Engen Petroleum (Pvt) Ltd v Felistus Mutangadura

### Preamble
1
HH 738-18
HC 6384/15
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ENGEN PETROLEUM (PVT) LTD

versus

FELISTUS MUTANGADURA

HIGH COURT OF ZIMBABWE

CHATUKUTA J

HARARE, 24 and 25 January 2018 & 31 October 2018

Civil Trial

R Matsika, for the plaintiff

C Daitai, for the defendant

CHATUKUTA J: The plaintiff issued summons on 8 July 2015 against the defendant claiming a sum of $26 912.27 with interest thereon at the rate of 5% per annum and costs of suit. The plaintiff further prayed for an order declaring Stand 10763 Bulawayo Township of Bulawayo Township Lands, measuring 1041 square metres (“the property”) specially executable.

The claim arises from the following facts which are common cause: The plaintiff entered into an Operating Lease Agreement with a company called Station Micro Finance (Pvt) Ltd. The terms of the agreement were that the plaintiff would lease its premises situated at Corner 14th Avenue and Robert Mugabe Street, Bulawayo to Station Micro Finance (Pvt) Ltd. In return, the defendant would pay for all the petroleum products that would be supplied by the plaintiff, rentals, electricity and municipality rates. The plaintiff demanded security against debts to be incurred by Station Micro Finance (Pvt) Ltd pursuant to the lease agreement.

The defendant was approached by one Emilia Sibanda, a director of Station Micro Finance (Pvt) Ltd with a request to act as surety. On 29 March 2012, she signed a draft power of attorney which she had been given by Emilia Sibanda appointing one Sindiso Shepherd Mazibisa to pass a mortgage bond in favour of the plaintiff as security.  On 16 April 2012, a mortgage bond was registered against the property. Station Micro Finance (Pvt) Ltd failed to pay rentals, electricity and municipality rates in the total sum of US$26 912.27. The dispute between the two parties was referred to arbitration where the plaintiff was awarded the sum claimed in these proceedings. The award was thereafter registered as an order of this court on 24 April 2014.

The defendant was therefore sued by the plaintiff after having acted as surety for the performance by Station Micro Finance of its obligations to the plaintiff.

Whilst admitting that a mortgage bond was registered against her property, the defendant denied that she acted as surety for the due performance of all the obligations of Station Micro Finance (Pvt) Ltd emanating from the lease agreement with the plaintiff. She contended that she agreed to act as surety in relation to payments for petroleum products only. She testified that she was introduced to Emilia Sibanda, by her nephew. She signed a Power of Attorney given to her by Emilia Sibanda believing that it related to a credit facility for the supply of petroleum products worth up to US$30 000. There was no draft mortgage bond attached to the draft power of attorney. She was also not aware of any mention of a Mortgage Bond in the Power of Attorney. Emilia Sibanda therefore misrepresented to her the purpose of the power of attorney. It is on that basis she denied any liability.

The main issue arising is whether the defendant acted as surety for the due performance of all the obligations of Station Micro Finance (Pvt) Ltd to the Plaintiff arising from the Operating Lease Agreement. The starting point in determining this issue is the power of attorney. The power of attorney reads:

“POWER OF ATTORNEY

I

FELISTAS MUTANGADURA

(born 19th February 1960)

do hereby appoint

SINDISO SHERPARD MAZIBISA

with the power of substitution, to be my lawful attorney, in my name to appear before the Registrar of Deeds at BULAWAYO and he as its act and deed to pass Mortgage Bond in favour of

CHEVRON ZIMBABWE (PRIVATE) LIMITED

for the sum of US$30 000.00 (Thirty Thousand United States Dollars) in terms of the draft Bond thereto annexed which I have initialled for the purpose of identification and with the contents of which I hereby acknowledge to be fully acquainted and generally for effecting the purposes aforesaid, to do, or cause to be done whatsoever shall be requisite, as fully and effectually, to all intents and purposes as I might or could do if personally present and acting herein:-hereby ratifying, allowing and confirming and promising and agreeing to ratify, allow and confirm all and whatsoever my said Attorney shall lawfully do or cause to be done by virtue of these presents.

Given under my HAND at HARARE this 29th day of MARCH 2012 in the presence of the undersigned witnesses.” (own emphasis)

It states that a draft bond was annexed to the draft power of attorney. The defendant had fully acquainted herself with the contents of the draft bond.  She had initialled the draft bond. The bond was for the sum of US$30 000. She was allowing, promising and agreeing to ratify whatever Mazibisa would lawfully do pursuant to the power of attorney.

The defendant did not deny the signature on the power of attorney as being hers. By affixing her signature she was accepting the contents of power attorney stated above.

It is trite under the caveat subscriptor rule that where a person affixes his/her signature to a document, such signature is proof that the signatory agreed to the terms which are embodied therein, even where it is shown that he/she did not read the document before signing and was therefore not aware of the terms. He/she can escape the application of the rule where she/he signed under a misapprehension as to the effect of the document which misapprehension must have been caused by the other party who required such signature. (See Van Der Merwe SWJ, Van Huysteen LF, Reinecke MFB & Lubbe GF, Contract: General Principles Juta and Company (Pty) Ltd 4th Ed p 261, Burger v Central African Railways 1903 TS 571, Gorden Mutsamba v Mrs E. Dube HB 190/15.)

Arising from the above, the defendant cannot escape the consequences of her signature irrespective of the fact that that she was misled as to the true nature of the power of attorney and the subsequent mortgage bond, and that the draft mortgage bond was not availed to her. Firstly, the alleged misrepresentation that the defendant seeks to rely was made not by the plaintiff but by Emilia Sibanda. Emilia Sibanda was not an agent of the plaintiff. She was a director of Station Micro Finance (Pvt) Ltd and approached the defendant on her own accord. The defendant did not alleged any connivance between Emilia Sibanda or Station Micro Finance (Pvt) Ltd and the plaintiff. The defendant chose not to call Emilia Sibanda or her nephew who introduced to her Emilia Sibanda as witnesses.

In fact, it can be said that she made a false declaration that she had acquainted herself with a document that she alleges never saw.

Secondly, the mortgage bond was executed on her authority. She is the one who appointed Sindiso Sherphard Mazibisa to pass the mortgage bond on her behalf. Clause 4 of the Bond sets out the extent of the liability covered under the bond. It reads:

“This bond shall be a continuing covering security to the amount of the capital, and the additional sum hereinbefore mentioned for costs and charges, for all and any sum or sums of money which shall now or may in future be owning to or claimable by the Mortgagee/s from whatsoever cause arising, for money lent and advanced or which may hereafter be lent and advanced by the provision of this Bond.” (own emphasis.)

The rules of interpretation of a contract are applicable in the interpretation of a mortgage bond. (See CBZ v Ndlovu N.O & Anor HH 137-2015). Effect is given to the ordinary meaning of the language used. The language used in the mortgage bond under consideration is very simple. Whilst the Bond alludes to a sum of money advanced, it includes any indebtedness “from whatever cause arising”. The extent of liability is therefore very broad and extends to liability due to the mortgagee by the debtor arising from any cause whatsoever. It is not specifically limited to a debtor arising from sale of petroleum products only. The defendant is the one who appointed Mazibisa to act on her behalf and his conduct cannot be said to be unlawful.

A reading of the power of attorney is that the defendant had sight of this Bond and familiarised herself with the contents thereof. The plaintiff’s claim is for rentals, municipal rates and electricity charges. Even assuming that the defendant was under the impression that the bond would be for petroleum products only, the bond extended Station Micro Finance (Pvt) Ltd’s liabilities to other debts other than from the supply of petroleum products.

As rightly submitted by the plaintiff, the misrepresentation by the judgment debtor does not taint the mortgage bond. Christie in The Law of Contract in South Africa, 5th ed at p 271 observed that:

“In a straightforward case where two parties are involved there is no difficulty about permitting the innocent party to rescind the contract as a result of a misrepresentation made by him to another. The only one to suffer will be the maker of the misrepresentation. But if the misrepresentation was made by a third party the matter is not so simple, as rescission would leave the maker of the misrepresentation unaffected but would adversely affect the other party to the contract, who is entirely innocent. In accordance with the general principle that when no one is to blame the loss must lie where it falls, no rescission is permitted in these circumstances. In Karabus Motors (1959) Ltd  v  van Eck  1962 (1) SA 452 © 453 Watermayer J said:

“It is a general rule of our law that if the fraud which induces a contract does not proceed from one of the parties, but from an independent third person, it will have no effect upon the contract. The fraud must be the fraud of one of the parties or of a third party acting in collusion with, or as the agent of, one of the parties (see Wessels Law).”

As alluded to earlier, the alleged misrepresentation that the defendant seeks to rely on was by a third party and not the plaintiff. The plaintiff accordingly succeeds in its claim.

It is accordingly ordered that:

Judgment be and is hereby granted in favour of the plaintiff against the defendant for payment of a sum of  US$26 912.27 with interest thereon at the rate of 5% per annum calculated from the date of summons  to the date of full payment;

The mortgaged property being Stand 10763 Bulawayo Township of Bulawayo Township Lands  measuring 1041 square metres and held under Deed of Transfer 355/2012 be and is hereby declared specially executable.

The defendant be and is hereby ordered to pay costs of suit.

Wintertons, legal practitioners for the plaintiff

Magwaliba and Masunga, legal practitioners for the defendant