Following a credit facility agreement dated 22 April 2004, the applicant (Trust Bank Corporation Limited) advanced an offshore loan facility of US$1,514,762.20 to the respondent (Cold Storage Company Limited). The loan had a specific repayment plan requiring an initial instalment of US$25,000 by 30 June 2004, followed by quarterly repayments of US$60,000 until 31 March 2005, with the entire amount remaining payable on demand at the Bank's discretion. As at 29 March 2005, the entire loan amount remained outstanding. The applicant issued summons for the full amount plus interest and costs. The applicant was under curatorship and had entered into an agreement with Zimbabwe Allied Banking Group Limited (ZABG) whereby it ceded various rights and obligations, including claims against debtors, to ZABG. The respondent admitted owing the money but filed opposition on the preliminary ground that the applicant lacked locus standi to bring the application, as an employee of ZABG (Collins Chikukwa) had sworn the founding affidavit, and there was no evidence of the Curator's permission to sue as required by section 54(1) of the Banking Act.
The application for summary judgment was dismissed with costs.
Where a banking institution is placed under curatorship in terms of the Banking Act [Chapter 20:24], section 54(1) suspends the powers of all directors, officers and shareholders except to the extent that the Curator permits them to exercise their powers. A bank under curatorship that has ceded its rights to another entity cannot institute legal proceedings in its own name without express permission from the Curator. Cession does not automatically confer agency powers on the cedent to sue in its own name; there must be a deliberate and visible act by the Curator creating such agency. Authority purportedly granted through an officer of the cessionary (rather than an officer of the cedent) is insufficient to satisfy the requirements of section 54(1). A party lacking locus standi cannot bring an application before the court, even where the substantive merits of the claim are not in dispute.
The court observed that failure to require deliberate and visible acts by the Curator to create agency would lead to the Curator's legal control and management of the entity placed under curatorship being compromised. The court also noted that the fact that the respondent admitted its indebtedness should not be allowed to cloud the fact that the applicant failed to follow the law regarding locus standi. The court referenced South African case law (Barme Marais & Seuns v Eli Lilly 1995 (SA) 469) cited by the applicant but distinguished it, noting that the position in Zimbabwean law was clear as established by Supreme Court precedent.
This case is significant in Zimbabwean banking law and civil procedure for clarifying the legal position of banks under curatorship. It establishes that: (1) a bank under curatorship cannot institute legal proceedings without the express permission of the Curator as required by section 54(1) of the Banking Act; (2) where a bank under curatorship has ceded its rights to another entity, the cedent loses its capacity to sue in its own name; (3) cession does not automatically confer agency powers on the cedent - explicit authorization from the Curator is required; and (4) procedural requirements regarding locus standi cannot be waived even where the substantive debt is admitted. The case reinforces the protective purpose of curatorship provisions in banking legislation and the importance of strict compliance with statutory requirements for locus standi.