MATHONSI J: When matters of the family end
up in court finding the truth in the maze of family disputation, especially when
a loving father and husband finds himself having to choose between members of
his family, is the proverbial searching for a needle in a haystack. Never mind
that this is litigation mainly between incorporations which in itself may be
deceiving indeed, but this matter seeks to resolve differences that have arisen
within members of one family.
The
plaintiff, which is an incorporation founded in 1975 by Senator Aguy Georgias,
the major shareholder and the pulse of the company, instituted proceedings against
the first defendant, who is Senator Georgias's son born out of wedlock, his
company the second defendant and the other three defendants seeking an order
nullifying mortgage bond number 01533/2011 registered in favour of the third
defendant, Telecel Zimbabwe (Pvt) Ltd and mortgage bond number 04504/2011
registered in favour of the fourth defendant; People's Own Savings Bank and
costs of suit.
The
plaintiff's declaration contains the following relevant averments:
“8. On the 6th February 2011 the plaintiff
and the first and second defendants entered into
and signed an agreement in terms of
which the first and second defendants would register
a second Bond over plaintiff's property namely stand 374 Willowvale Township, Harare.
9. It was a term of the agreement
that the bond was a covering bond for first and second defendants'
draw down on airtime cards.
10. Having entered into the said
agreement, it was a requirement that Trinity Engineering
(Private) Limited represented by
Senator Aguy Clement Georgias would sign
a power of attorney to pass
mortgage in favour of Telecel Zimbabwe (Private) Limited.
11.Trinity Engineering (Private)
Limited and/or any of its duly authorised representatives
did not sign such power of attorney to pass mortgage.
12. The first and second defendants
however managed to have two bonds registered over
the plaintiff's property without its mandate.
13. First and second defendants
registered a bond over plaintiff's property in the sum of US$250
000. 00 in favour of fourth defendant through Messrs Mawere and Sibanda Legal Practitioners without the
knowledge and consent of the plaintiff.
14. On the 4th March
2011, first and second defendants caused to be registered yet another bond over plaintiff's property in the
sum of US$1 000 000.00 in favour of the third
defendant.
15. In short, first and second
defendants forged signatures of Aguy Clement Georgias on both Powers
of Attorney to pass mortgage bonds and the respective minutes of the board of directors of Trinity
Engineering (Private) Limited authorising the registration of the
said bonds.
16. It is my humble submission that
the bonds are null and void and as a result of forgery.”
The
last paragraph of the declaration is misplaced in its wording as it is a
departure from standard pleading and assumes a personal nature of an affidavit
which it is not.
Only
the first, third and fourth defendants entered appearance and pleaded to the claim. I must say that the first defendant's initial
plea filed on 23 January 2012 (he later amended it and filed a completely
different plea recanting the first one), makes interesting reading to the
extent that it is an unmitigated confession to forgery. Self-acting, the first
defendant pleaded.
“The 1st defendant pleads as follows to the
plaintiff's claim:
1.
Ad
Paragraph 1-7
No
issues arises (sic)
2.
Ad
Paragraph 8-9
These
are correct.
3.
Ad
Paragraph 10
This
is correct
4.
Ad
Paragraph 11-12
This
is admitted. I, on behalf of the second defendant connived with a
representative of the third defendant in the person of its chairman, Mr James
Makamba to forge Senator Georgias' signature as he was not acting expeditiously
and was becoming reluctant to sign.
Indeed I had no authority or mandate to so act.
5.
Ad
Paragraph 13
This
is admitted.
6.
Ad
Paragraph 14
This
is admitted. Again I reiterate that this was without the consent and knowledge
of the plaintiff and/ or Mr Georgias.
7.
Ad
Paragraph 15-16
These
are admitted.
WHEREFORE
I and the second defendant admit that plaintiff be granted the prayer that it
seeks.”
As
I have said, more than 2 years later on 31 October 2014, the first defendant
recanted that plea in an amended plea averring that he never caused the
registration of the bonds but the plaintiff itself did. The plaintiff registered the bond over its
property in terms of the agreement of the parties and as consideration for that
the second defendant paid the plaintiff again in terms of the agreement. The first defendant denied forging the
signature of the plaintiff's representative on the powers of attorney and board
minutes and asserted that the bonds are valid.
In
its own plea, the third defendant insisted that the bond registered in its
favour was registered by the plaintiff and is therefore valid. The third defendant counter claimed against
the plaintiff and the second defendant for payment of US$686 172.38 due in
terms of a credit agreement for the supply of recharge telecommunication cards
to the second defendant wherein “the plaintiff agreed to stand as surety and
co-principal debtor”.
The
third defendant's counter claim and plea was amended a number of times and now
includes an averment that the plaintiff is bound by its contractual obligations
evinced by the mortgage bond especially as, prior to issuing summons it was
aware of the bond, made queries with the third defendant about the amount of
indebtedness and never raised any contemporaneous objection or challenge to the
signature. It further averred that the plaintiff
had received the benefit of payments effected under the advance secured by the
mortgage bond. The payment received by
the plaintiff constitutes unjust enrichment.
The
fourth defendant averred in its plea that the mortgage bond over the plaintiff's
property registered in its favour was registered with the knowledge and consent
of the plaintiff.
At
the pretrial conference of the parties held before a Judge the dispute between
the plaintiff and the fourth defendant was settled. According to the agreed
pretrial conference minute;
“1. It was agreed that the fourth
defendant, without admission of liability, does not oppose the relief sought against it, subjection (sic) to a cession of the said mortgage
bond to CBZ Bank Limited pursuant to an agreement between the
plaintiff and the said CBZ Bank Limited.
2. The plaintiff and the fourth
defendant shall file of record a consent order recording the settlement
between the said parties. Thereafter the
fourth defendant will play no further
part in these proceedings.”
Indeed
an order was granted by consent, per Kudya J, on 19 October 2012 in the
following:
“IT IS ORDERED THAT;
1.
The
4th defendant, without admission of liability, does not oppose the
relief sought against it by plaintiff subject to a cession of the mortgage bond number
04504/2011 to CBZ Bank Limited pursuant to an agreement between the plaintiff
and the said CBZ Bank Limited.
2.
Each
party shall bear its own costs.”
That
way the fourth defendant was phased out of these proceedings. The trial
involved the plaintiff against the first and third defendants only, the second
defendant's defence having been struck off at the pre-trial conference. The
claim of the third defendant against the second defendant was referred to the
unopposed roll.
As
between the plaintiff, the first and third defendants three issues were
identified namely:
1. Whether
the plaintiff's duly authorised agent signed the power of attorney authorising
the registration of the mortgage bond in favour of the third defendant.
2. Whether
the said mortgage bond in favour of the third defendant is valid.
3. Whether
the plaintiff stood a surety and co-principal debtor for any amount that may be
owing by the second defendant to the third defendant.
In
order to tackle those issues each party called one witness with the plaintiff
adding the testimony of its lawyer, Muyengwa Motsi to rebut certain allegations
made against him.
Senator
Aguy Clement Georgias testified on behalf of the plaintiff, while the first
defendant himself gave evidence and Lovemore Masvingise testified for the third
defendant.
The
80 year old Senator Georgias (Georgias) founded the plaintiff company in
1975. He is the majority shareholder and board chairman and talks fondly of his
“business empire” which unfortunately he said is crumbling because of his
involvement with the first defendant (Karimazondo) his son born out of
wedlock.
Of
course he has his wife, daughters and other sons but it is Karimazondo whom he
did not know of until a few years ago-“about four, five or seven years ago”
Then Karimazondo had pulled up in a flashy, Mercedes Benz ML Motor vehicle at
his Trinity Engineering offices and introduced himself as his son. From the very beginning Georgias' evidence is
at variance with that of Karimazondo who said that he first communicated on the
telephone with his father in 1994 when he was doing the first year of his
Bachelor of Business Administration at Solusi University. Thereafter Georgias assisted in paying his
University fees but he engaged him physically for the first time in year 2000
as his father, although he had seen him before.
Georgias
says he was quite happy to meet his son who made an immediate impact because he
was friendly with his daughters when his other boys from previous marriage did
not relate well with his daughters. He
was quick to point out that when one has children out of wedlock that is a
problem presumably because they do not get along well with the main stream
family. He trusted Karimazondo as he was
optimistic that he would look after his other children well after his demise he
being a brilliant young businessman. He
was ready to make him an executive in his business empire.
Karimazondo
wanted assistance from him to secure licences for his 20 recharge cards kiosks
dotted around town which did not have licences. Georgias quickly stepped in by
approaching Minister Chombo to expedite the licences which were issued. His son returned with a request for
assistance to meet Minister Goche in an effort to get a business deal from
Reward Kangai the head of Netone Cellular.
Although he assisted, nothing came out of that Karimazondo was not done
yet. He came back with a request to be
assisted in meeting Minister Mohadi who was thought to be in a position to
persuade James Makamba of Telecel to give the young businessman some
money. Although he again took his son to
him, Minister Mohadi was not impressed by the story and again nothing came out
of that.
Subsequent
to that Karimazondo then made a proposal to him for the sale of airtime cards
and vouchers which resulted in an agreement, exhibit 1, being signed between
them on 6 February 2011. The witness
confirmed that his signature is appended on that agreement he having signed on
behalf of the plaintiff. Karimazondo signed on behalf of the second defendant.
The
preamble to that agreement recites that the second defendant's core business is
the wholesale and retail of cellular airtime recharge cards/vouchers, that it
had secured a roll-over facility with the third defendant to access re-charge
cards/vouchers against suitable collateral of $1million and that the plaintiff
was “willing to permit a mortgage bond to be registered” over its property in
favour of the third defendant as security for the roll over facility. It
further records that the bond would be a second bond after that in favour of
POSB and that in return the parties would “profit share in the sale of the
stock allotted by Telecel to Maxifix.”
In
terms of clause 2 of that agreement:
“2. Bond Registration
Trinity shall do all such things
and sign all such documents as may be required to enable a second bond in the sum of US$1 million to be registered
over the property in favour of
Telecel. The said bond shall have a
fixed term of 12 months (the Bond Tenure)
commencing from the date of
registration. Maxifix shall bear all costs associated
with the bond registration.”
In terms of clause 4, in
consideration for the collateral
security the second defendant was, inter
alia, to pay the plaintiff $50 000-00 within 15 working days from the date
of initial draw-down, $500 000-00 within 8 weeks after the initial draw-down
and service the first bond in favour of POSB by stop order.
Georgias
denied ever signing the power of attorney to pass a mortgage bond either in
favour of POSB or the third defendant stating that the signature on the power
of attorney used by Wintertons to register the bond for the third defendant,
while it is strikingly similar to his, is not his but a forgery.
He
did not attend at Wintertons to sign it although they are his legal
practitioners of long standing he having dealt with Mr Paul of that firm. They
also did the conveyancing for his house. When he got to know that they had
registered the bond on his property in favour of the third defendant he did not
deem it necessary to take any action against them. He did not find it necessary
to report what was clearly a criminal offence to the police as he was legally
advised that it was not for him to do so but for the third defendant which has
been prejudiced.
The
witness stated that the existence of a bond in favour of the third defendant
was not discovered by himself but his wife and daughter. When the two made the
discovery they went about investigating
the issue only to discover that the first defendant already owed the
third defendant money which was now secured by the mortgage bond and not that
he needed the bond to secure future advances.
When
the existence of the third defendant's bond was brought to his attention he
says he confronted the first defendant demanding to know why, as his son he could
do such a thing to him when he had not met the conditions of their agreement,
namely to pay him the sums set out in the agreement and to allow access to the
books of the second defendant among others. He then pressured the first
defendant to pay off the debt owed to the third defendant in order to have his
property released from encumberment.
It
was at that point that the first defendant admitted having forged the witness's
signature which admission he demanded in writing. The first defendant was taken
to Harare Central Police Station to depose to an affidavit, exh 2, making that
confession. The affidavit which was sworn to on 22 January 2012 reads in
relevant part thus:
“I, RUSSEL KARIMAZONDO, ID NO
29-162678 M 47 of No 163 Robert Mugabe Road Harare, do hereby make oath and swear
that:-
1.
I
am the director of Maxifix (Private) Limited of 163 Robert Mugabe Road, Harare.
2.
I
confirm that I forged the signatures of Senator Aguy Clement Goergias to pass
two mortgage bonds in favour of Telecel Zimbabwe and People's Own Saving Bank amounting
to US$1 250 000-00.
3.
I
also forged Senator Georgias's signatures on the purported minutes of the Board
of Directors of Trinity Engineering (Private) Limited authorising the
registration of the said bonds.
4.
The
mortgage bond numbers are 04504/2011and 01533/2011 respectively.
5.
For
all intents and purposes it was my intention to pay off the bonds but failed to
do so because of Mr James Makamba of Telecel who did not perform his side of
the transaction as agreed.
6.
I
apologise to Senator Georgias for my misdemeanour.”
This is interesting
indeed. A person confessing to having committed a crime of forgery was, even as
he made the confession, still blaming someone else for his crime. I shall
return to deal with the credibility of the first defendant later. But for now,
let it suffice that Georgias stated that when the first defendant intimated
that he wanted to make arrangements to pay, he advised him to go to his lawyers
to do that. The engagement with first defendant ended, according to the father,
with the latter vowing that he never wanted to see his son again. He has kept
his word.
Georgias denied receiving
any payment from the first and second defendants whom he said failed to meet
any of the conditions in exh 1. He denied ever attending at the offices of the
third defendant to inquire about the status of the account maintaining that it
is his wife and daughter who did that. He denied standing as surety and
co-principal debtor for the due performance of the second defendant's liability
to the third defendant.
Under cross-examination
Georgias made quite surprising statements regarding the entire dispute.
Although both his summons and his exh 2 (Karimazondo's affidavit) state
categorically that the power of attorney and resolution of the board of directors
used to register the POSB bond were forged, he was adamant that the POSB bond
registration was, proper and there was no forgery involved at all.
In fact he said that bond
has been paid off through an arrangement he had with CBZ Bank. He literally
disowned the contents of his summons and declaration.
But then life can never
be that easy. A party to proceedings is bound by its pleadings. In addition, it
is trite that a litigant cannot be allowed to approbate and reprobate a step
taken in the proceedings. He cannot have it both ways: S v Marutsi 199- (2) ZLR
370 (S). The basis of the plaintiff's claim is that both bonds were registered
on the strength of forged documents and the pleadings were not amended. It
cannot turn around when it suits it, to accept one bond as having been lawfully
registered and persist on the other having been a fraud. It is either both were
unlawfully registered or not. It is not easy to accept the testimony of a
prevaricating witness, and ordinarily adverse inferences have to be drawn
against such a witness. Of course Mr Uriri tried to give that evidence a new
colour in his closing address stating that the plaintiff abandoned the claim
against POSB for other reasons than what was stated by the witness. Counsel cannot give evidence.
Although he claimed to
have discovered a crime and to being very angry with Karimazondo, someone he
never wanted to see again, he did not find it necessary to report the crime. He
left that to the third defendant, a party which was enjoying the benefit of
security which it is seeking to enforce. While he accused Wintertons of
fraudulently registering a bond on his property, he says he did not raise any
complaint with them and did not find it necessary to sue them because he never
dealt with them in the first place and saw no need to “bother them.”
In the end what was left
was his self-serving denial of his signature and the confessions of his son who
had made it a point to change his story each time an opportunity presented
itself. On the signature itself, he was requested by Mr Fitches for the third defendant to provide a specimen of the
signature from the witness box which he did. He admitted that the signature on
exh 1, the agreement with the second defendant, is his, so is the one on the
discovery affidavit and the two of them have a striking resemblance not only
with the specimen produced in court but also with the signature on the power of
attorney used to register the bond.
To my untrained eye,
there is absolutely no difference between the signature on the power of
attorney and the other three signatures attributed to Georgias. They are the
same. In that regard, I find it quite strange that Georgias, whose entire case
hinges on him successfully disowning the signature on the power of attorney,
with all his years as a businessman of repute and with the benefit of very competent legal
representation, did not bother to enlist the services of a handwriting expert
to assist him in his endeavours. Only an expert would have authoritatively
dealt with the issues of signatures and told us if his signature was forged,
not the mere say so of an extremely conflicted witness.
An adverse inference must
be drawn against the plaintiff's failure to adduce the evidence of an expert to
resolve the disputed signature. As I have said, to me the questioned signature
resembles that of Georgias. His failure to bring an expert can only mean that
he was aware that the expert would confirm that he signed the power of
attorney, as I hereby find as a fact that he did.
I am fortified in my
conclusion by the manner in which the whole saga unfolded. As I have said, it
is not Goergias of his own volition, who stood up to challenge the bond in
favour of the third defendant. In fact, as reference to the letters from his
legal practitioners dated 1 and 5 August 2011 will show, long after the bond
had been registered, he was happy to seek to harvest from the effects of the
registered bond. It is his wife and daughter who took the leading role in
raising a red flag. Although Georgias did not say so in his evidence, according
to his summary of evidence, his wife received a summons from POSB. When he went
to investigate the issue, she discovered there was another bond registered on
the property in favour of the third defendant. Problems then started for
Georgias, who was quick to point out himself at the commencement of his
testimony that if one has children out of wedlock that creates problems.
I would not want to
speculate, but one cannot resist the conclusion that when questioned about the
bond which was benefiting only his newly found son, Georgias was forced to
disown it. It is for that reason that this matter has come up. How else can one
explain his insistence on enforcing an agreement which could only bear fruits
upon registration of the bond, long after the bond had been registered on 7
March 2011. I am here referring to the letters from Gollop and Bank in August
2011, which incidentally did not complain about his signature in the power of
attorney?
On 1 August 2011, Gollop
and Bank then representing the plaintiff, complained to Karimazondo thus:
“Senator Goergias advises that he
met with you on Thursday 28th July 2011 to discuss the outstanding
issues mentioned in our two previous letters. ... Our instructions are that you
undertook to comply with the payment of $500 000-00 mentioned under Clause 4 ii
of the principal agreement by no later than Wednesday 3rd August
2011 and that you would also ensure that all payments due by Trinity in favour
of the POSB as mention in Clause 4 iii would be paid up to date. In addition to
the above you gave an undertaking to afford Trinity's representative access to
all your company records concerning payments that had been received from
Telecel as provided for with reference to Clause 3 and the sub-clauses
thereunder forthwith.
We are instructed to write to you
to confirm these arrangements which have been entered into and concluded with
you by Trinity on a purely 'without prejudice' basis and more particularly in
an attempt to keep the agreement alive. ....
In the event that your promised
payments are not effected by the close of business on Wednesday 3rd
August 2011our client instructs us that it shall deem the agreement violated
and that cancellation take place. Damages arising from the breach are reserved
and in addition our client, in the event that funds do (sic) to it under the
agreement have been diverted, will rise a complaint of fraud alternatively
theft by conversation with the Zimbabwe Republic Police as a criminal
complaint. Hopefully this can be avoided. The delays thus far are completely
unacceptable and require immediate rectification.”
In terms of exh 1, the
third defendant was only going to make advances against suitable collateral of
US$1 million and the parties would enjoy “profit share in the sales of the
stock allotted by Telecel to Maxifix” after registration of the bond. The
plaintiff could thus only claim as it did in the above letter after
registration for the bond.
On
5 August 2011 Gollop and Bank addressed another letter, this time to the third
defendant, which reads in part:
“Maxifix approached Trinity with a
proposal to share in the profit of the sale of the recharge cards/vouchers
which were to be administered by Maxifix. The consideration to profit-sharing
was dependant upon Trinity giving authority that its immovable property 70
Woolwich Road, Willowvale, Harare be released to Maxifix so that it in turn
could be handed over to Telecel who would register a bond over the property
equivalent to the amount of the required security reflected in the principal
agreement. Other undertakings by Maxifix are set out in the agreement attached
to this letter.
Trinity advise that Maxifix have
breached various terms and conditions of the agreement between them. In
consequence, Maxifix has been put on terms to remedy its default but thus far
has neglected to do so. The Trinity bond's tenure in terms of clause 2 was for
a period of 12 months. It is not known whether registration of the bond has
taken place. Trinity have requested that steps be taken to cancel the bond
which they assert has been registered
in consequence of fraudulent representations, clearly evidenced by the default
of Maxifix coupled with the conduct of the Managing Director……………..
Are you in a position to confirm
whether a bond has been registered in Telecel's favour over Trinity's property? If so, would
Telecel agree (to) the cancellation of the bond and return of title to Trinity?”
Of
course the plaintiff may have been laying the ground work for litigation and
experienced legal practitioners give away very little, but rocket science is
not required to decipher what was happening here because there can only be one
interpretation that can be assigned to this letter. It is that the plaintiff
was aware that the bond was either in the process of being registered or it had
been registered hence the need to have it cancelled. Significantly there is no
mention whatsoever of the signature having been forged. In fact the gist of the
“fraudulent representations” was not forging the signature but the default of
the second defendant coupled with the conduct of Karimazondo which prompted the
plaintiff to put the second defendant “on terms to remedy its default.”
I
therefore come to the inescapable conclusion that the plaintiff agreed to the
registration of the bond and that Georgias signed the documentation to make
this possible. When the second defendant failed to honour its side of the
bargain and realising what a bad business decision it had made, the plaintiff
resorted to disowning the bond.
Muyengwa
Motsi is the legal practitioner representing the plaintiff who has instructed
counsel in these proceedings. He is accused by Karimazondo of having drafted
the first plea that Karimazondo filed in which he admitted having forged
Georgias's signature and the affidavit, exh 2. He was brought in specifically
to rebut those allegations and did not make a good job of it.
What
is noteworthy is that he claims to have met Karimazondo for the first time at
Georgias' offices located at Construction House in early January 2012. He had
been called by his client to come and intercede between him and his son with a
view of resolving the matter amicably. His advice was that Karimazondo had to
simply pay off the debt in order to release the plaintiff's property from
encumberment. He denied drafting the pleas and confession affidavit.
When
his attention was drawn to the fact that January 2012 came long after the
summons commencing action in this matter had been issued on 18 August 2011, he
was puzzled indeed. In fact, if he met Karimazondo in January 2012, it
coincides with the time that the disowned plea was filed, it having been filed
on 23 January 2012 and the time that the confession affidavit was made on 22
January 2012.
When
he regained his composure Motsi
stated that he must have met Karimazondo at Construction House in January 2011.
Unfortunately for him that is not possible because then the parties had not
concluded even the principal agreement, exh 1, which was only signed in
February 2011 and was to take effect on 6 February 2011. The mortgage bond
forming the basis of the dispute, was only registered on 7 March 2011. He could
not have been advising the parties about the alleged forgery even before it had
allegedly occurred.
Motsi was not being candid with the
court. His only saving grace is that his accuser is a person who cannot be
believed in the end because he has discredited himself by changing statements,
for whatever reason, with changes in the weather. Had it not been that, I would
have made findings about Motsi's professional
conduct with necessary consequences. However, the accusations cannot be relied
upon.
Which
then brings me to the evidence of Karimazondo which I must say cannot be useful
to any court of law. For whatever reasons, he signed and filed a plea in this
court on 23 January 2012 which breaks all legal records by its bizarre contents
constituting a confession in a suit against him with serious consequences to
himself and his business. Under oath he stated in exh 2 that, he had committed
a crime by forging his father's signature. Instead of assuming full
responsibility for that infraction, he blamed it on James Makamba, not for
anything else but for denying him credit.
Much
later, when it suited him, he turned round and deposed to an affidavit in the
pursuit of recanting his earlier plea, in HC 8033/13 accusing the plaintiff's
lawyer of having prepared the plea for him and filing it. He eventually filed
an amended plea asserting that his father had indeed signed the power of
attorney for the bond registration. In his testimony in court he stuck to the
story that indeed his father signed the power of attorney and that he had lied
in his earlier pleading and on oath under duress, his father having threatened
him.
That
may well be so, but all credibility has been lost. It is trite that where a
witness has been shown to have lied, everything that he says should be
rejected. There is logic in that because a court of law may never know when the
truth is told by such a witness. It is only safe to reject everything the
witness says as I hereby proceed to do. It means therefore that both his
alleged confession and his testimony in court after he says he had undergone
some damascene experience and seen the light, are of no use to the court and
are rejected.
Lovemore
Masvingise who, at the material time was the credit control manager of the
third defendant, testified on behalf of the latter. He is now the
administration manager, he having been in the employ of the third defendant for
a period of 15 years.
Masvingise
stated that the third defendant had stopped giving credit to the second
defendant because it had an outstanding debt. It then demanded security to
cover the historical and future debt for it could resume business with the
second defendant. That is when the second defendant's representative,
Karimazondo brought an agreement between them and the plaintiff, exh 1. He
confirmed the contents of that agreement including the agreement to register a
mortgage bond in favour of the third defendant. He stated that the third
defendant insisted on the registration of the bond, as per that agreement,
before it could resume business with the second defendant. That way the bond
was registered although he, as credit control manager, had not seen the
plaintiff's representative to verify the authenticity of their undertaking
before the bond was registered. At that time the second defendant already owed
money which is now a sum of $686 172-38.
After
satisfying himself of the registration of the bond, they resumed providing
airtime cards to the second defendant for its operations. On its part, the
second defendant made some payments towards the debt but the aforesaid sum is
still owing.
It
was after the security had been registered that Georgias' wife and daughter
came to his office inquiring about the status of the second defendant's
account. He refused to divulge any information to them because they were not
the account holders. Later, Georgias who was known to him as a public figure
but he was meeting for the first time physically, came to his office in the
company of his daughter. He also inquired about the status of the account.
Masvingise says, initially he refused to divulge anything because the account
did not belong to them. Georgias pressed for it, reminding the witness that his
property was encumbered by a bond securing that account. At that he relented
and gave Georgias the information that he required.
Georgias'
concern was that the second defendant was not servicing the debt which
situation was putting his property at risk. He also complained that the second
defendant was not paying to him what was due in terms of the principal
agreement. The witness then formulated the impression that the plaintiff was
aware of the registration of the bond and consented to it.
Under
cross examination, the witness readily accepted that the third defendant did
not have a suretyship agreement with the plaintiff, except the bond, that he
had not communicated with the plaintiff about the security prior to the
registration of the bond as he relied entirely on Karimazondo and that nowhere
(other than the mortgage bond) does the plaintiff commit itself as a surety and
co-principal debtor. He also readily accepted that when they gave the second
defendant an indulgence in the repayment agreement signed on 6 April 2011, they
had not consulted the plaintiff.
Musvingise
gave his evidence very well and did not try to add anything that would put the
third defendant's case in a better light. He was quick to make concessions
where that was called for and his demeanor was very good. He struck me as a
credible witness. As Mr Mutevedzi for
the first defendant put it, he gave his evidence with admirable confidence and
candour. I embrace his evidence which is itself simply that the third defendant
is owed a sum of $686178-38 in respect of airtime re-charge cards advanced to the
second defendant on credit. The second defendant has not settled that amount,
which is secured by a mortgage bond passed by the plaintiff on its property.
For that reason both the second defendant and the plaintiff are liable to the
third defendant for that amount jointly and severally, the plaintiff by virtue
of the mortgage bond in question.
In
the course of this judgment, I have virtually answered the issues for trial.
The plaintiff failed dismally to prove that its representative did not sign the
power of attorney authorizing the registration of the mortgage surety bond in
favour of the third defendant. In fact the evidence placed before me shows, on
a balance of probabilities that Georgias signed that document.
The
plaintiff had sought to invalidate the mortgage bond, not on any other ground
than that the signature on the power of attorney was forged. It failed to
establish the forgery and to the extent that the mortgage bond was registered
on the strength of a power of attorney signed by Georgias, it is valid.
I
accept that in the heat of drafting pleadings the third defendants counsel made
the averments that the plaintiff had stood as surety and co-principal debtor
for the amounts that are owed by the second defendant when there is no
suretyship agreement to that effect and when the third defendant did not deal
with the plaintiff at all prior to the registration. However, that is of
academic interest only given the legal effect of a mortgage bond which the
plaintiff acceded to with its eyes, or is it those of its directors, very wide
open.
This
is because a mortgage bond is in essence, an acknowledgment of debt backed up
by the security of immovable property. Stricto
sensu in conveyancing, a mortgage bond is executed by either the owner of
the immovable property or a legal practitioner (Conveyancer) authorized by the
owner in the presence of the registrar of deeds for it to be valid. Where the
owner has given the conveyancer a power of attorney which is valid to appear on
his behalf and register the bond, a bond so registered is valid and creates a
creditor and debtor relationship between the mortgagee and mortgagor
respectively.
Mr
Uriri for the plaintiff submitted
that there exists four grounds upon which the mortgage bond should be nullified
namely that Georgias' signature was forged; the power of attorney for its
registration was irregular by reason that it fell foul of s 78 (a) of the Deeds
Registries Act [Chapter 20:05] to the
extent that, according to the evidence of Karimazondo, it was signed in the absence of witnesses; although
purporting to be a surety the bond was not predicated on a tripartite agreement
between the plaintiff, the second and third defendants and finally that it does
not accord with the terms of the principal agreement between the plaintiff and
the second defendant.
I
have canvassed the first ground relating to the signature allegedly forged and found
that the signature was not forged. The other 3 grounds sought to be relied upon
were not identified as trial issues. I
shall however address them.
Section
78 (a) of the Deeds Registries Act [Chapter
20:05] provides:
“Powers of attorney to pass deeds or to do any act in
connection with a deeds registry shall,
if executed within Zimbabwe be accepted if witnessed by two competent witnesses or by a justice of the peace or commissioner of oaths and the
signature of each such witness,
the justice of the peace or commissioner of oaths, as the case may be, has been affixed thereto in the presence of
the person executing it.”
Mr
Uriri submitted that the power of
attorney was invalid by reason that, according to Karimazondo, it was signed by
Georgias alone in the absence of witnesses.
He urged me to nullify the mortage bond on the basis that the power of
attorney signed in breach of s 78 (a) could not found a valid bond. I do not agree that the power of attorney was
signed in the absence of two witnesses. For a start, two witnessed appended
their signatures on that document as a seal that they witnessed the signing by
Georgias and on the face of it, there was compliance with the provisions of s
78(a).
The
problem with Mr Uriri's argument is
that it relies on the evidence of Karimazondo and his alone. I have already
rejected that evidence as being demonstrably unreliable. It therefore cannot form the basis for
impugning an otherwise valid power of attorney.
Mr
Uriri submitted that the power of
attorney should be nullified on the further basis, firstly that there was no
tripartite agreement involving the plaintiff, the second and third
defendants. A surety bond should have an
underlying suretyship agreement.
Secondly, the bond itself as registered was at variance with the terms
of the principal agreement between the plaintiff and the second defendant.
Mr
Fitches for the third defendant
objected strongly to the reliance on that argument in light of the fact that it
was not pleaded thereby depriving the defendants an opportunity to respond to
it and appears to have been highlighted in closing submissions. I must say that those issues were canvassed
during the cross examination of witnesses but were certainly not pleaded. More importantly, they were not made issues
for trial at the pre trial conference of the parties. The same applies to the submission that by
entering into an agreement post the default to extend the time to pay, the
second and third defendants released the surety. Can the plaintiff be allowed to raise a new
cause of action which is not contained in the pleadings? I think not. I have said that a party is bound by its
pleadings.
Even
if I am wrong in that conclusion, the plaintiff's cause cannot be rescued
because having denied the mortgage bond, it cannot at the same time rely on it
on the merits. The plaintiff cannot
approbate and reprobate at the same time.
That principle is to the effect that a person cannot on the one hand
state that a transaction is invalid and then turn round on the other to state
that it is valid for purposes of securing some other advantage: Archipelago (Pvt) Ltd v Local Authorities Pension Fund & Anor
SC 30/13; Fulner v Freeman 1985 (3) SA555 (C).
Allied
to that is the question of the disparity between the terms of the principal
agreement and the mortgage bond. This
was not the cause of action relied upon by the plaintiff in the suit. Even if it had been relied upon it would not
affect the liability of the plaintiff to the third defendant. This is because suretyship is a separate
agreement between the surety and the creditor.
Mr Uriri referred to a part in
Caney's The Law of Suretyship, 6th
ed, Juta p 30 where it is stated that there are three parties involved in a
suretyship to the extent that the suretyship agreement is an accessory to the
principal obligation and suggested that there must at all times be a principal
suretyship agreement.
What
counsel overlooked was the extrapolation by the authors at p 31 :
“Although there are three parties involved, there is
not necessarily a tripartite agreement or contract;
indeed, in practice there seldom is. There is the transaction, as a result of
which the principal debtor is bound to
the creditor, and there is a contract between creditor and surety by which each is bound to the other.
Thus the principal debtor is bound to the creditor, and there is a contract between creditor and surety by which each
is bound to the other. Thus the principal
debtor is not necessarily a party to the contract between the surety and the
creditor, but nonetheless, there
comes into existence the obligation of the principal debtor to reimburse the surety what he pays the
creditor…………. The surety's obligation arise from the making of the contract of suretyship,
from then he becomes bound to the creditor and from then he becomes a conditional creditor to
the principal debtor in relation to his right of recourse against the latter.”(the underlining is
mine)
What
is clear therefore is that the suretyship agreement, although accessory, is a
stand alone one binding the surety to the creditor. In the present case what we
have is a suretyship created by a mortgage bond which the plaintiff passed
through the medium of its attorney. Mr Mutevedzi
made the vital point that the mortgage bond itself, without recourse to any
other document, is evidence of liability that the plaintiff undertook. After
all it is an acknowledgment of indebtedness in which the mortgagor agreed to:
“……… bind itself as surety and Co-Principal Debtor in
the sum of US$1 000 000-00 (one million United States Dollars) ('the
capital sum') for the due payment of the said indebtedness
of the Principal Debtor under
the facilities and as security to hypothecate the
immovable property of the mortgagor
herein – after described.”
In my view that was a
separate suretyship agreement binding the plaintiff. In that regard all the
other issues of how and why it came about and the contents of the agreement
between the second and third defendants pale. The liability of the plaintiff
arises from the mortgage bond that it passed with its eyes very wide open which
I find as valid and binding.
It
has been argued on behalf of the plaintiff that the extension of time to pay
given to the second defendant by the agreement signed after default released
the plaintiff from liability in terms of the suretyship agreement. I have
already said that the plaintiff is not entitled to make that argument when it
denied the existence of the suretyship and/or validity of the bond. This would
amount to approbating and reprobating at the same time. Even if it had been on
properly made it would fail.
My
attention has been drawn to the remarks of the learned authors, C F Forstyth
& JT Pretorius in Caney's The Law of Suretyship ibid, at p 208
which settles that issue. They remarked:
“Although the old authorities are
not entirety harmonious on the question of the effect of an extension of time, the law was laid
down by the Appellate Division in Estate Liebenberg
v Standard
Bank of South Africa Ltd (1927 AD 502 at 520 ff). The central rule is that
where the creditor gives the
debtor more time in which to pay before the debt falls due, and time is of the essence,
that amounts to a material alteration and releases the surety. Unlike in English Law,should the grant be made
after the debtor is in mora, the
surety is not released.
This is because the surety can avoid any prejudice in such circumstances by paying the debt when it falls due and exercising his right of recourse against the
debtor.” (The underlining is mine)
In the present case I
have found as proved that the plaintiff gave Peter Joseph Moor of Wintertons a
valid power of attorney to appear before the Registrar of Deeds and pass the
mortgage bond in favour of the third defendant. All the conveyancing
formalities were complied with. To that extent therefore the plaintiff is bound
as surety and co-principal debtor. That, in any event is the whole basis for
requiring security of that nature. So that in the event of a default, the
creditor will fall back on the security. It can only do so if the mortgagor is
so bound.
The
third defendant has asked for costs on an admonitory scale to be awarded
against the plaintiff. Such costs are awarded, first and foremost as a seal of
the court's disapproval of the conduct of a party as well as recompense to a
party that has been unnecessarily put out of pocket. The findings I have made
in this matter point to conduct on the part of the plaintiff that should be
admonished. A party that led itself to a bad business decision set about to
pull the wool of over the court's eye by disowning what it had voluntarily
done. In the process it dragged everyone through a lengthy and expensive trial
which could have been avoided. The case cries out for punitive costs.
In the result, it is ordered that;
1. The
plaintiff's claim is hereby dismissed with costs on a legal practitioner and
client scale.
2. The
3rd defendant's counter claim succeeds to the extent that judgment
is hereby entered in its favour against the plaintiff and the 2nd
defendant jointly and severally, the one paying the other to be absolved in the
sum of US$686 172-38 together with interest at the rate of 5% per annum with
effect from 1 May 2011 to date of payment.
3. The
plaintiff and the 2nd defendant shall bear the 3rd
defendant's costs on a legal practitioner and client scale.
Messrs Motsi &
Associates,
plaintiff's legal practitioners
Mutangamira &
Associates,
1st defendant's legal practitioners
Scanlen & Holderness, 3rd
defendant's legal practitioners
