Skyview Investments (Private) Limited v T. Musarara and J. Muchada

### Preamble
1
HH 783-18
HC 8999/13
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SKYVIEW INVESTMENTS (PRIVATE) LIMITED

versus

T. MUSARARA

and

J. MUCHADA

HIGH COURT OF ZIMBABWE

MANGOTA J

HARARE, 2 July, 2018 & 22 November 2018

Opposed application

P.C Paul, for the applicant

N. Chikowero, for the 1st respondent

No appearance for the 2nd respondent

MANGOTA J: This application was initially set down for 18 June, 2018. It was postponed to 2 July, 2018 at the instance of the applicant. I heard the application on the mentioned date. I delivered an ex tempore judgment in which I dismissed the same with costs.

On 14 September, 2018 the registrar of this court addressed a minute to me. He advised that my decision is appealed. He requested for reasons for the same. These are they:

On 20 November, 2009 the applicant leased its stand 718 Willowvale Road, Adbennie, Harare [“the property”] to Consolidated Industries. The lease was to endure for twelve (12) months. It commenced on 1 December, 2009. Its date of termination was 30 November, 2010.

Although the respondents’ names were mentioned as representing Consolidated Industries, only the first respondent singed the lease for, and on behalf of, Consolidated Industries. The second did not.

Subsequent to the signing of the lease, the first respondent signed a Deed of Suretyship. He bound himself as surety and co-principal debtor in favour of the applicant for Consolidated Industries’ compliance with the terms and conditions of the lease. He did so on 20 November, 2009.

Consolidated Industries failed to live up to its commitments. It accumulated arrear rentals in the sum of $22 662.40 in respect of the property which it leased from the applicant.

The applicant sued Consolidated Industries. Its aim and object were to recover from it arrear rentals which were owed to it. Its suit was filed under HC 848/11. Default judgment was entered in its favour.

Challenges surfaced when the applicant sought to execute the judgment against Consolidated Industries. The search which its legal practitioners conducted at the companies offices revealed that no company with the name Consolidated Industries was in existence. The stated challenges precipitated this application.

The applicant contended that the respondents who bound themselves as sureties and co-principal debtors be substituted in place of Consolidated Industries. It insisted that the two were the proprietors of the business which operated under the name and style of Consolidated Industries. It moved the court to declare them to be the proprietors of Consolidated Industries and to have the default judgment which it obtained against the latter regarded as a judgment against the respondents. It anchored its position on r 8B (1) of the High Court Rules, 1971 in the mentioned regard. It averred that the two remained liable to pay the judgment debt by virtue of the Deed of Suretyship which they signed. It couched its draft order in the following terms:

“1. That the 1st and 2nd respondents are declared to be the proprietors of Consolidated 		      Industries so that the judgment in case number 848/11 against Consolidated Industries 	      is a 	judgment against them.

2. Alternatively, that judgment be entered against the 1st and 2nd respondents in the sum 	of 	    $22 662.40 on the basis of their suretyship.”

The first respondent opposed the application. The second did not. My assumption was that he chose to abide by my decision.

The first respondent raised three in limine matters. These were that:

the application was misplaced;

the applicant adopted a wrong procedure when it filed a chamber application-and

the non-joinder of Consolidated Industries to the application was fatally defective.

He stated that Consolidated Industries’ full name was Consolidated Industries Africa (Pvt) Ltd. He insisted that it was registered as such in terms of the Companies Act. He stated that the applicant should have filed a court, and not chamber, application. He averred that HC 848/11 related to Consolidated Industries which, according to him, should have been made part of this application. He denied, on the merits, that he was liable for the debt of Consolidated Industries by virtue of the deed of suretyship which he executed. He insisted that he could not be held liable when he was not a party to HC 848/11. He averred that liability could only have arisen if he had been sued together with Consolidated Industries or if the applicant had sued him alone. He moved the court to dismiss the application with costs.

The applicant, not out of its own making, made a number of assumptions which led it to the challenges which it is facing currently. At the time that it signed the lease with the first respondent, the applicant operated upon the genuine, but mistaken, view which was to the effect that Consolidated Industries was legal entity. The search which its legal practitioner conducted at the Companies Offices dispelled the view which it held. Its second view was that Consolidated Industries was an association as is described in r 8 of the High Court Rules, 1971. It remained of the view that Consolidated Industries was the association’s trading name. It did not spell what prompted it to think along the stated lines.

Because of the belief which it held, the applicant filed its application under r 8B of the rules of court. The rule allows the court to declare persons to be associates. It reads:

“(1) where proceedings have been instituted by or against an association in terms of 	this 	order, the court or a judge may, on a court application made by any party to the 	proceedings 	either before or after judgment, declare any person to be an associate of the association” 	[emphasis added]

The applicant is, in a large measure, the author of its own misfortunes. It did not exercise due diligence when it concluded the lease with Consolidated Industries. If it did, it would have realised that Consolidated Industries is not a legal entity as it earlier on assumed. It would also have realised that Consolidated Industries is not an association as it believed it be when it sued it and later filed this application. It would, in short, have realised that Consolidated Industries is not a trading name for any association.

Evidence which is filed or record shows that Consolidated Industries is not a legal entity or an association. It is not a natural person. It is not a thing. It is nothing.

The long and short of the observed matter is that the court could not make a declaration which was to the effect that the first respondent was/is an associate of a non-existent association. Such a declaration would have produced an absurdity of unimaginable proportions.

Given the fact that Consolidated Industries is not a natural person or a legal persona or an association, it stands to reason that the order which the applicant obtained against it is a nullity. It was obtained against a non-existent party. It cannot, therefore, hold.

Paragraph 1 of the applicant’s draft order cannot, on the strength of the above – observed matter, stand. The court cannot, in other words, declare that the judgment which the applicant obtained under HC 848/11 be a judgment against the first respondent. That judgment is, in the words of Lord Denning, null and void. Nothing can, therefore, be attached to it and be expected to stay there.

The remarks of the learned Lord Justice are apposite. He states, in MacFoy v United Africa Co Ltd (1961) 5 ALL ER 1169 (PC) 1172 that:

“If an act is void, then it is a nullity. It is not only bad, but incurably bad……You cannot 	put 	something on nothing and expect it to stay there. It will collapse.”

The cavalier approach which the applicant employed to protect its interests accounts for the unfortunate circumstances in which it finds itself. The first respondent’s opposing papers informed it in sufficient detail of the fact that Consolidated Industries did not exist. He stated in his first in limine matter that the procedure which the applicant employed to sue as it did was inapplicable. He averred that Consolidated Industries Africa (Private) Limited was a registered company and not an association.

That knowledge on its part notwithstanding, the applicant persisted with its application. It did so with the full knowledge that Consolidated Industries was not an association or a trading name for any association. It persisted with a matter which it knew would bring about an absurd result to its cause.

The applicant should, on a realization that it sued a non-existent party, have withdrawn its application. It had every right to withdraw and refile the same with the correct party or parties being cited. As an intelligent litigant, it would have realised that Consolidation Industries Africa (Private) Limited would resist its claim on the basis that it did not conclude any lease with it. It would, in the circumstances, have joined the first respondent to the suit as he is, after all, the person who misled it into believing that it was contracting with a legal entity when it contracted with no one. Its joinder of the first respondent to the new suit would have saved it the agony which it endured when it went about to assert its rights in terms of the lease which, as it later turned out, was no lease at all.

It is as a result of the applicant’s lack of attention to detail that it suffers the consequences of the craftiness of the first respondent. The contents of the lease which it attached to its application show that only the first respondent signed the same. The contents of the Deed of Suretyship also show that only the first respondent signed it. The second respondent, it is evident, did not sign either of those documents.

The applicant advances no reason as to why it proceeded against the second respondent in the face of the above-stated matters. Nor does it advance any reason as to why it did not sue the first respondent together with Consolidated Industries when it filed its suit under HC 848/11.

A joint suit of the two would have averted the challenges which it is enduring currently. That is so as it could easily have enforced HC 848/11 against the first respondent in circumstances where it could not enforce the same against Consolidated Industries which, as has already been observed, is a nullity.

The applicant’s alternative claim, as it stated it in the draft order, cannot hold. The suretyship upon which it anchors the same is invalid. It fails to identify the three parties to it. The deed of suretyship shows that the first respondent undertook to bind himself as a surety in favour of the applicant in respect of terms which are incorporated in the deed which he signed with the applicant. He cannot be a surety and a principal debtor in one and the same. Further, the suretyship is executed under the name and title Lessee namely Consolidated Industries.

A suretyship, as CF Caney defines it in The Law of Suretyship 3rd ed p 27, is “an accessory contract by which a person (surety) undertakes to the creditor of another (the principal debtor), primarily that the principal debtor who remains bound, will perform his obligations to the creditor, and secondarily, that if and so far as the principal debtor fails to do so, he the surety, will perform it, or failing that indemnify the creditor”.

It is evident, from the foregoing, that the three parties to a surety agreement are: (a) the surety; (b) the creditor and (c) the principal debtor. The agreement upon which the applicant anchors its claim has two parties to it. It has the creditor who is the applicant in casu and the principal debtor namely Consolidated Industries which is also the surety to the agreement. Such a suretyship agreement cannot be enforced. It is invalid

The applicant’s claim falls to pieces on both grounds which it advanced. It is devoid of merit. It cannot stand. It is, therefore, dismissed with costs.

Winterons, applicant’s legal practitioners

Musarira Law Chambers, 1st respondent’s legal practitioners