NMB Bank Limited v Potrid Investments (Pvt) Ltd and Others

Under a facility letter dated 2 April 2009, the plaintiff (NMB Bank Limited) advanced a loan of US$30,000 to the first defendant (Potrid Investments). The loan was secured by a mortgage bond registered over immovable property owned by the second defendant (Coster Maisiri) - Stand 2300 Glenview Township, measuring 200 square metres, registration number 14567/2002. The third defendant (Trevor Mupamhadzi), a director of the first defendant, had brought the second defendant to the bank in August 2008, where the second defendant allegedly consented to his property being used as security, surrendered title deeds, and signed a power of attorney and affidavit enabling registration of the mortgage bond. The loan remained outstanding. The first, third and fourth defendants defaulted at pre-trial conference and default judgment was granted against them. Only the second defendant defended the action, claiming he never consented to use of his property as security and was unaware of the business dealings. However, the second defendant had written a letter in March 2012 to the bank stating he was "misinformed" by Mupamhadzi about the purpose of the loan but acknowledging his property was used as security.

• Whether the second defendant consented to his property being used as collateral security for the loan advanced to the first defendant
• Whether the second defendant signed any deed of suretyship or power of attorney for the registration of a surety mortgage bond on his property
• Whether the mortgage bond over the second defendant's property was validly registered and executable

1. The 2nd defendant was ordered to pay the plaintiff US$31,351.91 with interest at 60% per annum from 1 November 2010 to date of payment in full; 2. The property (Stand 2300 Glenview Township, 200 square metres, Reg No. 14567/2002) was declared executable; 3. The 2nd defendant was ordered to pay the plaintiff's costs of suit on a legal practitioner and client scale.

Where a property owner has consented to the registration of a mortgage bond over his property as security for a loan, evidenced by surrender of title deeds, execution of power of attorney and affidavit, and subsequent written acknowledgment, the property owner cannot escape liability under the mortgage by claiming he was misinformed about the purpose for which the borrowed funds would be used. Consent to provide security is established where documentary evidence and credible witness testimony demonstrate the property owner's voluntary acts in facilitating registration of the mortgage bond. A party's own written admissions, particularly when confirmed under oath during trial, constitute compelling evidence that can override earlier denials.

The court applied and endorsed the principle from Mucha v Mucha HH 101/09 that where evidence is properly backed by documentation, the credibility of witnesses cannot be doubted. The court observed that the second defendant's strategy appeared to be creating a new story to save his property, but he discovered toward the end of trial that his story could not destroy the truth, leading him to abandon calling a handwriting expert and to confirm the contents of his March 2012 letter.

This case illustrates the importance of documentary evidence in banking litigation and demonstrates that a party cannot escape liability under a validly registered mortgage bond by claiming misrepresentation about the purpose for which borrowed funds would be used, where consent to the mortgage itself was given. The case reinforces that consent to provide security is distinct from any representations about how loan proceeds will be utilized. It also demonstrates the evidentiary weight courts give to admissions made in contemporaneous correspondence, particularly where such admissions are later confirmed under oath.