Gift Chaapo Madhlayo and G.M. Financial Services (Pvt) Ltd v Megalink Investments (Pvt) Ltd

In 2015, first applicant Madhlayo, as managing director of second applicant G.M. Financial Services, was mandated by respondent Megalink to secure documentary letters of credit (LCs) valued at US$3,582,500 to facilitate importation of 25 Zhongtong buses from China. Megalink paid mandate fees of US$170,168 into an offshore account belonging to Polo Trade Finance. Megalink alleged that G.M. Financial established the wrong LCs which were rejected by Zhongtong Buses China. On 30 April 2016, Madhlayo executed an acknowledgement of debt on behalf of G.M. Financial for US$170,168. G.M. Financial failed to honour the debt, and Megalink issued summons on 12 July 2019 claiming US$170,168.75 against both Madhlayo and G.M. Financial, alleging Madhlayo was the alter-ego of G.M. Financial. Default judgment was granted on 2 February 2020 by Phiri J. Applicants sought rescission of the default judgment under rule 29 of the High Court Rules 2021.

• Whether the default judgment was erroneously granted within the meaning of rule 29 of the High Court Rules 2021
• Whether summons were properly served on the applicants
• Whether the contract was tainted by fraud and illegality due to alleged Exchange Control Regulations violations
• Whether the claim had prescribed in terms of section 15(d) of the Prescription Act
• Whether the order against Madhlayo personally was competent given the defence of separate legal personality
• The requirements for rescission of judgment under rule 29 versus rule 27 and common law applications

The application for rescission of judgment was dismissed with costs on the ordinary scale.

For a rescission of judgment under rule 29 of the High Court Rules 2021 to succeed, an applicant must demonstrate that there existed a specific error at the time judgment was issued - namely, a fact of which the judge was unaware which would have precluded the granting of judgment and would have induced the judge not to grant it. The presentation of substantive defences to the underlying claim does not constitute an 'error' in granting judgment for purposes of rule 29. Applicants seeking rescission under rule 29 need not prove they were not in wilful default or demonstrate a bona fide defence with prospects of success (those being requirements for rule 27 applications). Different categories of rescission applications have distinct pleading requirements, and applicants must properly identify and address the specific requirements applicable to their circumstances.

The court made observations about the maxims 'nemo ex proprio dolo consequitur actionem' (no one maintains an action arising out of his own wrong) and 'nemo ex suo delicto meliorem suam conditionem facere potest' (no one can make his position better by his own misdeed), noting their potential application to parties who allegedly ignore court process and to parties who allegedly violate statutory requirements (such as Exchange Control Regulations) and then seek to rely on those violations in their defence. The court also noted doubts about the sustainability of the Exchange Control argument given that the payment offshore appeared to have been effected at G.M. Financial's own command, and that as a seasoned banker and businessman, Madhlayo should have appreciated the importance of regulatory compliance.

This case clarifies the important procedural distinctions between different types of rescission applications in Zimbabwean law, particularly emphasizing that rule 29 rescission requires demonstration of a specific error by the court in granting judgment, not merely the presentation of a substantive defence to the underlying claim. The judgment reinforces that parties seeking rescission must properly identify and plead under the correct category of rescission application (rule 29, rule 27, or common law), as failure to do so may result in dismissal. The case also illustrates that a party cannot benefit from its own potential wrongdoing (such as violating Exchange Control Regulations) when seeking equitable relief.