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 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
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. 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 multicurrency system had been introduced following the demise of
the local currency. Most companies' balance sheets had almost
reduced to zero. As a recapitalisation 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 Munengwa and
Matete. But heads of divisions such as Mugwara were also members.
Mugwara was a member.
It
was common cause that 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 Mugwara, on the one side, and Munengwa and
Matete on the other, was the extent of Mugwara's authority.
Specifically with regards to the issuing of guarantees.
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 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 Matete kept. He challenged 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, 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.
Munengwa
and Matete vehemently disputed that Mugwara could issue guarantees on
his single signature and bind the Bank. They said all the Bank's
guarantees had to be countersigned. 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 Mugwara had
also issued on his single signature in favour of other third parties,
Munengwa and Matete said they were invalid for lack of authority.
They had never been brought up to the PSPC for specific approval.
Munengwa
and Matete also accused Mugwara of fraud. They said when they had
confronted him after Mudzengerere had called up the guarantees and
was pressing for payment, 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.
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 Mugwara to the police.
However, it was also common cause that the State had declined to
prosecute for lack evidence.
For
Engen, Mudzengerere said his first encounter with Mugwara was when, a
few days before the guarantees, Mugwara had arrived at his office
offering Engen two million litres of fuel. 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, 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 Mugwara
had returned to Mudzengerere's office with a sample guarantee from
IDBZ. 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 $450,000-00. 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
Mudzengerere called up the guarantees, Mugwara got in touch with
Wedzera. Wedzera wrote something to assuage Engen. Mudzengerere was
unimpressed. He pressed for payment. Eventually he got through to
Munengwa. 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
Mugwara. They were invalid.
Having
faced a brick wall, Engen sued. That was essentially the case before
me.
Mr
Fitches, for the plaintiff, argued that the Bank's defence was
misconceived. From the facts, 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. Mugwara's contract of employment empowered him to issue
such guarantees. Mr Fitches further argued that if it should be said
that 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. Mugwara had subsequently been promoted to head it. All this
had been in the eyes of the public. Mr Fitches highlighted that
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. Mugwara had been mandated to market and manage them.
Third parties like Engen could hardly be faulted for accepting
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 disentitle Engen from
holding the Bank to the guarantees.
For
the Bank, Mr Moyo explored Mugwara's contract of employment in some
detail and argued that nothing said therein could be said to amount
to authority for Mugwara to issue such guarantees on his single
signature. Mr Moyo 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 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, Mugwara was just a rogue. He had taken a
bribe for $10,000 in return for the guarantees. When confronted by
Messrs Munengwa and 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 Mr Moyo, 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, 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 Mugwara had issued, would run them past
its own bankers. The bankers would know how to go about verifying
them for authenticity. Mr Moyo 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.
In
his closing submissions Mr Moyo sprang a new argument. It had not
been pleaded. It had never been referred to before.
It
was that the Bank was a statutory corporation the powers of which
were set out in its enabling Act. In summary, Mr Moyo's new
argument was that anyone could check what the Bank could or could not
do. Among other things, only the Bank's Board and its Chief
Executive Officer had the sole mandate to represent the Bank.
Mugwara's conduct had been in contravention of the law. Mr Moyo
quoted section 21 of the IDBZ Act in extenso. It sets out the
procedures and requirements for financing by the Bank. Among other
things, there can be no financing for any project without the Bank's
Board having first considered it. An elaborate procedure is then set
out on how the Board may go about considering a proposal for funding;
what sort of things it must look for, and what conditions it may
prescribe if the proposal is approved. It was argued that Mugwara,
not having followed, or caused to be followed, the statutory
procedures, his guarantees were ultra vires the Act, manifestly void
and therefore unenforceable.
Inevitably,
reference was made to LORD DENNING'S seminal statement in McFoy v
United Africa Co. Ltd1.
If an act is void, then it is a legal nullity. Such an act is not
only bad, but also incurably so. There is no need for an order of
court to set it aside. Every proceeding founded on it is also
incurably bad:
“You
cannot put something on nothing and expect it to stay there. It will
collapse.”
Mr
Moyo also referred to section 30 of the IDBZ Act. By this provision,
the Bank is made immune from the provisions of the Companies Act,
[Chapter 24:04], or of any other law relating to companies.
This
has huge significance.
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 Turquand2
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 Ltd3.
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.
Plainly,
but for section 30 of the IDBZ Act, the Bank could never have mounted
the kind of defence that it did herein, for Mugwara's actions fell
squarely within the scope of the presumptions of regularity
prescribed by section 12 of the Companies Act.
However,
in spite of the ousting by section 30 of the IDBZ Act of the
provisions of the Companies Act, and any other law relating to
companies; in spite of such further provisions of the IDBZ Act as may
repose in the Bank's Board the sole power to represent it and to
consider all funding proposals, and furthermore, notwithstanding the
Bank's argument that Mugwara's powers might have been limited, I
find that 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
guarantees and to bind the Bank to third party recipients.
LORD
DENNING MR, in Hely-Hutchinson v Brayhead Ltd & Another4
[quoted with approval by MPATI P in Northern Metropolitan Coal
Council v Company Unique Finance [Pty] Ltd & Ors5
] 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 Motors6
[quoted with approval in Seniors Service [Pvt] Ltd v Nyoni7]
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 above; NBS Bank Ltd v Cape Produce Co [Pty]
Ltd & Ors8;
Africa Life Assurance Company Limited v NBS Bank Limited9
and Glofinco v ABSA Bank Ltd t/a United Bank & Ors10.
In
NBS Bank Ltd v Cape Produce Co [Pty] Ltd & Ors above, 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 Mr Moyo relied was the judgment of the court of
first instance in Glofinco11
above.
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 liable12.
In
my view, Glofinco is distinguishable from the instant case on the
facts.
In
Northern Metropolitan Coal Council above, 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 is also distinguishable from the instant
case.
Du
Plessis and Van Wyk were respectively the last and second last from
the bottom. In casu, Munengwa and 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.
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.
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.” [my emphasis]
Among
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 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” [my emphasis]
During
trial, the Bank tried desperately to downgrade Mugwara's position.
It tried to strip him of all manner of authority.
I
totally disagree.
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 its defence.
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 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 Mugwara did.
With
respect, it was disingenuous for the Bank to try and seek refuge from
the provisions of the IDBZ Act that, as argued by Mr Moyo, reposed in
its Board of Directors or the Chief Executive Officer the mandate to
represent it or to consider funding for new projects.
The
argument was flawed because in terms of sections 4 and 4A of the IDBZ
Act, the Board is in charge of the policy and administrative affairs
of the Bank, not its operations. It can supervise all the activities
of the Bank. But section 7 of the Act empowers the Board to establish
committees and vest them with the requisite authority for the better
exercise of functions. Persons appointed to such committees need not
be members of the Board.
I
believe the PSPC was one such committee.
As
said before, Mugwara was a member.
Furthermore,
and at any rate, the Board can delegate its powers to the Chief
Executive Officer, who may, in terms of section 9 of the Act, employ
staff necessary for the conduct of the Bank's business.
Nobody
said that the Bank's innovative strategy in offering
non-traditional products in the post dollarization period was not
sanctioned by the Board.
Mugwara
was expressly authorised to market that vision. This was consistent
with his job description. The Bank held him out to the world as one
authorised to do so. It provided him with the necessary stationery to
issue out the guarantees. He could incept them.
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. 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 Limited v Cape Produce Co. [Pty] Ltd & Ors, supra.
I
find nothing unreasonable in Mudzengerere's reliance on 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
Mugwara called at his office for the first time, it was to interest
Mudzengerere in a bulk fuel deal worth over a whopping $2 million. So
when 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. 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 Limited, supra. So again 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
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 Mugwara would testify for Engen until a few days before
the trial.
That
was rather lame.
Whether
or not 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 Mugwara to the police soon after the guarantees
had surfaced. Munengwa's witness' statement to the police did not
contain any reference to Mugwara having received a cash inducement
from Nhodza. The complaint was concealment by Mugwara of his
transactions of which Munengwa concluded amounted to fraudulent
misrepresentation.
No
wonder the State had declined to prosecute.
In
his testimony, 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 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.
15
April 2016
Wintertons,
plaintiff's legal practitioners
Kantor
& Immerman, second defendant's legal practitioners
1
[1961] 3 All ER 1169 [PC] at 1172
2.
(1856) 6 E & B 327; (1843-60) 119 ER 886
3.
2013 [1] ZLR 38 [H] at 42-43
4.
[1968] 1 QB 549; [1967] 3 All ER 98 [CA]
5.
2012 [3] All SA 498 [SCA], at p 507a – c
6.
[1969] [2] RLR 519 [AD], at p 523; 1970 [1] SA 521 [RAD]
7.
1986 [2] ZLR 293 [SC]
8.
2002 [1] SA 396 [SCA]; [2002] 2 All SA 262 [SCA]
9.
2001 [1] SA 432 [W] 432
10.
[2002] ZASCA 91
11.
Reported
in 2001 [2] SA 1048
12.
These two other cases were NBS Bank v Cape Produce Company [Pty] and
Others 2002 [1] SA 369 [SCA] and South Eagle Insurance Company Ltd v
NBS Bank Ltd 2002 [1] SA 560 [SCA]
