Debt re: Security, Executable Assets, Jus In re Aliena, Parate Executie or Summary Execution and Pactum Commissorium

HH720-14 : PANDHARI LODGE (PVT) LTD and SUNDAY CHIFAMBA and SWISIDAYI NYAMUFUKUDZA vs CENTRAL AFRICA BUILDING SOCIETY and DEPUTY SHERIFF
Ruled By: MANGOTA J

Counsel for the first respondent made a statement which relates to a well-known principle of law. The principle is that when a mortgage bond is registered against an immovable, the creditor obtains a real right over the property. He developed an argument on the known principle and submitted that the right which the creditor obtains in the ...

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HH385-13 : WEBSTER RUSHESHA (guardian of Panashe and Tivonge Rushesha) and RASAR INV PL vs ALEXIOUS DERA and ZIMCOR TRUSTEES LTD and FRANK BUYANGA and BOKA INV PL and MATTHEW BOKA and ANOR
Ruled By: ZHOU J

The shares were given to secure a loan given to the first defendant by the second and third defendants. The taking of ownership of the shares by the second defendant makes the transaction a pactum commissorium. See Vasco Dry Cleaners v Twycross 1979 (1) SA 603 (A). In the case of Chimutanda Motor Spares (Pvt) Ltd ...

Appealed
SC14-19 : JUDITH ISHEMUNYORO (NEE MANDIDEWA) vs ANTHONY ISHEMUNYORO and TYNSERVE DISTRIBUTORS (PVT) LTD and THE REGISTRAR OF DEEDS and THE SHERIFF FOR ZIMBABWE
Ruled By: GWAUNZA JA, HLATSHWAYO JA and ZIYAMBI AJA

This is an appeal against the whole judgment of the High Court which dismissed an application by the appellant for a declaratur and certain relief related to the matrimonial home that she jointly owned with the first respondent. Factual Background The appellant and the first respondent are husband and wife. They were customarily married in 1991. In or around ...

Factual Background

The appellant and the first respondent are husband and wife. They were customarily married in 1991. In or around that time, the appellant was an employee of the Ministry of Local Government and Housing. She was allocated and allowed to rent certain property called Stand No.424 Sinoia Township, (“the property”) by her employer. Sometime in 1994, the Government offered to sell the property to the appellant. She accepted the offer and allegedly paid the full purchase price of the property through monthly deductions from her salary. Upon completion of payment of the purchase price, on 11 June 2012, the property was transferred into the names of both the appellant and the first respondent, her husband. Prior to that development, on 28 November 2008, the two had solemnised their union in terms of the Marriages Act [Chapter 5:11].

In 2000, the first respondent joined a certain businessman in the operation of a grocery store known as Manyene Trading (Pvt) Ltd (“the company”). The first respondent was a shareholder in the company, and, at some point, he acquired goods for the company on credit from the second respondent and bound himself as surety for the debt owed by the company. The company failed to repay the debt owed to the second respondent and the latter instituted proceedings against it and the first respondent, as surety and co-principal debtor, in the Magistrates' Court. The total sum claimed by the second respondent was US$138,500=.

On 7 November 2014, the magistrate found in favour of the second respondent and ordered the company and its directors to pay the US$138,500= claimed. Neither the company nor the directors managed to pay the said amount, and, as a result, the fourth respondent attached the first respondent's 50 percent share in the property in execution of the court order because the other 50 percent belonged to the appellant.

Aggrieved by the attachment, the appellant filed an application in the High Court seeking a declaratur to the following effect:

“In immovable matrimonial property, which is the matrimonial home, creditors cannot attach the same as a result of debt accrued by either of the parties.”

She also sought an order;

(i) That the attachment of the first respondent's rights in the property concerned be set aside;

(ii) That the Registrar of Deeds be authorised to transfer the 50 percent share of the property held by the first respondent to her; and

(iii) That the first and second respondents pay costs of suit.

The second respondent opposed the application while the first respondent did not file any opposing papers thereto.

The court a quo found that the first respondent's share of the property was capable of being attached by the Sheriff and sold in order to recover the debt that he owed to the second respondent. It found, further, that insufficient evidence was led to prove that the appellant was the sole owner of the property, or that she was entitled to have the first respondent's share transferred into her name. In the result, it dismissed the appellant's application.

The appellant was aggrieved by the decision of the court a quo, and, consequently, noted the present appeal on grounds that essentially raise two issues, that is:

(i) Whether or not the first respondent's share in the property can be transferred to the appellant; and

(ii) Whether or not a share in a matrimonial home jointly owned by spouses can be attached and sold in execution of a judgment entered against one of the spouses.

The appellant raised the following other ground of appeal:

“More importantly, the court a quo ignored, and was timid, in failing to take a robust approach required by the Constitution in protecting women's rights in the matter.”

The Appellant's case

The appellant's main case a quo was that the first respondent had acted recklessly in 'exposing' the matrimonial home and acquiring debts which resulted in his share of it being attached by the Sheriff. Further, she stated thus in her founding affidavit:

“…, as a joint owner, it is my respectful contention that a co-owner does not have jus abutendi in respect of the property. A co-owner, in my opinion, cannot introduce a structural change in the occupation of the land without the consent of the other, or, alternatively, the co-owner cannot expose the property through reckless action such that the rights of the co-owner can be directed (sic)…,. I therefore believe that where matrimonial property is concerned, which is jointly owned, the common law should be expanded to recognise that property cannot be attached or exposed without the consent of the other co-owner.”…,.

The appellant also made reference to the effect that the attachment of the first respondent's half share of the property would have, in particular, that it would result in the imposition on her, of another co-owner with equal rights over the property. She accordingly sought, in this respect, an order setting aside the attachment of the first respondent's half share in the property.

The appellant, in her heads of argument, argued that the attachment of the first respondent's share in the property amounted to an interference with her rights as a co-owner. She further argued that the rights enjoyed by co-owners do not include the right to alienate the property jointly owned without the consent of the other party. Accordingly, the first respondent had no right to pledge his share in the property as security for a debt without her consent. In advancing this argument, the appellant relied on the cases of Van de Merwe v Van Wyk 1921 EDC 298; Erasmus v Afrikander Proprietary Mines Ltd 1976 (1) SA 950…,; and Masubey v Masubey 1993 (2) ZLR 36.

The appellant argued that she was offered the option to buy the property by her former employer, the Government, accepted the offer and paid the full purchase price of the property. Consequently, the first respondent's share must be transferred to her because the first respondent had not paid anything in the acquisition of the property. Finally, the appellant advanced the argument that the first respondent's unilateral encumbrance of their matrimonial home constituted an infringement of her constitutional rights to equal treatment as enshrined in sections 56 and 80 of the Constitution.

Respondents' case

It has already been noted that the first respondent did not put up any challenge to the appellant's case a quo. The consequence of this is that what the appellant averred in relation to how the immovable property in question was acquired, and who contributed what to its acquisition, remained undisputed. The same applies to the averment that the first respondent had 'exposed' the property to judicial attachment without the appellant's consent.

The second respondent, who was in no position to dispute these averments, argued that in terms of property law, ownership of immovable property is proved by way of registration of title. Once the right of ownership is proved, it confers the most complete and comprehensive control over property to the extent that a co-owner has the right to alienate or dispose of his or her share in the property without seeking the consent of the other co-owner(s). The second respondent, however, accepted that before a co-owner can alienate his or her share in the property, it is desirable that they seek the consent of the other co-owner. However, it took the view that failure to obtain such consent cannot, alone, be taken as a basis to interdict a co-owner from alienating his rights in the property unless it is proved that such alienation was done in an unreasonable manner. The second respondent thus argued that in this case the first respondent had not exercised his right of ownership unreasonably since he used it as security “to honour a commercial transaction.”

The second respondent further argued that the constitutional right to equality applies to every person, man or woman, and, consequently, the fact that the appellant is a woman does not exempt her from the consequences of the law where there are legal obligations which must be met….,.

It should be noted that the first respondent in casu did not formally or directly 'alienate' his share of the property. A perusal of the Deed of Suretyship shows that what he did was bind himself as surety and co-principal debtor with his company, Manyene Trading (Pvt) Ltd, for the due payment of its debt to the second respondent (it is noted that the Deed of Suretyship purports to have been entered into and signed for by both the appellant and the first respondent. However, it can be assumed, and was so accepted by the court a quo, that the appellant had no knowledge of the transaction and that her signature thereto was forged. Indeed, a casual look shows a marked difference between her supposed signature in the Deed of Suretyship and that in her founding affidavit).

Nowhere in the Deed of Suretyship does it state that the matrimonial home was being pledged as security for the repayment of the debt in question. Nor did the appellant tender any other evidence to that effect, for instance a Surety Mortgage Bond over the first respondent's half share in the property. It was therefore a mis-characterisation of the evidence before the court to allege that the first respondent unilaterally encumbered the property by binding it as security for the repayment of the debt owed to the second respondent. At the stage of signing the Deed of Suretyship, all that the first respondent did was to create the possibility, in the event that he failed to repay the debt in his capacity as surety and co-principal debtor, of his share in the matrimonial home being attached in order to raise funds to repay the debt in question….,.

Be that as it may, it cannot be denied that, while the signing of the Deed of Suretyship, in reality, might per se not have interfered with the family's daily enjoyment of the matrimonial home, the danger, presumably unknown to the appellant, was always there that the first respondent might default in his repayment of the loan, giving rise to the judicial attachment of his share of the property. This having then transpired, the consequence is that, in practical terms, the appellant's and the family's enjoyment of the matrimonial home, as a whole, has been jeopardised.

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HH348-17 : JUDITH ISHEMUNYORO (nee MANDIDEWA) vs ANTONY ISHEMUNYORO and TYNSERVE DISTRIBUTORS (PVT) LTD and THE REGISTRAR OF DEEDS and THE SHERIFF FOR ZIMBABWE
Ruled By: MUNANGATI-MANONGWA J

The applicant and the first respondent are husband and wife being married in terms of the Marriage Act [Chapter 5:11] and the marriage still subsists. What has brought the parties before the court is not a matrimonial dispute but consequences arising from a commercial transaction concluded between the first respondent and the second respondent, Tynserve Distributors ...

The latter has attached half share of a jointly owned property. The facts of the matter are as follows;

The applicant and the first respondent started life together in 1991 after customary rites had been performed. It was only in 2008 that the parties solemnized their marriage in terms of the Marriages Act [Chapter 5:11]. Of the three children born of the marriage one (1) was a minor at the time of hearing of this matter. At the time of marriage, the applicant was employed by the Ministry of Public Construction and National Housing and was allocated Stand 424 Sinoia Township (hereinafter called “the property”) on rental terms. Subsequently, in 1994, the property was offered to the applicant to buy; she accepted the offer. She paid fully the purchase price which was directly deducted from her salary as a Government employee.

It is not in dispute that on 11 June 2012 the property was transferred into the applicant and her husband's names under Deed of Grant 2350/2012.

The applicant's husband has been running a grocery business under Manyene Trading (Pvt) Ltd since 2000. The second respondent supplied goods to the business on credit and the first respondent stood as surety and co-principal debtor for the due payment of monies due to the second respondent. Upon the business defaulting payment, the second respondent successfully sued the first respondent in the Magistrates Court for payment of the sum of $138,000=. The applicant purports that she was unaware of these developments.

The second respondent, in pursuit of execution, has attached 50% of the property to recover what is owed to it. It is this act which has led the applicant to approach this court. The applicant seeks the following order:

1. The attachment by the second respondent of rights in the property, being Stand 402 Sinoia Township situate in the district of Lomagundi measuring 2,025 square metres, arising out of a judgment of the Magistrates Court in case number HC23332/14, dated 7 November 2014, be and is hereby set aside;

2. In immovable matrimonial, which is the matrimonial home, creditors cannot attach the same as a result of debt accrued by either of the parties.

3. The Registrar of Deeds be and is hereby authorised to transfer the 50% ownership of the property held by the first respondent to the applicant and the Sheriff of Zimbabwe be and is hereby authorized to execute all such documents and do all such things to effect this transfer.

4. The first and second respondents pay costs of suit.

The first respondent, the applicant's husband, has not opposed the application. The second respondent vehemently opposes the relief sought.

Applicant's Submissions

Counsel for the applicant submitted that the first respondent (hereinafter referred to as “applicant's husband”), as co-owner, is not entitled to introduce structural changes in occupation, expose the property or encumber the property which is jointly owned. He argued that the applicant's husband, the first respondent, and his company pledged the property in question as security without the applicant's consent. That being so, that pledge is null and void as the applicant, a joint-tenant to the property, was not a party and never consented to that.

Relying on “ius abutendi,” he submitted that no co-owner has a right to destroy the property. Relying on Erasmus v Afrikander Proprietary Mines Limited1976 (1) SA 950 counsel for the applicant submitted that a co-owner has a right to reasonably use that property but if the use puts a premium or creates a nuisance on the rights of a co-owner then that right does not exist. He further referred to the decision of Masubey v Masubeyz1993 (2) ZLR 36 (HC) where the court held that the actions of a husband (now late) in granting his mother a usufruct on part of the property jointly owned, without the consent of his wife, infringed upon the rights of his wife.

In essence, counsel for the applicant submitted that the attachment of the first respondents' half share was null and void for it ran contrary to the common law principle on joint ownership.

The applicant asserted in her application that her rights as co-owner are so critical as to determine who she could co-own the property with. She further advocates for the expansion of the common law to recognize that jointly owned matrimonial property should not be attached or exposed without the co-owner's consent. This, counsel for the applicant argued, could be achieved through judicial activism duly supported by the Constitution, which, in section 176, gives power to this court, among the other superior courts, to develop the common law or customary law taking into account the interests of justice and the provisions of the Constitution.

Following on the applicant's assertion that she contributed the entire price, counsel for the applicant urged the court to consider that the applicant has a far greater share in the property - it having been acquired through her employment and therefore entitled to transfer of the whole property. This submission he premised on the fact that whilst jointly owned, the property is held in shares proportionate to respective contributions. Adopting this perspective would result in the declaration of the applicant as the sole owner of the property.

Further, the applicant's application has a constitutional dimension to it. She seeks to rely on section 56(1) which guarantees equality and equal protection of the law and section 56(2) on equal treatment including the right to equal opportunities in political, economic cultural and social sphere.

Counsel for the applicant submitted that allowing the husband to unilaterally mortgage the jointly owned matrimonial property is an infringement of the above-stated rights.

Section 80(1) is brought in and the same provides that every woman has full and equal dignity of the person with men including equal opportunities in political, economic and social activities. Thus, allowing the attachment and sale of the property without the applicant's consent will amount to discriminating against the applicant and will maintain the “inherent” disadvantages which women in Zimbabwe experience. Reference was made to the Committee on Economic, Social and Cultural Rights wherein its General Comment No.16 (2005) placed emphasis on equal enjoyment of the rights for men and women in practice. The vulnerability of women was discussed at length with reference to different International Conventions or Committees, the UN Committee on Economic Social and Cultural Rights General Comment No.7 (1997) on the right to adequate housing for this vulnerable group.

Counsel for the applicant called upon the court to live to its obligation under section 44 of the Constitution to respect, protect, promote and fulfil rights and freedoms set out in the Constitution.

In summary, counsel for the applicant submitted that the attachment was unlawful as the husband did not have ius abutendi. If the applicant were to be deprived of her home this would be an infringement of her rights to dignity, equality, equal protection and benefit of the law and her right to property. Counsel for the applicant sought to persuade the court to adopt the English position, as espoused by LORD DENNING in William and Glyn's Bank Limited v Boland, which makes it a duty of creditors to do due diligence when dealing in matrimonial properties, which principle is utilized in Malawi and Zambia.

Second Respondent's Case

For ease of reference, the second respondent shall be referred to as “Tynserve”. Counsel for Tynserve submitted that on the common law aspect the case of Erasmus v Afrikander Proprietary Mines Limited1976 (1) SA 950 sets out the standard. The applicant has to establish that the manner in which title has been used is unreasonable. This is not the case in casu. The law of property, and section 72 of the Constitution, provide that everyone has a right to property. That being so, the respondent has a right to deal with his share as benefits him as an owner. In that regard, there is no need to set the attachment aside. She further submitted that the attachment is proper as it flows from an order of court, which, in terms of section 164(3) of the Constitution, is binding on all persons. She checked the relevance of all the sections of the Constitution which counsel for the applicant referred to being section 19, 25, 26, 56, 78, and 81 as having no bearing to the matter at hand. She stated that there is no evidence of which right is being infringed.

It was further submitted on behalf of the second respondent that the relief sought in the draft order, that creditors cannot attach immovable property which is the matrimonial home, is not supported by any authority.

Further, there is no basis for the court to order transfer of the 50% ownership of the property held by the first respondent to the applicant.

In response, counsel for the applicant indicated that the founding affidavit does not have to state the constitutional aspect characterizing the application. The second respondent should have sought a declaration that the first respondent owns 50% before proceeding. Further, this case is different from Linda Mudawadzuri v Kingdom Bank Africa LtdHH95-15 as there was distinct ownership as the shares were indicated. According to counsel for the applicant, the attachment of the 50% amounted to unilateral allocation of shares.

Analysis

It is common cause that the property in issue is jointly registered, therefore, it is co-owned. Unlike in Linda Mudawadzuri v Kingdom Bank Africa LtdHH95-15, the Deed of Grant which is filed of record does not specifically state that either party owns an un-divided half share. The preamble to the Deed which refers to the State as the transferor or simply states;

“I do hereby grant unto Antony Ishemunyoro (born 10 January 1964) and Judith Mandidewa (born 28 February 1970).”

“I do hereby grant unto Antony Ishemunyoro (born 10 January 1964) and Judith Mandidewa (born 28 February 1970), their heirs, executors, administrators or assigns hereinafter referred to as the owner, or a piece of land measuring 2,085 square meters called Stand 424 Sinoia Township.”

In the absence of the specificity regarding the shares, the legal position where property is jointly registered was enunciated by McNALLY JA as follows in Lafontant v Kennedy (2000 (2) ZLR 280 SC;

“What, then is the Zimbabwean law relating to joint ownership of immovable property? It seems on that joint ownership is the same as co-ownership, which in turn coincides with what the Deeds Registry Act [Chapter 20:05] calls a land held by two persons in undivided share. See sections 24, 25 and 26 of that Act.

Where two persons own immovable property in undivided shares (as is the case here) there must, I think, be a rebuttable presumption that they own it in equal shares. That presumption will be strengthened when (as here) the parties are married to each other at the time ownership was acquired.”

He further cites JONES, Conveyancing in South Africa,4ed…, which states;

“Where transferees acquire in equal shares it need not be stated in the Deed that they acquire 'in equal shares' as this fact is presumed on the absence of any statement to the contrary.”

In essence, the starting point is that parties are prima facie owners in equal shares. The court held in the same case that “the court cannot move from that position on mere grounds of equity. There must be a more solid foundation in law than that. Examples of facts amounting to evidence which may lead to successful rebuttal of the presumption are stated as instances where the co-owner is a nominee or agent of the other owner, where there is fraud, mistake, or a donation which can be voided by the donor.”

I am not satisfied that the applicant presented to court any evidence which would persuade the court to declare her the sole owner of the property. Apart from absence of any evidence to prove her extent of contribution (except mere say so), and, further, establishment of a solid foundation or a basis why the first defendant's share should be awarded to her. Without any recognised ground, mere contribution not being enough as mere grounds of equity do not suffice. The degree of rebuttal of the presumption on equal shares is very high as enunciated above.

Following the finding that the applicant has failed to establish grounds why she should be entitled to the whole property, it follows therefore that the first respondent remains the owner of 50% share in the jointly owned property.

That being so, to what extent can he deal with his property?

The answer can be extricated from SIELBERG and SCHOEMAN's The Law of Property, 5th edition…, where the rights of a co-owner are enunciated as follows;

“Every co-owner has the right, freely and without reference to co-owners, to alienate his or her share, or even part of his or her share subject of course to the provision of the subdivision of Agricultural Land Act. It is this right which is probably the most important characteristic which distinguishes a co-owner per se from all other forms of co-ownership such as partnerships and association. It is clear that the exercise of this right may lead to friction on that it enables one co-owner to force the others into a legal relationship with a party or parties they do not desire.”

Thus, a co-owner has a right to deal with his rights.

As rightly put by the author referred to above, an undesirable situation may arise where the other co-owner may then own property with a stranger.

In essence, therefore, the first respondent is, at law, authorised to alienate his rights, encumber the same without reference to the other co-owner. It therefore follows that the second respondent would be within its rights to attach the 50% share of the first respondent to recover a debt incurred in a purely commercial transaction.

It cannot be disputed that the exercise of a co-owner's rights bring outright hardship to another co-owner in a matrimonial set up. This is particularly so when the property in issue is a matrimonial home. A house, being indivisible, the property being a family home, as in this case, it becomes, in my view, virtually impractical that the property be owned by two unrelated parties. It is this undesirable and impracticable situation that, in my view, counsel for the applicant sought to demonstrate and seek solution to by referring to dynamic constitutionalism.

No doubt, legislation intervention is required to protect a family home.

This may constitute in law reform providing legal mechanisms for the prevention of encumbering a matrimonial home in the absence of meeting certain criteria. As TSANGA J stated in Madzara v Stanbic Bank Zimbabwe Limited and OthersHH546-15…,;

“The absence of mechanisms for the protection of a matrimonial home is indicative of a lacuna in the law which needs to be addressed legislatively in terms of spelling out the exact parameters of the protection of the matrimonial home.”

Attainment of such a milestone can never be achieved through judicial activism. This is a pertinent issue which touches on the concept of real rights as constituted by ownership and the will to deal in property and the limiting of such rights where matrimonial property is juxtaposed with the dictates of commerce. Entities like banks and other lenders rely on security which is guaranteed by ownership rights. It is upon the trust and security that whatever is lent out can be recovered that holds the confidence of banks and lenders. Given that scenario, the clandestine interference by the courts in upturning the law may create an imbalance if not supported by the necessary legislative intervention. The situation obtaining in Malawi and Zambia cannot be brought about by the courts.

In my view, no constitutional provision, in terms of equality of rights during marriage, or equal treatment including equal opportunities in economic, cultural and social spheres was infringed. Neither was the right to acquire property.

The applicant worked and acquired property of which she, out of her free will and volition, decided to register jointly with the husband. No cogent reason was advanced to explain why she decided to include, in title, her husband who did not, according to her evidence, contribute to the acquisition. It can only be concluded that she donated the half-share to her husband and it was only after she was faced with the disposal of the husband's half share that she panicked and raised this application.

In conclusion, it is time that the legislature listens to the outcry that has resulted from the disposal of family homes by either spouse encumbering or selling a matrimonial home without the knowledge of the other leaving the family destitute. The Constitution recognizes the right to family and its protection to shelter and indeed protection of children. These rights will remain on paper unless effective measures and timeous intervention is made regarding protection of matrimonial homes. The dictates of commerce need be considered against the backdrop that family is what ultimately constitutes a nation upon which commerce is subsequently built.

Although this application cannot succeed, it counts towards the statistics of reflecting the extent of the problems associated with the legislative gap viz protection of the matrimonial home. Accordingly, for the aforegoing reasons, the following order is made;

The application is dismissed with costs.

Appealed
SC21-19 : RONALD BAKARI vs TOTAL ZIMBABWE (PRIVATE) LIMITED
Ruled By: GARWE JA, GUVAVA JA and BHUNU JA

This is an appeal against the entire judgment of the High Court sitting at Harare dated 30 March 2016 wherein it was held that there was a valid and binding surety agreement between the appellant and the respondent. On that basis, the appellant was ordered to pay the respondent the sum of US$37,497=42. BACKGROUND FACTS The brief facts of ...

BACKGROUND FACTS

The brief facts of the matter may be summarised as follows:

On 28 December 2006, the respondent, Total Zimbabwe Limited and a company known as SM Tyres (Pvt) Ltd (hereinafter referred to as SM Tyres) entered into a marketing licence agreement in terms of which SM Tyres was permitted to enter, operate and utilize one of the respondent's service stations at Nyamapanda Border Post. Following the agreement between the respondent and SM Tyres, the appellant and one Shadreck Mawire entered into a surety agreement on behalf of SM Tyres. In terms of the agreement, SM Tyres was entitled, among other things, to purchase petroleum based products exclusively from the respondent. SM Tyres was granted a credit facility for the supply of the products and it was obliged to make daily payments of all sale proceeds into the respondent's bank account. It was also to pay all taxes and rates charged in respect of its use of the service station.

SM Tyres failed to honour its obligations in terms of the credit facility as it did not settle an outstanding balance for fuel deliveries, electricity bills, unit tax for water re-connection and the Environmental Management Agency application fees which resulted in SM Tyres attracting a spot fine for storing fuel without a licence. The debts that accrued to the service station during the time that SM Tyres operated it amounted to US$37,497=42.

On 26 July 2011, the respondent terminated the agreement and demanded payment of the amount owing. On 12 June 2012, the respondent obtained judgment against SM Tyres in judgment number HH245-12.

SM Tyres failed to pay.

Having failed to obtain its money from SM Tyres, the respondent then issued summons in March 2014 out of the High Court against the appellant for payment of the amount owing because SM Tyres had failed to pay the judgment debt. It sued on the strength of a surety document. It alleged that the appellant and Shadreck Mawire stood as sureties on behalf of SM Tyres as was required of SM Tyres when it signed the marketing licence agreement. The appellant denied having stood surety for SM Tyres and the matter proceeded to trial.

The respondent's sole witness, Esther Verenga, the General Trade Manager for Total Zimbabwe, testified that the respondent entered into an agreement with a company called SM Tyres (Pvt) Ltd trading as Nyamapanda Service Station. She averred that she was not responsible for the preparation of the surety document because a template was used. She further testified that she was not present when the document was signed neither was she aware of who was present at the signing of the agreement. She however stated that the surety document had a signature belonging to the appellant and his contact details. She stated the amount that was owing and how it had accrued.

At the end of the respondent's case, the appellant applied for absolution from the instance. The appellant's argument was that the respondent's witness was not present when the surety document was either prepared or signed therefore the evidence she presented before the court could not be relied upon. It was also his argument that the marketing licence agreement presented to the court made reference to a “licencee” yet the principal debtor in the surety document was referred to as an “operator”. The appellant argued that the respondent had failed to prove a prima facie case against him. The application was opposed and subsequently dismissed.

The matter proceeded to the defence case on the basis that since the appellant did not dispute signing the surety document, the onus now lay on him to show that he had not stood as surety for SM Tyres.

The appellant testified that he did not owe the respondent because he stood as surety for a company known as Limpopo Investments and not for SM Tyres (Pvt) Ltd. He testified that he did not know SM Tyres. He signed a surety agreement at the request of a friend, one Mr Wycliffe Chiunda (Chiunda) who, at that time, was a Marketing Executive with the respondent. Limpopo Investments was Wycliffe Chiunda's company and he wanted a surety agreement in order for him to negotiate with the respondent so that he could use the respondent's Nyamapanda Service Station.

The appellant admitted that he wrote his name and that of Shadreck Mawire on the surety document. He confessed that he did not know Shadreck Mawire but the name was dictated to him by Wycliffe Chiunda. When Shadreck Mawire subsequently signed the document the appellant was not present. He accepted having endorsed his contact details on the document and the name Nyamapanda Service Station. He denied having been present when the witnesses signed and when the document was dated. It was his position that he signed the document in 2004 as opposed to 2006 the date that appeared on the document.

The appellant denied ever seeing the marketing licencing agreement that the respondent referred to. Upon being asked if he could produce the marketing licence agreement which related to Limpopo Investments he stated that he was not in a position to do so. He stated that Wycliffe Chiunda had communicated to him that there had been a mix up at the office which is why the two documents were together.

Wycliffe Chiunda was not one of the witnesses that testified in court on behalf of the appellant. The appellant stated that there was an affidavit from Wycliffe Chiunda which could substantiate his story but it was not produced before the court a quo as evidence.

It was also his evidence that the failure to endorse “Limpopo Investments” on the surety document was an oversight on his part.

The court disbelieved the appellant and judgment was entered against him. Aggrieved by the decision of the court a quo the appellant launched the present appeal.

ISSUES FOR DETERMINATION

It seems to me, from the grounds of appeal, that the following issues arise for determination in this matter.

1. Whether the Appellant bound himself as surety for SM Tyres (Pvt) Ltd when he signed the surety agreement?

2. Whether the court a quo erred in holding that the onus lay on the appellant to prove that he had signed for Limpopo Investments and not SM Tyres (Pvt) Ltd.

3. Whether the respondent's single witness was credible?

4. Whether judgment entered against the principal debtor novated the appellant's liability as surety?

5. Whether the court a quo erred by not granting absolution from the instance at the close of the plaintiff's case (herein respondent)?

1. Whether the Appellant bound himself as surety for SM Tyres (Pvt) Ltd when he signed the surety document?

In determining this issue, I will first consider what constitutes a valid surety and whether or not the agreement in question met the prescribed requirements. In the event that I find that it does, I will then consider whether the appellant bound himself as a surety for SM Tyres when he signed the suretyship document.

According to CANEY LR, FORSYTH CF and PRETORIOUS JT, Caney's The Law of Suretyship in South Africa, (Juta and Co, 2010) a suretyship involves three parties; the creditor, the principal debtor and the surety. It is a contract between the surety and the creditor in terms of which the surety binds himself to perform the obligations of the principal debtor to the creditor if the principal debtor fails, in whole or in part, to fulfil his obligations. Suretyship is a contract, and, as such, the principles of contract law apply to suretyships. The requirements of the suretyship are as follows; the identity of all parties (that is: creditor, principal debtor and surety); and the nature and amount of the principal debt. It is important to note that all three parties must be different parties as a person cannot stand surety for his own debt.

Having examined the above, I am satisfied that the agreement signed does meet the requirements of a valid suretyship. The creditor was Total Zimbabwe Limited, the principal debtor was SM Tyres (Pvt) Ltd, and the sureties are in the person of the appellant and Shadreck Mawire. It was a written document and all parties were clearly identified.

I therefore turn to the second part of the question before me.

It is not in dispute that the appellant signed a surety document. It is also not in dispute that it was the appellant who wrote his name and that of Shadreck Mawire on the surety document. Further, the appellant is the one who entered the name Nyamapanda Service Station on the document. Having done so, the appellant went on to put his contact details and signature to the document.

What appears to be in dispute, however, is, on whose behalf was the surety document signed.

The appellant alleges that the surety document that he signed was on behalf of Limpopo Investments and not SM Tyres. He alleges that his friend, one Wycliffe Chiunda, is the one who asked him to stand as surety for his company, Limpopo Investments. Having made those submissions no further evidence was adduced on his behalf to support his averments. He simply made an averment to the court a quo that he had an affidavit in his possession that had been deposed to by Wycliffe Chiunda but the affidavit was not produced in court. Wycliffe Chiunda was not called by the appellant to testify.

It seems to me that the appellant could only have escaped liability if, having realized that he had signed a document on behalf of someone he had not intended, he had sought to rectify the surety document. The remedy for persons who find themselves in a position that the appellant purports to have been, that of signing a document thinking that it is meant for one thing when in actual fact it means another, is the defence of rectification. According to CANEY LR, FORSYTH CF and PRETORIOUS JT, Caney's The Law of Suretyship in South Africa, (Juta and Co, 2010)…, “extrinsic evidence…, in regard to the central issue of consensus may be admissible when one of the parties seeks rectification of the suretyship document.”

In the case of Northern Cape Co-operative Livestock Agency Ltd v John Roderick and Co Ltd 1965 (2) SA 64 (O) it was stated that, with rectification, the party seeking to have the contract rectified claims that the contract does not reflect what the parties agreed on and seeks to have the matter put right. Clearly, this is a matter of evidence and it was imperative that Wycliffe Chiunda must have testified in support of the appellant's case.

In casu, the suretyship document that was the centre of this dispute contained the relevant elements that formed a binding suretyship agreement. The principal debtors, the amount of the debt, and the creditor were all clearly identified. Prima facie, the document substantially met the requirements of a valid suretyship document therefore it was binding. The only way that the appellant could have escaped liability was through rectification.

The appellant could have led evidence in order to rectify the agreement but chose not to do so. It seems to me that the only logical conclusion under the circumstances is that the appellant was fully aware about what he was getting himself into when he signed the document in question. The court a quo cannot therefore be faulted in finding that the appellant bound himself as surety in accordance with the agreement.

2. Whether the court a quo erred in holding that the onus to prove that the appellant was surety for Limpopo Investments and not SM Tyres (Pvt) Ltd was on the appellant

Under the law of suretyship, a surety who seeks to escape liability for one reason or another has the onus to prove his defence. In the case of Tesoriero v Bhyjo Investments Share Block (Pty) Ltd 2000 (1) SA 167 the court held as follows:

“Where a party who has signed a contract wishes to escape liability on the ground of justified error as to the nature or contents of the document he must show that he was misled as to the nature of the document or as to the terms of which it contains by some act or omission of the other party.”

In the case of Langeveld v Union Finance Holdings (Pty) Ltd 2007 (4) SA 572 (W), the court held that the onus was on a surety to prove that he was not aware that he was signing a document as a surety. The court further held that there was a strong praesumptio hominis that anyone who has signed a document, has the animus to enter into the transaction, and this person was burdened with the onus of convincing the court that he or she had not in fact entered the transaction.

In the case of Prins v ABSA Bank Ltd 1998 (3) SA 904 (C) a surety sought to rely on the defence that he believed, at the time of signing the surety agreement, that it was for a limited duration and a limited amount, yet, in actual fact, he had signed for an unlimited amount and an unlimited period. The onus was placed on him to prove that it was unreasonable to allow the creditor to rely on unlimited suretyship.

Although the above cited cases are not on all fours with the facts of this case, it is quite clear that the legal principle is the same.

The respondent's claim was clear and unequivocal. The respondent tendered the requisite evidence which showed that the appellant had signed a suretyship document on behalf of SM Tyres (Pvt) Ltd. Applying the above cases, it became the appellant's duty to refute that evidence. The appellant failed to explain why there was no reference to Limpopo Investments on the surety document. He simply attributed this material omission to oversight on his part. As a result of that oversight the appellant bound himself to pay SM Tyres' debts.

He also argued that the information relating to his domicile was not accurate and therefore he was not liable. However, the suretyship agreement shows his domicile as at 2004 and not his current address. In my view, this argument is without substance because the agreement was entered into in 2004. The fact that he subsequently relocated is immaterial.

In view of the above, the first and second grounds of appeal have no substance and the court a quo correctly found that the appellant had the onus to prove that the surety document that he signed was not on behalf of SM Tyres (Pvt) Ltd….,.

The appellant also based his defence on Wycliffe Chiunda, a former Marketing Executive of the respondent indicating that it was Wycliffe Chiunda who had asked him, as a favour, to stand as surety for his (Wycliffe Chiunda's) company called Limpopo Investments yet he failed to call Wycliffe Chiunda to corroborate his evidence.

In light of the above, the court a quo was correct to query his credibility considering his level of intelligence. The court a quo correctly took into account the educational qualifications that the appellant possessed. It was therefore not unreasonable for it to expect him to know the consequences of affixing his signature to the contract.

In this respect, the judge a quo held that:

“A litigant who challenges a surety deed on the premise that he signed it for a different entity or person can only discharge the onus resting upon him to show that he never intended to sign the document on behalf of the plaintiff, and be bound by it, by calling evidence to support his assertion. He is required to do more than make a bare denial of the surety deed or simply make a challenge to the surety deed and leave it there. It was incumbent upon the defendant to call Mr. Chiunda to show that the deed was done for Limpopo Investments and that he indeed did sign the deed for Limpopo Investments. The defendant failed to call Mr. Chiunda to come and substantiate his version and hence the defendant failed to discharge his onus…,.”

In light of the above, the court a quo cannot be faulted in arriving at the conclusion it did.

4. Whether judgment entered against the principal debtor novated the appellant's liability as surety?

The appellant, in his sixth ground of appeal takes the position that the granting of a judgment against SM Tyres (Pvt) Ltd novated the surety agreement that established his liability to the respondent.

The respondent's argument is that the granting of a judgment against a principal debtor does not prohibit a creditor from claiming the same amount against the surety if the principal debtor has failed to perform.

Novation was defined by ZIYAMBI JA in the case of Mupotola v Southern African Development Community SC07-06 where she stated as follows:

“Novation means replacing an existing obligation by a new one, the existing obligation being thereby discharged. See, The Law of Contract in South Africa, Third Ed, by R.H Christie at p498. The above definition presupposes that both the existing obligation and the new one arise out of valid contracts. When parties novate they intend to replace a valid contract by another valid contract. See Swadif (Pvt) Ltd v Dyke 1978 (1) SA 928 (A) at 940 quoted by Christie in the Law of Contract in South Africa, supra.”

Mupotola v Southern African Development Community SC07-06 is to the effect that novation arises where there are two contracts.

In casu, it is my view that the judgment against the principal debtor did not create a new agreement that set aside the suretyship agreement entered between the appellant and the principal debtor. The approach suggested by the appellant, that where a creditor sues a principal debtor separately from his surety and judgment is subsequently entered in favour of the creditor; the surety's obligation is, at that stage, discharged, is clearly an incorrect position of the law. It is trite that as long as the judgment debt has not been paid, and the matter has not prescribed, the judgment creditor may recover the debt from a surety….,.

DISPOSITION

During the trial the appellant failed to prove his defence on a balance of probabilities. He failed to provide evidence before the court to sustain his arguments. There was no misdirection by the court a quo in accepting the evidence from the respondent's single witness as the court found the witness credible. The issue of novation raised by the appellant, in a bid to evade liability, cannot stand because the issue was never raised in the court a quo. The Supreme Court, as an Appellate Court, save in exceptional circumstances, only deals with matters that have been dealt with by the court a quo. Its appellate powers do not stretch to dealing with matters as a court of first instance….,.

In the result, I find that the appeal is without merit and it is accordingly dismissed with no order as to costs.

View Appeal
HH222-16 : TOTAL ZIMBABWE (PVT) LTD vs RONALD BAKARI
Ruled By: DUBE J

This is a claim for monies outstanding from a debt to which the defendant allegedly stood surety to. The circumstances arising in this claim are mostly common cause. The plaintiff is Total Zimbabwe (Pvt) Ltd, a company dealing in petroleum products. The plaintiff entered into a marketing licensing agreement with SM Tyres (Pvt) Ltd in terms of ...

This is a claim for monies outstanding from a debt to which the defendant allegedly stood surety to.

The circumstances arising in this claim are mostly common cause. The plaintiff is Total Zimbabwe (Pvt) Ltd, a company dealing in petroleum products. The plaintiff entered into a marketing licensing agreement with SM Tyres (Pvt) Ltd in terms of which the company was permitted to enter, operate and utilise the plaintiff's service station at Nyamapanda Border Post. The plaintiff was to provide petroleum-based products and other products commercialised by it for sale at the service station. S.M. Tyres was granted a credit facility for the supply of the produce by the plaintiff. It failed to pay for the products supplied and acknowledged the arrears resulting in the plaintiff cancelling the Marketing Licence Agreement entered into, suing it, and obtaining judgment in the sum of $37,497=42.

The plaintiff avers that the defendant stood as surety and co-principal debtor to the marketing licence agreement between the plaintiff and SM Tyres and that the defendant is liable, jointly and severally, with SM Tyres for the payment of the arrears owed to the plaintiff. The plaintiff has issued summons against the defendant on the premise that he is a surety and co-principal debtor to the agreement between the plaintiff and S.M. Tyres for the outstanding amount.

The defendant denies guaranteeing the liability of S M Tyres to the plaintiff. He claims not to know SM Tyres and claims that he signed a suretyship document which was blank on the spaces meant for dates and witnesses at the instance of a friend who wanted to use it for his company called Limpopo Investments (Pvt) Ltd. The defendant maintains that there is no cause of action against him. In his plea, he claimed that the claim has prescribed in that the marketing licence agreement which was to run from 1 February 2007, for a period of three years, expired on 31 July 2010 and that any claim arising therefrom against the defendant has prescribed.

The following issues were referred to trial;

(1) Whether or not the claim is prescribed.

(2) Whether or not the deed of suretyship signed by the defendant in favour of the plaintiff is valid.

(3) If the answer to (2) is in the affirmative, whether or not the defendant is liable to the plaintiff for the sum of $37,497=42.

The trial opened with the plaintiff calling its General Trade Manager, Ester Verenga. She was the plaintiff's sole witness. She testified that when the transaction in issue was entered into she was the Retail Manager for the plaintiff. The defendant together with Shadreck Mawire entered into a Deed of Suretyship and a guarantee in favour of the plaintiff on 28 December 2006. The plaintiff also entered into a marketing licence agreement with S.M. Tyres trading as Nyamapanda Service. The arrears were computed at $37,497=42. S.M. Tyres acknowledged the arrears. In May 2011, the agreement was suspended and the dealership was terminated in July 2011 and the company vacated the premises in August 2011. The witness acknowledged, under examination, that she is not the one who prepared the Deed of Suretyship as a template is used. She was not present when it was signed and she did not try to find out who the witnesses were and who was present when it was signed. The former Retail Manager, Mr Chiunda, is the one who put these papers together. She is aware that the former manager claims that the surety deed and guarantee is for Limpopo Investments. She was unaware of the company called Limpopo Investments or of any dealings it had with the plaintiff. She was aware that the defendant claims that he signed the deed in favour of Limpopo Investments and not S.M. Tyres. She insisted that because it is endorsed on the deed that it is for Nyamapanda Service Station and Mr Mawire, who represented S.M. Tyres, also signed it, it was signed in favour of SM Tyres. She sees a link between the Deed of Surety and the marketing licence agreement. She acknowledged, under cross examination, that many people have approached the plaintiff to try to use Nyamapanda Service Station. She accepted that any person who intends to use Nyamapanda Service Station has to have a Deed of Surety attached to the operator's agreement. She insisted that the Deed of Surety is only signed when you sign the agreement. The witness did not establish if the defendant is a Director of S.M. Tyres.

The plaintiff sued S.M. Tyres and obtained judgement against it. The witness gave her evidence well. She maintained her story under cross examination. Although this is a single witness case, the evidence of the witness was clear, truthful and satisfactory. Her version was corroborated by the contents of the surety document and other documents produced. She was a credible witness and I believed her.

At the close of the plaintiff's case, the defendant applied for absolution from the instance. The defendant submitted as follows;

The plaintiff's case fell apart during cross examination. The evidence of the sole witness to the plaintiff's case revealed that the surety document was signed for Limpopo Investments and not SM Tyres. The defendant contended that the witness did not prepare the surety agreement on which the plaintiff's case is based and she did not know how both the Marketing License Agreement and Surety Agreement found themselves together. Further, that the former Retail Manager responsible for the signing of the surety agreement states that the surety agreement was signed in favour of an entity known as Limpopo Investments (Pvt) Ltd and not for the debt owed to the plaintiff by SM Tyres as alleged. The defendant did not raise the issue of prescription as part of this application.

The plaintiff opposed the application and I will not, for the purposes of this judgment, summarise its argument.

The test to be employed in deciding an application for absolution from the instance is well settled and was laid down in United Air Charters Ltd v Jarman 1994 (2) ZLR 341 (SC). A plaintiff will withstand such an application if, at the close of his case, there is evidence which a court, directing its mind to such evidence, could or might find for him. See also Katerere v Standard Chartered Bank Zimbabwe Limited HB51-08; Supreme Service Station (1969) (Pvt) Ltd v Fox & Goodridge (Pvt) Ltd 1971 (1) RLR 1 (A); Lourenzo v Raja Dry Cleaners & Steam Laundry (Pvt) Ltd 1984 (2) ZLR 151 for the same approach.

I dismissed the application after considering submissions from both parties. The issue of onus exercised my mind. The law is that the onus of proving one's case in a matter involving a dispute over a surety agreement is on the one who seeks to rely on the suretyship deed. The position changes where a surety challenges liability for a debt based on a surety agreement he signed. In Langeveldt v Union Finance (4) SA 572 (W), the court discussed the subject of a surety seeking to be released from liability in terms of his suretyship agreement and held that the surety bears the onus of convincing the court that he did not intend to enter into the suretyship agreement in issue. That is the correct legal position. Where a surety seeks to avoid liability in terms of a surety agreement and challenges a surety agreement, the onus switches to him to show why he should not be bound by the surety agreement. He bears the onus of convincing the court that it was not his intention to enter into the agreement in issue.

Similarly, where a surety challenges a surety agreement and he makes an application for absolution from the instance at the close of the plaintiff's case, his application cannot, from a practical standpoint, succeed because of the reverse onus reposed on him. A defendant who applies for absolution from the instance at the close of the plaintiff's case has not had an opportunity to present his own case and defence at this stage of proceedings. Whether or not he has managed to discharge the onus on him can only be resolved after he has led his own evidence and canvassed fully his defence. His side of the story has to be heard first before a decision to dismiss the plaintiff's case is made; this, because of the onus resting on the surety.

The defendant's challenge to liability is that the surety document he signed, which the plaintiff seeks to rely on, was done for Limpopo Investments and not SM Tyres. The onus shifted onto him, the moment he raised this defence, to show that he did not sign the surety document for SM Tyres. It was mischievous of the defendant to apply for absolution from the instance at the close of the plaintiff's case.

I dismissed the application and allowed the matter to proceed to the defence case.

The defendant testified in his own case. His evidence is as follows;

He signed the surety agreement after he had been requested by Whitecliff Chiunda, a Total Marketing Executive, to do so. He was told by Mr Chiunda that he wanted to use the surety document to negotiate with his employers so that he could operate Nyamapanda Service Station. He signed the Deed of Surety for Mr Chiunda's company, Limpopo Investments. He endorsed all the names on the surety document and included Mr Mawire's name because two sureties were required. He did not know him, Mr Mawire. He was not present when Mr Mawire signed the document. He also endorsed his own contact numbers. The surety document was not dated when he signed it. The date was added without his consent. He had not had sight of the operating license when he signed the surety. He endorsed the words Nyamapanda Service Station on the deed document because that is the place where Limpopo Investments was supposed to operate from. He failed to endorse the words Limpopo Investments on the document through an oversight and thought that the endorsement of Nyamapanda Service Station was sufficient. Under cross examination, the witness denied that the fact that he endorsed the words Nyamapanda Service Station on the deed meant that the Deed of Surety was for SM Tyres. He maintained that he did so because that is the place Limpopo Investments was supposed to operate from. He does not know S M Tyres and did not enter into any surety arrangement for SM Tyres. He was surprised that the agreement is for SM Tyres. When he contacted Mr Chiunda about it, he was told that there must be a mix-up. He was not calling Mr Chiunda as his witness as he gave him an affidavit outlining what happened. It is not necessary for him to testify because everything is sorted with the plaintiff's witness who confirmed that Mr Chiunda told her that the Deed of Surety was for Limpopo Investments.

The witness did not impress as a truthful witness….,.

It is common cause that the defendant signed and made all endorsements on the Deed of Suretyship except for the date and the portion where Mr Mawire signed. There is a marketing licence agreement signed between SM Tyres and Mr Mawire of SM Tyres trading as Nyamapanda Service Station.

The issue for determination is for whom the deed of surety was signed.

In Fourlamel (Pty) Ltd v Maddison 1997 (1) SA 333 (A) the court held that the following factors ought to be laid out in writing in order to constitute a valid and binding Deed of Suretyship;

(a) Identity of the creditor.

(b) Identity of the surety.

(d) The rights and obligations of the parties.

See also Spairstein v Anglo African Shipping Co SA Ltd 1978 4 SA; Langeveld v Union Finance Holdings (Pty) Ltd 19 SA for the same proposition.

The onus is on a plaintiff to prove that all the formal requirements for the surety's validity appear on the document. A surety agreement where the principal debtor and creditor are not ascertainable from the papers which are subject of the surety agreement does not comply with the requirements of a Deed of Suretyship. The Deed of Suretyship filed in support of this claim reveals, on the face of it, that it was signed for Nyamapanda Service Station, being the principal debtor. Accompanying this deed is a marketing licence agreement for SM Tyres trading as Nyamapanda Service Station signed by a representative of SM Tyres. It is clear from the marketing licence agreement that SM Tyres traded as Nyamapanda Service Station. The fact that both the deed and the Marketing Licence agreement bear the same date and were signed by Mr Mawire supports the plaintiff's assertion that the documents relate to SM Tyres and are for the same transaction.

The documents were signed the same day signifying that they were prepared for the same transaction. There is an unmistakable link between S M Tyres and Nyamapanda Service Station. The identity of the principal debtor is clear. The identity of the creditor is also clearly visible on the deed. The deed shows that the defendant and Mr Mawire bound themselves as sureties and co-principal debtors with Nyamapanda Service Station to the plaintiff. The rights and obligations of the parties are fully and clearly laid out. All the essentials of a valid contract of suretyship are present in this deed. A valid contract of suretyship was entered into by the parties to the surety agreement.

The defendant is the one who endorsed most of the details on the document. The words Nyamapanda Service Station were endorsed by the defendant. He also endorsed Mr Mawire's name as co-surety. He endorsed his own name together with his telephone details and signed the document. The defendant seemed to be in control of the situation and knew what he was doing when he signed the surety deed. The defendant testified that he appreciated the implications of the surety agreement. The defendant is not illiterate. He is a former telecommunications specialist and holds a Diploma in Telecommunication.

Where a person has signed a document to enter into a transaction which he later challenges, he is required to explain to the court why he asserts that he did not intend to enter into the transaction. The defendant failed to explain, under cross examination, why he did not endorse the name of Limpopo Investments on the deed, choosing to say that this was through an oversight. He knew the implications of the document that he had drawn up and signed. It is incomprehensible how the defendant would endorse on the deed only the name of Nyamapanda Service Station. The defendant failed to explain why he did not endorse either the name of Mr Chiunda or Limpopo Investments on the surety document if he understood the surety agreement to relate to the two. Right under his name, in paragraph 1(a) of the deed, is stated that the surety binds himself jointly and severally with the operator for his due and punctual performance yet he did not find out who the operator was. The defendant claimed that he was shown a marketing licence agreement for Limpopo when he signed the surety document yet he was unable to produce any documentation related to Limpopo Investments that ties with the surety deed. It has not been shown that Limpopo Investments ever operated the service station or ever made any arrangements for the operation of the service station. The endorsement of Nyamapanda Service Station by the defendant shows clearly that it was meant to reflect for who the deed was being signed – thus, SM Tyres (Pvt) Ltd. An obvious link has been shown between the marketing licensing agreement and the surety deed.

The plaintiff's witness insisted that the deed of surety is only signed when you sign the marketing licence agreement as an operator. The word ''operator'' is clearly used in reference to the licensee under the marketing license agreement. The only marketing licence agreement shown to have been signed with an operator which is supported by a surety deed is the one produced, involving SM Tyres and the plaintiff. He also never bothered to find out who his co-surety was. No link has been shown between Mr Mawire and Limpopo Investments. No reason has been advanced why Mr Mawire would act as a surety for Limpopo Investments. The defendant is bound by what he gave out and signed for.

A man who signs a contract is taken to be bound by the ordinary meaning and effect of the words which appear over his signature. There is a presumption that a person who authors and signs a document does so after he has acquainted himself with the contents thereof and that any person who enters into a contract has the intention to enter into it and be bound by the terms of the agreement. These principles sum up the caveat subscriptor rule.

A surety who endorses all the essential details of a surety deed on the deed document cannot turn around and say that he did not understand the import of the deed. He is taken to have acquainted himself with the contents of the document and is bound by its contents.

The defendant filled in the details of the surety deed and signed it thereby accepting the import of the terms and conditions of the agreement he signed. The maxim caveat subscriptor is applicable to the circumstances of the signing of this document. The evidence led leads to one conclusion - that the defendant and Mr Mawire bound themselves as sureties and co –principal debtors for S M Tyres (Pvt) Ltd…,.

It was incumbent upon the defendant to call Mr Chiunda to show that the Deed was done for Limpopo Investments and that he indeed did sign the Deed for Limpopo Investments. The defendant failed to call Mr Chiunda to come and substantiate his version and hence the defendant has failed to discharge the onus on him to show that the Deed of Suretyship he signed was for Limpopo Investments.

The probabilities favour the plaintiff's version that the defendant bound himself as surety and co-principal debtor with Mr Mawire for SM Tyres. The defendant signed the agreement of surety, specifically accepting the import of its terms and conditions into the document he signed. The plaintiff is entitled to its claim. I accordingly make the following order;

Judgment is granted against the defendant for;

1. Payment in the sum of $37,497=42.

2. Interest at 5% per annum from January 2013 to date of payment in full.

3. Costs of suit.

View Appeal
HH273-16 : KINGDOM BANK LIMITED vs THE RIGHT INVESTMENTS (PVT) LTD and OPIUM INVESTMENTS (PVT) LTD and PHILLIPA COUMBIS
Ruled By: CHAREWA J

The plaintiff, through a series of offer letters commencing 30 March 2009 to 25 July 2011, advanced overdraft and loan facilities to Stir Crazy Group of Companies (Annexures D, E, G, H, J and L to its particulars of claim refers). It is an undisputed fact that Stir Crazy Group of Companies does not exist….,. If a principal debtor ...

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HH273-16 : KINGDOM BANK LIMITED vs THE RIGHT INVESTMENTS (PVT) LTD and OPIUM INVESTMENTS (PVT) LTD and PHILLIPA COUMBIS
Ruled By: CHAREWA J

I also agree with the plaintiff, with regard to sureties, that the correct position is as summarised in Millmann Anor v Masterbond Participation Trust Managers (Pty) Ltd (under curatorship) Ors 1997 (1) SA 113C when FRIEDMAN JP and FARLAM J said: “In our view, the legal position was correctly stated by Professor ...

HH203-14 : CALEB DENGU and WILSON TENDAI NYABANDA vs ZIMBABWE ALLIED BANKING GROUP LIMITED
Ruled By: MATANDA-MOYO J

It is true that from a reading of the plaintiff's cause of action its cause of action arises from monies lent to Onclass Investments (Pvt) Ltd in terms of a credit facility agreement. The plaintiff sues the defendants based on surety documents they signed with the plaintiff whereby the second defendant pledged a certain piece ...

HH183-15 : ZB BANK LIMITED vs ERIC ROSEN (PVT) LTD and ERIC ANTHONY ROSEN and ELIZABETH ROSEN
Ruled By: MAFUSIRE J

The second and third defendants bound themselves as sureties and co-principal debtors with the first defendant for the due repayment of the loan.

Appealed
SC16-20 : INFRASTRUCTURE DEVELOPMENT BANK OF ZIMBABWE vs ENGEN PETROLEUM ZIMBABWE (RIVATE) LIMITED
Ruled By: GUVAVA JA, MAVANGIRA JA and ZIYAMBI AJA

This is an appeal against the decision of the High Court handed down under HH253-16 wherein the court a quo found the appellant liable to pay to the respondent the sum of US$847,847=65 together with costs of suit and interest at the prescribed rate from the date of the granting of the judgment to the date of payment in full.

The appellant is a statutory corporation set up in terms of the Infrastructure Development Bank of Zimbabwe Act [Chapter 24:14] (“the IDBZ Act”). The respondent is an oil company registered in accordance with the Companies Act [Chapter 24:03].

The background to the matter may be summarized as follows:

A company known as Wedzera Petroleum (Private) Limited (“Wedzera”) entered into a verbal agreement with the respondent wherein the respondent would sell bulk petroleum fuels to it from time to time. The respondent would supply the petroleum products on credit and raise invoices to be settled by Wedzera Petroleum. Wedzera Petroleum would, in turn, settle the invoices within ten days from the date on which the invoices would be raised.

In November 2010, the respondent sold to Wedzera, petroleum products worth US$847,847=65. The sale of the petroleum products was made on the basis of two guarantees made by the appellant binding itself to pay in the event that Wedzera Petroleum failed to honour the debt. The two guarantees were drafted on 5 November 2010 and 19 November 2010 for the sums of US$500,000 and US$450,000 respectively.

The guarantees issued by the appellant were in the form of a letter, which bore the letter head of the Infrastructural Development Bank of Zimbabwe. It was addressed to the respondent and signed by one Francis Mugwara (“Mugwara”) the Head of the Short Term Loans Unit.

Part of the first guarantee, dated 5 November 2010, read as follows:

“In consideration of Wedzera Petroleum (Pvt) Ltd…, agreeing to the submission of a guarantee for the supply of fuel products by Engen Petroleum Zimbabwe (Pvt) Ltd, we, Infrastructure Development Bank of Zimbabwe – IDBZ…, do hereby guarantee full payment of USD500,000.00…, being the total amount of the Bank Guarantee to Engen Petroleum Zimbabwe (Pvt) Limited. The payment of the USD500,000 will be after a period of 10 (ten) days from the date of fuel drawdown and is on revolving basis…,.”

The second guarantee, dated 19 November 2010, read as follows:

“In consideration of Wedzera Petroleum (Pvt) Ltd…, agreeing to the submission of a guarantee for the supply of fuel products by Engen Petroleum Zimbabwe (Pvt) Ltd, we, Infrastructure Development Bank of Zimbabwe – IDBZ…, do hereby guarantee full payment of USD450,000…, being the total amount of the Bank Guarantee to Engen Petroleum Zimbabwe (Pvt) Limited. The payment of the USD450,000 will be after a period of 10 (ten) days from the date of fuel draw-down and is on revolving basis…,.”

After the guarantees had been issued, Wedzera Petroleum failed to pay the debts arising from the petroleum products which were sold to it on credit by the respondent.

On 8 March 2011, Wedzera Petroleum wrote to the respondent informing that it (Wedzera Petroleum) was experiencing negative cash flows due to the unavailability of fuel during the months of December 2010 and January 2011 and that it was aware of its indebtedness to the respondent. Wedzera Petroleum further informed the respondent that it would pay its entire indebtedness within 14 days.

Wedzera Petroleum failed to honour its indebtedness as promised.

The respondent wrote to the appellant on 15 March 2011 informing it to liquidate Wedzera Petroleum's debt in accordance with the two guarantees.

The appellant, through a letter dated 31 of March 2011, informed the respondent that upon checking its records it found that it had not issued the guarantees in favour of the respondent against any debts incurred by Wedzera Petroleum. The appellant further informed the respondent that it was unsure of the circumstances under which the purported guarantees had been drafted and issued to the respondent on behalf of Wedzera Petroleum.

Following the failure by Wedzera Petroleum to make due payment of the debt, and the repudiation of the guarantees by the appellant, the respondent issued summons against Wedzera Petroleum and the appellant for the payment of the sum of US$847,847=65.

PROCEEDINGS BEFORE THE COURT A QUO

In the court a quo, Wedzera Petroleum, in its plea, admitted its indebtedness to the respondent but denied liability as it argued that liability had passed to the appellant who undertook to settle the debt due in terms of the two guarantees.

The appellant, in its plea, denied being indebted to the respondent at all. It indicated that according to their records there was no indication that Wedzera Petroleum had applied for, or had been granted any guarantees. It further alleged that the guarantees had been generated through fraud.

At the pre-trial conference, the main issue which was referred to trial was: whether or not the appellant was liable to pay Wedzera Petroleum's debt on the basis of the two guarantees.

At the trial, Wedzera Petroleum was in default. The court a quo, upon application from the respondent, granted default judgment against Wedzera Petroleum in favour of the respondent for the sum of US$847,847=65 together with costs of suit and interest at the prescribed rate.

The trial proceeded against the appellant.

In analysing closing submissions made by counsel, the court a quo noted that the appellant's counsel sought to introduce a new argument which had not been pleaded.

The argument was based on the fact that the appellant was a statutory corporation which derived its powers from the Infrastructure Development Bank of Zimbabwe Act [Chapter 24:14] and that the provisions of the Companies Act [Chapter 24:03] (“the Companies Act”), which codified the Turquand Rule, could not be applied against the appellant in terms of section 30 of the Infrastructure Development Bank of Zimbabwe Act [Chapter 24:14].

The court held that in spite of the provisions of section 30 of the Infrastructure Development Bank of Zimbabwe Act (IDBZ Act) which made the appellant immune to the provisions of the Companies Act, the actions of Francis Mugwara fell squarely within the scope of the presumptions of ostensible authority.

The court found that Francis Mugwara held a senior position in the Bank; that he had subordinate staff under him; he had access to and used the appellant's stationery. He was the Head of the Short Term Loans Unit which Unit had, amongst others, a mandate to issue guarantees.

The court further found that Francis Mugwara's job description empowered him: “…, to generate, manage and control the Bank's short-term lending portfolio as well as [to] supervis[e]…, Regional Offices.”

Further, that his key duties included decision making authority, authority to approve departmental expenses and the budgets for the Unit and the Regional Offices.

The court found that the onus was on the appellant to prove that Francis Mugwara did not have any form of authority to facilitate guarantees and to prove any form of fraud and bribery on his part.

The court found the appellant liable to the respondent for the guarantees which were issued by Francis Mugwara in respect of Wedzera Petroleums's indebtedness. The appellant was thus ordered to pay the respondent the sum of US$847,847=65, or the remaining amount after payment was made by Wedzera Petroleum, together with costs of suit and interest at the prescribed rate from the date of the granting of the judgment to the date of payment.

PROCEEDINGS ON APPEAL

Aggrieved by the findings of the court a quo the appellant noted this appeal on the basis of the following grounds of appeal:

(i) Having found, as it did, that there was no conclusive evidence to establish that one Francis Mugwara had authority to issue the two guarantees relied upon by the respondent on his single signature, the court a quo erred in law in placing a further negative onus of proof on the appellant to establish that one Francis Mugwara had no such authority.

(ii) Having found, as it did, that there was no conclusive evidence to establish that one Francis Mugwara had authority to issue the two guarantees relied upon by the respondent on his single signature, the court a quo erred and misdirected itself on the facts, and in law, in finding, as it did, that Francis Mugwara had actual and/or implied authority to issue the two guarantees relied upon by the respondent in its cause of action.

(iii) The court a quo erred and misdirected itself in law in finding the appellant liable to the respondent on the basis of ostensible authority when such was not pleaded by the respondent in the Summons and Declaration.

(iv) The court a quo grossly erred and misdirected itself on the facts in finding, as it did, or must be taken to have done that the appellant represented to third parties, in particular to the respondent, that one Francis Mugwara had authority to issue the guarantees relied upon by the respondent in its cause of action.

(v) The court a quo erred in law in failing to find that the two guarantees relied upon by the respondent were fraudulently procured and thereafter tendered to the respondent by Wedzera Petroleum (Private) Limited, and, as such, no liability could flow from such fraudulent instruments.

(vi) The court a quo erred on the facts and in law in finding, as it did, that the respondent had acted diligently in accepting the two guarantees tendered to it by Wedzera Petroleum (Private) Limited in the absence, inter alia, of any facility between the appellant and Wedzera Petroleum (Pvt) Ltd.

(vii) The court a quo erred on the facts and in law in failing to find that the conduct of Francis Mugwara, in purporting to issue the two guarantees in the absence, inter alia, of any facility agreement between the appellant and Wedzera Petroleum (Pvt) Ltd and/or the respondent not only offended the internal processes of the appellant but also the procedure set out in the Infrastructure Development Bank of Zimbabwe Act [Chapter 24:14]. Consequently, the court a quo ought to have found that his conduct was a legal nullity and no liability attached to the appellant.

(viii) The court a quo erred in law in effectively finding the appellant liable on the two guarantees on the basis of the Turquand Rule when the application of such rule is specifically ousted by the provisions of section 30 of the Infrastructure Development Bank of Zimbabwe Act.

In my view, it is apparent from the appellant's grounds of appeal that three issues arise for determination. These are the following:

A. Whether or not the court a quo erred in finding that Francis Mugwara had authority to issue the two guarantees relied upon by the respondent.

B. Whether or not the court a quo erred in finding the appellant liable to pay the respondent on the basis of ostensible authority.

C. Whether or not the appellant was liable to pay the respondent on the basis of the Turquand Rule when such was never pleaded by the respondent in its summons and declaration.

I will proceed to deal with each of these issues.

Whether or not the court a quo erred in finding that Francis Mugwara had authority to issue the two guarantees relied upon by the respondent

The appellant argued that Francis Mugwara's contract of employment did not give him authority to act on behalf of the Bank. It also submitted that the court a quo erred in its factual findings to the effect that he had implied authority to act on behalf of the appellant.

In order to fully understand the authority Francis Mugwara possessed there is need to make reference to his key duties in the Bank.

Francis Mugwara held the title of the 'Head of Short Term Loans'. Under this title, he was the second in charge after the office of the Director of Private Sector Projects as shown from the organogram of the Short Term Loans Unit. A summary of Francis Magwara's job was stated as:

“To generate, manage, and control the Bank's short term lending portfolio as well as supervision of Regional Offices.”

Among his key tasks was “marketing of Bank products to achieve bankable portfolio of clients, disbursements of funds on approved facilities, and making presentations to the Private Sector Projects Committee (PSPC) on projects for approval.”

In addition, Francis Mugwara's job description had an incidental clause on error of judgment and the consequences which would affect the Bank if the Head of Short Term Loans made a wrong decision. The clause stated as follows:

“Catastrophic as bad decisions can lead to the insolvency of the Bank through the creation of a Bad Loan portfolio. Reputation of the Bank can be on the line if prompt and correct decisions are not made.”

The court made factual findings that Francis Mugwara had authority to act on behalf of the appellant. The court a quo noted the following:

“…, notwithstanding the Bank's argument that Mugwara's power might have been limited, I find that as much as between himself and the Bank, Mugwara had actual or implied authority to issue those guarantees. I find that as between Engen and the Bank, Mugwara had ostensible authority to issue the guarantee and to bind the Bank to third party recipients.”

A clear reading of Francis Mugwara's key tasks shows that he worked under a Unit which controlled the manner in which guarantees were issued. He was the senior personnel in the Bank as he was second in command from the Director of the Unit. He had access and control of the appellant's stationery to an extent that he had business cards to identify himself. He had the task of marketing Bank products and disbursements of funds on approved loan facilities.

The court a quo found that on these factual findings the key tasks done by Francis Mugwara were enough evidence to show that he had authority to act on behalf of the appellant.

The court a quo also took into account that although criminal proceedings were instituted against Francis Mugwara by the appellant, on the basis of fraud and bribery, the office of the Prosecutor General refused to prosecute the matter on the basis that it was a labour matter. That, in any event, the appellant had failed to provide adequate evidence to sustain a conviction.

The court a quo, in determining the impact of the criminal charges laid against Francis Mugwara, found that the onus to prove fraud and bribery was on the appellant and that the prosecutor had failed to prove that Francis Mugwara had been fraudulent or had received any bribe.

The proof to be proffered by the appellant for fraud and bribery in casu would be proof on a balance of probabilities as the fraud and bribery were being alleged in a civil trial after the criminal charges had failed to materialise.

Proof in civil proceedings is always on a balance of probabilities.

In the case of Zimbabwe Electricity Supply Authority v Dera 1998 (1) ZLR 500 (SC), the court stated the following:

“…, in a civil case, the standard of proof is never anything other than proof on the balance of probabilities. The reason for the difference in onus between civil and criminal cases is that in the former the dispute is between individuals, where both sides are equally interested parties. The primary concern is to do justice to each party, and the test for that justice is to balance their competing claims.

In a criminal matter, on the other hand, the trial is an attack by the State, representing society, on the integrity of an individual. The main concern is to do justice to the accused. If the prosecution fails, the State does not lose.”

Francis Mugwara, having admitted that he issued the guarantees and having alleged that he did so lawfully, it was for the appellant to prove all the allegations laid against him of fraud and bribery.

The appellant did not adduce any proof to the contrary, but, rather, stood on the argument that he had no authority to individually sign a guarantee.

The appellant produced sample guarantees which it alleged were lawfully facilitated for other parties. These sample guarantees were juxtaposed with the guarantees which Francis Mugwara had facilitated and affixed a single signature instead of two signatures as appeared on the sample guarantees. The appellant argued that the fact that the guarantees issued on behalf of Wedzera Petroleum were not counter-signed meant that the guarantees were fake and invalid.

Sample guarantees produced before the court a quo showed that Francis Mugwara would countersign a guarantee with other personnel of the Bank. It is of importance to note, however, that such other personnel would be junior personnel and Francis Mugwara would counter sign to give effect to the validity of the guarantee facilitated by his subordinates.

It thus could not have been extensively irregular that on the two guarantees made in favour of the respondent Francis Mugwara signed the guarantees with no other counter signature as he was the head of the Unit from which such guarantees originated.

The arguments raised by the appellant, that absence of a second signature rendered the guarantees ineffective, thus lacks merit.

The appellant did not adduce any evidence to show that the facilitation of the guarantee was not carried out in-house. The appellant's witnesses could have brought the register for credit facilities issued by the Bank to show that no entry was ever made in favour of Wedzera Petroleum to the respondent.

Francis Mugwara vehemently denied that he had not followed proper procedures in processing the guarantees and stated that records of the guarantees were with the appellant.

In examination in chief, Francis Mugwara admitted to having recorded the guarantees in the Bank's register. The court a quo, in assessing these facts, found that:

“The evidence on whether or not Mugwara could issue guarantees on his single signature was inconclusive. Mugwara said he could. The Bank said he could not. The onus was on the Bank to prove that he could not. It did not refute, satisfactorily, Mugwara's claim that it was only guarantees initiated by subordinates that required to be counter-signed for validity. I find that the Bank failed to discharge the onus on such a key aspect of defence.”

In finding that Francis Mugwara had authority to act on behalf of the appellant, the court a quo made reference to the incidental clause in his job description document. A reading of the clause shows that Francis Mugwara, as the Head of Short Term Loans, had to take due diligence and not make an error of judgment as such error in creating a bad loan portfolio would have catastrophic consequences which could lead the appellant to insolvency.

This clause, in itself, crystalizes the point that he had authority to act on behalf of the appellant in a manner which could extend to issuing guarantees. Only a senior officer of the Bank could possess authority to act on its behalf to an extent where an error of judgment would lead to catastrophic results.

It is a settled principle that this Court will not easily interfere with factual findings made by a lower court unless the findings are grossly unreasonable. See ZINWA v Mwoyounotsva 2015 (1) ZLR 935 (S); Hama v NRZ 1996 (1) ZLR 664 (S); Reserve Bank of Zimbabwe v Corrine Granger and Another SC34-01.

The lower court enjoys the opportunity to see the witnesses on the stand, assess their demeanour and credibility. Such findings of fact cannot easily be interfered with by an Appellate Court as it is limited to the record of proceedings. See Mtimukulu v Nkiwane and Another SC136-01.

It is my view that the court a quo's factual findings cannot be impugned.

Francis Mugwara was a senior employee who could carry out credit facilitation and represent the appellant.

All the above findings lead to the inescapable conclusion that the court a quo's factual findings were correct.

The next inquiry that arises from this finding is the extent of the authority Francis Mugwara had in issuing the guarantees to the respondent; that is, whether or not it was implied or express authority.

Whether or not the court a quo erred in finding the appellant liable to pay the respondent on the basis of ostensible authority

The court a quo found that the authority exercised by Francis Mugwara, in issuing the guarantees, was implied (apparent or ostensible) authority.

The respondent based its arguments for the claim of payment of the guarantees on the ostensible authority which had been exercised by Francis Mugwara. Counsel for the respondent submitted that it was on the basis of this apparent authority exercised in the issuing of the guarantees that the respondent agreed to issue Wedzera Petroleum fuel.

It was the appellant's argument that no such implied authority existed and that on the basis of Francis Mugwara's job description such authority was not given to him.

The appellant also argued that in terms of the Bank's Lending Policy, Francis Mugwara did not have authority to single-handedly facilitate a credit facility, sign it, and issue it without proper procedure being followed.

Ostensible authority, or apparent authority, exists where an agent's words or conduct lead a reasonable person in a third party's position to believe that the agent is authorized to act, even if the principal and the purported agent have never discussed such a relationship.

The effect and meaning of ostensible authority was discussed in Makate v Vodacom Ltd 2016 (4) SA 121 (CC)…, in which the case of Hely-Hutchinson CA v Brayhead Ltd and Another [1968] 1 QB 549 (CA)…, was referred to with approval. The court stated the following:

“Actual authority and ostensible or apparent authority are the opposite sides of the same coin. If an agent wishes to perform a juristic act on behalf of the principal, the agent requires authority to do so, for the act to bind its principal. If the principal had conferred the necessary authority, either expressly or impliedly, the agent is taken to have actual authority. But, if the principal were to deny that she had conferred authority, the third party who concluded the juristic act with the agent may plead estoppel in replication.

In this context, estoppel is not a form of authority but a rule to the effect that if the principal had conducted herself in a manner that misled the third party into believing that the agent has authority, the principal is precluded from denying that the agent had authority.”

The court went on to state the importance of ostensible authority and made the following remarks..,.:

“The concept of apparent authority, as it appears from the statement by, Lord Denning, was introduced into law for purposes of achieving justice in circumstances where a principal had created an impression that its agent has authority to act on its behalf.

If this appears to be the position to others, and an agreement that accords with that appearance is concluded with the agent, then justice demands that the principal must be held liable in terms of the agreement.

It cannot be gainsaid that, on present facts, there is a yearning for justice and equity.”

In Rama Corporation Ltd v Proved Tin and General Investments Ltd [1952] 2 QB 147, SLADE J noted as follows:

“Ostensible or apparent authority which negatives the existence of actual authority is merely a form of estoppel; indeed, it has been termed agency by estoppel, and you cannot call in aid an estoppel unless you have three ingredients:

(i) A representation;

(ii) A reliance on the representation; and

(iii) An alteration of your position resulting from such reliance.”

See also Freeman and Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480.

Ostensible authority thus binds a principal over actions done by its agent with relation to third parties. Such principal can thus be estopped from denying liability of the actions of the agent.

In casu, Francis Mugwara was an agent of the appellant; he was the head of the Short-Term Loans Unit and had subordinates under him. His key duties included a mandate to approach companies and commercial institutions in a bid to facilitate that these companies and institutions acquired loan facilities from the appellant.

It was not in dispute that at the time the two guarantees were issued to the respondent on behalf of Wedzera Petroleum, the appellant was running off-balance sheet facilities due to the economic situation which was prevailing in the country at that time. On the basis of such off balance sheet facilities the appellant would issue credit facilities to finance different business ventures.

It is important to note that the first encounter under which Francis Mugwara and the respondent met was not on the issuance of the guarantees. Francis Mugwara had previously made presentations before Mr Mudzengerere, who was the respondent's Managing Director. Francis Mugwara approached the respondent to issue the guarantees on fuel procurement and disbursement. The intended business venture between Francis Mugwara and the respondent did not materialise at that time but a relationship had been formed.

It thus cannot be taken as being irregular that, upon being presented with the guarantees in favour of Wedzera Petroleum, for fuel allocation, Mr Mudzengerere, on behalf of the respondent, accepted these guarantees.

The respondent duly accepted the guarantees on the basis of the conduct and representations which had been made by Francis Mugwara - even before Wedzera Petroleum sought a credit facility from the appellant.

The respondent's cause of action against the appellant, for payment, was on the basis of ostensible authority which had been exercised by Francis Mugwara.

The court a quo duly made factual findings on the exercise of this authority. Clearly, there is nothing illogical or unreasonable from the court a quo's findings.

Francis Mugwara confirmed that he had authority to carry out his duties and the respondent could not be faulted for honouring the guarantees which were issued on behalf of the appellant by its Head of Short Term Loans.

The court a quo found Francis Mugwara to be a reliable witness.

On the basis of the above finding it is therefore my view that the appellant is liable to pay the respondent the sums of money arising from the guarantees.

View Appeal
HH253-16 : ENGEN PETROLEUM ZIMBABWE [PVT] LTD vs WEDZERA PETROLEUM [PVT] LTD and INFRASTRUCTURE DEVELOPMENT BANK OF ZIMBABWE
Ruled By: MAFUSIRE J

This was a civil trial.

The first defendant [“Wedzera”] was in default. On application by the plaintiff [“Engen”] in respect to which the second defendant [“the Bank” or “IDBZ”] had nothing to say, I entered a default judgment against Wedzera, in favour of the plaintiff, in the sum of $847,847=65, together with costs of suit and interest at the prescribed rate.

Most of the material facts were common cause.

Engen was an oil company. It sold bulk fuels. Wedzera operated filling stations at which it retailed fuels. IDBZ was a statutory corporation set up in terms of its enabling Act, the Infrastructure Development Bank of Zimbabwe Act [Chapter 24:14] [“IDBZ Act”].

Engen's claim arose out of petroleum fuels sold and delivered to Wedzera in terms of an agreement between them. Wedzera had failed or neglected to pay. Engen claimed IDBZ had guaranteed the due payment by Wedzera up to an amount in the sum of $950,000. That amount was made up of two guarantees, one for $500,000 and the other for $450,000.

But, IDBZ disowned them. It argued that one of its ex-employees had issued them fraudulently or without authorisation.

Engen called two witnesses.

The first, Johannes Mudzengerere [“Mudzengerere”] had been Engen's Managing Director at the relevant time. He had been in charge of Engen's entire operations, including the procurement and disposal of fuel stocks.

Engen's second witness, Francis Mugwara [“Mugwara”], was the man at the centre of the guarantees. He had been subpoenaed just before the trial commenced. He was the one who had signed and issued the impeached guarantees. Figuratively, and perhaps not unexpectedly, the Bank sought to lynch him.

For the Bank, there were also two witnesses.

At the relevant time, Norbert Munengwa [“Munengwa”] had been an Assistant Director in charge of a unit or division called Private Sector Projects. He reported to the Chief Executive Officer. His portfolio covered the crafting of strategies, policy formulation, and business development. Within that sector Francis Mugwara had, at all relevant times, been the Head of the unit called Corporate Banking. It was formerly called the Short Term Loans Unit. He had joined it as Assistant Head, and had subsequently been promoted. He reported to Norbert Munengwa.

The Bank's second witness was Desmond Matete [“Matete”]. He was a qualified lawyer. At the relevant time he was the Director for Legal and Corporate Services. Amongst other duties, he was the custodian of the Bank's legal documents.

There was much convergence, or little controversy, on such key aspects of the evidence as would, in my view, decide the matter. Differences were mainly on peripheral issues and on the parties' application of the law to the facts.

Wedzera used to buy bulk fuels from Engen for cash. As its sales increased, it wanted more fuels - but on credit. Engen obliged. Wedzera signed Engen's standard credit facility application form. Johannes Mudzengerere ran it past Engen's agent for credit rating. He also sought and obtained clearance from Engen's head office in South Africa. Everything seemed in order.

Wedzera had to provide a Bank guarantee to guarantee the due payment for the fuels. These came from IDBZ.

During this period, 2010, the country's economy had just “dollarized”. A multi-currency system had been introduced following the demise of the local currency. Most companies' balance sheets had almost reduced to zero. As a re-capitalisation strategy, the Bank had decided to offer non-traditional or non-generic products that either avoided or minimised direct cash outlays, or that brought in quick income. The witnesses said the Bank was trading off-balance sheet. The Bank's new strategy concentrated on non-direct cash products such as short to medium term loans, Bankers' acceptances, Bills discounting and Bank guarantees. This strategy also involved the bulk importation of petroleum products and the procurement of fertilisers for disposal on the local market.

The Bank had set up a body known as the Private Sector Projects Committee [“the PSPC”]. This committee would grant global approvals and cap the upper monetary limits for any new projects. The members of this committee were the Bank's senior officials, including Norbert Munengwa and Desmond Matete. But heads of divisions, such as Francis Mugwara, were also members. Francis Mugwara was a member.

It was common cause that Francis Mugwara had the Bank's authority to market this new strategic innovation. He had the authority to procure new business, to manage, and grow it.

The point of departure between Francis Mugwara, on the one side, and Nobert Munengwa and Desmond Matete on the other, was the extent of Francis Mugwara's authority - specifically with regards to the issuing of guarantees.

Francis Mugwara claimed he had the authority to issue guarantees in favour of third parties and binding on the Bank, for as long as the amounts on them did not exceed the limits set by the Private Sector Projects Committee (PSPC). He claimed he could issue such guarantees on his single signature. He had access to the Bank's stationery - including sample guarantee forms. He managed Harare, Bulawayo and other towns. He was in charge of all staff falling under his unit. He insisted he had complied with all the standard operating procedures, not least opening an account for Wedzera and issuing it with a facility letter; raising bank charges and completing all other relevant documents. He claimed all the paper work had been placed in the relevant Bank records which Desmond Matete kept. He challenged Desmond Matete to produce those records.

Of some guarantees that were produced in evidence bearing two signatures and which the Bank gave as an example of what a valid guarantee was like, Francis Mugwara said these had been initiated by his subordinates who also had the authority to issue guarantees. However, guarantees by subordinates had to be countersigned by himself, as head of the unit, or else they would be invalid.

Nobert Munengwa and Desmond Matete vehemently disputed that Francis Mugwara could issue guarantees on his single signature and bind the Bank. They said all the Bank's guarantees had to be counter-signed. They said there were elaborate internal standard operating procedures. These had to be followed at all times that the Bank would offer any credit facility to anyone. Of the two guarantees in question, and some two others that Francis Mugwara had also issued on his single signature in favour of other third parties, Nobert Munengwa and Desmond Matete said they were invalid for lack of authority. They had never been brought up to the Private Sector Projects Committee (PSPC) for specific approval.

Nobert Munengwa and Desmond Matete also accused Francis Mugwara of fraud. They said when they had confronted him after Johannes Mudzengerere had called up the guarantees and was pressing for payment, Francis Mugwara had broken down and confessed to having been paid by Wedzera's Managing Director, one Eric Nhodza [“Nhodza”], an amount in the sum of $10,000 in return for the guarantees. The Bank had raised misconduct charges against him. However, he had ducked out of the disciplinary process by resigning.

Francis Mugwara denied the fraud. He denied the confession. He maintained he had issued the guarantees within the scope of his mandate.

It was common cause that the Bank had reported Francis Mugwara to the police. However, it was also common cause that the State had declined to prosecute for lack evidence.

For Engen, Johannes Mudzengerere said his first encounter with Francis Mugwara was when, a few days before the guarantees, Francis Mugwara had arrived at his office offering Engen two million litres of fuel. Francis Mugwara had introduced himself as the Bank's Head of Corporate Unit. He had produced his business card. However, the fuel deal had subsequently fallen through. When Wedzera was increasing its fuel purchases and was asking for supplies on credit, Johannes Mudzengerere had required the provision of security in the form of assets or guarantees from a reputable Bank. A few days later a Wedzera representative and Francis Mugwara had returned to Johannes Mudzengerere's office with a sample guarantee from IDBZ. Johannes Mudzengerere had been satisfied with the wording. He had been comfortable with IDBZ as a “Government Bank”.

The first guarantee had been issued. It was for $300,000. Engen never had to call it up. Wedzera had paid in accordance with the agreement. Wedzera had further increased its fuel purchases. It had provided further guarantees from IDBZ for $500,000 and $450,000.

It was on these last two guarantees that the case before me was all about. Wedzera had failed to pay. Its debt at the time of the default stood at $847,847=65. That was the amount claimed in the summons.

There was no issue about the wording of the guarantees.

When Johannes Mudzengerere called up the guarantees, Francis Mugwara got in touch with Wedzera. Wedzera wrote something to assuage Engen. Johannes Mudzengerere was un-impressed. He pressed for payment. Eventually, he got through to Nobert Munengwa. Nobert Munengwa disowned the guarantees. The Bank's position was that Wedzera was not, and had never been, a customer of the Bank. Among other things, and contrary to standard operating procedures, there was no record of any account having been opened for Wedzera before or after the guarantees had been incepted. No bank charges had been raised as fees for the guarantees. There was simply no paper trail relating to them. As far as the Bank was concerned, the purported guarantees had been an abuse of the Bank's stationery by Francis Mugwara. They were invalid.

Having faced a brick wall, Engen sued. That was essentially the case before me.

Counsel for the plaintiff argued that the Bank's defence was misconceived. From the facts, Francis Mugwara had the actual authority to issue the guarantees in question. He was the Head of the Bank's unit that had the requisite mandate to issue such type of Bank products. Francis Mugwara's contract of employment empowered him to issue such guarantees. Counsel for the plaintiff further argued that if it should be said that Francis Mugwara had no actual authority to issue the guarantees, then he undoubtedly had ostensible authority. The Bank had held him up as one with such authority. He had started off as Assistant Head in the Short Term Loans Unit. He had interacted with the public in that capacity. This unit had subsequently changed its name to Corporate Banking. Francis Mugwara had subsequently been promoted to head it. All this had been in the eyes of the public.

Counsel for the plaintiff highlighted that Francis Mugwara had access to the Bank's stationery. It had provided him with business cards, obviously to assist in the marketing of its products. One such product had been the non-generic, off balance sheet facility that involved minimal cash outlay. There were also other innovations, such as the non-traditional trade in fuels and fertilizers. Francis Mugwara had been mandated to market and manage them. Third parties, like Engen, could hardly be faulted for accepting Francis Mugwara's authority and his guarantees. Nothing warned them that he might be unauthorised. That he might have breached the Bank's in-house standard operating procedures, or that he might have exceeded the bounds of his authority, could not dis-entitle Engen from holding the Bank to the guarantees.

Counsel for the Bank explored Francis Mugwara's contract of employment in some detail and argued that nothing said therein could be said to amount to authority for Francis Mugwara to issue such guarantees on his single signature.

Counsel for the Bank further explored the Bank's standard operating procedures and concluded that Mr Mugwara had manifestly breached all the important check-lists. Among other things, Wedzera had never been a customer of the Bank. There was nothing on record to show that any of the account opening and account operating procedures had been put in place. No fees had been raised. No facility letter had been issued. No customer vetting had been done. The guarantees had never been brought up to the Private Sector Projects Committee (PSPC) for approval. There was not a single meeting convened for this business, let alone any minutes taken in respect of it.

To the Bank, Francis Mugwara was just a rogue.

He had taken a bribe for $10,000 in return for the guarantees. When confronted by Messrs Nobert Munengwa and Desmond Matete, he had confessed. To avoid disciplinary action he had simply resigned. He had an axe to grind with the Bank. He had been blacklisted and was no longer employable in the finance industry.

According to counsel for the Bank, Francis Mugwara had neither the actual nor the ostensible authority to issue those guarantees. Engen had been negligent in accepting them without verification. It should have checked with the Bank for their authenticity. On this particular point, Desmond Matete claimed, in his evidence, that it was the practice and custom in the capital markets that a third party who is given a guarantee, such as the type Francis Mugwara had issued, would run them past its own bankers. The bankers would know how to go about verifying them for authenticity.

Counsel for the Bank discredited Engen's credit rating process of Wedzera. He pointed out that on the credit facility application form, the Standard Chartered Bank, not IDBZ, had been listed as Wedzera's bankers. If Engen had been diligent or prudent enough, it should have been suspicious to be receiving from Wedzera guarantees from IDBZ instead of the Standard Chartered Bank....,.

Section 12 of the Companies Act codifies the common law rule of Company Law, also known as the Turquand Rule, after the 19th century English case of Royal British Bank v Turquand (1856) 6 E & B 327; (1843-60) 119 ER 886 in which the rule was first succinctly expounded.

This rule says that any person dealing with a company is entitled to make certain assumptions, such as that the company's internal regulations have been duly complied with. The company is estopped from denying the truth of such assumptions. Anyone is entitled to assume that every person whom the company represents to be its officer or agent has been duly appointed and has authority to exercise the functions customarily exercised by him: see Mills v Tanganda Tea Company Ltd 2013 [1] ZLR 38 [H]…,.

In terms of section 13 of the Companies Act, a company shall be bound in terms of section 12 notwithstanding that the person held out to be the officer or agent for it might have acted fraudulently or forged a document purporting to be sealed or signed on behalf of the company....,.

LORD DENNING MR, in Hely-Hutchinson v Brayhead Ltd & Another [1968] 1 QB 549; [1967] 3 All ER 98 [CA] [quoted with approval by MPATI P in Northern Metropolitan Coal Council v Company Unique Finance [Pty] Ltd & Ors 2012 [3] All SA 498 [SCA]…, explained actual or implied authority as follows:

“[Actual authority] is express when it is given by express words, such as when a Board of Directors pass a resolution which authorises two of their number to sign cheques. It is implied when it is inferred from the conduct of the parties and the circumstances of the case, such as when the Board of Directors appoint one of their number to be Managing Director. They thereby impliedly authorise him to do all such things as fall within the usual scope of that office.”

BEADLE CJ, in Reed NO v Sager's Motors (Pvt) Ltd [1969] [2] RLR 519 [AD]…,; 1970 [1] SA 521 [RAD] [quoted with approval in Seniors Service [Pvt] Ltd v Nyoni 1986 [2] ZLR 293 [SC]] explained apparent or ostensible authority as follows:

“The word 'ostensible', in the Rhodes Motor Company case (1965 (4) SA 40), is used in the sense of 'apparent' and in the language of the law of agency these two terms are synonymous.

If a principal employs a servant or agent in a certain capacity, and it is generally recognised that servants or agents employed in this capacity have authority to do certain acts, then any of those acts performed by such servant or agent will bind the principal because they are within the scope of his 'apparent' authority. The principal is bound even though he never expressly or impliedly authorised the servant or agent to do these acts, nor had he by any special act [other than the act of appointing him in this capacity] held the servant or agent out as having this authority.

The agent's authority flows from the fact that persons employed in the particular capacity in which he is employed, normally have authority to do what he did.”

The principles that emerge from case authority in relation to the ostensible authority of employees in general, and Bank managers in particular, are that the principal [the employer] must have created an impression in the mind of the third party, even though that impression might be wrong, that his agent [the employee] had the requisite authority to transact on behalf of the principal. The third party must show a representation by words or conduct by the principal, not merely by the agent. The representation must have been in such form as would reasonably lead outsiders to act on the strength of it to their prejudice.

The court considers the façade of regularity of the employee's actions purporting to act on behalf of the employer, given all the trappings of his appointment as set in a context.

The branch manager of a Bank is a senior employee. He is the face of the Bank to the world. He is its local spokesman. The outside world is normally entitled to assume or believe that he has the authority to issue out letters of credit binding on the Bank: see Northern Metropolitan Coal Council v Company Unique Finance [Pty] Ltd & Ors 2012 [3] All SA 498 [SCA]; NBS Bank Ltd v Cape Produce Co [Pty] Ltd & Ors 2002 [1] SA 396 [SCA]; [2002] 2 All SA 262 [SCA]; Africa Life Assurance Company Limited v NBS Bank Limited 2001 [1] SA 432 [W] 432; and Glofinco v ABSA Bank Ltd t/a United Bank & Ors [2002] ZASCA 91.

In NBS Bank Ltd v Cape Produce Co [Pty] Ltd & Ors 2002 [1] SA 396 [SCA]; [2002] 2 All SA 262 [SCA], SCHULTZ JA,, holding the Bank liable for deposits stolen by a rogue manager at one of its branches, said:

“[The branch manager] was appointed the local head of this business at Kempton Park. He commanded the staff, including his secretary, who typed the letters and then deleted them from her computer on his instructions, keeping qualms to herself - whether out of fear, or loyalty, or both. The letterhead on which the letters were typed was provided by the NBS. The facility was created, and it functioned, for the NBS to take Cape Produce's cheques into its bank account, and for its cheques to be issued in repayment. The state of affairs continued for some 18 months with numerous repayments, without the NBS's own system of control detecting the abuse.”

One of the cases on which counsel for the Bank relied was the judgment of the court of first instance in Glofinco v ABSA Bank Ltd t/a United Bank & Ors Reported in 2001 [2] SA 1048.

In that case, the trial court held the Bank not liable where a manager at one of its branches was in the habit of endorsing certain post-dated cheques from one of its customers in favour of a factoring agent, in effect making the Bank a surety and co-principal debtor in solidum with the customer. The manager's actions were inimical to the interests of the Bank. She had no authority to commit the Bank in that manner.

The trial court held that the powers of a Bank manager are not limitless. The decision was upheld on appeal.

It was found that the transactions were not ordinary transactions of a kind a branch manager would do as a matter of course. Other than the fact of her appointment, the Bank had made no other representation that the manger might have been authorised to carry out such peculiar transactions. Furthermore, in spite of its own serious misgivings about the authority of the manager to bind the Bank in the manner she was doing, the factoring agent had purposefully chosen to rely on her word and had refrained from verifying with her employer.

The appeal judgment was a split decision: three for and two against.

Even then, the majority judgment made it clear from the outset that the case would turn on its own peculiar set of facts; it being analogous to two other cases that the court had recently dealt with and in which the Banks had been found liable. These two other cases were NBS Bank v Cape Produce Company [Pty] Ltd and Others 2002 [1] SA 369 [SCA] and South Eagle Insurance Company Ltd v NBS Bank Ltd 2002 [1] SA 560 [SCA].

In my view, Glofinco v ABSA Bank Ltd t/a United Bank & Ors Reported in 2001 [2] SA 1048 is distinguishable from the instant case on the facts.

In Northern Metropolitan Coal Council v Company Unique Finance [Pty] Ltd & Ors 2012 [3] All SA 498 [SCA], the court freed the Metropolitan Council from liability for the contracts signed by some security personnel, one Du Plessis. He was a mere superintendent. He was No.2 from the bottom in the order of administrative authority. His immediate boss, one Van Wyk [senior superintendent], had purported to approve the contracts. Du Plessis and Van Wyk both operated from a side structure outside of the main offices. It was not clear how they had got hold of Council's stationary and equipment like letterheads and stamps. There was no evidence of what the trappings of their positions were, or what would normally go with those positions. The court found that the third party had dealt very casually and superficially with Du Plessis. Among other things, it had relied on a clumsily worded and open-ended resolution, signed by Van Wyk, and which purported to give Du Plessis limitless powers to contract on behalf of the Council. The conduct of the third party had not been reasonable, especially given the experience that its witnesses said they had in dealing with local authorities.

Northern Metropolitan Coal Council v Company Unique Finance [Pty] Ltd & Ors 2012 [3] All SA 498 [SCA] is also distinguishable from the instant case.

Du Plessis and Van Wyk were, respectively, the last and second last from the bottom.

In casu, Nobert Munengwa and Francis Mugwara were, respectively, No.1 and No.2 from the top in the Corporate Banking Unit.

The Unit, among other things, had the requisite mandate to issue guarantees.

Francis Mugwara was the Head. He had layers of staff below him. He managed other regions, not just Harare. He had the authority to use the Bank's stationery. He was expressly entitled and empowered to market the Bank's new innovative trade in non-traditional products in the new multi-currency dispensation. In the overall administrative structure of the Bank, he was No.4 from the Chief Executive Officer, the top most officer.

Francis Mugwara's job description empowered him “to generate, manage and control the Bank's short term lending portfolio as well as [to] supervis[e]…, Regional Offices.”

Expressly, he was tasked with ensuring that his unit achieved its set business volumes, and, significantly, he was also tasked with the “disbursements of funds on approved facilities.”…,.

Among Francis Mugwara's key decision making authority aspects was the approval of departmental expenses and the budgets for the Unit and the Regional Offices.

There was one further subtle detail on Francis Mugwara's job description.

Listed as one of the consequences of an error of judgment on his part in relation to, for example, financial/material loss, etc., i.e. what could happen to the organization if he made a wrong decision or failed to perform his job, was this:

“Catastrophic, as bad decisions can lead to the insolvency of the Bank through the creation of a bad Loan portfolio;” and:

“Reputation of the Bank can be on the line if prompt and correct decisions are not made”…,.

During trial, the Bank tried desperately to downgrade Francis Mugwara's position. It tried to strip him of all manner of authority.

I totally disagree.

The evidence on whether or not Francis Mugwara could issue guarantees on his single signature was inconclusive.

Francis Mugwara said he could. The Bank said he could not.

It did not refute, satisfactorily, Francis Mugwara's claim that it was only guarantees initiated by subordinates that required to be counter signed for validity. I find that the Bank failed to discharge the onus on such a key aspect of its defence.

Francis Mugwara was by no means a junior employee. I have found nothing from his contract of employment, or his job description, that precluded him from issuing those guarantees on his single signature.

Admittedly, these documents did not expressly say he could. But, equally, they did not expressly say he could not.

There was simply nothing in them that was specific to any type of product the Bank was offering at the time. But, when one considers, objectively, the overall job description and the trappings of his appointment; when one considers that an error of judgment on his part could lead to the Bank going bankrupt or putting its reputation at risk, I find that the issuing of the guarantees in the manner Francis Mugwara did, fell squarely within the scope of the risk the Bank had assumed when it appointed him to that position.

That, in my view, was implied authority for what Francis Mugwara did....,.

The Bank's complaint was only that he had to have had the guarantees counter-signed and that he did not follow the standard operating procedures.

But, to the rest of the world, like Engen, those were minute details. They could not be of concern to it. Francis Mugwara's position, as Head of Corporate Banking, who had business cards issued to him by the Bank confirming such status, was not a “nude appointment”. It was an appointment that had to be considered with “all its trappings”: see NBS Bank Ltd v Cape Produce Co [Pty] Ltd & Ors 2002 [1] SA 396 [SCA]; [2002] 2 All SA 262 [SCA].

I find nothing unreasonable in Johannes Mudzengerere's reliance on Francis Mugwara's job description as one who had the requisite authority to issue the guarantees. I find nothing that should have put him on his guard.

When Francis Mugwara called at his office for the first time, it was to interest Johannes Mudzengerere in a bulk fuel deal worth over a whopping $2 million. So when Francis Mugwara came back a few weeks later, now in the company of a representative from Wedzera, with a guarantee for a trifle $300,000, it was not unreasonable for him to accept the guarantee. Francis Mugwara's actions had a “façade of regularity.” This particular guarantee ran its life without the Bank's system of control detecting it: see NBS Bank Ltd v Cape Produce Co [Pty] Ltd & Ors 2002 [1] SA 396 [SCA]; [2002] 2 All SA 262 [SCA]. So, again, Johannes Mudzengerere cannot be faulted for accepting the two subsequent guarantees.

The Bank's reliance on fraud or bribery was problematic.

Nothing was proved. The criminal case that the Bank had reported against Francis Mugwara had collapsed.

In casu, the Bank had no records or document of any sort to support the allegations. Its witnesses said that some of its records had been misplaced or had become unavailable when it had changed offices sometime after the incident. They further said that they had been unaware that Francis Mugwara would testify for Engen until a few days before the trial.

That was rather lame.

Whether or not Francis Mugwara had been lined up to testify for Engen did not detract from the fact that the onus would always lie on the Bank to prove fraud or bribery. It was the Bank making those allegations.

Furthermore, the Bank had reported Francis Mugwara to the police soon after the guarantees had surfaced. Nobert Munengwa's witness' statement to the police did not contain any reference to Francis Mugwara having received a cash inducement from Eric Nhodza. The complaint was concealment by Francis Mugwara of his transactions of which Nobert Munengwa concluded amounted to fraudulent misrepresentation.

No wonder the State had declined to prosecute.

In his testimony, Francis Mugwara maintained that the allegations of fraud or bribery had never been made to him at any time before the trial.

The Bank did not satisfactorily refute this.

For these reasons, I find the Bank liable to Engen for the guarantees issued by Francis Mugwara in respect of Wedzera's indebtedness. Therefore, I make the following Order:

The second defendant shall pay the plaintiff the sum of US$847,847=65, or so much of it as has remained unpaid by the first defendant, together with costs of suit and interest at the prescribed rate from the date of this judgment to the date of payment.

HH39-11 : BLUMO TRADING (PVT) LTD vs NELMAH MILLING COMPANY (PVT) LTD and NELSON MAHUPETE
Ruled By: PATEL J

The plaintiff in this matter claims the sum of US$24,100 as special damages, being loss of profits arising from an alleged breach of contract by the defendants.It also claims restitution of US$10,000 paid as a deposit to the first defendant under the same contract.The defendants deny any breach on their ...

The plaintiff in this matter claims the sum of US$24,100 as special damages, being loss of profits arising from an alleged breach of contract by the defendants.

It also claims restitution of US$10,000 paid as a deposit to the first defendant under the same contract.

The defendants deny any breach on their part and allege that it was in fact the plaintiff that acted in breach of contract.

Evidence for the Plaintiff

Wayne Victor Moss is the Chief Executive Officer of the plaintiff company which, together with CCC Pigs (Pvt) Ltd, is a subsidiary of Colcom Foods Limited. He testified as follows:

On the 18th of January 2010, he signed the Agreement in casu with the defendants. In essence, the Agreement was for the sale of 500 tons of maize (at US$235 per ton) for a total purchase price of US$117,500. The maize was to be sourced by the first defendant from the Grain Marketing Board (the GMB).

On the same date, the second defendant signed a contract of suretyship guaranteeing the delivery of maize in terms of the Agreement. He said that the first defendant had a credit facility with the Grain Marketing Board (GMB) for 2,000 tons.

On the 21st of January, he withdrew a total of US$100,000 from the bank. He paid the agreed deposit of US$10,000 to the second defendant and then proceeded with him to the Grain Marketing Board (GMB) with US$90,000 in cash.

The Grain Marketing Board (GMB) was not aware of the transaction and had no release orders in the name of the first defendant. He was told by the GMB's Credit Controller (Mawanza) that he could obtain only 300 tons of maize at a higher price of US$300 per ton if he paid the US$90,000 into the first defendant's account with the GMB. This was because the first defendant's facility was for a maximum of 300 tons and because its account with the GMB was in debit at that time.

The second defendant then undertook to resolve the matter the following day.

The witness subsequently visited the Grain Marketing Board (GMB) on four consecutive days and was given the same explanations by Mawanza. He then met the GMB Marketing Manager (Mandizvidza) who cautioned him against dealing with the first defendant. Mandizvidza later furnished a letter confirming the first defendant's credit standing with the GMB at the relevant time.

The plaintiff did not proceed with the transaction as it became evident that the first defendant did not have the capacity to deliver as agreed.

The Agreement was cancelled on the 2nd of February and this was confirmed by the plaintiff's lawyers in their letter of the 4th of March to the first defendant. The defendants offered to restitute the US$10,000 deposit in January and October 2010, but have not made any payment to date.

The plaintiff had a contract with CCC Pigs (Pvt) Ltd, signed immediately after the Agreement with the defendants, for the onward supply of 500 tons of maize at a price of US$290 per ton. This represented a profit margin of US$55 per ton equating to a total profit of US$22,500. The plaintiff had arranged for the transportation of the maize at a cost of US$200 per truck. In order to meet its contract with CCC Pigs the plaintiff had to order 508 tons of maize from South Africa at a price of US$317 per ton.

Under cross-examination, the witness conceded that the deposit of US$10,000 was not paid on signature of the Agreement but on the 21st of January and that the sum of US$90,000 was not deposited into the GMB's bank account as agreed. The payments were a few days late and not strictly in accordance with the terms of the Agreement. However, this was not unreasonable in the circumstances of the transaction and the second defendant had accepted the delays. Moreover, the witness did not have the Grain Marketing Board's (GMB) bank account details.

Odson Dzanga is the plaintiff's Financial Manager. He accompanied Wayne Victor Moss to the Grain Marketing Board (GMB) on the 22nd of January 2010. He confirmed that the GMB would only have released 300 tons of maize upon payment of the US$90,000 in cash. He added that the first defendant's account with the GMB was in arrears standing at about US$54,000 as at the 8th of January 2010.

Emson Mandizvidza has been employed by the Grain Marketing Board (GMB) as its Marketing Manager since 2003. His duties include checking the credit facilities of customers, and, in conjunction with the Credit Controller, authorising release orders on credit sales. He corroborated the testimony of Wayne Victor Moss and Odson Dzanga regarding their visit to the GMB on the 22nd of January and his discussion with Moss in the presence of the second defendant. He also confirmed the contents of his letter of the 13th of May 2010 concerning GMB prices and the first defendant's credit status.

Between the 18th and 22nd of January 2010, the first defendant's credit facility was on hold because of its outstanding arrears of US$54,000, and, in any event, that facility did not enable it to buy 500 tons of maize from the Grain Marketing Board (GMB). At that time, the first defendant's credit facility was limited to 300 tons per month.

In practice, a credit customer wishing to increase its credit limit would have to apply, in writing, and the application would then be assessed by the Risk Management Committee (the RMC) which meets once a week.

In December 2009, the first defendant applied to increase its credit limit to 2,000 tons per month. This application was turned down by the Risk Management Committee (RMC) before the 18th of January. As at that date, there was no application from the first defendant to increase its credit limit. Even if it had lodged an application, this would only have been processed the following week and it would not have been possible to approve any increase on the 22nd of January. The Grain Marketing Board (GMB) sued the first defendant for the outstanding US$54,000 in April 2010 in Case No. HC2191/10. At the present time, the first defendant is no longer a credit client of the Grain Marketing Board (GMB).

Wanda van den Bergh is a grain broker. Her evidence was that she introduced Wayne Victor Moss to the second defendant in January 2010. The agreement between them was for the first defendant to supply maize to the plaintiff for onward sale to CCC Pigs (Pvt) Ltd. She was not aware of the first defendant's credit facility with the Grain Marketing Board (GMB).

Evidence for the Defendants

Nelson Mahupete, the second defendant, is the Chairman and Managing Director of the first defendant.

His evidence was that in December 2009 he applied to the Grain Marketing Board's (GMB) credit controllers (Mawanza and Pfumbidza) to increase the first defendant's credit facility from 300 tons to 2,000 tons per month. They agreed to increase the facility to 1,500 tons - provided the outstanding debt of US$54,000 due to the GMB was cleared.

After the Agreement was concluded with the plaintiff, Wayne Victor Moss only paid the deposit of US$10,000 after three (3) days. Moreover, he did not effect transfer of the US$90,000 into the Grain Marketing Board's (GMB) account but arrived at the GMB offices with the cash equivalent. He then declined to pay that amount towards the first defendant's account with the GMB. If he had done so, the first defendant would have fulfilled the contract to deliver 500 tons of maize.

As regards the debt of US$54,000 owed to the Grain Marketing Board (GMB), the first defendant has already paid US$33,250 towards this and the balance is to be cleared as per an agreed payment plan.

Under cross-examination, the second defendant conceded that the 500 tons of maize in question was for pig feed but denied that it was intended for CCC Pigs (Pvt) Ltd.

He disputed the averment to that effect made by Mandizvidza in his statement to the CID Serious Fraud Squad on the 12th of February 2010.

As regards the release orders for 500 tons of maize, he admitted that he did not have them in his possession on signature of the Agreement on the 18th of January or at the Grain Marketing Board (GMB) offices on the 21st of January.

He has been charged with fraud in respect of the present contract. The criminal trial has commenced and is yet to be completed.

Vavavirayi Mawanza has been the Grain Marketing Board's (GMB) Credit Controller since January 1999.

His evidence was that Grain Marketing Board (GMB) release orders are first signed by him and then by the Marketing Manager before they are issued. In August 2009, the first defendant applied for a credit facility, and, in September, it was granted a facility for 150 tons per fortnight or 300 tons per month. In December 2009, the GMB released a total of 268 tons of maize to the first defendant. The latter then applied for a facility of 2,000 tons per month. On the 18th or 19th of December, he verbally advised the second defendant that he could only approve a facility of 1,500 tons on condition that the first defendant paid an additional US$200,000 towards its account with the GMB.

As at the 8th of January 2010, the first defendant's account was in debit of about US$54,000. On the 22nd of January 2010, Wayne Victor Moss came to the Grain Marketing Board (GMB) wanting to pay US$90,000 into the first defendant's account. The witness refused his request and said that the first defendant should make the payment itself. Moreover, it would not have been possible for Moss to have paid the GMB through its own bank account.

In his statement to the CID Serious Fraud Squad, dated the 15th of February 2010, he declared that “the accused (second defendant) has a buying limit of 150 tonnes at a time.”

There was no mention of an increased limit of 1,500 tons having been conditionally approved.

Tatenda Pfumbidza is an Assistant Credit Controller with the Grain Marketing Board (GMB).

He confirmed that an existing credit client must apply, in writing, for any increase in its credit facility and that, if its application is approved, the Marketing Department and the client must be advised of the increased limit in writing.

When the first defendant applied for an increased limit of 2,000 tons, in December 2000, it was told to make an additional payment of “more than US$100,000” towards its account with the Grain Marketing Board (GMB). This application was not approved because the additional payment was not made.

In February 2010, the second defendant approached him for a credit reference. He then wrote two reference letters dated the 5th and 8th of February. He conceded that the letters were silent as to the conditions of release and the tonnage that could be released to the first defendant. Moreover, he accepted that the letters were not addressed to the plaintiff or to Wayne Victor Moss and that they were written after the events giving rise to the plaintiff's action in casu.

Breach of Agreement by Plaintiff

It is a fundamental premise of every contract that both parties will duly carry out their respective obligations. See Green v Lutz 1966 RLR 633; ESE Financial Services (Pty) Ltd v Cramer 1975 (2) SA 805 (C)…,.

As is explained by CHRISTIE: Business Law in Zimbabwe…,.:

“There is a presumption that in every bilateral or synallagmatic contract, i.e. one in which each party undertakes obligations towards the other, the common intention is that neither should be entitled to enforce the contract unless he has performed or is ready to perform his own obligations….,.

…,. Conversely, a party who has caused the other to commit a breach cannot found a claim on the breach…,.”

In terms of clause 3 of the Agreement in this case, the plaintiff undertook to pay a deposit of US$100,000 “upon the signing of this agreement”, US$90,000 into the bank account of the Grain Marketing Board (GMB) and US$10,000 in cash to the defendants.

It is common cause that Wayne Victor Moss did not pay the deposit of US$10,000 and did not transfer the sum of US$90,000 into the Grain Marketing Board's (GMB) bank account upon signature of the Agreement. Instead, he paid the US$10,000 deposit only on the 21st of January, and, on the same date, tendered US$90,000 in cash to the GMB.

It is therefore clear that the plaintiff did not perform its obligations strictly in accordance with clause 3 of the Agreement.

However, it is equally clear that the defendants accepted the late payment of the US$10,000, and, furthermore, they actively attempted to pressurise Wayne Victor Moss to pay the US$90,000 in cash to the Grain Marketing Board (GMB), particularly as it was not practically possible for him to make that payment into the GMB's bank account.

At that stage, he was obviously willing and able to make both payments in performance of the plaintiff's obligations.

Given the attitude and conduct of the parties, the delay of three (3) days in tendering the payments and the departure in the mode of payment to the Grain Marketing Board (GMB) were not material to the plaintiff's undertakings under the Agreement; and, although the plaintiff did not strictly comply with its payment obligations, such non-compliance was accepted by the defendants.

In short, they positively acquiesced in that non-compliance and are therefore estopped from raising it as a defence to the plaintiff's claim.

Breach of Agreement by Defendants

Turning to the defendants' undertakings, these were spelt out in clauses 4 to 7 of the Agreement.

(a) Firstly, once the plaintiff had paid the deposit, the first defendant was obliged, under clause 4, to cede its release orders for 500 tons of maize “which it has already received or will shortly receive from GMB.”

(b) Secondly, after paying the deposit, the plaintiff was authorised, by clause 5, “to immediately upload the maize from GMB.”

(c) Thirdly, by virtue of clause 6.1, the first defendant warranted that “it does currently, or it will, by Tuesday 19 January 2010, have a release order or release orders in its name from GMB for 500 tons of maize.”

(d) Finally, clause 7.1 entitled the plaintiff to cancel the contract “should the seller not have a release offer [sic] or release offers [sic] in its name by Friday 22 January 2010.”

It is submitted, for the defendants, that the undertakings stipulated in the Agreement are dubious in their meaning. Consequently, in as much as the Agreement was drafted by the plaintiff's lawyers, its provisions must be construed strictly as against the plaintiff on the one hand and leniently as against the defendants on the other.

While this may be the general purport of the so-called contra proferentem or contra stipulatorem rule of interpretation, it is trite that this rule may only be invoked where the provision to be applied is ambiguous in its meaning or effect. See CHRISTIE: Business Law in Zimbabwe…,.

In the instant case, I do not perceive any such ambiguity in the terms of the Agreement. In my view, the combined effect of clauses 4 to 7 of the Agreement was this:

The defendants warranted that they either had the requisite release orders or would have them in their possession by the 19th of January; they undertook to cede the release orders to the plaintiff upon payment of the stipulated deposit; the plaintiff would then take delivery of 500 tons of maize; and, in the event that the defendants did not have the release orders by the 22nd of January, at the latest, the plaintiff was entitled to cancel the Agreement.

The test for determining the repudiation of a contract by way of anticipatory breach was expounded by NIENEBAR JA in Datacolor International (Pty) Ltd v Intamarket (Pty) Ltd 2001 (1) SA 581 (A)…, as follows:

“…, the emphasis is not on the repudiating party's state of mind, on what he subjectively intended, but on what someone in the position of the innocent party would think he intended to do; repudiation is, accordingly, not a matter of intention, it is a matter of perception.

The perception is that of a reasonable person placed in the position of the aggrieved party. The test is whether such a notional reasonable person would conclude that proper performance (in accordance with a true interpretation of the agreement) will not be forthcoming. The inferred intention accordingly serves as the criterion for determining the nature of the threatened actual breach.

…, due to the co-contractant's repudiation, the innocent contractant is excused from any steps that he must take in preparation for his own performance…,. In these circumstances, the purchaser will not fall into mora by failing to tender performance…, as long as he signifies his willingness to perform.”

Similarly, LORD WRIGHT, cited with approval in Chinyerere v Fraser N.O. 1994 (2) ZLR 234 (H)…, observed as follows in Ross T. Smyth & Co. Ltd v T.D. Bailey, Son & Co. [1940] 3 All ER 60 (HL)…,.:

“I do not say that it is necessary to show that the party alleged to have repudiated should have an actual intention not to fulfil the contract. He may intend in fact to fulfil it, but, may be determined to do so only in a manner substantially inconsistent with his obligations, and in no other way.”

The evidence before the Court shows that the first defendant did not have the requisite release orders from the Grain Marketing Board (GMB), either by the 19th or the 22nd of January, nor did it hold a credit facility with the GMB for 500 tons of maize at that time. Conversely, on the 21st of January, the plaintiff had paid the cash deposit of US$10,000 to the defendants and was prepared to pay the remaining deposit of $90,000 in cash to the GMB.

It follows that the defendants were patently in breach of the warranty contained in clause 6.1, and, because of their evident inability to fulfil the contract timeously, they were in anticipatory breach of their obligations under clauses 4 and 5 to cede the release orders and deliver 500 tons of maize. Consequently, the plaintiff was entitled to withhold any further payment under the Agreement.

Cancellation of Agreement

At common law, an anticipatory breach ordinarily entitles the innocent contractant to cancel the contract. As is observed by KERR: The Principles of Contract Law (6th ed.)…,.:

“…, repudiation before the due date for performance by a party prospectively in default constitutes anticipatory breach of contract on which the aggrieved party may take action if he so elects.”

In the instant case, clause 7.1 of the Agreement expressly allowed the plaintiff to cancel the contract in the event of the first defendant's failure to have the requisite release orders in its name by the 22nd of January 2010.

Thus, as at that date, the plaintiff was entitled to cancel on two separate grounds, viz;

(i) The defendants' actual breach of warranty as well as;

(ii) Their anticipated failure to cede the release orders and deliver the stipulated tonnage of maize in breach of clauses 4 and 5 of the Agreement.

In the event, the plaintiff lawfully cancelled the Agreement on the 2nd of February 2010, as was confirmed by its lawyers in their letter of the 4th of March 2010 to the defendants.

Claim for Special Damages

Clause 7 of the Agreement stipulates the plaintiff's remedies in the event of cancellation.

Both counsel for the plaintiff and counsel for the defendants have opted not to proffer any enlightenment on what was intended by the parties, presumably because that intention is not easily discernible from the vague and seemingly contradictory elections set out in this clause.

It then becomes necessary to consider the plaintiff's rights and remedies at common law.

It is trite that an aggrieved contractant is entitled to claim damages arising from his co-contractant's breach of contract - including any breach of warranty.

As was stated in Evans & Plows v Willis & Co. 1923 CPD 496…,:

“In our law, if an express warranty…, has been given by the seller and this turns out to be untrue an action for damages for breach of contract lies.”

The plaintiff in casu has elected not to claim the expenses actually incurred by it in replacing the 500 tons of maize at US$317 per ton from the alternative source in South Africa. The difference in prices alone would derive a net loss of US$158,500 less US$117,500 amounting to US$41,000.

Instead, the plaintiff claims a lesser sum of US$24,100 as special damages, based on its anticipated loss of profits consequential upon the defendants' breach of contract. This amount is calculated as follows: the gross profit of US$145,000 that the plaintiff would have received from its contract with CCC Pigs (Pvt) Ltd less US$120,900, being the contract price of US$117,500 under the Agreement plus the notional cost of transport totalling US$3,400.

In United Air Charters (Pvt) Ltd v Jarman 1994 (2) ZLR 341 (S)…, cited with approval in Collective Self Finance Scheme v Asharia 2000 (1) ZLR 472 (S)…, GUBBAY JA described special damages as follows:

“Special damages…, are ordinarily regarded in law as being too remote to be recoverable unless, in the special circumstances attending the conclusion of the contract, it can be deduced that the parties actually or presumptively foresaw that they would probably flow from its breach (and thus, that it was within their contemplation).

…,. To ascertain what the parties actually contemplated, or may be supposed to have contemplated, it is of assistance to look to:

(a) The subject matter and terms of the contract itself;
(b) The special circumstances known to both parties at the time they contracted.”

The evidence in this case shows that the defendants were aware of the plaintiff's onward contract with CCC Pigs (Pvt) Ltd and the contemplated profit that the plaintiff would accrue from that contract. They therefore foresaw, either actually or presumptively, that the plaintiff would suffer loss of profits in the event of their breaching their undertakings in terms of the Agreement. They are accordingly liable for the special damages claimed by the plaintiff.

Claim for Restitution

In the event of non-delivery of the goods sold under a contract, the right of the aggrieved party to claim restitution from the defaulting party is ordinarily unchallengeable.

As was held by KORSAH JA in Nissan Zimbabwe (Pvt) Ltd v Hopitt (Pvt) Ltd 1997 (1) ZLR 569 (S)…,:

“Whether the wrongful act arises out of contract or tort, where there has been actual pecuniary loss which is capable of precise quantification, the rule which the law adopts is restitutio in integrum – the injured party is entitled to claim to be placed back in the same position as he would have been in had it not been for the defendant's wrongful act.”

In the present matter, the plaintiff's right to recover the deposit paid in the event of cancellation is also affirmed in clause 7 of the Agreement, notwithstanding the ambiguities in that clause that I have earlier referred to.

The evidence clearly shows that the plaintiff paid US$10,000 as a deposit to the defendants and that the latter gave nothing in return for that amount.

Indeed, the defendants specifically acknowledged their liability to refund the deposit in the subsequent dealings between the parties and their respective lawyers.

It follows that there is no defence to the plaintiff's right to restitution and that this claim must also be upheld.

Suretyship and Joint and Several Liability

The contract of suretyship attached to the Agreement, which contract was admittedly signed by the second defendant, binds him “as surety and co-principal debtor…, for the due performance by [the first defendant] of all its obligations under the agreement.”

Again, “in the event of [the first defendant] failing to perform any of its obligations under the said agreement”, the second defendant explicitly accepted “liability for the balance of its indebtedness and for all interest, costs, damages, losses and expenses which [the first defendant] might be liable for in terms of the said agreement.”

Having regard to these unambiguous provisions, I am unable to comprehend why it is necessary to determine the second defendant's status as surety under the Agreement or the joint and several liability of both defendants thereunder.

It is undeniably clear that the second defendant stood as surety for the first defendant, and, thereby, rendered himself liable for the full performance of the first defendant's obligations under the Agreement. It is also unquestionable that the first and second defendants are jointly and severally liable for the damages and legal costs incurred by the plaintiff.

Costs

As a rule, the courts are loathe to accede to a prayer for an award of costs beyond the ordinary scale. However, this rule may properly be departed from where the unsuccessful party's conduct has been particularly unreasonable and reprehensible; for instance, by obstinately refusing to resolve the dispute amicably and inexpensively. Such vexatious conduct fully justifies an award of costs on a higher scale in favour of the successful party. See Borrowdale Country Club v Murandu 1987 (2) ZLR 77 (H); Chioza v Sawyer 1997 (2) ZLR 178 (S); NUST v NUST Academic Staff & Others 2006 (1) ZLR 107 (H).

The evidence before the Court shows that this matter could, and should, have been resolved in January or soon thereafter. It was obvious, at that stage, that the defendants were unable to fulfil the terms of the Agreement, largely because of their own default in sustaining their credit account with the Grain Marketing Board (GMB). In light of their failure to deliver under the Agreement, there should have been no question of their liability to refund the deposit of US$10,000 to the plaintiff. Their exposure to an additional claim for damages might also have been averted had they restored that deposit or demonstrated their preparedness to restitute. Their recalcitrance was simply designed to delay and frustrate the plaintiff and compel it to seek recourse before this Court at considerable legal expense.

I am amply satisfied that they should recompense the plaintiff through a punitive award of costs.

Disposition

In the result, it is ordered that judgment be entered in favour of the plaintiff as against the defendants, jointly and severally, the one paying the other to be absolved, for:

(i) Payment of the sum of US$24,100 as special damages for loss of profits;

(ii) Payment of the sum of US$10,000 as restitution;

(iii) Interest on the aforesaid amounts at the prescribed rate calculated from the date of judgment to the date of full and final payment;

(iv) Costs of suit on a legal practitioner and client scale.

HH135-16 : FRANCIS NYADINDU and SHILLAH NYADINDU vs BARCLAYS BANK OF ZIMBABWE LTD and SHERIFF OF THE HIGH COURT (N.O.) and REGISTRAR OF DEEDS (N.O.) and SOLID REAL ESTATE
Ruled By: DUBE J

A judgment debtor or any person who has an interest in a sale is entitled to bring objections challenging the conduct of a judicial sale by the Sheriff in terms of Rule 359(1).

Objections may be taken on all process leading to the sale and are not limited to the actual conduct of the auction sale. Where a petitioner challenges the decision of the Sheriff to confirm the sale, he may do so by approaching the court for the setting aside of the sale, on review, in terms of Rule 359(8). He may not challenge the Sheriff's decision on grounds not raised as objections.

The applicants seek an order for the setting aside of a sale conducted by the Sheriff. The application is brought in terms of Rule 359(8) of the High Court Rules, 1971.

The first applicant is the judgment debtor and the second applicant is his wife. The first respondent, the judgment creditor, opposes this application.

The second respondent, the Sheriff of the High Court (hereinafter referred to as the Sheriff), the Registrar of Deeds, and the fourth respondent, who is the purchaser of the property, have not opposed the application.

The first applicant took a mortgage bond against House Number 116 Eastern Road, Greendale to finance his farming operations. The applicant failed to service the loan resulting in the first respondent issuing summons to recover the outstanding balance. On 8 May 2013, the first respondent obtained an order against the first applicant for payment of the outstanding balance on the loan.

On 5 October 2013, the Sheriff of the High Court sold the applicants' house by public auction to the highest bidder at $151,000. The first applicant objected to the sale resulting in the highest bidder withdrawing his bid. The Sheriff accepted the second highest bid. The first applicant filed an objection to the sale with the Sheriff in terms of Order 40 Rule 359. The basis of the applicant's challenge was that the bid price was unreasonably low, in that the price realized at the sale could not extinguish the debt owed to the judgment creditor, and, given time to sell the property by private treaty, they could get a higher offer for the property.

After hearing the objections, the Sheriff dismissed the objections declaring the fourth respondent the highest bidder. The Sheriff ruled that the price realized at the auction was not unreasonably low as the price fetched at the auction was far more than the forced sale value of the property pegged at $100,000 and the price obtained at the sale is close to the open market value of $170,000. The Sheriff confirmed the sale at $150,000.

The applicants submitted that the property which is the subject of the application is a family home and the family's primary home and ought not to have been sold. The applicants submitted that the effect of the respondents' action is to make the applicants' family destitute. The first applicant is 58 years old and the second applicant 51 years old. Should the house be sold, the applicants have nowhere to stay. They are pensioners and there is no likelihood of buying another house. The respondents have taken all the applicants' movable property including their motor vehicle and furniture.

The applicants argue that the respondent's actions, of selling the applicants' primary residence are contrary to public policy and section 28 of the Constitution....,.

The first respondent defends the application....,.

Rule 348 deals with a scenario where a dwelling is attached.

Rule 348A(2)(a) provides that when the Sheriff receives documents and particulars relating to the attachment, he shall, forthwith, send written notice to the Secretary responsible for Housing and Building indicating that the dwelling has been attached and is to be sold in execution.

The applicants allege that this was not done.

The first respondent has a mortgage bond over the property and instituted foreclosure proceedings when the applicants failed to pay the debt.

In Meda v Homelink (Pvt) Ltd and Anor HB195-11 the court dealt with Rule 348A in the context of foreclosure proceedings and held as follows;

“The only interpretation that makes sense rather than a mockery of justice is one which says that Rule 348A is not applicable to foreclosure proceedings.”

See also Electroforce Wholesellers (Pvt) Ltd v FBC HH14-15.

In Meda v Homelink (Pvt) Ltd and Anor HB195-11, the court also remarked as follows with respect to sale of residential properties in execution;

“To put residential property, which is a person's home, into that class of assets beyond the reach of execution would be to sterilize the immovable property from commerce thereby rendering it useless as a means to raise credit.

Preventing debtors from using their homes as security to raise credit will create a class of homeless persons; those who are unable to afford the full purchase price of their homes in a cash sale, but, could afford to repay a loan for the purchase price. It would lock up capital and prevent the home owning entrepreneur from using his home as security to finance business initiative. Members of the poor communities will not be able to obtain finance from banks who will not advance money to purchase immovable property if the immovable property cannot be used as security for repayment.”

I agree with these observations.

Rule 348A is applicable where the Sheriff attaches a “dwelling” in circumstances where the debt sought to be recovered is not linked to the dwelling concerned. It applies where the dwelling attached is not under mortgage.

Rule 348A is not applicable to foreclosure proceedings.

Where a person approaches a Bank for a loan and mortgages his house as security for a debt, he cannot, when he defaults, plead that his house is his sole dwelling. Any person who puts his home up as security for loan, and does so being well aware of the fact that should he fail to service the loan, his house will be up for sale, cannot complain when he fails to service the loan and the Bank attaches his home. Such a person takes a risk which he should live with.

The applicants cannot cry foul now and seek to avoid their financial and lawful obligations by invoking Rule 348 to avoid their obligations. The applicants should live with the consequences of mortgaging their house. To allow litigants in foreclosure proceedings to hide behind the fact that the mortgaged house is a family dwelling would amount to home seekers getting mortgages without security. This would naturally have a negative effect on the mortgage lenders as they will not be able to recover their investments. They will no longer be keen to give mortgages to home-seekers.

There is nothing that is contrary to public policy about two parties entering into a loan agreement and a mortgagor calling up loaned monies and foreclosing on the mortgage bond. This arrangement remains purely a commercial transaction and is legal.

Having found that a 348A application cannot be brought where there have been foreclosure proceedings, I find that the failure by the Sheriff to comply with the requirement to write to the Home Secretary concerning the attachment is immaterial and of no consequence.

The Sheriff was not required to comply with the requirements of Rule 348A.

HH240-18 : KENNETH SCHOFIELD vs FBC BANK LIMITED and THE SHERIFF OF THE HIGH COURT OF ZIMBABWE N.O.
Ruled By: CHIKOWERO J

On 27 April 2018 the applicant filed an urgent chamber application for suspension of a sale in execution of a dwelling in terms of Rule 348A(5b) of the High Court Rules, 1971.

In line with Rule 348A(6) l treated this matter as urgent. I caused it to be set down for 2 May at 2:30pm for hearing as soon as it was allocated to me.

Opposing papers were duly filed on 30 April 2018 and served.

The parties and their legal practitioners appeared before, and, by consent, the matter was postponed to 3 May 2018 at 9:00am to enable the applicant's legal practitioner to reconsider whether to proceed with the application. This was occasioned by the points in limine raised in the first respondent's opposing affidavit.

I also took the opportunity to point out to both parties to consider whether the matter was properly before me in view of this court's decision in Masimbe v Rainbow Tourism Group 2016 (1) ZLR 367.

I pause to remark that when l was preparing this judgment l noted that the application was meant to be brought under Rule 348A(5a) and not (5b).

Rule 348A(5b) provides for the form in terms of which the application in terms of Rule 348A(5a) must be brought. The form is provided in the rules as Form No.45b. The citation of the incorrect sub-rule prejudiced no one. I ignored it....,.

Preliminary point 2: Is Rule 348A(5a) applicable to a dwelling which has been declared by a court order to be specially executable?

This issue has been considered by this court in the past. The following matters are pertinent in this regard; Meda v Homelink (Pvt) Ltd & Anor 2011 (2) ZLR 516 (H); Nyabindu & Anor v Barclays Bank of Zimbabwe Ltd & Others 2016 (1) ZLR 348 (H); Electroforce Wholesalers (Pvt) Ltd & Anor v FBC Bank Ltd HH14-15.

In all three matters, this court has held that Rule 348A(5a) does not apply to a dwelling which has been declared, by a court order, to be specially executable.

I am not persuaded that the above matters were wrongly decided.

In Meda v Homelink (Pvt) Ltd & Anor 2011 (2) ZLR 516 (H) DUBE J stated…,;

“Rule 348A is applicable where the Sheriff attaches a 'dwelling' in circumstances where the debt sought to be recovered is not linked to the dwelling concerned. It applies where the dwelling is not under mortgage. Rule 348A is not applicable to foreclosure proceedings.

Where a person approaches a Bank for a loan and mortgages his house as security for a debt, he cannot, when he defaults, plead that his house is his sole dwelling. Any person who puts his home up as security for loan and does so being well aware of the fact that should he fail to service the loan, his house will be up for sale, cannot complain when he fails to service the loan and the Bank attaches his home. Such a person takes a risk which he should live with.

The applicants cannot cry foul now and seek to avoid their financial and lawful obligations by invoking Rule 348A to avoid their obligations. The applicants should live with the consequences of mortgaging their house. To allow litigants in foreclosure proceedings to hide behind the fact that the mortgaged house is a family dwelling would amount to home seekers getting mortgages without security.”

I am in entire agreement with these remarks.

Although no distinction is made, on a plain and literal reading of Rule 348A(5a), between attached dwellings subject to a mortgage bond and those not so subject - by mortgaging the dwelling, the applicant effectively waived the protection otherwise available under Rule 348A.

In my view, this court cannot blow hot and cold. It cannot declare the dwelling specially executable, and then, when that very order is executed upon, effectively set it aside by declaring the same property not executable, never mind the conditions attached to such latter court order.

I am aware that Masendeke v Central Africa Building Society & Anor 2003 (1) ZLR 65 (H) was an urgent chamber application brought under Rule 348A wherein this court suspended the sale in execution of a dwelling.

A reading of that judgment does not disclose that this point was raised in that matter. Rather, the matter was decided on the basis of Rule 348(5e)(b)(i)(ii) and (iii).

I observe also, in passing, that Masendeke v Central Africa Building Society & Anor 2003 (1) ZLR 65 (H) was brought as an urgent chamber application when the Rules provide for a chamber application. Because of that, the provisional order granted therein was not only final in nature but a replica of the final order sought.

I remain un-persuaded that Masendeke v Central Africa Building Society & Anor 2003 (1) ZLR 65 (H) was correctly decided in so far as it ordered suspension of sale in execution of a dwelling declared specially executable by an order of court.

I therefore uphold this preliminary point.

Appealed
SC87-19 : PRECIOUS CHIPUNZA vs MOSLEY MASHINGAIDZE
Ruled By: PATEL JA, BHUNU JA and BERE JA

This is an appeal against the decision of the High Court granting an order evicting the appellant and requiring him to pay holding over damages and costs of suit.

The respondent alleged that he was the registered owner of the property in question, situated in Meyrick Park, Harare, and that the appellant was occupying the property without his consent, entitling him to claim holding over damages in the sum of $500 per month from 1 November 2011.

The appellant himself also claimed title to the property.

He denied having transferred the property to the respondent or to any other person. He had borrowed $19,000 from one Frank Buyanga and was made to sign a purported Agreement of Sale in respect of the property. After he failed to settle his loan debt, Frank Buyanga sold the property to an entity called Gildastone Holdings (Pvt) Ltd.

The appellant disputed that the respondent was a bona fide purchaser or that he was entitled to holding over damages and punitive costs.

High Court Judgment

The court a quo found that the respondent was the registered owner of the property, having purchased it from Gildastone Holdings - without having been told of any disputed sale. He paid $55,000 for the property and his current rental claim was not disputed by the appellant who was still occupying the property. His evidence was credible and not controverted under cross-examination.

Conversely, the court found that the appellant's evidence was too complicated. He had either sold the property to Lalapanzi Properties (Pvt) Ltd or had failed to service his loan agreement bringing the Agreement of Sale into fruition.

On either of his versions, he had agreed to the sale of his house.

He placed no evidence before the court to support his bald assertion that Frank Buyanga was behind the fraudulent sales of properties in similar circumstances.

As regards the appellant's point in limine, that the instant matter be deferred until another matter in Case No. HC2469/13, dealing with the ownership of the property, is determined, the court noted that this was a later case instituted several years after the instant case. The court found that the appellant's point in limine was an afterthought and was not genuinely raised. In any case, although the respondent's claim was for eviction, it was based on the actio rei vindicatio and therefore required the court to determine the true ownership of the property. The point in limine accordingly failed and was dismissed.

The court reiterated that the respondent had provided a title deed to show that he was the holder of legal title to the property. The appellant was in occupation of the property and had to show that he was vested with some right to remain which was enforceable against the registered owner. He had failed to raise any recognisable defence to the respondent's claim for eviction or holding over damages. Consequently, the court ordered the appellant to vacate the property forthwith. The appellant was also ordered to pay holding over damages of $500 per month, from 1 November 2011 to the date of vacation or eviction, and costs of suit.

Grounds of Appeal and Relief Sought

The grounds of appeal herein are essentially twofold:

(i) The primary ground of attack is that the court a quo erred in ordering eviction despite the matter pending in the High Court to resolve the substantive question of ownership. The court therefore misdirected itself in failing to stay eviction proceedings during the pendency of Case No. HC2469/13, wherein Frank Buyanga and his associated companies were cited and which was therefore better placed to resolve the question of ownership....,.

The relief sought by the appellant is that the judgment appealed against be set aside and substituted with an order staying the matter in Case No. HC11588/11, pending the resolution of the question of ownership in Case No. HC2469/13....,.

Pendency of Case No. HC2469/13

The gist of the appellant's position a quo was that there was an action pending in Case No. HC2469/13 to determine the true ownership of the property in question and that the interests of justice, convenience, and finality to litigation demanded that the real substance of the dispute, i.e. ownership of the property, be ventilated and determined first.

In essence, the appellant raised the defence of lis alibi pendens.

The defence or objection of lis alibi pendens is usually invoked in litigation where a civil suit is already pending between the parties and another suit is instituted involving the same parties in relation to the same cause of action and in respect of the same subject matter. See HERBSTEIN and Van WINSEN: The Civil Practice of the Superior Courts in South Africa (3rd ed.)…,.

As is pointed out by the learned authors, it lies within the discretion of the court to allow or decline the defence. This point is aptly elaborated in D.W. Hattingh & Sons (Pvt) Ltd v Cole N.O. 1991 (2) ZLR 176 (SC)…, as follows:

“The court has a discretion to order or refuse a stay of proceedings on the grounds of lis alibi pendens, and, in the exercise of that discretion, it will have regard to the equities and to the balance of convenience in the matter.”…,.

What emerges from this passage is that the court seized with a request for the stay of proceedings must have regard to all the relevant circumstances of the case. In short, considerations of fairness and convenience are decisive in the exercise of the court's discretion. Thus, it is not an immutable rule that the matter or suit which was commenced first should be proceeded with and determined before the matter that is instituted at some later stage. The particular facts and issues involved in both matters must be taken into account in granting or refusing a request for the stay of proceedings.

In dismissing the appellant's objection in limine to the continuation of the proceedings a quo, the learned judge reasoned as follows:

The instant matter was filed in 2011 well before the matter in Case No. HC2469/13. At that time, there was no similar matter pending between the parties. The defence of lis alibi pendens applies to a pending earlier matter involving the same parties, the same subject matter and the same cause of action. Therefore, the action which was first commenced should be decided first. The defence raised by the appellant was an afterthought. In any event, although the instant claim was for eviction, it still required the court to determine the question of ownership of the property. Consequently, the learned judge dismissed the point in limine and proceeded to find that the appellant had no recognisable defence to an actio rei vindicatio or to the claim for holding over damages.

Having regard to what I have stated earlier, the learned judge was clearly wrong in taking the position that the defence of lis alibi pendens only applies to a pending earlier matter and that the action which was commenced first should be decided first.

In my view, the correct principle to be applied in the case of dual or multiple proceedings is not that of “first come first adjudicated”. Rather, it is one of having regard to all the relevant circumstances and balancing the interests of justice and convenience to all the parties involved as well as the court system.

The court a quo failed to do so and misdirected itself by applying the wrong principle in the exercise of its discretion in determining whether or not to stay the instant proceedings.

Equally significantly, the learned judge appears to have committed a further critical error in her adjudication of the question of ownership.

At an early stage during the trial a quo the appellant's counsel applied for a postponement of the trial on the ground that there was a pending chamber application for the consolidation of the two matters in question. It was argued that it was convenient for both matters to be heard at the same time.

The learned judge declined the application for postponement on the basis that the application for consolidation was belated and had been overtaken by events.

While the learned judge cannot be faulted for having taken this robust approach, it seems to me that she could not have been in any position to make conclusive findings on the question of ownership without having examined the record in Case No. HC2469/13. That is the matter in which the issues of ownership and several transfers of title in the disputed property are to be fully ventilated.

It is not in dispute that neither Gildastone Holdings nor Lalapanzi Properties have filed any notice of opposition to the appellant's claim in that matter. It is also not in dispute that the principal player in the purported loan-cum-sale arrangement over the property, ie Frank Buyanga, has been evasive hitherto but has since been served with process by edictal citation pursuant to a court order dated 4 April 2019.

In short, the proceedings in Case No. HC2469/13 have progressed to a stage where they can be expedited by the parties themselves, or, if necessary, by appropriate directions from the court.

As I have already noted, the appellant did initially raise the question of lawful title and ownership in October 2012. However, these issues were omitted from the joint pre-trial conference minute filed in February 2013, at the time when the appellant was not legally represented. Subsequently, he issued summons in Case No. HC2469/13 on the basis that he was still the legal owner of the property.

His uncontroverted averment in this regard is that he did so pursuant to the indications of the judge presiding at the pre-trial conference, to the effect that it was not meaningful for him to challenge the last transfer to the respondent without challenging the initial transfer.

That being so, it cannot be said, as was rather unfairly found by the court a quo, that the defence raised by the appellant was merely an afterthought.

It is common cause that the appellant possessed initial title in the disputed property. His position is that he inadvertently signed what he was led to believe and understood to be simply a loan agreement and that he did not sign anything else relating to the transfer of the property.

At present, title to the property is registered in the respondent's name.

However, it is trite that a title deed is not conclusive proof of ownership.

In casu, the presumption of ownership being vested in the respondent has been challenged and possibly dislodged by the absence of evidence proving the various transfers of title from the appellant to Lalapanzi Properties and then to Gildastone Holdings and eventually to the respondent.

In the final analysis, I am satisfied that the court a quo erred and misdirected itself in declining to stay the proceedings before it pending the disposition of Case No. HC2469/13, notwithstanding that the latter case had been instituted after the former.

In the exercise of its discretion, the court acted on the wrong principle. Moreover, it failed to take into account crucially relevant facts pertaining to title in and ownership of the property.

If the judgment a quo were to be enforced, resulting in the appellant being evicted from his only home, he would no doubt be rendered destitute pending the possible restoration of the status quo ante. Conversely, if the eviction of the appellant were to be delayed pending the finalisation of Case No. HC2469/13 and if the respondent were to succeed in that matter, the latter could be compensated by an award of holding over damages coupled with an order of punitive costs, if appropriate, and would therefore suffer minimal prejudice. In other words, the balance of convenience clearly favours the appellant.

Disposition

In the premises, I take the view that the real dispute between all of the parties involved is still pending in Case No. HC2469/13.

In this particular instance, the matter that fully and definitively resolves the issues of ownership and title should be heard and determined first. This would resonate not only with the interests of justice and the balance of convenience between the parties but also with the need to bring finality to the protracted contestation in this matter.

The court a quo should have exercised its discretion accordingly and its decision to the contrary cannot be allowed to stand.

As regards costs, I have earlier indicated that the appellant was prepared, in the event that the appeal succeeds, to forego the costs a quo as well as the costs of the appeal. It is accordingly ordered as follows:

1. The appeal be and is hereby allowed with no order as to costs.

2. The judgment of the court a quo be and is hereby set aside and substituted with the following:

“(i) The matter be and is hereby stayed pending the determination of Case No. HC2469/13.

(ii) There shall be no order as to costs.”

View Appeal
HH211-18 : MOSLEY MASHINGAIDZE vs PRECIOUS CHIPUNZA
Ruled By: MATANDA-MOYO J

The plaintiff sued the defendant by way of summons for the following relief;

(a) An order evicting the defendant and all those claiming occupation through him from the plaintiff's premises known as Number 20 Saint Stephens Road, Meyrick Park, Harare;

(b) Holding over damages in the sum of $500 per month with effect from 1 November 2011 to date of vacation or eviction; and

(c) Costs of suit on a legal practitioner-client scale.

The plaintiff alleged that he is the owner of Number 20 Saint Stephens Road, Meyrick Park, Harare which is described as Stand 3206 Marbelreign Township 17 of Greeba of Mabelreign measuring 1,065 square metres, held under Deed of Transfer 4941/2011 dated 18 October 2011. The defendant is in occupation of that property. As a result of such occupation by the defendant, the plaintiff alleged he is suffering $500 per month holding over damages from 1 November 2011. The $500 represents the amount the plaintiff would realize from renting out the above property.

The defendant disputed the plaintiff's ownership of the property. The defendant, instead, claimed ownership of the property.

It is the defendant's case that if the plaintiff indeed holds title to the property then such title would have been fraudulently acquired. The defendant denied having transferred his property to the plaintiff nor to any other person. Instead, the defendant pleaded that he borrowed $19,000 from a certain Frank Buyanga. He was made to sign a purported Agreement of Sale in respect of the property, hence, after the defendant failed to settle the debt, Frank Buyanga sold the property to Gildastone Holdings (Pvt) Ltd who have a pending eviction matter before the Magistrates Court against the defendant. It is the defendant's case that if indeed the plaintiff purchased the property, then he was and is not a bona fide purchaser.

The defendant denied being liable for holding over damages, insisting he was the owner of the property, and also denied that the plaintiff was entitled to costs on a legal practitioner-client scale. He also prayed for dismissal of the plaintiff's claim with costs on a higher scale.

Without replicating, the matter was set down for pre-trial conference. The issues for trial were as follows;

1. Whether or not the defendant has a defence to the plaintiff's claim;

2. Whether or not the plaintiff is entitled to recover holding over damages in the sum of $500 from 1 November 2011 to date of eviction; and

3. Whether or not the plaintiff is entitled to costs on a higher scale of legal practitioner and client.

Mr Mosley Mashingaidze testified that he is a Logistics Manager for a transport company based in DRC. He testified that he is the registered owner of Stand 3206, Mabelreign Township. He produced the title deed which is in his name; namely, Deed of Transfer number 004941/2011. The transfer was done on the authority of High Court Order 3931/11 dated 19 July 2011. He said he bought the property for $55,000. Receipts to that effect were produced.

The plaintiff testified that he entered into an Agreement of Sale with Goldastone Holdings (Pvt) Ltd. The sale was concluded through Floburg Real Estate agents. This was after the sale of the property was advertised through the newspapers. He then sent his sister to view the house. Thereafter, he also came over to view the property. The property was occupied then and so he was able to view the house. No one told him that there was a dispute in relation to the property. The defendant was in occupation of the house at the time of viewing.

Around April 2010, two or three months after purchasing the property, this witness learnt that the defendant was claiming ownership to the property. To his surprise, the defendant sat back and did nothing to assert his purported rights.

On holding over damages, this witness testified that he had not been able to occupy his property as the owner. The defendant, without just cause, continued in occupation. The defendant has not been paying rentals.

The house in question comprises of 3 bedrooms, 2 toilets, dining room, lounge and a verandah. The market rentals for such property is $500 per month. This witness also added that no mention of Frank Buyanga was ever made in these transactions.

Under cross examination, this witness said whilst it is true that at some point the defendant paid rentals through Nyamushaya, Kasuso and Rubaya Legal Practitioners, he had not presented such proof in the form of receipts. He insisted the defendant paid such rental for two months.

On being questioned on the existence of a court order cancelling the sale from the defendant to Lalapanzi, this witness said since he was not party to the proceedings he was unaware of the court order cancelling the sale from the defendant to Lalapanzi. He insisted he was not aware of the participation of Frank Buyanga in these matters.

On re-examination, this witness denied knowledge of Frank Buyanga nor one Akim Ndlovu.

The defendant opened his case by calling Mr Cheza, the Client Services Manager for the Zimbabwe Revenue Authority.

He testified that during the course of his duties he received a request from the defendant's lawyers to confirm whether the transfer to the plaintiff of the property in question passed through his office. He confirmed transfer to Lalapanzi did not exist in their records. There was no record of the defendant having paid capital gains tax. In fact, he said he failed to get any records pertaining to the transfer.

Under cross-examination, he confirmed he has been working for the Zimbabwe Revenue Authority (ZIMRA) since 2001 and in the present capacity since 2014. He clarified that his evidence was to the effect that no records were found. He could not say for sure that the parties did not deal with the Zimbabwe Revenue Authority (ZIMRA). He admitted it could be a question of mis-filing. He confirmed transfer could not be effected without proof of payment of capital gains tax.

Under re-examination, he maintained his position that it was possible that documents were lost at the Zimbabwe Revenue Authority (ZIMRA).

The defendant testified that no evidence was led by the plaintiff to show capital gains tax was paid by the defendant to the Zimbabwe Revenue Authority (ZIMRA).

He said earlier on he got judgment from this court for transfer to be reversed. However, such judgment has since been reversed for failure to cite the plaintiff.

He said he never received the purchase price from the plaintiff nor from Gilderstone nor Lalapanzi. Gilderstone, at some point, tried to seek his eviction and payment of rentals but abandoned the claim.

Under cross examination, he stated that he was a Director of a company which provides financial advisory services. In that capacity, he is aware of what constitutes security for a loan. He admitted that he did not produce any loan agreement. He said he once worked for Banc ABC and would securitize loans by pledging title deeds. He failed to answer whether the Bank made people sign agreements of sale for the properties and powers of attorney to make transfer. On being probed further he replied in the negative.

He admitted he signed an Agreement of Sale and not a Loan Agreement.

He confirmed that in the Agreement of Sale between the plaintiff and Gilderstone Holdings, Frank Buyanga's name did not appear anywhere. Instead, Alexander Chitamba represented the company. He admitted that there was no proof that the transfer was done by Frank Buyanga. He admitted he had no proof that Frank Buyanga had links with Lalapanzi or Gilderstone Holdings. The property was never registered in Frank Buyanga's name. He conceded that the plaintiff could well be an innocent purchaser. He was taken to task on whether he had told the plaintiff, during inspection, that there was a dispute, and his answer was, he did not.

Under re-examination, he said the plaintiff never replicated to his plea suggesting he agreed with same. He said the plaintiff was aware of the matter before the court where the defendant was challenging transfer to Lalapanzi.

Analysis of Evidence

From the evidence submitted, the plaintiff gave simple and straightforward evidence. He is the owner of the property in question. All the parties agreed that such property is registered in his name. He bought the property from Gilderstone (Pvt) Ltd having viewed the property. His evidence was that no one told him of the disputed sale.

I believed him.

The conduct of the defendant of sitting back and not doing anything until later on after receiving these summons tends to corroborate the plaintiff's story.

The plaintiff paid $55,000 for the property and the defendant is still occupying the house. He has not benefited from the house from the date of transfer. He has lost out in terms of revenue. The current rentals claimed are not disputed. The plaintiff gave his evidence well and such evidence was not controverted during cross-examination.

The defendant called Mr Cheza from the Zimbabwe Revenue Authority (ZIMRA). His evidence did not take the matter any further. He could not say for sure capital gains tax over the property was not paid for. There was no evidence from him that the Zimbabwe Revenue Authority (ZIMRA) was indeed following up on unpaid capital gains tax. Although he said no records pertaining to the sale of he property in question were found, he did not rule out misfiling. In any case, this witness was not employed within that department responsible for capital gains tax at the time of the transfer. Someone else could have handled the assessment of capital gains. However, this witness admitted that without a capital gains tax certificate, transfer would not have gone through.

The defendant's testimony was too complicated.

The defendant tried to throw in anything and everything that could make his story believable. The defendant testified that he was a finance person, well versed in loan documents. The defendant was very clear that what he signed was an Agreement of Sale. He, however, testified that it was executed in place of a Loan Agreement. His testimony was that he borrowed $19,000 from Frank Buyanga who made him sign an Agreement of Sale. He said he signed the agreement after being satisfied with the explanation he got from Frank Buyanga that such agreement of sale represented a loan agreement.

Having worked with a Bank where he came into contact with documents required for securitization of a loan, the defendant knew that he had signed an agreement to sell his property.

So, it is my finding that indeed the defendant sold his property to Lalapanzi.

The purported agreement between Lalapanzi and the defendant, according to the defendant's version, was that if he failed to service the loan agreement his house would be sold. Evidence before me shows that the defendant failed to service the loan agreement and the agreement of sale came to fruition.

Either versions, I am of the view that the defendant appreciated, and by conduct, agreed to the sale of the house.

HH14-15 : ELECTROFORCE WHOLESALERS (PVT) LTD and CHAMUNORWA MAWUNGANIDZE vs FBC BANK LIMITED
Ruled By: MAKONI J

The applicants brought the present proceedings in terms of Rule 348A(5a) of the High Court Civil Rules 1979 (The Rules).

They seek an order suspending the sale in execution of Stand Number 834 Adylin Township of Lot 2A Bluffhill measuring 1211 square meters held by the second applicant under Title Deed Number 549/07 (the property).

They seek a suspension, for a period of 12 months, from the date of the order, with a condition that within that period, the first applicant clears its indebtedness to the first respondent in full. They also seek an order of costs against the respondent.

The brief background to the matter is that the respondent, and in case number HC4944/12, obtained a judgment against the applicants on 10 October 2012. On 11 March 2013, the applicants were served with a Notice of Attachment of movable and immovable property.

On 19 March 2013, the applicant filed the present proceedings.

The applicants seek the order on the basis that the second applicant and his family resides at the property which is the subject of execution. He does not have any other house. If the property is sold, undue hardship and irreparable harm will be suffered by the second applicant and his family. He will not be in a position to buy some other house.

He further avers that the first applicant had made significant inroads towards extinguishing the debt and it has the capacity to pay off the amount outstanding. The first applicant is owed substantial amounts by several debtors, chief among them the ZRP, who owes it USD1,200,000.

They were therefore praying to be given a period of 12 months within which to clear the debt.

The application is opposed, and the respondent raised two points in limine, viz;

(i)...,.

(ii) That the property was bonded in favour of the respondent and had been specially declared executable by an order of court....,.

Mortgaged property and are declared specially executable by an order of court

It was submitted on behalf of the respondent that Rule 348A does not apply to sale of immovable property specially declared executable by an order of a competent court.

Counsel for the respondent referred to the case of Priscilla Moda v Homelink (Pvt) Ltd and Anor HB195-11…,.

Counsel for the applicants submitted that the Rule in question does not specifically exclude such properties.

It is common cause that the second applicant's immovable property was hypothecated to the respondent as security for due payment of the amounts loaned to the first applicant. It is also common cause that the applicants failed to repay the loan resulting in the respondent instituting foreclosure proceedings. The respondent sought an order that the property be specially executable and the applicants did not contest the grant of such relief. The court duly granted the order sought.

In Priscilla Meda v Homelink (Pvt) Ltd and Anor HB195-11, NDOU J…, dealt with the case which is almost on all fours with the present matter. At p3 of the cyclostyled judgment he stated the following:-

“In my humble view, execution of mortgaged property is different from the property being referred to in order 40 Rule 348A.

The difference is that we dealing here with foreclosure proceedings. In foreclosure proceeding, the security which the mortgager pledged is the one that is sold after institution of judicial proceedings for the amount of the debt, whereafter a writ of execution against the property is issued. In one word, if the mortgagor does not pay the capital when due, or if he commits any breach of the conditions of the contract entitling the mortgage to foreclose then the latter is entitled to have the secured property sold and obtain the amount of his debt from the proceeding the sale – Benson v Hirschlorin 1936 NPD 277.

A mortgagor cannot claim a stay of execution in terms of Rule 348A (supra).”

Further down in the judgment, NDOU J has this to say regarding property declared specially executable by an order of the court;

“Having made an order directing the sale of the house, applicant, cannot now bring an application in terms of Rule 348A(5a) stopping the sale on the basis she has made a reasonable offer. She is thus precluded from doing so as allowing the application would have the effect of rescinding, through the back door, the order that has been made by a competent court. By declaring the house “specially executable” the court has given the first respondent the right to sell the house in execution to recover what is owed to it.

The mortgagor's first and foremost duty is to pay the debt secured and the mortgage's corresponding right is to 'call up' or 'foreclose' the bond. The significance of mortgage bonds and all other forms of hypothecation lies in the fact that they provide the creditor with a 'real security' for the payment of his claim; for, if the debtor is unable to raise the necessary funds to pay the debt which is secured, the creditor is entitled to demand that the property, that being the thing which is subject matter of his security, be sold and that the proceeds of such sale are used for the satisfaction of his claim –

The Law of Property (3rd Ed) SILBERBERG and SCHOEMAN at 419 and 429.”…,.

He concluded by stating the following:-

“On the basis of the aforesaid, it is respectfully submitted that Rule 348A is not applicable to foreclosure proceedings and to the sale of immovable property which has been declared to be specially executable as in this case. Accordingly, the present application must be dismissed with costs on a legal practitioner and client scale. As averred in the foreclosure proceedings filed, it was a term of the loan agreement and Deed of Hypothecation that Applicants would pay Respondents legal costs on a legal practitioner and client scale. See Scotfin Ltd v Ngomahuru (Pvt) Ltd 1997 (2) ZLR 567.”

I associate fully with the views expressed by NDOU J in Priscilla Meda v Homelink (Pvt) Ltd and Anor HB195-11.

In casu, the second applicant mortgaged to the respondent the property in question to secure a debt advanced to the first applicant. When the first applicant defaulted, the respondent instituted foreclosure proceedings wherein it sought an order to have the property specially executable. The applicants did not context the granting of such a relief. They only sprung to action when the property was attached in execution and filed the present proceedings.

As was stated by NDOU J in Priscilla Meda v Homelink (Pvt) Ltd and Anor HB195-11, this is seeking rescission of a judgment made by a competent court, declaring the property executable, through the back door.

In view of the above, I will therefore uphold the points in limine as raised by the respondent and make the following order;

(i) The application is dismissed with costs.

SC40-15 : INDIUM INVESTMENTS (PVT) LTD vs KINGSHAVEN (PVT) LTD and DANIEL SHUMBA and LINDA SHUMBA
Ruled By: CHIDYAUSIKU CJ, GWAUNZA JA, GOWORA JA, HLATSHWAYO JA and MAVANGIRA AJA

On 28 February 2008, under case no. HC1239/08, the appellant caused summons to be issued against the respondents seeking an order for the cancellation of a lease, and, consequent thereto, the eviction of the respondents from the leased premises.

On 10 December 2008, a second summons was issued by the appellant under case no.6969/08 wherein it sought the eviction of the respondents due to the expiry of the lease.

The High Court dismissed the claims with costs.

The appellant was aggrieved by the dismissal and has noted this appeal.

THE FACTUAL BACKGROUND

The basic facts surrounding the dispute are the following:

The appellant (hereinafter referred to as “Indium”) is the registered owner of certain immovable property, being Stand 450 Avondale West Township of Stand 390 Avondale West, also known as 108 West Road, Strathaven, Harare, (hereinafter referred to as “the premises”). The first respondent (hereinafter referred to as “Kingshaven”) is a private company registered as such under the laws of Zimbabwe. The second respondent (hereinafter referred to as “Shumba” and the third respondent, his wife, are the only shareholders of and directors in Kingshaven.

Kingshaven carries on business in the hospitality sector and is in occupation of the premises by virtue of a lease concluded on 14 December 2007 with Indium. Notwithstanding the date of signing, the agreement was to come into force on 10 December 2007 and was to endure for a period of 365 days, terminating automatically on 9 December 2008.

Shumba and his wife are shareholders in a Close Corporation, ERF Bryanstan Cc, which is duly registered as such under the laws of South Africa.

ERF Bryanstan is the registered owner of an immovable property, being Portion 2 of ERF 825 Bryanstan Township also known as 17 Portman Road, Bryanstan Sandton, Johannesburg.

In 2007, ABSA Bank, in whose favour ERF Bryanstan had registered a mortgage against the property, called up the mortgage and executed against the same.

In an effort to save the property, Shumba approached Jayesh Shah (hereinafter referred to as “Shah”) for financial assistance, and this culminated in a number of agreements.

The first agreement consists of a loan between Shah, on the one part, as lender, and Shumba and ERF Bryanstan Cc, on the other, as borrowers. The loan amount is UD$500,000.

The second agreement is for the sale of the entire shareholding in Indium concluded by Shumba and his wife, on the one part, as sellers, and Jayesh Shah and Shaleetha Mahabeer, on the other, as purchasers.

The last agreement is the lease agreement concluded between Indium, as lessor, and Kingshaven, as lessee on 14 December 2007.

The two matters instituted by Indium were, by consent of the parties, consolidated for trial before the High Court.

In dismissing the claims, the court a quo stated:

“He intended to secure a windfall by all means legally possible. His legal practitioner advised a web of agreements to ensure he remained within the realms of the law. A loan here, a purchase of shares there and a lease with a buy-back option to crown it all, was all it took to secure apparent control of the debtor's immovable property in Zimbabwe without any reference to its true value.

Clearly, whatever the parties decided to call it, the agreement to take over control of the plaintiff company from Shumba, without paying for it, amounted, in my view, to a pactum commissorium.

It is the substance, not the form, to which the court looks when deciding the true nature of an agreement.

Consequently, therefore, the second issue, whether annexure “C” amounts to a pactum commissorium is determined in defendants' favour.

I have already found that the payment, in South Africa, by Shah, was intended as a loan, as pleaded by plaintiff; therefore, there is no evidence to suggest that the same payment doubled as payment for shares in Indium Investments (Private) Limited.

That issue is resolved in favour of the defendants as well.

The transactions were clearly in fraudum legis. The law in this jurisdiction is clear. Where the contract which is in fraudum legis is performed, the court cannot come to either party's assistance.”

The appeal is premised on the following grounds:

1. That, the court a quo erred in not finding, that, in the absence of a plea for rectification of a contract, the parole evidence rule operates to exclude extrinsic evidence to disprove the contents of a written contract. (sic)

2. The court a quo erred in not finding, that, returns lodged with the Registrar of Companies are prima facie proof of the correctness thereof, and the same cannot be impugned without the joinder of the Registrar of Companies.

3. Consequently, and for the stronger reason in view of grounds of appeal 1 and 2 above, the court a quo erred in holding that the respondents had discharged the onus of justifying possession of the appellant's property within the context of the actio rei vindicatio.

4. The court a quo erred in fact and in law in holding that the agreements in question were simulated agreements which “mimicked” the South African agreements.

5. The court a quo erred in any event in holding, that, the agreements the subject of the litigation were in fraudem legis in that they sought to evade the exchange control legislation, in view of the fact that free funds were paid to the credit of a South African resident, and in not finding, that, the fact that such South African resident was a citizen of Zimbabwe and did not give rise to the need for exchange control approval.(sic)

6. The court a quo erred in fact and in law in holding, that, the agreements the subject of the litigation a quo were a pactum commissorium.

Counsel for the appellant urged us to find, that, the learned judge in the court a quo had not dealt with the case that was placed before him.

It was his contention, that, the matter before the court was principally for the cancellation of the lease agreement between Indium and Kingshaven and consequential relief. He argued that it was essentially a rei vindicatio.

What the court a quo did, however, it is argued, was to turn its focus on a completely different issue which it could not competently determine and made findings which cannot be supported.

It is contended, that, the court thereby misdirected itself.

In my view, the dispute can be resolved by this court having regard to the manner in which the court a quo dealt with what it referred to as the simulated agreements, and, secondly, dealing with the actio rei vindicatio in accordance with the claims in the summons.

THE ALLEGEDLY SIMULATED AGREEMENTS

In answer to the claim for the eviction of Kingshaven from the premises, the respondents raised various defences, namely, that Shumba and his wife had borrowed a specified sum of money from Shah, and that, as security for their due performance thereon, the latter had demanded security in Zimbabwe in the form of shares in Indium. They pleaded, further, that the parties entered into a simulated agreement for the sale of shares in Indium which ultimately resulted in the lease agreement providing for a buy-back option in favour of Shumba and his wife.

There is no suggestion on the papers that Indium participated in any of the agreements except the lease.

It then begs the question which parties the court a quo referred to when it concluded that the agreements were fraudum legis.

It is common cause, that, the loan agreement was between ERF 825 Bryanston Cc, in which Shumba and his wife owned shares, and Shah.

ERF Byanston Cc was not cited as a party to the proceedings before the court a quo.

Shah only appeared in the proceedings in the court a quo as a witness on behalf of Indium.

In the circumstances, the court could not have properly considered the loan agreement, or its legality, in the absence of the parties thereto.

I turn next to the “share sale” agreement in relation to the shares in Indium.

The parties to the sale of the shares were, on the one part, Shumba and his wife, as sellers, and, on the other part, Jayesh Shah and Shaleetha Mahabeer.

The last two were never before the court as parties and the agreement for the sale of shares could therefore not be scrutinised to any extent by a court in their absence.

Consequently, the determination by the court of the issues related to the lease agreement concluded by Indium and all the respondents in reference to the share sale agreement was highly irregular.

It follows, therefore, that, any issues referred to the trial court for determination in relation thereto would be irregular. It is therefore logical to conclude that the court a quo dealt with matters and issues that were not before it.

This leaves Indium, Kingshaven, Shumba and his wife.

They were parties to a document, being the lease agreement, which is the only document properly before the court.

Those were the parties that were before the court, and, therefore, the only dispute for determination was that arising from the lease agreement in respect of which the court had to determine the respective rights and obligations of the parties before it.

In the absence of a counter-claim for declarations of invalidity in respect of the agreements discussed above, the court could not grant relief to the effect that the agreements were invalid. At best, it was argued, the court ought to have granted absolution from the instance.

I think the criticism is well taken.

At p8 of the cyclostyled judgment, the learned judge in the court a quo stated:

“In my view of the facts, the defendants have adduced sufficient evidence to rebut the presumption of legality of the transactions described above. Generally, one of the most common forms of tax avoidance is where the parties to a contract attempt to disguise its true nature in order to qualify for a tax benefit that would not be available if the true contract between them were revealed. The courts require no statutory powers to ignore pretence of this kind and the law will always give effect to the real transaction between the parties.”

The court a quo then went on to consider the agreements in question, and, at p11 of the judgment, concluded:

“In my view, the true nature of the Zimbabwean agreements was that they were additional securities to the South African loan despite the fact that they in effect apparently passed ownership and control to Shah. The buy-back option as well as the fact that the loan had been secured by a mortgage bond gave Shumba the belief (that) these agreements will be respected by the parties as pledged to the underlying loan agreement. I therefore find for the defendant in respect of the first issue.

As to whether annexure “C” amounts to a pactum commissorium, it follows from my reasoning, that, once the interpretation given by the defendant is upheld, the court must find in his favour on this point as well.

I do so for the following reasons:

A pactum commissorium has been defined as a 'pact by which the parties agree that if the debtor does not, within a certain time, release the thing given in pledge by paying the entire debt, after the lapse of the time fixed, the full ownership in the thing will invariably pass to the creditor in payment of the debt:' see Chimutanda Motor Spares (Pvt) Ltd v Musare & Another 1994 (1) ZLR 310; Van Rensberg v Wieblen 1916 OPD 247 at 252.”

Undoubtedly, the court was correct in its statement of the principle of a pactum commissorium.

However, it was incorrect in applying that principle to the facts of this case.

It gave the respondents far reaching relief which they had neither sought nor prayed for.

If the respondents were under the impression that the underlying agreements, which gave rise to the lease agreement, were invalid, it behoved them to bring proceedings as a pre-emptive attack on the agreements.

This they chose not to do.

It is common cause, that, in their plea to the claim for eviction, the respondents raised the issue related to the loan between Shah and Shumba and his wife, the agreement for the sale of shares in respect of Indium, and the lease agreement in terms of which Kingshaven, and through it, Shumba and his wife occupied the premises.

A plea is a defence, and, as such, can be likened to a shield. It is not a weapon or a sword. No relief can attach to a party through a plea.

In the same plea, the respondents averred, that, by separate process, Shumba and his wife would approach the High Court for a declaration of invalidity of the two Zimbabwean agreements.

No such process was ever launched.

Clearly, the court a quo misdirected itself in that it resolved a dispute that was not before it.

Some of the parties to the dispute in question were not before it and they were denied the right to be heard in their own cause.

The ratio of the decision of the court strikes at the rights of Jayesh Shah and Shaleetha Mahabeer without affording them the right to be heard.

I say so for the reason, that, a judgment in which the court stated that the acquisition of shares by the two was a nullity could not be made in their absence and in proceedings in which they have not been cited as parties.

The question that arises for determination is whether such a judgment can be said to be valid and binding as against Jayesh Shah and Shaleetha Mahabeer.

In Hundah v Murauro 1993 (2) ZLR 401, the point was made, that, for a party who has a real interest in the matter in dispute before a court to be bound by a judgment of the court, such party should be cited. At p404E-G the court stated:

“We have drawn attention to this point previously on a number of occasions: see e.g. Munemo v Muswera 1987 (1) ZLR 20 (S) at 21G-H; often in conjunction with the other important point that the local authority should be cited in proceedings of this kind since it has real interest in the property in dispute: see e.g. Ncube v Mkandla SC123-89. If it indicates, in writing, beforehand, that, it is happy to accept whatever the court decides, well and good. But, otherwise, it should be cited, if only to ensure that it is bound by whatever judgment is given. Such an order does not bind it if it was not a party.”

Additionally, the court only had regard to the Zimbabwean agreements.

In the event that its conclusion, that the lease agreement was a simulation and that the “share sale” agreement was security for the loan, such finding could not be arrived at without considering the South African agreements.

The court declined to have regard to them on the basis that the order sought did not depend upon their validity.

This was despite the fact that the pactum commissorium depended on the loan agreement, which was a South African agreement, and which the court had properly declined to consider.

The contradiction is obvious and the misdirection can thus not be in dispute.

THE VALIDITY OF THE LEASE AND THE REI VINDICATIO

I turn, then, to discuss the real issue before the court a quo, that is, the claim for the eviction of Kingshaven, and through it, Shumba and his wife, from its premises.

The preamble to the lease agreement acknowledges that Jayesh Shah and Shaleetha Mahabeer have become the beneficial owners of shares in Indium Investments (Private) Limited. The relevant provision states:

“Whereas, by a sale of shares agreement between JAYESH SHAH and SHALEETHA MAHABEER, on the one part, and DANIEL SHUMBA and LINDA SHUMBA, on the other, JAYESH SHAH and SHALLETHA MAHABEER have become the beneficial owners of shares in INDIUM INVESTMENTS (PRIVATE) LIMITED.”

In turn, Indium is the registered owner of the premises.

In terms of clause 3.1 of the lease agreement, the lessee undertook to deposit an amount of Z$ One Billion as security for the due performance by it of its obligations under the lease. Rental for the premises was set at Z$ One Billion per month payable in advance and reviewable from time to time.

In recognition of the prior ownership of the shares in Indium, by Shumba and his wife, in terms of clause 13.1 of the lease, the latter were granted an option to re-purchase the shares in Indium. The option was to expire on 9 October 2008.

It is common cause that the option was not exercised.

In February 2008, Indium advised Kingshaven, that, it was in breach of its obligations under the lease to pay rentals and cancelled the lease. On 10 December 2008, the lease also expired through the effluxion of time. Indium again issued summons, this time claiming return of the premises by virtue of the expiry of the lease through the effluxion of time.

In the plea to the claim for their eviction from the premises, the respondents admitted, that, the appellant was the registered owner of the premises.

The claim, as pleaded by the appellant, was a simple actio rei vindicatio.

The nub of the actio rei vindicatio is that an owner is entitled to reclaim possession of his property from whosoever is in possession thereof. As was stated in Chetty v Naidoo 1974 (3) SA 3…,:

“It may be difficult to define dominium comprehensively (cf. Johannesburg Municipal Council v Rand Townships Registrar & Ors 1910 TS 1314 at 1319), but, there can be little doubt…, that, one of its incidents is the right to exclusive possession of the res, with the necessary corollary that the owner may claim his property wherever found, from whomsoever holding it.

It is inherent in the nature of ownership, that, possession of the res should normally be with the owner, and, it follows, that, no other person may withhold it from the owner unless he is vested with some enforceable right against the owner (e.g. a right of retention or a contractual right).”

As a consequence, once the ownership by Indium of the premises was acknowledged and accepted by the respondents, all that the court a quo had to determine was whether Kingshaven had any legal right to remain in possession of the same.

Therefore, the simple task before the court a quo was to decide whether or not a lease agreement existed between the parties as alleged, and, thereafter, to determine whether or not the claim for eviction on the lease was well founded.

This, the court failed to do.

It went on to make wider pronouncements on relationships that were not before it. It thereby misdirected itself.

The principle of rei vindicatio was applied in Stanbic Finance Zimbabwe Ltd v Chivhungwa 1999 (1) ZLR 262 (H) by MALABA J…, where he remarked as follows:

“The principle on which the actio rei vindicatio is based is that an owner cannot be deprived of his property against his will and that he is entitled to recover it from any person who retains possession of it without his consent.

The plaintiff, in such a case, must allege, and prove, that he is the owner of a clearly identifiable movable or immovable asset and that the defendant was in possession of it at the commencement of the action.

Once ownership has been proved, its continuation is presumed.

The onus is on the defendant to prove a right of retention: Chetty v Naiddo 1974 (3) SA 13 (A) at 20A-C: Makumborensa v Marini SC130-95 p2.

It follows, that, the action is based on the factual situation that prevailed at the time of the commencement of the legal proceedings.”

Once an owner proves that the property is his and that the defendant originally obtained possession of the res pursuant to a contract, the owner is obliged to prove that such a contract has expired or that he was entitled to cancel it and has indeed terminated it.

In Chetty v Naidoo 1974 (3) SA 3 it was emphasised that:

“…,. a plaintiff who claims possession by virtue of his ownership must, ex facie his statement of claim, prove the termination of any right which he concedes the defendant would have had but for the termination.”…,.

The only defences available to a defendant in the position of the respondent are the following;

(i) That he had a right to possess;

(ii) That he was not in possession; or

(iii) That the plaintiff is not the owner.

It is worth noting, that, the respondents did not plead any of these defences.

In truth, they could not have, as they had a lease with Indium the termination of which they did not deny or place in issue. The validity of the lease agreement is confirmed.

Counsel for the appellant has, however, further submitted, that, the court, in the face of this clear claim, then went on to grant judgment in favour of the respondents in the absence of a counter claim.

In African Farms and Townships v C.T. Municipality 1963 (20) SA 555 (AD) STEYNE CJ made the following remarks:

“Counsel for the appellant further argued, that, the order in the original proceedings, which as such is an order dismissing the application, is to be equated with absolution from the instance, leaving the issue undecided.

In my view, there is no substance in that argument.

As Sande, De Diversis Regulis ad l. 207, points out, the res judicata is not so much the sentential, the sentence, or the order made, as the lis or negotium, the matter in dispute or question at issue about which the sententia is given, or the causa which is determined by the sententia judicis.

As pointed out in Purchase v Purchase 1960 (3) SA 383 (N) at p385, dismissal and refusal of an application have the same effect, namely, a decision in favour of the respondent.

The equivalent of absolution from the instance would be that no order is made, or that leave is granted to apply again on the same papers.

In Commissioner of Customs v Airton Timber Co Ltd 1926 CPD 351 at p359, WATERMEYER J, draws a distinction between the actual judgment and the reasons for judgment, and expresses the view, in effect, that, where the decision of a particular question, although dealt with in the reasons for judgment, is not incorporated in the actual judgment, and the question is not necessarily determined by the judgment, the matter is not res judicata.

I do not understand this to mean, that, where a Court decides the particular issue raised and dismisses the application, the question decided is not res judicata. If that is what it does mean or imply, I would be unable to agree with it.

In the present case, having regard to the judgment, the import of the order is clearly that, on the issues raised, the Court found against the appellant and in favour of the respondents.”

A dismissal of the plaintiff's claim is a judgment in favour of a defendant.

It is my view, that, the dismissal had the effect of awarding the respondents judgment in their favour.

I turn next to the relief being sought.

In the prayer, the appellant seeks an order for the setting aside of the judgment of the court a quo and its substitution with an order entering judgment in its favour in terms of the summons.

In addition to the cancellation of the lease, Indium sought the following relief:

“2. An order directing the defendants, and all those claiming occupation through them, to vacate the premises situate Stand 450 Avondale West Township of Stand 390 Avondale West, otherwise known as 108 West Road, Strathaven, Harare (“the premises”).

3. An order that in the event that within forty-eight (48) hours of the date of the above order being issued and the defendants failing and/or neglecting and/or refusing to comply, the Sheriff for Zimbabwe, or his lawful deputy for Harare, duly assisted by the Zimbabwe Republic Police if need be, be authorised empowered and directed to eject the defendants from the premises, and all those claiming occupation through them, and to hand over vacant occupation of the premises to the plaintiff or its authorised agent or representative.

4. An order precluding and restraining the defendants from removing any item of property from the premises.

5. An order for payment of the sum of $Z2,567,000,000 (two billion five hundred and sixty seven million dollars) together with interest thereon calculated at the prescribed rate to the date of payment as follows;

5.1 On Z$567,000,000 (five hundred and sixty seven million dollars) with effect from 10 December 2007;

5.2 On Z$1,000,000,000 (one billion dollars) with effect from 1 January 2008; and

5.3 On Z$1,000,000,000 (one billion dollars) with effect from 1 February 2008.

6. An order for holding-over damages at the rate of Z$4,000,000,000 (four billion dollars) per month with effect from 1 March 2008 to the date that the plaintiff recovers vacant occupation of the premises aforesaid, such rate to be adjusted from time to time in accordance with market rates.

7. An order for interest on the sum of holding over damages aforesaid at the prescribed rate from the date each amount becomes due and payable.

8. An order for payment of the sum of Z$10,000,000,000 (ten billion dollars) together with interest thereon at the prescribed rate from the date of judgment to the date of payment.

9. Costs of suit as between legal practitioner and client.”

The appellant sought for an order confirming the cancellation of the lease.

It is common cause that the lease has expired through the effluxion of time. Its expiry is not in dispute and it is not necessary to confirm its cancellation.

As a consequence, an order for the eviction of the respondents from the premises will issue.

The interdict against the removal of items from the premises was never put in issue.

However, the claim for the payment of sums under various heads was not considered by the court a quo.

Neither counsel addressed us on the issue.

The record is clear, however, that, no evidence was adduced by Indium in respect of the sums of money being claimed under the various heads.

The claim for holding over damages is premised on the lease agreement and it would follow from a confirmation of the cancellation of the lease.

The same considerations would apply to the claim for arrear rentals as that would be a consequence of the finding that a valid lease existed between Kingshaven and Indium.

The amounts claimed were denominated in the local currency and were never converted to the United States Dollar currency in the trial below. They therefore remain an issue for determination by the court a quo.

In view of the position taken by the court a quo not to delve into the merits of the claim for ejectment and consequential relief flowing therefrom, it seems in order that the parties be given an opportunity to have that aspect of the dispute fully ventilated and determined by the court.

In the premises, it is only appropriate to grant relief in respect of the eviction and the interdict and to remit the matter to the court a quo for the determination of what sums of money, if any, may be due to Indium.

The trial court can take judicial notice of the fact, that, the country, and, indeed, every person in the country uses foreign currency to transact and that the country adopted a multi-currency regime with effect from February 2009.

It is also worthy to note, that, the Zimbabwe Dollar has since been demonetized.

To that end, justice would best be served if the parties were to adduce evidence from experts in the field of real estate as to any sums that may be owing under the headings on which the matter is remitted for the adduction of evidence.

With regard to the sums being claimed for payment of costs on the various agreements concluded between the parties, no evidence was led in the court a quo, either as to the amounts being claimed in the local currency, if any, or the rate of exchange that should be applied in converting the said sums to the US Dollar.

This claim must fail.

Accordingly, the appeal succeeds to the extent that the lease agreement is held to be valid and an order for the eviction of the respondents shall ensue.

The matter is remitted for the determination of the arrear rentals and holding over damages before the court a quo.

Accordingly, the following order will issue:

“IT IS ORDERED THAT:

1. The appeal is allowed with costs to the extent provided for hereunder:

(i) The judgment of the court a quo is set aside and substituted with the following:

(a) It is declared that the lease agreement between the plaintiff and the first respondent has terminated through the effluxion of time.

(a) The defendants, and all those claiming occupation through them, shall vacate the premises, being Stand 450 Avondale West Township of Stand 390 Avondale West, otherwise known as 108 West Road, Strathaven, Harare within seven (7) days of the date of this judgment, failing which the Sheriff for Harare or his lawful deputy is hereby authorised to eject them from the same and give vacant possession to the plaintiff or its duly authorised agent or representative.

(b) The defendants be and are hereby precluded and prevented from removing, with the exception of personal items belonging to them, any item of property from the premises.

(c) The claim for payment of Z$10,000,000,000, being costs for the preparation of various agreements concluded by the parties, is hereby dismissed with costs.

2. The issue relating to the payment of sums of money claimed under paras (e) to (g) of the prayer in the declaration are remitted to the court a quo for a determination on the substance of what sums are due and owing.”

View Appeal
HH677-14 : MAXWELL SIBANDA vs ZAMBE NYIKA/GWASIRA and REGISTRAR OF DEEDS and EVERJOY MEDA
Ruled By: MATANDA-MOYO J

The applicant obtained default judgment against the first respondent in case No. HC12599/11 on 7 March 2012 in the sum of $4,000, delivery of 1,120m3 of sawn timber, or, alternatively, $392,000 together with interest at the prescribed rate plus costs of suit.

The applicant has not executed on the judgment to date.

Initially, the applicant brought this application against the first and second respondents. The third respondent sought to be joined in the matter claiming she had interest therein.

Such joinder was granted.

This is an application for an interdict barring the first respondent from disposing of a certain piece of property, namely, Stand 13552 Salisbury Township of Salisbury Township Lands measuring 1,569m2 held by the first respondent under Deed of Transfer number 5750/94 dated 21 September 1994.

The applicant also seeks an order declaring the above property specially executable in order to satisfy the judgment debt owed to the applicant under case no. HC12599/11.

The applicant also sought costs of suit from the first respondent.

The first respondent opposed the application.

In his opposition, the first respondent sought an order for rescission of judgment in HC case number 12599/11.

The first respondent has failed to meaningfully respond to the present application.

The first respondent seeks to rescind a default judgement via filing of opposition. Such procedure is irregular and not in compliance with the rules of this court.

Rule 63 and Rule 449 of the High Court Rules 1971 deal with applications for rescission of judgment.

Such application will take the format prescribed in Rule 230, that is, must be in Form No.29.

Rule 229A provides for counter applications which are the equivalent of a counter claim in an action matter. It provides:

“(1) Where a respondent files a notice of opposition and opposing affidavit, he may file, together with those documents a counter–application against the applicant in the form, mutatis mutandis, of a court application or a chamber application whichever is appropriate.”

From the above, it follows, therefore, that, a counter relief can be sought against an applicant by a respondent under a separate heading than the notice of opposition and opposing affidavit.

It is a stand-alone claim made against an applicant.

Even if the applicant later withdraws his application, the counter application could be proceeded with.

In the matter in casu, the purported counterclaim by the first respondent is not in terms of the rules of this court and is therefore invalid. The purported counter application for rescission of judgment is therefore improperly before the court and cannot be entertained.

Since the first respondent has not opposed the relief sought by the applicant, the first paragraph of the Order stands unopposed.

This was also confirmed by the counsel for the third respondent.

The only issue which falls for determination is whether I should declare the property in question specially executable.

The third respondent has opposed the granting of the relief sought on the basis that she has an interest in the property.

The third respondent was customarily married to the first respondent and the two have one minor child.

It is common cause that the third respondent and the minor child reside at the property in question. The respondent opposed the attachment of the immovable property on the basis that she owns 50% share of the value therein.

The third respondent relied on a provisional order granted in her favour on 20 March 2001 by ORMERJEE J…, in HC2784/01. The order was granted against the first respondent. The order was in the following;

“PROVISIONAL ORDER TERMS OF ORDER MADE:

That you show cause to this Honourable Court why a final order should not be made in the following terms;

1. That, the first respondent be and is hereby interdicted from selling the matrimonial home, namely, Stand No.13552 Salisbury Township of Salisbury Township lands situated in the District of Salisbury also known as No.48 Don Judson Road, Milton Park, Harare, registered in the name of the first respondent under Deed of Transfer No.5750/9 pending determination in the appropriate court by the applicant of a claim for her share in the matrimonial home and pending the finalisation of that suit.

2. That, alternatively, in the event that the transfer has been done, the first respondent is hereby interdicted from receiving any proceeds from the sale of the property without paying the applicant the sum of $1,000,000 being the applicant's half share of the value of the property or failing agreement thereon pending determination as the applicant's claim in the appropriate.

3. That, second respondent be and is hereby interdicted from transferring or registering the transfer of Stand No 13552…, to any third party pending the finalisation of applicant's claim for a share in the matrimonial property in a, and competent count as stipulated in para1 above.

INTERIM RELIEF GRANTED

That, pending the determination of this matter, the applicant is granted the following relief:

1. The first respondent be and is hereby interdicted from selling the matrimonial home, namely, Stand 13552…, known as No.48 Don Judson Road, Milton Park, Belvedere, Harare…, pending the filing in the appropriate court by the applicant of a claim for her share in the matrimonial home within 7 days of the granting of this order….,.

2. That, the second respondent be and is hereby interdicted from transferring or registering the transfer of Stand 13552…, registered under Deed of Transfer No.5750/94 to any third party pending the finalisation of the applicant's claim for a share in the matrimonial property in a, and by competent court stipulated in para 1 above.

3. That, alternatively, in the event that the transfer has been effected, the first respondent is hereby interdicted from receiving any proceeds from the sale of the property without paying the applicant the sum of $1,000,000 or failing agreement on the value of applicant's share, pending the determination of the applicant's claim in the appropriate court as set out in para 1 above.”

The above provisional order was never confirmed.

I also did not hear the third respondent to be saying she brought a claim for the share of the matrimonial home in compliance with paragraph 1 of the interim order granted. Such action was to be brought within seven (7) days of the Order. Such period has since lapsed.

In any case a provisional order simply grants prima facie rights. A provisional order should be real rights.

What the above order did was to bar the first respondent herein from selling the matrimonial property. Such order did not extend to banning sale by execution.

Counsel for the applicant referred to HERBSTEIN and Van WINSEN, 3ed in Civil Practice of the Superior Courts in South Africa where the author says:

“A judgment creditor is entitled to attach and have sold in execution the property of his debtor notwithstanding that a third party has a personal right against such a debtor to the ownership or possession of such property, which right arose prior to the attachment or even the judgment creditor's cause of action, and of which the judgment creditor had notice when the attachment was made. An attachment in execution creates a judicial mortgage or pignus judiciale.”

Counsel for the applicant argued, that, the third respondent's rights in the immovable property are of a personal nature. She does not have real rights in the property as her name does not appear in the Deed registry as co-owner of the property.

He argued that the third respondent's rights, even if accepted, are not such as to result in a situation where property is excluded from execution.

What are the third respondent's rights in the property?

It is common cause that no competent court of law has declared the rights of the third respondent in the immovable property. The third respondent attempted to rely on the interim order granted above in her favour, in a matter between her and the first respondent.

As I reiterated above, the third respondent has failed to persue the interim relief to finality. It remains a prima facie right.

The third respondent submitted, that, she has been staying in the house together with a son she had with the first respondent. The third respondent wants the applicant to respect her 50% share in the property.

I am of the view, that, the third respondent has personal rights in the property, but, such rights are as against the first respondent. Such rights cannot stop a judgment creditor from selling the property in execution.

BUNNS–WORD J, in ABSA Bank Ltd v Peterson (934/2011) (2012) ZA WCHC 18…, said:

“It is only when the exercise of the mortgage's right (to realise the security) is in bad faith that effect should not be given to the right. An indication of bad faith would be provided if the mortgage seeks to proceed with execution against the defendant's home when it is evident that the judgment debt can probably be satisfied in a reasonable manner without involving the drastic consequences of the loss of the mortgaged home.”

The above can be applied with equal force in this scenario where a judgment creditor intends to execute on a home.

The respondents did not argue that they are capable of settling the debt using other means. The first respondent has not been making payment towards the debt. There is, therefore, no evidence of malice on the part of the judgment creditor that has been placed before me.

I am satisfied that this is a case where execution against the first respondent's property should be ordered.

The first respondent has not shown any intention nor capacity to pay the judgment debt in reasonable instalments. There has been no evidence placed before me that the first respondent has movables which could be executed upon to satisfy the debt. The third respondent has not acted with diligence in protecting her rights in the above property.

As was reiterated in Mavhunduse v UDC Ltd & Ors 2001 (2) ZLR 337 that:

“Until such time as title deeds are issued in respect of Plot 216, and ownership thereof is registered in the Deeds Registry in the name of a particular planter, all that the applicant and the purchaser can acquire are rights and interests in the plot. Such rights are personal to the holder thereof. They are not real rights.”

I am, in the result, satisfied that the applicant has met the rest for the granting of the interdict sought. Accordingly, it is ordered as follows:

(1) That the application for a mandament, restraining the first respondent from disposing or otherwise alienating the immovable property be and is hereby granted.

(2) That the immovable property, known as Stand 13552 Salisbury Township of Salisbury Township lands, held by the first respondent under Deed of Transfer number 5750/94, dated 21 September 1994, be and is hereby declared specially executable.

(3) That the first respondent shall pay costs of suit.

SSC17-21 : MARRY MUBAIWA CHIWENGA vs THE NATIONAL PROSECUTING AUTHORITY and THE CLERK OF COURT ROTTEN ROW MAGISTRATE'S COURT
Ruled By: UCHENA JA

This is an appeal against the judgment of the High Court dismissing the appellant's application for variation of bail conditions.FACTSThe details of this case can be summarised as follows:The appellant was, in 2018, injured during a bomb blast in Bulawayo. She sustained injuries on her arms. She sought medical treatment ...

This is an appeal against the judgment of the High Court dismissing the appellant's application for variation of bail conditions.

FACTS

The details of this case can be summarised as follows:

The appellant was, in 2018, injured during a bomb blast in Bulawayo. She sustained injuries on her arms. She sought medical treatment in South Africa. Until her arrest, on 4 December 2019, she was receiving treatment from a South African specialist doctor.

On her arrest, she was charged with:

1. Six (6) Counts of contravening section 5(1)(a) of the Exchange Control Act [Chapter 22.05] 'exporting foreign currency.'

2. Six (6) Counts of contravening section 8(2) of the Money Laundering and Proceeds of Crime Act [Chapter 9.24] 'concealing, disguising the true nature, source, location, disposition, movement or ownership of or right's with respect to property, knowing or suspecting that such property is proceeds of crime.'

3. One (1) Count of contravening section 136 of the Criminal Law (Codification and Reform) Act [Chapter 9.23] (fraud).

She was subsequently charged with the attempted murder of her husband and assault for assaulting their maid.

According to documents attached to Form 242s in the applicant's application for variation, the appellant's charges of 6 (six) counts of contravening section 5(1)(a) of the Exchange Control Act are based on the following facts:

Count One: That she sent her driver Carrington Kazingizi and Terrence Mutandwa to China with US$114,000 without any declaration being made to the authorities.

Count Two: That she instructed Memory Chakuinga to issue a proforma invoice for the supply of event tents and chairs which were sent to CBZ Bank and the appellant. The appellant then applied to CBZ Bank for the transfer of US$201,846-=81 by telegraphic transfer into Falcon Projects Suppliers (Private) Limited's South African FNB bank account no 62576755105.

Thereafter, the appellant instructed Memory Chakuinga to divert the money from the purchase of event tents and chairs to Range Rover Centre Menyln towards the purchase of her personal vehicle, a Range Rover Autobiography, which she registered in South Africa, in her name, bearing registration number HW40JNGP.

Count Three: That she instructed Memory Chakuinga to raise a proforma invoice for the supply of household electric meters which she sent to CBZ Bank and the appellant. The appellant used that proforma invoice to cause CBZ Bank to transfer US$307,545=05 into Falcon Projects Suppliers (Private) Limited's South African FNB Bank account number 62576755105.

Thereafter, the appellant instructed Memory Chakuinga to divert the funds towards purchasing House Number 1309 Kingstone Heath Close, Waterkloof Golf Estate, Pretoria, South Africa. The house was registered in the name of LaChelle Travel and Tours (Pty) Ltd South Africa of which the appellant is the sole shareholder.

Count Four: That the appellant requested Judith Gamuchirai Goredema to source for three million rands for the purchase of the appellant's two cars, a Range Rover and a Ranger.

Thereafter, the appellant gave Judith Gamuchirai Goredema US$230,769=23. The Range Rover was registered in South Africa in the appellant's names bearing registration number HX61PSGP. The registration details for the Ranger had not been established at the time the charges were preferred.

Count Five: That the appellant externalised US$36,923=08 for the purchase of furniture for her South African House Number 1309 Kingstone Heath Close, Waterkloof Golf Estate, Pretoria, South Africa.

Count Six: That the appellant instructed Memory Chakuinga to prepare an invoice for the supply of prepaid meters. Thereafter, the appellant used it to cause CBZ Bank to transfer US$142,859=30 into Bonnette Electrical (Pty) Ltd's South African Standard Bank account number 371164540.

Instead of the money being used to purchase prepaid meters, the appellant instructed Memory Chakuinga to divert it towards the purchase of her second house being, Number 149 Valderana Close, Pretoria, South Africa.

The allegations involve the unlawful externalisation of US$1,033,943=10.

The other 6 (six) counts are for money laundering.

The charge of fraud is for misrepresenting to the Judge President and the Acting Chief Magistrate that her husband had consented to the solemnisation of their marriage when he had not, resulting in marriage arrangements and documents being prepared and the Acting Chief Magistrate going to No. 614 Nick Price Drive, Borrowdale Brooke to solemnise the marriage which did not take place.

The attempted murder charge is based on what she is alleged to have done in South Africa when her husband, who was critically ill, had been airlifted to South Africa for treatment.

It is alleged, that, she, instead of taking him to hospital, kept him in a hotel room for more than 24 hours until her husband's security personnel intervened and took him to hospital. Thereafter, the appellant visited her husband who was in a private ward and on life saving Intra Venous Giving Set as well as Central Venous Catheter in order to sustain his life. She requested for privacy with her husband. Her husband's security personnel left the ward after which the appellant removed the life-saving equipment from the complainant who started bleeding profusely. She is alleged to have pushed him off the bed and left the ward. Thereafter, her husband's security personnel, on seeing what had been done to the complainant raised alarm and hospital staff came and reconnected the life saving equipment.

The assault charge is based on allegations that she assaulted their maid who she had met at their children's school.

Her bail applications in the Magistrate's Court were dismissed. She appealed to the High Court which granted her bail for the initial charges, on the following conditions:

1....,.

2....,.

3. That the Clerk of Court shall accept as surety the property known as Lot 1 of Lot 343A Highlands Estate measuring 3,642 square metres held by KM Auctions (Private) Limited, under Deed of Transfer 2244/2006 accompanied by the necessary resolution of the directors and shareholders of KM Auctions (Private) Limited, Keni Mubaiwa and Helga Junior Mubaiwa.

4....,.

5....,.

6....,.

Appealed
SC97-21 : THE TRUSTEES FOR THE TIME BEING OF CORNERSTONE TRUST and JULIUS MAKONI and THE TRUSTEES FOR THE TIME BEING OF RYVONNE TRUST vs NMB BANK LTD
Ruled By: HLATSHWAYO JA, PATEL JA and MAVANGIRA JA

This is an appeal against the entire judgment delivered by the Honourable Justice Zhou in the High Court of Zimbabwe.The order sought to be impugned reads as follows:“IT IS ORDERED THAT:1. Judgment be and is hereby given in favour of the plaintiff against the first, second, and third defendants jointly ...

This is an appeal against the entire judgment delivered by the Honourable Justice Zhou in the High Court of Zimbabwe.

The order sought to be impugned reads as follows:

“IT IS ORDERED THAT:

1. Judgment be and is hereby given in favour of the plaintiff against the first, second, and third defendants jointly and severally the one paying the others to be absolved for:

(a) Payment of US$1,105,748=90 plus interest at the rate of 15 per cent per annum from the 9 September 2015; such interest calculated monthly and in advance on the said sum and capitalized to the date of payment in full.

(b) Payment of collection commission in accordance with the Law Society's By-Laws.

(c) Payment of plaintiff's costs of suit on the legal practitioner and client scale.

(d) A declaration that the immovable property, being a certain piece of land situate in the district of Salisbury called Remainder of Lot 6 Rietfontein, measuring, 1,2129 hectares held by the second defendant under Deed of Transfer No.4388/1991 is executable.

2. The first defendant's claim in reconvention be and is hereby dismissed with costs on the legal practitioner and client scale.”

The background of this matter may be summarised as follows:

The second appellant is a shareholder in the respondent and has previously occupied the positions of Chief Executive Officer, Executive Director, and Director therein.

The respondent in this matter issued summons against the appellants in the court a quo claiming USD$1,105,748=90 being indebtedness arising from a loan agreement between the first appellant and the respondent.

The second and third appellants bound themselves as guarantors/sureties and co-principal debtors of the first appellant in relation to the loan agreement.

As security, the second appellant gave Power of Attorney to register a mortgage bond over his property, in favour of the respondent. As further security, the third appellant pledged certain executable shares.

It was the respondent's case a quo that the first appellant defaulted in the performance of its obligations in terms of the loan agreement, necessitating the institution of legal proceedings for the recovery of the outstanding amount.

The respondent sought that the appellants be held jointly and severally liable for the indebtedness.

The appellants disputed the respondent's claim on two main premises:

It was argued, for the first appellant, that, the person who purported to enter into the loan agreement with the respondent was not authorised to do so.

Additionally, the second appellant disputed that he granted the Power of Attorney used to register the mortgage bond over his property.

The appellants further lodged a counter claim against the respondent's claim, which counter-claim was subsequently sought to be withdrawn during the course of the proceedings a quo.

The application for withdrawal was unsuccessful and the counterclaim was eventually dismissed.

At the conclusion of proceedings, the court a quo made adverse credibility findings against the second appellant, who it determined was untruthful.

It was found, that, the first appellant was the alter ego of the second appellant, who used the former to secure funds for his benefit from the respondent.

Additionally, the court a quo was of the view, that, the second appellant had signed a Power of Attorney for the registration of a mortgage bond in order to secure an advance from the respondent.

With regard to the third appellant, it was found that it had properly bound itself as surety to the loan facility agreement.

Resultantly, it was determined that the appellants were jointly and severally liable for the indebtedness and that the respondent was entitled to recover from the appellants the principal sum owing in terms of the loan facility agreement.

Aggrieved, the appellants have lodged the present appeal on the following grounds:

GROUNDS OF APPEAL

1. With respect, the court a quo erred at law in dismissing the first appellant's claim in reconvention; which claim was withdrawn before the conclusion of leading evidence. At law, the respondent was not entitled to insist on judgment pertaining a disputation to which not all datum had been made available and the contestation inter parties not finalised.

2. The court a quo also erred in sustaining the respondent's claim as against the appellants. At law, the respondent was enjoined to prove the existence of loan agreement and that the attendant funds were advanced in terms of that agreement. In casu, the evidence led a quo clearly demonstrated that the monies claimed to have been advanced were never paid out in accordance to the structures of the agreement on which the claim was predicated; resultantly, no sustainable claim could have been mounted by the respondent.

3. The court a quo grossly misdirected itself in conflating the affairs of the first appellant with those of the second appellant. At law, the first and second appellant's obligation to the respondent were independent of each other. More critically, no evidence was led substantiating the notion that the first appellant ever received funds from the respondent thereby actuating the need to resort to the second and third respondent's suretyship and securitisation.

4. The court a quo grossly misdirected itself in dismissing the second appellant's evidence on the back of its anomalous finding that he was dishonest and not a credible witness. Such findings are palpably irregular in that the court a quo did not take full cognisance of all the second appellant's evidence and attendant explanation regarding the existence of his independent loan with the respondent which loan the respondent was not relying on.

From the foregoing, two identifiable issues are before the court:

(i) Firstly, there is need to determine whether or not the court a quo properly dismissed the appellants counterclaim given their application for withdrawal of the same.

(ii) The second issue for determination is whether or not the court a quo misdirected itself in holding the appellants jointly and severally liable to the respondent for the indebtedness arising from the disputed loan facility agreement....,.

With regard to the second issue for consideration before the court, that is, whether or not the court a quo misdirected itself in holding the appellants jointly and severally liable to the respondent for the indebtedness arising from the disputed loan facility agreement, the findings made a quo turned on considerations of fact.

It is settled at law that this Court will only interfere with factual findings of a lower court in limited circumstances. The case of Zimre Property Investments Limited v Saintcor t/a V. Track & Anor SC59-16…, is instructive, wherein it was stated:

“The position is now settled, that, an Appellate Court will not interfere with the findings of fact made by a trial court unless the court comes to the conclusion that the findings are so irrational that no reasonable tribunal, faced with the same facts, would have arrived at such a conclusion. Where there has been no such misdirection, the Appeal Court will not interfere. This position was aptly captured by this Court in Hama v National Railways of Zimbabwe 1996 (1) ZLR 664 (S). At 670, KORSAH JA remarked:

'The general rule of law as regards irrationality is that an Appellate Court will not interfere with a decision of a trial court based purely on a finding of fact unless it is satisfied, that, having regard to the evidence placed before the trial court, the finding complained of is so outrageous in its defiance of logic that no sensible person who had applied his mind to the question to be decided could have arrived at such a conclusion….,.'”

Remaining mindful of the foregoing, it is evident from the record, that, there existed a loan facility agreement between the first appellant and the respondent, and to which the second and third appellants were sureties.

Although the first and second appellants disputed the authority upon which the loan facility and the mortgage bond were entered into on their behalf, they did not challenge the allegation that they were indebted to the respondent and that the said indebtedness had not been extinguished.

In terms of the law, it is generally accepted, that, what is not denied is taken to be admitted: see Fawcett Security Operations P/L v Director of Customs and Excise and Ors 1993 (2) ZLR 121 (S)…,.; Nhidza v Unifreight Ltd SC27-99; and Minister of Lands and Agriculture v Commercial Farmers Union SC111-01…,.

In view of the factual nature of the findings of the court a quo, it is necessary to consider the evidence presented and the relevant findings made thereon.

On the issue of the validity of the loan facility, the evidence of record establishes, that, a trustee of the first appellant, named Mr D. Higginson, concluded the loan facility agreement on behalf of the first appellant.

The second appellant sought to dispute Mr Higginson's authority to enter into the purported agreement with the respondent, and, ultimately, the validity of the entire loan facility agreement.

A perusal of the record makes it apparent that there was scant evidence to support the submissions of the second appellant.

It was found a quo that the second appellant accessed and utilised the loan overdraft facility on numerous occasions, leading the court to the conclusion that there was no merit to the second appellant's contention that Mr D. Higginson entered into the loan agreement without the requisite authority to do so.

Further to that, it was the court's view that the first appellant was merely a vehicle of the second appellant in order to access funds from the respondent.

I am of the view that the finding of the court a quo is supported by the fact that the second appellant utilised the accessed loan facility funds (through the medium of the first appellant) to attend to his personal expenses.

In light of the foregoing considerations, it does not appear to me, that, the second appellant can seek to avoid liability on the premise that the loan facility was not validly entered into.

To do so would essentially constitute an exercise in which the second appellant seeks to approbate and reprobate. In other words, the second appellant cannot seek to dispute the validity of the loan facility agreement from which he consistently sought and derived benefit.

The position was well articulated in the case of S v Marutsi 1990 (2) ZLR 370…, wherein it was stated that:

“It is trite that a litigant cannot be allowed to approbate and reprobate a step taken in the proceedings. He can only do one or the other - not both.”

Moreover, in the case of Alliance Insurance v Imperial Plastics (Pvt) Ltd & Another SC30-17, the court took the view that such conduct amounts to a classic display of mala fides.

An application of the mind to the facts would dictate, that, had the loan agreement been improperly concluded, the second appellant would have, at the very first opportunity, alerted the respondent to the fact and sought to resolve the situation as opposed to accessing and deriving benefit from the agreement, then denying liability when called upon to service the said debt.

Significantly, the second appellant undertook to repay the outstanding loan when called upon to do so by the respondent, which makes plain the fact that the second appellant was aware and a willing participant to the loan agreement.

The evidence is overwhelming and the conclusions of the court a quo, in that regard, cannot be said to have been improperly arrived at.

In determining that the first appellant acted as the second appellant's alter ego for the purpose of accessing funds from the respondent; the court a quo took cognisance of witness evidence that established that the funds availed to the first appellant by the respondent were utilised by the second appellant for his personal expenses.

As both the Founder and Director of the first appellant and the respondent respectively, the second respondent was, in my view, not only involved in a conflict of interest but actively abusing his status and position in order to access funds from the respondent.

It is equally telling that the loan facility was regarded as an “insider loan” by the respondent when it sought recovery of the indebtedness due to it from the second appellant. It is also established that the second appellant did not seek to dispute that it was indeed an insider loan.

In the circumstances, the court a quo's findings appear well grounded in evidence and cannot be said to be irrational or a misdirection.

It is worth mentioning that the court a quo took a step further in determining that the Power of Attorney granted by the second appellant to register a mortgage bond over his property in favour of the loan facility agreement was properly concluded.

The court a quo arrived at that decision pursuant to an identification of the second appellant's signature on the disputed Power of Attorney.

The fact that the registration of the mortgage bond was directly beneficial to the second appellant does not help his case.

With regard to the third appellant, its liability as surety was never challenged and therefore remains extant.

In the light of the above considerations, it is the court's view that the appeal lacks merit and is hereby dismissed with costs following the cause.

View Appeal
HH466-18 : NMB BANK LTD vs THE TRUSTEES FOR THE TIME BEING OF CORNERSTONE TRUST and JULIUS MAKONI and THE TRUSTEES FOR THE TIME BEING OF RYVONNE TRUST
Ruled By: ZHOU J

The plaintiff, a commercial Bank, claims against the three defendants payment of a sum of money amounting to US$1,105,748=90 together with interest thereon at the rate of 15% per annum calculated from the 9th September 2015 to the date of payment in full; such interest to be calculated monthly and in advance and capitalized.

The plaintiff also claims collection commission and costs of suit on the legal practitioner and client scale, as well as an order declaring a certain immovable property, described in the summons as a certain piece of land situate in the District of Salisbury called the Remainder of Lot 6 of Reitfontein, measuring 1,2129 hectares, to be specially executable.

The claim is for money advanced to the first defendant pursuant to loan and overdraft facilities and in respect of which the second and third defendants are said to have executed deeds of suretyship and guarantorship.

The claim is contested by all the defendants....,.

On the main claim, the plea which was filed on behalf of the defendants is very brief. In that plea, the defendants deny that the person who entered into the agreements pursuant to which the plaintiff advanced money to the first defendant had the authority to represent the first defendant.

The other aspect, which is denied, is that the second defendant executed the power of attorney which was used to register a mortgage bond over his immovable property in favour of the plaintiff.

Going by the pleadings, the other material allegations made in the plaintiff's declaration are not disputed and must therefore be taken as admitted. These include:

(i) The existence of the facilities (save for the alleged lack of authority of the person who represented the first defendant).

(ii) The terms of the loan facility as set out in paragraph 6 of the plaintiff's declaration.

(iii) The facts alleged in paragraph 7 of the plaintiff's declaration that the second and third defendants executed deeds of suretyship and guarantees by which they bound themselves as sureties and co-principal debtors for performance of the first defendant's contractual obligations to the plaintiff under the facilities.

(iv) There is also no denial of the failure by the first defendant to pay the amount due to the plaintiff in terms of the agreements.

(v) The amount claimed in the summons and declaration is also not disputed in the plea.

Although three issues were outlined in the joint pre-trial conference minute, a resolution of those issues depends on the determination of whether the loan facilities were validly concluded on behalf of the plaintiff and whether the mortgage bond over the immovable property known as a Certain Piece of Land Situate in the District of Salisbury Called the Remainder of Lot 6 of Rietfontein measuring 1,2129 hectares, held by the second defendant under Deed of Transfer Number 4388/1994, was validly executed.

The plaintiff led evidence, oral and documentary, from Alwyn Tafadzwa Chinyoka, Leonard Tendai Nhari, Lazarus Marume, Benson Ndachena, and Lionel Chinyamutangira, all of whom are its employees save for Leonard Tendai Nhari who is a handwriting expert.

The essence of the evidence of these witnesses is that the second defendant, Julius Tawona Makoni, was a founder and director of the plaintiff. He was still a director of the plaintiff when the facility upon which the claim arose was granted to the first defendant.

A composite facility of call loans and overdraft of US$760,000 was extended to the first defendant. The first defendant is the second defendant's Trust through which he operated to access money from the plaintiff.

Alwyn Tafadzwa Chinyoka testified, that, Dr Makoni signed the power of attorney to pass a mortgage bond over his property. The guarantee executed by the third defendant was signed by Dr Higginson, who, together with the second defendant, was the authorized signatory. The two were also the signatories for the first defendant.

The second defendant would give instructions to the plaintiff's employees for draw-downs on the facility.

He stated that the plaintiff engaged the second defendant about recovery of the amounts owed following a directive from the Reserve Bank of Zimbabwe that all insider loans be settled by 31 December 2014.

When the second defendant was approached about the debt, he acknowledged it and advised that he was making arrangements to settle it.

The matter was discussed at some Board meetings of the plaintiff in the presence of the second defendant. The minutes of Board meetings were produced in evidence.

The witness also gave evidence of the emails which were exchanged between the second defendant and the plaintiff's officials in connection with the debt in which the second defendant acknowledged the debt.

The witness disputed the signatures on the alleged loan agreement upon which the first defendant's counter-claim was based.

He also gave evidence of payments made on behalf of, and, at times, on the instructions of the second defendant from the account of the first defendant.

He testified that the facility availed to the first defendant was to cater for the personal needs of the second defendant.

The first defendant held shares in the plaintiff on behalf of the second defendant, according to the witness.

Lazarus Marume, who was employed by the plaintiff as Branch Manager at Mutare, stated that he knew the second defendant as the founder of the plaintiff and as a Bishop of the Church of the Province of Central Africa.

He confirmed, that, the second defendant signed the power of attorney to pass a mortgage bond at Mutare.

The witness had always known the second defendant's signature as he had dealt with him many times before that. He signed as a witness after the second defendant had signed in his presence. The document was signed at the second defendant's office to which the witness had taken the document.

Significantly, at no time during cross-examination was it suggested to this witness that the signature on the document was not that of the second defendant; neither was it suggested that the second defendant had not signed the document.

The evidence of Leonard Tendai Nhari and Benson Ndachema pertains to the first respondent's claim in reconvention, which, as already noted, has been abandoned.

In relation to the main claim, Benson Ndachema's evidence confirmed the instruction from the Reserve Bank of Zimbabwe for the recovery of insider loans. He also stated, that, the second defendant, as representative of the first defendant, owed money to the plaintiff, and that he resigned from his directorship owing to his failure to repay the loan.

The second defendant, according to the witness, had indicated that he would settle his indebtedness to the plaintiff from the proceeds of his shares in MBCA Bank which he would dispose of.

Lionel Chinyamutangira was Chief Banking Officer at the plaintiff at the time that he gave his evidence.

When he was Relationships Manager he reported directly to the second defendant, and got to deal with the first and third defendants as well. He explained that the purpose of the facility extended to the first defendant was in fact to take care of the second defendant's affairs when he was away, such as paying for his family's expenses and motor vehicle expenses. The second defendant would instruct him, and the other employees of the plaintiff, on the transactions to be performed, and Higginson would do the paperwork.

He identified some e-mails exchanged between him and the second defendant in terms of which the second defendant would sometimes instruct him to debit the first defendant's account for the purposes of paying his (second defendant's) expenses.

This witness identified various documents pertaining to payments to or on behalf of the second defendant made from the account of the first defendant. He confirmed that the second defendant stepped down from the Board of the plaintiff because of his failure to discharge his financial obligations to the plaintiff.

Two witnesses testified on behalf of the defendants. These are James Friedlander and the second defendant, Julius Makoni.

James Friedlander's evidence pertained to the claim in reconvention. It is therefore not necessary to consider it in any detail in view of the abandonment of that claim.

The second defendant's evidence was that he is the one who founded the plaintiff. He was its Chief Executive Officer, Executive Director, and Non-Executive Director at different times. He is also a shareholder of the plaintiff.

His evidence was that he was not clear as to what the basis of his liability for the first defendant's debts to the plaintiff was.

He recognized and identified the signature on the Deed of Suretyship, executed on 10 July 2002, to be his. He then sought to state that he did not understand why he was to act as surety for the first defendant's obligations to the plaintiff.

He stated that he never enjoyed any benefit from the facility granted to Cornerstone.

He stated that he resigned voluntarily from the Board of the first defendant and that his resignation was unconnected to the debt owed by the first respondent.

The first issue, of whether or not there was a valid loan agreement between the plaintiff and the first defendant, can be easily disposed of.

The facility letter, dated 19 June 2013, was duly signed on behalf of the first defendant. The person who signed on behalf of the defendant, David Higginson, was a duly authorized signatory on the account.

Both the first and second defendants benefited from the facilities as shown by the evidence of the witnesses for the plaintiff.

There is documentary evidence, in the form of emails, exchanged with the second defendant in which instructions to make payments from the account of the first defendant were given by the second defendant.

It is clear that the first defendant was a just vehicle by which the second defendant accessed loan facilities from the plaintiff using his position in the plaintiff.

It was clear that the second defendant is a dishonest person who was being deliberately untruthful and sought to mislead the court about his involvement in the financial transactions of the first defendant. He is the typical businessman who started the business of a Bank in order to give money from the bank to himself.

The unchallenged evidence of the witnesses for the plaintiff was that when the second defendant was approached about the need to settle the loan account he advised that he would do that from the proceeds of the sale of his shares in MBCA Bank.

At no time did he dispute the amount or that he owed it.

Minutes of a meeting of the plaintiff's Board of the Credit Committee held on 30 January 2015 deliberated on the first defendant's debt and the undertaking by the second defendant to settle it. Under item 12.7 of the minutes, the following is recorded:

“CORNERSTONE $1,059,432: Management advised that Dr Makoni had advised that he intended to repay the loan from proceeds of a share sale as he held shares in another financial institution.”

In the same minutes, under item 14 (from 14.1 to 14.10) the second defendant is the subject of discussion, and the resolution that he must resign his directorship, owing to his non-performing loan, is recorded.

The second defendant feigns ignorance of that resolution in the face of such documentary evidence.

His evidence is unconvincing.

The first defendant pretended not to know anything about the Reserve Bank of Zimbabwe's directive concerning insider loans. Yet, that matter was discussed at a Board meeting which he attended on 19 March 2014, and appears as item 5.4 in the minutes of that meeting.

The evidence led establishes that the first defendant entered into a valid facility agreement in terms of which it accessed funds availed by the plaintiff.

The court finds, that, the first defendant was an entity established and controlled by the second defendant for the purposes of accessing money from the plaintiff. Through the first defendant, the second defendant accessed money from the plaintiff, and, from time to time, gave instructions to Bank officials to pay his expenses from the account of the first defendant.

The second defendant signed a Deed of Suretyship for the first respondent's obligations to the plaintiff. He is accordingly liable on the basis of that Deed of Suretyship.

The third defendant is equally liable to the plaintiff for the debts of the first defendant on the basis of the suretyship agreement.

As noted above, the existence of these deeds of suretyship is not challenged by the defendants.

On the power of attorney used to register the mortgage bond over the second defendant's property, the document was duly signed by the second defendant on 10 July 2013.

The second defendant did not dispute the signature on that power of attorney when he gave evidence.

It is clearly his signature.

The court finds, that, he is the one who signed the power of attorney to pass a mortgage bond on his immovable property.

The debt secured by the mortgage bond has been proved. The plaintiff is accordingly entitled to recover the debt through the sale of the mortgaged property.

In terms of clause 5.7 of the facility agreement, the plaintiff is entitled to recover collection charges and its legal fees on the attorney-client scale.

In any event, such costs would still have been justified by the vexatiousness of the defence to the claim in the instant case.

In the result, IT IS ORDERED THAT:

1. Judgment be and is hereby given in favour of the plaintiff against the first, second, and third defendants jointly and severally the one paying the others to be absolved for:

(a) Payment of US$1,105,748=90 plus interest thereon at the rate of 15% per annum from the 9th September 2015; such interest calculated monthly and in advance on the said sum and capitalized to the date of payment in full.

(b) Payment of collection commission in accordance with the Law Society By-Laws.

(c) Payment of plaintiff's costs of suit on the legal practitioner and client scale.

(d) A declaration that the immovable property, being a certain piece of land situate in the district of Salisbury called the Remainder of Lot 6 of Rietfontein, measuring 1,2129 hectares, held by the second defendant under Deed of Transfer No.4388/1994, is executable.

2. The first defendant's claim in reconvention be and is hereby dismissed with costs on the legal practitioner and client scale.

SC101-21 : EQUITY PROPERTIES (PVT) LTD vs ALSHAMS GLOBAL BVI LIMITED and REGISTRAR OF DEEDS
Ruled By: BHUNU JA, UCHENA JA and KUDYA AJA

This is an appeal against part of the judgment of the High Court of Zimbabwe sitting at Harare on 20 November 2019 granting an interim interdict in favour of the first respondent.THE FACTSThe appellant and the first respondent have been engaged in a flurry of litigation, and, at other times, ...

This is an appeal against part of the judgment of the High Court of Zimbabwe sitting at Harare on 20 November 2019 granting an interim interdict in favour of the first respondent.

THE FACTS

The appellant and the first respondent have been engaged in a flurry of litigation, and, at other times, with Interfin Banking Corporation Ltd in liquidation (the Bank) in both the High Court and in this Court. Some of the cases have been concluded while others are still pending.

The facts relevant to this appeal are narrow.

On 16 March 2018, in HC2463/18, the appellant brought motion proceedings against the first respondent seeking vindication of its original title deed no. 9068/2008, which pertains to Lot 3 of Bannockburn (the immovable property), within 10 days of the grant of the order failing which the second respondent was to issue a duplicate replacement deed within 90 days of that order.

The order was granted, purportedly in default of the first respondent, on 6 June 2018.

On 18 July 2018, while the application for rescission of the default judgment was pending, the appellant obtained the duplicate replacement title deed from the second respondent.

The first respondent filed three urgent chamber applications to stop the second respondent from issuing the replacement deed and one court application to prevent the appellant from using it.

The three urgent applications were all removed from the roll for lack of urgency while the court application was withdrawn.

The default judgment, upon which the replacement deed was issued, was rescinded a quo, in terms of Rule 449 of the High Court Rules 1971, on 21 November 2018.

The appellant duly appealed against the rescission of the judgment of the court a quo to this Court. The appeal was dismissed with costs on the higher scale on 7 October 2019 in case number SC924/18 for two reasons:

(i) The first was that the substituted service, upon which the rescinded judgment was based, had been effected on legal practitioners who did not have the mandate to represent the first respondent.

(ii) The second was that the order for substituted service had, by consent of the parties, been rescinded by this Court in SC733/18 on 25 March 2019.

It was common cause that the appellant used the duplicate title deed to subdivide an undisclosed number of Stands on Lot 3 of Bannockburn. He also used it to conclude an undisclosed number of agreements of sale with purchasers such as Conradie Tinofirei Mutumbuki, the third respondent in the application for rescission, on 11 October 2019, and to transfer title thereof to three purchasers, one of which was David Madyausiku who took transfer on 12 April 2019.

On 21 October 2019, the first respondent filed the urgent chamber application which has given rise to this appeal. It sought, in the interim, the return of the replacement deed to the second respondent; its cancellation by the second respondent; and the setting aside of all transactions based on it.

On the return date, it sought confirmation of the interim relief and costs de bonis propriis on the higher scale against the appellant's legal practitioner of record, one Mr Kwaramba.

On 29 October 2019, the appellant opposed the application.

It also filed a counter urgent chamber application in terms of Rule 229A of the High Court Rules, 1971. It raised five preliminary points. These were;

(i) That one of the urgent chamber applications that had been removed from the roll was lis pendens;

(ii) There was material non-disclosure of all the urgent applications that had been removed from the roll and the court application that had been withdrawn;

(iii) The application was not urgent;

(iv) There was non-joinder of third parties who had benefited from transactions based on the replacement title deed; and

(v) Lastly, that the relief in the interim order was the same as the one in the final order.

On the merits, it sought the dismissal of the application.

In the counter application, the appellant sought the retention of the replacement deed in the interim and determination of the lawfulness of the first respondent's possession of the original title deed on the return date.

It indicated its avowed intention to utilize the replacement deed to conduct further subdivisions, conclude more agreements of sale, and transfer the subdivisions that had been sold.

One such purchaser was Conrad Tinofirei Mutumbuki, who was joined in the proceedings on his own motion as the third respondent at the hearing on 29 October 2019 and made common cause with the appellant.

The first respondent also raised the preliminary point of lack of urgency against the counterclaim and sought its dismissal on the merits.

THE FINDINGS A QUO

The court a quo dismissed all the preliminary points raised by the appellant.

While it regarded one of the urgent chamber applications that had been removed from the roll to be pending at the instance of the first respondent, it found the cause of action and relief sought to be different from those before it.

It found the non-disclosure of prior urgent chamber applications and court application irrelevant to the determination of whether the main application was urgent.

It held, that, as the appellant had only impugned the interim relief pertaining to the setting aside of all transactions based on the replacement deed, and not the surrender and cancellation relief as final in effect, it could exercise its Rule 240 discretion to grant interim relief that was not final in effect.

It proceeded to do so by suspending, rather than cancelling, all the transactions predicated upon the replacement deed.

The court a quo further determined, that, the relief sought did not seek to stop past events but “recent and ongoing events.”

It also relied on the provisions of Rule 87 to find that the non-joinder of the third parties who purchased or took transfer of the purchased subdivisions was not inimical to their rights and interests as they were not involved in the procurement of the impugned replacement deed.

Lastly, it found that the first respondent had acted with speed after the decision of this Court of 7 October 2019 to launch the urgent chamber application after the subsequent ten-day negotiations for the voluntary surrender of the replacement deed failed.

Under the consequence factor, it held, that, the first respondent had established that the failure to intervene on an urgent basis would result in the attenuation and dissipation of the immovable property to the detriment of the first respondent's rights in the security pending litigation in HC8113/16, the consolidated case under which the application for rescission had also been incorporated.

Regarding the counter-application, it upheld the preliminary point of lack of urgency that was raised by the first respondent and struck it off the roll with costs on the higher scale.

On the merits of the main application, the court a quo was cognisant of the fact that the issue before it concerned the legality of the possession of the duplicate title deed by the appellant and not the legality of the possession of the original title deed by the first respondent.

It held, that, the appellant had fraudulently procured the duplicate title deed through a deliberate omission of the timeous opposition to its application in HC2463/18 from the bundle of documents for default judgment and the improper appeal against the rescission of the default judgment.

It reasoned that the appellant had done so for the twin purposes of obtaining and utilizing the duplicate deed to undertake the transactions it could not do without the original title deed; such as, the advertisements for the sale of Stands, the conclusion of agreements of sale, and the transfer of the Stands.

It also determined, that, the rescission of the default judgment restored the status quo ante, thereby effectively maintaining and preserving the first respondent's possession of the original deed and preventing the appellant from utilizing the duplicate deed to attenuate and dissipate the security by subdividing, selling, and transferring any subdivisions.

Lastly, it held that the first respondent had established all the requirements for a mandamus.

It therefore granted the provisional order for the return of the duplicate deed to the second respondent for cancellation and suspended all pending activities founded on the subdivisions, agreements of sale, and transfers of title predicated upon the duplicate title deed.

The appellant was accordingly estopped from effectuating all activities based on the duplicate title deed.

The court a quo reserved the nature and level of costs for the return day.

GROUNDS OF APPEAL

Aggrieved by the determination a quo, the appellant sought the setting aside of the order in the main application only and its substitution by a dismissal of the urgent chamber application with costs on the following four grounds of appeal:

“1. The court a quo erred in concluding that the 1st respondent's application was urgent when the 'time' and 'consequence' factors of urgency were not satisfied.

2. The court a quo erred in granting the relief of an interdict when all the requirements of an interdict were not met.

3. The court a quo grossly misdirected itself by granting a final interdict on an interim basis.

4. The court a quo grossly misdirected itself by purporting to interdict past events done pursuant to the replacement title deed.”

It is noteworthy that the appellant did not appeal against the striking off order against its counter urgent chamber application.

THE ISSUES

It was common cause that the issues for determination that arise from the grounds of appeal are:

1. Whether the court a quo correctly determined that the matter was urgent.

2. Whether the requirements of an interim interdict were satisfied.

3. Whether or not the court a quo granted a final interdict when the first respondent had sought an interim order....,.

On the merits, the appellant contended that the court a quo erred in holding;

(i) Firstly, that, the time to act commenced soon after this Court's judgment of 7 October 2019 rather than 18 July 2018, when the replacement title deed was issued by the second respondent; and

(ii) Secondly, that, the continued use of the replacement deed to subdivide, sell, and transfer the subdivisions constituted an irreversible dissipation of the immovable property secured by the collateral held by the first respondent.

It submitted, that, the previous attempts, in HC5466/19 and HC7769/19, to stop the use of the replacement deed negated the “time and consequence” based urgency by the time the provisional order was sought on 21 October 2019, since the dissipation of the immovable property, which began in 2008, was known to the first respondent from March 2012 when it took possession of the original deed.

On the consequent aspect, the appellant argued, that, the failure a quo to determine whether the tender of security in lieu of the original deed negated any irremediable harm arising from the indebtedness claimed in HC8113/16, which had been fully ventilated by the parties, constituted a fatal misdirection warranting interference with its discretion on appeal.

The appellant further submitted, that, as the immovable property was not hypothecated, it could not constitute security for the Bankers Acceptances.

It strongly contended, that, the absence of irreparable harm therefore negated the finding a quo of urgency.

The appellant further impugned the finding that the first respondent had established a prima facie case for granting the provisional order.

It assailed the existence of a prima facie entitlement, though open to some doubt, to possess the original title deed pending determination of HC8113/16, on four grounds:

(i) Firstly, the absence of a debtor-creditor relationship;

(ii) Secondly, the absence of a cession between the two protagonists;

(iii) Thirdly, that the appellant had discharged its obligations in full to the Bank; and

(iv) Lastly, that possession of the original title deed was contrary to the Security Trust Deed and Assignment Agreement between the first respondent and the Bank.

The appellant also emphasized, that, as the title deed was not the subject of the claim in HC8113/16, nor encumbered, the purported tender of the bond of security countervailed the existence of actual or reasonable apprehension of harm.

It further argued, that, the balance of convenience favoured the appellant in that it had earned US$15 million from the sale of 300 stands on which third parties had invested a further US$18m, which, in aggregate, significantly eclipsed the claim of US$2.3m in HC8113/16.

It boasted of its ability to pay the claimed amount in the event liability was established.

Lastly, the appellant contended, that, the court a quo improperly granted final relief on an interim basis on a lower onus, which did not protect its rights pending HC8113/16.

Per contra, the first respondent contended, that, the court a quo had correctly found that the first respondent established both the “time and consequence” factors of urgency and all the four requirements for the grant of an interim interdict.

Counsel for the first respondent further argued, that, the provisional order was not final in form or substance as it was premised on the determination of HC8113/16, which was pending before the High Court.

THE LAW

The treatment of whether an application is urgent is a matter in the discretion of the court a quo.

This Court has very limited grounds upon which it can interfere with the exercise of that discretion. It can do so where the lower court makes a mistake on the law or the facts; acts upon a wrong principle; allows extraneous considerations to influence its decision; fails to take into account relevant facts; or, more generally, makes a decision that is irrational: see Hama v National Railways of Zimbabwe 1996 (1) ZLR 664 (S)…,; Barros & Anor v Chimpondah 1999 (1) ZLR 58 (S)…,; and Econet Wireless (Pvt) Ltd v Trust Co Mobile (Pty) Ltd & Anor SC43-13.

The law on what constitutes urgency is settled.

Urgency is manifested by either a time or consequence dimension: see Kuvarega v Registrar-General & Anor 1998 (1) 188 (H)…,; Document Support Centre (Pvt) Ltd v Mapuvire 2006 (2) ZLR 240 (H); Gwarada v Johnson & Ors 2009 (2) ZLR 159 (H); and Sitwell Gumbo v Porticullis (Pvt) Ltd t/a Financial Clearing Bureau SC28-14…,.

In addition, in Econet Wireless (Pvt) Ltd v Trust Co. Mobile (Pty) Ltd & Anor SC43-13…, GARWE JA,…, further suggested that an urgent chamber application in which the interim relief is similar to or has the same effect as the final relief prayed for may justifiably be found to be not urgent.

While he generally approved the position articulated in Kuvarega v Registrar General & Anor 1998 (1) 188 (H), at 193A-C, he underscored that such an application could not be regarded as a nullity and stated that:

“Whilst no hard and fast rule can be laid down, there may well be cases where a court would be justified in holding, in such a situation, that the application is not therefore urgent and that it should be dealt with as an ordinary court application. There may also be cases where the court, as it is empowered to do…, may amend the relief sought in order to grant…, interim protection (and) obviate a situation where final relief is granted by way of a provisional order.”

It is apparent, that, the consequence dimension pre-supposes that the harm sought to be protected in an impending matter would be amorphously irremediable without the interim indulgence.

In Chiwenga v Mubaiwa SC86-20…, this Court further highlighted the incongruence of noting an appeal against a finding of urgency for the basic reason that the finding of urgency is a mere procedural device used by an applicant to jump the queue of other pending matters for a consideration of the merits. This Court reasoned that:

“Looked at differently, an order granting the urgent hearing of a matter is generally not appealable. This is for the simple reason that the order has no bearing on the merits of the application or judgment. This is akin to a bank customer who is, rightly or wrongly, allowed to jump the queue. His or her transaction cannot be impugned or rendered unlawful solely on the basis that he or she has jumped the queue. By the same token, a correct judgment cannot be impugned or rendered incorrect by the mere fact that the matter was improperly heard as an urgent application.”

In Nyakutombwa Mugabe Legal Counsel v Mutasa & Ors SC28-18…, this Court held that a finding of urgency by a court, on its own, cannot constitute a substantive ground of appeal.

In our law, a pledge vests real rights of security in the property pledged to the pledgee. This was pertinently pronounced by MFALILA J in Hughes v Lotriet 1985 (2) ZLR 179 (H)…, thus:

“This valid pledge, therefore, had the effect of conferring on the applicant (the pledgee) a real right in the articles pledged and this right can only terminate when the pledge is extinguished. The pledge is extinguished only after the original or principal obligation is discharged….,. Until this is done, the respondent, as pledgor, has no right of action either for their return or damages for their loss.”

The requirements and purpose of an interim interdict are also well settled in this jurisdiction.

It seeks to protect an existing right from unlawful infringement that is either continuing or reasonably anticipated: see Mayor Logistics (Pvt) Ltd v Zimbabwe Revenue Authority CC07-14; Setlogelo v Setlogelo 1914 AD 221…,; and Tribac (Pvt) Ltd v Tobacco Marketing Board 1996 (2) ZLR 52 (S).

In the latter case, this Court stated…, that:

“An application for a mandamus or 'mandatory interdict' as it is often termed, can only be granted if all the requisites of a prohibitory interdict are established: see Lipschitz v Wattrus NO 1980 (1) SA 662 (T) at 673C-D; Kaputuaza & Anor v Executive Committee of the Administration for the Hereros & Ors 1984 (4) SA 295 (SWA) at 317E. These are:

1. A clear or definite right - this is a matter of substantive law.

2. An injury actually committed or reasonably apprehended - an infringement of the right established and resultant prejudice.

3. The absence of a similar protection by any other ordinary remedy. The alternative remedy must -

(a) Be adequate in the circumstances;

(b) Be ordinary and reasonable;

(c) Be a legal remedy; and

(d) Grant similar protection.”

In respect of an interim interdict, where the right sought to be protected is not clear “a right which 'though prima facie established, is open to some doubt'” suffices: see Eriksen Motors (Welkom) Ltd v Warrenton & Anor 1973 (3) SA 685 (A)…,.

Where a clear right is established, the applicant is precluded from establishing a well-grounded apprehension of irreparable harm, but must do so where only a prima facie right open to some doubt is established: see Pinkstone Mining (Pvt) Ltd & Ors v Lafarge Cement (Pvt) Ltd & Anor HH118-18…,.

Bankers Acceptances (BAs) meet the definition of a bill of exchange espoused in the Bills of Exchange Act [Chapter 14:02] (section 3(1)): A bill of exchange is an unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand, or at a fixed or determinable future time, a sum certain in money to, or to the order of, a specified person, or to bearer.

The Bills of Exchange Act also defines certain correlative terms to a bankers acceptance such as 'acceptance' 'bearer' 'delivery' 'endorsement holder' and 'payment in due course'.

“acceptance” means an acceptance completed by delivery or notification;

“bearer” means the person in possession of a bill or note which is payable to bearer;

“delivery” means transfer of possession, actual or constructive, from one person to another;

“endorsement” means an endorsement completed by delivery;

“holder” means the payee or endorsee of a bill or note, who is in possession of it, or the bearer thereof;

“payment in due course” means payment made at or after the maturity of a bill to the holder thereof in good faith and without notice that his title to the bill is defective.

APPLICATION OF THE LAW TO THE FACTS

The appellant submitted, that, the court a quo mis-applied the time aspect and failed to consider the “consequence” factor.

The ratio of the court a quo on these two aspects is delineated on p13 of the appealed judgment in these words:

“Notwithstanding that the order that enabled the first respondent to procure a duplicate title deed was effectively nullified by the Supreme Court on 7 October 2019, the first respondent (appellant) is still refusing to return the replacement copy of the title deed in terms of which it subsequently subdivided and sold parts of the property as evidenced by the agreement of sale in the third respondent's (Mutumbuki) notice of opposition, hence, first respondent is effectively in the process of developing and dissipating Stands to individual purchasers.

From the papers, applicant engaged the first respondent from 7th to 17th October 2019 but first respondent has made it clear that it wants to hold onto the replacement title deed at all costs to further its apparent unlawful activities of dissipating the immovable property before resolution of case HC8113/18 (sic).

It becomes prudent for this court to intervene, on an urgent basis, to force the first respondent to return the duplicate title deed and for the duplicate title deed to be cancelled, if necessary, to prevent first respondent from alienating the property or disposing of its title in the said immovable property pending litigation between the parties before MUSHORE J.”

The above sentiments are unassailable.

Before the order of this Court of 7 October 2019, all prior urgent applications to stop the issuance and use of the replacement deed by the second respondent were hamstrung by the extant default judgment that permitted the appellant to obtain the replacement deed.

The patently erroneous default judgment had been given a lease of life by the improper appeal lodged by the appellant against the order of rescission.

Notwithstanding that the service by substitution order upon which the default judgment was based was, by consent, rescinded by this Court on 25 March 2019, the appellant brazenly utilized the replacement deed to transfer a Stand on the immovable property to Madyausiku on 12 April 2019.

And, despite the confirmation, again by this Court, of the rescission of the default judgment, on 7 October 2019, which, by operation of law, rendered the replacement deed inefficacious, the appellant perverted the default judgement and the replacement deed by concluding an agreement of sale for a Stand on the immovable property with, amongst others, Mutumbuki, on 11 October 2019.

In its opposing affidavit, the appellant persisted with its avowed intention to continue using the replacement deed to subdivide, sell, and transfer Stands on the immovable property.

We are satisfied that the court a quo properly applied both the time and consequent factors of urgency.

The exercise of its discretion, on the question of urgency, is unassailable.

Again, on the authority of this Court in Nyakutombwa Mugabe Legal Counsel v Mutasa & Ors SC28-18 and Chiwenga v Mubaiwa SC86-20, the first ground of appeal is not only ill-conceived and misplaced but also devoid of merit.

The tenor of the contentions made by the appellant in respect of the second ground of appeal disingenuously relates more to the counter application that was struck off and not appealed against rather than the provisional order that it sought to impugn.

The provisional order protected the first respondent's right to legality, which constitutes a vital aspect of the rule of law.

The consolidated matter in which, inter alia, the first respondent sought the discharge of dishonored Bankers Acceptances drawn by the appellant and secured by the title deed was pending as was the claim of vindication that was lodged by the appellant.

The case was awaiting determination in accordance with the law.

This Court had effectively disgorged the appellant of the ill-gotten duplicate deed and nullified its efficacy on 7 October 2019.

The appellant's refusal to voluntarily surrender the duplicate deed was inimical to the first respondent's real rights in the security that are awaiting determination. The provisional order could not, and did not, determine the issues pending in HC8113/16.

It was remiss of the appellant to motivate the second ground solely on the legality of the possession of the original deed by the first respondent while studiously ignoring the legality of its own stranglehold on the duplicate deed.

The failure to properly demonstrate how the court a quo misdirected itself in finding that the constituent elements of an interim interdict were established is fatal to the second ground of appeal.

The second ground of appeal lacks merit and must, therefore, fail.

The appellant further contended, that, the court a quo erred in granting a final interdict on an interim basis.

The order granted a quo was a provisional order, which restored the status quo ante pending the conclusion of the consolidated matter, HC8113/16.

Before the replacement deed was issued, the appellant could neither subdivide, sell, nor transfer any Stands on the immovable property.

That is the position that was safeguarded by the provisional order.

The order sought to be confirmed or discharged is predicated on the pending consolidated matter HC8113/16, which, at the time the provisional order was sought and granted, incorporated HC2463/18.

In addition, the court will determine the propriety of mulcting Mr Kwaramba with costs on the higher scale de bonis propriis on the return date.

The first respondent will also be obliged to show not only why the status quo ante should be confirmed pending the determination of the disputes raised by both parties in the consolidated matter, HC8113/16, but also why Mr Kwaramba should personally be mulcted with punitive costs.

The provisional order did not stop the determination of HC8113/16 nor did it pre-empt any of the issues raised therein.

The provisional order was therefore not the same as the final order sought nor did it have final effect.

Accordingly, the third ground of appeal must fail.

COSTS

It is clear to us, that, the appeal was launched for the perverse purpose of prolonging the appellant's stranglehold on the replacement deed in order to render the security held by the first respondent redundant. This is a proper case for expressing our displeasure at the conduct of the appellant by mulcting it with costs on the scale of legal practitioner and client.

DISPOSITION

Accordingly, it is ordered that:

1. The appeal be and is hereby dismissed.

2. The appellant shall pay the first respondent's costs on the scale of legal practitioner and client.

SC102-21 : DOVES FUNERAL ASSURANCE (PVT) LTD vs FERNABY INVESTMENTS (PVT) LTD and QUECOM ENGINEERING (PVT) LTD and DENNIS NGORIMA and STANDARD CHARTERED BANK LTD and HOMELAND REAL ESTATE and THE SHERIFF
Ruled By: BHUNU JA, MATHONSI JA and CHITAKUNYE JA

On 7 October 2020, the High Court handed down judgment in an application made by the first and third respondents in terms of Rule 359(8) of the High Court Rules, 1971.

It set aside the Sheriff's sale of a property known as Lot 8 Brooke Estate, Harare in execution of a judgment in favour of Standard Chartered Bank Limited and granted the first, second, and third respondents three months to either satisfy the judgment debt or find another purchaser willing to pay more than USD260,000 for the same property.

This is an appeal against that judgment of the High Court (the court a quo).

After hearing submissions by counsel, this Court issued the following order:

“1. The appeal succeeds.

2. By consent, the first, second, and third respondents shall bear the costs of suit.

3. The judgment of the court a quo be and is hereby set aside and substituted with the following:

'(i) The application to set aside the Sheriff's sale be and is hereby dismissed with costs.

(ii) The sale of the applicant's property, being certain piece of land situate in the district of Salisbury called the remainder of lot Brooke Estate, measuring 7258 square meters, held under Deed of Transfer No.4935/2004, sold by public auction to the third respondent, in the sum of $260,000 be and is hereby confirmed.'”

After issuing the order, we stated that the reasons for doing so would follow. What follows hereunder are those reasons.

THE FACTS

Quecom Engineering (Private) Limited, which is the second respondent herein, entered into a loan agreement with Standard Chartered Bank Limited, the fourth respondent herein, in terms of which the latter extended a revolving credit facility to it with a limit of USD800,000.

The first and third respondents, together with the third respondent's now deceased wife, bound themselves as sureties and co-principal debtors for the due performance by the second respondent of its obligations under the loan agreement.

In addition, the first respondent executed a deed of hypothecation over its immovable property, which is now the subject of the dispute between the parties, as security for the second respondent's indebtedness to the Bank.

In due course, the second respondent benefited from the loan but failed to pay the sum of $241,056 which remained owing.

The Bank sued and obtained judgment against the first, second, and third respondents in the sum of $292,272=12 together with ancillary relief.

A writ of execution against property was issued leading to the attachment by the sheriff of the immovable property forming the basis of the current dispute.

Then, began the haggling over the sale of the property, which, when put on sale, would attract unreasonably low prices.

The first attempt at selling the property, on 24 January 2015, attracted a sale price of US$150,000. The first, second, and third respondents filed a request to set aside the sale, which, by consent, was not confirmed by the sheriff.

On 6 August 2015, the judgment debtors were given an opportunity to sell the property by private treaty. They failed to do so, resulting in the property being placed on public auction, where, on 12 January 2017, it only fetched a price of $150,000.

Again, the judgment debtors requested the setting aside of the sale by the Sheriff.

At that stage, the parties agreed that they be given a further four (4) months to sell the property by private treaty failing which the sale for $150,000 would be confirmed.

Again, the judgment debtors failed to find a purchaser. As a result, the sale was confirmed by the Sheriff.

Unhappy, the judgment debtors filed an application to set aside the Sheriff's confirmation in terms of Rule 359(8). This was under case number HC7151/17.

They obtained an order, on 27 September 2017, setting aside the sale by private treaty. The court gave them another period of six (6) months to try and sell the property for a price above the $150,000 previously achieved, and, if they failed, the court directed that the property be sold by public auction.

The judgement debtors again failed to sell the property.

On 6 September 2018, the Sheriff sold the property by public action to the appellant for $260,000.

The judgment debtors would have none of it.

They still filed with the Sheriff a request in terms of Rule 359(1) for the setting aside of the sale on two grounds, namely, that:

(a) The sale was improperly conducted; and

(b) The property was sold for an unreasonably low price.

The Sheriff dismissed the request to set aside the sale and proceeded to confirm it on 29 November 2018.

PROCEEDINGS IN THE COURT A QUO

On 12 December 2018, the judgment debtors launched a court application in the court a quo, in terms of Rule 359(8), for the setting aside of the Sheriff's decision to confirm the sale. They cited two grounds for seeking that relief, namely, that;

(i) The property was sold for an unreasonably low price; and

(ii) That they had found a financier who was willing to pay the full judgment debt on their behalf from the proceeds of the sale of its property.

The financier was said to be in the process of selling its own property to raise funds.

The application was opposed by the appellant which set out the chequered history of the matter making it clear that the so-called financier was in fact a company known as Retour Investments (Private) Limited.

It had, in 2015, been touted by the judgment debtors as a potential financier - without any headway.

In the course of preparing its judgment, the court a quo came up with issues not raised by the parties.

It mero motu invited the parties to address it on two legal issues;

(i) Firstly, whether the application before it was one for a review of the Sheriff's decision.

(ii) Secondly, it desired to know whether it was open to the Sheriff to depart from the provisions of Rule 359 by allowing an oral hearing without the parties having filed formal pleadings.

Having done that, the court a quo refrained from determining the merits of the application before it but disposed of the application entirely on the issues raised by it mero motu.

The court a quo found, that, once a request to set aside the sale is made to the Sheriff, any person intending to oppose it should indicate the grounds for opposition and submit affidavits to support the grounds for opposition.

It found, further, that, as the appellant had failed to file written submissions opposing the objection to the sale, but appeared before the Sheriff to make oral submissions, the hearing by the Sheriff was a nullity.

Having concluded that the Sheriff's proceedings were a nullity, the court a quo set aside the decision to confirm the sale.

It however proceeded to grant the judgment debtors a further period of three (3) months to either satisfy the judgment debt or find another purchaser willing to pay more than $260,000 for the property failing which the sale to the appellant would be deemed confirmed and the property transferred to the appellant.

PROCEEDINGS BEFORE THIS COURT

The appellant was aggrieved by the judgment of the court a quo. It noted the present appeal on two grounds, namely, that:

1. The court a quo erred in granting the first to third respondents a further three months to sell the attached property by private treaty without considering the merits of their objection and whether the objection constituted good cause to justify such order.

2. The court a quo erred at law in granting the first to third respondents the right to sell the attached property by private treaty when such right no longer existed having been granted such opportunity several times before and when there was no firm offer from a prospective purchaser to pay a price higher than the public auction.

This appeal requires the court to determine one issue, namely, whether the court a quo erred in setting aside the confirmation proceedings of the Sheriff and affording the judgment debtors three (3) months period to secure a buyer by private treaty.

WHETHER THE COURT A QUO ERRED IN SETTING ASIDE CONFIRMATION OF THE SALE

Counsel for the appellant submitted, that, the court a quo erred in determining the matter on grounds other than those provided for in Rule 359(1) as read with Rule 359(8) and (9).

He submitted, further, that, the court a quo did not focus on the relevant grounds but on points that it raised mero motu and then relied on those points to dispose of the matter.

It was further submitted, on behalf of the appellant, that, where a request is made by an interested party, to the Sheriff, in terms of Rule 359(1), for the setting aside of a sale, the Sheriff has no power to grant default judgment as suggested by the court a quo.

In all the circumstances, the Sheriff is required, even where no opposing papers are filed, to consider the request and decide whether there is a basis for setting aside the sale.

In advancing that argument, counsel for the appellant relied on the authority of Zimunhu v Gwati & Ors SC43-02 which held, that, even if no opposing papers have been filed following a request to set aside the sale, the Sheriff still has a duty to consider the papers before him or her and decide whether they provide a basis for setting aside the sale.

In addition, the point was made, on behalf of the appellant, that, once an application in terms of Rule 359(8) had been made, the court a quo was enjoined to consider its merits. It could not set aside the sale on mere technicalities.

In this case, the property had been sold on a number of occasions previously but the sales were set aside on the basis of low price.

The sum of $260,000 offered by the appellant was the highest price ever achieved.

The judgment debtors had been accorded opportunities before to sell the property by private treaty. They failed to secure a buyer offering more than what was achieved at the Sheriff's sale.

The valuation report relied upon by the judgement debtors, which placed the forced sale value of the property at $307,500 was done on 5 December 2018 - long after the Sheriff's sale. It was therefore of no use in determining the application.

Per contra, counsel for the first, second, and third respondents submitted, that, the court a quo found an irregularity in the proceedings before the Sheriff. The irregularity was the failure by the appellant to file opposing papers to the request for the setting aside of the sale.

He submitted further, that, having found an irregularity, the court a quo was correct in concluding that the proceedings were a nullity and setting aside the sale. It was correct in not relating to the merits of the matter.

Regarding the issue of whether the judgment debtors have a right to procure a new purchaser, counsel for the first, second, and third respondents submitted, that, the Sheriff's price was unreasonably low. As such, nothing stopped them from doing so.

He however conceded, that, the valuation report submitted by the judgment debtors was irrelevant.

After the interventions of the court directed at whether the jurisdiction of the court a quo, in an application of that nature, could be triggered if the proceedings before the Sheriff were a nullity, counsel for the first, second, and third respondents capitulated; he then suggested that the matter be remitted to the court a quo for a determination on the merits.

The dispute which gave rise to this appeal was initiated by a request made to the Sheriff by the judgment debtors in terms of Rule 359(1) of the High Court Rules. It provides:

“(1) Subject to this rule, any person who has an interest in a sale in terms of this Order may request the Sheriff to set it aside on the ground that:

(a) The sale was improperly conducted; or

(b) The property was sold for an unreasonably low price, or on any other good ground.”

Subrule (1) of Rule 359 therefore imposes limitations on the grounds upon which an interested party may approach the Sheriff with a request to set aside the sale of property in execution of a judgment.

In his affidavit in support of the objection to the sale which was submitted to the Sheriff, the third respondent set out the grounds at paragraphs 20 and 21 as follows:

“20 The purchase price of US$260,000 is a slight improvement from the price of US$150,000 fetched in July 2015 which was roundly condemned by the parties and subsequently set aside by consent of the parties.

21. Applicant is still objecting to the confirmation of the sale on the basis that the purchase price that is being offered by third respondent is below the forced sale value and the actual market value.”

The Sheriff dismissed the objection and confirmed the sale.

The judgment debtors approached the court a quo, in terms of Rule 359(8), for an order setting aside the sale.

They did not seek to be given three months to sell the property by private treaty - which relief the court a quo granted mero motu.

I mention, in passing, that, the court a quo could not grant relief which was neither prayed for nor established in the application.

It is a cardinal principle of our civil practice and procedure, that, the onus is on a person who claims something from another in a court of law to satisfy the court that he or she is entitled to it: see ZUPCO Limited v Pakhorse Services (Private) Limited SC13-17.

Equally important is the principle, that, where there is a dispute on some question of law or fact, there must be a judicial decision or determination on the issue in dispute. A failure to resolve the dispute is a misdirection that vitiates the order given: see Gwaradzimba v CJ. Petron & Co (Proprietary) Limited 2016 (1) ZLR 28…,.

By the same token, it is a grave misdirection for a court to determine an issue not placed before it by the parties and proceed to grant relief not sought by any of the parties.

A party interested in a Sheriff's sale can only approach the court in terms of Rule 359(8) where the Sheriff has refused a request made in terms of Rule 359(1).

In terms of Rule 359(7);(8) and (9):

“(7) On receipt of a request in terms of subrule (1), and any opposing or replying papers filed in terms of this Rule, the Sheriff shall advise the parties when he will hear them, and, after giving them or their legal representatives, if any, an opportunity to make their submissions, he shall either -

(a) Confirm the sale; or

(b) Cancel the sale and make such order as he considers appropriate in the circumstances, and shall, without delay, notify the parties in writing of his decision.

(8) Any person who is aggrieved by the Sheriff's decision, in terms of subrule (7), may, within one month after he was notified of it, apply to the court by way of court application to have the decision set aside.

(9) In an application in terms of sub-rule (8), the court may confirm, vary, or set aside the Sheriff's decision or make such other order as the court considers appropriate in the circumstances.”

The court a quo found that the Sheriff deviated from the rules of court rendering the proceedings irregular and the “decision reached thereon a nullity.”

It however went on to issue an order giving the judgment debtors more time to sell the property.

The jurisdiction of the court a quo to exercise power reposed to it by Rule 359(9) arises from an application being made to it in terms of sub rule (8). Such an application can only be made following a decision by the Sheriff refusing to set aside the sale in terms of subrule (7).

The Sheriff can only make a decision in terms of sub-rule (7) upon a request made to him by an interested party in terms of subrule (1).

Where the proceedings before the Sheriff are a nullity, as the court a quo found, erroneously in my view, the jurisdiction of the court a quo, in terms of subrule (9), cannot be engaged.

It can only be engaged where there were valid proceedings conducted by the Sheriff.

There was a glaring misdirection in granting the judgment debtors relief as the court a quo did.

In any event, it occurs to me, that, the failure by the appellant to file written opposition to the request for setting aside the sale made to the Sheriff, as required by Rule 359(4), could not give rise to a default judgment.

I do not read subrules (4) and (7) as giving rise to an automatic bar against an interested party from contesting the request made to the Sheriff. The use of the word “may” in sub-rule (4) suggests discretion on the party to lodge written notice to the Sheriff.

Equally so, the expression: “On receipt of a request in terms subrule (1) and any opposing or replying papers” in subrule (7) is indicative of the fact, that, opposing papers may or may not be filed.

All that does not detract from the duty of the Sheriff to consider the request and decide whether there is a basis for setting aside the sale.

The Sheriff did that.

I am aware that having concluded that the proceedings before the Sheriff were a nullity, the court a quo did not fully engage the merits.

The court a quo however granted three (3) months for the judgment debtors to satisfy the judgment or find another purchaser.

One can therefore safely say that it regarded the price as being unreasonably low - without giving reasons.

This is therefore not a case in which the matter can be remitted to the court a quo for a determination on the merits. Either it determined the merits or its judgment had that effect.

More importantly, this case has a chequered history wherein a beneficiary of a court judgment has struggled to execute it since 2014. The judgment debtors have had ample time given to them by the court to either pay the debt or sell the property in question at a higher price. They have failed to do so.

There must be finality to this long standing case.

No case whatsoever was made, either before the Sheriff or the court a quo, for the setting aside of the sale.

It is for these reasons that we issued the order mentioned above.

HH974-15 : GUGULETHU HURASHA vs CENTRAL AFRICAN BUILDING SOCIETY and FIRST CAPITAL PLUS and ITAYI MUNYEZA and SHERIFF OF ZIMBABWE and MASTER OF THE HIGH COURT
Ruled By: NDEWERE J

The applicant and the third respondent divorced on 16 January 2014 in Case No. HC7328/13.

In terms of a consent paper concluded on 14 November 2013, which became part of the divorce order of 16 January 2014, the applicant and the third respondent agreed to give their matrimonial home, Stand No.17074 Giraffe Crescent, Borrowdale West, Harare to their two minor children in equal shares.

Paragraph E.5 of the Consent Paper stated as follows:

“E. Division of Matrimonial Property

5. Stand No.17074 Giraffe Crescent, Borrowdale West, Harare shall be awarded to the two minor children in equal shares. The property shall be transferred and registered in the said minor children's names within one year of the order. The parties shall sign all relevant papers to effect transfer to the minor children, failing which, the Sheriff Harare shall sign all such papers as if it were the plaintiff and defendant. The plaintiff shall pay the cost of the transfer. In addition, the defendant shall exercise the rights (usufruct) of use and occupation until she dies or remarries whichever occurs sooner.”

Stand No.17074 Giraffe Crescent was not transferred and registered in the children's names within one year, contrary to what was ordered by the court.

The court was not told of any steps which were taken by the applicant and the third respondent towards complying with the Divorce Order.

It also appears, that, the Sheriff, who was supposed to sign all the papers, for purposes of transfer and registration, if the applicant and the third respondent failed to do so, was never approached.

The property thus remained in the third respondent's name, in contravention of the divorce order.

It is common cause, that, in August, 2015, the above property was attached by the first respondent in order to satisfy a debt by the second respondent where the third respondent had signed as surety.

The applicant says she became aware of the attachment on 21 August 2015. On 2 September 2015 the applicant filed an urgent chamber application for stay of execution of the writ of attachment.

There was a delay of more than 10 days from the date of the attachment to the date of filing of the urgent application. That delay is not explained, contrary to case authorities which indicate that any delay in approaching the court urgently should be explained since an applicant in an urgent application should herself treat the matter urgently.

The first respondent opposed the urgent application....,.

I will..., proceed to consider the merits of the application.

The court order of 16 January 2014 said Stand 17074 Giraffe Crescent was to be transferred and registered in the minor children's names within one year of the divorce order….,.

This time limit was put to protect the interests of the minor children by ensuring a speedy transfer and registration into their names.

This was not done, and, as stated previously, no explanation is given as to why that was not done.

There is just a bald statement by the applicant, which was not supported by a supporting affidavit from the third respondent, that the third respondent did not have the money to process the transfer.

The attachment was done more than one and a half years after the divorce order.

Why then should the first respondent be prejudiced when it is the applicant and the third respondent who failed to protect their minor children's rights by complying with the terms of the divorce order to transfer and register the house into the children's names within a year of the divorce order?

The adage “the law helps the vigilant and not the sluggard” enunciated in Ndebele v Ncube 1992 (1) ZLR 288…, is applicable in this instance.

The applicant and the third respondent were not vigilant in safeguarding the minor children's interests.

Secondly, as indicated by the first respondent, the applicant was aware of the debt and the search for assets as far back as December 2014, yet, she still did not make effort to ensure registration of the house into the children's names.

What further compounds the matter for the applicant is that the relief she is seeking sounds permanent in nature.

It is not a stay pending some other application or action to be taken but a permanent stay of execution.

Her affidavit, in paragraph 18.3, also suggests that the second and third respondents have no financial means to clear the debt.

All these factors militate against the granting of the application.

Granting the application will mean that the first respondent cannot recover his debt from the second and the third respondent forever, when he has a court order entitling him to do so, and this court has no power to stop a creditor with a valid court order from recovering his debt.

In any event, the property is also mortgaged to another creditor so the rights of the children remain exposed even if the application were to be granted.

As correctly conceded by the applicant, in paragraph 19.1 of her founding affidavit, the attachment cannot be faulted since the property still belongs to the third respondent.

While the court sympathizes with the minor children in this case, the court has no legal basis to stay execution of the attached property.

The application is therefore dismissed with costs.

SC140-21 : MBCA BANK (PRIVATE) LIMITED (Now known as Nedbank Zimbabwe Limited) vs ZIMBABWE REVENUE AUTHORITY
Ruled By: GUVAVA JA, UCHENA JA and MAKONI JA

This is an appeal against the whole judgment of the Special Court for Income Tax Appeals, dated 28 November 2019, upholding the respondent's amended assessment of tax against the appellant.FACTSThe facts of the case can be summarised as follows;The appellant is a registered Bank in Zimbabwe. It is also a ...

This is an appeal against the whole judgment of the Special Court for Income Tax Appeals, dated 28 November 2019, upholding the respondent's amended assessment of tax against the appellant.

FACTS

The facts of the case can be summarised as follows;

The appellant is a registered Bank in Zimbabwe. It is also a subsidiary of MBCA Holdings Limited a local holding company, which, in turn, is a subsidiary of Nedbank Limited (Nedbank) a South African company.

The respondent is an authority established in terms of the Revenue Authority Act [Chapter 23:11]. It is responsible for assessing, collecting, and enforcing payment of taxes to the State.

On 5 June 2012, the appellant filed its income tax self-assessment with the respondent for the tax year ending 31 December 2011.

On 27 June 2012, the respondent's Commissioner of Investigations and International Affairs launched a tax review of the appellant's operations for the period spanning January 2009 to May 2012.

The exercise resulted in the respondent issuing amended manual notices of assessment for Income Tax numbers 203324818 and 20324821 for the tax years 2010 and 2011 respectively.

The amended notice of assessment in respect of the 2010 tax year was subsequently withdrawn, whilst the amended assessment in respect of the 2011 tax year resulted in additional tax and penalties amounting to US$944,614=80.

The appellant objected to the amendment for the tax year ending 31 December 2011.

The respondent dismissed the objection after which the appellant appealed to the Special Court for Income Tax Appeals (the court a quo).

The issue before the court a quo was the validity of the amended assessment of Income Tax number 20324821, for the 2011 tax year.

The respondent disallowed the appellant's deductions pertaining to “expenditure incurred on general administration and management” in terms of section 16(1)(r) of the Income Tax Act [Chapter 23:06] and debts written off by the appellant in its income tax self assessment as “bad debts” in terms of section 15(2)(a) as read with section 15(2)(g) of the Income Tax Act.

It was established before the court a quo, that, the appellant is a subsidiary of MBCA Holdings Limited a local holding company, which, in turn, is a subsidiary of Nedbank Limited (Nedbank) a South African company.

In terms of section 143(1)(b) of the then Companies Act [Chapter 24:03] the appellant was deemed to be a subsidiary of Nedbank (South Africa).

During the 2011 tax year, Nedbank (South Africa) met several expenses on behalf of the appellant including travelling costs, telecommunications costs, and postage and freight costs. It also rendered services such as Group technology infrastructure and operation support services, system support service for the Africa Banking and e-commerce, strategic planning assistance, and risk advisory service assistance.

The appellant subsequently paid Nedbank (South Africa) for the incurred expenses and accounted for all the payments made thereto, including reimbursement, payment for services rendered, and general and specific administration costs through a single ledger account headed “Operating Costs”.

The respondent's amended assessment was based on its treatment of all the payments made to Nedbank (South Africa) by the appellant as general administration and management costs.

The respondent disallowed all amounts in excess of limits set in terms of section 16(1)(r)(ii) of the Income Tax Act.

In respect of bad debts, the respondent's position was that bad debts could only be claimed in terms of section 15(2)(g) of the Income Tax Act and that the debts written off as “bad debts” by the appellant, for the 2011 income tax year, failed to meet the criteria established in terms section 15(2)(g) of the Income Tax Act.

PROCEEDINGS BEFORE THE COURT A QUO

In proceedings before the court a quo, the appellant submitted, that, general costs and not specific costs fell under the purview of section 16(1)(r) of the Income Tax Act, while the respondent adopted the contrary view, that, section 16(1)(r) of the Income Tax Act did not differentiate between general and specific costs, but, rather, gave effect to all costs incurred by a subsidiary company to its holding company as general administration and management expenses which were deductible in terms of the formula provided by section 16(1)(r)(i)and (ii) of the Income Tax Act.

In determining the appeal, the court a quo held, that, section 16(1)(r) of the Income Tax Act constituted an anti-tax avoidance measure against a local taxpayer by limiting its allowable deductions in respect of general administration and management expenses incurred by a foreign holding company.

It held, that, the provisions were enacted by the legislature to prevent local subsidiary companies and their foreign holding companies from colluding to overload expenses on the local entity whilst simultaneously reducing its Zimbabwean tax liability and increasing the foreign entity's profits.

In respect of all the payments made by the appellant to Nedbank (South Africa), the court a quo held that section 16(1)(r) as read with section 26(2) of the Income Tax Act was applicable.

The appellant was therefore confined to the prescribed deductible income limits provided for in section 16(1)(r)(ii) of the Income Tax Act.

In view of the foregoing, the court a quo determined, that, the expenses deducted by the appellant in favour of Nedbank (South Africa) fell into the category of “expenditure on general administration and management” in terms of section 16(1)(r) of the Income Tax Act.

The court a quo took into consideration the Shorter Oxford English Dictionary definition of the term 'administration' and 'management' respectively, and determined that the former related to “the act of administering, management” and the latter to “the act or manner of managing, administrative skill.”

The court a quo was, however, of the view, that, the definitions were not the determinant factors of the issue, as “all of the appellant's contracted functions (were) headlined as management of sorts” in the appellant's accounting books.

It held, that, the pertinent issue for consideration was the proper definition of the word 'general' which definition was held to pertain to “all or most of the parts of the whole, completely or approximately universal within implied limits.”

After determining the issue of deductible income in terms of section 16(1)(r) of the Income Tax Act, the court a quo considered whether or not the bad debts claimed by the appellant were allowable deductions in terms of section 15(2)(g) of the Income Tax Act.

The bad debts claimed by the appellant, in its 2011 tax assessment, pertained to the sum of US$2,250,365=17 being unsatisfied loans due to the appellant from its four Bulawayo-based corporate clients.

The respondent was not satisfied, that, the debts written-off by the appellant constituted bad debts in terms of section 15(2)(g) of the Income Tax Act.

The appellant contended, that, loss sustained and written off by a banking institution or money-lending business (such as itself) from loans, constituted a deductible loss as contemplated in section 15(2)(a) of the Income Tax Act.

The appellant argued, that, bad debts in the case of banking institutions and money-lending institutions come into existence by operation of law as contained in paragraphs 20, 22, 24 and 25 of the Banking Regulations 2000, SI205 of 2000 (the Regulations).

The appellant wrote off the four unsatisfied loans in terms of paragraph 22(e) of the Banking Regulations 2000, S.I.205 of 2000, at the lapse of 360 days, which, it argued, placed them in the ambit of section 15(2)(a) of the Income Tax Act.

The court a quo held, that, a past due date loan could not be categorised as a loss when the loan was well secured and/or where legal action to satisfy the loan has commenced. It held that a loan could be classified as a loss when it is established that it can no longer be recovered.

It was established, that, the appellant had not commenced legal proceedings against its first borrower when the debt was written off.

It was therefore held, that, the appellant had failed to discharge the onus upon it to prove, on a balance of probabilities, that the loan was not recoverable at the time that the loss was declared.

In respect of the appellant's remaining three borrowers, it was established, that, their matters were under legal proceedings, wherein the respondent had secured judgments against the borrowers but had only partially recovered the total amount due to it. Sureties for the three borrowers had not yet been sued.

The court a quo held, that, the appellant had failed to establish, on a balance of probabilities, that the debts written off were unrecoverable and constituted a loss.

It held, that, the appellant had failed to establish loss as provided for in terms of paragraph 22(e) of the Banking Regulations 2000, S.I.205 of 2000 or debt in terms of section 15(2)(g) of the Income Tax Act, thus precluding the appellant from claiming income tax deductions thereon.

The court a quo therefore dismissed the appellant's appeal.

Aggrieved by the decision of the court a quo, the appellant noted an appeal to this Court on the following grounds:

GROUNDS OF APPEAL

“1. The court a quo erred in finding that there is no distinction between the expenditure incurred on general administration and management as contemplated by section 16(1)(r) of the Income Tax Act [Chapter 23:06] and remuneration for reimbursement of specific services or expenses paid by a subsidiary to a holding company.

2. The court a quo erred in finding that the disputed expenses constituted expenditure on general administration and management as contemplated by section 16(1)(r) of the Income Tax Act and were properly disallowed.

3. The court a quo erred in finding that bad debts written off by a commercial bank (specifically in terms of the Banking Regulations SI205/2000) cannot constitute expenses incurred for the purpose of trade or in the production of income as contemplated by section 15(2)(a) of the Income Tax Act.

4. The court a quo erred in finding that the disputed debts could not be categorized as losses in terms of paragraph 22(e) of the Banking Regulations.

5. Alternatively, the court a quo erred in finding, that, the disputed debts were not bad debts and therefore deductible from the appellant's income in terms of section 15(2)(g) of the Income Tax Act.”

The appeal raises two issues for determination:

1. Whether or not the court a quo erred in determining that there was no distinction between general costs, as provided for in section 16(1)(r) of the Income Tax Act, and specific costs incurred by a subsidiary in favour of its foreign holding company.

2. Whether or not the court a quo erred in finding that the disputed debts were improperly written off as bad debts and therefore not deductible from the appellant's income in terms of section 15(2)(a) or section 15(2)(g) of the Income Tax Act.

SUBMISSIONS MADE BY THE PARTIES

Counsel for the appellant submitted, that, the court a quo did not make a finding on the nature of the services, but, rather, the recipient of the services. He further submitted, that, the nature of the expenses was not distinguished as that is not in the judgment of the court a quo.

On the deductibility of bad debts, he argued, that, as per Salisbury Board of Executors Ltd v Commissioner of Taxes 1941 SR 147, such deductions depended on whether the losses are in the course of the business of banking or money lending.

He contended, that, debts written off constitute losses of a revenue nature.

Counsel for the appellant submitted, that, section 15(2)(a) and (g) of the Income Tax Act are distinct and it was difficult to see which one the court a quo was using between the two.

He asserted, that, section 15(2)(a) of the Income Tax Act applied primarily to and regulates a situation where there is a secondary consideration. He contended, that, in terms of section 15(2)(a), all that needs to be proved is that bad debts were written off. Counsel for the appellant argued, that, the criterion in the banking regulation was met bringing the claim in the purview of section 15(2)(a) and not (g) of the Income Tax Act.

Counsel for the respondent submitted, that, the judgment of the court a quo is correct.

He argued, that, when interpreting any statute, the context is a major consideration as indicated in Zambezi Gas (Pvt) Limited v N R Barber (Pvt) Limited & Anor SC03-20.

Counsel for the respondent submitted, that, the appellant and Nedbank (South Africa) are related parties.

He further argued, that, the agreement between the parties stated that the services were general.

He contended, that, the heading thereon is management support agreement between the appellant and Nedbank (South Africa) and that the nature of the services is clear from the agreement itself.

Counsel for the respondent argued, that, the purpose of section 16(1)(a) of the Income Tax Act is not to distinguish between general and specific costs.

He submitted, that, a specific service may be paid for in an exercise of rendering general and administrative services. He further submitted, that, in any event, the appellant's witness stated, that, all expenses can be labelled under specific expenses.

Concerning the issue of bad debts, counsel for the respondent submitted, that, Salisbury Board of Executors Ltd v Commissioner of Taxes 1941 SR 147 is not relevant in this case as section 15(2)(g) of the Income Tax Act was not in existence in its current form at the time of the (1941) judgment.

He argued, that, the thrust of the respondent's submission is that there were no actual losses incurred.

He further argued, that, in 2011, the appellant held security which was sufficient to cover the debts and that it was its duty, in terms of section 15(2)(g) of the Income Tax Act, to be satisfied that the debts were bad.

Counsel for the respondent contended, that, the discretion of the Commissioner was properly exercised.

In response, counsel for the appellant submitted, that, the respondent was attempting to use the agreement to blanket all expenses as general when there is a clear distinction in the provision of services.

Concerning the issue of bad debts, he argued, that, the main consideration was that it was a loss incurred in the course of trade.

APPLICATION OF THE LAW TO THE FACTS

2. Whether or not the court a quo erred in finding that the disputed debts were improperly written off as bad debts and therefore not deductible from the appellant's income in terms of section 15(2)(a) or section 15(2)(g) of the Income Tax Act

The court a quo upheld the decision of the respondent that the disputed debts were improperly written off as bad debts as the appellant had collateral security in respect of each debt. The evidence placed before the court a quo establish that each debt was secured by a mortgage bond over immovable property and sureties.

It held, that, the appellant had failed to produce any documents justifying the need to write-off the debts and that the Commissioner had properly disallowed the deductions of bad debts.

Counsel for the appellant relied on the decision in Salisbury Board of Executors Ltd v Commissioner of Taxes 1941 SR 147, where it was held, that, such deductions depended on whether the losses are in the course of the business of banking or money-lending.

The court a quo held, that, the issue before that court was not on the interpretation of section 15(2)(g) of the Income Tax Act but was an obiter statement hesitantly made in passing.

A reading of the case confirms the court a quo's observation.

Commenting on the effect of Salisbury Board of Executors Ltd v Commissioner of Taxes 1941 SR 147, counsel for the respondent said it was an irrelevant precedent as the case was considering the statute as it then was and not as it now is.

I agree with his submission.

A statute which has been amended should be interpreted according to its current wording.

An interpretation given to it before an amendment which substantially altered the law is not binding precedent.

In this case, section 15(2)(g) of the Income Tax Act was amended and substituted by Act 10 of 2009 and now reads as follows:

“(g) The amount of any debts due to the taxpayer, to the extent to which they are proved to the satisfaction of the Commissioner to be bad, if such amount is included in the current year of assessment or was included in any previous year of assessment in the taxpayer's income either in terms of this Act or a previous law;
[Paragraph substituted by Act 10 of 2009].”

The section must be read together with the Banking Regulations SI205 of 2000 which also came into force long after the 1941 decision.

These changes must therefore be taken into account in interpreting the amended law.

I therefore agree with the court a quo, that, Salisbury Board of Executors Ltd v Commissioner of Taxes 1941 SR 147 is not a reliable precedent, and had no binding effect on the court a quo.

The purpose of amending a law is to bring into effect the legislature's current intention.

The legislature's new intention must prevail over its former intention.

Reference to the former law must be construed to mean the law which was in existence immediately before the amendment and subsection of section 15(2)(g) of the Income Tax Act by Act 10 of 2009. It does not mean the law as it was in 1941 as the 1941 provision and those which followed it were rendered inoperative by the coming into force of the 2009 amendment.

Section 15(2)(a) of the Income Tax Act provides for deductions which can be made by a taxpayer as follows:

“(2) The deductions allowed shall be —

(a) Expenditure and losses to the extent to which they are incurred for the purposes of trade or in the production of the income except to the extent to which they are expenditure or losses of a capital nature;”

The provisions of section 15(2)(a) of the Income Tax Act provide, in general, for deductions of expenditure and losses incurred for the purposes of trade which can be deducted to the extent to which they are expenditure or losses of a capital nature.

It is apparent, that, section 15(2)(a) is of general application. Its provisions are subordinated to those of section 15(2)(g) which provides for the circumstances under which the deduction of losses can be allowed.

Section 15(2)(g) of the Income Tax Act, which provides for the circumstances under which bad debts can be deducted, provides as follows:

“(2) The deductions allowed shall be —

(g) The amount of any debts due to the taxpayer to the extent to which they are proved to the satisfaction of the Commissioner to be bad, if such amount is included in the current year of assessment or was included in any previous year of assessment in the taxpayer's income either in terms of this Act or a previous law;”...,.

Section 15(2)(g) of the Income Tax Act should be read together with section 22(e) and 24 of the Banking Regulations, 2000 SI205 of 2000; but, what is apparent from the reading of section 15(2)(g) of the Income Tax Act is that the loss must be proved to the satisfaction of the Commissioner to be a bad debt.

It therefore will not be granted on the say so of the tax payer to be a bad debt.

The taxpayer has to prove to the Commissioner that it is a bad debt. If the Commissioner is not satisfied that it is a bad debt, he is, at law, entitled to disallow the deduction.

Section 22(e) of the Banking Regulations 2000, SI205/2000 reads as follows:

“22 For the purpose of this Part, every banking institution shall classify all assets according to the following gradations -

(a)…,. n/a

(b)…,. n/a

(c)…,. n/a

(d)…,. n/a

(e) 'loss' if the asset in question -

(i) Is past due for more than 360 days, unless such asset is well secured and legal action has actually commenced which is expected to result in the timely realisation of the collateral or enforcement of any guarantee relating to the asset; or

(ii)...,. n/a

(iii) Is otherwise considered uncollectable or of such little value that its continuance as an asset is not warranted:

Provided that a loss classification shall not preclude the possibility of recovering the asset or securing a salvage value for it.”...,.

Section 22 of the Banking Act clearly states, that, the purpose of the gradations is for the classification of a banking institution's assets. This means they remain assets of the bank as section 22 ends by saying: “Provided that a loss classification shall not preclude the possibility of recovering the asset or securing a salvage value for it.”

This means mere classification as a 'loss' does not prove an irrecoverable loss of the asset.

The Commissioner will, in such circumstances, be justified in disallowing the deduction, if he is not satisfied that such a 'loss' is a bad debt.

The taxpayer must therefore prove, to the satisfaction of the Commissioner, that, the debt is no longer recoverable.

It is not enough to merely deduct it as a bad debt without attaching proof that it is no longer recoverable.

Section 24 of the Banking Regulations 2000, S.I.205/2000 provides as follows:

“A loan or asset graded 'loss' shall be immediately written off, whether or not the banking institution intends or is in the process of attempting to recover the loan or asset.”...,.

This again proves the inconclusiveness of the gradations, as an asset can be written off even if the Bank intends or is in the process of attempting to recover it.

The Commissioner cannot be expected to be satisfied that such a 'loss' constitutes a bad debt.

The law requires the Commissioner to be satisfied that the debt is indeed a bad debt in terms of section 15(2)(g) of the Income Tax Act before allowing deductions to be made.

The Commissioner should therefore carefully assess the alleged bad debts for him to be satisfied that they have been properly claimed in terms of the law. If he is reasonably and justifiably not satisfied, the law allows him to refuse to allow the deduction of the alleged bad debts.

A perusal of the record establishes, that, in respect of each borrower, the appellant had indeed not exhausted its rights against sureties and was receiving payments from the borrowers during the period of litigation.

It was, therefore, not legally correct for such debts to be deducted as bad debts whilst they could still be recovered from the sureties and while the borrowers were making further payments.

Commenting on the status of the four borrowers whose debts the appellant had written off as bad debts and deducted in its self-assessment of 2011, the court a quo said:

“The appellant declared the losses on 29 April 2011. At that time, it was the mortgagee of the encumbered property, which belonged to a third party and not the first borrower. That property had been independently valued by valuators engaged by appellant a year before, on 11 February 2010, at US$1.1 million.

The appellant did not conduct another independent valuation before declaring the loss.

We know, from the letter written by NSSA on 23 February 2011, that independent valuers engaged by NSSA between 11 February and 23 March 2011 had valued the property at US$2.7m.

The pleadings and the evidence of the Head of Credit never did explain why the appellant never sought satisfaction of the loan from that property and other properties encumbered by unlimited guarantees such as the amalgamated contiguous building guaranteed by LB (Pvt) Ltd, which, according to the letter of the borrower's managing director of 2 April 2009, was unencumbered....,

The Head of Credit did not produce any evidence of the valuations done in 2011 either by an independent valuer or by a desktop valuer. He did not intimate that any such evidence was availed to the investigators or the Commissioner.

I have already highlighted the weaknesses in the evidence provided by the appellant in respect of the first borrower. Those findings apply with equal force in the consideration of the satisfaction issue. I am not satisfied that there was an unlikelihood of realization of the securities held by the appellant against the debt of the first borrower.

In regards to the second borrower, the security would have been sufficient to meet its indebtedness had it been executed in 2011.

The debt went 360 days past due in July 2010. The Head of Credit was wont to say, ad nauseum, that properties were overvalued in 2009 when the United States dollar was introduced into the multicurrency monetary basket in Zimbabwe and progressively fell in nominal terms in subsequent years.

Apparently, the trend was debunked by the residential property that secured the second borrower's debt for it was sold by the Sheriff, in 2015, for US$57,500 and the surety complained that the price was too low.

I agree with Mr Magwaliba that the property could have been worth much more in 2011. It would have been able to cover the second borrower's debt.

The appellant wrongly considered the debt bad. The Commissioner properly disallowed it from the appellant's 2011 income tax return.

In respect of the third borrower, the debt went 360 days past due in May 2010. The security was disposed of in the Sheriff's sale in execution in November for US$35,000, an amount which was greater than the debt owing but which the Sheriff considered too low such that he invoked the private treaty route.

The reasoning adopted in the second borrower's case applies with equal force to the present matter.

I am satisfied that the value of the security would have most likely covered the debt that was considered bad by the appellant in the 2011 tax year. The Commissioner correctly disallowed it from the appellant's 2011 income tax return.

Lastly, the debt of the fourth borrower went 360 days past due in March 2010. The debt had increased to US$26,225=78 from the original amount of US$20,000 by the time judgment was taken in 2011.

The property was valued at US$31,250 at the time the facility was availed to the fourth borrower.

The property attracted the highest bid of US$7,000 at the Sheriff's sale in execution conducted in March 2015, a price, which, at the date of hearing of this appeal, was still awaiting the Sheriff's confirmation.

The appellant did not produce any valuation evidence which would have tended to justify the partial write off of the debt. The appellant failed to show, on a balance of probabilities, that the security was inadequate to cover the outstanding debt in 2011.

I am not satisfied that the security was inadequate to cover the outstanding amount.

The Commissioner correctly disallowed the deduction claimed in respect of the fourth borrower in the appellant's 2011 income tax return.”

When legal proceedings were instituted, the second borrower owed the appellant US$40,000. During the contested action, the second borrower made intermittent payments of US$17,191=13. The mortgaged property was sold at US$57,500 at the Sheriff's sale - a price much higher than the amount owed.

The third borrower owed US$26,677=27. The mortgaged property was sold for US$35,000 at the Sheriff's sale - again a price much higher than the amount owed.

The fourth borrower had been placed under liquidation. The appellants argue that that rendered the debt a bad debt.

This is not correct as a debt can be recovered even if a company is under liquidation subject to certain conditions.

A debt can only be rendered irrecoverable when the company has wound up and closed.

In Allied Bank Ltd v Dengu & Anor SC52-16, this Court remarked as follows:

“The court was not persuaded by Mr Matinenga's submissions. Section 213 of the Companies Act provides as follows;

'In a winding up by the court —

(a) No action or proceeding shall be proceeded with or commenced against the company except by leave of the court and subject to such terms as the court may impose;

(b) Any attachment or execution put in force against the assets of the company after the commencement of the winding up shall be void;

(c) Every disposition of the property, including rights of action of the company and every transfer of shares or alteration in the status of its members, made after the commencement of the winding up, shall, unless the court otherwise orders, be void.'

What can be noted from the above section is that where the company is a defendant, no action can be proceeded with or commenced against the company without leave of the court.

This section states, that, the only circumstance in which the leave of the court is required 'to proceed' or 'to continue' with the proceeding is where the company that fell under liquidation during the proceedings, is a defendant/respondent.”…,.

In light of the above, it is clear that a company under liquidation can be sued subject to being granted leave to do so by the court.

It is my view, that, if sureties have not yet been sued, a debt cannot be classified as a bad debt.

The court a quo was therefore correct when it held, that, there was still a possibility of recovering the appellant's money from the borrower. The appellant should therefore not have passively rendered it a bad debt.

The appellant had to join the queue of other creditors and could only treat it as a bad debt if all this had been exhausted.

Over and above the fourth borrowers ability to liquidate its debt through sureties and payments to creditors by a company under liquidation, the appellant had, during litigation, received intermittent payments of US$13,123=55 from the borrower....,.

The court a quo took into consideration the facts of each borrower's debt and correctly held, that, the security provided for each debt, plus the value of the properties mortgaged for each debt, did not prove that the debts were unrecoverable.

It correctly dismissed the appellant's appeal.

There is no merit in the appellant's appeal. In respect of costs, there is no reason why they should not follow the result.

It is accordingly ordered as follows:

'The appeal be and is hereby dismissed with costs.'

HB60-15 : JABULANI NCUBE vs INNOCENT NYATHI
Ruled By: MOYO J

This is an application for condonation of the late filing of an application for rescission of judgment.

The parties have been engaged in protracted litigation dating far back as 2006.

The parties, in 2006, entered into a loan agreement. Part of the terms of the loan agreement were that:

“That the loanee offers his house, being Stand 32699 Bulawayo Township of Bulawayo Township Lands as security.”

Clause 10 of the loan agreement also provides as follows:

“In the event the loanee breaches any content of this agreement, the house that he has given as security to the loaner shall hold him to this agreement (sic) and claim transfer of the pledged stand number 32699 Entumbane area (above-named).”

In this matter, the applicant was the loanee and the respondent was the loaner.

The applicant did make some payments towards the loan, although it looks like they were not made timeously. It is also not clear as to whether the loan was paid up or not.

In such applications, what is central are the following principles:

“It is well established, that, in considering application for condonation, the court has a discretion to be exercised judicially upon a consideration of all the facts, and that, in essence, it is a question of fairness to both sides.

In this enquiry, relevant considerations may include the degree of success…, (agreements); the importance of the case; the respondent's interest in the finality of his judgment; and the avoidance of an unnecessary delay in the administration of justice.

The list is not exhaustive.

These factors are not individually decisive but are inter-related and must be weighed one against the other; thus, a slight delay and a good explanation, may help compensate for prospects of success which are not strong.”

Per the case of United Plant Hire (Pvt) Ltd v Hills & Ors 1976 (1) SA 717 (A)…,.

Our Supreme Court also listed the considerations relevant to the determination of such an application in the case of KM Auctions (Pvt) Ltd v Adanesh Samuel & Anor SC15-12.

In this case, they were listed as:

(i) The degree of non-compliance.

(ii) The explanation for it.

(iii) The importance of the case.

(iv) The prospects of success.

(v) The respondent's interest in the finality of the case.

(vi) The convenience of the court.

(vii) The avoidance of unnecessary delay in the administration of justice.

Apparently, the delay in this matter has been quite lengthy; initially, a default judgment against the applicant was rescinded in 2008, the applicant did nothing, prompting the respondent to seek directions on how to proceed.

Eventually, default judgment awarding the respondent Stand 32699 Entumbane Township was granted on 10 November 2011.

The applicant states, in his founding affidavit, that, he learnt of the default judgement in February 2012, when the respondent intended to evict him from the said property. He states, that, his legal practitioner relocated and went to Botswana and that he never was aware that the legal practitioner had relocated and that there were court proceedings against him. He then approached another firm of lawyers who filed an urgent application for stay of execution that was eventually dismissed.

He says he then had financial problems and could not approach lawyers for assistance.

He then approached his current legal practitioners who advised him, that, condonation had to be sought in order to file an application for rescission of judgment.

The applicant has not gone into much detail as to the specific times he approached these different firms of lawyers. His explanation lacks information and is very slippery. He does not volunteer much information on the delay of more than two (2) years counting from February 2012 to October 2014 when this application was filed.

He tries to blame the departure of his legal practitioner from Zimbabwe to Botswana.

However, he had a duty to check on his matter and not wait until when he hears from the Deputy Sheriff upon execution of the order. A diligent litigant does not wait for his lawyer to communicate with him - especially when the lawyer becomes silent. The litigant is duty bound to enquire from his legal practitioner the status of his case.

In any event, the legal practitioner in question was no longer in the picture from February 2012 when the applicant became aware of the judgment against him.

In this regard, STEYN CJ, in the case of Salajee & Anor NNO v Minister of Community Development 1965 (2) SA 135…, said:

“A litigant…, is not entitled to hand over a matter to his attorneys and then wash his hands of it. If, as here, the stage is reached where it must become obvious also to a layman that there is a protracted delay, he cannot sit passively by, without so much as directing any reminder or enquiry to his attorney…,.”

I accordingly make a finding that:

The applicant was negligent in the prosecution of his own case. He has difficulty explaining the delay. What he has attempted to throw in as an explanation for the delay does not hold any water.

Having found, that, the delay has not been explained to the satisfaction of the court, I therefore move on to find if there are any other factors that could find favour in the applicant's situation, for, the enquiry does not end with the reasonableness or otherwise of the explanation for the delay.

It goes beyond that.

In the case of Mahachi v Barclays Bank of Zimbabwe SC06-06, it was held, that, in a case where no acceptable explanation for non-compliance with the Rules has been given, the applicant must show very good prospects of success.

In the case of Melane v Santana Insurance Co. Ltd 1962 (4) SA 531 (A)…, it was stated thus:

“In deciding whether sufficient cause has been shown, the basic principle is, that, the court has a discretion, to be exercised judicially upon a consideration of all the facts, and, in essence, it is a matter of fairness to both sides.

Among the facts usually relevant are the degree of lateness, the explanation therefore, the prospects of success, and the importance of the case. Ordinarily, these facts are interrelated, they are compatible with a true discretion, save of course that if there are no prospects of success there would be no point in granting condonation.

An attempt to formulate a rule of thumb would only save to harden the arteries of what should be a flexible discretion. What is needed is an objective conspectus of all the facts.

Thus, a slight delay and a good explanation may help to compensate for prospects of success which are not strong or the importance of the issue may tend to compensate for a long delay. And the respondent's interest in finality must not be overlooked.”…,.

I now turn to assess the merits.

In this case, the parties entered into a loan agreement, on the face of it which strikes as an agreement that has certain terms, like clause 10, that may be found to be unlawful.

Clause 10 of the agreement, in my view, is a pactum commissorium.

A pactum commissorium is defined, in the case of Chimutanda Motor Spares (Pvt) Ltd v Musare & Anor 1994 ZLR 310 (H), as:

“A pact by which the parties agree, that, if the debtor does not, within a certain time, release the thing given in pledge by paying the entire debt, after the lapse of the time fixed, the full property in the thing will irrevocably pass to the creditor in payment of the debt.”

WILLES, Principles of South African Law, 8th Edition…, established, that, a valid pledge merely confers the right to retain possession of the thing pledged as security by the pledgor as long as the debt remains unpaid - it does not confer the right of ownership. The pledger retains ownership of the pledged property.

It would appear, that, from the afore-stated authorities, there is a well grounded contention, prima facie, that the agreement between the parties, and the subsequent transfer of the property to the respondent, was in fact premised on an illegality.

There is also a problem raised by a reading of the two (2) letters written by both the applicant's former legal practitioner to the respondent's legal practitioner and the respondent's legal practitioner's response thereto.

These are annexure C on page 28 and the unmarked annexure on page 29 of the bound record.

Annexure C is a letter written by the applicant's former legal practitioner to the respondent's legal practitioner. It is dated 21 March 2007. It reads as follows:

“Re: Jabulani Ncube vs Innocent Nyathi

The above matter refers.

Please find attached the sum of $630,000 (Zim Dollars) being the full and final payment of ours indebtedness to yours.

We accordingly await receipt of your notice of withdrawal.”

On 26 March 2007, the respondent's legal practitioners responded in the following manner:

“Re: Jabulani Ncube & Innocent Nyathi

Your letter of 21st instant refers.

We have receipted your client's payment and wish to quickly indicate that:

There is the issue of costs which your client has to settle, and these, on a comprise, are, $370,000 +15% VAT = $425,000.

There is the issue of inflation, as discussed by clients, which, however, is not part of the summons.

Therefore, if your client pays ours within 7 days of the date of this letter we shall withdraw the matter.

Your client's payment is not full and final bill (sic).”

It is important to note, that, these letters give an impression that the debt was paid up save for costs.

The interest referred to in the letter from the respondent's lawyers, is, by their own admission, not part of the summons.

The immediate question that arises therefore is: what then was the cause of the transfer of the house from the applicant to the respondent when the debt was seemingly paid up save for costs?

Is there not a danger that the respondent was paid the debt in cash and also took the immovable property?

Even if a balance could be found to have been owing on the loan, would it equate to the appropriation of the immovable property whose value was not even established for purposes of settlement of the loan?

I am of the considered view, that, the applicant has a good case on the merits.

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Debt re: Security, Executable Assets, Jus In re Aliena, Parate Executie or Summary Execution and Pactum Commissorium

HH720-14 : PANDHARI LODGE (PVT) LTD and SUNDAY CHIFAMBA and SWISIDAYI NYAMUFUKUDZA vs CENTRAL AFRICA BUILDING SOCIETY and DEPUTY SHERIFF
Ruled By: MANGOTA J

View Appeal
HH385-13 : WEBSTER RUSHESHA (guardian of Panashe and Tivonge Rushesha) and RASAR INV PL vs ALEXIOUS DERA and ZIMCOR TRUSTEES LTD and FRANK BUYANGA and BOKA INV PL and MATTHEW BOKA and ANOR
Ruled By: ZHOU J

Appealed
SC14-19 : JUDITH ISHEMUNYORO (NEE MANDIDEWA) vs ANTHONY ISHEMUNYORO and TYNSERVE DISTRIBUTORS (PVT) LTD and THE REGISTRAR OF DEEDS and THE SHERIFF FOR ZIMBABWE
Ruled By: GWAUNZA JA, HLATSHWAYO JA and ZIYAMBI AJA

View Appeal
HH348-17 : JUDITH ISHEMUNYORO (nee MANDIDEWA) vs ANTONY ISHEMUNYORO and TYNSERVE DISTRIBUTORS (PVT) LTD and THE REGISTRAR OF DEEDS and THE SHERIFF FOR ZIMBABWE
Ruled By: MUNANGATI-MANONGWA J

Appealed
SC21-19 : RONALD BAKARI vs TOTAL ZIMBABWE (PRIVATE) LIMITED
Ruled By: GARWE JA, GUVAVA JA and BHUNU JA

View Appeal
HH222-16 : TOTAL ZIMBABWE (PVT) LTD vs RONALD BAKARI
Ruled By: DUBE J

View Appeal
HH273-16 : KINGDOM BANK LIMITED vs THE RIGHT INVESTMENTS (PVT) LTD and OPIUM INVESTMENTS (PVT) LTD and PHILLIPA COUMBIS
Ruled By: CHAREWA J

View Appeal
HH273-16 : KINGDOM BANK LIMITED vs THE RIGHT INVESTMENTS (PVT) LTD and OPIUM INVESTMENTS (PVT) LTD and PHILLIPA COUMBIS
Ruled By: CHAREWA J

HH203-14 : CALEB DENGU and WILSON TENDAI NYABANDA vs ZIMBABWE ALLIED BANKING GROUP LIMITED
Ruled By: MATANDA-MOYO J

HH183-15 : ZB BANK LIMITED vs ERIC ROSEN (PVT) LTD and ERIC ANTHONY ROSEN and ELIZABETH ROSEN
Ruled By: MAFUSIRE J

Appealed
SC16-20 : INFRASTRUCTURE DEVELOPMENT BANK OF ZIMBABWE vs ENGEN PETROLEUM ZIMBABWE (RIVATE) LIMITED
Ruled By: GUVAVA JA, MAVANGIRA JA and ZIYAMBI AJA

View Appeal
HH253-16 : ENGEN PETROLEUM ZIMBABWE [PVT] LTD vs WEDZERA PETROLEUM [PVT] LTD and INFRASTRUCTURE DEVELOPMENT BANK OF ZIMBABWE
Ruled By: MAFUSIRE J

HH39-11 : BLUMO TRADING (PVT) LTD vs NELMAH MILLING COMPANY (PVT) LTD and NELSON MAHUPETE
Ruled By: PATEL J

HH135-16 : FRANCIS NYADINDU and SHILLAH NYADINDU vs BARCLAYS BANK OF ZIMBABWE LTD and SHERIFF OF THE HIGH COURT (N.O.) and REGISTRAR OF DEEDS (N.O.) and SOLID REAL ESTATE
Ruled By: DUBE J

HH240-18 : KENNETH SCHOFIELD vs FBC BANK LIMITED and THE SHERIFF OF THE HIGH COURT OF ZIMBABWE N.O.
Ruled By: CHIKOWERO J

Appealed
SC87-19 : PRECIOUS CHIPUNZA vs MOSLEY MASHINGAIDZE
Ruled By: PATEL JA, BHUNU JA and BERE JA

View Appeal
HH211-18 : MOSLEY MASHINGAIDZE vs PRECIOUS CHIPUNZA
Ruled By: MATANDA-MOYO J

HH14-15 : ELECTROFORCE WHOLESALERS (PVT) LTD and CHAMUNORWA MAWUNGANIDZE vs FBC BANK LIMITED
Ruled By: MAKONI J

SC40-15 : INDIUM INVESTMENTS (PVT) LTD vs KINGSHAVEN (PVT) LTD and DANIEL SHUMBA and LINDA SHUMBA
Ruled By: CHIDYAUSIKU CJ, GWAUNZA JA, GOWORA JA, HLATSHWAYO JA and MAVANGIRA AJA

View Appeal
HH677-14 : MAXWELL SIBANDA vs ZAMBE NYIKA/GWASIRA and REGISTRAR OF DEEDS and EVERJOY MEDA
Ruled By: MATANDA-MOYO J

SSC17-21 : MARRY MUBAIWA CHIWENGA vs THE NATIONAL PROSECUTING AUTHORITY and THE CLERK OF COURT ROTTEN ROW MAGISTRATE'S COURT
Ruled By: UCHENA JA

Appealed
SC97-21 : THE TRUSTEES FOR THE TIME BEING OF CORNERSTONE TRUST and JULIUS MAKONI and THE TRUSTEES FOR THE TIME BEING OF RYVONNE TRUST vs NMB BANK LTD
Ruled By: HLATSHWAYO JA, PATEL JA and MAVANGIRA JA

View Appeal
HH466-18 : NMB BANK LTD vs THE TRUSTEES FOR THE TIME BEING OF CORNERSTONE TRUST and JULIUS MAKONI and THE TRUSTEES FOR THE TIME BEING OF RYVONNE TRUST
Ruled By: ZHOU J

SC101-21 : EQUITY PROPERTIES (PVT) LTD vs ALSHAMS GLOBAL BVI LIMITED and REGISTRAR OF DEEDS
Ruled By: BHUNU JA, UCHENA JA and KUDYA AJA

SC102-21 : DOVES FUNERAL ASSURANCE (PVT) LTD vs FERNABY INVESTMENTS (PVT) LTD and QUECOM ENGINEERING (PVT) LTD and DENNIS NGORIMA and STANDARD CHARTERED BANK LTD and HOMELAND REAL ESTATE and THE SHERIFF
Ruled By: BHUNU JA, MATHONSI JA and CHITAKUNYE JA

HH974-15 : GUGULETHU HURASHA vs CENTRAL AFRICAN BUILDING SOCIETY and FIRST CAPITAL PLUS and ITAYI MUNYEZA and SHERIFF OF ZIMBABWE and MASTER OF THE HIGH COURT
Ruled By: NDEWERE J

SC140-21 : MBCA BANK (PRIVATE) LIMITED (Now known as Nedbank Zimbabwe Limited) vs ZIMBABWE REVENUE AUTHORITY
Ruled By: GUVAVA JA, UCHENA JA and MAKONI JA

HB60-15 : JABULANI NCUBE vs INNOCENT NYATHI
Ruled By: MOYO J

Categories

Law Portal Zimbabwe

Debt re: Security, Executable Assets, Jus In re Aliena, Parate Executie or Summary Execution and Pactum Commissorium

HH720-14 : PANDHARI LODGE (PVT) LTD and SUNDAY CHIFAMBA and SWISIDAYI NYAMUFUKUDZA vs CENTRAL AFRICA BUILDING SOCIETY and DEPUTY SHERIFF Ruled By: MANGOTA J

View Appeal HH385-13 : WEBSTER RUSHESHA (guardian of Panashe and Tivonge Rushesha) and RASAR INV PL vs ALEXIOUS DERA and ZIMCOR TRUSTEES LTD and FRANK BUYANGA and BOKA INV PL and MATTHEW BOKA and ANOR Ruled By: ZHOU J

Appealed SC14-19 : JUDITH ISHEMUNYORO (NEE MANDIDEWA) vs ANTHONY ISHEMUNYORO and TYNSERVE DISTRIBUTORS (PVT) LTD and THE REGISTRAR OF DEEDS and THE SHERIFF FOR ZIMBABWE Ruled By: GWAUNZA JA, HLATSHWAYO JA and ZIYAMBI AJA

View Appeal HH348-17 : JUDITH ISHEMUNYORO (nee MANDIDEWA) vs ANTONY ISHEMUNYORO and TYNSERVE DISTRIBUTORS (PVT) LTD and THE REGISTRAR OF DEEDS and THE SHERIFF FOR ZIMBABWE Ruled By: MUNANGATI-MANONGWA J

Appealed SC21-19 : RONALD BAKARI vs TOTAL ZIMBABWE (PRIVATE) LIMITED Ruled By: GARWE JA, GUVAVA JA and BHUNU JA

View Appeal HH222-16 : TOTAL ZIMBABWE (PVT) LTD vs RONALD BAKARI Ruled By: DUBE J

View Appeal HH273-16 : KINGDOM BANK LIMITED vs THE RIGHT INVESTMENTS (PVT) LTD and OPIUM INVESTMENTS (PVT) LTD and PHILLIPA COUMBIS Ruled By: CHAREWA J

View Appeal HH273-16 : KINGDOM BANK LIMITED vs THE RIGHT INVESTMENTS (PVT) LTD and OPIUM INVESTMENTS (PVT) LTD and PHILLIPA COUMBIS Ruled By: CHAREWA J

HH203-14 : CALEB DENGU and WILSON TENDAI NYABANDA vs ZIMBABWE ALLIED BANKING GROUP LIMITED Ruled By: MATANDA-MOYO J

HH183-15 : ZB BANK LIMITED vs ERIC ROSEN (PVT) LTD and ERIC ANTHONY ROSEN and ELIZABETH ROSEN Ruled By: MAFUSIRE J

Appealed SC16-20 : INFRASTRUCTURE DEVELOPMENT BANK OF ZIMBABWE vs ENGEN PETROLEUM ZIMBABWE (RIVATE) LIMITED Ruled By: GUVAVA JA, MAVANGIRA JA and ZIYAMBI AJA

View Appeal HH253-16 : ENGEN PETROLEUM ZIMBABWE [PVT] LTD vs WEDZERA PETROLEUM [PVT] LTD and INFRASTRUCTURE DEVELOPMENT BANK OF ZIMBABWE Ruled By: MAFUSIRE J

HH39-11 : BLUMO TRADING (PVT) LTD vs NELMAH MILLING COMPANY (PVT) LTD and NELSON MAHUPETE Ruled By: PATEL J

HH135-16 : FRANCIS NYADINDU and SHILLAH NYADINDU vs BARCLAYS BANK OF ZIMBABWE LTD and SHERIFF OF THE HIGH COURT (N.O.) and REGISTRAR OF DEEDS (N.O.) and SOLID REAL ESTATE Ruled By: DUBE J

HH240-18 : KENNETH SCHOFIELD vs FBC BANK LIMITED and THE SHERIFF OF THE HIGH COURT OF ZIMBABWE N.O. Ruled By: CHIKOWERO J

Appealed SC87-19 : PRECIOUS CHIPUNZA vs MOSLEY MASHINGAIDZE Ruled By: PATEL JA, BHUNU JA and BERE JA

View Appeal HH211-18 : MOSLEY MASHINGAIDZE vs PRECIOUS CHIPUNZA Ruled By: MATANDA-MOYO J

HH14-15 : ELECTROFORCE WHOLESALERS (PVT) LTD and CHAMUNORWA MAWUNGANIDZE vs FBC BANK LIMITED Ruled By: MAKONI J

SC40-15 : INDIUM INVESTMENTS (PVT) LTD vs KINGSHAVEN (PVT) LTD and DANIEL SHUMBA and LINDA SHUMBA Ruled By: CHIDYAUSIKU CJ, GWAUNZA JA, GOWORA JA, HLATSHWAYO JA and MAVANGIRA AJA

View Appeal HH677-14 : MAXWELL SIBANDA vs ZAMBE NYIKA/GWASIRA and REGISTRAR OF DEEDS and EVERJOY MEDA Ruled By: MATANDA-MOYO J

SSC17-21 : MARRY MUBAIWA CHIWENGA vs THE NATIONAL PROSECUTING AUTHORITY and THE CLERK OF COURT ROTTEN ROW MAGISTRATE'S COURT Ruled By: UCHENA JA

Appealed SC97-21 : THE TRUSTEES FOR THE TIME BEING OF CORNERSTONE TRUST and JULIUS MAKONI and THE TRUSTEES FOR THE TIME BEING OF RYVONNE TRUST vs NMB BANK LTD Ruled By: HLATSHWAYO JA, PATEL JA and MAVANGIRA JA

View Appeal HH466-18 : NMB BANK LTD vs THE TRUSTEES FOR THE TIME BEING OF CORNERSTONE TRUST and JULIUS MAKONI and THE TRUSTEES FOR THE TIME BEING OF RYVONNE TRUST Ruled By: ZHOU J

SC101-21 : EQUITY PROPERTIES (PVT) LTD vs ALSHAMS GLOBAL BVI LIMITED and REGISTRAR OF DEEDS Ruled By: BHUNU JA, UCHENA JA and KUDYA AJA

SC102-21 : DOVES FUNERAL ASSURANCE (PVT) LTD vs FERNABY INVESTMENTS (PVT) LTD and QUECOM ENGINEERING (PVT) LTD and DENNIS NGORIMA and STANDARD CHARTERED BANK LTD and HOMELAND REAL ESTATE and THE SHERIFF Ruled By: BHUNU JA, MATHONSI JA and CHITAKUNYE JA

HH974-15 : GUGULETHU HURASHA vs CENTRAL AFRICAN BUILDING SOCIETY and FIRST CAPITAL PLUS and ITAYI MUNYEZA and SHERIFF OF ZIMBABWE and MASTER OF THE HIGH COURT Ruled By: NDEWERE J

SC140-21 : MBCA BANK (PRIVATE) LIMITED (Now known as Nedbank Zimbabwe Limited) vs ZIMBABWE REVENUE AUTHORITY Ruled By: GUVAVA JA, UCHENA JA and MAKONI JA

HB60-15 : JABULANI NCUBE vs INNOCENT NYATHI Ruled By: MOYO J

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Law Portal
Zimbabwe

HH720-14 : PANDHARI LODGE (PVT) LTD and SUNDAY CHIFAMBA and SWISIDAYI NYAMUFUKUDZA vs CENTRAL AFRICA BUILDING SOCIETY and DEPUTY SHERIFF
Ruled By: MANGOTA J

View Appeal
HH385-13 : WEBSTER RUSHESHA (guardian of Panashe and Tivonge Rushesha) and RASAR INV PL vs ALEXIOUS DERA and ZIMCOR TRUSTEES LTD and FRANK BUYANGA and BOKA INV PL and MATTHEW BOKA and ANOR
Ruled By: ZHOU J

Appealed
SC14-19 : JUDITH ISHEMUNYORO (NEE MANDIDEWA) vs ANTHONY ISHEMUNYORO and TYNSERVE DISTRIBUTORS (PVT) LTD and THE REGISTRAR OF DEEDS and THE SHERIFF FOR ZIMBABWE
Ruled By: GWAUNZA JA, HLATSHWAYO JA and ZIYAMBI AJA

View Appeal
HH348-17 : JUDITH ISHEMUNYORO (nee MANDIDEWA) vs ANTONY ISHEMUNYORO and TYNSERVE DISTRIBUTORS (PVT) LTD and THE REGISTRAR OF DEEDS and THE SHERIFF FOR ZIMBABWE
Ruled By: MUNANGATI-MANONGWA J

Appealed
SC21-19 : RONALD BAKARI vs TOTAL ZIMBABWE (PRIVATE) LIMITED
Ruled By: GARWE JA, GUVAVA JA and BHUNU JA

View Appeal
HH222-16 : TOTAL ZIMBABWE (PVT) LTD vs RONALD BAKARI
Ruled By: DUBE J

View Appeal
HH273-16 : KINGDOM BANK LIMITED vs THE RIGHT INVESTMENTS (PVT) LTD and OPIUM INVESTMENTS (PVT) LTD and PHILLIPA COUMBIS
Ruled By: CHAREWA J

View Appeal
HH273-16 : KINGDOM BANK LIMITED vs THE RIGHT INVESTMENTS (PVT) LTD and OPIUM INVESTMENTS (PVT) LTD and PHILLIPA COUMBIS
Ruled By: CHAREWA J

HH203-14 : CALEB DENGU and WILSON TENDAI NYABANDA vs ZIMBABWE ALLIED BANKING GROUP LIMITED
Ruled By: MATANDA-MOYO J

HH183-15 : ZB BANK LIMITED vs ERIC ROSEN (PVT) LTD and ERIC ANTHONY ROSEN and ELIZABETH ROSEN
Ruled By: MAFUSIRE J

Appealed
SC16-20 : INFRASTRUCTURE DEVELOPMENT BANK OF ZIMBABWE vs ENGEN PETROLEUM ZIMBABWE (RIVATE) LIMITED
Ruled By: GUVAVA JA, MAVANGIRA JA and ZIYAMBI AJA

View Appeal
HH253-16 : ENGEN PETROLEUM ZIMBABWE [PVT] LTD vs WEDZERA PETROLEUM [PVT] LTD and INFRASTRUCTURE DEVELOPMENT BANK OF ZIMBABWE
Ruled By: MAFUSIRE J

HH39-11 : BLUMO TRADING (PVT) LTD vs NELMAH MILLING COMPANY (PVT) LTD and NELSON MAHUPETE
Ruled By: PATEL J

HH135-16 : FRANCIS NYADINDU and SHILLAH NYADINDU vs BARCLAYS BANK OF ZIMBABWE LTD and SHERIFF OF THE HIGH COURT (N.O.) and REGISTRAR OF DEEDS (N.O.) and SOLID REAL ESTATE
Ruled By: DUBE J

HH240-18 : KENNETH SCHOFIELD vs FBC BANK LIMITED and THE SHERIFF OF THE HIGH COURT OF ZIMBABWE N.O.
Ruled By: CHIKOWERO J

Appealed
SC87-19 : PRECIOUS CHIPUNZA vs MOSLEY MASHINGAIDZE
Ruled By: PATEL JA, BHUNU JA and BERE JA

View Appeal
HH211-18 : MOSLEY MASHINGAIDZE vs PRECIOUS CHIPUNZA
Ruled By: MATANDA-MOYO J

HH14-15 : ELECTROFORCE WHOLESALERS (PVT) LTD and CHAMUNORWA MAWUNGANIDZE vs FBC BANK LIMITED
Ruled By: MAKONI J

SC40-15 : INDIUM INVESTMENTS (PVT) LTD vs KINGSHAVEN (PVT) LTD and DANIEL SHUMBA and LINDA SHUMBA
Ruled By: CHIDYAUSIKU CJ, GWAUNZA JA, GOWORA JA, HLATSHWAYO JA and MAVANGIRA AJA

View Appeal
HH677-14 : MAXWELL SIBANDA vs ZAMBE NYIKA/GWASIRA and REGISTRAR OF DEEDS and EVERJOY MEDA
Ruled By: MATANDA-MOYO J

SSC17-21 : MARRY MUBAIWA CHIWENGA vs THE NATIONAL PROSECUTING AUTHORITY and THE CLERK OF COURT ROTTEN ROW MAGISTRATE'S COURT
Ruled By: UCHENA JA

Appealed
SC97-21 : THE TRUSTEES FOR THE TIME BEING OF CORNERSTONE TRUST and JULIUS MAKONI and THE TRUSTEES FOR THE TIME BEING OF RYVONNE TRUST vs NMB BANK LTD
Ruled By: HLATSHWAYO JA, PATEL JA and MAVANGIRA JA

View Appeal
HH466-18 : NMB BANK LTD vs THE TRUSTEES FOR THE TIME BEING OF CORNERSTONE TRUST and JULIUS MAKONI and THE TRUSTEES FOR THE TIME BEING OF RYVONNE TRUST
Ruled By: ZHOU J

SC101-21 : EQUITY PROPERTIES (PVT) LTD vs ALSHAMS GLOBAL BVI LIMITED and REGISTRAR OF DEEDS
Ruled By: BHUNU JA, UCHENA JA and KUDYA AJA

SC102-21 : DOVES FUNERAL ASSURANCE (PVT) LTD vs FERNABY INVESTMENTS (PVT) LTD and QUECOM ENGINEERING (PVT) LTD and DENNIS NGORIMA and STANDARD CHARTERED BANK LTD and HOMELAND REAL ESTATE and THE SHERIFF
Ruled By: BHUNU JA, MATHONSI JA and CHITAKUNYE JA

HH974-15 : GUGULETHU HURASHA vs CENTRAL AFRICAN BUILDING SOCIETY and FIRST CAPITAL PLUS and ITAYI MUNYEZA and SHERIFF OF ZIMBABWE and MASTER OF THE HIGH COURT
Ruled By: NDEWERE J

SC140-21 : MBCA BANK (PRIVATE) LIMITED (Now known as Nedbank Zimbabwe Limited) vs ZIMBABWE REVENUE AUTHORITY
Ruled By: GUVAVA JA, UCHENA JA and MAKONI JA

HB60-15 : JABULANI NCUBE vs INNOCENT NYATHI
Ruled By: MOYO J