MTSHIYA J: On 10 March 2010 the plaintiff issued summons
against the defendant praying for the following relief:
“(a) Payment
of the amount of USD80 421-84.
(b) Interest
thereon at he rate of 9.07% per annum.
(c) Costs
of suit”.
The
background to the above claim is that on 22 April 2003, through a facility
letter addressed to the defendant's Mr Warren Lobel, the plaintiff advanced a
loan facility to the plaintiff. The facility was at the defendant's request and
the defendant duly confirmed its acceptance of the loan facility on 30 April
2003.
Some of the salient clauses in the
facility provided as follows:
“3. FACILITY OFFERED
3.1 A
composite facility comprising:
Overdraft and/or
Revolving Acceptance Credits and/or
Productive Sector Finance and/or
Export Finance Facility
3.2. Post-Shipment
Offshore Loans
4. AMOUNT
4.1. The total amount available under the
composite facility will be Z$150 000 000-00 only (One hundred and fifty million
Zimbabwe
dollars) only.
4.2. The total amount available under the
Post-Shipment Offshore Loans facility will be ZAR850 000-00 (South African
Rands eight hundred and fifty thousand only) and USD 300 000-00 (Three hundred
thousand United States Dollars only).
5. PURPOSE
5.1. Overdraft
To
cover short term working capital requirements.
5.2 Revolving
Acceptance Credits
To finance stocks and/or trade
debtors
5.3 Productive
Sector Finance
To finance working capital
requirements
5.4 Export
Finance Facility
To finance pre and post shipment
exports
5.5 Post
Shipment Offshore Loans
To facilitate the importation of raw
materials.
6. UTILISATION
6.1.….
6.2. …..
6.5 Post-shipment offshore loan
6.5.1. At the request of the Borrower, and
subject to availability, the bank shall provide the borrower with an all
inclusive currency rate quotation for drawing under the offshore Loan Facility
in foreign currency.
6.5.2. The Borrower may request a specified
value date provided a suitable notice of drawing is received by the bank within
two business days of the Bank's quotation being given to the Borrower.
6.5.3. 'Each Notice of Drawing' Shall -
· Specify
the currency of the drawing,
· The
amount (which amount must not exceed 90% of CDI's submitted)
· The
required value date and the maturity date. (The maturity date of each drawing
will be a business day falling no later than 90 days from the value date
subject to Exchange Control Approval and must tie in with date of expected
receipt of export proceeds).
· Be
accompanied by import documents to the value of the loan for payments to be
made using the loan proceeds.
· Be
accompanied by a copy of the CDI(s) covering the export transactions to be
financed.
8. INTEREST
& COMMISSION
8.1. Overdraft
Interest will be charged on daily
balances and compounded monthly at the rate per annum of the Banks Prima
Lending Rate (PLR presently 48% p.a. plus a margin of 3% per annum. A flat 2%
establishment fee will be charged upon acceptance of this facility offer
letter. Prime Lending rate varies in the light of market conditions prevailing
at any one time. The Bank reserves the right to give notice at any time and
thereafter the Borrower continues to use the overdraft and doe not repay it in
full immediately, the Borrower will be deemed to have agreed to such other
rate. Such notice shall be given on the Borrower's bank statement and will be
advertised in the local press and the Borrower hereby accepts that this method
of giving notice is valid and reasonable.
In the event of the agreed overdraft
limit being exceeded without the prior approval of the Bank, or in the event of
all sums outstanding not being paid immediately on the expiry date of this
facility if called upon to do so, an excess availment fee of 10% p.a over the
Prime Lending Rate will be charged on excess balances.
8.4 RBZ
Statutory Reserve Export Finance Facility
Funds under this facility will
attract an all inclusive interest rate of 5% per annum. Interest will be due
and payable on maturity of the loan.
8.5 Post-shipment
offshore Loans
Quotes are available on request, but
will be based on libor rate plus 5% per annum. In addition, an establishment
fee of 1%(Flat) is to be levied in the currency of the loan.
Interest and fees will be deducted
from the proceeds of the export receipt on maturity of the loan.
9. APPROPRIATION OF PAYMENTS
The Bank shall have the right to
appropriate the Borrower's payments to such of the Borrower's debts as it
considers fit, and in the absence of any appropriation by the Bank to the
contrary, the Borrower's payments shall be appropriated to interest due, and
any balance remaining shall be appropriated to capital.
13. DEFAULT
If the Borrower shall fail to make
payment by due date of any amount due in terms of the facility, or shall become
insolvent, or shall be provisionally or finally sequestrated, or provisionally
or finally wound up, or be unable to pay its debts as they become due, or be
placed under provisional or final judicial management or enter into a scheme of
arrangement with its creditors, or pass a resolution for the winding up of the
Borrower, or should the Borrower commit any act of insolvency or any
undertaking, terms or condition of this facility, or be placed under
provisional or final judicial management or enter into a scheme of arrangement
with its creditors, or pass a resolution for the winding up of the Borrower, or
should the Borrower commit any act of insolvency or enter into any compromise
with its creditors, or make default in the performance of any undertaking, term
or condition of this facility, or if the Borrower acts in any way which, in the
reasonable opinion of the Bank, may have a material adverse effect on the
Borrower's ability to perform its obligations under this facility, then in any
such event, the full amount of the facility, then outstanding, and all charges
accrued thereon, together with default interest of PLR plus 10% p.a., shall
immediately become due and payable.
14. GENERAL CONDITIONS
14.1 In
the event of the Bank taking any proceedings to recover any amount due to it
the amount due to it shall be determined and proved by a certificate signed by
the Manager, Account Manager or Accountant of this branch of the Bank and such
certificate shall be prima facie
proof of the amount due by the Borrower and the onus shall be on the Borrower
to disprove the accuracy of such certificate”
On 30 April 2003, in its letter of confirmation
of acceptance of the facility (i.e. the letter signed by the defendant's
Chairman and Group Financial Manager) the defendant declared as follows:
“We confirm by signature hereunder,
that the attached letter dated 22 April 2003 is acceptable to the addressee and
that they set out all the terms and conditions of the facility.
Yours faithfully
for and on behalf of Flair Furniture
Company (Successors) (Private) Limited”.
On
the basis of the above agreement, which set out “all the terms and conditions
of the facility”, seven draw downs on the loan were made as follows:
“1. USD34,929.52 value 22/10/03
2. USD36,305.99 value 23/10/03
3. USD46,772.09 value 23/12/03
4. USD37,614.51 value 07/11/03
5. USD39,620.20 value 10/12/03
6. USD39,620.00 value 23/12/03
7. USD49,364.68 value 31/12/03”.
On 30 June 2004 the loans were
amalgamated into one composite loan of USD284,226-99, which loan, as at 10 March
2010 when the summons was issued, had an outstanding balance of USD$80 421-84. Despite demand from the plaintiff for
payment, the defendant had, up to the issuance of the summons, not paid the
amount.
It is the alleged non-payment of the
above balance that led to these proceedings. Several attempts to settle the
matter at the pre-trial conference stage were made but to no avail.
The final settlement offer from the
defendant, which was rejected by the plaintiff, was made on 29 October 2009 in
the following terms;
“Dear Sirs
Flair International (Private) Limited and Stanbic Bank Zimbabwe
Limited
We refer to the numerous attempts to
settle this matter:
Our client hereby tenders to your client
in full and final settlement of all monies owed by ours to yours the sum of USD$57,353-03 (fifty seven thousand United
States dollars and three cents.
It carried out a comprehensive
exercise to arrive at this figure.
Our client as a gesture of good
faith will pay to yours the sum of
(i) USD$20,000 (twenty thousand United
States dollars) by the 15th
November 2009,
(ii) USD$13,000 (thirteen thousand United
States dollars) by the 30th
November 2009,
(iii) USD$12,000 (twelve thousand United
States dollars) by the 15th
January 2010,
(iv) USD$5,000 (five thousand United
States dollars) by the 31st
January 2010 and;
(v) USD$7,353-03 (seven thousand three hundred and fifty three dollars and three cents)
before the 28th February 2010-09-13.
Please advise if your client is agreeable
to the above failing which we will make a formal tender into Court.
Our client would also request that
yours release our clients title deeds to it by the 15th January 2010
once yours has received USD$ 45 000 (forty five thousand United States dollars) to enable it
to finance the balance of the repayments and fund its working capital
requirements for 2010.
Yours faithfully
Venturas & Samukange”
With
all attempts at settlement having failed, the parties, on 28 October 2009, had
already agreed at a pre-trial conference that the issues for trial would be as
follows:
“1.1. Did Reserve Bank of Zimbabwe's actions of appropriating
proceeds of defendant's exports amount to supervining impossibility.
1.2. Whether the defendant is indebted to the
plaintiff in the sum of USD80 421-84 or at all.
1.3. If the defendant is indebted to the
plaintiff, in what sum is it indebted to the plaintiff.
1.4. Whether
the plaintiff is entitled to payment in foreign currency”
The above remain the issues for
determination in this action.
The
plaintiff called one witness, a Mr Weston Munashe Makwara (Makwara). He said he
is employed by the plaintiff as an Executive Director (Corporate and
Investments Banking) His duties involved looking after customer relationships-
particularly large customers. He was aware of the loan agreement between the
plaintiff and the defendant, he then produced exh 1 containing the facility
letter from pp 1-8 of the exhibit (i.e plaintiff's bundle of documents). It was
then agreed between the parties that exh 2 be also produced (i.e. defendant's
bundle of documents).
Makwara said
under the agreement the defendant would request the plaintiff to pay its
(defendant's) customers/suppliers for imports. The plaintiff would then make
direct payments to the defendant's suppliers. Makwara confirmed the seven draw
downs indicated at p 2 of this judgement and said that out of the total of
those draw downs a balance of USD88 452-05 was still owing from the defendant
as at 26 April 2010.
Makwara
said the interest rate chargeable was incorporated in the agreement and that
the London Interbank Offer rates (libor) used were extracted from Reuters. He
said all banks, including the Reserve Bank of Zimbabwe, had access to Reuters and
relied on Reuters for interest rates.
Makwara
said the facility enjoyed the authority of the Reserve Bank of Zimbabwe as
confirmed by its letter of 9 February 2010. It was his evidence that prior to
the issuance of the summons there was no dispute on the amount(s) owing from
the defendant.
Under
cross examination Makwara said he could not understand why the defendant could
deny that draw downs were made when repayments by the defendant were actually
made by the defendant against the draw downs. He did not agree that the
plaintiff's figures were inaccurate. He agreed that the defendant had
challenged the libor rates used. He also admitted that in an attempt to settle
the dispute, changes were made relating to the amount owing. That, he said did
not change the actual indebtedness of the defendant as reflected in the
plaintiff's court papers. He said the plaintiff had, where necessary addressed
the defendant's queries. Makwara said payments were made to the defendant's
customers as per its instructions.
Makwara
said the summons issued by the plaintiff was supported by schedules to prove
the plaintiff's claim. He did not believe that the intervention of the Reserve
Bank of Zimbabwe
rendered the defendant incapable of meeting or paying its debts. It remained an
importer and could rely on other resources. The defendant remained obligated to
pay the plaintiff the balance still outstanding on the loan. The calculations
of the balance were in terms of the facility letter (agreement).
The
defendant called two witnesses the first witness was Mr Tafadzwa Shumba
(Shumba). He said he holds a Bachelor of Science degree in applied Mathematics
and is employed by Deliottes and Touch as a quantitative analyst. Together with
Edric Prince and Amon Kubikwa (his seniors in the Financial Advisory department)
they had, on behalf of the defendant, examined the plaintiff's claim. The
defendant had given them what he referred to as “armotization schedules”
indicating loan repayments. It was his evidence that the libor rates used did
not show the actual rates as derived from other sources such as Bloomberg. He
said although some of the rates used were correct some were wrong and higher than
those from Bloomberg and thus leading to a higher balance of the loan. He said
this would be so because the bulk of the repayments would be diverted to
interest instead of the capital amount. In the main his evidence was that the
plaintiff was charging more interest than what was required or agreed.
Under
cross examination Shumba agreed that he had no qualification in banking or finance
and had only worked in a bank for six months in the United States of America. He said
in comparing rates from Bloomberg and Reuters it would be difficult to say
which ones were actually correct or wrong.
The
second and last witness called by the defendant was Mr Neil James Bruce
(Bruce). He said he holds a Bachelor of Commerce degree in Marketing and
Economics. He joined the defendant in 2002 as a Sales and Transport Manager and
rose to the position of Managing Director in 2008. He was aware of the facility
letter and of the documentation required in the execution of the loan facility.
Bruce said the plaintiff had since paid US$233 000 towards the loan. He said that
although he was advised of the seven draw downs, he had not seen documentary
proof of same. He, however, admitted that he had not worked in the department
that dealt with loans.
As
Managing Director, Bruce said he had asked for documentary proof relating to
the loans. He had not yet received certificates signed by a financial manager
in plaintiff to show the extent of the defendant's indebtedness. He said when the facility expired on 30 November 2003
it was extended in June 2004 and thereafter there were 4 draw downs for which
the plaintiff was never sued.
He
said the statutory surrenders required by the Reserve Bank of Zimbabwe had
affected the plaintiff's ability to service its loans.
Bruce
said he had seen the letter from the Reserve Bank of Zimbabwe dated 9 February 2010. His
view was that the letter referred to a blanket approval yet approval was
required for each specific draw down. He did not deny the authenticity of the
letter. Bruce said because he was not happy with interest calculations on the
loan, he had requested for bank statements. He said the loan balance kept
changing and the plaintiff was forced to engage an independent analyst to
examine the plaintiff's schedules. The analyst had told the defendant that
there were errors in the manner the plaintiff was calculating interest.
He said settlement negotiations had
collapsed and the offer in the plaintiff's letter of 29 October 2010 had also
fallen away.
Under
cross examination Bruce repeated that he had never worked in the finance
department where accounts were settled. He had a Finance Director and the sum
of US$233 000 was paid before he took over as Managing Director. He said he
himself could not dispute that draw downs were made but he had no proof of
same. He agreed that the dispute only arose when he took over as Managing
Director. His predecessor had been paying towards the debt. His own
calculations had given him a balance of US$35000-00 instead of US$78 603-08
initially demanded by the plaintiff. He agreed, though, that in the plea the
defendant had denied owing any money at all.
Bruce
went on to say the figure of US$57 353-03 in the defendant's letter of 29
October 2009 was only brought up for purposes of settling the dispute amicably.
He
said although the surrender policy of the Reserve Bank of Zimbabwe had affected
the defendant's ability to pay, it (the defendant) was now in a position to pay
although under extreme difficulty.
Bruce
told the court that the defendant kept its own records. He maintained that the
dispute had arisen because of the different interest rates that were used by
the plaintiff, namely 4% and 5%. He said for six (6) years the defendant had
been repaying on the basis of an interest rate of 4%.
In
his submissions, Advocate Zhou, for
the plaintiff, stated that the defendant had failed to deny that it drew down a
total of US$274 616-33 under the loan agreement. He said the amount in the
plaintiff's declaration had not been disputed and should therefore be taken as
admitted. He said Bruce had admitted payment of US$233 000 under the agreement
and thus leaving a balance of US$41 616-00 excluding interest. He said given
the aspect of interest it was not therefore surprising that as at 30 September
2008 the amount owing was US$80 421-84. He went further to submit that between
22 October 2003 and 29 June 2004 the libor rate of interest used was 2.3%. That
was the rate obtained from Reuters and used by the Reserve Bank of Zimbabwe
and all other Banks in the country.
The defendant through its witness
Shumba, who was not an expert, Advocate Zhou
argued, was now alleging that the rate
was too high without giving the applicable rate at the time. The Bloomberg
rates referred to by the witness were not placed before the court.
Advocate Zhou also said Bruce had not explained his failure to call his
Finance Director who was involved in settling accounts. Bruce was not involved
and there was also no reason for the department not to keep its own records. It
was Advocate Zhou's submission therefore
that the questioning of the interest rates after default in payments was a mere
afterthought intended to delay judgment. He said both the interest rates and
service fee were provided for in the facility letter.
Furthermore,
Advocate Zhou argued, the debt did
not remain static as interest continued to accrue and will continue to run
until payment is made. That explains the different figures that appeared after
the issuance of summons and indeed the differences in the schedules that were
presented when the hearing of the case commenced.
Advocate
Zhou said in casu, all the plaintiff had to do was to establish, on a balance
of probabilities, that there were amounts of money still outstanding in terms
of the loan facility. He submitted that given the circumstances of the case
“the plaintiff was entitled to judgment in the sum of US$80 421-84 claimed
together with interest at the rate stated in the summons to the date of payment
in full”.
Advocate
Zhou also submitted that in the event
of the court refusing to grant judgment in the sum of US$80 421-84, the court
should then grant judgment in the sum of US$57 353-03 admitted by the defendant
in its letter of 29 October 2009. The offer was not on a “without prejudice”
basis and the defendant had said it had arrived at the figure after carrying
out “a comprehensive exercise”. The tender to pay that amount was not
conditional and had been followed by a payment of US$20 000 on 11 November
2009.
In
his detailed submissions, Mr Venturas,
for the defendant, said that the defendant's stance was that:
“1. Plaintiff does not have the requisite
proof to prove its claim.
2. Plaintiff's summons was invalid as it
had not been signed by a manager or accountant of the
plaintiff in breach of the facility letter;
3. The claim made more than six years
after the debt was due was illegal due to plaintiff's non
compliance with the Exchange Control Regulations S.I 109 of 1996;
4. The agreement became unenforceable due
to impossibility after the Reserve Bank of Zimbabwe intervened in the market
and compelled defendant to surrender export proceeds”
After
going through a detailed background of the dispute, Mr Venturas gave the following summary:
“The
LIBOR rates were wrong:
The
application of the arrangement fees were wrong;
It
was inconsistent to change the interest from 4-5%
It was inconsistent to back date the
arrangement fees;”
Mr
Venturas correctly submitted that it
was the plaintiff's duty to prove its claim on a balance of probabilities. The
plaintiff, he argued, had failed to prove its case. He said within a space of
three months after the issuance of the summons the plaintiff had, without leave
of court, produced three different figures as follows:
“9.2.1. As of 17 May 2010: USD83,953-02;
9.2.2. As of 18 2010: USD88,452-00;
9.2.3. As of 19 May 2010: USD99,383-52.”
He went further to submit that the
plaintiff had not sought leave of the court to rectify
its failure to file a schedule
of loan movements signed by a Manager or
Accountant and to justify its claim for costs de bonis propriis- the latter being a new ground of claim not
previously pleaded.
Mr
Venturas submitted that the facility
violated Exchange Control Regulations and that the purported authority dated 9
February 2010 stated that approval was for the loan facility on 31 January 2003
yet the facility was only entered into in April 2003. There was, he argued, no
evidence of approval for each draw down. He went further to sate that an
attempt on the part of the plaintiff to change the interest rate after six (6)
years would be illegal as it would be in contravention of the Prescription Act
[Cap 8:11). He said the interest rate
used upon payment of a total of US$233,866-14 was 4% .
Mr
Venturas submitted that the Reserve
Bank of Zimbabwe's
statutory surrender policy of a proportion of foreign exchange generated from
exports affected the defendant's ability to pay and as such the defendant was
entitled to resile from the contract.
On
the alternative relief relating to the acceptance of the US$57,353-03 tendered
by the defendant, Mr Venturas
submitted that if the court followed that route, then the defendant would be
entitled to a special order for costs on a legal practitioner client scale
because the plaintiff had earlier rejected the tender and thus leading to costs
incurred in this trial.
All
in all, Mr Venturas submitted that
the plaintiff had, on a balance of probabilities, failed to prove its case. It
had failed to produce documents in support of its claim, failed to prove that
it had Reserve Bank of Zimbabwe
authority/approval for the draw downs, failed to seek the leave of court in
order to procedurally alter its pleadings and failed to rectify the invalidity
of the summons by filing a certificate signed by a Manager/ Accountant.
I
am indebted to Mr Venturas for
clearly highlighting the main reasons behind the defendant's refusal/rejection
of the plaintiff's claim. I have listed these reasons at p 10 of this judgment.
I believe the reasons are indeed in line with the issues listed for
determination at the pre-trial conference. I shall therefore deal with each of
those summarised reasons and in so doing, I shall not necessarily follow the
order in which they were presented. I shall also, where necessary, marry the
reasons to the agreed issues for determination, which issues I have also listed
at p 6 of this judgment.
I believe that a proper examination
of the reasons for the rejection of the plaintiff's claim by the defendant will
assist in the final determination of this matter.
I shall now proceed to deal with
each of the said reasons given by the defendant for rejecting the plaintiff's
claim:
1. Plaintiffs summons was invalid as it
had not been signed by a manager or accountant of the plaintiff in breach of
the facility letter
If the
above challenge, which, I must say, was never preceded by an exception, is correct, then there are no
proceedings before the court. I shall therefore start by examining that
challenge from the defendant. The challenge is based on para 14.1 of the
facility letter which provides as follows:
“In the event of the Bank taking any
proceedings to recover any amount due to it, the amount due to it shall be
determined and proved by a certificate signed by the manager. Accountant
Manager or Accountant of this branch of the Bank and such certificate shall be prima facie proof of the amount due by
he Borrower and the onus shall be on the Borrower to disprove the accuracy of
such certificate.
I
do not believe that the above is a pre-requisite for the issuance of a summons.
The certificate referred to is one of the forms through which the plaintiff can
support/prove its case. The plaintiff can prove its case through other forms of
evidence but the production of such a certificate would strengthen its case (ie
prima facie proof). It need not, in
my view, be part of the summons. I therefore agree with the plaintiff that no
issue arises since that certificate is a matter for the plaintiff. In the
circumstances, my finding is that the summons was properly issued and the
plaintiff is therefore properly before the court.
2. The plaintiff does not have the
requisite proof to prove the claim
In
its plea the defendant avers as follows:
“Defendant denies that the sum of
US$80.421.84 (eighty thousand four hundred and twenty one United States dollars and eighty
four cents) or any sum at all is owed to the plaintiff”
However,
notwithstanding the above, evidence before the court shows that:
(a) there was an accepted facility which
was renewed in June 2004.
(b) draw downs were indeed made on the
facility and each party kept its own records.
(c) a balance of US$35,000 was admitted
as definitely owing to the plaintiff.
(d) a balance of US$57,353-03 was
tendered as a settlement amount.
(e) up until 2008 there was never an
averment to the fact that the plaintiff had contravened the terms and
conditions of the facility letter by using incorrect interest rates.
(f) Bruce, who only came onto the scene in
2008, admitted that the defendant kept its own records which it had used to
arrive at the figure of US$35.000 and indeed the settlement figure of US$57,353-03. However, no records of the transactions were placed before the court.
There was no evidence of that in defendant's bundle of documents.
(g) the plaintiff produced a schedule
attached to the summons which shows that, apart from the last payment of
US$20,000 paid on 11 November 2009, the defendant had, up to 30 April 2008,
effected a total of thirty two (32) payments in varying amounts. This probably
accounts for the sum of US$233,000 which the defendant says it paid. The defendant
was definitely paying towards known draw downs. (i.e. the seven draw downs
listed at p 4 of this judgment).
(h) in making the thirty two (32)
payments referred to in (g) above, the defendant never questioned the libor
rates that were used by the plaintiff. The rates were only questioned when Bruce
took over in 2008 and when the defendant was in default.
(i) expert witness called by the
defendant testified that the libor rates he obtained from Bloomberg were higher than the
Reuters rates but never produced the Bloomberg rates.
(j) the plaintiff admitted that the
schedules used in court reflected amounts higher than the amount on the
summons. This, the plaintiff explained, was so because the outstanding
balances(s) continued to accrue interest.
I agree with the above explanation in
para (j) above relating to why the amount on the summons was rising. I actually
found it unfortunate for the defendant's counsel to expend a lot of his time on
that issue. There was never any attempt
to amend the amount on the summons as supported by the prayer in the
plaintiff's heads of argument. At the
time of trial the plaintiff merely indicated the movement of the debt without
amending the claim in the summons.
A
consideration of the above factors and the submissions by counsel for both
parties leads me to the conclusion that the plaintiff has, on a balance of
probabilities, proved its claim against the defendant. I agree with Advocate Zhou's reliance on Miller v Minister of Pensions(1947) Z ALL ER 372 where LORD DENNING
stated:
“It must carry a reasonable degree
of probability but not so high as is required in a criminal case. If the
evidence is such that the tribunal can say 'we think it is more probable than
not', the burden is discharge…….”
Without carrying out a reconciliation
exercise of figures for the parties, which I believe I am being asked to do, I believe,
upon taking into account the factors listed above (a-j), it is more probable
than not that the defendant owes the plaintiff the amount claimed.
I
am unable in casu, to find anything
to suggest that the loans(s) were executed outside the confines of the facility
letter. My finding is that the defendant admits receiving the loans and in the
absence of a departure from the provisions of the facility letter, on the part
of the plaintiff, it is difficult to accept the purported challenge(s) to its
claim by the defendant.
I
fully agree that the plaintiff bears the burdens of proof in proving its case
on a balance of probabilities, but the evidence in casu clearly demonstrates that the plaintiff has, on a balance
of probabilities, adequately discharged that burden. The defendant failed to
place before the court instruments that could have deflated the plaintiff's
claim. Both the libor rates and the establishment fee were applied in terms of
the provisions of the facility letter.
The plaintiff's claim has not been
successfully challenged and that being the case I am not persuaded to consider
the alternative of satisfying the claim in the form of the tendered lower
figure of US$57,353-03.I believe the plaintiff is entitled to its full claim of
US$80,421-84 with interest thereon at the rate of 9.07% per annum. That
interest rate is not above the default interest provided for in the facility
letter.
The facility enjoyed the approval of
the Reserve Bank of Zimbabwe,
as will be shown below, and as such the debt is payable in foreign currency and
is not in any way affected by prescription.
3. The claim made more than six years
after the debt was due was illegal due to the plaintiff's non-compliance with
Exchange Control Regulations S/I 109 of 1996
The
defendant did not, according to Bruce's evidence, doubt the authenticity of the
letter from the Reserve Bank of Zimbabwe
dated 9 February 2010. In the main what Bruce believed was that each draw down
had to be backed by a separate approval. However, it cannot be doubted that the
plaintiff's recent approach to the Reserve Bank of Zimbabwe was for the purposes of
prosecuting this case. The Reserve Bank of Zimbabwe must have been made aware
of that fact and hence the response it gave. I do not believe an institution of
the Reserve Bank of Zimbabwe's
standing would deceive this court. That approval is further confirmed in exhibit
1 at page 28 where the document addressed to the Reserve Bank of Zimbabwe
states in paragraphs 3, 4 & 5 thereof as follows:
“The customer drewdown an offshore
loan on 31/12/03 of USD49,364-88 (Forty nine thousand three hundred and sixty
four united states dollars and 88/100) under Stanbic Treasury Facility of USD5,000,000-00 approval under reference GE514 dated 31 January 2003 by the
External Loans Co-ordination Committee wherein banks were authorised to lend up
to 75% of their FCA balances against export proceeds supported by valid CD'Is.
This loan was drawn under the
client's USD284,226-99 Offshore loan facility under which they drewdown as
detailed below:
Stanbic Bank Zimbabwe Limited A member of the Standard Bank Group
of South Africa
1. USD34,929.52 value 22/10/03
2. USD36,305.99 value 23/10/03
3. USD46,772.09 value 23/12/03
4. USD37,614.51 value 07/11/03
5. USD39,620.20 value 10/12/03
6. USD39,620.00 value 23/12/03
7. USD49,364.68 value 31/12/03”. (my own
underlining)
Paragraph 3
of the above document, which document captures the subject matter of the
facility, clearly repeats what is contained in the letter of 9 February 2010
from the Reserve Bank of Zimbabwe.
It was the defendant's evidence that Exchange Control approval was required
prior to any disbursements. In casu
and in accordance with the law, disbursements were effected in April 2003 on
the basis of approval already granted on 31 January 2003. The last drawdown referred to above and based
on the existing approval was made of 31 December 2003. It is clear therefore from the quoted document
that the plaintiff was already conducting routine business with the Reserve
Bank of Zimbabwe
on behalf of the defendant on the basis of the approval granted on 31
January 2003. As confirmed by the Reserve Bank of Zimbabwe, I am
satisfied that the plaintiff had authority to execute the loan facility in
foreign currency. There was therefore no contravention of the Exchange Control
Regulations.
4. The agreement became unenforceable
due to impossibility after the Reserve Bank of Zimbabwe intervened in the market
and compelled defendant to surrender export proceeds
The
above factor, in my view, fell away when Bruce admitted that notwithstanding
Reserve Bank of Zimbabwe's
intervention, the defendant remained in business. Admittedly its ability to service
its loans was affected. He said “it was extremely difficult to pay but not
impossible”. The burden to prove impossibility lay with the defendant. There
was therefore, in my view, no supervening impossibility. The difficulties
experienced by the defendant fail to meet the requirements of a supervening
impossibility.
I
believe that in dealing with the main issues on which the defendant anchored
its rejection of the plaintiff's claim I have also covered all the issues
identified for determination at the pre-trial conference.
All
in all, the plaintiff has an unassailable and enforceble claim against the
defendant.
Costs
The
plaintiff, through Advocate Zhou,
made the following submission in respect of costs:
“2.3. It is respectfully submitted that this is an
appropriate case for costs to be given against the defendant and Neil James
Bruce, the defendant's Managing Director, de
bonis propriis jointly and severally the one paying the other to be
absolved. This Honourable Court is respectfully invited to consider awarding
costs against the defendant's legal practitioners de bonis propriss as well what will be submitted below”.
Advocate
Zhou argued that the defendant's
opposition to the claim was vexatious and therefore an abuse of the court
process. He said Bruce had personally taken it upon himself to dispute a debt
that had existed for five years and was being honoured. Bruce had gone further
to deny that draw downs were ever made and finally admitting liability in his
correspondence.
With regards the legal practitioner,
Advocate Zhou said misleading legal
advice had been rendered. He said initially the defendant had denied owing the
plaintiff anything at all but had later unconditionally tendered payment of a
sum of money.
Furthermore,
Advocate Zhou argued, there was a
denial of draw downs and yet there was a claim that the Reserve Bank of Zimbabwe
had rendered payment of the debt impossible.
In
response to the issue of costs, Mr Venturas,
for the defendant submitted that if the plaintiff felt there was no defence at
all it should have excepted. He said the alternative defence (i.e.
intervention) was common to both parties. The only issue was to what extent it impacted
on the defendant's ability to pay. Some of the developments that occurred in
the case were a result of the numerous efforts made to settle out of court. He
said the defendant had a right to question the figures presented by the
plaintiff and the legal practitioner had taken a stance of settling the matter.
In
its prayer in the summons the plaintiff only prayed for costs of suit. I am
certain that right from the inception the plaintiff was pretty certain that
there was no defence to its claim. Any defence could have been quickly demolished
much earlier had the plaintiff presented the defendant with the original
documents upon request and indeed from the outset. I do not believe that the
fact that the plaintiff has gone on to prove its case without the production of
some of the original documents, as initially requested for by the defendant,
should entitle the plaintiff to a demand for punitive costs.
Given the concerted efforts embarked
upon by both parties to settle the matter, I would find it difficult to fault
the defendants' legal practitioner for the various settlement stances adopted
up to the trial stage. Accordingly I am not convinced that punitive costs are
called for.
In
view of the foregoing, I order as follows:
1. The
defendant be and is hereby ordered to pay the plaintiff the sum of US$80,421-84
together with interest at 9.07% per annum from the date of service of summons
to the date of payment in full; and
2. The
defendant be and hereby ordered to pay costs of suit.
Atherstone & Cook, plaintiff's legal practitioners
Byron
Venturas & Samkange,
defendant's legal practitioners
