First National Bank of Swaziland Ltd. v. Makhaza (Pty) Ltd (3/2001) (Pty) [2001] SZSC 2 (01 January 2001);

“Pursuant to a resolution dated the 5^th day of October 1998, a certified copy whereof is hereto annexed”.

It would appear that no such copy was in fact annexed.

In signing the two powers of attorney Maziya stated that he gave the powers of attorney to the conveyancers –

“In my capacity as a duly authorised director of Makhaza (Pty) Ltd duly authorised thereto by virtue of a resolution passed at a meeting of the Board of Directors of the Company held at Mbabane on the 14^th March 1996”. (in respect of the first bond) and “on 4^th November 1998” (in respect of the second)

In each instance there was a document which purported to be a true copy of a –

that the respective surety bonds be passed and
(B)      that MDUDUZI CYPRIAN MAZIYA in his capacity as Director of the above company, be and is hereby authorised to sign the Power of Attorney to Mortgage and to include therein such conditions as he may deem fit”.

Afri-craft was placed in liquidation on 22^nd December 1998.

On 10^th February 1999 the Bank issued summons against the respondent in which, because of the liquidation of Afri-craft which could no longer pay the Bank what it owed it and relying on the suretyship agreement and the two surety bonds, it claimed from the respondent payment of the aforesaid and amounts of E411 271.23 and E437 223.32, together with interest thereon and costs on the scale as between attorney and own client. It also claimed an order that the property mortgaged under the surety mortgage bonds Nos 296/1996 and 578/1998 be declared executable.

An abortive application for summary judgment by the Bank, which was opposed by the respondent, resulted in respondent’s filing of a plea and the matter thereafter going to trial.

In its plea, the respondent denied that the suretyship was authorised and that the mortgage bonds were valid, in that they had not been authorised and that the resolution “purporting to be a resolution of the board is not a resolution of the board of the said company (i.e. the respondent)”.

At a pre-trial conference the liability of Afri-craft to the Bank in respect of the overdraft and loan account was admitted. Respondent further admitted that the suretyship of 5^th October 1998 was signed by Maziya, who was a director of the respondent when he signed it but it denied that the resolution referred to in the suretyship –

“An express mandate would therefore have been within the competency of the Board. And, that being so, there is no reason on principle why a mandate of similar scope should not be inferred if sufficient grounds exist. It was held in an American case (JONES V WILLIAMS (37 LAWYERS’ REPORTS, ANNOTATED, page 682)) that management of the entire business of a corporation might be entrusted to its president either by an express resolution of the directors or by their acquiescence in a course of dealing. And the directors, who, in COOK V DEEKS (1916, 1 A.C. p. 561), were described as having the entire management of an important section of the Company’s operations in their hands, had not, so far as the report shows, been placed in that position by any express mandate from the Board. So that there is no legal obstacle to the existence of an implied mandate here. Whether it was rightly implied depends upon the facts”.

In the same case, Solomon J.A. at pages 217-218 said this, after referring to the English case of BURLAND V EARLE 1902 A.C. 83:

“It is clear from this case that a director is not as such an agent of his company. He may, however, become an agent in more ways than one. Under the Articles of Association of the plaintiff company, as of most companies, the directors may delegate any of their powers to committees consisting of such member or members of their body as they think fit, and upon such delegation to one or more of their number the director or directors in question would themselves become agents of the company in regard to the duties so entrusted to them. Moreover such delegation may take place not only formally by express resolution of the board but also informally by the directors acquiescing in a course of dealing”.

In DICKSON V ACROW ENGINEERS (PTY) LTD supra, Roper J in considering whether one de Vigier, a director of the defendant company had authority to bind the company said at page 64 –

“I am one of the two directors of the company. I am not aware the company having authorised any person to enter into a suretyship. I have thoroughly searched the books of the company and there was never a resolution authorising any person to sign the suretyship on its behalf”. (my emphasis)

Asked what books she had searched she said “I do not recall”. Asked by the learned Judge “Why did you search the books?”, she replied “I did not search any books”. The following questions and answers then follow:

“JUDGE:   But why did you say you did?
FLYNN:   Why did you on oath say that you did?
NTOMBI:  (Silent)
FLYNN:   Can you not answer that?
NTOMBI:  No.”

Referred to a further paragraph in her affidavit that “the loan agreement was never authorised” she was asked by Mr. Flynn.

It is clear from the aforegoing that she was untruthful. She said in her affidavit that she had thoroughly searched the Books of respondent company at a time when she knew the books had been destroyed. The other passages I have quoted also show her also to have been a lying and unreliable witness at the trial.

It is significant that she should have lied in relation to looking for resolutions in the books of the company and this leaves one with the distinct suspicion that there were the requisite resolutions and that she knew about them.

Her evidence can also not, in my view, be relied on when she says that she would have participated in the passing of the resolutions. She had in my opinion left the conduct of the affairs of the respondent company entirely to her husband, Cyprian Maziya.

Mrs. Maziya said she did not play an active part in the affairs of the company because most the time she was not in Swaziland. When she found out about the suretyship she “was really disappointed. He (her husband) was not honest enough to let me know about that”. It was never discussed with her at all. “He did everything on his own” she said. “He never told me anything about it”. She conceded that she knew very little about what was happening in the respondent company. The company was not trading. It was a property-holding company. Asked if she took no interest in the affairs of the company, she said –

And further questions and answers during her cross-examination by Mr. Flynn for the Bank read as follows.

husband.

A:       No I did not”.

She also conceded that she did not know, as the facts established, that payments of approximately E15,000.00 were made on respondent’s behalf to the Bank in respect of the indebtedness of Afri-craft or of payments made by a company known as Dundee Investments (Pty) Ltd to respondent. Pursuant to this, the following questions by Mr. Flynn and her replies to them appear on the record:

Referring to the time when the resolutions were passed Mrs. Maziya was asked –

Furthermore, in questioning by the learned trial Judge, the following appears:

In assessing Mrs. Maziya’s evidence learned Chief Justice found that “although cross-examined at length she remained firm and unshaken on this crucial issue” i.e. on whether she took part in the passing of the resolutions. He said further in regard to her evidence: