What is a loan? If you buy a car through a bank, do you actually own that car? Does having a blue book really prove legal proprietary rights in a vehicle?
These are just two of the contentious questions in a long-running legal dispute between a Gaborone businessman, Resego “Leshman” Matenge, and Stanbic Bank Botswana. In December 2011, Matenge’s company, Leshman’s Phone Shop, secured what he believed was a loan (P827 125) through Stanbic to buy a BMW X5. The finance interest charges (P277 830), loan administration fees (P5178) and interest rate (prime plus 1) brought the total amount he had to pay off in 60 months to a little over P1 million. The monthly instalment amount was P18 415. To fulfill a legal requirement stipulated in the Road Traffic Act, Matenge registered the car at the Department of Transport in his name, in the process acquiring a blue book.
Some four years later (November 2015) this deal went south as Matenge took a long road trip north. The car broke down along the way and a mechanic would later determine that it needed a gearbox and engine overhauling. The total cost for the repairs was P256 743. Once more, Matenge approached Stanbic with a proposal to vary the payment plan and by his account – which the bank hasn’t disputed in court papers – a verbal agreement was reached to that effect. However, Leshman’s Phone Shop would default along the way, prompting the bank to launch a court case that ended with it repossessing the car in March 2017 and later auctioning it off for P194 000.
This is where the legal plot thickens. Leshman’s Phone Shop contested the auctioning of the car, arguing that the court order for repossession didn’t include sale by auction and that the bank should have sought another court order to that effect. That was the argument that the company’s lawyers, Ramalepa Attorneys, made in a demand letter that they wrote to the Managing Director for Stanbic in May 16, 2018: “It is common cause that the repossession order in question did not authorise you to sell and/or dispose of the said motor vehicle … It is also common cause that no summons and/or any other claim in respect of the said motor vehicle was ever instituted against client as part of the above repossession order.”
The matter would return to court, with Leshman’s Phone Shop arguing that “the sale by way of a public auction of a certain BMW X5 of registration number B242 AUB registered into [Leshman’s Phone Shop] names held on or about the 26th April 2018 be declared unlawful and be set aside.” Conversely, Stanbic made a counter-application for “absolution from the instance” – legalese for an order granted to dismiss a plaintiff’s claim on the basis that no order can be made in respect thereof. In layman’s language, the bank wanted the court to declare that it was blameless and should thus be released from consequences, obligations or penalties relating to the case. The latter was indeed what Justice Mercy Garekwe ended up doing in December last year, ruling that Stanbic is “absolved from the instance” and that Leshman’s Phone’s action is dismissed.
Garekwe’s judgement offers answers to the questions raised in the introduction. Matenge, the Managing Director of Leshman’s Phone Shop, was under the impression that he was getting a “loan” when the bank gave him money to buy the X5. On the hand, Stanbic argued that it entered into not into a loan/finance agreement with Leshman Phone Shop but a motor vehicle lease agreement in terms of which the latter leased the car from the bank. Garekwe agreed with the bank that Leshman’s Phone Shop entered into a lease and not loan agreement with Stanbic.
As reflected in the blue book, Matenge was the car’s registered owner. While it conceded this point, Stanbic said that he still didn’t have legal proprietary rights in the car. In bolstering its claim, the bank stressed that the agreement with Leshman’s Phone Shop made clear the fact that the actual ownership of the car shall at all times remain with it. Garekwe found that in terms of the agreement that Leshman’s Phone Shop had entered into with Stanbic, the car belonged to the latter. She referred to a Court of Appeal judgement made in a similar case that says that “it does not appear from the careful and precise wording of [Section 8 of the Road Traffic Act] that the ownership conferred by registration in the name of a person can invest that person with legal proprietary rights in the registered vehicle.” On the basis of the latter and her own legal reasoning, Garekwe ruled that “plaintiff’s claim to ownership of the motor vehicle is therefore clearly ill-conceived.”
The Banking Act requires banks to develop credit policies and as the regulator, the Bank of Botswana (BoB) is itself required to ensure that such policies comply with the law. That was the context in which Matenge took the matter up with BoB to ascertain whether Stanbic had complied with the law. He posed three questions: What regulatory framework allows Stanbic lawful capacity to enter into long-term motor vehicle lease agreements? What regulatory framework permits banks to participate in fleet management activities that are ordinarily engaged in by car rental companies such as Avis and does such framework stipulate a time frame for transactions? What regulatory framework permits his own name to appear in a registration book of a motor vehicle that was not obtained for his ownership on agreed financial terms and conditions?
To the first question, Lesedi Senatla, the Director, Banking Supervision Department, responded that the credit facility that was extended to Matenge through his company “is a vehicle finance lease, not a long-term motor vehicle lease. The vehicle finance lease is governed by Stanbic’s vehicle financing facility terms and conditions to which you consented by signing the lease agreement.” It would have been helpful if the answer had clarified whether Stanbic’s terms and conditions comply with the law or not but the author didn’t go that far. To the second question, Senatla stated that Stanbic doesn’t participate in fleet management but merely “provides financial resources for the acquisition of motor vehicles by clients on agreed terms and conditions.” To the third question, Senatla reproduced an article from Stanbic’s terms and conditions and asked Matenge to seek legal interpretation from his lawyers.
Dissatisfied still, Matenge went a step farther and sought the intervention of the Ministry of Finance and Economic Development – which would return response that “Bank of Botswana has sufficiently addressed your complaint.” While Matenge contemplates his next move, Stanbic has gone back to court, this time to recover money it says his company still owes it from the car deal gone wrong. By Stanbic’s calculations, a balance of P268 158 is still outstanding from the facility it extended to Leshman’s Phone Shop. The bank wants the company to settle that debt through a court order.
Given the role that the meaning of what are ordinarily simple words has played in this case, it is unusually interesting that whereas the bank has in the past contended (and Justice Garekwe has agreed) that Leshman’s Phone Shop was never given a loan, its own particulars of claim in the current matter use “loan” to refer to the very same money that the company got from the bank.