Nu Naks (Private) Limited v J W Jaggares Wholesalers (Private) Limited and Export Credit Guarantee Corporation of Zimbabwe (Private) Limited

The plaintiff sold and delivered goods worth US$98,239.64 to the first defendant during the period from 20 August 2009 to 30 September 2010. By May 2010, the first defendant owed approximately US$84,000 and the plaintiff stopped supplying goods. On 11 August 2010, the second defendant issued a letter of guarantee binding itself as surety in solidum and co-principal debtor with the first defendant to repay sums "which may now or from time to time hereafter become owing" to the plaintiff, limited to US$100,000. The guarantee was cancelled on 8 October 2010. The plaintiff resumed supplies after the guarantee was issued. The second defendant accepted liability for US$12,124.56 (debt incurred after the guarantee) but denied liability for US$86,115.08, claiming the guarantee did not cover pre-existing debts.

• Whether the letter of guarantee covered pre-existing debts that arose before 11 August 2010
• The proper interpretation of the phrase 'which may now or from time to time hereafter become owing' in the guarantee
• The quantum of the second defendant's liability to the plaintiff

The plaintiff's claim was dismissed with costs on the ordinary scale.

A surety is bound strictly to the letter of its agreement and liability cannot extend beyond the proper meaning and effect of the engagement entered into. In interpreting suretyship agreements, the grammatical and ordinary sense of words must be adhered to unless this leads to absurdity, repugnance or inconsistency. The phrase "which may now or from time to time hereafter become owing" in a guarantee refers to debts that become owing at the time of or after the execution of the guarantee, not to pre-existing debts that had already become owing before that date. The operative word "become" applies to both classes of debts identified and requires that the debt must arise or fall due at or after the date of the guarantee.

The court observed that witnesses' views of what words mean or what was intended cannot override the clear grammatical ordinary meaning of words, particularly when that meaning creates no absurdity, repugnance or inconsistency. The court noted that if a guarantee is meant to cover pre-existing debts, it should simply say so, especially when the amount is known and not in dispute. While the court found in favor of the defendant on merits, it declined to award costs on a punitive scale despite the defendant's argument that the matter could have been resolved more economically through a special case procedure under Order 29, as the court's discretion favored ordinary costs given that only a small fragment of evidence was ultimately determinative.

This case is significant for establishing principles of interpretation of suretyship agreements in Zimbabwean commercial law. It reinforces that sureties are bound strictly to the letter of their engagement and that guarantees must be interpreted according to their plain, ordinary grammatical meaning. The judgment clarifies that words defining temporal scope of guarantees ("now" and "hereafter") must be read in their full grammatical context with operative verbs like "become owing". It demonstrates judicial reluctance to extend a surety's liability beyond the clear terms of the guarantee, consistent with the principle that sureties should not be held liable beyond the proper interpretation of their undertaking.