LINCOLN CAPITAL (PVT) LTD v KILPIN and ANOTHER (231 of 2025) [2025] ZWHHC 231 (31 March 2025)

5 HH 231-25 HCHC 184/24 LINCOLN CAPITAL (PVT) LTD Versus DAVID VICTOR KILPIN AND DVK GOLD MINING (PVT) LTD HIGH COURT OF ZIMBABWE COMMERCIAL DIVISION CHILIMBE J HARARE 15 January and 31 March 2025 Special plea S.T. Muzorori for plaintiff C.Makwara for first and second defendants CHILIMBE J BACKGROUND [1] Plaintiff is a lender who instituted proceedings against a borrower and guarantor over an alleged unpaid loan balance of US$107,459,56. The defendants, who are associated parties, have raised a joint special plea in bar under several heads. Plaintiff dismisses the special pleas as a dishonest gambit to evade obligations due at law. THE MAIN DISPUTE [2] Plaintiff avers that it is a microfinance lender duly registered in terms of the Microfinance Act [Chapter 24:30]. The defendants aver that plaintiff is unregistered. This contention forms part of the heads raised in the in the special plea to which I will turn shortly. [3] Plaintiff claims in the declaration that (on a date or dates stated neither in its summons nor declaration) it advanced to first defendant a total of US$140,000,00 in two disbursements of US$90,000,00 and US$50,000,00. The money was advanced as a working capital facility to fund second defendant in its mining ventures. [4] The due date for the loan repayment was 28 February 2023, a commitment which plaintiff alleged was breached by first defendant. The loan was secured by an unlimited guarantee from second defendant who in that regard, bound itself as surety and co-principal debtor. [5] The plaintiff-who admitted but did not stipulate in its summons the part payment-claimed an amount of US$107,459,56 as capital. It further prayed for an order directing payment of contractually agreed interest on the sum at 10% per months annum together with costs on an attorney-client scale. Relying on “SI 118/20221”, plaintiff prayed for an order sounding in specifically in United States Dollars (USD). THE SPECIAL PLEA [6] The plea, in paraphrase, can be distilled under the following heads (a) illegality for want of compliance with statute being (i) the Microfinance Act [Chapter 24:30] (“the Microfinance Act”) and (ii) the Exchange Control Act [Chapter 22:05], (b) duress, (c) misrepresentation, and (d) simulation of the loan agreement. [7] The basis of the special pleas was that plaintiff was not registered in terms of the Microfinance Act. As such it was precluded from claiming the capital and interest in terms of ss 6 and 26 of that Act. This defect rendered the loan and security agreements unenforceable. The defendants also argued that the “restructured” loan agreement was tainted by duress and misrepresentation. [8] I may safely say that the allegations of duress were not seriously pursued. The defendants also contended that the loan agreement was a simulation where a ZWL loan was presented as a purely USD loan facility. Yet the plaintiff had disbursed the funds partly as USD and partly as Zimbabwe currency ZWL. THE REPLICATION [9] The plaintiff disputed that it was unregistered. It attached to that effect, a certificate of registration as a microfinance institution issued by the Reserve Bank of Zimbabwe (RBZ) under the hand of the Registrar of Microfinance Institutions on 21 December 2021. [10] Plaintiff denied with some vehemence, the allegations of duress and misrepresentation. It tendered further details regarding the conclusion of the loan transaction, stating in the process, that first defendant was not only an astute businessman, but a long-standing client. The loan agreement dated 8 March 2022 was emailed to first defendant who signed and returned it. [11] It was also the plaintiff`s position that the present claim was based on a loan facility that formed part of a revolving credit. The loan was, according to plaintiff, denominated and payable in USD.The final loan facility was preceded by other arrangements essentially structured to refinance first defendant`s failure to settle his loan obligations. THE PARTIES` ARGUMENTS IN THE WRITTEN SUBMISSIONS [12] The defendant raised the following issues in their heads of argument; -firstly, that s 6 of the Microfinance Act prohibited unregistered persons from conducting a microfinance business. The Act thus prohibited the recovery of any advances including interest made in contravention of the Act. Additionally, offenders faced criminal sanction. [13] Secondly, this point was reinforced by reference to authorities on illegality and effect thereof. In Joseph Tambu v Quick Cash (Pvt) Ltd HB 286-16, this court per TAKUVA J dismissed a lender`s claim on the basis that the transaction constituted an illegal act in contravention of s 6 of the Microfinance Act. The defendants` counsel also cited definition of illegality in the famous passages from Christie, Business Law in Zimbabwe, Juta & Co Ltd 1998 at p 88 as well as Dube v Khumalo 1986 (2) ZLR 103 at 109 D – F. [14] Thirdly, relying on these and additional authorities2, it was argued on the defendants` behalf that the circumstances of the dispute did not merit a relaxation of the in pari delictum rule. The loss in the form of any balances and interest outstanding had to lie where it lay with the plaintiff. Lastly, the defendants contended that by not availing first defendant a copy of the loan agreement, plaintiff violated s 26 of the Microfinance Act. Such breach disentitled plaintiff from claiming both the capital and interest. [15] In response, the plaintiff dismissed, in the heads of arguments filed on its behalf, the defence and its supporting legal contentions. In the process, the plaintiff slighted the competency of defendants` counsel as they also attacked the integrity of first defendant. The protestations in that were to say the least, were rather discomfortingly vehement. I may sound the reminder that restraint and courtesy should characterise submissions and pleadings filed in the courts of this jurisdiction. [16] It was further submitted on behalf of plaintiff that the defendants bore the onus in proving that plaintiff was unregistered. He who alleges must prove, so argued plaintiff and authorities were cited to underpin this legal argument. It mattered not, according to plaintiff, that it had already referred to and attached a near-ineluctable response to this issue in the form of the RBZ registration certificate. THE NATURE, PURPOSE AND PROCEDURE APPLICABLE TO A SPECIAL PLEA [17] Each side to the dispute then invited one witness each to testify. Essentially, each witness`s testimony followed the course marked by the issues in the special plea and replication respectively. Before setting out the evidence concerned, I will restate the purpose of the present proceedings. [18] A special plea is described as follows at page 598 of the Fifth Edition of Herbstein and Van Winsen`s The Civil Practice of the High Courts and Supreme Court of Appeal of South Africa; - “As stated, a special plea is one that does not raise a defence on the merits of the case but, as its name implies, sets up some special defence which has as its object either to delay the proceedings (a dilatory plea) or to object to the jurisdiction of the court (a declinatory plea) or to quash the action altogether (a peremptory plea) …...These special pleas do not concern the merits of the action. They merely seek to interpose some defence not apparent on the face of the pleadings up to the time when they are raised.” [ underlined and stressed for emphasis]. [19] This court expressed the nature, purpose and procedure of a special plea through the mordant pen of GILLESPIE J as follows in Doelcam (Pvt) Ltd v Pichanick & Others 1999 (1) ZLR 390(H), at 396 B-F; - “The purpose of a special plea is to permit a defendant to achieve prompt resolution of a factual issue which founds a legal argument that disposes of the plaintiff's claim. Special pleas are three in kind. The plea in bar, by which a party may interpose a purely formal objection to the jurisdiction of the court. The plea is available as a plea to the jurisdiction or as a plea for the recusal of a judge and in no other case. Other special pleas are available to disclose some ground either for quashing or abating a declaration or for delaying proceedings. Both are usually termed pleas in abatement, although that expression is properly used to describe the declinatory, rather than merely dilatory, plea. The plea in abatement, strictly so called, avers some good ground, not disclosed in the declaration, which otherwise is admitted, for denying the plaintiff relief. The dilatory plea advances some fact, not disclosed in the declaration, which is otherwise admitted, and which entitles the defendant to a stay of proceedings. Since a special plea involves the averment of a new fact, it is susceptible of replication and of a hearing at which evidence on this new fact alone may be led.” [Underlined for emphasis]. WHAT ARE THE FACTUAL ISSUES WHICH FOUND THE LEGAL ARGUMENTS THAT CAN DISPOSE OF THE PLAINTIFF`S CLAIM? [20] It is necessary to identify the critical factual issues upon which the legal arguments founding the special plea are based. Once these issues are ascertained, they can then be viewed against the evidence tendered by the witnesses. I say so because this dispute is about a special plea. The court must therefore ascertain and address itself as to the existence and arguments generated by a special plea. [21] This observation is after all but a truism. To my mind, having trimmed those issues which bait the court to delve into the merits, 2 potentially dispositive issues are generated by the special pleas. First, the registration status of the plaintiff and its compliance with s 6 of the Microfinance Act. Second, whether plaintiff breached s 26 of the same Act by failing to avail the loan agreement to first defendant. [22] The rest of the issues regarding duress, misrepresentation and currency applicable either (i) draw the discussion into the merits, or (ii) can be addressed via the 2 main issues. And with specific reference to the currency issue, this was neither framed with certainty, nor defined with clarity in heads of argument and closing submissions filed on behalf of the defendants. Nonetheless, I will return to deal with this point morefully before concluding. WITNESS TESTIMONY ON THE SPECIAL PLEA [23] Dr David Victor Kilpin, the first defendant testified on behalf of the defendants. A resident of a place called Rushden in the United Kingdom, the witness`s testimony went thus; -he ran what he termed a mining operation in Zimbabwe. He was well-acquainted with plaintiff having negotiated for funding to finance his mine on a number of occasions. [24] The witness related the several funding arrangements he had previously so negotiated with plaintiff. He was advanced two loan amounts of ZWL 10,300,000 and US$50,000 on 25 November 2021. These funds were meant to finance working capital at his mine. But the mining venture struggled, beset by materials and power challenges. As a result, the witness confirmed that he failed to meet his repayment commitments under the loan agreements. [25] The loan was then restructured. A key aspect of such was the conversion of the ZWL obligation to a USD facility giving a new figure of US$86,556,80. This reprieve was not met with improved fortunes and he defaulted once again. He approached the plaintiffs for further financial assistance. He received an additional US$50,000 taking the new balance outstanding to US$140,000. [26] Dr Kilpin`s testimony was that respective agreements he concluded under such agreements “were related to each other”. He denied that one agreement succeeded the next. He further advised the court that he was never given a copy of the 8 March 2022 agreement. What transpired, according to the witness, was that the plaintiff instructed him to sign a blank copy then email same back to them and he duly complied. The witness also stated that he dealt with plaintiff “in good faith.” He did not ascertain if the plaintiff was a registered microfinance lender. [27] I now turn to the evidence led on behalf of the plaintiff. Mr Herbert Mapashike, plaintiff`s Head of Credit Risk outlined his duties, the general operations of a microfinance institution as well as the licencing procedures and regulatory framework. The plaintiff exercised rigour in onboarding, vetting and extending credit. It was also stringently monitored by the regulatory authority the RBZ. [28] Mr Mapashike testified that plaintiff was licenced to operate as a microfinance lender for a period of one year on 6 June 2019.Its licence fell due for renewal on 6 June 2020.On 21 January 2020, the RBZ issued guidelines to operationalise the Microfinance Amendment Act No 6 of 2019.This amendment introduced what the witness described as “perpetual licences” and phase out the renewable regime. [29] The witness stated that the RBZ guidelines permitted microfinance institutions with renewable licences to apply for permanent licences before expiry of extant licences. With the onset of COVID 19 in March 2020, the RBZ issued, according to Mr. Mapashike, Directive BSD 3/2020 which inter alia, extended all licences by a period of 180 days from the date of expiry. [30] With a 6-month extension from 6 June 2020, plaintiff applied for the permanent licence on 21 November 2020.It was Mr. Mapashike`s further evidence that the RBZ then indicated that all microfinance institutions that had submitted applications for permanent licences were authorised to operate until their licences were either approved or rejected. Plaintiff`s licence was eventually granted on 20 December 2021. ANALYSIS OF THE EVIDENCE [31] In Nan Brooker v Mudhanda & Ors SC 5-18, the Supreme Court held that the defendant bears an evidentiary burden to prove a special plea. I found nothing in the testimony of Dr Kilpin that came close toward proving that (a) plaintiff operated under the defect of non-registration, (b) that it failed to explain and give a copy of the agreement to first defendant in terms of s 26 of the Microfinance Act and (c) that USD loan repayments were out of scope under the loan agreements. [32] Dr Kilpin`s testimony confirmed that he approached plaintiff on three occasions seeking to refinance his loan. The original part USD and part ZWL loan was by consent, converted to a USD facility. The witness and indeed special plea recognised that the plaintiff`s claim was based on an alleged breach of the 8 March 2022 agreement. This agreement was concluded well-after plaintiff obtained its licence on 21 December 2021. [33] Dr Kilpin struck the court as an astute, calm and collected business person-fitting the description given by the plaintiff. It is inconceivable that he executed agreements whose subject matter was unknown to him. Whilst Dr Kilpin gave his testimony well, it largely dwelt on the uncontested, irrelevant or improbable. Mr Mapashike on the other hand was even more impressive. [34] Whilst his story on the plaintiff`s licencing journey and operations in general, was robustly tested under cross examination, it remained largely unscathed. I have no hesitation in accepting it as a factual account by a responsible officer in a regulated entity. FINDINGS ON THE SPECIAL PLEA [35] In conclusion, my view is that the special plea moved by first and second defendants is unsustainable and herewith the reasons. As already observed, the defendants failed to discharge the evidentiary onus placed upn them. The matter could very well end here but there are further grounds. [36] The defendants` special plea would not have succeeded even if it had been proven that plaintiff was unregistered. Section s 6 (3) of the Microfinance Act provides that; - 6 (3) Without derogating from subsection (2), where a person advances a loan or credit to another person in the course of microfinance business that is conducted in contravention of subsection (1)(a)— (a) no interest shall be payable on the loan or advance; and (b) the capital sum of the loan or advance shall not be recoverable from the borrower unless a competent court, on application by the lender, has condoned the lender’s failure to comply with subsection (1). [37] The phrase in bold is clear that a breach of s 6 of the Microfinance Act does not give birth to an absolute bar to recovery. (Compare with the situation dealt with in Cabat Trade and Finance v MDC SC 50-12) The special plea before me sought to quash the proceedings on the basis on non-compliance with s 6 of the Act. [38] It was not, for example, an attempt to seek the abatement of proceedings pending exercise of the right in s 6 (3) (b). The same principle applies to the second provision relied upon by the defendants. A similar escape valve is built into s 26 (3) which prescribes that; - 26 (3) If a microfinance institution makes a loan or advances credit without complying with subsection (1) or (2)— (a) no interest shall be payable on the loan or advance; and (b) the capital sum of the loan or advance shall not be recoverable from the borrower unless a competent court, on application by the microfinance institution, has condoned the institution’s failure to comply with the provision concerned. [39] Finally and for completeness, I deal with the question of currency. Paragraph 17 of the heads of argument filed on behalf on the defendants disposes of this point through propositions fatal to their special plea. I set it out below; - “17. Before this date, [27 June 20223] the loan repayments were not paid exclusively in foreign currency. As such, the same are payable in the local currency at the prevailing interbank rate. It is important to note that the first agreements which resulted in the debt which accumulated to US$90 000.00 (which is part of the US$140 000.00 being claimed) was given to the Defendant in November 2021. That debt, by operation of the law, cannot be claimed exclusively in United States Dollars. In any event, that debt consisted of money which was advanced to defendant in ZWL Dollar (in terms of the agreement of ZWL$10,300,000.00). As such, the claim for that money cannot legally be converted and claimed to be repayment exclusively in United States Dollars. The only amount which Plaintiff could have been able to claim exclusively in United States Dollars is the US$50 000.00 which was advanced in July 2022. However, this has since been paid up, and will require new computation of the claim.” [40] Firstly, no reference is made to specific provisions of law which disentitled plaintiff to claim its dues in USD. This argumentative posture was sustained throughout the defendants` case. No surefooted legal principle was referred to in support of the attack on the claim by plaintiff for payment in USD. Such averments become necessary if one has regard to the arguments placed and dealt with the court in decisions such as Cabat Trade and Finance v MDC (supra) and Mundangepfupfu & Anor v Chisepo HH 188-17. [41] Secondly, the defendants defeat their own cause by admitting that part of the claim could be properly claimed in USD. This concession undoes the special plea as an answer dispositive permantly or temporarily, of the plaintiff`s claim. Thirdly as a general observation, the defendants sought to invade issues reserved for the merits. In particular, strenuous were counsel for the defendants` arguments on the applicable agreement among the several concluded by the parties. DISPOSITION [42] Having found against the defendants, I turn to the issue of costs. Plaintiff was emphatic in condemning the special plea as incompetent, and its movers as insincere. It thus made a prayer for costs on a punitive scale. Apart from agreeing with plaintiff that further reflection ought to have accompanied the special plea, I am not altogether convinced that the lack of probity on the part of the defendants is apparent. [43] On that basis, I am not inclined to grant the prayer for punitive costs. I am guided in that conclusion, by the trite principles governing the award of costs of the higher scale. There is nothing that takes the defendants` aberrations into that realm of unconscionable litigant misconduct that must invite such censure. Accordingly, it is ordered that; - The defendants` special plea be and is hereby dismissed with costs. Mandipa, Makwara and Chikukwa Legal Practice-plaintiff`s legal practitioners Nenjy Nyamapheni Law Practice -defendants` legal practitioners [CHILIMBE J____31/03/25] 1 The Presidential Powers (Temporary Measures) (Amendment of Exchange Control Act) Regulations, SI 118A of 2022(“SI 118A of 2022”) 2 Jajbhay v Cassim 1939 AD 537 at 544 and Chioza v Siziba SC 4-15 3 Date when the Statutory Instrument 118A of 2022 came into effect. 5 HH 231-25 HCHC 184/24 5 HH 231-25 HCHC 184/24 LINCOLN CAPITAL (PVT) LTD Versus DAVID VICTOR KILPIN AND DVK GOLD MINING (PVT) LTD HIGH COURT OF ZIMBABWE COMMERCIAL DIVISION CHILIMBE J HARARE 15 January and 31 March 2025 Special plea S.T. Muzorori for plaintiff C.Makwara for first and second defendants CHILIMBE J BACKGROUND [1] Plaintiff is a lender who instituted proceedings against a borrower and guarantor over an alleged unpaid loan balance of US$107,459,56. The defendants, who are associated parties, have raised a joint special plea in bar under several heads. Plaintiff dismisses the special pleas as a dishonest gambit to evade obligations due at law. THE MAIN DISPUTE [2] Plaintiff avers that it is a microfinance lender duly registered in terms of the Microfinance Act [Chapter 24:30]. The defendants aver that plaintiff is unregistered. This contention forms part of the heads raised in the in the special plea to which I will turn shortly. [3] Plaintiff claims in the declaration that (on a date or dates stated neither in its summons nor declaration) it advanced to first defendant a total of US$140,000,00 in two disbursements of US$90,000,00 and US$50,000,00. The money was advanced as a working capital facility to fund second defendant in its mining ventures. [4] The due date for the loan repayment was 28 February 2023, a commitment which plaintiff alleged was breached by first defendant. The loan was secured by an unlimited guarantee from second defendant who in that regard, bound itself as surety and co-principal debtor. [5] The plaintiff-who admitted but did not stipulate in its summons the part payment-claimed an amount of US$107,459,56 as capital. It further prayed for an order directing payment of contractually agreed interest on the sum at 10% per months annum together with costs on an attorney-client scale. Relying on “SI 118/20221”, plaintiff prayed for an order sounding in specifically in United States Dollars (USD). THE SPECIAL PLEA [6] The plea, in paraphrase, can be distilled under the following heads (a) illegality for want of compliance with statute being (i) the Microfinance Act [Chapter 24:30] (“the Microfinance Act”) and (ii) the Exchange Control Act [Chapter 22:05], (b) duress, (c) misrepresentation, and (d) simulation of the loan agreement. [7] The basis of the special pleas was that plaintiff was not registered in terms of the Microfinance Act. As such it was precluded from claiming the capital and interest in terms of ss 6 and 26 of that Act. This defect rendered the loan and security agreements unenforceable. The defendants also argued that the “restructured” loan agreement was tainted by duress and misrepresentation. [8] I may safely say that the allegations of duress were not seriously pursued. The defendants also contended that the loan agreement was a simulation where a ZWL loan was presented as a purely USD loan facility. Yet the plaintiff had disbursed the funds partly as USD and partly as Zimbabwe currency ZWL. THE REPLICATION [9] The plaintiff disputed that it was unregistered. It attached to that effect, a certificate of registration as a microfinance institution issued by the Reserve Bank of Zimbabwe (RBZ) under the hand of the Registrar of Microfinance Institutions on 21 December 2021. [10] Plaintiff denied with some vehemence, the allegations of duress and misrepresentation. It tendered further details regarding the conclusion of the loan transaction, stating in the process, that first defendant was not only an astute businessman, but a long-standing client. The loan agreement dated 8 March 2022 was emailed to first defendant who signed and returned it. [11] It was also the plaintiff`s position that the present claim was based on a loan facility that formed part of a revolving credit. The loan was, according to plaintiff, denominated and payable in USD.The final loan facility was preceded by other arrangements essentially structured to refinance first defendant`s failure to settle his loan obligations. THE PARTIES` ARGUMENTS IN THE WRITTEN SUBMISSIONS [12] The defendant raised the following issues in their heads of argument; -firstly, that s 6 of the Microfinance Act prohibited unregistered persons from conducting a microfinance business. The Act thus prohibited the recovery of any advances including interest made in contravention of the Act. Additionally, offenders faced criminal sanction. [13] Secondly, this point was reinforced by reference to authorities on illegality and effect thereof. In Joseph Tambu v Quick Cash (Pvt) Ltd HB 286-16, this court per TAKUVA J dismissed a lender`s claim on the basis that the transaction constituted an illegal act in contravention of s 6 of the Microfinance Act. The defendants` counsel also cited definition of illegality in the famous passages from Christie, Business Law in Zimbabwe, Juta & Co Ltd 1998 at p 88 as well as Dube v Khumalo 1986 (2) ZLR 103 at 109 D – F. [14] Thirdly, relying on these and additional authorities2, it was argued on the defendants` behalf that the circumstances of the dispute did not merit a relaxation of the in pari delictum rule. The loss in the form of any balances and interest outstanding had to lie where it lay with the plaintiff. Lastly, the defendants contended that by not availing first defendant a copy of the loan agreement, plaintiff violated s 26 of the Microfinance Act. Such breach disentitled plaintiff from claiming both the capital and interest. [15] In response, the plaintiff dismissed, in the heads of arguments filed on its behalf, the defence and its supporting legal contentions. In the process, the plaintiff slighted the competency of defendants` counsel as they also attacked the integrity of first defendant. The protestations in that were to say the least, were rather discomfortingly vehement. I may sound the reminder that restraint and courtesy should characterise submissions and pleadings filed in the courts of this jurisdiction. [16] It was further submitted on behalf of plaintiff that the defendants bore the onus in proving that plaintiff was unregistered. He who alleges must prove, so argued plaintiff and authorities were cited to underpin this legal argument. It mattered not, according to plaintiff, that it had already referred to and attached a near-ineluctable response to this issue in the form of the RBZ registration certificate. THE NATURE, PURPOSE AND PROCEDURE APPLICABLE TO A SPECIAL PLEA [17] Each side to the dispute then invited one witness each to testify. Essentially, each witness`s testimony followed the course marked by the issues in the special plea and replication respectively. Before setting out the evidence concerned, I will restate the purpose of the present proceedings. [18] A special plea is described as follows at page 598 of the Fifth Edition of Herbstein and Van Winsen`s The Civil Practice of the High Courts and Supreme Court of Appeal of South Africa; - “As stated, a special plea is one that does not raise a defence on the merits of the case but, as its name implies, sets up some special defence which has as its object either to delay the proceedings (a dilatory plea) or to object to the jurisdiction of the court (a declinatory plea) or to quash the action altogether (a peremptory plea) …...These special pleas do not concern the merits of the action. They merely seek to interpose some defence not apparent on the face of the pleadings up to the time when they are raised.” [ underlined and stressed for emphasis]. [19] This court expressed the nature, purpose and procedure of a special plea through the mordant pen of GILLESPIE J as follows in Doelcam (Pvt) Ltd v Pichanick & Others 1999 (1) ZLR 390(H), at 396 B-F; - “The purpose of a special plea is to permit a defendant to achieve prompt resolution of a factual issue which founds a legal argument that disposes of the plaintiff's claim. Special pleas are three in kind. The plea in bar, by which a party may interpose a purely formal objection to the jurisdiction of the court. The plea is available as a plea to the jurisdiction or as a plea for the recusal of a judge and in no other case. Other special pleas are available to disclose some ground either for quashing or abating a declaration or for delaying proceedings. Both are usually termed pleas in abatement, although that expression is properly used to describe the declinatory, rather than merely dilatory, plea. The plea in abatement, strictly so called, avers some good ground, not disclosed in the declaration, which otherwise is admitted, for denying the plaintiff relief. The dilatory plea advances some fact, not disclosed in the declaration, which is otherwise admitted, and which entitles the defendant to a stay of proceedings. Since a special plea involves the averment of a new fact, it is susceptible of replication and of a hearing at which evidence on this new fact alone may be led.” [Underlined for emphasis]. WHAT ARE THE FACTUAL ISSUES WHICH FOUND THE LEGAL ARGUMENTS THAT CAN DISPOSE OF THE PLAINTIFF`S CLAIM? [20] It is necessary to identify the critical factual issues upon which the legal arguments founding the special plea are based. Once these issues are ascertained, they can then be viewed against the evidence tendered by the witnesses. I say so because this dispute is about a special plea. The court must therefore ascertain and address itself as to the existence and arguments generated by a special plea. [21] This observation is after all but a truism. To my mind, having trimmed those issues which bait the court to delve into the merits, 2 potentially dispositive issues are generated by the special pleas. First, the registration status of the plaintiff and its compliance with s 6 of the Microfinance Act. Second, whether plaintiff breached s 26 of the same Act by failing to avail the loan agreement to first defendant. [22] The rest of the issues regarding duress, misrepresentation and currency applicable either (i) draw the discussion into the merits, or (ii) can be addressed via the 2 main issues. And with specific reference to the currency issue, this was neither framed with certainty, nor defined with clarity in heads of argument and closing submissions filed on behalf of the defendants. Nonetheless, I will return to deal with this point morefully before concluding. WITNESS TESTIMONY ON THE SPECIAL PLEA [23] Dr David Victor Kilpin, the first defendant testified on behalf of the defendants. A resident of a place called Rushden in the United Kingdom, the witness`s testimony went thus; -he ran what he termed a mining operation in Zimbabwe. He was well-acquainted with plaintiff having negotiated for funding to finance his mine on a number of occasions. [24] The witness related the several funding arrangements he had previously so negotiated with plaintiff. He was advanced two loan amounts of ZWL 10,300,000 and US$50,000 on 25 November 2021. These funds were meant to finance working capital at his mine. But the mining venture struggled, beset by materials and power challenges. As a result, the witness confirmed that he failed to meet his repayment commitments under the loan agreements. [25] The loan was then restructured. A key aspect of such was the conversion of the ZWL obligation to a USD facility giving a new figure of US$86,556,80. This reprieve was not met with improved fortunes and he defaulted once again. He approached the plaintiffs for further financial assistance. He received an additional US$50,000 taking the new balance outstanding to US$140,000. [26] Dr Kilpin`s testimony was that respective agreements he concluded under such agreements “were related to each other”. He denied that one agreement succeeded the next. He further advised the court that he was never given a copy of the 8 March 2022 agreement. What transpired, according to the witness, was that the plaintiff instructed him to sign a blank copy then email same back to them and he duly complied. The witness also stated that he dealt with plaintiff “in good faith.” He did not ascertain if the plaintiff was a registered microfinance lender. [27] I now turn to the evidence led on behalf of the plaintiff. Mr Herbert Mapashike, plaintiff`s Head of Credit Risk outlined his duties, the general operations of a microfinance institution as well as the licencing procedures and regulatory framework. The plaintiff exercised rigour in onboarding, vetting and extending credit. It was also stringently monitored by the regulatory authority the RBZ. [28] Mr Mapashike testified that plaintiff was licenced to operate as a microfinance lender for a period of one year on 6 June 2019.Its licence fell due for renewal on 6 June 2020.On 21 January 2020, the RBZ issued guidelines to operationalise the Microfinance Amendment Act No 6 of 2019.This amendment introduced what the witness described as “perpetual licences” and phase out the renewable regime. [29] The witness stated that the RBZ guidelines permitted microfinance institutions with renewable licences to apply for permanent licences before expiry of extant licences. With the onset of COVID 19 in March 2020, the RBZ issued, according to Mr. Mapashike, Directive BSD 3/2020 which inter alia, extended all licences by a period of 180 days from the date of expiry. [30] With a 6-month extension from 6 June 2020, plaintiff applied for the permanent licence on 21 November 2020.It was Mr. Mapashike`s further evidence that the RBZ then indicated that all microfinance institutions that had submitted applications for permanent licences were authorised to operate until their licences were either approved or rejected. Plaintiff`s licence was eventually granted on 20 December 2021. ANALYSIS OF THE EVIDENCE [31] In Nan Brooker v Mudhanda & Ors SC 5-18, the Supreme Court held that the defendant bears an evidentiary burden to prove a special plea. I found nothing in the testimony of Dr Kilpin that came close toward proving that (a) plaintiff operated under the defect of non-registration, (b) that it failed to explain and give a copy of the agreement to first defendant in terms of s 26 of the Microfinance Act and (c) that USD loan repayments were out of scope under the loan agreements. [32] Dr Kilpin`s testimony confirmed that he approached plaintiff on three occasions seeking to refinance his loan. The original part USD and part ZWL loan was by consent, converted to a USD facility. The witness and indeed special plea recognised that the plaintiff`s claim was based on an alleged breach of the 8 March 2022 agreement. This agreement was concluded well-after plaintiff obtained its licence on 21 December 2021. [33] Dr Kilpin struck the court as an astute, calm and collected business person-fitting the description given by the plaintiff. It is inconceivable that he executed agreements whose subject matter was unknown to him. Whilst Dr Kilpin gave his testimony well, it largely dwelt on the uncontested, irrelevant or improbable. Mr Mapashike on the other hand was even more impressive. [34] Whilst his story on the plaintiff`s licencing journey and operations in general, was robustly tested under cross examination, it remained largely unscathed. I have no hesitation in accepting it as a factual account by a responsible officer in a regulated entity. FINDINGS ON THE SPECIAL PLEA [35] In conclusion, my view is that the special plea moved by first and second defendants is unsustainable and herewith the reasons. As already observed, the defendants failed to discharge the evidentiary onus placed upn them. The matter could very well end here but there are further grounds. [36] The defendants` special plea would not have succeeded even if it had been proven that plaintiff was unregistered. Section s 6 (3) of the Microfinance Act provides that; - 6 (3) Without derogating from subsection (2), where a person advances a loan or credit to another person in the course of microfinance business that is conducted in contravention of subsection (1)(a)— (a) no interest shall be payable on the loan or advance; and (b) the capital sum of the loan or advance shall not be recoverable from the borrower unless a competent court, on application by the lender, has condoned the lender’s failure to comply with subsection (1). [37] The phrase in bold is clear that a breach of s 6 of the Microfinance Act does not give birth to an absolute bar to recovery. (Compare with the situation dealt with in Cabat Trade and Finance v MDC SC 50-12) The special plea before me sought to quash the proceedings on the basis on non-compliance with s 6 of the Act. [38] It was not, for example, an attempt to seek the abatement of proceedings pending exercise of the right in s 6 (3) (b). The same principle applies to the second provision relied upon by the defendants. A similar escape valve is built into s 26 (3) which prescribes that; - 26 (3) If a microfinance institution makes a loan or advances credit without complying with subsection (1) or (2)— (a) no interest shall be payable on the loan or advance; and (b) the capital sum of the loan or advance shall not be recoverable from the borrower unless a competent court, on application by the microfinance institution, has condoned the institution’s failure to comply with the provision concerned. [39] Finally and for completeness, I deal with the question of currency. Paragraph 17 of the heads of argument filed on behalf on the defendants disposes of this point through propositions fatal to their special plea. I set it out below; - “17. Before this date, [27 June 20223] the loan repayments were not paid exclusively in foreign currency. As such, the same are payable in the local currency at the prevailing interbank rate. It is important to note that the first agreements which resulted in the debt which accumulated to US$90 000.00 (which is part of the US$140 000.00 being claimed) was given to the Defendant in November 2021. That debt, by operation of the law, cannot be claimed exclusively in United States Dollars. In any event, that debt consisted of money which was advanced to defendant in ZWL Dollar (in terms of the agreement of ZWL$10,300,000.00). As such, the claim for that money cannot legally be converted and claimed to be repayment exclusively in United States Dollars. The only amount which Plaintiff could have been able to claim exclusively in United States Dollars is the US$50 000.00 which was advanced in July 2022. However, this has since been paid up, and will require new computation of the claim.” [40] Firstly, no reference is made to specific provisions of law which disentitled plaintiff to claim its dues in USD. This argumentative posture was sustained throughout the defendants` case. No surefooted legal principle was referred to in support of the attack on the claim by plaintiff for payment in USD. Such averments become necessary if one has regard to the arguments placed and dealt with the court in decisions such as Cabat Trade and Finance v MDC (supra) and Mundangepfupfu & Anor v Chisepo HH 188-17. [41] Secondly, the defendants defeat their own cause by admitting that part of the claim could be properly claimed in USD. This concession undoes the special plea as an answer dispositive permantly or temporarily, of the plaintiff`s claim. Thirdly as a general observation, the defendants sought to invade issues reserved for the merits. In particular, strenuous were counsel for the defendants` arguments on the applicable agreement among the several concluded by the parties. DISPOSITION [42] Having found against the defendants, I turn to the issue of costs. Plaintiff was emphatic in condemning the special plea as incompetent, and its movers as insincere. It thus made a prayer for costs on a punitive scale. Apart from agreeing with plaintiff that further reflection ought to have accompanied the special plea, I am not altogether convinced that the lack of probity on the part of the defendants is apparent. [43] On that basis, I am not inclined to grant the prayer for punitive costs. I am guided in that conclusion, by the trite principles governing the award of costs of the higher scale. There is nothing that takes the defendants` aberrations into that realm of unconscionable litigant misconduct that must invite such censure. Accordingly, it is ordered that; - The defendants` special plea be and is hereby dismissed with costs. Mandipa, Makwara and Chikukwa Legal Practice-plaintiff`s legal practitioners Nenjy Nyamapheni Law Practice -defendants` legal practitioners [CHILIMBE J____31/03/25] 1 The Presidential Powers (Temporary Measures) (Amendment of Exchange Control Act) Regulations, SI 118A of 2022(“SI 118A of 2022”) 1 The Presidential Powers (Temporary Measures) (Amendment of Exchange Control Act) Regulations, SI 118A of 2022(“SI 118A of 2022”) 2 Jajbhay v Cassim 1939 AD 537 at 544 and Chioza v Siziba SC 4-15 2 Jajbhay v Cassim 1939 AD 537 at 544 and Chioza v Siziba SC 4-15 3 Date when the Statutory Instrument 118A of 2022 came into effect. 3 Date when the Statutory Instrument 118A of 2022 came into effect.