Delta Beverages Private Limited v Sachies Private Limited and Phoebe Manyaya t/a Sachies Wholesale and Charity Sachikonye

### Preamble
1
HH 789-18
HC 9296/14
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DELTA BEVERAGES PRIVATE LIMITED

versus

SACHIES PRIVATE LIMITED

and

PHOEBE MANYAYA t/a SACHIES WHOLESALE

and

CHARITY SACHIKONYE

HIGH COURT OF ZIMBABWE

MUZENDA J

HARARE, 29 October  2018 & 28 November 2018

Civil Trial

G Machingambi, for the plaintiff

S M Chisoko, for the defendants

MUZENDA J: Delta  Beverages Private Limited (plaintiff) sued all the three defendants claiming the sum of US$33 876.72 being the amount due and owing by the defendants to the plaintiff in respect of the balance of the costs of goods namely beverages supplied on credit to first and second defendants during the period extending from the 11th February 2009 to 9th June 2014 and for which the first and second defendants on the 30th December 2013 acknowledged themselves to be truly and lawfully indebted to the plaintiff as at that date in the total sum of US$22 107. The third defendant bound herself as a surety and co-principal debtor with the first and second defendants to the total sum of US$48 000 or any amount owed by the first, and second defendants at any time in and under a mortgage bond passed at Harare on the 16th May 2012. Plaintiff also claims interest at the prescribed rate calculated from the 9th December 2013 and costs of suit on attorney-client scale.

Sachies Private Limited (first defendant) is a company carrying on business at Stand No. 86 New Tafara Mabvuku,  Harare. Phoebe Manyaya (Second defendant) carries on business at No. 86 New Tafara, Mabvuku under the style of Sachies Wholesale. Charity Sachikonye (3rd defendant) is the surety and registered owner of certain 420 square metres of land called Stand 5276 Budiriro Township of Willowvale Estate situated in the district of Salisbury held under Deed of transfer number 003824/2001.

During the period extending from 11th February 2009 to 22 March 2012 plaintiff and first and second defendants agreed to supply goods to the first and second defendants on credit and for which first and second defendants were obliged to pay within seven days after delivery of the goods. Under the agreement plaintiff supplied a variety of beverages to first and second defendant during the above stated period. On the 30th December 2013 the first and second defendants acknowledged themselves to be indebted to the plaintiff in the sum of $22 107 wherein they also bound themselves to pay plaintiff’s costs on attorney-client scale. The third defendant bound herself as a surety and co-principal debtor with the first and second defendants to the total sum of $48 000 of any amount owed by the first and second defendants at any time in and under a surety mortgage bond passed at Harare on the 16th May 2012 over the property cited hereinabove as belonging to third defendant. Plaintiff is also seeking an order declaring the property mortgaged by the third defendant specially executable.

The three defendants jointly and severally aver that all the amounts were paid in full and that it was a thirty day account. They also add that the sum of US$22 107 was also paid in full. The amount of US$19 347.82 in respect of alcoholic beverages was also paid for in full. They admit owing plaintiff US$14 528 plus interest.

On 22 March 2018 the matter was referred to trial and the issues for trial were spelt out by the parties as follows:

(a)  whether the first, second and third defendants are jointly and severally indebted to the

plaintiff in the amount claimed or any other sum at all?

(b)  whether plaintiff is entitled to an order declaring certain piece of land situated in the

district of Salisbury being Stand number 5276 Budiriro Township of Willowvale    Estate, measuring 420 square metres and held under Deed of Transfer No. 3824/2001 dated 7 May 2001 specially executable?

The onus of proof is on the plaintiff on both issues.

The plaintiff called Phillip Musonza as its first witness who told the court that during the period extending from 11th February 2009 to 22 March 2012 plaintiff and first and second defendants entered into an agreement whereby plaintiff agreed to supply goods to the first and second defendants on credit for which first and second defendants were obliged to pay within seven days after delivery of goods. Acting under the said agreement plaintiff supplied goods namely a variety of beverages. First and second defendants signed an acknowledgement of debt on the 30th December 2013. The third defendant bound herself as surety and co-principal debtor with first defendant. The amount which is due is $33 876.72. The plaintiff produced the whole copy of the consolidated record.

Mr Musonza added clarifying second defendant’s statement captured on pages 8-13 of the record. “Sachies wholesale detailed ledger as at 5 December 2013,” the statement shows payments which are in brackets and the invoices which are on the debit side. The invoices total $443 797.70 p 11 of the record and total payments made by the second defendant added up to $429 528.00. The balance due to the plaintiff as at 5 December 2013 being $14 528.90. This balance arose from the supply of soft drinks by the plaintiff to the second defendant. The witness told the court he met Phoebe Manyaya from 2009 and the client traded in both lagers and softdrinks. Second defendant was trading as Sachies Wholesales. He confirms that the balance of $14 528.90 as at 5 December 2013 was still outstanding.

The document captured on page 82 of the bundle was explained by the witness. It shows that on the 23rd November 2013 under invoice number RAP 02064519 plaintiff delivered lagers with $10 426.77 and the second defendant said $8 939.02 leaving a balance of $1 487.75 due to plaintiff. On the 30th November 2013 under invoice number RAP 02072348 plaintiff delivered consignment on the second defendant valued at $12 664.96 and second defendant still owes that money to the plaintiff. On the 10th December 2013 under invoice number RAP 02083444 plaintiff delivered goods on the defendant worth $5 347.56 and defendant has not paid. On the 9th of June 2014 the plaintiff deducted from the amount owed by the second defendant an amount of $152.45 being spillages (spoiled beer) and that affected the balance by the same amount to leave an amount owed by the defendant to plaintiff in the sum of $19 347.82. This is the amount that is central to these trial proceedings. Plaintiff’s witness insists that this amount is due and the defendant denies receipt of those goods / beer specified on the cited invoices above.

On pages 15 – 17 of the bundles there is an acknowledgment of debt signed by second defendant on the 30th December 2013 in favour of the plaintiff. The witness Mr Musonza signed on behalf of the plaintiff. The amount acknowledged by the second defendant is $22 107.00 and on pages 17-21 there is a surety bond signed by the 3rd defendant binding 1st defendant as the principal debtor and third defendant as the surety and the amount covered is $48 000. The total debt remains outstanding up to this date and the surety bond should now be enforceable against the third defendant.

The witness highlighted that on page 28 of the bundle, in para 5 of defendant’s plea, the defendants averred that the subject sum of US$19 347.82 was duly paid, yet it is still outstanding. The defendants also admit that the amount of $14 528.90 was indeed due because first defendant’s employees had stolen. The defendants jointly and severally considered payment of the sum of $1 452.90 however up to this date that amount is still outstanding and the defendants are neglecting to pay. That amount has been due to plaintiff since December 2013. Although the second defendant’s statements to the plaintiff credits, the defendants have not formally made claims of those amounts and in principle plaintiff deny owing any of the defendants any money. The date covered in respect of documents shown on pages 85-93 do not tally with those of the plaintiffs. The total amount due to the plaintiff hence remains $33 876.72.

The witness was cross examined by Mr Chisoko but he remains adamant. He was tasked to separate first and third defendants from the second defendant on the aspect of liability but the witness did not agree. All the three defendants are liable to the plaintiff jointly and severally he reiterated. He also repeatedly averred under cross examination that the summary of documents to transactions on pages 103-105 reflect the respective dates of delivery done by plaintiff’s drivers on the 23rd of November, 29 November and 9 December 2013. The witness’ evidence is accepted by this court as credible. He was to explain the differences in legal status between first and second defendants but that is not material in this matter.

The plaintiff called the drivers, Mr Tongai Mapuka, Mr Samson Kamwendo and Mr Redgeman Charles Razao whose evidence was almost identical. They are the ones who delivered the consignment on the respective dates. They explained the comprehensive procedure of how they receive orders, pack the lagers, some at the customer’s premises, show the customers the details of each load, physically count the crates and bottles and reconcile or collate with the figures, in the written documents. After verification the driver of the plaintiff signs and the recipient customer or his / her representative countersigns on the invoice captured on pages 103-105. An analysis of their evidence shows that they gave their evidence very well. Yes, there were some notable inconsistencies in the evidence of the drivers but those were insignificant and immaterial. What is conspicuously clear is that the goods worth $19 347.82 were delivered by these drivers on the 23rd November, 30th November and 10th December 2013 and that amount was not settled by the defendants jointly and severally. The plaintiff largely managed to prove on a balance of probabilities through oral and documentary exhibits that that amount was not paid. I accept plaintiff’s evidence and further the amount of $14 528.90 is not in dispute. The capital debt has been proved.

After plaintiff had closed its case, as has now become the norm by legal practitioners the first and third defendants applied for absolution. The basis of the application is that there is no basis laid out by plaintiff so as for it to rely on the surety agreement. Plaintiff failed to prove its case in as far as it relates to the relief sought against first and third defendants.

It is further argued on behalf of the first and third defendants that the corporate veil cannot just be lifted because a creditor wants to recover his money from a third party who was separate from the company. The first and third defendant further submitted that the onus was on the plaintiff to prove that there was indeed a sale to the first defendant and if any of it, was authorised by the directors. It was also argued that plaintiff failed to attach or produce any facility letter between it and the defendants relating to their relationship and how they were going to engage in the transactions.

The first and third defendants strongly argued against the piercing of the corporate veil unless there is fraud. They jointly argue that they have established good grounds for absolution and pray that the applicator be granted with costs.

The application for absolution from the instance is being opposed by the plaintiff. It was submitted by the plaintiff that the first and third defendants must be put on their defence.

The following issues were established when the plaintiff’s witnesses testified

Phoebe Manyaya, second defendant trades as Sachies Wholesale.

she is the alter ego of the first defendant; where she is the Managing Director.

the negotiations and signing of all transactions pertaining to the Sales to the first and second defendants were done by second defendant or her designated agent.

besides the word “Private Limited” one can hardly distinguish the activities of second defendant from the first defendant.

second defendant partly settled invoices due to the plaintiff.

there is no one else who stands up to claim first defendants name other than second defendant.

third defendant is the surety to the principal debtor.

the defendants admit owing plaintiff part of the capital.

The question is whether the plaintiff has proved on a balance of probabilities that the first and third defendants are liable to pay the amount in dispute. All the 3 defendants chose to be represented by one legal practitioner. All the 3 defendants filed a single plea to plaintiff’s claim, and in para 5 of their plea the 3 pleaded as follows:

“Defendants further admit that the sum of US$14 528-90 remains outstanding due to theft of beverages by the defendants’ employees, which fact is well known to the plaintiff. Defendants, however, tender payment of the sum of US14528.90 together with interest thereon at the prescribed rates calculated from 9 December 2014, to date of full and final payment.”

The first and third defendants do not distance themselves from this admission and once an admission is given it cannot be withdrawn and the first and third defendants are estopped from making such withdrawal. This court fails to find the basis of the application given this unequivocal admission of indebtedness by the first and third defendant on a figure which has remained unpaid. Once such an admission is made the first and third defendants had voluntarily joined themselves to the second defendant’s cause and they also bound themselves.

In Bailey No. v Trinity Engineering (Pvt) Ltd & Ors 2002 (2) ZLR 484 (H) Matika J on p 484 G-H held that:

“…..in an application for absolution from the instance the test to be applied is whether there is evidence upon which a reasonable court might find for the plaintiff. If so, and particularly if the defence is something peculiarly within the knowledge of the defendant who might be 	afraid to go into the box should not be permitted to shelter behind the procedure of the 	absolution from the instance…. The defendants had admitted taking the loan and it was 	necessary for them to prove their defence……”

The first defendant must justify and prove that it knows nothing about the debt as well as that it did not admit to owing the plaintiff part of the money which it tendered to pay together with interest. The third defendant’s liability largely depends on the liability of the principal debtor, first defendant.

The application for absolution is dismissed.

Defendants’ case

The defendants opened their case by calling Mr JAK Sachikonye, who told the court that he acted as the accountant for the second defendant. He is married to the second defendant’s elder sister and owns a number of shops in Mabvuku where Sachie’s Wholesales is situated. He said the second defendant has a trading relationship with the plaintiff which started from 11 February 2006 and terminated on 22 March 2012. He became aware of the acknowledgement of debt signed by the second defendant but denied that that amount is owed by the second defendant to the plaintiff. The amount of $19 347-80 for lagers is not due because it was paid in full. The second respondent made payments in advance or paid directly to Delta and in which event plaintiff would acknowledge payments and make delivery. The amount of $19 347.80 is denied by the second defendant because the invoices read dates in November and December 2013  when the second defendant had ceased operation. He also denied that the employees’ signatures were an imitation of the real ones. However he admits that Mr Saruchera was the Supervisor of second defendant and Mr Musuki was a security employee of the second defendant. Both of these employees were qualified to sign on behalf of the second defendant. The second defendant is owed money by the plaintiff but has not made any formal claim nor demand for payment, however the onus was on the plaintiff to produce, a statement summarising the transactions pertaining to the purchases by the customer, he added. The amount of $22 107 was reconciled and reduced to $14 528.90 and for alcoholic beverages an amount of $21 000 was reduced to $10 000. These figures were rejected by the plaintiff citing prescription. The first defendant was owned by the witness, his late brother, Tendai Douglas Sachikonye. Third defendant does not have a position in the first defendant and the surety bond related to the first defendant and not the second defendant. In any case the witness states the surety bond was processed for the benefit of the third defendant who wanted to do business with the plaintiff but was discouraged by the witness. For the statements captured on pages 85-93, the witness accepted that he compiled information stretching from p 85 to the middle of p 86, the rest of reconciliation, he stated that it was authored by the plaintiff’s employees. He did not see the invoices attached to the summons, that is Annexure A7 whose total add up to $19 347.82 and second defendant cannot be asked to pay the $19 347-82 because that money is covered in the $29 000 owed by the plaintiff to the second defendant. The first and third defendants are not liable to pay the plaintiff they do not have anything to do with the second defendant’s business with the plaintiff.

The second witness to be called was Phoebe Faith Manyaya (2nd respondent). She is the proprietor of Sachies Wholesale. She has been having relationship with the plaintiff since 2009 and ended on 22 March 2012. She admits signing the acknowledgment of debt but did not comprehend its fundamental meaning. She does not agree that she owes the plaintiff any money because after going through the process of reconciliation the plaintiff owed her well in excess of $50 000-00. She had not received any invoices from the plaintiff. She denies owing the first defendant but knows Mr Sachikonye, Saruchera and Musuki. Mr Saruchera was employed as a supervisor and cashier and Musuku was for Security. The Signatures on the invoices did not belong to Saruchera and Musuki, in general term the employee was supposed to write his initial and surname and then sign, this was not done and thus the signatures were fake. The debts in dispute are attributable to the witness and not the first and third defendants, she stressed.

The last witness was Charity Sachikonye the third defendant who is the principle Surety. She told the court that she did not sign any papers that led to the Surety Bond. It was the first witness Mr Sachikonye who was responsible for that document. She also stated that at one occasion she wanted to open a general dealer shop that is when she wanted a Surety Bond. She did not pledge her property to the first defendant. At the end of the testimony of the third witness for the defendants it was not clear as to who signed papers which led to the Surety Bond whether it was Ms Sachikonye or her husband Mr Sachikonye. This aspect is no significance to the plaintiff because it is holding security over a debt.

The following are common cause and need not detain this court:

(a)	plaintiff and 2nd defendant have been dealing together where the plaintiff has

been supplying 2nd defendant alcoholic beverages and soft drinks from 2009.

(b)	the amount of $14 528-90 is now admitted by 2nd defendant to be due to the plaintiff.

(c)	“Sachies” is a short name of Sachikonye and Mr Sachikonye is related to the 2nd defendant and is the accountant for Sachies Wholesalers.

(d)	the Surety Bond is registered in favour of the plaintiff for  an amount not exceeding $40 000.

The only issue for determination is whether the plaintiff is owed $19 347-82 for

alcoholic beverages delivered 23rd November, 30th November 2013 and 10 December 2013 as shown on Annexure A7 on p 14 of the bundle. As already analysed above when summarising the evidence of the plaintiff, the plaintiff produced invoices on pp 103-105, singed by the drivers and countersigned by either Mr Saruchera or Mr Musuki for and on behalf of the second defendant. The amounts of delivery were reconciled against the breakages worth $152-45 and the balance outstanding is $19 347-82. The defendants deny that the invoices of November –December 2013 were fake because the trading period was 22 March 2012. Either the drivers fraudulently signed on behalf of Saruchera and Musuki or they never delivered the goods to second defendant. The defendants simply refute Saruchera and Musuki’s signatures by word of mouth and nothing more. They did not call neither of these two employees to testify on behalf of the defendants. I will accept the plaintiff’s evidence and find that the plaintiff delivered beer on the dates in November and December 2013 for the value of $19 347-82. I am inclined to find so when  I take into consideration the signing of the Acknowledgment of debt by the second defendant on 30 December, 2013, 20 days after the last delivery. No payments were made by the second defendant after 30th December 2013. The second defendant found it difficult to explain the acknowledgment of debt if at all she did not owe the plaintiff. If reconciliation of the figures was done how and why should she sign an acknowledgment of debt. The second respondent’s pleadings on this claim are haphazardly presented. Reconciliation was said to have been done at the direction of Phiri J at the pre-trial conference where parties were directed to go and exchange notes and come out with the figures which were not in dispute, however the defendants’ plea dated 19 February 2015 in para 5, the defendants jointly pleaded that the amount of $19 347-82 had already been paid in full. When was it paid in full? No dates were given, no proof of payments were produced in court nor discovered. The evidence of the plaintiff on this aspect is clearer and logical and I am satisfied that the plaintiff has managed to prove its case on the amount of $19 347-82. The acknowledgment of debt of 30th December 2013 had an amount of $22 107 and after that the second defendants made some payments which reduced the figure to $19 347-82 and that was not disputed by the defendants.

As to the question of the first and third defendants’ liability the plaintiff led evidence to the effect that the second defendant was the director of the first defendant and that although the deliveries were made to Sachies Wholesales, their customer was the first defendant. After the agreement was made between the plaintiff and second defendant that the plaintiff would supply beer and soft drinks to the second defendant, the plaintiff demanded Surety and the third defendant tendered her house in Budiriro which led to the Surety Bond on p 71 of the bundle dated 15th May 2012 and third defendant prepared a power of attorney to have that bond registered. The causa of that bond on p 2 of the bond talks of “repayment of moneys lent and advanced by the mortgaged to the principal debtor” and the principal debtor is the first defendant. There is logic in this flow of evidence and I accept the plaintiff’s version on the citation of the first and third defendants. Both are jointly liable to the plaintiff over and above the second defendant’s liability. The Surety Bond cannot talk of money “lent and advanced” if the third defendant was talking of a future business which she was going to introduce. At the time the Surety Bond was processed, the first and second defendant, owed the plaintiff money for the deliveries. Further Mr Sachikonye told the court that the first defendant’s directors included his late brother on the CR 14 and on another note he does not know whether the first defendant was registered or not, the court noted that the second defendant and Mr Sachikonye tried at all angles to hide the truth from the court and the third defendant furtively distanced herself from the Surety Bond. All the defence witnesses did not impress the court as truthful, they avoided clear cut questions in a bid to conceal the obvious, their defence fails. The plaintiff’s claim succeeds and the following order is granted.

All defendants, jointly and severally, the one paying, the others to be absolved, pay plaintiff the sum of $33 876-72.

Interest on that sum at the prescribed rate calculated from the 9th December 2014 to the date of full payment.

Stand 5276 Budiriro Township of Willowvale Estate, measuring 420 square metres and held under Deed of Transfer Number 3824/2001 dated 7th may 2001 is specially executable.

Defendants to pay plaintiff’s costs on a legal-practitioner client scale.

G Machingambi Legal Practitioners, plaintiff’s legal practitioners

Chiturumani & Zvavanoda Law Chambers, 1st , 2nd, & 3rd defendants’ legal practitioners