Mary Murdoch Howson v John Alexander Cameron

### Preamble
Judgment No. SC 69/20
1
Civil Appeal No. SC 272/18
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DISTRIBUTABLE	(61)

MARY     MURDOCH     HOWSON

v

JOHN     ALEXANDER     CAMERON

SUPREME COURT OF ZIMBABWE

MAKARAU JA, MAVANGIRA JA & UCHENA JA

HARARE, NOVEMBER 4, 2019

F. Girach, for the appellant

J. Wood, for the respondent

UCHENA JA:	This is an appeal against the whole judgment of the High Court, dismissing the appellant’s claim against the respondent on the basis that it had prescribed and that the alleged acknowledgment of debt by the respondent did not interrupt prescription. After hearing submissions from both parties we allowed the appeal and made the following order:

“IT IS ORDERED THAT:

The appeal be and is hereby allowed with costs.

The judgment of the court a quo be and is hereby set aside.

The matter is remitted to the court a quo for continuation of the trial on the merits.

The full reasons for this order will follow.”

The following are the reasons for the order we granted.

Background Facts;

The appellant and respondent are siblings. They are the only children of their parents who owned Hamish Cameron (Pvt) Ltd. On the death of their father they inherited shares in the Company. On 30 June 2008, the appellant sold her shares in Hamish Cameron to the respondent for US$240 000. The appellant transferred her shares to the respondent in accordance with the agreement before the respondent made any payment to her.  By 25 November 2010, the respondent had paid US$40 000 after which he made no further payments despite reminders and demands from the appellant. He failed to pay the outstanding balance of US$200 000. The appellant issued summons in the High Court against the respondent for payment of the sum of US$200 000 being the balance due and payable to her.

In his plea to the appellant’s claim, the respondent pleaded that the claim had prescribed and that the agreement was illegal and unenforceable given that it created an obligation on a Zimbabwean resident to make payment in foreign currency to another Zimbabwean resident in Zimbabwe, without exchange control authority. The respondent further argued that the agreement was varied at the instigation of their mother.

The relevant terms of the agreement are as follows:

“The appellant agreed to sell her interest in Harmish Cameron (Private) Limited to the respondent and the respondent accepted the offer.

The purchase consideration included payment by the respondent of an amount equivalent to US$240 000.00 in 5 equal instalments within 5 years.

The agreement constituted the whole agreement between the parties.

Any variation would be of no force and effect unless reduced into writing and signed by both parties.”

Proceedings in the Court a quo.

It is common cause that the parties entered into a valid agreement after which the respondent paid the sum of US$40 000 instead of US$240 000. The respondent’s evidence in the court a quo was to the effect that the agreement was varied by the parties and the appellant’s claim had prescribed by the time summons were issued. He further contended that the effect of the variation was that the US$40 000 he paid was the full and final settlement of all monies due to the appellant.

The appellant disputed the respondent’s claim that she signed a variation agreement. Her assertion was confirmed by the respondent’s production of an unsigned variation agreement. On the alleged prescription of her claim, the appellant told the court a quo that prescription was interrupted by the respondent’s acknowledgement of debt expressly and by conduct. She produced minutes of a meeting held on 19 March 2015 during which the respondent, after considerable prevarication expressly and by conduct acknowledged his indebtedness to her. The minutes of that meeting which were produced before the court a quo, establish, among other factors, that the respondent offered to pay the debt at US$1000 per month which offer the appellant did not accept. They also establish that he offered to pay through assets and that he would pay any reasonable amount to be agreed upon, by their lawyers. A reading of pages 115 to 120 of the minutes establishes that he eventually agreed that he was indebted to the appellant and apologised for what he said was a misunderstanding and that the appellant should have nudged him earlier on about the indebtedness. On page 120 he ended up acknowledging his signature on the agreement.

In determining the dispute, the court a quo found that the parties had entered into an agreement of sale. It further found that the variation addendum was not signed by both parties and was therefore invalid. The court a quo found that the summons was served upon the respondent when the prescription period had run out and the claim had thus prescribed. It held that the words “you will get your money if you are owed” and “I will make you an offer if we can pay you $1 000 a month” by the respondent at the meeting held on 19 March 2015 were not an acknowledgment of debt.

The court a quo held that there was no acknowledgment of debt as the offer of $1000 per month was conditional upon appellant accepting the offer. It further held that the appellant failed to discharge the onus upon her of proving that the respondent acknowledged the debt on 19 March 2015 and that there was no interruption of prescription. It, therefore, dismissed the appellant’s claim.

Aggrieved by the decision of the court a quo, the appellant appealed to this Court on the following grounds:

“1.	The learned judge in the court a quo erred in finding that Appellant had not discharged the onus of proving that prescription had been interrupted by an acknowledgement of liability.

2.	The learned judge in the court a quo erred in finding that the acknowledgement of liability on the part of Respondent was conditional upon Appellant accepting the offer made and failed to place any weight on the fact that Respondent had stated that the acknowledgement was a sarcastic remark.

3.	The learned judge in the court a quo erred and grossly misdirected herself in relying solely on a selected part of the transcript of the meeting held on 19 March 2015 and grossly misdirected herself in failing to consider the evidence as a whole.

4.	The learned judge in the court a quo erred grossly and misdirected herself in failing to place any weight on the other evidence that showed that respondent had acknowledged the debt.

5.	The learned judge in the court a quo erred grossly and misdirected herself in not rejecting the evidence of Respondent and his witness.

6.	The learned judge in the court a quo erred grossly and misdirected herself, in any event, in not finding that the version of events as proffered by Respondent were improbable.”

The appeal raises one issue for determination by this court:

Whether or not the court a quo erred in finding that the utterances and conduct of the respondent at the meeting of 19 March 2015 did not constitute an express or tacit acknowledgment of debt and thus could not interrupt prescription?

Mr Girach for the appellant, submitted that the court a quo erred in relying on selected parts of the record and ignoring other relevant parts of it. He argued that a perusal of the record reveals that the respondent did not make the offer to pay $1000 per month as a conditional offer and the court a quo erred in that regard as its finding was not supported by evidence. Mr Girach argued further that the court a quo overlooked some parts of the record which were indicative of an acknowledgment of debt by the respondent and these included the respondent’s offer to pay in assets and an offer to pay any reasonable amount which would have been agreed to by the legal practitioners handling the matter. He contended that the averments by the respondent, taken cumulatively, were express and tacit acknowledgments of debt which had the effect of interrupting prescription. Mr Girach prayed for a declaratur on the issue of prescription and that the matter be remitted to the court a quo for a determination on the merits.

Ms Wood, for the respondent, submitted that the offer made by the respondent to pay $1 000 per month was conditional. She contended that the use of “if” in the respondent’s statements is evidence that the offer was conditional. Ms Wood argued that the respondent’s statement was not an acknowledgment of debt and that it was not an offer to pay. She asserted that the respondent was not aware that he owed the appellant money and subsequently denied liability several times. She further argued that even if this court was to find that there was an acknowledgment of debt, the remaining 4 instalments of the agreement prescribed in 2014 and as such the remaining balance was $48 000. Ms Wood submitted that the court a quo took all this into account and correctly made its finding.

The issue arising in this appeal can be determined by the interpretation of ss 2, 15 and 18 of the Prescription Act [Chapter 8:11] (“The Act”). Section 2 provides as follows:

“2 In this Act—

“debt”, without limiting the meaning of the term, includes anything which may be sued for or claimed by reason of an obligation arising from statute, contract, delict or otherwise.” (my emphasis)

In casu, the appellant’s claim is a debt arising from contract. The record reveals that the agreement was signed on 30 June 2008, but was effective from 1 January 2008. The debt was to be paid in equal instalments over a period of five years.  In cases involving instalments, prescription normally starts to run on the date the last instalment is due as held in Makusha v Chihoho & Ors SC 28/08. That means the last instalment was due on 1 January 2013. Section 15 of the Act provides that the debt in question prescribes after three years and three years down the line would have lapsed on 31 December 2015.

The main ground of appeal is on the court a quo’s failure to consider all evidence which had been placed before it on whether or not prescription had been interrupted?

It must be noted from the onset that the respondent constantly changed his positions in the court a quo, which conduct ought to have been held against him. A perusal of the record reveals that he changed positions several times in relation to the debt in question. His initial response was that he did not have any knowledge of the debt. On the other hand, he agreed that he owed the appellant money but made a ridiculous offer of $1 000 per month which he claimed was sarcastic. On a different note, the respondent conceded owing the debt and stated that “I said no we will wait until lawyers come up with a reasonable figure.” This means that he was willing to pay any reasonable amount agreed to by the lawyers. The respondent was approbating and reprobating. The position of the law on such conduct was succinctly captured in Alliance Insurance v Imperial Plastics (Pvt) Ltd & Anor SC 30/17 which quoted with approval the remarks made in S v Marutsi 1990 (2) ZLR 370 at p 374B where the court said:

“It is trite that a litigant cannot be allowed to approbate and reprobate a step taken in the proceedings. He can only do one or the other, not both.” (my emphasis) See also Archipelago (Pvt) Ltd v Local Authorities Pension Fund & Anor SC 30/13.

This ought to have been taken against the respondent as it proved that he was an unreliable witness.

Mr Girach for the appellant submitted that the respondent made express and tacit acknowledgments of debt which interrupted prescription in terms of the law. Section 18 of the Act provides as follows:

“18 (1) 	The running of prescription shall be interrupted by an express or tacit acknowledgment of liability by the debtor.

(2) 	If the running of prescription is interrupted in terms of subsection (1), prescription shall commence to run afresh—

(a) 	from the date on which the interruption takes place; or

(b) 	if at the time of the interruption or at any time thereafter the parties postpone the due date of the debt, from the date upon which the debt again becomes due.” (my emphasis)

Section 18 provides for the interruption of prescription before the prescription period runs its full course on the expiry of a period of three years as provided by s 15 of the Act. In this case, the appellant alleged that prescription was interrupted on 19 March 2015, when the prescription period would have run out on 31 December 2015. This means if prescription was interrupted on 19 March 2015 it commenced to run afresh, from that day for a further period of three years.

An express acknowledgement of debt is one in which a debtor expressly admits that he owes the creditor the amount claimed.

A tacit acknowledgement of liability occurs when a debtor without expressly saying words of acknowledgement acts or conducts himself in a manner indicative of his acknowledgement of debt. The conduct should be such as cannot be explained away as indicative of anything other than an acknowledgment of debt. As acknowledgement of debt is inferred from the debtor’s conduct the conduct should be such as would not justify the drawing of any other inference other than an acknowledgement of debt.

In First Mutual Bank of Zimbabwe v Fortress Industrial Investments (Pvt) Ltd & Anor 2000 (1) ZLR 211 (S) this Court had the opportunity to comment on the interpretation of s 18 (1) of the Act. It held that:

“The use by the Legislature of the word “tacit” in s 18(1) is important. It signifies that the debtor’s words and conduct should be taken into account…However, conduct alleged to constitute a tacit acknowledgement of liability must be seen in proper context.  See Benson & Anor v Walters & Ors 1984 (1) SA 73 (A) at 87C-88A.” (my emphasis)

In this matter sight should not be lost of the general principles applicable to the interruption of prescription. It should not be overlooked that in the determination of whether an existing liability was acknowledged, an objective assessment must be made of what the respondent’s conduct conveyed with respect to whether or not it was subjectively intended to acknowledge liability. See Agnew v Union and South West Africa Insurance Co Ltd 1977 (1) SA 617 (A) at 623 A-C.  That inquiry will always be a factual one as will more fully appear in the foregoing.  See Petzer v Radford (Pty) Ltd 1953 (4) SA 314 (N) at 318E.

The respondent’s attempt to vary the sale agreement without the consent of the appellant and his subsequent reliance on the alleged variation at the meeting on 19 March 2015 is a tacit acknowledgement of the debt. By instructing his lawyers to come up with a reasonable figure which he would agree to pay he further tacitly acknowledged the debt. One cannot vary a non- existent debt. One can also not instruct his lawyers to negotiate a compromise figure for a non- existent debt.

It is settled law in matters involving prescription that the onus is on the appellant to prove the existence of an acknowledgment of debt as was held in Bower Cardona Incorporated v Cash Converters Southern Africa (Pty) Ltd (2002/2010) [2014] ZAGPJHC 266 (17 October 2014). This position was approved by this Court in Nan Brooker v Mudhanda & Anor SC 5/18 where this Court said:

“In a plea of prescription, the onus is on the defendant to show that the claim is prescribed but if in reply to the plea the plaintiff alleges that prescription was interrupted or waived, the onus would be on the plaintiff to show that it was interrupted or waived.” (my emphasis)

In casu, I am of the view that the appellant successfully discharged this onus. She told the court a quo that the respondent made offers to settle the debt in assets and monetary instalments which instalments the respondent claimed to have been made in jest. An offer to pay cannot be divorced from an acknowledgment of liability. If the respondent did not owe the appellant any money, he surely would not have made offers to pay. He would not have sought to vary an agreement with a debt he was not aware of. The appellant also established that the respondent offered to settle the debt if the lawyers came up with a reasonable figure. His instructing his Lawyers to negotiate for a reasonable figure is a tacit acknowledgement of the debt. One cannot seek a compromise of a debt which does not exist.

In light of the above and taking into consideration the cumulative effect of the evidence placed before the court a quo, I am of the view that the court a quo erred in overlooking evidence which was determinant of the case. The respondent’s conduct as explained above was a tacit acknowledgment of debt which interrupted prescription in terms of the law. A careful reading of the minutes of the meeting of 19 March 2015, establishes that the respondent eventually expressly acknowledged his indebtedness to the appellant and apologized.

The court a quo, therefore, determined the issue of prescription without taking into consideration the full text of the discussions at the 19 March meeting. It did not take into consideration the respondent’s admission that they had resolved the issue of company shares after which he offered to equally share their mother’s 1 per cent share in the company which the appellant turned down and the appellant insisted that she take the 0.5 per cent share. This clearly demonstrates that the court a quo misdirected itself and failed to properly determine the issue of prescription.

It is for these reasons that we allowed the appeal after hearing submissions by both parties.

MAKARAU JA      		I agree

MAVANGIRA JA      	I agree

Atherstone & cook, appellant’s legal practitioners

Venturas & Samukange, respondent’s legal practitioners.