumbe (Reserve Bank’s lawyers) not wanting it in Zimbabwe dollars. I no longer remember what exactly happened. But the trust tendered to our lawyers and then to Ziumbe, then there was also the question of foreign currency that we cannot accept in Zimbabwe dollars.</p> <p>Q.        So you do not know what was put to the Reserve Bank?</p> <p>A.        <strong>I do not know what was put in the Reserve Bank”</strong></p> <p>Thus in giving his testimony, Mr Dengu failed to establish the basis for the plaintiffs claim. The observations made by MATHONSI J [then] in <em>Railings Enterprises (Pvt) Limited v Dowood Services (Pvt) Limited &amp; Ors</em>HB 53-16 are reflective of Mr Dengu’s posturing on honouring his obligation. The court made the following observation:-</p> <p>“Some people simply will not settle a debt. No matter how many times the debtor ruins around the walls of Jericho, the walls remain unshakeable and will not simply fall. So steadfast are they that the debtor would rather spend so much on the legal fees which surpass the amount of the debt owed. It is just in their nature that they incur a debt which they have no intention whatsoever of paying back” </p> <p>Mr Madera who testified on behalf of the second defendant told the court that the first plaintiff initiated and attended many meetings at the Reserve Bank, in which he promised to produce documents which would prove that he had in fact tendered payment to the first defendant. Mr Madhera told the court that despite his many promises; Mr Dengu did not fulfil such promises. Mr Madhera stated that the debt was never paid. He remained unshaken under cross examination.</p> <p>Returning to the issue of tender, it is my view, however, that even if the tender had been made and communicated to the defendants; such a communication did not bind the defendants into relinquishing their claim that the loan debt was repayable in foreign currency. The effect of any such tender was ineffectual in discharging the plaintiffs’ obligation to the first defendant in full or at all. In fact when looking at the Order of the Court in HC 1971/2006, it was intended that the value of the ZW$50 million be calculated in US dollars first; and then only when that was done would the value of the Zimbabwe Dollars in foreign currency be made manifest. The useof the words in the Court Order make it clear by specifically stating that</p> <p><em>“1. Against<strong>payment in the currency</strong>of Zimbabwe Dollars of such sums as are currently due to the first respondent:</em></p> <p><em>1.1</em></p> <p><em>1.2</em></p> <p><em>1.3 By the third applicant under mortgage bond, first respondent shall take all steps as are necessary to effect cancellation of the said  mortgages and to return the applicants their title deeds” </em></p> <p>The default judgment does not justify the plaintiffs contention that the sum of ZW$ 50 million represented the full sum due by the plaintiffs to the first defendant. A calculation of the value of ZW$50 million dollars would still have to be done against the UEPTA Dollars loaned plus interest, which the first defendant insists are due. I therefore agree with the first defendant that the tender of ZW$ 50 million did not constitute full and final payment of the sums due and thus thetender of the sum guaranteed by the mortgage bond were ineffectual in extinguishing the debt due to the first defendant.</p> <p>WHETHER THERE WAS A VALID CESSION OF ONCLASS’S INDEBTEDNESS BY FIRST DEFENDANT TO THE SECOND DEFENDANT?</p> <p>Mrs Lucy Otolo, who flew in from Kenya to give her testimony convicted the court as to the fact that the loan was validly ceded to the second defendant. In fact she stated that she was perplexed that the first defendant had been included in the litigation as an active party, because any rights which the first defendant had held had been ceded to the second defendant. In her evidence in chief, Mrs Otolo gave the following answers:-</p> <p>Record p 25 (Examination-in-chief)</p> <p>Q.        It is also common cause that the amount that is the subject of the matter was subsequently disbursed to Onclass?</p> <p>A.        It was United States Dollars</p> <p>Q.        What happened subsequent to the disbursement of the money?</p> <p>A.        Subsequent to the, ordinarily Onclass were supposed to discharge its obligations in accordance with the terms of the loan agreement. But Onclass failed to discharge its obligations. Our loan account became delinquent.</p> <p>Q.        Did the bank take any action?</p> <p>A.        The loan became delinquent. I think there are a number of cases between us and Onclass. But ultimately we ceded our rights under a mortgage bond to the Reserve Bank of Reserve Bank of Zimbabwe. So we are actually not sure we are party to this suit because we no longer have anything to do with the defendants”</p> <p>Mrs Otolo was an impressive witness. She was unflappable and gave her testimony with dignity and with a quiet confidence. Her testimony was flawless. Her opinion was in alliance with the law. In his book, CHRISTIE LAW OF CONTRACT IN SOUTH AFRIC; 7THEdition at page 537, the learned authorhad this to say on the subject:-</p> <p>“A cession...... involves the substitution of a new creditor (cessionary) for the original creditor (cedent), the debtor remaining the same. If the effect of the transaction is not to divest the cedent of the right to sue the debtor, it is not a cession. The cessionary sues on the old contract. Hence our law starts from the general proposition that all rights may be ceded without the debtor’s consent”</p> <p>Meanwhile the plaintiffs’ case is that the cession was invalid and therefore the plaintiff is not obligated at law to pay the second defendant anything. Further the plaintiff avers that in order that a cession be regarded as being valid; (and more specifically the cession which the first defendant made transferring its rights in the loanindebtedness to the second defendant) that it is required by the defendants to show that thecessionwas registered. However the first plaintiff’s persistent and direct enquiries to the second defendant show that the plaintiffs accepted the legal propriety of the cession. Exchanges of correspondence between the first plaintiff and the second defendant prove this fact. </p> <p>I have isolated one letter to give the context of the exchanges between the plaintiffs and the 2nddefendant. In is a letter dated 1stNovember 2007, Mr Nyabonda of ZITAC, on behalf the plaintiff and addressed to the 2nddefendant, wrote:</p> <p>“01 November 2007</p> <p>Attention Mr Matiza</p> <p>Dear Sir </p> <p>Re: PTA Bank</p> <p>“Thank you for the meeting held at the Reserve Bank of Zimbabwe with Messrs. Saburi and Masoso. We are grateful that the Bank has provided the foreign currency to settle our exposure to PTA Ban. We will be grateful if you can provide the foreign currency to settle our exposure to PTA Bank. We will be grateful if you can provide us with the Zimbabwe Dollar figure in order to arrange the settlement.</p> <p>As agreed at the meeting we enclose a copy of the Loan Agreement and Sale and Lease Back Agreement on the equipment purchased from the loan.</p> <p>Please note US$750,000-00 was the loan amount however only US$400,000-00 was drawn down. The documents on the court case are being put together and will be passed onto you.</p> <p>We wait to hear from you,</p> <p>Sincerely yours</p> <p>For and on behalf of Onclass Investments t/a ZITAC</p> <p>Signed”</p> <p>It is thus evident that by their conduct and attitude, the plaintiffs recognised that a valid cession had taken place. On page 540 of his book PROFESSOR CHRISTIE propounded that no formalities are necessary for a cession to be regarded as being a valid one when he stated:-</p> <p>“In general, no formalities are required for a cession, which may validly bemade orally or tacitly, even if the rights ceded form part of a written contract. The cessionary of a principal debt, payment of which is secured by a surety, acquires rights in respect of suretyship by reason if the cession, a formal cession of the rights against the surety being unnecessary. Since notice of the cession to the principal debtor is not a pre-requisite for the validity of the cession, so too,, notice to the surety is not a pre-requisite for the cessionary acquisition of the rights against the surety... if the intention is to cede is genuine and the motive or purpose is not unlawful, immoral or against public policy, the cession will be valid. Notice to the debtor is not necessary to effect a valid cession” </p> <p>            Also see the case of <em>Larry Makamadze v Marmak (Private) Limited </em>v<em>Jacinth and Associates</em>HH 658/14.</p> <p>Section 51 of the Deeds Registry Act [<em>Chapter20:05.</em>] infers that the registration or non-registration of the cession is not an act antecedent to its being legally binding upon a transferor and transferee of ceded rights. Section 51 of the Deeds Registry Act allows for the cession of the rights in a mortgage bong from the first defendant (transferor) to the second defendant (transferee), without the sanction of the plaintiffs. S 51 states as follows:</p> <p><strong>51 Substitution of debtor in respect of bond</strong></p> <p>“(1) If the owner (in this section referred to as the transferor) of land which is hypothecated under a registered mortgage bond, not being a person referred to in paragraph (<em>b</em>) of the proviso to subsection (1) of section <em>fifty</em>, has agreed to transfer to another person the whole of the land and has not reserved any real right in such land. The registrar may register the transfer and substitute the transferee for the transferor as debtor in respect of the bond if there is produced to him, in duplicate, the written consent of the holder of the bond and the transferee to the substitution of the transferee for the transferor as the debtor in respect of the bond. </p> <p>(2) In registering the transfer the registrar shall— </p> <p>(<em>a</em>) make in the appropriate register— </p> <p>(i) an entry setting forth that the debt of the transferor secured by the bond is cancelled; and </p> <p>(ii) an entry setting forth that the transferee has become the debtor in respect of the bond; </p> <p>and</p> <p>(<em>b</em>) annex one duplicate of the written consent referred to in subsection (1) to the bond and file the other with the registry duplicate thereof; and </p> <p>(<em>c</em>) endorse upon the bond— </p> <p>(i) the name of the transferee; and </p> <p>(ii) the date and number of the transfer; and </p> <p>(iii) a reference to the said written consent; and </p> <p>(iv) that the transferee has been substituted for the transferor as debtor in respect of the bond; </p> <p>and</p> <p>(<em>d</em>) make on the transfer deed an endorsement of mortgage containing the date and number of the bond and the amount due in terms thereof. </p> <p><strong>(3) As from the date of the transfer deed the transferor shall be absolved from any obligation secured by the bond and the transferee shall be substituted for him as the debtor in respect of such bond and shall be bound by the terms thereof in the same manner as if he had himself passed the bond and had renounced therein the benefit of the exceptions stated therein. </strong></p> <p>(4) Subsections (1) to (3) shall apply, <em>mutatis mutandis</em>, to a real right in land, other than the ownership thereof, which is hypothecated under a registered mortgage bond.”</p> <p> </p> <p>The third defendant stated that it was satisfied that it could substitute the debtor after having received proof that the second defendant had remitted and paid the first defendant the value of the loan and identified the proof of transfer of US$500 000.00 for credit to the first defendant by it by producing the actual payment receipt for the US$500 000.00. ([Exh “2” p 82] </p> <p>            In the light of the above, it is my finding that the cession of the debt by the 1stdefendant to the second defendant was valid.</p> <p>WHETHER THE 1STAND 2NDDEFENDANTS LODGED THEIR CLAIM WITH THE LIQUIDATOR.</p> <p>            It is common cause that Onclass went into full liquidation around 2011. The cession had taken place by that date thus the question pertains only to the actions of the 2nddefendant. During the trial of the matter, a Mr Madera from the 2nddefendant testified that the 2nddefendant did in fact lodge a claim with the liquidator, and was assured by the liquidator that the 2nddefendant is a secured creditor. The reason why this issue was tabulated was that the plaintiff was alleging that if no claim as filed by the defendants that gave rise to the notion that the defendants had waived their rights to recover the loan debt from the liquidated company. However, a waiver does not come into play simply because a claim was lodged with the liquidator.</p> <p>Ultimately, and given all of the oral and documentary evidence, the defendants cases are fully supported by the law. In the result,the plaintiffs have not proved their entitlement to the remedy of cancellation of the mortgage.</p> <p>I therefore rule as follows:</p> <p><em>“Plaintiff’s claim is dismissed with costs.”</em></p> <p> </p> <p> </p> <p><em>Mtetwa &amp; Nyambirai</em>, plaintiff’s legal practitioners</p> <p><em>Ziumbe &amp; Partners</em>, 1stdefendant’s legal practitioners</p> <p><em>Chinamasa, Mudimu &amp; Maguranyanga</em>, 2nddefendant’s legal practitioners</p> </div></div></div><div class="field field-name-field-download field-type-file field-label-above"><div class="field-label">Download:&nbsp;</div><div class="field-items"><div class="field-item even"><span class="file"><img class="file-icon" alt="File" title="application/vnd.openxmlformats-officedocument.wordprocessingml.document" src="/modules/file/icons/x-office-document.png" /> <a href="https://old.zimlii.org/zw/judgment/files/harare-high-court/2020/684/2020-zwhhc-684.docx" type="application/vnd.openxmlformats-officedocument.wordprocessingml.document; length=39420">2020-zwhhc-684.docx</a></span></div><div class="field-item odd"><span class="file"><img class="file-icon" alt="PDF icon" title="application/pdf" src="/modules/file/icons/application-pdf.png" /> <a href="https://old.zimlii.org/zw/judgment/files/harare-high-court/2020/684/2020-zwhhc-684.pdf" type="application/pdf; length=201228">2020-zwhhc-684.pdf</a></span></div></div></div><span class="vocabulary field field-name-field-flynote-sync-local field-type-taxonomy-term-reference field-label-above"><h2 class="field-label">ZimLII Flynote:&nbsp;</h2><ul class="vocabulary-list"><li class="vocabulary-links field-item even"><a href="/tags-local/c">C</a></li><li class="vocabulary-links field-item odd"><a href="/tags-local/contract">CONTRACT</a></li><li class="vocabulary-links field-item even"><a href="/tags-local/loan">Loan</a></li><li class="vocabulary-links field-item odd"><a href="/tags-local/m">M</a></li><li class="vocabulary-links field-item even"><a href="/tags-local/mortgage">MORTGAGE</a></li><li class="vocabulary-links field-item odd"><a href="/tags-local/mortgage-bond-over-residential-property">Mortgage bond over residential property</a></li><li class="vocabulary-links field-item even"><a href="/tags-local/s">S</a></li><li class="vocabulary-links field-item odd"><a href="/tags-local/t">T</a></li><li class="vocabulary-links field-item even"><a href="/tags-local/trust">TRUST</a></li><li class="vocabulary-links field-item odd"><a href="/tags-local/nature-trust">Nature of Trust</a></li><li class="vocabulary-links field-item even"><a href="/tags-local/status-trust">Status of Trust</a></li></ul></span><div class="field field-name-field-legislation-considered field-type-node-reference field-label-above"><div class="field-label">Legislation considered:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/zw/legislation/act/2017/8">Deeds Registries Amendment Act, 2017</a></div></div></div> Wed, 25 Nov 2020 06:57:00 +0000 Sandra 9947 at https://old.zimlii.org Veritas v ZEC & 2 Ors; Firinne Trust also known as Veritas v ZEC & 2 Ors (SC 103-20, Civil Appeal No. SC 563/18) [2020] ZWSC 103 (17 July 2020); https://old.zimlii.org/zw/judgment/supreme-court-zimbabwe/2020/103 <div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p><strong>REPORTABLE</strong>                    <strong>(94)</strong></p> <p> </p> <p> </p> <p><strong>   </strong></p> <p> </p> <p><strong>VERITAS</strong></p> <p><strong>v</strong></p> <p><strong>(1)     ZIMBABWE     ELECTORAL     COMMISSION     (2)     MINISTER     OF     JUSTICE,     LEGAL     AND     PARLIAMENTARY     AFFAIRS     (3)     ATTORNEY     GENERAL     OF     ZIMBABWE</strong></p> <p> </p> <p><strong>FIRINNE     TRUST     ALSO     KNOWN     AS     VERITAS </strong></p> <p><strong>v</strong></p> <p><strong>(1)     ZIMBABWE     ELECTORAL     COMMISSION      (2)     MINISTER     OF     JUSTICE,     LEGAL     AND     PARLIAMENTARY     AFFAIRS     (3)     ATTORNEY     GENERAL     OF     ZIMBABWE</strong></p> <p> </p> <p> </p> <p><strong>SUPREME COURT OF ZIMBABWE</strong></p> <p><strong>GOWORA JA, GUVAVA JA &amp; BHUNU JA </strong></p> <p><strong>HARARE: MARCH 05, 2019 &amp; JULY 17, 2020</strong></p> <p>                                                                                                                                       </p> <p> </p> <p><em>T. R. Mafukidze </em>with<em> D. Coltart</em>, for the appellant</p> <p><em>T. M. Kanengoni</em>, for the first respondent</p> <p><em>K. Chimiti</em>, for the second and third respondents</p> <p> </p> <p> </p> <p><strong>GOWORA JA</strong>: </p> <p><strong>BACKGROUND FACTS</strong></p> <p>[1] The first appellant, Firinne Trust, is a trust incorporated as such by deed of Trust under the laws of Zimbabwe and registered with the Registrar of Deeds. It trades as Veritas, which is the second appellant herein. The first respondent, is the Zimbabwe Electoral Commission, (ZEC), established in terms of s 238 of the Constitution. Although it is established under the Constitution it carries out its mandate in terms of the Electoral Act [<em>Chapter 2:13</em>], the (“Act”). The second respondent, the (“Minister”) is the government official assigned the administration of the Act. The third respondent, (“the Attorney-General”), is the legal adviser to the Government. </p> <p> </p> <p>[2] On 19 December 2017, under Case No HC 11749/17, Veritas filed an application with the High Court in which it sought a declaratur and ancillary relief pertaining to sections of the Act. The premise of the application was that the specified sections of the Act imposed restrictions on conducting voter education by persons other than ZEC and political parties.</p> <p> </p> <p>[3] In this application, Veritas, on its own behalf and on behalf of the public in general sought an order declaring ss 40C (1)(g), 40C(1)(h), 40C(2) and 40F of the Act as being <em>ultra vires </em>ss 56, 61 and 67 of the Constitution, the allegation being that the impugned sections infringe the right of the public in general, and that of Veritas in particular, to equality and non-discrimination, freedom of expression and their political rights including the right to a free and fair election and to make political choices freely.</p> <p> </p> <p>[4] ZEC opposed the application raising several points <em>in limine</em> relating to the citation of the applicant in the matter and the form of the application which it contended was not in accordance with the requirements of the rules of court.</p> <p> </p> <p>[5] In response, and under Case No HC 4391/18, Firinne Trust filed an application for leave to amend the citation of Veritas as applicant. It sought that the record be amended to reflect the applicant as “Firinne Trust also known as Veritas”. This application was also opposed by ZEC. The Minister and the Attorney-General filed their opposing papers out of time. Their failure to adhere to the rules was condoned at the hearing of the applications and they were given leave to participate in the proceedings.</p> <p> </p> <p>[6] The matters were subsequently consolidated by consent and set down for hearing before the same judge. The learned judge in the court <em>a quo</em> was persuaded to find that the application was fatally defective in that it had been filed by a non-existent party. As a consequence, he refused the request for leave to amend the citation of the applicant, (Veritas) for the reason that there was no applicant before him. He also found that the form used by Veritas in the court application rendered the application itself fatally defective. Consequent thereto, he upheld the points <em>in limine </em>and dismissed both applications with costs. This appeal is against the dismissal of the applications.</p> <p> </p> <p><strong>THE APPEAL</strong></p> <p>[7] Although the learned judge did not delve into the merits of the dispute the notice of appeal filed sought to touch on the merits of the dispute. The court is grateful to counsel for accepting that the merits of the dispute are not in contention in this appeal. The appeal before us is as a result confined to the determination by the court of the points <em>in limine</em>.</p> <p> </p> <p>[8] The grounds of appeal upon which the judgment is attacked are the following:</p> <ol> <li>The court <em>a quo</em> erred in law in failing to hold that r 8C of the High Court Rules, 1971 permits a trust to sue and be sued in its trade name as if it were its proper name.</li> <li>The court <em>a quo</em> erred in law in failing to hold that the use of a name or trade name of a trust in litigation in place of the names of the trustees is for convenience and does not deprive the appellant of <em>locus standi</em> under ss 45(3) and 85 of the Constitution.</li> <li>The court <em>a quo</em> erred in law and misdirected itself by refusing the amendment of the citation of the appellant in circumstances where a trade name had been properly used and the amendment was merely cosmetic.</li> <li>The court <em>a quo</em> erred in law and misdirected itself by failing to hold that the use of Form 29B, with such alterations as circumstances require, is permitted under r 229C as read with r 4(2)C of the High Court Rules and in any event any departure from the rules should have been condoned under r 4C.</li> <li>The court <em>a quo</em> erred in law in upholding preliminary points lacking substance raised by a party abiding in circumstances where the appellant, second respondent and third respondent wanted the merits determined.</li> <li>The court <em>a quo</em> erred in law and misdirected itself in awarding costs on a legal practitioner and client scale against the appellant in a constitutional matter of huge public interest and importance without making any finding in law warranting the exercise of the learned judge’s discretion in this regard.</li> </ol> <p> </p> <p><strong>DETERMINATION OF THE POINTS IN LIMINE BY THE COURT A QUO</strong></p> <p>[9] In deciding on the points <em>in limine</em> the court <em>a quo</em> made remarks to the following effect:</p> <p>“<em>In casu</em>, the applicant is cited herein in case HC 11749/17 as Veritas. It is thereafter described in the founding affidavit deposed to on its behalf by Valerie Anne Ingham-Thorpe, (paragraph 1 thereof), as a trust incorporated in Zimbabwe by a deed of trust and registered with the Deeds Registry as Firinne Trust but trading as Veritas. In my view, the applicant having realized the folly of using the name Veritas alone(a Trust) as the applicant in case HC 11749/17 and having been jolted by points <em>in limine</em> raised by the first respondent, must have realized that its application was potentially fatally defective and to avoid the application being declared as such at the hearing of the matter sought to bring the second application in case HC 4391/18 seeking leave to amend the citation of the applicant in the matter HC 11749/17 by inserting the words FIRINNE TRUST also known as in front of the current citation of the applicant in the main matter such that the full citation of the applicant shall read as follows: FIRINNE TRUST also known as Veritas to ensure that both the registered name as well as the operating name of the Trust in whose name the application has been brought appears on all pleadings.</p> <p> </p> <p>…………………………………</p> <p> </p> <p>Procedurally I agree with the counsel for the first respondent’s observation because having noted that its application was potentially fatally defective the applicant need not have resorted to filing a new application dealing with points <em>in limine</em> raised in another application. I say so because in paragraph 10 the applicant said in her founding affidavit in case     HC 4391/18 that-</p> <p> </p> <p>“However, in its Opposing Affidavit, the First respondent raised a number of points <em>in limine</em> including one that the application could not be brought in the name of the Trust. The First Respondent subsequently altered this point in its heads of argument to say that the application should have been brought in the name of the registered trust rather than the trust’s operating name.”</p> <p> </p> <p><strong>ISSUES ON APPEAL</strong></p> <p>[10] The above remarks were made in relation to the application to amend the citation of Veritas, to replace the named applicant in the court <em>a quo</em> with a totally different party to the one appearing on the pleadings. It seems to me that the application was not one for amendment of the citation of the applicant but its substitution. I believe that the substance of the appeal addresses this particular finding of the court <em>a quo</em> and the first three grounds of appeal are pertinent in this regard. Can it be said that the court <em>a quo</em> erred in refusing the application to amend the citation of the appellant?</p> <p> </p> <p>[11] The issues to decide are firstly, whether or not Veritas is a person. If it is not a person, can the citation be amended as prayed for by the appellants or does its status as a non-legal person render the proceedings instituted under Case No HC 11749/17 in its name a nullity. Although not dispositive of the appeal in the instant case, the form in which the main application was brought to court was a contentious issue. It will also be considered as an issue in the appeal. The issue on costs is conceded.</p> <p> </p> <p><strong>ARGUMENTS ON APPEAL</strong></p> <p> </p> <p>[12] Mr <em>Mafukidze</em> made reference to r 8 of the Rules of the High Court 1971, and submitted that in terms of that rule a person carrying on business may sue or be sued in that name. He argued that an association includes a trust, and that as a consequence, a trust being an association is capable of mounting suit in its trade name. Having said this, he accepted that a trust was not a person in that it was not separate from its trustees. He conceded that the trust had no separate existence and that it was set up in terms of a constitution whether as a corporate entity or incorporated one. He suggested however, that our rules permit the amendment sought in the lower court.</p> <p> </p> <p>[13] On the use of the appropriate form, his argument was that the form used was 29B as provided in the rules. He accepted the defect on the form used but submitted that the rules permit the court the discretion to condone a departure from such compliance.</p> <p> </p> <p>[14] The court <em>a quo</em> dismissed both the application for an amendment and the main application with costs at a punitive scale. The appellant contends that there is a principle within this jurisdiction that in order not to unnecessarily discourage litigants from seeking to enforce their rights through the Constitution it is only in the extreme cases that courts should order costs against any litigant raising violation of a constitutional right. He argued that the court <em>a quo</em> therefore misdirected itself when it ordered the appellants to pay the costs.</p> <p> </p> <p>[15] On behalf of ZEC, Mr <em>Kanengoni</em> made the following submissions. He contended that ZEC wished to interrogate whether the jurisdiction of the High Court had been properly invoked by the appellants. To this end, any determination on the merits would have to be grounded on proper invocation.  He argued that such invocation is premised on properly issued process.  It was the considered view of ZEC that the manner in which the matter was brought before the court was in disregard of the rules. He added that it was within the discretion of the appellants to have withdrawn the application. Instead they chose to pursue it with the faults that everyone accepts bedevil the main application.</p> <p> </p> <p>[16] As regards the form of the main application, he submitted that he did not accept the appellants’ contention that the application had been brought in the correct form. He argued that the form used excluded fundamental elements upon which the application is founded and that those elements are material in that the respondent is not informed on what to do to show opposition to the application. The form did not give notice to the respondent, it did not provide the <em>dies induciae</em> in which opposition should be mounted and more particularly, it did not inform the respondents of their rights. He said that the rights and obligations of the respondents arise from these points. He said that the form in which the application was in rendered it a nullity and a discretion to condone cannot be exercised in the circumstances.</p> <p> </p> <p>[17] As regards the citation of the applicant in the lower court he disagreed with counsel for the appellants that r 8C was applicable in this instance. He contended that a trust was not a person as envisaged in the rule and therefore the appellants could not have recourse to the rule and have the trust sue in the name of VERITAS. He suggested that there was of necessity a separation between r 8 and r 8C. He argued that r 8 incorporated the ability of the trustees to sue in the name of the Trust. In this case the name of the Trust is Firinne Trust. He contended that a trust cannot rely on r 8C to sue in a trade name.</p> <p> </p> <p>[18] On the question of costs, his attitude was that the court <em>a quo</em> had confined itself to the preliminary issues. There was as a consequence, no determination on the substance. Given this scenario, he would not insist that the award of punitive costs remain.</p> <p> </p> <p>Mr <em>Chimiti</em> on behalf of the Minister and the Attorney-General indicated that he would abide by the decision of the court.</p> <p> </p> <p><strong>THE NATURE OF A TRUST </strong></p> <p>[19] A very pertinent passage on trusts is found in the book Herbstein &amp; Van Winsen, Civil Practice of the High Courts of South Africa by the learned authors Cilliers, Loots &amp; Nel to the following effect:</p> <p>“A trust is not a legal <em>persona</em>, but a legal institution <em>sui generis</em>. Therefore, it must be sued in the name of the trustee or trustees. However, when the trust itself has been cited, the courts have allowed the correction of the citation. Unless one of the trustees is authorized to act by the remaining trustee or trustees, all the trustees must be joined in suing, and all must be joined when an action is instituted against a trust. The trustee should be cited in their representative capacities.”</p> <p> </p> <p>Within this jurisdiction the issue of whether or not a trust is a person has received attention and there is a plethora of authority on the subject. In <em>Crundall Bros (Pvt) Ltd v Lazarus NO &amp; Anor </em>1990 (1) ZLR (H), at 298E the court stated:</p> <p>“I can see no reason why a trust should be regarded as a ‘person’ for the purposes of the Regulations, when it is not regarded as a ‘person’ for other purposes.”</p> <p> </p> <p>[20] This principle was confirmed by SMITH J in <em>WILSA &amp; Ors v Mandaza &amp; Ors </em>2003(1) ZLR (H), at 505-6 wherein is stated the following:</p> <p>“Mr <em>Nherere</em> took the point, <em>in limine</em>, that WLSA, being a trust is not a corporate body and therefore cannot appear as a party. That contention is legally sound. In Commissioner for <em>Inland Revenue v MacNeillie’s Estate</em> 1961(3) SA 833 (A) at 840F-H, Steyn CJ said:</p> <p> </p> <p>“Like a deceased estate, a trust, if it is to be clothed with juristic personality, would be a persona or legal entity consisting of an aggregate of assets and liabilities. Neither our authorities nor our courts have recognized it as such a <em>persona</em> or entity. The Estate Duty Act, like the Income Tax Act, 31 of 1941, does not define ‘person’. The Statutory definition in sec. 2(x) of the Interpretation Act, 33 of 1957, does not mention a trust or any category of persons which would include a trust. It is trite law that the assets and liabilities in a trust vest in the trustee. The introduction of another persona consisting of those assets and liabilities for the purposes of imposition and collection of a tax, when there is a trustee ready to hand, would be an extraordinary measure which would call for some adjustment, the nature of which is by no means obvious, and of which there is no trace in the Act, between the legal position of such a <em>persona</em> and of the trustee.”       </p> <p> </p> <p> </p> <p> </p> <p>That statement of the law was confirmed in <em>Crundall Bros (Pvt) Ltd v Lazarus NO &amp; Anor</em> 1991(2) ZLR 125(S) where at 128F, it was said:</p> <p>“A trust is not a person. The trustee is the person to be considered for the purposes of the Regulations”.”</p> <p> </p> <p>Herbstein &amp; Van Winsen also states:</p> <p>“The fact that one trustee has been authorized by the remaining trustees to institute action on behalf of the trust does not necessarily confer <em>locus standi</em> on that trustee. The trustees must act <em>nomine officii</em> and cannot act in their private capacities. Beneficiaries cannot act independently of trustees against someone other than the trustee in legal proceedings relating to trust property.”</p> <p> </p> <p> </p> <p>[21] The passage quoted above is in sync with our law. In <em>Chiite &amp; 7 Others v Trustees, Leonard Cheshire Homes Zimbabwe Central Trust</em> CCZ 10/17, MALABA CJ made the following observation regarding the citation of trustees:</p> <p>“A proper reading of the provisions of r 8A of the High Court Rules establishes that it is not a requirement for the names of the trustees to be listed when they bring an action on behalf of the Trust. The only place where the issue of the listing of the names of the trustees when an action has been instituted on behalf of the Trust is where a defendant to a suit by the Trustees has requested from the Trust the names and addresses of the individual trustees. This would be in line with r 8A of the High Court Rules, 1971.”</p> <p> </p> <p> </p> <p>[22] The contention by the appellants is that it is the trust that has brought this suit. That is incorrect. The suit has been brought by Veritas. The person who deposed to the founding affidavit is not a trustee, she is an administrator in the employ of the trading arm of the trust. Thus the party before the court is not the trust, it is an entity associated with the trust. I am not convinced that the rule that the appellants place reliance on is of any assistance to them.</p> <p> </p> <p><strong>DOES RULE 8C APPLY IN THE INSTANT PERMITTING THE AMENDMENT SOUGHT</strong></p> <p>[23] In order to bolster their argument that an amendment of the applicant in this instance would be in order, the appellants have referred the court to <em>Luxavia (Pty) Ltd v Gray Security Services (Pty) Ltd</em> 2001(4) SA 211. At p219, para 15-16, TIP AJ states:</p> <p>“There is also a category of cases in which substitution was refused because the initial plaintiff was not a legal <em>persona</em>. In <em>Van Heerden v Du Plessis</em> 1969(3) SA 298(O) an action for patrimonial damages had been instituted in the name of a person who was already deceased. An application to substitute the executor of the estate was held to be impermissible on the basis that the original summons was a nullity (at 304A-G). In reaching that conclusion, Smuts J placed some reliance on the approach taken in <em>Van Heerden v Braun &amp; Summers</em>, to which I have referred above. <em>Van Heerden v Du Plessis</em> was applied in <em>Friends of the Sick Association v Commercial Properties (Pty) Ltd and Another</em> 1996(4) SA 154(D), where the plaintiff had been described in the summons as a voluntary association although it had ceased to be such upon its incorporation as a company not for gain several decades earlier. Refusing substitution, the Court held at 158A-B that the summons was a nullity and there was no need to even consider whether or not an amendment might cause prejudice.”</p> <p> </p> <p>[24] It seems to me that the above statement is not only apposite in this instance but it applies with equal force. The principle that the citation of a non-existent party results in a nullity was confirmed in <em>Gariya Safaris (Pvt) Ltd v van Wyk </em>1996(2) ZLR 246(H). At 253C-254B, MALABA J (as he then was) said:</p> <p>“In this case, the person against whom the plaintiff thought it was proceeding as a defendant was non-existent at the time summons was issued. The proceedings and judgment that followed the summons were null and void. To try an action in which there is only one party is an exercise in futility. There were no two parties to give rise to the existence of a cause of action between them. There was nothing to be substituted by the respondent as a new judgment debtor. There was no old judgment debtor.</p> <p> </p> <p>This proposition is not without authority. In <em>van Heerden v du Plessis</em> 1969 (3) SA 298 (O) a summons was issued against a person who had already died. Application was made for an order of substitution of the executor testamentary for the deceased. The application, which was opposed, was refused on the ground that the summons was wholly invalid. In <em>Devonia Shipping Ltd v MV Luis (Yeoman Shipping Co Ltd Intervening) supr</em>a, the learned judge mentioned that cases in which the summons has been issued against a non-existent person are exceptions to the application of the general rule on the approach courts should adopt in deciding applications for orders of substitution. The learned judge at 369J- 370A had this to say:</p> <p> </p> <p>“The correction of a mis-description of an applicant differs also from the cases where the courts have regarded a summons or notice of motion as <em>ab initio</em> invalid because the plaintiff or applicant was a non-existent person. “</p> <p> </p> <p> </p> <p>In <em>Fosa v Commercial properties (Pty) Ltd &amp; Anor</em> [1996] 2 All SA 611 (D) the summons was issued in the name of anon-existent plaintiff. An application for substitution was refused by NILE-DUNER AJ on the ground that, the fact that the persona described in the summons did not exist at the date of issue of the summons, called into question the validity of the proceedings before him. The learned acting judge concluded at p 614 by saying:</p> <p> </p> <p>“There is, in my opinion no difference in principle between the situation in <em>van Heerden v du Plessis supra</em> and the present case. I accordingly take the view that the summons is a nullity and that I cannot by the process of substitution revive it to the date of its issue.”</p> <p> </p> <p>See also <em>Dawson(Bradford) Ltd &amp; Ors v Dove &amp; Anor</em> [1971]1 All ER 554(QB) where it was held that substituting the defendant for the deceased against whom summons had been issued after his death was not an act of substitution but of creation.”        </p> <p> </p> <p>  </p> <p> </p> <p>[25] The suit in this appeal has not been brought by the trust. If it had been brought by the trust, the remarks by the court in the case of <em>Chiite &amp; Ors v Trustees, Leonard Cheshire Homes (supra) </em>would have been apposite. The arguments made by Mr <em>Mafukidze</em> might have been persuasive. In this instance his arguments are not apposite. <em>In casu</em>, the appellants have not argued that Veritas is a trust. The applicant as cited is a trade name. It is not a legal <em>persona.</em> It is not suggested that Veritas is an entity, like an association or a partnership. Veritas is a trade name which the trust makes use of when trading.</p> <p> </p> <p>[26] Mr <em>Mafukidze</em> concedes that Veritas is not a <em>persona</em>. It is also not the trust. Despite these very fundamental legal obstacles it is still contended that the court <em>a quo</em> should have exercised its discretion in favour of the appellants and invoked r 8C and allowed the application to amend the citation. R 8C reads:</p> <p><strong><em>8C. Proceedings by or against persons under their trade name</em></strong></p> <p>Subject to this Order, a person carrying on business in a name or style other than his own name may sue or be sued in that name or style as if it were the name of an association, and rules 8A and 8B shall apply, <em>mutatis mutandis</em>, to any such proceedings.      </p> <p> </p> <p>[27] Rule 8C, which Mr <em>Mafukidze</em> seeks reliance on makes reference to a person. Veritas is not a person. The trust, Firinne Trust, is also not a person. In moving the appeal Mr <em>Mafukidze</em> sought reliance on the remarks by MATHONSI J, (as he then was) in <em>Nuvert Trading (Pvt) Ltd t/a Triple Tee Footwear v Hwange Colliery Company</em> HH 791/15 to the following effect:</p> <p>“Those cases are clearly distinguishable from the present case and reliance on them is completely misplaced. In both cases, there was no defendant at all and the court correctly found that no amendment could be made to a non-existent summons given that a summons is only valid if it has a defendant to answer to. In the present case it cannot be said by any stretch of the imagination that the defendant does not exist because there is an entity answering to that name. The only omission is the word “Limited” which is an expression speaking to its limited liability status than anything. The amendment sought relates to completeness of the name as opposed to introducing a new persona to a summons originally without a defendant.”</p> <p> </p> <p> </p> <p> </p> <p>[28] A reading of that statement makes it clear that there must be a party to proceedings, viz, there must be a <em>persona</em> in one form or another. In my view the authority does not assist the position taken by the appellants. What it does is to reinforce the argument adopted by ZEC, to the effect that if the applicant is not a <em>persona,</em> one cannot apply to have that applicant substituted. The citation of a non-existent entity renders the proceedings a nullity. I am fortified in these remarks by the dicta in <em>J D M Agro-consult (Pvt) Ltd v Editor, The Herald &amp; Anor </em>2007 (2) ZLR 71 (H), at 75A-E to the following effect:</p> <p>“What is now before me is a point in <em>limine</em> dealing with the question of the citation of the parties. It is a legal issue, in that the defendants aver that the summons is bad at law, in that no defendant has been brought before the court. They allege that the proceedings are a nullity as a result, and no application launched by the plaintiff to amend the summons or substitute the defendants can cure the defect, as the summons is a nullity.</p> <p> </p> <p>It is pertinent to state from the outset that the application to amend the summons by altering the name of the second defendant, which was granted at the pre-trial conference was without effect. The party named as the second defendant did not exist at the time that the summons was issued and served. The correct appellation for the publisher and owner of the newspaper is Zimbabwe Newspapers (1980) Limited. That is a registered company, duly incorporated under the laws of this country. Its coming into being is due to the process by which it was incorporated as such. It is then, after its incorporation, that it becomes a juristic person, capable of suing and being sued in its own right. Without that process it is non-existent. The entity sued by the plaintiff as the second defendant is The Herald Newspaper. It is not a registered company and does not exist in any other form. Consequently, the plaintiff issued summons against a non-existent being. The amendment to the second defendant’s name therefore was of no force and effect as the summons itself was a nullity. In <em>Gariya Safaris (Pvt</em>) <em>Ltd</em> v <em>Van Wyk</em>, this court stated:</p> <p>“A summons has legal force and effect when it is issued by the plaintiff against an existing legal or natural person. If there is no legal or natural person answering to the names in the summons as being those of the defendant, the summons is <em>null</em> and<em> void ab initio</em>”.”</p> <p> </p> <p>[29] The appellants concede that Veritas is not a person. The rule that they seek to rely on in having the citation amended speaks of “any person”. Once it is conceded that Veritas is not a legal <em>persona</em> no reliance can be sought in the rule. The appellants are out of court. There is as a consequence no applicant in the main application.</p> <p> </p> <p>[30] ZEC has argued that the application is a nullity and that as a result there is nothing to amend. I am constrained to accept that contention. It is trite that proceedings which are a nullity cannot be amended. This was confirmed in <em>Jensen v Acavalos</em> 1993(1) ZLR 216(S), where KORSAH JA, stated at 220C-D:</p> <p>“With this view I most respectfully agree: for if the notice of appeal is incurably bad, then, to borrow the words of LORD DENNING in <em>McFoy v United Africa Co Ltd</em> [1961] 3 All ER 1169(PC) at 11721, ‘every proceeding which is founded on it is also bad and incurably bad. You cannot put something on nothing and expect it to stay there. It will collapse’.”</p> <p> </p> <p>[31] Those remarks apply with equal force in this appeal. There was no applicant before the court <em>a quo</em>. The citation of a non-existent party cannot be amended. The proceedings themselves are a nullity. The application for amendment must as a result fail. The court <em>a quo</em> was correct in this regard.</p> <p> </p> <p><strong>THE FORM OF THE APPLICATION</strong></p> <p>[32] I turn now to the form used in the main application before the court a quo.</p> <p>Veritas mounted a court application in terms of Order 32. The rule pertaining to the form that such application should take is r 230, and it provides as follows:</p> <p><strong>C. COURT APPLICATIONS</strong></p> <p><strong><em>230. Form of court application</em></strong></p> <p>A court application shall be in Form No. 29 and shall be supported by one or more affidavits setting out the facts upon which the applicant relies.</p> <p> </p> <p>Provided that, where a court application is not to be served on any person, it shall be in Form No. 29B with appropriate modifications.</p> <p> </p> <p>The court <em>a quo</em> found that, in addition to the lack of proper citation of the applicant, the application was itself defective for want of the proper form. To that end the court concluded that there was in fact no application before it.</p> <p> </p> <p>[33] The appellants accept that the notice is not in the correct form. They contend however, that the notice was in fact according to Form 29B and that this form was permissible in terms of r 230. There is no doubt that the form used is not what is provided for in peremptory terms by r 230. The rule requires that a court application be in Form 29. It is only when the application is not to served on any other party that the rule permits reliance on Form 29B. The application in contention was served on three respondents. It therefore did not fall within the genre of applications provided for in the proviso to the rule. A notice in an application serves many purposes. The notice informs the respondent of the steps he is required to take if he intends to oppose the application. It also places upon a respondent the onus to file and serve his or her papers within a given period and most importantly gives the address for service of the applicant. The court and the registrar are also informed by the notice of the requirements placed upon the respondent to such suit. This is why the rule is peremptory.</p> <p>[34] In <em>Zimbabwe Open University v Madzombwe</em> 2009 (1) ZLR 101 (H), HLATSHWAYO J, (as he then was) held as follows:</p> <p>“In Form 29, the applicant gives notice to the respondents that he or she intends to apply to the High Court for an order in terms of the annexed draft and that the accompanying affidavit/s and documents shall be used in support of the application. It goes on to inform the respondent, if he so wishes, to file papers in opposition in a specified manner and within a specified limit of time, failing which the respondent is warned that the application would be dealt with as an unopposed application. In Form 29B, an application is made for an order in terms of an annexed draft on grounds that are set out in summary on the basis of the application and affidavits and documents are tendered in support of the application.</p> <p> </p> <p>.…..</p> <p> </p> <p>Now, the format adopted by the applicant does not contain the plethora of procedural rights that the respondent is alerted to in Form 29, nor is the summary of the grounds of the application required in Form 29B.”</p> <p> </p> <p>The application was therefore held to be fatally defective.</p> <p> </p> <p>[35] The application in this appeal was brought before the court on the basis of a form which reads as follows:</p> <p>“Application be and is hereby made for an order in terms of the draft annexed hereto. </p> <p>The accompanying affidavit(s) and document will be used in support of the application.”</p> <p> </p> <p>This application was served on the respondents. It is not an application provided for in Form 29B. Contrary to the requirements of Form 29, which are peremptory, there was no attempt to give notice to the respondents of what was required of them to oppose the application. The form excludes those fundamental elements upon which an application is founded, which are    material for purposes of giving notice to a respondent of his rights as regards the application. It did not state the <em>dies induciae</em> operating against the respondent for purposes of mounting any opposition. There was not even an attempt to include a summary of the basis upon which the application was being mounted on the face of the application. In this case, in the absence of a notice in the proper form the court may be left in doubt as to whether or not a respondent has opposed the application within the prescribed period and served the application at the proper address. In this instance the appellants have not stated why the application did not contain the proper form by way of notice. I hold that the application is as a result fatally defective.</p> <p> </p> <p><strong>THE QUESTION OF COSTS</strong></p> <p>[36] The court <em>a quo</em> ordered the appellants to pay punitive costs. The respondents have conceded that there is no legal justification for such an award. I must agree. The award of costs on the punitive scale cannot stand and the appeal against the award of costs at that scale must succeed. The appeal succeeds on that sole ground.</p> <p> </p> <p><strong>DISPOSITION</strong></p> <p>[37] Once the lack of status of Veritas was raised the appellants should have exercised caution and, as found by the learned judge, in the court <em>a quo</em>, withdrawn the application. Instead there was a dogged insistence on proceeding with the papers in the form that they were in. Wiser counsel should have prevailed. I note in passing that the application to amend the citation was properly done in terms of Form 29. As argued by Mr <em>Kanengoni,</em> the jurisdiction of the court must be invoked properly and lawfully. It cannot be lawfully invoked at the instance of a non-existent party. The court <em>a quo</em> was correct in exercising its discretion in favour of the respondents and upholding the points <em>in limine</em>. The order of costs on the higher scale however, must be set aside.  </p> <p> </p> <p>Accordingly, an order will issue as follows:</p> <p>IT IS ORDERED THAT:</p> <ol> <li>The appeal partially succeeds to the extent set out in paragraph 2 below.</li> <li>Paragraph 2 of the order of the court <em>a quo</em> is set aside and in its place is substituted the following:</li> </ol> <p>“The applicants shall pay the respondents’ costs on the ordinary scale of costs, <em>viz</em> as between party and party.”</p> <ol> <li>For the avoidance of doubt the appeal against the points <em>in limine</em> is dismissed.</li> <li>The appellants are ordered to pay the costs of this appeal, jointly and severally, the one paying, the other to be absolved.</li> </ol> <p><strong>GUVAVA JA                                    </strong>I agree</p> <p> </p> <p><strong>BHUNU JA                                       </strong>I agree</p> <p> </p> <p>Mtetwa &amp; Nyambirai, <em>appellant’s legal practitioners</em></p> <p>Messrs Nyika, Kanengoni &amp; Partners, <em>1st respondent’s legal practitioners</em></p> <p>Civil Division of the Attorney General’s Office, <em>2nd &amp; 3rd respondent’s legal practitioners</em></p> <p>At p 182</p> <p>At p 183</p> <p>Herbstein &amp; Van Winsen 5 ed pp182-183</p> <p>1996 (2) ZLR 246 (H)</p> </div></div></div><div class="field field-name-field-download field-type-file field-label-above"><div class="field-label">Download:&nbsp;</div><div class="field-items"><div class="field-item even"><span class="file"><img class="file-icon" alt="File" title="application/vnd.openxmlformats-officedocument.wordprocessingml.document" src="/modules/file/icons/x-office-document.png" /> <a href="https://old.zimlii.org/zw/judgment/files/supreme-court-zimbabwe/2020/103/2020-zwsc-103.docx" type="application/vnd.openxmlformats-officedocument.wordprocessingml.document; length=47969">2020-zwsc-103.docx</a></span></div><div class="field-item odd"><span class="file"><img class="file-icon" alt="PDF icon" title="application/pdf" src="/modules/file/icons/application-pdf.png" /> <a href="https://old.zimlii.org/zw/judgment/files/supreme-court-zimbabwe/2020/103/2020-zwsc-103.pdf" type="application/pdf; length=549540">2020-zwsc-103.pdf</a></span></div></div></div><span class="vocabulary field field-name-field-flynote-sync-local field-type-taxonomy-term-reference field-label-above"><h2 class="field-label">ZimLII Flynote:&nbsp;</h2><ul class="vocabulary-list"><li class="vocabulary-links field-item even"><a href="/tags-local/p">P</a></li><li class="vocabulary-links field-item odd"><a href="/tags-local/practice-and-procedure">PRACTICE AND PROCEDURE</a></li><li class="vocabulary-links field-item even"><a href="/tags-local/locus-standi-0">Locus standi</a></li><li class="vocabulary-links field-item odd"><a href="/tags-local/pleadings">Pleadings</a></li><li class="vocabulary-links field-item even"><a href="/tags-local/amendment-pleadings">amendment of pleadings</a></li><li class="vocabulary-links field-item odd"><a href="/tags-local/t">T</a></li><li class="vocabulary-links field-item even"><a href="/tags-local/trust">TRUST</a></li><li class="vocabulary-links field-item odd"><a href="/tags-local/nature-trust">Nature of Trust</a></li><li class="vocabulary-links field-item even"><a href="/tags-local/status-trust">Status of Trust</a></li></ul></span><div class="field field-name-field-cases-considered field-type-node-reference field-label-above"><div class="field-label">Cases considered:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/zw/judgment/harare-high-court/2004/35">Women in Law in Southern Africa and Others v Mandaza (HH 35-2004 ) [2004] ZWHHC 35 (17 February 2004);</a></div></div></div><div class="field field-name-field-legislation-considered field-type-node-reference field-label-above"><div class="field-label">Legislation considered:&nbsp;</div><div class="field-items"><div class="field-item even"><a href="/zw/legislation/act/2013/amendment-no-20-constitution-zimbabwe">The Constitution of Zimbabwe Amendment (No. 20) Act, 2013</a></div></div></div> Wed, 19 Aug 2020 09:48:03 +0000 Sandra 9832 at https://old.zimlii.org