Charter Properties (Private) Limited v Delma Lupepe

The plaintiff sued the defendant for $258,230.57 as surety and co-principal debtor for Zimbabwe Express Pvt Ltd's rental obligations. The defendant signed a deed of suretyship on 20 September 2004 when CB Richard Ellis were the property agents. A lease agreement was entered into at that time between the creditor and the debtor company. Subsequently, when property management changed from CB Richard Ellis to Knight Frank, a new lease agreement was entered into between the creditor and debtor, but no new suretyship deed was signed with the defendant. The new lease agreement had different terms and conditions from the original one and contained a clause requiring that a suretyship agreement be signed simultaneously with the lease agreement, which did not occur. The plaintiff sought to enforce the original 2004 suretyship deed against the defendant for debts arising under the new lease agreement.

• Whether a surety is discharged when a new lease agreement is entered into between the creditor and principal debtor without the surety's consent
• Whether the entering of a new lease agreement with different terms constituted novation or variation of the original contract
• Whether novation or material variation of the principal contract discharges a surety from obligations under the original suretyship deed
• Whether the plaintiff established a prima facie case sufficient to resist absolution from the instance

Absolution from the instance granted in favour of the defendant. The plaintiff was ordered to pay the costs of suit.

A contract of suretyship is accessory to the principal debt and is discharged by novation or material variation of the principal contract without the surety's consent. When parties enter into a new lease agreement with different terms and conditions that replaces an original lease agreement, this constitutes novation or material variation which automatically discharges any surety who provided security for the original agreement. The surety cannot be held liable under the original suretyship deed for obligations arising under the new agreement. For a surety to be bound to a new or varied agreement, a fresh suretyship agreement must be entered into.

The court noted that lease agreements differ from one estate agent to another, implying that when property management changes hands, the use of a different estate agent's standard form lease agreement would typically involve different terms and conditions. The court also observed that the new lease agreement itself contained a clause stipulating that a suretyship agreement should be signed simultaneously with the lease agreement, which reinforced the requirement for a fresh suretyship deed when a new lease is entered into. The court cited with approval the obiter dictum in HB 152/17 between the same parties, suggesting there may have been prior litigation involving similar issues between these parties.

This case is significant in Zimbabwean law as it reinforces the principle that a surety is automatically discharged when the principal contract is novated or materially varied without the surety's consent. It clarifies that when a new lease agreement with different terms replaces an original lease agreement, the suretyship deed attached to the original agreement is extinguished and cannot be enforced for obligations arising under the new agreement. The case emphasizes the accessory nature of suretyship agreements and protects sureties from being bound to obligations they did not agree to undertake. It serves as a reminder to creditors that when varying or replacing principal contracts, new suretyship agreements must be obtained if they wish to maintain security.