NBS Bank has appealed against a High Court of Malawi Commercial Division order for the bank to pay about K1.1 billion as damages to Capital Oil Refining Industries (Cori) for failing to supply foreign currency to the company in 2012.
Cori took NBS Bank to court in March 2013 claiming compensation for breach of contract and loss of profits attributable to the same.
Private practice lawyer Fostino Maele last week confirmed representing Cori in the matter on behalf of his former employees, Sacranie Gow & Company, but could not be drawn into further comment.
He said: “Unfortunately, that time I was working for Sacranie Gow & Company, but now I left. My contract ended last week so I can’t say anything because my contract forbids me to say anything on a matter that I dealt with when I was there.”
But writ of summons issued against the bank which The Nation has seen show NBS Bank signed a forward contract with Cori in March 2012 to sell the oil company $1 650 000 by June 30 2012.
Further, between March 30 and April 24 2012, Cori paid NBS Bank K200 million in two instalments to buy forex amounting to $1 041 535.92.
The company said it wanted to use the foreign currency to import raw materials for its cooking oil refining and production business.
However, the bank reportedly failed to supply the sought forex within the specified period and after a delay of nearly 90 days it only managed to make available $128 000 on July 24 2012.
Thus, by failing to secure and supply the remaining $913 535.93, the oil company argued that NBS Bank exercised negligence and also breached the agreement.
Cori took NBS Bank to court claiming compensation and interest on the $913 535.93, damages for breach of the agreement, damages on negligence and damages on the basis of restitution, among others.
But the bank denied the claim, suggesting there was no breach of contract on its part and further argued the alleged loss of profits could not be attributed to the failure to provide the foreign currency.
In his ruling, the presiding judge Chifundo Kachale said the bank made a genuine error in judgement that was not actuated by a deliberate disregard for their legal obligations (financial services).
In his final analysis, Kachale upheld the claim for damages in respect of the undelivered dollars from the K200 million the bank received from Cori.
“For effective restitution the court hereby awards Cori the outstanding sum of $913 535.92 or the Malawi kwacha equivalent as of today,” reads part of the judgement dated July 7 2015.
In a notice of appeal dated July 29 2016 against the July 7 2015 court ruling, NBS Bank, through Mbendera & Nkhono Associates, among others, argues that the judge erred in law by reckoning Cori’s measure of damages in reference to the US dollar sum rather than by reference to the K200 million the oil company paid in view of evidence that the company fully mitigated its loss by purchasing its raw materials from alternative sources.
Further, NBS Bank is also arguing that the judge erred in fact and law by ordering payment of interest on the foreign currency sum of US$913 535.92 by reference to interest applicable to Malawi Kwacha.