STANBIC BANK ZIMBABWE LIMITED

versus

FLAIR FURNITURE COMPANY

(SUCCESSORS) LIMITED

 

 

HIGH COURT OF ZIMBABWE

MTSHIYA J

HARARE, 4 & 22 June 2010 & 22 September 2010

 

 

Advocate Zhou, for the plaintiff

Mr Venturas, for the defendant

 

            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

 

1. Interest thereon at he 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

1. A composite facility comprising:-

Overdraft and/or

Revolving Acceptance Credits and/or

Productive Sector Finance and/or

Export Finance Facility

 

1. Post-Shipment Offshore Loans

 

4.         AMOUNT

4.1.      The total amount available under the composite facility will be Z$150 000 000-00 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 000-00 (South African Rands eight hundred and fifty thousand only) and USD 300 000-00 (Three hundred thousand United States Dollars only).

                        5.         PURPOSE

                        5.1.      Overdraft

                                    To cover short term working capital requirements

• Revolving Acceptance Credits

To finance stocks and/or trade debtors

• Productive Sector Finance

To finance working capital requirements

• Export Finance Facility

To finance pre and post shipment exports

• Post Shipment Offshore Loans

To facilitate the importation of raw materials.

           

1. UTILISATION
   1. …..
   2. …..
   3. Post-shipment offshore loan
   4. 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.
   5. 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. ‘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 Prima 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 doe 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.

 

• 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.

• 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.

 

1. 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.

 

1. 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.    

 

1. GENERAL CONDITIONS
   • 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

1. USD36 305.99 value 23/10/03
2. USD46 772.09 value 23/12/03
3. USD37 614.51 value 07/11/03
4. USD39 620.20 value 10/12/03
5. USD39 620.00 value 23/12/03
6. 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. Several attempts to settle the matter at the pre-trial conference stage were made but to no avail.

The final settlement offer from the defendant, which was rejected by the plaintiff, was made on 29 October 2009 in the following terms;

 

“Dear Sirs

 

    Flair International (Private) Limited and Stanbic Bank Zimbabwe Limited

 

We refer to the numerous attempts to settle this matter:

 

Our client hereby tenders to your client in full and final settlement of all monies owed by ours to yours the sum of USD$ 57 353-03 (fifty seven thousand United States dollars and three cents.

 

It carried out a comprehensive exercise to arrive at this figure.

 

Our client as a gesture of good faith will pay to yours the sum of

 

1. USD$ 20 000 (twenty thousand United States dollars) by the 15^thNovember 2009,
2. USD$ 13 000 (thirteen thousand United States dollars) by the 30^thNovember 2009,
3. USD$ 12 000 (twelve thousand United States dollars) by the 15^thJanuary 2010,
4. USD$ 5 000 (five thousand United States dollars) by the 31^stJanuary 2010 and;
5. USD$ 7 353-03 (seven thousand three hundred and fifty three dollars and three cents) before the 28^thFebruary 2010-09-13

 

Please advise if your client is agreeable to the above failing which we will

make a formal tender into Court.

 

Our client would also request that yours release our clients title deeds to it by

the 15^thJanuary 2010 once yours has received USD$ 45 000 (forty five thousand United States dollars) to enable it to finance the balance of the repayments and fund its working capital requirements for 2010

 

Yours faithfully

 

 

Venturas & Samukange”

  

            With all attempts at settlement having failed, the parties, on 28 October 2009, had already agreed at a pre-trial conference that the issues for trial would be as follows:-

“1.1.    Did Reserve Bank of Zimbabwe’s actions of appropriating proceeds of defendant’s exports amount to supervining impossibility.

 

1.2.      Whether the defendant is indebted to the plaintiff in the sum of USD80 421-84 or at all

 

1.3.      If the defendant is indebted to the plaintiff, in what sum is it indebted to the plaintiff.

 

1. Whether the plaintiff is entitled to payment in foreign currency”

 

The above remain the issues for determination in this action.

The plaintiff called one witness, a Mr Weston Munashe Makwara (Makwara). He said he is employed by the plaintiff as an Executive Director (Corporate and Investments Banking) His duties involved looking after customer relationships- particularly large customers. He was aware of the loan agreement between the plaintiff and the defendant, he then produced exh 1 containing the facility letter from pp 1-8 of the exhibit (i.e plaintiff’s bundle of documents). It was then agreed between the parties that exh 2 be also produced (i.e. defendant’s bundle of documents).

Makwara said under the agreement the defendant would request the plaintiff to pay its (defendant’s) customers/suppliers for imports. The plaintiff would then make direct payments to the defendant’s suppliers. Makwara confirmed the seven draw downs indicated at p 2 of this judgement and said that out of the total of those draw downs a balance of USD88 452-05 was still owing from the defendant as at 26 April 2010.  

            Makwara said the interest rate chargeable was incorporated in the agreement and that the London Interbank Offer rates (libor) used were extracted from Reuters. He said all banks, including the Reserve Bank of Zimbabwe, had access to Reuters and relied on Reuters for interest rates.

            Makwara said the facility enjoyed the authority of the Reserve Bank of Zimbabwe as confirmed by its letter of 9 February 2010. It was his evidence that prior to the issuance of the summons there was no dispute on the amount(s) owing from the defendant.

            Under cross examination Makwara said he could not understand why the defendant could deny that draw downs were made when repayments by the defendant were actually made by the defendant against the draw downs. He did not agree that the plaintiff’s figures were inaccurate. He agreed that the defendant had challenged the libor rates used. He also admitted that in an attempt to settle the dispute, changes were made relating to the amount owing. That, he said did not change the actual indebtedness of the defendant as reflected in the plaintiff’s court papers. He said the plaintiff had, where necessary addressed the defendant’s queries. Makwara said payments were made to the defendant’s customers as per its instructions.

            Makwara said the summons issued by the plaintiff was supported by schedules to prove the plaintiff’s claim. He did not believe that the intervention of the Reserve Bank of Zimbabwe rendered the defendant incapable of meeting or paying its debts. It remained an importer and could rely on other resources. The defendant remained obligated to pay the plaintiff the balance still outstanding on the loan. The calculations of the balance were in terms of the facility letter (agreement).

            The defendant called two witnesses the first witness was Mr Tafadzwa Shumba (Shumba). He said he holds a Bachelor of Science degree in applied Mathematics and is employed by Deliottes and Touch as a quantitative analyst. Together with Edric Prince and Amon Kubikwa (his seniors in the Financial Advisory department) they had, on behalf of the defendant, examined the plaintiff’s claim. The defendant had given them what he referred to as “armotization schedules” indicating loan repayments. It was his evidence that the libor rates used did not show the actual rates as derived from other sources such as Bloomberg. He said although some of the rates used were correct some were wrong and higher than those from Bloomberg and thus leading to a higher balance of the loan. He said this would be so because the bulk of the repayments would be diverted to interest instead of the capital amount. In the main his evidence was that the plaintiff was charging more interest than what was required or agreed.

            Under cross examination Shumba agreed that he had no qualification in banking or finance and had only worked in a bank for six months in the United States of America. He said in comparing rates from Bloomberg and Reuters it would be difficult to say which ones were actually correct or wrong.

            The second and last witness called by the defendant was Mr Neil James Bruce (Bruce). He said he holds a Bachelor of Commerce degree in Marketing and Economics. He joined the defendant in 2002 as a Sales and Transport Manager and rose to the position of Managing Director in 2008. He was aware of the facility letter and of the documentation required in the execution of the loan facility. Bruce said the plaintiff had since paid US$233 000 towards the loan. He said that although he was advised of the seven draw downs, he had not seen documentary proof of same. He, however, admitted that he had not worked in the department that dealt with loans.

            As Managing Director, Bruce said he had asked for documentary proof relating to the loans. He had not yet received certificates signed by a financial manager in plaintiff to show the extent of the defendant’s indebtedness. He said  when the facility expired on 30 November 2003 it was extended in June 2004 and thereafter there were 4 draw downs for which the plaintiff was never sued.

            He said the statutory surrenders required by the Reserve Bank of Zimbabwe had affected the plaintiff’s ability to service its loans.

            Bruce said he had seen the letter from the Reserve Bank of Zimbabwe dated 9 February 2010. His view was that the letter referred to a blanket approval yet approval was required for each specific draw down. He did not deny the authenticity of the letter. Bruce said because he was not happy with interest calculations on the loan, he had requested for bank statements. He said the loan balance kept changing and the plaintiff was forced to engage an independent analyst to examine the plaintiff’s schedules. The analyst had told the defendant that there were errors in the manner the plaintiff was calculating interest.

He said settlement negotiations had collapsed and the offer in the plaintiff’s letter of 29 October 2010 had also fallen away.

            Under cross examination Bruce repeated that he had never worked in the finance department where accounts were settled. He had a Finance Director and the sum of US$233 000 was paid before he took over as Managing Director. He said he himself could not dispute that draw downs were made but he had no proof of same. He agreed that the dispute only arose when he took over as Managing Director. His predecessor had been paying towards the debt. His own calculations had given him a balance of US$35000-00 instead of US$78 603-08 initially demanded by the plaintiff. He agreed, though, that in the plea the defendant had denied owing any money at all.

            Bruce went on to say the figure of US$57 353-03 in the defendant’s letter of 29 October 2009 was only brought up for purposes of settling the dispute amicably.

            He said although the surrender policy of the Reserve Bank of Zimbabwe had affected the defendant’s ability to pay, it (the defendant) was now in a position to pay although under extreme difficulty.

            Bruce told the court that the defendant kept its own records. He maintained that the dispute had arisen because of the different interest rates that were used by the plaintiff, namely 4% and 5%. He said for six (6) years the defendant had been repaying on the basis of an interest rate of 4%.

            In his submissions, Advocate Zhou, for the plaintiff, stated that the defendant had failed to deny that it drew down a total of US$274 616-33 under the loan agreement. He said the amount in the plaintiff’s declaration had not been disputed and should therefore be taken as admitted. He said Bruce had admitted payment of US$233 000 under the agreement and thus leaving a balance of US$41 616-00 excluding interest. He said given the aspect of interest it was not therefore surprising that as at 30 September 2008 the amount owing was US$80 421-84. He went further to submit that between 22 October 2003 and 29 June 2004 the libor rate of interest used was 2.3%. That was the rate obtained from Reuters and used by the Reserve Bank of Zimbabwe and all other Banks in the country.

The defendant through its witness Shumba, who was not an expert, Advocate Zhou  argued, was now alleging that the rate was too high without giving the applicable rate at the time. The Bloomberg rates referred to by the witness were not placed before the court.

Advocate Zhou also said Bruce had not explained his failure to call his Finance Director who was involved in settling accounts. Bruce was not involved and there was also no reason for the department not to keep its own records. It was Advocate Zhou’s submission therefore that the questioning of the interest rates after default in payments was a mere afterthought intended to delay judgment. He said both the interest rates and service fee were provided for in the facility letter.

            Furthermore, Advocate Zhou argued, the debt did not remain static as interest continued to accrue and will continue to run until payment is made. That explains the different figures that appeared after the issuance of summons and indeed the differences in the schedules that were presented when the hearing of the case commenced.

            Advocate Zhou said in casu, all the plaintiff had to do was to establish, on a balance of probabilities, that there were amounts of money still outstanding in terms of the loan facility. He submitted that given the circumstances of the case “the plaintiff was entitled to judgment in the sum of US$80 421-84 claimed together with interest at the rate stated in the summons to the date of payment in full”.

            Advocate Zhou also submitted that in the event of the court refusing to grant judgment in the sum of US$80 421-84, the court should then grant judgment in the sum of US$57 353-03 admitted by the defendant in its letter of 29 October 2009. The offer was not on a “without prejudice” basis and the defendant had said it had arrived at the figure after carrying out “a comprehensive exercise”. The tender to pay that amount was not conditional and had been followed by a payment of US$20 000 on 11 November 2009.

            In his detailed submissions, Mr Venturas, for the defendant, said that the defendant’s stance was that:-

            “1        Plaintiff does not have the requisite proof to prove its claim

            2.         Plaintiff’s summons was invalid as it had not been signed by a manager or

                        accountant of the plaintiff in breach of the facility letter;

 

            3.         The claim made more than six years after the debt was due was illegal due to 

                        plaintiff’s non compliance with the Exchange Control Regulations S.I 109 

                        1996;

 

4.         The agreement became unenforceable due to impossibility after the Reserve Bank of Zimbabwe intervened in the market and compelled defendant to surrender export proceeds”

 

After going through a detailed background of the dispute, Mr Venturas gave the

following summary:-

            “The LIBOR rates were wrong:

            The application of the arrangement fees were wrong;

            It was inconsistent to change the interest from 4-5%

It was inconsistent to back date the arrangement fees;”

 

            Mr Venturas correctly submitted that it was the plaintiff’s duty to prove its claim on a balance of probabilities. The plaintiff, he argued, had failed to prove its case. He said within a space of three months after the issuance of the summons the plaintiff had, without leave of court, produced three different figures as follows:-

“9.2.1.As of 17 May 2010: USD 83 953-02;

1. As of 18 2010: USD 88 452-00
2. As of 19 May 2010: USD 99383-52”

 

He went further to submit that the plaintiff had not sought leave of the court to rectify

its failure to file a schedule of  loan movements signed by a Manager or Accountant and to justify its claim for costs de bonis propriis- the latter being a new ground of claim not previously pleaded.

            Mr Venturas submitted that the facility violated Exchange Control Regulations and that the purported authority dated 9 February 2010 stated that approval was for the loan facility on 31 January 2003 yet the facility was only entered into in April 2003. There was, he argued, no evidence of approval for each draw down. He went further to sate that an attempt on the part of the plaintiff to change the interest rate after six (6) years would be illegal as it would be in contravention of the Prescription Act [Cap 8:11). He said the interest rate used upon payment of a total of US$ 233 866-14 was 4% .

            Mr Venturas submitted that the Reserve Bank of Zimbabwe’s statutory surrender policy of a proportion of foreign exchange generated from exports affected the defendant’s ability to pay and as such the defendant was entitled to resile from the contract.

            On the alternative relief relating to the acceptance of the US$57 353-03 tendered by the defendant, Mr Venturas submitted that if the court followed that route, then the defendant would be entitled to a special order for costs on a legal practitioner client scale because the plaintiff had earlier rejected the tender and thus leading to costs incurred in this trial.

            All in all, Mr Venturas submitted that the plaintiff had, on a balance of probabilities, failed to prove its case. It had failed to produce documents in support of its claim, failed to prove that it had Reserve Bank of Zimbabwe authority/approval for the draw downs, failed to seek the leave of court in order to procedurally alter its pleadings and failed to rectify the invalidity of the summons by filing a certificate signed by a Manager/ Accountant.

            I am indebted to Mr Venturas for clearly highlighting the main reasons behind the defendant’s refusal/rejection of the plaintiff’s claim. I have listed these reasons at p 10 of this judgment. I believe the reasons are indeed in line with the issues listed for determination at the pre-trial conference. I shall therefore deal with each of those summarised reasons and in so doing, I shall not necessarily follow the order in which they were presented. I shall also, where necessary, marry the reasons to the agreed issues for determination, which issues I have also listed at p 6 of this judgment.

I believe that a proper examination of the reasons for the rejection of the plaintiff’s claim by the defendant will assist in the final determination of this matter.

I shall now proceed to deal with each of the said reasons given by the defendant for rejecting the plaintiff’s claim:-

1.         Plaintiffs summons was invalid as it had not been signed by a manager or accountant of the plaintiff in breach of the facility letter

 

If the above challenge, which, I must say, was never preceded by an exception, is

correct, then there are no proceedings before the court. I shall therefore start by examining that challenge from the defendant. The challenge is based on para 14.1 of the facility letter which provides as follows:-

“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. Accountant Manager or Accountant of this branch of the Bank and such certificate shall be prima facie proof of the amount due by he Borrower and the onus shall be on the Borrower to disprove the accuracy of such certificate.

 

            I do not believe that the above is a pre-requisite for the issuance of a summons. The certificate referred to is one of the forms through which the plaintiff can support/prove its case. The plaintiff can prove its case through other forms of evidence but the production of such a certificate would strengthen its case (ie prima facie proof). It need not, in my view, be part of the summons. I therefore agree with the plaintiff that no issue arises since that certificate is a matter for the plaintiff. In the circumstances, my finding is that the summons was properly issued and the plaintiff is therefore properly before the court.

            2.         The plaintiff does not have the requisite proof to prove the claim

            In its plea the defendant avers as follows:-

“Defendant denies that the sum of US$80 421.84 (eighty thousand four hundred and twenty one United States dollars and eighty four cents) or any sum at all is owed to the plaintiff”

 

            However, notwithstanding the above, evidence before the court shows that:-

 

1. there was an accepted facility which was renewed in June 2004.
2. draw downs were indeed made on the facility and each party kept its own records.
3. a balance of US$35000 was admitted as definitely owing to the plaintiff
4. a balance of US$57 353-03 was tendered as a settlement amount
5. up until 2008 there was never an averment to the fact that the plaintiff had contravened the terms and conditions of the facility letter by using incorrect interest rates.
6. Bruce, who only came onto the scene in 2008, admitted that the defendant kept its own records which it had used to arrive at the figure of US$35000 and indeed the settlement figure of US$57 353-03. However, no records of the transactions were placed before the court. There was no evidence of that in defendant’s bundle of documents.
7. the plaintiff produced a schedule attached to the summons which shows that, apart from the last payment of US$20000 paid on 11 November 2009, the defendant had, up to 30 April 2008, effected a total of thirty two (32) payments in varying amounts. This probably accounts for the sum of US$233 000 which the defendant says it paid. The defendant was definitely paying towards known draw downs. (i.e. the seven draw downs listed at p 4 of this judgment)
8. in making the thirty two (32) payments referred to in (g) above, the defendant never questioned the libor rates that were used by the plaintiff. The rates were only questioned when Bruce took over in 2008 and when the defendant was in default.  

            (i)  expert witness called by the defendant testified that the libor rates he obtained from 

                  Bloomberg were higher than the Reuters rates but never produced the Bloomberg 

                  rates

 

 

 

 

 

 

 

1. the plaintiff admitted that the schedules used in court reflected amounts higher than the amount on the summons. This, the plaintiff explained, was so because the outstanding balances(s) continued to accrue interest.

 

I agree with the above explanation in para (j) above relating to why the amount on the summons was rising. I actually found it unfortunate for the defendant’s counsel to expend a lot of his time on that issue.  There was never any attempt to amend the amount on the summons as supported by the prayer in the plaintiff’s heads of argument.  At the time of trial the plaintiff merely indicated the movement of the debt without amending the claim in the summons.

            A consideration of the above factors and the submissions by counsel for both parties leads me to the conclusion that the plaintiff has, on a balance of probabilities, proved its claim against the defendant. I agree with Advocate Zhou’s reliance on Miller v Minister of Pensions(1947) Z ALL ER 372 where LORD DENNING stated:           

“It must carry a reasonable degree of probability but not so high as is required in a criminal case. If the evidence is such that the tribunal can say ‘we think it is more probable than not’, the burden is discharge…….”  

 

Without carrying out a reconciliation exercise of figures for the parties, which I believe

I am being asked to do, I believe, upon taking into account the factors listed above (a-j), it is more probable than not that the defendant owes the plaintiff the amount claimed.

            I am unable in casu, to find anything to suggest that the loans(s) were executed outside the confines of the facility letter. My finding is that the defendant admits receiving the loans and in the absence of a departure from the provisions of the facility letter, on the part of the plaintiff, it is difficult to accept the purported challenge(s) to its claim by the defendant.

            I fully agree that the plaintiff bears the burdens of proof in proving its case on a balance of probabilities, but the evidence in casu clearly demonstrates that the plaintiff has, on a balance of probabilities, adequately discharged that burden. The defendant failed to place before the court instruments that could have deflated the plaintiff’s claim. Both the libor rates and the establishment fee were applied in terms of the provisions of the facility letter.

The plaintiff’s claim has not been successfully challenged and that being the case I am not persuaded to consider the alternative of satisfying the claim in the form of the tendered lower figure of US$57 353-03.I believe the plaintiff is entitled to its full claim of US$80 421-84 with interest thereon at the rate of 9.07% per annum. That interest rate is not above the default interest provided for in the facility letter.

The facility enjoyed the approval of the Reserve Bank of Zimbabwe, as will be shown below, and as such the debt is payable in foreign currency and is not in any way affected by prescription.

3.         The claim made more than six years after the debt was due was illegal due to the plaintiff’s non-compliance with Exchange Control Regulations S/I 109 of 1996  

 

            The defendant did not, according to Bruce’s evidence, doubt the authenticity of the letter from the Reserve Bank of Zimbabwe dated 9 February 2010. In the main what Bruce believed was that each draw down had to be backed by a separate approval. However, it cannot be doubted that the plaintiff’s recent approach to the Reserve Bank of Zimbabwe was for the purposes of prosecuting this case. The Reserve Bank of Zimbabwe must have been made aware of that fact and hence the response it gave. I do not believe an institution of the Reserve Bank of Zimbabwe’s standing would deceive this court. That approval is further confirmed in exhibit 1 at page 28 where the document addressed to the Reserve Bank of Zimbabwe states in paragraphs 3, 4 & 5 thereof as follows:-

 

“The customer drewdown an offshore loan on 31/12/03 of USD49 364-88 (Forty nine thousand three hundred and sixty four united states dollars and 88/100) under Stanbic Treasury Facility of USD5 000 000-00 approval under reference GE514 dated 31 January 2003 by the External Loans Co-ordination Committee wherein banks were authorised to lend up to 75% of their FCA balances against export proceeds supported by valid CD’Is.

 

This loan was drawn under the client’s USD 284 226-99 Offshore loan facility under which they drewdown as detailed below:

 

Stanbic Bank Zimbabwe Limited

A member of the Standard Bank Group of South Africa

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

1.       USD39 620.00 value 23/12/03
2.       USD49 364.68 value 31/12/03”. (my own underlining)

 

 

 

 

Paragraph 3 of the above document, which document captures the subject matter of the facility, clearly repeats what is contained in the letter of 9 February 2010 from the Reserve Bank of Zimbabwe. It was the defendant’s evidence that Exchange Control approval was required prior to any disbursements. In casu and in accordance with the law, disbursements were effected in April 2003 on the basis of approval already granted on 31 January 2003.  The last drawdown referred to above and based on the existing approval was made of 31 December 2003.  It is clear therefore from the quoted document that the plaintiff was already conducting routine business with the Reserve Bank of Zimbabwe on behalf of the defendant on the basis of the approval granted on 31 January  2003.  As confirmed by the Reserve Bank of Zimbabwe, I am satisfied that the plaintiff had authority to execute the loan facility in foreign currency. There was therefore no contravention of the Exchange Control Regulations.

4.         The agreement became unenforceable due to impossibility after the Reserve Bank of Zimbabwe intervened in the market and compelled defendant to surrender export proceeds

 

            The above factor, in my view, fell away when Bruce admitted that notwithstanding Reserve Bank of Zimbabwe’s intervention, the defendant remained in business. Admittedly its ability to service its loans was affected. He said “it was extremely difficult to pay but not impossible”. The burden to prove impossibility lay with the defendant. There was therefore, in my view, no supervening impossibility. The difficulties experienced by the defendant fail to meet the requirements of a supervening impossibility.

            I believe that in dealing with the main issues on which the defendant anchored its rejection of the plaintiff’s claim I have also covered all the issues identified for determination at the pre-trial conference.

            All in all, the plaintiff has an unassailable and enforceble claim against the defendant.

            Costs 

            The plaintiff, through Advocate Zhou, made the following submission in respect of costs:

“2.3.    It is respectfully submitted that this is an appropriate case for costs to be given against the defendant and Neil James Bruce, the defendant’s Managing Director, de bonis propriis jointly and severally the one paying the other to be absolved. This Honourable Court is respectfully invited to consider awarding costs against the defendant’s legal practitioners de bonis propriss as well what will be submitted below”.

 

            Advocate Zhou argued that the defendant’s opposition to the claim was vexatious and therefore an abuse of the court process. He said Bruce had personally taken it upon himself to dispute a debt that had existed for five years and was being honoured. Bruce had gone further to deny that draw downs were ever made and finally admitting liability in his correspondence.

With regards the legal practitioner, Advocate Zhou said misleading legal advice had been rendered. He said initially the defendant had denied owing the plaintiff anything at all but had later unconditionally tendered payment of a sum of money.

            Furthermore, Advocate Zhou argued, there was a denial of draw downs and yet there was a claim that the Reserve Bank of Zimbabwe had rendered payment of the debt impossible.

            In response to the issue of costs, Mr Venturas, for the defendant submitted that if the plaintiff felt there was no defence at all it should have excepted. He said the alternative defence (i.e. intervention) was common to both parties. The only issue was to what extent it impacted on the defendant’s ability to pay. Some of the developments that occurred in the case were a result of the numerous efforts made to settle out of court. He said the defendant had a right to question the figures presented by the plaintiff and the legal practitioner had taken a stance of settling the matter.

            In its prayer in the summons the plaintiff only prayed for costs of suit. I am certain that right from the inception the plaintiff was pretty certain that there was no defence to its claim. Any defence could have been quickly demolished much earlier had the plaintiff presented the defendant with the original documents upon request and indeed from the outset. I do not believe that the fact that the plaintiff has gone on to prove its case without the production of some of the original documents, as initially requested for by the defendant, should entitle the plaintiff to a demand for punitive costs.

Given the concerted efforts embarked upon by both parties to settle the matter, I would find it difficult to fault the defendants’ legal practitioner for the various settlement stances adopted up to the trial stage. Accordingly I am not convinced that punitive costs are called for.

            In view of the foregoing, I order as follows:-

1. The defendant be and is hereby ordered to pay the plaintiff the sum of US$80 421-84 together with interest at 9.07% per annum from the date of service of summons to the date of payment in full; and

 

1. The defendant be and hereby ordered to pay costs of suit.

 

 

 

Atherstone & Cook, plaintiff’s legal practitioners

Byron Venturas & Samkange, defendant’s legal practitioners