CLAY PRODUCTS LTD
HIGH COURT OF ZIMBABWE
BULAWAYO 8 AND 18 JUNE 2015
Application for summary judgment
Mr S. Chamunorwa for the applicant
Advocate H. Moyo for the respondent
MAKONESE J: On 30 May 2014, the applicant issued summons against the respondent claiming payment in the sum of $51 470 in respect of monies due to the applicant for salary, bonuses and Board sitting fees for the period 2010 to 24 February 2014. The applicant averred in the summons that respondent had acknowledged itself to be truly and lawfully indebted to the applicant. The respondent filed a plea to applicant’s claims in the following terms:
“1. The plaintiff’s summons do not elucidate concisely how it is that the plaintiff is entitled to a salary whilst he is not an employee but a shareholder.
2. Defendant denies owing plaintiff a salary as an employee and plaintiff is legally entitled to a share of profit as per shareholding.
3. The plaintiff is responsible as Head of Sales and Operation from 2012 to date for running the defendant at a loss, hence the businesses (sic) inability to pay its overhead costs of operating, specifically in that:
(a) No tax returns were made and submitted
(b) No payments were done to ZIMRA
(c) No tax reconciliations carried out.
(d) Overall debt given from US$90435 to US$2 219 599, ultimately resulting
from ZIMRA garnishing defendant’s business account.
4. Even if plaintiff’s claim were to be accepted of which it is not, defendant business account has been garnished by law as a result of plaintiff and any payments cannot be made from that account.”
The applicant contends that the respondent does not have a bona fide defence to his claims and that an Appearance to Defend has been entered for the sole purpose of delay. The respondent has opposed the application for summary judgment on the following broad grounds:
- this application is not properly before the court as the applicant has not exhausted domestic remedies and should have taken the matter for Arbitration in terms of a shareholder agreement.
- This matter should have been referred to the Labour Court for conciliation or arbitration.
- The schedule of monies due to the applicant is not an acknowledgment of debt and does not prove that respondent is indebted to the applicant.
- The applicant is a director of the respondent and as such is not entitled to a salary.
- The respondent has not been placed in mora.
The brief background to the applicant’s claims is that he is employed by the respondent as a Marketing director. Due to liquidity problems, the respondent has failed to meet its obligations to pay its employees, including the respondent their salaries on time. There is no dispute that the applicant is entitled to receive a salary, bonuses and board sitting fees from the respondent from time to time. There is, further no dispute that as at 24 February 2014, the applicant was owed a total of US$51 470 in respect of outstanding salary, bonuses and board sitting fees. A schedule attached to the papers as Annexure “D” confirms that such sums of money are due and owing. The schedule is signed by the Managing Director and the Finance Manager. The applicant endorsed his signature on the schedule. It is against this background that the respondent has defended the claims.
Facts that are common cause
The following issues are not in dispute. The fact that applicant is employed as a Marketing Director does not imply that he is entitled to receive a salary, bonuses and board sitting allowances. The respondent’s managing director and finance director signed a schedule of monies owed to the applicant. It was not suggested by the respondent that the schedule of the outstanding payments is a fraudulent document. In the absence of any evidence to the contrary the schedule of monies due and owing signed by both the Managing Director and the Finance Director is sufficient proof of respondent’s liability in the matter. The averment by the respondent that it is experiencing financial challenges is not a recognizable defence at law.
The position of the law
The law on summary judgment is well traversed in our jurisdiction. The purpose of an application for summary judgment is deny a mala fide defendant the opportunity to raise frivolous and vexatious defences that only serve to delay the granting of judgment. The procedure allows an applicant who has an answerable claim to obtain judgment inspite of the other party raising what may appear to be a defence. The respondent who is faced with an application for summary judgment is required to establish a good and bona fide defence. What constitutes a good and bona fide defence are allegations in the defence which amount to a valid defence which may succeed if proved at trial.
See Chrismar (Pvt) Ltd v Stuchbury and Another 1973 (1) RLR 277; Davis v Terry 1957 R & N 392 and Pitchford Investments (Pvt) Ltd v Muzari 2005 (1) ZLR 1. Rule 64 (1) of the High Court Rules, 1971 in terms of which the court grants summary judgment provides as follows:
“where the defendant has entered appearance to summons, the plaintiff may, at any time before a pre-trial conference is held, make a court application in terms of this rule for the court to enter summary judgment for what is claimed in the summons and costs.”
I shall proceed to consider each of the defences proffered by the respondent to ascertain whether a bona fide defence has been raised:
(a) That plaintiff should have proceeded to Arbitration in terms of the shareholders agreement
The dispute before the court has nothing to do with the shareholders agreement. The parties to that agreement are Gillen Sithole, Lazurus Chitere, the applicant and one Killan Mudzimu. These individuals are shareholders in the company known as Wulton Holdings (Pvt) Ltd. The company bears no relationship to Clay products, the respondent in this matter. The shareholders agreement is intended to govern and regulate the relationship of the shareholders in Wulton Holdings (Pvt) Ltd. The applicant’s claims for arrear salary and sitting allowances is not governed by this shareholders agreement. There is no legal basis upon which this court can make a finding that the shareholders agreement affects the applicant’s claims. This issue has been raised simply to obfuscate the real issue. The above issue raises no defence to the claims.
(b) That applicant should have used the procedure under the Labour Act [Chapter 28:01]
I hold the view that the schedule of the outstanding salaries, bonuses and board sitting fees is an unequivocal proof of liability. The documents is simply a liquid document which requires no further proof to establish its purpose. It matters not, that the document is not worded “acknowledgment of debt.” The document was signed by the Managing Director and Finance Director and its authenticity and purpose is beyond dispute. In any event, the Constitution of Zimbabwe, in section 171 (1) confers jurisdiction on this court.
(c) The document upon which the plaintiff relies is not an acknowledgment of debt
I have already made a finding that the schedule of salaries amounts to an acknowledgment of debt. There would therefore be no need for the applicant to have recourse to the Labour Court.
(d) That the applicant is a Director and not entitled to a salary
This averment is clearly a desperate attempt by the respondent not to settle its obligations. The obligation to pay salaries is imposed on the employer by operation of the law, while matters of sitting fees and allowances are contractual obligations. The applicant has set out his claims in a schedule and pointed out the arrear salaries, bonuses and sitting fees. These are amounts lawfully due and owing to the applicant.
It is clear that the respondent has no bona fide defence to the claims. In its plea the respondent blows hot and cold. On the other hand, the respondent alleges that its account has been garnished and as a result the company cannot pay its creditors. On the other hand the respondent claims that this is a Labour dispute which should be resolved by the Labour Court. The respondent has failed to show that it has a bona fide defence. The defendant has not raised a triable issue and has not raised any valid defence at law.
I am satisfied that the applicant is entitled to summary judgment and accordingly make the following order:
- Summary judgment is hereby entered in favour of the applicant in the sum of $51 470 together with interest at the rate of 5% per annum with effect from 30 May 2014 to date of final payment together with costs.
Calderwood, Bryce Hendrie and Partners, applicant’s legal practitioners
Messrs Ndove, Museta and Partners’ respondent’s legal practitioners