ProChem (Private) Limited v Bernard Mangwaya

### Preamble
1
HH 477-18
HC 1171/17
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PROCHEM (PRIVATE) LIMITED

versus

BERNARD MANGWAYA

HIGH COURT OF ZIMBABWE

CHAREWA J

HARARE, 12 June 2018 & 29 August 2018

Trial

B Mahuni, for the plaintiff

P.N Chinzou, for the defendant

CHAREWA J: Plaintiff issued out summons against the defendant claiming

$15 761.91 being the balance due to the plaintiff for medical goods supplied. The claim was predicated on an acknowledgment of debt which plaintiff alleged defendant had signed.

The defendant disputes the claim, alleging that he does not owe plaintiff anything and that he was coerced into signing the acknowledgement of debt.

The facts and background

It is not in dispute that plaintiff and defendant had an agency arrangement whereby defendant was contracted to sell, on commission, medical/health goods to third parties on behalf of the plaintiff. The duty of the plaintiff was to supply defendant with what the parties called “an individual warehouse” in the form of a van into which plaintiff would stock the products. Plaintiff would generate stock sheets of goods supplied to defendant and invoice defendant for the same.

The obligation of the defendant was to identify third party customers to whom he would sell the products, collect the payments and remit the same to plaintiff. Defendant would make returns of sales made and account for purchase prices received, whereupon plaintiff would issue receipts to defendant for monies received and produce reconciliations for goods sold and unsold.

Defendant would not be liable to pay for unsold goods unless he failed to return them. However, he would be liable for all sales in the event of non-remittal of receipts for sales.

It is also not in dispute that some of the third parties would and did make direct payments to plaintiff in which case receipts were supposed to be issued to defendant, and not to the third parties.

The dispute

Between November 2015 and January 2016, defendant was supplied with goods which he sold to third parties and for which plaintiff alleges it did not receive payment, either from defendant or the third parties. A reconciliation was carried out in February 2016 which revealed that defendant had not remitted to plaintiff the sum of $15 761.91. Consequently, on

17 February 2016, defendant signed an acknowledgment of debt thereof undertaking to pay the debt by 31 December 2016. Defendant failed to make payment as undertaken.

Defendant disputes that he owes any money to the plaintiff at all as he remitted all payments due to plaintiff. Further, he contends that the acknowledgement of debt is invalid as it was not signed freely and voluntarily as he was forced to sign it after having been threatened with being reported to the police and/or termination of his agency agreement. In addition, he contends that the acknowledgment of debt is not binding as it was conditional upon his surrendering title deeds to his house as security, which condition he refused to accede to.

The issues

At the hearing of this matter, the parties agreed that the issues which the court was called upon to decide were the following:

Whether the acknowledgment of debt is valid and binding; and

If so, whether the defendant is liable for the amount claimed.

Plaintiff’s evidence

The plaintiff called only one witness, Desmond Nyamutswa, its accountant. He led evidence from which the agreed facts are gleaned. In particular, he stated that after stock was placed into the individual warehouse, on return of a sales agent, a stock take would be done to reconcile stock given and stock returned, as well as to account for sales made on credit and payments made to the agent.

With respect to defendant, the witness testified that the reconciliation revealed a shortfall of $15 761.91. The defendant was therefore called into the plaintiff’s offices to explain. He did not dispute the shortfall, but in fact agreed to it and freely and voluntarily signed the acknowledgement of debt entered into the record by consent as Exh 1 at p. 1-3 of the plaintiff’s bundle of discovered documents. The amount in the summons is extracted from the acknowledgement of debt.

In turn, the amount in the acknowledgment of debt was extracted from the reconciliation statement, Exh 3, at p. 49-50 of the plaintiff’s bundle, also entered into the record by consent. The amount in the reconciliation statement was compiled from the defendant’s total van sales as shown in Exh 2, which was also admitted into the record by consent, at p 4-22 of plaintiff’s bundle, as against the receipts for payments made to the plaintiff by the defendant and or some of his customers. Defendant did not dispute Exh 4, at p 23-34 and p 36 of plaintiff’s bundle, which the witness stated comprises of the receipts issued to defendant, for payments made by him as well as direct payments made to plaintiff by his customers.

Finally, the defendant consented to Exh 5, at p. 52-54 of plaintiff’s bundle, which is a schedule of sales matched to receipts in defendant’s account with plaintiff. The witness concluded that these documents clearly show that sales were made for which some of the proceeds were not remitted to plaintiff.

The witness testified that he was present, in the managing director’s office, when the defendant was called in to plaintiff’s offices and when he signed the acknowledgment of debt. He explained that this was because the managing director wanted to verify the correctness of all issues before the defendant was asked to sign the acknowledgment. The witness was unaware of any threats to report the defendant to the police or the withholding of further stock or paper work to enable defendant to carry out his own reconciliations should he refuse to sign the acknowledgment of debt. defendant never cross-examined the witness as to whether the defendant ever met the managing director in the absence of other staff of the plaintiff including the witness himself.

The witness further testified that defendant did not dispute the shortfall or protest at being asked to acknowledge the debt, nor did he at any time thereafter seek to challenge it. However, the witness confirmed that subsequent to the signature of the acknowledgment of debt, upon being asked to provide security, defendant refused to provide title deeds to his house. The witness testified that defendant’s protestation only occurred on his return after defendant had initially offered the title deeds as security and left plaintiff’s premises promising to go and fetch the title deeds. Further, the witness confirmed that while the acknowledgment of debt required the provision of security, it did not require that such security be in the form of title deeds. In any event, defendant was never asked to provide title deeds as security, but that he offered it himself. Finally, the witness testified that a criminal case was only instituted against defendant after he refused to provide security and to honour the acknowledgment of debt claiming that he did not owe any outstanding amount to plaintiff.

This witness gave his evidence well, clearly, concisely and logically. His demeanour exuded honesty and truthfulness. His testimony was consistent. He made admissions where he lacked knowledge or had forgotten, and made concessions where it was necessary. He was not shaken under cross examination and struck me as a totally credible witness.

While he did not personally conduct the stock take, he lucidly explained the process and confirmed that no audit was done for defendant’s specific account. He confirmed that monies paid directly to plaintiff by third parties were accounted for in the reconciliation contrary to defendant’s assertion. This is borne out, for instance, by receipt numbers 8048, 8056, 8068, 8074, 8076, 8089, 8101 and 8112, which defendant claims were unaccounted for but which are captured in Exhibit 2.

Defendant’s case

The defendant gave evidence on his own behalf. He confirmed the common cause facts. However, in his evidence in chief, he claimed that he signed the acknowledgment of debt under duress in order to protect his job. He stated that he signed the acknowledgment because he was promised that he could continue to work if he did. He informed the court that he signed in the presence of seven of plaintiff’s employees who included the managing director, the plaintiff’s witness, its sales and marketing person and a lady.

Further, the defendant informed the court that he was threatened with a report to the police after (my emphasis) he signed. He then changed his statement to say that he was told to sign the acknowledgment of debt or face police arrest. He also stated that he signed before the reconciliation was done. However he subsequently confirmed that he in fact did the reconciliation, Exh 3, together with plaintiff’s credit controller. Finally, he claimed that he never received receipts for payments made directly to plaintiff by his customers.

Under cross examination, he confirmed that he did not report the plaintiff for extortion or attempt to impugn the acknowledgment for having signed it involuntarily. He also confirmed that he understands that he is bound by his signature.

He proffered no reasonable explanation as to why he signed an acknowledgment of debt for $15 761.91, when he had already paid plaintiff $16 777, much more than he allegedly owed.

He went on to disown his evidence in chief, claiming that instead of 7 people, there were only two people in the managing director’s office, the managing director and himself, when he was threatened and made to sign the acknowledgment. He therefore alleged that no one could confirm that he was coerced.

On redirect, the defendant maintained the position that no witnesses were there when he was coerced to sign the acknowledgment of debt and that he never received any receipts for payments made by his customers. For the first time, he asserted that Exhibit 3 was not the final reconciliation. On questioning by the court he could not satisfactorily explain his statement that receipts were not captured on his account (Exhibit 2) when they are clearly there. Nor was he able to clearly state whether he sought confirmation from his clients for proof of payment he alleges they made to plaintiff and were not captured.

Save where his evidence converged with plaintiff’s, I found the defendant to be an untruthful and dishonest witness as he contradicted himself and changed his testimony to tailor it to suit the outcome he wanted.

Analysis

There is no dispute that the parties had an agency agreement where defendant received products from plaintiff to sell and subsequently acquit the sales and remit the proceeds to plaintiff. There is also no dispute that defendant signed an acknowledgment of debt for $15 761.91 as established by the reconciliation entered into the record as Exh 3. This reconciliation was carried out on 15 February 2017 and subsequently signed on 17 February 2016. It seems to me this is in line with both parties’ statements: the plaintiff alleging that the managing director decided to deal with the matter to make sure of the correctness of all issues; and the defendant alleging that he sat with the credit controller to work on this reconciliation.

Plaintiff’s witness is absolutely correct. Paragraph 2 of the acknowledgment of debt required defendant to provide security for the debt. However, it was never a requirement that the security should be title deeds to immovable property. The law is clear that it is only movable assets that can be pledged as security. For immovable property one has to register a bond. The acknowledgment of debt does not refer to registration of bonds. Further, paragraph 2 is clearly not worded in suspensive terms. The validity of the acknowledgement of debt was therefore never conditional upon the provision of title deeds as alleged by defendant.

The defendant wants the court to believe that he signed the acknowledgment of debt involuntarily as a result of threats he faced. The law is clear: a contract obtained by fear induced by threats of force cannot stand. Such threats must be imminent, must be directed at the party or his family, thus subjecting him to intimidation, improper pressure or infliction of physical force. The fear must be reasonable, caused by the threat of some considerable harm or evil, the harm must be imminent or inevitable, unlawful or contra bonos mores and must have caused damage. The onus is on the party alleging duress to prove it. Further such party must show that he took steps to avoid the forced contract.  The standard for raising duress to avoid the consequences of contractual obligations is therefore very high. As a result, the Supreme Court has stated that:

“Contracts that are void ab initio by reason of duress are very rare as the duress required to render an agreement void ab initio has to be extremely severe. It has to be so severe as to negate any element of voluntariness such as where a stronger person physically overcomes a weaker person and puts a pen in his hand and forces his hand to write his signature on a written contract.”

In the instant case, the defendant has the onus to convince the court that the pressure applied upon him to coerce him to sign the acknowledgment of debt was so extreme or so severe as to negate any voluntariness on his part. Further, such pressure was unlawful or contra bonos mores.  Ultimately, he took steps to try and extricate himself from such contract. This he failed to do.

Firstly a report to the police on allegations of fraud, which would have been the competent complaint, if defendant converted to his own use, monies properly due to plaintiff, is not unlawful or contra bonos mores. Secondly, he alleges that he signed the acknowledgment for fear of losing his contract. Clearly he was motivated by financial gain rather than any severe or evil threat of harm to himself and his family. And considering that he did lose the contract the following month and the report to the police was made anyway, it is not understandable that he has taken no steps to avoid the contract to date. He had a viable course of action to institute proceedings to declare the acknowledgment of debt invalid but chose not to do so. I therefore subscribe to the sentiments of Dube J when she asserted that:

“It has become highly fashionable to try to wriggle out of debt re-payments by playing victim and challenging acknowledgments of debt on the grounds of duress and undue influence. Courts will not sanction such energy unless a person who has penned his signature to an acknowledgment of debt can convince the court that that he was forced or threatened to sign the document.”

In view of the contradiction in his testimony, I therefore totally discount, as a fabrication, defendant’s allegation that he was threatened by the managing director in the absence of any other witness to sign the acknowledgment of debt on pain of losing his job, or being reported to the police.

The acknowledgment of debt having been signed two days after the defendant had worked out the reconciliation with plaintiff’s credit controller, it seems to me that the defendant lied about the proper sequence of events: that he signed the acknowledgment before the reconciliation was done. This vindicates the plaintiff that after the reconciliation was done and the managing director verified the correctness of the debt, the acknowledgment of debt was then signed. This would tally with the defendant’s own evidence in chief that 7 of the plaintiff’s staff were in the meeting on the issue: the managing director to ensure everything was above board, the plaintiff’s witness (the accountant) presumably to ensure that the calculations were correct, the marketing person, likely to ensure the verification of products given to defendant and those returned and/or sold etc.

That he sought to recant his evidence in cross-examination and questioning by the court to allege that he was threatened by the managing director in the absence of any witness further solidifies the court’s impression that defendant is an untruthful person. In the circumstances I take note of the principle that once it is shown that he is not credible, and in fact peddles untruths, the court should reject everything a witness says as it is not safe to accept his testimony.

The fact that defendant himself sat down with the credit controller to do the reconciliation further supports the assumption that the defendant agreed to this reconciliation and that is why he signed the acknowledgment of debt which merely carried forward the figure agreed in the reconciliation. Assertions, on re-direct, that such reconciliation was not final are a mere after thought which does not deserve further attention, else it would have been raised in the plea or the evidence in chief nor even under cross-examination.

Neither is it true that defendant did not receive receipts from plaintiff for payments made directly by his customers. His own discovery documents contain receipts in his name carrying aggregated amounts of money received from himself and his customers. Nor do I find it true that certain receipts were not captured on his account as they are clearly there: for instance, receipt numbers 8048, 8056, 8068, 8074, 8076, 8089, 8101 and 8112, which defendant claims were unaccounted for are captured in Exh 2.

Further, I do not find any credence in defendant’s argument that a payment he made between 6 January 2016 and 5 February 2016 was not taken into account. This is because, firstly, the reconciliation of amounts paid was done with the participation of defendant, by his own testimony, on 15 February 2016, long after the alleged payment had been done. If it had not been captured, then he would have drawn it to the attention of the credit controller he worked with in arriving at the reconciliation in Exh 3 almost two weeks after the alleged payment. Secondly, he would not have appended his signature to the reconciliation if it had omitted any payments he made. Thirdly, I have already noted and pointed out that some of the receipts which comprise part of this payment are indeed captured in Exh 2, which is a statement of defendant’s account. Fourthly, defendant produced no proof of such payment except for receipts at pages 1-14 of his bundle of discovered documents, which receipts are already captured in plaintiffs Exh 4. Finally, if defendant had paid $16 777 by 5 February 2016 to clear the indebtedness to plaintiff, why did he sign the acknowledgment of debt at all? In fact, the plausible explanation on the papers is that the payment of $16 777, if any, in fact reduced defendant’s indebtedness to plaintiff to the amount established in the reconciliation and which is the subject of the claim in the summons.

In the premises, I find that the acknowledgment of debt was freely and voluntarily entered into by the defendant. Further, it is not subject to any suspensive conditions and is thus valid. In the event, defendant is indebted to the plaintiff as claimed in the summons.

Disposition

Accordingly, defendant be and is hereby ordered to pay to the plaintiff the sum of $15 761.91 together with interest thereon at the prescribed rate calculated from 1 December 2016 to date of full and final payment and costs of suit.

Messrs Scanlen & Holderness, plaintiff’s legal practitioners

Chakanyuka & Associates Attorneys, Defendant’s legal practitioners