No. SC 53/03
Appeal No. 337/02
MINING CORPORATION (PRIVATE) LIMITED
COURT OF ZIMBABWE
CJ, CHEDA JA & MALABA JA
23, 2003 & FEBRUARY 3, 2004
for the appellant
P de Bourbon SC,
for the respondent
JA: The respondent owned Mangula Farms (Private) Limited
(Mangula). It sold the entire issued share capital to
Nyahondo Estates (Private) Limited (Nyahondo), which was owned
by Gary James Dodd (Dodd), who is the appellants son-in-law.
sale took place in January 1996 and a written agreement was signed.
In terms of the agreement, Nyahondo was to pay for the
1. $250 000.00 on or before
30 June 1997;
2. $250 000.00
on or before 30 June 1998;
3. $250 000.00
on or before 30 June 1999;
4. $250 000.00
on or before 30 June 2000;
5. $250 000.00
on or before 30 June 2001;
6. $250 000.00
on or before 30 June 2002;
7. $250 000.00
on or before 30 June 2003; and
8. $250 000.00
on or before 30 June 2004.
paid only the first instalment due on 30 June 1997 and failed to
make further payments. Nyahondo is now in liquidation
and has no
assets to make further payments.
respondent issued summons against the appellant, alleging that the
appellant verbally bound herself as a guarantor in favour
respondent for all the obligations of Nyahondo in terms of the
written agreement. The appellant denied liability and the
went to trial at the High Court. Judgment was given for the
respondent with costs. The appellant now appeals against that
respondent led evidence from two witnesses. The first witness was
Peter Joseph Moore (Moore). He said he was
practitioner at Winterton, Holmes & Hill (Wintertons). He
does mainly conveyancing work of that firm and has
been heading the
conveyancing section for the last twenty years. He prepared the
agreement whereby the respondent sold the shares
of Mangula to
Nyahondo for the sum of $2.1 million. The agreement was
produced in court. He said the purchase price was to
be paid in
instalments of $250 000.00 per year.
said that Mr Ford (Ford), who represented the respondent,
had requested him to set up a meeting at his
(Moores) office to
clarify the terms of the agreement and thereafter prepare an
agreement of sale. Clause 7 on p 5
of the agreement
provided for security in respect of the balance of the price firstly
by registration of a second mortgage bond and
secondly by a personal
guarantee signed by Mrs S Forrester together with the other
shareholders of the purchasing company.
said a meeting took place at his house and was attended by Ford
and Mr and Mrs Dodd. He said he believed Mrs Forrester
also at the meeting. He said Ford told him that he had met
Mrs Forrester and her daughter and son-in-law and Mrs Forrester
had told him she owned immovable property in Strathaven and Avondale
in Harare, in addition to owning land in the Lowveld area of
Zimbabwe. As such Ford was happy with the security offered.
did not recall taking down any details of Mrs Forrester, but he
subsequently saw a file note in his handwriting
Mrs Forresters details. He said the details were taken from
the meeting at his office. He later said he
could be mistaken about
whether he got the details from Mrs Forrester or her daughter or
said the agreement of sale was signed on 25 January 1996 at his
office. Some years later he learnt that Dodds
company, or Dodd
himself, had gone into liquidation and there was still a debt owed to
said when Dodd was asked if his mother-in-law was at the meeting he
noticed Mrs Forrester shaking her head at
him to indicate that
the answer should be No.
why no written suretyship document was prepared and signed by
Mrs Forrester, he said Ford was the chief executive in
financial institution and was well aware of the requirements of a
transfer of shares. He did not personally give the matter more
cross-examination Moore said there must be some minutes of the
meeting but he did not have the file with him.
it was suggested that he was not certain that Mrs Forrester
attended that meeting, Moore said he did not have a hundred
recollection of it, but was certain that Mrs Forresters daughter
was at the meeting. He accepted that he could have
got the details
of the guarantee from someone other than Mrs Forrester and that
it could have been either Mrs Forresters
also gave evidence. He said he is a chartered accountant who left
the profession soon after qualifying and worked
for some banks. He
is familiar with the concept of security for debts. He became
involved when his family decided to sell Mangula.
He did not know
Dodd before this. Mr Ford said Dodd had no security for the
balance but told him that his mother-in-law,
who had previously or at
that time guaranteed in favour of a member of the family, might be
able to provide suitable security for
the payment of the balance.
Later Dodd said his mother-in-law had agreed to that and they could
proceed on that basis. Later
Ford said he was not sure who told him
that Mrs Forrester owned a house in Harare and a farm in the
Ford also said he thought he had met Mrs Forrester with Mr and
Mrs Dodd at his office in Newlands and they discussed the
He told the three to go with him and instruct Moore together. He
said he was hazy as to whether Mrs Forrester was there
or not at
if he discussed with Mrs Forrester what assets she had, Ford replied:
think I did. I think she recently came in from her farm and I asked
her if she owned her house in Strathaven. She indicated
did. That was the extent of the inquiry.
said he took the issue of the security seriously and it was the key
clause in the sale agreement after the purchase price.
denied all this in her evidence. She said she never took part in
the discussions and negotiations, but was
present at one meeting in
the very beginning in November or December at Fords office in
Newlands. She went there because her
daughter and son-in-law were
staying with her and using her car. She denied giving a guarantee
at this meeting or any other meeting.
Mrs Forrester said she
was never consulted about giving security and did not see the
agreement. She never gave Moore her
address or telephone number.
She said she could not guarantee her son-in-law as she was already
guaranteeing her own farm and her
son. Her son-in-law did not
discuss the matter with her.
said he was asked if he could find a guarantor and he told them that
his mother-in-law was not in a position to guarantee
him as she had
outstanding guarantees to Culsh Enterprises. He also said at the
meeting in Fords office Moore suggested that
could provide a guarantee for him.
guarantee is a contract whereby one person binds himself or herself
as being responsible for a debt of another person should that
person fail to meet his or her obligation.
this case, the respondent claims that the appellant bound herself
verbally. However, in all their evidence neither of the two
witnesses of the respondent could state how the appellant made the
Mr Moore obviously relied
on what he was told by Ford. At no stage did he claim at the trial
that he discussed the guarantee
with the appellant. His evidence
was cast into doubt as he gave answers such as: I think she
was; I believe she did;
and I cannot be a hundred percent
his evidence he never discussed the issue of the guarantee with the
appellant directly. He prepared the agreement of sale but did
even provide for her to sign it. The agreement was not even shown
to the appellant. He made no attempt at all to confirm
that she agreed to provide the guarantee yet there was no separate
document providing the guarantee. From his answers
to questions put
to him, Moore could not recall who gave him the appellants details
of address and telephone number.
Mr Fords evidence was
equally unreliable. He too said several times that he thought
certain things had happened but was
said Ford asked him to set up a meeting at Moores office to
clarify the terms of the agreement. In the absence
discussion with Mrs Forrester, it is difficult to see what was
clarified. The two witnesses do not even state what
Mr Moore says he believed Mrs Forrester was at the meeting
in his office, but says nothing about any discussion
concerning the guarantee. No reason is given why they would shy
away from discussing the issue if she was indeed at the
Even if one goes by Moores allegation that Ford told him, if they
met to discuss the terms one would have expected
him to clarify this
particular issue with Mrs Forrester.
evidence is also unreliable. Mr Ford says the discussion with
Mrs Forrester was only to ask her if she
owned her house in
Strathaven. He says that was all and that that was the extent of
the enquiry. He also says he is not certain
if he got
Mrs Forresters details from her or from her daughter or
son-in-law. It seems everything about Mrs Forrester
obtained from her daughter and son-in-law. Mr Ford then passed
all the information to Moore as if he had either spoken
himself or heard her speak, yet he got all the information from her
daughter or son-in-law. In his evidence there is nowhere
claims to have discussed the guarantee with Mrs Forrester, yet
he claims it was the most important issue which he took
result is that the two witnesses for the respondent never got any
guarantee from Mrs Forrester either in writing or
Neither of them ever mentioned the guarantee to Mrs Forrester.
There is no evidence at all of Mrs Forrester
guarantee verbally as alleged.
and to whom was the alleged guarantee given? Neither of the
witnesses could say. If she made a verbal guarantee,
at least the
witnesses should have given an indication of her words to that effect
which resulted in the verbal contract being created.
trial court stated as follows in the judgment:
is in my opinion inconceivable that the (respondents legal
practitioners) would have incorporated a clause in the agreement
relating to the plaintiffs surety without the defendants name
having been put forward by the parties to the agreement.
evidence was that Dodd said that his mother-in-law might provide a
guarantee. This shows that she had not agreed
and it is not clear
whether by then she had been requested to do so or not. There is no
evidence that Dodd, neither does he claim
to have, asked her to do so
as he says he was aware of her commitment already. It seems because
Ford heard this, he got this to
be included in the agreement without
consulting Mrs Forrester on the matter. Either he assumed this
to be the position or
he had misunderstood Dodd; but, whatever
happened, Mrs Forrester never gave any guarantee.
if Mrs Forrester, on seeing the letter of demand for payment,
did not immediately deny liability, that is not proof that
admitted it. If she was admitting, why would she not say so? Why
refer the matter to her lawyers? The fact that the reply
legal practitioners came six weeks later does not prove anything.
considering the issue of credibility, the witnesses may have given
their evidence well as the court found, but still neither
gave evidence that solves the issues of whether Mrs Forrester
gave the guarantee. When Moore was asked about the details
guarantee he replied: That was never discussed at all. He
said this after telling the court that the meeting was
to discuss the
details of the terms of the agreement.
order to succeed, the respondent needed to show, through its two
witnesses, that the appellant did agree to provide a guarantee.
evidence of the two witnesses is so unreliable that one cannot come
to the conclusion that a guarantee was in fact provided
the respondent did not prove that the appellant agreed to provide a
appeal succeeds with costs and it is upheld. The order of the court
is set aside and is substituted by the following
plaintiffs claim is dismissed.
plaintiff is to pay the costs of suit.
CJ: I agree.
JA: I agree.
Welsh & Guest,
appellant's legal practitioners
respondent's legal practitioners