CBZ Bank Limited v Moses Tsorai

### Preamble
1
HH 502-18
HC 9972/16
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CBZ BANK LIMITED

versus

MOSES TSORAI

HIGH COURT OF ZIMBABWE

CHAREWA J

HARARE, 7 February 2018 & 5 September 2018

Trial

Mr D Halimani, for the plaintiff

Mr M Tsorai, for the defendant

CHAREWA J: On 3 October 2016, plaintiff issued out summons against the defendant claiming a total of $85 773.69 arising out of a loan agreement.

In his plea, the defendant admits the loan of $10 000 but denies any other loan in excess of that. He also pleads prescription and counterclaims for cancellation of the mortgage bond securing his indebtedness. However, at the commencement of the trial, the defendant admitted liability as claimed save that he disputed the quantum of the balance. The parties agreed to proceed to trial merely on the issue of quantum.

The facts and background

It is thus not in dispute that on 16 June 2009 plaintiff and defendant entered into a loan agreement whereby defendant was advanced $6 500. The loan was secured by a Mortgage Bond number 893/2009 to the value of $26 000 registered on 9 July 2009 against immovable property known as Stand 3661 Chinhoyi Township of Stand 3743 Chinhoyi Township  measuring 350 square metres and held under Deed of Transfer 3212/2004 5 May 2004. Further, on 6 October 2009 plaintiff and defendant entered into another loan agreement whereby defendant was advanced $10 000. Subsequently, and on 27 October 2009 the parties entered into an inputs and working capital loan agreement whereby defendant was purportedly advanced $34 380. Consequently, and on 18 January 2010, the defendant registered a second Mortgage Bond number 252/2010 over his immovable property aforesaid to the value of $51 502 to secure his loans. In addition, and on 13 March 2013, defendant registered a Notarial General Covering Bond number 1227/2013 for $11 340.00.

The issues

The single issue before the court is therefore whether the defendant is liable to the plaintiff in the amount claimed.

Plaintiff’s evidence

The plaintiff called only one witness, Thomas Tsvangirayi Gambiza, its Head of Recoveries and Collections. He introduced the plaintiff’s bundle of documents which was entered into the record by consent as Exhibit 1. He explained the in duplum schedule at p.50-51 of Exh. 1 as showing the following columns:

The date of transaction;

The opening balance

Debits going through the defendant’s account

Current interest accumulation for a particular month

Accumulated interest

Current bank charges

Accumulated charges

Credits

Allocation of interest

Credits to capital

Charges

Total outstanding interest

Total outstanding capitol

Closing balance.

The witness testified that with respect to defendant, column C showed that as at June 2016, regardless of what the loan agreements between the parties contain, defendant had cumulatively accessed or withdrawn from plaintiff a total amount  of $43 192.89. Total credits/payments he made to reduce his indebtedness amounted to $4 098.10, per column H, allocated to interest first in the amount of $3 794.88 per column I, and latterly to capital in the amount of $303.22, per column J. The total interest accumulation was therefore $110 287.29 (Column E) while outstanding interest per column L was $106 492.41. Outstanding charges were $426.35 (Column M), while outstanding capital was $42 673.67 per column N. The witness, further testified that the in duplum schedule reveals that there was a breach of the in duplum rule as the outstanding interest per column L was far in excess of the outstanding capital. Therefore the excess interest of $63 818.74 was reversed to cap the interest at the level of the cumulative capital of $42 673.67. This reversal of excess interest is captured in the statement sent to defendant at p. 48 of Exh. 1. Hence the claim against defendant was calculated as $42 673.67 being unpaid capital, $42 673.67 being unpaid in duplum interest and $426.35 for unpaid charges, and thus excludes any excess interest over and above the in duplum rule.

The witness further testified that cash withdrawal slips at p. 52-56 of Exh. 1 do not tally with the capital withdrawal of $43 192.89 because these were only attached to prove those withdrawals which defendant disputed. Plaintiff did not include those withdrawal slips which defendant acknowledged and admitted. Further, and in any event, the capital debt includes other withdrawals and bank transfers made by defendant against his account as shown on his bank statements up until February 2013. In addition the capital debt also includes such costs as establishment fees, insurance premiums and mortgage registration costs for which no vouchers exist as they are direct charges against the account separate from bank charges.

The witness disputed the truthfulness of any assertion that the defendant only withdrew $5 000 as the in duplum schedule clearly shows total withdrawals amounting to $43 192.89. Further, the defendant received regular statements of his account which were sent to his address and he never queried the withdrawals shown thereon.

Finally, the witness attested that the capital debt also includes an inputs loan of $26 460 as shown at p. 42 of Exh. 1.

Under cross examination, the witness reiterated that the in duplum schedule shows that the figures for capital, interest and charges add up to $85 773.69. Further, he confirmed that the withdrawal slips in Exh. 1 add up to only $20 440, but explained that this was because these were withdrawals slips specifically requested by the defendant to explain contested withdrawals. Therefore they do not show the total withdrawals which the defendant made. These withdrawal slips are thus marked with a tick on the bank statement at p. 30-49 of Exh. 1. as shown on pages 31-34 thereof. The rest of the withdrawals appearing without a tick on the bank statements were not queried and the relevant slips were therefore not provided as they were not in dispute.

Further, he asserted that the payment of $9 000 by the defendant on 14 December 2009 was not a loan repayment, but that defendant’s account was overdrawn over and above his loan indebtedness such that when the loan became due on 31 December 2009, there would not have been any money in the account to meet it. Hence defendant had to put his account in credit. He denied that defendant only withdrew $20 460 as shown by the cash withdrawal slips and referred the court to the in duplum schedule. Further he asserted that, because of the defendant’s default, plaintiff is entitled to 26% interest per annum on the whole debt.

In addition, he disputed that the in duplum schedule was confusing but that it was the defendant who has failed to understand and appreciate how the claim is calculated. However, he admitted that the inputs loan has no effect on the debt as it was nullified as shown on the double entries on the bank statements.

This witness gave his evidence well and consistently. Cross examination only gave him a further opportunity to confirm his testimony.

Defendant’s case

The defendant gave evidence on his own behalf. He admitted entering into the loan agreement for $6 500 in June 2009, but disputed all other subsequent loan agreements. He thus belied his admission of liability made at the commencement of the trial whereby he effectively conceded to the factual basis of the claim and opted only to contest quantum. He claimed that he withdrew only the sums shown on the withdrawal slips produced by plaintiff amounting to $20 460, yet he does not recant his plea that he only withdrew $5 000. Further he does not dispute that he never contested the periodic bank statements he received showing other withdrawals and transfers he allegedly made. He claims that his spouse deposited $9 000 for the loan repayment, yet he does not dispute that his account was overdrawn at the time in an amount of $7 625.57.

He therefore admits liability for $20 460 less the alleged payment of $9 000. He further admits to interest on the $20 460 at 8% in terms of the loan agreement as well as to payment of bank charges of $426.35. He therefore disputes liability for punitive interest at 26% per annum, claiming that he was only obliged to pay interest at 8% per annum.

Finally defendant denies registering any mortgage bond to secure the loan of $10 000 but for other unspecified purposes. He professed ignorance of penalty interest leviable on overdue loans, despite being a lawyer who appended his signature to loan agreements.

The defendant’s testimony is incredible, and beggars belief particularly in view of the fact that he is a practising legal practitioner.

Analysis

The parties went to town about the inputs loan scheme, but clearly, this is neither here nor there. While a loan agreement was indeed signed and secured by a mortgage bond, the fact remains that the entries on defendant’s account clearly show that this loan was nullified. It’s a non-event which does not affect the substance of the claim before me. I will therefore not waste any time in consideration thereof.

The defendant’s bank statements clearly show that he was advanced $10 000, of which he drew down $9 700 in cash. After deduction of bank charges, establishment fee, bond fees and further cash withdrawals totalling $7 245, defendant’s account was overdrawn by $7 625,57. There was therefore no money to meet the loan repayment when it became due.

The defendant then deposited $9 000 which cleared the overdraft and only left the account in credit to the amount of $1 374, 43. This was still not enough to satisfy the loan repayment. Besides defendant went on to make further withdrawals against this credit balance such that by 31 December 2009 when the loan was due, the account only had a credit balance of $40.44. Therefore upon being debited with the loan repayment of $10 000, defendant went into overdraft again of $9 959.56. Defendant’s account has remained in overdraft ever since, the debit balance growing all the time as he continued to make further withdrawals and transfers right up until the last transfer he made on 13 march 2013, by which date his debt had ballooned, with interest accumulations, to $66 472.51.

At the time summons were issued, defendant disputed some of his withdrawals and transfers and was provided with the vouchers therefore. He did not dispute the rest of the withdrawals and transfers shown on his statement, which I therefore take to be accepted.

There is no dispute that plaintiff rendered periodic statements to defendant on his financial standing with plaintiff. Such running account showed that as at 31 May 2016, the defendant had a cumulative debit balance on his account amounting to $143 203.92. The periodic statements exhorted the defendant to notify the plaintiff of any discrepancies within 14 days of its despatch, failing which the plaintiff would assume that the statements were correct. It is a fact that nothing on the record shows that defendant disputed the account rendering up until the time that summons were issued.

The in duplum schedule provided by the plaintiff is in fact a succinct rendering of the reconciliation of information already contained in the statements of account as supported by the vouchers which defendant did not query and those which he queried. I am of the view that the plaintiff’s witness is absolutely correct: the defendant showed an abysmal understanding of rendering of his accounts. The in duplum schedule is so clear that it needs no further elucidation. Regardless, plaintiff's witness gave a clear explanation thereof, such that it is an easy matter to check the correctness of the in duplum schedule with cross references to the bank statements, even had the queried withdrawal slips not been provided.

The long and the short of it is as explained by plaintiff’s witness: by 13 March 2013, defendant had accessed a loan of $10 000, had accumulated capital costs in bond registration fees, insurance premiums and loan establishment fees as well as made cash withdrawals and transfers all amounting to a cumulative total of $43 192.89. Of this capital debt, defendant only made a payment of $303.22 leaving an outstanding capital debt of $42 673.67. Interest accrued at 8% on this capital debt up to the in duplum level. Ergo, the defendant is liable to pay to the plaintiff the total of $85 347.34 in capital and interest.

The defendant having already conceded that he owes $426.35 in bank charges, I cannot but find that the defendant is liable to the quantum of $85 773.69 as claimed by the plaintiff.

Finally, defendant’s objection to punitive interest is unwarranted. It is a term of the agreement he signed: should he default on the loan repayment, then plaintiff is entitled to punitive interest at the rate of 26% per annum on the whole of the claim.

Costs

The plaintiff prayed for judgment with costs on the higher scale. I note that in terms of the loan agreement between the parties this is a given. The defendant agreed that he would pay costs on the higher scale should he default on the loan.

However, I must state that, even were there no agreement as to costs the conduct of the defendant would have merited such an order. This is a matter which, as commented by the pre-trial judge, should never have come to trial. It was an absolute and total abusive waste of the court’s time. It seems clear that defendant was bent on frustrating the plaintiff and dragging out this matter as much as possible. Such conduct is reprehensible and should not be condoned: viz, on 7 February 2018, the defendant sought a postponement on the grounds that his advocate of choice was unavailable. Given that this matter had been set down in September 2017, for the defendant to wait until 1 February 2018 to seek a postponement is deplorable.

Such reprehensible conduct is further capped by demonstrable lack of good faith by the defendant. He raised and insisted on defences in his plea which he abandoned at the trial. He denied the existence of loan agreements and mortgage bonds which documentary proof, under his signature, was in the record. He contradicted himself, denying borrowing any amount in excess of $10 000 yet admitted indebtedness for $20 440. He denied withdrawals he made, conceding only to having withdrawn $5 200, yet did not query some withdrawals shown on his bank statements, while accepting withdrawals far in excess of the alleged $5 200.

In the result, this is a matter where an order for costs on a higher scale is amply warranted.

Disposition

Accordingly, it be and is hereby ordered that

Defendant shall pay to the plaintiff the sum of $85 773.69 together with interest thereon at the rate of 26% calculated monthly in advance and compounded monthly in arrears reckoned from 25 August 2016 to the date of full and final payment.

The property situated in the District of Lomagundi measuring 350 square metres called Stand 3661 Chinhoyi Township of Stand 3743 Chinhoyi Township held by the defendant under deed of Transfer No. 3212/2004 dated 5th May 2004 be especially executable.

The defendant shall pay collection commission calculated in accordance with Law Society by-laws and costs of suit on the scale of legal practitioner and client.

Messrs Wintertons, plaintiff’s legal practitioners

Tsorai & Associates, defendant’s legal practitioners