Shongwe Holdings (Pvt) Ltd v Chegutu Municipality

The respondent (Chegutu Municipality) issued summons against the applicant (Shongwe Holdings) in July 2017 for arrear rates on stand number 4001 Chegutu Township. The matter was set for pre-trial conference on 15 June 2018. The applicant's legal practitioner, Madzingira & Nhokwara Legal Practitioners, attended late and the applicant defaulted, resulting in a default judgment being granted. A writ of execution was subsequently issued. On 18 June 2018, three days after default judgment, the applicant's legal practitioners wrote a 'strictly without prejudice' letter offering to settle the debt over nine months. The applicant only filed an application for rescission of judgment on 16 April 2019, ten months after the default judgment. The applicant claimed it was not aware of the default judgment because its legal officer Tafadzwa Gomwe had withdrawn the mandate from the legal practitioners and left employment without handing over the file. The applicant contended it had a good defence because it had sold the property to Regal Insurance Company in 2012, as evidenced by deed of transfer number 5737/12.

• Whether the 'without prejudice' letter dated 18 June 2018 was admissible in evidence
• Whether condonation should be granted for the late filing of the application for rescission of judgment
• Whether the applicant provided a reasonable explanation for the ten-month delay in seeking rescission
• Whether the applicant had a bona fide defence on the merits

The application for condonation of late application for rescission of judgment was dismissed with costs.

1. 'Without prejudice' correspondence is generally inadmissible to facilitate settlement negotiations, but no privilege attaches to such communications when they are made after judgment has been granted and outside the context of bona fide settlement negotiations - in such circumstances the communication amounts to an admission of liability rather than a privileged settlement discussion. 2. For condonation of late applications for rescission of judgment, applicants must provide adequate and convincing explanations for delay that are free from material contradictions. 3. Knowledge of judgment acquired by an applicant's legal practitioners and employees is attributed to the applicant itself, and an applicant cannot avoid the consequences of default judgment by claiming its directors were not personally informed when its agents had knowledge. 4. Prospects of success on the merits will be defeated where the proposed defence contradicts the applicant's prior conduct, such as offering to pay a debt in instalments after judgment while later claiming not to owe the debt at all.

The court emphasized that it is always within the discretion of the court to determine whether to admit or exclude 'without prejudice' communications, and that the court may remove the privilege attaching to such communications if it deems that admissibility is essential for proving certain matters or if upholding the privilege would be contrary to public policy. The court also noted that merely labelling a document 'without prejudice' does not necessarily confer privilege on its contents - what is important is whether the communication is considered privileged from an objective point of view. The court observed that where settlement is reached after negotiations, the negotiations leading up to it should be available to the court since the whole basis of non-disclosure would have fallen away.

This case clarifies the principles regarding admissibility of 'without prejudice' communications in Zimbabwean law, particularly that privilege does not attach to such communications when made after judgment has been granted and outside the context of genuine settlement negotiations. It also reinforces the stringent requirements for condonation applications, emphasizing that applicants must provide clear, consistent and convincing explanations for delay, supported by appropriate evidence including affidavits from all relevant parties. The case demonstrates that knowledge of judgment acquired through agents is attributed to the principal, and that contradictory conduct (such as offering to pay a debt while simultaneously denying liability) will undermine prospects of success on the merits.