Drummond Ranching (Pvt) Ltd v West Agencies (Pvt) Ltd and Lunar Chickens Pvt Ltd

### Preamble
1
HB 113/20
HC 33/17
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DRUMMOND RANCHING (PVT) LTD

Versus

WEST AGENCIES (PVT) LTD

And

LUNAR CHICKENS PVT LTD

HIGH COURT OF ZIMBABWE

DUBE-BANDA J

BULAWAYO 27 May 2020 & 4 June 2020

Opposed application

V. Majoko, for the plaintiff

M. Mugomeza, for the first defendant

S. Chamunorwa, for the second defendant

DUBE-BANDA J:	In this matter the plaintiff, by way of a provisional sentence summons, claims payment of US$55 895.21 together with interest calculated at 5% per annum.

The claim is based on an account reconciliation, an alleged written acknowledgement of debt, a letter from Lunar Chickens and a letter from first defendant’s legal practitioners.  The defendant raises the defence, inter alia, that it paid the debt to plaintiff’s creditor.  For this reason, the first defendant argues that provisional sentence must be refused with costs on a punitive scale.

The acknowledgement of debt

In the summons, plaintiff relies on four documents. During the hearing of this matter, Mr Majoko for the plaintiff submitted that plaintiff was anchoring its claim on one document. The document reads as follows:

“Dear Nolly

Please find attached detailed ledger per our system.

Kindly send the invoice for the 21st of July production. Please note that you overcharged us by $8.22 on invoice DIN00299 dated 8 July 2016. Please pass credit note and send to us. Total owed to you as at 31st July 2016 is $55 895.91.

Please send your undated statement.

Kind regards

Forget Zulu / Finance Manager

West Agencies”

It is trite that an acknowledgement of debt can be relied upon in provisional sentence proceedings as it is usually a liquid document. However, in this case, the document requires careful consideration.

Legal principles

The remedy of provisional sentence is provided for in terms of order 4 rule 20 and 21 of the High Court Rules of Zimbabwe 1971, which provides that;-

“20. Summons claiming provisional sentence

Where the plaintiff is the holder of a valid acknowledgement in writing of a debt, commonly called a liquid document, the plaintiff may cause a summons to be issued claiming provisional sentence on the said document. (My emphasis).

21. Contents of summons for provisional sentence

A summons claiming provisional sentence shall state the amount and any interest due by virtue of the said liquid document or other such demand as by virtue of the said liquid document is legally claimable, and shall call upon the defendant to satisfy the plaintiff’s claim, or in default to appear before the court at the hour and on the day and at the place stated in the summons to show why he has not done so, and to acknowledge or deny the signature to the said liquid document or the validity of the said claim.” (My emphasis).

The validity of a provisional sentence summons rests upon the contents of the liquid document. The document must contain some acceptance by the debtor of the sum(s) of money which is or are stated on it. The debtor’s attitude to the debt evinces itself through his acceptance of:  (a) what is stated in the document as supported by (b) his signature which he must acknowledge as his. See Zimbabwe Newspapers (1980) Limited v Innocent Manyange and Sheriff of Zimbabwe HH 170-16.

In Basil Read (Pty) Ltd v Beta Hotels (Pty) Limited [2000] 1 All SA 1 (C) his Lordship Justice Moosa held as follows:

“Provisional sentence is an extraordinary remedy designed to enable a creditor who has liquid proof of his claim to obtain a speedy judgment there for without resorting to the more expensive and dilatory machinery of an illiquid action (see Erasmus on Superior Court Practice B1-62; Ashersons v Panache World (Pty) Ltd 1992 (4) SA 611 (C) at 612J-613B).

If the document in question upon a proper construction thereof evidences by its terms, and without resort to evidence extrinsic thereto, an unconditional acknowledgement of indebtedness in an ascertained amount of money, the payment of which is due to the creditor, it is one upon which provisional sentence may properly be granted (Rich and Others v Lagerwey 1974 (4) SA 748 (A) at 754H).

The plaintiff’s title and defendant’s liability must appear ex facie the summons and the document upon which the claim is founded without resort to extrinsic evidence. Regard, however, could also be had to the allegations in the summons and the defendant’s response thereto. Support for this approach is found in Coetzee & Solomon Real Estate (Pty) Limited v Texeira 1970 (1) SA 94 (D) at 95 where the court pointed out that the document must be read with the summons and if the identity of a creditor, who is indicated but not named in the acknowledgement of debt, is alleged in the summons, the fate of the action for provisional sentence may well depend on the defendant’s response to that allegation. This approach was approved in Morgenster Development and Finance v Metelerkamp and Others 1986 (2) SA 453 (C) at 457A-B and Navidas (Pty) Limited v Essop 1994 (4) SA 141 (A) at 154A-B’5”

In Basil Read (Pty) Ltd v Beta Hotels (Pty) Limited (sup), the court said  plaintiff must provide liquid proof of his claim and the defendant’s liability must appear ex facie the document on which the claim is founded and this without the resort to extrinsic evidence. However, a court may have regard to allegations in the summons and the defendant’s response.

A defendant served with summons for provisional sentence may either satisfy the claim or appear in court to show cause why he has not satisfied the claim, or to acknowledge or deny the signature on the said document or the validity of the signature.

Is plaintiff relying on a liquid document?

Where a creditor possesses a liquid document, i.e. a document in which the debtor has acknowledged, or is in law deemed to have acknowledged, his indebtedness to the creditor in a fixed and determinate sum of money, a rebuttable presumption of indebtedness arises. While the plaintiff’s cause of action is really the obligation evidenced by the contents of the document signed by the defendant, the practice of granting provisional sentence is based upon “such strong prima facie proof of debt as is afforded by a clear written acknowledgment of debt, or written undertaking of payment.”

The first respondent has not disputed that the document relied upon by plaintiff is a liquid document. Such concession is not dispositive of the matter. I say so because, section 36 (3) of the Civil Evidence Act says it shall not be necessary for any party to civil proceedings to prove any fact admitted on the record of the proceedings. Whether the document complies with rule 20 of the High Court Rules, is not a factual issue, but a legal issue. Therefore, the concession made by the first defendant is not conclusive. Mr Majoko, understands this dichotomy. I say so because, notwithstanding the concession, he tenaciously argued that the document meets the requirements of rule 20 of the High Court Rules.

To further support his contention that the document meets the requirements of rule 20 of the High Court Rules, Mr Majoko argues that the authenticity of the document is not being challenged. It may well be so, but rule 20 does not speak only to the authenticity of the document. The document might well be authentic, but still fail to meet the requirements of rule 20. Authenticity relates to proving that the document was written or executed by the person who purports to have done so. One could prove this in a number of ways, of which the most common would be to call the writer to identify the document, or to tender the evidence of someone who saw him sign or write it, or who can identify his handwriting. A debtor may well accept that indeed he executed the document, but it is not an unequivocal acknowledgment of liability. Authenticity would have been conceded, but liquidity challenged. Therefore, my view is that rule 20 of the High Court Rules goes beyond mere proof of authenticity.

Rule 20 of the High Court Rules says, where the plaintiff is the holder of a valid acknowledgement in writing of a debt, commonly called a liquid document, the plaintiff may cause a summons to be issued claiming provisional sentence on the said document. Therefore, what engages the jurisdiction of the court in a matter for provisional sentence is that the plaintiff is the holder of a valid acknowledgement in writing of a debt. Otherwise, without a valid acknowledgement in writing of a debt, rule 20 cannot be engaged.

What is a valid acknowledgement in writing of a debt? A liquid document may be defined as a document in which the debtor acknowledges, over his signature or that of a duly authorised agent, or is in law regarded as having acknowledged without his signature being actually affixed to the document, his indebtedness in a fixed and determinate sum of money.

To constitute a liquid document, the acknowledgement of debt must be clear and certain on the face of the document itself, i.e. there must be an unequivocal admission of indebtedness. The document must speak for itself, if it does not, and extrinsic evidence is necessary to prove indebtedness, and when payment is to be made, the document is not liquid. It is an illiquid document.

In the summons for provisional sentence, plaintiff relied on four documents. However, in argument, Mr Majoko singled one document, and argued that it is the document relied on for provisional sentence.

Mr Majoko singled out the following from the document as the anchor for the summons for provisional sentence, that “total owed to you as at 31st July 2016 is $55 895.91.” Is this a valid acknowledgement in writing of a debt? Rule 21 says a defendant may appear before the court to acknowledge or deny the signature to the said liquid document or the validity of the said claim” [emphasis added]

The validity of a provisional sentence summons rests upon the contents of the liquid document. The document must contain some acceptance by the debtor of the sum(s) of money which is or are stated on it. The debtor’s attitude to the debt evinces itself through his acceptance of: (a) what is stated in the document as supported by (b) his signature which he must acknowledge as his.

The document relied on has no signature. Mr Mojoko’s answer to this is that, the High Court Rules were enacted in 1971. At that point in time, there were no e-mails. This document was sent by way of an e-mail. I do not agree that this is a valid reason. The rule speaks to a signature. Without a signature, the document does not meet the requirements of the rules. This requirement must be understood on the premise that provisional sentence is an extraordinary remedy.  The plaintiff must put himself within the four corners of the rules, if he has to succeed.

In the document relied on by the plaintiff, the date of payment is not provided. The only relevant portion in the letter reads “total owed to you as at 31st July 2016 is $55 895.91.” I take the view that, there is a distinction, between “I owe you” and “I owe you and undertake to pay you.” This is not merely a distinction without a difference. It is a distinction of substance. This distinction conforms with first defendant’s defence to the claim, which shall be discussed later in this judgment.

My thinking is that, this document is not an unconditional acknowledgement of indebtedness. It does not pass to anchor a summons for provisional sentence. It is the liquidity of the document which determines whether provisional sentence procedure is appropriate or not. Rich v Lagerwey 1974 (4) SA 748 (A) at 754H), enjoins a court to look beyond the form or nature of the document relied on and determine whether it fits the description of a liquid document. In my view, the acknowledgement of debt in this matter does not. The document talks of liability and not when such liability shall be discharged. The document does not evidence an unconditional undertaking to pay and that payment is due.

I take the view that the document relied upon by the plaintiff, is not a valid acknowledgement in writing of a debt. It is not a document that meets the requirements of rule 20 of the High Court Rules. It cannot anchor a claim for provisional sentence. See Pioneer Properties Limited v Message Ncube t/a Foundation College HH 23/04.

My finding that the document relied upon by the plaintiff is not a valid acknowledgement in writing of a debt, commonly called a liquid document, should ordinarily signal an end to the enquiry. A court may, notwithstanding such a finding, use its discretion to proceed and look into the defence to the claim proffered by the defendant. In casu, I take into account the background, the particular facts of this case and the fact that first defendant had conceded that the document relied on by the plaintiff is a liquid document, to proceed and look into defence.

A bona fide defence

Rule 21 of the High Court Rules, provides the following defences as available to the defendant in opposing a provisional sentence summons, that the defendant may deny the signature to the said liquid document or the validity of the said claim.

Only a bona fide defence can defeat an application for provisional sentence. A bona fide defence has been held to be: …a plausible case with sufficient clarity and completeness to enable the court to determine whether the affidavit discloses a bona fide defence. Defendant must allege facts which if established, would entitle him to succeed.

The first defendant, in his opposing affidavit, states the following:

At all material times, defendant had a chicken slaughtering contract with Lunar Chickens (Pvt) Ltd, a company domiciled in Harare and which is in the business of breading chickens. The chicken slaughtering process was carried out at Lunar Chickens farming premises in Harare.

It came to defendant’s knowledge that plaintiff was also carrying out Ecosoft operations at Lunar Chickens premises and was in addition, also involved in the business of slaughtering chickens. As plaintiff and defendant were working from same premises, whenever the situation demanded, defendant would hire plaintiff to assist defendant in its own chicken slaughtering business.

However, on or about June 2016, the Zimbabwe Electricity Supply Authority came and switched off electricity at the Lunar Chickens premises. On checking with ZESA, it was noted that plaintiff was not paying its portion of the ZESA bill which had accrued to $136 719.57. Despite pleas from Lunar Chickens and defendant, ZESA refused to at least keep electricity switched on for continued business by defendant given that defendant was not in breach of its ZESA obligations. ZESA simply switched off the entire premises. Plaintiff proceeded to vacate the premises in a huff and left defendant stranded.

Consequent to this, the board of directors of Lunar Chickens resolved on the 24th August 2016 that any monies owed to plaintiff by defendant be channelled towards settling the plaintiff’s ZESA account.

Plaintiff was duly advised of this position by Lunar Chickens. Defendant also addressed plaintiff on the same issue on the 29 August 2016.

Following on this, defendant duly disbursed the funds.

In the premises, defendant does not owe plaintiff any amount of money whatsoever.

The claim of provisional sentence is therefore an abuse of the court process which deserves a dismissal with costs at an attorney client scale.

The first defendant raises two defences against plaintiff’s claim. The first is that the claim has been discharged through payment to the creditor’s creditor, and the second is that part of the payment has been settled through a set-off.

First defendant has placed before court documentary proof to show that it indeed has paid ZESA, the amount due to the plaintiff. In certain circumstances, the law accepts that payment to a creditor’s creditor is payment to the creditor. See C Pettigrew (Pvt) Ltd v Cone Textiles (Pvt) Ltd t/a Darryn Textiles Milles 1976 (3) SA 569 (R); Matanhire & Anr v Chapendama & Anr 2014 (2) ZLR 15. Again a set-off, is in certain circumstances, recognised in law as payment to the creditor.  In casu, there is no dispute whether first defendant paid the third party, the dispute is whether such payment discharges the indebtedness to the plaintiff. On the papers before court, this question cannot be conclusively answered without the risk of doing an injustice to either of the litigants.

The general rule is that provisional sentence should be refused if the defendant proves on a balance of probabilities that its defence will succeed at the trial. My view is that this is not a dispute that can be resolved in a provisional sentence proceedings. It cannot be resolved on the papers before court. It can only be resolved in a trial. This is a case where first defendant may well succeed at the trial. Granting provisional sentence in such a case, on these facts, may result in a grave injustice to the first defendant. The probability of first defendant succeeding at the trial is sufficient force, to warrant a refusal of provisional sentence.

Furthermore, plaintiff filed an answering affidavit covering approximately eight pages. It had to explain and re-explain the business relations of the parties and its contention that first defendant has not discharged its liability. The fact that plaintiff saw it prudent to proffer such a long and winding answering affidavit, is proof of the fact that this is not a proper provisional sentence case.

It cannot be said that the defendant has very poor prospects of success in the main matter; the defence proffered is weak, and not likely to be accepted by the court. In conclusion, I find that plaintiff has failed to discharge the onus resting on it, of showing that it has made a case for a provisional sentence. No provisional sentence can be allowed in such a case. The claim for provisional sentence must be refused.

The general rule is that where the court finds that the document sued on is not a liquid document, it must dismiss the case. However, the background, the particular facts of this case and the fact that first defendant had conceded that the document relied on by the plaintiff is a liquid document, I do not opt for a dismissal, but a referral to trial.

Costs

The ordinary principles which govern awards of costs also apply in provisional sentence proceedings. Thus a successful action for provisional sentence will generally carry costs and an unsuccessful action will generally be dismissed with costs. If provisional sentence is refused the court may, in the exercise of its discretion, reserve the question of costs for decision at the trial of the principal case.

I take the view that plaintiff's case suffered from a terminal defect from the outset. Again, once the opposing affidavits had been filed, it should have been clear that this matter was not appropriate for provisional sentence proceedings.

I have considered whether the costs should be reserved for determination at the trial.  It might be that the plaintiff prevails at a trial, but this will not override the fact that the plaintiff elected to proceed by way of provisional sentence summons when it was inappropriate to do so. Plaintiff must pay the costs.

First defendant called for a punitive costs order. Under the heading ‘Circumstances in which attorney and client costs may be awarded’, A C Cilliers states the following:

“Vexatious and frivolous proceedings

Conduct which is vexatious and an abuse of the process of the court may form the basis for an order that costs should be paid on an attorney and client scale, even though there is no intention to be vexatious. . . . A punitive costs order requires ‘exceptional circumstances’. Allegations of ‘inferred misconduct’ are not enough”.

An award of punitive costs requires exceptional circumstances. It is more than mere success or failure in the case that justifies punitive costs. In this matter the plaintiff instituted proceedings by way of provisional sentence based on an illiquid document. During the hearing it confined itself to one of the documents. There was thus no prospect of success from the outset. Furthermore, the opposing affidavits made it apparent that this was not a provisional sentence matter. However, this does not amount to vexatious and frivolous conduct.  This is what litigants have to contend with at every turn. It does not amount to abuse of the process of the court.  In the circumstances the first defendant is not entitled to an order that costs be paid on an attorney client scale.

Disposition

In the result, I order as follows:

Provisional sentence is refused and it is ordered that the case stand over for trial. The summons for provisional sentence shall stand as a summons in an ordinary action and the defendant shall enter appearance within five days of this judgment, and thereafter the rules for procedure in an ordinary action shall apply.  Plaintiff to pay the costs of suit.

Majoko and Majoko, plaintiff’s legal practitioners

Chanayiwa Law Chambers, first defendant’s legal practitioners

Calderwood, Bryce Hendrie, second defendant’s legal practitioners