Blue Financial Zambia Ltd and Ors v African Banking Corporation Zambia Ltd (Appeal 118 of 2015) [2016] ZMSC 249 (26 January 2016)

ii IN THE SUPREME COURT OF ZAMBIA HOLDEN AT NDOLA (Civil Jurisdiction) Appeal No. 118/2015 SCZ/8/ 146/2015 BETWEEN: BLUE FINANCIAL ZAMBIA LIMITED BLUE EMPLOYEE BENEFITS (Proprietary) LIMITED BLUE FINANCIAL SERVICES LIMITED 1ST APPELLANT 2ND APPELLANT 3' APPELLANT AND AFRICAN BANKING CORPORATION ZAMBIA LIMITED (T/A BANC ABC) (cid:9) I (cid:9) RESPONDENT Coram: (cid:9) Chibomba, Hamaundu and Malila, JJS On 1st December, 2015 and 26th January, 2016 For the Appellants: (cid:9) Mr. L. Linyama, Messrs Eric Silwamba, Jalasi and Linyama Legal Practitioners For the Respondent: (cid:9) Mr. G. Pindani - Messrs Chonta, Musaila and Pindani S Advocates JUDGMENT Malila, JS delivered the judgment of the court. Case refereed to: 1. Natal Joint Municipal Pension Fund v. Endumeni Municipality 2012(4) SA 593 (SCA) (2012) 2 ALL SA 262 2. Bothma-Batho Transport v. Bothma and Seun Transport 2014(2) SA 494 (SCA) 10-12 3. Pieters and Company v. Solomon 1911 AD 121 (cid:9) J2 4. Stanbic Bank Zambia Limited v. Trade Kings Limited 2009/HPC/ 0460 5. Wilson Masauso Zulu v. Avondale Housing Project (1982) ZR 172 6. Attorney General v. Aboubacar Tall and Zambia Airways Corporation Limited (SCZ Appeal No. 77 of 1994) 7. Sentor Motors Limited and 3 Other Companies (SCZ judgment No. 9 of 1996) 8. Kenneth Van der Westherzen v. Roat Rabels Limited and Ying Duag Li Ling 2010/HP/387 9. Leopard Ridge Safaris Limited v. Zambia Wildlife Authority(2008) ZR 10. Attorney General v. Marcus Kapumba Achiume (1983) ZR] 11. Nkata and 4 Others v. Attorney General (1966) ZR 124 12. Zambia Revenue Authority v. Independent Service Station (SCZ Appeal No. 137 of 2000) 13. John Paul Mwila Kasengele and Others v. Zambia National Commercial Bank Limited (SCZ Judgment No.1 of 2000) 14. Pandoliker and Sons Limited, Pegant Zambia Limited Atul Pandoliker and Thankorbhai Chaganbhai Pandoliker (Appeal No. 231 of 2013) Legislations refereed to: 1. Section 9(1) of the Supreme Court Rules Chapter 25 of the Laws of Zambia 2. Order 5 rule 7 of the High Court Rules, chapter 50 of the Laws of Zambia 3. Chitty on Contract Vol.1 281h Edition paragraph 22-001 4. Section 73(6) of the Banking and Finance Services Act Chapter 387 of the Laws of Zambia (Amended) ' (cid:9) This appeal is against the decision of the High Court given on the 21st May, 2015 in which the court found in favour of the respondent (which was the plaintiff in that court) on a claim arising from a loan facility. The court also awarded the respondent interest and costs to be paid by the appellants, failing which the respondent would be at liberty to enforce the security given for the loan facility. J3 The facts of the case were quite involved. The learned trial judge's attempted summary of those facts suffers from the inclusion of avoidable detail. Shorn of inessential particulars, the facts were that at the 1st appellant's request and instance, the respondent did, on the 21s' July, 2008, grant the 1st appellant a loan facility in the sum of US 8,700,000.00 which the latter required to finance the purchase of the entire shareholding in a corporate entity known as Nedfin Limited. By some inadvertence on the respondent's part, the loan facility letter was wrongly dated 21s' July, 2007. Upon realising this mistake, the respondent dispatched to the 1st appellant another letter dated 5th August, 2008 in an attempt to rectify the anomaly detected in the earlier loan facility letter. The 1St appellant, however opted, despite all the respondent's effort to persuade it to do so, not to return the signed copy of the corrected • facility letter. In this judgment, reference to the loan facility letter is therefore, to the misdated facility letter of 215t July 2007. In terms of the loan facility letter, the Ps, appellant was to repay the loan within three (3) years with interest initially agreed at 13% per annum, and later renegotiated and agreed at 17% per annum. J4 A fairly complex set of arrangements to secure the loan were made. The 1st appellant and Nedfin Limited concluded an agreement with the respondent under which the 1st appellant ceded its rights over book debts to the respondent. The 211 and 3rd appellant for their part, furnished guarantees as continuing securities in favour of the respondent. Furthermore, it was a condition of the loan agreement that the 1st appellant would continuously provide the respondent with monthly management accounts incorporating the profit and loss account and the balance sheet, not later than the 25th day of the month following the end of each respective month. In addition the 1st appellant was to provide the respondent with an audited copy of its annual report and financial statements within 180 days of the close of each financial year. As it turned out, the 1st appellant experienced difficulties adhering to the loan conditions, particularly, the repayment terms. When the 1 St appellant defaulted on the terms of the loan facility agreement, its explanation was that it, together with other companies in the Blue Group of companies, were facing considerable financial challenges. In an attempt to save the 1St (cid:9) J5 appellant from collapse, the respondent agreed to suspend payments on the loan up to the 31st January, 2010. In due course (in October, 2010) the respondent and the appellants and other stake-holders, entered into an agreement called "the Debt Rescheduling Agreement" (DRA) which effectively was intended to serve as a stand still arrangement for the principal debt. The respondent attempted in the lower court, to impeach the legal efficacy of this agreement on the basis of absence of consideration. Under the DRA the appellants were given a three (3) year moratorium to repay the principal sum, but were to continue to pay interest as it fell due on the loan during the moratorium period. The respondent's view was that the DRA did not supplant the loan facility and the security provided under it; that even after expiry of the DRA, the appellants have remained in breach of their payment obligations under the loan facility. The 3rd appellant, rather than honour its guarantee upon default by the 1st appellant, offered the respondent a conversion of the debt into shares which the respondent declined, having regard to the J6 view held by the respondent that the 3rd appellant was a delinquent debtor. According to the respondent, as of 3rd January, 2014 the sum owing to it under the loan facility was K22,125,523.96, (equivalent to US$3,979,414 at the then prevailing exchange rate of US$1 to K5.56,) and interest thereon. Accordingly, on the 19th February, 9 2014 the respondent took out an action in the High Court claiming the sums indicated as owing. After hearing the parties' respective positions presented through their various witnesses, and upon considering the parties' able counsel's submissions, the learned High Court judge, in a prolix judgment covering sixty-six folios, came to the conclusion that the respondent was entitled to judgment. Further, that the sum owing • on the loan which was provided by the respondent to the 1st appellant through the letter of 21s' July, 2007, was to be ascertained and determined by the Deputy Registrar upon production by the respondent, of a certificate in terms of the provisions of the loan facility letter. Interest and costs were also awarded to the respondent. J7 Discomposed with the High Court judgment, the appellants have now appealed on six grounds structured as follows: 1. The learned puisne judge erred in law and in fact in his findings at pages J60 - J63 concerning the legal relationship between the 'existing facility' and the Debt Rescheduling Agreement (DRA). 2. The learned puisne judge erred in law and in fact in the respectful view of the appellants, by not finding that in terms of the DRA especially clause 7.11, 7.29 and 7.30 thereof, the plaintiff who is the respondent herein expressly waived its rights to enforce the July, 2007 facility letter (in the form they existed prior to the DRA). 3. The learned puisne judge fell into error when he did not hold that the plaintiff was accordingly obliged, in respect of claims for principal amounts due under the applicable Existing Facility Agreement (claimed in the statement of claim) to adhere to the Distribution Principles stipulated in terms of the provision of clause 7.12 of the DRA. 4. The learned puisne judge erred in law by making a finding premised on the assumption that the terms of the DRA could be departed from at the whim of the respondent without having regard to the mandatory terms and conditions contained in the DRA. 5. The learned puisne judge erred by finding that the plaintiff was not obliged, in terms of clause 19 of the DRA, to submit all disputes arising from the DRA to the agreed dispute resolution process. J8 6. (cid:9) The learned puisne judge erred in law when he abrogated his role in failing to finally determine a substantive threshold matter and referring matters of proof of the debt to the Deputy Registrar of the High Court of Judicature for Zambia. The trial court further misdirected itself in court by failing to dismiss the respondent's claim when it failed to discharge the burden of proof of the debt. The learned trial court erred in law and in fact by not dismissing the respondent's claims herein when he said respondent lamentably failed to produce a certificate required in terms of clause 12.2 of the facility letter of the debt which is a sine qua non for any claim arising out of the facility. $ The appellants' learned counsel filed in copious heads of argument in which they defined two overarching issues as forming the crux of the appeal, namely, first the validity, meaning and effect of the RDA (the DRA question), and second, the effect of the absence of the certificate signed by any director of the respondent as prima fade proof (the missing certificate question). Counsel made a short point under each of these two questions. As regards the first question, the gist of the argument was that in terms of the DRA, the respondent expressly waived its rights to enforce the July, 2007 loan facility letter. It is obliged to follow the procedures stipulated in the DRA. Under the second question, the appellant's contention J9 is that the failure to satisfy the requirement with regard to the certificate of the debt was fatal to the respondent's claim. On the 23rd November, 2015 the respondent's learned advocates filed in a notice to raise a preliminary objection to the appeal pursuant to section 9(1) of the Supreme Court Rules, chapter 25 of the laws of Zambia. The notice was supported by an affidavit in which it was averred that the record of appeal did not comply with the relevant rules of court in that the page numbers on the folios containing the proceedings in the court below were not sequentially numbered and that certain other documents in the record were not placed in the correct order. There was an affidavit in opposition filed on behalf of the appellants. Lists of authorities were also filed in support of the parties respective positions. It would appear that AOW precipitate corrective action on the part of the appellants' learned counsel saved the day and rendered the respondent's motion nugatory and was thus abandoned at the hearing of the appeal. We shall in due course comment on this needless application and the cost implications for the parties. J10 At the hearing of the appeal Mr. Linyama, learned counsel for the appellants, indicated that he was placing reliance on the plenteous written heads of argument and was ready to clarify any issues for the benefit of the court. In those written heads of argument, it was indicated that the appellants also relied on the submissions filed in support of the appellants' case in the court a quo. We deliberately set out the arguments of counsel in extenso. This will facilitate a consummate consideration of the issues we are being called upon to determine. As already noted, under ground one to five, the appellants allege errors of law and fact on the part of the trial judge regarding the legal relationship between the 'existing facility agreements' and the DRA, and pointed to various aspects regarding the judge's perceived misapprehension in this regard. The learned counsel accordingly argued grounds one to five compositely, while ground six was argued distinctly. In developing his arguments under grounds one to five, Mr. Linyama began by pointing out that the respondent's claim is ill wholly founded on the 'existing facility' so called of 21st July, 2007 and that no cause of action under the DRA was pleaded. It was the learned counsel's further preliminary submission that the respondent's twin arguments, namely, that the DRA was merely a debt standstill arrangement which expired three years after it was concluded, and that in any event, it was void abinitio as the appellants did not furnish any consideration for it, were matters of legal interpretation of the DRA. The learned counsel spent a considerable amount of time explaining his understanding of what the governing law of the DRA was, more specifically to determine the question whether the governing law of the DRA was South African law or Zambian law. As will become apparent in due course, this was a key question in this appeal. The arguments of the respective parties on the issue on the governing law of the DRA differed significantly, with the appellants fingering clause 19.2 of the DRA which states that the agreement was to be governed by the laws of the Republic of South Africa. The respondent, on the other hand, contended that clause 2.19 of the DRA, which defined 'applicable law' in relation to the Borrower, was J12 the governing law, and that this was the common law in each jurisdiction in which the Borrower undertakes its lending business including the jurisdiction in which that Borrower has been incorporated. The learned counsel for the appellants made very long winded arguments to support the appellants' position that the applicable law to the DRA was South African and not Zambian. Turning to proof of South African law, the learned counsel cited Order 5 rule 7 $ of the High Court Rules, chapter 50 of the laws of Zambia and referred to and quoted dicta from the South African Supreme Court decisions in the cases of Natal Joint Municipal Pension Fund v. Endumeni Municipality(') and Bothma-Batho Transport v. Bothma and Seun Transport(2), on the approach used in that jurisdiction in interpretation of contracts. (cid:9) According to Mr. Linyama, the authorities he cited indicate that the modern approach to interpretation requires that the context be considered in the first instance. A commercial construction is likely to give effect to the intention of the parties. Furthermore, that interpretation is a J13 matter of law and not fact, and accordingly, that interpretation is a matter for the courts, not witnesses. Mr. Linyama posited that the DRA was designed to avoid the adverse consequences of forced liquidation through an elaborate process of debt rescheduling. The context of the DRA is recorded in clause 3.5 of the DRA itself which lists the principles upon which the DRA is based. That clause, in Mr. Linyama's view, should be read in light of the evidence of the appellants' witnesses in the court below. The learned counsel went on to recap the evidence given in the lower court by Mr. Meiring, the Group Chief Executive Officer of the Mayibuye Group (Pty) as well as the third appellant. The conclusion Mr. Linyama came to was that the dispute procedure set out in clause 19.1 of the DRA had been adopted resulting in the appointment on December 20, 2013 of Deloitte and Touche to resolve this dispute. It follows that the respondent is bound by the dispute resolution process contemplated in the DRA. The learned counsel for the appellant gainsaid the contention by the respondent that a claim based solely on the July, 2007 facility letter was legally sound and that the DRA expired at the effluxion of three J14 years from the date of its coming into effect. The learned counsel maintained that the approach taken by the respondent in this respect was, in principle, wrong and at odds with the provisions of the DRA, read in context. The learned counsel then focused his submissions on what he indentified as the two distinct phases in the debt rescheduling a process within the DRA, namely, (a) the debt rescheduling period covering 1st January, 2011 - 611, September, 2013 and (b) since 3rd September, 2013 the "End Phase' or "Payment Period." According to Mr. Linyama, the debt rescheduling period ended on 6th September, 2013 when the accelerated "End Date" occurred as per "Acceleration Notice" in the DRA. The second phase then commenced on 6th September 2013 (i.e. the "Payment Period"). This . latter phases ends when all "Capital Account Instruments" and all "Included Claims" which are "Performing Claims" on the "End Date" had been collected in full or written off as irrecoverable in terms of the "Provisioning Policy" under clause 7.17 of the DRA. J15 The learned counsel argued that once the "End Date" was accelerated, payment occurs in accordance with the "Distribution Principles" set out in the DRA. Applying the principles set out in the South African case authorities he had cited earlier, it was Mr. Linyama's contention that to entertain the respondent's claim at this stage of the process when the "End Date" has been triggered, would, to use the words of Wallis JA in Natal Joint Municipal Pension Fund v. Endumeni Municipality('): "lead to insensible or unbusinesslike results [and] undermine the apparent purpose [of the DRA]." It was the learned counsel's position that the respondent, in terms of the DRA, waived and abandoned what were termed as "Existing Facilities" upon which the respondent's claims are founded. In this connection the appellants invoked the DRA provisions in clause 7.29 - 7.30 regarding waiver of rights, which provisions, according to Mr. Linyama, were fatal to the respondent's cause of action based on the July, 2007 facility letter, which facility is included in the DRA's definition of "Existing Facilities". The learned counsel submitted further that as no part of the respondent's claim is based J16 on the DRA, the claim must fail, unless it is proved by the respondent that the DRA is void for want of consideration. The learned counsel for the appellant next turned to the issue of consideration. The thrust of his argument on this point was that the doctrine of consideration has no application because under South African law, which the parties chose as applicable to the S DRA, the doctrine of consideration is not recognized. It follows therefore, that reliance by the respondent on the absence of consideration on the part of the appellants to invalidate the DNA is legally not well anchored. The South African case of Pieters and Company v. Solomon(3) was cited and relied upon for the submission that consideration is not a prerequisite for a valid contract under South African law. In the alternative, Mr. Linyama submitted that even if the doctrine of consideration was found to be applicable, the evidence on the record shows that consideration was present. He referred to a number of authorities including the High Court case of Stanbic Bank Zambia Limited v. Trade Kings Limited 4 to buttress his submission. He ended by urging us to uphold grounds one to five of the appeal. J17 Under ground six of the appeal, the learned counsel for the appellant raised the issue of absence of a certificate as required under the July 2007 facility letter. He quoted paragraph 12.2 of that letter which states that: "In the event of the Bank taking any proceedings to recover any amount due to it, the amount due to it shall be determined and proved by a certificate signed by any Director of the Bank and such certificate shall be prima facie proof of the amount due to the Borrower and the onus shall be on the Borrower to disprove the accuracy of such certificate." In the present case, submitted Mr. Linyama, since the amount of the claim has been raised as an issue, a certificate was essential. Here there was no certificate given in compliance with the relevant clause. The learned counsel then took us through the evidence of the witnesses and submitted that even if the DRA were to be ignored, the respondent failed to discharge the burden of proving the debt. According to Mr. Linyama, it was a misdirection for the learned trial judge to have referred the matter to the Deputy Registrar for purposes of the respondent proving the actual debt thereby creating a second chance to conduct a trial. The learned trial judge should have dealt with the question of liability instead of J18 referring it to the Deputy Registrar. The cases of Wilson Masauso Zulu v. Avondale Housing Project(5) and Attorney General v. Aboubacar Tall and Zambia Airways Corporation Limited(6) were cited as authorities for the submission that a trial court should adjudicate on all matters in controversy. To the same intent, the case of Sentor Motors Limited and 3 Other Companies (7) was called in aid. The learned counsel for the appellant then dealt with what he called miscellaneous questions. Here, two issues were argued. First, that the respondent's invitation to the court that the DRA should be construed contra proferentem against the appellants, was an inappropriate argument to make given that the respondent admitted actively participating in the preparation of the DRA and further benefited from it and is seeking redress pursuant to the same document in the Botswana High Court. Furthermore, the respondent has failed to explain in what respects the contra proferentem rule is supposed to be applied to the DRA. Second, that by opting to enter into the DRA, the parties submitted to the provisions of the whole agreement including those relating to dispute resolution as contained in clause 19 of the DRA. It is for J19 this reason that, according to Mr. Linyama, the respondent's action was prematurely before the court. The learned counsel cited a number of case authorities including the High Court of Zambia case of Kenneth Van der Westherzen v. Roat Rabels Limited and Ying Duag Li Ling(8), and our decision in Leopard Ridge Safaris Limited v. Zambia Wildlife Authority 9 to support his submission. To an intent which to us remains obscure, the learned counsel went on to list the lower court's findings of facts, specifying the ones the learned counsel agreed with and the ones he did not agree with. He then went back to ground six of the grounds of appeal and once again argued that the trial judge fell into error for reasons he particularised. We shall later in this judgment make our comments and observations on the style of presentation of the arguments which the learned counsel for the appellant adopted in this appeal. Mr. Pindani, learned counsel for the respondent, countered the arguments made on behalf of the appellant. He equally relied on (cid:9) (cid:9) J20 the written heads of argument and supplemented these with some oral submissions. In regard to the preliminary arguments regarding the two questions, i.e. the DRA question and the missing certificate question, Mr. Pindani submitted that the respondent never at any point in time, or as contained in the DRA document itself, expressly or otherwise waive its right to enforce the July, 2007 facility letter. To the contrary, argued Mr. Pindani, the DRA expressly in several of its clauses recognizes the fact that the July, 2007 facility and security remained valid and could be enforced by the Lender. As regards the missing certificate question, the learned counsel's short response was that the demand letter issued by the respondent to the appellant on 1st November, 2013 and that issued by the respondent's advocates on 22nd November, 2013 satisfied the terms of the July, 2007 facility relating to certification. Mr. Pindani made a global response to grounds 1 to 5 of the appeal. He contended that these grounds attack findings of fact by the lower court, and this court, as an appellate court, was ill-positioned J21 to disturb those findings. To this end, hc cited this court's decisions in the case of Attorney General v. Marcus Kapumba Achiume('°), Nkata and 4 Others v. Attorney General(11) and Zambia Revenue Authority v. Independent Service Station(12), all of which stress the principle that the Supreme Court will not interfere with a trial court's findings of fact except in very rare circumstances where it is demonstrated that the trial court's findings of fact were perverse or 6 made in the absence of any relevant evidence or upon a misapprehension of the facts, or such other reason. In the present case, the trial court's findings of fact upon which grounds 1 to 5 of the appeal are anchored were, according to Mr. Pindani, not such as to fall under the exception to the rule against interference by an appellate court with findings of fact by a trial court. S Mr. Pindani also pointed out that as the evidence on the record of appeal shows, the 1st appellant conceded that it still owes the respondent. The issue of liability by the 1st appellant for the debt was, according to the learned counsel, firmly and properly arrived at by the lower court. The learned counsel submitted that the only J22 reason for the appellants' failure to honour their debt obligation was that they were facing financial challenges. This, however, is hardly a defence to a claim for a debt. The learned counsel cited the case of John Paul Mwila Kasengele and Others v. Zambia National Commercial Bank Limited(13) and quoted a passage where we stated that: "inability to pay has never been and is not a defence to a claim. It is not a bar to entering judgment in favour of a successful litigant." Mr. Pindani argued that the 1st appellant, which is the principal debtor, was properly ordered to pay the debt together with the 2nd and 3rd appellants who are guarantors and whose unlimited guarantees were not cancelled or terminated by the DRA. These remain continuing security until the debt guaranteed was paid in full. The learned counsel also argued that the proposal by the appellants that they allocate shares to the respondent in the 3rd appellant company which is based in South Africa, is contrary to the facility agreement of July, 2007. This arrangement would entail performance of a contract by the appellants in a manner not contemplated or agreed to by the parties. The learned counsel quoted from Chitty on Contract Vol.1, 28th Edition, paragraph 22- 001, to buttress this submission. The passage reads: J23 "A party to a contract must perform exactly what he undertook to do. When an issue arises as to whether performance is sufficient the court must first construe the contract." It was the learned counsel's further argument that the issuance of shares to the respondent in settlement of the facility would amount to an unsound banking practice proscribed by section 73(6) of the Banking and Financial Services Act, chapter 387 of the laws of Zambia, as amended. Prior authorisation of the Bank of Zambia is S required. More purposefully perhaps, Mr. Pindani highlighted the provisions in the DRA which, in his view, entitled the respondent to recover the debt. In particular, we were referred to clause 3.5.6 of the DRA which provides that while no principal payments were to be made under existing facilities for a period of three years, interest which had accrued on the existing facilities would be paid during that period. (cid:9) The learned counsel contended that the appellants breached the terms of the DRA relating to the payment of interest. J24 Mr. Pindani also quoted clauses 3.5.11, 7.4, 7.28 and 7.29 of the DRA to support the position he took that the DRA did, in fact, entitle the respondent to claim the monies owing under the existing facility and to realise the security, where appropriate. After quoting from clause 7.30 and 7.30.1 of the DRA, the learned counsel for the respondent submitted that the import of these . provisions is that the July, 2007 facility agreement was amended only in regard to the time of payment of the principal debt and nothing else. According to Mr. Pindani, the rest of the terms of the July 2007 facility agreement remained valid and enforceable. The lower court's finding could, therefore, according to Mr. Pindani, not be faulted. On applicable law, Mr. Pindani maintained that Zambian law applied because the DRA recognized the existing facility agreement and security interest. He quoted clause 16 of te Guarantee which provides that the guarantee is governed by Zambian law, and submitted that there is an apparent conflict on the law applicable to the DRA and the facility agreements as well as the guarantees. The approach to each, according to Mr. Pindani, is to look at the law of J25 the place where the contract to borrow was bcing performed and where the principal debtor was, i.e. Zambia. As regards ground six of the appeal, Mr. Pindani complained that the appellant's arguments appear to address issues that were not part of the original ground six. He reiterated hfs opening argument in regard to the missing certificate. The learned counsel for the respondent also raised the issue of failure by the appellants to deliver a distribution plan within 10 days after the "End Date" in accordance with clause 7.13 and 7.21 of the DRA. It was counsel's argument that the appellants have themselves been guilty of breaches of the DRA in several respects, and yet they wish to selectively enforce some of the provisions of the DRA in an attempt to avoid paying back the money they borrowed 10 (cid:9) and utilised. In concluding his arguments in response, Mr. Pindani raised the issue of dispute resolution. He submitted that the Transaction Auditors, Delloitte and Touche, declined to be involved in the legal matters of the DRA; that there was no arbitration clause whatsoever J26 in the DRA to serve as an alternative form of dispute resolution. The learned counsel prayed that the appeal be dismissed with costs. Before we consider the legal position on the issues on which we have been so ably addressed by counsel, we wish to make some observations in regard to the style adopted by the learned counsel O for the appellant to argue the grounds of appeal raised. Heads of argument should be concisely and elegantly drafted and straight to the point so that the error or errors complained of, be they of fact or law, are clearly identified and addressed. The arguments in support of the grounds of appeal should only relate to the portion of the decision being challenged. With the style adopted by the learned counsel for the appellant, it is difficult to situate all the ' arguments that the learned counsel made into the six grounds of appeal raised. The arguments relating to the choice of law in the DRA as well as those on the contra proferenterrL rule do not appear to fit into any of the grounds of appeal, and yet the learned counsel spent a considerable amount of time ventilating them. We note that the respondent's counsel equally sneaked in arguments on issues (cid:9) (cid:9) J27 that were not properly matters for this appeal, such as those relating to delivery of the distribution plan. Furthermore, the approach adopted of arguing the grounds globally tended, in this particular case, to obfuscate the real issues for determination under each of the six grounds. We have nonetheless carefully examined the clashing arguments of . counsel for both parties. We see the real question in controversy between the parties as gyrating around the true effect of the DRA on the original loan facility of 21st July, 2007. It is rightly common ground that a loan facility was contracted by the 1st appellant with the 2nd and 3rd appellants being guarantors. It is equally uncontroverted that the Pt appellant defaulted in the repayment of the loan, and that as at the time of the commencement of these proceedings in the High Court by the respondent, certain monies were due and owing to the respondent. What is also beyond argument is that the amount outstanding on the loan facility is ex facie recoverable and the security enforceable by the respondent. The appellants stoutly oppose the respondent's claim principally on grounds that following the conclusion of the (cid:9) (cid:9) J28 DRA, the relationship between the respondent as lender and the appellants as borrowers, was henceforth governed by the provisions of the DRA whose letter and spirit all the parties to it were bound to observe. They posit that the DRA has specific provisions respecting recovery of the outstanding amounts from the 1 st appellant and the terms and conditions attaching thereto. (cid:9) These terms and conditions have not been followed by the respondent and, therefore, commencement of the current proceedings purely on the basis of the July, 2007 facility letter was legally inappropriate. We have duly perused the provisions of the DRA. Frankly, it is not the easiest document to understand. (cid:9) However, reading it contextually, we discern that the overriding design of the agreement was to provide some temporary respite or relief in the payment 40 (cid:9) obligations by the among others. A selective reading of the provisions of the DRA, as 1st appellant under the July, 2007 facility letter, has been pointed to us by the learned counsel for the appellants, clearly beclouds the real position that the 1st appellant and associated companies faced harsh realities and pragmatic constraints in honouring their obligations assumed under the July, J29 2007 loan facility. We are in this regard inclined to quote from clause 3.3 and 3.4 which state as follows: "3.3 The Borrowers [appellants] are indebted to the Lenders on account of the Existing Facilities and, as a result of the circumstances described in clause 3.2, the Borrowers have been unable to comply with their repayment obligations under the Existing Facility Agreements." And 443.4 (cid:9) Mayibuye believes that the Group is capable of rescue and, in such circumstances, Mayibuye... As a pre-condition for the conclusion of the Subscription Agreement Mayibuye has required that the Borrowers' obligations under the Existing Facilities must be rescheduled in the manner set out in this Agreement." As regards the choice of law, we have read the provisions of clause 19.2 which Mr. Linyama referred us to. It is couched in clear language as follows: "This agreement shall be governed by the laws of the Republic of South Africa." In our view, this provision does not require esoteric interpretation to understand it. We accept the arguments of the learned counsel for the appellants that the DRA is to be interpreted in accordance with the laws of the Republic of South Africa for that is what the parties J30 to the DRA had expressly intended. It follows that if South African law, both written and unwritten, applies to the DRA, then the Roman-Dutch law unwritten principles of law apply. (cid:9) This invariably includes the position that under that system of law, consideration as a doctrine so fervently required under English common law to support a simple contract, has no similar significance under South African law. This also means that the argument that no fresh consideration was provided by the appellants for the DRA has no place in the efficacy and construction of the DRA. On a perusal of the provisions of the DRA, particularly clauses 3.5.4 and 12 under 'Basic Restructuring Principles', a persuasive case, as Mr. Linyama sought to make out , is apparent that there was, in any case, possibly sufficient consideration to support the DRA if consideration were required at all. Given the view that we take however, no purpose will be served in pursuing that argument further. Any objection to the efficacy of the DRA premised on absence of consideration is therefore, bad at law. J31 Mr. Linyama delivered a legal argument when he insisted that the respondent should have brought the action pointing at a definite provision in the DRA that clearly donates the right to the respondent to do so rather than ground its claim under the July, 2007 loan facility letter. This brings to the fore the question of the real effect of the DRA which is what ground one of the appeal is all about. In our view, whether the present appeal should succeed or fail depends, at the end of the day, on the effect of the DRA on the loan facility of July, 2007. In this regard, we consider as being cardinal, the provisions of clause 7, particularly as they relate to waiver of rights and enforcement. The significant provisions in our view, in defining the nature of the obligations of the parties are to be found in clause 7.29 to 7.30.2 of the DRA. We reproduce them here: Waiver of Rights. 7.29 (cid:9) Each Lender hereby waives any rights which it may have acquired, prior to the Signature Date, or which it may acquire after the Signature Date, or which it may acquire after the Signature Date but before the Effective Date, against any Borrower arising out of any default (however it is described) under any Existing Facility Agreement. J32 7.30 Each Lender hereby confirms that this Agreement constitutes an amendment of the Existing Facility Agreement(s) which it has concluded with the applicable Borrower(s) and in particular that - 7.30.1 the obligations of the applicable Borrower(s) to pay any principal amounts due under the applicable Existing Facility Agreements have been amended in the manner envisaged in this Agreement; and 7.30.2 the financial covenants contained in clause 12 and the undertakings contained in clause 14 and 15 are in lieu of any financial covenants and/or undertakings contained in the Existing Facility Agreements." It is clear to us that by entering into the DRA, the appellants and the respondent amended the existing facility given under the July, 2007 facility letter. Enforcement of the provisions of the facility as originally set out in the July, 2007 facility letter was henceforth subject to the provisions of the DRA. In the case of Pandoliker and Sons Limited, Pegant Zambia Limited Atul Pandoliker and Thankorbhai Chaganbhai Pandoliker(14), we had occasion to consider the effect of a restructuring of an existing mortgage facility, in particular, what the effect was of a banking facility letter issued to consolidate existing facilities and convert the existing facilities into a United States J33 dollars denominated loan. Among other things, we stated in that case as follows: "In our view, by deciding to restructure the loan facility through the banking facility letter of 28th September, 2011, the parties redefined their relationship so that reference to the old order had henceforth become impertinent.. .to the extent that the parties redefined their relationship through the new banking facility letter... any defaults and breaches under the previous relationship could not be part of the new credit affair that started with the 28th September, 2011 banking facility letter." Elsewhere in the same judgment, we stated that: "Even assuming that the appellants had adduced sufficient evidence to show that their counter claim was well founded, to raise as a defence, the perceived breaches of the respondent's pre-structured loan facility in an action premised on the post-structured facility would, in our view, be anachronistic." Drawing parallels from this case, it seems to us to be indisputable that when parties to an agreement chose to redefine their contractual relationship by altering the original terms of their agreement in whatever way, and by whatever name called - an amendment or a restructuring - they will henceforth be bound by the fresh arrangement by which they mutually agree to be governed. In casu, the parties had entered into the loan facility arrangement in July, 2007. This was amended by mutual consent J34 of the parties through the DRA as has already been alluded to. The original loan facility of July, 2007 had henceforth become subject to the DRA. All provisions of the DRA, to the extent that they were relevant to the appellants and the respondent, applied. We agree with the submissions of Mr. Linyama in this regard that recovery by the respondent of the sums due under the loan facility of July, 2007 had to be subject to the DRA. In other words, during the subsistence of the DRA, there could be no question of default on the part of the appellants or enforcement of the terms of the loan facility letter of July, 2007 without recourse to the provisions of the DRA. A perusal of the writ of summons and statement of claim dated 181h February, 2014 by which the respondent commenced court process q does show that, as submitted by Mr. Linyama, the respondent's claim is wholly founded on the existing facility of July, 2007 and that no mention of the DRA was made. In this regard, we again agree with the learned counsel for the appellants that the approach taken by the respondent in this respect was in principle, at odds with the provisions of the DRA, read in context. J35 Under clause 7.29 which we have already alluded to, the respondent as lender clearly waived its rights under the facility letter of July, 2007. (cid:9) Furthermore, under clause 7.30.1, the obligations of the borrower [appellants] to pay any principal amount due under the July, 2007 facility have been amended in the manner envisaged in the DRA. The submission by the learned counsel for the respondent that the respondent never at any point in time, expressly or otherwise waive its right to enforce the July, 2007 facility letter, cannot possibly be true. It goes contra to the express provisions of the DRA signed by the respondent. Mr. Pindani referred us to clause 3.5.6 of the DRA in terms of which no principal payment was to be made under Existing Facilities for a period of three years (the standstill period), but interest which accrues on the Existing Facilities would be paid during that period. This point is, in our view, significant because the DRA did not abrogate the appellant's obligations under the loan facility of July, 2007 nor was it intended to last forever. It was a rescue arrangement designed to provide relief to the borrowers while J36 creating condition that would make real, the prospects for the lender under the July, 2007 facility letter to recover its loan. The DRA could not have effect beyond its life span. On behalf of the respondent, it was argued by Mr. Pindani that the DRA was for a three year period, and that such period expired in 2013. On behalf of the appellants, Mr. Linyama argued that the DRA had two phases in debt rescheduling to wit, the period 1st January, 2011 to 61h September, 2013 and another from 3rd September, 2013 and ends when all "Capital Account Instruments" and all "Included Claims" which are "Performing Claims" on the "End Date" had been collected in full or written off as irrecoverable in terms of the "Provisioning Policy." The duration of the DRA is of great significance in this appeal because if it can be shown, as the learned counsel for the respondent has argued, that the DRA had elapsed following the expiry of three years, then the respondent would be perfectly entitled to commence proceedings for the recovery of the monies advanced under the July, 2007 facility letter without reference to the DRA. I J37 As regards the duration of the DRA itself, a perusal of the DRA shows that the various provisions have to be read together for one to identify the exact duration of that agreement. Under clause 2.1.110 the "rescheduling period" is defined to mean the period which commences on the "Effective Date" and which ends on the "End Date." The "Effective Date" is defined in clause 2.1.44 as the first day of the first calendar month which occurs after the date on which the "Condition Precedent" is fulfilled. "Condition Precedent" is in turn defined in clause 2.1.30 as the suspensive condition contained in clause 4. Clause 4 for its part states: "That the Suspensive Condition is the conclusion of the subscription agrecinent and the said agreement becoming unconditional." The Subscription Agreement is defined in clause 2.1.121 as being a subscription agreement which had been concluded between Mayibuye and Blue, a copy of which is annexed to the DRA. This agreement is produced in Volume II of the record of appeal and was signed by the parties to it on the 8th of June, 2010. We take it therefore, that the "Effective Date" began to run with reference to J38 the conclusion of the Subscription Agreement on the 81h June, 2010. As regards the "End Date" clause 2.1.46 states that the "End Date" means the day before the third anniversary of the "Effective Date"; or 1. if an acceleration event occurs such an earlier date as the lender, committee determines in accordance with the provisions of clause 2.7.8; or 2. such a letter date as the lender committee determines in accordance with the provision of clause 7.9; or 3. such an earlier date as Blue determines in accordance with the provisions of clause 2.12 (if any secure lender exercises its right to require the borrower to make payments to it). The combined effect of these provisions, in our view, is that the DRA had a three year period during which the respondent subscribed to waiver of its rights to enforce payment of the facility given through the July 2007 facility letter. We accept, therefore, Mr. Pindani's argument that the DRA was for three years only. After the expiry of J39 the three years, we do not think that the DRA could still stand in the way of the respondent in its quest to enforce payment of monies readily acknowledged by the appellants as properly due to it under the July, 2007 loan facility. Furthermore, the submission of counsel for the respondent that the 1st appellant is guilty of breaches of provisions of the DRA, which submission appears not to have been rebutted by the respondent, can only work against the appellants' position and justify the respondent's eagerness to resile from the restrictions imposed by the DRA. It is our view, therefore, that the respondent was entitled to commence proceedings in the manner that it did without any reference whatsoever to the DRA after the lapse of the rescheduling period of three years set in the DRA. Mr. Pindani made a global submission regarding the first five grounds of appeal raised by the appellants, claiming that they challenged findings of fact by the learned trial judge. Although we indeed agree that Mr. Pindani cited the correct law in which we have constantly stated that as an appellate court, we do not routinely interfere with the findings of fact by the trial court, we J40 cannot agree that grounds 1 to 5 as set out in the memorandum of appeal impugned findings of fact. Ground 1, for example, alleged a misdirection on the findings of the trial judge regarding the legal relationship between the Existing Facility of the DRA. Ground 2, relates to interpretation of clauses of the DRA and their effect. Ground 3, relates to liability under Existing Facility Agreement. Ground 4, has to do with the binding • effect of the DRA while Ground 5 equally relates to the obligation of the parties under the DRA. In our view these did not entail making findings of fact and the trial court's findings on these issues were not factual so that they cannot be a subject of appeal before this court. At best, they were findings of mixed law and fact. Having said this, we think nonetheless that I in the general submissions of the learned counsel for the respondent an attempt has been made to argue the substance of these five grounds notwithstanding his misgivings regarding their propriety as grounds of appeal. (cid:9) (cid:9) Ib a S J41 As regards the absence of a certificate signed by the director of the respondent which the appellants raised and which was a requirement under the letter of facility of July, 2007 Mr. Pindani spurned the appellants' argument saying that absence of a certificate did not extinguish the 1st appellant's indebtedness and that, in any case, the letters of demand written by the respondent to the 1st appellant and by the respondent's advocates to the 111t appellant were just as good as the certificate envisaged under the facility letter of 2007 and, therefore, that the absence of such a certificate could not defeat the respondent's legitimate claim which was proved otherwise than by production of the certificate. S We had in the recent case of Pandoliker and Sons Limited, Pegant Zambia Limited Atul Pandoliker and Thankorbhai Chaganbhai Pandoliker (14) occasion to consider a similar argument. We stated in that case obita that, "[a]bsence of a certificate in the form prescribed in the facility letter would not defeat a claim which could otherwise be proved." This dicta in our view, accords with common sense viewed from the stand point that a certificate is not conclusive proof of indebtedness. J42 In the present case, we note that the learned trial judge had directed that the certificate should be prepared and produced before the Deputy Registrar. We think this directive was superfluous and unnecessary. We do not think that having found that the 1st appellant was liable under the loan facility letter of July, 2007 it was an unreasonable for the court to order the Deputy Registrar to ascertain the exact amount outstanding. We equally do not think that proof of the 1st appellant's indebtedness lay in the production of a certificate. Indeed, such certificate may possibly contain information which could be disputed at trial and this would not apriori entail the collapse of the appellant's claim if the indebtedness could be otherwise proved. In these circumstances, therefore, we do not believe that there is merit in ground 6 of the appeal. In sum, we find under ground one that although the DRA amended the original loan facility of July, 2007 it did not supplant the original facility letter or abrogate the appellants' obligations under that letter. In this regard we agree with the learned trial judge's findings. Ground 1, therefore, fails. S I J43 In regard to ground 2, while we agree that the respondent expressly waived its right to enforce the July, 2007 facility letter in the form it existed prior to the DRA, we hold nonetheless that such waiver was for the duration of the "Rescheduling Period" and was not intended to last indefinitely. We do not think that the learned trial judge could be faulted in failing to make a pronouncement on the waiver of the respondent's rights as set out in the DRA. Ground 2 cannot, therefore, succeed. Likewise, for the explanation that we have earlier given, grounds 3 and 4 are devoid of merit and cannot succeed and are, therefore, bound to fail. Regarding ground 5 specifically, if as we have stated, the DRA ended its three year life-span, it would be a contradiction to hold that the provision relating to dispute resolution in the DRA I survived the DRA itself. On a realistic view of the circumstances we are bound to rule that the respondent's claim is legitimate and cannot be defeated by the highly technical defence the appellants sought to raise. (cid:9) (cid:9) 41 4 This bgs us to the issue of the notice to raise a preliminary issue Which was filed into court by the respondent. It is obvious to us that had counsel for the respondent requested counsel for the appellants to make amends prior to filing in of the notice and all the supporting affidavit, it would not have been necessary for the respondent to file the notice and prepare all the supporting documents. The respondent cannot justifiably be entitled to the costs relating to the notice to raise preliminary issues which could have been avoided had the respondent's counsel warned the appellants' advocates. We dismiss the appeal in its entirety with costs, save the costs relating to the notice to raise the preliminary issue and ancillary matters, I H. C. Chibomba SUPREME COURT JUDGE E. M. H.nfcdu SUPREME COURT JUDGE Mr-MT.ii1a, SC SUPREME COURT JUDGE