Ecobank Zimbabwe Limited v Puzey and Payne (Private) Limited and Others

The applicant (Ecobank Zimbabwe Limited) and the first respondent (Puzey and Payne (Private) Limited) entered into a Facility Agreement whereby the applicant would loan money to the first respondent to purchase buses, motor vehicles, spares and parts to fulfil confirmed orders, with repayment from sale proceeds. The second, third, fourth, fifth and sixth respondents bound themselves jointly and severally as sureties and co-principal debtors with the first respondent. The first respondent failed to make full repayment, and the debt rose to US$282,528.76. The applicant issued summons against all respondents. Subsequently, the applicant and respondents entered into a scheme of arrangement which was registered as an order of court on 12 July 2017 and registered with the Registrar of Companies. The applicant then sought summary judgment against the fifth respondent only for payment of the debt.

• Whether summary judgment should be granted against a surety when a scheme of arrangement had been entered into with the principal debtor
• Whether the fifth respondent had established a prima facie defence to resist summary judgment
• Whether a creditor can enforce a guarantee after agreeing to new payment terms with the principal debtor through a scheme of arrangement
• Whether claims against sureties are stayed when a scheme of arrangement is in place with the principal debtor

1) The application for summary judgment was dismissed. 2) The applicant was ordered to pay the respondents' costs.

Where a creditor has entered into a scheme of arrangement with a principal debtor that stays claims and restructures the debt, the creditor cannot enforce a joint and several guarantee against a surety without demonstrating that the principal debtor has defaulted under the scheme of arrangement. A surety's liability being joint and several with the principal debtor means that if no valid claim can be made against the principal debtor under the current arrangement, no claim can be made against the surety. In summary judgment proceedings, a defendant need only establish a prima facie defence by alleging facts which, if proven at trial, would entitle them to succeed in their defence.

The court made observations about the applicant's conduct in failing to make any reference to the scheme of arrangement in its founding affidavit, noting that "for reasons which are not clear" there was no averment that the first respondent had failed to pay in terms of the new arrangement. This suggests judicial concern about the completeness of the applicant's disclosure. The court also reinforced general principles about summary judgment being an "extraordinary and drastic nature which is very stringent" remedy, and cautioned against "an injustice of expecting the defendant to satisfy the court that he has a bona fide defence without the benefit of further particulars, discovery or examination."

This case is significant in Zimbabwean law for clarifying the operation of summary judgment procedures in the context of schemes of arrangement and suretyship. It reinforces the principle that summary judgment is an extraordinary remedy that will not be granted where a defendant raises a prima facie defence. The case establishes important principles regarding the enforcement of suretyship obligations when the underlying principal debt has been restructured through a scheme of arrangement. It demonstrates that creditors cannot bypass the terms of a scheme of arrangement by pursuing sureties when the principal debtor is complying with the restructured payment terms. The judgment also emphasizes the importance of complete disclosure in summary judgment applications, particularly regarding material facts such as subsequent schemes of arrangement.