2
HB 01/17
HC 394/17
PALACE HOTEL PVT) LTD
Versus
BULAWAYO CITY COUNCIL
IN THE HIGH COURT OF ZIMBABWE
TAKUVA J
BULAWAYO 28 OCTOBER 2016 & 12 JANUARY 2017
Opposed Application
N. Mlala for the applicant
R. Majwabu for the respondent
TAKUVA J: The applicant owns property within respondent’s area of jurisdiction. Following non-payment of rates and other charges, respondent issued summons against the applicant claiming US$74 711,71. Applicant admitted liability to owing US$39 291,19 to the respondent and judgment was granted by consent under case numbers HC 3168/13 and HC 2846/13. The order under case number HC 3168/13 was granted on 10 December 2014 while that under case number HC 2846/13 was granted pursuant to a deed of settlement on 6 July 2015. Applicant also through the same deed of settlement agreed to pay legal costs in the sum of US$11 697,00 plus interest at 5%. As a result of these orders the judgment debts were US$39 291,19 and US$35 420,71 totalling US$74 420,71.
Applicant agreed to settle this amount by paying US$4 500,00 monthly. By early December 2015, applicant had fallen into arrears as it defaulted in making payments in terms of the court order by consent. Respondent commenced execution resulting in applicant’s hotel being put up for sale. Applicant pleaded with respondent to stay the sale because it had secured US$60 000,00 from the sale of its property in Gwanda. Applicant’s lawyers wrote to respondent’s lawyers on 11 December 2015 confirming that they were holding the US$60 000,00 in their trust account for purposes of clearing the judgment debt - see annexure D.
Respondent accepted the arrangement and stayed execution. Surprisingly, on 28 January 2016, applicant’s legal practitioners wrote a letter in the following terms to the respondent’s legal practitioners:
“We refer to the above matter. We attach a copy of the statement of the above property from Bulawayo City Council. Our client has paid US$22 142,00 on 31st December 2015 and took advantage of the promotion by BCC that a certain percentage will be discounted if they paid the amount paid. Our client owes US $2 481,14 in rates and these are current monthly rates. We believe that the debt has been settled and the matter can be laid to rest. The only amount remaining is that of your fees which is around US$3 300 and shall be continued being paid monthly in terms of the agreement or deed of settlement.” (my emphasis)
On 29 January 2016 the respondent rejected this proposal in toto and informed the applicant that they had instructions to proceed with execution. This jolted the applicant into filing this application seeking the following order:
“(a) The judgment under HC 3168/13 be and is hereby declared fully paid by the applicant.
(b) The respondent be and is hereby stopped from executing the court order under HC 3168/13.
(c) The respondent be and is hereby ordered to pay costs of suit.”
The applicant’s case is that it has fully paid the debt. While accepting that there are 2 judgments in favour of the respondent, the applicant contends that it took advantage of the promotion or policy by the respondent which states that “if someone or a company paid 50% of the debt or the money that was indicated by the accounts department of the applicants the balance will be discounted.” Applicant then paid US$22 142 on 31 December 2015 through and RTGs. The money was received by the respondent on 6 January 2016. According to the applicant between August and December 2015 it had paid a total of US$39 626 towards clearing the debt.
In its answering affidavit, applicant alleges that it does not make sense for the respondent to stay execution for $74 712,00 after being promised only US$60 000,00. It denies that it secretly and fraudulently obtained a discount from respondent’s finance department. According to applicant’s argument the discount applies to all debts including those where judgments were obtained following litigation. It denied that the outstanding amount is US$52 798,73 as alleged by the respondent.
Applicant put the position thus;
“13. I have attached receipts as proof of the money that has been paid by the applicant from July 2014 the time the first judgment of $39 291 was granted up to December 31, 2015. The amount that applicant has paid is $79 273,81. The respondent claims that the judgment debt if $74 712,43 with an interest of 5% per annum. This means that the interest will be $3 735,62. This brings the judgment debt to a total of $78 448,05. This is the simple maths. So the applicant has paid an excess of $785,76.
14. Thus to state that there is a balance of $52 798,73 is unjust at the expense of the applicant because that $52 798,73 includes the monthly billings from July 2014 up to March 2016. During that time, the actual billing of the monthly rates by the respondent is $44 199. This figure excludes the 6% interest that is charged on all unpaid accounts after the due date of payment has elapsed. This means that every month, the applicant incurs interest of 6% per annum on overdue debt.
15. Thus to incorporate this amount as part of the judgment is unfair to the applicant because it means that the judgment debt would have been altered to $128 000. That is what the respondent intends to achieve. It now wants to recover the debt not covered by the judgment using the same judgment which is fraudulent to say the least. …”
The respondent opposed the application on the following grounds:
It instructed the Sheriff to execute against the attached property for the two judgments totaling US$74 712,43. Execution was stayed by consent on condition applicant paid off the judgment debt with proceeds of the sale of applicant’s Gwanda property.
While respondent had a policy that discounted 50% of arrears, if a debtor paid 50%, this policy came to an end on 31 December, 2015 and did not apply to debts which had been handed over for adjudication by the courts, certainly not to debts where respondent had been granted a judgment by the court. The policy does not state that a judgment debt qualified to be discounted as such judgments are final. Further, when applicant requested for stay of execution, it knew fully well that it was on the understanding of both parties that applicant would pay the full judgment debt with funds from the proceeds of sale of their Gwanda property. For the applicant to now turn around and claim to be taking advantage of the alleged 50% is totally disingenuous.
The 50% payment of the debt was not approved by the respondent in that applicant secretly went behind the back of the respondent’s legal practitioners and respondent’s legal department, which deals with debts that have been handed over to lawyers for legal action, and engaged respondent’s staff in the finance department and without disclosing to them that its debt had been handed over to legal practitioners who had litigated on the matter and won an order by consent between the parties for the full amount claimed, advised them that they wanted to take advantage of the 50% discount. Unaware of the judgment by consent, respondent’s staff took applicant as any other debtor and discounted the amount reflected on the outstanding account. This was wrong because the amount owing did not qualify as it was subject of a court order obtained by consent and payment was in fact made after the deadline had expired.
The respondent has reversed the discount because applicant secured it through deliberate misrepresentation by not disclosing to the staff the full facts that its case had gone to court and that two judgments had been granted by consent and by failing to disclose that execution had been stayed on the basis of an undertaking by applicant that it was going to pay off the judgment debt with funds that had come to its legal practitioners as proceeds of sale of its property in Gwanda.
It is incorrect to say that the judgment debt under case HC 3168/13 has been fully paid in that the summons issued under that case was for $74 798,73. Of that total claim the applicant consented to judgment in the sum of $39 291,19 on the 18th July 2014, leaving a disputed sum of $35 420,52. Applicant consented to judgment to this $35 420,52 on the 6th July 2015. If applicant paid $39 626,00 as stated in paragraph 12 of its opposing affidavit, then this would mean that there is at least $35 172,73 outstanding. There would therefore be no justification for an order declaring that the judgment debt has been fully paid.
It is incorrect to state that the money paid by the applicant between July 2014 and 31st December 2015 went towards repaying the judgment debt. Applicant accepts that it is obliged to pay current monthly rates charges of $2 481,14. Therefore, during the relevant period of 17 months applicant paid $42 179,39 towards current charges. This means that from the alleged payment of $79 273,81, only $37 094,43 went towards reducing the judgment debt. It must be noted that the alleged payment was not paid as specifically a judgment debt repayment. It was paid through the running rates account which is specifically an account into which applicant pays its monthly rates charges.
Also, it is not correct to allege that respondent wants to recover $128 000,00 as part of the judgment debt. Respondent only wants to recover the judgment debt granted to it in terms of the deed of settlement. Applicant has paid the billings raised by the respondent from July 2014 to March 2016 and they amount to $44 199,00. Since the billings for that period have been paid, there would be no reason for applying for an order in their respect. It is only the balance of the judgment debt that respondent wants to recover from the applicant through execution if need be.
As regards the Acting Town Clerk’s advice dated 4 March 2015 through “minutes”, it does not form part of the applicant’s case in that it does not form part of applicant’s founding affidavit. Therefore, his case stands or falls on the basis of documents attached to the founding affidavit.
In my view, the crust of the matter is whether or not applicant has fully paid the debt arising from the two judgments referred to above. In answering this issue, sight should not be lost of the fact that applicant had an obligation to pay monthly rates charges. The applicant was supposed to comply with agreed terms in the deed of settlement. It voluntarily chose not to do so, prompting the respondent to execute. When applicant was granted a reprieve, it again chose to dishonor its promise. Instead of sticking o the payment of $60 000,00 it had committed itself in black and white, it stealthily misled respondent’s staff into believing that applicant was eligible for the discount.
Applicant then paid 50% of the outstanding debt. In my view this was irregular in that applicant deliberately kept respondent’s legal practitioner in the dark in respect of its intention to unilaterally vary the terms of the deed of settlement. Applicant does not deny this. It however hides behind a finger by attributing the non consultation to shortage of time. This is a lame excuse in view of the fact that the scheme had been operational since August 2015 and it was an open secret to all rate payers.
Further, applicant accepts that it had dual liabilities which were to be settled simultaneously in the form of monthly billings and the judgment debt. It certainly does not make sense to me for the applicant to argue that while there was a judgment to be settled, it was exempted from current rates charges. I say so for the simple reason that there was no such agreement between the parties. For that reason, I find that any payments made through the account applicant normally pays its rates should be primarily first allocated to current monthly charges. This is the case because the judgment debt was supposed to be paid in terms of the court order. By unilaterally varying the terms of the settlement and imposing those new terms on the respondent, the applicant became the author of its woes. It made its bed and it must lie on it.
If applicant intended the payments it made to go towards reducing the judgment debt, it should have so specified to enable respondent to know how much was meant for the judgment debt reduction and how much for current rates charges.
In my view, there is merit in respondent’s argument that the scheme did not apply to judgment debts, as to hold otherwise would obviously result in absurd results. In any case the scheme was not operational when the parties signed the deed of settlement which gave birth to the consent judgment on 6 July 2015. Further, the 50% discount scheme was only applicable to debtors between 1st August and 31st December 2015. It follows therefore that any payments received after the 31st December 2015 were disqualified. In casu, applicant only instructed its bank to pay the 50% on the 31st December 2015 and payment only reached the respondent on the 6th January 2016 well after the incentive scheme had terminated.
For these reasons, I find that there is an outstanding amount in the sum of US$52 798,73 arising from the judgment debt. This figure reflects the balance after taking into account the total paid by applicant towards debt reduction and billings for the relevant period. For the avoidance of doubt, the discount scheme did not apply to the applicant’s debt arising from the consent order.
In the circumstances, the application is dismissed with costs.
Sansole & Senda, applicant’s legal practitioners
Messrs James, Moyo-Majwabu & Nyoni, respondent’s legal practitioners