Lydia Lukiya Nabeza v Naomie Chambeshi Muteteka (2025/HPC/0102) [2025] ZMHC 40 (28 March 2025)

l IN THE HIGH COURT OF ZAMBIA AT THE COMMERCIAL REGISTRY HOLDEN AT LUSAKA (Civil Jurisdiction) 2025/HPC/0102 IN THE MATTER OF: IN THE MATTER OF: IN THE MATTER OF: IN THE MATTER OF: ORDER 30 RULE 14 OF THE HIGH COURT RULES CHAPTER 27 OF THE LAWS OF ZAMBIA ORDER 88 RULE 1 OF THE RULES OF THE SUPREME COURT OF ENGLAND, 1999 EDITION (WHITE BOOK) A MORTGAGE ACTION RELATING TO SUBDIVISION C OF PLOT NO. 16658/M, SITUATE AT LUSAKA IN LUSAKA PROVINCE OF ZAMBIA, COMPRISED UNDER AN EQUITABLE MORTGAGE FORECLOSURE, POSSESSION AND SALE OF MORTGAGED PROPERTY BETWEEN: LYDIA LUKIYA NABEZA AND HIGH COURT OF ZAMBIA COM JUDICIARY ~ -t DIV/SI N 8 MAH 202 PLAINTIFF DEFENDANT Delivered ex tempore before the Honourable Mrs. Justice K. E. Mwenda-Zimba on the 28th day of March, 2025. For the Plaintiff Mr. D. Kalima & Ms L. T. Chilima of Mess rs D. Kalima & Company Legal Practitioners For the Defendant : Mr R. Katumbi of Willa Mutofwe & Associates JUDGMENT Cases referred to: l. Zambia Extracts Oils and Colourants Ltd & Another v. Zambia State Insurance Pension Trust Fund Board of Trustees (2016} 2 ZR 316. 2. Neighbours City Estates v. Mark Mushili, Appeal No. 47 of 2013 (unreported}. 3. Banda v. Lunqu (2017} l ZR 514. 4. Kasabi Industries Limited v. Intermarket Banking Cooperation Limited Appeal No 168 of2009 (unreported}. Scanned with ~ CamScanner· I Legislation ref erred to: 1. The High Court Rules, Chapter 27 of the Laws of Zambia, Order 30 Rule 14. 2. Money Lenders Act. Chapter 398 of the Laws o(Zambla. Sections 3/3/ and 15/1/. 1.0. BACKGROUND 1. 1. In 2022, Bliss Financial Services commenced an action against the respondent, Naomi Chambeshi Muteteka under Cause No. 2022/HPC/0659. In that case, the respondent argued that Bliss Financial Services was not the rightful person to commence the action. However, the Judge dismissed this contention and held that Bliss Financial Services had proved its case on a balance of probabilities and ordered that the respondent pays the principal sum claimed plus interest at 48% per annum as per the Money Lender's Act, Chapter 398 of the Laws of Zambia; among others. 1.2. The respondent, Naomi Chambeshi Muteteka, who is also the respondent in this matter, appealed to the Court of Appeal challenging the locus standi of Bliss Financial Services. The Court of Appeal held that Bliss Financial Services did not have locus standi to commence an action in the court below. Consequently, they set aside the judgment of the court below. Following the above events, the applicant commenced this action before me. 2.0. THE CONTENTIONS OF THE PARTIES 2.1. The applicant seeks to recover ZMWl 90,000.00 advanced to the respondent and her late husband. The loan sum was to be repaid within 10 months with interest at 15% per month. The loan was secured by a deposit of the Certificate of Title relating to -J2- Scanned with (i CamScanner- Subdivision C of Lot No. 16658/M situate in Lusaka of the Lusaka Province of Zambia. 2.2. In her opposition, the respondent does not deny borrowing, depositing the certificate of title of Subdivision C of Lot No. 16658/M, Lusaka as security for the loan and defaulting on her payments. She swore that the applicant is a Money Lender who is supposed to charge at most, interest at 48% per annum and not the 180% per annum claimed by the applicant. 2.3. In her reply, the applicant denies being a registered money lender and insists that interest was agreed at 15% per month. 3.0. CONSIDERATIONS, FINDINGS AND CONCLUSION 3.1. I have considered the originating summons, the parties' affidavits, skeleton arguments and authorities cited. 3.2. It is not in dispute that the respondent contracted a loan from the applicant in the sum of ZMW190,000.00. According to the terms of the money lending agreement dated 18th February, 2020, exhibited as "LLN 1" in the affidavit in support, the loan was to be repaid in 10 months. However, no rate of interest was stated in the agreement. The respondent contends that the interest rate of 15% per month is harsh while the applicant contends that it was agreed. 3.3. I have reviewed the money lending agreement exhibited as "LLNl" aforesaid and there is nowhere where the interest rate is stated. However, in paragraph 4 of the affidavit in support of the -J3- Scanned with CamScanner- originating summons, the applicant alleged that the parties agreed to interest at 15% per month for 10 months. The respondent did not dispute this paragraph in her affidavit in opposition. All she said in her paragraph 11 of the said opposition was that the rate of interest of 15% per month was illegal under the Money Lenders Act. Having not disputed the assertion that this rate of interest was agreed, I do not hesitate to find that the parties agreed that interest would be at 15% per month for 10 months. 3.4. Turning to the issue of whether the applicant is a money lender regulated under the Money Lenders Act, there is no evidence to support the respondent's contention. The Court of Appeal, in its judgment referred to the agreement as a money lending agreement. However, it did not state that the applicant is a money lender regulated by the Money Lending Act. I, therefore, find that the applicant is not a licenced money lender. It follows that her money lending activities offended the Money Lenders Act. 3.5. Guidance has been given by the Supreme Court in instances where a person carries out the business of lending money without a licence under the now repealed Banking and Financial Services Act (BFSA), Cap 387 of the Laws of Zambia. This was in Zambia Extracts Oil and Colourants Ltd and Another v. Zambia State Insurance Pension Fund Board ofTrustees'11 where the Court held that- " ... the fundamental principle in assessing the effect of statute law upon contracts is whether the statute intended to affect contracts -J4- Scanned with (i CamScanner- and make them void thereby depriving the contracting party the benefits under the contract. The mortgage transaction was made and performed contrary to section 17 of the BFSA, as the respondent lent out monies to the first appellant on the security of a mortgage without a licence. Section 17 of the BFSA on Its proper construction does not invalidate or vitiate contracts entered into by a body corporate on a financial service business in breach of that section. The legislature did not aim at the voiding of contracts like the one in issue or at punishing transgressors twice by imposing criminal sanctions and by voiding their contracts as this would amount to double jeopardy." 3.6. I note that the above guidance relates to lending under the BFSA. However, the principle of assessing the effect of a statute upon contracts remains applicable in the present case. Under Section 3(3) of the Money lenders Act, the penalty for lending money without a licence prescribed by the legislature is a conviction under criminal law. It does not extend to making the contract void. More specific guidance to lending without a licence under the Money Lenders Act was discussed by the Supreme Court in Neighbours City Estates limited v. Mark Mushili.12) In that case, much as the money lender was not licenced, it still upheld the contract between the parties with interest at the average short-term deposit rate from the date of the writ to the date of judgment and thereafter at the bank lending rate until full payment. The Court refused to award interest prescribed by the money lenders act as the lender was not licenced. The Neighbours City Estates limited(2) case was -JS- ' : Scanned with ·-- -------------------- ! ii CamScanner· '···········------·······---- approved by the Supreme Court in Banda v. Lungu(3l. In that case, the Supreme Court upheld the contractual interest on the loan applicable before the date of Judgment. 3.7. In the present case, it is clear that the parties intended to create legal relations by entering into the money lending agreement. There is no evidence of any misrepresentation, duress or fraud in the signing of the agreement. Therefore, much as I have found that the applicant was not a licenced money lender, she is entitled to payment of the principal plus interest as guided in the Neighbours City Estates Limited(2) and Banda v. Lungul3l cases cited above. 3.8. Therefore, I find. that the applicant has proved her case on a balance of probabilities. I accordingly enter judgment in her favour for the sum ofZMW190,000.00 with interest at 15% per month for 10 months. Thereafter, interest shall be at the average short-term bank deposit rate from the date of the originating summons to date of this judgment and thereafter, at the bank lending rate as determined by the Bank of Zambia until full payment. 3.9. As the loan was secured by a deposit of title deeds, I find that an equitable mortgage was created under which an order of sale cannot be granted. Therefore, I order that the said judgment sum plus interest be paid within 60 days from today, failing which the applicant shall be at liberty to foreclose and the respondent shall convey the mortgaged property being Subdivision C of Lot No. 16658/M Lusaka to the applicant unconditionally. I refuse to -JG- Scanned with (i CamScanner· order sale of the mortgaged property on the authority of Kasabi Industries Limited v. lntermarket Banking Cooperation Limited. (3) 3.10. The applicant is entitled to her costs to be truced in default of agreement. Dated at Lusaka this 28th day of March, 2025. '2 ... ~ .................... . K. E. Mwenda-Zimba HIGH COURT JUDGE -J7- Scanned with 11 CamScanner-