Wednesday, April 24, 2024

Stanbic Bank TKO’d in P3.8 million case, wants rematch

Unless the order is reversed, Stanbic Bank Botswana stands to lose P3.8 million to a customer it tangled with before Justice Godfrey Nthomiwa at the Lobatse High Court.

The action against the bank had been brought by Themba Mhotsha (first plaintiff) who is the founding director of Raging Storm Holdings (second plaintiff), a company that he founded in 2014. Two years later, a resolution appointing Owen Chipewo, a Zambian, as director and shareholder of the company, was passed. In his court papers, Mhotsha is keen to stress that Chipewo was a director “but never a shareholder.” A year later, another resolution was passed to open an online facility on a business account held with Stanbic. A copy of an unsigned resolution which has been presented as evidence shows that Mhotsha and Chipewo were authorized to conduct business on this facility. Chipewo was then tasked to take a copy of this resolution to the company secretary to have it stamped and signed and use it to open the online facility.

Mhotsha says that what instead happened was that Stanbic created a facility that gave Chipewo sole access to the company’s bank account.

“There is, or was, no resolution from the second plaintiff authorising Mr. Chipewo to operate the facility solely,” Mhotsha says in his court papers, adding that there is no resolution from the company replacing the original one and that the company did not authorise or agree (by resolution) to give Chipewo sole access.

In reference to the opening of the facility in the problematic manner he describes, Mhotsha accuses Stanbic of “failing to execute its mandate in a reasonable fashion. This failure or breach of mandate amounts to gross negligence and/or reckless conduct by the defendant.” The result was “financial loss to the second plaintiff, and equally importantly its shareholder(s).” Casting such loss in more precise terms, Mhotsha says that Chipewo was able to 

make “unauthorised transfers” between December 2017 and February 2020. An amount of P 1.1 million was transferred out between December 2017 and August 2018 and an additional P2.7 million transferred out between August 2018 and February 2020. These transactions attracted bank charges totaling P9 173.44.

On learning about these transfers, Mhotsha says that he instructed the bank to terminate the facility. Such instruction, as he puts it in the court papers, was “blatantly ignored.” He describes the bank’s actions as amounting to “gross negligence, recklessness and failure to execute its mandate diligently and with due care.”

Mhotsha went to court to reclaim the money he said had been skimmed from the company’s account, bank charges those transactions attracted, interest at the rate of 10 percent per annum from the date of demandas well as legal costs. The grand total was P3.8 million.

After the matter came before Justice Nthomiwa, Stanbic was served with a copy of a summons. The bank instructed its attorneys, Armstrongs Attorneys, to defend the matter but the latter fatefully missed an important deadline by a day. In the circumstances, Mhotsha’s lawyers, Mugabe Legal Consultants, applied for and were granted a default judgement. The judgement means that Stanbic now has to cough up the P3.8 million.

In explaining how this happened, Armstrongs Attorneys states that when it tried to serve the Appearance to Defend papers at Mugabe Legal Consultants, “there was nobody” at the office to receive service. A telephone was placed to the Managing Partner, Keolebogile Mugabe, who, in indicating that he was otherwise engaged, alerted the caller to the fact that it was too late to serve the papers and that he (Mugabe) had already filed a request for a default judgement on that same day.

“It was at that point that the [Bank’s] attorneys of record realised that it had filed its Appearance to Defend late by one day,” reads an affidavit by Siamisang Morolong, Stanbic’s Head of Legal. “I have been advised that this was a miscalculation on the reckoning of days to file the Appearance to Defend on the part of the [Bank’s] attorneys of record as they did not factor in the date of service, when calculating the number of days to file their Appearance to Defend in the matter. The [Bank’s] attorneys of record were under the mistaken belief that the last day to file the Appearance to Defend was the 12th November 2020, instead of the 11th November 2020.”

In terms of High Court rules, the Bank has the option of seeking consent to file late. Morolong says that the Bank sought to exercise this option and that all its efforts to enquire from Mugabe whether he would agree to such filing didn’t bear fruit. Later, Morolong would learn that Mugabe had made an application for final judgement for default of appearance. On December 2, 2020, the Registrar granted a Default Judgment and issued a warrant of
execution against the Bank. In the circumstances, Stanbic has made its own application through which it wants the default judgement to be rescinded and its late filing admitted.  In the service of the latter assertion, Morolong argues that the judgement was “erroneously sought” because it doesn’t comply with High Court rules. One such rule says that where judgment in default of appearance is sought for unliquidated damages or for the value of goods, the application may be made ex parte (from one party only) and shall be accompanied by evidence, on affidavit, establishing and justifying the damages or value for which judgment is sought.

“It is submitted that the respondents’ application for final judgment for default of appearance is based on an unliquidated claim and no supporting affidavit was filed to establish and justify the damages or value, for which judgment was sought. Therefore, the default judgment and the issuance of the warrant of execution by the Registrar was erroneously sought by the respondents. On that basis alone, the default judgment and warrant of execution granted by the Registrar on the 2nd December 2020 ought to be rescinded.”

One part of the Stanbic’s application deals with the merits of Mhotsha’s assertion that Chipewo was not authorised to make the transactions that he made. The Bank contends that it complied with its mandate, that it was fully authorised to deal with Chipewo on account of his directorship of the company and in terms of the Companies Act. It denies that Mhotsha and his company have suffered the damages they claim, noting that Mhotsha personally received payments from the business online account, “which payments [are] presumably included in his damages claim.” It further contends that some other payments appear to have been made to the company’s suppliers, which would not have resulted in loss to the Mhotsha and his company.


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