Chidzankufa v Nedbank Malawi Limited (1 of 2008) [2008] MWCommC 4 (31 March 2008);

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IN THE HIGH COURT OF MALAWI

COMMERCIAL DIVISION

COMMERCIAL CAUSE NUMBER 1 OF 2008

 

BETWEEN

 

GEORGE DUNCAN CHIDZANKUFA.……………………………...PLAINTIIFF

 

AND

 

NEDBANK MALAWI LIMITED.……………….………………….DEFENDANT

 

 

 

CORAM: HON. JUSTICE J. KATSALA

D. Chagwamnjira, of counsel for the plaintiff

R. Kasambara, of counsel for the defendant

E. M. Phiri, court clerk

Kampondeni, Mrs, court reporter

 

 

JUDGMENT

 

Katsala, J.

The plaintiff took out an originating summons seeking the determination of the following questions;

 

  1. “Whether, on a true interpretation of Section 14 of the Bills of Sale Act, the defendant’s Bill of Sale is valid and enforceable.

  2. If the answer to (1) above is in the negative, whether the defendant’s Bill of Sale should set aside and

  3. Whether the defendant should pay damages for wrongful seizure and for costs of this action.” (sic)

 

The plaintiff filed an affidavit in support of the originating summons. The defendant contests the summons and counterclaims from the plaintiff the sum of K4,895,649.49 plus interest at 3% above the defendant’s lending rate.

 

The facts of the case as can be made out from the affidavits are that the plaintiff obtained a loan in the sum of K5,440,000.00 from the defendant to assist him in purchasing a truck. One of the conditions for the loan was that he should execute a bill of sale over the motor vehicle in favour of the defendant, and that he should take out full comprehensive insurance cover for the motor vehicle. This was to be the security for the loan. The plaintiff executed a bill of sale but there is a disagreement on whether he took out the insurance cover or not. The plaintiff now alleges that the bill of sale is invalid because it failed to comply with the form prescribed by the Bills of Sale Act (Cap 48:03). It is alleged that the bill of sale did not stipulate the period and the mode for the repayment of the loan. He therefore seeks an order declaring the bill of sale void for such non compliance.

 

The defendant appears not to dispute the plaintiff’s allegation that the bill of sale is void. All it is saying is that the plaintiff is in serious arrears on the loan repayments and that he has not taken out the comprehensive insurance cover as required. The defendant further says that if the court finds in favour of the plaintiff then it would counter claim the sum of K4,895,649.49 which is the amount that was outstanding on the plaintiff’s loan as at 21st November 2006, and also interest at the agreed rate of 3% above the defendant’s lending rate.

 

Both parties lodged written submissions in support of their cases. I wish to say that I have paid great attention to the arguments advanced and to the cases cited in support thereof.

 

The starting point in determining this originating summons should be section 14 of the Bills of Sale Act. It provides as follows;

 

“A bill of sale made or given by way of security for the payment of money by the grantor thereof shall be void unless made in accordance with Form No. 2 in the Schedule”

 

It is clear from the wording in the section that compliance with the Form No. 2 is mandatory for all bills of sale given as security for payment of money. There is no doubt in my mind that the bill of sale in dispute in the present case falls within the purview of this section since it was made to secure the repayment of the loan the plaintiff obtained from the defendant. It was therefore necessary that the bill of sale executed by the plaintiff in favour of the defendant complied with the prescribed form. A close look at the prescribed Form No. 2 reveals that it makes provision for the specification of the payments (the amount), the mode or number of payments to be made (instalments or otherwise) and the duration (period) of payments to be made under it by the grantor.

 

The bill of sale in the present case does not state how the plaintiff was to repay the loan or when the loan was to be repaid. This is the irregularity that the plaintiff has raised and alleges renders the bill of sale void.

 

I have already hinted that the defendant appears not to dispute the plaintiff’s allegation but submits that since the plaintiff freely consented to the bill of sale and went on to pocket the loan from the defendant on the strength of the bill of sale, he is estopped from disputing its validity. Many cases have been cited in support of the argument. These include Brikon Investments Ltd v Seaford, [1981] 1WLR 863, Keepers and Governors of the Free Grammar School of John Lyon v Mary Gew, [1997] 17 E9 163, Western Fish Products Ltd v Penwith District Council, [1981] 2 All ER 204, Woodhouse A.C, Israel Cocoa Ltd S.A v Nigerian Produce Marketing Company Ltd, [1971] 2 QB 23 and Wilmont v Barber, [1880] 15Ch D 96.

 

I have seriously considered the defendant’s submission and the authorities cited and in my view the case at hand can be distinguished from those cases on one point. The issue at hand is one that involves strict compliance with the law, an Act of Parliament to be specific. The Act itself prescribes the form that a bill of sale must take. It provides that that form must be complied with at all times. Further, it specifically states that non compliance with the form renders a bill of sale void. Thus the Act demands absolute compliance with the form. I would like to believe that the law did not require strict compliance with the prescribed Form for nothing. It must have been for a purpose. A good purpose for that matter. Therefore, in my judgment, it would be grossly wrong and contrary to public policy if this court were to hold that parties can ignore the prescribed form (thereby flouting the law) but still be able to benefit from the law. In other words, and put it more precisely, the court cannot validate what the Act has specifically invalidated.

 

The defendant has argued that since the plaintiff knew the mode and repayment period for the loan from the loan agreement, to hold that the bill of sale is void would be allowing the plaintiff to use the Act as a cloak for fraud. I think what I can say is that section 14 of the Act demands absolute compliance. Focus should not be lost of that fact. Just like in cases of strict liability in criminal law, the court should only look at the deed and determine whether there is compliance with the law or not. All other matters are irrelevant in so far as the issue at hand is concerned. It would be fallacious, in my view, for the court to hold that even though the bill of sale does not comply with the Act, therefore void, it is still effective as between the parties.

 

Since the parties herein chose to avail themselves of the benefits of the Act, it was incumbent upon them, both of them, to ensure that the provisions of the Act were complied with. As things are at this moment, there are no two ways about it. The alleged bill of sale does not comply with the prescribed Form No. 2 and in terms of section 14 of the Act it is void. I would therefore answer the plaintiff’s first question in the negative, that is to say, the bill of sale in the present case is not valid. It is void.

 

It would therefore follow from the foregoing that the answer to the plaintiff’s second question inevitably should be in the positive. The alleged bill of sale, being void as I have found, must be and is hereby set aside.

 

Coming to the plaintiff’s third question, I would split it into two, the issue of damages and that of costs of the action. It seems inevitable that the answer to the question in respect of damages has to be in the positive. If the defendant seized the plaintiff’s motor vehicle in the purported exercise of its powers and or rights under the void bill of sale, then such seizure was wrongful and the plaintiff is entitled to redress in form of damages. I would therefore hold that in the circumstances of this case the plaintiff is entitled to damages. I reserve the question of costs until the end of this judgment.

 

The matter does not however end there. As earlier indicated, the defendant counterclaims from the plaintiff the sum of K4,895,649.49 the amount outstanding on the plaintiff’s loan as at 21st November 2006. It also claims for interest at the agreed rate of 3% above the defendant’s lending rate. From the evidence before me, the plaintiff is not disputing this claim. Nothing has been said in the affidavit which suggests that he is disputing the claim. I would therefore enter judgment in favour of the defendant on the counterclaim in the sum of K4,895,649.49 and interest as claimed.

 

Since both the plaintiff and the defendant have succeeded on their claims I would order that each party must bear its own costs.

 

Pronounced at Blantyre this 31st day of March 2008.

 

 

 

 

 

J. KATSALA

JUDGE

 

 

 

 

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