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Fidelis Munyoro Chief Court Reporter
A Harare medical doctor’s generosity to stand as co-surety for a bank loan advanced to local automotive parts manufacturer and distributor has cost him a fortune after the High Court ordered him to settle a $220 000 debt.
Dr John Walter Madambi Pfumojena stood as co-surety to the US$222 932, 02 loan advanced to Kenrose Filters (Pvt) Limited by African Banking Corporation of Zimbabwe Limited (BancABC) to finance its operations two years ago.
The company, which supplies GUD filters, had slowed production due to stiff competition from imports and failed to settle the debt.
BancABC sued at the High Court to recover its money.
It obtained a summary judgment against Kenrose.
Later the bank sued Dr Pfumojena, who was cited separately as a defendant in the claim. Dr Pfumojena denied any liability arguing that since the same court had already granted judgment against Kenrose and two other sureties, the matter was settled. But Justice Joseph Martin Mafusire rejected Dr Pfumojena’s defence.
He allowed the claim by BancABC with costs. “The defendant shall pay the plaintiff the sums of US$222 932.02 and US$36 145.93,” ruled Justice Mafusire.
The judge ordered Dr Pfumojena to pay interest at the rate of 48 percent from the date of judgment to the date of payment.
He dismissed arguments by Dr Pfumojena’s lawyer, Advocate Lewis Uriri, that an extension of time to repay granted by the creditor to the principal debtor absolved his client from liability.
“In my view, suretyships are the lifeblood of the world of finance. Their value lies in granting additional security to the lender,” said Justice Mafusire.
“In the world of commerce, it is probably largely on account of the availability and willingness of the surety and also creditworthiness that the creditor will part with his money in the first place. Therefore, a surety should be bound to the letter and spirit of his undertaking.”
BancABC lawyer Mr N. Munetsi said there was nothing in dispute between his client and the medial practitioner.
He argued that Dr Pfumojena’s liability under the surety was not an issue, which Justice Mafusire accepted.
BancABC granted Kenrose the credit facility after Dr Pfumojena guaranteed and bound himself to the bank as surety and co-principal debtor with Kenrose.
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