Allied Timbers Zimbabwe (Private) Limited v Joseph Kanyekanye

The respondent was employed by the applicant as Group Chief Executive Officer. The parties executed a Mutual Termination of Employment Agreement on 16 February 2015, which quantified terminal benefits totaling $153,295.00 to be paid to the respondent. The agreement included a release clause (paragraph 3.4) whereby the employer released the employee from all claims. When the applicant failed to pay the benefits timeously, the respondent filed an application for a compelling interdict, which was served on the applicant on 11 December 2015. The applicant intended to oppose because a subsequent ZIMRA audit revealed that the respondent had an additional tax liability of $293,698.19, which subsumed his net entitlement to $54,225.99. While the applicant's legal practitioners sought to resolve the matter through discussions, the respondent's legal practitioners enrolled the matter on the unopposed motion roll. Despite the applicant's current legal practitioners confronting them in court and requesting they not proceed, they obtained a default judgment on 27 January 2016 for $54,225.99. The applicant then applied for rescission of the default judgment under Rule 63 of the High Court Rules, 1971.

• Whether the applicant demonstrated good and sufficient cause for rescission of the default judgment
• Whether the applicant had a reasonable explanation for its default in filing opposing papers
• Whether the applicant had a bona fide defence to the respondent's claim
• Whether the applicant had prospects of success on the merits
• Whether the Mutual Termination of Employment Agreement required the employer to pay the employee's personal tax obligations to ZIMRA
• Whether clause 3.4 of the agreement could override the statutory obligations under the Income Tax Act [Chapter 23:06] requiring employers to withhold tax
• Whether the respondent's legal practitioners engaged in improper conduct by 'snatching' the judgment

1. The default judgment granted under case number HC 12172/15 on 27 January 2016 was rescinded. 2. The applicant was ordered to file the notice of opposition in case number 12172/15 within 5 days from the date of the order. 3. The respondent was ordered to pay the costs.

For rescission of a default judgment under Rule 63 of the High Court Rules, 1971, an applicant must demonstrate good and sufficient cause, which ordinarily requires: (1) a reasonable explanation for the default (showing the applicant was not in wilful default); (2) a bona fide defence to the claim; and (3) prospects of success on the merits. An employer's statutory obligation under the Income Tax Act [Chapter 23:06] to withhold employee tax cannot be overridden by a private contractual agreement. Article 7 of the Thirteenth Schedule to the Income Tax Act makes void any agreement whereby an employer undertakes not to withhold tax. Where legal practitioners proceed to obtain default judgment while genuine settlement discussions are ongoing and despite being confronted in court by opposing counsel, such conduct amounts to 'snatching a judgment' and constitutes a factor supporting the granting of rescission.

The court made several non-binding observations: (1) The court questioned why the respondent, as Chief Executive Officer in charge of day-to-day operations, failed to effect tax deductions from his pay as required by law; (2) The court observed that the conduct of the respondent's legal practitioners in snatching judgment and then seeking to discuss the matter afterward was reprehensible; (3) The court noted that litigation should have been held in abeyance pending resolution of discussions regarding the ZIMRA audit findings; (4) The court cited with approval the dictum from Minister of Home Affairs & Ors v Vuta 1990 (2) ZLR 338 at 344 that 'a litigant who snatches a judgment may be expected, in a proper case, to consent to rescission or pay the costs of opposition'; (5) The court suggested that various factual and legal issues deserved to be ventilated, including whether the employer was aware of the extent of the tax liability and whether, if the tax bill exceeds the benefits due, the employer owes the employee anything.

This case is significant in Zimbabwean jurisprudence for several reasons: (1) It reinforces the principle that legal practitioners must act with propriety and not 'snatch' judgments when genuine discussions are ongoing between parties; (2) It demonstrates the interaction between contractual agreements and statutory tax obligations, particularly the question of whether private agreements can override statutory duties under the Income Tax Act requiring employers to withhold and remit employee taxes; (3) It clarifies the requirements for rescission of default judgments under Rule 63, emphasizing that good and sufficient cause includes having a reasonable explanation for default, a bona fide defence, and prospects of success on the merits; (4) It illustrates that courts will grant rescission where the opposing party has engaged in conduct that amounts to obtaining judgment improperly, even where technical procedural requirements may have been met; (5) It addresses the limits of contractual release clauses in employment termination agreements, particularly whether such clauses can extend to absolving employers from their statutory duty to collect and remit employee taxes.