This
is a claim for monies outstanding from a debt to which the defendant
allegedly stood surety to.
The
circumstances arising in this claim are mostly common cause. The
plaintiff is Total Zimbabwe (Pvt) Ltd, a company dealing in petroleum
products. The plaintiff entered into a marketing licensing agreement
with SM Tyres (Pvt) Ltd in terms of which the company was permitted
to enter, operate and utilise the plaintiff's service station at
Nyamapanda Border Post. The plaintiff was to provide petroleum-based
products and other products commercialised by it for sale at the
service station. S.M. Tyres was granted a credit facility for the
supply of the produce by the plaintiff. It failed to pay for the
products supplied and acknowledged the arrears resulting in the
plaintiff cancelling the Marketing Licence Agreement entered into,
suing it, and obtaining judgment in the sum of $37,497=42.
The
plaintiff avers that the defendant stood as surety and co-principal
debtor to the marketing licence agreement between the plaintiff and
SM Tyres and that the defendant is liable, jointly and severally,
with SM Tyres for the payment of the arrears owed to the plaintiff.
The plaintiff has issued summons against the defendant on the premise
that he is a surety and co-principal debtor to the agreement between
the plaintiff and S.M. Tyres for the outstanding amount.
The
defendant denies guaranteeing the liability of S M Tyres to the
plaintiff. He claims not to know SM Tyres and claims that he signed a
suretyship document which was blank on the spaces meant for dates and
witnesses at the instance of a friend who wanted to use it for his
company called Limpopo Investments (Pvt) Ltd. The defendant maintains
that there is no cause of action against him. In his plea, he claimed
that the claim has prescribed in that the marketing licence agreement
which was to run from 1 February 2007, for a period of three years,
expired on 31 July 2010 and that any claim arising therefrom against
the defendant has prescribed.
The
following issues were referred to trial;
(1)
Whether or not the claim is prescribed.
(2)
Whether or not the deed of suretyship signed by the defendant in
favour of the plaintiff is valid.
(3)
If the answer to (2) is in the affirmative, whether or not the
defendant is liable to the plaintiff for the sum of $37,497=42.
The
trial opened with the plaintiff calling its General Trade Manager,
Ester Verenga. She was the plaintiff's sole witness. She testified
that when the transaction in issue was entered into she was the
Retail Manager for the plaintiff. The defendant together with
Shadreck Mawire entered into a Deed of Suretyship and a guarantee in
favour of the plaintiff on 28 December 2006. The plaintiff also
entered into a marketing licence agreement with S.M. Tyres trading as
Nyamapanda Service. The arrears were computed at $37,497=42. S.M.
Tyres acknowledged the arrears. In May 2011, the agreement was
suspended and the dealership was terminated in July 2011 and the
company vacated the premises in August 2011. The witness
acknowledged, under examination, that she is not the one who prepared
the Deed of Suretyship as a template is used. She was not present
when it was signed and she did not try to find out who the witnesses
were and who was present when it was signed. The former Retail
Manager, Mr Chiunda, is the one who put these papers together. She is
aware that the former manager claims that the surety deed and
guarantee is for Limpopo Investments. She was unaware of the company
called Limpopo Investments or of any dealings it had with the
plaintiff. She was aware that the defendant claims that he signed the
deed in favour of Limpopo Investments and not S.M. Tyres. She
insisted that because it is endorsed on the deed that it is for
Nyamapanda Service Station and Mr Mawire, who represented S.M. Tyres,
also signed it, it was signed in favour of SM Tyres. She sees a link
between the Deed of Surety and the marketing licence agreement. She
acknowledged, under cross examination, that many people have
approached the plaintiff to try to use Nyamapanda Service Station.
She accepted that any person who intends to use Nyamapanda Service
Station has to have a Deed of Surety attached to the operator's
agreement. She insisted that the Deed of Surety is only signed when
you sign the agreement. The witness did not establish if the
defendant is a Director of S.M. Tyres.
The
plaintiff sued S.M. Tyres and obtained judgement against it. The
witness gave her evidence well. She maintained her story under cross
examination. Although this is a single witness case, the evidence of
the witness was clear, truthful and satisfactory. Her version was
corroborated by the contents of the surety document and other
documents produced. She was a credible witness and I believed her.
At
the close of the plaintiff's case, the defendant applied for
absolution from the instance. The defendant submitted as follows;
The
plaintiff's case fell apart during cross examination. The evidence
of the sole witness to the plaintiff's case revealed that the
surety document was signed for Limpopo Investments and not SM Tyres.
The defendant contended that the witness did not prepare the surety
agreement on which the plaintiff's case is based and she did not
know how both the Marketing License Agreement and Surety Agreement
found themselves together. Further, that the former Retail Manager
responsible for the signing of the surety agreement states that the
surety agreement was signed in favour of an entity known as Limpopo
Investments (Pvt) Ltd and not for the debt owed to the plaintiff by
SM Tyres as alleged. The defendant did not raise the issue of
prescription as part of this application.
The
plaintiff opposed the application and I will not, for the purposes of
this judgment, summarise its argument.
The
test to be employed in deciding an application for absolution from
the instance is well settled and was laid down in United
Air Charters Ltd v Jarman
1994 (2) ZLR 341 (SC). A plaintiff will withstand such an application
if, at the close of his case, there is evidence which a court,
directing its mind to such evidence, could or might find for him. See
also Katerere
v Standard Chartered Bank Zimbabwe Limited
HB51-08; Supreme
Service Station (1969) (Pvt) Ltd v Fox & Goodridge (Pvt) Ltd
1971 (1) RLR 1 (A); Lourenzo
v Raja Dry Cleaners & Steam Laundry (Pvt) Ltd
1984 (2) ZLR 151 for the same approach.
I
dismissed the application after considering submissions from both
parties. The issue of onus exercised my mind. The law is that the
onus of proving one's case in a matter involving a dispute over a
surety agreement is on the one who seeks to rely on the suretyship
deed. The position changes where a surety challenges liability for a
debt based on a surety agreement he signed. In Langeveldt
v Union Finance
(4)
SA 572 (W), the court discussed the subject of a surety seeking to be
released from liability in terms of his suretyship agreement and held
that the surety bears the onus of convincing the court that he did
not intend to enter into the suretyship agreement in issue. That is
the correct legal position. Where a surety seeks to avoid liability
in terms of a surety agreement and challenges a surety agreement, the
onus switches to him to show why he should not be bound by the surety
agreement. He bears the onus of convincing the court that it was not
his intention to enter into the agreement in issue.
Similarly,
where a surety challenges a surety agreement and he makes an
application for absolution from the instance at the close of the
plaintiff's case, his application cannot, from a practical
standpoint, succeed because of the reverse onus reposed on him. A
defendant who applies for absolution from the instance at the close
of the plaintiff's case has not had an opportunity to present his
own case and defence at this stage of proceedings. Whether or not he
has managed to discharge the onus on him can only be resolved after
he has led his own evidence and canvassed fully his defence. His side
of the story has to be heard first before a decision to dismiss the
plaintiff's case is made; this, because of the onus resting on the
surety.
The
defendant's challenge to liability is that the surety document he
signed, which the plaintiff seeks to rely on, was done for Limpopo
Investments and not SM Tyres. The onus shifted onto him, the moment
he raised this defence, to show that he did not sign the surety
document for SM Tyres. It was mischievous of the defendant to apply
for absolution from the instance at the close of the plaintiff's
case.
I
dismissed the application and allowed the matter to proceed to the
defence case.
The
defendant testified in his own case. His evidence is as follows;
He
signed the surety agreement after he had been requested by Whitecliff
Chiunda, a Total Marketing Executive, to do so. He was told by Mr
Chiunda that he wanted to use the surety document to negotiate with
his employers so that he could operate Nyamapanda Service Station. He
signed the Deed of Surety for Mr Chiunda's company, Limpopo
Investments. He endorsed all the names on the surety document and
included Mr Mawire's name because two sureties were required. He
did not know him, Mr Mawire. He was not present when Mr Mawire signed
the document. He also endorsed his own contact numbers. The surety
document was not dated when he signed it. The date was added without
his consent. He had not had sight of the operating license when he
signed the surety. He endorsed the words Nyamapanda Service Station
on the deed document because that is the place where Limpopo
Investments was supposed to operate from. He failed to endorse the
words Limpopo Investments on the document through an oversight and
thought that the endorsement of Nyamapanda Service Station was
sufficient. Under cross examination, the witness denied that the fact
that he endorsed the words Nyamapanda Service Station on the deed
meant that the Deed of Surety was for SM Tyres. He maintained that he
did so because that is the place Limpopo Investments was supposed to
operate from. He does not know S M Tyres and did not enter into any
surety arrangement for SM Tyres. He was surprised that the agreement
is for SM Tyres. When he contacted Mr Chiunda about it, he was told
that there must be a mix-up. He was not calling Mr Chiunda as his
witness as he gave him an affidavit outlining what happened. It is
not necessary for him to testify because everything is sorted with
the plaintiff's witness who confirmed that Mr Chiunda told her that
the Deed of Surety was for Limpopo Investments.
The
witness did not impress as a truthful witness….,.
It
is common cause that the defendant signed and made all endorsements
on the Deed of Suretyship except for the date and the portion where
Mr Mawire signed. There is a marketing licence agreement signed
between SM Tyres and Mr Mawire of SM Tyres trading as Nyamapanda
Service Station.
The
issue for determination is for whom the deed of surety was signed.
In
Fourlamel
(Pty) Ltd v Maddison
1997 (1) SA 333 (A) the court held that the following factors ought
to be laid out in writing in order to constitute a valid and binding
Deed of Suretyship;
(a)
Identity of the creditor.
(b)
Identity of the surety.
(c)
Identity of the principal debtor.
(d)
The rights and obligations of the parties.
See
also Spairstein
v Anglo African Shipping Co SA Ltd 1978 4 SA;
Langeveld
v Union Finance Holdings (Pty) Ltd 19 SA for
the same proposition.
The
onus is on a plaintiff to prove that all the formal requirements for
the surety's validity appear on the document. A surety agreement
where the principal debtor and creditor are not ascertainable from
the papers which are subject of the surety agreement does not comply
with the requirements of a Deed of Suretyship. The Deed of Suretyship
filed in support of this claim reveals, on the face of it, that it
was signed for Nyamapanda Service Station, being the principal
debtor. Accompanying this deed is a marketing licence agreement for
SM Tyres trading as Nyamapanda Service Station signed by a
representative of SM Tyres. It is clear from the marketing licence
agreement that SM Tyres traded as Nyamapanda Service Station. The
fact that both the deed and the Marketing Licence agreement bear the
same date and were signed by Mr Mawire supports the plaintiff's
assertion that the documents relate to SM Tyres and are for the same
transaction.
The
documents were signed the same day signifying that they were prepared
for the same transaction. There is an unmistakable link between S M
Tyres and Nyamapanda Service Station. The identity of the principal
debtor is clear. The identity of the creditor is also clearly visible
on the deed. The deed shows that the defendant and Mr Mawire bound
themselves as sureties and co-principal debtors with Nyamapanda
Service Station to the plaintiff. The rights and obligations of the
parties are fully and clearly laid out. All the essentials of a valid
contract of suretyship are present in this deed. A valid contract of
suretyship was entered into by the parties to the surety agreement.
The
defendant is the one who endorsed most of the details on the
document. The words Nyamapanda Service Station were endorsed by the
defendant. He also endorsed Mr Mawire's name as co-surety. He
endorsed his own name together with his telephone details and signed
the document. The defendant seemed to be in control of the situation
and knew what he was doing when he signed the surety deed. The
defendant testified that he appreciated the implications of the
surety agreement. The defendant
is not illiterate. He is a former telecommunications specialist and
holds a Diploma in Telecommunication.
Where
a person has signed a document to enter into a transaction which he
later challenges, he is required to explain to the court why he
asserts that he did not intend to enter into the transaction. The
defendant failed to explain, under cross examination, why he did not
endorse the name of Limpopo Investments on the deed, choosing to say
that this was through an oversight. He knew the implications of the
document that he had drawn up and signed. It is incomprehensible how
the defendant would endorse on the deed only the name of Nyamapanda
Service Station. The defendant failed to explain why he did not
endorse either the name of Mr Chiunda or Limpopo Investments on the
surety document if he understood the surety agreement to relate to
the two. Right under his name, in paragraph 1(a) of the deed, is
stated that the surety binds himself jointly and severally with the
operator for his due and punctual performance yet he did not find out
who the operator was. The defendant claimed that he was shown a
marketing licence agreement for Limpopo when he signed the surety
document yet he was unable to produce any documentation related to
Limpopo Investments that ties with the surety deed. It has not been
shown that Limpopo Investments ever operated the service station or
ever made any arrangements for the operation of the service station.
The endorsement of Nyamapanda Service Station by the defendant shows
clearly that it was meant to reflect for who the deed was being
signed – thus, SM Tyres (Pvt)
Ltd.
An obvious link has been shown between the marketing licensing
agreement and the surety deed.
The
plaintiff's witness insisted that the deed of surety is only signed
when you sign the marketing licence agreement as an operator. The
word ''operator'' is clearly used in reference to the
licensee under the marketing license agreement.
The
only marketing licence agreement shown to have been signed with an
operator which is supported by a surety deed is the one produced,
involving SM Tyres and the plaintiff.
He
also never bothered to find out who his co-surety was. No link has
been shown between Mr Mawire and Limpopo Investments. No reason has
been advanced why Mr Mawire would act as a surety for Limpopo
Investments. The defendant is bound by what he gave out and signed
for.
A
man who signs a contract is taken to be bound by the ordinary meaning
and effect of the words which appear over his signature. There is a
presumption that a person who authors and signs a document does so
after he has acquainted himself with the contents thereof and that
any person who enters into a contract has the intention to enter into
it and be bound by the terms of the agreement. These principles sum
up the caveat
subscriptor
rule.
A
surety who endorses all the essential details of a surety deed on the
deed document cannot turn around and say that he did not understand
the import of the deed. He is taken to have acquainted himself with
the contents of the document and is bound by its contents.
The
defendant filled in the details of the surety deed and signed it
thereby accepting the import of the terms and conditions of the
agreement he signed. The maxim caveat
subscriptor
is applicable to the circumstances of the signing of this document.
The evidence led leads to one conclusion - that the defendant and Mr
Mawire bound themselves as sureties and co –principal debtors for S
M Tyres (Pvt)
Ltd…,.
It
was incumbent upon the defendant to call Mr Chiunda to show that the
Deed was done for Limpopo Investments and that he indeed did sign the
Deed for Limpopo Investments. The defendant failed to call Mr Chiunda
to come and substantiate his version and hence the defendant has
failed to discharge the onus on him to show that the Deed of
Suretyship he signed was for Limpopo Investments.
The
probabilities favour the plaintiff's version that the defendant
bound himself as surety and co-principal debtor with Mr Mawire for SM
Tyres.
The
defendant signed the agreement of surety, specifically accepting the
import of its terms and conditions into the document he signed. The
plaintiff is entitled to its claim. I accordingly make the following
order;
Judgment
is granted against the defendant for;
1.
Payment in the sum of $37,497=42.
2.
Interest at 5% per annum from January 2013 to date of payment in
full.
3.
Costs of suit.
