Kasimboti Trading (Private) Limited and Others v ZB Bank Limited

The appellants had a credit facility with the respondent bank. The respondent sued the appellants for US$151,981.23 (capital), US$24,716.11 (interest) and US$81.00 (bank charges), alleging default. The appellants did not defend and a default judgment was entered. Two years later, the appellants obtained an interest research bureau report which revealed that interest had been overcharged by US$25,266.13. The debt was subsequently sold to an asset management company which settled it in full. On 3 April 2017, the respondent wrote a letter marked "without prejudice" confirming the loan was paid in full and promising to verify the interest charged and credit any overcharges. The respondent later reneged, claiming the matter was res judicata. The appellants applied under Rule 449 of the High Court Rules to vary/correct the default judgment or alternatively for an order that the respondent credit US$25,266.13 or render an account for debatement. The High Court dismissed the application with costs on the higher scale, finding the letter of 3 April 2017 inadmissible as a "without prejudice" document.

• Whether a letter marked 'without prejudice' is admissible in evidence where it does not contain an admission of liability or offer to settle but merely records an agreed course of action
• Whether the scope of the 'without prejudice' privilege is qualified or absolute
• Whether the appellants were seeking to revisit a default judgment or raising a new cause of action based on breach of a subsequent agreement
• Whether the High Court erred in dismissing the application without properly determining the merits of the new cause of action

1. The appeal is allowed with costs. 2. The judgment of the court a quo is set aside. 3. The matter is remitted to the court a quo for determination by a different judge.

The binding legal principles established are: (1) The 'without prejudice' rule protecting statements from disclosure and admissibility is not absolute or unqualified. (2) For a statement to enjoy privilege under the 'without prejudice' rule, it must contain an admission made in a genuine attempt to settle a legal dispute, contain an offer to settle, and be adverse to the maker's interests and position in the legal dispute. (3) A letter marked 'without prejudice' that merely records an agreed course of action or a promise to adhere to given conduct, without constituting an admission of liability or settlement offer, does not attract the privilege and is admissible in evidence. (4) Where a party alleges breach of a subsequent agreement concluded after a default judgment, this constitutes a new cause of action that must be determined on its merits, rather than an impermissible attempt to revisit the default judgment.

The Supreme Court made non-binding observations that: (1) It was inadequate for the High Court to rule against admissibility of the letter in a single sentence when this was the central point upon which the application turned—the court should have provided detailed reasons with reference to applicable law. (2) The appellants' counsel incorrectly used the terms 'compromise' and 'agreement' interchangeably, though it was not necessary to address the differences for purposes of the judgment. (3) The appellants properly abandoned their attempt to have the default judgment varied or corrected under Rule 449 of the High Court Rules (implicitly confirming this was not the proper procedural mechanism for such relief).

This case is significant in Zimbabwean law (with persuasive value in South African jurisprudence given the similarity of legal systems) for clarifying the scope and limits of the 'without prejudice' privilege in evidence. It establishes that not every document marked 'without prejudice' is automatically inadmissible, and that the privilege only applies to genuine admissions and settlement offers adverse to the maker's position. The case also illustrates the principle that parties may raise new causes of action based on subsequent agreements even after a default judgment has been obtained, and that courts must properly distinguish between attempts to revisit final judgments and legitimate claims based on new contractual relationships.