Kingdom Bank Limited v Riger Holdings (Pvt) Ltd and Others

Kingdom Bank Limited (plaintiff) issued summons against six defendants jointly and severally for two claims totaling approximately $253,185.61 in capital, interest, and bank charges arising from loan agreements. The agreements contained a clause (clause 10) providing that in case of default, the bank would be entitled to recover costs on a legal practitioner and own client scale. The defendants filed a plea that did not disclose a proper defence. On the hearing date, the parties reached a consent judgment on the substantive claims for payment of $386,000.00, with payment terms and a certain property declared specially executable in the event of default. The only disputed issue remaining was the level of costs payable. The plaintiff argued the defendants used dilatory tactics, filed hopeless defences, and caused multiple postponements, including applying for postponement on the hearing date to allow consolidation with another matter. The defendants blamed the plaintiff's counsel for delays in negotiations.

• Whether the court should exercise its discretion to award costs on a higher scale (legal practitioner and own client scale) despite the general rule of party-to-party costs
• Whether the contractual agreement between the parties providing for costs on a higher scale should be enforced
• Whether the defendants' conduct in the litigation justified punitive costs

The first, third, fourth, fifth and sixth defendants were ordered jointly and severally (the one paying the other to be absolved) to pay the plaintiff's costs on a client-attorney scale (also referred to as legal practitioner and own client scale).

Where parties have contractually agreed that costs shall be payable on a legal practitioner and own client scale in the event of default and subsequent legal action, the court will generally enforce such agreement unless there are compelling reasons not to do so. The court retains discretion to award punitive costs where a party has engaged in dilatory tactics, advanced hopeless defences without merit, caused unnecessary postponements, and thereby prejudiced the opposing party and wasted court time. The purposes of punitive costs - deterring frivolous litigation, encouraging settlement, and discouraging hopeless cases - justify such awards where defendants fail to provide any reasonable basis for their conduct or for departing from the agreed contractual terms.

The court observed that the defendants' plea did not disclose a proper defence from the outset, suggesting the matter should have been settled much earlier. The court noted that the application for consolidation on the hearing date appeared to be designed to delay finalization of the matter further, indicating the defendants were not serious about settling. The court commented that such postponements cause not only prejudice to the plaintiff but also inconvenience to the court, justifying the court's expression of displeasure through the costs award. While the court acknowledged its discretion to refuse to sanction agreed costs provisions (citing Neyhoff v York Timber Ltd), it indicated this discretion should be exercised based on the specific circumstances and conduct of the parties.

This case demonstrates the Zimbabwe High Court's approach to enforcing contractual provisions for costs on a higher scale and awarding punitive costs. It affirms that while courts retain discretion to refuse to enforce such agreements, they will do so where defendants engage in dilatory tactics, advance hopeless defences, and cause unnecessary delays and prejudice. The case illustrates the court's willingness to use costs awards as a tool to discourage frivolous litigation and abuse of court process, particularly in commercial banking disputes where loan agreements contain costs clauses. It also serves as a warning to litigants that procedural tactics designed to delay proceedings will result in adverse costs consequences.