IN THE COURT OF APPEAL OF BOTSWANA HELD AT LOBATSE Court of Appeal Civil Appeal No. 30/2004 High Court Civil Case No. 2953/2003 In the matter between BUSY FIVE ENTERPRISES (PTY) LTDAppellant And RON MARSH1ST RESPONDENT AFRO TOURS (PTY) LTD2nd Respondent Dr. H. Lever S.C. with him Mr. J. Griffiths for the Appellant Mrs. L. Dowa for the Respondents
This is an appeal against a decision of the High Court whereby the Court granted summary judgment in the sum of P500.000.0, together
with interest thereon at the rate of 10% per annum a tempore morae and costs, against the appellant at the instance of the Respondents. For
convenience I shall continue to refer to the parties as 1st or 2nd plaintiff and defendant. The cause of action is set forth in the Particulars of Claim as follows:
"4. On 10th day of July 2002, the defendant's Board of Directors passed a resolution the pertinent terms of which were as follows: 4.1
1st plaintiff would lend the defendant an amount of P500 000.00 (Five Hundred Thousand Pula)
4.2
The said amount would assist with the time project settlement. 4.3
Interest would be payable monthly at 1% from receipt of the money. 4.4
The loan would be given to the defendant on 12th July 2002. 4.5
The full amount would be repaid on 30th April 2003.
5.
On 12th day of July 2002 a letter containing the above was sent by the defendant to the 2nd Plaintiff a company run by the 1st plaintiff as its Managing Director and a major shareholder (annexed hereto is a copy of letter marked "A")
6.
On the 13th day of July 2002, the 1* Plaintiff through the 2nd plaintiff loaned the defendant the said amount of P500 000.00 in accordance with
the defendant's resolution referred to in paragraph 4 herein above, and 2nd Plaintiffs account No. 9034992, Barclays Bank Ltd (Mall branch) was debited accordingly. (Annexed hereto is a photocopy of a Bank
statement marked ("B").
7.
From the foregoing the defendant is lawfully indebted to the plaintiffs for an amount of P500 000.00 and interest in terms of the
defendants resolution aforesaid as repayment date is long past.
8.
Despite repeated request and notice of intention to sue, the defendant has refused, neglected or failed to pay the said amount of
P500 000.00 plus interest.
2 WHEREFORE plaintiffs jointly pray for judgment against the defendant for: (a)
payment of P500.000 (five hundred thousand pula) (b)
Interest at 10% per annum (c)
Costs of suit (d)
Any relief the Honourable Court my deem fit to grant. Dated at Gaborone on the 23rd day of July 2003.
Upon being served with the plaintiffs Writ of Summon and particulars of Claim, the defendant lodged an Appearance to Defend the matter
on 7th August 2003. Whereupon the plaintiff filed a Notice of Application for Summary Judgment in terms of Order 34 Rule 2 wherein the 1st plaintiff verified the cause of action and the amount claimed in the particulars of claim and stated that in his opinion the defendant
had no bona fide defence and that entry of appearance to defend had been delivered solely for the purpose of delay.
The defendant in resisting the application for summary judgment conceded that an agreement was entered into between the parties regarding
the loan of P500 000.00, but contended that the agreement relied upon by the plaintiffs in their quest for summary judgment was not
the true agreement entered into between the parties. The defendant further contended that at a Board of Directors Meeting, at which
the 1st plaintiff was present, the true agreement in respect of the loan for P500
3 000.00 entered into by the parties was concluded and that this agreement differs materially from the terms of appendix "A" upon which the plaintiffs rely in their pursuit of summary judgment. This issue of the loan was discussed at great length at the Board Meeting held on 10th July 2002. The defendant refers to the minutes of the said meeting in its Opposing Affidavit and alleges that:
"....it does not appear from the minutes of the Board meeting of Busy Five that a specific date was agreed upon (for repayment
of the loan) even though appended to the summons is a minute reflecting this. This loan was regarded as a director's loan to the
company and even the interest was not agreed upon, [see Annexure KR5]. Subsequent to the Board Meeting, Mr. Marsh attended at the
offices of Busy Five and demanded that the letter be couched in a manner dictated by him and signed by the parties prior to his releasing
the director's loan.";
The defendant annexed the said minutes as "KR5" to its affidavit and explained how two of the directors - Luc Vandecasteele and Koen de Ruyck, contrary to the agreement entered into by the parties at the Board Meeting of 10th July 2002, came to append their signatures to annexure "A".
It is clear from this paragraph of the defendant's affidavit in opposition to the application for summary judgment, that very serious
doubts had been raised regarding the veracity of the plaintiffs allegation that the agreement upon which he bases his cause of action
was concluded by the parties since this alleged agreement differs materially from the
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resolution passed by the Members of the Board of the defendant on 10th day of July 2002. In an application for summary judgment, the affidavit in support thereof in terms of Order 34 Rule 2 must : "swear positively to the facts verifying the cause of action
and the amount, if any, claimed, and stating that in his opinion there is no bona fide defence to the action and that the entry of appearance to defend has been delivered solely for the purpose of delay."
In this case, it must have been evident to the 1st plaintiff, who deposed to the affidavit in support of the application for summary judgment, that the agreement on which he relied, as conferring upon plaintiffs a cause of action, did not emanate as alleged by him, from any resolution passed by the Board of Directors of the Defendant on 10th day of July 2002. In the circumstances the defendant's alleged defence to the plaintiffs claim cannot be said to be without merit and it cannot be said that appearance to defend the action was entered by him solely for purposes of delay. Weighty issues were raised for determination. As COBERTT J.A stated in another respect in Maharai v Barclays National Bank Ltd 1976 (1) SA 418 at 423 E - F.
"While undue formalism in procedural matters is always to be eschewed it is important in summary judgment applications under
Rule 32 (i.e. our order 34) that, in substance, the plaintiff should do what is required of him by the Rule. The extra-ordinary and
drastic nature of the
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remedy of summary judgment in its present form has often been judicially emphasized."
The very fact that a date for repayment of the loan was not agreed upon in the resolution of the Board of Directors of the Defendant
Company passed on 10th July 2002, made suspect the plaintiffs averment that his claim for payment had matured as of 30th April 2003. This dispute called for resolution by evidence.
In his affidavit in opposition to the application for summary judgment, the defendant appended a number of documents in support thereof,
including the minutes of the meeting of the Board of Directors held on 10th July 2002 at the premises of Premier Properties. Hereunder appear the relevant parts of the Board Meeting - annexure KR5.
"BUSY FIVE BOARD METING HELD ON 10 JULY 2002 AT PREMIER PROPERTIES OFFICES. ATTENDANCE: PAUL WHITEHEAD LUC VANDECASTEELE CHARLES TIBONE KOEN DE RUYCK RON MARSH APOLOGIES
JAN DE WET RAHIM KHAN HENTJIE DE WET
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4.0LOAN BY RON MARSH TO BUSY 5
ENTERPRISES FOR A PAYMENT OF TIME
PROJECTS
Reference was made to a letter received from Corporate Holdings (Pty) Ltd on 5th July. Copy of letter attached and appended to minutes.
The Board requested Ron Marsh put forward this proposal to the meeting.
Ron Marsh confirmed the following: 4.1Refer Paragraph 2
Interest Payment. The payment of interest stated under this paragraph was from the date of the loan and thereafter monthly. This conflicts
with the previous agreement entered into between Busy Five Enterprises and Ron Marsh on the same issue.
4.2Refer paragraph 3
Security for this loan. Ron Marsh confirmed that paragraph 3 was in effect a request for shares in Busy 5 Enterprises to be lodged
as security against the loan in the event of default of the payment conditions. Luc commented that this conflicted with the Articles
of Association and agreements reached at Board level where directors would make directors loans to Busy 5 Enterprises. It had been
agreed that loan accounts would bear interest at prime plus 1. Luc felt that this P500 000.00 loan was indeed a directors loan as
any other and that interest should be payable on this loan in terms of how Busy 5 dealt with other directors loans. Luc confirmed
that in his view that the P500 000 loan was no different to a normal directors loan and that in pursuance of this no additional security
was required.
4.6 Busy 5 Response
With the exception of Ron Marsh the remaining Board Members in attendance responded that Busy 5 Enterprises and Ron Marsh already
had an agreement in place with regard to this issue. The original agreement could not be
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found as it had been filed by Mrs. B. Vandecasteele who was away in Belgium and that the terms and conditions regarding the loan and
interest were clearly stipulated.
Paul Whitehead proposed that a new agreement be entered into to satisfy Ron Marsh's current conditions and that it superceded the
previous agreement.
The Board rejected this proposal and Charles Tibone stated there could not be two agreements on the same issue.
It was resolved that the original agreement stated that Ron Marsh would lend Busy 5 Enterprises an amount of P500 000 according to
the terms and conditions which were set down in the original agreement.
As a consequence the original agreement not being to hand, it was the proposed and agreed by all present that the original conditions
of the agreement would stand and that the principles of the loan of P500 000 being lent to Busy 5 by Ron Marsh be put into effect.
In the event that the original agreement is silent on the terms and conditions of repayment and of interest then it was agreed that
Busy 5 would pay interest in the loan to Ron Marsh in arrears on a monthly basis, commencing 1 month after the advancement of the
loan.
In the event the original agreement is not silent on interest and terms of payment, the original terms and conditions of that agreement should apply. The above was accepted by all present including Ron Marsh.
4.7 Advancement of Loan
In pursuance of the above agreement it was resolved that Ron would pay the amount of P500 000 into Busy 5 bank account by the close
of business on 12th July 2002. This payment would be utilized to meet Busy 5 current commitments. The issues of interest relating to this loan as noted
above would then be solved upon examination of the original agreement."
The original agreement referred to above was appended as annexure KR7, which reads:-
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"It is hereby agreed that Mr. Ron N. Marsh shall help Busy 5 Enterprises (PTY)LTD with the settlement of TIME PROJECTS claim
as follows:
1.
If the extra PI 000.000 (One Million Pula) interest free loan is approved by BP - Botswana, I shall immediately cede such loan to
Busy Five Enterprises (PTY)Ltd
2.
If the extra loan is not approved. I undertake to make the first required payment of P500 000 (Five Hundred Thousand) to TIME PROJECTS
out of the PI 000 000 paid to me as prepaid rental by BP Botswana. Such loan is to be treated as directors loan and repayable at
Prime + 1%, starting from the opening date of the complex.
Signed by Mr. R. N. Marsh on this day of 18 -06 0 2001 Witnesson this day of 18-06-2001."
There are obvious differences between Annexure "A" and the resolution passed at the meeting of the Board of Directors on
10th July 2002. Firstly, the issue is raised whether the loan should be regarded as a director's loan to the defendant. Secondly, the
question of interest as agreed upon in the original agreement differed from that stated in annexure "A". Thirdly, and more
importantly, the time for repayment was not stated in either of the annexures KR5 or KR7. These factors cast grave doubt on the authenticity
of Annexure "A" upon which the plaintiffs claimed judgment.
The relevant portion of Order 34 Rule 3 (b) recites that:
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"3. Upon the hearing of an application for summary judgment, the defendant may -
(b) satisfy the court by affidavit .. or, with the leave of the court, by oral evidence of himself or of any other person who can swear positively to the fact that he has a bona fide defence to the action, such affidavit or evidence shall disclose fully the nature and the grounds of the defence and the material
facts relied upon therefor."
In resisting an application for summary judgment the defendant does not have to establish a cast iron defence. It is sufficient if what it alleges to be true may be capable of being proved at the trial and if so proved would constitute a defence to the plaintiffs claim. This was put succinctly thus by TEBBUTT J.A (as he then was) in Du Setto (Sunnyside II) v Financial Services Co. of Botswana Ltd [1994] BLR 274 at 287 B - E
"Those cases lay down that the defendant must satisfy the court that he has a defence which, if proved, would constitute an answer
to the claim and that he is advancing it honestly. He must disclose what his defence is and set out the material facts upon which
it is based and while he need not deal exhaustively with the facts and evidence relied upon to substantiate his defence or with the
detail or precision required of a pleading, he must set them out with sufficient particularity and completeness to enable the court
to decide whether the affidavit discloses a bona fide defence or not.
The allegations in the affidavit must not be bald, vague or sketchy. What is required is that the defence be not set out so baldly,
vaguely or laconically that the court, with due regard to all the circumstances, receives the impression that the defendant has,
or may have, dishonestly sought to avoid the dangers inherent in the presention of a fuller or clearer version of the defence which
he claims to have.
The affidavit must not lack "forthrightness as well as the particularity that a candid disclosure of a defence should
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embody" (see Diesel Power Plant Hire case Supra at 298 D-F). It has also been held that "if the statements of fact are equivocal or ambiguous or contradictory or
fail to canvass matters essential to the defence raised, then the affidavit does not comply with the rule" (see also Arend v Astra Furnishers supra at 304 A-B). It is not an onerous task to file an affidavit which meets the requirements of the Rule. On the contrary it is
a simple matter where a bona fide defence is available to a defendant. If he does not do so, the court will be entitled to grant
summary judgment and not only where the plaintiffs case is an unanswerable one."
I am in agreement with the submission by Dr. Lever that a comparison of the allegations contained in paragraph 4 of the plaintiffs
particulars of claim, with the minutes of the defendant company of 10th July 2002 (annexure KR5) shows that the defendant did not pass a resolution in the terms alleged by the plaintiff.
Further evidence is required by one or other party to buttress or refute the Plaintiffs claim. As matters stand the ends of justice
can not be achieved by allowing this judgment to stand. The appeal is accordingly allowed with costs, and it is ordered that: 1.
The summary judgment granted by the court a quo is hereby set aside 2.
The appellant is granted leave to defend this action 3.
The costs of the action to be costs in the cause.
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DELIVERED IN OPEN COURT AT LOBATSE THIS 28th DAY OF JANUARY 2005. K.R. A KORSAH JUDGE OF APPEAL I agree N. W. ZIETSMAN JUDGE OF APPEAL I agree N. J. McNALLY JUDGE OF APPEAL
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