Chachinja Money Lenders v Mungole Chimpende (2024/SID/108) [2024] ZMSUB 10 (15 October 2024)

IN THE SUBORDINATE COURT OF THE THIRD CLASS 2024/SID/108 FOR THE MBALA DISTRICT HOLDEN AT MBALA (Civil Jurisdiction) BETWEEN REPUBLIC OF ZAMBIA THE JUDICIARY MA GIST RATE CLASS I\\ P. O. BOX 420101 , M3l1:.. A CHACHINJA MONEY LENDERS PLAINTIFF AND MUNGOLE CHIMPINDE DEFENDANT Before: Hon’ble Deeleslie Mondoka For the Plaintiff For the Defendant : : In person In person JUDGMENT CASES REFERRED TO: i. ii. iii. iv. v. vi. vii. viii. ZAMBIA NATIONAL BUILDING SOCIETY V. ERNEST MUKWAMATABA NAYUNDA (S. C. Z. JUDGMENT 11 OF 1993) [1993) ZMSC 25 (19 AUGUST 1993); DIEGO CASILLI V ACCESS BANK (ZAMBIA) LIMITED AND OTHERS (APPEAL NO. 259 OF 2022); CUTTER V POWELL [1875] 6 TERM. REP 320; MOREHOUSE ET AL V INCOME INVESTMENTS LTD ET AL - CAN LU, 353; NEIGHBOURS CITY ESTATES LIMITED V MARK MUSHILI -SCZ APPEAL NO. 47 OF 2013; EDMAN BANDA V CHARLES LUNGU - SCZ SELECTED JUDGMENT NO.22 OF 2017; FISTON MTAMBO V SILILO KANALA 2010/HL/52 [UNREPORTED]; ATTORNEY GENERAL V DELSON CHIBAYA AND OTHERS SCZ APPEAL NO.70 OF 2011; J1 ix. x. xi. xii. xiii. xiv. xv. INDO ZAMBIA BANK LIMITED V R. M FUMBESHI AND COMPANY LIMITED & OTHERS - CAZ APPEAL NO. 238 OF 2021; M’MEMBE AND POST NEWSPAPERS LTD (IN LIQUIDATION) V MBOOZI AND OTHERS APPEAL 7 OF 2021) [2022] ZMSC 4; SAUNDERS V EDWARDS [1987] 1 WLR 1116; PHOENIX GENERAL INSURANCE COMPANY OF GREECE SA VS. ADMINSTRATIA ASIGURARILOR DE STAT (1987) 2 ALL ER 152, AND ST JOHN SHIPPING CORPORATION VS. JOSEPH RANK LIMITED (1956) 3 ALL ER 683; HOLMAN V JOHNSON (1775) 1 COWP 341; LES LABORATOIRES SERVIER V. APOTEX INC., (2013) BUS L. R. 80, AND ZAMBIAN SUPREME COURT EMBRACED WITH COMMENDABLE ENTHUSIASM IN ZAMBIA EXTRACTS OILS AND COLOURANTS LIMITED & ENVIRO OILS AND COLOURANTS LIMITED V. ZAMBIA STATE INSURANCE PENSION TRUST FUND BOARD OF TRUSTEES: SCZ/SELECTED JUDGMENT NO. 31 OF 2016. STATUTE i. ii. THE SUBORDINATE COURT ACT RULES, CHAPTER 28 OF THE LAWS OF ZAMBIA, & MONEY LENDERS ACT, CHAPTER 398 OF THE LAWS OF ZAMBIA OTHER MATERIALS REFERRED TO: i. ii. iii. iv. v. vi. PHIPSON ON EVIDENCE, 14TH EDITION (1990 LONDON, SWEET & MAXWELL); G. MONAHAN ON ESSENTIAL CONTRACT LAW, 2ND EDITION, CAVINDESH PUBLISHING (AUSTRALIA) PTY LIMITED 2001; CHITTY ON CONTRACTS, VOLUME 1 (GENERAL PRINCIPLES) 26TH EDITION, SWEET & MAXWELL, LONDON (1999) BY BEALE H G; LAW OF CONTRACT, 7TH EDITION BY P. RICHARDS, PEARSON LONGMAN, 2006; GAMER, BRYAN A AND HENRY CAMPBELL BLACK. BLACK’S LAW DICTIONARY. (2004) 8TH EDITION, ST. PAUL MN, THOMSON/ WEST; THE DOCTRINE OF UNCONSCIONABILITY AND ABUSIVE CLAUSES: A COMMON POINT BETWEEN CIVIL AND COMMON LAW LEGAL TRADITIONS - PROFESSOR CAMILO A. RODRIQUEZ-YONG. INTRODUCTION [1] This Court's deliberations commence with a claim of pecuniary recompense, wherein the plaintiff, a duly certified and licenced money lender, seeks judicial J2 recourse for:(i) The sum of K6,540.00, representing an outstanding debt incurred by the defendant on February 16, 2024; (ii) Reimbursement of costs attendant to this litigation; (iii) Such additional relief as this Court, in its discretion, may deem just and proper." BACKGROUND FACTS [2] On the third day of October, in the year of our Lord 2024, within the remote and brooding confines of Mbala District, the vast and intricate engine of justice creaked into motion at the humble Subordinate Court. It was upon the tenth day of October that the true course of this legal affair began to take its path, like a ship setting forth on an uncertain sea. Within the solemn chamber, shadowed by the weight of law and consequence, the plaintiff—solitary and steadfast—rose before the court. Sworn in as PW1, he stood alone, yet unwavering, at the helm of this ordeal. Here, the pursuit of truth unfurled its sails, and the opening lines of this grave narrative began to echo through the courtroom’s hallowed walls. [3] With the scene thus set, I turn to the facts that form the spine of this unfolding drama—a tale of debt, obligation, and evasion. The plaintiff, PW1, takes us back to the 16th day of February, 2024, and deponed that he lent the defendant the sum of K1,500.00. The terms, as clear as the sky before a storm, were simple: the full payment, including a 20 per centum interest, was due on the 22nd of that same month, totalling K1,800.00—nothing more, nothing less. [4] The plaintiff’s testimony further disclosed that the defendant initially appeared committed to settling this obligation within the agreed-upon time frame. However, as is not uncommon in matters such as these, the defendant, having made this promise, began to engage in evasive tactics—an all-too- familiar scenario in the realm of financial disputes. What began as a firm commitment quickly eroded into a pattern of avoidance and delay. [5] PW1 determined not to let this promise sink beneath the waves of forgetfulness, PW1 sought out the defendant at his place of work. There, amid the daily toil, a crucial moment took place. In a critical moment, facilitated by J3 the defendant’s supervisor, the defendant acknowledged his debt—an admission both candid and clear—and committed to repayment by September of 2024. Yet, despite this acknowledgment, no payment materialized. The defendant’s promise proved as hollow as it was certain. [6] PW1 proceeded to lay out a meticulous account of the debt’s accumulation, with interest compounding at 20 per centum—a figure that grew from K1,800.00 to being in excess of K6,500.00, the debt had grown like a leviathan from the deep, impossible to ignore and heavier with each passing month. [7] Then came the cross-examination, a crucible of tension where the defendant, at long last ensnared by the web of his own making, conceded to having borrowed K1,500.00. Yet, in a desperate bid for redemption, he proclaimed his debt to be but a trifling sum of K3,600.00—a mere amalgamation of principal and interest, entangled in the intricate dance of fiscal obligation. The courtroom, steeped in a heavy silence, hung on his every word, as if the very air conspired to amplify his plight. No further truths were unearthed during the re-examination; the atmosphere thickened, suffused with the unspoken acknowledgment of a battle half-fought and half-lost. Thus, the plaintiff’s case, resilient yet weary, was brought to a close, like a ship finally finding refuge after a tempestuous voyage, its sails torn but its spirit unbroken, retreating into the shadows of uncertainty, leaving the echoes of a storm behind. THE DEFENDANT’S CASE [8] On the 10th of October, 2024, as the court quietly awaited the next move, the defendant—poised yet calm—rose from his seat. All eyes followed as he took the stand. The moment was charged with anticipation. With a deliberate grace, he raised his hand and, in a solemn gesture, was sworn in as DW1. The stage was now his, and what followed was a testimony rich with detail and insight. His words, like the rhythmic pulse of nature itself, would now paint the canvas of the courtroom. What revelations would emerge? The proceedings, unfolding with measured precision, held everyone captive. J4 [9] DW1 deponed that on February 16, 2024, he, in need of financial assistance, borrowed K1,500. This was not a mere informal arrangement but a loan governed by clear terms: a 20 per centum interest charge—K300—raising the total obligation to K1,800. The parties entered into this contract with the full understanding of their respective duties. [10] DW1's testimony revealed a tale of purported diligence, as he claimed to have pursued educational endeavours subsequent to securing the loan. However, the plaintiff's agent, tasked with collecting the debt, encountered an obstacle in September of that year. [11] DW1, it seemed, had vanished from Senga's midst, having been temporarily reassigned to Mbala in a quest to marshal the necessary funds for repayment. Fate, it appears, had other plans. The plaintiff's representative instead found himself face-to-face with DW1's supervisor, a proxy for the elusive debtor. [12] Now, here is where things become instructive. When DW1 was contacted, he did not shirk from his obligations. Quite the contrary: he acknowledged his debt in no uncertain terms and proposed a repayment plan—K2,000 in October, and K1,600 in November—thus satisfying the entirety of his debt, K3,600. This proposal, made in the presence of his supervisor and PW1’s representative, evidenced his willingness to fulfil his contractual obligation. [13] During PW1’s cross-examination, the courtroom’s atmosphere grew tense as a series of leading questions began to unravel DW1’s carefully calculated figures. PW1 confidently asserted that the debt exceeded K6,500, far more than DW1 had originally claimed. This unexpected shift cast doubt over the earlier testimony, unsettling the courtroom and leaving the once-stable numbers adrift. As the tension mounted, re-examination failed to restore any clarity or resolve the matter. The truth remained elusive, suspended in a fog of uncertainty, with no firm conclusions to anchor the case. UNDISPUTED FACTS [14] The record, shorn of all uncertainty, discloses with pristine clarity two undeniable truths: first, DW1's debt to PW1 originated from a loan of K1,500.00, granted on the 16th of February, 2024, and set to mature by the J5 22nd of that same month; second, the interest upon this loan, as unmistakably agreed by both parties, was fixed at a rate of 20 percent per month on the principal. This agreement, bound in the cold arithmetic of commerce, lays bare the obligations tethering one to the other, precise and unyielding in its terms. DISPUTED FACTS [15] The heart of this dispute, the very crux upon which it pivots, is the amount of debt said to be owed by DW1 to PW1. PW1, with an air of resolute certainty, contends that the sum still outstanding is no less than K6,540.00, a figure emblematic of seven long months of unmet obligations. On the other hand, DW1, with equal fervour and unwavering conviction, presents a counter- narrative: his liability, he insists, is a paltry K3,600.00, a sum significantly more modest. Thus, it is upon this divergence, this sharp fracture between claim and counterclaim, that the entire matter turns. ISSUES FOR DETERMINATION [16] In the matter before me, I confront two pivotal legal questions that demand a rigorous analysis. First, I must ascertain whether a legally binding contract was indeed forged between Plaintiff Witness 1 (PW1) and Defendant Witness 1 (DW1). This determination is crucial, as it speaks to the very foundation of any contractual obligations that may exist between the parties. [17] If, and only if, I conclude that such a contract exists, I must then consider whether it can be enforced against the defendant. Specifically, the plaintiff seeks to recover a sum of K6,540.00, and it falls upon this court to decide whether the law permits such a claim to be upheld. Thus—I embark on this legal inquiry, firmly grounded in the principles of contract law and the necessity of upholding justice. [18] And now, I shall introduce the third and final question—one that looms large: whether a person, duly registered as a money lender, is permitted by law to impose interest upon a debt at their whim, recklessly and without restraint, as if beyond the reach of justice? Does the law, in its wisdom, allow such J6 audacity, such unchecked liberty, to reign over those who borrow in need? This question, pressing and inevitable, demands an answer that will echo through the chambers of fairness and equity. ANALYSIS OF THE LAW & FACTS [19] At the very outset, I must clarify the essence of a contract—what, precisely, is meant by this term? As elucidated by the esteemed author of Essential Contract Law, a contract is defined as: “An agreement giving rise to obligations which are enforced or recognized by law. The factor which distinguishes contractual from other legal obligations is that they are based on the agreement of the contracting parties. A legally binding agreement made between two or more persons by which rights are acquired by one or more to acts or forbearances on the part of the other or other.” (Emphasis supplied) [20] What issues are of concern relating to performance of a contract? To help unpack this notion, I shall consider the Learned Authors of Chitty on Contracts1 who stated the general rule relating to the performance of a binding contract at paragraph 22-001 as follows: “The general rule is that a party to a contract must perform exactly what he undertook to do. When an issue arises as to whether performance is sufficient, the Court must construe the contract in order to ascertain the nature of the obligation (which is a question of law); the next question is to see whether the actual performance measures up to that obligation (which is a question of ‘mixed fact and law in that the Court decides whether the facts of the actual performance satisfy the standard prescribed by the contractual provisions defining the obligation”. (Emphasis supplied) 1 Chitty on Contracts, Volume 1 (General Principles) 26th Edition, Sweet & Maxwell, London (1999) By Beale H G J7 [21] Further, the Law of Contract, 13th Edition, Butterworths (1996) at page 29, stating that the authors, in writing on the phenomena of agreement, put it this way: - “Behind all forms of contract, no doubt, lies the basic idea of assent. A contracting party, unlike a tortfeasor is bound because he has agreed to be bound. Agreement, however, is not a mental state but an act, and as an act, is a matter of inference from conduct. The parties are to be judged not by what is in their minds, but by what they have said or written or done.” [emphasis supplied] [22] In re Cutter v Powell [1875] 6 Term. Rep 320, the court stated as follows: “Parties must perform precisely all the terms of the contract in order to discharge their obligations ... A breach of contract occurs if a party to a contract fails to comply with his obligations under it or performs his obligations in a defective manner ... In other words, the law will not regard a person to have discharged the contract unless he has completely and precisely performed the exact thing that he agreed to do under the contract.” [emphasis added] [23] From the foregoing, it becomes undeniably apparent that the bond between PW1 and the defendant was, in essence, a contract. There is no dispute—no shadow of doubt—that the defendant borrowed the sum of K1,500.00, with the understanding that it would bear interest at 20 percent. And now the question arises, like an inevitable spectre: what, then, are the consequences of any breaches, or the damages that might flow from this contract, should its delicate threads be broken? It is here, in this fragile space of obligation and consequence, that the matter unfolds. [24] The Supreme Court in Zambia National Building Society v. Ernest Mukwamataba Nayunda (S. C. Z. Judgment 11 of 1993) [1993) ZMSC 25 (19 August 1993), stated as follows: “... The essence of damages has always been that the injured party should be put, as far as monetary compensation can go, in about the same position he would have been had he not been injured. He J8 should not be in a prejudiced position nor be unjustly enriched.” [emphasis mine] DETERMINATION [25] After a thorough and scrupulous examination of the facts and the law laid before me, I find myself resolutely convinced that this case resides firmly within the domain of contract law. It is an arena governed by the intricate principles and established jurisprudence that define its very essence. [26] With the weight of reason and reflection guiding my judicial mind, I acknowledge that the matters at hand unfold within a framework where the delicate balance of rights and obligations must be meticulously preserved. Here, the interplay of intent and obligation dances under the watchful eye of legal doctrine, a testament to the complexities of human dealings that demand not only scrutiny but a commitment to justice and equity. Thus, I stand at the threshold of a legal labyrinth, where every clause and condition reverberate with the echoes of accountability and ethical governance. [27] It is of paramount importance to acknowledge that the equitable nature of interest rates, as delineated across various jurisdictions, finds its foundation in a myriad of statutes alongside the venerable traditions of common law that permeate our own legal landscape. It is a well-established tenet of this common law that exorbitantly oppressive terms of interest may transgress the bounds of reason, emerging as not merely harsh but utterly unconscionable, rendering them null and void in the eyes of justice. The very fabric of fairness weaves through these principles, inviting both contemplation and scrutiny as we navigate the turbulent waters of financial obligation. [28] According to the Learned Author of Essential Contract Law2 at page 27: “A valid contract is a contract that the law will enforce and creates legal rights and obligations. A contract valid ab initio (from the beginning) contains all the three essential elements of formation: Agreement (offer and acceptance). Intention (to be bound by the 2 G. Monahan On Essential Contract Law, 2nd Edition, Cavindesh Publishing (Australia) Pty Limited 2001 J9 agreement). Consideration (for example, the promise to pay for goods or services received.” (Emphasis supplied) [29] In addressing the matter at hand, the core issue for determination is whether the agreement executed by PW1 and DW1 on February 16, 2024, is valid and capable of being upheld by this Court, despite any alleged deficiencies or defects that may be present. The inquiry I must undertake is both straightforward and essential: does this contract fulfil the fundamental criteria requisite for judicial enforcement? [30] I must first look to the essential elements of a valid contract, which form the bedrock of enforceability: (i) was there mutual assent between PW1 and DW1, that meeting of the minds (consensus ad idem), without which no contract can stand? (ii) did the parties possess the requisite capacity to bind themselves in law? (iii) was the object of the contract lawful, or was it in furtherance of some forbidden or pernicious purpose? (iv) was consideration —that age-old quid pro quo—present to form the contractual glue? And finally, (v) Did the contract comply with any applicable statutory formalities, if the law demands such solemnities? [31] Now, assuming all these elements are satisfied, the inquiry does not end there. I must scrutinize whether any vitiating factors operate to strike down this agreement. Was there duress? Was undue influence at play, distorting the parties' free will? Or perhaps there was a mistake so grave, so fundamental, that it undermines the very basis of the agreement? [32] Only after considering all these factors can it be determined whether this contract, forged on February 16, 2024, stands as a beacon of enforceability, or whether it collapses under the weight of its own infirmities. [33] The Court of Appeal in re Diego Casilli v. Access Bank (Zambia) Limited and Others (Appeal No. 259 of 2022), sympathized with Professor Camilo A Rodriquez - Yong3,in his Article presented to the Oxford University Law Forum 3 The Doctrine of Unconscionability and Abusive Clauses: A Common Point Between Civil and Common Law Legal Traditions - Professor Camilo A. Rodriquez-Yong J10 on the subject of The Doctrine of Unconscionability and abusive clauses: a common point between civil and common law traditions, had this to say: “The speed at which the world moves and advances has brought multiple economic social changes to our society. One of the clearest examples of these transformation is the way in which people contract in the acquisition of services and goods. We have moved from a period where the content of a contract was individually negotiated by both parties, to one where only one of them imposes it, the party that holds bargain superiority. This situation has led to the creation of a contractual model known as adhesion contracts ... Taking into consideration the great power that one of the parties enjoys in determining the rights and obligations of the contract, it has become necessary to develop mechanisms that limit such authority. One of these mechanisms is the adoption of legal doctrines that attempt to avoid the unlimited and abusive exercise of that unequal power by restricting the autonomy of will and freedom of the parties to enter in contract within these developments, it is possible to identify two key doctrines; the doctrines of unconscionability and of abusive clauses. These doctrines represent legal instruments that prevent contractual unfairness and protect parties from overreaching. The former is implemented in common law countries ....” [emphasis supplied] [34] In examining the contract dated February 16, 2024, between PW1 and DW2, one cannot overlook the staggering interest rate imposed—an exorbitant 330 per centum on the vulnerable DW1. This interest, steeped in harshness and unconscionability, stands as a glaring testament to the inequity inherent in the agreement. It is clear that such a rate is not merely excessive; it is, in fact, unconscionable and thus unenforceable under the tenets of law. [35] The doctrine of unconscionability serves as a formidable legal instrument, wielded by the courts to scrutinize agreements and safeguard against egregious unfairness. Its purpose is to thwart the incorporation and legal enforcement of contracts that are one-sided, oppressive, or fundamentally J11 unjust. In this instance, the court must intervene to uphold the principles of fairness and equity, ensuring that justice prevails over exploitation. [36] In the ebb and flow of human existence, individuals like DW1 may, at times, find themselves ensnared in desperate circumstances, driven by necessity to acquiesce to a loan burdened with an exorbitant interest rate. Such predicaments illuminate the moral fabric of our society, wherein the law, in its wisdom, stands sentinel against the predatory inclinations of lenders, forbidding them from exploiting the vulnerabilities of the distressed and imposing rigid restrictions on the rates they may demand. [37] From this, it becomes abundantly clear that the courts possess the discernment to recognize a loan as unconscionable when its terms betray a profound injustice, rendering it morally indefensible to uphold. Instances marked by stark disparities in bargaining power and the egregious unfairness of certain agreements evoke a sense of moral outrage, provoking the court to declare such contracts as those that "shock the conscience." In this theatre of justice, it is the role of the judiciary to intercede, to temper the excesses of the powerful, and to restore balance to the scales of equity. [38] Generally, where an interest rate was negotiated with undue influence, such as where the lender preys upon the vulnerabilities of the borrower or where an interest rate is beyond the statutory limit and is explicitly unlawful or is so disproportionate as to offend a sense of reasonableness within the market place for similar lending rights, that interest may be set aside or substituted as was appropriately done in the case of Morehouse Et Al V Income Investments Ltd Et al - CAN LU, 353. [39] The Supreme Court had occasion to address this issue in the case of Neighbours City Estates Limited V Mark Mushili -SCZ Appeal No. 47 of 2013. In that case, the trial court was faced with the question of the legality of the loan agreement, especially as it related to the interest agreed between the parties, which the borrower alleged was illegal due to the fact that the lender had no money lenders certificate. The trial Judge took the view that both parties agreed to the terms of the agreement and that in doing so, they were J12 represented by Counsel and that therefore the issue of illegality could not arise. The learned Judge proceeded to enter judgment in favour of the lender for the outstanding amount, together with interest of 120 per centum per annum as per the agreement between the parties. [40] On appeal, the Supreme Court formulated the issue for determination as follows: "The question is what is the position of the law as regards the interest agreed between the parties." [41] The Supreme Court delivered a pivotal ruling that cast a revealing light on the complexities of financial governance, taking aim at a staggering interest rate in excess of the statutory 48 percent per annum imposed by a lender. This usurious rate not only contravened The Money Lenders Act but also ignited profound questions about the integrity of the lending practices at play. [42] In their deliberations, the Justices astutely concluded that the lender, lacking the requisite classification under the Act, had no legitimate authority to impose such exorbitant charges. Rather than viewing the agreement through the lens of predatory lending, they framed it as a standard contract governed by principles of fairness and decency. [43] In a decisive stance, the court ruled that a reasonable interest rate should prevail, reaffirming the fundamental tenet that fairness must guide all financial transactions. This landmark decision underscored the importance of equitable dealings in the lending arena, ensuring that justice remained firmly anchored amid the shadows of greed. [44] The Court went on to state as follows: "It seems obvious to us that the Respondent took advantage of the Appellant's desperation to charge excessive interest which we cannot allow as this would be against the public policy. It is our duty to protect desperate members of the public who end up being exploited by loan sharks. We must bear in mind, in this case, that the lender was an J13 individual and not a financial institution and certainly we agree that although he is entitled to interest, this must be reasonable.” [emphasis supplied] [45] Herein lies the profound irony. On the 8th of July, 2024, PW1 was duly issued a Money Lenders Certificate, in accordance with section 3 of the Money Lenders Act, Chapter 398 of the Laws of Zambia—a document that ostensibly bestows legitimacy, permitting all who hold it to engage in trade within our jurisdiction. Yet, beneath this veneer of legality, PW1 has orchestrated a perverse mockery of the very law he purports to uphold. Under the auspices of the Money Lenders Act, he has brazenly transgressed the statutes that unequivocally prohibit the imposition of exorbitant interest rates, levying such burdens upon DW1 with impunity. [46] In this tragic tableau, PW1 wields the mantle of legality not as a shield for just commerce, but rather as a weapon to perpetuate a grievous illegality. Thus, he stands as a testament to the insidious nature of those who, cloaked in the garb of lawful authority, exploit the system for personal gain, rendering the law itself a mere instrument of their own avarice. [47] It is crucial to note that that—the Money Lenders Act was conceived to ensnare those who make a business of lending, designed to regulate their practices, and, more crucially, to safeguard the public from the grasp of those who would exploit them, the so-called shylocks. It is a law born of necessity, a measure meant to impose order upon a trade fraught with danger, to protect the innocent from being ensnared by avarice disguised as aid. It is, in its essence, a shield against the relentless march of unchecked greed4. [48] In any case—it must be asserted with unwavering certainty that no party can contract beyond the immutable dictates of the law or the statutes that govern our society. The boundaries set by legal framework are not mere suggestions; they are the very bedrock upon which the edifice of contractual obligations rests. Any attempt to transcend these boundaries is not only futile but a reckless affront to the sanctity of the law itself. Thus, the rule of law stands as 4 Fiston Mtambo v Sililo Kanala 2010/HL/52 [unreported] J14 a stern sentinel, ensuring that the dance of agreements unfolds within the confines of reason and order, lest chaos and injustice seep into the fabric of our dealings5. [49] In re Indo Zambia Bank Limited V R. M Fumbeshi And Company Limited & Others - CAZ Appeal No. 238 of 2021, the Court of Appeal did in that case hold that: “Taking into consideration the circumstances of the case, this was a proper case for restricting the will and freedom of the parties in the manner they contracted by applying the doctrine of unconscionability. There is definitely no doubt that there was oppression and predatory conduct on the part of the Appellant.” [emphasis mine] [50] I shall venture boldly and declare that a contract forbidden by statute bears the unmistakable mark of illegality from the very moment it is forged. The courts, in their august authority, shall refuse to breathe life into such an agreement, for it stands condemned by the law itself. To attempt enforcement would be to trample upon the very foundations of justice, as though daring the law to defy its own dictates6. [51] I must, with all due respect to the parties involved, declare that I cannot, in good conscience, enforce the plaintiff's claim of K6,540.00 following the agreement reached between PW1 and DW1 on February 16, 2024. The reason is straightforward: to uphold the plaintiff’s claim as is would not only invite the spectre of injustice but would also undermine the fundamental principles of equity that our legal system is designed to uphold. [52] The law, in its profound wisdom, aims to eradicate significant injustices, serving as a bulwark against the predatory instincts that lurk in the shadows of human desperation. This court must stand ever vigilant against any action that would warp the very fabric of justice I am sworn to protect. Let it be clear: I am not here to reward the avaricious or to turn a blind eye to the principles of fairness and equity. The courts exist to ensure that justice is not merely an 5 Attorney General v Delson Chibaya and Others SCZ Appeal No.70 of 2011 6 See the cases of Phoenix General Insurance Company of Greece SA v. Adminstratia Asigurarilor De Stat (1987) 2 All ER 152, and St John Shipping Corporation vs. Joseph Rank Limited (1956) 3 ALL ER 683, J15 abstract concept but a living reality, one that we must fiercely defend against all threats, even those disguised as legitimate claims. [53] In this context, the plaintiff’s demand for K6,540.00 ex facie collapses— failing not merely on technical legal grounds but in the essence of fairness itself. This claim falters, its foundation undermined by the statutes intended to protect the vulnerable, leaving no room for exploitation to encroach upon the sanctity of justice. [54] The Court is under a solemn duty, once it becomes aware of a contract’s illegality, to raise the issue suo motu and refuse enforcement. This obligation applies regardless of whether the information comes from the party responsible for the illegality or from an external source. The judiciary’s role is not to lend its authority to the enforcement of illegal agreements. Estoppel has no place here. The Court's refusal stems from its paramount duty to protect the public interest, not to facilitate lawbreaking. To do otherwise would be a perversion of justice itself7. [55] Yet, I cannot ignore the undeniable fact that the defendant owes a debt to the plaintiff, regardless of the exorbitant interest claimed by the plaintiff— interest that exceeds a staggering 330 per centum on a principal amount of K1,500.00, as asserted by DW1. Such a figure far exceeds the permissible interest rates prescribed by The Money Lenders Act and eclipses what any duly registered financial institution would dare impose under The Banking and Financial Services Act. The plaintiff, therefore, is beholden to the restrictions of The Money Lenders Act and cannot justifiably impose such exorbitant interest. [56] Does this, then, absolve DW1 of liability, casting him free from the burden of PW1’s claims, simply because PW1’s actions reek of illegality? The debt is not in dispute—the contract, solemnized on the sixteenth day of February, 2024, binds DW1 to his obligation. How thoughtless it would be for this court to dismiss DW1's liability, clinging lazily to the shield of “ex dolo malo non oritur actio”—that no court will come to the aid of a man whose cause is 7 Mahmoud & Ispahani, Re (1921) All Er Rep 217, CA J16 rooted in immorality or illegality8. Yes, PW1 may have breached the law by imposing an interest rate exceeding the statutory cap of 48 percent, as per the Money Lenders Act, but to casually brush aside DW1's responsibility under the contract would be an act of judicial abandonment. [57] In the case of Saunders v. Edwards [1987] 1 WLR 1116, Lord Justice Bingham, with the weight of reason behind him, warned against such cold, indifferent legalism: the court must not, at the first hint of unlawful conduct, lift its skirts and flee from the scene, leaving the plaintiff to languish in ruin. It is not justice to ignore the gravity of the plaintiff’s loss, to measure his suffering as equal to his unlawful act. No, the court must weigh both sides of the scale, understanding that a misstep on one end should not obliterate all remedy on the other. [58] In certain cases, a contract that might otherwise be deemed illegal could find itself upheld by the court, swayed by the presence of circumstances so particular, so compelling, that to deny enforcement would seem an act of sheer obstinacy. The law, often rigid and cold, bends subtly when these factors—rare as they are—emerge, softening its stance in a display of measured grace. The refusal to honour such an agreement, though lawful, becomes not merely unreasonable but almost a contradiction to the principles of fairness, which, like a breath of wind, sometimes move beyond the ironclad letter of the law. See the legal case of Edman Banda V Charles Lungu - SCZ Selected Judgment No.22 Of 2017. [59] In advancing this proposition, I draw upon the insightful words of Etherton L. J. in the case of Les Laboratoires Servier V. Apotex Inc., (2013) BUS L. R. 80, which the Zambian Supreme Court embraced with commendable enthusiasm in Zambia Extracts Oils and Colourants Limited & Enviro Oils and Colourants Limited V. Zambia State Insurance Pension Trust Fund Board of Trustees: SCZ/Selected Judgment No. 31 of 2016: “It is not necessary in order to resolve [a matter where illegality is alleged] to undertake a comprehensive analysis of the decided cases. 8 Holman v Johnson (1775) 1 Cowp 341 J17 Such an exercise would, in any event, be complex, very lengthy and, in a large part, unrewarding. The decisions inevitably turn on their own particular facts. The statements of law or principle they contain are not all consistent or easily reconciled ... What is required in each case is an intense analysis of the particular facts and of the proper application of the various policy considerations underlying the illegality principle so as to produce a just and proportionate response to the illegality.” [emphasis supplied] [60] Its beyond question—the issue of illegality of a contract vis-à-vis statute is a nuanced issue and that a simplistic approach to the same is inappropriate in this particular case, as such an approach can be both prejudicial and unjust. Therefore—the core question when evaluating the impact of statutory law on contracts is this: did the legislature intend for the statute to render such contracts void, stripping the parties of their contractual rights and benefits? That’s the key. If the statute was designed to knock out the contract itself, then it’s a hard stop—the contract fails, and the benefits disappear with it. [61] Further, the Court's task is to determine whether the statute, properly interpreted, is meant to invalidate contracts of the type in question, or if it simply bars the performance of a specific act. The distinction matters—does the law strike down the whole class of contracts, or just prohibit a particular conduct within them? This is the lens through which the statute must be read, and the answer will decide whether the contract stands or falls. [62] When I view this case in the round—it is patently clear that—the legal performance9 of a contract that skirts the bounds of legality may still be enforced, insofar as it pertains to the undeniable fact that DW1 owes PW1 money, which sum must be satiated. However, the irony lies in this: the enforceable amount in this suit falls short of the shocking K6,540.00 that the plaintiff claims herein. The law, in its measured hand, as per the Money 9 Gideon Mundanda Vs Timothy Mulwani & 2 Others (1987) ZL 29 J18 Lenders Act grants only what is due and or would be due and owing, yet not without trimming the excess of expectation. CONCLUSION [63] Thusly—in the spirit of fairness, striving for a delicate balance—an earnest attempt to render justice in a manner that befits the rule of law10, I do HEREBY ORDER that the defendant (DW1) shall pay the plaintiff (PW1) the sum of K2,220.00—an amount that, while modest, is nevertheless a conscionable quantum and aligns with the 48 percent cap mandated by the Money Lenders Act. This sum, along with all incidental costs associated with this suit, must be settled by the defendant no later than the 31st day of October, 2024. Let there be no confusion: the law demands compliance, and the time for payment is fixed. [64] Either party has the right to appeal to the High Court for Zambia within 30 days from the date hereof. JUDGEMENT DELIVERED AT MBALA ON 15TH OCTOBER, 2024 _____________________________________________ DEELESLIE MONDOKA HON’BLE MAGISTRATE 10 M’membe And Post Newspapers Ltd (In Liquidation) v. Mboozi And Others (Appeal 7 Of 2021) [2022] ZMSC J19