African Banking Corporation of Zimbabwe Limited t/a Banc ABC versus Townsend Enterprises (Private) Limited and Raymond Harry Townsend and Patricia Luisa Townsend and Matthew Brett Tambling and Ivon James Guy Hudson and Jenniffer Anne Hudson

### Preamble
1
HH 488-18
HC 2069/18
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AFRICAN BANKING CORPORATION OF ZIMBABWE LIMITED

t/a Banc ABC

versus

TOWNSEND ENTERPRISES (PRIVATE) LIMITED

and

RAYMOND HARRY TOWNSEND

and

PATRICIA LUISA TOWNSEND

and

MATTHEW BRETT TAMBLING

and

IVON JAMES GUY HUDSON

and

JENNIFFER ANNE HUDSON

HIGH COURT OF ZIMBABWE

MUZOFA J

HARARE, 19 July & 20 August 2018

Opposed application

A Muchandiona, for the plaintiff

F.P Muringi, for the 1st, 2nd, 3rd respondents

C McGown, for the 4th, 5th, 6th respondents

MUZOFA J: This matter turns on the interpretation of a deed of settlement prepared by the applicant’s legal practitioners in consultation with the respondent’s legal practitioners who eventually signed the deed of settlement on behalf of their clients.

The applicant and the respondents were involved in a matter under case number HC4000/17. At the pre-trial conference, the parties negotiated and reached settlement in respect of the subject matter of the proceedings in that case. The settlement culminated into a deed of settlement in terms of which the respondents were to pay certain specified amounts of money on specified dates. The deed of settlement was signed by the parties’ legal representatives.

In terms of the deed of settlement clause 2.1 thereof the respondents were to pay US$400 000 on or before 31 January 2018. It is common cause that the respondents failed to pay the said amount on the due date. On the basis of the default and in terms of the deed of settlement the applicant filed this application for judgment in the sum of US$600 000 with interest at the rate of 15% per annum from the 1 February 2018 to date at full and final payment, also US$5 750 being costs in case number HC4000/17.

In order to put the parties’ interpretation into perspective it is necessary to reproduce the provisions of the deed of settlement in issue.

“2. It is agreed that the defendants shall liquidate the said debt as follows:-

2.1. By making a payment of US$400 000.00 on or before the 31st January 2018; and

2.2 By paying the balance of US$200 000.00 on or before the 30th June 2018.

3. It is hereby recorded that no interest shall accrue on the debt if the payment referred to in 	Clause 2.1 above is made on the due date and also if the balance of the debt referred to in 	Clause 2.2. above is paid in full on or before the 30th April 2018.

4. in the event of the defendants paying the initial sum of US$400 000.00 on or before the 31st 	January 2018 but failing to pay the balance of US$200 000.00 on or before the 3oth April 	2018, then I interest shall accrue on the balance of the debt at the rate of 12% per annum from 	the 1st May 2018 up to the date of full and final payment.

5. It is further agreed that the defendant shall also pay the plaintiff’s legal costs in the sum of 	US5 750.00 (inclusive of value added tax) by way of three equal instalments between 31 July 	and 30 September 2018.

6. In the event of the defendants failing to make the payments referred to in Clauses 2.1; 2.2 	and 5 above on the due dates, the entire balance then outstanding on the debt shall become 	immediately due and payable together with interest thereon at the rate of 15 % per annum 	from the date of default to the date of full payment.

7. Also in the event of a default in payment by the defendants as envisaged in Clause 6 above 	the plaintiff shall be entitled to make a Chamber application for judgment to be entered 	against the defendants for the entire balance of the debt plus interest at the rate of 15% per 	annum and for an Order declaring all the properties pledged to the plaintiff by the defendants 	as security to be specially executable and together with costs of e chamber application made 	in terms of this clause on the legal practitioner and client scale.”

The parties are in agreement on the relevant principles to be applied in the interpretive exercise. For the plaintiff it was submitted on the authority of Madada v Tanganda Tea Company Ltd 199 (1) ZLR 374 SC at 377 that the golden rule of interpretation should be applied in this case. No absurdity will result. Also on the authority of Fiona Trust and Holding Corporation and Others v Privalov and Others (2007) 4 ALL ER 951 (HL) the court was urged not to isolate one word and interpret it and that clause 6 of the deed of settlement should be interpreted together with the whole document in order to ascertain the true intention of the parties.

From that perspective the applicant’s interpretation of clause 6 of the deed of settlement is that a default in the payment of one instalment on the due date, the whole amount became due and payable. It only makes business sense to apply the golden rule of interpretation.

For the respondents, applying the canons of interpretation, the meaning of clause 6 is that it only after defaulting on all the payments in clauses 2.1, 2.2 and 5 that the applicant would be entitled to make a chamber application for the whole amount plus interest. It was not the intention of the parties for applicant to obtain judgment based on a single default. This application is premature.

According to respondents, the applicant was cushioned in the event of a single default by the high interest rate of 15% per annum to be levied. Further that the use of the words ‘payments’ in clause 6 clearly show that it is not just one default that would entitle the applicant to a judgment.

Reference was also made to the contra proferentem or contra stipulatorem rule which I do not believe is applicable in this case since the  parties are agreed that there  no ambiguity arises from the application of the golden rule in this case.

In their heads of argument the first, second and third respondents urged the court to apply all the canons of interpretation which actually come to one conclusion in support of their interpretation.

It is a settled principle in interpretation that in an interpretive exercise the starting point is that the words should be given their usual or ordinary meaning this is the golden rule of interpretation. Where the ordinary meaning results in an absurdity or brings out an interpretation that neither of the parties contemplated then other approaches can be resorted to. In this case no absurdity was referred to by the either party to justify any other approach.

In interpreting the words in a document, the words should be taken in the context of the whole document; this is but one unitary exercise. Reference can be made to the words preceding or following the ones in issue. In Director of Education (Transvaal) v McCageie and Ors 1918 AD 616 Innes CJ had this to say on this

“...where general words have a wide meaning, their interpretation must be affected by what 	precedes them, general words following or connected with specific words are more restricted 	in their operation than if they stood alone. They are clouted by their context and their meaning 	is cut down so as to comprehend only things of the same kind as those designated by specific 	words – unless there is something to show that a wider sense was intended.”

The context of the deed of settlement is that parties intended to give each other time within which to settle the debt without prejudicing the creditor. Clause 2 therefore set out the amounts payable and the due dates. Clause 3 speaks to interest, it was not payable if the payment in clause 2.1 was made on the due date and payment in clause 2.2 was made by 30 April 2018. Clause 4 provides that where clause 2.2 was not satisfied by 30 April 2018 interest will accrue on the balance at the rate of 12% per annum from 1 May 2018. Of note is that clause 2.2 provides for payment on or before 30 June 2018 but clause 4 refers to payment by 30 April 2018 failure of which interest would accrue.

That clause shows that parties agreed that for a certain period no interest was chargeable but thereafter interest was chargeable. No clause relates to non-payment in terms of clause 2.1. Clause 5 also sets out time lines for the payment of costs.

Clause 6 read in the context of the preceding clauses can only mean on the default of one payment the whole amount was due and payable and the applicant entitled to seek judgment.

Nothing much should be attached the term “payments” in its plural form because it refers to the three instalments. What is key in clause 6 is that failure to pay on the due dates the entire balance became due. The due date for the first payment is different from the rest. So the failure to pay by the 31st of January 2018 being the due date for the first instalment could well trigger the chamber application.

I am not persuaded by the respondent’s submission that, a default for the first and second payments was cushioned by interest on a higher scale of 15%. As stated before there is no clause that speaks to a default in the first payment. It would not make business sense for the applicant to continue expecting payment from defendants with no interest from 1 February 2018 to the 1st of October 2018 the date the respondent interpret the applicant would be entitled to seek judgment in the event of a default on all the three payments. It means the applicant would have to wait eight months before seeking judgment. Applicant is a bank that is in the business of making money and part of that money is derived from interests. From a business perspective applicant would obviously wish to protect its interests in the event of a default as soon as possible. Why would parties agree on time lines if it was their understanding that by the 30th of September full payment should have been made, never mind in what amounts in the interim? It is the court’s considered view that the dates of payment set out in the deed of settlement had a purpose not only in respect of interest but to give the applicant the right to seek judgment in the event of non compliance.

I do not believe the 12% interest in clause 4 has anything to do or has the effect of compromising the applicant’s rights in terms of clause 7.

Adopting the respondents’ interpretation can lead to an inherent absurdity. In the event that respondents default in making the three instalments and the whole amount is subsequently claimed, an issue may arise as to from what date interest would start running since the dues dates are different. Certainly the interpretation would be at odds with the commercial reality underpinning the deed of settlement.

The overwhelming sense is that from the language in the deed of settlement read in its context and purpose the applicant’s interpretation is correct. There is no need to read too much into clause 6. The parties agreed on the terms of payment and signed therefore they are bound. The plaintiff is entitled to invoke clause 7 its remedy to require defendants to pay the whole debt.

Respondents highlighted what they said are the circumstances leading to the making of the deed of settlement. They said the applicant was advised that payment would be from an arbitration matter from which the first respondent was expecting some payments. The applicant denied that there was such an understanding. Even if I resort to the circumstances, they do not confirm what the respondents allege. Firstly the understanding is not part of the deed of settlement. Secondly the e-mails from applicant’s legal practitioners are clear that the deed of settlement was not dependent on the arbitration process.

The defendants cannot succeed in their plea. Accordingly the following order is made.

The application be and is hereby granted.

Judgment is hereby entered against the 1st, 2nd, 3rd, 4th , 5th and 6th respondents jointly and severally, the one paying the others being absolved in case number HC 4000/17.

Payment of US$600 000 together with interest thereon at the rate of 15% per annum from 1st of February 2018 to date of full and final payment.

Payment at the applicant’s costs in case number HC 4000/17 in the sum of      US$5 750.00

Costs on the legal practitioner and client scale.

Danziger & partners, applicant’s legal practitioners

Machekano Law Practice, 1st, 2nd & 3rd respondent’s legal practitioners

Venturas & Samukange, 4th-6th respondent’s legal practitioners