Closed Interfin Bank Ltd will have to fork out US$26 million to controversial businessman Jayesh Shah’s Al Shams Global BVI Ltd.
By Kudzai Kuwaza
This comes after a Supreme Court appeal by the Deposit Protection Corporation (DPC) against a High Court ruling compelling Interfin Bank Ltd to honour agreements valued at US$26 million it entered with Shah’s Al Shams Global BVI Ltd was thrown out.
A unanimous ruling by Supreme Court Justices Vernanda Ziyambi, Anne Marie Gowora and Ben Hlatshwayo, dated February 20, 2017 in the case of DPC CE John Chikura versus Al Shams Global BVI Ltd, dismissed the DPC’s appeal on the basis that the appeal was “fatally defective”.
“In my view, the lengthy and rambling notice of appeal filed in casu falls woefully short of what was required. Mr Bursey (an applicant in a South African case which the judge cites) suggested that grounds of appeal could be gleaned from the notice, but that it is not the point — the point is that the notice must clearly set out the grounds and it is not for the court to have to analyse a lengthy document in an attempt to establish what grounds the applicant intended to rely upon but did not clearly set out. On this basis alone, the application seems to me to be fatally defective and must be dismissed,” Ziyambi quoted from a South African Court case Sonyongo v minister of law and order 1996, which she said was equally applicable to DPC’s application.
“Great care should be taken in drafting a notice of appeal to ensure the grounds of appeal concisely and clearly set out the issues to be determined by the appeal court and the respondent is properly informed of the case he has to meet on appeal,” Ziyambi said.
The Supreme Court judges upheld the objections by Shah, represented by advocate Lewis Uriri and Thabani Mpofu, who argued that the appeal by the DPC was unnecessarily long and incoherent, and should thus be struck off the appeal with costs.
The DPC contested the assignment and security trust deed concluded between Shah and Interfin in April 2012, which would allow it to recover US$26 million it was owed by the bank after Al Shams purchased a number of Bankers Acceptances from Interfin on a buy back basis.
It argued that enforcing the agreement will shortchange other creditors of the bank, including depositors, who also want to be paid by the financial institution, now under liquidation.
A banker’s acceptance is a short-term debt instrument issued by a firm that is guaranteed by a commercial bank. It is similar to treasury bills and is often used in the money market.
Al Shams had taken Chikura and DPC to the High Court in May last year to enforce the agreement made with Interfin.
DPC was appointed liquidator of Interfin in accordance with the Banking Act in February 2015, who, according to Shah, stopped the payments which had been collected by the curator Peter Bailey prior to liquidation as part of the agreement with the bank.
“The last update and account of funds collected on behalf of the applicant totalled US$5 962 194,74 of which US$5 472 304,74 was paid to the applicant,” the court papers say.
Shah in his High Court application said a meeting had been held on March 6 2015 at the Reserve Bank of Zimbabwe, involving central bank representatives, Shah, Bailey and Chikura, where Shah was seeking to know whether the DPC would consider the agreements and revert back to him.
“Four months down the line no feedback came from the second respondent (DPC) despite numerous reminders,” Shah wrote in his application.
“The second respondent’s silence on the issue crippled the applicant’s legal practitioners who were unable to proceed with legal proceedings . . . The applicant now wants this court to intervene and make a declaration in the matter as per the draft order.”
The DPC, represented by its lawyers Scanlen & Holderness, argued that there are material disputes of fact which cannot be resolved on the papers. It also said there was no valid indebtness between Shah and Interfin due to lack of prior exchange control approval and that the applicant unlawfully transacted without a registered branch office or foreign company.
They further argued that they had proceeded against a company in liquidation without the approval of the court.
The arguments were dismissed by Justice Owen Tagu who ordered the agreement be enforced by Chikura and the DPC. The DPC was ordered to pay Shah’s company costs of the lawsuit on a legal practitioner and client scale.