Savanna Tobacco (Private) Limited v Joel Chasara

### Preamble
1
HH 248-2012
HC 8349/11
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SAVANNA TOBACCO (PRIVATE)

LIMITED

versus

JOEL CHASARA

HIGH COURT OF ZIMBABWE

KUDYA J

HARARE, 13 June 2012

Opposed Application

Ms E Chimombe, for the applicant

A Makoni, for the respondent

KUDYA J:  The applicant seeks payment of US$ 121 115-00 together with interest at the rate of 20% per annum from 1 July 2011 to the date of full payment, costs on the scale of legal practitioner and client and collection commission to the extent permitted by the Law Society of Zimbabwe by-laws. Its cause of action is based on the acknowledgement of debt and payment arrangement signed by the defendant and witnessed by Richard Kavaza, the applicant’s credit controller on 1 July 2011. The application was filed on 26 August 2011.

In the acknowledgement of debt, the respondent, amongst other terms, agreed to liquidate the debt at the rate of US$1 000-00 per week starting from 1 August 2011 until the debt was paid in full and that failure to pay on the due date attracted the interest rate of 20% on the balance. He also agreed to pay costs on the higher scale and collection commission.

The respondent opposed the application on 7 September 2011. He averred that he signed the acknowledgment of debt under duress. He alleged that the duress stemmed from threats issued by the applicant’s employees to make a report of fraud against him and undue influence to reinstate him as a cigarette distributor with a credit facility once he acknowledged the debt. He sought to confirm his allegations through three letters filed of record. The first letter was written by the respondent on 16 June 2011. In that letter, captioned Payment Plan of $121 115-00, he proposed a payment plan to liquidate the debt. The plan was predicated on his reinstatement as a distributor and ability to sell 130 cases of tobacco a week. He also proposed the surrender of his title deeds to his Glen Norah C Harare property. The second letter is undated but was delivered to the applicant on 18 July 2011. He referred to the acknowledgement of debt and sought appraisal on agreed arrangements. The third was from Richard Kavaza, the credit controller of the applicant dated 18 July 2011, captioned: Intention to pursue criminal charges, a response to the second letter. Apparently the parties had met on 13 July and the applicant had indicated its intention to press fraud charges against the respondent who had asked for time to the next day to seek legal advice. The letter invited him to visit the applicant’s offices on 22 July 2011 to receive clarity as the respondent was unreachable on his mobile.

The second basis for opposing the application was that the debt was incurred by Zimidzi (Pvt) Ltd (Zimidzi) which at one time traded in the applicant’s name “for tax remittance purposes” while the purchases were invoiced in the respondent’s name. Thirdly, he raised the defence of errori calculi due to misposting of invoices to the account at times without the backing of source documents and other debtors being grouped under Zimidzi debt, duplication and overstating of invoices, inclusion of stocks destroyed by fire at Dhewa Mini Market in Kariba and of theft of stock from Good Shepherd Store in Chinhoyi for which the applicant recovered the loss from its insurers and other payments made to the applicant that were not acknowledged.

He attached annexure “d” (p 17 -38) to his opposing affidavit that he claimed was the applicant’s ledger which was replete with mispostings, duplications, overstatements and postings without source documents. He did not indicate the amount of prejudice to him. On Annexure E (p 39-46), the list of debtors owing Zimidzi US$69 147-90 he indicated but did not specify what the sum of US$24 117-85 represented. His complaint being that the applicant was chasing these debtors directly yet the debts were part of the US$121 115-00 it claims from him.

The respondent further averred that as on the date the application was filed, it had not defaulted in making payments under the acknowledgement of debt, a condition precedent to trigger the running of interest. He filed proof that he paid US$3 500-00 on 26 July 2011, US$ 1000-00 each on 2 and 11 August 2011. He prayed for the dismissal of the claim with costs on the scale of legal practitioner and client.

In its answering affidavit filed on 23 September 2011, the applicant explained the basis of the threat to lay charges for fraud was based on another transaction in which the respondent misappropriated US$21 000-00 that he received on behalf of the applicant. Apparently, he was supposed to liquidate this payment by paying US$4 000-00 per month with effect from 1 August 2011.

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The first issue for determination is whether there are disputes of fact in this matter as contended by the respondent. Mr Makoni, for the respondent, correctly contended that paragraph 5 of the applicant’s founding affidavit incorrectly averred that the applicant had not made any payment in liquidation of the debt at the time the application was filed. Clearly, the applicant overlooked the payments made on 2 and 11 August 2011 of US$1 000-00 respectively. The suggestion by Mr Makoni that there might be other payments that were made that remain unacknowledged was not supported by any deposit slips. It seems to me that the effect of the two payments would be to reduce the applicant’s claim from US$121 115-00 to US$119 115-00 and alter the date on which interest will commence to run from 1 July to 1 August 2011 if these had been the only payments made by the respondent. There is no real dispute of fact between the parties on the outstanding debt after appropriating the two payments in question. Mr Makoni also contended that the second dispute of fact incapable of resolution on the papers concerned the payment by the respondent of US$3 500-00 on 26 July 2011. The respondent contended that it was a prepayment under the acknowledgment of debt. The applicant averred that it appropriated it to the theft by conversion account as it was paid before the due date stipulated in the acknowledgment of debt of 1 August 2011. As I am able to determine the issue of the payment of 26 July 2011 on the papers, I hold that there is no dispute of fact on this issue.

The last purported dispute of fact arose from what the respondent averred was an error in the calculation of the debt in the acknowledgment of debt. The respondent relied on the ledger account that it attached to its opposing affidavit as annexure “d”. The accuracy of annexure “d” was put in issue by the applicant who disputed the averments in regards to mispostings on the Zimidzi (Pvt) Ltd account. Annexure “d” fails to establish the wrong amounts. Mr Makoni abandoned the annexure and conceded that as it related to Zimidzi, it could not be raised as a defence by the respondent. It seems to me that the respondent could properly raise all defences that could have been raised by Zimidzi (Private) Limited if the cause of the debt was Zimidzi (Private) Limited’s indebtedness to the applicant. See Venture Capital Company Zimbabwe Ltd v Chirovero Investment (Pvt) Ltd 2000 (2) ZLR 30 (H) at 34D-E where GILLESPIE J stated that:

“It is consonant with the previous pleas, and with the text of the title, that the renunciation of the plea in respect of an admitted amount outstanding merely affects the question of onus such that a debtor who has renounced may no longer himself insist upon a re-accounting but, if he wishes to challenge the calculation of the amount due, must undertake the burden of proving the accounts to be wrong.

In no circumstances can the renunciation of the plea be construed as an acceptance without question of unilateral calculations by the creditor of the amount outstanding or a waiver of any right to insist upon proof by the creditor of any such unilateral calculation.”

In the present matter, the respondent did not renounce any of the exceptions that may be raised against an acknowledgment of debt. Had it established in annexure “d” the possibility of an error in the calculation of the acknowledged indebtedness, I would have upheld its contention of the existence of a dispute of fact on this ground. Annexure “d” fails to establish the possibility of error and Mr Makoni abandoned it in his submissions.

I am satisfied that there are no disputes of fact that cannot be determined on the papers.

The second issue for determination is whether the acknowledgment was signed under duress.

The letter of 16 June 2011 does not assist the respondent to discharge the onus on him to show that he signed the acknowledgment under duress. All it demonstrates, especially from his use of the second person, is that he was acknowledging the debt in the claimed amount and was willing together with  Zimidzi to liquidate it on the conditions that he spelt out.  The letter does not prove that he acted under duress. The threat to refer the case to police fraud squad came on 13 July, after he had signed the acknowledgment and was confirmed in the letter of 18 July. It is within the legal rights of the applicant to report the applicant to the police for investigation if it held reasonable suspicion that he had committed fraud. In my view such a report based on reasonable suspicion would not amount to duress even if the respondent signed the acknowledgment to avoid an investigation.  All it does is that it casts a shadow on the conduct of the respondent in the debt that arose. It amounts to an implicit admission on the part of the respondent that he contributed to Zimidzi’s failure to honour its indebtedness. The letters however do not corroborate the respondent’s version that he was unduly influenced to sign the acknowledgement of debt. The averment he makes that they do actually cast him in bad light. He seeks to penalize the applicant for the exercise of his own free will. See Muzengi v Standard Chartered Bank & Anor 2000 (2) ZLR 137 (H) at 141D.  He failed in his papers to set out the material circumstances from which I could find that he signed the acknowledgment of debt and payment plan under undue influence. He simply makes a bald averment that is not substantiated by detailed facts of how the undue influence was asserted on him.

I therefore hold that the acknowledgment of debt was procured from the respondent of his own volition without any undue influence.

The third issue for determination is whether the defence of errori calculi is available to the respondent. It seems to me that such a defence can properly be raised by the respondent notwithstanding that in his letters of 16 June and 18 July 2011 he did not refer to it. That he was aware of the defence before signing the acknowledgment or before he wrote those letters does not assist the applicant as long as the respondent is able to show that the errors are real. He cannot be asked to pay an incorrect amount simply because at the time he signed the acknowledgment he believed that the figure was correct. There is no strict liability attaching to an acknowledgment of debt. I have already found that annexure “d” does not establish the possibility of an error in calculation. In any event all reliance on the annexure “d” was abandoned by his counsel.

The last defence raised by the respondent was that he was not in breach of the acknowledgment of debt on 26 August 2011 when the applicant filed the present application. He contended that this was because he had made a prepayment of US$3 500-00 on 26 July 2011 towards the liquidation of the acknowledged debt. Ms Chimombe, for the applicant, contended that the prepayment was for the theft by conversion account to which it was appropriated by the applicant. She based her contention on the ground that the first payment under the acknowledgement of debt was only due on 1 August 2011. I found her reasoning disingenuous in view of the averment made in paragraph 5 of the applicant’s answering affidavit.  The relevant part reads:

Ad paragraph 6

“Further, the respondent also is liable to the applicant in respect of a separate account relating to the amount which he received on behalf of the applicant which he converted to his own use. That was the amount which was subject to the threats of criminal prosecution. The total amount converted by the respondent to his own use was the sum of US$21 000-00. … The agreement in respect of the sum relating to the theft by conversion was reached at a meeting which was attended by the respondent, his brother Walter Chasara, George Saruchera an accountant with the applicant and myself. The amount of US$24 000-00 ought to have been paid off within six months with effect from 1 August 2011. Unfortunately, the respondent is misleading the Honourable Court by pretending that he has been applying all payments to the acknowledgment of debt. With respect, that is not so.”

The averment establishes that the first payment for the theft by conversion was also due on 1 August 2011. The applicant did not explain the rationale for appropriating the pre-payment of US$3 500-00 to the theft by conversion account as opposed to the acknowledgement of debt account. The deposit slip attached to the payment by both parties does not disclose whether the amount was destined to the theft by conversion or acknowledgement of debt account.

I am able to adopt a robust view to determine the account for which the amount was for. I rely for my finding on the averments of the respondent who paid the money. He averred that it was for the acknowledgment of debt account. The applicant has no way of disputing this averment. It does not appear to have been aware of the prepayment and the other two subsequent payments of 2 and 11 August 2011.

I am satisfied that the respondent has demonstrated that by 26 August 2011 when the applicant filed the present application, it had paid a total of US$5 500-00 into the acknowledgement of debt account. The amount due by 1, 8, 15 and 22 August at the rate of US$1 000-00 on each date was US$4 000-00. It was therefore not in breach of the acknowledgment of debt.

The applicant did not have a cause of action to launch the present application against the respondent. It filed the application prematurely without determining from the respondent what the three payments of 26 July, 2 and 11 August 2011 were in respect of.

The respondent was put out of pocket by the premature application. The deponent to the applicant’s founding affidavit made false averments in paragraph 5 of the founding affidavit. It is for these reasons that I will mulct the applicant with costs on the higher scale.

Accordingly, the application is dismissed with costs on the scale of legal practitioner and client.

Magwaliba & Kwirira, applicant’s legal practitioners

Makoni Legal Practice, respondent’s legal practitioners