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;
(c) Costs of suit.”
The background to the above claim
is that on 22 April 2003, through a facility letter addressed to the
defendant's Mr Warren Lobel, the plaintiff advanced a loan facility to the
plaintiff. The facility was at the defendant's request and the defendant duly
confirmed its acceptance of the loan facility on 30 April 2003.
Some of the salient clauses in
the facility provided as follows -
“3. FACILITY OFFERED
3.1 A composite facility
comprising:-
Overdraft and/or;
Revolving Acceptance Credits
and/or;
Productive Sector Finance and/or;
Export Finance Facility.
3.2 Post-Shipment Offshore Loans.
4. AMOUNT
4.1. The total amount available
under the composite facility will be Z$150,000,000= 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.