Trustees (For The Time Being) of Tongogara Community Share Ownership Trust versus Matrix Realty (Private) Limited

The respondent (Matrix Realty) brokered an agreement of sale between the applicant (Tongogara Community Share Ownership Trust) and Kelor Investments for the sale of immovable property. The contract provided for agent's commission of 5% plus 15% VAT, payable by the seller, with a clause stating that if either party breached the agreement, the defaulting party would be liable for the commission. The applicant's Board Chairperson, Oathnery Munetsi Ngere, signed the agreement on 25 August 2015. The applicant failed to pay the purchase price by the agreed timeline and wrote a letter on 15 October 2015 cancelling the contract. The respondent sued the applicant for commission of US$54,625.00 on the basis that the applicant had breached the agreement. The applicant was served with the court application on 26 April 2017 but filed its notice of opposition and opposing affidavit late on 16 May 2017 (the deadline being 11 May 2017). The respondent obtained a default judgment on 24 May 2017. The applicant then applied for rescission of the default judgment.

• Whether there was good and sufficient cause to set aside the default judgment under Rule 63 of the High Court Rules, 1971
• Whether the applicant provided a reasonable explanation for its default
• Whether the application for rescission was bona fide
• Whether the applicant had a bona fide defence on the merits with prospects of success
• Whether the respondent had locus standi to sue the applicant in contract despite not being a party to the agreement of sale
• Whether the stipulatio alteri (ius quaesitum tertio) principle applied to give the respondent contractual rights
• Whether the agreement was valid given questions about the authority of the Board Chairperson to conclude the agreement on behalf of the Trust
• Whether the respondent adopted the correct procedure by proceeding by way of application rather than action

The application for rescission of the default judgment in HC 1863/17 was granted with costs.

In applications for rescission of default judgment under Rule 63 of the High Court Rules, 1971, the court must consider (i) reasonableness of the explanation for default, (ii) bona fides of the application, and (iii) bona fides of the defence on the merits, conjunctively and cumulatively. An unsatisfactory explanation for default may be strengthened by a strong defence on the merits. For the stipulatio alteri doctrine to apply, the contract must give the third party the option to adopt it as its own, this intention must appear from the contract, and the third party must accept and communicate acceptance to the contracting parties. A clause in a contract of sale providing that a defaulting party will pay the agent's commission does not automatically create contractual rights for the agent under the stipulatio alteri principle if the clause was intended to regulate liability between the contracting parties rather than make the agent a party to the contract.

The court observed that giving fair warning to the other party about irregular proceedings saves trouble and expense, citing Zimbabwe Banking Corporation Ltd v Masendeke, though it noted that procedurally the respondent was entitled to seek default judgment as the applicant was automatically barred under Rule 233(3). The court also noted that when a litigant gives false evidence, the court may draw adverse inferences and disregard the evidence as if none had been given, though this did not determine the outcome in this case. The court commented that the applicant should have withdrawn its application and started afresh when it realized its founding affidavit was based on false allegations of fraud, rather than attempting to raise new grounds in the answering affidavit. The court also noted that regarding Trust matters, contractual capacity is determined by the Trust Deed, and in the absence of producing the Trust Deed, a party cannot establish whether authority was properly granted.

This case illustrates the Zimbabwean courts' approach to applications for rescission of default judgments under Rule 63, emphasizing that the factors of reasonable explanation, bona fides, and defence on the merits must be considered cumulatively rather than in isolation. It demonstrates that even where an explanation for default is highly unsatisfactory (involving contradictory allegations of fraud and mistake), rescission may still be granted if there is a strong bona fide defence on the merits. The case provides important guidance on the stipulatio alteri (ius quaesitum tertio) doctrine in the context of agent's commission clauses, clarifying the requirements for a third party to acquire contractual rights. It also addresses procedural issues regarding the impermissibility of raising new matters for the first time in an answering affidavit and the consequences of providing false or misleading evidence to the court.