DEWERAS FARM (PVT) LTD & ORS v ZIMBABWE BANKING CORP 1997 (2) ZLR 47 (H)

Flynote

Bank — statements — sending of statements regularly — whether customer who does not object should be held tacitly to agree with practice disclosed by statements — implied terms — whether a trade usage exists as to charging of interest on C overdrawn accounts, etc — bank's discretion

Practice and procedure — default judgment — rescission — applicant previously in "wilful default" — meaning of wilful default — effect of such default — whether relief must inevitably be refused — deliberate default because of mistaken belief that no D legal basis existed for resisting claim — such a default not necessarily disqualifying — finality in litigation — desirability of

Headnote

The respondent bank had in December 1995 obtained default judgment against the applicants. The applicants' liability arose out of an agreement of loan, in particular an overdraft in the name of the first applicant, secured by the personal sureties of the second and third applicants. The summons was in the same form as that used at that time and subsequently criticised in Commercial Bank of Zimbabwe Ltd v MM Builders & Suppliers (Pvt) Ltd 1996 (2) ZLR 420 (H). It had averred the existence of the agreement and the amount outstanding on the overdraft, without any particularity as to such material facts as the amount of the capital advanced, the amount of interest accrued, and the amount of appropriation of any repayments.

In their application for rescission of the default judgment, the applicants averred that they relied on the bank's expertise in calculating the indebtedness and that the decision not to contest the claim was made in the honest and reasonable belief that the bank had correctly calculated the amount outstanding and interest thereon. At that time they confined their endeavours to negotiating a manner of payment of the amount claimed and believed to be owing. In their application for rescission, however, they relied on the decision in Commercial Bank of Zimbabwe G Ltd v MM Builders & Suppliers (Pvt) Ltd, claiming that they were unable to calculate the capital sum owed, suggesting that the interest rates were not agreed upon and had never been stated and that there had been an appropriation of interest contrary to the manner approved in the MM Builders case. The question arose whether the applicants' deliberate failure to oppose the summons constituted "wilful default" and whether wilful default necessarily disqualified them from relief.

Held, that the traditional perception of wilful default is that it occurs when a party, with full knowledge of the service or set-down of the matter and the risks attendant on default, freely takes a decision to refrain from appearing. But the wilfulness of a default is seldom, if ever, clear cut. There is almost always anelement of negligence, and there is a certain weighing of the extent of the negligence and the merits of the defence.

Held, further, that the High Court Rules, unlike the Magistrates Court (Civil) Rules, make no provision for the concept of wilful default. All that is required for rescission is that there be "good and sufficient cause" for it. Even where gross negligence is revealed, it is not inevitable that relief must be refused; consideration must also be given to the other factors in the case. While wilful default will normally be a bar to success, there may still be situations where good and sufficient cause might be found to be shown. The court is entitled, if it considers it fair and just to do so, to consider whether the circumstances, in spite of the default, warrant consideration of the merits of the defence and, if these are satisfactory, the extension of the indulgence sought. In this case, the explanation was that the deliberate decision not to contest was based upon a genuine belief that the debt was due and that no defence existed, but that acquiescence in the judgment would not have been given if the availability of the defence had been known to the applicants. In this situation, the default would have been wilful, but satisfactorily explicable.

Held, further, that the applicants had to show good and sufficient cause for rescission. The default judgment was an existing finding that a certain amount was owed by them. They had to establish a prima facie defence to that judgment debt; this they could not do by bald averments or denial. They had failed to establish a minimum undisputed debt and to proffer provisional calculations and firm supportable averments in defence of the claim for the balance. Although their explanation was acceptable in principle, it was entirely outweighed by the unacceptable lack of support for a defence which is equivocally advanced.

Held, therefore, that the application should be dismissed.