CHIWESHE
JA:
This
is an appeal against the whole judgment of the High Court (the court
a
quo)
sitting at Harare, handed down on 9 May 2023, dismissing the first
appellant's application for a declaration under case HC5989/19 and
granting the first respondent's application to set aside the second
respondent's decision to uplift judicial attachment on Stand 654
Pomona Township, under case HC10315/19.
Aggrieved
by the decision of the court a
quo,
the appellants have noted the present appeal.
The
Facts
The
first respondent obtained an arbitral award against the first
appellant in the sum of US$4,800,000-00 excluding interest. The award
was granted on 19 March 2015.
The
first appellant appealed the arbitral award which appeal was
dismissed on 11 February 2019.
The
award was ultimately registered as an order of the court a
quo
on 26 June 2019.
A
writ of execution was issued by the fist respondent leading to the
attachment of Stand No.654 Pomona Township held under Deed of Grant
No.2884/10 (“the property”).
Thereafter
the first appellant paid the sum of RTGS $4,800,000 as the judgment
debt and RTGS $1,078,040-21 as interest thereon.
Following
these payments, the second respondent advised the judgment creditors
(ie the first respondent) that the debt had been discharged and he
was thus proceeding to remove the property from judicial attachment.
He did so through letters to the first respondent dated 21 and 25
November 2019, respectively.
The
first respondent protested this move arguing that the property should
not be removed from attachment as the judgment debt had not been
extinguished because the amount should be paid at the prevailing
inter-bank rate between the US$ and the RTGS, and not at the rate of
1US$ to 1RTGS$.
The
second respondent did not heed that advice.
It
was then that the first respondent approached the court a
quo
under HC10315/19 for an order setting aside the second respondent's
decision to remove the property from attachment. It also sought
consequential relief.
At
the close of submissions, the court a
quo
found in favour of the first respondent who had sued under HC10315/19
for the setting aside of the second respondent's decision to remove
the property from attachment.
Under
HC5989/19 the court a
quo
dismissed the first appellant's application for a declaration that
the judgment debt be extinguished at the rate of 1:1 between the US$
and the RTGS$.
For
convenience the two applications were heard together.
The
appellants appeal the decisions of the court a
quo
on the following grounds:
“GROUNDS
OF APPEAL
1.
The court a
quo
erred in failing to hold that the Arbitral Award dated 19 August
2015, granted in favour of the first respondent, constituted a
liability affected by the provisions of section 4(1)(d) of Statutory
Instrument 33 of 2019 (subsequently section 22 of the Finance Act
No.2 of 2019).
2.
Concomitantly, the court a
quo
also erred in determining that the Arbitral Award issued on the 19th
of March 2015 only became effectual upon its registration on the 26th
of June 2019. At law an arbitral award constitutes a binding
obligation as at the date of its grant and not its registration.
3.
With respect, the court a
quo
also grossly misdirected itself in holding that the first appellant's
RTGS payments did not fully discharge its indebtedness to the first
respondent in respect of the registered arbitral award dated 19th
March 2015. Such payments fully discharged what was lawfully due.
4.
The court a
quo
also erred in determining that the second respondent had acted
unlawfully in uplifting the judicial attachment on Stand 654 Pomona
held under Deed of Grant 2884/10. The voiding of such uplifting was
anomalous at law given that the first appellant had discharged its
indebtedness thereby obviating the continuation of execution.
5.
Additionally, the court a
quo
erred
in cancelling 'any and all' transfers effected on Stand 654
Pomona Township in circumstances where the second appellant had
received title by operation of an extant Deed of Settlement and court
order handed down by the court a
quo
under HC4528/19.
6.
The court a
quo
also
erred in ordering the advertisement and sale in execution of Stand
652 Pomona Township held under Deed of Grant No.2884/10 after the
cancellation of all subsequent transfers. Such determination is
anomalous in that after the aforesaid cancellation of subsequent
transfers the land reverts to being State land, incapable of being
sold in execution.”
The
appellants seek the following relief:
“1.
That the instant appeal succeeds with costs.
2.
That the order of the court a
quo
be set aside and be substituted with:
Case
No. HC5989/19
(i)
The application for a declaration order be and is hereby granted.
(ii)
The liability arising from the Arbitral Award dated 19th
March
2015 in favour of the first respondent be and is hereby declared
executable in RTGS dollars at the rate of one to one to the United
States dollars in accordance with section 4(1)(d) of Statutory
Instrument 22 of 2019.
(iii)
The first respondent to pay costs of suit.
Case
No. HC10315/19
(i)
The application is dismissed with costs.”
The
grounds of appeal raise only one issue, that is, whether the arbitral
award in issue, is subject to the provisions of SI 33/19 in terms of
which all assets and obligations denominated in United States dollars
immediately before the effective date of 22 February 2019 shall be
redeemed at the rate of 1US$ to 1RTGS$.
If
that question is answered in the affirmative, then the appeal should
succeed. If not, then the appeal stands to be dismissed.
PRELIMINARY
OBJECTIONS
The
first respondent raised a number of preliminary objections. The
objections have no merit.
Firstly,
it is contended that the second respondent (the sheriff) has not paid
security for costs and therefore the appeal is accordingly deemed to
have been dismissed by operation of law.
Secondly,
it is averred that the second respondent (the sheriff) should have
filed an appeal against the judgment granted against him and not a
cross appeal as the cross appeal does not seek the alteration or
variation of any judgment made in favour of the first and the second
appellants. The cross appeal, it is argued, is consequently a nullity
that ought to be struck off the roll.
Thirdly,
it is contended that the second respondent (the sheriff) cannot
purport to appeal against the whole judgment of the court a
quo
as some parts of that judgment were not made against him and
therefore, he has no right to appeal the whole judgment. Thus it is
argued the sheriff had no interest in the dismissal of the
application for a declaration under HC5989/19 and cannot appeal or
seek relief against the judgment of the court. Only the first and
second appellant can seek relief against that judgment.
Fourthly,
it is contended that the second respondent (the sheriff) did not file
opposing papers in the court a
quo
and consequently did not participate in the proceedings before that
court. The judgment against him was given in default and for that
reason, such judgment is not appealable.
Fifthly,
it is alleged that the first and second appellants did not serve the
notice of appeal upon the second respondent (the sheriff) at all or
timeously. That irregularity renders the appeal invalid, so argues
the first respondent.
Sixthly,
it is averred that the second appellant did not pay security for
costs. In the same breath it is conceded that the first appellant
paid such costs on behalf of the second appellant.
Once
that concession is made, the preliminary issue falls by the way side
for it matters not who actually deposits the required sums. It could
be the party concerned, a fellow litigant, a friend or even a
well-wisher. Such costs would have been paid.
With
regards the first to the fifth preliminary issues raised by the first
respondent we make the following observation:
The
sheriff is not a litigant. He is an officer of the High Court.
Section 55(1) of the High Court Act [Chapter
7:06]
establishes the offices of the registrar of the High Court and the
Sheriff. It reads:
“55.
Officers of High Court
(i)
There shall be -
(a)
a registrar of the High Court and such deputy registrars and other
officers of the High Court as may be required; and
(b)
for Zimbabwe, a sheriff and such additional sheriffs and assistant
sheriffs as may be required; whose offices shall be public offices
and shall form part of the judicial service.”
Being
an officer of the court, the immunity extended to judicial officers
and other officers of the court extends to the office of the sheriff.
The
accepted practice is that where a complaint is raised against the
sheriff or proceedings issued against him, the sheriff, not being a
litigant, is required to issue a report informing the court and the
parties to the dispute, of the facts as known to him, the actions he
took and the reasons therefor.
The
sheriff is not expected to file opposing papers and heads of
arguments since he is not a party to the dispute and has no interest
in the outcome of the case.
Once
he has submitted his report, he will do no more than abide by the
decision of the court.
As
an officer of the court, no order of costs should be issued against
him. Nor is he required to pay security for costs in the event that
he wishes to place his report before any court, notwithstanding
promises to that effect in any notice of appeal.
The
sheriff is there to assist the court.
It
matters not what label he may give to his papers 'appeal'
'cross-appeal' or 'report' the purpose of his intervention
remains the same – to appraise the appeal court of the contents of
his report in the court a
quo
and to engage counsel to articulate the implications thereof.
For
these reasons we would dismiss, as we hereby do, the first to fifth
preliminary points raised by the first respondent.
APPELLANTS
SUBMISSIONS IN THIS COURT
It
is now trite that all assets and liabilities that were denominated in
United States dollars immediately before 22 February 2019, must, on
or after that date, be valued in RTGS dollars on a one is to one
rate. This is the effect of section 4(1)(d) of SI 33 of 2019 and
subsequently, section 22 of the Finance Act No.2 of 2019.
This
position was confirmed by Malaba CJ in the seminal case of Zambezi
Gas Zimbabwe P/L v N.R. Barber P/L and Anor SC3/20.
The
appellants submit that the court a
quo
erred in interpreting the above provisions in that it treated a
judgment debt as if it was separate from the definition of “debt”.
It also erred in taking the date of registration of the arbitral
award as if it was the date on which the debt came into existence. It
failed to appreciate that prior to the registration of the award, a
debt already existed as confirmed by the arbitration award of 2015,
paving the way for enforcement. This debt arose before 22 February
2019, the effective date under SI 33/2019. The court a
quo
also erred in treating an arbitration award as of no force or effect
as long as it was not registered.
It
misunderstood the existence of an award embodying a debt and its
enforcement.
The
appellants further submitted that the law is clear that the
registration of an award in the court a
quo
is purely for purposes of execution through the sheriff. To that end
the registration of an award as an order of the court a
quo
does not create a new debt nor does it at law change the status of
the debt.
The
appellant relied in this regard on the words of Bhunu JA in the case
of Gwanda
Rural District Council v Botha
SC174/20 wherein he had this to say:
“Before
delving into the merits or otherwise of the grounds of appeal, l
pause to observe that when presiding over the registration of an
arbitral award, the court a
quo
had very limited jurisdiction. This is mainly because its function
was merely to register the arbitral award for purposes of
enforcement. To that end, it did not in the main exercise its
appellate or review jurisdiction.”
Accordingly,
argue the appellants, the High Court does not enquire into anything
when registering an award. It is merely permitting the applicant
access to its enforcement mechanism.
The
court a
quo
was thus in error when it held that an arbitral award dated 19 March
2015, only became effective when it was registered by the court a
quo
on
26 June 2019, well after the effective date fixed under SI 33/2019.
The
appellants reiterate that such registration by the court a
quo
was for purposes of execution only.
It
was because of that error that the court a
quo
determined that the arbitral award was not affected by the provisions
of section 4(1)(d) of SI 33/2019, a finding contrary to law.
The
appellants further relied on the case of Air
Zimbabwe Holdings v Chiweshe and Others
2019
(1) ZLR 311 (S)
where GOWORA JAl
had this to say by way of dicta:
“Once
rendered an arbitral award is binding upon everyone to whom it
pertains until set aside.”
In
other words, the first appellant's liability to pay arose on the
date of issue of the award, that is on the 19th
March 2015 and not on the date of registration in the court a
quo.
Reliance
was placed on the case of Dudka
& Ors v Cheni Investments (Pvt) Ltd
2011 (1) ZLR I where MAKONI J, as she then was, remarked that:
“an
award takes effect upon its grant. Its execution has no effect on
whether it is binding or not. A party can choose to obey an award
such that there would not be need for the award to be registered.”
The
court a
quo,
according to the appellants, was wrong when it held that the first
appellant was only obligated to pay the respondent after the arbitral
award was registered.
Further
under our law the registration of an arbitral award does not turn
such an award into an order of the High Court. Arbitral awards are
registered and enforced as is without being transformed into court
judgments. See Thornton
v Mckenzie
2006 (2) ZLR 91 (H) at 94G.
The
registration of an arbitral award does not create new obligations,
further submitted the appellants.
In
Ropa
v Reosmart Investments (Pvt) Ltd
2006 (2) ZLR 283 (S) at 286B the finality of arbitral awards was
explained by GWAUNZA JA, as she then was, in the following terms:
“In
addition to this, I found to be persuasive the submission made by the
respondent, that the effect of the arbitral award is to bring to
finality the dispute between the parties.”
At
law, therefore, no new rights and entitlements are obtained by the
holder of an arbitral award upon recognition and enforcement.
Accordingly,
submit the appellants, the registration of the 19 March 2015 arbitral
award did not create a new liability or circumstances that allowed it
to escape the jaws of section 4(1)(d) of SI 33/19.
The
appellants further argue that “the novation upon registration”
that the first respondent refers to is erroneous at law. It is that
submission that led the court a
quo
astray.
Counsel
for the sheriff (the second respondent) filed heads of arguments
titled:
“SECOND
RESPONDENT'S/CROSS APPELLANT'S HEADS OF ARGUMENTS INCORPORATING
SECOND RESPONDENT'S HEADS OF ARGUMENTS IN RESPECT OF THE MAIN
APPEAL”
Mr
Chinake,
for the sheriff (second respondent) stated in his heads of arguments
that the second respondent had been served with the notice of appeal
filed by the appellants on 12 May 2023. The second respondent filed a
cross-appeal in terms of Rule 45(1) as read with Rule 45(2) of the
Supreme Court Rules 2018 on 22 May 2023. The cross appeal is on three
critical errors of law and fact made by the court a
quo.
Firstly,
the court a
quo
grossly misdirected itself and erred in failing to consider or
address in its judgment, the sheriff's report which had been filed
of record on 23 June 2020, at pages 373-374 of the record. The report
was filed in case No. HC10315/19 and bears the full citation of the
case.
The
second respondent contends that it is a valid sheriff's report
compiled and filed in terms of the rules of the court a
quo.
The report is comprehensive in that it sets out the background of the
matter, the steps taken by the sheriff and the reasons therefor. It
explains how the amount of RTGS4,800,000 had been paid out and how
the property had been transferred to the second appellant. The report
is quoted from p8 as follows:
“8.
We proceeded to uplift the caveat and transferred the property to
Doorest properties as per court order by Justice Mushore.
9.
Our actions led to Messrs Mutumbwa Mugabe Legal Practitioners filing
the current application as they believed we failed to execute our
mandate properly.
10.
It is our belief that the $4,800,000-00 paid constitutes the judgment
debt in full.
11.
Our decision to act in the manner we did was informed by the legal
position prevailing with regards to execution of court orders
denominated in USD dollars, in light of SI 33/2019 and Finance Act 2
of 2019.
12.
If our position was wrong it was because of the lack of clarity with
regards to the interpretation of the relevant statutes.
13.
The matter was once directed to the Judicial Service as a complaint
and the position taken was that the sheriff had not acted improperly.
14.
We believe our decision was not irrational. The case arises from
different interpretations of available statutory instruments. We are
now aware of the Supreme Court Judgment which vindicates the position
that we took.
15.
We pray that no costs are levied against the sheriff as we believe we
acted reasonable in terms of the law.
M.
Madhega Sheriff of the High Court of Zimbabwe, Harare.”
Thus,
the Sheriff's report constitutes a full and proper response to the
issues raised by the first respondent in the court a
quo.
It does not, argues the second respondent, in any way constitute
disrespect of the court proceedings nor a failure to respond nor is
it an improper pleading.
The
second respondent asserts that the application in the court a
quo
under HC10315/19 was to all intents and purposes a review of the
action taken by the Sheriff. The Sheriff was thus functus
officio.
The rules do not require him to file opposing affidavits. He is only
required to file a report informing the court as to what he did and
the reasons therefore.
In
such situations the sheriff is not a litigant but an officer of the
court charged with the execution of court orders.
The
sheriff's report having been tendered to the court a
quo
in conformity with its rules should have been given due regard before
the court a
quo
arrived at its decision. If the court a
quo
had applied its mind to this report it would have arrived at a
different decision.
That
the application before the court a
quo
was for review of the second respondent's decision is confirmed by
the court a
quo
when it states:
“The
applicant in the first instance, Fairclot Investments, seeks a review
of the decision of the second respondent of 21 November 2019 to
uplift the judicial attachment of Stand 654 Pomona Township…”
The
second respondent further argues that it is common cause that the
Sheriff gave notice to all parties that the judgment debt had been
discharged in full and for that reason he was removing the
attachment.
Nothing
was done clandestinely or maliciously as all concerned were informed
beforehand.
In
the circumstances there was no basis for the levying of costs against
the sheriff (which on its own is unusual on an officer of the court)
let alone on the legal practitioner and client scale.
The
court a
quo
misdirected itself on the facts when it held:
“Given
the history of the case and the manner in which the sheriff handled
the case, refusing to heed the call not to uplift the caveat when
advised that the writ had not been satisfied the defiance requires a
sanction be imposed upon the sheriff. Most disturbing is the fact
that, despite being cited in an application where costs are claimed
on the attorney/client scale the sheriff made no effort to defend
himself/herself.
Without
any submission from the Sheriff as to why costs on a higher scale
should not be imposed, the court is left with no option but to accede
to the prayer for costs against the Sheriff.”
Clearly
the court a
quo,
argues the second respondent, did not take into account the contents
of the sheriff's report giving reasons why the court should not
levy costs against it. The finding on costs is therefore without
basis.
With
regards the interpretation of SI 33/2019 as read with the Finance Act
2/2019 the second respondent agreed with the first and second
appellants that the award granted in March 2015 is payable in RTGS$
at the rate of 1 to 1 with the US$, and, further that the
registration of the award in the court a
quo
was only for purposes of execution. Such registration does not novate
or change the status of the arbitral award.
SUBMISSIONS
BY THE FIRST RESPONDENT
On
the merits, Mr Mpofu,
for the first respondent, submitted that an arbitral award does not
become final as long as it is being challenged. He submitted further
that it does not become final if it has not been recognized (ie
registered as an order of the court a
quo)
or the party against whom it is made has not paid in accordance with
its terms.
In
other words although in casu
the arbitral award was granted in 2015, it was not final until the
challenges brought against it by the first appellant had been
resolved and it had been registered by the court a
quo.
Reliance
was placed in this regard on the provisions of Article 34(4) of the
Model Law which provides:
“The
High Court, when asked to set aside an award, may, where appropriate
and so requested by a party, suspend the setting aside proceedings
for a period of time determined by it in order to give the arbitral
tribunal an opportunity to resume the arbitral proceedings or to take
such other action as in the arbitral tribunal's opinion will
eliminate the grounds for setting aside.”
For
that reason it is argued that for as long a party has challenged an
award, finality cannot be achieved. Matters will remain fluid until
the award has been finally recognized.
It
is further argued that Article 36 sets out the grounds upon which the
court a
quo
may decline to register an award. This is a clear sign that the
arbitral award is not final until it is registered.
The
gravamen of the first respondent's argument is that because of the
continued litigation at the instance of the first appellant, there
was still a live dispute between the parties such that the debt could
not have been affected by the provisions of SI 33 of 2019.
For
this proposition the first respondent has relied on the cases of Lock
v Lock and Another SC127/22 and Lugalulu Investments and Another v
National Railways of Zimbabwe
SC43/22.
It
must be noted that these cases dealt with High Court judgments
(therefore judgments debts) as opposed to arbitral awards.
The
first respondent submits that since the award in casu
was registered after the effective date in terms of SI 33 of 2019,
the award is not affected by the provisions of that statutory
instrument. In other words, the debt is payable in United States
dollars converted to RTGS at the prevailing bank rate.
The
first respondent concedes that an arbitral award is not a judgment
debt. It submits however that once registered as an order of the
court a
quo
it becomes a judgment debt.
ANALYSIS
Both
parties have cited authorities tending to show, on behalf of the
appellants, that an arbitral award is final upon its grant, and, on
behalf of the first respondent, that it is not final until it is
registered.
We
note that there is no legislative provision that says that the filing
of a challenge to an arbitral award suspends the operation of the
award.
That
being the case we would agree with Mr Zhuwarara,
for the first and second appellants, that an arbitral award is
effective upon its grant until it is set aside.
In
any event, it does not matter when the arbitral award may be regarded
as being final. The point is, whether at the time of ultimate
registration in the court a quo, such an award becomes a judgment of
the court a
quo.
We
agree with Mr Zhuwawara
that registration of an award in the court a
quo
does not change the status of the award. The award is registered
simply for the purpose of execution. The court a
quo,
at registration, does not determine the rights and obligations of the
parties. These have already been determined by the arbitrator. The
court a
quo
does not and cannot determine the matter on the merits.
For
that reason, the order for registration does not become a judgment
debt because it is not a judgment of the court a
quo.
The fact that the court a
quo
may refuse to register an award on any of the grounds set out under
Article 36 of the Model Law is irrelevant to the issue at hand,
namely whether the registration of an arbitral award transforms it
into a judgment debt.
The
rights and obligations of the parties were determined by the
arbitrator in 2015. The award/debt is fully covered by the provisions
of SI 33 of 2019 notwithstanding its registration after 22 February
2019 (the effective date).
The
position would have been different if proceedings in a court of law
had been instituted in 2015 but concluded after the effective date.
The order given would be a judgment debt. In such a scenario the
rights and obligations of the parties would have been determined by a
court after the effective date and therefore the judgment debt so
arising would be payable in Unites States dollars converted to RTGS
at the prevailing bank rate.
An
arbitral award granted in 2015 cannot assume a similar status merely
because it was registered by the court a
quo
after the effective date.
The
court a
quo
therefore misdirected itself in treating the order for registration
of the award as a novation of the arbitral award giving rise to a
judgment debt. Having so misdirected itself, it wrongly concluded
that the debt was not covered by SI 33 of 2019 and disregarded the
payment in full in RTGS dollars made by the first appellant.
There
is no evidence in the judgment of the court a
quo
that it took into account or noted the Sheriff's report filed of
record. There is absolutely no reference to it. If it had had regard
to the sheriff report, it would not have issued an order for costs
against him on the higher scale or indeed any costs at all.
As
already indicated, the sheriff is an officer of the court, not a
litigant. He is not required to file opposing papers. His report is
sufficient to inform the court and the parties as to his actions and
the reasons therefor.
We
agree that the Sheriff, when in doubt, should seek directions from
the court. He should have done so.
As
it turns out however, he was right in his assertion that the debt had
been fully discharged in RTGS at the prescribed rate of one is to one
to the United States dollar.
For
that reason the order granted against him cannot stand. In any event
the sheriff acted in terms of an order granted by MUSHORE J.
DISPOSITION
The
appeal has merit. The registration of an arbitral award does not
create a judgment debt. Registration is a vehicle through which
parties may access the services of the sheriff to execute arbitral
awards. It is a procedure designed solely for purposes of execution.
In that regard, the court a
quo
does
not inquire into or determine the merits of the matter as it is a
mere vehicle for enforcement.
Thus,
the arbitral award, granted in 2015, is subject to the provisions of
SI 33 of 2019, notwithstanding its late registration after the
effective date. The debt is therefore payable at the prescribed rate
of 1US$ to 1RTGS$. The first appellant has thus fully discharged its
debt.
The
order for costs against the sheriff is not justifiable. It must be
set aside. Costs will follow the cause.
In
the result it is ordered as follows:
1.
That the appeal succeeds with costs.
2.
That the order of the court a
quo
in case No. HC5989/19 and case No. HC10315/19 be set aside and be
substituted with the following:
“Case
No. HC5989/19
(i)
The application for a declaratory order be and is hereby granted.
(ii)
The liability arising from the arbitral award dated 19th
March 2015 in favour of the first respondent be and is hereby
declared executable in RTGS dollars at the rate of one to one to the
United States dollar in accordance with section 4(1)(d) of Statutory
Instrument 33 of 2019.
(iii)
The first respondent to pay costs of suit.
Case
No. HC10315/19
The
application is dismissed with costs.”
BHUNU
JA: I
agree
MWAYERA
JA: I
agree
Chinawa
Law Chambers,
appellant's legal practitioners
Mutumbwa
Mugabe & Partners,
1st
respondent's legal practitioners
Kantor
& Immerman,
2nd
respondent's legal practitioners
