Total Zimbabwe (Private) Limited V LUKE Slayton Mkungatu T/a Dombotombo Service Station

### Preamble
1
HH 261-2012
HC 10762/11
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TOTAL ZIMBABWE (PRIVATE) LIMITED

versus

LUKE SLAYTON MKUNGATU t/a

DOMBOTOMBO SERVICE STATION

HIGH COURT OF ZIMBABWE

KUDYA J

HARARE, 19 June 2012

Opposed Application

T Pasirayi, for the applicant

Ms T Gonese, for the respondent

KUDYA J: This is an application filed by the applicant company against the respondent on 31 October 2011, to confirm the cancellation of the marketing licence agreement between them, his eviction and that of his assignees, invites, sub-tenants or any other persons claiming occupation through him from the service station, the payment of US$20 737.03, interest at the prescribed rate, collection commission in terms of the Law Society by-laws and costs on the scale of legal practitioner and client. The respondent opposed the application on 18 November 2011.

The parties concluded a marketing licence agreement on 1 March 2005 under which the respondent occupied the applicant’s Dombotombo service station for the sale of petroleum products.  In terms of the agreement, the respondent was obliged to purchase the products for sale exclusively from the applicant, pay for the purchases in cash or by any method acceptable to the applicant before the delivery of the goods. Later the parties concluded a credit facility under which the respondent was obliged to make one or more daily payments of all sale proceeds into the applicant’s bank account on the day of the sales or the following day. The respondent was liable to pay local authority taxes and rates though the applicant could in its discretion pay them for the respondent’s account. The failure to pay any amount due in terms of the agreement or abide by the terms of the credit facility gave the applicant the right to terminate the agreement on two days notice. The ordinary notice period that each party could give in the absence of breach was six months.

On 28 September 2010 the applicant cancelled the credit facility on the ground that the respondent was more than 30 days in arrears of US$ 16 905-76. It demanded, within seven days, payment of the outstanding amount together with proof that the respondent was able to raise working capital of US$30 000-00. It warned him that if he failed to pay the outstanding amount and raise the working capital the marketing license agreement would be suspended for two months during which period he was expected to clear the debt and raise the working capital. Failure to do these things in that period would result in cancellation of the marketing licence agreement on 30 November 2010.

On 7 October 2010 the respondent accepted responsibility for the shortfall and promised to liquidate it and raise the required working capital by 20 October 2010. In his letter of acknowledgment he suspected that the shortfall was due to under deliveries deliberately engineered by the applicant’s employees that his staff failed to detect and overthrowing of fuel by a faulty pump that had been subject of several repairs which was detected and decommissioned on 18 August 2010. On the same day he handed over the forecourt to the applicant and remained in occupation of the kiosk.

The respondent filed, amongst other documents, the letter he wrote to the applicant on 22 December 2010. Attached to that letter were four fuel stock control reports raised by the applicant’s territory manager and the pump service job card by Globnet Systems (Pvt) Ltd. The four stock control reports covered the period from 26 March 2010 to 18 May 2010; 18 May to 21 July 2010; 21 July to 9 September and 6 August to 7 October 2010. The fuel stock reports were commissioned by the applicant and conducted by its territory manager who observed in each report that the petrol dispensing meters were faulty and that the pumps required calibration. For diesel he noted in each report that loss was caused by faulty electronic meter that required calibration of the pumps.  Globnet Systems was engaged by the applicant to assess pump 2 at the leased premises. The assessment was conducted on 18 August 2010. A form captioned ‘Total Zimbabwe Work Verification Form’ was compiled by Globnet and signed by the assessor and the respondent. It indicated that Globnet had been notified to attend to the pump on 13 August 2010. In the form was indicated that the respondent first notified Total of the problem in August/September 2009. An additional comment states that:

“The station has lost a lot of money through the seemingly elusive fault which has been happening since August/September 2009. It needs very urgent attention: the pump has been closed”.

The technician observed that the pump required a solenoid as it was dispensing petrol when off.

In that letter, the respondent traced the shortfalls of US$9 000-00 discovered during the May stock control exercise that increased to US$12 000-00 in July instead of decreasing to US$ 6 000-00 after he paid US$3 000-00 in June 2010 and subsequently to US$16 000-00 in August 2010. He complained that his request for pressure testing between May and August 2010 were ignored by the applicant. He stated that on 18 August the Globnet technician demonstrated how the pump 2 was overthrowing petrol. He attributed the loss to this pump. He exonerated himself of any wrongdoing by indicating that he did not have the capacity to detect electronic defects on pumps and underscored that his acceptance of liability “should not be construed as submission of guilty” as he had been  motivated by the desire to save the dealership. He requested the applicant to reconsider the loss in view of the “defective equipment”.

It is apparent from the contents of that letter that the respondent was not admitting liability.

On 20 January 2011, the applicant through its territory manager wrote to the respondent. It intimated that the marketing licence agreement was terminated in line with article VIII (ii) (b) on 31 December 2010 due to failure to pay the outstanding debt. It indicated that the Total caretaker who took over from him on 7 October 2010 inherited a municipal bill of US$6 133-00 from the respondent that increased the respondent’s debt to US$25 422-52. The amount demanded from him was US$20 983-52 after the deduction of a deposit of US$4 439-00.

The respondent responded to the letter on 16 February 2011. In his three page response, he denied violating the marketing licence agreement. He based his denial on the faulty equipment highlighted in the applicant’s periodic stock control reports from March to October 2010. He also challenged the total loss attributed to him for the period to 31 August 2010 and intimated owing the applicant US$223-44 from fuel losses. He maintained that the electronic fault could only be detected by qualified technicians as happened on 18 August 2010. He accused the applicant of prematurely and illegally terminating the marketing licence agreement on 7 October 2010 by moving a Total caretaker to the forecourt before 31 December.

Again that letter did not amount to an admission of liability.

On 11 May 2011, the applicant’s erstwhile legal practitioners wrote a letter of demand indicating his failure to raise US$30 000-00 working capital and liquidate the date by 30 November 2010 as the cause for cancellation of the marketing licence agreement. They demanded payment of US$20 564-00 within five days. The respondent answered the letter on 16 May 2011. He denied fault and attributed wilful negligence to the applicant for failing to repair faulty equipment that it noted between March and August 2010. He blamed the takeover of the forecourt on 7 October for his inability to raise working capital.

Again, the respondent was not admitting liability.

In addition to opposing the application on the ground of faulty equipment and wrongful termination of the marketing licence agreement, the respondent also challenged the amount claimed. He averred that the applicant failed to deduct US$4 587-00 that he deposited on 10 May 2010 as shown in the bank deposit slip filed of record. In its letter of 28 September 2010, the applicant disputed payment of that amount. It stated that it had not been reflected in its bank account by 9 September 2010. In its answering affidavit filed on 21 December 2011, the applicant conceded that the money was credited to its account on 26 May 2010. The respondent further averred that the loss from faulty equipment was in the region of 2 978 litres of petrol and 1 286 litres of diesel translating to US$5 000-00 -        US$6 000-00 between August 2009 and July 2011 (sic).

He also opposed the application on the ground that there were disputes of fact in regards to the outstanding indebtedness. The letter of 20 January 2011 claimed he owed US$20 983-52. The letter of demand of 11 May 2011 sought payment of US$20 564-00. The statement of account dated 31 January 2011 indicated that he owed the applicant           US$38 574-35. The claim in the founding affidavit was US$20 737-03.  He averred that the applicant violated the marketing licence agreement by seizing the forecourt on 7 October 2010. It left him in the kiosk where he was evicted on 20 January 2011.

The first issue for determination is whether the opposing affidavit should be dismissed for failure to abide by the provisions of Order 32 r 227 (1) (c) and 2 (d) that require pagination and indexing of any application, notice of opposition or answering affidavit of more than five pages. I note in passing that the applicant was guilty of the same failures in its original application. The logical conclusion of its argument would be that there is no application before me. In any event, in his oral submissions, Mr Pasirayi, for the applicant abandoned the first issue. The omissions, in my view, were corrected on the compilation of the consolidated application. I dismiss the first issue and proceed to the second issue.

The second issue is whether there is a dispute of fact that is incapable of resolution on the papers. The applicant averred that the letter of the respondent of 7 October 2010 was an acknowledgement of debt of the sum of US$16 905-76. The additional outstanding municipal and electricity bills of US$8 280-27 increased the respondent’s liability to US$25 186-03. The applicant deducted US$4 439-00 paid as a deposit to arrive at US$20 747-03. It contended that the admission of liability in itself was an admission of breach of the terms of both the marketing licence agreement and the credit facility. It averred that it was entitled to cancel the marketing licence agreement on breach and it did so on 31 December 2010.

The respondent averred that while he acknowledged the amount owing on 7 October 2010, he thereafter disputed the cause of the indebtedness and the amount claimed. The letters of 22 December 2010, 16 February and 16 May 2011 confirm his denial of liability and the reasons for such denial.  In our law, an acknowledgement of debt can be challenged by the debtor. Such a debtor bears the onus of proving its invalidity on a balance of probabilities. See Venture Capital Company Zimbabwe Ltd v Chirovero Investment (Pvt) Ltd 2000 (2) ZLR 30 (H) at 34D-E. In an application such as this the respondent only has to establish an arguable case against the acknowledgment of debt. It seems to me that the letters he wrote on 22 December 2010, 16 February and 16 May 2011 demonstrate his purported defence against the validity of the acknowledgment. He contended in those letters that the applicant was to blame for the shortfalls by its failure to attend to the repair of the faulty pump expeditiously. The applicant contended that it was excluded from bearing responsibility for the loss by article VII (vi) of the marketing licence agreement. That may very well be so, but the respondent’s valid contention is that that clause may well be found inoperative in circumstances such as this where the applicant bore the responsibility of maintaining the pump and had constructive knowledge of its state of disrepair. In addition he illustrated in the letter of 16 February 2011 a much lower amount of indebtedness than the one claimed by the applicant.

The case of Bevcorp (Pvt) Ltd v Nyoni & Ors 1992 (1) ZLR 352 (S) supports the respondent’s contention. The issue in that case was succinctly set out by KORSAH JA at 355F-H thus:

“The only issues for determination between the parties were whether or not the distribution losses incurred by the appellant arose from the use of faulty equipment, spillage and evaporation, or whether such losses stemmed from theft and/or negligence by the respondents. It seems to me that these issues, requiring as they do evidence of calibration and methods by which beer losses were calculated, do not lend themselves to resolution without the adduction of oral evidence, and so motion proceedings are not the appropriate means by which to seek redress.”

The learned JUDGE OF APPEAL proceeded to state at p 359E-360B that:

“These cases clearly establish that, while motion proceedings may be permissible in respect of money claims, such proceedings will only be entertained where no real dispute of fact exists between the parties and where the respondent in such a proceeding will not be disadvantaged by, for example, his inability to press his counter-claim against the applicant, as in the instant appeal. See also the caveat sounded by GUBBAY JA (as he then was) in Zimbabwe Bonded Fibreglass (Pvt) Ltd v Peech 1987 (2) ZLR 338 (S) at p 339C, that a court must adopt a robust approach in such proceedings:

"... always provided that it is convinced that there is no real possibility of any resolution doing an injustice to the other party concerned." (Emphasis added.)

And see Public Service Commission & Anor v Tsomondo 1988 (1) ZLR 427 (S) at 442G-443A, per McNALLAY JA. BEADLE ACJ sounded a warning in Miller v Roussot 1975 (1) RLR 324 at 326E that, where the claim sounds in money, motion proceedings:

"... is not a form of procedure which is looked upon by this court with any favour. It is a costly procedure and in the normal course in claims of this sort, the proper thing is to proceed by way of summons.”

For the reasons above given, I am of opinion that this matter ought not to have been commenced by way of motion and that it should have been dismissed or at best referred to trial by the learned trial Judge.”

The respondent raised a dispute of fact concerning the faulty pump 2 that continued to dispense fuel when off. He filed fuel stock reports from the applicant’s territory manager that repeatedly noted that the losses were attributable to faulty meters and pumps that required calibration as soon as possible. The duty to repair the faulty pumps was cast on the applicant by article VII (vi) of the marketing licence agreement.

I am satisfied that the respondent has an arguable case against the applicant’s claim. The application cannot be granted.

The respondent prayed for the dismissal of the application with costs. He contended that the applicant brought this application well aware that the respondent would oppose it because it was replete with material disputes of fact. It was aware of the respondent’s contentions well before it launched the application in previous correspondence exchanged between the parties. I agree with the respondent. The applicant chose the application procedure at its own peril. See Masukusa v National Foods Ltd & Anor 1983 (1) ZLR 232 (H) at 234D and Mashingaidze v Mashingaidze 1995 (1) ZLR 219 (H) at 221G-222A. It was alive to the basis of the respondent’s opposition long before it launched the application. Whilst article I (v) of the marketing licence agreement allowed the applicant to handover the forecourt to a third party during the suspension of the agreement, it appears to have contravened the two months grace period it availed the respondent to repair the breach by prematurely handing it over. It does not appear to me that the applicant acted in good faith at all. It is proper to dismiss the application.

Accordingly, the application is dismissed with costs.

Gill, Godlonton & Gerrans, applicant’s legal practitioners

Gonese Attorneys, respondent’s legal practitioners