Als Capital Limited v Beatech Enterprises Limited (2024/HPC/0258) [2024] ZMHC 187 (14 October 2024)

IN THE HIGH COURT FOR ZAMBIA ' AT THE COMMERCIAL REGIST$. Y f -..,i" HOLDEN AT LUSAKA (Civil Jurisdiction) I. 2024/HPC/0258 ... \ L r i Lt ORDER XXX· RULE 14 OF THE HIGH . f CbURT RULES C~APTER 27 OF THE J\ LAWS OF ZAMBIA IN THE MATTER OF IN THE MATTER OF: IN THE MATTER OF: IN THE MATTER OF: ORDER 88 RULE 1 OF THE RULES OF THE SUPREME COURT OF ENGLAND AS CONTAINED IN THE WHITE BOOK NO. AN EQUITABLE MORTGAGE OVER STAND S/LUSAK/SLN 0031/7882-628 SQUARE METRES STAND LUSAKA NO. S/LUSAK/SLN 0031/5013-586 LUSAKA IN THE LUSAKA PROVINCE OF THE REPUBLIC OF ZAMBIA ANS FORECLOSURE, POSSESSION AND SALE OF STAND NO. S/LUSAK/SLN 0031/7882-628 SQUARE METRES STAND LUSAKA NO. S/LUSAK/SLN 0031/5013-586 LUSAKA IN THE LUSAKA PROVINCE OF THE REPUBLIC OF ZAMBIA ANS BETWEEN: ALS CAPITAL LIMITED AND BEATECH ENTERPRISES LIMITED ALLAN NGWEWA APPLICANT 1 ST RESPONDENT 2ND RESPONDENT Before Hon. M. Chilambwe in Chambers For the Applicant: Mr. P. Chomba of Messrs Mulenga Mundashi Legal Practitioners For the Js1 Respondent: Mr. P. Ng'ambi of Messrs OMM Banda & Company JUDGMENT ON ASSESSMENT Cases referred to: 1. King Farm Products Limited and Mwanamu to Investments Limited v Dipti Rani Sen (executrix and Adminstratri.x of the Estate of Ajit Barab Sen) (2008) Z. R. 72 Vol. 2 (S. C.) J1 2. Khalid Mohamed v The Attorney-General (1982) Z. R. 49 3. Credit Africa Bank Limited (In Liquidation) v John Dingani Mudenda (SCZ Judgment No. 10 of 2003) 4. Union Bank Zambia Limited v Southern Province Cooperative Marketing Union (1995-1997) ZR, 207 5. African Banking Corporation (Z) Limited v Plinth Technical Works Limited & Others (SCZ 8 128 of 2015) Introduction This assessment emanates from the Judgment dated 22nd July 2024 by the Honourable Judge K. E. Mwenda-Zirnba. In the said judgment, it was order as follows: ((From the above, I find that the application has proved its case on a balance of probabilities. ~ accordingly enter judgment in its favour. However) I order that the amount due be assessed by the Registrar of this court.'' Applicant's case In making out its case, the Applicant filed an affidavit deposed to by Ruth Simwanza Mulenga the Chief Executive Officer in the employ of the Applicant which discloses the following. On 9 th April, the Applicant commenced an action against the 1st Respondent for recovery of the sum of ZMWl,039,596.00, J2 foreclosure, possession and sale of pledged properties. Subsequently on 3 rd July 2024, the 2 nd Respondent was joined to the proceedings. In the judgment of 22nd July 2024, the court found in favour of the Applicant and referred the n1atter to the Registrar for assessment of damages. It was further directed that the amount due shall attract 60% interest per annum. According to the statement of account exhibited in the Applicant's affidavit, the amount accrued as at 30th July 2024 was ZMWl,167,913.23. There was no affidavit in opposition filed by the Respondents. Hearing At the hearing, counsel for the Applicant placed reliance on the affidavit in support of assessment and attendant skeleton arguments and list of authorities. He clarified that that the monthly interest rate was 5% which culminated into 60% interest payable for a period of 12 months. Counsel further submitted that legal costs should be excluded from the tabulation on the statement of account. Counsel for the 1st Respondent acknowledged there was no opposing affidavit filed and submitted the 1st Respondent was not J3 opposing the application. He intimated that a payment of ZMW40,000.00 was made to the Applicant and the same should be taken into account by the court. In reply counsel for the Applicant confirmed the receipt of ZMW40,000.00 by the Applicant from Lhe 1st Respondent. Consideration and decision I have considered the application, affidavit in support, skeleton arguments in support and list of authorities and oral submissions advanced by counsel at the hearing. Before delving into determination, it is imperative to mention that the parameters of my jurisdiction in these proceedings are limited to the pronouncements of the Hon. Judge in the Judgment. For avoidance of doubt, paragraphs 2.10 and 2.11 at page JS read as follows: "2.10 From the above, I.find that the application has proved its case on a balance of probabilities. I, accordingly enter judgment in its favour. However, I order that the amount due be assessed by the Registrar of this court. 2.11 The amount assessed shall cany interest at the contractually agreed rate of 60% per annum from date of writ to date of J4 assessment and thereafter at the current bank lending rate as determined by the bank of Zambia until full payment." A perusal of the Applicant's notice of appointment, affidavit in support and skeleton arguments seems to suggest that this application is for assessme.-nt. of damage.-s. Particu1arly, in paragraph 5, the affiant of the affidavit in support states that the Hon. Judge referred damages for assessment by the Registrar. However, the above excerpts of the judgment clearly show that the Court referred the matter to the Registrar for assessment of the amount due. The Supreme Court in King Farm Products Limited and Mwanamuto Investments Limited v Dipti Rani Sen (executrix and Adminstratrix of the Estate of Ajit Barab Sen)Pl, held that: '½ Deputy Registrar cannot vary an order made by a Judge whether in chambers or in open Court. " Therefore, it is important to state that my jurisdiction is limited to assessing the amount due to the Applicant, which sum shall attract the contractually agreed 60% interest rate per annum. I am alive to the fact that the Respondents herein did not file any affidavit in opposition, and counsel for the 1st Respondent JS informed this court that they were not opposing the application. However, this does not absorb the Applicant's burden of making out its case. In other words, the Applicant still bears the onus to prove its case. The Supreme Court in the case of Khalid Mohamed v The Attorney-Genera1t2l, guided that: "We made it clear that the Plaintiff cannot rely on the alleged "Jailed defence" of the Defendant to sustain his claim against the Defendant and that a Plaintiff should not automatically succeed whenever a defence fails as the Plaintiff must prove his case and that if he falls to do so, the mere failure of the opponent's defence does not entitle him to Judgment. " It is common cause that on 25th September 2023, the 1st Respondent obtained a loan from the Applicant in the sum of ZWM850,000 to be repaid 'With interest at 60% per annum. The loan was secured by properties known as Stands S/LUSAK/SLN_0031/7882 and S/LUSAK/SLN_0031/5013 Lusaka. It is not in dispute that following the 1st Respondent's default in repaying the loan the Applicant commenced an action and judgment was entered in the Applicant's favour on 22nd July, 2024. However, the Hon. Judge was unable to determine the amount due to the Applicant hence referring it for assessment. J6 The Applicant claims that as at 30th July 2024, the outstanding amount had accrued to the sum of ZMWl,167,913.23. To substantiate this claim, reliance is placed on exhibited "RSM2" which is a statement of account. At page J4 of the judgment, paragraph 2.9, the Hon. Judge stated as follows: «I note that the figure as at 31 st January, 2024 is ZMWl,010,436.94. However, this statement has an income rate of 60% and another interest of 5% which is not clear. Therefore, I am not able to tell the amount due as a result. The above notwithstanding, there is no dispute that the Respondents defaulted and are owing. \. Vhat is not clear is the amount due." The loan amount is ZMW850,000 which was to be paid in 12 monthly instalments. As regards the interest applicable, counsel for the Applicant clarified the uncertainty noted in paragraph 2.9 of the judgment by explaining that 60% was the interest rate charged per annum. This translates into monthly interest rate of 5%. He further acknowledged receipt of a payment of ZMW40,000 during the pendency of assessment proceedings. The issue of interest in this case is very cardinal in ascertaining the amount due and should be glossed over. There are two types J7 of interest rate charges, that is, simple interest and compound interest. Simple Interest can simply be defined as the sum paid back on borrowed money over a fixed period of time. This type of interest is charged on the orjginal pdncipa] a111ount and the principal amount rernains conslanl. The forrnula for calculating sirnple interest is as follows: I = P x Rx T / 100 (Interest= principal amount x interest rate x time of default / 100) Conversely, compound interest may be defined as interest calculated on the principal and accumulated interest. The principal amount is not constant but changes throughout the entire borrowing period. It is trite law that is prohibited with the exception of where parties expressly agree to do so. In the case of Credit Africa Bank Limited (In Liquidation) v John Dingani Mudendal3l, the Supreme Court stated that: "The charging of compound interest can only be sustained if there is express agreement between the parties to the charging of compound interest or if there is evidence of consent or acquiescence to the same." J8 Further, in the case of Union Bank Zambia Limited v Southern Province Co-operative Marketing Union Limited(4l, it was stated that: ((By the universal custom of bankers, a banker has the right to charge simple interest at a reasonable rate on all overdrafts or loans. However, when it comes to an, uriusual rate of interest - such as compound interest - express agreement is required, or in the alternative evidence of consent or acquiescence to such a practice or custom." A reading of the loan facility shows that parties agreed to charge simple interest on the loan amount. For avoidance of doubt, clause 5 reads as follows: "Interest will be payable on the outstanding facility amount at a Kwacha Rate of [60% p. a]. Interest shall be calculated and payable at the end of each applicable interest period up to 6 months." In the case of African Banking Corporation Limited v Plinth Technical Works Limited & Others15l, the Supreme Court stated that: J9 ''The function of the Court is to ascertain what the parties meant by the words which they have used; to declare the meaning of what is written in the instrument, not of what was intended to have been written; and to give effect to the intention as expressed." Going by the agreement., it is nppnrent. that parties intended to charge simple interest on the loan facility. The Applicant is thus prohibited from charging compound interest in the absence of express agreement. It is also clear that parties expressly agreed on a payment term of 12 months, that is, that the loan would be repaid in 12 monthly instalments. This entails that the principal sum of ZMW850,000 was to be divided into 12 monthly instalment payments translating to ZMW70,833.34 per month. It is common cause that the loaned sum was to attract interest rate of 5% per month. Therefore, the 1st Respondent ought to have been paying as follows: ZMW70,833.34 x 5 x 1/100= ZMW3,541.67 That is, ZMW70,833.34 as the principal sum and 5% monthly interest of ZMW3,541.67. I have carefully combed through the exhibit "RSM2" and noted that the outstanding balance (principal) is not constant. It is also notable that the interest rate of 5% is not JlO constant for the duration of the loan. It is evident that the Applicant was calculating interest on the principal sum of ZMW850,000 and adding it to the outstanding balance as accumulative interest. The exhibit ("R8M2'') also shows variation on the interest charged, however, there is no explanation as to why there are such variations. For example, the principal instalment payable in October 2023 5% interest is ZMW42,500 and in November 2023 5%) interest is ZMW39,829.92. the balance column also changes from ZMWSS0,000 in September (when the loan was disbursed) to ZMW892,500 in October 2023 and ZMW932,329.92 in November 2023. It is clear from the said variations that the Applicant was charging compound interest which is illegal in the absence of an express agreement by the parties. Having established that the correct interest applicable is simple interest, I shall now proceed to calculate the amount due to the Applicant. The period of consideration is 12 months being the duration of the loan facility. Principal monthly sum x 12 months ZMW70,833.34 x 12 = ZMWSS0,000 Jll Monthly simple interest x 12 months ZMW3,54 l .67 x 12 = ZMW42,500 Total ZMW850,000 + ZMW42,500 = ZMW892,500 I am alive to the fact that a sum of ZMW40,000 was paid by the 1st Respondent to the Applicant as confinned by counsel for the Applicant at the hearing. Hence when ZMW40,000 is deducted from ZMW892,500, the balance is ZMW852,500. I therefore, find that the amount due and payable to the Applicant for the loan duration is ZMW852,500. The Hon. Judge further directed that the amount found due shall attract interest at the contractually agreed rate of 60%> per annum from the date of Writ to date of assessment. The record shows the matter was commenced in April 2024, and from then to date it culminates into a period of 6 months. As rightly explained by counsel for the Applicant, interest rate of 60% per annum translates to 5% per month. Thus, ZMW852,500 x 5 x 6/ 100= ZMW255, 750. Premised on the foregoing, I find as follows: 1. The amount due as judgment sum is ZMW852,500.00; J12 11. The judgment sum of ZMW852,500.00 shall attract a contractual interest of ZMW255,750.00 from date of Writ to date of assessment and thereafter at the current bank lending rate as determined by the Bank of Zambia until full payment; 111. The juclgn1ent sum of ZMW852,500.00 plus interest of ZMW255,750.00 (total of sum of ZMWl,108,250.00) is to be paid within 90 days from today's date failing which the Applicant will be at liberty to foreclose, repossess and sale the mortgaged properties being Stands S/LUSAK/SLN_0031/7882 and S/LUSAK/SLN_0031/5013 Lusaka. Leave to appeal is granted. Delivered this 14th day of October, 2024. · · · ·· jUOICIARY·OF ZAMBIA Ms. M. hilaml::Nilfett COURT. D • t . t' 1).paf' Mll_mercial Olv1s1on m iil ,~~ .. ~ 1S rlC :fSU'~ ... ~ DISTRICT REGISTAR P. O, BOX 50067, LUSAKA J13