SPAR Harare (Pvt) LTD V FAP Marketing (Pvt) LTD & 3 ORS

### Preamble
1
HH 581-18
HC 11372/16
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SPAR HARARE (PVT) LTD

versus

FAP MARKETING (PVT) LTD

and

PRISCILLA MAMBO

and

FRANCIS MAMBO

and

CORNELIUS ANDRES PIJORO

HIGH COURT OF ZIMBABWE

HUNGWE J

HARARE, 13 and 14 September 2018 & 25 September 2018

Civil Trial

T.J Muhonde, for the plaintiff

T.I.G Musarurwa, for the 4th defendant

HUNGWE J: Plaintiff issued summons against the defendants for the recovery of a debt in the sum USD81 881.42 which it claims is due and owing to it. Plaintiff prayed for an order in the following terms:-

Judgment in the sum of US$81 881.42 being the capital sum owing under a Trade Credit Facility Agreement between plaintiff and first defendant dated 13 January 2011 for goods and commodities supplied and delivered  at the instance and specific request of the first defendant, the sum of which has remained due despite due and proper demand.

An order declaring specially executable, the immovable property, certain piece of land situate in the District of Goromonzi being stand 1012 Ruwa Township measuring 2096 square metres held by fourth defendant under Deed of Grant No. 8182/2002 dated 14 June 2002 bound specially as First Mortgage favour of plaintiff as security for the repayment of all the sum due to plaintiff by first defendant under Mortgage Bond No. 1309/2011 dated 22 February 2011.

Interest on the said sum of US$81 881.42 at the rate of 5% per month from November 2011 to date of payment in full in terms Clause 2 of the STANDARD TERMS OF SALE annexed to the said Trade Credit Facility Agreement.

Judgment in the sum of US$1 922.03 being collection commission payable in terms of Clause 5 of the said Mortgage Bonds and Clause 9 of the STANDARD TERMS OF SALE attached to the said Trade Credit Facility Agreement also payable and calculated in terms of the Law Society of Zimbabwe (Amendment) By-Laws, 2014 (No. 15) published under S.I. 157 of 2014.

Costs of suit on a legal practitioner and client scale recoverable in terms of Clause 5 of the said Mortgage Bond and Clause 9 of the STANDARD TERMS OF SALE annexed to the said Trade Credit Facility Agreement.

Summons in respect of first and second and third defendants were served at an address where service was accepted by one Makaza, a relative of the second and third defendants. The return of service indicates that he accepted service on behalf of the three defendants. Pleadings were exchanged between plaintiff, first, second and third defendants. At a scheduled pre-trial conference, first, second and third defendants defaulted. Plaintiff took out default judgment against the three defendants. Plaintiff and fourth defendant who had filed his plea and counter-claim, proceeded to trial on the following issues.

ISSUES FOR DETERMINATION

Whether or not the fourth defendant is liable to pay plaintiff the sum of

USD81 881.42 being the capital sum owing under the signed Trade Credit Facility Agreement entered into between the plaintiff and the first defendant dated 13 January 2011 and secured under Mortgage Bond No. 1309/11 executed in favour of the plaintiff by fourth defendant.

Whether or not mortgage bond No. 1309/11 was fraudulently registered, if not, whether the fourth defendant is liable to plaintiff as mortgagor and co-principal debtor under Mortgage Bond No. 1309/11 dated 22 February 2011.

Whether therefore the fourth defendant’s immovable property namely certain piece of land situate in the District of Goromonzi, being Stand 1012 Ruwa Township, measuring 2096 square metres held under Deed of Grant No. 8182/2002 dated 14 June 2002 is specially executable in favour of the plaintiff.

Whether or not the mortgage bond registered over the said immovable property should be cancelled.

Whether or not the fourth defendant is liable to pay interest on the sum USD81 881.42 at the rate of 5% per month from the date of issue of summons to date of payment in full in terms of the Trade Credit Facility Agreement.

Whether or not the fourth defendant is liable to pay legal costs on a legal practitioner and client scale recoverable and payable in terms of the Clause 9 of the Standard Terms of Sale annexed to the said Trade Credit Facility Terms Agreement.

THE PLEADINGS

Plaintiff pleaded its case as follows.

The defendants are lawfully indebted to plaintiff for the sum of USD81 882.42 accrued in terms of a Trade Credit Facility Agreement dated 13 January 2011 which existed between plaintiff and first defendant.

This debt was secured under a mortgage bond No 1309/11 executed in favour of plaintiff by the fourth defendant.

Fourth defendant mortgaged his immovable property as security for the repayment of the said capital sum, a certain piece of land being stand number 1012 Ruwa Township measuring 2096 square metres held under deed of Grant No. 8182/2002 as security for the repayment of the sum of US$81 881.42.

The defendants having defaulted on their obligations under the Trade Credit Facility Agreement and Mortgage Bond the said capital amount has become due immediately.

It is just and equitable that the mortgaged property be declared specially executable for the recovery of all was due to plaintiff under the mortgage bond and Trade Credit Facility Agreement.

For his part, fourth defendant pleaded his defence to this claim as follows.

He denied being indebted to plaintiff in any amount and challenged plaintiff to prove its claim against him.

He denied ever executing a Mortgage Bond over his immovable property in favour of plaintiff for sums owed by first defendant.

He stated that he is not aware of the Trade Credit Facility Agreement signed between plaintiff and first defendant.

He maintained that his immovable property was mortgaged fraudulently without his knowledge and consent.

Fourth defendant prayed that the amounts owing be recovered from first, second and third defendants as the beneficiaries of the credit extended to them.

Fourth defendant counter-claimed as follows;

He is the registered owner of the immovable property known as stand 102 Ruwa Township, Goromonzi measuring 2096 square metres.

On 22 February 2011, first, second and third defendants registered a mortgage bond over the said property as security for the repayment of sums of money due to plaintiff from first, second and third defendant.

The mortgage bond was registered fraudulently as it was done without his knowledge or consent. He never signed a power of attorney authorising anyone to pass a mortgage bond over his property for any sums owing to plaintiff by defendants. As such any claims arising out of the mortgage bond are a legal nullity.

Consequently he prayed for the cancellation of the mortgage bond.

In its replication and joinder plaintiff disputed the fourth defendant’s averments in the counter-claim. It insisted that fourth defendant duly executed the power of attorney to pass the mortgage bond. Plaintiff challenged fourth defendant to prove that the mortgage bond was fraudulently passed over his immovable property.

Plaintiff insisted that fourth defendant securitized the first defendant’s indebtedness to plaintiff for the sum of $130 000.00 by personally executing the power of attorney to pass a mortgage bond over his own immovable property. Plaintiff averred that the signature on the power of attorney to pass the bond was that of the defendant. As such, plaintiff averred that the bond was validly registered and lawfully securitized the indebtedness of first defendant to plaintiff. Consequently plaintiff prayed for the dismissal of the fourth defendant’s counter-claim with costs on a higher scale.

The parties thereafter joined issue.

MATTERS WHICH ARE COMMON CAUSE BETWEEN THE PARTIES

From the above it is clear that the following facts are not disputed by the parties.

Plaintiff extended credit facilities to the first defendant, a trading company in which second and third defendant had an interest as directions and/or shareholders.

In their trade dealings, plaintiff and first defendant entered into a trade credit facilities

agreement. This agreement was executed by representatives of plaintiff and first defendant. Second defendant bound herself specifically as the surety and co-principal debtor for the first defendant’s credit facility.

(c)  Fourth defendant had no interest in the business of first defendant.

(d) The trade credit facility agreement is the document titled STANDARD TERMS OF  	SALE “Savemor”

In order to succeed on the claim against fourth defendant, plaintiff needed to discharge the onus on it to prove:

That 4th defendant was lawfully indebted to it either as surety and co-principal debtor or as a result of his voluntary assumption of the debts incurred by first defendant by way of the mortgage bond.

That fourth defendant executed a power of attorney in favour of that person who passed a mortgage bond over his immovable property;

That the fourth defendant duly signed the documents necessary to pass the mortgage bond.

THE EVIDENCE

At the trial, Joseph Paradzai Paradza, a credit manager with plaintiff, testified on plaintiff’s behalf. His evidence was that second defendant, on behalf of first defendant trading as Savemor, approached plaintiff through him with a specific request for credit terms.  It was explained that credit would be extended to it on an agreed sum if she furnished security over immovable property over which plaintiff’s legal practitioners were able to pass a mortgage bond.  On a certain day she and someone presented themselves and showed him an original title deed in the name of fourth defendant. He did not know fourth defendant till the day they met at court. The person in whose company second defendant appeared was not fourth defendant. He was satisfied with the adequacy of the security offered.  He referred them to their legal practitioners who were to register a mortgage bond over the property.

Once the bond was confirmed registered, he authorized the facility. First defendant drew down on the facility. When payment became due, first defendant defaulted.

He was unable to testify whether fourth defendant executed a power of attorney authorizing one Magaya to pass a mortgage bond over the properties.  This was the exclusive domain of their legal practitioners who, at the time were Sawyer and Mkushi, of Harare. He only became aware of the fraud allegations when he was summoned by police over this matter in 2016. Police have not concluded their investigations yet, to his knowledge.

Consequently, he was unable to identify fourth defendant’s signature on any of the papers produced in evidence namely;

(i)  Standard terms of Sale;

(ii)  Mortgage Bond;

(iii)  Deed of Grant 8182/2002.

It will be clear from the evidence tendered on behalf of the plaintiff that despite its claim that fourth defendant had executed a power of attorney to pass a mortgage bond over his immovable property, plaintiff was unable to prove that fact.  It is a fact within its knowledge and control as it referred second defendant, who came with the deed of transfer, to its lawyers who passed the mortgage bond over fourth defendant’s immovable property.  It should have been a matter easy of proof for plaintiff as these lawyers were known to it. It is trite that in law he who alleges must prove.

Clearly, therefore, I must find that fourth defendant did not execute the power of attorney or any such instrument as authorize the person who signed the mortgage bond on his behalf, one Magaya to do so. The correctness of this finding is confirmed by fourth defendant.  He explained how second defendant came into possession of the deed of grant as follows.

Fourth defendant is related to the second defendant. At the time fourth defendant was working permanently in Cape Town, South Africa.  Second defendant is third defendant’s wife. Third defendant was at the time working in Botswana. They had asked for the deed of grant through his wife who was at home in Harare on the pretext that they will only use it to support their business project proposal.  The bank wanted to verify that the deeds were of any encumbrance and would be returned. They assured him that within three months they would have returned the Deeds. He allowed his wife to let them take the Deeds away on the understanding that the Deeds would be returned after at most three months.

They did not return the Deeds after three or six months. He panicked and began to make telephone calls to them from his South African base. He could not immediately leave his job as this would have had adverse economic consequences for his family back home. In any event he did not suspect foul play. He believed that in the fullness of time they would return his Title Deeds as promised. Over a year passed. The husband discarded the only mobile number which the fourth defendant used. He eventually returned home to pursue the matter by physically visiting them. When this did not yield the desired results, he decided to consult legal counsel. He learnt that the title deeds had been mortgaged to Spar Harare, the plaintiff, over the first defendant’s indebtedness to the former. The advice he got was to report the matter to Police as indications were that a criminal offence had been committed.

Prior to this discovery, he had no knowledge that this was the reason behind the request for the title deeds. He had no idea that the couple was running a supermarket in Harare. He maintained in his evidence that he had not signed any document permitting anyone to pass or register a bond over his immovable property. He did not believe that anyone could seek to use his title deed without consulting him over such an important issue. Apparently, to his surprise, this is what had happened. The Police treated the matter as crime. He felt cheated and betrayed. He seeks an order for the cancellation of the mortgage bond over his property.

He also prays that the plaintiff’s claims against him be dismissed with costs.

From the above evidence, it is clear that the plaintiff’s claim against the fourth defendant cannot succeed. It should fail. The registration of the mortgage bond over his property is clearly a fraudulent act. It is no wonder that both husband and wife cannot be located. They are literally fugitives from justice. They have left the present parties with egg on their faces. Fourth defendant was unaware of the debtor/ creditor relationship between the three defendants and the plaintiff. Nor was he in the least aware that the Mambos were running a supermarket in Harare for which they might need lines of credit from supplier like the plaintiff. Therefore when he authorised the release of his deeds to the second defendant, he could not have reasonably foreseen that the Title Deeds might be used as security for a debt. Even if he might have foreseen this, it is highly unlikely that he would have known that there could be a registration of bond over the premises without his being consulted over it.

In other words this court accepts the fourth defendant’s averment that the mortgage bond was registered fraudulently. As such it is liable to be cancelled.

To my mind, this is why the plaintiff was unable to call its legal practitioners to come and testify on how it is that they had successfully registered a bond without the power of attorney being granted in their favour by the registered owner of the immovable property. Clearly, there is only one explanation to this, the registration was fraudulent. The plaintiff tendered no explanation for the situation where it made bald assertions about the role its lawyers played but fail to call those lawyers. Between them, they were aware of the irregularities which plagued the registration of this mortgage bond.

Consequently the plaintiff’s claim against the fourth defendant is dismissed with costs.

The fourth defendant’s claim is granted in the following terms;

The mortgage bond number 1309/2011 which was fraudulently registered against the property registered in the name of Cornelius Andreas Piroro being a certain piece of land situate to the district of Goromonzi, being Stand No. 1012 Ruwa Township be and is hereby cancelled

Fourth defendant is awarded cost of suit.

Muhonde Attorneys, plaintiff’s legal practitioners

Legal Aid Directorate, 4th defendant’s legal practitioners