THE Supreme Court has ruled against a Zimbabwean who guaranteed a loan applied for by Switzerland-registered company, Transafrica Holding SA, which defaulted payment of the US$400 000 loan with Connect Microfinance Zambia Limited, resulting in his properties being confiscated in settlement of the debt.
Elisha Tsindikidzo approached the Supreme Court in bid to stop Connect Microfinance Zambia from taking his properties.
In the matter heard by a bench that consists of Justices Chinembiri Bhunu, George Chiweshe and Joseph Musakwa, Tsindikidzo appealed the judgment of the Commercial Division of the High Court which dismissed his preliminary objection to jurisdiction and choice of law.
The court heard that sometime in 2019, Transafrica, a company registered under the laws of Switzerland, obtained a loan facility from Connect Microfinance Zambia, a company resident and incorporated in Zambia.
Tsindikidzo, who owns two immovable properties in Harare, stood as guarantor, surety and co-principal debtor for the due performance of Transafrica’s loan obligations.
He mortgaged and hypothecated the two properties as security for the due repayment of the loan and both mortgage bonds were drawn up executed and registered in Zimbabwe.
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It was a term of the two surety bonds that they would provide continuing cover in respect of Transafrica’s debt to the respondent.
The court heard that Transafrica defaulted in repaying the loan.
Pursuant to the surety bond, Connect Microfinance Zambia sued Tsindikidzo in the Commercial Court seeking relief for payment of US$714 000.
It further sought an order declaring the two mortgaged properties executable.
Tsindikidzo objected to the jurisdiction of Zimbabwean courts, arguing that they could not hear and determine the matter.
Connect Microfinance Zambia argued that Tsindikidzo was a Zimbabwean national with properties in Zimbabwe and transacting business in the country.
It further contended that Tsindikidzo was not a party to the loan agreement, but to the surety agreement which was drawn, executed and registered in terms of Zimbabwean law.
It also argued that the cause of action in respect of the surety agreement arose in Zimbabwe.
Connect Microfinance Zambia also argued that the Commercial Court is a court of unlimited jurisdiction hence it had the necessary jurisdiction to hear and determine the dispute between the parties.
The Commercial Court then upheld the respondent’s argument and rejected that of the appellant.
Tsindikidzo was then ordered to pay US$714 000 for the US$409 000 loan with interests, resulting the two properties being attached.
Aggrieved, Tsindikidzo appealed to the Supreme Court on grounds that the Commercial Court erred in declaring that it had jurisdiction to hear the matter.
Tsindikidzo sought relief that the whole judgment of the Commercial Court be set aside.
However, after hearing the arguments, the Supreme Court bench upheld the Commercial Court’s determination.
“The surety contract was executed in Zimbabwe hypothecating immovable property in Zimbabwe over which no Zambian court or any other foreign court had jurisdiction.
“The appellant, though resident in Zambia, is a Zimbabwean national. On those facts, we hold that the cause of action arose in Zimbabwe. It is trite in our law that you pursue the defendant to their court or the place where the cause of action arose.
“Our courts in Zimbabwe will always jealously guard their jurisdiction. They will not hesitate to exercise their jurisdiction in the absence of clear proof that they have no jurisdiction to hear and determine any matter occurring in their territorial jurisdiction.”
The court also ruled that the surety contract was concluded in Zimbabwe and the dispute between the parties was over property in the country.