Ashok Motiwala v Yusuf Ismail

Mr Motiwala (applicant) issued a post-dated cheque for $500,000 to Zimland Investments (Private) Limited dated 30 July 1998 for goods to be imported. At Zimland's request, he cancelled the "A/c payee only" marking. On 3 July 1998, before the cheque matured, Zimland advised Motiwala to stop payment as the goods would not be available, which he did. However, on 31 July 1998, Mr Ismail (respondent) attempted to deposit the cheque which had been endorsed to him by M Chokour, a director of Zimland. The cheque was dishonoured due to the stop payment. Mr Ismail sued on the cheque and obtained summary judgment. Motiwala's application for rescission was refused on 27 January 2000. He then applied out of time for leave to appeal. During proceedings, it emerged that Motiwala's legal practitioner, Mr Wilson Manase, was himself a co-director of Zimland with Mr Chokour, creating a potential conflict of interest.

• Whether the applicant showed good cause for condonation of the delay in noting an appeal
• Whether the applicant had an arguable defence to the claim on the post-dated cheque
• Whether the respondent was a holder in due course of the cheque entitled to enforce payment
• Whether notice of a potential defect (that goods had not been delivered) defeated holder in due course status
• Whether there was a conflict of interest warranting referral to the Law Society regarding the conduct of the applicant's legal practitioner

The application for an extension of time in which to appeal was refused with costs. The firm Manase & Manase, and in particular Mr Wilson Manase, were directed not to recover from the applicant any costs incurred in making and prosecuting the application. A copy of the judgment was directed to be sent to the Secretary of the Law Society of Zimbabwe for appropriate action.

A holder of a post-dated cheque who acquires it in good faith and for value before the date it matures is a holder in due course. To defeat holder in due course status under s 28(1)(c) of the Bills of Exchange Act, there must be notice of a defect in title at the time the bill was negotiated. Notice of a potential defect that might never eventuate, or notice received after negotiation, does not defeat holder in due course status. There is a fundamental difference between having notice of an actual defect at the time of negotiation and having notice of circumstances that might potentially give rise to a defect in the future. A legal practitioner who has a personal interest in a matter that is prima facie adverse to his client's interests should not act for that client, and such conduct may warrant referral to the Law Society for investigation.

The court expressed serious concerns about the conduct of Zimland and its director Mr Chokour, questioning: why the "A/c payee only" marking was deleted; why and when the cheque was endorsed to Mr Ismail; for what consideration it was endorsed; and why Mr Chokour failed to file an affidavit despite apparently collaborating with the applicant. The court observed that it was unclear why Mr Motiwala had not attempted to join Zimland and Mr Chokour as parties to the proceedings. McNally JA commented that this was not the first time Mr Manase had been out of time with appeals, and expressed being "quite appalled by the standard of the submissions in the affidavits" which "betray a total lack of understanding of the law relating to negotiable instruments." The court noted it was "disturbed about the way in which this case has been handled from the beginning" by Mr Manase.

This case is significant in Zimbabwean law for: (1) clarifying the principles governing holder in due course status under the Bills of Exchange Act, particularly regarding post-dated cheques and what constitutes notice of defect of title; (2) illustrating the distinction between notice of an actual defect at the time of negotiation versus subsequent notice of a potential defect; (3) addressing professional conduct issues and conflicts of interest where a legal practitioner has a personal interest in a company adverse to his client's position; and (4) demonstrating the court's willingness to exercise its inherent jurisdiction to refuse costs to legal practitioners who fail to meet professional standards and to refer matters to the Law Society for disciplinary consideration.