NMB Bank Limited v Formscaff (Private) Limited and Others

NMB Bank (appellant) issued summons against Formscaff (Pvt) Ltd (1st respondent) and six other respondents for payment of US$389,362.72 arising from a loan facility dated 2 November 2015. The loan of US$350,000 was advanced to assist the 1st respondent with working capital requirements. The 2nd to 7th respondents bound themselves as sureties and co-principal debtors, with mortgage bonds registered over certain properties. The respondents denied owing the money, claiming the loan was repaid in full on 30 December 2015 based on an accounting entry. The respondents also challenged the validity of the suretyships and mortgage bonds. At the close of the appellant's case, all respondents applied for absolution from the instance. The High Court granted the application, cancelled the suretyships and mortgage bonds, and awarded costs on an attorney-client scale. The bank had a long-standing relationship with the 1st respondent spanning several years involving multiple loan facilities.

• Whether the High Court correctly granted absolution from the instance
• Whether the appellant established a prima facie case at the close of its evidence
• Whether counterclaims that were not properly pleaded could be granted
• Whether the loan facility dated 2 November 2015 was repaid on 30 December 2015
• Whether the suretyships and mortgage bonds were valid and enforceable
• Whether the High Court erred in assessing witness credibility without hearing the defence case

The appeal was allowed with costs. The High Court judgment was set aside and substituted with an order dismissing the applications for absolution from the instance and the 2nd respondent's application for its claim in reconvention to be granted at the close of the plaintiff's case. The matter was remitted to the High Court for continuation of trial.

At the absolution from the instance stage, a court should not dismiss a plaintiff's evidence or make findings on witness credibility in the absence of evidence from the defendant, as there is nothing to measure the plaintiff's evidence against. The test for absolution is whether there is evidence upon which a court, applying its mind reasonably, could or might (not should or ought) find for the plaintiff. A prima facie case requires evidence relating to all elements of the claim. Courts cannot grant counterclaims or other relief that has not been properly pleaded in accordance with the procedural rules - specifically, a claim in reconvention must be bound and filed with the defendant's plea as required by Rule 121 of the High Court Rules. When interpreting commercial agreements, courts should construe documents fairly and broadly without being too astute in finding defects, particularly where businessmen record agreements in summary fashion.

The Court noted approvingly the principle that businessmen often record important agreements in crude and summary fashion, and modes of expression sufficient to them in the course of business may appear incomplete to those unfamiliar with the business. The Court emphasized the duty to construe such documents fairly and broadly, applying the maxim "verba ita sunt intelligenda ut res magis valeat quam pereat" (words are to be understood so that the subject matter may be preserved rather than destroyed). The Court also observed that while grounds of appeal could have been more elegantly crafted, courts should be guided by substance rather than form, and where some grounds are valid and others invalid, the court should proceed on the basis of valid grounds.

This case clarifies important principles regarding absolution from the instance in Zimbabwean civil procedure. It emphasizes that courts must not assess witness credibility at the absolution stage when there is no evidence from the opposing party to measure against. The case reinforces that the test is whether there is evidence upon which a court, directing its mind reasonably, could or might find for the plaintiff - not whether the evidence is conclusive. It also establishes that courts cannot grant relief on counterclaims that have not been properly pleaded in accordance with the Rules. The judgment provides guidance on interpreting banking transactions and credit facilities in the context of refinancing arrangements, emphasizing that business documents should be construed fairly and broadly without being overly astute in finding defects.