Alshams Global Limited v Interfin Bank Limited and Savannah Tobacco (Private) Limited

Alshams Global Limited (applicant) held Bankers Acceptances (BAs) avalised by Interfin Bank to the value of US$26,000,000. In 2011-2012, Savannah Tobacco accessed certain facilities from Interfin secured by BAs issued by Savannah and drawn on, avalised and accepted by Interfin to the value of US$2,789,137.02. Interfin sold the BAs to Alshams on a buy-back basis. On maturity, Alshams presented the BAs for payment but Savannah failed or refused to honour or discharge them. Savannah claimed it had accessed a loan through Interfin from Afrexim Bank and the BAs were issued as a condition of that loan facility. Savannah contended it was unaware of any transfer of the BAs to Alshams and alleged the transfer was unlawful, fraudulent and in breach of the banker/client relationship. Savannah only became aware of the arrangement on 7 March 2012 through a letter from Interfin. Savannah further claimed it had discharged its obligations to Interfin and that the BAs had expired. Interfin did not enter appearance to defend and default judgment was obtained against it.

• Whether Interfin had authority to negotiate or trade the Bankers Acceptances to Alshams without Savannah's consent
• Whether the negotiation of the BAs by Interfin was unlawful and fraudulent
• Whether Savannah had established a prima facie defence to resist summary judgment
• Whether the answering affidavit filed by Alshams should be admitted in terms of Order 10 Rule 67(c)
• Whether the BAs had expired at the time of presentation
• Whether Savannah's payments to Interfin constituted a defence to Alshams's claim on the BAs

Summary judgment was granted in favor of Alshams. Savannah (first respondent) was ordered to pay: (a) US$2,789,137.02 being the face value of the Bankers Acceptances; (b) Interest at 25% per annum capitalised from maturity date of each BA to final payment; (c) Collection commission in accordance with Law Society By-law 70(2). Savannah's liability was declared joint and several with Interfin (second respondent), with absolution only upon full payment by Interfin. Costs were awarded to the applicant.

Bankers Acceptances are by their nature freely negotiable financial instruments that may be sold by any holder before maturity without the consent of the drawer. An open endorsement on a BA without reference to a specific party indicates that the holder may deal with the BA in relation to any other party. The consent of the drawer is not a prerequisite to the negotiation of BAs, as requiring such consent would defeat the underlying purpose of BAs which is to raise funds on the open market. In summary judgment proceedings, a defendant must establish a prima facie defence by alleging material facts with sufficient clarity and completeness, not vague generalities or conclusory allegations unsupported by solid facts. In terms of Order 10 Rule 67(c), an answering affidavit in summary judgment proceedings may only address matters raised by the defendant which the plaintiff could not reasonably be expected to have dealt with in the founding affidavit.

The court observed that if Savannah had genuine concerns about Interfin's handling of the BAs, one would have expected it to protest to both Interfin and Alshams at the earliest opportunity (7 March 2012). Its silence was consistent with knowledge and appreciation of the exact nature of the instrument it had signed. The court noted that Savannah's claim to have paid off the loan to Interfin was not properly substantiated, and in any event Alshams's claim was based on the BAs themselves and not on the underlying facility between Savannah and Interfin. The court also commented that Savannah's other allegations (regarding retired BAs and expired bills) were not based on the specific BAs that formed the subject of Alshams's claim, and constituted an attempt to create a ruse to buy time.

This case is significant in Zimbabwean commercial and banking law for clarifying the nature and negotiability of Bankers Acceptances. It establishes that BAs are freely negotiable instruments similar to treasury bills and bills of exchange, and can be sold by holders without the consent of the drawer. The judgment reinforces the principle that summary judgment is available where a plaintiff's claim is unimpeachable and a defendant's defences are vague, unsubstantiated or amount to delay tactics. The case also provides guidance on the procedure for filing answering affidavits in summary judgment proceedings under Order 10 Rule 67(c), requiring that such affidavits be filed beforehand with permission sought at hearing, and limiting their scope to matters the plaintiff could not reasonably have anticipated.