Credit Facilities and Money Lending

HH04-08 : CECIL MADONDO (In his capacity as the duly appointed Liquidator of Century Discount House Ltd) vs ZIMBABWE BANKING CORPORATION
Ruled By: GARWE JP

On a careful analysis of the facts of this case, I am satisfied that the apparent dispute, on the facts, can be resolved by adopting a robust approach. It is clear that CDH operated a current account with Zimbank. By whatever name one may call it, CDH enjoyed an unsecured overdraft facility with Zimbank. No security ...

HH43-10 : KUDAKWASHE MAVINDIDZE and NYARADZO MAVINDIDZE vs MURISI MUKONOWESHURO
Ruled By: PATEL J

If, on the other hand, the Acknowledgement of Debt is premised on a disguised loan, as is contended by the defendant, the total sum, inclusive of capital and interest, claimed by the plaintiffs may well exceed the amount legally claimable under the in duplum rule. The Acknowledgement of Debt, and the loan, underlying it fall to ...

HH155-10 : BLESSMORE CHANAKIRA vs TAWANDA MAPFUMO and W.R. GABRAITH
Ruled By: CHIWESHE JP

On 29 October 2008 the applicant and the first respondent entered into a written agreement in terms of which the applicant advanced to the first respondent the sum of one hundred thousand United States dollars (the equivalent then of two hundred Old Mutual Ordinary Shares listed on the Stock Exchange). As a return on this investment, it was agreed that the applicant would be entitled to thirty percent of the capital sum invested “each and every month” regardless of the performance of the investment.

The thirty percent return was to accrue without deduction each and every month the capital sum remained outstanding, and, in the event the applicant did not withdraw the thirty percent return, such outstanding amounts were to accrue to the capital as capital.

Either party could terminate the agreement by giving one month's notice, and, in that event, the first respondent would be required to pay to the applicant the entire compounded capital plus any outstanding returns before the expiry of the thirty day notice period. Any payments still outstanding after the notice period would accrue thirty percent return on investment which would accrue to capital for each and every month it remained unpaid.

Disputes arising from the performance of the agreement were to be referred to arbitration.

It is common cause that at the time the capital sum of one hundred thousand United States dollars was advanced to the first respondent neither party had sought exchange control approval for that transaction as then required in terms of the Exchange Control Regulations, 1996. Similarly, the first respondent's repayment in terms of the agreement would have required exchange approval.

Following changes to the law, in February 2009, the need to seek exchange control approval fell away.

The first respondent failed to meet the terms of the agreement before and after February 2009. The applicant then terminated the agreement on 1 October 2009. However, on 13 October 2009, the parties entered into another written agreement. They signed an acknowledgement of debt in terms of which the first respondent acknowledged his indebtedness arising from his outstanding obligations under the terminated agreement. As assurance and security of his indebtedness, the first respondent surrendered to the applicant the title deeds of Stand 2253 Bluffhill Township, a property registered in his name.

It is common cause that on 17 September 2009, and on 9 October 2009, the first respondent made payments the total sum of which amounted to one hundred and fifty eight thousand United States dollars. The parties however failed to agree on the exact amount of money owed by the first respondent.

The parties then referred the matter to arbitration.

The arbitration process consisted of a claim by the applicant for payment in full in terms of the agreement between the parties and a defence by the first respondent who argued that the agreement constituted a loan and not an investment, and, as such, fell foul of the Money Lending and Rates of Interest Act [Chapter 14:14] as it bore interest rates above the stipulated levels.

The first respondent also argued that the agreement was illegal as it contravened the exchange control regulations as no authority had been obtained by either party to deal in foreign currency.

For these reasons, the first respondent argued that the agreement was against public policy and that therefore the arbitrator had no jurisdiction to determine the matters under it.

The arbitrator ruled that the agreement was not a loan but an investment and that, as such, the agreement was not against public policy as the in duplum rule did not apply. He however held, under paragraph 6.2 of his determination, that the agreement contravened the Exchange Control Regulations, 1996 in that authority to pay had not been sought from the Reserve Bank. He was of the view that as a result the agreement was subject to that suspensive condition whose non fulfillment rendered the agreement void. On that basis he dismissed the claim and held, further, that as the parties were both guilty, the in pari delicto rule applied and the loss must lie where it falls.

Aggrieved by that arbitral decision the applicant approached this court by way of the present application. He seeks an order to the following effect:

“IT IS DECLARED THAT:

1. Para 6.2 of the arbitration award handed down by the second respondent at Harare on 13 March 2010 in the arbitration proceedings between the applicant and the first respondent is contrary to the public policy of Zimbabwe.

2. Consequently, it is ordered that the said para 6.2 of the arbitration award aforesaid be and is hereby set aside in terms of art 34(2)(b)(ii) of the Unictral Model Law, First Schedule to the Arbitration Act [Cap 2:15].

3. Consequently, it is ordered, further, that the matter be and is hereby remitted back to the second respondent for the computation of the amount due to the applicant under the investment agreement between the applicant and the first respondent.

4. That the first respondent shall pay the costs of this application only if the application is opposed.”

Is the arbitration award contrary to the public policy of Zimbabwe?

In terms of Article 34 of the Model Law, a party may apply to the High Court for setting aside an arbitral award. Article 2 thereof provides:-

“(2) An arbitral award may be set aside by the High Court only if –

(a)…,.

(b) The High Court finds that –

(i) The subject matter of the dispute is not capable of settlement by arbitration under the law of Zimbabwe.

(ii) The award is in conflict with public policy of Zimbabwe.”

The applicant contends that the award is contrary to the public policy of Zimbabwe, inter alia, because it is contrary to the substantive law of Zimbabwe.

In terms of section 34(5), an award is in conflict with the public policy of Zimbabwe if the making of the award was induced by fraud or corruption or a breach of the rules of natural justice occurred in connection with the making of the award. However, the provision makes it clear that public policy may be impinged for reasons other than the above, by providing that the generality of paragraph 2(b)(ii) shall not be limited to these categories.

In Sasfin (Pty) Ltd v Beukes SA 1989 (1) the court had occasion to deal with the nature and extent of the elusive concept of “public policy”. In deciding whether an agreement is contrary to public policy the interests of the community or the public are of utmost importance. Agreements which are contrary to law or morality are contrary to public policy and may not be enforced. The court's power to declare transactions or contracts contrary to public policy should be exercised with caution and with a view to do justice as between individuals. It must be borne in mind that public policy upholds the freedom of contract and requires that “commercial transactions should not be unduly tramelled by restrictions on that freedom.” The power to declare contracts contrary to public policy should thus be exercised sparingly lest the whole field of contract is thrown into uncertainty as to the validity of contracts.

In ZESA v Maphosa 1999 (2) ZLR 452 (S) GUBBAY CJ…, had this to say…,:

“…, the approach to be adopted is to apply the public policy defence…, restrictively in order to preserve and recognize the basic objective of finality in all arbitrations: and to hold such defence applicable only if some fundamental principle of the law or morality or justice is violated.”…,.

At p466 of the same judgment it was held thus:

“An award will not be contrary to public policy merely because the reasoning or conclusions of the arbitrator are wrong in fact or in law. In such a situation the court would not be justified in setting the award aside…,. Where, however, the reasoning or conclusion in an award goes beyond mere faultiness or incorrectness and constitutes a palpable inequity that is so far reaching and outrageous in its defiance of logic or accepted moral standards that a fair minded person would consider that the conception of justice in Zimbabwe would be intolerably hurt by the award, then it would be contrary to public policy to uphold it.”

In this case, I agree with the arbitrator's decision in holding that the agreement was not a loan but an investment, in terms of which a return on investment rather than interest accruing on the capital sum loaned was payable.

HH206-10 : STANBIC BANK ZIMBABWE LIMITED vs FLAIR FURNITURE COMPANY (SUCCESSORS) LIMITED
Ruled By: MTSHIYA J

On 10 March 2010 the plaintiff issued summons against the defendant praying for the following relief - “(a) Payment of the amount of USD80,421=84; (b) Interest thereon at the rate of 9.07% per annum; (c) Costs of suit.” The background to the above claim is that on 22 April 2003, through a facility letter addressed to the defendant's Mr ...

On 10 March 2010 the plaintiff issued summons against the defendant praying for the following relief -

“(a) Payment of the amount of USD80,421=84;

(b) Interest thereon at the rate of 9.07% per annum;

The background to the above claim is that on 22 April 2003, through a facility letter addressed to the defendant's Mr Warren Lobel, the plaintiff advanced a loan facility to the plaintiff. The facility was at the defendant's request and the defendant duly confirmed its acceptance of the loan facility on 30 April 2003.

Some of the salient clauses in the facility provided as follows -

“3. FACILITY OFFERED

3.1 A composite facility comprising:-

Overdraft and/or;

Revolving Acceptance Credits and/or;

Productive Sector Finance and/or;

Export Finance Facility.

3.2 Post-Shipment Offshore Loans.

4. AMOUNT

4.1. The total amount available under the composite facility will be Z$150,000,000= only (One hundred and fifty million Zimbabwe dollars) only.

4.2. The total amount available under the Post-Shipment Offshore Loans facility will be ZAR850,000= (South African Rands eight hundred and fifty thousand only) and USD300,000= (Three hundred thousand United States Dollars only).

5. PURPOSE

5.1. Overdraft; to cover short term working capital requirements.

5.2 Revolving Acceptance Credits; to finance stocks and/or trade debtors.

5.3 Productive Sector Finance; to finance working capital requirements.

5.4 Export Finance Facility; to finance pre and post shipment exports.

5.5 Post Shipment Offshore Loans; to facilitate the importation of raw materials.

6. UTILISATION

6.1 ...,.

6.2 …,.

6.5 Post-shipment offshore loan

6.5.1 At the request of the Borrower, and subject to availability, the bank shall provide the borrower with an all-inclusive currency rate quotation for drawing under the Offshore Loan Facility in foreign currency.

6.5.2 The Borrower may request a specified value date provided a suitable notice of drawing is received by the bank within two business days of the Bank's quotation being given to the Borrower.

6.5.3 'Each Notice of Drawing' shall-

· Specify the currency of the drawing;

· The amount (which amount must not exceed 90% of CDI's submitted);

· The required value date and the maturity date. (The maturity date of each drawing will be a business day falling no later than 90 days from the value date subject to Exchange Control Approval and must tie in with date of expected receipt of export proceeds);

· Be accompanied by import documents to the value of the loan for payments to be made using the loan proceeds;

· Be accompanied by a copy of the CDI(s) covering the export transactions to be financed.

8. INTEREST & COMMISSION

8.1. Overdraft

Interest will be charged on daily balances and compounded monthly at the rate per annum of the Banks Prime Lending Rate (PLR presently 48% p.a. plus a margin of 3% per annum. A flat 2% establishment fee will be charged upon acceptance of this facility offer letter. Prime Lending Rate varies in the light of market conditions prevailing at any one time. The Bank reserves the right to give notice at any time and thereafter the Borrower continues to use the overdraft and does not repay it in full immediately, the Borrower will be deemed to have agreed to such other rate. Such notice shall be given on the Borrower's bank statement and will be advertised in the local press and the Borrower hereby accepts that this method of giving notice is valid and reasonable.

In the event of the agreed overdraft limit being exceeded without the prior approval of the Bank, or in the event of all sums outstanding not being paid immediately on the expiry date of this facility if called upon to do so, an excess availment fee of 10% p.a over the Prime Lending Rate will be charged on excess balances.

8.4 RBZ Statutory Reserve Export Finance Facility

Funds under this facility will attract an all inclusive interest rate of 5% per annum. Interest will be due and payable on maturity of the loan.

8.5 Post-shipment offshore Loans

Quotes are available on request, but will be based on libor rate plus 5% per annum. In addition, an establishment fee of 1% (Flat) is to be levied in the currency of the loan.

Interest and fees will be deducted from the proceeds of the export receipt on maturity of the loan.

9. APPROPRIATION OF PAYMENTS

The Bank shall have the right to appropriate the Borrower's payments to such of the Borrower's debts as it considers fit, and in the absence of any appropriation by the Bank to the contrary, the Borrower's payments shall be appropriated to interest due, and any balance remaining shall be appropriated to capital.

13. DEFAULT

If the Borrower shall fail to make payment by due date of any amount due in terms of the facility, or shall become insolvent, or shall be provisionally or finally sequestrated, or provisionally or finally wound up, or be unable to pay its debts as they become due, or be placed under provisional or final judicial management or enter into a scheme of arrangement with its creditors, or pass a resolution for the winding up of the Borrower, or should the Borrower commit any act of insolvency or any undertaking, terms or condition of this facility, or be placed under provisional or final judicial management or enter into a scheme of arrangement with its creditors, or pass a resolution for the winding up of the Borrower, or should the Borrower commit any act of insolvency or enter into any compromise with its creditors, or make default in the performance of any undertaking, term or condition of this facility, or if the Borrower acts in any way which, in the reasonable opinion of the Bank, may have a material adverse effect on the Borrower's ability to perform its obligations under this facility, then in any such event, the full amount of the facility, then outstanding, and all charges accrued thereon, together with default interest of PLR plus 10% p.a., shall immediately become due and payable.

14. GENERAL CONDITIONS

14.1 In the event of the Bank taking any proceedings to recover any amount due to it the amount due to it shall be determined and proved by a certificate signed by the Manager, Account Manager or Accountant of this branch of the Bank and such certificate shall be prima facie proof of the amount due by the Borrower and the onus shall be on the Borrower to disprove the accuracy of such certificate.”

On 30 April 2003, in its letter of confirmation of acceptance of the facility (i.e. the letter signed by the defendant's Chairman and Group Financial Manager), the defendant declared as follows -

“We confirm by signature hereunder, that the attached letter dated 22 April 2003 is acceptable to the addressee and that they set out all the terms and conditions of the facility.

Yours faithfully

for and on behalf of Flair Furniture Company (Successors) (Private) Limited.”

On the basis of the above agreement, which set out “all the terms and conditions of the facility”, seven draw downs on the loan were made as follows -

“1. USD34,929=52 value 22/10/03

2. USD36,305=99 value 23/10/03

3. USD46,772=09 value 23/12/03

4. USD37,614=51 value 07/11/03

5. USD39,620=20 value 10/12/03

6. USD39,620= value 23/12/03

7. USD49,364=68 value 31/12/03.”

On 30 June 2004 the loans were amalgamated into one composite loan of USD284,226=99, which loan, as at 10 March 2010 when the summons was issued, had an outstanding balance of USD$80,421=84. Despite demand from the plaintiff for payment, the defendant had, up to the issuance of the summons, not paid the amount.

It is the alleged non-payment of the above balance that led to these proceedings.

HH225-10 : SOUTHEND CARGO AIRLINES (PVT) LTD and STEPHEN CHITUKU and PATIENCE CHITUKU vs INFRASTRUCTURE DEVELOPMENT BANK OF ZIMBABWE and THE SHERIFF OF ZIMBABWE and THE DEPUTY SHERIFF
Ruled By: MTSHIYA J

This application was filed on 2 March 2009 for the following relief - “(a) The writ of execution issued under HC11569/98 be and is hereby set aside. (b) The judgment of this court granted under HC11569/98 is hereby held to have been fully paid and settled by the applicants.” This matter has a long history dating back from ...

This application was filed on 2 March 2009 for the following relief -

“(a) The writ of execution issued under HC11569/98 be and is hereby set aside.

(b) The judgment of this court granted under HC11569/98 is hereby held to have been fully paid and settled by the applicants.”

This matter has a long history dating back from 1997. The relevant brief background, which I deem necessary for the purposes of the determination required in this judgment, is as follows -

On 5 June 1997 the applicants were granted a loan facility by the first respondent (then operating as the Zimbabwe Development Bank) in the sum of ZWD6,200,000= in foreign currency. The salient parts of the Finance Agreement read as -

“Whereas Southend Cargo Airlines (Private) Limited has applied to the Bank for loan finance and the Bank has approved of said application. It is hereby agreed by the parties as follows:

Amount: Up to ZWD6,200,000= in foreign currency (six million two hundred thousand Zimbabwe dollars) to be spent as follows:

Down payment to secure the plane Z$6,200,000=

TERM AND INTEREST: Over a period of 60 months including up to 12 months Grace in respect of principal and payable monthly at an interest rate of 10.5% per annum at a variable rate for Risk Class C. Any amount past due attracts said interest rate plus an additional interest charge of 4% per annum and capitalised monthly until cleared:

FEES: A commission of 1% flat to be paid on or before loan signature and a commitment fee of 2%. Any additional fees and charges which may become payable as provided for in the General Conditions of the Finance Agreement will be advised when the event occurs.

REPAYMENT: Instalments of principal amount to be repaid in 48 equal monthly instalments beginning from 30 May 1998. Interest to be billed and paid monthly as from the beginning of 30 June 1997. The Bank may at its sole discretion levy a penalty to be advised on application for voluntary early repayment of the loan amount. The entire outstanding loan amount to be repaid in the event of the cancellation of lease. Stop order to be established through the client's commercial Bank.

SECURITIES: The loan amount shall be secured as follows:

At all times and for the validity of this loan, a First Mortgage Bond valued at Z$1,700,000= over Lot 2 of Lot 381, Highlands and a Notarial General Covering Bond valued at Z$5,200,000= (Five Million Two hundred thousand Zimbabwe dollars) over the company's moveable assets, together with shareholders sureties of Stephen Jackson Chituku and Patience Fadzai Chituku.

DISBURSEMENT:

Delivery to the Bank of signed original of this agreement, payment of the commission, delivery of signed resolutions of the company granting specific authority to raise this loan and authorising the signatory to enter into this agreement, signed surety and signed power of attorney shall be satisfied before the first disbursement of this loan.

REPORTING: The Bank shall from time to time seek financial and operational information from the company and in order to assist in this process, the following standard reports shall be prepared and submitted:

During implementation, a monthly report of progress and problems encountered and implanted as per the attached implementation schedule.

Within 30 days of each calendar quarter, income statement and balance sheet and cashflow of the company.

Within 60 days of the company's financial year end, an income statement and balance sheet in draft to be followed by a final set thereafter. Audited accounts may be requested if the need arises.

No future borrowings by the Borrower shall be entered into without the prior written consent of the Bank which consent shall not be unreasonably withheld.

SPECIAL CONDITIONS: Client to clear all the Mortgage Bonds on the property before disbursement of the funds.

GENERAL CONDITIONS: The conditions attaching to this loan are more fully explained in clauses 1 through to 36 of the attached.”

HH177-14 : BONIFACE DENENGA and LORRANE DENENGA vs ECOBANK ZIMBABWE (PVT) LTD and STRIVEWELL INVESTMENTS P/L (represented by Mr. Makuyana The Judicial Manager) and THE SHERIFF OF ZIMBABWE
Ruled By: MAWADZE J

The background facts of this mater are as follows. The first respondent, on 10 July 2013, issued summons out of this court claiming the following against the applicants and the second respondent jointly and severally the one paying the other to be absolved; “a. Payment of US$288,519=90 due in respect of an unpaid loan facility advanced ...

The background facts of this mater are as follows.

The first respondent, on 10 July 2013, issued summons out of this court claiming the following against the applicants and the second respondent jointly and severally the one paying the other to be absolved;

“a. Payment of US$288,519=90 due in respect of an unpaid loan facility advanced to first defendant (now 2^nd respondent) by the plaintiff (now 1^st respondent).

b. Interest at the penalty rate from time to time, currently at 24% per annum, compounded on a monthly basis with effect from 30 June 2013.

c. Payment of the sum of US$163,633=35 due in respect of an overdraft facility extended to the first defendant by the plaintiff.

d. Interest thereon at a penalty rate 24% per annum, compounded on a monthly basis with effect from 30 June 2013 to the date of full payment in full.

e. An order declaring a certain piece of land in this District of Salisbury, being Stand 375 Borrowdale Brook Township of Stand 137 Borrowdale Brook Township measuring 2,206 square metres specially executable.

f. Collection commission thereon calculated in accordance with By-Law 70 of the Law Society of Zimbabwe By-Laws 1982.

g. Costs of suit on a legal practitioner attorney–client scale.”

The first respondent, Ecobank Zimbabwe Ltd, is a duly registered company in terms of the laws of Zimbabwe and carries out business as a registered Commercial Bank. The second respondent, Strivewell Investments (Pvt) Ltd t/a Denenga Supermarkets is a duly registered company in terms of the laws of Zimbabwe. Both the first and second applicants, whose relationship is not clear, reside at No.375 Brook Way, Borrowdale Brook, Harare.

On 29 June 2012, the first respondent and the second respondent entered into a written agreement (attached to the declaration) in which the first respondent provided to the second respondent banking facility, firstly, as a loan payable on specified terms and overdraft facility also repaid on specified terms in the amounts claimed in the summons. The second respondent breached both the loan agreement and the agreement relating to the overdraft facility by failing to pay amounts due hence both amounts became immediately due and payable in accordance with the agreement….,.

The second respondent was served with the summons on 8 August 2013. Both the first and second applicants were served with the summons at their place of residence, No 375 Brook Way, Borrowdale Brook, Harare through their maid Esther Kubwire on 29 July 2013. Neither the second respondent nor the both first and second applicants entered an appearance to defend. On 10 October 2013, the first respondent applied for a default judgement which was granted by my brother MATHONSI J on 16 October 2013 as per the first respondent's claim in the summons. Subsequent to that, writ of execution against the immovable property, Stand 375 Borrowdale Brook Township of Stand 137 Borrowdale Brook Township in the District of Salisbury measuring 2,206 m² was issued on 5 November 2013. A notice of seizure and attachment was issued on 31 January 2014 with the removal date being 4 February 2014.

This triggered the filing of this urgent chamber application by the first and second applicants on 4 February 2014.

HH254-14 : NMB BANK LIMITED vs BRAITWOOD TRADING (PVT) LTD and BRABOURN INVESTMENTS (PVT) LTD and TAKESURE MAGORONGA and BERNARD MUTANGA
Ruled By: NDEWERE J

On 3 February 2011, the first defendant entered into an agreement with the plaintiff for a facility covering call loans, overdraft and off shore finance. The purpose of the facility was to assist the first defendant to purchase stock from overseas and local markets as well as day to day cash requirements.

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

The plaintiff issued summons against the defendants on 18 January 2013 for the payment of $521,686=47 being money lent and advanced to Onclass Investments (Pvt) Ltd. The plaintiffs, on its declaration, stated that such loan was given in terms of a credit facility agreement between the plaintiff and Onclass Investments (Pvt) Ltd. The two defendants acted as sureties and co-principal debtors with Onclass Investments. The plaintiffs sought an order declaring the second defendant's property, namely, Stand 120 Adylinn Township 6 of Stand 8 of Adylinn North held under Deed of Transfer number 46187 executable. The plaintiff sought interest, collection commission and costs on a higher scale against the defendants.

Both defendants entered appearance to defend. On 11 February 2013, the defendants requested further particulars amongst which they sought to be furnished with particulars of how the amounts were disbursed. Under paragraph 3(b) the following particulars were sought;

“3. Ad Paragraph 9

(a)…,.

(b) How was the money availed to the Principal Debtor? If it was by way of Banker's Acceptances copies thereof are requested.”

The plaintiff provided the further particulars as follows:-

“3. Ad Paragraph 3

(a) The money was disbursed into the principal debtor's account.

(b) Copies of the banker's acceptances are attached hereto as Annexures 'B1', 'B2', 'B3', 'B4', 'B5', 'B6', 'B7' and 'B8'”.

The defendants then filed an exception to the claim as follows:

“1. The plaintiff sues on a facility allegedly advanced in the form of banker's acceptances, Annexures “B1”to “B8” to the plaintiff's further particulars.

2. Banker's Acceptances are negotiable instruments within the contemplation of the Bills of Exchange Act [Cap 14:02].

3. A plaintiff who found a cause of action on a Bill of Exchange such as a Banker's Acceptance is obliged to allege that:

3.1. The plaintiff is the legal holder of a banker's acceptance that is due; and

3.2. The banker's acceptance was drawn and availed by the defendant; and

3.3 The banker's acceptance was presented for payment after the due date; and

3.4. The banker's acceptance was dishonoured; and

3.5. Notice of dishonour was given in terms of the Act.

4. The plaintiff has not alleged any of the essential requisites to relief founded on a banker's acceptance.

5. Consequently, the claim is bad in law for want of plea of a proper cause of action.”

The excepients argued that the respondent's cause of action is founded on Banker's Acceptance. However, the summons do not allege material facts to a suit founded on Banker's Acceptances. The excepients argued, therefore, that the summons do not disclose a cause of action.

The respondent, on the other hand, denied that its cause of action was based on Banker's Acceptances. It is the respondent's argument that its claim, as per the summons, is very clear. It is based on money lent and advanced to Onclass Investments (Pvt) Ltd in terms of a credit facility agreement. Such amounts were allegedly deposited into Onclass Investments (Pvt) Ltd's account.

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 of property as security. Sureties are persons who pledge security with a creditor to cover the indebtedness of another. The defendants herein engaged with the plaintiff to be answerable, in the second degree, for the default of Onclass Investments (Pvt) Ltd. The defendants' liability in this matter, therefore, follows that of the principle debtor. It follows, therefore, that the defences available to Onclass Investments (Pvt) Ltd are automatically available to the defendants as sureties.

An exception to the summons succeeds if the excipient shows that the summons and the declaration do not disclose a cause of action and that it is vague and embarrassing. It is not a process to challenge the evidence in the matter.

The plaintiff's summons and declaration herein disclose a cause of action. The issue of the Banker's Acceptance constitute evidence. The defendants can plead to the averments made by the plaintiff in the summons and declaration. The plaintiffs have a right to control their pleadings. It is not for the defendants to substitute the plaintiff's cause of action. It is improper for the defendants to force the plaintiffs to base their cause of action on Banker's Acceptance. The defendants can answer to the plaintiff's claim and can introduce the issue of Banker's Acceptance in their defence. The onus of showing that a pleading is excipiable rests on the excipient. See Voset and Others v Kleynhans 2003 (2) SA 148 (C).

The plaintiff referred me to the case of Francis v Sharp and Others 2004 (3) SA 230 where HJ ERASMUS J…, stated as follows;

“I preface evaluation of these exceptions by three preliminary observations. First, in Colonial Industries v Provincial Insurance Co. Ltd 1920 CPD 627 at 630 BENJAMIN J said, in regard to the general approach to exceptions:

'Save in the instance where an exception is taken for the purpose of raising a substantive question of law which may have the effect of settling the dispute between the parties an excipient should make out a very clear, strong case, before he could be allowed to succeed.'

Secondly, the courts are reluctant to decide upon exception questions concerning the interpretation of a contract…,. In this regard, it must be borne in mind that an excipient has the duty to convince the court that he had a strong clear case.”

In my opinion, this is not one such strong case made by the excipients.

In the premises, the exception is not successful and the application is dismissed with costs.

HH43-06 : ZIMBABWE DEVELOPMENT BANK vs NAGA SALONS and NYARAI CHIWAURA and BETTY CHIWAURA
Ruled By: KUDYA J

The plaintiff, the Zimbabwe Development Bank, hereinafter referred to as the Bank, issued summons out of this court on 17 December 2004 seeking, against the three defendants, jointly and severally, the one paying the others to be absolved, payment of $587,612,879=86 and interest thereon capitalized monthly at 1% per day calculated from the date of issue of summons to the date of full payment and costs of suit on a legal practitioner scale and collection commission as provided for under the Law Society of Zimbabwe By-laws, 1982.

On 6 January 2005, the defendants entered appearance in which they indicated that they had received the summons on 4 January 2005.

Counsel for the plaintiff applied to amend the summons and declaration during the plaintiff's cross-examination. She sought the deletion of the claim of interest on the bank charges, and the substitution of the payment of interest from the date of issue of summons by the date of service of summons. The application was not opposed. It was therefore granted.

In essence, the plaintiff, therefore, seeks interest, from the date of service of summons calculated at 1% per day to the date of full payment on the sum of $500 million.

The plaintiff called the evidence of its Credit Controller, one Dumisani Sibanda and produced three (3) documentary exhibits in a bid to prove its claim. The defendants called the evidence of Betty Chiwaura, the third defendant, to counter the claim.

It was common cause that the plaintiff is a company duly incorporated in accordance with the laws of Zimbabwe and is a registered financial institution while the first defendant is a company also duly incorporated in accordance with the laws of Zimbabwe while the other two defendants, who are mother and daughter, are directors of the first defendant and sureties and co-principal debtors with the first defendant of the plaintiff.

On 22 March 2004, the first defendant (the company), which was represented by the third defendant, executed an Invoice Discounting Agreement Exhibit '1' (the agreement) with the plaintiff. On the same date, the second and third defendants bound themselves jointly and severally with the first defendant as sureties and co-principal debtors of the plaintiff.

It was common cause that before the execution of the present agreement, the parties had executed three similar agreements which had been discharged. The defendants were therefore alive to the contents of exhibit '2, the General Conditions of the Invoice Discounting Agreement, which consists of 32 conditions on three pages, which governed the operation of the agreement.

On 24 March 2004, the plaintiff disbursed $250 million to the company in terms of the agreement. Notwithstanding the fact that the plaintiff averred, in its declaration, that the invoice discounting fee in terms of the agreement was set at 25% of the capital sum disbursed, the company corrected it in its plea by stating that the 25% per month was variable and would be compounded.

In its declaration, the Bank had stated that the company would repay the capital sum and interest, 60 days after the inception of the facility, as a lump sum. The defendants, in their plea, disputed the averment stating, in turn, that repayment was in terms of paragraph 4 of the agreement. The agreement referred to the general conditions of the agreement for guidelines on the dates of repayment. Exhibit '2' however does not give the duration of the agreement. In his testimony, Dumisani Sibanda alleged that the agreement had a lifespan of one (1) month, a fact which was confirmed by the third defendant in her evidence in chief. The agreement was therefore for a duration of 30 days.

The defendants fell on hard circumstances and failed to meet their obligations to the plaintiff.

At the pre-trial conference held on 8 September 2005, the defendants admitted owing the plaintiff the aggregate sum of $500 million made up of capital of $250 million and interest of $250 million. The following issues were referred for determination:-

1. Whether or not the defendants are liable to pay to the plaintiff bank charges in the sum of $87,612,879=86.

2. Whether or not the defendants are liable to pay interest on both capital and interest on $500 million from date of summons to date of full payment.

3. Whether or not the defendants are liable to pay costs on an attorney/client scale and collection commission.

I have chosen to word the issues in the manner in which they were captured by the judge who presided over the pre-trial conference in his handwritten notes in preference to the manner in which they are captured in the joint pre-trial conference minute filed by the parties on 13 September 2005. This is because the presiding judge's minutes captured the essence of the defendant's plea which cast the onus on the plaintiff to prove that the Bank charges and interest were due, and, in the event that they were due, to establish how they arose and their arithmetical computation. The plea also joined issue with the plaintiff on costs on a legal practitioner and client scale and collection commission.

The evidence led by each witness which was in dispute will be resolved as I determine the issues referred to trial by the parties.

View Appeal
HH207-15 : G BANK ZIMBABWE LTD vs ZIMBABWE REVENUE AUTHORITY
Ruled By: KUDYA J

This is an appeal filed on 3 September 2013 by a registered commercial bank in the High Court in terms of section 65 of the Income Tax Act [Chapter 23:06]. It arises from taxation in the four areas of staff retrenchment costs, Nostro accounts, Nostro charges [non-resident tax on fees] and offshore loans.

At the appeal hearing, the appellant called the evidence of 6 witnesses and produced a compendium of documentary exhibits encompassing some 1,207 pages. These documents were contained in 2 large box files, 2 lever files and 1 flat file. In addition, 10 loose leaf documentary exhibits that served as a useful summary to the compendium were produced.

The respondent did not lead any evidence. It was content to rely on the averments made in the 15-paged Commissioner's case and the 76 paged Rule 11 of the Income Tax Rules documents.

On 16 November 2012, the respondent issued to the appellant three amended assessments in respect of income tax for the tax years ending December 2009, 2010 and 2011 [p 1-3 Rule 11 documents], respectively.

The respondent objected to the assessments on 12 December 2012. The objections in respect of the subject matter for which the present appeal is concerned with were disallowed on 15 August 2013 [p 4-7 of Rule 11 documents]. However, on 21 November 2013 the appellant proceeded to issue further amended assessments for the tax year ending 31 December 2010 and 31 December 2011, respectively, after allowing deductions for VAT expenses incurred in the two years in question.

The issues for determination were:

1. Whether the appellant correctly brought the provision for retrenchment costs to account in its income tax return in the 2009 tax year.

2. Whether the respondent was entitled to deem the appellant's offshore Nostro accounts as interest-bearing accounts and the appropriate rate of interest.

3. Whether the respondent was entitled to attribute interest earned by non-resident related parties on loans made to businesses in Zimbabwe to the appellant.

4. Whether bank charges raised by offshore Banks holding the appellant's Nostro accounts amounted to fees under paragraph 1 of the 17th Schedule of the Income Tax Act....,.

OFFSHORE LOANS

The respondent wrote back into the appellant's taxable income, for the tax years 2009, 2010 and 2011, interest paid by six onshore borrowers on the basis that it was purportedly earned by the appellant.

The appellant objected on 12 December 2012.

After an exchange of correspondence between the parties, the respondent disallowed the objection on 15 August 2013. The dis-allowance was based on the nature and scope of the loan agreement and the original approvals from the External Loans Coordinating Committee (ELCC) of the Reserve Bank of Zimbabwe.

In a bid to establish that the loan agreements executed between the appellant and the onshore payers of interest did not reflect the true position governing the loans in issue the appellant called the evidence of four (4) witnesses.

The first witness on this aspect of the appeal was the Head of Corporate Banking of the appellant. The second was the Managing Director of a local tobacco company. The third was an Executive Director of another local tobacco company. The fourth and last witness was the Company Secretary of a large local manufacturing and distribution conglomerate.

In addition, it relied on pages 580 to 1037 of the bundle, the 170 paged exhibit 6 and exhibit 7, 8, 9 and 10.

The evidence of the Head of Corporate Banking cut across all the six local companies that purportedly executed loan agreements with the appellant. He referred to the Master Risk Participation Agreement (MRPA) [p 9 to 29 of exhibit 6 and 615-630 of the bundle] concluded on 12 June 2002 between the appellant and the offshore related party. It was conceived as a vehicle to provide suitable local borrowers with offshore funding at a time Zimbabwe was experiencing endemic foreign currency challenges.

The Master Risk Participation Agreement (MRPA) laid the general framework for the execution of acceptance agreements in the form of Schedule 1 to the Master Risk Participation Agreement (MRPA) between the two Banks. In the event of inconsistency between the Acceptance Agreement and the Master Agreement, the provisions of the Acceptance Agreement prevailed. The Acceptance agreements were of two forms. The first was a Funded Risk Participation agreement and the second was an Unfunded Risk Participation agreement. There were three important designations in the Master Risk Participation Agreement (MRPA). These were Grantor, Participant, and Obligor.

A grantor could be any one of the two Banks who offered the other, the participant, a participation in the funding or in the risk associated with the non-payment of the whole or any part of the amounts loaned out. A participant could be any one of the two Banks that accepted a participation in the risk that would be assumed or the amount advanced. The obligor was the borrower of the funds.

In a funded participation [clause 3 of the MRPA on p11 of exhibit 6], the Bank providing the funds was the participant. The participant was obliged to deposit the funds representing the extent of the exposure it was willing to assume with the grantor before it was disbursed to the borrower. It was required, in terms of clause 3.2, to indemnify the grantor to the extent of the risk percentage on any default by the borrower. The grantor was required to promptly allocate to the participant its share of the payments made by the borrower inclusive of interest, commission and fees accruing or expenses incurred.

In an unfunded risk participation, in terms of clause 4 of the Master Risk Participation Agreement (MRPA), the participant would pay it's pro rata share of the risk percentage of the principal, interest, fees, costs and expenses to the grantor in case of default by the borrower. The participant would pay the participation percentage from any recoveries made from the borrower.

The witness clarified that a funded risk participation was invariably fully funded by the offshore related party while an unfunded risk participation was fully funded by the appellant with the offshore related party sharing in the risk of default to an agreed percentage. In both instances, the appellant was the grantor while the offshore related party was the participant.

Clause 5 of the Master Risk Participation Agreement (MRPA) dealt with the appropriation of payments made by either party. Clause 6.4 outlined the relationship between the parties. The parties accepted that the MRPA or any acceptance agreement or any other agreement or understanding did not constitute the grantor an agent, fiduciary, or trustee of the participant. The grantor's rights could not be transferred or assigned except for the right in clause 7.5 to sue the borrower for the whole amount owing. The participant had no rights to deal with, make payments to, or receive payments from the borrower in the loaned amount. The parties were not in partnership, joint venture, or association. The grantor was not required to indemnify the participant on its participation share.

In the event of default by the borrower, the grantor was obliged to notify the participant in terms of clause 7.3. In terms of clause 11.6,., privity of contract and associated benefits to third parties, who were not party to the Master Risk Participation Agreement (MRPA), were expressly excluded. In terms of clause 14, English Law and Courts were conferred jurisdiction over both the Master Risk Participation Agreement (MRPA) and any Acceptance Agreement derived from it.

It was the testimony of the Head of Corporate Banking that despite the contents of clause 6.4 the appellant considered itself an agent of the participant. This was also confirmed by the evidence of the other three witnesses who testified on this aspect. They regarded the appellant (the grantor) as an agent of the offshore related party (the participant).

He established that the Exchange Control (Tobacco Finance) Order 2004 SI 161/2004 [p 1-3 of exhibit 6; p 580-582 of bundle] and the Exchange Control (Cotton) Order 2008 [p 4-8 of exhibit 6; p 583-587 of bundle] required that offshore funds be utilised for the growth and purchase of auction and contract tobacco and seed cotton. The loans were approved by the External Loans Co-ordinating Committee (ELCC) of the Reserve Bank of Zimbabwe. Tobacco buyers were precluded, by section 4(3), and contract growers, by 4A(3), from either drawing on corporate foreign currency account or purchasing, borrowing or raising foreign currency onshore from the interbank market or authorised dealers or any domestic source whatsoever to purchase contract or auction tobacco. A similar bar was placed against seed cotton merchants by the relevant statutory instrument. In both instruments, onshore funds were defined as:

“Any funds, moneys, deposit, loan, line of credit advance from customer or parent company or other funds or facility whatsoever (in the tobacco order)/wheresoever (in the seed cotton order) located or obtainable within Zimbabwe.”

He identified two (2) facility letters, pages 30 to 40 and 41 to 51 of exhibit 6, for one of the three (3) tobacco merchants. All the other documentation for the tobacco company in question being master participation documents, rate fixed advice and correspondence run from p 631 to 807 in the bundle [p 627 -726 contains acceptance agreements for the facility letter of 29 June 2011 and the various draw-downs and security compliance certificates. The facility letter of 29 June 2011 was not produced in evidence or in any of the documents]. The first, dated 4 June 2009, for US$25 million was for the purchase and processing of tobacco for export for the 2008/2009 season and financing inputs and equipment for contract growing and purchase of tobacco in the 2009/2010 season.

The second facility letter, dated 26 August 2010, for US$35 million, was for purchase of tobacco in 2009/2010 and inputs for 2010/2011 season.

The Managing Director of the tobacco company in question confirmed accessing these offshore loans. The 3 paged exhibit 8, dated 17 December 2009 and 31 March 2010, were the bank statements of account produced by the Managing Director to confirm that his company maintained a current account 0101 2524708 50 with the foreign lender in accordance with the facility letters. The statements showed that the borrower received US$26 million in 2009 and US$3 million in 2010 from tobacco buyers. It paid out capital and interest in the sum of US$3,031,210 on 9 March 2010. The tobacco company in question repaid the capital and interest into the Evidence Account 01012 252708 50 of the foreign lender.

The acceptance agreement for the first facility letter is at p 727-730 of the bundle. The grantor was the appellant while the participant was the offshore related party. The participant funded the loan in the sum of US$22 million and assumed risk at a margin and interest of Libor plus 4%. The facility letter was for US$25 million with a margin and interest rate of Libor plus 6%. It would appear from these two documents that the appellant might have contributed US$3 million and taken the balance of the risk of Libor plus 2%.

The evidence of the Head of Corporate was that all the money was supplied from the offshore related party at the margin and interest rate stated in the facility letter to whom all the capital and interest were remitted.

It seems to me that he did not fully disclose the nature of the relationship between the appellant and the offshore related party in this regard. I find that he was therefore untruthful in this regard. The acceptance agreement for the facility letter of 26 August 2010 was not produced in evidence. It also does not form part of the documents in the bundle.

The facility letters were generally worded thus:

“BANKING FACILITIES

The appellant (the Bank) is pleased to confirm (subject to the conditions precedent and upon representations and any warranties as set out herein) its willingness to make available to your company (the Borrower) the uncommitted banking facilities (the facilities) outlined below on the terms and conditions set out in this letter, as modified by the Bank from time to time and (where applicable) terms and conditions set out in the appendix.”

The facilities became available on receipt of originals security documents, a certified copy of Board resolution, the RBZ approval for the facilities, requisite insurance policy, and opening of an Evidence Account at the Bank (the Evidence Account). The interest rate differed in each facility letter. In the first, it was set at the aggregate of Libor plus 6%; in the second, was risk price of 3.75 and establishment fee of 2.3%.

Other conditions specific to each onshore borrower were stipulated. These were submissions of monthly schedules, management accounts, audited financials, proof of seasonality, and submission of quarterly crop records to the appellant on set timelines. In addition, Customs Declaration Forms (CD1) of the projected export revenue to be routed and processed through the appellant and insurance cover with reputable offshore insurer reflecting the appellant as the loss payee were also stipulated. The borrower undertook to the appellant to take comprehensive insurance.

All sales proceeds from the tobacco sold were to be remitted to the appellant for the credit of the Evidence Account. The balance of the Evidence Account would be applied towards the reduction of any outstanding loans due to the appellant and the residue paid to the Borrower. The Bank would only act on instructions received from or verified by the local agent for the operations of the Evidence Account. The Borrower was required to issue instructions to its overseas buyers to remit funds to the Bank for credit to the Evidence Account. The Evidence Account was supplied.

The choice of law clause conferred jurisdiction on the local courts.

A four-paged appendix consisting of 13 clauses was attached. The appellant was permitted to cede its rights in the facility to third parties. Clause 13, on disclosures, identified the appellant as the Bank. The confidentiality clause regarded the contents as the property of the appellant.

The facility letters of the second tobacco company were dated 30 September 2009 [p 61-72 of exhibit 6] for US$1 million and 6 May 2010 [p 52-60 of exhibit 6] for US$3 million. The full documentation for the second tobacco company runs from p808 to 854 of the bundle. The acceptance agreements filed are for the facility letter for 6 March 2012. The two facility letters made no reference to the opening of an Evidence Account. There were no acceptance agreements for the two facility letters for this company that are the subject of the appeal.

The facility letters of the third tobacco company were dated 7 May 2009 [p111-122] for a loan of US$15 million and 21 September 2010 [p123-135] for a loan of US$45 million. There were no documents filed in respect of the third tobacco company in the bundle of documents. The acceptance agreements in respect of the two facility letters for the third tobacco company were not produced in evidence.

The Accounts Director of the third company stated that his company accessed the offshore component of the loans. His company would instruct the appellant to pay off the loan on maturity through the Evidence Account. His company did not access local funds as that would have been contrary to law.

The facility letters for the seed cotton company are dated 3 July 2009 [p136-149] for US$2.5 million and 29 June 2010 [p150-158] for US$3 million. The conditions were markedly different to those of the tobacco companies but the framework of the facility letters was similar to the tobacco ones especially the appendices. There were no other documents filed of record or produced in evidence in respect of the seed cotton company. The booking location stated in the facility letters was the appellant. The interest rate was set at Libor plus cost of funds plus 6%.

The facility letters in respect of the second and third tobacco companies and the seed cotton company made no reference to an Evidence Account. They were all formatted differently from the facility letters of the first tobacco company in that respect. They were formatted much like the three onshore funded facility letters for the manufacturing and distribution conglomerate. Two of the three facility letters for the conglomerate that were admittedly funded onshore by the appellant were dated 24 August 2009 for a loan of US$10 million [p73-86 of exhibit 6] and 22 September 2010 for a loan of US$20 million [p87-103 of exhibit 6].

The witness averred that the appellant acted as the agent of the offshore related party. He further stated that the appellant did not receive any interest from any of the four clients. The interest was paid to the Evidence Account of the offshore related party on the instruction of the appellant.

The facility letter for the cement manufacturer was dated 30 August 2010. The loan of US$3 million was required to finance the importation of mobile equipment, compressors, factory consumables and other capital equipment for the quarry and other factory operations. The other documents for the cement company run form p908 to 1037. The booking location on the facility letter for 30 August 2010 was the offshore related party. The tenor was a year and interest was the aggregate of the cost of the funds to the appellant plus 2.5%.

Amongst the conditions, condition (c) and (f) on p104 of exhibit 6 stand out like a sore thumb.

Both grant the sole discretion to roll over the loan to the appellant. The appendix to the facility letter is a carbon copy of the appendices in the tobacco and cotton facilities. The choice of law clause imbues the appellant with the choice of recovering any outstanding amounts in the Magistrates' Court in Zimbabwe. The acceptance agreement in respect of this facility letter was not produced.

The Head of Corporate Banking disclosed that the facility letters dated 24 August 2010 [p73-86] for US$10 million and 22 September 2010 [p87-102] for US$20 million were in respect of onshore funds availed to the manufacturing and distribution conglomerate. He produced the 28 paged exhibit 7, the facility letter dated 19 October 2011. It differs from all other facility letters thus far analysed in design, content and coverage. The total commitments made in the facility letter were in the sum of US$60 million. It was a revolving loan facility for the general corporate purposes of the borrower. Clause 11.6 and 25 conferred jurisdiction on the English Courts. In Schedule 1 paragraph 11 the guarantor provided security in favour of the appellant.

The Head of Corporate Banking claimed that the appellant did not have the capacity to loan out such an amount. He produced exhibit 9, the loan drawdown advice from the offshore related party, dated 17 November 2011, as evidence of the direct payment of interest into the Evidence Account of the offshore related party. It stipulated the loan amount of US$60 million, the tenor of 182 days. The rate setting information was provided as were remittance instructions. The all-in-all rate was 7.43% and the interest in the sum of US$2,253,766=67 was payable on 17 May 2012.

He produced exhibit 10, the acceptance agreement in the format of Schedule 1 to the Master Risk Participation Agreement (MRPA). It is in respect of the US$60 million loaned out to the manufacturing and distribution conglomerate. The grantor was the appellant. The participant was the offshore related party. The obligor was the manufacturing and distribution conglomerate. The guarantor was the offshore holding company for the borrower. The participation was fully funded by the participant. The interest rate was Libor plus 6.75%.

Exhibit 9 further stipulates the remittance instructions. It reads:

“Please arrange to pay us the total due of US$12,253,766=67 on 17 May 2012 at maturity to the following Standard Settlement instruction:…,.”

The nominated account number for payment happens to be the one indicated in exhibit 3 as the Nostro account of the appellant, account number 3582 088442 001 Ref: LPU/ [the Conglomerate (Pvt) Ltd].

The appellant sought authority from the External Loans Coordinating Committee (ELCC) of the Reserve Bank of Zimbabwe to borrow offshore funds on behalf of non-tobacco clients. On 6 October 2009 [p159-162 of exhibit 6; p592-595 of bundle] the ELCC approved an ordinary non-tobacco pre and post shipment finance facility in the sum of US$50 million. The lender was indicated as the offshore related party and the borrower was the appellant. The approval also covered a further US$50 million for tobacco financing. Again, the borrower was indicated as the appellant and the lender was the offshore related party. Both facilities had an expiry date of 31 August 2010.

Again, on 9 September 2010 [p163-166; p596-599] the External Loans Co-ordinating Committee (ELCC) approved an enhanced ordinary non-tobacco pre and post shipment facility increasing the loan amount from US$50 million granted on 6 October 2009 to US$100 million sought by the appellant from the offshore related party at an interest rate of Libor plus 4%. The tobacco pre and post shipment facility was also increased from US$50 million to US$100 million with an interest rate of Libor plus 3% expiring on 31 August 2011. The borrower/beneficiary was the appellant while the lender was the offshore related party.

The witness characterised the non-tobacco facility as a global arrangement rather than a specific one. He stated that the Reserve Bank of Zimbabwe required approval by the ELCC even for non-tobacco loans from offshore to obviate the need to seek exchange control authority to repay as this would be embedded in the approval before loans were disbursed to clients.

The US$60 million was included in the US$100 million non-tobacco facility approval. He stated that the External Loan Co-ordinating Committee (ELCC) was aware of the legal requirement for tobacco merchants to access funds offshore but approved the appellant as borrower well knowing that the money was for clients rather than for the appellant's own use.

He was unable to shed light on the ELCC approval dated 7 December 2011 [p167-170 of exhibit 6; p600-603 of bundle]. It was for US$200 million divided equally between ordinary non-tobacco and tobacco pre and post shipment finance with maturity dates of 31 July 2010 and 31 July 2011, respectively, that predate the date of the authority. Both had a coupon rate of Libor plus 6%. The approval in question was, however, corrected by the ELCC on 14 June 2012 [page 36-39 of Rule 11 documents]. The coupon rate for the non-tobacco loan was reduced to Libor plus 4% and the expiry date was amended from 31 July 2010 to 31 August 2012 while for the tobacco facility the coupon rate was reduced to Libor plus 3% and the maturity date was amended to 31 August 2012. The other information remained the same.

He portrayed the appellant as an agent of the offshore related party in administering the loan.

He maintained funds were disbursed to the six (6) onshore companies from offshore and that the borrowers also made direct interest payments offshore. In regards to the conglomerate, he averred that the appellant did not have capacity to loan out more than 25% of its capital to any one entity. He confidently affirmed the absence of the interest payments in the profit and loss interest account as proof that the money was never credited to the appellant.

The evidence of the Head of Corporate Banking, in respect of the manufacturing conglomerate, was confirmed by the Company Secretary of the conglomerate. He took part in the discussions that gave rise to the loan facility. It was clear to him that the appellant fronted the off-shore related party.

Representatives of the lender sat in the discussions to acquaint themselves with the borrower. He stated that the money came directly from the foreign Bank through the appellant. He stated that the appellant had no capacity to raise such a sum of money. He, however, acknowledged that his company did not execute any agreement with the foreigner lender.

The movement of the US$60 million is shown on p906 and 907 of the bundle. The money was deposited into the appellant's Nostro account in NY on 17 November 2011 and credited to the local bank account of the borrower on the following day. He confirmed that payment of interest instructions by his company to the appellant were triggered by the interest rate fix, exhibit 9. The appellant would debit the company's bank account and credit the offshore related party's nominated account. The interest repayments in each 6 month period was in the region of US$2.2 million.

The evidence of the Head of Corporate Banking was supported by the three witnesses who testified on behalf of the borrowers. They all maintained that notwithstanding the contents of the facility letters, they sourced offshore loans from the offshore related party. They remitted interest to the offshore related party. The appellant was merely a conduit pipe who facilitated easy access of the funds and sought approval from the Reserve Bank of Zimbabwe on behalf of both the borrowers' and the offshore lender.

There was a plethora of disquieting features in the testimony of the Head of Corporate Banking.

He disputed that any money was paid to the appellant by the offshore lender contrary to the stipulation in clause 3 of the Master Risk Participation Agreement (MRPA). He disputed that the appellant borrowed funds from the onshore lender, again, contrary to all the approvals he produced that emanated from the Central Bank. The lender was clearly indicated as the offshore related party and the borrower, and, in later approvals, the beneficiary, as the appellant.

The unexplained discrepancy between the first facility letter and the acceptance agreement in respect of the first tobacco company did not engender confidence in his testimony. More importantly, the failure to produce the acceptance agreements of all the other facility letters save for the one in respect of the conglomerate, exhibit 7, and rate fix documents in respect of all the facility letters undermined his credibility.

The impression left in my mind was that the appellant was deliberately hiding information in corporate underbrush.

The similarity of all the letters save for the first two for the first tobacco company with the ones the appellant admitted were provided with local funds undermined the appellant's case. There was no reference to any Evidence Account in these facility letters. The choice of law clause conferred jurisdiction on the local courts. The calculation of the computation of the interest rate in respect of the cement manufacturer demonstrated that it was receiving onshore finance from the appellant.

In my view, it was simply incredible that the appellant did not have the capacity to fund the requirements of the conglomerate. It admitted to funding the conglomerate in the aggregate sum of US$30 million from onshore funds. In any event, it held approvals from the External Loan Co-ordinating Committee (ELCC) to on-lend funds borrowed offshore to both tobacco and seed cotton merchants and other non-tobacco customers. I was satisfied that the Head of Banking, for reasons best known to himself and the appellant, chose to mislead this court about the true nature of the interest payments that were paid by the six onshore companies.

The issue for determination is whether the respondent was entitled to attribute interest earned by non-resident related parties on loans made to businesses in Zimbabwe to the appellant.

It was common cause that the facility letters were all in the name of the appellant. The appellant set the terms and conditions for accessing the loan amounts. The parties were required to provide Board of Directors' resolutions, various security documents, and, in some instances, proof of an offshore Evidence Account. The appellant was the link between the borrowers and the External Loans Coordinating Committee of the Reserve Bank of Zimbabwe. It applied for approval of both tobacco and non-tobacco pre and post shipment offshore loans. The approvals identified the appellant as the borrower and the offshore related party as the lender.

The respondent, understandably, took the view that the appellant was borrowing offshore funds for onshore lending.

This view was, in part, derived from the letter from the Central Bank of 12 February 2013 on page 23 and 24 of the Rule 11 documents. The Central Bank advised that current exchange control regulations allowed authorised dealers to access offshore lines of credit for on lending and own use while local companies were permitted to directly access offshore loans from offshore lenders including their holding and sister companies. The letter further indicated, in line with the Exchange Control Directive ECD01, dated 31 July 2009, during the period to 5 February 2013, that authorised dealers were allowed to process off-shore loans of up to US$5 million under the advice of the External Loans Co-ordinating Committee (ELCC) whilst offshore loans in excess of US$5 million required prior approval by the ELCC. The prior approval of the use of the onshore funds borrowed offshore for the purchase and growth of tobacco and seed cotton may have dulled the collective conscience of the parties from the possible breach of the law.

The External Loans Co-ordinating Committee (ELCC) approvals granted to the appellant on 6 October 2009, 9 September 2010 and 7 December 2011, as corrected on 14 June 2012, identified the appellant as the borrower of offshore funds emanating from the offshore related party for both tobacco and non-tobacco pre and post shipment loans.

It was on the basis of the contents of the paperwork represented by the facility letters and the ELCC approvals that counsel for the respondent maintained that the interest purportedly paid by the borrowers to the related offshore party accrued to the appellant. He forcefully contended that the facility document created legal rights and obligations between the appellant and the specified onshore clients. It created the cause for payment of interest to the appellant and did not establish a similar cause for payment to the offshore related party. He relied on Commissioner of Inland Revenue v Lever Brothers and Unilever Ltd 14 SATC 1…, where WATERMEYER CJ observed that:

“The provision of credit is the originating cause or source of the interest received by the lender.”

The onus to show that the interest in issue accrued to the offshore related party, in terms of section 63 of the Income Tax Act, as interpreted in such cases as Commissioner of Taxes v A Company 1979 (2) SA 409 (RA)…, lies on the appellant.

The thrust of the appellant's case and evidence from the four witnesses it called on this aspect appeared to me to be that the interest was, in reality, received by the offshore related party. The witnesses indisputably established this fact through a variety of documents such as the interest rate fix and bank statements.

Interest, like any other income, is also taxed on the basis of accrual. Accrual denotes legal entitlement.

The facility documents seem to appropriate interest to the appellant. They point to the appellant as the provider of the credit to whom interest payments were due. In the parlance of WATERMEYER CJ in Commissioner of Inland Revenue v Lever Brothers and Unilever Ltd 14 SATC 1 the provision of the credit was the originating cause or source of the interest.

The appellant, however, argued that the interest could not have accrued to it because it was not the actual lender of the money. It merely facilitated the provision of the loan amount to the borrower.

The four witnesses confirmed this fact.

The appellant also relied on the Master Risk Participation Agreement (MRPA) and acceptance agreements it executed with the offshore lender. The MRPA mandated the execution of an acceptance agreement between the appellant and the lender to record the relationship between the parties in a funded or unfunded risk participation.

The appellant did not produce any acceptance agreement in respect of the cotton company, two of the tobacco companies, and the cement company. The acceptance agreement for the one tobacco company that was produced left unanswered questions that undermined its probative value.

The appellant, therefore, failed to establish the basis for the remittal of interest to the offshore related party.

It produced a relevant acceptance agreement for the loan facility provided to the manufacturing and distribution conglomerate. I would have found for the appellant in regard to the conglomerate were it not for the unexplained remittance details in exhibit 9 which seem to direct payment of capital and interest to the appellant's New York Nostro account listed in exhibit 3.

I therefore hold that the appellant has failed to demonstrate that it did not earn the interest deposited into the offshore Evidence Account held with the offshore related party....,.

(c) As for the third issue, on offshore loans, the respondent was entitled to attribute interest earned by non-resident related parties on loans made to businesses in Zimbabwe to the appellant. He correctly added it back to income in the respective tax years that it was earned;

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.

Appealed
HH287-20 : PENELOPE STONE and RICHARD BEATTIE t/a THE STONE/BEATTIE STUDIO vs CENTRAL AFRICAN BUILDING SOCIETY and RESERVE BANK OF ZIMBABWE and MINISTER OF FINANCE & ECONOMIC DEVELOPMENT
Ruled By: ZHOU J

Both the applicant and the first respondent accept that theirs is a banker-customer relationship. The relationship has its foundation in contract, hence the general principles of the Law of Contract apply to it. It, however, has its unique features which would distinguish it from other special contractual relationships. The relationship ...

Both the applicant and the first respondent accept that theirs is a banker-customer relationship.

The relationship has its foundation in contract, hence the general principles of the Law of Contract apply to it. It, however, has its unique features which would distinguish it from other special contractual relationships.

The relationship is explained in a leading text on Banking Law, Paget's Law of Banking, 13th Ed by M. HAPGOOD QC…, as follows:

"The relationship of a banker to customer is one of contract. It consists of a general contract, which is basic to all transactions, together with special contracts which arise only as they are brought into being in relation to specific transactions or banking services. The essential distinction is between obligations which come into existence upon the creation of the banker-customer relationship and obligations which are subsequently assumed by specific agreement; or, from the standpoint of the customer, between services which a bank is obliged to provide if asked, and services which many bankers habitually do, but are not bound to, provide."

In the case of Standard Bank of South Africa v Oneanate Investments (Pty) Ltd 1995 (4) SA 510 (C)…, the Court examined how this relationship, of banker-customer, developed to its current status:

"The law treats the relationship between banker and customer as a contractual one. The reciprocal rights and duties included in the contract are, to a great extent, based upon custom and usage.

Although historically the original objective of a depositor was to ensure the safekeeping of his money; over time, jurists have considered characterizing and explaining the basic relationship as one of depositum, mutuum or agency.

All of these approaches have, on analysis, proved to be inadequate.

It is now accepted that the basic, albeit not sole, relationship between banker and customer in respect of a current account is one of debtor and creditor.

In the landmark 1848 case of Foley v Hill (1843-60) AII ER Rep 16 (1848) 2 HL Cas 28, it was strenuously argued that the banker should be treated as an agent with authority to use his customers money at his own discretion. The argument was rejected in favour of the finding that the nature of the ordinary relationship was one of debtor and creditor. The bank makes use of the money which the customer has deposited:

'It is then the money of the banker…, he makes what profit he can, which profit he retains for himself…, he has contracted, having received that money, to repay to the principal, when demanded, a sum equivalent to that paid into his hands.'”

In situations where the bank collects, on behalf of a customer, the proceeds of a cheque, the relationship remains the same, as articulated by ATKIN LJ in Joachimson v Swiss Bank Corporation 1921 (3) KB 110…,:

"The bank undertakes to receive money and collect bills for its customer's account. The proceeds so received are not to be held in trust for the customer, but the bank borrows the proceeds and undertakes to repay them. The promise to repay is to repay at the branch of the bank where the account is kept, and during banking hours. It includes a promise to repay any part of the amount due against the written order of the customer addressed to the bank at the branch, and as such written orders may be outstanding in the ordinary course of business for two or three days, it is a term of the contract that the bank will not cease to do business with the customer except upon reasonable notice.

The customer, on his part, undertakes to exercise reasonable care in executing his written orders so as not to mislead the bank or to facilitate forgery. I think it is necessarily a term of such a contract that the bank is not liable to pay the customer the full amount of his balance until he demands payment from the bank at the branch at which the current account is kept."

Where a current account is in credit, money deposited into the account ceases to belong to the account holder. The banker becomes the owner of the money and is free to use it as it pleases, as long as it pays the equivalent therefor on demand: see Zimbabwe Revenue Authority & Anor v Murowa Diamonds (Pvt) Ltd 2009 (2) ZLR 213 (S); Standard Chartered Bank of Zimbabwe Ltd v China Shougang International Ltd (2) ZLR 385 (S), SC49-13…,; ABC Bank v Mackie Diamonds SC23-13.

HH224-22 : MUTSA DENHERE and DEMMUSK ENTERPRISES (PVT) LTD vs FAENSA FRISCO LIMITED
Ruled By: CHIRAWU-MUGOMBA J

The genesis of this matter lies in proceedings held under case number HC8844/12. In that matter, the respondent in casu obtained an order against the applicants as follows:

1. Judgement be and is hereby entered in favour of the plaintiff against defendants jointly and severally the one paying the other to be absolved in the sum of US$43,065.

2. Defendants pay, jointly and severally, the one paying the other to be absolved penalty interest at the rate of 4% per month on the sum of US$41,800 from the 24th of August 2021 to date of payment in full.

3. Costs of suit on an attorney and client scale.

The applicants' case is as follows:

The second applicant entered into a loan facility with the respondent for a total sum of US$45,000 constituting US$15,000 roll over and a new sum of US$30,000. This money was disbursed to the applicants.

It was a material term of the loan agreement that since the respondent is a foreign entity, it had to obtain exchange control approval from the Reserve Bank and this was also in terms of Clause 7:10.

Such proof was never furnished despite the payment supposedly coming from Mauritius.

In pursuance of a writ of execution in case no. HC8844/12, the Sheriff of the High Court visited the first applicant's place of residence armed with a notice of seizure and attachment. This writ was in Zimbabwean dollars and her legal practitioners paid on her behalf the sum of ZW$50,878.

The respondent's legal practitioners however insisted that the payment had to be in United States Dollars. This was ostensibly on the basis that the amount owed was a foreign debt.

The circumstances of the loan however point out to the fact that it was not a foreign obligation as claimed. It was actually a fraud based on the fact that no exchange control authority was sought and obtained.

The loan agreement was executed in Harare, the funds were to be used in Zimbabwe, the laws of Zimbabwe apply and the respondent's representative ordinarily resided in Zimbabwe.

The applicants therefore sought an order declaring the loan agreement entered into by the parties on the 18th of November 2010 as null and void and the discharging of the sureties.

In addition, they sought an order of costs on a higher scale.

Alternatively, they sought a declaratur that the ZW$50,878 is in full and final settlement of the respondents judgment debt.

In responding to the application, the respondent raised points in limine.

They contended that the applicants and respondents entered into the loan agreement in 2010 and the applicants defaulted in 2012 leading to institution of proceedings. They were aware of the existence of the agreement but did not challenge it. They entered into a Deed of Settlement which resulted in the default judgment against them when they failed to honour the agreement. They should have challenged the validity of the agreement within three (3) years but they did not do so. They cannot seek to enforce an agreement nearly nine years after.

Their claim for a declaratur has prescribed.

Additionally, the relief they seek has been overtaken by events. The Deed of Settlement settled the obligations between the parties which Deed became the cause of action resulting in the obtaining of the default judgment. The judgment remains extant and they have not challenged its validity. The applicants are estopped from challenging the validity of the loan agreement.

In any event the applicants are seeking an opinion and not a declaratur.

On the merits, the respondent averred as follows:

It is a duly registered company located in Mauritius. A copy of a certificate of incorporation was attached.

The second applicant and the respondent entered into a loan agreement as stated in the founding affidavit. The advance was made from Mauritius where the respondent is incorporated. Inserted into the loan agreement were warranties to ensure compliance with the laws of Zimbabwe.

The loan agreement did not require exchange control authority as contended by the applicants.

The loan amount was credited into the second applicant's Standard Chartered bank account held in Zimbabwe. The applicants made some payments, specifically a payment of US$2,000 (two thousand) via telegraphic transfer on the 15th of June 2012 to the respondent's bank account held in Mauritius but subsequently defaulted which resulted in the institution of legal proceedings on the 8th of August 2012.

Thereafter, the respondent obtained judgment against the applicants based on a Deed of Settlement.

Further, that the debt is owed to a foreign entity and should be paid in United States Dollars.

The fact that the writ and notice of removal by the Sheriff was in Zimbabwe dollars does not make it less so. The court order upon which the debt is based is expressed in United States dollars. The fact that the loan agreement was executed in Zimbabwe, by a borrower in Zimbabwe, for use in Zimbabwe is irrelevant as is the fact that the respondent's representative was based in Zimbabwe.

What defines whether or not a loan is a foreign obligation is the source of the funds.

The applicants cannot deny that the respondent is registered in Mauritius and funds were transferred from a bank in Mauritius.

At the hearing, after counsel for the respondent had made submissions on the points in limine, counsel for the applicants, in response, abandoned the main relief sought and submitted that the applicants were now only seeking the alternative relief.

The alternative relief is couched as follows:

Alternatively -

(a) It is declared that the applicants payment of ZW$50,878 is a full and final settlement of the respondent's judgment debt.

(b) The respondent shall pay costs of suit on the higher scale of legal practitioner and client scale.

As rightly contended by counsel for the applicants, the legal issue that arises is whether or not the debt is a foreign obligation.

In his submissions, he contends that the court must declare that the ZW$50,878 discharged the obligations the applicants owed to the respondent. This is due to the effects of S.I.33 of 2019 as subsequently provided for in the Finance Act, No.2 of 2019.

By operation of the law, the debt became a Zimbabwe dollar one.

The loan agreement must be viewed in a holistic manner based on the factual circumstances upon which the loan was extended. The laws to be applied must be those of Zimbabwe - including the Exchange Control Regulations.

Counsel for the respondent, on the other hand, submitted as follows:

It is not in dispute that the respondent is a foreign entity operating out of Mauritius as evidenced by the certificate of incorporation. The loan agreement itself shows the domicile of the parties as being Zimbabwe and Mauritius respectively. The capital sum of US$45,000 advanced to the applicants came out of Mauritius. The loan agreement sets out the Bank to which the loan is to be repaid as being in Mauritius. Partial settlement was made by the applicants into that Bank.

They cannot now be heard to suggest that the loan should be paid in Zimbabwe dollars.

In Zimbabwe, the issue of debts owed and indeed the currency in which they have to be paid has found its way into the courts after the promulgation of SI33 of 2019.

The Supreme Court dealt with these issues in the oft cited cases of Zambezi Gas Zimbabwe (Pvt) Ltd v N.R Barber and Another SC03-20 and Breastplate Services (Pvt) Ltd v Cambria Africa PLC SC66-20. See also Central Africa Building Society v Stone and Ors SC15-21.

In Mushayakura v Zimbabwe Leaf Tobacco Company (Pvt) Ltd SC108-21, the court dealt with a matter involving a growing and financing agreement, an acknowledgment of debt, and a Deed of Settlement involving the appellant and respondent. MALABA CJ had this to say regarding the definition of a foreign loan and obligation:

“The term 'foreign loans and obligations denominated in any foreign currency', as it appears in section 44C(2) of the Reserve Bank Act, is not defined in SI33 of 2019. As stated in the Breastplate case supra, its meaning in any given case must be ascertained from the factual circumstances of the parties involved and the material substance of the transaction that they have entered into.

Section 44C(2)(b) of the Reserve Bank Act makes it clear that the issuance of any electronic currency, that is RTGS dollars, shall not affect or apply to any foreign obligation, as the provision explicitly excludes foreign obligations valued and expressed in United States dollars from the deemed parity valuation in RTGS dollars.

It is settled that the effect of SI33/19 was to render all assets and liabilities, except those referred to in section 44C(2)(b) of the Reserve Bank Act, as values in RTGS dollars at the exchange rates prescribed.

It was the appellant's position that, since the parties had concluded a Deed of Settlement, the court a quo was not entitled to take into consideration agreements that preceded the Deed of Settlement.

The appellant argued that the Deed of Settlement constituted a compromise.

It was the appellant's further submission that it did not matter that the debt had been expressed in United States dollars. The argument was that the issue was whether the appellant could discharge his liability in RTGS dollars at the rate of one-to-one in terms of Statutory Instrument 33 of 2019.

The Deed of Settlement, and the preceding contracts, have to be read together for a proper understanding of the arrangement the parties entered into.

The source of the funds had to be established first for the Court to be able to make a determination of the issue of the currency in which the debt admittedly due had to be repaid.”

Further, that:

“The Deed of Settlement was entered into for the purpose of allowing the appellant to repay the debt he acknowledged to be owing in instalments in United States dollars. The Deed of Settlement was for the benefit of the appellant.

The appellant cannot escape the obligation he voluntarily undertook to repay the funds advanced to him in United States dollars for the specific purpose of financing the production of the tobacco crop by calling the Deed of Settlement a compromise. There was no dispute between the parties over the currency in which the offshore funds received by the appellant from the respondent had to be repaid.

The respondent was entitled to invoke the provisions of section 44C(2)(b) of the Reserve Bank Act to protect its rights to the repayment of the offshore funds advanced to the appellant in United States dollars under the Deed of Settlement.”

In casu, it is common cause that the source of funds was from a bank in Mauritius. The applicants never denied this fact.

They, instead, after benefiting from the loan, sought to cast aspersions on the juristic person of the respondent and went on to place irrelevant facts of money laundering before the court.

It is also common cause that the respondent is a registered entity in Mauritius.

Clause 5.7 of the loan agreement makes it clear that the repayments were to be done through a bank in Mauritius. The applicants did, in fact, pay a sum of US$2,000 via that account. The loan agreement itself was cognisant of the fact that the currency in Zimbabwe could change and hence clause 9.3 which states as follows:

“The borrower acknowledges that in the event of the Government of Zimbabwe announcing plans for, or implementing plans for the re-introduction of the Zimbabwe dollar as the primary currency of transactions, with or without the withdrawal of the use of other currencies in use as at the date of this agreement, the lender shall be entitled, at its election to call up the entire amount then due from the borrower and the borrower shall be obliged to repay back the amount due as provided for in clause 11.2 of this agreement.”

This clearly and unequivocally supports the fact that the loan itself was a foreign obligation otherwise there would not have been need for such a clause.

Clause 16 of the agreement shows the domicile of the respondent as being at an address in Mauritius.

The Deed of Settlement signed by the parties shows the amount owing as being US$51,800.

The totality of the circumstances of the matter, and on the authority of Mushayakura v Zimbabwe Leaf Tobacco Company (Pvt) Ltd SC108-21, the inescapable conclusion is that the debt owed to the respondent can only be discharged in United States Dollars.

The fact that the Sheriff expressed the amount in Zimbabwe currency, in the writ and notice of removal, is neither here nor there.

I find no merit in the applicant's contention that there was no exchange control approval obtained.

Once the applicants abandoned the main claim in favour of the alternative, the only issue is whether or not payment of the amount owed in Zimbabwean dollars discharged the debt.

In Mushayakura v Zimbabwe Leaf Tobacco Company (Pvt) Ltd SC108-21, the court made a very pertinent observation that:

“If payment were to be made in RTGS dollars, contrary to the clear and unambiguous language of section 44C(2)(b) of the Reserve Bank Act, the purpose of the provision of ensuring that tobacco farmers benefit from offshore funding lines of credit accessible to the respondent and others in similar business would be defeated to the detriment of the national interest in the protection and promotion of the development of the tobacco industry.

The court a quo cannot be faulted for holding that the funds advanced to the appellant had to be repaid in United States dollars.

The Zambezi Gas case supra is distinguishable from the present matter.

The present case relates to offshore funding. The obligation incurred by the respondent was a foreign obligation denominated in foreign currency within the contemplation of section 44C of the Reserve Bank Act.”

In casu, the agreement between the parties constitutes offshore funding.

The respondent stated clearly in its opposing affidavit that the applicants sought funding after they had been denied such by local banking institutions. This was not denied.

Offshore funding presents a lifeline for most businesses in Zimbabwe that cannot obtain any or adequate funding on the domestic market.

Surprisingly, after receiving the money, the applicants turned around and accused the respondent of not being an authorised dealer yet happily received US$45,000.

Clearly, payment in RTGS dollars will have a negative impact on businesses and would not be in the national interest.

The requirements of a declaratur have been set out in a plethora of cases: see Streamsleigh Investments (Pvt) Ltd v Autoband Investments (Pvt) Ltd, 2014 (1) ZLR 736.

In my view, and for reasons stated above, the applicants have not established any basis for the granting of a declaratory order.

Costs should follow the cause. I do not perceive of any factors that support an award of costs on a higher scale.

DISPOSITION

1. The application be and is hereby dismissed with costs.

HH137-15 : OLIVER CHIDAWU and DANOCT INV and DANNOV INV and BROADWAY INV vs JAYESH SHAH and TN ASSET MANAGEMENT and PELHAMS LTD and ORS
Ruled By: MATHONSI J

Writing about negotiable instruments, the learned author R.H. CHRISTIE, Business Law in Zimbabwe, ed 2, Juta Co Ltd stated…,:“In outline, this concept is simply that provided a written instrument complies with the prescribed formalities, the legal rights which are written on the instrument may be transferred from person ...

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.

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Law Portal
Zimbabwe

Credit Facilities and Money Lending

HH04-08 : CECIL MADONDO (In his capacity as the duly appointed Liquidator of Century Discount House Ltd) vs ZIMBABWE BANKING CORPORATION
Ruled By: GARWE JP

HH43-10 : KUDAKWASHE MAVINDIDZE and NYARADZO MAVINDIDZE vs MURISI MUKONOWESHURO
Ruled By: PATEL J

HH155-10 : BLESSMORE CHANAKIRA vs TAWANDA MAPFUMO and W.R. GABRAITH
Ruled By: CHIWESHE JP

HH206-10 : STANBIC BANK ZIMBABWE LIMITED vs FLAIR FURNITURE COMPANY (SUCCESSORS) LIMITED
Ruled By: MTSHIYA J

HH225-10 : SOUTHEND CARGO AIRLINES (PVT) LTD and STEPHEN CHITUKU and PATIENCE CHITUKU vs INFRASTRUCTURE DEVELOPMENT BANK OF ZIMBABWE and THE SHERIFF OF ZIMBABWE and THE DEPUTY SHERIFF
Ruled By: MTSHIYA J

HH177-14 : BONIFACE DENENGA and LORRANE DENENGA vs ECOBANK ZIMBABWE (PVT) LTD and STRIVEWELL INVESTMENTS P/L (represented by Mr. Makuyana The Judicial Manager) and THE SHERIFF OF ZIMBABWE
Ruled By: MAWADZE J

HH254-14 : NMB BANK LIMITED vs BRAITWOOD TRADING (PVT) LTD and BRABOURN INVESTMENTS (PVT) LTD and TAKESURE MAGORONGA and BERNARD MUTANGA
Ruled By: NDEWERE J

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

HH43-06 : ZIMBABWE DEVELOPMENT BANK vs NAGA SALONS and NYARAI CHIWAURA and BETTY CHIWAURA
Ruled By: KUDYA J

View Appeal
HH207-15 : G BANK ZIMBABWE LTD vs ZIMBABWE REVENUE AUTHORITY
Ruled By: KUDYA 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

Appealed
HH287-20 : PENELOPE STONE and RICHARD BEATTIE t/a THE STONE/BEATTIE STUDIO vs CENTRAL AFRICAN BUILDING SOCIETY and RESERVE BANK OF ZIMBABWE and MINISTER OF FINANCE & ECONOMIC DEVELOPMENT
Ruled By: ZHOU J

HH224-22 : MUTSA DENHERE and DEMMUSK ENTERPRISES (PVT) LTD vs FAENSA FRISCO LIMITED
Ruled By: CHIRAWU-MUGOMBA J

HH137-15 : OLIVER CHIDAWU and DANOCT INV and DANNOV INV and BROADWAY INV vs JAYESH SHAH and TN ASSET MANAGEMENT and PELHAMS LTD and ORS
Ruled By: MATHONSI J

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

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Law Portal Zimbabwe

Credit Facilities and Money Lending

HH04-08 : CECIL MADONDO (In his capacity as the duly appointed Liquidator of Century Discount House Ltd) vs ZIMBABWE BANKING CORPORATION Ruled By: GARWE JP

HH43-10 : KUDAKWASHE MAVINDIDZE and NYARADZO MAVINDIDZE vs MURISI MUKONOWESHURO Ruled By: PATEL J

HH155-10 : BLESSMORE CHANAKIRA vs TAWANDA MAPFUMO and W.R. GABRAITH Ruled By: CHIWESHE JP

HH206-10 : STANBIC BANK ZIMBABWE LIMITED vs FLAIR FURNITURE COMPANY (SUCCESSORS) LIMITED Ruled By: MTSHIYA J

HH225-10 : SOUTHEND CARGO AIRLINES (PVT) LTD and STEPHEN CHITUKU and PATIENCE CHITUKU vs INFRASTRUCTURE DEVELOPMENT BANK OF ZIMBABWE and THE SHERIFF OF ZIMBABWE and THE DEPUTY SHERIFF Ruled By: MTSHIYA J

HH177-14 : BONIFACE DENENGA and LORRANE DENENGA vs ECOBANK ZIMBABWE (PVT) LTD and STRIVEWELL INVESTMENTS P/L (represented by Mr. Makuyana The Judicial Manager) and THE SHERIFF OF ZIMBABWE Ruled By: MAWADZE J

HH254-14 : NMB BANK LIMITED vs BRAITWOOD TRADING (PVT) LTD and BRABOURN INVESTMENTS (PVT) LTD and TAKESURE MAGORONGA and BERNARD MUTANGA Ruled By: NDEWERE J

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

HH43-06 : ZIMBABWE DEVELOPMENT BANK vs NAGA SALONS and NYARAI CHIWAURA and BETTY CHIWAURA Ruled By: KUDYA J

View Appeal HH207-15 : G BANK ZIMBABWE LTD vs ZIMBABWE REVENUE AUTHORITY Ruled By: KUDYA 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

Appealed HH287-20 : PENELOPE STONE and RICHARD BEATTIE t/a THE STONE/BEATTIE STUDIO vs CENTRAL AFRICAN BUILDING SOCIETY and RESERVE BANK OF ZIMBABWE and MINISTER OF FINANCE & ECONOMIC DEVELOPMENT Ruled By: ZHOU J

HH224-22 : MUTSA DENHERE and DEMMUSK ENTERPRISES (PVT) LTD vs FAENSA FRISCO LIMITED Ruled By: CHIRAWU-MUGOMBA J

HH137-15 : OLIVER CHIDAWU and DANOCT INV and DANNOV INV and BROADWAY INV vs JAYESH SHAH and TN ASSET MANAGEMENT and PELHAMS LTD and ORS Ruled By: MATHONSI J

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

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Law Portal
Zimbabwe

HH04-08 : CECIL MADONDO (In his capacity as the duly appointed Liquidator of Century Discount House Ltd) vs ZIMBABWE BANKING CORPORATION
Ruled By: GARWE JP

HH43-10 : KUDAKWASHE MAVINDIDZE and NYARADZO MAVINDIDZE vs MURISI MUKONOWESHURO
Ruled By: PATEL J

HH155-10 : BLESSMORE CHANAKIRA vs TAWANDA MAPFUMO and W.R. GABRAITH
Ruled By: CHIWESHE JP

HH206-10 : STANBIC BANK ZIMBABWE LIMITED vs FLAIR FURNITURE COMPANY (SUCCESSORS) LIMITED
Ruled By: MTSHIYA J

HH225-10 : SOUTHEND CARGO AIRLINES (PVT) LTD and STEPHEN CHITUKU and PATIENCE CHITUKU vs INFRASTRUCTURE DEVELOPMENT BANK OF ZIMBABWE and THE SHERIFF OF ZIMBABWE and THE DEPUTY SHERIFF
Ruled By: MTSHIYA J

HH177-14 : BONIFACE DENENGA and LORRANE DENENGA vs ECOBANK ZIMBABWE (PVT) LTD and STRIVEWELL INVESTMENTS P/L (represented by Mr. Makuyana The Judicial Manager) and THE SHERIFF OF ZIMBABWE
Ruled By: MAWADZE J

HH254-14 : NMB BANK LIMITED vs BRAITWOOD TRADING (PVT) LTD and BRABOURN INVESTMENTS (PVT) LTD and TAKESURE MAGORONGA and BERNARD MUTANGA
Ruled By: NDEWERE J

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

HH43-06 : ZIMBABWE DEVELOPMENT BANK vs NAGA SALONS and NYARAI CHIWAURA and BETTY CHIWAURA
Ruled By: KUDYA J

View Appeal
HH207-15 : G BANK ZIMBABWE LTD vs ZIMBABWE REVENUE AUTHORITY
Ruled By: KUDYA 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

Appealed
HH287-20 : PENELOPE STONE and RICHARD BEATTIE t/a THE STONE/BEATTIE STUDIO vs CENTRAL AFRICAN BUILDING SOCIETY and RESERVE BANK OF ZIMBABWE and MINISTER OF FINANCE & ECONOMIC DEVELOPMENT
Ruled By: ZHOU J

HH224-22 : MUTSA DENHERE and DEMMUSK ENTERPRISES (PVT) LTD vs FAENSA FRISCO LIMITED
Ruled By: CHIRAWU-MUGOMBA J

HH137-15 : OLIVER CHIDAWU and DANOCT INV and DANNOV INV and BROADWAY INV vs JAYESH SHAH and TN ASSET MANAGEMENT and PELHAMS LTD and ORS
Ruled By: MATHONSI J

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